<PAGE> 1
As filed with the Securities and Exchange Commission on May 8, 1997
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
KEY PLASTICS, INC.
(Exact name of Registrant as specified in its charter)
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<S> <C> <C>
Michigan 3714 38-2653726
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization Classification Code Number) Identification No.)
Michigan Key Plastics International L.L.C. 38-3341783
Michigan Key Plastics Automotive L.L.C. 38-3341785
Michigan Key Plastics Technology L.L.C. 35-1997449
Michigan Key Mexico A, L.L.C. Applied for
Michigan Key Mexico B, L.L.C. Applied for
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21333 Haggerty Road
Novi, Michigan
(810) 449-6100
(Address, including zip code, and telephone number, including area code, of
registrants' principal executive offices)
-------------------------
David C. Benoit
21333 Haggerty Road
Novi, Michigan
(810) 449-6100
(Name, Address, including zip code, and telephone number, including area code,
of agent for service)
copies to:
Aleksandra A. Miziolek
Dykema Gossett PLLC
400 Renaissance Center
Detroit, Michigan 48243
-------------------------
Approximate date of commencement of proposed sale to public: As soon as
practicable after the effective date of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: _
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========================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED PER UNIT (1) OFFERING PRICE (1) REGISTRATION FEE
========================================================================================================
<S> <C> <C> <C> <C>
10 1/4% Senior Subordinated Notes
due March 15, 2007, Series B.....
Guarantees of 10 1/4% Senior
Subordinated Notes due $125,000,000 100% $125,000,000 $37,878.78
March 15, 2007, Series B ........ (2) (2) (2) (2)
========================================================================================================
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(1) Estimated pursuant to Rule 457(f)(2) solely for the purpose of calculating
the registration fee.
(2) No additional consideration will be paid by the persons who receive the
Senior Subordinated Notes, Series B for the guarantees. Pursuant to Rule
457(n) of the Securities Act of 1933, no separate is payable for the
guarantees.
The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE> 2
KEY PLASTICS, INC.
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
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FORM S-4 ITEM NUMBER HEADING OR SUBHEADING IN PROSPECTUS
- -------------------- -----------------------------------
A. INFORMATION ABOUT THE TRANSACTION
<S> <C>
1. Forepart of the Registration Statement; Outside
Front Cover Page Prospectus . . . . . . . . . . . . . . . . Facing Page of Registration Statement; Cross Reference
Sheet; Outside Front Cover Page of Prospectus.
2. Inside Front and Outside Back Cover
Pages of Prospectus . . . . . . . . . . . . . . . . . . . . Inside Front Cover Page of Prospectus; Outside Back
Cover Page of Prospectus.
3. Risk Factors, Ratio of Earnings
to Fixed Charges, and Other
Information . . . . . . . . . . . . . . . . . . . . . . . . Prospectus Summary; Risk Factors; Business; Selected
Consolidated Financial Data
4. Terms of the Transaction . . . . . . . . . . . . . . . . . Prospectus Summary; The Exchange Offer, Description of
Notes; Description of Notes --Registration Rights; Certain
Federal Income Tax Considerations.
5. Pro Forma Financial Information . . . . . . . . . . . . . . Not Applicable.
6. Material Contracts With the Company
Being Acquired . . . . . . . . . . . . . . . . . . . . . . Not Applicable.
7. Additional Information Required For
Reoffering by Persons and Parties
Deemed to be Underwriters . . . . . . . . . . . . . . . . . Not Applicable.
8. Interests of Named Experts and
Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . Legal Matters; Experts.
B. INFORMATION ABOUT THE REGISTRANT
10. Information With Respect to S-3
Registrants . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable.
11. Incorporation of Certain Information
by Reference . . . . . . . . . . . . . . . . . . . . . . . Not Applicable.
12. Information With Respect to S-2 or
S-3 Registrants . . . . . . . . . . . . . . . . . . . . . . Not Applicable
13. Incorporation of Certain Information
by Reference . . . . . . . . . . . . . . . . . . . . . . . Not Applicable.
14. Information With Respect to
Registrants Other Than S-2 or S-3
Companies . . . . . . . . . . . . . . . . . . . . . . . . . Prospectus Summary; Capitalization; Business; Selected
Consolidated Financial Data; Management's Discussion and
Analysis of Financial Condition and Results of Operations;
Description of Notes; Financial Statements
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C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
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15. Information With Respect to S-3
Companies . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable.
16. Information With Respect to S-2 or
S-3 Companies . . . . . . . . . . . . . . . . . . . . . . . Not Applicable.
17. Information With Respect to
Companies With S-2 or S-3
Companies . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable.
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or
Authorizations Are to be Solicited . . . . . . . . . . . . Not Applicable.
19. Information if Proxies, Consents or
Authorizations Are Not to be
Solicited, or in an Exchange Offer . . . . . . . . . . . . . Directors and Officers; Executive Compensation; Certain
Relationships and Related Transactions; Security Ownership
of Certain Beneficial Owners and Management.
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<PAGE> 4
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
Subject to completion, dated , 1997.
------------
$125,000,000
KEY PLASTICS, INC.
OFFER TO EXCHANGE
10 1/4% SENIOR SUBORDINATED NOTES DUE 2007, SERIES B
FOR ALL OUTSTANDING
10 1/4% SENIOR SUBORDINATED NOTES DUE 2007
THE EXCHANGE OFFER
WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME
ON , 1997, UNLESS EXTENDED
-------------
---------------------------------------------------
THE NOTES ARE GUARANTEED BY
KEY PLASTICS INTERNATIONAL LLC
KEY PLASTICS AUTOMOTIVE LLC
KEY PLASTICS TECHNOLOGY LLC
KEY MEXICO A, L.L.C.
KEY MEXICO B, L.L.C.
----------------------------------------------------
Key Plastics, Inc., a Michigan company (the "Company"), hereby offers upon
the terms and subject to conditions set forth in this Prospectus (the
"Prospectus") and the accompanying Letter of Transmittal (the "Letter of
Transmittal," together with the Prospectus, the "Exchange Offer"), to exchange
up to an aggregate principal amount of $125,000,000 of its 10 1/4% Senior
Subordinated Notes due 2007, Series B (the "Series B Notes") for up to an
aggregate principal amount of $125,000,000 of its outstanding 10 1/4% Senior
Subordinated Notes Due 2007 (the "Series A Notes"). The terms of the Series B
Notes are substantially identical in all material respects to those of the
Series A Notes, except for certain transfer restrictions, registration rights
and liquidated damages relating to the Senior A Notes. The Series B will be
issued pursuant to, and entitled to the benefit of, the Indenture (as defined
herein) governing the Series A Notes. The Series B Notes and the Series A
Notes are sometimes referred to collectively as the "Notes". Interest on the
Series B Notes will accrue from the date of issuance thereof and will be
payable semi-annually on March 15 and September 15 of each year commencing
September 15, 1997.
The Series B Notes will be redeemable at the option of the Company, in
whole or in part, at any time on or after March 15, 2002, at the redemption
prices set forth herein, plus accrued and unpaid interest and Liquidated
Damages (as defined), if any, to the date of redemption. In addition, in the
event that the Company consummates a public offering of its Common Stock on or
before March 15, 2000, the Company may redeem up to 35% of the originally
issued principal amount of Series B Notes at a redemption price of 109 1/4% of
the principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, to the date of redemption; provided that at least 65% of the
originally issued principal amount of Notes remain outstanding immediately
after the occurrence of such redemption. Upon the occurrence of a Change of
Control (as defined), the Company will be required, subject to certain
conditions, to make an offer to purchase the Notes at a price equal to 101% of
the principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, to the date of purchase. See "Description of Notes."
The Series B Notes will be general unsecured obligations of the Company,
subordinated in right of payment to all existing and future Senior Debt (as
defined), including all borrowings of the Company and its subsidiaries under
the Senior Credit Facility (as defined). The Notes will be guaranteed on a
senior subordinated basis by the Guarantors (as defined herein). As of March
31, 1997, the Company and its Subsidiaries (as defined) would have had
approximately $64.0 million of Senior Debt outstanding. See "Description of
Certain Indebtedness -- Senior Credit Facility" and "Description of Notes."
<PAGE> 5
SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS
WHICH HOLDERS OF THE SERIES A NOTES SHOULD CONSIDER IN CONNECTION WITH THE
EXCHANGE OFFER.
THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR INADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The Company will accept for exchange of any and all Series A Notes which
are properly tendered in the Exchange Offer prior to 5:00 p.m., New York City
time, on _____________, 1997, unless extended by the Company in its sole
discretion (the "Expiration Date"). The Expiration Date will not in any event
be extended to a date later than _________, 1997. Tenders of Series A Notes
may be withdrawn at any time prior to 5:00 p.m., New York City time, on the
Expiration Date. In the event the Company terminates the Exchange Offer and
does not accept for exchange any Series A Notes with respect to the Exchange
Offer, the Company will promptly return the Series A Notes to the holders
thereof. The Exchange Offer is not conditioned upon any minimum principal
amount of Series A Notes being tendered for exchange, but is otherwise subject
to certain customary conditions. The Series A Notes may be tendered only in
integral multiples of $1,000.
The Series B Notes are being offered hereunder in order to satisfy certain
obligations of the Company contained in the Registration Rights Agreement dated
March 24, 1997 (the "Registration Rights Agreement") by and among the Company,
the Guarantors (as defined herein) and Lehman Brothers, Inc. and First Chicago
Capital Markets, Inc., as the initial purchasers (the "Initial Purchasers"),
with respect to the initial sale of the Series A Notes. Based on
interpretations by the staff of the Securities and Exchange Commission (the
"Commission") contained in certain no-action requests from third parties
unrelated to the Company, the Series B Notes issued pursuant to the Exchange
Offer in exchange for Series A Notes may be offered for resale, resold and
otherwise transferred by respective holders thereof (other than any such holder
which is an "affiliate") of the Company within the meaning of Rule 405 under
the Securities Act, without compliance with the registration and prospectus
delivery provisions of the Securities Act of 1933, as amended (the "Securities
Act"), provided that the Series B Notes are acquired in the ordinary course of
such holder's business and such holder has no arrangement with any person to
participate in the distribution of such Series B Notes and is not engaged in
and does not intend to engage in a distribution of the Series B Notes. Each
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of the Series B Notes received in exchange for Series A Notes if
such Series B Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 365 days after the Expiration Date, it will make this
Prospectus available to any broker-dealer for use in connection with any such
resale. See "Plan of Distribution." EXCEPT AS DESCRIBED IN THIS PARAGRAPH,
THIS PROSPECTUS MAY NOT BE USED FOR AN OFFER TO RESELL, RESALE OR OTHER
TRANSFER OR NOTES.
Prior to the Exchange Offer, there has been no public market for the
Series B Notes. The Series A Notes are not, and the Series B Notes are not
expected to be, listed on any securities exchange or authorized for trading on
The Nasdaq Stock Market. There can be no assurances as to the liquidity of any
markets that may develop for the Series B Notes, the ability of holders to sell
the Series B Notes, or the price at which holders would be able to sell the
Series B Notes. Future trading prices of the Series B Notes will depend on
many factors, including among other things, prevailing interest rates, the
Company's operating results and the market for similar securities.
Historically, the market for securities similar to the Series B Notes,
including non-investment grade debt, has been subject to disruptions that have
caused substantial volatility in the prices of such securities. There can be
no assurance that any market for the Series B Notes, if such market develops,
will not be subject to similar disruptions. The Initial Purchasers have
advised the Company that they currently intend to make a market in the Series B
Notes offered hereby. However, the Initial Purchasers are not obligated to do
so and any market making may be discontinued at any time without notice.
The Series A Notes were initially purchased by accredited investors and
"qualified institutional buyers" (as such term is defined in Rule 144A under
the Securities Act) and by certain persons who are not U.S. Persons (as such
term is defined in Regulation S under the Securities Act). The Series A Notes
were initially represented only in book-entry form and in the form of global
notes in fully registered form (the "Global Series A Notes"), registered in the
name of a nominee of The Depository Trust Company ("DTC"), as depositary. The
Series B Notes exchanged for Series A Notes represented by the Global Series A
Notes will be represented by global notes in fully registered form (the
"Global Series B Notes") registered in the name of the nominee of DTC. The
Global Series B Notes will be exchangeable for Series B Notes in registered
form, denominations of $1,000 and integral multiples thereof as set forth in
the Indenture. The Series B Notes in global form will trade in DTC's Same-Day
Funds Settlement System, and secondary market trading activity in such Series B
Notes will therefore settle in immediately available funds. See "Description
of Notes -- Book-Entry; Delivery and Form."
ii
<PAGE> 6
The Company will not receive any proceeds from the Exchange Offer. See
"Use of Proceeds." The Company has agreed to pay the expenses incident to the
Exchange Offer.
The date of this Prospectus is , 1997.
----------
iii
<PAGE> 7
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-4 (the "Exchange Offer Registration Statement," which term shall encompass
all amendments, exhibits, annexes and schedules thereto) pursuant to the
Securities Act, and the rules and regulations promulgated thereunder, covering
the Series A Notes being offered hereby. This Prospectus does not contain all
the information set forth in the Exchange Offer Registration Statement. For
further information with respect to the Company and the Exchange Offer,
reference is made to the Exchange Offer Registration Statement. Statements
made in this Prospectus as to the contents of any contract, agreement or other
document referred to are not necessarily complete. With respect to each such
contract, agreement or other document filed as an exhibit to the Exchange Offer
Registration Statement, reference is made to the exhibit for a more complete
description of the document or matter involved, and each such statement shall
be deemed qualified in its entirety by such reference.
The Company is subject to the informational requirements of Section 15 of
the Exchange Act, and in accordance therewith files reports and other
information with the Securities and Exchange Commission (the "Commission").
Periodic reports and other information filed by the Company can be inspected
and copied at the public reference facilities of the Commission's principal
office at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549, and the regional offices of the Commission at Seven World Trade Center,
13th Floor, New York, New York 10048 and 500 West Madison Street, 14th Floor,
Chicago, Illinois 60661. Copies of such material can be obtained from the
public reference facilities of the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, at prescribed rates. In
addition, the Commission maintains a Website (http://www.sec.gov) that also
contains such reports and other information filed by the Company.
In addition, the Company has agreed that, whether or not it is required to
do so by the rules and regulations of the Commission, for so long as any Notes
remain outstanding, it will furnish to the holders of the Notes and, to the
extent permitted by applicable law or regulation, file with the Commission (i)
all quarterly and annual financial information that would be required to be
contained in a filing with the Commission on Forms 10-Q and 10-K if the Company
was required to file such Forms, including in each a "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and, with
respect to the annual information only, a report thereof by the Company's
independent certified public accountants and (ii) all reports that would be
required to be filed on Form 8-K if it were required to file such reports. In
addition, for so long as any of the Notes remain outstanding, the Company has
agreed to make available to any prospective purchaser of the Notes or
beneficial owner of the Notes, in connection with any sale thereof, the
information required by Rule 144A(d)(4) under the Securities Act.
iv
<PAGE> 8
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained or incorporated by reference in this
Prospectus, including, without limitation, statements containing the words
"believes," "anticipates," "expects," and words of similar import, constitutes
"forward-looking statements" within the meaning of the Private Securities
Reform Act of 1995. Such statements include all discussions concerning
anticipated future revenues or sales. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors that may cause the
actual results, performance or achievements of the Company, or industry
results, to be materially difference from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
factors include, among others, the following: international, national and
local general economic and market conditions; demographic changes; the size and
growth of the automobile market or the plastic automobile component market;
consumer demand for the particular models or lines that use the Company's
parts; the ability of the Company to sustain, manage or forecast; the size,
timing and mix of purchases of the Company's products; new product development
and introduction; existing government regulations and change sin, or the
failure to comply with, government regulations; adverse publicity; dependence
upon OEMs (as defined); liability and other claims asserted against the
Company; competition; the loss of significant customers or suppliers;
fluctuations and difficulty in forecasting operating results; changes in
business strategy or development plans; business disruptions; product recalls;
warranty costs; the ability to attract and retain qualified personnel; the
ability to protect technology; the ability to realize planned cost savings in
its acquisitions; the use of proceeds from the Offering; retention of earnings;
and other factors referenced in this Prospectus. Certain of these factors are
discussed in more detail elsewhere in this Prospectus, including, without
limitation, under the captions "Risk Factors," "Use of Proceeds,"
"Capitalization," "Selected Consolidated Financial Data," "Management's
Discussion and Analysis of Financial condition and Results of Operations" and
"Business." Given these uncertainties, prospective investors are cautioned not
to place undue reliance on such forward-looking statements. The Company
disclaims any obligation to update any such factors or to publicly announce the
result of any revisions to any of the forward-looking statements contained or
incorporated by reference herein to reflect future events or developments.
v
<PAGE> 9
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Holders should carefully consider the
information set forth under the heading "Risk Factors" and elsewhere in this
Prospectus. This Prospectus contains forward-looking statements which involve
risks and uncertainties. The Company's actual results could differ materially
from those anticipated in these forward-looking statements as a result of
certain factors, including those set forth under "Risk Factors" and elsewhere
in this Prospectus.
THE COMPANY
Key Plastics, Inc. (the "Company") was formed in January 1986 to acquire
the plastics manufacturing operations of Key International Manufacturing, Inc.,
which operations had been involved in plastics manufacturing for over 20 years.
In 1995, the Company established operations in Chihuahua, Chihuahua,
Mexico.
In May 1996, the Company, through its subsidiary Key Plastics, U.K.,
acquired substantially all of the assets and the business of Clearplas, a
U.K. plastic parts supplier (the "Clearplas Acquisition"). In addition, in
November 1996, the Company acquired control of Materias Plasticas, S.A.
("MaP"), a Portuguese plastic parts supplier (the "MaP Acquisition"), by
acquiring 38% of its voting stock with an option to acquire the remaining
voting stock. The Clearplas Acquisition and the MaP Acquisition enabled the
Company to establish a European manufacturing presence as a part of its
globalization strategy, to leverage its engineering and manufacturing expertise
and to enhance its existing customer relationships. In March 1997, the Company
acquired three manufacturing facilities of Aeroquip, a division of TRINOVA
Corporation (the "Aeroquip Acquisition").
The Company is a global supplier of highly engineered plastic components
and assemblies to automotive original equipment manufacturers and Tier I
suppliers. The Company believes it is the largest independent supplier of
plastic door handle assemblies, decorative bezels and pressurized bottles in
North America for the automotive industry. Other products manufactured by the
Company include interior trim components, precision molded parts, instrument
cluster components, electrical connector covers, air louvers, speaker grilles
and underhood functional components.
The Company provides the automotive industry with comprehensive plastics
manufacturing capabilities, including design and engineering, high-precision
injection molding, automated manufacturing and assembly, plastic painting and
material and product testing. The Company operates its world headquarters and
technical center, nine manufacturing and two paint facilities in North America
and two facilities in Europe with painting and manufacturing capabilities. The
Company also has extensive tool making capabilities and designs and builds
approximately one-third of the tooling used in the manufacturing of its
principal products.
Management believes that the Company has achieved its current leadership
position and is well positioned to benefit from emerging trends in the global
automotive markets as a result of several key competitive strengths, including:
(i) demonstrated technological expertise and innovation in developing highly
engineered systems and components; (ii) strong relationships with major OEMs;
(iii) an emphasis on quality management; (iv) the ability to supply its
customers globally; and (v) state of the art equipment and facilities.
Since 1992, the Company has invested over $93.8 million to upgrade its
existing facilities and to acquire and build new facilities. Since that time,
the Company has established its world headquarters and technical center, has
constructed a new paint facility in Hartford City, Indiana, has brought on line
four molding facilities in Grand Rapids, Michigan, York, Pennsylvania, South
Bend, Indiana and Chihuahua, Mexico, has acquired the assets and business of
Clearplas, has acquired control of MaP and consummated the Aeroquip Acquisition.
The Company is privately owned by management and employees. Since its
incorporation in 1986, the Company has elected to be taxed as a corporation
under Subchapter S (a "Subchapter S corporation") of the Internal Revenue Code
of 1986, as amended (the "Code"). The Company has made, and intends to
continue to make, distributions to its shareholders to pay their income tax
obligations as a result of the Company's status as a Subchapter S corporation.
The principal executive offices of the Company are located at 21333
Haggerty Road, Novi, Michigan, 48375 and its telephone number is (810)
449-6100.
BUSINESS STRATEGY
The automotive industry is currently characterized by a number of factors
which affect the Company and its business strategy. These factors include (i)
OEMs' demand for suppliers with efficient, comprehensive research and
development, design and manufacturing capabilities, (ii) consolidation of
suppliers as a result of increasing OEM demands, and (iii) the globalization of
the OEM supplier base. As a result of these factors, suppliers must (i)
continually
<PAGE> 10
demonstrate the ability to satisfy, in cost efficient ways, the OEMs' design
and manufacturing demands and (ii) establish international positions which can
effectively supply and service the OEMs.
The Company seeks to maintain its leadership position in the industry and
maximize its revenues and net income by employing its operating strategy, which
has the following principal components.
Focus on Highly Engineered, Value-added Products. The Company believes
highly engineered, value-added components are typically more difficult for a
customer to produce in-house or a competitor to replicate due to the
substantial investment required in specialized engineering, design and
manufacturing capabilities. Management believes such products have strong
worldwide growth potential and high margins. Further, the Company capitalizes
on the specialized design and manufacturing expertise it has developed for one
customer by marketing such expertise across its customer base.
Emphasize Quality Management. Among the most important factors in
maintaining preferred supplier status with OEMs is product quality. The
Company has a strong quality assurance program and has made substantial
investments in technology to monitor and improve quality. Included among these
investments are CAD/CAM equipment, statistical process control systems, failure
mode and effect systems, process-controlled molding machines and automated
assembly equipment. In addition, the Company has material and product test
laboratories that monitor product reliability and which are accredited by its
major OEM customers.
Provide Comprehensive Manufacturing and Engineering Capabilities while
Improving Cost Competitiveness. In response to increasingly rigorous OEM
purchasing and manufacturing policies, the Company has developed comprehensive
plastics manufacturing capabilities, including design and engineering,
automated manufacturing and assembly, painting and materials and product
testing, prototype production and tooling. In addition to requiring
comprehensive manufacturing capabilities, OEMs are demanding market-driven
pricing and long-term productivity commitments, which demands are forcing
suppliers to eliminate waste and optimize productivity. The Company has
invested in and successfully implemented lean manufacturing methodologies,
including the use of cell-based manufacturing and automation through state of
the art "poke-yoked" (fail safed) devices which have made significant
contributions to the Company's product quality and have assisted in the
reduction of labor costs and work-in-progress inventory.
Establish a Global Position. The Company has acquired strategic positions
in Europe in order to serve its customers on a global basis. Several OEMs have
announced certain models designed for the world automobile market. As a
result, certain domestic and European OEMs have encouraged their existing
suppliers to establish foreign production support for World Car programs.
Enhance Tier I Relationships. The OEMs continue to give more
responsibility for total program management to large Tier I suppliers. These
suppliers are evaluating the available supply of parts and whether the
manufacturers who are currently supplying them are qualified. As Tier I
suppliers shift to more qualified automotive parts manufacturers, the Company
believes that it is well positioned to take advantage of such change.
Make Selected Acquisitions. In recent years, OEMs have instituted
policies which have resulted in the consolidation of the automotive supplier
industry. Through strategic acquisitions, the Company believes it can leverage
off of its existing engineering and manufacturing capabilities, quality focus
and relationships with its customers by adding complementary product lines and
achieving greater economies of scale.
THE EXCHANGE OFFER
The Series B Notes ..................... The forms and terms of the Series B
Notes are substantially identical in
all material respects to the terms of
the Series A Notes for which they may
be exchanged pursuant to the Exchange
Offer, except for certain transfer
restrictions and registration rights
relating to the Senior Notes and
except for certain liquidated damages
provisions relating to the Senior
Notes described below under "Terms of
Series B Notes."
The Exchange Offer ..................... The Company is offering to exchange
up to $125,000,000 aggregate
principal amount of 10 1/4% Senior
Subordinated Notes due 2007, Series B
(the "Series B Notes") for up to
$125,000,000 aggregate principal
amount of its outstanding
2
<PAGE> 11
10 1/4% Senior Subordinated Notes due
2007 (the "Series A Notes"). Series A
Notes may be exchanged only in
integral multiples of $1,000.
Expiration Date; Withdrawal of Tender .. The Exchange Offer will expire at
5:00 p.m., New York City time, on
______________, 1997 or such later
date and time to which it is extended
by the Company. The tender of Series
A Notes pursuant to the Exchange
Offer may be withdrawn at any time
prior to the Expiration Date. Any
Series A Notes not accepted for
exchange for any reason will be
returned without expense to the
tendering holder thereof as promptly
as practicable after the expiration
or termination of the Exchange Offer.
TERMS OF SERIES B NOTES
The Exchange Offer applies to up to $125.0 million aggregate principal
amount of the Company's Series B Notes. The Series B Notes will be obligations
of the Company evidencing the same debt as the Series A Notes and will be
entitled to the benefits of the same Indenture. To the extent that any Series
A Notes remain outstanding after the Exchange Offer, the Series A Notes will
rank pari passu in right of payment with the Series B Notes. See "Description
of Notes." The form and terms of the Series B Notes are the same as the form
and terms of the Series A in all material respect except that the Series B
Notes have been registered under the Securities Act and hence do not include
certain rights to registration thereunder and do not contain transfer
restrictions or terms with respect to liquidated damages applicable to the
Series A Notes. See "Description of Notes."
Securities Offered ..................... $125 million aggregate principal
amount of 10 1/4 Senior Subordinated
Notes, Series B (the "Series B
Notes").
Maturity Date .......................... March 15, 2007.
Interest Payment Dates ................. March 15 and September 15, commencing
September 15, 1997.
Mandatory Redemption ................... None.
Optional Redemption .................... The Series B Notes will be redeemable
at the option of the Company, in whole
or in part, at any time on or after
March 15, 2002, at the redemption
prices set forth herein, plus accrued
and unpaid interest and Liquidated
Damages (as defined), if any, to the
date of redemption. In addition, in
the event that the Company consummates
a public offering of its Common Stock
on or before March 15, 2000, the
Company may redeem up to 35% of the
originally issued principal amount of
Series B Notes at a redemption price
of 109 1/4% of the principal amount
thereof, plus accrued and unpaid
interest and Liquidated Damages, if
any, to the date of redemption;
provided that at least 65% of the
originally issued principal amount of
Series B Notes remain outstand-ing
immediately after the occurrence of
such redemption. See "Description of
Notes -- Optional Redemption."
Change of Control ...................... Upon the occurrence of a Change of
Control (as defined), the Company will
be required, subject to certain
conditions, to make an offer to
purchase the Series B Notes at a price
equal to 101% of the principal amount
thereof, plus accrued and unpaid
interest and Liquidated Damages, if
any, to the date of purchase. See
"Description of Notes -- Repurchase at
Option of Holders -- Change of
Control."
Ranking ................................ The Series B Notes will be general
unsecured obligations of the Company,
subordinated in right of payment to
all
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<PAGE> 12
existing and future Senior Debt (as
defined), including all borrowings of
the Company and its subsidiaries
under the Senior Credit Facility. As
of March 31, 1997, the Company and
its Subsidiaries (as defined) would
have had approximately $64.0 million
Senior Debt outstanding. See
"Description of Certain Indebtedness
-- Senior Credit Facility." The
indenture pursuant to which the
Series B Notes will be issued (the
"Indenture") will permit the Company
to incur additional Senior Debt,
subject to certain limitations. See
"Description of Notes."
Guarantees ............................... The Series B Notes will be jointly
and severally guaranteed on a senior
subordinated basis by all current
Subsidiaries other than Foreign
Restricted Subsidiaries (as defined).
As of the date hereof, MaP, Key
Plastics U.K. and Clearplas Ltd. will
be Unrestricted Subsidiaries (as
defined), and will not be required to
issue a Subsidiary Guarantee (as
defined) with respect to the Notes.
The Company will be able to designate
other current or future subsidiaries
to be Unrestricted Subsidiaries under
certain circumstances. Unrestricted
Subsidiaries will not be required to
issue a Subsidiary Guarantee with
respect to the Notes and will not be
subject to many of the restrictive
covenants set forth in the Indenture.
See "Description of Notes -- Certain
Covenants" and "--Certain
Definitions."
Certain Covenants ........................ The Indenture contains certain
covenants that, among other things,
limit the ability of the Company and
certain of its subsidiaries to (i)
incur additional Indebtedness (as
defined) and issue Disqualified Stock
(as defined) and Preferred Stock (as
defined) of Subsidiaries, (ii) pay
dividends or make other
distributions, repurchase Equity
Interests (as defined) or
subordinated Indebtedness or make
certain investments, (iii) create
certain liens, (iv) enter into
certain transactions with
affiliates, (v) sell assets of the
Company or certain of its
subsidiaries or (vi) enter into
certain mergers and consolidations.
In addition, under certain
circumstances, the Company will be
required to offer to purchase the
Series B Notes at a price equal to
100% of the principal amount
thereof, plus accrued and unpaid
interest and Liquidated Damages, if
any, to the date of purchase, with
the proceeds of certain Asset Sales
(as defined). See "Description of
Notes -- Certain Covenants --
Repurchase at Option of Holders --
Asset Sales."
Exchange Offer, Registration Rights,
Liquidated Damages ....................... Pursuant to a Registration Rights
Agreement (the "Registration Rights
Agreement") by and among the Company,
the Guarantors and the Initial
Purchasers, the Company agreed to
file a registration statement (the
"Exchange Offer Registration
Statement") with respect to an offer
to exchange the Notes for a new issue
of debt securities of the Company
(the "New Notes") registered under
the Securities Act with terms
substantially identical to those of
the Notes. If (i) the Exchange Offer
is not permitted by applicable law or
(ii) any holder of Transfer
Restricted Securities (as defined)
notifies the Company that (A) it is
prohibited by law or policy of the
Securities and Exchange Commission
(the "Commission") from participating
in the Exchange Offer, (B) it may not
resell the New Notes acquired by it
in the Exchange Offer to the
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<PAGE> 13
public without delivering a
prospectus and the prospectus
contained in the Exchange Offer
Registration Statement is not
appropriate or available for such
resales or (C) it is a broker-dealer
and holds Notes acquired directly
from the Company or an affiliate of
the Company, the Company will be
required to provide a shelf
registration statement (the "Shelf
Registration Statement"), to cover
resales of the Notes by the holders
thereof. If the Company fails to
satisfy these registration
obligations, it may be required to
pay Liquidated Damages ("Liquidated
Damages") to the holders of the
Notes under certain circumstances.
See "Description of Notes --
Registration Rights; Liquidated
Damages."
Conditions to the Exchange Offer ......... The Exchange Offer is subject to
certain customary conditions,
including, the institution of any
action or proceeding which might
materially impair the ability of
the Company to proceed with the
Exchange Offer, changes in
statutory or other law which could
impair the Company's ability to
proceed with the Exchange Offer or
the failure to obtain a
governmental approval which the
Company may deem necessary to
consummate the Exchange Offer.
Such conditions may be waived by
the Company. See "The Exchange
Offer - Certain Conditions to the
Exchange Offer."
Procedures for Tendering Series A Notes .. Each holder of Series A Notes
wishing to accept the Exchange
Offer must complete, sign and date
the Letter of Transmittal, or a
facsimile thereof, in accordance
with the instructions contained
herein and therein, and mail or
otherwise deliver such Letter of
Transmittal, or such facsimile,
together with such Series A Notes
and any other required documentation
to the Exchange Agent (as defined)
at the address set forth herein. By
executing the Letter of Transmittal,
each holder will represent to the
Company that, among other things,
(i) any Series B Notes to be
received by it will be acquired in
the ordinary course of its business,
(ii) it has no arrangement with any
person to participate in the
distribution of the Series B Notes
and (iii) it is not an "affiliate,"
as defined in Rule 405 of the
Securities Act, of the Company.
Special Procedures for Beneficial Owners .. Any beneficial owner whose Series
A Notes are registered in the name
of a broker, dealer, commercial
bank, trust company or other nominee
and who wishes to tender such Series
A Notes in the Exchange Offer should
contact such registered holder
promptly and instruct such
registered to tender on such
beneficial owner's behalf. If such
beneficial owner wishes to tender on
such owner's own behalf, such owner
must, prior to completing and
executing the Letter of transmittal
and delivering his Series A Notes,
either make appropriate arrangements
to register ownership of the Series
A Notes in such owner's name or
obtain a properly completed bond
power from the registered holder.
The transfer of registered ownership
may take considerable time and may
not be completed prior to the
Expiration Date.
Guaranteed Delivery Procedures ............ Holders of Notes who wish to
tender their Series A Notes and
whose Series A Notes are not
immediately available or who cannot
deliver their Series A Notes, the
Letter of Transmittal or any other
documents required by the Letter of
Transmittal to the Exchange Agent,
prior to the
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<PAGE> 14
Expiration Date, must tender
their Senior Notes according to
the guaranteed delivery
procedures set forth in "The
Exchange Offer -- Guaranteed
Delivery Procedures."
Certain Federal Income Tax Considerations .. For a discussion of certain
federal income tax considerations
relating to the exchange of the
Series B Notes for the Series A
Notes, see "Material Federal
Income Tax Considerations."
Exchange Agent ............................. Marine Midland Bank is the
Exchange Agent. The address and
telephone number of the Exchange
Agent are set forth in "The
Exchange Offer -- Exchange
Agent."
RISK FACTORS ............................... FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED
BY HOLDERS OF THE SERIES A NOTES
IN CONNECTION WITH THE EXCHANGE
OFFER, SEE "RISK FACTORS."
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<PAGE> 15
RISK FACTORS
An investment in the Series B Notes involves a high degree of risk. In
connection with the Exchange Offer, prospective investors should carefully
consider the following risk factors in addition to the other information set
forth elsewhere in this Prospectus. This Prospectus contains forward-looking
statements which involve known and unknown risks, uncertainties and other
factors including, without limitation, those set forth in the following Risk
Factors and elsewhere in this Prospectus that may cause the actual results of
the Company to be materially different from the results expressed or implied in
such forward-looking statements.
SIGNIFICANT LEVERAGE AND ABILITY TO SERVICE OUTSTANDING DEBT
The Company has, and, upon consummation of the Exchange Offer, will
continue to have, indebtedness which is substantial in relation to its
shareholders' deficit, as well as interest and debt service requirements which
are significant compared to its cash flow from operations. As of March 31,
1997, the Company had indebtedness consisting of $149.9 million in long term
notes, $24.9 million of 14% Senior Notes due 1999 and $33.0 under the Senior
Credit Facility. The level of the Company's indebtedness could have important
consequences, including, but not limited to, the following: (i) a substantial
portion of the Company's cash flow from operations must be dedicated to debt
service and will not be available for other purposes; (ii) the Company's
ability to obtain additional debt financing in the future for working capital,
capital expenditures, acquisitions and general corporate or other purposes may
be limited; (iii) certain of the Company's borrowings may be at variable rates
of interest, which could result in higher interest expense in the event of
increases in interest rates; and (iv) the Company will be subject to a variety
of restrictive covenants, the failure to comply with which could result in
events of default that, if not cured or waived, could restrict the Company's
ability to make payments of principal, interest and liquidated damages, if any,
on its indebtedness.
The Company's ability to pay interest, and to satisfy its obligations
under the Notes will depend upon its future operating performance, which will
be affected by prevailing economic conditions and financial, business and other
factors, many of which are beyond its control. The Company anticipates that
its operating cash flow, together with available borrowings under its Credit
Agreement (the "Senior Credit Facility") dated March 24, 1997 will be
sufficient to meet its operating expenses, to service interest requirements on
its debt obligations as they become due and to implement its business strategy.
There can be no assurance, however, that the Company's business will generate
sufficient cash flow from operations or that future borrowings will be
available in an amount sufficient to enable the Company to service its
indebtedness, to make anticipated capital expenditures or to implement its
business strategy. The Company may be required to refinance portions of its
indebtedness at or prior to maturity. No assurance can be given that, if
required, the Company will be able to refinance such indebtedness on terms
acceptable to it, if at all. If the Company is unable to service its
indebtedness, it will be forced to adopt an alternative strategy that may
include actions such as reducing or delaying capital expenditures, selling
assets, restructuring or refinancing its indebtedness or seeking additional
equity capital. There can be no assurance that any of these strategies could
be effected on terms acceptable to the Company, if at all. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations-Liquidity and Capital Resources."
RESTRICTIONS IN DEBT INSTRUMENTS ON COMPANY'S OPERATIONS
The Indenture contains certain restrictive covenants which will affect,
and in many respects significantly limit or prohibit, among other things, the
ability of the Company to incur indebtedness, make prepayments of certain
indebtedness, make investments, engage in transactions with affiliates, create
liens, sell assets and engage in mergers and acquisitions. The Senior Credit
Facility contains similar and more restrictive covenants and also requires
the Company to meet certain financial ratios and tests. These covenants may
significantly limit the operating and financial flexibility of the Company and
may limit its ability to respond to changes in its business or competitive
activities. The ability of the Company to comply with such provisions may be
affected by events beyond its control. In the event of any default under the
Senior Credit Facility, the lenders thereunder could elect to declare all
amounts borrowed under the Senior Credit Facility, together with accrued
interest, to be due and payable. If the Company were unable to repay such
borrowings, the lenders thereunder could proceed against the collateral
securing the Senior Credit Facility, which consists of substantially all of the
assets of the Company. If the indebtedness under the Senior Credit Facility
were to be accelerated, there can be no assurance that the assets of the
Company would be sufficient to repay such indebtedness and the Notes in full.
See "Description of Certain Indebtedness--Senior Credit Facility."
SUBORDINATION AND COMPANY STRUCTURE
The Notes are unsecured and subordinated in right of payment to all Senior
Debt (as defined in the Indenture) of the Company, including, borrowings under
the Senior Credit Facility. Further, the Senior Credit Facility is secured by
liens on substantially all of the assets of the Company. In the event of the
bankruptcy, liquidation or reorganization of
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<PAGE> 16
the Company, the assets of the Company will be available to pay obligations on
the Notes only after all Senior Debt, including borrowings under the Senior
Credit Facility, has been paid in full and sufficient assets may not remain to
pay amounts due on any or all of the Notes then outstanding. In certain
circumstances, provisions of the Senior Debt could prohibit payments of amounts
due to holder of the Notes. See "Description of Notes--Subordination."
Subject to certain limitations, the Company, from time to time, may incur
additional Senior Debt, including secured indebtedness, which secured
indebtedness will effectively rank senior to the Notes to the extent of the
value of the assets securing such indebtedness. See "Description of
Notes--Certain Covenants--Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock of Subsidiaries."
The Indenture requires that all domestic subsidiaries become guarantors of
the Notes unless such subsidiaries are Unrestricted Subsidiaries (as defined in
the Indenture). None of the Company's foreign subsidiaries are required to
become guarantors of the Notes. As of March 31, 1997, Key Plastics
International LLC, Key Plastics Automotive LLC, Key Plastics Technology, LLC,
Key Mexico A, L.L.C. and Key Mexico B, L.L.C. are Guarantors. Any right of the
holders of the Notes to participate in the assets of an international
subsidiary of the Company upon any liquidation or reorganization of such
subsidiary will be subject to the prior claims of such subsidiary's creditors,
including trade creditors. Accordingly, the Notes will be structurally
subordinated to all liabilities, including trade payables, of the international
subsidiaries of the Company with respect to the assets of such subsidiaries.
The Company's Mexican subsidiary will be a restricted subsidiary for purposes
of the Indenture. The Indenture limits the ability of the Company's
subsidiaries which are not guarantors to borrow money.
Three of the Company's subsidiaries, MaP, Key Plastics U.K. and Clearplas
Ltd., will be Unrestricted Subsidiaries for purposes of the Indenture and,
therefore, will not be subject to the restrictive covenants which will be
contained in the Indenture. The Company derived approximately 13.6 % of its
fiscal year 1996 net sales, from these subsidiaries. Accordingly, the Company
will be able to incur additional indebtedness at the Unrestricted Subsidiary
level, which could have a material adverse effect on the cash flow, if any, to
the Company. In addition, under certain circumstances, the Company may be able
to designate current and future subsidiaries as Unrestricted Subsidiaries.
INTERNATIONAL OPERATIONS
The Company derived approximately 13.6 % of its fiscal year 1996 net
sales, from its operations in the United Kingdom and Portugal. The Company's
international operations are subject to risks inherent in international
business activities, including, in particular, compliance with a variety of
foreign laws and regulations, unexpected changes in regulatory requirements,
overlap of different tax structures, foreign currency exchange rate
fluctuations and general economic conditions.
The Company prices its products in the United Kingdom and Portugal in the
currency of the country in which the product is sold and, in the United States
and Mexico, in United States dollars. To the extent that prices are in the
currency of the country in which the products are sold, the prices of such
products in dollars will vary as the value of the dollar fluctuates against
such currencies. There can be no assurance that there will not be increases in
the value of the dollar against such currencies that will reduce the dollar
return to the Company on the sale of its products in such countries. The
Company is presently engaged in limited currency hedging transactions in
Mexico, involving the purchase of Mexican pesos to make local payments. There
can be no assurance that such hedging transactions will protect the Company
against losses in the event of fluctuations in the value of the dollar.
THE OEM SUPPLIER INDUSTRY
The Company competes in the global automotive original equipment
manufacturer supplier industry. The OEM supplier industry is highly cyclical
and, in large part, dependent upon the overall strength of consumer demand for
light trucks and passenger cars. There can be no assurance that the automotive
industry for which the Company supplies components and systems will not
experience downturns in the future. An economic recession typically impacts
substantially leveraged companies such as the Company more than similarly
situated companies with less leverage. A decrease in overall consumer demand
for light trucks or passenger cars could have a material adverse effect on the
Company's financial condition and results of operations.
The automotive industry is characterized by a small number of OEM
customers that are able to exert considerable pressure on component and system
suppliers to reduce costs, improve quality and provide additional design and
engineering capabilities. In the past, OEMs have generally demanded and
received price reductions and measurable increases in quality by implementing
competitive selection processes, rating programs and various other
arrangements. Also, through increased partnering on platform work, OEMs have
generally required component and system suppliers to provide more design
engineering input at earlier stages of the product development process, the
costs of which have, in some cases, been absorbed by the suppliers. Although
the Company historically has regained the loss caused by price
8
<PAGE> 17
reductions to the OEMs through cost reduction initiatives and assistance from
the OEMs, there can be no assurance that future price reductions, increased
quality standards or additional engineering capabilities required by OEMs will
not have a material adverse effect on the financial condition or results of
operations of the Company.
Many of the Company's OEM customers and their Tier I suppliers are
unionized. Work stoppages and slow downs experienced by OEMs and their Tier I
suppliers, as a result of labor disputes, could have a material adverse effect
on the Company's financial condition or results of operations.
RAW MATERIALS
The principal raw materials used by the Company are engineered plastic
resins such as nylon, polypropylene and ABS, all of which are available from
several suppliers, except that the customer generally specifies a single
supplier to be used by the Company in connection with a specific program. The
Company has no reason to believe that there will not be an ample supply of its
raw materials for the reasonably foreseeable future, but the Company cannot
make any prediction as to the future price of such raw materials. The Company
is generally not able to pass on to its customers any increase in raw material
costs; however, the Company, in the past two years, has not experienced any
significant increases in the prices of its raw materials as result of the
consolidation of procurement and supply of raw materials. A substantial
interruption in the Company's supply of plastic resins, or a material increase
in the price thereof, could have a material adverse effect on the Company's
financial condition or results of operation.
RELIANCE ON PRINCIPAL CUSTOMERS
The Company's direct sales to its principal customers, Ford Automotive
Operations ("Ford"), Chrysler Corporation ("Chrysler") and General Motors
Corporation ("GM"), accounted for approximately 58.4%, 9.2% and 8.2%,
respectively, of the Company's consolidated net sales in fiscal year 1996. If
sales to such OEMs' Tier I suppliers are included, the Company's sales to Ford,
Chrysler and GM accounted for 63.9%, 11.9% and 9.1%, respectively, of the
Company's consolidated net sales in fiscal year 1996. Although the Company has
ongoing supply relationships with its principal customers, and is considered by
Ford and Chrysler to be a preferred supplier of door handles and pressurized
bottles, there can be no assurance that sales to Ford, Chrysler and GM will
continue at the same level. Furthermore, continuation of these relationships
is dependent upon the customers' satisfaction with the price, quality and
delivery of the Company's products. In addition, the Company's agreements to
produce parts are fixed to specific models or product lines of its customers.
Accordingly, the Company's business, and estimates for future business, are
dependent upon consumer demand for the specific models and product lines that
incorporate the Company's parts. The Company's arrangements with its OEMs are
typically in the form of purchase orders that may be canceled by the OEMs.
However, the Company believes that cancellation of purchase orders is rare,
due, in part, to the OEM production interruption likely to be caused by
changing suppliers. While management believes the Company's relationships with
its customers are mutually satisfactory, if any of these customers were to
reduce substantially or discontinue their purchases from the Company, the
financial condition and results of operations of the Company would be
materially adversely affected. See "Business-Customers, Marketing and
Engineering Support."
COMPETITION
The Company operates in an industry which is highly competitive. The
Company competes on the basis of quality, cost, timely delivery and customer
service and, increasingly, on the basis of design and engineering capability,
painting capability, new product innovation and product testing capability.
There can be no assurance that the Company's products will continue to compete
successfully with the products of competitors, including the automotive OEMs
themselves, many of which are significantly larger and have greater financial
and other resources than the Company. Management believes that the Company's
experience in design engineering and its ability to control manufacturing and
development costs should allow the Company's product prices to remain
competitive. However, there can be no assurance that the Company will be able
to improve or maintain its profit margins on sales to OEM customers. See
"Business-Competition."
UNCERTAINTY OF FUTURE ACQUISITIONS; INTEGRATION OF ACQUIRED COMPANIES AND
POTENTIAL EFFECT OF ACQUISITIONS
In fiscal 1996, the Company completed the MaP Acquisition and the
Clearplas Acquisition, and, in the first quarter of 1997, completed the
Aeroquip Acquisition. Further, the Company has designated a portion of
availability under its Senior Credit Facility for use by the Company to make
future acquisitions. There can no assurance that the Company will be able to
locate and acquire additional businesses to enable it to so utilize that
portion of the Senior Credit Facility. To the extent that any future
acquisitions require the incurrence or assumption of additional indebtedness, a
waiver of certain covenants in its new Indenture or an amendment of the Senior
Credit Facility may be required. There can be
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<PAGE> 18
no assurance that any acquisition will be permissible under these loan
agreements or that waivers of any such covenants could be obtained. See
"Description of Notes--Certain Covenants."
In certain instances, a consummated acquisition may adversely affect the
Company's financial condition and reported results, depending on many factors,
including capital requirements and the accounting treatment of such
acquisitions. There can be no assurance that recent acquisitions, or future
acquisitions, if completed, will perform as expected, will not result in
significant unexpected liabilities or will contribute significant revenues or
profits to the Company. Further, integration of the acquired businesses is
subject to numerous contingencies, some of which are beyond management's
control. Accordingly, no assurance can be given that the Company will be able
to successfully integrate any business it acquires. Further, as the Company
continues to grow, the increasing size of its operations will place additional
demands on existing management resources, which will require the Company to
effectively redeploy such resources and, at times, to hire new personnel. If
the Company is unable to manage growth effectively, the Company's financial
condition or operating results could be materially adversely affected.
CONTROL BY PRINCIPAL SHAREHOLDERS
Joel D. Tauber, George Mars and David C. Benoit, directors and
shareholders of the Company (the "Shareholders"), hold beneficially 67.4% of
the outstanding capital stock of the Company. Circumstances may occur in which
the interests of the Shareholders could be in conflict with the interests of
the holders of the Notes. For example, if the Company encounters financial
difficulties or is unable to pay certain of its debts as they mature, the
interests of the Shareholders might conflict with those of the holders of the
Company's indebtedness. In addition, the Shareholders may have an interest in
pursuing acquisitions, divestitures or other transactions that, in their
judgment, could enhance their equity investment, even though such transactions
might involve risks to the holders of the Company's indebtedness.
CHANGE OF CONTROL
The Indenture provides that, upon the occurrence of a Change of Control
(as defined in the Indenture), the Company will be required to make an offer to
purchase all of the Senior Subordinated Notes then outstanding at a purchase
price equal to 101% of the principal amount thereof, plus accrued and unpaid
interest and liquidated damages thereon, if any, to the date of purchase. Such
a Change of Control constitutes an event of default under the Senior Credit
Facility. Accordingly, if a Change of Control were to occur, the subordination
provisions contained in the Indenture could prohibit the Company from
satisfying its obligation to repurchase the Senior Subordinated Notes until all
Senior Debt (as defined in Indenture), including all indebtedness under the
Senior Credit Facility, is repaid. There can be no assurance that the Company
would have adequate financial resources to repay all of its obligations under
the Senior Subordinated Notes upon the occurrence of a Change of Control. See
"Description of Notes--Repurchase at the Option of Holders--Change of Control."
FRAUDULENT CONVEYANCE
The incurrence by the Company or the Guarantors of indebtedness, such as
the Series B Notes or the Subsidiary Guarantees (as defined in the Indenture),
as applicable, may be subject to review under relevant state and federal
fraudulent conveyance laws if a bankruptcy case or lawsuit is commenced by or
on behalf of unpaid creditors of the Company or the Guarantors. Under these
laws, if a court were to find that, after giving effect to the issuance of the
Series B Notes or the Subsidiary Grantees, as the case may be, and the
application of the net proceeds therefrom, either (a) the Company or any
Guarantor incurred such indebtedness with the intent of hindering, delaying or
defrauding creditors or (b) the Company or any Guarantor received less than
reasonably equivalent value or consideration for incurring such indebtedness
and (i) was insolvent or was rendered insolvent by reason of such transaction,
(ii) was engaged in a business or transaction for which the property remaining
with the Company or any Guarantor constituted unreasonably small capital or
(iii) intended to incur, or believed that it would incur, debts beyond its
ability to pay as they matured, such court may subordinate such indebtedness to
presently existing and future indebtedness of the Company or any Guarantor, as
the case may be, avoid the issuance of such indebtedness and direct repayment
of any amounts paid thereunder to the company's or the Guarantor's creditors,
as the case may be, or take other action detrimental to the holders of the
Series B Notes and the Subsidiary Guarantees.
The definition of insolvency for purposes of determining whether a
transfer is avoidable as a fraudulent transfer varies depending upon the law of
the jurisdiction which is being applied. Generally, however, a debtor would be
considered insolvent if the sum of all of its liabilities, including contingent
liabilities, were greater than the value of all of its property at a fair
valuation, or if the present saleable value of the debtor's assets were less
than the amount required to repay its probable liabilities on its debt,
including contingent liabilities as they become absolute and matured. There
can be no assurance as to what standard a court would apply in order to
determine solvency.
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<PAGE> 19
The Company and the guarantors believe that they will receive reasonably
equivalent value at the time the indebtedness under the Notes and the
Subsidiary Guarantees is incurred. In addition, neither the Company nor the
Guarantors believe, that after giving effect to the offering of Senior
Subordinated Notes and the application of the net proceeds therefrom, they (i)
were or will be insolvent or rendered insolvent, (ii) were or will be engaged
in a business or transaction for which their respective remaining property
constituted unreasonably small capital or (iii) intend or intended to incur, or
would incur debts beyond their respective ability to pay such debts as they
mature. There can be no assurance, however, that a court determining the
merits of these issues would reach the same conclusion.
ENVIRONMENTAL MATTERS
The Company and its operations are subject to comprehensive and frequently
changing federal, state and local environmental and occupational health and
safety laws and regulations, including laws and regulations governing emissions
of air pollutants, discharges of waste and storm water, and the disposal of
hazardous wastes. The Company is also subject to liability for the
investigation and remediation of environmental contamination (including
contamination caused by other parties) at the properties it owns or operates
and at other properties where the Company or predecessors have arranged for the
disposal of hazardous substances. As a result, the Company is involved, from
time to time, in administrative and judicial proceedings and inquiries relating
to environmental matters. The Ohio Environmental Protection Agency has raised
questions about the air permit status of the Company's facility in Montpelier,
Ohio. The Company expects to resolve these questions without making
significant financial expenditures, although there can be no assurance thereof.
The Company does not believe there are any other pending investigations at the
Company's plants or sites relating to environmental matters. However, there
can be no assurance that the Company will not be involved in other such
proceedings in the future and that the aggregate amount of future clean-up
costs and other environmental liabilities will not be material.
Federal, state and local governments could enact laws or regulations
concerning environmental matters that increase the cost of producing, or
otherwise adversely affect the demand for, the Company's products. The Company
cannot predict the environmental liabilities that may result from legislation
or regulations adopted in the future. Nor can the Company predict how existing
or future laws and regulations will be administered or interpreted or what
environmental conditions may be found to exist. The enactment of more
stringent laws or regulations or stricter interpretation of existing laws and
regulations could require additional expenditures by the Company, some of which
could be material.
CONSEQUENCES OF FAILURE TO EXCHANGE; POSSIBLE ADVERSE EFFECT ON TRADING MARKET
FOR SERIES A NOTES
Holders of Series A Notes who do not exchange their Series A Notes for
Series B Notes pursuant to the Exchange Offer will continue to be subject to
the restrictions on transfer of such Series A Notes as set forth in the legend
thereon as a consequence of the issuance of the Series A Notes pursuant to
exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws. In
general, the Series A Notes may not be offered or sold unless registered under
the Securities Act and applicable state laws, or pursuant to an exemption
therefrom. Subject to the obligation by the Company to file a shelf
registration statement covering resales of Series A Notes in certain limited
circumstances, the Company does not intend to register the Series A Notes under
the Securities Act and, after consummation of the Exchange Offer, will not be
obligated to do so. In addition, any holder of Series A Notes who tenders in
the Exchange Offer for the purpose of participating in a distribution of the
Series B Notes may be deemed to have received restricted securities and, if so,
will be required to comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction.
Additionally, as a result of the Exchange Offer, it is expected that a
substantial decrease in the aggregate principal amount of Series A Notes
outstanding will occur. As a result, it is unlikely that a liquid trading
market will exist for the Series A Notes at any time. This lack of liquidity
will make transactions more difficult and may reduce the trading price of the
Series A Notes. See "The Exchange Offer" and "Description Notes - Registration
Rights; Liquidated Damages."
ABSENCE OF PUBLIC MARKET
The Series B Notes will constitute a new class of securities with no
established trading market. The Company does not intend to list the Series B
Noes on any national securities exchange or to seek the admission thereof to
trading in The Nasdaq Stock Market's National Market. The Company has been
advised by the Initial Purchasers that the Initial Purchasers currently intend
to make a market in the Series B Notes. They are not obligated to do so,
however, and any market-making activities with respect to the Notes may be
discontinued at any time without notice. In addition, such market-making
activity will be subject to the limits imposed by the Securities Act and the
Exchange Act, and may be limited during the Exchange Offer and the pendency of
any Shelf Registration Statement. See "Description of Notes -- Registration
Rights; Liquidated Damages." Accordingly, no assurance can be given that an
active public or other market will develop for the Series B Notes or as to the
liquidity of the trading market for the Series B Notes.
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<PAGE> 20
If the trading market does not develop or is not maintained, holders of
the Series B Notes may experience difficulty in reselling the Series B Notes or
may be unable to sell them at all. If a market for the Series B Notes does
develop, any such market may be discontinued at any time. If a public trading
market develops for the Notes, future trading prices of such Series B Notes
will depend upon many factors, including, among other things, prevailing
interest rates, the Company's financial condition and results of operations,
and the market for similar notes. Depending upon those and other factors, the
Series B Notes may trade at a discount from their principal amount.
Historically, the market for noninvestment grade debt has been subject to
disruptions that have caused substantial volatility in the prices of such
securities. There can be no assurance that the market for the Series B Notes
will not be subject to similar disruptions. Any such disruptions may have an
adverse effect on holders of the Series B Notes.
<PAGE> 21
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
Pursuant to the Registration Rights Agreement, the Company agreed (i) to
file a registration statement with respect to a registered offer to exchange
the Series A Notes for the Series B Notes, which will have with terms
substantially identical in all material respects to the Series A Notes (except
that the Series B Notes will not contain terms with respect to transfer
restrictions, registration rights and liquidated damages) within 45 days after
the date of original issuance of the Series A Notes and (ii) to use reasonable
best efforts to cause such registration statement to become effective under the
Securities Act at the earliest possible time but in any event no later than 60
days after the filing with the Commission. In the event that applicable law or
interpretations of the staff of the Commission do not permit the Company to
file the registration statement containing this Prospectus or to effect the
Exchange Offer, or if certain holders of the Series A Notes notify the Company
that they are prohibited by law or Commission policy from participating in the
Exchange Offer, or subject to certain other restrictions the Company will use
its reasonable best efforts to cause to become effective the shelf registration
statement with respect to the resale of the Series A Notes and to keep the
shelf registration statement effective until the earlier of three years
following the date of original issue and such time as all the Series A Notes
have been sold thereunder or are otherwise not restricted securities. See
"Description of Notes--Registration Rights, Liquidated Damages."
Each holder of the Series A Notes who wishes to exchange such Series A
Notes for Series B Notes in the Exchange Offer will be required to make certain
representations, including representations that (i) any Exchange Notes to be
received by it will be acquired in the ordinary course of its business, (ii) it
has no arrangement with any person to participate in the distribution of the
Series B Notes, and (iii) it is not an "affiliate," as defined in Rule 405 of
the Securities Act, of the Company. See "Description of Notes--Registration
Rights."
RESALE OF SERIES B NOTES
Based on interpretations by the staff of the Commission set forth in
no-action letters issued to third parties, the Company believes that, except as
described below, Series B Notes issued pursuant to the Exchange Offer in
exchange for Series A Notes may be offered for resale, resold and otherwise
transferred by any holder thereof (other than a holder which is an "affiliate"
of the Company within the meaning of Rule 405 under the Securities Act) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such Series B Notes are acquired in the ordinary
course of such holder's business and such holder does not intend to participate
and has no arrangement or understanding with any person to participate in the
distribution of such Series B Notes. Any holder who tenders in the Exchange
Offer with the intention or for the purpose of participating in a distribution
of the Series B Notes cannot rely on such interpretation by the staff of the
Commission and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction. Unless an exemption from registration is otherwise available, any
such resale transaction should be covered by an effective registration
statement containing the information required by the Securities Act. This
Prospectus may be used for an offer to resell, resale or other retransfer of
Series B Notes only as specifically set forth herein. Each broker-dealer that
receives Series B Notes for its own account in exchange for Series A Notes,
where such Series A Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such Series B Notes.
See "Plan of Distribution."
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept for exchange any and
all Series A Notes properly tendered and not withdrawn prior to 5:00 p.m., New
York City time, on the Expiration Date. The Company will issue $1,000
principal amount of Series B Notes in exchange for each $1,000 principal amount
of outstanding Series A Notes surrendered pursuant to the Exchange Offer.
Series A Notes may be tendered only in integral multiples of $1,000.
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<PAGE> 22
The form and terms of the Series B Notes will be the substantially
identical in all material respects to as the form and terms of the Series A
Notes except the Series B Notes will be registered under the Securities Act and
hence will not bear legends restricting the transfer thereof. The Series B
Notes will evidence the same debt as the Series A Notes. The Series B Notes
will be issued under and entitled to the benefits of the Indenture, which also
authorized the issuance of the Series A Notes, such that both series will be
treated as a single class of debt securities under the Indenture.
The Exchange Offer is not conditioned upon any minimum aggregate principal
amount of Series A Notes being tendered for exchange.
As of the date of this Prospectus, $125,000,000 aggregate principal amount
of the Series A Notes are outstanding. This Prospectus, together with the
Letter of Transmittal, is being sent to all registered holders of Series A
Notes. There will be no fixed record date for determining registered holders
of Series A Notes entitled to participate in the Exchange Offer.
The Company intends to conduct the Exchange Offer in accordance with the
provisions of the Registration Rights Agreement and the applicable requirements
of the Exchange Act, and the rules and regulations of the Commission
thereunder. Series A Notes which are not tendered for exchange in the Exchange
Offer will remain outstanding and continue to accrue interest and will be
entitled to the rights and benefits such holders have under the Indenture and
the Registration Rights Agreement.
The Company shall be deemed to have accepted for exchange properly
tendered Series A Notes when, as and if, the Company shall have given written
notice thereof to the Exchange Agent and complied with the provisions of the
Registration Rights Agreement. The Exchange Agent will act as agent for the
tendering holders for the purpose of receiving the Series B Notes from the
Company. The Company expressly reserves the right to amend or terminate the
Exchange Offer, and not to accept for exchange any Series A Notes not
theretofore accepted for exchange, upon the occurrence of any of the
conditions specified below under "-- Certain Conditions to the Exchange Offer."
Holders who tender Series A Notes in the Exchange Offer will not be
required to pay brokerage commissions or fees or, subject to the instructions
in the Letter of Transmittal, transfer taxes with respect to the exchange of
Series A Notes pursuant to the Exchange Offer. The Company will pay all
charges and expense, other than certain applicable taxes described below, in
connection with the Exchange Offer. See "The Exchange Offer -- Fees and
Expenses."
EXPIRATION DATE, EXTENSIONS; AMENDMENTS
The term "Expiration Date," shall mean 5:00 p.m., New York City time on
___________, 1997, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Company will notify the
Exchange Agent of any extension by written notice, prior to 9:00 a.m., New York
City time, on the next business day after the previously scheduled Expiration
Date, and will mail to the registered holders of Series A Notes an announcement
thereof.
The Company reserves the right, in its sole discretion, (i) to delay
accepting for exchange any Series A Notes, to extend the Exchange Offer or to
terminate the Exchange Offer if any of the conditions set forth below under
"The Exchange Offer -- Conditions" shall not have been satisfied, by giving
oral or written notice of such delay, extension or termination to the Exchange
Agent or (ii) to amend the terms of the Exchange Offer in any manner. Any such
delay in acceptance, extension, termination or amendment will be followed as
promptly as practicable by written notice thereof to the registered holders of
Series A Notes. If the Exchange Offer is amended in a manner determined by the
Company to constitute a material change, the Company will promptly disclose
such amendment in a manner reasonably calculated to inform the holders of the
Series A Notes of such amendment and the Company will extend the Exchange Offer
as necessary to provide the holders with a period of five to ten business days,
after such amendment, depending upon the significance of the amendment and the
manner of disclosure to the registered holders, if the Exchange Offer would
otherwise expire during such period.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other term of the Exchange Offer, the Company will not
be required to accept for exchange, or exchange any Series B Notes for, any
Series A Notes, and may terminate the Exchange offer as provided herein before
the acceptance of any Series A Notes for exchange, if.
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<PAGE> 23
(a) any action or proceeding is instituted or threatened in any
court or by or before any governmental agency with respect to the
Exchange Offer which, in the Company's reasonable judgment, might ht
materially impair the ability of the Company to proceed with the Exchange
Offer, or
(b) any law, statute, rule or regulation is proposed, adopted or
enacted, or any existing law, statute, rule or regulation is interpreted
by the staff of the Commission, which, in the Company's reasonable
judgment, might materially impair the ability of the Company to proceed
with the Exchange Offer, or
(c) any governmental approval has not been obtained, which approval
the Company shall, in its reasonable discretion, deem necessary for the
consummation of the Exchange Offer as contemplated hereby.
The Company expressly reserves the right, at any time or from time to
time, to extend the period of time during which the Exchange Offer is open, and
thereby delay acceptance for exchange of any Series A Notes, by giving written
notice of such extension to the holders thereof. During any such extensions,
all Series A Notes previously tendered will remain subject to the Exchange
Offer and may be accepted for exchange by the Company. Any Series A Notes not
accepted for exchange for any reason will be returned without expense to the
tendering holder thereof as promptly as practicable after the expiration or
termination of the Exchange Offer.
The Company expressly reserves the right to amend or terminate the
Exchange Offer, and not to accept, for exchange any Series A Notes not
theretofore accepted for exchange, upon the occurrence of any of the conditions
of the Exchange Offer specified above under "-- Certain Conditions to the
Exchange Offer." The Company will give written notice of any extension,
amendment, non-acceptance or termination to the holders of the Series A Notes
as promptly as practicable, such notice in the case of any extension to be
issued no later than 9:00 a.m., New York City time, on the next business day
after the previously scheduled Expiration Date.
The foregoing conditions are for the sole benefit of the Company and may
be asserted by the Company regardless of the circumstances giving rise to any
such condition or may be waived by the Company in whole or in part at any time
and from time to time in its sole discretion. The failure by the Company at
any time to exercise any of the foregoing rights shall not be deemed a waiver
of any such right and each such right shall be deemed an ongoing right which
may be asserted at any time and from time to time.
In addition, the Company will not accept for exchange any Series A Notes
tendered, and no Series B Notes will be issued in exchange for any such Series
A Notes, if at such time any stop order shall be threatened or in effect with
respect to the Registration Statement of which this Prospectus constitutes a
part or the qualification of the Indenture under the Trust Indenture Act of
1939 (the "TIA").
PROCEDURES FOR TENDERING
Only a holder of Series A Notes may tender such Series A Notes in the
Exchange Offer. To tender in the Exchange Offer, a holder must complete, sign
and date the Letter of Transmittal, or facsimile thereof, have the signature
thereon guaranteed if required by the Letter of Transmittal, and mail or
otherwise deliver such Letter of Transmittal or such facsimile to the Exchange
Agent prior to 5:00 p.m., New York City time, on the Expiration Date. In
addition, either (i) Series A Notes must be received by the Exchange Agent
along with the Letter of Transmittal, or (ii) a timely confirmation of
book-entry transfer (a "Book-Entry Confirmation") of such Series A Notes, if
such procedure is available, into the Exchange Agent's account at the
Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the
procedure for book-entry transfer described below must be received by the
Exchange Agent prior to the Expiration Date, or (iii) the holder must comply
with the guaranteed delivery procedures described below. To be tendered
effectively, the Letter of Transmittal and other required documents must be
received by the Exchange Agent at the address set forth below under "The
Exchange Offer -- Exchange Agent" prior to 5:00 p.m., New York City time, on
the Expiration Date.
The tender by a holder which is not withdrawn prior to the Expiration Date
will constitute an agreement between such holder and the Company in accordance
with the terms and subject to the conditions set forth herein and in the Letter
of Transmittal.
THE METHOD OF DELIVERY OF SERIES A NOTES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK
OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE
AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE.
NO LETTER OF TRANSMITTAL OR SERIES A NOTES SHOULD BE SENT TO THE COMPANY.
HOLDERS MAY REQUEST THEIR RESPEC-
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<PAGE> 24
TIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR OTHER NOMINEES TO
EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Series A Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct such
registered holder of Series A Notes to tender on such beneficial owner's
behalf. If such beneficial owner wishes to tender on such owner's own behalf,
such owner must, prior to completing and executing the Letter of Transmittal
and delivering such owner's Series A Notes, either make appropriate
arrangements to register ownership of the Series A Notes in such owner's name
or obtain a properly completed bond power from the registered holder of Series
A Notes. The transfer of registered ownership may take considerable time and
may not be able to be completed prior to the Expiration Date.
Signatures on a Letter of Transmittal or a notice of withdrawal described
below, as the case be, must be guaranteed by an Eligible Institution (as
defined below) unless the Series A Notes tendered pursuant thereto are tendered
(i) by a registered holder who has not completed the box entitled "Special
Issuance Instructions" or "Special Delivery Instructions" on the Letter of
Transmittal or (ii) for the account of an Eligible Institution. In the event
that signatures on a Letter Transmittal or a notice of withdrawal, as the case
may be, are required to be guaranteed, such guarantor must be a member firm of
a registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office
or correspondent in the United States or an "eligible guarantor institution"
within the meaning of Rule 17Ad-15 under the Exchange Act which is a member of
one of the recognized signature guarantee programs identified in the Letter of
Transmittal (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the
registered holder of any Series A Notes listed therein, such Series A Notes
must be endorsed or accompanied by a properly completed bond power, signed by
such registered holder as such registered holder's name appears on such Series
A Notes with the signature thereon guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Series A Notes or bond powers are
signed by trustees, executors, administrators, guardians, attorney-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and unless waived by
the Company, evidence satisfactory to the Company of their authority to so act
must be submitted with the Letter of Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Series A Notes and withdrawal of tendered
Series A Notes will be determined by the Company in its sole discretion, which
determination will be final and binding. The Company reserves the absolute
right to reject any and all Series A Notes not properly tendered or any Series
A Notes the Company's acceptance of which would, in the opinion of counsel for
the Company, be unlawful. The Company also reserves the right to waive any
defects, irregularities or conditions of tender as to particular Series A
Notes. The Company's interpretation of the terms and conditions of the
Exchange Offer (including the instructions in the Letter of Transmittal) will
be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Series A Notes must be cured
within such time as the Company shall determine. Although the Company intends
to notify holders of defects or irregularities with respect to tenders of
Series A Notes, neither the Company, the Exchange Agent nor any other person
shall incur any liability for failure to give such notification. Tenders of
Series A Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Series A Notes received by the
Exchange Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering holders, unless otherwise provided in the Letter of
Transmittal, as soon as practicable following the Expiration Date.
In all cases, issuance of Series B Notes for Series A Notes that are
accepted for exchange pursuant to the Exchange Offer will be made only after
timely receipt by the Exchange Agent of Notes or a timely Book-Entry
Confirmation of such Series A Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility, properly completed and duly executed Letter of
Transmittal and all other required documents. If any tendered Series A Notes
are not accepted for exchange for any reason set forth in the terms and
conditions of the Exchange Offer or if Series A Notes are submitted for a
greater principal amount than the holder desires to exchange, such unaccepted
or non-exchanged Series A Notes will be returned without expense to the
tendering holder thereof (or, in the case of Series A Notes tendered by
book-entry transfer into the Exchange Agent's account at the Book-Entry
Transfer Facility pursuant to the book-entry transfer procedures described
below, such non-exchanged Notes will be credited to an account maintained with
such Book-Entry Transfer Facility) as promptly as practicable after the
expiration or termination of the Exchange Offer.
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<PAGE> 25
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with
respect to the Series A Notes at the Book-Entry Transfer Facility for purposes
of the Exchange Offer within two business days after the date of this
Prospectus, and any financial institution that is a participant in the
Book-Entry Transfer Facility's system may make book-entry delivery of Series A
Notes by causing the Book-Entry Transfer Facility in accordance with such
Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Notes may be effected through book-entry at the Book-Entry Transfer
Facility, the Letter of Transmittal or facsimile thereof, with any required
signature guarantees and any other required documents, must, in any case, be
transmitted to and received by the Exchange Agent at the address set forth
below under "The Exchange Offer - Exchange Agent" on or prior to the Expiration
Date or, if the guaranteed delivery procedures described below are to be
complied with, within the time period provided under such procedures. Delivery
of documents to the Book-Entry Transfer Facility does not constitute delivery
to the Exchange Agent.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Series A Notes and (i) whose Series A
Notes are not immediately available or (h) who cannot deliver their Series A
Notes, the Letter of Transmittal or any other required documents to the
Exchange Agent prior to the Expiration Date, may effect a tender if:
(a) The tender is made through an Eligible Institution;
(b) Prior to the Expiration Date, the Exchange Agent received from
such Eligible Institution a properly completed and duly executed Notice
of Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder, the
registered number(s) of such Series A Notes and the principal amount of
Series A Notes tendered, stating that the tender is being made thereby
and guaranteeing that, within three (3) New York Stock Exchange trading
days after the Expiration Date, the Letter of Transmittal (or facsimile
thereof) together with the Series A Notes or a Book-Entry Confirmation,
as the case may be, and any other documents required by the Letter of
Transmittal will be deposited by the Eligible Institution with the
Exchange Agent; and
(c) Such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as all tendered Notes in proper form for
transfer or a Book-Entry Confirmation, as the case may be, and all other
documents required by the Letter of Transmittal, are received by the
Exchange Agent within three (3) New York Stock Exchange trading days
after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will
be sent to holders who wish to tender their Series A Notes according to the
guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Series A Notes may be
drawn at any time prior to 5:00 p.m., New York City time, on the Expiration
Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent at the address set forth below under "Exchange
Agent." Any such notice of withdrawal must specify the name of the person
having tendered the Series A Notes to be withdrawn, identify the Series A Notes
to be withdrawn (including the principal amount of such Series A Notes), and
(where certificates for Series A Notes have been transmitted) specify the name
in which such Series A Notes were registered, if different from that of the
withdrawing holder. If certificates for Series A Notes have been delivered or
otherwise identified to the Exchange Agent, then, prior to the release of such
certificates the withdrawing holder must also submit the serial numbers of the
particular certificates to be withdrawn and a signed notice of withdrawal with
signatures guaranteed by an Eligible Institution unless such holder is an
Eligible Institution. If Series A Notes have been tendered pursuant to the
procedure for book-entry transfer described above, any notice of withdrawal
must specify the name and number of the account at the Book-Entry Transfer
Facility to be credited with the withdrawn Series A Notes and otherwise comply
with the procedures of such facility. All questions as to the validity, form
and eligibility (including time of receipt) of such notices will be determined
by the Company, whose determination shall be final and binding on all parties.
Any Series A Notes so withdrawn will be deemed not to have been validly
tendered for exchange for purposes of the Exchange Offer. Any Series A Notes
which have been tendered for exchange but which are not exchanged for any
reason will be returned to the holder thereof without cost to such holder (or,
in the case of Series A Notes tendered by book-entry transfer into the Exchange
Agent's account at the Book-Entry Transfer Facility pursuant to the book-entry
transfer procedures described above, such Series A Notes will be credited to an
account maintained with such Book-Entry Transfer Facility for the Series A
Notes) as soon as
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<PAGE> 26
practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Series A Notes may be retendered by
following one of the procedures described under "Procedures for Tendering
Series A Notes" above at any time on or prior to the Expiration Date.
EXCHANGE AGENT
Marine Midland Bank has been appointed as Exchange Agent of the Exchange
Offer. Questions and requests for assistance, request for additional copies of
this Prospectus or of the Letter of Transmittal and requests for Notice of
Guaranteed Delivery should be directed to the Exchange Agent addressed as
follows:
By Mail, Overnight Courier or Hand Delivery: By Facsimile:
Marine Midland Bank Marine Midland Bank
140 Broadway Attention: Paulette Shaw
New York, New York 10004 (212) 659-2292
Attention: Paulette Shaw (For Eligible Institutions Only)
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telephone, telephone or in person by officers and of the Company
and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to broker-dealers or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay
the Exchange Agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer
will be paid by the Company and are estimated in the aggregate to be
approximately $99,000. Such expenses include registration fees, fees and
expenses of the Exchange Agent and Trustee, accounting and legal fees and
printing costs, and related fees and expenses.
The Company will pay all transfer taxes, if any, applicable to the
exchange of Notes pursuant to the Exchange Offer. If, however, certificates
representing Series A Notes for principal amounts not tendered or accepted for
exchange are to be delivered to, or are to be issued in the name of, any person
other than the holder of Notes tendered, or if tendered Notes are registered in
the name of any person other than signing the Letter of Transmittal, or if a
transfer tax is imposed for any reason other than the exchange of Notes
pursuant to the Exchange Offer, then the amount of any such transfer taxes
(whether imposed on the registered holder or any other persons) will be payable
by the tendering holder. If satisfactory evidence of payment of such taxes or
exemption therefrom is not submitted with the Letter of Transmittal, the amount
of such transfer taxes will be billed directly to such tendering holder.
TRANSFER TAXES
Holders who tender their Series A Notes for exchange will not be obligated
to pay any transfer taxes in connection therewith, except that holders who
instruct the Company to register Series B Notes in the name of, or request that
Series A Notes not tendered or not accepted in the Exchange Offer be returned
to, a person other than the registered tendering holder will be responsible for
the payment of any applicable transfer tax thereon.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Series A Notes who do not exchange their Series A Notes for
Series B Notes pursuant to the Exchange Offer will continue to be subject to
the restrictions on transfer of such Series A Notes, as set forth in the legend
thereon as a consequence of the issuance of the Series A Notes pursuant to the
exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws. In
general, the Series A Notes may not be offered or sold, unless registered under
the Securities Act, except pursuant to an exemption from, or in a transaction
not subject to, the Securities Act and applicable state securities laws. The
Company does not currently anticipate that it will register the Series A Notes
under the Securities Act. Based on interpretations by the staff of the
Commission, Series B Notes issued pursuant to the Exchange Offer may be offered
for resale, resold or otherwise transferred by holders thereof (other than any
such holder which is an "affiliate" of the Company within the meaning of Rule
405 under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such Series
B Notes are acquired in the ordinary
17
<PAGE> 27
course of such holders' business and such holders have no arrangement or
understanding with respect to the distribution of the Series B Notes to be
acquired pursuant to the Exchange Offer. Any holder who tenders in the
Exchange Offer for the purpose of participating in a distribution of the Series
B Notes (i) could not rely on the applicable interpretations of the staff of
the Commission and (ii) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a secondary
resale transaction. In addition, to comply with the securities laws of certain
jurisdictions, if applicable, the Series B Notes may not be offered or sold
unless they have been registered or complied with. The Company has agreed,
pursuant to the Registration Rights Agreement and subject to certain specified
limitations therein, to register or qualify the Series B Notes for offer or
sale under the securities or blue sky laws of such jurisdictions as are
necessary to consummate the Exchange Offer.
18
<PAGE> 28
USE OF PROCEEDS
USE OF PROCEEDS OF SERIES B NOTES
This Exchange Offer is intended to satisfy certain obligations of the
Company under the Registration Rights Agreement. The Company will not receive
any proceeds from the issuance of the Series B Notes offered hereby. In
consideration for issuing the Series B Notes as contemplated in the Prospectus,
the Company will receive, in exchange, Series A Notes in like principal amount.
The form terms of the Series B Notes are substantially identical in all
material respects to the form and terms of the Series A Notes, except as
otherwise described herein under "The Exchange Offer - Terms of Exchange
Offer." The Series A Notes surrendered in exchange for the Series B Notes will
be retired and canceled and cannot be reissued. Accordingly, issuance of the
Series B Notes will not result any increase in the outstanding debt of the
Company.
USE OF PROCEEDS OF SERIES A NOTES
The Company used the net proceeds, together of the offering of the Series
A Notes, together with borrowings under the Senior Credit Facility, (i) to
repurchase a portion of its 14% Senior Notes due 1999, (ii) to repay
indebtedness under its prior credit facility, (iii) to repay certain other
obligations, (iv) to repay certain obligations to its shareholders and (v) for
general corporate purposes.
CAPITALIZATION
The following table set forth the capitalization of the Company at March
31, 1997, on a historical basis, and of the Company, on an as adjusted basis,
giving effect to the Exchange Offer. The historical and as adjusted data
should be read in conjunction with the historical consolidated financial
statements of the Company included elsewhere herein.
<TABLE>
<CAPTION>
AS OF MARCH 31, 1997
HISTORICAL AS ADJUSTED
-------------- --------------
(IN THOUSANDS)
<S> <C> <C>
Cash ................................................... $ 1,966 $ 1,867
============== ==============
Long-term debt, including current portion:
Senior Credit Facility ................................ 32,969 32,969
14% Senior Notes due 1999.............................. 24,865 24,865
10-1/4% Senior Subordinated Notes due 2007 ............ 125,000 --
10-1/4% Senior Subordinated Notes due 2007, Series B .. -- 125,000
Other Debt ............................................ 15,001 15,001
-------------- --------------
Total Debt ........................................... 197,835 197,835
-------------- --------------
Shareholders' equity (deficit)(a) ...................... (17,863) (17,863)
-------------- --------------
Total capitalization ................................... $ 179,972 $ 179,972
============== ==============
</TABLE>
______________
(a) Shareholders' deficit results primarily from a distribution in 1988 to
the Company's shareholders of approximately $57 million as a dividend and
a repurchase of stock held by persons who were not employees of the
Company at the time offset by the Company's cumulative net income,
dividends and other capital transactions.
19
<PAGE> 29
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected historical consolidated financial
data of Key Plastics, Inc. for the five year period ended December 31, 1996 and
the three months ended March 31, 1997. The selected consolidated financial
data for such fiscal years were derived from the audited consolidated financial
statements of the Company. The audited consolidated financial statements of
the Company for each of the three years in the period ended December 31, 1996
are included elsewhere in this Prospectus together with the report thereon of
Coopers & Lybrand, L.L.P., independent accountants. The following table should
be read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the historical consolidated financial
statements of the Company presented elsewhere in this Prospectus.
<TABLE>
<CAPTION>
QUARTER
YEAR ENDED DECEMBER 31 ENDED
-------------------------------------------------- MARCH
1992 1993 1994(A) 1995(A) 1996(B) 31, 1997
---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales ..................................................... $119,600 $149,658 $194,112 $179,251 $217,087 $ 66,742
Cost of sales ................................................. 95,646 120,902 158,052 141,707 177,635 54,125
-------- -------- -------- -------- -------- --------
Gross profit .................................................. 23,954 28,756 36,060 37,544 39,452 12,617
Selling, general and administrative expenses................... 9,721 10,362 13,955 15,531 16,532 6,367
Amortization .................................................. 1,841 899 784 641 658 195
-------- -------- -------- -------- -------- --------
Operating income .............................................. 12,392 17,495 21,321 21,372 22,262 6,055
Interest expense .............................................. 10,553 11,575 12,752 14,292 15,211 4,978
Extraordinary item-loss on early retirement
of debt (c) ............................................... 5,840 --- --- --- --- 5,471
Cumulative effect of accounting change (d).................... 354 --- --- --- --- ---
Net income (loss) ......................................... $ (4,355) $ 5,920 $ 8,569 $ 7,080 $ 7,051 ($ 4,244)
======== ======== ======== ======== ======== =========
Ratio of earnings to fixed charges (e) ....................... -- 1.5x 1.6x 1.5x 1.4x 1.3x
OTHER FINANCIAL DATA:
EBITDA (f) ................................................... $ 18,370 $ 23,305 $ 27,588 $ 28,984 $ 32,095 $ 9,278
Depreciation and amortization ................................ 5,978 5,810 6,267 7,612 9,833 3,223
Capital expenditures:
Acquisitions of property, plant and equipment, net ........ 6,911 16,816 16,819 14,047 16,738 3,241
Property, plant and equipment from acquired business ...... -- -- -- -- 23,109 10,300
BALANCE SHEET DATA:
Total assets .............................................. $ 74,625 $ 96,556 $121,853 $126,900 $193,204 $230,444
Total debt ................................................ 92,748 102,859 111,060 119,640 149,062 197,835
Long-term debt ............................................ 87,168 85,818 103,522 102,467 84,578 192,132
Total shareholders' equity (deficit) (g) .................. (42,504) (29,841) (23,427) (20,875) (15,563) (17,863)
</TABLE>
- ---------------
(a) The Company's financial statements for the years ended December 31, 1994
and 1995 have been restated to reflect errors in previously reported
amounts. See Note 11 of Notes to Consolidated Financial Statements.
(b) The income statement data and other financial data for 1996 reflect the
results of the Clearplas Acquisition as of May 1, 1996 and the MaP
Acquisition as of November 1, 1996.
20
<PAGE> 30
(c) In 1992, this reflects a non-cash charge representing unamortized original
issue discount on certain subordinated notes of the Company which were
retired in 1992 at their fair value. In 1997, approximately $4.5 million
was paid for certain tender offer and consent solicitation fees related to
the retirement of a portion of 14% Senior Notes due 1999 and approximately
$1.0 million of unamortized original issue discount, related to the notes
tendered, was written off.
(d) Reflects the adoption of the requirements of Statement of Accounting
Standards No. 106, "Employers' Accounting for Postretirement Benefits
Other than Pensions."
(e) For purposes of this computation, earnings consist of income (loss)
before income taxes plus fixed charges. Fixed charges consist of interest
on indebtedness plus that portion of lease rental expense representative
of the interest factor. The Company's earnings were insufficient to cover
fixed charges for the fiscal year ended December 31, 1992 by approximately
$4.4 million. Net income for 1992 includes a $5.8 million non-cash
extraordinary loss item which reflects unamortized original issue discount
on certain subordinated notes of the Company which were retired at their
face value.
(f) EBITDA is defined as operating income plus depreciation and amortization.
EBITDA is presented because it is widely accepted financial indicator of
a company's ability to incur and service debt. However, EBITDA should not
be considered in isolation or as a substitute for net income or cash flow
data prepared in accordance with generally accepted accounting principles
or as a measure of a company's profitability or liquidity.
(g) Shareholders' deficit results primarily from a distribution in 1988 to
the Company's shareholders of approximately $57 million as a dividend and
a repurchase of stock held by persons who were not employees of the
Company at such time, partially offset by the Company's cumulative net
income, dividends and other capital transactions.
21
<PAGE> 31
BUSINESS
THE COMPANY
The Company is a global supplier of highly engineered plastic components
and assemblies to automotive original equipment manufacturers and Tier I
suppliers. The Company believes it is the largest independent supplier of
plastic door handle assemblies, decorative bezels and pressurized bottles in
North America for the automotive industry. Other products manufactured by the
Company include interior trim components, precision molded parts, instrument
cluster components, electrical connector covers, air louvers, speaker grilles
and underhood functional components.
The Company provides the automotive industry with comprehensive plastics
manufacturing capabilities, including design and engineering, high-precision
injection molding, automated manufacturing and assembly, plastic painting and
material and product testing. The Company operates its world headquarters and
technical center, nine manufacturing and two paint facilities in North America
and two facilities in Europe with painting and manufacturing capabilities. The
Company also has extensive tool making capabilities and designs and builds
approximately one-third of the tooling used in the manufacturing of its
principal products.
Management believes that the Company has achieved its current leadership
position and is well positioned to benefit from emerging trends in the global
automotive markets as a result of several key competitive strengths, including:
(i) demonstrated technological expertise and innovation in developing highly
engineered systems and components; (ii) strong relationships with major OEMs;
(iii) an emphasis on quality management; (iv) the ability to supply its
customers globally; and (v) state of the art equipment and facilities.
Since 1992, the Company has invested over $93.8 million to upgrade its
existing facilities and to acquire and build new facilities. Since that time,
the Company has established its world headquarters and technical center, has
constructed a new paint facility in Hartford City, Indiana, has brought on line
four molding facilities in Grand Rapids, Michigan, York, Pennsylvania, South
Bend, Indiana and Chihuahua, Mexico, has acquired the assets and business of
Clearplas, has acquired control of MaP and consummated the Aeroquip Acquisition.
BUSINESS STRATEGY
The automotive industry is currently characterized by a number of factors
which affect the Company and its business strategy. These factors include (i)
OEMs' demand for suppliers with efficient, comprehensive research and
development, design and manufacturing capabilities, (ii) consolidation of
suppliers as a result of increasing OEM demands, and (iii) the globalization of
the OEM supplier base. As a result of these factors, suppliers must (i)
continually demonstrate the ability to satisfy, in cost efficient ways, the
OEMs' design and manufacturing demands and (ii) establish international
positions which can effectively supply and service the OEMs.
The Company seeks to maintain its leadership position in the industry and
maximize its revenues and net income by employing its operating strategy, which
has the following principal components.
Focus on Highly Engineered, Value-added Products. The Company believes
highly engineered, value-added components are typically more difficult for a
customer to produce in-house or a competitor to replicate due to the
substantial investment required in specialized engineering, design and
manufacturing capabilities. Management believes such products have strong
worldwide growth potential and high margins. Further, the Company capitalizes
on the specialized design and manufacturing expertise it has developed for one
customer by marketing such expertise across its customer base. For example,
the Company has recently utilized its CAD/CAM systems, including finite element
analysis, to verify the Dodge Dakota door handle design, eliminating the need
for prototype tools, and thereby saving one year of product development time
and the corresponding required investment. The Company expects to be able to
utilize this expertise as more OEMs move away from tooling in designing
prototypes.
Emphasize Quality Management. Among the most important factors in
maintaining preferred supplier status with OEMs is product quality. The
Company has a strong quality assurance program and has made substantial
investments in technology to monitor and improve quality. Included among these
investments are CAD/CAM equipment, statistical process control systems, failure
mode and effect systems, process-controlled molding machines and automated
assembly
22
<PAGE> 32
equipment. In addition, the Company has material and product test laboratories
that monitor product reliability and which are accredited by its major OEM
customers, and the Company's engineering functions are ISO 9001 certified. The
Company has exceeded the supplier criteria established by Ford and, since
January 1996, the Company has experienced a monthly average of only
twenty-eight rejects per million parts. Under Ford's criteria for the
Company's parts, Ford requires less than 300 rejects per million parts. Because
the Company has substantially exceeded such goals, it considers itself to be a
world class supplier.
Provide Comprehensive Manufacturing and Engineering Capabilities while
Improving Cost Competitiveness. In response to increasingly rigorous OEM
purchasing and manufacturing policies, the Company has developed comprehensive
plastics manufacturing capabilities, including design and engineering,
automated manufacturing and assembly, painting and materials and product
testing, prototype production and tooling. For example, the Company has
developed a manufacturing process which eliminates work-in-progress inventory
for its door handle assemblies. Door handle assemblies move directly from the
paint line to a work station where they are assembled and packaged as finished
products. The Company produces 36 different door handles in 98 different
colors for five OEMs. The Company expects to produce approximately 7 million
door handle assemblies, consisting of approximately 14 million molded-and
painted parts, in 1997 at its Hartford, Indiana facility. In addition to
requiring comprehensive manufacturing capabilities, OEMs are demanding
market-driven pricing and long-term productivity commitments, which demands are
forcing suppliers to eliminate waste and optimize productivity. The Company
has invested in and successfully implemented lean manufacturing methodologies,
including the use of cell-based manufacturing and automation through state of
the art "poke-yoked" (fail safed) devices which have made significant
contributions to the Company's product quality and have assisted in the
reduction of labor costs and work-in-progress inventory. Cell-based
manufacturing utilizes machine vision, robotics and a pelletized approach in
the production of components. Conversion of a work cell from one application
to another is easily accomplished through reprogramming and the installation of
new pallets at significantly less cost than a traditional approach to
manufacturing products. The Company utilizes a work cell approach to produce
pressurized bottles for Ford's F-Series pickup trucks and Taurus/Sable models
and to assemble air louvers. To produce pressurized bottles, two halves of the
pressurized bottles are molded by two injection molding machines and then fed
into fully automated, computerized and "poke-yoked" (fail safed) work cells,
which, at the end of the process, assign a serial number to each bottle to
allow for lot traceability. In addition, the use of these work cells has
enabled the Company to reduce manpower required to assemble air louvers by
approximately 50% to 15 people per shift and reduce the number of operators in
the production of pressurized bottles from 5 to 1.
Establish a Global Position. The Company has acquired strategic positions
in Europe in order to serve its customers on a global basis. Several OEMs have
announced certain models designed for the world automobile market. As a
result, certain domestic and European OEMs have encouraged their existing
suppliers to establish foreign production support for World Car programs.
During 1996, the Company acquired a manufacturing presence in the UK and
Portugal. The ability to produce product in both locations has resulted in the
award of new programs from the existing customer base in North America and
Europe. This expansion has also resulted in the addition of new customers such
as Rover. The Company will use its presence in Europe as a base to establish
opportunities for further expansion through acquisition.
Enhance Tier I Relationships. The OEMs continue to give more
responsibility for total program management to large Tier I suppliers. These
suppliers are evaluating the available supply of parts and whether the
manufacturers who are currently supplying them are qualified. As Tier I
suppliers shift to more qualified automotive parts manufacturers, the Company
believes that it is well positioned to take advantage of such change. The
Company has recently received programs from TRW Inc., Lear Corp., United
Technologies Automotive, Magna International, Inc., and Johnson Controls, Inc.
which represent an expansion of the Company's traditional customer base of OEMs
and transplants.
Make Selected Acquisitions. In recent years, OEMs have instituted
policies which have resulted in the consolidation of the automotive supplier
industry. Through strategic acquisitions, the Company believes it can leverage
off of its existing engineering and manufacturing capabilities, quality focus
and relationships with its customers by adding complementary product lines and
achieving greater economies of scale. In 1996, the Company acquired Clearplas
and MaP. The Clearplas Acquisition resulted in the Company adding Rover to its
customer base and enhanced the Company's global position. The MaP Acquisition
furthered the globalization of the Company's decorative bezel business. In
1997, the Company consummated the Aeroquip Acquisition, which resulted in the
Company expanding its operations in Mexico and Michigan.
23
<PAGE> 33
PRODUCTS
The Company manufactures the variety of highly engineered plastic
components described below. In 1996, revenues from door handle assemblies,
pressurized bottles and decorative bezels represented approximately 45% of the
Company's net sales. No other product represented more than 10% of the
Company's sales.
Door Handle Assemblies (22.0% of 1996 net sales). The Company's principal
products are interior and exterior door handle assemblies. The Company is the
largest independent manufacturer of plastic door handles in North America. The
Company estimates that it currently supplies approximately 57% of all plastic
door handles used by Ford, approximately 50% of the outside plastic door
handles used by Chrysler and approximately 31% of the door handle assemblies
used by GM.
Pressurized Bottles (13.5% of 1996 net sales). Since 1990, the Company
has produced underhood pressurized coolant bottles and remote power steering
reservoirs with integral filters and assembled caps. The manufacture of these
products require newly engineered plastic resins, automated assembly machines
and special testing equipment. The pressurized coolant bottles are replacing
blow molded coolant bottles on new aluminum overhead cam engines.
Decorative Bezels (9.2% of 1996 net sales). Decorative bezels consist of
the face plate and speaker button assembly. The Company's decorative bezel
components, also introduced in 1990, utilize its plastic molding, painting,
robotic assembly and laser etch marking capabilities for high-volume production
and a near zero-defect rate. Laser etch marking technology is more cost
efficient than traditional marking techniques for imprinting decorative bezel
push buttons.
Interior Trim Components. The Company's interior trim components include
seat shields, seat track covers, seat belt trim and switch housing.
Precision Molded Parts. The Company's precision molded parts consist of
mass airflow housing units, throttle bobbins and cam assemblies.
Instrument Cluster Components. Instrument clusters consist of backplates,
trim masks, and clear plastic lenses which house the vehicle's odometer, oil,
temperature and other gauges.
Electrical Connector Covers. These components are used as the casing for
multiple electrical connector systems and are supplied to wire harness system
manufacturers for automotive and communication applications.
Air Louvers. Air louvers provide directional air control for automotive
heating and cooling systems and are supplied as subsystems to instrument panel
and door system manufacturers. The Company continues to make substantial
improvements in the design and development of intricate new tooling and robotic
assembly equipment used in the manufacture of its air louver products.
Speaker Grilles. The Company uses advanced manufacturing technology to
mold decorative speaker grilles which are thin, highly contoured and have
intricate hole patterns. These characteristics provide clear sound
transmission and enable the Company to market its plastic speaker grilles as a
lower cost alternative to metal ones.
Underhood Functional Components. The Company's underhood functional
products consist of various sophisticated electronic and fuel delivery
components including speed control housings, remote anti-skid brake system
modules, and distributorless ignition systems. OEMs are increasingly
substituting plastic for metal in the underhood components and systems in an
effort to reduce cost, noise, weight, to improve airflow and to increase
aesthetic appeal.
Other Products: The Company also manufacturers a variety of other
automotive components, such as shift knobs, air dams, insulators, light
housings, fuel shields and hood latches. Plastic components manufactured for
non-automotive use include electrical and office supply products.
24
<PAGE> 34
CUSTOMERS, MARKETING AND ENGINEERING SUPPORT
The Company's principal customers are Ford, Chrysler, GM, Rover, Honda and
their respective Tier I suppliers. The approximate net sales and percentage of
net sales to the Company's principal customers, including respective Tier I
suppliers, for the year ended December 31, 1996 are shown below:
SALES % 1996 SALES
------------- ------------
(IN MILLIONS)
Ford ............................................ $138.8 63.9%
Chrysler ........................................ 25.9 11.9
GM .............................................. 19.9 9.2
Rover ........................................... 16.0 7.4
Honda ........................................... 3.2 1.5
Other ........................................... 13.3 6.1
------------ ------------
Total ..................................... $217.1 100.0%
Sales to OEMs and Tier I suppliers are made directly by the Company's
sales staff, consisting of 31 individuals, of which 8 were added through the
MaP Acquisition and Clearplas Acquisition and 3 have been added in 1997. In
North America, the Company is expanding its sales effort to Tier 1 suppliers
and domestic transplant customers and, in Europe, is augmenting its sales
efforts to capture opportunities available in Europe. The Company's
engineering personnel are an integral part of the Company's sales effort
because of the need to be involved in the early stages of product design and
development.
Because OEMs demand early involvement of suppliers in the design and
engineering aspects of product development, the Company, in recent years, has
substantially increased its design, engineering and tooling capabilities. The
Company maintains a 67-person mold building operation for construction of
complex production tooling and, in 1996, the Company established a new
technical center which is ISO 9000 certified and which houses its engineering
and design group. The Company has 74 product engineers and 34 CAD/CAM
engineers, in addition to the manufacturing engineers located at the Company's
facilities. The Company has an advanced computer aided design and computer
aided manufacturing (CAD/CAM) system with multiple work stations and a product
test laboratory which supports its engineering and manufacturing operations.
The Company provides complete black box (in which the Company has principal
design responsibility) and gray box (in which the customer has principal design
responsibility) engineering capabilities for door handles, power steering
reservoirs, air louvers, pressurized coolant bottles and decorative bezels.
The Company's engineering staff works closely with customers' engineers in
designing the specifications of the product material, the part to be produced
and the tooling required to produce the finished product. The Company's
engineering functions have been ISO 9000 certified and the Company believes its
design, engineering and tooling expertise has been an important factor in its
ability to broaden its product lines, maintain its existing customer base, and
attract a new customer base.
The Company obtains most of its new orders through a presourcing process
by which the customer invites one or a few preferred suppliers to manufacture
and design a component or assembly that meets certain price, timing and
functional parameters. Upon selection at the development stage, the Company
and the customer typically agree to cooperate in developing the product to meet
the specified parameters. Upon completion of the development stage and the
award of the manufacturing business, the Company receives a blanket purchase
order that covers parts to be supplied for a particular car model. Such supply
arrangements normally extend over the life of the model, which is generally
four to seven years. In addition, the Company competes to supply parts for
successor models even though the Company may currently supply parts on the
predecessor model.
Products under development are assigned a target sale price which is
reevaluated from time to time during the product development cycle. Prior to
the Company's commitment for full production, the Company and the customer must
agree on a final price, which, in some instances, may be subject to negotiated
price reductions over the term of the project. Consequently, the Company's
ability to improve operating performance is dependent primarily on its ability
to reduce costs and operate more efficiently. Although the Company
historically has regained the loss caused by price reductions to the OEMs
through cost reduction initiatives and assistance from the OEMs, there can be
no assurance that future price
25
<PAGE> 35
reductions, increased quality standards or additional engineering capabilities
required by OEMs will not have a material adverse effect on the financial
condition or results of operations of the Company.
MANUFACTURING OPERATIONS
Product Manufacturing. The Company's core manufacturing technologies are
small press injection molding, automated assembly, pad printing, painting,
laser etching, sonic welding and hot plate welding. As part of its strategy to
supply highly engineered, value-added components, the Company has substantially
expanded the use of automation and robotics in its assembly operations. For
example, robotics are used in the assembly of door handle latching systems and
decorative bezels, and the Company's "poke-yoked" (fail safed) system is
utilized in the production of air louvers. These capabilities enhance quality
and reliability and reduce labor costs.
The Company has organized its production process to minimize the number of
manufacturing functions and the frequency of material handling, thereby
reducing labor costs. In addition, the Company utilizes, where practical, a
flexible manufacturing process which uses cellular manufacturing to allow a
continuous flow of parts with minimal set-up time. Such cellular manufacturing
utilizes machine vision, robotics and a pelletized approach and can be easily
converted from one product application to the other with re-programming and new
pallets at a cost lower than traditional work cell approach. The Company also
utilizes just-in-time manufacturing and sourcing systems in an attempt to meet
its customers' requirements for faster deliveries while minimizing inventory
levels.
The Company believes, its broad base of class A paint application
capabilities positions it well for supplying the domestic and foreign exterior
trim market. The Company is able to provide both high-bake, high solids
painting, which is traditionally preferred by domestic OEMs, and low-bake, two
component painting, which is preferred by foreign OEMs. The Company has also
developed paint application technology utilizing innovative robotic
applications which has enabled the Company to reduce costs by improving paint
transfer efficiency.
Tooling and CAD/CAM Design. The Company's plastic components have
sophisticated tooling requirements, the costs for which are generally billed to
the customer at preauthorized levels. Development of the tooling typically
begins approximately two to three years before production, after the Company is
selected by the customer to develop a particular component or assembly At that
time, the Company commences its tooling design and development work and
accumulates in inventory the costs incurred. The production tooling and gauges
are ordered generally one year prior to production. Upon completion of the
development stage and delivery of the tooling, the customer is billed. The
Company supplies approximately one-third of its tooling requirements from its
own advanced tooling operation. The remaining tooling requirements are
purchased from other tool makers.
Although tooling costs are preauthorized by the customer pursuant to
specified guidelines, such costs are subject to audit and acceptance by the
customer. In addition, tooling cost guidelines are subject to interpretation
by the OEMs and are changed from time to time without prior notice to the
Company.
Recently, OEMs have begun the process to eliminate tooling because of the
high costs and long lead time the tooling process involves in the development
of new products. To assist OEMs in this need and to further strengthen its
customer relationships, the Company is utilizing more CAD/CAM systems in
product design. For example, the Company utilized its CAD/CAM systems,
including finite element analysis, to design and verify prototypes for
Chrysler's Dodge Dakota door handle program. Management believes that
additional opportunities exist to utilize its CAD/CAM expertise.
Product Quality. Among the most important factors in maintaining
preferred supplier status with OEMs is product quality. The Company has a
strong quality assurance program and has made substantial investments in
technology to monitor and improve quality. Included among these investments
are CAD/CAM equipment, statistical process control systems, failure made and
effect systems and Process-controlled molding machines. The Company encourages
employee participation in quality improvement through the use of quality
circles and team-oriented problem solving techniques.
In addition, the Company has material and product test laboratories
accredited by its major OEM customers, which monitor production efficiency and
product reliability. In cooperation with its customers, the Company regularly
conducts tests on its raw materials to reduce variability and inconsistencies
in properties such as melt flow, filler content,
26
<PAGE> 36
moisture and tensile strength to meet the requirements of the Company's major
OEM customers. The Company also conducts a variety of engineering
specification and climate testing on new and existing products.
RAW MATERIALS
The principal raw materials used by the Company are engineered plastic
resins such as nylon, polypropylene and ABS, all of which are available from
several suppliers, except that the customer generally specifies a single
supplier to be used by the Company in connection with a specific program. The
Company has no reason to believe that there will not be an ample supply of its
raw materials for the reasonably foreseeable future, but the Company cannot
make any prediction as to the future price of such raw materials. The Company
is generally not able to pass on to its customers any increase in raw material
costs; however, the Company, in the past two years, has not experienced any
significant increases in the prices of its raw materials as result of the
consolidation of procurement and supply of raw materials. A substantial
interruption in the Company's supply of plastic resins, or a material increase
in the price thereof, could have a material adverse effect on the Company.
EMPLOYEES
At March 31, 1997, the Company employed approximately 3,300 persons in
North America and Europe. The Company believes that relations with its
employees are good. Hourly employees at the Company's Plymouth, Michigan
facility (approximately 10% of all employees) and Key U.K. (approximately 9%
of all employees) are the only employees represented by collective bargaining
units. The Plymouth employees are represented by Local 7639 International
Union of United Paper Workers pursuant to a collective bargaining agreement
which expires on December 7, 2000. The workforce at Key's Coventry facility is
represented by two unions: Amalgamated Electrical and Engineering Union
("AEEU") and Manufacturing, Scientific and Finance Union ("MSF"). Both AEEU
and MSF follow the traditional negotiation patterns seen in Great Britain by
renegotiating terms and conditions on an annual basis. The AEEU contract is
generally re-negotiated in January/February of each year. Those negotiations
are currently being conducted and are expected to conclude without incident.
The Company began renegotiation of the MSF contract in April and expects to
conclude such negotiation without incident.
ENVIRONMENTAL MATTERS
The Company and its operations are subject to comprehensive and frequently
changing federal, state and local environmental and occupational health and
safety laws and regulations, including laws and regulations governing emissions
of air pollutants, discharges of waste and storm water, and the disposal of
hazardous wastes. The Company is also subject to liability for the
investigation and remediation of environmental contamination (including
contamination caused by other parties) at the properties it owns or operates
and at other properties where the Company or predecessors have arranged for the
disposal of hazardous substances. As a result, the Company is involved, from
time to time, in administrative and judicial proceedings and inquiries relating
to environmental matters. The Ohio Environmental Protection Agency has raised
questions about the air permit status of the Company's facility in Montpelier.
The Company expects to resolve these questions without making significant
financial expenditures, although there can be no assurance thereof. The
Company does not believe there are any other pending investigations at the
Company's plants or sites relating to environmental matters. However, there
can be no assurance that the Company will not be involved in other such
proceedings in the future and that the aggregate amount of future clean-up
costs and other environmental liabilities will not be material.
Federal, state and local governments could enact laws or regulations
concerning environmental matters that increase the cost of producing, or
otherwise adversely affect the demand for, the Company's products. The Company
cannot predict the environmental liabilities that may result from legislation
or regulations adopted in the future. Nor can the Company predict how existing
or future laws and regulations will be administered or interpreted or what
environmental conditions may be found to exist. The enactment of more
stringent laws or regulations or stricter interpretation of existing laws and
regulations could require additional expenditures by the Company, some of which
could be material.
COMPETITION
27
<PAGE> 37
The Company's business is highly competitive. Competition generally
occurs on the basis of product groups. A large number of actual or potential
competitors exist, including the internal component operations of the OEMs as
well as independent suppliers, many of which are larger than the Company. Some
of the Company's competitors include Donnelly Corporation, Lear Corp., TRINOVA
Corporation, Summit Plastic Co., LDM Technologies, Inc., Fawn Industries, Inc.,
Lacks Industries, Inc., United Technologies, Inc., and Geiger Technik.,
although none of these competitors compete with the Company along all product
lines. In addition, the Company's business is increasingly competitive due to
the supplier consolidation resulting from changing OEM policies. The Company
principally competes for new business both at the beginning of the development
of new models and upon the redesign of existing models by its major customers.
New model development generally begins two to four years prior to the marketing
of such models to the public. Because of the large investment by OEMs in
tooling and the long lead time required to commence production, OEMs generally
do not change a supplier during a program.
The Company competes on the basis of quality, cost, timely delivery and
customer service and, increasingly, on the basis of design and engineering
capability, painting capability, new product innovation and product testing
capability.
Some of the OEMs have adopted supplier management policies designed to
strengthen their supply base. These policies include designating only some of
the suppliers as preferred future suppliers and, in some cases, encouraging new
suppliers to begin to supply selected product groups.
28
<PAGE> 38
PROPERTIES
All of the Company's facilities are owned by the Company, except for the
Company's world headquarters and the Company's facilities in Grand Rapids,
Michigan and Coventry, U.K., which are leased. Management believes that its
facilities are adequate for its present needs. The Company's operations are
located in the following communities.
<TABLE>
<CAPTION>
APPROXIMATE
LOCATION SQUARE FOOTAGE DESCRIPTION OF USE
- -------- -------------- ------------------
<S> <C> <C>
Novi, MI ......................................... 29,000 World Headquarters and
Technical Center
Plymouth, MI ..................................... 168,000 Manufacturing
Felton, PA (Plant 1) ............................. 53,000 Manufacturing
Felton, PA (Plant 2) ............................. 39,060 Manufacturing
Hamilton, IN ..................................... 54,000 Manufacturing
York, PA (Plant 1) ............................... 22,000 Manufacturing
York PA (Plant 2) ................................ 40,000 Manufacturing
Montpelier, OH ................................... 79,000 Painting
Hartford City, IN ................................ 50,000 Painting and Assembly
Chihuahua, MX .................................... 65,000 Manufacturing
Grand Rapids, MI ................................. 56,000 Manufacturing
South Bend, IN ................................... 80,000 Manufacturing
Coventry, UK ..................................... 100,000 Manufacturing and Painting
Leiria, Portugal ................................. 84,000 Manufacturing and Painting
</TABLE>
LEGAL PROCEEDINGS
The Company is, from time to time, involved in routine litigation arising
out of the ordinary course of its business. The Company believes currently
pending or threatened litigation will not have a material adverse effect on the
consolidated financial condition or results of operations of the Company.
29
<PAGE> 39
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following management's discussion and analysis of financial condition
and results of operations should be read in conjunction with the Company's
Consolidated Financial Statements (including the notes thereto) appearing
elsewhere in this Prospectus. The Company's financial statements for the years
ended December 31, 1994 and 1995 have been restated to reflect errors in
previously reported amounts. See Note 11 of Notes to Consolidated Financial
Statements.
FIRST QUARTER ENDED MARCH 31, 1997 COMPARED TO FIRST QUARTER ENDED MARCH 31,
1996
Net sales for the three month period ended March 31, 1997 were $66.7
million; an increase of approximately $21.4 million or 47% over the same period
last year. Approximately $15 million of the increase relates to the Company's
European subsidiaries, Key U.K. and Materias Plasticas (MaP) which were
acquired in 1996 (Key U.K. was acquired May 1, 1996 and a controlling interest
in MaP was acquired on November 1, 1996). Sales of injection molded parts and
assemblies in the Company's existing businesses were up $6.6 or approximately
17% due to increases in related vehicle production by the Company's customers
as well as increased sales related to newly launched vehicle programs during
1996. First quarter revenues related to customer tooling programs
year-over-year were flat at about $6.2 million.
Gross profit increased $3.4 million in the first quarter of 1997 compared
to the first quarter of 1996 as a result of the aforementioned sales increases.
The degradation of the gross profit percentage of 1.5% from 1997 to 1996 is
primarily attributable to operations in the United Kingdom where factory
productivity is much lower than other Company facilities.
Selling, general and administrative expenses increased $3.1 million in
1997 as compared to the same period last year. Approximately $1.9 million of
the increase is due to costs incurred in facilities owned by the Company for
less than one year as of March 31, 1997, primarily in Europe. The remainder of
the increase relates to staff and facility costs necessary to support the
Company's expansion.
Operating income increased by $.2 million as a result of the foregoing.
Interest expense in the first quarter of 1997 increased by about $1.5
million over the same 1996 period because of higher average debt outstanding.
The increase in debt stemmed primarily from acquisitions made during the course
of 1996 including Clearplas, Ltd. in the United Kingdom and Materias Plasticas,
S.A. in Portugal, and a plastic injection molding company in South Bend Indiana.
The extraordinary item of $5.5 million represents the amount paid for the
tender offer and related consent fees for the retirement of $40.1 million of the
14% Senior Notes due 1999 and the write-off of related unamortized discount
related to the notes tendered.
1996 FISCAL YEAR COMPARED TO 1995 FISCAL YEAR
Net sales of the fiscal year ended December 31, 1996 (the "1996 Fiscal
Year") increased by $37.8 million, or 21.1%, over net sales for the fiscal year
ended December 31, 1995 (the "1995 Fiscal Year"). The increase is primarily
attributable to the Clearplas Acquisition, which accounted for $24.2 million of
the increase in net sales of the Company from the 1995 Fiscal Year, and to the
MaP Acquisition, which accounted for $5.3 million of the increase in net sales
of the Company from the 1995 Fiscal Year. In addition, North American product
sales increased by $10.2 million, or 6.6%, primarily due to new program
launches. Tooling sales declined by $1.9 million, or $7.3%. This decline,
however, is not indicative of future program activity in that tooling related
inventory at December 31, 1996 increased by $7.4 million to $17.6 million from
$10.2 million at December 31, 1995.
30
<PAGE> 40
Gross profit for the 1996 Fiscal Year increased by $1.9 million, or 5.1%,
over gross profit for the 1995 Fiscal Year. Gross profit margin decreased by
2.7%, from 20.9% in the 1995 Fiscal Year to 18.2% in the 1996 Fiscal Year.
This decrease stemmed primarily from increased price concessions (1.4%) and
lower European margins compared to North American Margins (1.3%).
Selling, general and administrative expenses (SG&A) for the 1996 Fiscal
Year increased by $1.0 million, or 6.4%. The increase results from addition
SG&A resulting from the MaP Acquisition and the Clearplas Acquisition or $2.3
million, partially offset by lower North American SG&A. As a percent of net
sales, SG&A decreased from 8.7% in the 1995 Fiscal Year to 7.6% in the 1996
Fiscal Year. The percentage point reduction relates primarily to increased
1996 Fiscal Year sales.
Interest expense increased from $14.3 million in the 1995 Fiscal Year to
$15.2 in the 1996 Fiscal Year as a result of higher average debt, resulting
primarily from borrowings related to acquisitions and capital asset purchases.
Net income for the 1996 Fiscal Year remained substantially unchanged from
the 1995 Fiscal Year as a result of the foregoing.
1995 FISCAL YEAR COMPARED TO 1994 FISCAL YEAR
Net sales for the 1995 Fiscal Year decreased by $14.9 million, or 7.7%,
over net sales for the fiscal year ended December 31, 1994 (the "1994 Fiscal
Year"). The decrease is attributable to a $18.4 million, or 10.7%, decrease in
the sales of injection molded plastic parts partially offset by a $3.6 million,
or 16.2%, increase in tooling revenues. The decrease in injection-molded
plastic part revenues resulted primarily from related vehicle production
decreases.
Gross profit for the 1995 Fiscal Year increased by $1.5 million, or 4.1%,
from gross profit for the 1994 Fiscal Year. Gross profit margin for the 1995
Fiscal Year increased by 2.3 percentage points, from 18.6% in the 1994 Fiscal
Year to 20.9% in the 1995 Fiscal Year. Gross margin improvement resulted
primarily from the Hartford City, Indiana, Grand Rapids, Michigan and
Chihuahua, Mexico facilities which were launched in 1994, and became fully
operational in the 1995 Fiscal Year.
SG&A expenses for the 1995 Fiscal Year increased by $1.6 million, or
11.3%, over the same period in the 1994 Fiscal Year. As a percent of net
sales. SG&A increased to 8.6% from 7.2% in the 1994 Fiscal Year. This increase
is primarily attributable to the aforementioned start-up facilities.
Interest expense increased from $12.8 million to $14.3 million in the 1995
Fiscal Year as a result of higher average debt, resulting primarily from $14.0
million of capital asset purchases and a $2.9 million increase in net working
capital, excluding debt obligations.
Net income for the 1995 Fiscal Year decreased by $1.5 million, or 17.4%,
from net income for the 1994 Fiscal Year as a result of the foregoing.
LIQUIDITY AND CAPITAL RESOURCES
During March 1997 the Company refinanced its existing debt as follows:
(i) pursuant to a tender offer for all of its 14% Senior Notes
due 1999, repaid $40.1 million of such notes and $24.9 million
remain outstanding; (ii) a private placement, issued $125.0 million
of 10 1/4 % Senior Subordinated Notes due 2007; and (iii) entered
into a new $140.0 million Senior Credit Facility, under which $23.5
million was outstanding as of March 31, 1997.
The proceeds of the private placement were principally used to fund the
tender and replace existing bank debt. Borrowings on the Senior Credit
Facility were for general corporate purposes, including an acquisition,
discussed more fully below. The net impact of the refinancing was to increase
the Company's debt at March 31, 1997 by $48.8 million dollars from December 31,
1996.
31
<PAGE> 41
The Company believes its existing sources of liquidity are adequate to
meet its operating requirements in fiscal 1997. At March 31, 1997 the Company
had $43.5 million of availability under the Senior Credit Facility.
On March 28, 1997, the Company acquired three injection molding and
assembly operations owned by Aeroquip corporation, a subsidiary of TRINOVA
Corporation. The acquired business represents an expansion of the Company's
existing decorative bezel business. The investment has been accounted for in
these statements using the purchase method.
Accounts receivable increased by $14.1 million comparing March 31, 1997 to
December 31, 1996. $6.5 million is due to increased parts sales and timing
within the quarter. The acquisition of three Aeroquip factories added $5.7
million of accounts receivable at March 31, 1997. Customer tooling related
receivables increased by $1.9 million over the prior quarter primarily as a
result of increased tooling programs.
The inventory increase of $5.3 million from December 31, 1996 to March 31,
1997 was due in part to the inventory acquired from Aeroquip of $3.5 million
and $1.8 million to increases in customer tooling inventory related to the
design and build of tooling for programs expected to launch in 1998.
Accrued liabilities decreased by $7.4 million from December 31, 1996 due
primarily to the $5.9 million payout of all accrued interest for the debt
refinanced.
32
<PAGE> 42
DIRECTORS AND OFFICERS
The following are the directors and executive officers of the Company:
<TABLE>
<CAPTION>
Name Age Position with the Company
- ---- --- -------------------------
<S> <C> <C>
Joel D. Tauber ................................. 61 Director
George Mars .................................... 59 Director
David C. Benoit ................................ 48 Chief Executive Officer and a Director
Leonard R. Griffin ............................. 45 President and Chief Operating Officer
A.E. "Gene" Stull .............................. 49 Vice President, Sales and Marketing
Calvin A. Saur ................................. 45 Vice President, Engineering
Douglas C. Chapple ............................. 45 Vice President, Eastern Group
Henry J. Wojtaszek ............................. 53 Vice President, Western Group
E.R. "Skip" Autry .............................. 42 Chief Financial Officer
William J. Luka ................................ 50 Vice President, Quality
Richard J. Blough .............................. 50 Vice President, Administration and Human Resources
Mark J. Abbo ................................... 44 Treasurer
</TABLE>
Joel D. Tauber formed the Company with Messrs. Mars and Benoit in 1986
and has been a director and Chairman of the Board since that time. The Company
was formed to acquire the assets of the plastics division of Key International
Manufacturing, Inc. ("KIMI"), a company involved in plastics manufacturing for
over twenty years and in which Mr. Tauber served as President. Mr. Tauber is a
manufacturing executive, business consultant and investor. Mr. Tauber is
President of Keyco Bond Fund, Inc. and serves as Chairman of the Board of
Complex Tooling & Molding, Inc., Keywell Corporation and KMGl, Inc.
George Mars formed the Company with Messrs. Tauber and Benoit in 1986,
has been a director since that time and Co-Chairman of the Board since 1995.
Prior to his retirement, Mr. Mars served as President of the Company from 1986
to 1995. Mr. Mars was a General Manager of the plastics division of KIMI.
David C. Benoit formed the Company with Messrs. Tauber and Mars and has
been a director since the Company's formation in 1986. Mr. Benoit was
Executive Vice President of the Company from 1986 to 1995, when he was
appointed to his current position of Chief Executive Officer. Mr. Benoit was
Chief Financial Officer of KIMI and has 16 years experience in the automotive
industry.
Leonard R. Griffin, President and Chief Operating Officer of the Company,
joined the Company in April 1995. Prior to joining the Company, Mr. Griffin
served for five years as President of Woodbridge Inoac, Inc., a joint venture
partnership formed by Woodbridge Group, a Canadian plastics company and Inoac,
Ltd., a Japanese automotive parts supplier. Prior to serving as President of
Woodbridge, Mr. Griffin was General Manager of Rockwell International's
Automotive Plastics Products Operations. Mr. Griffin's business experience
consists of over 27 years in the automotive industry, including the foregoing,
and years spent in management, manufacturing and quality control capacities at
Libbey Owens Ford (now known as TRINOVA Corporation) and Allen Industries.
A.E. Stull has been Vice President, Sales and Marketing of the Company
since November 1991, and has served in various other capacities at the Company
since 1988. Mr. Stull joined the Company in November 1988 and served as Vice
President, Sales and Marketing of the Company's Plymouth Division until
November 1991 when he became Vice President, Sales and Marketing for all
Company operations. Prior to joining the Company, Mr. Stull was Director of
Sales for Magna International, Inc., Tesma Group, an automotive supplier.
Calvin A. Saur has been employed at the Company since 1986 and, since May
1995, has been Vice President, Engineering of the Company. Prior to attaining
his present position, Mr. Saur held various other positions at the Company,
including Vice President, Research and Development. Mr. Saur has been employed
in the automotive industry for 26 years.
33
<PAGE> 43
Douglas C. Chapple has been Vice President, Eastern Group of the Company
since November 1996. Prior to joining the Company, Mr. Chapple was, from 1994
to 1996, Vice President, Manufacturing of Dott Industries, Inc., a privately
owned finisher and decorator of plastic products, including painted interior
components, exterior grilles and encapsulated assemblies. Before joining Dott
Industries, Inc., Mr. Chapple was employed, for over 17 years, by General
Motors Corporation in a variety of manufacturing and engineering capacities,
including Director of Engineering at GM's Inland Fisher Guide Division.
Henry J. Wojtaszek has been employed at the Company for 11 years in
various manufacturing capacities, and since 1996, has been Vice President,
Western Group. Mr. Wojtaszek has been employed in the automotive industry for
34 years and has been a president of the Society of Plastics Engineers.
E.R. "Skip" Autry, Vice President, Finance and Procurement, is the Chief
Financial Officer of the Company and joined the Company in 1995. Prior to
joining the Company, Mr. Autry held various finance positions at Chrysler
Corporation from 1986 to 1995, including, Director, Corporate Accounting,
Manager, Corporate Investments and Analysis and Controller, Corporate Staff.
From 1976 to 1986, Mr. Autry held various positions at Coopers & Lybrand,
specializing in manufacturing and publicly held companies.
William J. Luka has been Vice President, Quality of the Company since
1993. Prior to joining the Company, Mr. Luka was employed at Ford Motor
Company for three years as a Supplier Quality Engineer Auditor, where he was
actively involved in the development of Ford's QOS Methodology. Among his
various duties, Mr. Luka is responsible for implementing ISO-9000 throughout
the Company. Mr. Luka has been employed in the automotive industry for 26
years and has been certified as a QS Auditor by the QS 9000 Registration
Accreditation Board.
Richard J. Blough has been Vice President, Administration and Human
Resources of the Company since 1996. Prior to joining the Company, Mr. Blough
was Vice President, Human Resources at Electro-Wire Products, Inc., for two
years, Electro-Wire Products supplies wiring and electrical components to the
automotive and heavy truck industries. Prior to joining the Company, from 1989
to 1994, Mr. Blough was Director of Human Resources for the corporate office at
American Brass Company Incorporated. Mr. Blough has 27 years experience in the
automotive industry.
Mark J. Abbo has been Treasurer of the Company since 1993. Mr. Abbo
joined the Company in 1988 as Corporate Controller and held that position until
he was appointed Treasurer in 1993.
34
<PAGE> 44
EXECUTIVE COMPENSATION
The following table sets forth certain information as to the cash
compensation earned by each of the Company's five most highly paid current
executive officers who earned more than $100,000 for services rendered to the
Company during the three years ended December 31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ALL OTHER
NAME AND TITLE YEAR SALARY BONUS COMPENSATION
- -------------- ---- -------- -------- ------------
<S> <C> <C> <C> <C>
David C. Benoit .................................... 1996 $275,000 $125,000 $ 1,300(a)
Chief Executive Officer 1995 361,000 37,500 1,500(a)
1994 306,000 50,000 16,509(b)
Leonard R. Griffin ................................. 1996 240,000 106,000 700(a)
President (c) 1995 156,125 76,042 ----
1994 ---- ---- ----
A.E. Stull ......................................... 1996 137,000 39,200 1,300(a)
Vice President, Sales & Marketing 1995 137,000 35,000 1,500(a)
1994 130,000 20,000 1,500(a)
Calvin A. Saur ..................................... 1996 117,000 24,250 1,300(a)
Vice President, Engineering 1995 110,000 20,000 1,500(a)
1994 110,000 10,000 1,500(a)
Henry J. Wojtaszek ................................. 1996 96,500 40,950 1,300(a)
Vice President, Western Group 1995 90,000 21,042 1,500(a)
1994 85,000 54,438 1,500(a)
</TABLE>
- -------------
(a) Represents profit sharing amounts paid to the named executive officers.
(b) Represents fees earned in capacity as a director of the Company and/or
amounts contributed to the Company's retirement savings plan on behalf of
the named executive officer.
(c) Joined the Company in 1995.
1996 FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED EXERCISABLE
UNEXERCISED EXERCISABLE OPTIONS IN-THE-MONEY OPTIONS
NAME AT 1996 FISCAL YEAR-END AT 1996 FISCAL YEAR-END(A)
- ---- ------------------------------ --------------------------
<S> <C> <C>
David C. Benoit .............................. --- $---
Leonard R. Griffin ........................... 1,250 26,000
A. E. Stull .................................. 5,500 318,550
Calvin A. Saur ............................... --- ---
Henry J. Wojtaszek ........................... --- ---
</TABLE>
(a) The dollar values in this column are calculated by determining the
difference between the fair market value of the securities underlying the
options and the exercise price of the options at December 31, 1996. The
Company is privately held and no public market exists for the Company's
Common Stock. Fair market value has been determined by the Company's
Board of Directors.
35
<PAGE> 45
CHANGE OF CONTROL ARRANGEMENTS - LONG TERM INCENTIVE PLAN
The Company's Long Term Incentive Plan (the "LTIP") is intended to provide
additional incentive to officers, including the executive officers named in the
Summary Compensation Table, and other eligible key employees of the Company.
The LTIP provides compensation to the employees who are included in the LTIP
and who remain employees as of the date of the occurrence of a Third Party
Transaction (as defined) of the Company. A Third Party Transaction is defined
as an initial public offering of the Company's Common Stock, a sale of all or
substantially all of the Company's Common Stock or a sale of all or
substantially all of the Company's assets. In the event that a Third Party
Transaction occurs, each eligible employee will be entitled to payment based on
a formula equal to the Total Incentive Pool (as defined) multiplied by the
result obtained by multiplying a factor assigned to each employee at the time
such employee is included in the LTIP times the employee's Cumulative Base
Compensation. Cumulative Base Compensation means the total base compensation
earned by such employee from the date of inclusion in the LTIP to the date of
occurrence of a Third Party Transaction. The factor assigned to each employee
is based upon the level of management in which the employee is included. Total
Incentive Pool means the total of all Cumulative Base Compensation of every
eligible employee. The LTIP will fund upon the occurrence of a Third Party
Transaction and terminates as of the date of such occurrence.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Company's
Common Stock as of March 31, 1997 owned by the directors of the Company, the
named executive officers, and all directors and officers as a group, and by
other holders known to the Company as having beneficial ownership of more than
5% of the Common Stock. Each person exercises sole investment and voting
rights with respect to the shares of Common Stock shown in the table below
unless otherwise stated. The address of each of the following persons is Suite
200, 21333 Haggerty Road, Novi, Michigan 48375.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF
OF COMMON STOCK OUTSTANDING
DIRECTORS, OFFICERS AND FIVE PERCENT HOLDERS OWNED BENEFICIALLY SHARES(A)
- -------------------------------------------- ------------------ -------------
<S> <C> <C>
Joel D. Tauber .......................................................... 90,828 26.3%
David C. Benoit ......................................................... 79,833(b) 23.1%
George Mars ............................................................. 62,065 18.0%
Kenneth A. Dishell ...................................................... 18,700 5.4%
Henry A. Wotjaszek ...................................................... 11,578 3.4%
Calvin A. Saur .......................................................... 8,924 2.6%
A.E. Stull .............................................................. 6,000(c) 1.7%
Leonard R. Griffin ...................................................... 5,100(d) 1.5%
All directors and officers as a group (12 persons) 269,695(a) 78.2%
</TABLE>
(a) Includes 2,898 shares of Common Stock and options to acquire an aggregate
of 2,468 shares of Common Stock of the Company held by the executive
officers not otherwise included in the table.
(b) 79,833 shares are held by the David C. Benoit Trust, of which Mr. Benoit
is the Trustee and beneficiary.
(c) Includes options to acquire 5,500 shares of Common Stock of the Company,
which options are exercisable within 60 days of January 31, 1997.
(d) Includes options to acquire 2,500 shares of Common Stock of the Company,
which options are exercisable within 60 days of January 31, 1997.
Messrs. Tauber, Mars and Benoit, if they vote their shares in a
combination which exceeds 50% of the outstanding Common Stock, have the ability
to elect the entire Board of Directors of the Company and determine the outcome
of any other matter submitted to shareholders for approval. There are no
arrangements, however, among any of the shareholders
36
<PAGE> 46
of the Company, including such persons, with respect to the voting or
disposition of the Common Stock and there are no arrangements between the
shareholders and the Company, except that shareholders may not make any
dispositions which could result in the termination of the Company's S-
Corporation status.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Shareholder Agreement. Each Shareholder, including Messrs. Tauber, Mars
and Benoit, has entered into a shareholder agreement with the Company.
Pursuant to such agreement, a shareholder may not transfer shares of the
Company's Common Stock without the written consent of the Company, except that
no consent is required for transfers to a decedent shareholder's beneficiaries,
but only if such transfers would not result in the disqualification of the
Company as a Subchapter S corporation.
Tax Allocation Agreement. The Company has entered into a Tax Allocation
Agreement with each of its shareholders relating to federal and certain state
and local income tax liabilities of the Company. This agreement generally
provides that (i) in any fiscal year in which the Company has a net operating
loss for tax purposes, each shareholder will pay to the Company an amount equal
to the net tax benefit realized by the shareholder as a result of the
allocation to the shareholder of such net operating loss incurred by the
Company, up to the amount of dividends received by the shareholders and not
previously repaid to the Company, (ii) if in any fiscal year the Company
distributes dividends relating to the shareholders' tax liability which exceed
the actual liability at the highest marginal tax rate based on the Company's
net taxable income for such fiscal year, each shareholder will pay to the
Company, as a contribution to capital, an amount equal to the difference
between the dividends paid to the shareholder during such fiscal year and the
actual liability at the highest marginal tax rate based on the net taxable
income allocated to the shareholder for such fiscal year, and (iii) if the
Company's election is disallowed or revoked for any taxable year for which such
election was in effect, each shareholder will pay to the Company the full
amount of any distribution made to the shareholder with respect to such taxable
year for payment of taxes for income of the Company allocated to the
shareholder. Each shareholder has pledged the shareholder'S common stock in
the Company to secure any debt that the shareholder may owe to the Company
pursuant to the Tax Allocation Agreement. In addition, the Company has the
right to set off any amounts owed to the Company by the shareholder under the
Tax Allocation Agreement against any future dividends or redemption payments
payable by the Company to the shareholder.
Consulting Arrangements. The Company has a consulting arrangements with
each of Messrs. Tauber and Mars. Mr. Tauber and Mr. Mars are each paid
$10,000 per month for services provided to the Company. In addition, Mr. Mars
receives compensation at a rate of $1,000 per diem, plus out-of-pocket
expenses, for each day of services provided, which services are not compensated
for by the $10,000. In 1996, Mr. Tauber and Mr. Mars earned $120,000 and
$178,000, respectively.
37
<PAGE> 47
DESCRIPTION OF NOTES
GENERAL
The Notes are issued pursuant to an Indenture (the "Indenture") by and
among the Company, the Guarantors and Marine Midland Bank, as trustee (the
"Trustee"). The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939 (the "Trust Indenture Act"). The Notes are subject to all such terms, and
Holders of Notes are referred to the Indenture and the Trust Indenture Act for
a statement thereof. The following summary of the material provisions of the
Indenture does not purport to be complete and is qualified in its entirety by
reference to the Indenture, including the definitions therein of certain terms
used below. The definitions of certain terms used in the following summary are
set forth below under "-Certain Definitions." For purposes of this summary, the
term "Company" refers only to Key Plastics, Inc. and not to any of its
subsidiaries.
The Notes are jointly and severally guaranteed on a senior subordinated
basis by all current Subsidiaries other than Foreign Restricted Subsidiaries.
As of the date here of, MaP, Key Plastics U.K., and Clearplas Ltd. will be
Unrestricted Subsidiaries. Unrestricted Subsidiaries will not be subject to
many of the restrictive covenants set forth in the Indenture and will not be
required to become Guarantors. Moreover, under certain circumstances, the
Company will be able to designate current or future subsidiaries as
Unrestricted Subsidiaries. As used herein, the term "Subsidiary" shall exclude
any subsidiary that is an Unrestricted Subsidiary. The Indenture will require
Subsidiaries created or designated as a Subsidiary after the date of the
Indenture, other than Foreign Restricted Subsidiaries, to become Guarantors.
As of March 31, 1997, Key Plastics Automotive, Key Plastics Technology, Key
Plastics International, Key Mexico A, L.L.C. and Key Mexico B, L.L.C. are
Guarantors. Any Series A Notes that remain outstanding after the completion of
the Exchange Offer, together with the Series B Notes issued in connection with
the Exchange Offer, will be treated as a single class of securities under the
Indenture.
PRINCIPAL, MATURITY AND INTEREST
The Notes are limited in aggregate principal amount to $125.0 million and
will mature on March 15, 2007. Interest on the Notes will accrue at the rate
of 10 1/4% per annum and will be payable semi-annually in arrears on March 15
and September 15, commencing on September 15, 1997, to Holders of record on the
immediately preceding March 1 and September 1. Interest on the Notes will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the date of original issuance. Interest will be
computed on the basis of a 360-day year comprised of twelve 30-day months.
Principal, premium, and interest and Liquidated Damages, if any, on the Notes
will be payable at the office or agency of the Company maintained for such
purpose within the City and State of New York or, at the option of the Company,
payment of interest and Liquidated Damages, if any, may be made by check mailed
to the Holders of the Notes at their respective addresses set forth in the
register of Holders of Notes; provided that all payments of principal, premium,
interest and Liquidated Damages, if any, with respect to Notes the Holders of
which have given wire transfer instructions to the Company will be required to
be made by wire transfer of immediately available funds to the accounts
specified by the Holders thereof. Until otherwise designated by the Company,
the Company'S office or agency in New York will be the office of the Trustee
maintained for such purpose. The Notes will be issued in denominations of
$1,000 and integral multiples thereof.
SUBORDINATION
The payment of principal of, premium, if any, interest on and all other
Obligations in connection with, the Notes, are subordinated in right of
payment, as set forth in the Indenture, to the prior payment, in full, of all
Senior Debt, including, without limitation, all borrowings, letters of credit,
other advances and all other Obligations of the Company under the Senior Credit
Facility, whether outstanding on the date of the Indenture or thereafter
incurred.
Upon any payment or distribution of assets of the Company of any kind or
character, whether in cash, property, or securities to creditors of the Company
in a liquidation or dissolution of the Company or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Company or its property, an assignment for the benefit of creditors or any
marshaling of the Company'S assets and liabilities, the holders of Senior Debt
will be entitled to receive payment in full of all Obligations due in respect of
such Senior Debt (including, without limitation, interest after the commencement
of any such proceeding at the rate specified in the applicable Senior Debt
whether or not such interest is
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an allowable claim under applicable law) before the Holders of Notes will be
entitled to receive any payment or distribution of assets of the Company or any
Guarantors of any kind or character with respect to the Notes, and until all
Obligations with respect to Senior Debt are paid in full, any distribution to
which the Holders of Notes would be entitled shall be made to the holders of
Senior Debt (except that Holders of Notes may receive Permitted Junior
Securities and payments made from the trust described under "-Legal Defeasance
and Covenant Defeasance," provided that such payments are made in accordance
with the provisions described therein).
Neither the Company nor any Subsidiary shall make any payment or any
distribution of any kind upon or in respect of the Notes or any other
Obligation in connection with the Notes, including, without limitation, for the
acquisition or defeasance of any of the Notes (except in Permitted Junior
Securities or from the trust described under "-Legal Defeasance and Covenant
Defeasance," provided that such payments are made in accordance with the
provisions described therein) if (i) a default in the payment, whether at
stated maturity, by acceleration, by declaration or otherwise, of the principal
of, premium, if any, interest on, unpaid drawings for letters of credit issued
in respect of, or any regularly accruing fees with respect to, any Designated
Senior Debt occurs and is continuing beyond any applicable period of grace (a
"payment default") or (ii) any other default occurs and is continuing with
respect to Designated Senior Debt that permits holders of the Designated Senior
Debt as to which such default relates to accelerate its maturity (a "nonpayment
default") and, with respect to nonpayment defaults, the Trustee receives a
notice of such default (a "Payment Blockage Notice") from the Company or the
holders of any Designated Senior Debt. Payments on the Notes, may and shall be
resumed (a) in the case of a payment default, upon the date on which such
default is cured or waived and (b) in case of a nonpayment default, the earlier
of the date on which such nonpayment default is cured or waived or 179 days
after the date on which the applicable Payment Blockage Notice is received,
unless the maturity of any Designated Senior Debt has been accelerated. No new
period of payment blockage based on a nonpayment default may be commenced
unless and until 360 days have elapsed since the date that the immediately
prior Payment Blockage Notice was received. No nonpayment default that existed
or was continuing on the date of delivery of any Payment Blockage Notice to the
Trustee shall be, or be made, the basis for a subsequent Payment Blockage
Notice unless such default was cured or waived for 90 days.
The Indenture further requires that the Company promptly notify holders of
Senior Debt if payment of the Notes is accelerated because of an Event of
Default (as defined in the Indenture).
As a result of the subordination provisions described above, in the event
of a liquidation or insolvency, Holders of Notes may recover less ratably than
creditors of the Company who are holders of Senior Debt. As of March 31, 1997,
the Company and its Subsidiaries had $____ million of Senior Debt outstanding.
The Indenture will permit the Company to incur additional Senior Debt, subject
to certain limitations. See "-Certain Covenants-Incurrence of Indebtedness and
Issuance of Disqualified Stock and Preferred Stock of Subsidiaries."
OPTIONAL REDEMPTION
The Notes are not be redeemable at the Company'S option prior to March 15,
2002. Thereafter, the Notes will be subject to redemption, at any time, at the
option of the Company, in whole or in part, upon not less than 30 nor more than
60 days' notice, at the redemption prices (expressed as percentages of
principal amount) set forth below plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the applicable redemption date, if
redeemed during the twelve-month period beginning on March 15 of the years
indicated below:
YEAR PERCENTAGE
2002.................... 105.125%
2003.................... 103.417
2004.................... 101.708
2005..and thereafter.... 100.000%
Notwithstanding the foregoing, prior to March 15, 2000, the Company may
redeem up to 35% of the aggregate principal amount, of the Notes initially
issued at a redemption price of 1091/4% of the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the
redemption date, with the net cash proceeds of a public equity offering of
Common Stock of the Company; provided that at least 65% of the aggregate
principal amount of the Notes originally issued under the Indenture remain
outstanding immediately after the occurrence of such
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<PAGE> 49
redemption; and provided, further, that such redemption shall occur within 60
days of the date of the closing of such public equity offering.
SELECTION AND NOTICE
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which
the Notes are listed, or, if the Notes are not so listed, on a pro rata basis,
by lot or by such method as the Trustee shall deem fair and appropriate;
provided that no Notes of $ 1,000 or less shall be redeemed in part. Notices
of redemption shall be mailed by first class mail at least 30 but not more than
60 days before the redemption date to each Holder of Notes to be redeemed at
its registered address. Notices of redemption may not be conditional. If any
Note is to be redeemed in part only, the notice of redemption that relates to
such Note shall state the portion of the principal amount thereof to be
redeemed. A new Note in principal amount equal to the unredeemed portion
thereof will be issued in the name of the Holder thereof upon cancellation of
the original Note. Notes called for redemption become due on the date fixed
for redemption. On and after the redemption date, interest ceases to accrue on
Notes or portions of them called for redemption.
MANDATORY REDEMPTION
Except as set forth below under "Repurchase at the Option of Holders," the
Company is not required to make mandatory redemption or sinking fund payments
with respect to the Notes.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each Holder of Notes will have
the right to require the Company to repurchase all or any part (equal to $1,000
or an integral multiple thereof) of such Holder'S Notes pursuant to the offer
described below (the "Change of Control Offer") at an offer price in cash equal
to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the date of purchase (the
"Change of Control Payment"). Within ten days following any Change of Control,
the Company will mail a notice to each Holder describing the transaction or
transactions that constitute the Change of Control and offering to repurchase
Notes on the date specified in such notice, which date shall be no earlier than
30 days and no later than 60 days from the date such notice is mailed (the
"Change of Control Payment Date"), pursuant to the procedures required by the
Indenture and described in such notice. The Company will comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Notes as a result of a
Change of Control.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating
the aggregate principal amount of Notes or portions thereof being purchased by
the Company. The Paying Agent will promptly mail to each Holder of Notes so
tendered the Change of Control Payment for such Notes, and the Trustee will
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided that each such new Note will be in a
principal amount of $1,000 or an integral multiple thereof. The Indenture will
provide that, prior to complying with the provisions of this covenant, but in
any event within 90 days following a Change of Control, the Company will either
repay all outstanding Senior Debt or obtain the requisite consents, if any,
under all agreements governing outstanding Senior Debt to permit the repurchase
of Notes required by this covenant. The Company will publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.
The Change of Control provisions described above will be applicable
whether or not any other provisions of the Indenture are applicable. Except as
described above with respect to a Change of Control, the Indenture does not
contain provisions that permit the Holders of the Notes to require that the
Company repurchase or redeem the Notes in the event of a takeover,
recapitalization or similar transaction.
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The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set
forth in the Indenture applicable to a Change of Control Offer made by the
Company and purchases all Notes validly tendered and not withdrawn under such
Change of Control Offer.
The definition of Change of Control includes a phrase relating to the
sale, lease, transfer, conveyance or other disposition of "all or substantially
all" of the assets of the Company and its Subsidiaries taken as a whole.
Although there is a developing body of case law interpreting the phrase
"substantially all," there is no precise established definition of the phrase
under applicable law. Accordingly, the ability of a Holder of Notes to require
the Company to repurchase such Notes as a result of a sale, lease, transfer,
conveyance or other disposition of less than all of the assets of the Company
and its Subsidiaries taken as a whole to another Person or group may be
uncertain.
ASSET SALES
The Indenture will provide that the Company will not, and will not permit
any of its Subsidiaries to, consummate an Asset Sale or issue Equity Interests
in any of its Subsidiaries or sell Equity Interests in any of its Subsidiaries,
unless (i) the Company (or the Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value (evidenced by a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Trustee) of the assets or Equity
Interests issued or sold or otherwise disposed of and (ii) at least 80% of the
consideration therefor received by the Company or such Subsidiary is in the
form of cash; provided that the amount of (x) any liabilities (as shown on the
Company'S or such Subsidiary'S most recent balance sheet), of the Company or
any Subsidiary (other than contingent liabilities and liabilities that are by
their terms subordinated to the Notes or any guarantee thereof) that are
assumed by the transferee of any such assets such that the Company or such
Subsidiary have no further liability and (y) any securities, notes or other
obligations received by the Company or any such Subsidiary from such transferee
that are immediately converted by the Company or such Subsidiary into cash (to
the extent of the cash received), shall be deemed to be cash for purposes of
this provision.
Within 180 days after the receipt of any Net Proceeds from an Asset Sale,
the Company may apply such Net Proceeds, at its option, (a) to repay
Indebtedness under the Senior Credit Facility or Senior Debt (and to
correspondingly permanently reduce commitments with respect thereto), or (b) to
the acquisition of a controlling interest in another business, the making of a
capital expenditure or the acquisition of other long-term assets, in each case,
in a Permitted Business. Pending the final application of any such Net
Proceeds, the Company may temporarily reduce revolving Indebtedness under the
Senior Credit Facility or other-wise invest such Net Proceeds in any manner
that is not prohibited by the Indenture. Any Net Proceeds from Asset Sales
that are not applied or invested as provided in the first sentence of this
paragraph will be deemed to constitute "Excess Proceeds." When the aggregate
amount of Excess Proceeds exceeds $5.0 million, the Company will be required to
make an offer to all Holders of Notes (an "Asset Sale Offer") to purchase the
maximum principal amount of Notes that may be purchased out of the Excess
Proceeds, at an offer price in cash in an amount equal to 100% of the principal
amount thereof plus accrued and unpaid interest and Liquidated Damages thereon,
if any, to the date of purchase, in accordance with the procedures set forth in
the Indenture. To the extent that the aggregate amount of Notes tendered
pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company
may use any remaining Excess Proceeds for general corporate purposes. If the
aggregate principal amount of Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes to be purchased
on a pro rata basis. Upon completion of such offer to purchase, the amount of
Excess Proceeds shall be reset at zero.
CERTAIN COVENANTS
RESTRICTED PAYMENTS
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly: (i) declare or pay any dividend
or make any other payment or distribution on account of the Company'S or any
of its Subsidiaries' Equity Interests (including, without limitation, any
payment in connection with any merger or consolidation involving the Company)
or to the direct or indirect holders of the Company'S or any of its
Subsidiaries' Equity Interests in their capacity as such (other than (a)
dividends or distributions payable in Equity Interests (other than Disqualified
Stock) of the Company or (b) the payment of any dividend or distribution by a
Subsidiary of the Company to the holders of a class of its Equity Interests,
which include the Company or a Subsidiary, on a pro rata basis); (ii)
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purchase, redeem or other-wise acquire or retire for value (including without
limitation, in connection with any merger or consolidation involving the
Company) any Equity Interests of the Company or any direct or indirect parent of
the Company; (iii) make any payment on or with respect to, or purchase, redeem,
defease or otherwise acquire or retire for value any Indebtedness that is
subordinated to the Notes, except a payment of interest or principal at Stated
Maturity; (iv) make any payment in respect of any Non-Competition Agreement; or
(v) make any Restricted Investment (all such payments and other actions set
forth in clauses (i) through (v) above being collectively referred to as
"Restricted Payments"), unless, at the time of and after giving effect to such
Restricted Payment:
(a) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof;
(b) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made at
the beginning of the applicable four-quarter period, have been permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of the covenant described
below under caption "-Incurrence of Indebtedness and Issuance of Disqualified
Stock and Preferred Stock of Subsidiaries;" and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Subsidiaries after the
date of the Indenture (excluding Restricted Payments permitted by clauses (ii),
(iii), (vi) and (vii) of the next succeeding paragraph), is less than the sum
of (i) 50% of the Consolidated Net Income of the Company for the period (taken
as one accounting period) from the beginning of the first fiscal quarter
commencing after the date of the Indenture to the end of the Company'S most
recently ended fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such Consolidated Net
Income for such period is a deficit, less 100% of such deficit) less the amount
paid or to be paid in respect of such period pursuant to clause (vii) of the
next following paragraph, plus (h) 100% of the aggregate net cash proceeds
received by the Company from the issue or sale since the date of the Indenture
of Equity Interests of the Company (other than (x) proceeds from the sale of
Disqualified Stock, (y) proceeds received by the Company from its stockholders
pursuant to Paragraph I of the Tax Allocation Agreement or proceeds from
contributions or payments received by the Company from any stockholder of the
Company as compensation for, or in connection with, the net tax benefit
realized by such stockholder as a result of the allocation to such stockholder
of the net loss of the Company for income tax purposes and (z) proceeds
received by the Company which are used by the Company to make a substantially
concurrent restricted Payment pursuant to clause (ii) or (vi) below) or of
Disqualified Stock or debt securities of the Company that have been converted
into such Equity Interests (other than Equity Interests (or Disqualified Stock
or convertible debt securities) sold to a Subsidiary of the Company and other
than Disqualified Stock or convertible debt securities that have been converted
into Disqualified Stock), plus (iii) to the extent that any Restricted
Investment that was made after the date of the Indenture is sold for cash or
otherwise liquidated or repaid for cash, the lesser of (A) the cash return of
capital with respect to such Restricted Investment (less the cost of
disposition, if any) and (B) the initial amount of such Restricted Investment,
plus (iv) $2.5 million.
The foregoing provisions will not prohibit (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at said date of
declaration such payment would have complied with the provisions of the
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any pari passu or subordinated Indebtedness or Equity Interests
of the Company in exchange for, or out of the net cash proceeds of the
substantially concurrent sale or issuance (other than to a Subsidiary of the
Company) of, other Equity Interests of the Company (other than any Disqualified
Stock); provided that the amount of any such net cash proceeds that are utilized
for any such redemption, repurchase, retirement, defeasance or other acquisition
shall be excluded from clause (c) (ii) of the preceding paragraph; (iii) the
defeasance, redemption, repurchase or other acquisition of pari passu or
subordinated Indebtedness with the net cash proceeds from an incurrence of
Permitted Refinancing Indebtedness; (iv) the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of the Company or
any Subsidiary of the Company held by any employee of the Company or any of its
Subsidiaries upon termination of employment; provided that the aggregate price
paid for all such repurchased, redeemed, acquired or retired Equity Interests
shall not exceed $1.0 million in any twelve-month period and no Default or Event
of Default shall have occurred and be continuing immediately after such
transaction; (v) the purchase of the remaining outstanding Equity Interests in
Materias Plasticas, S.A. not owned by the Company pursuant to the Purchase and
Sale of Shares Promissory Agreement; (vi) make any Restricted Payment by
exchange for, or out of the proceeds of the substantially concurrent sale of, or
capital contribution in respect of, Capital Stock of the
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Company (other than Disqualified Stock and other Capital Stock issued or sold to
a Subsidiary or an employee stock ownership plan or to a trust established by
the Company or any of its Subsidiaries for the benefit of their employees);
provided that if such transaction is permitted pursuant to this clause (vi),
then the net proceeds received by the Company shall not be included in the
calculation of net proceeds received by the Company referred to in clause (c)
(ii) of the preceding paragraph; and (vii) the payment of Permitted Quarterly
Tax Distributions to the holders of Common Stock of the Company as described
below.
For so long as the Company is an S-Corporation or a substantially similar
pass-through entity for Federal income tax purposes, the Company may make cash
distributions to its members, during each Quarterly Payment Period, in an
aggregate amount not to exceed the Permitted Quarterly Tax Distribution in
respect of the related Estimation Period. If any portion of a Permitted
Quarterly Tax Distribution is not distributed during such Quarterly Payment
Period, the Permitted Quarterly Tax Distribution payable during the immediately
following Quarterly Payment Period shall be increased by such undistributed
portion.
Within 10 days following the Company's filing of Internal Revenue Service
Form 1120S for the immediately preceding taxable year, the Tax Amounts CPA
shall file with the Trustee a written statement indicating in reasonable detail
the calculation of the True-up Amount. In the case of a True-up Amount due to
the members, the Permitted Quarterly Tax Distribution payable during the
immediately following Quarterly Payment Period shall be increased by such
True-up Amount. In the case of a True-up Amount due to the Company, the
Permitted Quarterly Tax Distribution payable during the immediately following
Quarterly Payment Period shall be reduced by such True-up Amount and the
excess, if any, of the True-up Amount over such Permitted Quarterly Tax
Distribution shall be applied to reduce the immediately following Permitted
Quarterly Tax Distributions until such True-up Amount is entirely offset.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any non-cash Restricted Payment shall be determined by the
Board of Directors whose resolution with respect thereto shall be delivered to
the Trustee, such determination to be based upon an opinion or appraisal issued
by an accounting, appraisal or investment banking firm of national standing if
such fair market value exceeds $1.0 million. Not later than the date of making
any Restricted Payment, the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by the covenant "Restricted
Payments" were computed, together with a copy of any fairness opinion or
appraisal required by the Indenture.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK AND
PREFERRED STOCK OF SUBSIDIARIES
The Indenture will provide that the Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness (including
Acquired Debt) and that the Company will not issue any Disqualified Stock and
will not permit any of its Subsidiaries to issue any shares of preferred stock;
provided, however, that the Company or any Guarantor may incur Indebtedness
(including Acquired Debt) or issue shares of Disqualified Stock if the Fixed
Charge Coverage Ratio for the Company's most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding the date on which such additional Indebtedness is incurred or such
Disqualified Stock is issued would have been at least 2 to 1, if such
Indebtedness is incurred or such Disqualified Stock is issued prior to March 15,
1998, or 2.25 to 1 thereafter, in each case determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if the
additional Indebtedness had been incurred, or the Disqualified Stock had been
issued, as the case may be, at the beginning of such four-quarter period;
The provisions of the first paragraph of this covenant will not apply to the
incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):
(i) the incurrence by the Company of Indebtedness represented by the Notes
and the Indenture and the guarantee by any Subsidiary of such Indebtedness;
(ii) the incurrence by the Company or any Guarantor of term Indebtedness
under the Term Facility Tranche of the Senior Credit Facility (the "Term
Facility Tranche"), letters of credit (with letters of credit being deemed to
have
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<PAGE> 53
a principal amount equal to the maximum potential ability of the Company and the
Guarantors thereunder) and related Guarantees (with the amount of such Guarantee
not being duplicatively counted) under the Term Facility Tranche; provided that
the aggregate principal amount of all Indebtedness outstanding under the Term
Facility Tranche after giving effect to such incurrence, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any other
Indebtedness incurred pursuant to this clause (ii), does not exceed an amount
equal to $15.0 million less the aggregate amount of Net Proceeds from Asset
Sales applied to permanently reduce the Indebtedness under the Term Facility
Tranche and less the amount of any permanent reductions in commitments under the
Term Facility Tranche subsequent to the date of the Indenture;
(iii) the incurrence by the Company or any Guarantor of revolving credit
Indebtedness under the revolving portion of the Senior Credit Facility (the
"Revolving Credit Facility"), letters of credit (with letters of credit being
deemed to have a principal amount equal to the maximum potential liability of
the Company and the Guarantors thereunder) and related Guarantees (with the
amount of such Guarantee not being duplicatively counted) under the Revolving
Credit Facility; provided that the aggregate principal amount of all
Indebtedness (with letters of credit being deemed to have a principal amount
equal to the maximum potential liability of the Company and the Guarantors
thereunder) outstanding under the Revolving Credit Facility after giving effect
to such incurrence, including all Permitted Refinancing Indebtedness incurred
to refund, refinance or replace any other Indebtedness incurred pursuant to
this clause (iii), does not exceed the greater of the Borrowing Base at the
time incurred or $125.0 million, in each case, less the sum of (a) the
mandatory permanent reductions in commitments under the Revolving Credit
Facility, up to $55 million, and (b) the aggregate amount of Net Proceeds from
Asset Sales applied to permanently reduce the availability of revolving credit
Indebtedness under the Revolving Credit Facility;
(iv) the incurrence by the Company and the Guarantors of the Existing
Indebtedness;
(v) the incurrence by the Company or any Subsidiary of Hedging Obligations
that are incurred for the purpose of fixing or hedging currency rate risk or
interest rate risk with respect to any floating rate or fixed rate Indebtedness
or otherwise swapping fixed rate to floating rate or floating rate to fixed
rate Indebtedness for the purpose of hedging against interest rate risk that,
in each case, is permitted by the terms of this Indenture to be outstanding;
(vi) the incurrence by the Company or any Subsidiary of intercompany
Indebtedness between or among the Company and any Subsidiary; provided,
however, that any sale or other transfer of any such Indebtedness to a Person
that is not either the Company or a Subsidiary shall be deemed, in each case,
to constitute an incurrence of such Indebtedness by the Company or such
Subsidiary, as the case may be;
(vii) the guarantee by the Company or any Guarantor of Indebtedness of the
Company or a Guarantor of the Company that was permitted to be incurred by
another provision of this covenant; .
(viii) surety bonds and appeal bonds required in the ordinary course of
business or in connection with the enforcement of rights or claims of the
Company or any Guarantor in connection with judgements which do not result. in
an Event of Default;
(ix) the incurrence by the Company or the Guarantor of Permitted
Refinancing Indebtedness in exchange for, or the net proceeds of which are used
to extend, refinance, renew, replace, defease or refund Indebtedness that was
permitted by the Indenture to be incurred;
(x) the incurrence of Indebtedness to a holder of Common Stock of the
Company; provided, however, that (a) such Indebtedness is expressly
subordinated to the prior payment in full in cash of all Obligations with
respect the Notes, (b) such Indebtedness does not, upon the happening of any
event or otherwise, mature or become mandatorily redeemable, pursuant to a
sinking fund obligation or other-wise, or become redeemable at the option of
the Holder thereof, in whole or in part, on or prior to the date that is 91
days after the date on which the Notes mature, (c) such Indebtedness does not
require any cash interest payments with respect such Indebtedness prior to 91
days after the date on which the Notes mature and (d) any sale or other
transfer of any such Indebtedness to a Person that is not holder of Common
Stock of the Company shall be deemed to constitute an incurrence of such
Indebtedness by the Company;
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(xi) the incurrence by a Foreign Restricted Subsidiary of Indebtedness;
provided, however, that the aggregate amount of outstanding Indebtedness
incurred pursuant to this clause (xi) does not exceed $2.5 million at any time
or such Indebtedness is incurred or guaranteed, directly or indirectly, as part
of the Senior Credit Facility; and
(xii) the incurrence by the Company or any Guarantor of additional
Indebtedness in an aggregate principal amount (or accredit value, as
applicable) at any time outstanding, including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any other Indebtedness
incurred pursuant this clause (xii), not to exceed $15.0 million.
For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xii) above or is
entitled to be incurred pursuant to the first paragraph of this covenant, the
Company shall, in its sole discretion, classify such item of Indebtedness in
any manner that complies with this covenant and such item of Indebtedness will
be treated as having been incurred pursuant to only one of such clauses or
pursuant to the first paragraph hereof. Accrual of interest, the accretion of
accredit value and the payment of interest in the form of additional
Indebtedness will not be deemed to be an incurrence of Indebtedness for
purposes of this covenant.
DESIGNATION OF UNRESTRICTED SUBSIDIARIES
Any designation of an Unrestricted Subsidiary by the Board of Directors
shall be evidenced to the Trustee by filing with the Trustee a certified copy
of the Board Resolution giving effect to such designation and an Officers'
Certificate certifying that any Investments in such entity, after giving effect
to such designation, comply with the terms of the Indenture governing the
designation of Unrestricted Subsidiaries and are permitted by the covenant
described above under the caption "Certain Covenants-Restricted Payments." If,
at any time, any Unrestricted Subsidiary fails to meet the foregoing
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of
such subsidiary shall be deemed to be incurred by a Subsidiary of the Company
as of such date (and, if such Indebtedness is not permitted to be incurred as
of such date under the covenant described under the caption "Incurrence of
Indebtedness and Issuance of Disqualified Stock and Preferred Stock of
Subsidiaries," the Company shall be in default of such covenant). The Board of
Directors of the Company may at any time designate any Unrestricted Subsidiary
to be a Subsidiary; provided that such designation shall be deemed to be an
incurrence of Indebtedness by a Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (i) such Indebtedness is permitted under the covenant described
under the caption "Certain Covenants-Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock of Subsidiaries," calculated on a pro
forma basis as if such designation had occurred at the beginning of the
four-quarter reference period, and (ii) no Default or Event of Default would be
in existence following such designation.
LIENS
The Indenture provides that the Company will not and will not permit any
of its Subsidiaries to, create, incur, assume or otherwise cause or suffer to
exist or become effective any Lien of any kind upon any of their property or
assets, now owned or hereafter acquired, securing (i) Indebtedness incurred in
violation of the Indenture, (ii) Indebtedness of the Company to any Subsidiary
or Unrestricted Subsidiary or (iii) Indebtedness which by its terms is
subordinate or junior in the right of payment to any other Indebtedness unless
all payments due under the Indenture and the Notes are secured on an equal and
ratable basis with the obligations so secured until such time as such
obligations are no longer secured by a Lien.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on the
ability of any Subsidiary to (i) (a) pay dividends or make any other
distributions to the Company or any of its Subsidiaries (1) on its Capital
Stock or (2) with respect to any other interest or participation in, or
measured by, its profits, or (b) pay any indebtedness owed to the Company or
any of its Subsidiaries, (ii) make loans or advances to the Company or any of
its Subsidiaries or (iii) transfer any of its properties or assets to the
Company or any of its Subsidiaries, except for such encumbrances or
restrictions existing under or by reason of (a) existing agreements as in
effect on the date of the
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Indenture, (b) the Senior Credit Facility as in effect as of the date of the
Indenture, and any amendments, modifications, extensions, restatements,
renewals, increases, supplements, refundings, replacements or refinancings
thereof, provided that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacement, extensions or refinancings are
no more restrictive with respect to such dividend and other payment restrictions
than those contained in the Senior Credit Facility as in effect on the date of
the Indenture, (c) the Indenture and the Notes, (d) applicable law, (e) any
instrument governing Indebtedness or Capital Stock of a Person acquired by the
Company or any of its Subsidiaries as in effect at the time of such acquisition
(except to the extent such Indebtedness was incurred in connection with or in
contemplation of such acquisition), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so acquired, provided that,
in the case of Indebtedness, such Indebtedness was permitted by the terms of the
Indenture to be incurred, (f) by reason of customary non-assignment provisions
in leases or agreements entered into in the ordinary course of business and
consistent with past practices, (g) purchase money obligations for property
acquired in the ordinary course of business that impose restrictions of the
nature described in clause (iii) above on the property so acquired, (h)
Indebtedness of Guarantors or Foreign Restricted Subsidiaries, provided that
such Indebtedness was permitted to be incurred pursuant to the Indenture, or (i)
Permitted Refinancing Indebtedness, provided that the restrictions contained in
the agreements governing such Permitted Refinancing Indebtedness are no more
restrictive than those contained in the agreements governing the Indebtedness
being refinanced.
MERGER, CONSOLIDATION, OR SALE OF ASSETS
The Indenture provides that the Company may not consolidate or merge with
or into (whether or not the Company is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially
all of its properties or assets in one or more related transactions, to another
corporation, Person or entity unless (i) the Company is the surviving
corporation or the entity or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the United
States, any state thereof or the District of Columbia; (ii) the entity or
Person formed by or surviving any such consolidation or merger (if other than
the Company) or the entity or Person to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made assumes all the
obligations of the Company under the Notes and the Indenture pursuant to a
supplemental indenture in a form reasonably satisfactory to the Trustee; (iii)
immediately after such transaction no Default or Event of Default exists; and
(iv) except in the case of a merger of the Company with or into a Guarantor, the
Company or the entity or Person formed by or surviving any such consolidation or
merger (if other than the Company), or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made (A) will have
Consolidated Net Worth immediately after the transaction equal to or greater
than the Consolidated Net Worth of the Company immediately preceding the
transaction and (B) will, at the time of such transaction and after giving pro
forma effect thereto as if such transaction had occurred at the beginning of the
applicable four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in the first paragraph of the covenant described above under the caption
"-Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred
Stock of Subsidiaries."
The Indenture provides that no Guarantor may consolidate with or merge
with or into (whether or not such Guarantor is the surviving Person), another
corporation, Person or entity whether or not affiliated with such Guarantor
unless (i) subject to the provisions related to the release of a Subsidiary
Guarantor as set forth under the caption "Subsidiary Guarantees," the Person
formed by or surviving any such consolidation or merger (if other than such
Guarantor or the Company) assumes all the obligations of such Guarantor
pursuant to a supplemental indenture in form and substance reasonably
satisfactory to the Trustee, under the Notes, the Indenture (unless released as
provided in the Indenture) and (ii) immediately after giving effect to such
transaction, no Default or Event of Default exists.
SUBSIDIARY GUARANTEES
The Indenture provides that if the Company or any of its Subsidiaries
shall acquire or create another Subsidiary after the date of the Indenture or
designate an Unrestricted Subsidiary to be a Subsidiary, then such newly
acquired, created or designated Subsidiary shall execute a Subsidiary Guarantee
pursuant to which such Subsidiary shall become a Guarantor
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on a senior subordinated basis (pursuant to the subordination provisions
substantially similar to those described above under the caption
"-Subordination") of the Company'S'S payment obligations under the Notes and
the Indenture, and deliver an opinion of counsel, in accordance with the terms
of the Indenture, provided, that this covenant shall not apply to (i) any
Subsidiary that has been properly designated as an Unrestricted Subsidiary in
accordance with the Indenture for so long as it continues to constitute an
Unrestricted Subsidiary and (ii) any Foreign Restricted Subsidiary. The Company
has two domestic subsidiaries whose sole assets are the equity interests of Key
Plastics, U.K. The Company has two other domestic Subsidiaries whose sole
assets are the equity interests of Key Plastics de Mexico 2 S.A. del. C.V. Such
subsidiaries are Guarantors as provided herein.
The Indenture provides that in the event of a sale or other disposition of
all of the assets of any Guarantor, by way of merger, consolidation or
otherwise, or a sale or other disposition of all of the capital stock of any
Guarantor, then such Guarantor (in the event of a sale or other disposition, by
way of such a merger, consolidation or otherwise, of all of the capital stock
of such Guarantor) or the corporation acquiring the property (in the event of a
sale or other disposition of all of the assets of such Guarantor) will be
released and relieved of any obligations under its Subsidiary Guarantee and the
Trustee shall provide the Company with a certificate certifying that such
Guarantor has been so released and relieved of its obligations; provided that
the Net Proceeds of such sale or other disposition are applied in accordance
with the applicable provisions of the Indenture. See "Repurchase at Option of
Holders-Asset Sales."
TRANSACTIONS WITH AFFILIATES
The Indenture will provide that the Company will not, and will not permit
any of its Subsidiaries to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make, or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"),
unless (i) such Affiliate Transaction is on terms that are no less favorable to
the Company or the relevant Subsidiary than those that would have been obtained
in a comparable transaction by the Company or such Subsidiary with an unrelated
Person and (ii) the Company delivers to the Trustee (a) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $1.0 million, a resolution of the Board of
Directors set forth in an Officers' Certificate certifying that such Affiliate
Transaction complies with clause (i) above and that such Affiliate Transaction
has been approved by a majority of the disinterested members of the Board of
Directors and (b) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $5.0
million, an opinion as to the fairness to the Holders of such Affiliate
Transaction from a financial point of view issued by an accounting, appraisal or
investment banking firm of national standing; provided that (v) any employment
or consulting agreement or arrangement entered into by the Company or any of its
Subsidiaries in the ordinary course of business and consistent with the past
practice of the Company or such Subsidiary, (w) transactions between or among
the Company and/or its Subsidiaries and (x) Restricted Payments that are
permitted by the provisions of the -Indenture described above under the caption
"-Restricted Payments," (y) Permitted Quarterly Tax Distributions and (z)
Permitted Investments, in each case, shall not be deemed Affiliate Transactions.
NO SENIOR SUBORDINATED DEBT
The Indenture provides that the Company will not incur, create, issue,
assume, guarantee or otherwise become liable for any Indebtedness that is
subordinate or junior in right of payment to any Senior Debt and senior in any
respect in right of payment to the Notes.
BUSINESS ACTIVITIES
The Company will not, and will not permit any Subsidiary to, engage in any
business other than Permitted Businesses, except to such extent as would not be
material to the Company and its Subsidiaries taken as a whole.
PAYMENTS FOR CONSENT
The Indenture provides that neither the Company nor any of its
Subsidiaries or Unrestricted Subsidiaries will, directly or indirectly, pay or
cause to be paid any consideration, whether by way of interest, fee or
otherwise, to any Holder of any Notes for or as an inducement to any consent,
waiver or amendment of any of the terms or provisions of the
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Indenture or the Notes unless such consideration is offered to be paid or is
paid to all Holders of the Notes that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
REPORTS
The Indenture provides that, whether or not required by the rules and
regulations of the Securities and Exchange Commission (the "Commission"), so
long as any Notes are outstanding, the Company will furnish to the Holders of
Notes (i) all quarterly and annual financial information that would be required
to be contained in a filing with the Commission on Forms 10-Q and 10-K if the
Company were required to file such Forms, including a "Management's Discussion
and Analysis of Financial Condition and Results of Operations" that describes
the financial condition and results of operations of the Company and its
consolidated Subsidiaries (showing in reasonable detail, either on the face of
the financial statements or in the footnotes thereto and in Management's
Discussion and Analysis of Financial Condition and Results of Operations, the
financial condition and results of operations of the Company and its
Subsidiaries separate from the financial condition and results of operations of
the Unrestricted Subsidiaries of the Company) and, with respect to the annual
information only, a report thereon by the Company's certified independent
accountants and (ii) all current reports that would be required to be filed
with the Commission on Form 8-K if the Company were required to file such
reports. In addition, whether or not required by the rules and regulations of
the Commission, the Company will file a copy of all such information and
reports with the Commission for public availability (unless the Commission will
not accept such a filing) and make such information available to securities
analysts and prospective investors upon request. In addition, the Company has
agreed that, for so long as any Notes remain outstanding, it will furnish to
the Holders and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d) (4)
under the Securities Act.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes (whether or not prohibited by the
subordination provisions of the Indenture); (ii) default in payment when due of
the principal of or premium, if any, on the Notes (whether or not prohibited by
the subordination provisions of the Indenture); (iii) failure by the Company to
comply with the provisions described under the captions "-Change of Control,"
or "-Asset Sales"; (iv) failure by the Company for 60 days after notice to
comply with any of its other agreements in the Indenture or the Notes, (v)
default under any mortgage, indenture or instrument under which there may be
issued or by which there may be secured or evidenced any Indebtedness for money
borrowed by the Company or any of its Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Subsidiaries) whether such Indebtedness
or guarantee now exists, or is created after the date of the Indenture, which
default (a) is caused by a failure to pay principal of or premium, if any, or
interest on such Indebtedness prior to the expiration of the grace period
provided in such Indebtedness on the date of such default (a "Payment Default")
or (b) results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under which
there has been a Payment Default or the maturity of which has been so
accelerated, aggregates $2.5 million or more; (vi) failure by the Company or
any of its Subsidiaries to pay final judgments aggregating in excess of $2.5
million, which judgments are not paid, discharged or stayed for a period of 60
days; (vii) except as permitted by the Indenture, any Subsidiary Guarantee by a
Significant Subsidiary shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force and
effect or any Guarantor that is a Significant Subsidiary, or any Person acting
on behalf of any Guarantor that is a Significant Subsidiary, shall deny or
disaffirm its obligations under its Subsidiary Guarantee; and (viii) certain
events of bankruptcy or insolvency with respect to the Company or any of its
Subsidiaries.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to the Company or any Subsidiary, all
outstanding Notes will become due and payable without further action or notice.
Holders of the Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of the Notes notice of any continuing Default or Event of Default
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(except a Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their interest.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have
had to pay if the Company then had elected to redeem the Notes pursuant to the
optional redemption provisions of the Indenture, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the Notes. If an Event of Default occurs prior to
March 15, 2002 by reason of any willful action (or inaction) taken (or not
taken) by or on behalf of the Company with the intention of avoiding the
prohibition on redemption of the Notes prior to March 15, 2002, then the
premium specified in the Indenture shall also become immediately due and
payable to the extent permitted by law upon the acceleration of the Notes.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the
Company, as such, shall have any liability for any obligations of the Company
under the Notes, the Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder of Notes by
accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes. Such waiver
may not be effective to waive liabilities under the federal securities laws and
it is the view of the Commission that such a waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Notes ("Legal
Defeasance") except for (i) the rights of Holders of outstanding Notes to
receive payments in respect of the principal of, premium, if any, and interest
and Liquidated Damages on such Notes when such payments are due from the trust
referred to below, (ii) the Company's obligations with respect to the Notes
concerning issuing temporary Notes, registration of Notes, mutilated,
destroyed, lost or stolen Notes and the maintenance of an office or agency for
payment and money for security payments held in trust, (iii) the rights,
powers, trusts, duties and immunities of the Trustee, and the Company's
obligations in connection therewith and (iv) the Legal Defeasance provisions of
the Indenture. In addition, the Company may, at its option and at any time,
elect to have the obligations of the Company released with respect to certain
covenants that are described in the Indenture ("Covenant Defeasance") and
thereafter any omission to comply with such obligations shall not constitute a
Default or Event of Default with respect to the Notes. In the event Covenant
Defeasance occurs, certain events (not including non-payment, bankruptcy,
receivership, rehabilitation and insolvency events) described under "Events of
Default" will no longer constitute an Event of Default with respect to the
Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Company must irrevocably deposit with the Trustee, in trust, for the
benefit of the Holders of the Notes, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, premium, if any, and interest and
Liquidated Damages on the outstanding Notes on the stated maturity or on the
applicable redemption date, as the case may be, and the Company must specify
whether the Notes are being defeased to maturity or to a particular redemption
date; (ii) in the case of Legal Defeasance, the Company shall have delivered to
the Trustee an opinion of counsel in the United States reasonably acceptable to
the Trustee confirming that (A) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling or (B) since the date
of the Indenture, there has been a change in the applicable federal income tax
law, in either case to the effect that, and based thereon such opinion of
counsel shall confirm that, the Holders of the outstanding Notes will not
recognize income, gain or loss for federal income tax purposes as a result of
such Legal
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Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case
if such Legal Defeasance had not occurred; (iii) in the case of Covenant
Defeasance, the Company shall have delivered to the Trustee an opinion of
counsel in the United States reasonably acceptable to the Trustee confirming
that the Holders of the outstanding Notes will not recognize income, gain or
loss for federal income tax purposes as a result of such Covenant Defeasance
and will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred; (iv) no Default or Event of Default shall have
occurred and be continuing on the date of such deposit (other than a Default or
Event of Default resulting from the borrowing of funds to be applied to such
deposit) or insofar as Events of Default from bankruptcy or insolvency events
are concerned, at any time in the period ending on the 91st day after the date
of deposit; (v) such Legal Defeasance or Covenant Defeasance will not result in
a breach or violation of, or constitute a default under any material agreement
or instrument (other than the Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound; (vi) the Company must have delivered to the Trustee an opinion of
counsel to the effect that after the 91st day following the deposit, the trust
funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally; (vii) the Company must deliver to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders of Notes over the other creditors of the
Company with the intent of defeating, hindering, delaying or defrauding
creditors of the Company or others; and (viii) the Company must deliver to the
Trustee an Officers' Certificate and an opinion of counsel, each stating that
all conditions precedent provided for relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and the Company may
require a Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to transfer or exchange any Note
selected for redemption. Also, the Company is not required to transfer or
exchange any Note for a period of 15 days before a selection of Notes to be
redeemed.
The registered Holder of a Note will be treated as the owner of it for
all purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Indenture or
the Notes may be amended or supplemented with the consent of the Holders of at
least a majority in principal amount of the Notes then outstanding (including,
without limitation, consents obtained in connection with a purchase of, or
tender offer or exchange offer for, Notes), and any existing default or
compliance with any provision of the Indenture or the Notes may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding Notes (including consents obtained in connection with a tender
offer or exchange offer for Notes).
Without the consent of each Holder affected, an amendment or waiver may
not (with respect to any Notes held by a non-consenting Holder): (i) reduce the
principal amount of Notes whose Holders must consent to an amendment,
supplement or waiver, (ii) reduce the principal of or change the fixed maturity
of any Note or alter the provisions with respect to the redemption of the Notes
(other than provisions relating to the covenants described above under the
caption "-Repurchase at the Option of Holders"), (iii) reduce the rate of or
change the time for payment of interest on any Note, (iv) waive a Default or
Event of Default in the payment of principal of or premium, if any, or interest
on the Notes (except a rescission of acceleration of the Notes by the Holders
of at least a majority in aggregate principal amount of the Notes and a waiver
of the payment default that resulted from such acceleration), (v) make any Note
payable in money other than that stated in the Notes, (vi) make any change in
the provisions of the Indenture relating to waivers of past Defaults or the
rights of Holders of Notes to receive payments of principal of or premium, if
any, or interest on the Notes, (vii) waive a redemption payment with respect to
any Note (other than a payment required by one of the covenants described above
under the caption "-Repurchase at the Option of Holders") or (viii) make any
change in the foregoing amendment and waiver provisions. In addition, any
amendment to the provisions of Article 10 of the Indenture (which relate to
subordination) will require the consent of the Holders of at least 75% in
aggregate principal amount of the Notes then outstanding if such amendment
would adversely affect the rights of Holders of Notes.
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Notwithstanding the foregoing, without the consent of any Holder of Notes,
the Company and the Trustee may amend or supplement the Indenture or the Notes
to cure any ambiguity, defect or inconsistency, to provide for uncertificated
Notes in addition to or in place of certificated Notes, to provide for the
assumption of the Company's obligations to Holders of Notes in the case of a
merger or consolidation, to make any change that would provide any additional
rights or benefits to the Holders of Notes or that does not adversely affect
the legal rights under the Indenture of any such Holder, or to comply with
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the Trust Indenture Act.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee will be permitted to engage
in other transactions; however, if it acquires any conflicting interest it must
eliminate such conflict within 90 days, apply to the Commission for permission
to continue or resign.
The Holders of a majority in principal amount of the then outstanding
Notes will have the right to direct the time, method and place of conducting
any proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent person in the
conduct of his own affairs. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the Indenture
at the request of any Holder of Notes, unless such Holder shall have offered to
the Trustee security and indemnity satisfactory to it against any loss,
liability or expense.
BOOK-ENTRY; DELIVERY AND FORM
Except as described in the next paragraph, the Notes initially will be
represented by one or more permanent global certificates in definitive, fully
registered form (the "Global Notes"). The Global Notes will be deposited on
the date of issuance with, or on behalf of, The Depository Trust Company, New
York, New York ("DTC") and registered in the name of a nominee of DTC.
Notes (i) originally purchased by or transferred to "foreign purchasers"
or institutional "accredited investors" (as defined in Rule 501(a)(1), (2), (3)
or (7) under the Securities Act) ("Accredited Investors") who are not
"qualified institutional buyers" (as defined in Rule 144A promulgated under the
Securities Act) ("QIBS") or (ii) held by QIBs or institutional Accredited
Investors who are not QIBs who elect to take physical delivery of their
certificates instead of holding their interest through a Global Note (and which
are thus ineligible to trade through DTC) (collectively referred to herein as
the "Non-Global Purchasers") will be issued in registered form (the
"Certificated Security"). Upon the transfer to a QIB or another institutional
Accredited Investor who is not a QIB of any Certificated Security initially
issued to a Non-Global Purchaser, such Certificated Security will, unless the
transferee requests otherwise or the Global Certificates have previously been
exchanged in whole for Certificated Securities, be exchanged for an interest in
a Global Note.
The Global Notes. The Company expects that pursuant to procedures
established by DTC (i) upon the issuance of the Global Notes, DTC or its
custodian will credit, on its internal system, the principal amount of Notes of
the individual beneficial interests represented by such Global Notes to the
respective accounts of persons who have accounts with such depositary and (ii)
ownership of beneficial interests in the Global Notes will be shown on, and the
transfer of such ownership will be effected only through, records maintained by
DTC or its nominee (with respect to interests of participants) and the records
of participants (with respect to interests of persons other than participants).
Such accounts initially will be designated by or on behalf of the Initial
Purchasers and ownership of beneficial interests in the Global Notes will be
limited to persons who have accounts with DTC ("participants") or persons who
hold interests through participants. QIBs and institutional Accredited
Investors who are not QIBs may hold their interests in the Global Note directly
through DTC if they are participants in such system, or indirectly through
organizations which are participants in such system.
So long as DTC, or its nominee, is the registered owner or holder of the
Notes, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the Notes represented by such Global Notes for all purposes
under
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the Indenture. No beneficial owner of an interest in any of the Global
Notes will be able to transfer that interest except in accordance with DTC'S
procedures, in addition to those provided for under the Indenture with respect
to the Notes.
Payments of the principal of, premium (if any) and interest on the Global
Notes will be made to DTC or its nominee, as the case may be, as the registered
owner thereof. None of the Company, the Trustee or any Paying Agent will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global Notes
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interest.
The Company expects that DTC or its nominee, upon receipt of any payment
of principal, premium, if any, or interest in respect of the Global Notes, will
credit participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the Global Notes as
shown on the records of DTC or its nominee. The Company also expects that
payments by participants to owners of beneficial interests in the Global Notes
held through such participants will be governed by standing instructions and
customary practice, as is now the case with securities held for the accounts of
customers registered in the names of nominees for such customers. Such
payments will be the responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way
through DTC'S same-day funds system in accordance with DTC rules and will be
settled in same day funds. If a holder requires physical delivery of a
Certificated Security for any reason, including to sell Notes to persons in
states which require physical delivery of the Notes, or to pledge such
securities, such holder must transfer its interest in a Global Note, in
accordance with the normal procedures of DTC and with the procedures set forth
in the Indenture.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Notes (including the presentation of Notes for exchange as
described below) only at the direction of one or more participants to whose
account the DTC interests in the Global Notes are credited and only in respect
of such portion of the aggregate principal amount of Notes as to which such
participant or participants has or have given such direction. However, if
there is an Event of Default under the Indenture, DTC will exchange the Global
Notes for Certificated Securities, which it will distribute to its
participants.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "Clearing Agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities transactions between participants through electronic book-entry
changes in accounts in participants, thereby eliminating the need for physical
movement of certificates. Participants include securities brokers and dealers,
banks, trust companies and clearing corporations and certain other
organizations. Indirect access to the DTC system is available to others such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly
("indirect participants").
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Notes among participants of DTC, it is
under no obligation to perform such procedures, and such procedures may be
discontinued at any time. Neither the Company nor the Trustee will have any
responsibility for the performance by DTC or its participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
Certificated Securities. If DTC is at any time unwilling or unable to
continue as a depositary for the Global Notes and a successor depositary is not
appointed by the Company within 90 days, Certificated Securities will be issued
in exchange for the Global Notes.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
The Company and the Initial Purchasers entered into the Registration
Rights Agreement. Pursuant to the Registration Rights Agreement, the Company
agreed to file with the Commission the Exchange Offer Registration Statement on
the appropriate form under the Securities Act with respect to the New Notes.
Upon the effectiveness of the Exchange Offer Registration Statement, the
Company will offer to the Holders of Transfer Restricted Securities pursuant
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to the Exchange Offer who are able to make certain representations the
opportunity to exchange their Transfer Restricted Securities for New Notes. If
(i) the Company is not required to file the Exchange Offer Registration
Statement or permitted to consummate the Exchange Offer because the Exchange
Offer is not permitted by applicable law or Commission policy or (ii) any
Holder of Transfer Restricted Securities notifies the Company prior to the 20th
day following consummation of the Exchange Offer that (A) it is prohibited by
law or Commission policy from participating in the Exchange Offer or (B) that
it may not resell the New Notes acquired by it in the Exchange Offer to the
public without delivering a prospectus and the prospectus contained in the
Exchange Offer Registration Statement is not appropriate or available for such
resales or (C) that it is a broker-dealer and owns Notes acquired directly from
the Company or an affiliate of the Company, the Company will file with the
Commission a Shelf Registration Statement to cover resales of the Notes by the
Holders thereof who satisfy certain conditions relating to the provision of
information in connection with the Shelf Registration Statement. The Company
will use its best efforts to cause the applicable registration statement to be
declared effective as promptly as possible by the Commission. For purposes of
the foregoing, "Transfer Restricted Securities" means each Note until (i) the
date on which such Note has been exchanged by a person other than a
broker-dealer for a New Note in the Exchange Offer, (ii) following the exchange
by a broker-dealer in the Exchange Offer of a Note for a New Note, the date on
which such New Note is sold to a purchaser who receives from such broker-dealer
on or prior to the date of such sale a copy of the prospectus contained in the
Exchange Offer Registration Statement, (iii) the date on which such Note has
been effectively registered under the Securities Act and disposed of in
accordance with the Shelf Registration Statement or (iv) the date on which such
Note is distributed to the public pursuant to Rule 144 under the Act.
The Registration Rights Agreement provides that (i) the Company will file
an Exchange Offer Registration Statement with the Commission on or prior to 45
days after the Closing Date, (ii) the Company will use its best efforts to have
the Exchange Offer Registration Statement declared effective by the Commission
on or prior to 105 days after the Closing Date, (iii) unless the Exchange Offer
would not be permitted by Applicable law or Commission policy, the Company will
commence the Exchange Offer and use its best efforts to issue on or prior to 30
business days after the date on which the Exchange Offer Registration Statement
was declared effective by the Commission, New Notes in exchange for all Notes
tendered prior thereto in the Exchange Offer and (iv) if obligated to file the
Shelf Registration Statement, the Company will use its best efforts to file the
Shelf Registration Statement with the Commission on or prior to 45 days after
such filing obligation arises and to cause the Shelf Registration to be
declared effective by the Commission on or prior to 105 days after such
obligation arises. If (a) the Company fails to file any of the Registration
Statements required by the Registration Rights Agreement on or before the date
specified for such filing, (b) any of such Registration Statements is not
declared effective by the Commission on or prior to the date specified for such
effectiveness (the "Effectiveness Target Date"), or (c) the Company fails to
consummate the Exchange Offer within 30 business days of the Effectiveness
Target Date with respect to the Exchange Offer Registration Statement, or (d)
the Shelf Registration Statement or the Exchange Offer Registration Statement
is declared effective but thereafter ceases to be effective or usable in
connection with resales of Transfer Restricted Securities during the periods
specified in the Registration Rights Agreement (each such event referred to in
clauses (a) through (d) above a "Registration Default"), then the Company will
pay Liquidated Damages to each Holder of Notes, with respect to the first
90-day period immediately following the occurrence of the first Registration
Default in an amount equal to $.05 per week per $1,000 principal amount of
Notes held by such Holder. The amount of the Liquidated Damages will increase
by an additional $.05 per week per $1,000 principal amount of Notes with
respect to each subsequent 90-day period until all Registration Defaults have
been cured, up to a maximum amount of Liquidated Damages of $.50 per week per
$1,000 principal amount of Notes. All accrued Liquidated Damages will be paid
by the Company on each Damages Payment Date to the Global Note Holder by wire
transfer of immediately available funds or by federal funds check and to
Holders of Certificated Securities by wire transfer to the accounts specified
by them or by mailing checks to their registered addresses if no such accounts
have been specified. Following the cure of all Registration Defaults, the
accrual of Liquidated Damages will cease.
Holders of Notes will be required to make certain representations to the
Company (as described in the Registration Rights Agreement) in order to
participate in the Exchange Offer and will be required to deliver information
to be used in connection with the Shelf Registration Statement and to provide
comments on the Shelf Registration Statement within the time periods set forth
in the Registration Rights Agreement in order to have their Notes included in
the Shelf Registration Statement and benefit from the provisions regarding
Liquidated Damages set forth above.
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CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture.
Reference is made to the Indenture for a full disclosure of all such terms, as
well as any other capitalized terms used herein for which no definition is
provided.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness any other Person existing at the time such other Person is merged
with or into or became a subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition of
any assets or rights (including, without limitation, by way of a sale and
leaseback) other than sales of inventory., goods and services in the. ordinary
course of business (provided that the sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Company 'and its
Subsidiaries taken as a whole will be governed by the provisions of the
Indenture described above under the caption "-Change of Control" and/or the
provisions described above under the caption "-Merger, Consolidation or Sale of
Assets" and not by the provisions of the Asset Sale covenant), and (ii) the
issue or sale by the Company or any of its Subsidiaries of Equity Interests of
any of the Company's Subsidiaries, in the case of either clause (i) or (ii),
whether in a single transaction or a series of related transactions (a) that
have a fair market value in excess of $1.0 million or (b) for net proceeds in
excess of $1.0 million. Notwithstanding the foregoing: (i) a transfer of
assets by the Company to a Subsidiary; or by a Subsidiary to the Company or to
another Subsidiary (ii) an issuance of Equity Interests by a Subsidiary to the
Company or to another Subsidiary, and (iii) any Restricted Payment, Permitted
Investment or dividend or distribution that is permitted by the covenant
described above under the caption "-Restricted Payments" will not be deemed to
be Asset Sales.
"Borrowing Base" means, as of any date, an amount equal to the sum of (a)
$55.0 million, (b) 90% of the face amount of all accounts receivable owned by
the Company, its Subsidiaries and Key Plastics U.K. as of such date and (c) 60%
of the book value on a FIFO basis of all inventory owned by the Company, its
Subsidiaries and Key Plastics U.K. as of such date, all calculated on a
consolidated basis and in accordance with GAAP. To the extent that information
is not available as to the amount of accounts receivable or inventory as of a
specific date, the Company may utilize the most recent available information
for purposes of calculating the Borrowing Base.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership., interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of,
the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof having maturities of not more than six
months from the date of acquisition, (iii) marketable direct obligations issued
by any state of the United States of America or any political subdivision of
any such state or any public instrumentality thereof maturing within one year
from the date of acquisition thereof and, at the time of acquisition, having
one of the two highest ratings obtainable from either Standard & Poor's
Corporation ("S&P") or Moody's Investors Service, Inc. ("Moody's "), (iv)
certificates of deposit and eurodollar
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time deposits with maturities of six months or less from the date of
acquisition, bankers' acceptances with maturities not exceeding six months and
overnight bank deposits, in each case with any lender party to the Senior
Credit Facility or with any domestic commercial bank having capital and surplus
in excess of $250.0 million and a Keefe Bank Watch Rating of "B" or better, (v)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (ii), (iii). and (iv) above
entered into with any financial institution meeting the qualifications
specified in clause (iv) above, (vi) commercial paper having one of the two
highest ratings obtainable from Moody's or S&P and in each case maturing
within six months after the date of acquisition and (vii) investments in money
market funds which invest substantially all their assets in securities of the
types described in clauses (i) through (vi) above.
"Change of Control" means the occurrence of any of the following: (i) the
adoption of a plan relating to the liquidation or dissolution of the Company,
(ii) the consummation of any transaction (including, without limitation, any
merger or consolidation) the result of which is that (a) prior to an Initial
Public Offering, any "person" (as defined above), other than the Principals
and their Related Parties, (1) becomes the "beneficial owner" (as such term is
defined in Rule 13d-3 and Rule l3d-5 under the Exchange Act, except that a
person shall be deemed to have "beneficial ownership" of all securities that
such person has the right to acquire, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition), directly or indirectly, of more than 50% of the Voting Stock of the
Company (measured by voting power rather than number of shares), (2) becomes a
shareholder of the Company with the right to appoint or remove directors of the
Company holding 50% or more of the voting rights at meetings of the Board of
Directors on all, or substantially all, matters or (3) becomes able to exercise
the right to give directions with respect to the operating and financial
policies of the Company with which the relevant directors are obligated to
comply by reason of (A) provisions contained in the organization documents of
the Company, or (B) the existence of any contract permitting such person to
exercise control over the Company, or (b) after an Initial Public Offering, any
"person" (as defined above), other than the Principals and their Related
Parties, becomes the "beneficial owner" (as such term is defined in Rule 13d-3
and Rule l3d-5 under the Exchange Act, except that a person shall be deemed to
have "beneficial ownership" of all securities that such person has the right to
acquire, whether such right is currently exercisable or is exercisable only
upon the occurrence of a subsequent condition), directly or indirectly, of more
than 30% of the total of the Voting Stock of the Company (measured by voting
power rather than number of shares), and, the Principals, collectively, are the
"beneficial owners" of a lesser percentage of the Voting Stock of the Company
than such other "person" and do not have the right or ability by voting power,
contract or otherwise, to elect or designate for election, a majority of the
Board of Directors of the Company, (iii) the first day on which a majority of
the members of the Board of Directors of the Company are not Continuing
Directors, (iv) the Company consolidates with, or merges with or into, any
Person or sells, assigns, conveys, transfers, leases or otherwise disposes of
all or substantially all of its assets to any Person, or any Person
consolidates with, or merges with or into, the Company, in any such event
pursuant to a transaction in which any of the outstanding Voting Stock of the
Company is converted into or exchanged for cash, securities or other property,
other than any such transaction where the Voting Stock of the Company
outstanding immediately prior to such transaction is converted into or
exchanged for Voting Stock (other than Disqualified Stock) of the surviving or
transferee Person constituting a majority of the outstanding shares of such
Voting Stock of such surviving or transferee Person (immediately after giving
effect to such issuance) or (v) the Company sells, assigns, conveys, transfers,
leases or otherwise disposes of all or substantially all of its assets to any
Person pursuant to a transaction in which none of the outstanding Voting Stock
of the Company is converted into or exchanged for cash, securities or other
property.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary loss plus any net loss realized in connection with
an Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) if the Company is not an S-Corporation or
substantially similar pass-through entity for Federal income tax purposes, any
provision for taxes based on income or profits of such Person and its
Subsidiaries for such period, to the extent that such provision for taxes was
included in computing such Consolidated Net Income, plus (iii) consolidated
interest expense of such Person and its Subsidiaries for such period, whether
paid or accrued and whether or not capitalized (including, without limitation,
amortization of debt issuance costs and original issue discount, non-cash
interest payments, the interest component of any deferred payment obligations,
the interest component of all payments associated with Capital Lease
Obligations, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net payments
(if any) pursuant to Hedging Obligations), to the extent that any such expense
was deducted in computing such Consolidated Net Income, plus (iv) depreciation,
amortization (including amortization of goodwill and other intangibles but
excluding amortization of prepaid cash expenses that were paid in a prior
period) and other non-cash expenses (excluding any such non-cash expense to the
extent that it represents an accrual of or reserve
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for cash expenses in any future period or amortization of a prepaid cash
expense that was paid in a prior period) of such Person and its Subsidiaries
for such period to the extent that such depreciation, amortization and other
noncash expenses were deducted in computing such Consolidated Net Income, minus
(v) non-cash items increasing such Consolidated Net Income for such period, in
each case, on a consolidated basis and determined in accordance with GAAP.
Notwithstanding the foregoing, the provision for taxes based on the income or
profits of, and the depreciation and amortization and other non-cash charges
of, a Subsidiary of a Person shall be added to Consolidated Net Income to
compute Consolidated Cash Flow only to the extent (and in the same proportion)
that the Net Income of such Subsidiary was included in calculating the
Consolidated Net Income of such Person and only if a corresponding amount would
be permitted at the date of determination to be dividended to the Company by
such Subsidiary without prior approval (that has not been obtained), pursuant
to the terms of its charter and all agreements, instruments, judgments,
decrees, orders, statutes, rules and governmental regulations applicable to
that Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) the Net Income (but not loss) of any Person that is not a
Subsidiary or that is accounted for by the equity method of accounting shall be
included only to the extent of the amount of dividends or distributions paid in
cash to the referent Person or a Subsidiary thereof, (h) the Net Income of any
Subsidiary that is not a Guarantor shall be excluded to the extent that the
declaration or payment of dividends or similar distributions by that Subsidiary
of that Net Income is not at the date of determination permitted without any
prior governmental approval (that has not been obtained) or, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary or its stockholders, (iii) the Net Income of any
Person acquired in a pooling of interests transaction for any period prior to
the date of such acquisition shall be excluded, (iv) the cumulative effect of a
change in accounting principles shall be excluded and (v) the Net Income (or
loss) of any Unrestricted Subsidiary shall be excluded, whether or not
distributed to the Company or one of its Subsidiaries.
"Consolidated Net Worth " means, with respect to any Person as of any
date, the sum of (i) the consolidated equity of the common stockholders of such
Person and its consolidated Subsidiaries as of such date plus (ii) the
respective amounts reported on such Person'S balance sheet as of such date
with respect to any series of preferred stock (other than Disqualified Stock)
that by its terms is not entitled to the payment of dividends unless such
dividends may be declared and paid only out of net earnings in respect of the
year of such declaration and payment, but only to the extent of any cash
received by such Person upon issuance of such preferred stock, less (x) all
write-ups (other than write-ups resulting from foreign currency translations
and write-ups of tangible assets of a going concern business made within 12
months after the acquisition of such business) subsequent to the date of the
Indenture in the book value of any asset owned by such Person or a consolidated
Subsidiary of such Person, (y) all investments as of such date in
unconsolidated Subsidiaries and in Persons that are not Subsidiaries (except,
in each case, Permitted Investments), and (z) all unamortized debt discount and
expense and unamortized deferred charges as of such date, all of the foregoing
determined in accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date of the Indenture or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Designated Senior Debt" means (i) any Indebtedness outstanding under the
Senior Credit Facility and (ii) any other Senior Debt permitted under the
Indenture the principal amount of which is $25.0 million or more and that has
been designated by the Company as "Designated Senior Debt."
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable
at the option of the Holder thereof, in whole or in part, on or prior to the
date that is 91 days after the date on which the Notes mature.
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"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Estimation Period" means the period for which a stockholder who is an
individual is required to estimate for Federal income tax purposes his
allocation of taxable income from a calendar year in connection with
determining his estimated federal income tax liability for such period.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Senior Credit Facility) in
existence on the date of the Indenture, until such amounts are repaid.
"Fixed Charges" means, with respect to any Person and its Subsidiaries for
any period, the sum, without duplication, of (i) the consolidated interest
expense of such Person and its Subsidiaries for such period, whether paid or
accrued and (ii) the consolidated interest of such Person and its Subsidiaries
that was capitalized during such period, and (iii) any interest expense on
Indebtedness of another Person that is Guaranteed by such Person or one of its
Subsidiaries or secured by a Lien on assets of such Person or one of its
Subsidiaries (whether or not such Guarantee or Lien is called upon) and (iv)
the product of (a) all dividend payments, whether or not in cash, on any series
of preferred stock of such Person or any of its Subsidiaries, other than
dividend payments on Equity Interests payable solely in Equity Interests of the
Company, times (b) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal, state and
local statutory tax rate of such Person, expressed as a decimal, in each case,
on a consolidated basis and in accordance with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person and its
Subsidiaries for any period, the ratio of the Consolidated Cash Flow of such
Person and its Subsidiaries for such period to the Fixed Charges of such Person
for such period. In the event that the Company or any of its Subsidiaries
incurs, assumes, Guarantees or redeems any Indebtedness (other than revolving
credit borrowings) or issues preferred stock subsequent to the commencement of
the period for which the Fixed Charge Coverage Ratio is being calculated but
prior to the date on which the event for which the calculation of the Fixed
Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge
Coverage Ratio shall be calculated giving pro forma effect to such incurrence,
assumption, Guarantee or redemption of Indebtedness, or such issuance or
redemption of preferred stock, as if the same had occurred at the beginning of
the applicable four-quarter reference period. In addition, for purposes of
making the computation referred to above, (i) acquisitions that have been made
by the Company or any of its Subsidiaries, including through mergers or
consolidations and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date shall be deemed to have occurred on the first day
of the four-quarter reference period and Consolidated Cash Flow for such
reference period shall be calculated without giving effect to clause (iii) of
the proviso set forth in the definition of Consolidated Net Income, and (ii)
the Consolidated Cash Flow attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded and (iii) the Fixed Charges
attributable to discontinued operations, as determined in accordance with GAAP,
and operations or businesses disposed of prior to the Calculation Date, shall
be excluded, but only to the extent that the obligations giving rise to such
Fixed Charges will not be obligations of the referent Person or any of its
Subsidiaries following the Calculation Date.,
"Foreign Restricted Subsidiary" means a Subsidiary that is not formed
under the laws of the United States of America or of a state or territory
thereof.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of the Indenture.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
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<PAGE> 67
"Guarantors" means (i) each of Key Plastics International LLC, Key
Plastics Automotive LLC and Key Plastics Technology, LLC and (ii) any other
Subsidiary that executes a Subsidiary Guarantee in accordance with the
provisions of the Indenture, and their respective successors and assigns.
"Hedging Obligations" means, with respect to any Person, the obligations
of such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements, (ii) foreign exchange contracts
and currency swap agreements, or (iii) other agreements or arrangements
designed to protect such Person against fluctuations in interest rates or
currency values.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker'S acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable,
if and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance
sheet of such Person prepared in accordance with GAAP, as well as all
indebtedness of others secured by a Lien on any asset of such Person (whether
or not such indebtedness is assumed by such Person) and, to the extent not
otherwise included, the Guarantee by such Person of any indebtedness of any
other Person. The amount of any Indebtedness outstanding as of any date shall
be (i) the accredit value thereof, in the case of any Indebtedness that does
not require current payments of interest, and (ii) the principal amount
thereof, together with any interest thereon that is more than 30 days past due,
in the case of any other Indebtedness.
"Initial Public Offering" means the sale of capital stock of the Company
pursuant to (a) a registration statement under the Securities Act that has been
declared effective by the Commission or (b) a public offering outside the
United States and which results, in either case, in an active trading market
for such shares. An active trading market shall be deemed to exist if such
shares are listed on the New York Stock Exchange, the American Stock Exchange
or the Nasdaq National Market System or any major international trading market
exchange.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates), in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP,
provided that the deferral of existing royalty and management fees owing by any
Unrestricted Subsidiary to the Company consistent with the past practice of the
Company shall not be "Investments" provided that any such amounts are not
included as revenues of the Company and the Subsidiaries during such deferral
period for purposes of calculating any amounts under the Indenture.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease
in the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b)
the disposition of any securities by such Person or any of its Subsidiaries or
the extinguishment of any Indebtedness of such Person or any of its
Subsidiaries and (ii) any extraordinary or nonrecurring gain (but not loss),
together with any related provision for taxes on such extraordinary or
nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the Company
or any of its Subsidiaries in respect of any Asset Sale (including, without
limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation,
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<PAGE> 68
legal, accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), and any reserve for adjustment in
respect of the sale price of such asset or assets established in accordance
with GAAP.
"Non-Competition Agreement" means, collectively, the provisions contained
in the Employment and Noncompetition Agreements, each dated August 5, 1988,
between the Company and certain shareholders of the Company, and in the
Consulting and Noncompetition Agreement, dated August 9, 1990, between the
Company and a certain shareholder of the Company, whereby such shareholders
agreed not to compete with the Company on the terms and conditions set forth
therein, as amended on November 17, 1992, and as amended subsequent to the date
of the Indenture.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the Company
nor any of its Subsidiaries (a) provides credit support of any kind (including
any undertaking, agreement or instrument that would constitute Indebtedness),
(b) is directly or indirectly liable (as a guarantor or otherwise), or (c)
constitutes the lender-, (ii) no default with respect to which (including any
rights that the holders thereof may have to take enforcement action against an
Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any
holder of any other Indebtedness of the Company or any of its Subsidiaries to
declare a default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity; and (iii) as to which the
lenders have been notified in writing that they will not have any recourse to
the stock or assets of the Company or any of its Subsidiaries; provided,
however, that Indebtedness that would otherwise be NonRecourse Debt but for the
reason that the Company or a Subsidiary may be directly or indirectly liable as
a guarantor or otherwise, such Indebtedness will be considered Non-Recourse
Debt if the guarantee of such Indebtedness or other obligation with respect to
such Indebtedness was not prohibited at the time of its incurrence by the
covenants described under the captions "-Restricted Payments" and "-Incurrence
of Indebtedness and Issuance of Disqualified Stock and Preferred Stock of
Subsidiaries" (with the amount of the Restricted Payment or Indebtedness, as
the case may be, being equal to the principal amount of the Indebtedness so
guaranteed, directly or indirectly, by the Company or any Subsidiary or for
which the Company or any Subsidiary may be, directly or indirectly, obligated).
"Obligations" means any principal, premium, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Permitted Businesses" means (a) any business in which the Company and its
Subsidiaries are engaged on the date of the Indenture or any reasonable
extension or expansion of such businesses and (b) any business similar or
related to the manufacture, design, marketing, distribution or resale of
automotive parts or plastic products, parts, components or assemblies.
"Permitted Investments" means (a) any Investment in the Company or in a
Subsidiary; (b) any Investment in Cash Equivalents; (c) any Investments
existing on the date of the Indenture after giving effect to the intended use
of proceeds set forth and transactions referred to under the caption "Use of
Proceeds" of the offering memorandum pursuant to which the Series A Notes were
issued and any amendment, modification, restatement, supplement, extension,
renewal, refunding, replacement, refinancing, in whole or in part, thereof;
provided that the aggregate amount of such Investments under this clause (c) do
not at any time exceed, in the aggregate, the amount of such Investments
outstanding on the date of the Indenture (d) any Investment by the Company or
any Subsidiary of the Company, if as a result of such Investment (i) such
Person becomes a Subsidiary of the Company or (ii) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Company or a Subsidiary of the
Company; (e) any Restricted Investment made as a result of the receipt of
non-cash consideration from an Asset Sale that was made pursuant to and in
compliance with the covenant described above under the caption "-Repurchase at
the Option of Holders-Asset Sales;" (f) any acquisition of assets in exchange
for the issuance of Equity Interests (other than Disqualified Stock) of the
Company; (g) loans and advances to employees and officers of the Company and
its Subsidiaries in the ordinary course of business for bona fide business
purposes not in excess of $1,000,000 at any one time outstanding; and (h) other
Investments in any Person having an aggregate fair market value (measured on
the date each such Investment was made and without giving effect to subsequent
changes in value), when taken to ether with all other Investments made pursuant
to this clause (h) that are at the time outstanding, not to exceed $12.5
million.
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<PAGE> 69
"Permitted Junior Securities" means Equity Interests in the Company or
debt securities that are subordinated to all Senior Debt (and any debt
securities issued in exchange for Senior Debt) to substantially the same extent
as, or to a greater extent than, the Notes are subordinated to Senior Debt
pursuant to Article 10 of the Indenture.
"Permitted Quarterly Tax Distributions" means quarterly distributions of
Tax Amounts determined on the basis of the estimated taxable income of the
Company, for the related Estimation Period, provided, however, that, (A) prior
to any distributions of Tax Amounts the Company shall deliver an officers'
certificate certifying that the Tax Amounts to be distributed were determined
pursuant to the terms of the Indenture and stating to the effect that the
Company qualifies as an S-Corporation or substantially similar pass-through
entity for Federal income tax purposes and (B) at the time of such
distributions, the most recent audited financial statements of the Company
reflect that the Company was treated as an S-Corporation or substantially
similar pass-through entity for Federal income tax purposes for the period
covered by such financial statements.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Subsidiaries issued in exchange for, or the net proceeds of which
are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of the Company or any of its Subsidiaries; provided that: (i) the
principal amount (or accredit value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount of (or accredit
value, if applicable), plus accrued interest on, the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus the amount of
reasonable expenses incurred in connection therewith, including any premiums on
principal); (ii) such Permitted Refinancing Indebtedness has a final maturity
date later than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; and (iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the
Notes, such Permitted Refinancing Indebtedness has a final maturity date later
than the final maturity date of, and is subordinated in right of payment to,
the Notes on terms at least as favorable to the Holders of Notes as those
contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded.
"Principals" mean (i) any or all of David Benoit, George Mars and Joel
Tauber and (ii) any trust established by any of the foregoing provided that the
beneficiaries of the trust are members of such person'S immediate family and
such person maintains sole voting power over the shares held by such trust.
"Purchase and Sale of Shares Promissory Agreement" means the Purchase and
Sale of Shares Promissory Agreement, dated October 21, 1996, by and between the
Company and the other parties named therein.
"Quarterly Payment Period" means the period commencing on the tenth day
and ending on and including the twentieth day of each month in which Federal
individual estimated tax payments are due provided that payments in respect of
estimated state income taxes due in January may instead, at the option of the
Company, be paid during the last 20 days of the immediately preceding December.
"Related Party" with respect to any Principal means (A) any controlling
stockholder, 80% (or more) owned Subsidiary, or spouse or immediate family
member (in the case of an individual) of such Principal or (B) or trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially holding an 80% or more controlling
interest of which consist of such Principal and/or such other Persons referred
to in the immediately preceding clause (A).
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Senior Credit Facility" means that certain Credit Agreement, dated as of
March 24, 1997, by and among the Company, the lenders party thereto from time
to time and NBD Bank, as agent for such lenders, providing for up to $140.0
million of credit borrowings, including any related notes, guarantees, letters
of credit, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, restated,
supplemented, extended, renewed, refunded, replaced, refinanced or defeased
from time to time.
"Senior Debt" means (i) all Indebtedness and other obligations and
liabilities outstanding at any time under the Senior Credit Facility permitted
under clauses (ii) and (iii) of the second paragraph of the covenant described
above under
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<PAGE> 70
the caption "-Incurrence of Indebtedness and Issuance of Disqualified Stock and
Preferred Stock of Subsidiaries," (ii) any other Indebtedness permitted to be
incurred by the Company or any Subsidiary under the terms of the Indenture,
unless the instrument under which such Indebtedness is incurred expressly
provides that it is on parity with or subordinated in right of payment to the
Notes including, without limitation, any Indebtedness of any Subsidiary to the
Company unless such intercompany Indebtedness expressly provides that it is
subordinated to the Notes and (iii) all Obligations with respect to the
foregoing as described in clauses (i) and (ii) above, and in all cases whether
now outstanding or hereafter created, assumed or incurred and including,
without limitation, interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided in the relevant document, whether or not an
allowed claim. Notwithstanding anything to the contrary in the foregoing,
Senior Debt will not include (w) any liability for federal, state, local or
other taxes owed or owing by the Company, (x) any Indebtedness of the Company
to any of its Subsidiaries or other Affiliates, (y) any trade payables or (z)
any Indebtedness that is incurred in violation of the Indenture.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date hereof.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of in
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations
to' repay, redeem or repurchase any such interest or principal prior to the
date originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a
combination thereof) and (ii) any partnership (a) the sole general partner or
the managing general partner of which is such Person or a Subsidiary of such
Person or (b) the only general partners of which are such Person or of one or
more Subsidiaries of such Person (or any combination thereof).
Notwithstanding the foregoing, a "Subsidiary" shall: (x) include, with respect
to any Person, any corporation, association or other business entity in which
Such Person or a Subsidiary of such Person holds at least 35% of the equity and
has the ability to direct the policies and business decisions of such
corporation, association or other business entity, whether by control of the
Board of Directors, contract or otherwise; and (y) not include, with respect to
any Person, any Unrestricted Subsidiary of such Person.
"Subsidiary Guarantee" means a Guarantee by a Subsidiary on a senior
subordinated basis of the Company's payment obligations under the Notes and
the Indenture.
"Tax Amounts" with respect to any taxable period shall not exceed an
amount equal to (A) the product of (x) the taxable income of the Company for
such period as determined by the Tax Amounts CPA and (y) the Tax Percentage
reduced by (B) to the extent not previously taken into account, any income tax
benefit attributable to the Company which could be realized (without regard to
the actual realization) by its stockholders in the current or any prior taxable
year, or portion thereof, commencing on or after the Issue Date (including any
tax losses or tax credits), computed at the applicable Tax Percentage for the
year that such benefit is taken into account for purposes of this computation.
"Tax Amounts CPA " means a nationally recognized certified public
accounting firm.
"Tax Percentage" means, for a particular taxable year, the highest
effective marginal combined rate of Federal and state income tax, imposed on an
individual taxpayer, as certified by the Tax Amounts CPA in a certificate filed
with the Trustee. The rate of "state income tax" to be taken into account for
purposes of determining the Tax Percentage for a particular taxable year shall
be deemed to be the highest state marginal tax rate applicable to any
stockholder.
"True-up Amount" means, in respect of a particular taxable year, an amount
determined by the Tax Amounts CPA equal to the difference between (i) the
aggregate Permitted Quarterly Tax Distributions actually distributed in respect
of such taxable year and (ii) the actual Tax Amounts for such year. For
purposes of this Agreement, the amount equal to the excess, if any, of the
amount described in clause (i) over the amount described in clause (ii) above
shall be referred to as the "True-up Amount due to the Company" and the excess,
if any, of the amount described in clause (ii) over the amount described in
clause (i) above shall be referred to as the "True-up Amount due to the
stockholders."
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<PAGE> 71
"True-up Determination Date" means the date on which the Tax Amounts CPA
delivers a statement to the Trustee indicating the True-up Amount.
"Unrestricted Subsidiary" means any Person who would otherwise be a
Subsidiary, but for the fact that such Person is designated by the Board of
Directors as an Unrestricted Subsidiary pursuant to a Board Resolution; but
only to the extent that such Person: (a) has no Indebtedness other than
Non-Recourse Debt; (b) is not party to any agreement, contract, arrangement or
understanding with the Company or any Subsidiary of the Company unless the
terms of any such agreement, contract, arrangement or understanding are no less
favorable to the Company or such Subsidiary than those that might be obtained
at the time from Persons who are not Affiliates of the Company; (c) is a Person
with respect to which neither the Company nor any of its Subsidiaries has any
direct or indirect obligation (x) to subscribe for additional Equity Interests
or (y) to maintain or preserve such Person'S financial condition or to cause
such Person to achieve any specified levels of operating results, other than to
the extent permitted in the definition of Non-Recourse Debt; and (d) has not
guaranteed or otherwise directly or indirectly provided credit support for any
Indebtedness of the Company or any of its Subsidiaries;
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board
of Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one twelfth) that will elapse
between such date and the making of such payment, by (ii) the then outstanding
principal amount of such Indebtedness.
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<PAGE> 72
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is based on the current provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), applicable Treasury
regulations, judicial authority and administrative rulings and practice. There
can be no assurance that the Internal Revenue Service (the "Service") will not
take a contrary view, and no ruling from the Service has been or will be
sought. Legislative, judicial or administrative changes or interpretations may
be forthcoming that could alter or modify the statements and conditions set
forth herein. Any such changes or interpretations may or may not be
retroactive and could affect the tax consequences to holders. Certain holders
(including insurance companies, tax-exempt organizations, financial
institutions, broker-dealers, foreign corporations and persons who are not
citizens or residents of the United States) may be subject to special rules not
discussed below. The Company recommends that each holder consult such holder's
own tax advisor as to the particular tax consequences of exchanging such
holder's Series A Notes for Series B Notes, including the applicability and
effect of any state, local or foreign tax laws.
The Company believes that the exchange of Series B Notes for Series B
Notes pursuant to the Exchange Offer will not be treated as an "exchange" for
federal income tax purposes because the Series B Notes should not constitute a
significant modification of the terms of the Series A Notes. Rather, the
Series B Notes received by a holder will be treated as a continuation of the
Series A Notes in the hands of such holder. As a result, there will be no
federal income tax consequences to holders exchanging Series A Notes for
Exchange Notes pursuant to the Exchange Offer.
PLAN OF DISTRIBUTION
Based on interpretations by the Staff set forth in no-action letters
issued to third parties, the Company believes that Series B Notes issued
pursuant to the Exchange Offer in exchange for the Series A Notes may be
offered for resale, resold and otherwise transferred by holders thereof (other
than any holder which is (i) an "affiliate" of the Company within the meaning
of Rule 405 under the Securities Act, (ii) a broker dealer who acquired Notes
directly from the Company or (iii) broker-dealers who acquired Notes as a
result of market-making or other trading activities) without compliance with
the registration and prospectus delivery provisions of the Securities Act
provided that such Series B Notes are acquired in the ordinary course of such
holders' business, and such holders are not engaged in, and do not intend to
engage in, and have no arrangement or understanding with any person to
participate in, a distribution of such Series B Notes; provided that
broker-dealers ("Participating Broker-Dealers") receiving Series B Notes in the
Exchange Offer will be subject to a prospectus delivery requirement with
respect to resales of such Series B Notes. To date, the Staff has taken the
position that Participating Broker-Dealers may fulfill their prospectus
delivery requirements with respect to transactions involving an exchange of
securities such as the exchange pursuant to the Exchange Offer (other than a
resale of an unsold allotment from the sale of the Series A Notes to the
Initial Purchasers) with the Prospectus contained in the Registration
Statement. Pursuant to the Registration Rights Agreement, the Company has
agreed to permit Participating Broker-Dealers and other persons, if any,
subject to similar prospectus delivery requirements to use this Prospectus in
connection with the resale of such Series B Notes. The Company has agreed
that, for a period of 365 days after the Expiration Date, it will make this
Prospectus, and any amendment or supplement to this Prospectus, available to
any broker-dealer that requests such documents in the Letter of Transmittal.
Each holder of the Series A Notes who wishes to exchange its Series A
Notes for Series B Notes in the Exchange Offer will be required to make certain
representations to the Company as set forth in "The Exchange Offer - Terms and
Conditions of the Letter of Transmittal." In addition, each holder who is a
broker-dealer and who receives Series B Notes for its own account in exchange
for Series A Notes that were acquired by it as a result of market-making
activities or other trading activities, will be required to acknowledge that it
will deliver a prospectus in connection with any resale by it of such Series B
Notes.
The Company will not receive any proceeds from any sale of Series B Notes
by broker-dealers. Series B Notes received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the Series B Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or a negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from any
such broker-dealer
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and/or the purchasers of any such Series B Notes. Any brokered dealer that
resells Series B Notes that were received by it for its own account pursuant to
the Exchange Offer and any broker or dealer that participates in a distribution
of such Series B Notes may be deemed to be an "underwriter" within the meaning
of the Securities Act and any profit on any such resale of Series B Notes and
any commissions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that
by acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.
The Company has agreed to pay all expenses incidental to the Exchange
Offer other than commissions and concession of any brokers or dealers and will
indemnify holders of the Series A Notes (including any broker-dealers) against
certain liabilities, including liabilities under the Securities act, as set
forth in the Registration Rights Agreement.
LEGAL MATTERS
Certain legal matters with respect to the Notes will passed upon for the
Company by Dykema Gossett PLLC, Detroit, Michigan.
EXPERTS
The consolidated balance sheets as of December 31, 1996 and 1995, and the
consolidated statements of income, shareholders' deficit and cash flows for
each of the three years in the period ended December 31, 1996, included in this
prospectus, have been included herein in reliance on the report of Coopers &
Lybrand, L.L.P., independent accountants, given on the authority of that firm
as experts in accounting and auditing.
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KEY PLASTICS, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants........................... F-2
Consolidated Balance Sheets -- December 31, 1996 and 1995... F-3
Consolidated Statements of Income -- Years Ended December
31, 1996, 1995, and 1994.................................. F-4
Consolidated Statements of Shareholders' Deficit -- Years
Ended December 31, 1996, 1995,
and 1994.................................................. F-5
Consolidated Statements of Cash Flows -- Years Ended
December 31, 1996, 1995 and 1994.......................... F-6
Notes to Consolidated Financial Statements.................. F-7-15
</TABLE>
F-1
<PAGE> 75
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of Key Plastics, Inc.:
We have audited the accompanying consolidated balance sheets of Key
Plastics, Inc. and Subsidiaries as of December 31, 1996 and 1995 and the
related consolidated statements of income, shareholder's equity, and cash flows
for each of the three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Key
Plastics, Inc. and Subsidiaries as of December 31, 1996 and 1995 and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles.
As discussed in Note 11, the accompanying financial statements for the
years ended December 31, 1995 and 1994 have been revised.
Coopers & Lybrand Sig.
Detroit, Michigan
March 3, 1997, except as to the information
presented in paragraph 2 in Note 12,
for which the date is March 19, 1997.
F-2
<PAGE> 76
KEY PLASTICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
ASSETS
Current assets:
Accounts receivable, net.................................. $ 43,131,344 $ 29,406,392
Inventories............................................... 35,634,636 22,063,953
Prepaid expenses.......................................... 2,075,589 1,169,835
------------ ------------
Total current assets................................. 80,841,569 52,640,180
Property, plant and equipment, net.......................... 98,908,150 68,183,780
Intangibles, net............................................ 8,516,123 2,844,297
Other assets................................................ 4,938,500 2,421,728
------------ ------------
Total assets......................................... $193,204,342 $126,089,985
============ ============
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Current maturities of long-term debt...................... $ 64,484,121 $ 17,172,590
Accounts payable.......................................... 35,706,663 19,189,716
Outstanding checks in excess of cash balances............. 5,371,686 1,017,869
Accrued interest.......................................... 5,275,094 3,771,017
Accrued payroll........................................... 3,527,258 1,570,546
Other accrued liabilities................................. 6,699,633 865,009
------------ ------------
Total current liabilities............................ 121,064,455 43,586,747
Capital lease obligation.................................... 2,057,059 2,669,133
Long-term debt.............................................. 82,520,618 99,797,587
Other long-term obligations................................. 3,124,779 911,332
Shareholders' equity (deficit):
Common stock, par value $.30 per share; 450,000 shares
authorized and 315,908 and 316,834 shares issued and
outstanding for 1996 and 1995, respectively............ 94,772 95,050
Additional paid-in capital................................ 9,786,603 10,002,725
Accumulated deficit....................................... (25,703,244) (30,972,589)
Currency translation...................................... 259,300 --
------------ ------------
Total shareholders' equity (deficit)................. (15,562,569) (20,874,814)
------------ ------------
Total liabilities and shareholders' equity
(deficit)......................................... $193,204,342 $126,089,985
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE> 77
KEY PLASTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Net sales.......................................... $217,086,635 $179,250,924 $194,111,889
Cost of sales...................................... 177,634,483 141,707,160 158,051,681
------------ ------------ ------------
Gross profit.................................. 39,452,152 37,543,764 36,060,208
Selling, general and administrative expenses....... 16,532,360 15,531,393 13,955,313
Amortization....................................... 657,495 640,811 783,686
------------ ------------ ------------
Operating income.............................. 22,262,297 21,371,560 21,321,209
Interest expense................................... 15,211,183 14,292,010 12,752,054
------------ ------------ ------------
Net income.................................... $ 7,051,114 $ 7,079,550 $ 8,569,155
============ ============ ============
Net income per common share and common share
equivalents...................................... $21.33 $21.18 $25.42
============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE> 78
KEY PLASTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
----------------- PAID-IN ACCUMULATED CURRENCY
SHARES AMOUNT CAPITAL DEFICIT TRANSLATION TOTAL
------ ------ ---------- ----------- ----------- -----
<S> <C> <C> <C> <C> <C> <C>
Balances, January 1, 1994............ 326,781 $98,035 $10,557,995 $(40,497,359) $(29,841,329)
Issuance of common stock............. 1,694 508 82,498 83,006
Dividend distributions, $6.45 per
share.............................. (2,098,745) (2,098,745)
Purchase and constructive retirement
of common stock.................... (3,074) (923) (138,257) (139,180)
Net income........................... 8,569,155 8,569,155
------- ------- ----------- ------------ -------- ------------
Balances, December 31, 1994.......... 325,401 97,620 10,502,236 (34,026,949) (23,427,093)
Dividend distributions, $6.54 per
share.............................. (4,025,190) (4,025,190)
Purchase and constructive retirement
of common stock.................... (8,567) (2,570) (499,511) (502,081)
Net income........................... 7,079,550 7,079,550
------- ------- ----------- ------------ -------- ------------
Balances, December 31, 1995.......... 316,834 95,050 10,002,725 (30,972,589) (20,874,814)
Dividend distributions, $5.63 per
share.............................. (1,781,769) (1,781,769)
Purchase and constructive retirement
of common stock.................... (926) (278) (216,122) (216,400)
Currency translation................. $259,300 259,300
Net income........................... 7,051,114 7,051,114
------- ------- ----------- ------------ -------- ------------
Balances, December 31, 1996.......... 315,908 $94,772 $ 9,786,603 $(25,703,244) $259,300 $(15,562,569)
======= ======= =========== ============ ======== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE> 79
KEY PLASTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 1996, 1995, AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income........................................ $ 7,051,114 $ 7,079,550 $ 8,569,155
------------ ------------ ------------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation................................... 9,174,944 6,971,368 5,483,469
Amortization................................... 657,495 640,811 783,686
Decrease (increase) in assets:
Accounts receivable............................ (13,724,952) (737,030) (7,940,450)
Inventories.................................... (13,570,683) 4,784,426 (4,540,689)
Prepaid expenses............................... (905,754) (35,551) 315,762
Increase (decrease) in liabilities:
Accounts payable............................... 16,516,947 (7,317,872) 9,804,905
Other accrued liabilities...................... 9,295,413 309,973 780,468
------------ ------------ ------------
Total adjustments............................ 7,443,410 4,616,125 4,687,151
------------ ------------ ------------
Net cash provided by operating
activities.............................. 14,494,524 11,695,675 13,256,306
------------ ------------ ------------
Cash flows from investing activities:
Acquisitions of property, plant and equipment,
net............................................ (16,738,353) (14,046,654) (16,189,222)
Property, plant and equipment from acquired
businesses..................................... (23,108,961) -- --
Increase in other assets, net..................... (8,102,038) (1,814,835) (261,969)
------------ ------------ ------------
Net cash used in investing activities..... (47,949,352) (15,861,489) (16,451,191)
------------ ------------ ------------
Cash flows from financing activities:
Net borrowings under debt agreements.............. 45,464,204 14,124,549 8,644,378
Principal payments under debt agreements and
capital lease obligations...................... (16,041,717) (5,546,172) (3,228,038)
Long-term agreements to finance acquisitions...... 1,676,693 -- --
Purchase of common stock.......................... (216,400) (502,081) (139,179)
Dividend distributions............................ (1,781,769) (4,025,190) (2,098,746)
Change in outstanding checks...................... 4,353,817 114,708 16,470
------------ ------------ ------------
Net cash provided by financing
activities.............................. 33,454,828 4,165,814 3,194,885
------------ ------------ ------------
Net increase in cash................................ 0 0 0
Cash, beginning of year............................. 0 0 0
------------ ------------ ------------
Cash, end of year................................... $ 0 $ 0 $ 0
============ ============ ============
Supplemental disclosure of cash flow information --
Cash paid during the year for interest............ $ 13,888,749 $ 13,209,030 $ 12,722,511
============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-6
<PAGE> 80
KEY PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION -- The consolidated financial statements include the accounts of
Key Plastics, Inc. and its majority-owned or controlled subsidiaries (the
"Company"). All significant intercompany accounts and transactions have been
eliminated.
INVENTORIES -- Inventories are stated at the lower of cost or market with cost
determined using the FIFO (first-in, first-out) method.
REVENUE RECOGNITION:
Manufactured Parts -- Sales are recognized on manufactured parts when the
parts are shipped to the customer. Returns and allowances are recorded as a
reduction of sales in the period they occur.
Tooling -- Costs of tooling purchased or produced are included in
work-in-progress inventory. Generally, such tooling is owned by the customer and
used by the Company for the production of parts for the respective customer.
Income from contracts for the manufacture of customer tooling is accounted for
under the completed-contract method of accounting, which recognizes revenue upon
completion of contracts or identifiable segments. Costs in excess of customer
reimbursement are capitalized and amortized over the related part's production
period. Such capitalized costs, net of amortization, are included in other
assets.
PROPERTY, PLANT AND EQUIPMENT -- Property, plant and equipment are stated at
cost. Depreciation is determined using the straight-line method over the
estimated useful lives of the assets.
The general ranges of lives are as follows:
<TABLE>
<S> <C>
Building and improvements................................... 25 to 30 years
Machinery and equipment..................................... 3 to 15 years
Furniture and fixtures...................................... 3 to 10 years
</TABLE>
Maintenance and repairs are expensed; renewals and betterments are
capitalized. Upon retirement, replacement, or sale, gains or losses are included
in income. The costs of major refurbishments and improvements to tools, utilized
in the manufacturing process, are capitalized in property, plant and equipment
and amortized over the lesser of three years or the remaining useful life of the
tool.
INTANGIBLES:
Goodwill -- Goodwill represents the excess of amounts paid and liabilities
assumed over the fair value of identifiable tangible and intangible assets
acquired. This amount is amortized using the straight-line method over a period
of 15 years. The company evaluates the carrying value of goodwill for potential
impairment on an ongoing basis. Such evaluations compare operating income before
amortization of goodwill to the amortization recorded for the operations to
which the goodwill relates. The company also considers projected future
operating results, trends and other circumstances in making such estimates and
evaluations.
Deferred Financing Costs -- Deferred financing costs represent costs
incurred in connection with obtaining financing. These costs are amortized over
the period the loans are outstanding.
Other Intangibles -- Other intangibles are amortized using the
straight-line method over five to 10 years.
Preproduction Costs -- Preproduction costs associated with the start-up of
manufacturing activities related to new parts are included in the cost of sales
in the period incurred.
INCOME TAXES -- The Company has elected to be taxed as an S-Corporation. Under
the provisions of this election, the Company is not subject to federal income
taxes. The Company's policy is to pay dividends to shareholders for the income
taxes due on the shareholders' share of the Company's taxable income. Under the
terms of a shareholder tax allocation agreement, the shareholders are required
to make additional capital
F-7
<PAGE> 81
KEY PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
1. SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
contributions to the Company equivalent to the income tax benefit resulting from
their share of the Company's taxable losses. The additional capital
contributions are recorded when received.
EARNINGS PER COMMON SHARE AND COMMON SHARE EQUIVALENTS -- Earnings per share is
based on the weighted average number of shares of common stock outstanding and,
to the extent dilutive, common stock equivalents (relating to stock options and
warrants) outstanding during the period.
MAJOR CUSTOMER AND CONCENTRATION OF CREDIT RISK -- The Company manufactures
injection molded plastic parts for sale primarily to domestic automobile
manufacturers and their suppliers. Substantially all of the Company's net sales
and accounts receivable are with three domestic automobile manufacturers and
their suppliers. Net sales to one of these customers accounted for approximately
58 percent of net sales in 1996, approximately 57 percent of 1995 sales and
approximately 62 percent in 1994. Net sales to a second one of these customers
accounted for approximately 9 percent of sales in 1996, approximately 10 percent
in 1995 and approximately 11 percent in 1994.
ESTIMATES -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the period.
Actual results could differ from those estimates.
RECLASSIFICATIONS -- Certain reclassifications have been made to the 1995
financial statements to conform with classifications used in 1996.
2. INVENTORIES
The components of inventories consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1996 1995
---- ----
<S> <C> <C>
Raw materials....................................... $ 7,859,701 $ 5,645,958
Work in process..................................... 2,584,080 1,975,308
Finished goods...................................... 7,586,917 4,217,179
Customer tooling in process......................... 17,603,938 10,225,508
----------- -----------
Total.......................................... $35,634,636 $22,063,953
=========== ===========
</TABLE>
F-8
<PAGE> 82
KEY PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1996 1995
---- ----
<S> <C> <C>
Land........................................................ $ 2,159,746 $ 1,563,585
Building and improvements................................... 35,182,494 19,994,952
Machinery and equipment..................................... 102,724,181 69,984,842
Furniture and fixtures...................................... 4,641,092 2,961,868
Construction-in-progress.................................... 1,844,632 5,546,328
------------ ------------
Total.................................................. 146,552,145 100,051,575
Less accumulated depreciation............................... 47,643,995 31,867,795
------------ ------------
Total.................................................. $ 98,908,150 $ 68,183,780
============ ============
</TABLE>
4. INTANGIBLES
Intangible assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1996 1995
---- ----
<S> <C> <C>
Goodwill.................................................... $6,592,469 $ 498,965
Deferred financing costs.................................... 4,164,458 3,831,958
Other intangibles........................................... 836,002 916,002
---------- ----------
Total....................................................... 11,592,929 5,246,925
Less accumulated amortization............................... 3,076,806 2,402,628
---------- ----------
Total....................................................... $8,516,123 $2,844,297
========== ==========
</TABLE>
F-9
<PAGE> 83
KEY PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
5. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1996 1995
---- ----
<S> <C> <C>
Senior Notes due November 1999 requiring semiannual interest
payments at the rate of 14%............................... $ 65,000,000 $ 65,000,000
Revolving credit loan, bank, due May 1, 1997 requiring
monthly interest payments at prime (8.25% at December 31,
1996)..................................................... 28,988,307 16,260,684
Demand note, bank requiring monthly interest payments at
prime plus .5% (8.75% at December 31, 1996)............... 9,000,000 9,000,000
Installment financing, payable in monthly installments of
$250,000 plus interest at prime (8.25% at December 31,
1996)..................................................... 7,500,000 10,500,000
Industrial Development Revenue Bond, due August 1999,
requiring semiannual interest payments at rates ranging
from 6.9% to 7.2% and annual principal payments of
$465,000 to $1,000,000.................................... 2,465,000 3,265,000
Economic Development Revenue Bonds, payable on demand and
due July 1, 2004, requiring monthly interest payments at a
floating interest rate (3.8% at December 31, 1996)........ 3,600,000 4,050,000
Installment notes, due from January 1995 to April 1997,
requiring monthly principal payments plus interest at
prime plus 1.5% (9.25% at December 31, 1996).............. 64,809 359,405
Bank note payable, due April 1997, requiring monthly
interest payments at prime (8.25% at December 31, 1996)... 5,500,000 --
Installment notes, due from June 1998 to December 2003,
requiring semiannual principal payments plus interest of
8% or 11.64%, payable in Portuguese Escudos............... 895,761 --
1992 & 1994 series bonds, requiring semiannual principal
payments plus interest of 11.75%, payable in Portuguese
Escudos................................................... 2,903,226 --
Working capital loan collateralized by accounts receivable
of MaP (Portugal) operation. Interest for these loans
averages 12%.............................................. 2,721,548 --
Term loan and revolving credit facility, bearing interest at
LIBOR plus 2.5% (8.75% at December 31, 1996), payable in
British Pounds Sterling................................... 9,831,000 --
Subordinated Shareholders' Notes due August 2000, requiring
semiannual interest payment at the rate of 12%............ 8,535,088 8,535,088
------------ ------------
Total.................................................. 147,004,739 116,970,177
Less current maturities..................................... 64,484,121 17,172,590
------------ ------------
Total.................................................. $ 82,520,618 $ 99,797,587
============ ============
</TABLE>
Principal payments of long-term debt for each of the next five years is as
follows:
<TABLE>
<S> <C>
Current maturities.......................................... $64,484,121
1998........................................................ 4,955,736
1999........................................................ 67,759,452
2000........................................................ 9,329,540
2001........................................................ 475,890
</TABLE>
The Company's financing agreements contain many restrictive loan covenants,
some of which require the Company to maintain minimum levels of working capital,
require the maintenance of specified financial ratios,
F-10
<PAGE> 84
KEY PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
LONG-TERM DEBT -- (CONTINUED)
and restrict specified payments, including dividends. Under the most restrictive
covenant, the Company can only distribute dividends to shareholders equal to
their respective tax liabilities generated from the Company.
Substantially all of the Company's assets are pledged as collateral for
long-term debt.
The Economic Development Revenue Bonds are classified within current
maturities of long-term debt because the bonds are redeemable at the option of
the bondholders. Management believes the bonds can be remarketed in the event
the bondholders require redemption. The Bonds are collateralized by a $3.6
million letter of credit issued by a bank.
At December 31, 1996, the Company had the following additional open letters
of credit. The Industrial Development Revenue Bond is collateralized by a $2.5
million bank letter of credit. The Company is self-insured in the State of
Michigan for workers' compensation. As such, the Company has a bank letter of
credit in the amount of $815,000 to serve as collateral for any potential
claims. The Company pays commitment fees on the above letters of credit in the
amount of 1.5 percent per year of the committed amount.
The Company has a $41.0 million working capital line of credit. Interest
under the facility is at prime. Additional available borrowings under the
facility are limited primarily to a percentage of accounts receivable and
inventory and were approximately $1.0 million on December 31, 1996.
The Subordinated Shareholders' Notes are uncollateralized and subordinate
to all present and future bank indebtedness of the Company. Payments of
principal or interest to shareholders are subject to certain restrictions under
the terms of the Company's Senior Notes. If an employee-shareholder breaches the
terms of certain noncompete provisions, that person may forfeit any amount due
and owing to him or her under the Subordinated Shareholders' Notes. Interest
expense includes $1,024,000 in 1996, $1,099,000 in 1995 and $1,200,000 in 1994
related to the Subordinated Shareholders' Notes.
On February 19, 1997 the Company commenced an offer to repurchase the
Senior Notes at an expected 11% premium. As such, the Company estimates the fair
value of those notes at $72.2 million from February 19, 1997 until the offer
expires on March 18, 1997. See Note 12, Subsequent Events, for a more detailed
discussion of the transaction.
The carrying amount of the bank debt and the remaining other long-term debt
instruments approximate fair value as the floating rates inherent in this debt
reflect changes in overall market interest rates. The estimated fair value of
the Industrial Revenue Bond is approximately the book value of $3,265,000 as
estimated by discounting future cash flows based on the Company's incremental
borrowing rate for similar types of debt instruments. The carrying amount of the
Company's Subordinated Shareholders' Notes approximates fair value.
F-11
<PAGE> 85
KEY PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
6. LEASES
During 1994, the Company entered into four capital leases for a production
plant and various equipment in Mexico. The assets recorded under the capital
leases as included in property plant and equipment in the accompanying
consolidated balance sheets consist of the following:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Land........................................................ $ 406,965 $ 406,965
Production facility......................................... 2,170,914 2,170,914
Equipment................................................... 207,567 207,567
---------- ----------
Total.................................................. 2,785,446 2,785,446
---------- ----------
Less accumulated amortization............................... 130,373 35,917
---------- ----------
Total....................................................... $2,655,073 $2,749,529
========== ==========
</TABLE>
Present value of net minimum lease payments under the capital leases is
$1,894,640.
During 1995, the Company entered into a 10 year operating lease for Novi,
Michigan. The executive, engineering and sales departments moved to this
location. The Company also holds a renewable 4 year operating lease for the
Grand Rapids, Michigan plant that expires in 1998. The rental expense related to
these leases amounted to $530,454 in 1996 and $405,536 in 1995. Rental expense
for the Company's subsidiary in the United Kingdom was $617,000 in 1996.
Minimum future lease obligations on capital and operating leases in effect
at December 31, 1996 are as follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
------- ---------
<S> <C> <C>
1997........................................................ $865,084 $1,607,263
1998........................................................ 865,084 1,531,914
1999........................................................ 648,813 1,415,674
2000........................................................ 0 1,300,231
2001........................................................ 0 901,022
Thereafter.................................................. 0 2,262,155
</TABLE>
7. EMPLOYEE BENEFITS AND COMPENSATION COMMITMENTS
PENSION AND PROFIT-SHARING PLAN - The Company has a profit-sharing plan
covering a majority of its employees who are not covered by the defined
contribution plan. The plan provides for contributions determined at the Board
of Directors' discretion from current or accumulated net income. Contributions
are allocated on the basis of salaries and are funded as accrued.
STOCK OPTIONS - During 1995, the Company issued options to employees to
purchase shares of common stock at an exercise price of $61. No new options were
issued in 1996. The exercise price represents management's estimate of fair
market value of the shares at the date of issuance of the option. At December
31, 1996, options outstanding and exercisable totaled 22,668 shares.
F-12
<PAGE> 86
KEY PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
7. EMPLOYEE BENEFITS AND COMPENSATION COMMITMENTS -- (CONTINUED)
The following table summarizes the activity related to the Company's stock
option plans:
<TABLE>
<CAPTION>
WEIGHTED
NUMBER OF AVERAGE
OPTIONS PRICE PER SHARE
--------- ---------------
<S> <C> <C>
Outstanding at January 1, 1994.............................. 20,812 $24.01
====== ======
Granted................................................... 1,000 $49.00
------ ------
Exercised................................................. --
Forfeited................................................. --
Outstanding at December 31, 1994............................ 21,812 $25.15
====== ======
Granted................................................... 5,556 $61.10
Exercised................................................. --
Forfeited................................................. --
Outstanding at December 31, 1995............................ 27,368 $32.45
====== ======
Granted................................................... --
Exercised................................................. 4,700 24.40
Forfeited................................................. --
Outstanding at December 31, 1996............................ 22,668 $34.12
====== ======
</TABLE>
CHANGE IN CONTROL AGREEMENT -- LONG TERM INCENTIVE PLAN
Certain key management are included in a long term incentive plan. The plan
provides for payments upon the occurrence of an initial public offering, sale of
all or substantially all of the Company's stock or sale of all or substantially
all of the Company's assets. Payment is based upon a formula specified in the
plan.
8. LITIGATION AND CLAIMS
The Company is subject to various legal and regulatory proceedings and
claims which arise in the ordinary course of business. In the opinion of
management, the amount of any liability which may result with respect to these
actions will not materially affect the financial position of the Company.
Additionally, the Company is under investigation by the Ohio Environmental
Protection Agency ("OEPA") for possible violations of environmental emission
standards and permitting regulations at its Ohio facility. The Company is in the
process of providing the information requested by the OEPA and is taking the
necessary steps to comply with the regulations. At this point, no fines and
penalties have been assessed against the Company. However, based on current
information, management believes that the results of the investigation will not
materially affect the financial position of the Company.
9. ACQUISITIONS
During 1996, the Company acquired Clearplas, Ltd. (Clearplas) and Materias
Plasticas, S.A. (MaP). Both companies are automotive suppliers specializing in
injection molding, painting and assembly. The results of operations for
Clearplas and MaP are included in the Consolidated Statement of Income beginning
May 1 and November 1, respectively. These acquisitions were accounted for using
the purchase method. At December 31, 1996, Other Long-Term Obligations include
$1.7 million, representing the present value of deferred payments for the
acquired shares from one of these acquisitions.
F-13
<PAGE> 87
KEY PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
9. ACQUISITIONS -- (CONTINUED)
The Company acquired MaP pursuant to an agreement which provided for the
Company's acquisition of 38% of the voting stock of the Company and an option to
purchase all of the remaining shares of MaP. Commencing in 1996, the agreement
gives the Company significant operational control, including the appointment of
a majority of the Board of Directors, appointment of the general manager and the
ability to influence significant operational decisions. The option is subject to
MaP meeting certain performance criteria during 1998, with payment of the
purchase price for the option and the 38% to occur in 1999.
Prior to the acquisition, the Company had operated a joint venture with MaP
which began during 1993. The joint venture allowed the Company to establish a
base in Europe and transfer certain technologies it had developed to MaP. During
1995 the Company loaned MaP approximately $300,000 in cash. Additionally, during
1996 and 1995, the Company recognized royalties related to the provision of
technical, sales and management support of approximately $1,600,000 and
$400,000, respectively. During 1996 and 1995, the Company sold products totaling
approximately $1,400,000 and $400,000, respectively, of products to MaP for
finishing and sale to customers in Portugal.
10. SEGMENT DATA
The Company is a global supplier of highly engineered plastic components
for the automotive industry. Its comprehensive plastics manufacturing
capabilities include design and engineering, high-precision injection molding,
automated manufacturing and assembly, plastic painting and material and product
testing. The Company conducts manufacturing and painting operations from eleven
facilities in North America and two facilities in Europe. All of these
activities constitute a single business segment. Prior to 1996, nearly all of
the Company's operations and assets were within North America.
Financial information summarized by geographic area is as follows:
<TABLE>
<CAPTION>
1996
----
<S> <C>
Net Sales:
North America............................................. $187,636,306
Europe.................................................... 29,450,329
------------
$217,086,635
============
Operating Income:
North America............................................. $ 21,706,703
Europe.................................................... 555,594
------------
$ 22,262,297
============
Identifiable Assets:
North America............................................. $150,147,448
Europe.................................................... 43,056,894
------------
$193,204,342
============
</TABLE>
F-14
<PAGE> 88
KEY PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
11. FINANCIAL STATEMENT REVISIONS RELATED TO PRIOR YEAR'S
Certain adjustments have been made to prior periods to correct errors in
previously reported amounts.
The balance sheet at December 31, 1994 had previously included at full
value, approximately $900,000 of uncollectible accounts receivable for which no
provision was established and excluded certain accrued liabilities totaling
approximately $200,000. A portion of the uncollectible accounts receivable had
been subsequently written off in 1995. Previously issued financial statements
for 1995 and 1994 have been restated to reflect the above matters, as follows:
<TABLE>
<CAPTION>
RESTATED PREVIOUSLY
AMOUNT ADJUSTMENT PRESENTED
-------- ---------- ----------
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
1995:
Accounts receivable, net.................................. $ 29,406 $ (300) $ 29,706
Total current assets...................................... 52,640 (300) 52,940
Total assets.............................................. 126,090 (300) 126,390
Accrued liabilities....................................... 865 200 665
Total current liabilities................................. 43,587 200 43,387
Total shareholders' deficit............................... 20,875 500 20,375
Total liabilities and shareholders' deficit............... 126,090 (300) 126,390
Cost of sales............................................. 141,707 (600) 142,307
Net income................................................ 7,080 600 6,480
Net income per common share............................... $21.18 $1.79 $19.39
1994:
Accounts receivable, net.................................. 28,669 (900) 29,569
Accrued liabilities....................................... 682 200 482
Total shareholders' deficit............................... 23,427 1,100 22,327
Cost of sales............................................. 158,052 1,100 156,952
Net income................................................ 8,569 (1,100) 9,669
Net income per common share............................... $25.42 $(3.26) $28.68
</TABLE>
12. SUBSEQUENT EVENTS
On February 19, 1997 the Company commenced an offer to purchase its 14%
Senior Notes due 1999 (the "Old Notes"). Concurrently, the Company is in the
process of offering, in a private placement, New Senior Subordinated Notes with
a face amount of $125 million (the "New Notes"). Simultaneously, the Company
expects to enter into a new $140 million Senior Credit Facility. The proceeds
from the New Notes are expected to approximate $121 million. The Company expects
that proceeds from the New Notes together with borrowings under the Senior
Credit Facility will be used to repurchase a portion of the Old Notes and repay
indebtedness under its existing credit facility and certain other obligations.
On March 19, 1997, $40,135,000 of the Old Notes had been validly tendered
and not withdrawn pursuant to the Tender Offer. The premium related to the
repurchase of the Old Notes and the consent fees in the aggregate will be
$4,436,650 and the write-off of unamortized debt issuance costs related to the
Tender Offer will be $1,167,000.
During January 1997, the Company declared and paid approximately $733,000
in dividends to satisfy shareholders' income tax obligations.
* * * * * *
F-15
<PAGE> 89
KEY PLASTICS, INC. AND SUBSIDIARIES
INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Condensed Consolidated Balance Sheets -- March 31, 1997 and
December 31, 1996........................................... F-18
Condensed Consolidated Statements of Operations -- Three
Months Ended March 31, 1997 and 1996........................ F-17
Condensed Consolidated Statements of Cash Flows -- For the
Three Months Ended March 31, 1997 and 1996.................. F-19
Notes to Condensed Consolidated Financial Statements.......... F-20-22
</TABLE>
F-16
<PAGE> 90
KEY PLASTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the three months
ended March 31,
---------------
1997 1996
---- ----
<S> <C> <C>
Net Sales $ 66,742,305 $ 45,296,576
Cost of Sales 54,124,549 36,039,566
------------ ------------
Gross Profit 12,617,757 9,257,010
Selling, general & administrative
expenses 6,366,933 3,254,249
Amortization 195,223 160,203
------------ ------------
Operating income 6,055,601 5,842,558
Interest expense, net 4,978,017 3,506,668
------------ ------------
Net income before foreign taxes 1,077,584 2,335,890
------------ ------------
Foreign income taxes 149,000 --
Net income before extraordinary item 1,226,584 2,335,890
------------ ------------
Extraordinary item -- debt refinancing (5,470,960) --
------------ ------------
Net income (loss) $ (4,244,376) $ 2,335,890
============ ============
Earnings per share:
Net income before extraordinary item $3.67 $7.06
Net income (loss) $(12.69) $7.06
============ ============
</TABLE>
See notes to condensed consolidated financial statements
F-17
<PAGE> 91
KEY PLASTICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, Dec. 31,
1997 1996
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 1,966,040 $ --
Accounts receivable, net 57,197,022 43,131,344
Inventories 40,898,408 35,634,636
Prepaid expenses and other
current assets 4,222,348 2,075,589
------------ ------------
Total current assets 104,283,818 80,841,569
Property, plant and equipment, net 108,999,812 98,908,150
Intangibles, net 12,188,655 8,516,123
Other assets 4,971,240 4,938,500
------------ ------------
Total assets $230,443,525 $193,204,342
============ ============
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Current maturities of long-
term debt $ 5,703,006 $ 64,484,121
Accounts payable 34,365,050 35,706,663
Accrued liabilities 13,505,782 20,873,671
------------ ------------
Total current liabilities 53,573,838 121,064,455
Capital lease obligations 2,383,832 2,057,059
Long-term debt 189,747,970 82,520,618
Other long-term liabilities 2,600,779 3,124,779
Shareholders' deficit:
Common stock, par value $.30
Authorized: 450,000
Issued and outstanding:
320,908 and 315,908, respectively 96,274 94,772
Additional paid-in capital 12,458,894 9,786,603
Currency translation 199,300 259,300
Accumulated deficit (30,617,362) (25,703,244)
------------ ------------
Total shareholders' deficit (17,862,894) (15,562,569)
------------ ------------
Total liabilities and
shareholders' deficit $230,443,525 $193,204,342
============ ============
</TABLE>
See notes to condensed consolidated financial statements
F-18
<PAGE> 92
KEY PLASTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the three months
ended March 31,
---------------
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating
activities:
Net income before extraordinary item $ 1,226,584 $ 2,335,890
------------- -----------
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation & Amortization 3,227,565 2,098,119
(Increase) in assets:
Accounts receivable (14,065,678) (6,300,427)
Inventories (5,263,772) (216,319)
Other current assets (2,146,759) (504,688)
Increase (Decrease) in
liabilities:
Accounts payable (830,613) 947,361
Accrued liabilities (7,331,280) 2,743,731
------------- -----------
Total adjustments (26,431,537) (1,232,223)
------------- -----------
Net cash provided from
operating activities (25,193,953) 1,103,667
------------- -----------
Cash flows from investing
activities:
Acquisitions of property,
plant and equipment, net (3,240,680) (1,388,852)
Property, Plant and equipment from
acquired business (10,300,000) --
Increase in other assets (32,740) 4,772
------------- -----------
Net cash used for investing
activities (13,573,420) (1,384,080)
------------- -----------
Cash flows from financing
activities:
Net borrowings under debt
agreements 160,761,425 1,020,202
Shareholder capital contribution 2,672,424
Principal payments under
debt agreements (112,641,991) (143,650)
Dividend distributions (669,725) (596,139)
Debt refinancing cost (9,398,720) --
Net cash provided by
financing activities 40,723,413 280,413
------------- -----------
</TABLE>
F-19
<PAGE> 93
<TABLE>
<S> <C> <C>
Net increase in cash 1,966,040 --
Cash, beginning of period 0 --
---------- --------
Cash, end of period $1,966,040 $ 0
========== ========
Supplemental disclosure of
cash flow information,
cash paid during the
period for interest $7,718,933 $970,649
========== ========
</TABLE>
See notes to condensed consolidated financial statements
F-20
<PAGE> 94
KEY PLASTICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Financial Statement Presentation:
Information for the three month period ended March 31, 1997 and 1996 is
unaudited but includes all adjustments, consisting of normal recurring
adjustments, which management of Key Plastics, Inc. (the "Company")
considers necessary for a fair presentation of the consolidated
financial position, results of operations and cash flows. Certain
information and footnotes necessary to comply with generally accepted
accounting principles have been condensed or omitted.
Certain items in the December 31, 1996 balance sheet have been
reclassified to conform to the current period presentation.
During March of 1997 the Company completed several actions to refinance
its existing debt and secure additional financing for the future,
including: (1) A tender offer for all of its $65.0 million, 14% Senior
Notes due 1999 [$40.1 million of the notes were tendered]; (2) A private
placement for $125.0 million, 10 1/4% New Senior Subordinated Notes due
2007; and (3) Entered into a new $140.0 million Senior Credit Facility.
On March 28, 1997, the Company acquired three injection molding and
assembly operations owned by Aeroquip Corporation, a subsidiary of
TRINOVA Corporation. Two of the acquired plants are located in Michigan
and the third is in Chihuahua, Mexico. The acquired business represents
an expansion of the Company's existing decorative bezel business. The
acquisition has been accounted for using the purchase method.
These financial statements should be read in conjunction with the
Company's consolidated financial statements for the year ended December
31, 1996 which contain a summary of the Company's accounting principles
and other information. The results of operations for any interim period
should not necessarily be considered indicative of the results of
operations for a full year.
F-21
<PAGE> 95
2. Inventories:
Inventories are stated at the lower of cost or market with cost
determined using the FIFO (first in, first out) method. The components
of inventories consisted of the following:
<TABLE>
<CAPTION>
March 31, Dec. 31,
1997 1996
--------- --------
<S> <C> <C>
Raw materials $ 9,103,789 $ 7,859,701
Work in progress 2,193,482 2,584,080
Finished goods 7,790,689 7,586,917
Customer Tooling 21,810,448 17,603,938
----------- -----------
$40,898,408 $35,634,636
=========== ===========
</TABLE>
3. Earnings Per Share:
Earnings per share amounts for the three month periods ended March 31,
1997 and 1996 are computed by using net income divided by the weighted
average number of shares of common and common equivalent shares
outstanding during the period under the treasury stock method.
The weighted average number of shares used in computing earnings per
share are 334,468 and 330,709 for the three months ended March 31, 1997
and 1996, respectively.
The Company is closely-held and, accordingly, there is no public market
for the Company's common stock. For purposes of computing the
incremental common equivalent shares outstanding under the treasury
stock method, the Company utilized management's estimate of fair value
of the Company's Common Stock.
F-22
<PAGE> 96
===================================================
No person has been authorized to give any
information or to make any representations not
contained in this Prospectus, and, if given or
made, such other information or representations
must not be relied upon as having been authorized
by the Company. Neither the delivery of this
Prospectus nor any sale made hereunder shall,
under any circumstances, create any implication
that there has been no change in the affairs of
the Company since the date hereof or that the
information contained herein is correct as of any
time subsequent to its date. This Prospectus does
not constitute an offer to sell or a solicitation
of an offer to buy any securities other than the
securities to which it relates. This Prospectus
does not constitute an offer to sell, or a
solicitation of an offer to buy any securities
other than the securities to which it relates.
This Prospectus does not constitute an offer to
sell, or a solicitation of an offer to buy such
securities in any jurisdiction in which such offer
or solicitation is unlawful.
-----------------
TABLE OF CONTENTS
Page
- ----
Prospectus Summary.................................
Risk Factors.......................................
The Exchange Offer.................................
Use of Proceeds....................................
Capitalization.....................................
Selected Consolidated Financial Data...............
Management'S Discussion
and Analysis of Financial Condition
and Results of Operations.........................
Business...........................................
Management.........................................
Certain Transactions...............................
Security Ownership of Certain
Beneficial Owners and
Management........................................
Description of Certain Indebtedness................
Description of Notes...............................
Plan of Distribution...............................
Legal Matters......................................
Experts............................................
Index to Consolidated Financial
Statements........................................
===================================================
===================================================
$125,000,000
KEY PLASTICS, INC.
10 1/4% SENIOR SUBORDINATED
NOTES DUE 2007, SERIES B
---------------
PROSPECTUS
_________, 1997
---------------
===================================================
<PAGE> 97
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Sections 561 through 571 of the Michigan Business Corporation Act ("MBCA")
set forth the conditions and limitations governing the indemnification of
officers, directors and other persons.
In general, the MBCA allows Michigan corporations to indemnify a person
who was or is a party or is threatened to be made a party to a threatened,
pending or completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative and whether formal or informal, other than an
action by or in the right of the corporation, by reason of the fact that such
person is or was a director, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, partner,
trustee, employee, or agent of another enterprise, against expenses, including
attorneys' fees, judgments, penalties, fines and amounts paid in settlement
actually and reasonably incurred in connection therewith, if such preson acted
in good faith and in a manner reasonably believed to be in or not opposed to
the beset interests of the corporation or its shareholders, and with respect to
a criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful.
The MBCA also allows Michigan corporations to indemnify such a person who
was or is a party or is threatened to be made a party to a threatened, pending,
or completed action or suit by or in the right of the corporation against
expenses, including actual and reasonable attorneys' fees, and amounts paid in
settlement actually and reasonably incurred by the person in connection with
the action or suit, if such person acted in good faith and in a manner
reasonably believed to be in or not opposed to the best interests of the
corporation or its shareholders. However, indemnification shall not be made
for a claim, issue or matter in which the person is found liable to the
corporation unless and only to the extent that a court of competent
jurisdiction has determined that, despite the adjudication of liability but in
view of all circumstances of the case, the person is fairly and reasonably
entitled to indemnification for the expenses which the court considers proper.
The Company'S Articles of Incorporation provide for indemnification of
directors and officers of the Company and authorize the Board to extend such
indemnification to others to the fullest extent permitted by the aforementioned
sections of the MBCA.
The Company'S Bylaws also authorize the Company to purchase and maintain
insurance on behalf of any officer, director, employee or agent of the Company
against any liability asserted against or incurred by them in such capacity or
arising out of their status as such without regard for whether the Company
would have the power to indemnify such officer, director, employee or agent
against such liability under the provisions of the Bylaws or Michigan law.
ITEM 21. EXHIBITS
A list of exhibits included as part of this Registration Statement is set
forth in the Exhibit Index which immediately precedes such exhibits and is
incorporated herein by reference.
ITEM 22. UNDERTAKINGS
1. The undersigned Registrant hereby undertakes as follows:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement: (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act; (ii) to reflect
in the prospectus any facts or events arising after the effective date of the
Registration Statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement (notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from
II-1
<PAGE> 98
the low or high end of the estimated maximum offering range may be reflected in
the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the "Calculation of
Registration fee" table in the effective registration statement); (iii) to
include any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change to
such information in the Registration Statement.
(b) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) To remove from registration by means of post-effective amendment any
of the foregoing securities being registered which remain unsold at the
termination of the offering.
2. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other
than the payment by a Registrant of expenses incurred or paid by a
director, officer or controlling person of such Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Registrant against which such claim is asserted
will, unless in the opinion of its counsel the mater has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by them is against public policy as
expressed in the Act and will be governed by the final adjudication of
such issue.
3. The undersigned Registrant hereby undertakes to file an application for
the purpose of determining the eligibility under subsection (a) of section
310 of the Trust Indenture Act ("Act") in accordance with the rules and
regulations prescribed by the Commission under section 305(b)(2) of the
Act.
4. The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant
to Item 4, 10(b), 11, or 13 of this form, within one business day of
receipt of such request, and to send the incorporated documents by first
class mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
5. The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in this Registration Statement when it became effective.
II-2
<PAGE> 99
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each
Registrant certifies that it has reasonable grounds to believe that it meets
all requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Novi, State of Michigan on the date indicated
below.
KEY PLASTICS, INC.
Dated: May 8, 1997 By:______________________
David C. Benoit
Chief Executive Officer
KEY PLASTICS INTERNATIONAL L.L.C.
KEY PLASTICS AUTOMOTIVE L.L.C.
KEY PLASTICS TECHNOLOGY L.L.C.
By: KEY PLASTICS, INC.
By:______________________
David C. Benoit
Chief Executive Officer
By:______________________
David C. Benoit, Member
KEY MEXICO A, L.L.C.
KEY MEXICO B, L.L.C.
By: KEY PLASTICS, INC.
By:_____________________
David C. Benoit
Chief Executive Officer
By: KEY PLASTICS TECHNOLOGY, L.L.C.
By:_____________________
David C. Benoit
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints David C. Benoit and Mark J. Abbo, or
either of them, his attorneys-in-fact, each with the power of
II-3
<PAGE> 100
substitution, for him in any and all capacities, to sign any amendments to the
Registration Statement (including Post-Effective Amendments) and to file the
same, with Exhibits thereto and other documents in connection therewith, with
the Securities and Exchange Commission, hereby ratifying and confirming all
that each of said attorneys-in-fact, or his substitute or substitutes, may do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Registration Statement has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated, in the City
of Novi, State of Michigan.
Signature Title Date
____________________ Chief Executive Officer and Director May 8, 1997
David C. Benoit (Principal Executive Officer)
____________________ Vice President (Principal Financial May 8, 1997
E.R. Autry Officer)
____________________ Controller (Principal Accounting Officer) May 8, 1997
David Smith
____________________ Director of Key Plastics, Inc. May 8, 1997
Joel D. Tauber
____________________ Director of Key Plastics Inc. May __, 1997
George Mars
II-4
<PAGE> 101
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
3.1 Articles of Incorporation of the Company, as amended. Incorporated
herein by reference to Exhibit 3.1 to the Company's Registration
Statement No. 33-56048.
3.2* Articles of Organization of Key Plastics International L.L.C.
3.3* Articles of Organization of Key Plastics Automotive L.L.C.
3.4* Articles of Organization of Key Plastics Technology L.L.C.
3.5* Articles of Organization of Key Mexico A, L.L.C.
3.6* Articles of Organization of Key Mexico B, L.L.C.
3.7 Bylaws of the Company, as amended. Incorporated herein by
reference to Exhibit 3.1 to the Company's Annual Report on Form
10-K for the Year Ended December 31, 1996.
3.8* Operating Agreement of Key Plastics International L.L.C.
3.9* Operating Agreement of Key Plastics Automotive L.L.C.
3.10* Operating Agreement of Key Plastics Technology L.L.C.
3.11* Operating Agreement of Key Mexico A, L.L.C.
3.12* Operating Agreement of Key Mexico B, L.L.C.
4.1 Indenture, dated November 17, 1992, by and between the Company and
Society National Bank, as Trustee (the "Indenture"), including 14%
Senior Notes to be issued thereunder. Incorporated herein by
referenced to Exhibit 4.1 to the Company's Registration Statement
No. 33-56048.
4.2 Loan Agreement, dated as of August 1, 1989, between the Company
and the Town of Hamilton, Indiana. Incorporated herein by
reference to Exhibit 4.5 of the Company's Registration Statement
33-56048.
4.3 Reimbursement Agreement, dated as of November 17, 1992, between the
Company and Comerica Bank. Incorporated herein by reference to
Exhibit 4.6 to the Company's Registration Statement No. 33-56048.
4.4 Loan Agreement, dated as of December 1, 1987, between the Company
and the Economic Development Corporation of the Township of
Plymouth, Michigan. Incorporated herein by reference to Exhibit 4.
7 to the Company's Registration Statement No. 33-56048.
4.5 Reimbursement Agreement, dated as of December 1, 1987, between the
Company and Manufacturers Bank of Detroit, as amended. Incorporated
herein by reference to Exhibit 4.8 to the Company's Registration
Statement 33-56048.
4.6* Indenture dated March 24, 1997 by and between the Company and
Marine Midland Bank, as Trustee.
E-1
<PAGE> 102
4.7* Supplemental Indenture dated March 28, 1997 by and between Key
Mexico A, L.L.C. and Marine Midland Bank, as Trustee.
4.8* Supplemental Indenture dated March 28, 1997, by and between Key
Mexico B, L.L.C. and Marine Midland Bank, as Trustee.
4.9* 10 1/4% Senior Subordinated Notes dated March 24, 1997.
4.10* Guarantee dated May 24, 1997 of Key Plastics International L.L.C.
4.11* Guarantee dated May 24, 1997 of Key Plastics Technology L.L.C.
4.12* Guarantee dated May 24, 1997 of Key Plastics Automotive L.L.C.
4.13* Guarantee dated May 28, 1997 of Key Plastics A, L.L.C.
4.14* Guarantee dated May 28, 1997 of Key Plastics B, L.L.C.
4.15* Registration Rights Agreement dated March 24, 1997 by and among the
Company, the Guarantors and Lehman Brothers Inc. and First Chicago
Capital Markets, Inc.
4.16* Purchase Agreement dated March 24, 1997 by and among the Company, the
Guarantors and Lehman Brothers, Inc. and First Chicago Capital Markets,
Inc.
4.17* Standby letter of Credit Application and Reimbursement Agreement dated
March 24, 1997
5.1** Opinion of Dykema Gossett PLLC
10.1 Amended and Restated Tax Allocation Agreement dated as of August 9,
1988 between the Company and each of its shareholders, as amended.
Incorporated herein by reference to Exhibit 10.1 to the Company's
Registration Statement No. 33-56048.
10.2* Credit Agreement, dated as of March 24, 1997, by and among the Company,
the lenders party thereto from time to time and NBD Bank, as agent for
such lenders.
10.3* Mortgage, Security and Assignment of Rents (Michigan Form) dated as
of March 24, 1997 by and among the Company, the lenders, and NBD Bank,
as agent for such lenders.
10.4* Mortgage, Security and Assignment of Rents (Indiana Form) dated as of
March 24, 1997 by and among the Company, the lenders, and NBD Bank,
as agent for such lenders.
10.5* Open-End Mortgage, Security Agreement and Assignment of Rents (Ohio
Form) by and among the Company, the lenders, and NBD Bank, as agent
for the lenders.
10.6* Open-End Mortgage, Security Agreement and Assignment of Rents
(Pennsylvania Form) by and among the Company, the lenders, and NBD
Bank, as agent for the lenders.
10.7* Security Agreement dated as of March 24, 1997 by and among the Company,
the lenders, and NBD Bank, as agent for such lenders.
10.8* Security Agreement to be ended to by each Guarantor, the lenders and
NBD Bank as agent for the lenders.
10.9* Guaranty dated March 24, 1997 and among Key Plastics International,
Key Plastics Automotive, Key Plastics Technology, the lenders and NBD
Bank as agent for the lenders.
10.10* Guaranty dated March 28, 1997 by and among Key Mexico A, Key Mexico B,
the lenders and NBD Bank as agent for the lenders.
21* Subsidiaries of the Registrant.
23.1* Consent of Coopers & Lybrand, L.L.P.
23.2** Consent of Dykema Gossett PLLC, (contained in their opinion filed as
Exhibit 5.1).
24* Power of Attorney (included with signatures in Part II of the
Registration Statement).
25** Form T-1 Statement of Eligibility and Qualifications under the Trust
Indenture Act of 1939 of Marine Midland Bank.
99.1* Form of Letter of Transmittal with Respect to the Exchange Offer.
E-2
<PAGE> 103
99.2* Form of Notice of Guaranteed Delivery.
99.3* Instruction to Registered Holder and/or Book Entry Transfer
Participant from Beneficial Owner.
99.4* Letter from Registered Holder to Brokers, Dealers and other Nominees.
99.5* Letter from Trustee to Registered Holder.
__________________________
* Filed herewith.
** To be filed by amendment.
E-3
<PAGE> 1
EXHIBIT 3.2
- -------------------------------------------------------------------
MICHIGAN DEPARTMENT OF COMMERCE - CORPORATION AND SECURITIES BUREAU
- -------------------------------------------------------------------
(FOR BUREAU USE ONLY) Date Received
APR 15 1996
FILED
APR 15 1996
Administrator
MICHIGAN DEPARTMENT OF COMMERCE
Corporation & Securities Bureau
EFFECTIVE DATE:
- -------------------------------------------------------------------
CORPORATION IDENTIFICATION NUMBER _ _ _ - _ _ _
- -------------------------------------------------------------------
ARTICLES OF ORGANIZATION
For Use By Domestic Limited Liability Companies
Pursuant to the provisions of Act 23, Public Acts of 1993, the undersigned
execute the following Articles:
ARTICLE I
The name of the limited liability company is KEY PLASTICS INTERNATIONAL
L.L.C.
ARTICLE II
The purpose or purposes for which the limited liability company is formed
is to engage in any activity within the purposes for which a limited liability
company may be formed under the Limited Liability Company Act of Michigan.
ARTICLE III
The duration of the limited liability company is December 31, 2025.
ARTICLE IV
The address of the registered office and the mailing address are 21333
Haggerty Road, Suite 200, Novi, Michigan 48375. The name of the resident agent
at the registered office is David C. Benoit.
SEAL APPEARS ONLY ON ORIGINAL
<PAGE> 2
ARTICLE V
The limited liability company shall be managed by a manager and shall not
managed by its members.
The undersigned are two of the members of the limited liability company
and they signed these Articles on April __, 1996.
David C. Benoit
-----------------------------------------
David C. Benoit, Member
Joel Tauber
-----------------------------------------
Joel Tauber, Member
SEAL APPEARS ONLY ON ORIGINAL
2
<PAGE> 3
These Articles were prepared by,
and when filed please return to:
Thomas B. Spillane, Jr.
Dykema Gossett PLLC
1577 North Woodward
Suite 300
Bloomfield Hills, MI 48304
(810) 540-0754
Name of Person or Organization Remitting Fees:
Dykema Gossett PLLC
AAM/2992
SEAL APPEARS ONLY ON ORIGINAL
3
<PAGE> 4
MICHIGAN DEPARTMENT OF COMMERCE - CORPORATION AND SECURITIES BUREAU
Date Received (FOR BUREAU USE ONLY)
APR 26 1996
FILED
APR 26 1996
Administrator
MICHIGAN DEPARTMENT OF COMMERCE
Corporation & Securities Bureau
Name
Mark C. Larson, Esq.
Address
DYKEMA GOSSETT
400 Renaissance Center
City State Zip Code
Detroit, MI 48243 EFFECTIVE DATE:
DOCUMENT WILL BE RETURNED TO THE NAME
AND ADDRESS YOU ENTER ABOVE
CERTIFICATE OF AMENDMENT TO THE ARTICLES OF ORGANIZATION
FOR USE BY LIMITED LIABILITY COMPANIES
(Please read information and instructions on reverse side)
Pursuant to the provisions of Act 23, Public Acts of 1993, the undersigned
limited liability company executes the following Certificate of Amendment:
1. The present name of the limited liability company is:
Key Plastics International L.L.C.
2. The identification number assigned by the Bureau is: BO3-936
3. The date of filing of its original articles of organization was:
April 15, 1996
4. The location of its registered office is:
21333 Haggerty Road, Suite 200, Novi, Michigan 48375
(Street Address) (City) (Zip Code)
5. Article V of the Articles of Organization is hereby amended to read as
follows:
The limited liability company shall be managed by its members.
The foregoing amendment to the Articles of Organization was duly adopted on the
25 day of April, 1996 as required by Section 502 of the Act by at least a
majority vote of the members or by such other vote as required by the articles
of organization or the operating agreement.
Signed this 25th day of April, 1996
By David C. Benoit
---------------------------------------------
(Signature)
David C. Benoit Manager
---------------------------------------------
(Type or Print Name) (Type or Print Title)
<PAGE> 5
NAME OF PERSON OR ORGANIZATION
REMITTING FEES
Dykema Gossett
-------------------------------------
-------------------------------------
Preparer's Name and Business
Telephone Number
Mark C. Larson, Esq.
-------------------------------------
(313) 568-6790
-------------------------------------
INFORMATION AND INSTRUCTIONS
1. The amendment cannot be filed until this form, or a comparable document,
is submitted.
2. Submit one original of this document. Upon filing, the document will be
added to the records of the Corporation and Securities Bureau. The original
will be returned to the address you enter in the box on the front as
evidence of filing.
Since this document will be maintained on optical disc media, it is
important that the filing be legible. Documents with poor black and white
contrast, or otherwise illegible, will be rejected.
3. This document is to be used pursuant to the provisions of section 603 of
the Act for the purpose of amending the articles of organization of a
domestic limited liability company. Do not use this form for restated
articles.
4. Item 2 - Enter the identification number assigned by the Bureau.
5. Item 4 - The article being amended must be set forth in its entirety.
However, if the article being amended is divided into separately
identifiable sections, only the sections being amended need be included.
6. This document is effective on the date endorsed "Filed" by the Bureau. A
later effective date, no more than 90 days after the date of delivery, may
be stated as an additional article.
7. The amendment must be signed in ink by a manager if management is vested in
one or more managers. Otherwise, the signature of at least one member is
required.
8. If more space is needed, attach additional pages. All pages should be
numbered.
9. FEES: Make remittance payable to the State of Michigan. Include limited
liability company name and number on check or money order. NONREFUNDABLE
FILING FEE $25.00
10. Mail form and fee to: The office is located at:
Michigan Department of Commerce 6546 Mercantile Way
Corporation and Securities Bureau Lansing, MI 48910
Corporation Division (517) 334-6302
P.O. Box 30054
Lansing, MI 48909-7554
<PAGE> 1
EXHIBIT 3.3
- -------------------------------------------------------------------
MICHIGAN DEPARTMENT OF COMMERCE - CORPORATION AND SECURITIES BUREAU
- -------------------------------------------------------------------
(FOR BUREAU USE ONLY) Date Received
APR 15 1996
FILED
APR 15 1996
Administrator
MICHIGAN DEPARTMENT OF COMMERCE
Corporation & Securities Bureau
EFFECTIVE DATE:
- -------------------------------------------------------------------
CORPORATION IDENTIFICATION NUMBER B 0 3 - 9 3 4
- -------------------------------------------------------------------
ARTICLES OF ORGANIZATION
For Use By Domestic Limited Liability Companies
Pursuant to the provisions of Act 23, Public Acts of 1993, the undersigned
execute the following Articles:
ARTICLE I
The name of the limited liability company is KEY PLASTICS AUTOMOTIVE
L.L.C.
ARTICLE II
The purpose or purposes for which the limited liability company is formed
is to engage in any activity within the purposes for which a limited liability
company may be formed under the Limited Liability Company Act of Michigan.
ARTICLE III
The duration of the limited liability company is December 31, 2025.
ARTICLE IV
The address of the registered office and the mailing address are 21333
Haggerty Road, Suite 200, Novi, Michigan 48375. The name of the resident agent
at the registered office is David C. Benoit.
<PAGE> 2
ARTICLE V
The limited liability company shall be managed by a manager and shall
not managed by its members.
The undersigned are two of the members of the limited liability company
and they signed these Articles on April 12, 1996.
David C. Benoit
-------------------------------
David C. Benoit, Member
Joel Tauber
-------------------------------
Joel Tauber, Member
2
<PAGE> 3
These Articles were prepared by,
and when filed please return to:
Thomas B. Spillane, Jr.
Dykema Gossett PLLC
1577 North Woodward
Suite 300
Bloomfield Hills, MI 48304
(810) 540-0754
Name of Person or Organization Remitting Fees:
Dykema Gossett PLLC
AAM/2993
3
<PAGE> 4
MICHIGAN DEPARTMENT OF COMMERCE - CORPORATION AND SECURITIES BUREAU
Date Received (FOR BUREAU USE ONLY)
APR 26, 1996
FILED
APR 26, 1996
Administrator
MICHIGAN DEPARTMENT OF COMMERCE
Corporation & Securities Bureau
Name
Mark C. Larson, Esq.
Address
DYKEMA GOSSETT
400 Renaissance Center
City State Zip Code
Detroit, MI 48243 EFFECTIVE DATE:
DOCUMENT WILL BE RETURNED TO THE NAME
AND ADDRESS YOU ENTER ABOVE
CERTIFICATE OF AMENDMENT TO THE ARTICLES OF ORGANIZATION
FOR USE BY LIMITED LIABILITY COMPANIES
(Please read information and instructions on reverse side)
Pursuant to the provisions of Act 23, Public Acts of 1993, the
undersigned limited liability company executes the following Certificate of
Amendment:
1. The present name of the limited liability company is:
Key Plastics Automotive L.L.C.
2. The identification number assigned by the Bureau is: B03-934
3. The date of filing of its original articles of organization was: April 15,
1996
4. The location of its registered office is:
21333 Haggerty Road, Suite 200, Novi, Michigan 48375
(Street Address) (City) (Zip Code)
5. Article V of the Articles of Organization is hereby amended to read as
follows:
The limited liability company shall be managed by its members.
The foregoing amendment to the Articles of Organization was duly adopted on the
25 day of April, 1996 as required by Section 502 of the Act by at least a
majority vote of the members or by such other vote as required by the articles
of organization or the operating agreement.
Signed this 25th day of April, 1996
By David C. Benoit
---------------------------------------------------
(Signature)
David C. Benoit Manager
---------------------------------------------------
(Type or Print Name) (Type or Print Title)
<PAGE> 5
Name of Person or Organization
Remitting Fees
Dykema Gossett
----------------------------------------
----------------------------------------
Preparer's Name and Business
Telephone Number
Mark C. Larson, Esq.
----------------------------------------
(313) 568-6790
----------------------------------------
INFORMATION AND INSTRUCTIONS
1. The amendment cannot be filed until this form, or a comparable document, is
submitted.
2. Submit one original of this document. Upon filing, the document will be
added to the records of the Corporation and Securities Bureau. The original
will be returned to the address you enter in the box on the front as
evidence of filing.
Since this document will be maintained on optical disc media, it is
important that the filing be legible. Documents with poor black and white
contrast, or otherwise illegible, will be rejected.
3. This document is to be used pursuant to the provisions of section 603 of
the Act for the purpose of amending the articles of organization of a
domestic limited liability company. Do not use this form for restated
articles.
4. Item 2 - Enter the identification number assigned by the Bureau.
5. Item 4 - The article being amended must be set forth in its entirety.
However, if the article being amended is divided into separately
identifiable sections, only the sections being amended need be included.
6. This document is effective on the date endorsed "Filed" by the Bureau. A
later effective date, no more than 90 days after the date of delivery, may
be stated as an additional article.
7. The amendment must be signed in ink by a manager if management is vested in
one or more managers. Otherwise, the signature of at least one member is
required.
8. If more space is needed, attach additional pages. All pages should be
numbered.
9. FEES: Make remittance payable to the State of Michigan. Include limited
liability company name and number on check or money order. NONREFUNDABLE
FILING FEE.........................................................$25.00
10. Mail form and fee to: The office is located at:
Michigan Department of Commerce 6546 Mercantile Way
Corporation and Securities Bureau Lansing, MI 48910
Corporation Division (517) 334-6302
P.O. Box 30054
Lansing, MI 48909-7554
<PAGE> 6
ASSIGNMENT OF MEMBERSHIP INTEREST
For value received, Joel D. Tauber hereby assigns to David C. Benoit,
all of his membership interest in Key Plastics Automotive L.L.C. and directs
the Company to reflect such assignment in its books and records.
Dated: April 25, 1996
Joel D. Tauber
------------------------------
Joel D. Tauber
MCLA:2342
<PAGE> 1
EXHIBIT 3.4
MICHIGAN DEPARTMENT OF COMMERCE - CORPORATION AND SECURITIES BUREAU
Date Received (FOR BUREAU USE ONLY)
SEP 17 1996
ADJUSTED PURSUANT TO FILED
TELEPHONE AUTHORIZATION SEP 17 1996
STEVE Administrator
MI DEPARTMENT OF
CONSUMER & INDUSTRY SERVICES
CORPORATION, SECURITIES & LAND
DEVELOPMENT BUREAU
Name: Mark C. Larson
Address: Dykema Gossett PLLC
400 Renaissance Center
City State Zip Code
Detroit, Michigan 48243 Effective Date
DOCUMENT WILL BE RETURNED TO THE NAME AND ADDRESS YOU ENTER ABOVE
ARTICLES OF ORGANIZATION B07-062
FOR USE BY DOMESTIC LIMITED LIABILITY COMPANIES
Pursuant to the provisions of Act 23, Public Acts of 1993, the undersigned
execute the following Articles:
ARTICLE I
The name of the limited liability company is Key Plastics Technology,
L.L.C.
ARTICLE II
The purpose or purposes for which the limited liability company is
formed is to engage in any activity within the purposes for which a limited
liability company may be formed under the Limited Liability Company Act of
Michigan.
ARTICLE III
The duration of the limited liability company is December 31, 2035
unless terminated earlier pursuant to statute or an operating agreement.
SEAL APPEARS ONLY ON ORIGINAL
<PAGE> 2
ARTICLE IV
The address of the registered office and the mailing address is 21333
Haggerty Road, Suite 200, Novi, Michigan 48375. The name of the resident agent
at the registered office is David C. Benoit.
The undersigned are two of the members of the limited liability company
and they signed these Articles on September 16, 1996.
_________________________________
David C. Benoit, Member
KEY PLASTICS, INC. Member
By: __________________________________
David C. Benoit
Its: Chief Executive Officer
These Articles were prepared by
Mark C. Larson
Dykema Gossett PLLC
400 Renaissance Center
Detroit, Michigan 48243
(313) 568-6582
Name of Person or Organization Remitting Fees:
Dykema Gossett PLLC
MCL:1916
SEAL APPEARS ONLY ON ORIGINAL
2
<PAGE> 1
EXHIBIT 3.5
MICHIGAN DEPARTMENT OF COMMERCE - CORPORATION AND SECURITIES BUREAU
Date Received (FOR BUREAU USE ONLY)
MAR 27 1997
FILED
MAR 27 1997
Administrator
MI DEPARTMENT OF CONSUMER & INDUSTRY SERVICES
CORPORATION, SECURITIES & LAND DEVELOPMENT BUREAU
Name: Mark C. Larson
Address: Dykema Gossett PLLC
400 Renaissance Center
City State Zip Code
Detroit, Michigan 48243 EFFECTIVE DATE
DOCUMENT WILL BE RETURNED TO THE NAME AND ADDRESS YOU ENTER ABOVE
ARTICLES OF ORGANIZATION L C -
FOR USE BY DOMESTIC LIMITED LIABILITY COMPANIES
Pursuant to the provisions of Act 23, Public Acts of
1993, the undersigned execute the following Articles:
ARTICLE I
The name of the limited liability company is Key
Mexico B, L.L.C.
ARTICLE II
The purpose or purposes for which the limited
liability company is formed is to engage in any activity
within the purposes for which a limited liability company
may be formed under the Limited Liability Company Act of
Michigan.
ARTICLE III
The duration of the limited liability company is
December 31, 2035 unless terminated earlier pursuant to
statute or an operating agreement.
SEAL APPEARS ONLY ON ORIGINAL
<PAGE> 2
ARTICLE IV
The address of the registered office and the mailing address is 21333
Haggerty Road, Suite 200, Novi, Michigan 48375. The name of the registered
agent at the registered office is David C. Benoit.
The undersigned are two of the members of the limited liability company
and they signed these Articles on March 20, 1997.
KEY PLASTICS TECHNOLOGY, L.L.C.,
Member
By: David C. Benoit
--------------------------
David C. Benoit
Its: Member
KEY PLASTICS INC., Member
By: David C. Benoit
--------------------------
David C. Benoit
Its: Chief Executive Officer
These Articles were prepared by
Mark C. Larson
Dykema Gossett PLLC
400 Renaissance Center
Detroit, Michigan 48243
(313) 568-6582
Name of Person or Organization Remitting Fees:
Dykema Gossett PLLC
MCL:2618
SEAL APPEARS ONLY ON ORIGINAL
2
<PAGE> 1
EXHIBIT 3.6
MICHIGAN DEPARTMENT OF COMMERCE - CORPORATION AND SECURITIES BUREAU
Date Received (FOR BUREAU USE ONLY)
MAR 27 1997
FILED
MAR 27 1997
Administrator
MI DEPARTMENT OF CONSUMER
& INDUSTRY SERVICES
CORPORATION, SECURITIES & LAND
DEVELOPMENT BUREAU
Name: Mark C. Larson
Address: Dykema Gossett PLLC
400 Renaissance Center
City State Zip Code
Detroit, Michigan 48243 Effective Date
DOCUMENT WILL BE RETURNED TO THE NAME AND ADDRESS YOU ENTER ABOVE
ARTICLES OF ORGANIZATION LC -
FOR USE BY DOMESTIC LIMITED LIABILITY COMPANIES
Pursuant to the provisions of Act 23, Public Acts of 1993, the undersigned
execute the following Articles:
ARTICLE I
The name of the limited liability company is Key Mexico A, L.L.C.
ARTICLE II
The purpose or purposes for which the limited liability company is
formed is to engage in any activity within the purposes for which a limited
liability company may be formed under the Limited Liability Company Act of
Michigan.
ARTICLE III
The duration of the limited liability company is December 31, 2035
unless terminated earlier pursuant to statute or an operating agreement.
SEAL APPEARS ONLY ON ORIGINAL
<PAGE> 2
ARTICLE IV
The address of the registered office and the mailing address is 21333
Haggerty Road, Suite 200, Novi, Michigan 48375. The name of the registered
agent at the registered office is David C. Benoit.
The undersigned are two of the members of the limited liability company
and they signed these Articles on March 20, 1997.
KEY PLASTICS TECHNOLOGY, L.L.C.,
Member
By: David C. Benoit
-----------------------------------------
David C. Benoit
Its: Member
KEY PLASTICS, INC., Member
By: David C. Benoit
-----------------------------------------
David C. Benoit
Its: Chief Executive Officer
These Articles were prepared by
Mark C. Larson
Dykema Gossett PLLC
400 Renaissance Center
Detroit, Michigan 48243
(313) 568-6582
Name of Person or Organization Remitting Fees:
Dykema Gossett PLLC
MCL:2617
SEAL APPEARS ONLY ON ORIGINAL
2
<PAGE> 1
EXHIBIT 3.8
OPERATING AGREEMENT
OF
KEY PLASTICS INTERNATIONAL L.L.C.
<PAGE> 2
TABLE OF CONTENTS
Page
----
Article 1 Organization of Company 1
1.1 Formation 1
1.2 Name and Office 1
1.3 Duration 1
1.4 Registered Office and Resident Agent 1
Article 2 Definitions 1
Article 3 Purposes 5
Article 4 Capital Contributions; Borrowings 6
4.1 Initial Contributions of Members 6
4.2 Additional Capital Contributions 6
4.3 Withdrawals 6
4.4 Borrowings 6
4.5 Additional Members 6
Article 5 Management 6
5.1 Powers of the Members 6
5.2 Limitations on Powers 7
5.3 Self Dealing 7
5.4 Standard of Care; Liability 8
5.5 Reimbursement 8
5.6 Delegation of Authority 8
Article 6 Meetings of Members 9
6.1 Voting 9
6.2 Meetings 9
6.3 Consent 9
Article 7 Capital Accounts; Profits and Losses;
Distributions 10
7.1 Capital Accounts 10
7.2 Allocation of Profits and Losses 10
7.3 Distributions 11
7.4 Other Allocations 11
7.5 Share of Excess Nonrecourse Liabilities 14
Article 8 Limitation of Liability; Indemnification 15
8.1 Limitation of Liability 15
8.2 Liability of Member to the Company 15
8.3 Indemnification 15
(i)
<PAGE> 3
Page
----
Article 9 Term of Company 16
9.1 Commencement 16
9.2 Dissolution 16
Article 10 Application of Assets 16
Article 11 Assignability of Interests 17
11.1 Permitted Assignments 17
11.2 Admission of Assignees as Members 17
11.3 Restrictions on Transfers 18
11.4 Section 754 Election 18
Article 12 Buy-Out Provisions Upon Member's Death 19
Article 13 Arbitration 20
Article 14 Investment Representation 20
Article 15 Amendments 20
Article 16 Miscellaneous Provisions 20
16.1 Books of Account; Reports 20
16.2 Bank Accounts and Investment of Funds 20
16.3 Accounting Decisions 21
16.4 Federal Income Tax Elections 21
16.5 Entire Agreement 21
16.6 Notices 21
16.7 Further Execution 22
16.8 Binding Effect 22
16.9 Severability 22
16.10 Captions 22
16.11 Counterparts 22
16.12 Michigan Law to Control 23
Exhibit A A-1
(ii)
<PAGE> 4
OPERATING AGREEMENT
OF
KEY PLASTICS INTERNATIONAL L.L.C.
THIS OPERATING AGREEMENT of KEY PLASTICS INTERNATIONAL L.L.C., a Michigan
limited liability company ("Company"), is made and entered into as of April __,
1996 by and among the Company and those persons whose names are set forth on
attached Schedule A and are made a part of this Operating Agreement and those
persons who are later admitted as members (individually, "Member," and
collectively, "Members") who agree as follows:
ARTICLE 1
ORGANIZATION OF COMPANY
1.1 Formation. The Company has been organized as a Michigan limited
liability company pursuant to the provisions of the Act and this Agreement.
1.2 Name and Office. The name of the Company shall be Key Plastics
International L.L.C., and its office shall be located at 21333 Haggerty Road,
Suite 200, Novi, Michigan 48375, or such other place as the Majority Interest
may determine from time to time.
1.3 Duration. The Company shall continue in existence for the period
fixed in the Articles for the duration of the Company or until the Company
shall be sooner dissolved and its affairs wound up in accordance with the Act
or this Agreement.
1.4 Registered Office and Resident Agent. The Company's initial
registered office shall be at the office of its resident agent at 21333
Haggerty Road, Suite 200, Novi, Michigan 48375 and the name of its initial
resident agent at such address shall be David C. Benoit. The registered office
and resident agent may be changed from time to time in accordance with the Act.
If the resident agent shall ever resign, the Company shall promptly appoint a
successor.
ARTICLE 2
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
<PAGE> 5
The "Act" means the Michigan Limited Liability Company Act being Act No.
23, Public Acts of 1993, as amended.
"Adjusted Deficit Capital Account Balance" means, with respect to any
Member, the deficit balance, if any, in such Member's Capital Account as of the
end of the relevant Company Fiscal Year, (1) increased by any amounts which
such Member is obligated to restore under Treasury Regulation Section
1.704-1(b)(2)(ii)(c), plus an amount equal to such Member's share of Company
Minimum Gain and such Member's share of Member Nonrecourse Debt Minimum Gain
and (2) decreased by the items described in Treasury Regulation Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6). This definition of Adjusted Capital
Account Deficit is intended to comply with the provisions of Treasury
Regulation Sections 1.704-1(b)(2)(ii)(d) and 1.704-2, and will be interpreted
consistently with those provisions.
"Affiliate" means (i) any person directly or indirectly controlling,
controlled by or under common control with another person, (ii) a person owning
or controlling ten percent (10%) or more of the outstanding voting securities
of such other person, (iii) any officer, director, member or partner of such
person, or (iv) a person who is an officer, director, member, partner or holder
of ten percent (10%) or more of any of the voting interests of any person
described in clauses (i) through (iii) of this sentence.
"Agreement" means this Operating Agreement and amendments adopted in
accordance with this Agreement and the Act.
The "Articles" means the Articles of Organization, including any
restatements or amendments, which are filed with the Michigan Department of
Commerce.
"Book Value" means with respect to any asset, the asset's adjusted basis
for federal income tax purposes, except as follows:
(a) the initial Book Value of any asset contributed (or deemed
contributed) to the Company shall be such asset's gross fair
market value at the time of such contribution;
(b) the Book Value of all Company assets shall be adjusted to equal
their respective gross fair market values at the times specified
in Treasury Regulations under Code Section 704(b) if the
Company so elects;
2
<PAGE> 6
(c) if the Book Value of an asset has been determined pursuant to
clause (a) or (b), such Book Value shall thereafter be adjusted
by the Depreciation taken into account with respect to such
asset for purposes of computing Profits and Losses.
"Capital Accounts" shall have the meaning set forth in Section 7.1 of this
Agreement.
"Capital Contributions" means the amount of cash, property, or services
contributed or obligated to be contributed to the Company by a Member.
The "Code" means the Internal Revenue Code, as amended.
"Company Minimum Gain" means an amount determined in accordance with
Treasury Regulation Section 1.704-2(d) for partnership minimum gain by
computing, with respect to each nonrecourse liability of the Company (as
defined in Treasury Regulation Section 1.752-1(a)(2)), the amount of gain (of
whatever character), if any, that would be realized by the Company if (in a
taxable transaction) it disposed of property subject to such liability in full
satisfaction thereof, and by then aggregating the amounts so computed.
"Depreciation" means for each Fiscal Year of the Company or other period,
an amount equal to the depreciation, amortization or other cost recovery
deduction allowable under the Code with respect to an asset for such year or
other period, except that if the Book Value of an asset differs from its
adjusted basis for federal income tax purposes at the beginning of such year or
other period, Depreciation shall be an amount which bears the same ratio to
such beginning Book Value as the federal income tax depreciation, amortization
or other cost recovery deduction for such year or other period bears to such
beginning adjusted tax basis; provided, however, that if the federal income tax
depreciation, amortization or other cost recovery deduction for such year is
zero, Depreciation shall be determined with reference to such beginning Book
Value using any reasonable method selected by the Majority Interest.
"Distributable Cash" means, at any time, that portion of the cash and cash
equivalent assets of the Company which, in light of the Company's then current
and foreseeable sources of, and needs for, cash, exceeds the amount of cash
needed by the Company, as determined by the Majority Interest, to (i) service
its debts and obligations in a timely fashion, (ii) maintain adequate working
capital and reserves, and (iii) conduct its business and carry out its purposes.
3
<PAGE> 7
The "Fiscal Year" of the Company, and its taxable year for Federal income
tax purposes, shall be the calendar year.
"Insolvent" means such time as when the value of the Company's assets
become less than the sum of its liabilities or the Company becomes unable to
pay its debts as they become due in the usual course of business.
"Majority Interest" means those Members holding more than 50% of the
Membership Percentages held by the Members.
"Majority Interest of the Remaining Members" means Members holding more
than 50% of the Membership Percentages and Capital Account Balances of the
Members entitled to vote (other than the Member triggering dissolution under
Section 9.2(d)).
"Member Nonrecourse Debt" shall have the meaning, and be determined in the
same manner as, partner nonrecourse debt pursuant to Treasury Regulation
Section 1.704-2(b)(4).
"Member Nonrecourse Debt Minimum Gain" means the amount, with respect to
each Member Nonrecourse Debt, equal to the Company Minimum Gain that would
result if such Member Nonrecourse Debt were treated as a nonrecourse liability
of the Company, determined in the same manner as partner nonrecourse debt
minimum gain in accordance with Treasury Regulation Section 1.704-2(i)(3).
"Member Nonrecourse Deductions" shall have the meaning, and be determined
in the same manner as, partner nonrecourse deduction pursuant to Treasury
Regulation Section 1.704-2(i)(2).
"Members" are the persons designated as such in Exhibit A. Any reference
to a Member shall, unless the context clearly requires otherwise, include a
reference to his predecessor and successor (other than a mere assignee not made
a substitute Member) in interest.
"Membership Percentages" means the Members' respective interests in the
Company as set forth in Exhibit A, as amended from time to time. "Nonrecourse
Deductions" shall have the meaning set forth in Treasury Regulation Section
1.704-2(c).
"Profits and Losses" means the Company's taxable income or loss for each
Fiscal Year (or other period) determined in accordance with the accounting
methods followed by the Company for federal income tax purposes (for this
purpose all items of income, gain, loss or deduction required to be separately
stated pursuant to Code Section 703(a)(1)
4
<PAGE> 8
shall be included in taxable income or loss) as determined by the independent
certified public accountants employed by the Company, with the following
adjustments:
(a) any income of the Company that is exempt from federal
income tax and not otherwise taken into account in computing Profits and Losses
shall be added to such taxable income or loss:
(b) any expenditures of the Company described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures under Code
Section 704(b) and not otherwise taken into account in computing Profits and
Losses shall be subtracted from such taxable income or loss;
(c) in the event the Book Value of any Company asset is
adjusted, the amount of such adjustment shall be taken into account as gain or
loss from the disposition of such asset for purposes of computing Profits or
Losses;
(d) any gain or loss resulting from any disposition of
Company property with respect to which gain or loss is recognized for federal
income tax purposes shall be computed by reference to the Book Value of such
property rather than its adjusted tax basis;
(e) in lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing taxable income or loss,
there shall be taken into account Depreciation for such Fiscal Year or other
period; and
(f) notwithstanding the foregoing, any items which are
specially allocated pursuant to Section 7.4 shall not be taken into account in
computing Profits and Losses.
"Treasury Regulations" includes proposed, temporary and final regulations
promulgated under the Code and the corresponding sections of any regulations
subsequently issued that amend or supersede such regulations.
All references to statutory provisions shall be deemed to include
reference to corresponding provisions of subsequent law.
ARTICLE 3
PURPOSES
The Company may engage in any lawful business permitted by the Act or the
laws of any jurisdiction in which the Company may do business. The Company
shall have the authority to do all things necessary or convenient to
accomplishment of its purposes and to operate its business,
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including all powers granted by the Act.
ARTICLE 4
CAPITAL CONTRIBUTIONS; BORROWINGS
4.1 Initial Capital Contributions of Members. Each of the Members
has made an initial capital contribution and owns a Membership Percentage in
the Company as set forth on Schedule A, as amended. No interest shall accrue
on any Capital Contribution made to the Company unless otherwise agreed by the
Members in writing or otherwise provided in this Agreement.
4.2 Additional Capital Contributions. Additional Capital
Contributions shall be made by the Members to the Company only upon the
unanimous consent of the Members.
4.3 Withdrawals. No Member shall be entitled to be repaid any
portion of his Capital Contribution or withdraw from the Company except as
provided in this Agreement. A Member who withdraws in violation of this
Agreement shall not be entitled to receive the fair market value of his
interest after the withdrawal but shall only be entitled to distributions he
otherwise would have received as a nonwithdrawing Member.
4.4 Borrowings. The Company may borrow sums for Company purposes
from any source, including any Member, provided that such borrowing is not
prohibited by any applicable law or regulation and is approved as required
under Section 5 of this Agreement.
4.5 Additional Members. No additional Members shall be admitted to
the Company without the unanimous consent of all Members.
ARTICLE 5
MANAGEMENT
5.1 Powers of the Members.
(a) The Company shall be managed by the Members in proportion to
their Membership Percentages. Each Member shall have the power to do all
things appropriate to the accomplishment of the purposes of the Company,
including (but not limited to): (1) entering into any and all agreements and
executing contracts, notes, mortgages and other writings; (2) paying all
Company obligations including construction cost expenditures and property
management fees; (3) purchasing and maintaining insurance on behalf of the
Company and its Members and employees or agents against any liability or
expense asserted against or incurred by the Company or such persons; (4)
transacting the Company's business under an assumed name or name other than its
name as set forth in the Articles and
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filing a Certificate of Assumed Name with the Michigan Department of Commerce;
(5) appointing any Member or other person as agent for service of process on
the Company as required by the law of any state in which the Company transacts
business; (6) commencing, prosecuting or defending any proceeding in the
Company's name; (7) participating with others in partnerships, joint ventures,
and other associations of any kind; and (8) doing such other acts as may
facilitate the Company's business.
(b) Every contract, lease, deed or other instrument executed
by a Member or Members holding a Majority Interest of the Membership
Percentages shall be conclusive evidence, at the time of execution, that this
Company was then in existence, that this Agreement had not theretofore been
terminated or amended in any manner not disclosed in the Articles and that the
execution and delivery of such instrument was duly authorized by the Members.
(c) David C. Benoit shall act as "tax matters Partner" of the
Company, as defined in Code Section 6231(a)(7).
5.2 Limitations on Powers. Notwithstanding the foregoing and any
other provision contained in this Agreement to the contrary, no act shall be
taken, sum expended, decision made, obligation incurred or power exercised by
any Member on behalf of the Company except by the consent of all of the Members
with respect to (a) the assignment, transfer, pledge, compromise or release of
any of the claims of or debts due the Company (except upon payment in full) or
arbitrate or consent to the arbitration of any of the disputes or controversies
of the Company; (b) any merger of the Company; (c) a transaction involving an
actual or potential conflict of interest between a Member and the Company; (d)
any change in the character of the business and affairs of the Company; (e) the
commission of any act which would make it impossible for the Company to carry
on its ordinary business and affairs; or (f) any act that would contravene any
provision of the Articles or this Agreement or the Act.
5.3 Self Dealing. Any Member and any Affiliate of a Member may deal
with the Company, directly or indirectly, as vendor, purchaser, employee, agent
or otherwise. No contract or other act of the Company shall be voidable or
affected in any manner by the fact that a Member or his Affiliate is directly
or indirectly interested in such contract or other act apart from his interest
as a Member, nor shall any Member or his Affiliate be accountable to the
Company or the other Members in respect of any profits directly or indirectly
realized by him by reason of such contract or other act, and such interested
Member shall be eligible to vote or take any
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other action as a Member in respect of such contract or other act as it would
be entitled were he or his Affiliate not interested therein. Notwithstanding
the foregoing provisions of this Section 5.3, (a) any direct or indirect
interest of a Member or Affiliate of a Member in any contract or other act,
other than his interest as a Member, shall be disclosed to all other Members,
(b) such contract or other act shall be approved by a Majority Interest of the
Members unless the same is specifically authorized herein, and (c) the Members
shall not receive or hold any property of the Company as collateral security in
respect of any claim against the Company.
5.4 Standard of Care; Liability. Each Member shall discharge his
management duties in good faith, with the care an ordinarily prudent person in
a like position would exercise under similar circumstances, and in a manner he
reasonably believes to the be in the best interests of the Company as required
by the Act. A Member shall not be liable for monetary damages to the Company
for any breach of any such management duties except for (i) actions
constituting fraud, willful misconduct or gross negligence, (ii) actions taken
by a Member in violation of this Agreement, (iii) the receipt of a financial
benefit to which the Member is not entitled, (iv) voting for or assenting to a
distribution to Members in violation of this Agreement or the Act, or (v) a
knowing violation of the law.
5.5 Reimbursement. Members shall receive no compensation for
managing the affairs of the Company unless approved by an affirmative vote of a
Majority Interest. Members shall be entitled to reimbursement from the Company
of all expenses of the Company reasonably incurred and paid for by such Member
on behalf of the Company.
5.6 Delegation of Authority. The Members, acting by Majority
Interest and by a written instrument, may from time to time delegate all or any
of their powers or duties hereunder to one or more Members. Any Member may by
written instrument delegate any of his powers and duties to any other Member,
in which event any exercise or performance of such powers or duties by such
Member shall be treated as the action of the delegating Member as well as the
acting Member. Any Member making such delegation shall be permitted to revoke
the delegation at any time by written notice to the other Members and the
Company.
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ARTICLE 6
MEETINGS OF MEMBERS
6.1 Voting. All Members shall be entitled to vote on any matter
submitted to a vote of the Members. Unless a greater vote is required by the
Act, the Articles, or this Agreement, the affirmative vote or consent of a
Majority Interest of all the Members entitled to vote or consent on such matter
shall be required.
6.2 Meetings. An annual meeting of Members for the transaction of
such business as may properly come before the Meeting, shall be held at such
place, on such date and at such time as the Majority Interest shall determine.
Special meetings of Members for any proper purpose or purposes may be called at
any time by the holders of at least twenty-five percent (25%) of the Membership
Percentages of all Members. The Company shall deliver or mail written notice
stating the date, time, place and purposes of any meeting to each Member
entitled to vote at the meeting. Such notice shall be given not less than ten
(10) nor more than sixty (60) days before the date of the meeting. Meetings
may be conducted in person or by telephone conference of the Members upon the
consent of the Majority Interest.
6.3 Consent. Any action required or permitted to be taken at an
annual or special meeting of the Members may be taken without a meeting,
without prior notice, and without a vote, if consents in writing, setting forth
the action so taken, are signed by the Members having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all Members entitled to vote on the action were present and
voted. Every written consent shall bear the date and signature of each Member
who signs the consent. Prompt notice of the taking of action without a meeting
by less than unanimous written consent shall be given to all Members who have
not consented in writing to such action. In addition, the Company may give all
the Members written notice of the action, event or agreement and state in the
notice that any Member who does not indicate his disapproval by written notice
to the Company within a specified period of time (not less than 30 days after
mailing of the notice) shall be deemed to have given his consent or approval to
the action or event or to have made the agreement referred to in the notice.
In such event, any Member who does not indicate his disapproval by written
notice to the Company within the time specified shall be deemed to have given
his written consent, approval or agreement.
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ARTICLE 7
CAPITAL ACCOUNTS; PROFITS AND LOSSES; DISTRIBUTIONS
7.1 Capital Accounts. A capital account shall be maintained for each
Member, to which contributions, Profits and any items of income and gain under
Section 7.4 shall be credited and against which distributions and Losses and
any items of deduction and loss under Section 7.4 shall be charged. Capital
accounts shall be maintained in accordance with the accounting principles of
Code Section 704 and the regulations thereunder.
7.2 Allocation of Profits and Losses. Except as provided in Section
7.2(c) and (d) and after giving effect to the special allocations set forth in
Section 7.4, to the extent applicable, Profits and Losses for any Fiscal Year
shall be allocated to the Members:
(a) First, in the case of Profits, to any Member in an amount
up to, but not exceeding, the aggregate amount of Losses previously allocated
to that Member in accordance with the second sentence of Section 7.2(c); and
(b) Second, in the case of either Profits or Losses, to the
Members in accordance with their Membership Percentages.
(c) The Losses allocated pursuant to Section 7.2(b) shall not
exceed the maximum amount of Losses that can be so allocated without causing
any Member to have an Adjusted Capital Account Deficit at the end of any Fiscal
Year. In the event some but not all of the Members would have Adjusted Capital
Account Deficits as a consequence of an allocation of Losses pursuant to
Section 7.2(b), the limitation set forth in this Section 7.2(c) will be applied
on a Member by Member basis so as to allocate the maximum permissible Losses to
each Member under Treasury Regulations Section 1.704-1(b)(2)(ii)(d). In the
event all Members have Adjusted Capital Account Deficits, Losses shall be
allocated in accordance with Section 7.2(b) hereof.
(d) If there is an addition, withdrawal or substitution of,
or any other change in the interest of, any Member during the period covered by
an allocation, then subject to any agreement between the persons affected, the
Profits and Losses for the period shall be allocated among the varying
interests consistent with the provisions of Code Section 706(d) and any
regulations promulgated thereunder. If Code Section 706(d) or any regulation
thereunder allow alternative methods of allocation, the Majority Interest shall
determine, in its
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sole discretion, which alternative methods to use in allocating Profits and
Losses among the varying interests.
7.3 Distributions. (a) The Company shall distribute to the Members
from time to time, as determined by the Majority Interest, Distributable Cash
of the Company. Except as provided in Section 10, all distributions shall be
made to the Members in proportion to their respective Membership Percentages on
the date of the distribution.
(b) No distributions shall be declared and paid unless, after
the distribution is made, the Company would be able to pay its debts as they
become due in the usual course of business and the assets of the Company are in
excess of the sum of: (i) the Company's liabilities, plus (ii) the amount that
would be needed to satisfy the preferential rights of other Members upon
dissolution that are superior to the rights of the Members(s) receiving the
distribution.
7.4 Other Allocations. Notwithstanding the foregoing provisions of
this Section 7 or any other provision of this Agreement, the following
provisions shall apply:
(a) Compliance With Treasury Regulations. It is anticipated
that the Company will be treated as a partnership for federal income tax
purposes and, accordingly, the partnership tax provisions of the Code shall
apply to the Company and its Members. It is the intent of the Members that
each Member's distributive share of income, gain, loss, deduction, or credit
(or item thereof) shall be determined and allocated in accordance with this
Section 7 to the fullest extent permitted by Section 704(b) of the Code. In
order to preserve and protect the determinations and allocations provided for
in this Section 7, the Majority Interest is authorized and directed to allocate
income, gain, loss, deduction, or credit (or item thereof) arising in any year
differently than otherwise provided for in this Section 7 to the extent that
allocating income, gain, loss, deduction, or credit (or item thereof) in the
manner provided for in this Section 7 would cause the determinations and
allocations of each Member's distributive share of income, gain, loss,
deduction, or credit (or item thereof) not to be permitted by Section 704(b) of
the Code and Treasury Regulations promulgated thereunder. Any allocation made
pursuant to this Section 7.4 shall be deemed to be a complete substitute for
any allocation otherwise provided for in this Section 7 and no amendment of
this Agreement or approval of any Member shall be required. The terms used in
this Section 7 shall have the same meaning as in such Treasury Regulations.
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(b) Only Required Modifications. In making any allocation
(the "new allocation") under Section 7.4, the Majority Interest is authorized
to act only after having been advised by the Company's accountants that, under
Section 704(b) of the Code and the Treasury Regulations thereunder (i) the new
allocation is necessary, and (ii) the new allocation is the minimum
modification of the allocations otherwise provided for in this Section 7
necessary in order to assure that, either in the then current year or in any
preceding year, each Member's distributive share of income, gain, loss,
deduction, or credit (or item thereof) is determined and allocated in
accordance with this Section 7 to the fullest extent permitted by Section
704(b) of the Code and the Treasury Regulations thereunder.
(c) Company Minimum Gain Chargeback. If there is a net
decrease in Company Minimum Gain during a Company Fiscal Year so that an
allocation is required by Treasury Regulation Section 1.704-2(f), then each
Member shall be specially allocated items of income and gain for such year
(and, if necessary, subsequent years) equal to such Member's share of the net
decrease in Company Minimum Gain as determined by Treasury Regulation Section
1.704-2(g)(2). Such allocations shall be made in a manner and at a time which
will satisfy the requirements of Treasury Regulation Section 1.704-2(f)(1) and
shall be interpreted consistently therewith.
(d) Member Minimum Gain Chargeback. If there is a net
decrease in the Member Nonrecourse Debt Minimum Gain during any Fiscal Year,
any Member who has a share of such Member Nonrecourse Debt Minimum Gain (as
determined in the same manner as partner nonrecourse debt minimum gain under
Treasury Regulation Section 1.704-2(i)(5)) shall be specially allocated items
of income or gain for such year (and, if necessary, subsequent Fiscal Years)
equal to such Member's share of the net decrease in the Member Nonrecourse Debt
Minimum Gain in the manner and to the extent required by Treasury Regulation
Section 1.704-2(i)(4) and shall be interpreted consistently therewith.
(e) Qualified Income Offset. If a Member unexpectedly
receives an adjustment, allocation, or distribution described in Treasury
Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), any of which causes or
increases an Adjusted Deficit Capital Account Balance in such Member's capital
account, then he will be specially allocated items of income and gain in an
amount and manner sufficient to eliminate such deficit balance created or
increased by such adjustment, allocation, or distribution as quickly as
possible; provided, however, an allocation pursuant to this Section 7.4(e) will
be made if and only to the extent that such Member would have an Adjusted
Capital Account Deficit after all other
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allocations provided for in Section 7 have been tentatively made as if this
Section 7.4(e) were not in the Agreement.
(f) Gross Income Allocation. If a Member has an Adjusted
Deficit Capital Account Balance at the end of a Company taxable year, such
Member shall be allocated items of income and gain in the amount of such
Adjusted Deficit Capital Account Balance as quickly as possible in order to
eliminate it.
(g) Allocation of Nonrecourse Deductions. Nonrecourse
Deductions shall be allocated among the Members in proportion to their
respective Membership Percentages.
(h) Member Nonrecourse Deductions. Any Member Nonrecourse
Deductions shall be allocated to the Member who bears the economic risk of loss
with respect to the Member Nonrecourse Debt to which such Member Nonrecourse
Deductions are attributable in accordance with Treasury Regulation Section
1.704-2(i)(1).
(i) Curative Allocations. If the Company is required by
Section 7.4(a),(c),(d),(e),(f),(g), or (h) to make any new allocation in a
manner other than as provided for in this Section 7 without regard thereto,
then the Majority Interest is authorized and directed, insofar as it is
permitted to do so by Section 704(b) of the Code, to allocate income, gain,
loss, deduction, or credit (or item thereof) arising in the current Fiscal Year
(or subsequent Fiscal Years, if necessary) in such manner so as to bring the
proportions of income, gain, loss, deduction, or credit (or item thereof)
allocated to the Members as nearly as possible to the proportion otherwise
contemplated by this Section 7 without regard thereto; provided, however, that
Nonrecourse Deductions shall not be taken into account except to the extent
that there has been a reduction in Company Minimum Gain and Member Nonrecourse
Deductions shall not be taken into account except to the extent that there has
been a reduction in Member Minimum Gain and provided further that such
Nonrecourse Deductions and Member Nonrecourse Deduction shall not in any event
be taken into account to the extent that the Majority Interest reasonably
determines that such allocations are likely to be offset by subsequent
allocations pursuant to Section 7.4(c) or (d).
(j) Advice of Accountants. Allocations made by the Majority
Interest under this Section 7.4 in reliance upon the advice of the Company's
accountants shall be deemed to be made pursuant to any fiduciary obligation to
the Company and the Members.
(k) Section 754 Election. To the extent an adjustment to the
adjusted tax basis of any Company asset
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pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to
Regulations Section 1.704-1(b)(2)(iv)(m), to be taken into account in
determining capital accounts, the amount of such adjustment to the capital
accounts shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreased such basis) and such
gain or loss shall be specially allocated to the Members in a manner consistent
with the manner in which their capital accounts are required to be adjusted
pursuant to such Section of the Regulations.
(l) Imputed Interest. If any Member makes a loan to the
Company, or the Company makes a loan to any Member, and interest in excess of
the amount actually payable is imputed under Code Sections 7872, 483, or 1271
through 1288 or corresponding provisions of subsequent Federal income tax law,
then any item of income or expense attributable to any such imputed interest
shall be allocated solely to the Member who made or received the loan and shall
be credited or charged to his capital account, as appropriate.
(m) Contributed Property. Income, gain, loss or deduction
with respect to any property contributed by a Member shall, solely for tax
purposes, be allocated among the Members, to the extent required by Code
Section 704(c) and the related Treasury Regulations, to take account of the
variation between the adjusted tax basis of such property and its Book Value at
the time of contribution to the Company. If the Book Value of any Company
property is adjusted as provided in Treasury Regulation Section
1.704-1(b)(2)(iv), subsequent allocations of income, gain, loss and deduction
and the Book Value of such property shall be adjusted as provided in Code
Section 704(c) and the related Treasury Regulations. If Code Section 704(c)
and the regulations thereunder allow alternative methods of making such
acquired allocations, the Majority Interest shall determine, in their sole
discretion, which alternative method to use. Allocations under this Section
7.4(m) are solely for purposes of federal, state and local taxes and shall not
affect, or in any way be taken into account in computing, any Member's Capital
Account or share of Profits, Losses, or other items or distributions under any
provision of this Agreement.
7.5 Share of Excess Nonrecourse Liabilities. For purposes of
calculating the Members' shares of "excess nonrecourse liabilities" of the
Company (within the meaning of Treasury Regulation Section 1.752-3(a)(3)), the
Members intend that they be considered as sharing profits of the Company in
proportion to their respective Membership Percentages.
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ARTICLE 8
LIMITATION OF LIABILITY; INDEMNIFICATION
8.1 Limitation of Liability. Unless otherwise provided by this
Agreement, the Act, or expressly assumed, a person who is a Member shall not be
liable for the acts, debts or liabilities of the Company beyond his respective
Capital Contribution.
8.2 Liability of Member to the Company. A Member who knowingly
receives a distribution made by the Company which is either in violation of
this Agreement or when the Company is Insolvent, is liable to the Company for
the repayment of the distribution.
8.3 Indemnification. Except as otherwise provided in this Section
8.3, the Company shall indemnify any Member (and may indemnify any employee or
agent of the Company), who was or is a party or is threatened to be made a
party to a threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative, or investigative, and whether formal or
informal (other than an action by or in the right of the Company) by reason of
the fact that such person is or was a Member, employee or agent of the Company
against expenses (including attorneys' fees), judgments, penalties, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with the action, suit or proceeding, if the person acted in good
faith, with the care an ordinarily prudent person in a like position would
exercise under similar circumstances, and in a manner that such person
reasonably believed to be in the best interests of the Company, and with
respect to a criminal action or proceeding, if such person had no reasonable
cause to believe such person's conduct was unlawful. To the extent that a
Member, employee or agent of the Company has been successful on the merits or
otherwise in defense of an action, suit or proceeding referred to in this
Section 8.3, or in defense of any claim, issue or other matter in the action,
suit or proceeding, such person shall be indemnified against actual and
reasonable expenses (including attorneys' fees) incurred by such person in
connection with the action, suit or proceeding and any action, suit or
proceeding brought to enforce the mandatory indemnification provided herein.
Any indemnification permitted under this Section 8.3 (unless ordered by a
court) shall be made by the Company only as authorized in the specific case
upon a determination that the indemnification is proper under the circumstances
because the person to indemnify has met the applicable standard of conduct and
upon an evaluation of the reasonableness of expenses and amount paid in
settlement. This determination and evaluation shall be made by the Majority
Interest of the Members who are not parties or threatened to be made parties to
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the action, suit or proceeding. Notwithstanding anything in this Section 8.3
to the contrary, no indemnification shall be provided to any Member, employee
or agent of the Company for or in connection with the receipt of a financial
benefit to which such person is not entitled, voting for or assenting to a
distribution to Members in violation of this Agreement or Act, or a knowing
violation of law.
ARTICLE 9
TERM OF COMPANY
9.1 Commencement. The term of the Company began on the date the
Articles of Organization were filed with the Michigan Department of Commerce
and became effective under the Act, April 15, 1996.
9.2 Dissolution. The Company shall be dissolved and its affairs be
wound up upon the occurrence of any of the following events:
(a) December 31, 2025;
(b) The sale or other disposition of substantially all of the
assets of the Company;
(c) By the written consent of Members holding at least 75% of
the Membership Percentages in the Company;
(d) The death, withdrawal, expulsion, bankruptcy, or
dissolution of a Member or the occurrence of any other event that terminates
the continued membership of a Member in the Company; provided, however, that
the Company's existence shall not terminate if within 90 days after such event,
a Majority Interest of the Remaining Members elect to reconstitute and continue
the business of the Company and to the admission of one or more Members as
necessary; or
(e) Upon entry of a decree of judicial dissolution.
ARTICLE 10
APPLICATION OF ASSETS
Upon dissolution of the Company, the Company shall cease carrying on its
business and affairs and shall commence winding up of the Company's business
and affairs and complete the winding up as soon as practicable. The Company
affairs shall be concluded by a Member or Members selected in writing by the
Majority Interest. The assets of the Company may be liquidated or distributed
in kind, as determined by the Majority Interest, and the same shall first be
applied to the
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payment of, or to a reserve for the payment of Company liabilities (including
such provision for contingent or unforeseen liabilities as the Majority
Interest deems appropriate) and then to the Members in accordance with their
respective positive Capital Accounts after allocations pursuant to Sections 7.2
and 7.4 for the current Fiscal Year. If Company assets are distributed in
kind, the assets so distributed shall be valued at their current fair market
values and the unrealized appreciation or depreciation in value of the assets
shall be allocated to the Members' Capital Accounts in the manner described in
Section 7.2 and 7.4 as if such assets had been sold, and such assets shall then
be distributed to the Members in accordance with their respective positive
Capital Accounts as so adjusted. To the extent that Company assets cannot
either be sold without undue loss or readily divided for distribution in kind
to the Members, then the Company may, as determined by the Majority Interest,
convey those assets to a trust or other suitable holding entity established for
the benefit of the Members in order to permit the assets to be sold without
undue loss and the proceeds thereof distributed to the Members at a future
date. The legal form of the holding entity, the identity of the trustee or
other fiduciary, and the terms of its governing instrument shall be determined
by the Majority Interest.
ARTICLE 11
ASSIGNABILITY OF INTERESTS
11.1 Permitted Assignments. Subject to the provisions of Section 11,
a Member may assign his interest in the Company in whole or part. Such
assignment shall not of itself substitute the assignee as a Member or entitle
the assignee to participate in the management of the Company. Such assignee is
only entitled to receive, to the extent assigned, the distributions the
assigning Member would otherwise be entitled to. Unless otherwise provided,
the assignor shall remain a Member liable for payment of any remaining
installments of Capital Contributions due with respect to the interest
assigned. No assignment of a Company interest shall be effective with respect
to the Company until written notice is given to the Company.
11.2 Admission of Assignees as Members. Except as provided in
Sections 11.3 and 12.1, an assignee shall be admitted as a Member only upon the
unanimous written consent of all the Members. As a condition of such consent,
the Members may require a substitute Member to comply with the following
requirements: (i) the assignment instrument being in form and substance
satisfactory to the Majority Interest and the Company's counsel; (ii) the
assignor and assignee named therein having executed and acknowledged such other
instrument or
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instruments as the Majority Interest may deem necessary or desirable to
effectuate such admission; (iii) the assignee having accepted and adopted all
of the terms and provisions of the Agreement, as the same may have been
amended, as if the assignee were a party who joined in the execution of this
Agreement; and (iv) such assignee having paid or acknowledged an obligation to
pay, as the Majority Interest may determine, all reasonable expenses (including
attorneys' fees) connected with such admission. If admitted, the substitute
Member has, to the extent assigned, all of the rights and powers, and is
subject to all the restrictions and liabilities of a Member.
11.3 Restrictions on Transfers. Notwithstanding the other provisions
of this Section 11, no Member shall sell, assign, transfer, exchange, mortgage,
pledge, grant, hypothecate, or otherwise dispose of any interest in the Company
except in compliance with Section 11.3. No Member shall dispose of his
interest in Company without the prior written consent of all the Members (1) if
the effect of the assignment would be to terminate the Company within the
meaning of Code Section 708(b), or (2) without an opinion of counsel in form
and substance satisfactory to counsel for the Company that registration is not
required under the Securities Act of 1933 and applicable state law. In no
event shall any Member assign his interest in the Company if such assignment
would violate any applicable state or Federal securities law. The Members
acknowledge that their interests in the Company have not been registered under
the Michigan Uniform Securities Act and agree that such interests will not be
transferred without registration under said Act or exemption therefrom. Any
attempted disposition of a Member's interest in the Company in violation of
Section 11 shall be null and void ab initio.
11.4 Section 754 Election. In the event of the transfer of a Member's
interest in the Company by sale or exchange, or upon the death of a Member, the
Company, if the person acquiring such interest so requests, shall elect
pursuant to Code Section 754, to adjust the basis of the Company property.
Each Member hereby agrees to provide the Company with all information necessary
to give effect to such election. The transferee shall reimburse the Company
for any reasonable costs incurred as a result of such election, as determined
by the Majority Interest.
ARTICLE 12
BUY-OUT PROVISION UPON MEMBER'S DEATH
(a) If a Member dies (the "Deceased Member"), the Company shall have an
option to acquire not less than all of the Deceased Member's interest in the
Company ("Company Interest"). The option shall be exercisable by written
notice to the Deceased Member's personal representative and the
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<PAGE> 22
successors in interest to the Deceased Member, collectively the "Selling
Members", at any time within sixty (60) days after death of the Deceased Member
or the appointment of personal representative, whichever is later ("Notice to
Purchase"). If the option is exercised, the Deceased Member's Company Interest
shall be purchased by the Company. The Company shall purchase the Deceased
Member's Company Interest for (i) an amount agreed upon by the parties within
30 days from the date of the Notice to Purchase, or if they cannot agree, then
(ii) an amount equal to the Net Equity of the Deceased Member's Company
Interest as defined in Section 12(b).
(b) The Net Equity of the Deceased Member's Company Interest shall be
the amount that would be distributed to the Deceased Member in liquidation of
the Company pursuant to Section 10 if (i) all of the Company's assets were sold
at their book value, (ii) the Company paid its accrued, but unpaid, liabilities
and establish reserves for reasonably anticipated contingent and unknown
liabilities, and (iii) the Company distributed the remaining proceeds to the
Members in liquidation, as of the date of the Notice to Purchase.
(c) The closing for the purchase of the Deceased Member's Company
Interest shall take place within 20 days after the purchase price has been
finally agreed upon or the Net Equity determined. At the closing, the Selling
Members shall execute and deliver such instruments as the Company shall
reasonably require to vest in the Company the interest of the Selling Members
in and to the Deceased Member's Company Interest. Upon delivery of such
instruments, the Company, at its election, shall pay to each Selling Member
their share of the purchase price either (i) in cash or by certified or bank
check in one lump sum, or (ii) in seven equal annual installments. The lump
sum or the first installment shall be paid at the closing and any remaining
payments evidenced by a promissory note bearing interest at the Applicable
Federal Rate at the closing date determined under Section 1274 of the Internal
Revenue Code to avoid the imputed interest rules. However, if the Company is
the beneficiary of any insurance policy on the life of the Deceased Member, the
net proceeds of such policy received by the Company shall, to the extent of any
unpaid purchase price and after reduction for any other amount paid upon
closing, be applied in full as a payment when received. The note shall be
secured by the Company's assets (subordinate to any existing or future bank
debt) and evidenced by a recorded security interest. The note shall permit
prepayment at any time without penalty and shall provide for immediate payment
of the balance due on default in payment of principal or interest after 10 days
written notice of default. The Company also shall agree in writing to defend,
indemnify and hold harmless the Selling Members to the extent that they have
any direct or indirect liability for the debts
19
<PAGE> 23
or other obligations of the Company.
(d) If the Company does not purchase the Deceased Member's Company
Interest, the Deceased Member's estate or successors in interest shall succeed
to the Deceased Member's Company Interest, but such interest in the Company
shall remain subject to all of the provisions of this Agreement.
ARTICLE 13
ARBITRATION
Any disputes arising out of this Agreement which cannot be resolved by the
Members themselves or pursuant to the terms of this Agreement shall be
submitted to arbitration in accordance with the rules of the American
Arbitration Association, and judgment may be entered upon the award of the
arbitrators in a court of competent jurisdiction.
ARTICLE 14
INVESTMENT REPRESENTATION
Each Member represents and warrants to each other and to the Company he is
acquiring his respective interest in the Company for his own personal account
for investment, and without a view to transferring, reselling, or distributing
such interest. In addition, no Member shall sell or dispose of his interest in
the Company in a manner that violates any Federal or state securities laws.
Each Member shall indemnify and hold the Company harmless from and against all
liability, costs and expenses, including reasonable attorneys' fees, incurred
by the Company or the Members, as a result of a breach of the representations
and warranties made in this Section 14 by such Member.
ARTICLE 15
AMENDMENTS
This Agreement may be amended only by written agreement of all the
Members; provided, however, that this Agreement may be amended by the Majority
Interest to the extent necessary to permit the allocations and distributions
contained in this Agreement to be sustained under existing or future Federal
income tax laws and regulations.
ARTICLE 16
MISCELLANEOUS PROVISIONS
16.1 Books of Account; Reports. (a) The Company shall keep true and
complete books of account and records of all Company's business and affairs as
required by the Act. The books of account and records shall be kept at the
principal
20
<PAGE> 24
office of the Company. The Company shall maintain at such office (i) a list of
names and addresses of all Members; (ii) a copy of the Articles together with
executed copies of all powers of attorney pursuant to which the Articles have
been executed; (iii) copies of the Company's Federal, state and local income
tax returns and reports for the three most recent years; (iv) copies of the
Company's current Agreement and (v) copies of the financial statements of the
Company for the three most recent years. Such Company records shall be
available to any Member or his designated representative during ordinary
business hours at the reasonable request and expense of such Member.
(b) The Company will use its best efforts to furnish, or
cause to be furnished, the following items on the dates indicated:
(1) an annual report consisting of an income statement
for the prior year and a balance sheet as of the year ended - annually.
(2) Member information tax returns (Schedule K-1) -
March 15.
16.2 Bank Accounts and Investment of Funds. All funds of the Company
shall be deposited in its name in such checking accounts, savings accounts,
time deposits, or certificates of deposit or shall be invested in such other
manner, as shall be designated by the Majority Interest from time to time.
Withdrawals shall be made upon such signature or signatures as the Majority
Interest may designate.
16.3 Accounting Decisions. All decisions as to accounting matters,
except as specifically provided to the contrary herein, shall be made by the
Majority Interest in accordance with generally accepted accounting principles
consistently applied. Such decisions shall be acceptable to the accountants
retained by the Company, and the Majority Interest may rely upon the advice of
the accountants as to whether such decisions are in accordance with generally
accepted accounting principles.
16.4 Federal Income Tax Elections. The Company shall, to the extent
permitted by applicable law and regulations and upon obtaining any necessary
approval of the Commissioner of Internal Revenue, elect to use such methods of
depreciation, and make all other Federal income tax elections in such manner,
as the Majority Interest determine to be most favorable to the Members. The
Majority Interest may rely upon the advice of the accountants retained by the
Company as to the availability and effect of all such elections.
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<PAGE> 25
16.5 Entire Agreement. This Agreement constitutes the entire
Agreement between the parties and may be modified only as provided herein. No
representations or oral or implied agreements have been made by any party
hereto or his agent, and no party to this Agreement relies upon any
representation or agreement not set forth in it. This Agreement supersedes any
and all other agreements, either oral or written, by and among the Company and
its Members.
16.6 Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if (i) physically delivered, telephonically transmitted by telecopier or
other similar means, (ii) one (1) day after having been delivered to Federal
Express or other delivery courier for next day delivery, with proof of delivery
to the recipient received by the courier in the form of a signature of
recipient, or (iii) three (3) days after having been deposited in the United
States Mail, as certified mail with return receipt requested and with postage
prepaid, addressed to the Members at the addresses listed in Exhibit A. The
addresses and other information so indicated for any Member may be changed by a
Member by written notice to the Company.
16.7 Further Execution. Upon request of the Company from time to
time, the Members shall execute and swear to or acknowledge any amended
Articles and any other writing which may be required by any rule or law or
which may be appropriate to the effecting of any action by or on behalf of the
Company or the Members which has been taken in accordance with the provisions
of this Agreement.
16.8 Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the parties, their successors and permitted assigns.
None of the provisions of this Agreement shall be construed as for the benefit
of or as enforceable by any creditor of the Company or the Members or any other
person not a party to this Agreement.
16.9 Severability. The invalidity or unenforceability of any
provision of this Agreement in a particular respect shall not affect the
validity and enforceability of any other provision of this Agreement or of the
same provision in any other respect.
16.10 Captions. All captions are for convenience only, do not form a
substantive part of this Agreement and shall not restrict or enlarge any
substantive provisions of this Agreement.
16.11 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one instrument. The
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<PAGE> 26
Company shall have custody of counterparts executed in the aggregate by all
Members.
16.12 Michigan Law to Control. The validity and interpretation of, and
the sufficiency of performance under, this Agreement shall be governed by
Michigan law.
The parties have executed this Agreement to be effective on the date first
above written.
MEMBERS:
KEY PLASTICS, INC.
By: David C. Benoit
--------------------------
Its: CEO
--------------------
David C. Benoit
--------------------------
David C. Benoit
23
<PAGE> 27
KEY PLASTICS INTERNATIONAL L.L.C.
EXHIBIT A
Initial Capital Membership
Name and Address Contributions Percentages
- ---------------- ---------------- -----------
Members
- -------
Key Plastics, Inc. $ 99%
21333 Haggerty Road
Suite 200
Novi, Michigan 48375
David C. Benoit $ 1%
------- --
21333 Haggerty Road
Suite 200
Novi, Michigan 48375
Totals $ 100%
======= ===
A-1
<PAGE> 1
EXHIBIT 3.9
OPERATING AGREEMENT
OF
KEY PLASTICS AUTOMOTIVE L.L.C.
<PAGE> 2
TABLE OF CONTENTS
Page
----
Article 1 Organization of Company 1
1.1 Formation 1
1.2 Name and Office 1
1.3 Duration 1
1.4 Registered Office and Resident Agent 1
Article 2 Definitions 1
Article 3 Purposes 5
Article 4 Capital Contributions; Borrowings 6
4.1 Initial Contributions of Members 6
4.2 Additional Capital Contributions 6
4.3 Withdrawals 6
4.4 Borrowings 6
4.5 Additional Members 6
Article 5 Management 6
5.1 Powers of the Members 6
5.2 Limitations on Powers 7
5.3 Self Dealing 7
5.4 Standard of Care; Liability 8
5.5 Reimbursement 8
5.6 Delegation of Authority 8
Article 6 Meetings of Members 9
6.1 Voting 9
6.2 Meetings 9
6.3 Consent 9
Article 7 Capital Accounts; Profits and Losses;
Distributions 10
7.1 Capital Accounts 10
7.2 Allocation of Profits and Losses 10
7.3 Distributions 11
7.4 Other Allocations 11
7.5 Share of Excess Nonrecourse Liabilities 14
Article 8 Limitation of Liability; Indemnification 15
8.1 Limitation of Liability 15
8.2 Liability of Member to the Company 15
8.3 Indemnification 15
(i)
<PAGE> 3
Page
----
Article 9 Term of Company 16
9.1 Commencement 16
9.2 Dissolution 16
Article 10 Application of Assets 16
Article 11 Assignability of Interests 17
11.1 Permitted Assignments 17
11.2 Admission of Assignees as Members 17
11.3 Restrictions on Transfers 18
11.4 Section 754 Election 18
Article 12 Buy-Out Provisions Upon Member's Death 19
Article 13 Arbitration 20
Article 14 Investment Representation 20
Article 15 Amendments 20
Article 16 Miscellaneous Provisions 20
16.1 Books of Account; Reports 20
16.2 Bank Accounts and Investment of Funds 20
16.3 Accounting Decisions 21
16.4 Federal Income Tax Elections 21
16.5 Entire Agreement 21
16.6 Notices 21
16.7 Further Execution 22
16.8 Binding Effect 22
16.9 Severability 22
16.10 Captions 22
16.11 Counterparts 22
16.12 Michigan Law to Control 23
Exhibit A A-1
(ii)
<PAGE> 4
OPERATING AGREEMENT
OF
KEY PLASTICS AUTOMOTIVE L.L.C.
THIS OPERATING AGREEMENT of KEY PLASTICS AUTOMOTIVE L.L.C., a
Michigan limited liability company ("Company"), is made and entered into as of
April __, 1996 by and among the Company and those persons whose names are set
forth on attached Schedule A and are made a part of this Operating Agreement
and those persons who are later admitted as members (individually, "Member,"
and collectively, "Members") who agree as follows:
ARTICLE 1
ORGANIZATION OF COMPANY
1.1 Formation. The Company has been organized as a
Michigan limited liability company pursuant to the provisions of the Act and
this Agreement.
1.2 Name and Office. The name of the Company shall be Key
Plastics Automotive L.L.C., and its office shall be located at 21333 Haggerty
Road, Suite 200, Novi, Michigan 48375, or such other place as the Majority
Interest may determine from time to time.
1.3 Duration. The Company shall continue in existence for
the period fixed in the Articles for the duration of the Company or until the
Company shall be sooner dissolved and its affairs wound up in accordance with
the Act or this Agreement.
1.4 Registered Office and Resident Agent. The Company's
initial registered office shall be at the office of its resident agent at 21333
Haggerty Road, Suite 200, Novi, Michigan 48375 and the name of its initial
resident agent at such address shall be David C. Benoit. The registered
office and resident agent may be changed from time to time in accordance with
the Act. If the resident agent shall ever resign, the Company shall promptly
appoint a successor.
ARTICLE 2
DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
<PAGE> 5
The "Act" means the Michigan Limited Liability Company Act being
Act No. 23, Public Acts of 1993, as amended.
"Adjusted Deficit Capital Account Balance" means, with respect
to any Member, the deficit balance, if any, in such Member's Capital Account as
of the end of the relevant Company Fiscal Year, (1) increased by any amounts
which such Member is obligated to restore under Treasury Regulation Section
1.704-1(b)(2)(ii)(c), plus an amount equal to such Member's share of Company
Minimum Gain and such Member's share of Member Nonrecourse Debt Minimum Gain
and (2) decreased by the items described in Treasury Regulation Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6). This definition of Adjusted Capital
Account Deficit is intended to comply with the provisions of Treasury
Regulation Sections 1.704-1(b)(2)(ii)(d) and 1.704-2, and will be interpreted
consistently with those provisions.
"Affiliate" means (i) any person directly or indirectly
controlling, controlled by or under common control with another person, (ii) a
person owning or controlling ten percent (10%) or more of the outstanding
voting securities of such other person, (iii) any officer, director, member or
partner of such person, or (iv) a person who is an officer, director, member,
partner or holder of ten percent (10%) or more of any of the voting interests
of any person described in clauses (i) through (iii) of this sentence.
"Agreement" means this Operating Agreement and amendments
adopted in accordance with this Agreement and the Act.
The "Articles" means the Articles of Organization, including any
restatements or amendments, which are filed with the Michigan Department of
Commerce.
"Book Value" means with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:
(a) the initial Book Value of any asset contributed (or
deemed contributed) to the Company shall be such asset's
gross fair market value at the time of such contribution;
(b) the Book Value of all Company assets shall be adjusted
to equal their respective gross fair market values at the
times specified in Treasury Regulations under Code Section
704(b) if the Company so elects;
2
<PAGE> 6
(c) if the Book Value of an asset has been determined
pursuant to clause (a) or (b), such Book Value shall
thereafter be adjusted by the Depreciation taken into
account with respect to such asset for purposes of computing
Profits and Losses.
"Capital Accounts" shall have the meaning set forth in Section
7.1 of this Agreement.
"Capital Contributions" means the amount of cash, property, or
services contributed or obligated to be contributed to the Company by a Member.
The "Code" means the Internal Revenue Code, as amended.
"Company Minimum Gain" means an amount determined in accordance
with Treasury Regulation Section 1.704-2(d) for partnership minimum gain by
computing, with respect to each nonrecourse liability of the Company (as
defined in Treasury Regulation Section 1.752-1(a)(2)), the amount of gain (of
whatever character), if any, that would be realized by the Company if (in a
taxable transaction) it disposed of property subject to such liability in full
satisfaction thereof, and by then aggregating the amounts so computed.
"Depreciation" means for each Fiscal Year of the Company or
other period, an amount equal to the depreciation, amortization or other cost
recovery deduction allowable under the Code with respect to an asset for such
year or other period, except that if the Book Value of an asset differs from
its adjusted basis for federal income tax purposes at the beginning of such
year or other period, Depreciation shall be an amount which bears the same
ratio to such beginning Book Value as the federal income tax depreciation,
amortization or other cost recovery deduction for such year or other period
bears to such beginning adjusted tax basis; provided, however, that if the
federal income tax depreciation, amortization or other cost recovery deduction
for such year is zero, Depreciation shall be determined with reference to such
beginning Book Value using any reasonable method selected by the Majority
Interest.
"Distributable Cash" means, at any time, that portion of the
cash and cash equivalent assets of the Company which, in light of the Company's
then current and foreseeable sources of, and needs for, cash, exceeds the
amount of cash needed by the Company, as determined by the Majority Interest,
to (i) service its debts and obligations in a timely fashion, (ii) maintain
adequate working capital and reserves, and (iii) conduct its business and carry
out its purposes.
3
<PAGE> 7
The "Fiscal Year" of the Company, and its taxable year for
Federal income tax purposes, shall be the calendar year.
"Insolvent" means such time as when the value of the Company's
assets become less than the sum of its liabilities or the Company becomes
unable to pay its debts as they become due in the usual course of business.
"Majority Interest" means those Members holding more than 50% of
the Membership Percentages held by the Members.
"Majority Interest of the Remaining Members" means Members
holding more than 50% of the Membership Percentages and Capital Account
Balances of the Members entitled to vote (other than the Member triggering
dissolution under Section 9.2(d)).
"Member Nonrecourse Debt" shall have the meaning, and be
determined in the same manner as, partner nonrecourse debt pursuant to Treasury
Regulation Section 1.704-2(b)(4).
"Member Nonrecourse Debt Minimum Gain" means the amount, with
respect to each Member Nonrecourse Debt, equal to the Company Minimum Gain that
would result if such Member Nonrecourse Debt were treated as a nonrecourse
liability of the Company, determined in the same manner as partner nonrecourse
debt minimum gain in accordance with Treasury Regulation Section 1.704-2(i)(3).
"Member Nonrecourse Deductions" shall have the meaning, and be
determined in the same manner as, partner nonrecourse deduction pursuant to
Treasury Regulation Section 1.704-2(i)(2).
"Members" are the persons designated as such in Exhibit A. Any
reference to a Member shall, unless the context clearly requires otherwise,
include a reference to his predecessor and successor (other than a mere
assignee not made a substitute Member) in interest.
"Membership Percentages" means the Members' respective interests
in the Company as set forth in Exhibit A, as amended from time to time.
"Nonrecourse Deductions" shall have the meaning set forth in
Treasury Regulation Section 1.704-2(c).
"Profits and Losses" means the Company's taxable income or loss
for each Fiscal Year (or other period) determined in accordance with the
accounting methods followed by the Company for federal income tax purposes (for
this purpose all items of income, gain, loss or deduction required to be
separately stated pursuant to Code Section 703(a)(1)
4
<PAGE> 8
shall be included in taxable income or loss) as determined by the independent
certified public accountants employed by the Company, with the following
adjustments:
(a) any income of the Company that is exempt from
federal income tax and not otherwise taken into account in computing Profits
and Losses shall be added to such taxable income or loss:
(b) any expenditures of the Company described in
Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
under Code Section 704(b) and not otherwise taken into account in computing
Profits and Losses shall be subtracted from such taxable income or loss;
(c) in the event the Book Value of any Company
asset is adjusted, the amount of such adjustment shall be taken into account as
gain or loss from the disposition of such asset for purposes of computing
Profits or Losses;
(d) any gain or loss resulting from any disposition
of Company property with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to the Book Value of
such property rather than its adjusted tax basis;
(e) in lieu of the depreciation, amortization, and
other cost recovery deductions taken into account in computing taxable income
or loss, there shall be taken into account Depreciation for such Fiscal Year or
other period; and
(f) notwithstanding the foregoing, any items which
are specially allocated pursuant to Section 7.4 shall not be taken into account
in computing Profits and Losses.
"Treasury Regulations" includes proposed, temporary and final
regulations promulgated under the Code and the corresponding sections of any
regulations subsequently issued that amend or supersede such regulations.
All references to statutory provisions shall be deemed to
include reference to corresponding provisions of subsequent law.
ARTICLE 3
PURPOSES
The Company may engage in any lawful business permitted by the
Act or the laws of any jurisdiction in which the Company may do business. The
Company shall have the authority to do all things necessary or convenient to
accomplishment of its purposes and to operate its business,
5
<PAGE> 9
including all powers granted by the Act.
ARTICLE 4
CAPITAL CONTRIBUTIONS; BORROWINGS
4.1 Initial Capital Contributions of Members. Each of the
Members has made an initial capital contribution and owns a Membership
Percentage in the Company as set forth on Schedule A, as amended. No interest
shall accrue on any Capital Contribution made to the Company unless otherwise
agreed by the Members in writing or otherwise provided in this Agreement.
4.2 Additional Capital Contributions. Additional Capital
Contributions shall be made by the Members to the Company only upon the
unanimous consent of the Members.
4.3 Withdrawals. No Member shall be entitled to be repaid
any portion of his Capital Contribution or withdraw from the Company except as
provided in this Agreement. A Member who withdraws in violation of this
Agreement shall not be entitled to receive the fair market value of his
interest after the withdrawal but shall only be entitled to distributions he
otherwise would have received as a nonwithdrawing Member.
4.4 Borrowings. The Company may borrow sums for Company
purposes from any source, including any Member, provided that such borrowing is
not prohibited by any applicable law or regulation and is approved as required
under Section 5 of this Agreement.
4.5 Additional Members. No additional Members shall be
admitted to the Company without the unanimous consent of all Members.
ARTICLE 5
MANAGEMENT
5.1 Powers of the Members.
(a) The Company shall be managed by the Members in
proportion to their Membership Percentages. Each Member shall have the power
to do all things appropriate to the accomplishment of the purposes of the
Company, including (but not limited to): (1) entering into any and all
agreements and executing contracts, notes, mortgages and other writings; (2)
paying all Company obligations including construction cost expenditures and
property management fees; (3) purchasing and maintaining insurance on behalf of
the Company and its Members and employees or agents against any liability or
expense asserted against or incurred by the Company or such persons; (4)
transacting the Company's business under an assumed name or name other than its
name as set forth in the Articles and
6
<PAGE> 10
filing a Certificate of Assumed Name with the Michigan Department of Commerce;
(5) appointing any Member or other person as agent for service of process on
the Company as required by the law of any state in which the Company transacts
business; (6) commencing, prosecuting or defending any proceeding in the
Company's name; (7) participating with others in partnerships, joint ventures,
and other associations of any kind; and (8) doing such other acts as may
facilitate the Company's business.
(b) Every contract, lease, deed or other instrument
executed by a Member or Members holding a Majority Interest of the Membership
Percentages shall be conclusive evidence, at the time of execution, that this
Company was then in existence, that this Agreement had not theretofore been
terminated or amended in any manner not disclosed in the Articles and that the
execution and delivery of such instrument was duly authorized by the Members.
(c) David C. Benoit shall act as "tax matters
Partner" of the Company, as defined in Code Section 6231(a)(7).
5.2 Limitations on Powers. Notwithstanding the foregoing
and any other provision contained in this Agreement to the contrary, no act
shall be taken, sum expended, decision made, obligation incurred or power
exercised by any Member on behalf of the Company except by the consent of all
of the Members with respect to (a) the assignment, transfer, pledge, compromise
or release of any of the claims of or debts due the Company (except upon
payment in full) or arbitrate or consent to the arbitration of any of the
disputes or controversies of the Company; (b) any merger of the Company; (c) a
transaction involving an actual or potential conflict of interest between a
Member and the Company; (d) any change in the character of the business and
affairs of the Company; (e) the commission of any act which would make it
impossible for the Company to carry on its ordinary business and affairs; or
(f) any act that would contravene any provision of the Articles or this
Agreement or the Act.
5.3 Self Dealing. Any Member and any Affiliate of a Member
may deal with the Company, directly or indirectly, as vendor, purchaser,
employee, agent or otherwise. No contract or other act of the Company shall be
voidable or affected in any manner by the fact that a Member or his Affiliate
is directly or indirectly interested in such contract or other act apart from
his interest as a Member, nor shall any Member or his Affiliate be accountable
to the Company or the other Members in respect of any profits directly or
indirectly realized by him by reason of such contract or other act, and such
interested Member shall be eligible to vote or take any
7
<PAGE> 11
other action as a Member in respect of such contract or other act as it would
be entitled were he or his Affiliate not interested therein. Notwithstanding
the foregoing provisions of this Section 5.3, (a) any direct or indirect
interest of a Member or Affiliate of a Member in any contract or other act,
other than his interest as a Member, shall be disclosed to all other Members,
(b) such contract or other act shall be approved by a Majority Interest of the
Members unless the same is specifically authorized herein, and (c) the Members
shall not receive or hold any property of the Company as collateral security in
respect of any claim against the Company.
5.4 Standard of Care; Liability. Each Member shall
discharge his management duties in good faith, with the care an ordinarily
prudent person in a like position would exercise under similar circumstances,
and in a manner he reasonably believes to the be in the best interests of the
Company as required by the Act. A Member shall not be liable for monetary
damages to the Company for any breach of any such management duties except for
(i) actions constituting fraud, willful misconduct or gross negligence, (ii)
actions taken by a Member in violation of this Agreement, (iii) the receipt of
a financial benefit to which the Member is not entitled, (iv) voting for or
assenting to a distribution to Members in violation of this Agreement or the
Act, or (v) a knowing violation of the law.
5.5 Reimbursement. Members shall receive no compensation
for managing the affairs of the Company unless approved by an affirmative vote
of a Majority Interest. Members shall be entitled to reimbursement from the
Company of all expenses of the Company reasonably incurred and paid for by such
Member on behalf of the Company.
5.6 Delegation of Authority. The Members, acting by
Majority Interest and by a written instrument, may from time to time delegate
all or any of their powers or duties hereunder to one or more Members. Any
Member may by written instrument delegate any of his powers and duties to any
other Member, in which event any exercise or performance of such powers or
duties by such Member shall be treated as the action of the delegating Member
as well as the acting Member. Any Member making such delegation shall be
permitted to revoke the delegation at any time by written notice to the other
Members and the Company.
8
<PAGE> 12
ARTICLE 6
MEETINGS OF MEMBERS
6.1 Voting. All Members shall be entitled to vote on any
matter submitted to a vote of the Members. Unless a greater vote is required
by the Act, the Articles, or this Agreement, the affirmative vote or consent of
a Majority Interest of all the Members entitled to vote or consent on such
matter shall be required.
6.2 Meetings. An annual meeting of Members for the
transaction of such business as may properly come before the Meeting, shall be
held at such place, on such date and at such time as the Majority Interest
shall determine. Special meetings of Members for any proper purpose or
purposes may be called at any time by the holders of at least twenty-five
percent (25%) of the Membership Percentages of all Members. The Company shall
deliver or mail written notice stating the date, time, place and purposes of
any meeting to each Member entitled to vote at the meeting. Such notice shall
be given not less than ten (10) nor more than sixty (60) days before the date
of the meeting. Meetings may be conducted in person or by telephone conference
of the Members upon the consent of the Majority Interest.
6.3 Consent. Any action required or permitted to be taken
at an annual or special meeting of the Members may be taken without a meeting,
without prior notice, and without a vote, if consents in writing, setting forth
the action so taken, are signed by the Members having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all Members entitled to vote on the action were present and
voted. Every written consent shall bear the date and signature of each Member
who signs the consent. Prompt notice of the taking of action without a meeting
by less than unanimous written consent shall be given to all Members who have
not consented in writing to such action. In addition, the Company may give all
the Members written notice of the action, event or agreement and state in the
notice that any Member who does not indicate his disapproval by written notice
to the Company within a specified period of time (not less than 30 days after
mailing of the notice) shall be deemed to have given his consent or approval to
the action or event or to have made the agreement referred to in the notice.
In such event, any Member who does not indicate his disapproval by written
notice to the Company within the time specified shall be deemed to have given
his written consent, approval or agreement.
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ARTICLE 7
CAPITAL ACCOUNTS; PROFITS AND LOSSES; DISTRIBUTIONS
7.1 Capital Accounts. A capital account shall be
maintained for each Member, to which contributions, Profits and any items of
income and gain under Section 7.4 shall be credited and against which
distributions and Losses and any items of deduction and loss under Section 7.4
shall be charged. Capital accounts shall be maintained in accordance with the
accounting principles of Code Section 704 and the regulations thereunder.
7.2 Allocation of Profits and Losses. Except as provided
in Section 7.2(c) and (d) and after giving effect to the special allocations
set forth in Section 7.4, to the extent applicable, Profits and Losses for any
Fiscal Year shall be allocated to the Members:
(a) First, in the case of Profits, to any Member in
an amount up to, but not exceeding, the aggregate amount of Losses previously
allocated to that Member in accordance with the second sentence of Section
7.2(c); and
(b) Second, in the case of either Profits or
Losses, to the Members in accordance with their Membership Percentages.
(c) The Losses allocated pursuant to Section 7.2(b)
shall not exceed the maximum amount of Losses that can be so allocated without
causing any Member to have an Adjusted Capital Account Deficit at the end of
any Fiscal Year. In the event some but not all of the Members would have
Adjusted Capital Account Deficits as a consequence of an allocation of Losses
pursuant to Section 7.2(b), the limitation set forth in this Section 7.2(c)
will be applied on a Member by Member basis so as to allocate the maximum
permissible Losses to each Member under Treasury Regulations Section
1.704-1(b)(2)(ii)(d). In the event all Members have Adjusted Capital Account
Deficits, Losses shall be allocated in accordance with Section 7.2(b) hereof.
(d) If there is an addition, withdrawal or
substitution of, or any other change in the interest of, any Member during the
period covered by an allocation, then subject to any agreement between the
persons affected, the Profits and Losses for the period shall be allocated
among the varying interests consistent with the provisions of Code Section
706(d) and any regulations promulgated thereunder. If Code Section 706(d) or
any regulation thereunder allow alternative methods of allocation, the Majority
Interest shall determine, in its
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sole discretion, which alternative methods to use in allocating Profits and
Losses among the varying interests.
7.3 Distributions. (a) The Company shall distribute to the
Members from time to time, as determined by the Majority Interest,
Distributable Cash of the Company. Except as provided in Section 10, all
distributions shall be made to the Members in proportion to their respective
Membership Percentages on the date of the distribution.
(b) No distributions shall be declared and paid
unless, after the distribution is made, the Company would be able to pay its
debts as they become due in the usual course of business and the assets of the
Company are in excess of the sum of: (i) the Company's liabilities, plus (ii)
the amount that would be needed to satisfy the preferential rights of other
Members upon dissolution that are superior to the rights of the Members(s)
receiving the distribution.
7.4 Other Allocations. Notwithstanding the foregoing
provisions of this Section 7 or any other provision of this Agreement, the
following provisions shall apply:
(a) Compliance With Treasury Regulations. It is
anticipated that the Company will be treated as a partnership for federal
income tax purposes and, accordingly, the partnership tax provisions of the
Code shall apply to the Company and its Members. It is the intent of the
Members that each Member's distributive share of income, gain, loss, deduction,
or credit (or item thereof) shall be determined and allocated in accordance
with this Section 7 to the fullest extent permitted by Section 704(b) of the
Code. In order to preserve and protect the determinations and allocations
provided for in this Section 7, the Majority Interest is authorized and
directed to allocate income, gain, loss, deduction, or credit (or item thereof)
arising in any year differently than otherwise provided for in this Section 7
to the extent that allocating income, gain, loss, deduction, or credit (or item
thereof) in the manner provided for in this Section 7 would cause the
determinations and allocations of each Member's distributive share of income,
gain, loss, deduction, or credit (or item thereof) not to be permitted by
Section 704(b) of the Code and Treasury Regulations promulgated thereunder.
Any allocation made pursuant to this Section 7.4 shall be deemed to be a
complete substitute for any allocation otherwise provided for in this Section 7
and no amendment of this Agreement or approval of any Member shall be required.
The terms used in this Section 7 shall have the same meaning as in such
Treasury Regulations.
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(b) Only Required Modifications. In making any
allocation (the "new allocation") under Section 7.4, the Majority Interest is
authorized to act only after having been advised by the Company's accountants
that, under Section 704(b) of the Code and the Treasury Regulations thereunder
(i) the new allocation is necessary, and (ii) the new allocation is the minimum
modification of the allocations otherwise provided for in this Section 7
necessary in order to assure that, either in the then current year or in any
preceding year, each Member's distributive share of income, gain, loss,
deduction, or credit (or item thereof) is determined and allocated in
accordance with this Section 7 to the fullest extent permitted by Section
704(b) of the Code and the Treasury Regulations thereunder.
(c) Company Minimum Gain Chargeback. If there is a
net decrease in Company Minimum Gain during a Company Fiscal Year so that an
allocation is required by Treasury Regulation Section 1.704-2(f), then each
Member shall be specially allocated items of income and gain for such year
(and, if necessary, subsequent years) equal to such Member's share of the net
decrease in Company Minimum Gain as determined by Treasury Regulation Section
1.704-2(g)(2). Such allocations shall be made in a manner and at a time which
will satisfy the requirements of Treasury Regulation Section 1.704-2(f)(1) and
shall be interpreted consistently therewith.
(d) Member Minimum Gain Chargeback. If there is a
net decrease in the Member Nonrecourse Debt Minimum Gain during any Fiscal
Year, any Member who has a share of such Member Nonrecourse Debt Minimum Gain
(as determined in the same manner as partner nonrecourse debt minimum gain
under Treasury Regulation Section 1.704-2(i)(5)) shall be specially allocated
items of income or gain for such year (and, if necessary, subsequent Fiscal
Years) equal to such Member's share of the net decrease in the Member
Nonrecourse Debt Minimum Gain in the manner and to the extent required by
Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted consistently
therewith.
(e) Qualified Income Offset. If a Member
unexpectedly receives an adjustment, allocation, or distribution described in
Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), any of which
causes or increases an Adjusted Deficit Capital Account Balance in such
Member's capital account, then he will be specially allocated items of income
and gain in an amount and manner sufficient to eliminate such deficit balance
created or increased by such adjustment, allocation, or distribution as quickly
as possible; provided, however, an allocation pursuant to this Section 7.4(e)
will be made if and only to the extent that such Member would have an Adjusted
Capital Account Deficit after all other
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allocations provided for in Section 7 have been tentatively made as if this
Section 7.4(e) were not in the Agreement.
(f) Gross Income Allocation. If a Member has an
Adjusted Deficit Capital Account Balance at the end of a Company taxable year,
such Member shall be allocated items of income and gain in the amount of such
Adjusted Deficit Capital Account Balance as quickly as possible in order to
eliminate it.
(g) Allocation of Nonrecourse Deductions.
Nonrecourse Deductions shall be allocated among the Members in proportion to
their respective Membership Percentages.
(h) Member Nonrecourse Deductions. Any Member
Nonrecourse Deductions shall be allocated to the Member who bears the economic
risk of loss with respect to the Member Nonrecourse Debt to which such Member
Nonrecourse Deductions are attributable in accordance with Treasury Regulation
Section 1.704-2(i)(1).
(i) Curative Allocations. If the Company is
required by Section 7.4(a),(c),(d),(e),(f),(g), or (h) to make any new
allocation in a manner other than as provided for in this Section 7 without
regard thereto, then the Majority Interest is authorized and directed, insofar
as it is permitted to do so by Section 704(b) of the Code, to allocate income,
gain, loss, deduction, or credit (or item thereof) arising in the current
Fiscal Year (or subsequent Fiscal Years, if necessary) in such manner so as to
bring the proportions of income, gain, loss, deduction, or credit (or item
thereof) allocated to the Members as nearly as possible to the proportion
otherwise contemplated by this Section 7 without regard thereto; provided,
however, that Nonrecourse Deductions shall not be taken into account except to
the extent that there has been a reduction in Company Minimum Gain and Member
Nonrecourse Deductions shall not be taken into account except to the extent
that there has been a reduction in Member Minimum Gain and provided further
that such Nonrecourse Deductions and Member Nonrecourse Deduction shall not in
any event be taken into account to the extent that the Majority Interest
reasonably determines that such allocations are likely to be offset by
subsequent allocations pursuant to Section 7.4(c) or (d).
(j) Advice of Accountants. Allocations made by the
Majority Interest under this Section 7.4 in reliance upon the advice of the
Company's accountants shall be deemed to be made pursuant to any fiduciary
obligation to the Company and the Members.
(k) Section 754 Election. To the extent an
adjustment to the adjusted tax basis of any Company asset
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pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to
Regulations Section 1.704-1(b)(2)(iv)(m), to be taken into account in
determining capital accounts, the amount of such adjustment to the capital
accounts shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreased such basis) and such
gain or loss shall be specially allocated to the Members in a manner consistent
with the manner in which their capital accounts are required to be adjusted
pursuant to such Section of the Regulations.
(l) Imputed Interest. If any Member makes a loan
to the Company, or the Company makes a loan to any Member, and interest in
excess of the amount actually payable is imputed under Code Sections 7872, 483,
or 1271 through 1288 or corresponding provisions of subsequent Federal income
tax law, then any item of income or expense attributable to any such imputed
interest shall be allocated solely to the Member who made or received the loan
and shall be credited or charged to his capital account, as appropriate.
(m) Contributed Property. Income, gain, loss or
deduction with respect to any property contributed by a Member shall, solely
for tax purposes, be allocated among the Members, to the extent required by
Code Section 704(c) and the related Treasury Regulations, to take account of
the variation between the adjusted tax basis of such property and its Book
Value at the time of contribution to the Company. If the Book Value of any
Company property is adjusted as provided in Treasury Regulation Section
1.704-1(b)(2)(iv), subsequent allocations of income, gain, loss and deduction
and the Book Value of such property shall be adjusted as provided in Code
Section 704(c) and the related Treasury Regulations. If Code Section 704(c)
and the regulations thereunder allow alternative methods of making such
acquired allocations, the Majority Interest shall determine, in their sole
discretion, which alternative method to use. Allocations under this Section
7.4(m) are solely for purposes of federal, state and local taxes and shall not
affect, or in any way be taken into account in computing, any Member's Capital
Account or share of Profits, Losses, or other items or distributions under any
provision of this Agreement.
7.5 Share of Excess Nonrecourse Liabilities. For purposes
of calculating the Members' shares of "excess nonrecourse liabilities" of the
Company (within the meaning of Treasury Regulation Section 1.752-3(a)(3)), the
Members intend that they be considered as sharing profits of the Company in
proportion to their respective Membership Percentages.
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ARTICLE 8
LIMITATION OF LIABILITY; INDEMNIFICATION
8.1 Limitation of Liability. Unless otherwise provided by
this Agreement, the Act, or expressly assumed, a person who is a Member shall
not be liable for the acts, debts or liabilities of the Company beyond his
respective Capital Contribution.
8.2 Liability of Member to the Company. A Member who
knowingly receives a distribution made by the Company which is either in
violation of this Agreement or when the Company is Insolvent, is liable to the
Company for the repayment of the distribution.
8.3 Indemnification. Except as otherwise provided in this
Section 8.3, the Company shall indemnify any Member (and may indemnify any
employee or agent of the Company), who was or is a party or is threatened to be
made a party to a threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative, or investigative, and whether formal
or informal (other than an action by or in the right of the Company) by reason
of the fact that such person is or was a Member, employee or agent of the
Company against expenses (including attorneys' fees), judgments, penalties,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with the action, suit or proceeding, if the person acted
in good faith, with the care an ordinarily prudent person in a like position
would exercise under similar circumstances, and in a manner that such person
reasonably believed to be in the best interests of the Company, and with
respect to a criminal action or proceeding, if such person had no reasonable
cause to believe such person's conduct was unlawful. To the extent that a
Member, employee or agent of the Company has been successful on the merits or
otherwise in defense of an action, suit or proceeding referred to in this
Section 8.3, or in defense of any claim, issue or other matter in the action,
suit or proceeding, such person shall be indemnified against actual and
reasonable expenses (including attorneys' fees) incurred by such person in
connection with the action, suit or proceeding and any action, suit or
proceeding brought to enforce the mandatory indemnification provided herein.
Any indemnification permitted under this Section 8.3 (unless ordered by a
court) shall be made by the Company only as authorized in the specific case
upon a determination that the indemnification is proper under the circumstances
because the person to indemnify has met the applicable standard of conduct and
upon an evaluation of the reasonableness of expenses and amount paid in
settlement. This determination and evaluation shall be made by the Majority
Interest of the Members who are not parties or threatened to be made parties to
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the action, suit or proceeding. Notwithstanding anything in this Section 8.3
to the contrary, no indemnification shall be provided to any Member, employee
or agent of the Company for or in connection with the receipt of a financial
benefit to which such person is not entitled, voting for or assenting to a
distribution to Members in violation of this Agreement or Act, or a knowing
violation of law.
ARTICLE 9
TERM OF COMPANY
9.1 Commencement. The term of the Company began on the
date the Articles of Organization were filed with the Michigan Department of
Commerce and became effective under the Act, April 15, 1996.
9.2 Dissolution. The Company shall be dissolved and its
affairs be wound up upon the occurrence of any of the following events:
(a) December 31, 2025;
(b) The sale or other disposition of substantially
all of the assets of the Company;
(c) By the written consent of Members holding at
least 75% of the Membership Percentages in the Company;
(d) The death, withdrawal, expulsion, bankruptcy,
or dissolution of a Member or the occurrence of any other event that terminates
the continued membership of a Member in the Company; provided, however, that
the Company's existence shall not terminate if within 90 days after such event,
a Majority Interest of the Remaining Members elect to reconstitute and continue
the business of the Company and to the admission of one or more Members as
necessary; or
(e) Upon entry of a decree of judicial dissolution.
ARTICLE 10
APPLICATION OF ASSETS
Upon dissolution of the Company, the Company shall cease
carrying on its business and affairs and shall commence winding up of the
Company's business and affairs and complete the winding up as soon as
practicable. The Company affairs shall be concluded by a Member or Members
selected in writing by the Majority Interest. The assets of the Company may be
liquidated or distributed in kind, as determined by the Majority Interest, and
the same shall first be applied to the
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payment of, or to a reserve for the payment of Company liabilities (including
such provision for contingent or unforeseen liabilities as the Majority
Interest deems appropriate) and then to the Members in accordance with their
respective positive Capital Accounts after allocations pursuant to Sections 7.2
and 7.4 for the current Fiscal Year. If Company assets are distributed in
kind, the assets so distributed shall be valued at their current fair market
values and the unrealized appreciation or depreciation in value of the assets
shall be allocated to the Members' Capital Accounts in the manner described in
Section 7.2 and 7.4 as if such assets had been sold, and such assets shall then
be distributed to the Members in accordance with their respective positive
Capital Accounts as so adjusted. To the extent that Company assets cannot
either be sold without undue loss or readily divided for distribution in kind
to the Members, then the Company may, as determined by the Majority Interest,
convey those assets to a trust or other suitable holding entity established for
the benefit of the Members in order to permit the assets to be sold without
undue loss and the proceeds thereof distributed to the Members at a future
date. The legal form of the holding entity, the identity of the trustee or
other fiduciary, and the terms of its governing instrument shall be determined
by the Majority Interest.
ARTICLE 11
ASSIGNABILITY OF INTERESTS
11.1 Permitted Assignments. Subject to the provisions of
Section 11, a Member may assign his interest in the Company in whole or part.
Such assignment shall not of itself substitute the assignee as a Member or
entitle the assignee to participate in the management of the Company. Such
assignee is only entitled to receive, to the extent assigned, the distributions
the assigning Member would otherwise be entitled to. Unless otherwise
provided, the assignor shall remain a Member liable for payment of any
remaining installments of Capital Contributions due with respect to the
interest assigned. No assignment of a Company interest shall be effective with
respect to the Company until written notice is given to the Company.
11.2 Admission of Assignees as Members. Except as provided
in Sections 11.3 and 12.1, an assignee shall be admitted as a Member only upon
the unanimous written consent of all the Members. As a condition of such
consent, the Members may require a substitute Member to comply with the
following requirements: (i) the assignment instrument being in form and
substance satisfactory to the Majority Interest and the Company's counsel; (ii)
the assignor and assignee named therein having executed and acknowledged such
other instrument or
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instruments as the Majority Interest may deem necessary or desirable to
effectuate such admission; (iii) the assignee having accepted and adopted all
of the terms and provisions of the Agreement, as the same may have been
amended, as if the assignee were a party who joined in the execution of this
Agreement; and (iv) such assignee having paid or acknowledged an obligation to
pay, as the Majority Interest may determine, all reasonable expenses (including
attorneys' fees) connected with such admission. If admitted, the substitute
Member has, to the extent assigned, all of the rights and powers, and is
subject to all the restrictions and liabilities of a Member.
11.3 Restrictions on Transfers. Notwithstanding the other
provisions of this Section 11, no Member shall sell, assign, transfer,
exchange, mortgage, pledge, grant, hypothecate, or otherwise dispose of any
interest in the Company except in compliance with Section 11.3. No Member
shall dispose of his interest in Company without the prior written consent of
all the Members (1) if the effect of the assignment would be to terminate the
Company within the meaning of Code Section 708(b), or (2) without an opinion of
counsel in form and substance satisfactory to counsel for the Company that
registration is not required under the Securities Act of 1933 and applicable
state law. In no event shall any Member assign his interest in the Company if
such assignment would violate any applicable state or Federal securities law.
The Members acknowledge that their interests in the Company have not been
registered under the Michigan Uniform Securities Act and agree that such
interests will not be transferred without registration under said Act or
exemption therefrom. Any attempted disposition of a Member's interest in the
Company in violation of Section 11 shall be null and void ab initio.
11.4 Section 754 Election. In the event of the transfer of
a Member's interest in the Company by sale or exchange, or upon the death of a
Member, the Company, if the person acquiring such interest so requests, shall
elect pursuant to Code Section 754, to adjust the basis of the Company
property. Each Member hereby agrees to provide the Company with all
information necessary to give effect to such election. The transferee shall
reimburse the Company for any reasonable costs incurred as a result of such
election, as determined by the Majority Interest.
ARTICLE 12
BUY-OUT PROVISION UPON MEMBER'S DEATH
(a) If a Member dies (the "Deceased Member"), the Company shall
have an option to acquire not less than all of the Deceased Member's interest
in the Company ("Company Interest"). The option shall be exercisable by
written notice to the Deceased Member's personal representative and the
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successors in interest to the Deceased Member, collectively the "Selling
Members", at any time within sixty (60) days after death of the Deceased Member
or the appointment of personal representative, whichever is later ("Notice to
Purchase"). If the option is exercised, the Deceased Member's Company Interest
shall be purchased by the Company. The Company shall purchase the Deceased
Member's Company Interest for (i) an amount agreed upon by the parties within
30 days from the date of the Notice to Purchase, or if they cannot agree, then
(ii) an amount equal to the Net Equity of the Deceased Member's Company
Interest as defined in Section 12(b).
(b) The Net Equity of the Deceased Member's Company
Interest shall be the amount that would be distributed to the Deceased Member
in liquidation of the Company pursuant to Section 10 if (i) all of the
Company's assets were sold at their book value, (ii) the Company paid its
accrued, but unpaid, liabilities and establish reserves for reasonably
anticipated contingent and unknown liabilities, and (iii) the Company
distributed the remaining proceeds to the Members in liquidation, as of the
date of the Notice to Purchase.
(c) The closing for the purchase of the Deceased Member's
Company Interest shall take place within 20 days after the purchase price has
been finally agreed upon or the Net Equity determined. At the closing, the
Selling Members shall execute and deliver such instruments as the Company shall
reasonably require to vest in the Company the interest of the Selling Members
in and to the Deceased Member's Company Interest. Upon delivery of such
instruments, the Company, at its election, shall pay to each Selling Member
their share of the purchase price either (i) in cash or by certified or bank
check in one lump sum, or (ii) in seven equal annual installments. The lump
sum or the first installment shall be paid at the closing and any remaining
payments evidenced by a promissory note bearing interest at the Applicable
Federal Rate at the closing date determined under Section 1274 of the Internal
Revenue Code to avoid the imputed interest rules. However, if the Company is
the beneficiary of any insurance policy on the life of the Deceased Member, the
net proceeds of such policy received by the Company shall, to the extent of any
unpaid purchase price and after reduction for any other amount paid upon
closing, be applied in full as a payment when received. The note shall be
secured by the Company's assets (subordinate to any existing or future bank
debt) and evidenced by a recorded security interest. The note shall permit
prepayment at any time without penalty and shall provide for immediate payment
of the balance due on default in payment of principal or interest after 10 days
written notice of default. The Company also shall agree in writing to defend,
indemnify and hold harmless the Selling Members to the extent that they have
any direct or indirect liability for the debts
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or other obligations of the Company.
(d) If the Company does not purchase the Deceased Member's
Company Interest, the Deceased Member's estate or successors in interest shall
succeed to the Deceased Member's Company Interest, but such interest in the
Company shall remain subject to all of the provisions of this Agreement.
ARTICLE 13
ARBITRATION
Any disputes arising out of this Agreement which cannot be
resolved by the Members themselves or pursuant to the terms of this Agreement
shall be submitted to arbitration in accordance with the rules of the American
Arbitration Association, and judgment may be entered upon the award of the
arbitrators in a court of competent jurisdiction.
ARTICLE 14
INVESTMENT REPRESENTATION
Each Member represents and warrants to each other and to the
Company he is acquiring his respective interest in the Company for his own
personal account for investment, and without a view to transferring, reselling,
or distributing such interest. In addition, no Member shall sell or dispose of
his interest in the Company in a manner that violates any Federal or state
securities laws. Each Member shall indemnify and hold the Company harmless
from and against all liability, costs and expenses, including reasonable
attorneys' fees, incurred by the Company or the Members, as a result of a
breach of the representations and warranties made in this Section 14 by such
Member.
ARTICLE 15
AMENDMENTS
This Agreement may be amended only by written agreement of all
the Members; provided, however, that this Agreement may be amended by the
Majority Interest to the extent necessary to permit the allocations and
distributions contained in this Agreement to be sustained under existing or
future Federal income tax laws and regulations.
ARTICLE 16
MISCELLANEOUS PROVISIONS
16.1 Books of Account; Reports. (a) The Company shall keep
true and complete books of account and records of all Company's business and
affairs as required by the Act. The books of account and records shall be kept
at the principal
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office of the Company. The Company shall maintain at such office (i) a list of
names and addresses of all Members; (ii) a copy of the Articles together with
executed copies of all powers of attorney pursuant to which the Articles have
been executed; (iii) copies of the Company's Federal, state and local income
tax returns and reports for the three most recent years; (iv) copies of the
Company's current Agreement and (v) copies of the financial statements of the
Company for the three most recent years. Such Company records shall be
available to any Member or his designated representative during ordinary
business hours at the reasonable request and expense of such Member.
(b) The Company will use its best efforts to
furnish, or cause to be furnished, the following items on the dates indicated:
(1) an annual report consisting of an income
statement for the prior year and a balance sheet as of the
year ended - annually.
(2) Member information tax returns (Schedule
K-1) - March 15.
16.2 Bank Accounts and Investment of Funds. All funds of
the Company shall be deposited in its name in such checking accounts, savings
accounts, time deposits, or certificates of deposit or shall be invested in
such other manner, as shall be designated by the Majority Interest from time to
time. Withdrawals shall be made upon such signature or signatures as the
Majority Interest may designate.
16.3 Accounting Decisions. All decisions as to accounting
matters, except as specifically provided to the contrary herein, shall be made
by the Majority Interest in accordance with generally accepted accounting
principles consistently applied. Such decisions shall be acceptable to the
accountants retained by the Company, and the Majority Interest may rely upon
the advice of the accountants as to whether such decisions are in accordance
with generally accepted accounting principles.
16.4 Federal Income Tax Elections. The Company shall, to
the extent permitted by applicable law and regulations and upon obtaining any
necessary approval of the Commissioner of Internal Revenue, elect to use such
methods of depreciation, and make all other Federal income tax elections in
such manner, as the Majority Interest determine to be most favorable to the
Members. The Majority Interest may rely upon the advice of the accountants
retained by the Company as to the availability and effect of all such
elections.
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16.5 Entire Agreement. This Agreement constitutes the
entire Agreement between the parties and may be modified only as provided
herein. No representations or oral or implied agreements have been made by any
party hereto or his agent, and no party to this Agreement relies upon any
representation or agreement not set forth in it. This Agreement supersedes any
and all other agreements, either oral or written, by and among the Company and
its Members.
16.6 Notices. All notices or other communications required
or permitted hereunder shall be in writing and shall be deemed to have been
duly given if (i) physically delivered, telephonically transmitted by
telecopier or other similar means, (ii) one (1) day after having been delivered
to Federal Express or other delivery courier for next day delivery, with proof
of delivery to the recipient received by the courier in the form of a signature
of recipient, or (iii) three (3) days after having been deposited in the United
States Mail, as certified mail with return receipt requested and with postage
prepaid, addressed to the Members at the addresses listed in Exhibit A. The
addresses and other information so indicated for any Member may be changed by a
Member by written notice to the Company.
16.7 Further Execution. Upon request of the Company from
time to time, the Members shall execute and swear to or acknowledge any amended
Articles and any other writing which may be required by any rule or law or
which may be appropriate to the effecting of any action by or on behalf of the
Company or the Members which has been taken in accordance with the provisions
of this Agreement.
16.8 Binding Effect. This Agreement shall be binding upon
and shall inure to the benefit of the parties, their successors and permitted
assigns. None of the provisions of this Agreement shall be construed as for
the benefit of or as enforceable by any creditor of the Company or the Members
or any other person not a party to this Agreement.
16.9 Severability. The invalidity or unenforceability of
any provision of this Agreement in a particular respect shall not affect the
validity and enforceability of any other provision of this Agreement or of the
same provision in any other respect.
16.10 Captions. All captions are for convenience only, do not
form a substantive part of this Agreement and shall not restrict or enlarge any
substantive provisions of this Agreement.
16.11 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
shall constitute one instrument. The
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<PAGE> 26
Company shall have custody of counterparts executed in the aggregate by all
Members.
16.12 Michigan Law to Control. The validity and interpretation
of, and the sufficiency of performance under, this Agreement shall be governed
by Michigan law.
The parties have executed this Agreement to be effective on the
date first above written.
MEMBERS:
KEY PLASTICS, INC.
By: David C. Benoit
----------------------------
Its: C.E.O.
------------------------
David C. Benoit
----------------------------
David C. Benoit
<PAGE> 27
KEY PLASTICS AUTOMOTIVE L.L.C.
EXHIBIT A
Initial Capital Membership
Name and Address Contributions Percentages
- ---------------- ---------------- -----------
Members
- -------
Key Plastics, Inc. $ 99%
21333 Haggerty Road
Suite 200
Novi, Michigan 48375
David C. Benoit $ 1%
------- --
21333 Haggerty Road
Suite 200
Novi, Michigan 48375
Totals $ 100%
======= ===
A-1
<PAGE> 1
EXHIBIT 3.10
OPERATING AGREEMENT
OF
KEY PLASTICS TECHNOLOGY, L.L.C.
<PAGE> 2
TABLE OF CONTENTS
Page
----
Article 1 Organization of Company 1
1.1 Formation 1
1.2 Name and Office 1
1.3 Duration 1
1.4 Registered Office and Resident Agent 1
Article 2 Definitions 1
Article 3 Purposes 5
Article 4 Capital Contributions; Borrowings 6
4.1 Initial Contributions of Members 6
4.2 Additional Capital Contributions 6
4.3 Withdrawals 6
4.4 Borrowings 6
4.5 Additional Members 6
Article 5 Management 6
5.1 Powers of the Members 6
5.2 Limitations on Powers 7
5.3 Self Dealing 7
5.4 Standard of Care; Liability 8
5.5 Reimbursement 8
5.6 Delegation of Authority 8
Article 6 Meetings of Members 9
6.1 Voting 9
6.2 Meetings 9
6.3 Consent 9
Article 7 Capital Accounts; Profits and Losses;
Distributions 10
7.1 Capital Accounts 10
7.2 Allocation of Profits and Losses 10
7.3 Distributions 11
7.4 Other Allocations 11
7.5 Share of Excess Nonrecourse Liabilities 14
Article 8 Limitation of Liability; Indemnification 15
8.1 Limitation of Liability 15
8.2 Liability of Member to the Company 15
8.3 Indemnification 15
(i)
<PAGE> 3
Page
----
Article 9 Term of Company 16
9.1 Commencement 16
9.2 Dissolution 16
Article 10 Application of Assets 16
Article 11 Assignability of Interests 17
11.1 Permitted Assignments 17
11.2 Admission of Assignees as Members 17
11.3 Restrictions on Transfers 18
11.4 Section 754 Election 18
Article 12 Buy-Out Provisions Upon Member's Death 19
Article 13 Arbitration 20
Article 14 Investment Representation 20
Article 15 Amendments 20
Article 16 Miscellaneous Provisions 20
16.1 Books of Account; Reports 20
16.2 Bank Accounts and Investment of Funds 20
16.3 Accounting Decisions 21
16.4 Federal Income Tax Elections 21
16.5 Entire Agreement 21
16.6 Notices 21
16.7 Further Execution 22
16.8 Binding Effect 22
16.9 Severability 22
16.10 Captions 22
16.11 Counterparts 22
16.12 Michigan Law to Control 23
Exhibit A A-1
(ii)
<PAGE> 4
OPERATING AGREEMENT
OF
KEY PLASTICS TECHNOLOGY, L.L.C.
THIS OPERATING AGREEMENT of KEY PLASTICS TECHNOLOGY, L.L.C., a
Michigan limited liability company ("Company"), is made and entered into as of
September 16, 1996 by and among the Company and those persons whose names are
set forth on attached Schedule A and are made a part of this Operating
Agreement and those persons who are later admitted as members (individually,
"Member," and collectively, "Members") who agree as follows:
ARTICLE 1
ORGANIZATION OF COMPANY
1.1 Formation. The Company has been organized as a
Michigan limited liability company pursuant to the provisions of the Act and
this Agreement.
1.2 Name and Office. The name of the Company shall be Key
Plastics Technology, L.L.C., and its office shall be located at 21333 Haggerty
Road, Suite 200, Novi, Michigan 48375, or such other place as the Majority
Interest may determine from time to time.
1.3 Duration. The Company shall continue in existence for
the period fixed in the Articles for the duration of the Company or until the
Company shall be sooner dissolved and its affairs wound up in accordance with
the Act or this Agreement.
1.4 Registered Office and Resident Agent. The Company's
initial registered office shall be at the office of its resident agent at 21333
Haggerty Road, Suite 200, Novi, Michigan 48375 and the name of its initial
resident agent at such address shall be David C. Benoit. The registered
office and resident agent may be changed from time to time in accordance with
the Act. If the resident agent shall ever resign, the Company shall promptly
appoint a successor.
ARTICLE 2
DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
<PAGE> 5
The "Act" means the Michigan Limited Liability Company Act being
Act No. 23, Public Acts of 1993, as amended.
"Adjusted Deficit Capital Account Balance" means, with respect
to any Member, the deficit balance, if any, in such Member's Capital Account as
of the end of the relevant Company Fiscal Year, (1) increased by any amounts
which such Member is obligated to restore under Treasury Regulation Section
1.704-1(b)(2)(ii)(c), plus an amount equal to such Member's share of Company
Minimum Gain and such Member's share of Member Nonrecourse Debt Minimum Gain
and (2) decreased by the items described in Treasury Regulation Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6). This definition of Adjusted Capital
Account Deficit is intended to comply with the provisions of Treasury
Regulation Sections 1.704-1(b)(2)(ii)(d) and 1.704-2, and will be interpreted
consistently with those provisions.
"Affiliate" means (i) any person directly or indirectly
controlling, controlled by or under common control with another person, (ii) a
person owning or controlling ten percent (10%) or more of the outstanding
voting securities of such other person, (iii) any officer, director, member or
partner of such person, or (iv) a person who is an officer, director, member,
partner or holder of ten percent (10%) or more of any of the voting interests
of any person described in clauses (i) through (iii) of this sentence.
"Agreement" means this Operating Agreement and amendments
adopted in accordance with this Agreement and the Act.
The "Articles" means the Articles of Organization, including any
restatements or amendments, which are filed with the Michigan Department of
Commerce.
"Book Value" means with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:
(a) the initial Book Value of any asset contributed (or
deemed contributed) to the Company shall be such asset's
gross fair market value at the time of such contribution;
(b) the Book Value of all Company assets shall be adjusted
to equal their respective gross fair market values at the
times specified in Treasury Regulations under Code Section
704(b) if the Company so elects;
2
<PAGE> 6
(c) if the Book Value of an asset has been determined
pursuant to clause (a) or (b), such Book Value shall
thereafter be adjusted by the Depreciation taken into
account with respect to such asset for purposes of computing
Profits and Losses.
"Capital Accounts" shall have the meaning set forth in Section
7.1 of this Agreement.
"Capital Contributions" means the amount of cash, property, or
services contributed or obligated to be contributed to the Company by a Member.
The "Code" means the Internal Revenue Code, as amended.
"Company Minimum Gain" means an amount determined in accordance
with Treasury Regulation Section 1.704-2(d) for partnership minimum gain by
computing, with respect to each nonrecourse liability of the Company (as
defined in Treasury Regulation Section 1.752-1(a)(2)), the amount of gain (of
whatever character), if any, that would be realized by the Company if (in a
taxable transaction) it disposed of property subject to such liability in full
satisfaction thereof, and by then aggregating the amounts so computed.
"Depreciation" means for each Fiscal Year of the Company or
other period, an amount equal to the depreciation, amortization or other cost
recovery deduction allowable under the Code with respect to an asset for such
year or other period, except that if the Book Value of an asset differs from
its adjusted basis for federal income tax purposes at the beginning of such
year or other period, Depreciation shall be an amount which bears the same
ratio to such beginning Book Value as the federal income tax depreciation,
amortization or other cost recovery deduction for such year or other period
bears to such beginning adjusted tax basis; provided, however, that if the
federal income tax depreciation, amortization or other cost recovery deduction
for such year is zero, Depreciation shall be determined with reference to such
beginning Book Value using any reasonable method selected by the Majority
Interest.
"Distributable Cash" means, at any time, that portion of the
cash and cash equivalent assets of the Company which, in light of the Company's
then current and foreseeable sources of, and needs for, cash, exceeds the
amount of cash needed by the Company, as determined by the Majority Interest,
to (i) service its debts and obligations in a timely fashion, (ii) maintain
adequate working capital and reserves, and (iii) conduct its business and carry
out its purposes.
3
<PAGE> 7
The "Fiscal Year" of the Company, and its taxable year for
Federal income tax purposes, shall be the calendar year.
"Insolvent" means such time as when the value of the Company's
assets become less than the sum of its liabilities or the Company becomes
unable to pay its debts as they become due in the usual course of business.
"Majority Interest" means those Members holding more than 50% of
the Membership Percentages held by the Members.
"Majority Interest of the Remaining Members" means Members
holding more than 50% of the Membership Percentages and Capital Account
Balances of the Members entitled to vote (other than the Member triggering
dissolution under Section 9.2(d)).
"Member Nonrecourse Debt" shall have the meaning, and be
determined in the same manner as, partner nonrecourse debt pursuant to Treasury
Regulation Section 1.704-2(b)(4).
"Member Nonrecourse Debt Minimum Gain" means the amount, with
respect to each Member Nonrecourse Debt, equal to the Company Minimum Gain that
would result if such Member Nonrecourse Debt were treated as a nonrecourse
liability of the Company, determined in the same manner as partner nonrecourse
debt minimum gain in accordance with Treasury Regulation Section 1.704-2(i)(3).
"Member Nonrecourse Deductions" shall have the meaning, and be
determined in the same manner as, partner nonrecourse deduction pursuant to
Treasury Regulation Section 1.704-2(i)(2).
"Members" are the persons designated as such in Exhibit A. Any
reference to a Member shall, unless the context clearly requires otherwise,
include a reference to his predecessor and successor (other than a mere
assignee not made a substitute Member) in interest.
"Membership Percentages" means the Members' respective interests
in the Company as set forth in Exhibit A, as amended from time to time.
"Nonrecourse Deductions" shall have the meaning set forth in
Treasury Regulation Section 1.704-2(c).
"Profits and Losses" means the Company's taxable income or loss
for each Fiscal Year (or other period) determined in accordance with the
accounting methods followed by the Company for federal income tax purposes (for
this purpose all items of income, gain, loss or deduction required to be
separately stated pursuant to Code Section 703(a)(1)
4
<PAGE> 8
shall be included in taxable income or loss) as determined by the independent
certified public accountants employed by the Company, with the following
adjustments:
(a) any income of the Company that is exempt from
federal income tax and not otherwise taken into account in computing Profits
and Losses shall be added to such taxable income or loss:
(b) any expenditures of the Company described in
Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
under Code Section 704(b) and not otherwise taken into account in computing
Profits and Losses shall be subtracted from such taxable income or loss;
(c) in the event the Book Value of any Company
asset is adjusted, the amount of such adjustment shall be taken into account as
gain or loss from the disposition of such asset for purposes of computing
Profits or Losses;
(d) any gain or loss resulting from any disposition
of Company property with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to the Book Value of
such property rather than its adjusted tax basis;
(e) in lieu of the depreciation, amortization, and
other cost recovery deductions taken into account in computing taxable income
or loss, there shall be taken into account Depreciation for such Fiscal Year or
other period; and
(f) notwithstanding the foregoing, any items which
are specially allocated pursuant to Section 7.4 shall not be taken into account
in computing Profits and Losses.
"Treasury Regulations" includes proposed, temporary and final
regulations promulgated under the Code and the corresponding sections of any
regulations subsequently issued that amend or supersede such regulations.
All references to statutory provisions shall be deemed to
include reference to corresponding provisions of subsequent law.
ARTICLE 3
PURPOSES
The Company may engage in any lawful business permitted by the
Act or the laws of any jurisdiction in which the Company may do business. The
Company shall have the authority to do all things necessary or convenient to
accomplishment of its purposes and to operate its business,
5
<PAGE> 9
including all powers granted by the Act.
ARTICLE 4
CAPITAL CONTRIBUTIONS; BORROWINGS
4.1 Initial Capital Contributions of Members. Each of the
Members has made an initial capital contribution and owns a Membership
Percentage in the Company as set forth on Schedule A, as amended. No interest
shall accrue on any Capital Contribution made to the Company unless otherwise
agreed by the Members in writing or otherwise provided in this Agreement.
4.2 Additional Capital Contributions. Additional Capital
Contributions shall be made by the Members to the Company only upon the
unanimous consent of the Members.
4.3 Withdrawals. No Member shall be entitled to be repaid
any portion of his Capital Contribution or withdraw from the Company except as
provided in this Agreement. A Member who withdraws in violation of this
Agreement shall not be entitled to receive the fair market value of his
interest after the withdrawal but shall only be entitled to distributions he
otherwise would have received as a nonwithdrawing Member.
4.4 Borrowings. The Company may borrow sums for Company
purposes from any source, including any Member, provided that such borrowing is
not prohibited by any applicable law or regulation and is approved as required
under Section 5 of this Agreement.
4.5 Additional Members. No additional Members shall be
admitted to the Company without the unanimous consent of all Members.
ARTICLE 5
MANAGEMENT
5.1 Powers of the Members.
(a) The Company shall be managed by the Members in
proportion to their Membership Percentages. Each Member shall have the power
to do all things appropriate to the accomplishment of the purposes of the
Company, including (but not limited to): (1) entering into any and all
agreements and executing contracts, notes, mortgages and other writings; (2)
paying all Company obligations including construction cost expenditures and
property management fees; (3) purchasing and maintaining insurance on behalf of
the Company and its Members and employees or agents against any liability or
expense asserted against or incurred by the Company or such persons; (4)
transacting the Company's business under an assumed name or name other than its
name as set forth in the Articles and
6
<PAGE> 10
filing a Certificate of Assumed Name with the Michigan Department of Commerce;
(5) appointing any Member or other person as agent for service of process on
the Company as required by the law of any state in which the Company transacts
business; (6) commencing, prosecuting or defending any proceeding in the
Company's name; (7) participating with others in partnerships, joint ventures,
and other associations of any kind; and (8) doing such other acts as may
facilitate the Company's business.
(b) Every contract, lease, deed or other instrument
executed by a Member or Members holding a Majority Interest of the Membership
Percentages shall be conclusive evidence, at the time of execution, that this
Company was then in existence, that this Agreement had not theretofore been
terminated or amended in any manner not disclosed in the Articles and that the
execution and delivery of such instrument was duly authorized by the Members.
(c) David C. Benoit shall act as "tax matters
Partner" of the Company, as defined in Code Section 6231(a)(7).
5.2 Limitations on Powers. Notwithstanding the foregoing
and any other provision contained in this Agreement to the contrary, no act
shall be taken, sum expended, decision made, obligation incurred or power
exercised by any Member on behalf of the Company except by the consent of all
of the Members with respect to (a) the assignment, transfer, pledge, compromise
or release of any of the claims of or debts due the Company (except upon
payment in full) or arbitrate or consent to the arbitration of any of the
disputes or controversies of the Company; (b) any merger of the Company; (c) a
transaction involving an actual or potential conflict of interest between a
Member and the Company; (d) any change in the character of the business and
affairs of the Company; (e) the commission of any act which would make it
impossible for the Company to carry on its ordinary business and affairs; or
(f) any act that would contravene any provision of the Articles or this
Agreement or the Act.
5.3 Self Dealing. Any Member and any Affiliate of a Member
may deal with the Company, directly or indirectly, as vendor, purchaser,
employee, agent or otherwise. No contract or other act of the Company shall be
voidable or affected in any manner by the fact that a Member or his Affiliate
is directly or indirectly interested in such contract or other act apart from
his interest as a Member, nor shall any Member or his Affiliate be accountable
to the Company or the other Members in respect of any profits directly or
indirectly realized by him by reason of such contract or other act, and such
interested Member shall be eligible to vote or take any
7
<PAGE> 11
other action as a Member in respect of such contract or other act as it would
be entitled were he or his Affiliate not interested therein. Notwithstanding
the foregoing provisions of this Section 5.3, (a) any direct or indirect
interest of a Member or Affiliate of a Member in any contract or other act,
other than his interest as a Member, shall be disclosed to all other Members,
(b) such contract or other act shall be approved by a Majority Interest of the
Members unless the same is specifically authorized herein, and (c) the Members
shall not receive or hold any property of the Company as collateral security in
respect of any claim against the Company.
5.4 Standard of Care; Liability. Each Member shall
discharge his management duties in good faith, with the care an ordinarily
prudent person in a like position would exercise under similar circumstances,
and in a manner he reasonably believes to the be in the best interests of the
Company as required by the Act. A Member shall not be liable for monetary
damages to the Company for any breach of any such management duties except for
(i) actions constituting fraud, willful misconduct or gross negligence, (ii)
actions taken by a Member in violation of this Agreement, (iii) the receipt of
a financial benefit to which the Member is not entitled, (iv) voting for or
assenting to a distribution to Members in violation of this Agreement or the
Act, or (v) a knowing violation of the law.
5.5 Reimbursement. Members shall receive no compensation
for managing the affairs of the Company unless approved by an affirmative vote
of a Majority Interest. Members shall be entitled to reimbursement from the
Company of all expenses of the Company reasonably incurred and paid for by such
Member on behalf of the Company.
5.6 Delegation of Authority. The Members, acting by
Majority Interest and by a written instrument, may from time to time delegate
all or any of their powers or duties hereunder to one or more Members. Any
Member may by written instrument delegate any of his powers and duties to any
other Member, in which event any exercise or performance of such powers or
duties by such Member shall be treated as the action of the delegating Member
as well as the acting Member. Any Member making such delegation shall be
permitted to revoke the delegation at any time by written notice to the other
Members and the Company.
8
<PAGE> 12
ARTICLE 6
MEETINGS OF MEMBERS
6.1 Voting. All Members shall be entitled to vote on any
matter submitted to a vote of the Members. Unless a greater vote is required
by the Act, the Articles, or this Agreement, the affirmative vote or consent of
a Majority Interest of all the Members entitled to vote or consent on such
matter shall be required.
6.2 Meetings. An annual meeting of Members for the
transaction of such business as may properly come before the Meeting, shall be
held at such place, on such date and at such time as the Majority Interest
shall determine. Special meetings of Members for any proper purpose or
purposes may be called at any time by the holders of at least twenty-five
percent (25%) of the Membership Percentages of all Members. The Company shall
deliver or mail written notice stating the date, time, place and purposes of
any meeting to each Member entitled to vote at the meeting. Such notice shall
be given not less than ten (10) nor more than sixty (60) days before the date
of the meeting. Meetings may be conducted in person or by telephone conference
of the Members upon the consent of the Majority Interest.
6.3 Consent. Any action required or permitted to be taken
at an annual or special meeting of the Members may be taken without a meeting,
without prior notice, and without a vote, if consents in writing, setting forth
the action so taken, are signed by the Members having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all Members entitled to vote on the action were present and
voted. Every written consent shall bear the date and signature of each Member
who signs the consent. Prompt notice of the taking of action without a meeting
by less than unanimous written consent shall be given to all Members who have
not consented in writing to such action. In addition, the Company may give all
the Members written notice of the action, event or agreement and state in the
notice that any Member who does not indicate his disapproval by written notice
to the Company within a specified period of time (not less than 30 days after
mailing of the notice) shall be deemed to have given his consent or approval to
the action or event or to have made the agreement referred to in the notice.
In such event, any Member who does not indicate his disapproval by written
notice to the Company within the time specified shall be deemed to have given
his written consent, approval or agreement.
9
<PAGE> 13
ARTICLE 7
CAPITAL ACCOUNTS; PROFITS AND LOSSES; DISTRIBUTIONS
7.1 Capital Accounts. A capital account shall be
maintained for each Member, to which contributions, Profits and any items of
income and gain under Section 7.4 shall be credited and against which
distributions and Losses and any items of deduction and loss under Section 7.4
shall be charged. Capital accounts shall be maintained in accordance with the
accounting principles of Code Section 704 and the regulations thereunder.
7.2 Allocation of Profits and Losses. Except as provided
in Section 7.2(c) and (d) and after giving effect to the special allocations
set forth in Section 7.4, to the extent applicable, Profits and Losses for any
Fiscal Year shall be allocated to the Members:
(a) First, in the case of Profits, to any Member in
an amount up to, but not exceeding, the aggregate amount of Losses previously
allocated to that Member in accordance with the second sentence of Section
7.2(c); and
(b) Second, in the case of either Profits or
Losses, to the Members in accordance with their Membership Percentages.
(c) The Losses allocated pursuant to Section 7.2(b)
shall not exceed the maximum amount of Losses that can be so allocated without
causing any Member to have an Adjusted Capital Account Deficit at the end of
any Fiscal Year. In the event some but not all of the Members would have
Adjusted Capital Account Deficits as a consequence of an allocation of Losses
pursuant to Section 7.2(b), the limitation set forth in this Section 7.2(c)
will be applied on a Member by Member basis so as to allocate the maximum
permissible Losses to each Member under Treasury Regulations Section
1.704-1(b)(2)(ii)(d). In the event all Members have Adjusted Capital Account
Deficits, Losses shall be allocated in accordance with Section 7.2(b) hereof.
(d) If there is an addition, withdrawal or
substitution of, or any other change in the interest of, any Member during the
period covered by an allocation, then subject to any agreement between the
persons affected, the Profits and Losses for the period shall be allocated
among the varying interests consistent with the provisions of Code Section
706(d) and any regulations promulgated thereunder. If Code Section 706(d) or
any regulation thereunder allow alternative methods of allocation, the Majority
Interest shall determine, in its
10
<PAGE> 14
sole discretion, which alternative methods to use in allocating Profits and
Losses among the varying interests.
7.3 Distributions. (a) The Company shall distribute to the
Members from time to time, as determined by the Majority Interest,
Distributable Cash of the Company. Except as provided in Section 10, all
distributions shall be made to the Members in proportion to their respective
Membership Percentages on the date of the distribution.
(b) No distributions shall be declared and paid
unless, after the distribution is made, the Company would be able to pay its
debts as they become due in the usual course of business and the assets of the
Company are in excess of the sum of: (i) the Company's liabilities, plus (ii)
the amount that would be needed to satisfy the preferential rights of other
Members upon dissolution that are superior to the rights of the Members(s)
receiving the distribution.
7.4 Other Allocations. Notwithstanding the foregoing
provisions of this Section 7 or any other provision of this Agreement, the
following provisions shall apply:
(a) Compliance With Treasury Regulations. It is
anticipated that the Company will be treated as a partnership for federal
income tax purposes and, accordingly, the partnership tax provisions of the
Code shall apply to the Company and its Members. It is the intent of the
Members that each Member's distributive share of income, gain, loss, deduction,
or credit (or item thereof) shall be determined and allocated in accordance
with this Section 7 to the fullest extent permitted by Section 704(b) of the
Code. In order to preserve and protect the determinations and allocations
provided for in this Section 7, the Majority Interest is authorized and
directed to allocate income, gain, loss, deduction, or credit (or item thereof)
arising in any year differently than otherwise provided for in this Section 7
to the extent that allocating income, gain, loss, deduction, or credit (or item
thereof) in the manner provided for in this Section 7 would cause the
determinations and allocations of each Member's distributive share of income,
gain, loss, deduction, or credit (or item thereof) not to be permitted by
Section 704(b) of the Code and Treasury Regulations promulgated thereunder.
Any allocation made pursuant to this Section 7.4 shall be deemed to be a
complete substitute for any allocation otherwise provided for in this Section 7
and no amendment of this Agreement or approval of any Member shall be required.
The terms used in this Section 7 shall have the same meaning as in such
Treasury Regulations.
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<PAGE> 15
(b) Only Required Modifications. In making any
allocation (the "new allocation") under Section 7.4, the Majority Interest is
authorized to act only after having been advised by the Company's accountants
that, under Section 704(b) of the Code and the Treasury Regulations thereunder
(i) the new allocation is necessary, and (ii) the new allocation is the minimum
modification of the allocations otherwise provided for in this Section 7
necessary in order to assure that, either in the then current year or in any
preceding year, each Member's distributive share of income, gain, loss,
deduction, or credit (or item thereof) is determined and allocated in
accordance with this Section 7 to the fullest extent permitted by Section
704(b) of the Code and the Treasury Regulations thereunder.
(c) Company Minimum Gain Chargeback. If there is a
net decrease in Company Minimum Gain during a Company Fiscal Year so that an
allocation is required by Treasury Regulation Section 1.704-2(f), then each
Member shall be specially allocated items of income and gain for such year
(and, if necessary, subsequent years) equal to such Member's share of the net
decrease in Company Minimum Gain as determined by Treasury Regulation Section
1.704-2(g)(2). Such allocations shall be made in a manner and at a time which
will satisfy the requirements of Treasury Regulation Section 1.704-2(f)(1) and
shall be interpreted consistently therewith.
(d) Member Minimum Gain Chargeback. If there is a
net decrease in the Member Nonrecourse Debt Minimum Gain during any Fiscal
Year, any Member who has a share of such Member Nonrecourse Debt Minimum Gain
(as determined in the same manner as partner nonrecourse debt minimum gain
under Treasury Regulation Section 1.704-2(i)(5)) shall be specially allocated
items of income or gain for such year (and, if necessary, subsequent Fiscal
Years) equal to such Member's share of the net decrease in the Member
Nonrecourse Debt Minimum Gain in the manner and to the extent required by
Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted consistently
therewith.
(e) Qualified Income Offset. If a Member
unexpectedly receives an adjustment, allocation, or distribution described in
Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), any of which
causes or increases an Adjusted Deficit Capital Account Balance in such
Member's capital account, then he will be specially allocated items of income
and gain in an amount and manner sufficient to eliminate such deficit balance
created or increased by such adjustment, allocation, or distribution as quickly
as possible; provided, however, an allocation pursuant to this Section 7.4(e)
will be made if and only to the extent that such Member would have an Adjusted
Capital Account Deficit after all other
12
<PAGE> 16
allocations provided for in Section 7 have been tentatively made as if this
Section 7.4(e) were not in the Agreement.
(f) Gross Income Allocation. If a Member has an
Adjusted Deficit Capital Account Balance at the end of a Company taxable year,
such Member shall be allocated items of income and gain in the amount of such
Adjusted Deficit Capital Account Balance as quickly as possible in order to
eliminate it.
(g) Allocation of Nonrecourse Deductions.
Nonrecourse Deductions shall be allocated among the Members in proportion to
their respective Membership Percentages.
(h) Member Nonrecourse Deductions. Any Member
Nonrecourse Deductions shall be allocated to the Member who bears the economic
risk of loss with respect to the Member Nonrecourse Debt to which such Member
Nonrecourse Deductions are attributable in accordance with Treasury Regulation
Section 1.704-2(i)(1).
(i) Curative Allocations. If the Company is
required by Section 7.4(a),(c),(d),(e),(f),(g), or (h) to make any new
allocation in a manner other than as provided for in this Section 7 without
regard thereto, then the Majority Interest is authorized and directed, insofar
as it is permitted to do so by Section 704(b) of the Code, to allocate income,
gain, loss, deduction, or credit (or item thereof) arising in the current
Fiscal Year (or subsequent Fiscal Years, if necessary) in such manner so as to
bring the proportions of income, gain, loss, deduction, or credit (or item
thereof) allocated to the Members as nearly as possible to the proportion
otherwise contemplated by this Section 7 without regard thereto; provided,
however, that Nonrecourse Deductions shall not be taken into account except to
the extent that there has been a reduction in Company Minimum Gain and Member
Nonrecourse Deductions shall not be taken into account except to the extent
that there has been a reduction in Member Minimum Gain and provided further
that such Nonrecourse Deductions and Member Nonrecourse Deduction shall not in
any event be taken into account to the extent that the Majority Interest
reasonably determines that such allocations are likely to be offset by
subsequent allocations pursuant to Section 7.4(c) or (d).
(j) Advice of Accountants. Allocations made by the
Majority Interest under this Section 7.4 in reliance upon the advice of the
Company's accountants shall be deemed to be made pursuant to any fiduciary
obligation to the Company and the Members.
(k) Section 754 Election. To the extent an
adjustment to the adjusted tax basis of any Company asset
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<PAGE> 17
pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to
Regulations Section 1.704-1(b)(2)(iv)(m), to be taken into account in
determining capital accounts, the amount of such adjustment to the capital
accounts shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreased such basis) and such
gain or loss shall be specially allocated to the Members in a manner consistent
with the manner in which their capital accounts are required to be adjusted
pursuant to such Section of the Regulations.
(l) Imputed Interest. If any Member makes a loan
to the Company, or the Company makes a loan to any Member, and interest in
excess of the amount actually payable is imputed under Code Sections 7872, 483,
or 1271 through 1288 or corresponding provisions of subsequent Federal income
tax law, then any item of income or expense attributable to any such imputed
interest shall be allocated solely to the Member who made or received the loan
and shall be credited or charged to his capital account, as appropriate.
(m) Contributed Property. Income, gain, loss or
deduction with respect to any property contributed by a Member shall, solely
for tax purposes, be allocated among the Members, to the extent required by
Code Section 704(c) and the related Treasury Regulations, to take account of
the variation between the adjusted tax basis of such property and its Book
Value at the time of contribution to the Company. If the Book Value of any
Company property is adjusted as provided in Treasury Regulation Section
1.704-1(b)(2)(iv), subsequent allocations of income, gain, loss and deduction
and the Book Value of such property shall be adjusted as provided in Code
Section 704(c) and the related Treasury Regulations. If Code Section 704(c)
and the regulations thereunder allow alternative methods of making such
acquired allocations, the Majority Interest shall determine, in their sole
discretion, which alternative method to use. Allocations under this Section
7.4(m) are solely for purposes of federal, state and local taxes and shall not
affect, or in any way be taken into account in computing, any Member's Capital
Account or share of Profits, Losses, or other items or distributions under any
provision of this Agreement.
7.5 Share of Excess Nonrecourse Liabilities. For purposes
of calculating the Members' shares of "excess nonrecourse liabilities" of the
Company (within the meaning of Treasury Regulation Section 1.752-3(a)(3)), the
Members intend that they be considered as sharing profits of the Company in
proportion to their respective Membership Percentages.
14
<PAGE> 18
ARTICLE 8
LIMITATION OF LIABILITY; INDEMNIFICATION
8.1 Limitation of Liability. Unless otherwise provided by
this Agreement, the Act, or expressly assumed, a person who is a Member shall
not be liable for the acts, debts or liabilities of the Company beyond his
respective Capital Contribution.
8.2 Liability of Member to the Company. A Member who
knowingly receives a distribution made by the Company which is either in
violation of this Agreement or when the Company is Insolvent, is liable to the
Company for the repayment of the distribution.
8.3 Indemnification. Except as otherwise provided in this
Section 8.3, the Company shall indemnify any Member (and may indemnify any
employee or agent of the Company), who was or is a party or is threatened to be
made a party to a threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative, or investigative, and whether formal
or informal (other than an action by or in the right of the Company) by reason
of the fact that such person is or was a Member, employee or agent of the
Company against expenses (including attorneys' fees), judgments, penalties,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with the action, suit or proceeding, if the person acted
in good faith, with the care an ordinarily prudent person in a like position
would exercise under similar circumstances, and in a manner that such person
reasonably believed to be in the best interests of the Company, and with
respect to a criminal action or proceeding, if such person had no reasonable
cause to believe such person's conduct was unlawful. To the extent that a
Member, employee or agent of the Company has been successful on the merits or
otherwise in defense of an action, suit or proceeding referred to in this
Section 8.3, or in defense of any claim, issue or other matter in the action,
suit or proceeding, such person shall be indemnified against actual and
reasonable expenses (including attorneys' fees) incurred by such person in
connection with the action, suit or proceeding and any action, suit or
proceeding brought to enforce the mandatory indemnification provided herein.
Any indemnification permitted under this Section 8.3 (unless ordered by a
court) shall be made by the Company only as authorized in the specific case
upon a determination that the indemnification is proper under the circumstances
because the person to indemnify has met the applicable standard of conduct and
upon an evaluation of the reasonableness of expenses and amount paid in
settlement. This determination and evaluation shall be made by the Majority
Interest of the Members who are not parties or threatened to be made parties to
15
<PAGE> 19
the action, suit or proceeding. Notwithstanding anything in this Section 8.3
to the contrary, no indemnification shall be provided to any Member, employee
or agent of the Company for or in connection with the receipt of a financial
benefit to which such person is not entitled, voting for or assenting to a
distribution to Members in violation of this Agreement or Act, or a knowing
violation of law.
ARTICLE 9
TERM OF COMPANY
9.1 Commencement. The term of the Company began on the
date the Articles of Organization were filed with the Michigan Department of
Commerce and became effective under the Act, April 15, 1996.
9.2 Dissolution. The Company shall be dissolved and its
affairs be wound up upon the occurrence of any of the following events:
(a) December 31, 2025;
(b) The sale or other disposition of substantially
all of the assets of the Company;
(c) By the written consent of Members holding at
least 75% of the Membership Percentages in the Company;
(d) The death, withdrawal, expulsion, bankruptcy,
or dissolution of a Member or the occurrence of any other event that terminates
the continued membership of a Member in the Company; provided, however, that
the Company's existence shall not terminate if within 90 days after such event,
a Majority Interest of the Remaining Members elect to reconstitute and continue
the business of the Company and to the admission of one or more Members as
necessary; or
(e) Upon entry of a decree of judicial dissolution.
ARTICLE 10
APPLICATION OF ASSETS
Upon dissolution of the Company, the Company shall cease
carrying on its business and affairs and shall commence winding up of the
Company's business and affairs and complete the winding up as soon as
practicable. The Company affairs shall be concluded by a Member or Members
selected in writing by the Majority Interest. The assets of the Company may be
liquidated or distributed in kind, as determined by the Majority Interest, and
the same shall first be applied to the
16
<PAGE> 20
payment of, or to a reserve for the payment of Company liabilities (including
such provision for contingent or unforeseen liabilities as the Majority
Interest deems appropriate) and then to the Members in accordance with their
respective positive Capital Accounts after allocations pursuant to Sections 7.2
and 7.4 for the current Fiscal Year. If Company assets are distributed in
kind, the assets so distributed shall be valued at their current fair market
values and the unrealized appreciation or depreciation in value of the assets
shall be allocated to the Members' Capital Accounts in the manner described in
Section 7.2 and 7.4 as if such assets had been sold, and such assets shall then
be distributed to the Members in accordance with their respective positive
Capital Accounts as so adjusted. To the extent that Company assets cannot
either be sold without undue loss or readily divided for distribution in kind
to the Members, then the Company may, as determined by the Majority Interest,
convey those assets to a trust or other suitable holding entity established for
the benefit of the Members in order to permit the assets to be sold without
undue loss and the proceeds thereof distributed to the Members at a future
date. The legal form of the holding entity, the identity of the trustee or
other fiduciary, and the terms of its governing instrument shall be determined
by the Majority Interest.
ARTICLE 11
ASSIGNABILITY OF INTERESTS
11.1 Permitted Assignments. Subject to the provisions of
Section 11, a Member may assign his interest in the Company in whole or part.
Such assignment shall not of itself substitute the assignee as a Member or
entitle the assignee to participate in the management of the Company. Such
assignee is only entitled to receive, to the extent assigned, the distributions
the assigning Member would otherwise be entitled to. Unless otherwise
provided, the assignor shall remain a Member liable for payment of any
remaining installments of Capital Contributions due with respect to the
interest assigned. No assignment of a Company interest shall be effective with
respect to the Company until written notice is given to the Company.
11.2 Admission of Assignees as Members. Except as provided
in Sections 11.3 and 12.1, an assignee shall be admitted as a Member only upon
the unanimous written consent of all the Members. As a condition of such
consent, the Members may require a substitute Member to comply with the
following requirements: (i) the assignment instrument being in form and
substance satisfactory to the Majority Interest and the Company's counsel; (ii)
the assignor and assignee named therein having executed and acknowledged such
other instrument or
17
<PAGE> 21
instruments as the Majority Interest may deem necessary or desirable to
effectuate such admission; (iii) the assignee having accepted and adopted all
of the terms and provisions of the Agreement, as the same may have been
amended, as if the assignee were a party who joined in the execution of this
Agreement; and (iv) such assignee having paid or acknowledged an obligation to
pay, as the Majority Interest may determine, all reasonable expenses (including
attorneys' fees) connected with such admission. If admitted, the substitute
Member has, to the extent assigned, all of the rights and powers, and is
subject to all the restrictions and liabilities of a Member.
11.3 Restrictions on Transfers. Notwithstanding the other
provisions of this Section 11, no Member shall sell, assign, transfer,
exchange, mortgage, pledge, grant, hypothecate, or otherwise dispose of any
interest in the Company except in compliance with Section 11.3. No Member
shall dispose of his interest in Company without the prior written consent of
all the Members (1) if the effect of the assignment would be to terminate the
Company within the meaning of Code Section 708(b), or (2) without an opinion of
counsel in form and substance satisfactory to counsel for the Company that
registration is not required under the Securities Act of 1933 and applicable
state law. In no event shall any Member assign his interest in the Company if
such assignment would violate any applicable state or Federal securities law.
The Members acknowledge that their interests in the Company have not been
registered under the Michigan Uniform Securities Act and agree that such
interests will not be transferred without registration under said Act or
exemption therefrom. Any attempted disposition of a Member's interest in the
Company in violation of Section 11 shall be null and void ab initio.
11.4 Section 754 Election. In the event of the transfer of
a Member's interest in the Company by sale or exchange, or upon the death of a
Member, the Company, if the person acquiring such interest so requests, shall
elect pursuant to Code Section 754, to adjust the basis of the Company
property. Each Member hereby agrees to provide the Company with all
information necessary to give effect to such election. The transferee shall
reimburse the Company for any reasonable costs incurred as a result of such
election, as determined by the Majority Interest.
ARTICLE 12
BUY-OUT PROVISION UPON MEMBER'S DEATH
(a) If a Member dies (the "Deceased Member"), the Company
shall have an option to acquire not less than all of the Deceased Member's
interest in the Company ("Company Interest"). The option shall be
exercisable by written notice to the Deceased Member's personal representative
and the
18
<PAGE> 22
successors in interest to the Deceased Member, collectively the "Selling
Members", at any time within sixty (60) days after death of the Deceased Member
or the appointment of personal representative, whichever is later ("Notice to
Purchase"). If the option is exercised, the Deceased Member's Company Interest
shall be purchased by the Company. The Company shall purchase the Deceased
Member's Company Interest for (i) an amount agreed upon by the parties within
30 days from the date of the Notice to Purchase, or if they cannot agree, then
(ii) an amount equal to the Net Equity of the Deceased Member's Company
Interest as defined in Section 12(b).
(b) The Net Equity of the Deceased Member's Company
Interest shall be the amount that would be distributed to the Deceased Member
in liquidation of the Company pursuant to Section 10 if (i) all of the
Company's assets were sold at their book value, (ii) the Company paid its
accrued, but unpaid, liabilities and establish reserves for reasonably
anticipated contingent and unknown liabilities, and (iii) the Company
distributed the remaining proceeds to the Members in liquidation, as of the
date of the Notice to Purchase.
(c) The closing for the purchase of the Deceased Member's
Company Interest shall take place within 20 days after the purchase price has
been finally agreed upon or the Net Equity determined. At the closing, the
Selling Members shall execute and deliver such instruments as the Company shall
reasonably require to vest in the Company the interest of the Selling Members
in and to the Deceased Member's Company Interest. Upon delivery of such
instruments, the Company, at its election, shall pay to each Selling Member
their share of the purchase price either (i) in cash or by certified or bank
check in one lump sum, or (ii) in seven equal annual installments. The lump
sum or the first installment shall be paid at the closing and any remaining
payments evidenced by a promissory note bearing interest at the Applicable
Federal Rate at the closing date determined under Section 1274 of the Internal
Revenue Code to avoid the imputed interest rules. However, if the Company is
the beneficiary of any insurance policy on the life of the Deceased Member, the
net proceeds of such policy received by the Company shall, to the extent of any
unpaid purchase price and after reduction for any other amount paid upon
closing, be applied in full as a payment when received. The note shall be
secured by the Company's assets (subordinate to any existing or future bank
debt) and evidenced by a recorded security interest. The note shall permit
prepayment at any time without penalty and shall provide for immediate payment
of the balance due on default in payment of principal or interest after 10 days
written notice of default. The Company also shall agree in writing to defend,
indemnify and hold harmless the Selling Members to the extent that they have
any direct or indirect liability for the debts
19
<PAGE> 23
or other obligations of the Company.
(d) If the Company does not purchase the Deceased Member's
Company Interest, the Deceased Member's estate or successors in interest shall
succeed to the Deceased Member's Company Interest, but such interest in the
Company shall remain subject to all of the provisions of this Agreement.
ARTICLE 13
ARBITRATION
Any disputes arising out of this Agreement which cannot be
resolved by the Members themselves or pursuant to the terms of this Agreement
shall be submitted to arbitration in accordance with the rules of the American
Arbitration Association, and judgment may be entered upon the award of the
arbitrators in a court of competent jurisdiction.
ARTICLE 14
INVESTMENT REPRESENTATION
Each Member represents and warrants to each other and to the
Company he is acquiring his respective interest in the Company for his own
personal account for investment, and without a view to transferring, reselling,
or distributing such interest. In addition, no Member shall sell or dispose of
his interest in the Company in a manner that violates any Federal or state
securities laws. Each Member shall indemnify and hold the Company harmless
from and against all liability, costs and expenses, including reasonable
attorneys' fees, incurred by the Company or the Members, as a result of a
breach of the representations and warranties made in this Section 14 by such
Member.
ARTICLE 15
AMENDMENTS
This Agreement may be amended only by written agreement of all
the Members; provided, however, that this Agreement may be amended by the
Majority Interest to the extent necessary to permit the allocations and
distributions contained in this Agreement to be sustained under existing or
future Federal income tax laws and regulations.
ARTICLE 16
MISCELLANEOUS PROVISIONS
16.1 Books of Account; Reports. (a) The Company shall keep
true and complete books of account and records of all Company's business and
affairs as required by the Act. The books of account and records shall be kept
at the principal
20
<PAGE> 24
office of the Company. The Company shall maintain at such office (i) a list of
names and addresses of all Members; (ii) a copy of the Articles together with
executed copies of all powers of attorney pursuant to which the Articles have
been executed; (iii) copies of the Company's Federal, state and local income
tax returns and reports for the three most recent years; (iv) copies of the
Company's current Agreement and (v) copies of the financial statements of the
Company for the three most recent years. Such Company records shall be
available to any Member or his designated representative during ordinary
business hours at the reasonable request and expense of such Member.
(b) The Company will use its best efforts to
furnish, or cause to be furnished, the following items on the dates indicated:
(1) an annual report consisting of an income statement
for the prior year and a balance sheet as of the year ended -
annually.
(2) Member information tax returns (Schedule K-1) -
March 15.
16.2 Bank Accounts and Investment of Funds. All funds of the
Company shall be deposited in its name in such checking accounts, savings
accounts, time deposits, or certificates of deposit or shall be invested in
such other manner, as shall be designated by the Majority Interest from time to
time. Withdrawals shall be made upon such signature or signatures as the
Majority Interest may designate.
16.3 Accounting Decisions. All decisions as to accounting
matters, except as specifically provided to the contrary herein, shall be made
by the Majority Interest in accordance with generally accepted accounting
principles consistently applied. Such decisions shall be acceptable to the
accountants retained by the Company, and the Majority Interest may rely upon
the advice of the accountants as to whether such decisions are in accordance
with generally accepted accounting principles.
16.4 Federal Income Tax Elections. The Company shall, to the
extent permitted by applicable law and regulations and upon obtaining any
necessary approval of the Commissioner of Internal Revenue, elect to use such
methods of depreciation, and make all other Federal income tax elections in
such manner, as the Majority Interest determine to be most favorable to the
Members. The Majority Interest may rely upon the advice of the accountants
retained by the Company as to the availability and effect of all such
elections.
21
<PAGE> 25
16.5 Entire Agreement. This Agreement constitutes the
entire Agreement between the parties and may be modified only as provided
herein. No representations or oral or implied agreements have been made by any
party hereto or his agent, and no party to this Agreement relies upon any
representation or agreement not set forth in it. This Agreement supersedes any
and all other agreements, either oral or written, by and among the Company and
its Members.
16.6 Notices. All notices or other communications required
or permitted hereunder shall be in writing and shall be deemed to have been
duly given if (i) physically delivered, telephonically transmitted by
telecopier or other similar means, (ii) one (1) day after having been delivered
to Federal Express or other delivery courier for next day delivery, with proof
of delivery to the recipient received by the courier in the form of a signature
of recipient, or (iii) three (3) days after having been deposited in the United
States Mail, as certified mail with return receipt requested and with postage
prepaid, addressed to the Members at the addresses listed in Exhibit A. The
addresses and other information so indicated for any Member may be changed by a
Member by written notice to the Company.
16.7 Further Execution. Upon request of the Company from
time to time, the Members shall execute and swear to or acknowledge any amended
Articles and any other writing which may be required by any rule or law or
which may be appropriate to the effecting of any action by or on behalf of the
Company or the Members which has been taken in accordance with the provisions
of this Agreement.
16.8 Binding Effect. This Agreement shall be binding upon
and shall inure to the benefit of the parties, their successors and permitted
assigns. None of the provisions of this Agreement shall be construed as for
the benefit of or as enforceable by any creditor of the Company or the Members
or any other person not a party to this Agreement.
16.9 Severability. The invalidity or unenforceability of
any provision of this Agreement in a particular respect shall not affect the
validity and enforceability of any other provision of this Agreement or of the
same provision in any other respect.
16.10 Captions. All captions are for convenience only, do not
form a substantive part of this Agreement and shall not restrict or enlarge any
substantive provisions of this Agreement.
16.11 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
shall constitute one instrument. The
22
<PAGE> 26
Company shall have custody of counterparts executed in the aggregate by all
Members.
16.12 Michigan Law to Control. The validity and interpretation
of, and the sufficiency of performance under, this Agreement shall be governed
by Michigan law.
The parties have executed this Agreement to be effective on the
date first above written.
SEG:4060
MEMBERS:
KEY PLASTICS, INC.
By: Mark J. Abbo
----------------------------
Its: Treasurer
------------------------
David C. Benoit
----------------------------
David C. Benoit
23
<PAGE> 27
KEY PLASTICS TECHNOLOGY, L.L.C.
EXHIBIT A
Initial Capital Membership
Name and Address Contributions Percentages
- ---------------- ---------------- -----------
Members
- -------
Key Plastics, Inc. $ 990 99%
21333 Haggerty Road
Suite 200
Novi, Michigan 48375
David C. Benoit 10 1%
------- --
21333 Haggerty Road
Suite 200
Novi, Michigan 48375
Totals $ 1,000 100%
======= ===
A-1
<PAGE> 1
EXHIBIT 3.11
OPERATING AGREEMENT
OF
KEY MEXICO A, L.L.C.
<PAGE> 2
TABLE OF CONTENTS
Page
----
Article 1 Organization of Company 1
1.1 Formation 1
1.2 Name and Office 1
1.3 Duration 1
1.4 Registered Office and Resident Agent 1
Article 2 Definitions 1
Article 3 Purposes 5
Article 4 Capital Contributions; Borrowings 6
4.1 Initial Contributions of Members 6
4.2 Additional Capital Contributions 6
4.3 Withdrawals 6
4.4 Borrowings 6
4.5 Additional Members 6
Article 5 Management 6
5.1 Powers of the Members 6
5.2 Limitations on Powers 7
5.3 Self Dealing 7
5.4 Standard of Care; Liability 8
5.5 Reimbursement 8
5.6 Delegation of Authority 8
Article 6 Meetings of Members 9
6.1 Voting 9
6.2 Meetings 9
6.3 Consent 9
Article 7 Capital Accounts; Profits and Losses;
Distributions 10
7.1 Capital Accounts 10
7.2 Allocation of Profits and Losses 10
7.3 Distributions 11
7.4 Other Allocations 11
7.5 Share of Excess Nonrecourse Liabilities 14
Article 8 Limitation of Liability; Indemnification 15
8.1 Limitation of Liability 15
8.2 Liability of Member to the Company 15
8.3 Indemnification 15
(i)
<PAGE> 3
Page
----
Article 9 Term of Company 16
9.1 Commencement 16
9.2 Dissolution 16
Article 10 Application of Assets 16
Article 11 Assignability of Interests 17
11.1 Permitted Assignments 17
11.2 Admission of Assignees as Members 17
11.3 Restrictions on Transfers 18
11.4 Section 754 Election 18
Article 12 Arbitration 18
Article 13 Investment Representation 19
Article 14 Amendments 19
Article 15 Miscellaneous Provisions 19
15.1 Books of Account; Reports 19
15.2 Bank Accounts and Investment of Funds 20
15.3 Accounting Decisions 20
15.4 Federal Income Tax Elections 20
15.5 Entire Agreement 20
15.6 Notices 20
15.7 Further Execution 21
15.8 Binding Effect 21
15.9 Severability 21
15.10 Captions 21
15.11 Counterparts 21
15.12 Michigan Law to Control 21
Exhibit A A-1
(ii)
<PAGE> 4
OPERATING AGREEMENT
OF
KEY MEXICO A, L.L.C.
THIS OPERATING AGREEMENT of KEY MEXICO A, L.L.C., a Michigan limited
liability company ("Company"), is made and entered into as of March 27, 1997 by
and among the Company and those persons whose names are set forth on attached
Schedule A and are made a part of this Operating Agreement and those persons
who are later admitted as members (individually, "Member," and collectively,
"Members") who agree as follows:
ARTICLE 1
ORGANIZATION OF COMPANY
1.1 Formation. The Company has been organized as a Michigan limited
liability company pursuant to the provisions of the Act and this Agreement.
1.2 Name and Office. The name of the Company shall be Key Mexico A,
L.L.C., and its office shall be located at 21333 Haggerty Road, Suite 200,
Novi, Michigan 48375, or such other place as the Majority Interest may
determine from time to time.
1.3 Duration. The Company shall continue in existence for the period
fixed in the Articles for the duration of the Company or until the Company
shall be sooner dissolved and its affairs wound up in accordance with the Act
or this Agreement.
1.4 Registered Office and Resident Agent. The Company's initial
registered office shall be at the office of its resident agent at 21333
Haggerty Road, Suite 200, Novi, Michigan 48375 and the name of its initial
resident agent at such address shall be David C. Benoit. The registered office
and resident agent may be changed from time to time in accordance with the Act.
If the resident agent shall ever resign, the Company shall promptly appoint a
successor.
ARTICLE 2
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
<PAGE> 5
The "Act" means the Michigan Limited Liability Company Act being Act No.
23, Public Acts of 1993, as amended.
"Adjusted Deficit Capital Account Balance" means, with respect to any
Member, the deficit balance, if any, in such Member's Capital Account as of the
end of the relevant Company Fiscal Year, (1) increased by any amounts which
such Member is obligated to restore under Treasury Regulation Section
1.704-1(b)(2)(ii)(c), plus an amount equal to such Member's share of Company
Minimum Gain and such Member's share of Member Nonrecourse Debt Minimum Gain
and (2) decreased by the items described in Treasury Regulation Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6). This definition of Adjusted Capital
Account Deficit is intended to comply with the provisions of Treasury
Regulation Sections 1.704-1(b)(2)(ii)(d) and 1.704-2, and will be interpreted
consistently with those provisions.
"Affiliate" means (i) any person directly or indirectly controlling,
controlled by or under common control with another person, (ii) a person owning
or controlling ten percent (10%) or more of the outstanding voting securities
of such other person, (iii) any officer, director, member or partner of such
person, or (iv) a person who is an officer, director, member, partner or holder
of ten percent (10%) or more of any of the voting interests of any person
described in clauses (i) through (iii) of this sentence.
"Agreement" means this Operating Agreement and amendments adopted in
accordance with this Agreement and the Act.
The "Articles" means the Articles of Organization, including any
restatements or amendments, which are filed with the Michigan Department of
Consumer & Industry Services.
"Book Value" means with respect to any asset, the asset's adjusted basis
for federal income tax purposes, except as follows:
(a) the initial Book Value of any asset contributed (or deemed
contributed) to the Company shall be such asset's gross fair
market value at the time of such contribution;
(b) the Book Value of all Company assets shall be adjusted to equal
their respective gross fair market values at the times specified
in Treasury Regulations under Code Section 704(b) if the
Company so elects;
2
<PAGE> 6
(c) if the Book Value of an asset has been determined pursuant to
clause (a) or (b), such Book Value shall thereafter be adjusted
by the Depreciation taken into account with respect to such
asset for purposes of computing Profits and Losses.
"Capital Accounts" shall have the meaning set forth in Section 7.1 of this
Agreement.
"Capital Contributions" means the amount of cash, property, or services
contributed or obligated to be contributed to the Company by a Member.
The "Code" means the Internal Revenue Code, as amended.
"Company Minimum Gain" means an amount determined in accordance with
Treasury Regulation Section 1.704-2(d) for partnership minimum gain by
computing, with respect to each nonrecourse liability of the Company (as
defined in Treasury Regulation Section 1.752-1(a)(2)), the amount of gain (of
whatever character), if any, that would be realized by the Company if (in a
taxable transaction) it disposed of property subject to such liability in full
satisfaction thereof, and by then aggregating the amounts so computed.
"Depreciation" means for each Fiscal Year of the Company or other period,
an amount equal to the depreciation, amortization or other cost recovery
deduction allowable under the Code with respect to an asset for such year or
other period, except that if the Book Value of an asset differs from its
adjusted basis for federal income tax purposes at the beginning of such year or
other period, Depreciation shall be an amount which bears the same ratio to
such beginning Book Value as the federal income tax depreciation, amortization
or other cost recovery deduction for such year or other period bears to such
beginning adjusted tax basis; provided, however, that if the federal income tax
depreciation, amortization or other cost recovery deduction for such year is
zero, Depreciation shall be determined with reference to such beginning Book
Value using any reasonable method selected by the Majority Interest.
"Distributable Cash" means, at any time, that portion of the cash and cash
equivalent assets of the Company which, in light of the Company's then current
and foreseeable sources of, and needs for, cash, exceeds the amount of cash
needed by the Company, as determined by the Majority Interest, to (i) service
its debts and obligations in a timely fashion, (ii) maintain adequate working
capital and reserves, and (iii) conduct its business and carry out its
purposes.
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The "Fiscal Year" of the Company, and its taxable year for Federal income
tax purposes, shall be the calendar year.
"Insolvent" means such time as when the value of the Company's assets
become less than the sum of its liabilities or the Company becomes unable to
pay its debts as they become due in the usual course of business.
"Majority Interest" means those Members holding more than 50% of the
Membership Percentages held by the Members.
"Majority Interest of the Remaining Members" means Members holding more
than 50% of the Membership Percentages and Capital Account Balances of the
Members entitled to vote (other than the Member triggering dissolution under
Section 9.2(d)).
"Member Nonrecourse Debt" shall have the meaning, and be determined in the
same manner as, partner nonrecourse debt pursuant to Treasury Regulation
Section 1.704-2(b)(4).
"Member Nonrecourse Debt Minimum Gain" means the amount, with respect to
each Member Nonrecourse Debt, equal to the Company Minimum Gain that would
result if such Member Nonrecourse Debt were treated as a nonrecourse liability
of the Company, determined in the same manner as partner nonrecourse debt
minimum gain in accordance with Treasury Regulation Section 1.704-2(i)(3).
"Member Nonrecourse Deductions" shall have the meaning, and be determined
in the same manner as, partner nonrecourse deduction pursuant to Treasury
Regulation Section 1.704-2(i)(2).
"Members" are the persons designated as such in Exhibit A. Any reference
to a Member shall, unless the context clearly requires otherwise, include a
reference to his predecessor and successor (other than a mere assignee not made
a substitute Member) in interest.
"Membership Percentages" means the Members' respective interests in the
Company as set forth in Exhibit A, as amended from time to time. "Nonrecourse
Deductions" shall have the meaning set forth in Treasury Regulation Section
1.704-2(c).
"Profits and Losses" means the Company's taxable income or loss for each
Fiscal Year (or other period) determined in accordance with the accounting
methods followed by the Company for federal income tax purposes (for this
purpose all items of income, gain, loss or deduction required to be separately
stated pursuant to Code Section 703(a)(1)
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shall be included in taxable income or loss) as determined by the independent
certified public accountants employed by the Company, with the following
adjustments:
(a) any income of the Company that is exempt from federal
income tax and not otherwise taken into account in computing Profits and Losses
shall be added to such taxable income or loss:
(b) any expenditures of the Company described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures under Code
Section 704(b) and not otherwise taken into account in computing Profits and
Losses shall be subtracted from such taxable income or loss;
(c) in the event the Book Value of any Company asset is
adjusted, the amount of such adjustment shall be taken into account as gain or
loss from the disposition of such asset for purposes of computing Profits or
Losses;
(d) any gain or loss resulting from any disposition of
Company property with respect to which gain or loss is recognized for federal
income tax purposes shall be computed by reference to the Book Value of such
property rather than its adjusted tax basis;
(e) in lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing taxable income or loss,
there shall be taken into account Depreciation for such Fiscal Year or other
period; and
(f) notwithstanding the foregoing, any items which are
specially allocated pursuant to Section 7.4 shall not be taken into account in
computing Profits and Losses.
"Treasury Regulations" includes proposed, temporary and final regulations
promulgated under the Code and the corresponding sections of any regulations
subsequently issued that amend or supersede such regulations.
All references to statutory provisions shall be deemed to include
reference to corresponding provisions of subsequent law.
ARTICLE 3 PURPOSES
The Company may engage in any lawful business permitted by the Act or the
laws of any jurisdiction in which the Company may do business. The Company
shall have the authority to do all things necessary or convenient to
accomplishment of its purposes and to operate its business,
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including all powers granted by the Act.
ARTICLE 4
CAPITAL CONTRIBUTIONS; BORROWINGS
4.1 Initial Capital Contributions of Members. Each of the Members
has made an initial capital contribution and owns a Membership Percentage in
the Company as set forth on Schedule A, as amended. No interest shall accrue
on any Capital Contribution made to the Company unless otherwise agreed by the
Members in writing or otherwise provided in this Agreement.
4.2 Additional Capital Contributions. Additional Capital
Contributions shall be made by the Members to the Company only upon the
unanimous consent of the Members.
4.3 Withdrawals. No Member shall be entitled to be repaid any
portion of his Capital Contribution or withdraw from the Company except as
provided in this Agreement. A Member who withdraws in violation of this
Agreement shall not be entitled to receive the fair market value of his
interest after the withdrawal but shall only be entitled to distributions he
otherwise would have received as a non-withdrawing Member.
4.4 Borrowings. The Company may borrow sums for Company purposes
from any source, including any Member, provided that such borrowing is not
prohibited by any applicable law or regulation and is approved as required
under Section 5 of this Agreement.
4.5 Additional Members. No additional Members shall be admitted to
the Company without the unanimous consent of all Members.
ARTICLE 5
MANAGEMENT
5.1 Powers of the Members.
(a) The Company shall be managed by the Members in proportion to
their Membership Percentages. Each Member shall have the power to do all
things appropriate to the accomplishment of the purposes of the Company,
including (but not limited to): (1) entering into any and all agreements and
executing contracts, notes, mortgages and other writings; (2) paying all
Company obligations including construction cost expenditures and property
management fees; (3) purchasing and maintaining insurance on behalf of the
Company and its Members and employees or agents against any liability or
expense asserted against or incurred by the Company or such persons; (4)
transacting the Company's business under an assumed name or name other than its
name as set forth in the Articles and
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filing a Certificate of Assumed Name with the Michigan Department of Commerce;
(5) appointing any Member or other person as agent for service of process on
the Company as required by the law of any state in which the Company transacts
business; (6) commencing, prosecuting or defending any proceeding in the
Company's name; (7) participating with others in partnerships, joint ventures,
and other associations of any kind; and (8) doing such other acts as may
facilitate the Company's business.
(b) Every contract, lease, deed or other instrument executed
by a Member or Members holding a Majority Interest of the Membership
Percentages shall be conclusive evidence, at the time of execution, that this
Company was then in existence, that this Agreement had not theretofore been
terminated or amended in any manner not disclosed in the Articles and that the
execution and delivery of such instrument was duly authorized by the Members.
(c) David C. Benoit shall act as "tax matters Partner" of the
Company, as defined in Code Section 6231(a)(7).
5.2 Limitations on Powers. Notwithstanding the foregoing and any
other provision contained in this Agreement to the contrary, no act shall be
taken, sum expended, decision made, obligation incurred or power exercised by
any Member on behalf of the Company except by the consent of all of the Members
with respect to (a) the assignment, transfer, pledge, compromise or release of
any of the claims of or debts due the Company (except upon payment in full) or
arbitrate or consent to the arbitration of any of the disputes or controversies
of the Company; (b) any merger of the Company; (c) a transaction involving an
actual or potential conflict of interest between a Member and the Company; (d)
any change in the character of the business and affairs of the Company; (e) the
commission of any act which would make it impossible for the Company to carry
on its ordinary business and affairs; or (f) any act that would contravene any
provision of the Articles or this Agreement or the Act.
5.3 Self Dealing. Any Member and any Affiliate of a Member may deal
with the Company, directly or indirectly, as vendor, purchaser, employee, agent
or otherwise. No contract or other act of the Company shall be voidable or
affected in any manner by the fact that a Member or his Affiliate is directly
or indirectly interested in such contract or other act apart from his interest
as a Member, nor shall any Member or his Affiliate be accountable to the
Company or the other Members in respect of any profits directly or indirectly
realized by him by reason of such contract or other act, and such interested
Member shall be eligible to vote or take any
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other action as a Member in respect of such contract or other act as it would
be entitled were he or his Affiliate not interested therein. Notwithstanding
the foregoing provisions of this Section 5.3, (a) any direct or indirect
interest of a Member or Affiliate of a Member in any contract or other act,
other than his interest as a Member, shall be disclosed to all other Members,
(b) such contract or other act shall be approved by a Majority Interest of the
Members unless the same is specifically authorized herein, and (c) the Members
shall not receive or hold any property of the Company as collateral security in
respect of any claim against the Company.
5.4 Standard of Care; Liability. Each Member shall discharge his
management duties in good faith, with the care an ordinarily prudent person in
a like position would exercise under similar circumstances, and in a manner he
reasonably believes to the be in the best interests of the Company as required
by the Act. A Member shall not be liable for monetary damages to the Company
for any breach of any such management duties except for (i) actions
constituting fraud, willful misconduct or gross negligence, (ii) actions taken
by a Member in violation of this Agreement, (iii) the receipt of a financial
benefit to which the Member is not entitled, (iv) voting for or assenting to a
distribution to Members in violation of this Agreement or the Act, or (v) a
knowing violation of the law.
5.5 Reimbursement. Members shall receive no compensation for
managing the affairs of the Company unless approved by an affirmative vote of a
Majority Interest. Members shall be entitled to reimbursement from the Company
of all expenses of the Company reasonably incurred and paid for by such Member
on behalf of the Company.
5.6 Delegation of Authority. The Members, acting by Majority
Interest and by a written instrument, may from time to time delegate all or any
of their powers or duties hereunder to one or more Members. Any Member may by
written instrument delegate any of his powers and duties to any other Member,
in which event any exercise or performance of such powers or duties by such
Member shall be treated as the action of the delegating Member as well as the
acting Member. Any Member making such delegation shall be permitted to revoke
the delegation at any time by written notice to the other Members and the
Company.
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ARTICLE 6
MEETINGS OF MEMBERS
6.1 Voting. All Members shall be entitled to vote on any matter
submitted to a vote of the Members. Unless a greater vote is required by the
Act, the Articles, or this Agreement, the affirmative vote or consent of a
Majority Interest of all the Members entitled to vote or consent on such matter
shall be required.
6.2 Meetings. An annual meeting of Members for the transaction of
such business as may properly come before the Meeting, shall be held at such
place, on such date and at such time as the Majority Interest shall determine.
Special meetings of Members for any proper purpose or purposes may be called at
any time by the holders of at least twenty-five percent (25%) of the Membership
Percentages of all Members. The Company shall deliver or mail written notice
stating the date, time, place and purposes of any meeting to each Member
entitled to vote at the meeting. Such notice shall be given not less than ten
(10) nor more than sixty (60) days before the date of the meeting. Meetings
may be conducted in person or by telephone conference of the Members upon the
consent of the Majority Interest.
6.3 Consent. Any action required or permitted to be taken at an
annual or special meeting of the Members may be taken without a meeting,
without prior notice, and without a vote, if consents in writing, setting forth
the action so taken, are signed by the Members having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all Members entitled to vote on the action were present and
voted. Every written consent shall bear the date and signature of each Member
who signs the consent. Prompt notice of the taking of action without a meeting
by less than unanimous written consent shall be given to all Members who have
not consented in writing to such action. In addition, the Company may give all
the Members written notice of the action, event or agreement and state in the
notice that any Member who does not indicate his disapproval by written notice
to the Company within a specified period of time (not less than 30 days after
mailing of the notice) shall be deemed to have given his consent or approval to
the action or event or to have made the agreement referred to in the notice.
In such event, any Member who does not indicate his disapproval by written
notice to the Company within the time specified shall be deemed to have given
his written consent, approval or agreement.
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ARTICLE 7
CAPITAL ACCOUNTS; PROFITS AND LOSSES; DISTRIBUTIONS
7.1 Capital Accounts. A capital account shall be maintained for each
Member, to which contributions, Profits and any items of income and gain under
Section 7.4 shall be credited and against which distributions and Losses and
any items of deduction and loss under Section 7.4 shall be charged. Capital
accounts shall be maintained in accordance with the accounting principles of
Code Section 704 and the regulations thereunder.
7.2 Allocation of Profits and Losses. Except as provided in Section
7.2(c) and (d) and after giving effect to the special allocations set forth in
Section 7.4, to the extent applicable, Profits and Losses for any Fiscal Year
shall be allocated to the Members:
(a) First, in the case of Profits, to any Member in an amount
up to, but not exceeding, the aggregate amount of Losses previously allocated
to that Member in accordance with the second sentence of Section 7.2(c); and
(b) Second, in the case of either Profits or Losses, to the
Members in accordance with their Membership Percentages.
(c) The Losses allocated pursuant to Section 7.2(b) shall not
exceed the maximum amount of Losses that can be so allocated without causing
any Member to have an Adjusted Capital Account Deficit at the end of any Fiscal
Year. In the event some but not all of the Members would have Adjusted Capital
Account Deficits as a consequence of an allocation of Losses pursuant to
Section 7.2(b), the limitation set forth in this Section 7.2(c) will be applied
on a Member by Member basis so as to allocate the maximum permissible Losses to
each Member under Treasury Regulations Section 1.704-1(b)(2)(ii)(d). In the
event all Members have Adjusted Capital Account Deficits, Losses shall be
allocated in accordance with Section 7.2(b) hereof.
(d) If there is an addition, withdrawal or substitution of,
or any other change in the interest of, any Member during the period covered by
an allocation, then subject to any agreement between the persons affected, the
Profits and Losses for the period shall be allocated among the varying
interests consistent with the provisions of Code Section 706(d) and any
regulations promulgated thereunder. If Code Section 706(d) or any regulation
thereunder allow alternative methods of allocation, the Majority Interest shall
determine, in its
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sole discretion, which alternative methods to use in allocating Profits and
Losses among the varying interests.
7.3 Distributions. (a) The Company shall distribute to the Members
from time to time, as determined by the Majority Interest, Distributable Cash
of the Company. Except as provided in Section 10, all distributions shall be
made to the Members in proportion to their respective Membership Percentages on
the date of the distribution.
(b) No distributions shall be declared and paid unless, after
the distribution is made, the Company would be able to pay its debts as they
become due in the usual course of business and the assets of the Company are in
excess of the sum of: (i) the Company's liabilities, plus (ii) the amount that
would be needed to satisfy the preferential rights of other Members upon
dissolution that are superior to the rights of the Members(s) receiving the
distribution.
7.4 Other Allocations. Notwithstanding the foregoing provisions of
this Section 7 or any other provision of this Agreement, the following
provisions shall apply:
(a) Compliance With Treasury Regulations. It is anticipated
that the Company will be treated as a partnership for federal income tax
purposes and, accordingly, the partnership tax provisions of the Code shall
apply to the Company and its Members. It is the intent of the Members that
each Member's distributive share of income, gain, loss, deduction, or credit
(or item thereof) shall be determined and allocated in accordance with this
Section 7 to the fullest extent permitted by Section 704(b) of the Code. In
order to preserve and protect the determinations and allocations provided for
in this Section 7, the Majority Interest is authorized and directed to allocate
income, gain, loss, deduction, or credit (or item thereof) arising in any year
differently than otherwise provided for in this Section 7 to the extent that
allocating income, gain, loss, deduction, or credit (or item thereof) in the
manner provided for in this Section 7 would cause the determinations and
allocations of each Member's distributive share of income, gain, loss,
deduction, or credit (or item thereof) not to be permitted by Section 704(b) of
the Code and Treasury Regulations promulgated thereunder. Any allocation made
pursuant to this Section 7.4 shall be deemed to be a complete substitute for
any allocation otherwise provided for in this Section 7 and no amendment of
this Agreement or approval of any Member shall be required. The terms used in
this Section 7 shall have the same meaning as in such Treasury Regulations.
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(b) Only Required Modifications. In making any allocation
(the "new allocation") under Section 7.4, the Majority Interest is authorized
to act only after having been advised by the Company's accountants that, under
Section 704(b) of the Code and the Treasury Regulations thereunder (i) the new
allocation is necessary, and (ii) the new allocation is the minimum
modification of the allocations otherwise provided for in this Section 7
necessary in order to assure that, either in the then current year or in any
preceding year, each Member's distributive share of income, gain, loss,
deduction, or credit (or item thereof) is determined and allocated in
accordance with this Section 7 to the fullest extent permitted by Section
704(b) of the Code and the Treasury Regulations thereunder.
(c) Company Minimum Gain Chargeback. If there is a net
decrease in Company Minimum Gain during a Company Fiscal Year so that an
allocation is required by Treasury Regulation Section 1.704-2(f), then each
Member shall be specially allocated items of income and gain for such year
(and, if necessary, subsequent years) equal to such Member's share of the net
decrease in Company Minimum Gain as determined by Treasury Regulation Section
1.704-2(g)(2). Such allocations shall be made in a manner and at a time which
will satisfy the requirements of Treasury Regulation Section 1.704-2(f)(1) and
shall be interpreted consistently therewith.
(d) Member Minimum Gain Chargeback. If there is a net
decrease in the Member Nonrecourse Debt Minimum Gain during any Fiscal Year,
any Member who has a share of such Member Nonrecourse Debt Minimum Gain (as
determined in the same manner as partner nonrecourse debt minimum gain under
Treasury Regulation Section 1.704-2(i)(5)) shall be specially allocated items
of income or gain for such year (and, if necessary, subsequent Fiscal Years)
equal to such Member's share of the net decrease in the Member Nonrecourse Debt
Minimum Gain in the manner and to the extent required by Treasury Regulation
Section 1.704-2(i)(4) and shall be interpreted consistently therewith.
(e) Qualified Income Offset. If a Member unexpectedly
receives an adjustment, allocation, or distribution described in Treasury
Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), any of which causes or
increases an Adjusted Deficit Capital Account Balance in such Member's capital
account, then he will be specially allocated items of income and gain in an
amount and manner sufficient to eliminate such deficit balance created or
increased by such adjustment, allocation, or distribution as quickly as
possible; provided, however, an allocation pursuant to this Section 7.4(e) will
be made if and only to the extent that such Member would have an Adjusted
Capital Account Deficit after all other
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allocations provided for in Section 7 have been tentatively made as if this
Section 7.4(e) were not in the Agreement.
(f) Gross Income Allocation. If a Member has an Adjusted
Deficit Capital Account Balance at the end of a Company taxable year, such
Member shall be allocated items of income and gain in the amount of such
Adjusted Deficit Capital Account Balance as quickly as possible in order to
eliminate it.
(g) Allocation of Nonrecourse Deductions. Nonrecourse
Deductions shall be allocated among the Members in proportion to their
respective Membership Percentages.
(h) Member Nonrecourse Deductions. Any Member Nonrecourse
Deductions shall be allocated to the Member who bears the economic risk of loss
with respect to the Member Nonrecourse Debt to which such Member Nonrecourse
Deductions are attributable in accordance with Treasury Regulation Section
1.704-2(i)(1).
(i) Curative Allocations. If the Company is required by
Section 7.4(a),(c),(d),(e),(f),(g), or (h) to make any new allocation in a
manner other than as provided for in this Section 7 without regard thereto,
then the Majority Interest is authorized and directed, insofar as it is
permitted to do so by Section 704(b) of the Code, to allocate income, gain,
loss, deduction, or credit (or item thereof) arising in the current Fiscal Year
(or subsequent Fiscal Years, if necessary) in such manner so as to bring the
proportions of income, gain, loss, deduction, or credit (or item thereof)
allocated to the Members as nearly as possible to the proportion otherwise
contemplated by this Section 7 without regard thereto; provided, however, that
Nonrecourse Deductions shall not be taken into account except to the extent
that there has been a reduction in Company Minimum Gain and Member Nonrecourse
Deductions shall not be taken into account except to the extent that there has
been a reduction in Member Minimum Gain and provided further that such
Nonrecourse Deductions and Member Nonrecourse Deduction shall not in any event
be taken into account to the extent that the Majority Interest reasonably
determines that such allocations are likely to be offset by subsequent
allocations pursuant to Section 7.4(c) or (d).
(j) Advice of Accountants. Allocations made by the Majority
Interest under this Section 7.4 in reliance upon the advice of the Company's
accountants shall be deemed to be made pursuant to any fiduciary obligation to
the Company and the Members.
(k) Section 754 Election. To the extent an adjustment to the
adjusted tax basis of any Company asset
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pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to
Regulations Section 1.704-1(b)(2)(iv)(m), to be taken into account in
determining capital accounts, the amount of such adjustment to the capital
accounts shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreased such basis) and such
gain or loss shall be specially allocated to the Members in a manner consistent
with the manner in which their capital accounts are required to be adjusted
pursuant to such Section of the Regulations.
(l) Imputed Interest. If any Member makes a loan to the
Company, or the Company makes a loan to any Member, and interest in excess of
the amount actually payable is imputed under Code Sections 7872, 483, or 1271
through 1288 or corresponding provisions of subsequent Federal income tax law,
then any item of income or expense attributable to any such imputed interest
shall be allocated solely to the Member who made or received the loan and shall
be credited or charged to his capital account, as appropriate.
(m) Contributed Property. Income, gain, loss or deduction
with respect to any property contributed by a Member shall, solely for tax
purposes, be allocated among the Members, to the extent required by Code
Section 704(c) and the related Treasury Regulations, to take account of the
variation between the adjusted tax basis of such property and its Book Value at
the time of contribution to the Company. If the Book Value of any Company
property is adjusted as provided in Treasury Regulation Section
1.704-1(b)(2)(iv), subsequent allocations of income, gain, loss and deduction
and the Book Value of such property shall be adjusted as provided in Code
Section 704(c) and the related Treasury Regulations. If Code Section 704(c)
and the regulations thereunder allow alternative methods of making such
acquired allocations, the Majority Interest shall determine, in their sole
discretion, which alternative method to use. Allocations under this Section
7.4(m) are solely for purposes of federal, state and local taxes and shall not
affect, or in any way be taken into account in computing, any Member's Capital
Account or share of Profits, Losses, or other items or distributions under any
provision of this Agreement.
7.5 Share of Excess Nonrecourse Liabilities. For purposes of
calculating the Members' shares of "excess nonrecourse liabilities" of the
Company (within the meaning of Treasury Regulation Section 1.752-3(a)(3)), the
Members intend that they be considered as sharing profits of the Company in
proportion to their respective Membership Percentages.
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ARTICLE 8
LIMITATION OF LIABILITY; INDEMNIFICATION
8.1 Limitation of Liability. Unless otherwise provided by this
Agreement, the Act, or expressly assumed, a person who is a Member shall not be
liable for the acts, debts or liabilities of the Company beyond his respective
Capital Contribution.
8.2 Liability of Member to the Company. A Member who knowingly
receives a distribution made by the Company which is either in violation of
this Agreement or when the Company is Insolvent, is liable to the Company for
the repayment of the distribution.
8.3 Indemnification. Except as otherwise provided in this Section
8.3, the Company shall indemnify any Member (and may indemnify any employee or
agent of the Company), who was or is a party or is threatened to be made a
party to a threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative, or investigative, and whether formal or
informal (other than an action by or in the right of the Company) by reason of
the fact that such person is or was a Member, employee or agent of the Company
against expenses (including attorneys' fees), judgments, penalties, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with the action, suit or proceeding, if the person acted in good
faith, with the care an ordinarily prudent person in a like position would
exercise under similar circumstances, and in a manner that such person
reasonably believed to be in the best interests of the Company, and with
respect to a criminal action or proceeding, if such person had no reasonable
cause to believe such person's conduct was unlawful. To the extent that a
Member, employee or agent of the Company has been successful on the merits or
otherwise in defense of an action, suit or proceeding referred to in this
Section 8.3, or in defense of any claim, issue or other matter in the action,
suit or proceeding, such person shall be indemnified against actual and
reasonable expenses (including attorneys' fees) incurred by such person in
connection with the action, suit or proceeding and any action, suit or
proceeding brought to enforce the mandatory indemnification provided herein.
Any indemnification permitted under this Section 8.3 (unless ordered by a
court) shall be made by the Company only as authorized in the specific case
upon a determination that the indemnification is proper under the circumstances
because the person to indemnify has met the applicable standard of conduct and
upon an evaluation of the reasonableness of expenses and amount paid in
settlement. This determination and evaluation shall be made by the Majority
Interest of the Members who are not parties or threatened to be made parties to
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the action, suit or proceeding. Notwithstanding anything in this Section 8.3
to the contrary, no indemnification shall be provided to any Member, employee
or agent of the Company for or in connection with the receipt of a financial
benefit to which such person is not entitled, voting for or assenting to a
distribution to Members in violation of this Agreement or Act, or a knowing
violation of law.
ARTICLE 9
TERM OF COMPANY
9.1 Commencement. The term of the Company began on the date the
Articles of Organization were filed with the Michigan Department of Consumer &
Industry Services and became effective under the Act, March 27, 1997.
9.2 Dissolution. The Company shall be dissolved and its affairs be
wound up upon the occurrence of any of the following events:
(a) December 31, 2035;
(b) The sale or other disposition of substantially all of the
assets of the Company;
(c) By the written consent of Members holding at least 75% of
the Membership Percentages in the Company;
(d) The death, withdrawal, expulsion, bankruptcy, or
dissolution of a Member or the occurrence of any other event that terminates
the continued membership of a Member in the Company; provided, however, that
the Company's existence shall not terminate if within 90 days after such event,
a Majority Interest of the Remaining Members elect to reconstitute and continue
the business of the Company and to the admission of one or more Members as
necessary; or
(e) Upon entry of a decree of judicial dissolution.
ARTICLE 10
APPLICATION OF ASSETS
Upon dissolution of the Company, the Company shall cease carrying on its
business and affairs and shall commence winding up of the Company's business
and affairs and complete the winding up as soon as practicable. The Company
affairs shall be concluded by a Member or Members selected in writing by the
Majority Interest. The assets of the Company may be liquidated or distributed
in kind, as determined by the Majority Interest, and the same shall first be
applied to the
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payment of, or to a reserve for the payment of Company liabilities (including
such provision for contingent or unforeseen liabilities as the Majority
Interest deems appropriate) and then to the Members in accordance with their
respective positive Capital Accounts after allocations pursuant to Sections 7.2
and 7.4 for the current Fiscal Year. If Company assets are distributed in
kind, the assets so distributed shall be valued at their current fair market
values and the unrealized appreciation or depreciation in value of the assets
shall be allocated to the Members' Capital Accounts in the manner described in
Section 7.2 and 7.4 as if such assets had been sold, and such assets shall then
be distributed to the Members in accordance with their respective positive
Capital Accounts as so adjusted. To the extent that Company assets cannot
either be sold without undue loss or readily divided for distribution in kind
to the Members, then the Company may, as determined by the Majority Interest,
convey those assets to a trust or other suitable holding entity established for
the benefit of the Members in order to permit the assets to be sold without
undue loss and the proceeds thereof distributed to the Members at a future
date. The legal form of the holding entity, the identity of the trustee or
other fiduciary, and the terms of its governing instrument shall be determined
by the Majority Interest.
ARTICLE 11
ASSIGNABILITY OF INTERESTS
11.1 Permitted Assignments. Subject to the provisions of Section 11,
a Member may assign his interest in the Company in whole or part. Such
assignment shall not of itself substitute the assignee as a Member or entitle
the assignee to participate in the management of the Company. Such assignee is
only entitled to receive, to the extent assigned, the distributions the
assigning Member would otherwise be entitled to. Unless otherwise provided,
the assignor shall remain a Member liable for payment of any remaining
installments of Capital Contributions due with respect to the interest
assigned. No assignment of a Company interest shall be effective with respect
to the Company until written notice is given to the Company.
11.2 Admission of Assignees as Members. Except as provided in
Sections 11.3 and 12.1, an assignee shall be admitted as a Member only upon the
unanimous written consent of all the Members. As a condition of such consent,
the Members may require a substitute Member to comply with the following
requirements: (i) the assignment instrument being in form and substance
satisfactory to the Majority Interest and the Company's counsel; (ii) the
assignor and assignee named therein having executed and acknowledged such other
instrument or
17
<PAGE> 21
instruments as the Majority Interest may deem necessary or desirable to
effectuate such admission; (iii) the assignee having accepted and adopted all
of the terms and provisions of the Agreement, as the same may have been
amended, as if the assignee were a party who joined in the execution of this
Agreement; and (iv) such assignee having paid or acknowledged an obligation to
pay, as the Majority Interest may determine, all reasonable expenses (including
attorneys' fees) connected with such admission. If admitted, the substitute
Member has, to the extent assigned, all of the rights and powers, and is
subject to all the restrictions and liabilities of a Member.
11.3 Restrictions on Transfers. Notwithstanding the other provisions
of this Section 11, no Member shall sell, assign, transfer, exchange, mortgage,
pledge, grant, hypothecate, or otherwise dispose of any interest in the Company
except in compliance with Section 11.3. No Member shall dispose of his
interest in Company without the prior written consent of all the Members (1) if
the effect of the assignment would be to terminate the Company within the
meaning of Code Section 708(b), or (2) without an opinion of counsel in form
and substance satisfactory to counsel for the Company that registration is not
required under the Securities Act of 1933 and applicable state law. In no
event shall any Member assign his interest in the Company if such assignment
would violate any applicable state or Federal securities law. The Members
acknowledge that their interests in the Company have not been registered under
the Michigan Uniform Securities Act and agree that such interests will not be
transferred without registration under said Act or exemption therefrom. Any
attempted disposition of a Member's interest in the Company in violation of
Section 11 shall be null and void ab initio.
11.4 Section 754 Election. In the event of the transfer of a Member's
interest in the Company by sale or exchange, or upon the death of a Member, the
Company, if the person acquiring such interest so requests, shall elect
pursuant to Code Section 754, to adjust the basis of the Company property.
Each Member hereby agrees to provide the Company with all information necessary
to give effect to such election. The transferee shall reimburse the Company
for any reasonable costs incurred as a result of such election, as determined
by the Majority Interest.
ARTICLE 12
ARBITRATION
Any disputes arising out of this Agreement which cannot be resolved by the
Members themselves or pursuant to the terms of this Agreement shall be
submitted to arbitration in accordance with the rules of the American
Arbitration Association, and judgment may be entered upon the award of the
arbitrators in a court of competent jurisdiction.
18
<PAGE> 22
ARTICLE 13
INVESTMENT REPRESENTATION
Each Member represents and warrants to each other and to the Company he is
acquiring his respective interest in the Company for his own personal account
for investment, and without a view to transferring, reselling, or distributing
such interest. In addition, no Member shall sell or dispose of his interest in
the Company in a manner that violates any Federal or state securities laws.
Each Member shall indemnify and hold the Company harmless from and against all
liability, costs and expenses, including reasonable attorneys' fees, incurred
by the Company or the Members, as a result of a breach of the representations
and warranties made in this Section 14 by such Member.
ARTICLE 14
AMENDMENTS
This Agreement may be amended only by written agreement of all the
Members; provided, however, that this Agreement may be amended by the Majority
Interest to the extent necessary to permit the allocations and distributions
contained in this Agreement to be sustained under existing or future Federal
income tax laws and regulations.
ARTICLE 15
MISCELLANEOUS PROVISIONS
15.1 Books of Account; Reports. (a) The Company shall keep true and
complete books of account and records of all Company's business and affairs as
required by the Act. The books of account and records shall be kept at the
principal office of the Company. The Company shall maintain at such office (i)
a list of names and addresses of all Members; (ii) a copy of the Articles
together with executed copies of all powers of attorney pursuant to which the
Articles have been executed; (iii) copies of the Company's Federal, state and
local income tax returns and reports for the three most recent years; (iv)
copies of the Company's current Agreement and (v) copies of the financial
statements of the Company for the three most recent years. Such Company
records shall be available to any Member or his designated representative
during ordinary business hours at the reasonable request and expense of such
Member.
(b) The Company will use its best efforts to furnish, or
cause to be furnished, the following items on the dates indicated:
(1) an annual report consisting of an income statement
for the prior year and a balance sheet as of the year ended - annually.
19
<PAGE> 23
(2) Member information tax returns (Schedule K-1) -
March 15.
15.2 Bank Accounts and Investment of Funds. All funds of the Company
shall be deposited in its name in such checking accounts, savings accounts,
time deposits, or certificates of deposit or shall be invested in such other
manner, as shall be designated by the Majority Interest from time to time.
Withdrawals shall be made upon such signature or signatures as the Majority
Interest may designate.
15.3 Accounting Decisions. All decisions as to accounting matters,
except as specifically provided to the contrary herein, shall be made by the
Majority Interest in accordance with generally accepted accounting principles
consistently applied. Such decisions shall be acceptable to the accountants
retained by the Company, and the Majority Interest may rely upon the advice of
the accountants as to whether such decisions are in accordance with generally
accepted accounting principles.
15.4 Federal Income Tax Elections. The Company shall, to the extent
permitted by applicable law and regulations and upon obtaining any necessary
approval of the Commissioner of Internal Revenue, elect to use such methods of
depreciation, and make all other Federal income tax elections in such manner,
as the Majority Interest determine to be most favorable to the Members. The
Majority Interest may rely upon the advice of the accountants retained by the
Company as to the availability and effect of all such elections.
15.5 Entire Agreement. This Agreement constitutes the entire
Agreement between the parties and may be modified only as provided herein. No
representations or oral or implied agreements have been made by any party
hereto or his agent, and no party to this Agreement relies upon any
representation or agreement not set forth in it. This Agreement supersedes any
and all other agreements, either oral or written, by and among the Company and
its Members.
15.6 Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if (i) physically delivered, telephonically transmitted by telecopier or
other similar means, (ii) one (1) day after having been delivered to Federal
Express or other delivery courier for next day delivery, with proof of delivery
to the recipient received by the courier in the form of a signature of
recipient, or (iii) three (3) days after having been deposited in the United
States Mail, as certified mail with return receipt requested and with postage
prepaid, addressed to the Members at the addresses listed in Exhibit A. The
addresses and other information so indicated for any Member may be changed by a
Member by written notice to the Company.
20
<PAGE> 24
15.7 Further Execution. Upon request of the Company from time to
time, the Members shall execute and swear to or acknowledge any amended
Articles and any other writing which may be required by any rule or law or
which may be appropriate to the effecting of any action by or on behalf of the
Company or the Members which has been taken in accordance with the provisions
of this Agreement.
15.8 Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the parties, their successors and permitted assigns.
None of the provisions of this Agreement shall be construed as for the benefit
of or as enforceable by any creditor of the Company or the Members or any other
person not a party to this Agreement.
15.9 Severability. The invalidity or unenforceability of any
provision of this Agreement in a particular respect shall not affect the
validity and enforceability of any other provision of this Agreement or of the
same provision in any other respect.
15.10 Captions. All captions are for convenience only, do not form a
substantive part of this Agreement and shall not restrict or enlarge any
substantive provisions of this Agreement.
15.11 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one instrument. The Company shall have custody of counterparts
executed in the aggregate by all Members.
15.12 Michigan Law to Control. The validity and interpretation of, and
the sufficiency of performance under, this Agreement shall be governed by
Michigan law.
The parties have executed this Agreement to be effective on the date first
above written.
MEMBERS:
KEY PLASTICS, INC.
By: Mark J. Abbo
--------------------------------
Its:
--------------------------------
21
<PAGE> 25
KEY PLASTICS TECHNOLOGY, L.L.C.
By: Key Plastics, Inc., Member
By: Mark J. Abbo
------------------------------
Its:
-----------------------------
22
<PAGE> 26
KEY MEXICO A, L.L.C.
EXHIBIT A
<TABLE>
<CAPTION>
Initial Capital Membership
Name and Address Contributions Percentages
- ---------------- ---------------- -----------
Members
- -------
<S> <C> <C>
Key Plastics, Inc. $ 990 99%
21333 Haggerty Road
Suite 200
Novi, Michigan 48375
Key Plastics Technology, 10 1%
L.L.C.
21333 Haggerty Road
Suite 200
Novi, Michigan 48375
-------- ---
Totals $ 1,000 100%
======== ===
</TABLE>
A-1
<PAGE> 1
EXHIBIT 3.12
OPERATING AGREEMENT
OF
KEY MEXICO B, L.L.C.
<PAGE> 2
TABLE OF CONTENTS
Page
----
Article 1 Organization of Company 1
1.1 Formation 1
1.2 Name and Office 1
1.3 Duration 1
1.4 Registered Office and Resident Agent 1
Article 2 Definitions 1
Article 3 Purposes 5
Article 4 Capital Contributions; Borrowings 6
4.1 Initial Contributions of Members 6
4.2 Additional Capital Contributions 6
4.3 Withdrawals 6
4.4 Borrowings 6
4.5 Additional Members 6
Article 5 Management 6
5.1 Powers of the Members 6
5.2 Limitations on Powers 7
5.3 Self Dealing 7
5.4 Standard of Care; Liability 8
5.5 Reimbursement 8
5.6 Delegation of Authority 8
Article 6 Meetings of Members 9
6.1 Voting 9
6.2 Meetings 9
6.3 Consent 9
Article 7 Capital Accounts; Profits and Losses;
Distributions 10
7.1 Capital Accounts 10
7.2 Allocation of Profits and Losses 10
7.3 Distributions 11
7.4 Other Allocations 11
7.5 Share of Excess Nonrecourse Liabilities 14
Article 8 Limitation of Liability; Indemnification 15
8.1 Limitation of Liability 15
8.2 Liability of Member to the Company 15
8.3 Indemnification 15
(i)
<PAGE> 3
Page
----
Article 9 Term of Company 16
9.1 Commencement 16
9.2 Dissolution 16
Article 10 Application of Assets 16
Article 11 Assignability of Interests 17
11.1 Permitted Assignments 17
11.2 Admission of Assignees as Members 17
11.3 Restrictions on Transfers 18
11.4 Section 754 Election 18
Article 12 Arbitration 18
Article 13 Investment Representation 19
Article 14 Amendments 19
Article 15 Miscellaneous Provisions 19
15.1 Books of Account; Reports 19
15.2 Bank Accounts and Investment of Funds 20
15.3 Accounting Decisions 20
15.4 Federal Income Tax Elections 20
15.5 Entire Agreement 20
15.6 Notices 20
15.7 Further Execution 21
15.8 Binding Effect 21
15.9 Severability 21
15.10 Captions 21
15.11 Counterparts 21
15.12 Michigan Law to Control 21
Exhibit A A-1
(ii)
<PAGE> 4
OPERATING AGREEMENT
OF
KEY MEXICO B, L.L.C.
THIS OPERATING AGREEMENT of KEY MEXICO B, L.L.C., a Michigan
limited liability company ("Company"), is made and entered into as of March 27,
1997 by and among the Company and those persons whose names are set forth on
attached Schedule A and are made a part of this Operating Agreement and those
persons who are later admitted as members (individually, "Member," and
collectively, "Members") who agree as follows:
ARTICLE 1
ORGANIZATION OF COMPANY
1.1 Formation. The Company has been organized as a
Michigan limited liability company pursuant to the provisions of the Act and
this Agreement.
1.2 Name and Office. The name of the Company shall be Key
Mexico B, L.L.C., and its office shall be located at 21333 Haggerty Road, Suite
200, Novi, Michigan 48375, or such other place as the Majority Interest may
determine from time to time.
1.3 Duration. The Company shall continue in existence for
the period fixed in the Articles for the duration of the Company or until the
Company shall be sooner dissolved and its affairs wound up in accordance with
the Act or this Agreement.
1.4 Registered Office and Resident Agent. The Company's
initial registered office shall be at the office of its resident agent at 21333
Haggerty Road, Suite 200, Novi, Michigan 48375 and the name of its initial
resident agent at such address shall be David C. Benoit. The registered
office and resident agent may be changed from time to time in accordance with
the Act. If the resident agent shall ever resign, the Company shall promptly
appoint a successor.
ARTICLE 2
DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
<PAGE> 5
The "Act" means the Michigan Limited Liability Company Act being
Act No. 23, Public Acts of 1993, as amended.
"Adjusted Deficit Capital Account Balance" means, with respect
to any Member, the deficit balance, if any, in such Member's Capital Account as
of the end of the relevant Company Fiscal Year, (1) increased by any amounts
which such Member is obligated to restore under Treasury Regulation Section
1.704-1(b)(2)(ii)(c), plus an amount equal to such Member's share of Company
Minimum Gain and such Member's share of Member Nonrecourse Debt Minimum Gain
and (2) decreased by the items described in Treasury Regulation Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6). This definition of Adjusted Capital
Account Deficit is intended to comply with the provisions of Treasury
Regulation Sections 1.704-1(b)(2)(ii)(d) and 1.704-2, and will be interpreted
consistently with those provisions.
"Affiliate" means (i) any person directly or indirectly
controlling, controlled by or under common control with another person, (ii) a
person owning or controlling ten percent (10%) or more of the outstanding
voting securities of such other person, (iii) any officer, director, member or
partner of such person, or (iv) a person who is an officer, director, member,
partner or holder of ten percent (10%) or more of any of the voting interests
of any person described in clauses (i) through (iii) of this sentence.
"Agreement" means this Operating Agreement and amendments
adopted in accordance with this Agreement and the Act.
The "Articles" means the Articles of Organization, including any
restatements or amendments, which are filed with the Michigan Department of
Consumer & Industry Services.
"Book Value" means with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:
(a) the initial Book Value of any asset contributed (or
deemed contributed) to the Company shall be such asset's
gross fair market value at the time of such contribution;
(b) the Book Value of all Company assets shall be adjusted
to equal their respective gross fair market values at the
times specified in Treasury Regulations under Code Section
704(b) if the Company so elects;
2
<PAGE> 6
(c) if the Book Value of an asset has been determined
pursuant to clause (a) or (b), such Book Value shall
thereafter be adjusted by the Depreciation taken into
account with respect to such asset for purposes of computing
Profits and Losses.
"Capital Accounts" shall have the meaning set forth in Section
7.1 of this Agreement.
"Capital Contributions" means the amount of cash, property, or
services contributed or obligated to be contributed to the Company by a Member.
The "Code" means the Internal Revenue Code, as amended.
"Company Minimum Gain" means an amount determined in accordance
with Treasury Regulation Section 1.704-2(d) for partnership minimum gain by
computing, with respect to each nonrecourse liability of the Company (as
defined in Treasury Regulation Section 1.752-1(a)(2)), the amount of gain (of
whatever character), if any, that would be realized by the Company if (in a
taxable transaction) it disposed of property subject to such liability in full
satisfaction thereof, and by then aggregating the amounts so computed.
"Depreciation" means for each Fiscal Year of the Company or
other period, an amount equal to the depreciation, amortization or other cost
recovery deduction allowable under the Code with respect to an asset for such
year or other period, except that if the Book Value of an asset differs from
its adjusted basis for federal income tax purposes at the beginning of such
year or other period, Depreciation shall be an amount which bears the same
ratio to such beginning Book Value as the federal income tax depreciation,
amortization or other cost recovery deduction for such year or other period
bears to such beginning adjusted tax basis; provided, however, that if the
federal income tax depreciation, amortization or other cost recovery deduction
for such year is zero, Depreciation shall be determined with reference to such
beginning Book Value using any reasonable method selected by the Majority
Interest.
"Distributable Cash" means, at any time, that portion of the
cash and cash equivalent assets of the Company which, in light of the Company's
then current and foreseeable sources of, and needs for, cash, exceeds the
amount of cash needed by the Company, as determined by the Majority Interest,
to (i) service its debts and obligations in a timely fashion, (ii) maintain
adequate working capital and reserves, and (iii) conduct its business and carry
out its purposes.
3
<PAGE> 7
The "Fiscal Year" of the Company, and its taxable year for
Federal income tax purposes, shall be the calendar year.
"Insolvent" means such time as when the value of the Company's
assets become less than the sum of its liabilities or the Company becomes
unable to pay its debts as they become due in the usual course of business.
"Majority Interest" means those Members holding more than 50% of
the Membership Percentages held by the Members.
"Majority Interest of the Remaining Members" means Members
holding more than 50% of the Membership Percentages and Capital Account
Balances of the Members entitled to vote (other than the Member triggering
dissolution under Section 9.2(d)).
"Member Nonrecourse Debt" shall have the meaning, and be
determined in the same manner as, partner nonrecourse debt pursuant to Treasury
Regulation Section 1.704-2(b)(4).
"Member Nonrecourse Debt Minimum Gain" means the amount, with
respect to each Member Nonrecourse Debt, equal to the Company Minimum Gain that
would result if such Member Nonrecourse Debt were treated as a nonrecourse
liability of the Company, determined in the same manner as partner nonrecourse
debt minimum gain in accordance with Treasury Regulation Section 1.704-2(i)(3).
"Member Nonrecourse Deductions" shall have the meaning, and be
determined in the same manner as, partner nonrecourse deduction pursuant to
Treasury Regulation Section 1.704-2(i)(2).
"Members" are the persons designated as such in Exhibit A. Any
reference to a Member shall, unless the context clearly requires otherwise,
include a reference to his predecessor and successor (other than a mere
assignee not made a substitute Member) in interest.
"Membership Percentages" means the Members' respective interests
in the Company as set forth in Exhibit A, as amended from time to time.
"Nonrecourse Deductions" shall have the meaning set forth in
Treasury Regulation Section 1.704-2(c).
"Profits and Losses" means the Company's taxable income or loss
for each Fiscal Year (or other period) determined in accordance with the
accounting methods followed by the Company for federal income tax purposes (for
this purpose all items of income, gain, loss or deduction required to be
separately stated pursuant to Code Section 703(a)(1)
4
<PAGE> 8
shall be included in taxable income or loss) as determined by the independent
certified public accountants employed by the Company, with the following
adjustments:
(a) any income of the Company that is exempt from
federal income tax and not otherwise taken into account in computing Profits
and Losses shall be added to such taxable income or loss:
(b) any expenditures of the Company described in
Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
under Code Section 704(b) and not otherwise taken into account in computing
Profits and Losses shall be subtracted from such taxable income or loss;
(c) in the event the Book Value of any Company
asset is adjusted, the amount of such adjustment shall be taken into account as
gain or loss from the disposition of such asset for purposes of computing
Profits or Losses;
(d) any gain or loss resulting from any disposition
of Company property with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to the Book Value of
such property rather than its adjusted tax basis;
(e) in lieu of the depreciation, amortization, and
other cost recovery deductions taken into account in computing taxable income
or loss, there shall be taken into account Depreciation for such Fiscal Year or
other period; and
(f) notwithstanding the foregoing, any items which
are specially allocated pursuant to Section 7.4 shall not be taken into account
in computing Profits and Losses.
"Treasury Regulations" includes proposed, temporary and final
regulations promulgated under the Code and the corresponding sections of any
regulations subsequently issued that amend or supersede such regulations.
All references to statutory provisions shall be deemed to
include reference to corresponding provisions of subsequent law.
ARTICLE 3
PURPOSES
The Company may engage in any lawful business permitted by the
Act or the laws of any jurisdiction in which the Company may do business. The
Company shall have the authority to do all things necessary or convenient to
accomplishment of its purposes and to operate its business,
5
<PAGE> 9
including all powers granted by the Act.
ARTICLE 4
CAPITAL CONTRIBUTIONS; BORROWINGS
4.1 Initial Capital Contributions of Members. Each of the
Members has made an initial capital contribution and owns a Membership
Percentage in the Company as set forth on Schedule A, as amended. No interest
shall accrue on any Capital Contribution made to the Company unless otherwise
agreed by the Members in writing or otherwise provided in this Agreement.
4.2 Additional Capital Contributions. Additional Capital
Contributions shall be made by the Members to the Company only upon the
unanimous consent of the Members.
4.3 Withdrawals. No Member shall be entitled to be repaid
any portion of his Capital Contribution or withdraw from the Company except as
provided in this Agreement. A Member who withdraws in violation of this
Agreement shall not be entitled to receive the fair market value of his
interest after the withdrawal but shall only be entitled to distributions he
otherwise would have received as a non-withdrawing Member.
4.4 Borrowings. The Company may borrow sums for Company
purposes from any source, including any Member, provided that such borrowing is
not prohibited by any applicable law or regulation and is approved as required
under Section 5 of this Agreement.
4.5 Additional Members. No additional Members shall be
admitted to the Company without the unanimous consent of all Members.
ARTICLE 5
MANAGEMENT
5.1 Powers of the Members.
(a) The Company shall be managed by the Members in
proportion to their Membership Percentages. Each Member shall have the power
to do all things appropriate to the accomplishment of the purposes of the
Company, including (but not limited to): (1) entering into any and all
agreements and executing contracts, notes, mortgages and other writings; (2)
paying all Company obligations including construction cost expenditures and
property management fees; (3) purchasing and maintaining insurance on behalf of
the Company and its Members and employees or agents against any liability or
expense asserted against or incurred by the Company or such persons; (4)
transacting the Company's business under an assumed name or name other than its
name as set forth in the Articles and
6
<PAGE> 10
filing a Certificate of Assumed Name with the Michigan Department of Commerce;
(5) appointing any Member or other person as agent for service of process on
the Company as required by the law of any state in which the Company transacts
business; (6) commencing, prosecuting or defending any proceeding in the
Company's name; (7) participating with others in partnerships, joint ventures,
and other associations of any kind; and (8) doing such other acts as may
facilitate the Company's business.
(b) Every contract, lease, deed or other instrument
executed by a Member or Members holding a Majority Interest of the Membership
Percentages shall be conclusive evidence, at the time of execution, that this
Company was then in existence, that this Agreement had not theretofore been
terminated or amended in any manner not disclosed in the Articles and that the
execution and delivery of such instrument was duly authorized by the Members.
(c) David C. Benoit shall act as "tax matters
Partner" of the Company, as defined in Code Section 6231(a)(7).
5.2 Limitations on Powers. Notwithstanding the foregoing
and any other provision contained in this Agreement to the contrary, no act
shall be taken, sum expended, decision made, obligation incurred or power
exercised by any Member on behalf of the Company except by the consent of all
of the Members with respect to (a) the assignment, transfer, pledge, compromise
or release of any of the claims of or debts due the Company (except upon
payment in full) or arbitrate or consent to the arbitration of any of the
disputes or controversies of the Company; (b) any merger of the Company; (c) a
transaction involving an actual or potential conflict of interest between a
Member and the Company; (d) any change in the character of the business and
affairs of the Company; (e) the commission of any act which would make it
impossible for the Company to carry on its ordinary business and affairs; or
(f) any act that would contravene any provision of the Articles or this
Agreement or the Act.
5.3 Self Dealing. Any Member and any Affiliate of a Member
may deal with the Company, directly or indirectly, as vendor, purchaser,
employee, agent or otherwise. No contract or other act of the Company shall be
voidable or affected in any manner by the fact that a Member or his Affiliate
is directly or indirectly interested in such contract or other act apart from
his interest as a Member, nor shall any Member or his Affiliate be accountable
to the Company or the other Members in respect of any profits directly or
indirectly realized by him by reason of such contract or other act, and such
interested Member shall be eligible to vote or take any
7
<PAGE> 11
other action as a Member in respect of such contract or other act as it would
be entitled were he or his Affiliate not interested therein. Notwithstanding
the foregoing provisions of this Section 5.3, (a) any direct or indirect
interest of a Member or Affiliate of a Member in any contract or other act,
other than his interest as a Member, shall be disclosed to all other Members,
(b) such contract or other act shall be approved by a Majority Interest of the
Members unless the same is specifically authorized herein, and (c) the Members
shall not receive or hold any property of the Company as collateral security in
respect of any claim against the Company.
5.4 Standard of Care; Liability. Each Member shall
discharge his management duties in good faith, with the care an ordinarily
prudent person in a like position would exercise under similar circumstances,
and in a manner he reasonably believes to the be in the best interests of the
Company as required by the Act. A Member shall not be liable for monetary
damages to the Company for any breach of any such management duties except for
(i) actions constituting fraud, willful misconduct or gross negligence, (ii)
actions taken by a Member in violation of this Agreement, (iii) the receipt of
a financial benefit to which the Member is not entitled, (iv) voting for or
assenting to a distribution to Members in violation of this Agreement or the
Act, or (v) a knowing violation of the law.
5.5 Reimbursement. Members shall receive no compensation
for managing the affairs of the Company unless approved by an affirmative vote
of a Majority Interest. Members shall be entitled to reimbursement from the
Company of all expenses of the Company reasonably incurred and paid for by such
Member on behalf of the Company.
5.6 Delegation of Authority. The Members, acting by
Majority Interest and by a written instrument, may from time to time delegate
all or any of their powers or duties hereunder to one or more Members. Any
Member may by written instrument delegate any of his powers and duties to any
other Member, in which event any exercise or performance of such powers or
duties by such Member shall be treated as the action of the delegating Member
as well as the acting Member. Any Member making such delegation shall be
permitted to revoke the delegation at any time by written notice to the other
Members and the Company.
8
<PAGE> 12
ARTICLE 6
MEETINGS OF MEMBERS
6.1 Voting. All Members shall be entitled to vote on any
matter submitted to a vote of the Members. Unless a greater vote is required
by the Act, the Articles, or this Agreement, the affirmative vote or consent of
a Majority Interest of all the Members entitled to vote or consent on such
matter shall be required.
6.2 Meetings. An annual meeting of Members for the
transaction of such business as may properly come before the Meeting, shall be
held at such place, on such date and at such time as the Majority Interest
shall determine. Special meetings of Members for any proper purpose or
purposes may be called at any time by the holders of at least twenty-five
percent (25%) of the Membership Percentages of all Members. The Company shall
deliver or mail written notice stating the date, time, place and purposes of
any meeting to each Member entitled to vote at the meeting. Such notice shall
be given not less than ten (10) nor more than sixty (60) days before the date
of the meeting. Meetings may be conducted in person or by telephone conference
of the Members upon the consent of the Majority Interest.
6.3 Consent. Any action required or permitted to be taken
at an annual or special meeting of the Members may be taken without a meeting,
without prior notice, and without a vote, if consents in writing, setting forth
the action so taken, are signed by the Members having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all Members entitled to vote on the action were present and
voted. Every written consent shall bear the date and signature of each Member
who signs the consent. Prompt notice of the taking of action without a meeting
by less than unanimous written consent shall be given to all Members who have
not consented in writing to such action. In addition, the Company may give all
the Members written notice of the action, event or agreement and state in the
notice that any Member who does not indicate his disapproval by written notice
to the Company within a specified period of time (not less than 30 days after
mailing of the notice) shall be deemed to have given his consent or approval to
the action or event or to have made the agreement referred to in the notice.
In such event, any Member who does not indicate his disapproval by written
notice to the Company within the time specified shall be deemed to have given
his written consent, approval or agreement.
9
<PAGE> 13
ARTICLE 7
CAPITAL ACCOUNTS; PROFITS AND LOSSES; DISTRIBUTIONS
7.1 Capital Accounts. A capital account shall be
maintained for each Member, to which contributions, Profits and any items of
income and gain under Section 7.4 shall be credited and against which
distributions and Losses and any items of deduction and loss under Section 7.4
shall be charged. Capital accounts shall be maintained in accordance with the
accounting principles of Code Section 704 and the regulations thereunder.
7.2 Allocation of Profits and Losses. Except as provided
in Section 7.2(c) and (d) and after giving effect to the special allocations
set forth in Section 7.4, to the extent applicable, Profits and Losses for any
Fiscal Year shall be allocated to the Members:
(a) First, in the case of Profits, to any Member in
an amount up to, but not exceeding, the aggregate amount of Losses previously
allocated to that Member in accordance with the second sentence of Section
7.2(c); and
(b) Second, in the case of either Profits or
Losses, to the Members in accordance with their Membership Percentages.
(c) The Losses allocated pursuant to Section 7.2(b)
shall not exceed the maximum amount of Losses that can be so allocated without
causing any Member to have an Adjusted Capital Account Deficit at the end of
any Fiscal Year. In the event some but not all of the Members would have
Adjusted Capital Account Deficits as a consequence of an allocation of Losses
pursuant to Section 7.2(b), the limitation set forth in this Section 7.2(c)
will be applied on a Member by Member basis so as to allocate the maximum
permissible Losses to each Member under Treasury Regulations Section
1.704-1(b)(2)(ii)(d). In the event all Members have Adjusted Capital Account
Deficits, Losses shall be allocated in accordance with Section 7.2(b) hereof.
(d) If there is an addition, withdrawal or
substitution of, or any other change in the interest of, any Member during the
period covered by an allocation, then subject to any agreement between the
persons affected, the Profits and Losses for the period shall be allocated
among the varying interests consistent with the provisions of Code Section
706(d) and any regulations promulgated thereunder. If Code Section 706(d) or
any regulation thereunder allow alternative methods of allocation, the Majority
Interest shall determine, in its
10
<PAGE> 14
sole discretion, which alternative methods to use in allocating Profits and
Losses among the varying interests.
7.3 Distributions. (a) The Company shall distribute to the
Members from time to time, as determined by the Majority Interest,
Distributable Cash of the Company. Except as provided in Section 10, all
distributions shall be made to the Members in proportion to their respective
Membership Percentages on the date of the distribution.
(b) No distributions shall be declared and paid
unless, after the distribution is made, the Company would be able to pay its
debts as they become due in the usual course of business and the assets of the
Company are in excess of the sum of: (i) the Company's liabilities, plus (ii)
the amount that would be needed to satisfy the preferential rights of other
Members upon dissolution that are superior to the rights of the Members(s)
receiving the distribution.
7.4 Other Allocations. Notwithstanding the foregoing
provisions of this Section 7 or any other provision of this Agreement, the
following provisions shall apply:
(a) Compliance With Treasury Regulations. It is
anticipated that the Company will be treated as a partnership for federal
income tax purposes and, accordingly, the partnership tax provisions of the
Code shall apply to the Company and its Members. It is the intent of the
Members that each Member's distributive share of income, gain, loss, deduction,
or credit (or item thereof) shall be determined and allocated in accordance
with this Section 7 to the fullest extent permitted by Section 704(b) of the
Code. In order to preserve and protect the determinations and allocations
provided for in this Section 7, the Majority Interest is authorized and
directed to allocate income, gain, loss, deduction, or credit (or item thereof)
arising in any year differently than otherwise provided for in this Section 7
to the extent that allocating income, gain, loss, deduction, or credit (or item
thereof) in the manner provided for in this Section 7 would cause the
determinations and allocations of each Member's distributive share of income,
gain, loss, deduction, or credit (or item thereof) not to be permitted by
Section 704(b) of the Code and Treasury Regulations promulgated thereunder.
Any allocation made pursuant to this Section 7.4 shall be deemed to be a
complete substitute for any allocation otherwise provided for in this Section 7
and no amendment of this Agreement or approval of any Member shall be required.
The terms used in this Section 7 shall have the same meaning as in such
Treasury Regulations.
11
<PAGE> 15
(b) Only Required Modifications. In making any
allocation (the "new allocation") under Section 7.4, the Majority Interest is
authorized to act only after having been advised by the Company's accountants
that, under Section 704(b) of the Code and the Treasury Regulations thereunder
(i) the new allocation is necessary, and (ii) the new allocation is the minimum
modification of the allocations otherwise provided for in this Section 7
necessary in order to assure that, either in the then current year or in any
preceding year, each Member's distributive share of income, gain, loss,
deduction, or credit (or item thereof) is determined and allocated in
accordance with this Section 7 to the fullest extent permitted by Section
704(b) of the Code and the Treasury Regulations thereunder.
(c) Company Minimum Gain Chargeback. If there is a
net decrease in Company Minimum Gain during a Company Fiscal Year so that an
allocation is required by Treasury Regulation Section 1.704-2(f), then each
Member shall be specially allocated items of income and gain for such year
(and, if necessary, subsequent years) equal to such Member's share of the net
decrease in Company Minimum Gain as determined by Treasury Regulation Section
1.704-2(g)(2). Such allocations shall be made in a manner and at a time which
will satisfy the requirements of Treasury Regulation Section 1.704-2(f)(1) and
shall be interpreted consistently therewith.
(d) Member Minimum Gain Chargeback. If there is a
net decrease in the Member Nonrecourse Debt Minimum Gain during any Fiscal
Year, any Member who has a share of such Member Nonrecourse Debt Minimum Gain
(as determined in the same manner as partner nonrecourse debt minimum gain
under Treasury Regulation Section 1.704-2(i)(5)) shall be specially allocated
items of income or gain for such year (and, if necessary, subsequent Fiscal
Years) equal to such Member's share of the net decrease in the Member
Nonrecourse Debt Minimum Gain in the manner and to the extent required by
Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted consistently
therewith.
(e) Qualified Income Offset. If a Member
unexpectedly receives an adjustment, allocation, or distribution described in
Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), any of which
causes or increases an Adjusted Deficit Capital Account Balance in such
Member's capital account, then he will be specially allocated items of income
and gain in an amount and manner sufficient to eliminate such deficit balance
created or increased by such adjustment, allocation, or distribution as quickly
as possible; provided, however, an allocation pursuant to this Section 7.4(e)
will be made if and only to the extent that such Member would have an Adjusted
Capital Account Deficit after all other
12
<PAGE> 16
allocations provided for in Section 7 have been tentatively made as if this
Section 7.4(e) were not in the Agreement.
(f) Gross Income Allocation. If a Member has an
Adjusted Deficit Capital Account Balance at the end of a Company taxable year,
such Member shall be allocated items of income and gain in the amount of such
Adjusted Deficit Capital Account Balance as quickly as possible in order to
eliminate it.
(g) Allocation of Nonrecourse Deductions.
Nonrecourse Deductions shall be allocated among the Members in proportion to
their respective Membership Percentages.
(h) Member Nonrecourse Deductions. Any Member
Nonrecourse Deductions shall be allocated to the Member who bears the economic
risk of loss with respect to the Member Nonrecourse Debt to which such Member
Nonrecourse Deductions are attributable in accordance with Treasury Regulation
Section 1.704-2(i)(1).
(i) Curative Allocations. If the Company is
required by Section 7.4(a),(c),(d),(e),(f),(g), or (h) to make any new
allocation in a manner other than as provided for in this Section 7 without
regard thereto, then the Majority Interest is authorized and directed, insofar
as it is permitted to do so by Section 704(b) of the Code, to allocate income,
gain, loss, deduction, or credit (or item thereof) arising in the current
Fiscal Year (or subsequent Fiscal Years, if necessary) in such manner so as to
bring the proportions of income, gain, loss, deduction, or credit (or item
thereof) allocated to the Members as nearly as possible to the proportion
otherwise contemplated by this Section 7 without regard thereto; provided,
however, that Nonrecourse Deductions shall not be taken into account except to
the extent that there has been a reduction in Company Minimum Gain and Member
Nonrecourse Deductions shall not be taken into account except to the extent
that there has been a reduction in Member Minimum Gain and provided further
that such Nonrecourse Deductions and Member Nonrecourse Deduction shall not in
any event be taken into account to the extent that the Majority Interest
reasonably determines that such allocations are likely to be offset by
subsequent allocations pursuant to Section 7.4(c) or (d).
(j) Advice of Accountants. Allocations made by the
Majority Interest under this Section 7.4 in reliance upon the advice of the
Company's accountants shall be deemed to be made pursuant to any fiduciary
obligation to the Company and the Members.
(k) Section 754 Election. To the extent an
adjustment to the adjusted tax basis of any Company asset
13
<PAGE> 17
pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to
Regulations Section 1.704-1(b)(2)(iv)(m), to be taken into account in
determining capital accounts, the amount of such adjustment to the capital
accounts shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreased such basis) and such
gain or loss shall be specially allocated to the Members in a manner consistent
with the manner in which their capital accounts are required to be adjusted
pursuant to such Section of the Regulations.
(l) Imputed Interest. If any Member makes a loan
to the Company, or the Company makes a loan to any Member, and interest in
excess of the amount actually payable is imputed under Code Sections 7872, 483,
or 1271 through 1288 or corresponding provisions of subsequent Federal income
tax law, then any item of income or expense attributable to any such imputed
interest shall be allocated solely to the Member who made or received the loan
and shall be credited or charged to his capital account, as appropriate.
(m) Contributed Property. Income, gain, loss or
deduction with respect to any property contributed by a Member shall, solely
for tax purposes, be allocated among the Members, to the extent required by
Code Section 704(c) and the related Treasury Regulations, to take account of
the variation between the adjusted tax basis of such property and its Book
Value at the time of contribution to the Company. If the Book Value of any
Company property is adjusted as provided in Treasury Regulation Section
1.704-1(b)(2)(iv), subsequent allocations of income, gain, loss and deduction
and the Book Value of such property shall be adjusted as provided in Code
Section 704(c) and the related Treasury Regulations. If Code Section 704(c)
and the regulations thereunder allow alternative methods of making such
acquired allocations, the Majority Interest shall determine, in their sole
discretion, which alternative method to use. Allocations under this Section
7.4(m) are solely for purposes of federal, state and local taxes and shall not
affect, or in any way be taken into account in computing, any Member's Capital
Account or share of Profits, Losses, or other items or distributions under any
provision of this Agreement.
7.5 Share of Excess Nonrecourse Liabilities. For purposes
of calculating the Members' shares of "excess nonrecourse liabilities" of the
Company (within the meaning of Treasury Regulation Section 1.752-3(a)(3)), the
Members intend that they be considered as sharing profits of the Company in
proportion to their respective Membership Percentages.
14
<PAGE> 18
ARTICLE 8
LIMITATION OF LIABILITY; INDEMNIFICATION
8.1 Limitation of Liability. Unless otherwise provided by
this Agreement, the Act, or expressly assumed, a person who is a Member shall
not be liable for the acts, debts or liabilities of the Company beyond his
respective Capital Contribution.
8.2 Liability of Member to the Company. A Member who
knowingly receives a distribution made by the Company which is either in
violation of this Agreement or when the Company is Insolvent, is liable to the
Company for the repayment of the distribution.
8.3 Indemnification. Except as otherwise provided in this
Section 8.3, the Company shall indemnify any Member (and may indemnify any
employee or agent of the Company), who was or is a party or is threatened to be
made a party to a threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative, or investigative, and whether formal
or informal (other than an action by or in the right of the Company) by reason
of the fact that such person is or was a Member, employee or agent of the
Company against expenses (including attorneys' fees), judgments, penalties,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with the action, suit or proceeding, if the person acted
in good faith, with the care an ordinarily prudent person in a like position
would exercise under similar circumstances, and in a manner that such person
reasonably believed to be in the best interests of the Company, and with
respect to a criminal action or proceeding, if such person had no reasonable
cause to believe such person's conduct was unlawful. To the extent that a
Member, employee or agent of the Company has been successful on the merits or
otherwise in defense of an action, suit or proceeding referred to in this
Section 8.3, or in defense of any claim, issue or other matter in the action,
suit or proceeding, such person shall be indemnified against actual and
reasonable expenses (including attorneys' fees) incurred by such person in
connection with the action, suit or proceeding and any action, suit or
proceeding brought to enforce the mandatory indemnification provided herein.
Any indemnification permitted under this Section 8.3 (unless ordered by a
court) shall be made by the Company only as authorized in the specific case
upon a determination that the indemnification is proper under the circumstances
because the person to indemnify has met the applicable standard of conduct and
upon an evaluation of the reasonableness of expenses and amount paid in
settlement. This determination and evaluation shall be made by the Majority
Interest of the Members who are not parties or threatened to be made parties to
15
<PAGE> 19
the action, suit or proceeding. Notwithstanding anything in this Section 8.3
to the contrary, no indemnification shall be provided to any Member, employee
or agent of the Company for or in connection with the receipt of a financial
benefit to which such person is not entitled, voting for or assenting to a
distribution to Members in violation of this Agreement or Act, or a knowing
violation of law.
ARTICLE 9
TERM OF COMPANY
9.1 Commencement. The term of the Company began on the
date the Articles of Organization were filed with the Michigan Department of
Consumer & Industry Services and became effective under the Act, March 27,
1997.
9.2 Dissolution. The Company shall be dissolved and its
affairs be wound up upon the occurrence of any of the following events:
(a) December 31, 2035;
(b) The sale or other disposition of substantially
all of the assets of the Company;
(c) By the written consent of Members holding at
least 75% of the Membership Percentages in the Company;
(d) The death, withdrawal, expulsion, bankruptcy,
or dissolution of a Member or the occurrence of any other event that terminates
the continued membership of a Member in the Company; provided, however, that
the Company's existence shall not terminate if within 90 days after such event,
a Majority Interest of the Remaining Members elect to reconstitute and continue
the business of the Company and to the admission of one or more Members as
necessary; or
(e) Upon entry of a decree of judicial dissolution.
ARTICLE 10
APPLICATION OF ASSETS
Upon dissolution of the Company, the Company shall cease
carrying on its business and affairs and shall commence winding up of the
Company's business and affairs and complete the winding up as soon as
practicable. The Company affairs shall be concluded by a Member or Members
selected in writing by the Majority Interest. The assets of the Company may be
liquidated or distributed in kind, as determined by the Majority Interest, and
the same shall first be applied to the
16
<PAGE> 20
payment of, or to a reserve for the payment of Company liabilities (including
such provision for contingent or unforeseen liabilities as the Majority
Interest deems appropriate) and then to the Members in accordance with their
respective positive Capital Accounts after allocations pursuant to Sections 7.2
and 7.4 for the current Fiscal Year. If Company assets are distributed in
kind, the assets so distributed shall be valued at their current fair market
values and the unrealized appreciation or depreciation in value of the assets
shall be allocated to the Members' Capital Accounts in the manner described in
Section 7.2 and 7.4 as if such assets had been sold, and such assets shall then
be distributed to the Members in accordance with their respective positive
Capital Accounts as so adjusted. To the extent that Company assets cannot
either be sold without undue loss or readily divided for distribution in kind
to the Members, then the Company may, as determined by the Majority Interest,
convey those assets to a trust or other suitable holding entity established for
the benefit of the Members in order to permit the assets to be sold without
undue loss and the proceeds thereof distributed to the Members at a future
date. The legal form of the holding entity, the identity of the trustee or
other fiduciary, and the terms of its governing instrument shall be determined
by the Majority Interest.
ARTICLE 11
ASSIGNABILITY OF INTERESTS
11.1 Permitted Assignments. Subject to the provisions of
Section 11, a Member may assign his interest in the Company in whole or part.
Such assignment shall not of itself substitute the assignee as a Member or
entitle the assignee to participate in the management of the Company. Such
assignee is only entitled to receive, to the extent assigned, the distributions
the assigning Member would otherwise be entitled to. Unless otherwise
provided, the assignor shall remain a Member liable for payment of any
remaining installments of Capital Contributions due with respect to the
interest assigned. No assignment of a Company interest shall be effective with
respect to the Company until written notice is given to the Company.
11.2 Admission of Assignees as Members. Except as provided
in Sections 11.3 and 12.1, an assignee shall be admitted as a Member only upon
the unanimous written consent of all the Members. As a condition of such
consent, the Members may require a substitute Member to comply with the
following requirements: (i) the assignment instrument being in form and
substance satisfactory to the Majority Interest and the Company's counsel; (ii)
the assignor and assignee named therein having executed and acknowledged such
other instrument or
17
<PAGE> 21
instruments as the Majority Interest may deem necessary or desirable to
effectuate such admission; (iii) the assignee having accepted and adopted all
of the terms and provisions of the Agreement, as the same may have been
amended, as if the assignee were a party who joined in the execution of this
Agreement; and (iv) such assignee having paid or acknowledged an obligation to
pay, as the Majority Interest may determine, all reasonable expenses (including
attorneys' fees) connected with such admission. If admitted, the substitute
Member has, to the extent assigned, all of the rights and powers, and is
subject to all the restrictions and liabilities of a Member.
11.3 Restrictions on Transfers. Notwithstanding the other
provisions of this Section 11, no Member shall sell, assign, transfer,
exchange, mortgage, pledge, grant, hypothecate, or otherwise dispose of any
interest in the Company except in compliance with Section 11.3. No Member
shall dispose of his interest in Company without the prior written consent of
all the Members (1) if the effect of the assignment would be to terminate the
Company within the meaning of Code Section 708(b), or (2) without an opinion of
counsel in form and substance satisfactory to counsel for the Company that
registration is not required under the Securities Act of 1933 and applicable
state law. In no event shall any Member assign his interest in the Company if
such assignment would violate any applicable state or Federal securities law.
The Members acknowledge that their interests in the Company have not been
registered under the Michigan Uniform Securities Act and agree that such
interests will not be transferred without registration under said Act or
exemption therefrom. Any attempted disposition of a Member's interest in the
Company in violation of Section 11 shall be null and void ab initio.
11.4 Section 754 Election. In the event of the transfer of
a Member's interest in the Company by sale or exchange, or upon the death of a
Member, the Company, if the person acquiring such interest so requests, shall
elect pursuant to Code Section 754, to adjust the basis of the Company
property. Each Member hereby agrees to provide the Company with all
information necessary to give effect to such election. The transferee shall
reimburse the Company for any reasonable costs incurred as a result of such
election, as determined by the Majority Interest.
ARTICLE 12
ARBITRATION
Any disputes arising out of this Agreement which cannot be
resolved by the Members themselves or pursuant to the terms of this Agreement
shall be submitted to arbitration in accordance with the rules of the American
Arbitration Association, and judgment may be entered upon the award of the
arbitrators in a court of competent jurisdiction.
18
<PAGE> 22
ARTICLE 13
INVESTMENT REPRESENTATION
Each Member represents and warrants to each other and to the
Company he is acquiring his respective interest in the Company for his own
personal account for investment, and without a view to transferring, reselling,
or distributing such interest. In addition, no Member shall sell or dispose of
his interest in the Company in a manner that violates any Federal or state
securities laws. Each Member shall indemnify and hold the Company harmless
from and against all liability, costs and expenses, including reasonable
attorneys' fees, incurred by the Company or the Members, as a result of a
breach of the representations and warranties made in this Section 14 by such
Member.
ARTICLE 14
AMENDMENTS
This Agreement may be amended only by written agreement of all
the Members; provided, however, that this Agreement may be amended by the
Majority Interest to the extent necessary to permit the allocations and
distributions contained in this Agreement to be sustained under existing or
future Federal income tax laws and regulations.
ARTICLE 15
MISCELLANEOUS PROVISIONS
15.1 Books of Account; Reports. (a) The Company shall keep
true and complete books of account and records of all Company's business and
affairs as required by the Act. The books of account and records shall be kept
at the principal office of the Company. The Company shall maintain at such
office (i) a list of names and addresses of all Members; (ii) a copy of the
Articles together with executed copies of all powers of attorney pursuant to
which the Articles have been executed; (iii) copies of the Company's Federal,
state and local income tax returns and reports for the three most recent years;
(iv) copies of the Company's current Agreement and (v) copies of the financial
statements of the Company for the three most recent years. Such Company
records shall be available to any Member or his designated representative
during ordinary business hours at the reasonable request and expense of such
Member.
(b) The Company will use its best efforts to
furnish, or cause to be furnished, the following items on the dates indicated:
(1) an annual report consisting of an income
statement for the prior year and a balance sheet as of the year
ended - annually.
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<PAGE> 23
(2) Member information tax returns (Schedule
K-1) - March 15.
15.2 Bank Accounts and Investment of Funds. All funds of
the Company shall be deposited in its name in such checking accounts, savings
accounts, time deposits, or certificates of deposit or shall be invested in
such other manner, as shall be designated by the Majority Interest from time to
time. Withdrawals shall be made upon such signature or signatures as the
Majority Interest may designate.
15.3 Accounting Decisions. All decisions as to accounting
matters, except as specifically provided to the contrary herein, shall be made
by the Majority Interest in accordance with generally accepted accounting
principles consistently applied. Such decisions shall be acceptable to the
accountants retained by the Company, and the Majority Interest may rely upon
the advice of the accountants as to whether such decisions are in accordance
with generally accepted accounting principles.
15.4 Federal Income Tax Elections. The Company shall, to
the extent permitted by applicable law and regulations and upon obtaining any
necessary approval of the Commissioner of Internal Revenue, elect to use such
methods of depreciation, and make all other Federal income tax elections in
such manner, as the Majority Interest determine to be most favorable to the
Members. The Majority Interest may rely upon the advice of the accountants
retained by the Company as to the availability and effect of all such
elections.
15.5 Entire Agreement. This Agreement constitutes the
entire Agreement between the parties and may be modified only as provided
herein. No representations or oral or implied agreements have been made by any
party hereto or his agent, and no party to this Agreement relies upon any
representation or agreement not set forth in it. This Agreement supersedes any
and all other agreements, either oral or written, by and among the Company and
its Members.
15.6 Notices. All notices or other communications required
or permitted hereunder shall be in writing and shall be deemed to have been
duly given if (i) physically delivered, telephonically transmitted by
telecopier or other similar means, (ii) one (1) day after having been delivered
to Federal Express or other delivery courier for next day delivery, with proof
of delivery to the recipient received by the courier in the form of a signature
of recipient, or (iii) three (3) days after having been deposited in the United
States Mail, as certified mail with return receipt requested and with postage
prepaid, addressed to the Members at the addresses listed in Exhibit A. The
addresses and other information so indicated for any Member may be changed by a
Member by written notice to the Company.
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<PAGE> 24
15.7 Further Execution. Upon request of the Company from
time to time, the Members shall execute and swear to or acknowledge any amended
Articles and any other writing which may be required by any rule or law or
which may be appropriate to the effecting of any action by or on behalf of the
Company or the Members which has been taken in accordance with the provisions
of this Agreement.
15.8 Binding Effect. This Agreement shall be binding upon
and shall inure to the benefit of the parties, their successors and permitted
assigns. None of the provisions of this Agreement shall be construed as for
the benefit of or as enforceable by any creditor of the Company or the Members
or any other person not a party to this Agreement.
15.9 Severability. The invalidity or unenforceability of
any provision of this Agreement in a particular respect shall not affect the
validity and enforceability of any other provision of this Agreement or of the
same provision in any other respect.
15.10 Captions. All captions are for convenience only, do not
form a substantive part of this Agreement and shall not restrict or enlarge any
substantive provisions of this Agreement.
15.11 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
shall constitute one instrument. The Company shall have custody of
counterparts executed in the aggregate by all Members.
15.12 Michigan Law to Control. The validity and
interpretation of, and the sufficiency of performance under, this Agreement
shall be governed by Michigan law.
The parties have executed this Agreement to be effective on the
date first above written.
MEMBERS:
KEY PLASTICS, INC.
By: Mark J. Abbo
------------------------
Its:
-----------------------
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<PAGE> 25
KEY PLASTICS TECHNOLOGY, L.L.C.
By: Key Plastics, Inc., Member
By: Mark J. Abbo
-----------------------------
Its:
-----------------------------
22
<PAGE> 26
KEY MEXICO B, L.L.C.
EXHIBIT A
Initial Capital Membership
Name and Address Contributions Percentages
- ---------------- ---------------- -----------
Members
- -------
Key Plastics, Inc. $ 990 99%
21333 Haggerty Road
Suite 200
Novi, Michigan 48375
Key Plastics Technology, 10 1%
L.L.C.
21333 Haggerty Road
Suite 200
Novi, Michigan 48375
------- ---
Totals $ 1,000 100%
======= ===
A-1
<PAGE> 1
EXECUTION COPY
EXHIBIT 4.6
================================================================================
KEY PLASTICS, INC.
SERIES A AND SERIES B
10 1/4% SENIOR SUBORDINATED NOTES DUE 2007
_________________
INDENTURE
Dated as of March 24, 1997
_________________
_________________
Marine Midland Bank
_________________
Trustee
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
<S> <C>
310 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.05
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.03
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.03
313 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.07
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06, 12.02
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.03
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 12.04
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 12.04
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.05
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.05
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316 (a)(last sentence) . . . . . . . . . . . . . . . . . . . . 2.09
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . 6.05
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . 6.04
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.12
317 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 6.08
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . 6.09
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
318 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.01
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
N.A. means not applicable.
</TABLE>
*This Cross-Reference Table is not part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions ............................................ 1
Section 1.02. Other Definitions....................................... 15
Section 1.03. Incorporation by Reference of Trust Indenture Act....... 16
Section 1.04. Rules of Construction................................... 16
ARTICLE 2
THE SENIOR SUBORDINATED NOTES
Section 2.01. Form and Dating......................................... 17
Section 2.02. Execution and Authentication............................ 19
Section 2.03. Registrar and Paying Agent.............................. 19
Section 2.04. Paying Agent to Hold Money in Trust..................... 20
Section 2.05. Holder Lists............................................ 20
Section 2.06. Transfer and Exchange................................... 20
Section 2.07. Replacement Of Senior Subordinated Notes................ 28
Section 2.08. Outstanding Senior Subordinated Notes................... 28
Section 2.09. Treasury Senior Subordinated Notes...................... 29
Section 2.10. Temporary Senior Subordinated Notes..................... 29
Section 2.11. Cancellation............................................ 29
Section 2.12. Defaulted Interest...................................... 30
Section 2.13. Record Date............................................. 30
Section 2.14. CUSIP Number............................................ 30
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee...................................... 30
Section 3.02. Selection of Senior Subordinated Notes to be Redeemed... 30
Section 3.03. Notice of Redemption.................................... 31
Section 3.04. Effect of Notice of Redemption.......................... 32
Section 3.05. Deposit of Redemption Price............................. 32
Section 3.06. Senior Subordinated Notes Redeemed in Part.............. 32
Section 3.07. Optional Redemption..................................... 32
Section 3.08. Mandatory Redemption.................................... 33
Section 3.09. Repurchase Offers....................................... 33
ARTICLE 4
COVENANTS
Section 4.01. Payment of Senior Subordinated Notes.................... 35
Section 4.02. Maintenance of Office or Agency......................... 36
Section 4.03. Reports................................................. 36
Section 4.04. Compliance Certificate.................................. 37
Section 4.05. Taxes................................................... 37
Section 4.06. Stay, Extension and Usury Laws.......................... 38
</TABLE>
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<TABLE>
<S> <C> <C>
Section 4.07. Restricted Payments....................................... 38
Section 4.08. Dividend and Other Payment Restrictions Affecting
Subsidiaries.............................................. 40
Section 4.09. Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock of Subsidiaries.... 41
Section 4.10. Asset Sales............................................... 43
Section 4.11. Transactions with Affiliates.............................. 44
Section 4.12. Liens..................................................... 44
Section 4.13. Line of Business.......................................... 45
Section 4.14. Corporate Existence....................................... 45
Section 4.15. Offer to Repurchase Upon Change of Control................ 45
Section 4.16. No Senior Subordinated Debt............................... 45
Section 4.17. Designation of Unrestricted Subsidiaries.................. 46
Section 4.18. Subsidiary Guarantees..................................... 46
Section 4.19. Payments for Consent...................................... 46
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets.................. 46
Section 5.02. Successor Corporation Substituted......................... 47
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default......................................... 48
Section 6.02. Acceleration.............................................. 49
Section 6.03. Other Remedies............................................ 50
Section 6.04. Waiver of Past Defaults................................... 50
Section 6.05. Control by Majority....................................... 50
Section 6.06. Limitation on Suits....................................... 51
Section 6.07. Rights of Holders of Senior Subordinated Notes to
Receive Payment........................................... 51
Section 6.08. Collection Suit by Trustee................................ 51
Section 6.09. Trustee May File Proofs of Claim.......................... 52
Section 6.10. Priorities................................................ 52
Section 6.11. Undertaking for Costs..................................... 53
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee......................................... 53
Section 7.02. Rights of Trustee......................................... 54
Section 7.03. Individual Rights of Trustee.............................. 55
Section 7.04. Trustee's Disclaimer...................................... 55
Section 7.05. Notice of Defaults........................................ 55
Section 7.06. Reports by Trustee to Holders of the Senior
Subordinated Notes........................................ 55
Section 7.07. Compensation and Indemnity................................ 56
Section 7.08. Replacement of Trustee.................................... 56
Section 7.09. Successor Trustee by Merger, etc.......................... 57
Section 7.10. Eligibility; Disqualification............................. 58
Section 7.11. Preferential Collection of Claims Against Company ........ 58
</TABLE>
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<TABLE>
<S> <C> <C>
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance................................................. 58
Section 8.02. Legal Defeasance and Discharge............................. 58
Section 8.03. Covenant Defeasance........................................ 59
Section 8.04. Conditions to Legal or Covenant Defeasance................. 59
Section 8.05. Deposited Money and Government Securities to be
Held in Trust; Other Miscellaneous Provisions.............. 60
Section 8.06. Repayment to Company....................................... 61
Section 8.07. Reinstatement.............................................. 61
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Senior Subordinated Notes.... 62
Section 9.02. With Consent of Holders of Senior Subordinated Notes....... 62
Section 9.03. Compliance with Trust Indenture Act........................ 64
Section 9.04. Revocation and Effect of Consents.......................... 64
Section 9.05. Notation on or Exchange of Senior Subordinated Notes....... 64
Section 9.06. Trustee to Sign Amendments, etc ........................... 64
ARTICLE 10
SUBORDINATION
Section 10.01. Agreement to Subordinate................................... 65
Section 10.02. Liquidation; Dissolution; Bankruptcy....................... 65
Section 10.03. Default on Designated Senior Debt.......................... 65
Section 10.04. Acceleration of Securities................................. 66
Section 10.05. When Distribution Must Be Paid Over........................ 66
Section 10.06. Notice By Company.......................................... 66
Section 10.07. Subrogation................................................ 66
Section 10.08. Relative Rights............................................ 67
Section 10.09. Subordination May Not Be Impaired by Company............... 67
Section 10.10. Distribution or Notice to Representative................... 67
Section 10.11. Rights of Trustee and Paying Agent......................... 68
Section 10.12. Authorization to Effect Subordination...................... 68
Section 10.13. Amendments................................................. 68
ARTICLE 11
SUBSIDIARY GUARANTEES
Section 11.01. Subsidiary Guarantees...................................... 68
Section 11.02. Execution and Delivery of Subsidiary Guarantee............. 69
Section 11.03. Guarantors May Consolidate, Etc., on Certain Terms......... 70
Section 11.04. Releases Following Sale of Assets.......................... 70
Section 11.05. "Trustee" to Include Paying Agent.......................... 71
Section 11.06. Additional Guarantors...................................... 71
Section 11.07. Subordination of Subsidiary Guarantee...................... 71
Section 11.08. Liquidation; Dissolution; Bankruptcy....................... 71
Section 11.09. Default on Designated Senior Debt.......................... 72
Section 11.10. Acceleration of Securities................................. 72
</TABLE>
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<TABLE>
<S> <C> <C>
Section 11.11. When Distribution Must Be Paid Over....................... 72
Section 11.12. Notice By A Guarantor..................................... 73
Section 11.13. Subrogation............................................... 73
Section 11.14. Relative Rights........................................... 73
Section 11.15. Subordination May Not Be Impaired by any Guarantor........ 74
Section 11.16. Distribution or Notice to Representative.................. 74
Section 11.17. Rights of Trustee and Paying Agent........................ 74
Section 11.18. Authorization to Effect Subordination..................... 74
Section 11.19. Limitation of Guarantor's Liability....................... 75
ARTICLE 12
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls.............................. 75
Section 12.02. Notices................................................... 75
Section 12.03. Communication by Holders of Senior Subordinated
Notes with Other Holders of Senior Subordinated
Notes..................................................... 76
Section 12.04. Certificate and Opinion as to Conditions Precedent........ 77
Section 12.05. Statements Required in Certificate or Opinion............. 77
Section 12.06. Rules by Trustee and Agents............................... 77
Section 12.07. No Personal Liability of Directors, Officers,
Employees and Stockholders................................ 77
Section 12.08. Governing Law............................................. 78
Section 12.09. No Adverse Interpretation of Other Agreements............. 78
Section 12.10. Successors................................................ 78
Section 12.11. Severability.............................................. 78
Section 12.12. Counterpart Originals..................................... 78
Section 12.13. Table of Contents, Headings, etc ......................... 78
</TABLE>
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EXHIBITS
<TABLE>
<S> <C>
Exhibit A-1 FORM OF SENIOR SUBORDINATED NOTE
Exhibit A-2 FORM OF REGULATION S TEMPORARY GLOBAL
SENIOR SUBORDINATED NOTE
Exhibit B-1 FORM OF CERTIFICATE FOR EXCHANGE OR
REGISTRATION OF TRANSFER FROM RULE 144A
GLOBAL SENIOR SUBORDINATED NOTE TO
REGULATION S GLOBAL SENIOR SUBORDINATED
NOTE
Exhibit B-2 FORM OF CERTIFICATE FOR EXCHANGE OR
REGISTRATION OF TRANSFER FROM REGULATION S
GLOBAL SENIOR SUBORDINATED NOTE TO RULE
144A GLOBAL SENIOR SUBORDINATED NOTE
Exhibit B-3 FORM OF CERTIFICATE FOR EXCHANGE OR
REGISTRATION OF TRANSFER OF DEFINITIVE SENIOR
SUBORDINATED NOTES
Exhibit B-4 FORM OF CERTIFICATE FOR EXCHANGE OR
REGISTRATION OF TRANSFER FROM RULE 144A
GLOBAL SENIOR SUBORDINATED NOTE OR
REGULATION S PERMANENT GLOBAL SENIOR
SUBORDINATED NOTE TO DEFINITIVE SENIOR
SUBORDINATED NOTE
Exhibit C FORM OF CERTIFICATE TO BE DELIVERED BY
INSTITUTIONAL ACCREDITED INVESTORS
Exhibit D FORM OF SUBSIDIARY GUARANTEE
Exhibit E FORM OF SUPPLEMENTAL INDENTURE
</TABLE>
v
<PAGE> 8
INDENTURE dated as of March 24, 1997, by and among Key Plastics, Inc., a
Michigan corporation, as Issuer (the "Company"), Key Plastics International
LLC, a Michigan limited liability company, Key Plastics Automotive LLC, a
Michigan limited liability company, and Key Plastics Technology, LLC, a
Michigan limited liability company, as Guarantors (the "Guarantors") and Marine
Midland Bank, as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the 10 1/4%
Series A Senior Subordinated Notes due 2007 (the "Series A Senior Subordinated
Notes") and the 10 1/4% Series B Senior Subordinated Notes due 2007 (the
"Series B Senior Subordinated Notes" and, together with the Series A Senior
Subordinated Notes, the "Senior Subordinated Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or
exchange of beneficial interests in a Global Note, the rules and procedures of
the Depositary that apply to such transfer or exchange.
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any assets or rights (including, without limitation, by way of a
sale and leaseback) other than sales of inventory, goods or services in the
ordinary course of business (provided that the sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Company and its
Subsidiaries taken as a whole will be governed by the provisions of Sections
4.15 and/or 5.01 and not by the provisions of Section 4.10), and (ii) the issue
or sale by the Company or any of its Subsidiaries of Equity Interests of any of
the Company's Subsidiaries, in the case of either clause (i) or (ii), whether
in a single transaction or a series of related transactions (a) that have a
fair market value in excess of $1.0 million or (b) for net proceeds in excess
of $1.0 million. Notwithstanding the foregoing: (i) a transfer of assets by
the Company to a Subsidiary; or by a Subsidiary to the Company or to another
Subsidiary, (ii) an issuance of Equity Interests by a Subsidiary to the Company
or to another Subsidiary, and (iii) any Restricted Payment, Permitted
<PAGE> 9
Investment or dividend or distribution that is permitted by Section 4.07 will
not be deemed to be Asset Sales.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company, or
any authorized committee of the Board of Directors.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Borrowing Base" means, as of any date, an amount equal to the sum of
(a) $55.0 million, (b) 90% of the face amount of all accounts receivable owned
by the Company, its Subsidiaries or Key Plastics U.K. as of such date and (c)
60% of the book value on a FIFO basis of all inventory owned by the Company,
its Subsidiaries or Key Plastics U.K. as of such date, all calculated on a
consolidated basis and in accordance with GAAP. To the extent that information
is not available as to the amount of accounts receivable or inventory as of a
specific date, the Company may utilize the most recent available information
for purposes of calculating the Borrowing Base.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital
lease that would at such time be required to be capitalized on a balance sheet
in accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having maturities of not
more than six months from the date of acquisition, (iii) marketable direct
obligations issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality thereof
maturing within one year from the date of acquisition thereof and, at the time
of acquisition, having one of the two highest ratings obtainable from either
Standard & Poor's Ratings Services ("S&P") or Moody's Investors Service, Inc.
("Moody's"), (iv) certificates of deposit and eurodollar time deposits with
maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any lender party to the Senior Credit Facility or
with any domestic commercial bank having capital and surplus in excess of
$250.0 million and a Keefe Bank Watch Rating of "B" or better, (v) repurchase
obligations with a term of not more than seven days for underlying securities
of the types described in clauses (ii), (iii) and (iv) above entered into with
any financial institution meeting the qualifications specified in clause (iv)
2
<PAGE> 10
above, (vi) commercial paper having one of the two highest ratings obtainable
from Moody's or S&P and in each case maturing within six months after the date
of acquisition and (vii) investments in money market funds which invest
substantially all their assets in securities of the types described in clauses
(i) through (vi) above.
"Cedel" means Cedel bank, societe anonyme.
"Change of Control" means the occurrence of any of the following:
(i) the adoption of a plan relating to the liquidation or dissolution of the
Company, (ii) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that (a) prior
to an Initial Public Offering, any "Person" (as such term is used in Section
13(d)(3) of the Exchange Act), other than the Principals and their Related
Parties, (1) becomes the "beneficial owner" (as such term is defined in Rule
13d-3 and Rule 13d-5 under the Exchange Act, except that a Person shall be
deemed to have "beneficial ownership" of all securities that such Person has
the right to acquire, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition), directly or
indirectly, of more than 50% of the Voting Stock of the Company (measured by
voting power rather than number of shares), (2) becomes a shareholder of the
Company with the right to appoint or remove directors of the Company holding
50% or more of the voting rights at meetings of the Board of Directors on all,
or substantially all, matters or (3) becomes able to exercise the right to give
directions with respect to the operating and financial policies of the Company
with which the relevant directors are obligated to comply by reason of (A)
provisions contained in the organization documents of the Company, or (B) the
existence of any contract permitting such Person to exercise control over the
Company, or (b) after an Initial Public Offering, any "Person" (as defined
above), other than the Principals and their Related Parties, becomes the
"beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under
the Exchange Act, except that a Person shall be deemed to have "beneficial
ownership" of all securities that such Person has the right to acquire, whether
such right is currently exercisable or is exercisable only upon the occurrence
of a subsequent condition), directly or indirectly, of more than 30% of the
total of the Voting Stock of the Company (measured by voting power rather than
number of shares), and, the Principals, collectively, are the "beneficial
owners" of a lesser percentage of the Voting Stock of the Company than such
other "Person" and do not have the right or ability by voting power, contract
or otherwise, to elect or designate for election, a majority of the Board of
Directors of the Company, (iii) the first day on which a majority of the
members of the Board of Directors of the Company are not Continuing Directors,
(iv) the Company consolidates with, or merges with or into, any Person or
sells, assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of its assets to any Person, or any Person consolidates with,
or merges with or into, the Company, in any such event pursuant to a
transaction in which any of the outstanding Voting Stock of the Company is
converted into or exchanged for cash, securities or other property, other than
any such transaction where the Voting Stock of the Company outstanding
immediately prior to such transaction is converted into or exchanged for Voting
Stock (other than Disqualified Stock) of the surviving or transferee Person
constituting a majority of the outstanding shares of such Voting Stock of such
surviving or transferee Person (immediately after giving effect to such
issuance) or (v) the Company sells, assigns, conveys, transfers, leases or
otherwise disposes of all or substantially all of its assets to any Person
pursuant to a transaction in which none of the outstanding Voting Stock of the
Company is converted into or exchanged for cash, securities or other property.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (i) an
amount equal to any extraordinary loss plus any net loss realized in connection
with an Asset Sale (to the extent such losses were deducted in computing such
3
<PAGE> 11
Consolidated Net Income), plus (ii) if the Company is not an S-Corporation or
substantially similar pass-through entity for Federal income tax purposes, any
provision for taxes based on income or profits of such Person and its
Subsidiaries for such period, to the extent that such provision for taxes was
included in computing such Consolidated Net Income, plus (iii) consolidated
interest expense of such Person and its Subsidiaries for such period, whether
paid or accrued and whether or not capitalized (including, without limitation,
amortization of debt issuance costs and original issue discount, non-cash
interest payments, the interest component of any deferred payment obligations,
the interest component of all payments associated with Capital Lease
Obligations, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net payments
(if any) pursuant to Hedging Obligations), to the extent that any such expense
was deducted in computing such Consolidated Net Income, plus (iv) depreciation,
amortization (including amortization of goodwill and other intangibles but
excluding amortization of prepaid cash expenses that were paid in a prior
period) and other non-cash expenses (excluding any such non-cash expense to the
extent that it represents an accrual of or reserve for cash expenses in any
future period or amortization of a prepaid cash expense that was paid in a
prior period) of such Person and its Subsidiaries for such period to the extent
that such depreciation, amortization and other non-cash expenses were deducted
in computing such Consolidated Net Income, minus (v) non-cash items increasing
such Consolidated Net Income for such period, in each case, on a consolidated
basis and determined in accordance with GAAP. Notwithstanding the foregoing,
the provision for taxes based on the income or profits of, and the depreciation
and amortization and other non-cash charges of, a Subsidiary of a Person shall
be added to Consolidated Net Income to compute Consolidated Cash Flow only to
the extent (and in the same proportion) that the Net Income of such Subsidiary
was included in calculating the Consolidated Net Income of such Person and only
if a corresponding amount would be permitted at the date of determination to be
dividended to the Company by such Subsidiary without prior approval (that has
not been obtained), pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) the Net Income (but not loss) of any Person that is not a
Subsidiary or that is accounted for by the equity method of accounting shall be
included only to the extent of the amount of dividends or distributions paid in
cash to the referent Person or a Subsidiary thereof, (ii) the Net Income of any
Subsidiary that is not a Guarantor shall be excluded to the extent that the
declaration or payment of dividends or similar distributions by that Subsidiary
of that Net Income is not at the date of determination permitted without any
prior governmental approval (that has not been obtained) or, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary or its stockholders, (iii) the Net Income of any
Person acquired in a pooling of interests transaction for any period prior to
the date of such acquisition shall be excluded, (iv) the cumulative effect of a
change in accounting principles shall be excluded and (v) the Net Income (or
loss) of any Unrestricted Subsidiary shall be excluded, whether or not
distributed to the Company or one of its Subsidiaries.
"Consolidated Net Worth" means, with respect to any Person as of any
date, the sum of (i) the consolidated equity of the common stockholders of such
Person and its consolidated Subsidiaries as of such date plus (ii) the
respective amounts reported on such Person's balance sheet as of such date with
respect to any series of preferred stock (other than Disqualified Stock) that
by its terms is not entitled to the payment of dividends unless such dividends
may be declared and paid only out of net earnings in respect
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<PAGE> 12
of the year of such declaration and payment, but only to the extent of any cash
received by such Person upon issuance of such preferred stock, less (x) all
write-ups (other than write-ups resulting from foreign currency translations
and write-ups of tangible assets of a going concern business made within 12
months after the acquisition of such business) subsequent to the date of this
Indenture in the book value of any asset owned by such Person or a consolidated
Subsidiary of such Person, (y) all investments as of such date in
unconsolidated Subsidiaries and in Persons that are not Subsidiaries (except,
in each case, Permitted Investments), and (z) all unamortized debt discount and
expense and unamortized deferred charges as of such date, all of the foregoing
determined in accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date of this Indenture or (ii) was nominated for
election or elected to such Board of Directors with the approval of a majority
of the Continuing Directors who were members of such Board at the time of such
nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address of
the Trustee specified in Section 12.02 hereof or such other address as to which
the Trustee may give notice to the Company.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Definitive Senior Subordinated Notes" means Senior Subordinated
Notes that are in the form of the Senior Subordinated Notes attached hereto as
Exhibit A-1, that do not include the information called for by footnotes 1 and
3 thereof.
"Depositary" means, with respect to the Senior Subordinated Notes
issuable or issued in whole or in part in global form, the Person specified in
Section 2.03 hereof as the Depositary with respect to the Senior Subordinated
Notes, until a successor shall have been appointed and become such pursuant to
the applicable provision of this Indenture, and, thereafter, "Depositary" shall
mean or include such successor.
"Designated Senior Debt" means (i) any Indebtedness outstanding under
the Senior Credit Facility and (ii) any other Senior Debt permitted under this
Indenture the principal amount of which is $25.0 million or more and that has
been designated by the Company in an Officers' Certificate as "Designated
Senior Debt."
"Disqualified Stock" means any Capital Stock that, by its terms (or
by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable
at the option of the registered holder thereof, in whole or in part, on or
prior to the date that is 91 days after the date on which the Senior
Subordinated Notes mature.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Estimation Period" means the period for which a stockholder who is
an individual is required to estimate for Federal income tax purposes his
allocation of taxable income from a calendar year in connection with
determining his estimated federal income tax liability for such period.
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"Euroclear" means Morgan Guaranty Trust Company of New York, the
Brussels office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" means the offer that may be made by the Company
pursuant to the Registration Rights Agreement to exchange Series B Senior
Subordinated Notes for Series A Senior Subordinated Notes.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Senior Credit Facility) in
existence on the date of this Indenture, until such amounts are repaid.
"Fixed Charges" means, with respect to any Person and its
Subsidiaries for any period, the sum, without duplication, of (i) the
consolidated interest expense of such Person and its Subsidiaries for such
period, whether paid or accrued, (ii) the consolidated interest of such Person
and its Subsidiaries that was capitalized during such period, (iii) any
interest expense on Indebtedness of another Person that is Guaranteed by such
Person or one of its Subsidiaries or secured by a Lien on assets of such Person
or one of its Subsidiaries (whether or not such Guarantee or Lien is called
upon) and (iv) the product of (a) all dividend payments, whether or not in
cash, on any series of preferred stock of such Person or any of its
Subsidiaries, other than dividend payments on Equity Interests payable solely
in Equity Interests of the Company, times (b) a fraction, the numerator of
which is one and the denominator of which is one minus the then current
combined federal, state and local statutory tax rate of such Person, expressed
as a decimal, in each case, on a consolidated basis and in accordance with
GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person and
its Subsidiaries for any period, the ratio of the Consolidated Cash Flow of
such Person and its Subsidiaries for such period to the Fixed Charges of such
Person for such period. In the event that the Company or any of its
Subsidiaries incurs, assumes, Guarantees or redeems any Indebtedness (other
than revolving credit borrowings) or issues preferred stock subsequent to the
commencement of the period for which the Fixed Charge Coverage Ratio is being
calculated but prior to the date on which the event for which the calculation
of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the
Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such
incurrence, assumption, Guarantee or redemption of Indebtedness, or such
issuance or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable four-quarter reference period. In addition, for
purposes of making the computation referred to above, (i) acquisitions that
have been made by the Company or any of its Subsidiaries, including through
mergers or consolidations and including any related financing transactions,
during the four-quarter reference period or subsequent to such reference period
and on or prior to the Calculation Date shall be deemed to have occurred on the
first day of the four-quarter reference period and Consolidated Cash Flow for
such reference period shall be calculated without giving effect to clause (iii)
of the proviso set forth in the definition of Consolidated Net Income, and (ii)
the Consolidated Cash Flow attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded, and (iii) the Fixed Charges
attributable to discontinued operations, as determined in accordance with GAAP,
and operations or businesses disposed of prior to the Calculation Date, shall
be excluded, but only to the extent that the obligations giving rise to such
Fixed Charges will not be obligations of the referent Person or any of its
Subsidiaries following the Calculation Date.
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<PAGE> 14
"Foreign Restricted Subsidiary" means a Subsidiary that is not formed
under the laws of the United States of America or of a state or territory
thereof.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect on the date of this
Indenture.
"Global Senior Subordinated Notes" means, individually and
collectively, the Regulation S Temporary Global Senior Subordinated Note, the
Regulation S Permanent Global Senior Subordinated Note and the Rule 144A Global
Senior Subordinated Note.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States of America is
pledged.
"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
"Guarantors" means (i) Key Plastics International LLC, a Michigan
limited liability company, Key Plastics Automotive LLC, a Michigan limited
liability company, and Key Plastics Technology, LLC, a Michigan limited
liability company and (ii) any other Subsidiary that executes a Subsidiary
Guarantee in accordance with the provisions of this Indenture, and their
respective successors and assigns.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements, (ii) foreign exchange
contracts and currency swap agreements, or (iii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or currency values.
"Holder" means a Person in whose name a Senior Subordinated Note is
registered.
"Indebtedness" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable,
if and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance
sheet of such Person prepared in accordance with GAAP, as well as all
indebtedness of others secured by a Lien on any asset of such Person (whether
or not such indebtedness is assumed by such Person) and, to the extent not
otherwise included, the Guarantee by such Person of any indebtedness of any
other Person. The amount of any Indebtedness outstanding as of any date shall
be (i) the accreted value thereof, in the case of any Indebtedness that does
not require current payments of interest, and (ii) the principal amount
thereof, together with any interest thereon that is more than 30 days past due,
in the case of any other Indebtedness.
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<PAGE> 15
"Indenture" means this Indenture, as amended or supplemented from
time to time.
"Indirect Participant" means a Person who holds an interest through a
Participant.
"Initial Public Offering" means the sale of Capital Stock of the
Company pursuant to (a) a registration statement under the Securities Act that
has been declared effective by the SEC or (b) a public offering outside the
United States and which results, in either case, in an active trading market
for such shares. An active trading market shall be deemed to exist if such
shares are listed on the New York Stock Exchange, the American Stock Exchange
or the Nasdaq National Market System or any major international trading market
exchange.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates), in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP,
provided that the deferral of existing royalty and management fees owing by any
Unrestricted Subsidiary to the Company consistent with the past practice of the
Company shall not be "Investments," provided that any such amounts are not
included as revenues or income of the Company and its Subsidiaries during such
deferral period for purposes of calculating any amounts under the Indenture.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease
in the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Liquidated Damages" means all liquidated damages then owing pursuant
to Section 5 of the Registration Rights Agreement.
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b)
the disposition of any securities by such Person or any of its Subsidiaries or
the extinguishment of any Indebtedness of such Person or any of its
Subsidiaries and (ii) any extraordinary or nonrecurring gain (but not loss),
together with any related provision for taxes on such extraordinary or
nonrecurring gain (but not loss).
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<PAGE> 16
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), and any reserve for adjustment in respect of the sale price of
such asset or assets established in accordance with GAAP.
"Non-Competition Agreement" means, collectively, the provisions
contained in the Employment and Noncompetition Agreements, each dated August 5,
1988, between the Company and certain shareholders of the Company, and in the
Consulting and Noncompetition Agreement, dated August 9, 1990, between the
Company and a certain shareholder of the Company, whereby such shareholders
agreed not to compete with the Company on the terms and conditions set forth
therein, as amended on November 17, 1992, and as amended subsequent to the date
of this Indenture.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the
Company nor any of its Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender; (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity; and (iii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of the
Company or any of its Subsidiaries; provided, however, that Indebtedness that
would otherwise be Non-Recourse Debt but for the reason that the Company or a
Subsidiary may be directly or indirectly liable as a guarantor or otherwise,
such Indebtedness will be considered Non-Recourse Debt if the guarantee of such
Indebtedness or other obligation with respect to such Indebtedness was not
prohibited at the time of its incurrence by Sections 4.07 and 4.09 (with the
amount of the Restricted Payment or Indebtedness, as the case may be, being
equal to the principal amount of the Indebtedness so guaranteed, directly or
indirectly, by the Company or any Subsidiary or for which the Company or any
Subsidiary may be, directly or indirectly, obligated).
"Note Custodian" means the Trustee, as custodian for the Depositary
with respect to the Securities in global form, or any successor entity thereto.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 12.05 hereof.
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<PAGE> 17
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
12.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Participant" means, with respect to DTC, Euroclear or Cedel, a
Person who has an account with DTC, Euroclear or Cedel, respectively (and, with
respect to DTC, shall include Euroclear and Cedel).
"Permitted Business" means (a) any business in which the Company and
its Subsidiaries are engaged on the date of this Indenture or any reasonable
extension or expansion of such businesses and (b) any business similar or
related to the manufacture, design, marketing, distribution or resale of
automotive parts or plastic products, parts, components or assemblies.
"Permitted Investments" means (a) any Investment in the Company or in
a Subsidiary; (b) any Investment in Cash Equivalents; (c) any Investments
existing on the date of this Indenture after giving effect to the intended use
of proceeds set forth and transactions referred to in the Offering Memorandum
related to the Senior Subordinated Notes under the caption "Use of Proceeds"
and any amendment, modification, restatement, supplement, extensions, renewal,
refunding, replacement, refinancing, in whole or in part, thereof, provided
that the aggregate amount of such Investments under this clause (c) do not at
any time exceed, in the aggregate, the amount of such Investments outstanding
on the date of this Indenture; (d) any Investment by the Company or any
Subsidiary of the Company, if as a result of such Investment (i) such Person
becomes a Subsidiary of the Company or (ii) such Person is merged, consolidated
or amalgamated with or into, or transfers or conveys all or substantially all
of its assets to, or is liquidated into, the Company or a Subsidiary of the
Company; (e) any Restricted Investment made as a result of the receipt of
non-cash consideration from an Asset Sale that was made pursuant to and in
compliance with Section 4.10; (f) any acquisition of assets in exchange for the
issuance of Equity Interests (other than Disqualified Stock) of the Company;
(g) loans and advances to employees and officers of the Company and its
Subsidiaries in the ordinary course of business for bona fide business purposes
not in excess of $1,000,000 at any one time outstanding; and (h) other
Investments in any Person having an aggregate fair market value (measured on
the date each such Investment was made and without giving effect to subsequent
changes in value), when taken together with all other Investments made pursuant
to this clause (h) that are at the time outstanding, not to exceed $12.5
million.
"Permitted Junior Securities" means Equity Interests in the Company
or debt securities that are subordinated to all Senior Debt (and any debt
securities issued in exchange for Senior Debt) to substantially the same extent
as, or to a greater extent than, the Senior Subordinated Notes are subordinated
to Senior Debt pursuant to Article 10 of this Indenture.
"Permitted Quarterly Tax Distributions" means quarterly distributions
of Tax Amounts determined on the basis of the estimated taxable income of the
Company, for the related Estimation Period, provided, however, that (A) prior
to any distributions of Tax Amounts the Company shall deliver an Officers'
Certificate certifying that the Tax Amounts to be distributed were determined
pursuant to the terms of this Indenture and stating that the Company qualifies
as an S-Corporation or substantially similar pass-through entity for Federal
income tax purposes and (B) at the time of such distributions, the most recent
audited financial statements of the Company reflect that the Company was
treated as an S-Corporation or substantially similar pass-through entity for
Federal income tax purposes for the period covered by such financial
statements.
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<PAGE> 18
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Subsidiaries issued in exchange for, or the net proceeds
of which are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of the Company or any of its Subsidiaries; provided that: (i) the
principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount of (or accreted
value, if applicable), plus accrued interest on, the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus the amount of
reasonable expenses incurred in connection therewith, including any premiums on
principal); (ii) such Permitted Refinancing Indebtedness has a final maturity
date later than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; and (iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the
Senior Subordinated Notes, such Permitted Refinancing Indebtedness has a final
maturity date later than the final maturity date of, and is subordinated in
right of payment to, the Senior Subordinated Notes on terms at least as
favorable to the Holders of Senior Subordinated Notes as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization or government or agency or political subdivision
thereof (including any subdivision or ongoing business of any such entity or
substantially all of the assets of any such entity, subdivision or business).
"Principals" mean (i) any or all of David Benoit, George Mars and
Joel Tauber and (ii) any trust established by any of the foregoing provided
that the beneficiaries of the trust are members of such person's immediate
family and such person maintains sole voting power over the shares held by such
trust.
"Purchase and Sale of Shares Promissory Agreement" means the Purchase
and Sale of Shares Promissory Agreement, dated October 21, 1996, by and between
the Company and the other parties named therein.
"Quarterly Payment Period" means the period commencing on the tenth
day and ending on and including the twentieth day of each month in which
Federal individual estimated tax payments are due provided that payments in
respect of estimated state income taxes due in January may instead, at the
option of the Company, be paid during the last 20 days of the immediately
preceding December.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of March 24, 1997, by and among the Company, the Guarantors
and the other parties named on the signature pages thereof, as such agreement
may be amended, modified or supplemented from time to time.
"Regulation S" means Regulation S promulgated under the Securities
Act.
"Regulation S Global Senior Subordinated Note" means a Regulation S
Temporary Global Senior Subordinated Note or Regulation S Permanent Global
Senior Subordinated Note, as appropriate.
"Regulation S Permanent Global Senior Subordinated Note" means a
permanent global Senior Subordinated Note that contains the paragraph referred
to in footnote 1 and the additional schedule referred to in footnote 3 to the
form of the Senior Subordinated Note attached hereto as Exhibit A-1, and that
is
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deposited with and registered in the name of the Depositary, representing the
Senior Subordinated Notes sold in reliance on Regulation S.
"Regulation S Temporary Global Senior Subordinated Note" means a
single temporary global Senior Subordinated Note in the form of the Senior
Subordinated Note attached hereto as Exhibit A-2 that is deposited with and
registered in the name of the Depositary, representing the Senior Subordinated
Notes sold in reliance on Regulation S.
"Related Party" with respect to any Principal means (A) any
controlling stockholder, 80% (or more) owned Subsidiary, or spouse or immediate
family member (in the case of an individual) of such Principal or (B) any
trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or Persons beneficially holding an 80% or more
controlling interest of which consist of such Principal and/or such other
Persons referred to in the immediately preceding clause (A).
"Representative" means the Trustee or other trustee, agent or
representative for any Senior Debt.
"Responsible Officer," when used with respect to the Trustee, means
any officer within the Corporate Trust Administration of the Trustee with
direct responsibility for the administration of the Indenture and also means,
with respect to a particular corporate trust matter, any other officer to whom
such matter is referred because of his knowledge of and familiarity with the
particular subject.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 144A Global Senior Subordinated Note" means a permanent global
Senior Subordinated Note that contains the paragraph referred to in footnote 1
and the additional schedule referred to in footnote 3 to the form of the Senior
Subordinated Note attached hereto as Exhibit A-1, and that is deposited with
and registered in the name of the Depositary, representing the Senior
Subordinated Notes sold to U.S. Persons in reliance on Rule 144A or another
exemption from the registration requirements of the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Credit Facility" means that certain Credit Agreement, dated
as of March 24, 1997, by and among the Company, the lenders party thereto from
time to time and NBD Bank, as agent for such lenders, providing for up to
$140.0 million of credit borrowings, including any related notes, guarantees,
letters of credit, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, restated,
supplemented, extended, renewed, refunded, replaced, refinanced or defeased
from time to time.
"Senior Debt" means (i) all Indebtedness and other obligations and
liabilities outstanding at any time under the Senior Credit Facility permitted
under clauses (ii) and (iii) of the second paragraph of Section 4.09, (ii) any
other Indebtedness permitted to be incurred by the Company or any Subsidiary
under the terms of this Indenture, unless the instrument under which such
Indebtedness is incurred expressly
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<PAGE> 20
provides that it is on parity with or subordinated in right of payment to the
Senior Subordinated Notes, including, without limitation, any Indebtedness of
any Subsidiary to the Company unless such intercompany Indebtedness expressly
provides that it is subordinated to the Senior Subordinated Notes and (iii) all
Obligations with respect to the foregoing as described in clauses (i) and (ii)
above, and in all cases whether now outstanding or hereafter created, assumed
or incurred and including, without limitation, interest accruing subsequent to
the filing of a petition of bankruptcy at the ratio provided in the relevant
document, whether or not an allowed claim. Notwithstanding anything to the
contrary in the foregoing, Senior Debt shall not include (w) any liability for
federal, state, local or other taxes owed or owing by the Company, (x) any
Indebtedness of the Company to any of its Subsidiaries or other Affiliates, (y)
any trade payables or (z) any Indebtedness that is incurred in violation of
this Indenture.
"Senior Subordinated Note Custodian" means the Trustee, as custodian
with respect to the Senior Subordinated Notes in global form, or any successor
entity thereto.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Act, as such Regulation is in effect on the date
hereof.
"Stated Maturity" means, with respect to any installment of interest
or principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations
to repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a
combination thereof) and (ii) any partnership (a) the sole general partner or
the managing general partner of which is such Person or a Subsidiary of such
Person or (b) the only general partners of which are such Person or of one or
more Subsidiaries of such Person (or any combination thereof). Notwithstanding
the foregoing, a "Subsidiary" shall: (x) include, with respect to any Person,
any corporation, association or other business entity in which such Person or a
Subsidiary of such Person holds at least 35% of the equity and has the ability
to direct the policies and business decisions of such corporation, association
or other business entity, whether by control of the Board of Directors,
contract or otherwise; and (y) not include, with respect to any Person, any
Unrestricted Subsidiary of such Person.
"Subsidiary Guarantee" means a Guarantee by a Subsidiary on a senior
subordinated basis of the Company's payment obligations under the Senior
Subordinated Notes and this Indenture.
"Tax Allocation Agreement" means that certain Tax Allocation
Agreement by and between the Company and its shareholders relating to federal
and certain state and local tax liabilities of the Company.
"Tax Amounts" with respect to any taxable period shall not exceed an
amount equal to (A) the product of (x) the taxable income of the Company for
such period as determined by any Tax Amounts CPA and (y) the Tax Percentage
reduced by (B) to the extent not previously taken into account, any income tax
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<PAGE> 21
benefit attributable to the Company which could be realized (without regard to
the actual realization) by its stockholders in the current or any prior taxable
year, or portion thereof, commencing on or after the date of this Indenture
(including any tax losses or tax credits), computed at the applicable Tax
Percentage for the year that such benefit is taken into account for purposes of
this computation.
"Tax Amounts CPA" means a nationally recognized certified public
accounting firm.
"Tax Percentage" means, for a particular taxable year, the highest
effective marginal combined rate of Federal and state income tax, imposed on an
individual taxpayer, as certified by any Tax Amounts CPA in a certificate filed
with the Trustee. The rate of "state income tax" to be taken into account for
purposes of determining the Tax Percentage for a particular taxable year shall
be deemed to be the highest state marginal tax rate applicable to any
stockholder.
"Transfer Restricted Securities" means securities that bear or are
required to bear the legend set forth in Section 2.06(g)(i) hereof.
"True-up Amount" means, in respect of a particular taxable year, an
amount determined by any Tax Amounts CPA equal to the difference between (i)
the aggregate Permitted Quarterly Tax Distributions actually distributed in
respect of such taxable year and (ii) the actual Tax Amounts for such year.
For purposes of this Agreement, the amount equal to the excess, if any, of the
amount described in clause (i) over the amount described in clause (ii) above
shall be referred to as the "True-up Amount due to the Company" and the excess,
if any, of the amount described in clause (ii) over the amount described in
clause (i) above shall be referred to as the "True-up Amount due to the
stockholders."
"True-up Determination Date" means the date on which any Tax Amounts
CPA delivers a statement to the Trustee indicating the True-up Amount.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Section
Section 77aaa-77bbbb) as in effect on the date on which this Indenture is
qualified under the TIA; provided, however, that in the event the Trust
Indenture Act of 1939 is amended after such date, then "TIA" means, to the
extent required by such amendment, the Trust Indenture Act of 1939 as so
amended.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Subsidiary" means any Person who would otherwise be a
Subsidiary, but for the fact that such Person is designated by the Board of
Directors as an Unrestricted Subsidiary pursuant to a Board Resolution; but
only to the extent that such Person: (a) has no Indebtedness other than
Non-Recourse Debt; (b) is not party to any agreement, contract, arrangement or
understanding with the Company or any Subsidiary of the Company unless the
terms of any such agreement, contract, arrangement or understanding are no less
favorable to the Company or such Subsidiary than those that might be obtained
at the time from Persons who are not Affiliates of the Company; (c) is a Person
with respect to which neither the Company nor any of its Subsidiaries has any
direct or indirect obligation (x) to subscribe for additional Equity Interests
or (y) to maintain or preserve such Person's financial condition or to cause
such Person to achieve any specified levels of operating results, other than to
the extent permitted in the definition of Non-Recourse Debt; and (d) has not
guaranteed or otherwise directly or indirectly provided credit support for any
Indebtedness of the Company or any of its Subsidiaries.
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<PAGE> 22
"U.S. Person" has the meaning specified in Regulation S.
"Voting Stock" of any Person as of any date means the Capital Stock
of such Person that is at the time entitled to vote in the election of the
Board of Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (ii) the then outstanding
principal amount of such Indebtedness.
SECTION 1.02. OTHER DEFINITIONS.
<TABLE>
<CAPTION>
Defined in
Term Section
<S> <C>
"Accredited Investor" . . . . . . . . . . . . . . . . . . . . . . 2.01
"Affiliate Transaction" . . . . . . . . . . . . . . . . . . . . . 4.11
"Change of Control Offer" . . . . . . . . . . . . . . . . . . . . 3.09
"Change of Control Payment" . . . . . . . . . . . . . . . . . . . 4.15
"Covenant Defeasance" . . . . . . . . . . . . . . . . . . . . . . 8.03
"Custodian" . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.01
"DTC" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.03
"Event of Default" . . . . . . . . . . . . . . . . . . . . . . . . 6.01
"Excess Proceeds" . . . . . . . . . . . . . . . . . . . . . . . . 4.10
"Excess Proceeds Offer" . . . . . . . . . . . . . . . . . . . . . 3.09
"Excess Proceeds Offer Triggering Event" . . . . . . . . . . . . . 4.10
"incur" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.09
"Legal Defeasance" . . . . . . . . . . . . . . . . . . . . . . . 8.02
"Nonpayment Default" . . . . . . . . . . . . . . . . . . . . . . 10.03
"Offer Amount" . . . . . . . . . . . . . . . . . . . . . . . . . . 3.09
"Offer Period" . . . . . . . . . . . . . . . . . . . . . . . . . . 3.09
"Paying Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . 2.03
"Payment Default" . . . . . . . . . . . . . . . . . . . . . . . 10.03
"Payment Blockage Notice" . . . . . . . . . . . . . . . . . . . 10.03
"Permitted Debt" . . . . . . . . . . . . . . . . . . . . . . . . . 4.09
"Purchase Date" . . . . . . . . . . . . . . . . . . . . . . . . . 3.09
"QIB" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01
"Registrar" . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.03
"Repurchase Offer" . . . . . . . . . . . . . . . . . . . . . . . . 3.09
"Restricted Payments" . . . . . . . . . . . . . . . . . . . . . . 4.07
"Revolving Credit Facility" . . . . . . . . . . . . . . . . . . . 4.09
"Term Facility Tranche" . . . . . . . . . . . . . . . . . . . . . 4.09
</TABLE>
15
<PAGE> 23
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Senior Subordinated Notes;
"indenture security holder" means a Holder of a Senior Subordinated
Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Senior Subordinated Notes means the Company, any
Guarantor and any successor obligor upon the Senior Subordinated Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the
TIA have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act
shall be deemed to include substitute, replacement of successor sections
or rules adopted by the SEC from time to time.
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<PAGE> 24
ARTICLE 2
THE SENIOR SUBORDINATED NOTES
SECTION 2.01. FORM AND DATING.
The Senior Subordinated Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A-1 or Exhibit A-2
attached hereto. The Senior Subordinated Notes may have notations, legends or
endorsements required by law, stock exchange rule or usage. Each Senior
Subordinated Note shall be dated the date of its authentication. The Senior
Subordinated Notes shall be issued in minimum denominations of $1,000 and
integral multiples of $1,000 in excess thereof. The terms and provisions
contained in the Senior Subordinated Notes shall constitute, and are hereby
expressly made, a part of this Indenture and the Company and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.
(a) Global Senior Subordinated Notes. Senior Subordinated Notes
offered and sold to (i) qualified institutional buyers as defined in Rule 144A
("QIBs") in reliance on Rule 144A and (ii) institutional accredited investors
as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act,
("Accredited Investors") who are not QIBs, shall be issued initially in the form
of Rule 144A Global Senior Subordinated Notes, which shall be registered in the
name of the Depositary or a nominee of the Depositary, duly executed by the
Company and authenticated by the Trustee as hereinafter provided. The
aggregate principal amount of the Rule 144A Global Senior Subordinated Notes
may from time to time be increased or decreased by adjustments made on the
records of the Trustee and the Depositary or its nominee as hereinafter
provided.
Senior Subordinated Notes offered and sold in reliance on Regulation
S shall be issued initially in the form of the Regulation S Temporary Global
Senior Subordinated Note, which shall be deposited on behalf of the purchasers
of the Senior Subordinated Notes represented thereby with the Trustee, at its
New York office, as custodian for the Depositary, and registered in the name of
the Depositary or the nominee of the Depositary for the accounts of designated
agents holding on behalf of Euroclear or Cedel Bank, duly executed by the
Company and authenticated by the Trustee as hereinafter provided. The "40-day
restricted period" (as defined in Regulation S) shall be terminated upon the
receipt by the Trustee of (i) a written certificate from the Depositary,
together with copies of certificates from Euroclear and Cedel Bank certifying
that they have received certification of non-United States beneficial ownership
of 100% of the aggregate principal amount of the Regulation S Temporary Global
Senior Subordinated Note (except to the extent of any beneficial owners thereof
who acquired an interest therein pursuant to another exemption from
registration under the Securities Act and who will take delivery of a
beneficial ownership interest in a Rule 144A Global Senior Subordinated Note,
all as contemplated by Section 2.06(a)(ii) hereof), and (ii) an Officers'
Certificate from the Company. Following the termination of the 40-day
restricted period, beneficial interests in the Regulation S Temporary Global
Senior Subordinated Note shall be exchanged for beneficial interests in
Regulation S Permanent Global Senior Subordinated Notes pursuant to the
Applicable Procedures. Simultaneously with the authentication of Regulation S
Permanent Global Senior Subordinated Notes, the Trustee shall cancel the
Regulation S Temporary Global Senior Subordinated Note. The aggregate
principal amount of the Regulation S Temporary Global Senior Subordinated Note
and the Regulation S Permanent Global Senior Subordinated Notes may from time
to time be increased or decreased by adjustments made on the records of the
Trustee and the Depositary or its nominee, as the case may be, in connection
with transfers of interest as hereinafter provided.
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<PAGE> 25
Each Global Senior Subordinated Note shall represent such of the
outstanding Senior Subordinated Notes as shall be specified therein and each
shall provide that it shall represent the aggregate amount of outstanding
Senior Subordinated Notes from time to time endorsed thereon and that the
aggregate amount of outstanding Senior Subordinated Notes represented thereby
may from time to time be reduced or increased, as appropriate, to reflect
exchanges, redemptions and transfers of interests. Any endorsement of a Global
Senior Subordinated Note to reflect the amount of any increase or decrease in
the amount of outstanding Senior Subordinated Notes represented thereby shall
be made by the Trustee or the Senior Subordinated Note Custodian, at the
direction of the Trustee, in accordance with instructions given by the Holder
thereof as required by Section 2.06 hereof.
The provisions of the "Operating Procedures of the Euroclear System"
and "Terms and Conditions Governing Use of Euroclear" and the "Management
Regulations" and "Instructions to Participants" of Cedel Bank shall be
applicable to interests in the Regulation S Temporary Global Senior
Subordinated Note and the Regulation S Permanent Global Senior Subordinated
Notes that are held by Participants through Euroclear or Cedel Bank.
Except as set forth in Section 2.06 hereof, the Global Senior
Subordinated Notes may be transferred, in whole and not in part, only to
another nominee of the Depositary or to a successor of the Depositary or its
nominee.
(b) Book-Entry Provisions. This Section 2.01(b) shall apply only to
Rule 144A Global Senior Subordinated Notes and Regulation S Permanent Global
Senior Subordinated Notes deposited with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance with
this Section 2.01(b), authenticate and deliver the Global Senior Subordinated
Notes that (i) shall be registered in the name of the Depositary or the nominee
of the Depositary and (ii) shall be delivered by the Trustee to the Depositary
or pursuant to the Depositary's instructions or held by the Senior Subordinated
Notes Custodian as custodian for the Depositary.
Participants shall have no rights either under this Indenture with
respect to any Global Senior Subordinated Note held on their behalf by the
Depositary or by the Senior Subordinated Note Custodian as custodian for the
Depositary or under such Global Senior Subordinated Note, and the Depositary
may be treated by the Company, the Trustee and any agent of the Company or the
Trustee as the absolute owner of such Global Senior Subordinated Note for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Trustee or any agent of the Company or the Trustee
from giving effect to any written certification, proxy or other authorization
furnished by the Depositary or impair, as between the Depositary and its
Participants, the operation of customary practices of such Depositary governing
the exercise of the rights of an owner of a beneficial interest in any Global
Senior Subordinated Note.
(c) Definitive Senior Subordinated Notes. Senior Subordinated Notes
issued in certificated form shall be substantially in the form of Exhibit A-1
attached hereto (but without including the text referred to in footnotes 1 and
3 thereto).
SECTION 2.02. EXECUTION AND AUTHENTICATION.
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<PAGE> 26
Two Officers shall sign the Senior Subordinated Notes for the Company
by manual or facsimile signature. If an Officer whose signature is on a Senior
Subordinated Note no longer holds that office at the time a Senior Subordinated
Note is authenticated, the Senior Subordinated Note shall nevertheless be
valid.
A Senior Subordinated Note shall not be valid until authenticated by
the manual signature of the Trustee. The signature shall be conclusive
evidence that the Senior Subordinated Note has been authenticated under this
Indenture. The form of Trustee's certificate of authentication to be borne by
the Senior Subordinated Notes shall be substantially as set forth in Exhibit
A-1 or Exhibit A-2 hereto.
The Trustee shall, upon a written order of the Company signed by two
Officers directing the Trustee to authenticate the Notes and certifying that
all conditions precedent to the issuance of the Senior Subordinated Notes
contained herein have been complied with, authenticate Senior Subordinated
Notes for original issue up to $125.0 million in aggregate principal amount.
The aggregate principal amount of Senior Subordinated Notes outstanding at any
time may not exceed such amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Senior Subordinated Notes. An authenticating agent may
authenticate Senior Subordinated Notes whenever the Trustee may do so. Each
reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as
an Agent to deal with the Company or an Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Senior
Subordinated Notes may be presented for registration of transfer or for
exchange ("Registrar") and an office or agency where Senior Subordinated Notes
may be presented for payment ("Paying Agent"). The Registrar shall keep a
register of the Senior Subordinated Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change
any Paying Agent or Registrar without notice to any Holder. The Company shall
notify the Trustee in writing of the name and address of any Agent not a party
to this Indenture. If the Company fails to appoint or maintain another entity
as Registrar or Paying Agent, the Trustee shall act as such. The Company or
any of its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC")
to act as Depositary with respect to the Global Senior Subordinated Notes.
The Company initially appoints the Trustee to act as the Registrar
and Paying Agent and to act as Senior Subordinated Note Custodian with respect
to the Global Senior Subordinated Notes.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Senior
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<PAGE> 27
Subordinated Notes, and will notify the Trustee of any default by the Company
or any Guarantor in making any such payment. While any such default or an
Event of Default continues, the Trustee may require a Paying Agent to pay all
money held by it to the Trustee. The Company at any time may require a Paying
Agent to pay all money held by it to the Trustee. Upon payment over to the
Trustee, the Paying Agent (if other than the Company or a Subsidiary) shall
have no further liability for the money. If the Company or a Subsidiary acts
as Paying Agent, it shall segregate and hold in a separate trust fund for the
benefit of the Holders all money held by it as Paying Agent. Upon any
bankruptcy or reorganization proceedings relating to the Company or any other
event described under Section 6.01 (g) or (h) herein, the Trustee shall serve
as Paying Agent for the Senior Subordinated Notes.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the
Trustee is not the Registrar, the Company and/or the Guarantors shall furnish
to the Trustee at least seven (7) Business Days before each interest payment
date and at such other times as the Trustee may request in writing, a list in
such form and as of such date as the Trustee may reasonably require of the
names and addresses of the Holders of Senior Subordinated Notes and the Company
and the Guarantors shall otherwise comply with TIA Section 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Senior Subordinated Notes. The
transfer and exchange of Global Senior Subordinated Notes or beneficial
interests therein shall be effected through the Depositary, in accordance with
this Indenture and the procedures of the Depositary therefor, which shall
include restrictions on transfer comparable to those set forth herein to the
extent required by the Securities Act. Beneficial interests in a Global Senior
Subordinated Note may be transferred to Persons who take delivery thereof in
the form of a beneficial interest in the same Global Senior Subordinated Note
in accordance with the transfer restrictions set forth in the legend in
subsection (g) of this Section 2.06. Transfers of beneficial interests in the
Global Senior Subordinated Notes to Persons required to take delivery thereof
in the form of an interest in another Global Senior Subordinated Note shall be
permitted as follows:
(i) Rule 144A Global Senior Subordinated Note to Regulation S Global
Senior Subordinated Note. If, at any time, an owner of a
beneficial interest in a Rule 144A Global Senior Subordinated
Note wishes to transfer its beneficial interest in such Rule 144A
Global Senior Subordinated Note to a Person who is required or
permitted to take delivery thereof in the form of an interest in
a Regulation S Global Senior Subordinated Note, such owner shall,
subject to the Applicable Procedures, exchange or cause the
exchange of such interest for an equivalent beneficial interest
in a Regulation S Global Senior Subordinated Note as provided in
this Section 2.06(a)(i). Upon receipt by the Trustee of (1)
instructions given in accordance with the Applicable Procedures
from a Participant directing the Trustee to credit or cause to be
credited a beneficial interest in the Regulation S Global Senior
Subordinated Note in an amount equal to the beneficial interest
in the Rule 144A Global Senior Subordinated Note to be exchanged,
(2) a written order given in accordance with the Applicable
Procedures containing information regarding the participant
account of the Depositary and the Euroclear or Cedel Bank account
to be credited with such increase, and (3) a certificate in the
form of Exhibit B-1 hereto given by the owner of such beneficial
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<PAGE> 28
interest stating that the transfer of such interest has been made
in compliance with the transfer restrictions applicable to the
Global Senior Subordinated Notes and pursuant to and in accordance
with Rule 903 or Rule 904 of Regulation S, then the Trustee, as
Registrar, shall instruct the Depositary to reduce or cause to be
reduced the aggregate principal amount at maturity of the
applicable Rule 144A Global Senior Subordinated Note and to
increase or cause to be increased the aggregate principal amount
at maturity of the applicable Regulation S Global Senior
Subordinated Note by the principal amount at maturity of the
beneficial interest in the Rule 144A Global Senior Subordinated
Note to be exchanged or transferred, to credit or cause to be
credited to the account of the Person specified in such
instructions a beneficial interest in the Regulation S Global
Senior Subordinated Note equal to the reduction in the aggregate
principal amount at maturity of the Rule 144A Global Senior
Subordinated Note, and to debit, or cause to be debited, from the
account of the Person making such exchange or transfer the
beneficial interest in the Rule 144A Global Senior Subordinated
Note that is being exchanged or transferred.
(ii) Regulation S Global Senior Subordinated Note to Rule 144A Global
Senior Subordinated Note. If, at any time, an owner of a
beneficial interest in a Regulation S Global Senior Subordinated
Note wishes to transfer its beneficial interest in such Regulation
S Global Senior Subordinated Note to a Person who is required or
permitted to take delivery thereof in the form of an interest in a
Rule 144A Global Senior Subordinated Note, such owner shall,
subject to the Applicable Procedures, exchange or cause the
exchange of such interest for an equivalent beneficial interest in
a Rule 144A Global Senior Subordinated Note as provided in this
Section 2.06(a)(ii). Upon receipt by the Trustee of (1)
instructions from Euroclear or Cedel Bank, if applicable, and the
Depositary, directing the Trustee, as Registrar, to credit or
cause to be credited a beneficial interest in the Rule 144A Global
Senior Subordinated Note equal to the beneficial interest in the
Regulation S Global Senior Subordinated Note to be exchanged, such
instructions to contain information regarding the participant
account with the Depositary to be credited with such increase, (2)
a written order given in accordance with the Applicable Procedures
containing information regarding the participant account of the
Depositary and (3) a certificate in the form of Exhibit B-2
attached hereto given by the owner of such beneficial interest
stating (A) if the transfer is pursuant to Rule 144A, that the
Person transferring such interest in a Regulation S Global Senior
Subordinated Note reasonably believes that the Person acquiring
such interest in a Rule 144A Global Senior Subordinated Note is a
QIB and is obtaining such beneficial interest in a transaction
meeting the requirements of Rule 144A and any applicable blue sky
or securities laws of any state of the United States, (B) that the
transfer complies with the requirements of Rule 144A under the
Securities Act and any applicable blue sky or securities laws of
any state of the United States, (C) that the transfer is to an
institutional "accredited investor" (as defined in Rule 501(1),
(2), (3) or (7) of the Securities Act that prior to such transfer
furnishes the Trustee a signed letter, substantially in the form
of Exhibit C hereto, containing certain representations and
agreements and, if such transfer is in respect of an aggregate
principal amount of less than $100,000, an Opinion of Counsel that
such transfer is in compliance with the Securities Act or (D) if
the transfer is pursuant to any other exemption from the
registration requirements of the Securities Act, that the transfer
of such interest has been made in compliance with the transfer
restrictions applicable to the Global Senior Subordinated Notes
and pursuant to and in accordance with the requirements of the
exemption claimed, such statement to be supported by an Opinion of
Counsel from the
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<PAGE> 29
transferee or the transferor in form reasonably acceptable to the
Company and to the Registrar, then the Trustee, as Registrar,
shall instruct the Depositary to reduce or cause to be reduced the
aggregate principal amount at maturity of such Regulation S
Global Senior Subordinated Note and to increase or cause to be
increased the aggregate principal amount at maturity of the
applicable Rule 144A Global Senior Subordinated Note by the
principal amount at maturity of the beneficial interest in the
Regulation S Global Senior Subordinated Note to be exchanged, or
transferred, and the Trustee, as Registrar, shall instruct the
Depositary, concurrently with such reduction, to credit or cause
to be credited to the account of the Person specified in such
instructions a beneficial interest in the applicable Rule 144A
Global Senior Subordinated Note equal to the reduction in the
aggregate principal amount at maturity of such Regulation S Global
Senior Subordinated Note and to debit or cause to be debited from
the account of the Person making such transfer the beneficial
interest in the Regulation S Global Senior Subordinated Note that
is being exchanged or transferred.
(b) Transfer and Exchange of Definitive Senior Subordinated Notes. When
Definitive Senior Subordinated Notes are presented by a Holder to the Registrar
with a request:
(x) to register the transfer of the Definitive Senior Subordinated
Notes; or
(y) to exchange such Definitive Senior Subordinated Notes for an equal
principal amount of Definitive Senior Subordinated Notes of other
authorized denominations,
the Registrar shall register the transfer or make the exchange as requested;
provided, however, that the Definitive Senior Subordinated Notes presented or
surrendered for registration of transfer or exchange:
(i) shall be duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by
such Holder or by his attorney, duly authorized in writing; and
(ii) in the case of a Definitive Senior Subordinated Note that is a
Transfer Restricted Security, such request shall be accompanied by
the following additional information and documents, as applicable:
(A) if such Transfer Restricted Security is being delivered to
the Registrar by a Holder for registration in the name of
such Holder, without transfer, or such Transfer Restricted
Security is being transferred to the Company, a
certification to that effect from such Holder (in
substantially the form of Exhibit B-3 hereto);
(B) if such Transfer Restricted Security is being transferred to
a QIB in accordance with Rule 144A under the Securities Act
or pursuant to an exemption from registration in
accordance with Rule 144 under the Securities Act or
pursuant to an effective registration statement under the
Securities Act, a certification to that effect from such
Holder (in substantially the form of Exhibit B-3 hereto); or
(C) if such Transfer Restricted Security is being
transferred to an Institutional Accredited Investor in
reliance on an exemption from the registration requirements
of the
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<PAGE> 30
Securities Act other than those listed in paragraphs (B) or
(D), a certification to that effect from such Holder
(in substantially the form of Exhibit B-3 hereto); or
(D) if such Transfer Restricted Security is being transferred
to a Non-United States Person in an offshore transaction
in accordance with Rule 904 under the Securities Act, a
certification to that effect from such Holder (in
substantially the form of Exhibit B-3 hereto); or
(E) if such Transfer Restricted Security is being transferred in
reliance on any other exemption from the registration
requirements of the Securities Act, a certification to that
effect from such Holder (in substantially the form of
Exhibit B-3 hereto) and an Opinion of Counsel from such
Holder or the transferee reasonably acceptable to the
Company and to the Registrar to the effect that such
transfer is in compliance with the Securities Act.
(c) Transfer of a Beneficial Interest in a Rule 144A Global Senior
Subordinated Note or Regulation S Permanent Global Senior
Subordinated Note for a Definitive Senior Subordinated Note.
(i) Any Person having a beneficial interest in a Rule 144A Global
Senior Subordinated Note or Regulation S Permanent Global Senior
Subordinated Note may upon request, subject to the Applicable
Procedures, exchange such beneficial interest for a Definitive
Senior Subordinated Note. Upon receipt by the Trustee of written
instructions or such other form of instructions as is customary
for the Depositary (or Euroclear or Cedel Bank, if applicable),
from the Depositary or its nominee on behalf of any Person having
a beneficial interest in a Rule 144A Global Senior Subordinated
Note or Regulation S Permanent Global Senior Subordinated Note,
and, in the case of a Transfer Restricted Security, the following
additional information and documents (all of which may be
submitted by facsimile):
(A) if such beneficial interest is being transferred to the
Person designated by the Depositary as being the beneficial
owner, a certification to that effect from such Person (in
substantially the form of Exhibit B-4 hereto);
(B) if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A under the Securities Act or
pursuant to an exemption from registration in accordance
with Rule 144 under the Securities Act or pursuant to an
effective registration statement under the Securities
Act, a certification to that effect from the transferor (in
substantially the form of Exhibit B-4 hereto;
(C) if such beneficial interest is being transferred to an
institutional "accredited investor," within the meaning of
Rule 501(a)(1), (2), (3) or (7) under the Securities Act
pursuant to a private placement exemption from the
registration requirements of the Securities Act (and based
on an opinion of counsel if the Company so requests),
a certification to that effect from such Holder (in
substantially the form of Exhibit B-4 hereto) and a
certification from the applicable transferee (in
substantially the form of Exhibit C hereto); or
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(D) if such beneficial interest is being transferred in reliance
on any other exemption from the registration requirements of
the Securities Act, a certification to that effect from the
transferor (in substantially the form of Exhibit B-4 hereto)
and an Opinion of Counsel from the transferee or the
transferor reasonably acceptable to the Company and to the
Registrar to the effect that such transfer is in compliance
with the Securities Act, in which case the Trustee or the
Senior Subordinated Note Custodian, at the direction of the
Trustee, shall, in accordance with the standing instructions
and procedures existing between the Depositary and the
Senior Subordinated Note Custodian, cause the aggregate
principal amount of Rule 144A Global Senior Subordinated
Notes or Regulation S Permanent Global Senior Subordinated
Notes, as applicable, to be reduced accordingly and,
following such reduction, the Company shall execute and, the
Trustee shall authenticate and deliver to the transferee a
Definitive Senior Subordinated Note in the appropriate
principal amount.
(ii) Definitive Senior Subordinated Notes issued in exchange for a
beneficial interest in a Rule 144A Global Senior Subordinated
Note or Regulation S Permanent Global Senior Subordinated Note,
as applicable, pursuant to this Section 2.06(c) shall be
registered in such names and in such authorized denominations as
the Depositary, pursuant to instructions from its direct or
indirect Participants or otherwise, shall instruct the Trustee.
The Trustee shall deliver such Definitive Senior Subordinated
Notes to the Persons in whose names such Senior Subordinated
Notes are so registered. Following any such issuance of
Definitive Senior Subordinated Notes, the Trustee, as Registrar,
shall instruct the Depositary to reduce or cause to be reduced
the aggregate principal amount at maturity of the applicable
Global Senior Subordinated Note to reflect the transfer.
(d) Restrictions on Transfer and Exchange of Global Senior Subordinated
Notes. Notwithstanding any other provision of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.06), a Global Senior
Subordinated Note may not be transferred as a whole except by the Depositary to
a nominee of the Depositary or by a nominee of the Depositary to the Depositary
or another nominee of the Depositary or by the Depositary or any such nominee
to a successor Depositary or a nominee of such successor Depositary.
(e) Transfer and Exchange of a Definitive Senior Subordinated Note for a
Beneficial Interest in a Global Senior Subordinated Note. A Definitive Senior
Subordinated Note may not be transferred or exchanged for a beneficial interest
in a Global Senior Subordinated Note.
(f) Authentication of Definitive Senior Subordinated Notes in Absence of
Depositary. If at any time:
(i) the Depositary for the Senior Subordinated Notes notifies the
Company that the Depositary is unwilling or unable to continue
as Depositary for the Global Senior Subordinated Notes and a
successor Depositary for the Global Senior Subordinated Notes is
not appointed by the Company within 90 days after delivery of
such notice; or
(ii) the Company, at its sole discretion, notifies the Trustee in
writing that it elects to cause the issuance of Definitive
Senior Subordinated Notes under this Indenture,
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then the Company shall execute, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.02 hereof, authenticate and
deliver, Definitive Senior Subordinated Notes in an aggregate principal amount
equal to the principal amount of the Global Senior Subordinated Notes in
exchange for such Global Senior Subordinated Notes.
(g) Legends.
(i) Except as permitted by the following paragraphs (ii), (iii)
and (iv), each Senior Subordinated Note certificate evidencing
Global Senior Subordinated Notes and Definitive Senior
Subordinated Notes (and all Senior Subordinated Notes issued in
exchange therefor or substitution thereof) shall bear legends
in substantially the following form:
"THE SENIOR SUBORDINATED NOTE (OR ITS PREDECESSOR) EVIDENCED
HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SENIOR
SUBORDINATED NOTE EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE
SENIOR SUBORDINATED NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED
THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE
144A THEREUNDER. THE HOLDER OF THE SENIOR SUBORDINATED NOTE
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT
(A) SUCH SENIOR SUBORDINATED NOTE MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN
PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904
UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO
REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH
THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER FROM IT OF THE SENIOR SUBORDINATED NOTE EVIDENCED
HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a
Global Senior Subordinated Note) pursuant to Rule 144 under
the Securities Act or pursuant to an effective registration
statement under the Securities Act:
(A) in the case of any Transfer Restricted Security that is a
Definitive Senior Subordinated Note, the Registrar shall
permit the Holder thereof to exchange such Transfer
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Restricted Security for a Definitive Senior Subordinated
Note that does not bear the legend set forth in (i) above
and rescind any restriction on the transfer of such
Transfer Restricted Security upon receipt of a certification
from the transferring holder substantially in the form of
Exhibit B-4 hereto; and
(B) in the case of any Transfer Restricted Security represented
by a Global Senior Subordinated Note, such Transfer
Restricted Security shall not be required to bear the legend
set forth in (i) above, but shall continue to be subject to
the provisions of Section 2.06(a) and (b) hereof; provided,
however, that with respect to any request for an exchange of
a Transfer Restricted Security that is represented by a
Global Senior Subordinated Note for a Definitive
Senior Subordinated Note that does not bear the legend set
forth in (i) above, which request is made in reliance upon
Rule 144, the Holder thereof shall certify in writing to the
Registrar that such request is being made pursuant to Rule
144 (such certification to be substantially in the form of
Exhibit B-4 hereto).
(iii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a
Global Senior Subordinated Note) in reliance on any exemption
from the registration requirements of the Securities Act (other
than exemptions pursuant to Rule 144A or Rule 144 under the
Securities Act) in which the Holder or the transferee provides
an Opinion of Counsel to the Company and the Registrar in form
and substance reasonably acceptable to the Company and the
Registrar (which Opinion of Counsel shall also state that the
transfer restrictions contained in the legend are no longer
applicable):
(A) in the case of any Transfer Restricted Security that is a
Definitive Senior Subordinated Note, the Registrar
shall permit the Holder thereof to exchange such Transfer
Restricted Security for a Definitive Senior Subordinated
Note that does not bear the legend set forth in (i) above
and rescind any restriction on the transfer of such Transfer
Restricted Security; and
(B) in the case of any Transfer Restricted Security
represented by a Global Senior Subordinated Note, such
Transfer Restricted Security shall not be required to bear
the legend set forth in (i) above, but shall continue to be
subject to the provisions of Section 2.06(a) and (b) hereof.
(iv) Notwithstanding the foregoing, upon consummation of the Exchange
Offer in accordance with the Registration Rights Agreement, the
Company shall issue and, upon receipt of an authentication
order in accordance with Section 2.02 hereof, the Trustee shall
authenticate Series B Senior Subordinated Notes in exchange for
Series A Senior Subordinated Notes accepted for exchange in the
Exchange Offer, which Series B Senior Subordinated Notes shall
not bear the legend set forth in (i) above, and the Registrar
shall rescind any restriction on the transfer of such Series B
Senior Subordinated Notes, in each case unless the Company
notifies the Registrar in writing that the Holder of such
Series A Senior Subordinated Notes is either (A) a
broker-dealer, (B) a Person participating in the distribution
of the Series A Senior Subordinated Notes or (C) a Person who
is an affiliate (as defined in Rule 144A) of the Company.
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(h) Cancellation and/or Adjustment of Global Senior Subordinated
Notes. At such time as all beneficial interests in Global Senior Subordinated
Notes have been exchanged for Definitive Senior Subordinated Notes, redeemed,
repurchased or cancelled, all Global Senior Subordinated Notes shall be
returned to or retained and cancelled by the Trustee in accordance with Section
2.11 hereof. At any time prior to such cancellation, if any beneficial
interest in a Global Senior Subordinated Note is exchanged for Definitive
Senior Subordinated Notes, redeemed, repurchased or cancelled, the principal
amount of Senior Subordinated Notes represented by such Global Senior
Subordinated Note shall be reduced accordingly and an endorsement shall be made
on such Global Senior Subordinated Note, by the Trustee or the Senior
Subordinated Notes Custodian, at the direction of the Trustee, to reflect such
reduction.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate
Definitive Senior Subordinated Notes and Global Senior
Subordinated Notes at the Registrar's request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company
may require payment of a sum sufficient to cover any
transfer tax or similar governmental charge payable
in connection therewith (other than any such transfer
taxes or similar governmental charge payable upon
exchange or transfer pursuant to Sections 3.06, 4.10,
4.15 and 9.05 hereto).
(iii) The Registrar shall not be required to register the
transfer of or exchange any Senior Subordinated Note
selected for redemption in whole or in part, except
the unredeemed portion of any Senior Subordinated Note
being redeemed in part.
(iv) All Definitive Senior Subordinated Notes and Global
Senior Subordinated Notes issued upon any registration of
transfer or exchange of Definitive Senior Subordinated
Notes or Global Senior Subordinated Notes shall be the
valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this
Indenture, as the Definitive Senior Subordinated Notes or
Global Senior Subordinated Notes surrendered upon such
registration of transfer or exchange.
(v) The Company shall not be required:
(A) to issue, to register the transfer of or to exchange
Senior Subordinated Notes during a period beginning
at the opening of business 15 days before the day of
any selection of Senior Subordinated Notes for
redemption under Section 3.02 hereof and ending at
the close of business on the day of selection; or
(B) to register the transfer of or to exchange any
Senior Subordinated Note so selected for redemption
in whole or in part, except the unredeemed portion
of any Senior Subordinated Note being redeemed in
part; or
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(C) to register the transfer of or to exchange a Senior
Subordinated Note between a record date and the
next succeeding interest payment date.
(vi) Prior to due presentment for the registration of a
transfer of any Senior Subordinated Note, the Trustee,
any Agent and the Company may deem and treat the Person
in whose name any Senior Subordinated Note is registered
as the absolute owner of such Senior Subordinated
Note for the purpose of receiving payment of principal of
and interest on such Senior Subordinated Notes, and
neither the Trustee, any Agent nor the Company shall be
affected by notice to the contrary.
(vii) The Trustee shall authenticate Definitive Senior
Subordinated Notes and Global Senior Subordinated Notes in
accordance with the provisions of Section 2.02 hereof.
SECTION 2.07. REPLACEMENT OF SENIOR SUBORDINATED NOTES.
If any mutilated Senior Subordinated Note is surrendered to the
Trustee, or the Company and the Trustee receives evidence to its satisfaction
of the destruction, loss or theft of any Senior Subordinated Note, the Company
shall issue and the Trustee, upon the written order of the Company signed by
two Officers of the Company, shall authenticate a replacement Senior
Subordinated Note if the Trustee's requirements are met. If required by the
Trustee or the Company, an indemnity bond must be supplied by the Holder that
is sufficient in the judgment of the Trustee and the Company to protect the
Company, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Senior Subordinated Note is replaced. The Company
may charge for its expenses in replacing a Senior Subordinated Note.
Every replacement Senior Subordinated Note is an additional
obligation of the Company and shall be entitled to all of the benefits of this
Indenture equally and proportionately with all other Senior Subordinated Notes
duly issued hereunder.
SECTION 2.08. OUTSTANDING SENIOR SUBORDINATED NOTES.
The Senior Subordinated Notes outstanding at any time are all the
Senior Subordinated Notes authenticated by the Trustee except for those
cancelled by it, those delivered to it for cancellation, those reductions in
the interest in a Global Senior Subordinated Note effected by the Trustee in
accordance with the provisions hereof, and those described in this Section as
not outstanding. Except as set forth in Section 2.09 hereof, a Senior
Subordinated Note does not cease to be outstanding because the Company or an
Affiliate of the Company holds the Senior Subordinated Note.
If a Senior Subordinated Note is replaced pursuant to Section 2.07
hereof, it ceases to be outstanding unless the Trustee receives proof
satisfactory to it that the replaced Senior Subordinated Note is held by a bona
fide purchaser.
If the entire principal of, and premium, if any, and accrued and
unpaid interest on, and Liquidated Damages, if any, with respect to any Senior
Subordinated Note is considered paid under Section 4.01 hereof, it ceases to be
outstanding and interest on it ceases to accrue.
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If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Senior Subordinated Notes payable on that date, then on and
after that date such Senior Subordinated Notes shall be deemed to be no longer
outstanding and shall cease to accrue interest.
SECTION 2.09. TREASURY SENIOR SUBORDINATED NOTES.
In determining whether the Holders of the required principal amount
of Senior Subordinated Notes have concurred in any direction, waiver or
consent, Senior Subordinated Notes owned by the Company, or by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company, shall be considered as though not outstanding,
except that for the purposes of determining whether the Trustee shall be
protected in relying on any such direction, waiver or consent, only Senior
Subordinated Notes that a Responsible Officer of the Trustee knows are so owned
shall be so disregarded.
SECTION 2.10. TEMPORARY SENIOR SUBORDINATED NOTES.
Until definitive Senior Subordinated Notes are ready for delivery,
the Company may prepare and the Trustee shall authenticate temporary Senior
Subordinated Notes upon a written order of the Company signed by two Officers
of the Company. Temporary Senior Subordinated Notes shall be substantially in
the form of definitive Senior Subordinated Notes but may have variations that
the Company considers appropriate for temporary Senior Subordinated Notes and
as shall be reasonably acceptable to the Trustee. Without unreasonable delay,
the Company shall prepare and the Trustee shall authenticate definitive Senior
Subordinated Notes in exchange for temporary Senior Subordinated Notes. Until
such exchange, Holders of temporary Senior Subordinated Notes shall be entitled
to all of the rights, benefits and privileges of this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Senior Subordinated Notes to the
Trustee for cancellation. The Registrar and Paying Agent shall forward to the
Trustee any Senior Subordinated Notes surrendered to them for registration of
transfer, exchange or payment. The Trustee and no one else shall cancel all
Senior Subordinated Notes surrendered for registration of transfer, exchange,
payment, replacement or cancellation and shall destroy cancelled Senior
Subordinated Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all cancelled Senior Subordinated
Notes shall be delivered to the Company. The Company may not issue new Senior
Subordinated Notes to replace Senior Subordinated Notes that it has paid or
that have been delivered to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Senior
Subordinated Notes, it shall pay the defaulted interest in any lawful manner
plus, to the extent lawful, interest payable on the defaulted interest, to the
Persons who are Holders on a subsequent special record date, in each case at
the rate provided in the Senior Subordinated Notes and in Section 4.01 hereof.
The Company shall notify the Trustee in writing of the amount of defaulted
interest proposed to be paid on each Senior Subordinated
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Note and the date of the proposed payment. The Company shall fix or cause to
be fixed each such special record date and payment date, provided that no such
special record date shall be less than 10 days prior to the related payment
date for such defaulted interest. At least 15 days before the special record
date, the Company (or, upon the written request of the Company, the Trustee in
the name and at the expense of the Company) shall mail or cause to be mailed to
Holders a notice that states the special record date, the related payment date
and the amount of such interest to be paid.
SECTION 2.13. RECORD DATE.
The record date for purposes of determining the identity of Holders of
Senior Subordinated Notes entitled to vote or consent to any action by vote or
consent authorized or permitted under this Indenture shall be determined as
provided for in section 316(c) of the TIA.
SECTION 2.14. CUSIP NUMBER.
A "CUSIP" number shall be printed on the Senior Subordinated Notes,
and the Trustee shall use the CUSIP number in notices of redemption, purchase or
exchange as a convenience to Holders, provided that any such notice may state
that no representation is made as to the correctness or accuracy of the CUSIP
number printed in the notice or on the Senior Subordinated Notes and that
reliance may be placed only on the other identification numbers printed on the
Senior Subordinated Notes. The Company shall promptly notify the Trustee of
any change in the CUSIP number.
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Senior Subordinated Notes pursuant to
the optional redemption provisions of Section 3.07 hereof, it shall furnish to
the Trustee, at least 30 days but not more than 60 days before a redemption
date, an Officers' Certificate setting forth (i) the clause of this Indenture
pursuant to which the redemption shall occur, (ii) the redemption date, (iii)
the principal amount of Senior Subordinated Notes to be redeemed and (iv) the
redemption price.
SECTION 3.02. SELECTION OF SENIOR SUBORDINATED NOTES TO BE REDEEMED.
If less than all of the Senior Subordinated Notes are to be redeemed
at any time, selection of Senior Subordinated Notes for redemption shall be
made by the Trustee in compliance with the requirements of the principal
national securities exchange, if any, on which the Senior Subordinated Notes
are listed, or, if the Senior Subordinated Notes are not so listed, on a pro
rata basis, by lot or by such method as the Trustee shall deem fair and
appropriate; provided that no Senior Subordinated Notes of $1,000 or less shall
be redeemed in part.
The Trustee shall promptly notify the Company in writing of the
Senior Subordinated Notes selected for redemption and, in the case of any
Senior Subordinated Note selected for partial redemption, the principal amount
thereof to be redeemed. Senior Subordinated Notes and portions of Senior
Subordinated Notes selected shall be in amounts of $1,000 or whole multiples of
$1,000; except that if all of the Senior Subordinated Notes of a Holder are to
be redeemed, the entire outstanding amount of Senior
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Subordinated Notes held by such Holder, even if not a multiple of $1,000, shall
be redeemed. Except as provided in the preceding sentence, provisions of this
Indenture that apply to Senior Subordinated Notes called for redemption also
apply to portions of Senior Subordinated Notes called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
Notices of redemption shall be mailed by first class mail at least 30
but not more than 60 days before the redemption date to each Holder of Senior
Subordinated Notes to be redeemed at its registered address. Notices of
redemption may not be conditional.
The notice shall identify the Senior Subordinated Notes to be
redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Senior Subordinated Note is to be redeemed in part only,
the notice of redemption that relates to such Senior Subordinated Note
shall state the portion of the principal amount thereof to be redeemed and
that, a new Senior Subordinated Note in principal amount equal to the
unredeemed portion thereof shall be issued in the name of the Holder
thereof upon cancellation of the original Senior Subordinated Note;
(d) the name and address of the Paying Agent;
(e) that Senior Subordinated Notes called for redemption must be
surrendered to the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption
payment, interest on Senior Subordinated Notes called for redemption ceases
to accrue on and after the redemption date;
(g) the paragraph of the Senior Subordinated Notes and/or Section of
this Indenture pursuant to which the Senior Subordinated Notes called for
redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the Senior
Subordinated Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that
the Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as
provided in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Senior Subordinated Notes called for redemption become due on the
date fixed for redemption. On and after the redemption date, interest ceases
to accrue on Senior Subordinated Notes or portions of them called for
redemption.
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SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
On or prior to the redemption date, the Company shall deposit with
the Trustee or with the Paying Agent money sufficient to pay the redemption
price of and accrued interest on all Senior Subordinated Notes to be redeemed
on that date. The Trustee or the Paying Agent shall promptly return to the
Company any money deposited with the Trustee or the Paying Agent by the Company
in excess of the amounts necessary to pay the redemption price of, and accrued
interest on, all Senior Subordinated Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Senior Subordinated Notes or the portions of Senior Subordinated Notes
called for redemption. If a Senior Subordinated Note is redeemed on or after
an interest record date but on or prior to the related interest payment date,
then any accrued and unpaid interest shall be paid to the Person in whose name
such Senior Subordinated Note was registered at the close of business on such
record date. If any Senior Subordinated Note called for redemption shall not
be so paid upon surrender for redemption because of the failure of the Company
to comply with the preceding paragraph, interest shall be paid on the unpaid
principal, from the redemption date until such principal is paid, and to the
extent lawful on any interest not paid on such unpaid principal, in each case
at the rate provided in the Senior Subordinated Notes and in Section 4.01
hereof.
SECTION 3.06. SENIOR SUBORDINATED NOTES REDEEMED IN PART.
Upon surrender of a Senior Subordinated Note that is redeemed in
part, the Company shall issue and, upon the Company's written request, the
Trustee shall authenticate for the Holder at the expense of the Company a new
Senior Subordinated Note equal in principal amount to the unredeemed portion of
the Senior Subordinated Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
The Senior Subordinated Notes shall not be redeemable at the
Company's option prior to March 15, 2002. Thereafter, the Senior Subordinated
Notes shall be subject to redemption at any time at the option of the Company,
in whole or in part, upon not less than 30 nor more than 60 days' notice, at
the redemption prices (expressed as percentages of principal amount) set forth
below plus accrued and unpaid interest and Liquidated Damages thereon to the
applicable redemption date, if redeemed during the twelve-month period
beginning on March 15 of the years indicated below:
YEAR PERCENTAGE
2002 . . . . . . . . . . . . . . . . . . 105.125%
2003 . . . . . . . . . . . . . . . . . . 103.417
2004 . . . . . . . . . . . . . . . . . . 101.708
2005 and thereafter . . . . . . . . . . . 100.000%
Notwithstanding the foregoing, prior to March 15, 2000, the Company
may redeem up to 35% of the aggregate principal amount of the Senior
Subordinated Notes initially issued at a redemption price
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of 109 1/4% of the principal amount thereof, plus accrued and unpaid interest
and Liquidated Damages thereon, if any, to the redemption date, with the net
cash proceeds of a public equity offering of common stock of the Company;
provided that at least 65% of the aggregate principal amount of the Senior
Subordinated Notes originally issued pursuant to this Indenture remain
outstanding immediately after the occurrence of such redemption; and provided,
further, that such redemption shall occur within 60 days of the date of the
closing of such public equity offering.
Any redemption pursuant to this Section 3.07 shall be made pursuant
to the provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION.
Except as set forth under Sections 4.10 and 4.15 hereof, the Company
shall not be required to make mandatory redemption or sinking fund payments
with respect to the Senior Subordinated Notes.
SECTION 3.09. REPURCHASE OFFERS.
In the event that the Company shall be required to commence an offer
to all Holders to purchase Senior Subordinated Notes (a "Repurchase Offer"),
pursuant to Section 4.10 hereof (an "Excess Proceeds Offer"), or pursuant to
Section 4.15 hereof (a "Change of Control Offer") the Company shall follow the
procedures specified below.
The Repurchase Offer shall commence no later than ten Business Days
after a Change of Control (unless the Company is not required to make such
offer pursuant to Section 4.15(b) hereof) or an Excess Proceeds Offer
Triggering Event, as the case may be, and remain open for a period of 20
Business Days following its commencement and no longer, except to the extent
that a longer period is required by applicable law (the "Offer Period"). No
later than five Business Days after the termination of the Offer Period (the
"Purchase Date"), the Company shall purchase the principal amount of Senior
Subordinated Notes required to be purchased pursuant to Section 4.10 hereof, in
the case of an Excess Proceeds Offer, or 4.15 hereof, in the case of a Change
of Control Offer (the "Offer Amount") or, if less than the Offer Amount has
been tendered, all Senior Subordinated Notes tendered in response to the
Repurchase Offer. Payment for any Senior Subordinated Notes so purchased shall
be made in the same manner as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Senior Subordinated Note is registered at
the close of business on such record date, and no additional interest shall be
payable to Holders who tender Senior Subordinated Notes pursuant to the Excess
Proceeds Offer.
Upon the commencement of a Repurchase Offer, the Company shall send,
by first class mail, a notice to the Trustee and each of the Holders, with a
copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Senior Subordinated Notes pursuant
to such Repurchase Offer. The Repurchase Offer shall be made to all Holders.
The notice, which shall govern the terms of the Repurchase Offer, shall
describe the transaction or transactions that constitute the Change of Control
or Excess Proceeds Offer Triggering Event, as the case may be and shall state:
(a) that the Repurchase Offer is being made pursuant to this
Section 3.09 and Section 4.10 or 4.15 hereof, as the case may be, and the
length of time the Repurchase Offer shall remain open;
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(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Senior Subordinated Note not tendered or accepted for
payment shall continue to accrete or accrue interest;
(d) that, unless the Company defaults in making such payment, any
Senior Subordinated Note accepted for payment pursuant to the Repurchase
Sale Offer shall cease to accrete or accrue interest after the Purchase
Date;
(e) that Holders electing to have a Senior Subordinated Note
purchased pursuant to an Repurchase Offer may only elect to have all or
any portion of such Senior Subordinated Note purchased;
(f) that Holders electing to have a Senior Subordinated Note
purchased pursuant to any Repurchase Offer shall be required to surrender
the Senior Subordinated Note, with the form entitled "Option of Holder to
Elect Purchase" on the reverse of the Senior Subordinated Note, or such
other customary documents of surrender and transfer as the Company may
reasonably request, duly completed, or transfer by book-entry transfer, to
the Company, the Depositary, or the Paying Agent at the address specified
in the notice at least three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if
the Company, the Depositary or the Paying Agent, as the case may be,
receives, not later than the expiration of the Offer Period, a telegram,
telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Senior Subordinated Note
the Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Senior Subordinated Note purchased;
(h) that, if the aggregate principal amount of Senior Subordinated
Notes surrendered by Holders exceeds the Offer Amount, the Company shall
select the Senior Subordinated Notes to be purchased on a pro rata basis
(with such adjustments as may be deemed appropriate by the Company so that
only Senior Subordinated Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(i) that Holders whose Senior Subordinated Notes were purchased
only in part shall be issued new Senior Subordinated Notes equal in
principal amount to the unpurchased portion of the Senior Subordinated
Notes surrendered (or transferred by book-entry transfer).
On (or at the Company's election, before) the Purchase Date, the
Company shall, (i) to the extent lawful, accept for payment, on a pro rata
basis to the extent necessary, the Senior Subordinated Notes or portions
thereof tendered pursuant to the Repurchase Offer and not theretofore
withdrawn, or if less than the Offer Amount has been tendered, all Senior
Subordinated Notes tendered, and shall deliver to the Trustee an Officers'
Certificate stating that such Senior Subordinated Notes or portions thereof
were accepted for payment by the Company in accordance with the terms of this
Section 3.09, (ii) deposit with the Paying Agent an amount equal to the Change
of Control Payment or Excess Proceeds Payment in respect of all Senior
Subordinated Notes or portions thereof so tendered and (iii) deliver or cause
to be delivered to the Trustee the Senior Subordinated Notes so accepted
together with an Officers' Certificate stating the aggregate principal amount
of Senior Subordinated Notes or portions thereof being purchased by the
Company. The Company, the Depositary or the Paying Agent, as the case may be,
shall promptly
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(but in any case not later than five days after the Purchase Date) mail or
deliver to each tendering Holder an amount equal to the purchase price of the
Senior Subordinated Notes tendered by such Holder and accepted by the Company
for purchase, and the Company shall promptly issue a new Senior Subordinated
Note, and the Trustee, upon written request from the Company shall authenticate
and mail or deliver such new Senior Subordinated Note to such Holder, in a
principal amount equal to any unpurchased portion of the Senior Subordinated
Note surrendered, provided that each such new Senior Subordinated Note shall be
in a principal amount of $1,000 or an integral multiple thereof. Any Senior
Subordinated Note not so accepted shall be promptly mailed or delivered by the
Company to the Holder thereof. All Senior Subordinated Notes or portions
thereof purchased pursuant to the Repurchase Offer will be cancelled by the
Trustee. The Company shall publicly announce the results of the Repurchase
Offer on or as soon as practicable after the Purchase Date, but in no case more
than five Business Days after the Purchase Date.
Other than as specifically provided in this Section 3.09 or Section
4.10 or 4.15, any purchase pursuant to this Section 3.09 shall be made pursuant
to the provisions of Sections 3.01 through 3.06 hereof.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF SENIOR SUBORDINATED NOTES.
The Company shall pay or cause to be paid the principal of, premium,
if any, and interest on the Senior Subordinated Notes on the dates and in the
manner provided in the Senior Subordinated Notes. Principal, premium, if any,
and interest shall be considered paid on the date due if the Paying Agent, if
other than the Company or a Subsidiary thereof, holds as of 10:00 a.m. New York
City time on the due date money deposited by the Company in immediately
available funds and designated for and sufficient to pay all principal,
premium, if any, and interest then due. The Company shall pay all Liquidated
Damages, if any, in the same manner on the dates and in the amounts set forth
in the Registration Rights Agreement.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of the then applicable interest rate on the Senior
Subordinated Notes to the extent lawful; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and Liquidated Damages (without regard to any
applicable grace period) at the same rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Senior Subordinated
Notes may be surrendered for registration of transfer or for exchange and where
notices and demands to or upon the Company or any Guarantor in respect of the
Senior Subordinated Notes and this Indenture may be served. The Company shall
give prompt written notice to the Trustee of the location, and any change in
the location, of such office or agency. If at any time the Company shall fail
to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee.
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The Company may also from time to time designate one or more other
offices or agencies where the Senior Subordinated Notes may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall
in any manner relieve the Company of its obligation to maintain an office or
agency in the Borough of Manhattan, the City of New York for such purposes.
The Company shall give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.
SECTION 4.03. REPORTS.
Whether or not required by the rules and regulations of the SEC, so
long as any Senior Subordinated Notes are outstanding, the Company shall
furnish to the Holders of Senior Subordinated Notes (i) all quarterly and
annual financial information that would be required to be contained in a filing
with the SEC on Forms 10-Q and 10-K if the Company were required to file such
Forms, including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" that describes the financial condition and results
of operations of the Company and its consolidated Subsidiaries (showing in
reasonable detail, either on the face of the financial statements or in the
footnotes thereto and in Management's Discussion and Analysis of Financial
Condition and Results of Operations, the financial condition and results of
operations of the Company and its Subsidiaries separate from the financial
condition and results of operations of the Unrestricted Subsidiaries of the
Company) and, with respect to the annual information only, a report thereon by
the Company's certified independent accountants and (ii) all current reports
that would be required to be filed with the SEC on Form 8-K if the Company were
required to file such reports. In addition, whether or not required by the
rules and regulations of the SEC, the Company shall file a copy of all such
information and reports with the SEC for public availability (unless the SEC
will not accept such a filing) and make such information available to
securities analysts and prospective investors upon request. In addition, for
so long as any Senior Subordinated Notes remain outstanding, the Company and
the Guarantors shall furnish to the Holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Trustee, within 90 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge the Company
has kept, observed, performed and fulfilled each and every covenant contained
in this Indenture and is not in default in the performance or observance of any
of the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action the Company is
taking or proposes to take with respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest,
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if any, on the Senior Subordinated Notes is prohibited or if such event has
occurred, a description of the event and what action the Company is taking or
proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03 above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation. If the
Company's independent public accountants cannot furnish such statement because
such a statement would be contrary to the current recommendations of the
American Institute of Certified Public Accountants, the Company shall furnish
to the Trustee in connection with the distribution of year-end financial
statements delivered pursuant to Section 4.03(a) above, an Officers'
Certificate certifying thereto and the reasons therefor.
(c) The Company shall, so long as any of the Senior Subordinated
Notes are outstanding, deliver to the Trustee, forthwith upon any Officer
becoming aware of any Default or Event of Default, an Officers' Certificate
specifying such Default or Event of Default and what action the Company is
taking or proposes to take with respect thereto.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate
proceedings or where the failure to effect such payment is not adverse in any
material respect to the Holders of the Senior Subordinated Notes.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage of any
such law, and covenants that it shall not, by resort to any such law, hinder,
delay or impede the execution of any power herein granted to the Trustee, but
shall suffer and permit the execution of every such power as though no such law
has been enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly: (i) declare or pay any dividend or make any other
payment or distribution on account of the Company's or any of its Subsidiaries'
Equity Interests (including, without limitation, any payment in connection with
any merger or consolidation involving the Company) or to the direct or indirect
holders of the Company's or any of its Subsidiaries' Equity Interests in their
capacity as such (other than (a) dividends or distributions payable in Equity
Interests (other than Disqualified Stock) of the Company or (b) the payment of
any
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dividend or distribution by a Subsidiary of the Company to the holders of a
class of its Equity Interests, which include the Company or a Subsidiary, on a
pro rata basis); (ii) purchase, redeem or otherwise acquire or retire for value
(including without limitation, in connection with any merger or consolidation
involving the Company) any Equity Interests of the Company or any direct or
indirect parent of the Company; (iii) make any payment on or with respect to,
or purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness that is subordinated to the Senior Subordinated Notes, except a
payment of interest or principal at Stated Maturity; (iv) make any payment in
respect of any Non-Competition Agreement; or (v) make any Restricted Investment
(all such payments and other actions set forth in clauses (i) through (v) above
being collectively referred to as "Restricted Payments"), unless, at the time of
and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the applicable four-quarter period, have
been permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in the first
paragraph of Section 4.09 hereof; and
(c) such Restricted Payment, together with the aggregate amount of
all other Restricted Payments made by the Company and its Subsidiaries
after the date of this Indenture (excluding Restricted Payments permitted
by clauses (ii), (iii), (vi) and (vii) of the next succeeding paragraph),
is less than the sum of (i) 50% of the Consolidated Net Income of the
Company for the period (taken as one accounting period) from the beginning
of the first fiscal quarter commencing after the date of this Indenture to
the end of the Company's most recently ended fiscal quarter for which
internal financial statements are available at the time of such Restricted
Payment (or, if such Consolidated Net Income for such period is a deficit,
less 100% of such deficit) less the amount paid or to be paid in respect
of such period pursuant to clause (vii) of the next following paragraph,
plus (ii) 100% of the aggregate net cash proceeds received by the Company
from the issue or sale since the date of this Indenture of Equity
Interests of the Company (other than (x) proceeds from the sale of
Disqualified Stock, (y) proceeds received by the Company from its
stockholders pursuant to Paragraph 1 of the Tax Allocation Agreement or
proceeds from contributions or payments received by the Company from any
stockholder of the Company as compensation for, or in connection with, the
net tax benefit realized by such stockholder as a result of the allocation
to such stockholder of the net loss of the Company for income tax purposes
and (z) proceeds received by the Company which are used by the Company to
make a substantially concurrent Restricted Payment pursuant to clause (ii)
or (vi) below) or of Disqualified Stock or debt securities of the Company
that have been converted into such Equity Interests (other than Equity
Interests (or Disqualified Stock or convertible debt securities) sold to a
Subsidiary of the Company and other than Disqualified Stock or convertible
debt securities that have been converted into Disqualified Stock), plus
(iii) to the extent that any Restricted Investment that was made after the
date of this Indenture is sold for cash or otherwise liquidated or repaid
for cash, the lesser of (A) the cash return of capital with respect to
such Restricted Investment (less the cost of disposition, if any) and (B)
the initial amount of such Restricted Investment, plus (iv) $2.5 million.
The foregoing provisions will not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition
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of any pari passu or subordinated Indebtedness or Equity Interests of the
Company in exchange for, or out of the net cash proceeds of the substantially
concurrent sale or issuance (other than to a Subsidiary of the Company) of,
other Equity Interests of the Company (other than any Disqualified Stock);
provided that the amount of any such net cash proceeds that are utilized for
any such redemption, repurchase, retirement, defeasance or other acquisition
shall be excluded from clause (c)(ii) of the preceding paragraph; (iii) the
defeasance, redemption, repurchase or other acquisition of pari passu or
subordinated Indebtedness with the net cash proceeds from an incurrence of
Permitted Refinancing Indebtedness; (iv) the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of the Company or
any Subsidiary of the Company held by any employee of the Company or any of its
Subsidiaries upon termination of employment; provided that the aggregate price
paid for all such repurchased, redeemed, acquired or retired Equity Interests
shall not exceed $1.0 million in any twelve-month period and no Default or
Event of Default shall have occurred and be continuing immediately after such
transaction; (v) the purchase of the remaining outstanding Equity Interests in
Materias Plasticas, S.A. not owned by the Company pursuant to the Purchase and
Sale of Shares Promissory Agreement; (vi) the making of any Restricted Payment
by exchange for, or out of the proceeds of the substantially concurrent sale
of, or capital contribution in respect of, Capital Stock of the Company (other
than Disqualified Stock and other Capital Stock issued or sold to a Subsidiary
or an employee stock ownership plan or to a trust established by the Company or
any of its Subsidiaries for the benefit of their employees); provided that if
such transaction is permitted pursuant to this clause (vi), then the net
proceeds received by the Company shall not be included in the calculation of
net proceeds received by the Company referred to in clause (c)(ii) of the
preceding paragraph; and (vii) the payment of Permitted Quarterly Tax
Distributions to the holders of Common Stock of the Company as described below.
For so long as the Company is an S-Corporation or a substantially
similar pass-through entity for Federal income tax purposes, the Company may
make cash distributions to its members, during each Quarterly Payment Period,
in an aggregate amount not to exceed the Permitted Quarterly Tax Distribution
in respect of the related Estimation Period. If any portion of a Permitted
Quarterly Tax Distribution is not distributed during such Quarterly Payment
Period, the Permitted Quarterly Tax Distribution payable during the immediately
following Quarterly Payment Period shall be increased by such undistributed
portion.
Within 10 days following the Company's filing of Internal Revenue
Service Form 1120S for the immediately preceding taxable year, the Company
shall cause a Tax Amounts CPA to file with the Trustee a written statement
indicating in reasonable detail the calculation of the True-up Amount and a
certification that the Tax Percentage has been calculated in accordance with
this Indenture. In the case of a True-up Amount due to the members, the
Permitted Quarterly Tax Distribution payable during the immediately following
Quarterly Payment Period shall be increased by such True-up Amount. In the
case of a True-up Amount due to the Company, the Permitted Quarterly Tax
Distribution payable during the immediately following Quarterly Payment Period
shall be reduced by such True-up Amount and the excess, if any, of the True-up
Amount over such Permitted Quarterly Tax Distribution shall be applied to
reduce the immediately following Permitted Quarterly Tax Distributions until
such True-up Amount is entirely offset.
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any non-cash Restricted Payment shall be determined by the
Board of Directors and evidenced by a Board Resolution delivered to the
Trustee, such determination to be based upon an opinion or appraisal issued by
an accounting, appraisal or investment banking firm of national standing if
such fair market value
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exceeds $1.0 million. Not later than the date of making any Restricted
Payment, the Company shall deliver to the Trustee an Officers' Certificate
stating the amount of such Restricted Payment, that such Restricted Payment is
permitted and setting forth the basis upon which the calculations required by
Section 4.07 were computed, together with a copy of any fairness opinion or
appraisal required by this Indenture.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any encumbrance or restriction on the ability of any
Subsidiary to (i)(a) pay dividends or make any other distributions to the
Company or any of its Subsidiaries (1) on its Capital Stock or (2) with respect
to any other interest or participation in, or measured by, its profits, or (b)
pay any indebtedness owed to the Company or any of its Subsidiaries, (ii) make
loans or advances to the Company or any of its Subsidiaries or (iii) transfer
any of its properties or assets to the Company or any of its Subsidiaries,
except for such encumbrances or restrictions existing under or by reason of (a)
existing agreements as in effect on the date of this Indenture, (b) the Senior
Credit Facility as in effect as of the date of this Indenture, and any
amendments, modifications, extensions, restatements, renewals, increases,
supplements, refundings, replacements or refinancings thereof, provided that
such amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacement, extensions or refinancings are no more restrictive
with respect to such dividend and other payment restrictions than those
contained in the Senior Credit Facility as in effect on the date of this
Indenture, (c) this Indenture and the Senior Subordinated Notes, (d) applicable
law, (e) any instrument governing Indebtedness or Capital Stock of a Person
acquired by the Company or any of its Subsidiaries as in effect at the time of
such acquisition (except to the extent such Indebtedness was incurred in
connection with or in contemplation of such acquisition), which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person, or the property or assets of the Person, so
acquired, provided that, in the case of Indebtedness, such Indebtedness was
permitted by the terms hereof to be incurred, (f) by reason of customary
non-assignment provisions in leases or agreements entered into in the ordinary
course of business and consistent with past practices, (g) purchase money
obligations for property acquired in the ordinary course of business that
impose restrictions of the nature described in clause (iii) above on the
property so acquired, (h) Indebtedness of Guarantors or Foreign Restricted
Subsidiaries, provided that such Indebtedness was permitted to be incurred
pursuant to this Indenture, or (i) Permitted Refinancing Indebtedness, provided
that the restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are no more restrictive than those contained in the
agreements governing the Indebtedness being refinanced.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK
AND PREFERRED STOCK OF SUBSIDIARIES.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, issue, assume, guarantee or
otherwise become directly or indirectly liable, contingently or otherwise, with
respect to (collectively, "incur") any Indebtedness (including Acquired Debt)
and the Company shall not issue any Disqualified Stock and shall not permit any
of its Subsidiaries to issue any shares of preferred stock; provided, however,
that the Company or any Guarantor may incur Indebtedness (including Acquired
Debt) or issue shares of Disqualified Stock if the Fixed Charge Coverage Ratio
for the Company's most recently ended four full fiscal quarters for which
internal financial statements are available immediately preceding the date on
which such additional Indebtedness is incurred or such
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Disqualified Stock is issued would have been at least 2 to 1, if such
Indebtedness is incurred or such Disqualified Stock is issued prior to March
15, 1998, or 2.25 to 1 thereafter, in each case determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if the
additional Indebtedness had been incurred, or the Disqualified Stock had been
issued, as the case may be, at the beginning of such four-quarter period;
The foregoing limitations shall not apply to the incurrence of any of
the following items of Indebtedness (collectively, "Permitted Debt"):
(i) the incurrence by the Company of Indebtedness represented by the
Senior Subordinated Notes and this Indenture and the guarantee by any
Subsidiary of such Indebtedness;
(ii) the incurrence by the Company or any Guarantor of term Indebtedness
under the Term Facility Tranche of the Senior Credit Facility (the "Term
Facility Tranche"), letters of credit (with letters of credit being deemed to
have a principal amount equal to the maximum potential liability of the Company
and the Guarantors thereunder) and related Guarantees (with the amount of such
Guarantee not being duplicatively counted) under the Term Facility Tranche;
provided that the aggregate principal amount of all Indebtedness (with letters
of credit being deemed to have a principal amount equal to the maximum
potential liability of the Company and the Guarantors thereunder) outstanding
under the Term Facility Tranche after giving effect to such incurrence,
including all Permitted Refinancing Indebtedness incurred to refund, refinance
or replace any other Indebtedness incurred pursuant to this clause (ii), does
not exceed an amount equal to $15.0 million less the aggregate amount of Net
Proceeds from Asset Sales applied to permanently reduce the Indebtedness under
the Term Facility Tranche and less the amount of any permanent reductions in
commitments under the Term Facility Tranche subsequent to the date hereof;
(iii) the incurrence by the Company or any Guarantor of revolving credit
Indebtedness under the revolving portion of the Senior Credit Facility (the
"Revolving Credit Facility"), letters of credit (with letters of credit being
deemed to have a principal amount equal to the maximum potential liability of
the Company and the Guarantors thereunder) and related Guarantees (with the
amount of such Guarantee not being duplicatively counted) under the Revolving
Credit Facility; provided that the aggregate principal amount of all
Indebtedness (with letters of credit being deemed to have a principal amount
equal to the maximum potential liability of the Company and the Guarantors
thereunder) outstanding under the Revolving Credit Facility after giving effect
to such incurrence, including all Permitted Refinancing Indebtedness incurred
to refund, refinance or replace any other Indebtedness incurred pursuant to
this clause (iii), does not exceed the greater of the Borrowing Base at the
time incurred or $125.0 million, in each case, less the sum of (a) the
mandatory permanent reductions in commitments under the Revolving Credit
Facility, up to $55 million, and (b) the aggregate amount of Net Proceeds from
Asset Sales applied to permanently reduce the availability of revolving credit
Indebtedness under the Revolving Credit Facility;
(iv) the incurrence by the Company and the Guarantors of the Existing
Indebtedness;
(v) the incurrence by the Company or any Subsidiary of Hedging Obligations
that are incurred for the purpose of fixing or hedging currency rate risk or
interest rate risk with respect to any floating rate or fixed rate Indebtedness
or otherwise swapping fixed rate to floating rate or floating rate to fixed
rate Indebtedness for the purpose of hedging against instant rate risk that, in
each case, is permitted by the terms hereof to be outstanding;
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(vi) the incurrence by the Company or any Subsidiary of intercompany
Indebtedness between or among the Company and any Subsidiary; provided,
however, that any sale or other transfer of any such Indebtedness to a Person
that is not either the Company or a Subsidiary shall be deemed, in each case,
to constitute an incurrence of such Indebtedness by the Company or such
Subsidiary, as the case may be;
(vii) the guarantee by the Company or any Guarantor of Indebtedness of the
Company or a Guarantor of the Company that was permitted to be incurred by
another provision of this covenant;
(viii) surety bonds and appeal bonds required in the ordinary course of
business or in connection with the enforcement of rights or claims of the
Company or any Guarantor in connection with judgements which do not result in
an Event of Default;
(ix) the incurrence by the Company or the Guarantor of Permitted
Refinancing Indebtedness in exchange for, or the net proceeds of which are used
to extend, refinance, renew, replace, defease or refund Indebtedness that was
permitted by this Indenture to be incurred;
(x) the incurrence of Indebtedness to a holder of Common Stock of the
Company; provided, however, that (a) such Indebtedness is expressly
subordinated to the prior payment in full in cash of all Obligations with
respect the Senior Subordinated Notes, (b) such Indebtedness does not, upon the
happening of any event or otherwise, mature or become mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or become redeemable at the
option of the Holder thereof, in whole or in part, on or prior to the date that
is 91 days after the date on which the Senior Subordinated Notes mature, (c)
such Indebtedness does not require any cash interest payments with respect such
Indebtedness prior to 91 days after the date on which the Senior Subordinated
Notes mature and (d) any sale or other transfer of any such Indebtedness to a
Person that is not holder of Common Stock of the Company shall be deemed to
constitute an incurrence of such Indebtedness by the Company;
(xi) the incurrence by a Foreign Restricted Subsidiary of Indebtedness;
provided, however, that the aggregate amount of outstanding Indebtedness
incurred pursuant to this clause (xi) does not exceed $2.5 million at any time
or such Indebtedness is incurred or guaranteed, directly or indirectly, as part
of the Senior Credit Facility; and
(xii) the incurrence by the Company or any Guarantor of additional
Indebtedness in an aggregate principal amount (or accreted value, as
applicable) at any time outstanding, including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any other Indebtedness
incurred pursuant this clause (xii), not to exceed $15.0 million.
For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xii) above or is
entitled to be incurred pursuant to the first paragraph of this covenant, the
Company shall, in its sole discretion, classify such item of Indebtedness in
any manner that complies with this covenant and such item of Indebtedness will
be treated as having been incurred pursuant to only one of such clauses or
pursuant to the first paragraph hereof. Accrual of interest, the accretion of
accreted value and the payment of interest in the form of additional
Indebtedness will not be deemed to be an incurrence of Indebtedness for
purposes of this covenant.
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SECTION 4.10. ASSET SALES.
The Company shall not, and shall not permit any of its Subsidiaries
to, consummate an Asset Sale or issue Equity Interests in any of its
Subsidiaries or sell Equity Interests in any of its Subsidiaries, unless (i)
the Company (or the Subsidiary, as the case may be) receives consideration at
the time of such Asset Sale at least equal to the fair market value (evidenced
by Board Resolution delivered to the Trustee) of the assets or Equity Interests
issued or sold or otherwise disposed of and (ii) at least 80% of the
consideration therefor received by the Company or such Subsidiary is in the
form of cash; provided that the amount of (x) any liabilities (as shown on the
Company's or such Subsidiary's most recent balance sheet), of the Company or
any Subsidiary (other than contingent liabilities and liabilities that are by
their terms subordinated to the Senior Subordinated Notes or any guarantee
thereof) that are assumed by the transferee of any such assets such that the
Company or such Subsidiary have no further liability and (y) any securities,
notes or other obligations received by the Company or any such Subsidiary from
such transferee that are within 3 Business Days converted by the Company or
such Subsidiary into cash (to the extent of the cash received), shall be deemed
to be cash for purposes of this provision.
Within 180 days after the receipt of any Net Proceeds from an Asset
Sale, the Company may apply such Net Proceeds, at its option, (a) to repay
Indebtedness under the Senior Credit Facility or Senior Debt (and to
correspondingly permanently reduce commitments with respect thereto), or (b) to
the acquisition of a controlling interest in another business, the making of a
capital expenditure or the acquisition of other long-term assets, in each case,
in a Permitted Business. Pending the final application of any such Net
Proceeds, the Company may temporarily reduce revolving Indebtedness under the
Senior Credit Facility or otherwise invest such Net Proceeds in any manner that
is not prohibited by this Indenture. Any Net Proceeds from Asset Sales that
are not applied or invested as provided in the first sentence of this paragraph
shall be deemed to constitute "Excess Proceeds." When the aggregate amount of
Excess Proceeds exceeds $5.0 million (an "Excess Proceeds Offer Triggering
Event"), the Company shall be required to make an Exceed Proceeds Offer to all
Holders of Senior Subordinated Notes to purchase the maximum principal amount
of Senior Subordinated Notes that may be purchased out of the Excess Proceeds,
at an offer price in cash in an amount equal to 100% of the principal amount
thereof plus accrued and unpaid interest and Liquidated Damages thereon, if
any, to the date of purchase, in accordance with the procedures set forth in
this Indenture. To the extent that the aggregate amount of Senior Subordinated
Notes tendered pursuant to an Excess Proceeds Offer is less than the Excess
Proceeds, the Company may use any remaining Excess Proceeds for general
corporate purposes. If the aggregate principal amount of Senior Subordinated
Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Company shall select the Senior Subordinated Notes to be purchased pursuant to
Section 3.09 hereof. Upon completion of such offer to purchase, the amount of
Excess Proceeds shall be reset at zero.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Subsidiaries
to, make any payment to, or sell, lease, transfer or otherwise dispose of any
of its properties or assets to, or purchase any property or assets from, or
enter into or make or amend any transaction, contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (i) such
Affiliate Transaction is on terms that are no less favorable to the Company or
the relevant Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such Subsidiary with an unrelated
Person and (ii) the Company delivers to the Trustee (a) with
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respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $1.0 million, a
Board Resolution certifying that such Affiliate Transaction complies with
clause (i) above and that such Affiliate Transaction has been approved by a
majority of the disinterested members of the Board of Directors and (b) with
respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $5.0 million, an
opinion as to the fairness to the Holders of such Affiliate Transaction from a
financial point of view issued by an accounting, appraisal or investment
banking firm of national standing; provided that (v) any employment or
consulting agreement or arrangement entered into by the Company or any of its
Subsidiaries in the ordinary course of business and consistent with the past
practice of the Company or such Subsidiary, (w) transactions between or among
the Company and/or its Subsidiaries and (x) Restricted Payments that are
permitted by Section 4.07 hereof, (y) Permitted Quarterly Tax Distributions and
(z) Permitted Investments, in each case, shall not be deemed Affiliate
Transactions.
SECTION 4.12. LIENS.
The Company shall not and shall not permit any of its Subsidiaries
to, create, incur, assume or otherwise cause or suffer to exist or become
effective any Lien of any kind upon any of their property or assets, now owned
or hereafter acquired, securing (i) Indebtedness incurred in violation of this
Indenture, (ii) Indebtedness of the Company to any Subsidiary or Unrestricted
Subsidiary or (iii) Indebtedness that is subordinate or junior in right of
payment to any Senior Debt, unless all payments due under this Indenture and
the Senior Subordinated Notes are secured on an equal and ratable basis with
the obligations so secured until such time as such obligations are no longer
secured by a Lien.
SECTION 4.13. LINE OF BUSINESS.
The Company shall not, and shall not permit any Subsidiary to, engage
in any business other than Permitted Businesses, except to such extent as would
not be material to the Company and its Subsidiaries taken as a whole.
SECTION 4.14. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Subsidiaries, in accordance with the respective organizational documents
(as the same may be amended from time to time) of the Company or any such
Subsidiary and (ii) the rights (charter and statutory), licenses and franchises
of the Company and its Subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Subsidiaries, if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders of the Senior Subordinated Notes.
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each Holder of
Senior Subordinated Notes shall have the right to require the Company to
repurchase all or any part (equal to $1,000 or an integral multiple thereof) of
such Holder's Senior Subordinated Notes pursuant to a Change of Control Offer
at an offer
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price in cash equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
of purchase (the "Change of Control Payment"). Within ten days following any
Change of Control, the Company shall commence a Change of Control Offer
pursuant to Section 3.09 hereof. The Company shall comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Senior Subordinated Notes
as a result of a Change of Control. Prior to complying with the provisions of
this covenant, but in any event within 90 days following a Change of Control,
the Company shall either repay all outstanding Senior Debt or obtain the
requisite consents, if any, under all agreements governing outstanding Senior
Debt to permit the repurchase of Senior Subordinated Notes required by this
covenant.
(b) Notwithstanding the foregoing, the Company shall not be required
to make a Change of Control Offer upon a Change of Control if a third party
makes the Change of Control Offer in the manner, at the times and otherwise in
compliance with the requirements set forth in this Section 4.15 applicable to a
Change of Control Offer made by the Company and purchases all Senior
Subordinated Notes validly tendered and not withdrawn under such Change of
Control Offer.
SECTION 4.16. NO SENIOR SUBORDINATED DEBT
Neither the Company nor any Guarantor shall incur, create, issue,
assume, guarantee or otherwise become liable for any Indebtedness that is
subordinate or junior in right of payment to any Senior Debt of such Person and
senior in any respect in right of payment to the Senior Subordinated Notes.
SECTION 4.17. DESIGNATION OF UNRESTRICTED SUBSIDIARIES.
Any designation of an Unrestricted Subsidiary by the Board of
Directors shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the Board Resolution giving effect to such designation and an
Officers' Certificate certifying that any Investments in such entity, after
giving effect to such designation, comply with the terms of this Indenture
governing the designation of Unrestricted Subsidiaries and are permitted by
Section 4.07. If, at any time, any Unrestricted Subsidiary fails to meet the
foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease
to be an Unrestricted Subsidiary for purposes of this Indenture and any
Indebtedness of such subsidiary shall be deemed to be incurred by a Subsidiary
of the Company as of such date (and, if such Indebtedness is not permitted to
be incurred as of such date under Section 4.09, the Company shall be in default
of Section 4.09). The Board of Directors of the Company may at any time
designate any Unrestricted Subsidiary to be a Subsidiary; provided that such
designation shall be deemed to be an incurrence of Indebtedness by a Subsidiary
of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary
and such designation shall only be permitted if (i) such Indebtedness is
permitted under Section 4.09 calculated on a pro forma basis as if such
designation had occurred at the beginning of the four-quarter reference period,
and (ii) no Default or Event of Default would be in existence following such
designation.
SECTION 4.18. SUBSIDIARY GUARANTEES.
If the Company or any of its Subsidiaries shall acquire or create
another Subsidiary after the date of this Indenture or designate an
Unrestricted Subsidiary to be a Subsidiary, then such newly acquired, created
or designated Subsidiary shall execute a Supplemental Indenture in
substantially the form as Exhibit E hereof and deliver an Opinion of Counsel,
in accordance with the terms of Article 11 hereof, provided, that this covenant
shall not apply to (i) any Subsidiary that has been properly designated as an
Unrestricted
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Subsidiary in accordance with this Indenture for so long as it continues to
constitute an Unrestricted Subsidiary and (ii) any Foreign Restricted
Subsidiary.
SECTION 4.19. PAYMENTS FOR CONSENT.
Neither the Company nor any of its Subsidiaries or Unrestricted
Subsidiaries shall directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder of
any Senior Subordinated Notes for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of this Indenture or the Senior
Subordinated Notes unless such consideration is offered to be paid or is paid
to all Holders of the Senior Subordinated Notes that consent, waive or agree to
amend in the time frame set forth in the solicitation documents relating to
such consent, waiver or agreement.
ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company shall not consolidate or merge with or into (whether or
not the Company is the surviving corporation), or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions, to another Person
unless (i) the Company is the surviving corporation or the Person formed by or
surviving any such consolidation or merger (if other than the Company) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made is a corporation organized or existing under the laws of
the United States, any state thereof or the District of Columbia; (ii) the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or the entity or Person to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made assumes all the
obligations of the Company under the Senior Subordinated Notes and this
Indenture pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee; (iii) immediately after such transaction no
Default or Event of Default exists; (iv) except in the case of a merger of the
Company with or into a Guarantor, the Company or Person formed by or surviving
any such consolidation or merger (if other than the Company), or to which such
sale, assignment, transfer, lease, conveyance or other disposition shall have
been made (A) will have Consolidated Net Worth immediately after the
transaction equal to or greater than the Consolidated Net Worth of the Company
immediately preceding the transaction and (B) will, at the time of such
transaction and after giving pro forma effect thereto as if such transaction
had occurred at the beginning of the applicable four-quarter period, be
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first paragraph of Section
4.09; and (v) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger, sale,
assignment, transfer, lease, conveyance or other disposition and such
supplemental indenture complies with this Article and that all conditions
precedent herein provided for relating to such transaction have been complied
with.
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SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the
assets of the Company in accordance with Section 5.01 hereof, the successor
corporation formed by such consolidation or into or with which the Company is
merged or to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so that from and
after the date of such consolidation, merger, sale, lease, conveyance or other
disposition, the provisions of this Indenture referring to the "Company" shall
refer instead to the successor corporation and not to the Company), and may
exercise every right and power of the Company under this Indenture with the
same effect as if such successor Person had been named as the Company herein;
provided, however, that the predecessor Company shall not be relieved from the
obligation to pay the principal of and interest on the Senior Subordinated
Notes except in the case of a sale of all of the Company's assets that meets
the requirements of Section 5.01 hereof.
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ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
Each of the following constitutes an "Event of Default":
(a) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the Senior Subordinated Notes (whether
or not prohibited by the provisions of Article 10);
(b) default in payment when due of the principal of or premium, if
any, on the Senior Subordinated Notes (whether or not prohibited by the
provisions of Article 10 hereof);
(c) failure by the Company to comply with the provisions of Sections
4.10 or 4.15;
(d) failure by the Company for 60 days after notice by the Trustee
to the Company, or by any Holder to the Company and the Trustee, to
comply with any of its other agreements in this Indenture or the Senior
Subordinated Notes;
(e) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Subsidiaries
(or the payment of which is guaranteed by the Company or any of its
Subsidiaries) whether such Indebtedness or guarantee now exists, or is
created after the date of this Indenture, which default (a) is caused
by a failure to pay principal of or premium, if any, or interest on such
Indebtedness prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a "Payment Default") or (b)
results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under
which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $2.5 million or more;
(f) failure by the Company or any of its Subsidiaries to pay final
judgments aggregating in excess of $2.5 million, which judgments are not
paid, discharged or stayed for a period of 60 days;
(g) except as permitted by this Indenture, any Subsidiary Guarantee
by a Significant Subsidiary is held in any judicial proceeding to be
unenforceable or invalid or ceases for any reason to be in full force and
effect or any Guarantor that is a Significant Subsidiary, or any Person
acting on behalf of any Guarantor that is a Significant Subsidiary, denies
or disaffirms its obligations under its Subsidiary Guarantee;
(h) the Company or any of its Subsidiaries pursuant to or within the
meaning of any Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in
an involuntary case,
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(iii) consents to the appointment of a Custodian of it or for
all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally is not paying its debts as they become due; or
(i) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against the Company or any Subsidiary in an
involuntary case,
(ii) appoints a Custodian of the Company or any Subsidiary or
for all or substantially all of the property of the Company or any
Subsidiary, or
(iii) orders the liquidation of the Company or any Subsidiary,
and the order or decree remains unstayed and in effect for 60 consecutive
days.
In the case of any Event of Default occurring by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding payment of the premium that the Company
would have had to pay if the Company then had elected to redeem the Senior
Subordinated Notes pursuant to Section 3.07 hereof, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the Senior Subordinated Notes. If an Event of Default
occurs prior to March 15, 2002 by reason of any willful action (or inaction)
taken (or not taken) by or on behalf of the Company with the intention of
avoiding the prohibition on redemption of the Senior Subordinated Notes prior
to such date, then, upon the acceleration of the Senior Subordinated Notes an
additional premium shall also become and be immediately due and payable in an
amount, for each of the years beginning March 15 of the years set forth below,
as set forth below (expressed as a percentage of the principal amount that
would otherwise be due but for the provisions of this sentence, plus accrued
and unpaid interest, if any, to the date of payment:
Year Percentage
---- ----------
1997 113.667%
1998 111.958
1999 110.250
2000 108.452
2001 106.833%
SECTION 6.02. ACCELERATION.
If an Event of Default (other than an Event of Default specified in
clauses (h) and (i) of Section 6.01 relating to the Company, any Significant
Subsidiary or any group of Subsidiaries that, taken together, would constitute
a Significant Subsidiary) occurs and is continuing, the Trustee or the Holders
of at least 25% in principal amount of the then outstanding Senior Subordinated
Notes may declare the Senior Subordinated Notes to be due and payable
immediately. If an Event of Default specified in clause (h) or (i) of Section
6.01 relating to the Company, any Significant Subsidiary or any group of
Subsidiaries
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that, taken together, would constitute a Significant Subsidiary occurs, all
outstanding Senior Subordinated Notes shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder. Holders of the Senior Subordinated Notes shall not
enforce this Indenture or the Senior Subordinated Notes except as provided
herein without further action or notice. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Senior
Subordinated Notes may direct the Trustee in its exercise of any trust or
power. The Holders of a majority in principal amount of the then outstanding
Senior Subordinated Notes by written notice to the Trustee may rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default (except nonpayment of
principal or interest that has become due solely because of the acceleration)
have been cured or waived. The Trustee may withhold from Holders of the Senior
Subordinated Notes notice of any continuing Default or Event of Default (except
a Default or Event of Default relating to the payment of principal or interest)
if it determines that withholding notice is in their interest.
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, and interest and Liquidated Damages, if any, on the Senior Subordinated
Notes or to enforce the performance of any provision of the Senior Subordinated
Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Senior Subordinated Notes or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Holder of a Senior
Subordinated Note in exercising any right or remedy accruing upon an Event of
Default shall not impair the right or remedy or constitute a waiver of or
acquiescence in the Event of Default. All remedies are cumulative to the
extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of a majority in aggregate principal amount of the then
outstanding Senior Subordinated Notes by notice to the Trustee may on behalf of
the Holders of all of the Senior Subordinated Notes waive an existing Default
or Event of Default and its consequences hereunder, except a continuing Default
or Event of Default in the payment of the principal of, premium and Liquidated
Damages, if any, or interest on, the Senior Subordinated Notes (including in
connection with an offer to purchase) (provided, however, that the Holders of a
majority in aggregate principal amount of the then outstanding Senior
Subordinated Notes may rescind an acceleration and its consequences, including
any related payment default that resulted from such acceleration). Upon any
such waiver, such Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default
or impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding
Senior Subordinated Notes may direct the time, method and place of conducting
any proceeding for exercising any remedy available to the Trustee or exercising
any trust or power conferred on it. However, the Trustee may refuse to follow
any direction that conflicts with law or this Indenture, that the Trustee
determines may be unduly prejudicial to the rights of other Holders of Senior
Subordinated Notes or that may involve the Trustee in personal
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liability. Notwithstanding any provision to the contrary in this Indenture,
the Trustee shall not be obligated to take any action with respect to the
provisions of the last paragraph of Section 6.02 hereof unless directed to do
so pursuant to this Section 6.05.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Senior Subordinated Note may pursue a remedy with
respect to this Indenture or the Senior Subordinated Notes only if:
(a) the Holder of a Senior Subordinated Note gives to the Trustee
written notice of a continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Senior Subordinated Notes make a written request to the
Trustee to pursue the remedy;
(c) such Holder of a Senior Subordinated Note or Holders of Senior
Subordinated Notes offer and, if requested, provide to the Trustee
indemnity satisfactory to the Trustee against any loss, liability or
expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Senior Subordinated Notes do not give the
Trustee a direction inconsistent with the request.
A Holder of a Senior Subordinated Note may not use this Indenture to prejudice
the rights of another Holder of a Senior Subordinated Note or to obtain a
preference or priority over another Holder of a Senior Subordinated Note.
SECTION 6.07. RIGHTS OF HOLDERS OF SENIOR SUBORDINATED NOTES TO RECEIVE
PAYMENT.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Senior Subordinated Note to receive payment of principal,
premium and Liquidated Damages, if any, and interest on the Senior Subordinated
Note, on or after the respective due dates expressed in the Senior Subordinated
Note (including in connection with an offer to purchase), or to bring suit for
the enforcement of any such payment on or after such respective dates, shall
not be impaired or affected without the consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name
and as trustee of an express trust against the Company for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Senior Subordinated Notes and interest on overdue principal and,
to the extent lawful, interest and such further amount as shall be sufficient
to cover the costs and expenses of collection,
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including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel and any other amounts due to the Trustee
under Section 7.07 hereof.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel and
any other amounts due to the Trustee under Section 7.07 hereof) and the Holders
of the Senior Subordinated Notes allowed in any judicial proceedings relative
to the Company (or any other obligor upon the Senior Subordinated Notes), its
creditors or its property and shall be entitled and empowered to collect,
receive and distribute any money or other property payable or deliverable on
any such claims and any custodian in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee, and in the
event that the Trustee shall consent to the making of such payments directly to
the Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof.
To the extent that the payment of any such compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall
be deemed to authorize the Trustee to authorize or consent to or accept or
adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Senior Subordinated Notes or the rights
of any Holder, or to authorize the Trustee to vote in respect of the claim of
any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due
under Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: subject to Article 10 hereof, to Holders of Senior
Subordinated Notes for amounts due and unpaid on the Senior Subordinated Notes
for principal, premium and Liquidated Damages, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Senior Subordinated Notes for principal, premium and Liquidated
Damages, if any and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Senior Subordinated Notes pursuant to this Section 6.10.
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SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Senior Subordinated Note pursuant to Section 6.07 hereof, or a suit by Holders
of more than 10% in principal amount of the then outstanding Senior
Subordinated Notes.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only
those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section.
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(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee shall be under
no obligation to exercise any of the rights or powers vested in it by this
Indenture at the request or direction of any of the Holders pursuant to the
provisions of this Indenture, including, without limitation, the provisions of
Section 6.05 hereof, unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
(g) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture or
other paper or documents, but the Trustee, in its discretion may make such
further inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Company or any Guarantor, personally or by agent or attorney.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document believed by
it to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall
not be liable for any action it takes or omits to take in good faith in reliance
on such Officers' Certificate or Opinion of Counsel. The Trustee may consult
with counsel and the written advice of such counsel or any Opinion of Counsel
shall be full and complete authorization and protection from liability in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company. A permissive right granted to the Trustee
hereunder shall not be deemed an obligation to act.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.
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(g) The Trustee shall not be charged with knowledge of any Default
or Event of Default unless either (i) a Responsible Officer of the Trustee
shall have actual knowledge of such Default or Event of Default or (ii) written
notice of such Default or Event of Default shall have been given to the Trustee
by the Company or any Holder.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Senior Subordinated Notes and may otherwise deal with the
Company or any Affiliate of the Company with the same rights it would have if
it were not Trustee. However, in the event that the Trustee acquires any
conflicting interest it must eliminate such conflict within 90 days, apply to
the SEC for permission to continue as trustee or resign. Any Agent may do the
same with like rights and duties. The Trustee is also subject to Sections 7.10
and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Senior Subordinated
Notes, it shall not be accountable for the Company's use of the proceeds from
the Senior Subordinated Notes or any money paid to the Company or upon the
Company's direction under any provision of this Indenture, it shall not be
responsible for the use or application of any money received by any Paying
Agent other than the Trustee, and it shall not be responsible for any statement
or recital herein or any statement in the Senior Subordinated Notes or any
other document in connection with the sale of the Senior Subordinated Notes or
pursuant to this Indenture other than its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to Holders of Senior
Subordinated Notes a notice of the Default or Event of Default within 90 days
after it occurs. Except in the case of a Default or Event of Default in
payment of principal of, premium or Liquidated Damages, if any, or interest on
any Senior Subordinated Note, the Trustee may withhold the notice if and so
long as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of the Holders of the Senior
Subordinated Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE SENIOR SUBORDINATED NOTES.
Within 60 days after each March 15 beginning with the March 15
following the date of this Indenture, and for so long as Senior Subordinated
Notes remain outstanding, the Trustee shall mail to the Holders of the Senior
Subordinated Notes a brief report dated as of such reporting date that complies
with TIA Section 313(a) (but if no event described in TIA Section 313(a) has
occurred within the twelve months preceding the reporting date, no report need
be transmitted). The Trustee also shall comply with TIA Section 313(b)(2).
The Trustee shall also transmit by mail all reports as required by TIA Section
313(c).
A copy of each report at the time of its mailing to the Holders of
Senior Subordinated Notes shall be mailed to the Company and filed with the SEC
and each stock exchange on which the Senior
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Subordinated Notes are listed in accordance with TIA Section 313(d). The
Company shall promptly notify the Trustee when the Senior Subordinated Notes
are listed on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred
or made by it in addition to the compensation for its services. Such expenses
shall include the reasonable compensation, disbursements and expenses of the
Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company (including
this Section 7.07) and defending itself against any claim (whether asserted by
the Company or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder. The
Company shall defend the claim and the Trustee shall cooperate in the defense.
The Trustee may have separate counsel and the Company shall pay the reasonable
fees and expenses of such counsel. The Company need not pay for any settlement
made without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive
the resignation or removal of the Trustee and the satisfaction and discharge of
this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Senior Subordinated Notes on all money
or property held or collected by the Trustee, except that held in trust to pay
principal and interest on particular Senior Subordinated Notes. Such Lien
shall survive resignation or removal of the Trustee and the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01(h) or (i) hereof occurs, the expenses and
the compensation for the services (including the fees and expenses of its
agents and counsel) are intended to constitute expenses of administration under
any Bankruptcy Law.
The Trustee shall comply with the provisions of TIA Section
313(b)(2) to the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of Senior
Subordinated Notes of a majority in principal amount
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of the then outstanding Senior Subordinated Notes may remove the Trustee by so
notifying the Trustee and the Company in writing. The Company may remove the
Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the then outstanding Senior
Subordinated Notes may appoint a successor Trustee to replace the successor
Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Senior Subordinated Notes of at least 10% in principal amount of
the then outstanding Senior Subordinated Notes may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Senior
Subordinated Note who has been a Holder of a Senior Subordinated Note for at
least six months, fails to comply with Section 7.10, such Holder of a Senior
Subordinated Note may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Senior Subordinated Notes. The retiring Trustee
shall promptly transfer all property held by it as Trustee to the successor
Trustee, provided all sums owing to the Trustee hereunder have been paid and
subject to the Lien provided for in Section 7.07 hereof. Notwithstanding
replacement of the Trustee pursuant to this Section 7.08, the Company's
obligations under Section 7.07 hereof shall continue for the benefit of the
retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or
state
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authorities and that has a combined capital and surplus of at least $100
million as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced by
a Board Resolution, at any time, elect to have either Section 8.02 or 8.03
hereof be applied to all outstanding Senior Subordinated Notes and Subsidiary
Guarantees upon compliance with the conditions set forth below in this Article
8.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company and each Guarantor shall, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, be
deemed to have been discharged from its obligations with respect to all
outstanding Senior Subordinated Notes and Subsidiary Guarantees on the date the
conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For
this purpose, Legal Defeasance means that the Company and each Guarantor shall
be deemed to have paid and discharged the entire Indebtedness represented by
the outstanding Senior Subordinated Notes and Subsidiary Guarantees, which
shall thereafter be deemed to be "outstanding" only for the purposes of Section
8.05 hereof and the other Sections of this Indenture referred to in (a) and (b)
below, and to have satisfied all its other obligations under such Senior
Subordinated Notes and Subsidiary Guarantees and this Indenture (and the
Trustee, on demand of and at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following provisions which
shall survive until otherwise terminated or discharged hereunder: (a) the
rights of Holders of outstanding Senior Subordinated Notes to receive payments
in respect of the principal of, premium, if any, and interest and Liquidated
Damages on such Senior Subordinated Notes when such payments are due, (b) the
Company's obligations with respect to such Senior Subordinated Notes under
Article 2 and Section 4.02 hereof, (c) the rights, powers, trusts, duties and
immunities of the Trustee hereunder and the Company's obligations in connection
therewith and (d) this Article 8. Subject to compliance with this Article 8,
the Company may exercise its option under this Section 8.02 notwithstanding the
prior exercise of its option under Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
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Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company and each Guarantor shall, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, be
released from its obligations under the covenants contained in Sections 4.07,
4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17 and 4.18 hereof with
respect to the outstanding Senior Subordinated Notes and Subsidiary Guarantees
on and after the date the conditions set forth below are satisfied
(hereinafter, "Covenant Defeasance"), and the Senior Subordinated Notes and
Subsidiary Guarantees shall thereafter be deemed not "outstanding" for the
purposes of any direction, waiver, consent or declaration or act of Holders
(and the consequences of any thereof) in connection with such covenants, but
shall continue to be deemed "outstanding" for all other purposes hereunder (it
being understood that such Senior Subordinated Notes and Subsidiary Guarantees
shall not be deemed outstanding for accounting purposes). For this purpose,
Covenant Defeasance means that, with respect to the outstanding Senior
Subordinated Notes and Subsidiary Guarantees, the Company, its Subsidiaries or
any Guarantor may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such
covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 6.01 hereof, but,
except as specified above, the remainder of this Indenture and such Senior
Subordinated Notes and Subsidiary Guarantees shall be unaffected thereby. In
addition, upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03 hereof, subject to the satisfaction of the
conditions set forth in Section 8.04 hereof, Sections 6.01(d) through 6.01(f)
hereof shall not constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either Section
8.02 or 8.03 hereof to the outstanding Senior Subordinated Notes and Subsidiary
Guarantees:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders, cash in United States dollars,
non-callable Government Securities, or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest and Liquidated Damages on
the outstanding Senior Subordinated Notes on the stated maturity or on
the applicable redemption date, as the case may be, and the Company
must specify whether the Senior Subordinated Notes are being defeased
to Maturity or to a particular redemption date;
(b) in the case of an election under Section 8.02 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in
the United States reasonably acceptable to the Trustee confirming that
(A) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (B) since the date of this
Indenture, there has been a change in the applicable federal income
tax law, in either case to the effect that, and based thereon such
Opinion of Counsel shall confirm that, the Holders of the outstanding
Senior Subordinated Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Legal Defeasance and
will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Legal
Defeasance had not occurred;
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(c) in the case of an election under Section 8.03 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in
the United States reasonably acceptable to the Trustee confirming that
the Holders of the outstanding Senior Subordinated Notes will not
recognize income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event
of Default resulting from the borrowing of funds to be applied to such
deposit or insofar as Sections 6.01(h) or 6.01(i) hereof is concerned,
at any time in the period ending on the 91st day after the date of
deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result
in a breach or violation of, or constitute a default under, any
material agreement or instrument (other than this Indenture) to which
the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that after the 91st day following the deposit,
the trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with
the intent of preferring the Holders over the other creditors of the
Company with the intent of defeating, hindering, delaying or
defrauding creditors of the Company or others; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for or relating to the Legal Defeasance
or the Covenant Defeasance have been complied with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Senior
Subordinated Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Senior Subordinated Notes and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as Paying Agent) as the Trustee may determine, to
the Holders of such Senior Subordinated Notes of all sums due and to become due
thereon in respect of principal, premium, if any, and interest, but such money
need not be segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04
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hereof or the principal and interest received in respect thereof other than any
such tax, fee or other charge which by law is for the account of the Holders of
the outstanding Senior Subordinated Notes.
Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.04(a) hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.
SECTION 8.06. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of, premium, if
any, or interest on any Senior Subordinated Note and remaining unclaimed for
two years after such principal, and premium, if any, or interest has become due
and payable shall be paid to the Company on its request or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Senior
Subordinated Note shall thereafter, as a general creditor, look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease; provided, however, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in the New York Times and
The Wall Street Journal (national edition), notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less
than 30 days from the date of such notification or publication, any unclaimed
balance of such money then remaining will be repaid to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02
or 8.03 hereof, as the case may be, by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the Company's and each Guarantor's obligations under
this Indenture and the Senior Subordinated Notes and the Subsidiary Guarantees
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company or any
Guarantor makes any payment of principal of, premium, if any, or interest on
any Senior Subordinated Note following the reinstatement of its obligations,
the Company or any Guarantor shall be subrogated to the rights of the Holders
of such Senior Subordinated Notes to receive such payment from the money held
by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF SENIOR SUBORDINATED NOTES.
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Notwithstanding Section 9.02 of this Indenture, the Company and the
Guarantors, when authorized by a Board Resolution, and the Trustee may amend or
supplement this Indenture or the Senior Subordinated Notes without the consent
of any Holder of a Senior Subordinated Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Senior Subordinated Notes in
addition to or in place of certificated Senior Subordinated Notes;
(c) to provide for the assumption of the Company's or a Guarantor's
obligations to Holders of Senior Notes in the case of a merger or
consolidation and to provide for the issuance of a Subsidiary Guarantee of
the Company's Obligations under the Senior Notes and this Indenture by a
Subsidiary of the Company in accordance with Section 4.18 hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Senior Subordinated Notes or that does not
adversely affect the legal rights hereunder of any Holder; or
(e) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by a Board Resolution
authorizing the execution of any such amended or supplemental Indenture, and
upon receipt by the Trustee of the documents described in Section 7.02 hereof,
the Trustee shall join with the Company in the execution of any amended or
supplemental Indenture authorized or permitted by the terms of this Indenture
and to make any further appropriate agreements and stipulations that may be
therein contained, but the Trustee shall not be obligated to enter into such
amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF SENIOR SUBORDINATED NOTES.
Except as provided below in this Section 9.02, the Company and the
Guarantors, when authorized by a Board Resolution, and the Trustee may amend or
supplement this Indenture and the Senior Subordinated Notes may be amended or
supplemented with the consent of the Holders of at least a majority in
principal amount of the Senior Subordinated Notes then outstanding (including
consents obtained in connection with a purchase of, or tender offer or exchange
offer for the Senior Subordinated Notes), and, subject to Sections 6.04 and
6.07 hereof, any existing Default or Event of Default (other than a Default or
Event of Default in the payment of the principal of, premium, if any, or
interest on the Senior Subordinated Notes, except a payment default resulting
from an acceleration that has been rescinded) or compliance with any provision
of this Indenture or the Senior Subordinated Notes may be waived with the
consent of the Holders of a majority in principal amount of the then
outstanding Senior Subordinated Notes (including consents obtained in
connection with a tender offer or exchange offer for the Senior Subordinated
Notes).
Upon the request of the Company accompanied by a Board Resolution
authorizing the execution of any such amended or supplemental Indenture, and
upon the filing with the Trustee of evidence satisfactory to the Trustee of the
consent of the Holders of Senior Subordinated Notes as aforesaid, and
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upon receipt by the Trustee of the documents described in Section 7.02 hereof,
the Trustee shall join with the Company in the execution of such amended or
supplemental Indenture unless such amended or supplemental Indenture affects
the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Senior
Subordinated Notes under this Section 9.02 to approve the particular form of
any proposed amendment or waiver, but it shall be sufficient if such consent
approves the substance thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Senior Subordinated Notes
affected thereby a notice briefly describing the amendment, supplement or
waiver. Any failure of the Company to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such
amended or supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07
hereof, the Holders of a majority in aggregate principal amount of the Senior
Subordinated Notes then outstanding may waive compliance in a particular
instance by the Company with any provision of this Indenture or the Senior
Subordinated Notes. However, without the consent of each Holder affected, an
amendment or waiver may not (with respect to any Senior Subordinated Notes held
by a non-consenting Holder):
(a) reduce the principal amount of Senior Subordinated Notes
whose Holders must consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any
Senior Subordinated Note or alter the provisions with respect to the
redemption of the Senior Subordinated Notes except as provided above
with respect to Sections 4.10 and 4.15 hereof;
(c) reduce the rate of or change the time for payment of interest
on any Senior Subordinated Note;
(d) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest on the Senior
Subordinated Notes (except a rescission of acceleration of the Senior
Subordinated Notes by the Holders of at least a majority in aggregate
principal amount of the Senior Subordinated Notes and a waiver of the
payment default that resulted from such acceleration);
(e) make any Senior Subordinated Note payable in money other than
that stated in the Senior Subordinated Notes;
(f) make any change in the provisions of this Indenture relating
to waivers of past Defaults or the rights of Holders of Senior
Subordinated Notes to receive payments of principal of or premium, if
any, or interest on the Senior Subordinated Notes;
(g) waive a redemption payment with respect to any Senior
Subordinated Note (other than a payment required by Sections 4.10 and
4.15 hereof); or
(h) make any change in the foregoing amendment and waiver
provisions.
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In addition, any amendment to the provisions of Article 10 hereof
will require the consent of the Holders of at least 75% in aggregate principal
amount of the Senior Subordinated Notes then outstanding if such amendment
would adversely affect the rights of Holders of Senior Subordinated Notes.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Senior
Subordinated Notes shall be set forth in a amended or supplemental Indenture
that complies with the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Senior Subordinated Note is a continuing consent by the
Holder of a Senior Subordinated Note and every subsequent Holder of a Senior
Subordinated Note or portion of a Senior Subordinated Note that evidences the
same debt as the consenting Holder's Senior Subordinated Note, even if notation
of the consent is not made on any Senior Subordinated Note. However, any such
Holder of a Senior Subordinated Note or subsequent Holder of a Senior
Subordinated Note may revoke the consent as to its Senior Subordinated Note if
the Trustee receives written notice of revocation before the date the waiver,
supplement or amendment becomes effective. An amendment, supplement or waiver
becomes effective in accordance with its terms and thereafter binds every
Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF SENIOR SUBORDINATED NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Senior Subordinated Note thereafter authenticated.
The Company in exchange for all Senior Subordinated Notes may issue and the
Trustee shall authenticate new Senior Subordinated Notes that reflect the
amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Senior
Subordinated Note shall not affect the validity and effect of such amendment,
supplement or waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article 9 if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company may not sign an amendment or supplemental Indenture until the Board
of Directors approves it. In executing any amended or supplemental indenture,
the Trustee shall be entitled to receive and (subject to Section 7.01) shall be
fully protected in relying upon, in addition to the documents required by
Section 12.04 hereof, an Officer's Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
ARTICLE 10
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SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE.
The payment of principal of, premium and Liquidated Damages, if any,
interest on and all other Obligations in connection with, the Senior
Subordinated Notes shall be subordinated in right of payment, to the prior
payment, in full, of all Senior Debt, including without limitation all
borrowings, letters of credit, other advances and all other Obligations of the
Company under the Senior Credit Facility, whether outstanding on the date
hereof or thereafter incurred.
SECTION 10.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities to creditors of the
Company in a liquidation or dissolution of the Company or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Company or its property, an assignment for the benefit of creditors or any
marshalling of the Company's assets and liabilities, the holders of Senior Debt
shall be entitled to receive payment in full of all Obligations due in respect
of such Senior Debt (including, without limitation, interest after the
commencement of any such proceeding at the rate specified in the applicable
Senior Debt whether or not such interest is an allowable claim under applicable
law) before the Holders of Senior Subordinated Notes shall be entitled to
receive any payment or distribution of assets of the Company or any Guarantors
of any kind or character with respect to the Senior Subordinated Notes, and
until all Obligations with respect to Senior Debt are paid in full, any
distribution to which the Holders of Senior Subordinated Notes would be
entitled shall be made to the holders of Senior Debt (except that Holders of
Senior Subordinated Notes may receive Permitted Junior Securities and payments
made from the trust pursuant to Article 8 hereof provided that such payments
are made in accordance with the provisions described therein).
SECTION 10.03. DEFAULT ON DESIGNATED SENIOR DEBT.
Neither the Company nor any Subsidiary shall make any payment or any
distribution of any kind upon or in respect of the Senior Subordinated Notes or
any other Obligation in connection with the Senior Subordinated Notes,
including, without limitation, for the acquisition or defeasance of any of the
Senior Subordinated Notes (except in Permitted Junior Securities or from the
trust pursuant to Article 8 hereof provided that such payments are made in
accordance with the provisions described therein) if (i) a default in the
payment, whether at stated maturity, by acceleration, by declaration or
otherwise, of the principal of, premium, if any, or interest on, unpaid
drawings for letters of credit issued in respect of, or any regularly accruing
fees with respect to, any Designated Senior Debt occurs and is continuing
beyond any applicable period of grace (a "payment default") or (ii) any other
default occurs and is continuing with respect to Designated Senior Debt that
permits holders of the Designated Senior Debt as to which such default relates
to accelerate its maturity (a "nonpayment default") and, with respect to
nonpayment defaults, the Trustee receives a notice of such default (a "Payment
Blockage Notice") from the Company or the holders of any Designated Senior
Debt. Payments on the Senior Subordinated Notes may and shall be resumed (a)
in the case of a payment default, upon the date on which such default is cured
or waived and (b) in case of a nonpayment default, the earlier of the date on
which such nonpayment default is cured or waived or 179 days after the date on
which the applicable Payment Blockage Notice is received, unless the maturity
of any Designated Senior Debt has been accelerated. No new period of payment
blockage based on a nonpayment default may be commenced unless and until 360
days have elapsed since the date that the
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immediately prior Payment Blockage Notice was received. No nonpayment default
that existed or was continuing on the date of delivery of any Payment Blockage
Notice to the Trustee shall be, or be made, the basis for a subsequent Payment
Blockage Notice unless such default was cured or waived for at least 90 days.
SECTION 10.04. ACCELERATION OF SECURITIES.
The Company shall promptly notify holders of Senior Debt if payment
of the Senior Subordinated Notes is accelerated because of an Event of Default.
SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives any payment of
any Obligations with respect to the Senior Subordinated Notes at a time when
the Trustee or such Holder, as applicable, has actual knowledge that such
payment is prohibited by Section 10.03 hereof, such payment shall be held by
the Trustee or such Holder, in trust for the benefit of, and shall be paid
forthwith over and delivered, upon written request, to, the holders of Senior
Debt as their interests may appear or their Representative under the indenture
or other agreement (if any) pursuant to which Senior Debt may have been issued,
as their respective interests may appear, for application to the payment of all
Obligations with respect to Senior Debt remaining unpaid to the extent
necessary to pay such Obligations in full in accordance with their terms, after
giving effect to any concurrent payment or distribution to or for the holders
of Senior Debt.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically
set forth in this Article 10, and no implied covenants or obligations with
respect to the holders of Senior Debt shall be read into this Indenture against
the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders or the Company
or any other Person money or assets to which any holders of Senior Debt shall
be entitled by virtue of this Article 10, except if such payment is made as a
result of the willful misconduct or gross negligence of the Trustee.
SECTION 10.06. NOTICE BY COMPANY.
The Company shall promptly notify the Trustee and the Paying Agent of
any facts known to the Company that would cause a payment of any Obligations
with respect to the Senior Subordinated Notes to violate this Article 10, but
failure to give such notice shall not affect the subordination of the Senior
Subordinated Notes to the Senior Debt as provided in this Article 10.
SECTION 10.07. SUBROGATION.
After all Senior Debt is paid in full and until the Senior
Subordinated Notes are paid in full, Holders shall be subrogated (equally and
ratably with all other Indebtedness pari passu with the Securities) to the
rights of holders of Senior Debt to receive distributions applicable to Senior
Debt to the extent that distributions otherwise payable to the Holders have
been applied to the payment of Senior Debt. A distribution made under this
Article 10 to holders of Senior Debt that otherwise would have been made to
Holders is not, as between the Company and Holders, a payment by the Company on
the Senior Subordinated Notes.
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SECTION 10.08. RELATIVE RIGHTS.
This Article 10 defines the relative rights of Holders and
holders of Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Company and Holders, the obligation
of the Company, which is absolute and unconditional, to pay principal
of and interest and Liquidated Damages, if any, on the Senior
Subordinated Notes in accordance with their terms;
(2) affect the relative rights of Holders and creditors of the
Company other than their rights in relation to holders of Senior Debt;
or
(3) prevent the Trustee or any Holder from exercising its
available remedies upon a Default or Event of Default, subject to the
rights of holders and owners of Senior Debt to receive distributions
and payments otherwise payable to Holders.
If the Company fails because of this Article 10 to pay principal
of or interest or Liquidated Damages, if any, on the Senior Subordinated Notes
to a Holder on the due date, the failure is still a Default or Event of Default.
SECTION 10.09. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Debt to enforce the
subordination of the Indebtedness evidenced by the Senior Subordinated Notes
shall be impaired by any act or failure to act by the Company or any Holder or
by the failure of the Company or any Holder to comply with this Indenture.
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to
holders of Senior Debt, the distribution may be made and the notice given to
their Representative.
Upon any payment or distribution of assets of the Company
referred to in this Article 10, the Trustee and the Holders shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of such Representative or of the liquidating trustee or
agent or other Person making any distribution to the Trustee or to the Holders
for the purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 10.
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SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Senior Subordinated Notes, unless the Trustee shall
have received at its Corporate Trust Office of the Trustee at least five
Business Days prior to the date of such payment written notice of facts that
would cause the payment of any Obligations with respect to the Senior
Subordinated Notes to violate this Article 10. Only the Company or a
Representative may give the notice. Nothing in this Article 10 shall impair
the claims of, or payments to, the Trustee under or pursuant to Section 7.07
hereof.
The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may
do the same with like rights.
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Senior Subordinated Note by the Holder's acceptance
thereof authorizes and directs the Trustee on the Holder's behalf to take such
action as may be necessary or appropriate to effectuate the subordination as
provided in this Article 10, and appoints the Trustee to act as the Holder's
attorney-in-fact for any and all such purposes. If the Trustee does not file a
proper proof of claim or proof of debt in the form required in any proceeding
referred to in Section 6.09 hereof at least 30 days before the expiration of
the time to file such claim, a Representative of Designated Senior Debt is
hereby authorized to file an appropriate claim for and on behalf of the Holders
of the Senior Subordinated Notes.
SECTION 10.13. AMENDMENTS.
The provisions of this Article 10 shall not be amended or modified
except as set forth in Section 9.02 hereof.
ARTICLE 11
SUBSIDIARY GUARANTEES
SECTION 11.01. SUBSIDIARY GUARANTEES.
Each Guarantor hereby, jointly and severally, unconditionally
guarantees to each Holder of a Senior Subordinated Note authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the Senior
Subordinated Notes or the Obligations of the Company hereunder and thereunder,
that: (a) the principal of, premium, if any, interest and Liquidated Damages,
if any, on the Senior Subordinated Notes will be promptly paid in full when
due, subject to any applicable grace period, whether at maturity, by
acceleration, redemption or otherwise, and interest on the overdue principal,
premium, if any, interest on any interest, if any (to the extent permitted by
law), and Liquidated Damages, if any, on the Senior Subordinated Notes, and all
other payment Obligations of the Company to the Holders or the Trustee
hereunder or thereunder will be promptly paid in full and performed, all in
accordance with the terms hereof and thereof; and (b) in case of any extension
of time of payment or renewal of any Senior Subordinated Notes or any of such
other Obligations, the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, subject to any
applicable grace period, whether at stated maturity, by
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acceleration, redemption or otherwise. Failing payment when so due of any
amount so guaranteed or any performance so guaranteed for whatever reason the
Guarantors will, jointly and severally with all other Guarantors, be obligated
to pay the same immediately. An Event of Default under this Indenture or the
Senior Subordinated Notes shall constitute an event of default under the
Subsidiary Guarantees, and shall entitle the Holders to accelerate the
Obligations of the Guarantors hereunder in the same manner and to the same
extent as the Obligations of the Company. The Guarantors hereby agree that its
Obligations hereunder shall be unconditional, irrespective of the validity,
regularity or enforceability of the Senior Subordinated Notes or this
Indenture, the absence of any action to enforce the same, any waiver or consent
by any Holder with respect to any provisions hereof or thereof, the recovery of
any judgment against the Company, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a Guarantor. Each Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest, notice and all demands whatsoever and covenants that this
Subsidiary Guarantee will not be discharged except by complete performance of
the Obligations contained in the Senior Subordinated Notes and this Indenture.
If any Holder or the Trustee is required by any court or otherwise to return to
the Company, the Guarantors, or any Note Custodian, Trustee, liquidator or
other similar official acting in relation to either the Company or the
Guarantors, any amount paid by either to the Trustee or such Holder, this
Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated
in full force and effect. Each Guarantor agrees that it shall not be entitled
to, and hereby waives, any right of subrogation in relation to the Holders in
respect of any Obligations guaranteed hereby until payment in full of the
Obligations hereunder. Each Guarantor further agrees that, as between the
Guarantors, on the one hand, and the Holders and the Trustee, on the other
hand, (x) the maturity of the Obligations guaranteed hereby may be accelerated
as provided in Article 6 hereof for the purposes of the this Subsidiary
Guarantee, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the Obligations guaranteed hereby, and (y) in
the event of any declaration of acceleration of such Obligations as provided in
Article 6 hereof, such Obligations (whether or not due and payable) shall
forthwith become due and payable by the Guarantors for the purpose of this
Subsidiary Guarantee. The Guarantors shall have the right to seek contribution
from any non-paying Guarantor so long as the exercise of such right does not
impair the rights of the Holders under the Subsidiary Guarantees.
SECTION 11.02. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEE.
To evidence its Subsidiary Guarantee set forth in Section 11.01
hereof, each Guarantor hereby agrees that a notation of such Subsidiary
Guarantee substantially in the form of Exhibit D shall be endorsed by an
Officer of such Guarantor on each Senior Subordinated Note authenticated and
delivered by the Trustee and that this Indenture shall be executed on behalf of
such Guarantor, by manual or facsimile signature, by an Officer of such
Guarantor.
Each Guarantor hereby agrees that its Subsidiary Guarantee set forth
in Section 11.01 hereof shall remain in full force and effect notwithstanding
any failure to endorse on each Senior Subordinated Note a notation of such
Subsidiary Guarantee.
If an Officer whose signature is on this Indenture or on the
Subsidiary Guarantee no longer holds that office at the time the Trustee
authenticates the Senior Subordinated Note on which a Subsidiary Guarantee is
endorsed, the Subsidiary Guarantee shall be valid nevertheless.
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The delivery of any Senior Subordinated Note by the Trustee, after
the authentication thereof hereunder, shall constitute due delivery of the
Subsidiary Guarantee (in existence on or after the date hereof) set forth in
this Indenture on behalf of the Guarantors.
SECTION 11.03. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
(a) Except as set forth in Articles 4 and 5, nothing contained in
this Indenture or in any of the Senior Subordinated Notes shall prevent any
consolidation or merger of a Guarantor with or into the Company or shall
prevent any sale or conveyance of the property of a Guarantor as an entirety or
substantially as an entirety, to the Company, unless immediately after giving
effect to such transaction, a Default or Event of Default exists.
(b) Except as set forth in paragraph (a) above, no Guarantor may
consolidate with or merge with or into (whether or not such Guarantor is the
surviving Person) another Person, whether or not affiliated with such
Guarantor, unless (i) subject to the provisions of the following paragraph, the
Person formed by or surviving any such consolidation or merger (if other than
such Guarantor) assumes all the obligations of such Guarantor, pursuant to a
supplemental indenture in form and substance reasonably satisfactory to the
Trustee, under the Senior Subordinated Notes and this Indenture and (ii)
immediately after giving effect to such transaction, no Default or Event of
Default exists.
(c) In the event of a sale or other disposition of all of the assets
of any Guarantor, by way of merger, consolidation or otherwise, or a sale or
other disposition of all of the capital stock of any Guarantor, then such
Guarantor (in the event of a sale or other disposition, by way of such a
merger, consolidation or otherwise, of all of the capital stock of such
Guarantor) or the Person acquiring the property (in the event of a sale or
other disposition of all of the assets of such Guarantor) shall be released and
relieved of any obligations under its Subsidiary Guarantee and, upon delivery
by the Company to the Trustee of an Officers' Certificate and an Opinion of
Counsel to the effect that such sale or other disposition was made by the
Company in accordance with the provisions of this Indenture, including, without
limitation, Section 4.10 hereof, the Trustee shall provide the Company with a
certificate certifying that such Guarantor has been so released and relieved of
its obligations; provided that the Net Proceeds of such sale or other
disposition are applied in accordance with Section 4.10 hereof.
SECTION 11.04. RELEASES FOLLOWING SALE OF ASSETS.
Concurrently with any Asset Sale (including, if applicable, all of
the capital stock of any Guarantor), any Liens in favor of the Trustee in the
assets sold thereby shall be released; provided that in the event of an Asset
Sale, the Net Proceeds of such sale or other disposition are applied in
accordance with the provisions of Section 4.10 hereof. If the assets sold in
such sale or other disposition include all or substantially all of the assets
of any Guarantor or all of the capital stock of any Guarantor, then such
Guarantor (in the event of a sale or other disposition of all of the capital
stock of such Guarantor) or the corporation acquiring the property (in the
event of a sale or other disposition of all or substantially all of the assets
of a Guarantor) shall be released and relieved of its obligations under its
Subsidiary Guarantee or Section 11.03 hereof, as the case may be, provided that
in the event of an Asset Sale, the Net Proceeds from such sale or other
disposition are treated in accordance with the provisions of Section 4.10
hereof. Upon delivery by the Company to the Trustee of an Officers'
Certificate and an Opinion of Counsel to the effect that such sale or other
disposition was made by the Company in accordance with the provisions of this
Indenture, including, without limitation, Section 4.10 hereof, the Trustee
shall execute any documents
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reasonably required in order to evidence the release of any Guarantor from its
obligations under its Subsidiary Guarantee. Any Guarantor not released from
its obligations under its Subsidiary Guarantee shall remain liable for the full
amount of principal of and interest on the Senior Subordinated Notes and for
its other obligations under this Indenture as provided in this Article 11.
SECTION 11.05. "TRUSTEE" TO INCLUDE PAYING AGENT.
In case at any time any Paying Agent other than the Trustee shall
have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article 11 shall in such case (unless the context
shall otherwise require) be construed as extending to and including such Paying
Agent within its meaning as fully and for all intents and purposes as if such
Paying Agent were named in this Article 11 in place of the Trustee.
SECTION 11.06. ADDITIONAL GUARANTORS.
Any Person that was not a Guarantor on the date hereof may become a
Guarantor by executing and delivering to the Trustee (a) a supplemental
indenture in substantially the form of Exhibit E hereto, and (b) an Opinion of
Counsel to the effect that such supplemental indenture has been duly authorized
and executed by such Person and constitutes the legal, valid, binding and
enforceable obligation of such Person (subject to such customary exceptions
concerning creditors' rights, fraudulent transfers, public policy and equitable
principles as may be acceptable to the Trustee in its discretion).
SECTION 11.07. SUBORDINATION OF SUBSIDIARY GUARANTEE.
The Obligations of each Guarantor under its Subsidiary Guarantee
pursuant to this Article 11 shall be subordinated in right of payment to the
prior payment, in full, of all Obligations due in respect of Senior Debt of
such Guarantor, whether outstanding on the date hereof or hereafter created,
incurred, assumed or guaranteed.
SECTION 11.08. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any payment or distribution of assets of any Guarantor of any
kind or character, whether in cash, property or securities, to creditors of
such Guarantor in a liquidation or dissolution of such Guarantor or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to such Guarantor or its property, an assignment for the benefit of
creditors or any marshalling of the such Guarantor's assets and liabilities,
the holders of Senior Debt of such Guarantor shall be entitled to receive
payment in full of all Obligations due in respect of such Senior Debt of such
Guarantor (including, without limitation, interest after the commencement of
any such proceeding at the rate specified in the applicable Senior Debt of such
Guarantor whether or not such interest is an allowable claim under applicable
law) before the Holders of Senior Subordinated Notes shall be entitled to
receive any payment or distribution of assets the Guarantor of any kind or
character with respect to the Senior Subordinated Notes, and until all
Obligations with respect to Senior Debt of such Guarantor are paid in full, any
distribution to which the Holders of Senior Subordinated Notes would be
entitled shall be made to the holders of Senior Debt of such Guarantor (except
that Holders of Senior Subordinated Notes may receive Permitted Junior
Securities and payments made from the trust pursuant to Article 8 hereof
provided that such payments are made in accordance with the provisions
described therein).
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SECTION 11.09. DEFAULT ON DESIGNATED SENIOR DEBT.
No Guarantor shall make any payment or any distribution of any kind
upon or in respect of the Senior Subordinated Notes or any other Obligation in
connection with the Senior Subordinated Notes, including, without limitation,
for the acquisition or defeasance of any of the Senior Subordinated Notes
(except in Permitted Junior Securities or from the trust pursuant to Article 8
hereof, provided that such payments are made in accordance with the provisions
described therein) if (i) a default in the payment, whether at stated maturity,
by acceleration, by declaration or otherwise, of the principal of, premium, if
any, or interest on, unpaid drawings for letters of credit issued in respect
of, or any regularly accruing fees with respect to, any Designated Senior Debt
of such Guarantor occurs and is continuing beyond any applicable period of
grace (a "payment default") or (ii) any other default occurs and is continuing
with respect to Designated Senior Debt of such Guarantor that permits holders
of the Designated Senior Debt of such Guarantor as to which such default
relates to accelerate its maturity (a "nonpayment default") and, with respect to
nonpayment defaults, the Trustee receives a notice of such default (a "Payment
Blockage Notice") from such Guarantor or the holders of any Designated Senior
Debt of such Guarantor. Payments in respect of such Guarantor's Subsidiary
Guarantee of the Senior Subordinated Notes may and shall be resumed (a) in the
case of a payment default, upon the date on which such default is cured or
waived and (b) in case of a nonpayment default, the earlier of the date on
which such nonpayment default is cured or waived or 179 days after the date on
which the applicable Payment Blockage Notice is received, unless the maturity
of any Designated Senior Debt of such Guarantor has been accelerated. No new
period of payment blockage based upon a nonpayment default may be commenced
unless and until 360 days have elapsed since the date that the immediately
prior Payment Blockage Notice was received. No nonpayment default that existed
or was continuing on the date of delivery of any Payment Blockage Notice to the
Trustee shall be, or be made, the basis for a subsequent Payment Blockage
Notice unless such default was cured or waived for at least 90 days.
SECTION 11.10. ACCELERATION OF SECURITIES.
Each Guarantor shall promptly notify holders of Senior Debt of such
Guarantor if payment of the Senior Subordinated Notes is accelerated because of
an Event of Default.
SECTION 11.11. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives from a Guarantor
any payment of any Obligations with respect to the Senior Subordinated Notes at
a time when the Trustee or such Holder, as applicable, has actual knowledge
that such payment is prohibited by Section 11.09 hereof, such payment shall be
held by the Trustee or such Holder, in trust for the benefit of, and shall be
paid forthwith over and delivered, upon written request, to, the holders of
Senior Debt of such Guarantor as their interests may appear or their
Representative under the indenture or other agreement (if any) pursuant to
which Senior Debt of such Guarantor may have been issued, as their respective
interests may appear, for application to the payment of all Obligations with
respect to Senior Debt of such Guarantor remaining unpaid to the extent
necessary to pay such Obligations in full in accordance with their terms, after
giving effect to any concurrent payment or distribution to or for the holders
of Senior Debt of such Guarantor.
With respect to any Guarantor with respect to the holders of Senior
Debt of such Guarantor, the Trustee undertakes to perform only such obligations
on the part of the Trustee as are specifically set forth in this Article 11,
and no implied covenants or obligations with respect to the holders of Senior
Debt of
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such Guarantor shall be read into this Indenture against the Trustee. The
Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior
Debt of such Guarantor, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders or the Company
or any other Person money or assets to which any holders of Senior Debt of such
Guarantor shall be entitled by virtue of this Article 11, except if such
payment is made as a result of the willful misconduct or gross negligence of
the Trustee.
SECTION 11.12. NOTICE BY A GUARANTOR.
Each Guarantor shall promptly notify the Trustee and the Paying Agent
of any facts known to such Guarantor that would cause a payment of any
Obligations with respect to the Senior Subordinated Notes or its Subsidiary
Guarantee to violate this Article 11, but failure to give such notice shall not
affect the subordination of its Subsidiary Guarantee or of the Senior
Subordinated Notes to the Senior Debt of such Guarantor as provided in this
Article 11.
SECTION 11.13. SUBROGATION.
With respect to any Guarantor, after all Senior Debt of such
Guarantor is paid in full and until the Senior Subordinated Notes are paid in
full, Holders shall be subrogated (equally and ratably with all other
Indebtedness of such Guarantor pari passu with the Securities) to the rights of
holders of Senior Debt of such Guarantor to receive distributions applicable to
Senior Debt of such Guarantor to the extent that distributions otherwise
payable to the Holders have been applied to the payment of Senior Debt of such
Guarantor. A distribution made under this Article 11 to holders of Senior Debt
of such Guarantor that otherwise would have been made to Holders is not, as
between the such Guarantor and Holders, a payment by the Company on the Senior
Debt of such Guarantor.
SECTION 11.14. RELATIVE RIGHTS.
This Article 11 defines the relative rights of Holders and holders of
Senior Debt of the Guarantors. Nothing in this Indenture shall:
(1) impair, as between each Guarantor and the Holders, the
obligation of such Guarantor, which is absolute and unconditional, to pay
principal of and interest and Liquidated Damages, if any, on the Senior
Subordinated Notes in accordance with their terms;
(2) affect the relative rights of Holders and creditors of each
Guarantor other than their rights in relation to holders of Senior Debt of
such Guarantor; or
(3) prevent the Trustee or any Holder from exercising its available
remedies upon a Default or Event of Default, subject to the rights of
holders and owners of Senior Debt of each Guarantor to receive
distributions and payments otherwise payable to Holders.
If any Guarantor fails because of this Article 11 to pay principal of
or interest on the Senior Subordinated Notes to a Holder on the due date, the
failure is still a Default or Event of Default.
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SECTION 11.15. SUBORDINATION MAY NOT BE IMPAIRED BY ANY GUARANTOR.
With respect to any Guarantor, no right of any holder of Senior Debt
of such Guarantor to enforce the subordination of the Subsidiary Guarantee
shall be impaired by any act or failure to act by such Guarantor or any Holder
or by the failure of such Guarantor to comply with this Indenture.
SECTION 11.16. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
With respect to any Guarantor, whenever a distribution is to be made
or a notice given to holders of Senior Debt of such Guarantor, the distribution
may be made and the notice given to their Representative.
Upon any payment or distribution of assets referred to in this
Article 11, the Trustee and the Holders shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction or upon any
certificate of such Representative or of the liquidating trustee or agent or
other Person making any distribution to the Trustee or to the Holders for the
purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Debt of such Guarantor, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article 11.
SECTION 11.17. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 11 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Senior Subordinated Notes, unless the Trustee shall
have received at its Corporate Trust Office at least five Business Days prior
to the date of such payment, written notice of facts that would cause the
payment of any Obligations with respect to the Subsidiary Guarantee to violate
this Article 11. Only a Guarantor or a Representative may give the notice.
Nothing in this Article 11 shall impair the claims of, or payments to, the
Trustee under or pursuant to Section 7.07 hereof.
With respect to any Guarantor, the Trustee in its individual or any
other capacity may hold Senior Debt of such Guarantor with the same rights it
would have if it were not Trustee. Any Agent may do the same with like rights.
SECTION 11.18. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Senior Subordinated Note by the Holder's acceptance
thereof authorizes and directs the Trustee on the Holder's behalf to take such
action as may be necessary or appropriate to effectuate the subordination as
provided in this Article 11, and appoints the Trustee to act as the Holder's
attorney-in-fact for any and all such purposes. If the Trustee does not file a
proper proof of claim or proof of debt in the form required in any proceeding
relative to any Guarantor referred to in Section 6.09 hereof at least 30 days
before the expiration of the time to file such claim, a Representative of
Designated Senior Debt of each Guarantor is hereby authorized to file an
appropriate claim for and on behalf of the Holders of the Senior Subordinated
Notes.
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SECTION 11.19. LIMITATION OF GUARANTOR'S LIABILITY.
Each Guarantor and by its acceptance hereof, each beneficiary hereof,
hereby confirm that it is its intention that the Subsidiary Guarantee by such
Guarantor not constitute a fraudulent transfer or conveyance for purposes of
the Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform
Fraudulent Transfer Act or any similar federal or state law to the extent
applicable to any Subsidiary Guarantees. To effectuate the foregoing
intention, each such Person hereby irrevocably agrees that the obligation of
such Guarantor under its Subsidiary Guarantee under this Article 11 shall be
limited to the maximum amount as will, after giving effect to such maximum
amount and all other (contingent or otherwise) liabilities of such Guarantor
that are relevant under such laws, and after giving effect to any collections
from or payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under this Article 11, result in the
obligations of such Guarantor in respect of such maximum amount not
constituting a fraudulent conveyance. Each beneficiary under the Subsidiary
Guarantees, by accepting the benefits hereof, confirms its intention that, in
the event of a bankruptcy, reorganization or other similar proceeding of the
Company or any Guarantor in which concurrent claims are made upon such
Guarantor hereunder, to the extent such claims will not be fully satisfied,
each such claimant with a valid claim against the Company shall be entitled to
a ratable share of all payments by such Guarantor in respect of such concurrent
claims.
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by TIA Section 318(c), the imposed duties shall
control.
SECTION 12.02. NOTICES.
Any notice or communication by the Company, any Guarantor or the
Trustee to the others is duly given if in writing and delivered in Person or
mailed by first class mail (registered or certified, return receipt requested),
telecopier or overnight air courier guaranteeing next day delivery, to the
others' address:
If to the Company or any Guarantor:
Key Plastics, Inc.
21333 Haggerty Road
Suite 200
Novi, MI 48375
Telecopier No.: (810) 449-6199
Attention: Mark Abbo
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With, in the case of any notice furnished pursuant to Article 6, a
copy to:
Dykema Gossett PLLC
400 Renaissance Center
Detroit, MI 48243-1688
Telecopier No.: (313) 568-6915
Attention: Aleksandra A. Miziolek
If to the Trustee:
Marine Midland Bank
140 Broadway
New York, NY 10005-1180
Telecopier No.: (212) 658-6425
Attention: Corporate Trust Services, 12th Floor
The Company, the Guarantors or the Trustee, by notice to the others
may designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the
next Business Day after timely delivery to the courier, if sent by overnight
air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first
class mail or by overnight air courier guaranteeing next day delivery to its
address shown on the register kept by the Registrar. Any notice or
communication shall also be so mailed to any Person described in TIA Section
313(c), to the extent required by the TIA. Failure to mail a notice or
communication to a Holder or any defect in it shall not affect its sufficiency
with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company or any Guarantor mails a notice or communication to
Holders, it shall mail a copy to the Trustee and each Agent at the same time.
SECTION 12.03. COMMUNICATION BY HOLDERS OF SENIOR SUBORDINATED NOTES WITH OTHER
HOLDERS OF SENIOR SUBORDINATED NOTES.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Senior
Subordinated Notes. The Company, the Trustee, the Registrar and anyone else
shall have the protection of TIA Section 312(c).
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SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 12.05 hereof) stating that, in the opinion of the signers,
all conditions precedent and covenants, if any, provided for in this
Indenture relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 12.05 hereof) stating that, in the opinion of such counsel, all
such conditions precedent and covenants have been satisfied.
SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions
of TIA Section 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
SECTION 12.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting
of Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No director, officer, employee, incorporator or stockholder of the
Company or any Guarantor, as such, shall have any liability for any obligations
of the Company or any Guarantor under the Senior Subordinated Notes, any
Subsidiary Guarantee or this Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder by
accepting a Senior Subordinated Note waives and releases all such liability.
The waiver and release are part of the consideration for issuance of the Senior
Subordinated Notes and the Subsidiary Guarantees. Such waiver may not be
effective to waive
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<PAGE> 85
liabilities under the federal securities laws, and it is the view of the SEC
that such a waiver is against public policy.
SECTION 12.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE SENIOR SUBORDINATED NOTES AND THE SUBSIDIARY
GUARANTEES.
SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or its Subsidiaries or of any other Person.
Any such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 12.10. SUCCESSORS.
All agreements of the Company and the Guarantors in this Indenture,
the Senior Subordinated Notes and the Subsidiary Guarantees shall bind their
respective successors. All agreements of the Trustee in this Indenture shall
bind its successors.
SECTION 12.11. SEVERABILITY.
In case any provision in this Indenture, in the Senior Subordinated
Notes or in any Subsidiary Guarantee shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
SECTION 12.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
Signatures on following page
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<PAGE> 86
Dated as of March 24, 1997 KEY PLASTICS, INC.
By: Mark J. Abbo
--------------------------------------
Name: Mark J. Abbo
Title: Treasurer and Assistant Secretary
Dated as of March 24, 1997 KEY PLASTICS INTERNATIONAL LLC
By: Mark J. Abbo
--------------------------------------
Name: Mark J. Abbo
Title: Attorney-in-Fact for
David C. Benoit, Member
By: Key Plastics, Inc.
By: Mark J. Abbo
-----------------------------------
Name: Mark J. Abbo
Title: Treasurer and Assistant
Secretary
Dated as of March 24, 1997 KEY PLASTICS AUTOMOTIVE LLC
By: Mark J. Abbo
--------------------------------------
Name: Mark J. Abbo
Title: Attorney-in-Fact for
David C. Benoit, Member
By: Key Plastics, Inc.
By: Mark J. Abbo
-----------------------------------
Name: Mark J. Abbo
Title: Treasurer and Assistant
Secretary
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<PAGE> 87
Dated as of March 24, 1997 KEY PLASTICS TECHNOLOGY, LLC
By: Mark J. Abbo
--------------------------------------
Name: Mark J. Abbo
Title: Attorney-in-Fact for
David C. Benoit, Member
By: Key Plastics, Inc.
By: Mark J. Abbo
-----------------------------------
Name: Mark J. Abbo
Title: Treasurer and Assistant
Secretary
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<PAGE> 88
Dated as of March 24, 1997 MARINE MIDLAND BANK
as Trustee
By: Marcia A. Markowski
----------------------------------
Name: Marcia A. Markowski
Title: Corporate Trust Officer
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<PAGE> 89
================================================================================
EXHIBIT A-1
(Face of Senior Subordinated Note)
10 1/4% Series [A/B] Senior Subordinated Notes due 2007
No. $__________
CUSIP No.
KEY PLASTICS, INC.
promises to pay to
or registered assigns,
the principal sum of
Dollars on March 15, 2007.
Interest Payment Dates: March 15, and September 15
Record Dates: March 1, and September 1
Dated:
KEY PLASTICS, INC.
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
Trustee's Certificate of Authentication
This is one of the [Global]
Senior Subordinated Notes referred to in the
within-mentioned Indenture:
MARINE MIDLAND BANK,
as Trustee
A-1-1
<PAGE> 90
By:
================================================================================
A-1-2
<PAGE> 91
[Unless and until it is exchanged in whole or in part for Senior
Subordinated Notes in definitive form, this Senior Subordinated Note may not be
transferred except as a whole by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. Unless this certificate is
presented by an authorized representative of The Depository Trust Company (55
Water Street, New York, New York) ("DTC"), to the issuer or its agent for
registration of transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or such other name as may be requested by
an authorized representative of DTC (and any payment is made to Cede & Co. or
such other entity as may be requested by an authorized representative of DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an
interest herein.](1)
THE SENIOR SUBORDINATED NOTE (OR ITS PREDECESSOR) EVIDENCED
HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SENIOR
SUBORDINATED NOTE EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SENIOR
SUBORDINATED NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE
SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THE SENIOR SUBORDINATED NOTE EVIDENCED HEREBY
AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SENIOR
SUBORDINATED NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE
THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH
CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION
AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED
TO, NOTIFY ANY PURCHASER FROM IT OF THE SENIOR SUBORDINATED NOTE
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE.(2)
Additional provisions of this Note are set forth on the other side of this Note.
____________________
1. This paragraph should be included only if the Senior Subordinated Note is
issued in global form.
2. This paragraph should be removed upon the exchange of Series A Notes for
Series B Notes in the Exchange Offer or upon the registration of the Series A
Notes pursuant to the terms of the Registration Rights Agreement
A-1-3
<PAGE> 92
(Back of Senior Subordinated Note)
10 1/4% Series [A/B] Senior Subordinated Notes due 2007
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Key Plastics, Inc., a Michigan corporation (the
"Company"), promises to pay interest on the principal amount of this Senior
Subordinated Note at 10 1/4% per annum from March 24, 1997 until maturity and
shall pay the Liquidated Damages payable pursuant to Section 5 of the
Registration Rights Agreement referred to below. The Company shall pay
interest and Liquidated Damages semi-annually on March 15 and September 15 of
each year, or if any such day is not a Business Day, on the next succeeding
Business Day (each an "Interest Payment Date"). Interest on the Senior
Subordinated Notes will accrue from the most recent date to which interest has
been paid or, if no interest has been paid, from the date of issuance; provided
that if there is no existing Default in the payment of interest, and if this
Senior Subordinated Note is authenticated between a record date referred to on
the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be September 15, 1997. The Company shall
pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at a rate that is 1% per annum in excess of the rate then in effect; it
shall pay interest (including post-petition interest in any proceeding under
any Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of
a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company shall pay interest on the Senior
Subordinated Notes (except defaulted interest) and Liquidated Damages to the
Persons who are registered Holders of Senior Subordinated Notes at the close of
business on the March 1 or September 1 next preceding the Interest Payment
Date, even if such Senior Subordinated Notes are cancelled after such record
date and on or before such Interest Payment Date, except as provided in Section
2.12 of the Indenture with respect to defaulted interest. The Senior
Subordinated Notes will be payable as to principal, premium, interest and
Liquidated Damages at the office or agency of the Company maintained for such
purpose within or without the City and State of New York, or, at the option of
the Company, payment of interest and Liquidated Damages may be made by check
mailed to the Holders at their addresses set forth in the register of Holders,
and provided that payment by wire transfer of immediately available funds will
be required with respect to principal of and interest, premium and Liquidated
Damages on, all Global Senior Subordinated Notes and all other Senior
Subordinated Notes the Holders of which shall have provided wire transfer
instructions to the Company or the Paying Agent. Such payment shall be in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, Marine Midland Bank, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The
Company may change any Paying Agent or Registrar without notice to any Holder.
The Company or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Senior Subordinated Notes under
an Indenture dated as of March 24, 1997 ("Indenture") among the Company, as
Issuer, and Key Plastics International LLC, a Michigan limited liability
company, Key Plastics Automotive LLC, a Michigan limited liability company, and
Key Plastics Technology, LLC, a Michigan limited liability company, as
Guarantors, and the Trustee. The terms of the Senior Subordinated Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended (15 U.S.
A-1-4
<PAGE> 93
Code Sections 77aaa-77bbbb). The Senior Subordinated Notes are subject to all
such terms, and Holders are referred to the Indenture and such Act for a
statement of such terms. The Senior Subordinated Notes are unsecured senior
subordinated obligations of the Company limited to $125,000,000 in aggregate
principal amount, plus amounts, if any, issued to pay Liquidated Damages on
outstanding Senior Subordinated Notes as set forth in Paragraph 2 hereof.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in subparagraph (b) of this Paragraph 5, the
Senior Subordinated Notes shall not be redeemable at the Company's option prior
to March 15, 2002. Thereafter, the Senior Subordinated Notes shall be subject
to redemption at any time at the option of the Company, in whole or in part,
upon not less than 30 nor more than 60 days' notice, at the redemption prices
(expressed as percentages of principal amount) set forth below plus accrued and
unpaid interest and Liquidated Damages thereon to the applicable redemption
date, if redeemed during the twelve-month period beginning on March 15 of the
years indicated below:
YEAR PERCENTAGE
2002 . . . . . . . . . . . . . . . . . . . . . . 105.125%
2003 . . . . . . . . . . . . . . . . . . . . . . 103.417
2004 . . . . . . . . . . . . . . . . . . . . . . 101.708
2005 and thereafter . . . . . . . . . . . . . . . 100.000%
(b) Notwithstanding the provisions of subparagraph (a) of this
Paragraph 5, prior to March 15, 2000, the Company may redeem up to 35% of the
aggregate principal amount, of the Senior Subordinated Notes initially issued
at a redemption price of 109 1/4% of the principal amount thereof, plus accrued
and unpaid interest and Liquidated Damages thereon, if any, to the redemption
date, with the net cash proceeds of an public equity offering of common stock
of the Company; provided that at least 65% of the aggregate principal amount of
the Senior Subordinated Notes originally issued pursuant to the Indenture
remain outstanding immediately after the occurrence of such redemption; and
provided, further, that such redemption shall occur within 60 days of the date
of the closing of such public equity offering.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption or sinking fund payments with respect to
the Senior Subordinated Notes.
7. REPURCHASE AT OPTION OF HOLDERS.
(a) Upon the occurrence of a Change of Control, each Holder of Senior
Subordinated Notes shall have the right to require the Company to repurchase
all or any part (equal to $1,000 or an integral multiple thereof) of such
Holder's Senior Subordinated Notes pursuant to the offer described below (the
"Change of Control Offer") at an offer price in cash equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the date of purchase (the "Change of
Control Payment").
(b) If the Company or any Subsidiary consummates one or more Asset
Sales and does not use all of the Net Proceeds from such Asset Sales as
provided in Section 4.10 of the Indenture, the Company will be required, under
certain circumstances, to utilize the Excess Proceeds from such Asset Sales to
offer (an "Excess Proceeds Offer") to purchase Notes at a purchase price in
cash equal to 100% of the aggregate
A-1-5
<PAGE> 94
principal amount of the Notes plus any accrued and unpaid interest and
Liquidated Damages, if any, to the date of purchase. If the Excess Proceeds
are insufficient to purchase all Notes tendered pursuant to any Excess Proceeds
Offer, the Company shall select the Notes to be purchased in accordance with
the terms of Article 3 of the Indenture and Section 4.10, as applicable.
(c) Holders may tender all or any portion of their Notes in a Change
of Control Offer or Excess Proceeds Offer (collectively, an "Offer") by
completing the form below entitled "OPTION OF HOLDER TO ELECT PURCHASE."
(d) The Company shall comply with any tender offer rules under the
Exchange Act which may then be applicable, including Rule 14e-1, in connection
with an Offer required to be made by the Company to repurchase the Notes as a
result of a Change of Control or an Asset Sale. To the extent that the
provisions of any securities laws or regulations conflict with provisions of
the Indenture, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under the
Indenture by virtue thereof.
8. NOTICE OF REDEMPTION. Notices of redemption will be mailed by
first class mail at least 30 days but not more than 60 days before the
redemption date to each Holder whose Senior Subordinated Notes are to be
redeemed at its registered address. Notices of redemption may not be
conditional. Senior Subordinated Notes in denominations larger than $1,000 may
be redeemed in part but only in whole multiples of $1,000, unless all of the
Senior Subordinated Notes held by a Holder are to be redeemed. On and after
the redemption date interest ceases to accrue on Senior Subordinated Notes or
portions thereof called for redemption.
9. SUBORDINATION. The payment of principal of, premium and Liquidated
Damages, if any, interest on and all other Obligations in connection with, the
Senior Subordinated Notes is subordinated in right of payment, to the extent
and in the manner provided in Article 10 of the Indenture, to the prior payment
in full of all Senior Debt, which includes (a) all Indebtedness outstanding
under the Senior Credit Facility permitted under clauses (ii) and (iii) of the
second paragraph of Section 4.09 of the Indenture, (b) any other Indebtedness
permitted to be incurred by the Company or any Subsidiary under the terms of
the Indenture, unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the Senior Subordinated Notes, including, without limitation, any
Indebtedness of any Subsidiary to the Company unless such intercompany
Indebtedness expressly provides that it is subordinated to the Senior
Subordinated Notes and (c) all Obligations with respect to the foregoing as
described in clauses (a) and (b) above, and in all cases whether now
outstanding or hereafter created, assumed or incurred and including, without
limitation, interest accruing subsequent to the filing of a petition of
bankruptcy at the ratio provided in the relevant document, whether or not an
allowed claim. Notwithstanding anything to the contrary in the foregoing,
Senior Debt shall not include (w) any liability for federal, state, local or
other taxes owed or owing by the Company, (x) any Indebtedness of the Company
to any of its Subsidiaries or other Affiliates, (y) any trade payables or (z)
any Indebtedness that is incurred in violation of the Indenture. The Company
agrees, and each Holder by accepting a Senior Subordinated Note consents and
agrees, to the subordination provided in the Indenture and authorizes the
Trustee to give it effect.
10. SUBSIDIARY GUARANTEES. The Company's payment obligations
under the Notes are jointly and severally unconditionally guaranteed by the
Guarantors. The Subsidiary Guarantees of each Guarantor will be subordinated
to the prior payment in full of all Senior Debt of such Guarantor and the
amounts for which the Guarantors will be liable under the guarantees issued
from time to time with respect to Senior Debt.
A-1-6
<PAGE> 95
11. DENOMINATIONS, TRANSFER, EXCHANGE. The Senior Subordinated Notes
are in registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Senior Subordinated Notes may be
registered and Senior Subordinated Notes may be exchanged as provided in the
Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Senior Subordinated Note or portion of a Senior Subordinated
Note selected for redemption, except for the unredeemed portion of any Senior
Subordinated Note being redeemed in part. Also, it need not exchange or
register the transfer of any Senior Subordinated Notes for a period of 15 days
before a selection of Senior Subordinated Notes to be redeemed or during the
period between a record date and the corresponding Interest Payment Date.
12. PERSONS DEEMED OWNERS. The registered Holder of a Senior
Subordinated Note may be treated as its owner for all purposes.
13. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture, the Senior Subordinated Notes and the Subsidiary Guarantees may
be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the then outstanding Senior Subordinated Notes
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, Senior Subordinated Notes), and any
existing default or compliance with any provision of the Indenture or the
Senior Subordinated Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Senior Subordinated Notes
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, Senior Subordinated Notes). Without
the consent of any Holder of a Senior Subordinated Note, the Indenture or the
Senior Subordinated Notes may be amended or supplemented to cure any ambiguity,
defect or inconsistency, to provide for uncertificated Senior Subordinated
Notes in addition to or in place of certificated Senior Subordinated Notes, to
provide for the assumption of the Company's obligations to Holders of the
Senior Subordinated Notes in case of a merger or consolidation, to make any
change that would provide any additional rights or benefits to the Holders of
the Senior Subordinated Notes or that does not adversely affect the legal
rights under the Indenture of any such Holder, or to comply with the
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the Trust Indenture Act.
14. DEFAULTS AND REMEDIES. Events of Default include: (i) default
for 30 days in the payment when due of interest on, or Liquidated Damages with
respect to, the Senior Subordinated Notes (whether or not prohibited by the
provisions of Article 10 of the Indenture); (ii) default in payment when due of
the principal of or premium, if any, on the Senior Subordinated Notes when the
same becomes due and payable at maturity, upon redemption (including in
connection with an offer to purchase) or otherwise (whether or not prohibited
by the provisions of Article 10 of the Indenture), (iii) failure by the Company
to comply with Section 4.10 and 4.15 of the Indenture; (iv) failure by the
Company for 60 days after notice to comply with certain other agreements in the
Indenture or this Senior Subordinated Note; (v) default under certain other
agreements relating to Indebtedness of the Company which default results in the
acceleration of such Indebtedness prior to its express maturity; (vi) certain
final judgments for the payment of money that remain undischarged for a period
of 60 days; (vii) except as permitted by the Indenture, any Subsidiary
Guarantee by a Significant Subsidiary is held in any judicial proceeding to be
unenforceable or invalid or ceases for any reason to be in full force and
effect or any Guarantor that is a Significant Subsidiary, or any Person acting
on behalf of any Guarantor that is a Significant Subsidiary, denies or
disaffirms its obligations under its Subsidiary Guarantee; and (viii) certain
events of bankruptcy or insolvency with respect to the Company or any of its
Subsidiaries. If any Event of Default occurs and is continuing, the Trustee or
the Holders of at least 25% in principal amount of the then outstanding Senior
Subordinated
A-1-7
<PAGE> 96
Notes may declare all the Senior Subordinated Notes to be due and payable.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, all outstanding Senior Subordinated
Notes will become due and payable without further action or notice. Holders
may not enforce the Indenture or the Senior Subordinated Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding Senior Subordinated Notes
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Senior Subordinated Notes notice of any continuing
Default or Event of Default (except a Default or Event of Default relating to
the payment of principal or interest) if it determines that withholding notice
is in their interest. The Holders of a majority in aggregate principal amount
of the Senior Subordinated Notes then outstanding by notice to the Trustee may
on behalf of the Holders of all of the Senior Subordinated Notes waive any
existing Default or Event of Default and its consequences under the Indenture
except a continuing Default or Event of Default in the payment of interest on,
or the principal of, the Senior Subordinated Notes. The Company and each
Guarantor are required to deliver to the Trustee annually a statement regarding
compliance with the Indenture, and the Company is required upon becoming aware
of any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.
15. TRUSTEE DEALINGS WITH COMPANY. The Trustee in its individual or
any other capacity may become the owner or pledgee of Senior Subordinated Notes
and may otherwise deal with the Company or any Affiliate of the Company with
the same rights it would have if it were not Trustee. However, in the event
that the Trustee acquires any conflicting interest it must eliminate such
conflict within 90 days, apply to the SEC for permission to continue as trustee
or resign. Any Agent may do the same with like rights and duties. The Trustee
is also subject to Sections 7.10 and 7.11 of the Indenture.
16. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company or any Guarantor, as such, shall
not have any liability for any obligations of the Company or such Guarantor
under the Senior Subordinated Notes, the Subsidiary Guarantee or the Indenture,
as applicable, or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Senior Subordinated
Note and the Subsidiary Guarantees waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the Senior
Subordinated Notes and the Subsidiary Guarantees. Such waiver may not be
effective to waive liabilities under the federal securities laws, and it is the
view of the SEC that such a waiver is against public policy.
17. AUTHENTICATION. This Senior Subordinated Note shall not be valid
until authenticated by the manual signature of the Trustee or an authenticating
agent.
18. ABBREVIATIONS. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
19. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES.
In addition to the rights provided to Holders of Senior Subordinated Notes
under the Indenture, Holders of Transferred Restricted Securities shall have
all the rights set forth in the Registration Rights Agreement dated as of March
24, 1997, by and among the Company, the Guarantors and the parties named on the
signature pages thereof (the "Registration Rights Agreement").
20. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Senior Subordinated Notes and the Trustee
may use CUSIP numbers in notices of redemption as a convenience
A-1-8
<PAGE> 97
to Holders. No representation is made as to the accuracy of such numbers
either as printed on the Senior Subordinated Notes or as contained in any
notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.
The Company shall furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights
Agreement. Requests may be made to:
Key Plastics, Inc.
21333 Haggerty Road
Suite 200
Novi, Michigan 48375
Attention: Mark Abbo
A-1-9
<PAGE> 98
ASSIGNMENT FORM
To assign this Senior Subordinated Note, fill in the form below: (I) or (we)
assign and transfer this Senior Subordinated Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Senior Subordinated Note on the books of the Company. The
agent may substitute another to act for him.
________________________________________________________________________________
Date:_________________________________________________________
_______
Your Signature:_________________________
(Sign exactly as your name appears on the face
of this Senior Subordinated Note)
Signature Guarantee.
A-1-10
<PAGE> 99
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Senior Subordinated Note purchased
by the Company pursuant to Section 4.10 or 4.15 of the Indenture, check the box
below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Senior Subordinated
Note purchased by the Company pursuant to Section 4.10 or Section 4.15 of the
Indenture, state the amount you elect to have purchased: $___________
Date:______________ Your Signature:__________________
(Sign exactly as your name appears on the
Senior Subordinated Note)
Tax Identification No.:__________
Signature Guarantee.
A-1-11
<PAGE> 100
SCHEDULE OF EXCHANGES OF DEFINITIVE SENIOR SUBORDINATED NOTE(3)
The following exchanges of a part of this Global Senior Subordinated
Note for Definitive Senior Subordinated Notes have been made:
<TABLE>
<CAPTION>
Principal Amount of this Signature of
Amount of decrease in Amount of increase in Global Senior authorized officer of
Principal Amount of Principal Amount of Subordinated Note Trustee or Senior
this Global Senior this Global Senior following such decrease Subordinated Note
Date of Exchange Subordinated Note Subordinated Note (or increase) Custodian
- -------------------- --------------------- --------------------- ------------------------ ---------------------
<S> <C> <C> <C> <C>
</TABLE>
- -------------------
3. This should be included only if the Note is issued in global form.
A-1-12
<PAGE> 101
================================================================================
EXHIBIT A-2
(Face of Regulation S Temporary Global Note)
10 1/4% Series [A/B] Senior Subordinated Notes due 2007
No. $__________
CUSIP No.
KEY PLASTICS, INC.
promises to pay to
or registered assigns,
the principal sum of
Dollars on March 15, 2007.
Interest Payment Dates: March 15, and September 15
Record Dates: March 1, and September 1
Dated:
KEY PLASTICS, INC.
By:________________________
Name:
Title:
By:________________________
Name:
Title:
Trustee's Certificate of Authentication
This is one of the [Global]
Senior Subordinated Notes referred to in the
within-mentioned Indenture:
MARINE MIDLAND BANK,
as Trustee
By:__________________________________
A-2-1
<PAGE> 102
================================================================================
A-2-2
<PAGE> 103
(Back of Regulation S Temporary Global Senior Subordinated Note)
10 1/4 % Series [A/B] Senior Subordinated Note due 2007
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SENIOR
SUBORDINATED NOTES IN DEFINITIVE FORM, THIS SENIOR SUBORDINATED NOTE MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY
OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY
OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55
WATER STREET, NEW YORK, NEW YORK) ("DTC"),TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR
SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
THE SENIOR SUBORDINATED NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT") AND (A) MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT
(1) BY THE INITIAL INVESTOR (A) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES
IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (B)
IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S
UNDER THE SECURITIES ACT, (C) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (D) TO THE
COMPANY OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND (2), BY SUBSEQUENT INVESTORS, AS SET FORTH IN (1) ABOVE AND,
IN ADDITION, TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND, IN EACH CASE, IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED
STATES AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER FROM IT OF THE SENIOR SUBORDINATED NOTE EVIDENCED HEREBY
OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE. NO REPRESENTATION CAN BE
MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 FOR RESALE OF
THE SENIOR SUBORDINATED NOTES.
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL SENIOR
SUBORDINATED NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR
DEFINITIVE SENIOR SUBORDINATED NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS
DEFINED HEREIN).
NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S
TEMPORARY GLOBAL SENIOR SUBORDINATED NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT
OF INTEREST HEREON PRIOR TO THE EXCHANGE OF THIS SENIOR SUBORDINATED NOTE FOR A
REGULATION S TEMPORARY GLOBAL SENIOR SUBORDINATED NOTE AS CONTEMPLATED BY THE
INDENTURE.
A-2-3
<PAGE> 104
Subject to the provisions hereof, Key Plastics, Inc., a Michigan
corporation, (the "Company), promises to pay to ___________ the
principal sum of_________________________ UNITED STATES DOLLARS (U.S. $____ on
March 15, 2007, and to pay interest on the principal amount of this Senior
Subordinated Note beginning March 24, 1997 at the rate of 10 1/4% per annum.
Interest shall be payable in cash semi-annually in arrears on March 15 and
September 15 or if any such day is not a Business Day, on the next succeeding
Business Day (each an "Interest Payment Date"); provided that the first Interest
Payment Date shall be September 15, 1997. Interest on the Senior Subordinated
Notes will accrue from the most recent date to which interest has been paid or,
if no interest has been paid, from the date of original issuance. Interest
will be computed on the basis of a 360-day year comprised of twelve 30-day
months.
This Regulation S Temporary Global Senior Subordinated Note is issued
in respect of an issue of 10 1/4% Senior Subordinated Notes due 2007 (the
"Senior Subordinated Notes") of the Company, limited to the aggregate principal
amount of U.S. $125.0 million issued pursuant to an Indenture (the "Indenture")
dated as of March 24, 1997, by and among the Company, as Issuer, and Key
Plastics International LLC, a Michigan limited liability company, Key Plastics
Automotive LLC, a Michigan limited liability company, and Key Plastics
Technology, LLC, a Michigan limited liability company, (the "Guarantors") and
Marine Midland Bank, as trustee (the "Trustee"), and is governed by the terms
and conditions of the Indenture governing the Senior Subordinated Notes, which
terms and conditions are incorporated herein by reference and, except as
otherwise provided herein, shall be binding on the Company and the Holder
hereof as if fully set forth herein. Unless the context otherwise requires,
the terms used herein shall have the meanings specified in the Indenture.
Until this Regulation S Temporary Global Senior Subordinated Note is
exchanged for Regulation S Permanent Global Senior Subordinated Notes, the
Holder hereof shall not be entitled to receive payments of interest hereon
although interest will continue to accrue; until so exchanged in full, this
Regulation S Temporary Global Senior Subordinated Note shall in all other
respects be entitled to the same benefits as other Senior Subordinated Notes
under the Indenture.
This Regulation S Temporary Global Senior Subordinated Note is
exchangeable in whole or in part for one or more Regulation S Permanent Global
Senior Subordinated Notes or Rule 144A Global Senior Subordinated Notes only
(i) on or after the termination of the 40-day restricted period (as defined in
Regulation S) and (ii) upon presentation of certificates (accompanied by an
Opinion of Counsel, if applicable) required by Article 2 of the Indenture.
Upon exchange of this Regulation S Temporary Global Senior Subordinated Note
for one or more Regulation S Permanent Global Senior Subordinated Notes or Rule
144A Global Senior Subordinated Notes, the Trustee shall cancel this Regulation
S Temporary Global Senior Subordinated Note.
This Regulation S Temporary Global Senior Subordinated Note shall not
become valid or obligatory until the certificate of authentication hereon shall
have been duly manually signed by the Trustee in accordance with the Indenture.
This Regulation S Temporary Global Senior Subordinated Note shall be governed
by and construed in accordance with the laws of the State of the New York. All
references to "$," "Dollars," "dollars" or "U.S. $" are to such coin or
currency of the United States of America as at the time shall be legal tender
for the payment of public and private debts therein.
A-2-4
<PAGE> 105
SCHEDULE OF EXCHANGES FOR GLOBAL SENIOR SUBORDINATED NOTES
The following exchanges of a part of this Regulation S Temporary
Global Senior Subordinated Note for other Global Senior Subordinated
Notes have been made:
<TABLE>
<CAPTION>
Principal Amount of this Signature of
Amount of decrease in Amount of increase in Global Senior authorized officer of
Principal Amount Principal Amount Subordinated Note Trustee or Senior
of this Global of this Global following such decrease Subordinated Note
Date of Exchange Senior Subordinated Note Senior Subordinated Note (or increase) Custodian
- ------------------------ ------------------------ ------------------------ ------------------------ ---------------------
<S> <C> <C> <C> <C>
</TABLE>
A-2-5
<PAGE> 106
EXHIBIT B-1
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM RULE 144A GLOBAL SENIOR SUBORDINATED NOTE TO REGULATION S GLOBAL
SENIOR SUBORDINATED NOTE
(Pursuant to Section 2.06(a)(1) of the Indenture)
Marine Midland Bank
140 Broadway
New York, NY 10005-1180
Attention: Corporate Trust Services, 12th Floor
Re: 10 1/4% Senior Subordinated Senior Subordinated Notes due 2007
of Key Plastics, Inc.
Reference is hereby made to the Indenture dated as of March 24, 1997
(the "Indenture"), by and among Key Plastics, Inc. (the "Company"), as Issuer,
and Key Plastics International LLC, a Michigan limited liability company, Key
Plastics Automotive LLC, a Michigan limited liability company, and Key Plastics
Technology, LLC, a Michigan limited liability company, as Guarantors, (the
"Guarantors") and Marine Midland Bank, as trustee (the "Trustee"). Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to $ ___ principal amount of Senior Subordinated
Notes which are evidenced by one or more Rule 144A Global Senior Subordinated
Notes (CUSIP No. ______________) and held with the Depositary in the name
of (the "Transferor"). The Transferor has requested a transfer of such
beneficial interest in the Senior Subordinated Notes to a Person who will take
delivery thereof in the form of an equal principal amount of Senior
Subordinated Notes evidenced by one or more Regulation S Global Senior
Subordinated Notes (CUSIP No. ______________), which amount, immediately after
such transfer, is to be held with the Depositary through Euroclear or Cedel
Bank or both (Common Code ____________).
In connection with such request and in respect of such Senior
Subordinated Notes, the Transferor hereby certifies that such transfer has been
effected in compliance with the transfer restrictions applicable to the Global
Senior Subordinated Notes and pursuant to and in accordance with Rule 903 or
Rule 904 under the United States Securities Act of 1933, as amended (the
"Securities Act"), and accordingly the Transferor hereby further certifies that:
(1) The offer of the Senior Subordinated Notes was not made to a person
in the United States;
(2) either:
(a) at the time the buy order was originated, the transferee was
outside the United States or the Transferor and any person
acting on its behalf reasonably believed and believes that
the transferee was outside the United States; or
(b) the transaction was executed in, on or through the facilities
of a designated offshore securities market and neither the
Transferor nor any person acting on its behalf knows that the
transaction was prearranged with a buyer in the United States;
B-1-1
<PAGE> 107
(3) no directed selling efforts have been made in contravention of
the requirements of Rule 904(b) of Regulation S;
(4) the transaction is not part of a plan or scheme to evade the
registration provisions of the Securities Act; and
(5) upon completion of the transaction, the beneficial interest being
transferred as described above is to be held with the Depositary
through Euroclear or Cedel Bank or both (Common Code
__________________).
Upon giving effect to this request to exchange a beneficial interest in a
Rule 144A Global Senior Subordinated Note for a beneficial interest in a
Regulation S Global Senior Subordinated Note, the resulting beneficial interest
shall be subject to the restrictions on transfer applicable to Regulation S
Global Senior Subordinated Notes pursuant to the Indenture and the Securities
Act and, if such transfer occurs prior to the end of the 40-day restricted
period associated with the initial offering of Senior Subordinated Notes, the
additional restrictions applicable to transfers of interest in the Regulation S
Temporary Global Senior Subordinated Note.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company, the Guarantors and Lehman Brothers
Inc., the initial purchaser of such Senior Subordinated Notes being
transferred. Terms used in this certificate and not otherwise defined in the
Indenture have the meanings set forth in Regulation S under the Securities Act.
[Insert Name of Transferor]
By: __________________________
Name:
Title:
Dated:
cc: Key Plastics, Inc.
Lehman Brothers Inc.
B-1-2
<PAGE> 108
EXHIBIT B-2
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM REGULATION S GLOBAL SENIOR SUBORDINATED NOTE TO RULE 144A GLOBAL
SENIOR SUBORDINATED NOTE
(Pursuant to Section 2.06(a)(ii) of the Indenture)
Marine Midland Bank
140 Broadway
New York, NY 10005-1180
Attention: Corporate Trust Services, 12th Floor
Re: 10 1/4% Senior Subordinated Senior Subordinated Notes due 2007 of
Key Plastics, Inc.
Reference is hereby made to the Indenture, dated as of March 24, 1997
(the "Indenture"), by and among Key Plastics, Inc. (the "Company"), as Issuer,
and Key Plastics International LLC, a Michigan limited liability company, Key
Plastics Automotive LLC, a Michigan limited liability company, and Key Plastics
Technology, LLC, a Michigan limited liability company, as Guarantors, (the
"Guarantors") and Marine Midland Bank, as trustee (the "Trustee"). Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to $_____ principal amount of Senior Subordinated
Notes which are evidenced by one or more Regulation S Global Senior
Subordinated Notes (CUSIP No. ______________________ and held with the
Depositary through Euroclear or Cedel Bank (Common Code ______________________)
in the name of _________________________________ (the "Transferor"). The
Transferor has requested a transfer of such beneficial interest in the Senior
Subordinated Notes to a Person who will take delivery thereof in the form of an
equal principal amount of Senior Subordinated Notes evidenced by one or more
Rule 144A Global Senior Subordinated Notes (CUSIP No.________________________),
to be held with the Depositary.
In connection with such request and in respect of such Senior
Subordinated Notes, the Transferor hereby certifies that:
[CHECK ONE]
[ ] such transfer is being effected pursuant to and in accordance with Rule
144A under the United States Securities Act of 1933, as amended (the
"Securities Act"), and, accordingly, the Transferor hereby further
certifies that the Senior Subordinated Notes are being transferred to a
Person that the Transferor reasonably believes is purchasing the Senior
Subordinated Notes for its own account, or for one or more accounts with
respect to which such Person exercises sole investment discretion, and
such Person and each such account is a "qualified institutional buyer"
within the meaning of Rule 144A in a transaction meeting the requirements
of Rule 144A;
or
[ ] such transfer is being effected pursuant to and in accordance with Rule 144
under the Securities Act;
or
B-2-1
<PAGE> 109
[ ] such transfer is being effected pursuant to an effective registration
statement under the Securities Act;
or
[ ] such transfer is to an institutional "accredited investor" as such term is
defined in Rule 501(a)(1), (2) (3) or (7) of the Securities Act and is
being effected pursuant to an exemption from the registration requirements
of the Securities Act other than Rule 144A or Rule 144, and the Transferor
hereby further certifies that the Senior Subordinated Notes are being
transferred in compliance with the transfer restrictions applicable to the
Global Senior Subordinated Notes and in accordance with the requirements of
the exemption claimed, which certification is supported by an Opinion of
Counsel, provided by the transferor or the transferee (a copy of which the
Transferor has attached to this certification) in form reasonably
acceptable to the Company and to the Registrar, to the effect that such
transfer is in compliance with the Securities Act;
or
[ ] such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A or
Rule 144, and the Transferor hereby further certifies that the Senior
Subordinated Notes are being transferred in compliance with the transfer
restrictions applicable to the Global Senior Subordinated Notes and in
accordance with the requirements of the exemption claimed, which
certification is supported by an Opinion of Counsel, provided by the
transferor or the transferee (a copy of which the Transferor has attached
to this certification) in form reasonably acceptable to the Company and to
the Registrar, to the effect that such transfer is in compliance with the
Securities Act;
and such Senior Subordinated Notes are being transferred in compliance with any
applicable blue sky securities laws of any state of the United States.
Upon giving effect to this request to exchange a beneficial interest
in Regulation S Global Senior Subordinated Notes for a beneficial interest in
Rule 144A Global Senior Subordinated Notes, the resulting beneficial interest
shall be subject to the restrictions on transfer applicable to Rule 144A Global
Senior Subordinated Notes pursuant to the Indenture and the Securities Act.
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company, the Guarantors and Lehman Brothers
Inc., the initial purchaser of such Senior Subordinated Notes being
transferred. Terms used in this certificate and not otherwise defined in the
Indenture have the meanings set forth in Regulation S under the Securities Act.
[Insert Name of Transferor]
By: ___________________
Name:
Title:
Dated:
cc: Key Plastics, Inc.
Lehman Brothers Inc.
B-2-2
<PAGE> 110
EXHIBIT B-3
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
OF DEFINITIVE SENIOR SUBORDINATED NOTES
(Pursuant to Section 2.06(b) of the Indenture)
Marine Midland Bank
140 Broadway
New York, NY 10005-1180
Attention: Corporate Trust Services, 12th Floor
Re: 10 1/4% Senior Subordinated Senior Subordinated Notes due 2007 of
Key Plastics, Inc.
Reference is hereby made to the Indenture, dated as of March 24, 1997
(the "Indenture"), by and among Key Plastics, Inc. (the "Company"), as Issuer,
and Key Plastics International LLC, a Michigan limited liability company, Key
Plastics Automotive LLC, a Michigan limited liability company, and Key Plastics
Technology, LLC, a Michigan limited liability company, as Guarantors, (the
"Guarantors") and Marine Midland Bank, as trustee (the "Trustee"). Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
This relates to $ ___________ principal amount of Senior
Subordinated Notes which are evidenced by one or more Definitive Senior
Subordinated Notes (CUSIP ________________ ) in the name of __________________
(the "Transferor"). The Transferor has requested an exchange or transfer of
such Definitive Senior Subordinated Note(s) in the form of an equal principal
amount of Senior Subordinated Notes evidenced by one or more Definitive Senior
Subordinated Notes (CUSIP ____________________ ), to be delivered to the
Transferor or, in the case of a transfer of such Senior Subordinated Notes, to
such Person as the Transferor instructs the Trustee.
In connection with such request and in respect of the Senior
Subordinated Notes surrendered to the Trustee herewith for exchange (the
"Surrendered Senior Subordinated Notes"), the Holder of such Surrendered Senior
Subordinated Notes hereby certifies that:
[CHECK ONE]
[ ] the Surrendered Senior Subordinated Notes are being acquired for the
Transferor's own account, without transfer;
or
[ ] the Surrendered Senior Subordinated Notes are being transferred to the
Company;
or
[ ] the Surrendered Senior Subordinated Notes are being transferred
pursuant to and in accordance with Rule 144A under the United States
Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the
Surrendered Senior Subordinated Notes are being transferred to a Person
that the Transferor reasonably believes is purchasing the Surrendered
Senior Subordinated Notes for its own account, or for one or more
accounts with respect to which such Person exercises sole investment
discretion, and such Person
B-3-1
<PAGE> 111
and each such account is a "qualified institutional buyer" within the
meaning of Rule 144A, in each case in a transaction meeting the
requirements of Rule 144A;
or
[ ] the Surrendered Senior Subordinated Notes are being transferred in a
transaction permitted by Rule 144 under the Securities Act;
or
[ ] the Surrendered Senior Subordinated Notes are being transferred
pursuant to an effective registration statement under the Securities
Act;
or
[ ] such transfer is to an institutional "accredited investor" as such term
is defined in Rule 501(a)(1), (2), (3) or (7) of the Securities Act and
is being effected pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 144A or Rule 144,
and the Transferor hereby further certifies that the Senior
Subordinated Notes are being transferred in compliance with the
transfer restrictions applicable to the Global Senior Subordinated
Notes and in accordance with the requirements of the exemption claimed,
which certification is supported by an Opinion of Counsel, provided by
the transferor or the transferee (a copy of which the Transferor has
attached to this certification) in form reasonably acceptable to the
Company and to the Registrar, to the effect that such transfer is in
compliance with the Securities Act;
or
[ ] such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A or
Rule 144, and the Transferor hereby further certifies that the Senior
Subordinated Notes are being transferred in compliance with the
transfer restrictions applicable to the Global Senior Subordinated
Notes and in accordance with the requirements of the exemption claimed,
which certification is supported by an Opinion of Counsel, provided by
the transferor or the transferee (a copy of which the Transferor has
attached to this certification) in form reasonably acceptable to the
Company and to the Registrar, to the effect that such transfer is in
compliance with the Securities Act;
and the Surrendered Senior Subordinated Notes are being transferred in
compliance with any applicable blue sky securities laws of any state of the
United States.
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company, the Guarantors and Lehman Brothers
Inc., the initial purchaser of such Senior Subordinated Notes being
transferred. Terms used in this certificate and not otherwise defined in the
Indenture have the meanings set forth in Regulation S under the Securities Act.
[Insert Name of Transferor]
By: __________________
Name:
B-3-2
<PAGE> 112
Title:
Dated:
cc: Key Plastics, Inc.
Lehman Brothers Inc.
B-3-3
<PAGE> 113
EXHIBIT B-4
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM RULE 144A GLOBAL SENIOR SUBORDINATED NOTE OR REGULATION S
PERMANENT GLOBAL SENIOR SUBORDINATED NOTE
TO DEFINITIVE SENIOR SUBORDINATED NOTE
(Pursuant to Section 2.06(c) of the Indenture)
Marine Midland Bank
140 Broadway
New York, NY 10005-1180
Attention: Corporate Trust Services, 12th Floor
Re: 10 1/4% Senior Subordinated Senior Subordinated Notes due 2007 of
Key Plastics, Inc.
Reference is hereby made to the Indenture, dated as of March 24, 1997
(the "Indenture"), by and among Key Plastics, Inc. (the "Company"), as Issuer,
and Key Plastics International LLC, a Michigan limited liability company, Key
Plastics Automotive LLC, a Michigan limited liability company, and Key Plastics
Technology, LLC, a Michigan limited liability company, as Guarantors, (the
"Guarantors") and Marine Midland Bank, as trustee (the "Trustee"). Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to $__________ principal amount of Senior
Subordinated Notes which are evidenced by a beneficial interest in one or more
Rule 144A Global Senior Subordinated Notes or Regulation S Permanent Global
Senior Subordinated Notes (CUSIP ________________) in the name of
____________________ (the "Transferor"). The Transferor has requested an
exchange or transfer of such beneficial interest in the form of an equal
principal amount of Senior Subordinated Notes evidenced by one or more
Definitive Senior Subordinated Notes (CUSIP _________________), to be
delivered to the Transferor or, in the case of a transfer of such Senior
Subordinated Notes, to such Person as the Transferor instructs the Trustee.
In connection with such request and in respect of the Senior
Subordinated Notes surrendered to the Trustee herewith for exchange (the
"Surrendered Senior Subordinated Notes"), the Holder of such Surrendered Senior
Subordinated Notes hereby certifies that:
[CHECK ONE]
[ ] the Surrendered Senior Subordinated Notes are being transferred to the
beneficial owner of such Senior Subordinated Notes;
or
[ ] the Surrendered Senior Subordinated Notes are being transferred
pursuant to and in accordance with Rule 144A under the United States
Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the
Surrendered Senior Subordinated Notes are being transferred to a Person
that the Transferor reasonably believes is purchasing the Surrendered
Senior Subordinated Notes for its own account, or for one or more
B-4-1
<PAGE> 114
accounts with respect to which such Person exercises sole investment
discretion, and such Person and each such account is a "qualified
institutional buyer" within the meaning of Rule 144A, in each case in a
transaction meeting they requirements of Rule 144A;
or
[ ] the Surrendered Senior Subordinated Notes are being transferred in a
transaction permitted by Rule 144 under the Securities Act;
or
[ ] the Surrendered Senior Subordinated Notes are being transferred
pursuant to an effective registration statement under the Securities
Act;
or
[ ] such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A or
Rule 144, and the Transferor hereby further certifies that the Senior
Subordinated Notes are being transferred in compliance with the
transfer restrictions applicable to the Global Senior Subordinated
Notes and in accordance with the requirements of the exemption claimed,
which certification is supported by an Opinion of Counsel, provided by
the transferor or the transferee (a copy of which the Transferor has
attached to this certification) in form reasonably acceptable to the
Company and to the Registrar, to the effect that such transfer is in
compliance with the Securities Act;
or
[ ] such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A or
Rule 144, and the Transferor hereby further certifies that the Senior
Subordinated Notes are being transferred in compliance with the
transfer restrictions applicable to the Global Senior Subordinated
Notes to an institutional "accredited investor" as such term is defined
in Rule 501(a)(1), (2), (3) or (7) of the Securities Act and in
accordance with the requirements of the exemption claimed, which
certification is supported by an Opinion of Counsel, provided by the
transferor or the transferee (a copy of which the Transferor has
attached to this certification) in form reasonably acceptable to the
Company and to the Registrar, to the effect that such transfer is in
compliance with the Securities Act;
and the Surrendered Senior Subordinated Notes are being transferred in
compliance with any applicable blue sky securities laws of any state of the
United States.
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company, the Guarantors and Lehman Brothers
Inc., the initial purchaser of such Senior Subordinated Notes being
transferred. Terms used in this certificate and not otherwise defined in the
Indenture have the meanings set forth in Regulation S under the Securities Act.
[Insert Name of Transferor]
B-4-2
<PAGE> 115
By: _______________________
Name:
Title:
Dated:
cc: Key Plastics, Inc.
Lehman Brothers Inc.
B-4-3
<PAGE> 116
EXHIBIT C
FORM OF CERTIFICATE TO BE DELIVERED BY
INSTITUTIONAL ACCREDITED INVESTORS
________________, _____
Marine Midland Bank, as Registrar
140 Broadway
New York, NY 10005-1180
Attention: Corporate Trust Services, 12th Floor
Ladies and Gentlemen:
In connection with our proposed purchase of certain 10 1/4%
Series [A/B] Senior Subordinated Notes due 2007 (the "Senior Subordinated
Notes") of Key Plastics, Inc., a Michigan corporation (the "Company"), we
represent that:
(i) we are an "accredited investor" within the meaning of
Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as
amended (the "Securities Act"), or an entity in which all of the equity
owners are accredited investors within the meaning of Rule 501(a)(1),
(2), (3) or (7) under the Securities Act (an "Institutional Accredited
Investor");
(ii) any purchase of Senior Subordinated Notes will be for
our own account or for the account of one or more other Institutional
Accredited Investors;
(iii) in the event that we purchase any Senior Subordinated
Notes, we will acquire such Senior Subordinated Notes having a minimum
purchase price of at least $100,000 for our own account and for each
separate account for which we are acting;
(iv) we have such knowledge and experience in financial and
business matters that we are capable of evaluating the merits and risks
of purchasing Senior Subordinated Notes;
(v) we are not acquiring Senior Subordinated Notes with a
view to any distribution thereof in a transaction that would violate
the Securities Act or the securities laws of any State of the United
States or any other applicable jurisdiction; provided that the
disposition of our property and the property of any accounts for which
we are acting as fiduciary shall remain at all times within our
control; and
(vi) we have received a copy of the Offering Memorandum and
acknowledge that we have had access to such financial and other
information, and have been afforded the opportunity to ask such
questions of representatives of the Company and receive answers
thereto, as we deem necessary in connection with our decision to
purchase Senior Subordinated Notes.
We understand that the Senior Subordinated Notes are being
offered in a transaction not involving any public offering within the meaning
of the Securities Act and that the Senior Subordinated Notes have not been
registered under the Securities Act, and we agree, on our own behalf and on
behalf of each account for which we acquire any Senior Subordinated Notes, that
such Senior Subordinated Notes
C-1
<PAGE> 117
may be offered, resold, pledged or otherwise transferred only (i) to a person
whom we reasonably believe to be a qualified institutional buyer (as defined in
Rule 144A under the Securities Act) in a transaction meeting the requirements
of Rule 144A, in a transaction meeting the requirements of Rule 144 under the
Securities Act, outside the United States in a transaction meeting the
requirements of Rule 904 under the Securities Act or in accordance with another
exemption from the registration requirements of the Securities Act (and based
upon an opinion of counsel if the Company so requests), (ii) to the Company or
(iii) pursuant to an effective registration statement, and, in each case, in
accordance with any applicable securities laws of any State of the United
States or any other applicable jurisdiction. We understand that the registrar
will not be required to accept for registration of transfer any Senior
Subordinated Notes, except upon presentation of evidence satisfactory to the
Company that the foregoing restrictions on transfer have been complied with.
We further understand that the Senior Subordinated Notes purchased by us will
be in the form of definitive physical certificates and that such certificates
will bear a legend reflecting the substance of this paragraph.
We acknowledge that you, the Company and others will rely upon
our confirmations, acknowledgements and agreements set forth herein, and we
agree to notify you promptly in writing if any of our representations or
warranties herein ceases to be accurate and complete.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
Very truly yours,
_________________
[Name of Transferor]
_____
By:_______________________
Name:
Title:
Address:
C-2
<PAGE> 118
EXHIBIT D
FORM OF SUBSIDIARY GUARANTEE
Each Guarantor hereby, jointly and severally, unconditionally
guarantees to each Holder of a 10 1/4% Senior Subordinated Note due 2007 (a
"Senior Subordinated Note") of Key Plastics, Inc., a Delaware corporation (the
"Company") authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of the
Indenture, the Senior Subordinated Notes and the Obligations of the Company
hereunder and thereunder, that: (a) the principal of, premium, if any, interest
and Liquidated Damages, if any, on the Notes will be promptly paid in full when
due, subject to any applicable grace period, whether at maturity, by
acceleration, redemption or otherwise, and interest on the overdue principal,
premium, if any (to the extent permitted by law), interest on any interest, if
any, and Liquidated Damages, if any, on the Notes, and all other payment
Obligations of the Company to the Holders or the Trustee hereunder or
thereunder will be promptly paid in full and performed, all in accordance with
the terms hereof and thereof; and (b) in case of any extension of time of
payment or renewal of any Notes or any of such other Obligations, the same will
be promptly paid in full when due or performed in accordance with the terms of
the extension or renewal, subject to any applicable grace period, whether at
stated maturity, by acceleration, redemption or otherwise. Failing payment
when so due of any amount so guaranteed or any performance so guaranteed for
whatever reason the Guarantors will be jointly and severally obligated to pay
the same immediately.
The obligations of each Guarantor to the Holders of Notes and to the
Trustee pursuant to this Subsidiary Guarantee and the Indenture are expressly
set forth in Article 11 of the Indenture and reference is hereby made to such
Indenture for the precise terms of this Subsidiary Guarantee. THE TERMS OF
ARTICLE 11 OF THE INDENTURE ARE INCORPORATED HEREIN BY REFERENCE. In the case
of any discrepancy between this writing and Article 11 of the Indenture,
Article 11 of the Indenture shall control.
This is a continuing Subsidiary Guarantee and shall remain in full
force and effect and shall be binding upon each Guarantor and its successors
and assigns until full, final and indefeasible payment of all of the Company's
obligations under the Notes and the Indenture (subject to Section 11.04 of the
Indenture) and shall inure to the benefit of the successors and assigns of the
Trustee and the Holders of Notes and, in the event of any transfer or
assignment of rights by any Holder of Notes or the Trustee, the rights and
privileges herein conferred upon the party shall automatically extend to and be
vested in such transferee or assignee, all subject to the terms and conditions
hereof. This is a Subsidiary Guarantee of payment and not a guarantee of
collection.
For purposes hereof, each Guarantor's liability shall be limited to
the lesser of (i) the aggregate amount of the Obligations of the Company under
the Senior Subordinated Notes and the Indenture and (ii) the amount, if any,
which would not have (A) rendered such Guarantor "insolvent" (as such term is
defined in the United States Bankruptcy Code and in the Debtor and Creditor Law
of the State of New York) or (B) left such Guarantor with unreasonably small
capital at the time its Subsidiary Guarantee of the Senior Subordinated Notes
was entered into; provided that it will be a presumption in any lawsuit or
other proceeding in which a Guarantor is a party that the amount guaranteed
pursuant to the Subsidiary Guarantee is the amount set forth in clause (i)
above unless any creditor, or representative of creditors of such Guarantor, or
debtor in possession or trustee in bankruptcy of the Guarantor, otherwise
proves in such a lawsuit that the aggregate liability of the Guarantor is the
amount set forth in clause (ii) above. The Indenture provides that, in making
any determination as to solvency or sufficiency of capital of a Guarantor
D-1
<PAGE> 119
in accordance with the previous sentence, the right of such Guarantor to
contribution from other Guarantors, and any other rights such Guarantor may
have, contractual or otherwise, shall be taken into account.
This Subsidiary Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Senior Subordinated Note
upon which this Guarantee is noted shall have been executed by the Trustee
under the Indenture by the manual signature of one of its authorized officers.
Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
GUARANTOR
By:_______________________
Name
Title
D-2
<PAGE> 120
EXHIBIT E
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
_____________, ____, between _________________________ (the "Guarantor"), a
subsidiary of Key Plastics, Inc., a Michigan corporation (the "Company"), and
Marine Midland Bank, as trustee under the indenture referred to below (the
"Trustee").
W I T N E S S E T H
WHEREAS, the Company, as Issuer and Key Plastics International LLC, a
Michigan limited liability company, Key Plastics Automotive LLC, a Michigan
limited liability company, and Key Plastics Technology, LLC, a Michigan limited
liability company, as Guarantors have heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of March 24, 1997, providing
for the issuance of an aggregate principal amount of $125,000,000 of 10 1/4%
Series [A/B] Senior Subordinated Notes due 2007 (the "Senior Subordinated
Notes");
WHEREAS, Section 4.15 of the Indenture provides that under certain
circumstances the Company is required to cause the Guarantor to execute and
deliver to the Trustee a supplemental indenture pursuant to which the Guarantor
shall unconditionally guarantee all of the Company's obligations under the
Senior Subordinated Notes pursuant to a Guarantee on the terms and conditions
set forth in Article 11 of the Indenture; and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Guarantor and the Trustee mutually covenant and agree for the equal and ratable
benefit of the holders of the Senior Subordinated Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO GUARANTEE. The Guarantor hereby agrees, jointly and
severally with all other Guarantors, to guarantee the Company's Obligations
under the Notes on the terms and subject to the conditions set forth in Article
11 of the Indenture and to be bound by all other applicable provisions of the
Indenture.
3. NO RECOURSE AGAINST OTHERS. No officer, employee, director,
incorporator or stockholder of the Company or a Guarantor shall have any
liability for any Obligations of the Company or a Guarantor under the Senior
Subordinated Notes, the Indenture or this Supplemental Indenture, or for any
claim based on, in respect of, or by reason of, such Obligations or the
creation of any such Obligation. Each Holder by accepting a Senior
Subordinated Note waives and releases all such liability, and such waiver and
release is part of the consideration for the issuance of the Senior
Subordinated Notes.
E-1
<PAGE> 121
4. GOVERNING LAW. The internal laws of the State of New York shall
govern this Supplemental Indenture, without regard to the conflict of laws
provisions thereof.
5. COUNTERPARTS. This Supplemental Indenture may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
6. EFFECT OF HEADINGS. The Section headings herein are for convenience
only and shall not affect the construction hereof.
E-2
<PAGE> 122
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated: ____________, ____ [GUARANTOR]
By:_____________________________
Name:
Title:
MARINE MIDLAND BANK
as Trustee
By:_____________________________
Name:
Title:
Attest:
________________________
Name:
Title:
E-3
<PAGE> 1
EXHIBIT 4.7
KEY MEXICO A, L.L.C.,
SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
March,27, 1997, between Key Mexico A, L.L.C., a Michigan limited liability
company (the "Guarantor"), a subsidiary of Key Plastics, Inc., a Michigan
corporation (the "Company"), and Marine Midland Bank, as trustee under the
indenture referred to below (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company, as Issuer and Key Plastics International LLC, a
Michigan limited liability company, Key Plastics Automotive LLC, a Michigan
limited liability company, and Key Plastics Technology, LLC, a Michigan limited
liability company, as Guarantors have heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of March 24, 1997, providing
for the issuance of an aggregate principal amount of $125,000,000 of 10 1/4%
Series [A/B] Senior Subordinated Notes due 2007 (the "Senior Subordinated
Notes");
WHEREAS, Section 4.15 of the Indenture provides that under certain
circumstances the Company is required to cause the Guarantor to execute and
deliver to the Trustee a supplemental indenture pursuant to which the Guarantor
shall unconditionally guarantee all of the Company's obligations under the
Senior Subordinated Notes pursuant to a Guarantee on the terms and conditions
set forth in Article 11 of the Indenture; and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Guarantor and the Trustee mutually covenant and agree for the equal and ratable
benefit of the holders of the Senior Subordinated Notes as follows:
i. CAPITALIZED TERMS. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.
ii. AGREEMENT TO GUARANTEE. The Guarantor hereby agrees, jointly
and severally with all other Guarantors, to guarantee the Company's
Obligations under the Notes on the terms and subject to the conditions
set forth in Article 11 of the Indenture and to be bound by all other
applicable provisions of the Indenture.
iii. NO RECOURSE AGAINST OTHERS. No officer, employee, director,
incorporator or stockholder of the Company or a Guarantor shall have
any liability for any Obligations of the Company or a Guarantor under
the Senior Subordinated Notes, the Indenture or this Supplemental
Indenture, or for any claim based on, in respect of, or by reason of,
such Obligations or the creation of any such Obligation. Each Holder
by accepting a Senior Subordinated Note waives and releases all such
liability, and such waiver and release is part of the consideration
for the issuance of the Senior Subordinated Notes.
<PAGE> 2
iv. GOVERNING LAW. The internal laws of the State of New York
shall govern this Supplemental Indenture, without regard to the
conflict of laws provisions thereof.
v. COUNTERPARTS. This Supplemental Indenture may be executed in
any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the
same agreement.
vi. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction hereof.
2
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated: March 27, 1997 KEY MEXICO A, L.L.C.
By:_____________________________
Key Plastics, Inc.,
Member by Mark J. Abbo
its Treasurer and Assistant Secretary
MARINE MIDLAND BANK
as Trustee
By:_____________________________
Name:
Title:
Attest:
________________________________
Name:
Title:
3
<PAGE> 1
EXHIBIT 4.8
KEY MEXICO B, L.L.C.,
SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
March,27, 1997, between Key Mexico B, L.L.C., a Michigan limited liability
company (the "Guarantor"), a subsidiary of Key Plastics, Inc., a Michigan
corporation (the "Company"), and Marine Midland Bank, as trustee under the
indenture referred to below (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company, as Issuer and Key Plastics International LLC, a
Michigan limited liability company, Key Plastics Automotive LLC, a Michigan
limited liability company, and Key Plastics Technology, LLC, a Michigan limited
liability company, as Guarantors have heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of March 24, 1997, providing
for the issuance of an aggregate principal amount of $125,000,000 of 10 1/4%
Series [A/B] Senior Subordinated Notes due 2007 (the "Senior Subordinated
Notes");
WHEREAS, Section 4.15 of the Indenture provides that under certain
circumstances the Company is required to cause the Guarantor to execute and
deliver to the Trustee a supplemental indenture pursuant to which the Guarantor
shall unconditionally guarantee all of the Company's obligations under the
Senior Subordinated Notes pursuant to a Guarantee on the terms and conditions
set forth in Article 11 of the Indenture; and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Guarantor and the Trustee mutually covenant and agree for the equal and ratable
benefit of the holders of the Senior Subordinated Notes as follows:
vii. CAPITALIZED TERMS. Capitalized terms used herein without
definition shall have the meanings assigned to them in the
Indenture.
viii. AGREEMENT TO GUARANTEE. The Guarantor hereby agrees,
jointly and severally with all other Guarantors, to guarantee
the Company's Obligations under the Notes on the terms and
subject to the conditions set forth in Article 11 of the
Indenture and to be bound by all other applicable provisions
of the Indenture.
ix. NO RECOURSE AGAINST OTHERS. No officer, employee, director,
incorporator or stockholder of the Company or a Guarantor shall
have any liability for any Obligations of the Company or a
Guarantor under the Senior Subordinated Notes, the Indenture
or this Supplemental Indenture, or for any claim based on, in
respect of, or by reason of, such Obligations or the creation
of any such Obligation. Each Holder by accepting a Senior
Subordinated Note waives and releases all such liability, and
such waiver and release is part of the consideration for the
issuance of the Senior Subordinated Notes.
<PAGE> 2
x. GOVERNING LAW. The internal laws of the State of New York
shall govern this Supplemental Indenture, without regard to
the conflict of laws provisions thereof.
xi. COUNTERPARTS. This Supplemental Indenture may be executed
in any number of counterparts and by the parties hereto in
separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall
constitute one and the same agreement.
xii. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction hereof.
2
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated: March 27, 1997 KEY MEXICO B, L.L.C.
By:_____________________________
Key Plastics, Inc., Member
by Mark J. Abbo
its Treasurer and Assistant Secretary
MARINE MIDLAND BANK
as Trustee
By:_____________________________
Name:
Title:
Attest:
________________________________
Name:
Title:
DE\60502.1
ID\ MWP
3
<PAGE> 1
EXHIBIT 4.9
===============================================================================
10-1/4% Series A Senior Subordinated Notes due 2007
No. 1 $123,765,000
CUSIP No. 493137AB9
KEY PLASTICS, INC.
promises to pay to Cede & Co
or registered assigns,
the principal sum of One Hundred Twenty Three Million Seven Hundred Sixty Five
Thousand Dollars on March 15, 2007.
Interest Payment Dates: March 15 and September 15
Record Dates: March 1 and September 1
Dated: March 24, 1997
KEY PLASTICS, INC.
By:__________________________
Name: E.R. "Skip" Autry
Title: Vice President and Chief Financial Officer
By:__________________________
Name: Mark J. Abbo
Title: Treasurer and Assistant Secretary
Trustee's Certificate of Authentication
This is one of the Global
Senior Subordinated Notes referred to in the
within-mentioned Indenture:
MARINE MIDLAND BANK,
as Trustee
By:__________________________
Authorized Signatory
===============================================================================
<PAGE> 2
Unless and until it is exchanged in whole or in part for Senior
Subordinated Notes in definitive form, this Senior Subordinated Note may not be
transferred except as a whole by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary. Unless this certificate is presented by
an authorized representative of The Depository Trust Company (55 Water Street,
New York, New York) ("DTC"), to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as may be requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or such other
entity as may be requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an
interest herein.
THE SENIOR SUBORDINATED NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5
OF THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THE
SENIOR SUBORDINATED NOTE EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THE SENIOR SUBORDINATED NOTE
EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED
BY RULE 144A THEREUNDER. THE HOLDER OF THE SENIOR SUBORDINATED NOTE
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SENIOR
SUBORDINATED NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY
(1)(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE
THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE
WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2)
TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND,
IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE
HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER FROM IT OF THE SENIOR SUBORDINATED NOTE EVIDENCED HEREBY OF THE
RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.
Additional provisions of this Note are set forth on the other side of this
Note.
2
<PAGE> 3
(Back of Senior Subordinated Note)
10-1/4% Series A Senior Subordinated Notes due 2007
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. INTEREST. Key Plastics, Inc., a Michigan corporation (the "Company"),
promises to pay interest on the principal amount of this Senior Subordinated
Note at 10-1/4% per annum from March 24, 1997 until maturity and shall pay the
Liquidated Damages payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Company shall pay interest and Liquidated
Damages semi-annually on March 15 and September 15 of each year, or if any such
day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"). Interest on the Senior Subordinated Notes will accrue
from the most recent date to which interest has been paid or, if no interest
has been paid, from the date of issuance; provided that if there is no existing
Default in the payment of interest, and if this Senior Subordinated Note is
authenticated between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided, further, that the first Interest
Payment Date shall be September 15, 1997. The Company shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law)
on overdue principal and premium, if any, from time to time on demand at a rate
that is 1% per annum in excess of the rate then in effect; it shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company shall pay interest on the Senior
Subordinated Notes (except defaulted interest) and Liquidated Damages to the
Persons who are registered Holders of Senior Subordinated Notes at the close of
business on the March 1 or September 1 next preceding the Interest Payment
Date, even if such Senior Subordinated Notes are cancelled after such record
date and on or before such Interest Payment Date, except as provided in Section
2.12 of the Indenture with respect to defaulted interest. The Senior
Subordinated Notes will be payable as to principal, premium, interest and
Liquidated Damages at the office or agency of the Company maintained for such
purpose within or without the City and State of New York, or, at the option of
the Company, payment of interest and Liquidated Damages may be made by check
mailed to the Holders at their addresses set forth in the register of Holders,
and provided that payment by wire transfer of immediately available funds will
be required with respect to principal of and interest, premium and Liquidated
Damages on, all Global Senior Subordinated Notes and all other Senior
Subordinated Notes the Holders of which shall have provided wire transfer
instructions to the Company or the Paying Agent. Such payment shall be in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, Marine Midland Bank, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The
Company may change any Paying Agent or Registrar without notice to any Holder.
The Company or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Senior Subordinated Notes under an
Indenture dated as of March 24, 1997 ("Indenture") among the Company, as
Issuer, and Key Plastics International LLC, a Michigan limited liability
company, Key Plastics Automotive LLC, a Michigan limited liability company, and
Key Plastics Technology, LLC, a Michigan limited liability company, as
Guarantors, and the Trustee.
<PAGE> 4
The terms of the Senior Subordinated Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb). The
Senior Subordinated Notes are subject to all such terms, and Holders are
referred to the Indenture and such Act for a statement of such terms. The
Senior Subordinated Notes are unsecured senior subordinated obligations of the
Company limited to $125,000,000 in aggregate principal amount, plus amounts, if
any, issued to pay Liquidated Damages on outstanding Senior Subordinated Notes
as set forth in Paragraph 2 hereof.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in subparagraph (b) of this Paragraph 5, the
Senior Subordinated Notes shall not be redeemable at the Company's option prior
to March 15, 2002. Thereafter, the Senior Subordinated Notes shall be subject
to redemption at any time at the option of the Company, in whole or in part,
upon not less than 30 nor more than 60 days' notice, at the redemption prices
(expressed as percentages of principal amount) set forth below plus accrued and
unpaid interest and Liquidated Damages thereon to the applicable redemption
date, if redeemed during the twelve-month period beginning on March 15 of the
years indicated below:
YEAR PERCENTAGE
2002 . . . . . . . . . . . . . . . . . . . 105.125%
2003 . . . . . . . . . . . . . . . . . . . 103.417
2004 . . . . . . . . . . . . . . . . . . . 101.708
2005 and thereafter . . . . . . . . . . . 100.000%
(b) Notwithstanding the provisions of subparagraph (a) of this Paragraph
5, prior to March 15, 2000, the Company may redeem up to 35% of the aggregate
principal amount, of the Senior Subordinated Notes initially issued at a
redemption price of 109.25% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the redemption date,
with the net cash proceeds of a public equity offering of common stock of the
Company; provided that at least 65% of the aggregate principal amount of the
Senior Subordinated Notes originally issued pursuant to the Indenture remain
outstanding immediately after the occurrence of such redemption; and provided,
further, that such redemption shall occur within 60 days of the date of the
closing of such public equity offering.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption or sinking fund payments with respect to
the Senior Subordinated Notes.
7. REPURCHASE AT OPTION OF HOLDERS.
(a) Upon the occurrence of a Change of Control, each Holder of Senior
Subordinated Notes shall have the right to require the Company to repurchase
all or any part (equal to $1,000 or an integral multiple thereof) of such
Holder's Senior Subordinated Notes pursuant to the offer described below (the
"Change of Control Offer") at an offer price in cash equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the date of purchase (the "Change of
Control Payment").
(b) If the Company or any Subsidiary consummates one or more Asset Sales
and does not use all of the Net Proceeds from such Asset Sales as provided in
Section 4.10 of the Indenture, the Company
2
<PAGE> 5
will be required, under certain circumstances, to utilize the Excess Proceeds
from such Asset Sales to offer (an "Excess Proceeds Offer") to purchase Notes
at a purchase price in cash equal to 100% of the aggregate principal amount of
the Notes plus any accrued and unpaid interest and Liquidated Damages, if any,
to the date of purchase. If the Excess Proceeds are insufficient to purchase
all Notes tendered pursuant to any Excess Proceeds Offer, the Company shall
select the Notes to be purchased in accordance with the terms of Article 3 of
the Indenture and Section 4.10, as applicable.
(c) Holders may tender all or a portion of their Notes in a Change of
Control Offer or Asset Sale Offer (collectively, an "Offer") by completing the
form below entitled "OPTION OF HOLDER TO ELECT PURCHASE."
(d) The Company shall comply with any tender offer rules under the
Exchange Act which may then be applicable, including Rule 14e-1, in connection
with an offer required to be made by the Company to repurchase the Notes as a
result of a Change of Control or an Asset Sale. To the extent that the
provisions of any securities laws or regulations conflict with provisions of
the Indenture, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under the
Indenture by virtue thereof.
8. NOTICE OF REDEMPTION. Notices of redemption will be mailed by
first class mail at least 30 days but not more than 60 days before the
redemption date to each Holder whose Senior Subordinated Notes are to be
redeemed at its registered address. Notices of redemption may not be
conditional. Senior Subordinated Notes in denominations larger than $1,000 may
be redeemed in part but only in whole multiples of $1,000, unless all of the
Senior Subordinated Notes held by a Holder are to be redeemed. On and after the
redemption date interest ceases to accrue on Senior Subordinated Notes or
portions thereof called for redemption.
9. SUBORDINATION. The payment of principal of, premium and Liquidated
Damages, if any, interest on and all other Obligations in connection with, the
Senior Subordinated Notes is subordinated in right of payment, to the extent
and in the manner provided in Article 10 of the Indenture, to the prior payment
in full of all Senior Debt, which includes (a) all Indebtedness outstanding
under the Senior Credit Facility permitted under clauses (ii) and (iii) of the
second paragraph of Section 4.09 of the Indenture, (b) any other Indebtedness
permitted to be incurred by the Company or any Subsidiary under the terms of the
Indenture, unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the Senior Subordinated Notes, including, without limitation, any
Indebtedness of any Subsidiary to the Company unless such intercompany
Indebtedness expressly provides that it is subordinated to the Senior
Subordinated Notes and (c) all Obligations with respect to the foregoing as
described in clauses (a) and (b) above, and in all cases whether now
outstanding or hereafter created, assumed or incurred and including, without
limitation, interest accruing subsequent to the filing of a petition of
bankruptcy at the ratio provided in the relevant document, whether or not an
allowed claim. Notwithstanding anything to the contrary in the foregoing,
Senior Debt shall not include (w) any liability for federal, state, local or
other taxes owed or owing by the Company, (x) any Indebtedness of the Company
to any of its Subsidiaries or other Affiliates, (y) any trade payables or (z)
any Indebtedness that is incurred in violation of the Indenture. The Company
agrees, and each Holder by accepting a Senior Subordinated Note consents and
agrees, to the subordination provided in the Indenture and authorizes the
Trustee to give it effect.
10. SUBSIDIARY GUARANTEES. The Company's payment obligations under
the Notes are jointly and severally unconditionally guaranteed by the
Guarantors. The Subsidiary Guarantees of each Guarantor will be subordinated to
the prior payment in full of all Senior Debt of such Guarantor and the amounts
for
3
<PAGE> 6
which the Guarantors will be liable under the guarantees issued from time to
time with respect to Senior Debt.
11. DENOMINATIONS, TRANSFER, EXCHANGE. The Senior Subordinated Notes
are in registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Senior Subordinated Notes may be registered
and Senior Subordinated Notes may be exchanged as provided in the Indenture.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and the Company may
require a Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company need not exchange or register the transfer of any Senior
Subordinated Note or portion of a Senior Subordinated Note selected for
redemption, except for the unredeemed portion of any Senior Subordinated Note
being redeemed in part. Also, it need not exchange or register the transfer of
any Senior Subordinated Notes for a period of 15 days before a selection of
Senior Subordinated Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
12. PERSONS DEEMED OWNERS. The registered Holder of a Senior
Subordinated Note may be treated as its owner for all purposes.
13. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture, the Senior Subordinated Notes and the Subsidiary Guarantees may
be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the then outstanding Senior Subordinated Notes
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, Senior Subordinated Notes), and any
existing default or compliance with any provision of the Indenture or the
Senior Subordinated Notes maybe waived with the consent of the Holders of a
majority in principal amount of the then outstanding Senior Subordinated Notes
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, Senior Subordinated Notes). Without
the consent of any Holder of a Senior Subordinated Note, the Indenture or the
Senior Subordinated Notes may be amended or supplemented to cure any ambiguity,
defect or inconsistency, to provide for uncertificated Senior Subordinated
Notes in addition to or in place of certificated Senior Subordinated Notes, to
provide for the assumption of the Company's obligations to Holders of the
Senior Subordinated Notes in case of a merger or consolidation, to make any
change that would provide any additional rights or benefits to the Holders of
the Senior Subordinated Notes or that does not adversely affect the legal
rights under the Indenture of any such Holder, or to comply with the
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the Trust Indenture Act.
14. DEFAULTS AND REMEDIES. Events of Default include: (i) default for
30 days in the payment when due of interest on, or Liquidated Damages with
respect to, the Senior Subordinated Notes (whether or not prohibited by the
provisions of Article 10 of the Indenture); (ii) default in payment when due of
the principal of or premium, if any, on the Senior Subordinated Notes when the
same becomes due and payable at maturity, upon redemption (including in
connection with an offer to purchase) or otherwise (whether or not prohibited by
the provisions of Article 10 of the Indenture) (iii) failure by the Company to
comply with Section 4.10 and 4.15 of the Indenture; (iv) failure by the
Company for 60 days after notice to comply with certain other agreements in the
Indenture or this Senior Subordinated Note; (v) default under certain other
agreements relating to Indebtedness of the Company which default results in the
acceleration of such Indebtedness prior to its express maturity; (vi) certain
final judgments for the payment of money that remain undischarged for a period
of 60 days; (vii) except as permitted by the Indenture, any Subsidiary
Guarantee by a Significant Subsidiary is held in any judicial proceeding to be
unenforceable or invalid or ceases for any reason to be in full force and
effect or any Guarantor that is a Significant Subsidiary, or any Person acting
on behalf of any Guarantor that is a Significant Subsidiary, denies or
disaffirms its
4
<PAGE> 7
obligations under its Subsidiary Guarantee; and (viii) certain events of
bankruptcy or insolvency with respect to the Company or any of its
Subsidiaries. If any Event of Default occurs and is continuing, the Trustee or
the Holders of at least 25% in principal amount of the then outstanding Senior
Subordinated Notes may declare all the Senior Subordinated Notes to be due and
payable. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, all outstanding Senior
Subordinated Notes will become due and payable without further action or
notice. Holders may not enforce the Indenture or the Senior Subordinated Notes
except as provided in the Indenture. Subject to certain limitations, Holders of
a majority in principal amount of the then outstanding Senior Subordinated Notes
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Senior Subordinated Notes of any continuing
Default or Event of Default (except a Default or Event of Default relating to
the payment of principal or interest) if it determines that withholding notice
is in their interest. The Holders of a majority in aggregate principal amount
of the Senior Subordinated Notes then outstanding by notice to the Trustee may
on behalf of the Holders of all of the Senior Subordinated Notes waive any
existing Default or Event of Default and its consequences under the Indenture
except a continuing Default or Event of Default in the payment of interest on,
or the principal of, the Senior Subordinated Notes. The Company is required to
deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Company is required upon becoming aware of any Default or
Event of Default, to deliver to the Trustee a statement specifying such Default
or Event of Default.
15. TRUSTEE DEALINGS WITH COMPANY. The Trustee in its individual or any
other capacity may become the owner or pledgee of Senior Subordinated Notes and
may otherwise deal with the Company or any Affiliate of the Company with the
same rights it would have if it were not Trustee. However, in the event that
the Trustee acquires any conflicting interest it must eliminate such conflict
within 90 days, apply to the SEC for permission to continue as trustee or
resign. Any Agent may do the same with like rights and duties. The Trustee is
also subject to Sections 7.10 and 7.11 of the Indenture.
16. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company or any Guarantor, as such, shall
not have any liability for any obligations of the Company or such Guarantor
under the Senior Subordinated Notes, the Subsidiary Guarantee or the Indenture,
as applicable, or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Senior Subordinated
Note and the Subsidiary Guarantees waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the Senior
Subordinated Notes and the Subsidiary Guarantees. Such waiver may not be
effective to waive liabilities under the federal securities laws, and it is the
view of the SEC that such a waiver is against public policy.
17. AUTHENTICATION. This Senior Subordinated Note shall not be valid
until authenticated by the manual signature of the Trustee or an authenticating
agent.
18. ABBREVIATIONS. Customary abbreviations may be used in the name of
a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
19. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES. In
addition to the rights provided to Holders of Senior Subordinated Notes under
the Indenture, Holders of Transferred Restricted Securities shall have all the
rights set forth in the Registration Rights Agreement dated as of March 24,
1997, by and among the Company, the Guarantors and the parties named on the
signature pages thereof (the "Registration Rights Agreement").
5
<PAGE> 8
20. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Senior Subordinated Notes and the Trustee
may use CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Senior Subordinated Notes or as contained in any notice of redemption and
reliance may be placed only on the other identification numbers placed thereon.
The Company shall furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights
Agreement. Requests may be made to:
Key Plastics, Inc.
21333 Haggerty Road
Suite 200
Novi, Michigan 48375
Attention: Chief Executive Officer
6
<PAGE> 9
ASSIGNMENT FORM
To assign this Senior Subordinated Note, fill in the form below: (I) or (we)
assign and transfer this Senior Subordinated Note to
(Insert assignee's soc. sec. or tax I.D. no.)
(Print or type assignee's name, address and zip code)
and irrevocably appoint
to transfer this Senior Subordinated Note on the books of the Company. The
agent may substitute another to act for him.
Date:
Your Signature:
(Sign exactly as your name appears on the face
of this Senior Subordinated Note)
Signature Guarantee.
<PAGE> 10
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Senior Subordinated Note purchased by
the Company pursuant to Section 4.10 or 4.15 of the Indenture, check the box
below:
/ / Section 4.10 / / Section 4.15
If you want to elect to have only part of the Senior Subordinated Note
purchased by the Company pursuant to Section 4.10 or Section 4.15 of the
Indenture, state the amount you elect to have purchased: $ _____________
Date: Your Signature:
(Sign exactly as your name appears on the Senior
Subordinated Note)
Tax Identification No.: _________________
Signature Guarantee.
<PAGE> 11
SCHEDULE OF EXCHANGES OF DEFINITIVE SENIOR SUBORDINATED NOTE(1)
The following exchanges of a part of this Global Senior Subordinated
Note for Definitive Senior Subordinated Notes have been made:
<TABLE>
<CAPTION>
Principal Amount of this Signature of
Amount of decrease in Amount of increase in Global Senior authorized officer of
Principal Amount of Principal Amount of Subordinated Note Trustee or Senior
this Global Senior this Global Senior following such decrease Subordinated Note
Date of Exchange Subordinated Note Subordinated Note (or increase) Custodian
- ---------------- ----------------- ----------------- ----------------------- ---------------------
<S> <C> <C> <C> <C>
</TABLE>
- ----------------
<PAGE> 12
10-1/4% Series A Senior Subordinated Notes due 2007
No. 1 $350,000
CUSIP No. 493137AC7
KEY PLASTICS, INC.
promises to pay to Cede & Co
or registered assigns,
the principal sum of Three Hundred Fifty Thousand Dollars on March 15, 2007.
Interest Payment Dates: March 15 and September 15
Record Dates: March 1 and September 1
Dated: March 24, 1997
KEY PLASTICS, INC.
By:_____________________________
Name: E.R. "Skip" Autry
Title: Vice President and Chief Financial Officer
By:_____________________________
Name: Mark J. Abbo
Title: Treasurer and Assistant Secretary
Trustee's Certificate of Authentication
This is one of the Global
Senior Subordinated Notes referred to in the
within-mentioned Indenture:
MARINE MIDLAND BANK,
as Trustee
By:________________________________
Authorized Signatory
<PAGE> 13
(Face of Regulation S Temporary Global Senior Subordinated Note)
10-1/4% Series A Senior Subordinated Notes due 2007
No. 1 $885,000
CUSIP No. U49135AA1
KEY PLASTICS, INC.
promises to pay to Cede & Co.
or registered assigns,
the principal sum of Eight Hundred and Eighty Five Thousand Dollars on March
15, 2007.
Interest Payment Dates: March 15 and September 15
Record Dates: March 1 and September 1
Dated: March 24, 1997
KEY PLASTICS, INC.
By:_________________________
Name: E.R. "Skip" Autry
Title: Vice President and Chief Financial Officer
By:_________________________
Name: Mark J. Abbo
Title: Treasurer & Assistant Secretary
Trustee's Certificate of Authentication
This is one of the Global
Senior Subordinated Notes referred to in the
within-mentioned Indenture:
MARINE MIDLAND BANK,
as Trustee
By:___________________________
Authorized Signatory
<PAGE> 14
(Back of Regulation S Temporary Global Senior Subordinated Note)
10-1/4 % Series A Senior Subordinated Note due 2007
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SENIOR
SUBORDINATED NOTES IN DEFINITIVE FORM, THIS SENIOR SUBORDINATED NOTE MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY
OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY
OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY
(55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.
OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.
THE SENIOR SUBORDINATED NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND (A)
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) BY THE
INITIAL INVESTOR (a) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b)
IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S
UNDER THE SECURITIES ACT, (c) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (d) TO THE
COMPANY OR (e) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND (2), BY SUBSEQUENT INVESTORS, AS SET FORTH IN (1) ABOVE,
AND, IN ADDITION, TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND, IN EACH
CASE, IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE
UNITED STATES AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED
TO, NOTIFY ANY PURCHASER FROM IT OF THE SENIOR SUBORDINATED NOTE EVIDENCED
HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE. NO REPRESENTATION CAN
BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 FOR RESALE
OF THE SENIOR SUBORDINATED NOTES.
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL SENIOR
SUBORDINATED NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR
DEFINITIVE SENIOR SUBORDINATED NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS
DEFINED HEREIN).
NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S
TEMPORARY GLOBAL SENIOR SUBORDINATED NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT
OF INTEREST HEREON PRIOR TO THE EXCHANGE OF THIS SENIOR SUBORDINATED NOTE FOR A
REGULATION S TEMPORARY GLOBAL SENIOR SUBORDINATED NOTE AS CONTEMPLATED BY THE
INDENTURE.
2
<PAGE> 15
Subject to the provisions hereof, Key Plastics, Inc., a Michigan
corporation, (the "Company"), promises to pay to Cede & Co. the principal sum
of Eight Hundred Eighty Five Thousand Dollars UNITED STATES DOLLARS (U.S.
$885,000 on March 15, 2007, and to pay interest on the principal amount of this
Senior Subordinated Note beginning March 24, 1997 at the rate of 10-1/4% per
annum. Interest shall be payable in cash semi-annually in arrears on March 15
and September 15 or if any such day is not a Business Day, on the next
succeeding Business Day (each an "Interest Payment Date"); provided that the
first Interest Payment Date shall be September 15, 1997. Interest on the Senior
Subordinated Notes will accrue from the most recent date to which interest has
been paid or, if no interest has been paid, from the date of original issuance.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months.
This Regulation S Temporary Global Senior Subordinated Note is issued
in respect of an issue of 10-1/4% Senior Subordinated Notes due 2007 (the
"Senior Subordinated Notes") of the Company, limited to the aggregate principal
amount of U.S. $125.0 million issued pursuant to an Indenture (the "Indenture")
dated as of March 24, 1997, by and among the Company, as Issuer, and Key
Plastics International LLC, a Michigan limited liability company, Key Plastics
Automotive LLC, a Michigan limited liability company, and Key Plastics
Technology, LLC, a Michigan limited liability company, (the "Guarantors") and
Marine Midland Bank, as trustee (the "Trustee"), and is governed by the terms
and conditions of the Indenture governing the Senior Subordinated Notes, which
terms and conditions are incorporated herein by reference and, except as
otherwise provided herein, shall be binding on the Company and the Holder
hereof as if fully set forth herein. Unless the context otherwise requires, the
terms used herein shall have the meanings specified in the Indenture.
Until this Regulation S Temporary Global Senior Subordinated Note is
exchanged for Regulation S Permanent Global Senior Subordinated Notes, the
Holder hereof shall not be entitled to receive payments of interest hereon
although interest will continue to accrue; until so exchanged in full, this
Regulation S Temporary Global Senior Subordinated Note shall in all other
respects be entitled to the same benefits as other Senior Subordinated Notes
under the Indenture.
This Regulation S Temporary Global Senior Subordinated Note is
exchangeable in whole or in part for one or more Regulation S Permanent Global
Senior Subordinated Notes or Rule 144A Global Senior Subordinated Notes only
(i) on or after the termination of the 40-day restricted period (as defined in
Regulation S) and (ii) upon presentation of certificates (accompanied by an
Opinion of Counsel, if applicable) required by Article 2 of the Indenture. Upon
exchange of this Regulation S Temporary Global Senior Subordinated Note for one
or more Regulation S Permanent Global Senior Subordinated Notes or Rule 144A
Global Senior Subordinated Notes, the Trustee shall cancel this Regulation S
Temporary Global Senior Subordinated Note.
This Regulation S Temporary Global Senior Subordinated Note shall not
become valid or obligatory until the certificate of authentication hereon shall
have been duly manually signed by the Trustee in accordance with the Indenture.
This Regulation S Temporary Global Senior Subordinated Note shall be governed
by and construed in accordance with the laws of the State of the New York. All
references to "$," "Dollars," "dollars" or "U.S. $" are to such coin or
currency of the United States of America as at the time shall be legal tender
for the payment of public and private debts therein.
3
<PAGE> 16
SCHEDULE OF EXCHANGES FOR GLOBAL SENIOR SUBORDINATED NOTES
The following exchanges of a part of this Regulation S Temporary Global Senior
Subordinated Note for other Global Senior Subordinated Notes have been made:
<TABLE>
<CAPTION>
Principal Amount of this Signature of
Amount of decrease in Amount of increase in Global Senior authorized officer of
Principal Amount Principal Amount Subordinated Note Trustee or Senior
of this Global of this Global following such decrease Subordinated Note
Date of Exchange Senior Subordinated Note Senior Subordinated Note (or increase) Custodian
- ---------------- ------------------------ ------------------------ ------------------------ ---------------------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE> 1
EXHIBIT 4.10
SUBSIDIARY GUARANTEE
Each Guarantor hereby, jointly and severally, unconditionally guarantees
to each Holder of a 10-1/4% Senior Subordinated Note due 2007 (a "Senior
Subordinated Note") of Key Plastics, Inc., a Michigan corporation (the
"Company") authenticated and delivered by the Trustee and to the Trustee and
its successors and assigns, irrespective of the validity and enforceability of
the Indenture, the Senior Subordinated Notes and the Obligations of the Company
hereunder and thereunder, that: (a) the principal of, premium, if any, interest
and Liquidated Damages, if any, on the Notes will be promptly paid in full when
due, subject to any applicable grace period, whether at maturity, by
acceleration, redemption or otherwise, and interest on the overdue principal,
premium, if any (to the extent permitted by law), interest on any interest, if
any, and Liquidated Damages, if any, on the Notes, and all other payment
Obligations of the Company to the Holders or the Trustee hereunder or
thereunder will be promptly paid in full and performed, all in accordance with
the terms hereof and thereof; and (b) in case of any extension of time of
payment or renewal of any Notes or any of such other Obligations, the same will
be promptly paid in full when due or performed in accordance with the terms of
the extension or renewal, subject to any applicable grace period, whether at
stated maturity, by acceleration, redemption or otherwise. Failing payment
when so due of any amount so guaranteed or any performance so guaranteed for
whatever reason the Guarantors will be jointly and severally obligated to pay
the same immediately.
The obligations of each Guarantor to the Holders of Notes and to the
Trustee pursuant to this Subsidiary Guarantee and the Indenture are expressly
set forth in Article 11 of the Indenture and reference is hereby made to such
Indenture for the precise terms of this Subsidiary Guarantee. THE TERMS OF
ARTICLE 11 OF THE INDENTURE ARE INCORPORATED HEREIN BY REFERENCE. In the case
of any discrepancy between this writing and Article 11 of the Indenture,
Article 11 of the Indenture shall control.
This is a continuing Subsidiary Guarantee and shall remain in full force
and effect and shall be binding upon each Guarantor and its successors and
assigns until full, final and indefeasible payment of all of the Company's
obligations under the Notes and the Indenture (subject to Section 11.04 of the
Indenture) and shall inure to the benefit of the successors and assigns of the
Trustee and the Holders of Notes and, in the event of any transfer or
assignment of rights by any Holder of Notes or the Trustee, the rights and
privileges herein conferred upon the party shall automatically extend to and be
vested in such transferee or assignee, all subject to the terms and conditions
hereof. This is a Subsidiary Guarantee of payment and not a guarantee of
collection.
For purposes hereof, each Guarantor's liability shall be limited to the
lesser of (i) the aggregate amount of the Obligations of the Company under the
Senior Subordinated Notes and the Indenture and (ii) the amount, if any, which
would not have (A) rendered such Guarantor "insolvent" (as such term is defined
in the United States Bankruptcy Code and in the Debtor and Creditor Law of the
State of New York) or (B) left such Guarantor with unreasonably small capital
at the time its Subsidiary Guarantee of the Senior Subordinated Notes was
entered into; provided that it will be a presumption in any lawsuit or other
proceeding in which a Guarantor is a party that the amount guaranteed pursuant
to the Subsidiary Guarantee is the amount set forth in clause (i) above unless
any creditor, or representative of creditors of such Guarantor, or debtor in
possession or trustee in bankruptcy of the Guarantor, otherwise proves in such
a lawsuit that the aggregate liability of the Guarantor is the amount set forth
in clause (ii) above. The Indenture provides that, in making any determination
as to solvency or sufficiency of capital of a Guarantor in accordance with the
previous sentence, the right of such Guarantor to contribution from other
Guarantors, and any other rights such Guarantor may have, contractual or
otherwise, shall be taken into account.
This Subsidiary Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Senior Subordinated Note upon
which this Guarantee is noted shall have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized officers.
<PAGE> 2
Capitalized terms used herein have the same meanings given in the Indenture
unless otherwise indicated.
KEY PLASTICS INTERNATIONAL L.L.C.
By: KEY PLASTICS, INC., Member
By: _____________________________
Name: Mark J. Abbo
Title: Treasurer and Assistant
Secretary
David C. Benoit, Member
By: _____________________________
Mark J. Abbo, Attorney-in-Fact
2
<PAGE> 1
EXHIBIT 4.11
SUBSIDIARY GUARANTEE
Each Guarantor hereby, jointly and severally, unconditionally
guarantees to each Holder of a 10-1/4% Senior Subordinated Note due 2007 (a
"Senior Subordinated Note") of Key Plastics, Inc., a Michigan corporation (the
"Company") authenticated and delivered by the Trustee and to the Trustee and
its successors and assigns, irrespective of the validity and enforceability of
the Indenture, the Senior Subordinated Notes and the Obligations of the Company
hereunder and thereunder, that: (a) the principal of, premium, if any, interest
and Liquidated Damages, if any, on the Notes will be promptly paid in full when
due, subject to any applicable grace period, whether at maturity, by
acceleration, redemption or otherwise, and interest on the overdue principal,
premium, if any (to the extent permitted by law), interest on any interest, if
any, and Liquidated Damages, if any, on the Notes, and all other payment
Obligations of the Company to the Holders or the Trustee hereunder or
thereunder will be promptly paid in full and performed, all in accordance with
the terms hereof and thereof; and (b) in case of any extension of time of
payment or renewal of any Notes or any of such other Obligations, the same
will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, subject to any applicable grace period,
whether at stated maturity, by acceleration, redemption or otherwise. Failing
payment when so due of any amount so guaranteed or any performance so
guaranteed for whatever reason the Guarantors will be jointly and severally
obligated to pay the same immediately.
The obligations of each Guarantor to the Holders of Notes and to the
Trustee pursuant to this Subsidiary Guarantee and the Indenture are expressly
set forth in Article 11 of the Indenture and reference is hereby made to such
Indenture for the precise terms of this Subsidiary Guarantee. THE TERMS OF
ARTICLE 11 OF THE INDENTURE ARE INCORPORATED HEREIN BY REFERENCE. In the case
of any discrepancy between this writing and Article 11 of the Indenture,
Article 11 of the Indenture shall control.
This is a continuing Subsidiary Guarantee and shall remain in full
force and effect and shall be binding upon each Guarantor and its successors
and assigns until full, final and indefeasible payment of all of the Company's
obligations under the Notes and the Indenture (subject to Section 11.04 of the
Indenture) and shall inure to the benefit of the successors and assigns of the
Trustee and the Holders of Notes and, in the event of any transfer or
assignment of rights by any Holder of Notes or the Trustee, the rights and
privileges herein conferred upon the party shall automatically extend to and be
vested in such transferee or assignee, all subject to the terms and conditions
hereof. This is a Subsidiary Guarantee of payment and not a guarantee of
collection.
For purposes hereof, each Guarantor's liability shall be limited to the
lesser of (i) the aggregate amount of the Obligations of the Company under the
Senior Subordinated Notes and the Indenture and (ii) the amount, if any, which
would not have (A) rendered such Guarantor "insolvent" (as such term is defined
in the United States Bankruptcy Code and in the Debtor and Creditor Law of the
State of New York) or (B) left such Guarantor with unreasonably small capital
at the time its Subsidiary Guarantee of the Senior Subordinated Notes was
entered into; provided that it will be a presumption in any lawsuit or other
proceeding in which a Guarantor is a party that the amount guaranteed pursuant
to the Subsidiary Guarantee is the amount set forth in clause (i) above unless
any creditor, or representative of creditors of such Guarantor, or debtor in
possession or trustee in bankruptcy of the Guarantor, otherwise proves in such
a lawsuit that the aggregate liability of the Guarantor is the amount set forth
in clause (ii) above. The Indenture provides that, in making any determination
as to solvency or sufficiency of capital of a Guarantor in accordance with the
previous sentence, the right of such Guarantor to contribution from other
Guarantors, and any other rights such Guarantor may have, contractual or
otherwise, shall be taken into account.
This Subsidiary Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Senior Subordinated Note
upon which this Guarantee is noted shall have been executed by the Trustee
under the Indenture by the manual signature of one of its authorized officers.
<PAGE> 2
Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
KEY PLASTICS TECHNOLOGY, L.L.C.
By: KEY PLASTICS, INC., Member
By:__________________________________
Name: Mark J. Abbo
Title: Treasurer and Assistant Secretary
David C. Benoit, Member
By:__________________________________
Mark J. Abbo, Attorney-in-Fact
2
<PAGE> 1
EXHIBIT 4.12
SUBSIDIARY GUARANTEE
Each Guarantor hereby, jointly and severally, unconditionally
guarantees to each Holder of a 10-1/4% Senior Subordinated Note due 2007 (a
"Senior Subordinated Note") of Key Plastics, Inc., a Michigan corporation (the
"Company") authenticated and delivered by the Trustee and to the Trustee and
its successors and assigns, irrespective of the validity and enforceability of
the Indenture, the Senior Subordinated Notes and the Obligations of the Company
hereunder and thereunder, that: (a) the principal of, premium, if any, interest
and Liquidated Damages, if any, on the Notes will be promptly paid in full when
due, subject to any applicable grace period, whether at maturity, by
acceleration, redemption or otherwise, and interest on the overdue principal,
premium, if any (to the extent permitted by law), interest on any interest, if
any, and Liquidated Damages, if any, on the Notes, and all other payment
Obligations of the Company to the Holders or the Trustee hereunder or
thereunder will be promptly paid in full and performed, all in accordance with
the terms hereof and thereof; and (b) in case of any extension of time of
payment or renewal of any Notes or any of such other Obligations, the same will
be promptly paid in full when due or performed in accordance with the terms of
the extension or renewal, subject to any applicable grace period, whether at
stated maturity, by acceleration, redemption or otherwise. Failing payment when
so due of any amount so guaranteed or any performance so guaranteed for
whatever reason the Guarantors will be jointly and severally obligated to pay
the same immediately.
The obligations of each Guarantor to the Holders of Notes and to the
Trustee pursuant to this Subsidiary Guarantee and the Indenture are expressly
set forth in Article 11 of the Indenture and reference is hereby made to such
Indenture for the precise terms of this Subsidiary Guarantee. THE TERMS OF
ARTICLE 11 OF THE INDENTURE ARE INCORPORATED HEREIN BY REFERENCE. In the case
of any discrepancy between this writing and Article 11 of the Indenture,
Article 11 of the Indenture shall control.
This is a continuing Subsidiary Guarantee and shall remain in full
force and effect and shall be binding upon each Guarantor and its successors
and assigns until full, final and indefeasible payment of all of the Company's
obligations under the Notes and the Indenture (subject to Section 11.04 of the
Indenture) and shall inure to the benefit of the successors and assigns of the
Trustee and the Holders of Notes and, in the event of any transfer or assignment
of rights by any Holder of Notes or the Trustee, the rights and privileges
herein conferred upon the party shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions hereof.
This is a Subsidiary Guarantee of payment and not a guarantee of collection.
For purposes hereof, each Guarantor's liability shall be limited to the
lesser of (i) the aggregate amount of the Obligations of the Company under the
Senior Subordinated Notes and the Indenture and (ii) the amount, if any, which
would not have (A) rendered such Guarantor "insolvent" (as such term is defined
in the United States Bankruptcy Code and in the Debtor and Creditor Law of the
State of New York) or (B) left such Guarantor with unreasonably small capital
at the time its Subsidiary Guarantee of the Senior Subordinated Notes was
entered into; provided that it will be a presumption in any lawsuit or other
proceeding in which a Guarantor is a party that the amount guaranteed pursuant
to the Subsidiary Guarantee is the amount set forth in clause (i) above unless
any creditor, or representative of creditors of such Guarantor, or debtor in
possession or trustee in bankruptcy of the Guarantor, otherwise proves in such
a lawsuit that the aggregate liability of the Guarantor is the amount set forth
in clause (ii) above. The Indenture provides that, in making any determination
as to solvency or sufficiency of capital of a Guarantor in accordance with the
previous sentence, the right of such Guarantor to contribution from other
Guarantors, and any other rights such Guarantor may have, contractual or
otherwise, shall be taken into account.
This Subsidiary Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication of the Senior Subordinated Note
upon which this Guarantee is noted shall have been executed by the Trustee
under the Indenture by the manual signature of one of its authorized officers.
<PAGE> 2
Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
KEY PLASTICS AUTOMOTIVE L.L.C.
By: KEY PLASTICS, INC., Member
By:________________________________
Name: Mark J. Abbo
Title: Treasurer and Assistant Secretary
David C. Benoit, Member
By:_________________________________
Mark J. Abbo, Attorney-in-Fact
2
<PAGE> 1
EXHIBIT 4.13
KEY MEXICO A, L.L.C.,
a Michigan limited liability company
SUBSIDIARY GUARANTEE
Each Guarantor hereby, jointly and severally, unconditionally guarantees
to each Holder of a 10 1/4% Senior Subordinated Note due 2007 (a "Senior
Subordinated Note") of Key Plastics, Inc., a Michigan corporation (the
"Company") authenticated and delivered by the Trustee and to the Trustee and
its successors and assigns, irrespective of the validity and enforceability of
the Indenture, the Senior Subordinated Notes and the Obligations of the Company
hereunder and thereunder, that: (a) the principal of, premium, if any, interest
and Liquidated Damages, if any, on the Notes will be promptly paid in full when
due, subject to any applicable grace period, whether at maturity, by
acceleration, redemption or otherwise, and interest on the overdue principal,
premium, if any (to the extent permitted by law), interest on any interest, if
any, and Liquidated Damages, if any, on the Notes, and all other payment
Obligations of the Company to the Holders or the Trustee hereunder or
thereunder will be promptly paid in full and performed, all in accordance with
the terms hereof and thereof; and (b) in case of any extension of time of
payment or renewal of any Notes or any of such other Obligations, the same will
be promptly paid in full when due or performed in accordance with the terms of
the extension or renewal, subject to any applicable grace period, whether at
stated maturity, by acceleration, redemption or otherwise. Failing payment
when so due of any amount so guaranteed or any performance so guaranteed for
whatever reason the Guarantors will be jointly and severally obligated to pay
the same immediately.
The obligations of each Guarantor to the Holders of Notes and to the
Trustee pursuant to this Subsidiary Guarantee and the Indenture are expressly
set forth in Article 11 of the Indenture and reference is hereby made to such
Indenture for the precise terms of this Subsidiary Guarantee. THE TERMS OF
ARTICLE 11 OF THE INDENTURE ARE INCORPORATED HEREIN BY REFERENCE. In the case
of any discrepancy between this writing and Article 11 of the Indenture,
Article 11 of the Indenture shall control.
This is a continuing Subsidiary Guarantee and shall remain in full force
and effect and shall be binding upon each Guarantor and its successors and
assigns until full, final and indefeasible payment of all of the Company's
obligations under the Notes and the Indenture (subject to Section 11.04 of the
Indenture) and shall inure to the benefit of the successors and assigns of the
Trustee and the Holders of Notes and, in the event of any transfer or
assignment of rights by any Holder of Notes or the Trustee, the rights and
privileges herein conferred upon the party shall automatically extend to and be
vested in such transferee or assignee, all subject to the terms and conditions
hereof. This is a Subsidiary Guarantee of payment and not a guarantee of
collection.
For purposes hereof, each Guarantor's liability shall be limited to the
lesser of (i) the aggregate amount of the Obligations of the Company under the
Senior Subordinated Notes and the Indenture and (ii) the amount, if any, which
would not have (A) rendered such Guarantor "insolvent" (as such term is defined
in the United States Bankruptcy Code and in the Debtor and Creditor Law of the
State of New York) or (B) left such Guarantor with unreasonably small capital
at the time its Subsidiary Guarantee of the Senior Subordinated Notes was
entered into; provided that it will be a presumption in any lawsuit or other
proceeding in which a Guarantor is a party that the amount guaranteed pursuant
to the Subsidiary Guarantee is the amount set forth in clause (i) above unless
any creditor, or representative of creditors of such Guarantor, or debtor in
possession or trustee in bankruptcy of the Guarantor, otherwise proves in such
a lawsuit that the aggregate liability of the Guarantor is the amount set forth
in clause (ii) above. The Indenture provides that, in making any determination
as to solvency or sufficiency of capital of a Guarantor in accordance with the
previous sentence, the right of such Guarantor to contribution from other
<PAGE> 2
Guarantors, and any other rights such Guarantor may have, contractual or
otherwise, shall be taken into account.
This Subsidiary Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Senior Subordinated Note upon
which this Guarantee is noted shall have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized officers.
Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
KEY MEXICOA, L.L.C.
GUARANTOR
By:_______________________
Key Plastics, Inc., Member
by Mark J. Abbo
its Treasurer and Assistant Secretary
2
<PAGE> 1
EXHIBIT 4.14
KEY MEXICO B, L.L.C.,
a Michigan limited liability company
SUBSIDIARY GUARANTEE
Each Guarantor hereby, jointly and severally, unconditionally guarantees
to each Holder of a 10 1/4% Senior Subordinated Note due 2007 (a "Senior
Subordinated Note") of Key Plastics, Inc., a Michigan corporation (the
"Company") authenticated and delivered by the Trustee and to the Trustee and
its successors and assigns, irrespective of the validity and enforceability of
the Indenture, the Senior Subordinated Notes and the Obligations of the Company
hereunder and thereunder, that: (a) the principal of, premium, if any, interest
and Liquidated Damages, if any, on the Notes will be promptly paid in full when
due, subject to any applicable grace period, whether at maturity, by
acceleration, redemption or otherwise, and interest on the overdue principal,
premium, if any (to the extent permitted by law), interest on any interest, if
any, and Liquidated Damages, if any, on the Notes, and all other payment
Obligations of the Company to the Holders or the Trustee hereunder or
thereunder will be promptly paid in full and performed, all in accordance with
the terms hereof and thereof; and (b) in case of any extension of time of
payment or renewal of any Notes or any of such other Obligations, the same will
be promptly paid in full when due or performed in accordance with the terms of
the extension or renewal, subject to any applicable grace period, whether at
stated maturity, by acceleration, redemption or otherwise. Failing payment
when so due of any amount so guaranteed or any performance so guaranteed for
whatever reason the Guarantors will be jointly and severally obligated to pay
the same immediately.
The obligations of each Guarantor to the Holders of Notes and to the
Trustee pursuant to this Subsidiary Guarantee and the Indenture are expressly
set forth in Article 11 of the Indenture and reference is hereby made to such
Indenture for the precise terms of this Subsidiary Guarantee. THE TERMS OF
ARTICLE 11 OF THE INDENTURE ARE INCORPORATED HEREIN BY REFERENCE. In the case
of any discrepancy between this writing and Article 11 of the Indenture,
Article 11 of the Indenture shall control.
This is a continuing Subsidiary Guarantee and shall remain in full force
and effect and shall be binding upon each Guarantor and its successors and
assigns until full, final and indefeasible payment of all of the Company's
obligations under the Notes and the Indenture (subject to Section 11.04 of the
Indenture) and shall inure to the benefit of the successors and assigns of the
Trustee and the Holders of Notes and, in the event of any transfer or
assignment of rights by any Holder of Notes or the Trustee, the rights and
privileges herein conferred upon the party shall automatically extend to and be
vested in such transferee or assignee, all subject to the terms and conditions
hereof. This is a Subsidiary Guarantee of payment and not a guarantee of
collection.
For purposes hereof, each Guarantor's liability shall be limited to the
lesser of (i) the aggregate amount of the Obligations of the Company under the
Senior Subordinated Notes and the Indenture and (ii) the amount, if any, which
would not have (A) rendered such Guarantor "insolvent" (as such term is defined
in the United States Bankruptcy Code and in the Debtor and Creditor Law of the
State of New York) or (B) left such Guarantor with unreasonably small capital
at the time its Subsidiary Guarantee of the Senior Subordinated Notes was
entered into; provided that it will be a presumption in any lawsuit or other
proceeding in which a Guarantor is a party that the amount guaranteed pursuant
to the Subsidiary Guarantee is the amount set forth in clause (i) above unless
any creditor, or representative of creditors of such Guarantor, or debtor in
possession or trustee in bankruptcy of the Guarantor, otherwise proves in such
a lawsuit that the aggregate liability of the Guarantor is the amount set forth
in clause (ii) above. The Indenture provides that, in making any determination
as to solvency or sufficiency of capital of a Guarantor in accordance with the
previous sentence, the right of such Guarantor to contribution from other
<PAGE> 2
Guarantors, and any other rights such Guarantor may have, contractual or
otherwise, shall be taken into account.
This Subsidiary Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Senior Subordinated Note upon
which this Guarantee is noted shall have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized officers.
Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
KEY MEXICO B, L.L.C.
GUARANTOR
By:_______________________
Key Plastics, Inc., Member
by Mark J. Abbo
its Treasurer and Assistant Secretary
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EXHIBIT 4.17
EXECUTION COPY
STANDBY LETTER OF CREDIT APPLICATION
AND REIMBURSEMENT AGREEMENT
(Hamilton, Indiana Bonds)
THIS STANDBY LETTER OF CREDIT APPLICATION AND REIMBURSEMENT AGREEMENT
(this "Agreement"), dated as of March 24, 1997, between KEY PLASTICS, INC., a
Michigan corporation (the "Company"), and NBD BANK, a Michigan banking
corporation with its principal office in Detroit, Michigan (the "Bank").
RECITALS
A. The Town of Hamilton, Indiana (the "Issuer"), pursuant to the
provisions of Title 36, Article 7, Chapter 12 of the Indiana Code, as amended
(the "Act"), issued $7,500,000 in aggregate principal amount of its Limited
Obligation Industrial Development Revenue Bonds (Key Plastics, Inc. Project)
dated August 1, 1989 (the "Bonds"), pursuant to a Trust Indenture dated as of
August 1, 1989 (as amended, the "Indenture"), between the Issuer and Norwest
Bank Indiana, National Association, as trustee (as successor trustee to Lincoln
National Bank and Trust Company of Fort Wayne) (the "Trustee"), to finance the
acquisition, construction and equipping of a manufacturing facility located in
the Town of Hamilton, Indiana (the "Project"), pursuant to a Credit Agreement,
dated as of August 1, 1989 (as amended, the "Bond Credit Agreement"), between
the Issuer and the Company.
B. The Bank has agreed, at the request of the Company, to issue an
irrevocable transferable direct-pay letter of credit (as defined herein, the
"Letter of Credit") for the account of the Company in favor of the Trustee to
provide credit and liquidity support with respect to the Bonds in substitution
for the Comerica Bank irrevocable letter of credit which currently secures the
Bonds.
C. This Agreement will constitute a "Letter of Credit application" and a
"Letter of Credit Document" as referred to in that certain Credit Agreement
dated as of March 24, 1997, by and among the Company, the lenders who are
parties thereto (collectively, the "Lenders" and individually, a "Lender"), and
NBD Bank, as agent for the Lenders, as the same may be amended or restated from
time to time (the "Credit Agreement"), and the Letter of Credit when issued
will constitute a "Bond L/C", a "Letter of Credit" and a "S/L/C" issued under
and as defined in the Credit Agreement.
D. The Bank and the Company desire to enter into this Agreement pursuant
to Section 2.6(d) of the Credit Agreement to provide specific terms and
conditions relating to the issuance of the Letter of Credit which will
supplement the terms of the Credit Agreement.
<PAGE> 2
AGREEMENT
The Company and the Bank agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. (a) Unless the context otherwise requires
or such terms are defined in this Agreement, terms defined in the Credit
Agreement are used with the same meanings in this Agreement.
(b) The following terms are used in this Agreement with the following
respective meanings:
"Bond Documents" means the Indenture, the Bond Loan Agreement, the Bonds,
and the Mortgage, and any amendments thereto, and any other documents executed
by the Company in connection with the Bonds.
"Credit Documents" means this Agreement, the Letter of Credit and the
Credit Agreement.
"Date of Issuance" means the date on which all conditions precedent under
Article III hereof have been met or waived by the Bank, and on which the Letter
of Credit is issued.
"Drawing" shall mean a draft or other demand for payment presented by the
Trustee under the Letter of Credit.
"Drawing Date" means each date on which the Bank honors a Drawing.
"Governmental Action" means any authorization, approval, consent, waiver,
exception, license, filing, registration, permit, notarization, special lease
or other requirement of any Governmental Person.
"Governmental Person" means any foreign or domestic national, federal,
state or local government, any political subdivision thereof, any governmental,
quasi-governmental, judicial, public or statutory instrumentality, authority,
body or entity, or any other regulatory bureau, authority, body or entity,
including the Federal Deposit Insurance Corporation, the Comptroller of the
Currency, the Board of Governors of the Federal Reserve System, any central
bank and any comparable authority.
"Lenders" means the "Lenders" as defined in the Credit Agreement.
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"Letter of Credit" means the irrevocable, transferable direct pay letter
of credit issued by the Bank in favor of the Trustee substantially in the form
of Exhibit A hereto, as the same may be extended or amended, or any letter of
credit issued in replacement thereof in accordance with the terms hereof.
"Letter of Credit Fees" means the fees to be paid by the Company in
connection with the Letter of Credit as set forth in Section 2.3(b) of the
Credit Agreement.
"Mortgage" means the Mortgage and Security Agreement dated November 1,
1992 made by the Company in favor of Comerica Bank (as successor by merger to
Manufacturers National Bank of Detroit) and the Issuer, which interests of the
Issuer were assigned therein to the Trustee. The Mortgage is recorded at
Mortgage Record 144, Page 375, Steuben County, Indiana Records.
"Mortgage Assignment" means the Assignment of Mortgage and Security
Agreement dated even date herewith made by Comerica Bank in favor of the Bank.
"Mortgage Amendment" means the First Amendment to Mortgage dated even date
herewith among the Trustee, the Company and the Bank whereby the parties
acknowledge that the Bank has replaced Comerica Bank as a mortgagee and secured
party under the Mortgage.
"Obligations" means Letter of Credit Fees, and any and all obligations of
the Company to reimburse the Bank for any Drawings under the Letter of Credit,
and all other obligations of the Company to the Bank arising under or in
relation to this Agreement or the other Credit Documents.
"Person" means an individual, a corporation, a partnership, an
association, a trust, a government, a political subdivision, a governmental
agency or instrumentality, or any other entity or organization.
"Related Documents" means the Bond Documents, the Credit Documents, and
any other agreement or instrument related hereto or thereto.
"Stated Amount" has the meaning set forth in the Letter of Credit.
"Stated Expiration Date" means the date on which the Letter of Credit
expires in accordance with its terms, which initially shall be August 15, 1999.
"Trustee" means Norwest Bank Indiana, National Association, acting in its
capacity as trustee under the Indenture, and any successor trustee thereunder.
Section 1.02. Interpretation. In this Agreement, the singular
includes the plural and the plural the singular; words importing any gender
include the other genders; references to statutes are to be construed as
including all statutory provisions consolidating, amending or replacing all
statutory provisions consolidating, amending or replacing the statute referred
to; references in "writing" include printing, typing, lithography and other
means of reproducing words in a
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tangible, visible form; the words "including," "includes" and "include" shall
be deemed to be followed by the words "without limitation"; references to
articles, sections (or subdivisions of sections), recitals, exhibits, annexes
or schedules are to those of this Agreement unless otherwise indicated;
references to agreements and other contractual instruments shall be deemed to
include all subsequent amendments and other modifications to such instruments,
but only to the extent such amendments and other modifications are not
prohibited by the terms of this Agreement; and references to the parties and to
Persons include their respective permitted successors and assigns and, in the
case of Governmental Persons, Persons succeeding to their respective functions
and capacities. References to the "Bonds" shall mean and include references to
beneficial interests in the Bonds, as appropriate.
ARTICLE II
THE LETTER OF CREDIT
Section 2.01. Amount and Term of Letter of Credit. The Bank agrees to
issue on the Date of Issuance, upon the terms, subject to satisfaction of the
conditions and relying upon the representations and warranties set forth in
this Agreement, the Letter of Credit in the amount of $2,567,364, effective on
the Date of Issuance and expiring on the Stated Expiration Date. The Letter of
Credit shall secure the payment of the principal of, and 210 days' interest on,
the Bonds.
Section 2.02. Letter of Credit Drawings. The Trustee is authorized to
make drawings under the Letter of Credit in accordance with the terms thereof.
The Company hereby directs the Bank to make payments under the Letter of Credit
in the manner therein provided. The Company hereby irrevocably approves
reductions and reinstatements of the Stated Amount as provided in the Letter of
Credit.
Section 2.03. Reimbursement; Interest; Fees. The Company shall reimburse
the Bank for drawings under the Letter of Credit in accordance with the terms
of the Credit Agreement. Interest and Letter of Credit Fees payable in
connection with the Letter of Credit shall also be payable in accordance with
the Credit Agreement.
Section 2.04. Source of Funds. All payments made by the Bank pursuant to
the Letter of Credit shall be made from funds of the Bank, and not from the
funds of any other Person.
Section 2.05. Letter of Credit Transfer Fee. The Company hereby agrees
to pay or cause to be paid to the Bank on the date of any transfer of the
Letter of Credit in accordance with its terms to a successor to the Trustee a
transfer fee in the amount of $500 or, at the option of the Bank, such other
amount as shall at the time of transfer be the charge that the Bank is making
for transfers of similar letters of credit. The Bank agrees to notify the
Company of any change in such charge.
Section 2.06. Drawing Fees. The Company hereby agrees to pay to the
Bank, not later than the one Business Day following each Drawing by the Trustee
under the Letter of Credit, the
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sum of $100 or, at the option of the Bank, such other amount as shall at the
time of such Drawing be the charge that the Bank is making for drawings on
similar letters of credit, or such other amount agreed upon by the Bank and the
Company. The Bank agrees to notify the Company of any change in such charge.
Section 2.07. Conditions Precedent. The obligation of the Bank to
issue the Letter of Credit is subject to the conditions precedent described in
Section 2.6 of the Credit Agreement and the following additional conditions
precedent:
(a) Documents. On or before the Date of Issuance, the Bank shall have
received the following documents in form and substance satisfactory to the
Bank.
(i) Mortgage Assignment and Mortgage Amendment. The Mortgage Assignment
and Mortgage Amendment duly executed by the parties thereto, together with any
UCC financing statements required to assign the security interests of Comerica
Bank to the Bank.
(ii) Bond Documents. Executed copies of the Bond Documents.
(iii) Opinions. The favorable written opinion of Counsel to the Company
as to such matters as the Bank may reasonably request.
(b) Commitment Fee. The Bank shall have received the Letter of Credit
Fees described in Section 2.3(b) of the Credit Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Company's Representations. In order to induce the Bank
to enter into this Agreement, the Company represents and warrants as of the
Date of Issuance that:
(a) Incorporation of Representations and Warranties from the Credit
Agreement. The representation and warranties made by the Company in Article IV
of the Credit Agreement are true and correct in all material respects on and as
of the Date of Issuance with the same force and effect as if made on and as of
the Date of Issuance.
(b) Validity and Binding Nature. The Company has the power to execute,
deliver and perform this Agreement and the other Related Documents to which it
is a party, and to request the issuance of, and act as account party under, the
Letter of Credit; and when executed and delivered, this Agreement and such
other Related Documents will be valid and legally binding obligations of the
Company, enforceable in accordance with their respective terms; provided,
however, that this representation with respect to enforceability is limited by
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bankruptcy, insolvency or other similar laws of general application relating to
or affecting the enforcement of creditors' rights.
(c) Due Authorization. The execution, delivery and performance by the
Company of this Agreement, the Credit Documents and the Related Documents to
which the Company is a party, and the requesting of the Letter of Credit
hereunder, have been duly authorized by all required corporate action on the
part of the Company and will not, and the form and purpose of the Letter of
Credit will not, violate any provisions of law, any order of any court or
arbitrator, or any other Governmental Person, applicable to the Company or the
organizational documents or by-laws of the Company.
(d) Conflicting Instruments; No Default. The execution, delivery and
performance of this Agreement, the Credit Documents and the Related Documents
to which the Company is a party, and the requesting of the Letter of Credit
hereunder, will not violate any provisions of any indenture, agreement or other
instrument to which the Company or any of its properties or assets are bound or
subject, and will not be in conflict with, result in a breach of, or constitute
(with due notice and/or the lapse of time) a default under any such indenture,
agreement or other instrument, or result in the creation or impositions of any
lien upon any of the properties or assets of the Company, and no Unmatured
Event or Event of Default hereunder has occurred and is continuing.
(e) Authorization and Consents. No authorization, consent, approval,
license or exemption of, and no registration, qualification, designation,
declaration or filing with any court or Governmental Person is necessary for
the valid execution and delivery of this Agreement, the Credit Documents or the
Related Documents to which the Company is a party.
ARTICLE IV
DEFAULTS AND REMEDIES
Section 4.01. Event of Default and Remedies. If any of the following
event shall occur, each such event shall be an "Event of Default":
(a) any material representation or warranty made by the
Company in this Agreement (or incorporated herein by reference) or
in any of the other Related Documents or in any certificate,
document, instrument, opinion or financial or other statement
contemplated by or made or delivered pursuant to or in connection
with Agreement or with any of the other Related Documents, shall
prove to have been incorrect, incomplete or misleading in any
material respect;
(b) any "event of default" shall have occurred (after any applicable
grace periods) under any of the Related Documents (as defined
respectively therein); or
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(c) default in the due observance or performance by the Company of
any other term, covenant or agreement set forth in this Agreement and the
continuance of such default for 30 days after the occurrence thereof.
Section 4.02. Remedies. In addition to the remedies otherwise described
in the Credit Agreement or in any other Related Document, upon the occurrence
of an Event of Default hereunder, the Bank may, at the direction of the
Required Lenders, exercise one or more of the following rights and remedies:
(a) give notice of the occurrence of an Event of Default hereunder to the
Trustee directing an acceleration of the Bonds pursuant to Section 701(f) of
the Indenture, or (b) pursue any rights and remedies provided to the Bank under
the Restated Documents.
ARTICLE V
LETTER OF CREDIT AN ADVANCE
UNDER LOAN AGREEMENT
Section 5.01. Letter of Credit an Advance under Credit Agreement. The
Company and the Bank acknowledge and agree that (a) the Bank is serving as an
"Agent" on behalf of the Lenders under the Credit Agreement in connection with
the issuance of the Letter of Credit, (b) the Letter of Credit will be issued
pursuant to Section 2.4 of the Credit Agreement and participated in by the
Lenders pursuant to the terms of the Credit Agreement, (c) the issuance of the
Letter of Credit constitutes a "Letter of Credit Advance" as such term is
defined in the Credit Agreement, and (d) the Letter of Credit constitutes a
"Bond L/C" and a "Letter of Credit" as those terms are defined in the Credit
Agreement. This Agreement is intended to supplement the Credit Agreement and
the Bank and the Company agree that the covenants and agreements contained
herein are in addition to and not in substitution for the covenants and
agreements contained in the Credit Agreement.
ARTICLE VI
MISCELLANEOUS
Section 6.01. Waivers. No failure to exercise and no delay on the part
of the Bank in exercising any power or right in connection herewith or under
any of the other Related Documents shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right or power, or any abandonment
or discontinuance of steps to enforce such a right or power, preclude any other
or further exercise thereof or the exercise of any other right or power. No
course of dealing between the Company and the Bank shall operate as a waiver of
any right of the Bank. No modification or waiver of any provision of this
Agreement or any other Related Document nor any consent to any departure
therefrom shall in any event be effective unless the same shall be in writing
and signed by the person or entity against whom enforcement thereof is to be
sought, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given.
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Section 6.02. Waiver of Jury Trial. The Bank and the Company, after
consulting or having had the opportunity to consult with counsel, knowingly,
voluntarily and intentionally waive any right either of them may have to a
trial by jury in any litigation based upon or arising out of this Agreement or
any related instrument or agreement or any of the transactions contemplated by
this Agreement or any course of conduct, dealing, statements (whether oral or
written) or actions of either of them. Neither the Bank nor the Company shall
seek to consolidate, by counterclaim or otherwise, any such actin in which a
jury trial has been waived with any other action in which a jury trial cannot
be or has not been waived. These provisions shall not be deemed to have been
modified in any respect or relinquished by either the Bank or the Company
except by a written instrument executed by both of them.
Section 6.03. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF MICHIGAN (WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW); AND THE LETTER OF CREDIT SHALL BE
ISSUED SUBJECT TO, AND BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE
UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION) ICC
PUBLICATION NO. 500, EXCEPT FOR ARTICLES 48(f) AND 48(g), AND, TO THE EXTENT
NOT INCONSISTENT WITH SAID UNIFORM CUSTOMS AND PRACTICE, SHALL BE GOVERNED BY
THE LAW OF THE STATE OF MICHIGAN, INCLUDING ARTICLE 5 OF THE UNIFORM COMMERCIAL
CODE AS IN EFFECT IN THE STATE OF MICHIGAN.
Section 6.04. Notices. All notices, consents and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given when delivered in compliance with the provisions of Section 8.2 of the
Credit Agreement.
Section 6.05. Benefits of Agreement. This Agreement is a continuing
obligation and binds, and the benefits hereof shall inure to, the Company and
the Bank and their respective successors and assigns, provided that the Company
may not transfer or assign any or all of its rights or obligations hereunder
without the written consent of the Bank.
Section 6.06. Counterparts. This Agreement may be executed by one or
more of the parties hereto on any number of separate counterparts and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument.
Section 6.07. Parties; No Third-Party Beneficiaries. This Agreement,
the other and the Related Documents shall be binding upon, and inure to the
benefit of, the successors of the Bank, the permitted successors of the
Company, the assigns, transferees and endorsees of the Bank, the Agent, and the
Lenders. No other person or entity shall be deemed to be a third-party
beneficiary of any of the provisions of this Agreement or such other documents
or otherwise have any rights by reason of any provision of this Agreement, or
such other documents.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first above written.
KEY PLASTICS, INC.
By: _______________________________
Its:___________________________
NBD BANK
By:________________________________
Teresa A. Kalil
Its: Vice President
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EXECUTION COPY
STANDBY LETTER OF CREDIT APPLICATION
AND REIMBURSEMENT AGREEMENT
(Plymouth Township, Michigan Bonds)
THIS STANDBY LETTER OF CREDIT APPLICATION AND REIMBURSEMENT AGREEMENT
(this "Agreement"), dated as of March 24, 1997, between KEY PLASTICS, INC., a
Michigan corporation (the "Company"), and NBD BANK, a Michigan banking
corporation with its principal office in Detroit, Michigan (the "Bank").
RECITALS
A. The Economic Development Corporation of the Charter Township of
Plymouth (the "Issuer"), pursuant to the provisions of Act No. 338, Public
Laws of Michigan, 1984, as amended (the "Act"), issued $4,500,000 in aggregate
principal amount of its Floating Rate Monthly Demand Economic Development
Revenue Bonds (Key International Manufacturing, Inc. Project), Series 1984 (the
"Bonds"), pursuant to a Trust Indenture dated as of June 1, 1984 (as amended,
the "Indenture"), between the Issuer and First Trust National Association, as
trustee (as successor trustee to Comerica Bank-Detroit) (the "Trustee"), to
finance the acquisition, construction and equipping of a manufacturing facility
located in Plymouth Township, Michigan (the "Project"), pursuant to a Credit
Agreement, dated as of June 1, 1984 (as amended, the "Bond Credit Agreement"),
between the Issuer and the Company.
B. The Bank has agreed, at the request of the Company, to issue an
irrevocable transferable direct-pay letter of credit (as defined herein, the
"Letter of Credit") for the account of the Company in favor of the Trustee to
provide credit and liquidity support with respect to the Bonds in substitution
for the Comerica Bank irrevocable letter of credit which currently secures the
Bonds.
C. This Agreement will constitute a "Letter of Credit application" and a
"Letter of Credit Document" as referred to in that certain Credit Agreement
dated as of March 24, 1997, by and among the Company, the lenders who are
parties thereto (collectively, the "Lenders" and individually, a "Lender"), and
NBD Bank, as agent for the Lenders, as the same may be amended or restated from
time to time (the "Credit Agreement"), and the Letter of Credit when issued
will constitute a "Bond L/C", a "Term Facility A Letter of Credit" and a
"S/L/C" issued under and as defined in the Credit Agreement.
D. The Bank and the Company desire to enter into this Agreement pursuant
to Section 2.6(d) of the Credit Agreement to provide specific terms and
conditions relating to the issuance of the Letter of Credit which will
supplement the terms of the Credit Agreement.
<PAGE> 11
AGREEMENT
The Company and the Bank agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. (a) Unless the context otherwise requires
or such terms are defined in this Agreement, terms defined in the Credit
Agreement are used with the same meanings in this Agreement.
(b) The following terms are used in this Agreement with the following
respective meanings:
"Bond Documents" means the Indenture, the Bond Loan Agreement, the Bonds,
the Security Agreement, and the Mortgage, and any amendments thereto, and any
other documents executed by the Company in connection with the Bonds.
"Credit Documents" means this Agreement, the Letter of Credit, the Pledge
Agreement, and the Credit Agreement.
"Date of Issuance" means the date on which all conditions precedent under
Article III hereof have been met or waived by the Bank, and on which the Letter
of Credit is issued.
"Drawing" shall mean a draft or other demand for payment presented by the
Trustee under the Letter of Credit.
"Drawing Date" means each date on which the Bank honors a Drawing.
"Governmental Action" means any authorization, approval, consent, waiver,
exception, license, filing, registration, permit, notarization, special lease
or other requirement of any Governmental Person.
"Governmental Person" means any foreign or domestic national, federal,
state or local government, any political subdivision thereof, any governmental,
quasi-governmental, judicial, public or statutory instrumentality, authority,
body or entity, or any other regulatory bureau, authority, body or entity,
including the Federal Deposit Insurance Corporation, the Comptroller of the
Currency, the Board of Governors of the Federal Reserve System, any central
bank and any comparable authority.
"Lenders" means the "Lenders" as defined in the Credit Agreement.
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"Letter of Credit" means the irrevocable, transferable direct pay letter
of credit issued by the Bank in favor of the Trustee substantially in the form
of Exhibit A hereto, as the same may be extended or amended, or any letter of
credit issued in replacement thereof in accordance with the terms hereof.
"Letter of Credit Fees" means the fees to be paid by the Company in
connection with the Letter of Credit as set forth in Section 2.3(b) of the
Credit Agreement.
"Mortgage" means the Mortgage and Security Agreement dated as of December
1, 1987 made by the Company in favor of Comerica Bank (as successor by merger
to Manufacturers National Bank of Detroit) and the Issuer, which interests of
the Issuer were assigned therein to the Trustee. The Mortgage was recorded on
December 23, 1987 at Liber 23562, Page 754, Wayne County, Michigan Records.
"Mortgage and Security Agreement Assignment" means the Assignment of
Mortgage and Security Agreement dated even date herewith made by Comerica Bank
in favor of the Bank.
"Mortgage Amendment" means the First Amendment to Mortgage dated even date
herewith among the Trustee, the Company and the Bank whereby the parties
acknowledge that the Bank has replaced Comerica Bank as a mortgagee and secured
party under the Mortgage.
"Obligations" means Letter of Credit Fees, and any and all obligations of
the Company to reimburse the Bank for any Drawings under the Letter of Credit,
and all other obligations of the Company to the Bank arising under or in
relation to this Agreement or the other Credit Documents.
"Person" means an individual, a corporation, a partnership, an
association, a trust, a government, a political subdivision, a governmental
agency or instrumentality, or any other entity or organization.
"Pledge Agreement" means the Pledge and Security Agreement dated as of
even date herewith among the Company, the Trustee and the Bank, as it may be
amended or restated.
"Related Documents" means the Bond Documents, the Credit Documents, and
any other agreement or instrument related hereto or thereto.
"Security Agreement" means the Security Agreement dated as of December 1,
1987 made by the Company in favor of Comerica Bank (as successor by merger to
Manufacturers National Bank of Detroit) and the Trustee.
"Security Agreement Amendment" means the First Amendment to Security
Agreement dated even date herewith among the Trustee, the Company and the Bank
whereby the parties acknowledge that the Bank has replaced Comerica Bank as a
secured party under the Security Agreement.
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"Stated Amount" has the meaning set forth in the Letter of Credit.
"Stated Expiration Date" means the date on which the Letter of Credit
expires in accordance with its terms, which initially shall be July 15, 1998.
"Trustee" means First Trust National Association (as successor trustee to
Comerica Bank-Detroit), acting in its capacity as trustee under the Indenture,
and any successor trustee thereunder.
Section 1.02. Interpretation. In this Agreement, the singular
includes the plural and the plural the singular; words importing any gender
include the other genders; references to statutes are to be construed as
including all statutory provisions consolidating, amending or replacing all
statutory provisions consolidating, amending or replacing the statute referred
to; references in "writing" include printing, typing, lithography and other
means of reproducing words in a tangible, visible form; the words "including,"
"includes" and "include" shall be deemed to be followed by the words "without
limitation"; references to articles, sections (or subdivisions of sections),
recitals, exhibits, annexes or schedules are to those of this Agreement unless
otherwise indicated; references to agreements and other contractual instruments
shall be deemed to include all subsequent amendments and other modifications to
such instruments, but only to the extent such amendments and other
modifications are not prohibited by the terms of this Agreement; and references
to the parties and to Persons include their respective permitted successors and
assigns and, in the case of Governmental Persons, Persons succeeding to their
respective functions and capacities. References to the "Bonds" shall mean and
include references to beneficial interests in the Bonds, as appropriate.
ARTICLE II
THE LETTER OF CREDIT
Section 2.01. Amount and Term of Letter of Credit. The Bank agrees to
issue on the Date of Issuance, upon the terms, subject to satisfaction of the
conditions and relying upon the representations and warranties set forth in
this Agreement, the Letter of Credit in the amount of $3,696,165, effective on
the Date of Issuance and expiring on the Stated Expiration Date. The Letter of
Credit shall secure the payment of the principal of, and 65 days' interest on,
the Bonds at a maximum interest rate of 15% per annum.
Section 2.02. Letter of Credit Drawings. The Trustee is authorized to
make drawings under the Letter of Credit in accordance with the terms thereof.
The Company hereby directs the Bank to make payments under the Letter of Credit
in the manner therein provided. The Company hereby irrevocably approves
reductions and reinstatements of the Stated Amount as provided in the Letter of
Credit.
Section 2.03. Reimbursement; Interest; Fees. The Company shall reimburse
the Bank for drawings under the Letter of Credit in accordance with the terms
of the Credit Agreement.
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Interest and Letter of Credit Fees payable in connection with the Letter of
Credit shall also be payable in accordance with the Credit Agreement.
Section 2.04. Source of Funds. All payments made by the Bank pursuant to
the Letter of Credit shall be made from funds of the Bank, and not from the
funds of any other Person.
Section 2.05. Letter of Credit Transfer Fee. The Company hereby agrees
to pay or cause to be paid to the Bank on the date of any transfer of the
Letter of Credit in accordance with its terms to a successor to the Trustee a
transfer fee in the amount of $500 or, at the option of the Bank, such other
amount as shall at the time of transfer be the charge that the Bank is making
for transfers of similar letters of credit. The Bank agrees to notify the
Company of any change in such charge.
Section 2.06. Drawing Fees. The Company hereby agrees to pay to the
Bank, not later than the one Business Day following each Drawing by the Trustee
under the Letter of Credit, the sum of $100 or, at the option of the Bank, such
other amount as shall at the time of such Drawing be the charge that the Bank
is making for drawings on similar letters of credit, or such other amount
agreed upon by the Bank and the Company. The Bank agrees to notify the Company
of any change in such charge.
Section 2.07. Conditions Precedent. The obligation of the Bank to
issue the Letter of Credit is subject to the conditions precedent described in
Section 2.6 of the Credit Agreement and the following additional conditions
precedent:
(a) Documents. On or before the Date of Issuance, the Bank shall have
received the following documents in form and substance satisfactory to the
Bank.
(i) Mortgage and Security Agreement Assignment and Amendment. The
Mortgage and Security Agreement Assignment, the Mortgage Amendment, and the
Security Agreement Amendment duly executed by the parties thereto, together with
any UCC financing statements required to assign the security interests of
Comerica Bank to the Bank.
(ii) Pledge Agreement. The Pledge Agreement duly executed by the
parties thereto and evidence of the discharge of the related Comerica Bank
pledge agreement and reimbursement agreement.
(iii) Bond Documents. Executed copies of the Bond Documents.
(iv) Opinions. The favorable written opinion of Counsel to the
Company as to such matters as the Bank may reasonably request.
(b) Commitment Fee. The Bank shall have received the Letter of Credit
Fees described in Section 2.3(b) of the Credit Agreement.
5
<PAGE> 15
Section 2.08. Extension of the Letter of Credit. Subject to the terms
and conditions of the Credit Agreement, the Stated Expiration Date of the
Letter of Credit may be extended from time to time and each time for a period
of one year. Pursuant to the terms of the Letter of Credit, the Letter of
Credit will be automatically extended for an additional one year period on each
July 15, commencing July 15, 1998 through and including July 15, 2002 (each an
"Extension Date"), unless the Bank, at its sole discretion notifies the Trustee
in writing at least 60 days prior to the then applicable Extension Date that
the Bank will not renew the Letter of Credit beyond its then current stated
Expiration Date. The Company may direct the Bank not to renew the Letter of
Credit at any time, so long as such direction is received by the Bank in a
timely manner. Notwithstanding the foregoing, the Stated Expiration Date shall
not be extended beyond July 15, 2003. No extension of the Letter of Credit
shall in any way limit or otherwise affect the remedies of the Bank upon an
Event of Default as set forth in Section 5.01 hereof or available to the Bank
under the Credit Agreement or any of the other Related Documents.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Company's Representations. In order to induce the Bank
to enter into this Agreement, the Company represents and warrants as of the
Date of Issuance that:
(a) Incorporation of Representations and Warranties from the Credit
Agreement. The representation and warranties made by the Company in Article IV
of the Credit Agreement are true and correct in all material respects on and as
of the Date of Issuance with the same force and effect as if made on and as of
the Date of Issuance.
(b) Validity and Binding Nature. The Company has the power to execute,
deliver and perform this Agreement and the other Related Documents to which it
is a party, and to request the issuance of, and act as account party under, the
Letter of Credit; and when executed and delivered, this Agreement and such
other Related Documents will be valid and legally binding obligations of the
Company, enforceable in accordance with their respective terms; provided,
however, that this representation with respect to enforceability is limited by
bankruptcy, insolvency or other similar laws of general application relating to
or affecting the enforcement of creditors' rights.
(c) Due Authorization. The execution, delivery and performance by the
Company of this Agreement, the Credit Documents and the Related Documents to
which the Company is a party, and the requesting of the Letter of Credit
hereunder, have been duly authorized by all required corporate action on the
part of the Company and will not, and the form and purpose of the Letter of
Credit will not, violate any provisions of law, any order of any court or
arbitrator, or any other Governmental Person, applicable to the Company or the
organizational documents or by-laws of the Company.
6
<PAGE> 16
(d) Conflicting Instruments; No Default. The execution, delivery and
performance of this Agreement, the Credit Documents and the Related Documents
to which the Company is a party, and the requesting of the Letter of Credit
hereunder, will not violate any provisions of any indenture, agreement or other
instrument to which the Company or any of its properties or assets are bound or
subject, and will not be in conflict with, result in a breach of, or constitute
(with due notice and/or the lapse of time) a default under any such indenture,
agreement or other instrument, or result in the creation or impositions of any
lien upon any of the properties or assets of the Company, and no Unmatured
Event or Event of Default hereunder has occurred and is continuing.
(e) Authorization and Consents. No authorization, consent, approval,
license or exemption of, and no registration, qualification, designation,
declaration or filing with any court or Governmental Person is necessary for
the valid execution and delivery of this Agreement, the Credit Documents or the
Related Documents to which the Company is a party.
ARTICLE IV
DEFAULTS AND REMEDIES
Section 4.01. Event of Default and Remedies. If any of the following
event shall occur, each such event shall be an "Event of Default":
(a) any material representation or warranty made by the
Company in this Agreement (or incorporated herein by reference) or
in any of the other Related Documents or in any certificate,
document, instrument, opinion or financial or other statement
contemplated by or made or delivered pursuant to or in connection
with Agreement or with any of the other Related Documents, shall
prove to have been incorrect, incomplete or misleading in any
material respect;
(b) any "event of default" shall have occurred (after any applicable
grace periods) under any of the Related Documents (as defined
respectively therein); or
(c) default in the due observance or performance by the Company of
any other term, covenant or agreement set forth in this Agreement and the
continuance of such default for 30 days after the occurrence thereof.
Section 4.02. Remedies. In addition to the remedies otherwise described
in the Credit Agreement or in any other Related Document, upon the occurrence
of an Event of Default hereunder, the Bank may, at the direction of the
Required Lenders, exercise one or more of the following rights and remedies:
(a) give notice of the occurrence of an Event of Default hereunder to the
Trustee directing an acceleration of the Bonds pursuant to Section 9.01(e) of
the Indenture, or (b) pursue any rights and remedies provided to the Bank under
the Restated Documents.
7
<PAGE> 17
ARTICLE V
LETTER OF CREDIT AN ADVANCE
UNDER LOAN AGREEMENT
Section 5.01. Letter of Credit an Advance under Credit Agreement. The
Company and the Bank acknowledge and agree that (a) the Bank is serving as an
"Agent" on behalf of the Lenders under the Credit Agreement in connection with
the issuance of the Letter of Credit, (b) the Letter of Credit will be issued
pursuant to Section 2.4 of the Credit Agreement and participated in by the
Lenders pursuant to the terms of the Credit Agreement, (c) the issuance of the
Letter of Credit constitutes a "Letter of Credit Advance" as such term is
defined in the Credit Agreement, and (d) the Letter of Credit constitutes a
"Bond L/C" and a "Letter of Credit" as those terms are defined in the Credit
Agreement. This Agreement is intended to supplement the Credit Agreement and
the Bank and the Company agree that the covenants and agreements contained
herein are in addition to and not in substitution for the covenants and
agreements contained in the Credit Agreement.
ARTICLE VI
MISCELLANEOUS
Section 6.01. Waivers. No failure to exercise and no delay on the part
of the Bank in exercising any power or right in connection herewith or under
any of the other Related Documents shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right or power, or any abandonment
or discontinuance of steps to enforce such a right or power, preclude any other
or further exercise thereof or the exercise of any other right or power. No
course of dealing between the Company and the Bank shall operate as a waiver of
any right of the Bank. No modification or waiver of any provision of this
Agreement or any other Related Document nor any consent to any departure
therefrom shall in any event be effective unless the same shall be in writing
and signed by the person or entity against whom enforcement thereof is to be
sought, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given.
Section 6.02. Waiver of Jury Trial. The Bank and the Company, after
consulting or having had the opportunity to consult with counsel, knowingly,
voluntarily and intentionally waive any right either of them may have to a
trial by jury in any litigation based upon or arising out of this Agreement or
any related instrument or agreement or any of the transactions contemplated by
this Agreement or any course of conduct, dealing, statements (whether oral or
written) or actions of either of them. Neither the Bank nor the Company shall
seek to consolidate, by counterclaim or otherwise, any such actin in which a
jury trial has been waived with any other action in which a jury trial cannot
be or has not been waived. These provisions shall not be deemed to have been
modified in any respect or relinquished by either the Bank or the Company
except by a written instrument executed by both of them.
8
<PAGE> 18
Section 6.03. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF MICHIGAN (WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW); AND THE LETTER OF CREDIT SHALL BE
ISSUED SUBJECT TO, AND BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE
UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION) ICC
PUBLICATION NO. 500, EXCEPT FOR ARTICLES 48(f) AND 48(g), AND, TO THE EXTENT
NOT INCONSISTENT WITH SAID UNIFORM CUSTOMS AND PRACTICE, SHALL BE GOVERNED BY
THE LAW OF THE STATE OF MICHIGAN, INCLUDING ARTICLE 5 OF THE UNIFORM COMMERCIAL
CODE AS IN EFFECT IN THE STATE OF MICHIGAN.
Section 6.04. Notices. All notices, consents and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given when delivered in compliance with the provisions of Section 8.2 of the
Credit Agreement.
Section 6.05. Benefits of Agreement. This Agreement is a continuing
obligation and binds, and the benefits hereof shall inure to, the Company and
the Bank and their respective successors and assigns, provided that the Company
may not transfer or assign any or all of its rights or obligations hereunder
without the written consent of the Bank.
Section 6.06. Counterparts. This Agreement may be executed by one or
more of the parties hereto on any number of separate counterparts and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument.
Section 6.07. Parties; No Third-Party Beneficiaries. This Agreement,
the other and the Related Documents shall be binding upon, and inure to the
benefit of, the successors of the Bank, the permitted successors of the
Company, the assigns, transferees and endorsees of the Bank, the Agent, and the
Lenders. No other person or entity shall be deemed to be a third-party
beneficiary of any of the provisions of this Agreement or such other documents
or otherwise have any rights by reason of any provision of this Agreement, or
such other documents.
9
<PAGE> 19
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first above written.
KEY PLASTICS, INC.
By:_______________________________
Its:_________________________
NBD BANK
By:_______________________________
Teresa A. Kalil
Its: Vice President
10
<PAGE> 20
EXHIBIT A
NBD BANK
611 WOODWARD AVENUE
DETROIT, MICHIGAN 48226
IRREVOCABLE LETTER OF CREDIT
NO. 512
MARCH 24, 1997
First Trust National Association
411 West Lafayette, 4th Floor
Detroit, Michigan 48226
Attention: Corporate Trust Department
Ladies and Gentlemen:
We hereby establish, at the request and for the account of Key
Plastics, Inc., a Michigan corporation (the "Company"), in your favor, as
Trustee under the Trust Indenture, dated as of June 1, 1984 (the "Indenture"),
between the Economic Development Corporation of the Charter Township of Plymouth
(the "Issuer") and you, pursuant to which $4,500,000 in aggregate principal
amount of the Floating Rate Monthly Demand Economic Development Revenue Bonds
(Key International Manufacturing, Inc. Project), Series 1984 (the "Bonds"), are
being issued, our Irrevocable Letter of Credit No. 512, in the amount not to
exceed $3,696,165 (representing the principal amount of the Bonds ($3,600,000)
plus 65 days' interest thereon at a maximum rate of 15% per annum as more fully
described below) effective immediately and expiring on July 15, 1998, or such
later date to which the Stated Expiration Date has been extended in accordance
with the terms hereof (the "Stated Expiration Date").
We hereby irrevocably authorize you to draw on us, in accordance with
your draft payable one Business Day (as hereinafter defined) after sight, drawn
on us, and accompanied by your written and completed certificate signed by you
in substantially the form of Annex A attached hereto (such draft being your
"Interest Draft"), an amount not to exceed $96,165 (representing 65 days'
interest on the Bonds at a maximum rate of 15% per annum), subject to reduction
or reinstatement, if applicable, as hereinafter provided, (2) in one or more
drawings by your draft or drafts payable one Business Day after sight, drawn on
us, and, for each such drawing, accompanied by your written and completed
certificate signed by you in substantially the form of Annex B attached hereto
(any such draft being your "Principal Draft"), an aggregate amount not to exceed
$3,600,000, subject to reduction as hereinafter provided, (3) in one or more
drawings by your draft or drafts payable one Business Day (or in certain
circumstances as described herein
<PAGE> 21
on the same Business Day) after sight, drawn on us, and, for each such drawing,
accompanied by your written and completed certificate signed by you in
substantially the form of Annex C attached hereto (any such draft being your
"Bond Purchase Draft"), an aggregate amount not to exceed $3,696,165
(representing the principal amount of the Bonds plus 65 days' interest coverage
at a maximum rate of 15% per annum), subject to reduction or reinstatement, if
applicable, as hereinafter provided, and (4) in a single drawing by your draft
payable one Business Day after sight, drawn on us, and accompanied by your
written and completed certificate signed by you in substantially the form of
Annex D attached hereto (such draft being your "Final Draft"), an amount not to
exceed $3,696,165 (representing the principal amount of the Bonds plus 65 days'
interest coverage at a maximum rate of 15% per annum), as hereinafter provided.
Any such draft, with the accompanying certificate, drawn in strict conformity
with the terms and conditions of this Letter of Credit and presented at our
office as hereinafter set forth prior to 12:00 noon (Detroit, Michigan time) on
any Business Day shall be honored by us before 12:00 noon (Detroit, Michigan
time) on the next (or in the case of presentation after 12:00 noon, Detroit,
Michigan time, the second next) Business Day thereafter in accordance with your
payment instructions; provided, however, that any Bond Purchase Draft, with the
accompanying certificate, drawn in strict conformity with the terms and
conditions of this Letter of Credit and presented at our office as hereinafter
set forth prior to 11:00 a.m. (Detroit, Michigan time) on any Business Day shall
be honored by us before 2:00 p.m. (Detroit, Michigan time) on the same (or in
the case of a presentation after 11:00 a.m., Detroit, Michigan time, on the
next) Business Day if specified in your payment instructions. Notwithstanding
any other provision of this Letter of Credit, you are not authorized to draw on
us hereunder with respect to any payment of principal of or interest on any
Pledged Bonds (as defined in the Indenture).
If you shall draw on us by your Interest Draft and shall have received
from us within 15 calendar days from the date of our honoring such Interest
Draft a written direction under Section 601(f) of the Indenture to declare the
Bonds immediately due and payable because of the occurrence of an Event of
Default as defined in the Credit Agreement dated as of March 24, 1997, among the
Company, the party lenders thereto, and NBD Bank, as agent for the lenders (as
it may be amdned or restated from time to time, the "Credit Agreement"), your
right to draw on us in multiple drawings by your Bond Purchase Draft(s) or in a
single drawing by your Final Draft shall be reduced by the amount of such
Interest Draft. Your right to draw on us by your Interest Draft(s) shall also
be reduced by the amount of any drawing or drawings theretofore made on us by
your Bond Purchase Draft(s) and attributable to interest on the Bonds, unless
reinstated. Your right to draw on us by your Principal Draft(s), your Bond
Purchase Draft(s) and your Final Draft shall also be reduced by the amount of
any drawing or drawings theretofore made on us by your Principal Draft(s) and,
unless reinstated, your Bond Purchase Draft(s).
If you shall draw on us by your Interest Draft and shall not have
received from us within 15 calendar days from the date of our honoring such
Interest Draft a written direction under Section 9.01(e) of the Indenture to
declare the Bonds immediately due and payable because of the occurrence of an
Event of Default as defined in the Reimbursement Agreement, your right to draw
on us in a single drawing by your Interest Draft under clause (1) above shall be
automatically and irrevocably reinstated and, effective the 16th calendar day
from the date of
NBD LETTER OF CREDIT NO. 512
-2-
<PAGE> 22
our honoring such Interest Draft, you shall again be irrevocably authorized to
draw on us in accordance with clause (1) and the other terms and conditions
referred to or set forth above, in a drawing by your Interest Draft; and this
automatic reinstatement of your right to draw on us by your Interest Draft
under clause (1) above shall be applicable to successive drawings by your
Interest Drafts under clause (1) so long as this Letter of Credit shall not
have terminated as set forth below.
If you shall draw on us by your Bond Purchase Draft and thereafter you
shall receive and confirm to us by telephone that you hold in trust for our
account collected and immediately available funds constituting the proceeds of
the remarketing of all or a portion of the Bonds tendered to you for purchase in
accordance with the terms of the Indenture, such confirmation shall
automatically reinstate your right to draw on us (i) by your Interest Draft
under clause (1) above in the amount of the drawing made on us by such Bond
Purchase Draft and attributable to interest on the Bonds that have been
remarketed and for which you are holding proceeds, (ii) by your Principal
Draft(s) under clause (2) above, in the amount of the drawing made on us by such
Bond Purchase Draft and attributable to principal on the Bonds that have been
remarketed and for which you are holding proceeds and (iii) by your Bond
Purchase Draft(s) under clause (3) above and your Final Draft under clause (4)
above, in the amount of the drawing made on us by such Bond Purchase Draft and
attributable to the Bonds that have been remarketed and for which you are
holding proceeds. Upon the resale and delivery of the Bonds in such amount
under the Indenture and your telephonic confirmation to us, you shall again be
irrevocably authorized to draw on us in accordance with clauses (1) through (4)
in the second paragraph hereof, and the other terms and conditions referred to
or set forth above, in a single or multiple drawing as set forth above; and this
automatic reinstatement of your right to draw on us shall be applicable to
successive drawings hereunder so long as this Letter of Credit shall not have
been terminated as set forth below. We shall thereafter promptly confirm such
reinstatement in writing, but such written confirmation to you by us shall not
be required to effect such reinstatement.
Subject to the provisions set forth above for reinstatement of amounts
drawn under the Letter of Credit by your Interest Draft(s) and Bond Purchase
Draft(s), drawings under the Letter of Credit honored by us shall not, in the
aggregate, exceed the face amount of this Letter of Credit as reduced from time
to time as hereinabove provided.
Funds under this Letter of Credit are available to you against (1)
your Interest Draft accompanied by your written and completed certificate signed
by you in substantially the form of Annex A attached hereto, (2) your Principal
Draft accompanied by your written and completed certificate signed by you in
substantially the form of Annex B attached hereto, (3) your Bond Purchase Draft
accompanied by your written and completed certificate signed by you in
substantially the form of Annex C attached hereto, and (4) your Final Draft
accompanied by your written and completed certificate signed by you in
substantially the form of Annex D attached hereto. To the extent that amounts
are available to be drawn by your Interest Draft, such Interest Draft may be
presented together with your Principal Draft (but not your Final Draft). Each
such draft shall include thereon a reference to the number of this Letter of
Credit and each such draft and certificate shall be dated the date of its
presentation and shall be presented at our
NBD LETTER OF CREDIT NO. 512
-3-
<PAGE> 23
office located at 611 Woodward Avenue, Detroit, Michigan, 48226 or if delivered
via tested telex, to telex number 4320060, Answerback: NationBank DET, or if
delivered via facsimile, to facsimile number (313) 225-4533, in each case to
the attention of Capital Markets Division -- Revenue Bond Group, or at any
other office in Detroit, Michigan which may be designated by us by written
notice delivered to you three Business Days preceding the date on which such
change of address shall be effective; provided, that any draft and certificate
presented by telex or facsimile shall be simultaneously confirmed with our
office by telephone at (313) 225-2387 (or such other phone number as we may
designate) and an original executed copy of such draft and certificate shall be
forwarded to us promptly by first class mail or overnight mail. If requested by
you, payment under this Letter of Credit may be made by wire transfer or by
deposit of immediately available funds into a designated account that you
maintain with us. We agree that all payments made by us hereunder will be made
with our own funds.
This Letter of Credit shall automatically terminate upon the earliest
to occur of (i) our honoring your Final Draft hereunder, or (ii) your
surrendering this Letter of Credit to us for cancellation as a result of (A) the
payment in full of the Bonds pursuant to the provisions of the Indenture, or (B)
the acceptance by you of an Alternate Letter of Credit (as defined in the
Indenture), as certified by you to us, or (iii) the Stated Expiration Date, or
(iv) the Business Day following the date on which the interest rate on the Bonds
has been converted to a Fixed Interest Rate (as defined in the Indenture) unless
waived in writing by us prior to such date, or (v) the fifteenth calendar day
following delivery to you of a direction by us under Section 9.01(e) of the
Indenture to declare the Bonds immediately due and payable which has not been
rescinded.
If a demand for payment made by you hereunder does not, in any
instance, conform to the terms and conditions of this Letter of Credit, we shall
give you prompt written notice that the demand was not effected in accordance
with the terms and conditions of this Letter of Credit, stating the reasons
therefore and that we are holding any documents at your disposal or are
returning the same to you, as we may elect. Upon being notified that the demand
was not effected in conformity with this Letter of Credit, you may attempt to
correct any such non-conforming demand for payment if, and to the extent that,
you are able to do so in accordance with terms of this Letter of Credit and
within the expiration date of the Letter of Credit.
Communications with respect to this Letter of Credit shall be in
writing and shall be addressed to us at 611 Woodward Avenue, Detroit, Michigan,
Attention: Capital Markets Division -- Revenue Bond Group, or, if sent to us by
tested telex to No. 4320060; Answerback: NationBank DET, and specifically
referring to the number of this Letter of Credit. The term "Business Day" as
used herein shall mean any day other than (i) a Saturday, (ii) a Sunday, (iii) a
day on which banking institutions in the city in which the principal corporate
trust office of the Trustee (or its bond registrar, paying agent or tender agent
offices) is located or the principal office of the Remarketing Agent (as defined
in the Indenture) is located or the office of NBD Bank at which action is to be
taken to realize moneys under this Letter of Credit are required or authorized
by law or executive order to be closed, or (iv) a day on which the New York
Stock Exchange is closed.
NBD LETTER OF CREDIT NO. 512
-4-
<PAGE> 24
This Letter of Credit is subject to the Uniform Customs and Practice
for Documentary Credits (1993 Revision), International Chamber of Commerce,
Publication No. 500 (the "Uniform Customs") with the exceptions of Articles
48(f) and 48(g) thereof. This Letter of Credit shall be deemed to be a contract
made under the laws of the State of Michigan and shall, as to matters not
governed by the Uniform Customs, be governed by and constructed in accordance
with the laws of the State of Michigan, including the Uniform Commercial Code as
in effect in the State of Michigan.
This Letter of Credit is transferable to any transferee who has
succeeded you as Trustee under the Indenture. Each letter of credit issued upon
any such transfer may be successively transferred. Transfer of the available
drawing(s) under this Letter of Credit to such transferee shall be effected by
the presentation to us of this Letter of Credit accompanied by a written and
completed certificate signed by you substantially in the form of Annex E
attached hereto. Upon such presentation we shall forthwith transfer the same to
your transferee or, if so requested by your transferee, issue an irrevocable
letter of credit to your transferee in the form of this Letter of Credit.
On each July 15, commencing July 15, 1998 through and including July
15, 2002 (each an "Extension Date"), this Letter of Credit will be extended for
an additional period of one year beyond the original or any extended Stated
Expiration Date (so that on each Extension Date this Letter of Credit will
always have a remaining term of one year), unless we notify you at least 60 days
prior to the then applicable Extension Date by a certificate in the form of the
attached Annex F that this Letter of Credit will not be extended beyond its then
applicable Stated Expiration Date. Such notice may be given in our sole
discretion. Notwithstanding the foregoing, the Stated Expiration Date shall not
be extended beyond July 15, 2003.
This Letter of Credit sets forth in full our undertaking, and such
undertaking shall not in any way be modified, amended, amplified or limited by
reference to any document, instrument or agreement referred to herein
(including, without limitation, the Bonds), other than the certificates and the
drafts referred to herein; and any such reference shall not be deemed to
incorporate herein by reference any document, instrument or agreement except for
such certificates and such drafts.
Very truly yours,
NBD BANK
By:_____________________________
Teresa A. Kalil
Its: Vice President
NBD LETTER OF CREDIT NO. 512
-5-
<PAGE> 25
ANNEX A
CERTIFICATE FOR DRAWING IN CONNECTION
WITH THE PAYMENT OF INTEREST ON THE
ECONOMIC DEVELOPMENT CORPORATION OF
THE CHARTER TOWNSHIP OF PLYMOUTH FLOATING
RATE MONTHLY DEMAND ECONOMIC DEVELOPMENT
REVENUE BONDS (KEY INTERNATIONAL MANUFACTURING
INC. PROJECT), SERIES 1984
The undersigned, a duly authorized officer of First Trust National
Association, a national banking association (acting in its capacity as trustee
under the Indenture, the "Trustee"), hereby certifies to NBD Bank, a Michigan
banking corporation (the "Bank"), with reference to Irrevocable Letter of Credit
No. 512 (the "Letter of Credit") issued by the Bank in favor of the Trustee,
that:
(1) The Trustee is the Trustee under the Indenture for the
holders of the Bonds.
(2) The Trustee is making a drawing under the Letter of Credit
with respect to a payment, pursuant to the terms of the Indenture, of interest
on the Bonds.
(3) The amount of the Interest Draft accompanying this
Certificate is $__________, being drawn in respect of such interest, and does
not include any amount of interest on the Bonds included in any Interest Draft
or Bond Purchase Draft (that has not been reinstated) presented to you and not
dishonored by you on or prior to the date of presentation hereof.
(4) [The Interest Draft accompanying this Certificate is the
first Interest Draft presented by the Trustee under the Letter of Credit.](1)
[The Interest Draft last presented by the Trustee under the Letter of Credit was
honored by you on ________________, 19__, and the Trustee did not within 15
calendar days after such date receive a written direction from you under Section
9.01(e) of the Indenture to accelerate and declare the Bonds immediately due and
payable because of the occurrence and continuance of an Event of Default as
defined in the Credit Agreement.](2)
(5) The amount of the Interest Draft accompanying this
Certificate was computed in accordance with the terms and conditions of the
Bonds and the Indenture. Such amount does not include any amount in respect of
Pledged Bonds and does not exceed the amount available to be drawn by an
Interest Draft under the Letter of Credit.
(1)To be used in the Certificate relating to the first Interest Draft only.
(2)To be used in each Certificate relating to each Interest Draft other than the
first Interest Draft.
<PAGE> 26
(6) This Certificate and the Interest Draft it accompanies are
dated, and are being presented to the Bank on, the date that is one Business Day
prior to the date on which interest on the Bonds with respect to which this
drawing is being made is due and payable under the terms of the Bonds and the
Indenture.
All capitalized terms used but not defined herein shall have the
meaning assigned thereto in the Letter of Credit.
IN WITNESS WHEREOF, the Trustee has executed this Certificate as of
the _____ day of _______________, ____.
FIRST TRUST NATIONAL ASSOCIATION
as Trustee
By:_______________________________
Its: Authorized Officer
INTEREST CERTIFICATE
-2 -
<PAGE> 27
ANNEX B
CERTIFICATE FOR DRAWING IN CONNECTION WITH
THE PAYMENT OF UNPAID PRINCIPAL OF THE
ECONOMIC DEVELOPMENT CORPORATION OF
THE CHARTER TOWNSHIP OF PLYMOUTH FLOATING
RATE MONTHLY DEMAND ECONOMIC DEVELOPMENT
REVENUE BONDS (KEY INTERNATIONAL MANUFACTURING
INC. PROJECT), SERIES 1984
The undersigned, a duly authorized officer of First Trust National
Association, a national banking association (acting in its capacity as trustee
under the Indenture, the "Trustee"), hereby certifies to NBD Bank, a Michigan
banking corporation (the "Bank"), with reference to Irrevocable Letter of Credit
No. 512 (the "Letter of Credit") issued by the Bank in favor of the Trustee,
that:
(1) The Trustee is the Trustee under the Indenture for the
holders of the Bonds.
(2) The Trustee is making a drawing under the Letter of Credit
with respect to the payment, pursuant to the terms of the Indenture, of less
than all of the unpaid principal of the Bonds which are outstanding under the
Indenture.
(3) The amount of the Principal Draft accompanying this
Certificate is $__________, being drawn in respect of the payment of such
principal, and does not include any amount of principal on the Bonds included in
any Principal Draft, Bond Purchase Draft that has not been reinstated or Final
Draft presented to you and not dishonored by you on or prior to the date of
presentation hereof.
(4) The amount of the Principal Draft accompanying this
Certificate was computed in accordance with the terms and conditions of the
Bonds and the Indenture. Such amount does not include any amount in respect of
Pledged Bonds and does not exceed the amount available to be drawn with respect
to principal of the Bonds under the Letter of Credit.
(5) This Certificate and the Principal Draft it accompanies are
dated, and are being presented to the Bank on, the date that is one Business Day
prior to the date on which unpaid principal of the Bonds with respect to which
this drawing is being made is due and payable under the terms of the Bonds and
the Indenture.
The Trustee acknowledges that, pursuant to the terms of the Letter of
Credit, upon your honoring the Principal Draft accompanying this Certificate,
the total amount available under the Letter of Credit and the amounts available
to be drawn by the Trustee thereunder by any subsequent Principal Draft and
Final Draft are automatically decreased by an amount equal to the
<PAGE> 28
amount specified in paragraph (3) above as being drawn in respect of the payment
of unpaid principal of the Bonds.
All capitalized terms used but not defined herein shall have the
meaning assigned thereto in the Letter of Credit.
PRINCIPAL CERTIFICATE
- 2 -
<PAGE> 29
IN WITNESS WHEREOF, the Trustee has executed this Certificate as of
the ______ day of _________, ___.
FIRST TRUST NATIONAL ASSOCIATION
as Trustee
By:______________________________
Its: Authorized Officer
PRINCIPAL CERTIFICATE
- 3 -
<PAGE> 30
ANNEX C
CERTIFICATE FOR DRAWING IN CONNECTION WITH
THE PAYMENT OF THE PURCHASE PRICE OF THE
ECONOMIC DEVELOPMENT CORPORATION OF
THE CHARTER TOWNSHIP OF PLYMOUTH FLOATING
RATE MONTHLY DEMAND ECONOMIC DEVELOPMENT
REVENUE BONDS (KEY INTERNATIONAL MANUFACTURING
INC. PROJECT), SERIES 1984
The undersigned, a duly authorized officer of First Trust National
Association, a national banking association (acting in its capacity as trustee
under the Indenture, the "Trustee"), hereby certifies to NBD Bank, a Michigan
banking corporation (the "Bank"), with reference to Irrevocable Letter of Credit
No. 512 (the "Letter of Credit") issued by the Bank in favor of the Trustee,
that:
(1) The Trustee is the Trustee under the Indenture for the
holders of the Bonds.
(2) The Trustee is making a drawing under the Letter of Credit
with respect to the payment of the aggregate purchase price of the Bonds
tendered to the Trustee for purchase pursuant to the terms of the Bonds and of
Section 3.01 or 3.10 of the Indenture. Sufficient funds are not available in
accordance with the terms of Section 6.05 of the Indenture to make such payment,
and the amount of such drawing represents, but does not exceed, the amount of
funds required to make such payment.
(3) The amount of the Bond Purchase Draft accompanying this
Certificate is $__________ (representing $_________ of principal and $_________
of interest), being drawn in respect of the payment of the purchase price of
Bonds properly tendered or deemed tendered for purchase, and does not include
any amount of principal on the Bonds included in any other Bond Purchase Draft
(except to the extent of your reinstatement of the amount which may be drawn
thereby under the terms of the Letter of Credit), or in any Principal Draft or
Final Draft presented to you, and not dishonored by you, on or prior to the date
of presentation hereof.
(4) The amount of the Bond Purchase Draft accompanying this
Certificate was computed in accordance with the terms and conditions of the
Bonds and the Indenture. Such amount does not include any amount in respect of
Pledged Bonds and does not exceed the amount available to be drawn under the
Letter of Credit with respect to the purchase price of the Bonds.
(5) This Certificate and the Bond Purchase Draft it accompanies
are dated, and are being presented to the Bank on, the date that is not more
than one Business Day
<PAGE> 31
prior to the date on which the purchase price of the Bonds with respect to
which this drawing is being made is due and payable under the terms of the
Bonds and the Indenture.
The Trustee acknowledges that, pursuant to the terms of the Letter of
Credit, upon your honoring the Bond Purchase Draft accompanying this
Certificate, the total amount of the Letter of Credit and the amounts available
to be drawn by the Trustee thereunder by (i) any subsequent Bond Purchase Draft,
Principal Draft, and Final Draft are automatically decreased by an amount equal
to the amount specified in paragraph (3) above as being drawn in respect of the
payment of unpaid principal of the Bonds, unless such amount is reinstated in
the manner provided in the Letter of Credit, and (ii) any subsequent Interest
Draft, Bond Purchase Draft and Final Draft is automatically decreased by an
amount equal to the amount specified in paragraph (3) above as being drawn in
respect of the payment of unpaid interest on the Bonds, unless such amount is
reinstated in the manner provided in the Letter of Credit.
All capitalized terms used but not defined herein shall have the
meaning assigned thereto in the Letter of Credit.
IN WITNESS WHEREOF, the Trustee has executed this Certificate as of
the _____ day of ______________, 19__.
FIRST TRUST NATIONAL ASSOCIATION
as Trustee
By:____________________________
Its: Authorized Officer
BOND PURCHASE DRAFT CERTIFICATE
- 2 -
<PAGE> 32
ANNEX D
CERTIFICATE FOR DRAWING IN CONNECTION WITH
THE PAYMENT OF ENTIRE OUTSTANDING
PRINCIPAL OF AND INTEREST ON THE
ECONOMIC DEVELOPMENT CORPORATION OF
THE CHARTER TOWNSHIP OF PLYMOUTH FLOATING
RATE MONTHLY DEMAND ECONOMIC DEVELOPMENT
REVENUE BONDS (KEY INTERNATIONAL MANUFACTURING
INC. PROJECT), SERIES 1984
The undersigned, a duly authorized officer of First Trust National
Association, a national banking association (acting in its capacity as trustee
under the Indenture, the "Trustee"), hereby certifies to NBD Bank, a Michigan
banking corporation (the "Bank"), with reference to Irrevocable Letter of Credit
No. 512 (the "Letter of Credit") issued by the Bank in favor of the Trustee,
that:
(1) The Trustee is the Trustee under the Indenture for the
holders of the Bonds.
(2) The Trustee is making a drawing under the Letter of Credit
with respect to the payment of the unpaid principal amount of, and up to 65
days' interest on, all of the Bonds which are outstanding under the Indenture.
(3) The amount of the Final Draft accompanying this Certificate
is equal to the sum of (i) $___________ being drawn in respect of unpaid
principal of the Bonds and (ii) $____________ being drawn in respect of unpaid
interest on the Bonds, and does not include any amount of principal of or
interest on the Bonds included in any Interest Draft or Bond Purchase Draft that
has not been reinstated, or Principal Draft presented and not dishonored by you
on or prior to the date of this Certificate.
(4) The amount of the Final Draft accompanying this Certificate
was computed in accordance with the terms and conditions of the Bonds and the
Indenture. Such amount does not include any amount in respect of Pledged Bonds
and does not exceed the amount available to be drawn by a Final Draft under the
Letter of Credit.
(5) This Certificate and the Final Draft it accompanies are
dated, and are being presented to the Bank on, the date that is one Business Day
prior to the date on which the unpaid principal of, and interest on, all of the
Bonds which are outstanding under the Indenture is due and payable under the
terms of the Bonds and the Indenture.
The Trustee acknowledges that, pursuant to the terms of the Letter of
Credit, upon your honoring the Final Draft accompanying this Certificate, the
entire amount available to be
<PAGE> 33
drawn by the Trustee under the Letter of Credit shall have been drawn and the
Letter of Credit shall automatically terminate.
All capitalized terms used but not defined herein shall have the
meaning assigned thereto in the Letter of Credit.
REDUCTION CERTIFICATE
- 2 -
<PAGE> 34
IN WITNESS WHEREOF, the Trustee has executed this Certificate as of
this _______ day of __________________, 19__.
FIRST TRUST NATIONAL ASSOCIATION
as Trustee
By:_______________________________
Its: Authorized Officer
REDUCTION CERTIFICATE
- 3 -
<PAGE> 35
ANNEX E
INSTRUCTIONS TO TRANSFER
_________________, 19__
NBD Bank
611 Woodward Avenue
Detroit, Michigan 48226
Attention:Capital Market Division -- Revenue Bond Group
Re:NBD Bank Irrevocable Letter of Credit No. ___
Ladies and Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably
transfers to:
__________________________________________
(Name of Transferee)
__________________________________________
(Address)
all rights of the undersigned beneficiary to draw under the above Letter of
Credit. Such transferee has succeeded the undersigned beneficiary as Trustee
under the Indenture.
By this transfer, all rights of the undersigned beneficiary in such
Letter of Credit are transferred to the transferee and the transferee shall
hereafter have the sole rights as beneficiary thereof; provided, however, that
no rights shall be deemed to have been transferred to the transferee until such
transfer complies with the requirements of such Letter of Credit pertaining to
transfers.
Such Letter of Credit is returned herewith and in accordance therewith
we ask you to transfer the same to the transferee or, if so requested by the
transferee, to issue a new irrevocable letter of credit in favor of the
transferee with provisions consistent with such Letter of Credit.
All capitalized terms used but not defined herein shall have the
meaning assigned thereto in such Letter of Credit.
<PAGE> 36
FIRST TRUST NATIONAL ASSOCIATION
as Trustee
By:________________________________
Authorized Officer
INSTRUCTIONS TO TRANSFER
- 2 -
<PAGE> 37
ANNEX F
EXPIRATION CERTIFICATE
_______________, 19__
First Trust National Association
411 W. Lafayette, 4th Floor
Detroit, Michigan 48226
Attention: Corporate Trust Department
Re: NBD Bank Irrevocable Letter of Credit No. 512 Securing the
Economic Development Corporation of the Charter Township of
Plymouth Floating Rate Monthly Demand Economic Development
Revenue Bonds (Key International Manufacturing Inc. Project),
Series 1984
Ladies and Gentlemen:
Reference is made to that certain Irrevocable Letter of Credit No. 512
dated March 24, 1997 (the "Letter of Credit") issued by NBD Bank in your favor
as beneficiary. We hereby notify you that the Stated Expiration Date (as
defined in the Letter of Credit) will not be extended beyond its scheduled
expiration date of July 15, ____, and therefore the Letter of Credit will
terminate on July 15, ________.
NBD BANK
By: ______________________________
Its:__________________________
<PAGE> 38
EXHIBIT A
NBD BANK
611 WOODWARD AVENUE
DETROIT, MICHIGAN 48226
IRREVOCABLE LETTER OF CREDIT
NO. 511
MARCH 24, 1997
Norwest Bank Indiana, National Association
as Trustee
P. O. Box 960
Fort Wayne, IN 46801-0960
Attention: Corporate Trust Department
Ladies and Gentlemen:
At the request of and for the account of Key Plastics, Inc., a Michigan
corporation (the "Company"), we (the "Bank") hereby establish this irrevocable,
transferable, Letter of Credit in favor of you as Trustee under the Trust
Indenture dated as of August 1, 1989 (the "Indenture") between you (as
successor trustee to Lincoln National Bank and Trust Company of Fort Wayne) and
the Town of Hamilton, Indiana (the "Issuer"), pursuant to which Limited
Obligation Industrial Development Revenue Bonds (Key Plastics, Inc. Project) in
the aggregate principal amount of $7,500,000 (the "Bonds") were issued by the
Issuer.
We hereby irrevocably authorize you to draw on us, from and after the date
hereof, to and including the Expiration Date (hereinafter defined), in
accordance with the terms and conditions hereinafter set forth, available by
your sight draft in an amount not exceeding $2,567,364 (the "Original Stated
Amount"), of which an amount not exceeding $2,465,000 may be drawn upon with
respect to the unpaid principal of the Bonds, and of which an amount not
exceeding the lesser of $102,364 or two hundred ten (210) days accrued interest
on the Bonds at any one time outstanding may be drawn based upon the annual
interest rates then in effect.
Subject to the foregoing and the further provisions of this Letter of
Credit, a demand for payment may be made by you by presentation to us at 611
Woodward Avenue, Detroit, Michigan 48226, Attention: Capital Markets Division -
Revenue Bond Group, of your sight draft in the form of Annex 1 and of payment
documents in the forms attached hereto as Annex 2 or Annex 3 appropriately
completed and signed on your behalf by you. The sight draft drawn under this
<PAGE> 39
Letter of Credit must bear on its face the clause "Drawn under NBD Bank Letter
of Credit No. 511." In addition when a draft is submitted in the form of Annex
No. 2, requesting a payment of principal of the Bonds, your draft must also be
accompanied by your completed and signed certificate relating to the reduction
of the Stated Amount of this Letter of Credit in the form of Annex 4 attached
hereto. Each draft and certificate shall be dated as of the date of
presentation.
Any demand for payment hereunder shall not exceed the Stated Amount. The
Stated Amount shall be reduced from time to time by payment of principal made
on the Bonds from drawings made hereunder and from surplus bond proceeds, plus
the amount of the corresponding interest portion thereof allocable to such
principal, but only if Annex 4 with respect to such principal payment shall
have been delivered to us.
On the tenth (10th) calendar day following each drawing hereunder to pay
interest on the Bonds, the amount so drawn shall be restored to the amount
available to be drawn hereunder in respect of payment of interest on the Bonds
accrued on or prior to the maturity thereof unless you shall have received
notice from us substantially in the form of Annex No. 6 hereto, stating that an
Event of Default under the Credit Agreement dated as of March 24, 1997 (as it
may be amended or restated from time to time, the "Credit Agreement"), among
the Company, the lenders party thereto (the "Lenders") and NBD Bank, as agent
for the Lenders, has occurred and is then continuing and which contains a
statement that this Letter of Credit shall terminate fifteen (15) calendar days
after the date of your receipt of such notice and that you are required to draw
on the Letter of Credit within that period and directing you to accelerate and
declare immediately due and payable all unpaid principal of and interest on the
Bonds.
This Letter of Credit shall terminate fifteen (15) calendar days after the
date of your receipt of such notice (or if such 15th day is not a business day,
on the next succeeding business day). Subject to the preceding sentence,
drawings in respect of payments hereunder honored by us shall not, in the
aggregate, exceed the Stated Amount.
The drawing made pursuant to such certificate shall be made by tested
telegraphic communication, Federal Express (or similar overnight
instrumentality of delivery) or hand delivery without further need of document
presentation, including the original of this Letter of Credit, it being
understood that such certificate submitted via tested telegraphic
communication, Federal Express or similar overnight instrumentation of
delivery) or hand delivery is to be the sole operative instrument of drawing.
Demand for payment may be made by you under this Letter of Credit at our
address set forth above (or at such other office as may be designated by us by
written notice delivered to you) at any time during our business hours on a
Business Day prior to the Expiration Date. As used herein, the term "Business
Day" means a day on which banks located in the city in which the principal
corporate trust office of the Trustee is located or Detroit, Michigan, are not
required or authorized to remain closed, and on which the New York Stock
Exchange is not closed.
If a drawing for payment for any purpose is made by you hereunder prior to
3:00 p.m. Detroit, Michigan time, on a Business Day, and provided that such
drawing for payment and the
2
<PAGE> 40
documents presented in connection therewith conform to the terms and conditions
hereof, payment shall be made to you of the amount specified, in immediately
available funds before 12:00 noon Detroit, Michigan time, on the next Business
Day.
If the drawing is made by you after 3:00 p.m., Detroit, Michigan time on a
Business Day, payment shall be made to you of the amount specified, in
immediately available funds by 12:00 noon Detroit, Michigan time on the second
next Business Day thereafter.
We agree to honor and pay the amount of drawing if presented in compliance
with the terms and conditions hereof using our general funds and not any funds
received from the Company. If requested by you, payment under this Letter of
Credit may be made by deposit of immediately available funds (including without
limitation by wire transfer of funds) into a designated account that you
maintain with us.
If a drawing made by you hereunder does not, in any instance, conform to
the terms and conditions of this Letter of Credit, we will give you prompt
notice that the purported presentment was not effected in accordance with the
terms and conditions of this Letter of Credit, stating the reasons therefor,
and that we are holding any documents at your disposal or are returning the
same to you, as we may elect. Upon being notified that the drawing was not
effected in conformity with this Letter of Credit, you may attempt to correct
any such non-conforming demand for payment if, and to the extent that, you are
entitled (without regard to the provisions of this sentence) and able to do so.
Drawings in respect of payments hereunder honored by us shall not, in the
aggregate, exceed the Stated Amount. Subject to the preceding sentence and to
the provisions herein for the reinstatement of amounts drawn hereunder in
respect to interest, each drawing honored by the Bank hereunder shall pro tanto
reduce the Stated Amount available under this Letter of Credit.
The demand for payment hereunder shall not exceed the Stated Amount. The
Stated Amount of this Letter of Credit shall be the Original Stated Amount, as
reduced in accordance with the provisions hereof. The Stated Amount, and the
portion thereof that may be drawn upon with respect to principal of the Bonds,
shall be permanently reduced automatically upon notice by you to us, without
amendment of this Letter of Credit, to the amount set forth in your certificate
(as set forth in Annex 4 hereto duly signed by your authorized officer) by the
amount of any reduction in the amount of any Bonds outstanding.
This Letter of Credit applies only to the payment of principal of the
Bonds and up to two hundred ten (210) days, accrued interest at any one time
outstanding in respect of interest accruing on the Bonds on or prior to August
15, 1999 and does not apply to any interest that may accrue thereon after such
date.
The Letter of Credit shall be effective immediately and shall
automatically expire and be delivered to us for cancellation at our close of
business at our aforesaid address on the earlier to occur (the "Expiration
Date") of the following:
3
<PAGE> 41
(i) the date on which we honor the last drawing available to be made
hereunder,
(ii) the date on which the principal amount and premium, if any, and
interest on the Bonds shall have been paid in full pursuant to the terms
of the Indenture from the proceeds of a drawing under this Letter of
Credit,
(iii) fifteen (15) calendar days (or, if the 15th day is not a
business day, then on the next succeeding business day) after we have
provided you with written notice (in substantially the form of Annex No.
6 hereto) of an Event of Default under the Credit Agreement which
contains a statement that the Letter of Credit shall terminate fifteen
(15) calendar days after the date of your receipt of such notice and that
you are required to draw on this Letter of Credit within that period and
have directed you to accelerate and declare immediately due and payable
all unpaid principal of the Bonds,
(iv) August 15, 1999 -- the Stated Expiration Date.
This Letter of Credit shall be promptly surrendered to us by you upon any such
expiration.
By acceptance of this Letter of Credit, you agree that upon payment of any
draft(s) which reduce the Stated Amount of this Letter of Credit to zero, you
shall deliver forthwith an assignment to us of all of your interest in the
Mortgage (as defined in the Indenture) in proper form for recording and filing.
This Letter of Credit and the Annexes 1 through 6 appended hereto sets
forth in full the terms of our undertaking, and this undertaking shall not in
any way be modified, amended or expanded by reference to any document,
instrument or agreement referred to herein (except the Uniform Customs
hereinafter mentioned) or to which this Letter of Credit relates, and any such
reference shall not be deemed to incorporate herein by reference any document,
instrument or agreement.
This Letter of Credit is transferable in its entirety (but not in part) to
any transferee who has succeeded you as Trustee under the Indenture and may be
successively transferred. Transfer of this Letter of Credit to such transferee
shall be effected by and upon the presentation to us of this Letter of Credit
accompanied by a certificate substantially in the form of Annex 5 attached
hereto. Notwithstanding any contrary provision of the Uniform Commercial
Customs and Practice for Documentary Credits (1993 Revision), International
Chamber of Commerce, Publication No. 500 (the "Uniform Customs") payments of
any charges in respect of transfer of this Letter of Credit shall not be a
condition precedent to such transfer.
This Letter of Credit is subject to the Uniform Customs or by subsequent
Uniform Customs fixed by subsequent Congresses of the International Chamber of
Commerce. This Letter of Credit shall be deemed to be made under the laws of
the State of Michigan, including Article 5 of the Uniform Commercial Code as in
effect in the State of Michigan, and shall be governed by and construed in
accordance with the laws of the State of Michigan. As to any
4
<PAGE> 42
matter of conflict between the provisions of the Uniform Customs and the laws
of the State of Michigan, the laws of the State of Michigan shall govern this
Letter of Credit.
Only you (or a transferee as permitted by the terms of this Letter of
Credit) may make a drawing under this Letter of Credit.
Upon the payments to you or your account of the amount specified in a
sight draft drawn hereunder, we shall be fully discharged of our obligation
under this Letter of Credit with respect to such sight draft, and we shall not
thereafter be obligated to make any further payment under this Letter of Credit
in respect of such sight draft to you or any other person who may have made to
you or who makes to you a demand for payment of principal or, premium, if any,
or interest on the Bonds.
Very truly yours,
NBD BANK
By:___________________________
Teresa A. Kalil
Title: Vice President
5
<PAGE> 43
ANNEX 1
SIGHT DRAFT
_________________________
(Place)
___________________, 19__
(Date)
For value received, pay to Norwest Bank Indiana, National Association as
incumbent Trustee under the Trust Indenture dated as of August 1, 1989 between
the Town of Hamilton, Indiana (the "Issuer") and Norwest Bank Indiana, National
Association, as Trustee, pursuant to which the Trustee issued $7,500,000 in
aggregate principal amount of its Limited Obligation Industrial Development
Revenue Bonds (Key Plastics, Inc. Project) (the "Bonds"), for the Bonds,
$_________ (Dollars).
Drawn under NBD Bank Transferable Irrevocable Letter of Credit No. 511.
To: NBD Bank
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Capital Markets Division - Revenue Bond Group
NORWEST BANK INDIANA, NATIONAL
ASSOCIATION, as Trustee
By:_________________________
Its:____________________
<PAGE> 44
ANNEX 2
CERTIFICATE FOR DRAWING
WITH RESPECT TO PRINCIPAL OF
THE LIMITED OBLIGATION
INDUSTRIAL DEVELOPMENT REVENUE BONDS
Town of Hamilton, Indiana
(Key Plastics, Inc. Project)
The undersigned, a duly authorized officer of Norwest Bank Indiana,
National Association (the "Trustee"), hereby certifies to NBD Bank (the
"Bank"), with reference to Irrevocable Letter of Credit No. 511 (the "Letter of
Credit") issued by the Bank in favor of the Trustee, that:
1. The Trustee is the Trustee under the Indenture for the holders of the
Bonds.
2. The Trustee is making a drawing under the Letter of Credit with respect
to the payment of principal on the Bonds.
3. The Trustee is directed to draw $__________ under the Letter of Credit
with respect to payment of principal on the Bonds pursuant to Section 501 of
the Indenture.
4. The amount of the sight draft accompanying this certificate does not
exceed the amount available to be drawn under the Letter of Credit.
5. The amount of the sight draft accompanying this certificate was
computed in accordance with the terms and conditions of the Bonds and the
Indenture.
Any capitalized term used herein and not defined shall have its respective
meaning as set forth in the Letter of Credit.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate this ____ day of _________, 19__.
NORWEST BANK INDIANA, NATIONAL
ASSOCIATION,
as Trustee
By:____________________________
Title:
Authorized Signatory
<PAGE> 45
ANNEX 3
CERTIFICATE FOR DRAWING
WITH RESPECT TO INTEREST ON
THE LIMITED OBLIGATION
INDUSTRIAL DEVELOPMENT REVENUE BONDS
Town of Hamilton, Indiana
(Key Plastics, Inc. Project)
The undersigned, a duly authorized officer of Norwest Bank Indiana,
National Association (the "Trustee"), hereby certifies to NBD Bank (the
"Bank"), with reference to Irrevocable Letter of Credit No. 511 (the "Letter of
Credit") issued by the Bank in favor of the Trustee, that:
1. The Trustee is the Trustee under the Indenture for the holders of the
Bonds.
2. The Trustee is making a drawing under the Letter of Credit with respect
to the payment of principal on the Bonds.
3. The Trustee is directed to draw $__________ under the Letter of Credit
with respect to payment of interest on the Bonds pursuant to Section 501 of the
Indenture.
4. The amount of the sight draft accompanying this certificate does not
exceed the amount available to be drawn under the Letter of Credit.
5. The amount of the sight draft accompanying this certificate was
computed in accordance with the terms and conditions of the Bonds and the
Indenture.
Any capitalized term used herein and not defined shall have its respective
meaning as set forth in the Letter of Credit.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate this ____ day of _________, 19__.
NORWEST BANK INDIANA, NATIONAL
ASSOCIATION,
as Trustee
By:_______________________
Title:
Authorized Signatory
<PAGE> 46
ANNEX 4
CERTIFICATE FOR REDUCTION OF
AMOUNTS AVAILABLE UNDER LETTER OF CREDIT
ISSUED IN CONNECTION WITH
THE LIMITED OBLIGATION
INDUSTRIAL DEVELOPMENT REVENUE BONDS
Town of Hamilton, Indiana
(Key Plastics, Inc. Project)
The undersigned, a duly authorized officer of Norwest Bank Indiana,
National Association (the "Trustee"), hereby certifies to Comerica Bank (the
"Bank"), with reference to Irrevocable Letter of Credit No. 511 (the "Letter of
Credit") issued by the Bank in favor of the Trustee, that:
1. The Trustee is the Trustee under the Indenture for the holders of the
Bonds.
2. The initial amount available under the Letter of Credit with respect to
the principal of the Bonds was $__________.
3. The Trustee hereby notifies you that after March 24, 1997 and prior to
the date hereof $__________ principal amount of the Bonds has been paid (or
provision for payment thereof has been made) pursuant to the Indenture.
[SELECT APPLICABLE PARAGRAPH 4 below]
4. The Trustee hereby notifies you that following payment of the Draft
which this Reduction Certificate accompanies $__________ principal amount of
the Bonds will have been paid (or provision for payment thereof made) pursuant
to the Indenture.
4. The Trustee hereby notifies you that $__________ of surplus bond
proceeds has been applied to payment of the Bonds in accordance with the
Indenture; and, after the application of such surplus bond proceeds,
$__________ principal amount of the Bonds will have been paid (or provision for
payment thereof made) pursuant to the Indenture.
5. Following the principal payment(s) referred to in paragraphs (3) and
(4) above, the aggregate principal amount of all of the Bonds "outstanding" (as
defined in the Indenture) is $__________.
<PAGE> 47
6. The amount available to be drawn by the Trustee under the Letter of
Credit with respect to principal of the Bonds is hereby reduced to $__________
(such amount being the amount specified in paragraph 5 above).
Any capitalized term used herein and not defined shall have its respective
meaning as set forth in the Letter of Credit.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the ____ day of __________, 19__.
NORWEST BANK INDIANA, NATIONAL
ASSOCIATION,
as Trustee
By:________________________
Title:
Authorized Signatory
2
<PAGE> 48
ANNEX 5
INSTRUCTION TO TRANSFER
_______________, 19___
NBD Bank
611 Woodward Avenue
Detroit, Michigan 48226
In re: NBD Bank, Irrevocable Letter of Credit No. 511
Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably
instructs you to transfer to:
(Name of Transferee)
(Address)
all rights of the undersigned beneficiary to draw under the above-captioned
Letter of Credit (the "Letter of Credit"). The transferee has succeeding the
undersigned as Trustee under the Trust Indenture, dated as of August 1, 1989,
between the Town of Hamilton, Indiana and Norwest Bank Indiana, National
Association.
By this transfer, all rights of the undersigned beneficiary in the Letter
of Credit are transferred to the transferee and the transferee shall hereafter
have the sole rights as beneficiary thereof; provided, however, that no rights
shall be deemed to have been transferred to the transferee until such transfer
complies with the requirements of the Letter of Credit pertaining to transfers.
The Letter of Credit is returned herewith and in accordance therewith we
ask that this transfer be effected.
SIGNATURE AND LEGAL
CAPACITY GUARANTEED Very truly yours,
________________________ _____________________________
(Bank) Trustee
By:_________________________
________________________ Title:
Authorized Signature Authorized Signatory
<PAGE> 49
ANNEX 6
Notice of Direction to Trustee
to Make a Drawing Under Letter of Credit
Date: _______________
Lincoln National Bank and Trust
Company of Fort Wayne, as Trustee
Post Office Box 960
Fort Wayne, IN 46801-0960
Re: Irrevocable Transferable Letter of Credit No. 511 Issued by
NBD Bank
Gentlemen:
Reference is made to the Credit Agreement dated as of March 24, 1997,
among Key Plastics, Inc., the lenders party thereto, and NBD Bank, as agent for
the lenders (as it may be amended or restated from time to time, the "Credit
Agreement") pursuant to which there exists an Event of Default (as defined in
the Credit Agreement) under [insert Section reference and a specific
description of the Event of Default].
Please be advised (i) that in accordance with the Trust Indenture dated as
of August 1, 1989, between Town of Hamilton, Indiana, and you as Trustee (the
"Indenture"), we are directing you, as the beneficiary of the Letter of Credit,
to make a drawing under the Letter of Credit for the principal amount of all
outstanding bonds, together with interest accrued thereon and (ii) that as a
consequence of such direction, you may make a drawing under the Letter of
Credit no later than fifteen (15) days (or if such 15th day is not a business
day, on the next succeeding business day) after your receipt of this notice,
after which day the Letter of Credit will expire.
Very truly yours,
NBD BANK
By:________________________
Its:__________________
<PAGE> 1
Exhibit 10.2
Execution Copy
KEY PLASTICS, INC.
--------------------------------------
CREDIT AGREEMENT
dated as of March 24, 1997
--------------------------------------
NBD BANK, as Agent
<PAGE> 2
TABLE OF CONTENTS
Section Page
- ------- ----
ARTICLE I1
1.1 Certain Definitions ......................................... 1
1.2 Other Definitions; Rules of Construction .................... 18
1.3 Accounting Terms and Determinations ......................... 18
ARTICLE II ................................................................. 19
2.1 Commitments of the Lenders .................................. 19
2.2 Termination and Reduction of Revolving Credit Commitments ... 21
2.3 Fees ........................................................ 21
2.4 Disbursement of Advances .................................... 22
2.5 Conditions for First Disbursement ........................... 24
2.6 Further Conditions for Disbursement ......................... 26
2.7 Subsequent Elections as to Borrowings ....................... 26
2.8 Limitation of Requests and Elections ........................ 28
2.9 Minimum Amounts; Limitation on Number of Borrowings ......... 28
2.10 Borrowing Base Adjustments ................................. 27
2.11 Security and Collateral .................................... 29
ARTICLE III ................................................................ 29
3.1 Principal Payments .......................................... 28
3.2 Interest Payments ........................................... 29
3.3 Letter of Credit Reimbursement Payments ..................... 31
3.4 Payment Method .............................................. 32
3.5 No Setoff or Deduction ...................................... 34
3.6 Payment on Non-Business Day; Payment Computations ........... 34
3.7 Additional Costs ............................................ 34
3.8 Illegality and Impossibility ................................ 35
3.9 Indemnification ............................................. 36
3.10 Substitution of Lender ..................................... 36
ARTICLE IV ................................................................. 37
4.1 Corporate Existence and Power ............................... 37
4.2 Corporate Authority ......................................... 37
4.3 Binding Effect .............................................. 37
4.4 Subsidiaries ................................................ 37
4.5 Litigation .................................................. 37
4.6 Financial Condition ......................................... 38
4.7 Use of Advances ............................................. 38
4.8 Consents, Etc ............................................... 38
4.9 Taxes ....................................................... 38
4.10 Title to Properties ........................................ 38
4.11 ERISA ...................................................... 39
4.12 Disclosure ................................................. 39
4.13 Environmental and Safety Matters ........................... 39
<PAGE> 3
Section Page
- ------- ----
4.14 Borrowing Base ............................................. 39
4.15 No Default ................................................. 39
4.16 Intellectual Property ...................................... 40
4.17 No Burdensome Restrictions ................................. 40
4.18 Labor Matters .............................................. 40
4.19 Solvency ................................................... 40
4.20 Not an Investment Company; other Regulations ............... 41
4.21 14% Senior Debt Documents .................................. 41
4.22 Senior Subordinated Debt Documents ......................... 41
ARTICLE V .................................................................. 41
5.1 Affirmative Covenants ....................................... 41
(a) Preservation of Corporate Existence, Etc. ........... 41
(b) Compliance with Laws, Etc. .......................... 42
(c) Maintenance of Properties; Insurance ................ 42
(d) Reporting Requirements .............................. 42
(e) Accounting, Access to Records, Books, Etc. .......... 44
(f) Additional Security and Collateral .................. 44
(g) Further Assurances .................................. 44
5.2 Negative Covenants .......................................... 45
(a) Net Worth ........................................... 45
(b) Total Debt to EBITDA Ratio .......................... 45
(c) Interest Coverage Ratio ............................. 42
(d) Fixed Charge Coverage Ratio ......................... 43
(e) Indebtedness ........................................ 43
(f) Liens ............................................... 46
(g) Merger; Acquisitions; Etc. .......................... 47
(h) Disposition of Assets; Etc. ......................... 48
(i) Nature of Business .................................. 48
(j) Dividends and Other Restricted Payments ............. 48
(k) Investments, Loans and Advances ..................... 49
(l) Transactions with Affiliates ........................ 50
(m) Inconsistent Agreements ............................. 50
(n) Negative Pledge Limitation .......................... 50
(o) Subsidiary Dividends. ............................... 50
(p) Payments and Modification of Debt ................... 51
(q) EBITDA ..............................................
5.3 Additional Covenants ........................................ 47
ARTICLE VI ................................................................. 51
6.1 Events of Default ........................................... 51
6.2 Remedies .................................................... 53
6.3 Distribution of Proceeds of Collateral ...................... 54
6.4 Letter of Credit Liabilities ................................ 55
CREDIT AGREEMENT Page ii
<PAGE> 4
Section Page
- ------- ----
ARTICLE VII ................................................................ 55
7.1 Appointment; Nature of Relationship ......................... 52
7.2 Powers ...................................................... 52
7.3 General Immunity ............................................ 52
7.4 No Responsibility for Loans, Recitals, etc. ................. 52
7.5 Action on Instructions of Lenders ........................... 53
7.6 Employment of Agents and Counsel ............................ 53
7.7 Reliance on Documents; Counsel .............................. 53
7.8 Agent's Reimbursement and Indemnification ................... 53
7.9 Notice of Default ........................................... 53
7.10 Rights as a Lender ......................................... 53
7.11 Lender Credit Decision ..................................... 54
7.12 Successor Agent ............................................ 54
7.13 Collateral Management ...................................... 54
7.14 Rights to Indemnity ........................................ 55
7.15 Sharing of Payments ........................................ 55
7.16 Withholding Tax Exemption .................................. 55
ARTICLE VIII ............................................................... 56
8.1 Amendments, Etc. ............................................ 56
8.2 Notices ..................................................... 56
8.3 No Waiver By Conduct; Remedies Cumulative ................... 57
8.4 Reliance on and Survival of Various Provisions .............. 57
8.5 Expenses; Indemnification ................................... 57
8.6 Successors and Assigns ...................................... 58
8.7 Counterparts ................................................ 60
8.8 Governing Law ............................................... 60
8.9 Table of Contents and Headings .............................. 61
8.10 Construction of Certain Provisions ......................... 61
8.11 Integration and Severability ............................... 61
8.12 Independence of Covenants .................................. 61
8.13 Interest Rate Limitation ................................... 61
8.14 Judgment Currency .......................................... 63
8.15 WAIVER OF JURY TRIAL ....................................... 63
CREDIT AGREEMENT Page iii
<PAGE> 5
EXHIBITS
- --------
Exhibit A ................. Borrowing Base Certificate
Exhibit B ................. Environmental Certificate
Exhibit C ................. Guaranty
Exhibit D ................. Mortgage
Exhibit E-1, E-2 and E-3 .. Pledge Agreements
Exhibit F-1 ............... Revolving Credit Note
Exhibit F-2 ............... Swingline Note
Exhibit F-3 ............... Term Note
Exhibit G-1 and G-2 ....... Security Agreements
Exhibit H-1 ............... Request for Revolving Credit Advance
and Swingline Loan
Exhibit H-2 ............... Request for Acquisition Amount
Exhibit I ................. Opinion of Counsel
Exhibit J ................. Request for Continuation or Conversion of Advance
Exhibit K ................. Assignment and Acceptance
SCHEDULES
- ---------
Schedule 1.1-A ............ 14% Senior Debt Documents
Schedule 1.1-B ............ Senior Subordinated Debt Documents
Schedule 4.4 .............. Subsidiaries
Schedule 4.5 .............. Litigation
Schedule 4.16 ............. Intellectual Property
Schedule 4.21 ............. Application of Funds
Schedule 5.2(e) ........... Indebtedness
Schedule 5.2(f) ........... Liens
Schedule 5.2(k) ........... Investments, Loans and Advances
CREDIT AGREEMENT Page iv
<PAGE> 6
THIS CREDIT AGREEMENT, dated as of March 24, 1997 (this "Agreement"),
is by and among KEY PLASTICS, INC., a Michigan corporation (the "Company"), the
lenders party hereto from time to time (collectively, the "Lenders" and
individually, a "Lender"), and NBD BANK, a Michigan banking corporation, as
agent for the Lenders (in such capacity, the "Agent").
INTRODUCTION
The Company desires to obtain a $15,000,000 seven and one half year
amortizing term loan and a $125,000,000 six and one half year reducing revolving
credit, including letters of credit, in order to refinance existing
indebtedness, to provide for certain acquisitions and to provide funds and other
financial accommodations for its corporate purposes, and the Lenders are willing
to make such term loan and to establish such credit facility in favor of the
Company on the terms and conditions herein set forth.
In consideration of the premises and of the mutual agreements herein
contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Definitions. As used herein the following terms shall have
the following respective meanings:
"Acquisition Amount" shall mean an amount blocked from the Revolving
Credit Commitments and the Borrowing Base for the purpose of funding the Initial
Acquisitions, which amount shall be equal to $30,000,000 on the Effective Date.
"Acquisition Amount Expiry Date" shall mean July 24, 1997 or such later
date as determined by the Required Revolving Credit Lenders, provided that the
Acquisition Amount Expiry Date may not be extended beyond a date one year after
the Effective Date unless approved by all Revolving Credit Lenders.
"Adjusted Prime Rate" shall mean the per annum rate equal to the sum of
(a) the Applicable Margin, plus (b) the greater of the Prime Rate or the Federal
Funds Rate plus 1/2%, in each case as in effect from time to time, which
Adjusted Prime Rate shall change simultaneously with any change in such Prime
Rate or Federal Funds Rate, as the case may be.
"Adjusted Prime Rate Loan" shall mean any Loan which bears interest at
the Adjusted Prime Rate.
"Advance" shall mean any Loan and any Letter of Credit Advance.
"Aeroquip" shall mean a portion of the Aeroquip division of Trinova
Corp. and related assets.
"Affiliate", when used with respect to any Person, shall mean any other
Person which, directly or indirectly, controls or is controlled by or is under
common control with such Person. For purposes of this definition "control"
(including the correlative meanings of the terms "controlled by" and "under
common control with"), with respect to any Person, shall mean possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities or by contract or otherwise. Without limiting the foregoing
definition of Affiliate, any Person shall be deemed to control another Person if
the controlling Person owns or controls 10% or more of any class of voting
securities (or other ownership interest of any kind) of the controlled Person.
<PAGE> 7
"Applicable Lending Office" shall mean, with respect to any Advance
made by any Lender or with respect to such Lender's Commitment, the office of
such Lender or of any Affiliate of such Lender located at the address specified
as the applicable lending office for such Lender set forth next to the name of
such Lender in the signature pages hereof or any other office or Affiliate of
such Lender or of any Affiliate of such Lender hereafter selected and notified
to the Company and the Agent by such Lender.
"Applicable Margin" shall mean, (a) with respect to the Term Loan,
0.75% in the case of Adjusted Prime Rate Loans and 2.50% in the case of LIBOR
Loans, (b) with respect to the fee payable pursuant to Section 2.3(b)(i) on Bond
L/Cs, 1.50% and (c) with respect to any other Adjusted Prime Rate Loan, LIBOR
Loan, Letter of Credit fee under Section 2.3(b)(i) and commitment fee under
Section 2.3(a), as the case may be, the applicable percentage set forth in the
applicable table below based upon the Total Debt to EBITDA Ratio, as adjusted on
the sixtieth day after the end of each fiscal quarter of the Company and shall
remain in effect until the next change to be effected pursuant to this
definition, based upon the Total Debt to EBITDA Ratio as of the last day of the
most recently ended fiscal quarter, provided that (a) any change in the
Applicable Margin with respect to any LIBOR Loan during a LIBOR Interest Period
with respect to such LIBOR Loan shall not be effective until after the end of
such LIBOR Interest Period and (b) if any Event of Default has occurred and is
continuing the Total Debt to EBITDA Ratio as of the end of the most recently
ended fiscal quarter shall, for the purposes of this definition, be deemed to be
greater than 5.0 to 1.0:
<TABLE>
<CAPTION>
===============================================================================================================================
APPLICABLE MARGIN
- -------------------------------------------------------------------------------------------------------------------------------
Total Debt to EBITDA Ratio Adjusted Prime Rate Loan LIBOR Loan and Letter of Commitment Fee
Credit Fee
(other than Bond L/Cs)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Greater Than or Equal to 5.00 75 bps 250 bps 50 bps
- -------------------------------------------------------------------------------------------------------------------------------
Greater Than or Equal to 4.50 but Less Than 5.00 50 bps 225 bps 50 bps
- -------------------------------------------------------------------------------------------------------------------------------
Greater Than or Equal to 3.50 but Less Than 4.50 25 bps 200 bps 45 bps
- -------------------------------------------------------------------------------------------------------------------------------
Greater Than or Equal to 3.00 but Less Than 3.50 0 bps 175 bps 37.5 bps
- -------------------------------------------------------------------------------------------------------------------------------
Less Than 3.00 0 bps 150 bps 35 bps
===============================================================================================================================
</TABLE>
"Assignment and Acceptance" is defined in Section 8.6(c).
"Assignment of Rents and Leases" shall mean each assignment of rents
and leases or similar agreement entered into by the Company or any Guarantor for
the benefit of the Agent and the Lenders pursuant to this Agreement in such form
as approved by the Agent, as amended or modified from time to time.
"Board of Directors" means the Board of Directors of the Company, or
any authorized committee of the Board of Directors.
"Bond L/Cs" shall mean the Letters of Credit issued for the account of
the Company pursuant to Section 2.1(a) as follows: (a) in the amount of
$2,567,364 to back payment under the Limited Obligation Industrial Revenue Bonds
issued by the Town of Hamilton and (b) in the amount of $3,696,165 to back
CREDIT AGREEMENT Page 2
<PAGE> 8
payments under Floating Rate Monthly Demand Economic Development Bonds issued by
the Economic Development of the Township of Plymouth.
"Borrowing" shall mean the aggregation of Advances, including each
Letter of Credit issuance, of the Lenders to be made to the Company, or
continuations and conversions of such Loans, made pursuant to Article II on a
single date and, in the case of any Loans, for a single LIBOR Interest Period,
which Borrowings may be classified for purposes of this Agreement by reference
to the type of Loans or the type of Advances comprising the related Borrowing,
e.g., a "LIBOR Borrowing" is a Borrowing comprised of LIBOR Loans and a "Letter
of Credit Borrowing" is an Advance comprised of a single Letter of Credit.
"Borrowing Base" shall mean, as of any date, (a) an amount equal to 85%
of the amount of Eligible Accounts Receivable, plus (b) an amount equal to 50%
of the amount of Eligible Inventory, plus (c) an amount (based on the Dollar
Equivalent thereof) equal to the sum of 85% of the amount of Eligible U.K.
Receivables plus 50% of the amount of Eligible U.K. Inventory, provided that, if
the Key U. K. Letter of Credit is issued, the amount determined pursuant to this
clause (c) shall not exceed the lesser of the amount of the Key U. K. Letter of
Credit or the amount outstanding under the Key U. K. Credit Facility, plus (d)
$55,000,000 (subject to reduction by the Agent based on the final targets
comprising the Initial Acquisitions) of fixed asset reliance, such amount to
reduce quarterly in the same amounts and at the same times as the reductions in
the Revolving Credit Commitments pursuant to Section 2.2(a)(vi) and (vii) and to
reduce pursuant to the terms described in Section 3.1(c), minus (e) the unfunded
portion of the Acquisition Amount, minus (f) the 14% Senior Note Portion.
"Borrowing Base Certificate" for any date shall mean an appropriately
completed report as of such date and substantially in the form of Exhibit A
hereto, certified as true and correct as of such date by a duly authorized
officer of the Company.
"Business Day" shall mean a day other than a Saturday, Sunday or other
day on which banks in New York, Chicago or Detroit are not open to the public
for carrying on substantially all of their banking functions.
"Capital Expenditures" shall mean, for any period, the additions to
property, plant and equipment and other capital expenditures of the Company and
its Subsidiaries for such period, as the same are (or should be) set forth, in
accordance with Generally Accepted Accounting Principles, in consolidated
financial statements of the Company and its Subsidiaries for such period;
provided, however, that the initial expenditures to acquire all or substantially
all of the assets or Capital Stock of any Person and the initial expenditures to
complete the Initial Acquisitions shall not be considered Capital Expenditures
for purposes of this definition.
"Capital Lease" of any Person shall mean any lease which, in accordance
with Generally Accepted Accounting Principles, is or should be capitalized on
the books of such Person.
"Capital Stock" shall mean (i) in the case of any corporation, all
capital stock and any securities exchangeable for or convertible into capital
stock and any warrants, rights or other options to purchase or otherwise acquire
capital stock or such securities or any other form of equity securities, (ii) in
the case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock, (iii) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited) and (iv) any
other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distribution of assets of, the issuing
Person.
"Cash Equivalent" shall mean (i) cash in Dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having maturities of not
more than six months from the date of acquisition, (iii) marketable direct
obligations issued
CREDIT AGREEMENT Page 3
<PAGE> 9
by any state of the United States of America or any political subdivision of any
such state or any public instrumentality thereof maturing within one year from
the date of acquisition thereof and, at the time of acquisition, having one of
the two highest ratings obtainable from either Standard & Poor's Corporation
("S&P") or Moody's Investors Service, Inc. ("Moody's"), (iv) certificates of
deposit and eurodollar time deposits with maturities of six months or less from
the date of acquisition, bankers' acceptances with maturities not exceeding six
months and overnight bank deposits, in each case with any Lender or with any
domestic commercial bank having capital and surplus in excess of $250,000,000
and a Keefe Bank Watch Rating of "B" or better, (v) repurchase obligations with
a term of not more than seven days for underlying securities of the types
described in clauses (ii), (iii) and (iv) above entered into with any financial
institution meeting the qualifications specified in clause (iv) above, (vi)
commercial paper having one of the two highest ratings obtained from Moody's or
S&P and in each case maturing within six months after the date of acquisition
and (vii) investments in money market funds which invest substantially all their
assets in securities of the type described in clauses (i) through (vii) above.
"Change in Control" shall mean the occurrence of any of the following:
(a) prior to an Initial Public Offering, the Principals and their
Related Parties shall cease to control, directly or indirectly, in each case
free and clear of all Liens, at least 51% (on a fully diluted basis) of the
issued and outstanding shares of Capital Stock of the Company entitled to vote
for the election of members of the board of directors of the Company and have
the right and authority to appoint, designate or otherwise elect each of the
members of the board of directors of the Company;
(b) after an Initial Public Offerings, (i) the Principals and their
Related Parties shall cease to control, directly or indirectly, in each case
free and clear of all Liens, at least 20% (on a fully diluted basis) of the
issued and outstanding shares of Capital Stock of the Company entitled to vote
for the election of directors of the board of directors of the Company and have
the right and authority to appoint, designate or otherwise elect at least 20% of
the members of the board of directors of the Company or (ii) other than the
Principals and their Related Parties, any Person, or two or more Persons acting
in concert, acquire beneficial ownership (within the meaning of Rule 13d-3 of
the Securities and Exchange Commission under the Securities Exchange Act of
1934) of 15% or more of the outstanding shares of voting stock of the Company on
a fully diluted basis;
(c) David C. Benoit or Joel D. Tauber shall not have the current
management and director positions that they now hold with the Company with all
responsibilities normally associated with those positions;
(d) any "Change in Control" as defined in the Senior Subordinated Note
Indenture; or
(e) any "Change of Control" as defined in the 14% Senior Note
Indenture.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated thereunder.
"C/L/C" shall mean any commercial letter of credit issued hereunder.
"Commitments" shall mean, collectively, the Revolving Credit
Commitments and the Term Loan Commitments.
"Consolidated" or "consolidated" shall mean, when used with reference
to any financial term in this Agreement, the aggregate for two or more Persons
of the amounts signified by such term for all such Persons determined on a
consolidated basis in accordance with Generally Accepted Accounting Principles.
CREDIT AGREEMENT Page 4
<PAGE> 10
"Contingent Liabilities" shall mean as to any Person any obligation of
such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(a) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligator, (c) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (d) otherwise to assure or hold harmless the owner of
such primary obligation against loss in respect thereof, provided however, that
the term Contingent Liabilities shall not include endorsements of instruments
for deposit or collection in the ordinary course of business; provided further,
that, for purposes of calculating the financial covenants contained in Sections
5.2(a) through (d), Contingent Liabilities shall be those Contingent Liabilities
that are or should be noted in the financial statements of such Person or the
notes thereto as required under Generally Accepted Accounting Principles or
otherwise described in clause (iv) of the definition of Total Debt. The amount
of any Contingent Liability shall be deemed to be an amount equal to the stated
or determinable amount of the primary obligation in respect of which such
Contingent Liability is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
"Continuing Directors" shall mean as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the Effective Date or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"Contractual Obligation" shall mean, as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Defaulting Lender" shall mean any Lender that fails to make available
to the Agent such Lender's Loans required to be made hereunder or shall have not
made a payment required to be made to the Agent hereunder. Once a Lender becomes
a Defaulting Lender, such Lender shall continue as a Defaulting Lender until
such time as such Defaulting Lender makes available to the Agent the amount of
such Defaulting Lender's Loans and all other amounts required to be paid to the
Agent pursuant to this Agreement.
"Disqualified Stock" shall mean any Capital Stock that, by its terms
(or by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part.
"Dollar Equivalent" shall mean as of any date, with respect to any
amount in a currency other than Dollars, the sum in Dollars resulting from the
conversion of such amount from such currency into Dollars at the most favorable
spot exchange rate determined by the Agent to be available to it for the
purchase of such currency with Dollars at approximately 11:00 a.m. local time of
the Applicable Lending Office on such date as a determination of the Dollar
Equivalent is made.
"Dollars" and "$" shall mean the lawful money of the United States of
America.
"Domestic Subsidiary" shall mean each present and future Subsidiary of
the Company which is not a Foreign Subsidiary.
CREDIT AGREEMENT Page 5
<PAGE> 11
"EBITDA" shall mean, for any period, Net Income for such period plus
all amounts deducted in determining such Net Income on account of (a) Total
Interest Expense, (b) income taxes, and (c) depreciation and amortization
expense, all as determined for the Company and its Subsidiaries on a
consolidated basis in accordance with Generally Accepted Accounting Principles.
"Effective Date" shall mean the effective date specified in the final
paragraph of this Agreement.
"Eligible Accounts Receivable" shall mean, as of any date, those
accounts receivable owned by the Company or any Guarantor which are payable in
any Permitted Currency (valued at the Dollar Equivalent thereof) and in which
the Company or any Guarantor has granted to the Agent, for the benefit of the
Agent and the Lenders, an enforceable, perfected security interest which is not
void or voidable pursuant to a Security Agreement and all representations and
warranties pertaining to such accounts receivable in such Security Agreement are
true and correct, valued at the face amount thereof less sales, excise or
similar taxes outstanding and less returns, discounts, credits and allowances of
any nature at any time claimed in writing or issued, owing or granted; but shall
not include any such account receivable (a) that is not a bona fide existing
obligation created by the sale and actual delivery of inventory, goods or other
property or the furnishing of services or other good and sufficient
consideration to customers of the Company or any Guarantor, as the case may be,
in the ordinary course of business, (b) that is more than 90 days past due or
that remains outstanding more than 90 days after the earlier of the date of the
invoice or the shipment of the related inventory, goods or other property or the
furnishing of the related services or other consideration, (c) that is subject
to any dispute, contra-account, defense, offset or counterclaim or any Lien
(except those in favor of the Agent under the Security Documents), or the
inventory, goods, property, services or other consideration of which such
account receivable constitutes proceeds are subject to any such Lien, but only
to the extent of such dispute, contra-account, defense, offset, counterclaim or
Lien, (d) in respect of which the inventory, goods, property, services or other
consideration have been rejected or the amount is in dispute, but only to the
extent of such dispute, (e) that is due from any Affiliate or Subsidiary of the
Company or any Guarantor, (f) that is payable by any Person located outside the
United States (which shall not be deemed to include any territories of the
United States) or Canada, other than any Subsidiary of General Motors
Corporation, Ford Motor Company or Chrysler Corporation or any other substantial
auto manufacturer or supplier approved by the Agent; (g) that is payable by the
United States or any of its departments, agencies or instrumentalities or by any
state or other governmental entity or by any foreign government unless the
Company or such Guarantor, as the case may be, fully complies with the
Assignment of Claims Act and executes all documents and agreements and causes
all documents and agreements to be executed in connection therewith as requested
by the Agent or any similar foreign statute in the case of accounts receivable
payable by a foreign government, (h) that is payable by any Person as to which
25% or more of the aggregate amount of such accounts receivable payable by such
Person to the Company or any Guarantor, as the case may be, do not otherwise
constitute Eligible Accounts Receivable pursuant to clause (b) of this
definition (i) that are payable by any Person that is the subject of any
proceeding seeking to adjudicate it a bankrupt or insolvent or seeking
liquidation, winding up or reorganization, arrangement, adjustment, protection,
relief or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief or protection of debtors or seeking the
appointment of a receiver, trustee, custodian or other similar official for it
or for any substantial part of its property, or that is not generally paying its
debts as they become due or has admitted in writing its inability to pay its
debts generally or has made a general assignment for the benefit of creditors,
(j) which is evidenced by a promissory note or other instrument, or (k) that for
any other reason is at any time deemed by the Agent to be ineligible.
"Eligible Inventory" shall mean, as of any date, that inventory
(including raw materials, work in process, tooling and finished goods) owned by
the Company or any Guarantor and in which the Company or such Guarantor has
granted to the Agent, for the benefit of the Lenders, an enforceable, perfected
security interest which is not void or voidable pursuant to a Security Agreement
and all representations and warranties
CREDIT AGREEMENT Page 6
<PAGE> 12
pertaining to such inventory in such Security Agreement are true and correct,
valued at the lower of cost or market on a FIFO basis and subject to such
reserves as established by the Agent, but shall not include any such inventory
(a) that does not constitute inventory readily salable or usable in the business
of the Company or any Guarantor, (b) that is located outside the United States
(which shall not be deemed to include any territories of the United States), (c)
that is subject to, or any accounts or other proceeds resulting from the sale or
other disposition thereof could be subject to, any Lien (except those in favor
of the Agent under the Security Documents), including any sale on approval or
sale or return transaction or any consignment, (d) that is not in the possession
of the Company or any Guarantor, (e) that is held for lease or is the subject of
any lease, (f) that is subject to any trademark, trade name or licensing
arrangement, or any law, rules or regulation, that could limit or impair the
ability of the Agent to promptly exercise all rights of the Agent under the
security Agreements, (g) if such inventory is located on premises not owned by
the Company or any Guarantor and the landlord or other owner of such premises
has not waived its distraint, lien and similar rights with respect to such
inventory and shall not have agreed to permit the Agent to enter such premises
pursuant to a waiver and agreement of such Person in favor of and in form and
substance acceptable to Agent, (h) with respect to which any insurance proceeds
are not payable to the Agent as a loss payee or are payable to any loss payee
other than the Agent, the Company or any Guarantor, as the case may be, or (i)
that for any other reason is at any time deemed by the Agent to be ineligible.
"Eligible U.K. Inventory" shall mean, as of any date, that inventory
owned by Key U.K. which meets each of the following conditions: (a) (i) NBD has
a first priority, enforceable, perfected security interest which is not void or
voidable in such inventory pursuant to the Key U.K. Credit Facility and the
Agent and the Lenders would be subrogated to all rights and remedies of NBD with
respect to such inventory upon a draw under the Key U.K. Letter of Credit or
(ii) the Agent, for the benefit of itself and the Lenders, has a first priority,
enforceable perfected security interest which is not void or voidable in such
inventory securing the Lender Indebtedness, and (b) such inventory is considered
by NBD and by the Agent eligible to be borrowed against.
"Eligible U.K. Receivables" shall mean, as of any date, those accounts
receivable owned by Key U.K. which meet each of the following conditions: (a)
(i) NBD has a first priority, enforceable, perfected security interest which is
not void or voidable in such accounts receivable pursuant to the Key U.K. Credit
Facility and the Agent and the Lenders would be subrogated to all rights and
remedies of NBD with respect to such accounts receivable upon a draw under the
Key U.K. Letter of Credit or (ii) the Agent, for the benefit of itself and the
Lenders, has a first priority, enforceable perfected security interest which is
not void or voidable in such accounts receivable securing the Lender
Indebtedness, and (b) such accounts receivable are considered by NBD and by the
Agent eligible to be borrowed against.
"Environmental Certificate" shall mean an appropriately completed
environmental certificate in the form of Exhibit B attached hereto delivered by
the Company and the Guarantors.
"Environmental Laws" at any date shall mean all provisions of law,
statutes, ordinances, rules, regulations, judgments, writs, injunctions,
decrees, orders, awards and standards promulgated by the government of the
United States of America or any foreign government or by any state, province,
municipality or other political subdivision thereof or therein or by any court,
agency, instrumentality, regulatory authority or commission of any of the
foregoing concerning the protection of, or regulating the discharge of hazardous
substances into, the environment.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations thereunder.
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"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) which, together with the Company or any Subsidiary of the Company,
would be treated as a single employer under Section 414 of the Code.
"Estimation Period" shall mean the period for which a shareholder who
is an individual is required to estimate for Federal income tax purposes his
allocation of taxable income for a calendar year in connection with determining
his estimated federal income tax liability for such period.
"Event of Default" shall mean any of the events or conditions described
in Section 6.1.
"Federal Funds Rate" shall mean, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10 a.m. (Detroit
time) on such day on such transactions received by the Agent from three Federal
funds brokers of recognized standing selected by the Agent in its sole
discretion.
"Fixed Charge Coverage Ratio" shall mean, as of the last day of any
fiscal quarter of the Company, the ratio of (a) EBITDA plus Rental Charges,
minus Capital Expenditures, to (b) Fixed Charges, in each case as calculated for
the four consecutive fiscal quarters then ending, provided that for (i) the
fiscal quarter ending June 30, 1997, such amounts shall be calculated for the
fiscal quarter ending June 30, 1997, (ii) the fiscal quarter ending September
30, 1997, such amounts shall be calculated for the two consecutive fiscal
quarters ending September 30, 1997, and (iii) the fiscal quarter ending December
31, 1997, such amounts shall be calculated for the three consecutive fiscal
quarters ending December 31, 1997, all as determined in accordance with
Generally Accepted Accounting Principles.
"Fixed Charges" shall mean, for any period, the sum, without
duplication, of (a) Total Interest Expense plus (b) all payments of principal
and other sums required to be paid during such period by the Company or its
Subsidiaries with respect to Indebtedness of the Company or its Subsidiaries,
other than payments required under Sections 3.1(c), (d) and (e) hereof and the
principal payment on the 14% Senior Notes, plus (c) Rental Charges paid or
payable during such period by the Company and its Subsidiaries, plus (d) all
dividends, distributions and other obligations paid with respect to any class of
the Company's Capital Stock or any dividend, payment or distribution paid in
connection with the redemption, purchase, retirement or other acquisition,
directly or indirectly, of any shares of the Company's Capital Stock, other than
Permitted Sub S Dividends, plus (e) all accrued income taxes for such period for
the Company or its Subsidiaries, which shall include, so long as the Company is
an S- Corporation, the greater of the amount which is or should be accrued
quarterly by the Company to pay Permitted Sub S Dividends or the amount of
Permitted Sub S Dividends paid for such period, plus (f) all Capital
Expenditures.
"Foreign Subsidiary" shall mean any Subsidiary incorporated or formed
in any jurisdiction other than any State of the United States of America.
"14% Senior Debt Documents" shall mean the 14% Senior Note Indenture,
the 14% Senior Notes and all agreements and documents executed in connection
therewith at any time, including without limitation those agreements and
documents listed on Schedule 1.1-A hereto.
"14% Senior Notes" issued by the Company in the original aggregate
principal amount of $65,000,000 due 1999 issued pursuant to the 14% Senior Note
Indenture.
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"14% Senior Note Indenture" shall mean the Indenture dated as of
November 17, 1992 between the Company and Mellon Bank F.S.B. (successor to
KeyBank National Association, formerly known as Society National Bank), as
trustee, as amended or modified from time to time.
"14% Senior Note Portion" shall mean an amount equal to the unpaid
principal balance of the 14% Senior Notes (which amount is equal to $24,865,000
as of the Effective Date), and such amount is blocked from the Revolving Credit
Commitments and the Borrowing Base for the purpose of funding the principal
payments due on the 14% Senior Notes.
"Generally Accepted Accounting Principles" shall mean generally
accepted accounting principles as in effect from time to time, applied on a
basis consistent (except for changes concurred in by the Company's independent
public accountants) with the most recent audited consolidated financial
statements of the Company and its Subsidiaries delivered to the Lenders.
"Guaranties" shall mean the guaranties entered into by each of the
Guarantors for the benefit of the Agent and the Lenders pursuant to this
Agreement in substantially the form of Exhibit C hereto, as amended or modified
from time to time.
"Guarantor" shall mean each present and future Domestic Subsidiary of
the Company or any other Person executing a Guaranty at any time.
"Indebtedness" of any Person shall mean, as of any date, (a) all
obligations of such Person for borrowed money or evidenced by bonds, notes,
debentures or similar instruments or letters of credit (or reimbursement
agreements in respect thereof) or bankers' acceptances, (b) all obligations of
such Person as lessee under any Capital Lease, (c) all obligations which are
secured by any Lien existing on any asset or property of such Person whether or
not the obligation secured thereby shall have been assumed by such Person, (d)
the unpaid purchase price for goods, property or services acquired by such
Person, except for trade accounts and accrued expenses payable arising in the
ordinary course of business which are not past due within customary payment
terms, (e) all obligations of such Person in respect of any Swap (valued in an
amount equal to the highest termination payment, if any, that would be payable
by such Person upon termination for any reason on the date of determination),
and (f) all Contingent Liabilities of such Person with respect to or relating to
indebtedness, obligations and liabilities of others similar in character to
those described in clauses (a) through (e) of this definition.
"Initial Acquisitions" shall mean the acquisition by the Company of all
of the assets of (a) a Person approved by the Required Lenders in writing in
their discretion, and (b) Aeroquip, all in accordance with the terms of the
Initial Acquisition Documents.
"Initial Acquisition Documents" shall mean all purchase agreements and
all other agreements and documents executed pursuant to the Initial
Acquisitions.
"Initial Public Offering" means the sale of capital stock of the
Company pursuant to (a) a registration statement under the Securities Act that
has been declared effective by the SEC or (b) a public offering outside the
United States and which results, in either case, in an active trading market for
such shares. An active trading market shall be deemed to exist if such shares
are listed on the New York Stock Exchange, the American Stock Exchange or the
Nasdaq National Market System or any major international trading market
exchange.
"Interest Coverage Ratio" shall mean, as of the end of any fiscal
quarter, the ratio of (a) EBITDA to (b) Total Interest Expense, in each case as
calculated for the four consecutive fiscal quarters then ending,
CREDIT AGREEMENT Page 9
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provided that for (i) the fiscal quarter ending June 30, 1997, such amounts
shall be calculated for the fiscal quarter ending June 30, 1997, (ii) the fiscal
quarter ending September 30, 1997, such amounts shall be calculated for the two
consecutive fiscal quarters ending September 30, 1997, and (iii) the fiscal
quarter ending December 31, 1997, such amounts shall be calculated for the three
consecutive fiscal quarters ending December 31, 1997, all as determined in
accordance with Generally Accepted Accounting Principles.
"Interest Payment Date" shall mean (a) with respect to any LIBOR Loan,
the last day of each LIBOR Interest Period with respect to such LIBOR Loan, and,
in the case of any LIBOR Interest Period exceeding three months, those days that
occur during such LIBOR Interest Period at intervals of three months after the
first day of such LIBOR Interest Period and (b) in all other cases, the last
Business Day of each March, June, September and December occurring after the
date hereof, commencing with the first such Business Day occurring after the
date of this Agreement.
"Key U.K. " shall mean Key Plastics, U.K., a corporation formed under
the laws of the United Kingdom.
"Key U.K. Credit Facility" shall mean any credit facility of NBD to Key
U.K., as amended or modified from time to time.
"Key U.K. Letter of Credit" shall mean any Letter of Credit issued at
any time to support the Key U.K. Credit Facility by NBD.
"Lender Indebtedness" shall mean (a) the Advances and all other
indebtedness, obligations and liabilities of the Company and of each Guarantor
to the Agent or the Lender under any Loan Document, and (b) all indebtedness,
obligations and liabilities of the Company and of each Guarantor to any Lender
in respect of any Swaps.
"Letter of Credit" shall mean a C/L/C or S/L/C having a stated expiry
date or a date upon which the draft must be reimbursed not later than twelve
months (other than Bond L/C's, which may be up to three years, and Letters of
Credit which are automatically renewable annually but may be cancelled by the
Agent annually are permissible) after the date of issuance and not later than
the fifth Business Day before the Termination Date, issued by the Agent on
behalf of the Revolving Credit Lenders for the account of the Company pursuant
to Section 2.1(a) under an application and related documentation acceptable to
the Agent issuing such Letter of Credit requiring, among other things, immediate
reimbursement by the Company or such Subsidiary to the Agent in respect of all
drafts or other demand for payment honored thereunder and all expenses paid or
incurred by the Agent relative thereto.
"Letter of Credit Advance" shall mean any issuance of a Letter of
Credit under Section 2.4 made pursuant to Section 2.1(a) in which each Revolving
Credit Lender acquires a pro rata risk participation.
"Letter of Credit Documents" shall have the meaning ascribed thereto in
Section 3.3(b).
"LIBOR Business Day" shall mean, with respect to any LIBOR Loan, a day
which is both a Business Day and a day on which dealings in Dollar deposits are
carried out in the London interbank market with respect to such LIBOR Loan.
"LIBOR Interest Period" shall mean, with respect to any LIBOR Loan, the
period commencing on the day such LIBOR Loan is made or converted to a LIBOR
Loan and ending on the date one, two, three or six months thereafter, as the
Company may elect under Section 2.4 or 2.7, and each subsequent period
commencing on the last day of the immediately preceding LIBOR Interest Period
and ending on the date one, two, three or six
CREDIT AGREEMENT Page 10
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months thereafter, as the Company may elect under Section 2.4 or 2.7, provided,
however, that (a) any LIBOR Interest Period which commences on the last LIBOR
Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last LIBOR Business Day of the appropriate subsequent calendar
month, (b) each LIBOR Interest Period which would otherwise end on a day which
is not a LIBOR Business Day shall end on the next succeeding LIBOR Business Day
or, if such next succeeding LIBOR Business Day falls in the next succeeding
calendar month, on the next preceding LIBOR Business Day, and (c) no LIBOR
Interest Period which would end after the Maturity Date with respect to the Term
Loan or the Termination Date with respect to any Revolving Credit Loan shall be
permitted.
"LIBOR" shall mean, with respect to any LIBOR Loan and the related
LIBOR Interest Period, the per annum rate that is equal to the sum of:
(a) the Applicable Margin, plus
(b) the rate per annum obtained by dividing (i) the per annum rate of
interest at which deposits in Dollars for such LIBOR Interest Period and in an
aggregate amount comparable to the amount of such LIBOR Loan to be made by the
Agent in its capacity as a Lender hereunder are offered to the Agent by other
prime banks in the London interbank market at approximately 11:00 a.m. local
time in London on the second LIBOR Business Day prior to the first day of such
LIBOR Interest Period by (ii) an amount equal to one minus the stated maximum
rate (expressed as a decimal) of all reserve requirements (including, without
limitation, any marginal, emergency, supplemental, special or other reserves)
that is specified on the first day of such LIBOR Interest Period by the Board of
Governors of the Federal Reserve System (or any successor agency thereto) for
determining the maximum reserve requirement with respect to eurocurrency funding
(currently referred to as "Eurocurrency liabilities" in Regulation D of such
Board) maintained by a member bank of such System;
all as conclusively determined by the Agent, such sum to be rounded up, if
necessary, to the nearest whole multiple of one one-hundredth of one percent
(1/100 of 1%).
"LIBOR Loan" shall mean any Loan which bears interest at LIBOR.
"Lien" shall mean any pledge, assignment, hypothecation, mortgage,
security interest deposit arrangement, option, conditional sale or title
retaining contract, sale and leaseback transaction, financing statement filing,
lessor's or lessee's interest under any capital lease, subordination of any
claim or right, or any other type of lien, charge or encumbrance.
"Loan" shall mean any Revolving Credit Loan, any Term Loan and any
Swingline Loan. Any such Loan or portion thereof may also be denominated as an
Adjusted Prime Rate Loan or a LIBOR Loan and such Adjusted Prime Rate Loans and
LIBOR Loans are referred to herein as "types" of Loans.
"Loan Document" shall mean, collectively, this Agreement, the Notes,
the Security Documents and any other agreement, instrument or document executed
in connection with any of the foregoing at any time.
"MaP" shall mean Materias Plastics, S.A. of Portugal.
"Material Adverse Effect" shall mean (i) a material adverse effect on
the property, business, operations, financial condition, liabilities or
capitalization of the Company and its Subsidiaries, taken as a whole, (ii) a
material adverse effect on the ability of the Company or any Guarantor to
perform its obligations under the Loan Documents or (iii) a material adverse
effect on the rights and remedies of the Agent or the Lenders under the Loan
Documents.
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"Maturity Date" shall mean the earlier to occur of (a) the date on
which the maturity of the Term Loan is accelerated pursuant to Section 6.2 and
(b) September 24, 2004.
"Mortgages" shall mean each mortgage, deed of trust or similar
agreement entered into by the Company or any Guarantor for the benefit of the
Agent and the Lenders pursuant to this Agreement substantially in the form
attached hereto as Exhibit D or such other form as approved by the Agent, as
amended or modified from time to time.
"Multiemployer Plan" shall mean any "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA or Section 414(f) of the Code.
"NBD" shall mean NBD Bank, a Michigan banking corporation, including
any of its branches and affiliates.
"Net Cash Proceeds" shall mean, (a) in connection with any sale or
other disposition of any asset or any settlement by, or receipt of payment in
respect of, any property insurance claim or condemnation award, the cash
proceeds (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or purchase price
adjustment receivable or otherwise, but only as and when received) of such sale,
settlement or payment, net of reasonable and documented attorneys' fees,
accountants' fees, investment banking fees, amounts required to be applied to
the repayment of Indebtedness secured by a Lien expressly permitted hereunder on
any asset which is the subject of such sale, insurance claim or condemnation
award (other than any Lien in favor of the Agent for the benefit of the Agent
and the Lenders) and other customary fees actually incurred in connection
therewith and net of taxes paid or reasonably estimated to be payable as a
result thereof and (b) in connection with any issuance or sale of any equity
securities or debt securities or instruments or the incurrence of loans, the
cash proceeds received from such issuance or incurrence, net of investment
banking fees, reasonable and documented attorneys' fees, accountants' fees,
underwriting discounts and commissions and other reasonable and customary fees
and expenses actually incurred in connection therewith.
"Net Income" shall mean, for any period, the net income (or loss) of
the Company and its Subsidiaries on a consolidated basis for such period taken
as a single accounting period, determined in accordance with Generally Accepted
Accounting Principles; provided that in determining Net Income there shall be
excluded, without duplication: (a) the income of any Person (other than a
Subsidiary of the Company) in which any Person other than the Company or any of
its Subsidiaries has a joint interest or partnership interest or other ownership
interest, except to the extent of the amount of dividends or other distributions
actually paid to the Company or any of its Subsidiaries by such Person during
such period, (b) the income of any Person accrued prior to the date it becomes a
Subsidiary of the Company or is merged into or consolidated with the Company or
any of its Subsidiaries or that Person's assets are acquired by the Company or
any of its Subsidiaries, (c) the proceeds of any insurance policy, (d) gains
(but not losses) from the sale, exchange, transfer or other disposition of
property or assets not in the ordinary course of business of the Company and its
Subsidiaries, and related tax effects in accordance with Generally Accepted
Accounting Principles, (e) any other extraordinary or non-recurring gains of the
Company or its Subsidiaries, and related tax effects in accordance with
Generally Accepted Accounting Principles, (f) any income of any Unrestricted
Subsidiary and any payments or other transfers of any kind of any Unrestricted
Subsidiary to the Company or any of its Subsidiaries, and (g) the income of any
Subsidiary of the Company to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or of any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary.
"Net Worth" shall mean, as of any date, the amount of any capital
stock, paid in capital and similar equity accounts plus (or minus in the case of
a deficit) the capital surplus and retained earnings of the
CREDIT AGREEMENT Page 12
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Company and the Subsidiaries and the amount of any foreign currency translation
adjustment account shown as a capital account of the Company and its
Subsidiaries, all on a consolidated basis in accordance with Generally Accepted
Accounting Principles.
"Non-Competition Agreement" shall mean, collectively, the provisions
contained in the Employment and Noncompetition Agreements, each dated August 5,
1988, between the Company and certain shareholders of the Company, and in the
Consulting and Noncompetition Agreement, dated August 9, 1990, between the
Company and a certain shareholder of the Company, whereby such shareholders
agreed not to compete with the Company on the terms and conditions set forth
therein, as amended on November 17, 1992, and as amended subsequent to the date
of this Agreement.
"Note" shall mean any Revolving Credit Note, any Term Loan Note or the
Swingline Note.
"Overdue Rate" shall mean (a) in respect of principal of Adjusted Prime
Rate Loans, a rate per annum that is equal to the sum of three percent (3%) per
annum plus the Adjusted Prime Rate, (b) in respect of principal of LIBOR Loans,
a rate per annum that is equal to the sum of three percent (3%) per annum plus
the per annum rate in effect thereon until the end of the then current LIBOR
Interest Period for such Loan and, thereafter, a rate per annum that is equal to
the sum of three percent (3%) per annum plus the Adjusted Prime Rate, and (c) in
respect of other amounts payable by the Company hereunder (other than interest),
a per annum rate that is equal to the sum of three percent (3%) per annum plus
the Adjusted Prime Rate.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
"Permitted Currency" shall mean Dollars or the lawful currency of
Canada.
"Permitted Liens" shall mean Liens permitted by Section 5.2(f) hereof.
"Permitted Quarterly Tax Distributions" shall mean quarterly
distribution of Tax Amounts determined on the basis of the estimated taxable
income of the Company, for the related Estimation Period, provided, however,
that: (A) prior to any distributions of Tax Amounts the Company shall deliver an
officers' certificate certifying that the Tax Amounts to be distributed were
determined pursuant to the terms of this Agreement, containing a comparison of
such distribution of Tax Amounts to the projections of such distributions
supplied by the Company to the Agent and explaining the reasons for any
differences, and stating to the effect that the Company qualifies as an
S-Corporation or substantially similar pass-through entity for Federal Income
tax purposes and (B) at the time of such distributions, the most recent audited
financial statements of the Company reflect that the Company was treated as an
S-Corporation or substantially similar pass-through entity for Federal income
tax purposes for the period covered by such financial statements.
"Permitted Sub S Dividends" shall mean the dividends permitted by
clause (iii) of Section 5.2 (j).
"Person" shall include an individual, a corporation, an association, a
partnership, a trust or estate, a joint stock company, an unincorporated
organization, a joint venture, a trade or business (whether or not
incorporated), a government (foreign or domestic) and any agency or political
subdivision thereof, or any other entity.
"Plan" shall mean any pension plan (other than a Multiemployer Plan)
subject to Title IV of ERISA or to the minimum funding standards of Section 412
of the Code which has been established or maintained by the Company, any
Subsidiary of the Company or any ERISA Affiliate, or by any other Person if the
Company, any Subsidiary of the Company or any ERISA Affiliate could have
liability with respect to such pension plan.
CREDIT AGREEMENT Page 13
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"Pledge Agreements" shall mean each Pledge Agreement entered into by
the Company or any Guarantor for the benefit of the Agent and the Lenders
pursuant to this Agreement substantially in the forms attached hereto as
Exhibits E-1, E-2 and E-3, as amended or modified from time to time.
"Pounds" shall mean the lawful currency of the United Kingdom.
"Prime Rate" shall mean the per annum rate announced by the Agent from
time to time as its "prime rate" (it being acknowledged that such announced rate
may not necessarily be the lowest rate charged by the Agent to any of its
customers), which Prime Rate shall change simultaneously with any change in such
announced rate.
"Principals" shall mean (i) any or all of David Benoit, George Mars and
Joel Tauber and (ii) any trust established by any of the foregoing, provided
that the beneficiaries of the trust are members of such Person's immediate
family and such Person maintains sole voting power over the shares held by such
trust.
"Prohibited Transaction" shall mean any transaction involving any Plan
which is proscribed by Section 406 of ERISA or Section 4975 of the Code.
"Purchase and Sale of Shares Promissory Agreement" shall mean the
Purchase and Sale of Shares Promissory Agreement, dated October 21, 1996 by and
between the Company and the other parties named therein.
"Quarterly Payment Period" shall mean the period commencing on the
tenth day and ending on and including the twentieth day of each month in which
Federal individual estimated tax payments are due; provided that payments in
respect of estimated state income taxes due in January may instead, at the
option of the Company, be paid during the last 20 days of the immediately
preceding December.
"Reimbursement Agreements" shall mean the Standby Letter of Credit
Applications and Reimbursement Agreements executed in connection with the Bond
L/Cs, as amended or modified from time to time.
"Related Party" with respect to any Principal shall mean (A) any
controlling stockholder, 80% (or more) owned Subsidiary, or spouse or immediate
family member (in the case of an individual) of such Principal or (B) any trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially holding an 80% or more controlling
interest of which consist of such Principal and/or such other Persons referred
to in the immediately preceding clause (A).
"Rental Charges" shall mean, for any period, the maximum amount of all
rents and other payments (exclusive of property taxes, property and liability
insurance premiums and maintenance costs) paid or required to be paid by the
Company or its Subsidiaries during such period under any lease of real or
personal property in respect of which the Company or its Subsidiaries are
obligated as a lessee or user, other than any Capital Lease.
"Reportable Event" shall mean a reportable event as described in
Section 4043(b) of ERISA including without limitation those events as to which
the thirty (30) day notice period is waived under Part 2615 of the regulations
promulgated by the PBGC under ERISA.
"Required Lenders" shall mean Lenders holding not less than 51% of the
Commitments (or 51% of the Advances if the Commitments have been terminated).
CREDIT AGREEMENT Page 14
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"Required Revolving Credit Lenders" shall mean Revolving Credit Lenders
holding not less than 51% of the Revolving Credit Commitments (or 51% of the
Revolving Credit Advances if the Revolving Credit Commitments have been
terminated).
"Requirement of Law" shall mean as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other governmental authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Revolving Credit Advance" shall mean any Revolving Credit Loan and any
Letter of Credit Advance.
"Revolving Credit Commitments" shall mean, with respect to each Lender,
the commitment of each such Lender to make Revolving Credit Loans, and to
participate in Letter of Credit Advances, in amounts not exceeding in the
aggregate principal or face amount outstanding at any time the Revolving Credit
Commitment amount for such Lender set forth next to the name of such Lender on
the signature pages hereof, or, as to any Lender becoming a party hereto after
the Effective Date, as set forth in the applicable Assignment and Acceptance, in
each case as reduced pursuant to Section 2.2 or modified pursuant to Section
8.6.
"Revolving Credit Lenders" shall mean those Lenders which have a
Revolving Credit Commitment or, if such Commitment shall have been terminated,
have outstanding Revolving Credit Advances.
"Revolving Credit Loan" shall mean any borrowing under Section 2.4
evidenced by the Revolving Credit Notes and made pursuant to Section 2.1(a).
"Revolving Credit Notes" shall mean the promissory notes of the Company
evidencing the Revolving Credit Loans, in substantially the form annexed hereto
as Exhibit F-1, respectively, as amended or modified from time to time and
together with any promissory note or notes issued in exchange or replacement
therefor, and "Revolving Credit Note" shall mean any one of such Revolving
Credit Notes.
"Security Agreements" shall mean each Security Agreement entered into
by the Company or any Guarantor for the benefit of the Agent and the Lenders
pursuant to this Agreement substantially in the forms attached hereto as Exhibit
G-1 and G-2, as amended or modified from time to time, and any other agreement
executed by the Company granting a Lien for the benefit of the Agent and the
Lenders in form or substance satisfactory to the Agent, as amended or modified
from time to time.
"Security Documents" shall mean the Mortgages, the Pledge Agreements,
the Security Agreements, the Guaranties, the Reimbursement Agreements, the
Assignment of Rents and Leases and all other agreements and documents delivered
pursuant to this Agreement or otherwise entered into by any Person to secure or
guaranty the obligations of the Company under this Agreement.
"Senior Subordinated Debt Documents" shall mean the Senior Subordinated
Note Indenture, the Senior Subordinated Notes and all agreements and documents
executed in connection therewith at any time, including without limitation those
agreements and documents listed on Schedule 1.1-B hereto.
"Senior Subordinated Notes " shall mean the Senior Subordinated Notes
issued by the Company in the aggregate principal amount of $125,000,000 due 2007
issued pursuant to the Senior Subordinated Note Indenture.
CREDIT AGREEMENT Page 15
<PAGE> 21
"Senior Subordinated Note Indenture" shall mean the Senior Subordinated
Indenture between the Company and Marine Midland Bank, as trustee, dated as of
March 24, 1997, as amended or modified from time to time.
"S/L/C" shall mean any standby letter of credit issued hereunder.
"Subordinated Debt" shall mean, for any Person, any Indebtedness of
such Person which is fully subordinated to all Indebtedness of such Person owing
to the Agent and the Lenders, by written agreements and documents in form and
substance satisfactory to the Required Lenders and which is governed by terms
and provisions, including without limitation maturities, covenants, defaults,
rates and fees, acceptable to the Agent, and shall include, without limitation,
all Indebtedness owing pursuant to the Senior Subordinated Notes.
"Subordinated Debt Documents" shall mean the Senior Subordinated Debt
Documents and any other agreement or document evidencing or relating to any
Subordinated Debt, whether under the Senior Subordinated Notes or any other
Subordinated Debt.
"Subsidiary" of any Person shall mean any other Person (whether now
existing or hereafter organized or acquired) in which (other than directors,
qualifying shares required by law) at least a majority of the securities or
other ownership interests of each class having ordinary voting power or
analogous right (other than securities or other ownership interests which have
such power or right only by reason of the happening of a contingency), at the
time as of which any determination is being made, are owned, beneficially and of
record, by such Person or by one or more of the other Subsidiaries of such
Person or by any combination thereof. Notwithstanding anything herein to the
contrary, an Unrestricted Subsidiary shall not be considered a Subsidiary.
"Swaps" shall mean any interest rate or currency swaps, rate caps or
similar transactions, provided that such transactions are entered into by the
Company or any of its Subsidiaries to protect against fluctuations in interest
rates on Indebtedness of the Company and its Subsidiaries or in exchange rates,
and not for speculative purposes.
"Swingline Loan" shall mean any loan under Section 2.4 evidenced by the
Swingline Note and made by the Agent to the Company pursuant to Section 2.1(c).
"Swingline Note" shall mean any promissory note of the Company
evidencing the Swingline Loans in substantially the form of Exhibit F-2 hereto,
as amended or modified from time to time and together with any promissory note
or notes issued in exchange or replacement therefor.
"Tax Amounts" with respect to any taxable period shall not exceed an
amount equal to (A) the product of (x) the taxable income of the Company for
such period as determined by the Tax Amounts CPA and (y) the Tax Percentage
reduced by (B) to the extent not previously taken into account, any income tax
benefit attributable to the Company which could be realized (without regard to
the actual realization) by its stockholders in the current or any prior taxable
year, or portion thereof, commencing on or after the Issue Date (including any
tax losses or tax credits), computed at the applicable Tax Percentage for the
year that such benefit is taken into account for purposes of this computation.
"Tax Amounts CPA" shall mean a nationally recognized certified public
accounting firm.
"Tax Percentage" shall mean, for a particular taxable year, the highest
effective marginal combined rate of Federal and state income tax, imposed on an
individual taxpayer, as certified by the Tax Amounts CPA in a certificate filed
with the Agent. The rate of open "state income tax" to be taken into account for
purposes
CREDIT AGREEMENT Page 16
<PAGE> 22
of determining the Tax Percentage for a particular taxable year shall be deemed
to be the highest state marginal tax rate applicable to any stockholder.
"Term Loan " shall mean the single borrowing under Section 2.4
evidenced by the Term Loan Notes and made to the Company pursuant to Section
2.1(b).
"Term Loan Commitment" shall mean, with respect to each Lender, the
commitment of each Lender to make the Term Loan in an amount not exceeding in
the aggregate principal amount outstanding at any time the Term Loan Commitment
amount for such Lender set forth next to the name of such Lender on the
signature pages hereof, or, as to any Lender becoming a party hereto after the
Effective Date, as set forth in the applicable Assignment and Acceptance, in
each case as reduced by payments on the Term Loan or modified pursuant to
Section 8.6.
"Term Loan Lenders" shall mean those Lenders which have a Term Loan
Commitment or, if such Commitments have been terminated, have an outstanding
portion of the Term Loan.
"Term Loan Notes" shall mean the promissory notes of the Company
evidencing the Term Loan, in substantially the form of Exhibit F-3, as amended
or modified from time to time and together with any promissory note or notes
issued in exchange or replacement therefor, and "Term Loan Note" shall mean any
one of such Term Loan Notes.
"Term Facility Tranche" shall mean the loan facility established
pursuant to Section 2.1(b).
"Termination Date" shall mean the earlier to occur of (a) September 24,
2003, and (b) the date on which the Revolving Credit Commitments shall be
terminated pursuant to Section 2.2 or 6.2.
"Total Debt" as of any date, shall mean all of the following for the
Company and its Subsidiaries on a consolidated basis: (i) all debt for borrowed
money and similar monetary obligations evidenced by bonds, notes, debentures,
Capital Lease obligations or otherwise, including without limitation obligations
in respect of the deferred purchase price of properties or assets, in each case
whether direct or indirect; (ii) all liabilities secured by any Lien existing on
property owned or acquired subject thereto, whether or not the liability secured
thereby shall have been assumed; (iii) all reimbursement obligations under
outstanding letters of credit in respect of drafts which (A) may be presented or
(B) have been presented and have not yet been paid and are not included in
clause (i) above; and (iv) all guarantees and other Contingent Liabilities
relating to indebtedness, obligations or liabilities of the type described in
the foregoing clauses (i), (ii) and (iii).
"Total Debt to EBITDA Ratio" shall mean, at any time, the ratio of (a)
Total Debt at such time to (b) EBITDA, as calculated as of the four most
recently completed fiscal quarters of the Company, (provided that EBITDA as
calculated in determining the Total Debt to EBITDA Ratio for (i) the fiscal
quarter ending June 30, 1997 shall be equal to the product of EBITDA for the
fiscal quarter ending June 30, 1997 times four, (ii) the fiscal quarter ending
September 30, 1997 shall be equal to the product of EBITDA for the two quarters
ending September 30, 1997 times two, and (iii) the fiscal quarter ending
December 31, 1997, shall be equal to the product of EBITDA for the three fiscal
quarters ending December 31, 1997 times four thirds), all as determined in
accordance with Generally Accepted Accounting Principles.
"Total Interest Expense" shall mean, for any period, total interest and
related expense (including, without limitation, that portion of any Capitalized
Lease obligation attributable to interest expense in conformity with Generally
Accepted Accounting Principles, amortization of debt discount, all capitalized
interest, the interest portion of any deferred payment obligations, all
commissions, discounts and other fees and charges owed with respect to letter of
credit and bankers acceptance financing, the net costs and net payments under
any
CREDIT AGREEMENT Page 17
<PAGE> 23
interest rate hedging, cap or similar agreement or arrangement, prepayment
charges, agency fees, administrative fees, commitment fees and capitalized
transaction costs allocated to interest expense) paid, payable or accrued during
such period, without duplication for any other period, with respect to all
outstanding Indebtedness of the Company and its Subsidiaries, all as determined
for the Company and its Subsidiaries on a consolidated basis for such period in
accordance with Generally Accepted Accounting Principles; provided that the
interest with respect to the 14% Senior Notes shall be calculated at the
interest rate applicable to Revolving Credit Loans for purposes of this
definition.
"True-up Amounts" means, in respect of a particular taxable year, an
amount determined by the Tax Amounts CPA equal to the difference between (i) the
aggregate permitted Quarterly Tax Distributions actually distributed in respect
of such taxable year and (ii) the actual Tax Amounts for such year. For purposes
of this Agreement, the amount equal to the excess, if any, of the amount
described in clauses (i) over the amount described in clause (ii) above shall be
referred to as the "True-up Amount due to the Company" and the excess, if any,
of the amount described in clause (ii) over the amount described in clause (i)
above shall be referred to as the "True-up Amount due to the stockholders."
"True-up Determination Date" shall mean the date on which the Tax
Amounts CPA delivers a statement to the Agent indicating the True-up Amount.
"Unfunded Benefit Liabilities" shall mean, with respect to any Plan as
of any date, the amount of the unfunded benefit liabilities determined in
accordance with Generally Accepted Accounting Principles.
"Unmatured Event" shall mean any event or condition which might become
an Event of Default with notice or lapse of time or both.
"Unrestricted Subsidiary" shall mean MaP or any Subsidiary designated
by the Company as an Unrestricted Subsidiary and approved by the Agent in its
discretion, provided that (a) neither the Company nor any Subsidiary of the
Company which is not an Unrestricted Subsidiary shall be liable, directly or
indirectly, for any of the indebtedness, obligations or other liabilities of any
such Unrestricted Subsidiary or for any Contingent Liabilities with respect to
any Unrestricted Subsidiary and (b) after giving effect to such designation, no
Event of Default or Unmatured Event exists or would be caused thereby, on a pro
forma basis acceptable to the Agent. Any Unrestricted Subsidiary may be
designated as a Subsidiary by the Company at any time provided that (i) such
designation is approved by the Agent and (ii) no Event of Default or Unmatured
Event exists or would be caused thereby, all on a pro forma basis acceptable to
the Agent.
1.2 Other Definitions; Rules of Construction. As used herein, the terms
"Agent", "Lenders", "Company", and "this Agreement" shall have the respective
meanings ascribed thereto in the introductory paragraph of this Agreement. Such
terms, together with the other terms defined in Section 1.1, shall include both
the singular and the plural forms thereof and shall be construed accordingly.
Use of the terms "herein", "hereof", and "hereunder" shall be deemed references
to this Agreement in its entirety and not to the Section or clause in which such
term appears. References to "Sections" and "subsections" shall be to Sections
and subsections, respectively, of this Agreement unless otherwise specifically
provided.
1.3 Accounting Terms and Determinations.
(a) Except as otherwise expressly provided herein, all
accounting terms used herein shall be interpreted, and all financial statements
and certificates and reports as to financial matters required to be delivered to
the Lenders hereunder shall (unless otherwise disclosed to the Lenders in
writing at the time of delivery thereof in the manner described in subsection
(b) below) be prepared, in accordance with Generally Accepted Accounting
Principles provided that, if the Company notifies the Agent that it wishes to
amend any
CREDIT AGREEMENT Page 18
<PAGE> 24
covenant in Article V to eliminate the effect of any change in Generally
Accepted Accounting Principles (or if the Agent notifies the Company that the
Required Lenders wish to amend Article V for such purpose), then the Company's
compliance with such covenants shall be determined on the basis of Generally
Accepted Accounting Principles in effect immediately before the relevant change
in Generally Accepted Accounting Principles became effective until either such
notice is withdrawn or such covenant or any such defined term is amended in a
manner satisfactory to the Company and the Required Lenders. Except as otherwise
expressly provided herein, all references to a time of day shall be references
to Detroit, Michigan time. Notwithstanding anything herein, in any financial
statements of the Company or in Generally Accepted Accounting Principles to the
contrary, for purposes of calculating and determining compliance with the
financial covenants in Sections 5.2(a), (b), (c) and (d), including defined
terms used therein, (i) no Unrestricted Subsidiary shall be consolidated with
the Company and its other Subsidiaries and each Unrestricted Subsidiary shall be
treated as if it were an equity interest and all income, liabilities and assets
of each Unrestricted Subsidiary shall be excluded from all such calculations and
determinations thereunder, (ii) if at any time Key U.K. has any material
Indebtedness (other than (A) Indebtedness owing to NBD under the Key U.K. Credit
Facility or (B) Indebtedness owing to the Company, which Indebtedness and other
obligations owing to the Company are pledged on a first priority basis to the
Agent for the benefit of the Lenders), then Key U.K. shall not be consolidated
with the Company and its other Subsidiaries and shall be treated as if it were
an equity investment and all income, liabilities and assets of Key U.K. shall be
excluded from all calculations and determinations thereunder, and (iii) any
acquisitions made by the Company or any of its Subsidiaries including through
mergers or consolidations and including any related financing transactions,
during the period for which such financial covenants were calculated shall be
deemed to have occurred on the first day of the relevant period for which such
financial covenants were calculated on a pro forma basis acceptable to the
Agent. Notwithstanding anything in Sections 5.2(b), (c) or (d) or in the
definition of Applicable Margin (or the defined terms as used in Sections
5.2(b),(c) or (d) or within the definition of Applicable Margin), such financial
covenants shall be tested, and the Applicable Margin shall be adjusted, for the
first time based on the results for the fiscal quarter ending June 30, 1997.
(b) The Company shall deliver to the Lenders at the same time
as the delivery of any annual or monthly financial statement under Section
5.1(d) hereof (i) a description in reasonable detail of any material variation
between the application or other modification of accounting principles employed
in the preparation of such statement and the application or other modification
of accounting principles employed in the preparation of the immediately prior
annual or monthly financial statements as to which no objection has been made in
accordance with the last sentence of subsection (a) above and (ii) reasonable
estimates of the difference between such statements arising as a consequence
thereof.
(c) To enable the ready and consistent determination of
compliance with the covenants set forth in Section 5.2 hereof, the Company will
not change the last day of its fiscal year from December 31 of each year, or the
last days of the first three fiscal quarters in each of its fiscal years from
March 31, June 30, and September 30 of each year, respectively.
ARTICLE II
THE COMMITMENTS AND THE ADVANCES
2.1 Commitments of the Lenders.
CREDIT AGREEMENT Page 19
<PAGE> 25
(a) Revolving Credit Advances. Each Revolving Credit Lender
agrees, for itself only, subject to the terms and conditions of this Agreement,
to make Revolving Credit Loans to the Company pursuant to Section 2.4 and to
participate in Letter of Credit Advances to the Company pursuant to Section 3.3,
from time to time from and including the Effective Date to but excluding the
Termination Date, not to exceed in aggregate principal amount at any time
outstanding the amount determined pursuant to Section 2.1(d).
(b) Term Loan . Each Term Loan Lender agrees, for itself only,
subject to the terms and conditions of this Agreement, to make a portion of the
Term Loan to the Company on the Effective Date in an amount equal to its Term
Loan Commitment.
(c) Swingline Loans. (i) The Company may request the Agent to
make, and the Agent may, in its sole discretion, make Swingline Loans to the
Company from time to time on any Business Day during the period from the
Effective Date until the Termination Date in an aggregate principal amount not
to exceed at any time the lesser of (A) $5,000,000 (the "Swingline Facility")
and (B) the aggregate amount of Revolving Credit Advances that could be but is
not borrowed as of such date. Each Lender's Revolving Credit Commitment shall be
deemed utilized by an amount equal to such Lender's pro rata share (based on
such Lender's Revolving Credit Commitment) of each Swingline Loan for purposes
of determining the amount of Revolving Credit Advances required to be made by
such Lender, but no Lender's Revolving Credit Commitment, including NBD's, shall
be deemed utilized for purposes of determining commitment fees under Section
2.3(a). Swingline Loans shall bear interest at the Adjusted Prime Rate. Within
the limits of the Swingline Facility, so long as the Agent, in its sole
discretion, elects to make Swingline Loans, the Company may borrow and reborrow
under this Section 2.1(c)(i).
(ii) The Agent may at any time in its sole and absolute
discretion require that any Swingline Loan be refunded by a Revolving Credit
Loan which is an Adjusted Prime Rate Borrowing from the Revolving Lenders, and
upon written notice thereof by the Agent to the Revolving Credit Lenders and the
Company, the Company shall be deemed to have requested a Revolving Credit Loan
which is an Adjusted Prime Rate Borrowing in an amount equal to the amount of
such Swingline Loan, and such Adjusted Prime Rate Borrowing shall be made to
refund such Swing Line Loan. Each Revolving Credit Lender shall be absolutely
and unconditionally obligated to fund its pro rata share (based on such
Revolving Credit Lender's Revolving Credit Commitment) of such Adjusted Prime
Rate Borrowing or, if applicable, purchase a participating interest in the
Swingline Loans pursuant to Section 2.1(c)(iii) and such obligation shall not be
affected by any circumstance, including, without limitation, (A) any set-off,
counterclaim, recoupment, defense or other right which such Revolving Credit
Lender has or may have against the Agent or the Company or any if its
Subsidiaries or anyone else for any reason whatsoever; (B) the occurrence or
continuance of an Unmatured Event or an Event of Default, subject to Section
2.1(c)(iii); (C) any adverse change in the condition (financial or otherwise) of
the Company or any of its Subsidiaries; (D) any breach of this Agreement or any
other agreement by any other Lender, the Company or any Guarantor; or (E) any
other circumstance, happening or event whatsoever, whether or not similar to any
of the foregoing (including without limitation the Company's failure to satisfy
any conditions contained in Article II or any other provision of this
Agreement).
(iii) If, due to any Event of Default (including without
limitation as a result of the occurrence of an Event of Default with respect to
the Company or any of its Subsidiaries pursuant to Section 6.1(h)) Adjusted
Prime Rate Loans may not be made by the Revolving Credit Lenders as described in
Section 2.1(c)(ii), then (A) the Company agrees that each Swingline Loan not
paid pursuant to Section 2.1(c)(ii) shall bear interest, payable on demand by
the Agent, at the Overdue Rate, and (B) effective on the date each such Adjusted
Prime Rate Loan would otherwise have been made, each Revolving Credit Lender
severally agrees that it shall unconditionally and irrevocably, without regard
to the occurrence of any Unmatured Event or Event of Default or any other
circumstances, in lieu of deemed disbursement of loans, to the extent of such
CREDIT AGREEMENT Page 20
<PAGE> 26
Revolving Credit Lender's Revolving Credit Commitment, purchase a participating
interest in the Swingline Loans by paying its participation percentage thereof.
Each Revolving Credit Lender will immediately transfer to the Agent, in same day
funds, the amount of its participation. After such payment to the Agent, each
Revolving Credit Lender shall share on a pro rata basis (calculated by reference
to its Revolving Credit Commitment) in any interest which accrues thereon and in
all repayments thereof. If and to the extent that any Revolving Credit Lender
shall not have so made the amount of such participating interest available to
the Agent, such Revolving Credit Lender and the Company severally agree to pay
to the Agent forthwith on demand such amount together with interest thereon, for
each day from the date of demand by the Agent until the date such amount is paid
to the Agent, at (x) in the case of the Company, the interest rate specified
above and (y) in the case of such Lender, the Federal Funds Rate for the first
five days after the date of demand by the Agent and thereafter at the interest
rate specified above.
(d) Limitation on Amount of Advances. Notwithstanding anything
in this Agreement to the contrary, the aggregate principal amount of the
Revolving Credit Advances at any time outstanding to the Company shall not
exceed the lesser of (i) the amount of the Borrowing Base at such time
determined by the Agent and (ii) the aggregate amount of the Revolving Credit
Commitments at such time minus (A) the unused amount of the Acquisition Amount,
provided that the Acquisition Amount may be borrowed, in whole or in part and
from time to time until the Acquisition Amount Expiry Date, if the conditions
for all Revolving Credit Advances are satisfied as well as the condition
described in Section 2.6(e), and any Borrowing for any Initial Acquisition shall
be deemed usage of the Acquisition Amount, minus (B) the 14% Senior Note
Portion, provided that the 14% Senior Note Portion shall not be deducted from
the Revolving Credit Commitments for any Revolving Credit Loan which will be
used solely to make a principal payment on the 14% Senior Notes if the
conditions for all Revolving Credit Advances are satisfied; provided, however,
that the aggregate principal amount of Letters of Credit outstanding at any time
shall not exceed $30,000,000. Notwithstanding anything herein to the contrary,
the aggregate principal amount of the portion of the Term Loan made by each Term
Loan Lender to the Company shall not exceed the amount of its respective Term
Loan Commitment.
2.2 Termination and Reduction of Revolving Credit Commitments. (a)
The Company shall have the right to terminate or reduce the Revolving Credit
Commitments at any time and from time to time, provided that (i) the Company
shall give notice of such termination or reduction to the Agent specifying the
amount and effective date thereof, (ii) each partial reduction of the Revolving
Credit Commitment shall be in a minimum amount of $5,000,000 and in an integral
multiple of $1,000,000 and shall reduce the Revolving Credit Commitments of all
of the Lenders proportionately in accordance with the respective Revolving
Credit Commitment amounts for each such Lender, (iii) no such termination or
reduction shall be permitted with respect to any portion of the Revolving Credit
Commitments as to which a request for an Advance pursuant to Section 2.4 is then
pending, (iv) the Revolving Credit Commitments may not be terminated if any
Revolving Credit Advances are then outstanding and may not be reduced below the
principal amount of Revolving Credit Advances then outstanding, (v) the
Revolving Credit Commitments may not be reduced below the outstanding principal
amount of 14% Senior Notes, (vi) the Revolving Credit Commitments shall be
automatically reduced by the unused amount of the Acquisition Amount on the
Acquisition Amount Expiry Date, and (vii) the Revolving Credit Commitments shall
reduce, on a pro rata basis, in 24 consecutive quarterly reductions on the last
Business Day of each March, June, September and December commencing with the
last Business Day of March, 1998, as follows:
CREDIT AGREEMENT Page 21
<PAGE> 27
<TABLE>
<CAPTION>
Date of each Quarterly Reduction of Revolving Amount of each Quarterly Amount of Annual
Reduction of Revolving Credit Reductions of Revolving
Credit Commitments Commitments Credit Commitments
<S> <C> <C>
Four principal installments on the last $1,375,000 $5,500,000
Business day of March, 1998, June, 1998,
September, 1998 and December, 1998
Four principal installments on the last $1,718,750 $6,875,000
Business Day of March, 1999, June, 1999,
September, 1999 and December, 1999
Four principal installments on the last $2,062,500 $8,250,000
Business Day of March, 2000, June, 2000,
September, 2000 and December, 2000
Four principal installments on the last $2,406,250 $9,625,000
Business Day of March, 2001, June, 2001,
September, 2001 and December, 2001
Four principal installments on the last $2,750,000 $11,000,000
Business Day of March, 2002, June, 2002,
September, 2002 and December, 2002
Four principal installments on the last $3,437,500 $13,750,000
Business Day of March, 2003, June, 2003,
September 2003 and December 2003
</TABLE>
Upon any reduction of the Revolving Credit Commitments due to any expiration or
termination of all or any part of the Acquisition Amount, the Agent shall
recalculate the above quarterly reductions such that the reductions amortize the
difference of $55,000,000 minus such reduction at the same rate the above table
amortizes $55,000,000. The Revolving Credit Commitments or any portion thereof
terminated or reduced pursuant to this Section 2.2, whether optional or
mandatory, may not be reinstated.
(b) For purposes of this Agreement, a Letter of Credit Advance (i)
shall be deemed outstanding in an amount equal to the sum of the maximum amount
available to be drawn under the related Letter of Credit on or after the date of
determination and on or before the stated expiry date thereof plus the amount of
any draws under such Letter of Credit that have not been reimbursed as provided
in Section 3.3 and (ii) shall be deemed outstanding at all times on and before
such stated expiry date or such earlier date on which all amounts available to
be drawn under such Letter of Credit have been fully drawn, and thereafter until
all related reimbursement obligations have been paid pursuant to Section 3.3. As
provided in Section 3.3, upon each payment made by the Agent in respect of any
draft or other demand for payment under any Letter of Credit, the amount of any
Letter of Credit outstanding immediately prior to such payment shall be
automatically reduced by the amount of each Revolving Credit Loan deemed
advanced in respect of the related reimbursement obligation of the Company.
2.3 Fees (a) The Company agrees to pay to the Revolving Credit
Lenders a commitment fee on the daily average unused amount of the Revolving
Credit Commitment, for the period from the Effective Date to but excluding the
Termination Date, at a rate equal to the Applicable Margin. All Letters of
Credit shall be considered usage of the Revolving Credit Commitments. Accrued
commitment fees shall be payable quarterly in arrears on the last Business Day
of each March, June, September and December, commencing on June 30, 1997 and on
the Termination Date.
(b) The Company agrees to pay to the Agent (i) with respect to
Letters of Credit, a fee computed at the Applicable Margin calculated on the
maximum amount available to be drawn from time to time under a Letter of Credit,
which fee shall be paid annually in advance at the time such Letter of Credit is
issued for the period from and including the date of issuance of such Letter of
Credit to and including the stated expiry date
CREDIT AGREEMENT Page 22
<PAGE> 28
of such Letter of Credit, which fees shall be for the pro rata benefit of the
Revolving Credit Lenders and (ii) in addition to all other fees, with respect to
all Letters of Credit, a fee computed at the rate of 0.15% per annum calculated
on the face amount of each Letter of Credit, which fee shall be paid at the time
each Letter of Credit is issued and shall be solely for the account of the
Agent. Such fees are nonrefundable and the Company shall not be entitled to any
rebate of any portion thereof if such Letter of Credit does not remain
outstanding through its stated expiry date or for any other reason. The Company
further agrees to pay to the Agent, on demand, such other customary
administrative fees, charges and expenses of the Agent in respect of the
issuance, negotiation, acceptance, amendment, transfer and payment of such
Letter of Credit or otherwise payable pursuant to the application and related
documentation under which such Letter of Credit is issued.
(c) The Company agrees to pay to the Agent agency fees for its
services as Agent under this Agreement and for other services in such amounts as
may from time to time be agreed to in writing between the Company and the Agent.
2.4 Disbursement of Advances. (a) The Company shall give the Agent
notice of its request for each Advance in substantially the form of Exhibit H-1
hereto or, in the case of the Acquisition Amount, Exhibit H-2 hereto, not later
than 10:00 a.m. Detroit time (i) three LIBOR Business Days prior to the date
such Advance is requested to be made if such Advance is to be made as a LIBOR
Borrowing, (ii) five Business Days prior to the date any Letter of Credit
Advance is requested to be made, (iii) on the Business Day such Advance is
requested to be made in the case of any Swingline Loan, (iv) other than in
connection with the acquisition of Aeroquip, ten Business Days prior to the date
such Advance is requested to be made if such Advance is the Acquisition Amount,
and (v) on the Business Day prior to the date such Advance is requested to be
made in all other cases, which notice shall specify whether a LIBOR Borrowing,
an Adjusted Prime Rate Borrowing, a Swingline Loan or a Letter of Credit Advance
is requested and, in the case of each requested LIBOR Borrowing, the LIBOR
Interest Period to be initially applicable to such Borrowing and, in the case of
each Letter of Credit Advance, such information as may be necessary for the
issuance thereof by the Agent. The Agent, not later than 12:00 noon the same
Business Day such notice is given, shall provide notice of such requested
Advance (other than Swingline Loan) to each Revolving Credit Lender in the case
of each Revolving Credit Advance and to each Term Loan Lender in the case of the
Term Loan. Subject to the terms and conditions of this Agreement, the proceeds
of each such requested Advance shall be made available to the Company by
depositing the proceeds thereof, in immediately available funds, in an account
maintained and designated by the Company at the principal office of the Agent.
Subject to the terms and conditions of this Agreement, the Agent shall, on the
date such Letter of Credit Advance is requested to be made, issue the related
Letter of Credit on behalf of the Revolving Credit Lenders for the account of
the Company. Notwithstanding anything herein to the contrary, the Agent may
decline to issue any requested Letter of Credit on the basis that the
beneficiary, the purpose of issuance or the terms or the conditions of drawing
are unacceptable to it in it reasonable discretion, provided that the Agent
shall not unreasonably decline to issue a Letter of Credit pursuant to this
sentence.
(b) Each Lender, not later than 2:00 p.m. on the date any Borrowing
in the form of a Loan for which such Lender has a Commitment is required to be
made, shall make its pro rata share of such Borrowing available in immediately
available funds at the principal office of the Agent for disbursement to the
Company. Unless the Agent shall have received notice from any Lender prior to
the date such Borrowing is requested to be made under this Section 2.4 that such
Lender will not make available to the Agent such Lender's pro rata portion of
such Borrowing, the Agent may assume that such Lender has made such portion
available to the Agent on the date such Borrowing is requested to be made in
accordance with this Section 2.4. If and to the extent such Lender shall not
have so made such pro rata portion available to the Agent, the Agent may (but
shall not be obligated to) make such amount available to the Company, and such
Lender and the Company severally agree to pay to the Agent forthwith on demand
such amount together with interest thereon, for each day from the date such
amount is made available to the Company by the Agent until the date such amount
is repaid to the Agent, at a rate per annum equal to, in the case of the
Company, the interest rate applicable to such Borrowing during such
CREDIT AGREEMENT Page 23
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period and, in the case of any Lender, at the Federal Funds Rate for the first
five days and at the interest rate applicable to such borrowing thereafter. If
such Lender shall pay such amount to the Agent together with interest, such
amount so paid shall constitute a Loan by such Lender as a part of such
Borrowing for purposes of this Agreement. The failure of any Lender to make its
pro rata portion of any such Borrowing available to the Agent shall not relieve
any other Lender of its obligations to make available its pro rata portion of
such Borrowing on the date such Borrowing is requested to be made, but no Lender
shall be responsible for failure of any other Lender to make such pro rata
portion available to the Agent on the date of any such Borrowing.
(c) All Revolving Credit Loans shall be evidenced by the Revolving
Credit Notes, the Term Loan shall be evidenced by the Term Loan Notes, and the
Swingline Loans shall be evidenced by the Swingline Note and all such Loans
shall be due and payable and bear interest as provided in Article III. Each
Lender and the Agent is hereby authorized by the Company to record on the
schedule attached to the Notes, or in its books and records, the date, and
amount and type of each Loan and the duration of the related LIBOR Interest
Period (if applicable), the amount of each payment or prepayment of principal
thereon, and the other information provided for on such schedule, which schedule
or books and records, as the case may be, shall constitute prima facie evidence
of the information so recorded, provided, however, that failure of any Lender or
the Agent to record, or any error in recording, any such information shall not
relieve the Company of its obligation to repay the outstanding principal amount
of the Loans, all accrued interest thereon and other amounts payable with
respect thereto in accordance with the terms of the Notes and this Agreement.
Subject to the terms and conditions of this Agreement, the Company may borrow
Revolving Credit Advances under this Section 2.4 and under Section 3.3, prepay
Revolving Credit Advances pursuant to Section 3.1 and reborrow Revolving Credit
Advances but not the Term Loan under this Section 2.4.
(d) Nothing in this Agreement shall be construed to require or
authorize any Lender to issue any Letter of Credit, it being recognized that the
Agent has the sole obligation under this Agreement to issue Letters of Credit
for the risk of the Lenders. Upon issuance of a Letter of Credit by the Agent,
each Lender shall automatically acquire a pro rata risk participation interest
in such Letter of Credit Advance based on its respective Revolving Credit
Commitment. If the Agent shall honor a draft or other demand for payment
presented or made under any Letter of Credit, the Agent shall provide notice
thereof to each Lender on the date such draft or demand is honored unless the
Company or any of its Subsidiaries shall have satisfied its reimbursement
obligation under Section 3.3 by payment to the Agent on such date. Each Lender,
on such date, shall make its pro rata share of the amount paid by the Agent
available in immediately available funds at the principal office of the Agent
for the account of the Agent. If and to the extent such Lender shall not have
made any required pro rata portion available to the Agent, such Lender and the
Company, unconditionally and irrevocably, severally agree to pay to the Agent
forthwith on demand such amount together with interest thereon, for each day
from the date such amount was paid by the Agent until such amount is so made
available to the Agent at a per annum rate equal to the interest rate applicable
during such period to the related Loan disbursed under Section 3.3 in respect of
the reimbursement obligation of the Company. If such Lender shall pay such
amount to the Agent together with such interest, if any, accrued, such amount so
paid shall constitute a Revolving Credit Loan by such Lender as part of the
Revolving Credit Borrowing disbursed in respect of the reimbursement obligation
of the Company under Section 3.3 for purposes of this Agreement. The failure of
any Lender to make its pro rata portion of any such amount paid by the Agent
available to the Agent shall not relieve any other Lender of its obligation to
make available its pro rata portion of such amount, but no Lender shall be
responsible for failure of any other Lender to make such pro rata portion
available to the Agent. Notwithstanding anything herein to the contrary, it is
acknowledged and agreed that Letters of Credit hereunder may be issued for the
account of any of the Subsidiaries of the Company, provided that for all
purposes of this Agreement both the Company and such Subsidiary shall be deemed
the account party thereon and shall be jointly and severally liable for all
obligations in connection therewith and the Company shall have obtained an
agreement from such Subsidiary that such Subsidiary shall be bound all of the
terms and provisions of this Agreement with respect to Letters of Credit, such
agreement to be in form of substance satisfactory to the Agents.
CREDIT AGREEMENT Page 24
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2.5 Conditions for First Disbursement. The obligation of the Lenders to
make the first Advance hereunder is subject to receipt by each Lender and the
Agent of the following documents and completion of the following matters, in
form and substance satisfactory to each Lender and the Agent:
(a) Charter Documents. Certificates of recent date of the
appropriate authority or official of the Company's and each Guarantor's
respective jurisdiction of organization listing all charter documents of the
Company or each Guarantor, respectively, on file in that office and certifying
as to the good standing and corporate existence of the Company or each
Guarantor, respectively, together with copies of such charter documents of the
Company or each Guarantor certified as of a recent date by such authority or
official and certified as true and correct as of the Effective Date by a duly
authorized officer of the Company or each Guarantor, respectively;
(b) By-Laws and Corporate Authorizations. Copies of the by-laws of
the Company and operating agreement of each Guarantor together with all
authorizing resolutions and evidence of other corporate action taken by the
Company and each Guarantor to authorize the execution, delivery and performance
by the Company and each Guarantor of this Agreement, the Notes and the Security
Documents to which the Company or such Guarantor, respectively, is a party and
the consummation by the Company or such Guarantor, respectively, of the
transactions contemplated hereby, certified as true and correct as of the
Effective Date by a duly authorized officer of the Company or each Guarantor,
respectively;
(c) Incumbency Certificate. Certificates of incumbency of the
Company and each Guarantor containing, and attesting to the genuineness of, the
signatures of those officers or members, as the case may be, authorized to act
on behalf of the Company or each Guarantor in connection with this Agreement,
the Notes and the Security Documents to which the Company and such Guarantor is
a party and the consummation by the Company or such Guarantor of the
transactions contemplated hereby, certified as true and correct as of the
Effective Date by a duly authorized officer of the Company and each Guarantor;
(d) Notes. The Notes duly executed on behalf of the Company for
each Lender;
(e) Security Documents. The Security Documents duly executed on
behalf of the Company and the Guarantors, as the case may be, granting to the
Lenders and the Agent the collateral and security intended to be provided
pursuant to Section 2.11, together with:
(i) Recording, Filing, Etc. Recordation, filing and other
action (including payment of any applicable taxes or fees) in such jurisdictions
as the Lenders or the Agent may deem necessary or appropriate with respect to
the Security Documents, including the filing of financing statements and similar
documents which the Lenders or the Agent may deem necessary or appropriate to
create, preserve or perfect the liens, security interests and other rights
intended to be granted to the Lenders or the Agent thereunder, together with
Uniform Commercial Code record searches in such offices as the Lenders or the
Agent may request;
(ii) Title Insurance. Policies of mortgage title insurance
issued by an insurer and in amounts satisfactory to the Lenders and the Agent,
insuring the interest of the Lenders and the Agent under the Mortgages without
standard exceptions and without any special exceptions not acceptable to the
Lenders and the Agent and containing such further endorsements, affirmative
coverage and other terms as the Lenders and the Agent may request;
(iii) Surveys. Surveys of the property subject to the Mortgages
made by a land surveyor licensed in the State in which such property is located
and acceptable to the Lenders and the Agent complying with the Minimum Standard
Detail Requirements for Land Title Surveys as adopted by the American
CREDIT AGREEMENT Page 25
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Land Title Association and the American Congress on Surveying and Mapping and
showing such details as the Lenders and the Agent may request, certified to the
Lenders and the Agent and the issuer of such mortgage title insurance policy in
form acceptable to the Lenders and the Agent, or such surveys recertified by
such a surveyor sufficient to permit the issuers of all mortgage title insurance
policies to remove their standard exceptions;
(iv) Leased Property; Landlord Waivers. Copies of all real
property leases, certified as true and correct as of the Effective Date by a
duly authorized officer of the Company, and an agreement of each landlord under
such leases to the extent required by the Agent, in form and substance
acceptable to the Agent, waiving its distraint, lien and similar rights with
respect to any property subject to the Security Documents and agreeing to permit
the Lenders and the Agent to enter such premises in connection therewith; and
(v) Casualty and Other Insurance. Evidence that the casualty
and other insurance required pursuant to Section 5.1(c), paragraph 1(e) of the
Security Agreement and paragraph 6 of each Mortgage is in full force and effect;
(f) Legal Opinions. The favorable written opinion of counsel for the
Company and each Guarantor, substantially in the form of Exhibit I attached
hereto and as to such other matters as the Agent may request;
(g) Consents, Approvals, Etc. Copies of all governmental and
nongovernmental consents, approvals, authorizations, declarations, registrations
or filings, if any, required on the part of the Company or any Guarantor in
connection with the execution, delivery and performance of the Loan Documents or
the transactions contemplated hereby or as a condition to the legality, validity
or enforceability of, the Loan Documents, certified as true and correct and in
full force and effect as of the Effective Date by a duly authorized officer of
the Company, or if none are required, a certificate of such officer to that
effect;
(h) Subordinated Debt. Evidence satisfactory to the Agent that the
Company has incurred Subordinated Debt in an amount equal to or greater than
$125,000,000 in accordance with the Senior Subordinated Debt Documents, all
Senior Subordinated Debt Documents shall have been delivered to the Agent and
approved by the Agent and all transactions contemplated pursuant to the Senior
Subordinated Debt Documents shall have been completed;
(i) Environmental Certificate. An Environmental Certificate duly
executed by the Company and the Guarantors;
(j) Payments. Evidence satisfactory to the Agent that all transfers
of funds and payments described on Schedule 4.21 are being accomplished
simultaneously, or at such other time as noted on Schedule 4.21, with the first
Advance hereunder, including without limitation the payment in full of all
indebtedness and other liabilities, and the termination of all commitments to
lend and all Liens relating thereto, as described on Schedule 4.21;
(k) Due Diligence. The Agent shall have received and be satisfied
with a field asset examination of receivables and inventory (provided that it is
acknowledged that such field asset examination is a condition precedent only to
the Revolving Credit Advances), all environmental reports and liabilities, all
litigation searches, a review of all Contingent Liabilities, all fixed asset
appraisals and all other due diligence and investigation required by the Agent;
(l) Certificates. The Agent shall have received, in form and
substance satisfactory to the Agent, a pro forma covenant compliance certificate
and projection of tax payments, as of the Effective Date and as of the end of
each of the first four quarters after the Effective Date; and
CREDIT AGREEMENT Page 26
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(m) 14% Senior Notes. Evidence satisfactory to the Agent that, after
giving effect to the payments on the 14% Senior Notes on the date hereof, the
outstanding aggregate principle balance of the 14% Senior Notes is equal to
$24,865,000, and the 14% Senior Debt Documents shall have been delivered to the
Agent and approved by the Agent and all transactions contemplated pursuant to
the tender offer and consent solicitation pursuant to the 14% Senior Notes shall
have been completed; and
(n) Other Conditions. Such other documents and completion of such
other matters as the Agent or any Lender may reasonably request, including
without limitation copies of all final projections and financial statements and
copies of the Purchase and Sale of Shares Promissory Agreement and all other
agreements and documents of the Company or any of its Subsidiaries relating to
MaP.
2.6 Further Conditions for Disbursement. The obligation of the Lenders
to make any Advance (including the first Advance), or any continuation or
conversion under Section 2.7, is further subject to the satisfaction of the
following conditions precedent:
(a) The representations and warranties contained in Article IV
hereof and in the Security Documents shall be true and correct on and as of the
date such Advance is made (both before and after such Advance is made) as if
such representations and warranties were made on and as of such date;
(b) No Event of Default or Unmatured Event shall exist or shall have
occurred and be continuing on the date such Advance is made and the making of
such Advance shall not cause an Event of Default or Unmatured Event;
(c) The Agent shall have received the Borrowing Base Certificate
pursuant to Section 5.1(d)(v) as of the close of business on the last day of the
month preceding the date such Advance is made;
(d) In addition to all other applicable conditions, in the case of
any Letter of Credit Advance, the Company shall have delivered to the Agent
issuing the related Letter of Credit an application for such Letter of Credit
and other related documentation requested by and acceptable to the Agent
appropriately completed and duly executed on behalf of the Company; and
(e) In addition to all other applicable conditions, in the case of
any Revolving Credit Advance using any portion of the Acquisition Amount to
consummate an Initial Acquisition, (i) the Company shall deliver evidence
satisfactory to the Agent that the Company will be completing such Initial
Acquisition simultaneously with the disbursement of any such Revolving Credit
Advance, (ii) all Initial Acquisition Documents with respect to such Initial
Acquisition shall have been delivered to the Agent and be satisfactory to the
Agent, (iii) such Initial Acquisitions shall have been completed in accordance
with the applicable Initial Acquisition Documents and the Company shall acquire,
free and clear of all Liens (other than Liens permitted by this Agreement), good
and marketable title to all assets being acquired pursuant to such Initial
Acquisition, (iv) such Initial Acquisition shall be completed in accordance with
all applicable laws and regulations, and such Initial Acquisition shall not be
void or voidable, (v) the Agent shall have completed such due diligence with
respect to the Initial Acquisitions as required by the Agent, (vi) such
Revolving Credit Advance shall be used solely to consummate such Initial
Acquisition and (vii) the Company shall deliver such customary legal opinions
and certificates required in connection with the Initial Acquisitions as
reasonably required by the Agent.
The Company shall be deemed to have made a representation and warranty to the
Lenders at the time of the making of, and the continuation or conversion of,
each Advance to the effects set forth in clauses (a) and (b) of this Section
2.6. For purposes of this Section 2.6, the representations and warranties
contained in Section 4.6
CREDIT AGREEMENT Page 27
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hereof shall be deemed made with respect to both the financial statements
referred to therein and the most recent financial statements delivered pursuant
to Section 5.1(d)(ii) and (iii).
2.7 Subsequent Elections as to Borrowings. As to Revolving Credit
Loans, the Company may elect (a) to continue a LIBOR Borrowing of one type, or a
portion thereof, as a LIBOR Borrowing of the then existing type or (b) may elect
to convert a LIBOR Borrowing of one type, or a portion thereof, to a Borrowing
of another type or (c) elect to convert an Adjusted Prime Rate Borrowing, or a
portion thereof, to a LIBOR Borrowing, in each case by giving notice thereof to
the Agent in substantially the form of Exhibit J hereto not later than 10:00
a.m. Detroit time three LIBOR Business Days prior to the date any such
continuation of or conversion to a LIBOR Borrowing is to be effective and not
later than 10:00 a.m. Detroit time on the Business Day date such continuation or
conversion is to be effective in all other cases, provided that an outstanding
LIBOR Borrowing may only be converted on the last day of the then current LIBOR
Interest Period with respect to such Borrowing, and provided, further, if a
continuation of a Borrowing as, or a conversion of a Borrowing to, a LIBOR
Borrowing is requested, such notice shall also specify the LIBOR Interest Period
to be applicable thereto upon such continuation or conversion. The Agent, not
later than 1:00 p.m. the Business Day such notice is given, shall provide notice
of such election to the Revolving Credit Lenders. If the Company shall not
timely deliver such a notice with respect to any outstanding LIBOR Borrowing,
the Company shall be deemed to have elected to convert such LIBOR Borrowing to
an Adjusted Prime Rate Borrowing on the last day of the then current LIBOR
Interest Period with respect to such Borrowing.
2.8 Limitation of Requests and Elections. Notwithstanding any other
provision of this Agreement to the contrary, if, upon receiving a request for a
LIBOR Borrowing pursuant to Section 2.4, or a request for a continuation of a
LIBOR Borrowing, or a request for a conversion of an Adjusted Prime Rate
Borrowing to a LIBOR Borrowing pursuant to Section 2.7, (a) in the case of any
LIBOR Borrowing, deposits in Dollars for periods comparable to the LIBOR
Interest Period elected are not available to any Lender in the relevant
interbank or market, or (b) applicable interest rate will not adequately and
fairly reflect the cost to any Lender of making, funding or maintaining the
related LIBOR Borrowing or (c) by reason of national or international financial,
political or economic conditions or by reason of any applicable law, treaty,
rule or regulation (whether domestic or foreign) now or hereafter in effect, or
the interpretation or administration thereof by any governmental authority
charged with the interpretation or administration thereof, or compliance by any
Lender with any guideline, request or directive of such authority (whether or
not having the force of law), including without limitation exchange controls, it
is impracticable, unlawful or impossible for any Lender (i) to make or fund the
relevant LIBOR Borrowing or (ii) to continue such LIBOR Borrowing or (iii) to
convert a Borrowing to such a LIBOR Borrowing, then the Company shall not be
entitled, so long as such circumstances continue, to request a LIBOR Borrowing
pursuant to Section 2.4 or a continuation of or conversion to a LIBOR Borrowing
pursuant to Section 2.7. In the event that such circumstances no longer exist,
the Lenders shall again consider requests for LIBOR Borrowings pursuant to
Section 2.4, and requests for continuations of and conversions to LIBOR
Borrowings of the affected type pursuant to Section 2.7.
2.9 Minimum Amounts; Limitation on Number of Borrowings. Except for (a)
Advances and conversions thereof which exhaust the entire remaining amount of
the Commitments and (b) payments required pursuant to Section 3.8, each
Borrowing and each continuation or conversion pursuant to Section 2.7 and each
prepayment thereof shall be in a minimum amount of, in the case of LIBOR
Borrowings, $2,000,000 and in integral multiples of $1,000,000, and in the case
of Adjusted Prime Rate Borrowings, $500,000 and in integral multiples of
$100,000. No more than six LIBOR Interest Periods shall be permitted to exist at
any one time with respect to all Revolving Credit Borrowings outstanding
hereunder from time to time.
2.10 Borrowing Base Adjustments. The Company agrees that if at any time
any trade account receivable or any inventory of the Company or any Guarantor
fails to constitute Eligible Accounts Receivable or Eligible Inventory, as the
case may be, for any reason, the Agent may, at any time upon written notice to
the Company and notwithstanding any prior classification of eligibility,
classify such asset or property as ineligible and exclude the same from the
computation of the Borrowing Base. Additionally, the Agent may
CREDIT AGREEMENT Page 28
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establish such reserves against the Eligible Accounts Receivables and Eligible
Inventory from time to time as determined by the Agent, in each case without in
any way impairing the rights of the Lenders and the Agent in and to the same
under the Security Agreements.
2.11 Security and Collateral. To secure the payment when due of the
Notes and all other obligations of the Company under this Agreement to the
Lenders and the Agent, the Company shall execute and deliver, or cause to be
executed and delivered, to the Lenders and the Agent Security Documents granting
the following:
(a) Security interests in all present and future accounts,
inventory, equipment, fixtures and all other personal property of the Company
and each Guarantor;
(b) Mortgage liens on all real property and fixtures of the Company
and each Guarantor;
(c) Pledges of 100% of the Capital Stock of all Domestic
Subsidiaries owned by the Company and 65% of all Capital Stock of all Foreign
Subsidiaries of the Company;
(d) Guarantees of all Domestic Subsidiaries of the Company;
(e) All other security and collateral described in the Security
Documents.
ARTICLE III
PAYMENTS AND PREPAYMENTS OF ADVANCES
3.1 Principal Payments.
(a) Unless earlier payment is required under this Agreement, the
Company shall pay to the Revolving Credit Lenders on the Termination Date the
entire outstanding principal amount of the Revolving Credit Loans outstanding to
it. If the Revolving Credit Advances at any time exceed the amount allowed
pursuant to Section 2.1(d), the Company shall prepay the Revolving Credit
Advances by an amount equal to or greater than such excess.
(b) Unless earlier payment is required under this Agreement, the
Company shall pay to the Term Loan Lenders the principal of the Term Loan in 30
consecutive quarterly installments payable on the last Business Day of each
March, June, September and December, commencing with the last Business Day of
June, 1997, as follows: (i) twenty six quarterly principal installments of
$75,000 each for the first twenty six quarterly payments and (ii) four principal
installments of $3,262,500 each for the next four quarterly installments, and on
the Maturity Date the Term Loan shall be paid in full.
(c) In addition to all other payments of the Loans required
hereunder, the Company shall prepay the Loan by an amount equal to 100% of all
of the Net Cash Proceeds from any sale or other disposition of any assets (other
than the sale of inventory in the ordinary course of business upon customary
credit terms, sales of scrap or obsolete material or equipment which are not
material in the aggregate and transfers of assets, including without limitation
Capital Stock, between Guarantors or between the Company and Guarantors) in
excess of $1,000,000 in aggregate amount in any fiscal year (other than such Net
Cash Proceeds which are used within 180 days of the date received to replace the
asset so sold or otherwise disposed of to acquire an asset of comparable value)
which payments shall be due 20 days after the end of each month for all such
sales and other dispositions during such month. The Company shall provide a
certificate to the Agent
CREDIT AGREEMENT Page 29
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within 20 days after the each sale of assets which, but for the above
parenthetical, would cause a prepayment under this Section 3.1(c), which
certificate shall describe such sale of assets and estimate when such Net Cash
Proceeds will be used to purchase assets of a comparable value, and if such Net
Cash Proceeds are not used within 180 days after such sale or such earlier date
when the Company has determined not to purchase assets of comparable value with
such Net Cash Proceeds the Company will then prepay the Loans with such Net Cash
Proceeds. Such mandatory prepayments shall be applied pro rata between the Term
Loan and the Revolving Credit Advances, and shall be applied to installments of
the Term Loan in the inverse order or maturities until paid in full and any such
payments on the Revolving Credit Advances shall permanently reduce the amount of
the Revolving Credit Commitments and the amount of the Borrowing Base determined
pursuant to clause (d) of the definition of Borrowing Base, in each case by the
amount of such payment.
(d) In addition to all other payments of the Loans required
hereunder, subject to Section 3.1(f) the Company shall prepay the Loans by an
amount equal to 75% of all Net Cash Proceeds of any Subordinated Debt incurred
at any time, excluding the Subordinated Debt incurred on the Effective Date
pursuant to the Senior Subordinated Debt Documents. Such mandatory prepayments
shall be applied pro rata between the Term Loan and the Revolving Credit
Advances, and shall be applied to installments of the Term Loan in the inverse
order or maturities until paid in full and any such payments on the Revolving
Credit Advances shall permanently reduce the amount of the Revolving Credit
Commitments by the amount of such payment.
(e) In addition to all payments of the Loans required hereunder,
subject to Section 3.1(f) the Company shall prepay the Loans by an amount equal
to 75% of the Net Cash Proceeds from the issuance or other sale of any Capital
Stock of the Company or any of its Subsidiaries. Such mandatory prepayments on
the Loans shall be applied pro rata between the Term Loan and the Revolving
Credit Advances, and shall be applied to installments of the Term Loan in the
inverse order or maturities until paid in full and any such payments on the
Revolving Credit Advances shall permanently reduce the amount of the Revolving
Credit Commitments by the amount of such payment.
(f) Notwithstanding Sections 3.1(d) or (e), the first $10,000,000 of
the aggregate amount of the sum of the Net Cash Proceeds of any Subordinated
Debt incurred after the Effective Date plus the Net Cash Proceeds from the
issuance or other sale of any Capital Stock of the Company or any of its
Subsidiaries after the Effective Date shall not be subject to the provisions of
Section 3.1(d) or (e) if both before and after giving effect to such Net Cash
Proceeds (i) no Unmatured Event or Event of Default shall exist, (ii) the
Company is able to borrow at least $10,000,000 in Revolving Credit Loans and
(iii) the Total Debt to EBITDA Ratio is at least 0.5 below the level required
under this Agreement.
(g) The Company may at any time and from time to time prepay all or
a portion of the Loans, without premium or penalty, provided that (i) the
Company may not prepay any portion of any Loan as to which an election of or a
conversion to a LIBOR Loan is pending pursuant to 2.7, (ii) the Company shall
comply with all requirements of Section 3.9 in connection with any payment of
any LIBOR Loan, and (iii) all optional prepayments of the Term Loan shall be
applied to installments due thereon in the inverse order of maturities.
3.2 Interest Payments. The Company shall pay interest to the Lenders on
the unpaid principal amount of each Loan, for the period commencing on the date
such Loan is made until such Loan is paid in full, on each Interest Payment Date
and at maturity (whether at stated maturity, by acceleration or otherwise), and
thereafter on demand, at the following rates per annum:
(a) During such periods that such Loan is an Adjusted Prime Rate
Loan, the Adjusted Prime Rate.
CREDIT AGREEMENT Page 30
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(b) During such periods that such Loan is a LIBOR Loan, the LIBOR
applicable to such Loan for each related LIBOR Interest Period.
Notwithstanding the foregoing paragraphs (a) and (b), the Company shall pay
interest on demand at the Overdue Rate on the outstanding principal amount of
any Loan and any other amount payable by the Company hereunder (other than
interest) upon and during the continuance of any Event of Default if required by
the Required Lenders.
3.3 Letter of Credit Reimbursement Payments. (a) (i) The Company agrees
to pay to the Agent, not later than 1:00 p.m. Detroit time on the date on which
the Agent shall honor a draft or other demand for payment presented or made
under such Letter of Credit, an amount equal to the amount paid by the Agent in
respect of such draft or other demand under such Letter of Credit and all
reasonable expenses paid or incurred by the Agent relative thereto (the
"Reimbursement Amount"). The Agent shall, on the date of each demand for payment
under any Letter of Credit issued by the Agent, give the Company notice thereof
and of the amount of the Company's reimbursement obligation and liability for
expenses relative thereto; provided that the failure of the Agent to give such
notice shall not affect the reimbursement and other obligations of the Company
under this Section 3.3. Unless the Company shall have made such payment to the
Agent on such day, upon each such payment by the Agent, the Company shall be
deemed to have elected to satisfy its reimbursement obligation by an Adjusted
Prime Rate Borrowing in an amount equal to the amount so paid by the Agent in
respect of such draft or other demand under such Letter of Credit, and the Agent
shall be deemed to have disbursed to the Company, for the account of the
Revolving Credit Lenders, the Adjusted Prime Rate Loans comprising such Adjusted
Prime Rate Borrowing, and each Revolving Credit Lender shall make its share of
each such Adjusted Prime Rate Borrowing available to the Agent in accordance
with this Agreement. Such Adjusted Prime Rate Loans shall be deemed disbursed
notwithstanding any failure to satisfy any conditions for disbursement of any
Loan and, to the extent of the Adjusted Prime Rate Loans so disbursed, the
reimbursement obligation of the Company with respect to such Letter of Credit
under this subsection (a)(i) shall be deemed satisfied.
(ii) If, for any reason (including without limitation as a
result of the occurrence of an Event of Default with respect to the Company
pursuant to Section 6.1(h)), Adjusted Prime Rate Loans may not be made by the
Revolving Credit Lenders as described in subsection (a)(i) of this Section 3.3,
(A) the Company agrees that each Reimbursement Amount not paid pursuant to the
first sentence of subsection (a)(i) of this Section 3.3 shall bear interest,
payable on demand by the Agent, at the interest rate then applicable to Adjusted
Prime Rate Loans, and (B) effective on the date each such Adjusted Prime Rate
Loan would otherwise have been made with respect to any Letter of Credit, each
Revolving Credit Lender severally agrees that it shall unconditionally and
irrevocably, without regard to the occurrence of any Event of Default or
Unmatured Event to the extent of such Revolving Credit Lender's pro rata share
(based on the percentage of the aggregate Revolving Credit Commitments of all
Revolving Credit Lenders then constituted by such Revolving Credit Lender's
Revolving Credit Commitment) purchase a participating interest in each
Reimbursement Amount. Each such Lender will immediately transfer to the Agent,
in same day funds, the amount of its participation. Each such Lender shall share
on a pro rata basis in any interest which accrues thereon and in all repayments
thereof. If and to the extent that any Lender shall not have so made the amount
of such participating interest available to the Agent, such Lender agrees to pay
to the Agent forthwith on demand such amount together with interest thereon, for
each day from the date of demand by the Agent until the date such amount is paid
to the Agent, at the Federal Funds Rate for the first five days after such
demand and at the Overdue Rate thereafter.
(iii) Each Revolving Credit Lender shall be obligated,
absolutely and unconditionally, to make Adjusted Prime Rate Loans pursuant to
Section 3.3(a)(i) to purchase and fund participation interests in Letters of
Credit pursuant to Section 2.4(d) and 3.3(a)(ii) and the obligation shall not be
affected by any circumstance whatsoever, including, without limitation, (i) any
set off, counterclaim,
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recoupment, defense or other right which such Lender or the Company may have
against the Agent, the Company or anyone else for any reason whatsoever, (ii)
the occurrence of any Event of Default or Unmatured Event (iii) any adverse
change in the condition (financial or otherwise) of the Company or any of their
Subsidiaries, (iv) any breach of this Agreement by the Company, any of its
Subsidiaries, the Agent, or any other Lender, or (v) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing,
including without limitation any termination or other limitation on the
Revolving Credit Commitments or any failure to satisfy any conditions precedent
to any Advance contained herein or any other provision of this Agreement.
(b) The reimbursement obligation of the Company under this Section
3.3 shall be absolute, unconditional and irrevocable and shall remain in full
force and effect until all obligations of the Company to the Lenders hereunder
shall have been satisfied, and such obligations of the Company shall not be
affected, modified or impaired upon the happening of any event, including
without limitation, any of the following, whether or not with notice to, or the
consent of, the Company:
(i) Any lack of validity or enforceability of any Letter of
Credit or any documentation relating to any Letter of Credit or to any
transaction related in any way to such Letter of Credit (the "Letter of Credit
Documents");
(ii) Any amendment, modification, waiver, consent, or any
substitution, exchange or release of or failure to perfect any interest in
collateral or security, with respect to any of the Letter of Credit Documents;
(iii) The existence of any claim, setoff, defense or other right
which the Company may have at any time against any beneficiary or any transferee
of any Letter of Credit (or any Persons or entities for whom any such
beneficiary or any such transferee may be acting), the Agent or any Lender or
any other Person or entity, whether in connection with any of the Letter of
Credit Documents, the transactions contemplated herein or therein or any
unrelated transactions;
(iv) Any draft or other statement or document presented under
any Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect;
(v) Payment by the Agent to the beneficiary under any Letter
of Credit against presentation of documents which do not comply with the terms
of the Letter of Credit, including failure of any documents to bear any
reference or adequate reference to such Letter of Credit;
(vi) Any failure, omission, delay or lack on the part of the
Agent, the Agent or any Lender or any party to any of the Letter of Credit
Documents to enforce, assert or exercise any right, power or remedy conferred
upon the Agent, the Agent, any Lender or any such party under this Agreement or
any of the Letter of Credit Documents, or any other acts or omissions on the
part of the Agent, the Agent, any Lender or any such party; or
(vii) Any other event or circumstance that would, in the absence
of this clause, result in the release or discharge by operation of law or
otherwise of the Company from the performance or observance of any obligation,
covenant or agreement contained in this Section 3.3.
No setoff, counterclaim, reduction or diminution of any obligation or any
defense of any kind or nature which the Company has or may have against the
beneficiary of any Letter of Credit shall be available hereunder to the
CREDIT AGREEMENT Page 32
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Company against the Agent or any Lender. Nothing in this Section 3.3 shall limit
the liability, if any, of the Lenders to the Company pursuant to Section 3.3(c).
(c) The Company hereby indemnifies and agrees to hold harmless the
Lenders, the Agent and their respective officers, directors, employees and
agents, harmless from and against any and all claims, damages, losses,
liabilities, costs or expenses of any kind or nature whatsoever which the
Lenders, the Agent or any such Person may incur or which may be claimed against
any of them by reason of or in connection with any Letter of Credit, and neither
any Lender, the Agent nor any of their respective officers, directors, employees
or agents shall be liable or responsible for: (i) the use which may be made of
any Letter of Credit or for any acts or omissions of any beneficiary in
connection therewith; (ii) the validity, sufficiency or genuineness of documents
or of any endorsement thereon, even if such documents should in fact prove to be
in any or all respects invalid, insufficient, fraudulent or forged; (iii)
payment by the Agent to the beneficiary under any Letter of Credit against
presentation of documents which do not comply with the terms of any Letter of
Credit, including failure of any documents to bear any reference or adequate
reference to such Letter of Credit; (iv) any error, omission, interruption or
delay in transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit; or (v) any other event or
circumstance whatsoever arising in connection with any Letter of Credit;
provided, however, that the Company shall not be required to indemnify the
Lenders, the Agent and such other Persons, and the Lenders shall be severally
liable to the Company to the extent, but only to the extent, of any direct, as
opposed to consequential or incidental, damages suffered by the Company which
were caused by (A) the Agent's wrongful dishonor of any Letter of Credit after
the presentation to it by the beneficiary thereunder of a draft or other demand
for payment and other documentation strictly complying with the terms and
conditions of such Letter of Credit, or (B) the payment by the Agent to the
beneficiary under any Letter of Credit against presentation of documents which
do not comply with the terms of the Letter of Credit to the extent, but only to
the extent, that such payment constitutes gross negligence or wilful misconduct
of the Agent; provided that none of the Agent, any Lender or any such Person
shall have the right to be indemnified hereunder for its own gross negligence or
wilful misconduct as determined by a court of competent jurisdiction. It is
understood that in making any payment under a Letter of Credit the Agent will
rely on documents presented to it under such Letter of Credit as to any and all
matters set forth therein without further investigation and regardless of any
notice or information to the contrary, and such reliance and payment against
documents presented under a Letter of Credit substantially complying with the
terms thereof shall not be deemed gross negligence or wilful misconduct of the
Agent in connection with such payment. It is further acknowledged and agreed
that the Company may have rights against the beneficiary or others in connection
with any Letter of Credit with respect to which the Lenders or the Agent are
alleged to be liable and it shall be a precondition of the assertion of any
liability of the Lenders or the Agent under this Section that the Company shall
first have exhausted all remedies in respect of the alleged loss against such
beneficiary and any other parties obligated or liable in connection with such
Letter of Credit and any related transactions.
(d) Letters of Credit may be issued in any currency acceptable to
the Agent, provided that all Reimbursement Amounts payable by the Company shall
be paid in Dollars in an amount equal to the Dollar Equivalent of such
Reimbursement Amount as determined at the time the Agent makes payment under any
Letter of Credit and not more than an amount equal to the Dollar Equivalent of
$15,000,000 in Letters of Credit in any currency other than Dollars may be
issued, which Dollar Equivalent shall be measured at the time of issuance of any
Letter of Credit. For purposes of this Agreement, the outstanding amount of any
Letter of Credit issued in any currency other than Dollars shall be equal the
Dollar Equivalent thereof.
3.4 Payment Method. (a) All payments to be made by the Company hereunder
will be made in Dollars and in immediately available funds to the Agent for the
account of the Lenders at its address set forth on the signature pages not later
than 1:00 p.m. Detroit time on the date on which such payment shall become due.
Payments received after 1:00 p.m. Detroit time shall be deemed to be payments
made prior to 1:00 p.m. Detroit time on the next succeeding Business Day. The
Company hereby authorizes the Agent to charge its account with
CREDIT AGREEMENT Page 33
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the Agent in order to cause timely payment of principal, interest and fees due
under Section 2.3 to be made (subject to sufficient funds being available in
such account for that purpose).
(b) At the time of making each such payment, the Company shall,
subject to the other terms and conditions of this Agreement, specify to the
Agent that Advance or other obligation of the Company hereunder to which such
payment is to be applied. In the event that the Company fails to so specify the
relevant obligation or if an Event of Default shall have occurred and be
continuing, the Agent may apply such payments as it may determine.
(c) On the day such payments are deemed received, the Agent shall
remit to the Lenders their pro rata shares of such payments in immediately
available funds, (i) in the case of payments of principal and interest on any
Borrowing, determined with respect to each such Lender by the ratio which the
outstanding principal balance of its Loan included in such Borrowing bears to
the outstanding principal balance of the Loans of all the Lenders included in
such Borrowing and (ii) in the case of fees paid pursuant to Section 2.3 and
other amounts payable hereunder (other than the Agent's fees payable pursuant to
Section 2.3(c) and amounts payable to any Lender under Section 2.4 or 3.7)
determined with respect to each such Revolving Credit Lender by the ratio which
the Commitment of such Revolving Credit Lender bears to the Commitments of all
the Revolving Credit Lenders.
3.5 No Setoff or Deduction. All payments of principal and interest on
the Loans and other amounts payable by the Company hereunder shall be made by
the Company without setoff or counterclaim, and free and clear of, and without
deduction or withholding for, or on account of, any present or future taxes,
levies, imposts, duties, fees, assessments, or other charges of whatever nature,
imposed by any governmental authority, or by any department, agency or other
political subdivision or taxing authority.
3.6 Payment on Non-Business Day; Payment Computations. Except as
otherwise provided in this Agreement to the contrary, whenever any installment
of principal of, or interest on, any Loan or any other amount due hereunder
becomes due and payable on a day which is not a Business Day, the maturity
thereof shall be extended to the next succeeding Business Day and, in the case
of any installment of principal, interest shall be payable thereon at the rate
per annum determined in accordance with this Agreement during such extension.
Computations of interest and other amounts due under this Agreement shall be
made on the basis of a year of 360 days for the actual number of days elapsed,
including the first day but excluding the last day of the relevant period,
provided that the computation of interest at the Adjusted Prime Rate and of
commitment fees under Section 2.3(a) shall be made on the basis of a year of 365
days for the actual number of days elapsed, including the first day but
excluding the last day of the relevant period.
3.7 Additional Costs. (a) In the event that any applicable law, treaty,
rule or regulation (whether domestic or foreign) now or hereafter in effect and
whether or not presently applicable to any Lender or the Agent, or any
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof, or compliance by any Lender
or the Agent with any guideline, request or directive of any such authority
(whether or not having the force of law), shall (i) directly affect the basis of
taxation of payments to any Lender or the Agent of any amounts payable by the
Company under this Agreement (other than taxes imposed on the overall net income
of any Lender or the Agent, by the jurisdiction, or by any political subdivision
or taxing authority of any such jurisdiction, in which any Lender or the Agent,
as the case may be, has its principal office), or (ii) shall impose, modify or
deem applicable any reserve, special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by any Lender
or the Agent, or (iii) shall impose any other condition with respect to this
Agreement, the Commitments, the Notes or the Loans or any Letter of Credit, and
the result of any of the foregoing (i.e., (i), (ii) or (iii)) is to increase the
cost to any Lender or the Agent, as the case may be, of making, funding or
maintaining any LIBOR Loan or any Letter of Credit or to reduce the amount of
any sum receivable by any Lender or the Agent, as the case may be,
CREDIT AGREEMENT Page 34
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thereon, then the Company shall pay to such Lender or the Agent, as the case may
be, from time to time, upon request by such Lender (with a copy of such request
to be provided to the Agent) or the Agent, additional amounts sufficient to
compensate such Lender or the Agent, as the case may be, for such increased cost
or reduced sum receivable to the extent, in the case of any LIBOR Loan, such
Lender or the Agent is not compensated therefor in the computation of the
interest rate applicable to such LIBOR Loan. A statement as to the amount of
such increased cost or reduced sum receivable, prepared in good faith and in
reasonable detail by such Lender or the Agent, as the case may be, and submitted
by such Lender or the Agent, as the case may be, to the Company, shall be
conclusive and binding for all purposes absent manifest error in computation.
(b) In the event that any applicable law, treaty, rule or regulation
(whether domestic or foreign) now or hereafter in effect and whether or not
presently applicable to any Lender or the Agent, or any interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof, or compliance by any Lender or the
Agent with any guideline, request or directive of any such authority (whether or
not having the force of law), including any risk-based capital guidelines,
affects or would affect the amount of capital required or expected to be
maintained by such Lender or the Agent (or any corporation controlling such
Lender or the Agent) and such Lender or the Agent, as the case may be,
determines that the amount of such capital is increased by or based upon the
existence of such Lender's or the Agent's obligations hereunder and such
increase has the effect of reducing the rate of return on such Lender's or the
Agent's (or such controlling corporation's) capital as a consequence of such
obligations hereunder to a level below that which such Lender or the Agent (or
such controlling corporation) could have achieved but for such circumstances
(taking into consideration its policies with respect to capital adequacy) by an
amount deemed by such Lender or the Agent to be material, then the Company shall
pay to such Lender or the Agent, as the case may be, from time to time, upon
request by such Lender (with a copy of such request to be provided to the Agent)
or the Agent, additional amounts sufficient to compensate such Lender or the
Agent (or such controlling corporation) for any increase in the amount of
capital and reduced rate of return which such Lender or the Agent reasonably
determines to be allocable to the existence of such Lender's or the Agent's
obligations hereunder. A statement as to the amount of such compensation,
prepared in good faith and in reasonable detail by such Lender or the Agent, as
the case may be, and submitted by such Lender or the Agent to the Company, shall
be conclusive and binding for all purposes absent manifest error in computation.
3.8 Illegality and Impossibility. In the event that any applicable law,
treaty, rule or regulation (whether domestic or foreign) now or hereafter in
effect and whether or not presently applicable to any Lender, or any
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof, or compliance by any Lender
with any guideline, request or directive of such authority (whether or not
having the force of law), including without limitation exchange controls, shall
make it unlawful or impossible for any Lender to maintain any LIBOR Loan under
this Agreement, the Company shall upon receipt of notice thereof from such
Lender, repay in full the then outstanding principal amount of each LIBOR Loan
so affected, together with all accrued interest thereon to the date of payment
and all amounts owing to such Lender under Section 3.9, which LIBOR Loan may be
repaid with an Adjusted Prime Rate Loan if the conditions for such Loan are
satisfied, in each case (a) on the last day of the then current LIBOR Interest
Period applicable to such Loan if such Lender may lawfully continue to maintain
such Loan to such day, or (b) immediately if such Lender may not continue to
maintain such Loan to such day.
3.9 Indemnification. If the Company makes any payment of principal with
respect to any LIBOR Loan on any other date than the last day of a LIBOR
Interest Period applicable thereto (whether pursuant to Section 3.8, Section 6.2
or otherwise), or if the Company fails to borrow any LIBOR Loan after notice has
been given to the Lenders in accordance with Section 2.4, or if the Company
fails to make any payment of principal or interest in respect of a LIBOR Loan
when due, the Company shall reimburse each Lender on demand for any resulting
loss or expense incurred by each such Lender, including without limitation any
loss incurred in obtaining, liquidating or employing deposits from third
parties, whether or not such Lender shall have funded or
CREDIT AGREEMENT Page 35
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committed to fund such Loan. A statement as to the amount of such loss or
expense, prepared in good faith and in reasonable detail by such Lender and
submitted by such Lender to the Company, shall be conclusive and binding for all
purposes absent manifest error in computation. Calculation of all amounts
payable to such Lender under this Section 3.9 shall be made as though such
Lender shall have actually funded or committed to fund the relevant LIBOR Loan
through the purchase of an underlying deposit in an amount equal to the amount
of such Loan and having a maturity comparable to the related LIBOR Interest
Period and through the transfer of such deposit from an offshore office of such
Lender to a domestic office of such Lender in the United States of America;
provided, however, that such Lender may fund any LIBOR Loan in any manner it
sees fit and the foregoing assumption shall be utilized only for the purpose of
calculation of amounts payable under this Section 3.9.
3.10 Substitution of Lender. If (i) the obligation of any Lender to make
or maintain LIBOR Loans has been suspended pursuant to Section 3.8 when not all
Lenders obligations have been suspended (ii) any Lender has demanded
compensation under Section 3.7 or (iii) any Lender is a Defaulting Lender, the
Company shall have the right, if no Unmatured Event or Event of Default then
exists, to replace such Lender (a "Replaced Lender") with one or more other
lenders (collectively, the "Replacement Lender") acceptable to the Agent,
provided that (x) at the time of any replacement pursuant to this Section 3.10,
the Replacement Lender shall enter into one or more Assignment and Acceptances,
pursuant to which the Replacement Lender shall acquire the Commitments and
outstanding Advances and other obligations of the Replaced Lender and, in
connection therewith, shall pay to the Replaced Lender in respect thereof an
amount equal to the sum of (A) the amount of principal of, and all accrued
interest on, all outstanding Loans of the Replaced Lender, (B) the amount of all
accrued, but theretofore unpaid, fees owing to the Replaced Lender under Section
2.3 and (C) the amount which would be payable by the Company to the Replaced
Lender pursuant to Section 3.9 if the Company prepaid at the time of such
replacement all of the Loans of such Replaced Lender outstanding at such time
and (y) all obligations of the Company then owing to the Replaced Lender (other
than those specifically described in clause (x) above in respect of which the
assignment purchase price has been, or is concurrently being, paid) shall be
paid in full to such Replaced Lender concurrently with such replacement. Upon
the execution of the respective Assignment and Acceptances, the payment of
amounts referred to in clauses (x) and (y) above and, if so requested by the
Replacement Lender, delivery to the Replacement Lender of the appropriate Note
or Notes executed by the Company, the Replacement Lender shall become a Lender
hereunder and the Replaced Lender shall cease to constitute a Lender hereunder.
The provisions of this Agreement (including without limitation Sections 3.9 and
8.5) shall continue to govern the rights and obligations of a Replaced Lender
with respect to any Loans made or any other actions taken by such lender while
it was a Lender. Nothing herein shall release any Defaulting Lender from any
obligation it may have to the Company, the Agent or any other Lender.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants that:
4.1 Corporate Existence and Power. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of incorporation or organization, and is duly qualified to do
business, and is in good standing, in all additional jurisdictions where such
qualification is necessary under applicable law, except for those jurisdictions
where the failure to so qualify or be in good standing could not result in any
Material Adverse Effect. The Company has all requisite corporate power to own or
lease the properties used in its business and to carry on its business as now
being conducted and as proposed to be
CREDIT AGREEMENT Page 36
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conducted, and to execute and deliver the Loan Documents to which it is a party
and to engage in the transactions contemplated by the Loan Documents.
4.2 Corporate Authority. The execution, delivery and performance by the
Company and the Guarantors of the Loan Documents to which it is a party have
been duly authorized by all necessary corporate action and are not in
contravention of any law, rule or regulation, or any judgment, decree, writ,
injunction, order or award of any arbitrator, court or governmental authority,
or of the terms of the Company's or any Guarantor's charter or by-laws, or of
any contract or undertaking to which the Company or any Guarantor is a party or
by which the Company or any Guarantor or their respective property may be bound
or affected or result in the imposition of any Lien except for Permitted Liens.
4.3 Binding Effect. The Loan Documents to which the Company or any
Guarantor is a party are the legal, valid and binding obligations of the Company
and the Guarantors, respectively, enforceable against the Company and the
Guarantors in accordance with their respective terms, subject to the effect of
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting the rights of creditors generally and by general principles of equity.
4.4 Subsidiaries. Schedule 4.4 hereto correctly sets forth the corporate
name, jurisdiction of organization and ownership of each Subsidiary of the
Company. Each such Subsidiary and each Person becoming a Subsidiary of the
Company after the date hereof is and will be a corporation or limited liability
company duly organized, validly existing and in good standing under the laws of
its jurisdiction of incorporation or organization and is and will be duly
qualified to do business in each additional jurisdiction where such
qualification is or may be necessary under applicable law, except for those
jurisdictions where the failure to so qualify or be in good standing could not
result in any Material Adverse Effect. Each Subsidiary of the Company has and
will have all requisite power to own or lease the properties used in its
business and to carry on its business as now being conducted and as proposed to
be conducted, except where the failure to have such power could not result in a
Material Adverse Effect. All outstanding shares of capital stock of each class
of each Subsidiary of the Company have been and will be validly issued and are
and will be fully paid and nonassessable and, except as otherwise indicated in
Schedule 4.4 hereto, are and will be owned, beneficially and of record, by the
Company or another Subsidiary of the Company free and clear of any Liens other
than as permitted under this Agreement.
4.5 Litigation. Except as set forth in Schedule 4.5 hereto, there is no
action, suit or proceeding pending or, to the best of the Company's knowledge,
threatened against or affecting the Company or any of its Subsidiaries before or
by any court, governmental authority or arbitrator, which if adversely decided
might result, either individually or collectively, in any Material Adverse
Effect and, to the best of the Company's knowledge, there is no basis for any
such action, suit or proceeding.
4.6 Financial Condition. The consolidated balance sheet of the Company
and its Subsidiaries and the consolidated statements of income, retained
earnings and cash flows of the Company and its Subsidiaries for the fiscal year
ended December 31, 1996 and reported on by Coopers & Lybrand L.L.P., independent
certified public accountants, copies of which have been furnished to the
Lenders, fairly present, and the financial statements of the Company and its
Subsidiaries delivered pursuant to Section 5.1(d) will fairly present, the
consolidated financial position of the Company and its Subsidiaries as at the
respective dates thereof, and the consolidated results of operations of the
Company and its Subsidiaries for the respective periods indicated, all in
accordance with Generally Accepted Accounting Principles (subject, in the case
of said interim statements, to year-end audit adjustments). The budgeted
consolidated and consolidating financial statements of the Company and its
Subsidiaries and the pro forma projections of consolidated financial results of
the Company and its Subsidiaries for each of the fiscal years ending December
31, 1997 through December 31, 2001 are based on appropriate assumptions and the
best information available. There has been no Material Adverse Effect since
CREDIT AGREEMENT Page 37
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December 31, 1996. There is no material Contingent Liability of the Company that
is not reflected in such financial statements or in the notes thereto.
4.7 Use of Advances. The Company will use the proceeds of the initial
Advances hereunder as described in Section 4.21, and will use all other Advances
for general corporate purposes. Without limiting the foregoing, it is
acknowledged that this Agreement refinances the Credit and Security Agreement
dated November 17, 1992 entered into by and between the Company and Comerica
Bank, as amended. Neither the Company nor any of its Subsidiaries extends or
maintains, in the ordinary course of business, credit for the purpose, whether
immediate, incidental, or ultimate, of buying or carrying margin stock (within
the meaning of Regulation G or U of the Board of Governors of the Federal
Reserve System), and no part of the proceeds of any Advance will be used for the
purpose, whether immediate, incidental, or ultimate, of buying or carrying any
such margin stock or maintaining or extending credit to others for such purpose.
4.8 Consents, Etc. Except for such consents, approvals, authorizations,
declarations, registrations or filings delivered by the Company pursuant to
Section 2.5(g), if any, each of which is in full force and effect, no consent,
approval or authorization of or declaration, registration or filing with any
governmental authority or any nongovernmental Person or entity, including
without limitation any creditor, lessor or stockholder of the Company or any of
its Subsidiaries, is required on the part of the Company or any Guarantor in
connection with the execution, delivery and performance of any Loan Document or
the transactions contemplated hereby or as a condition to the legality, validity
or enforceability of any Loan Document.
4.9 Taxes. The Company and its Subsidiaries have filed all tax returns
(federal, state and local) required to be filed and have paid all taxes shown
thereon to be due and required to be paid including interest and penalties, or
have established adequate financial reserves on their respective books and
records for payment thereof. Neither the Company nor any of its Subsidiaries
knows of any actual or proposed tax assessment or any basis therefor, and no
extension of time for the assessment of deficiencies in any federal or state tax
has been granted by the Company or any Subsidiary.
4.10 Title to Properties. Except as otherwise disclosed in the latest
balance sheet delivered pursuant to Section 4.6 or 5.1(d) of this Agreement, the
Company or one or more of its Subsidiaries have good and marketable fee simple
title to all of the real property reflected in said balance sheet, and a valid
and indefeasible ownership interest in all of the other properties and assets
reflected in said balance sheet or subsequently acquired by the Company or any
Subsidiary. All of such properties and assets are free and clear of any Lien
except for Permitted Liens. The Security Documents grant a first priority,
enforceable and perfected lien and security interest which is not void or
voidable in all real property, personal property and all other assets of the
Company and each Guarantor, subject only to Permitted Liens.
4.11 ERISA. The Company, its Subsidiaries, the ERISA Affiliates and the
Plans are in compliance in all material respects with those provisions of ERISA
and of the Code which are applicable with respect to any Plan. No Prohibited
Transaction and no Reportable Event has occurred with respect to any Plan. None
of the Company, any of its Subsidiaries or any of the ERISA Affiliates is an
employer with respect to any Multiemployer Plan. The Company, its Subsidiaries
and the ERISA Affiliates have met the minimum funding requirements under ERISA
and the Code with respect to each of their respective Plans, if any, and (b)
other than obligations in the ordinary course of business to make Plan
contributions and pay PBGC premiums which have been paid when due, not incurred
any liability to the PBGC or any Plan. Assuming the funds provided by each
Lender do not constitute the plan assets of any pension plan, the execution,
delivery and performance of this Agreement, the Notes and the Security Documents
does not constitute a Prohibited Transaction. There is no material Unfunded
Benefit Liability with respect to any Plan. As of the Effective Date, the
Company and its Subsidiaries have no Plans.
CREDIT AGREEMENT Page 38
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4.12 Disclosure. No report or other information furnished in writing or
on behalf of the Company or any Subsidiary to any Lender or the Agent in
connection with the negotiation or administration of this Agreement contains to
the best of its knowledge any material misstatement of fact or omits to state
any material fact or any fact necessary to make the statements contained therein
not misleading. No Loan Document nor any other document, certificate, or report
or statement or other information furnished to any Lender or the Agent by or on
behalf of the Company or any Subsidiary in connection with the transactions
contemplated hereby contains any untrue statement of a material fact or omits to
state a material fact in order to make the statements contained herein and
therein not misleading. There is no fact known to the Company which materially
and adversely affects, or which in the future may materially and adversely
affect, the business, properties, operations or condition, financial or
otherwise, of the Company or any Subsidiary, which has not been set forth in
this Agreement or in the other documents, certificates, statements, reports and
other information furnished in writing to the Lenders by or on behalf of the
Company or any Subsidiary in connection with the transactions contemplated
hereby taken as a whole, including without limitation the offering memorandum
for the Senior Subordinated Notes.
4.13 Environmental and Safety Matters. All representations and
warranties made by the Company and the Guarantors in the Environmental
Certificate delivered pursuant to Section 2.5(i) and Section 5.1(d)(x) are true
and correct.
4.14 Borrowing Base. All trade accounts receivable and inventory of the
Company and each Guarantor represented or reported by the Company to be, or are
otherwise included in, Eligible Accounts Receivable and Eligible Inventory
comply in all respects with the requirements therefor set forth in the
definition thereof, and the computations of the Borrowing Base set forth in each
Borrowing Base Certificate are true and correct.
4.15 No Default. Neither the Company nor any Subsidiary is in default or
has received any written notice of default under or with respect to any of its
Contractual Obligations in any respect which is reasonably likely to result in a
Material Adverse Effect. No Unmatured Event or Event of Default has occurred and
is continuing.
4.16 Intellectual Property. Set forth on Schedule 4.16 is a complete and
accurate list of all patents, trademarks, trade names, service marks and
copyrights, and all applications therefor and licenses thereof, of the Company
and each of its Subsidiaries showing as of the Effective Date the jurisdiction
in which registered, the registration number and the date of registration. The
Company and each of its Subsidiaries owns, or is licensed to use, all
trademarks, tradenames, service marks, copyrights, technology, know-how and
processes necessary for the conduct of its business as currently conducted (the
"Intellectual Property") except for those the failure to own or license which
could not reasonably be expected to have a Material Adverse Effect. No claim has
been asserted and is pending by any Person challenging or questioning the use of
any such Intellectual Property or the validity or effectiveness of any such
Intellectual Property, nor does the Company or any of its Subsidiaries know of
any valid basis for any such claim, the use of such Intellectual Property by the
Company and each of its Subsidiaries does not infringe on the rights of any
Person, and, to the knowledge of the Company, no Intellectual Property has been
infringed, misappropriated or diluted by any other Person except for such
claims, infringements, misappropriation and dilutions that, in the aggregate,
could not have a Material Adverse Effect.
4.17 No Burdensome Restrictions. No Requirement of Law or Contractual
Obligation applicable to the Company or any Subsidiary could have a
Material Adverse Effect.
4.18 Labor Matters. There are no strikes or other labor disputes against
the Company or any Subsidiary pending or, to the knowledge of the Company,
threatened that (individually or in the aggregate) could
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have a Material Adverse Effect. Hours worked by and payment made to employees of
the Company and its Subsidiaries have not been in violation of the Fair Labor
Standards Act, if applicable, or any other applicable Requirement of Law dealing
with such matters that (individually or in the aggregate) could have a Material
Adverse Effect. All payments due from the Company and each of its Subsidiaries
on account of employee health and welfare insurance that (individually or in the
aggregate) could have a Material Adverse Effect if not paid have been paid or
accrued as a liability on the books of the Company and its Subsidiaries.
4.19 Solvency. (a) After giving effect to the transactions described
herein and to the incurrence or assumption of all Indebtedness (including
without limitation the Subordinated Debt, all Advances and all other obligations
being incurred or assumed in connection herewith and therewith) (i) the fair
value of the assets of the Company and its Subsidiaries on a consolidated basis,
at a fair valuation, will exceed the debts and liabilities, subordinated,
contingent or otherwise, of the Company and its Subsidiaries on a consolidated
basis; (ii) the present fair saleable value of the property of the Company and
its Subsidiaries on a consolidated basis will be greater than the amount that
will be required to pay the probable liability of the Company and its
Subsidiaries on a consolidated basis on their debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured; (iii) the Company and its Subsidiaries on a
consolidated basis will be able to pay their debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured; and (iv) the Company and its Subsidiaries on a
consolidated basis will not have unreasonably small capital with which to
conduct the businesses in which they are engaged as such businesses are now
conducted and are proposed to be conducted after the date hereof.
(b) The Company does not intend to, or to permit any of its
Subsidiaries to, and does not believe that it or any of its Subsidiaries will,
incur debts beyond its ability to pay such debts as they mature, taking into
account the timing of and amounts of cash to be received by it or any such
Subsidiary and the timing of the amounts of cash to be payable on or in respect
of its Indebtedness or the Indebtedness of any such Subsidiary.
4.20 Not an Investment Company; Other Regulations. Neither the Company
nor any of its Subsidiaries is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended. Neither the Company nor any of its
Subsidiaries is subject to any regulation under any federal or state statute or
regulation which limits its ability to incur Indebtedness.
4.21 14% Senior Debt Documents. As of the Effective Date, the aggregate
outstanding principal balance of the 14% Senior Notes is equal to $24,865,000
and all 14% Senior Debt Documents are described on Schedule 1.1-A hereto. There
is no event of default or event or condition which could become an event of
default with notice or lapse of time or both under the 14% Senior Debt
Documents. The Third Amendment to Indenture dated as of November 17, 1992
between the Company and Mellon Bank, F.S.B. as trustee, relating to the 14%
Senior Note Indenture is in full force and effect and is valid and binding on
the Company and each holder of the 14% Senior Notes.
4.22 Senior Subordinated Debt Documents. All representations and
warranties of the Company contained in any Senior Subordinated Debt Document are
true and correct in all material respects. The Company will be receiving net
proceeds in the approximate amount of $121,000,000 on the Effective Date from
its issuance of the Senior Subordinated Notes, and all agreements, instruments
and documents executed or delivered pursuant to the issuance of the Senior
Subordinated Notes are described on Schedule 1.1 hereto. All Lender Indebtedness
is "Senior Debt " and "Designated Senior Debt" as defined in the Senior
Subordinated Debt Documents, this Agreement and the other Loan Documents are the
"Senior Credit Facility" as defined in the Senior Subordinated Debt Documents
and, other than the Lender Indebtedness, there is no other "Designated Senior
Debt" thereunder. There is no Event of Default or event or condition which could
become an Event of
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Default with notice or lapse of time or both, under the Senior Subordinated Debt
Documents and each of the Senior Subordinated Debt Documents is in full force
and effect. Other than pursuant to the Senior Subordinated Notes, there is no
obligation pursuant to any Senior Subordinated Debt Document or other document
or agreement evidencing or relating to any Subordinated Debt outstanding or to
be outstanding on the Effective Date which obligates the Company to pay any
principal or interest or redeem any of its Capital Stock or incur any other
monetary obligation.
ARTICLE V
COVENANTS
5.1 Affirmative Covenants. The Company covenants and agrees that, until
the later of the Maturity Date or the Termination Date and thereafter until
payment in full of the principal of and accrued interest on the Notes and the
performance of all other obligations of the Company under this Agreement, unless
the requisite Lenders pursuant to Section 8.1 shall otherwise consent in
writing, it shall, and, shall cause each of its Subsidiaries to:
(a) Preservation of Corporate Existence, Etc. Do or cause to be done
all things necessary to preserve, renew and keep in full force and effect its
legal existence and its qualification as a foreign corporation or limited
liability company, as the case may be (other than any merger permitted pursuant
to Section 5.2(g) and other than any dissolution or liquidations of any
Subsidiary if the assets of such Subsidiary are transferred to the Company or
any Guarantor in connection with such dissolution or liquidation), in good
standing in each jurisdiction in which such qualification is necessary under
applicable law and the rights, licenses, permits (including those required under
Environmental Laws), franchises, patents, copyrights, trademarks and trade names
material to the conduct of its businesses; provided, however, that the Company
shall not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Subsidiaries, if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Agent or the Lenders; and defend all of the foregoing against all
claims, actions, demands, suits or proceedings at law or in equity or by or
before any governmental instrumentality or other agency or regulatory authority.
(b) Compliance with Laws, Etc. Comply in all material respects with
all applicable laws, rules, regulations and orders of any governmental authority
whether federal, state, local or foreign (including without limitation ERISA,
the Code and Environmental Laws), in effect from time to time, the enforcement
of which could have a Material Adverse Effect; and pay and discharge, before any
interest or penalty for nonpayment thereof becomes payable, all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income, revenues or property, before the same shall become delinquent or in
default, as well as all lawful claims for labor, materials and supplies or
otherwise, which, if unpaid, might give rise to Liens (other than Permitted
Liens) upon such properties or any portion thereof, except to the extent that
payment of any of the foregoing is then being contested in good faith by
appropriate legal proceedings and with respect to which adequate financial
reserves have been established on the books and records of the Company or such
Subsidiary.
(c) Maintenance of Properties; Insurance. Maintain, preserve and
protect all property that is material to the conduct of the business of the
Company or any of its Subsidiaries and keep such property in good repair,
working order and condition and from time to time make, or cause to be made all
needful and proper repairs, renewals, additions, improvements and replacements
thereto necessary in order that the business carried on in connection therewith
may be properly conducted at all times in accordance with customary and prudent
business practices for similar businesses; and maintain in full force and effect
insurance with responsible and
CREDIT AGREEMENT Page 41
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reputable insurance companies or associations in such amounts, on such terms and
covering such risks, including fire and other risks insured against by extended
coverage, as is usually carried by companies engaged in similar businesses and
owning similar properties similarly situated and maintain in full force and
effect public liability insurance, insurance against claims for personal injury
or death or property damage occurring in connection with any of its activities
or any of any properties owned, occupied or controlled by it, in such amount as
it shall reasonably deem necessary, and maintain such other insurance as may be
required by law or as may be reasonably requested by the Required Lenders for
purposes of assuring compliance with this Section 5.1(c).
(d) Reporting Requirements. Furnish to the Lenders and the Agent the
following:
(i) Promptly and in any event within five Business Days after
becoming aware of the occurrence of (A) any Unmatured Event or Event of Default,
(B) the commencement of any litigation against, by or affecting the Company or
any of its Subsidiaries, which could have a Material Adverse Effect, and any
material developments therein, or (C) entering into any material contract or
undertaking that is not entered into in the ordinary course of business or (D)
any development in the business or affairs of the Company or any of its
Subsidiaries which has resulted in or which is likely in the reasonable judgment
of the Company, to result in a Material Adverse Effect, a statement of the chief
financial officer of the Company setting forth details of such Unmatured Event
or Event of Default and the action which the Company or such Subsidiary, as the
case may be, has taken and proposes to take with respect thereto;
(ii) As soon as available and in any event within 60 days after
the end of each fiscal quarter of the Company, the consolidated and
consolidating balance sheet of the Company and its Subsidiaries and of its
Unrestricted Subsidiaries as of the end of such quarter, and the related
consolidated and consolidating statements of income cash flows for such quarter
and for the period commencing at the end of the previous fiscal year and ending
with the end of such quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding date or period of the preceding
fiscal year and the variances, if any, from the budget and forecast delivered
pursuant to Section 5.1(d)(ix), all in reasonable detail and duly certified
(subject to year-end audit adjustments) by the chief financial officer of the
Company as having been prepared in accordance with Generally Accepted Accounting
Principles, together with a certificate of the chief financial officer of the
Company stating (A) that no Unmatured Event or Event of Default, has occurred
and is continuing or, if an Unmatured Event or Event of Default has occurred and
is continuing, a statement setting forth the details thereof and the action
which the Company has taken and proposes to take with respect thereto, and (B)
that a computation (which computation shall accompany such certificate and shall
be in detail satisfactory to the Agent) showing compliance with Section 5.2 (a),
(b), (c) and (d) hereof is in conformity with the terms of this Agreement;
(iii) As soon as available and in any event within 90 days after
the end of each fiscal year of the Company, a copy of the consolidated balance
sheet of the Company and its Subsidiaries as of the end of such fiscal year and
the related consolidated statements of income and cash flows for such fiscal
year, with a customary audit report of Coopers & Lybrand L.L.P., or any of the
six largest independent certified public accounting firms in the United States,
without qualifications unacceptable to the Agent, together with, a certificate
of the chief financial officer of the Company stating (A) that no Unmatured
Event or Event of Default has occurred and is continuing, a statement setting
forth the details thereof and the action which the Company has taken and
proposes to take with respect thereto, and (B) that a computation (which
computation shall accompany such certificate and shall be in reasonable detail)
showing compliance with Section 5.2 (a), (b) (c) and (d) hereof is in conformity
with the terms of this Agreement;
(iv) Promptly after the sending or filing thereof, copies of
all reports, proxy statements and financial statements which the Company or any
of its Subsidiaries sends to or files with any of
CREDIT AGREEMENT Page 42
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their respective security holders or any securities exchange or the Securities
and Exchange Commission or any successor agency thereof;
(v) Within 20 days after the end of each month, a Borrowing
Base Certificate prepared as of the close of business on the last day of each
month, certified as true and correct by the chief financial officer of the
Company, together with such supporting schedules and information as requested by
the Agent;
(vi) As soon as available and in any event within 20 days
after the end of each month, a report containing an aging as of the end of the
preceding month of accounts receivable and accounts payable of the Company, in a
form satisfactory to the Agent, if requested by the Agent;
(vii) As soon as available and in any event within 20 days
after the end of each month, a report identifying the inventory of the Company
and the Guarantors, and cost and location thereof as of the end of the preceding
month, in a form satisfactory to the Agent, if requested by the Agent;
(viii) Promptly and in any event within 10 Business Days after
receipt, a copy of any management letter or comparable analysis prepared by the
auditors for the Company or any of its Subsidiaries;
(ix) Within 90 days before the end of each fiscal year of the
Company, a budget and forecast prepared by the Company for the following fiscal
year;
(x) Within 60 calendar days after the end of each fiscal year
of the Company, a duly executed Environmental Certificate; and
(xi) Promptly, such other information respecting the business,
properties, operations or condition, financial or otherwise, of the Company or
any of their respective Subsidiaries as any Lender or the Agent may from time to
time reasonably request.
(e) Accounting, Access to Records, Books, Etc. Maintain a system of
accounting established and administered in accordance with sound business
practices to permit preparation of financial statements in accordance with
Generally Accepted Accounting Principles and to comply with the requirements of
this Agreement and, at any reasonable time and from time to time, (i) permit any
Lender or the Agent, or any agents or representatives thereof, to examine and
make copies of and abstracts from the records and books of account of, and visit
the properties of, the Company and its Subsidiaries, and to discuss the affairs,
finances and accounts of the Company and its Subsidiaries with their respective
directors, officers, employees and independent auditors, and by this provision
the Company does hereby authorize such Persons to discuss such affairs, finances
and accounts with any Lender or the Agent, (ii) at the expense of the Company,
permit the Agent or any of its agents or representatives to conduct a
comprehensive field audit of its books, records, properties and assets,
including without limitation all collateral subject to the Security Documents
and site access, at the Company's expense, and (iii) at the expense of the
Company after and during the continuance of an Event of Default, permit the
Agent or any of its agents to conduct real estate appraisals, provided that the
Agent shall give the Company reasonable notice of any of the foregoing.
(f) Additional Security and Collateral. Promptly (i) execute and
deliver and cause each Guarantor to execute and deliver, additional Security
Documents, within 30 days after request therefor by the Agent, sufficient to
grant to the Agent for the benefit of the Lenders and the Agent liens and
security interests in any after acquired property, and (ii) cause each Person
becoming a Domestic Subsidiary of the Company or any Guarantor from time to time
to execute and deliver to the Lenders and the Agent, within 30 days after such
Person becomes a Domestic Subsidiary, a Guaranty and a Security Agreement,
together with other related
CREDIT AGREEMENT Page 43
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documents described in Section 2.5 sufficient to grant to the Agent for the
benefit of the Lenders and the Agent liens and security interests in all
collateral of the type described in Section 2.11. The Company shall notify the
Lenders and the Agent, within 10 days after the occurrence thereof, of the
acquisition of any property by the Company or any Guarantor that is not subject
to the existing Security Documents, any Person becoming a Domestic Subsidiary
and any other event or condition, other than the passage of time, that may
require additional action of any nature in order to preserve the effectiveness
and perfected status of the liens and security interests of the Lenders and the
Agent with respect to such property pursuant to the Security Documents,
including without limitation delivering the originals of all promissory notes
and other instruments payable to the Company or any Domestic Subsidiary to the
Agent and delivering the originals of all stock certificates or other
certificates evidencing any Capital Stock owned by the Company or any Domestic
Subsidiary at any time. Upon the occurrence and during the continuance of an
Event of Default, the Company shall, upon request of the Required Lenders, (i)
promptly cause each Foreign Subsidiary to execute and deliver to the Lenders and
the Agent a Guaranty and Security Agreement, together with other related
documents described in Section 2.5 sufficient to grant to the Agent for the
benefit of the Lenders and the Agent liens and security interests, to the extent
available under applicable law, in all collateral of the type described in
Section 2.10 and (ii) deliver to the Agent for the benefit of the Lenders and
the Agent 100% of the Capital Stock of each Foreign Subsidiary owned by the
Company or any of its Subsidiaries.
(g) Further Assurances. Execute and deliver within 30 days after
request therefor by the Agent, all further instruments and documents and take
all further action that the Agent may reasonably request, in order to give
effect to the intent of, and to aid in the exercise and enforcement of the
rights and remedies of the Lenders under, this Agreement, the Notes and the
Security Documents, including without limitation causing each lessor of real
property to the Company, any Guarantor or any of their respective Subsidiaries
to execute and deliver to the Agent, prior to or upon the commencement of any
tenancy, an agreement in form and substance acceptable to the Agent duly
executed on behalf of such lessor waiving any distraint, liens and similar
rights with respect to any property subject to the Security Documents and
agreeing to permit the Lenders and the Agent to enter such premises in
connection therewith. In addition, the Company and each Guarantor agrees to
deliver to the Agent from time to time upon the acquisition or creation of any
subsidiary not listed in Schedule 4.4 hereto supplements to Schedule 4.4 such
that such Schedule, together with such supplements, shall at all times
accurately reflect the information provided for thereon.
5.2 Negative Covenants. Until the later of the Maturity Date or the
Termination Date and thereafter until payment in full of the principal of and
accrued interest on the Notes and the performance of all other obligations of
the Company under this Agreement, the Company agrees that, unless the requisite
Lenders pursuant to Section 8.1 shall otherwise consent in writing, it shall
not, and shall not permit any of its Subsidiaries, to:
(a) Net Worth. Permit or suffer the Consolidated Net Worth of the
Company and its Subsidiaries at any time to be less than the sum of negative
$21,750,000 plus 50% of the net income (net of any Permitted Sub S Dividends) of
the Company and its Subsidiaries, added as of the end of each fiscal year of the
Company, commencing with the fiscal year ending December 31, 1997, provided that
if such net income is negative in any fiscal year the amount added for such
fiscal year shall be zero and shall not reduce the amount added for any other
fiscal year.
(b) Total Debt to EBITDA Ratio. Permit or suffer the Total Debt to
EBITDA Ratio to be greater than (i) 5.5 to 1.0 at any time from and including
April 1, 1997 to and including March 31, 1998, (ii) 5.0 to 1.0 at any time from
and including April 1, 1998 to and including June 30, 1999 or (iii) 4.5 to 1.0
at any time thereafter.
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<PAGE> 50
(c) Interest Coverage Ratio. Permit or suffer the Interest Coverage
Ratio to be less than (i) 2.0 to 1.0 as of the end of any fiscal quarter of the
Company ending on or before June 30, 1999, or (ii) 2.25 to 1.0 as of the end of
any fiscal quarter of the Company ending thereafter.
(d) Fixed Charge Coverage Ratio. Permit or suffer the Fixed Charge
Coverage Ratio to be less than (i) 1.05 to 1.0 as of the end of any fiscal
quarter of the Company ending on or before June 30, 1999, or (ii) 1.15 to 1.0 as
of the end of any fiscal quarter of the Company thereafter.
(e) Indebtedness. Create, incur, assume or in any manner become
liable in respect of, or suffer to exist, or permit or suffer any Subsidiary to
create, incur, assume or in any manner become liable in respect of, or suffer to
exist, any Indebtedness other than:
(i) The Lender Indebtedness;
(ii) The Indebtedness described in Schedule 5.2(e) hereto and
refinancings thereof, but no increase in the amount thereof (as such amount is
reduced from time to time) and no modifications of the terms thereof which is
less favorable to the Company or more restrictive on the Company in any material
manner shall be permitted;
(iii) Indebtedness of any Subsidiary of the Company owing to
the Company or to any other Subsidiary of the Company;
(iv) Subordinated Debt, including the related subordinated
guarantees, pursuant to the Senior Subordinated Debt Documents, provided that
the aggregate principal amount of such Subordinated Debt shall not exceed
$125,000,000;
(v) Indebtedness of Key U.K. under the Key U.K. Facility in
aggregate amount not to exceed 7,500,000 Pounds and refinancings thereof, but no
increase in the amount thereof;
(vi) Indebtedness pursuant to the 14% Senior Notes in an
aggregate amount not to exceed a principal amount equal to $24,865,000, as
reduced from time to time;
(vii) Indebtedness of any Foreign Subsidiary in an aggregate
amount not to exceed $2,500,000 at any time outstanding;
(viii) Subordinated Debt owing to shareholders of the Company;
(ix) Trade accounts payable and accrued expenses arising in
the ordinary course which are past due in an amount which is not material in the
aggregate for the Company and its Subsidiaries on a consolidated basis or which
are being contested in good faith by appropriate proceedings and for which
adequate reserves are maintained on the books of the Company; and
(x) Indebtedness other than (i) through (ix) above not
exceeding $15,000,000 in aggregate amount at any time outstanding.
(f) Liens. Create, incur or suffer to exist any Lien on any of the
assets, rights, revenues or property, real, personal or mixed, tangible or
intangible, whether now owned or hereafter acquired, of the Company or any of
its Subsidiaries, other than:
CREDIT AGREEMENT Page 45
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(i) Liens for taxes not delinquent or for taxes
being contested in good faith by appropriate proceedings and as to which
adequate financial reserves have been established on its books and records;
(ii) Liens (other than any Lien imposed by ERISA)
created and maintained in the ordinary course of business which are not material
in the aggregate, and which would not have a Material Adverse Effect and which
constitute (A) pledges or deposits under worker's compensation laws,
unemployment insurance laws or similar legislation, (B) good faith deposits in
connection with bids, tenders, contracts or leases to which the Company or any
of its Subsidiaries is a party for a purpose other than borrowing money or
obtaining credit, including rent security deposits, (C) liens imposed by law,
such as those of carriers, warehousemen and mechanics, if payment of the
obligation secured thereby is not yet due or which are being contested in good
faith by appropriate legal proceedings and with respect to which adequate
financial reserves have been established on the books and records of Company or
such Subsidiary, (D) liens securing taxes, assessments or other governmental
charges or levies not yet subject to penalties for nonpayment, and (E) pledges
or deposits to secure public or statutory obligations of the Company or any of
its Subsidiaries, or surety, customs or appeal bonds to which the Company or any
of its Subsidiaries is a party;
(iii) Liens affecting real property which
constitute minor survey exceptions or defects or irregularities in title, minor
encumbrances, easements or reservations of, or rights of others for, rights of
way, sewers, electric lines, telegraph and telephone lines and other similar
purposes, or zoning or other restrictions as to the use of such real property,
provided that all of the foregoing, in the aggregate, do not at any time
materially detract from the value of said properties or materially impair their
use in the operation of the businesses of the Company or any of its
Subsidiaries;
(iv) Liens created pursuant to the Security
Documents and Liens expressly permitted by the Security Documents;
(v) Each Lien described in Schedule 5.2(f)
hereto may be suffered to exist, provided that there may be no increase in the
amount of indebtedness, obligations or liabilities secured thereby and it may
not secure any other indebtedness, obligations and liabilities other than those
now secured;
(vi) Any Lien created to secure payment of a
portion of the purchase price of, or existing at the time of acquisition of, any
tangible fixed asset acquired by the Company or any of its Subsidiaries may be
created or suffered to exist upon such fixed asset if the outstanding principal
amount of the Indebtedness secured by such Lien does not at any time exceed the
purchase price paid by the Company or such Subsidiary for such fixed asset,
provided that such Lien does not encumber any other asset at any time owned by
the Company or such Subsidiary, and provided, further, that not more than one
such Lien shall encumber such fixed asset at any one time;
(vii) Any Lien on the assets of Key U.K. in favor
of NBD to secure the Indebtedness permitted under Section 5.2(e)(v) which is
owing to NBD;
(viii) Any Lien on any assets of any Subsidiaries
of the Company in favor of the Company securing permitted Indebtedness of such
Subsidiary owing to the Company, provided that such Lien is subordinated to the
Liens of the Agent by written agreements satisfactory to the Agent; and
(ix) The interest or title of a lessor under any
lease otherwise permitted under this Agreement with respect to the property
subject to such lease to the extent performance of the obligations of the
Company or its Subsidiary thereunder is not delinquent in any material respect.
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(g) Merger; Acquisitions; Etc. Purchase or otherwise
acquire, or permit or suffer any Subsidiary to purchase or otherwise acquire,
whether in one or a series of transactions and whether pursuant to the Initial
Acquisitions or any other acquisition or transaction, all or a substantial
portion of the business assets, rights, revenues or property, real, personal or
mixed, tangible or intangible, of any Person, or all or a substantial portion of
the Capital Stock of or other ownership interest in any other Person; nor merge
or consolidate or amalgamate with any other Person or take any other action
having a similar effect, nor enter into any joint venture or similar arrangement
with any other Person, provided, however, that this Section 5.2(g) shall not
prohibit (i) any merger of any Subsidiary with or into another Subsidiary or any
merger of any Subsidiary into the Company, provided that (A) there is no
Unmatured Event or Event of Default either before or after such merger, (B) if
any such merger involves the Company, the Company shall be the surviving
corporation and (C) any such merger involves the Company or any Guarantor, the
Consolidated Net Worth of the Company or such Guarantor involved in such merger
immediately after the merger would be equal to or greater than its Consolidated
Net Worth immediately preceding such merger, or (ii) any other acquisition if
(A) immediately before and after (on a pro forma basis acceptable to the Agent
and supported by such certificates and opinions required by the Agent) such
acquisition: (w) no Unmatured Event or Event of Default shall exist or shall
have occurred and be continuing, (x) the representations and warranties
contained in the Loan Documents shall be true and correct as if made on the date
such acquisition is consummated, (y) the Company is able to borrow at least
$10,000,000 in Revolving Credit Loans after giving effect to such acquisition
and (z) with respect to any acquisition subsequent to the Initial Acquisitions,
the Total Debt to EBITDA Ratio is at least 0.5 below the level required under
this Agreement, (B) prior to the consummation of such acquisition, the Company
shall have provided to the Lenders a certificate of the chief financial officer
of the Company (attaching pro forma financial statements and computations to
demonstrate compliance and projected compliance with all covenants and
conditions hereunder), stating that such acquisition complies with this Section
5.2(g), customary legal opinions reasonably acceptable to the Agent if requested
by the Agent, evidence that the Acquisition is in compliance with all laws and
regulations and that any other conditions under this Agreement relating to such
transaction have been satisfied, all in form and substance satisfactory to the
Agent, (C) the target of such acquisition is in the same line of business as the
Company and (D) prior to the consummation of such acquisition, the Lenders shall
have completed such due diligence and reviewed such agreements and documents
with respect to such acquisition as required by the Agent, and the Agent shall
be satisfied with such due diligence and such review.
(h) Disposition of Assets; Etc. Sell, lease, license,
transfer, assign or otherwise dispose of all or any portion of its business,
assets, rights, revenues or property, real, personal or mixed, tangible or
intangible, whether in one or a series of transactions, other than inventory
sold in the ordinary course of business upon customary credit terms and sales of
scrap or obsolete material or equipment which are not material in the aggregate,
and shall not permit or suffer any Subsidiary to do any of the foregoing;
provided, however, that this Section 5.2(h) shall not prohibit any such sale,
lease, license, transfer, assignment or other disposition if (i) the aggregate
book value (disregarding any write-downs of such book value other than ordinary
depreciation and amortization) of all of the business, assets, rights, revenues
and property disposed of after the Effective Date of this Agreement shall be
less than $1,000,000 in the aggregate and if, immediately after such
transaction, no Unmatured Event or Event of Default shall exist or shall have
occurred and be continuing, (ii) sales as to which proceeds are used within 180
days to purchase or construct assets of at least equivalent value to those sold,
(iii) sales as to which proceeds are used to make optional prepayments on the
Term Loan and the Revolving Credit Advances, provided that such prepayments on
the Revolving Credit Advances also permanently reduce the Revolving Credit
Commitments and the Borrowing Base by the amount of such payments, (iv)
transfers of assets, including without limitation Capital Stock, between
Guarantors or between the Company and Guarantors, or (v) investments which
consist of transfers of assets instead of cash and which are permitted by
Section 5.2(k) or (vi) such transfer of assets as pursuant to a dividend or
redemption permitted by Section 5.2(j) or an investment, loan or advance
permitted pursuant to Section 5.2(k); provided, however, in the case of any of
the foregoing permitted sales, leases, licenses, transfers, assignments or other
dispositions (an "Asset Sale") the
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Company shall not, and shall not permit any of its Subsidiaries to, consummate
an Asset Sale unless (A) the Company (or the Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale at least equal to the fair
market value (evidenced by a resolution of the Board of Directors set forth in
an officer's certificate delivered to the Agent) of the assets and (B) at least
80% of the consideration therefor received by the Company or such Subsidiary is
in the form of cash; provided that the amount of (x) any liabilities (as shown
on the Company's or such Subsidiary's' most recent balance sheet), of the
Company or any Subsidiary that are assumed by the transferee of any such assets
such that the Company or such Subsidiary have no further liability and (y) any
securities, notes or other obligations received by the Company or any such
Subsidiary from such transferee that are converted by the Company or such
Subsidiary into cash (to the extent of the cash received), shall be deemed to be
cash for purposes of this provision and the definition of Net Cash Proceeds, and
the Agent promptly shall obtain a first priority security interest in any non
cash consideration for any Asset Sale.
(i) Nature of Business. Make or suffer any substantial
change in the nature of its business from that engaged in on the Effective Date
or engage in any other businesses other than those in which it is engaged on the
Effective Date.
(j) Dividends and Other Restricted Payments. Make, pay,
declare or authorize any dividend, payment or other distribution in respect of
any class of its Capital Stock or any dividend, payment or distribution in
connection with the redemption, purchase, retirement or other acquisition,
directly or indirectly, of any shares of its Capital Stock other than such
dividends, payments or other distributions (i) to the extent payable solely in
shares of Capital Stock (other than Disqualified Stock) of the Company, (ii) the
repurchase, redemption or other acquisition or retirement for value of any
Capital Stock of the Company held by any employee of the Company upon
termination of employment of such employee, provided that the aggregate price
paid for such repurchased, redeemed, acquired or retired Capital Stock shall not
exceed $1,000,000 in any consecutive twelve month period, no Event of Default or
Unmatured Event shall have occurred and be continuing immediately after such
transaction and the price paid for such Capital Stock shall be made in
accordance with the existing agreements relating thereto, and (iii) the
following described dividends: For so long as the Company is an S-Corporation or
substantially similar pass-through entity for Federal income tax purposes, the
Company may make cash distributions to its shareholders, during each Quarterly
Payment Period, in an aggregate amount not to exceed the Permitted Quarterly Tax
Distribution in respect of the related Estimation Period. If any portion of a
Permitted Quarterly Tax Distribution is not distributed during such Quarterly
Payment Period, the Permitted Quarterly Tax Distribution payable during the
immediately following Quarterly Payment Period shall be increased by such
undistributed portion. Within 10 days following the Company's filing of Internal
Revenue Service Form 1120S for the immediately preceding taxable year, the Tax
Amounts CPA shall file with the Agent a written statement indicating in
reasonable detail the calculation of the True-Up Amount. In the case of a
True-up Amount due to the stockholders, the Permitted Quarterly Tax Distribution
payable during the immediately following Quarterly Payment Period shall be
increased by such True-up Amount. In the case of a True-up Amount due to the
Company, the Permitted Quarterly Tax Distribution payable during the immediately
following Quarterly Payment Period shall be reduced by such True-up Amount and
the excess, if any, of the True-up Amount over such Permitted Quarterly Tax
Distribution shall be applied to reduce the immediately following Permitted
Quarterly Tax Distributions until such True-up Amount is entirely offset. The
Company will not issue any preferred stock or Disqualified Stock. The Company
shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, make any payment or other transfer of any kind in respect of any
Non-Competition Agreement if any Default or Event of Default shall have occurred
and be continuing or would occur as a consequence thereof and will not amend or
modify, or make any optional payment on, any Non-Competition Agreement.
(k) Investments, Loans and Advances. Purchase or
otherwise acquire any Capital Stock of or other ownership interest in, or debt
securities of or other evidences of Indebtedness of, any other Person; nor
CREDIT AGREEMENT Page 48
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make any loan or advance of any of its funds or property or make any other
extension of credit to, or make any other investment or contribution or acquire
any interest whatsoever in, any other Person; nor incur any Contingent Liability
except to the extent permitted under Section 5.2(e) and other Contingent
Liabilities in aggregate amount not to exceed $250,000; nor permit any
Subsidiary to do any of the foregoing; other than (i) extensions of trade credit
made in the ordinary course of business on customary credit terms and
commission, travel and similar advances made to officers and employees in the
ordinary course of business, (ii) Cash Equivalents, (iii) acquisitions permitted
pursuant to Section 5.2(g), (iv) investments, loans and advances in and to any
Guarantor, or any person becoming a Guarantor as a result thereof, (v) the
purchase of the remaining outstanding Capital Stock in MaP not owned by the
Company pursuant to the Purchase and Sale of Shares Promissory Agreement,
without giving effect to any amendment or modification thereof not approved by
the Agent, (vi) investments, loans and advances after the Effective Date of this
Agreement in Unrestricted Subsidiaries or Foreign Subsidiaries in aggregate
amount not exceeding $12,500,000, provided, however, that (A) such investments,
loans and advances under Section 5.2(k)(v) or (vi) shall not be permitted unless
immediately before and after (on a pro forma basis acceptable to the Agent and
supported by such certificates and opinions as requested by the Agent) such
investment, loan or advance: (w) the terms and conditions thereof shall be
satisfactory to the Agent, (x) no Unmatured Event or Event of Default shall
exist or shall have occurred and be continuing, (y) the representations and
warranties contained in the Loan Documents shall be true and correct on and as
of the date such investment, loan or advance is made as if made on the date
thereof and giving effect thereto and (z) the Company is able to borrow at least
$10,000,000 in Revolving Credit Loans after giving effect to such investment,
loan or advance and (B) it is acknowledged and agreed that the deferral of
existing royalty and management fees owing by any Unrestricted Subsidiary to the
Company consistent with the past practice of the Company and the sale of product
by the Company to Unrestricted Subsidiaries on customary trade terms on an arms
length basis shall not be considered investments, loans and advances to such
Unrestricted Subsidiary and shall not be prohibited by this Section 5.2(k),
provided that any such amounts are not included as revenues of the Company and
its Subsidiaries during such deferral, (vii) extensions of credit to employees
and officers of the Company and its Subsidiaries in the ordinary course of
business for the purpose of purchasing Capital Stock of the Company not in
excess of $1,000,000 in aggregate amount at any one time outstanding for all
employees and officers, (viii) the Key U.K. Letter of Credit, and (ix) those
investments, loans, advances and other transactions described in Schedule 5.2(k)
hereto, having the same terms as existing on the date of this Agreement, but no
extension or renewal thereof shall be permitted.
(l) Transactions with Affiliates. Make any payment to, or
sell, lease, transfer or otherwise dispose of any of its properties or assets
to, or purchase any property or assets from, or enter into or make or amend any
transaction, contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of, any Affiliates (each of the foregoing, an
"Affiliate Transaction") unless (i) such Affiliate Transaction is on terms that
are no less favorable to the Company or the relevant Subsidiary than those that
would have been obtained in a comparable transaction by the Company or such
Subsidiary with an unrelated Person and (ii) the Company delivers to the Agent
(x) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $1,000,000, a
resolution of the Board of Directors set forth in an officers' certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (y) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $5,000,000, an opinion as to the fairness
to the Lenders of such Affiliate Transaction from a financial point of view
issued by an accounting, appraisal or investment banking firm of national
standing, provided that (A) (1) any employment or consulting agreement or
arrangement entered into by the Company or any of its Subsidiaries in the
ordinary course of business and consistent with the past practice of the Company
or such Subsidiary, (2) transactions between or among the Company and/or the
Guarantors and (3) Permitted Quarterly Tax Distributions and other dividends and
redemptions pursuant to Section 5.2(j) shall not be deemed Affiliate
Transactions and (B) any loan, advance or investment permitted by Section 5.2
(k) shall not be subject to clause (y) above.
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(m) Inconsistent Agreements. Enter into any agreement or
permit or suffer any Subsidiary to enter into any agreement containing any
provision which would be violated or breached by this Agreement or any of the
transactions contemplated hereby or by performance by the Company or any of its
Subsidiaries of its obligations in connection therewith.
(n) Negative Pledge Limitation. Enter into any agreement
(other than the Senior Subordinated Note Indenture), including without
limitation any amendments to existing agreements, with any Person other than the
Lenders pursuant hereto which prohibits or limits the ability of the Company or
any Subsidiary to create, incur, assume or suffer to exist any Lien upon any of
its assets, rights, revenues or property, real, personal or mixed, tangible or
intangible, whether now owned or hereafter acquired.
(o) Subsidiary Dividends. The Company covenants that it
will not permit any of its Subsidiaries directly or indirectly to create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction which by its terms materially restricts the ability
of any such Subsidiary to (i) pay dividends or make any other distributions on
such Subsidiary's capital stock, (ii) pay any Indebtedness owed to the Company
or any of its other Subsidiaries, (iii) make any loans or advances to the
Company or any of such other Subsidiaries or (iv) transfer any material portion
of its assets to the Company or any of such other Subsidiaries, except for such
encumbrances or restrictions required by applicable law or by NBD pursuant to
the Key U. K. Credit Facility.
(p) Payments and Modification of Debt. Make, or permit
any Subsidiary to make, any optional payment, defeasance (whether a covenant
defeasance, legal defeasance or other defeasance), prepayment or redemption of
any of its or any of its Subsidiaries' Subordinated Debt or other Indebtedness
or amend or modify, or consent or agree to any amendment or modification of, any
instrument or agreement under which any of its Subordinated Debt is issued or
created or otherwise related thereto, or enter into any agreement or arrangement
providing for any defeasance of any kind of any of its Subordinated Debt, or
designate any Indebtedness (other than the Lender Indebtedness) as "Designated
Senior Debt" under the Senior Subordinated Debt Documents, provided that the
Company may prepay the 14% Senior Notes if no Unmatured Event or Event of
Default exists or would be caused thereby and if the conditions to receiving a
Revolving Credit Loan are satisfied. Nothing in this Section 5.2(p) shall
prohibit the Company from making any mandatory payment under Sections 4.12, 4.13
or 4.16 of the 14% Senior Note Indenture.
(q) EBITDA. Permit or suffer the EBITDA for the fiscal
quarter ending March 31, 1997 to be less than $7,000,000.
5.3 Additional Covenants. If at any time the Company shall enter
into or be a party to any instrument or agreement with respect to any
Indebtedness which in the aggregate, together with any related Indebtedness,
exceeds $250,000, including all such instruments or agreements in existence as
of the date hereof and all such instruments or agreements entered into after the
date hereof, relating to or amending any terms or conditions applicable to any
of such Indebtedness which includes covenants, terms, conditions or defaults not
substantially provided for in this Agreement or more favorable to the lender or
lenders thereunder than those provided for in this Agreement, then the Company
shall promptly so advise the Agent and the Lenders. Thereupon, if the Agent
shall request, upon notice to the Company, the Agent and the Lenders shall enter
into an amendment to this Agreement or an additional agreement (as the Agent may
request), providing for substantially the same covenants, terms, conditions and
defaults as those provided for in such instrument or agreement to the extent
required and as may be selected by the Agent. In addition to the foregoing, any
covenants, terms, conditions or defaults in the Senior Subordinated Debt
Documents not substantially provided for in this Agreement or more favorable to
the holders of Subordinated Debt issued in connection therewith are hereby
incorporated by reference into this Agreement to the same extent as if set forth
fully herein, and no subsequent
CREDIT AGREEMENT Page 50
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amendment, waiver, termination or modification thereof shall effect any such
covenants, terms, conditions or defaults as incorporated herein.
ARTICLE VI
DEFAULT
6.1 Events of Default. The occurrence of any one of the following
events or conditions shall be deemed an "Event of Default" hereunder unless
waived by the requisite Lenders pursuant to Section 8.1:
(a) Nonpayment. The Company shall fail to pay when due
any principal of the Notes, or any reimbursement obligation under Section 3.3
(whether by deemed disbursement of a Revolving Credit Loan or otherwise), or,
within 5 days after becoming due, any interest on the Notes or any fees or any
other amount payable hereunder;
(b) Misrepresentation. Any representation or warranty
made by the Company or any Subsidiary in any Loan Document or any other
certificate, report, financial statement or other document furnished by or on
behalf of the Company or any Guarantor in connection with this Agreement, shall
prove to have been incorrect in any material respect when made or deemed made;
(c) Certain Covenants. The Company or any Guarantor shall
fail to perform or observe any term, covenant or agreement contained in Section
5.1(d), Section 5.2 (other than Sections 5.2(e), (f), (l), (m), and (n)) or 5.3
hereof;
(d) Other Defaults. (i) The Company or any Guarantor
shall fail to perform or observe any term, covenant or agreement contained in
Sections 5.2(e) or (f) hereof and any such failure shall remain unremedied for 5
Business Days after written notice thereof shall have been given to the Company
by the Agent or (ii) the Company or any Guarantor shall fail to perform or
observe any other term, covenant or agreement contained in any Loan Document
(other than those described in Sections 6.1(a) or 6.1(c) or clause (i) of this
Section 6.1(d)), and any such failure shall remain unremedied for 20 calendar
days after written notice thereof shall have been given to the Company by the
Agent (or such longer or shorter period of time as may be specified in such Loan
Document);
(e) Other Indebtedness. The Company or any of its
Subsidiaries shall fail to pay any part of the principal of, the premium, if
any, or the interest on, or any other payment of money due under any of its
Indebtedness (other than Indebtedness hereunder), beyond any period of grace
provided with respect thereto, which individually or together with other such
Indebtedness as to which any such failure exists has an aggregate outstanding
principal amount in excess of $1,000,000; or the Company or any of its
Subsidiaries shall fail to perform or observe any other term, covenant or
agreement contained in any agreement, document or instrument evidencing or
securing any such Indebtedness having such aggregate outstanding principal
amount, or under which any such Indebtedness was issued or created, beyond any
period of grace, if any, provided with respect thereto if the effect of such
failure is either (i) to cause, or permit the holders of such Indebtedness (or a
trustee on behalf of such holders) to cause, any payment in respect of such
Indebtedness to become due prior to its due date or (ii) to permit the holders
of such Indebtedness (or a trustee on behalf of such holders) to elect a
majority of the board of directors of the Company;
(f) Judgments. One or more judgments or orders for the
payment of money (not fully paid or covered without dispute by insurance) in an
aggregate amount of $1,000,000 in any fiscal year shall be rendered against the
Company or any of its Subsidiaries, or any other judgment or order (whether or
not for the
CREDIT AGREEMENT Page 51
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payment of money) shall be rendered against or shall affect the Company or any
of its Subsidiaries which causes or could cause or could have a Material Adverse
Effect, and either (i) such judgment or order shall have remained unsatisfied
and the Company or such Subsidiary shall not have taken action necessary to stay
enforcement thereof by reason of pending appeal or otherwise, prior to the
expiration of the applicable period of limitations for taking such action or, if
such action shall have been taken, a final order denying such stay shall have
been rendered, or (ii) enforcement proceedings shall have been commenced by any
creditor upon any such judgment or order;
(g) ERISA. The occurrence of a Reportable Event that
results in or could result in liability of the Company, any Subsidiary of the
Company or any ERISA Affiliate to the PBGC or to any Plan and such Reportable
Event is not corrected within thirty (30) days after the occurrence thereof; or
the occurrence of any Reportable Event which could constitute grounds for
termination of any Plan by the PBGC or for the appointment by the appropriate
United States District Court of a trustee to administer any Plan and such
Reportable Event is not corrected within thirty (30) days after the occurrence
thereof; or the filing by the Company, any Subsidiary of the Company or any
ERISA Affiliate of a notice of intent to terminate a Plan or the institution of
other proceedings to terminate a Plan; or the Company, any Subsidiary of the
Company or any ERISA Affiliate shall fail to pay when due any liability to the
PBGC or to a Plan; or the PBGC shall have instituted proceedings to terminate,
or to cause a trustee to be appointed to administer, any Plan; or any Person
engages in a Prohibited Transaction with respect to any Plan which results in or
could result in liability of the Company, any Subsidiary of the Company, any
ERISA Affiliate to make a required installment or other payment to any Plan
within the meaning of Section 302(f) of ERISA or Section 412(n) of the Code that
results in or could result in liability of the Company, any Subsidiary of the
Company or any ERISA Affiliate to the PBGC or any Plan; or the withdrawal of the
Company, any of its Subsidiaries or any ERISA Affiliate from a Plan during a
plan year in which it was a "substantial employer" as defined in Section
4001(a)(2) of ERISA; or the Company, any of its Subsidiaries or any ERISA
Affiliate becomes an employer with respect to any Multiemployer Plan without the
prior written consent of the Required Lenders; provided, however, that the
aggregate liability caused by any of the foregoing exceeds $1,000,000;
(h) Insolvency, Etc.. The Company or any of its
Subsidiaries shall be dissolved or liquidated or any judgment, order or decree
therefor shall be entered (other than dissolutions or liquidations of
Subsidiaries permitted by Section 5.1(a)), or shall generally not pay its debts
as they become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors, or
shall institute, or there shall be instituted against the Company or any of its
Subsidiaries, any proceeding or case seeking to adjudicate it a bankrupt or
insolvent or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief or protection of
debtors or seeking the entry of an order for relief, or the appointment of a
receiver, trustee, custodian or other similar official for it or for any
substantial part of its assets, rights, revenues or property, and, if such
proceeding is instituted against the Company or such Subsidiary and is being
contested by the Company or such Subsidiary, as the case may be, in good faith
by appropriate proceedings, such proceeding shall remain undismissed or unstayed
for a period of 60 days; or the Company or such Subsidiary shall take any action
(corporate or other) to authorize or further any of the actions described above
in this subsection;
(i) Other Documents. Any material provision of any Loan
Document or any Subordinated Debt Document shall at any time for any reason
cease to be valid and binding and enforceable against any obligor thereunder, or
the validity, binding effect or enforceability thereof shall be contested by any
Person or any obligor, shall deny that it has any or further liability or
obligation thereunder, or any Loan Document or any Subordinated Debt Document
shall be terminated, invalidated or set aside, or be declared ineffective or
inoperative or in any way cease to give or provide to the Lenders and the Agent
the benefits purported to be created thereby in any material manner; or
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(j) Control. Any Change of Control shall occur.
6.2 Remedies.
(a) Upon the occurrence and during the continuance of any
Event of Default, by notice to the Company (i) the Agent may, and upon being
directed to do so by the Required Revolving Credit Lenders shall, terminate the
Commitments or (ii) the Agent may, and upon being directed to do so by the
Required Lenders, shall declare the outstanding principal of, and accrued
interest on, the Notes, all unpaid reimbursement obligations in respect of
drawings under Letters of Credit and all other amounts owing under this
Agreement to be immediately due and payable, or (iii) the Agent may, and upon
being directed to do so by the Required Lenders, shall demand immediate delivery
of cash collateral, and the Company agrees to deliver such cash collateral upon
demand, in an amount equal to the maximum amount that may be available to be
drawn at any time prior to the stated expiry of all outstanding Letters of
Credit, or any one or more of the foregoing, whereupon the Commitments shall
terminate forthwith and all such amounts, including such cash collateral, shall
become immediately due and payable, as the case may be, provided that in the
case of any event or condition described in Section 6.1(h), the Commitments
shall automatically terminate forthwith and all such amounts, including such
cash collateral, shall automatically become immediately due and payable without
notice; in all cases without demand, presentment, protest, diligence, notice of
dishonor or other formality, all of which are hereby expressly waived. Such cash
collateral delivered in respect of outstanding Letters of Credit shall be
deposited in a special cash collateral account to be held by the Agent as
collateral security for the payment and performance of the Company's obligations
under this Agreement to the Lenders and the Agent.
(b) The Agent may and, upon being directed to do so by
the Required Lenders, shall, in addition to the remedies provided in Section
6.2(a), exercise and enforce any and all other rights and remedies available to
it or the Lenders, whether arising under this Agreement or any other Loan
Document or under applicable law, in any manner deemed appropriate by the Agent,
including suit in equity, action at law, or other appropriate proceedings,
whether for the specific performance (to the extent permitted by law) of any
covenant or agreement contained in any other Loan Document or in aid of the
exercise of any power granted in any other Loan Document.
(c) Upon the occurrence and during the continuance of any
Event of Default, each Lender may, subject to Section 7.10, at any time and from
time to time, without notice to the Company (any requirement for such notice
being expressly waived by the Company) set off and apply against any and all of
the obligations of the Company now or hereafter existing under this Agreement,
whether owing to such Lender or any other Lender or the Agent, any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender or any Affiliate of
such Lender to or for the credit or the account of the Company and any property
of the Company from time to time in possession of such Lender, irrespective of
whether or not such Lender shall have made any demand hereunder and although
such obligations may be contingent and unmatured The Company hereby grants to
the Lenders and the Agent a lien on and security interest in all such deposits,
indebtedness and property as collateral security for the payment and performance
of the obligations of the Company under this Agreement. The rights of such
Lender under this Section 6.2(c) are in addition to other rights and remedies
(including, without limitation, other rights of setoff) which such Lender may
have.
6.3 Distribution of Proceeds of Collateral. All proceeds of any
realization on the collateral pursuant to the Security Documents and any
payments received by the Agent or any Lender pursuant to the Guaranties
subsequent to and during the continuance of any Event of Default, shall be
allocated and distributed by the Agent as follows:
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(a) First, to the payment of all reasonable costs and
expenses, including without limitation all reasonable attorneys' fees, of the
Agent in connection with the enforcement of the Security Documents and otherwise
administering this Agreement;
(b) Second, to the payment of all fees required to be
paid under any Loan Document including commitment fees, owing to the Lenders and
Agent pursuant to the Lender Indebtedness on a pro rata basis in accordance with
the Lender Indebtedness consisting of fees owing to the Lenders and Agent under
the Lender Indebtedness, for application to payment of such liabilities;
(c) Third, to the Lenders and Agent on a pro rata basis
in accordance with the Lender Indebtedness consisting of interest owing to the
Lenders and Agent under the Lender Indebtedness, and obligations and liabilities
relating to Swaps owing to the Lenders and the Agent under the Lender
Indebtedness for application to payment of such liabilities;
(d) Fourth, to the Lenders and the Agent on a pro rata
basis in accordance with the Lender Indebtedness consisting of principal
(including without limitation any cash collateral for any outstanding letters of
credit), for application to payment of such liabilities;
(e) Fifth, to the payment of any and all other amounts
owing to the Lenders and the Agent on a pro rata basis in accordance with the
total amount of such Indebtedness owing to each of the Lenders and the Agent,
for application to payment of such liabilities; and
(f) Sixth, to the Company, its Subsidiaries or such other
Person as may be legally entitled thereto.
Notwithstanding the foregoing, no payments of principal, interest or fees
delivered to the Agent for the account of any Defaulting Lender shall be
delivered by the Agent to such Defaulting Lender. Instead, such payments shall,
for so long as such Defaulting Lender shall be a Defaulting Lender, be held by
the Agent, and the Agent is hereby authorized and directed by all parties hereto
to hold such funds in escrow and apply such funds as follows:
(i) First, if applicable to any payments due from such Defaulting
Lender to the Agent, and
(ii) Second, to Loans required to be made by such Defaulting Lender
on any borrowing date to the extent such Defaulting Lender
fails to make such Loans.
Notwithstanding the foregoing, upon the termination of all Commitments and the
payment and performance of all of the Advances and other obligations owing
hereunder (other than those owing to a Defaulting Lender), any funds then held
in escrow by the Agent pursuant to the preceding sentence shall be distributed
to each Defaulting Lender, pro rata in proportion to amounts that would be due
to each Defaulting Lender but for the fact that it is a Defaulting Lender.
6.4 Letter of Credit Liabilities. For the purposes of payments and
distributions under Section 6.3, the full amount of Lender Indebtedness on
account of any letter of credit then outstanding but not drawn upon shall be
deemed to be then due and owing. Amounts distributable to the Lenders or Agent
on account of such Lender Indebtedness under such letters of credit shall be
deposited in a separate collateral account in the name of and under the control
of the Agent and held by the Agent first as security for such letter of credit
Lender Indebtedness and then as security for all other Lender Indebtedness and
the amount so deposited shall be applied to the letter of credit Lender
Indebtedness at such times and to the extent that such letter of credit Lender
Indebtedness become absolute liabilities and if and to the extent that the
letter of credit Lender Indebtedness fail
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to become absolute Lender Indebtedness because of the expiration or termination
of the underlying letters of credit without being drawn upon then such amounts
shall be applied to the remaining Lender Indebtedness in the order provided in
Section 6.3. The Company hereby grants to the Agent, for the benefit of the
Lenders and Agent, a lien and security interest in all such funds deposited in
such separate collateral account, as security for all the Lender Indebtedness as
set forth above.
ARTICLE VII
THE AGENT AND THE LENDERS
7.1. Appointment; Nature of Relationship. NBD is hereby appointed
by the Lenders as the Agent hereunder and under each other Loan Document, and
each of the Lenders irrevocably authorizes the Agent to act as the contractual
representative of such Lender with the rights and duties expressly set forth
herein and in the other Loan Documents. The Agent agrees to act as such
contractual representative upon the express conditions contained in this Article
VII. Notwithstanding the use of the defined term "Agent," it is expressly
understood and agreed that the Agent shall have not have any fiduciary
responsibilities to any Lender by reason of this Agreement or any other Loan
Document and that the Agent is merely acting as the representative of the
Lenders with only those duties as are expressly set forth in this Agreement and
the other Loan Documents. In its capacity as the Lenders' contractual
representative, the Agent (i) does not hereby assume any fiduciary duties to any
of the Lenders, (ii) is a "representative" of the Lenders within the meaning of
Section 9-105 of the Uniform Commercial Code and (iii) is acting as an
independent contractor, the rights and duties of which are limited to those
expressly set forth in this Agreement and the other Loan Documents. Each of the
Lenders hereby agrees to assert no claim against the Agent on any agency theory
or any other theory of liability for breach of fiduciary duty, all of which
claims each Lender hereby waives.
7.2. Powers. The Agent shall have and may exercise such powers
under the Loan Documents as are specifically delegated to the Agent by the terms
of each thereof, together with such powers as are reasonably incidental thereto.
The Agent shall have no implied duties to the Lenders, or any obligation to the
Lenders to take any action thereunder except any action specifically provided by
the Loan Documents to be taken by the Agent.
7.3. General Immunity. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Company or any of its
Subsidiaries, the Lenders or any Lender for any action taken or omitted to be
taken by it or them hereunder or under any other Loan Document or in connection
herewith or therewith except for its or their own gross negligence or willful
misconduct.
7.4. No Responsibility for Loans, Recitals, etc. Neither the Agent
nor any of its directors, officers, agents or employees shall be responsible for
or have any duty to ascertain, inquire into, or verify (i) any statement,
warranty or representation made in connection with any Loan Document or any
borrowing hereunder; (ii) the performance or observance of any of the covenants
or agreements of any obligor under any Loan Document, including, without
limitation, any agreement by an obligor to furnish information directly to each
Lender; (iii) the satisfaction of any condition specified in Article II, except
receipt of items required to be delivered to the Agent; (iv) the validity,
enforceability, effectiveness, sufficiency or genuineness of any Loan Document
or any other instrument or writing furnished in connection therewith; or (v) the
value, sufficiency, creation, perfection or priority of any interest in any
collateral security. The Agent shall have no duty to disclose to the Lenders
information that is not required to be furnished by the Company or any
Subsidiary to the Agent at such time, but is voluntarily furnished by the
Company or any Subsidiary to the Agent (either in its capacity as Agent or in
its individual capacity).
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7.5. Action on Instructions of Lenders. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder and
under any other Loan Document in accordance with written instructions signed by
the Required Lenders or the Required Revolving Credit Lenders, as the case may
be, and such instructions and any action taken or failure to act pursuant
thereto shall be binding on all of the Lenders and on all holders of Notes. The
Lenders hereby acknowledge that the Agent shall be under no duty to take any
discretionary action permitted to be taken by it pursuant to the provisions of
this Agreement or any other Loan Document unless it shall be requested in
writing to do so by the Required Lenders or the Required Revolving Credit
lenders, as the case may be. The Agent shall be fully justified in failing or
refusing to take any action hereunder and under any other Loan Document unless
it shall first be indemnified to its satisfaction by the Lenders pro rata
against any and all liability, cost and expense that it may incur by reason of
taking or continuing to take any such action.
7.6. Employment of Agents and Counsel. The Agent may execute any of
its duties as Agent hereunder and under any other Loan Document by or through
employees, agents, and attorneys-in-fact and shall not be answerable to the
Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning all matters pertaining to the agency hereby created and its
duties hereunder and under any other Loan Document.
7.7. Reliance on Documents; Counsel. The Agent shall be entitled to
rely upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent.
7.8. Agent's Reimbursement and Indemnification. The Lenders agree
to reimburse and indemnify the Agent ratably in proportion to their respective
Commitments (or, if the Commitments have been terminated, in proportion to their
Commitments immediately prior to such termination) (i) for any amounts not
reimbursed by the Company for which the Agent is entitled to reimbursement by
the Company under the Loan Documents, (ii) for any other expenses incurred by
the Agent on behalf of the Lenders, in connection with the preparation,
execution, delivery, administration and enforcement of the Loan Documents and
(iii) for any liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against the Agent in
any way relating to or arising out of the Loan Documents or any other document
delivered in connection therewith or the transactions contemplated thereby, or
the enforcement of any of the terms thereof or of any such other documents,
provided that no Lender shall be liable for any of the foregoing to the extent
they arise from the gross negligence or willful misconduct of the Agent. The
obligations of the Lenders under this Section 7.8 shall survive payment of the
Obligations and termination of this Agreement.
7.9. Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Unmatured Event or Event of Default
hereunder unless the Agent has received written notice from a Lender or the
Company referring to this Agreement describing such Default or Unmatured Default
and stating that such notice is a "notice of default". In the event that the
Agent receives such a notice, the Agent shall give prompt notice thereof to the
Lenders.
7.10. Rights as a Lender. In the event the Agent is a Lender, the
Agent shall have the same rights and powers hereunder and under any other Loan
Document as any Lender and may exercise the same as though it were not the
Agent, and the term "Lender" or "Lenders" shall, at any time when the Agent is a
Lender, unless the context otherwise indicates, include the Agent in its
individual capacity. The Agent may accept deposits from, lend money to, and
generally engage in any kind of trust, debt, equity or other transaction, in
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addition to those contemplated by this Agreement or any other Loan Document,
with the Company or any of its Subsidiaries in which the Company or such
Subsidiary is not restricted hereby from engaging with any other Person. The
Agent, in its individual capacity, is not, subject to Section 8.6, obligated to
remain a Lender.
7.11. Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and based
on the financial statements prepared by the Company and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and the other Loan Documents. Each Lender
also acknowledges that it will, independently and without reliance upon the
Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Loan Documents.
7.12. Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Company, such resignation to be
effective upon the appointment of a successor Agent or, if no successor Agent
has been appointed, forty-five days after the retiring Agent gives notice of its
intention to resign. Upon any such resignation, the Required Lenders shall have
the right to appoint, on behalf of the Company and the Lenders, a successor
Agent. If no successor Agent shall have been so appointed by the Required
Lenders within thirty days after the resigning Agent's giving notice of its
intention to resign, then the resigning Agent may appoint, on behalf of the
Company and the Lenders, a successor Agent. If the Agent has resigned and no
successor Agent has been appointed, the Lenders may perform all the duties of
the Agent hereunder and the Company shall make all payments in respect of the
Obligations to the applicable Lender and for all other purposes shall deal
directly with the Lenders. No successor Agent shall be deemed to be appointed
hereunder until such successor Agent has accepted the appointment. Any such
successor Agent shall be a commercial bank having capital and retained earnings
of at least $50,000,000. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
resigning Agent. Upon the effectiveness of the resignation of the Agent, the
resigning Agent shall be discharged from its duties and obligations hereunder
and under the Loan Documents. After the effectiveness of the resignation of an
Agent, the provisions of this Article VII shall continue in effect for the
benefit of such Agent in respect of any actions taken or omitted to be taken by
it while it was acting as the Agent hereunder and under the other Loan
Documents.
7.13. Collateral Management. The Agent is hereby authorized on
behalf of all of the Lenders, without the necessity of any further consent from
any Lender, from time to time prior to an Event of Default, to take any action
with respect to the collateral or the Security Documents which may be necessary
(i) to perfect and maintain perfected the security interest in and liens upon
the collateral granted pursuant to the Security Documents; and (ii) to release
portions of the collateral from the security interests and liens imposed by the
Security Documents in connection with any dispositions of such portions of the
collateral permitted hereby. In the event that the Company or the Guarantors
desire to sell or otherwise dispose of any assets and such sale or disposition
is permitted hereby, the Agent shall, upon timely notice from the Company,
release such portions of the collateral from the security interests and liens
imposed by the Security Documents as may be specified by the Company or the
Guarantors in order for the Borrower or the Guarantors to consummate such
proposed sale or disposition, provided that at or prior to the time of such
proposed sale or disposition no Unmatured Event or Event of Default shall have
occurred and be continuing, including, without limitation, any Unmatured Event
or Event of Default that would arise upon consummation of such sale or
disposition. For purposes of the preceding sentence, the Company shall give
timely notice if, not less than two Business Days prior to the date of such
proposed sale or disposition, it shall furnish to the Agent an officers'
certificate setting forth in reasonable detail the circumstances of such
proposed sale or disposition.
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7.14. Right to Indemnity. The Agent shall be fully justified in
failing or refusing to take any action hereunder unless it shall first be
indemnified to its satisfaction by the Lenders pro rata against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.
7.15 Sharing of Payments. The Lenders agree among themselves that,
in the event that any Lender shall obtain payment in respect of any Advance or
any other obligation owing to the Lenders under this Agreement through the
exercise of a right of set-off, banker's lien, counterclaim or otherwise in
excess of its ratable share of payments received by all of the Lenders on
account of the Advances and other obligations (or if no Advances are
outstanding, ratably according to the respective amounts of the Commitments),
such Lender shall promptly purchase from the other Lenders participations in
such Advances and other obligations in such amounts, and make such other
adjustments from time to time, as shall be equitable to the end that all of the
Lenders share such payment in accordance with such ratable shares. The Lenders
further agree among themselves that if payment to a Lender obtained by such
Lender through the exercise of a right of set-off, banker's lien, counterclaim
or otherwise as aforesaid shall be rescinded or must otherwise be restored, each
Lender which shall have shared the benefit of such payment shall, by repurchase
of participations theretofore sold, return its share of that benefit to each
Lender whose payment shall have been rescinded or otherwise restored. The
Company agrees that any Lender so purchasing such a participation may, to the
fullest extent permitted by law, exercise all rights of payment, including
set-off, banker's lien or counterclaim, with respect to such participation as
fully as if such Lender were a holder of such Advance or other obligation in the
amount of such participation. The Lenders further agree among themselves that,
in the event that amounts received by the Lenders and the Agent hereunder are
insufficient to pay all such obligations or insufficient to pay all such
obligations when due, the fees and other amounts owing to the Agent in such
capacity shall be paid therefrom before payment of obligations owing to the
Lenders under this Agreement. Except as otherwise expressly provided in this
Agreement, if any Lender or Agent shall fail to remit to the Agent or any other
Lender an amount payable by such Lender or Agent to the Agent or such other
Lender pursuant to this Agreement on the date when such amount is due, such
payments shall be made together with interest thereon for each date from the
date such amount is due until the date such amount is paid to the Agent or such
other Lender at a rate per annum equal to the rate at which borrowings are
available to the payee in its overnight federal funds market. It is further
understood and agreed among the Lenders and the Agent that if the Agent shall
engage in any other transactions with the Company and shall have the benefit of
any collateral or security therefor which does not expressly secure the
obligations arising under this Agreement except by virtue of a so-called dragnet
clause or comparable provision, the Agent shall be entitled to apply any
proceeds of such collateral or security first in respect of the obligations
arising in connection with such other transaction before application to the
obligations arising under this Agreement.
7.16 Withholding Tax Exemption. Each Lender that is not organized
and incorporated under the laws of the United States or any State thereof agrees
to file with the Agent and the Company, in duplicate, (a) on or before the later
of (i) the Effective Date and (ii) the date such Lender becomes a Lender under
this Agreement and (b) thereafter, for each taxable year of such Lender (in the
case of a Form 4224) or for each third taxable year of such Lender (in the case
of any other form) during which interest or fees arising under this Agreement
and the Notes are received, unless not legally able to do so as a result of a
change in United States income tax enacted, or treaty promulgated, after the
date specified in the preceding clause (a), on or prior to the immediately
following due date of any payment by the Company hereunder, a properly completed
and executed copy of either Internal Revenue Service Form 4224 or Internal
Revenue Service Form 1001 and Internal Revenue Service Form W-8 or Internal
Revenue Service Form W-9 and any additional form necessary for claiming complete
exemption from United States withholding taxes (or such other form as is
required to claim complete exemption from United States withholding taxes), if
and as provided by the Code or other pronouncements of the United States
Internal Revenue Service, and such Lender warrants to the Company that the form
so filed will be true and complete; provided that such Lender's failure to
complete and execute such Form 4224 or Form 1001, or Form W-8 or Form W-9, as
the case may be, and any such additional form (or any
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successor form or forms) shall not relieve the Company of any of its obligations
under this Agreement, except as otherwise provided in this Section 7.16.
ARTICLE VIII
MISCELLANEOUS
8.1 Amendments, Etc. (a) No amendment, modification, termination
or waiver of any provision of this Agreement nor any consent to any departure
therefrom shall be effective unless the same shall be in writing and signed by
the Required Lenders and, to the extent any rights, obligations or duties of the
Agent may be affected thereby, the Agent, provided, however, that no such
amendment, modification, termination, waiver or consent shall, without the
consent of the Agent and all of the Lenders, (i) authorize or permit the
extension of time for, or any reduction of the amount of, any payment of the
principal of, or interest on, the Notes or any Letter of Credit reimbursement
obligation, or any fees or other amount payable hereunder, (ii) amend or
terminate the respective Commitments of any Lender set forth on the signature
pages hereof or modify the provisions of this Section regarding the taking of
any action under this Section or the provisions of Section 7.10 or the
definition of Required Lenders, or (iii) release all or substantially all of the
collateral, and provided, further, that no such amendment, modification,
termination, waiver or consent, shall, without the consent of the Required
Revolving Credit Lenders, allow the Company to obtain a Revolving Credit Advance
if it would otherwise be unable to absent such amendment, modification,
termination, waiver or consent.
(b) Any such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
(c) Notwithstanding anything herein to the contrary, no
Defaulting Lender shall be entitled to vote (whether to consent or to withhold
its consent) with respect to any amendment, modification, termination or waiver
of any provision of this Agreement or any departure therefrom or any direction
from the Lenders to the Agent, and, for purposes of determining the Required
Lenders at any time, the Commitments and the Advances of each Defaulting Lenders
shall be disregarded.
8.2 Notices. (a) Except as otherwise provided in Section 8.2(c)
hereof, all notices and other communications hereunder shall be in writing and
shall be delivered or sent to the Company, the Agent and the Lenders at the
respective addresses and numbers for notices set forth on the signature pages
hereof, or to such other address as may be designated by the Company, the Agent
or any Lender by notice to the other parties hereto. All notices and other
communications shall be deemed to have been given at the time of actual delivery
thereof to such address, or if sent by certified or registered mail, postage
prepaid, to such address, on the third day after the date of mailing, or in the
case of telex notice, upon receipt of the appropriate answerback, or, in the
case of facsimile notice, upon receipt of a confirmation mechanically produced
by the facsimile machine, provided, however, that notices to the Agent shall not
be effective until received.
(b) Notices by the Company to the Agent with respect to
terminations or reductions of the Commitments pursuant to Section 2.2, requests
for Advances pursuant to Section 2.4, requests for continuations or conversions
of Loans pursuant to Section 2.7 and notices of prepayment pursuant to Section
3.1 shall be irrevocable and binding on the Company.
(c) Any notice to be given by the Company to the Agent
pursuant to Sections 2.4, 2.7 or 3.1 and any notice to be given by the Agent or
any Lender hereunder, may be given by telephone, and all such notices given by
the Company must be immediately confirmed in writing in the manner provided in
Section
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8.2(a). Any such notice given by telephone shall be deemed effective upon
receipt thereof by the party to whom such notice is to be given.
8.3 No Waiver By Conduct; Remedies Cumulative. No course of
dealing on the part of the Agent or any Lender, nor any delay or failure on the
part of the Agent or any Lender in exercising any right, power or privilege
hereunder shall operate as a waiver of such right, power or privilege or
otherwise prejudice the Agent's or such Lender's rights and remedies hereunder;
nor shall any single or partial exercise thereof preclude any further exercise
thereof or the exercise of any other right, power or privilege. No right or
remedy conferred upon or reserved to the Agent or any Lender under any Loan
Document is intended to be exclusive of any other right or remedy, and every
right and remedy shall be cumulative and in addition to every other right or
remedy granted thereunder or now or hereafter existing under any applicable law.
Every right and remedy granted by any Loan Document or by applicable law to the
Agent or any Lender may be exercised from time to time and as often as may be
deemed expedient by the Agent or any Lender.
8.4 Reliance on and Survival of Various Provisions. All terms,
covenants, agreements, representations and warranties of the Company and any
Guarantor made herein or in any other Loan Document or in any certificate,
report, financial statement or other document furnished by or on behalf of the
Company and any Guarantor in connection with the negotiation and modification of
this Agreement shall be deemed to have been relied upon by the Lenders,
notwithstanding any investigation heretofore or hereafter made by any Lender or
on such Lender's behalf, and those covenants and agreements of the Company set
forth in Section 3.7, 3.9 and 8.5 hereof shall survive the repayment in full of
the Advances and the termination of the Commitments.
8.5 Expenses; Indemnification. (a) The Company agrees to pay, or
reimburse the Agent for the payment of, on demand, (i) the reasonable fees and
expenses of counsel to the Agent, including without limitation the fees and
expenses of Dickinson, Wright, Moon, Van Dusen & Freeman and any other counsel
retained by the Agent in connection with the preparation, execution, delivery
and administration of the Loan Documents and the consummation of the
transactions contemplated hereby, and in connection with advising the Agent as
to its rights and responsibilities with respect thereto, and in connection with
any amendments, waivers or consents in connection therewith, and (ii) all stamp
and other taxes and fees payable or determined to be payable in connection with
the execution, delivery, filing or recording of the Loan Security Documents and
the consummation of the transactions contemplated hereby, and any and all
liabilities with respect to or resulting from any delay in paying or omitting to
pay such taxes or fees, and (iii) all reasonable costs and expenses of the Agent
(including reasonable fees and expenses of counsel and whether incurred through
negotiations, legal proceedings or otherwise) in connection with any Unmatured
Event or Event of Default or the enforcement of, or the exercise or preservation
of any rights under, any Loan Document or in connection with any refinancing or
restructuring of the credit arrangements provided under this Agreement and (iv)
all reasonable costs and expenses of the Agent (including reasonable fees and
expenses of counsel) in connection with any action or proceeding relating to a
court order, injunction or other process or decree restraining or seeking to
restrain the Agent from paying any amount under, or otherwise relating in any
way to, any Letter of Credit and any and all costs and expenses which any of
them may incur relative to any payment under any Letter of Credit.
(b) The Company agrees to indemnify each Lender, the
Agent and each of their respective officers, directors, employees and agents
(collectively, the "Indemnified Parties") and hold each Indemnified Party
harmless from and against any and all liabilities, losses, damages, costs and
expenses of any kind, including, without limitation, the reasonable fees and
disbursements of counsel, which may be incurred by any Indemnified Party in
connection with any investigative, administrative or judicial proceeding
(whether or not such Indemnified Party shall be designated a party thereto)
(collectively, the "Indemnified Liabilities") at any time relating to (whether
before or after the execution of this Agreement) any of the following:
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(i) any actual or proposed use of the Advances
hereunder by the Company or any of its Subsidiaries or Unrestricted Subsidiaries
or any transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of any Advance;
(ii) the entering into and performance of this
Agreement and any other Loan Document by any of the Indemnified Parties
(including any action brought by or on behalf of the Company as the result of
any determination by any Lender not to make any Advance);
(iii) any investigation, litigation or proceeding
related to either Initial Acquisition or any other acquisition or proposed
acquisition by the Company or any of its Subsidiaries of all or any portion of
the stock or assets of any Person or to the issuance of, or any other matter
relating to, any Subordinated Debt, whether or not any Indemnified Party is a
party thereto;
(iv) any investigation, litigation or proceeding
related to any environmental cleanup, audit, compliance or other matter relating
to any release by the Company or any of its Subsidiaries of any Hazardous
Material or any violations of Environmental Laws; or
(v) the presence on or under, or the escape,
seepage, leakage, spillage, discharge, emission, discharging or releases from,
any real property owned or operated by the Company or any Subsidiary thereof of
any Hazardous Material (including any losses, liabilities, damages, injuries,
costs, expenses or claims asserted or arising under any Environmental Law),
regardless of whether caused by, or within the control of, the Company or such
Subsidiary, except for any such Indemnified Liabilities arising for the account
of a particular Indemnified Party by reason of the activities of the Indemnified
Party on the property of the Company conducted subsequent to a foreclosure on
such property by any Indemnified Party or by reason of the relevant Indemnified
Party's gross negligence or wilful misconduct or breach of this Agreement, and
if and to the extent that the foregoing undertaking may be unenforceable for any
reason, the Company hereby agrees to make the maximum contribution to the
payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law. The Company shall be obligated to indemnify
the Indemnified Parties for all Indemnified Liabilities subject to and pursuant
to the foregoing provisions, regardless of whether the Company or any of its
Subsidiaries had knowledge of the facts and circumstances giving rise to such
Indemnified Liability.
Provided that no Indemnified Party shall have the right to be
indemnified hereunder for its own gross negligence or willful misconduct as
determined by a court of competent jurisdiction.
8.6 Successors and Assigns. (a) This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns, provided that the Company may not, without the prior
consent of all the Lenders, assign its rights or obligations under any Loan
Document and the Lenders shall not be obligated to make any Advance hereunder to
any entity other than the Company.
(b) Any Lender may sell a participation interest to any
financial institution or institutions, and such financial institution or
institutions may further sell, a participation interest (undivided or divided)
in, the Advances and such Lender's rights and benefits under the Loan Documents,
and to the extent of that participation, such participant or participants shall
have the same rights and benefits against the Company under Section 6.2(c) as it
or they would have had if participation of such participant or participants were
the Lender making the Advances to the Company hereunder, provided, however, that
(i) such Lender's obligations under this Agreement shall remain unmodified and
fully effective and enforceable against such Lender, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (iii) such Lender shall remain the holder of its Notes for all
purposes of this Agreement, (iv) the Company, the Agent and the other Lenders
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement, (v) such Lender shall
not grant to its participant any rights to
CREDIT AGREEMENT Page 61
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consent or withhold consent to any action taken by such Lender or the Agent
under this Agreement other than action requiring the consent of all of the
Lenders hereunder and (iv) such participation shall in no event be less than
$5,000,000. The Agent from time to time in its sole discretion may appoint
agents for the purpose of servicing and administering this Agreement and the
transactions contemplated hereby and enforcing or exercising any rights or
remedies of the Agent provided under the Loan Documents or otherwise. In
furtherance of such agency, the Agent may from time to time direct that the
Company provide notices, reports and other documents contemplated by this
Agreement (or duplicates thereof) to such agent. The Company hereby consents to
the appointment of such agent and agrees to provide all such notices, reports
and other documents and to otherwise deal with such agent acting on behalf of
the Agent in the same manner as would be required if dealing with the Agent
itself.
(c) Each Lender may, with the prior written consent of
the Company, which consent from the Company shall not be unreasonably withheld
and may not be withheld if any Event of Default has occurred and is continuing
or if such assignment is to an Affiliate of a Lender, and the prior written
consent of the Agent, assign to one or more banks or other entities all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment, the Advances owing to it and the
Note or Notes held by it); provided, however, that (i) each such assignment
shall be of a uniform, and not a varying, percentage of all rights and
obligations, (ii) except in the case of an assignment of all of a Lender's
rights and obligations under this Agreement, (A) the amount of the Commitment of
the assigning Lender being assigned pursuant to each such assignment (determined
as of the date of the Assignment and Acceptance with respect to such assignment)
shall in no event be less than $5,000,000, and in integral multiples of
$1,000,000 thereafter, or such lesser amount as the Company and the Agent may
consent to and (B) after giving effect to each such assignment, the amount of
the Commitment of the assigning Lender shall in no event be less than
$5,000,000, and (iii) the parties to each such assignment shall execute and
deliver to the Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance in the form of Exhibit K hereto (an "Assignment and
Acceptance"), together with any Note or Notes subject to such assignment and a
processing and recordation fee of $5,000. Upon such execution, delivery,
acceptance and recording, from and after the effective date specified in such
Assignment and Acceptance, (x) the assignee thereunder shall be a party hereto
and, to the extent that rights and obligations hereunder have been assigned to
it pursuant to such Assignment and Acceptance, have the rights and obligations
of a Lender hereunder and (y) the Lender assignor thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights and be released from
its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto).
(d) By executing and delivering an Assignment and
Acceptance, the Lender assignor thereunder and the assignee thereunder confirm
to and agree with each other and the other parties hereto as follows: (i) other
than as provided in such Assignment and Acceptance, such assigning Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Company or the performance or observance by the Company of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the financial statements referred to in
Section 4.6 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance under the Agent, such assigning Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (v) such assignee appoints and authorizes the
CREDIT AGREEMENT Page 62
<PAGE> 68
Agent to take such action as agent on its behalf and to exercise such powers and
discretion under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers and discretion as are reasonably incidental
thereto; and (vi) such assignee agrees that it will perform in accordance with
their terms all of the obligations that by the terms of this Agreement are
required to be performed by it as a Lender.
(e) The Agent shall maintain at its address designated on
the signature pages hereof a copy of each Assignment and Acceptance delivered to
and accepted by it and a register for the recordation of the names and addresses
of the Lenders and the Commitment of, and principal amount of the Advances owing
to, each Lender from time to time (the "Register"). The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and the
Company, the Agent and the Lenders may treat each Person whose name is recorded
in the Register as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Company or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(f) Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and an assignee, together with any Note or Notes
subject to such assignment, the Agent shall, if such Assignment and Acceptance
has been completed, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the Company. Within five Business Days after its receipt of such
notice, the Company, at its own expense, shall execute and deliver to the Agent
in exchange for the surrendered Note or Notes a new Note or Notes to the order
of such assignee in an amount equal to the Commitment assumed by it pursuant to
such Assignment and Acceptance and, if the assigning Lender has retained a
Commitment hereunder, a new Note to the order of the assigning Lender in an
amount equal to the Commitment retained by it hereunder. Such new Note or Notes
shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Note or Notes, shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially the form
of Exhibit K hereto.
(g) The Lenders may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
8.6, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Company, provided that assignee or
participant agrees to keep all non public information confidential.
(h) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time create a security interest in, or assign,
all or any portion of its rights under this Agreement (including, without
limitation, the Loans owing to it and the Note or Notes held by it) in favor of
any Federal Reserve Lender in accordance with Regulation A of the Board of
Governors of the Federal Reserve System; provided that such creation of a
security interest or assignment shall not release such Lender from its
obligations under this Agreement.
8.7 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
8.8 Governing Law. This Agreement is a contract made under, and
shall be governed by and construed in accordance with, the law of the State of
Michigan in the same manner applicable to contracts made and to be performed
entirely within such State and without giving effect to choice of law principles
of such State. The Company further agrees that any legal action or proceeding
with respect to any Loan Document or the transactions contemplated hereby may be
brought in any court of the State of Michigan, or in any court of the United
States of America sitting in Michigan, and the Company hereby submits to and
accepts generally and unconditionally the jurisdiction of those courts with
respect to its Person and property and irrevocably consents to the service of
process in connection with any such action or proceeding by personal delivery to
the Company
CREDIT AGREEMENT Page 63
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or by the mailing thereof by registered or certified mail, postage prepaid to
the Company at its address set forth on the signature pages hereof or as
provided pursuant to Section 8.2. Nothing in this paragraph shall affect the
right of the Lenders and the Agent to serve process in any other manner
permitted by law or limit the right of the Lenders or the Agent to bring any
such action or proceeding against the Company or property in the courts of any
other jurisdiction. The Company hereby irrevocably waives any objection to the
laying of venue of any such suit or proceeding in the above described courts.
8.9 Table of Contents and Headings. The table of contents and the
headings of the various subdivisions hereof are for the convenience of reference
only and shall in no way modify any of the terms or provisions hereof.
8.10 Construction of Certain Provisions. If any provision of this
Agreement refers to any action to be taken by any Person, or which such Person
is prohibited from taking, such provision shall be applicable whether such
action is taken directly or indirectly by such Person, whether or not expressly
specified in such provision.
8.11 Integration and Severability. This Agreement embodies the
entire agreement and understanding between the Company and the Agent and the
Lenders, and supersedes all prior agreements and understandings, relating to the
subject matter hereof. In case any one or more of the obligations of the Company
under any Loan Document shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
obligations of the Company shall not in any way be affected or impaired thereby,
and such invalidity, illegality or unenforceability in one jurisdiction shall
not affect the validity, legality or enforceability of the obligations of the
Company under any Loan Document in any other jurisdiction.
8.12 Independence of Covenants. All covenants hereunder shall be
given independent effect so that if a particular action or condition is not
permitted by any such covenant, the fact that it would be permitted by an
exception to, or would be otherwise within the limitations of, another covenant
shall not avoid the occurrence of an Unmatured Event or an Event of Default or
any event or condition which with notice or lapse of time, or both, could become
such an Unmatured Event or an Event of Default if such action is taken or such
condition exists.
8.13 Interest Rate Limitation. Notwithstanding any provision of any
Loan Document, in no event shall the amount of interest paid or agreed to be
paid by the Company exceed an amount computed at the highest rate of interest
permissible under applicable law. If, from any circumstances whatsoever,
fulfillment of any provision of any Loan Document at the time performance of
such provision shall be due, shall involve exceeding the interest rate
limitation validly prescribed by law which a court of competent jurisdiction may
deem applicable hereto, then, ipso facto, the obligations to be fulfilled shall
be reduced to an amount computed at the highest rate of interest permissible
under applicable law, and if for any reason whatsoever the Lender shall ever
receive as interest an amount which would be deemed unlawful under such
applicable law such interest shall be automatically applied to the payment of
principal of the Advances outstanding hereunder (whether or not then due and
payable) and not to the payment of interest, or shall be refunded to the Company
if such principal and all other obligations of the Company to the Lenders have
been paid in full.
8.14 Judgment and Payment. (a) If, for the purpose of obtaining
judgment in any court, it is necessary to convert a sum owing hereunder by the
Company in one currency into another currency, the Company agrees, to the
fullest extent that it may effectively do so, that the rate of exchange used
shall be that at which in accordance with normal banking procedures in the
relevant jurisdiction the relevant Lender could purchase the first currency with
such other currency for the first currency on the Business Day immediately
preceding the day on which the final judgment is given.
(b) The obligations of the Company in respect of any sum
due in Dollars to any party hereto or any holder of the obligations owing
hereunder (the "Applicable Creditor") shall,
CREDIT AGREEMENT Page 64
<PAGE> 70
notwithstanding any payment obligation or judgment in a currency (the "Payment
Currency") other than Dollars, be discharged only to the extent that, on the
Business Day following receipt by the Applicable Creditor of any sum adjudged to
be so due in the Payment Currency, the Applicable Creditor may in accordance
with normal banking procedures in the relevant jurisdiction purchase Dollars
with the Payment Currency; if the amount of Dollars so purchased is less than
the sum originally due to the Applicable Creditor in Dollars, the Company
agrees, as a separate obligation and notwithstanding any such judgment, to
indemnify the Applicable Creditor against such loss. The obligations of the
Company contained in this Section 8.14 shall survive the termination of this
Agreement and the payment of all other amounts owing hereunder.
8.15 WAIVER OF JURY TRIAL. THE LENDERS AND THE AGENTS AND THE
COMPANY, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO
A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF ANY LOAN DOCUMENT
OR ANY RELATED INSTRUMENT OR AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR
WRITTEN) OR ACTIONS OF EITHER OF THEM. NEITHER ANY LENDER, THE AGENT NOR THE
COMPANY SHALL SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY SUCH ACTION
IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY
TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THESE PROVISIONS SHALL NOT BE DEEMED TO
HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY ANY PARTY HERETO EXCEPT BY
A WRITTEN INSTRUMENT EXECUTED BY SUCH PARTY.
CREDIT AGREEMENT Page 65
<PAGE> 71
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered on the 24th day of March, 1997, which shall be the
Effective Date of this Agreement.
Address for Notices: KEY PLASTICS, INC.
21333 Haggerty Road
Novi, Michigan 48375
Attention: Chief Financial Officer By:/s/ Mark Abbo
Facsimile No.: (810) 449-4130 -------------
Its: Treasurer
CREDIT AGREEMENT Page 66
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611 Woodward Avenue NBD BANK, as Agent and as a Lender
Detroit, Michigan 48226
Attention: Michigan Banking Division By:/s/ Tess Kalil
Facsimile No.: (313) 225-2290 --------------
Its: Vice President
Revolving Credit Commitment: $85,000,000
Term Loan Commitment: $15,000,000
CREDIT AGREEMENT Page 67
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Three World Financial Center LEHMAN COMMERCIAL PAPER, INC.
New York, New York 10285
Attention: Dennis Dee By:/s/ Dennis Dee
Facsimile No.: (212)528 0819 --------------
Its: Authorized Signatory
Revolving Credit Commitment: $40,000,000
Term Loan Commitment: $0
CREDIT AGREEMENT Page 68
<PAGE> 1
EXHIBIT 10.3
MICHIGAN FORM
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
THIS MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS, dated as of
March 24, 1997 by KEY PLASTICS, INC., a Michigan corporation, whose address is
21333 Haggerty Road, Suite 200, Novi, Michigan 48375 (the "Mortgagor"), to NBD
BANK, a Michigan banking corporation, whose address is 611 Woodward Avenue,
Detroit, Michigan 48226 (the "Mortgagee"), as agent for the benefit of itself
and the lenders (the "Lenders") which are parties to the Credit Agreement
defined below.
RECITALS:
A. The Mortgagor has entered into a Credit Agreement dated as of March
24, 1997 (as amended or modified from time to time, including any agreement
entered into in substitution therefor, the "Credit Agreement") pursuant to which
the Lenders agreed, subject to the terms and conditions thereof, to extend
credit to the Mortgagor up to and pursuant to the Schedule attached hereto a
maximum principal amount outstanding at any time equal to One Hundred and Forty
Million and No/100 Dollars ($140,000,000.00) maturing on or before September 24,
2004, as such date may be extended by agreement of the parties to the Credit
Agreement.
B. As a condition to the effectiveness of the obligations of the
Mortgagee and the Lenders under the Credit Agreement, the Mortgagor is
obligated, among other things, to grant a lien on the mortgaged premises
hereinafter described.
WITNESSETH:
NOW, THEREFORE, to secure (a) the prompt and complete payment of all
Indebtedness and other obligations of the Mortgagor or any Subsidiary now or
hereafter owing to the Lenders or the Mortgagee under or on account of the
Credit Agreement, any Security Document or any letters or credit, notes or other
instruments issued to the Mortgagee or the Lenders pursuant thereto, (b) the
performance of the covenants under the Credit Agreement and the Security
Documents and any monies expended by any Lender or the Mortgagee in connection
therewith, and (c) the prompt and complete payment of all obligations and
performance of all covenants of the Mortgagor or any Subsidiary in connection
with Swaps relating to Indebtedness under the Loan Documents (including any
interest accruing subsequent to any petition filed by or against the Mortgagor
or any Subsidiary under the U.S. Bankruptcy Code, whether or not allowed),
indemnity and reimbursement obligations, charges, expenses, fees, reasonable
attorneys' fees and disbursements and any other amounts owing thereunder (all of
the aforesaid Indebtedness,
<PAGE> 2
obligations and liabilities of the Mortgagor and its Subsidiaries being herein
called the "Mortgage Indebtedness" and this Mortgage and all of the other
documents, agreements and instruments among the Mortgagor, the Subsidiaries, the
Lenders, the Mortgagee or any of them, evidencing or securing the repayment of,
or otherwise pertaining to, the Mortgage Indebtedness, including without
limitation the Credit Agreement, the Notes and the Security Documents, being
herein collectively called the "Loan Documents"), the Mortgagor does hereby
MORTGAGE and WARRANT unto the Mortgagee, and its successors and assigns, the
following described property (the "Mortgaged Premises"):
(A) the land situated in the Township of Plymouth, County of Wayne and
State of Michigan, more specifically described in Exhibit A hereto (the "Land");
(B) all easements, rights-of-way, licenses and privileges, thereunto
belonging or in anywise appertaining, including without limitation all
Mortgagor's right, title and interest in and to those easements, rights-of-way,
licenses and privileges described in Exhibit A hereto, if any;
(C) all buildings and improvements now or hereafter situated upon the
Land or any part thereof;
(D) to the extent, if any, of Mortgagor's interests thereon, all
minerals, royalties, gas rights, water, water rights, water stock, flowers,
shrubs, lawn plants, crops, trees, timber and other emblements now or hereafter
located on, under or above all or any part of the Land;
(E) all and singular the tenements, hereditament and appurtenances
belonging or in anywise appertaining to the Land, and the reversion or
reversions, remainder and remainders thereof; and also all the estate, right,
title, interest, property, claim and demand whatsoever of Mortgagor, of, in and
to the same and of, in and to every part and parcel thereof;
(F) all the rents, issues and profits thereof under present or future
leases, or otherwise, which are hereby specifically assigned, transferred and
set over to Mortgagee, including, but not limited to, all rights conferred by
Act No. 210 of the Michigan Public Acts of 1953 as amended by Act No. 151 of the
Michigan Public Acts of 1966 (MCL 554.231 et seq.), and Act No. 228 of the
Michigan Public Acts of 1925 as amended by Act No. 55 of the Michigan Public
Acts of 1933 (MCL 554.211 et seq.) and including, but not limited to, all cash
or securities deposited under any such leases to secure performance by the
tenants of their obligations thereunder, whether said cash or securities are to
be held until the expiration of the terms of such leases or applied to one or
more of the installments of rent coming due thereunder;
(G) all right, title and interest of Mortgagor, if any, in and to the
land lying in the bed of any street, road, avenue, alley or walkway, opened or
proposed or vacated, or any strip or gore, in front of or adjoining the Land;
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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(H) all machinery, apparatus, equipment, fittings, fixtures, and
articles of personal property of every kind and nature whatsoever, other than
consumable goods, now or hereafter located in or upon the Land or any part
thereof and used or useable in connection with any present or future operation
of the Land or any building or buildings now or hereafter on the Land and now
owned or hereafter acquired by Mortgagor (all of which is herein called
"Equipment"), including, but without limiting the generality of the foregoing,
all lighting, heating, cooling, ventilating, air-conditioning, incinerating,
refrigerating, plumbing, sprinkling, communicating and electrical systems, and
the machinery, appliances, fixtures and equipment pertaining thereto, it being
understood and agreed that all Equipment is part and parcel of the Land and
appropriated to the use of said real estate and, whether affixed or annexed or
not, shall for the purposes of this Mortgage, unless Mortgagee shall otherwise
elect, be deemed conclusively to be real estate and mortgaged hereby; and
(I) any and all awards or payments, including interest thereon, and the
right to receive the same, which may be made with respect to the Land and are or
will be payable to Mortgagor as a result of (a) the exercise of the right of
eminent domain, (b) the alteration of the grade of any street, (c) any loss of
or damage to any building or other improvement on the Land, (d) any other injury
to or decrease in the value of the Land or (e) any refund due on account of the
payment of real estate taxes, assessments or other charges levied against or
imposed upon the Land, to the extent of all amounts which may be secured by this
Mortgage at the date of receipt of any such award or payment by Mortgagee, and
of the reasonable counsel fees, costs and disbursements incurred by Mortgagee in
connection with the collection of such award or payment, Mortgagor hereby
agreeing to execute and deliver, from time to time, such further instruments as
may be reasonably requested by Mortgagee to confirm such assignment to Mortgagee
of any such award or payment.
TO HAVE AND TO HOLD the Mortgaged Premises, and each and every part
thereof, unto Mortgagee and its successors and assigns forever. Any reference
herein to the "Mortgaged Premises" shall, unless the context shall require
otherwise, be deemed to include and apply to the above described Land and said
buildings, improvements, Equipment, rents, issues, profits, leases, easements,
tenements, hereditament and appurtenances and all other rights, privileges and
interests hereinabove described.
SUBJECT only to those matters set forth in Exhibit B hereto ("Permitted
Encumbrances").
AND Mortgagor does hereby covenant and warrant as follows:
1. Payment of Mortgage Indebtedness; Performance of Agreements. The
Mortgagor shall pay the principal of and interest on the Mortgage Indebtedness
according to the terms thereof, and will keep and perform all the covenants,
promises and agreements on its part to be performed in any and all Loan
Documents, all in the manner herein or therein set forth.
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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<PAGE> 4
2. Covenants of Title. The Mortgagor has good and indefeasible title to
the Land in fee simple and has good and indefeasible title to the entire
Mortgaged Premises and with good right and full power to sell, mortgage and
convey the Mortgaged Premises, the Mortgaged Premises are free and clear of
liens and encumbrances except Permitted Encumbrances, whether presently existing
or which may hereafter be created in accordance with the terms hereof, and
Mortgagor will warrant and defend the Mortgaged Premises against all lawful
claims and demands whatsoever. The Mortgagee shall have the right, at its option
and at such time or times as it, in its sole discretion, shall deem reasonably
necessary, to take whatever action it may reasonably deem necessary to defend or
uphold the lien of this Mortgage or otherwise enforce any of the rights of
Mortgagee hereunder or any obligation secured hereby, including without
limitation, the right to institute appropriate legal proceedings for such
purposes.
3. Payment of Taxes, Assessments and Charges. The Mortgagor shall pay
when due, and before any interest, collection fees or penalties shall accrue,
all real estate taxes, special assessments, water and sewer charges or other
governmental charges and impositions levied or assessed with respect to the
Mortgaged Premises or any part thereof except to the extent that payment of any
of the foregoing is then being contested in good faith by appropriate legal
proceedings and with respect to which adequate financial reserves have been
established on the books and records of the Mortgagor. Should Mortgagor fail to
so pay such taxes, special assessments, water and sewer charges or other
governmental charges or impositions or establish such adequate financial
reserves, Mortgagee may, at its option, pay the same for the account of
Mortgagor.
4. Reserves for Taxes and Insurance Premiums. Upon the occurrence of
any Event of Default, Mortgagor shall pay to Mortgagee upon the request of
Mortgagee, installments of the taxes and assessments levied or to be levied upon
the Mortgaged Premises, and installments of the premiums that will become due
and payable to renew the insurance hereinafter provided, said installments to be
substantially equal and to be in such amount as will assure to Mortgagee that
not less than 30 days before the time when such taxes and premiums,
respectively, become due Mortgagor will have paid to Mortgagee a sufficient
amount to pay the same in full. Said amounts paid to Mortgagee hereunder need
not be segregated nor kept in a separate fund, and no interest shall be payable
thereon. Said amounts shall be held by Mortgagee as additional security for the
Mortgage Indebtedness and, except as provided in the following sentence, be
applied to the payment of said taxes and assessments when the same become due
and payable. Mortgagee may, at its option, but without any obligation on its
part so to do, apply said amounts upon said taxes and assessments or insurance
premiums or toward the payment of the Mortgage Indebtedness or any portion
thereof, whether or not then due or payable. The Mortgagee shall endeavor to
notify the Mortgagor of how such amounts were applied, provided however that the
failure to give such notice shall not affect Mortgagee's rights under this
Mortgage.
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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<PAGE> 5
Upon an assignment of the Mortgage, Mortgagee shall have the right to pay
over the balance of such deposits in its possession to the assignee and
Mortgagee shall thereupon be completely released from all liability with respect
to such deposits and Mortgagor or owner of the Mortgaged Premises shall look
solely to the assignee or transferee in reference thereto. This provision shall
apply to every transfer of such deposits to a new assignee. Upon full payment
and satisfaction of the Mortgage Indebtedness or at any prior time upon the
election of Mortgagee, the balance of the unapplied deposits in its possession
shall be paid over to the record owner of the Mortgaged Premises and no other
party shall have any right or claim thereto in any event, provided that in the
event of a foreclosure of the Mortgaged Premises, the purchaser at such
foreclosure shall have the right to receive such unapplied deposits. The
Mortgagor agrees, at Mortgagee's request, to deliver the aforesaid deposits to
such service or financial institution as Mortgagee shall from time to time
designate.
5. Payment of Other Obligations. The Mortgagor shall also pay any and
all other obligations, liabilities or debts which may become liens, security
interests, or encumbrances upon or charges against the Mortgaged Premises for
any repairs or improvements that are now completed or are in progress or which
may hereafter be made thereon, or for any other goods, services, or utilities
furnished to the Mortgaged Premises, and shall not permit any lien, security
interest, encumbrance or charge of any kind securing the repayment of borrowed
funds (including the deferred purchase price for any property) to accrue and
remain outstanding against the Mortgaged Premises or any part thereof, or any
improvements thereon other than Permitted Encumbrances, if any, except to the
extent that payment of any of the foregoing is then being contested in good
faith by appropriate legal proceedings and with respect to which adequate
financial reserves have been established on the books and records of the
Mortgagor.
6. Maintenance and Repair; Compliance with Laws; Inspection. The
Mortgagor will keep the Land and all the improvements thereon in good order and
repair, and Mortgagor expressly agrees that it will not do or permit waste on
the Land nor do any other act whereby the Mortgaged Premises will become less
valuable or the lien hereof may be impaired. Should Mortgagor fail to effect the
necessary repairs and such failure shall remain unremedied for 20 calendar days
after written notice thereof shall have been given to the Mortgagor by the
Mortgagee, Mortgagee may at its option make such repairs for the account of
Mortgagor. The Mortgagor will promptly comply, and cause the Mortgaged Premises
and the occupants or users thereof to comply, with all present and future laws,
ordinances, orders, rules and regulations and other requirements of any
governmental authority affecting the Mortgaged Premises or any part thereof or
the use or occupancy thereof and with all instruments and documents of record or
otherwise affecting the Mortgaged Premises, or any part thereof, or the use or
occupancy thereof. The Mortgagee, and any person authorized by Mortgagee, shall
have the right to enter upon and inspect the Mortgaged Premises at all
reasonable times and with reasonable notice.
7. Insurance. (a) The Mortgagor shall keep the buildings and other
improvements on the Land, or which may hereafter be erected thereon, constantly
insured for the benefit of
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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<PAGE> 6
Mortgagee with such company or companies as may be reasonably acceptable to
Mortgagee and in an amount reasonably satisfactory to Mortgagee, which amount
shall not be less than 100% of the then full replacement cost of such building
and improvements (exclusive of excavations, foundations and footings), which
policies shall be without deduction for depreciation and be subject to the
payment of a deductible not in excess of an amount reasonably satisfactory to
Mortgagee, until the Mortgage Indebtedness and all interest thereon and all of
the amounts due hereunder are fully paid, against fire and such other hazards
and risks customarily covered by the standard form of "extended coverage"
endorsements available in the State of Michigan, and shall further provide flood
insurance (if the Mortgaged Premises are situated in an area designated as a
flood hazard area by the Director of the Federal Emergency Management Agency or
as otherwise required by the Flood Disaster Protection Act of 1973 and
regulations issued thereunder), rent insurance in an amount not less than one
year's gross rent derived from the Mortgaged Premises, and such other
appropriate insurance as Mortgagee may reasonably require from time to time. All
such policies shall include standard mortgagee clauses in favor of Mortgagee and
shall provide that the proceeds thereof shall be paid to Mortgagee, all as may
be satisfactory to Mortgagee. During any construction, repair or restoration of
the buildings and other improvements on the Mortgaged Premises, Mortgagor shall
carry or cause to be carried builder's risk insurance which names Mortgagee as a
loss payee as its interests may appear. The Mortgagor shall also carry
comprehensive general or public liability insurance with reference to the
Mortgaged Premises, which names Mortgagee as an additional insured. All such
policies shall provide that the same may not be canceled or terminated without
giving Mortgagee at least 30 days' prior written notice of such cancellation or
termination.
(b) The Mortgagor shall deliver to Mortgagee at its principal
office aforesaid or at such other place as may be designated by the holder
hereof such insurance policies or, if Mortgagee consents, certificates
evidencing such policies. Renewals thereof shall likewise be delivered to
Mortgagee at least 15 days before the expiration of any existing policies.
Should Mortgagor fail to insure or fail to pay the premiums on any such
insurance or fail to deliver the policies or renewals thereof as provided above,
Mortgagee at its option may have such insurance written or renewed and pay the
premiums thereon for the account of Mortgagor.
(c) In the event of loss or damage, the proceeds of said property
and builders' risk insurance on the buildings and improvements shall be paid to
Mortgagee alone. No such loss or damage shall itself reduce the Mortgage
Indebtedness. The Mortgagee is authorized to adjust and compromise such loss
without the consent of Mortgagor, to collect, receive and receipt for such
proceeds in the name of Mortgagee and Mortgagor and to endorse Mortgagor's name
upon any check in payment thereof. Such proceeds shall be applied first toward
reimbursement of all costs and expenses of Mortgagee in collecting said proceeds
and then toward payment of the Mortgage Indebtedness or any portion thereof,
whether or not then due or payable, or Mortgagee at its option may apply said
insurance proceeds, or any part thereof, to the repair or rebuilding of the
Mortgaged Premises. No such application of proceeds by Mortgagee toward
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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<PAGE> 7
payment of the Mortgage Indebtedness shall reduce the amount of the payments
required to be made on the Mortgage Indebtedness in accordance with its terms.
(d) In the event of a foreclosure of this Mortgage, the purchaser
of the Mortgaged Premises shall succeed to all of the rights of Mortgagor under
said insurance policies payable to Mortgagee, including any right to unearned
premiums and the right to receive the proceeds of any insurance payable by
reason of any loss theretofore or thereafter occurring.
8. Eminent Domain. Notwithstanding any taking under the power of
eminent domain, alteration of the grade of any street, or other injury to or
decrease in value of the Mortgaged Premises by any public or quasi-public
authority or corporation, Mortgagor shall continue to pay the Mortgage
Indebtedness in accordance with the terms of the Notes, and any reduction in the
principal sum resulting from the application by Mortgagee of such award or
payment as hereinafter set forth shall be deemed to take effect only upon the
receipt by Mortgagee of such award. The Mortgagor hereby assigns the entire
proceeds of any award or payment to Mortgagee. The Mortgagee is authorized to
commence, appear in and prosecute, in its own or in Mortgagor's name, any action
or proceeding relating to any such taking, and to settle or compromise any claim
in connection therewith. Such proceeds shall be applied first toward
reimbursement of all costs and expenses of Mortgagee in collecting said proceeds
and then toward payment of the Mortgage Indebtedness or any portion thereof,
whether or not then due or payable, or Mortgagee at its option may apply said
proceeds, or any part thereof, to the alteration, restoration or rebuilding of
the Mortgaged Premises. No such application of proceeds by Mortgagee toward
payment of the Mortgage Indebtedness shall reduce the amount of the payments
required to be made on the Mortgage Indebtedness in accordance with its terms.
9. Waste. The failure of Mortgagor to pay any taxes or assessments
assessed against the Mortgaged Premises, or any installment thereof, or any
premiums payable with respect to any insurance policy covering the Mortgaged
Premises, shall constitute waste, as provided by Act No. 236 of the Michigan
Public Acts of 1961 as amended (MCLA 600.2927). The Mortgagor further hereby
consents to the appointment of a receiver under said statute, should Mortgagee
elect to seek such relief thereunder.
10. Reimbursement of Advances by Mortgagee. The Mortgagor shall pay to
Mortgagee, upon demand, all sums expended by Mortgagee, or by a receiver
appointed at the request of Mortgagee, unless such sums shall be paid out of the
rents, income and profits from the Mortgaged Premises, (a) to pay insurance
premiums, taxes, assessments, water and sewer charges and other governmental
charges and impositions with respect to the Mortgaged Premises, (b) to maintain,
repair or improve the Mortgaged Premises, (c) to defend the lien of this
Mortgage as a lien against the Mortgaged Premises subject only to the Permitted
Encumbrances hereinabove expressly set forth, (d) to discharge any lien or
encumbrance affecting the Mortgaged Premises other than Permitted Encumbrances,
(e) to cure any default of Mortgagor under any lease or other agreement covering
the Mortgaged Premises, (f) to cure any default of
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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<PAGE> 8
Mortgagor hereunder or under any of the Loan Documents or (g) for or in
connection with any other action taken by Mortgagee to preserve the security of
this Mortgage or any other security for the Mortgage Indebtedness or to protect
any of Mortgagee's rights hereunder. All such expenditures as shall be made by
Mortgagee or such receiver or pursuant to any other provision of this Mortgage
or the other Loan Documents, including any reasonable attorneys' fees and
disbursements incurred by Mortgagee or such receiver in connection with the
foregoing, shall be payable upon demand and be secured by this Mortgage and
shall bear interest at the Overdue Rate set forth in the Credit Agreement.
11. Change in Taxes. In the event any tax shall be due or become due and
payable to the United States of America, the State of Michigan or any political
subdivision thereof with respect to the execution and delivery or recordation of
this Mortgage or any note or other instrument or agreement evidencing or
securing repayment of the Mortgage Indebtedness or the interest of Mortgagee in
the Mortgaged Premises, Mortgagor shall pay such tax at the time and in the
manner required by applicable law and Mortgagor shall hold Mortgagee harmless
and shall indemnify Mortgagee against any liability of any nature whatsoever as
a result of the imposition of any such tax.
In the event of the passage after the date of this Mortgage of any law in
the State of Michigan deducting from the value of real property for purposes of
taxation any lien thereon, or changing in any way the laws now in force for the
taxation of mortgages or debts secured thereby (including the interest thereon)
for state or local purposes, or changing the manner of collection of any such
taxes, and imposing a tax, either directly or indirectly, on this Mortgage, the
Notes or any of the other Loan Documents, the holder of this Mortgage shall have
the right to declare the entire unpaid amount of the Mortgage Indebtedness,
together with accrued and unpaid interest thereon, to be due and payable on a
date to be specified by not less than 30 days' written notice to Mortgagor,
provided, however, that such election shall not be effective if Mortgagor is
permitted by law to pay the whole of such tax in addition to all other payments
required thereunder and if Mortgagor, prior to such specified date, makes
payment of such tax then due and agrees to pay any such tax when thereafter
levied or assessed against the Mortgaged Premises, this Mortgage, the Notes or
any of the other Loan Documents.
12. Events of Default. The occurrence of any of the following events
shall be deemed an "Event of Default" hereunder and shall entitle Mortgagee to
exercise its remedies hereunder and under any of the other Loan Documents or as
otherwise provided by law:
(a) Nonpayment of any of the Mortgage Indebtedness when due,
beyond any period of grace, if any, provided with respect thereto and after the
giving of any required notice;
(b) The failure of the Mortgagor to perform or observe any
material term or covenant contained in this Mortgage and such failure shall
remain unremedied for 30 calendar days after the earlier of (i) written notice
thereof shall have been given to the Mortgagor from the
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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<PAGE> 9
Mortgagee and (ii) when the Mortgagor otherwise had knowledge of such failure,
unless the Mortgagor is diligently pursuing to cure such failure to the
reasonable satisfaction of the Mortgagee;
(c) Any representation or warranty made by Mortgagor in this
Mortgage shall prove to have been false or misleading in any material respect
when made; or
(d) The occurrence of any Event of Default (as defined in the
Credit Agreement) under the Credit Agreement.
13. Remedies upon Default; Power of Sale. Immediately upon the
occurrence of any Event of Default after applicable notice and grace periods
have elapsed, Mortgagee shall have the option, in addition to and not in lieu of
or substitution for all other rights and remedies provided in this Mortgage or
any other Loan Documents or provided by law, and is hereby authorized and
empowered by Mortgagor, to do any or all of the following:
(a) Declare the entire unpaid amount of the Mortgage Indebtedness,
together with accrued and unpaid interest thereon, and any and all charges
payable by Mortgagor to Mortgagee pursuant to any of the Loan Documents,
immediately due and payable and, at Mortgagee's option, (i) to bring suit
therefor, or (ii) to bring suit for any delinquent payment of or upon the
Mortgage Indebtedness, or (iii) to take any and all steps and institute any and
all other proceedings that Mortgagee deems necessary to enforce payment of the
Mortgage Indebtedness and performance of other obligations secured hereunder and
to protect the lien of this Mortgage.
(b) Commence foreclosure proceedings against the Mortgaged
Premises through judicial proceedings or by advertisement, at the option of
Mortgagee, pursuant to the applicable statutes in such case made and provided,
and to sell the Mortgaged Premises or to cause the same to be sold at public
sale, and to convey the same to the purchaser in accordance with said statutes
in a single parcel or in several parcels at the option of Mortgagee.
(c) Cause to be brought down to date an abstract or abstracts and
tax histories of the Mortgaged Premises, procure title insurance or title
reports or, if necessary, procure new abstracts and tax histories.
(d) Obtain a receiver to manage the Mortgaged Premises and collect
the rents, profits and income therefrom.
(e) In the event of any sale of the Mortgaged Premises by
foreclosure, through judicial proceedings, by advertisement or otherwise, apply
the proceeds of any such sale in the order following to: (i) all expenses
incurred for the collection of the Mortgage Indebtedness and the foreclosure of
this Mortgage, including reasonable attorneys' fees and disbursements, or such
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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<PAGE> 10
attorneys' fees and disbursements as are permitted by law, (ii) all sums
expended or incurred by Mortgagee directly or indirectly in carrying out the
terms, covenants and agreements of the Notes, this Mortgage and the other Loan
Documents, together with interest thereon as therein provided, (iii) all accrued
and unpaid interest upon the Mortgage Indebtedness, (iv) the unpaid principal
amount of the Mortgage Indebtedness, and (v) the surplus, if any there be,
unless a court of competent jurisdiction decrees otherwise, to Mortgagor.
14. Successors in Ownership. In the event ownership of the Mortgaged
Premises or any part thereof becomes vested in a person or persons other than
Mortgagor without the prior written approval of Mortgagee, Mortgagee may (but
shall not be obligated to) deal with such successor or successors in interest
with reference to this Mortgage and the other Loan Documents in the same manner
as with Mortgagor, without in any manner discharging or otherwise affecting
Mortgagor's liability hereunder or upon the Mortgage Indebtedness.
15. Personal Property. (a) The Mortgagor represents and warrants that
Mortgagor owns all presently owned Equipment and other personal property
described in this Mortgage free and clear of any and all liens and security
interests except for the lien and security interest granted by this Mortgage and
Permitted Encumbrances and any Liens permitted by the terms of the Credit
Agreement. The Mortgagor further represents and warrants that, as to Equipment
and other personal property hereafter acquired, Mortgagor will own all such
Equipment and other personal property at the time it is brought on the Land and
thereafter free and clear of any and all liens and security interests except for
the lien and security interest granted by this Mortgage, any other security
instrument or agreement in favor of Mortgagee, and Permitted Encumbrances and
any Liens permitted by the terms of the Credit Agreement.
(b) The Mortgagor does hereby grant a security interest to
Mortgagee pursuant to the Uniform Commercial Code in any Equipment and other
personal property covered hereby. The Mortgagor agrees, upon request of
Mortgagee, to furnish an inventory of personal property owned by Mortgagor and
subject to this Mortgage and, upon request by Mortgagee, to execute any
supplements to this Mortgage, any separate security agreement and any financing
statements to include specifically said inventory of personal property. Upon the
occurrence of an Event of Default, Mortgagee shall have all of the rights and
remedies therein provided or otherwise provided by law or by this Mortgage,
including but not limited to the right to require Mortgagor to assemble such
personal property and make it available to Mortgagee at a place to be designated
by Mortgagee which is reasonably convenient to both parties, the right to take
possession of such personal property with or without demand and with or without
process of law and the right to sell and dispose of the same and distribute the
proceeds according to law. The parties hereto agree that any requirement of
reasonable notice shall be met if Mortgagee sends such notice to Mortgagor at
least five (5) days prior to the date of sale, disposition or other event giving
rise to the required notice, and that the proceeds of any disposition of any of
such personal property may be applied by Mortgagee first to the reasonable
expenses in connection
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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<PAGE> 11
therewith, including reasonable attorneys' fees and disbursements and then to
payment of the Mortgage Indebtedness.
16. Assignment of Leases and Rents. As of the date of this Mortgage,
Mortgagor hereby assigns to Mortgagee all its right, title and interest in and
to all written and oral leases, whether now in existence or which may hereafter
come into existence during the term of this Mortgage, or any extension hereof,
covering the Mortgaged Premises or any part thereof (but without an assumption
by Mortgagee of liabilities of Mortgagor under any such leases by virtue of this
assignment), and Mortgagor hereby assigns to Mortgagee the rents, issues and
profits of the Mortgaged Premises. Until the occurrence of an Event of Default,
Mortgagor shall have the right to receive and collect such rents, issues and
profits. Upon the occurrence of an Event of Default, Mortgagee may elect upon
written notice to Mortgagor to receive and collect said rents, issues and
profits personally or through a receiver so long as any such Event of Default
shall exist and during the pendency of any foreclosure proceedings and during
any redemption period, and Mortgagor hereby consents to the appointment of a
receiver if believed necessary or desirable by Mortgagee to enforce its rights
under this paragraph 16. The Mortgagee shall be entitled to all of the rights
and benefits conferred by Act No. 210 of the Michigan Public Acts of 1953 as
amended by Act No. 151 of the Michigan Public Acts of 1966 (MCL 554.231 et
seq.), and Act No. 228 of the Michigan Public Acts of 1925 as amended by Act No.
55 of the Michigan Public Acts of 1933 (MCL 554.211 et seq.). The collection of
rents by Mortgagee shall in no way waive the right of Mortgagee to foreclose
this Mortgage in the event of any Event of Default.
17. Prohibition of Transfer and Further Encumbrances. Except as
permitted under the Credit Agreement, the Mortgagor shall not, without the prior
written consent of Mortgagee, permit or suffer the Mortgaged Premises, or any
part thereof, to be sold, assigned, transferred or encumbered in any way,
whether by operation of law or otherwise. The preceding sentence shall not apply
to transfers of ownership in Mortgagor resulting from the death of a natural
person, transfers by a natural person to a member or members of such person's
immediate family or transfers by a natural person in connection with bona fide
estate planning.
18. Severability. If any provision hereof is in conflict with any
statute or rule of law of the State of Michigan or is otherwise unenforceable
for any reason whatsoever, then such provision shall be deemed null and void to
the extent of such conflict or unenforceability and shall be deemed severable
from but shall not invalidate any other provisions of this Mortgage.
19. Environmental Matters. The representations, warranties, covenants
and agreements made by the Mortgagor to the Mortgagee in the Environmental
Certificate delivered by the Mortgagor to the Mortgagee in connection with the
execution of this Mortgage are incorporated herein by reference. The Mortgagor
agrees that any default under the terms of the Environmental Certificate will
constitute a default under this Mortgage.
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
- 11 -
<PAGE> 12
20. Waiver. No waiver by Mortgagee of any right or remedy granted
hereunder or failure to insist on strict performance by Mortgagor hereunder
shall affect or extend to or act as a waiver of any other right or remedy of
Mortgagee hereunder, nor affect the subsequent exercise of the same right or
remedy by Mortgagee for any further or subsequent default by Mortgagor
hereunder, and all such rights and remedies of Mortgagee hereunder are
cumulative.
21. Marshalling. The Mortgagor hereby waives, in the event of
foreclosure of this Mortgage or the enforcement by the Mortgagee of any other
rights and remedies hereunder, any right otherwise available in respect to
marshalling of assets which secure the Mortgage Indebtedness or to require
Mortgagee to pursue its remedies against any other such assets.
22. POWER OF SALE; WAIVER OF NOTICE AND HEARING ON FORECLOSURE. THIS
MORTGAGE CONTAINS A POWER OF SALE AND UPON THE OCCURRENCE OF AN EVENT OF DEFAULT
MAY BE FORECLOSED BY ADVERTISEMENT. IN FORECLOSURE BY ADVERTISEMENT AND THE SALE
OF THE MORTGAGED PREMISES IN CONNECTION THEREWITH NO HEARING IS REQUIRED AND THE
ONLY NOTICE REQUIRED IS THE PUBLICATION OF NOTICE IN A LOCAL NEWSPAPER AND THE
POSTING OF A COPY OF THE NOTICE ON THE PREMISES. THE MORTGAGOR HEREBY WAIVES ALL
RIGHTS UNDER THE CONSTITUTION AND LAWS OF THE UNITED STATES AND THE STATE OF
MICHIGAN TO A HEARING PRIOR TO SALE IN CONNECTION WITH FORECLOSURE OF THIS
MORTGAGE BY ADVERTISEMENT AND ALL NOTICE REQUIREMENTS EXCEPT AS SET FORTH IN THE
MICHIGAN STATUTE PROVIDING FOR FORECLOSURE BY ADVERTISEMENT.
23. Further Instruments. The Mortgagor shall execute, acknowledge and
deliver any and all such further conveyances, documents, mortgages and
assurances, and do or cause to be done all such further acts, as Mortgagee may
reasonably require to confirm and protect the lien of this Mortgage or otherwise
to accomplish the purposes hereof forthwith upon the request of Mortgagee,
whether in writing or otherwise.
24. Notices. All notices, demands, requests, consents and other
communications shall be delivered and shall be effective in the manner
specified in the Credit Agreement.
25. Governing Law; Binding Effect; Definitions. This Mortgage, made in
the State of Michigan, shall be construed according to the laws thereof and
shall be binding upon Mortgagor and its successors and assigns and any
subsequent owners of the Mortgaged Premises, and all of the covenants herein
contained shall run with the land, and this Mortgage and all of the covenants
herein contained shall inure to the benefit of Mortgagee, its successors and
assigns. Terms used but not defined herein shall have the meanings ascribed
thereto in the Credit Agreement.
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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<PAGE> 13
26. Headings. The headings in this Mortgage are for convenience of
reference only and shall not limit or otherwise affect the meaning of any
provision of this Mortgage.
27. Fixture Filing. This Mortgage also constitutes a financing statement
filed as a fixture filing under the Uniform Commercial Code with respect to
goods which are or are to become fixtures relating to the Land and as to which
Mortgagor is the debtor and record owner of the Land and Mortgagee is the
secured party. It is to be recorded in the real estate records of the County in
which the Land is located.
28. Future Advance Mortgage. This Mortgage secures future advances and
is a future advance mortgage under Act No. 348 of the Michigan Public Acts of
1990 (MCL 565.901 et seq). All future advances under the Notes, this Mortgage
and the other Loan Documents shall have the same priority as if the future
advance was made on the date that this Mortgage was recorded.
29. Use of Insurance and Condemnation Proceeds. Notwithstanding any
other provision of this Mortgage, all insurance proceeds recovered by the
Mortgagee on account of damage or destruction to the Mortgaged Premises and all
proceeds of any condemnation award recovered by the Mortgagee for any building
or equipment taken or damaged, less the cost, if any, to the Mortgagee of such
recovery and of paying out such proceeds (including attorneys' fees and costs
allocable to inspecting the work and the plans and specifications therefor),
shall, upon the written request of the Mortgagor, be applied by the Mortgagee to
the payment of the cost of repairing, restoring or rebuilding the improvements
on the Mortgaged Premises so damaged or destroyed or of the portion or portions
of the Mortgaged Premises not so taken (hereinafter referred to as the "work")
and shall be paid out from time to time to the Mortgagor as the work progresses,
but subject to the Mortgagee's standard requirements for construction loans of
similar nature and subject to the following conditions:
(a) There shall be no Event of Default under this Mortgage or
any of the other Loan Documents; and
(b) The request for any payment after the work has been completed
shall be accompanied by a copy of any certificate or certificates required by
law to render occupancy of the Mortgaged Premises legal.
Upon the completion of the work and payment in full therefore, or
upon any failure on the part of the Mortgagor promptly to commence or continue
the work, or at any time upon request by the Mortgagor, the Mortgagee may, at
its option, either apply the amount of any such proceeds then or thereafter in
the hands of the Mortgagee to the payment of the Mortgage Indebtedness or any
portion thereof, whether or not then due and payable, or remit such amount to
the Mortgagor.
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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<PAGE> 14
IN WITNESS WHEREOF, Mortgagor has duly executed this Mortgage as of the
day and year first above written.
Signed in the presence of: KEY PLASTICS, INC.
/s/ Mary S. Kershner By: /s/ Mark J. Abbo
- ---------------------------------- --------------------------------
Print Name: Mary S. Kershner Mark J. Abbo
----------------------- Its: Treasurer and Assistant Secretary
/s/ Mi Young Lee
- ---------------------------------
Print Name: Mi Young Lee
----------------------
STATE OF MICHIGAN )
)SS.
COUNTY OF WAYNE )
The foregoing instrument was acknowledged before me on this 24th day of
March, 1997, by Mark J. Abbo, the Treasurer and Assistant Secretary of Key
Plastics, Inc., a Michigan corporation, on behalf of said corporation.
/s/ Janice K. Atkins
- ---------------------
Notary Public, Janice K. Atkins
-------------------------------
Notary Public, Wayne County, MI
Acting in ___________________ County
My Commission Expires: Aug 25 1998
- -------------
Drafted by and when recorded return to:
Mi Young Lee, Esq.
Dickinson, Wright, Moon,
Van Dusen & Freeman
500 Woodward Avenue, Suite 4000
Detroit, Michigan 48226
(313) 223-3500
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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<PAGE> 15
EXHIBIT A
Legal Description of Land
Situated in the Township of Plymouth, Wayne County, Michigan, described as:
Part of the east 1/2 of section 25, town 1 south, range 8 east, being more
particularly described as: Commencing at the north 1/4 corner of said section
25, thence south 01 degree 58 minutes 06 seconds east along the north-south 1/4
line of said section, 76.77 feet (49.5 feet recorded) to the south line of the
Chesapeake and Ohio Railroad Right of Way; thence north 88 degrees 59 minutes
20 seconds east along said south right of way line 232.32 feet to the point of
beginning; thence continuing north 88 degrees 59 minutes 20 seconds east along
said south right of way, 565.39 feet to a point of a curve; thence along a
curve to the right radius of 2815.43 feet through a central angle of 03 degrees
18 minutes 40 seconds arc distance of 162.69 feet, chord bearing south 89
degrees 21 minutes 20 seconds east 162.67 feet to the west line of "I-275"
Expressway; thence south 03 degrees 33 minutes 31 seconds east along said west
line 1172.85 feet to a monument (M.D.O.T. #33-82293); thence south 01 degree 37
minutes 45 seconds east along said west line 1704.49 feet to the north line of
Plymouth Road (70 feet half road right of way); thence north 75 degrees 37
minutes 31 seconds west along said north line 273.99 feet; thence south 14
degrees 22 minutes 29 seconds west 10.00 feet to the north line of Plymouth
Road (60 feet half road right of way); thence north 75 degrees 37 minutes 31
seconds west along said north line 396.61 feet; thence north 76 degrees 03
minutes 41 seconds west along said north line 24.11 feet; thence north 02
degrees 22 minutes 25 seconds west 1508.00 feet; thence north 88 degrees 19
minutes 32 seconds east 540.69 feet (540.46 feet recorded); thence north 01
degree 34 minutes 42 seconds west 788.47 feet (788.42 feet recorded); to a point
of curve; thence along a curve to the left, radius of 379.25 feet, through a
central angle 89 degrees 44 minutes 22 seconds arc distance of 594.00 feet,
chord bearing north 46 degrees 26 minutes 53 seconds west 535.12 feet (534.69
feet recorded); thence south 88 degrees 40 minutes 56 seconds west 241.02 feet
(241.18 feet recorded); thence north 02 degrees 23 minutes 04 seconds west 29.83
feet to the point of beginning.
Tax Parcel No. 78-025-99-0006-000
------------------
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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<PAGE> 16
EXHIBIT B
Permitted Encumbrances
(Plymouth, Michigan)
1. Mortgage and Security Agreement in the face amount of $4,500,000.00
executed by Key Plastics, Inc., a Michigan corporation, to The Economic
Development Corporation of the Charter Township of Plymouth (the "EDC")
and to Manufacturers National Bank of Detroit (now Comerica Bank), as
co-mortgagees, dated December 1, 1987 and recorded December 23, 1987 in
liber 23562, page 754 Wayne County Records; which interests of the EDC
were assigned to First Trust National Association (as successor to
Comerica Bank-Detroit), as trustee, pursuant to an Assignment of
Mortgage and Security Agreement dated December 1, 1987 and recorded
December 23, 1987 in Liber 13562, Page 772; and all right, title and
interest of Comerica Bank under which have been assigned to NBD Bank
pursuant to the Assignment of Mortgage and Security Agreement dated as
of March __, 1997 and recorded on _______________, 1997 in liber ___,
page ___ Wayne County Records; and as amended by the First Amendment to
Mortgage and Security Agreement among Key Plastics, Inc., NBD Bank and
First Trust National Association, as trustee, dated as of March __, 1997
and recorded on _________, 1997 in liber ____, page ____ Wayne County
Records.
2. Uniform Commercial Code-Fixture Filing and Financing Statement filed and
recorded December 23, 1987 in liber 23562, page 775 Wayne County
Records, Key Plastics, Inc. as Debtor, to The Economic Development
Corporation of the Charter Township of Plymouth, which has been
continued in liber 26248, page 762, Wayne County Records. NOTE: Said
Financing Statement has been assigned on its face to Comerica
Bank-Detroit, now known as Comerica Bank, as trustee.
3. Uniform Commercial Code-Fixture Filing and Financing Statement filed and
recorded December 23, 1987 in liber 23562, page 792 Wayne County
Records, Key Plastics, Inc. as Debtor, to Manufacturers National Bank of
Detroit, now known as Comerica Bank, as Secured Party, which has been
continued in liber 25899, page 281, Wayne County Records, and amended in
liber 26163, page 894, Wayne County Records, as assigned to NBD Bank, as
agent pursuant to the assignment filed in liber ____, page ____, Wayne
County Records.
4. Subject to a Right-of-Way in favor of The Detroit Edison Company over
subject property as recorded in Register No. B-137405, Wayne County
Records.
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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<PAGE> 17
5. Subject to the Interest of Consumers Power Company as to underground gas
storage as recorded in liber 16572, page 230 and re-recorded in liber
16589, page 622 and in liber 19465, page 490, Wayne County Records.
6. Subject to a Pipeline Easement in favor of Consumers Power Company over
subject property as recorded in liber 16572, page 902, Wayne County
Records.
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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<PAGE> 18
SCHEDULE TO MORTGAGE, SECURITY AGREEMENT
AND ASSIGNMENT OF RENTS
1. The Revolving Credit Loan is payable on September 24, 2003.
2. The Term Loan is payable in 30 consecutive quarterly installments on the
last Business Day of each March, June, September and December,
commencing with the last Business Day of June, 1997, as follows: (i)
twenty-six quarterly principal installments of $75,000 each for the
first twenty-six quarterly payments and (ii) four principal installments
of $3,262,500 each for the next four quarterly installments, and on
September 24, 2004.
<PAGE> 19
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
(CHESTERFIELD TOWNSHIP, MICHIGAN)
THIS MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS, dated as of
March 28, 1997 by KEY PLASTICS, INC., a Michigan corporation, whose address is
21333 Haggerty Road, Suite 200, Novi, Michigan 48375 (the "Mortgagor"), to NBD
BANK, a Michigan banking corporation, whose address is 611 Woodward Avenue,
Detroit, Michigan 48226 (the "Mortgagee"), as agent for the benefit of itself
and the lenders (the "Lenders") which are parties to the Credit Agreement
defined below.
RECITALS:
A. The Mortgagor has entered into a Credit Agreement dated as of March
24, 1997 (as amended or modified from time to time, including any agreement
entered into in substitution therefor, the "Credit Agreement") pursuant to which
the Lenders agreed, subject to the terms and conditions thereof, to extend
credit to the Mortgagor up to a maximum principal amount outstanding at any time
equal to One Hundred and Forty Million and No/100 Dollars ($140,000,000.00)
maturing on or before September 24, 2004 in accordance with the Schedule
attached hereto, as such date may be extended by agreement of the parties to the
Credit Agreement.
B. As a condition to the effectiveness of the obligations of the
Mortgagee and the Lenders under the Credit Agreement, the Mortgagor is
obligated, among other things, to grant a lien on the mortgaged premises
hereinafter described.
WITNESSETH:
NOW, THEREFORE, to secure (a) the prompt and complete payment of all
Indebtedness and other obligations of the Mortgagor or any Subsidiary now or
hereafter owing to the Lenders or the Mortgagee under or on account of the
Credit Agreement, any Security Document or any letters or credit, notes or other
instruments issued to the Mortgagee or the Lenders pursuant thereto, (b) the
performance of the covenants under the Credit Agreement and the Security
Documents and any monies expended by any Lender or the Mortgagee in connection
therewith, and (c) the prompt and complete payment of all obligations and
performance of all covenants of the Mortgagor or any Subsidiary in connection
with Swaps relating to Indebtedness under the Loan Documents (including any
interest accruing subsequent to any petition filed by or against the Mortgagor
or any Subsidiary under the U.S. Bankruptcy Code, whether or not allowed),
indemnity and reimbursement obligations, charges, expenses, fees, reasonable
attorneys' fees and disbursements and any other amounts owing thereunder (all of
the aforesaid Indebtedness, obligations and liabilities of the Mortgagor and its
Subsidiaries being herein called the "Mortgage Indebtedness" and this Mortgage
and all of the other documents, agreements and instruments among the Mortgagor,
the Subsidiaries, the Lenders, the Mortgagee or any of them, evidencing or
securing the repayment of, or otherwise pertaining to, the Mortgage
Indebtedness, including without limitation the Credit Agreement, the Notes and
the Security Documents, being herein
<PAGE> 20
collectively called the "Loan Documents"), the Mortgagor does hereby MORTGAGE
and WARRANT unto the Mortgagee, and its successors and assigns, the following
described property (the "Mortgaged Premises"):
(A) the land situated in the Township of Chesterfield, County of Macomb
and State of Michigan, more specifically described in Exhibit A hereto (the
"Land");
(B) all easements, rights-of-way, licenses and privileges, thereunto
belonging or in anywise appertaining, including without limitation all
Mortgagor's right, title and interest in and to those easements, rights-of-way,
licenses and privileges described in Exhibit A hereto, if any;
(C) all buildings and improvements now or hereafter situated upon the
Land or any part thereof;
(D) to the extent, if any, of Mortgagor's interests thereon, all
minerals, royalties, gas rights, water, water rights, water stock, flowers,
shrubs, lawn plants, crops, trees, timber and other emblements now or hereafter
located on, under or above all or any part of the Land;
(E) all and singular the tenements, hereditament and appurtenances
belonging or in anywise appertaining to the Land, and the reversion or
reversions, remainder and remainders thereof; and also all the estate, right,
title, interest, property, claim and demand whatsoever of Mortgagor, of, in and
to the same and of, in and to every part and parcel thereof;
(F) all the rents, issues and profits thereof under present or future
leases, or otherwise, which are hereby specifically assigned, transferred and
set over to Mortgagee, including, but not limited to, all rights conferred by
Act No. 210 of the Michigan Public Acts of 1953 as amended by Act No. 151 of the
Michigan Public Acts of 1966 (MCL 554.231 et seq.), and Act No. 228 of the
Michigan Public Acts of 1925 as amended by Act No. 55 of the Michigan Public
Acts of 1933 (MCL 554.211 et seq.) and including, but not limited to, all cash
or securities deposited under any such leases to secure performance by the
tenants of their obligations thereunder, whether said cash or securities are to
be held until the expiration of the terms of such leases or applied to one or
more of the installments of rent coming due thereunder;
(G) all right, title and interest of Mortgagor, if any, in and to the
land lying in the bed of any street, road, avenue, alley or walkway, opened or
proposed or vacated, or any strip or gore, in front of or adjoining the Land;
(H) all machinery, apparatus, equipment, fittings, fixtures, and
articles of personal property of every kind and nature whatsoever, other than
consumable goods, now or hereafter located in or upon the Land or any part
thereof and used or useable in connection with any present or future operation
of the Land or any building or buildings now or hereafter on the Land and now
owned or hereafter acquired by Mortgagor (all of which is herein called
"Equipment"),
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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including, but without limiting the generality of the foregoing, all lighting,
heating, cooling, ventilating, air-conditioning, incinerating, refrigerating,
plumbing, sprinkling, communicating and electrical systems, and the machinery,
appliances, fixtures and equipment pertaining thereto, it being understood and
agreed that all Equipment is part and parcel of the Land and appropriated to the
use of said real estate and, whether affixed or annexed or not, shall for the
purposes of this Mortgage, unless Mortgagee shall otherwise elect, be deemed
conclusively to be real estate and mortgaged hereby; and
(I) any and all awards or payments, including interest thereon, and the
right to receive the same, which may be made with respect to the Land and are or
will be payable to Mortgagor as a result of (a) the exercise of the right of
eminent domain, (b) the alteration of the grade of any street, (c) any loss of
or damage to any building or other improvement on the Land, (d) any other injury
to or decrease in the value of the Land or (e) any refund due on account of the
payment of real estate taxes, assessments or other charges levied against or
imposed upon the Land, to the extent of all amounts which may be secured by this
Mortgage at the date of receipt of any such award or payment by Mortgagee, and
of the reasonable counsel fees, costs and disbursements incurred by Mortgagee in
connection with the collection of such award or payment, Mortgagor hereby
agreeing to execute and deliver, from time to time, such further instruments as
may be reasonably requested by Mortgagee to confirm such assignment to Mortgagee
of any such award or payment.
TO HAVE AND TO HOLD the Mortgaged Premises, and each and every part
thereof, unto Mortgagee and its successors and assigns forever. Any reference
herein to the "Mortgaged Premises" shall, unless the context shall require
otherwise, be deemed to include and apply to the above described Land and said
buildings, improvements, Equipment, rents, issues, profits, leases, easements,
tenements, hereditament and appurtenances and all other rights, privileges and
interests hereinabove described.
SUBJECT only to those matters set forth in Exhibit B hereto ("Permitted
Encumbrances").
AND Mortgagor does hereby covenant and warrant as follows:
1. Payment of Mortgage Indebtedness; Performance of Agreements. The
Mortgagor shall pay the principal of and interest on the Mortgage Indebtedness
according to the terms thereof, and will keep and perform all the covenants,
promises and agreements on its part to be performed in any and all Loan
Documents, all in the manner herein or therein set forth.
2. Covenants of Title. The Mortgagor has good and indefeasible title to
the Land in fee simple and has good and indefeasible title to the entire
Mortgaged Premises and with good right and full power to sell, mortgage and
convey the Mortgaged Premises, the Mortgaged Premises are free and clear of
liens and encumbrances except Permitted Encumbrances, whether
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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presently existing or which may hereafter be created in accordance with the
terms hereof, and Mortgagor will warrant and defend the Mortgaged Premises
against all lawful claims and demands whatsoever. The Mortgagee shall have the
right, at its option and at such time or times as it, in its sole discretion,
shall deem reasonably necessary, to take whatever action it may reasonably deem
necessary to defend or uphold the lien of this Mortgage or otherwise enforce any
of the rights of Mortgagee hereunder or any obligation secured hereby, including
without limitation, the right to institute appropriate legal proceedings for
such purposes.
3. Payment of Taxes, Assessments and Charges. The Mortgagor shall pay
when due, and before any interest, collection fees or penalties shall accrue,
all real estate taxes, special assessments, water and sewer charges or other
governmental charges and impositions levied or assessed with respect to the
Mortgaged Premises or any part thereof except to the extent that payment of any
of the foregoing is then being contested in good faith by appropriate legal
proceedings and with respect to which adequate financial reserves have been
established on the books and records of the Mortgagor. Should Mortgagor fail to
so pay such taxes, special assessments, water and sewer charges or other
governmental charges or impositions or establish such adequate financial
reserves, Mortgagee may, at its option, pay the same for the account of
Mortgagor.
4. Reserves for Taxes and Insurance Premiums. Upon the occurrence of
any Event of Default, Mortgagor shall pay to Mortgagee upon the request of
Mortgagee, installments of the taxes and assessments levied or to be levied upon
the Mortgaged Premises, and installments of the premiums that will become due
and payable to renew the insurance hereinafter provided, said installments to be
substantially equal and to be in such amount as will assure to Mortgagee that
not less than 30 days before the time when such taxes and premiums,
respectively, become due Mortgagor will have paid to Mortgagee a sufficient
amount to pay the same in full. Said amounts paid to Mortgagee hereunder need
not be segregated nor kept in a separate fund, and no interest shall be payable
thereon. Said amounts shall be held by Mortgagee as additional security for the
Mortgage Indebtedness and, except as provided in the following sentence, be
applied to the payment of said taxes and assessments when the same become due
and payable. Mortgagee may, at its option, but without any obligation on its
part so to do, apply said amounts upon said taxes and assessments or insurance
premiums or toward the payment of the Mortgage Indebtedness or any portion
thereof, whether or not then due or payable. The Mortgagee shall endeavor to
notify the Mortgagor of how such amounts were applied, provided however that the
failure to give such notice shall not affect Mortgagee's rights under this
Mortgage.
Upon an assignment of the Mortgage, Mortgagee shall have the right to pay
over the balance of such deposits in its possession to the assignee and
Mortgagee shall thereupon be completely released from all liability with respect
to such deposits and Mortgagor or owner of the Mortgaged Premises shall look
solely to the assignee or transferee in reference thereto. This provision shall
apply to every transfer of such deposits to a new assignee. Upon full payment
and satisfaction of the Mortgage Indebtedness or at any prior time upon the
election of
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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Mortgagee, the balance of the unapplied deposits in its possession shall be paid
over to the record owner of the Mortgaged Premises and no other party shall have
any right or claim thereto in any event, provided that in the event of a
foreclosure of the Mortgaged Premises, the purchaser at such foreclosure shall
have the right to receive such unapplied deposits. The Mortgagor agrees, at
Mortgagee's request, to deliver the aforesaid deposits to such service or
financial institution as Mortgagee shall from time to time designate.
5. Payment of Other Obligations. The Mortgagor shall also pay any and
all other obligations, liabilities or debts which may become liens, security
interests, or encumbrances upon or charges against the Mortgaged Premises for
any repairs or improvements that are now completed or are in progress or which
may hereafter be made thereon, or for any other goods, services, or utilities
furnished to the Mortgaged Premises, and shall not permit any lien, security
interest, encumbrance or charge of any kind securing the repayment of borrowed
funds (including the deferred purchase price for any property) to accrue and
remain outstanding against the Mortgaged Premises or any part thereof, or any
improvements thereon other than Permitted Encumbrances, if any, except to the
extent that payment of any of the foregoing is then being contested in good
faith by appropriate legal proceedings and with respect to which adequate
financial reserves have been established on the books and records of the
Mortgagor.
6. Maintenance and Repair; Compliance with Laws; Inspection. The
Mortgagor will keep the Land and all the improvements thereon in good order and
repair, and Mortgagor expressly agrees that it will not do or permit waste on
the Land nor do any other act whereby the Mortgaged Premises will become less
valuable or the lien hereof may be impaired. Should Mortgagor fail to effect the
necessary repairs and such failure shall remain unremedied for 20 calendar days
after written notice thereof shall have been given to the Mortgagor by the
Mortgagee, Mortgagee may at its option make such repairs for the account of
Mortgagor. The Mortgagor will promptly comply, and cause the Mortgaged Premises
and the occupants or users thereof to comply, with all present and future laws,
ordinances, orders, rules and regulations and other requirements of any
governmental authority affecting the Mortgaged Premises or any part thereof or
the use or occupancy thereof and with all instruments and documents of record or
otherwise affecting the Mortgaged Premises, or any part thereof, or the use or
occupancy thereof. The Mortgagee, and any person authorized by Mortgagee, shall
have the right to enter upon and inspect the Mortgaged Premises at all
reasonable times and with reasonable notice.
7. Insurance. (a) The Mortgagor shall keep the buildings and other
improvements on the Land, or which may hereafter be erected thereon, constantly
insured for the benefit of Mortgagee with such company or companies as may be
reasonably acceptable to Mortgagee and in an amount reasonably satisfactory to
Mortgagee, which amount shall not be less than 100% of the then full replacement
cost of such building and improvements (exclusive of excavations, foundations
and footings), which policies shall be without deduction for depreciation and be
subject to the payment of a deductible not in excess of an amount reasonably
satisfactory to Mortgagee, until the Mortgage Indebtedness and all interest
thereon and all of the amounts due
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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<PAGE> 24
hereunder are fully paid, against fire and such other hazards and risks
customarily covered by the standard form of "extended coverage" endorsements
available in the State of Michigan, and shall further provide flood insurance
(if the Mortgaged Premises are situated in an area designated as a flood hazard
area by the Director of the Federal Emergency Management Agency or as otherwise
required by the Flood Disaster Protection Act of 1973 and regulations issued
thereunder), rent insurance in an amount not less than one year's gross rent
derived from the Mortgaged Premises, and such other appropriate insurance as
Mortgagee may reasonably require from time to time. All such policies shall
include standard mortgagee clauses in favor of Mortgagee and shall provide that
the proceeds thereof shall be paid to Mortgagee, all as may be satisfactory to
Mortgagee. During any construction, repair or restoration of the buildings and
other improvements on the Mortgaged Premises, Mortgagor shall carry or cause to
be carried builder's risk insurance which names Mortgagee as a loss payee as its
interests may appear. The Mortgagor shall also carry comprehensive general or
public liability insurance with reference to the Mortgaged Premises, which names
Mortgagee as an additional insured. All such policies shall provide that the
same may not be canceled or terminated without giving Mortgagee at least 30
days' prior written notice of such cancellation or termination.
(b) The Mortgagor shall deliver to Mortgagee at its principal
office aforesaid or at such other place as may be designated by the holder
hereof such insurance policies or, if Mortgagee consents, certificates
evidencing such policies. Renewals thereof shall likewise be delivered to
Mortgagee at least 15 days before the expiration of any existing policies.
Should Mortgagor fail to insure or fail to pay the premiums on any such
insurance or fail to deliver the policies or renewals thereof as provided above,
Mortgagee at its option may have such insurance written or renewed and pay the
premiums thereon for the account of Mortgagor.
(c) In the event of loss or damage, the proceeds of said property
and builders' risk insurance on the buildings and improvements shall be paid to
Mortgagee alone. No such loss or damage shall itself reduce the Mortgage
Indebtedness. The Mortgagee is authorized to adjust and compromise such loss
without the consent of Mortgagor, to collect, receive and receipt for such
proceeds in the name of Mortgagee and Mortgagor and to endorse Mortgagor's name
upon any check in payment thereof. Such proceeds shall be applied first toward
reimbursement of all costs and expenses of Mortgagee in collecting said proceeds
and then toward payment of the Mortgage Indebtedness or any portion thereof,
whether or not then due or payable, or Mortgagee at its option may apply said
insurance proceeds, or any part thereof, to the repair or rebuilding of the
Mortgaged Premises. No such application of proceeds by Mortgagee toward payment
of the Mortgage Indebtedness shall reduce the amount of the payments required to
be made on the Mortgage Indebtedness in accordance with its terms.
(d) In the event of a foreclosure of this Mortgage, the purchaser
of the Mortgaged Premises shall succeed to all of the rights of Mortgagor under
said insurance policies payable to Mortgagee, including any right to unearned
premiums and the right to receive the proceeds of any insurance payable by
reason of any loss theretofore or thereafter occurring.
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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<PAGE> 25
8. Eminent Domain. Notwithstanding any taking under the power of
eminent domain, alteration of the grade of any street, or other injury to or
decrease in value of the Mortgaged Premises by any public or quasi-public
authority or corporation, Mortgagor shall continue to pay the Mortgage
Indebtedness in accordance with the terms of the Notes, and any reduction in the
principal sum resulting from the application by Mortgagee of such award or
payment as hereinafter set forth shall be deemed to take effect only upon the
receipt by Mortgagee of such award. The Mortgagor hereby assigns the entire
proceeds of any award or payment to Mortgagee. The Mortgagee is authorized to
commence, appear in and prosecute, in its own or in Mortgagor's name, any action
or proceeding relating to any such taking, and to settle or compromise any claim
in connection therewith. Such proceeds shall be applied first toward
reimbursement of all costs and expenses of Mortgagee in collecting said proceeds
and then toward payment of the Mortgage Indebtedness or any portion thereof,
whether or not then due or payable, or Mortgagee at its option may apply said
proceeds, or any part thereof, to the alteration, restoration or rebuilding of
the Mortgaged Premises. No such application of proceeds by Mortgagee toward
payment of the Mortgage Indebtedness shall reduce the amount of the payments
required to be made on the Mortgage Indebtedness in accordance with its terms.
9. Waste. The failure of Mortgagor to pay any taxes or assessments
assessed against the Mortgaged Premises, or any installment thereof, or any
premiums payable with respect to any insurance policy covering the Mortgaged
Premises, shall constitute waste, as provided by Act No. 236 of the Michigan
Public Acts of 1961 as amended (MCLA 600.2927). The Mortgagor further hereby
consents to the appointment of a receiver under said statute, should Mortgagee
elect to seek such relief thereunder.
10. Reimbursement of Advances by Mortgagee. The Mortgagor shall pay to
Mortgagee, upon demand, all sums expended by Mortgagee, or by a receiver
appointed at the request of Mortgagee, unless such sums shall be paid out of the
rents, income and profits from the Mortgaged Premises, (a) to pay insurance
premiums, taxes, assessments, water and sewer charges and other governmental
charges and impositions with respect to the Mortgaged Premises, (b) to maintain,
repair or improve the Mortgaged Premises, (c) to defend the lien of this
Mortgage as a lien against the Mortgaged Premises subject only to the Permitted
Encumbrances hereinabove expressly set forth, (d) to discharge any lien or
encumbrance affecting the Mortgaged Premises other than Permitted Encumbrances,
(e) to cure any default of Mortgagor under any lease or other agreement covering
the Mortgaged Premises, (f) to cure any default of Mortgagor hereunder or under
any of the Loan Documents or (g) for or in connection with any other action
taken by Mortgagee to preserve the security of this Mortgage or any other
security for the Mortgage Indebtedness or to protect any of Mortgagee's rights
hereunder. All such expenditures as shall be made by Mortgagee or such receiver
or pursuant to any other provision of this Mortgage or the other Loan Documents,
including any reasonable attorneys' fees and disbursements incurred by Mortgagee
or such receiver in connection with the foregoing, shall be payable upon demand
and be secured by this Mortgage and shall bear interest at the Overdue Rate set
forth in the Credit Agreement.
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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<PAGE> 26
11. Change in Taxes. In the event any tax shall be due or become due and
payable to the United States of America, the State of Michigan or any political
subdivision thereof with respect to the execution and delivery or recordation of
this Mortgage or any note or other instrument or agreement evidencing or
securing repayment of the Mortgage Indebtedness or the interest of Mortgagee in
the Mortgaged Premises, Mortgagor shall pay such tax at the time and in the
manner required by applicable law and Mortgagor shall hold Mortgagee harmless
and shall indemnify Mortgagee against any liability of any nature whatsoever as
a result of the imposition of any such tax.
In the event of the passage after the date of this Mortgage of any law in
the State of Michigan deducting from the value of real property for purposes of
taxation any lien thereon, or changing in any way the laws now in force for the
taxation of mortgages or debts secured thereby (including the interest thereon)
for state or local purposes, or changing the manner of collection of any such
taxes, and imposing a tax, either directly or indirectly, on this Mortgage, the
Notes or any of the other Loan Documents, the holder of this Mortgage shall have
the right to declare the entire unpaid amount of the Mortgage Indebtedness,
together with accrued and unpaid interest thereon, to be due and payable on a
date to be specified by not less than 30 days' written notice to Mortgagor,
provided, however, that such election shall not be effective if Mortgagor is
permitted by law to pay the whole of such tax in addition to all other payments
required thereunder and if Mortgagor, prior to such specified date, makes
payment of such tax then due and agrees to pay any such tax when thereafter
levied or assessed against the Mortgaged Premises, this Mortgage, the Notes or
any of the other Loan Documents.
12. Events of Default. The occurrence of any of the following events
shall be deemed an "Event of Default" hereunder and shall entitle Mortgagee to
exercise its remedies hereunder and under any of the other Loan Documents or as
otherwise provided by law:
(a) Nonpayment of any of the Mortgage Indebtedness when due,
beyond any period of grace, if any, provided with respect thereto and after the
giving of any required notice;
(b) The failure of the Mortgagor to perform or observe any
material term or covenant contained in this Mortgage and such failure shall
remain unremedied for 30 calendar days after the earlier of (i) written notice
thereof shall have been given to the Mortgagor from the Mortgagee and (ii) when
the Mortgagor otherwise had knowledge of such failure, unless the Mortgagor is
diligently pursuing to cure such failure to the reasonable satisfaction of the
Mortgagee;
(c) Any representation or warranty made by Mortgagor in this
Mortgage shall prove to have been false or misleading in any material respect
when made; or
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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(d) The occurrence of any Event of Default (as defined in the
Credit Agreement) under the Credit Agreement.
13. Remedies upon Default; Power of Sale. Immediately upon the
occurrence of any Event of Default after applicable notice and grace periods
have elapsed, Mortgagee shall have the option, in addition to and not in lieu of
or substitution for all other rights and remedies provided in this Mortgage or
any other Loan Documents or provided by law, and is hereby authorized and
empowered by Mortgagor, to do any or all of the following:
(a) Declare the entire unpaid amount of the Mortgage Indebtedness,
together with accrued and unpaid interest thereon, and any and all charges
payable by Mortgagor to Mortgagee pursuant to any of the Loan Documents,
immediately due and payable and, at Mortgagee's option, (i) to bring suit
therefor, or (ii) to bring suit for any delinquent payment of or upon the
Mortgage Indebtedness, or (iii) to take any and all steps and institute any and
all other proceedings that Mortgagee deems necessary to enforce payment of the
Mortgage Indebtedness and performance of other obligations secured hereunder and
to protect the lien of this Mortgage.
(b) Commence foreclosure proceedings against the Mortgaged
Premises through judicial proceedings or by advertisement, at the option of
Mortgagee, pursuant to the applicable statutes in such case made and provided,
and to sell the Mortgaged Premises or to cause the same to be sold at public
sale, and to convey the same to the purchaser in accordance with said statutes
in a single parcel or in several parcels at the option of Mortgagee.
(c) Cause to be brought down to date an abstract or abstracts and
tax histories of the Mortgaged Premises, procure title insurance or title
reports or, if necessary, procure new abstracts and tax histories.
(d) Obtain a receiver to manage the Mortgaged Premises and collect
the rents, profits and income therefrom.
(e) In the event of any sale of the Mortgaged Premises by
foreclosure, through judicial proceedings, by advertisement or otherwise, apply
the proceeds of any such sale in the order following to: (i) all expenses
incurred for the collection of the Mortgage Indebtedness and the foreclosure of
this Mortgage, including reasonable attorneys' fees and disbursements, or such
attorneys' fees and disbursements as are permitted by law, (ii) all sums
expended or incurred by Mortgagee directly or indirectly in carrying out the
terms, covenants and agreements of the Notes, this Mortgage and the other Loan
Documents, together with interest thereon as therein provided, (iii) all accrued
and unpaid interest upon the Mortgage Indebtedness, (iv) the unpaid principal
amount of the Mortgage Indebtedness, and (v) the surplus, if any there be,
unless a court of competent jurisdiction decrees otherwise, to Mortgagor.
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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14. Successors in Ownership. In the event ownership of the Mortgaged
Premises or any part thereof becomes vested in a person or persons other than
Mortgagor without the prior written approval of Mortgagee, Mortgagee may (but
shall not be obligated to) deal with such successor or successors in interest
with reference to this Mortgage and the other Loan Documents in the same manner
as with Mortgagor, without in any manner discharging or otherwise affecting
Mortgagor's liability hereunder or upon the Mortgage Indebtedness.
15. Personal Property. (a) The Mortgagor represents and warrants that
Mortgagor owns all presently owned Equipment and other personal property
described in this Mortgage free and clear of any and all liens and security
interests except for the lien and security interest granted by this Mortgage and
Permitted Encumbrances and any Liens permitted by the terms of the Credit
Agreement. The Mortgagor further represents and warrants that, as to Equipment
and other personal property hereafter acquired, Mortgagor will own all such
Equipment and other personal property at the time it is brought on the Land and
thereafter free and clear of any and all liens and security interests except for
the lien and security interest granted by this Mortgage, any other security
instrument or agreement in favor of Mortgagee, and Permitted Encumbrances and
any Liens permitted by the terms of the Credit Agreement.
(b) The Mortgagor does hereby grant a security interest to
Mortgagee pursuant to the Uniform Commercial Code in any Equipment and other
personal property covered hereby. The Mortgagor agrees, upon request of
Mortgagee, to furnish an inventory of personal property owned by Mortgagor and
subject to this Mortgage and, upon request by Mortgagee, to execute any
supplements to this Mortgage, any separate security agreement and any financing
statements to include specifically said inventory of personal property. Upon the
occurrence of an Event of Default, Mortgagee shall have all of the rights and
remedies therein provided or otherwise provided by law or by this Mortgage,
including but not limited to the right to require Mortgagor to assemble such
personal property and make it available to Mortgagee at a place to be designated
by Mortgagee which is reasonably convenient to both parties, the right to take
possession of such personal property with or without demand and with or without
process of law and the right to sell and dispose of the same and distribute the
proceeds according to law. The parties hereto agree that any requirement of
reasonable notice shall be met if Mortgagee sends such notice to Mortgagor at
least five (5) days prior to the date of sale, disposition or other event giving
rise to the required notice, and that the proceeds of any disposition of any of
such personal property may be applied by Mortgagee first to the reasonable
expenses in connection therewith, including reasonable attorneys' fees and
disbursements and then to payment of the Mortgage Indebtedness.
16. Assignment of Leases and Rents. As of the date of this Mortgage,
Mortgagor hereby assigns to Mortgagee all its right, title and interest in and
to all written and oral leases, whether now in existence or which may hereafter
come into existence during the term of this Mortgage, or any extension hereof,
covering the Mortgaged Premises or any part thereof (but without an assumption
by Mortgagee of liabilities of Mortgagor under any such leases by virtue
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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of this assignment), and Mortgagor hereby assigns to Mortgagee the rents, issues
and profits of the Mortgaged Premises. Until the occurrence of an Event of
Default, Mortgagor shall have the right to receive and collect such rents,
issues and profits. Upon the occurrence of an Event of Default, Mortgagee may
elect upon written notice to Mortgagor to receive and collect said rents, issues
and profits personally or through a receiver so long as any such Event of
Default shall exist and during the pendency of any foreclosure proceedings and
during any redemption period, and Mortgagor hereby consents to the appointment
of a receiver if believed necessary or desirable by Mortgagee to enforce its
rights under this paragraph 16. The Mortgagee shall be entitled to all of the
rights and benefits conferred by Act No. 210 of the Michigan Public Acts of 1953
as amended by Act No. 151 of the Michigan Public Acts of 1966 (MCL 554.231 et
seq.), and Act No. 228 of the Michigan Public Acts of 1925 as amended by Act
No. 55 of the Michigan Public Acts of 1933 (MCL 554.211 et seq.). The
collection of rents by Mortgagee shall in no way waive the right of Mortgagee
to foreclose this Mortgage in the event of any Event of Default.
17. Prohibition of Transfer and Further Encumbrances. Except as
permitted under the Credit Agreement, the Mortgagor shall not, without the prior
written consent of Mortgagee, permit or suffer the Mortgaged Premises, or any
part thereof, to be sold, assigned, transferred or encumbered in any way,
whether by operation of law or otherwise. The preceding sentence shall not apply
to transfers of ownership in Mortgagor resulting from the death of a natural
person, transfers by a natural person to a member or members of such person's
immediate family or transfers by a natural person in connection with bona fide
estate planning.
18. Severability. If any provision hereof is in conflict with any
statute or rule of law of the State of Michigan or is otherwise unenforceable
for any reason whatsoever, then such provision shall be deemed null and void to
the extent of such conflict or unenforceability and shall be deemed severable
from but shall not invalidate any other provisions of this Mortgage.
19. Environmental Matters. The representations, warranties, covenants
and agreements made by the Mortgagor to the Mortgagee in the Environmental
Certificate delivered by the Mortgagor to the Mortgagee in connection with the
execution of this Mortgage are incorporated herein by reference. The Mortgagor
agrees that any default under the terms of the Environmental Certificate will
constitute a default under this Mortgage.
20. Waiver. No waiver by Mortgagee of any right or remedy granted
hereunder or failure to insist on strict performance by Mortgagor hereunder
shall affect or extend to or act as a waiver of any other right or remedy of
Mortgagee hereunder, nor affect the subsequent exercise of the same right or
remedy by Mortgagee for any further or subsequent default by Mortgagor
hereunder, and all such rights and remedies of Mortgagee hereunder are
cumulative.
21. Marshalling. The Mortgagor hereby waives, in the event of
foreclosure of this Mortgage or the enforcement by the Mortgagee of any other
rights and remedies hereunder, any
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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<PAGE> 30
right otherwise available in respect to marshalling of assets which secure the
Mortgage Indebtedness or to require Mortgagee to pursue its remedies against any
other such assets.
22. POWER OF SALE; WAIVER OF NOTICE AND HEARING ON FORECLOSURE. THIS
MORTGAGE CONTAINS A POWER OF SALE AND UPON THE OCCURRENCE OF AN EVENT OF DEFAULT
MAY BE FORECLOSED BY ADVERTISEMENT. IN FORECLOSURE BY ADVERTISEMENT AND THE SALE
OF THE MORTGAGED PREMISES IN CONNECTION THEREWITH NO HEARING IS REQUIRED AND THE
ONLY NOTICE REQUIRED IS THE PUBLICATION OF NOTICE IN A LOCAL NEWSPAPER AND THE
POSTING OF A COPY OF THE NOTICE ON THE PREMISES. THE MORTGAGOR HEREBY WAIVES ALL
RIGHTS UNDER THE CONSTITUTION AND LAWS OF THE UNITED STATES AND THE STATE OF
MICHIGAN TO A HEARING PRIOR TO SALE IN CONNECTION WITH FORECLOSURE OF THIS
MORTGAGE BY ADVERTISEMENT AND ALL NOTICE REQUIREMENTS EXCEPT AS SET FORTH IN THE
MICHIGAN STATUTE PROVIDING FOR FORECLOSURE BY ADVERTISEMENT.
23. Further Instruments. The Mortgagor shall execute, acknowledge and
deliver any and all such further conveyances, documents, mortgages and
assurances, and do or cause to be done all such further acts, as Mortgagee may
reasonably require to confirm and protect the lien of this Mortgage or otherwise
to accomplish the purposes hereof forthwith upon the request of Mortgagee,
whether in writing or otherwise.
24. Notices. All notices, demands, requests, consents and other
communications shall be delivered and shall be effective in the manner specified
in the Credit Agreement.
25. Governing Law; Binding Effect; Definitions. This Mortgage, made in
the State of Michigan, shall be construed according to the laws thereof and
shall be binding upon Mortgagor and its successors and assigns and any
subsequent owners of the Mortgaged Premises, and all of the covenants herein
contained shall run with the land, and this Mortgage and all of the covenants
herein contained shall inure to the benefit of Mortgagee, its successors and
assigns. Terms used but not defined herein shall have the meanings ascribed
thereto in the Credit Agreement.
26. Headings. The headings in this Mortgage are for convenience of
reference only and shall not limit or otherwise affect the meaning of any
provision of this Mortgage.
27. Fixture Filing. This Mortgage also constitutes a financing
statement filed as a fixture filing under the Uniform Commercial Code with
respect to goods which are or are to become fixtures relating to the Land and as
to which Mortgagor is the debtor and record owner of the Land and Mortgagee is
the secured party. It is to be recorded in the real estate records of the County
in which the Land is located.
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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<PAGE> 31
28. Future Advance Mortgage. This Mortgage secures future advances and
is a future advance mortgage under Act No. 348 of the Michigan Public Acts of
1990 (MCL 565.901 et seq). All future advances under the Notes, this Mortgage
and the other Loan Documents shall have the same priority as if the future
advance was made on the date that this Mortgage was recorded.
29. Use of Insurance and Condemnation Proceeds. Notwithstanding any
other provision of this Mortgage, all insurance proceeds recovered by the
Mortgagee on account of damage or destruction to the Mortgaged Premises and all
proceeds of any condemnation award recovered by the Mortgagee for any building
or equipment taken or damaged, less the cost, if any, to the Mortgagee of such
recovery and of paying out such proceeds (including attorneys' fees and costs
allocable to inspecting the work and the plans and specifications therefor),
shall, upon the written request of the Mortgagor, be applied by the Mortgagee to
the payment of the cost of repairing, restoring or rebuilding the improvements
on the Mortgaged Premises so damaged or destroyed or of the portion or portions
of the Mortgaged Premises not so taken (hereinafter referred to as the "work")
and shall be paid out from time to time to the Mortgagor as the work progresses,
but subject to the Mortgagee's standard requirements for construction loans of
similar nature and subject to the following conditions:
(a) There shall be no Event of Default under this Mortgage or any
of the other Loan Documents; and
(b) The request for any payment after the work has been completed
shall be accompanied by a copy of any certificate or certificates required by
law to render occupancy of the Mortgaged Premises legal.
Upon the completion of the work and payment in full therefore, or
upon any failure on the part of the Mortgagor promptly to commence or continue
the work, or at any time upon request by the Mortgagor, the Mortgagee may, at
its option, either apply the amount of any such proceeds then or thereafter in
the hands of the Mortgagee to the payment of the Mortgage Indebtedness or any
portion thereof, whether or not then due and payable, or remit such amount to
the Mortgagor.
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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<PAGE> 32
IN WITNESS WHEREOF, Mortgagor has duly executed this Mortgage as of the
day and year first above written.
Signed in the presence of: KEY PLASTICS, INC.
/s/ Andrew S. Boyce By: /s/ Mark J. Abbo
- ------------------------------ ---------------------------------------
Print Name: Andrew S. Boyce Mark J. Abbo
------------------- Its: Treasurer and Assistant Secretary
/s/ Mary Kershner
- ------------------------------
Print Name: Mary Kershner
-------------------
STATE OF MICHIGAN )
)SS.
COUNTY OF WAYNE )
The foregoing instrument was acknowledged before me on this 28th day of
March, 1997, by Mark J. Abbo, the Treasurer and Assistant Secretary of Key
Plastics, Inc., a Michigan corporation, on behalf of said corporation.
/s/ Janice K. Atkins
----------------------------------
Notary Public, Janice K. Atkins
Acting in Wayne County, MI
My Commission Expires: Aug 25 1998
Drafted by and when
recorded return to:
Mi Young Lee, Esq.
Dickinson, Wright, Moon,
Van Dusen & Freeman
500 Woodward Avenue, Suite 4000
Detroit, Michigan 48226
(313) 223-3500
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
- 14 -
<PAGE> 33
EXHIBIT A
Legal Description
(Chesterfield, Michigan)
Situated in the Township of Chesterfield, Macomb County, Michigan, described as:
Lot 41, R.C. Schmidt & Sons Industrial Complex, according to the plat thereof as
recorded in liber 81, pages 30 through 46, both inclusive, of Plats, Macomb
County Records.
Together with a railroad easement described as follows: The south line of a
twenty foot wide Railroad Easement, described as commencing at the southeast
corner of parcel; thence north 29 degrees 05 minutes 30 seconds ease 153.00 feet
to a point on the east line of parcel; thence southeasterly 160 feet to a point
on the east-west 100 foot Railroad Right-of-Way line, said point being 100 feet
southeasterly of said southeast corner and 22 feet northeasterly of the south
line of parcel.
Parcel Identification No. 09-19-226-004
Commonly known as: 50800 East Russel Schmidt
<PAGE> 34
EXHIBIT B
Permitted Encumbrances
(Chesterfield Township, Michigan)
1. Thirty foot easement over the northwesterly side of said lot for storm
sewer, drainage, water main and public utilities, as shown on the
recorded plat.
2. Utility Easements as set forth in instrument recorded in liber 3538,
page 85, Macomb County Records.
3. Easement in favor of the Township of Chesterfield for water main, as
recorded in liber 3900, page 351, Macomb County Records.
4. Encroachment of concrete, curbing, parking area, landscape, lights and
sign over private 30 foot storm sewer, drainage, water main and public
utility easement at west boundary of property.
5. Encroachment of parking area, concrete and landscaping over water main,
public utilities and storm drainage easements at south end of property.
<PAGE> 35
SCHEDULE TO MORTGAGE, SECURITY AGREEMENT
AND ASSIGNMENT OF RENTS
1. The Revolving Credit Loan is payable on September 24, 2003.
2. The Term Loan is payable in 30 consecutive quarterly installments on
the last Business Day of each March, June, September and December,
commencing with the last Business Day of June, 1997, as follows: (i)
twenty-six quarterly principal installments of $75,000 each for the
first twenty-six quarterly payments and (ii) four principal
installments of $3,262,500 each for the next four quarterly
installments, and on September 24, 2004.
<PAGE> 36
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
(PORT HURON, MICHIGAN)
THIS MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS, dated as of
March 28, 1997 by KEY PLASTICS, INC., a Michigan corporation, whose address is
21333 Haggerty Road, Suite 200, Novi, Michigan 48375 (the "Mortgagor"), to NBD
BANK, a Michigan banking corporation, whose address is 611 Woodward Avenue,
Detroit, Michigan 48226 (the "Mortgagee"), as agent for the benefit of itself
and the lenders (the "Lenders") which are parties to the Credit Agreement
defined below.
RECITALS:
A. The Mortgagor has entered into a Credit Agreement dated as of March
24, 1997 (as amended or modified from time to time, including any agreement
entered into in substitution therefor, the "Credit Agreement") pursuant to which
the Lenders agreed, subject to the terms and conditions thereof, to extend
credit to the Mortgagor up to a maximum principal amount outstanding at any time
equal to One Hundred and Forty Million and No/100 Dollars ($140,000,000.00)
maturing on or before September 24, 2004 in accordance with the Schedule
attached hereto, as such date may be extended by agreement of the parties to the
Credit Agreement.
B. As a condition to the effectiveness of the obligations of the
Mortgagee and the Lenders under the Credit Agreement, the Mortgagor is
obligated, among other things, to grant a lien on the mortgaged premises
hereinafter described.
WITNESSETH:
NOW, THEREFORE, to secure (a) the prompt and complete payment of all
Indebtedness and other obligations of the Mortgagor or any Subsidiary now or
hereafter owing to the Lenders or the Mortgagee under or on account of the
Credit Agreement, any Security Document or any letters or credit, notes or other
instruments issued to the Mortgagee or the Lenders pursuant thereto, (b) the
performance of the covenants under the Credit Agreement and the Security
Documents and any monies expended by any Lender or the Mortgagee in connection
therewith, and (c) the prompt and complete payment of all obligations and
performance of all covenants of the Mortgagor or any Subsidiary in connection
with Swaps relating to Indebtedness under the Loan Documents (including any
interest accruing subsequent to any petition filed by or against the Mortgagor
or any Subsidiary under the U.S. Bankruptcy Code, whether or not allowed),
indemnity and reimbursement obligations, charges, expenses, fees, reasonable
attorneys' fees and disbursements and any other amounts owing thereunder (all of
the aforesaid Indebtedness, obligations and liabilities of the Mortgagor and its
Subsidiaries being herein called the "Mortgage Indebtedness" and this Mortgage
and all of the other documents, agreements and instruments among the Mortgagor,
the Subsidiaries, the Lenders, the Mortgagee or any of them, evidencing or
securing the repayment of, or otherwise pertaining to, the Mortgage
Indebtedness, including without limitation the Credit Agreement, the Notes and
the Security Documents, being herein
<PAGE> 37
collectively called the "Loan Documents"), the Mortgagor does hereby MORTGAGE
and WARRANT unto the Mortgagee, and its successors and assigns, the following
described property (the "Mortgaged Premises"):
(A) the land situated in the City of Port Huron, County of St. Clair
and State of Michigan, more specifically described in Exhibit A hereto (the
"Land");
(B) all easements, rights-of-way, licenses and privileges, thereunto
belonging or in anywise appertaining, including without limitation all
Mortgagor's right, title and interest in and to those easements, rights-of-way,
licenses and privileges described in Exhibit A hereto, if any;
(C) all buildings and improvements now or hereafter situated upon the
Land or any part thereof;
(D) to the extent, if any, of Mortgagor's interests thereon, all
minerals, royalties, gas rights, water, water rights, water stock, flowers,
shrubs, lawn plants, crops, trees, timber and other emblements now or hereafter
located on, under or above all or any part of the Land;
(E) all and singular the tenements, hereditament and appurtenances
belonging or in anywise appertaining to the Land, and the reversion or
reversions, remainder and remainders thereof; and also all the estate, right,
title, interest, property, claim and demand whatsoever of Mortgagor, of, in and
to the same and of, in and to every part and parcel thereof;
(F) all the rents, issues and profits thereof under present or future
leases, or otherwise, which are hereby specifically assigned, transferred and
set over to Mortgagee, including, but not limited to, all rights conferred by
Act No. 210 of the Michigan Public Acts of 1953 as amended by Act No. 151 of the
Michigan Public Acts of 1966 (MCL 554.231 et seq.), and Act No. 228 of the
Michigan Public Acts of 1925 as amended by Act No. 55 of the Michigan Public
Acts of 1933 (MCL 554.211 et seq.) and including, but not limited to, all cash
or securities deposited under any such leases to secure performance by the
tenants of their obligations thereunder, whether said cash or securities are to
be held until the expiration of the terms of such leases or applied to one or
more of the installments of rent coming due thereunder;
(G) all right, title and interest of Mortgagor, if any, in and to the
land lying in the bed of any street, road, avenue, alley or walkway, opened or
proposed or vacated, or any strip or gore, in front of or adjoining the Land;
(H) all machinery, apparatus, equipment, fittings, fixtures, and
articles of personal property of every kind and nature whatsoever, other than
consumable goods, now or hereafter located in or upon the Land or any part
thereof and used or useable in connection with any present or future operation
of the Land or any building or buildings now or hereafter on the Land and now
owned or hereafter acquired by Mortgagor (all of which is herein called
"Equipment"),
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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<PAGE> 38
including, but without limiting the generality of the foregoing, all lighting,
heating, cooling, ventilating, air-conditioning, incinerating, refrigerating,
plumbing, sprinkling, communicating and electrical systems, and the machinery,
appliances, fixtures and equipment pertaining thereto, it being understood and
agreed that all Equipment is part and parcel of the Land and appropriated to the
use of said real estate and, whether affixed or annexed or not, shall for the
purposes of this Mortgage, unless Mortgagee shall otherwise elect, be deemed
conclusively to be real estate and mortgaged hereby; and
(I) any and all awards or payments, including interest thereon, and the
right to receive the same, which may be made with respect to the Land and are or
will be payable to Mortgagor as a result of (a) the exercise of the right of
eminent domain, (b) the alteration of the grade of any street, (c) any loss of
or damage to any building or other improvement on the Land, (d) any other injury
to or decrease in the value of the Land or (e) any refund due on account of the
payment of real estate taxes, assessments or other charges levied against or
imposed upon the Land, to the extent of all amounts which may be secured by this
Mortgage at the date of receipt of any such award or payment by Mortgagee, and
of the reasonable counsel fees, costs and disbursements incurred by Mortgagee in
connection with the collection of such award or payment, Mortgagor hereby
agreeing to execute and deliver, from time to time, such further instruments as
may be reasonably requested by Mortgagee to confirm such assignment to Mortgagee
of any such award or payment.
TO HAVE AND TO HOLD the Mortgaged Premises, and each and every part
thereof, unto Mortgagee and its successors and assigns forever. Any reference
herein to the "Mortgaged Premises" shall, unless the context shall require
otherwise, be deemed to include and apply to the above described Land and said
buildings, improvements, Equipment, rents, issues, profits, leases, easements,
tenements, hereditament and appurtenances and all other rights, privileges and
interests hereinabove described.
SUBJECT only to those matters set forth in Exhibit B hereto ("Permitted
Encumbrances").
AND Mortgagor does hereby covenant and warrant as follows:
1. Payment of Mortgage Indebtedness; Performance of Agreements. The
Mortgagor shall pay the principal of and interest on the Mortgage Indebtedness
according to the terms thereof, and will keep and perform all the covenants,
promises and agreements on its part to be performed in any and all Loan
Documents, all in the manner herein or therein set forth.
2. Covenants of Title. The Mortgagor has good and indefeasible title to
the Land in fee simple and has good and indefeasible title to the entire
Mortgaged Premises and with good right and full power to sell, mortgage and
convey the Mortgaged Premises, the Mortgaged Premises are free and clear of
liens and encumbrances except Permitted Encumbrances, whether
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
- 3 -
<PAGE> 39
presently existing or which may hereafter be created in accordance with the
terms hereof, and Mortgagor will warrant and defend the Mortgaged Premises
against all lawful claims and demands whatsoever. The Mortgagee shall have the
right, at its option and at such time or times as it, in its sole discretion,
shall deem reasonably necessary, to take whatever action it may reasonably deem
necessary to defend or uphold the lien of this Mortgage or otherwise enforce any
of the rights of Mortgagee hereunder or any obligation secured hereby, including
without limitation, the right to institute appropriate legal proceedings for
such purposes.
3. Payment of Taxes, Assessments and Charges. The Mortgagor shall pay
when due, and before any interest, collection fees or penalties shall accrue,
all real estate taxes, special assessments, water and sewer charges or other
governmental charges and impositions levied or assessed with respect to the
Mortgaged Premises or any part thereof except to the extent that payment of any
of the foregoing is then being contested in good faith by appropriate legal
proceedings and with respect to which adequate financial reserves have been
established on the books and records of the Mortgagor. Should Mortgagor fail to
so pay such taxes, special assessments, water and sewer charges or other
governmental charges or impositions or establish such adequate financial
reserves, Mortgagee may, at its option, pay the same for the account of
Mortgagor.
4. Reserves for Taxes and Insurance Premiums. Upon the occurrence of
any Event of Default, Mortgagor shall pay to Mortgagee upon the request of
Mortgagee, installments of the taxes and assessments levied or to be levied upon
the Mortgaged Premises, and installments of the premiums that will become due
and payable to renew the insurance hereinafter provided, said installments to be
substantially equal and to be in such amount as will assure to Mortgagee that
not less than 30 days before the time when such taxes and premiums,
respectively, become due Mortgagor will have paid to Mortgagee a sufficient
amount to pay the same in full. Said amounts paid to Mortgagee hereunder need
not be segregated nor kept in a separate fund, and no interest shall be payable
thereon. Said amounts shall be held by Mortgagee as additional security for the
Mortgage Indebtedness and, except as provided in the following sentence, be
applied to the payment of said taxes and assessments when the same become due
and payable. Mortgagee may, at its option, but without any obligation on its
part so to do, apply said amounts upon said taxes and assessments or insurance
premiums or toward the payment of the Mortgage Indebtedness or any portion
thereof, whether or not then due or payable. The Mortgagee shall endeavor to
notify the Mortgagor of how such amounts were applied, provided however that the
failure to give such notice shall not affect Mortgagee's rights under this
Mortgage.
Upon an assignment of the Mortgage, Mortgagee shall have the right to
pay over the balance of such deposits in its possession to the assignee and
Mortgagee shall thereupon be completely released from all liability with respect
to such deposits and Mortgagor or owner of the Mortgaged Premises shall look
solely to the assignee or transferee in reference thereto. This provision shall
apply to every transfer of such deposits to a new assignee. Upon full payment
and satisfaction of the Mortgage Indebtedness or at any prior time upon the
election of
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
- 4 -
<PAGE> 40
Mortgagee, the balance of the unapplied deposits in its possession shall be paid
over to the record owner of the Mortgaged Premises and no other party shall have
any right or claim thereto in any event, provided that in the event of a
foreclosure of the Mortgaged Premises, the purchaser at such foreclosure shall
have the right to receive such unapplied deposits. The Mortgagor agrees, at
Mortgagee's request, to deliver the aforesaid deposits to such service or
financial institution as Mortgagee shall from time to time designate.
5. Payment of Other Obligations. The Mortgagor shall also pay any and
all other obligations, liabilities or debts which may become liens, security
interests, or encumbrances upon or charges against the Mortgaged Premises for
any repairs or improvements that are now completed or are in progress or which
may hereafter be made thereon, or for any other goods, services, or utilities
furnished to the Mortgaged Premises, and shall not permit any lien, security
interest, encumbrance or charge of any kind securing the repayment of borrowed
funds (including the deferred purchase price for any property) to accrue and
remain outstanding against the Mortgaged Premises or any part thereof, or any
improvements thereon other than Permitted Encumbrances, if any, except to the
extent that payment of any of the foregoing is then being contested in good
faith by appropriate legal proceedings and with respect to which adequate
financial reserves have been established on the books and records of the
Mortgagor.
6. Maintenance and Repair; Compliance with Laws; Inspection. The
Mortgagor will keep the Land and all the improvements thereon in good order and
repair, and Mortgagor expressly agrees that it will not do or permit waste on
the Land nor do any other act whereby the Mortgaged Premises will become less
valuable or the lien hereof may be impaired. Should Mortgagor fail to effect the
necessary repairs and such failure shall remain unremedied for 20 calendar days
after written notice thereof shall have been given to the Mortgagor by the
Mortgagee, Mortgagee may at its option make such repairs for the account of
Mortgagor. The Mortgagor will promptly comply, and cause the Mortgaged Premises
and the occupants or users thereof to comply, with all present and future laws,
ordinances, orders, rules and regulations and other requirements of any
governmental authority affecting the Mortgaged Premises or any part thereof or
the use or occupancy thereof and with all instruments and documents of record or
otherwise affecting the Mortgaged Premises, or any part thereof, or the use or
occupancy thereof. The Mortgagee, and any person authorized by Mortgagee, shall
have the right to enter upon and inspect the Mortgaged Premises at all
reasonable times and with reasonable notice.
7. Insurance. (a) The Mortgagor shall keep the buildings and other
improvements on the Land, or which may hereafter be erected thereon, constantly
insured for the benefit of Mortgagee with such company or companies as may be
reasonably acceptable to Mortgagee and in an amount reasonably satisfactory to
Mortgagee, which amount shall not be less than 100% of the then full replacement
cost of such building and improvements (exclusive of excavations, foundations
and footings), which policies shall be without deduction for depreciation and be
subject to the payment of a deductible not in excess of an amount reasonably
satisfactory to Mortgagee, until the Mortgage Indebtedness and all interest
thereon and all of the amounts due
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
- 5 -
<PAGE> 41
hereunder are fully paid, against fire and such other hazards and risks
customarily covered by the standard form of "extended coverage" endorsements
available in the State of Michigan, and shall further provide flood insurance
(if the Mortgaged Premises are situated in an area designated as a flood hazard
area by the Director of the Federal Emergency Management Agency or as otherwise
required by the Flood Disaster Protection Act of 1973 and regulations issued
thereunder), rent insurance in an amount not less than one year's gross rent
derived from the Mortgaged Premises, and such other appropriate insurance as
Mortgagee may reasonably require from time to time. All such policies shall
include standard mortgagee clauses in favor of Mortgagee and shall provide that
the proceeds thereof shall be paid to Mortgagee, all as may be satisfactory to
Mortgagee. During any construction, repair or restoration of the buildings and
other improvements on the Mortgaged Premises, Mortgagor shall carry or cause to
be carried builder's risk insurance which names Mortgagee as a loss payee as its
interests may appear. The Mortgagor shall also carry comprehensive general or
public liability insurance with reference to the Mortgaged Premises, which names
Mortgagee as an additional insured. All such policies shall provide that the
same may not be canceled or terminated without giving Mortgagee at least 30
days' prior written notice of such cancellation or termination.
(b) The Mortgagor shall deliver to Mortgagee at its principal
office aforesaid or at such other place as may be designated by the holder
hereof such insurance policies or, if Mortgagee consents, certificates
evidencing such policies. Renewals thereof shall likewise be delivered to
Mortgagee at least 15 days before the expiration of any existing policies.
Should Mortgagor fail to insure or fail to pay the premiums on any such
insurance or fail to deliver the policies or renewals thereof as provided above,
Mortgagee at its option may have such insurance written or renewed and pay the
premiums thereon for the account of Mortgagor.
(c) In the event of loss or damage, the proceeds of said property
and builders' risk insurance on the buildings and improvements shall be paid to
Mortgagee alone. No such loss or damage shall itself reduce the Mortgage
Indebtedness. The Mortgagee is authorized to adjust and compromise such loss
without the consent of Mortgagor, to collect, receive and receipt for such
proceeds in the name of Mortgagee and Mortgagor and to endorse Mortgagor's name
upon any check in payment thereof. Such proceeds shall be applied first toward
reimbursement of all costs and expenses of Mortgagee in collecting said proceeds
and then toward payment of the Mortgage Indebtedness or any portion thereof,
whether or not then due or payable, or Mortgagee at its option may apply said
insurance proceeds, or any part thereof, to the repair or rebuilding of the
Mortgaged Premises. No such application of proceeds by Mortgagee toward payment
of the Mortgage Indebtedness shall reduce the amount of the payments required to
be made on the Mortgage Indebtedness in accordance with its terms.
(d) In the event of a foreclosure of this Mortgage, the purchaser
of the Mortgaged Premises shall succeed to all of the rights of Mortgagor under
said insurance policies payable to Mortgagee, including any right to unearned
premiums and the right to receive the proceeds of any insurance payable by
reason of any loss theretofore or thereafter occurring.
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
- 6 -
<PAGE> 42
8. Eminent Domain. Notwithstanding any taking under the power of
eminent domain, alteration of the grade of any street, or other injury to or
decrease in value of the Mortgaged Premises by any public or quasi-public
authority or corporation, Mortgagor shall continue to pay the Mortgage
Indebtedness in accordance with the terms of the Notes, and any reduction in the
principal sum resulting from the application by Mortgagee of such award or
payment as hereinafter set forth shall be deemed to take effect only upon the
receipt by Mortgagee of such award. The Mortgagor hereby assigns the entire
proceeds of any award or payment to Mortgagee. The Mortgagee is authorized to
commence, appear in and prosecute, in its own or in Mortgagor's name, any action
or proceeding relating to any such taking, and to settle or compromise any claim
in connection therewith. Such proceeds shall be applied first toward
reimbursement of all costs and expenses of Mortgagee in collecting said proceeds
and then toward payment of the Mortgage Indebtedness or any portion thereof,
whether or not then due or payable, or Mortgagee at its option may apply said
proceeds, or any part thereof, to the alteration, restoration or rebuilding of
the Mortgaged Premises. No such application of proceeds by Mortgagee toward
payment of the Mortgage Indebtedness shall reduce the amount of the payments
required to be made on the Mortgage Indebtedness in accordance with its terms.
9. Waste. The failure of Mortgagor to pay any taxes or assessments
assessed against the Mortgaged Premises, or any installment thereof, or any
premiums payable with respect to any insurance policy covering the Mortgaged
Premises, shall constitute waste, as provided by Act No. 236 of the Michigan
Public Acts of 1961 as amended (MCLA 600.2927). The Mortgagor further hereby
consents to the appointment of a receiver under said statute, should Mortgagee
elect to seek such relief thereunder.
10. Reimbursement of Advances by Mortgagee. The Mortgagor shall pay to
Mortgagee, upon demand, all sums expended by Mortgagee, or by a receiver
appointed at the request of Mortgagee, unless such sums shall be paid out of the
rents, income and profits from the Mortgaged Premises, (a) to pay insurance
premiums, taxes, assessments, water and sewer charges and other governmental
charges and impositions with respect to the Mortgaged Premises, (b) to maintain,
repair or improve the Mortgaged Premises, (c) to defend the lien of this
Mortgage as a lien against the Mortgaged Premises subject only to the Permitted
Encumbrances hereinabove expressly set forth, (d) to discharge any lien or
encumbrance affecting the Mortgaged Premises other than Permitted Encumbrances,
(e) to cure any default of Mortgagor under any lease or other agreement covering
the Mortgaged Premises, (f) to cure any default of Mortgagor hereunder or under
any of the Loan Documents or (g) for or in connection with any other action
taken by Mortgagee to preserve the security of this Mortgage or any other
security for the Mortgage Indebtedness or to protect any of Mortgagee's rights
hereunder. All such expenditures as shall be made by Mortgagee or such receiver
or pursuant to any other provision of this Mortgage or the other Loan Documents,
including any reasonable attorneys' fees and disbursements incurred by Mortgagee
or such receiver in connection with the foregoing, shall be
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
- 7 -
<PAGE> 43
payable upon demand and be secured by this Mortgage and shall bear interest at
the Overdue Rate set forth in the Credit Agreement.
11. Change in Taxes. In the event any tax shall be due or become due
and payable to the United States of America, the State of Michigan or any
political subdivision thereof with respect to the execution and delivery or
recordation of this Mortgage or any note or other instrument or agreement
evidencing or securing repayment of the Mortgage Indebtedness or the interest of
Mortgagee in the Mortgaged Premises, Mortgagor shall pay such tax at the time
and in the manner required by applicable law and Mortgagor shall hold Mortgagee
harmless and shall indemnify Mortgagee against any liability of any nature
whatsoever as a result of the imposition of any such tax.
In the event of the passage after the date of this Mortgage of any law
in the State of Michigan deducting from the value of real property for purposes
of taxation any lien thereon, or changing in any way the laws now in force for
the taxation of mortgages or debts secured thereby (including the interest
thereon) for state or local purposes, or changing the manner of collection of
any such taxes, and imposing a tax, either directly or indirectly, on this
Mortgage, the Notes or any of the other Loan Documents, the holder of this
Mortgage shall have the right to declare the entire unpaid amount of the
Mortgage Indebtedness, together with accrued and unpaid interest thereon, to be
due and payable on a date to be specified by not less than 30 days' written
notice to Mortgagor, provided, however, that such election shall not be
effective if Mortgagor is permitted by law to pay the whole of such tax in
addition to all other payments required thereunder and if Mortgagor, prior to
such specified date, makes payment of such tax then due and agrees to pay any
such tax when thereafter levied or assessed against the Mortgaged Premises, this
Mortgage, the Notes or any of the other Loan Documents.
12. Events of Default. The occurrence of any of the following events
shall be deemed an "Event of Default" hereunder and shall entitle Mortgagee to
exercise its remedies hereunder and under any of the other Loan Documents or as
otherwise provided by law:
(a) Nonpayment of any of the Mortgage Indebtedness when due, beyond
any period of grace, if any, provided with respect thereto and after the giving
of any required notice;
(b) The failure of the Mortgagor to perform or observe any material
term or covenant contained in this Mortgage and such failure shall remain
unremedied for 30 calendar days after the earlier of (i) written notice thereof
shall have been given to the Mortgagor from the Mortgagee and (ii) when the
Mortgagor otherwise had knowledge of such failure, unless the Mortgagor is
diligently pursuing to cure such failure to the reasonable satisfaction of the
Mortgagee;
(c) Any representation or warranty made by Mortgagor in this
Mortgage shall prove to have been false or misleading in any material respect
when made; or
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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<PAGE> 44
(d) The occurrence of any Event of Default (as defined in the
Credit Agreement) under the Credit Agreement.
13. Remedies upon Default; Power of Sale. Immediately upon the
occurrence of any Event of Default after applicable notice and grace periods
have elapsed, Mortgagee shall have the option, in addition to and not in lieu of
or substitution for all other rights and remedies provided in this Mortgage or
any other Loan Documents or provided by law, and is hereby authorized and
empowered by Mortgagor, to do any or all of the following:
(a) Declare the entire unpaid amount of the Mortgage Indebtedness,
together with accrued and unpaid interest thereon, and any and all charges
payable by Mortgagor to Mortgagee pursuant to any of the Loan Documents,
immediately due and payable and, at Mortgagee's option, (i) to bring suit
therefor, or (ii) to bring suit for any delinquent payment of or upon the
Mortgage Indebtedness, or (iii) to take any and all steps and institute any and
all other proceedings that Mortgagee deems necessary to enforce payment of the
Mortgage Indebtedness and performance of other obligations secured hereunder and
to protect the lien of this Mortgage.
(b) Commence foreclosure proceedings against the Mortgaged Premises
through judicial proceedings or by advertisement, at the option of Mortgagee,
pursuant to the applicable statutes in such case made and provided, and to sell
the Mortgaged Premises or to cause the same to be sold at public sale, and to
convey the same to the purchaser in accordance with said statutes in a single
parcel or in several parcels at the option of Mortgagee.
(c) Cause to be brought down to date an abstract or abstracts and
tax histories of the Mortgaged Premises, procure title insurance or title
reports or, if necessary, procure new abstracts and tax histories.
(d) Obtain a receiver to manage the Mortgaged Premises and collect
the rents, profits and income therefrom.
(e) In the event of any sale of the Mortgaged Premises by
foreclosure, through judicial proceedings, by advertisement or otherwise, apply
the proceeds of any such sale in the order following to: (i) all expenses
incurred for the collection of the Mortgage Indebtedness and the foreclosure of
this Mortgage, including reasonable attorneys' fees and disbursements, or such
attorneys' fees and disbursements as are permitted by law, (ii) all sums
expended or incurred by Mortgagee directly or indirectly in carrying out the
terms, covenants and agreements of the Notes, this Mortgage and the other Loan
Documents, together with interest thereon as therein provided, (iii) all accrued
and unpaid interest upon the Mortgage Indebtedness, (iv) the unpaid principal
amount of the Mortgage Indebtedness, and (v) the surplus, if any there be,
unless a court of competent jurisdiction decrees otherwise, to Mortgagor.
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
- 9 -
<PAGE> 45
14. Successors in Ownership. In the event ownership of the Mortgaged
Premises or any part thereof becomes vested in a person or persons other than
Mortgagor without the prior written approval of Mortgagee, Mortgagee may (but
shall not be obligated to) deal with such successor or successors in interest
with reference to this Mortgage and the other Loan Documents in the same manner
as with Mortgagor, without in any manner discharging or otherwise affecting
Mortgagor's liability hereunder or upon the Mortgage Indebtedness.
15. Personal Property. (a) The Mortgagor represents and warrants that
Mortgagor owns all presently owned Equipment and other personal property
described in this Mortgage free and clear of any and all liens and security
interests except for the lien and security interest granted by this Mortgage and
Permitted Encumbrances and any Liens permitted by the terms of the Credit
Agreement. The Mortgagor further represents and warrants that, as to Equipment
and other personal property hereafter acquired, Mortgagor will own all such
Equipment and other personal property at the time it is brought on the Land and
thereafter free and clear of any and all liens and security interests except for
the lien and security interest granted by this Mortgage, any other security
instrument or agreement in favor of Mortgagee, and Permitted Encumbrances and
any Liens permitted by the terms of the Credit Agreement.
(b) The Mortgagor does hereby grant a security interest to
Mortgagee pursuant to the Uniform Commercial Code in any Equipment and other
personal property covered hereby. The Mortgagor agrees, upon request of
Mortgagee, to furnish an inventory of personal property owned by Mortgagor and
subject to this Mortgage and, upon request by Mortgagee, to execute any
supplements to this Mortgage, any separate security agreement and any financing
statements to include specifically said inventory of personal property. Upon the
occurrence of an Event of Default, Mortgagee shall have all of the rights and
remedies therein provided or otherwise provided by law or by this Mortgage,
including but not limited to the right to require Mortgagor to assemble such
personal property and make it available to Mortgagee at a place to be designated
by Mortgagee which is reasonably convenient to both parties, the right to take
possession of such personal property with or without demand and with or without
process of law and the right to sell and dispose of the same and distribute the
proceeds according to law. The parties hereto agree that any requirement of
reasonable notice shall be met if Mortgagee sends such notice to Mortgagor at
least five (5) days prior to the date of sale, disposition or other event giving
rise to the required notice, and that the proceeds of any disposition of any of
such personal property may be applied by Mortgagee first to the reasonable
expenses in connection therewith, including reasonable attorneys' fees and
disbursements and then to payment of the Mortgage Indebtedness.
16. Assignment of Leases and Rents. As of the date of this Mortgage,
Mortgagor hereby assigns to Mortgagee all its right, title and interest in and
to all written and oral leases, whether now in existence or which may hereafter
come into existence during the term of this Mortgage, or any extension hereof,
covering the Mortgaged Premises or any part thereof (but
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
- 10 -
<PAGE> 46
without an assumption by Mortgagee of liabilities of Mortgagor under any such
leases by virtue of this assignment), and Mortgagor hereby assigns to Mortgagee
the rents, issues and profits of the Mortgaged Premises. Until the occurrence of
an Event of Default, Mortgagor shall have the right to receive and collect such
rents, issues and profits. Upon the occurrence of an Event of Default, Mortgagee
may elect upon written notice to Mortgagor to receive and collect said rents,
issues and profits personally or through a receiver so long as any such Event of
Default shall exist and during the pendency of any foreclosure proceedings and
during any redemption period, and Mortgagor hereby consents to the appointment
of a receiver if believed necessary or desirable by Mortgagee to enforce its
rights under this paragraph 16. The Mortgagee shall be entitled to all of the
rights and benefits conferred by Act No. 210 of the Michigan Public Acts of 1953
as amended by Act No. 151 of the Michigan Public Acts of 1966 (MCL 554.231 et
seq.), and Act No. 228 of the Michigan Public Acts of 1925 as amended by Act No.
55 of the Michigan Public Acts of 1933 (MCL 554.211 et seq.). The collection of
rents by Mortgagee shall in no way waive the right of Mortgagee to foreclose
this Mortgage in the event of any Event of Default.
17. Prohibition of Transfer and Further Encumbrances. Except as
permitted under the Credit Agreement, the Mortgagor shall not, without the prior
written consent of Mortgagee, permit or suffer the Mortgaged Premises, or any
part thereof, to be sold, assigned, transferred or encumbered in any way,
whether by operation of law or otherwise. The preceding sentence shall not apply
to transfers of ownership in Mortgagor resulting from the death of a natural
person, transfers by a natural person to a member or members of such person's
immediate family or transfers by a natural person in connection with bona fide
estate planning.
18. Severability. If any provision hereof is in conflict with any
statute or rule of law of the State of Michigan or is otherwise unenforceable
for any reason whatsoever, then such provision shall be deemed null and void to
the extent of such conflict or unenforceability and shall be deemed severable
from but shall not invalidate any other provisions of this Mortgage.
19. Environmental Matters. The representations, warranties, covenants
and agreements made by the Mortgagor to the Mortgagee in the Environmental
Certificate delivered by the Mortgagor to the Mortgagee in connection with the
execution of this Mortgage are incorporated herein by reference. The Mortgagor
agrees that any default under the terms of the Environmental Certificate will
constitute a default under this Mortgage.
20. Waiver. No waiver by Mortgagee of any right or remedy granted
hereunder or failure to insist on strict performance by Mortgagor hereunder
shall affect or extend to or act as a waiver of any other right or remedy of
Mortgagee hereunder, nor affect the subsequent exercise of the same right or
remedy by Mortgagee for any further or subsequent default by Mortgagor
hereunder, and all such rights and remedies of Mortgagee hereunder are
cumulative.
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
- 11 -
<PAGE> 47
21. Marshalling. The Mortgagor hereby waives, in the event of
foreclosure of this Mortgage or the enforcement by the Mortgagee of any other
rights and remedies hereunder, any right otherwise available in respect to
marshalling of assets which secure the Mortgage Indebtedness or to require
Mortgagee to pursue its remedies against any other such assets.
22. POWER OF SALE; WAIVER OF NOTICE AND HEARING ON FORECLOSURE. THIS
MORTGAGE CONTAINS A POWER OF SALE AND UPON THE OCCURRENCE OF AN EVENT OF DEFAULT
MAY BE FORECLOSED BY ADVERTISEMENT. IN FORECLOSURE BY ADVERTISEMENT AND THE SALE
OF THE MORTGAGED PREMISES IN CONNECTION THEREWITH NO HEARING IS REQUIRED AND THE
ONLY NOTICE REQUIRED IS THE PUBLICATION OF NOTICE IN A LOCAL NEWSPAPER AND THE
POSTING OF A COPY OF THE NOTICE ON THE PREMISES. THE MORTGAGOR HEREBY WAIVES ALL
RIGHTS UNDER THE CONSTITUTION AND LAWS OF THE UNITED STATES AND THE STATE OF
MICHIGAN TO A HEARING PRIOR TO SALE IN CONNECTION WITH FORECLOSURE OF THIS
MORTGAGE BY ADVERTISEMENT AND ALL NOTICE REQUIREMENTS EXCEPT AS SET FORTH IN THE
MICHIGAN STATUTE PROVIDING FOR FORECLOSURE BY ADVERTISEMENT.
23. Further Instruments. The Mortgagor shall execute, acknowledge and
deliver any and all such further conveyances, documents, mortgages and
assurances, and do or cause to be done all such further acts, as Mortgagee may
reasonably require to confirm and protect the lien of this Mortgage or otherwise
to accomplish the purposes hereof forthwith upon the request of Mortgagee,
whether in writing or otherwise.
24. Notices. All notices, demands, requests, consents and other
communications shall be delivered and shall be effective in the manner specified
in the Credit Agreement.
25. Governing Law; Binding Effect; Definitions. This Mortgage, made in
the State of Michigan, shall be construed according to the laws thereof and
shall be binding upon Mortgagor and its successors and assigns and any
subsequent owners of the Mortgaged Premises, and all of the covenants herein
contained shall run with the land, and this Mortgage and all of the covenants
herein contained shall inure to the benefit of Mortgagee, its successors and
assigns. Terms used but not defined herein shall have the meanings ascribed
thereto in the Credit Agreement.
26. Headings. The headings in this Mortgage are for convenience of
reference only and shall not limit or otherwise affect the meaning of any
provision of this Mortgage.
27. Fixture Filing. This Mortgage also constitutes a financing
statement filed as a fixture filing under the Uniform Commercial Code with
respect to goods which are or are to become fixtures relating to the Land and as
to which Mortgagor is the debtor and record owner
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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<PAGE> 48
of the Land and Mortgagee is the secured party. It is to be recorded in the real
estate records of the County in which the Land is located.
28. Future Advance Mortgage. This Mortgage secures future advances and
is a future advance mortgage under Act No. 348 of the Michigan Public Acts of
1990 (MCL 565.901 et seq). All future advances under the Notes, this Mortgage
and the other Loan Documents shall have the same priority as if the future
advance was made on the date that this Mortgage was recorded.
29. Use of Insurance and Condemnation Proceeds. Notwithstanding any
other provision of this Mortgage, all insurance proceeds recovered by the
Mortgagee on account of damage or destruction to the Mortgaged Premises and all
proceeds of any condemnation award recovered by the Mortgagee for any building
or equipment taken or damaged, less the cost, if any, to the Mortgagee of such
recovery and of paying out such proceeds (including attorneys' fees and costs
allocable to inspecting the work and the plans and specifications therefor),
shall, upon the written request of the Mortgagor, be applied by the Mortgagee to
the payment of the cost of repairing, restoring or rebuilding the improvements
on the Mortgaged Premises so damaged or destroyed or of the portion or portions
of the Mortgaged Premises not so taken (hereinafter referred to as the "work")
and shall be paid out from time to time to the Mortgagor as the work progresses,
but subject to the Mortgagee's standard requirements for construction loans of
similar nature and subject to the following conditions:
(a) There shall be no Event of Default under this Mortgage or any
of the other Loan Documents; and
(b) The request for any payment after the work has been completed
shall be accompanied by a copy of any certificate or certificates required by
law to render occupancy of the Mortgaged Premises legal.
Upon the completion of the work and payment in full therefore, or
upon any failure on the part of the Mortgagor promptly to commence or continue
the work, or at any time upon request by the Mortgagor, the Mortgagee may, at
its option, either apply the amount of any such proceeds then or thereafter in
the hands of the Mortgagee to the payment of the Mortgage Indebtedness or any
portion thereof, whether or not then due and payable, or remit such amount to
the Mortgagor.
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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<PAGE> 49
IN WITNESS WHEREOF, Mortgagor has duly executed this Mortgage as of the
day and year first above written.
Signed in the presence of: KEY PLASTICS, INC.
/s/ Andrew S. Boyce By: /s/ Mark J. Abbo
- ------------------------------ --------------------------------------
Print Name: Andrew S. Boyce Mark J. Abbo
------------------- Its: Treasurer and Assistant Secretary
/s/ Mary S. Kershner
- ------------------------------
Print Name: Mary S. Kershner
-------------------
STATE OF MICHIGAN )
)SS.
COUNTY OF WAYNE )
The foregoing instrument was acknowledged before me on this 28th day of
March, 1997, by Mark J. Abbo, the Treasurer and Assistant Secretary of Key
Plastics, Inc., a Michigan corporation, on behalf of said corporation.
/s/ Janice K. Atkins
----------------------------------
Notary Public, Janice K. Atkins
Acting in Wayne County, MI
My Commission Expires: Aug 25 1998
Drafted by and when
recorded return to:
Mi Young Lee, Esq.
Dickinson, Wright, Moon,
Van Dusen & Freeman
500 Woodward Avenue, Suite 4000
Detroit, Michigan 48226
(313) 223-3500
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
- 14 -
<PAGE> 50
EXHIBIT A
Legal Description
(Port Huron, Michigan)
Real property in the City of Port Huron, County of St. Clair, State of
Michigan more particularly described as follows:
That part of Lots 1 through 16, both inclusive, Block 2 and Lots 1
through 13, both inclusive, Block 1 and vacated Dixon Street and
vacated 23rd Street, and vacated alleys adjacent, Dixon Plat, according
to the plat thereof as recorded in liber 16, page 159, of Plats, St.
Clair County Records, being more particularly described as: Commencing
at the southwest corner of Lot 9, Block 2; thence south 89 degrees 52
minutes 00 seconds east 18.00 feet to the point of beginning; thence
north 0 degrees 10 minutes 15 seconds east 88.00 feet; thence north 3
degrees 32 minutes 02 seconds west 278.57 feet; thence north 0 degrees
10 minutes 15 seconds east 285.30 feet; thence south 80 degrees 29
minutes 37 seconds east 303.55 feet; thence south 0 degrees 13 minutes
55 seconds west 575.86 feet; thence north 89 degrees 52 minutes 00
seconds west 280.91 feet to the point of beginning.
Parcel Identification No. 74-06-315-0020-000
<PAGE> 51
EXHIBIT B
Permitted Encumbrances
(Port Huron, Michigan)
1. Right-of-Way in favor of the Detroit Edison Company, as recorded in
liber 453 of Deeds, page 213, St. Clair County Records, as to Lot 6,
Block 1.
2. The Interest of the State of Michigan, as to all mineral, coal, oil and
gas, lying and being on, within or under the Mortgaged Premises, with
full and free liberty and power to the said State of Michigan, its duly
authorized officers, representatives and assigns, and its, or their
lessees, agents and workmen and all other persons by its or their
permission, whether already given or hereafter to be given, at any time
to enter upon said lands and take all usual, necessary or convenient
means for exploring, mining, working, piping, getting, laying up,
storing, dressing, making merchantable and taking away the said
mineral, coal, oil and gas; and also saving and reserving unto the
people of the State of Michigan, the rights of ingress and egress over
and across all of the abovementioned description of land lying along
any watercourse or stream, pursuant to the provisions of Section 12, of
Act 280, Public Acts of 1909, as amended, further excepting and
reserving to the State of Michigan, all aboriginal antiquities
including mounds, earth-works, forts, burial and village sites, mines
or other relics and also reserving the right to explore and excavate
for the same, by and through its duly authorized agents and employees,
pursuant to the provisions of Act 173, Public Acts of 1929, as reserved
in a certain Deed recorded in liber 393 of Deeds, page 463, St. Clair
County Records, as to Lots 4 and 5, Block 2.
3. An Easement Agreement in favor of the Detroit Edison Company and
Michigan Bell Telephone Company, now known as Ameritech, as recorded in
liber 1107 of Deeds, page 921, St. Clair Records, as to Lots 1 and 13,
Block 1.
4. Subject to the City of Port Huron for sidewalk and utility purposes
over the following described property; Commencing at the southwest
corner of Lot 9, Block 2; thence south 89 degrees 52 minutes 00 seconds
east 18.00 feet to the point of beginning; thence north 0 degrees 10
minutes 15 seconds east 88.00 feet; thence north 3 degrees 32 minutes
02 seconds west 278.57 feet; thence north 0 degrees 10 minutes 15
seconds east 60.00 feet; thence south 5 degrees 36 minutes 35 seconds
east 327.64 feet; thence north 89 degrees 52 minutes 00 seconds west
15.00 feet to the point of beginning, as disclosed in instrument
recorded in liber 1227, page 942, St. Clair County Records.
5. Reservation of a full width utility easement over that part of vacated
alley as reserved in resolution recorded in liber 1108 of Deeds, page
378, St. Clair County Records.
6. Encroachment of building and concrete over vacated alleys and vacated
Dixon Street and vacated Twenty Third Street, subject to public
utilities and Detroit Edison Easement.
<PAGE> 52
7. Encroachment of concrete walkway at west side of property.
8. Sanitary and storm sewer lines, water lines, electrical lines and
transformers.
9. UCC - Fixture Filing and Financing Statement filed and recorded January
27, 1993, in liber 1085 of Mortgages, page 683, St. Clair County
Records, Aeroquip Corporation, as Debtor, to First Tennessee Equipment
Finance Corporation, as Secured Party, provided that such Fixture
Filing and Financing Statement is terminated of record by not later
than April 30, 1997.
-2-
<PAGE> 53
SCHEDULE TO MORTGAGE, SECURITY AGREEMENT
AND ASSIGNMENT OF RENTS
1. The Revolving Credit Loan is payable on September 24, 2003.
2. The Term Loan is payable in 30 consecutive quarterly installments on
the last Business Day of each March, June, September and December,
commencing with the last Business Day of June, 1997, as follows: (i)
twenty-six quarterly principal installments of $75,000 each for the
first twenty-six quarterly payments and (ii) four principal
installments of $3,262,500 each for the next four quarterly
installments, and on September 24, 2004.
<PAGE> 1
EXHIBIT 10.4
INDIANA FORM
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF
RENTS AND FINANCING STATEMENT (FIXTURE FILING)
THIS MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS, AND FINANCING
STATEMENT (FIXTURE FILING), dated as of March 24, 1997, by KEY PLASTICS, INC.,
a Michigan corporation whose address is 21333 Haggerty Road, Suite 200, Novi,
Michigan 48375 (the "Mortgagor"), to NBD BANK, a Michigan banking corporation,
whose address is 611 Woodward Avenue, Detroit, Michigan 48226 (the
"Mortgagee"), as agent for the benefit of itself and the lenders (the
"Lenders") which are parties to the Credit Agreement defined below.
RECITALS:
A. The Mortgagor has entered into a Credit Agreement dated as of March 24,
1997 (as amended or modified from time to time, including any agreement entered
into in substitution therefor, the "Credit Agreement") pursuant to which the
Lenders agreed, subject to the terms and conditions thereof, to extend credit
to the Mortgagor up to a maximum principal amount outstanding at any time equal
to One Hundred and Forty Million and No/100 Dollars ($140,000,000.00) maturing
on or before September 24, 2004, as such date may be extended by agreement of
the parties to the Credit Agreement.
B. As a condition to the effectiveness of the obligations of the Mortgagee
and the Lenders under the Credit Agreement, the Mortgagor is obligated, among
other things, to grant a lien on the mortgaged premises hereinafter described.
WITNESSETH:
NOW, THEREFORE, to secure (a) the prompt and complete payment of the
principal Indebtedness in the aggregate amount of One Hundred and Forty Million
Dollars ($140,000,000) and all other Indebtedness and obligations of the
Mortgagor or any Subsidiary now or hereafter owing to the Lenders or the
Mortgagee under or on account of the Credit Agreement, any Security Document or
any letters or credit, notes or other instruments issued to the Mortgagee or
the Lenders pursuant thereto, (b) the performance of the covenants under the
Credit Agreement and the Security Documents and any monies expended by any
Lender or the Mortgagee in connection therewith, and (c) the prompt and
complete payment of all obligations and performance of all covenants of the
Mortgagor or any Subsidiary in connection with Swaps relating to Indebtedness
under the Loan Documents (including any interest accruing subsequent to any
petition filed by or against the Mortgagor or any Subsidiary under the U.S.
Bankruptcy Code, whether or not allowed), indemnity and reimbursement
obligations, charges, expenses, fees, reasonable attorneys' fees and
disbursements and any other amounts owing thereunder (all
<PAGE> 2
of the aforesaid Indebtedness, obligations and liabilities of the
Mortgagor and its Subsidiaries being herein called the "Mortgage Indebtedness"
and this Mortgage and all of the other documents, agreements and instruments
among the Mortgagor, the Subsidiaries, the Lenders, the Mortgagee or any of
them, evidencing or securing the repayment of, or otherwise pertaining to, the
Mortgage Indebtedness, including without limitation the Credit Agreement, the
Notes and the Security Documents, being herein collectively called the "Loan
Documents"), the Mortgagor does hereby MORTGAGE and WARRANT and does hereby
grant a security interest in and unto Mortgagee, and its successors and
assigns, the following described property (the "Mortgaged Premises"):
(A) the land situated in the Township of Otsego, County of Steuben and
State of Indiana, more specifically described in Exhibit A hereto (the "Land");
(B) all easements, rights-of-way, licenses and privileges, thereunto
belonging or in anywise appertaining, including without limitation all
Mortgagor's right, title and interest in and to those easements, rights-of-way,
licenses and privileges described in Exhibit A hereto, if any;
(C) all buildings and improvements now or hereafter situated upon the Land
or any part thereof;
(D) to the extent, if any, of Mortgagor's interests thereon, all minerals,
royalties, gas rights, water, water rights, water stock, flowers, shrubs, lawn
plants, crops, trees, timber and other emblements now or hereafter located on,
under or above all or any part of the Land;
(E) all and singular the tenements, hereditament and appurtenances
belonging or in anywise appertaining to the Land, and the reversion or
reversions, remainder and remainders thereof; and also all the estate, right,
title, interest, property, claim and demand whatsoever of Mortgagor, of, in and
to the same and of, in and to every part and parcel thereof;
(F) all the rents, issues and profits thereof under present or future
leases, or otherwise, which are hereby specifically assigned, transferred and
set over to Mortgagee, including, but not limited to, all cash or securities
deposited under any such leases to secure performance by the tenants of their
obligations thereunder, whether said cash or securities are to be held until
the expiration of the terms of such leases or applied to one or more of the
installments of rent coming due thereunder;
(G) all right, title and interest of Mortgagor, if any, in and to the land
lying in the bed of any street, road, avenue, alley or walkway, opened or
proposed or vacated, or any strip or gore, in front of or adjoining the Land;
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
-2-
<PAGE> 3
(H) all machinery, apparatus, equipment, fittings, fixtures, and articles
of personal property of every kind and nature whatsoever, other than consumable
goods, now or hereafter located in or upon the Land or any part thereof and
used or useable in connection with any present or future operation of the Land
or any building or buildings now or hereafter on the Land and now owned or
hereafter acquired by Mortgagor (all of which is herein called "Equipment"),
including, but without limiting the generality of the foregoing, all lighting,
heating, cooling, ventilating, air-conditioning, incinerating, refrigerating,
plumbing, sprinkling, communicating and electrical systems, and the machinery,
appliances, fixtures and equipment pertaining thereto, it being understood
and agreed that all Equipment is part and parcel of the Land and appropriated
to the use of said real estate and, whether affixed or annexed or not, shall
for the purposes of this Mortgage, unless Mortgagee shall otherwise elect,
be deemed conclusively to be real estate and mortgaged hereby; and
(I) any and all awards or payments, including interest thereon, and the
right to receive the same, which may be made with respect to the Land and are
or will be payable to Mortgagor as a result of (a) the exercise of the right of
eminent domain, (b) the alteration of the grade of any street, (c) any loss of
or damage to any building or other improvement on the Land, (d) any other
injury to or decrease in the value of the Land or (e) any refund due on account
of the payment of real estate taxes, assessments or other charges levied
against or imposed upon the Land, to the extent of all amounts which may be
secured by this Mortgage at the date of receipt of any such award or payment by
Mortgagee, and of the reasonable counsel fees, costs and disbursements incurred
by Mortgagee in connection with the collection of such award or payment,
Mortgagor hereby agreeing to execute and deliver, from time to time, such
further instruments as may be reasonably requested by Mortgagee to confirm such
assignment to Mortgagee of any such award or payment.
TO HAVE AND TO HOLD the Mortgaged Premises, and each and every part
thereof, unto Mortgagee and its successors and assigns forever. Any reference
herein to the "Mortgaged Premises" shall, unless the context shall require
otherwise, be deemed to include and apply to the above described Land and said
buildings, improvements, Equipment, rents, issues, profits, leases, easements,
tenements, hereditament and appurtenances and all other rights, privileges and
interests hereinabove described.
SUBJECT only to those matters set forth in Exhibit B hereto ("Permitted
Encumbrances").
AND Mortgagor does hereby covenant and warrant as follows:
1. Payment of Mortgage Indebtedness; Performance of Agreements. The
Mortgagor shall pay the principal of and interest on the Mortgage Indebtedness
according to the terms
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thereof, and will keep and perform all the covenants, promises and agreements
on its part to be performed in any and all Loan Documents, all in the manner
herein or therein set forth.
2. Covenants of Title. The Mortgagor has good and indefeasible title to
the Land in fee simple and has good and indefeasible title to the entire
Mortgaged Premises and with good right and full power to sell, mortgage and
convey the Mortgaged Premises, the Mortgaged Premises are free and clear of
liens and encumbrances except Permitted Encumbrances, whether presently
existing or which may hereafter be created in accordance with the terms hereof,
and Mortgagor will warrant and defend the Mortgaged Premises against all lawful
claims and demands whatsoever. The Mortgagee shall have the right, at its
option and at such time or times as it, in its sole discretion, shall deem
reasonably necessary, to take whatever action it may reasonably deem necessary
to defend or uphold the lien of this Mortgage or otherwise enforce any of the
rights of Mortgagee hereunder or any obligation secured hereby, including
without limitation, the right to institute appropriate legal proceedings for
such purposes.
3. Payment of Taxes, Assessments and Charges. The Mortgagor shall pay
when due, and before any interest, collection fees or penalties shall accrue,
all real estate taxes, special assessments, water and sewer charges or other
governmental charges and impositions levied or assessed with respect to the
Mortgaged Premises or any part thereof except to the extent that payment of any
of the foregoing is then being contested in good faith by appropriate legal
proceedings and with respect to which adequate financial reserves have been
established on the books and records of the Mortgagor. Should Mortgagor fail
to so pay such taxes, special assessments, water and sewer charges or other
governmental charges or impositions or establish such adequate financial
reserves, Mortgagee may, at its option, pay the same for the account of
Mortgagor.
4. Reserves for Taxes and Insurance Premiums. Upon the occurrence of any
Event of Default, Mortgagor shall pay to Mortgagee, upon the request of
Mortgagee, installments of principal and interest, and in addition thereto,
installments of the taxes and assessments levied or to be levied upon the
Mortgaged Premises, and installments of the premiums that will become due and
payable to renew the insurance hereinafter provided, said installments to be
substantially equal and to be in such amount as will assure to Mortgagee that
not less than 30 days before the time when such taxes and premiums,
respectively, become due Mortgagor will have paid to Mortgagee a sufficient
amount to pay the same in full. Said amounts paid to Mortgagee hereunder need
not be segregated nor kept in a separate fund, and no interest shall be payable
thereon. Said amounts shall be held by Mortgagee as additional security for
the Mortgage Indebtedness and, except as provided in the following sentence, be
applied to the payment of said taxes and assessments when the same become due
and payable. Mortgagee may, at its option, but without any obligation on its
part so to do, apply said amounts upon said taxes and assessments or insurance
premiums or toward the payment of the Mortgage Indebtedness or any portion
thereof, whether or not then due or payable. The Mortgagee shall endeavor to
notify the
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Mortgagor of how such amounts were applied, provided that the
failure to give such notice shall not affect Mortgagee's rights under this
Mortgage.
Upon an assignment of the Mortgage, Mortgagee shall have the right to pay
over the balance of such deposits in its possession to the assignee and
Mortgagee shall thereupon be completely released from all liability with
respect to such deposits and Mortgagor or owner of the Mortgaged Premises shall
look solely to the assignee or transferee in reference thereto. This provision
shall apply to every transfer of such deposits to a new assignee. Upon full
payment and satisfaction of the Mortgage Indebtedness or at any prior time upon
the election of Mortgagee, the balance of the unapplied deposits in its
possession shall be paid over to the record owner of the Mortgaged Premises
and no other party shall have any right or claim thereto in any event,
provided that in the event of a foreclosure of the Mortgaged Premises, the
purchaser at such foreclosure shall have the right to receive such unapplied
deposits. The Mortgagor agrees, at Mortgagee's request, to deliver the
aforesaid deposits to such service or financial institution as Mortgagee
shall from time to time designate.
5. Payment of Other Obligations. The Mortgagor shall also pay any and all
other obligations, liabilities or debts which may become liens, security
interests, or encumbrances upon or charges against the Mortgaged Premises for
any repairs or improvements that are now completed or are in progress or which
may hereafter be made thereon, or for any other goods, services, or utilities
furnished to the Mortgaged Premises, and shall not permit any lien, security
interest, encumbrance or charge of any kind securing the repayment of borrowed
funds (including the deferred purchase price for any property) to accrue and
remain outstanding against the Mortgaged Premises or any part thereof, or any
improvements thereon other than Permitted Encumbrances, if any, except to the
extent that payment of any of the foregoing is then being contested in good
faith by appropriate legal proceedings and with respect to which adequate
financial reserves have been established on the books and records of the
Mortgagor.
6. Maintenance and Repair; Compliance with Laws; Inspection. The
Mortgagor will keep the Land and all the improvements thereon in good order and
repair, and Mortgagor expressly agrees that it will not do or permit waste on
the Land nor do any other act whereby the Mortgaged Premises will become less
valuable or the lien hereof may be impaired. Should Mortgagor fail to effect
the necessary repairs and such failure shall remain unremedied for 20 calendar
days after written notice thereof shall have been given to the Mortgagor by the
Mortgagee, Mortgagee may at its option make such repairs for the account of
Mortgagor. The Mortgagor will promptly comply, and cause the Mortgaged
Premises and the occupants or users thereof to comply, with all present and
future laws, ordinances, orders, rules and regulations and other requirements
of any governmental authority affecting the Mortgaged Premises or any part
thereof or the use or occupancy thereof and with all instruments and documents
of record or otherwise affecting the Mortgaged Premises, or any part thereof,
or the use or occupancy
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thereof. The Mortgagee, and any person authorized by Mortgagee, shall have
the right to enter upon and inspect the Mortgaged Premises at all reasonable
times and with reasonable notice.
7. Insurance. (a) The Mortgagor shall keep the buildings and other
improvements on the Land, or which may hereafter be erected thereon, constantly
insured for the benefit of Mortgagee with such company or companies as may be
reasonable acceptable to Mortgagee and in an amount reasonably satisfactory to
Mortgagee, which amount shall not be less than 100% of the then full
replacement cost of such building and improvements (exclusive of excavations,
foundations and footings), which policies shall be without deduction for
depreciation and be subject to the payment of a deductible not in excess of an
amount reasonably satisfactory to Mortgagee, until the Mortgage Indebtedness
and all interest thereon and all of the amounts due hereunder are
fully paid, against fire and such other hazards and risks customarily covered
by the standard form of "extended coverage" endorsements available in the State
of Indiana, and shall further provide flood insurance (if the Mortgaged
Premises are situated in an area designated as a flood hazard area by the
Director of the Federal Emergency Management Agency or as otherwise required by
the Flood Disaster Protection Act of 1973 and regulations issued thereunder),
rent insurance, in an amount not less than one year's gross rent derived from
the Mortgaged Premises, and such other appropriate insurance as Mortgagee may
reasonably require from time to time. All such policies shall include standard
mortgagee clauses in favor of Mortgagee and shall provide that the proceeds
thereof shall be paid to Mortgagee, all as may be satisfactory to Mortgagee.
During any construction, repair or restoration of the buildings and other
improvements on the Mortgaged Premises, Mortgagor shall carry or cause to be
carried builder's risk insurance which names Mortgagee as a loss payee as its
interests may appear. The Mortgagor shall also carry comprehensive general or
public liability insurance with reference to the Mortgaged Premises, which
names Mortgagee as an additional insured. All such policies shall provide that
the same may not be canceled or terminated without giving Mortgagee at least 30
days' prior written notice of such cancellation or termination.
(b) The Mortgagor shall deliver to Mortgagee at its principal office
aforesaid or at such other place as may be designated by the holder hereof such
insurance policies or, if Mortgagee consents, certificates evidencing such
policies. Renewals thereof shall likewise be delivered to Mortgagee at least
15 days before the expiration of any existing policies. Should Mortgagor fail
to insure or fail to pay the premiums on any such insurance or fail to deliver
the policies or renewals thereof as provided above, Mortgagee at its option may
have such insurance written or renewed and pay the premiums thereon for the
account of Mortgagor.
(c) In the event of loss or damage, the proceeds of said property and
builders' risk insurance on the buildings and improvements shall be paid to
Mortgagee alone. No such loss or damage shall itself reduce the Mortgage
Indebtedness. The Mortgagee is authorized to adjust and compromise such loss
without the consent of Mortgagor, to collect, receive and receipt for such
proceeds in the name of Mortgagee and Mortgagor and to endorse Mortgagor's name
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upon any check in payment thereof. Such proceeds shall be applied first toward
reimbursement of all costs and expenses of Mortgagee in collecting said
proceeds and then toward payment of the Mortgage Indebtedness or any portion
thereof, whether or not then due or payable, or Mortgagee at its option may
apply said insurance proceeds, or any part thereof, to the repair or rebuilding
of the Mortgaged Premises. No such application of proceeds by Mortgagee toward
payment of the Mortgage Indebtedness shall reduce the amount of the payments
required to be made on the Mortgage Indebtedness in accordance with its terms.
(d) In the event of a foreclosure of this Mortgage, the purchaser of the
Mortgaged Premises shall succeed to all of the rights of Mortgagor under said
insurance policies payable to Mortgagee, including any right to unearned
premiums and the right to receive the proceeds of any insurance payable by
reason of any loss theretofore or thereafter occurring.
8. Eminent Domain. Notwithstanding any taking under the power of eminent
domain, alteration of the grade of any street, or other injury to or decrease
in value of the Mortgaged Premises by any public or quasi-public authority or
corporation, Mortgagor shall continue to pay the Mortgage Indebtedness in
accordance with the terms of the Notes, and any reduction in the principal sum
resulting from the application by Mortgagee of such award or payment as
hereinafter set forth shall be deemed to take effect only upon the receipt by
Mortgagee of such award. The Mortgagor hereby assigns the entire proceeds of
any award or payment to Mortgagee. The Mortgagee is authorized to commence,
appear in and prosecute, in its own or in Mortgagor's name, any action or
proceeding relating to any such taking, and to settle or compromise any claim
in connection therewith. Such proceeds shall be applied first toward
reimbursement of all costs and expenses of Mortgagee in collecting said
proceeds and then toward payment of the Mortgage Indebtedness or any portion
thereof, whether or not then due or payable, or Mortgagee at its option may
apply said proceeds, or any part thereof, to the alteration, restoration or
rebuilding of the Mortgaged Premises. No such application of proceeds by
Mortgagee toward payment of the Mortgage Indebtedness shall reduce the amount
of the payments required to be made on the Mortgage Indebtedness in accordance
with its terms.
9. Waste. The failure of Mortgagor to pay any taxes or assessments
assessed against the Mortgaged Premises, or any installment thereof, or any
premiums payable with respect to any insurance policy covering the Mortgaged
Premises, shall constitute waste. The Mortgagor hereby consents to the
appointment of a receiver under IC 34-1-12-1 et seq., should Mortgagee elect to
seek such relief thereunder.
10. Reimbursement of Advances by Mortgagee. The Mortgagor shall pay to
Mortgagee, upon demand, all sums expended by Mortgagee, or by a receiver
appointed at the request of Mortgagee, unless such sums shall be paid out of
the rents, income and profits from the Mortgaged Premises, (a) to pay insurance
premiums, taxes, assessments, water and sewer charges and other governmental
charges and impositions with respect to the Mortgaged Premises,
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(b) to maintain, repair or improve the Mortgaged Premises, (c) to defend the
lien of this Mortgage as a lien against the Mortgaged Premises subject only
to the Permitted Encumbrances hereinabove expressly set forth, (d) to
discharge any lien or encumbrance affecting the Mortgaged Premises other than
Permitted Encumbrances, (e) to cure any default of Mortgagor under any lease
or other agreement covering the Mortgaged Premises, (f) to cure any default of
Mortgagor hereunder or under any of the Loan Documents or (g) for or in
connection with any other action taken by Mortgagee to preserve the security
of this Mortgage or any other security for the Mortgage Indebtedness or to
protect any of Mortgagee's rights hereunder. All such expenditures as shall
be made by Mortgagee or such receiver or pursuant to any other provision of
this Mortgage or the other Loan Documents, including any reasonable attorneys'
fees and disbursements incurred by Mortgagee or such receiver in connection
with the foregoing, shall be payable upon demand and be secured by this
Mortgage and shall bear interest at the Overdue Rate set forth in the Credit
Agreement.
11. Change in Taxes. In the event any tax shall be due or become due and
payable to the United States of America, the State of Indiana or any political
subdivision thereof with respect to the execution and delivery or recordation
of this Mortgage or any note or other instrument or agreement evidencing or
securing repayment of the Mortgage Indebtedness or the interest of Mortgagee in
the Mortgaged Premises, Mortgagor shall pay such tax at the time and in the
manner required by applicable law and Mortgagor shall hold Mortgagee harmless
and shall indemnify Mortgagee against any liability of any nature whatsoever
as a result of the imposition of any such tax.
In the event of the passage after the date of this Mortgage of any law in
the State of Indiana deducting from the value of real property for purposes of
taxation any lien thereon, or changing in any way the laws now in force for the
taxation of mortgages or debts secured thereby (including the interest thereon)
for state or local purposes, or changing the manner of collection of any such
taxes, and imposing a tax, either directly or indirectly, on this Mortgage, the
Notes or any of the other Loan Documents, the holder of this Mortgage shall
have the right to declare the entire unpaid amount of the Mortgage
Indebtedness, together with accrued and unpaid interest thereon, to be due and
payable on a date to be specified by not less than 30 days' written notice to
Mortgagor, provided, however, that such election shall not be effective if
Mortgagor is permitted by law to pay the whole of such tax in addition to all
other payments required thereunder and if Mortgagor, prior to such specified
date, makes payment of such tax then due and agrees to pay any such tax when
thereafter levied or assessed against the Mortgaged Premises, this Mortgage,
the Notes or any of the other Loan Documents.
12. Events of Default. The occurrence of any of the following events
shall be deemed an "Event of Default" hereunder and shall entitle Mortgagee to
exercise its remedies hereunder and under any of the other Loan Documents or as
otherwise provided by law:
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(a) Nonpayment of any of the Mortgage Indebtedness when due, beyond any
period of grace, if any, provided with respect thereto and after the giving of
any required notice;
(b) The failure of the Mortgagor to perform or observe any material term
or covenant contained in this Mortgage and such failure shall remain unremedied
for 30 calendar days after the earlier of (i) written notice thereof shall have
been given to the Mortgagor from the Mortgagee and (ii) when the Mortgagor
otherwise had knowledge of such failure, unless the Mortgagor is diligently
pursuing to cure such failure to the reasonable satisfaction of the Mortgagee;
(c) Any representation or warranty made by Mortgagor in this Mortgage
shall prove to have been false or misleading in any material respect when made;
or
(d) The occurrence of any Event of Default (as defined in the Credit
Agreement) under the Credit Agreement.
13. Remedies upon Default. Immediately upon the occurrence of any Event
of Default after applicable notice and grace periods have elapsed, Mortgagee
shall have the option, in addition to and not in lieu of or substitution for
all other rights and remedies provided in this Mortgage or any other Loan
Documents or provided by law, and is hereby authorized and empowered by
Mortgagor, to do any or all of the following:
(a) Declare the entire unpaid amount of the Mortgage Indebtedness,
together with accrued and unpaid interest thereon, and any and all charges
payable by Mortgagor to Mortgagee pursuant to any of the Loan Documents,
immediately due and payable and, at Mortgagee's option, (i) to bring suit
therefor, or (ii) to bring suit for any delinquent payment of or upon the
Mortgage Indebtedness, or (iii) to take any and all steps and institute any and
all other proceedings that Mortgagee deems necessary to enforce payment of the
Mortgage Indebtedness and performance of other obligations secured hereunder
and to protect the lien of this Mortgage.
(b) Either in person or by agent, with or without bringing any action or
proceeding, enter upon and take possession of the Mortgaged Premises, or any
part thereof, in its own name, and do any acts which it deems necessary or
desirable to preserve the value, marketability or rentability of the Mortgaged
Premises or part thereof or interest therein including, without limitation,
enforce any leases, increase the income therefrom or protect the security
hereof and, with or without taking possession of the Mortgaged Premises, sue
for or otherwise collect the rents, including those past due and unpaid, and
apply the same in accordance with the provisions of this Mortgage. The
entering upon and taking possession of the Mortgaged Premises, the collection
of such rents, and the application thereof as aforesaid, shall not cure or
waive any default or notice of default hereunder or invalidate any act done in
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response to such default or pursuant to such notice of default and
notwithstanding the continuance in possession of the Mortgaged Premises or the
collection, receipt and application of rents, Mortgagee shall be entitled to
exercise every right provided for in any of the Loan Documents or by law upon
occurrence of any Event of Default.
(c) Commence an action to foreclose this Mortgage, appoint a receiver, or
specifically enforce any of the covenants of this Mortgage, the Notes, and any
or all of the Loan Documents.
(d) Exercise any or all of the remedies available to a secured party under
the Uniform Commercial Code of Indiana (the "Code"), including, but not limited
to:
(i) Either personally or by means of a court appointed
receiver, take possession of all or any of the personal
property and exclude therefrom Mortgagor and all others
claiming under Mortgagor, and thereafter hold, store,
use, operate, manage, maintain and control, make
repairs, replacements, alterations, additions and
improvements to and exercise all rights and powers of
Mortgagor in respect to the personal property or any
part thereof. In the event Mortgagee demands or
attempts to take possession of the personal property in
the exercise of any rights under any of the Loan
Documents, Mortgagor promises and agrees to promptly
turn over and deliver complete possession thereof to
Mortgagee;
(ii) Without notice to or demand upon Mortgagor, make
such payments and do such acts as Mortgagee may deem
necessary to protect its security interest in the
personal property, including without limitation, paying,
purchasing, contesting, or compromising any encumbrance,
charge or lien which is prior to or superior to the
security interest granted hereunder, and in exercising
any such powers or authority to pay all expenses
incurred in connection therewith;
(iii) Require Mortgagor to assemble the personal
property or any portion thereof, at a place designated
by Mortgagee and reasonably convenient to both parties,
and promptly to deliver such personal property to
Mortgagee, or an agent or representative designated by
it. Mortgagee, and its agents and representatives shall
have the right to enter upon any or all of the Mortgaged
Premises and/or Mortgagor's other premises and property
to exercise Mortgagee's rights hereunder;
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(iv) Sell, lease or otherwise dispose of the personal
property at public sale, with or without having the
personal property at the place of sale, and upon such
terms and in such manner as Mortgagee may determine.
Mortgagee may be a purchaser at any such sale; and/or
(v) Unless the personal property is perishable or
threatens to decline speedily in value or is of a type
customarily sold on a recognized market, Mortgagee shall
give Mortgagor at least five (5) days prior written
notice of the time and place of any public sale of the
personal property or other intended disposition thereof.
Such notice may be mailed to Mortgagor at the address
set forth at the beginning of this Mortgage.
(e) When the obligations hereby secured, or any part thereof, shall become
due, whether by acceleration or otherwise, Mortgagee shall have the right to
foreclose the lien hereof for such obligations or part thereof. In any suit to
foreclose the lien hereof or enforce any other remedy of Mortgagee under this
Mortgage or any other Loan Documents, there shall be allowed and included as
additional Indebtedness in the decree for sale or other judgment or decree all
expenditures and expenses which may be paid or incurred by or on behalf of
Mortgagee for attorneys' and paralegals' fees, appraiser's fees, outlays for
documentary and expert evidence, stenographers' charges, publication costs,
environmental assessments and costs (which may be estimated as to items to be
expended after entry of the decree) of procuring all such abstracts of title,
title searches and examinations, title insurance policies, survey, and similar
data and assurances with respect to title as Mortgagee may deem reasonably
necessary either to prosecute such suit or to evidence to bidders at any sale
which may be had pursuant to such decree the true condition of the title to or
the value of the Mortgaged Premises. All expenditures and expenses of the
nature in this paragraph mentioned, and such expenses and fees as may be
incurred in the protection of the Mortgaged Premises and the maintenance of the
lien of this Mortgage, including the fees of any attorneys and paralegals
employed by Mortgagee in any litigation or proceeding affecting this Mortgage,
any other Loan Documents or the Mortgaged Premises, including probate and
bankruptcy proceedings, or in preparations for the commencement or defense of
any proceeding or threatened suit or proceeding, shall be immediately due and
payable by Mortgagor, with interest thereon at the Overdue Rate.
(f) After the occurrence of an Event of Default, or at any time after the
filing of a complaint to foreclose this Mortgage, the court in which such
complaint is filed may appoint a receiver of the Mortgaged Premises and the
Mortgagor hereby consents to the appointment of a receiver. Such appointment
may be made either before or after sale, without notice (other than such notice
as is required to be given by law), without regard to the solvency or
insolvency of Mortgagor at the time of application for such receiver and
without regard to the then value of the
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Mortgaged Premises or whether the same shall be then occupied as a
homestead or not and Mortgagee hereunder or any successor of Mortgagee may be
appointed as such receiver. Such receiver shall have power: (a) to collect
the rents of the Mortgaged Premises during the pendency of such foreclosure
suit and, in case of a sale and a deficiency, during the full statutory period
of redemption, whether there be redemption or not, as well as during any
further times when Mortgagor, except for the intervention of such receiver,
would be entitled to collect such rents; (b) to extend or modify any then
existing leases and to make new leases, which extensions, modifications and new
leases may provide for terms to expire, or for options to lessees to extend or
renew terms to expire, beyond the maturity date of the Mortgaged Indebtedness
hereunder and beyond the date of the issuance of a deed or deeds to a purchaser
or purchasers at a foreclosure sale, it being understood and agreed that any
such leases, and the options or other such provisions to be contained therein,
shall be binding upon Mortgagor and all persons whose interests in the
Mortgaged Premises are subject to the lien hereof and upon the purchaser or
purchasers at any foreclosure sale, notwithstanding any redemption from sale,
discharge of the obligations, satisfaction of any foreclosure decree, or
issuance of any certificate of sale or deed to any purchaser; and (c) all other
powers which may be necessary or are usual in such cases for the protection,
possession, control, management, and operation of the Mortgaged Premises during
the whole of said period. The court from time to time may authorize the
receiver to apply the net income in his hands in payment in whole or in part
of: (a) the obligations secured hereby, or by any decree foreclosing this
Mortgage, or any tax, special assessment or other lien which may be or become
superior to the lien hereof or of such decree, provided such application is
made prior to foreclosure sale; and (b) the deficiency in case of a sale and
deficiency. To the fullest extent permitted by law, Mortgagor for itself and
any subsequent owner hereby waives any and all defenses to the application for
such a receiver, as above, but nothing herein contained is to be construed so
as to deprive the Mortgagee of any other right, remedy, or privilege it may not
have under the law to have a receiver appointed. This provision providing for
the appointment of a receiver of the Premises and/or the rents, issues and
profits thereof, and the assignment of such leases, rents, issues and profits
is made an express condition upon which the loan hereby secured is made.
(g) Mortgagee shall be entitled to enforce payment and performance of the
Indebtedness hereby secured or any part thereof secured hereby and to exercise
all rights and powers under this Mortgage or under any of the Loan Documents or
other agreement or any laws now or hereafter in force, notwithstanding some or
all of the said Indebtedness secured hereby may now or hereafter be otherwise
secured, whether by mortgage, deed of trust, pledge, lien, assignment or
otherwise. Neither the acceptance of this Mortgage nor its enforcement shall
prejudice or in any manner affect Mortgagee's right to realize upon or enforce
any other security now or hereafter held by Mortgagee, it being agreed that
Mortgagee shall be entitled to enforce this Mortgage and any other security now
or hereafter held by Mortgagee in such order and manner as Mortgagee may, in
its absolute discretion, determine. No remedy herein conferred upon or
reserved to Mortgagee is intended to be exclusive of any other remedy herein or
by law
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provided or permitted, but each shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing at
law or in equity or by statute. Every power or remedy given by any of the Loan
Documents to Mortgagee may be exercised, concurrently or independently, from
time to time as often as may be deemed expedient by Mortgagee and Mortgagee may
pursue inconsistent remedies; all of which shall be limited by applicable law.
14. Successors in Ownership. In the event ownership of the Mortgaged
Premises or any part thereof becomes vested in a person or persons other than
Mortgagor without the prior written approval of Mortgagee, Mortgagee may (but
shall not be obligated to) deal with such successor or successors in interest
with reference to this Mortgage and the other Loan Documents in the same manner
as with Mortgagor, without in any manner discharging or otherwise affecting
Mortgagor's liability hereunder or upon the Mortgage Indebtedness.
15. Personal Property. (a) The Mortgagor represents and warrants that
Mortgagor owns all presently owned Equipment and other personal property
described in this Mortgage free and clear of any and all liens and security
interests except for the lien and security interest granted by this Mortgage
and Permitted Encumbrances and any Liens permitted by the terms of the Credit
Agreement. The Mortgagor further represents and warrants that, as to Equipment
and other personal property hereafter acquired, Mortgagor will own all such
Equipment and other personal property at the time it is brought on the Land and
thereafter free and clear of any and all liens and security interests except
for the lien and security interest granted by this Mortgage, any other
security instrument or agreement in favor of Mortgagee, and Permitted
Encumbrances and any Liens permitted by the terms of the Credit Agreement.
(b) The Mortgagor does hereby grant a security interest to Mortgagee
pursuant to the Code in any Equipment and other personal property covered
hereby. The Mortgagor agrees, upon request of Mortgagee, to furnish an
inventory of personal property owned by Mortgagor and subject to this Mortgage
and, upon request by Mortgagee, to execute any supplements to this Mortgage,
any separate security agreement and any financing statements to include
specifically said inventory of personal property. Upon the occurrence of an
Event of Default, Mortgagee shall have all of the rights and remedies therein
provided or otherwise provided by law or by this Mortgage, including but not
limited to the right to require Mortgagor to assemble such personal property
and make it available to Mortgagee at a place to be designated by Mortgagee
which is reasonably convenient to both parties, the right to take possession of
such personal property with or without demand and with or without process of
law and the right to sell and dispose of the same and distribute the proceeds
according to law. The parties hereto agree that any requirement of reasonable
notice shall be met if Mortgagee sends such notice to Mortgagor at least five
(5) days prior to the date of sale, disposition or other event giving rise to
the required notice, and that the proceeds of any disposition of any of such
personal property may
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
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<PAGE> 14
be applied by Mortgagee first to the reasonable expenses in connection
therewith, including reasonable attorneys' fees and disbursements
and then to payment of the Mortgage Indebtedness.
(c) Mortgagor hereby authorizes Mortgagee, to the extent permitted by
applicable law, to execute and file financing statements signed only by a
representative of Mortgagee covering the security interest of Mortgagee in the
equipment and other personal property described in this Mortgage.
16. Assignment of Leases and Rents. As of the date of this Mortgage,
Mortgagor hereby assigns, transfers and conveys to Mortgagee all its right,
title and interest in and to all written and oral leases, whether now in
existence or which may hereafter come into existence during the term of this
Mortgage, or any extension hereof, covering the Mortgaged Premises or any part
thereof (but without an assumption by Mortgagee of liabilities of Mortgagor
under any such leases by virtue of this assignment), and Mortgagor hereby
assigns to Mortgagee the rents, issues and profits of the Mortgaged Premises.
Until the occurrence of an Event of Default, Mortgagor shall have the right to
receive and collect such rents, issues and profits. Upon the occurrence of an
Event of Default, Mortgagee may elect upon written notice to Mortgagor to
receive and collect said rents, issues and profits personally or through a
receiver so long as any such Event of Default shall exist and during the
pendency of any foreclosure proceedings and during any redemption period, and
Mortgagor hereby consents to the appointment of a receiver if believed
necessary or desirable by Mortgagee to enforce its rights under this paragraph
16. The collection of rents by Mortgagee shall in no way waive the right of
Mortgagee to foreclose this Mortgage in the event of any Event of Default.
17. Prohibition of Transfer and Further Encumbrances. Except as permitted
under the Credit Agreement, the Mortgagor shall not, without the prior written
consent of Mortgagee, permit or suffer the Mortgaged Premises, or any part
thereof, to be sold, assigned, transferred or encumbered in any way, whether by
operation of law or otherwise. The preceding sentence shall not apply to
transfers of ownership in Mortgagor resulting from the death of a natural
person, transfers by a natural person to a member or members of such person's
immediate family or transfers by a natural person in connection with bona fide
estate planning.
18. Severability. If any provision hereof is in conflict with any statute
or rule of law of the State of Indiana or is otherwise unenforceable for any
reason whatsoever, then such provision shall be deemed null and void to the
extent of such conflict or unenforceability and shall be deemed severable from
but shall not invalidate any other provisions of this Mortgage.
19. Environmental Matters. The representations, warranties, covenants and
agreements made by the Mortgagor to the Mortgagee in the Environmental
Certificate delivered by the Mortgagor to the Mortgagee in connection with the
execution of this Mortgage are incorporated herein by reference. The Mortgagor
agrees that any default under the terms of the
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
-14-
<PAGE> 15
Environmental Certificate will constitute a default under this
Mortgage. To the best of Mortgagor's knowledge, after diligent inquiry and
investigation, none of the Mortgaged Premises is within the definition of the
term "property" as used in the Indiana Responsible Property Transfer Law
("IRPTL") (IC 13-25-3-1 through 13-25-3-15), the transaction evidenced by this
Mortgage is not subject to the provisions of IRPTL and Mortgagor shall not
allow any of the Mortgaged Premises to become subject to or constitute
"property" subject to IRPTL.
20. Waiver. No waiver by Mortgagee of any right or remedy granted
hereunder or failure to insist on strict performance by Mortgagor hereunder
shall affect or extend to or act as a waiver of any other right or remedy of
Mortgagee hereunder, nor affect the subsequent exercise of the same right or
remedy by Mortgagee for any further or subsequent default by Mortgagor
hereunder, and all such rights and remedies of Mortgagee hereunder are
cumulative.
21. Marshalling. The Mortgagor hereby waives, in the event of foreclosure
of this Mortgage or the enforcement by the Mortgagee of any other rights and
remedies hereunder, any right otherwise available in respect to marshalling of
assets which secure the Mortgage Indebtedness or to require Mortgagee to pursue
its remedies against any other such assets.
22. [INTENTIONALLY OMITTED.]
23. Further Instruments. The Mortgagor shall execute, acknowledge and
deliver any and all such further conveyances, documents, mortgages and
assurances, and do or cause to be done all such further acts, as Mortgagee may
reasonably require to confirm and protect the lien of this Mortgage or
otherwise to accomplish the purposes hereof forthwith upon the request of
Mortgagee, whether in writing or otherwise.
24. Notices. All notices, demands, requests, consents and other
communications shall be delivered and shall be effective in the manner
specified in the Credit Agreement.
25. Governing Law; Binding Effect; Definitions. This Mortgage shall be
construed according to the laws of the State of Indiana and shall be binding
upon Mortgagor and its successors and assigns and any subsequent owners of the
Mortgaged Premises, and all of the covenants herein contained shall run with
the land, and this Mortgage and all of the covenants herein contained shall
inure to the benefit of Mortgagee, its successors and assigns. Terms used but
not defined herein shall have the meanings ascribed thereto in the Credit
Agreement.
26. Headings. The headings in this Mortgage are for convenience of
reference only and shall not limit or otherwise affect the meaning of any
provision of this Mortgage.
27. Fixture Filing. It is intended that, as to fixtures, this Mortgage
shall be deemed to constitute a continuously perfected financing statement
filed as a fixture filing from the date of
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
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<PAGE> 16
the filing of the Mortgage of record in the office of the recorder of
each county in which the Land is located pursuant to IC 26-1-9-402 and
26-1-9-403. The information provided in this paragraph is provided in order
that this Mortgage shall comply with the requirements of the Code, for a
mortgage instrument to be filed as a financing statement. The Mortgagor is the
"Debtor" and its name and mailing address are set forth in the preamble of this
Mortgage. The "Secured Party" is the Mortgagee and its name and mailing
address from which information concerning the security interest granted herein
may be obtained are set forth in the preamble of this Mortgage. A statement
describing the portion of the Mortgaged Premises comprising the fixtures hereby
secured is set forth as Section (H) of the definition of Mortgaged Premises
contained in this Mortgage.
28. Future Advance Mortgage. In addition to any other obligation secured
by this Mortgage, this Mortgage shall also secure (i) future obligations and
advances up to One Hundred and Forty Million Dollars ($140,000,000) (whether
made as an obligation, made at the option of the Mortgagee or the Lenders, made
after a reduction to a zero (0) or other balance, or made otherwise) to the
same extent as if the future obligations and advances were made on the date of
execution of this Mortgage and (ii) future modifications, extensions and
renewals of any Indebtedness or obligations secured by this Mortgage. The lien
of this Mortgage with respect to such future obligations, advances,
modifications, extensions and renewals shall have the same priority to which
this Mortgage otherwise would be entitled under IC 32-1-2-16 without regard to
the fact that such future obligations, advances, modifications, extensions, or
renewals may occur after this Mortgage is executed.
29. Use of Insurance and Condemnation Proceeds. Notwithstanding any other
provision of this Mortgage, all insurance proceeds recovered by the Mortgagee
on account of damage or destruction to the Mortgaged Premises and all proceeds
of any condemnation award recovered by the Mortgagee for any building or
equipment taken or damaged, less the cost, if any, to the Mortgagee of such
recovery and of paying out such proceeds (including attorneys' fees and costs
allocable to inspecting the work and the plans and specifications therefor),
shall, upon the written request of the Mortgagor, be applied by the Mortgagee
to the payment of the cost of repairing, restoring or rebuilding the
improvements on the Mortgaged Premises so damaged or destroyed
or of the portion or portions of the Mortgaged Premises not so taken
(hereinafter referred to as the "work") and shall be paid out from time to time
to the Mortgagor as the work progresses, but subject to the Mortgagee's
standard requirements for construction loans of similar nature and subject to
the following conditions:
(a) There shall be no Event of Default under this Mortgage or any of the
other Loan Documents; and
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
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<PAGE> 17
(b) The request for any payment after the work has been completed shall be
accompanied by a copy of any certificate or certificates required by law to
render occupancy of the Mortgaged Premises legal.
Upon the completion of the work and payment in full therefore, or upon any
failure on the part of the Mortgagor promptly to commence or continue the work,
or at any time upon request by the Mortgagor, the Mortgagee may, at its option,
either apply the amount of any such proceeds then or thereafter in the hands of
the Mortgagee to the payment of the Mortgage Indebtedness or any portion
thereof, whether or not then due and payable, or remit such amount to the
Mortgagor.
30. Remedies Enforceable at Time of Enforcement. Any provision in this
Mortgage to the contrary notwithstanding, to the extent applicable laws may
limit (i) availability of the exercise of any remedies set forth in this
Mortgage, or (ii) the enforcement of waivers and indemnities made by Mortgagor,
such remedies, waivers, or indemnities shall be exercisable or enforceable if,
and to the extent, permitted by the laws in force at the time of exercise of
such remedies or the enforcement of such waivers or indemnities without regard
to the enforceability of such remedies, waivers or indemnities at the time of
the execution and delivery of this Mortgage.
IN WITNESS WHEREOF, Mortgagor has duly executed this Mortgage as of the
day and year first above written.
KEY PLASTICS, INC.
By: /s/Mark J. Abbo
-----------------------------
Mark J. Abbo
Its: Treasurer and Assistant Secretary
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
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<PAGE> 18
STATE OF MICHIGAN )
)SS.
COUNTY OF WAYNE )
The foregoing instrument was acknowledged before me on this 24th day of
-----
March, 1997, by Mark J. Abbo, the Treasurer and Assistant Secretary of Key
Plastics, Inc., a Michigan corporation, on behalf of said corporation, who
stated that any representations therein contained are true and correct.
/s/ Janice K. Atkins
--------------------------------
(Signature)
Notary Public, Janice K. Atkins
---------------------
(printed name)
Resident of County
-----------------
My Commission Expires:
-----------
[seal]
Prepared by and when
recorded return to:
Mi Young Lee, Esq.
Dickinson, Wright, Moon,
Van Dusen & Freeman
500 Woodward Avenue, Suite 4000
Detroit, Michigan 48226
(313) 223-3500
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
-18-
<PAGE> 19
EXHIBIT A
Legal Description of Land
The land referred to in this commitment is described as follows:
A part of the Northwest Quarter of Section 10, Township 23 North, Range
10 East in Licking Township, Blackford County, Indiana, described as
follows:
Commencing at the Southwest corner of the Northwest Quarter of Section
10, Township 23 North, Range 10 East; thence North 89 degrees 50 minutes
07 seconds East 715.00 feet (assumed bearing) along the South line of
said Quarter section; thence North 00 degrees 00 minutes 00 seconds
50.00 feet parallel with the West line of said Quarter section to the
point of beginning; thence North 89 degrees 50 minutes 07 seconds East
618.10 feet to the East line of the Southwest Quarter of said
Northwest Quarter; thence North 00 degrees 13 minutes 24 seconds West
942.70 feet along said East line to the Southerly line of McDonald
Street; thence North 89 degrees 56 minutes 11 seconds West 614.44 feet
along said Southerly line to a point on a line said line being
parallel with and 715.00 feet East of the West line of said Quarter
section; thence South 00 degrees 00 minutes 00 seconds 941.25 feet
along said line to the point of beginning.
Tax Parcel No. ____________________
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
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<PAGE> 20
EXHIBIT B
Permitted Encumbrances
----------------------
(Hartford, Indiana)
1. Easement for Interceptor Sanitary Sewer granted by Overhead Door
Corporation in favor of Civil City of Hartford City dated June 29, 1961
and recorded July 18, 1963 in Deed Record 52, Page 36.
2. Easement for Interceptor Sanitary Sewer granted by Overhead Door
Corporation to Civil City of Hartford City dated August 30, 1971 and
recorded August 4, 1976 in Deed Record 64, page 545.
3. Electric line easement granted by the City of Hartford City,
Indiana in favor of Indiana & Michigan Electric Company dated
June 5, 1985 and recorded June 20, 1985 in Deed Record 74, Page 4.
4. Forty foot building line restriction on the west and north sides of
the premises.
5. Twenty foot building line restriction on the east and south
sides of the premises.
6. Apparent water line easement on the east side of the insured premises
as shown on the survey by Ashton Land Surveyor, Inc. dated
November 7, 1996.
7. Rights of utilities and municipality in D.S. drains and overhead power
lines as shown on survey by Ashton Land Surveyor, Inc. dated
November 7, 1996.
<PAGE> 21
INDIANA FORM
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF
RENTS AND FINANCING STATEMENT (FIXTURE FILING)
THIS MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS, AND FINANCING
STATEMENT (FIXTURE FILING), dated as of March 24, 1997, by KEY PLASTICS, INC.,
a Michigan corporation whose address is 21333 Haggerty Road, Suite 200, Novi,
Michigan 48375 (the "Mortgagor"), to NBD BANK, a Michigan banking corporation,
whose address is 611 Woodward Avenue, Detroit, Michigan 48226 (the
"Mortgagee"), as agent for the benefit of itself and the lenders (the
"Lenders") which are parties to the Credit Agreement defined below.
RECITALS:
A. The Mortgagor has entered into a Credit Agreement dated as of March 24,
1997 (as amended or modified from time to time, including any agreement entered
into in substitution therefor, the "Credit Agreement") pursuant to which the
Lenders agreed, subject to the terms and conditions thereof, to extend credit
to the Mortgagor up to a maximum principal amount outstanding at any time equal
to One Hundred and Forty Million and No/100 Dollars ($140,000,000.00) maturing
on or before September 24, 2004, as such date may be extended by agreement of
the parties to the Credit Agreement.
B. As a condition to the effectiveness of the obligations of the Mortgagee
and the Lenders under the Credit Agreement, the Mortgagor is obligated, among
other things, to grant a lien on the mortgaged premises hereinafter described.
WITNESSETH:
NOW, THEREFORE, to secure (a) the prompt and complete payment of the
principal Indebtedness in the aggregate amount of One Hundred and Forty Million
Dollars ($140,000,000) and all other Indebtedness and obligations of the
Mortgagor or any Subsidiary now or hereafter owing to the Lenders or the
Mortgagee under or on account of the Credit Agreement, any Security Document or
any letters or credit, notes or other instruments issued to the Mortgagee or
the Lenders pursuant thereto, (b) the performance of the covenants under the
Credit Agreement and the Security Documents and any monies expended by any
Lender or the Mortgagee in connection therewith, and (c) the prompt and
complete payment of all obligations and performance of all covenants of the
Mortgagor or any Subsidiary in connection with Swaps relating to Indebtedness
under the Loan Documents (including any interest accruing subsequent to any
petition filed by or against the Mortgagor or any Subsidiary under the U.S.
Bankruptcy Code, whether or not allowed), indemnity and reimbursement
obligations, charges, expenses, fees, reasonable attorneys' fees and
disbursements and any other amounts owing thereunder (all
<PAGE> 22
of the aforesaid Indebtedness, obligations and liabilities of the Mortgagor and
its Subsidiaries being herein called the "Mortgage Indebtedness" and
this Mortgage and all of the other documents, agreements and instruments among
the Mortgagor, the Subsidiaries, the Lenders, the Mortgagee or any of them,
evidencing or securing the repayment of, or otherwise pertaining to, the
Mortgage Indebtedness, including without limitation the Credit Agreement, the
Notes and the Security Documents, being herein collectively called the "Loan
Documents"), the Mortgagor does hereby MORTGAGE and WARRANT and does hereby
grant a security interest in and unto Mortgagee, and its successors and
assigns, the following described property (the "Mortgaged Premises"):
(A) the land situated in the Township of Otsego, County of Steuben and
State of Indiana, more specifically described in Exhibit A hereto (the "Land");
(B) all easements, rights-of-way, licenses and privileges, thereunto
belonging or in anywise appertaining, including without limitation all
Mortgagor's right, title and interest in and to those easements, rights-of-way,
licenses and privileges described in Exhibit A hereto, if any;
(C) all buildings and improvements now or hereafter situated upon the Land
or any part thereof;
(D) to the extent, if any, of Mortgagor's interests thereon, all minerals,
royalties, gas rights, water, water rights, water stock, flowers, shrubs, lawn
plants, crops, trees, timber and other emblements now or hereafter located on,
under or above all or any part of the Land;
(E) all and singular the tenements, hereditament and appurtenances
belonging or in anywise appertaining to the Land, and the reversion or
reversions, remainder and remainders thereof; and also all the estate, right,
title, interest, property, claim and demand whatsoever of Mortgagor, of, in and
to the same and of, in and to every part and parcel thereof;
(F) all the rents, issues and profits thereof under present or future
leases, or otherwise, which are hereby specifically assigned, transferred and
set over to Mortgagee, including, but not limited to, all cash or securities
deposited under any such leases to secure performance by the tenants of their
obligations thereunder, whether said cash or securities are to be held until
the expiration of the terms of such leases or applied to one or more of the
installments of rent coming due thereunder;
(G) all right, title and interest of Mortgagor, if any, in and to the land
lying in the bed of any street, road, avenue, alley or walkway, opened or
proposed or vacated, or any strip or gore, in front of or adjoining the Land;
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
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<PAGE> 23
(H) all machinery, apparatus, equipment, fittings, fixtures, and articles
of personal property of every kind and nature whatsoever, other than consumable
goods, now or hereafter located in or upon the Land or any part thereof and
used or useable in connection with any present or future operation of the Land
or any building or buildings now or hereafter on the Land and now owned or
hereafter acquired by Mortgagor (all of which is herein called "Equipment"),
including, but without limiting the generality of the foregoing, all lighting,
heating, cooling, ventilating, air-conditioning, incinerating, refrigerating,
plumbing, sprinkling, communicating and electrical systems, and the machinery,
appliances, fixtures and equipment pertaining thereto, it being understood and
agreed that all Equipment is part and parcel of the Land and appropriated to
the use of said real estate and, whether affixed or annexed or not, shall for
the purposes of this Mortgage, unless Mortgagee shall otherwise elect, be
deemed conclusively to be real estate and mortgaged hereby; and
(I) any and all awards or payments, including interest thereon, and the
right to receive the same, which may be made with respect to the Land and are
or will be payable to Mortgagor as a result of (a) the exercise of the right of
eminent domain, (b) the alteration of the grade of any street, (c) any loss of
or damage to any building or other improvement on the Land, (d) any other
injury to or decrease in the value of the Land or (e) any refund due on account
of the payment of real estate taxes, assessments or other charges levied
against or imposed upon the Land, to the extent of all amounts which may be
secured by this Mortgage at the date of receipt of any such award or payment by
Mortgagee, and of the reasonable counsel fees, costs and disbursements incurred
by Mortgagee in connection with the collection of such award or payment,
Mortgagor hereby agreeing to execute and deliver, from time to time, such
further instruments as may be reasonably requested by Mortgagee to confirm such
assignment to Mortgagee of any such award or payment.
TO HAVE AND TO HOLD the Mortgaged Premises, and each and every part
thereof, unto Mortgagee and its successors and assigns forever. Any reference
herein to the "Mortgaged Premises" shall, unless the context shall require
otherwise, be deemed to include and apply to the above described Land and said
buildings, improvements, Equipment, rents, issues, profits, leases, easements,
tenements, hereditament and appurtenances and all other rights, privileges and
interests hereinabove described.
SUBJECT only to those matters set forth in Exhibit B hereto ("Permitted
Encumbrances").
AND Mortgagor does hereby covenant and warrant as follows:
1. Payment of Mortgage Indebtedness; Performance of Agreements. The
Mortgagor shall pay the principal of and interest on the Mortgage Indebtedness
according to the terms
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
- 3 -
<PAGE> 24
thereof, and will keep and perform all the covenants, promises and agreements
on its part to be performed in any and all Loan Documents, all in the manner
herein or therein set forth.
2. Covenants of Title. The Mortgagor has good and indefeasible title to
the Land in fee simple and has good and indefeasible title to the entire
Mortgaged Premises and with good right and full power to sell, mortgage and
convey the Mortgaged Premises, the Mortgaged Premises are free and clear of
liens and encumbrances except Permitted Encumbrances, whether presently
existing or which may hereafter be created in accordance with the terms hereof,
and Mortgagor will warrant and defend the Mortgaged Premises against all lawful
claims and demands whatsoever. The Mortgagee shall have the right, at its
option and at such time or times as it, in its sole discretion, shall deem
reasonably necessary, to take whatever action it may reasonably deem necessary
to defend or uphold the lien of this Mortgage or otherwise enforce any of the
rights of Mortgagee hereunder or any obligation secured hereby, including
without limitation, the right to institute appropriate legal proceedings for
such purposes.
3. Payment of Taxes, Assessments and Charges. The Mortgagor shall pay
when due, and before any interest, collection fees or penalties shall accrue,
all real estate taxes, special assessments, water and sewer charges or other
governmental charges and impositions levied or assessed with respect to the
Mortgaged Premises or any part thereof except to the extent that payment of any
of the foregoing is then being contested in good faith by appropriate legal
proceedings and with respect to which adequate financial reserves have been
established on the books and records of the Mortgagor. Should Mortgagor fail
to so pay such taxes, special assessments, water and sewer charges or other
governmental charges or impositions or establish such adequate financial
reserves, Mortgagee may, at its option, pay the same for the account of
Mortgagor.
4. Reserves for Taxes and Insurance Premiums. Upon the occurrence of any
Event of Default, Mortgagor shall pay to Mortgagee, upon the request of
Mortgagee, installments of principal and interest, and in addition thereto,
installments of the taxes and assessments levied or to be levied upon the
Mortgaged Premises, and installments of the premiums that will become due and
payable to renew the insurance hereinafter provided, said installments to be
substantially equal and to be in such amount as will assure to Mortgagee that
not less than 30 days before the time when such taxes and premiums,
respectively, become due Mortgagor will have paid to Mortgagee a sufficient
amount to pay the same in full. Said amounts paid to Mortgagee hereunder need
not be segregated nor kept in a separate fund, and no interest shall be payable
thereon. Said amounts shall be held by Mortgagee as additional security for
the Mortgage Indebtedness and, except as provided in the following sentence, be
applied to the payment of said taxes and assessments when the same become due
and payable. Mortgagee may, at its option, but without any obligation on its
part so to do, apply said amounts upon said taxes and assessments or insurance
premiums or toward the payment of the Mortgage Indebtedness or any portion
thereof, whether or not then due or payable. The Mortgagee shall endeavor to
notify the
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
- 4 -
<PAGE> 25
Mortgagor of how such amounts were applied, provided that the failure to give
such notice shall not affect Mortgagee's rights under this Mortgage.
Upon an assignment of the Mortgage, Mortgagee shall have the right to pay
over the balance of such deposits in its possession to the assignee and
Mortgagee shall thereupon be completely released from all liability with
respect to such deposits and Mortgagor or owner of the Mortgaged Premises shall
look solely to the assignee or transferee in reference thereto. This provision
shall apply to every transfer of such deposits to a new assignee. Upon full
payment and satisfaction of the Mortgage Indebtedness or at any prior time upon
the election of Mortgagee, the balance of the unapplied deposits in its
possession shall be paid over to the record owner of the Mortgaged Premises and
no other party shall have any right or claim thereto in any event, provided
that in the event of a foreclosure of the Mortgaged Premises, the purchaser at
such foreclosure shall have the right to receive such unapplied deposits. The
Mortgagor agrees, at Mortgagee's request, to deliver the aforesaid deposits to
such service or financial institution as Mortgagee shall from time to time
designate.
5. Payment of Other Obligations. The Mortgagor shall also pay any and all
other obligations, liabilities or debts which may become liens, security
interests, or encumbrances upon or charges against the Mortgaged Premises for
any repairs or improvements that are now completed or are in progress or which
may hereafter be made thereon, or for any other goods, services, or utilities
furnished to the Mortgaged Premises, and shall not permit any lien, security
interest, encumbrance or charge of any kind securing the repayment of borrowed
funds (including the deferred purchase price for any property) to accrue and
remain outstanding against the Mortgaged Premises or any part thereof, or any
improvements thereon other than Permitted Encumbrances, if any, except to the
extent that payment of any of the foregoing is then being contested in good
faith by appropriate legal proceedings and with respect to which adequate
financial reserves have been established on the books and records of the
Mortgagor.
6. Maintenance and Repair; Compliance with Laws; Inspection. The
Mortgagor will keep the Land and all the improvements thereon in good order and
repair, and Mortgagor expressly agrees that it will not do or permit waste on
the Land nor do any other act whereby the Mortgaged Premises will become less
valuable or the lien hereof may be impaired. Should Mortgagor fail to effect
the necessary repairs and such failure shall remain unremedied for 20 calendar
days after written notice thereof shall have been given to the Mortgagor by the
Mortgagee, Mortgagee may at its option make such repairs for the account of
Mortgagor. The Mortgagor will promptly comply, and cause the Mortgaged
Premises and the occupants or users thereof to comply, with all present and
future laws, ordinances, orders, rules and regulations and other requirements
of any governmental authority affecting the Mortgaged Premises or any part
thereof or the use or occupancy thereof and with all instruments and documents
of record or otherwise affecting the Mortgaged Premises, or any part thereof,
or the use or occupancy
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
- 5 -
<PAGE> 26
thereof. The Mortgagee, and any person authorized by Mortgagee, shall
have the right to enter upon and inspect the Mortgaged Premises at all
reasonable times and with reasonable notice.
7. Insurance. (a) The Mortgagor shall keep the buildings and other
improvements on the Land, or which may hereafter be erected thereon, constantly
insured for the benefit of Mortgagee with such company or companies as may be
reasonable acceptable to Mortgagee and in an amount reasonably satisfactory to
Mortgagee, which amount shall not be less than 100% of the then full
replacement cost of such building and improvements (exclusive of excavations,
foundations and footings), which policies shall be without deduction for
depreciation and be subject to the payment of a deductible not in excess of an
amount reasonably satisfactory to Mortgagee, until the Mortgage Indebtedness
and all interest thereon and all of the amounts due hereunder are fully paid,
against fire and such other hazards and risks customarily covered by the
standard form of "extended coverage" endorsements available in the State of
Indiana, and shall further provide flood insurance (if the Mortgaged Premises
are situated in an area designated as a flood hazard area by the Director of
the Federal Emergency Management Agency or as otherwise required by the Flood
Disaster Protection Act of 1973 and regulations issued thereunder), rent
insurance, in an amount not less than one year's gross rent derived from the
Mortgaged Premises, and such other appropriate insurance as Mortgagee may
reasonably require from time to time. All such policies shall include standard
mortgagee clauses in favor of Mortgagee and shall provide that the proceeds
thereof shall be paid to Mortgagee, all as may be satisfactory to Mortgagee.
During any construction, repair or restoration of the buildings and other
improvements on the Mortgaged Premises, Mortgagor shall carry or cause to be
carried builder's risk insurance which names Mortgagee as a loss payee as its
interests may appear. The Mortgagor shall also carry comprehensive general or
public liability insurance with reference to the Mortgaged Premises, which
names Mortgagee as an additional insured. All such policies shall provide that
the same may not be canceled or terminated without giving Mortgagee at least 30
days' prior written notice of such cancellation or termination.
(b) The Mortgagor shall deliver to Mortgagee at its principal office
aforesaid or at such other place as may be designated by the holder hereof such
insurance policies or, if Mortgagee consents, certificates evidencing such
policies. Renewals thereof shall likewise be delivered to Mortgagee at least
15 days before the expiration of any existing policies. Should Mortgagor fail
to insure or fail to pay the premiums on any such insurance or fail to deliver
the policies or renewals thereof as provided above, Mortgagee at its option may
have such insurance written or renewed and pay the premiums thereon for the
account of Mortgagor.
(c) In the event of loss or damage, the proceeds of said property and
builders' risk insurance on the buildings and improvements shall be paid to
Mortgagee alone. No such loss or damage shall itself reduce the Mortgage
Indebtedness. The Mortgagee is authorized to adjust and compromise such loss
without the consent of Mortgagor, to collect, receive and receipt for such
proceeds in the name of Mortgagee and Mortgagor and to endorse Mortgagor's name
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
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upon any check in payment thereof. Such proceeds shall be applied first toward
reimbursement of all costs and expenses of Mortgagee in collecting said
proceeds and then toward payment of the Mortgage Indebtedness or any portion
thereof, whether or not then due or payable, or Mortgagee at its option may
apply said insurance proceeds, or any part thereof, to the repair or rebuilding
of the Mortgaged Premises. No such application of proceeds by Mortgagee toward
payment of the Mortgage Indebtedness shall reduce the amount of the payments
required to be made on the Mortgage Indebtedness in accordance with its terms.
(d) In the event of a foreclosure of this Mortgage, the purchaser of the
Mortgaged Premises shall succeed to all of the rights of Mortgagor under said
insurance policies payable to Mortgagee, including any right to unearned
premiums and the right to receive the proceeds of any insurance payable by
reason of any loss theretofore or thereafter occurring.
8. Eminent Domain. Notwithstanding any taking under the power of eminent
domain, alteration of the grade of any street, or other injury to or decrease
in value of the Mortgaged Premises by any public or quasi-public authority or
corporation, Mortgagor shall continue to pay the Mortgage Indebtedness in
accordance with the terms of the Notes, and any reduction in the principal sum
resulting from the application by Mortgagee of such award or payment as
hereinafter set forth shall be deemed to take effect only upon the receipt by
Mortgagee of such award. The Mortgagor hereby assigns the entire proceeds of
any award or payment to Mortgagee. The Mortgagee is authorized to commence,
appear in and prosecute, in its own or in Mortgagor's name, any action or
proceeding relating to any such taking, and to settle or compromise any claim
in connection therewith. Such proceeds shall be applied first toward
reimbursement of all costs and expenses of Mortgagee in collecting said
proceeds and then toward payment of the Mortgage Indebtedness or any portion
thereof, whether or not then due or payable, or Mortgagee at its option may
apply said proceeds, or any part thereof, to the alteration, restoration or
rebuilding of the Mortgaged Premises. No such application of proceeds by
Mortgagee toward payment of the Mortgage Indebtedness shall reduce the amount
of the payments required to be made on the Mortgage Indebtedness in accordance
with its terms.
9. Waste. The failure of Mortgagor to pay any taxes or assessments
assessed against the Mortgaged Premises, or any installment thereof, or any
premiums payable with respect to any insurance policy covering the Mortgaged
Premises, shall constitute waste. The Mortgagor hereby consents to the
appointment of a receiver under IC 34-1-12-1 et seq., should Mortgagee elect to
seek such relief thereunder.
10. Reimbursement of Advances by Mortgagee. The Mortgagor shall pay to
Mortgagee, upon demand, all sums expended by Mortgagee, or by a receiver
appointed at the request of Mortgagee, unless such sums shall be paid out of
the rents, income and profits from the Mortgaged Premises, (a) to pay insurance
premiums, taxes, assessments, water and sewer charges and other governmental
charges and impositions with respect to the Mortgaged Premises,
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
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(b) to maintain, repair or improve the Mortgaged Premises, (c) to defend the
lien of this Mortgage as a lien against the Mortgaged Premises subject only to
the Permitted Encumbrances hereinabove expressly set forth, (d) to discharge
any lien or encumbrance affecting the Mortgaged Premises other than Permitted
Encumbrances, (e) to cure any default of Mortgagor under any lease or other
agreement covering the Mortgaged Premises, (f) to cure any default of Mortgagor
hereunder or under any of the Loan Documents or (g) for or in connection with
any other action taken by Mortgagee to preserve the security of this Mortgage
or any other security for the Mortgage Indebtedness or to protect any of
Mortgagee's rights hereunder. All such expenditures as shall be made by
Mortgagee or such receiver or pursuant to any other provision of this Mortgage
or the other Loan Documents, including any reasonable attorneys' fees and
disbursements incurred by Mortgagee or such receiver in connection with the
foregoing, shall be payable upon demand and be secured by this Mortgage and
shall bear interest at the Overdue Rate set forth in the Credit Agreement.
11. Change in Taxes. In the event any tax shall be due or become due and
payable to the United States of America, the State of Indiana or any political
subdivision thereof with respect to the execution and delivery or recordation
of this Mortgage or any note or other instrument or agreement evidencing or
securing repayment of the Mortgage Indebtedness or the interest of Mortgagee in
the Mortgaged Premises, Mortgagor shall pay such tax at the time and in the
manner required by applicable law and Mortgagor shall hold Mortgagee harmless
and shall indemnify Mortgagee against any liability of any nature whatsoever
as a result of the imposition of any such tax.
In the event of the passage after the date of this Mortgage of any law in
the State of Indiana deducting from the value of real property for purposes of
taxation any lien thereon, or changing in any way the laws now in force for the
taxation of mortgages or debts secured thereby (including the interest thereon)
for state or local purposes, or changing the manner of collection of any such
taxes, and imposing a tax, either directly or indirectly, on this Mortgage, the
Notes or any of the other Loan Documents, the holder of this Mortgage shall
have the right to declare the entire unpaid amount of the Mortgage
Indebtedness, together with accrued and unpaid interest thereon, to be due and
payable on a date to be specified by not less than 30 days' written notice to
Mortgagor, provided, however, that such election shall not be effective if
Mortgagor is permitted by law to pay the whole of such tax in addition to all
other payments required thereunder and if Mortgagor, prior to such specified
date, makes payment of such tax then due and agrees to pay any such tax when
thereafter levied or assessed against the Mortgaged Premises, this Mortgage,
the Notes or any of the other Loan Documents.
12. Events of Default. The occurrence of any of the following events
shall be deemed an "Event of Default" hereunder and shall entitle Mortgagee to
exercise its remedies hereunder and under any of the other Loan Documents or as
otherwise provided by law:
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
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(a) Nonpayment of any of the Mortgage Indebtedness when due, beyond any
period of grace, if any, provided with respect thereto and after the giving of
any required notice;
(b) The failure of the Mortgagor to perform or observe any material term
or covenant contained in this Mortgage and such failure shall remain unremedied
for 30 calendar days after the earlier of (i) written notice thereof shall have
been given to the Mortgagor from the Mortgagee and (ii) when the Mortgagor
otherwise had knowledge of such failure, unless the Mortgagor is diligently
pursuing to cure such failure to the reasonable satisfaction of the Mortgagee;
(c) Any representation or warranty made by Mortgagor in this Mortgage
shall prove to have been false or misleading in any material respect when made;
or
(d) The occurrence of any Event of Default (as defined in the Credit
Agreement) under the Credit Agreement.
13. Remedies upon Default. Immediately upon the occurrence of any Event
of Default after applicable notice and grace periods have elapsed, Mortgagee
shall have the option, in addition to and not in lieu of or substitution for
all other rights and remedies provided in this Mortgage or any other Loan
Documents or provided by law, and is hereby authorized and empowered by
Mortgagor, to do any or all of the following:
(a) Declare the entire unpaid amount of the Mortgage Indebtedness,
together with accrued and unpaid interest thereon, and any and all charges
payable by Mortgagor to Mortgagee pursuant to any of the Loan Documents,
immediately due and payable and, at Mortgagee's option, (i) to bring suit
therefor, or (ii) to bring suit for any delinquent payment of or upon the
Mortgage Indebtedness, or (iii) to take any and all steps and institute any and
all other proceedings that Mortgagee deems necessary to enforce payment of the
Mortgage Indebtedness and performance of other obligations secured hereunder
and to protect the lien of this Mortgage.
(b) Either in person or by agent, with or without bringing any action or
proceeding, enter upon and take possession of the Mortgaged Premises, or any
part thereof, in its own name, and do any acts which it deems necessary or
desirable to preserve the value, marketability or rentability of the Mortgaged
Premises or part thereof or interest therein including, without limitation,
enforce any leases, increase the income therefrom or protect the security
hereof and, with or without taking possession of the Mortgaged Premises, sue
for or otherwise collect the rents, including those past due and unpaid, and
apply the same in accordance with the provisions of this Mortgage. The
entering upon and taking possession of the Mortgaged Premises, the collection
of such rents, and the application thereof as aforesaid, shall not cure or
waive any default or notice of default hereunder or invalidate any act done in
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
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response to such default or pursuant to such notice of default and
notwithstanding the continuance in possession of the Mortgaged Premises or the
collection, receipt and application of rents, Mortgagee shall be entitled to
exercise every right provided for in any of the Loan Documents or by law upon
occurrence of any Event of Default.
(c) Commence an action to foreclose this Mortgage, appoint a receiver, or
specifically enforce any of the covenants of this Mortgage, the Notes, and any
or all of the Loan Documents.
(d) Exercise any or all of the remedies available to a secured party under
the Uniform Commercial Code of Indiana (the "Code"), including, but not limited
to:
(i) Either personally or by means of a court appointed
receiver, take possession of all or any of the personal
property and exclude therefrom Mortgagor and all others
claiming under Mortgagor, and thereafter hold, store,
use, operate, manage, maintain and control, make
repairs, replacements, alterations, additions and
improvements to and exercise all rights and powers of
Mortgagor in respect to the personal property or any
part thereof. In the event Mortgagee demands or
attempts to take possession of the personal property in
the exercise of any rights under any of the Loan
Documents, Mortgagor promises and agrees to promptly
turn over and deliver complete possession thereof to
Mortgagee;
(ii) Without notice to or demand upon Mortgagor, make such
payments and do such acts as Mortgagee may deem
necessary to protect its security interest in the
personal property, including without limitation, paying,
purchasing, contesting, or compromising any encumbrance,
charge or lien which is prior to or superior to the
security interest granted hereunder, and in exercising
any such powers or authority to pay all expenses
incurred in connection therewith;
(iii)Require Mortgagor to assemble the personal property or
any portion thereof, at a place designated by Mortgagee
and reasonably convenient to both parties, and promptly
to deliver such personal property to Mortgagee, or an
agent or representative designated by it. Mortgagee,
and its agents and representatives shall have the right
to enter upon any or all of the Mortgaged Premises
and/or Mortgagor's other premises and property to
exercise Mortgagee's rights hereunder;
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
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(iv) Sell, lease or otherwise dispose of the personal
property at public sale, with or without having the
personal property at the place of sale, and upon such
terms and in such manner as Mortgagee may determine.
Mortgagee may be a purchaser at any such sale; and/or
(v) Unless the personal property is perishable or
threatens to decline speedily in value or is of a type
customarily sold on a recognized market, Mortgagee shall
give Mortgagor at least five (5) days prior written
notice of the time and place of any public sale of the
personal property or other intended disposition thereof.
Such notice may be mailed to Mortgagor at the address
set forth at the beginning of this Mortgage.
(e) When the obligations hereby secured, or any part thereof, shall become
due, whether by acceleration or otherwise, Mortgagee shall have the right to
foreclose the lien hereof for such obligations or part thereof. In any suit to
foreclose the lien hereof or enforce any other remedy of Mortgagee under this
Mortgage or any other Loan Documents, there shall be allowed and included as
additional Indebtedness in the decree for sale or other judgment or decree all
expenditures and expenses which may be paid or incurred by or on behalf of
Mortgagee for attorneys' and paralegals' fees, appraiser's fees, outlays for
documentary and expert evidence, stenographers' charges, publication costs,
environmental assessments and costs (which may be estimated as to items to be
expended after entry of the decree) of procuring all such abstracts of title,
title searches and examinations, title insurance policies, survey, and similar
data and assurances with respect to title as Mortgagee may deem reasonably
necessary either to prosecute such suit or to evidence to bidders at any sale
which may be had pursuant to such decree the true condition of the title to or
the value of the Mortgaged Premises. All expenditures and expenses of the
nature in this paragraph mentioned, and such expenses and fees as may be
incurred in the protection of the Mortgaged Premises and the maintenance of the
lien of this Mortgage, including the fees of any attorneys and paralegals
employed by Mortgagee in any litigation or proceeding affecting this Mortgage,
any other Loan Documents or the Mortgaged Premises, including probate and
bankruptcy proceedings, or in preparations for the commencement or defense of
any proceeding or threatened suit or proceeding, shall be immediately due and
payable by Mortgagor, with interest thereon at the Overdue Rate.
(f) After the occurrence of an Event of Default, or at any time after the
filing of a complaint to foreclose this Mortgage, the court in which such
complaint is filed may appoint a receiver of the Mortgaged Premises and the
Mortgagor hereby consents to the appointment of a receiver. Such appointment
may be made either before or after sale, without notice (other than such notice
as is required to be given by law), without regard to the solvency or
insolvency of Mortgagor at the time of application for such receiver and
without regard to the then value of the
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
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Mortgaged Premises or whether the same shall be then occupied as a homestead or
not and Mortgagee hereunder or any successor of Mortgagee may be appointed
as such receiver. Such receiver shall have power: (a) to collect the rents of
the Mortgaged Premises during the pendency of such foreclosure suit and, in
case of a sale and a deficiency, during the full statutory period of
redemption, whether there be redemption or not, as well as during any further
times when Mortgagor, except for the intervention of such receiver, would be
entitled to collect such rents; (b) to extend or modify any then existing
leases and to make new leases, which extensions, modifications and new leases
may provide for terms to expire, or for options to lessees to extend or renew
terms to expire, beyond the maturity date of the Mortgaged Indebtedness
hereunder and beyond the date of the issuance of a deed or deeds to a purchaser
or purchasers at a foreclosure sale, it being understood and agreed that any
such leases, and the options or other such provisions to be contained therein,
shall be binding upon Mortgagor and all persons whose interests in the
Mortgaged Premises are subject to the lien hereof and upon the purchaser or
purchasers at any foreclosure sale, notwithstanding any redemption from sale,
discharge of the obligations, satisfaction of any foreclosure decree, or
issuance of any certificate of sale or deed to any purchaser; and (c) all other
powers which may be necessary or are usual in such cases for the protection,
possession, control, management, and operation of the Mortgaged Premises during
the whole of said period. The court from time to time may authorize the
receiver to apply the net income in his hands in payment in whole or in part
of: (a) the obligations secured hereby, or by any decree foreclosing this
Mortgage, or any tax, special assessment or other lien which may be or become
superior to the lien hereof or of such decree, provided such application is
made prior to foreclosure sale; and (b) the deficiency in case of a sale and
deficiency. To the fullest extent permitted by law, Mortgagor for itself and
any subsequent owner hereby waives any and all defenses to the application for
such a receiver, as above, but nothing herein contained is to be construed so
as to deprive the Mortgagee of any other right, remedy, or privilege it may not
have under the law to have a receiver appointed. This provision providing for
the appointment of a receiver of the Premises and/or the rents, issues and
profits thereof, and the assignment of such leases, rents, issues and profits
is made an express condition upon which the loan hereby secured is made.
(g) Mortgagee shall be entitled to enforce payment and performance of the
Indebtedness hereby secured or any part thereof secured hereby and to exercise
all rights and powers under this Mortgage or under any of the Loan Documents or
other agreement or any laws now or hereafter in force, notwithstanding some or
all of the said Indebtedness secured hereby may now or hereafter be otherwise
secured, whether by mortgage, deed of trust, pledge, lien, assignment or
otherwise. Neither the acceptance of this Mortgage nor its enforcement shall
prejudice or in any manner affect Mortgagee's right to realize upon or enforce
any other security now or hereafter held by Mortgagee, it being agreed that
Mortgagee shall be entitled to enforce this Mortgage and any other security now
or hereafter held by Mortgagee in such order and manner as Mortgagee may, in
its absolute discretion, determine. No remedy herein conferred upon or
reserved to Mortgagee is intended to be exclusive of any other remedy herein or
by law
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
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provided or permitted, but each shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing at
law or in equity or by statute. Every power or remedy given by any of the Loan
Documents to Mortgagee may be exercised, concurrently or independently, from
time to time as often as may be deemed expedient by Mortgagee and Mortgagee may
pursue inconsistent remedies; all of which shall be limited by applicable law.
14. Successors in Ownership. In the event ownership of the Mortgaged
Premises or any part thereof becomes vested in a person or persons other than
Mortgagor without the prior written approval of Mortgagee, Mortgagee may (but
shall not be obligated to) deal with such successor or successors in interest
with reference to this Mortgage and the other Loan Documents in the same manner
as with Mortgagor, without in any manner discharging or otherwise affecting
Mortgagor's liability hereunder or upon the Mortgage Indebtedness.
15. Personal Property. (a) The Mortgagor represents and warrants that
Mortgagor owns all presently owned Equipment and other personal property
described in this Mortgage free and clear of any and all liens and security
interests except for the lien and security interest granted by this Mortgage
and Permitted Encumbrances and any Liens permitted by the terms of the Credit
Agreement. The Mortgagor further represents and warrants that, as to Equipment
and other personal property hereafter acquired, Mortgagor will own all such
Equipment and other personal property at the time it is brought on the Land and
thereafter free and clear of any and all liens and security interests except
for the lien and security interest granted by this Mortgage, any other security
instrument or agreement in favor of Mortgagee, and Permitted Encumbrances and
any Liens permitted by the terms of the Credit Agreement.
(b) The Mortgagor does hereby grant a security interest to Mortgagee
pursuant to the Code in any Equipment and other personal property covered
hereby. The Mortgagor agrees, upon request of Mortgagee, to furnish an
inventory of personal property owned by Mortgagor and subject to this Mortgage
and, upon request by Mortgagee, to execute any supplements to this Mortgage,
any separate security agreement and any financing statements to include
specifically said inventory of personal property. Upon the occurrence of an
Event of Default, Mortgagee shall have all of the rights and remedies therein
provided or otherwise provided by law or by this Mortgage, including but not
limited to the right to require Mortgagor to assemble such personal property
and make it available to Mortgagee at a place to be designated by Mortgagee
which is reasonably convenient to both parties, the right to take possession of
such personal property with or without demand and with or without process of
law and the right to sell and dispose of the same and distribute the proceeds
according to law. The parties hereto agree that any requirement of reasonable
notice shall be met if Mortgagee sends such notice to Mortgagor at least five
(5) days prior to the date of sale, disposition or other event giving rise to
the required notice, and that the proceeds of any disposition of any of such
personal property may
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
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be applied by Mortgagee first to the reasonable expenses in connection
therewith, including reasonable attorneys' fees and disbursements and then to
payment of the Mortgage Indebtedness.
(c) Mortgagor hereby authorizes Mortgagee, to the extent permitted by
applicable law, to execute and file financing statements signed only by a
representative of Mortgagee covering the security interest of Mortgagee in the
equipment and other personal property described in this Mortgage.
16. Assignment of Leases and Rents. As of the date of this Mortgage,
Mortgagor hereby assigns, transfers and conveys to Mortgagee all its right,
title and interest in and to all written and oral leases, whether now in
existence or which may hereafter come into existence during the term of this
Mortgage, or any extension hereof, covering the Mortgaged Premises or any part
thereof (but without an assumption by Mortgagee of liabilities of Mortgagor
under any such leases by virtue of this assignment), and Mortgagor hereby
assigns to Mortgagee the rents, issues and profits of the Mortgaged Premises.
Until the occurrence of an Event of Default, Mortgagor shall have the right to
receive and collect such rents, issues and profits. Upon the occurrence of an
Event of Default, Mortgagee may elect upon written notice to Mortgagor to
receive and collect said rents, issues and profits personally or through a
receiver so long as any such Event of Default shall exist and during the
pendency of any foreclosure proceedings and during any redemption period, and
Mortgagor hereby consents to the appointment of a receiver if believed
necessary or desirable by Mortgagee to enforce its rights under this paragraph
16. The collection of rents by Mortgagee shall in no way waive the right of
Mortgagee to foreclose this Mortgage in the event of any Event of Default.
17. Prohibition of Transfer and Further Encumbrances. Except as permitted
under the Credit Agreement, the Mortgagor shall not, without the prior written
consent of Mortgagee, permit or suffer the Mortgaged Premises, or any part
thereof, to be sold, assigned, transferred or encumbered in any way, whether by
operation of law or otherwise. The preceding sentence shall not apply to
transfers of ownership in Mortgagor resulting from the death of a natural
person, transfers by a natural person to a member or members of such person's
immediate family or transfers by a natural person in connection with bona fide
estate planning.
18. Severability. If any provision hereof is in conflict with any statute
or rule of law of the State of Indiana or is otherwise unenforceable for any
reason whatsoever, then such provision shall be deemed null and void to the
extent of such conflict or unenforceability and shall be deemed severable from
but shall not invalidate any other provisions of this Mortgage.
19. Environmental Matters. The representations, warranties, covenants and
agreements made by the Mortgagor to the Mortgagee in the Environmental
Certificate delivered by the Mortgagor to the Mortgagee in connection with the
execution of this Mortgage are incorporated herein by reference. The Mortgagor
agrees that any default under the terms of the
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
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<PAGE> 35
Environmental Certificate will constitute a default under this Mortgage. To
the best of Mortgagor's knowledge, after diligent inquiry and investigation,
none of the Mortgaged Premises is within the definition of the term "property"
as used in the Indiana Responsible Property Transfer Law ("IRPTL") (IC
13-25-3-1 through 13-25-3-15), the transaction evidenced by this Mortgage is
not subject to the provisions of IRPTL and Mortgagor shall not allow any of the
Mortgaged Premises to become subject to or constitute "property" subject to
IRPTL.
20. Waiver. No waiver by Mortgagee of any right or remedy granted
hereunder or failure to insist on strict performance by Mortgagor hereunder
shall affect or extend to or act as a waiver of any other right or remedy of
Mortgagee hereunder, nor affect the subsequent exercise of the same right or
remedy by Mortgagee for any further or subsequent default by Mortgagor
hereunder, and all such rights and remedies of Mortgagee hereunder are
cumulative.
21. Marshalling. The Mortgagor hereby waives, in the event of foreclosure
of this Mortgage or the enforcement by the Mortgagee of any other rights and
remedies hereunder, any right otherwise available in respect to marshalling of
assets which secure the Mortgage Indebtedness or to require Mortgagee to pursue
its remedies against any other such assets.
22. [INTENTIONALLY OMITTED.]
23. Further Instruments. The Mortgagor shall execute, acknowledge and
deliver any and all such further conveyances, documents, mortgages and
assurances, and do or cause to be done all such further acts, as Mortgagee may
reasonably require to confirm and protect the lien of this Mortgage or
otherwise to accomplish the purposes hereof forthwith upon the request of
Mortgagee, whether in writing or otherwise.
24. Notices. All notices, demands, requests, consents and other
communications shall be delivered and shall be effective in the manner
specified in the Credit Agreement.
25. Governing Law; Binding Effect; Definitions. This Mortgage shall be
construed according to the laws of the State of Indiana and shall be binding
upon Mortgagor and its successors and assigns and any subsequent owners of the
Mortgaged Premises, and all of the covenants herein contained shall run with
the land, and this Mortgage and all of the covenants herein contained shall
inure to the benefit of Mortgagee, its successors and assigns. Terms used but
not defined herein shall have the meanings ascribed thereto in the Credit
Agreement.
26. Headings. The headings in this Mortgage are for convenience of
reference only and shall not limit or otherwise affect the meaning of any
provision of this Mortgage.
27. Fixture Filing. It is intended that, as to fixtures, this Mortgage
shall be deemed to constitute a continuously perfected financing statement
filed as a fixture filing from the date of
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
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the filing of the Mortgage of record in the office of the recorder of each
county in which the Land is located pursuant to IC 26-1-9-402 and 26-1-9-403.
The information provided in this paragraph is provided in order that
this Mortgage shall comply with the requirements of the Code, for a mortgage
instrument to be filed as a financing statement. The Mortgagor is the "Debtor"
and its name and mailing address are set forth in the preamble of this
Mortgage. The "Secured Party" is the Mortgagee and its name and mailing
address from which information concerning the security interest granted herein
may be obtained are set forth in the preamble of this Mortgage. A statement
describing the portion of the Mortgaged Premises comprising the fixtures hereby
secured is set forth as Section (H) of the definition of Mortgaged Premises
contained in this Mortgage.
28. Future Advance Mortgage. In addition to any other obligation secured
by this Mortgage, this Mortgage shall also secure (i) future obligations and
advances up to One Hundred and Forty Million Dollars ($140,000,000) (whether
made as an obligation, made at the option of the Mortgagee or the Lenders, made
after a reduction to a zero (0) or other balance, or made otherwise) to the
same extent as if the future obligations and advances were made on the date of
execution of this Mortgage and (ii) future modifications, extensions and
renewals of any Indebtedness or obligations secured by this Mortgage. The lien
of this Mortgage with respect to such future obligations, advances,
modifications, extensions and renewals shall have the same priority to which
this Mortgage otherwise would be entitled under IC 32-1-2-16 without regard to
the fact that such future obligations, advances, modifications, extensions, or
renewals may occur after this Mortgage is executed.
29. Use of Insurance and Condemnation Proceeds. Notwithstanding any other
provision of this Mortgage, all insurance proceeds recovered by the Mortgagee
on account of damage or destruction to the Mortgaged Premises and all proceeds
of any condemnation award recovered by the Mortgagee for any building or
equipment taken or damaged, less the cost, if any, to the Mortgagee of such
recovery and of paying out such proceeds (including attorneys' fees and costs
allocable to inspecting the work and the plans and specifications therefor),
shall, upon the written request of the Mortgagor, be applied by the Mortgagee
to the payment of the cost of repairing, restoring or rebuilding the
improvements on the Mortgaged Premises so damaged or destroyed or of the
portion or portions of the Mortgaged Premises not so taken (hereinafter
referred to as the "work") and shall be paid out from time to time to the
Mortgagor as the work progresses, but subject to the Mortgagee's standard
requirements for construction loans of similar nature and subject to the
following conditions:
(a) There shall be no Event of Default under this Mortgage or any of the
other Loan Documents; and
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
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<PAGE> 37
(b) The request for any payment after the work has been completed shall be
accompanied by a copy of any certificate or certificates required by law to
render occupancy of the Mortgaged Premises legal.
Upon the completion of the work and payment in full therefore, or upon any
failure on the part of the Mortgagor promptly to commence or continue the work,
or at any time upon request by the Mortgagor, the Mortgagee may, at its option,
either apply the amount of any such proceeds then or thereafter in the hands of
the Mortgagee to the payment of the Mortgage Indebtedness or any portion
thereof, whether or not then due and payable, or remit such amount to the
Mortgagor.
30. Remedies Enforceable at Time of Enforcement. Any provision in this
Mortgage to the contrary notwithstanding, to the extent applicable laws may
limit (i) availability of the exercise of any remedies set forth in this
Mortgage, or (ii) the enforcement of waivers and indemnities made by Mortgagor,
such remedies, waivers, or indemnities shall be exercisable or enforceable if,
and to the extent, permitted by the laws in force at the time of exercise of
such remedies or the enforcement of such waivers or indemnities without regard
to the enforceability of such remedies, waivers or indemnities at the time of
the execution and delivery of this Mortgage.
IN WITNESS WHEREOF, Mortgagor has duly executed this Mortgage as of the
day and year first above written.
KEY PLASTICS, INC.
By: /s/ Mark J. Abbo
-------------------------
Mark J. Abbo
Its: Treasurer and Assistant Secretary
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
- 17 -
<PAGE> 38
STATE OF MICHIGAN )
)SS.
COUNTY OF WAYNE )
The foregoing instrument was acknowledged before me on this 24th day of
March, 1997, by Mark J. Abbo, the Treasurer and Assistant Secretary of Key
Plastics, Inc., a Michigan corporation, on behalf of said corporation, who
stated that any representations therein contained are true and correct.
Janice K. Atkins
------------------------------------
(Signature)
Notary Public, Janice K. Atkins
--------------------
(printed name)
Resident of _________________ County
My Commission Expires: ___________
[seal]
Prepared by and when
recorded return to:
Mi Young Lee, Esq.
Dickinson, Wright, Moon,
Van Dusen & Freeman
500 Woodward Avenue, Suite 4000
Detroit, Michigan 48226
(313) 223-3500
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
- 18 -
<PAGE> 39
EXHIBIT A
Legal Description of Land
A part of the West half of Section 33, Township 36 North, Range 14
East, Otsego Township, Steuben County, Indiana, described as follows:
Commencing at the northwest corner of said Section 33; thence South 1591.9 feet
along the west line of said section to the centerline of the Bellefountaine
Road; thence South 62 degrees 15 minutes East 926.64 feet; thence South 64
degrees 40 minutes East 382.14 feet; thence South 00 degrees 00 minutes East
539.08 feet to the true point of beginning of this description; thence
continuing South 00 degrees 00 minutes East 996.20 feet to the centerline of
Fish Creek; also known as the Cameron Ditch; thence North 71 degrees 19 minutes
22 seconds West 436.23 feet along said creek and ditch centerline; thence
continuing along said creek and ditch centerline North 68 degrees 38 minutes
14 seconds West 487.26 feet to the centerline of County Road #300E; thence
North 47 degrees 19 minutes 35 seconds East 261.10 feet along said road
centerline; thence northeasterly 221.74 feet along a 16.901 degree curve to the
left in said road centerline (said curve has a radius of 339.01 feet and a long
chord that bears North 28 degrees 35 minutes 17 seconds East 217.81 feet);
thence North 09 degrees 51 minutes 00 seconds East 392.29 feet along said road
centerline, thence South 81 degrees 27 minutes 00 seconds East 509.40 feet
back to the true point of beginning; subject to legal highways and easements
of record.
Tax Parcel No.________
MORTGAGE, SECURITY, AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
-19-
<PAGE> 40
EXHIBIT B
Permitted Encumbrances
(Hamilton, Indiana)
1. Mortgage and Security Agreement from Key Plastics, Inc., a Michigan
corporation, to Comerica Bank, a Michigan banking corporation, and the
Town of Hamilton, Indiana (the "Issuer"), dated November 1, 1992 and
recorded November 16, 1992 in Mortgage Record 144, Page 375, given to
secure the sum of $7,500,000.00; which interests of the Issuer were
assigned by the Issuer, to Lincoln National Bank and Trust Company of
Fort Wayne, dated November 1, 1992 and recorded November 16, 1992 in
Mortgage Assignment & Release Record 60, Page 578, records of Steuben
County, Indiana; and the right, title and interest of Comerica Bank in
which has been assigned to NBD Bank pursuant to the Assignment of
Mortgage and Security Agreement dated as of March 24, 1997 from Comerica
Bank to NBD Bank, recorded ___________________, 1997 in Mortgage
Assignment & Release Record _________, Page ______, Records of Steuben
County, Indiana, as amended by the First Amendment to Mortgage and
Security Agreement, dated as of March 24, 1997 among Key Plastics, Inc.,
NBD Bank and Norwest Bank Indiana, National Association (as successor
trustee to Lincoln National Bank and Trust Company of Fort Wayne), and
recorded ___________________, 1997 in Mortgage Record _______, page
________, Records of Steuben County, Indiana.
2. Financing Statement No. 10378, showing Key Plastics, Inc., as debtor,
a Comerica bank, as trustee, as secured party, filed November 16, 1992
in the Office of the Recorder of Steuben County, Indiana; amended in
Financing Statement No. 600,111, filed February 12, 1996.
3. Financing Statement No. 5811, showing Key Plastics, Inc., as debtor, and
Lincoln National Bank & Trust Company of Fort Wayne, as Trustee, as
secured party, filed August 15, 1989 in the Office of the Recorder of
Steuben County, Indiana; thence continued in Financing Statement No.
400239, showing Norwest Bank Indiana, National Association, as secured
party, filed May 19, 1994 in the Office of the Recorder of Steuben
County, Indiana.
4. 75 foot ditch maintenance right-of-way easement for the Cameron Ditch.
5. Blanket Electrical Easement executed by Earl Fee and Hazel Fee, his
wife, to Indiana & Michigan Electric Company, dated July 29, 1940 and
recorded August 30, 1940 in Deed Record 90, Page 610, records of Steuben
County, Indiana.
6. Right-of-way of Homestead Drive. Width of said Drive is 40 feet.
<PAGE> 41
7. Perpetual easement in the southwest corner of the real estate, as shown
on the survey by Rowland Associates, Inc., Drawing 96-547, dated
November 13, 1996.
8. Right-of-way Easement executed by Key Plastics, Inc. to Hamilton Lake
Conservancy District, dated September 26, 1989 and recorded July 10,
1990 in Deed Record 223, Page 445, records of Steuben County, Indiana.
9. Set-back and use restrictions, possible assessments and maintenance and
reconstruction; and all rights of others entitled to the continued
uninterrupted flow of the water through Fish Creek a/k/a Cameron Ditch.
10. The following matters as disclosed by survey prepared by Rowland
Associates, Inc., certified November 13, 1996:
(a) encroachment of landscaping and trees over North property lines;
(b) overhead utilities and underground telephone lines along
right-of-way on west side of premises; and
(c) woven wire fence along East property line of premises.
11. Unpaid annual ditch tax in the amount of $5.00.
-2-
<PAGE> 42
INDIANA FORM
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF
RENTS AND FINANCING STATEMENT (FIXTURE FILING)
THIS MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS, AND FINANCING
STATEMENT (FIXTURE FILING), dated as of March 24, 1997, by KEY PLASTICS
TECHNOLOGY, L.L.C., a Michigan limited liability company whose address is 21333
Haggerty Road, Suite 200, Novi, Michigan 48375 (the "Mortgagor"), to NBD BANK,
a Michigan banking corporation, whose address is 611 Woodward Avenue, Detroit,
Michigan 48226 (the "Mortgagee"), as agent for the benefit of itself and the
lenders (the "Lenders") which are parties to the Credit Agreement defined
below.
RECITALS:
A. Key Plastics, Inc., a Michigan corporation (the "Company") has entered
into a Credit Agreement dated as of March 24, 1997 (as amended or modified from
time to time, including any agreement entered into in substitution therefor,
the "Credit Agreement") pursuant to which the Lenders agreed, subject to the
terms and conditions thereof, to extend credit to the Company up to a maximum
principal amount outstanding at any time equal to One Hundred and Forty Million
and No/100 Dollars ($140,000,000.00) maturing on or before September 24, 2004,
as such date may be extended by agreement of the parties to the Credit
Agreement.
B. As a condition to the effectiveness of the obligations of the Mortgagee
and the Lenders under the Credit Agreement, the Mortgagor is obligated, among
other things, to grant a lien on the mortgaged premises hereinafter described.
WITNESSETH:
NOW, THEREFORE, to secure (a) the prompt and complete payment of the
principal Indebtedness in the aggregate amount of One Hundred and Forty Million
Dollars ($140,000,000) and all other Indebtedness and obligations of the
Mortgagor, the Company or any Subsidiary now or hereafter owing to the Lenders
or the Mortgagee under or on account of the Credit Agreement, any Security
Document or any letters or credit, notes or other instruments issued to the
Mortgagee or the Lenders pursuant thereto, (b) the performance of the covenants
under the Credit Agreement and the Security Documents and any monies expended
by any Lender or the Mortgagee in connection therewith, and (c) the prompt and
complete payment of all obligations and performance of all covenants of the
Mortgagor, the Company or any Subsidiary in connection with Swaps relating to
Indebtedness under the Loan Documents (including any interest accruing
subsequent to any petition filed by or against the Mortgagor, the Company or
any Subsidiary under the U.S. Bankruptcy Code, whether or not allowed),
indemnity and reimbursement obligations, charges, expenses, fees, reasonable
attorneys' fees and disbursements
<PAGE> 43
and any other amounts owing thereunder (all of the aforesaid Indebtedness,
obligations and liabilities of the Mortgagor, the Company and their
Subsidiaries being herein called the "Mortgage Indebtedness" and this Mortgage
and all of the other documents, agreements and instruments among the Mortgagor,
the Company, the Subsidiaries, the Lenders, the Mortgagee or any of them,
evidencing or securing the repayment of, or otherwise pertaining to, the
Mortgage Indebtedness, including without limitation the Credit Agreement, the
Notes and the Security Documents, being herein collectively called the "Loan
Documents"), the Mortgagor does hereby MORTGAGE and WARRANT and does hereby
grant a security interest in and unto Mortgagee, and its successors and
assigns, the following described property (the "Mortgaged Premises"):
(A) the land situated in the City of South Bend, County of St. Joseph and
State of Indiana, more specifically described in Exhibit A hereto (the "Land");
(B) all easements, rights-of-way, licenses and privileges, thereunto
belonging or in anywise appertaining, including without limitation all
Mortgagor's right, title and interest in and to those easements, rights-of-way,
licenses and privileges described in Exhibit A hereto, if any;
(C) all buildings and improvements now or hereafter situated upon the Land
or any part thereof;
(D) to the extent, if any, of Mortgagor's interests thereon, all minerals,
royalties, gas rights, water, water rights, water stock, flowers, shrubs, lawn
plants, crops, trees, timber and other emblements now or hereafter located on,
under or above all or any part of the Land;
(E) all and singular the tenements, hereditament and appurtenances
belonging or in anywise appertaining to the Land, and the reversion or
reversions, remainder and remainders thereof; and also all the estate, right,
title, interest, property, claim and demand whatsoever of Mortgagor, of, in and
to the same and of, in and to every part and parcel thereof;
(F) all the rents, issues and profits thereof under present or future
leases, or otherwise, which are hereby specifically assigned, transferred and
set over to Mortgagee, including, but not limited to, all cash or securities
deposited under any such leases to secure performance by the tenants of their
obligations thereunder, whether said cash or securities are to be held until
the expiration of the terms of such leases or applied to one or more of the
installments of rent coming due thereunder;
(G) all right, title and interest of Mortgagor, if any, in and to the land
lying in the bed of any street, road, avenue, alley or walkway, opened or
proposed or vacated, or any strip or gore, in front of or adjoining the Land;
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
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<PAGE> 44
(H) all machinery, apparatus, equipment, fittings, fixtures, and articles
of personal property of every kind and nature whatsoever, other than consumable
goods, now or hereafter located in or upon the Land or any part thereof and
used or useable in connection with any present or future operation of the Land
or any building or buildings now or hereafter on the Land and now owned or
hereafter acquired by Mortgagor (all of which is herein called "Equipment"),
including, but without limiting the generality of the foregoing, all lighting,
heating, cooling, ventilating, air-conditioning, incinerating, refrigerating,
plumbing, sprinkling, communicating and electrical systems, and the machinery,
appliances, fixtures and equipment pertaining thereto, it being understood and
agreed that all Equipment is part and parcel of the Land and appropriated to
the use of said real estate and, whether affixed or annexed or not, shall for
the purposes of this Mortgage, unless Mortgagee shall otherwise elect, be
deemed conclusively to be real estate and mortgaged hereby; and
(I) any and all awards or payments, including interest thereon, and the
right to receive the same, which may be made with respect to the Land and are
or will be payable to Mortgagor as a result of (a) the exercise of the right of
eminent domain, (b) the alteration of the grade of any street, (c) any loss of
or damage to any building or other improvement on the Land, (d) any other
injury to or decrease in the value of the Land or (e) any refund due on account
of the payment of real estate taxes, assessments or other charges levied
against or imposed upon the Land, to the extent of all amounts which may be
secured by this Mortgage at the date of receipt of any such award or payment by
Mortgagee, and of the reasonable counsel fees, costs and disbursements incurred
by Mortgagee in connection with the collection of such award or payment,
Mortgagor hereby agreeing to execute and deliver, from time to time, such
further instruments as may be reasonably requested by Mortgagee to confirm such
assignment to Mortgagee of any such award or payment.
TO HAVE AND TO HOLD the Mortgaged Premises, and each and every part
thereof, unto Mortgagee and its successors and assigns forever. Any reference
herein to the "Mortgaged Premises" shall, unless the context shall require
otherwise, be deemed to include and apply to the above described Land and said
buildings, improvements, Equipment, rents, issues, profits, leases, easements,
tenements, hereditament and appurtenances and all other rights, privileges and
interests hereinabove described.
SUBJECT only to those matters set forth in Exhibit B hereto ("Permitted
Encumbrances").
AND Mortgagor does hereby covenant and warrant as follows:
1. Payment of Mortgage Indebtedness; Performance of Agreements. The
Mortgagor shall pay the principal of and interest on the Mortgage Indebtedness
according to the terms
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
- 3 -
<PAGE> 45
thereof, and will keep and perform all the covenants, promises and agreements
on its part to be performed in any and all Loan Documents, all in the manner
herein or therein set forth.
2. Covenants of Title. The Mortgagor has good and indefeasible title to
the Land in fee simple and has good and indefeasible title to the entire
Mortgaged Premises and with good right and full power to sell, mortgage and
convey the Mortgaged Premises, the Mortgaged Premises are free and clear of
liens and encumbrances except Permitted Encumbrances, whether presently
existing or which may hereafter be created in accordance with the terms hereof,
and Mortgagor will warrant and defend the Mortgaged Premises against all lawful
claims and demands whatsoever. The Mortgagee shall have the right, at its
option and at such time or times as it, in its sole discretion, shall deem
reasonably necessary, to take whatever action it may reasonably deem necessary
to defend or uphold the lien of this Mortgage or otherwise enforce any of the
rights of Mortgagee hereunder or any obligation secured hereby, including
without limitation, the right to institute appropriate legal proceedings for
such purposes.
3. Payment of Taxes, Assessments and Charges. The Mortgagor shall pay
when due, and before any interest, collection fees or penalties shall accrue,
all real estate taxes, special assessments, water and sewer charges or other
governmental charges and impositions levied or assessed with respect to the
Mortgaged Premises or any part thereof except to the extent that payment of any
of the foregoing is then being contested in good faith by appropriate legal
proceedings and with respect to which adequate financial reserves have been
established on the books and records of the Mortgagor. Should Mortgagor fail
to so pay such taxes, special assessments, water and sewer charges or other
governmental charges or impositions or establish such adequate financial
reserves, Mortgagee may, at its option, pay the same for the account of
Mortgagor.
4. Reserves for Taxes and Insurance Premiums. Upon the occurrence of any
Event of Default, Mortgagor shall pay to Mortgagee, upon the request of
Mortgagee, installments of principal and interest, and in addition thereto,
installments of the taxes and assessments levied or to be levied upon the
Mortgaged Premises, and installments of the premiums that will become due and
payable to renew the insurance hereinafter provided, said installments to be
substantially equal and to be in such amount as will assure to Mortgagee that
not less than 30 days before the time when such taxes and premiums,
respectively, become due Mortgagor will have paid to Mortgagee a sufficient
amount to pay the same in full. Said amounts paid to Mortgagee hereunder need
not be segregated nor kept in a separate fund, and no interest shall be payable
thereon. Said amounts shall be held by Mortgagee as additional security for
the Mortgage Indebtedness and, except as provided in the following sentence, be
applied to the payment of said taxes and assessments when the same become due
and payable. Mortgagee may, at its option, but without any obligation on its
part so to do, apply said amounts upon said taxes and assessments or insurance
premiums or toward the payment of the Mortgage Indebtedness or any portion
thereof, whether or not then due or payable. The Mortgagee shall endeavor to
notify the
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
- 4 -
<PAGE> 46
Mortgagor of how such amounts were applied, provided that the failure
to give such notice shall not affect Mortgagee's rights under this Mortgage.
Upon an assignment of the Mortgage, Mortgagee shall have the right to pay
over the balance of such deposits in its possession to the assignee and
Mortgagee shall thereupon be completely released from all liability with
respect to such deposits and Mortgagor or owner of the Mortgaged Premises shall
look solely to the assignee or transferee in reference thereto. This provision
shall apply to every transfer of such deposits to a new assignee. Upon full
payment and satisfaction of the Mortgage Indebtedness or at any prior time upon
the election of Mortgagee, the balance of the unapplied deposits in its
possession shall be paid over to the record owner of the Mortgaged Premises and
no other party shall have any right or claim thereto in any event, provided
that in the event of a foreclosure of the Mortgaged Premises, the purchaser at
such foreclosure shall have the right to receive such unapplied deposits. The
Mortgagor agrees, at Mortgagee's request, to deliver the aforesaid deposits to
such service or financial institution as Mortgagee shall from time to time
designate.
5. Payment of Other Obligations. The Mortgagor shall also pay any and all
other obligations, liabilities or debts which may become liens, security
interests, or encumbrances upon or charges against the Mortgaged Premises for
any repairs or improvements that are now completed or are in progress or which
may hereafter be made thereon, or for any other goods, services, or utilities
furnished to the Mortgaged Premises, and shall not permit any lien, security
interest, encumbrance or charge of any kind securing the repayment of borrowed
funds (including the deferred purchase price for any property) to accrue and
remain outstanding against the Mortgaged Premises or any part thereof, or any
improvements thereon other than Permitted Encumbrances, if any, except to the
extent that payment of any of the foregoing is then being contested in good
faith by appropriate legal proceedings and with respect to which adequate
financial reserves have been established on the books and records of the
Mortgagor.
6. Maintenance and Repair; Compliance with Laws; Inspection. The
Mortgagor will keep the Land and all the improvements thereon in good order and
repair, and Mortgagor expressly agrees that it will not do or permit waste on
the Land nor do any other act whereby the Mortgaged Premises will become less
valuable or the lien hereof may be impaired. Should Mortgagor fail to effect
the necessary repairs and such failure shall remain unremedied for 20 calendar
days after written notice thereof shall have been given to the Mortgagor by the
Mortgagee, Mortgagee may at its option make such repairs for the account of
Mortgagor. The Mortgagor will promptly comply, and cause the Mortgaged
Premises and the occupants or users thereof to comply, with all present and
future laws, ordinances, orders, rules and regulations and other requirements
of any governmental authority affecting the Mortgaged Premises or any part
thereof or the use or occupancy thereof and with all instruments and documents
of record or otherwise affecting the Mortgaged Premises, or any part thereof,
or the use or occupancy
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
- 5 -
<PAGE> 47
thereof. The Mortgagee, and any person authorized by Mortgagee, shall have the
right to enter upon and inspect the Mortgaged Premises at all reasonable times
and with reasonable notice.
7. Insurance. (a) The Mortgagor shall keep the buildings and other
improvements on the Land, or which may hereafter be erected thereon, constantly
insured for the benefit of Mortgagee with such company or companies as may be
reasonable acceptable to Mortgagee and in an amount reasonably satisfactory to
Mortgagee, which amount shall not be less than 100% of the then full
replacement cost of such building and improvements (exclusive of excavations,
foundations and footings), which policies shall be without deduction for
depreciation and be subject to the payment of a deductible not in excess of an
amount reasonably satisfactory to Mortgagee, until the Mortgage Indebtedness
and all interest thereon and all of the amounts due hereunder are fully paid,
against fire and such other hazards and risks customarily covered by the
standard form of "extended coverage" endorsements available in the State of
Indiana, and shall further provide flood insurance (if the Mortgaged Premises
are situated in an area designated as a flood hazard area by the Director of
the Federal Emergency Management Agency or as otherwise required by the Flood
Disaster Protection Act of 1973 and regulations issued thereunder), rent
insurance, in an amount not less than one year's gross rent derived from the
Mortgaged Premises, and such other appropriate insurance as Mortgagee may
reasonably require from time to time. All such policies shall include standard
mortgagee clauses in favor of Mortgagee and shall provide that the proceeds
thereof shall be paid to Mortgagee, all as may be satisfactory to Mortgagee.
During any construction, repair or restoration of the buildings and other
improvements on the Mortgaged Premises, Mortgagor shall carry or cause to be
carried builder's risk insurance which names Mortgagee as a loss payee as its
interests may appear. The Mortgagor shall also carry comprehensive general or
public liability insurance with reference to the Mortgaged Premises, which
names Mortgagee as an additional insured. All such policies shall provide that
the same may not be canceled or terminated without giving Mortgagee at least 30
days' prior written notice of such cancellation or termination.
(b) The Mortgagor shall deliver to Mortgagee at its principal office
aforesaid or at such other place as may be designated by the holder hereof such
insurance policies or, if Mortgagee consents, certificates evidencing such
policies. Renewals thereof shall likewise be delivered to Mortgagee at least
15 days before the expiration of any existing policies. Should Mortgagor fail
to insure or fail to pay the premiums on any such insurance or fail to deliver
the policies or renewals thereof as provided above, Mortgagee at its option may
have such insurance written or renewed and pay the premiums thereon for the
account of Mortgagor.
(c) In the event of loss or damage, the proceeds of said property and
builders' risk insurance on the buildings and improvements shall be paid to
Mortgagee alone. No such loss or damage shall itself reduce the Mortgage
Indebtedness. The Mortgagee is authorized to adjust and compromise such loss
without the consent of Mortgagor, to collect, receive and receipt for such
proceeds in the name of Mortgagee and Mortgagor and to endorse Mortgagor's name
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
- 6 -
<PAGE> 48
upon any check in payment thereof. Such proceeds shall be applied first toward
reimbursement of all costs and expenses of Mortgagee in collecting said
proceeds and then toward payment of the Mortgage Indebtedness or any portion
thereof, whether or not then due or payable, or Mortgagee at its option may
apply said insurance proceeds, or any part thereof, to the repair or rebuilding
of the Mortgaged Premises. No such application of proceeds by Mortgagee toward
payment of the Mortgage Indebtedness shall reduce the amount of the payments
required to be made on the Mortgage Indebtedness in accordance with its terms.
(d) In the event of a foreclosure of this Mortgage, the purchaser of the
Mortgaged Premises shall succeed to all of the rights of Mortgagor under said
insurance policies payable to Mortgagee, including any right to unearned
premiums and the right to receive the proceeds of any insurance payable by
reason of any loss theretofore or thereafter occurring.
8. Eminent Domain. Notwithstanding any taking under the power of eminent
domain, alteration of the grade of any street, or other injury to or decrease
in value of the Mortgaged Premises by any public or quasi-public authority or
corporation, Mortgagor shall continue to pay the Mortgage Indebtedness in
accordance with the terms of the Notes, and any reduction in the principal sum
resulting from the application by Mortgagee of such award or payment as
hereinafter set forth shall be deemed to take effect only upon the receipt by
Mortgagee of such award. The Mortgagor hereby assigns the entire proceeds of
any award or payment to Mortgagee. The Mortgagee is authorized to commence,
appear in and prosecute, in its own or in Mortgagor's name, any action or
proceeding relating to any such taking, and to settle or compromise any claim
in connection therewith. Such proceeds shall be applied first toward
reimbursement of all costs and expenses of Mortgagee in collecting said
proceeds and then toward payment of the Mortgage Indebtedness or any portion
thereof, whether or not then due or payable, or Mortgagee at its option may
apply said proceeds, or any part thereof, to the alteration, restoration or
rebuilding of the Mortgaged Premises. No such application of proceeds by
Mortgagee toward payment of the Mortgage Indebtedness shall reduce the amount
of the payments required to be made on the Mortgage Indebtedness in accordance
with its terms.
9. Waste. The failure of Mortgagor to pay any taxes or assessments
assessed against the Mortgaged Premises, or any installment thereof, or any
premiums payable with respect to any insurance policy covering the Mortgaged
Premises, shall constitute waste. The Mortgagor hereby consents to the
appointment of a receiver under IC 34-1-12-1 et seq., should Mortgagee elect to
seek such relief thereunder.
10. Reimbursement of Advances by Mortgagee. The Mortgagor shall pay to
Mortgagee, upon demand, all sums expended by Mortgagee, or by a receiver
appointed at the request of Mortgagee, unless such sums shall be paid out of
the rents, income and profits from the Mortgaged Premises, (a) to pay insurance
premiums, taxes, assessments, water and sewer charges and other governmental
charges and impositions with respect to the Mortgaged Premises,
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
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<PAGE> 49
(b) to maintain, repair or improve the Mortgaged Premises, (c) to defend the
lien of this Mortgage as a lien against the Mortgaged Premises subject only to
the Permitted Encumbrances hereinabove expressly set forth, (d) to discharge
any lien or encumbrance affecting the Mortgaged Premises other than Permitted
Encumbrances, (e) to cure any default of Mortgagor under any lease or other
agreement covering the Mortgaged Premises, (f) to cure any default of Mortgagor
hereunder or under any of the Loan Documents or (g) for or in connection with
any other action taken by Mortgagee to preserve the security of this Mortgage
or any other security for the Mortgage Indebtedness or to protect any of
Mortgagee's rights hereunder. All such expenditures as shall be made by
Mortgagee or such receiver or pursuant to any other provision of this Mortgage
or the other Loan Documents, including any reasonable attorneys' fees and
disbursements incurred by Mortgagee or such receiver in connection with the
foregoing, shall be payable upon demand and be secured by this Mortgage and
shall bear interest at the Overdue Rate set forth in the Credit Agreement.
11. Change in Taxes. In the event any tax shall be due or become due and
payable to the United States of America, the State of Indiana or any political
subdivision thereof with respect to the execution and delivery or recordation
of this Mortgage or any note or other instrument or agreement evidencing or
securing repayment of the Mortgage Indebtedness or the interest of Mortgagee in
the Mortgaged Premises, Mortgagor shall pay such tax at the time and in the
manner required by applicable law and Mortgagor shall hold Mortgagee harmless
and shall indemnify Mortgagee against any liability of any nature whatsoever
as a result of the imposition of any such tax.
In the event of the passage after the date of this Mortgage of any law in
the State of Indiana deducting from the value of real property for purposes of
taxation any lien thereon, or changing in any way the laws now in force for the
taxation of mortgages or debts secured thereby (including the interest thereon)
for state or local purposes, or changing the manner of collection of any such
taxes, and imposing a tax, either directly or indirectly, on this Mortgage, the
Notes or any of the other Loan Documents, the holder of this Mortgage shall
have the right to declare the entire unpaid amount of the Mortgage
Indebtedness, together with accrued and unpaid interest thereon, to be due and
payable on a date to be specified by not less than 30 days' written notice to
Mortgagor, provided, however, that such election shall not be effective if
Mortgagor is permitted by law to pay the whole of such tax in addition to all
other payments required thereunder and if Mortgagor, prior to such specified
date, makes payment of such tax then due and agrees to pay any such tax when
thereafter levied or assessed against the Mortgaged Premises, this Mortgage,
the Notes or any of the other Loan Documents.
12. Events of Default. The occurrence of any of the following events
shall be deemed an "Event of Default" hereunder and shall entitle Mortgagee to
exercise its remedies hereunder and under any of the other Loan Documents or as
otherwise provided by law:
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
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(a) Nonpayment of any of the Mortgage Indebtedness when due, beyond any
period of grace, if any, provided with respect thereto and after the giving of
any required notice;
(b) The failure of the Mortgagor to perform or observe any material term
or covenant contained in this Mortgage and such failure shall remain unremedied
for 30 calendar days after the earlier of (i) written notice thereof shall have
been given to the Mortgagor from the Mortgagee and (ii) when the Mortgagor
otherwise had knowledge of such failure, unless the Mortgagor is diligently
pursuing to cure such failure to the reasonable satisfaction of the Mortgagee;
(c) Any representation or warranty made by Mortgagor in this Mortgage
shall prove to have been false or misleading in any material respect when made;
or
(d) The occurrence of any Event of Default (as defined in the Credit
Agreement) under the Credit Agreement.
13. Remedies upon Default. Immediately upon the occurrence of any Event
of Default after applicable notice and grace periods have elapsed, Mortgagee
shall have the option, in addition to and not in lieu of or substitution for
all other rights and remedies provided in this Mortgage or any other Loan
Documents or provided by law, and is hereby authorized and empowered by
Mortgagor, to do any or all of the following:
(a) Declare the entire unpaid amount of the Mortgage Indebtedness,
together with accrued and unpaid interest thereon, and any and all charges
payable by Mortgagor to Mortgagee pursuant to any of the Loan Documents,
immediately due and payable and, at Mortgagee's option, (i) to bring suit
therefor, or (ii) to bring suit for any delinquent payment of or upon the
Mortgage Indebtedness, or (iii) to take any and all steps and institute any and
all other proceedings that Mortgagee deems necessary to enforce payment of the
Mortgage Indebtedness and performance of other obligations secured hereunder
and to protect the lien of this Mortgage.
(b) Either in person or by agent, with or without bringing any action or
proceeding, enter upon and take possession of the Mortgaged Premises, or any
part thereof, in its own name, and do any acts which it deems necessary or
desirable to preserve the value, marketability or rentability of the Mortgaged
Premises or part thereof or interest therein including, without limitation,
enforce any leases, increase the income therefrom or protect the security
hereof and, with or without taking possession of the Mortgaged Premises, sue
for or otherwise collect the rents, including those past due and unpaid, and
apply the same in accordance with the provisions of this Mortgage. The
entering upon and taking possession of the Mortgaged Premises, the collection
of such rents, and the application thereof as aforesaid, shall not cure or
waive any default or notice of default hereunder or invalidate any act done in
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
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response to such default or pursuant to such notice of default and
notwithstanding the continuance in possession of the Mortgaged Premises or the
collection, receipt and application of rents, Mortgagee shall be entitled to
exercise every right provided for in any of the Loan Documents or by law upon
occurrence of any Event of Default.
(c) Commence an action to foreclose this Mortgage, appoint a receiver, or
specifically enforce any of the covenants of this Mortgage, the Notes, and any
or all of the Loan Documents.
(d) Exercise any or all of the remedies available to a secured party under
the Uniform Commercial Code of Indiana (the "Code"), including, but not limited
to:
(i) Either personally or by means of a court appointed
receiver, take possession of all or any of the personal
property and exclude therefrom Mortgagor and all others
claiming under Mortgagor, and thereafter hold, store,
use, operate, manage, maintain and control, make
repairs, replacements, alterations, additions and
improvements to and exercise all rights and powers of
Mortgagor in respect to the personal property or any
part thereof. In the event Mortgagee demands or
attempts to take possession of the personal property in
the exercise of any rights under any of the Loan
Documents, Mortgagor promises and agrees to promptly
turn over and deliver complete possession thereof to
Mortgagee;
(ii) Without notice to or demand upon Mortgagor, make such
payments and do such acts as Mortgagee may deem
necessary to protect its security interest in the
personal property, including without limitation, paying,
purchasing, contesting, or compromising any encumbrance,
charge or lien which is prior to or superior to the
security interest granted hereunder, and in exercising
any such powers or authority to pay all expenses
incurred in connection therewith;
(iii)Require Mortgagor to assemble the
personal property or any portion thereof, at a place
designated by Mortgagee and reasonably convenient to
both parties, and promptly to deliver such personal
property to Mortgagee, or an agent or representative
designated by it. Mortgagee, and its agents and
representatives shall have the right to enter upon any
or all of the Mortgaged Premises and/or Mortgagor's
other premises and property to exercise Mortgagee's
rights hereunder;
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
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(iv) Sell, lease or otherwise dispose of the personal
property at public sale, with or without having the
personal property at the place of sale, and upon such
terms and in such manner as Mortgagee may determine.
Mortgagee may be a purchaser at any such sale; and/or
(v) Unless the personal property is perishable or threatens
to decline speedily in value or is of a type
customarily sold on a recognized market, Mortgagee shall
give Mortgagor at least five (5) days prior written
notice of the time and place of any public sale of the
personal property or other intended disposition thereof.
Such notice may be mailed to Mortgagor at the address
set forth at the beginning of this Mortgage.
(e) When the obligations hereby secured, or any part thereof, shall become
due, whether by acceleration or otherwise, Mortgagee shall have the right to
foreclose the lien hereof for such obligations or part thereof. In any suit to
foreclose the lien hereof or enforce any other remedy of Mortgagee under this
Mortgage or any other Loan Documents, there shall be allowed and included as
additional Indebtedness in the decree for sale or other judgment or decree all
expenditures and expenses which may be paid or incurred by or on behalf of
Mortgagee for attorneys' and paralegals' fees, appraiser's fees, outlays for
documentary and expert evidence, stenographers' charges, publication costs,
environmental assessments and costs (which may be estimated as to items to be
expended after entry of the decree) of procuring all such abstracts of title,
title searches and examinations, title insurance policies, survey, and similar
data and assurances with respect to title as Mortgagee may deem reasonably
necessary either to prosecute such suit or to evidence to bidders at any sale
which may be had pursuant to such decree the true condition of the title to or
the value of the Mortgaged Premises. All expenditures and expenses of the
nature in this paragraph mentioned, and such expenses and fees as may be
incurred in the protection of the Mortgaged Premises and the maintenance of the
lien of this Mortgage, including the fees of any attorneys and paralegals
employed by Mortgagee in any litigation or proceeding affecting this Mortgage,
any other Loan Documents or the Mortgaged Premises, including probate and
bankruptcy proceedings, or in preparations for the commencement or defense of
any proceeding or threatened suit or proceeding, shall be immediately due and
payable by Mortgagor, with interest thereon at the Overdue Rate.
(f) After the occurrence of an Event of Default, or at any time after the
filing of a complaint to foreclose this Mortgage, the court in which such
complaint is filed may appoint a receiver of the Mortgaged Premises and the
Mortgagor hereby consents to the appointment of a receiver. Such appointment
may be made either before or after sale, without notice (other than such notice
as is required to be given by law), without regard to the solvency or
insolvency of Mortgagor at the time of application for such receiver and
without regard to the then value of the
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
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Mortgaged Premises or whether the same shall be then occupied as a homestead or
not and Mortgagee hereunder or any successor of Mortgagee may be appointed as
such receiver. Such receiver shall have power: (a) to collect the rents of
the Mortgaged Premises during the pendency of such foreclosure suit and,
in case of a sale and a deficiency, during the full statutory period of
redemption, whether there be redemption or not, as well as during any further
times when Mortgagor, except for the intervention of such receiver, would be
entitled to collect such rents; (b) to extend or modify any then existing
leases and to make new leases, which extensions, modifications and new leases
may provide for terms to expire, or for options to lessees to extend or renew
terms to expire, beyond the maturity date of the Mortgaged Indebtedness
hereunder and beyond the date of the issuance of a deed or deeds to a purchaser
or purchasers at a foreclosure sale, it being understood and agreed that any
such leases, and the options or other such provisions to be contained therein,
shall be binding upon Mortgagor and all persons whose interests in the
Mortgaged Premises are subject to the lien hereof and upon the purchaser or
purchasers at any foreclosure sale, notwithstanding any redemption from sale,
discharge of the obligations, satisfaction of any foreclosure decree, or
issuance of any certificate of sale or deed to any purchaser; and (c) all other
powers which may be necessary or are usual in such cases for the protection,
possession, control, management, and operation of the Mortgaged Premises during
the whole of said period. The court from time to time may authorize the
receiver to apply the net income in his hands in payment in whole or in part
of: (a) the obligations secured hereby, or by any decree foreclosing this
Mortgage, or any tax, special assessment or other lien which may be or become
superior to the lien hereof or of such decree, provided such application is
made prior to foreclosure sale; and (b) the deficiency in case of a sale and
deficiency. To the fullest extent permitted by law, Mortgagor for itself and
any subsequent owner hereby waives any and all defenses to the application for
such a receiver, as above, but nothing herein contained is to be construed so
as to deprive the Mortgagee of any other right, remedy, or privilege it may not
have under the law to have a receiver appointed. This provision providing for
the appointment of a receiver of the Premises and/or the rents, issues and
profits thereof, and the assignment of such leases, rents, issues and profits
is made an express condition upon which the loan hereby secured is made.
(g) Mortgagee shall be entitled to enforce payment and performance of the
Indebtedness hereby secured or any part thereof secured hereby and to exercise
all rights and powers under this Mortgage or under any of the Loan Documents or
other agreement or any laws now or hereafter in force, notwithstanding some or
all of the said Indebtedness secured hereby may now or hereafter be otherwise
secured, whether by mortgage, deed of trust, pledge, lien, assignment or
otherwise. Neither the acceptance of this Mortgage nor its enforcement shall
prejudice or in any manner affect Mortgagee's right to realize upon or enforce
any other security now or hereafter held by Mortgagee, it being agreed that
Mortgagee shall be entitled to enforce this Mortgage and any other security now
or hereafter held by Mortgagee in such order and manner as Mortgagee may, in
its absolute discretion, determine. No remedy herein conferred upon or
reserved to Mortgagee is intended to be exclusive of any other remedy herein or
by law
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
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provided or permitted, but each shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing at
law or in equity or by statute. Every power or remedy given by any of the Loan
Documents to Mortgagee may be exercised, concurrently or independently, from
time to time as often as may be deemed expedient by Mortgagee and Mortgagee may
pursue inconsistent remedies; all of which shall be limited by applicable law.
14. Successors in Ownership. In the event ownership of the Mortgaged
Premises or any part thereof becomes vested in a person or persons other than
Mortgagor without the prior written approval of Mortgagee, Mortgagee may (but
shall not be obligated to) deal with such successor or successors in interest
with reference to this Mortgage and the other Loan Documents in the same manner
as with Mortgagor, without in any manner discharging or otherwise affecting
Mortgagor's liability hereunder or upon the Mortgage Indebtedness.
15. Personal Property. (a) The Mortgagor represents and warrants that
Mortgagor owns all presently owned Equipment and other personal property
described in this Mortgage free and clear of any and all liens and security
interests except for the lien and security interest granted by this Mortgage
and Permitted Encumbrances and any Liens permitted by the terms of the Credit
Agreement. The Mortgagor further represents and warrants that, as to Equipment
and other personal property hereafter acquired, Mortgagor will own all such
Equipment and other personal property at the time it is brought on the Land and
thereafter free and clear of any and all liens and security interests except
for the lien and security interest granted by this Mortgage, any other security
instrument or agreement in favor of Mortgagee, and Permitted Encumbrances and
any Liens permitted by the terms of the Credit Agreement.
(b) The Mortgagor does hereby grant a security interest to Mortgagee
pursuant to the Code in any Equipment and other personal property covered
hereby. The Mortgagor agrees, upon request of Mortgagee, to furnish an
inventory of personal property owned by Mortgagor and subject to this Mortgage
and, upon request by Mortgagee, to execute any supplements to this Mortgage,
any separate security agreement and any financing statements to include
specifically said inventory of personal property. Upon the occurrence of an
Event of Default, Mortgagee shall have all of the rights and remedies therein
provided or otherwise provided by law or by this Mortgage, including but not
limited to the right to require Mortgagor to assemble such personal property
and make it available to Mortgagee at a place to be designated by Mortgagee
which is reasonably convenient to both parties, the right to take possession of
such personal property with or without demand and with or without process of
law and the right to sell and dispose of the same and distribute the proceeds
according to law. The parties hereto agree that any requirement of reasonable
notice shall be met if Mortgagee sends such notice to Mortgagor at least five
(5) days prior to the date of sale, disposition or other event giving rise to
the required notice, and that the proceeds of any disposition of any of such
personal property may
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
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<PAGE> 55
be applied by Mortgagee first to the reasonable expenses in connection
therewith, including reasonable attorneys' fees and disbursements and then to
payment of the Mortgage Indebtedness.
(c) Mortgagor hereby authorizes Mortgagee, to the extent permitted by
applicable law, to execute and file financing statements signed only by a
representative of Mortgagee covering the security interest of Mortgagee in the
equipment and other personal property described in this Mortgage.
16. Assignment of Leases and Rents. As of the date of this Mortgage,
Mortgagor hereby assigns, transfers and conveys to Mortgagee all its right,
title and interest in and to all written and oral leases, whether now in
existence or which may hereafter come into existence during the term of this
Mortgage, or any extension hereof, covering the Mortgaged Premises or any part
thereof (but without an assumption by Mortgagee of liabilities of Mortgagor
under any such leases by virtue of this assignment), and Mortgagor hereby
assigns to Mortgagee the rents, issues and profits of the Mortgaged Premises.
Until the occurrence of an Event of Default, Mortgagor shall have the right to
receive and collect such rents, issues and profits. Upon the occurrence of an
Event of Default, Mortgagee may elect upon written notice to Mortgagor to
receive and collect said rents, issues and profits personally or through a
receiver so long as any such Event of Default shall exist and during the
pendency of any foreclosure proceedings and during any redemption period, and
Mortgagor hereby consents to the appointment of a receiver if believed
necessary or desirable by Mortgagee to enforce its rights under this paragraph
16. The collection of rents by Mortgagee shall in no way waive the right of
Mortgagee to foreclose this Mortgage in the event of any Event of Default.
17. Prohibition of Transfer and Further Encumbrances. Except as permitted
under the Credit Agreement, the Mortgagor shall not, without the prior written
consent of Mortgagee, permit or suffer (a) the Mortgaged Premises, or any part
thereof, to be sold, assigned, transferred or encumbered in any way, whether by
operation of law or otherwise, (b) any conveyance, transfer, pledge or
encumbrance of any interest in Mortgagor to be made or agreed to be made, or
(c) all or any portion of the interest of any member thereof to be sold,
assigned or otherwise transferred or encumbered. The preceding sentence shall
not apply to transfers of ownership in Mortgagor resulting from the death of a
natural person, transfers by a natural person to a member or members of such
person's immediate family or transfers by a natural person in connection with
bona fide estate planning.
18. Severability. If any provision hereof is in conflict with any statute
or rule of law of the State of Indiana or is otherwise unenforceable for any
reason whatsoever, then such provision shall be deemed null and void to the
extent of such conflict or unenforceability and shall be deemed severable from
but shall not invalidate any other provisions of this Mortgage.
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
- 14 -
<PAGE> 56
19. Environmental Matters. The representations, warranties, covenants and
agreements made by the Mortgagor to the Mortgagee in the Environmental
Certificate delivered by the Mortgagor to the Mortgagee in connection with the
execution of this Mortgage are incorporated herein by reference. The Mortgagor
agrees that any default under the terms of the Environmental Certificate will
constitute a default under this Mortgage. To the best of Mortgagor's
knowledge, after diligent inquiry and investigation, none of the Mortgaged
Premises is within the definition of the term "property" as used in the Indiana
Responsible Property Transfer Law ("IRPTL") (IC 13-25-3-1 through 13-25-3-15),
the transaction evidenced by this Mortgage is not subject to the provisions of
IRPTL and Mortgagor shall not allow any of the Mortgaged Premises to become
subject to or constitute "property" subject to IRPTL.
20. Waiver. No waiver by Mortgagee of any right or remedy granted
hereunder or failure to insist on strict performance by Mortgagor hereunder
shall affect or extend to or act as a waiver of any other right or remedy of
Mortgagee hereunder, nor affect the subsequent exercise of the same right or
remedy by Mortgagee for any further or subsequent default by Mortgagor
hereunder, and all such rights and remedies of Mortgagee hereunder are
cumulative.
21. Marshalling. The Mortgagor hereby waives, in the event of foreclosure
of this Mortgage or the enforcement by the Mortgagee of any other rights and
remedies hereunder, any right otherwise available in respect to marshalling of
assets which secure the Mortgage Indebtedness or to require Mortgagee to pursue
its remedies against any other such assets.
22. [INTENTIONALLY OMITTED.]
23. Further Instruments. The Mortgagor shall execute, acknowledge and
deliver any and all such further conveyances, documents, mortgages and
assurances, and do or cause to be done all such further acts, as Mortgagee may
reasonably require to confirm and protect the lien of this Mortgage or
otherwise to accomplish the purposes hereof forthwith upon the request of
Mortgagee, whether in writing or otherwise.
24. Notices. All notices, demands, requests, consents and other
communications shall be delivered and shall be effective in the manner
specified in the Credit Agreement.
25. Governing Law; Binding Effect; Definitions. This Mortgage shall be
construed according to the laws of the State of Indiana and shall be binding
upon Mortgagor and its successors and assigns and any subsequent owners of the
Mortgaged Premises, and all of the covenants herein contained shall run with
the land, and this Mortgage and all of the covenants herein contained shall
inure to the benefit of Mortgagee, its successors and assigns. Terms used but
not defined herein shall have the meanings ascribed thereto in the Credit
Agreement.
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
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<PAGE> 57
26. Headings. The headings in this Mortgage are for convenience of
reference only and shall not limit or otherwise affect the meaning of any
provision of this Mortgage.
27. Fixture Filing. It is intended that, as to fixtures, this Mortgage
shall be deemed to constitute a continuously perfected financing statement
filed as a fixture filing from the date of the filing of the Mortgage of record
in the office of the recorder of each county in which the Land is located
pursuant to IC 26-1-9-402 and 26-1-9-403. The information provided in this
paragraph is provided in order that this Mortgage shall comply with the
requirements of the Code, for a mortgage instrument to be filed as a financing
statement. The Mortgagor is the "Debtor" and its name and mailing address are
set forth in the preamble of this Mortgage. The "Secured Party" is the
Mortgagee and its name and mailing address from which information concerning
the security interest granted herein may be obtained are set forth in the
preamble of this Mortgage. A statement describing the portion of the Mortgaged
Premises comprising the fixtures hereby secured is set forth as Section (H) of
the definition of Mortgaged Premises contained in this Mortgage.
28. Future Advance Mortgage. In addition to any other obligation secured
by this Mortgage, this Mortgage shall also secure (i) future obligations and
advances up to One Hundred and Forty Million Dollars ($140,000,000) (whether
made as an obligation, made at the option of the Mortgagee or the Lenders, made
after a reduction to a zero (0) or other balance, or made otherwise) to the
same extent as if the future obligations and advances were made on the date of
execution of this Mortgage and (ii) future modifications, extensions and
renewals of any Indebtedness or obligations secured by this Mortgage. The lien
of this Mortgage with respect to such future obligations, advances,
modifications, extensions and renewals shall have the same priority to which
this Mortgage otherwise would be entitled under IC 32-1-2-16 without regard to
the fact that such future obligations, advances, modifications, extensions, or
renewals may occur after this Mortgage is executed.
29. Use of Insurance and Condemnation Proceeds. Notwithstanding any other
provision of this Mortgage, all insurance proceeds recovered by the Mortgagee
on account of damage or destruction to the Mortgaged Premises and all proceeds
of any condemnation award recovered by the Mortgagee for any building or
equipment taken or damaged, less the cost, if any, to the Mortgagee of such
recovery and of paying out such proceeds (including attorneys' fees and costs
allocable to inspecting the work and the plans and specifications therefor),
shall, upon the written request of the Mortgagor, be applied by the Mortgagee
to the payment of the cost of repairing, restoring or rebuilding the
improvements on the Mortgaged Premises so damaged or destroyed or of the
portion or portions of the Mortgaged Premises not so taken (hereinafter
referred to as the "work") and shall be paid out from time to time to the
Mortgagor as the work progresses, but subject to the Mortgagee's standard
requirements for construction loans of similar nature and subject to the
following conditions:
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
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<PAGE> 58
(a) There shall be no Event of Default under this Mortgage or any of the
other Loan Documents; and
(b) The request for any payment after the work has been completed shall be
accompanied by a copy of any certificate or certificates required by law to
render occupancy of the Mortgaged Premises legal.
Upon the completion of the work and payment in full therefore, or upon any
failure on the part of the Mortgagor promptly to commence or continue the work,
or at any time upon request by the Mortgagor, the Mortgagee may, at its option,
either apply the amount of any such proceeds then or thereafter in the hands of
the Mortgagee to the payment of the Mortgage Indebtedness or any portion
thereof, whether or not then due and payable, or remit such amount to the
Mortgagor.
30. Remedies Enforceable at Time of Enforcement. Any provision in this
Mortgage to the contrary notwithstanding, to the extent applicable laws may
limit (i) availability of the exercise of any remedies set forth in this
Mortgage, or (ii) the enforcement of waivers and indemnities made by Mortgagor,
such remedies, waivers, or indemnities shall be exercisable or enforceable if,
and to the extent, permitted by the laws in force at the time of exercise of
such remedies or the enforcement of such waivers or indemnities without regard
to the enforceability of such remedies, waivers or indemnities at the time of
the execution and delivery of this Mortgage.
IN WITNESS WHEREOF, Mortgagor has duly executed this Mortgage as of the
day and year first above written.
KEY PLASTICS
TECHNOLOGY, L.L.C.
By: Key Plastics, Inc., Its Member
By: /s/ Mark J. Abbo
----------------------------
Mark J. Abbo
Its: Assistant Secretary
-------------------------
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
- 17 -
<PAGE> 59
<TABLE>
<S> <C>
STATE OF MICHIGAN )
)SS.
COUNTY OF WAYNE )
</TABLE>
The foregoing instrument was acknowledged before me on this 24th day of
-----
March, 1997, by Mark J. Abbo, the Treasurer and Assistant Secretary of Key
------------ ----------------------------------------
Plastics, Inc., a Michigan corporation, a member of Key Plastics Technology,
- -----------------------------------------------
L.L.C., a Michigan limited liability company, on behalf of said company, who
stated that any representations therein contained are true and correct.
/s/ Janice K. Atkins
--------------------------------
(Signature)
Notary Public, Janice K. Atkins
---------------------
(printed name)
Resident of County
-----------------
My Commission Expires:
-----------
[seal]
Prepared by and when
recorded return to:
Mi Young Lee, Esq.
Dickinson, Wright, Moon,
Van Dusen & Freeman
500 Woodward Avenue, Suite 4000
Detroit, Michigan 48226
(313) 223-3500
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
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<PAGE> 60
EXHIBIT A
Legal Description of Land
PARCEL I:
Lot Numbered Ten (10) as shown on the recorded Plat of Landmark Business Park,
Section Four (4), Part One (1), recorded June 23, 1986 in the Office of the
Recorder of St. Joseph County, Indiana, as Instrument No. 8614459, together
with the South Half of vacated Nutek Drive lying North and adjacent to said
lot.
PARCEL II:
A tract or parcel of land located in the Southwest Quarter of the Northeast
Quarter of Section 33, Township 38 North, Range 2 East, more particularly
described as follows:
Beginning at a point which is One Hundred Ninety-five (195) and Eighteen
Hundredths (195.18) feet North and Eight Hundred Fifty-five and Fifty-four
Hundredths (855.54) feet Easterly of the center of said Section 33, said point
being on the North line of Progress Drive; thence North 0 degrees 19 minutes 51
seconds East a distance of four Hundred Sixty-eight and Seventy-three
Hundredths (468.73) feet to the South line of the St. Joseph County Airport;
thence South 89 degrees 59 minutes 38 seconds East on and along the South line
of said St. Joseph County Airport a distance of Four Hundred Thirty-nine and
Ten Hundredths (439.10) feet; thence South 0 degrees 18 minutes 51 seconds West
a distance of Four Hundred Seventy and Sixty-five Hundredths (470.65) feet to
the North line of Progress Drive; thence North 89 degrees 40 minutes 09 seconds
West a distance of Four Hundred Thirty-nine and Seventy-one Hundredths (439.71)
feet to the point of beginning.
Tax Parcel No._______________
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
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<PAGE> 61
EXHIBIT A
Legal Description of Land
PARCEL III:
A part of the Northeast Quarter of Section 33, Township 38 North, Range 2 East,
City of South Bend, St. Joseph County, Indiana, described as follows:
Commencing at the Southeast corner of said quarter section; thence South 0
degrees 07 minutes 29 seconds West 815.52 feet along the East line of said
Section to the North boundary, extended, of Voorde Drive; thence north 89
degrees 40 minutes 09 seconds West, 1,288.56 fee along said extended boundary
and the North boundary of said Voorde Drive to the East boundary of Kenmore
Street (formerly Progress Drive): thence North 0 degrees 18 minutes 51 seconds
East 1,260.40 feet along the said East boundary, and said East boundary
extended, to the point of beginning of this description; thence North 0 degrees
18 minutes 51 seconds East 220.00 feet; thence North 89 degrees 56 minutes 16
seconds East 215.00 feet; thence South 0 degrees 18 minutes 51 seconds West
220.00 feet, thence South 89 degrees 56 minutes 16 seconds West 215.00 feet to
the point of beginning.
PARCEL IV:
Part of the Northeast Quarter (1/4) of Section 33, Township 38 North, Range 2
East, 2nd, P.M., City of South Bend, St. Joseph County, Indiana, more
particularly described as follows:
Commencing at the Southeast corner of said quarter section; thence South 0
degrees 07 minutes 29 seconds West along the East line of said section a
distance of 815.52 feet to the North boundary, extended, of Voorde Drive;
thence North 89 degrees 40 minutes 09 seconds West along said North boundary a
distance of 1288.56 feet to the East boundary of Kenmore Street (formerly
Progress Drive); thence North 0 degrees 18 minutes 51 seconds East along said
East boundary a distance 1260.40 feet to the point of beginning, said point
being marked by an iron re-bar; thence South 89 degrees 56 minutes 16 seconds
West a distance of 60.03 feet to the West boundary of Kenmore Street; thence
North 0 degrees 18 minutes 15 seconds East a distance of 220.14 feet to the
South boundary of Michiana Regional Airport; thence South 89 degrees 43 minutes
37 seconds East along said boundary a distance of 23.09 feet to a steel fence
corner post; thence North 89 degrees 56 minutes 16 seconds East along said
boundary a distance of 36.94 feet; thence South 0 degrees 18 minutes 51 seconds
West a distance of 220.00 feet to the point of beginning.
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FINANCING STATEMENT (FIXTURE FILING)
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<PAGE> 62
EXHIBIT B
Permitted Encumbrances
(South Bend, Indiana)
1. Building line along the North and East 25 feet of the lot as shown on
the plat of said subdivision. (Affects Parcel I)
2. Distribution Easement dated November 17, 1986 granted by Michigan Midget
Motors, Inc. to Indiana & Michigan Electric Company, an Indiana
Corporation recorded December 19, 1986 in the Office of the Recorder of
St. Joseph County, Indiana, as Instrument No. 8636121. (Affects Parcel I)
3. Covenants contained in a Warranty Deed dated September 2, 1954, from
Samuel Cassells and Bernice E. Cassells, husband and wife to State of
Indiana, recorded September 3, 1954 in the Office of the Recorder of St.
Joseph County, Indiana, in Deed Record 531, pages 511-512, providing that
said grantors will not establish, maintain or permit any person, firm or
corporation to establish or maintain on any of the remaining lands of
grantors, any billboard, sign notice, poster, advertising device or other
display which may be visible from the travel-way of the Indianan East-West
Toll Road unless grantors have received prior approval to do so from the
Commission, "but omitting any covenant or restriction based on race, color,
religion, sex, handicap, familial status, or national origin unless and
only to the extent that said covenant (a) is exempt under Chapter 42,
Section 3607 of the United States Code or (b) relates to handicap but does
not discriminate against handicapped persons." (Affects Parcel I)
4. Restrictions contained in an instrument dated January 19, 1984 and
recorded January 19, 1984 in the Office of the Recorder of St. Joseph
County, Indiana, as Instrument No. 8401162, "but omitting any covenant or
restriction based on race, color, religion, sex, handicap, familial status,
or national origin unless and only to the extent that said covenant (a) is
exempt under Chapter 42, Section 3607 of the United States Code or (b)
relates to handicap but does not discriminate against handicapped persons."
(Affects Parcel I)
5. Resolution No. 919 of the South Bend Redevelopment Commission
designating and declaring the airport economic development area, approving
an economic development plan and establishing an allocation area for
purposes of tax increment financing recorded February 28, 1990 in the
Office of the Recorder of St. Joseph County, Indiana, as Instrument No.
9004772, Resolution No. 938, recorded July 17, 1990, as Instrument No.
9018886, Resolution No. 965, recorded January 2, 1991, as Instrument No.
9100047, Resolution No. 971, recorded January 3, 1991, as Instrument No.
9100246, Resolution No. 1238, recorded October 26, 1994, as Instrument No.
9440336 and Resolution No. 1349, recorded July 11, 1995, as Instrument No.
9521199.
<PAGE> 63
6. Rights of the public utilities in and to that portion of said premises
falling within said vacated Nutek Drive. (Affects Parcel I)
7. Encroachment Easement Agreement dated July 7, 1989 by and between
Aquarius Plastics Finishers, Inc., an Automatic Technologies Corporation
and Bhar Associates, an Indiana Partnership recorded July 20, 1989 in
the Office of the Recorder of St. Joseph County, Indiana, as Instrument
No. 8918534. (Affects Parcel I)
8. Restrictions contained in a Warranty Deed dated July 8, 1970, from
Industrial Foundation, Inc. of South Bend, Indiana, an Indiana
Corporation to Wells Electronics, Inc., an Indiana Corporation, recorded
July 10, 1970 in the Office of the Recorder of St. Joseph County,
Indiana, in Deed Record 728, page 181, "but omitting any covenant or
restriction based on race, color, religion, sex, handicap, familial
status, or national origin unless and only to the extent that said
covenant (a) is except under Chapter 42, Section 3607 of the United
States Code or (b) relates to handicap but does not discriminate against
handicapped persons." (Affects Parcel II)
9. Building lines along the North, East and South 30 feet of the lot as
disclosed by a Quit-Claim Deed recorded June 9, 1981 in the Office of
the Recorder of St. Joseph County, Indiana, as Instrument No. 8110030.
(Affects Parcel III)
Building line along the West 60 feet of the lot as disclosed by a
Quit-Claim Deed recorded June 9, 1981 in the Office of the Recorder of
St. Joseph County, Indiana, as Instrument No. 8110030. (Affects
Parcel III)
10. Easement for public utilities 20 feet in width as shown in a Quit-Claim
Deed recorded June 9, 1981 in the Office of the Recorder of St. Joseph
County, Indiana, as Instrument No. 8110030. (Affects Parcels III and IV)
11. Easement for public utilities 20 feet in width as described in a
Warranty Deed recorded August 5, 1981 in the Office of the Recorder of
St. Joseph County, Indiana, as Instrument No. 8113657. (Affects Parcels
III and IV)
12. Financing Statement recorded July 28, 1994 in the Office of the Recorder
of St. Joseph County, Indiana, Recorder's No. 274890, Automatic
Technologies, Inc., Debtor, and AT&T Credit Corporation, Secured Party.
13. Sewer Easement as shown on the plat of said subdivision. (Affects Parcel
I)
14. Judgment against Automatic Technologies, Inc. in favor of Crystal
Electronics, Inc. rendered December 13, 1996 in the amount of
$14,171.68, plus costs and interest, and entered December 30, 1996 as
Cause No. 71D05 9607 CP 00680, Superior Court. (Affects Parcel IV).*
*subject to separate agreement of parties of even date herewith
regarding post-closing matters.
-2-
<PAGE> 64
15. Judgment against Automatic Technologies, Inc. in favor of Elgin
Organization, Inc. rendered December 11, 1996 in the amount of
$24,877.46 plus costs and interest, and entered December 30, 1996 as
Cause No. 71D05 9610 CP 00942,Superior Court. (Affects Parcel IV).*
16. Second installment of taxes for the year 1995 in the amount of
$6,666.97, plus penalty of $666.70 (Parcel I), $24,815.80, plus penalty
of $2,481.58 (Parcel II) and $4,304.52, plus penalty of $430.45 (Parcel
III).*
17. The survey encroachments for which a separate exception will be taken if
the general survey exceptions are deleted are as follows:
(a) Asphalt/concrete encroachment (.6) along the West line (Parcel
II).
(b) Fence encroachment (.25' to 1') along the North line
(Parcels II, III and IV).
(c) Brick sign encroachment in ROW along South line
(Parcel II).
(d) Violation of 30' Building Setback line along the
North line (Parcel III).
(e) Violation of 60' Setback line along the West line
(Parcel III).
*Subject to separate agreement of parties of even date herewith
regarding post-closing matters.
-3-
<PAGE> 1
EXHIBIT 10.5
OHIO FORM
OPEN-END MORTGAGE, SECURITY
AGREEMENT AND ASSIGNMENT OF RENTS
Maximum principal indebtedness not to exceed $140,000,000
THIS OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS, dated
as of March 24, 1997, by KEY PLASTICS, INC., a Michigan corporation, whose
address is 21333 Haggerty Road, Suite 200, Novi, Michigan 48375 (the
"Mortgagor"), to NBD BANK, a Michigan banking corporation, whose address is 611
Woodward Avenue, Detroit, Michigan 48226 (the "Mortgagee"), as agent for the
benefit of itself and the lenders (the "Lenders") which are parties to the
Credit Agreement defined below.
RECITALS:
A. The Mortgagor has entered into a Credit Agreement dated as of March 24,
1997 (as amended or modified from time to time, including any agreement entered
into in substitution therefor, the "Credit Agreement") pursuant to which the
Lenders agreed, subject to the terms and conditions thereof, to extend credit
to the Mortgagor up to a maximum principal amount outstanding at any time equal
to One Hundred and Forty Million and No/100 Dollars ($140,000,000) maturing on
or be fore September 24, 2004, as such date may be extended by agreement of the
parties to the Credit Agreement.
B. As a condition to the effectiveness of the obligations of the Mortgagee
and the Lenders under the Credit Agreement, the Mortgagor is obligated, among
other things, to grant a lien on the mortgaged premises hereinafter described.
WITNESSETH:
NOW, THEREFORE, to secure (a) the prompt and complete payment of all
Indebtedness and other obligations of the Mortgagor or any Subsidiary now or
hereafter owing to the Lenders or the Mortgagee under or on account of the
Credit Agreement, any Security Document or any letters or credit, notes or
other instruments issued to the Mortgagee or the Lenders pursuant thereto, (b)
the performance of the covenants under the Credit Agreement and the Security
Documents and any and all additional advances made by the Mortgagee to protect
or preserve the Mortgaged Premises (as defined below) or the lien or security
interest created hereby on the Mortgaged Premises, or for taxes, assessments,
or insurance premiums as hereinafter provided and as contemplated by Section
5301.233 of the Ohio Revised Code, and (c) the prompt and complete payment of
all obligations and performance of all covenants of the Mortgagor or any
<PAGE> 2
Subsidiary in connection with Swaps relating to Indebtedness under the Loan
Documents (including any interest accruing subsequent to any petition filed by
or against the Mortgagor or any Subsidiary under the U.S. Bankruptcy Code,
whether or not allowed), indemnity and reimbursement obligations, charges,
expenses, fees, reasonable attorneys' fees and disbursements and any other
amounts owing thereunder (all of the aforesaid Indebtedness, obligations and
liabilities of the Mortgagor and its Subsidiaries being herein called the
"Mortgage Indebtedness" and this Mortgage and all of the other documents,
agreements and instruments among the Mortgagor, the Subsidiaries, the Lenders,
the Mortgagee or any of them, evidencing or securing the repayment of, or
otherwise pertaining to, the Mortgage Indebtedness, including without
limitation the Credit Agreement, the Notes and the Security Documents, being
herein collectively called the "Loan Documents"), the Mortgagor does hereby
GRANT, MORTGAGE and WARRANT unto the Mortgagee, and its successors and assigns,
and grants a security interest in, the following described property (the
"Mortgaged Premises"):
(A). the land situated in the Village of Montpelier, County of Williams
and State of Ohio, more specifically described in Exhibit A hereto (the
"Land");
(B) all easements, rights-of-way, licenses and privileges, thereunto
belonging or in anywise appertaining, including without limitation all
Mortgagor's right, title and interest in and to those easements, rights-of-way,
licenses and privileges described in Exhibit A hereto, if any;
(C) all buildings and improvements now or hereafter situated upon the Land
or any part thereof;
(D) to the extent, if any, of Mortgagor's interests thereon, all minerals,
royalties, gas rights, water, water rights, water stock, flowers, shrubs, lawn
plants, crops, trees, timber and other emblements now or hereafter located on,
under or above all or any part of the Land;
(E) all and singular the tenements, hereditament and appurtenances
belonging or in anywise appertaining to the Land, and the reversion or
reversions, remainder and remainders thereof; and also all the estate, right,
title, interest, property, claim and demand whatsoever of Mortgagor, of, in and
to the same and of, in and to every part and parcel thereof;
(F) all the rents, issues and profits thereof under present or future
leases, or otherwise, which are hereby specifically assigned, transferred and
set over to Mortgagee, including, but not limited to, all rights conferred by
that certain Assignment of Real Estate Leases and Rentals from Mortgagor to
Mortgagee of even date herewith, if any, and including, but not limited to, all
cash or securities deposited under any such leases to secure performance by the
tenants of their obligations thereunder, whether said cash or securities are to
be held until the expiration of the terms of such leases or applied to one or
more of the installments of rent coming due thereunder;
OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
- 2 -
<PAGE> 3
(G) all right, title and interest of Mortgagor, if any, in and to the land
lying in the bed of any street, road, avenue, alley or walkway, opened or
proposed or vacated, or any strip or gore, in front of or adjoining the Land;
(H) all machinery, apparatus, equipment, fittings, fixtures, and articles
of personal property of every kind and nature whatsoever, other than consumable
goods, now or hereafter located in or upon the Land or any part thereof and
used or useable in connection with any present or future operation of the Land
or any building or buildings now or hereafter on the Land and now owned or
hereafter acquired by Mortgagor (all of which is herein called "Equipment"),
including, but without limiting the generality of the foregoing, all lighting,
heating, cooling, ventilating, air-conditioning, incinerating, refrigerating,
plumbing, sprinkling, communicating and electrical systems, and the machinery,
appliances, fixtures and equipment pertaining thereto, it being understood and
agreed that all Equipment is part and parcel of the Land and appropriated to
the use of said real estate and, whether affixed or annexed or not, shall for
the purposes of this Mortgage, unless Mortgagee shall otherwise elect, be
deemed conclusively to be real estate and mortgaged hereby; and
(I) any and all awards or payments, including interest thereon, and the
right to receive the same, which may be made with respect to the Land and are
or will be payable to Mortgagor as a result of (a) the exercise of the right of
eminent domain, (b) the alteration of the grade of any street, (c) any loss of
or damage to any building or other improvement on the Land, (d) any other
injury to or decrease in the value of the Land or (e) any refund due on account
of the payment of real estate taxes, assessments or other charges levied
against or imposed upon the Land, to the extent of all amounts which may be
secured by this Mortgage at the date of receipt of any such award or payment by
Mortgagee, and of the reasonable counsel fees, costs and disbursements incurred
by Mortgagee in connection with the collection of such award or payment,
Mortgagor hereby agreeing to execute and deliver, from time to time, such
further instruments as may be reasonably requested by Mortgagee to confirm such
assignment to Mortgagee of any such award or payment.
TO HAVE AND TO HOLD the Mortgaged Premises, and each and every part
thereof, unto Mortgagee and its successors and assigns forever. Any reference
herein to the "Mortgaged Premises" shall, unless the context shall require
otherwise, be deemed to include and apply to the above described Land and said
buildings, improvements, Equipment, rents, issues, profits, leases, easements,
tenements, hereditament and appurtenances and all other rights, privileges and
interests hereinabove described.
SUBJECT only to those matters set forth in Exhibit B hereto ("Permitted
Encumbrances").
AND Mortgagor does hereby covenant and warrant as follows:
OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
- 3 -
<PAGE> 4
1. Payment of Mortgage Indebtedness; Performance of Agreements. The
Mortgagor shall pay the principal of and interest on the Mortgage Indebtedness
according to the terms thereof, and will keep and perform all the covenants,
promises and agreements on its part to be performed in any and all Loan
Documents, all in the manner herein or therein set forth.
2. Covenants of Title. The Mortgagor has good and indefeasible title to
the Land in fee simple and has good and indefeasible title to the entire
Mortgaged Premises and with good right and full power to sell, mortgage and
convey the Mortgaged Premises, the Mortgaged Premises are free and clear of
liens and encumbrances except Permitted Encumbrances, whether presently
existing or which may hereafter be created in accordance with the terms hereof,
and Mortgagor will warrant and defend the Mortgaged Premises against all lawful
claims and demands whatsoever. The Mortgagee shall have the right, at its
option and at such time or times as it, in its sole discretion, shall deem
reasonably necessary, to take whatever action it may reasonably deem necessary
to defend or uphold the lien of this Mortgage or otherwise enforce any of the
rights of Mortgagee hereunder or any obligation secured hereby, including
without limitation, the right to institute appropriate legal proceedings for
such purposes.
3. Payment of Taxes, Assessments and Charges. The Mortgagor shall pay
when due, and before any interest, collection fees or penalties shall accrue,
all real estate taxes, special assessments, water and sewer charges or other
governmental charges and impositions levied or assessed with respect to the
Mortgaged Premises or any part thereof except to the extent that payment of any
of the foregoing is then being contested in good faith by appropriate legal
proceedings and with respect to which adequate financial reserves have been
established on the books and records of the Mortgagor. Should Mortgagor fail
to so pay such taxes, special assessments, water and sewer charges or other
governmental charges or impositions or establish such adequate financial
reserves, Mortgagee may, at its option, pay the same for the account of
Mortgagor.
4. Reserves for Taxes and Insurance Premiums. Upon the occurrence of any
Event of Default, Mortgagor shall pay to Mortgagee upon the request of
Mortgagee, installments of principal and interest, and in addition thereto,
installments of the taxes and assessments levied or to be levied upon the
Mortgaged Premises, and installments of the premiums that will become due and
payable to renew the insurance hereinafter provided, said installments to be
substantially equal and to be in such amount as will assure to Mortgagee that
not less than 30 days before the time when such taxes and premiums,
respectively, become due Mortgagor will have paid to Mortgagee a sufficient
amount to pay the same in full. Said amounts paid to Mortgagee hereunder need
not be segregated nor kept in a separate fund, and no interest shall be payable
thereon. Said amounts shall be held by Mortgagee as additional security for
the Mortgage Indebtedness and, except as provided in the following sentence, be
applied to the payment of said taxes and assessments when the same become due
and payable. Mortgagee may, at its option, but without any obligation on its
part so to do, apply said amounts upon said taxes and assessments or insurance
premiums or toward the payment of the Mortgage Indebtedness or any
OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
- 4 -
<PAGE> 5
portion thereof, whether or not then due or payable. The Mortgagee shall
endeavor to notify the Mortgagor of how such amounts were applied, provided
however that the failure to give such notice shall not affect Mortgagee's
rights under this Mortgage.
Upon an assignment of the Mortgage, Mortgagee shall have the right to pay
over the balance of such deposits in its possession to the assignee and
Mortgagee shall thereupon be completely released from all liability with
respect to such deposits and Mortgagor or owner of the Mortgaged Premises shall
look solely to the assignee or transferee in reference thereto. This provision
shall apply to every transfer of such deposits to a new assignee. Upon full
payment and satisfaction of the Mortgage Indebtedness or at any prior time upon
the election of Mortgagee, the balance of the unapplied deposits in its
possession shall be paid over to the record owner of the Mortgaged Premises and
no other party shall have any right or claim thereto in any event, provided
that in the event of a foreclosure of the Mortgaged Premises, the purchaser at
such foreclosure shall have the right to receive such unapplied deposits. The
Mortgagor agrees, at Mortgagee's request, to deliver the aforesaid deposits to
such service or financial institution as Mortgagee shall from time to time
designate.
5. Payment of Other Obligations. The Mortgagor shall also pay any and all
other obligations, liabilities or debts which may become liens, security
interests, or encumbrances upon or charges against the Mortgaged Premises for
any repairs or improvements that are now completed or are in progress or which
may hereafter be made thereon, or for any other goods, services, or utilities
furnished to the Mortgaged Premises, and shall not permit any lien, security
interest, encumbrance or charge of any kind securing the repayment of borrowed
funds (including the deferred purchase price for any property) to accrue and
remain outstanding against the Mortgaged Premises or any part thereof, or any
improvements thereon other than Permitted Encumbrances, if any, except to the
extent that payment of any of the foregoing is then being contested in good
faith by appropriate legal proceedings and with respect to which adequate
financial reserves have been established on the books and records of the
Mortgagor.
6. Maintenance and Repair; Compliance with Laws; Inspection. The
Mortgagor will keep the Land and all the improvements thereon in good order and
repair, and Mortgagor expressly agrees that it will not do or permit waste on
the Land nor do any other act whereby the Mortgaged Premises will become less
valuable or the lien hereof may be impaired. Should Mortgagor fail to effect
the necessary repairs and such failure shall remain unremedied for 20 calendar
days after written notice thereof shall have been given to the Mortgagor by the
Mortgagee, Mortgagee may at its option make such repairs for the account of
Mortgagor. The Mortgagor will promptly comply, and cause the Mortgaged
Premises and the occupants or users thereof to comply, with all present and
future laws, ordinances, orders, rules and regulations and other requirements
of any governmental authority affecting the Mortgaged Premises or any part
thereof or the use or occupancy thereof and with all instruments and documents
of record or otherwise affecting the Mortgaged Premises, or any part thereof,
or the use or occupancy
OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
- 5 -
<PAGE> 6
thereof. The Mortgagee, and any person authorized by Mortgagee, shall have the
right to enter upon and inspect the Mortgaged Premises at all reasonable times
and with reasonable notice.
7. Insurance. (a) The Mortgagor shall keep the buildings and other
improvements on the Land, or which may hereafter be erected thereon, constantly
insured for the benefit of Mortgagee with such company or companies as may be
reasonably acceptable to Mortgagee and in an amount reasonably satisfactory to
Mortgagee, which amount shall not be less than 100% of the then full
replacement cost of such building and improvements (exclusive of excavations,
foundations and footings), which policies shall be without deduction for
depreciation and be subject to the payment of a deductible not in excess of an
amount reasonably satisfactory to Mortgagee, until the Mortgage Indebtedness
and all interest thereon and all of the amounts due hereunder are fully paid,
against fire and such other hazards and risks customarily covered by the
standard form of "extended coverage" endorsements available in the State of
Ohio, and shall further provide flood insurance (if the Mortgaged Premises are
situated in an area designated as a flood hazard area by the Director of the
Federal Emergency Management Agency or as otherwise required by the Flood
Disaster Protection Act of 1973 and regulations issued thereunder), rent
insurance, in an amount not less than one year's gross rent derived from the
Mortgaged Premises, and such other appropriate insurance as Mortgagee may
reasonably require from time to time. All such policies shall include standard
mortgagee clauses in favor of Mortgagee and shall provide that the proceeds
thereof shall be paid to Mortgagee, all as may be satisfactory to Mortgagee.
During any construction, repair or restoration of the buildings and other
improvements on the Mortgaged Premises, Mortgagor shall carry or cause to be
carried builder's risk insurance which names Mortgagee as a loss payee as its
interests may appear. The Mortgagor shall also carry comprehensive general or
public liability insurance with reference to the Mortgaged Premises, which
names Mortgagee as an additional insured. All such policies shall provide that
the same may not be canceled or terminated without giving Mortgagee at least 30
days' prior written notice of such cancellation or termination.
(b) The Mortgagor shall deliver to Mortgagee at its principal office
aforesaid or at such other place as may be designated by the holder hereof such
insurance policies or, if Mortgagee consents, certificates evidencing such
policies. Renewals thereof shall likewise be delivered to Mortgagee at least
15 days before the expiration of any existing policies. Should Mortgagor fail
to insure or fail to pay the premiums on any such insurance or fail to deliver
the policies or renewals thereof as provided above, Mortgagee at its option may
have such insurance written or renewed and pay the premiums thereon for the
account of Mortgagor.
(c) In the event of loss or damage, the proceeds of said property and
builders' risk insurance on the buildings and improvements shall be paid to
Mortgagee alone. No such loss or damage shall itself reduce the Mortgage
Indebtedness. The Mortgagee is authorized to adjust and compromise such loss
without the consent of Mortgagor, to collect, receive and receipt for such
proceeds in the name of Mortgagee and Mortgagor and to endorse Mortgagor's name
upon any check in payment thereof. Such proceeds shall be applied first toward
reimbursement
OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
- 6 -
<PAGE> 7
of all costs and expenses of Mortgagee in collecting said proceeds and
then toward payment of the Mortgage Indebtedness or any portion thereof,
whether or not then due or payable, or Mortgagee at its option may apply said
insurance proceeds, or any part thereof, to the repair or rebuilding of the
Mortgaged Premises. No such application of proceeds by Mortgagee toward
payment of the Mortgage Indebtedness shall reduce the amount of the payments
required to be made on the Mortgage Indebtedness in accordance with its terms.
(d) In the event of a foreclosure of this Mortgage, the purchaser of the
Mortgaged Premises shall succeed to all of the rights of Mortgagor under said
insurance policies payable to Mortgagee, including any right to unearned
premiums and the right to receive the proceeds of any insurance payable by
reason of any loss theretofore or thereafter occurring.
8. Eminent Domain. Notwithstanding any taking under the power of eminent
domain, alteration of the grade of any street, or other injury to or decrease
in value of the Mortgaged Premises by any public or quasi-public authority or
corporation, Mortgagor shall continue to pay the Mortgage Indebtedness in
accordance with the terms of the Notes, and any reduction in the principal sum
resulting from the application by Mortgagee of such award or payment as
hereinafter set forth shall be deemed to take effect only upon the receipt by
Mortgagee of such award. The Mortgagor hereby assigns the entire proceeds of
any award or payment to Mortgagee. The Mortgagee is authorized to commence,
appear in and prosecute, in its own or in Mortgagor's name, any action or
proceeding relating to any such taking, and to settle or compromise any claim
in connection therewith. Such proceeds shall be applied first toward
reimbursement of all costs and expenses of Mortgagee in collecting said
proceeds and then toward payment of the Mortgage Indebtedness or any portion
thereof, whether or not then due or payable, or Mortgagee at its option may
apply said proceeds, or any part thereof, to the alteration, restoration or
rebuilding of the Mortgaged Premises. No such application of proceeds by
Mortgagee toward payment of the Mortgage Indebtedness shall reduce the amount
of the payments required to be made on the Mortgage Indebtedness in accordance
with its terms.
9. Waste. Except as otherwise permitted under this Mortgage, without
limiting in any way the construction of the term of "waste" under law, as the
same may exist from time to time, the failure of Mortgagor to pay any taxes or
assessments assessed against the Mortgaged Premises, or any installment
thereof, or any premiums payable with respect to any insurance policy covering
the Mortgaged Premises, shall constitute waste.
10. Reimbursement of Advances by Mortgagee. The Mortgagor shall pay to
Mortgagee, upon demand, all sums expended by Mortgagee, or by a receiver
appointed at the request of Mortgagee, unless such sums shall be paid out of
the rents, income and profits from the Mortgaged Premises, (a) to pay insurance
premiums, taxes, assessments, water and sewer charges and other governmental
charges and impositions with respect to the Mortgaged Premises, (b) to
maintain, repair or improve the Mortgaged Premises, (c) to defend the lien of
this Mortgage as a lien against the Mortgaged Premises subject only to the
Permitted Encumbrances
OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
- 7 -
<PAGE> 8
hereinabove expressly set forth, (d) to discharge any lien or encumbrance
affecting the Mortgaged Premises other than Permitted Encumbrances, (e) to cure
any default of Mortgagor under any lease or other agreement covering the
Mortgaged Premises, (f) to cure any default of Mortgagor hereunder or under any
of the Loan Documents or (g) for or in connection with any other action taken by
Mortgagee to preserve the security of this Mortgage or any other security for
the Mortgage Indebtedness or to protect any of Mortgagee's rights hereunder, to
the fullest extent contemplated by Section 5301.233 of the Ohio Revised Code.
All such expenditures as shall be made by Mortgagee or such receiver or pursuant
to any other provision of this Mortgage or the other Loan Documents, including
any reasonable attorneys' fees and disbursements incurred by Mortgagee or such
receiver in connection with the foregoing, shall be payable upon demand and be
secured by this Mortgage and shall bear interest at the Overdue Rate set forth
in the Credit Agreement.
11. Change in Taxes. In the event any tax shall be due or become due and
payable to the United States of America, the State of Ohio or any political
subdivision thereof with respect to the execution and delivery or recordation
of this Mortgage or any note or other instrument or agreement evidencing or
securing repayment of the Mortgage Indebtedness or the interest of Mortgagee in
the Mortgaged Premises, Mortgagor shall pay such tax at the time and in the
manner required by applicable law and Mortgagor shall hold Mortgagee harmless
and shall indemnify Mortgagee against any liability of any nature whatsoever
as a result of the imposition of any such tax.
In the event of the passage after the date of this Mortgage of any law in
the State of Ohio deducting from the value of real property for purposes of
taxation any lien thereon, or changing in any way the laws now in force for the
taxation of mortgages or debts secured thereby (including the interest thereon)
for state or local purposes, or changing the manner of collection of any such
taxes, and imposing a tax, either directly or indirectly, on this Mortgage, the
Notes or any of the other Loan Documents, the holder of this Mortgage shall
have the right to declare the entire unpaid amount of the Mortgage
Indebtedness, together with accrued and unpaid interest thereon, to be due and
payable on a date to be specified by not less than 30 days' written notice to
Mortgagor, provided, however, that such election shall not be effective if
Mortgagor is permitted by law to pay the whole of such tax in addition to all
other payments required thereunder and if Mortgagor, prior to such specified
date, makes payment of such tax then due and agrees to pay any such tax when
thereafter levied or assessed against the Mortgaged Premises, this Mortgage,
the Notes or any of the other Loan Documents.
12. Events of Default. The occurrence of any of the following events
shall be deemed an "Event of Default" hereunder and shall entitle Mortgagee to
exercise its remedies hereunder and under any of the other Loan Documents or as
otherwise provided by law:
(a) Nonpayment of any of the Mortgage Indebtedness when due, beyond any
period of grace, if any, provided with respect thereto and after the giving of
any required notice;
OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
- 8 -
<PAGE> 9
(b) The failure of the Mortgagor to perform or observe any material term
or covenant contained in this Mortgage and such failure shall remain unremedied
for 30 calendar days, after the earlier of (i) written notice thereof shall
have been given to the Mortgagor from the Mortgagee and (ii) when the Mortgagor
otherwise had knowledge of such failure, unless the Mortgagor is diligently
pursuing to cure such failure to the reasonable satisfaction of the Mortgagee;
(c) Any representation or warranty made by Mortgagor in this Mortgage
shall prove to have been false or misleading in any material respect when made;
or
(d) The occurrence of any Event of Default (as defined in the Credit
Agreement) under the Credit Agreement.
13. Remedies upon Default; Power of Sale. Immediately upon the occurrence
of any Event of Default after applicable notice and grace periods have elapsed,
Mortgagee shall have the option, in addition to and not in lieu of or
substitution for all other rights and remedies provided in this Mortgage or any
other Loan Documents or provided by law, and is hereby authorized and empowered
by Mortgagor, to do any or all of the following:
(a) Declare the entire unpaid amount of the Mortgage Indebtedness,
together with accrued and unpaid interest thereon, and any and all charges
payable by Mortgagor to Mortgagee pursuant to any of the Loan Documents,
immediately due and payable and, at Mortgagee's option, (i) to bring suit
therefor, or (ii) to bring suit for any delinquent payment of or upon the
Mortgage Indebtedness, or (iii) to take any and all steps and institute any and
all other proceedings that Mortgagee deems necessary to enforce payment of the
Mortgage Indebtedness and performance of other obligations secured hereunder
and to protect the lien of this Mortgage.
(b) Commence foreclosure proceedings against the Mortgaged Premises
through judicial proceedings or by advertisement, at the option of Mortgagee,
pursuant to the applicable statutes in such case made and provided, and to sell
the Mortgaged Premises or to cause the same to be sold at public sale, and to
convey the same to the purchaser in accordance with said statutes in a single
parcel or in several parcels at the option of Mortgagee.
(c) Cause to be brought down to date an abstract or abstracts and tax
histories of the Mortgaged Premises, procure title insurance or title reports
or, if necessary, procure new abstracts and tax histories.
(d) Obtain a receiver to manage the Mortgaged Premises and collect the
rents, profits and income therefrom.
OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
- 9 -
<PAGE> 10
(e) In the event of any sale of the Mortgaged Premises by foreclosure,
through judicial proceedings, by advertisement or otherwise, apply the proceeds
of any such sale in the order following to: (i) all expenses incurred for the
collection of the Mortgage Indebtedness and the foreclosure of this Mortgage,
including reasonable attorneys' fees and disbursements, or such attorneys' fees
and disbursements as are permitted by law, (ii) all sums expended or incurred
by Mortgagee directly or indirectly in carrying out the terms, covenants and
agreements of the Notes, this Mortgage and the other Loan Documents, together
with interest thereon as therein provided, (iii) all accrued and unpaid
interest upon the Mortgage Indebtedness, (iv) the unpaid principal amount of
the Mortgage Indebtedness, and (v) the surplus, if any there be, unless a court
of competent jurisdiction decrees otherwise, to Mortgagor.
14. Successors in Ownership. In the event ownership of the Mortgaged
Premises or any part thereof becomes vested in a person or persons other than
Mortgagor without the prior written approval of Mortgagee, Mortgagee may (but
shall not be obligated to) deal with such successor or successors in interest
with reference to this Mortgage and the other Loan Documents in the same manner
as with Mortgagor, without in any manner discharging or otherwise affecting
Mortgagor's liability hereunder or upon the Mortgage Indebtedness.
15. Personal Property. (a) The Mortgagor represents and warrants that
Mortgagor owns all presently owned Equipment and other personal property
described in this Mortgage free and clear of any and all liens and security
interests except for the lien and security interest granted by this Mortgage
and Permitted Encumbrances and any Liens permitted by the terms of the Credit
Agreement. The Mortgagor further represents and warrants that, as to Equipment
and other personal property hereafter acquired, Mortgagor will own all such
Equipment and other personal property at the time it is brought on the Land and
thereafter free and clear of any and all liens and security interests except
for the lien and security interest granted by this Mortgage, any other security
instrument or agreement in favor of Mortgagee, and Permitted Encumbrances and
any Liens permitted by the terms of the Credit Agreement.
(b) The Mortgagor does hereby grant a security interest to Mortgagee
pursuant to the Uniform Commercial Code and Chapter 1301.01 et seq. of the Ohio
Revised Code, each as amended from time to time, in any Equipment and other
personal property covered hereby. The Mortgagor agrees, upon request of
Mortgagee, to furnish an inventory of personal property owned by Mortgagor and
subject to this Mortgage and, upon request by Mortgagee, to execute any
supplements to this Mortgage, any separate security agreement and any financing
statements to include specifically said inventory of personal property. Upon
the occurrence of an Event of Default, Mortgagee shall have all of the rights
and remedies therein provided or otherwise provided by law or by this Mortgage,
including but not limited to the right to require Mortgagor to assemble such
personal property and make it available to Mortgagee at a place to be
designated by Mortgagee which is reasonably convenient to both parties, the
right to take possession of such personal property with or without demand and
with or without process of law and the right to sell and dispose of the same
and distribute the proceeds according to law. The
OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
- 10 -
<PAGE> 11
parties hereto agree that any requirement of reasonable notice shall be met if
Mortgagee sends such notice to Mortgagor at least ten (10) days prior to the
date of sale, disposition or other event giving rise to the required notice,
and that the proceeds of any disposition of any of such personal property may
be applied by Mortgagee first to the reasonable expenses in connection
therewith, including reasonable attorneys' fees and disbursements and then to
payment of the Mortgage Indebtedness.
16. Assignment of Leases and Rents. As of the date of this Mortgage,
Mortgagor hereby assigns to Mortgagee all its right, title and interest in and
to all written and oral leases, whether now in existence or which may hereafter
come into existence during the term of this Mortgage, or any extension hereof,
covering the Mortgaged Premises or any part thereof (but without an assumption
by Mortgagee of liabilities of Mortgagor under any such leases by virtue of
this assignment), and Mortgagor hereby assigns to Mortgagee the rents, issues
and profits of the Mortgaged Premises. Until the occurrence of an Event of
Default, Mortgagor shall have the right to receive and collect such rents,
issues and profits. Upon the occurrence of an Event of Default, Mortgagee may
elect upon written notice to Mortgagor to receive and collect said rents,
issues and profits personally or through a receiver so long as any such Event
of Default shall exist and during the pendency of any foreclosure proceedings
and during any redemption period, and Mortgagor hereby consents to the
appointment of a receiver if believed necessary or desirable by Mortgagee to
enforce its rights under this paragraph 16. The collection of rents by
Mortgagee shall in no way waive the right of Mortgagee to foreclose this
Mortgage in the event of any Event of Default.
17. Prohibition of Transfer and Further Encumbrances. Except as permitted
under the Credit Agreement, the Mortgagor shall not, without the prior written
consent of Mortgagee, permit or suffer the Mortgaged Premises, or any part
thereof, to be sold, assigned, transferred or encumbered in any way, whether by
operation of law or otherwise. The preceding sentence shall not apply to
transfers of ownership in Mortgagor resulting from the death of a natural
person, transfers by a natural person to a member or members of such person's
immediate family or transfers by a natural person in connection with bona fide
estate planning.
18. Severability. If any provision hereof is in conflict with any statute
or rule of law of the State of Ohio or is otherwise unenforceable for any
reason whatsoever, then such provision shall be deemed null and void to the
extent of such conflict or unenforceability and shall be deemed severable from
but shall not invalidate any other provisions of this Mortgage.
19. Environmental Matters. The representations, warranties, covenants and
agreements made by the Mortgagor to the Mortgagee in the Environmental
Certificate delivered by the Mortgagor to the Mortgagee in connection with the
execution of this Mortgage are incorporated herein by reference. The Mortgagor
agrees that any default under the terms of the Environmental Certificate will
constitute a default under this Mortgage.
OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
- 11 -
<PAGE> 12
20. Waiver. No waiver by Mortgagee of any right or remedy granted
hereunder or failure to insist on strict performance by Mortgagor hereunder
shall affect or extend to or act as a waiver of any other right or remedy of
Mortgagee hereunder, nor affect the subsequent exercise of the same right or
remedy by Mortgagee for any further or subsequent default by Mortgagor
hereunder, and all such rights and remedies of Mortgagee hereunder are
cumulative.
21. Marshalling. The Mortgagor hereby waives, in the event of foreclosure
of this Mortgage or the enforcement by the Mortgagee of any other rights and
remedies hereunder, any right otherwise available in respect to marshalling of
assets which secure the Mortgage Indebtedness or to require Mortgagee to pursue
its remedies against any other such assets.
22. POWER OF SALE; WAIVER OF NOTICE AND HEARING ON FORECLOSURE. THIS
MORTGAGE CONTAINS A POWER OF SALE AND UPON THE OCCURRENCE OF AN EVENT OF
DEFAULT MAY BE FORECLOSED BY ADVERTISEMENT. IN FORECLOSURE BY ADVERTISEMENT
AND THE SALE OF THE MORTGAGED PREMISES IN CONNECTION THEREWITH NO HEARING IS
REQUIRED AND THE ONLY NOTICE REQUIRED IS THE PUBLICATION OF NOTICE IN A LOCAL
NEWSPAPER AND THE POSTING OF A COPY OF THE NOTICE ON THE PREMISES. THE
MORTGAGOR HEREBY WAIVES ALL RIGHTS UNDER THE CONSTITUTION AND LAWS OF THE
UNITED STATES AND THE STATE OF OHIO TO A HEARING PRIOR TO SALE IN CONNECTION
WITH FORECLOSURE OF THIS MORTGAGE BY ADVERTISEMENT AND ALL NOTICE REQUIREMENTS
EXCEPT AS SET FORTH IN THE OHIO STATUTE PROVIDING FOR FORECLOSURE BY
ADVERTISEMENT.
23. Further Instruments. The Mortgagor shall execute, acknowledge and
deliver any and all such further conveyances, documents, mortgages and
assurances, and do or cause to be done all such further acts, as Mortgagee may
reasonably require to confirm and protect the lien of this Mortgage or
otherwise to accomplish the purposes hereof forthwith upon the request of
Mortgagee, whether in writing or otherwise.
24. Notices. All notices, demands, requests, consents and other
communications shall be delivered and shall be effective in the manner
specified in the Credit Agreement.
25. Governing Law; Binding Effect; Definitions. This Mortgage, made in
the State of Ohio, shall be construed according to the laws thereof and shall
be binding upon Mortgagor and its successors and assigns and any subsequent
owners of the Mortgaged Premises, and all of the covenants herein contained
shall run with the land, and this Mortgage and all of the covenants herein
contained shall inure to the benefit of Mortgagee, its successors and assigns.
Terms used but not defined herein shall have the meanings ascribed thereto in
the Credit Agreement.
OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
- 12 -
<PAGE> 13
26. Headings. The headings in this Mortgage are for convenience of
reference only and shall not limit or otherwise affect the meaning of any
provision of this Mortgage.
27. Fixture Filing. This Mortgage also constitutes a financing statement
filed as a fixture filing under the Uniform Commercial Code with respect to
goods which are or are to become fixtures relating to the Land and as to which
Mortgagor is the debtor and record owner of the Land and Mortgagee is the
secured party. It is to be recorded in the real estate records of the County
in which the Land is located.
28. Open-End Mortgage; Protective Advances. The parties hereto intend
that, in addition to any other debt or obligation secured hereby, this Mortgage
shall secure unpaid balances of loan advances made by the holder hereof, or by
the lenders for which the holder hereof acts as agent, at the request of
Mortgagor or any of its successors in title after this Mortgage is delivered to
the Recorder for record to the fullest extent and with the highest priority
contemplated by Section 5301.232 of the Ohio Revised Code. The maximum amount
of loan indebtedness secured by this Mortgage, in the aggregate and exclusive
of interest accrued thereon and protective advances made as contemplated in
Section 5301.233 of the Ohio Revised Code, which may be outstanding at any time
is One Hundred and Forty Million Dollars ($140,000,000). Any such loan
advances may or may not be evidenced by a note or notes of Mortgagor or its
successors in title executed and delivered at the time any loan advance is
made. If and to the extent applicable, Mortgagor hereby waives any right it
may have under Section 5301.232(c) of the Ohio Revised Code.
29. Mortgagee's Rights Under Mechanics' Lien Laws. Mortgagee shall be and
is hereby is authorized and empowered to do as Mortgagee all things provided in
the mechanics' lien laws of Ohio, including, without limitation, Section
1311.14 of the Ohio Revised Code, and all amendments and supplements thereto.
30. Use of Insurance and Condemnation Proceeds. Notwithstanding any other
provision of this Mortgage, all insurance proceeds recovered by the Mortgagee
on account of damage or destruction to the Mortgaged Premises and all proceeds
of any condemnation award recovered by the Mortgagee for any building or
equipment taken or damaged, less the cost, if any, to the Mortgagee of such
recovery and of paying out such proceeds (including attorneys' fees and costs
allocable to inspecting the work and the plans and specifications therefor),
shall, upon the written request of the Mortgagor, be applied by the Mortgagee
to the payment of the cost of repairing, restoring or rebuilding the
improvements on the Mortgaged Premises so damaged or destroyed or of the
portion or portions of the Mortgaged Premises not so taken (hereinafter
referred to as the "work") and shall be paid out from time to time to the
Mortgagor as the work progresses, but subject to the Mortgagee's standard
requirements for construction loans of similar nature and subject to the
following conditions:
OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
- 13 -
<PAGE> 14
(a) There shall be no Event of Default under this Mortgage or any of the
other Loan Documents; and
(b) The request for any payment after the work has been completed shall be
accompanied by a copy of any certificate or certificates required by law to
render occupancy of the Mortgaged Premises legal.
Upon the completion of the work and payment in full therefore, or upon any
failure on the part of the Mortgagor promptly to commence or continue the work,
or at any time upon request by the Mortgagor, the Mortgagee may, at its option,
either apply the amount of any such proceeds then or thereafter in the hands of
the Mortgagee to the payment of the Mortgage Indebtedness or any portion
thereof, whether or not then due and payable, or remit such amount to the
Mortgagor.
31. Appointment of Receiver. Mortgagor agrees that upon or any time after
(a) the occurrence of an Event of Default hereunder, or (b) the commencement of
an action to foreclose this Mortgage pursuant to Ohio law, Mortgagee shall, in
any event, and at any such time, have the right to apply without notice (the
same being expressly waived) for the appointment of a receiver of the Mortgaged
Premises and the rents and profits thereof, and Mortgagee shall be entitled to
the appointment of such a receiver as a matter of right, without consideration
of the value of the Mortgaged Premises as security for the Mortgage
Indebtedness or the solvency or insolvency of Mortgagor or any other party. To
the extent permitted by law, Mortgagor hereby waives any right to object to the
appointment of a receiver as aforesaid and expressly consents that such
appointment shall be made as an admitted equity and as a matter of absolute
right to Mortgagee. Mortgagee or any Lender may be appointed as such receiver.
Such receiver shall have power: (i) to collect the rents, issues and profits
of the Mortgaged Premises during the pendency of such foreclosure suit and, in
case of a sale and a deficiency, during the full statutory period of
redemption, whether there be redemption or not, as well as during any further
times when Mortgagor, except for the intervention of such receiver, would be
entitled to collect such rents, issues and profits; (ii) to extend or modify
any then existing leases and to make new leases, which extensions,
modifications and new leases may provide for terms to expire, or for options to
lessees to extend or renew terms to expire, beyond the maturity date of the
indebtedness hereunder and beyond the date of the issuance of a deed or deeds
to a purchaser or purchasers at a foreclosure sale, it being understood and
agreed that any such leases, and the options or other such provisions to be
contained therein, shall be binding upon Mortgagor and all persons whose
interests in the Mortgaged Premises are subject to the lien hereof and upon the
purchaser or purchasers at any foreclosure sale, notwithstanding any redemption
from sale, discharge of the Mortgage Indebtedness, satisfaction of any
foreclosure decree, or issuance of any certificate of sale or deed to any
purchaser; and (iii) all other powers which may be necessary or are usual in
such cases for the protection, possession, control, management and operation of
the Mortgaged Premises during the whole of said period. The court from time to
time may authorize the receiver to apply the net income in his hands in payment
in whole or in part of: (y) the
OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
- 14 -
<PAGE> 15
indebtedness secured hereby, or by any decree foreclosing this Mortgage, or any
tax, special assessment or other lien which may be or become superior to the
lien hereof or of such decree, provided such application is made prior to
foreclosure sale; and (z) the deficiency in case of a sale and deficiency.
IN WITNESS WHEREOF, Mortgagor has duly executed this Mortgage as of the
day and year first above written.
Signed in the presence of: KEY PLASTICS, INC.
Mary Skershiner
- ------------------------------ By: Mark J. Abbo
-----------------------------
Print Name: Mary Skershiner Mark J. Abbo
------------------- Its: Treasurer and Assistant Secretary
M. Young Lee
- ------------------------------
Print Name: M. Young Lee
-------------------
OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
- 15 -
<PAGE> 16
<TABLE>
<S> <C>
STATE OF MICHIGAN )
)SS.
COUNTY OF WAYNE )
</TABLE>
BEFORE ME, a Notary Public, in and for said County and State, personally
appeared Mark J. Abbo, the Treasurer and Assistant Secretary of Key Plastics,
Inc., a Michigan corporation, who acknowledged that he did sign the foregoing
instrument on behalf of said corporation, and that the same is the free act and
deed of said corporation, and his free act and deed individually and as such
________________, for the uses and purposes therein stated.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
Detroit , Michigan this 24th day of March, 1997.
- --------- -----------
Janice K. Atkins
- ----------------------------------- Notary Public,
-----------------------
Acting in
----------------------- County
My Commission Expires:
----------------
Drafted by and when
recorded return to:
Mi Young Lee, Esq.
Dickinson, Wright, Moon,
Van Dusen & Freeman
500 Woodward Avenue, Suite 4000
Detroit, Michigan 48226
(313) 223-3500
OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
- 16 -
<PAGE> 17
EXHIBIT A
Situated in the Village of Montpelier, County of Williams and State of Ohio and
described as follows:
PARCEL I:
Situated in the County of Williams in the State of Ohio and in the Village of
Montpelier and described as follows: Known as and being the west one-fifth of
Lot Number Seven (7) in SAMUEL MARTIN'S FIRST ADDITION, more particularly
described as follows: Commencing at the northwest corner of said Lot 7, thence
east 52.8 feet; thence south 61.75 feet to the south line of said Lot 7, thence
west 52.8 feet to the southwest corner of said Lot 7, and thence north to the
place of beginning. Now known as Lot 7-A on the Auditor's tax map.
PARCEL II:
Outlots Number 36, 36A, 36D, 36E in the East one half of Section 10, Town 7
North, Range 2 East; (which are comprised of the vacated streets and alleys
and Lots 8, 9, 10, 11, 12, 13, 14, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27,
28 and 29 of Samuel Martin's First Addition to the Village of Montpelier, Ohio,
and Lot No. 30 in Samuel Martin's First Addition to the Village of Montpelier,
saving and excepting that portion of said Lot 30 heretofore conveyed to the
Village of Montpelier, Ohio, by deed recorded in Volume 193, Page 404 of the
Williams County deed records; and saving and excepting parts deeded to the
Village of Montpelier, Ohio for street purposes by deeds recorded in Volume
253, Page 1034 and Volume 266, Page 523; said Lots 8 through 30 and streets and
alleys in Samuel Martin's Addition vacated by proceedings filed in Williams
County Common Pleas Court, File No. 16119, and Ordinance No. 57 of the Council
of the Village of Montpelier, passed on January 6, 1947.
PARCEL III:
Known as and being all of Outlot Number Eleven (11) in the east half of Section
10, Town 7 North, Range 2 East, in the Village of Montpelier.
PARCEL IV:
All of Outlot Number Seven (7) in the east half of Section 10, Town 7 North,
Range 2 East, in the Village of Montelier, more particularly described as
follows: Commencing at the southwest corner of Lot No. 7 in Samuel Martin's
First Addition to said village, running thence west to the east line of Lot
No. 9 in said addition; thence north to the northeast corner of said Lot No.
9, thence east to the northwest corner of said Lot No. 7, thence south to the
place of beginning.
<PAGE> 18
PARCEL V:
Known as and being all of Out lot No. Twenty in the east half of Section 10,
Town 7 North, Range 2 East in said village of Montpelier, Ohio. (Said outlot
20 includes a parcel of real estate previously described as follows:
Commencing at a point 52.8 feet east of the southwest corner of Lot No. 7 in
Samuel Martin's first Addition to said Village of Montpelier, running thence
south 120 feet, thence west 177.8 feet to the east line of Lot No. 8, thence
due north 120 feet, and thence east to the place of beginning.) Known as
Outlot 20, N pt. and Outlot 20, S pt on Auditor's tax map for said section.
PARCEL VI:
The west 22 feet of Outlots 9 and 10 in the east half of section 10, more
particular described as follows: Commencing at a point 158.7 feet north and
351.0 feet west of the intersection of the section line between Sections 10
and 11, Town 7 North, Range 2 East (said section line being the centerline of
Mill Street in said village), and the north line of the right-of-way of the
Wabash Railroad; running thence east 22 feet, running thence south
approximately 226.92 feet to the north line of the right-of-way of said
railroad, running thence southwest along said north right-of-way line
approximately 22.4 feet to a point directly south of the point of beginning,
running thence north 231.35 feet to the point of beginning.
PARCEL VII:
All of that part of Outlot Number thirty (30) in the east half of Section 10,
Town 7 North, Range 2 East, in said Village of Montpelier, more particularly
described as follows: Commencing at the northwest corner of Lot 29 in Samuel
Martin's First Addition to said Village, running thence north to the center of
what was formerly the channel of the St. Joseph River as it existed in 1905,
thence in a northeasterly direction following the center of said old channel
until it arrives at a point directly north of the northeast corner of said Lot
29, thence south to the northeast corner of said Lot 29, and thence in a
westerly direction to the place of beginning.
<PAGE> 19
PARCEL VIII:
Situated in the Village of Montepelier, County of Williams and State of Ohio
and being in the Southeast Quarter (1/4) of the Northeast Quarter (1/4) of
Section Ten (10) in Township 7 North, Range 2 East and being a part out of the
presently designated Outlot 5, and more specifically described as follows:
Commencing at the Southwest corner of Lot Number 5 of Samuel Martin's First
Addition to the Village of Monteplier, thence South 89 degrees 41 minutes 33
seconds West on and along Randolph Street approximately 235.2 feet, thence
north 0 degrees East approximately 120 feet, thence North 89 degrees 41
minutes 33 seconds East approximately 235.2 feet to a point on the west
boundary line of Lot Number 5 of Samuel Martin's First Addition, thence South 0
degrees West approximately 120 feet to the point of beginning. Now known as
Outlot 5A on the Auditor's tax map for said section.
<PAGE> 20
EXHIBIT B
---------
Permitted Encumbrances
(Montpelier, Ohio)
1. Mortgage form Key Plastics, Inc., Michigan Corporation, to Del-Craft,
Inc., an Ohio Corporation and to Del and Lola Kight ("Kight"), in the
amount of $1,019,100.00, dated January 11, 1988, received for record
January 11, 1998 at 4:28 PM and recorded in Williams County Record of
Mortgages Volume 253, Page 228.; provided that, as of the date hereof, such
Mortgage has been paid in full, and such Mortgage shall be released and
discharged of record by not later than April 30, 1997.
2. By instrument dated August 5, 1957, received for record August 14, 1957
at 2:31 PM and recorded in Williams County Record of Deed in Volume 194,
Page 141, an easement was granted unto The Village of Montpelier for
electric lines.
3. By instrument dated August 5, 1957, received for record August 14, 1957
at 2:33 PM and recorded in Williams County Record of Deeds in Volume 194 at
Page 143, easements were granted to The Village of Montpelier for pipe
sewers, and/or force main sewers and water mains.
4. By deed received for record October 28, 1958 at 11:24 AM and recorded
in Williams County Record of Deeds in Volume 197 at Page 295 part of the
premises was conveyed to a prior owner of said parcel by the Village of
Montpelier and said Village retained an easement upon, through and under
said property to use, repair, operate, and maintain all existing utilities.
5. Rights of others part of vacated streets and alleys as shown on deed
recorded in Williams Record of Deeds Volume 269, Page 811.
OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
<PAGE> 1
EXHIBIT 10.6
PENNSYLVANIA FORM
OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
THIS OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS, dated
as of March 24, 1997 by KEY PLASTICS, INC., a Michigan corporation, whose
address is 21333 Haggerty Road, Suite 200, Novi, Michigan 48375 (the
"Mortgagor"), to NBD BANK, a Michigan banking corporation, whose address is 611
Woodward Avenue, Detroit, Michigan 48226 (the "Mortgagee"), as agent for the
benefit of itself and the lenders (the "Lenders") which are parties to the
Credit Agreement defined below.
RECITALS:
A. The Mortgagor has entered into a Credit Agreement dated as of March 24,
1997 (as amended or modified from time to time, including any agreement entered
into in substitution therefor, the "Credit Agreement") pursuant to which the
Lenders agreed, subject to the terms and conditions thereof, to extend credit
to the Mortgagor up to a maximum principal amount outstanding at any time equal
to One Hundred and Forty Million and No/100 Dollars ($140,000.000.00) maturing
on or before September 24, 2004, as such date may be extended by agreement of
the parties to the Credit Agreement.
B. As a condition to the effectiveness of the obligations of the Mortgagee
and the Lenders under the Credit Agreement, the Mortgagor is obligated, among
other things, to grant a lien on the mortgaged premises hereinafter described.
WITNESSETH:
NOW, THEREFORE, to secure (a) the prompt and complete payment of all
Indebtedness and other obligations of the Mortgagor or any Subsidiary now or
hereafter owing to the Lenders or the Mortgagee under or on account of the
Credit Agreement, any Security Document or any letters or credit, notes or
other instruments issued to the Mortgagee or the Lenders pursuant thereto, (b)
the performance of the covenants under the Credit Agreement and the Security
Documents and any monies expended by any Lender or the Mortgagee in connection
therewith, and (c) the prompt and complete payment of all obligations and
performance of all covenants of the Mortgagor or any Subsidiary in connection
with Swaps relating to Indebtedness under the Loan Documents (including any
interest accruing subsequent to any petition filed by or against the Mortgagor
or any Subsidiary under the U.S. Bankruptcy Code, whether or not allowed),
indemnity and reimbursement obligations, charges, expenses, fees, reasonable
attorneys' fees and disbursements and any other amounts owing thereunder (all
of the aforesaid Indebtedness,
<PAGE> 2
obligations and liabilities of the Mortgagor and its Subsidiaries being herein
called the "Mortgage Indebtedness" and this Mortgage and all of the other
documents, agreements and instruments among the Mortgagor, the Subsidiaries,
the Lenders, the Mortgagee or any of them, evidencing or securing the repayment
of, or otherwise pertaining to, the Mortgage Indebtedness, including without
limitation the Credit Agreement, the Notes and the Security Documents, being
herein collectively called the "Loan Documents"), the Mortgagor does hereby
GRANT, BARGAIN, SELL, CONVEY, MORTGAGE and WARRANT unto the Mortgagee, and its
successors and assigns, the following described property (the "Mortgaged
Premises"):
(A) the land situated in the Township of Manchester or the Borough of
Winterstown, both in the County of York and Commonwealth of Pennsylvania, more
specifically described in Exhibit A hereto (the "Land");
(B) all easements, rights-of-way, licenses and privileges, thereunto
belonging or in anywise appertaining to the Land, including without limitation
all Mortgagor's right, title and interest in and to those easements,
rights-of-way, licenses and privileges described in Exhibit A hereto, if any;
(C) all buildings and improvements now or hereafter situated upon the Land
or any part thereof;
(D) to the extent, if any, of Mortgagor's interests thereon, all minerals,
royalties, gas rights, water, water rights, water stock, flowers, shrubs, lawn
plants, crops, trees, timber and other emblements now or hereafter located on,
under or above all or any part of the Land, subject to coal, oil, gas, mineral
and mining rights as set forth in prior instruments of record, and rights of
way, easements, restrictions, reservations and exceptions as set forth in prior
instruments of record;
(E) all and singular the tenements, hereditament and appurtenances
belonging or in anywise appertaining to the Land, and the reversion or
reversions, remainder and remainders thereof; and also all the estate, right,
title, interest, property, claim and demand whatsoever of Mortgagor, of, in and
to the same and of, in and to every part and parcel thereof;
(F) all the rents, issues and profits thereof under present or future
leases, or otherwise, which are hereby specifically assigned, transferred and
set over to Mortgagee, including, but not limited to, all cash or securities
deposited under any such leases to secure performance by the tenants of their
obligations thereunder, whether said cash or securities are to be held until
the expiration of the terms of such leases or applied to one or more of the
installments of rent coming due thereunder;
OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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(G) all right, title and interest of Mortgagor, if any, in and to the land
lying in the bed of any street, road, avenue, alley or walkway, opened or
proposed or vacated, or any strip or gore, in front of or adjoining the Land;
(H) all machinery, apparatus, equipment, fittings, fixtures, and articles
of personal property of every kind and nature whatsoever, other than consumable
goods, now or hereafter located in or upon the Land or any part thereof and
used or useable in connection with any present or future operation of the Land
or any building or buildings now or hereafter on the Land and now owned or
hereafter acquired by Mortgagor (all of which is herein called "Equipment"),
including, but without limiting the generality of the foregoing, all lighting,
heating, cooling, ventilating, air-conditioning, incinerating, refrigerating,
plumbing, sprinkling, communicating and electrical systems, and the machinery,
appliances, fixtures and equipment pertaining thereto, it being understood and
agreed that all Equipment is part and parcel of the Land and appropriated to
the use of said real estate and, whether affixed or annexed or not, shall for
the purposes of this Mortgage, unless Mortgagee shall otherwise elect, be
deemed conclusively to be real estate and mortgaged hereby; and
(I) any and all awards or payments, including interest thereon, and the
right to receive the same, which may be made with respect to the Land and are
or will be payable to Mortgagor as a result of (a) the exercise of the right of
eminent domain, (b) the alteration of the grade of any street, (c) any loss of
or damage to any building or other improvement on the Land, (d) any other
injury to or decrease in the value of the Land or (e) any refund due on account
of the payment of real estate taxes, assessments or other charges levied
against or imposed upon the Land, to the extent of all amounts which may be
secured by this Mortgage at the date of receipt of any such award or payment by
Mortgagee, and of the reasonable counsel fees, costs and disbursements incurred
by Mortgagee in connection with the collection of such award or payment,
Mortgagor hereby agreeing to execute and deliver, from time to time, such
further instruments as may be reasonably requested by Mortgagee to confirm such
assignment to Mortgagee of any such award or payment.
TO HAVE AND TO HOLD the Mortgaged Premises, and each and every part
thereof, unto Mortgagee and its successors and assigns forever. Any reference
herein to the "Mortgaged Premises" shall, unless the context shall require
otherwise, be deemed to include and apply to the above described Land and said
buildings, improvements, Equipment, rents, issues, profits, leases, easements,
tenements, hereditament and appurtenances and all other rights, privileges and
interests hereinabove described.
SUBJECT only to those matters set forth in Exhibit B hereto ("Permitted
Encumbrances").
THIS MORTGAGE is an "Open-End Mortgage" as set forth in 42 Pa.C.S.A.
Section 8143 and secures obligations up to a maximum principal amount of
indebtedness outstanding at any time equal to One Hundred and Forty Million and
No/100 Dollars ($140,000,000.00), plus accrued and unpaid interest, including
future advances under the Credit Agreement, any Security Document or any
letters of credit, notes or other instruments issued to the Mortgagee or the
OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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<PAGE> 4
Lenders pursuant thereto, including advances for the payment of taxes and
municipal assessments, maintenance charges, insurance premiums, costs incurred
for the protection of the Mortgaged Premises or the lien of this Mortgage,
expenses incurred by the Mortgagee by reason of default by the Mortgagor under
this Mortgage and advances for any other purpose, together with all other sums
hereunder or secured hereby. All notices to the Mortgagee pursuant to 42
Pa.C.S.A. Section 8143 shall be given personally or by certified mail, return
receipt requested, to the Mortgagee at the address first set forth above.
AND Mortgagor does hereby covenant and warrant as follows:
1. Payment of Mortgage Indebtedness; Performance of Agreements. The
Mortgagor shall pay the principal of and interest on the Mortgage Indebtedness
according to the terms thereof, and will keep and perform all the covenants,
promises and agreements on its part to be performed in any and all Loan
Documents, all in the manner herein or therein set forth.
2. Covenants of Title. The Mortgagor has good and indefeasible title to
the Land in fee simple and has good and indefeasible title to the entire
Mortgaged Premises and with good right and full power to sell, mortgage and
convey the Mortgaged Premises, the Mortgaged Premises are free and clear of
liens and encumbrances except Permitted Encumbrances, whether presently
existing or which may hereafter be created in accordance with the terms hereof,
and Mortgagor will warrant and defend the Mortgaged Premises against all lawful
claims and demands whatsoever. The Mortgagee shall have the right, at its
option and at such time or times as it, in its sole discretion, shall deem
reasonably necessary, to take whatever action it may reasonably deem necessary
to defend or uphold the lien of this Mortgage or otherwise enforce any of the
rights of Mortgagee hereunder or any obligation secured hereby, including
without limitation, the right to institute appropriate legal proceedings for
such purposes.
3. Payment of Taxes, Assessments and Charges. The Mortgagor shall pay
when due, and before any interest, collection fees or penalties shall accrue,
all real estate taxes, special assessments, water and sewer charges or other
governmental charges and impositions levied or assessed with respect to the
Mortgaged Premises or any part thereof except to the extent that payment of any
of the foregoing is then being contested in good faith by appropriate legal
proceedings and with respect to which adequate financial reserves have been
established on the books and records of the Mortgagor. Should Mortgagor fail
to so pay such taxes, special assessments, water and sewer charges or other
governmental charges or impositions or establish such adequate financial
reserves, Mortgagee may, at its option, pay the same for the account of
Mortgagor.
4. Reserves for Taxes and Insurance Premiums. Upon the occurrence of any
Event of Default, Mortgagor shall pay to Mortgagee upon the request of
Mortgagee, installments of principal and interest, and in addition thereto,
installments of the taxes and assessments levied or to be levied upon the
Mortgaged Premises, and installments of the premiums that will become
OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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<PAGE> 5
due and payable to renew the insurance hereinafter provided, said installments
to be substantially equal and to be in such amount as will assure to Mortgagee
that not less than 30 days before the time when such taxes and premiums,
respectively, become due Mortgagor will have paid to Mortgagee a sufficient
amount to pay the same in full. Said amounts paid to Mortgagee hereunder need
not be segregated nor kept in a separate fund, and no interest shall be payable
thereon. Said amounts shall be held by Mortgagee as additional security for
the Mortgage Indebtedness and, except as provided in the following sentence, be
applied to the payment of said taxes and assessments when the same become due
and payable. Mortgagee may, at its option, but without any obligation on its
part so to do, apply said amounts upon said taxes and assessments or insurance
premiums or toward the payment of the Mortgage Indebtedness or any portion
thereof, whether or not then due or payable. The Mortgagee shall endeavor to
notify the Mortgagor of how such amounts were applied, provided, however, that
the failure to give such notice shall not affect Mortgagee's rights under this
Mortgage.
Upon an assignment of the Mortgage, Mortgagee shall have the right to pay
over the balance of such deposits in its possession to the assignee and
Mortgagee shall thereupon be completely released from all liability with
respect to such deposits and Mortgagor or owner of the Mortgaged Premises shall
look solely to the assignee or transferee in reference thereto. This provision
shall apply to every transfer of such deposits to a new assignee. Upon full
payment and satisfaction of the Mortgage Indebtedness or at any prior time upon
the election of Mortgagee, the balance of the unapplied deposits in its
possession shall be paid over to the record owner of the Mortgaged Premises and
no other party shall have any right or claim thereto in any event, provided
that in the event of a foreclosure of the Mortgaged Premises, the purchaser at
such foreclosure shall have the right to receive such unapplied deposits. The
Mortgagor agrees, at Mortgagee's request, to deliver the aforesaid deposits to
such service or financial institution as Mortgagee shall from time to time
designate.
5. Payment of Other Obligations. The Mortgagor shall also pay any and all
other obligations, liabilities or debts which may become liens, security
interests, or encumbrances upon or charges against the Mortgaged Premises for
any repairs or improvements that are now completed or are in progress or which
may hereafter be made thereon, or for any other goods, services, or utilities
furnished to the Mortgaged Premises, and shall not permit any lien, security
interest, encumbrance or charge of any kind securing the repayment of borrowed
funds (including the deferred purchase price for any property) to accrue and
remain outstanding against the Mortgaged Premises or any part thereof, or any
improvements thereon other than Permitted Encumbrances, if any, except to the
extent that payment of any of the foregoing is then being contested in good
faith by appropriate legal proceedings and with respect to which adequate
financial reserves have been established on the books and records of the
Mortgagor.
6. Maintenance and Repair; Compliance with Laws; Inspection. The
Mortgagor will keep the Land and all the improvements thereon in good order and
repair, and Mortgagor expressly agrees that it will not do or permit waste on
the Land nor do any other act whereby the
OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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<PAGE> 6
Mortgaged Premises will become less valuable or the lien hereof may be
impaired. Should Mortgagor fail to effect the necessary repairs and such
failure shall remain unremedied for 20 calendar days after written notice
thereof shall have been given to the Mortgagor by the Mortgagee, Mortgagee may
at its option make such repairs for the account of Mortgagor. The Mortgagor
will promptly comply, and cause the Mortgaged Premises and the occupants or
users thereof to comply, with all present and future laws, ordinances, orders,
rules and regulations and other requirements of any governmental authority
affecting the Mortgaged Premises or any part thereof or the use or occupancy
thereof and with all instruments and documents of record or otherwise affecting
the Mortgaged Premises, or any part thereof, or the use or occupancy thereof.
The Mortgagee, and any person authorized by Mortgagee, shall have the right to
enter upon and inspect the Mortgaged Premises at all reasonable times and with
reasonable notice.
7. Insurance. (a) The Mortgagor shall keep the buildings and other
improvements on the Land, or which may hereafter be erected thereon, constantly
insured for the benefit of Mortgagee with such company or companies as may be
reasonably acceptable to Mortgagee and in an amount reasonably satisfactory to
Mortgagee, which amount shall not be less than 100% of the then full
replacement cost of such building and improvements (exclusive of excavations,
foundations and footings), which policies shall be without deduction for
depreciation and be subject to the payment of a deductible not in excess of an
amount reasonably satisfactory to Mortgagee, until the Mortgage Indebtedness
and all interest thereon and all of the amounts due hereunder are fully paid,
against fire and such other hazards and risks customarily covered by the
standard form of "extended coverage" endorsements available in the Commonwealth
of Pennsylvania, and shall further provide flood insurance (if the Mortgaged
Premises are situated in an area designated as a flood hazard area by the
Director of the Federal Emergency Management Agency or as otherwise required by
the Flood Disaster Protection Act of 1973 and regulations issued thereunder),
rent insurance in an amount not less than one year's gross rent derived from
the Mortgaged Premises, and such other appropriate insurance as Mortgagee may
reasonably require from time to time. All such policies shall include standard
mortgagee clauses in favor of Mortgagee and shall provide that the proceeds
thereof shall be paid to Mortgagee, all as may be satisfactory to Mortgagee.
During any construction, repair or restoration of the buildings and other
improvements on the Mortgaged Premises, Mortgagor shall carry or cause to be
carried builder's risk insurance which names Mortgagee as a loss payee as its
interests may appear. The Mortgagor shall also carry comprehensive general or
public liability insurance with reference to the Mortgaged Premises, which
names Mortgagee as an additional insured. All such policies shall provide that
the same may not be canceled or terminated without giving Mortgagee at least 30
days' prior written notice of such cancellation or termination.
(b) The Mortgagor shall deliver to Mortgagee at its principal office
aforesaid or at such other place as may be designated by the holder hereof such
insurance policies or, if Mortgagee consents, certificates evidencing such
policies. Renewals thereof shall likewise be delivered to Mortgagee at least 15
days before the expiration of any existing policies. Should Mortgagor fail to
insure or fail to pay the premiums on any such insurance or fail to deliver the
OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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<PAGE> 7
policies or renewals thereof as provided above, Mortgagee at its option may
have such insurance written or renewed and pay the premiums thereon for the
account of Mortgagor.
(c) In the event of loss or damage, the proceeds of said property and
builders' risk insurance on the buildings and improvements shall be paid to
Mortgagee alone. No such loss or damage shall itself reduce the Mortgage
Indebtedness. The Mortgagee is authorized to adjust and compromise such loss
without the consent of Mortgagor, to collect, receive and receipt for such
proceeds in the name of Mortgagee and Mortgagor and to endorse Mortgagor's name
upon any check in payment thereof. Such proceeds shall be applied first toward
reimbursement of all costs and expenses of Mortgagee in collecting said proceeds
and then toward payment of the Mortgage Indebtedness or any portion thereof,
whether or not then due or payable, or Mortgagee at its option may apply said
insurance proceeds, or any part thereof, to the repair or rebuilding of the
Mortgaged Premises. No such application of proceeds by Mortgagee toward payment
of the Mortgage Indebtedness shall reduce the amount of the payments required to
be made on the Mortgage Indebtedness in accordance with its terms.
(d) In the event of a foreclosure of this Mortgage, the purchaser of
the Mortgaged Premises shall succeed to all of the rights of Mortgagor under
said insurance policies payable to Mortgagee, including any right to unearned
premiums and the right to receive the proceeds of any insurance payable by
reason of any loss theretofore or thereafter occurring.
8. Eminent Domain. Notwithstanding any taking under the power of eminent
domain, alteration of the grade of any street, or other injury to or decrease
in value of the Mortgaged Premises by any public or quasi-public authority or
corporation, Mortgagor shall continue to pay the Mortgage Indebtedness in
accordance with the terms of the Notes, and any reduction in the principal sum
resulting from the application by Mortgagee of such award or payment as
hereinafter set forth shall be deemed to take effect only upon the receipt by
Mortgagee of such award. The Mortgagor hereby assigns the entire proceeds of
any award or payment to Mortgagee. The Mortgagee is authorized to commence,
appear in and prosecute, in its own or in Mortgagor's name, any action or
proceeding relating to any such taking, and to settle or compromise any claim
in connection therewith. Such proceeds shall be applied first toward
reimbursement of all costs and expenses of Mortgagee in collecting said
proceeds and then toward payment of the Mortgage Indebtedness or any portion
thereof, whether or not then due or payable, or Mortgagee at its option may
apply said proceeds, or any part thereof, to the alteration, restoration or
rebuilding of the Mortgaged Premises. No such application of proceeds by
Mortgagee toward payment of the Mortgage Indebtedness shall reduce the amount
of the payments required to be made on the Mortgage Indebtedness in accordance
with its terms.
9. Waste. The failure of Mortgagor to pay any taxes or assessments
assessed against the Mortgaged Premises, or any installment thereof, or any
premiums payable with respect to any insurance policy covering the Mortgaged
Premises, shall constitute waste.
OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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<PAGE> 8
10. Reimbursement of Advances by Mortgagee. The Mortgagor shall pay to
Mortgagee, upon demand, all sums expended by Mortgagee, or by a receiver
appointed at the request of Mortgagee, unless such sums shall be paid out of
the rents, income and profits from the Mortgaged Premises, (a) to pay insurance
premiums, taxes, assessments, water and sewer charges and other governmental
charges and impositions with respect to the Mortgaged Premises, (b) to
maintain, repair or improve the Mortgaged Premises, (c) to defend the lien of
this Mortgage as a lien against the Mortgaged Premises subject only to the
Permitted Encumbrances hereinabove expressly set forth, (d) to discharge any
lien or encumbrance affecting the Mortgaged Premises other than Permitted
Encumbrances, (e) to cure any default of Mortgagor under any lease or other
agreement covering the Mortgaged Premises, (f) to cure any default of Mortgagor
hereunder or under any of the Loan Documents or (g) for or in connection with
any other action taken by Mortgagee to preserve the security of this Mortgage
or any other security for the Mortgage Indebtedness or to protect any of
Mortgagee's rights hereunder. All such expenditures as shall be made by
Mortgagee or such receiver or pursuant to any other provision of this Mortgage
or the other Loan Documents, including any reasonable attorneys' fees and
disbursements incurred by Mortgagee or such receiver in connection with the
foregoing, shall be payable upon demand and be secured by this Mortgage and
shall bear interest at the Overdue Rate set forth in the Credit Agreement.
11. Change in Taxes. In the event any tax shall be due or become due and
payable to the United States of America, the Commonwealth of Pennsylvania or
any political subdivision thereof with respect to the execution and delivery or
recordation of this Mortgage or any note or other instrument or agreement
evidencing or securing repayment of the Mortgage Indebtedness or the interest
of Mortgagee in the Mortgaged Premises, Mortgagor shall pay such tax at the
time and in the manner required by applicable law and Mortgagor shall hold
Mortgagee harmless and shall indemnify Mortgagee against any liability of any
nature whatsoever as a result of the imposition of any such tax.
In the event of the passage after the date of this Mortgage of any law in
the Commonwealth of Pennsylvania deducting from the value of real property for
purposes of taxation any lien thereon, or changing in any way the laws now in
force for the taxation of mortgages or debts secured thereby (including the
interest thereon) for state or local purposes, or changing the manner of
collection of any such taxes, and imposing a tax, either directly or
indirectly, on this Mortgage, the Notes or any of the other Loan Documents, the
holder of this Mortgage shall have the right to declare the entire unpaid
amount of the Mortgage Indebtedness, together with accrued and unpaid interest
thereon, to be due and payable on a date to be specified by not less than 30
days' written notice to Mortgagor, provided, however, that such election
shall not be effective if Mortgagor is permitted by law to pay the whole of
such tax in addition to all other payments required thereunder and if
Mortgagor, prior to such specified date, makes payment of such tax then due and
agrees to pay any such tax when thereafter levied or assessed against the
Mortgaged Premises, this Mortgage, the Notes or any of the other Loan
Documents.
OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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<PAGE> 9
12. Events of Default. The occurrence of any of the following events
shall be deemed an "Event of Default" hereunder and shall entitle Mortgagee to
exercise its remedies hereunder and under any of the other Loan Documents or as
otherwise provided by law:
(a) Nonpayment of any of the Mortgage Indebtedness when due, beyond
any period of grace, if any, provided with respect thereto and after the giving
of any required notice;
(b) The failure of the Mortgagor to perform or observe any material
term or covenant contained in this Mortgage and such failure shall remain
unremedied for 30 calendar days after the earlier of (i) written notice thereof
shall have been given to the Mortgagor from the Mortgagee and (ii) when the
Mortgagor otherwise had knowledge of such failure, unless the Mortgagor is
diligently pursuing to cure such failure to the reasonable satisfaction of the
Mortgagee;
(c) Any representation or warranty made by Mortgagor in this Mortgage
shall prove to have been false or misleading in any material respect when made;
or
(d) The occurrence of any Event of Default (as defined in the Credit
Agreement) under the Credit Agreement.
13. Remedies upon Default; Power of Sale. Immediately upon the occurrence
of any Event of Default after applicable notice and grace periods have elapsed,
Mortgagee shall have the option, in addition to and not in lieu of or
substitution for all other rights and remedies provided in this Mortgage or any
other Loan Documents or provided by law, and is hereby authorized and empowered
by Mortgagor, to do any or all of the following:
(a) Declare the entire unpaid amount of the Mortgage Indebtedness,
together with accrued and unpaid interest thereon, and any and all charges
payable by Mortgagor to Mortgagee pursuant to any of the Loan Documents,
immediately due and payable and, at Mortgagee's option, (i) to bring suit
therefor, or (ii) to bring suit for any delinquent payment of or upon the
Mortgage Indebtedness, or (iii) to take any and all steps and institute any and
all other proceedings that Mortgagee deems necessary to enforce payment of the
Mortgage Indebtedness and performance of other obligations secured hereunder and
to protect the lien of this Mortgage.
(b) Commence foreclosure proceedings against the Mortgaged Premises
through judicial proceedings pursuant to the applicable statutes in such case
made and provided, and to sell the Mortgaged Premises or to cause the same to be
sold at public sale, and to convey the same to the purchaser in accordance with
said statutes in a single parcel or in several parcels at the option of
Mortgagee.
OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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<PAGE> 10
(c) Cause to be brought down to date an abstract or abstracts and tax
histories of the Mortgaged Premises, procure title insurance or title reports
or, if necessary, procure new abstracts and tax histories.
(d) Obtain a receiver to manage the Mortgaged Premises and collect the
rents, profits and income therefrom.
(e) In the event of any sale of the Mortgaged Premises by foreclosure,
through judicial proceedings or otherwise, apply the proceeds of any such sale
in the order following to: (i) all expenses incurred for the collection of the
Mortgage Indebtedness and the foreclosure of this Mortgage, including reasonable
attorneys' fees and disbursements, or such attorneys' fees and disbursements as
are permitted by law, (ii) all sums expended or incurred by Mortgagee directly
or indirectly in carrying out the terms, covenants and agreements of the Notes,
this Mortgage and the other Loan Documents, together with interest thereon as
therein provided, (iii) all accrued and unpaid interest upon the Mortgage
Indebtedness, (iv) the unpaid principal amount of the Mortgage Indebtedness, and
(v) the surplus, if any there be, unless a court of competent jurisdiction
decrees otherwise, to Mortgagor.
14. Successors in Ownership. In the event ownership of the Mortgaged
Premises or any part thereof becomes vested in a person or persons other than
Mortgagor without the prior written approval of Mortgagee, Mortgagee may (but
shall not be obligated to) deal with such successor or successors in interest
with reference to this Mortgage and the other Loan Documents in the same manner
as with Mortgagor, without in any manner discharging or otherwise affecting
Mortgagor's liability hereunder or upon the Mortgage Indebtedness.
15. Personal Property. (a) The Mortgagor represents and warrants that
Mortgagor owns all presently owned Equipment and other personal property
described in this Mortgage free and clear of any and all liens and security
interests except for the lien and security interest granted by this Mortgage
and Permitted Encumbrances and any Liens permitted by the terms of the Credit
Agreement. The Mortgagor further represents and warrants that, as to Equipment
and other personal property hereafter acquired, Mortgagor will own all such
Equipment and other personal property at the time it is brought on the Land and
thereafter free and clear of any and all liens and security interests except
for the lien and security interest granted by this Mortgage, any other security
instrument or agreement in favor of Mortgagee, and Permitted Encumbrances and
any Liens permitted by the terms of the Credit Agreement.
(b) The Mortgagor does hereby grant a security interest to Mortgagee
pursuant to the Uniform Commercial Code in any Equipment and other personal
property covered hereby. The Mortgagor agrees, upon request of Mortgagee, to
furnish an inventory of personal property owned by Mortgagor and subject to this
Mortgage and, upon request by Mortgagee, to execute any supplements to this
Mortgage, any separate security agreement and any financing statements to
include specifically said inventory of personal property. Upon the
OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
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<PAGE> 11
occurrence of an Event of Default, Mortgagee shall have all of the rights and
remedies therein provided or otherwise provided by law or by this Mortgage,
including but not limited to the right to require Mortgagor to assemble such
personal property and make it available to Mortgagee at a place to be
designated by Mortgagee which is reasonably convenient to both parties, the
right to take possession of such personal property with or without demand and
with or without process of law and the right to sell and dispose of the same
and distribute the proceeds according to law. The parties hereto agree
that any requirement of reasonable notice shall be met if Mortgagee sends such
notice to Mortgagor at least five (5) days prior to the date of sale,
disposition or other event giving rise to the required notice, and that the
proceeds of any disposition of any of such personal property may be applied by
Mortgagee first to the reasonable expenses in connection therewith, including
reasonable attorneys' fees and disbursements and then to payment of the
Mortgage Indebtedness.
16. Assignment of Leases and Rents. As of the date of this Mortgage,
Mortgagor hereby assigns to Mortgagee all its right, title and interest in and
to all written and oral leases, whether now in existence or which may hereafter
come into existence during the term of this Mortgage, or any extension hereof,
covering the Mortgaged Premises or any part thereof (but without an assumption
by Mortgagee of liabilities of Mortgagor under any such leases by virtue of
this assignment), and Mortgagor hereby assigns to Mortgagee the rents, issues
and profits of the Mortgaged Premises. Until the occurrence of an Event of
Default, Mortgagor shall have the right to receive and collect such rents,
issues and profits. Upon the occurrence of an Event of Default, Mortgagee may
elect upon written notice to Mortgagor to receive and collect said rents,
issues and profits personally or through a receiver so long as any such Event
of Default shall exist and during the pendency of any foreclosure proceedings
and during any redemption period, and Mortgagor hereby consents to the
appointment of a receiver if believed necessary or desirable by Mortgagee to
enforce its rights under this paragraph 16. The collection of rents by
Mortgagee shall in no way waive the right of Mortgagee to foreclose this
Mortgage in the event of any Event of Default.
17. Prohibition of Transfer and Further Encumbrances. Except as permitted
under the Credit Agreement, the Mortgagor shall not, without the prior written
consent of Mortgagee, permit or suffer the Mortgaged Premises, or any part
thereof, to be sold, assigned, transferred or encumbered in any way, whether by
operation of law or otherwise. The preceding sentence shall not apply to
transfers of ownership in Mortgagor resulting from the death of a natural
person, transfers by a natural person to a member or members of such person's
immediate family or transfers by a natural person in connection with bona fide
estate planning unless the same could result in a dissolution or termination of
Mortgagor.
18. Severability. If any provision hereof is in conflict with any statute
or rule of law of the Commonwealth of Pennsylvania or is otherwise
unenforceable for any reason whatsoever, then such provision shall be deemed
null and void to the extent of such conflict or
OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
- 11 -
<PAGE> 12
unenforceability and shall be deemed severable from but shall not invalidate
any other provisions of this Mortgage.
19. Environmental Matters. The representations, warranties, covenants and
agreements made by the Mortgagor to the Mortgagee in the Environmental
Certificate delivered by the Mortgagor to the Mortgagee in connection with the
execution of this Mortgage are incorporated herein by reference. The Mortgagor
agrees that any default under the terms of the Environmental Certificate will
constitute a default under this Mortgage.
20. Waiver. No waiver by Mortgagee of any right or remedy granted
hereunder or failure to insist on strict performance by Mortgagor hereunder
shall affect or extend to or act as a waiver of any other right or remedy of
Mortgagee hereunder, nor affect the subsequent exercise of the same right or
remedy by Mortgagee for any further or subsequent default by Mortgagor
hereunder, and all such rights and remedies of Mortgagee hereunder are
cumulative.
21. Marshalling. The Mortgagor hereby waives, in the event of foreclosure
of this Mortgage or the enforcement by the Mortgagee of any other rights and
remedies hereunder, any right otherwise available in respect to marshalling of
assets which secure the Mortgage Indebtedness or to require Mortgagee to pursue
its remedies against any other such assets.
22. Further Instruments. The Mortgagor shall execute, acknowledge and
deliver any and all such further conveyances, documents, mortgages and
assurances, and do or cause to be done all such further acts, as Mortgagee may
reasonably require to confirm and protect the lien of this Mortgage or
otherwise to accomplish the purposes hereof forthwith upon the request of
Mortgagee, whether in writing or otherwise.
23. Notices. All notices, demands, requests, consents and other
communications shall be delivered and shall be effective in the manner
specified in the Credit Agreement.
24. Governing Law; Binding Effect; Definitions. This Mortgage, made in
the Commonwealth of Pennsylvania, shall be construed according to the laws
thereof and shall be binding upon Mortgagor and its successors and assigns and
any subsequent owners of the Mortgaged Premises, and all of the covenants
herein contained shall run with the land, and this Mortgage and all of the
covenants herein contained shall inure to the benefit of Mortgagee, its
successors and assigns. Terms used but not defined herein shall have the
meanings ascribed thereto in the Credit Agreement.
25. Headings. The headings in this Mortgage are for convenience of
reference only and shall not limit or otherwise affect the meaning of any
provision of this Mortgage.
26. Fixture Filing. This Mortgage also constitutes a financing statement
filed as a fixture filing under the Uniform Commercial Code with respect to
goods which are or are to
OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
- 12 -
<PAGE> 13
become fixtures relating to the Land and as to which Mortgagor is the debtor
and record owner of the Land and Mortgagee is the secured party. It is to be
recorded in the real estate records of the County in which the Land is located.
27. Use of Insurance and Condemnation Proceeds. Notwithstanding any other
provision of this Mortgage, all insurance proceeds recovered by the Mortgagee
on account of damage or destruction to the Mortgaged Premises and all proceeds
of any condemnation award recovered by the Mortgagee for any building or
equipment taken or damaged, less the cost, if any, to the Mortgagee of such
recovery and of paying out such proceeds (including attorneys' fees and costs
allocable to inspecting the work and the plans and specifications therefor),
shall, upon the written request of the Mortgagor, be applied by the Mortgagee
to the payment of the cost of repairing, restoring or rebuilding the
improvements on the Mortgaged Premises so damaged or destroyed or of the
portion or portions of the Mortgaged Premises not so taken (hereinafter
referred to as the "work") and shall be paid out from time to time to the
Mortgagor as the work progresses, but subject to the Mortgagee's standard
requirements for construction loans of similar nature and subject to the
following conditions:
(a) There shall be no Event of Default under this Mortgage or any of
the other Loan Documents; and
(b) The request for any payment after the work has been completed
shall be accompanied by a copy of any certificate or certificates required by
law to render occupancy of the Mortgaged Premises legal.
Upon the completion of the work and payment in full therefore, or upon
any failure on the part of the Mortgagor promptly to commence or continue the
work, or at any time upon request by the Mortgagor, the Mortgagee may, at its
option, either apply the amount of any such proceeds then or thereafter in the
hands of the Mortgagee to the payment of the Mortgage Indebtedness or any
portion thereof, whether or not then due and payable, or remit such amount to
the Mortgagor.
OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
- 13 -
<PAGE> 14
IN WITNESS WHEREOF, Mortgagor has duly executed this Mortgage as of the
day and year first above written.
Signed in the presence of: KEY PLASTICS, INC.
/s/ George Fan By: /s/ Elvin R. Autry
- -------------------------- ----------------------------
Print Name: George Fan Elvin R. Autry
Its: Chief Financial Officer
/s/ Mi Young Lee ------------------------
- --------------------------
Print Name: Mi Young Lee
---------------
I, Mark J. Abbo the Assistant Secretary of Key Plastics, Inc., hereby
certify that the above signature is the authentic signature of Elvin R. Autry,
the Chief Financial Officer of Key Plastics, Inc.
STATE OF MICHIGAN ) /s/ Mark J. Abbo
)SS. ------------------------
COUNTY OF WAYNE ) Mark J. Abbo
On this, the 24th day of March, 1997, before me, the undersigned officer,
personally appeared Elvin R. Autry who acknowledged himself to be the Chief
Financial Officer of Key Plastics, Inc., a Michigan corporation, and that he as
such Chief Financial Officer, being authorized to do so, executed the foregoing
instrument for the purposes therein contained by signing the name of the
corporation by himself as Chief Financial Officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
Janice K. Atkins
----------------
JANICE K. ATKINS
Acting In, Wayne County, MI
My Commission Expires Aug 25 1998
- ---------------
OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
- 14 -
<PAGE> 15
Drafted by and when
recorded return to:
Mi Young Lee, Esq.
Dickinson, Wright, Moon,
Van Dusen & Freeman
500 Woodward Avenue, Suite 4000
Detroit, Michigan 48226
(313) 223-3500
OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
- 15 -
<PAGE> 16
A-1
EXHIBIT A
Legal Description of Land
PREMISES "A"
ALL THAT CERTAIN piece of parcel of land situate in the Borough of Winterstown,
York County, Pennsylvania, bounded and described as follows:
BEGINNING at a point in the center of Cherry Street, thence along the center
line of said street South seventy-seven degrees thirty minutes thirty seconds
East (S 77 degrees 30'30"E) eighty-three and thirty-six hundredths (83.36')
feet to a point; thence along same center line South seventy-nine degrees forty
minutes thirty seconds East (S 79 degrees 40'30"E) seventy-five and sixty-three
hundredths (75.63') feet to a point; thence by same center line South
eighty-one degrees fifty minutes thirty seconds East (S 81 degrees 50'30"E)
four hundred thirty-four and twenty-three hundredths (434.23') feet to a point;
thence along other lands of J. Wilbur and Helen M. Anderson South eight degrees
nine minutes thirty seconds West (S 08 degrees 09'30"W) three hundred
seventy-six and sixty-five hundredths (376.65') feet to an iron pin; thence
North sixty degrees thirty-three minutes fifty-one seconds West (N 60 degrees
33'51"W) two hundred sixty and ninety four hundredths (260.94') feet to an iron
pin; thence South eleven degrees one minute fifty-eight seconds West (S 11
degrees 01'58"W) one hundred seven and thirty-eight hundredths (107.38') feet to
a cement monument; thence North sixty degrees fourteen minutes West (N 60
degrees 14'00"W) three hundred thirty-three and seventeen hundredths (333.17')
feet to an iron pin; thence North one degree East (N 01 degree 00'00"E) two
hundred seventy-seven and eighty-four hundredths (277.84') feet to the place of
beginning.
PREMISES "B"
ALL THAT CERTAIN tract of land, with the improvements thereon erected, situate
in the Borough of Winterstown, County of York, and State of Pennsylvania,
bounded and described in accordance with a survey made October 28, 1978, by
Gordon L. Brown & Associates Inc., Engineers and Surveyors, identified as
Drawing No. 0-812, as follows:
BEGINNING at a spike in the intersection of Pennsylvania Department of
Transportation Legislative Route No. 66004, also known as Mt. Olivet Road, with
Cherry Street, a public road; thence extending in and through said Cherry
Street South seventy-five degrees thirty minutes East (S 75 degrees 30'E) one
hundred twenty-five and twenty-three hundredths (125.23) feet to a spike in the
bed of said street; thence extending across Cherry Street and along property
now or formerly of J. Wilbur Anderson South one degree zero minutes West (S 01
degrees 00'W) two hundred seventy-three and thirty-six hundredths (273.36) feet
to a concrete marker; thence continuing along lands now or formerly of J.
Wilbur Anderson South sixty degrees fourteen minutes East (S 60 degrees 14'E)
three hundred thirty-three and seventeen hundredths (333.17) feet to a concrete
marker; thence extending along lands now or formerly of Walter Pavoski South
forty-three degrees thirty minutes West (S 43 degrees 30'W) three hundred
forty-two and twenty-four hundredths (342.24) feet to an iron pipe; thence
extending along lands now or formerly of Clair L. Hess and crossing said
Legislative Route No. 66004 North sixty degrees fourteen minutes West (N 60
degrees 14'W) five hundred twenty-five and twenty-one hundredths (525.21) feet
to a spike in the bed of said Legislative Route No. 66004; thence extending in
and through said Legislative Route No. 66004 North thirty-one degrees
fifty-nine minutes East (N 31 degrees 59'E) five hundred thirty-nine and
fifty-one hundredths (539.51) feet to the spike at the point and place of
beginning.
BEING PARCEL NOS. 90 EK 68 P "A"/90 EK 127 A "B"
OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
<PAGE> 17
A-2
EXHIBIT A
Legal Description of Land
ALL THAT CERTAIN tract of land situate in Manchester Township, York County,
Pennsylvania, known as Lot No. 19 on a final plan prepared by Huth Engineers,
Inc., dated February 12, 1980, identified as Drawing LA-1464-15, and recorded in
the Office of the Recorder of Deeds, in and for York County, Pennsylvania, in
Plan Book BB, Page 986, bounded and described, as follows:
BEGINNING at a point on the southwesternmost right-of-way line of a 50 feet wide
road known as Farmtrail Road, at corner of Lot No. 18 on the above-mentioned
plan; thence along the southwesternmost right-of-way line of said Farmtrail Road
and along the arc of a circular curve to the left having a radius of 500.00
feet, an arc distance of 165.79 feet, the said arc being subtended by a chord
with a bearing of South 47 degrees 27 minutes 59 seconds East and a length of
165.03 feet, to a point at corner of Lot No. 20 on the above mentioned plan;
thence along Lot No. 20 South 33 degrees 2 minutes 5 seconds West 517.33 feet to
a point at Lot No. 28 on the above-mentioned plan; thence along Lot No. 28 South
84 degrees 49 minutes 35 seconds West 155.00 feet to a point at lands now or
formerly of Don C. Baker; thence along lands now or formerly of Don C. Baker
North 12 degrees 05 minutes 20 seconds West 274.98 feet to a point at corner of
Lot No. 17 on the above-mentioned plan; thence along Lots Nos. 17and 18 on said
plan North 52 degrees 1 minute 58 seconds East 472.71 feet to a point on the
southwesternmost right-of-way line of the aforementioned Farmtrail Road and the
place of BEGINNING; being known as Lot No. 19 on said plan.
BEING PARCEL NO. 36 27 19.
Tax Parcel No. _____________
OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
<PAGE> 18
A-3
EXHIBIT A
Legal Description of Land
ALL THAT CERTAIN lot or piece of ground with the buildings and improvements
thereon erected, situate in Manchester Township, York County, Pennsylvania,
and described according to a ALTA/ACSM Land Title Survey prepared for Key
Plastics Inc., by David A. Hoffman-Land Surveyor dated 11/4/1996 as follows, to
wit:
BEGINNING at a point on the southwesternmost right-of-way line of a 50 feet
wide road known as Farmtrail Road, at corner of Lot No. 19 on the above
mentioned plan; thence along the southwesternmost right-of-way line of said
Farmtrail Road and along the arc of a circular curve to the left having a
radius of 500.00 feet, an arc distance of 177.45 feet, the said arc being
subtended by a chord with a bearing of South 67 degrees 07 minutes 58 seconds
East and a length of 176.52 feet to a point at corner of Lot No. 21 on the
above mentioned plan; thence continuing along the southwesternmost right-of-way
line of said Farmtrail Road South 77 degrees 18 minutes 00 seconds East, 237.93
feet to a point at corner of Lot No. 22 on the above mentioned plan; thence
along Lot No. 22 South 12 degrees 42 minutes 00 seconds West 263.65 feet to a
point at Lot No. 25 on the above mentioned plan; thence along lots No. 25, 26,
27, 28 on the above mentioned plan South 84 degrees 49 minutes 35 seconds West
621.65 feet to a point at corner of Lot No. 19 on the above mentioned plan;
thence North 33 degrees 02 minutes 05 seconds East 517.88 feet to the point and
place of beginning.
BEING PARCEL NO. 36 27 20.
BEING the same premises which York County Industrial Development Authority and
D.I.A. Farmbrook Limited Partnership (a Maryland Limited Partnership) by Deed
dated 8/9/1993 and recorded 9/7/1993 in York County, Pennsylvania, in Record
Book 713 Page 444, conveyed unto Key Plastics Inc., (a Michigan Corporation), in
fee.
<PAGE> 19
A-4
EXHIBIT A
Legal Description of Land
ALL THAT CERTAIN lot or piece of ground with the buildings and improvements,
thereon erected, situate in Manchester Township, York County, Pennsylvania,
and described in accordance with a ALTA/ACSM Land Title Survey for Key
Plastics Inc., prepared by David A. Hoffman-Land Surveyor dated 11/4/1996 as
follows, to wit:
BEGINNING at a point on the northerly side of a 60 foot radius forming the
northern terminus of Rose Court at the northwestern corner of Lot No. 12;
extending these along the northerly side of said 60 foot radius by a curve to
the left having a radius of 60.00 feet for a distance of 60.00 feet,
the chord of which extends South sixty-five (65') degrees thirty-two (32)
minutes twenty-nine (29) seconds West, a distance of fifty-seven and fifty-three
hundredths (57.53) feet to a point at Lot No. 10; extending thence along Lot No.
10 North fifty-three (53) degrees six (06) minutes twenty-three (23) seconds
West, a distance of two hundred forty-seven and seventy-three hundredths
(247.73) feet to a point at Lot No. 7; extending thence along Lot No. 7, North
twenty-six (26) degrees forty-five (45) minutes two (02) seconds East, a
distance of fifty-eight and forty-three hundredths (58.43) feet to a point at
lands now or formerly of Edwin P. and Nancy C. Marlow extending thence along
said last mentioned lands North twenty-six (26) degrees twenty-nine (29)
minutes seven (07) seconds East, a distance of two hundred and twenty-five
hundredths (200.25) feet to a point at lands now or formerly of Michael K.
Laughman; extending thence along said last mentioned lands South fifty-eight
(58) degrees twenty (20) minutes seventeen (17) seconds East, a distance of two
hundred seventy and fifty-two hundredths (270.52) feet to a point at Lot No. 12
extending thence along Lot No. 12, South twenty-three (23) degrees fifty-nine
(59) minutes twenty (20) seconds West, a distance of two hundred thirty-four and
fifty-seven hundreds (234.57) feet to a point on the northerly side of a 60 foot
radius forming the northern terminus of Rose Court and the point of beginning.
BEING FOLIO NUMBER 36 LH 8A.
BEING the same premises which York County Industrial Development Corporation by
Deed dated 4/13/1989 and recorded 4/14/1989 in York County, Pennsylvania in Deed
Book 102 L Page 897, conveyed unto Key Plastics Inc., (a Michigan Corporation),
in fee.
<PAGE> 20
EXHIBIT B
Permitted Encumbrances
(York (Rose Court), Pennsylvania
1. Rights granted to Columbia Gas Transmission Corporation as in Record Book
64-X Page 369.
2. Rights granted to Metropolitan Edison Company as in Record Book 67-M Page
501.
3. Conditions as shown on Plan recorded in Plan Book T Page 410:
a) 30 feet building set back line, etc.
4. Conditions as disclosed on ALTA/ACSM Land Title Survey for Key Plastics,
Inc., prepared by David A. Hoffman - Land Surveyor dated 11/4/1996:
(a) Building set back line;
(b) Possible Wet Lands;
(c) Notes.
<PAGE> 21
B-2
EXHIBIT B
Permitted Encumbrances
----------------------
(York (I), Pennsylvania)
1. $290,000.00 Mortgage by Key Plastics, Inc. to D.I.A. Farmbrook Limited
Partnership dated 4/13/1989 and recorded 4/14/1989 in Mortgage Book 64 C
page 1118. Assigned to Peoples Bank of Glen Rock by Assignment recorded
4/14/1989 in Record Book 102 L page 927; provided that, as of the date
hereof, the indebtedness secured by such Mortgage has been paid in full,
and such Mortgage shall be released and discharged of record by not later
than April 30, 1997.
2. Declaration of Covenants, Conditions and Restrictions of Farmbrook
Industrial Park as in Record Book 95 Y Page 165 and Amendment thereto as in
104 U Page 597.
3. Rights granted to Metropolitan Edison Company as in Books 36 I Page 234,
66 W Page 452, 82 F Page 498,98 Z Page 693, 36 J Page 333, 93 C Page 466,
and 100 X Page 350.
4. Rights granted to The Manufacturers Light and Heat Company as in Books
35 N Page 531 and 45 Z Page 277.
5. Rights granted to Defense Plant Corporation as in Books 31 N Page 481
and 29 N Page 556.
6. Rights granted to York Telephone and Telegraph Company as in Book 47 Y
Page 622.
7. Rights granted to Southern Pipe Line Co. as in Book 24 L Page 313.
8. Rights granted to Columbia Gas of Pennsylvania, Inc. as in Book 82 O
Page 893.
9. Rights granted to General Telephone Company of Pennsylvania as in Book
82 Q Page 753.
10. Rights granted to Columbia Gas Transmission Corporation as in Book 891
Page 880.
11. Agreement with Manchester Township as in Record Book 89 E Page 1017.
12. Easement, restrictions, conditions, setback lines, notes, etc., as
shown in Subdivision Plan Book BB Page 986.
<PAGE> 22
13. 1993 - 1996 County, Township and School taxes, and water and sewer
charges, subject to separate agreement of parties of even date
herewith regarding post-closing matters.
14. ALTA/ACSM Land Title Survey for Key Plastics, Inc. prepared by David A.
Hoffman-Land Surveyor dated November 15, 1994 and revised 11/04/96
(Dwg. No. D-73 K36) discloses the following:
a. Building Setback Lines of various widths which have been
violated by Masonry Building and Conc. Walk & Steps;
b. Metropolitan Edison Easement for Underground Large Three Phase
Service-Non-Residential DEED Bk. "84-K" Pg. 892;
c. 15' Drainage & Utility Easement;
d. Overhead Electric and Telephone lines w/Poles;
e. Water and Sanitary Sewer Lines;
f. Conc. Walk & Steps encroach onto Lots Nos. 20 & 21;
g. Utility Easement;
h. Stream;
i. Approx. 100 Yr. Flood Plain Boundary
<PAGE> 23
EXHIBIT B
Permitted Encumbrances
(York (II), Pennsylvania)
1. Declaration of Covenants, Conditions and Restrictions of Farmbrook
Industrial Park as in Record Book(s) 95 Y Page 965 and Amendment thereto
as in 104 U Page 597.
2. Rights granted to General Telephone Company of Pennsylvania as in Record
Book 82-Q Page 753.
3. Rights granted to York Telephone and Telegraph Company as in Record Book
47-Y Page 622.
4. Rights granted to Metropolitan Edison Company as in Record Book 61 C Page
502, 82-F. Page 498, 93-C Page 466 and 100-X Page 350.
5. Rights granted to Texas Eastern Transmission Corporation as in Record Book
37-C Page 252, and Record Book 43 A Page 485.
6. Rights granted to The Manufacturers Light and Heat Company as in Record
Book 45-Z Page 277.
7. Rights granted to Columbia Gas Transmission Corporation as in Record Book
89-I Page 880.
8. Rights granted to Columbia Gas of Pennsylvania, Inc. as is Record Book 82-0
Page 893.
9. Restatement of Exhibit G to Declaration of Covenants, Conditions and
Restrictions of Farmbrook Industrial Park as in Record Book 167 Page 574.
10. Easement restrictions, conditions, setback lines, notes, etc. as shown in
Subdivision Plan Book BB Page 986.
11. The following conditions as disclosed on the survey prepared by David A.
Hoffman - Land Surveyor dated 11/4/96, Drawing No. D-73-K36:
(a) 15' D & V Easement;
(b) Storm Drain Pipe;
(c) Monitoring Well;
(d) Notes.
<PAGE> 24
EXHIBIT B
Permitted Encumbrances
(Felton, Pennsylvania)
1. Easement Agreement as in Record Book 1116 page 230. (Premises "A" and
"B")
2. Title to that portion of premises in the bed of Cherry Street is
subject to public and private rights therein. (Premises "A")
3. Title to that portion of premises in the bed of Cherry Street and
Legislative Route No. 66004 is subject to public and private rights
therein. (Premises "B")
4. Conditions disclosed by Final Subdivision Plan of Land along Cherry
Street dated 11/23/83 and recorded in Plan Book EE Page 268. (Premises
"A")
5. Rights granted to Metropolitan Edison Company Deed Books 53 V Page 435,
56 E Page 406,58 D Page 392, 60 K Page 56, 70 S Page 1192 and 81 A
Page 384. (Premises "B")
6. Rights granted to York Telephone & Telegraph Company as in Deed Book 59
H Pages 71 and 75 (Premises "B") and Deed Book 59 H Page 77. (Premises
"A")
7. Rights granted to General Telephone Company of Pennsylvania as in Deed
Book 85 E Page 27. (Premises "A")
8. Deeds of Easement to the Commonwealth of Pennsylvania, Department of
Highways as in Deed Books 59 N Page 299 and 59 of Page 608. (Premises
"B")
9. ALTA/ACSM Land Title Survey for Key Plastics, Inc. prepared by David A.
Hoffman - Land Surveyor dated November 16, 1994, revised 11/04/96
(Dwg. No. D74-K-36B) discloses the following:
a. Building Setback Lines of various widths which have been violated
by Metal and Masonry Buildings, Asphalt Volleyball Court w/fence,
Stone Wall, Flagpole, Garden and Planter;
b. Overhead Electric Lines and Poles;
c. Underground Telephone;
d. Sewer Lines.
<PAGE> 1
EXHIBIT 10.7
SECURITY AGREEMENT
THIS SECURITY AGREEMENT, dated as of March 24, 1997 (this "Security
Agreement"), is made by KEY PLASTICS, INC., a Michigan corporation (the
"Company"), in favor of NBD BANK, a Michigan banking corporation, as agent (in
such capacity, the "Agent") for the benefit of itself and the lenders (the
"Lenders") now or hereafter parties to the Credit Agreement described below.
RECITALS
A. The Company has entered into a Credit Agreement of even date herewith
(as amended or modified from time to time, including any agreement entered into
in substitution therefor, the "Credit Agreement"), with the Lenders and the
Agent pursuant to which the Lenders may make Advances (as therein defined) to
the Company.
B. Under the terms of the Credit Agreement, the Company has agreed to
grant to the Agent, for the benefit of itself and the Lenders, a security
interest, subject only to security interests expressly permitted by the Credit
Agreement, in and to the Collateral hereinafter described.
AGREEMENT
To secure (a) the prompt and complete payment of all indebtedness and
other obligations of the Company or any Subsidiary now or hereafter owing to
the Lenders or the Agent under or on account of the Credit Agreement, any
Security Document or any letters of credit, notes or other instruments issued
to the Agent or the Lenders pursuant thereto, (b) the performance of the
covenants under the Credit Agreement and the Security Documents and any monies
expended by any Lender or the Agent in connection therewith, and (c) the prompt
and complete payment of all obligations and performance of all covenants of the
Company or any Subsidiary in connection with Swaps relating to indebtedness
under the Loan Documents (including any interest accruing subsequent to any
petition filed by or against the Company or any Subsidiary under the U.S.
Bankruptcy Code, whether or not allowed), indemnity and reimbursement
obligations, charges, expenses, fees, reasonable attorneys' fees and
disbursements and any other amounts owing under the Loan Documents including,
without limitation, all renewals, extensions, refinancings, refundings,
amendments and modifications of any of the obligations described in clauses (a)
through (c) above (all of the aforesaid indebtedness, obligations and
liabilities of the Company and its Subsidiaries being herein called the
"Secured Obligations", and all of the documents, agreements and instruments
among the Company, the Subsidiaries, the Agent, the Lenders, or any of them,
evidencing or securing the
<PAGE> 2
repayment of, or otherwise pertaining to, the Secured Obligations
including without limitation the Credit Agreement, the Notes and the Security
Documents, being herein collectively called the "Operative Documents"), for
value received and pursuant to the Credit Agreement, the Company hereby grants,
assigns and transfers to the Agent for the benefit of the Lenders a security
interest, subject only to Permitted Liens, in and to the following described
property whether now owned or existing or hereafter acquired or arising and
wherever located (all of which is herein collectively called the "Collateral"):
(a) All of the Company's present and future accounts, documents,
instruments, general intangibles and chattel paper, including, but without
limitation, all of the Debtor's interest, now or hereafter, in Key Plastics
International L.L.C., Key Plastics Automotive L.L.C., Key Plastics Technology,
L.L.C., Key Mexico A, L.L.C. and Key Mexico B, L.L.C., including, without
limitation, the Debtor's member's interest therein, and all distributions and
proceeds of the foregoing, all accounts receivable, contract rights, all
deposit accounts and all monies and claims for money due or to become due to
the Company, security held or granted to the Company, and all assets described
in clause (d) below;
(b) All of the Company's furniture, fixtures, machinery and equipment,
whether now owned or hereafter acquired, and wherever located, and whether used
by the Company or any other person, or leased by the Company to any person and
whether the interest of Company is as owner, lessee or otherwise;
(c) All of the Company's present and future inventory of every type,
wherever located, including but not limited to raw materials, work in process,
finished goods and all inventory that is available for leasing or leased to
others by the Company;
(d) All other present and future assets of the Company (whether tangible
or intangible), including but not limited to all trademarks, tradenames,
service marks, patents, industrial designs, masks, trade names, trade secrets,
copyrights, franchises, customer lists, service marks, computer programs,
software, tax refund claims, licenses and permits, and the good will associated
therewith and all federal, state, foreign and other applications and
registrations therefor, all reissues, divisions, continuations, renewals,
extensions and continuations-in-part thereof now or hereafter in effect, all
income, license royalties, damages and payments now and hereafter due or
payable under and with respect thereto, including, without limitation, any
damages, proceeds or payments for past or future infringements thereof and all
income, royalties, damages and payments under all licenses thereof, the right
to sue for past, present and future infringements thereof, all right, title and
interest of the Company as licensor under any of the foregoing whether now
owned and existing or hereafter arising, and all other rights and other
interests corresponding thereto throughout the world (all of the assets
described in this clause (d) collectively referred to as the "Intellectual
Property");
(e) All books, records, files, correspondence, computer programs,
tapes, disks, cards, accounting information and other data of the Company
related in any way to the Collateral described in clauses (a), (b), (c) and (d)
above, including but not limited to any of
SECURITY AGREEMENT
- 2 -
<PAGE> 3
the foregoing necessary to administer, sell or dispose of any of the
Collateral;
(f) All substitutions and replacements for, and all additions and
accessions to, any and all of the foregoing; and
(g) All products and all proceeds of any and all of the foregoing, and, to
the extent not otherwise included, all payments under insurance (whether or not
the Agent is the loss payee thereof), and any indemnity, warranty or guaranty,
payable by reason of loss or damage to or otherwise with respect to any of the
foregoing.
1. Representations, Warranties, Covenants and Agreements. The Company
further represents, warrants, covenants, and agrees with the Agent for the
benefit of the Lenders as follows.
(a) Ownership of Collateral; Security Interest Priority. At the time any
Collateral becomes subject to a security interest of the Agent hereunder,
unless the Agent shall otherwise consent, the Company shall be deemed to have
represented and warranted that (i) the Company is the lawful owner of such
Collateral and has the right and authority to subject the same to the security
interest of the Agent; (ii) other than Permitted Liens and lessors' interest
with respect to any security interest in any property leased by the Company as
lessee, none of the Collateral is subject to any Lien other than that in favor
of the Agent and there is no effective financing statement or other filing
covering any of the Collateral on file in any public office, other than in
favor of the Agent. When financing statements have been filed in the
appropriate offices against the Company, this Security Agreement will create in
favor of the Agent a valid security interest, subject only to Permitted Liens,
in that Collateral in which a security interest may be perfected by filing,
which security interest shall be enforceable against the Company and all third
parties and shall secure the payment of the Secured Obligations. All financing
statements necessary to perfect such security interest in the Collateral have
been delivered by the Company to the Agent for filing.
(b) Location of Offices, Records and Facilities. The Company's chief
executive office and chief place of business and the office where the Company
keeps its records concerning its accounts, contract rights, chattel papers,
instruments, general intangibles and other obligations arising out of or in
connection with the sale or lease of goods or the rendering of services or
otherwise ("Receivables"), and all originals of all leases and other chattel
paper which evidence Receivables, are located in the State of Michigan, County
of Oakland at 21333 Haggerty Road, Novi, Michigan 48375. The Company will
provide the Agent with prior written notice of any proposed change in the
location of its chief executive office. The Company's only other offices and
facilities are at the locations set forth in Schedule 1(b) hereto. The Company
will provide the Agent with prior written notice of any change in the locations
of its other offices and the facilities at which any assets of the Company are
located. The tax identification number of the Company is 38-2653726. The
name of the Company is Key Plastics, Inc., and the Company operates under no
other names except for A-Line Plastics Company, Superior Mold Builders,
Precision Mold and Del Craft Inc. The Company shall not change its name
without the prior written consent of the Agent.
SECURITY AGREEMENT
- 3 -
<PAGE> 4
(c) Location of Inventory, Fixtures, Machinery and Equipment. (i) All
Collateral consisting of inventory is, and will be, located at the locations
listed on Schedule 1(c)(i) hereto, and at no other locations without the prior
written consent of the Agent. (ii) All Collateral consisting of fixtures,
machinery or equipment, is, and will be, located at the locations listed on
Schedule 1(c)(ii) hereto, and at no other locations without the prior written
consent of the Agent. If the Collateral described in clauses (i) or (ii) is
kept at leased locations or warehoused, the Company has obtained appropriate
landlord's lien waivers or appropriate warehousemen's notices have been sent,
each satisfactory to the Agent, unless waived by the Agent.
(d) Liens, Etc. The Company will keep the Collateral free at all times
from any and all liens, security interests or encumbrances other than Permitted
Liens and those consented to in writing by the Required Lenders. The Company
will not, without the prior written consent of the Agent, sell, lease, license,
transfer, assign or otherwise dispose, or permit or suffer to be sold, leased,
licensed, transferred, assigned or otherwise disposed, any of the Collateral,
except for, prior to an event of default only (notwithstanding any other
agreement), the following: inventory sold in the ordinary course of business
and other assets permitted to be sold, leased, licensed, transferred, assigned
or otherwise disposed under Section 5.2(f) or any other provision of the Credit
Agreement. The Agent or its attorneys may at any and all reasonable times
inspect the Collateral and for such purpose may enter upon any and all premises
where the Collateral is kept or located.
(e) Insurance. The Company shall keep the tangible Collateral insured at
all times against loss by theft, fire and other casualties. Said insurance
shall be issued by a company rated A or better by Best and shall be in amounts
sufficient to protect the Agent against any and all loss or damage to the
Collateral. The policy or policies which evidence said insurance shall be
delivered to the Agent upon request, shall contain a lender loss payable clause
in favor of the Agent, shall name the Agent for the benefit of the Lenders as
an additional insured, as its interest may appear, shall not permit amendment,
cancellation or termination without giving the Agent at least 30 days prior
written notice thereof, and shall otherwise be in form and substance
satisfactory to the Agent. Reimbursement under any liability insurance
maintained by the Company pursuant to this paragraph 1(e) may be paid directly
to the person who shall have incurred liability covered by such insurance,
provided that if there is no Unmatured Event or Event of Default (whether
before or after any event which caused any reimbursement under any liability
insurance) the Company may use the proceeds of such insurance solely to repair
or replace the property damaged.
(f) Taxes, Etc. The Company will pay promptly, and within the time that
they can be paid without interest or penalty, any taxes, assessments and
similar imposts and charges, except to the extent that payment of any of the
foregoing is then being contested in good faith by appropriate legal
proceedings and with respect to which adequate financial reserves have been
established on the books and records of the Company for payment thereof, which
are now or hereafter may become a Lien upon any of the Collateral. If the
Company fails to pay any such taxes, assessments or other imposts or charges or
fails to establish such
SECURITY AGREEMENT
- 4 -
<PAGE> 5
adequate financial reserves on its books and records for payment thereof in
accordance with this Section, the Agent shall have the option to do so and the
Company agrees to repay forthwith all amounts so expended by the Agent with
interest at the Overdue Rate.
(g) Further Assurances. The Company will do all acts and things and will
execute all financing statements and writings reasonably requested by the Agent
to establish, maintain and continue a perfected and valid security interest of
the Agent in the Collateral, and will promptly on demand pay all reasonable
costs and expenses of filing and recording all instruments, including the costs
of any searches reasonably deemed necessary by the Agent, to establish and
determine the validity and the priority of the Agent's security interests. A
carbon, photographic or other reproduction of this Security Agreement or any
financing statement covering the Collateral shall be sufficient as a financing
statement.
(h) List of Patents, Copyrights, Mask Works and Trademarks. Attached
hereto as Schedule 1(h)(i) is a list of all patents and patent applications
owned by the Company. Attached hereto as Schedule 1(h)(ii) is a list of all
registered copyrights and all mask works and applications therefor owned by the
Company. Attached hereto as Schedule 1(h)(iii) is a list of all trademarks and
service marks owned by the Company. If the Company at any time owns any
additional patents, copyrights, mask works, trademarks or any applications
therefor not listed on such schedules, the Company shall give the Agent prompt
written notice thereof and hereby authorizes the Agent to modify this Agreement
by amending Schedules 1(h)(i), 1(h)(ii) and 1(h)(iii) to include all future
patents, copyrights, mask works, trademarks and applications therefor and
agrees to execute all further instruments and agreements, if any, if requested
by the Agent to evidence the Agent's interest therein.
(i) Maintenance of Tangible Collateral. The Company will cause the
tangible Collateral material to the conduct of its business to be maintained
and preserved in good repair, working order and condition and from time to time
make, or cause to be made, all needful and proper repairs, renewals, additions,
improvements and replacements thereto necessary in order that the business
carried on in connection therewith may be properly conducted at all times in
accordance with customary and prudent business practices for similar
businesses. The Company shall promptly furnish to the Agent a statement
respecting any loss or damage to any of the tangible Collateral.
(j) Special Rights Regarding Receivables. Upon an Event of Default, the
Agent or any of its agents may verify, directly with each person (collectively,
the "Obligors") which owes any Receivables to the Company, the Receivables in
any manner. The Agent or any of its agents may, at any time from time to time
after and during the continuance of an Event of Default, notify the Obligors of
the security interest of the Agent in the Collateral and/or direct such account
debtors that all payments in connection with such obligations and the
Collateral be made directly to the Agent in the Agent's name. If the Agent or
any of its agents shall collect such obligations directly from the Obligors,
the Agent or any of its agents shall have the right to resolve any disputes
relating to returned goods directly with the Obligors in such manner and on
such terms as the Agent or any of its agents shall deem appropriate. Upon an
Event of Default, the Company directs and authorizes any and all of its
present and
SECURITY AGREEMENT
- 5 -
<PAGE> 6
future account debtors to comply with requests for information from
the Agent, the Agent's designees and agents and/or auditors, relating to any
and all business transactions between the Company and the Obligors. Upon an
Event of Default, the Company further directs and authorizes all of its
Obligors upon receiving a notice or request sent by the Agent or the Agent's
agents or designees to pay directly to the Agent any and all sums of money or
proceeds now or hereafter owing by the Obligors to the Company, and any such
payment shall act as a discharge of any debt of such Obligor to the Company in
the same manner as if such payment had been made directly to the Company. The
Company agrees to take any and all action as the Agent may reasonably request
to assist the Agent in exercising the rights described in this Section.
(k) Maintenance of Intellectual Property and Other Intangible Collateral.
The Company shall preserve and maintain all rights of the Company and the Agent
in all material Intellectual Property and all other material intangible
Collateral, including without limitation the payment of all maintenance fees,
filing fees and the taking of all appropriate action at the Company's expense
to halt the infringement of any of the Intellectual Property or other
Collateral, provided that, with respect to halting the infringement of any
Intellectual Property or other Collateral, the Company does not need to take
all such appropriate action if the Company has, or after event of default the
Required Lenders have, reasonably determined that it is not in its best
interest to demand or enforce cessation of such infringement or other conduct
because it is either not material or because the adverse consequences to the
Company would outweigh the benefits gained by such demand or enforcement.
2. Events of Default. The occurrence of any Event of Default under the
Credit Agreement shall be deemed an event of default under this Security
Agreement.
3. Remedies. Upon the occurrence of any event of default specified in
Paragraph 2 hereof, the Agent shall have and may exercise any one or more of
the rights and remedies provided to it under this Security Agreement or any of
the other Operative Documents or provided by law, including but not limited to
all of the rights and remedies of a secured party under the Uniform Commercial
Code, and the Company hereby agrees to assemble the Collateral and make it
available to the Agent at a place to be designated by the Agent which is
reasonably convenient to both parties, authorizes the Agent to take possession
of the Collateral with or without demand and with or without process of law and
to sell and dispose of the same at public or private sale and to apply the
proceeds of such sale to the costs and expenses thereof (including reasonable
attorneys' fees and disbursements, incurred by the Agent) and then to the
payment and satisfaction of the Secured Obligations. Any requirement of
reasonable notice shall be met if the Agent sends such notice to the Company,
by registered or certified mail, at least 10 days prior to the date of sale,
disposition or other event giving rise to a required notice. The Agent or any
Lender may be the purchaser at any such sale. The Company expressly authorizes
such sale or sales of the Collateral in advance of and to the exclusion of any
sale or sales of or other realization upon any other collateral securing the
Secured Obligations. The Agent shall have no obligation to preserve rights
against prior parties. The Company hereby waives as to the Agent and each
Lender any right of marshaling of such Collateral and any other collateral for
the Secured Obligations. To this
SECURITY AGREEMENT
- 6 -
<PAGE> 7
end, the Company hereby expressly agrees that any such collateral or other
security of the Company or any other party which the Agent may hold, or which
may come to any of the Lenders or any of their possession, may be dealt with in
all respects and particulars as though this Security Agreement were not in
existence. The Company shall be liable for any deficiency remaining after
disposition of the Collateral.
4. Special Remedies Concerning Certain Collateral.
(a) Upon the occurrence of any event of default, the Company shall, if
requested to do so in writing, and to the extent so requested (i) promptly
collect and enforce payment of all amounts due the Company on account of, in
payment of, or in connection with, any of the Collateral, (ii) hold all
payments in the form received by the Company as trustee for the Agent, without
commingling with any funds belonging to the Company, and (iii) forthwith
deliver all such payments to the Agent with endorsement to the Agent's order of
any checks or similar instruments.
(b) Upon the occurrence of any event of default, the Company shall, if
requested to do so, and to the extent so requested, notify all Obligors and
other persons with obligations to the Company on account of or in connection
with any of the Collateral of the security interest of the Agent in the
Collateral and direct such account debtors and other persons that all payments
in connection with such obligations and the Collateral be made directly to the
Agent. The Agent itself may, upon the occurrence of an event of default, so
notify and direct any such account debtor or other person that such payments
are to be made directly to the Agent.
(c) Upon the occurrence of any event of default, for purposes of assisting
the Agent in exercising its rights and remedies provided to it under this
Security Agreement, the Company (i) hereby irrevocably constitutes and appoints
the Agent its true and lawful attorney, for and in the Company's name, place
and stead, to collect, demand, receive, sue for, compromise, and give good and
sufficient releases for, any monies due or to become due on account of, in
payment of, or in connection with the Collateral, (ii) hereby irrevocably
authorizes the Agent to endorse the name of the Company, upon any checks,
drafts, or similar items which are received in payment of, or in connection
with, any of the Collateral, and to do all things necessary in order to reduce
the same to money, (iii) with respect to any Collateral, hereby irrevocably
assents to all extensions or postponements of the time of payment thereof or
any other indulgence in connection therewith, to each substitution, exchange or
release of Collateral, to the addition or release of any party primarily or
secondarily liable, to the acceptance of partial payments thereon and the
settlement, compromise or adjustment (including adjustment of insurance
payments) thereof, all in such manner and at such time or times as the Agent
shall deem advisable and (iv) hereby irrevocably authorizes the Agent to notify
the post office authorities to change the address for delivery of the Company's
mail to an address designated by the Agent, and the Agent may receive, open and
dispose of all mail addressed to the Company. Notwithstanding any other
provisions of this Security Agreement, it is expressly understood and agreed
that the Agent shall have no duty, and shall not be obligated in any manner, to
make any demand or to make any inquiry as to the nature or
SECURITY AGREEMENT
- 7 -
<PAGE> 8
sufficiency of any payments received by it or to present or file any claim or
take any other action to collect or enforce the payment of any amounts due or
to become due on account of or in connection with any of the Collateral.
5. Remedies Cumulative. No right or remedy conferred upon or reserved to
the Agent under any Operative Document is intended to be exclusive of any other
right or remedy, and every right and remedy shall be cumulative in addition to
every other right or remedy given hereunder or now or hereafter existing under
any applicable law. Every right and remedy of the Agent under any Operative
Document or under applicable law may be exercised from time to time and as
often as may be deemed expedient by the Agent. To the extent that it lawfully
may, the Company agrees that it will not at any time insist upon, plead, or in
any manner whatever claim or take any benefit or advantage of any applicable
present or future stay, extension or moratorium law, which may affect
observance or performance of any provisions of any Operative Document; nor will
it claim, take or insist upon any benefit or advantage of any present or future
law providing for the valuation or appraisal of any security for its
obligations under any Operative Document prior to any sale or sales thereof
which may be made under or by virtue of any instrument governing the same; nor
will the Company, after any such sale or sales, claim or exercise any right,
under any applicable law to redeem any portion of such security so sold.
6. Conduct No Waiver. No waiver of default shall be effective unless in
writing executed by the Agent and waiver of any default or forbearance on the
part of the Agent in enforcing any of its rights under this Security Agreement
shall not operate as a waiver of any other default or of the same default on a
future occasion or of such right.
7. Governing Law; Consent to Jurisdiction; Definitions. This Security
Agreement is a contract made under, and shall be governed by and construed in
accordance with, the law of the State of Michigan applicable to contracts made
and to be performed entirely within such State and without giving effect to
choice of law principles of such State. The Company agrees that any legal
action or proceeding with respect to this Security Agreement or the
transactions contemplated hereby may be brought in any court of the State of
Michigan, or in any court of the United States of America sitting in Michigan,
and the Company hereby submits to and accepts generally and unconditionally the
jurisdiction of those courts with respect to its person and property, and
irrevocably appoints the Vice President-Finance of the Company, at the
Company's address set forth in the Credit Agreement, as its agent for service
of process and irrevocably consents to the service of process in connection
with any such action or proceeding by personal delivery to such agent or to the
Company or by the mailing thereof by registered or certified mail, postage
prepaid to the Company at its address set forth in the Credit Agreement.
Nothing in this paragraph shall affect the right of the Agent to serve process
in any other manner permitted by law or limit the right of the Agent to bring
any such action or proceeding against the Company or its property in the courts
of any other jurisdiction. The Company hereby irrevocably waives any objection
to the laying of venue of any such suit or proceeding in the above described
courts. Terms used but not defined herein shall have the respective meanings
ascribed thereto in the Credit Agreement. Unless otherwise defined herein or
in the Credit Agreement, terms used in Article 9 of the Uniform Commercial Code
in
SECURITY AGREEMENT
- 8 -
<PAGE> 9
the State of Michigan are used herein as therein defined on the date hereof.
The headings of the various subdivisions hereof are for convenience of
reference only and shall in no way modify any of the terms or provisions
hereof.
8. Notices. All notices, demands, requests, consents and other
communications hereunder shall be delivered in the manner described in the
Credit Agreement.
9. Rights Not Construed as Duties. The Agent neither assumes nor shall it
have any duty of performance or other responsibility under any contracts in
which the Agent has or obtains a security interest hereunder. If the Company
fails to perform any agreement contained herein, the Agent may but is in no way
obligated to itself perform, or cause performance of, such agreement, and the
reasonable expenses of the Agent incurred in connection therewith shall be
payable by the Company under paragraph 12. The powers conferred on the Agent
hereunder are solely to protect its interests in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the safe
custody of any Collateral in its possession and accounting for monies actually
received by it hereunder and except as otherwise required under applicable law,
the Agent shall have no duty as to any Collateral or as to the taking of any
necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral.
10. Amendments. None of the terms and provisions of this Security
Agreement may be modified or amended in any way except by an instrument in
writing executed by each of the parties hereto.
11. Severability. If any one or more provisions of this Security
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected, impaired or prejudiced thereby.
12. Expenses.
(a) The Company agrees to indemnify the Agent as provided in the Credit
Agreement.
(b) The Company will, upon demand, pay to the Agent an amount of any and
all reasonable expenses, including the reasonable fees and disbursements of its
counsel and of any experts and agents, which the Agent may incur in connection
with (i) the administration of this Security Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of the Agent hereunder or under the Operative Documents, or
(iv) the failure of the Company to perform or observe any of the provisions
hereof.
13. Successors and Assigns; Termination. This Security Agreement shall
create a continuing security interest in the Collateral and shall be binding
upon the Company, its successors and assigns, and inure, together with the
rights and remedies of the Agent
SECURITY AGREEMENT
- 9 -
<PAGE> 10
hereunder, to the benefit of the Agent and its successors, transferees and
assigns. Upon the payment in full in immediately available funds of all of the
Secured Obligations and the termination of all commitments to lend under the
Operative Documents, the security interest granted hereunder shall terminate
and all rights to the Collateral shall revert to the Company.
14. Waiver of Jury Trial. The Agent and the Lenders, in accepting this
Security Agreement, and the Company, after consulting or having had the
opportunity to consult with counsel, knowingly, voluntarily and intentionally
waive any right any of them may have to a trial by jury in any litigation based
upon or arising out of this Security Agreement or any related instrument or
agreement or any of the transactions contemplated by this Security Agreement or
any course of conduct, dealing, statements (whether oral or written) or actions
of any of them. Neither the Agent, the Lenders nor the Company shall seek to
consolidate, by counterclaim or otherwise, any such action in which a jury
trial has been waived with any other action in which a jury trial cannot be or
has not been waived. These provisions shall not be deemed to have been
modified in any respect or relinquished by either the Agent, the Lenders or the
Company except by a written instrument executed by all of them.
IN WITNESS WHEREOF, the Company has caused this Security Agreement to be
duly executed as of the day and year first set forth above.
KEY PLASTICS, INC.
By: Mark J. Abbo
--------------------------------
Mark J. Abbo
Its: Treasurer and Assistant Secretary
Accepted and Agreed:
NBD BANK, as Agent and
on behalf of the Lenders
By: [SIG]
-----------------------------
Its: Vice President
-----------------------------
SECURITY AGREEMENT
- 10 -
<PAGE> 11
CERTIFICATE OF ACKNOWLEDGMENT
STATE OF MICHIGAN )
) ss.
COUNTY OF WAYNE )
The foregoing Security Agreement was acknowledged before me on this
24th day of March, 1997 by Mark J. Abbo, the Treasurer and Assistant
Secretary of Key Plastics, Inc., a Michigan corporation, on behalf of said
corporation.
(Seal) Notary Public
Janice K. Atkins
----------------------
CERTIFICATE OF ACKNOWLEDGMENT
STATE OF MICHIGAN )
) ss.
COUNTY OF WAYNE )
The foregoing Security Agreement was acknowledged before me on this
24th day of March, 1997 by Teresa A. Kalil, the Vice President of
NBD Bank, as Agent, a Michigan banking corporation, on behalf of said
corporation.
(Seal) Notary Public
Janice K. Atkins
----------------------
(Notary Seal)
SECURITY AGREEMENT
- 11 -
<PAGE> 12
SCHEDULE 1(b) TO SECURITY AGREEMENT
List of Other Office and Facility Locations
------------------------------------------
<TABLE>
<CAPTION>
Type of Office U.S.
Company of Facility Address City County State
- ------- -------------- ------- ---- ------ -----
<S> <C> <C> <C> <C> <C>
Key Plastics, Inc. Mfg. 12367 Mt. Olivet Rd. Felton York PA
Key Plastics, Inc. Painting and 1615 W. McDonald St. Hartford York IN
Assembly
Key Plastics, Inc. Painting 700 Randolph St. Montpelier Williams OH
Key Plastics, Inc. Mfg. 3390 Farmtrial Rd. York York PA
Key Plastics, Inc. Mfg. 3350 Farmtrial Rd. York York PA
Key Plastics, Inc. Mfg. 5460 Executive Parkway Grand Rapids Kent MI
Suite 100
Key Plastics, Inc. Mfg. 7540 S. Homestead Dr. Hamilton Steuben IN
Key Plastics, Inc. Mfg. 40300 Plymouth Rd. Plymouth Wayne MI
Key Plastics, Inc. Mfg. 3603 Progress Dr. South Bend St. Joseph IN
Key Plastics, Inc. 1920 North Kenmore South Bend St. Joseph IN
Key Plastics, Inc. 4221 Technology Drive South Bend St. Joseph IN
Key Plastics de Mexico Mfg. Victor Hugo No. 300 Chihuahua MX
S. de R.L. de C.V. C.P. 31109
Complejo Industrial
Chihuahua
Clearplas, Ltd. Mfg. Bayton Road, Exhall West Midlands England
Coventry
Key Plastics, Inc. Sales 15 Radford Crescent Billericay, Essex England
Materias Plasticas, Mfg. and Sede 2400 Leiria Portugal
S.A. Painting Vale Da Arieira-Barosa
</TABLE>
-12-
<PAGE> 13
SCHEDULE 1(c)(i) TO SECURITY AGREEMENT
List of Inventory Locations
<TABLE>
<CAPTION>
If Leased or Warehoused,
U.S. Name and Address of
Address City County State Lessor/Warehouseman
------- ---- ------ ----- ------------------------
<S> <C> <C> <C> <C>
21333 Haggerty Rd. Novi Oakland MI R.L. Kuss, Trustee
c/o Midland Properties, Inc.
2525 N. Limestone St.,
Suite 101
Springfield, OH 45503
2367 Mt. Olivet Rd. Felton York PA
1615 W. McDonald St. Hartford City York IN
700 Randolph St. Montpelier Williams OH
3390 Farmtrail Rd. York York PA
3350 Farmtrail Rd. York York PA
5460 Executive Parkway Kentwood Kent MI Riviera Die & Tool, Inc.
Suite 100 5460 Executive Parkway
Kentwood, MI
7540 S. Homestead Dr. Hamilton Steuben IN
40300 Plymouth Rd. Plymouth Wayne MI
3603 Progress Dr. South Bend St. Joseph IN
1920 N. Kenmore South Bend St. Joseph IN
4221 Technology Dr. South Bend St. Joseph IN
Victor Hugo No. 300 Chihuahua MX
C.P. 31109
Complejo Industrial
Chihuahua
Bayton Road, Exhall West Midlands England Suter Estates Limited
Coventry St. Vincents Grantham
Lincolnshire NG31 9EJ
15 Radford Cresent Billericay, Essex England
Sede 2400 Leiria Portugal
Vale Da Aricira-Barosa
</TABLE>
-13-
<PAGE> 14
SCHEDULE 1(c)(ii) TO SECURITY AGREEMENT
List of Fixtures, Machinery and Equipment Locations
<TABLE>
<CAPTION>
Legal Description, Record
U.S. Owner and Tax Parcel No.
Address City County State (if fixtures are at this location)
------- ---- ------ ----- ----------------------------------
<S> <C> <C> <C> <C>
21333 Haggerty Rd. Novi Oakland MI
2367 Mt. Olivet Rd. Felton York PA
1615 W. McDonald St. Hartford City York IN
700 Randolph St. Montpelier Williams OH
3390 Farmtrail Rd. York York PA
3350 Farmtrail Rd. York York PA
5460 Executive Parkway Grand Rapids Kent MI
Suite 100
7540 S. Homestead Dr. Hamilton Steuben IN
40300 Plymouth Rd. Plymouth Wayne MI
3603 Progress Dr. South Bend St. Joseph IN
1920 N. Kenmore South Bend St. Joseph IN
4221 Technology Dr. South Bend St. Joseph IN
Victor Hugo No. 300 Chihuahua MX
C.P. 31109
Complejo Industrial
Chihuahua
Bayton Road, Exhall West Midlands England
Coventry
15 Radford Cresent Billericay, Essex England
Sede 2400 Leiria Portugal
Vale Da Aricira-Barosa
</TABLE>
-14-
<PAGE> 15
SCHEDULE 1 (h)(i) TO SECURITY AGREEMENT
Patents and Applications
NONE.
SECURITY AGREEMENT
-15-
<PAGE> 16
SCHEDULE 1 (h)(ii) TO SECURITY AGREEMENT
Copyrights, Maskworks and Applications
NONE.
SECURITY AGREEMENT
-16-
<PAGE> 17
SCHEDULE 1(h)(iii) TO SECURITY AGREEMENT
Trademarks, Service Marks and Applications
NONE.
SECURITY AGREEMENT
-17-
<PAGE> 1
EXHIBIT 10.8
SECURITY AGREEMENT
(GUARANTORS)
THIS SECURITY AGREEMENT, dated as of March 24, 1997 (this "Security
Agreement"), is made by KEY PLASTICS INTERNATIONAL L.L.C., a Michigan limited
liability company, KEY PLASTICS AUTOMOTIVE L.L.C., a Michigan limited liability
company, and KEY PLASTICS TECHNOLOGY, L.L.C., a Michigan limited liability
company (each individually, a "Company" and, collectively, the "Companies"), in
favor of NBD BANK, a Michigan banking corporation, as agent (in such capacity,
the "Agent") for the benefit of itself and the lenders (the "Lenders") now or
hereafter parties to the Credit Agreement described below.
RECITALS
A. Key Plastics, Inc., a Michigan corporation (the "Borrower")
has entered into a Credit Agreement of even date herewith (as amended or
modified from time to time, including any agreement entered into in
substitution therefor, the "Credit Agreement"), with the Lenders and the Agent
pursuant to which the Lenders may make Advances (as therein defined) to the
Borrower.
B. Each Company has executed a guaranty in favor of the Agent and
the Lenders guaranteeing the obligations of the Borrower to the Agent and the
Lenders (the "Guaranty").
C. Under the terms of the Credit Agreement, each Company has
agreed to grant to the Agent, for the benefit of itself and the Lenders, a
security interest, subject only to security interests expressly permitted by
the Credit Agreement, in and to the Collateral hereinafter described to secure
its obligations pursuant to the Guaranty and the Borrower's obligations to the
Agent and the Lenders, including those arising under the Credit Agreement.
D. The Companies and the Borrower and the Borrower's other
subsidiaries are engaged as an integrated group and the integrated operation
requires financing on such a basis that credit supplied to the Borrower can be
made available from time to time to the Companies, as required for the
continued successful operation of the Borrower and its subsidiaries and the
integrated operation as a whole. The Borrower and the Companies have requested
that the Lenders lend and make credit available to the Borrower for the purpose
of financing the integrated operations of the Borrower and its subsidiaries
with the Companies expecting to derive benefit, directly or indirectly, from
the loans and letters of credit extended by the Lenders to the Borrower, in its
separate capacity and as a member of the integrated group, inasmuch as the
successful operation and condition of each Company is dependent upon the
continued successful performance of the functions of the integrated group as a
whole.
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AGREEMENT
To secure (a) the prompt and complete payment of all indebtedness and
other obligations of the Borrower, any Company or any Subsidiary now or
hereafter owing to the Lenders or the Agent under or on account of the Credit
Agreement, any Security Document or any letters of credit, notes or other
instruments issued to the Agent or the Lenders pursuant thereto, (b) the
performance of the covenants under the Credit Agreement and the Security
Documents and any monies expended by any Lender or the Agent in connection
therewith, (c) the prompt and complete payment of all obligations and
performance of all covenants of the Borrower, any Company or any Subsidiary in
connection with Swaps relating to indebtedness under the Loan Documents, and
(d) the Guaranty and any other guarantees executed by any Company or other
obligations of any Company for any indebtedness of the Borrower incurred under
the Credit Agreement (including any interest accruing subsequent to any
petition filed by or against the Borrower, any Company or any Subsidiary under
the U.S. Bankruptcy Code, whether or not allowed), indemnity and reimbursement
obligations, charges, expenses, fees, reasonable attorneys' fees and
disbursements and any other amounts owing under the Loan Documents, including,
without limitation, all renewals, extensions, refinancings, refundings,
amendments and modifications of any of the obligations described in clauses (a)
through (d) above (all of the aforesaid indebtedness, obligations and
liabilities of the Borrower, the Companies and their Subsidiaries being herein
called the "Secured Obligations", and all of the documents, agreements and
instruments among the Borrower, the Companies, the Subsidiaries, the Agent, the
Lenders, or any of them, evidencing or securing the repayment of, or otherwise
pertaining to, the Secured Obligations including without limitation the Credit
Agreement, the Notes and the Security Documents, being herein collectively
called the "Operative Documents"), for value received and pursuant to the
Credit Agreement, each Company hereby grants, assigns and transfers to the
Agent for the benefit of the Lenders a security interest, subject only to
Permitted Liens, in and to the following described property whether now owned
or existing or hereafter acquired or arising and wherever located (all of which
is herein collectively called the "Collateral"):
(a) All of the Company's present and future accounts, documents,
instruments, general intangibles and chattel paper, including, but without
limitation, all accounts receivable, contract rights, all deposit accounts and
all monies and claims for money due or to become due to the Company, security
held or granted to the Company, and all assets described in clause (d) below;
(b) All of the Company's furniture, fixtures, machinery and
equipment, whether now owned or hereafter acquired, and wherever located, and
whether used by the Company or any other person, or leased by the Company to
any person and whether the interest of Company is as owner, lessee or
otherwise;
(c) All of the Company's present and future inventory of every
type, wherever located, including but not limited to raw materials, work in
process, finished goods and all inventory that is available for leasing or
leased to others by the Company;
(d) All other present and future assets of the Company (whether
tangible or
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intangible), including but not limited to all trademarks, tradenames, service
marks, patents, industrial designs, masks, trade names, trade secrets,
copyrights, franchises, customer lists, service marks, computer programs,
software, tax refund claims, licenses and permits, and the good will associated
therewith and all federal, state, foreign and other applications and
registrations therefor, all reissues, divisions, continuations, renewals,
extensions and continuations-in-part thereof now or hereafter in effect, all
income, license royalties, damages and payments now and hereafter due or
payable under and with respect thereto, including, without limitation, any
damages, proceeds or payments for past or future infringements thereof and all
income, royalties, damages and payments under all licenses thereof, the right
to sue for past, present and future infringements thereof, all right, title and
interest of the Company as licensor under any of the foregoing whether now
owned and existing or hereafter arising, and all other rights and other
interests corresponding thereto throughout the world (all of the assets
described in this clause (d) collectively referred to as the "Intellectual
Property");
(e) All books, records, files, correspondence, computer programs,
tapes, disks, cards, accounting information and other data of the Company
related in any way to the Collateral described in clauses (a), (b), (c) and (d)
above, including but not limited to any of the foregoing necessary to
administer, sell or dispose of any of the Collateral;
(f) All substitutions and replacements for, and all additions and
accessions to, any and all of the foregoing; and
(g) All products and all proceeds of any and all of the foregoing,
and, to the extent not otherwise included, all payments under insurance
(whether or not the Agent is the loss payee thereof), and any indemnity,
warranty or guaranty, payable by reason of loss or damage to or otherwise with
respect to any of the foregoing.
1. Representations, Warranties, Covenants and Agreements. Each
Company further represents, warrants, covenants, and agrees with the Agent for
the benefit of the Lenders as follows:
(a) Ownership of Collateral; Security Interest Priority.
At the time any Collateral becomes subject to a security interest of the Agent
hereunder, unless the Agent shall otherwise consent, the Company shall be
deemed to have represented and warranted that (i) the Company is the lawful
owner of such Collateral and has the right and authority to subject the same to
the security interest of the Agent; (ii) other than Permitted Liens and
lessors' interest with respect to any security interest in any property leased
by the Company as lessee, none of the Collateral is subject to any Lien other
than that in favor of the Agent and there is no effective financing statement
or other filing covering any of the Collateral on file in any public office,
other than in favor of the Agent. When financing statements have been filed in
the appropriate offices against the Company, this Security Agreement will
create in favor of the Agent a valid security interest, subject only to
Permitted Liens, in that Collateral in which a security interest may be
perfected by filing, which security interest shall be enforceable against the
Company and all third parties and shall secure the payment of the Secured
Obligations. All financing statements necessary to perfect such security
interest in the Collateral have been
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delivered by the Company to the Agent for filing.
(b) Location of Offices, Records and Facilities. The
Company's chief executive office and chief place of business and the office
where the Company keeps its records concerning its accounts, contract rights,
chattel papers, instruments, general intangibles and other obligations arising
out of or in connection with the sale or lease of goods or the rendering of
services or otherwise ("Receivables"), and all originals of all leases and
other chattel paper which evidence Receivables, are at the location listed on
Schedule 1(b)(i) hereto. The Company will provide the Agent with prior written
notice of any proposed change in the location of its chief executive office.
The Company's only other offices and facilities are at the locations set forth
in Schedule 1(b)(ii) hereto. The Company will provide the Agent with prior
written notice of any change in the locations of its other offices and the
facilities at which any assets of the Company are located. The name of the
Company and the tax identification number of the Company are set forth on
Schedule 1(b)(i). The Company operates under no other names. The Company
shall not change its name without the prior written consent of the Agent.
(c) Location of Inventory, Fixtures, Machinery and
Equipment. (i) All Collateral consisting of inventory is, and will be, located
at the locations listed on Schedule 1(c)(i) hereto, and at no other locations
without the prior written consent of the Agent. (ii) All Collateral consisting
of fixtures, machinery or equipment, is, and will be, located at the locations
listed on Schedule 1(c)(ii) hereto, and at no other locations without the prior
written consent of the Agent. If the Collateral described in clauses (i) or
(ii) is kept at leased locations or warehoused, the Company has obtained
appropriate landlord's lien waivers or appropriate warehousemen's notices have
been sent, each satisfactory to the Agent, unless waived by the Agent.
(d) Liens, Etc. The Company will keep the Collateral
free at all times from any and all liens, security interests or encumbrances
other than Permitted Liens and those consented to in writing by the Required
Lenders. The Company will not, without the prior written consent of the Agent,
sell, lease, license, transfer, assign or otherwise dispose, or permit or
suffer to be sold, leased, licensed, transferred, assigned or otherwise
disposed, any of the Collateral, except for, prior to an event of default only
(notwithstanding any other agreement), the following: inventory sold in the
ordinary course of business and other assets permitted to be sold, leased,
licensed, transferred, assigned or otherwise disposed under Section 5.2(f) or
any other provision of the Credit Agreement. The Agent or its attorneys may at
any and all reasonable times inspect the Collateral and for such purpose may
enter upon any and all premises where the Collateral is kept or located.
(e) Insurance. The Company shall keep the tangible
Collateral insured at all times against loss by theft, fire and other
casualties. Said insurance shall be issued by a company rated A or better by
Best and shall be in amounts sufficient to protect the Agent against any and
all loss or damage to the Collateral. The policy or policies which evidence
said insurance shall be delivered to the Agent upon request, shall contain a
lender loss payable clause in favor of the Agent, shall name the Agent for the
benefit of the Lenders as an
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additional insured, as its interest may appear, shall not permit amendment,
cancellation or termination without giving the Agent at least 30 days' prior
written notice thereof, and shall otherwise be in form and substance
satisfactory to the Agent. Reimbursement under any liability insurance
maintained by the Company pursuant to this paragraph 1(e) may be paid directly
to the person who shall have incurred liability covered by such insurance,
provided that if there is no Unmatured Event or Event of Default (whether
before or after any event which caused any reimbursement under any liability
insurance) the Company may use the proceeds of such insurance solely to repair
or replace the property damaged.
(f) Taxes, Etc. The Company will pay promptly, and
within the time that they can be paid without interest or penalty, any taxes,
assessments and similar imposts and charges, except to the extent that payment
of any of the foregoing is then being contested in good faith by appropriate
legal proceedings and with respect to which adequate financial reserves have
been established on the books and records of the Company for payment thereof,
which are now or hereafter may become a Lien upon any of the Collateral. If
the Company fails to pay any such taxes, assessments or other imposts or
charges or fails to establish such adequate financial reserves on its books and
records for payment thereof in accordance with this Section, the Agent shall
have the option to do so and the Company agrees to repay forthwith all amounts
so expended by the Agent with interest at the Overdue Rate.
(g) Further Assurances. The Company will do all acts and
things and will execute all financing statements and writings reasonably
requested by the Agent to establish, maintain and continue a perfected and
valid security interest of the Agent in the Collateral, and will promptly on
demand pay all reasonable costs and expenses of filing and recording all
instruments, including the costs of any searches reasonably deemed necessary by
the Agent, to establish and determine the validity and the priority of the
Agent's security interests. A carbon, photographic or other reproduction of
this Security Agreement or any financing statement covering the Collateral
shall be sufficient as a financing statement.
(h) List of Patents, Copyrights, Mask Works and
Trademarks. Attached hereto as Schedule 1(h)(i) is a list of all patents and
patent applications owned by the Company. Attached hereto as Schedule 1(h)(ii)
is a list of all registered copyrights and all mask works and applications
therefor owned by the Company. Attached hereto as Schedule 1(h)(iii) is a list
of all trademarks and service marks owned by the Company. If the Company at
any time owns any additional patents, copyrights, mask works, trademarks or any
applications therefor not listed on such schedules, the Company shall give the
Agent prompt written notice thereof and hereby authorizes the Agent to modify
this Agreement by amending Schedules 1(h)(i), 1(h)(ii) and 1(h)(iii) to include
all future patents, copyrights, mask works, trademarks and applications
therefor and agrees to execute all further instruments and agreements, if any,
if requested by the Agent to evidence the Agent's interest therein.
(i) Maintenance of Tangible Collateral. The Company will
cause the tangible Collateral material to the conduct of its business to be
maintained and preserved in good repair, working order and condition and from
time to time make, or cause to be made, all needful and proper repairs,
renewals, additions, improvements and replacements thereto
SECURITY AGREEMENT (GUARANTORS)
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necessary in order that the business carried on in connection therewith may be
properly conducted at all times in accordance with customary and prudent
business practices for similar businesses. The Company shall promptly furnish
to the Agent a statement respecting any loss or damage to any of the tangible
Collateral.
(j) Special Rights Regarding Receivables. Upon an Event
of Default, the Agent or any of its agents may verify, directly with each
person (collectively, the "Obligors") which owes any Receivables to the
Company, the Receivables in any manner. The Agent or any of its agents may, at
any time from time to time after and during the continuance of an Event of
Default, notify the Obligors of the security interest of the Agent in the
Collateral and/or direct such account debtors that all payments in connection
with such obligations and the Collateral be made directly to the Agent in the
Agent's name. If the Agent or any of its agents shall collect such obligations
directly from the Obligors, the Agent or any of its agents shall have the
right to resolve any disputes relating to returned goods directly with the
Obligors in such manner and on such terms as the Agent or any of its agents
shall deem appropriate. Upon an Event of Default, the Company directs and
authorizes any and all of its present and future account debtors to comply with
requests for information from the Agent, the Agent's designees and agents
and/or auditors, relating to any and all business transactions between the
Company and the Obligors. Upon an Event of Default, the Company further
directs and authorizes all of its Obligors upon receiving a notice or request
sent by the Agent or the Agent's agents or designees to pay directly to the
Agent any and all sums of money or proceeds now or hereafter owing by the
Obligors to the Company, and any such payment shall act as a discharge of any
debt of such Obligor to the Company in the same manner as if such payment had
been made directly to the Company. The Company agrees to take any and all
action as the Agent may reasonably request to assist the Agent in exercising
the rights described in this Section.
(k) Maintenance of Intellectual Property and Other
Intangible Collateral. The Company shall preserve and maintain all rights of
the Company and the Agent in all material Intellectual Property and all other
material intangible Collateral, including without limitation the payment of all
maintenance fees, filing fees and the taking of all appropriate action at the
Company's expense to halt the infringement of any of the Intellectual Property
or other Collateral, provided that, with respect to halting the infringement of
any Intellectual Property or other Collateral, the Company does not need to
take all such appropriate action if the Company has, or after event of default
the Required Lenders have, reasonably determined that it is not in its best
interest to demand or enforce cessation of such infringement or other conduct
because it is either not material or because the adverse consequences to the
Company would outweigh the benefits gained by such demand or enforcement.
2. Events of Default. The occurrence of any Event of Default
under the Credit Agreement shall be deemed an event of default under this
Security Agreement.
3. Remedies. Upon the occurrence of any event of default
specified in Paragraph 2 hereof, the Agent shall have and may exercise any one
or more of the rights and remedies provided to it under this Security Agreement
or any of the other Operative Documents or
SECURITY AGREEMENT (GUARANTORS)
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provided by law, including but not limited to all of the rights and remedies of
a secured party under the Uniform Commercial Code, and each Company hereby
agrees to assemble the Collateral and make it available to the Agent at a place
to be designated by the Agent which is reasonably convenient to both parties,
authorizes the Agent to take possession of the Collateral with or without
demand and with or without process of law and to sell and dispose of the same
at public or private sale and to apply the proceeds of such sale to the costs
and expenses thereof (including reasonable attorneys' fees and disbursements,
incurred by the Agent) and then to the payment and satisfaction of the Secured
Obligations. Any requirement of reasonable notice shall be met if the Agent
sends such notice to the Companies, by registered or certified mail, at least
10 days prior to the date of sale, disposition or other event giving rise to a
required notice. The Agent or any Lender may be the purchaser at any such
sale. Each Company expressly authorizes such sale or sales of the Collateral
in advance of and to the exclusion of any sale or sales of or other realization
upon any other collateral securing the Secured Obligations. The Agent shall
have no obligation to preserve rights against prior parties. Each Company
hereby waives as to the Agent and each Lender any right of marshaling of such
Collateral and any other collateral for the Secured Obligations. To this end,
each Company hereby expressly agrees that any such collateral or other security
of the Company or any other party which the Agent may hold, or which may come
to any of the Lenders or any of their possession, may be dealt with in all
respects and particulars as though this Security Agreement were not in
existence. The Company shall be liable for any deficiency remaining after
disposition of the Collateral.
4. Special Remedies Concerning Certain Collateral.
(a) Upon the occurrence of any event of default, each
Company shall, if requested to do so in writing, and to the extent so requested
(i) promptly collect and enforce payment of all amounts due the Company on
account of, in payment of, or in connection with, any of the Collateral, (ii)
hold all payments in the form received by the Company as trustee for the Agent,
without commingling with any funds belonging to the Company, and (iii)
forthwith deliver all such payments to the Agent with endorsement to the
Agent's order of any checks or similar instruments.
(b) Upon the occurrence of any event of default, each
Company shall, if requested to do so, and to the extent so requested, notify
all Obligors and other persons with obligations to the Company on account of or
in connection with any of the Collateral of the security interest of the Agent
in the Collateral and direct such account debtors and other persons that all
payments in connection with such obligations and the Collateral be made
directly to the Agent. The Agent itself may, upon the occurrence of an event
of default, so notify and direct any such account debtor or other person that
such payments are to be made directly to the Agent.
(c) Upon the occurrence of any event of default, for
purposes of assisting the Agent in exercising its rights and remedies provided
to it under this Security Agreement, each Company (i) hereby irrevocably
constitutes and appoints the Agent its true and lawful attorney, for and in the
Company's name, place and stead, to collect, demand, receive, sue for,
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compromise, and give good and sufficient releases for, any monies due or to
become due on account of, in payment of, or in connection with the Collateral,
(ii) hereby irrevocably authorizes the Agent to endorse the name of the
Company, upon any checks, drafts, or similar items which are received in
payment of, or in connection with, any of the Collateral, and to do all things
necessary in order to reduce the same to money, (iii) with respect to any
Collateral, hereby irrevocably assents to all extensions or postponements of
the time of payment thereof or any other indulgence in connection therewith, to
each substitution, exchange or release of Collateral, to the addition or
release of any party primarily or secondarily liable, to the acceptance of
partial payments thereon and the settlement, compromise or adjustment
(including adjustment of insurance payments) thereof, all in such manner and at
such time or times as the Agent shall deem advisable and (iv) hereby
irrevocably authorizes the Agent to notify the post office authorities to
change the address for delivery of the Company's mail to an address designated
by the Agent, and the Agent may receive, open and dispose of all mail addressed
to the Company. Notwithstanding any other provisions of this Security
Agreement, it is expressly understood and agreed that the Agent shall have no
duty, and shall not be obligated in any manner, to make any demand or to make
any inquiry as to the nature or sufficiency of any payments received by it or
to present or file any claim or take any other action to collect or enforce the
payment of any amounts due or to become due on account of or in connection with
any of the Collateral.
5. Remedies Cumulative. No right or remedy conferred upon or
reserved to the Agent under any Operative Document is intended to be exclusive
of any other right or remedy, and every right and remedy shall be cumulative in
addition to every other right or remedy given hereunder or now or hereafter
existing under any applicable law. Every right and remedy of the Agent under
any Operative Document or under applicable law may be exercised from time to
time and as often as may be deemed expedient by the Agent. To the extent that
it lawfully may, each Company agrees that it will not at any time insist upon,
plead, or in any manner whatever claim or take any benefit or advantage of any
applicable present or future stay, extension or moratorium law, which may
affect observance or performance of any provisions of any Operative Document;
nor will it claim, take or insist upon any benefit or advantage of any present
or future law providing for the valuation or appraisal of any security for its
obligations under any Operative Document prior to any sale or sales thereof
which may be made under or by virtue of any instrument governing the same; nor
will such Company, after any such sale or sales, claim or exercise any right,
under any applicable law to redeem any portion of such security so sold.
6. Conduct No Waiver. No waiver of default shall be effective
unless in writing executed by the Agent and waiver of any default or
forbearance on the part of the Agent in enforcing any of its rights under this
Security Agreement shall not operate as a waiver of any other default or of the
same default on a future occasion or of such right.
7. Governing Law; Consent to Jurisdiction; Definitions. This
Security Agreement is a contract made under, and shall be governed by and
construed in accordance with, the law of the State of Michigan applicable to
contracts made and to be performed entirely within such State and without
giving effect to choice of law principles of such State. Each Company agrees
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that any legal action or proceeding with respect to this Security Agreement or
the transactions contemplated hereby may be brought in any court of the State
of Michigan, or in any court of the United States of America sitting in
Michigan, and the Company hereby submits to and accepts generally and
unconditionally the jurisdiction of those courts with respect to its person and
property, and irrevocably appoints the Vice President-Finance of the Company,
at the Company's address set forth in the Guaranty, as its agent for service of
process and irrevocably consents to the service of process in connection with
any such action or proceeding by personal delivery to such agent or to the
Company or by the mailing thereof by registered or certified mail, postage
prepaid to the Company at its address set forth in the Guaranty. Nothing in
this paragraph shall affect the right of the Agent to serve process in any
other manner permitted by law or limit the right of the Agent to bring any such
action or proceeding against any Company or its property in the courts of any
other jurisdiction. Each Company hereby irrevocably waives any objection to
the laying of venue of any such suit or proceeding in the above described
courts. Terms used but not defined herein shall have the respective meanings
ascribed thereto in the Credit Agreement. Unless otherwise defined herein or
in the Credit Agreement, terms used in Article 9 of the Uniform Commercial Code
in the State of Michigan are used herein as therein defined on the date hereof.
The headings of the various subdivisions hereof are for convenience of
reference only and shall in no way modify any of the terms or provisions
hereof.
8. Notices. All notices, demands, requests, consents and other
communications hereunder shall be delivered and shall be effective in the
manner specified in Section 8.2 of the Credit Agreement to the address of each
Company specified in the Guaranty.
9. Rights Not Construed as Duties. The Agent neither assumes nor
shall it have any duty of performance or other responsibility under any
contracts in which the Agent has or obtains a security interest hereunder. If
any Company fails to perform any agreement contained herein, the Agent may but
is in no way obligated to itself perform, or cause performance of, such
agreement, and the reasonable expenses of the Agent incurred in connection
therewith shall be payable by the Companies under paragraph 12. The powers
conferred on the Agent hereunder are solely to protect its interests in the
Collateral and shall not impose any duty upon it to exercise any such powers.
Except for the safe custody of any Collateral in its possession and accounting
for monies actually received by it hereunder and except as otherwise required
under applicable law, the Agent shall have no duty as to any Collateral or as
to the taking of any necessary steps to preserve rights against prior parties
or any other rights pertaining to any Collateral.
10. Amendments. None of the terms and provisions of this Security
Agreement may be modified or amended in any way except by an instrument in
writing executed by each of the parties hereto.
11. Severability. If any one or more provisions of this Security
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected, impaired or prejudiced thereby.
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12. Expenses.
(a) Each Company agrees to indemnify the Agent from and
against any and all claims, losses and liabilities growing out of or resulting
from this Security Agreement (including, without limitation, enforcement of
this Security Agreement), except claims, losses or liabilities resulting from
the Agent's gross negligence or willful misconduct.
(b) Each Company will, upon demand, pay to the Agent an
amount of any and all reasonable expenses, including the reasonable fees and
disbursements of its counsel and of any experts and agents, which the Agent may
incur in connection with (i) the administration of this Security Agreement,
(ii) the custody, preservation, use or operation of, or the sale of, collection
from or other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of the Agent hereunder or under the Operative
Documents, or (iv) the failure of the Company to perform or observe any of the
provisions hereof.
13. Successors and Assigns; Termination. This Security Agreement
shall create a continuing security interest in the Collateral and shall be
binding upon each Company, its successors and assigns, and inure, together with
the rights and remedies of the Agent hereunder, to the benefit of the Agent and
its successors, transferees and assigns. Upon the payment in full in
immediately available funds of all of the Secured Obligations and the
termination of all commitments to lend under the Operative Documents, the
security interest granted hereunder shall terminate and all rights to the
Collateral shall revert to the Companies.
14. Waiver of Jury Trial. The Agent and the Lenders, in accepting
this Security Agreement, and the Companies, after consulting or having had the
opportunity to consult with counsel, knowingly, voluntarily and intentionally
waive any right any of them may have to a trial by jury in any litigation based
upon or arising out of this Security Agreement or any related instrument or
agreement or any of the transactions contemplated by this Security Agreement or
any course of conduct, dealing, statements (whether oral or written) or actions
of any of them. Neither the Agent, the Lenders nor the Companies shall seek to
consolidate, by counterclaim or otherwise, any such action in which a jury
trial has been waived with any other action in which a jury trial cannot be or
has not been waived. These provisions shall not be deemed to have been
modified in any respect or relinquished by either the Agent, the Lenders or the
Companies except by a written instrument executed by all of them.
15. Waiver of Subrogation Rights. Each Company waives all rights
of subrogation, reimbursement or indemnity whatsoever and any rights of
recourse to security for the debts and obligations of the Borrower, unless and
until the Secured Obligations have been irrevocably paid in full.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first written above.
KEY PLASTICS INTERNATIONAL L.L.C.
By: Mark J. Abbo
------------------------------
Key Plastics, Inc., its Member
By: Mark J. Abbo
Its: Assistant Secretary
and By: Mark J. Abbo
------------------------------
David C. Benoit, its Member
By: Mark J. Abbo pursuant to
Power-of-Attorney
-11a-
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first written above.
KEY PLASTICS AUTOMOTIVE L.L.C.
By: Mark J. Abbo
------------------------------
Key Plastics, Inc., its Member
By: Mark J. Abbo
Its: Assistant Secretary
and By: Mark J. Abbo
------------------------------
David C. Benoit, its Member
By: Mark J. Abbo pursuant to
Power-of-Attorney
-11b-
<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first written above.
KEY PLASTICS TECHNOLOGY, L.L.C.
By: Mark J. Abbo
------------------------------
Key Plastics, Inc., its Member
By: Mark J. Abbo
Its: Assistant Secretary
and By: Mark J. Abbo
------------------------------
David C. Benoit, its Member
By: Mark J. Abbo pursuant to
Power-of-Attorney
-11c-
<PAGE> 14
IN WITNESS WHEREOF, each Company has caused this Security Agreement to
be duly executed as of the day and year first set forth above.
KEY PLASTICS INTERNATIONAL L.L.C.
By:
___________________________________
Its:
__________________________________
KEY PLASTICS AUTOMOTIVE L.L.C.
By:
___________________________________
Its:
___________________________________
KEY PLASTICS TECHNOLOGY, L.L.C.
By:
___________________________________
Its:
___________________________________
NBD BANK, as Agent and
on behalf of the Lenders
BY: [sig]
--------------------------------
Its: Vice President
---------------------------
SECURITY AGREEMENT (GUARANTORS)
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<PAGE> 15
CERTIFICATE OF ACKNOWLEDGMENT
STATE OF MICHIGAN )
) ss.
COUNTY OF Wayne )
The foregoing Security Agreement was acknowledged before me on this
24th day of March, 1997 by Mark J. Abbo, on behalf of Key Plastics
International L.L.C., a Michigan limited liability company.
(SEAL) Notary Public
Janice K. Atkins
--------------------------------
(Notary Seal)
STATE OF MICHIGAN )
) ss.
COUNTY OF Wayne )
The foregoing Security Agreement was acknowledged before me on this
24th day of March, 1997 by Mark J. Abbo, on behalf of Key Plastics Automotive
L.L.C., a Michigan limited liability company.
(SEAL) Notary Public
Janice K. Atkins
--------------------------------
(Notary Seal)
SECURITY AGREEMENT (GUARANTORS)
- 12 -
<PAGE> 16
STATE OF INDIANA )
) ss.
COUNTY OF Wayne )
The foregoing security agreement was acknowledged before me on this
24th day of March, 1997 by Mark J. Abbo, on behalf of Key Plastics Technology,
L.L.C., an Indiana limited liabilitY company.
(SEAL) Notary Public
Janice K. Atkins
--------------------------------
(Notary Seal)
CERTIFICATE OF ACKNOWLEDGMENT
STATE OF MICHIGAN )
) ss.
COUNTY OF Wayne )
The foregoing security agreement was acknowledged before me on this
24th day of March, 1997 by Teresa A. Kalil, the vice president of nbd bank, as
agent, a michigan banking corporation, on behalf of said corporation.
(seal) Notary Public
Janice K. Atkins
--------------------------------
(Notary Seal)
SECURITY AGREEMENT (GUARANTORS)
- 13 -
<PAGE> 1
EXHIBIT 10.9
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT, dated as of March 24, 1997 (this "Guaranty"), is
made by KEY PLASTICS INTERNATIONAL L.L.C., a Michigan limited liability
company, KEY PLASTICS AUTOMOTIVE L.L.C., a Michigan limited liability company,
and KEY PLASTICS TECHNOLOGY, L.L.C., a Michigan limited liability company (the
foregoing are hereinafter sometimes referred to individually as a "Guarantor"
and collectively as the "Guarantors"), in favor of the lenders (the "Lenders")
which are parties to the Credit Agreement hereinafter defined and NBD BANK, a
Michigan banking corporation, as agent (in such capacity, the "Agent") for the
Lenders.
RECITALS
A. Key Plastics, Inc., a Michigan corporation (the "Company") has entered
into a Credit Agreement, dated as of March 24, 1997 (as amended or modified
from time to time, the "Credit Agreement"), with the Lenders and the Agent
pursuant to which the Lenders may make Advances to the Company.
B. As a condition to the effectiveness of the obligations of the Lenders
under the Credit Agreement, each Guarantor is required to guarantee, among
other things, the obligations of the Company in respect of the Advances and
other obligations of the Company under the Operative Documents (hereinafter
defined).
C. The Guarantors and the Company and the Company's other subsidiaries are
engaged as an integrated group and the integrated operation requires financing
on such a basis that credit supplied to the Company can be made available from
time to time to the Company's subsidiaries, including without limitation the
Guarantors, as required for the continued successful operation of the Company
and its subsidiaries and the integrated operation as a whole. The Company has
requested that the Lenders lend and make credit available to the Company for
the purpose of financing the integrated operations of the Company and its
subsidiaries with the Guarantors expecting to derive benefit, directly or
indirectly, from the loans and letters of credit extended by the Lenders to the
Company, both in its separate capacity and as a member of the integrated group,
inasmuch as the successful operation and condition of each Guarantor is
dependent upon the continued successful performance of the functions of the
integrated group as a whole.
D. Each Guarantor has reviewed the Credit Agreement, the Notes, the
Security Documents, and all other documents, agreements, instruments and
certificates furnished by or on behalf of the Company in connection therewith
(all of the foregoing, as amended or modified from time to time and together
with any agreements or instruments in replacement thereof, being herein
collectively referred to as the "Operative Documents"), and each
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<PAGE> 2
Guarantor has determined that it is in its interest and to its financial
benefit that the parties to the Operative Documents enter into the transactions
contemplated thereby.
For valuable consideration, the receipt of which is hereby acknowledged
and as further consideration, and as an inducement to the Lenders and the Agent
to maintain the credit facilities established by the Operative Documents, each
Guarantor agrees with the Lenders and the Agent as follows:
1. Guarantee of Obligations.
(a) Each Guarantor hereby, jointly and severally, (i) guarantees, as
principal obligor and not as surety only, to the Agent and the Lenders the
prompt payment of the principal of and any and all accrued and unpaid interest
(including interest which otherwise may cease to accrue by operation of any
insolvency law, rule, regulation or interpretation thereof) on the Advances and
all other obligations of the Company to the Lenders and the Agent under the
Credit Agreement when due, whether by scheduled maturity, acceleration or
otherwise, all in accordance with the terms of the Credit Agreement and the
Notes, including, without limitation, default interest, all reimbursement
obligations under any letters of credit, indemnification payments and all
reasonable costs and expenses incurred by the Lenders and the Agent in
connection with enforcing any obligations of the Company thereunder, including
without limitation the reasonable fees and disbursements of counsel, (ii)
guarantees the prompt and punctual performance and observance of each and every
term, covenant or agreement contained in any Operative Document to be performed
or observed on the part of the Company and any monies expended by any Lender or
the Agent therewith, and (iii) guarantees the prompt and complete payment of
all obligations and performance of all covenants of the Company or any
Subsidiary in connection with Swaps relating to indebtedness under the Credit
Agreement (including any interest accruing subsequent to any petition filed by
or against the Company or any Subsidiary under the U.S. Bankruptcy Code,
whether or not allowed), indemnity and reimbursement obligations, charges,
expenses, fees, reasonable attorneys' fees and disbursements and any other
amounts owing under the Loan Documents, including, without limitation, all
renewals, extensions, refinancings, refundings, amendments and modifications of
any of the obligations in clauses (i) through (iii) above, and (iv) agrees to
make prompt payment, on demand, of any and all reasonable costs and expenses
incurred by the Lenders or the Agent in connection with enforcing the
obligations of any Guarantor hereunder, including, without limitation, the
reasonable fees and disbursements of counsel (all of the foregoing being
collectively referred to as the "Guaranteed Obligations").
(b) If for any reason any duty, agreement or obligation of the Company
contained in any Operative Document shall not be performed or observed by the
Company as provided therein, or if any amount payable under or in connection
with any Operative Document shall not be paid in full when the same becomes due
and payable, each Guarantor undertakes, but without duplication, to perform or
cause to be performed promptly each of such duties, agreements and obligations
and to pay forthwith each such amount to the Agent
GUARANTY AGREEMENT
- 2 -
<PAGE> 3
for the account of the Lenders regardless of any defense or setoff or
counterclaim which the Company may have or assert, and regardless of any other
condition or contingency.
2. Nature of Guaranty. This Guaranty is an absolute and unconditional and
irrevocable guaranty of payment and not a guaranty of collection and is wholly
independent of and in addition to other rights and remedies of the Lenders and
the Agent and is not contingent upon the pursuit by the Lenders and the Agent
of any such rights and remedies, such pursuit being hereby waived by each
Guarantor.
3. Waivers and Other Agreements. Each Guarantor hereby unconditionally
(a) waives any requirement that the Lenders or the Agent, upon the occurrence
of an Event of Default first make demand upon, or seek to enforce remedies
against the Company before demanding payment under or seeking to enforce this
Guaranty, (b) covenants that this Guaranty will not be discharged except by
complete performance of all obligations of the Company contained in the
Operative Documents, (c) agrees that this Guaranty shall remain in full force
and effect without regard to, and shall not be affected or impaired, without
limitation, by any invalidity, irregularity or unenforceability in whole or in
part of any of the Operative Documents, or any limitation on the liability of
the Company thereunder, or any limitation on the method or terms of payment
thereunder which may or hereafter be caused or imposed in any manner whatsoever
(including, without limitation, usury laws), (d) waives diligence, presentment
and protest with respect to, and any notice of default or dishonor in the
payment of any amount at any time payable by the Company under or in connection
with any of the Operative Documents, and further waives notice of any of the
matters referred to in paragraph 4 below, and further waives all notices which
may be required by statute, rule of law or otherwise to preserve any rights of
the Lenders or the Agent, including without limitation any requirement of
notice of acceptance of, or other formality relating to this Guaranty and (e)
agrees that the Guaranteed Obligations shall include any amounts paid by the
Company to the Lenders or the Agent which may be required to be returned to the
Company or to its representative or to a trustee, custodian or receiver for the
Company.
4. Obligations Absolute. The obligations, covenants, agreements and
duties of any Guarantor under this Guaranty shall not be released, affected or
impaired by any of the following whether or not undertaken with notice to or
consent of any Guarantor: (a) an assignment or transfer, in whole or in part,
of any of the Guaranteed Obligations or any of the Operative Documents although
made without notice to or consent of any Guarantor, or (b) any waiver by any
Lender or the Agent or by any other person, of the performance or observance by
the Company of any of the agreements, covenants, terms or conditions contained
in any of the Operative Documents, or (c) any indulgence in or the extension of
the time for payment by the Company of any amounts payable under or in
connection with any of the Operative Documents, or of the time for performance
by the Company of any other obligations under or arising out of any of the
Operative Documents, or the extension or renewal thereof, or (d) the
modification, amendment or waiver (whether material or otherwise) of any duty,
agreement or obligation of the Company set forth in any of the Operative
Documents (the modification, amendment or waiver from time to time of any of
the Operative Documents to which the
GUARANTY AGREEMENT
- 3 -
<PAGE> 4
Company is a party being expressly authorized without further notice to or
consent of any Guarantor), or (e) the voluntary or involuntary liquidation,
sale or other disposition of all or substantially all of the assets of the
Company or any receivership, insolvency, bankruptcy, reorganization, or other
similar proceedings, affecting the Company or any of its assets, or (f) the
merger or consolidation of the Company with or into any other person or any
transfer or other disposition of any shares of capital stock of the Company by
the holder thereof, or (g) the release of discharge of the Company from the
performance or observance of any agreement, covenant, term or condition
contained in any Operative Document, by operation of law, or (h) the release of
any security, if any, for the obligations of the Company under any of the
Operative Documents, or the impairment of or failure to perfect an interest in
any such security, or (i) the running of any limitations period otherwise
applicable, or (j) any exercise or non-exercise of any right, remedy, power or
privilege in respect of this Guaranty or any of the Operative Documents,
including without limitation the release, discharge, or variance of the
liability of any Guarantor, or (k) any other cause whether similar or
dissimilar to the foregoing which would release, affect or impair the
obligations, covenants, agreements or duties of any Guarantor hereunder.
5. Joint and Several Obligations. The obligations of the Guarantors
hereunder shall be several and also joint each with all or with any one or more
of the other parties now or hereafter guaranteeing any of the Guaranteed
Obligations, and such obligations of the Guarantors may be enforced against
each Guarantor separately or against any two or more jointly, or against some
separately and some jointly.
6. No Investigation by Lenders or Agent. Each Guarantor hereby waives
unconditionally any obligation which, in absence of such provision, the Lenders
or the Agent might otherwise have to investigate or to assure that there has
been compliance with the law of any jurisdiction with respect to the Guaranteed
Obligations recognizing that, to save both time and expense, each Guarantor has
requested that the Lenders and the Agent not undertake such investigation.
Each Guarantor hereby expressly confirms that the obligations of such Guarantor
hereunder shall remain in full force and effect without regard to compliance or
noncompliance with any such law and irrespective of any investigation or
knowledge of any Lender or the Agent of any such law.
7. Indemnity. As a separate, additional and continuing obligation, each
Guarantor unconditionally and irrevocably undertakes and agrees with the
Lenders and the Agent that, should the Guaranteed Obligations not be
recoverable from any Guarantor under paragraph 1 hereof for any reason
whatsoever (including, without limitation, by reason of any provision of this
Guaranty or any Operative Document being or becoming void, unenforceable, or
otherwise invalid under any applicable law) then, notwithstanding any knowledge
thereof by any Lender or the Agent at any time, each Guarantor as sole,
original and independent obligor, upon demand by the Agent, will make payment
to the Agent for the account of the Lenders and the Agent of the Guaranteed
Obligations by way of a full indemnity in such currency and otherwise in such
manner as is provided in this Guaranty and the Operative Documents.
GUARANTY AGREEMENT
- 4 -
<PAGE> 5
8. Subordination. Each Guarantor agrees that any present or future
indebtedness, obligations or liabilities of the Company to such Guarantor shall
be fully subordinate and junior in right and priority of payment to any present
or future indebtedness, obligations or liabilities of the Company to the
Lenders and the Agent. Each Guarantor waives any right of subrogation to the
rights of any Lender or the Agent against the Company or any other person
obligated for payment of the Guaranteed Obligations and any right of
reimbursement or indemnity whatsoever arising or accruing out of any payment
which such Guarantor may make pursuant to this Guaranty and the Notes, and any
right of recourse to security for the debts and obligations of the Company,
unless and until the entire principal balance of and interest on the Guaranteed
Obligations shall have been paid in full.
9. Representations and Warranties. Each Guarantor represents and warrants
that (a) the execution, delivery and performance by such Guarantor of this
Guaranty are within its company powers, have been duly authorized by all
necessary company action, require no action by or in respect of, or filing
with, any governmental body, and do not contravene, or constitute a default
under, any provision of any material applicable law or regulation or of the
articles of organization or other charter documents or operating agreement of
such Guarantor, or of any agreement, judgment, injunction, order, decree or
other instrument binding upon such Guarantor or its property which would have a
material adverse effect; (b) this Guaranty constitutes a legal, valid and
binding obligation of such Guarantor, enforceable against such Guarantor in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to creditors' rights and except that the remedy of specific
performance and injunctive and other forms of equitable relief are subject to
equitable defenses and to the discretion of the court for which any proceedings
may be brought; and (c) as of the date hereof, each of the following is true
and correct for such Guarantor: (i) the fair saleable value and the fair
valuation of such Guarantor's property, both as valued and as a going concern,
is greater than the total amount of its liabilities (including contingent
liabilities) and greater than the amount that would be required to pay its
probable aggregate liability on its existing debts as they become absolute and
matured, (ii) such Guarantor's capital is not unreasonably small in relation to
its current and/or contemplated business or other undertaken transactions, and
(iii) such Guarantor does not intend to incur, or believe that it will incur,
debt beyond its ability to pay such debts as they become due.
10. Remedies.
(a) Upon the occurrence and during the continuance of any Event of
Default, the Lenders, or the Agent on behalf of the Lenders, may, in addition
to the remedies provided in the Operative Documents, enforce their rights
either by suit in equity, or by action at law, or by other appropriate
proceedings, whether for the specific performance (to the extent permitted by
law) of any covenant or agreement contained in this Guaranty or in aid of the
exercise of any power granted in this Guaranty and may enforce payment under
this Guaranty and any of their other rights available at law or in equity.
GUARANTY AGREEMENT
- 5 -
<PAGE> 6
(b) Upon the occurrence and during the continuance of any Event of
Default hereunder, the Lenders are hereby authorized at any time and from time
to time, without notice to any Guarantor (any requirement for such notice being
expressly waived by each Guarantor) to set off and apply against any and all of
the obligations of the Guarantors now or hereafter existing under this Guaranty
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by the Lenders to or
for the credit of the account of the Guarantors and any property of the
Guarantors from time to time in possession of the Lenders, irrespective of
whether or not the Lenders shall have made any demand hereunder and although
such obligations may be contingent and unmatured. The rights of the Lenders
under this paragraph 10(b) are in addition to other rights and remedies
(including, without limitation, other rights of setoff) which the Lenders may
have.
(c) To the extent that it lawfully may, each Guarantor agrees that it
will not at any time insist upon or plead, or in any manner whatever claim or
take any benefit or advantage of any applicable present or future stay,
extension or moratorium law, which may affect observance or performance of the
provisions of this Guaranty, or any of the Operative Documents nor will it
claim, take or insist upon any benefit or advantage of any present or future law
providing for the evaluation or appraisal of any security for its obligations
hereunder or the obligations of the Company under the Operative Documents prior
to any sale or sales thereof which may be made under or by virtue of any
instrument governing the same.
11. Amendments, Etc. This Guaranty may be amended from time to time and
any provision hereof may be waived in accordance with the requirements of
Section 8.1 of the Credit Agreement. No such amendment or waiver of any
provision of this Guaranty nor consent to any departure by any Guarantor
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Required Lenders or all of the Lenders, as the case may be,
and, to the extent any rights or duties of the Agent may be affected, the Agent,
and then such amendment, waiver of consent shall be effective only in the
specific instance and for the specific purpose for which given.
12. Notices. All notices, demands, requests, consents and other
communications hereunder shall be in writing and shall be delivered or sent to
all or any of the Guarantors c/o, Key Plastics International L.L.C., 21333
Haggerty Road, Suite 200, Novi, Michigan 48375, Facsimile No. (810) 449-6195 and
to the Lenders and the Agent at the respective addresses for notice set forth in
the Credit Agreement or to such other address as may be designated by the
Guarantors, the Agent or any Lender by notice to the other parties hereto. All
notices and other communications shall be made in accordance with Section 8.2 of
the Credit Agreement.
13. Conduct No Waiver; Remedies Cumulative. The obligations of each
Guarantor under this Guaranty are continuing obligations and a separate and
independent cause of action shall arise in respect of each enforcement hereunder
and default hereunder or under the Credit Agreement. No course of dealing on
the part of any Lender or the Agent, nor any delay or failure on the part of any
Lender or the Agent in exercising any right, power or privilege hereunder shall
operate as a waiver of such right, power or privilege or otherwise prejudice the
GUARANTY AGREEMENT
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<PAGE> 7
rights and remedies of the Lenders and the Agent hereunder; nor shall any
single or partial exercise thereof preclude any further exercise thereof or the
exercise of any other right, power or privilege. No right or remedy conferred
upon or reserved to the Lenders or the Agent under this Guaranty is intended to
be exclusive of any other right or remedy, and every right and remedy shall be
cumulative and in addition to every other right or remedy given hereunder or
now or hereafter existing under any applicable law. Every right and remedy
given by this Guaranty or by applicable law to the Lenders or the Agent may be
exercised from time to time and as often as may be deemed expedient by them.
14. Reliance on and Survival of Various Provisions. All terms, covenants,
agreements, representations and warranties of each Guarantor made herein or in
any certificate or other document delivered pursuant hereto shall be deemed to
be have been relied upon by the Lenders and the Agent, notwithstanding any
investigation heretofore or hereafter made by any Lender or the Agent or on its
behalf.
15. Successors and Assigns. The rights and remedies of the Lenders and
the Agent hereunder shall inure to the benefit of the Lenders and the Agent and
their respective successors and assigns, and the duties and obligations of each
Guarantor hereunder shall be binding upon such Guarantor and its successors and
assigns.
16. Survival of Lenders' Rights and Remedies. Notwithstanding any
provision of this Guaranty to the contrary, the execution and delivery by the
Guarantors of this Guaranty, and the Lenders' and the Agent's acceptance
thereof, shall not be deemed to (a) be a consent to any action, whether
heretofore or hereafter taken, by the Company in violation of any provision of
any Operative Document, (b) be a waiver of any provision of any Operative
Document or (c) prejudice any rights or remedies which the Lenders and the
Agent may now have or have in the future under or in connection with any
Operative Document, including without limitation any such rights or remedies
with respect to any event of default or event causing or permitting
acceleration under any Operative Document which may heretofore have occurred
and be continuing or may hereafter occur.
17. Governing Law; Consent to Jurisdiction. This Guaranty is a contract
made under, and the rights and obligations of the parties hereunder, shall be
governed by and construed in accordance with, the laws of the State of Michigan
applicable to contracts to be made and to be performed entirely with such
State. Each Guarantor further agrees that any legal action or proceeding
brought with respect to this Guaranty or the transactions contemplated hereby
may be brought in any court of the State of Michigan, or any court of the
United States of America sitting in Michigan, and each Guarantor hereby
irrevocably submits to and accepts generally and unconditionally the
jurisdiction of those courts with respect to its person and property.
18. Definitions; Headings. Terms used but not defined herein shall have
the respective meanings ascribed thereto in the Credit Agreement. The headings
of the various
GUARANTY AGREEMENT
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<PAGE> 8
subdivisions hereof are for convenience of reference only and shall in no way
modify any of the terms or provisions hereof.
19. Integration; Severability; Enforceability. This Guaranty embodies the
entire agreement and understanding among the Guarantors, the Lenders and the
Agent, and supersedes all prior agreements and understandings, relating to the
subject matter hereof. If any one or more provisions of this Guaranty should
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any
way be affected, impaired, prejudiced or disturbed thereby. If at any time any
portion of the obligations of any Guarantor under this Guaranty shall be
determined by a court of competent jurisdiction to be invalid, unenforceable or
avoidable, the remaining portion of the obligations of such Guarantor and each
other Guarantor under this Guaranty shall not in any way be affected, impaired,
prejudiced or disturbed thereby and shall remain valid and enforceable to the
fullest extent permitted by applicable law. If at any time all or any portion
of the obligations of any Guarantor under this Guaranty would otherwise be
determined by a court of competent jurisdiction to be invalid, unenforceable or
avoidable under Section 548 of the federal Bankruptcy Code or under a similar
applicable law of any jurisdiction, then notwithstanding any other provisions
of this Guaranty to the contrary such obligation or portion thereof of such
Guarantor under this Guaranty shall be limited to the greatest of (i) the value
of any quantifiable economic benefits accruing to such Guarantor as a result of
this Guaranty, (ii) an amount equal to 95% of the excess on the date the
relevant Guaranteed Obligations were incurred of the present fair saleable
value of the assets of such Guarantor over the amount of all liabilities of
such Guarantor, contingent or otherwise, and (iii) the maximum amount for
which this Guaranty is determined to be enforceable.
20. Reinstatement. This Guaranty shall remain in full force and effect
and continue to be effective in the event any petition be filed by or against
the Company or any Guarantor for liquidation or reorganization, in the event
the Company or any Guarantor becomes insolvent or makes an assignment for the
benefit of creditors or in the event a receiver or trustee be appointed for all
or any significant part of the Company's or any Guarantor's assets, and shall
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Guaranteed Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise
be restored or returned by the Agent or any Lender, whether as a "voidable
preference", "fraudulent conveyance", or otherwise, all as though such payment
or performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Guaranteed
Obligations shall be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.
21. Counterpart Execution. This Guaranty may be signed upon any number of
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument. This Guaranty
shall become effective as to each Guarantor when a counterpart hereof shall
have been signed by such Guarantor.
GUARANTY AGREEMENT
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<PAGE> 9
22. Waiver of Jury Trial. The Agent, the Lenders and each Guarantor,
after consulting or having had the opportunity to consult with counsel,
knowingly, voluntarily and intentionally waive any right any of them may have
to a trial by jury in any litigation based upon or arising out of this Guaranty
or any related instrument or agreement or any of the transactions contemplated
by this Guaranty. Neither the Agent, any Lender nor any Guarantor shall seek
to consolidate, by counterclaim or otherwise, any such action in which a jury
trial has been waived with any other action in which a jury trial cannot be or
has not been waived. These provisions shall not be deemed to have been modified
in any respect or relinquished by the Agent, any Lender or any Guarantor except
by a written instrument executed by all of them.
GUARANTY AGREEMENT
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<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first written above.
KEY PLASTICS AUTOMOTIVE L.L.C.
By: /s/ Mark J. Abbo
--------------------------------
Key Plastics, Inc., its Member
By: Mark J. Abbo
Its: Assistant Secretary
and By: /s/ Mark J. Abbo
--------------------------------
David C. Benoit, its Member
By: Mark J. Abbo pursuant to
Power-of-Attorney
- 10a -
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first written above.
KEY PLASTICS INTERNATIONAL L.L.C
By: /s/ Mark J. Abbo
--------------------------------
Key Plastics, Inc., its Member
By: Mark J. Abbo
Its: Assistant Secretary
and By: /s/ Mark J. Abbo
--------------------------------
David C. Benoit, its Member
By: Mark J. Abbo pursuant to
Power-of-Attorney
- 10b -
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first written above.
KEY PLASTICS TECHNOLOGY, L.L.C
By: /s/ Mark J. Abbo
--------------------------------
Key Plastics, Inc., its Member
By: Mark J. Abbo
Its: Assistant Secretary
and By: /s/ Mark J. Abbo
--------------------------------
David C. Benoit, its Member
By: Mark J. Abbo pursuant to
Power-of-Attorney
- 10c -
<PAGE> 1
EXHIBIT 10.10
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT, dated as of March 28, 1997 (this "Guaranty"), is
made by KEY MEXICO A, L.L.C., a Michigan limited liability company, and KEY
MEXICO B, L.L.C., a Michigan limited liability company (the foregoing are
hereinafter sometimes referred to individually as a "Guarantor" and
collectively as the "Guarantors"), in favor of the lenders (the "Lenders")
which are parties to the Credit Agreement hereinafter defined and NBD BANK, a
Michigan banking corporation, as agent (in such capacity, the "Agent") for the
Lenders.
RECITALS
A. Key Plastics, Inc., a Michigan corporation (the "Company") has entered
into a Credit Agreement, dated as of March 24, 1997 (as amended or modified
from time to time, the "Credit Agreement"), with the Lenders and the Agent
pursuant to which the Lenders may make Advances to the Company.
B. As a condition to the effectiveness of the obligations of the Lenders
under the Credit Agreement, each Guarantor is required to guarantee, among
other things, the obligations of the Company in respect of the Advances and
other obligations of the Company under the Operative Documents (hereinafter
defined).
C. The Guarantors and the Company and the Company's other subsidiaries are
engaged as an integrated group and the integrated operation requires financing
on such a basis that credit supplied to the Company can be made available from
time to time to the Company's subsidiaries, including without limitation the
Guarantors, as required for the continued successful operation of the Company
and its subsidiaries and the integrated operation as a whole. The Company has
requested that the Lenders lend and make credit available to the Company for
the purpose of financing the integrated operations of the Company and its
subsidiaries with the Guarantors expecting to derive benefit, directly or
indirectly, from the loans and letters of credit extended by the Lenders to the
Company, both in its separate capacity and as a member of the integrated group,
inasmuch as the successful operation and condition of each Guarantor is
dependent upon the continued successful performance of the functions of the
integrated group as a whole.
D. Each Guarantor has reviewed the Credit Agreement, the Notes, the
Security Documents, and all other documents, agreements, instruments and
certificates furnished by or on behalf of the Company in connection therewith
(all of the foregoing, as amended or modified from time to time and together
with any agreements or instruments in replacement thereof, being herein
collectively referred to as the "Operative Documents"), and each Guarantor has
determined that it is in its interest and to its financial benefit that the
parties to the Operative Documents enter into the transactions contemplated
thereby.
For valuable consideration, the receipt of which is hereby acknowledged
and as further consideration, and as an inducement to the Lenders and the Agent
to maintain the credit
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facilities established by the Operative Documents, each Guarantor agrees with
the Lenders and the Agent as follows:
1. Guarantee of Obligations.
(a) Each Guarantor hereby, jointly and severally, (i) guarantees, as
principal obligor and not as surety only, to the Agent and the Lenders the
prompt payment of the principal of and any and all accrued and unpaid interest
(including interest which otherwise may cease to accrue by operation of any
insolvency law, rule, regulation or interpretation thereof) on the Advances and
all other obligations of the Company to the Lenders and the Agent under the
Credit Agreement when due, whether by scheduled maturity, acceleration or
otherwise, all in accordance with the terms of the Credit Agreement and the
Notes, including, without limitation, default interest, all reimbursement
obligations under any letters of credit, indemnification payments and all
reasonable costs and expenses incurred by the Lenders and the Agent in
connection with enforcing any obligations of the Company thereunder, including
without limitation the reasonable fees and disbursements of counsel, (ii)
guarantees the prompt and punctual performance and observance of each and every
term, covenant or agreement contained in any Operative Document to be performed
or observed on the part of the Company and any monies expended by any Lender or
the Agent therewith, and (iii) guarantees the prompt and complete payment of
all obligations and performance of all covenants of the Company or any
Subsidiary in connection with Swaps relating to indebtedness under the Credit
Agreement (including any interest accruing subsequent to any petition filed by
or against the Company or any Subsidiary under the U.S. Bankruptcy Code,
whether or not allowed), indemnity and reimbursement obligations, charges,
expenses, fees, reasonable attorneys' fees and disbursements and any other
amounts owing under the Loan Documents, including, without limitation, all
renewals, extensions, refinancings, refundings, amendments and modifications of
any of the obligations in clauses (i) through (iii) above, and (iv) agrees to
make prompt payment, on demand, of any and all reasonable costs and expenses
incurred by the Lenders or the Agent in connection with enforcing the
obligations of any Guarantor hereunder, including, without limitation, the
reasonable fees and disbursements of counsel (all of the foregoing being
collectively referred to as the "Guaranteed Obligations").
(b) If for any reason any duty, agreement or obligation of the Company
contained in any Operative Document shall not be performed or observed by the
Company as provided therein, or if any amount payable under or in connection
with any Operative Document shall not be paid in full when the same becomes due
and payable, each Guarantor undertakes, but without duplication, to perform or
cause to be performed promptly each of such duties, agreements and obligations
and to pay forthwith each such amount to the Agent for the account of the
Lenders regardless of any defense or setoff or counterclaim which the Company
may have or assert, and regardless of any other condition or contingency.
2. Nature of Guaranty. This Guaranty is an absolute and unconditional and
irrevocable guaranty of payment and not a guaranty of collection and is wholly
independent of and in addition to other rights and remedies of the Lenders and
the Agent and is not contingent
GUARANTY AGREEMENT
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upon the pursuit by the Lenders and the Agent of any such rights and remedies,
such pursuit being hereby waived by each Guarantor.
3. Waivers and Other Agreements. Each Guarantor hereby unconditionally
(a) waives any requirement that the Lenders or the Agent, upon the occurrence
of an Event of Default first make demand upon, or seek to enforce remedies
against the Company before demanding payment under or seeking to enforce this
Guaranty, (b) covenants that this Guaranty will not be discharged except by
complete performance of all obligations of the Company contained in the
Operative Documents, (c) agrees that this Guaranty shall remain in full force
and effect without regard to, and shall not be affected or impaired, without
limitation, by any invalidity, irregularity or unenforceability in whole or in
part of any of the Operative Documents, or any limitation on the liability of
the Company thereunder, or any limitation on the method or terms of payment
thereunder which may or hereafter be caused or imposed in any manner whatsoever
(including, without limitation, usury laws), (d) waives diligence, presentment
and protest with respect to, and any notice of default or dishonor in the
payment of any amount at any time payable by the Company under or in connection
with any of the Operative Documents, and further waives notice of any of the
matters referred to in paragraph 4 below, and further waives all notices which
may be required by statute, rule of law or otherwise to preserve any rights of
the Lenders or the Agent, including without limitation any requirement of
notice of acceptance of, or other formality relating to this Guaranty and (e)
agrees that the Guaranteed Obligations shall include any amounts paid by the
Company to the Lenders or the Agent which may be required to be returned to the
Company or to its representative or to a trustee, custodian or receiver for the
Company.
4. Obligations Absolute. The obligations, covenants, agreements and
duties of any Guarantor under this Guaranty shall not be released, affected or
impaired by any of the following whether or not undertaken with notice to or
consent of any Guarantor: (a) an assignment or transfer, in whole or in part,
of any of the Guaranteed Obligations or any of the Operative Documents although
made without notice to or consent of any Guarantor, or (b) any waiver by any
Lender or the Agent or by any other person, of the performance or observance by
the Company of any of the agreements, covenants, terms or conditions contained
in any of the Operative Documents, or (c) any indulgence in or the extension of
the time for payment by the Company of any amounts payable under or in
connection with any of the Operative Documents, or of the time for performance
by the Company of any other obligations under or arising out of any of the
Operative Documents, or the extension or renewal thereof, or (d) the
modification, amendment or waiver (whether material or otherwise) of any duty,
agreement or obligation of the Company set forth in any of the Operative
Documents (the modification, amendment or waiver from time to time of any of
the Operative Documents to which the Company is a party being expressly
authorized without further notice to or consent of any Guarantor), or (e) the
voluntary or involuntary liquidation, sale or other disposition of all or
substantially all of the assets of the Company or any receivership, insolvency,
bankruptcy, reorganization, or other similar proceedings, affecting the Company
or any of its assets, or (f) the merger or consolidation of the Company with or
into any other person or any transfer or other disposition of any shares of
capital stock of the Company by the holder thereof, or (g)
GUARANTY AGREEMENT
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the release of discharge of the Company from the performance or observance of
any agreement, covenant, term or condition contained in any Operative Document,
by operation of law, or (h) the release of any security, if any, for the
obligations of the Company under any of the Operative Documents, or the
impairment of or failure to perfect an interest in any such security, or (i)
the running of any limitations period otherwise applicable, or (j) any exercise
or non-exercise of any right, remedy, power or privilege in respect of this
Guaranty or any of the Operative Documents, including without limitation the
release, discharge, or variance of the liability of any Guarantor, or (k) any
other cause whether similar or dissimilar to the foregoing which would release,
affect or impair the obligations, covenants, agreements or duties of any
Guarantor hereunder.
5. Joint and Several Obligations. The obligations of the Guarantors
hereunder shall be several and also joint each with all or with any one or more
of the other parties now or hereafter guaranteeing any of the Guaranteed
Obligations, and such obligations of the Guarantors may be enforced against
each Guarantor separately or against any two or more jointly, or against some
separately and some jointly.
6. No Investigation by Lenders or Agent. Each Guarantor hereby waives
unconditionally any obligation which, in absence of such provision, the Lenders
or the Agent might otherwise have to investigate or to assure that there has
been compliance with the law of any jurisdiction with respect to the Guaranteed
Obligations recognizing that, to save both time and expense, each Guarantor has
requested that the Lenders and the Agent not undertake such investigation.
Each Guarantor hereby expressly confirms that the obligations of such Guarantor
hereunder shall remain in full force and effect without regard to compliance or
noncompliance with any such law and irrespective of any investigation or
knowledge of any Lender or the Agent of any such law.
7. Indemnity. As a separate, additional and continuing obligation, each
Guarantor unconditionally and irrevocably undertakes and agrees with the
Lenders and the Agent that, should the Guaranteed Obligations not be
recoverable from any Guarantor under paragraph 1 hereof for any reason
whatsoever (including, without limitation, by reason of any provision of this
Guaranty or any Operative Document being or becoming void, unenforceable, or
otherwise invalid under any applicable law) then, notwithstanding any knowledge
thereof by any Lender or the Agent at any time, each Guarantor as sole,
original and independent obligor, upon demand by the Agent, will make payment
to the Agent for the account of the Lenders and the Agent of the Guaranteed
Obligations by way of a full indemnity in such currency and otherwise in such
manner as is provided in this Guaranty and the Operative Documents.
8. Subordination. Each Guarantor agrees that any present or future
indebtedness, obligations or liabilities of the Company to such Guarantor shall
be fully subordinate and junior in right and priority of payment to any present
or future indebtedness, obligations or liabilities of the Company to the
Lenders and the Agent. Each Guarantor waives any right of subrogation to the
rights of any Lender or the Agent against the Company or any other person
obligated for payment of the Guaranteed Obligations and any right of
reimbursement or
GUARANTY AGREEMENT
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indemnity whatsoever arising or accruing out of any payment which such
Guarantor may make pursuant to this Guaranty and the Notes, and any right of
recourse to security for the debts and obligations of the Company, unless and
until the entire principal balance of and interest on the Guaranteed
Obligations shall have been paid in full.
9. Representations and Warranties. Each Guarantor represents and warrants
that (a) the execution, delivery and performance by such Guarantor of this
Guaranty are within its company powers, have been duly authorized by all
necessary company action, require no action by or in respect of, or filing
with, any governmental body, and do not contravene, or constitute a default
under, any provision of any material applicable law or regulation or of the
articles of organization or other charter documents or operating agreement of
such Guarantor, or of any agreement, judgment, injunction, order, decree or
other instrument binding upon such Guarantor or its property which would have a
material adverse effect; (b) this Guaranty constitutes a legal, valid and
binding obligation of such Guarantor, enforceable against such Guarantor in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to creditors' rights and except that the remedy of specific
performance and injunctive and other forms of equitable relief are subject to
equitable defenses and to the discretion of the court for which any proceedings
may be brought; and (c) as of the date hereof, each of the following is true
and correct for such Guarantor: (i) the fair saleable value and the fair
valuation of such Guarantor's property, both as valued and as a going concern,
is greater than the total amount of its liabilities (including contingent
liabilities) and greater than the amount that would be required to pay its
probable aggregate liability on its existing debts as they become absolute and
matured, (ii) such Guarantor's capital is not unreasonably small in relation to
its current and/or contemplated business or other undertaken transactions, and
(iii) such Guarantor does not intend to incur, or believe that it will incur,
debt beyond its ability to pay such debts as they become due.
10. Remedies.
(a) Upon the occurrence and during the continuance of any Event of
Default, the Lenders, or the Agent on behalf of the Lenders, may, in addition
to the remedies provided in the Operative Documents, enforce their rights
either by suit in equity, or by action at law, or by other appropriate
proceedings, whether for the specific performance (to the extent permitted by
law) of any covenant or agreement contained in this Guaranty or in aid of the
exercise of any power granted in this Guaranty and may enforce payment under
this Guaranty and any of their other rights available at law or in equity.
(b) Upon the occurrence and during the continuance of any Event of
Default hereunder, the Lenders are hereby authorized at any time and from time
to time, without notice to any Guarantor (any requirement for such notice
being expressly waived by each Guarantor) to set off and apply against any
and all of the obligations of the Guarantors now or hereafter existing under
this Guaranty any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by the Lenders
GUARANTY AGREEMENT
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to or for the credit of the account of the Guarantors and any property of the
Guarantors from time to time in possession of the Lenders, irrespective of
whether or not the Lenders shall have made any demand hereunder and although
such obligations may be contingent and unmatured. The rights of the Lenders
under this paragraph 10(b) are in addition to other rights and remedies
(including, without limitation, other rights of setoff) which the Lenders may
have.
(c) To the extent that it lawfully may, each Guarantor agrees
that it will not at any time insist upon or plead, or in any manner whatever
claim or take any benefit or advantage of any applicable present or future
stay, extension or moratorium law, which may affect observance or performance
of the provisions of this Guaranty, or any of the Operative Documents nor will
it claim, take or insist upon any benefit or advantage of any present or
future law providing for the evaluation or appraisal of any security for its
obligations hereunder or the obligations of the Company under the Operative
Documents prior to any sale or sales thereof which may be made under or by
virtue of any instrument governing the same.
11. Amendments, Etc. This Guaranty may be amended from time to time and
any provision hereof may be waived in accordance with the requirements of
Section 8.1 of the Credit Agreement. No such amendment or waiver of any
provision of this Guaranty nor consent to any departure by any Guarantor
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Required Lenders or all of the Lenders, as the case may be,
and, to the extent any rights or duties of the Agent may be affected, the
Agent, and then such amendment, waiver of consent shall be effective only in
the specific instance and for the specific purpose for which given.
12. Notices. All notices, demands, requests, consents and other
communications hereunder shall be in writing and shall be delivered or sent to
all or any of the Guarantors c/o, Key Plastics International L.L.C., 21333
Haggerty Road, Suite 200, Novi, Michigan 48375, Facsimile No. (810) 449-6195
and to the Lenders and the Agent at the respective addresses for notice set
forth in the Credit Agreement or to such other address as may be designated by
the Guarantors, the Agent or any Lender by notice to the other parties hereto.
All notices and other communications shall be made in accordance with Section
8.2 of the Credit Agreement.
13. Conduct No Waiver; Remedies Cumulative. The obligations of each
Guarantor under this Guaranty are continuing obligations and a separate and
independent cause of action shall arise in respect of each enforcement
hereunder and default hereunder or under the Credit Agreement. No course of
dealing on the part of any Lender or the Agent, nor any delay or failure on the
part of any Lender or the Agent in exercising any right, power or privilege
hereunder shall operate as a waiver of such right, power or privilege or
otherwise prejudice the rights and remedies of the Lenders and the Agent
hereunder; nor shall any single or partial exercise thereof preclude any
further exercise thereof or the exercise of any other right, power or
privilege. No right or remedy conferred upon or reserved to the Lenders or the
Agent under this Guaranty is intended to be exclusive of any other right or
remedy, and every right and remedy shall be cumulative and in addition to every
other right or remedy given hereunder or now or hereafter existing under any
applicable law. Every right and remedy given by this
GUARANTY AGREEMENT
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<PAGE> 7
Guaranty or by applicable law to the Lenders or the Agent may be exercised from
time to time and as often as may be deemed expedient by them.
14. Reliance on and Survival of Various Provisions. All terms, covenants,
agreements, representations and warranties of each Guarantor made herein or in
any certificate or other document delivered pursuant hereto shall be deemed to
be have been relied upon by the Lenders and the Agent, notwithstanding any
investigation heretofore or hereafter made by any Lender or the Agent or on its
behalf.
15. Successors and Assigns. The rights and remedies of the Lenders and
the Agent hereunder shall inure to the benefit of the Lenders and the Agent and
their respective successors and assigns, and the duties and obligations of each
Guarantor hereunder shall be binding upon such Guarantor and its successors and
assigns.
16. Survival of Lenders' Rights and Remedies. Notwithstanding any
provision of this Guaranty to the contrary, the execution and delivery by the
Guarantors of this Guaranty, and the Lenders' and the Agent's acceptance
thereof, shall not be deemed to (a) be a consent to any action, whether
heretofore or hereafter taken, by the Company in violation of any provision of
any Operative Document, (b) be a waiver of any provision of any Operative
Document or (c) prejudice any rights or remedies which the Lenders and the
Agent may now have or have in the future under or in connection with any
Operative Document, including without limitation any such rights or remedies
with respect to any event of default or event causing or permitting
acceleration under any Operative Document which may heretofore have occurred
and be continuing or may hereafter occur.
17. Governing Law; Consent to Jurisdiction. This Guaranty is a contract
made under, and the rights and obligations of the parties hereunder, shall be
governed by and construed in accordance with, the laws of the State of Michigan
applicable to contracts to be made and to be performed entirely with such
State. Each Guarantor further agrees that any legal action or proceeding
brought with respect to this Guaranty or the transactions contemplated hereby
may be brought in any court of the State of Michigan, or any court of the
United States of America sitting in Michigan, and each Guarantor hereby
irrevocably submits to and accepts generally and unconditionally the
jurisdiction of those courts with respect to its person and property.
18. Definitions; Headings. Terms used but not defined herein shall have
the respective meanings ascribed thereto in the Credit Agreement. The headings
of the various subdivisions hereof are for convenience of reference only and
shall in no way modify any of the terms or provisions hereof.
19. Integration; Severability; Enforceability. This Guaranty embodies the
entire agreement and understanding among the Guarantors, the Lenders and the
Agent, and supersedes all prior agreements and understandings, relating to the
subject matter hereof. If any one or more provisions of this Guaranty should
be invalid, illegal or unenforceable in any
GUARANTY AGREEMENT
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respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected, impaired, prejudiced or
disturbed thereby. If at any time any portion of the obligations of any
Guarantor under this Guaranty shall be determined by a court of competent
jurisdiction to be invalid, unenforceable or avoidable, the remaining portion
of the obligations of such Guarantor and each other Guarantor under this
Guaranty shall not in any way be affected, impaired, prejudiced or disturbed
thereby and shall remain valid and enforceable to the fullest extent permitted
by applicable law. If at any time all or any portion of the obligations of any
Guarantor under this Guaranty would otherwise be determined by a court of
competent jurisdiction to be invalid, unenforceable or avoidable under Section
548 of the federal Bankruptcy Code or under a similar applicable law of any
jurisdiction, then notwithstanding any other provisions of this Guaranty to the
contrary such obligation or portion thereof of such Guarantor under this
Guaranty shall be limited to the greatest of (i) the value of any quantifiable
economic benefits accruing to such Guarantor as a result of this Guaranty, (ii)
an amount equal to 95% of the excess on the date the relevant Guaranteed
Obligations were incurred of the present fair saleable value of the assets of
such Guarantor over the amount of all liabilities of such Guarantor, contingent
or otherwise, and (iii) the maximum amount for which this Guaranty is
determined to be enforceable.
20. Reinstatement. This Guaranty shall remain in full force and effect
and continue to be effective in the event any petition be filed by or against
the Company or any Guarantor for liquidation or reorganization, in the event
the Company or any Guarantor becomes insolvent or makes an assignment for the
benefit of creditors or in the event a receiver or trustee be appointed for all
or any significant part of the Company's or any Guarantor's assets, and shall
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Guaranteed Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise
be restored or returned by the Agent or any Lender, whether as a "voidable
preference", "fraudulent conveyance", or otherwise, all as though such payment
or performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Guaranteed
Obligations shall be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.
21. Counterpart Execution. This Guaranty may be signed upon any number of
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument. This Guaranty
shall become effective as to each Guarantor when a counterpart hereof shall
have been signed by such Guarantor.
22. Waiver of Jury Trial. The Agent, the Lenders and each Guarantor,
after consulting or having had the opportunity to consult with counsel,
knowingly, voluntarily and intentionally waive any right any of them may have
to a trial by jury in any litigation based upon or arising out of this Guaranty
or any related instrument or agreement or any of the transactions contemplated
by this Guaranty. Neither the Agent, any Lender nor any Guarantor shall seek
to consolidate, by counterclaim or otherwise, any such action in which a jury
trial has been waived with any other action in which a jury trial cannot be or
has not been waived.
GUARANTY AGREEMENT
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<PAGE> 9
These provisions shall not be deemed to have been modified in any respect or
relinquished by the Agent, any Lender or any Guarantor except by a written
instrument executed by all of them.
IN WITNESS WHEREOF, each Guarantor has caused this Agreement to be duly
executed and delivered as of the day and year first above written.
KEY MEXICO A., L.L.C.
By: /s/ Mark J. Abbo
----------------------------------------
Key Plastics, Inc., its Member
By: Mark J. Abbo
Its: Treasurer and Assistant Secretary
And By: /s/ Mark J. Abbo
-----------------------------
Key Plastics Technology, L.L.C., its
Member
By: Key Plastics, Inc., its Member
By: Mark J. Abbo
Its: Treasurer and Assistant Secretary
KEY MEXICO B, L.L.C.
By: /s/ Mark J. Abbo
----------------------------------------
Key Plastics, Inc., its Member
By: Mark J. Abbo
Its: Treasurer and Assistant Secretary
And By: /s/ Mark J. Abbo
----------------------------
Key Plastics Technology, L.L.C., its
Member
By: Key Plastics, Inc., its Member
By: Mark J. Abbo
Its: Treasurer and Assistant Secretary
GUARANTY AGREEMENT
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<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF REGISTRANT
Jurisdiction of Organization
Name of Subsidiary or Incorporation
------------------ ----------------------------
Key Plastics International L.L.C Michigan
Key Plastics Automotive L.L.C Michigan
Key Plastics Technology, L.L.C Michigan
Key Mexico A, L.L.C. Michigan
Key Mexico B, L.L.C. Michigan
Key Plastics de Mexico S.A. del. C.V. Mexico
Key Plastics de Mexico 2 S.A. del. C.V. Mexico
Materias Plastics, S.A. Portugal
Key Plastics, U.K. United Kingdom
Clearplas, Ltd. United Kingdom
<PAGE> 2
EXHIBIT 21
SUBSIDIARIES OF REGISTRANT
Jurisdiction of Organization
Name of Subsidiary or Incorporation
------------------ ----------------------------
Key Plastics International L.L.C Michigan
Key Plastics Automotive L.L.C Michigan
Key Plastics Technology, L.L.C Michigan
Key Mexico A, L.L.C. Michigan
Key Mexico B, L.L.C. Michigan
Key Plastics de Mexico S.A. del. C.V. Mexico
Key Plastics de Mexico 2 S.A. del. C.V. Mexico
Materias Plastics, S.A. Portugal
Key Plastics, U.K. United Kingdom
Clearplas, Ltd. United Kingdom
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of Key Plastics, Inc.
We consent to the inclusion of this registration statement on Form S-4 of our
report dated March 3, 1997, except as to the information presented in paragraph
2 in Note 12, for which the date is March 19, 1997, on our audits of the
consolidated financial statements of Key Plastics, Inc. and subsidiaries. We
also consent to the references to our firm under the captions "Selected
Consolidated Financial Data" and "Experts".
Coopers & Lybrand
Detroit, Michigan
May 7, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,966
<SECURITIES> 0
<RECEIVABLES> 57,197
<ALLOWANCES> 0
<INVENTORY> 40,898
<CURRENT-ASSETS> 80,842
<PP&E> 109,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 230,444
<CURRENT-LIABILITIES> 53,574
<BONDS> 189,748
0
0
<COMMON> 96
<OTHER-SE> (17,863)
<TOTAL-LIABILITY-AND-EQUITY> 230,444
<SALES> 66,742
<TOTAL-REVENUES> 66,742
<CGS> 54,125
<TOTAL-COSTS> 54,125
<OTHER-EXPENSES> 6,562
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,978
<INCOME-PRETAX> 1,078
<INCOME-TAX> 149
<INCOME-CONTINUING> 1,227
<DISCONTINUED> 0
<EXTRAORDINARY> 5,471
<CHANGES> 0
<NET-INCOME> (4,244)
<EPS-PRIMARY> (12.69)
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</TABLE>
<PAGE> 1
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF
10 1/4% SERIES A NOTES DUE 2007
IN EXCHANGE FOR
10 1/4% SENIOR SUBORDINATED NOTES DUE 2007, SERIES B
KEY PLASTICS, INC.
This form or one substantially equivalent hereto must be used by a holder
to accept the Exchange Offer of Key Plastics, Inc. (the "Company"), who wishes
to tender 10 1/4% Senior Subordinated Notes due 1007 (the "Series A Notes") to
the Exchange Agent pursuant to the guaranteed delivery procedures described in
"The Exchange Offer -- Guaranteed Delivery Procedures" of the Company's
Prospectus dated ______________, 1997 (the "Prospectus") and in Instruction 2
to the related Letter of Transmittal. Any holder who wishes to tender Series A
Notes pursuant to such guaranteed delivery procedures must ensure that the
Exchange Agent receives this Notice of Guaranteed Delivery prior to the
Expiration Date (as defined below) of the Exchange Offer. Capitalized terms
used but not defined herein have the meanings ascribed to them in the
Prospectus or the Letter of Transmittal.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
_____________, 1997, UNLESS EXTENDED (THE "EXPIRATION DATE"). SERIES A NOTES
TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE
EXPIRATION DATE.
The Exchange Agent for the Exchange Offer is:
MARINE MIDLAND BANK
By Mail, Overnight Courier of Hand Delivery: By Facsimile:
Marine Midland Bank Marine Midland Bank
140 Broadway Attention: Paulette Shaw
New York, New York 10004 (212) 659-2292
Attention: Paulette Shaw
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN
THE ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE BOX ON
THE LETTER OF TRANSMITTAL FOR GUARANTEE OF SIGNATURES.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, upon the terms and subject
to the conditions set forth in the Prospectus and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the principal amount of
Series A Notes set forth below pursuant to the guaranteed delivery procedures
set forth in the Prospectus and in Instruction 2 of the Letter of Transmittal.
The undersigned hereby tenders the Series A Notes listed below:
<TABLE>
<CAPTION>
AGGREGATE
PRINCIPAL AMOUNT AGGREGATE
CERTIFICATE NUMBERS(S) (IF KNOWN) OF SERIES A NOTES REPRESENTED PRINCIPAL
OR ACCOUNT NUMBER AT THE BOOK-ENTRY FACILITY BY NOTE AMOUNT TENDERED
- --------------------------------------------------- ---------------- ---------------
<S> <C> <C>
</TABLE>
PLEASE SIGN AND COMPLETE
<TABLE>
<S> <C>
Signatures of Registered Holder(s) or Date: . . . . . . . . . . . . . . . . . . .
Authorized Signatory: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Address: . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Area Code and Telephone No. . . . . . . . .
Name(s) of Registered Holder(s): . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
This Notice of Guaranteed Delivery must be signed by the Holder(s) exactly
as their name(s) appear on certificates for Series A Notes or on a security
position listing as the owner of Series A Notes, or by person(s) authorized to
become Holder(s) by endorsements and documents transmitted with this Notice of
Guaranteed Delivery. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must provide the following information.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s):
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capacity:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Address(es):
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
<PAGE> 3
GUARANTEE
(Not To Be Used for Signature Guarantee)
The undersigned, a firm which is a member of a registered national
Securities exchange or of the National Association of Securities Dealers, Inc.,
or is a commercial bank or trust company having an office or correspondence in
the United States, or is otherwise an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934,
guarantees deposit with the Exchange Agent of the Letter of Transmittal (or
facsimile thereof), together with the Series A Notes tendered hereby in proper
form for transfer (or confirmation of the book-entry transfer of such Series A
Notes into the Exchange Agent's account at the Book-Entry Transfer Facility
described in the Prospectus under the caption "The Exchange Offer -- Guaranteed
Delivery Procedures" and in the Letter of Transmittal and any other required
documents, all by 5:00 p.m., New York City time, within three (3) New York Stock
Exchange trading day following the Expiration Date.
Name of Firm:
------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number:
------------------------------------------------
Authorized Signature:
----------------------------------------------------------
Name:
--------------------------------------------------------------------------
Title:
-------------------------------------------------------------------------
(Please Type or Print)
Date:
----------------, 1997
DO NOT SEND SERIES A NOTES WITH THIS FORM. ACTUAL SURRENDER OF SERIES A NOTES
MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY A PROPERLY COMPLETED AND DULY
EXECUTED LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS.
INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY
1. DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY. A properly completed
and duly executed copy of this Notice of Guaranteed Delivery and any other
documents required by this Notice of Guaranteed Delivery must be received by
the Exchange Agent at its address set forth herein prior to the Expiration
Date. The method of delivery of this Notice of Guaranteed Delivery and any
other required documents to the Exchange Agent is at the election and sole risk
of the holder, and the delivery will be deemed made only when actually received
by the Exchange Agent. If delivery is by mail, registered mail with return
receipt requested, properly insured, is recommended. As an alternative to
delivery by mail the holders may wish to consider using an overnight or hand
delivery service. In all cases, sufficient time should be allowed to assure
timely delivery. For a description of the guaranteed delivery procedures, see
Instruction 2 of the Letter of Transmittal.
2. SIGNATURES ON THIS NOTICE OF GUARANTEED DELIVERY. If this Notice of
Guaranteed Delivery is signed by the registered holder(s) of the Series A Notes
referred to herein, the signature must correspond with the name(s) written on
the face of the Series A Notes without alteration, enlargement, or any change
whatsoever. If this Notice of Guaranteed Delivery is signed by a participant
of the Book-Entry Transfer Facility whose name appears on a security
<PAGE> 4
position listing as the owner of the Series A Notes, the signature must
correspond with the name shown on the security position listing as the owner of
the Series A Notes.
If this Notice of Guaranteed Delivery is signed by a person other than the
registered holder(s) of any Series A Notes listed or a participant of the
Book-Entry Transfer Facility, this Notice of Guaranteed Delivery must be
accompanied by appropriate bond powers, signed as the name of the registered
holder(s) appears on the Series A Notes or signed as the name of the
participant shown on the Book-Entry Transfer Facility's security position
listing.
If this Notice of Guaranteed Delivery is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation, or other
person acting in a fiduciary or representative capacity, such person should so
indicate when signing and submit with the Letter of Transmittal evidence
satisfactory to the Company of such person's authority to so act.
3. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance and requests for additional copies of the Prospectus may be
directed to the Exchange Agent at the address specified in the Prospectus.
Holders may also contact their broker, dealer, commercial bank, trust company,
or other nominee for assistance concerning the Exchange Offer.
<PAGE> 1
EXHIBIT 99.3
INSTRUCTION TO REGISTERED HOLDER AND/OR BOOK
ENTRY TRANSFER PARTICIPANT FROM BENEFICIAL OWNER
FOR
TENDER OF
10 1/4% SENIOR SUBORDINATED NOTES DUE 2007
IN EXCHANGE FOR
10 1/4% SENIOR SUBORDINATED NOTES DUE 2007, SERIES B
KEY PLASTICS, INC.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
__________, 1997, UNLESS EXTENDED (THE "EXPIRATION DATE"). SENIOR
NOTES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME
PRIOR TO THE EXPIRATION DATE.
To Registered Holder and/or Participant of the Book-Entry Transfer Facility:
The undersigned hereby acknowledges receipt of the Prospectus dated
__________, 1997 (the "Prospectus") of Key Plastics, Inc., a Michigan
corporation (the "Company") and the Guarantors named in the Prospectus, and the
accompanying Letter of Transmittal (the "Letter of Transmittal"), that together
constitute the Company's offer (the "Exchange Offer") to exchange its 10 1/4%
Senior Subordinated Notes Due 2007, Series B (the "Series B Notes") for all of
its outstanding 10 1/4% Senior Subordinated Notes Due 2007 (the "Series A
Notes"). Capitalized terms used but not defined herein have the meanings
ascribed to them in the Prospectus.
This will instruct you, the registered holder and/or book-entry
transfer facility participant, as to the action to be taken by you relating to
the Exchange Offer with respect to the Senior Notes held by you for the account
of the undersigned.
The aggregate face amount of the Series A Notes held by you for the
account of the undersigned is (FILL IN AMOUNT):
$________ of the 10 1/4% Senior Subordinated Notes Dues 2007.
With respect to the Exchange Offer, the undersigned hereby instructs
you (CHECK APPROPRIATE BOX):
[ ] To TENDER the following Senior Notes held by you for the
account of the undersigned (INSERT PRINCIPAL AMOUNT OF SERIES A NOTES
TO BE TENDERED (IF ANY): $_______
[ ] NOT to TENDER any Series B Notes hold by you for the account
of the undersigned.
If the undersigned instructs you to tender the Series A Notes held by
you for the account of the undersigned, it is understood that you are
authorized to make, on behalf of the undersigned (and the undersigned, by its
signature below, hereby makes to you), the representation and warranties
contained in the Letter of Transmittal that are to be made with respect to the
undersigned as a beneficial owner, including but not limited to the
representations, that (i) the Series B Notes acquired pursuant to the Exchange
Offer are being acquired in the ordinary course of business of the undersigned,
(ii) neither the undersigned nor any such other person has an arrangement or
understanding with any person to participate in the distribution within the
meaning of the Securities Act of 1933, as amended (the "Securities Act") of
such Series B Notes, (iii) if the undersigned is not a broker-dealer, or is a
broker-dealer but will not receive
<PAGE> 2
Series B Notes for its own account in exchange for Series A Notes, neither the
undersigned nor any such other person is engaged in or intends to participate
in the distribution of such Series B Notes and (iv) neither the undersigned
nor any such other person is an "affiliate" of the Company within the meaning
of Rule 405 under the Securities Act. If the undersigned is a broker-dealer
(whether or not it is also an "affiliate") that will receive Series B Notes
for its own account in exchange for Series A, it represents that such Series A
Notes were acquired as a result of market-making activities or other trading
activities, and it acknowledges that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such
Series B Notes. By acknowledging that it will deliver an by delivering a
prospectus meeting the requirements of the Securities Act in connection with
any resale of such Series B Notes, the undersigned is not deemed to admit
that it is an "underwriter" within the meaning of the Securities Act.
SIGN HERE
Name of beneficial owner(s): ....................................
Signature(s): ...................................................
Name(s) (please print): .........................................
Address: ........................................................
Telephone Number: ...............................................
Taxpayer Identification or Social Security Number: ..............
Date: ...........................................................
2
<PAGE> 1
EXHIBIT 99.4
KEY PLASTICS, INC.
FOR TENDER OF
10 1/4% SENIOR SUBORDINATED NOTES DUE 2007
IN EXCHANGE FOR
10 1/4% SENIOR SUBORDINATED NOTES DUE 2007, SERIES B
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON __________, 1997, UNLESS EXTENDED (THE "EXPIRATION DATE").
NOTES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN
AT ANY TIME PRIOR TO THE EXPIRATION DATE.
To Our Clients:
We are enclosing herewith a Prospectus, dated __________, 1997, of Key
Plastics, Inc., a Michigan corporation (the "Company"), and a related Letter of
Transmittal (which together constitute the "Exchange Offer") relating to the
offer by the Company, to exchange its 10 1/4% Senior Subordinated Notes due
2007, Series B (the "Series B Notes"), which have been registered under the
Securities Act of 1933, as amended (the "Securities Act") for a like principal
amount of its issued and outstanding 10 1/4% Senior Subordinated Notes due
2007, (the "Series A Notes"), upon the terms and subject to the conditions set
forth in the Exchange Offer.
The Exchange Offer is not conditioned upon any minimum number of Senior Notes
being tendered.
We are the holder of record of Series A Notes held by us for your own account.
A tender of such Series A Notes can be made only by us as the record holder and
pursuant to your instructions. The Letter of Transmittal is furnished to you
for your information only and cannot be used by you to tender Series A Notes
held by us for your account.
We request instructions as to whether you wish to tender any or all of the
Series A Notes held by us for your account pursuant to the terms and conditions
of the Exchange Offer. We also request that you confirm that we may on your
behalf make the representations contained in the Letter of Transmittal.
Pursuant to the Letter of Transmittal, each holder of Series A Notes
will represent to the Company that (i) the Series B Notes acquired pursuant to
the Exchange Offer are being acquired in the ordinary course of business of the
undersigned, (ii) neither the undersigned nor any such other person has an
arrangement or understanding with any person to participate in the distribution
within the meaning of the Securities Act of such Series B Notes, (iii) if the
undersigned is not a broker-dealer, or is a broker-dealer but will not receive
Series B Notes for its own account in exchange for Series A, neither the
undersigned nor any such other person is engaged in or intends to participate
in the distribution of such Series B Notes and (iv) neither the undersigned nor
any such other person is an "affiliate" of the Company within the meaning of
Rule 405 under the Securities Act or, if the undersigned is an "affiliate,"
that the undersigned will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable. If the
undersigned is a broker-dealer (whether or not it is also an "affiliate") that
will receive Series B Notes for its own account in exchange for Series A Notes,
it represents that such Series A Notes were acquired as a result of
market-making activities or other trading activities, and it acknowledges that
it will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Series B Notes. By acknowledging that it
will deliver and by delivering a prospectus meeting the requirements of the
Securities Act in connection with any resale of such Series B Notes, the
undersigned is not deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
Very truly yours,
<PAGE> 1
EXHIBIT 99.5
KEY PLASTICS, INC.
FOR TENDER OF
10 1/4% SENIOR SUBORDINATED NOTES DUE 2007
IN EXCHANGE FOR
10 1/4% SENIOR SUBORDINATED NOTES DUE 2007, SERIES B
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON __________, 1997, UNLESS EXTENDED (THE "EXPIRATION DATE").
SENIOR NOTES TENDERED IN THE EXCHANGE OFFER MAY BE
WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.
To Registered Holders and Depository
Trust Company Participants:
We are enclosing herewith the material listed below relating to the offer
by Key Plastics, Inc., a Michigan corporation (the "Company"), to exchange its
10 1/4% Senior Exchange Subordinated Notes due 2007, Series B (the "Series B
Notes"), which have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), for a like principal amount of its issued and
outstanding 10 1/4% Senior Subordinated Notes due 2007 (the "Series A Notes")
upon the terms and subject to the conditions set forth in the Company's
Prospectus, dated __________, 1997, and the related Letter of Transmittal
(which together constitute the "Exchange Offer").
Enclosed herewith are copies of the following documents:
1. Prospectus dated __________, 1997;
2. Letter of Transmittal (together with accompanying Substitute Form W-9
Guidelines);
3. Notice of Guaranteed Delivery; and
4. Letter which may be sent to your clients for whose account you hold
Series A Notes in your name or in the name of your nominee, with space
provided for obtaining such client's instruction with regard to the
Exchange Offer.
We urge you to contact your clients promptly. Please note that the
Exchange Offer will expire on the Expiration Date unless extended.
The Exchange Offer is not conditioned upon any minimum number of Series A
being tendered.
Pursuant to the Letter of Transmittal, each holder of Series A Notes must
represent to the Company that (i) the Series B Notes acquired pursuant to the
Exchange Offer are being acquired in the ordinary course of business of the
undersigned, (ii) neither the undersigned nor any such other person has an
arrangement or understanding with any person to participate in the distribution
within the meaning of the Securities Act of such Series B Notes, (iii) if the
undersigned is not a broker-dealer, or is a broker-dealer but will not receive
Series B Notes for its own account in exchange for Series A Notes, neither the
undersigned nor any such other person is engaged in or intends to participate
in the distribution of such Series B Notes and (iv) neither the undersigned nor
any such other person is an "affiliate"
<PAGE> 2
of the Company within the meaning of Rule 405 under the Securities Act or, if
the undersigned is an "affiliate," that the undersigned will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable. If the undersigned is a broker-dealer (whether or not it is
also an "affiliate") that will receive Series B Notes for its own account in
exchange for Series A Notes, it represents that such Series A Notes were
acquired as a result of market-making activities or other trading activities,
and it acknowledges that it will deliver a prospectus meeting the requirements
of the Securities Act in connection with any resale of such Series B Notes. By
acknowledging that it will deliver and by delivering a prospectus meeting the
requirements of the Securities Act in connection with any resale of such Series
B Notes, the holder is not deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.
The enclosed Letter to Clients contains an authorization by the beneficial
owners of the Series A Notes for you to make the foregoing representations.
The Company will not pay any fee or commission to any broker or dealer or
to any other persons (other than the Exchange Agent) in connection with the
solicitation of tenders of Series A pursuant to the Exchange Offer. The
Company will pay or cause to be paid any transfer taxes payable on the transfer
of Series A Notes to it, except as otherwise provided in Instruction 7 of the
enclosed Letter of Transmittal.
Additional copies of the enclosed material may be obtained from the
undersigned.
Very truly yours,
MARINE MIDLAND BANK
