<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM 8-K
-----------------------
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) August 17, 1995
COMMISSION FILE NUMBER: 1-11311
LEAR SEATING CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 13-3386776
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
21557 TELEGRAPH ROAD, SOUTHFIELD, MI 48034
(Address of principal executive offices) (zip code)
(810) 746-1500
(Registrant's telephone number, including area code)
NO CHANGE
(Former name or former address, if changes since last report)
<PAGE> 2
LEAR SEATING CORPORATION
ITEM 2: Acquisition of Assets
On August 17, 1995, Lear Seating Corporation (the "Company"), through
its wholly-owned subsidiary, AIHI Acquisition Corp. ("Acquisition Sub"),
acquired pursuant to a tender offer (the "Tender Offer Acquisition")
16,868,794 shares of Class A Common Stock, par value $.01 per share (the
"Shares"), of Automotive Industries Holding, Inc. ("AIHI"), representing
approximately 96% of the outstanding Shares of AIHI, at a purchase price of
$33.50 per Share net to the seller in cash. AIHI is a leading designer and
manufacturer of high quality interior trim systems and blow molded products
principally for North American and European car and light truck manufacturers.
The Tender Offer Acquisition occurred in accordance with an Agreement and Plan
of Merger (the "Merger Agreement") dated as of July 16, 1995, among the
Company, Acquisition Sub and AIHI pursuant to which the Company, through
Acquisition Sub, agreed to purchase all of the outstanding Shares of AIHI. On
August 22, 1995, pursuant to the terms of the Merger Agreement, Acquisition Sub
merged with and into AIHI, and AIHI became a wholly-owned subsidiary of the
Company (the "Merger"). In the Merger, each outstanding Share (other than (i)
Shares held by AIHI as treasury stock, (ii) Shares held by any subsidiary of
AIHI, (iii) Shares owned by the Company, Acquisition Sub or any subsidiary of
either of them and (iv) Shares held by stockholders, if any, who perfected
their appraisal rights under Delaware law) was converted into the right to
receive $33.50 in cash.
The aggregate purchase price for the acquisition of AIHI (the
"AIH Acquisition") was $926.4 million (including the assumption of $282.3
million of AIHI's existing indebtedness and payment of estimated fees and
expenses in connection with the AIH Acquisition). The aggregate purchase
price was determined based upon several factors, including evaluations of AIHI,
the market price of AIHI Shares, and negotiations with the management and
directors of AIHI. The financing for the Acquisition was provided under a
$1.5 billion revolving Credit Agreement (the "New Credit Agreement") dated as
of August 17, 1995 among the Company and a syndicate of financial institutions
for which Chemical Bank serves as administrative agent.
On July 7, 1995, AIHI, through an indirect wholly owned subsidiary,
acquired Plastifol GmbH & Co. KG and certain related entities ("Plastifol") for
a purchase price of approximately $60 million. The purchase price was funded
through borrowings under AIHI's then existing credit facility. The aggregate
purchase price was arrived at through arm's-length negotiations between the
parties.
1
<PAGE> 3
ITEM 7A: Financial Statements of Business being acquired
AUTOMOTIVE INDUSTRIES HOLDING, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS AS OF
DECEMBER 31, 1994 AND JANUARY 1, 1994
TOGETHER WITH REPORT OF
INDEPENDENT PUBLIC ACCOUNTANTS
2
<PAGE> 4
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Automotive Industries Holding, Inc.:
We have audited the accompanying consolidated balance sheets of Automotive
Industries Holding, Inc. (a Delaware corporation) and Subsidiaries as of
December 31, 1994 and January 1, 1994, and the related consolidated statements
of operations, shareholders' investment and cash flows for each of the three
years in the period ended December 31, 1994. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated 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 that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Automotive
Industries Holding, Inc. and Subsidiaries as of December 31, 1994 and January 1,
1994, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1994, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Minneapolis, Minnesota,
January 26, 1995
3
<PAGE> 5
AUTOMOTIVE INDUSTRIES HOLDING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1,
1994 1994
------------ ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents........................................... $ -- $ 1,156
Accounts receivable, net............................................ 107,106 53,314
Inventories......................................................... 42,117 19,338
Prepaid expenses.................................................... 2,357 666
Excess of cost over billings on uncompleted tooling projects........ 36,029 18,533
------------ ----------
Total current assets........................................... 187,609 93,007
------------ ----------
PROPERTY, PLANT AND EQUIPMENT, net.................................... 214,484 124,440
------------ ----------
OTHER ASSETS.......................................................... 16,932 --
INTANGIBLE ASSETS:
Goodwill............................................................ 155,468 124,331
Other............................................................... 7,113 6,194
------------ ----------
162,581 130,525
Less -- Accumulated amortization.................................... (14,189) (9,488)
------------ ----------
Intangible assets, net........................................... 148,392 121,037
------------ ----------
$567,417 $ 338,484
========== ========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Current maturities of long-term debt................................ $ 3,849 $ 1,862
Accounts payable.................................................... 63,654 18,039
Accrued compensation................................................ 11,871 7,086
Other accrued liabilities........................................... 8,946 6,982
Income taxes payable................................................ 7,897 1,996
------------ ----------
Total current liabilities...................................... 96,217 35,965
------------ ----------
LONG-TERM DEBT, net of current maturities............................. 216,920 93,829
DEFERRED INCOME TAXES................................................. 4,627 4,062
OTHER NONCURRENT LIABILITIES.......................................... 29,782 14,886
------------ ----------
SHAREHOLDERS' INVESTMENT:
Exchangeable preferred stock, par value $.01, redemption value $100:
Class A, Series A-2, 150 shares authorized, 68 and 69 issued
and outstanding................................................ 6,870 6,892
Class B, Series B-2, 75 shares authorized, 0 and 24 issued and
outstanding..................................................... -- 2,409
Common stock, par value $.01:
Class A, 100,000 shares authorized, 17,515 and 17,049 issued
and outstanding................................................ 175 170
Additional paid-in capital.......................................... 146,031 143,644
Retained earnings................................................... 69,301 36,627
Cumulative translation adjustment................................... (2,506) --
------------ ----------
Total shareholders' investment................................. 219,871 189,742
------------ ----------
$567,417 $ 338,484
========== ========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
4
<PAGE> 6
AUTOMOTIVE INDUSTRIES HOLDING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------------
DECEMBER 31, JANUARY 1, DECEMBER 26,
1994 1994 1992
------------ ---------- ------------
<S> <C> <C> <C>
REVENUES.................................................. $512,760 $ 348,718 $272,396
Cost of sales........................................... 408,877 273,805 216,875
------------ ---------- ------------
GROSS PROFIT.............................................. 103,883 74,913 55,521
Selling, general and administrative expenses............ 35,296 24,330 16,671
Amortization expense.................................... 4,701 3,442 2,304
------------ ---------- ------------
OPERATING INCOME.......................................... 63,886 47,141 36,546
Interest expense, net................................... (9,318) (7,138) (9,456)
------------ ---------- ------------
INCOME BEFORE INCOME TAXES................................ 54,568 40,003 27,090
Provision for income taxes.............................. 21,825 15,984 10,962
------------ ---------- ------------
INCOME BEFORE PREFERRED DIVIDENDS AND EXTRAORDINARY
ITEM.................................................... 32,743 24,019 16,128
Non-cash dividends on Series A 9.5% Cumulative
redeemable exchangeable preferred stock.............. -- -- 988
------------ ---------- ------------
INCOME BEFORE EXTRAORDINARY ITEM.......................... 32,743 24,019 15,140
Extraordinary item -- loss on early extinguishment of
debt................................................. -- -- (8,259)
------------ ---------- ------------
NET INCOME................................................ $ 32,743 $ 24,019 $ 6,881
========== ======== ==========
Net income per common and common equivalent share:
Before extraordinary item............................... $1.77 $1.41 $ 1.11
Extraordinary item...................................... -- -- (0.61)
Total................................................ $1.77 $1.41 $ 0.50
Weighted average common and common equivalent shares
outstanding............................................. 18,578 17,052 13,620
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE> 7
AUTOMOTIVE INDUSTRIES HOLDING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT
(IN THOUSANDS)
<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK ADDITIONAL CUMULATIVE
------------------ ------------------- PAID-IN RETAINED TRANSLATION
CLASS A CLASS B CLASS A CLASS B CAPITAL EARNINGS ADJUSTMENT
-------- ------- -------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, December 28, 1991........... $ -- $ -- $ 80 $ 6 $ 28,414 $ 5,788 $ --
Net income before dividends........ 7,869
Initial public offering of Class A
common stock -- 5,381 shares..... 54 68,783
Excercise of warrants -- 369
shares........................... 4 1,216
Dividends on Series A 9.5%
cumulative redeemable
exchangeable preferred stock..... (988)
Conversion premium on preferred
stock............................ (1,433)
-------- ------- -------- --- ---------- -------- ----------
BALANCE, December 26, 1992........... -- -- 138 6 96,980 12,669 --
Net income......................... 24,019
Issued in connection with
acquisition of ASAA
International, Inc.
Class A -- 69 shares........... 6,892
Class B -- 24 shares........... 2,409
Offering of Class A common stock --
1,900 shares..................... 19 43,994
Dividends on Class B preferred
stock............................ (61)
Sale of stock under Employee Stock
Discount Purchase Plan --
4 shares......................... 81
Exchange of Class B common stock
for Class A common stock --
648 shares....................... 6 (6)
Exercise of warrants -- 740
shares........................... 7 2,431
Exercise of options -- 9 shares.... 158
-------- ------- -------- --- ---------- -------- ----------
BALANCE, January 1, 1994............. 6,892 2,409 170 -- 143,644 36,627 --
Net income......................... 32,743
Dividends on Class B preferred
stock............................ (69)
Sale of stock under Employee Stock
Discount Purchase Plan -- 36
shares........................... 1 826
Cancellation and redemption of
preferred stock
Class A -- 1 share............. (22)
Class B -- 24 shares........... (2,409)
Exercise of warrants -- 420
shares........................... 4 1,380
Exercise of options -- 10 shares... 181
Change in cumulative translation
adjustment....................... (2,506)
-------- ------- -------- --- ---------- -------- ----------
BALANCE, December 31, 1994........... $6,870 $ -- $175 $ -- $146,031 $69,301 ($ 2,506)
======== ======== ======== ======== ========= ======== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
6
<PAGE> 8
AUTOMOTIVE INDUSTRIES HOLDING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------------
DECEMBER 31, JANUARY 1, DECEMBER 26,
1994 1994 1992
------------ ---------- ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income............................................. $ 32,743 $ 24,019 $ 6,881
Adjustments to reconcile net income to net cash
provided by operating activities --
Extraordinary loss on early extinguishment of
debt.............................................. -- -- 8,259
Non-cash preferred stock dividends.................. -- -- 988
Depreciation and amortization....................... 21,907 15,859 12,013
Deferred income taxes............................... 8,019 503 (2,392)
Changes in operating assets and liabilities:
Accounts receivable............................... (32,481) (313) (7,472)
Inventories....................................... (8,613) 77 964
Other current assets.............................. (13,942) (5,112) (2,722)
Accounts payable and accrued liabilities.......... 27,918 (7,559) 2,085
Income taxes payable.............................. 5,163 (4,860) 2,906
Other assets and liabilities...................... (18,198) (5,530) --
------------ ---------- ------------
Net cash provided by operating activities...... 22,516 17,084 21,510
------------ ---------- ------------
INVESTING ACTIVITIES:
Capital expenditures, net.............................. (40,461) (22,369) (8,927)
Acquisitions, net of cash acquired..................... (91,001) (42,404) (7,569)
Other, net............................................. (80) -- --
------------ ---------- ------------
Net cash used for investing activities......... (131,542) (64,773) (16,496)
------------ ---------- ------------
FINANCING ACTIVITIES:
Proceeds from stock offerings.......................... -- 44,013 68,837
Proceeds from exercise of warrants and options......... 181 2,596 1,220
Redemption of preferred stock.......................... (2,431) -- --
Dividends on preferred stock........................... (69) (61) --
Proceeds from sale of stock under Employee Stock
Discount Purchase Plan.............................. 827 81 --
Conversion premium on preferred stock.................. -- -- (1,433)
Extraordinary loss on early extinguishment of debt, net
of non-cash expenses of $5,714...................... -- -- (2,545)
Proceeds from borrowings............................... 433,683 104,840 53,812
Repayment of debt...................................... (323,417) (102,624) (126,189)
Other, net............................................. (910) -- --
------------ ---------- ------------
Net cash provided by (used for) financing
activities................................... 107,864 48,845 (6,298)
------------ ---------- ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS..... (1,162) 1,156 (1,284)
EFFECT OF EXCHANGE RATE ON CASH.......................... 6 -- --
CASH AND CASH EQUIVALENTS:
Beginning of period.................................... 1,156 -- 1,284
------------ ---------- ------------
End of period.......................................... $ -- $ 1,156 $ --
========== ========= ==========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for --
Interest............................................ $ 8,516 $ 8,041 $ 10,450
========== ========= ==========
Income taxes........................................ $ 11,515 $ 16,171 $ 5,109
========== ========= ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
7
<PAGE> 9
AUTOMOTIVE INDUSTRIES HOLDING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND JANUARY 1, 1994
1. ORGANIZATION AND BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Automotive
Industries Holding, Inc. (AIHI) and its wholly owned subsidiaries, Automotive
Industries Holding, Ltd. and Automotive Industries, Inc. (Automotive),
collectively referred to as the Company. Automotive and its subsidiaries design
and manufacture high-quality interior trim systems and components and blow
molded plastic components principally for the automotive industry. The Company
has twenty manufacturing facilities in North America located in Virginia,
Indiana, Kentucky, Michigan, Ohio, Texas, Wisconsin, and Toronto, Ontario, and
three manufacturing facilities in the United Kingdom.
2. SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
AIHI and its subsidiaries. All material subsidiaries are wholly owned. All
material inter-company accounts and transactions have been eliminated in
consolidation.
Fiscal Year
The Company's fiscal year ends on the Saturday closest to December 31.
Fiscal years 1994 and 1992 consisted of fifty-two weeks while fiscal year 1993
consisted of fifty-three weeks.
New Accounting Pronouncement
Effective January 2, 1994, the Company adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities", which requires a change in accounting for certain
investments from cost to fair value. The adoption did not have a material
effect on the accompanying consolidated financial statements.
Cash and Cash Equivalents
Cash equivalents include overnight investment grade commercial paper with
an original maturity of three months or less. Cash equivalents are stated at
cost which approximates fair value.
Inventories
Inventories are valued at the lower of first-in, first-out (FIFO) cost or
market.
Inventories consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1,
1994 1994
------------ ----------
<S> <C> <C>
Raw materials........................................... $ 24,097 $ 11,163
Work in process......................................... 3,223 3,086
Finished goods.......................................... 14,797 5,089
------------ ----------
$ 42,117 $ 19,338
========== =======
</TABLE>
Excess of Cost Over Billings on Uncompleted Tooling Projects
Excess of cost over billings on uncompleted tooling projects represents
costs incurred by the Company in the development of new tooling used in the
manufacture of the Company's products. The Company is
8
<PAGE> 10
AUTOMOTIVE INDUSTRIES HOLDING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1994 AND JANUARY 1, 1994
reimbursed by its customers for the cost of the tooling, at which time the
tooling becomes the property of the customer.
Property, Plant and Equipment
Additions to property, plant and equipment are stated at cost. For
financial reporting purposes, depreciation and amortization are provided using
the straight-line method over the following estimated useful lives:
<TABLE>
<S> <C>
Buildings and improvements...................................... 3 to 30 years
Machinery and equipment......................................... 3 to 10 years
</TABLE>
Accelerated depreciation methods are used for tax purposes.
Property, plant and equipment consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1,
1994 1994
------------ ----------
<S> <C> <C>
Land.................................................................. $ 7,391 $ 2,226
Buildings and improvements............................................ 63,818 44,623
Machinery and equipment............................................... 166,390 104,712
Construction in progress.............................................. 26,900 7,015
------------ ----------
264,499 158,576
Less-Accumulated depreciation......................................... (50,015) (34,136)
------------ ----------
$214,484 $ 124,440
========== ========
</TABLE>
Maintenance and repairs are charged to expense as incurred. Major repairs
and improvements are capitalized and depreciated. Property, plant and equipment
retired or disposed of are removed from the related accounts, and any residual
values are charged or credited to income. During the year ended December 31,
1994 the Company capitalized interest of $481,000 related to the construction in
progress.
Other Assets
Other assets consist principally of the Company's interest in Interiores
Automotrices Summa, S.A. de C.V. (IASSA) and capitalized design and engineering
costs that will be recovered from the Company's customers as manufactured
products are shipped.
Intangible Assets
Goodwill represents the excess of the purchase price over the fair value of
net assets acquired and is being amortized on a straight-line basis over 40
years. Other intangible assets include debt issuance costs which are amortized
over the terms of the related financing using the interest method and license
agreements related to the use of certain technologies which are being amortized
on a straight-line basis over the lives of the agreements.
Income Taxes
The Company follows Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes", which requires the use of the liability method in
accounting for income taxes. Deferred income taxes are recognized at currently
enacted income tax rates to reflect the tax effect of temporary differences
between the financial reporting and tax basis of assets and liabilities.
9
<PAGE> 11
AUTOMOTIVE INDUSTRIES HOLDING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1994 AND JANUARY 1, 1994
Foreign Currency Translation
Assets and liabilities of the Company's foreign operations are translated
using the year-end rates of exchange. Results of operations are translated using
the average rates prevailing throughout the period. Translation gains or losses
are accumulated as a separate component of shareholders' investment.
Net Income Per Common and Common Equivalent Share
Net income per common and common equivalent share amounts are computed by
dividing net income by the weighted average number of common and common
equivalent shares outstanding. Common equivalent shares include the number of
shares issuable upon conversion of the outstanding exchangeable promissory notes
and exchangeable preferred stock and upon the exercise of the outstanding
warrants and options less the number of shares that could have been purchased
with the proceeds from the exercise of the warrants and options based on the
average market value of the Class A Common Stock during the year. Net income,
for purposes of computing net income per common and common equivalent share,
includes interest expense, net of related income tax benefits, on the
exchangeable promissory notes and dividends on the exchangeable preferred stock.
Net income for purposes of computing net income per common and common equivalent
share was $32,935,000 for the year ended December 31, 1994, $24,098,000 for the
year ended January 1, 1994 and $6,881,000 for the year ended December 26, 1992.
Reclassifications
Certain amounts previously reported in the 1993 and 1992 consolidated
financial statements have been reclassified to conform to the 1994 presentation.
These reclassifications had no effect on previously reported net income or
shareholders' investment.
3. ACQUISITIONS
In February 1992, the Company acquired the operating assets and assumed the
liabilities of Plasta Fiber Industries, Inc. (PFI), a manufacturer of automotive
sun visors and die cut insulating products, for a cash purchase price of
approximately $5.0 million. In July 1992, the Company acquired the operating
assets and assumed the liabilities of Cellasto Plastics Industries, Inc.
(Cellasto), a manufacturer of interior trim injection molded products, for cash
consideration of approximately $2.4 million, plus the assumption of $4.0 million
in debt.
In May 1993, the Company acquired all of the outstanding common stock of
ASAA International, Inc. (ASAA), a manufacturer of interior trim components, for
cash consideration and assumption of debt of approximately $34.1 million plus
$9.3 million in exchangeable preferred stock. In addition, the former
shareholders of ASAA may receive contingent consideration of up to $20 million
if certain operating income levels are achieved through 1996. No contingent
consideration is payable through December 31, 1994. Based on historical and
forecasted operating income levels, the Company does not anticipate any amounts
will be payable under this agreement.
In July 1993, the Company acquired the operating assets and assumed the
liabilities of Fibercraft//DESCon Engineering, Inc. (Fibercraft), an advanced
design, engineering and program management company for interior trim systems and
vehicle platforms, for cash consideration and assumed indebtedness of
approximately $10 million plus the issuance of $4.75 million in promissory
notes, bearing interest at 6.5%, exchangeable into Class A Common Stock of the
Company at the lower of $34.10 per share or the fair value at the date of
exchange.
10
<PAGE> 12
AUTOMOTIVE INDUSTRIES HOLDING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1994 AND JANUARY 1, 1994
In May 1994, the Company acquired all of the outstanding capital stock of
John Cotton, Ltd. (Cotton). Cotton, headquartered in Manchester, England,
manufactures interior trim components for the European automotive industry. The
acquisition consideration for the capital stock of Cotton included approximately
$34.0 million in cash and assumption of indebtedness.
In November 1994, the Company acquired certain operating assets and assumed
certain liabilities of the Gulfstream Division of O'Sullivan Corporation
(Gulfstream). Gulfstream manufactures interior trim components for the North
American automotive industry and has five manufacturing facilities in Ohio and
Virginia. Consideration for the acquisition of Gulfstream was approximately
$50.0 million in cash and was financed with the proceeds from borrowings under
the 8.89% Senior Notes and the Company's Revolving Credit Facility.
The acquisitions described above have been accounted for as purchases, and,
accordingly, the assets acquired and liabilities assumed have been recorded at
fair market value as of the date of the acquisition. The assets and liabilities
of Cotton and Gulfstream have been recorded based on preliminary estimates of
fair market value as of the dates of acquisition. The Company does not believe
the final allocation of the purchase price will be materially different than the
preliminary allocations. The purchase price in excess of the fair value of the
net assets acquired is included in goodwill in the accompanying consolidated
balance sheets. Results of operations from the acquired companies have been
included in the accompanying consolidated financial statements from the
respective dates of acquisition. The pro forma effects of the acquisitions of
PFI, Cellasto and Fibercraft for the periods prior to the acquisitions are not
material to the Company's financial position or results of operations. Following
are unaudited pro forma results of consolidated operations for the years ended
December 31, 1994 and January 1, 1994 as if the acquisitions of ASAA, Cotton and
Gulfstream were completed at the beginning of the respective periods.
The unaudited pro forma financial information does not purport to represent
what the Company's results of operations would actually have been if such
transactions had occurred at such date or to project the Company's future
results of operations (in thousands, except per share data):
<TABLE>
<CAPTION>
PRO FORMA RESULTS FOR THE YEAR ENDED
--------------------------------------
DECEMBER 31, 1994 JANUARY 1, 1994
----------------- ---------------
(UNAUDITED)
<S> <C> <C>
Revenues...................................... $ 686,831 $ 550,778
============= ===========
Operating income.............................. $ 70,924 $ 58,199
============= ===========
Net income.................................... $ 33,874 $ 26,612
============= ===========
Weighted average common and common equivalent
shares outstanding.......................... 18,578 17,440
Net income per common and common equivalent
share....................................... $1.83 $1.49
</TABLE>
In January 1994, the Company completed its acquisition of an initial forty
percent interest in IASSA. IASSA, headquartered in Mexico City, is the largest
interior trim supplier in Mexico with fiscal 1993 revenues of approximately $35
million. The total cost of the investment was approximately $9.2 million. The
investment is being accounted for using the equity method whereby the Company
records its proportionate share of income and losses and other increases and
decreases in the net assets of IASSA.
11
<PAGE> 13
AUTOMOTIVE INDUSTRIES HOLDING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1994 AND JANUARY 1, 1994
4. SHAREHOLDERS' INVESTMENT
Public Offerings of Class A Common Stock
In May 1992, the Company completed an initial public offering (the IPO),
including shares issued by the Company pursuant to the underwriters'
over-allotment option, of 5,380,784 shares of its Class A Common Stock at $14.00
per share resulting in net proceeds to the Company of approximately $68.8
million after deducting underwriting discounts of $5.2 million and expenses of
$1.3 million. In addition, the Company realized proceeds of $1.2 million from
the exercise of warrants. The net proceeds of the IPO and exercise of warrants
were used to retire the Company's outstanding senior indebtedness.
In August 1993, the Company completed an offering of an additional
1,900,000 shares of its Class A Common Stock at $24.50 per share. Net proceeds
from this offering of approximately $44 million, after deducting underwriting
discounts of $2.2 million and expenses of $352,000, and net proceeds of
approximately $2.3 million from the exercise of certain warrants were used to
retire the $28.7 million 9.5% junior subordinated notes and borrowings
outstanding under the Company's revolving credit facility.
Preferred Stock
In May 1992, AIHI exercised its option to convert its Series A 9.5%
Cumulative Redeemable Exchangeable Preferred Stock with a principal amount of
$28.7 million into junior subordinated notes. The cash payment to effect this
conversion, $1,433,000, was charged against additional paid-in capital. The
Company's Restated Certificate of Incorporation authorizes 10,000,000 shares of
preferred stock, none of which have been issued.
In connection with the Company's acquisition of ASAA described in Note 3,
ASAA issued 68,910 shares of its Class A, Series A-2 Exchangeable Preferred
Stock (Series A-2 Preferred Stock) and 24,090 shares of its Class B, Series B-2
Exchangeable Preferred Stock (Series B-2 Preferred Stock) with a total face
amount of $9.3 million. The Series B-2 Preferred Stock, which was redeemed by
the Company in September 1994 for a cash payment of approximately $2.4 million,
had a stated dividend rate of 4% per annum. The Series A-2 Preferred Stock has
no stated dividend rate. The Series A-2 Preferred Stock is exchangeable, at the
option of the holder, into the Company's Class A Common Stock at the lower of
$28.88 per share or the fair value at the date of exchange. In addition, the
Company may, at its option under certain circumstances, redeem the Series A-2
Preferred Stock at its face amount.
Common Stock
The holder of each share of Class A Common Stock outstanding is entitled to
one vote per share. Class B Common Stock is nonvoting. During the year ended
January 1, 1994, the holder of the Class B Common Stock exercised its option to
convert the Class B Common Stock to Class A Common Stock.
Warrants to Purchase Common Stock of AIHI
In connection with the IPO, certain holders exercised warrants to acquire
369,216 shares of Class A Common Stock. Total proceeds to the Company from the
warrant exercise were approximately $1.2 million. In connection with the August
1993 offering, certain holders exercised warrants to acquire 707,000 shares of
Class A Common Stock. Total proceeds to the Company from the warrant exercise
were approximately $2.3 million. In December 1993, a holder exercised warrants
to acquire 32,845 shares of Class A Common Stock resulting in proceeds to the
Company of $108,000. In October 1994, a holder exercised warrants to acquire
420,000 shares of Class A Common Stock. The exercise price of the warrants,
$1,384,000, was paid by the holder through a reduction in the 8.75% Senior Note
due to the holder.
12
<PAGE> 14
AUTOMOTIVE INDUSTRIES HOLDING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1994 AND JANUARY 1, 1994
As of December 31, 1994, the Company had warrants outstanding to acquire up
to 633,497 shares of Class A Common Stock at an exercise price of $3.30 per
share. The warrants can be exercised anytime before their expiration in October
2001.
Stock Option Plan
In May 1992, the Company's board of directors adopted an employee stock
option plan (the Plan) that provides for the issuance of options to acquire up
to 790,000 shares of the Company's Class A Common Stock. The option exercise
price must be at least 100% of the fair value of Class A Common Stock at the
time of the issuance of the option. Non-qualified stock options granted under
the Plan generally vest ratably over 5 years and expire 10 years from the date
of grant.
Information regarding the Plan is as follows:
<TABLE>
<CAPTION>
SHARES UNDER EXERCISE
OPTION PRICES
------------ --------------
<S> <C> <C>
Outstanding at December 28, 1991.................. -- --
Granted......................................... 184,600 $ 16.875
------------ --------------
Outstanding at December 26, 1992.................. 184,600 16.875
Granted......................................... 294,500 15.875-24.500
Exercised....................................... (9,360) 16.875
Terminated...................................... (10,700) 16.875
------------ --------------
Outstanding at January 1, 1994.................... 459,040 15.875-24.500
Granted......................................... 154,500 27.750
Exercised....................................... (10,320) 15.875-24.500
Terminated...................................... (39,280) 15.875-27.750
------------ --------------
Outstanding at December 31, 1994.................. 563,940 $16.000-27.750
========== =============
</TABLE>
As of December 31, 1994, 122,646 options are fully vested and exercisable.
Employee Stock Discount Purchase Plan
In May 1993, the Company's shareholders approved the adoption of the
Employee Stock Discount Purchase Plan (ESDPP) which provides for the sale of up
to 500,000 shares of Class A Common Stock to eligible employees. Under the terms
of the ESDPP, eligible employees can authorize payroll deductions of up to
$5,200 per year for the purchase of Class A Common Stock. The Class A Common
Stock is purchased at 85% of the market price, as defined. During the years
ended December 31, 1994 and January 1, 1994, 36,077 and 3,854 shares of Class A
Common Stock were issued pursuant to the ESDPP, respectively.
13
<PAGE> 15
AUTOMOTIVE INDUSTRIES HOLDING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1994 AND JANUARY 1, 1994
5. DEBT
Debt consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1,
1994 1994
------------ ----------
<S> <C> <C>
Senior Notes, due December 2004, unsecured, principal payable in
installments beginning in 1998, interest at 8.89%, payable
semi-annually....................................................... $ 40,000 $ --
Senior Notes, due April 2000, unsecured, principal payable in
installments beginning in 1998, interest at 8.75%, payable
semi-annually....................................................... 39,508 40,892
Borrowings under Revolving Credit Facility, $20,005 at prime (8.5% at
December 31, 1994 and 6% at January 1, 1994), and $83,590 at
LIBOR-based borrowings (6.625% at December 31, 1994 and 4.125% at
January 1, 1994).................................................... 103,595 36,500
Borrowings under United Kingdom revolving credit facility, interest at
bank base rate plus 1.95% (8.2% at December 31, 1994)............... 8,509 --
Promissory Notes, due July 2003, unsecured, interest at 6.5% payable
semi-annually, exchangeable into Class A Common Stock............... 4,750 4,750
Other, including obligations under capital leases and Industrial
Revenue Bonds....................................................... 24,407 13,549
------------ ----------
220,769 95,691
Less- Current maturities.............................................. (3,849) (1,862)
------------ ----------
$216,920 $ 93,829
========== =======
</TABLE>
Future maturities of long-term debt are as follows as of December 31, 1994
(in thousands):
<TABLE>
<S> <C>
1995............................................................... $ 3,849
1996............................................................... 6,898
1997............................................................... 2,320
1998............................................................... 54,187
1999............................................................... 99,723
Thereafter......................................................... 53,792
--------
$220,769
========
</TABLE>
The Company has an unsecured Revolving Credit Facility which expires in
December 1999 and provides for borrowings up to $175 million at an interest rate
of LIBOR plus .625% or prime. On December 2, 1997, the lower of $80 million or
the amount outstanding under the Revolving Credit Facility converts to a term
loan, payable in eight equal quarterly installments. The remaining $95 million
of availability remains a Revolving Credit Facility.
As of December 31, 1994, approximately $16.4 million of the amounts
outstanding under the Revolving Credit Facility is in British pound sterling
denominated borrowings.
The Company also has an unsecured Revolving Credit Facility in the United
Kingdom. This facility expires in April 1995. As of December 31, 1994, $8.5
million is outstanding under this Revolving Credit Facility.
The debt agreements described above contain various restrictive covenants
which, among other matters, require the Company to maintain minimum consolidated
net worth levels, as defined, and certain financial ratios. The agreements also
limit additional indebtedness, capital expenditures and cash dividends. The
Company was in compliance with all debt covenants as of December 31, 1994.
14
<PAGE> 16
AUTOMOTIVE INDUSTRIES HOLDING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1994 AND JANUARY 1, 1994
6. INCOME TAXES
The income tax provision consisted of the following (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------------
DECEMBER 31, JANUARY 1, DECEMBER 26,
1994 1994 1992
------------ ---------- ------------
<S> <C> <C> <C>
Currently payable.......................................... $ 13,806 $ 15,481 $ 13,354
Deferred................................................... 8,019 503 (2,392)
------------ ---------- ------------
$ 21,825 $ 15,984 $ 10,962
========== ======= ==========
</TABLE>
The deferred provision (benefit) consisted of the following (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------------
DECEMBER 31, JANUARY 1, DECEMBER 26
1994 1994 1992
------------ ---------- ------------
<S> <C> <C> <C>
Depreciation lives and methods............................. $4,181 $ (663) $ (94)
Reserves and accruals deductible in different periods for
tax reporting purposes................................... 3,838 1,166 (2,298)
------------ ---------- ------------
$8,019 $ 503 $ (2,392)
========== ======= ==========
</TABLE>
A reconciliation of income taxes at the statutory rates to the provision
for income taxes is as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------------
DECEMBER 31, JANUARY 1, DECEMBER 26,
1994 1994 1992
------------ ---------- ------------
<S> <C> <C> <C>
Taxes at statutory rates.................... $ 19,099 $ 14,001 $ 9,211
State income taxes, net of federal
benefit................................... 2,093 1,430 948
Effect of permanent differences primarily
goodwill amortization and other........... 633 553 803
------------ ---------- ------------
Provision for income taxes.................. $ 21,825 $ 15,984 $ 10,962
========== ======= ==========
</TABLE>
A summary of deferred tax liabilities (assets) is as follows (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1,
1994 1994
------------ ----------
<S> <C> <C>
Depreciation lives and methods.......................... $ 13,341 $ 11,669
Reserves and accruals deductible in different periods
for tax reporting purposes............................ (8,714) (7,607)
------------ ----------
Net deferred tax liability.............................. $ 4,627 $ 4,062
========== =======
</TABLE>
7. MAJOR CUSTOMERS
The Company sells directly to each of the three major domestic automobile
manufacturers, to certain of the Japanese manufacturers operating in North
America and to certain automobile manufacturers operating in
15
<PAGE> 17
AUTOMOTIVE INDUSTRIES HOLDING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1994 AND JANUARY 1, 1994
Europe. Following is a summary of customers that accounted for more than 10% of
consolidated revenues for each of the three years in the period ended December
31, 1994:
<TABLE>
<CAPTION>
YEAR ENDED
--------------------------------------------
DECEMBER 31, JANUARY 1, DECEMBER 26,
1994 1994 1992
------------ ---------- ------------
<S> <C> <C> <C>
Ford..................................... 45% 49% 50%
General Motors........................... 17% 17% 18%
Chrysler................................. 12% 13% 15%
</TABLE>
Receivables from these three customers represented 62% of total accounts
receivable at December 31, 1994, and 75% of total accounts receivable at January
1, 1994.
8. RELATED-PARTY TRANSACTIONS
The Company paid underwriting fees to a shareholder of approximately $1.3
million in connection with the IPO, and $2.1 million in connection with the
August 1993 offering.
The Company paid Hidden Creek Industries, an affiliate of the Company,
$600,000 during the year ended December 31, 1994 and $300,000 during the year
ended January 1, 1994 for acquisition related services.
9. EMPLOYEE BENEFIT PLANS
The Company sponsored three defined benefit pension plans in 1994 and two
defined benefit pension plans in 1993 and 1992 which cover employees at certain
manufacturing facilities. The Company's policy is to make annual contributions
to the plan to fund the normal cost and the unfunded frozen initial liability
over 20 years.
Net pension expense consisted of the following (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------------
DECEMBER 31, JANUARY 1, DECEMBER 26,
1994 1994 1992
------------ ---------- ------------
<S> <C> <C> <C>
Service cost-benefits earned during the period............. $ 720 $ 550 $ 382
Interest cost on projected benefit obligation.............. 244 201 157
Return on plan assets...................................... 363 (278) (263)
Net amortization and deferral.............................. (510) 141 128
------------ ---------- ------------
Net pension expense........................................ $ 817 $ 614 $ 404
========== ======= ==========
</TABLE>
16
<PAGE> 18
AUTOMOTIVE INDUSTRIES HOLDING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1994 AND JANUARY 1, 1994
The funded status of the Company's plans as of October 1 is as follows (in
thousands):
<TABLE>
<CAPTION>
1994 1993
------ ------
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation................................................. $1,596 $2,438
====== ======
Accumulated benefit obligation............................................ $2,244 $3,345
====== ======
Projected benefit obligation.............................................. $3,108 $4,438
Plan assets at fair value................................................... 3,104 2,988
------ ------
Projected benefit obligation in excess of plan assets..................... 4 1,450
Unrecognized net gain (loss).............................................. 547 (853)
Prior service cost........................................................ (376) (405)
Adjustment to recognize minimum liability................................. -- 707
------ ------
Accrued pension costs....................................................... $ 175 $ 899
====== ======
</TABLE>
Accumulated and projected benefit obligation is determined using an assumed
discount rate of 7.25% for hourly plan and 7.50% for the salaried plan in 1994
and 5.75% for both plans in 1993. The averaged assumed long-term rate of return
on assets is 7.75% in 1994 and 1993. Plan assets consist principally of
investments in annuity contracts.
10. COMMITMENTS AND CONTINGENCIES
Leases
The Company leases office and warehouse space under operating lease
agreements which require the Company to pay maintenance, insurance, taxes and
other expenses in addition to annual rentals. Future annual rental commitments
under these leases are as follows (in thousands):
<TABLE>
<CAPTION>
YEAR AMOUNT
-------------------------------------------------------------------- -------
<S> <C>
1995................................................................ $ 4,467
1996................................................................ 3,174
1997................................................................ 2,407
1998................................................................ 1,449
1999................................................................ 1,380
Thereafter.......................................................... 2,193
-------
$15,070
=======
</TABLE>
Rent expense under the leases was $4,550,000 for the year ended December
31, 1994, $2,526,000 for the year ended January 1, 1994 and $448,000 for the
year ended December 26, 1992.
Contingencies
In the normal course of business, the Company becomes involved with
potential litigation and other matters which could lead to contingent
obligations. Management believes it has provided adequate reserves for any such
contingencies and that they will not have any material effect on the Company's
financial position or results of operations.
17
<PAGE> 19
AUTOMOTIVE INDUSTRIES HOLDING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1994 AND JANUARY 1, 1994
11. QUARTERLY FINANCIAL DATA (UNAUDITED)
The following is a condensed summary of actual quarterly results of
operations for 1994 and 1993 (in thousands except per share amounts):
<TABLE>
<CAPTION>
NET INCOME
PER COMMON
AND COMMON
GROSS OPERATING EQUIVALENT
REVENUES PROFIT INCOME NET INCOME SHARE
-------- -------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
1994:
First............................. $107,736 $ 21,633 $12,921 $ 6,755 $ 0.37
Second............................ 129,021 28,962 18,822 10,080 0.55
Third............................. 122,188 23,345 12,810 6,352 0.35
Fourth............................ 153,815 29,943 19,333 9,556 0.52
-------- -------- --------- ---------- ----------
$512,760 $103,883 $63,886 $ 32,743 $ 1.77
======== ======== ======= ======== ==========
1993:
First............................. $ 78,835 $ 15,468 $10,240 $ 4,880 $ 0.31
Second............................ 92,060 20,498 13,823 6,994 0.43
Third............................. 82,828 17,397 10,119 4,972 0.28
Fourth............................ 94,995 21,550 12,959 7,173 0.39
-------- -------- --------- ---------- ----------
$348,718 $ 74,913 $47,141 $ 24,019 $ 1.41
======== ======== ======= ======== ==========
</TABLE>
The sum of the quarterly net income per common and common equivalent share
for the year ended December 31, 1994 does not equal the total for the year due
to the effect of outstanding options, warrants, exchangeable preferred stock and
exchangeable promissory notes.
________________________________________________________________________________
EVENTS SUBSEQUENT TO DATE OF REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS.
On July 7, 1995, the Company completed the acquisition of (i) all of the
outstanding limited partnership interests of Plastifol GmbH & Co. KG, (ii) all
of the outstanding partnership interests of Manfred Rothe KG and (iii) all of
the outstanding shares of Plastifol Verwaltungs GmbH (the entities referred
to in clauses (i), (ii) and (iii) are referred to herein collectively as
"Plastifol"). Plastifol, headquartered near Munich, Germany, supplies interior
trim systems and components to the European automotive industry. Plastifol had
1994 revenues of approximately $75 million. Total consideration for the
partnership interests and stock of Plastifol was approximately $60 million and
was financed with borrowings under the Company's revolving credit facility.
On August 17, 1995, Lear Seating Corporation, through its wholly owned
subsidiary, AIHI Acquisition Corp. ("Acquisition Sub"), acquired (the "Tender
Offer Acquisition") 16,928,204 shares of Class A Common Stock, par value $.01
per share, (the "Shares") of AIHI representing approximately 96.4% of the
outstanding shares of AIHI, at a purchase price of $33.50 per share. The Tender
Offer Acquisition occurred in accordance with an Agreement and Plan of Merger
(the "Merger Agreement") dated as of July 16, 1995, among the Company,
Acquisition Sub and AIHI whereby the Company, through Acquisition Sub, agreed
to purchase all of the outstanding Shares of AIHI. On August 22, 1995, pursuant
to the terms of the Merger Agreement, the Company acquired the remaining shares
of AIHI pursuant to a second-step merger of Acquisition Sub with and into AIHI
at a purchase price of $33.50 per share, and AIHI became a direct wholly-owned
subsidiary of the Company.
18
<PAGE> 20
AUTOMOTIVE INDUSTRIES HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED
(Amounts in Thousands Except per Share Amounts - Unaudited)
<TABLE>
<CAPTION>
July 1, 1995 July 2, 1994
------------ ------------
<S> <C> <C>
Revenues $188,376 $129,021
Cost of sales 150,358 100,059
------------ ------------
Gross profit 38,018 28,962
Selling, general and administrative expenses 12,124 8,988
Amortization expense 1,294 1,152
------------ ------------
Operating income 24,600 18,822
Interest expense, net 4,414 1,911
------------ ------------
Income before income taxes 20,186 16,911
Provision for income taxes 8,034 6,831
------------ ------------
Net income $12,152 $10,080
============ ============
Net income available to common shareholders $12,197 $10,128
============ ============
Net income per common and
common equivalent share $0.66 $0.55
============ ============
Weighted average number of
common and common equivalent
shares outstanding 18,600 18,569
============ ============
</TABLE>
The accompanying notes to condensed consolidated financial statements
are an integral part of these statements.
<PAGE> 21
AUTOMOTIVE INDUSTRIES HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED
(Amounts in Thousands Except per Share Amounts - Unaudited)
<TABLE>
<CAPTION>
July 1, 1995 July 2, 1994
------------ ------------
<S> <C> <C>
Revenues $377,086 $236,757
Cost of sales 304,099 186,162
-------- --------
Gross profit 72,987 50,595
Selling, general and administrative expenses 24,930 16,628
Amortization expense 2,614 2,224
-------- --------
Operating income 45,443 31,743
Interest expense, net 8,953 3,577
-------- --------
Income before income taxes 36,490 28,166
Provision for income taxes 14,556 11,331
-------- --------
Net income $ 21,934 $ 16,835
======== ========
Net income available to
common shareholders $ 22,024 $ 16,931
======== ========
Income per common and common
equivalent share $1.18 $0.91
======== ========
Weighted average number of
common and common equivalent
shares outstanding 18,640 18,569
======== ========
</TABLE>
The accompanying notes to condensed consolidated financial statements
are an integral part of these statements.
<PAGE> 22
AUTOMOTIVE INDUSTRIES HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
<TABLE>
<CAPTION>
Assets July 1, 1995 Dec. 31, 1994
------------------------------------------------- ------------ -------------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ -- $ --
Accounts receivable 123,223 107,106
Inventories 41,971 42,117
Other current assets 40,597 38,386
-------- --------
Total current assets 205,791 187,609
Property, plant and equipment, net 233,448 214,484
Other assets 25,683 16,932
Goodwill and other intangible assets, net 146,424 148,392
-------- --------
$611,346 $567,417
======== ========
Liabilities and Shareholders' Investment
--------------------------------------------------------
Current liabilities:
Current maturities of long-term debt $ 3,909 $ 3,849
Accounts payable 75,371 63,654
Accrued liabilities 23,698 20,817
Income taxes payable 14,649 7,897
--------- ---------
Total current liabilities 117,627 96,217
Long-term debt, net of current maturities 221,066 216,920
Deferred income taxes 4,437 4,627
Other noncurrent liabilities 26,889 29,782
Shareholders' investment:
Exchangeable preferred stock 6,861 6,870
Common stock 175 175
Additional paid-in capital 146,586 146,031
Retained earnings 91,235 69,301
Cumulative translation adjustment (3,530) (2,506)
-------- --------
Total shareholders' investment 241,327 219,871
-------- --------
$611,346 $567,417
======== ========
</TABLE>
The accompanying notes to condensed consolidated financial statements
are an integral part of these statements.
-4-
<PAGE> 23
AUTOMOTIVE INDUSTRIES HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED
(Amounts in Thousands - Unaudited)
<TABLE>
July 1, 1995 July 2, 1994
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $21,934 $16,835
Adjustments to reconcile net income to
net cash provided by operating activities -
Depreciation and amortization 14,966 10,135
Changes in other operating items (10,302) (17,151)
--------- ---------
Net cash provided by operating activities 26,598 9,819
--------- ---------
INVESTING ACTIVITIES:
Capital expenditures, net (30,792) (18,617)
Acquisitions, net of cash acquired -- (42,658)
Changes in other assets, net (2,927) (46)
--------- ---------
Net cash used in investing activities (33,719) (61,321)
--------- ---------
FINANCING ACTIVITIES:
Proceeds from borrowings 225,412 180,241
Repayment of debt (218,821) (130,273)
Other, net 547 378
--------- ---------
Net cash provided by financing activities 7,138 50,346
--------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS 17 (1,156)
EFFECT OF EXCHANGE RATE ON CASH (17) --
CASH AND CASH EQUIVALENTS:
Beginning of period -- 1,156
--------- ---------
End of period $0 $0
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for --
Interest $8,125 $3,466
========= =========
Income taxes $7,804 $5,324
========= =========
</TABLE>
The accompanying notes to condensed consolidated financial statements
are an integral part of these statements.
-5-
<PAGE> 24
AUTOMOTIVE INDUSTRIES HOLDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The condensed consolidated financial statements have been prepared by
Automotive Industries Holding, Inc. (the "Company"), without audit,
pursuant to the rules and regulations of the Securities and Exchange
Commission. The information furnished in the condensed consolidated
financial statements includes normal recurring adjustments and reflects
all adjustments which are, in the opinion of management, necessary for
a fair presentation of such financial statements. Certain information
and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations.
Although the Company believes that the disclosures are adequate to make
the information presented not misleading, it is suggested that these
condensed consolidated financial statements be read in conjunction with
the audited financial statements and the notes thereto included in the
Company's 1994 Annual Report to Shareholders.
Revenues and operating results for the three months and six months
ended July 1, 1995 are not necessarily indicative of the results to be
expected for the full year.
2. Inventories, which are valued at the lower of first-in, first-out
(FIFO) cost or market, consisted of the following (in thousands):
<TABLE>
<CAPTION>
July 1, 1995 December 31, 1994
------------ -----------------
<S> <C> <C>
Raw materials $23,391 $24,097
Work-in-process 6,370 3,223
Finished goods 12,210 14,797
------- -------
$41,971 $42,117
======= =======
</TABLE>
3. In December 1994, the Company acquired certain operating assets and
assumed certain liabilities of the Gulfstream Division of O'Sullivan
Corporation (Gulfstream). Gulfstream manufactures interior trim
components for the North American automotive industry and has five
manufacturing facilities in Ohio and Virginia. Consideration for the
acquisition of Gulfstream was approximately $50.0 million in cash and
was financed with the proceeds from borrowings under the 8.89% Senior
Notes and the Company's Revolving Credit Facility.
In May 1994, the Company acquired all of the outstanding capital stock
of John Cotton (Colne) Limited (Cotton). Cotton, headquartered in
Manchester, England manufactures interior trim components for the
European automotive industry. The acquisition consideration for the
capital stock of Cotton included approximately $34.0 million in cash
and assumption of $10.6 million of indebtedness. The cash acquisition
consideration was financed through the Company's existing revolving
line of credit.
The acquisitions of Cotton and Gulfstream have been accounted for as
purchases and, accordingly, their assets acquired and liabilities
assumed have been recorded at fair market value as of the dates of the
acquisitions. The assets and liabilities of Cotton and Gulfstream have
been recorded based on preliminary estimates of fair market value as of
the dates of acquisition. The Company does not believe the final
allocation of the purchase price will be materially different than the
preliminary allocations. The purchase price in excess of the fair
value of the net assets acquired is included in goodwill in the
accompanying condensed consolidated balance sheets. Results of
operations from the acquired companies have been
-6-
<PAGE> 25
included in the accompanying condensed consolidated financial statements from
the respective dates of acquisition. Following are unaudited pro forma results
of consolidated operations for the six months ended July 2, 1994 as if the
acquisitions of Cotton and Gulfstream were completed at the beginning of the
period. The unaudited pro forma financial information does not purport to
represent what the Company's results of operations would actually have been if
such transactions had occurred at such date (in thousands, except per share
data):
<TABLE>
<CAPTION> Six Months
Ended
July 2, 1994
------------
<S> <C>
Revenues $343,045
=============
Operating income $36,151
=============
Net income available to
common shareholders $18,024
=============
Weighted average common and
common equivalent shares
outstanding 18,569
=============
Net income per common and
common equivalent share $0.97
=============
</TABLE>
4. In February 1995, the Company borrowed an additional $25 million
pursuant to its 8.89% Senior Notes. Proceeds from the borrowings were used
to retire borrowings outstanding under the Company's revolving credit
facility.
5. On July 7, 1995, the Company completed the acquisition of (i) all of
the outstanding limited partnership interests of Plastifol GmbH & Co. KG,
(ii) all of the outstanding partnership interests of Manfred Rothe KG and
(iii) all of the outstanding shares of Plastifol Verwaltungs GmbH (the
entities referred to in clauses (i), (ii) and (iii) are referred to herein
collectively as "Plastifol"). Plastifol, headquartered near Munich,
Germany, supplies interior trim systems and componets to the European
automotive industry. Plastifol had 1994 revenues of approximately $75
million. Total consideration for the partnership interests and stock of
Plastifol was approximately $60 million and was financed with borrowings
under the Company's revolving credit facility.
On July 16, 1995, the Company, Lear Seating Corporation ("Lear") and
AIHI Acquisition Corp., a wholly owned subsidiary of Lear ("Purchaser"),
entered into an Agreement and Plan of Merger (the "Merger Agreement"),
pursuant to which (i) Purchaser was to commence a tender offer to purchase,
for cash, all of the outstanding shares of the Company's Class A Common
Stock at a price of $33.50 per share (the "Offer") and (ii) following the
completion of the Offer and the satisfaction of certain conditions,
Purchaser was to merge with and into the Company (the "Merger"). The
Company's board of directors (the "Board") unanimously approved the Offer
and the Merger and determined that the terms of the Offer and the Merger are
fair to, and in the best interests of, the
<PAGE> 26
shareholders of the Company. Accordingly, the Board recommended that
shareholders of the Company accept the Offer and tender all of their shares
pursuant thereto.
On July 20, 1995, Purchaser commenced the Offer and the Company filed with the
Securities and Exchange Commission a Schedule 14D-9, which contained certain
information regarding the Offer and the Merger, including the approval and
recommendation of the Board and information considered by the Board prior to
approving and recommending the Offer and Merger. The Offer is conditioned
upon, among other things, (i) there being validly tendered prior to the
expiration of the Offer and not withdrawn that number of shares which, together
with the shares then owned by Lear, represents at least a majority of the
shares outstanding on a fully diluted basis; (ii) Lear having received the
financing necessary to consummate the Offer and the Merger from Chemical Bank
and Chemical Securities Inc. and (iii) other customary conditions, including
antitrust approval. The Offer will expire on August 16, 1995, unless it is
extended pursuant to the Merger Agreement.
<PAGE> 27
PLASTIFOL GmbH & CO. KG
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1994
Table of Contents
1. Independent Auditors' report
2. Balance sheet of December 31, 1994
3. Profit and loss statement for the period from January 1, 1994 to December
31, 1994
4. Cash flow statement for the year ended December 31, 1994
5. Voluntary notes to the financial statements
6. Significant differences between German and United States Generally Accepted
Accounting Principles
19
<PAGE> 28
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Plastifol GmbH & Co. KG
We have audited the accompanying balance sheet of Plastifol GmbH & Co. KG as of
31 December 1994 and the related profit and loss account and cash flow
statement for the year then ended. The financial statements are the
responsibility of the company's management. Our responsibility is to express
an opinion on the financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
in the United States. 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 that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Plastifol GmbH &
Co. KG as of 31 December 1994 and the results of their operations and their
cash flow for the year then ended in conformity with generally accepted
accounting principles in Germany.
Accounting principles generally accepted in Germany vary in certain significant
respects from accounting principles generally accepted in the United States. A
narrative description of certain significant differences, as applicable to
Plastifol GmbH & Co. KG, is included as an annex to the financial statements.
Munich, Germany KPMG Deutsche Treuhand-Gesellschaft
August 23, 1995 Aktiengesellschaft
Wirtschaftsprufungsgesellschaft
20
<PAGE> 29
PLASTIFOL GmbH & CO. KG
BALANCE SHEET AS AT DECEMBER 31, 1994
<TABLE>
<CAPTION>
ASSETS
as of December 31, 1994
----------------------------------
DM DM
<S> <C> <C>
A. FIXED ASSETS
I. PROPERTY, PLANT AND EQUIPMENT
1. Technical equipment, machinery 2,681,328,00
2. Other equipment 962,737,00
3. Advances paid and construction in
progress 207,736,16 3,851,801,16
II. FINANCIAL ASSETS
Investments 1,055,000,00
B. CURRENT ASSETS
I. INVENTORY
1. Raw materials and supplies 3,371,702,74
2. Work-in-process 178,764,00
3. Finished goods 1,611,760,00
4. Advances paid 1,546,190,40
-------------
6,708,417,14
LESS
Advances received 0,00 6,708,417,14
-------------
II. ACCOUNTS RECEIVABLE AND OTHER
ASSETS
1. Trade receivables 13,684,157,37
2. Accounts receivable due from
affiliates 3,522,264,29
3. Other assets 122,487,56 17,328,909,22
-------------
III. CASH AT BANK AND IN HAND 19,098,599,43
--------------
48,042,726,95
==============
<CAPTION>
EQUITY AND LIABILITIES
Allocation
Balance at Adjustments for Withdrawals of net Balance at
January 1, 1994 tax audit(1) reclassification income December 31, 1994
--------------- ----------- ---------------- ------------- -----------------
DM DM DM DM DM
<S> <C> <C> <C> <C> <C>
A. EQUITY
I. Unlimited partners
--no shareholding--
II. Limited partners
Capital accounts 12,196,688,00 0,00 0,00 103,312,00 12,300,000,00
Current accounts 7,359,458,57 737,374,88 -8,248,873,19 17,351,708,49 17,199,668,75
------------- ---------- ------------- -------------- --------------
19,556,146,57 737,374,88 -8,248,873,19 17,455,020,49 29,499,668,75
============= ========== ============= ============= ==============
B. SPECIAL RESERVES WITH
EQUITY PORTION
Reserve acc. to Sect. 34,
Para. 5 EStR 725,534,00
C. ACCRUALS
1. Accrual for pensions and
similar obligations 347,256,00
2. Tax accruals 2,010,000,00
3. Other accruals 3,471,100,00 5,828,356,00
------------
D. LIABILITIES
1. Trade payables 7,257,836,60
2. Liabilities due to affiliates 410,905,33
3. Other liabilities 4,320,426,27 11,989,168,20
------------ -------------
18,543,058,20
-------------
48,042,726,95
=============
</TABLE>
(1) adjusted without affecting the profit and loss statement.
21
<PAGE> 30
PLASTIFOL GmbH & CO. KG
PROFIT AND LOSS STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
1994
----------------------------------
DM DM
<S> <C> <C>
1. Turnover 106.038.627.56
2. Increase/decrease in finished goods and work-in-process 200.196.10
3. Other operating income 4.879.293.84
4. Material costs
a) Cost of raw materials, supplies and merchandise 47.238.760.06
b) Cost of purchased services 27.516.70 47.266.276.76
-------------
5. Personnel expenses
a) Wages and salaries 22.096.840.14
b) Social security, pensions and other benefit costs 3.959.803.95
--thereof for pensions - DM 74.773.00-- 26.056.644.09
-------------
6. Depreciation 4.525.518.92
--thereof accelerated depreciation DM 2.114.127.00--
7. Other operating expenses 13.294.113.22
--thereof addition to special reserve with equity portion DM 0.00
8. Other interest and similar income 1.139.099.85
9. Interest and similar expenses 86.474.85
10. Expense due to transfer to losses 226.436.95
-------------
Results from ordinary activities 20.801.752.56
11. Income taxes 3.204.685.50
12. Other taxes 142.046.57
-------------
13. Net profit for the year (1) 17.455.020.49
=============
</TABLE>
(1) before interest relating to current accounts
22
<PAGE> 31
PLASTIFOL GmbH & CO. KG
CASH FLOW STATEMENT FOR THE YEAR ENDED DECEMER 31, 1994
<TABLE>
<CAPTION>
KDM
<S> <C> <C>
I. CASH FLOWS FROM OPERATIONS
1. Net profit 17,455
2. Depreciation + 4,526
3. Decrease in special reserves with equity portion - 5,063
-------
16,918
4. Increase in inventory - 2,058
5. Increase in trade receivables - 4,224
6. Increase in trade payables + 2,646
7. Increase in short-term accruals + 1,765
-------
15,047
8. Increase in other assets - 182
9. Decrease in other liabilities - 6,822
-------
Cash-flow from operations 8,043
-------
II. CASH FLOWS FROM INVESTMENTS
1. Investments in fixed assets - 4,753
2. Disposals of fixed assets + 41
-------
- 4,712
-------
III. CASH FLOWS FROM FINANCING ACTIVITIES
Withdrawals/Paid to the limited partners - 7,512
-------
KDM
Cash at beginning of period 23.280
Cash at end of period 19.099 - 4.181
------ =======
</TABLE>
23
<PAGE> 32
VOLUNTARY NOTES TO THE 1994 FINANCIAL STATEMENTS
-- NOT REQUIRED BY GERMAN LAW FOR THE COMPANY --
General
-------
The Company is a limited partnership under German law and is registered with
the German Commercial Register of the District Court of Munich/Germany. The
personally liable (unlimited) partner is Plastifol Verwaltungs GmbH,
Ebersberg/Germany. The unlimited partner does not participate in the
Company's equity. Management and representation of the Company is performed by
the unlimited partner. General managers of the Company were Mr. Michael Kobe
and (since July 1, 1994) Ms. Franziska Schedlbauer.
Accounting policies
-------------------
The financial statements have been prepared in accordance with Sections
238 - 256 of the German Commercial Code (HGB); with respect to the
classification, Section 266 and Section 275 have been applied as deemed
appropriate. As the Company operates as a partnership, such provisions of the
HGB provide that footnotes to the financial statement are optional. The
Company has provided certain footnote information for the benefit of the
reader.
No changes have been made to the accounting policies compared to the prior
year. Valuation is based mainly on taxation principles within the scope allowed
in commercial law.
Fixed assets have been stated at acquisition or manufacturing costs, less
scheduled depreciation and accelerated depreciation according to the provisions
of the law for the Promotion of the Economic Development of the German Border
Areas ("Zonenrandforderungsgesetz", ZonenRFG) and subsidies.
Raw materials and supplies have been stated at acquisition costs; other
inventory are valued using the inverse method (i.e. sales price less profit and
selling expenses): the reduction made is unchanged compared to the previous
year. Financial assets have been stated at acquisition costs.
Receivables are stated at nominal value. The general credit risk has been
covered by a general bad debt provision. The reserve provided according to
ZonenRFG was released in 1994.
All risks are adequately covered by accruals.
Liabilities are valued at the amount to be repaid.
Receivables and liabilities stated in foreign currency are translated into the
respective local currency at the buying or selling rate on the day they are
incurred. If translation at the rates applicable on the balance sheet date
lowers the receivables or increases the liabilities in DM, these rates are
used.
24
<PAGE> 33
NOTES TO THE BALANCE SHEET AND INCOME STATEMENT
A. MOVEMENT OF FIXED ASSETS AND INVESTMENT
<TABLE>
<Caption
net book value Additions/re- Investment net book value
classifications Subsidy Disposals Depreciation Accelerated
01.01.1994 depreciation 31.12.1994
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
KDM KDM KDM KDM KDM KDM KDM
Technical equipment, machinery 2.522 4.353 429 33 1.802 1.930 2.681
Other equipment 1.143 662 41 8 609 184 963
Advances paid and construction in progress 0 208 0 0 0 0 208
TANGIBLE FIXED ASSETS 3.665 5.223 470 41 2.411 2.114 3.852
shares in subsidiaries 1.055 0 0 0 0 0 1.055
INVESTMENTS 1.055 0 0 0 0 0 1.055
------ ----- --- -- ----- ----- -----
FIXED ASSETS 4.720 5.223 470 41 2.411 2.114 4.907
====== ===== === == ===== ===== =====
<CAPTION>
A.II SHARES IN SUBSIDIARIES
Shareholding Equity
-------------------------
<S> <C> <C>
% KDM
Plastifol Beteiligungen GmbH, Ebersberg 100.00 1.000
AVB GmbH, Ebersberg 55.00 100
B.III CASH AT BANK AND IN HAND
KDM
Petty cash 12
cash in postal bank account 1
cash at banks 19.086
------
19.099
======
C.3 OTHER ACCRUALS
KDM
Bonuses 1.094
outstanding supplier's charge 842
vacation not yet taken 428
occupational insurance 395
severance payment 400
Other 312
------
3,471
======
D. LIABILITIES
All liabilities are due within one year
</TABLE>
25
<PAGE> 34
<TABLE>
<CAPTION>
<S> <C> <C>
1. TURNOVER KDM
Germany 100.879
Abroad 5.911
-------
106.790
LESS
Discounts -747
rebates -4
-------
106.039
=======
3. OTHER OPERATING INCOME
KDM
Release of special reserve with equity portion
(Sect 3 ZonenRFG) 4.594
Income from the sale of fixed assets 236
Other 49
-------
4.879
=======
7. OTHER OPERATING EXPENSES
KDM
Rent expenses 2.659
Operating expenses 5.981
Administrative expenses 1.604
Selling expenses 3.050
-------
13.294
=======
AVERAGE NUMBERS OF EMPLOYEES
Commercial employees 32
Technical employees 32
Industrial workers 410
-------
474
=======
</TABLE>
26
<PAGE> 35
ANNEX TO THE 1994 FINANCIAL STATEMENTS
SIGNIFICANT DIFFERENCES BETWEEN GERMAN AND UNITED STATES
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AS APPLICABLE
TO THE COMPANY
The Company's Financial Statements have been prepared in accordance
with the German Commercial Code (Handelsgesetzbuch) which represents generally
accepted accounting principles in Germany ("German GAAP"). German GAAP differs
in certain significant respects from United States generally accepted
accounting principles ("U.S. GAAP"). The Company has not prepared a
reconciliation between its financial position and results of operations
calculated under German GAAP to the comparable figures under U.S. GAAP.
However, the following represent the significant differences that would affect
the determination of the net income (loss) and stockholders' equity of the
Company for the period for which the financial statements have been presented
herein:
FIXED TANGIBLE ASSETS
The Company depreciates through the income statement fixed tangible assets
(plant and equipment) based upon depreciation rates prescribed by German tax
law. Under U.S. GAAP tangible fixed assets are depreciated either on a
straight-line or accelerated basis through the income statement over their
useful life. If the Company was depreciating its fixed tangible assets on a
straight-line basis over their expected useful lives the net book value of
tangible assets at December 31, 1994 would be substantially higher.
PENSIONS
The Company provides for pension costs and similar obligations including post
retirement benefits based upon actuarial studies using the entry age methods as
defined in the German tax code. U.S. GAAP is more prescriptive particularly as
to the use of actuarial assumptions and requires that a different actuarial
method (the projected unit credit method) be used.
TRANSLATION OF FOREIGN CURRENCIES
Under German GAAP, receivables and liabilities stated in foreign currency are
translated into the respective local currency at the buying or selling rate on
the day they are incurred. If translation at the rates applicable on the
balance sheet date lowers the receivables or increases the liabilities in DM,
these rates are used. Under U.S. GAAP, assets and liabilities denominated in a
foreign currency are recorded at period end rates wth any resulting gain or loss
recognized in the income statement.
27
<PAGE> 36
DEFERRED TAXES
Under German GAAP, deferred tax assets are generally recognized only for
exceptional tax depreciation not included in the financial statements and for
consolidation adjustments. Under U.S. GAAP, deferred taxes are provided for
all temporary differences, including net operating loss carryforwards where it
is more likely than not that the tax benefit will be realised in future
periods, based upon enacted tax rates. The Company has no deferred tax assets
or liabilities in their financial statements under German GAAP.
RECORDING OF PROVISIONS, RESERVES, VALUATION ADJUSTMENTS
Since under German tax law a company's financial statements prepared for
commercial purpose are also the basis of its tax accounts, tax considerations
influence their preparation. Companies therefore may tend to apply more
conservative valuation methods in their financial statements than they might
otherwise report. German GAAP permits the recognition of accruals or
provisions for uncertain liabilities and loss contingencies. The amount of
such accruals or provisions represents the anticipated expense to the Company.
Under U.S. GAAP, an accrual for loss contingency is recorded by a charge to
income if it is both probable that an asset has been impaired or a liability
has been incurred and the minimum amount of loss can be reasonably estimated.
Unspecified liability reserves for future losses, costs or risks do not meet the
condition for accrual under U.S. GAAP. Application of German GAAP may lead to
higher accrual balances and reserves for possible risks than allowed under U.S.
GAAP. However, under German GAAP, provisions, reserves and valuation
adjustments previously established may also be released in subsequent periods
with a resultant increase in reported profits in the period released.
PRESENTATION OF STATEMENT OF OPERATIONS
A statement of operations under German GAAP is normally prepared in the
expenditure format, rather than the cost of sales format as required by US
GAAP.
28
<PAGE> 37
ITEM 7B: PRO FORMA FINANCIAL DATA
The following pro forma unaudited consolidated statements of operations of
the Company were prepared to illustrate the estimated effects of (i) the AIH
Acquisition (including the refinancing of certain debt of AIH pursuant to the
New Credit Agreement), (ii) the acquisition by the Company in 1994 of the
primary automotive seat systems supplier to Fiat S.p.a. (the "FSB
Acquisition"), (iii) certain acquisitions completed by AIH prior to the
acquisition of AIH by the Company, (iv) the initial public offering of Common
Stock by the Company (the "IPO") and the application of the net proceeds
therefrom in April 1994, (v) the refinancing of the Company's 14% Subordinated
Debentures due 2000 (the "Subordinated Debentures") with its 8 1/4%
Subordinated Notes due 2002 (the "Subordinated Notes") and (vi) the refinancing
of the prior credit facility (the "Prior Credit Facility") with borrowings
under the New Credit Agreement (collectively, the "Pro Forma Transactions"),
as if the Pro Forma Transactions had occurred on January 1, 1994.
The following pro forma unaudited consolidated balance sheet (collectively
with the pro forma unaudited consolidated statements of operations, the "Pro
Forma Statements") was prepared as if the AIH Acquisition and the acquisition of
Plastifol by AIH had occurred as of July 1, 1995.
The Pro Forma Statements do not purport to represent (i) the actual results
of operations or financial position of the Company had the Pro Forma
Transactions occurred on the dates assumed or (ii) the results to be expected in
the future.
The pro forma adjustments are based upon available information and upon
certain assumptions that management believes are reasonable. The Pro Forma
Statements and accompanying notes should be read in conjunction with the
historical financial statements of the Company, AIH, FSB and Plastifol,
including the notes thereto.
PRO FORMA UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JULY 1, 1995
<TABLE>
<CAPTION>
AIH OPERATING AND
LEAR AIH ACQUISITIONS AIH AIH FINANCING
HISTORICAL HISTORICAL(1) HISTORICAL(2) ADJUSTMENTS(3) PRO FORMA ADJUSTMENTS PRO FORMA
---------- ------------- -------------- -------------- --------- ------------- ---------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales................ $ 2,186.1 $ 377.1 $ 49.1 $ -- $ 426.2 $ -- $2,612.3
Cost of sales............ 2,014.7 304.1 36.4 -- 340.5 -- 2,355.2
---------- ------------- ------ ------ --------- ------------- ---------
Gross profit............. 171.4 73.0 12.7 -- 85.7 -- 257.1
Selling, general and
administrative
expenses............... 50.1 24.9 4.2 -- 29.1 (0.4)(4) 78.8
Amortization............. 6.4 2.6 -- .5 3.1 4.7(5) 14.2
---------- ------------- ------ ------ --------- ------------- ---------
Operating income......... 114.9 45.5 8.5 (.5) 53.5 (4.3) 164.1
Interest expense......... 28.5 9.0 -- 2.1 11.1 23.7(6) 63.3
Other expense, net....... 5.8 -- -- -- -- -- 5.8
---------- ------------- ------ ------ --------- ------------- ---------
Income before income
taxes.................. 80.6 36.5 8.5 (2.6) 42.4 (28.0) 95.0
Income taxes............. 34.7 14.6 4.3 (.7) 18.2 (8.2)(7) 44.7
---------- ------------- ------ ------ --------- ------------- ---------
Net income............... $ 45.9 $ 21.9 $ 4.2 $ (1.9) $ 24.2 $ (19.8) $ 50.3
======== ========== =========== ============ ======== =========== ========
Net income per share..... $ .92 $ 1.01
Weighted average shares
outstanding (in
millions).............. 49.6 .1(10) 49.7
</TABLE>
29
<PAGE> 38
PRO FORMA UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
AIH
LEAR FSB FSB LEAR/FSB AIH ACQUISITIONS AIH AIH
HISTORICAL HISTORICAL(8) ADJUSTMENTS(9) PRO FORMA HISTORICAL(1) HISTORICAL(2) ADJUSTMENTS(3) PRO FORMA
---------- ------------- -------------- --------- ------------- --------------- -------------- ---------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales........ $ 3,147.5 $ 451.1 $ 4.8 $3,603.4 $ 512.8 $ 239.4 $ -- $ 752.2
Cost of sales.... 2,883.9 443.9 (1.0) 3,326.8 408.9 210.7 (1.8) 617.8
---------- ------------- ------ --------- ------------- ------- ------ ---------
Gross profit..... 263.6 7.2 5.8 276.6 103.9 28.7 1.8 134.4
Selling, general
and
administrative
expenses....... 82.6 31.5 (5.5) 108.6 35.3 14.4 (2.9) 46.8
Amortization..... 11.4 -- 2.0 13.4 4.7 -- 1.5 6.2
---------- ------------- ------ --------- ------------- ------- ------ ---------
Operating income
(loss)......... 169.6 (24.3) 9.3 154.6 63.9 14.3 3.2 81.4
Interest
expense........ 46.7 5.3 4.4 56.4 9.3 (.3) 8.7 17.7
Other expense
(income),
net............ 8.1 .8 -- 8.9 -- (.2) .3 .1
---------- ------------- ------ --------- ------------- ------- ------ ---------
Income (loss)
before income
taxes.......... 114.8 (30.4) 4.9 89.3 54.6 14.8 (5.8) 63.6
Income taxes..... 55.0 .2 (1.5) 53.7 21.9 3.5 (1.7) 23.7
---------- ------------- ------ --------- ------------- ------- ------ ---------
Net income
(loss)......... $ 59.8 $ (30.6) $ 6.4 $ 35.6 $ 32.7 $ 11.3 $ (4.1) $ 39.9
======== ========== ============ ======== ========== ============ ============ ========
Net income per
share.......... $ 1.26
Weighted average
shares
outstanding (in
millions)...... 47.4
</TABLE>
<TABLE>
<CAPTION>
OPERATING AND
LEAR/FSB AIH FINANCING
PRO FORMA PRO FORMA ADJUSTMENTS PRO FORMA
--------- --------- ------------- ---------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales........................................... $3,603.4 $ 752.2 $ -- $4,355.6
Cost of sales....................................... 3,326.8 617.8 -- 3,944.6
--------- --------- ------------- ---------
Gross profit........................................ 276.6 134.4 -- 411.0
Selling, general and administrative expenses........ 108.6 46.8 (.6)(4) 154.8
Amortization........................................ 13.4 6.2 9.5 (5) 29.1
--------- --------- ------------- ---------
Operating income.................................... 154.6 81.4 (8.9) 227.1
Interest expense.................................... 56.4 17.7 24.8 (6) 98.9
Other expense, net.................................. 8.9 .1 -- 9.0
--------- --------- ------------- ---------
Income before income taxes.......................... 89.3 63.6 (33.7) 119.2
Income taxes........................................ 53.7 23.7 (8.5)(7) 68.9
--------- --------- ------------- ---------
Net income.......................................... $ 35.6 $ 39.9 $ (25.2) $ 50.3
======== ======== =========== ========
Net income per share................................ $ 1.01
Weighted average shares outstanding (in millions)... 2.2(11) 49.6
</TABLE>
-------------------------
(1) The AIH Historical information represents the audited results of operations
for the year ended December 31, 1994 and the unaudited results of
operations for the six months ended July 1, 1995.
(2) The AIH Acquisitions Historical information represents the results of
operations for three companies acquired by AIH prior to their respective
acquisitions by AIH. The acquisitions were (i) John Cotton Limited
("Cotton") headquartered in Manchester, England and acquired in May 1994,
(ii) the Gulfstream Division of O'Sullivan Corporation ("Gulfstream")
located in Ohio and Virginia and acquired in December 1994, and (iii)
Plastifol headquartered in Ebersberg, Germany and acquired in July 1995.
(3) The AIH Adjustments information with respect to the Cotton, Gulfstream and
Plastifol acquisitions represents (i) adjustments to depreciation expense
due to the revaluation of assets; (ii) reclassifications needed to present
information on a basis that is consistent with AIH Historical information;
(iii) the elimination of management fees charged by a previous owner of
Gulfstream; (iv) interest on borrowings by AIH to finance the acquisitions;
and (v) the related income tax effects.
(4) Represents the elimination of certain management fees charged to AIH by an
affiliate of AIH which ceased to be payable upon the completion of the AIH
Acquisition.
30
<PAGE> 39
(5) The adjustment to goodwill for the AIH Acquisition represents the
following:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JULY 1, 1995 DECEMBER 31, 1994
---------------- -----------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Amortization of goodwill from the AIH Acquisition................. $ 7.3 $14.7
Elimination of the historical goodwill amortization of AIH........ (2.6) (5.2)
------ ------
$ 4.7 $ 9.5
=============== ===============
</TABLE>
(6) Reflects interest expense changes as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JULY 1, 1995 DECEMBER 31, 1994
---------------- -----------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Estimated interest on borrowings to finance the AIH Acquisition at
interest rates of 7.2% in the first six months of 1995 and 5.1%
for the year ended December 31, 1994............................. 32.6 46.2
Elimination of interest on AIH debt being refinanced............... (10.1) (18.6)
Reduction in interest due to application of proceeds from the
IPO.............................................................. -- (1.2)
Elimination of interest on the Subordinated Debentures............. -- (3.3)
Interest on the Subordinated Notes................................. -- 1.1
Interest on borrowings to finance fees and expenses related to the
New Credit Agreement............................................. .3 .5
Change in commitment fees due to increased availability under the
New Credit Agreement............................................. .4 .9
Change in interest expense due to rate differences between the
Prior Credit Facility and the New Credit Agreement............... .2 (1.6)
Change in deferred finance fees due to the refinancing of the Prior
Credit Facility and the issuance of the Subordinated Notes....... .3 .8
------ -------
$ 23.7 $ 24.8
====== =======
</TABLE>
(7) Reflects the income tax effects of the operating and financing adjustments.
(8) The FSB Historical information for the year ended December 31, 1994
represents the results of operations of FSB translated from lira to U.S.
dollars at an average exchange rate of 1,611 Lira to one U.S. dollar.
(9) The FSB Adjustments information represents (i) management's estimates of
the effects of product pricing adjustments negotiated in connection with
the FSB Acquisition of $4.8 million; (ii) the elimination of certain costs
being assumed by the seller of $1.5 million; (iii) an increase in
depreciation expense due to the revaluation of the assets of $.5 million;
(iv) on-going savings of $3.5 million as a result of consolidating
technical centers; (v) the elimination of management fees charged by the
parent of the seller of $2.0 million; (vi) amortization of goodwill as a
result of the FSB Acquisition of $2.0 million; (vii) an increase in
interest expense to finance the FSB Acquisition of $4.4 million; and (viii)
the related income tax effects of $1.5 million. The results from operations
of FSB for the six months ended July 1, 1995 are included in the historical
results of the Company.
(10) Reflects the effect on weighted average shares outstanding of options
originally granted under the Automotive Industries Holding, Inc. 1992 Key
Employee Stock Option Plan (the "AIH Options") which were converted into
options to purchase Common Stock in connection with the AIH Acquisition.
(11) Reflects the effect on weighted average shares outstanding as if the IPO
occurred on January 1, 1994.
31
<PAGE> 40
PRO FORMA UNAUDITED CONSOLIDATED BALANCE SHEET
AS OF JULY 1, 1995
<TABLE>
<CAPTION>
OPERATING
ACQUISITION AND AND
LEAR AIH AIH AIH VALUATION OF FINANCING
HISTORICAL HISTORICAL ACQUISITIONS(1) ADJUSTED AIH(2) ADJUSTMENTS PRO FORMA
---------- ---------- -------------- -------- ---------------- ----------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash....................... $ 53.0 $ -- $ -- $ -- $ (904.3) $ 904.3(3) $ 53.0
Accounts receivable, net... 700.2 123.2 9.8 133.0 -- -- 833.2
Inventories................ 111.0 42.0 4.8 46.8 -- -- 157.8
Other current assets....... 94.9 40.6 0.4 41.0 -- -- 135.9
---------- ---------- ----- -------- ------- ----------- ---------
959.1 205.8 15.0 220.8 (904.3) 904.3 1,179.9
---------- ---------- ----- -------- ------- ----------- ---------
Property, Plant and
Equipment, net............. 363.9 233.4 21.3 254.7 -- -- 618.6
Other Assets:
Goodwill and other
intangibles, net......... 494.4 146.4 39.1 185.5 404.0 -- 1,083.9
Deferred finance fees and
other.................... 37.7 25.7 3.1 28.8 -- 5.3 (4) 71.8
---------- ---------- ----- -------- ------- ----------- ---------
532.1 172.1 42.2 214.3 404.0 5.3 1,155.7
---------- ---------- ----- -------- ------- ----------- ---------
$1,855.1 $611.3 $ 78.5 $689.8 $ (500.3) $ 909.6 $2,954.2
======== ======== =========== ======= ============= ========== ========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities:
Short-term borrowings...... $ 19.2 $ -- $ -- $ -- $ -- $ -- $ 19.2
Cash overdrafts............ 55.2 -- -- -- -- -- 55.2
Accounts payable........... 766.0 75.4 5.2 80.6 -- -- 846.6
Accrued liabilities........ 199.5 38.3 5.4 43.7 -- (1.5)(4) 241.7
Current portion of
long-term debt........... 1.7 3.9 -- 3.9 -- -- 5.6
---------- ---------- ----- -------- ------- ----------- ---------
1,041.6 117.6 10.6 128.2 -- (1.5) 1,168.3
---------- ---------- ----- -------- ------- ----------- ---------
Long-Term Liabilities:
Long-term debt............. 460.1 221.1 60.0 281.1 (264.8) 913.8 (5) 1,390.2
Deferred national income
taxes.................... 24.3 4.4 7.9 12.3 -- -- 36.6
Other...................... 82.6 26.9 -- 26.9 3.9 -- 113.4
---------- ---------- ----- -------- ------- ----------- ---------
567.0 252.4 67.9 320.3 (260.9) 913.8 1,540.2
---------- ---------- ----- -------- ------- ----------- ---------
Stockholders' Equity......... 246.5 241.3 -- 241.3 (239.4) (2.7)(6) 245.7
---------- ---------- ----- -------- ------- ----------- ---------
$1,855.1 $611.3 $ 78.5 $689.8 $ (500.3) $ 909.6 $2,954.2
======== ======== =========== ======= ============= ========== ========
</TABLE>
-------------------------
(1) Represents the allocation of the purchase price to net assets of Plastifol
which was acquired by AIH in July 1995.
(2) The purchase price of $926.4 million consists of: (i) $625.7 million to
purchase all of the common stock of AIH ($623.8 million in cash and $1.9
million in new Lear options), (ii) $282.3 million of debt assumed
in connection with the AIH Acquisition, and (iii) $18.4 million to pay fees
and expenses related to the AIH Acquisition. The AIH Acquisition was
accounted for using the purchase method of accounting and the total purchase
cost was allocated first to assets and liabilities based on their respective
fair values, with the remainder allocated to goodwill. The allocation of the
purchase price above is based on historical costs and management's estimates
which may differ from the final allocation.
(3) Reflects proceeds of borrowings under the New Credit Agreement of $904.3
million.
(4) Reflects the capitalization of fees incurred in establishing the New Credit
Agreement of $9.5 million, net of the unamortized portion of fees from the
Prior Credit Facility of $4.2 million being written-off. Also reflects the
related income tax benefit of $1.5 million from the write-off.
(5) Reflects borrowings under the New Credit Agreement of $913.8 million to
finance the AIH purchase price and fees and expenses incurred to establish
the New Credit Agreement.
(6) Reflects the write-off of deferred finance fees, net of income
taxes, of $2.7 million related to the refinancing of the Prior Credit
Facility.
32
<PAGE> 41
ITEM 7C: Listing of Exhibits
2.1 Agreement and Plan of Merger, dated as of July 16, 1995, among the
Company, AIHI Acquisition Corp. and Automotive Industries Holding, Inc.
23.1 Consent of Arthur Andersen LLP with respect to AIH Financial
Statements.
23.2 Consent of KPMG Deutsche Treuhand-Gesellschaft with respect to
Plastifol GmbH & Co. KG Financial Statements.
99.1 Credit Agreement, dated as of August 17, 1995, among Lear Seating
Corporation, the several financial institutions parties thereto
(collectively, the "Banks"), Chemical Bank, a New York banking
corporation, as administrative agent for the Banks and the Managing
Agents, Co-Agents and Lead Managers identified therein.
33
<PAGE> 42
LEAR SEATING CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on behalf by the
undersigned thereunto duly authorized.
LEAR SEATING CORPORATION
Dated: August 25, 1995 By: /s/ James H. Vandenberghe
-------------------------
James H. Vandenberghe
Executive Vice President
Chief Financial Officer
34
<PAGE> 43
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
----------- ----------- --------
<S> <C>
2.1 Agreement and Plan of Merger, dated as of July 16, 1995, among the Company,
AIHI Acquisition Corp. and Automotive Industries Holding, Inc.
23.1 Consent of Arthur Andersen LLP with respect to AIH Financial Statements.
23.2 Consent of KPMG Deutsche Treuhand-Gesellschaft with respect to Plastifol
GmbH & Co. KG Financial Statements.
99.1 $1.5 Billion Credit Agreement, dated as of August 17, 1995, among Lear
Seating Corporation, a Delaware corporation (the "Borrower"), The several
financial institutions parties to this Agreement from time to time
(collectively, the "Banks"; individually, a "Bank"), Chemical Bank, a New York
banking corporation, as administrative agent for the Banks hereunder (in such
capacity, the "Agent"), and the Managing Agents, Co-Agents and Lead Managers
indentified on the signature pages hereof.
</TABLE>
<PAGE> 1
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
DATED AS OF
JULY 16, 1995
AMONG
AUTOMOTIVE INDUSTRIES HOLDING, INC.,
AIHI ACQUISITION CORP.
AND
LEAR SEATING CORPORATION
<PAGE> 2
AGREEMENT AND PLAN OF MERGER
AGREEMENT dated as of July 16, 1995 (this "Agreement") among
Automotive Industries Holding, Inc., a Delaware corporation (the "Company"),
Lear Seating Corporation, a Delaware corporation ("Buyer"), and AIHI
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
Buyer ("Merger Subsidiary").
RECITALS
WHEREAS, the Board of Directors of the Buyer, the Merger
Subsidiary and the Company have each approved the acquisition of the Company by
the Buyer upon the terms and subject to the conditions set forth herein;
WHEREAS, the Buyer and the Merger Subsidiary are unwilling to
enter into this Agreement (and effect the transactions contemplated hereby)
unless, contemporaneously with the execution and delivery hereof, (i) certain
beneficial and record holders of the Shares (as defined in Section 1.01)
identified on Exhibit A hereto enter into agreements (collectively, the
"Stockholders Agreement") providing for certain matters with respect to their
Shares, including the tender of their Shares and certain other actions relating
to the Offer (as defined in Section 1.01) and the other transactions
contemplated by this Agreement, and in order to induce the Buyer and the Merger
Subsidiary to enter into this Agreement, the Board of Directors of the Company
has approved the execution and delivery of the Stockholders Agreement so that
the restrictions on "business combinations" set forth in Section 203 of
Delaware Law (as defined below) do not and will not apply to Buyer, Merger
Subsidiary or affiliates or associates of Merger Subsidiary as a result of the
execution and delivery of the Stockholders Agreement or the consummation of the
transactions contemplated thereby or by this Agreement, and such stockholders
have agreed to execute and deliver the Stockholders Agreement.
WHEREAS, in furtherance of the acquisition of the Company by
the Buyer on the terms and subject to the conditions set forth herein, the
Board of Directors of the Buyer, the Merger Subsidiary and the Company have
each approved the merger of the Merger
<PAGE> 3
Subsidiary with and into the Company in accordance with the terms of this
Agreement and the General Corporation Law of the State of Delaware (the
"Delaware Law") and with any other applicable law;
WHEREAS, the Board of Directors of the Company has, in light
of and subject to the terms and conditions set forth herein, (i) unanimously
determined that (x) the consideration to be paid for each Share in the Offer and
the Merger (as defined in Section 2.01) is fair to the stockholders of the
Company and (y) the Offer and the Merger are otherwise in the best interests of
the Company and its stockholders, and (ii) resolved to approve and adopt this
Agreement and the transactions contemplated hereby and to recommend acceptance
of the Offer and approval and adoption by the stockholders of the Company of
this Agreement; and
WHEREAS, the Buyer and Merger Subsidiary are unwilling to
enter this Agreement (and effect the consummation of the transactions
contemplated hereby) unless, contemporaneously with the execution and delivery
hereof, certain beneficial and record holders of Shares and their affiliates
identified on Exhibit B hereto enter into an agreement, effective upon
consummation of the Offer, not to compete with the Company and the Buyer (the
"Noncompete Agreement"), and in order to induce the Buyer and Merger Subsidiary
to enter into this Agreement, such stockholders and affiliates have agreed to
execute and deliver the Noncompete Agreement.
NOW, THEREFORE, in consideration of the forgoing and the
mutual premises, representations, warranties, covenants and agreements herein
contained, the parties hereto agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01 The Offer.
(a) Provided that this Agreement shall not have been
terminated in accordance with Article X hereof and that none of the conditions
set forth in Annex I hereto shall have occurred and be
- 2 -
<PAGE> 4
continuing, Buyer and Merger Subsidiary shall, as promptly as practicable
following the date hereof and in no event later than five business days after
the public announcement of the execution and delivery of this Agreement,
commence a tender offer (within the meaning of Rule 14D-2 under the Securities
Exchange Act of 1934, as amended, (including the rules and regulations
promulgated thereunder, the "Exchange Act")) (the "Offer") to purchase all of
the outstanding shares of Class A Common Stock, $.01 par value, of the Company
(the "Shares") at a price of $33.50 per Share, net to the seller in cash. The
obligation of Merger Subsidiary to accept for payment and to pay for any Shares
tendered in the Offer shall be subject only (i) to the condition that there
shall be validly tendered prior to the expiration date of the Offer and not
withdrawn a number of Shares which, together with the Shares then owned by
Buyer or Merger Subsidiary, represents at least a majority of the outstanding
Shares on a fully-diluted basis on the date of purchase ("on a fully-diluted
basis" meaning, as of any date: the number of Shares outstanding, together
with Shares the Company is then required to issue pursuant to obligations
outstanding at that date under employee stock option or other benefit plans or
otherwise (assuming all options and other rights to acquire Shares are fully
vested and exercisable and all Shares issuable at any time have been issued),
including without limitation, pursuant to the Company Stock Options, the
Warrants, the Exchangeable Notes and the ASAA Preferred Stock (each as defined
in Section 2.05) and pursuant to the Stock Purchase Plan (as defined in Section
4.03)) (the "Minimum Condition"), (ii) the condition (the "Financing
Condition") that Buyer shall have received the Financing (as defined below)
necessary to consummate the Offer and the Merger contemplated by the commitment
letter dated July 7, 1995 from Chemical Bank and Chemical Securities Inc. (the
"Financing Commitment Letter") pursuant to which, subject to the terms and
conditions thereof, Chemical Bank has committed to provide all of the financing
("Financing") necessary to purchase all outstanding Shares pursuant to the
Offer and the Merger, and (iii) to the other conditions set forth in Annex I
hereto.
(b) Without the prior written consent of the Company,
neither Buyer nor Merger Subsidiary shall (i) decrease the price per Share or
change the form of consideration payable in the Offer, (ii) decrease the number
of Shares sought in the Offer, (iii) amend
- 3 -
<PAGE> 5
or waive satisfaction of the Minimum Condition, (iv) change or impose
additional conditions to the Offer or amend any other term of the Offer in any
manner adverse to the holders of Shares, or (v) extend the expiration date of
the Offer (except as required by applicable law and except that Merger
Subsidiary may extend the expiration date of the Offer for up to sixty days
after the initial expiration date in the event that any condition to the Offer
is not satisfied); provided, however, that, except as set forth above, the
Merger Subsidiary may waive any other condition to the Offer in its sole
discretion; and provided further, that the Offer may be extended in connection
with an increase in the consideration to be paid pursuant to the Offer so as to
comply with applicable rules and regulations of the United States Securities
and Exchange Commission (the "SEC"). Assuming the prior satisfaction or waiver
of the conditions to the Offer, upon the terms of the Offer, the Merger
Subsidiary will accept for payment and purchase, as soon as permitted under the
terms of the Offer, all Shares validly tendered and not withdrawn prior to the
expiration of the Offer.
(c) As soon as practicable on the date of commencement of
the Offer, Buyer and Merger Subsidiary shall file or cause to be filed with the
SEC a Tender Offer Statement on Schedule 14D-1(the "Schedule 14D-1") with
respect to the Offer which shall contain the offer to purchase and related
letter of transmittal and other ancillary Offer documents and instruments
pursuant to which the Offer will be made (collectively with any supplements or
amendments thereto, the "Offer Documents") and shall contain (or shall be
amended in a timely manner to contain) all information which is required to be
included therein in accordance with the Exchange Act and the rules and
regulations thereunder and any other applicable law. Each of Buyer and Merger
Subsidiary, on the one hand, and the Company, on the other hand, agree promptly
to correct any information provided by either of them for use in the Offer
Documents if and to the extent that it shall have become false or misleading in
any material respect and Merger Subsidiary further agrees to take all steps
necessary to cause the Offer Documents as so corrected to be filed promptly
with the SEC and to be disseminated to the stockholders of the Company, in each
case as and to the extent required by applicable law. The Company and its
counsel shall be given the opportunity to review the Offer
- 4 -
<PAGE> 6
Documents and any amendments thereto prior to the filing thereof with the SEC.
SECTION 1.02 Company Action.
(a) The Company hereby consents to the Offer and
represents that (i) the Company's Board of Directors (the "Board") has (x) at a
meeting duly called and held unanimously approved this Agreement and the
transactions contemplated hereby, including the Offer and the Merger (as
defined in Section 2.01), (y) resolved to recommend acceptance of the Offer and
adoption and approval of this Agreement and the Merger by the Company's
stockholders and (z) unanimously determined that each of this Agreement, the
Offer and the Merger are fair to and in the best interests of the stockholders
of the Company, and (ii) Donaldson, Lufkin & Jenrette Securities Corporation
("DLJ") and Robert W. Baird & Co. Incorporated ("Baird") have each delivered
to the Board their respective opinion that the per Share consideration to be
received by the Company's stockholders pursuant to the Offer and the Merger is
fair to such stockholders from a financial point of view. The Company hereby
consents to the inclusion in Buyer's and Merger Subsidiary's offering documents
relating to the Offer of the recommendations referred to in this Section 1.02.
(b) The Company will promptly furnish Buyer with a list
of its stockholders, mailing labels containing the names and addresses of all
record holders of Shares and lists of securities positions of Shares held in
stock depositories, as of the most recent practicable date, and will provide to
Buyer such additional information (including, without limitation, updated lists
of stockholders, mailing labels and lists of securities positions) and such
other assistance as Buyer may reasonably request in connection with the Offer.
Subject to the requirements of applicable law, and except for such steps as are
necessary to disseminate any documents necessary to consummate the Merger or
the Offer, Buyer shall hold in confidence the information contained in such
labels, listings and files, shall use such information only in connection with
the Merger and the Offer, and if this Agreement is terminated in accordance
with Section 10.01, shall deliver to the Company all copies of such information
then in its possession.
- 5 -
<PAGE> 7
(c) Contemporaneously with the commencement of the Offer
as provided for in Section 1.01, the Company will file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 (the "14D-9") which
shall reflect the recommendations and actions of the Board referred to above,
subject to the fiduciary duties of the Board under applicable law as advised by
independent legal counsel (who may be the Company's regularly engaged legal
counsel). Each of the Company, on the one hand, and Buyer and Merger
Subsidiary, on the other hand, agree promptly to correct any information
provided by either of them for use in the 14D-9 if and to the extent that it
shall have become false or misleading in any material respect, and the Company
further agrees to take all steps necessary to cause the 14D-9 as so corrected
to be filed with the SEC and to be disseminated to the stockholders of the
Company, in each case as and to the extent required by applicable laws. Buyer,
Merger Subsidiary and their counsel shall be given an opportunity to review the
14D-9 and any amendments thereto prior to filing thereof with the SEC.
SECTION 1.03 Directors.
(a) Promptly upon the purchase by Buyer or any of its
subsidiaries of Shares pursuant to the Offer, and from time to time thereafter,
Buyer shall be entitled to designate such number of directors, rounded up to
the next whole number (but in no event more than one less than the total number
of directors on the Board) as will give Buyer, subject to compliance with
Section 14(f) of the Exchange Act, representation on the Board equal to the
product of (x) the number of directors on the Board (giving effect to any
increase in the number of directors pursuant to this Section 1.03) and (y) the
percentage that such number of Shares so purchased bears to the aggregate
number of Shares outstanding (such number being, the "Board Percentage"), and
the Company shall, upon request by Buyer, promptly satisfy the Board Percentage
by (i) increasing the size of the Board or (ii) using its best efforts to
secure the resignations of such number of directors as is necessary to enable
Buyer's designees to be elected to the Board and shall cause Buyer's designees
promptly to be so elected. At the request of Buyer, the Company shall take, at
the Company's expense, all lawful action necessary to effect any such election,
including, without limitation, mailing to its stockholders the information
required by
- 6 -
<PAGE> 8
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, unless
such information has previously been provided to the Company's stockholders in
the 14D-9.
(b) Following the election or appointment of Buyer's
designees pursuant to this Section 1.03 and prior to the Effective Time of the
Merger, any amendment or termination of this Agreement, extension for the
performance or waiver of the obligations or other acts of Buyer or Merger
Subsidiary or waiver of the Company's rights thereunder, shall require the
concurrence of a majority of directors of the Company then in office who are
directors on the date hereof.
ARTICLE II
THE MERGER
SECTION 2.01 The Merger.
(a) At the Effective Time (as defined in Section
2.01(b)), Merger Subsidiary shall be merged (the "Merger") with and into the
Company in accordance with Delaware Law and the terms and conditions of this
Agreement, whereupon the separate existence of Merger Subsidiary shall cease,
and the Company shall be the surviving corporation (the "Surviving
Corporation") and shall be a direct wholly-owned subsidiary of Buyer. The
Offer and the Merger are sometimes hereinafter referred to as the
"Transaction."
(b) As soon as practicable, but in no event later than
five business days, after satisfaction or, to the extent permitted hereunder,
waiver of all conditions to the Merger, the Company and Merger Subsidiary will
file a Certificate of Merger (or, if applicable, a Certificate of Ownership and
Merger) with the Secretary of State of the State of Delaware and make all other
filings required by the Delaware Law in connection with the Merger. The Merger
shall become effective at such time as such Certificate of Merger (or, if
applicable, Certificate of Ownership and Merger) is duly filed with the
Secretary of State of the State of Delaware or at such later time as is
specified in such Certificate of Merger (the "Effective Time").
- 7 -
<PAGE> 9
(c) From and after the Effective Time, the Surviving
Corporation shall succeed to all the assets, rights, privileges, powers and
franchises and be subject to all of the liabilities,restrictions, disabilities
and duties of the Company and Merger Subsidiary, all as provided under the
Delaware Law.
SECTION 2.02 Conversion of Shares. At the Effective Time:
(a) Each Share of capital stock of the Company held by
the Company as treasury stock or held by any subsidiary of the Company or owned
by Buyer, Merger Subsidiary or any subsidiary of either of them immediately
prior to the Effective Time shall be cancelled and retired and shall cease to
exist, and no payment shall be made with respect thereto;
(b) Each share of capital stock of Merger Subsidiary
outstanding immediately prior to the Effective Time shall be converted into and
become one fully paid and non-assessable share of capital stock of the
Surviving Corporation, par value $0.01 per share, with the same rights and
privileges as the shares so converted and shall constitute the only outstanding
shares of capital stock of the Surviving Corporation; and
(c) Each Share outstanding immediately prior to the
Effective Time shall, except as otherwise provided in clause (a) above or as
provided in Section 2.04 with respect to Shares as to which appraisal rights
have been exercised, be converted into the right to receive $33.50, or any
higher price per Share paid in the Offer, in cash without any interest thereon
(the "Merger Consideration").
SECTION 2.03 Exchange of Shares.
(a) Prior to the Effective Time, Buyer shall appoint an
agent (the "Exchange Agent") for the purpose of exchanging certificates
representing Shares for the Merger Consideration. Buyer will make available to
the Exchange Agent, as needed, the Merger Consideration to be paid in respect
of the Shares. For purposes of determining the Merger Consideration to be made
available, Buyer shall assume that no stockholder of the Company will perfect
- 8 -
<PAGE> 10
his right to appraisal of his, her or its Shares. Promptly after the Effective
Time, Buyer will send, or will cause the Exchange Agent to send, to each holder
of Shares (other than as provided in Section 2.02(a)) at the Effective Time a
letter of transmittal for use in such exchange.
(b) After the Effective Time, each holder of Shares that
have been converted into a right to receive the Merger Consideration, upon
surrender to the Exchange Agent of a certificate or certificates representing
such Shares, together with a properly completed letter of transmittal covering
such Shares, will be entitled to receive the Merger Consideration payable in
respect of such Shares. Until so surrendered, each such certificate shall
(other than as provided in Section 2.02(a) or Section 2.04), after the
Effective Time, represent for all purposes only the right to receive such
Merger Consideration, and shall automatically be cancelled and shall cease to
exist. No interest shall be paid or accrued on such Merger Consideration.
(c) If any portion of the Merger Consideration payable in
respect of any Share is to be paid to a person other than the registered holder
of the Shares represented by the certificate or certificates surrendered, it
shall be a condition to such payment that the certificate or certificates so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the person requesting such payment shall pay to the Exchange
Agent any transfer or other taxes required as a result of such payment to a
person other than the registered holder of such shares or establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(d) After the Effective Time, the stock transfer books of
the Company shall be closed and there shall be no further registration of
transfers of Shares.
(e) Any portion of the Merger Consideration made
available to the Exchange Agent pursuant to paragraph (a) of this Section 2.03
that remains unclaimed by the holders of Shares entitled thereto twelve months
after the Effective Time shall be returned to Buyer, upon demand, and any
stockholder of the Company who has not exchanged his Shares for the Merger
Consideration in
- 9 -
<PAGE> 11
accordance with this Section 2.03 prior to that time shall thereafter look only
to Buyer for payment of the Merger Consideration in respect of his Shares.
(f) Any portion of the Merger Consideration made
available to the Exchange Agent pursuant to paragraph (a) of this Section 2.03
to pay for Shares for which appraisal rights shall have been perfected shall be
returned to Buyer, upon demand.
(g) None of Buyer, Merger Subsidiary nor the Company
shall be liable to any holder of the Shares for any Merger Consideration
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
(h) Buyer shall be entitled to deduct and withhold from
the consideration otherwise payable pursuant to this Agreement to any holder of
Shares such amounts as Buyer is required to deduct and withhold with respect to
the making of such payment under the Internal Revenue Code of 1986, as amended
(the "Code"), or any provision of state, local or foreign tax law. To the
extent that amounts are so withheld by Buyer, suchwithheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
the Shares in respect of which such deduction and withholding was made by
Buyer.
SECTION 2.04 Dissenting Shares. Notwithstanding any other
provision of this Agreement to the contrary, Shares outstanding immediately
prior to the Effective Time and held by a holder who has not voted in favor of
the Merger or consented thereto in writing and who has demanded appraisal for
such Shares in accordance with Delaware Law shall not be converted into a right
to receive the Merger Consideration, unless such holder fails to perfect or
withdraws or otherwise loses his right to appraisal. If, after the Effective
Time, such holder fails to perfect or withdraws or loses his right to
appraisal, such Shares shall be treated as if they had been converted as of the
Effective Time into a right to receive the Merger Consideration payable in
respect of such Shares pursuant to Section 2.02. The Company shall give Buyer
prompt notice of any demands received by the Company for appraisal of Shares,
and Buyer shall have the right to participate in all negotiations and
proceedings with respect to such demands. The
- 10 -
<PAGE> 12
Company shall not, except with the prior written consent of Buyer, make any
payment with respect to, or settle or offer to settle, any such demands.
SECTION 2.05 Stock Options; Warrants; Exchangeable Notes;
ASAA Preferred Stock.
(a) At the Effective Time, all outstanding options
(regardless of whether or not such options have vested) ("Company Stock
Options") granted pursuant to the Company's 1992 Key Employee Stock Option Plan
(the "Option Plan") or granted to any director of the Company shall either (i)
be cancelled and each holder of a cancelled option shall be entitled to
receive, in consideration for the cancellation of such option, an amount in
cash equal to the product of (x) the number of Shares previously subject to
such option and (y) the excess, if any, of the Merger Consideration over the
exercise price per Share previously subject to such option or (ii) if elected
by such holder, and if this option is made available by Buyer, such option will
convert into options or other rights to acquire shares of the common stock of
the Buyer, on terms determined in good faith by the Buyer to have substantially
the same value as the value of such option.
(b) At or prior to the Effective Time, the Company shall
use its reasonable best efforts to cause each holder of the warrants to acquire
Shares (the "Warrants") granted pursuant to those certain Note and Warrant
Exchange Agreements dated as of April 30, 1992, as amended, among the Company
and certain warrant holders (the "Note and Warrant Agreement") that are then
outstanding to be exercised for Shares. At the Effective Time, proper
provision shall be made for discharging all obligations under all outstanding
unexercised Warrants by providing that each holder of a Warrant shall be
entitled to solely receive, in consideration for the exercise and cancellation
of such Warrant, an amount in cash equal to the product of (x) the number of
Shares previously subject to such Warrant and (y) the excess, if any, of the
Merger Consideration over the exercise price per Share previously subject to
such Warrant.
(c) At or prior to the Effective Time, with the prior
consent of Buyer, the Company shall give any required notice to
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redeem, and redeem or deposit funds sufficient to redeem, all of the
outstanding shares of Class A Exchangeable Preferred Stock (the "ASAA Preferred
Stock") of the Company's indirect subsidiary, ASAA International, Inc.
("ASAA"), pursuant to the terms of ASAA's Certificate of Incorporation.
(d) At or prior to the Effective Time, with the prior
consent of Buyer, the Company shall give any required notice to redeem, and
redeem or deposit funds sufficient to redeem all of the 6.5% Exchangeable
Promissory Notes having an aggregate principal amount of $4.75 million (the
"Exchangeable Notes") issued July 28, 1993 by the Company's direct subsidiary,
Automotive Industries, Inc. ("AII"), pursuant to the terms thereof.
ARTICLE III
THE SURVIVING CORPORATION
SECTION 3.01 Certificate of Incorporation. The
Certificate of Incorporation of Merger Subsidiary in effect at the Effective
Time shall be the Certificate of Incorporation of the Surviving Corporation
until amended in accordance with applicable law.
SECTION 3.02 Bylaws. The Bylaws of Merger Subsidiary in
effect at the Effective Time shall be the Bylaws of the Surviving Corporation
until amended in accordance with applicable law.
SECTION 3.03 Directors and Officers. Immediately after
the Effective Time, until successors are duly elected or appointed in
accordance with the Certificate of Incorporation and Bylaws of Merger
Subsidiary and with applicable law, (i) the directors of Merger Subsidiary at
the Effective Time shall be elected to serve as the directors of the Surviving
Corporation, and (ii) the officers of the Company at the Effective Time shall be
elected to serve as the officers of the Surviving Corporation.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Buyer and Merger
Subsidiary as follows:
SECTION 4.01 Organization and Qualification; Subsidiaries.
(a) Each of the Company and each Company Subsidiary (as
defined below) is a corporation, partnership or other legal entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has the requisite power
and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as it is now being
conducted, except where the failure to be so organized, existing or in good
standing or to have such power, authority and governmental approvals would not,
individually or in the aggregate, have a Company Material Adverse Effect (as
defined below). The Company and each Company Subsidiary are duly qualified or
licensed as foreign corporations to do business, and are in good standing, in
each jurisdiction where the character of the properties owned, leased or
operated by them or the nature of their business makes such qualification or
licensing necessary, except for such failures to be so qualified or licensed
and in good standing that would not, individually or in the aggregate, have a
Company Material Adverse Effect. The term "Company Material Adverse Effect"
means any change or effect that is or would be materially adverse to the
business, results of operations or financial condition of the Company and the
Company Subsidiaries (as defined below), taken as a whole.
(b) Each subsidiary of the Company (a "Company
Subsidiary") that constitutes a "significant subsidiary" of the Company within
the meaning of Rule 1-02(w) of Regulation S-X of the SEC is referred to herein
as a "Material Subsidiary."
SECTION 4.02 Certificate of Incorporation and By-Laws.
The Company has heretofore made available to Buyer a complete and correct copy
of the Certificate of Incorporation and the By-Laws or
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<PAGE> 15
equivalent organizational documents, each as amended to date, of the Company
and each Material Subsidiary. Such Certificates of Incorporation, By-Laws and
equivalent organizational documents are in full force and effect. Neither the
Company nor any Material Subsidiary is in violation of any provision of its
Certificate of Incorporation, By-Laws or equivalent organizational documents,
except for such violations that would not, individually or in the aggregate,
have a Company Material Adverse Effect.
SECTION 4.03 Capitalization. The authorized capital stock
of the Company consists of 100,000,000 shares of Class A Common Stock, par
value $.01 per share (the "Company Common Stock"), 750,000 shares of Class B
Common Stock, par value $.01 per share (the "Class B Common"), 30,000 shares of
Cumulative Redeemable Exchangeable Preferred Stock, par value $.01 per share
(the "Series A Preferred Shares") and 9,970,000 additional shares of Preferred
Stock (the "Preferred Shares"). As of June 30, 1995, there were 17,547,796
shares of Company Common Stock outstanding. As of the date hereof, (a) there
are no shares of Class B Common outstanding, (b) there are no Series A
Preferred Shares outstanding, and (c) there are no Preferred Shares
outstanding. All outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid and nonassessable and
have no preemptive rights. As of the date hereof, there are 633,497 Shares
reserved for issuance upon exercise of the Warrants and 790,000 Shares reserved
for issuance upon exercise of the Company Stock Options (of which Company Stock
Options to acquire not more than 549,940 Shares have been granted, of which
Company Stock Options to acquire not more than 152,333 Shares are fully vested
and exercisable on the date hereof and Company Stock Options to acquire not
more than 397,607 Shares will become fully vested and exercisable upon
consummation of the Offer). Except for (i) the Company's Employee Stock
Discount Purchase Plan (the "Stock Purchase Plan"), (ii) the Company Stock
Options, (iii) the Warrants, (iv) the Exchangeable Notes, and (v) the ASAA
Preferred Stock, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character obligating the Company or any
Company Subsidiary to issue or sell any shares of capital stock of, or other
equity interests in, the Company or any Company Subsidiary. All shares of the
Company Common Stock subject to issuance as aforesaid, upon issuance on the
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<PAGE> 16
terms and conditions specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid and
nonassessable. As of June 30, 1995, 68,614.8 shares of ASAA Preferred Stock
were issued and outstanding. Except for the ASAA Preferred Stock there are no
material outstanding contractual obligations of the Company or any Company
Subsidiary to repurchase, redeem or otherwise acquire any shares of the Company
Common Stock or any capital stock of any Company Subsidiary, or make any
material investment (in the form of a loan, capital contribution or otherwise)
in any Company Subsidiary. Each outstanding share of capital stock of
each Company Subsidiary is duly authorized, validly issued, fully paid and
nonassessable and each such share owned by the Company or another Company
Subsidiary is free and clear of all security interests, liens, claims, pledges,
options, rights of first refusal, agreements, limitations on the Company's or
such other Company Subsidiary's voting rights, charges and other encumbrances
of any nature whatsoever.
SECTION 4.04 Authority Relative to this Agreement. The
Company has all necessary power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the transactions
contemplated herein (other than, with respect to the Merger, the approval and
adoption of this Agreement by the holders of a majority of the then outstanding
Shares and the filing of appropriate merger documents as required by Delaware
Law). This Agreement has been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and delivery by Buyer,
constitutes a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.
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<PAGE> 17
SECTION 4.05 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the
Company do not, and the performance of the transactions contemplated herein by
the Company will not, (i) conflict with or violate the Certificate of
Incorporation or By-Laws or equivalent organizational documents of the Company
or any Company Subsidiary, (ii) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to any Company or any Company
Subsidiary or by which any property or asset of the Company or any Company
Subsidiary is bound or affected, or (iii) except as set forth in Section 4.05
of the Company's Disclosure Schedule attached hereto (the "Company Disclosure
Schedule"), result in any breach of or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, result in
the loss of a material benefit under, or give to others any right of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of the Company
or any Material Subsidiary pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any Material Subsidiary is a party or by
which the Company or any Material Subsidiary or any property or asset of the
Company or any Material Subsidiary is bound or affected, except, in the case of
clauses (ii) and (iii) above, for any such conflicts, violations, breaches,
defaults or other occurrences which would not prevent or delay consummation of
the Merger in any material respect, or otherwise prevent the Company from
performing its obligations under this Agreement in any material respect, or
would not, individually or in the aggregate, have a Company Material Adverse
Effect. The Board, at a meeting duly called and held, has taken all actions
necessary under the Delaware Law, including approving the transactions
contemplated by this Agreement, to ensure that the restrictions on "business
combinations" set forth in Section 203 of the Delaware Law do not, and will
not, apply to Buyer, Merger Subsidiary, affiliates or associates of Buyer or
Merger Subsidiary, the transactions contemplated by this Agreement. The Board
has also taken all actions necessary so that the stockholder vote required by
Article
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<PAGE> 18
IX of the Company's Certificate of Incorporation does not, and will not, apply
to the transactions contemplated by this Agreement.
(b) The execution and delivery of this Agreement by the
Company do not, and neither the performance of this Agreement by the Company
nor the consummation of the transactions contemplated hereby by the Company
will, require any consent, approval, authorization, order or permit of, or
filing with or notification to, any governmental, administrative or regulatory
authority or agency, domestic or foreign (each a "Governmental Entity"), except
for (A) applicable requirements, if any, of the Exchange Act and Delaware Law,
(B) the pre-merger notification requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations thereunder
(the "HSR Act"), (C) filing of appropriate merger documents as required by
Delaware Law, (D) applicable requirements, if any, of any non-United States
competition, antitrust and investment laws including, without limitation,
Council Regulation (EEC) 4064/89, the Investment Canada Act, the Competition
Act (Canada), and any rules or regulations promulgated by the Secretary of
State for Trade and Industry (U.K.), The Act Against Restraints of Competition
(Germany) and (E) such other consents, approvals, authorizations, permits,
filings or notifications not obtained or made prior to consummation of the
Offer the failure of which to be obtained or made would not prevent or delay
consummation of the Merger or otherwise prevent the Company from performing its
obligations under this Agreement in any material respect, and which would not,
individually or in the aggregate, have a Company Material Adverse Effect.
SECTION 4.06 Compliance. Except as set forth in Section
4.06 of the Company Disclosure Schedule, neither the Company nor any Company
Subsidiary is in conflict with, or in default or violation of, (a) any law,
rule, regulation, order, judgment or decree (including, without limitation,
laws, rules and regulations relating to franchises) applicable to the Company
or any Company Subsidiary or by which any property or asset of
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<PAGE> 19
the Company or any Company Subsidiary is bound or affected, or (b) any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any Company
Subsidiary is a party or by which the Company or any Company Subsidiary or any
property or asset of the Company or any Company Subsidiary is bound or
affected, except for any such conflicts, defaults or violations that would not,
individually or in the aggregate, have a Company Material Adverse Effect.
SECTION 4.07 SEC Filings; Financial Statements.
(a) The Company has filed all forms, reports,
registration statements, proxy statements, schedules and documents required to
be filed by it with the SEC since December 26, 1992 and has heretofore made
available to Buyer, in the form filed with the SEC (excluding any exhibits
thereto), (i) its Annual Reports on Form 10-K for the fiscal years ended
December 26, 1992, January 1, 1994 and December 31, 1994, (ii) its Quarterly
Reports on Form 10-Q for the period ended March 31, 1995, (iii) all proxy
statements relating to the Company's meetings of stockholders (whether annual
or special) held since January 1, 1993 and (iv) all other forms, reports, other
registration statements and schedules (other than Quarterly Reports on Form
10-Q not referred to in clause (ii) above and preliminary materials) filed by
the Company with the SEC since December 31, 1994 (the forms, reports and other
documents referred to in clauses (i), (ii), (iii) and (iv) above being referred
to herein, collectively, as the "Company SEC Reports"). The Company SEC
Reports and any forms, reports and other documents filed by the Company with
the SEC after the date of this Agreement (x) were prepared in accordance with
the requirements of the Securities Act of 1933, as amended (the "Securities
Act") and the Exchange Act, as the case may be, and the rules and regulations
thereunder and (y) did not at the time they were filed contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in
the light of circumstances under which they were made, not misleading. No
Company Subsidiary, is required to file any form, report or other document with
the SEC.
(b) Each of the consolidated financial statements
(including, in each case, any notes thereto) contained in the Company SEC
Reports was prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods indicated
(except as may be indicated in the notes thereto) and each fairly presented the
financial position,
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<PAGE> 20
results of operations and cash flows of the Company and the consolidated
Company Subsidiaries, as the case may be, as at the respective dates thereof
and for the respective periods indicated therein (subject, in the case of
unaudited statements, to normal and recurring year-end adjustments which were
not and are not expected, individually or in the aggregate, to be material in
amount).
SECTION 4.08 Disclosure Documents.
(a) Each document filed or required to be filed by the
Company with the SEC in connection with the Transaction (the "Company
Disclosure Documents"), including, without limitation, the 14D-9, the proxy or
information statement of the Company (the "Company Proxy Statement"), if any,
to be filed with the SEC in connection with the Merger, and any amendments or
supplements to any thereof will comply as to form in all material respects with
the applicable requirements of the Exchange Act.
(b) At the time the Company Proxy Statement or any
amendment or supplement thereto is first mailed to stockholders of the Company,
at the time such stockholders vote on adoption of this Agreement and at the
Effective Time, the Company Proxy Statement as supplemented or amended, if
applicable, will not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
At the time of the filing with the SEC or any other governmental authority of
any Company Disclosure Documents (other than the Company Proxy Statement), at
the time of any distribution thereof and throughout the remaining pendency of
the Offer each such Company Disclosure Document will not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. The representations and warranties
contained in this subsection (b) will not apply to statements or omissions in
the Company Disclosure Documents based upon information furnished in writing to
the Company by Buyer or Merger Subsidiary specifically for use therein.
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<PAGE> 21
(c) The information with respect to the Company or any
Company Subsidiary furnished by the Company or its affiliates to Buyer in
writing specifically for use in the Offer and the Offer Documents shall not
contain, as of the date the Offer Documents are filed, any untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. If any such information provided by the Company or its
affiliates shall, after the filing of the Offer Documents, become false or
misleading in any material respect, the Company shall promptly notify Buyer and
update such information in writing.
SECTION 4.09 Brokers. Except for Hidden Creek Industries,
DLJ and Baird, whose fees will be paid by the Company, there is no investment
banker, broker, finder or other intermediary which has been retained by or is
authorized to act on behalf of the Company or any Company Subsidiary (or any
director or officer thereof) who might be entitled to any fee or commission
from the Company, any Company Subsidiary, Merger Subsidiary or Buyer or any of
their affiliates upon consummation of the transactions contemplated by this
Agreement. The fees described in this Section 4.09 shall not exceed $9.5
million in the aggregate.
SECTION 4.10. Absence of Certain Changes or Events. Since
April 1, 1995 except as contemplated by this Agreement or disclosed in the
Company Disclosure Schedule or any Company SEC Report filed since April 1, 1995
and prior to the date of this Agreement, the Company and the Company
Subsidiaries have conducted their businesses only in the ordinary course and in
a manner consistent with past
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<PAGE> 22
practice and, since April 1, 1995 there has not been (i) any material adverse
change in the business, results of operations or financial condition of the
Company and the Company Subsidiaries, taken as a whole, (ii) any damage,
destruction or loss (whether or not covered by insurance) with respect to any
property or asset of the Company or any Company Subsidiary having, individually
or in the aggregate, a Company Material Adverse Effect, (iii) any change by the
Company in its accounting methods, principles or practices, (iv) any
revaluation by the Company of any asset (including, without limitation, any
writing down of the value of inventory or writing off of notes or accounts
receivable), other than in the ordinary course of business consistent with past
practice, (v) any failure by the Company to revalue any asset in accordance
with generally accepted accounting principles consistent with past practice,
(vi) any entry by the Company or any Company Subsidiary into any commitment or
transaction material to the Company and the Company Subsidiaries, taken as a
whole, (vii) any declaration, setting aside or payment of any dividend or
distribution in respect of any capital stock of the Company or any redemption,
purchase or other acquisition of any of its securities, (viii) any increase in
or establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (including, without
limitation, the granting of stock options, stock appreciation rights,
performance awards or restricted stock awards), stock purchase or other
employee benefit plan, or any other increase in the compensation payable or to
become payable to any officers or key employees of the Company or any Company
Subsidiary, except in the ordinary course of business consistent with past
practice and except as described on Section 4.10 of the Company Disclosure
Schedule, or (ix) any entering into, renewal, modification or extension of, any
material contract, arrangement or agreement with any other party except for
contracts, arrangements or agreements in the ordinary course of business.
SECTION 4.11. Absence of Litigation. Except as set forth on
Schedule 4.11 of the Company Disclosure Schedule there is no claim, action,
proceeding or investigation pending or, to the knowledge of the Company,
threatened in writing against the Company or any Company Subsidiary, or any
property or asset of the Company or any Company Subsidiary, before any court,
arbitrator or administrative, governmental or regulatory authority or body,
domestic or foreign, which (i) individually or in the aggregate, is reasonably
likely to have a Company Material Adverse Effect or (ii) seeks to, or is
reasonably likely to, delay or prevent the consummation of the Offer or the
Merger. As of the date hereof, neither the Company nor any Company Subsidiary
nor any property or asset of the Company or any Company Subsidiary is subject
to any order, writ, judgment, injunction, decree, determination or award
having, individually or in the aggregate, a Company Material Adverse Effect.
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SECTION 4.12. Employee Benefit Plans/ERISA.
(a) The term "Employee Benefit Plan" means each employee
benefit plan within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") which is maintained for, or
to which contributions have been made on behalf of, employees ("Employees") of
the Company or any current or former corporation, person or trade or business
which is a member of a group which is under common control with the Company,
who together with the Company, is treated as a single employer within the
meaning of Sections 414(b)-(o) of the Internal Revenue Code of 1986, as amended
(the "Code") and, if applicable, Sections 4001(a) and (b) of ERISA (an "ERISA
Affiliate"). The term "Pension Plan" means any Employee Benefit Plan which is
subject to title IV of ERISA.
(b) Neither the Company nor any ERISA Affiliate
participates in or contributes to any multiemployer plan (as defined in Section
4001(a) of ERISA).
(c) Neither the Company nor any ERISA Affiliate has any
contingent liability with respect to any post-retirement benefit under any
employee benefit plan which is a welfare benefit plan as defined in Section
3(1) of ERISA (a "Welfare Plan") which would have a Company Material Adverse
Effect.
(d) None of the Employee Benefit Plans is a severance plan,
arrangement or program. Except as set forth in Schedule 4.12 of the Company
Disclosure Schedule, the consummation of the transactions contemplated by this
Agreement will not directly: (i) entitle any Employee to severance pay,
unemployment compensation or any other payment or (ii) accelerate the timing of
any payment or the vesting of any rights or increase the amount of any
compensation due any Employee, which would have a Company Material Adverse
Effect.
(e) The Company has made available or given to the Buyer true
and complete copies of all the following: each Employee Benefit Plan and
related trust agreement (including all amendments and commitments with respect
to such Employee Benefit Plan or trust) which the Company or ERISA Affiliate
maintains or is
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<PAGE> 24
committed to contribute to as of the date hereof and the most recent summary
plan description, actuarial report, determination letter issued by the Internal
Revenue Service and Form 5500 filed in respect of each such Employee Benefit
Plan for calendar years 1991, 1992 and 1993.
(f) Each Employee Benefit Plan complies, in both form and
operation in all material respects, with its terms, ERISA and the Code,
including, without limitation, Code Section 4980B, and no condition exists or
event has occurred with respect to any such plan which would result in the
incurrence by the Company or any ERISA Affiliate of any liability, fine or
penalty which would have a Company Material Adverse Effect. Neither the Company
nor any ERISA Affiliate has incurred any material liability to the Pension
Benefit Guaranty Corporation ("PBGC") which remains outstanding other than the
payment of premiums, and there are no premiums which have become due which are
unpaid. Neither the Company nor any ERISA Affiliate has engaged in any
transaction which could subject it to liability under Section 4069 or Section
4212(c) of ERISA which would have a Company Material Adverse Effect. Each
Employee Benefit Plan, related trust agreement, arrangement and commitment of
each the Company and ERISA Affiliate is legally valid and binding in full force
and effect. Each Employee Benefit Plan that is intended to be qualified under
Section 401(a) of the Code has received a favorable determination letter for
"TRA" (as defined in Rev. Proc. 93-39) from the IRS or has filed for such a
determination letter within the remedial amendment period, and each trust
related to such plan either has been determined to be exempt under, or has
pending a determination of an exemption under, Section 501(a) of the Code. To
the knowledge of the Company, nothing has occurred or is expected to occur that
would adversely affect the qualified status of the Employee Benefit Plan or any
related trust subsequent to the issuance of such determination letter. No
Employee Benefit Plan is being audited or investigated by any government agency
or subject to any pending or threatened claim or suit which would have a
Company Material Adverse Effect.
(g) Neither the Company nor any ERISA Affiliate nor any
fiduciary of any Employee Benefit Plan has engaged in a prohibited transaction
under Section 406 of ERISA or Section 4975 of the Code that will have a Company
Material Adverse Effect.
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<PAGE> 25
(h) No Termination Event has occurred or is reasonably
expected to occur that will have a Company Material Adverse Effect.
A "Termination Event" means any of the following:
(1) a "Reportable Event" by the Company
or any ERISA Affiliate described in Section 4043 of ERISA and the regulations
issued thereunder; or
(2) the withdrawal of the Company or any
ERISA Affiliate from a Pension Plan during a plan year in which it was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA or was deemed
such under Section 4068(f) of ERISA; or
(3) the distress termination of a
Pension Plan, the filing of a notice of intent to terminate a Pension Plan as a
distress termination or the treatment of a Pension Plan amendment as a
termination under Section 4041 of ERISA; or
(4) the institution of proceedings to
terminate a Pension Plan by the PBGC; or
(5) any other event or condition which would
constitute grounds under Section 4042(a) of ERISA for the termination of, or
the appointment of a trustee to administer, any Pension Plan; or
(6) the imposition of a lien pursuant to
Section 412 of the Code or Section 302 of ERISA.
SECTION 4.13. Taxes.
(a) The Company and the Company Subsidiaries (i) have filed
or caused to be filed with the appropriate taxing authorities on a timely basis
all federal Tax Returns (as hereinafter defined), all required state income Tax
Returns and all other Tax Returns which are required to have been filed,
and such Tax Returns are true, correct and complete in all material respects,
(ii) have paid on a timely basis or have made adequate provision for on their
balance sheet all Taxes (as hereinafter defined) reflected as due on such Tax
Returns and the periods covered thereby, and (iii) have
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<PAGE> 26
established reserves on their books and records adequate for the payment of all
Taxes not yet due. There are no material liens for Taxes upon the assets of
the Company and the Company Subsidiaries, except liens for Taxes not yet due.
Except as disclosed on Schedule 4.16 of the Company Disclosure Schedule,
neither the Company nor any Company Subsidiary has received a notice of any
pending audits, actions, proceedings, investigations or claims with respect to
any Taxes payable by or asserted against the Company and the Company
Subsidiaries. Except as disclosed on Schedule 4.16 of the Company Disclosure
Schedule, no claim has ever been made by a jurisdiction where the Company or
any of the Company Subsidiaries does not pay Taxes or file Tax Returns that
such entity may be subject to Taxes in such jurisdiction for any period
beginning after December 31, 1989. The taxable years or periods for the
assessment of federal income tax of the Company and the Company Subsidiaries
(including assessments relating to consolidated federal income tax returns, if
any, that include the Company or any of the Company Subsidiaries) are closed
either by agreement with the Internal Revenue Service or by operation of the
applicable statute of limitations for all taxable periods through 1990. Except
as set forth in Schedule 4.16 of the Company Disclosure Schedule, the taxable
years or periods for the assessment of state and local income tax of the
Company and the Company Subsidiaries (including assessments relating to
consolidated, combined or unitary Tax Returns, if any, that include the Company
or any Company Subsidiary) are closed either by agreement with the appropriate
taxing authority or by application of the applicable statute of limitations for
all periods through 1989. Except as disclosed on Schedule 4.16 of the Company
Disclosure Schedule, the Company and the Company Subsidiaries are not and have
not been subject to any income tax in any jurisdiction outside the United
States. No agreements relating to allocation or sharing of Taxes exists among
the Company and the Company Subsidiaries or among the Company and any of its
stockholders. Except as disclosed on Schedule 4.16 of the Company Disclosure
Schedule, there are no outstanding waivers or comparable consents or extensions
given by the Company or the Company Subsidiaries regarding the application of
the statute of limitations with respect to any Taxes or Tax Returns. Neither
the Company nor any Company Subsidiary has made any election which would result
or has resulted in an adjustment under Section 481 of the Code. Neither the
Company nor any Company
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<PAGE> 27
Subsidiary has filed a consent pursuant to Section 341(f) of the Code or agreed
to have Section 341(f)(2) of the Code apply to any disposition of a Section
341(f) asset (as such term is defined in Section 341(f)(4) of the Code). No
power of attorney granted by the Company or the Company Subsidiaries with
respect to Taxes is currently in force. Except as disclosed on the Company
Disclosure Schedule and other than this Agreement, there is no contract,
agreement, plan or arrangement that individually or collectively could give
rise to the payment by the Company or the Company Subsidiaries of any amount
that would not be deductible by reason of Section 280G of the Code. Neither
the Company nor any Company Subsidiary has any outstanding Corporate
Acquisition Indebtedness as such term is used in Code Section 279(b). For
purposes of this Section 4.13, where a determination of an occurrence of a
failure by the Company or any Company Subsidiary to comply with any
representation herein is to be made, a failure shall only occur if such failure
shall have a Company Material Adverse Effect.
(b) For purposes of this Agreement, (i) the term "Taxes"
shall mean all taxes, charges, fees, levies or other like assessments,
including without limitation, all net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, license, withholding,
payroll, employment, excise, estimated, severance, stamp, occupation, capital
stock, property or other taxes, customs duties, fees, assessments or charges of
any kind whatsoever, together with any interest, penalties or additional
amounts attributable to Taxes imposed by any governmental authority, and (ii)
the term "Tax Returns" shall mean all returns (including information returns),
declarations, reports, estimates and statements regarding Taxes required to be
filed under the United States federal, state or local laws or any foreign laws.
SECTION 4.14. Environmental Matters.
(a) For purposes of this Agreement, the following terms shall
have the following meanings: (i) "Hazardous Substances" means (A) all
substances, wastes, pollutants, contaminants and materials regulated, or
defined or designated as hazardous, extremely or imminently hazardous,
dangerous, or toxic under the following federal statutes and their state
counterparts, as well as
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these statutes' implementing regulations: the Comprehensive Environmental
Response, Compensation and Liability Act, the Federal Insecticide, Fungicide
and Rodenticide Act, the Atomic Energy Act, the Resource Conservation and
Recovery Act, the Clean Air Act and the Hazardous Materials Transportation Act;
(B) any asbestos or asbestos-containing material, petroleum and petroleum
products, including crude oil and any fractions thereof, natural gas, natural
gas liquids, synthetic gas, polychlorinated biphenyls or radon; or (C) any
substance with respect to which a federal, state or local agency requires
environmental investigation, monitoring, reporting or remediation; and
(ii) "Environmental Law" means any applicable statute, code, enactment,
ordinance, rule, regulation, permit, consent, authorization, judgment, order,
or other requirement having the force and effect of law whether local, state,
territorial or national, to the extent enacted and in effect on or prior to the
Closing Date, relating to: (A) emissions, discharges, spills, releases or
threatened releases of Hazardous Substances or materials containing Hazardous
Substances into ambient air, surface water, ground water, water courses,
publicly or privately owned treatment works, drains, sewer systems, wetlands,
septic systems or onto land; (B) the manufacture, handling, transport, use,
treatment, storage or disposal of Hazardous Substances or materials containing
Hazardous Substances; (C) the regulation of storage tanks; or (D) otherwise
relating to pollution or protection of the environment or the protection of
human health from environmental hazards.
(b) (i) Neither the Company nor any Company Subsidiary
has violated and is in violation of any Environmental Law; (ii) the Company and
each Company Subsidiary has all permits, licenses and other authorizations
required under any Environmental Law and the Company and each Company
Subsidiary has always been and is in compliance with their requirements; (iii)
no Hazardous Substances have been used, stored, manufactured or processed on
the property owned or leased by the Company or any Company Subsidiary except
as reasonably necessary to conduct the business of the Company and the Company
Subsidiaries, and in compliance with all laws, ordinances and regulations
applicable to the use, storage or manufacture thereof; (iv) to the Company's
knowledge, there has been no disposal, release or threatened release of
Hazardous Substances from or to the property owned or leased by the Company or
any
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Company Subsidiary; (v) to the Company's knowledge, none of the properties
owned or leased by the Company or any Company Subsidiary (including, without
limitation, soils and surface and ground waters) are contaminated with any
Hazardous Substance; (vi) to the best knowledge of the Company, neither the
Company nor any Company Subsidiary is liable for any off-site contamination;
and (vii) neither the Company nor any Company Subsidiary has received any
written notice of violation of or liability under any Environmental Law and the
Company is not aware of any circumstances that could reasonably be expected to
give rise to such notice, in each case when the failure to comply with this
Section 4.14 would reasonably be expected to result in a Company Material
Adverse Effect.
SECTION 4.15. Opinion of Financial Advisor. The Company has
received the written opinion of DLJ to the effect that the consideration to be
received by the stockholders of the Company pursuant to the Offer and the
Merger is fair to such shareholders from a financial point of view, a copy of
which opinion will be delivered to the Buyer and included in the 14D-9, any
Company Proxy Statement and the Offer Documents.
SECTION 4.16 Affiliate Transactions. All transactions
between the Company or a Company Subsidiary and any of their Affiliates (other
than the Company or a Company Subsidiary), shall be terminated and be of no
further legal force or effect, and neither the Company nor any Company
Subsidiary shall have any obligation or liability thereunder, from and after
the Effective Time. The termination of such transactions is not reasonably
expected to have a Company Material Adverse Effect. "Affiliate" of any person
means any other person directly or indirectly controlling, controlled by or
under common control with such person. A person shall be deemed to control
another person if the controlling person owns 10% or more of any class of
voting securities (or other ownership interests) of the controlled person or
possesses, directly or indirectly, the power to direct or cause the direction
of the management or policies of the controlled person, whether through
ownership of stock, by contract or otherwise. Without limiting the foregoing,
Hidden Creek Industries, ONEX US Investments Inc. and each of their Affiliates
shall be considered Affiliates of the Company and the Company Subsidiaries.
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SECTION 4.17. Labor Matters. Except as disclosed on Section
4.17 of the Company Disclosure Schedule, (i) there are no controversies pending
or, to the best knowledge of the Company, threatened between the Company or any
Company Subsidiary and any of their respective employees; (ii) to the best
knowledge of the Company, there are no activities or proceedings of any labor
union to organize any non-unionized employees; (iii) neither the Company nor
any Company Subsidiary has breached or otherwise failed to comply with any
provision of any such agreement or contract and there are no grievances
outstanding against the Company or any Company Subsidiary under any such
agreement or contract; (iv) there are no unfair labor practice complaints
pending against the Company or any Company Subsidiary before the National Labor
Relations Board or any current union representation questions involving
employees of the Company or any Company Subsidiary; and (v) there is no strike,
slowdown, work stoppage or lockout, or, to the best knowledge of the Company,
threat thereof, by or with respect to any employees of the Company or any
Company Subsidiary, other than any events described in clauses (i) through (v)
above which in the aggregate would not have a Company Material Adverse Effect.
SECTION 4.18. Real Property.
(a) The Company and the Company Subsidiaries have sufficient
title to or the legal right to use all their real properties currently used in
the conduct of their respective businesses, with such exceptions as,
individually or in the aggregate, would not have a Company Material Adverse
Effect.
(b) Except as set forth in Section 4.18 of the Company
Disclosure Schedule, each parcel of real property owned or leased by the
Company or any Company Subsidiary is owned or leased free and clear of all
mortgages, liens, security interests, or other claims of third parties of any
kind (collectively, "Liens"), other than (A) Liens for current taxes and
assessments not yet past due, (B) inchoate mechanics' and materialmen's Liens
for construction in progress, (C) workmen's, repairmen's, warehousemen's and
carriers' Liens arising in the ordinary course of business of the Company or
such Company Subsidiary consistent with past practice, and (D) all matters of
record, Liens and other imperfections of title and
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encumbrances which, individually or in the aggregate, would not have a Company
Material Adverse Effect (collectively, "Permitted Liens").
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Company that:
SECTION 5.01 Organization and Qualification; Subsidiaries.
Each of Buyer and Merger Subsidiary is a corporation, partnership or other
legal entity duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization and has the
requisite power and authority and all necessary governmental approvals to own,
lease and operate its properties and to carry on its business as it is now
being conducted, except where the failure to be so organized, existing or in
good standing or to have such power, authority and governmental approvals would
not, individually or in the aggregate, have a Buyer Material Adverse Effect (as
defined below). Each of Buyer and Merger Subsidiary is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its business makes such qualification or
licensing necessary, except for such failures to be so qualified or licensed
and in good standing that would not, individually or in the aggregate, have a
Buyer Material Adverse Effect. The term "Buyer Material Adverse Effect" means
any change or effect that is or would be materially adverse to the business,
results of operations or financial condition of Buyer, Merger Subsidiary and
each of Buyer's other subsidiaries, taken as a whole.
SECTION 5.02 Certificate of Incorporation and By-Laws.
Buyer has heretofore made available to the Company a complete and correct copy
of the Certificate of Incorporation and the By-Laws or equivalent
organizational documents, each as amended to date, of Buyer and Merger
Subsidiary. Such Certificates of Incorporation, By-Laws and equivalent
organizational documents are in full force
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and effect. Neither Buyer nor Merger Subsidiary is in violation of any
provision of its Certificate of Incorporation, By-Laws or equivalent
organizational documents, except for such violations that would not,
individually or in the aggregate, have a Buyer Material Adverse Effect.
SECTION 5.03 Authority Relative to this Agreement. Each
of Buyer and Merger Subsidiary has all necessary power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated herein. The execution and delivery of
this Agreement by Buyer and Merger Subsidiary and the consummation by Buyer and
Merger Subsidiary of the transactions contemplated herein have been duly and
validly authorized by all necessary corporate action and no other corporate
proceedings on the part of Buyer are necessary to authorize this Agreement or
to consummate the transactions contemplated herein (other than, with respect to
the Merger, the filing of the appropriate merger documents as required by
Delaware Law). This Agreement has been duly and validly executed and delivered
by Buyer and Merger Subsidiary and, assuming the due authorization, execution
and delivery by the Company, constitutes a legal, valid and binding obligation
of Buyer and Merger Subsidiary, enforceable against Buyer and Merger Subsidiary
in accordance with its terms.
SECTION 5.04 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Buyer
and Merger Subsidiary do not, and the performance of the transactions
contemplated herein by Buyer and Merger Subsidiary will not, (i) conflict with
or violate the Certificate of Incorporation or By-Laws or equivalent
organizational documents of Buyer or Merger Subsidiary, (ii) conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to
Buyer or any Merger Subsidiary or by which any property or asset of Buyer or
any Merger Subsidiary is bound or affected, or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, result in the loss of a material benefit under
or give to others any right of termination, amendment, acceleration or
cancellation of, or result
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in the creation of a lien or other encumbrance on any property or asset of
Buyer or any Merger Subsidiary pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Buyer or any Merger Subsidiary is a party or by which Buyer
or any Merger Subsidiary or any property or asset of Buyer or any Merger
Subsidiary is bound or affected, except in the case of clauses (ii) and (iii)
above, for any such conflicts, violations, breaches, defaults or other
occurrences which would not prevent or delay consummation of the Merger in any
material respect, or otherwise prevent Buyer from performing its obligations
under this Agreement in any material respect, or would not, individually or in
the aggregate, have a Buyer Material Adverse Effect.
(b) The execution and delivery of this Agreement by Buyer
and Merger Subsidiary do not, and neither the performance of this Agreement by
Buyer and Merger Subsidiary nor the consummation of the transactions
contemplated hereby by the Company will, require any consent, approval,
authorization, order or permit of, or filing with or notification to, any
Governmental Entity, except for (A) applicable requirements, if any, of the
Exchange Act and Delaware Law, (B) the pre-merger notification requirements of
the HSR Act, (C) filing of appropriate merger documents as required by Delaware
Law, (D) applicable requirements, if any, of any non-United States competition,
antitrust and investment laws including, without limitation, Council Regulation
(EEC) 4064/89, the Investment Canada Act, the Competition Act (Canada), and any
rules or regulations promulgated by the Secretary of State for Trade and
Industry (U.K.), and (E) such other consents, approvals, authorizations or
permits, filings or notifications, not obtained or made prior to consummation
of the Offer the failure of which to be obtained or made would not prevent or
delay consummation of the Merger, or otherwise prevent Buyer or Merger
Subsidiary from performing its obligations under this Agreement in any material
respect, and which would not, individually or in the aggregate, have a Buyer
Material Adverse Effect.
SECTION 5.05 Documents Relating to Offer; Company Proxy
Statement. The Offer Documents and the Offer will comply in all material
respects with the applicable requirements of the Exchange Act, except that no
representation is made by Buyer or Merger
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Subsidiary with respect to information supplied in writing by the Company
specifically for use in the Offer Documents. None of the information that may
be supplied in writing by Buyer or its affiliates specifically for use in the
Company Proxy Statement, the 14D-9 or any other document filed or to be filed
with the SEC will contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. If any
such information provided by Buyer or its affiliates shall, after the filing of
the 14D-9 or any other document filed by the Company with the SEC, become false
or misleading in any material respect, the Buyer shall promptly notify the
Company and update such information in writing.
SECTION 5.6 Financing. The Buyer has entered into, and
furnished to the Company a copy of, the Financing Commitment Letter with
Chemical Bank and Chemical Securities Inc. Subject to the terms and conditions
specified therein, the Financing Commitment Letter will provide Buyer funds
sufficient in amount to consummate the Offer and Merger pursuant to this
Agreement. The Financing Commitment Letter is in full force and effect as of
the date of this Agreement.
ARTICLE VI
COVENANTS OF THE COMPANY
SECTION 6.01 Conduct of the Company. The Company
covenants and agrees that, between the date of this Agreement and the Effective
Time, unless the Buyer shall have consented in writing (such consent not to be
unreasonably withheld), the businesses of the Company and the Company
Subsidiaries shall, in all material respects, be conducted in, and the Company
and the Company Subsidiaries shall not take any material action, except in the
ordinary course of business, consistent with past practice, and the Company
shall, and shall cause the Company Subsidiaries to use their respective
reasonable best efforts to preserve substantially intact their respective
business organizations, to keep available the services of their respective
current officers, employees and consultants and to preserve their respective
relationships with
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customers, suppliers and other persons with which it or any of the Company
Subsidiaries has significant business relations as well as with officials and
employees of government agencies and other entities which regulate the Company,
the Company Subsidiaries and their business. By way of amplification and not
limitation, except (i) as contemplated by this Agreement, (ii) as set forth on
Section 6.01 of the Company Disclosure Schedule, neither the Company nor any of
the Company Subsidiaries shall, between the date of this Agreement and the
Effective Time, directly or indirectly do, or propose or agree to do, any of
the following without the prior written consent of the Buyer (which will not be
unreasonably withheld) (provided that the following restrictions shall not
apply to any subsidiaries which the Company does not control):
(a) amend or otherwise change the Certificate of
Incorporation or By-Laws of the Company or any Company Subsidiary;
(b) (i) issue or sell, or authorize the issuance or sale
of, (I) any shares of capital stock of any class of, or any other ownership
interest in, the Company or any of the Company Subsidiaries, or any options,
warrants or other securities or rights convertible into, exchangeable for,
evidencing the right to subscribe for or purchase, or otherwise providing for
the right to acquire capital stock, or any other ownership interest (including,
without limitation, any phantom interest) of the Company or any of the Company
Subsidiaries (other than the issuance of shares of capital stock in connection
with (A) the exercise of the Company Stock Options and the Warrants, and the
redemption or exchange of the Exchangeable Notes and the ASAA Preferred Stock
in accordance with the terms of such securities in effect on the date of this
Agreement, or (B) the Stock Purchase Plan as in effect on the date of this
Agreement) or (II) any assets of it or any of the Company Subsidiaries, except
for sales in the ordinary course of business or which, individually, do not
exceed $10.0 million or which, in the aggregate, do not exceed $20.0 million,
or (ii) amend, waive or otherwise modify any of the terms of any option,
warrant or stock option plan of the Company or any Company Subsidiary,
including without limitation the Company Stock Options the Warrants, the
Exchangeable Notes, the ASAA Preferred Stock and the Stock Purchase Plan;
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<PAGE> 36
(c) declare, set aside or pay any dividend or other
actual, constructive or deemed distribution, payable in cash, stock, property
or otherwise, with respect to any of its capital stock (other than a divided or
distribution payable solely to the Company or a Company Subsidiary) or
otherwise make any payments to stockholders in their capacity as stockholders;
(d) reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any of its capital stock
other than redemptions of the ASAA Preferred Stock, consistent with applicable
securities laws;
(e) (i) acquire (for cash, shares of stock or other
consideration) (including, without limitation, by merger, consolidation, or
acquisition of stock or assets) any corporation, partnership, other business
organization or any division thereof (or a substantial portion of the assets
thereof) or any other assets, except for such acquisitions which, individually,
do not exceed $10.0 million or which, in the aggregate, do not exceed $25.0
million; (ii) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise as an accommodation
become responsible for, the obligations of any person, or make any loans or
advances, except (A) in connection with this Agreement and the transactions
contemplated hereby, or (B) borrowings under existing bank lines of credit in
the ordinary course of business; or (iii) enter into or amend any contract,
agreement, commitment or arrangement to effectuate any prohibited matter set
forth in this Section 6.01(e);
(f) adopt or amend any bonus, profit sharing,
compensation, severance, termination, stock option, pension, retirement,
deferred compensation, employment or other employee benefit agreements, trusts,
plans, funds or other arrangements for the benefit or welfare of any director,
officer or employee that increase in any manner the compensation, retirement,
welfare or fringe benefits of any director, officer or Employee, or pay any
benefit not required by any existing plan or arrangement (including without
limitation the granting of stock options or stock appreciation rights) or take
any action or grant any benefit not expressly required under the terms of any
existing agreements, trusts, plans, funds or other such arrangements or enter
into any
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contract, agreement, commitment or arrangement to do any of the foregoing,
except for normal increases in the ordinary course of business consistent with
past practice that do not result in a material increase in benefits or
compensation expense to the Company or pursuant to collective bargaining
agreements as presently in effect.
(g) take any action, other than reasonable and usual
actions in the ordinary course of business and consistent with past practice,
with respect to accounting policies or procedures.
(h) authorize, recommend, propose or announce an
intention to adopt a plan of complete or partial liquidation or dissolution of
the Company or any of its Material Subsidiaries;
(i) make any tax elections or settle or compromise any
material income tax liability;
(j) pay, discharge or satisfy any material claims,
liabilities or obligations (absolute, accrued, asserted, unasserted, contingent
or otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business and consistent with past practice of liabilities
reflected or reserved against in the consolidated financial statements of the
Company;
(k) other than in the ordinary course of business and
consistent with past practice, waive any rights of substantial value or make
any payment, direct or indirect, of any material liability of the Company or any
of the Company Subsidiaries before the same comes due in accordance with its
terms;
(l) fail to maintain its existing insurance coverage of
all types in effect or, in the event any such coverage shall be terminated or
lapse, to the extent available at reasonable cost, procure substantially
similar substitute insurance policies which in all material respects are in at
least such amounts and against such risks as are currently covered by such
policies;
(m) enter into any new collective bargaining agreement or
any successor collective bargaining agreement (other than the
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Weston Division collective bargaining agreement currently being negotiated);
(n) amend or otherwise modify the Option Plan or the
Stock Purchase Plan; or
(o) enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
SECTION 6.02 Stockholders' Meeting; Proxy Material.
Unless Buyer or Merger Subsidiary acquires at least 90% of the outstanding
Shares, in which case Buyer shall cause the Merger to take place without a vote
of the Company's stockholders as permitted under Delaware Law, if required by
applicable law, the Company shall cause a special meeting of its stockholders
(the "Company Stockholders Meeting") to be duly called and held as soon as
reasonably practicable after the purchase of Shares pursuant to the Offer for
the purpose of acting upon proposals to approve this Agreement and all actions
contemplated hereby that require the approval of the Company's stockholders.
The Board shall recommend approval and adoption of this Agreement by the
Company's stockholders, unless otherwise required by the fiduciary duties of
the Board under applicable law as advised by independent legal counsel (who may
be the Company's regularly engaged legal counsel). In connection with the
Company Stockholders Meeting the Company shall in accordance with applicable
law and after consultation with the Buyer, prepare and file with the SEC a
preliminary Company Proxy Statement relating to the matters to be considered at
the Company Stockholders Meeting, respond promptly to any comments made by the
SEC with respect to the preliminary Company Proxy Statement and cause a
definitive Company Proxy Statement to be mailed to its stockholders.
SECTION 6.03 Access to Information. The Company will give
Buyer, its counsel, financial advisors, auditors and other authorized
representatives full access to the offices, properties, books and records of
the Company and the Company Subsidiaries, will furnish to Buyer, its counsel,
financial advisors, auditors and authorized representatives such financial and
operating data and other information as such persons may reasonably request and
will cause the Company's employees, counsel and financial advisors to
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cooperate with Buyer in its investigation of the business of the Company and
the Company Subsidiaries.
SECTION 6.04 No Solicitations. From and after the date
hereof until the termination of this Agreement, the Company shall not, and
shall use its best efforts to cause its officers, directors, employees,
representatives, agents or affiliates (including, without limitation, any
investment banker, attorney or accountant retained by the Company or any of the
Company Subsidiaries) not to, directly or indirectly, invite, initiate, solicit
or knowingly encourage (including by way of furnishing non-public information
or assistance), any inquiries or the making of any proposal that constitutes,
or may reasonably be expected to lead to any Acquisition Proposal (as defined
below), provided, however, that nothing contained in this Section 6.04 shall
prohibit the Board from furnishing information to, or entering into discussions
or negotiations with, any person or entity that makes an unsolicited
Acquisition Proposal if, and only to the extent that, (A) the Board, after
consultation with and based upon the advice of independent legal counsel (who
may be the Company's regularly engaged independent legal counsel), determines
in good faith that such action is necessary for the Board to comply with its
fiduciary duties to stockholders under applicable law and (B) prior to taking
such action, to the extent any confidential information will be disclosed, the
Company receives from such person or entity an executed customary
confidentiality agreement. For purposes of this Agreement, "Acquisition
Proposal" shall mean any of the following (other than the transactions between
the Company, the Buyer and the Merger Subsidiary contemplated hereunder)
involving the Company or any of its Subsidiaries: (i) any merger,
consolidation, share exchange, recapitalization, business combination, or other
similar transaction; (ii) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition of 50% or more of the assets of the Company and the
Company Subsidiaries, taken as a whole, in a single transaction or series of
transactions; (iii) any tender offer or exchange offer for 50% or more of the
outstanding shares of capital stock of the Company or the filing of a
registration statement under the Securities Act in connection therewith; or
(iv) any public announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing. The Company
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represents that neither it nor, to its knowledge without independent inquiry
having been made, any of its stockholders is a party to or bound by any
agreement with respect to an Acquisition Proposal. In the event that the
Company receives or becomes aware of any Acquisition Proposal, the Company will
promptly notify the Buyer in writing of such communication (it being understood
that nothing set forth herein shall obligate the Buyer to disclose the details
of any such Acquisition Proposal if the Board determines such non-disclosure is
in the best interest of the Company's stockholders).
SECTION 6.05 Notices of Certain Events. The Company shall
promptly notify Buyer of:
(a) any notice or other communication from any person
alleging that the consent of such person is or may be required in
connection with the transactions contemplated by this Agreement;
(b) any notice or other communication from any
governmental or regulatory agency or authority in connection with the
transactions contemplated by this Agreement; and
(c) any actions, suits, claims, investigations or
proceedings commenced or, to the best of its knowledge threatened
against, relating to or involving or otherwise affecting the Company
or any Company Subsidiary on the date of this Agreement which could
interfere with the consummation of the transactions contemplated by
this Agreement or could result in a Company Material Adverse Effect;
and
(d) the occurrence, or non-occurrence, of any event which
would cause either (i) any representation or warranty of the Company
contained in this Agreement to be untrue or inaccurate in any material
respect at any time from the date hereof to the Effective Time, (ii)
any condition set forth in Annex I to be unsatisfied at any time from
the date hereof to the date Buyer or Merger Subsidiary purchases
Shares pursuant to the Offer, (iii) any condition set forth in Article
IX hereof to be unsatisfied at any time from the date hereof to the
Effective Time or (iv) any material failure by the Company
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<PAGE> 41
to comply with or satisfy any covenant, condition or agreement to be
complied with hereunder; provided that the delivery of any notice
pursuant to this Section 6.05 shall not limit or otherwise affect the
remedies available hereunder to Buyer or Merger Subsidiary.
SECTION 6.06 Debt Instruments. Prior to or at
the Effective Time, the Company and each Company Subsidiary shall, at the
request of Buyer, use its reasonable efforts to seek waivers from the parties
thereto with respect to the occurrence, as a result of the Merger, the Offer
and the other transactions contemplated by this Agreement, of a change in
control or any other event which constitutes a default (or an event which with
notice or lapse of time or both would become a default) under any debt
instrument of the Company or any Company Subsidiary.
ARTICLE VII
COVENANTS OF BUYER
SECTION 7.01 Confidentiality.
(a) All information obtained by Buyer in connection with
the Transaction shall be kept confidential in accordance with the
confidentiality agreement, dated April 18, 1995, between Buyer and DLJ
(the "Confidentiality Agreement"); provided that any provisions of the
Confidentiality Agreement that would prohibit Buyer or Merger
Subsidiary from engaging in the transactions contemplated by this
Agreement or by the Stockholders Agreement shall be deemed to be
modified to the extent required to permit Buyer and Merger Subsidiary
to engage in all such transactions; and, provided further, that the
Confidentiality Agreement shall terminate and be of no further force
or effect upon consummation of the Offer.
(b) From and after the time at which an Acquisition
Proposal is made to the Company, Buyer and Merger Subsidiary shall not
be prohibited by the Confidentiality Agreement from taking any or all
of the actions described in the last paragraph of page 3 of the
Confidentiality Agreement (which
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paragraph contains "standstill provisions"), in which case the
Confidentiality Agreement shall be deemed to be modified to the extent
required to permit Buyer and Merger Subsidiary to engage in all such
transactions.
(c) In the event that at any time after the date hereof
and prior to the termination or expiration of the Confidentiality
Agreement the Company shall enter into a confidentiality agreement or
similar arrangement with a third party containing provisions more
favorable to such party than the corresponding provisions of the
Confidentiality Agreement are favorable to Buyer, the Confidentiality
Agreement shall thereupon be deemed amended to incorporate such
provisions therein for the benefit of Buyer. Without limiting the
foregoing, the Company agrees that it shall not release any third
party from or waive or modify any confidentiality or standstill
agreement or similar arrangement to which the Company is a party.
SECTION 7.02 Obligations of Merger Subsidiary. Buyer will
take all action necessary to cause Merger Subsidiary to perform its obligations
under this Agreement and to consummate the Merger on the terms and conditions
set forth in this Agreement.
SECTION 7.03 Voting of Shares. Buyer agrees to vote all
Shares owned by Buyer, Merger Subsidiary or any of their affiliates in favor of
approval and adoption of this Agreement at the Company Stockholders Meeting.
SECTION 7.04 Director and Officer Liability.
(a) The Certificate of Incorporation and By-Laws of the
Surviving Corporation shall contain the provisions with respect to
indemnification set forth in the Certificate of Incorporation and By-Laws of
the Company on the date of this Agreement, which provisions shall not be
amended, repealed or otherwise modified for a period of six years after the
Effective Time in any manner that would adversely affect the rights thereunder
of individuals who at any time prior to the Effective Time were directors or
officers of the Company in respect of actions or omissions occurring at or
prior to the Effective Time (including, without limitation, the
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<PAGE> 43
transactions contemplated by this Agreement), unless such modification is
required by law.
(b) From and after the Effective Time, the Surviving
Corporation shall indemnify, defend and hold harmless the present and former
officers and directors of the Company (collectively, the "Indemnified Parties")
against all losses, expenses, claims, damages, liabilities or amounts that are
paid in settlement of, with the approval of the Surviving Corporation (which
approval shall not unreasonably be withheld), or otherwise incurred in
connection with any claim, action, suit, proceeding or investigation (a
"Claim"), based in whole or in part by reason of the fact that such person is
or was a director or officer of the Company and arising out of actions, events
or omissions occurring at or prior to the Effective Time (including, without
limitation, the transactions contemplated by this Agreement), in each case to
the full extent permitted under Delaware Law (and shall pay expenses in advance
of the final disposition of any such action or proceeding to each Indemnified
Party to the fullest extent permitted under Delaware Law, upon receipt from the
Indemnified Party to whom expenses are advanced of the undertaking to repay
such advances contemplated by Section 145(e) of Delaware Law); provided, that
the Surviving Corporation shall indemnify, defend and hold harmless the
Indemnified Parties only to the same extent and on the same terms (including
with respect to advancement of expenses) provided for in the Company's
Certificate of Incorporation and By Laws in effect on the date hereof (to the
extent consistent with applicable law), which rights pursuant to such provisions
shall survive the Merger and continue in full force and effect after the
Effective Time.
(c) without limiting the foregoing, in the event any
Claim is brought against any Indemnified Party (whether arising before or after
the Effective Time) after the Effective Time (i) the Indemnified Parties may
retain the Company's regularly engaged independent legal counsel or other
independent legal counsel satisfactory to them, provided that such other
counsel shall be reasonably acceptable to the Surviving Corporation, (ii) the
Surviving Corporation shall pay all reasonable fees and expenses of such
counsel for the Indemnified Parties promptly as statements therefor are received
and (iii) the Surviving
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<PAGE> 44
Corporation will use its reasonable best efforts to assist in the
vigorous defense of any such matter, provided that the Surviving Corporation
shall not be liable for any settlement of any Claim effected without its
written consent, which consent shall not be unreasonably withheld. Any
Indemnified Party wishing to claim indemnification under this Section 7.04 upon
learning of any such Claim shall notify the Surviving Corporation (although the
failure so to notify the Surviving Corporation shall not relieve the Surviving
Corporation from any liability which the Surviving Corporation may have under
this Section 7.04, except to the extent such failure materially prejudices the
Surviving Corporation's position with respect to such claim), and shall deliver
to the Surviving Corporation the undertaking contemplated by Section 145(e) of
Delaware Law. The Indemnified Parties as a group may retain no more than one
law firm (in addition to local counsel) to represent them with respect to each
such matter unless there is, under applicable standards of professional conduct
(as determined by counsel to the Indemnified Parties), an actual conflict
between the interests of any two or more Indemnified Parties, in which event
such additional counsel as may be required may be retained by the Indemnified
Parties.
(d) For a period of three years after the Effective Time,
the Surviving Corporation shall cause to be maintained in effect the liability
insurance policies for directors and officers which are currently maintained by
the Company with respect to claims arising from facts or events which occurred
before the Effective Time (provided that the Buyer may substitute therefor
policies of at least the same coverage and amounts containing terms and
conditions which are no less advantageous in any material respect to the
Indemnified Parties). Notwithstanding the foregoing, Buyer shall not be
required to pay an annual premium for such insurance in excess of 225% of the
last annual premium paid by the Company prior to the date hereof, but in such
case shall purchase as much coverage as possible for such amount.
(e) The Company and Buyer shall have no obligation under
this Section 7.04 to any Indemnified Party when and if a court of competent
jurisdiction shall ultimately determine, and such determination shall have
become final and non-appealable, that indemnification of such Indemnified Party
in the manner
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<PAGE> 45
contemplated hereby is prohibited by applicable law. In the event that it
shall be determined in a final and non-appealable judicial proceeding that a
person who has received advance payments of expenses or putative
indemnification sums pursuant to this Section 7.04 shall not be entitled to
indemnification hereunder such person shall repay to Buyer or the Company, as
the case may be, all such expenses and sums promptly following such
determination.
(f) Each Indemnified Party shall have rights as a third
party beneficiary under this Section 7.04 as separate contractual rights for
his or her benefit and such right shall be enforceable by such Indemnified
Party, its heirs and personal representatives and shall be binding on the
Surviving Corporation and its successors and assigns.
SECTION 7.05 Employee Benefits.
(a) Except as otherwise may be provided pursuant to a
collective bargaining agreement for a period ending no earlier than (i) with
respect to Employee Benefit Plans which are Pension Plans or Welfare Plans
(other than severance plans), the last day of the first plan year beginning
after the Effective Time, (ii) with respect to Employee Benefit Plans which are
cafeteria plans as defined in Section 125 of the Code, the last day of the plan
year during which the Effective Time occurs and (iii) one year from the date of
this Agreement with respect to any other employee benefits, Buyer shall cause
the Surviving Corporation to maintain or provide the employees of the Surviving
Corporation and its subsidiaries with employee benefits, or compensation which
in the aggregate is, substantially comparable to the employee benefits provided
by the Company and the Company Subsidiaries on the date hereof. Buyer shall
cause the Surviving Corporation to honor the terms of all employment agreements
of the Company and the Company Subsidiaries. Buyer shall cause the Surviving
Corporation to honor all collective bargaining agreements by which the Company
or any of the Company Subsidiaries is bound.
(b) The foregoing shall not constitute any commitment,
contract, understanding or guarantee (express or implied) on the part of the
Surviving Corporation of a post-Effective Time employment relationship of any
term or duration or on any terms
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<PAGE> 46
other than those the Surviving Corporation may establish. Employment of any of
the Employees by the Surviving Corporation shall be "at will" and may be
terminated by the Surviving Corporation at any time for any reason (subject to
any legally binding agreement, or any applicable laws or collective bargaining
agreement, or any arrangement or commitment). No provision of this Agreement
shall create any third-party beneficiary rights in any employee or former
employee (including any beneficiary or dependent thereof) of the Company or any
of the Company Subsidiaries in respect of continued employment or resumed
employment.
ARTICLE VIII
COVENANTS OF BUYER AND THE COMPANY
SECTION 8.01 Reasonable Best Efforts.
(a) Subject to the terms and conditions of this
Agreement, each party will use its commercially reasonable best
efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate the transactions contemplated by
this Agreement. Subject to the terms and conditions of this
Agreement, if at any time prior to the Effective Time, any further
action is necessary or desirable to consummate more effectively the
actions contemplated by this Agreement, at the request of the other
party hereto and at the expense of the party so requesting, Buyer and
Merger Subsidiary, on the one hand, and the Company, on the other
hand, shall execute and deliver to such requesting party such
documents and take such other action as such requesting party may
reasonably request. The Company shall, and shall cause the Company
Subsidiaries to, cooperate with Buyer and Merger Subsidiary in
obtaining the Financing and consummating the other transactions
contemplated by the Financing Commitment Letter.
(b) In the event any action, suit, claim, investigation
or other proceeding relating to this Agreement, the Merger or
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<PAGE> 47
the other transactions hereby shall be commenced, each of the parties
hereto agrees (subject, in the case of the Company, to the fiduciary
obligations of the Board under applicable law as advised by
independent legal counsel) to cooperate with each other party hereto
and to use its commercially reasonable best efforts to respond to and
to defend vigorously against such proceeding.
SECTION 8.02 Certain Filings. The Company and Buyer shall
cooperate with one another (a) in connection with the preparation of the
Company Disclosure Documents and the Offer Documents, and (b) in determining
whether any other action by or in respect of, or filing with, any governmental
body, agency or official, or authority or any actions, consents, approvals or
waivers are required to be obtained from parties to any material contracts in
connection with the consummation of the transactions contemplated by this
Agreement and (c) in seeking any such actions, consents, approvals or waivers
or making any such filings, furnishing information required in connection
therewith or with the Company Disclosure Documents or the Offer Documents and
seeking timely to obtain any such actions, consents, approvals or waivers
(including, without limitation, as may be required under the HSR Act).
SECTION 8.03 Public Announcements. Buyer and the Company
will consult with each other before issuing any press release or making any
public statement with respect to this Agreement and the transactions
contemplated hereby and will not issue any such press release or make any such
public statement prior to such consultation, except as may be required by
applicable law (as advised by independent counsel) or any listing agreement
with any national securities exchange.
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<PAGE> 48
ARTICLE IX
CONDITIONS TO THE MERGER
SECTION 9.01 Conditions to the Obligations of Each Party.
The obligations of the Company, Buyer and Merger Subsidiary to consummate the
Merger are subject to the satisfaction of the following conditions:
(a) if required by Delaware Law, this Agreement shall
have been approved and adopted by the stockholders of the Company in
accordance with Delaware Law (except that this condition shall be
deemed satisfied if Buyer and/or Merger Subsidiary shall have acquired
90% or more of the outstanding Shares);
(b) any applicable waiting period under the HSR Act
relating to the Merger shall have expired or been terminated; and
(c) no Governmental Entity or federal or state court of
competent jurisdiction shall have enacted, issued or enforced any
statute, regulation, decree, injunction or other order which has
become final and nonappealable and which materially restricts or
prohibits the consummation of the Merger.
ARTICLE X
TERMINATION; EXPENSES
SECTION 10.1 Termination. This Agreement may be
terminated and the Transaction may be abandoned at any time prior to the
Effective Time (notwithstanding any approval of this Agreement by the
stockholders of the Company):
(a) by mutual written consent of the Company and Buyer;
(b) by either Buyer or the Company, if any permanent
injunction, order or action by any Governmental Entity or by any
federal or state court of competent jurisdiction (other
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<PAGE> 49
than a temporary restraining order) preventing the consummation of the
Merger shall have become final and nonappealable;
(c) by either Buyer or the Company, (i) if the Merger
shall not have been consummated before November 30, 1995; provided,
however, that this Agreement may be extended by written notice of
either Buyer or the Company to a date not later than January 31, 1996,
if the Merger shall not have been consummated as a direct result of
Buyer or the Company having failed by November 30, 1995, to receive
all required approvals or consents with respect to the Merger, or (ii)
if the Offer is not consummated before October 31, 1995;
(d) by Buyer if, any corporation, partnership, person,
other entity or group (as defined in Section 13(d)(3) of the Exchange
Act) other than Buyer or the Merger Subsidiary or any of their
respective subsidiaries or affiliates shall have become the beneficial
owner of more than 20% of the outstanding Shares (either on a primary
or a fully diluted basis) (other than the ownership by any bona fide
arbitrageur for the purpose of arbitrage);
(e) by either Buyer or the Company, if the Merger shall
fail to receive the requisite vote for approval and adoption by the
stockholders of the Company at the Company Stockholders Meeting;
(f) by the Company, if the Board withdraws or modifies
its approval or recommendation of the Offer or its recommendation
referred to in Section 6.02, in each case in a manner adverse to
Buyer, so long as the Board, after consultation with and based upon
the advice of independent legal counsel (who may be the Company's
regularly engaged independent legal counsel), determines in good faith
that such action is necessary for the Board to comply with its
fiduciary duties to stockholders under applicable law;
(g) by the Buyer or the Company, if the Offer terminates,
expires or is withdrawn or abandoned by Buyer or
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<PAGE> 50
Merger Subsidiary by reason of the failure to satisfy any condition
set forth in Annex I hereto;
(h) by the Buyer, if (i) the Board shall withdraw, modify
or change its recommendation or approval in respect of this Agreement
or the Offer; (ii) the Board shall have recommended or accepted any
Acquisition Proposal other than by Buyer or the Merger Subsidiary; or
(iii) the Board shall have resolved to do any of the acts referred to
in (i) or (ii);
(i) by the Buyer, if the Company shall have breached its
obligation to mail the 14D-9 to its stockholders or failed to include
in such 14D-9 the recommendation by the Board referred to in clause
(i) of paragraph (h) above (including the recommendation that the
stockholders of the Company vote in favor of the Merger); or
(j) by the Company, if the Offer terminates, expires or
is withdrawn or abandoned by the Buyer or Merger Subsidiary.
The right of any party hereto to terminate this Agreement pursuant to
this Section 10.01 shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any party hereto, any
person controlling or controlled by any such party or any of their respective
officers or directors, whether prior to or after the execution of this
Agreement.
SECTION 10.02 Effect of Termination. If this Agreement is
terminated pursuant to Section 10.01, this Agreement shall become void and of
no effect with no liability on the part of any party hereto, except that the
agreements contained in Sections 7.01 and 10.03 shall survive the termination
hereof, and except that no such termination shall relieve any party from
liability for willful breach of this Agreement or willful failure by such party
to perform its obligations hereunder.
SECTION 10.03 Fees, Expenses and Other Payments.
(a) All out-of-pocket costs and expenses, including, without
limitation, fees and disbursements of counsel, financial advisors and
accountants, incurred directly or indirectly by the
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<PAGE> 51
parties hereto in respect of the transactions contemplated hereby shall be
borne by the party which has incurred such costs and expenses (with respect to
such party, its "Expenses"); provided, however, that if the Merger is
consummated all unpaid Expenses of the Company shall be paid by the Surviving
Corporation; provided, further, that all filing fees under the HSR Act shall be
borne by Buyer.
(b) The Company agrees that if this Agreement shall be
terminated pursuant to (i) Section 10.01(c) hereof at any time when (I) an
Acquisition Proposal shall have been made by a third party but shall not have
been rejected by the Company and (II) the Company or any of the Company
Subsidiaries or the Company's stockholders shall thereafter consummate or agree
to consummate a transaction which would constitute an Acquisition Proposal with
such third party offeror or a subsidiary or an affiliate of any such offeror,
(ii) Section 10.01(e) and at the time of the Company Stockholder Meeting Buyer
shall not have voting control over a sufficient number of Shares to approve the
Merger and there shall exist an Acquisition Proposal, (iii) Section 10.01(f),
(iv) 10.01(g) or 10.01(j) if the Minimum Condition has not been satisfied at
the time of the expiration, termination or withdrawal (on or after the initial
scheduled expiration date of the Offer) of the Offer and there shall exist an
Acquisition Proposal, (v) 10.01(h), or (vi) 10.01(i) and there shall exist an
Acquisition Proposal, then in any such event the Company shall pay to Buyer an
amount equal to $19.0 million (the "Termination Fee"), payable (x) in the case
of termination under clause (i) above upon the signing of a definitive
agreement relating to such Acquisition Proposal referred to in clause (i) of
this Section 10.03(b), or, if no such agreement is executed then at the closing
(and as condition to the closing) of such Acquisition Proposal, and (y) within
one business day of termination of this Agreement upon any termination of this
Agreement under clauses (ii), (iii), (iv), (v) or (vi) above. The Company
acknowledges that the agreements contained in this Section 10.03(b) hereof are
an integral part of the transactions contemplated by this Agreement.
Accordingly, if the Company shall fail to pay when due any amounts which shall
become due under Section 10.03(b) hereof, the Company shall in addition thereto
pay to Buyer all costs and expenses (including fees and disbursements of
counsel) incurred in connecting such overdue amounts, together
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<PAGE> 52
with interest on such overdue amounts from the date such payment was required
to be made until the date such payment is received at a rate per annum equal to
the "prime rate" as announced from time to time by Chemical Bank.
(c) Any payment required to be made pursuant to Section
10.03(b) shall be made when due by wire transfer of immediately available funds
to an account designated by Buyer.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 Notices. All notices, requests and other
communications to any party hereunder shall be in writing including facsimile,
telex or similar writing) and shall be given,
If to Buyer or Merger Subsidiary, to:
Lear Seating Corporation
21557 Telegraph Road
Southfield, Michigan 48034
Attention: Joseph F. McCarthy
with a copy to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: John L. MacCarthy
if to the Company, to:
Automotive Industries Holding, Inc.
4508 IDS Center
Minneapolis, MN 55402
Attention: Scott D. Rued
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<PAGE> 53
with a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: Jeffrey C. Hammes
or such other address, as such party may hereafter specify for the purpose by
notice to the other parties hereto. Each such notice, request or other
communication shall be effective (i) if given by facsimile, upon confirmation
of receipt, or (ii) if given by any other means, when delivered at the address
specified in this Section 11.01.
SECTION 11.02 Survival of Representations, Warranties and
Covenants. The representations and warranties contained herein shall not
survive the Effective Time; provided, however, that the representations and
warranties contained herein and made by the Company shall not survive the date
of acceptance for payment of, and payment for, the Shares pursuant to the
Offer. The covenants and agreements contained herein shall not survive the
Effective Time or the termination of this Agreement except for the covenants
and agreements set forth in Sections 7.01, 7.04, 7.05 and 10.03.
SECTION 11.03 Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or
waived prior to the Effective Time if, and only if, such amendment or waiver is
in writing and signed, in the case of an amendment, by the Company, Buyer and
Merger Subsidiary or in the case of a waiver, by the party against whom the
waiver is to be effective; provided that after the adoption of this Agreement
by the stockholders of the Company, no such amendment or waiver shall, without
the further approval of such stockholders, alter or change (i) the amount or
kind of consideration to be received in exchange for any shares of capital
stock of the Company, (ii) any term of the Certificate of Incorporation of the
Surviving Corporation or (iii) any of the terms or conditions of this Agreement
if such alteration or change would adversely affect the holders of any shares
of capital stock of the Company.
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<PAGE> 54
(b) No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 11.04 Successors and Assigns. The provisions of
this Agreement shall be binding upon and inure to the benefit of the Parties
hereto and their respective successor and assigns, provided that no party may
assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the consent of the other parties hereto.
SECTION 11.05 Governing Law; Consent to Jurisdiction. This
Agreement shall be construed in accordance with and governed in all respects,
including validity, interpretation and effect, by the law of the State of
Delaware without giving effect to the principles of conflicts of laws thereof.
Each of the parties hereto (a) consents to submit itself to the personal
jurisdiction of any state or federal court located in the State of Delaware in
the event any dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement, (b) agrees that it will not attempt to deny or
defeat such personal jurisdiction or venue by motion or other request for leave
from any such court and (c) agrees that it will not bring any action relating
to this Agreement or any of the transactions contemplated by this Agreement in
any court other than a state or federal court sitting in the State of Delaware.
SECTION 11.06 Counterparts; Effectiveness. This Agreement
may be signed in 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 Agreement shall become effective when each
party hereto shall have received counterparts hereof signed by all of the other
parties hereto.
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<PAGE> 55
SECTION 11.07 Headings. Section headings used in this
Agreement are for convenience only and shall be ignored in the construction and
interpretation hereof.
SECTION 11.8 No Third Party Beneficiaries. Except for
Section 7.04 (which is intended to and shall confer upon such persons all
rights and remedies by reason of this Agreement as if such person was a party
hereto), no provision of this Agreement is intended to, or shall, confer any
third party beneficiary or other rights or remedies upon any person other than
the parties hereto.
SECTION 11.9 Entire Agreement. This Agreement (together
with the Stockholders Agreement, the Non-Compete Agreement, the Company
Disclosure Schedule, the Buyer Disclosure Schedule and the other documents
delivered pursuant hereto) and the Confidentiality Agreement constitute the
entire agreements of the parties and supersede all prior agreements and
undertakings, both written and oral, between the parties, or any of them, with
respect to the subject matter hereof.
SECTION 11.10 Severability. If any term or other
provisions of this Agreement is invalid, illegal or incapable of being enforced
by any rule of law or public policy, all other conditions and provisions of
this Agreement shall nevertheless remain in full force and effect so long as
the economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible to the fullest extent permitted by applicable law in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to
the extent possible.
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<PAGE> 56
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
AUTOMOTIVE INDUSTRIES HOLDING, INC.
By: /s/ Scott D. Rued
------------------------------
Its: Vice President
------------------------------
LEAR SEATING CORPORATION
By: /s/ James H. Vandenberghe
------------------------------
Its: Executive Vice President
------------------------------
AIHI ACQUISITION CORP.
By: /s/ James H. Vandenberghe
------------------------------
Its: President
------------------------------
<PAGE> 57
ANNEX I
The capitalized terms used in this Annex I have the meanings
set forth in the attached Agreement, except that the term "Merger Agreement"
shall be deemed to refer to the attached Agreement.
Notwithstanding any other provision of the Offer, Merger
Subsidiary shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to Merger Subsidiary's obligation to pay for or return
tendered Shares promptly after expiration or termination of the Offer), to pay
for any Shares tendered, and, except as otherwise provided in the Merger
Agreement, may postpone the acceptance for payment or, subject to the
restriction referred to above, payment for any Shares tendered, and may amend
or terminate the Offer (whether or not any Shares have theretofore been
purchased or paid for) if (i) prior to the expiration date of the Offer, (A)
the Minimum Condition or the Financing Condition shall not have been satisfied,
(B) the applicable waiting period under the HSR Act shall not have expired or
been terminated or (C) all regulatory and related approvals shall have not been
obtained on terms reasonably satisfactory to the Buyer, except where the
failure to obtain such approval would not have a Company Material Adverse
Effect and would not materially restrict or prohibit consummation of the Offer,
or the Merger or (ii) prior to the acceptance for payment of or payment for
Shares and at any time on or after the date of the Merger Agreement, any of the
following conditions shall have occurred and be continuing:
(a) Any Governmental Entity or federal or state court of
competent jurisdiction shall have enacted, issued, promulgated,
entered or enforced any statute, rule, executive order, regulation,
decree, injunction or other order (whether temporary, preliminary or
permanent) which is in effect and which (1) materially restricts or
prohibits consummation of the Offer or the Merger, (2) prohibits or
limits materially the ownership or operation by the Company, the Buyer
or any of their subsidiaries of all or any material portion of the
business or assets of the Company and its subsidiaries taken as a
whole, or compels the Company, the Buyer, or any of their subsidiaries
to dispose of or hold separate all or any material portion of the
business or assets of the Company and its subsidiaries taken as a
whole, (3) imposes limitations on
<PAGE> 58
the ability of the Buyer, the Merger Subsidiary or any other
subsidiary of the Buyer to exercise rights of ownership of any Shares,
including, without limitation, the right to vote any Shares acquired
by the Merger Subsidiary pursuant to the Offer or otherwise on all
matters properly presented to the Company's stockholders, including,
without limitation, the approval and adoption of the Merger Agreement
and the transactions contemplated thereby, (4) requires divestitures
of any Shares by the Buyer, the Merger Subsidiary or any other
affiliate of the Buyer or (5) which would result in a Company Material
Adverse Effect; provided that Buyer shall have used commercially
reasonable efforts to cause any such decree, judgment, injunction or
other order to be vacated or lifted
(b) there shall have been instituted or there shall be
pending any action or proceeding before any Governmental Entity or
federal or state court of competent jurisdiction which is reasonably
likely to result, directly or indirectly, in any of the consequences
set forth in clauses (1) through (5) of paragraph (a) above; provided
that Buyer shall have used commercially reasonable efforts to cause
any such decree, judgment, injunction or other order to be vacated or
lifted;
(c) Any of the representations and warranties of the
Company contained in the Agreement shall not be true and correct as of
the date of consummation of the Offer as though made on and as of such
date, except (i) for changes specifically permitted by the Agreement,
(ii) that those representations and warranties which address matters
only as of a particular date shall remain true and correct as of such
date, and (iii) where, with respect to those representations and
warranties which are not qualified by materiality or a similar
qualification, such failures to be true and correct would not,
individually or in the aggregate, have a Company Material Adverse
Effect;
(d) The Company shall not have performed or complied in
all material respects with all agreements and covenants required by
the Agreement to be performed or complied with by the Company on or
prior to the date of consummation of the Offer;
(e) There shall have occurred and be continuing for a
period of two days or upon the date of any scheduled expiration of the
Offer (i) any general suspension of, or
<PAGE> 59
limitation or pricing for, trading in securities on any national
securities exchange or in the over-the-counter market, (ii) the
declaration of a banking moratorium or any suspension of payments in
respect of banks in United States (whether or not mandatory) (iii)
from the date of this Agreement through the date of termination or
expiration of the Offer, a decline of at least 25% in the Standard &
Poor's 500 Index, or (iv) in the case of any of the foregoing existing
at the time of the commencement of the Offer, a material acceleration
or worsening thereof;
(f) The Merger Agreement shall have been terminated in
accordance with its terms;
(g) Buyer and the Company shall have agreed that Buyer
shall amend the Offer to terminate the Offer or postpone the payment
for Shares pursuant thereto;
(h) The Board shall have withdrawn or materially modified
(in a manner adverse to the Buyer) its approval or recommendation of
the Offer or the Merger;
(i) either immediately before or after giving effect to
payment by the Buyer or the Merger Subsidiary for the Shares tendered
pursuant to the Offer, (i) a Potential Event of Default or Event of
Default (as defined in that certain Note and Warrant Exchange
Agreement dated as of April 30, 1992 by and among the Company,
Automotive Industries, Inc., Kemper Investors Life Insurance Company,
The Northwestern Mutual Life Insurance Company and Teachers Insurance
and Annuity Association of America (as amended, the "8.75% Note
Agreement")) shall have occurred and be continuing, (ii) a Default or
Event of Default (as defined in that certain Note Agreement dated as
of December 29, 1994 by and among Automotive Industries, Inc., The
North Atlantic Life Insurance Company of America, Northern Life
Insurance Company, The Northwestern Mutual Life Insurance Company and
Teachers Insurance and Annuity Association of America (as amended, the
"8.89% Note Agreement" and together with the 8.75% Note Agreement the
"Note Agreements")) shall have occurred and be continuing, or (iii)
the Note Agreements shall prohibit the Company from incurring an
additional dollar of Funded Debt (as defined in each of the Note
Agreements); or
<PAGE> 60
(j) Since April 1, 1995 there shall have been any material
adverse change in the business, results of operations, financial
condition or business prospects of the Company and the Company
Subsidiaries, taken as a whole (other than any change resulting from a
change in general economic conditions or a change in the automotive
industry generally).
The foregoing conditions are for the sole benefit of the Buyer
and the Merger Subsidiary and each of their affiliates and may be asserted by
the Buyer or the Merger Subsidiary or may be waived by the Buyer or the Merger
Subsidiary, in whole or in part, from time to time in either of their sole
discretion, except as otherwise provided in the Merger Agreement. The failure
by the Buyer or the Merger Subsidiary 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 and may be asserted at any time and from
time to time.
<PAGE> 61
EXHIBIT A
J2R Corporation
S. A. Johnson
Scott D. Rued
ONEX DHC LLC
<PAGE> 62
EXHIBIT B
Hidden Creek Industries
J2R Corporation
S. A. Johnson
Scott D. Rued
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report included in this Form 8-K into Lear Seating Corporation's
previously filed Registration Statements File Nos. 33-55783 (Form S-8 filed on
October 5, 1994), 33-57237 (Form S-8 filed on January 11, 1995), 33-59943 (Form
S-8 filed on June 5, 1995), 33-61583 (Form S-3 filed on August 4, 1995) and
33-61739 (Form S-8 filed on August 10, 1995).
ARTHUR ANDERSEN LLP
Minneapolis, Minnesota
August 24, 1995
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report dated August 23, 1995 with respect to the balance sheet of Plastifol GmbH
& Co. KG as of 31 December 1994 and the related profit and loss account and cash
flow statement for the year then ended which appears in this Form 8-K and is
incorporated by reference in LEAR SEATING Corporation's registration statements
(File Nos. 33-55783, 33-57237, 33-59943, 33-61583, 33-61739).
KPMG Deutsche Treuhand-Gesellschaft
Aktiengesellschaft
Wirtschaftsprufungsgesellschaft
Munich, Germany
August 23, 1995
<PAGE> 1
[EXECUTION COPY] EXHIBIT 99.1
================================================================================
LEAR SEATING CORPORATION
_______________________________
$1,500,000,000
CREDIT AGREEMENT
DATED AS OF AUGUST 17, 1995
______________________________
CHEMICAL BANK,
AS ADMINISTRATIVE AGENT
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2. AMOUNT AND TERMS OF LOAN COMMITMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.1 Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.2 Revolving Credit Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.3 Procedure for Revolving Credit Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.4 Swing Line Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.5 Swing Line Loan Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.6 Conversion and Continuation Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.7 Minimum Amounts of Tranches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.8 Termination or Reduction of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.9 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.10 Inability to Determine Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.11 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.12 Requirements of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.13 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.15 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.16 Assignment of Commitments Under Certain
Circumstances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.17 Regulation U and Regulation G . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 3. LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.1 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.2 Procedure for Issuance of Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.3 Participating Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.4 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.5 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3.6 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.7 Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.8 Letter of Credit Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.9 Purpose of Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 4. INTEREST RATE PROVISIONS, FEES AND PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.1 Interest Rates and Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.2 Commitment Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.3 Agent's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.4 Letter of Credit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.5 Computation of Interest and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.6 Pro Rata Treatment and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.7 Failure by Banks to Make Funds Available . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
</TABLE>
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SECTION 5. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.1 Conditions to Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.2 Conditions to Loans to Be Made on the Merger
Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.3 Conditions to Each Loan and Each Letter of
Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 6. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.1 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.2 No Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.3 Corporate Existence; Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.4 Corporate Power; Authorization; Enforceable
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.5 No Legal Bar; Senior Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.6 No Material Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.7 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.8 Ownership of Property; Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.9 No Burdensome Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.11 Securities Law, etc. Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.12 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.13 Investment Company Act; Other Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.14 Subsidiaries, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.15 Accuracy and Completeness of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.16 Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
6.17 Patents, Copyrights, Permits and Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
6.18 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
6.19 Acquisition Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
6.20 Regulation H. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 7. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.1 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.2 Certificates; Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.3 Performance of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
7.4 Conduct of Business, Maintenance of Existence
and Compliance with Obligations and Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
7.5 Maintenance of Property; Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
7.6 Inspection of Property; Books and Records;
Discussions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
7.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
7.8 Maintenance of Liens of the Security
Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.9 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
7.10 Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
7.11 Pledge Agreement Supplement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
7.12 Consummation of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
</TABLE>
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SECTION 8. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.1 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.2 Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
8.3 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
8.4 Limitation on Guarantee Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
8.5 Limitations on Fundamental Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
8.6 Limitation on Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
8.7 Limitation on Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
8.8 Limitation on Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
8.9 Limitation on Investments, Loans and Advances . . . . . . . . . . . . . . . . . . . . . . . . . . 77
8.10 Limitation on Optional Payments and
Modification of Debt Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
8.11 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
8.12 Sale and Leaseback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
8.13 Corporate Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
8.14 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
8.15 Limitation on Restrictions Affecting
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
8.16 Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
8.17 Special Purpose Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
8.18 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 9. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 10. THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
10.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
10.2 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
10.3 Exculpatory Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
10.4 Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
10.5 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
10.6 Non-Reliance on Agent and Other Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
10.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
10.8 Agent in Its Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
10.9 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
11.1 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
11.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
11.3 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
11.4 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
11.5 Payment of Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
11.6 Successors and Assigns; Participations;
Purchasing Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
11.7 Adjustments; Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
11.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
11.9 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
11.10 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
11.11 Submission to Jurisdiction; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
11.12 Existing Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
11.13 Release of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
</TABLE>
-iii-
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SCHEDULES:
Schedule 1.1(a) Addresses of Banks
Schedule 1.1(b) Security Documents
Schedule 1.1(c) Mortgaged Properties
Schedule 2.1 Commitments
Schedule 3.1 Existing Letters of Credit
Schedule 6.14 Subsidiaries, Divisions, Partnerships and Joint
Ventures
Schedule 6.18 Hazardous Material
Schedule 8.2(s) Existing Indebtedness
Schedule 8.2(t) AIHI Indebtedness
Schedule 8.9 Existing Investments, Loans and Advances
Schedule 8.15 Contractual Obligation Restrictions
EXHIBITS:
Exhibit A Form of Revolving Credit Note
Exhibit B Form of Swing Line Note
Exhibit C Form of Subsidiary Guarantee
Exhibit D Form of Domestic Pledge Agreement
Exhibit E Form of Fair Haven Pledge Agreement
Exhibit F Form of Acquisition Pledge Agreement
Exhibit G Form of Security Agreement
Exhibit H Form of Depositary Agency Agreement
Exhibit I Form of Borrowing Certificate
Exhibit J Form of Swing Line Participation Certificate
Exhibit K Form of Assignment and Acceptance
Exhibit L-1 Matters to be Covered by Opinion of Counsel to Borrower
Exhibit L-2 Matters to be Covered by Opinion of Counsel to Borrower and
Acquisition Corp.
-iv-
<PAGE> 6
CREDIT AGREEMENT, dated as of August 17, 1995, among (i)
LEAR SEATING CORPORATION, a Delaware corporation (the "Borrower"), (ii) the
several financial institutions parties to this Agreement from time to time
(collectively, the "Banks"; individually, a "Bank"), (iii) CHEMICAL BANK, a New
York banking corporation, as administrative agent for the Banks hereunder (in
such capacity, the "Agent"), and (iv) the Managing Agents, Co-Agents and Lead
Managers identified on the signature pages hereof.
W I T N E S S E T H :
WHEREAS, the Borrower is party to the Existing Credit
Agreement (such term and other capitalized terms used in these Recitals being
used as defined in Section 1);
WHEREAS, Acquisition Corp., a wholly owned Subsidiary of
the Borrower, has commenced the Tender Offer for the AIHI Shares of Automotive
Industries Holding, Inc., a Delaware corporation ("AIHI");
WHEREAS, the Borrower contemplates that, as promptly as
practicable following the purchase of the AIHI Shares pursuant to the Tender
Offer, the Borrower will cause the Merger to occur, as a result of which AIHI
will be the surviving corporation of the Merger and a wholly owned Subsidiary
of the Borrower;
WHEREAS, the Borrower has requested that the Banks
establish credit facilities in order to provide funds to the Borrower for the
purposes described herein, including, without limitation, (a) financing the
Tender Offer and the Merger and payment of fees and expenses of the
Acquisition, (b) refinancing certain existing indebtedness of AIHI, (c)
replacing and refinancing the Existing Credit Agreement and (d) providing
financing for general corporate purposes of the Borrower and its Subsidiaries,
including acquisitions permitted hereunder; and
WHEREAS, the Banks are willing, upon and subject to the
terms and conditions hereof, to establish such credit facilities for the
purposes described herein;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the
following terms have the following meanings:
"ABR": for any date, the higher of (a) the rate of
interest publicly announced by Chemical in New York, New
<PAGE> 7
2
York from time to time as its prime rate (the "Prime Rate") and (b)
0.5% per annum above the rate set forth for such date opposite the
caption "Federal Funds (Effective)" in the weekly statistical release
designated as "H.15(519)", or any successor publication, published by
the Federal Reserve Board. The ABR is not intended to be the lowest
rate of interest charged by Chemical in connection with extensions of
credit to borrowers.
"ABR Loans": Loans hereunder at such time as they are made
and/or being maintained at a rate of interest based upon the ABR.
"Acquisition": the acquisition by a Wholly Owned
Subsidiary of the Borrower of AIHI by means of the Tender Offer and
the Merger.
"Acquisition Corp.": AIHI Acquisition Corp., a Delaware
corporation.
"Acquisition Documents": the collective reference to the
Tender Offer Documents and the Merger Agreement and all other
documents and information sent by the Borrower or any of its
Subsidiaries or AIHI to the shareholders of AIHI or filed with the
Securities and Exchange Commission in connection with the Tender Offer
or the Merger.
"Acquisition Pledge Agreement": the Acquisition Pledge
Agreement, substantially in the form of Exhibit F, made by Acquisition
Corp. in favor of the Agent, pursuant to which Acquisition Corp.
pledges the AIHI Shares from time to time owned by it, as the same may
be amended, supplemented or otherwise modified from time to time.
"Adjustment Date": with respect to any fiscal quarter, (a)
the second Business Day following receipt by the Agent of both (i) the
financial statements required to be delivered pursuant to subsection
7.1(a) or (b), as the case may be, for the most recently completed
fiscal period and (ii) the compliance certificate required pursuant to
subsection 7.2(b) with respect to such financial statements or (b) if
such compliance certificate and financial statements have not been
delivered in a timely manner, the date upon which such compliance
certificate and financial statements were due; provided, however, that
(x) in the event that the Adjustment Date is determined in accordance
with the provisions of clause (b) of this definition, then the date
which is two Business Days following the date of receipt of the
financial statements and compliance certificate referenced in clause
(a) of this definition also shall be deemed to constitute an
Adjustment Date and (y) any Equity Closing Date shall also be an
Adjustment Date.
<PAGE> 8
3
"Affiliate": of any Person shall mean (a) any other Person (other than
a Wholly Owned Subsidiary of such Person) which, directly or indirectly, is in
control of, is controlled by, or is under common control with, such Person or
(b) any other Person who is a director or officer of (i) such Person, (ii) any
Subsidiary of such Person or (iii) any Person described in clause (a) above.
For purposes of this definition, a Person shall be deemed to be "controlled by"
such other Person if such other Person possesses, directly or indirectly, power
either to (i) vote 5% or more of the securities having ordinary voting power for
the election of directors of such first Person or (ii) direct or cause the
direction of the management and policies of such first Person whether by
contract or otherwise.
"Agent": as defined in the Preamble to this Agreement.
"Agreement": this Credit Agreement, as the same may be
amended, supplemented or otherwise modified from time to time.
"AIHI": as defined in the Recitals to this Agreement.
"AIHI Shares": the shares of Class A Common Stock, par
value $0.01 per share, of AIHI.
"Applicable Margin": at any time, the rate per annum set
forth below opposite the Level of Coverage Ratio most recently determined:
<TABLE>
<CAPTION>
Level of Applicable
Coverage Ratio Margin
-------------- ----------
<S> <C>
Level I:
Coverage Ratio is
less than 3.25 to 1 1.00%
Level II:
Coverage Ratio is
equal to or greater than 3.25 to 1
but less than 4.0 to 1 0.875%
Level III:
Coverage Ratio is
equal to or greater than 4.0 to 1 but less than 5.0 to 1 0.75%
Level IV
Coverage Ratio is
greater than or equal to 5.0 to 1 0.50%;
</TABLE>
<PAGE> 9
4
provided that (a) the Applicable Margin shall be that set forth above
opposite Level II from the Closing Date until the earlier of (i) the
Adjustment Date occurring after the first full fiscal quarter
following the fiscal quarter in which the Closing Date occurs, and
(ii) any Equity Closing Date, (b) the Applicable Margin determined for
any Adjustment Date shall remain in effect until a subsequent
Adjustment Date for which the Coverage Ratio falls within a different
Level, and (c) if the financial statements and related compliance
certificate for any fiscal period are not delivered by the date due
pursuant to subsections 7.1 and 7.2(b), the Applicable Margin shall be
(i) for the first 5 days subsequent to such due date, that in effect
on the day prior to such due date, and (ii) thereafter, that set forth
above opposite Level I, in either case, until the subsequent
Adjustment Date.
"Assignment and Acceptance": an Assignment and Acceptance,
substantially in the form of Exhibit K.
"Available Commitment": as to any Bank, at a particular time,
any amount equal to the excess, if any, of (a) the amount of such
Bank's Commitment at such time over (b) the sum of (i) the aggregate
unpaid principal amount at such time of all Revolving Credit Loans
made by such Bank pursuant to subsection 2.1 and (ii) such Bank's
Commitment Percentage of the aggregate Letter of Credit Obligations at
such time; collectively, as to all the Banks, the " Available
Commitments".
"Bank" and "Banks": as defined in the Preamble to this
Agreement.
"benefitted Bank": as defined in subsection 11.7.
"Borrower": as defined in the Preamble to this Agreement.
"Borrowing Date": any Business Day specified in a notice
pursuant to subsection 2.3 or 2.4 as a date on which the Borrower
requests the Banks to make Loans hereunder.
"Business Day": a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or
required by law to close.
"Capital Expenditures": direct or indirect (by way of the
acquisition of securities of a Person or the expenditure of cash or
the incurrence of Indebtedness) expenditures in respect of the
purchase or other acquisition of fixed or capital assets (excluding
any such asset (a) acquired in connection with normal replacement and
maintenance programs and properly charged to current operations, (b)
acquired pursuant to a Financing Lease or other lease, (c) acquired
<PAGE> 10
5
in the Acquisition or (d) otherwise permitted pursuant to subsection
8.5(f)).
"Cash Equivalents": (a) 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
twelve months from the date of acquisition, (b) time deposits and
certificates of deposit having maturities of not more than twelve
months from the date of acquisition, in each case with any Bank or
with any other domestic commercial bank having capital and surplus in
excess of $200,000,000, which has, or the holding company of which
has, a commercial paper rating meeting the requirements specified in
clause (d) below, (c) repurchase obligations with a term of not more
than seven days for underlying securities of the types described in
clauses (a) and (b) entered into with any bank meeting the
qualifications specified in clause (b) above, (d) commercial paper
issued by the parent corporation of any Bank and commercial paper
rated at least A-1 or the equivalent thereof by Standard & Poor's
Ratings Group or P-1 or the equivalent thereof by Moody's Investors
Service, Inc. and in either case maturing within nine months after the
date of acquisition, (e) deposits maintained with money market funds
having total assets in excess of $300,000,000, (f) demand deposit
accounts maintained in the ordinary course of business with banks or
trust companies located near plant locations, in an aggregate amount
not to exceed $750,000 at any one time at any one such bank or trust
company and (g) deposits in mutual funds invested in preferred
equities issued by U.S. corporations rated at least AA (or the
equivalent thereof) by Standard & Poor's Ratings Group.
"Chemical": Chemical Bank, a New York banking corporation, in
its individual capacity.
"CISA": Central de Industrias S.A. de C.V., a corporation
organized under the laws of Mexico.
"Closing Date": the date on which all of the conditions
precedent set forth in subsection 5.1 shall have been met or waived
and the initial Loans are made.
"Code": the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral": the collective reference to all collateral in
which the Agent has a security interest pursuant to the Security
Documents and all assets by which the Loans are deemed indirectly
secured within the meaning of Regulation U and Regulation G.
"Commercial Letters of Credit": as defined in subsection
3.1(a).
<PAGE> 11
6
"Commitment": as defined in subsection 2.1.
"Commitment Percentage": as to any Bank, the percentage of
the aggregate Commitments constituted by such Bank's Commitment.
"Commitment Period": the period from and including the date
hereof to but not including the Termination Date.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Borrower within
the meaning of Section 4001 of ERISA or is part of a group which
includes the Borrower and which is treated as a single employer under
Section 414 of the Code.
"Consolidated Indebtedness": at a particular date, all
Indebtedness of the Borrower and its Subsidiaries.
"Consolidated Interest Expense": for any fiscal period, the
amount which would, in conformity with GAAP, be set forth opposite the
caption "interest expense" (or any like caption) on a consolidated
income statement of the Borrower and its Subsidiaries for such period,
(a) excluding therefrom, however, fees payable under subsections 4.2,
4.3 or 4.4 and any amortization or write-off of deferred financing
fees during such period and (b) including any interest income during
such period.
"Consolidated Net Income": for any fiscal period, the
consolidated net income (or deficit) of the Borrower and its
Subsidiaries for such period (taken as a cumulative whole), determined
in accordance with GAAP; provided that (a) any provision for
post-retirement medical benefits, to the extent such provision
calculated under FAS 106 exceeds actual cash outlays calculated on the
"pay as you go" basis, shall not to be taken into account, and (b)
there shall be excluded (i) the income (or deficit) of any Person
accrued prior to the date it becomes a Subsidiary or is merged into or
consolidated with the Borrower or any Subsidiary, (ii) the income (or
deficit) of any Person (other than a Subsidiary) in which the Borrower
or any Subsidiary has an ownership interest, except to the extent that
any such income has been actually received by the Borrower or such
Subsidiary in the form of dividends or similar distributions, (iii)
the undistributed earnings of any Subsidiary to the extent that the
declaration or payment of dividends or similar distributions by such
Subsidiary is not at the time permitted by the terms of any
Contractual Obligation or Requirement of Law (other than any
Requirement of Law of Germany) applicable to such Subsidiary, and (iv)
in the case of a successor to the Borrower or any Subsidiary by
consolidation or merger or as a transferee of its assets, any earnings
of the successor corporation prior to such consolidation, merger or
transfer of assets; provided,
<PAGE> 12
7
further that the exclusions in clauses (i) and (iv) of this
definition shall not apply to the mergers or consolidations of the
Borrower or its Subsidiaries with their respective Subsidiaries.
"Consolidated Net Worth": at a particular date, all amounts
which would be included under shareholders' equity on a consolidated
balance sheet of the Borrower and its Subsidiaries determined on a
consolidated basis in accordance with GAAP as at such date plus the
amount of any redeemable common stock; provided, however, that any
cumulative adjustments made pursuant to FAS 106 shall not be taken
into account; and provided, further, that any stock option expense and
any amortization of goodwill, deferred financing fees and license fees
(including any write-offs of deferred financing fees, license fees and
up to an aggregate of $10,000,000 of goodwill from October 25, 1993)
shall not be taken into account in determining Consolidated Net Worth.
"Consolidated Operating Profit": for any fiscal period,
Consolidated Net Income for such period excluding (a) extraordinary
gains and losses arising from the sale of material assets and other
extraordinary and/or non-recurring gains and losses, (b) charges,
premiums and expenses associated with the discharge of Indebtedness,
(c) charges relating to FAS 106, (d) license fees (and any write- offs
thereof), (e) stock compensation expense, (f) deferred financing fees
(and any write-offs thereof), (g) write-offs up to $5,000,000 of
goodwill, (h) foreign exchange gains and losses, (i) miscellaneous
income and expenses and (j) miscellaneous gains and losses arising
from the sale of assets plus, to the extent deducted in determining
Consolidated Net Income, the excess of (i) the sum of (A) Consolidated
Interest Expense, (B) any expenses for taxes, (C) depreciation and
amortization expense and (D) minority interests in income of
Subsidiaries over (ii) net equity earnings in Affiliates (excluding
Subsidiaries).
"Continuing Directors": the directors of the Borrower on the
Closing Date and each other director, if such other director's
nomination for election to the Board of Directors of the Borrower is
recommended by a majority of the then Continuing Directors.
"Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or
undertaking to which such Person is a party or by which it or any of
its property is bound.
"Coverage Ratio": for any Adjustment Date the ratio of (a)
Consolidated Operating Profit for the four fiscal quarters most
recently ended to (b) Consolidated Interest Expense for the four
fiscal quarters most recently ended; provided, however, that (x) with
respect to any Adjustment
<PAGE> 13
8
Date occurring during the second, third and fourth full fiscal
quarters following the fiscal quarter in which the Closing Date
occurs, the Coverage Ratio will be calculated for the period of one,
two or three fiscal quarters, as the case may be, beginning with the
first full fiscal quarter following the fiscal quarter in which the
Closing Date occurs and ending with the fiscal quarter immediately
prior to the fiscal quarter during which such Adjustment Date occurs
and (y) if any Equity Closing Date occurs, the Coverage Ratio
calculated on such date and on each subsequent Adjustment Date will be
the Coverage Ratio that would have been applicable if such Equity
Closing Date had occurred on the Closing Date. For purposes of any
calculation of the Coverage Ratio pursuant to clause (y) of the
proviso to the preceding sentence as a result of the occurrence of an
Equity Closing Date prior to the scheduled Adjustment Date occurring
after the first full fiscal quarter following the fiscal quarter in
which the Closing Date occurs, such Coverage Ratio shall be a
fraction, the numerator of which is the combined Consolidated
Operating Profit of the Borrower and AIHI for the four fiscal quarters
ended June 30, 1995 and the denominator of which is projected
Consolidated Interest Expense for the fiscal year 1996 (such
Consolidated Interest Expense being projected to be $103,600,000) less
the amount by which such Consolidated Interest Expense would have been
reduced if such Equity Closing Date had occurred on the Closing Date
and net proceeds thereof used to repay the Loans. For purposes of any
calculation of the Coverage Ratio pursuant to clause (y) of the
proviso to the preceding sentence as a result of the occurrence of an
Equity Closing Date after the scheduled Adjustment Date occurring
after the first full fiscal quarter following the fiscal quarter in
which the Closing Date occurs, such Coverage Ratio shall be calculated
using actual Consolidated Operating Profit and Consolidated Interest
Expense for the period commencing with the first full fiscal quarter
following the fiscal quarter in which the Closing Date occurs,
adjusted to reduce such Consolidated Interest Expense to the amount
that would have been incurred if such Equity Closing Date had occurred
on the Closing Date and net proceeds thereof used to repay the Loans.
"Default": any of the events specified in Section 9, whether
or not any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"Dollars" and "$": lawful currency of the United States of
America.
"Domestic Loan Party": each Loan Party that is organized
under the laws of any jurisdiction of the United States.
<PAGE> 14
9
"Environmental Complaint": any complaint, order, citation,
notice or other written communication from any Person with respect to
the existence or alleged existence of a violation of any Environmental
Laws or legal liability resulting from air emissions, water
discharges, noise emissions, Hazardous Material or any other
environmental, health or safety matter.
"Equity Closing Date": the date, on or before the last day of
the fourth full fiscal quarter following the fiscal quarter in which
the Closing Date occurs, on which the Borrower (i) receives cash
proceeds from an issuance and sale by the Borrower of its equity
securities and (ii) applies the net cash proceeds to repay Revolving
Credit Loans.
"Environmental Laws": any and all applicable Federal,
foreign, state, local or municipal laws, rules, orders, regulations,
statutes, ordinances, codes, decrees, requirements of any Governmental
Authority and any and all common law requirements, rules and bases of
liability regulating, relating to or imposing liability or standards
of conduct concerning pollution or protection of the environment or
the Release or threatened Release of Hazardous Materials, as now or
hereafter in effect.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurodollar Base Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum
equal to the average (rounded upwards to the nearest whole multiple of
one sixteenth of one percent) of the respective rates notified to the
Agent by the Reference Banks as the rate at which such Reference Bank
is offered Dollar deposits two Working Days prior to the beginning of
such Interest Period in the interbank eurodollar market where the
eurodollar and foreign currency and exchange operations of such
Reference Bank are then being conducted, at or about 10:00 A.M., New
York City time, for delivery on the first day of such Interest Period
for the number of days comprised therein and in an amount comparable
to the amount of the Eurodollar Loan of such Reference Bank to be
outstanding during such Interest Period.
"Eurodollar Loans": Revolving Credit Loans at such time as
they are made and/or are being maintained at a rate of interest based
upon the Eurodollar Rate.
"Eurocurrency Reserve Requirements": with respect to any day
as applied to a Eurodollar Loan, the aggregate (without duplication)
of the rates (expressed as a decimal fraction) of reserve requirements
in effect on such day
<PAGE> 15
10
(including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors of
the Federal Reserve System or other Governmental Authority having
jurisdiction with respect thereto), dealing with reserve requirements
prescribed for eurocurrency funding (currently referred to as
"Eurocurrency liabilities" in Regulation D of such Board) maintained
by a member bank of such System.
"Eurodollar Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, a rate per annum
determined for such day in accordance with the following formula
(rounded upwards to the nearest whole multiple of 1/100th of one
percent):
Eurodollar Base Rate
---------------------------------------
1.00 - Eurocurrency Reserve Requirement
"Eurodollar Tranche": the collective reference to Eurodollar
Loans whose Interest Periods each begin on the same day and end on the
same other day.
"Event of Default": any of the events specified in Section 9,
provided that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, event or act has been
satisfied.
"Exchange Act": the Securities Exchange Act of 1934, as
amended.
"Existing Credit Agreement": the Second Amended and Restated
Credit Agreement, dated as of November 29, 1994, as amended, among the
Borrower, the lenders parties thereto, Chemical Bank, as
administrative agent, and Bankers Trust Company, The Bank of Nova
Scotia, Citicorp USA, Inc. and Lehman Commercial Paper Inc., as
managing agents.
"Existing Letters of Credit": as defined in subsection 3.1(b).
"Extensions of Credit": at any particular time, the sum of
(a) the aggregate principal amount of Revolving Credit Loans and Swing
Line Loans then outstanding and (b) the aggregate Letter of Credit
Obligations then outstanding.
"Federal Reserve Board": the Board of Governors of the
Federal Reserve System or any successor thereto.
"Fiat Seat Business": Sepi S.p.A. and certain related
businesses.
<PAGE> 16
11
"FIMA": FIMA Finance Management Inc., a British Virgin
Islands corporation and any other wholly owned subsidiary of Exor
Group S.A. or any of them.
"Financing Lease": (a) any lease of property, real or
personal, the obligations under which are capitalized on a
consolidated balance sheet of the Borrower and its Subsidiaries and
(b) any other such lease to the extent that the then present value of
the minimum rental commitment thereunder should, in accordance with
GAAP, be capitalized on a balance sheet of the lessee.
"Foreign Letter of Credit": a Standby Letter of Credit whose
beneficiary is a Person which is directly or indirectly extending
credit to a Foreign Subsidiary.
"Foreign Subsidiaries": each of the Subsidiaries so
designated on Schedule 6.14 and any Subsidiaries organized outside the
United States which are created after the effectiveness hereof.
"GAAP": generally accepted accounting principles in the
United States of America in effect from time to time.
"Governmental Authority": any nation or government, any state
or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guarantee Obligation": as to any Person, any obligation of
such Person guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends or other obligations (the "primary obligations") of
any other 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 obligor, (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 any such primary
obligation against loss in respect thereof; provided, however, that
the term Guarantee Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation shall be deemed to
be an amount equal to the value as of any date of determination of the
stated or determinable amount of the
<PAGE> 17
12
primary obligation in respect of which such Guarantee Obligation is
made (unless such Guarantee Obligation shall be expressly limited to a
lesser amount, in which case such lesser amount shall apply) or, if
not stated or determinable, the value as of any date of determination
of the maximum reasonably anticipated liability in respect thereof as
determined by such Person in good faith.
"Guarantor Supplement": a supplement to the Subsidiary
Guarantee, substantially in the form of Annex A to the Subsidiary
Guarantee, whereby a Subsidiary of the Borrower becomes a "Guarantor"
under the Subsidiary Guarantee.
"Hazardous Materials": any solid wastes, toxic or hazardous
substances, materials or wastes, defined, listed, classified or
regulated as such in or under any Environmental Laws, including,
without limitation, asbestos, petroleum or petroleum products
(including gasoline, crude oil or any fraction thereof),
polychlorinated biphenyls, and urea-formaldehyde insulation, and any
other substance the presence of which may give rise to liability under
any Environmental Law.
"Indebtedness": of a Person, at a particular date, the sum
(without duplication) at such date of (a) indebtedness for borrowed
money or for the deferred purchase price of property or services in
respect of which such Person is liable as obligor, (b) indebtedness
secured by any Lien on any property or asset owned or held by such
Person regardless of whether the indebtedness secured thereby shall
have been assumed by or is a primary liability of such Person, (c)
obligations of such Person under Financing Leases, (d) the face amount
of all letters of credit issued for the account of such person and,
without duplication, the unreimbursed amount of all drafts drawn
thereunder and (e) obligations (in the nature of principal or
interest) of such Person in respect of acceptances or similar
obligations issued or created for the account of such Person; but
excluding (i) trade and other accounts payable in the ordinary course
of business in accordance with customary trade terms and which are not
overdue for more than 120 days or, if overdue for more than 120 days,
as to which a dispute exists and adequate reserves in conformity with
GAAP have been established on the books of such Person, (ii) deferred
compensation obligations to employees and (iii) any obligations
otherwise constituting Indebtedness the payment of which such Person
has provided for pursuant to the terms of such Indebtedness or any
agreement or instrument pursuant to which such Indebtedness was
incurred, by the irrevocable deposit in trust of an amount of funds or
a principal amount of securities, which deposit is sufficient, either
by itself or taking into account the accrual of interest thereon, to
pay the principal of and interest on such obligations when due.
<PAGE> 18
13
"Industrial Revenue Bonds": industrial revenue bonds issued
for the benefit of the Borrower or its Subsidiaries and in respect of
which the Borrower or its Subsidiaries will be the source of
repayment, provided that such financings, (including, without
limitation, the indenture related thereto) shall be in form and
substance reasonably satisfactory to the Issuing Bank that issues a
Letter of Credit backing such Industrial Revenue Bonds.
"Insolvency" or "Insolvent": at any particular time, a
Multiemployer Plan is insolvent within the meaning of Section 4245 of
ERISA.
"Interest Payment Date": (a) as to any ABR Loan (including
Swing Line Loans), the last day of each March, June, September and
December, commencing on the first of such days to occur after the
effectiveness of this Agreement and (b) as to any Eurodollar Loan in
respect of which the Borrower has selected an Interest Period of one,
two or three months, the last day of such Interest Period, (c) as to
any Eurodollar Loan in respect of which the Borrower has selected an
Interest Period of longer than three months, each day which is three
months, or a whole multiple thereof, after the making of such
Eurodollar Loan and the last day of such Interest Period and (d) as to
any Loan, the Termination Date.
"Interest Period": with respect to any Eurodollar Loans:
(a) initially, the period commencing on the
borrowing or conversion date, as the case may be, with respect
to such Eurodollar Loans and ending one, two, three or six
months thereafter (or, to the extent available from all Banks,
nine or twelve months thereafter), as selected by the Borrower
in its notice of borrowing as provided in subsection 2.3 or
its notice of conversion as provided in subsection 2.6, as the
case may be; and
(b) thereafter, each period commencing on the last
day of the then current Interest Period applicable to such
Eurodollar Loans and ending one, two, three or six months
thereafter (or, to the extent available from all Banks, nine
or twelve months thereafter), as selected by the Borrower by
irrevocable notice to the Agent not less than three Working
Days prior to the last day of the then current Interest Period
with respect to such Eurodollar Loans;
<PAGE> 19
14
provided that all of the foregoing provisions relating to Interest
Periods are subject to the following:
(i) if any Interest Period would otherwise end on
a day which is not a Working Day, that Interest Period shall
be extended to the next succeeding Working Day unless the
result of such extension would be to carry such Interest
Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Working
Day;
(ii) no Interest Period shall extend beyond the
Termination Date;
(iii) if the Borrower shall fail to give notice as
provided above, the Borrower shall be deemed to have selected
an ABR Loan to replace the affected Eurodollar Loan;
(iv) any Interest Period that begins on the last
Working Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last Working
Day of a calendar month; and
(v) the Borrower shall select Interest Periods so
that there shall be no more than twenty Eurodollar Tranches in
existence on any one date; provided if the Borrower shall
select an Interest Period of one month, there shall be no more
than ten Eurodollar Tranches of one month in existence on any
one date.
"Interest Rate Agreement": any interest rate protection
agreement, interest rate swap or other interest rate hedge arrangement
(other than any interest rate cap or other similar agreement or
arrangement pursuant to which the Borrower has no credit exposure), to
or under which the Borrower or any of its Subsidiaries is a party or a
beneficiary.
"Interest Rate Agreement Obligations": all obligations of the
Borrower to any financial institution under any one or more Interest
Rate Agreements.
"Issuing Bank": Chemical, in its capacity as issuer of the
Letters of Credit or, if Chemical is not the Agent hereunder, such
other Bank, which the Borrower and the Required Banks shall have
approved, in its capacity as issuer of the Letters of Credit; provided
that any Bank other than Chemical which agrees to become an Issuing
Bank, and which the Borrower and the Required Banks shall have
approved, may become an Issuing Bank for Standby Letters of
<PAGE> 20
15
Credit to be used for the purposes described in subsection 3.9(b).
"Lear Italia": the collective reference to each direct
Foreign Subsidiary, organized under the laws of Italy, of the Borrower
or any Subsidiary party to the Subsidiary Guarantee.
"Letter of Credit Applications": (a) in the case of Standby
Letters of Credit, a letter of credit application for a Standby Letter
of Credit on the standard form of Chemical for standby letters of
credit, and (b) in the case of Commercial Letters of Credit, a letter
of credit application for a Commercial Letter of Credit on the
standard form of Chemical for commercial letters of credit.
"Letter of Credit Obligations": at any particular time, all
liabilities of the Borrower and any Subsidiary with respect to Letters
of Credit, whether or not any such liability is contingent, including
(without duplication) the sum of (a) the aggregate undrawn face amount
of all Letters of Credit then outstanding plus (b) the aggregate
amount of all unpaid Reimbursement Obligations and Subsidiary
Reimbursement Obligations.
"Letter of Credit Participation Certificate": a participation
certificate in the form customarily used by the Issuing Bank for such
purpose at the time such certificate is issued.
"Letters of Credit": as defined in subsection 3.1(a).
"Lien": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), or
preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement,
any Financing Lease having substantially the same economic effect as
any of the foregoing, and the filing of any financing statement under
the Uniform Commercial Code or comparable law of any jurisdiction in
respect of any of the foregoing).
"Loan" and "Loans": the collective reference to the Revolving
Credit Loans and the Swing Line Loans.
"Loan Documents": the collective reference to this Agreement,
the Notes, the Letters of Credit, the Letter of Credit Applications
and the Security Documents.
"Loan Parties": the collective reference to the Borrower,
each guarantor or grantor party to any Security
<PAGE> 21
16
Document and each issuer of pledged stock under each Pledge Agreement.
"Management Investors": each of the managers, officers and
other employees of the Borrower and its Subsidiaries from time to time
party to the Stockholders Agreement.
"Margin Stock Collateral": as defined in subsection 2.17.
"Material Subsidiary": each Loan Party and any other
Subsidiary which (a) for the most recent fiscal year of the Borrower
accounted for more than 5% of the consolidated revenues of the
Borrower or (b) as of the end of such fiscal year, was the owner of
more than 5% of the consolidated assets of the Borrower all as shown
on the consolidated financial statements of the Borrower for such
fiscal year.
"Merchant Banking Partnerships": Lehman Brothers Merchant
Banking Portfolio Partnership L.P., a Delaware limited partnership,
Lehman Brothers Offshore Investment Partnership - Japan L.P., a
Bermuda limited partnership, Lehman Brothers Offshore Investment
Partnership L.P., a Bermuda limited partnership and Lehman Brothers
Capital Partners II, L.P., a Delaware limited partnership
(collectively, the "Partnerships") or any majority owned direct or
indirect Subsidiary of Lehman Brothers Holdings Inc. or any
partnership the general partner of which is a majority owned direct or
indirect Subsidiary of Lehman Brothers Holdings Inc. (with the
Partnerships, collectively referred to as the "Permitted Lehman
Entities") or a trust the beneficiaries of which include only
investors in the Permitted Lehman Entities, or any of them.
"Merger": the merger of Acquisition Corp. with and into AIHI
pursuant to the Merger Agreement.
"Merger Agreement": the Agreement and Plan of Merger, dated
as of July 16, 1995, by and among the Borrower, Acquisition Corp. and
AIHI, as the same has been or will be amended, supplemented or
otherwise modified from time to time; provided, however, that any
material amendments, supplements or other modifications shall be
approved by the Required Banks.
"Merger Date": the date on which the Merger is consummated in
accordance with the Merger Agreement.
"Mortgaged Properties": the collective reference to the real
properties described on Schedule 1.1(c) and any other properties
mortgaged in favor of the Agent for the ratable benefit of the Banks
pursuant to this Agreement from time to time.
<PAGE> 22
17
"Mortgages": the collective reference to the mortgages listed
in Schedule 1.1(b), and each other mortgage or deed of trust that may
be delivered to the Agent as collateral security for any or all of the
Obligations and the Subsidiary Reimbursement Obligations, in each case
as such mortgages or deeds of trust may be amended, supplemented or
otherwise modified from time to time.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Proceeds": shall mean the gross proceeds received by the
Borrower or any Subsidiary from a sale or other disposition of any
asset of the Borrower or such Subsidiary less (a) all reasonable fees,
commissions and other out-of-pocket expenses incurred by the Borrower
or such Subsidiary in connection therewith, (b) Federal, state, local
and foreign taxes assessed in connection therewith and (c) the
principal amount, accrued interest and any related prepayment fees of
any Indebtedness (other than the Loans) which is secured by any such
asset and which is required to be repaid in connection with the sale
thereof.
"Notes": the collective reference to the Revolving Credit
Notes and the Swing Line Note.
"Obligations": the unpaid principal amount of, and interest
on, the Notes, the Reimbursement Obligations, the Interest Rate
Agreement Obligations owing to any Bank and all other obligations and
liabilities of the Borrower to the Agent, the Banks and the Issuing
Bank, whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise
under, out of, or in connection with this Agreement, the Notes, the
Letters of Credit, the Letter of Credit Applications, any other Loan
Document or any other document executed and delivered in connection
herewith or therewith, whether on account of principal, interest
(including, without limitation, interest accruing at the rate set
forth in this Agreement and the other Loan Documents after the
commencement of any proceeding of the type described in Section 9(i)
whether or not such interest constitutes an allowed claim in such
proceeding), reimbursement obligations, fees, indemnities, costs,
expenses (including, without limitation, all fees and disbursements of
counsel to the Agent) or otherwise.
"Offer to Purchase": the Offer to Purchase, dated July 20,
1995, of Acquisition Corp. relating to the Tender Offer, as amended,
supplemented or modified to the date hereof.
"Original Mortgages": as defined in subsection 5.1(h).
"Participants": as defined in subsection 11.6(b).
<PAGE> 23
18
"Participating Bank": any Bank (other than the Issuing Bank)
with respect to its Participating Interest in a Letter of Credit.
"Participating Interest": with respect to any Letter of
Credit (a) in the case of the Issuing Bank with respect thereto its
interest in such Letter of Credit and any Letter of Credit Application
relating thereto after giving effect to the granting of any
participating interests therein pursuant hereto and (b) in the case of
each Participating Bank, its undivided participating interest in such
Letter of Credit and any Letter of Credit Application relating
thereto.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"Person": an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which
is covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Pledge Agreement Supplement": as defined in subsection 7.11.
"Pledge Agreements": the collective reference to the Pledge
Agreements listed in Schedule 1.1(b) and each other pledge agreement
or similar agreement that may be delivered to the Agent as collateral
security for any or all of the Obligations and the Subsidiary
Reimbursement Obligations, in each case as such Pledge Agreements or
similar agreements may be amended, supplemented or otherwise modified
from time to time.
"Pledged Stock": as defined in each of the Pledge Agreements.
"Proprietary Rights": as defined in subsection 6.17.
"Purchase Agreement": the Agreement, dated as of August 19,
1988, among Lear Siegler Aerospace Products Holdings Corp., Lear
Siegler Commercial Products Holdings Corp., Lear Siegler Automotive
Products Holdings Corp. and LSS Acquisition Corporation, as amended,
supplemented or otherwise modified from time to time.
"Purchasing Banks": as defined in subsection 11.6(c).
<PAGE> 24
19
"Receivable Financing Transaction": any transaction or series
of transactions involving a non-recourse sale for cash of accounts
receivable by the Borrower or any of its Subsidiaries to a Special
Purpose Subsidiary and a subsequent incurrence by such Special Purpose
Subsidiary of unguaranteed Indebtedness secured solely by the accounts
receivable so acquired by such Special Purpose Subsidiary.
"Reference Banks": Chemical and The Bank of Nova Scotia.
"Refunded Swing Line Loans": as defined in subsection 2.4(c).
"Register": as defined in subsection 11.6(d).
"Regulation G": Regulation G of the Federal Reserve Board.
"Regulation T": Regulation T of the Federal Reserve Board.
"Regulation U": Regulation U of the Federal Reserve Board.
"Regulation X": Regulation X of the Federal Reserve Board.
"Reimbursement Obligation": the obligation of the Borrower to
reimburse the Issuing Bank in accordance with the terms of this
Agreement and the related Letter of Credit Application for any payment
made by the Issuing Bank under any Letter of Credit.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, escaping, leaking, dumping,
disposing, spreading, depositing or dispersing of any Hazardous
Materials in, unto or onto the environment.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
such term as used in Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day
notice period is waived under subsections .13, .14, .16, .18, .19 or
.20 of PBGC Reg. Section 2615.
"Required Banks": at a particular time, the holders of more
than 50% of the aggregate unpaid principal amount of the Notes and the
Letter of Credit Obligations (after giving effect to participating
interests to the Banks), or, if no
<PAGE> 25
20
amounts are outstanding under the Notes and no Letter of Credit
Obligations are outstanding, Banks having more than 50% of the
aggregate amount of the Commitments.
"Requirement of Law": as to (a) any Person, the certificate
of incorporation and by-laws or the partnership or limited partnership
agreement 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, (b) any property,
any law, treaty, rule, regulation, requirement, judgment, decree or
determination of any Governmental Authority applicable to or binding
upon such property or to which such property is subject, including,
without limitation, any Environmental Laws and (c) any of the
Mortgaged Properties, all Restrictive Agreements.
"Responsible Officer": with respect to any Loan Party, the
chief executive officer, the president, the chief financial officer,
any vice president, the treasurer or the assistant treasurer of such
Loan Party.
"Restrictive Agreement": any covenants, conditions or
restrictions which burden any of the Mortgaged Properties or any part
thereof for the benefit of other real property, including, without
limitation, the terms of any reciprocal easement agreement, any
agreement limiting the use of the Mortgaged Properties and any
agreements which must be performed as a condition to the continuance
of any easement included in the Mortgaged Properties.
"Revolving Credit Loan" and "Revolving Credit Loans": as
defined in subsection 2.1.
"Revolving Credit Note" and "Revolving Credit Notes": as
defined in subsection 2.2.
"Security Agreements": the collective reference to the
Security Agreement listed in Schedule 1.1(b), and each other security
agreement or similar agreement that may be delivered to the Agent as
collateral security for any or all of the Obligations and the
Subsidiary Reimbursement Obligations, in each case as such Security
Agreement or similar agreements may be amended, supplemented or
otherwise modified from time to time.
"Security Documents": the collective reference to the
Security Agreements, the Pledge Agreements, the Mortgages and the
Subsidiary Guarantee.
<PAGE> 26
21
"Senior Subordinated Note Indenture": the Indenture, dated as
of July 15, 1992, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with subsection
8.10.
"Senior Subordinated Notes": the 11 1/4% Senior Subordinated
Notes of the Borrower due 2000, issued pursuant to the Senior
Subordinated Note Indenture.
"Single Employer Plan": any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"Special Affiliate": any Affiliate of the Borrower which (a)
the Borrower possesses, directly or indirectly, (i) power to vote 20%
or more of the securities having ordinary voting power for the
election of directors of such Affiliate or (ii) a 20% ownership
interest in such Affiliate and (b) is engaged in business of the same
or related general type as now being conducted by the Borrower and its
Subsidiaries.
"Special Entity": any Person which is engaged in business of
the same or related general type as now being conducted by the
Borrower and its Subsidiaries.
"Special Purpose Subsidiary": any Wholly Owned Subsidiary of
the Borrower created by the Borrower for the sole purpose of
facilitating a Receivable Financing Transaction.
"Standby Letters of Credit": as defined in subsection 3.1(a).
"Stockholders Agreement": the Amended and Restated
Stockholders and Registration Rights Agreement, dated as of September
27, 1991 among the Borrower, FIMA, the Merchant Banking Partnerships
and the several other parties thereto, as the same has been and may be
amended, supplemented or otherwise modified from time to time.
"Subordinated Debt": any obligations (for principal, interest
or otherwise) evidenced by or arising under or in respect of the
Subordinated Notes, the Subordinated Note Indenture, the Senior
Subordinated Notes and the Senior Subordinated Note Indenture and any
other covenant, instrument or agreement of subordinated Indebtedness
issued or entered into pursuant to subsection 8.10.
"Subordinated Note Indenture": the Indenture dated as of
February 1, 1994, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with subsection
8.10.
<PAGE> 27
22
"Subordinated Notes": the 8-1/4% Subordinated Notes of the
Borrower due 2002, issued pursuant to the Subordinated Note Indenture.
"Subscription Agreements": the collective reference to the
Subscription Agreements, dated as of September 29, 1988, between Lear
Holdings Corporation and each of the Management Investors, as each of
the same may be amended, supplemented or otherwise modified from time
to time.
"Subsidiary": as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the
time owned, or the management of which is otherwise controlled,
directly or indirectly, through one or more intermediaries, or both,
by such Person (exclusive of any Affiliate in which such Person has a
minority ownership interest). Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Agreement
shall refer to a Subsidiary or Subsidiaries of the Borrower.
"Subsidiary Guarantee": the Subsidiary Guarantee, dated as of
the date hereof, made by LS Acquisition Corp. No. 14, Lear Seating
Holdings Corp. No. 50, Progress Pattern Corp., Lear Plastics Corp., LS
Acquisition Corporation No. 24, Fair Haven Industries, Inc. and
Acquisition Corp. in favor of the Agent, substantially in the form of
Exhibit C, as the same may be amended, supplemented or otherwise
modified from time to time.
"Subsidiary Reimbursement Obligation": the obligation of any
Subsidiary to reimburse the Issuing Bank in accordance with the terms
of this Agreement and the related Letter of Credit Application for any
payment made by the Issuing Bank under any Letter of Credit.
"Surviving Corporation": AIHI, as the surviving corporation
of the Merger.
"Swing Line Loan" and "Swing Line Loans": as defined in
subsection 2.4(a).
"Swing Line Note": as defined in subsection 2.4(b).
"Swing Line Participation Certificate": a certificate
substantially in the form of Exhibit J to this Agreement.
"Taxes": as defined in subsection 2.14.
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"Tender Offer": the tender offer made by Acquisition Corp.
for all of the AIHI Shares pursuant to the Offer to Purchase.
"Tender Offer Documents": collectively, (a) the tender offer
statement on Schedule 14D-1, dated July 20, 1995, filed by Acquisition
Corp. with the Securities and Exchange Commission pursuant to Section
14(d)(1) of the Exchange Act, together with all exhibits thereto,
including the Offer to Purchase and (b) the
solicitation/recommendation statement on Schedule 14D-9, dated July
20, 1995, filed by AIHI pursuant to Section 14(d)(4) of the Exchange
Act, in each case, as amended, supplemented or otherwise modified from
time to time.
"Termination Date": September 30, 2001 or such earlier date
on which the Commitments are terminated pursuant to this Agreement.
"Transfer Effective Date": as defined in each Assignment and
Acceptance.
"Transferee": as defined in subsection 11.6(f).
"Type": as to any Loan, its nature as an ABR Loan or
Eurodollar Loan.
"Wholly Owned Subsidiary": as to any Person, a corporation,
partnership or other entity of which (a) 100% of the common capital
stock or other ownership interests of such corporation, partnership or
other entity or (b) more than 95% of the common capital stock or other
ownership interests of such corporation, partnership or other entity
where the portion of the common capital stock or other ownership
interests not held by such Person is held by other Persons to satisfy
applicable legal requirements, is owned, directly or indirectly, by
such Person; provided, however, that so long as the Borrower owns,
directly or indirectly, more than 95% of the capital stock of Lear
Italia, Lear Italia shall be deemed a Wholly Owned Subsidiary of the
Borrower, and provided, further, that until the Merger Date, so long
as AIHI is a Subsidiary of the Borrower, AIHI and its Wholly Owned
Subsidiaries shall be deemed Wholly Owned Subsidiaries of the
Borrower.
"Working Day": any Business Day on which dealings in foreign
currencies and exchange between banks may be carried on in London,
England.
"Y Credit" and "Y Credits": as defined in subsection 2.17(a).
"Z Credit" and "Z Credits": as defined in subsection 2.17(a).
<PAGE> 29
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1.2 Other Definitional Provisions. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in the other Loan Documents or any certificate or other
document made or delivered pursuant hereto.
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto, accounting
terms relating to the Borrower and its Subsidiaries not defined in subsection
1.1 and accounting terms partly defined in subsection 1.1, to the extent not
defined, shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF LOAN COMMITMENTS
2.1 Commitments. Subject to the terms and conditions hereof,
each Bank, severally and not jointly, agrees to make revolving credit loans
(individually, a "Revolving Credit Loan"; collectively, the "Revolving Credit
Loans") to the Borrower from time to time during the Commitment Period in an
aggregate principal amount, together with the other Extensions of Credit (after
giving effect to participating interests to the Banks) of such Bank, not to
exceed at any one time outstanding the amount set forth under the heading
"Commitment" opposite the name of such Bank on Schedule 2.1, as such amount may
be reduced from time to time pursuant to subsection 2.8 (collectively, the
"Commitments"). During the Commitment Period, the Borrower may use the
Commitments by borrowing, repaying the Revolving Credit Loans in whole or in
part and reborrowing, all in accordance with the terms and conditions hereof;
provided that on the date of the making of any Revolving Credit Loans, and
after giving effect to the making of such Revolving Credit Loans, the
Extensions of Credit at such time shall not exceed the aggregate Commitments at
such time. The Revolving Credit Loans may from time to time be ABR Loans,
Eurodollar Loans or a combination thereof.
2.2 Revolving Credit Notes. The Revolving Credit Loans made
by each Bank shall be evidenced by a promissory note of the Borrower,
substantially in the form of Exhibit A (individually, a "Revolving Credit
Note"; collectively, the "Revolving Credit Notes"), with appropriate insertions
as to principal amount, payable to the order of such Bank and evidencing the
obligation of the Borrower to pay a principal
<PAGE> 30
25
amount equal to the lesser of (a) the amount of the Commitment of such Bank and
(b) the aggregate unpaid principal amount of all Revolving Credit Loans made by
such Bank. Each Bank is hereby authorized to record the date and amount of
each Revolving Credit Loan made by such Bank, and the date and amount of each
payment or prepayment of principal thereof, on the schedule annexed to and
constituting a part of its Revolving Credit Note, and any such recordation
shall constitute prima facie evidence of the accuracy of the information so
recorded; provided that the failure by any Bank to make any such recordation on
its Revolving Credit Note shall not affect any of the obligations of the
Borrower under such Revolving Credit Note or this Agreement. Each Revolving
Credit Note shall (i) be dated the Closing Date, (ii) be stated to mature on
the Termination Date and (iii) bear interest, payable on the dates specified in
subsection 4.1, for the period from the date thereof on the unpaid principal
amount thereof from time to time outstanding at the interest rate per annum
specified in subsection 4.1.
2.3 Procedure for Revolving Credit Borrowings. The Borrower
may borrow under the Commitments during the Commitment Period on any Business
Day by giving the Agent irrevocable written notice (which notice must be
received by the Agent prior to 12:00 P.M., New York City time) one Business Day
prior to the requested Borrowing Date of ABR Loans and three Working Days prior
to the requested Borrowing Date of Eurodollar Loans, specifying (a) the amount
to be borrowed, (b) the requested Borrowing Date and (c) whether the borrowing
is to be of ABR Loans, Eurodollar Loans or a combination thereof and (d) if the
borrowing is to be entirely or partly Eurodollar Loans, the amount of such
Loans and the length of initial Interest Period therefor. Upon receipt of such
notice from the Borrower, the Agent shall promptly notify each Bank thereof.
Not later than 12:00 P.M., New York City time, on the Borrowing Date specified
in such notice, each Bank shall make available to the Agent in immediately
available funds the amount equal to the Revolving Credit Loan to be made by
such Bank. The Agent shall make the amount of such borrowing available to the
Borrower by depositing the proceeds thereof in like funds as received by the
Agent in the account of the Borrower with the Agent on the date the Revolving
Credit Loans are made for transmittal by the Agent upon the Borrower's request.
Each borrowing pursuant to the Commitments, except any Revolving Credit Loan to
be used solely to pay a like amount of Reimbursement Obligations or Swing Line
Loans, shall be in an aggregate principal amount of $5,000,000 or a whole
multiple of $1,000,000 in excess thereof.
2.4 Swing Line Commitments. (a) Subject to the terms and
conditions hereof, Chemical agrees to make swing line loans (individually, a
"Swing Line Loan"; collectively, the "Swing Line Loans") to the Borrower from
time to time during the Commitment Period in an aggregate principal amount at
any one time outstanding not to exceed $65,000,000; provided that on the date
of the making of any Swing Line Loan, and after giving effect to
<PAGE> 31
26
the making of such Swing Line Loan, the Extensions of Credit at such time shall
not exceed the Commitments. Amounts borrowed by the Borrower under this
subsection 2.4 may be repaid and, through but excluding the Termination Date,
reborrowed. All Swing Line Loans shall be made as ABR Loans and shall not be
entitled to be converted into Eurodollar Loans. The Borrower shall give
Chemical irrevocable notice (which notice must be received by Chemical prior to
12:00 P.M., New York City time) on the requested Borrowing Date specifying the
amount of the requested Swing Line Loan which shall be in an aggregate minimum
amount of $100,000 or whole multiples thereof. The proceeds of the Swing Line
Loan will be made available by Chemical to the Borrower at the office of
Chemical by crediting the account of the Borrower at such office with such
proceeds.
(b) The Swing Line Loans shall be evidenced by a promissory
note of the Borrower, substantially in the form of Exhibit B (the "Swing Line
Note"), with appropriate insertions, payable to the order of Chemical and
representing the obligation of the Borrower to pay the unpaid principal amount
of the Swing Line Loans, with interest thereon as prescribed in subsection 4.1.
Chemical is hereby authorized to record the Borrowing Date, the amount of each
Swing Line Loan and the date and amount of each payment or prepayment of
principal thereof on the schedule annexed to and constituting a part of the
Swing Line Note, and any such recordation shall constitute prima facie evidence
of the accuracy of the information so recorded; provided that the failure by
Chemical to make any such recordation on the Swing Line Note shall not affect
any of the obligations of the Borrower under such Swing Line Note or this
Agreement. The Swing Line Note shall (i) be dated the Closing Date, (ii) be
stated to mature on the Termination Date and (iii) bear interest, payable on
the dates specified in 4.1, for the period from the date thereof to the
Termination Date on the unpaid principal amount thereof from time to time
outstanding at the applicable interest rate per annum specified in subsection
4.1.
(c) Chemical, at any time in its sole and absolute
discretion, may on behalf of the Borrower (which hereby irrevocably directs
Chemical to act on its behalf) request each Bank, including Chemical, to make a
Revolving Credit Loan in an amount equal to such Bank's Commitment Percentage
of the amount of the Swing Line Loans (the "Refunded Swing Line Loans")
outstanding on the date such notice is given. Unless any of the events
described in Section 9(i) shall have occurred (in which event the procedures of
subsection 2.4(d) shall apply) each Bank shall, not later than 12:00 P.M., New
York City time, on the Business Day next succeeding the date on which such
notice is given, make available to Chemical in immediately available funds the
amount equal to the Revolving Credit Loan to be made by such Bank. The
proceeds of such Revolving Credit Loans shall be immediately applied to repay
the Refunded Swing Line Loans. Upon any request by Chemical to the Banks
pursuant to this subsection
<PAGE> 32
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2.4(c), the Agent shall promptly give notice to the Borrower of such request.
(d) If prior to the making of a Revolving Credit Loan
pursuant to subsection 2.4(c) one of the events described in Section 9(i) shall
have occurred, each Bank will, on the date such Loan was to have been made,
purchase an undivided participating interest in the Swing Line Loans in an
amount equal to its Commitment Percentage of such Swing Line Loans. Each Bank
will immediately transfer to Chemical, in immediately available funds, the
amount of its participation, and upon receipt thereof Chemical will deliver to
such Bank a Swing Line Participation Certificate dated the date of receipt of
such funds and in the amount of such Bank's participation.
(e) Whenever, at any time after Chemical has received from
any Bank such Bank's participating interest in a Swing Line Loan, Chemical
receives any payment on account thereof, Chemical will distribute to such Bank
its participating interest in such amount (appropriately adjusted, in the case
of interest payments, to reflect the period of time during which such Bank's
participating interest was outstanding and funded); provided, however, that in
the event that such payment received by Chemical is required to be returned,
such Bank will return to Chemical any portion thereof previously distributed by
Chemical to it.
2.5 Swing Line Loan Participations. Each Bank's obligation
to purchase participating interests pursuant to subsection 2.4(d) shall be
absolute and unconditional and shall not be affected by any circumstance,
including, without limitation, (a) any set-off, counterclaim, recoupment,
defense or other right which such Bank or any Loan Party may have against
Chemical, any Loan Party or anyone else for any reason whatsoever; (b) the
occurrence or continuance of any Default or Event of Default; (c) any adverse
change in the condition (financial or otherwise) of any Loan Party; (d) any
breach of this Agreement by any Loan Party or any other Bank; or (e) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing.
2.6 Conversion and Continuation Options. (a) The Borrower
may elect from time to time to convert Revolving Credit Loans outstanding as
Eurodollar Loans to ABR Loans by giving the Agent at least one Business Day's
prior irrevocable notice of such election; provided that any such conversion of
Eurodollar Loans shall only be made on the last day of an Interest Period with
respect thereto. The Borrower may elect from time to time to convert Revolving
Credit Loans outstanding as ABR Loans to Eurodollar Loans by giving the Agent
at least three Working Days' prior irrevocable notice of such election. Upon
receipt of such notice, the Agent shall promptly notify each Bank thereof. All
or any part of the Revolving Credit Loans outstanding as Eurodollar Loans or
ABR Loans may be converted as provided herein; provided that (i) no ABR Loan
may be converted into a
<PAGE> 33
28
Eurodollar Loan when any Default or Event of Default has occurred and is
continuing, (ii) partial conversions shall be in an aggregate principal amount
of $5,000,000 or a whole multiple of $1,000,000 in excess thereof and (iii) any
such conversion may only be made if, after giving effect thereto, subsection
2.7 shall not have been contravened.
(b) Any Eurodollar Loans may be continued as such upon the
expiration of an Interest Period with respect thereto by compliance by the
Borrower with the notice provisions contained in the definition of "Interest
Period"; provided that no Eurodollar Loan may be continued as such when any
Default or Event of Default has occurred and is continuing but in such
circumstances shall be automatically converted to an ABR Loan on the last day
of the then current Interest Period with respect thereto.
2.7 Minimum Amounts of Tranches. Notwithstanding anything to
the contrary in this Agreement, all borrowings, conversions, payments,
prepayments and selection of Interest Periods hereunder in respect of the
Revolving Credit Loans shall be in such amounts and be made pursuant to such
elections so that, after giving effect thereto, the aggregate principal amount
of any one Eurodollar Tranche shall not be less than $5,000,000.
2.8 Termination or Reduction of Commitments. (a) The
Commitments shall automatically reduce on each March 31 and September 30 in
each calendar year during the Commitment Period, commencing March 31, 1996, by
an amount set forth opposite such year below:
<TABLE>
<CAPTION>
Year Semi-annual amount
---- ------------------
<S> <C>
1996 $ 25,000,000
1997 50,000,000
1998 62,500,000
1999 62,500,000
2000 75,000,000
2001 100,000,000
</TABLE>
(b) The Borrower shall have the right, upon not less than
five Business Days' notice to the Agent, to terminate the Commitments or to
reduce the amount of the Commitments; provided that any such reduction shall be
in an amount of $2,500,000 or a whole multiple of $500,000 in excess thereof
and shall reduce permanently the amount of the Commitments then in effect. No
reduction pursuant to this subsection 2.8(b) shall in any way affect the amount
of the reductions required to be made pursuant to subsection 2.8(a).
(c) The Commitments shall automatically terminate on the
Termination Date.
<PAGE> 34
29
2.9 Mandatory Prepayments. Any termination or reduction of
Commitments pursuant to subsections 2.8(a), 2.8(b), 2.8(c), 8.6(e) or otherwise
shall be accompanied by prepayment of the Loans (together in each case with
accrued interest on the amount so prepaid to the date of such prepayment and
any additional amounts owing under subsection 2.13), to the extent, if any,
that the amount of the Extensions of Credit then outstanding exceeds the amount
of the Commitments as so reduced (provided that if the aggregate principal
amount of Loans then outstanding is less than the amount of such excess because
Letter of Credit Obligations constitute a portion thereof, the Borrower shall,
to the extent of the balance of such excess, replace outstanding Letters of
Credit with new letters of credit or deposit an amount equal to such excess in
a cash collateral account with the Agent on terms and conditions reasonably
satisfactory to the Agent).
2.10 Inability to Determine Interest Rate. In the event that:
(a) the Agent shall have determined (which determination
shall be conclusive and binding upon the Borrower) that, by reason of
circumstances affecting the interbank eurodollar market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for
any requested Interest Period; or
(b) the Agent shall have received notice prior to the first
day of such Interest Period from Banks constituting the Required Banks
that the interest rate determined pursuant to subsection 4.1 for such
Interest Period does not accurately reflect the cost to such Banks (as
conclusively certified by such Banks) of making or maintaining their
affected Loans during such Interest Period,
with respect to (i) proposed Loans that the Borrower has requested be made as
Eurodollar Loans, (ii) Eurodollar Loans that will result from the requested
conversion of ABR Loans into Eurodollar Loans or (iii) the continuation of
Eurodollar Loans beyond the expiration of the then current Interest Period with
respect thereto, the Agent shall give telex or telephonic notice of such
determination to the Borrower and the Banks as soon as reasonably practicable
after it becomes aware of such determination. If such notice is given (x) any
requested Eurodollar Loans shall be made as ABR Loans, (y) any ABR Loans that
were to have been converted to Eurodollar Loans shall be continued as ABR Loans
and (z) any outstanding Eurodollar Loans shall be converted, on the last day of
the then current Interest Period with respect thereto, to ABR Loans. Until
such notice has been withdrawn by the Agent, no further Eurodollar Loans shall
be made, nor shall the Borrower have the right to convert ABR Loans to
Eurodollar Loans.
<PAGE> 35
30
2.11 Illegality. Notwithstanding any other provisions
herein, if any Requirement of Law or any change therein or in the
interpretation or application thereof shall make it unlawful for any Bank to
make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the
commitment of such Bank hereunder to make Eurodollar Loans or convert ABR Loans
to Eurodollar Loans shall forthwith be cancelled and (b) such Bank's Loans then
outstanding as Eurodollar Loans, if any, shall be converted automatically to
ABR Loans on the respective last days of the then current Interest Periods for
such Loans or within such earlier period as required by law. If any such
prepayment or conversion of a Eurodollar Loan occurs on a day which is not the
last day of the current Interest Period with respect thereto, the Borrower
shall pay to such Bank such amounts, if any, as may be required pursuant to
subsection 2.13.
2.12 Requirements of Law. (a) In the event that any
Requirement of Law (or any change therein or in the interpretation or
application thereof) or compliance by any Bank with any request or directive
(whether or not having the force of law) from any central bank or other
Governmental Authority:
(i) does or shall subject any Bank to any tax of any kind
whatsoever with respect to this Agreement, any Note or any Eurodollar
Loans made by it, or change the basis of taxation of payments to such
Bank of principal, commitment fee, interest or any other amount
payable hereunder (except for changes in the rate of tax on the
overall net income of such Bank);
(ii) does or shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, or deposits or other liabilities in or for the
account of, advances or loans by, or other credit extended by, or any
other acquisition of funds by, any office of such Bank which are not
otherwise included in the determination of the Eurodollar Rate; or
(iii) does or shall impose on such Bank any other condition;
and the result of any of the foregoing is to increase the cost to such Bank, by
any amount which such Bank deems to be material, of making, renewing or
maintaining advances or extensions of credit or to reduce any amount receivable
hereunder, in each case in respect of its Eurodollar Loans, then, in any such
case, the Borrower shall promptly pay such Bank, upon receipt of its demand
setting forth in reasonable detail any additional amounts necessary to
compensate such Bank for such additional cost or reduced amount receivable,
such additional amounts together with interest on each such amount from the
date two Business Days after the date demanded until payment in full thereof at
the ABR. A certificate as to any additional amounts payable pursuant to the
foregoing sentence submitted by such Bank, through the Agent,
<PAGE> 36
31
to the Borrower shall be conclusive in the absence of manifest error. This
covenant shall survive the termination of this Agreement and payment of the
outstanding Notes.
(b) In the event that any Bank shall have determined that the
adoption of any law, rule, regulation or guideline regarding capital adequacy
(or any change therein or in the interpretation or application thereof) or
compliance by any Bank or any corporation controlling such Bank with any
request or directive regarding capital adequacy (whether or not having the
force of law) from any central bank or Governmental Authority, including,
without limitation, the issuance of any final rule, regulation or guideline,
does or shall have the effect of reducing the rate of return on such Bank's or
such corporation's capital as a consequence of its obligations hereunder to a
level below that which such Bank or such corporation could have achieved but
for such adoption, change or compliance (taking into consideration such Bank's
or such corporation's policies with respect to capital adequacy) by an amount
deemed by such Bank to be material, then from time to time, after submission by
such Bank to the Borrower (with a copy to the Agent) of a written request
therefor, the Borrower shall promptly pay to such Bank such additional amount
or amounts as will compensate such Bank for such reduction.
(c) If the obligation of any Bank to make Eurodollar Rate
Loans has been suspended pursuant to subsection 2.10 or 2.11 for more than
three consecutive months or any Bank has demanded compensation under subsection
2.12(a) or 2.12(b), the Borrower shall have the right to substitute a financial
institution or financial institutions (which may be one or more of the Banks)
reasonably satisfactory to the Agent by causing such financial institution or
financial institutions to purchase the rights (by paying to such Bank the
principal amount of its outstanding Loans together with accrued interest
thereon and all other amounts accrued for its account or owed to it hereunder
and executing an Assignment and Acceptance) and to assume the obligations of
such Bank under the Loan Documents. Upon such purchase and assumption by such
substituted financial institution or financial institutions, the obligations of
such Bank hereunder shall be discharged; provided such Bank shall retain its
rights hereunder with respect to periods prior to such substitution including,
without limitation, its rights to compensation under this subsection 2.12.
2.13 Indemnity. The Borrower agrees to indemnify each Bank
and to hold each Bank harmless from any loss or expense which such Bank may
sustain or incur as a consequence of (a) default by the Borrower in payment
when due of the principal amount of or interest on any Eurodollar Loans of such
Bank, (b) default by the Borrower in making a borrowing or conversion after the
Borrower has given a notice of borrowing in accordance with subsection 2.3 or a
notice of conversion pursuant to subsection 2.6, (c) default by the Borrower in
making any prepayment after
<PAGE> 37
32
the Borrower has given a notice in accordance with subsection 2.8 or (d) the
making of a prepayment of a Eurodollar Loan on a day which is not the last day
of an Interest Period with respect thereto, including, without limitation, in
each case, any such loss or expense arising from the reemployment of funds
obtained by it to maintain its Eurodollar Loans hereunder or from fees payable
to terminate the deposits from which such funds were obtained. This covenant
shall survive termination of this Agreement and payment of the outstanding
Notes.
2.14 Taxes. (a) All payments made by the Borrower under
this Agreement shall be made free and clear of, and without reduction or
withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority excluding, in the case of the Agent and each Bank,
income or franchise taxes imposed on the Agent or such Bank by the jurisdiction
under the laws of which the Agent or such Bank is organized or any political
subdivision or taxing authority thereof or therein or by any jurisdiction in
which such Bank's lending office is located or any political subdivision or
taxing authority thereof or therein or as a result of a connection between such
Bank and any jurisdiction other than a connection resulting solely from
entering into this Agreement (all such non-excluded taxes, levies, imposts,
deductions, charges or withholdings being thereinafter called "Taxes").
Subject to the provisions of subsection 2.14(c), if any Taxes are required to
be withheld from any amounts payable to the Agent or any Bank hereunder or
under the Notes or the Letters of Credit, the amounts so payable to the Agent
or such Bank shall be increased to the extent necessary to yield to the Agent
or such Bank (after payment of all Taxes) interest or any such other amounts
payable hereunder at the rates or in the amounts specified in this Agreement
and the Notes. Whenever any Taxes are paid by the Borrower with respect to
payments made in connection with this Agreement, as promptly as possible
thereafter, the Borrower shall send to the Agent for its own account or for the
account of such Bank, as the case may be, a certified copy of an original
official receipt received by the Borrower showing payment thereof. Subject to
the provisions of subsection 2.14(c), if the Borrower fails to pay any Taxes
when due to the appropriate taxing authority or fails to remit to the Agent the
required receipts or other required documentary evidence, the Borrower shall
indemnify the Agent and the Banks for any incremental taxes, interest or
penalties that may become payable by the Agent or any Banks as a result of any
such failure.
(b) Each Bank that is not incorporated or organized under the
laws of the United States of America or a state thereof agrees that, prior to
the first date any payment is due to be made to it hereunder or under any Note
or Letter of Credit, it will deliver to the Borrower and the Agent (i) two
valid, duly
<PAGE> 38
33
completed copies of United States Internal Revenue Service Form 1001 or 4224 or
successor applicable form, as the case may be, certifying in each case that
such Bank is entitled to receive payments under this Agreement, the Notes
payable to it and the Letters of Credit, without deduction or withholding of
any United States federal income taxes, and (ii) a valid, duly completed
Internal Revenue Service Form W-8 or W-9 or successor applicable form, as the
case may be, to establish an exemption from United States backup withholding
tax. Each Bank which delivers to the Borrower and the Agent a Form 1001 or
4224 and Form W-8 or W-9 pursuant to the next preceding sentence further
undertakes to deliver to the Borrower and the Agent two further copies of the
said Form 1001 or 4224 and Form W-8 or W-9, or successor applicable forms, or
other manner or certification, as the case may be, on or before the date that
any such form expires or becomes obsolete or otherwise is required to be
resubmitted as a condition to obtaining an exemption from withholding tax, or
after the occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrower, and such extensions or renewals
thereof as may reasonably be requested by the Borrower, certifying in the case
of a Form 1001 or 4224 that such Bank is entitled to receive payments under
this Agreement without deduction or withholding of any United States federal
income taxes, unless any change in treaty, law or regulation or official
interpretation thereof has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Bank from duly completing and delivering any such
letter or form with respect to it and such Bank advises the Borrower that it is
not capable of receiving payments without any deduction or withholding of
United States federal income tax, and in the case of a Form W-8 or W-9,
establishing an exemption from United States backup withholding tax.
(c) The Borrower shall not be required to pay any additional
amounts to the Agent or any Bank (or Purchasing Bank) in respect of United
States withholding tax pursuant to subsection 2.14(a) if (i) the obligation to
pay such additional amounts would not have arisen but for a failure by the
Agent or such Bank (or Purchasing Bank) to comply with the requirements of
subsection 2.14(b) (or in the case of a Purchasing Bank, the requirements of
subsection 11.6(g)) or (ii) the Agent or such Bank (or Purchasing Bank) shall
not have furnished the Borrower with such forms and shall not have taken such
other steps as reasonably may be available to it (provided, however, that such
steps shall not impose on the Agent or such Bank any additional costs or legal
or regulatory burdens deemed by the Agent or such Bank in its sole judgment to
be material) under applicable tax laws and any applicable tax treaty or
convention to obtain an exemption from, or reduction (to the lowest applicable
rate) of, such United States withholding tax.
(d) Each Bank agrees to use reasonable efforts (including
reasonable efforts to change its lending office) to
<PAGE> 39
34
avoid or to minimize any amounts which might otherwise be payable pursuant to
this subsection 2.14; provided, however, that such efforts shall not impose on
such Bank any additional costs or legal or regulatory burdens deemed by such
Bank in its sole judgment to be material.
(e) The agreements in subsection 2.14(a) shall survive the
termination of this Agreement and the payment of the Notes and all other
amounts payable hereunder until the expiration of the applicable statute of
limitations for such taxes.
2.15 Use of Proceeds. The proceeds of the Revolving Credit
Loans shall be used (a) to finance the Acquisition, including payment for the
AIHI Shares in the Tender Offer and the Merger, (b) to pay fees and expenses of
the Acquisition, (c) to refinance certain existing indebtedness of AIHI, (d) to
refinance indebtedness under the Existing Credit Agreement and (e) for other
general corporate purposes, including acquisitions permitted hereunder,
provided that such acquisitions are not hostile. The proceeds of the Swing
Line Loans shall be used solely to finance the short-term working capital needs
of the Borrower and its Subsidiaries in the ordinary course of business.
2.16 Assignment of Commitments Under Certain Circumstances.
In the event that any Bank shall have delivered a notice or certificate
pursuant to subsection 2.12, the Borrower shall have the right, at its own
expense, upon notice to such Bank and the Agent, to require such Bank to
transfer and assign without recourse (in accordance with and subject to the
restrictions contained in subsection 11.6) all its interests, rights and
obligations under this Agreement to another bank or financial institution
identified by the Borrower reasonably acceptable to the Agent (subject to the
restrictions contained in subsection 11.6) which shall assume such obligations;
provided that (a) no such assignment shall conflict with any law, rule or
regulation or order of any Governmental Authority and (b) the Borrower or the
assignee, as the case may be, shall pay to the transferor Bank in immediately
available funds on the date of such assignment the principal of and interest
accrued to the date of payment on the Loans made by it hereunder and all other
amounts accrued for its account or owed to it hereunder, including, without
limitation, amounts payable pursuant to subsection 2.12.
2.17 Regulation U and Regulation G. (a) The Loans made by
each Bank shall at all times prior to the Merger be treated for purposes of
Regulation U and Regulation G, as applicable, as two separate extensions of
credit (the "Y Credit" and the "Z Credit" of such Bank and, collectively, the
"Y Credits" and the "Z Credits"), as follows:
(i) the aggregate amount of the Y Credit of such Bank
shall be an amount equal to such Bank's pro rata share (based on the
amount of its Commitment Percentage) of the
<PAGE> 40
35
maximum loan value (as determined in accordance with Regulation U and
Regulation G, as applicable), of the AIHI Shares pledged pursuant to
the Acquisition Pledge Agreement (such AIHI Shares, the " Margin Stock
Collateral"); and
(ii) the aggregate amount of the Z Credit of such Bank
shall be an amount equal to such Bank's pro rata share (based on the
amount of its Commitment Percentage) of all Loans outstanding
hereunder minus such Bank's Y Credit.
In the event that any Margin Stock Collateral is acquired or sold, the amount
of the Y Credit of such Bank shall be adjusted (if necessary), to the extent
necessary by prepayment, to an amount equal to such Bank's pro rata share
(based on the amount of its Commitment Percentage) of the maximum loan value
(determined in accordance with Regulation U and Regulation G, as applicable, as
of the date of such acquisition or sale) of the Margin Stock Collateral
immediately after giving effect to such acquisition or sale. Nothing contained
in this subsection 2.17 shall be deemed to permit any sale of Margin Stock
Collateral in violation of subsection 8.5 or 8.6.
(b) Each Bank will maintain its records to identify the Y
Credit of such Bank and the Z Credit of such Bank, and, solely for the purposes
of complying with Regulation U and Regulation G, as applicable, the Y and Z
Credits shall be treated as separate extensions of credit. Each Bank hereby
represents and warrants that the loan value of the Collateral (other than the
Margin Stock Collateral) is sufficient for such Bank to lend its pro rata share
of the Z Credit.
(c) The benefits of the security in the Margin Stock
Collateral created by the Acquisition Pledge Agreement, shall be allocated
first to the benefit and security of the payment of the principal of and
interest on the Y Credits of the Banks and of all other amounts payable by the
Borrower under this Agreement in connection with the Y Credits (collectively,
the "Y Credit Amounts") and second, only after the payment in full of the Y
Credit Amounts, to the benefit and security of the payment of the principal of
and interest on the Z Credits of the Banks and of all other amounts payable by
the Borrower under this Agreement in connection with the Z Credits
(collectively, the "Z Credit Amounts"). The benefits of the security in the
Collateral other than Margin Stock Collateral created by the Security Documents
and the benefits of the indirect security in Collateral other than Margin Stock
Collateral created by this Agreement, shall be allocated first to the benefit
and security of the Z Credit Amounts and second, only after the payment in full
of the Z Credit Amounts, to the benefit and security of the Y Credit Amounts.
(d) The Borrower shall furnish to each Bank at the time of
each acquisition and sale of Margin Stock Collateral such information and
documents as the Agent or such Bank may require
<PAGE> 41
36
to determine the Y and Z Credits, and at any time and from time to time, such
other information and documents as the Agent or such Bank may reasonably
require to determine compliance with Regulation U or Regulation G, as
applicable.
(e) Each Bank shall be responsible for its own compliance
with and administration of the provisions of this subsection 2.17 and
Regulation U or Regulation G, as applicable, and the Agent shall have no
responsibility for any determinations or allocations made or to be made by any
Bank as required by such provisions. The Agent shall transmit to the Borrower
on behalf of a Bank any requests made by such Bank pursuant to subsection
2.17(d) and shall transmit from the Borrower to such Bank or the Banks any
information provided by the Borrower in response to inquiries made under
subsection 2.17(d) or otherwise required to be delivered by the Borrower to the
Banks pursuant to this subsection 2.17.
SECTION 3. LETTERS OF CREDIT
3.1 Letters of Credit. (a) Subject to the terms and
conditions of this Agreement, Chemical (or such other Bank which succeeds
Chemical as Agent), as Issuing Bank, agrees, and any other Issuing Bank may, as
agreed between the Borrower and such Issuing Bank, agree, on behalf of the
Banks, and in reliance on the agreement of the Banks set forth in subsection
3.3, to issue for the account of the Borrower (or in connection with any
Foreign Letter of Credit, for the joint and several accounts of the Borrower
and such applicable Foreign Subsidiary) letters of credit in an aggregate face
amount not to exceed $175,000,000 at any time outstanding, as follows:
(i) standby letters of credit (collectively, the "Standby
Letters of Credit") in the form of either (A) in the case of standby
letters of credit to be used for the purposes described in subsection
3.9(a) or (c), the Issuing Bank's standard standby letter of credit or
(B) in the case of standby letters of credit to be used for the
purposes described in subsection 3.9(b), a letter of credit reasonably
satisfactory to the Issuing Bank, and in either case, in favor of such
beneficiaries as the Borrower shall specify from time to time (which
shall be reasonably satisfactory to the Issuing Bank); and
(ii) commercial letters of credit in the form of the
Issuing Bank's standard commercial letters of credit ("Commercial
Letters of Credit") in favor of sellers of goods or services to the
Borrower or its Subsidiaries (the Standby Letters of Credit and
Commercial Letters of Credit being referred to collectively as the
"Letters of Credit");
provided that on the date of the issuance of any Letter of Credit, and after
giving effect to such issuance, the Extensions
<PAGE> 42
37
of Credit shall not exceed the Commitments at such time. Each Standby Letter
of Credit shall (i) have an expiry date no later than (A) with respect to any
Standby Letter of Credit to be used for the purposes described in subsection
3.9(a) or (c), one year from the date of issuance thereof or, if earlier, the
Termination Date or (B) with respect to any Standby Letter of Credit to be used
for the purposes described in subsection 3.9(b), the Termination Date, (ii) be
denominated in Dollars and (iii) be in a minimum face amount of $500,000. Each
Commercial Letter of Credit shall (i) provide for the payment of sight drafts
when presented for honor thereunder, or of time drafts, in each case in
accordance with the terms thereof and when accompanied by the documents
described or when such documents are presented, as the case may be, (ii) be
denominated in Dollars and (iii) have an expiry date no later than six months
from the date of issuance thereof or, if earlier, five Business Days prior to
the Termination Date.
(b) Pursuant to the Existing Credit Agreement, Chemical, as
Issuing Bank, has issued the Letters of Credit described in Schedule 3.1 (the
"Existing Letters of Credit"). From and after the Closing Date, the Existing
Letters of Credit shall for all purposes be deemed to be Letters of Credit
outstanding under this Agreement.
3.2 Procedure for Issuance of Letters of Credit. The
Borrower may from time to time request, upon at least three Business Days'
notice, Chemical, as Issuing Bank, to issue a Letter of Credit by delivering to
such Issuing Bank at its address specified in subsection 11.2 a Letter of
Credit Application, completed to the satisfaction of such Issuing Bank,
together with such other certificates, documents and other papers and
information as such Issuing Bank may reasonably request. Upon receipt of any
Letter of Credit Application from the Borrower, or, in the case of a Foreign
Letter of Credit, from the Borrower and the Foreign Subsidiary that is an
account party on such Letter of Credit, such Issuing Bank will promptly, but in
no event later than five Business Days following receipt of such Letter of
Credit Application, notify each Bank thereof. Upon receipt of any Letter of
Credit Application, Chemical, as Issuing Bank, will process such Letter of
Credit Application, and the other certificates, documents and other papers
delivered in connection therewith, in accordance with its customary procedures
and shall promptly issue such Letter of Credit (but in no event earlier than
three Business Days after receipt by such Issuing Bank of the Letter of Credit
Application relating thereto) by issuing the original of such Letter of Credit
to the beneficiary thereof and by furnishing a copy thereof to the Borrower and
the Participating Banks. In addition, the Borrower may from time to time agree
with Issuing Banks other than Chemical upon procedures for issuance by such
Issuing Banks of Letters of Credit and cause Letters of Credit to be issued by
following such procedures. Such procedures shall be reasonably satisfactory to
the Agent. Prior to the issuance of any Letter of Credit, the Issuing Bank
<PAGE> 43
38
will confirm with the Agent that the issuance of such Letter of Credit is
permitted pursuant to Section 3 and subsection 5.3. Additionally, each Issuing
Bank and the Borrower shall inform the Agent of any modifications made to
outstanding Letters of Credit, of any payments made with respect to such
Letters of Credit, and of any other information regarding such Letters of
Credit as may be reasonably requested by the Agent, in each case pursuant to
procedures established by the Agent.
3.3 Participating Interests. In the case of each Existing
Letter of Credit, effective on the Closing Date, and in the case of each Letter
of Credit issued in accordance with the terms hereof on or after the Closing
Date, effective as of the date of the issuance thereof, the Issuing Bank in
respect of such Letter of Credit agrees to allot, and does allot, to each other
Bank, and each such Bank severally and irrevocably agrees to take and does
take, a Participating Interest in such Letter of Credit and the related Letter
of Credit Application in a percentage equal to such Bank's Commitment
Percentage. On the date that any Purchasing Bank becomes a party to this
Agreement in accordance with subsection 11.6, Participating Interests in any
outstanding Letter of Credit held by the Bank from which such Purchasing Bank
acquired its interest hereunder shall be proportionately reallotted between
such Purchasing Bank and such transferor Bank. Each Participating Bank hereby
agrees that its obligation to participate in each Letter of Credit issued in
accordance with the terms hereof and to pay or to reimburse the Issuing Bank in
respect of such Letter of Credit for its participating share of the drafts
drawn thereunder shall be irrevocable and unconditional; provided that no
Participating Bank shall be liable for the payment of any amount under
subsection 3.4(b) resulting solely from such Issuing Bank's gross negligence or
willful misconduct.
3.4 Payments. (a) The Borrower agrees (and in the case of a
Foreign Letter of Credit, such Foreign Subsidiary for whose account such Letter
of Credit was issued shall also agree, jointly and severally) (i) to reimburse
the Agent for the account of the relevant Issuing Bank, forthwith upon its
demand and otherwise in accordance with the terms of the Letter of Credit
Application, if any, relating thereto, for any payment made by such Issuing
Bank under any Letter of Credit issued by such Issuing Bank for its account and
(ii) to pay to the Agent for the account of such Issuing Bank, interest on any
unreimbursed portion of any such payment from the date of such payment until
reimbursement in full thereof at a fluctuating rate per annum equal to the rate
then borne by ABR Loans pursuant to subsection 4.1(a) plus 2%.
(b) In the event that an Issuing Bank makes a payment under
any Letter of Credit and is not reimbursed in full therefor, forthwith upon
demand of such Issuing Bank, and otherwise in accordance with the terms hereof
or of the Letter of Credit Application, if any, relating to such Letter of
Credit,
<PAGE> 44
39
such Issuing Bank will promptly through the Agent notify each Participating
Bank that acquired its Participating Interest in such Letter of Credit from
such Issuing Bank. No later than the close of business on the date such notice
is given, each such Participating Bank will transfer to the Agent, for the
account of such Issuing Bank, in immediately available funds, an amount equal
to such Participating Bank's pro rata share of the unreimbursed portion of such
payment. Upon its receipt from such Participating Bank of such amount, such
Issuing Bank will, if so requested by such Participating Bank, complete,
execute and deliver to such Participating Bank a Letter of Credit Participation
Certificate dated the date of such receipt and in such amount.
(c) Whenever, at any time, after an Issuing Bank has made
payment under a Letter of Credit and has received from any Participating Bank
such Participating Bank's pro rata share of the unreimbursed portion of such
payment, such Issuing Bank receives any reimbursement on account of such
unreimbursed portion or any payment of interest on account thereof, such
Issuing Bank will distribute to the Agent, for the account of such
Participating Bank, its pro rata share thereof; provided, however, that in the
event that the receipt by such Issuing Bank of such reimbursement or such
payment of interest (as the case may be) is required to be returned, such
Participating Bank will promptly return to the Agent, for the account of such
Issuing Bank, any portion thereof previously distributed by such Issuing Bank
to it.
3.5 Increased Costs. (a) In the event that any Requirement
of Law (or any change therein or in the interpretation or application thereof)
or compliance by any Bank or any corporation controlling a Bank with any
request or directive (whether or not having the force of law) from any central
bank or other Governmental Authority shall either (i) impose, modify or hold
applicable any reserve, special deposit or similar requirement against letters
of credit issued by an Issuing Bank or participated in by other Banks or (ii)
impose upon an Issuing Bank or on any other Bank (or any corporation
controlling any such Bank) any other condition regarding any Letter of Credit
and the result of any event referred to in clause (i) or (ii) above shall be to
increase the cost to such Issuing Bank or any other Bank (or any corporation
controlling any such Bank) of issuing or maintaining such Letter of Credit (or
its participation therein, as the case may be), or to reduce any amount
receivable in connection therewith then, in any such case the Borrower shall,
without duplication of any amounts paid pursuant to subsection 2.12(a),
promptly pay to such Issuing Bank or such other Bank, as the case may be, upon
receipt of its demand setting forth in reasonable detail any additional amounts
which shall be sufficient to compensate such Issuing Bank or such other Bank
for such increased cost or reduced amount receivable, together with interest on
each such amount from the date two Business Days after the date demanded until
payment in full
<PAGE> 45
40
thereof at the ABR. A certificate as to the fact and amount of such increased
cost incurred by such Issuing Bank or such other Bank or such reduced amount
receivable as a result of any event mentioned in clause (i) or (ii) above,
submitted by such Issuing Bank or any such other Bank (through the Agent) to
the Borrower, shall be conclusive in the absence of manifest error.
(b) In the event that an Issuing Bank shall have determined
that the adoption of any law, rule, regulation or guideline regarding capital
adequacy, or any change therein or in the interpretation or application thereof
or compliance by such Issuing Bank or any corporation controlling such Issuing
Bank with any request or directive regarding capital adequacy (whether or not
having the force of law) from any central bank or Governmental Authority,
including, without limitation, the issuance of any final rule, regulation or
guideline, does or shall have the effect of reducing the rate of return on such
Issuing Bank's or such corporation's capital as a consequence of its
obligations hereunder to a level below that which such Issuing Bank or such
corporation could have achieved but for such adoption, change or compliance
(taking into consideration such Issuing Bank's or such corporation's policies
with respect to capital adequacy) by an amount deemed by such Issuing Bank to
be material, then from time to time, after submission by such Issuing Bank to
the Borrower (with a copy to the Agent) of a written request therefor, the
Borrower shall promptly pay to such Issuing Bank, without duplication of any
amounts paid pursuant to subsection 2.12(b), such additional amount or amounts
as will compensate such Issuing Bank for such reduction.
3.6 Further Assurances. (a) The Borrower hereby agrees,
from time to time, to do and perform any and all acts and to execute any and
all further instruments reasonably requested by an Issuing Bank more fully to
effect the purposes of this Agreement and the issuance of the Letters of Credit
opened hereunder.
(b) It is understood that in connection with Letters of
Credit issued for the purposes described in subsection 3.9(b) it may be
customary for the Issuing Bank in respect of such Letter of Credit to obtain an
opinion of its counsel relating to such Letter of Credit, and each Issuing Bank
that issues such a Letter of Credit agrees to cooperate with the Borrower in
obtaining such customary opinion, which opinion shall be at the Borrower's
expense unless otherwise agreed to by such Issuing Bank.
3.7 Obligations Absolute. The payment obligations of the
Borrower under subsection 3.4 shall be unconditional and irrevocable and shall
be paid strictly in accordance with the terms of this Agreement under all
circumstances, including, without limitation, the following circumstances:
<PAGE> 46
41
(a) the existence of any claim, set-off, defense or other
right which the Borrower may have at any time against any beneficiary,
or any transferee, of any Letter of Credit (or any Persons for whom
any such beneficiary or any such transferee may be acting), any
Issuing Bank or any Participating Bank, or any other Person, whether
in connection with this Agreement, the transactions contemplated
herein, or any unrelated transaction;
(b) any statement or any other document presented under any
Letter of Credit opened for its account proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect;
(c) payment by an Issuing Bank under any Letter of Credit
against presentation of a draft or certificate which does not comply
with the terms of such Letter of Credit, except payment resulting
solely from the gross negligence or willful misconduct of such Issuing
Bank; or
(d) any other circumstances or happening whatsoever, whether
or not similar to any of the foregoing, except circumstances or
happenings resulting from the gross negligence or willful misconduct
of such Issuing Bank.
3.8 Letter of Credit Application. To the extent not
inconsistent with the terms of this Agreement (in which case the provisions of
this Agreement shall prevail), provisions of any Letter of Credit Application
related to any Letter of Credit are supplemental to, and not in derogation of,
any rights and remedies of the Issuing Banks and the Participating Banks under
this Section 3 and applicable law. The Borrower acknowledges and agrees that
all rights of the Issuing Bank under any Letter of Credit Application shall
inure to the benefit of each Participating Bank to the extent of its Commitment
Percentage as fully as if such Participating Bank was a party to such Letter of
Credit Application.
3.9 Purpose of Letters of Credit. Each Standby Letter of
Credit shall be used by the Borrower solely (a) to provide credit support for
borrowings by the Borrower or its Subsidiaries, (b) to pay or secure the
payment of the principal amount of, and accrued interest on, and other
obligations with respect to, Industrial Revenue Bonds in accordance with the
provisions of the indenture related thereto, or (c) for other working capital
purposes of the Borrower and Subsidiaries in the ordinary course of business.
Each Commercial Letter of Credit will be used by the Borrower and Subsidiaries
solely to provide the primary means of payment in connection with the purchase
of goods or services by the Borrower and Subsidiaries in the ordinary course of
business.
<PAGE> 47
42
SECTION 4. INTEREST RATE PROVISIONS, FEES AND PAYMENTS
4.1 Interest Rates and Payment Dates. (a) Each ABR Loan
shall bear interest for the period from and including the date thereof until
maturity, repayment or conversion on the unpaid principal amount thereof at a
rate per annum equal to the ABR.
(b) Each Eurodollar Loan shall bear interest for each
Interest Period with respect thereto on the unpaid principal amount thereof at
a rate per annum equal to the Eurodollar Rate determined for such Interest
Period plus the Applicable Margin.
(c) If all or a portion of the principal amount of any of the
Loans shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), each Eurodollar Loan shall be converted to an ABR
Loan at the end of the last Interest Period therefor for which the Agent shall
have determined a Eurodollar Rate on or prior to the date such unpaid principal
amount became due. If all or a portion of the principal amount of any of the
Loans shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), all Loans shall bear interest while such principal
amount is in default at a rate per annum equal to the interest rate then borne
by each such Loan under subsection 4.1(a) or 4.1(b), as applicable, plus 2%.
Any overdue fees payable hereunder shall bear interest from the due date
thereof until payment in full thereof (as well after judgment as before
judgment) at a rate per annum equal to the interest rate then borne by ABR
Loans plus 2%.
(d) Interest payable under subsection 4.1(a) or 4.1(b) shall
be payable in arrears on each Interest Payment Date, commencing on the first
such date to occur after the Closing Date. Interest payable under subsection
4.1(c) shall be payable on demand.
4.2 Commitment Fees. The Borrower agrees to pay to the
Agent, for the account of each Bank, a commitment fee for the period from and
including the Closing Date to the Termination Date calculated on the average
daily Available Commitment of such Bank for each day during the period for
which such commitment fee is being paid, at the rate per annum set forth below
opposite the Coverage Ratio most recently determined:
<TABLE>
<CAPTION>
Level of Commitment
Coverage Ratio Fee Rate
-------------- ----------
<S> <C>
Level I:
Coverage Ratio is
less than 3.25 to 1 0 .375%
</TABLE>
<PAGE> 48
43
<TABLE>
<S> <C>
Level II:
Coverage Ratio is
equal to or greater
than 3.25 to 1 but less
than 4.0 to 1 0 .250%
Level III:
Coverage Ratio is equal to
or greater than 4.0 to 1
but less than 5.0 to 1 0 .250%
Level IV
Coverage Ratio is
greater than or equal to 5.0 to 1 0.200%;
</TABLE>
provided that (a) the commitment fee rate shall be that set forth above
opposite Level II from the Closing Date until the earlier of (i) the Adjustment
Date occurring after the first full fiscal quarter following the fiscal quarter
in which the Closing Date occurs and (ii) any Equity Closing Date, (b) the
commitment fee rate determined for any Adjustment Date shall remain in effect
until a subsequent Adjustment Date for which the Coverage Ratio falls within a
different Level and (c) if the financial statements and related compliance
certificate for any fiscal period are not delivered by the date due pursuant to
subsections 7.1 and 7.2(b), the commitment fee rate shall be (i) for the first
5 days subsequent to such due date, that in effect on the day prior to such due
date, and (ii) thereafter, that set forth above opposite Level I, in either
case, until the subsequent Adjustment Date. Such fee shall be payable
quarterly in arrears on the last day of each March, June, September and
December, commencing on September 30, 1995 and on the Termination Date.
4.3 Agent's Fees. The Borrower agrees to pay to the Agent,
for its own account and for the account of Chemical Securities Inc., any fees
as agreed between Chemical and the Borrower in writing from time to time.
4.4 Letter of Credit Fees. (a) In lieu of any letter of
credit commissions and fees provided for in any Letter of Credit Application
(other than any standard issuance, amendment and negotiation fees), the
Borrower will pay the Agent, (i) for the account of the Issuing Bank, a
non-refundable fronting fee equal to 0.25% per annum and (ii) for the account
of the Banks, a non-refundable Letter of Credit fee equal to the Applicable
Margin with respect to Eurodollar Loans less 0.25%, in each case on the amount
available to be drawn under such Letter of Credit. Such fee shall be payable
quarterly in arrears on the last Business Day of each calendar quarter, and
shall be calculated on the average daily amount available to be drawn under the
Letters of Credit.
<PAGE> 49
44
(b) The Borrower agrees to pay the Issuing Bank for its own
account its customary administration, amendment, transfer and negotiation fees
charged by the Issuing Bank in connection with its issuance and administration
of Letters of Credit.
4.5 Computation of Interest and Fees. (a) Interest on the
Loans (other than interest calculated on the basis of the Prime Rate (as
defined in the definition of ABR)) and all fees payable pursuant hereto shall
be calculated on the basis of a 360 day year for the actual days elapsed.
Interest calculated on the basis of the Prime Rate shall be calculated on the
basis of a 365- or 366- (as the case may be) day year for the actual days
elapsed. The Agent shall as soon as practicable notify the Borrower and the
Banks of each determination of a Eurodollar Rate. Any change in the interest
rate on a Loan resulting from a change in the ABR, the Eurocurrency Reserve
Requirements or the Applicable Margin shall become effective as of the opening
of business on the day on which such change in the ABR is announced, such
change in the Eurocurrency Reserve Requirements shall become effective or such
change in the Applicable Margin occurs, as the case may be. The Agent shall as
soon as practicable notify the Borrower and the Banks of the effective date and
the amount of each such change. For purposes of the Interest Act (Canada),
where, in respect of any Loan, (i) a rate of interest is to be calculated on
the basis of a year of 360 days, the yearly rate of interest to which the 360
day rate is equivalent is such rate multiplied by the number of days in the
year for which such calculation is made and divided by 360, or (ii) an annual
rate of interest is to be calculated during a leap year, the yearly rate of
interest to which such rate is equivalent is such rate multiplied by 366 and
divided by 365.
(b) Each determination of an interest rate by the Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrower and the Banks in the absence of manifest error. The Agent shall,
at the request of the Borrower, deliver to the Borrower a statement showing the
quotations used by the Agent in determining any interest rate pursuant to
subsection 4.1(b).
(c) If any Reference Bank's Commitments shall terminate
(otherwise than on termination of all the Commitments), or all of its Loans
shall be assigned for any reason whatsoever, such Reference Bank shall
thereupon cease to be a Reference Bank, and if, as a result of the foregoing,
there shall only be one Reference Bank remaining, then the Agent (after
consultation with the Borrower and the Banks) shall, by notice to the Borrower
and the Banks, designate another Bank as a Reference Bank so that there shall
at all times be at least two Reference Banks.
(d) Each Reference Bank shall use its best efforts to furnish
quotations of rates to the Agent as contemplated hereby. If any of the
Reference Banks shall be unable or otherwise fails to supply such rates to the
Agent upon its request, the rate of
<PAGE> 50
45
interest shall be determined on the basis of the quotations of the remaining
Reference Banks or Reference Bank.
4.6 Pro Rata Treatment and Payments. Each borrowing by the
Borrower hereunder (other than pursuant to subsection 2.4(a)), each conversion
or continuation of a Loan under subsection 2.6, each payment (including each
prepayment) by the Borrower on account of principal, interest and fees
hereunder (except fees referred to in subsections 4.3, 4.4(a)(i) and 4.4(b) and
except for payments in respect of Swing Line Loans) and any reduction of the
Commitments shall be made pro rata according to the respective Commitment
Percentages of the Banks. All payments (including prepayments) to be made by
the Borrower on account of principal, interest and fees shall be made without
set off or counterclaim and shall be made to the Agent, for the account of the
Banks (except with respect to the fees referred to in subsections 4.3,
4.4(a)(i) and 4.4(b) and except for payments in respect of Swing Line Loans),
at the Agent's office set forth in subsection 11.2, in each case on or prior to
12:00 P.M., New York City time, in lawful money of the United States of America
and in immediately available funds. The Agent shall promptly distribute each
such payment to each Bank. If any payment hereunder (other than payments on
the Eurodollar Loans) becomes due and payable on a day other than a Business
Day, such payment shall be extended to the next succeeding Business Day, and,
with respect to payments of principal, interest thereon shall be payable at the
then applicable rate during such extension. If any payment on a Eurodollar
Loan becomes due and payable on a day other than a Working Day, the maturity
thereof shall be extended to the next succeeding Working Day unless the result
of such extension would be to extend such payment into another calendar month
in which event such payment shall be made on the immediately preceding Working
Day.
4.7 Failure by Banks to Make Funds Available. Unless the
Agent shall have been notified in writing by any Bank prior to a Borrowing Date
that such Bank will not make the amount which would constitute its Commitment
Percentage of the borrowing on such Borrowing Date available to the Agent, the
Agent may assume that such Bank has made such amount available to the Agent on
such Borrowing Date in accordance with subsection 2.3 or 2.4, as the case may
be, and the Agent may, in reliance upon such assumption, make available to the
Borrower a corresponding amount. If such amount is made available to the Agent
on a date after such Borrowing Date, such Bank shall pay to the Agent on demand
an amount equal to the product of (a) the daily average Federal funds rate
during such period as quoted by the Agent, times (b) the amount of such Bank's
Commitment Percentage of such borrowing, times (c) a fraction the numerator of
which is the number of days that elapse from and including such Borrowing Date
to the date on which such Bank's Commitment Percentage of such borrowing shall
have become immediately available to the Agent and the denominator of which is
360. A certificate of the Agent submitted to any Bank with respect to any
amounts owing under
<PAGE> 51
46
this subsection 4.7 shall be conclusive, absent manifest error. If such Bank's
Commitment Percentage of such borrowing is not in fact made available to the
Agent by such Bank within three Business Days of such Borrowing Date, the Agent
shall be entitled to recover from the Borrower such amount, on demand, with
interest thereon at the rate applicable to the Loans made on such Borrowing
Date. Nothing herein shall be deemed to relieve any Bank from its obligation
to fulfill its Commitment hereunder or to prejudice any rights which the
Borrower may have against such Bank as a result of any default by such Bank
hereunder.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Closing Date. The Closing Date shall occur
on the date of satisfaction of the following conditions precedent:
(a) Agreement; Notes. The Agent shall have received (i)
a counterpart of this Agreement for each Bank, duly executed by a
Responsible Officer of the Borrower and (ii) for each Bank, a
Revolving Credit Note (and, in the case of Chemical, a Swing Line
Note) conforming to the requirements hereof, duly executed by a
Responsible Officer of the Borrower.
(b) Subsidiary Guarantee. The Agent shall have received,
with a counterpart for each Bank, the Subsidiary Guarantee duly
executed by each guarantor party thereto.
(c) Security Agreements. The Agent shall have received, with
a counterpart for each Bank, each of the Security Agreements duly
executed by each grantor party thereto.
(d) Pledge Agreements. The Agent shall have received, with a
counterpart for each Bank, each of the Pledge Agreements duly executed
by each pledgor party thereto.
(e) Pledged Stock; Stock Powers. The Agent shall have
received the certificates representing the shares pledged pursuant to
each of the Pledge Agreements, together with an undated stock power
for each such certificate executed in blank by a duly authorized
officer of the pledgor thereof.
(f) Mortgages. The Agent shall have received, with a
counterpart for each Bank, each of the Mortgages duly executed by each
mortgagor party thereto.
(g) Perfection Actions. The Agent shall have received
evidence in form and substance satisfactory to it that all filings,
recordings, registrations and other actions, including, without
limitation, the filing of duly executed financing statements on form
UCC-1, necessary or, in the
<PAGE> 52
47
opinion of the Agent, desirable to perfect the Liens created by the
Security Documents shall have been completed.
(h) Title Reports. The Agent shall have received in
respect of each parcel covered by each Mortgage a title report from a
Person satisfactory to the Agent demonstrating that after release of
the mortgages (the "Original Mortgages") securing the Existing Credit
Agreement and the recordation of the Mortgages immediately after such
release, the Mortgages will constitute first mortgage liens on the
parcels covered thereby subject only to the exceptions described in
the title insurance policies issued in respect of the Original
Mortgages and others acceptable to the Agent.
(i) Flood Insurance. The Agent shall have received in
respect of each parcel covered by each Mortgage a certificate from
Transamerica Flood Certificate Service certifying that no parcel
covered by a Mortgage is located in an area that has been identified
by the Secretary of Housing and Urban Development as an area having
special flood hazards and in which flood insurance has been made
available under the National Flood Insurance Act of 1968.
(j) Lien Searches. The Agent shall have received the
results of a recent search by a Person satisfactory to the Agent, of
the Uniform Commercial Code, judgement and tax lien filings which may
have been filed with respect to personal property of the Borrower, and
the results of such search shall be reasonably satisfactory to the
Agent.
(k) Consents. The Agent shall have received, with copies
and executed certificates for each Bank, true and correct copies (in
each case certified as to authenticity on such date by a duly
authorized officer of the Borrower) of all documents and instruments,
including all consents, authorizations and filings, required under any
Requirement of Law or by Contractual Obligation of Borrower or any of
its Subsidiaries, in connection with the execution, delivery,
performance, validity and enforceability of this Agreement and the
other Loan Documents, and such consents, authorizations and filings
shall be satisfactory in form and substance to the Banks and be in
full force and effect.
(l) Incumbency Certificates. The Agent shall have
received, with a counterpart for each Bank, a certificate of the
Secretary or Assistant Secretary of each Domestic Loan Party, dated
the Closing Date, as to the incumbency and signature of their
respective officers executing each Loan Document to be entered into on
the Closing Date to which it is a party, together with satisfactory
evidence of the incumbency of such Secretary or Assistant Secretary.
<PAGE> 53
48
(m) Corporate Proceedings. The Agent shall have
received, with a counterpart for each Bank, a copy of the resolutions
in form and substance satisfactory to the Agent, of the Board of
Directors (or the executive committee thereof) of each Domestic Loan
Party authorizing (i) the execution, delivery and performance of each
Loan Document to be entered into on the Closing Date to which it is a
party, and (ii) the granting by it of the pledge and security
interests, if any, granted by it pursuant to such Loan Document,
certified by their respective Secretary or an Assistant Secretary as
of the Closing Date, which certificate shall state that the
resolutions thereby certified have not been amended, modified, revoked
or rescinded as of the date of such certificate.
(n) Fees. The Agent shall have received all fees
required to be paid to the Agent and/or the Banks pursuant to Section
4 and/or any other written agreement on or prior to the Closing Date.
(o) Legal Opinion of Counsel to Borrower. The Agent shall
have received, with a copy for each Bank, an opinion, dated the
Closing Date, of (i) Winston & Strawn, counsel to the Borrower and its
Subsidiaries, (ii) Michigan counsel to the Borrower and its
Subsidiaries, acceptable to the Agent, (iii) Wisconsin counsel to the
Borrower and its Subsidiaries acceptable to the Agent and (iv)
Tennessee counsel to the Borrower and its Subsidiaries acceptable to
the Agent, in each case in form and substance satisfactory to the
Banks and covering such matters incident to the transactions
contemplated hereby as the Banks may reasonably require.
(p) Legal Opinions of Foreign Counsel. The Agent shall have
received or waived as a condition precedent, with a counterpart for
each Bank, an opinion of Stikeman, Elliott, Canadian counsel to the
Borrower, Blake, Cassels & Graydon, Canadian counsel to the Agent,
Baker & McKenzie, Swedish counsel to the Borrower, Freshfields, French
counsel to the Agent, Peltzer & Riesenkampff, German counsel to the
Borrower, Enriquez, Gonzales, Aguirre y Ochoa, Mexican counsel to the
Borrower, and Clifford Chance, English counsel to the Agent in form
and substance satisfactory to the Agent and covering such matters
incident to the transactions contemplated hereby as the Agent may
reasonably require.
(q) Subordinated Debt Documents; Other Agreements. The Agent
shall have received, with a counterpart for each Bank, a certified
true copy of the Subordinated Note Indenture, the Senior Subordinated
Note Indenture, the Stockholders Agreement, the Subscription
Agreements and the Purchase Agreement.
<PAGE> 54
49
(r) Existing Credit Agreement. The Agent shall have received
evidence that the Existing Credit Agreement shall have been terminated
(other than those obligations which, by their terms, survive
termination) and all amounts payable thereunder shall have been paid
(other than obligations in respect of Existing Letters of Credit,
which become outstanding under this Agreement).
(s) Environmental Report. The Agent shall have received,
with a counterpart for each Bank, complete copies of each of the
written reports obtained by or on behalf of the Borrower from AIHI
and/or its Subsidiaries reasonably satisfactory to the Agent.
(t) Minimum Share Amount. The Agent shall have received
evidence that Acquisition Corp. shall have acquired concurrently with
the initial Loans on the Closing Date not less than a majority, on a
fully diluted basis, of the AIHI Shares and there shall not have been
any material change in the number of AIHI Shares outstanding (on a
fully diluted basis) since July 7, 1995.
(u) Offer to Purchase. The Tender Offer transactions
shall have been consummated (prior to or concurrently with the initial
Loans on the Closing Date) pursuant to the terms and conditions of the
Offer to Purchase, and none of the material terms or conditions of the
Tender Offer shall have been waived or modified (except with the
consent of the Agent and the Required Banks).
(v) Merger Agreement. The Merger Agreement shall be in
full force and effect and the Agent shall have received, in sufficient
copies for each Bank, a certified complete copy of the Merger
Agreement.
(w) Margin Regulations. All Loans made under this Agreement
shall be in full compliance with all applicable requirements of law,
including, without limitation, Regulations G, T, U and X, and the
Agent shall have received, for each Bank, a properly completed and
duly executed Form FR U-1 and Form FR G-3, as applicable.
(x) Acquisition Pledge Agreement; Depositary Agency
Agreement. The Agent shall have received the Acquisition Pledge
Agreement, duly executed by each of the parties thereto and the
Depositary Agency Agreement, duly executed by the Depositary, the
Borrower and Acquisition Corp., and there shall have been delivered to
the Agent or the Depositary:
(i) certificates representing the Initially
Pledged Stock (as such term is defined in the Acquisition
Pledge Agreement) (other than any such Initially Pledged Stock
constituting Book-Entry Shares
<PAGE> 55
50
(as defined in the Acquisition Pledge Agreement) that has been
transferred into an account of Chemical, for the benefit of
the Agent, with the Clearing Corporation (as defined in the
Acquisition Pledge Agreement) in accordance with Section 4(b)
of the Acquisition Pledge Agreement);
(ii) an undated stock power for each such
certificate executed in blank; and
(iii) with respect to Initially Pledged Stock
consisting of Book-Entry Shares, evidence that all actions
described in Section 3(b) of the Acquisition Pledge Agreement
which are necessary to create and perfect the security
interests pursuant to the Acquisition Pledge Agreement in
accordance with Article 8 of the Uniform Commercial Code have
been taken.
The Initially Pledged Stock under the Acquisition Pledge Agreement
shall constitute all of the AIHI Shares acquired in the Tender Offer
or through the Tender Offer Documents or otherwise owned by the
Borrower and its Subsidiaries.
(y) Representations and Warranties. The representations and
warranties made by each of the Loan Parties in or pursuant to the Loan
Documents shall be true and correct in all material respects on and as
of the Closing Date as if made on and as of the Closing Date.
(aa) Additional Matters. All corporate and other
proceedings, and all documents, instruments and other legal matters in
connection with the transactions contemplated by the Loan Documents
shall be reasonably satisfactory in form and substance to the Agent.
5.2 Conditions to Loans to Be Made on the Merger Date.
The obligation of each Bank to make any Loan requested to be made by it on the
Merger Date to fund the payment of the Merger Consideration (as defined in the
Merger Agreement) is subject to the satisfaction of the following conditions
precedent:
(a) Subsection 5.1 Conditions Satisfied. Each of the
conditions precedent listed in subsection 5.1 shall have been
satisfied or waived in accordance with this Agreement.
(b) Merger. The Agent shall be reasonably satisfied that all
transactions in connection with the Merger have been consummated under
the terms and conditions of the Merger Agreement and in compliance
with all relevant laws and regulations and that the Merger has become
effective.
(c) Approvals. Prior to or concurrently with the making of
the Loans to be made on the Merger Date, all
<PAGE> 56
51
conditions set forth in Section 9.01 of the Merger Agreement shall
have been satisfied.
(d) Legal Opinion. The Agent shall have received, in
sufficient copies for each Bank, opinions of counsel to the Borrower
and Acquisition Corp. reasonably satisfactory to the Agent, addressed
to the Agent and the Banks, containing opinions substantially in the
form of Exhibit L-2, with customary assumptions, qualifications and
exceptions.
5.3 Conditions to Each Loan and Each Letter of Credit. The
agreement of each Bank to make any Loan requested to be made by it on any date
(including, without limitation, the Closing Date) and the agreement of the
Issuing Bank to open any Letter of Credit requested to be opened on any date
(including, without limitation, the Closing Date), is subject to the
satisfaction of the following conditions precedent as of the date such Loan or
Letter of Credit is requested to be made or opened:
(a) Representations and Warranties. Each of the
representations and warranties made by each of the Loan Parties in or
pursuant to the Loan Documents shall be true and correct in all
material respects on and as of such date as if made on and as of such
date.
(b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the
Loans or the Letters of Credit requested to be made or opened, as the
case may be, on such date.
(c) No Litigation. No material litigation, investigation or
proceeding before or by any arbitrator or Governmental Authority shall
be continuing or threatened against Borrower, any Subsidiary or any of
the officers or directors of any thereof in connection with any Loan
Document or any of the transactions contemplated hereby or thereby.
(d) No Violations of Law. The Loans and the use of
proceeds thereof shall not contravene, violate or conflict with, nor
involve any Bank in a violation of, any law, rule, injunction, or
regulation or determination of any court of law or other Governmental
Authority.
(e) No Change. Since the Closing Date, there shall have
been no material adverse change in the business, operations, assets or
financial or other condition of the Borrower and its Subsidiaries
taken as a whole.
(f) Borrowing Certificate. The Agent shall have
received, with a copy for each Bank, a certificate of the Borrower,
substantially in the form of Exhibit I, dated such Borrowing Date and
executed and delivered by a Responsible Officer of the Borrower.
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Each borrowing by the Borrower hereunder and each request for
issuance of a Letter of Credit shall constitute a representation and warranty
by the Borrower as of the date of such borrowing that the conditions contained
in this subsection 5.3 have been satisfied.
SECTION 6. REPRESENTATIONS AND WARRANTIES
To induce the Banks to enter into this Agreement and to make
the Loans, and to induce the Issuing Bank to issue Letters of Credit, the
Borrower hereby represents and warrants to the Agent and to each Bank that:
6.1 Financial Statements. The audited consolidated
balance sheets of the Borrower as of December 31, 1994 and the related
statements of income and cash flow for the period ending on such date,
heretofore furnished to the Agent and the Banks and certified by a Responsible
Officer of the Borrower are complete and correct in all material respects and
fairly present the financial condition of the Borrower on such date in
conformity with GAAP applied on a consistent basis (subject to normal year-end
adjustments). All liabilities, direct and contingent, of the Borrower on such
dates required to be disclosed pursuant to GAAP are disclosed in such financial
statements.
6.2 No Change. There has been no material adverse change
in the business, operations, assets or financial or other condition of the
Borrower and its Subsidiaries taken as a whole from that reflected on the
financial statements dated December 31, 1994 referred to in subsection 6.1.
6.3 Corporate Existence; Compliance with Law. The
Borrower and each of its Material Subsidiaries (a) is duly organized, validly
existing and in good standing (or the functional equivalent thereof in the case
of Foreign Subsidiaries) under the laws of the jurisdiction of its
organization, (b) has the corporate power and authority, and the legal right,
to own and operate its property, to lease the property it operates as lessee
and to conduct the business in which it is currently engaged, (c) is duly
qualified as a foreign corporation and in good standing (or the functional
equivalent thereof in the case of Foreign Subsidiaries) under the laws of each
jurisdiction where its ownership, lease or operation of property or the conduct
of its business requires such qualification except where the failure to be so
qualified and in good standing would not, individually or in the aggregate,
have a material adverse effect on the business, operations, property or
financial or other condition of the Borrower and its Subsidiaries taken as a
whole and would not adversely affect the ability of any Loan Party to perform
its respective obligations under the Loan Documents to which it is a party and
(d) is in compliance with all Requirements of Law, except to the extent that
the failure to comply therewith could not, individually or in the
<PAGE> 58
53
aggregate, have a material adverse effect on the business, operations, assets
or financial or other condition of the Borrower and its Subsidiaries taken as a
whole and could not adversely affect the ability of any Loan Party to perform
its obligations under the Loan Documents to which it is a party.
6.4 Corporate Power; Authorization; Enforceable
Obligations. (a) Each Loan Party has the corporate power and authority, and
the legal right, to execute, deliver and perform each of the Loan Documents to
which it is a party or to which this Agreement requires it to become a party.
The Borrower has the corporate power and authority to borrow hereunder and has
taken all necessary corporate action to authorize the borrowings on the terms
and conditions of this Agreement and the Notes. Each Loan Party has taken all
necessary corporate action to authorize the execution, delivery and performance
of each of the Loan Documents to which it is a party or to which this Agreement
requires it to become a party.
(b) No consent or authorization of, filing with or other
act by or in respect of any Person (including, without limitation, any
Governmental Authority) is required in connection with the borrowings hereunder
or with the execution, delivery, performance, validity or enforceability of the
Loan Documents or the consummation of any of the transactions contemplated
hereby or thereby, except for consents, authorizations, or filings which have
been obtained and are in full force and effect.
(c) This Agreement and each other Loan Document to which
any Loan Party is a party has been, and each other Loan Document to be executed
by a Loan Party hereunder will be, duly executed and delivered on behalf of
such Loan Party. This Agreement and each other Loan Document to which any Loan
Party is a party constitutes, and each other Loan Document to be executed by a
Loan Party hereunder will constitute, a legal, valid and binding obligation of
such Loan Party enforceable against such Loan Party in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
6.5 No Legal Bar; Senior Debt. The execution, delivery
and performance by each Loan Party of the Loan Documents to which it is a
party, the borrowings hereunder and the use of the proceeds thereof, (a) will
not violate any Requirement of Law or any Contractual Obligation of the
Borrower or any other Loan Party (including, without limitation, the Senior
Subordinated Note Indenture and the Subordinated Note Indenture) except for
violations of Requirements of Law and Contractual Obligations (other than such
Indentures) which, individually or in the aggregate will not have a material
adverse effect on the business, operations, property or financial or other
condition of
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54
the Borrower and its Subsidiaries taken as a whole and will not adversely
affect the ability of any Loan Party to perform its obligations under any of
the Loan Documents to which it is a party and (b) will not result in, or
require, the creation or imposition of any Lien (other than the Liens created
by the Security Documents) on any of its or their respective properties or
revenues pursuant to any Requirement of Law or Contractual Obligation. The
Obligations constitute "Senior Indebtedness" benefitting from the subordination
provisions contained in the Subordinated Debt, except to the extent that such
Obligations are owed to an Affiliate of the Borrower.
6.6 No Material Litigation. No litigation, investigation
or proceeding of or before any arbitrator or Governmental Authority is pending
or, to the knowledge of the Borrower, threatened by or against the Borrower or
any of its Subsidiaries or against any of its or their respective properties or
revenues (a) with respect to any Loan Document or any of the transactions
contemplated hereby or thereby, (b) which, if adversely determined, would have
a material adverse effect on the business, operations, property or financial or
other condition of the Borrower and its Subsidiaries taken as a whole or (c)
which could adversely affect the ability of any Loan Party to perform its
obligations under any of the Loan Documents to which it is a party.
6.7 No Default. Neither the Borrower nor any of its
Subsidiaries is in default under or with respect to any Contractual Obligation
or any order, award or decree of any Governmental Authority or arbitrator
binding upon it or any of its properties in any respect which would have a
material adverse effect on the business, operations, property or financial or
other condition of the Borrower and its Subsidiaries taken as a whole or which
would adversely affect the ability of any Loan Party to perform its obligations
under any of the Loan Documents to which it is a party. No Default or Event of
Default has occurred and is continuing.
6.8 Ownership of Property; Liens. The Borrower and each
of its Material Subsidiaries has good record and marketable title in fee simple
to, or a valid and subsisting leasehold interest in all its real property, and
good title to all its other property, and none of such property is subject to
any Lien, except as permitted in subsection 8.3.
6.9 No Burdensome Restrictions. No Contractual
Obligation of the Borrower or any of its Subsidiaries and no Requirement of Law
materially adversely affects, or insofar as the Borrower could reasonably
foresee may so affect, the business, operations, property or financial or other
condition of the Borrower and its Subsidiaries taken as a whole.
6.10 Taxes. The Borrower and each of its Material
Subsidiaries has filed or caused to be filed all tax returns
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55
which to the knowledge of the Borrower are required to be filed and has paid
all taxes shown to be due and payable on said returns or on any assessments
made against it or any of its property and all other taxes, fees or other
charges imposed on it or any of its property (including, without limitation,
the Mortgaged Properties) by any Governmental Authority (other than those
which, in the aggregate, are not substantial in amount or those the amount or
validity of which are currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have
been provided on the books of the Borrower or its Subsidiaries, as the case may
be); and no tax lien has been filed and, to the knowledge of the Borrower, no
claim is being asserted with respect to any such tax, fee or other charge.
6.11 Securities Law, etc. Compliance. All transactions
contemplated by this Agreement and the other Loan Documents comply in all
material respects with all applicable laws and any rules and regulations
thereunder, including takeover, disclosure and other federal, state and foreign
securities law and Regulations G, T, U and X of the Federal Reserve Board.
6.12 ERISA. Neither a Reportable Event nor an "accumulated
funding deficiency" (within the meaning of Section 412 of the Code or Section
302 of ERISA) has occurred during the five-year period prior to the date on
which this representation is made or deemed made with respect to any Plan, and
each Plan has complied in all material respects with the applicable provisions
of ERISA and the Code. No termination of a Single Employer Plan has occurred
and no Lien under the Code or ERISA in favor of PBGC or a Single Employer Plan
has arisen during the five-year period prior to the date as of which this
representation is deemed made. The present value of all accrued benefits under
each Single Employer Plan maintained by the Borrower or any Commonly Controlled
Entity (based on those assumptions used to fund the Plans) did not, as of the
last annual valuation date prior to the date on which this representation is
made or deemed made, exceed the value of the assets of such Plan allocable to
such accrued benefits, either individually or in the aggregate with all other
Single Employer Plans under which such accrued benefits exceed such assets, by
more than $20,000,000. Neither the Borrower nor any Commonly Controlled Entity
has had a complete or partial withdrawal from any Multiemployer Plan, and
neither the Borrower nor any Commonly Controlled Entity would become subject to
liability under ERISA in the aggregate which exceeds $20,000,000 if the
Borrower or any such Commonly Controlled Entity were to withdraw completely
from all Multiemployer Plans as of the valuation date most closely preceding
the date hereof, and no such withdrawal is likely to occur. No such
Multiemployer Plan is in Reorganization or Insolvent. The present value
(determined using actuarial and other assumptions which are reasonable in
respect of the benefits provided and the employees participating) of the
liability of the
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56
Borrower and each Commonly Controlled Entity for post retirement benefits to be
provided to their current and former employees under Plans which are welfare
benefit plans (as defined in Section 3(1) of ERISA) does not, in the aggregate,
exceed the assets under all such Plans allocable to such benefits by an amount
in excess of $75,000,000.
6.13 Investment Company Act; Other Regulations. The Borrower
is not an "investment company" within the meaning of the Investment Company Act
of 1940, as amended. The Borrower is not subject to regulation under any
federal or state statute or regulation which limits its ability to incur
Indebtedness.
6.14 Subsidiaries, etc. The only Subsidiaries of the
Borrower, and the only partnerships, joint ventures or business trusts in which
the Borrower or any Subsidiary has an interest as of the Closing Date, are
those listed on Schedule 6.14. The Borrower owns, as of the Closing Date, the
percentage of the issued and outstanding capital stock or other evidences of
the ownership of each Subsidiary, partnership or joint venture listed on
Schedule 6.14 as set forth on such Schedule. No such Subsidiary, partnership
or joint venture has issued any securities convertible into shares of its
capital stock (or other evidence of ownership) or any options, warrants or
other rights (other than options, warrants or rights to purchase capital stock
of AIHI which are outstanding on the date hereof and will be redeemed or
otherwise terminated no later than the Merger Date and certain preferred stock
of AIHI which may remain outstanding after the Merger Date and will be redeemed
for an amount not exceeding $8,000,000 in the aggregate), to acquire such
shares or securities convertible into such shares (or other evidence of
ownership), and the outstanding stock and securities (or other evidence of
ownership) of such Subsidiaries, partnerships or joint ventures are owned by
the Borrower and its Subsidiaries free and clear of all Liens, warrants,
options or rights of others of any kind whatsoever except for Liens permitted
by subsection 8.3. All of the divisions of the Borrower and its Subsidiaries
as of the Closing Date are listed on Schedule 6.14.
6.15 Accuracy and Completeness of Information. All
information, reports and other papers and data with respect to the Borrower or
this Agreement or any transaction contemplated hereby furnished to the Banks by
the Borrower or on behalf of the Borrower, were, at the time the same were so
furnished, complete and correct in all material respects, or have been
subsequently supplemented by other information, reports or other papers or
data, to the extent necessary to give the Banks a true and accurate knowledge
of the subject matter in all material respects. All projections with respect
to the Borrower and its Subsidiaries or with respect to the Merger, so
furnished by the Borrower, as supplemented, were prepared and presented in good
faith by the Borrower, it being recognized by the Banks that such projections
as to future events are not to be viewed as facts and that actual results
during the period or periods covered by any
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57
such projections may differ from the projected results. No fact is known to
the Borrower which materially and adversely affects or in the future may (so
far as the Borrower can reasonably foresee) materially and adversely affect the
business, assets, liabilities, financial or other condition or prospects of the
Borrower or its Subsidiaries taken as a whole, which has not been set forth in
the financial statements referred to in subsection 6.1 or in such information,
reports, papers and data or otherwise disclosed in writing to the Banks prior
to the Closing Date. No document furnished or statement made in writing to the
Banks by the Borrower in connection with the negotiation, preparation or
execution of this Agreement contains any untrue statement of a material fact,
or, to the knowledge of the Borrower after due inquiry, omits to state any such
material fact necessary in order to make the statements contained therein not
misleading, in either case which has not been corrected, supplemented or
remedied by subsequent documents furnished or statements made in writing to the
Banks.
6.16 Security Documents. (a) Each Security Agreement is
effective to create in favor of the Agent, for the ratable benefit of the
Banks, a legal, valid and enforceable security interest in all right, title and
interest of the Loan Party thereto in the collateral described therein. Such
Security Agreement constitutes a fully perfected first Lien on, and security
interest in, all right, title and interest of such Loan Party in the collateral
described therein.
(b) Each Pledge Agreement is effective to create in favor
of the Agent, for the ratable benefit of the Banks, a legal, valid and
enforceable security interest in the pledged assets described therein. Such
Pledge Agreement constitutes a fully perfected first Lien on, and security
interest in, all right, title and interest of the Loan Party thereto in the
pledged assets described therein.
(c) Each Mortgage is effective to grant to the Agent, for
the ratable benefit of the Banks, a legal, valid and enforceable mortgage lien
on all of the right, title and interest of the Loan Party thereto in the
mortgaged property described therein. Upon recordation of each Mortgage in the
recording office specified therein and the release of the related Original
Mortgage, such Mortgage will constitute a fully perfected lien on and security
interest in, such mortgaged property, subject to the encumbrances and
exceptions to title set forth in the title policies or title reports previously
delivered to the Agent.
6.17 Patents, Copyrights, Permits and Trademarks. Each of
the Borrower and its Subsidiaries owns, or has a valid license or sub-license
in, all domestic and foreign letters patent, patents, patent applications,
patent and know-how licenses, inventions, technology, permits, trademark
registrations and applications, trademarks, trade names, trade secrets, service
marks, copyrights, product designs,
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58
applications, formulae, processes and the industrial property rights
("Proprietary Rights") used in the operation of its businesses in the manner in
which they are currently being conducted and which are material to the
business, operations, assets or financial or other condition of the Borrower
and its Subsidiaries taken as a whole. Neither the Borrower nor any of its
Subsidiaries is aware of any existing or threatened infringement or
misappropriation of any Proprietary Rights of others by the Borrower or any of
its Subsidiaries or of any Proprietary Rights of the Borrower or any of its
Subsidiaries by others which is material to the business operations, assets or
financial or other condition of the Borrower and its Subsidiaries taken as a
whole.
6.18 Environmental Matters. Except as disclosed in Schedule
6.18, and other than such exceptions to any of the following that would not
reasonably be expected to give rise to a material adverse effect on the
business, operations, property or financial condition of the Borrower and its
Subsidiaries taken as a whole, (a) with respect to the Mortgaged Properties:
(i) Except for the property referred to in subsection
7.10(c), the Mortgaged Properties constitute all of the real
properties owned in fee by the Borrower and its Subsidiaries in the
United States and required to be mortgaged to the Agent, for the
ratable benefit of the Banks.
(ii) To the best knowledge of the Borrower and its
Subsidiaries, after reasonable investigation consisting of reasonable
environmental compliance, review, monitoring, and remedial activities
conducted at the individual manufacturing, warehouse, or production
facility level, with all information relating to environmental matters
arising at such facilities being sent to the corporate officers of the
Borrower from such manufacturing, warehouse or production facilities
of any Subsidiary, the Mortgaged Properties do not contain, and have
not previously contained, any Hazardous Materials in amounts or
concentrations or under such conditions which (A) constitute a
violation of, or (B) could reasonably give rise to any liability under
any applicable Environmental Laws.
(iii) To the best knowledge of the Borrower and its
Subsidiaries, after reasonable investigation consisting of reasonable
environmental compliance, review, monitoring, and remedial activities
conducted at the individual manufacturing, warehouse, or production
facility level, with all information relating to environmental matters
arising at such facilities being sent to the corporate officers of the
Borrower from such manufacturing, warehouse or production facilities
of any Subsidiary, the Mortgaged Properties and all operations at the
Mortgaged Properties are in compliance, and have been in compliance
for the time period that each of the Mortgaged Properties has been
owned by the
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59
Borrower or its Subsidiaries, with all Environmental Laws, and there
is no contamination at, on or under the Mortgaged Properties, or
violation of any Environmental Laws with respect to the Mortgaged
Properties which could interfere with the continued operation of the
Mortgaged Properties or impair the fair saleable value thereof.
Neither the Borrower nor any Subsidiary has knowingly assumed any
liability, by contract or otherwise, of any person under any
Environmental Laws, other than in connection with the Tender Offer and
the Merger.
(iv) Neither the Borrower nor any of its Subsidiaries has
received any Environmental Complaint with regard to any of the
Mortgaged Properties or the operations of the Borrower or any of its
Subsidiaries, nor does the Borrower or any of its Subsidiaries have
knowledge or reason to believe that any such notice will be received
or is being threatened.
(v) To the best knowledge of the Borrower and its
Subsidiaries, based on the Borrower's and the Subsidiaries' customary
practice of contracting only with licensed haulers for removal of
Hazardous Materials from the Mortgaged Properties only to facilities
authorized to receive such Hazardous Materials, Hazardous Materials
have not been transported or disposed of from the Mortgaged Properties
in violation of, or in a manner or to a location which could
reasonably give rise to liability under, Environmental Laws, nor have
any Hazardous Materials been generated, treated, stored or disposed of
at, on or under any of the Mortgaged Properties in violation of, or in
a manner that could reasonably give rise to liability under any
Environmental Laws.
(vi) No judicial proceedings or governmental or
administrative action is pending, or, to the knowledge of the Borrower
and its Subsidiaries, threatened, under any Environmental Law to which
the Borrower and its Subsidiaries are or will be named as a party with
respect to the Mortgaged Properties, nor are there any consent decrees
or other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements outstanding
under any Environmental Law with respect to the Mortgaged Properties.
(vii) To the best knowledge of the Borrower and its
Subsidiaries after reasonable investigation, consisting of reasonable
environmental compliance, review, monitoring, and remedial activities
conducted at the individual manufacturing, warehouse, or production
facility level, with all information relating to environmental matters
arising at such facilities being sent to the corporate officers of the
Borrower from such manufacturing, warehouse or production facilities
of any Subsidiary, there has been no release or
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threat of release of Hazardous Materials at or from the Mortgaged
Properties, or arising from or related to the operations of the
Borrower or its Subsidiaries in connection with the Mortgaged
Properties in violation of or in amounts or in a manner that could
reasonably give rise to liability under any Environmental Laws.
(b) To the best knowledge of the Borrower and its
Subsidiaries, after reasonable investigation: (i) with respect to each parcel
of real property owned or operated by the Borrower and its Subsidiaries (other
than the Mortgaged Properties), each of the representations and warranties set
forth in subsection 6.18(a)(ii) through (a)(vii) is true and correct; and (ii)
none of the present or former operations or properties of AIHI or any of its
Subsidiaries or Hazardous Materials attributed thereto regardless of where
located, is reasonably likely to give rise to any violation of or liability
under any Environmental Law.
6.19 Acquisition Documents. Each Acquisition Document to
which the Borrower or any of its Subsidiaries is a party has been duly executed
and delivered by the Borrower or such Subsidiary, as the case may be, and to
the best knowledge of the Borrower, each Acquisition Document has been duly
executed and delivered by the parties thereto other than the Borrower and its
Subsidiaries and is in full force and effect. The representations and
warranties of the Borrower and each of its Subsidiaries contained in each
Acquisition Document to which the Borrower or such Subsidiary, as the case may
be, is a party are true and correct in all material respects on the date hereof
and will be true and correct in all material respects on the date hereof, the
Closing Date and the Merger Date, and the Agent and each Bank shall be entitled
to rely upon such representations and warranties with the same force and effect
as if they were incorporated in this Agreement and made to each Bank directly
as of the date hereof, the Closing Date and the Merger Date. To the best
knowledge of the Borrower and each of its Subsidiaries, the representations and
warranties of each other party to each Acquisition Document contained therein
are true and correct in all material respects on the date hereof and on the
Closing Date as if made on and as of the date hereof and the Closing Date, such
knowledge qualification being given only with respect to parties to the
Acquisition Documents other than the Borrower and its Subsidiaries. To the
best knowledge of the Borrower and each of its Subsidiaries, none of the Tender
Offer Documents contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
6.20 Regulation H. No Mortgage encumbers improved real
property which is located in an area that has been identified by the Secretary
of Housing and Urban Development as an area having special flood hazards and in
which flood insurance
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has been made available under the National Flood Insurance Act of 1968.
SECTION 7. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments
remain in effect, any Note or Letter of Credit remains outstanding or any other
amount is owing to any Bank or the Agent hereunder, the Borrower shall, and
(except in the case of delivery of financial information, reports and notices)
shall cause each of its Subsidiaries to:
7.1 Financial Statements. Furnish to each Bank:
(a) as soon as available, but in any event within 95 days
after the end of each fiscal year of the Borrower a copy of the
audited consolidated balance sheets of the Borrower and its
consolidated Subsidiaries as at the end of such year and the related
consolidated statements of income and cash flows for such year,
setting forth in each case in comparative form the figures for the
previous year, reported on without a "going concern" or like
qualification or exception, or qualification arising out of the scope
of the audit, by independent certified public accountants of
nationally recognized standing;
(b) as soon as available, but in any event not later than 50
days after the end of each of the first three quarterly periods of
each fiscal year of the Borrower the unaudited consolidated and
consolidating balance sheet of the Borrower and its consolidated
Subsidiaries as at the end of each such quarter and the related
unaudited consolidated and consolidating statements of income and cash
flows of the Borrower and their consolidated Subsidiaries for such
quarter and the portion of the fiscal year through such date, setting
forth in each case in comparative form the figures for the
corresponding quarterly period of the previous year, certified by a
Responsible Officer (subject to normal year-end audit adjustments).
The Borrower covenants and agrees that all such financial statements shall be
complete and correct in all material respects and shall be prepared in
reasonable detail and in accordance with GAAP applied consistently throughout
the periods reflected therein (except as approved by such accountants or
officer, as the case may be, and disclosed therein).
7.2 Certificates; Other Information. Furnish to each Bank:
(a) concurrently with the delivery of the financial
statements referred to in subsection 7.1(a), (i) a certificate of the
independent certified public accountants
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reporting on such financial statements stating that in making the
examination necessary therefor no knowledge was obtained of any
Default or Event of Default, except as specified in such certificate
and (ii) a certificate of such certified public accountants showing in
detail the calculations supporting such statements in respect of
subsection 8.1;
(b) concurrently with the delivery of the financial
statements referred to in subsection 7.1(a) and (b), a certificate of
a Responsible Officer of the Borrower (i) stating that such
Responsible Officer has obtained no knowledge of any Default or Event
of Default except as specified in such certificate, (ii) stating, to
the best of such Responsible Officer's knowledge, that all such
financial statements are complete and correct in all material respects
(subject, in the case of interim statements, to normal year-end audit
adjustments) and have been prepared in reasonable detail and in
accordance with GAAP applied consistently throughout the periods
reflected therein (except as disclosed therein) and (iii) showing in
detail the calculations supporting such statements in respect of
subsection 8.1;
(c) concurrently with the delivery of the financial
statements referred to in subsection 7.1(a) and (b), a copy of
management's report on the business, operations, property and
financial and other condition of the Borrower and its Subsidiaries,
including financial results with respect to each of their individual
manufacturing facilities, together with management's discussion
thereof;
(d) concurrently with the delivery of the financial
statements referred to in subsection 7.1(b), until the Merger is
consummated (if such financial statements are required to be filed
with the Securities and Exchange Commission pursuant to the Exchange
Act), the unaudited consolidated financial statements of AIHI and its
Subsidiaries prepared in conformity with GAAP, consisting of a
consolidated balance sheet as at the end of each fiscal quarter and
the related unaudited consolidated statements of income and cash flows
for such quarter and the portion of the fiscal year through such date,
setting forth in each case in comparative form the figures for the
corresponding quarterly period of the previous year.
(e) not later than thirty days after the end of each fiscal
year of the Borrower a copy in detail reasonably acceptable to the
Agent of the projections by the Borrower of the operating budget and
cash flow of the Borrower and its Subsidiaries, in each case for the
next succeeding fiscal year, such projections to be accompanied by a
certificate of a Responsible Officer of the Borrower to the effect
that such projections have been prepared on the basis
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63
of sound financial planning practice and that such officer on behalf
of the Borrower has no reason to believe they are incorrect or
misleading in any material respect;
(f) promptly upon receipt thereof, copies of all reports
submitted to the Borrower by independent certified public accountants
in connection with each annual, interim or special audit of the books
of the Borrower made by such accountants, including, without
limitation, any management letter commenting on the Borrower's
internal controls submitted by such accountants to management in
connection with their annual audit;
(g) promptly after the same are sent, copies of all financial
statements and reports which the Borrower sends to its public equity
holders, and within five days after the same are filed, copies of all
financial statements and reports which the Borrower may make to, or
file with, the Securities and Exchange Commission or any successor or
analogous Governmental Authority; and
(h) promptly, such additional financial and other information
as any Bank may from time to time reasonably request.
7.3 Performance of Obligations. Perform in all material
respects all of its obligations under the terms of each mortgage, indenture,
security agreement and other debt instrument by which it is bound or to which
it is a party and pay, discharge or otherwise satisfy at or before maturity or
before they become delinquent, as the case may be, all its material obligations
of whatever nature, except when the amount or validity thereof is currently
being contested in good faith by appropriate proceedings and reserves in
conformity with GAAP with respect thereto have been provided on the books of
the Borrower or its Subsidiaries, as the case may be.
7.4 Conduct of Business, Maintenance of Existence and
Compliance with Obligations and Laws. Continue to engage in business of the
same general type as now conducted by it and preserve, renew and keep in full
force and effect its corporate existence and take all reasonable action to
maintain all rights, privileges and franchises necessary or desirable in the
normal conduct of its business except as otherwise permitted pursuant to
subsection 8.5; comply with all Contractual Obligations and Requirements of Law
except to the extent that failure to comply therewith could not reasonably be
expected to have, individually or in the aggregate, a material adverse effect
on the business, operations, property or financial or other condition of the
Borrower and its Subsidiaries taken as a whole and could not reasonably be
expected to adversely affect the ability of the Borrower or any of its
Subsidiaries to perform their respective obligations under any of the Loan
Documents to which they are a party.
<PAGE> 69
54
7.5 Maintenance of Property; Insurance. Keep each Mortgaged
Property and all other property useful and necessary in its business in good
working order and condition; maintain with financially sound and reputable
insurance companies insurance on all its property in at least such amounts and
against at least such risks (but including in any event public liability,
product liability and business interruption) as are usually insured against in
the same general area by companies engaged in the same or a similar business
(including, without limitation, the insurance required pursuant to the Security
Documents); and furnish to the Agent, upon written request, full information as
to the insurance carried.
7.6 Inspection of Property; Books and Records; Discussions.
Keep proper books of records and account in which full, true and correct
entries in conformity with GAAP and all Requirements of Law shall be made of
all dealings and transactions in relation to its business and activities; and
permit representatives of any Bank to visit and inspect any of its properties
and examine and make abstracts from any of its books and records upon
reasonable notice and at any reasonable time and as often as may reasonably be
desired, and to discuss the business, operations, properties and financial and
other condition of the Borrower and its Subsidiaries with officers and
employees of the Borrower and its Subsidiaries and with its independent
certified public accountants.
7.7 Notices. Promptly give notice to the Agent and each Bank:
(a) of the occurrence of any Default or Event of Default;
(b) of any (i) default or event of default under any
Contractual Obligation of the Borrower or any of its Subsidiaries or
(ii) litigation, investigation or proceeding which may exist at any
time between the Borrower or any of its Subsidiaries and any
Governmental Authority, which in the case of either clause (i) or (ii)
above, if not cured or if adversely determined, as the case may be,
could have a material adverse effect on the business, operations,
property or financial condition of the Borrower and its Subsidiaries
taken as a whole or could adversely affect the ability of the Borrower
or any of its Subsidiaries to perform their respective obligations
under any of the Loan Documents to which they are a party;
(c) of any litigation or proceeding affecting the Borrower or
any of its Subsidiaries in which the amount involved is $3,000,000 or
more and not covered by insurance or in which material injunctive or
similar relief is sought;
<PAGE> 70
65
(d) of the following events, as soon as possible and in any
event within 30 days after the Borrower knows or has reason to know
thereof: (i) the occurrence or expected occurrence of any Reportable
Event with respect to any Single Employer Plan, a failure to make any
required contribution to any Single Employer Plan, unless such failure
is cured within such 30 days or does not involve an amount in excess
of $500,000, any Lien under the Code or ERISA in favor of the PBGC or
a Single Employer Plan, or any withdrawal from, or the termination,
Reorganization or Insolvency of any Multiemployer Plan or (ii) the
institution of proceedings or the taking of any other action by the
PBGC or the Borrower or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or the
termination, Reorganization or Insolvency of, any Single Employer or
Multiemployer Plan, if such proceedings or other action would
reasonably be expected to cause a material adverse change in the
business, assets, operations or financial condition of the Borrower
and its Subsidiaries taken as a whole;
(e) of any Environmental Complaint materially affecting the
Borrower or any Subsidiary, any Mortgaged Property or the operations
of the Borrower or any Subsidiary, and any notice from any Person of
(i) the occurrence of any release, spill or discharge of any Hazardous
Material that is reportable under any Environmental Law, (ii) the
commencement of any clean up pursuant to or in accordance with any
Environmental Law of any Hazardous Material at, on, under or within
the Mortgaged Property or any part thereof or (iii) any other
condition, circumstance, occurrence or event, any of which could
reasonably be expected to result in a material liability of the
Borrower or any Subsidiary under any Environmental Law;
(f) of (i) the incurrence of any Lien (other than Liens
permitted pursuant to subsection 8.3) on, or claim asserted against
any of the collateral security in the Security Documents or (ii) the
occurrence of any other event which could reasonably be expected to
have a material adverse effect on the aggregate value of the
collateral under any Security Document; and
(g) of a material adverse change in the business, operations,
property or financial or other condition of the Borrower and its
Subsidiaries taken as a whole.
Each notice pursuant to this subsection 7.7 shall be accompanied by a statement
of a Responsible Officer of the Borrower setting forth details of the
occurrence referred to therein and stating what action the Borrower proposes to
take with respect thereto.
7.8 Maintenance of Liens of the Security Documents.
Promptly, upon the reasonable request of any Bank, at the
<PAGE> 71
66
Borrower's expense, execute, acknowledge and deliver, or cause the execution,
acknowledgement and delivery of, and thereafter register, file or record, or
cause to be registered, filed or recorded, in an appropriate governmental
office, any document or instrument supplemental to or confirmatory of the
Security Documents or otherwise deemed by the Agent necessary or desirable for
the continued validity, perfection and priority of the Liens on the collateral
covered thereby.
7.9 Environmental Matters. (a) Comply in all material
respects with, and use all reasonable efforts to ensure compliance in all
material respects by all tenants and subtenants, if any, with, all
Environmental Laws and all requirements existing thereunder and obtain and
comply in all material respects with and maintain, and use all reasonable
efforts to ensure that all tenants and subtenants obtain, comply in all
material respects with and maintain, any and all licenses, approvals,
notifications, registrations or permits required by Environmental Laws.
(b) Promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws, other than such orders and directives as to which an appeal has been
taken in good faith and the pendency of any and all such appeals does not
materially and adversely affect the Borrower or any Subsidiary, any Mortgaged
Property, or the operations of the Borrower or any Subsidiary.
(c) Defend, indemnify and hold harmless the Agent and the
Banks and their Affiliates, and their respective employees, agents, officers
and directors, from and against any claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of whatever kind or
nature known or unknown, contingent or otherwise, arising out of, or in any way
relating to the violation of, noncompliance with or liability under any
Environmental Laws applicable to the Borrower or its Subsidiaries or the
Mortgaged Properties, or any orders, requirements or demands of Governmental
Authorities related thereto, including, without limitation, attorney's and
consultant's fees, investigation and laboratory fees, response costs, court
costs and litigation expenses, except to the extent that any of the foregoing
arise solely out of the gross negligence or willful misconduct of the party
seeking indemnification therefor. This indemnity shall continue in full force
and effect regardless of the termination of this Agreement.
(d) Promptly obtain such letters as the Borrower may
reasonably obtain from the Persons preparing the written reports referred to in
Section 5.1(s) hereof, entitling the Agent and each Bank to rely on such
reports.
7.10 Security Documents. (a) Promptly at the request of the
Required Banks (and in any event no later than 45 days after the date of such
request), the Borrower, at its own
<PAGE> 72
67
expense, shall (i) pledge 65% of the capital stock of Lear Italia to the Agent,
for the ratable benefit of the Banks, and (ii) cause the Agent to receive, with
a counterpart for each Bank, a legal opinion of Italian counsel acceptable to
the Agent covering such matters in respect of such pledge agreement as the
Agent shall reasonably request.
(b) As soon as possible and in no event later than 45 days
after the Closing Date, cause (i) the Liens granted pursuant to (A) the 1995
German Pledge Agreement, (B) the Mexican Pledge Agreement and (C) the Pledge
Agreement ("Nantissement") to be perfected and (ii) the Agent to receive, with
a counterpart for each Bank, legal opinions of Peltzer & Riesenkampff, German
counsel to the Borrower, Enriquez, Gonzales, Aguirre y Ochoa, Mexican counsel
to the Borrower, and Freshfields, French counsel to the Agent, covering such
matters in respect of such pledge agreements as the Agent shall reasonably
request.
(c) No later than 45 days after completion of construction of
the Borrower's facility located in Hammond, Indiana, grant to the Agent, for
the ratable benefit of the Banks, a perfected and duly filed first Lien of
record on all real property and fixtures, upon terms substantially the same as
those set forth in the Mortgages, owned by the Borrower, located in Hammond,
Indiana.
(d) As soon as possible and in no event later than 30 days
after the Merger Date, cause (i) each material domestic Subsidiary of the
Surviving Corporation (as determined by the Agent) to execute and deliver a
Guarantor Supplement, (ii) the pledge to the Agent, for the ratable benefit of
the Banks, of all of the common stock of each material domestic Subsidiary of
the Surviving Corporation (as determined by the Agent) owned directly or
indirectly by the Borrower pursuant to pledge agreements in the form and
substance satisfactory to the Agent and (iii) the Agent to receive, in
sufficient copies for each Bank, opinions of counsel to the Borrower reasonably
satisfactory to the Agent, addressed to the Agent and the Banks, containing
opinions substantially in the form of Exhibit L-1, with customary assumptions
qualifications and exceptions.
7.11 Pledge Agreement Supplement. The Borrower shall cause
Acquisition Corp. to deliver to the Agent on the date of purchase an executed
Pledge Agreement Supplement, substantially in the form of Exhibit A to the
Acquisition Pledge Agreement (a "Pledge Agreement Supplement"), covering any
Additional Pledged Stock (as defined in the Acquisition Pledge Agreement)
purchased by Acquisition Corp., and (a) in the case of a transfer to
Acquisition Corp. of any such Pledged Stock effected by delivery of share
certificates representing the capital stock of AIHI, the stock certificates
representing such Pledged Stock, and appropriate undated stock powers duly
executed in blank for each such stock certificate, shall be delivered to the
Agent or the Depositary, as appropriate, or (b) in the case of a transfer to
<PAGE> 73
68
Acquisition Corp. of any such Pledged Shares effected by book entry delivery
thereof, Acquisition Corp. shall authorize and cause all such shares to be
transferred to an account maintained in the name of Chemical, for the benefit
of the Agent, at the Clearing Corporation (as defined in the Acquisition Pledge
Agreement).
7.12 Consummation of Merger. The Borrower shall cause
Acquisition Corp. to consummate the Merger as soon as practicable after the
Closing Date and prior to 180 days after the Closing Date in accordance with
the terms of the Acquisition Documents and applicable Requirements of Law, and
shall comply and cause Acquisition Corp. to comply in all material respects
with the obligations of the Borrower and Acquisition Corp. under the
Acquisition Documents.
SECTION 8. NEGATIVE COVENANTS
The Borrower hereby agrees that, from and after the Closing
Date and so long as the Commitments remain in effect, any Note or Letter of
Credit remains outstanding or any other amount is owing to any Bank or the
Agent hereunder, the Borrower shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly:
8.1 Financial Covenants.
(a) Consolidated Net Worth. Permit Consolidated Net Worth at
the end of any quarter during any period set forth below to be less than the
amount set forth opposite such period below:
<TABLE>
<CAPTION>
Period Amount
------ ------
<S> <C>
The Closing Date to but excluding the last day of the
second fiscal quarter of 1996 $255,000,000
The last day of the second fiscal quarter of 1996 to but
excluding the last day of the second fiscal quarter of 1997 270,000,000
The last day of the second fiscal quarter of 1997 to but
excluding the last day of the second fiscal quarter of 1998 285,000,000
The last day of the second fiscal quarter of 1998 and
thereafter. 300,000,000
</TABLE>
(b) Interest Coverage. Permit, (i) at the end of the fourth
fiscal quarter of 1995, the ratio of (I) Consolidated Operating Profit for such
fiscal quarter to (II) Consolidated Interest Expense for such fiscal quarter,
to be less than 2.75 to 1, (ii) at the end of the first fiscal quarter of 1996,
the ratio of (I) Consolidated Operating Profit for two consecutive fiscal
quarters then ended to (II) Consolidated Interest Expense for such two
consecutive fiscal quarters, to be less than 2.75 to 1, (iii) at the end of the
second fiscal quarter of 1996, the ratio
<PAGE> 74
69
of (I) Consolidated Operating Profit for three consecutive fiscal quarters then
ended to (II) Consolidated Interest Expense for such three consecutive fiscal
quarters, to be less than 3.00 to 1 and (iv) at the end of any four consecutive
fiscal quarters ending during any period set forth below, the ratio of (I)
Consolidated Operating Profit for such four consecutive fiscal quarters to (II)
Consolidated Interest Expense for such four consecutive fiscal quarters, to be
less than the ratio set forth opposite such period below:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
The first day of the third fiscal quarter of 1996 through
the last day of the fourth fiscal quarter of 1996 3.00 to 1
The first day of the first fiscal quarter of 1997 and
thereafter 3.50 to 1
</TABLE>
(c) Consolidated Operating Profit. Permit Consolidated
Operating Profit for any fiscal year set forth below to be less than the amount
set forth opposite such fiscal year below:
<TABLE>
<CAPTION>
Fiscal Year Amount
----------- ------
<S> <C>
1995 $200,000,000
1996 315,000,000
1997 330,000,000
1998 340,000,000
1999 - thereafter 360,000,000
</TABLE>
8.2 Limitation on Indebtedness. Create, incur, assume or
suffer to exist any Indebtedness, except:
(a) Indebtedness in respect of the Loans, the Notes, the
Letters of Credit and other obligations arising under this Agreement
and, without duplication, Indebtedness of the Borrower and
Subsidiaries to the extent backed by Letters of Credit;
(b) Indebtedness in respect of (i) the Subordinated Notes (or
any refinancing thereof in accordance with subsection 8.10) in an
aggregate principal amount not exceeding $145,000,000 (plus the amount
of any premiums, costs and expenses incurred in connection with any
refinancing thereof) and (ii) the Senior Subordinated Notes (or any
refinancing thereof in accordance with subsection 8.10) in an
aggregate principal amount not exceeding $125,000,000 (plus the amount
of any premiums, costs and expenses incurred in connection with any
refinancing thereof);
(c) Indebtedness incurred to purchase, or to finance the
purchase of, fixed or capital assets in an aggregate
<PAGE> 75
70
principal amount not exceeding $2,000,000 at any one time outstanding;
(d) Indebtedness in respect of Interest Rate Agreement
Obligations in respect of a notional principal amount of up to
$500,000,000 in the aggregate;
(e) Indebtedness in respect of documentary letters of credit
(other than Letters of Credit) in an aggregate face amount not
exceeding $5,000,000 at any one time;
(f) Indebtedness in respect of letters of credit (other than
Letters of Credit) in an aggregate face amount not exceeding
$10,000,000 at any one time, provided that such letters of credit are
used solely (i) to provide credit support in respect of leased
property or (ii) to provide credit support for the benefit of Foreign
Subsidiaries;
(g) short-term Indebtedness incurred by all Foreign
Subsidiaries organized under the laws of France for working capital
purposes in an aggregate principal amount not to exceed 6,000,000
French Francs at any one time outstanding;
(h) Indebtedness permitted pursuant to subsection 8.9;
(i) Indebtedness incurred by all Foreign Subsidiaries
organized under the laws of Germany or Austria in an aggregate
principal amount not to exceed $25,000,000 at any one time
outstanding.
(j) Indebtedness incurred by all Foreign Subsidiaries
organized under the laws of Mexico in an aggregate principal amount
not to exceed $30,000,000 at any one time outstanding;
(k) Indebtedness incurred by all Foreign Subsidiaries
organized under the laws of Sweden or Finland in an aggregate
principal amount not to exceed $25,000,000 at any one time
outstanding;
(l) Indebtedness incurred by all Foreign Subsidiaries
organized under the laws of Canada in an aggregate principal amount
not to exceed $25,000,000 at any one time outstanding;
(m) Indebtedness incurred by all Foreign Subsidiaries
organized under the laws of Italy (i) in connection with the financing
of the Borrower's acquisition of the Fiat Seat Business, in an
aggregate principal amount not to exceed Lira 195,452,040,951 (and any
refinancings thereof) and (ii) in addition to Indebtedness permitted
in clause (i) above, in an aggregate principal amount not to exceed
$30,000,000 at any one time outstanding.
<PAGE> 76
71
(n) Indebtedness incurred by all Foreign Subsidiaries
organized under the laws of Poland in an aggregate principal amount
not to exceed $5,000,000 at any one time outstanding.
(o) Indebtedness incurred by all Foreign Subsidiaries
organized under the laws of Brazil or Argentina in an aggregate
principal amount not to exceed $30,000,000 at any one time
outstanding;
(p) Indebtedness incurred by all Foreign Subsidiaries
organized under the laws of South Africa in an aggregate principal
amount not to exceed $5,000,000 at any one time outstanding;
(q) Indebtedness incurred by all Foreign Subsidiaries
organized under the laws of Indonesia, Thailand or Australia in an
aggregate principal amount not to exceed $15,000,000 at any one time
outstanding;
(r) Indebtedness incurred by all Foreign Subsidiaries
organized under the laws of the United Kingdom in an aggregate
principal amount not to exceed $20,000,000 at any one time
outstanding;
(s) existing Indebtedness listed on Schedule 8.2(s) and
refinancings thereof;
(t) until the Merger Date, the Indebtedness of AIHI and its
Subsidiaries existing on the Closing Date and listed on Schedule
8.2(t) or any refinancing of such indebtedness, or any indebtedness of
the Borrower or any Subsidiary incurred in connection with the
refinancing of the Indebtedness of AIHI and its Subsidiaries;
(u) Indebtedness incurred by a Special Purpose Subsidiary
in connection with a Receivables Financing Transaction; and
(v) additional Indebtedness not otherwise permitted by
paragraphs (a) through (u) above, provided that the aggregate amount
of such Indebtedness does not exceed $75,000,000 at any one time
outstanding.
8.3 Limitation on Liens. Create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested
in good faith by appropriate proceedings; provided that adequate
reserves with respect thereto are maintained on the books of the
Borrower or its Subsidiaries, as the case may be, in conformity with
GAAP (or, in the case of Foreign Subsidiaries, generally accepted
accounting
<PAGE> 77
72
principles in effect from time to time in their respective
jurisdictions of organization);
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, or other like Liens arising in the ordinary course of
business and not overdue for a period of more than 30 days or which
are bonded or being contested in good faith by appropriate proceedings
in a manner which will not jeopardize or diminish the interest of the
Agent in any of the collateral subject to the Security Documents;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation;
(d) Liens (other than any Lien imposed by ERISA) incurred on
deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred which, in the aggregate, are not substantial in
amount and which do not in any case materially detract from the value
of the property subject thereto or materially interfere with the
ordinary conduct of the business of the Borrower or such Subsidiary;
(f) Liens in favor of the Agent and the Banks created
pursuant to the Security Documents and Liens securing Reimbursement
Obligations and Subsidiary Reimbursement Obligations;
(g) Liens securing Indebtedness of the Borrower and its
Subsidiaries permitted by subsection 8.2(c) in respect of the deferred
purchase price of fixed or capital assets; provided that (i) such
Liens shall be created substantially simultaneously with the purchase
of such fixed or capital assets, (ii) such Liens do not at any time
encumber any property other than the property financed by such
Indebtedness, (iii) the amount of Indebtedness secured thereby is not
increased and (iv) the principal amount of Indebtedness secured by any
such Lien shall at no time exceed 100% of the purchase price of such
property;
(h) Liens securing the Indebtedness permitted by
subsection 8.2(f), (g), (i), (j), (k), (l), (m), (n), (o), (p), (q),
(r), (s), (t), (u) and (v) and Liens securing obligations with respect
to government grants, provided that such Liens permitted by this
subsection 8.3(h) do not at any time encumber any property located in
the United States except for, in the case of Indebtedness permitted by
subsection 8.2(f), Liens that encumber leasehold interests
<PAGE> 78
73
supported by such Indebtedness, and, provided, further, that Liens
securing the Indebtedness permitted by subsection 8.2(s) shall only be
permitted to the extent such Liens are in existence as of the date of
this Agreement;
(i) Liens securing Indebtedness permitted by subsection
8.2(d), provided that such Liens run in favor of a Bank;
(j) attachment, judgment or other similar Liens arising in
connection with court or arbitration proceedings fully covered by
insurance or involving individually or in the aggregate, no more than
$3,000,000 at any one time, provided that the same are discharged, or
that execution or enforcement thereof is stayed pending appeal, within
30 days or, in the case of any stay of execution or enforcement
pending appeal, within such lesser time during which such appeal may
be taken;
(k) Liens securing reimbursement obligations with respect to
documentary letters of credit permitted by subsection 8.2(e) which
encumber documents and other property relating to such letters of
credit;
(l) Liens on the property or assets of a corporation which
becomes a Subsidiary on or after the date hereof (including AIHI and
its Subsidiaries) securing Indebtedness permitted by subsection 8.2,
provided that (i) such Liens existed at the time such corporation
became a Subsidiary and were not created in anticipation thereof, (ii)
any such Lien does not by its terms cover any property or assets after
the time such corporation becomes a Subsidiary which were not covered
immediately prior thereto and (iii) any such Lien does not by its
terms secure any Indebtedness other than Indebtedness existing
immediately prior to the time such corporation becomes a Subsidiary;
(m) Liens (not otherwise permitted hereunder) on assets
acquired after the date of this Agreement which secure the purchase
price thereof or other obligations related to the acquisition thereof
or on assets not subject to Liens pursuant to any Security Document,
provided that the estimated aggregate book value of the foregoing
assets shall not exceed $50,000,000;
(n) Liens on (i) investments permitted by subsection 8.9(o)
or (ii) cash deposits securing the Guarantee Obligations permitted by
subsection 8.4(f); and
(o) extensions, renewals and replacements of any Lien
described in subsections 8.3(a) through (n) above, provided that the
principal amount of the Indebtedness secured thereby is not increased
and such extension or renewal is limited to the property so
encumbered.
<PAGE> 79
74
8.4 Limitation on Guarantee Obligations. Create, incur,
assume or suffer to exist any Guarantee Obligation except:
(a) Guarantee Obligations in respect of the Subsidiary
Guarantee;
(b) Guarantee Obligations in respect of obligations of the
Borrower, Subsidiaries and Special Affiliates in an aggregate
principal amount not to exceed $50,000,000 at any one time;
(c) Guarantee Obligations in respect of obligations
entered into by Foreign Subsidiaries created in the ordinary course of
business, in an aggregate amount not to exceed $70,000,000 at any one
time;
(d) Guarantee Obligations in respect of Section 5.03 of
the Purchase Agreement;
(e) Guarantee Obligations of the Borrower in connection with
a receivables factoring or working capital credit facility for any
Foreign Subsidiary organized under the laws of Italy, in an aggregate
amount not to exceed $20,000,000 at any one time; and
(f) Guarantee Obligations of the Borrower in respect of
Indebtedness permitted to be incurred pursuant to subsection 8.2(m).
8.5 Limitations on Fundamental Changes. Unless expressly
permitted under this Agreement, enter into any transaction of acquisition or
merger or consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution), or convey, sell, lease,
assign, transfer or otherwise dispose of, all or substantially all of its
property, business or assets, or acquire by purchase or otherwise all or
substantially all of the business, property or fixed assets of, or stock or
other evidence of beneficial ownership of, any Person, or make any material
change in the present method of conducting business and except that, so long as
no Collateral is transferred for less than fair market value to a Person who
has not executed a security agreement in favor of the Agent, and none of the
Liens or guarantees created by any of the Security Documents are impaired
thereby:
(a) any Subsidiary of the Borrower may be merged or
consolidated with or into the Borrower (provided that the Borrower
shall be the continuing or surviving corporation) or with or into any
one or more Wholly Owned Subsidiaries of the Borrower that are
organized under any jurisdiction in the United States (provided that a
Wholly Owned Subsidiary shall be the continuing or surviving
corporation);
<PAGE> 80
75
(b) any Foreign Subsidiary may be merged or consolidated with
or into any one or more Wholly Owned Subsidiaries that are Foreign
Subsidiaries (provided that a Wholly Owned Subsidiary that is a
Foreign Subsidiary shall be the continuing or surviving corporation);
(c) any Wholly Owned Subsidiary may sell, lease, transfer or
otherwise dispose of any or all of its assets (upon voluntary
liquidation or otherwise) to the Borrower or another Wholly Owned
Subsidiary of the Borrower that is organized under any jurisdiction in
the United States;
(d) any Wholly Owned Subsidiary that is a Foreign Subsidiary
may sell, lease, transfer or otherwise dispose of any or all of its
assets (upon voluntary liquidation or otherwise) to another Wholly
Owned Subsidiary that is a Foreign Subsidiary;
(e) notwithstanding any other provision of this Agreement or
any Loan Document, the Borrower and its Subsidiaries may consummate
the Acquisition and all transactions contemplated in connection
therewith and, to the extent not already permitted under this
subsection 8.5, the Borrower may consummate the Merger; and
(f) the Borrower and its Subsidiaries may acquire any Special
Entities, provided that the aggregate purchase price of such
acquisitions does not exceed $50,000,000 per year and provided,
further, that up to $25,000,000 of any such permitted amount which is
not expended in any fiscal year may be carried over for such
acquisitions in any subsequent fiscal year.
Notwithstanding the foregoing, the Borrower or any Subsidiary may transfer
assets, including Collateral, to any Wholly Owned Subsidiary, whether or not
the assets so transferred will continue to be subject to the Agent's security
interest, provided, that the aggregate book value of assets so transferred
shall not exceed $50,000,000.
8.6 Limitation on Sale of Assets. Except as permitted by
subsection 8.5, convey, sell, lease, assign, transfer or otherwise dispose of,
any of its property, business or assets (including, without limitation,
receivables and leasehold interests) whether now owned or hereafter acquired
except:
(a) obsolete or worn out property or other property not
necessary for operations disposed of in the ordinary course of
business; provided that (i) the Net Proceeds of each such transaction
are applied to obtain a replacement item or items of property within
90 days of the disposition thereof or (ii) the fair market value of
any property not replaced pursuant to clause (i) above shall not
exceed
<PAGE> 81
76
$5,000,000 in the aggregate in any one fiscal year of the Borrower;
(b) the sale of inventory in the ordinary course of business;
(c) in a transaction permitted by subsection 8.12;
(d) the sale by any Foreign Subsidiary of its accounts
receivable; provided that the terms of each such sale are satisfactory
in form and substance to the Agent;
(e) the sale by any Domestic Loan Party of its accounts
receivable; provided that (i) the terms of each such sale are
satisfactory in form and substance to the Agent and (ii) the
Commitments are simultaneously reduced by the amount equal to a
percentage to be determined by the Agent of the fair market value (as
determined by the Board of Directors (or executive committee thereof)
of the Borrower) of such accounts receivable sold; and
(f) dispositions of assets not otherwise permitted by clauses
(a) through (e) above; provided that the fair market value thereof
shall not exceed $15,000,000 in the aggregate in any one fiscal year
of the Borrower.
8.7 Limitation on Dividends. Declare any dividend on, or
make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any shares of any class of stock or warrants of the Borrower,
whether now or hereafter outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash or property or in
obligations of the Borrower or any Subsidiary or permit any Subsidiary to make
any payment on account of, or purchase or otherwise acquire, any shares of any
class of stock or warrants of the Borrower from any Person except for (a) (i)
payment by the Borrower of amounts then owing to management personnel of the
Borrower pursuant to the terms of their respective employment contracts, (ii)
mandatory purchases by the Borrower of its common stock from Management
Investors pursuant to the terms of the Subscription Agreements and Stockholders
Agreement and all other expenses required to be incurred by the Borrower
pursuant to the terms of the Stockholders Agreement as in effect on the date
hereof (iii) additional repurchases by the Borrower of its common stock from
Management Investors, and other officers or employees of the Borrower in an
amount not to exceed $35,000,000 in the aggregate and (iv) the purchase,
redemption or retirement of any shares of any capital stock of the Borrower or
options to purchase capital stock of the Borrower in connection with the
exercise of outstanding stock options, (b) if no Default or Event of Default
has occurred and is continuing (or would occur and be continuing after giving
effect thereto) when any such dividend is declared by the Board of Directors of
the
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Borrower, quarterly cash dividends on the Borrower's capital stock not to
exceed $2,500,000 in the aggregate per quarter but only to the extent permitted
by the terms of the Subordinated Debt and (c) dividends in the form of
additional shares of capital stock.
8.8 Limitation on Capital Expenditures. Make or commit to
make any Capital Expenditures during any fiscal year set forth below not
exceeding, in the aggregate for the Borrower and its Subsidiaries, the amount
set forth opposite such fiscal year below:
<TABLE>
<CAPTION>
Fiscal Year Amount
----------- ------
<S> <C>
1995 $150,000,000
1996 125,000,000
1997 130,000,000
1998 100,000,000
1999 75,000,000
2000 75,000,000
2001 75,000,000;
</TABLE>
provided that up to $20,000,000 of any such permitted amount which is not
expended in any fiscal year may be carried over for expenditure in any
subsequent fiscal year, and provided, further, that up to $5,000,000 of any
such permitted amount available to be expended for any subsequent fiscal year
may be carried back for expenditure in any fiscal year.
8.9 Limitation on Investments, Loans and Advances. Make or
suffer to exist any advance, loan, extension of credit or capital contribution
to, or purchase any stock, bonds, notes, debentures or other securities of, or
make any other investment in, any Person, or acquire any interest in any
Person, except:
(a) extensions of trade credit in the ordinary course of
business;
(b) investments in Cash Equivalents;
(c) investments by Foreign Subsidiaries in high quality
investments of a type similar to Cash Equivalents made outside of the
United States of America;
(d) investments, loans and advances listed on Schedule 8.9;
(e) (i) loans, advances and capital contributions to the
Borrower, Subsidiaries (including Foreign Subsidiaries) and Special
Affiliates and (ii) loans, advances and capital contributions up to an
aggregate amount not to exceed $50,000,000 at any time from and after
the Closing Date to any Special Entity, in each case described in the
foregoing clauses (i) and (ii), in the ordinary course of business,
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and in an aggregate amount for all such investments described in the
foregoing clauses (i) and (ii) not to exceed $100,000,000 at any one
time from and after the Closing Date, provided that (x) any loans,
advances and capital contributions that are made to the Borrower or
any such Subsidiary or Foreign Subsidiary for the sole purpose of the
Borrower or such Subsidiary or Foreign Subsidiary making a loan,
advance or capital contribution to the Borrower or another Subsidiary
or Foreign Subsidiary, shall be deemed to have been made only to the
ultimate recipient of such funds and (y) the aggregate amount of
loans, advances and capital contributions to Probel S.A. may not
exceed $100,000 from and after the Closing Date;
(f) capital contributions, investments or transfers in
connection with transactions permitted by subsection 8.5;
(g) loans and advances to employees of the Borrower or its
Subsidiaries for travel, entertainment and relocation expenses in the
ordinary course of business;
(h) (i) loans and advances by any Subsidiary to the Borrower
and (ii) loans and advances by any Subsidiary to any other Subsidiary
which is a guarantor under any Guarantee;
(i) any Foreign Subsidiary may make loans, advances and
capital contributions to any other Foreign Subsidiary;
(j) any Wholly Owned Subsidiary organized under the laws
of any jurisdiction in the United States may make loans, advances and
capital contributions to any other Wholly Owned Subsidiary organized
under the laws or any jurisdiction in the United States;
(k) the acquisition, directly or indirectly, of the stock
of CISA not currently owned by the Borrower or its Subsidiaries;
(l) loans to Management Investors in connection with stock
purchases in an aggregate principal amount not exceeding $4,000,000 at
any one time outstanding;
(m) capital contributions to any Foreign Subsidiary organized
under the laws of Italy in an amount not to exceed $40,000,000;
(n) capital contributions to any Foreign Subsidiary organized
under the laws of Poland in an amount not to exceed $5,000,000;
(o) (i) loans or participating interests in loans made to
Lear Italia, provided Lear Italia is permitted to incur such
Indebtedness pursuant to subsection 8.2(m) and (ii)
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79
investments in high quality debt instruments acceptable to the Agent,
having a cost not exceeding the purchase price of the Fiat Seat
Business, and which are pledged to secure Indebtedness permitted
pursuant to subsection 8.2(m) or Guarantee Obligations permitted
pursuant to subsection 8.4(f);
(p) the transactions contemplated by the Tender Offer, the
Merger and the Acquisition;
(q) the purchase by the Borrower of participating interests
in loans to Foreign Subsidiaries; provided that the amount of each
such participating interest does not exceed the amount which the
Borrower would otherwise be permitted to lend or contribute to such
Foreign Subsidiaries pursuant to this subsection 8.9;
(r) investments or loans by the Borrower or its Subsidiaries
to AIHI or its Subsidiaries to refinance Indebtedness of AIHI and its
Subsidiaries outstanding as of the Closing Date;
(s) investments, loans and advances, which are in existence
on the Closing Date, among AIHI and its Subsidiaries; and
(t) other loans, advances or other investments up to an
aggregate amount not to exceed $5,000,000.
8.10 Limitation on Optional Payments and Modification of Debt
Instruments. (a) Prepay, purchase, redeem, retire, defease or otherwise
acquire, or make any payment on account of any principal of, interest on, or
premium payable in connection with the prepayment, redemption or retirement of
any outstanding Subordinated Debt, except that the Borrower may prepay,
purchase or redeem Subordinated Debt with the proceeds of the issuance of other
subordinated Indebtedness of the Borrower; provided that either (i) the
principal terms of such other subordinated Indebtedness are no more restrictive
to the Borrower and its Subsidiaries than the principal terms of the
Subordinated Notes or (ii) the terms and conditions of the other subordinated
Indebtedness are reasonably satisfactory to the Agent or (b) without the
consent of the Agent, amend, modify or change, or consent or agree to any
amendment, modification or change to any of the terms of any Subordinated Debt
(except that without the consent of the Agent or any Bank, the terms of the
Subordinated Debt may be amended, modified or changed if such amendment,
modification or change would extend the maturity or reduce the amount of any
payment of principal thereof, would reduce the rate or extend the date for
payment of interest thereon, would eliminate covenants (other than covenants
with respect to subordination to Indebtedness under this Agreement) or defaults
in such Subordinated Debt or would make such covenants or defaults less
restrictive); provided that, notwithstanding any
<PAGE> 85
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provision contained in this subsection 8.10, if no Default or Event of Default
has occurred and is continuing or would occur and be continuing as a result of
the following, the Subordinated Debt may be prepaid (A) in an amount equal to
the net proceeds of any public offering of common stock of the Borrower
occurring after the Closing Date and (B) in addition to any prepayment
permitted pursuant to clause (A) above, in an amount not to exceed $135,000,000
in the aggregate; provided, that prior to December 31, 1995, prepayments
permitted pursuant to clause (B) above shall not exceed $100,000,000 in the
aggregate.
8.11 Transactions with Affiliates. (a) Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transactions are otherwise permitted under this Agreement, the
Stockholders Agreement or the Subscription Agreements as in effect on the date
hereof, or such transactions are in the ordinary course of the Borrower's or
such Subsidiary's business and are upon fair and reasonable terms no less
favorable to the Borrower or such Subsidiary, as the case may be, than it would
obtain in a comparable arm's length transaction with a Person not an Affiliate;
provided, however, that the Borrower may engage Lehman Brothers Inc., The
Cypress Group, LLC, FIMA or any Affiliate of Lehman Brothers Inc., The Cypress
Group, LLC or FIMA as financial advisor, underwriter, broker, dealer-manager or
finder in connection with any transaction at the then customary market rates
for similar services.
8.12 Sale and Leaseback. Enter into any arrangement with any
Person providing for the leasing by the Borrower or any Subsidiary of real or
personal property which has been or is to be sold or transferred by the
Borrower or such Subsidiary to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations of the Borrower or such Subsidiary except that the
Borrower or any Subsidiary may enter into such transactions provided that the
fair market value of the real or personal property sold or transferred by the
Borrower or such Subsidiary does not exceed $50,000,000 in the aggregate.
8.13 Corporate Documents. Amend its Certificate of
Incorporation or By-Laws, each as in effect on the Closing Date, in any way
adverse to the interests of the Agent and the Banks.
8.14 Fiscal Year. Permit the fiscal year of the Borrower to
end on a day other than December 31.
8.15 Limitation on Restrictions Affecting Subsidiaries.
Enter into any agreement with any Person other than the Banks pursuant hereto
which prohibits or limits the ability of any Subsidiary to (a) pay dividends or
make other distributions or pay any Indebtedness owed to the Borrower or any
Subsidiary, (b) make loans or advances to the Borrower or any
<PAGE> 86
81
Subsidiary, (c) transfer any of its properties or assets to the Borrower or any
Subsidiary or (d) create, incur, assume or suffer to exist any Lien upon any of
its property, assets or revenues, whether now owned or hereafter acquired,
except (i) for any such restrictions existing by reasons of Contractual
Obligations listed on Schedule 8.15 and (ii) with respect to clauses (c) and
(d) above, agreements granting a Lien on such Subsidiary's assets which is
permitted by subsection 8.3.
8.16 Hazardous Materials. Release, discharge or otherwise
dispose of any Hazardous Material on any of the Mortgaged Properties or permit
the manufacture, storage, transmission or presence of any Hazardous Material
over or upon any of the Mortgaged Properties except in accordance in all
material respects with all Environmental Laws.
8.17 Special Purpose Subsidiary. Permit (a) any Special
Purpose Subsidiary to engage in any business other than Receivables Financing
Transactions and activities directly related thereto or (b) at any time the
Borrower or any of its Subsidiaries (other than a Special Purpose Subsidiary)
or any of their respective assets to incur any liability, direct or indirect,
contingent or otherwise, in respect of any obligation of a Special Purpose
Subsidiary whether arising under or in connection with any Receivables
Financing Transaction or otherwise.
8.18 Subsidiaries. Create, acquire or otherwise suffer to
exist any Subsidiary which was not a direct or indirect Subsidiary on the
Closing Date unless either (a) such new Subsidiary is organized under the laws
of a jurisdiction within the United States and (i) is party to a Guarantee
Supplement and (ii) all of the common stock of such new Subsidiary owned
directly or indirectly by the Borrower is pledged to the Agent, for the ratable
benefit of the Banks, pursuant to a pledge agreement in form and substance
satisfactory to the Agent or (b) such new Subsidiary is a Foreign Subsidiary;
provided that a Special Purpose Subsidiary shall not be required to enter into
a Guarantee Supplement pursuant to this subsection 8.18.
SECTION 9. EVENTS OF DEFAULT
Upon the occurrence of any of the following events:
(a) The Borrower shall fail to pay (i) any principal of any
Notes when due (whether at the stated maturity, by acceleration or
otherwise) in accordance with the terms thereof or hereof or (ii) any
interest on any Notes, or any fee or other amount payable hereunder,
within five days after any such interest, fee or other amount becomes
due in accordance with the terms thereof or hereof; or
<PAGE> 87
82
(b) Any representation or warranty made or deemed made by the
Borrower or any other Loan Party herein or in any other Loan Document
or which is contained in any certificate, document or financial or
other statement furnished at any time under or in connection with this
Agreement or any other Loan Document shall prove to have been
incorrect in any material respect on or as of the date made or deemed
made; or
(c) The Borrower or any other Loan Party shall default in the
observance or performance of (i) any negative covenant contained in
Section 8 or in any Security Document to which it is a party or (ii)
any covenant contained in subsection 7.12; or
(d) The Borrower or any other Loan Party shall default in the
observance or performance of any other agreement contained in this
Agreement or any other Loan Document other than as provided in (a)
through (c) above, and such default shall continue unremedied for a
period of 30 days; or
(e) Any Loan Document shall cease, for any reason, to be in
full force and effect, or the Borrower or any other Loan Party shall
so assert; or any security interest created by any of the Security
Documents shall cease to be enforceable and of the same effect and
priority purported to be created thereby, except, in each case, as
provided in subsection 11.13; or
(f) The Subsidiary Guarantee shall cease, for any reason, to
be in full force and effect, or any guarantor thereunder shall so
assert; or
(g) The subordination provisions contained in any instrument
pursuant to which the Subordinated Debt was created or in any
instrument evidencing such Subordinated Debt shall cease, for any
reason, to be in full force and effect or enforceable in accordance
with their terms; or
(h) The Borrower or any of its Subsidiaries shall (i) default
in any payment of principal of or interest on any Indebtedness (other
than the Notes), in the payment of any Guarantee Obligation or in the
payment of any Interest Rate Agreement Obligation, in any case where
the principal amount thereof then outstanding exceeds $20,000,000
beyond the period of grace (not to exceed 30 days), if any, provided
in the instrument or agreement under which such Indebtedness,
Guarantee Obligation or Interest Rate Agreement Obligation was
created; or (ii) default in the observance or performance of any other
agreement or condition relating to any such Indebtedness, Guarantee
Obligation or Interest Rate Agreement Obligation or contained in any
instrument or agreement evidencing, securing or relating thereto, or
any other event shall occur or condition exist, the effect of
<PAGE> 88
83
which default or other event or condition is to cause, or to permit
the holder or holders of such Indebtedness or, beneficiary or
beneficiaries of such Guarantee Obligation (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries) to
cause, with the giving of notice if required, such Indebtedness to
become due prior to its stated maturity or such Guarantee Obligation
to become payable; or
(i) (i) The Borrower or any Material Subsidiary shall
commence any case, proceeding or other action (A) under any existing
or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking
to have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian or other similar
official for it or for all or any substantial part of its assets, or
the Borrower or any Material Subsidiary shall make a general
assignment for the benefit of its creditors; or (ii) there shall be
commenced against the Borrower or any Material Subsidiary any case,
proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged
or unbonded for a period of 60 days; or (iii) there shall be commenced
against the Borrower or any Material Subsidiary any case, proceeding
or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial
part of its assets which results in the entry of an order for any such
relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within 60 days from the entry thereof; or (iv)
the Borrower or any Material Subsidiary shall take any action in
furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or
(iii) above; or (v) the Borrower or any Material Subsidiary shall
generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due; or
(j) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of
the Code) involving any Plan, (ii) any "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not
waived, shall exist with respect to any Single Employer Plan, (iii) a
Reportable Event shall occur with respect to, or proceedings shall
commence to have a trustee appointed, or a trustee shall be appointed,
to administer or to terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or
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84
appointment of a trustee is, in the reasonable opinion of the Required
Banks, likely to result in the termination of such Plan for purposes
of Title IV of ERISA, (iv) any Single Employer Plan shall terminate
for purposes of Title IV of ERISA, (v) the Borrower or any Commonly
Controlled Entity shall, or in the reasonable opinion of the Required
Banks is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur or
exist, with respect to a Plan; and in each case in clauses (i) through
(vi) above, such event or condition, together with all other such
events or conditions, if any, could subject the Borrower or any of its
Subsidiaries to any tax, penalty or other liabilities in the aggregate
material in relation to the business, operations, property or
financial or other condition of the Borrower and its Subsidiaries
taken as a whole; or
(k) One or more judgments or decrees shall be entered against
the Borrower or any of its Subsidiaries involving in the aggregate a
liability (not paid or fully covered by insurance) of $5,000,000 or
more and all such judgments or decrees shall not have been vacated,
discharged, stayed or bonded pending appeal within 30 days from the
entry thereof; or
(l) (i) Any Person or "group" (within the meaning of Section
13(d) or 14(d) of the Exchange Act) (other than FIMA, the Merchant
Banking Partnerships, The Cypress Group, LLC and the officers and
directors of the Borrower) (A) shall have acquired beneficial
ownership of 35% or more of any outstanding class of capital stock of
the Borrower having ordinary voting power in the election of directors
or (B) shall obtain the power (whether or not exercised) to elect a
majority of the Borrower's directors or (ii) the Board of Directors of
the Borrower shall not consist of a majority of Continuing Directors;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (i) above with respect of the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under
this Agreement, the Letters of Credit and the Notes shall immediately become
due and payable, and (B) if such event is any other Event of Default, any of
the following actions may be taken: (i) with the consent of the Required
Banks, the Agent may, or upon the request of the Required Banks, the Agent
shall, by notice to the Borrower declare the Commitments to be terminated
forthwith, whereupon the Commitments shall immediately terminate; (ii) with the
consent of the Required Banks, the Agent may, or upon the direction of the
Required Banks, the Agent shall, by notice of default to the Borrower, declare
the Loans hereunder (with accrued interest thereon) and all other amounts owing
under this
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85
Agreement (including amounts payable in respect of Letters of Credit whether or
not the beneficiaries thereof shall have presented the drafts and other
documents required thereunder) and the Notes to be due and payable forthwith,
whereupon the same shall immediately become due and payable and (iii) the Agent
may, and upon the direction of the Required Banks shall, exercise any and all
remedies and other rights provided pursuant to this Agreement and/or the other
Loan Documents. Except as expressly provided above in this Section,
presentment, demand, protest and all other notices of any kind are hereby
expressly waived.
SECTION 10. THE AGENT
10.1 Appointment. Each Bank hereby irrevocably designates
and appoints Chemical Bank as the Agent of such Bank under this Agreement, and
each Bank irrevocably authorizes Chemical Bank, as the Agent for such Bank, to
take such action on its behalf under the provisions of this Agreement and the
other Loan Documents and to exercise such powers and perform such duties as are
expressly delegated to the Agent by the terms of this Agreement and such other
Loan Documents, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere in this
Agreement or such other Loan Documents, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein and therein, or any
fiduciary relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or the other Loan Documents or otherwise exist against the Agent.
Notwithstanding anything to the contrary contained in this Agreement, the
parties hereto hereby agree that no Managing Agent, Co-Agent or Lead Manager
identified on the signature pages hereof shall have any rights, duties or
responsibilities in its capacity as Managing Agent, Co-Agent or Lead Manager,
as the case may be, and that no Managing Agent, Co-Agent or Lead Manager shall
have the authority to take any action hereunder in its capacity as such.
10.2 Delegation of Duties. The Agent may execute any of its
duties under this Agreement and the other Loan Documents by or through agents
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys in-fact selected by it with
reasonable care.
10.3 Exculpatory Provisions. Neither the Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or Affiliates
shall be (i) liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection with this Agreement or the other Loan
Documents (except for its or such Person's own gross negligence or willful
misconduct), or (ii) responsible in any manner to any
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86
of the Banks for any recitals, statements, representations or warranties made
by the Borrower, any other Loan Party or any officer thereof contained in this
Agreement or the other Loan Documents or in any certificate, report, statement
or other document referred to or provided for in, or received by the Agent
under or in connection with, this Agreement or the other Loan Documents or for
the value, validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement or the other Loan Documents or for any failure of the
Borrower or any other Loan Party to perform its obligations hereunder or
thereunder. The Agent shall not be under any obligation to any Bank to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement, or to inspect the
properties, books or records of the Borrower.
10.4 Reliance by Agent. The Agent shall be entitled to rely,
and shall be fully protected in relying, upon any Note, writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower), independent
accountants and other experts selected by the Agent. The Agent may deem and
treat the payee of any Note as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have been
filed with the Agent. The Agent shall be fully justified in failing or
refusing to take any action under this Agreement and the other Loan Documents
unless it shall first receive such advice or concurrence of the Required Banks
as it deems appropriate or it shall first be indemnified to its satisfaction by
the Banks against any and all liability and expense which may be incurred by it
by reason of taking or continuing to take any such action. The Agent shall in
all cases be fully protected in acting, or in refraining from acting, under
this Agreement and the Notes in accordance with a request of the Required Banks
(or, when required hereunder, all of the Banks), and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Banks and all future holders of the Notes.
10.5 Notice of Default. The Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Bank or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the Agent
receives such a notice, the Agent shall promptly give notice thereof to the
Banks. The Agent shall take such action with respect to such Default or Event
of Default as shall be reasonably directed by the Required Banks; provided that
unless and until the Agent shall have received such directions, the Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default or
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Event of Default as it shall deem advisable in the best interests of the Banks.
10.6 Non-Reliance on Agent and Other Banks. Each Bank
expressly acknowledges that neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of the Borrower or the other Loan
Parties, shall be deemed to constitute any representation or warranty by the
Agent to any Bank. Each Bank represents to the Agent that it has,
independently and without reliance upon the Agent, the Managing Agents or any
other Bank, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the
Borrower and the other Loan Parties and made its own decision to make its Loans
hereunder and enter into this Agreement. Each Bank also represents that it
will, independently and without reliance upon the Agent, the Managing Agents or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement and the other
Loan Documents, and to make such investigation as it deems necessary to inform
itself as to the business, operations, property, financial and other condition
and creditworthiness of the Borrower and the other Loan Parties. Except for
notices, reports and other documents expressly required to be furnished to the
Banks by the Agent hereunder or by the other Loan Documents, the Agent shall
not have any duty or responsibility to provide any Bank with any credit or
other information concerning the business, operations, property, financial and
other condition or creditworthiness of the Borrower and the other Loan Parties
which may come into the possession of the Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
10.7 Indemnification. The Banks agree to indemnify the Agent
in its capacity as such (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably according to
the respective amounts of their original Commitments, from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever which may at any
time (including without limitation at any time following the payment of the
Notes) be imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of this Agreement or the other Loan Documents, or
any documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or any action taken or omitted by
the Agent under or in connection with any of the foregoing; provided that no
Bank shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or
<PAGE> 93
88
disbursements resulting solely from the Agent's gross negligence or willful
misconduct. The agreements in this subsection shall survive the payment of the
Notes and all other amounts payable hereunder.
10.8 Agent in Its Individual Capacity. The Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Borrower and the other Loan Parties as though the
Agent were not the Agent hereunder. With respect to its Loans made or renewed
by it and any Note issued to it, the Agent shall have the same rights and
powers under this Agreement and the other Loan Documents as any Bank and may
exercise the same as though it were not the Agent, and the terms "Bank" and
"Banks" shall include the Agent in its individual capacity.
10.9 Successor Agent. The Agent may resign as Agent upon ten
days' notice to the Banks. If the Agent shall resign as Agent under this
Agreement, then the Required Banks shall appoint from among the Banks a
successor agent for the Banks which successor agent shall be approved by the
Borrower (which consent shall not be unreasonably withheld), whereupon such
successor agent shall succeed to the rights, powers and duties of the Agent,
and the term "Agent" shall mean such successor agent effective upon its
appointment, and the former Agent's rights, powers and duties as Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent or any of the parties to this Agreement or any holders of the Notes.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this subsection 10.9 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under this Agreement.
SECTION 11. MISCELLANEOUS
11.1 Amendments and Waivers. Neither this Agreement, any
Note or any other Loan Document, nor any terms hereof or thereof may be
amended, supplemented or modified except in accordance with the provisions of
this subsection. With the written consent of the Required Banks, the Agent and
the Borrower may, from time to time, enter into written amendments, supplements
or modifications hereto for the purpose of adding any provisions to this
Agreement, the Notes, or the other Loan Documents to which the Borrower is a
party or changing in any manner the rights of the Banks or of the Borrower
hereunder or thereunder or waiving, on such terms and conditions as the Agent
may specify in such instrument, any of the requirements of this Agreement or
the Notes or the other Loan Documents to which the Borrower is a party or any
Default or Event of Default and its consequences; provided, however, that no
such waiver and no such amendment, supplement or modification shall directly
(a) extend the expiry date of any Letter of Credit beyond the Termination Date
or extend the maturity of any Note, or reduce the rate or
<PAGE> 94
89
extend the time of payment of interest thereon, or reduce any fee, or extend
the time of payment of such fee, payable to the Banks hereunder, or reduce the
principal amount thereof, or increase the amount of any Bank's Commitment or
amend, modify or waive any provision of subsection 2.8 or this subsection 11.1
or reduce the percentage specified in the definition of Required Banks, or
consent to the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement, or release all or substantially all the
collateral security under the Security Documents, in each case without the
written consent of all the Banks, or (b) amend, modify or waive any provision
of Section 10 without the written consent of the then Agent or (c) except as
provided in subsection 11.13, release less than all or substantially all of the
collateral security under the Security Documents having a fair market value (as
determined in good faith by the Board of Directors (or the executive committee
thereof) of the Borrower and evidenced by a certificate delivered to the Agent)
in excess of $25,000,000 in the aggregate while this Agreement is in effect
without the written consent of the Required Banks. Any such waiver and any
such amendment, supplement or modification shall apply equally to each of the
Banks and shall be binding upon the Borrower, the Banks, the Agent and all
future holders of the Notes. In the case of any waiver, the Borrower, the
Banks and the Agent shall be restored to their former position and rights
hereunder and under the outstanding Notes, and any Default or Event of Default
waived shall be deemed to be cured and not continuing; but no such waiver shall
extend to any subsequent or other Default or Event of Default, or impair any
right consequent thereon.
11.2 Notices. All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing (including by
telegraph or telecopy), and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made when delivered by hand, or five days
after being deposited in the mail, postage prepaid, or, in the case of
telegraph or telecopy notice, when sent and receipt has been confirmed,
addressed as follows in the case of the Borrower and the Agent, and as set
forth in Schedule 1.1(a) in the case of the other parties hereto, or to such
other address as may be hereafter notified by the respective parties hereto and
any future holders of the Notes:
The Borrower: Lear Seating Corporation
21557 Telegraph Road
Southfield, Michigan 48034
Attention: Donald J. Stebbins
Telecopy: (810) 746-1593
The Agent: Chemical Bank
270 Park Avenue
New York, New York 10017
Attention: Rosemary Bradley
Telecopy: (212) 972-0009
<PAGE> 95
90
; provided that any notice, request or demand to or upon the Agent or the Banks
pursuant to subsections 2.3, 2.4, 2.6, 2.8 and 2.9 shall not be effective until
received.
11.3 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Agent or any Bank, any right,
remedy, power or privilege hereunder or under the Loan Documents, shall operate
as a waiver thereof; nor shall any single or partial exercise of any right,
remedy, power or privilege hereunder or thereunder preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided or
provided in the Loan Documents are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.
11.4 Survival of Representations and Warranties. All
representations and warranties made hereunder, in the other Loan Documents and
in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement,
the Letters of Credit and the Notes.
11.5 Payment of Expenses and Taxes. The Borrower agrees (a)
to pay or reimburse the Agent for all its reasonable out-of-pocket costs and
reasonable expenses incurred in connection with the development, preparation
and execution of, and any amendment, supplement or modification to, this
Agreement, the Notes, the Letters of Credit and the other Loan Documents and
any other documents prepared in connection herewith or therewith, and the
consummation of the transactions contemplated hereby and thereby, including,
without limitation, the reasonable fees and disbursements of counsel to the
Agent, (b) to pay or reimburse each Bank and the Agent for all their costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the Notes, the Letters of Credit and any such
other documents, including, without limitation, fees and disbursements of
counsel to the Agent and the reasonable fees and disbursements of counsel to
the several Banks, and (c) to pay, indemnify, and hold each Bank and the Agent
and their respective directors, officers, employees and agents harmless from,
any and all recording and filing fees and any and all liabilities with respect
to, or resulting from any delay in paying, stamp, excise and other taxes, if
any, which may be payable or determined to be payable in connection with the
execution and delivery of, or consummation of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement, the Notes, the Letters of
Credit and any such other documents, and (d) to pay, indemnify, and hold each
Bank and the Agent harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and
<PAGE> 96
91
administration of this Agreement, the Notes, the Letters of Credit and the
other Loan Documents, the use or proposed use by the Borrower of the proceeds
of the Loans (all the foregoing, collectively, the "indemnified liabilities");
provided that the Borrower shall have no obligation hereunder to the Agent or
any Bank with respect to indemnified liabilities arising from the gross
negligence or willful misconduct of the Agent or any such Bank as finally
determined by a court of competent jurisdiction. The agreements in this
subsection shall survive repayment of the Notes and all other amounts payable
hereunder.
11.6 Successors and Assigns; Participations; Purchasing
Banks. (a) This Agreement shall be binding upon and inure to the benefit of
the Borrower, the Banks, the Agent, all future holders of the Notes and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the
prior written consent of each Bank.
(b) Any Bank may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time sell to one
or more banks or other entities ("Participants") participating interests in any
Loan owing to such Bank, any Note held by such Bank, any Letter of Credit
Participating Interest of such Bank, any Commitment of such Bank or any other
interest of such Bank hereunder. In the event of any such sale by a Bank of
participating interests to a Participant, such Bank's obligations under this
Agreement to the other parties to this Agreement shall remain unchanged, such
Bank shall remain solely responsible for the performance thereof, such Bank
shall remain the holder of any such Note for all purposes under this Agreement
and the Borrower and the Agent shall continue to deal solely and directly with
such Bank in connection with such Bank's rights and obligations under this
Agreement. The Borrower agrees that if amounts outstanding under this
Agreement, the Letter of Credit and the Notes are due and unpaid, or shall have
been declared or shall have become due and payable upon the occurrence of an
Event of Default, each Participant shall be deemed to have the right of setoff
in respect of its participating interest in amounts owing under this Agreement,
any Letter of Credit and any Note to the same extent as if the amount of its
participating interest were owing directly to it as a Bank under this Agreement
or any Note; provided that such right of setoff shall be subject to the
obligation of such Participant to share with the Banks, and the Banks agree to
share with such Participant, as provided in subsection 11.7. The Borrower also
agrees that each Participant shall be entitled to the benefits of subsections
2.11, 2.12, 2.13, 2.14, 3.5 and 11.5 with respect to its participation in the
Commitments and the Loans and Letters of Credit outstanding from time to time;
provided that no Participant shall be entitled to receive any greater amount
pursuant to such subsections than the transferor Bank would have been entitled
to receive in respect of the amount of the
<PAGE> 97
92
participation transferred by such transferor Bank to such Participant had no
such transfer occurred.
(c) Any Bank may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time sell to any
Bank or any affiliate thereof, and, subject to the limitations set forth in the
proviso to this sentence and with the consent of the Borrower and the Agent
(which in each case shall not be unreasonably withheld) to one or more
additional banks or financial institutions ("Purchasing Banks") all or any part
of its rights and obligations under this Agreement and the Notes, pursuant to
an Assignment and Acceptance, executed by such Purchasing Bank, such transferor
Bank (and, in the case of a Purchasing Bank that is not then a Bank or an
affiliate thereof, by the Borrower and the Agent), and delivered to the Agent
for its acceptance and recording in the Register; provided, however, that (i)
the Commitment purchased by any such Purchasing Bank that is not then a Bank
shall be equal to or greater than $15,000,000 and (ii) the transferor Bank
which has transferred part of its Commitment to any such Purchasing Bank shall
retain a Commitment, after giving effect to such sale, equal to or greater than
$15,000,000. Upon such execution, delivery, acceptance and recording, from and
after the Transfer Effective Date determined pursuant to such Assignment and
Acceptance, (x) the Purchasing Bank thereunder shall be a party hereto and, to
the extent provided in such Assignment and Acceptance, have the rights and
obligations of a Bank hereunder with a Commitment as set forth therein, and (y)
the transferor Bank thereunder shall, to the extent provided in such Assignment
and Acceptance, be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining portion
of a transferor Bank's rights and obligations under this Agreement, such
transferor Bank shall cease to be a party hereto). Such Assignment and
Acceptance shall be deemed to amend this Agreement to the extent, and only to
the extent, necessary to reflect the addition of such Purchasing Bank and the
resulting adjustment of Commitment Percentages arising from the purchase by
such Purchasing Bank of all or a portion of the rights and obligations of such
transferor Bank under this Agreement and the Notes. On or prior to the
Transfer Effective Date determined pursuant to such Assignment and Acceptance,
the Borrower, at its own expense, shall execute and deliver to the Agent in
exchange for the surrendered Revolving Credit Note a new Revolving Credit Note
to the order of such Purchasing Bank in an amount equal to the Commitment
assumed by it pursuant to such Assignment and Acceptance and, if the transferor
Bank has retained a Commitment hereunder, a new Revolving Credit Note to the
order of the transferor Bank in an amount equal to the Commitment retained by
it hereunder. Such new Note shall be dated the Closing Date and shall
otherwise be in the form of the Note replaced thereby. The Note surrendered by
the transferor Bank shall be returned by the Agent to the Borrower marked
"cancelled". If any Letter of Credit Participation Certificates have been
issued to the transferor
<PAGE> 98
93
Bank and are then outstanding, new certificates shall be issued in the
appropriate amounts by the Issuing Bank to the Purchasing Bank and, if
appropriate, the transferor Bank, as promptly as practicable after the Transfer
Effective Date.
(d) The Agent shall maintain at its address referred to in
subsection 11.2 a copy of each Assignment and Acceptance delivered to it and a
register (the "Register") for the recordation of the names and addresses of the
Banks and the Commitment of, and principal amount of the Loans owing to, each
Bank from time to time. The entries in the Register shall be conclusive, in
the absence of manifest error, and the Borrower, the Agent and the Banks may
treat each Person whose name is recorded in the Register as the owner of the
Loan recorded therein for all purposes of this Agreement. The Register shall
be available for inspection by the Borrower or any Bank at any reasonable time
and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed
by a transferor Bank and a Purchasing Bank (and, in the case of a Purchasing
Bank that is not then a Bank or an affiliate thereof, by the Borrower and the
Agent) together with payment by the Purchasing Bank to the Agent of a
registration and processing fee of $2,500, the Agent shall (i) promptly accept
such Assignment and Acceptance (ii) on the Transfer Effective Date determined
pursuant thereto record the information contained therein in the Register and
give notice of such acceptance and recordation to the Banks and the Borrower.
(f) The Borrower authorizes each Bank to disclose to any
Participant or Purchasing Bank (each, a "Transferee") and any prospective
Transferee any and all financial information in such Bank's possession
concerning the Borrower and its affiliates which has been delivered to such
Bank by or on behalf of the Borrower pursuant to this Agreement or which has
been delivered to such Bank by or on behalf of the Borrower in connection with
such Bank's credit evaluation of the Borrower and its affiliates prior to
becoming a party to this Agreement; provided that the prospective Transferee
shall agree to maintain the confidentiality of such information pursuant to
subsection 11.10.
(g) If, pursuant to this subsection, any interest in this
Agreement, any Note or any Letter of Credit is transferred to any Transferee
which is organized under the laws of any jurisdiction other than the United
States or any State thereof, the transferor Bank shall cause such Transferee,
concurrently with the effectiveness of such transfer, (i) to represent to the
transferor Bank (for the benefit of the transferor Bank, the Agent and the
Borrower) that under applicable law and treaties no taxes will be required to
be withheld by the Agent, the Borrower or the transferor Bank with respect to
any payments to be made to such Transferee in respect of the Loans or the
Letters of Credit, (ii) to furnish to the transferor Bank, the Agent and the
<PAGE> 99
94
Borrower either U.S. Internal Revenue Service Form 4224 or U.S. Internal
Revenue Service Form 1001 or successor applicable form, as the case may be,
certifying in each case that the Transferee is entitled to receive payments
under this Agreement without deduction or withholding of any United States
federal income taxes, (iii) an Internal Revenue Service Form W-8 or W-9 or
successor applicable form, as the case may be, establish an exemption from
United States backup withholding taxes, and (iv) to agree (for the benefit of
the transferor Bank, the Agent and the Borrower) to provide the transferor
Bank, the Agent and the Borrower a new Form 4224 or Form 1001 and from W-8 or
W-9, or successor applicable forms, or other manner of certification, as the
case may be, on or before the date that any such letter or from expires or
becomes obsolete or after the occurrence of any event requiring change in the
most recent letter and from previously delivered by it to the Borrower, and
such extensions or renewals thereof as may reasonably be requested by the
Borrower, certifying in the case of a Form 1001 or 4224 that such Transferee is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes, unless in any such cases
an event (including without limitation any change in treaty, law or regulation)
has occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent the
Transferee from duly completing and delivering any such letter or from with
respect to it and such Transferee advises the transferor Bank, the Agent and
the Borrower that it is not capable of receiving payments without any deduction
or withholdings of United States federal income tax, and in the case of a Form
W-8 or W-9, establishing an exemption from United States backup withholding
tax.
(h) Nothing herein shall prohibit any Bank from pledging or
assigning any Note to any Federal Reserve Bank in accordance with applicable
law.
11.7 Adjustments; Set-off. (a) If any Bank (a "benefitted
Bank") shall at any time receive any payment of all or part of its Loans,
interest thereon or participations in Letters of Credit, or receive any
collateral in respect thereof (whether voluntarily or involuntarily, by
set-off, pursuant to events or proceedings of the nature referred to in clause
(i) of Section 9, or otherwise) in a greater proportion than any such payment
to and collateral received by any other Bank, if any, in respect of such other
Bank's Loans, or interest thereon, such benefitted Bank shall purchase for cash
from the other Banks such portion of each such other Bank's Loan, or shall
provide such other Banks with the benefits of any such collateral, or the
proceeds thereof, as shall be necessary to cause such benefitted Bank to share
the excess payment or benefits of such collateral or proceeds ratably with each
of the Banks; provided, however, that if all or any portion of such excess
payment or benefits is thereafter recovered from such benefitted Bank, such
purchase shall be rescinded, and the purchase price and benefits returned,
<PAGE> 100
95
to the extent of such recovery, but without interest. The Borrower agrees that
each Bank so purchasing a portion of another Bank's Loan may exercise all
rights of payment (including, without limitation, rights of set-off) with
respect to such portion as fully as if such Bank were the direct holder of such
portion.
(b) In addition to any rights and remedies of the Banks
provided by law, each Bank shall have the right, without prior notice to the
Borrower, any such notice being expressly waived by the Borrower to the extent
permitted by applicable law, upon the occurrence and continuance of a Default
and any amount becoming due and payable by the Borrower hereunder or under the
Notes (whether at the stated maturity, by acceleration or otherwise) to set-off
and appropriate and apply against such amount any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case whether direct
or indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Bank or any branch or agency thereof to or for the credit or the
account of the Borrower. Each Bank agrees promptly to notify the Borrower and
the Agent after any such set-off and application made by such Bank, provided
that the failure to give such notice shall not affect the validity of such
set-off and application.
11.8 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument. A set of the copies of this Agreement signed by all
the parties shall be lodged with the Borrower and the Agent.
11.9 GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTES SHALL
BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK.
11.10 Confidentiality. Each Bank and the Issuing Bank agrees
to take normal and reasonable precautions to maintain the confidentiality of
information designated in writing as confidential and provided to it by the
Borrower or any Subsidiary in connection with this Agreement; provided,
however, that any Bank may disclose such information (a) at the request of any
bank regulatory authority or in connection with an examination of such Bank by
any such authority, (b) pursuant to subpoena or other court process, (c) when
required to do so in accordance with the provisions of any applicable law, (d)
at the discretion of any other Governmental Authority, (e) to such Bank's
Affiliates, independent auditors and other professional advisors or (f) to any
Transferee or potential Transferee; provided that such Transferee agrees to
comply with the provisions of this subsection 11.10.
<PAGE> 101
96
11.11 Submission to Jurisdiction; Waivers. The Borrower
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal
action or proceeding relating to this Agreement or any other Loan
Document to which it is a party, or for recognition and enforcement of
any judgment in respect thereof, to the non-exclusive general
jurisdiction of the courts of the State of New York, the courts of the
United States of America for the Southern District of New York, and
appellate courts from any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives trial by jury and any objection that
it may now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding was
brought in an inconvenient court and agrees not to plead or claim the
same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to the Borrower, as the case may be, at its address set forth
in subsection 11.2 or at such other address of which the Agent shall
have been notified pursuant thereto; and
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction.
11.12 Existing Credit Agreement. (a) On the Closing Date,
all outstanding letters of credit under the Existing Credit Agreement set forth
on Schedule 3.1 shall be converted into Letters of Credit hereunder on the
terms and conditions set forth in this Agreement.
(b) The Required Banks (as defined in the Existing Credit
Agreement) hereby waive compliance by the Borrower of its obligations under
subsections 2.8 and 2.9 of the Existing Credit Agreement to notify the Agent of
its intention to terminate the "Commitments" and prepay "Loans" under (and as
defined in) the Existing Credit Agreement within the time periods specified in
such subsections.
11.13 Release of Collateral. (a) The Banks hereby agree
with the Borrower, and hereby instruct the Agent, that if (i) the implied
senior long-term unsecured debt securities of the Borrower are rated at least
BBB- by Standard and Poor's Ratings Group and at least BAA3 by Moody's
Investors Service, Inc., (ii) the Agent has no actual knowledge of the
existence of a Default and (iii) the Borrower shall have delivered a
certificate of a Responsible Officer stating that such Responsible Officer has
<PAGE> 102
97
obtained no knowledge of any Default or Event of Default, the Agent shall, at
the request and expense of the Borrower, take such actions as shall be
reasonably requested by the Borrower to release its security interest in all
collateral held by it pursuant to the Security Documents.
(b) The Banks hereby agree with the Borrower, and hereby
instruct the Agent, that upon any sale (i) of accounts receivable permitted by
this Agreement or (ii) of any assets permitted by subsection 8.6(f) or upon any
transfer of assets pursuant to the last sentence of subsection 8.5, the Agent
shall release, to the extent necessary, its security interest in such accounts
receivable or such assets, as the case may be.
(c) The Banks hereby agree with the Borrower and hereby
instruct the Agent to release its security interest in assets on which Liens
are being created by the Borrower or any Subsidiary as permitted by subsection
8.3(m).
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered in New York, New York by their
proper and duly authorized officers as of the day and year first above written.
LEAR SEATING CORPORATION
By:________________________________
Title:
CHEMICAL BANK, as Agent and as
a Bank
By:________________________________
Title:
ABN AMRO BANK N.V., as a Co-Agent
and as a Lender
By:________________________________
Title:
By:________________________________
Title:
<PAGE> 103
THE ASAHI BANK, LTD.
By:________________________________
Title:
BANKERS TRUST COMPANY, as a
Managing Agent and as a Lender
By:________________________________
Title:
BANK OF AMERICA ILLINOIS, as a Co-
Agent and as a Lender
By:________________________________
Title:
BANK OF MONTREAL, as a Co-Agent and
as a Lender
By:________________________________
Title:
THE BANK OF NEW YORK, as a Co-Agent
and as a Lender
By:________________________________
Title:
THE BANK OF NOVA SCOTIA, as a
Managing Agent and as a Lender
By:________________________________
Title:
THE BANK OF TOKYO TRUST COMPANY, as
a Co-Agent and as a Lender
By:________________________________
Title:
<PAGE> 104
BANQUE PARIBAS
By:________________________________
Title:
By:________________________________
Title:
CAISSE NATIONALE de CREDIT AGRICOLE
By:________________________________
Title:
CIBC INC., as a Co-Agent and as a
Lender
By:________________________________
Title:
CITICORP USA, INC., as a Managing
Agent and as a Lender
By:________________________________
Title:
COMERICA BANK, as a Co-Agent and
as a Lender
By:________________________________
Title:
<PAGE> 105
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE, as a Lead
Manager and as a Lender
By:________________________________
Title:
By:________________________________
Title:
COOPERATIEVE CENTRALE RAIFFEISEN -
BOERENLEENBANK B.A., "RABOBANK
NEDERLAND", NEW YORK BRANCH
By:________________________________
Title:
By:________________________________
Title:
CREDITANSTALT CORPORATE FINANCE,
INC.
By:________________________________
Title:
By:________________________________
Title:
CREDIT LYONNAIS CHICAGO BRANCH, as
a Co-Agent and as a Lender
By:________________________________
Title:
CREDIT LYONNAIS CAYMAN BRANCH, as a
Co-Agent and as a Lender
By:________________________________
Title:
<PAGE> 106
THE DAI-ICHI KANGYO BANK, LTD.
By:________________________________
Title:
DEUTSCHE BANK AG, CHICAGO BRANCH,
as a Co-Agent and as a Lender
By:________________________________
Title:
By:________________________________
Title:
DRESDNER BANK AG, CHICAGO AND GRAND
CAYMAN BRANCHES, as a Co-Agent
and as a Lender
By:________________________________
Title:
By:________________________________
Title:
FIRST AMERICAN NATIONAL BANK
By:________________________________
Title:
FIRST BANK NATIONAL ASSOCIATION
By:________________________________
Title:
THE FIRST NATIONAL BANK OF BOSTON,
as a Lead Manager and as a Lender
By:________________________________
Title:
<PAGE> 107
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA, as a Co-Agent and as a
Lender
By:________________________________
Title:
THE FUJI BANK, LIMITED, as a
Co-Agent and as a Lender
By:________________________________
Title:
THE INDUSTRIAL BANK OF JAPAN, LTD.,
CHICAGO BRANCH, as a Co-Agent and
as a Lender
By:________________________________
Title:
ISTITUTO BANCARIO SAN PAOLO
DI TORNIO SPA
By:________________________________
Title:
By:________________________________
Title:
KREDIETBANK N.V.
By:________________________________
Title:
By:________________________________
Title:
<PAGE> 108
LEHMAN COMMERCIAL PAPER INC., as
a Managing Agent and as a Lender
By:________________________________
Title:
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., CHICAGO BRANCH
By:________________________________
Title:
THE MITSUBISHI BANK, LIMITED
(CHICAGO BRANCH), as a Lead
Manager and as a Lender
By:________________________________
Title:
THE MITSUBISHI TRUST & BANKING
CORPORATION, CHICAGO BRANCH
By:________________________________
Title:
NATIONAL BANK OF CANADA
By:________________________________
Title:
By:________________________________
Title:
NATIONSBANK, N.A. (CAROLINAS), as a
Co-Agent and as a Lender
By:________________________________
Title:
<PAGE> 109
NBD BANK, as a Lead Manager and as
a Lender
By:________________________________
Title:
THE NIPPON CREDIT BANK, LTD., as a
Co-Agent and as a Lender
By:________________________________
Title:
ROYAL BANK OF CANADA, as a Lead
Manager and as a Lender
By:________________________________
Title:
THE ROYAL BANK OF SCOTLAND, plc.
By:________________________________
Title:
THE SAKURA BANK, LIMITED
By:________________________________
Title:
THE SANWA BANK, LIMITED,
CHICAGO BRANCH, as a Lead Manager
and as a Lender
By:________________________________
Title:
SOCIETE GENERALE, CHICAGO BRANCH
By:________________________________
Title:
<PAGE> 110
SOCIETY NATIONAL BANK
By:________________________________
Title:
THE SUMITOMO BANK, LIMITED,
CHICAGO BRANCH
By:________________________________
Title:
By:________________________________
Title:
THE SUMITOMO TRUST & BANKING CO.,
LTD., NEW YORK BRANCH
By:________________________________
Title:
THE TOKAI BANK, LTD. (CHICAGO
BRANCH)
By:________________________________
Title:
VIA BANQUE
By:________________________________
Title:
By:________________________________
Title:
WESTPAC BANKING CORPORATION
By:________________________________
Title:
<PAGE> 111
THE YASUDA TRUST & BANKING COMPANY,
LTD.
By:________________________________
Title:
<PAGE> 112
SCHEDULE 1.1(a)
NAMES AND ADDRESSES OF BANKS
Chemical Bank
270 Park Avenue
New York, New York 10017
Attention: Rosemary Bradley
Telecopier: (212) 972-0009
Telephone: (212) 270-7053
ABN AMRO Bank N.V.
135 S. LaSalle Street
Suite 425
Chicago, IL 60674-9135
Attention: Sheri Kempel
Telecopier: (312) 606-8425
Telephone: (312) 904-2953
The Asahi Bank, Ltd.
1 World Trade Center
Suite 6011
New York, NY 10048-0476
Attention: Douglas Price
Telecopier: (212) 432-1135
Telephone: (212) 912-7037
Bankers Trust Company
130 Liberty Street
30th Floor
New York, NY 10006
Attention: Steve Snicek
Telecopier: (212) 250-7351
Telephone: (212) 250-7561
Copy to:
Bankers Trust
233 South Wacker Drive
Chicago, IL 60606
Attention: Lianne Mech
Telecopier: (312) 993-8218
Telephone: (312) 993-8119
-1-
<PAGE> 113
2
Bank of America Illinois
231 S. LaSalle Street
Chicago, IL 60697
Attention: Steve Ahrenholz
Telecopier: (312) 987-5833
Telephone: (312) 828-1291
Bank of Montreal
115 South LaSalle Street
12th Floor West
Chicago, IL 60603
Attention: David J. Thompson
Telecopier: (312) 750-4314
Telephone: (312) 750-4372
Bank of New York
One Wall Street, 22nd Floor
New York, NY 10286
Attention: Lorna Alleyne
Telecopier: (212) 635-6397
Telephone: (212) 635-6725
The Bank of Nova Scotia
600 Peachtree Street NE
Suite 2700
Atlanta, GA 30308
Attention: F.C.H. Ashby
Telecopier: (404) 888-8998
Telephone: (404) 877-1500
The Bank of Tokyo Trust Company
National Banking Department
1251 Avenue of the Americas
New York, NY 10116-3138
Attention: Friedrich Wilms
Telecopier: (212) 782-6440
Telephone: (212) 782-4341
<PAGE> 114
3
Banque Paribas
227 West Monroe
Suite 3300
Chicago, IL 60635
Attention: Laurie Flom/Celine Dessureault
Telecopier: (312) 853-3087/6020
Telephone: (312) 853-6022
Caisse Nationale de Credit Agricole
55 E. Monroe Street
Suite 4700
Chicago, IL 60603
Attention: Richard Drennan
Telecopier: (312) 372-3724
Telephone: (312) 917-7441
CIBC Inc.
Two Paces West
2727 Paces Ferry Road
Suite 1200
Atlanta, GA 30339
Attention: Junior Williams
Telecopier: (404) 319-4950
Telephone: (404) 319-4820
Citicorp USA, Inc.
One Court Square
7th Floor
Long Island City, NY 11120
Attention: Angela Valentin
Telecopier: (718) 248-4844
Telephone: (718) 248-8618
Comerica Bank
One Detroit Center
500 Woodward Avenue
8th Floor
Detroit, MI 48226
Attention: Cheryl W. Ewers
Telecopier: (313) 222-3776
Telephone: (313) 222-9168
<PAGE> 115
4
Compagnie Financiere de CIC et de
l'Union Europeenne
520 Madison Avenue
37th Floor
New York, NY 10022
Attention: Brian O'Leary
Telecopier: (212) 715-4535
Telephone: (212) 715-4422
Cooperatieve Centrale Raiffeisen -
Boerenleenbank B.A.,
"Rabobank Nederland", New York Branch
245 Park Avenue
New York, NY 10167
Attention: Debra Rivers
Telecopier: (212) 916-7930
Telephone: (212) 916-7845
Creditanstalt Corporate Finance, Inc.
2 Greenwich Plaza, 2nd Floor
Greenwich, CT 06830
Attention: Stacy Harmon
Telecopier: (203) 861-6594
Telephone: (203) 861-6581
Credit Lyonnais
227 W. Monroe Street
Suite 3800
Chicago, IL 60606
Attention: Joce Cote
Telecopier: (312) 641-0527
Telephone: (312) 220-7303/7304
The Dai-Ichi Kangyo Bank, Ltd.
10 South Wacker Drive
26th Floor
Chicago, IL 60606
Attention: Brian J. Cushing
Telecopier: (312) 876-2011
Telephone: (312) 715-6361
Deutsche Bank AG, Chicago Branch
227 West Monroe
Suite 4350
Chicago, Illinois 60606
Attention: David Berger
Telecopier: (312) 578-4111
Telephone: (312) 578-4120
<PAGE> 116
5
Dresdner Bank AG,
Chicago and Grand Cayman Branches
190 S. LaSalle Street
Suite 2700
Chicago, IL 60603
Attention: Brian J. Brodeur
Telecopier: (312) 444-1305
Telephone: (312) 444-1319
First American National Bank
315 Union Street
3rd Floor
Nashville, TN 37237-0310
Attention: Andrew Zimberg
Telecopier: (615) 748-6072
Telephone: (615) 748-1401
First Bank National Association
First Bank Place
601 2nd Avenue South - MPFP0702
Minneapolis, MN 55402-4302
Attention: Michael J. McGroarty
Telecopier: (612) 973-0825
Telephone: (612) 973-0552
The First National Bank of Boston
100 Federal Street
Boston, MA 02106-2106
Attention: Lisa Marshall/Christopher Holtz
Telecopier: (617) 434-0630
Telephone: (617) 434-7690/4117
First Union National Bank of North Carolina
One First Union Center
301 S. Collete St., TW-19
Charlotte, NC 28288-0745
Attention: Glenn Edwards
Telecopier: (704) 374-2802
Telephone: (704) 383-3810
The Fuji Bank, Limited
225 West Wacker Drive
Suite 2000
Chicago, IL 60606
Attention: James Faven
Telecopier: (312) 621-0539/419-3677
Telephone: (312) 621-0518
<PAGE> 117
6
The Industrial Bank of Japan, Ltd.,
Chicago Branch
227 West Monroe Street
26th Floor
Chicago, IL 60606
Attention: John Bowin
Telecopier: (312) 855-8200
Telephone: (312) 855-8264
Istituto Bancario San Paolo
di Tornia SPA
245 Park Avenue
New York, NY 10167
Attention: Davide Scarselli
Telecopier: (212) 599-5303
Telephone: (212) 692-3172
Kredietbank N.V.
125 West 55th Street
10th Floor
New York, NY 10019
Attention: John Thierfelder
Telecopier: (212) 956-5580
Telephone: (212) 541-0727
Lehman Commercial Paper Inc.
c/o Banker's Trust Company
Corporate Trust & Agency Group
4 Albany Street - 10th Floor
New York, NY 10006
Attention: Brian Schmidt
Telecopier: (212) 250-6151
Telephone: (212) 250-6523
The Long-Term Credit Bank of
Japan, Ltd., Chicago Branch
190 S. LaSalle Street
Suite 800
Chicago, IL 60603
Attention: Koji Sasayama
Telecopier: (312) 704-8505
Telephone: (312) 704-5483
<PAGE> 118
7
The Mitsubishi Bank, Limited
115 South LaSalle St.
Suite 2100
Chicago, IL 60603
Attention: Michael Kempel
Telecopier: (312) 263-2555
Telephone: (312) 269-0415
The Mitsubishi Trust and Banking
Corporation, Chicago Branch
311 S. Wacker Dr.
Suite 6300
Chicago, IL 60606
Attention: Vicki L. Kamm
Telecopier: (312) 663-0863
Telephone: (312) 408-6014
National Bank of Canada
27777 Franklin Rd.
Suite 1570
Southfield, MI 48034
Attention: Jeffrey C. Angell
Telecopier: (810) 354-1768
Telephone: (810) 354-4800
NationsBank, N.A. (Carolinas)
Sears Tower
233 South Wacker Drive
Suite 2800
Chicago, IL 60606
Attention: Michael Zenfuss
Telecopier: (312) 234-5601
Telephone: (312) 234-5625
NBD Bank
611 Woodward Avenue
Detroit, MI 48226
Attention: Thomas A. Lakocy
Telecopier: (313) 225-2290
Telephone: (313) 225-2884
The Nippon Credit Bank, Ltd.
245 Park Avenue
30th Floor
New York, NY 10167
Attention: Clifford Abramsky
Telecopier: (212) 490-3895
Telephone: (212) 984-1238
<PAGE> 119
8
Royal Bank of Canada
One North Franklin Street
Suite 700
Chicago, IL 60606
Attention: Forrest Vollrath
Telecopier: (312) 551-0805
Telephone: (312) 551-1624
The Royal Bank of Scotland, plc.
Wall Street Plaza
88 Pine Street
26th Floor
New York, NY 10005-1801
Attention: Helaine Griffin
Telecopier: (212) 480-0791
Telephone: (212) 269-1700 X213
The Sakura Bank, Limited
227 W. Monroe Street
Suite 4700
Chicago, IL 60606
Attention: Kristin Hays
Telecopier: (312) 332-5345
Telephone: (312) 201-5141
The Sanwa Bank, Limited,
Chicago Branch
10 South Wacker Drive
31st Floor
Chicago, IL 60606
Attention: Richard H. Ault
Telecopier: (312) 346-6677
Telephone: (312) 368-3011
Societe Generale, Chicago Branch
181 West Madison Street
Suite 3400
Chicago, IL 60602
Attention: Gilles Demeulenaere
Telecopier: (312) 578-5099
Telephone: (312) 578-5056
<PAGE> 120
9
Society National Bank
127 Public Square
OH-01-127-0606
Cleveland, OH 44114-1806
Attention: Michael J. Jackson
Telecopier: (216) 689-4931
Telephone: (216) 689-4441
The Sumitomo Bank, Limited,
Chicago Branch
233 South Wacker Drive
Suite 4800
Chicago, IL 60606
Attention: Gertraud Wolters
Telecopier: (312) 876-6436
Telephone: (312) 876-7794
The Sumitomo Trust & Banking Co., Ltd.
New York Branch
527 Madison Avenue
New York, NY 10022
Attention: Masa Egami
Telecopier: (212) 418-4848
Telephone: (212) 326-0718
The Tokai Bank, Ltd.
(Chicago Branch)
181 West Madison Street
Suite 3600
Chicago, IL 60602
Attention: Cary Shinsako
Telecopier: (312) 977-0003
Telephone: (312) 456-3433
Via Banque
10 Rue Volney
75002, Paris, France
Attention: Jean-Louis Simon
Telecopier: 33-14-926-2626
Telephone: 33-14-926-2998
Westpac Banking Corporation
335 Madison Avenue
New York, NY 10017
Attention: Craig L. Jones
Telecopier: (212) 850-7619
Telephone: (212) 850-7862
<PAGE> 121
10
The Yasuda Trust & Banking Company, Ltd.
Chicago Branch
181 West Madison Street
Suite 4500
Chicago, IL 60602
Attention: Robert B. Orenstein
Telecopier: (312) 683-3899
Telephone: (312) 683-3836
<PAGE> 122
SCHEDULE 1.1(b)
SECURITY DOCUMENTS
I. Guarantee
1. Subsidiary Guarantee, dated as of the date hereof,
made by LS Acquisition Corp. No. 14, Lear Seating Holdings Corp. No. 50,
Progress Pattern Corp., Lear Plastics Corp., LS Acquisition Corporation No. 24,
Fair Haven Industries, Inc. and AIHI Acquisition Corp. in favor of the Banks,
substantially in the form of Exhibit C to the Agreement.
II. Pledge Agreements
1. Domestic Pledge Agreement, dated as of the date
hereof, made by the Borrower, pledging 100% of the stock of Progress Pattern
Corp., Lear Plastics Corp., LS Acquisition Corporation No. 24, LS Acquisition
Corporation No. 14, Lear Seating Holdings Corp. No. 50, AIHI Acquisition Corp.
and 65% of the stock of Lear Seating Sweden AB, in favor of the Agent,
substantially in the form of Exhibit D to the Agreement.
2. Fair Haven Pledge Agreement, dated as of the date
hereof, made by LS Acquisition Corporation No. 24, pledging 100% of the stock
of Fair Haven Industries, Inc., in favor of the Agent, substantially in the
form of Exhibit E to the Agreement.
3. Acquisition Pledge Agreement, dated as of the date
hereof, made by Acquisition Corp. in favor of the Agent, pledging the AIHI
Shares from time to time owned by Acquisition Corp., substantially in the form
of Exhibit F.
4. 1995 German Pledge Agreement made by LS Acquisition
Corp. No. 14, pledging 65% of the stock of NS Beteiligungs GmbH, in favor of
the Agent, substantially in form and substance satisfactory to the Agent.
5. Mexican Pledge Agreement made by Lear Seating
Holdings Corp. No. 50, pledging 65% of the stock of Equipos Automotrices
Tatales S.A. de C.V., in favor of the Agent, in form and substance satisfactory
to the Agent.
6. Pledge Agreement ("Nantissement") made by the
Borrower, pledging 65% of the stock of Lear France, in favor of the Agent,
together with the related Confirmation, in form and substance satisfactory to
the Agent.
7. Lear Seating Canada Ltd. Share Pledge Agreement made
by the Borrower, pledging 65% of the stock of Lear Seating Canada Ltd., in
favor of the Agent, together with the related
<PAGE> 123
2
Acknowledgment and Confirmation, in form and substance satisfactory to the
Agent.
8. Charge Over Shares made by the Borrower, charging 65%
of the stock of Lear Seating (U.K.) Limited, in favor of the Agent, in form and
substance satisfactory to the Agent.
III. Security Agreement
Security Agreement, dated as of the date hereof, made by the
Borrower, LS Acquisition Corp. No. 14, Lear Seating Holding Corp. No. 50,
Progress Pattern Corp., Lear Plastics Corp., LS Acquisition Corporation No. 24
and Fair Haven Industries, Inc., in favor of the Agent, substantially in the
form of Exhibit G to the Agreement.
IV. Mortgages
1. Mortgage on property located in Mendon, Michigan,
dated as of August 17, from Lear Plastics Corp. to the Agent.
2. Mortgage on property located in Fenton, Michigan,
dated as of August 17, from Lear Seating Corporation to the Agent.
3. Mortgage on property located in Southfield, Michigan,
dated as of August 17, from Progress Pattern Corp. to the Agent.
4. Mortgage on property located in Romulus, Michigan,
dated as of August 17, from Lear Seating Corporation to the Agent.
5. Mortgage on property located in Detroit, Michigan,
dated as of August 17, from Lear Seating Corporation to the Agent.
6. Deed of Trust on fee property located in Morristown,
Tennessee, each dated as of August 17, from Lear Seating Corporation to James
C. Warner, as Trustee, for the benefit of the Agent.
7. Mortgage on property located in Janesville,
Wisconsin, dated as of August 17, from Lear Seating Corporation to the Agent.
<PAGE> 124
SCHEDULE 1.1(c)
MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
Location Land Size
-------- ---------
Building Size
-------------
(Sq. Ft.) (Acres)
<S> <C> <C>
1. 21557 Telegraph Road 11.71
Southfield, Michigan
a. 70,000 sq. ft.
b. 65,500 sq. ft.
c. 19,000 sq. ft
2. 4600 Nancy Avenue 9.0
Detroit, Michigan
156,800 sq. ft.
3. 36300 Eureka Road N/A
Romulus, Michigan
89,600 sq. ft.
4. 36310 Eureka Road N/A
Romulus, Michigan
88,200 sq. ft.
5. 340 Fenway Drive 10.2
Fenton, Michigan
75,800 sq. ft.
6. 236 West Clark Street 18.0
Mendon, Michigan
168,500 sq. ft.
7. 325 Industrial Avenue 20.0
Morristown, Tennessee
(owned property)
235,900 sq. ft.
8. 3708 Enterprise Drive N/A
Janesville, Wisconsin
120,000 sq. ft.
</TABLE>
<PAGE> 125
SCHEDULE 2.1
COMMITMENTS
<TABLE>
<CAPTION>
Bank Commitment
---- ----------
<S> <C>
Chemical Bank $50,000,000.00
Bankers Trust Company $43,250,000.00
Citicorp USA, Inc. $43,250,000.00
Lehman Commercial Paper Inc. $43,250,000.00
The Bank of Nova Scotia $43,250,000.00
ABN AMRO Bank N.V. $37,000,000.00
Bank of America Illinois $37,000,000.00
Bank of Montreal $37,000,000.00
The Bank of New York $37,000,000.00
The Bank of Tokyo Trust Company $37,000,000.00
CIBC Inc. $37,000,000.00
Comerica Bank $37,000,000.00
Credit Lyonnais $37,000,000.00
Deutsche Bank AG $37,000,000.00
Dresdner Bank AG $37,000,000.00
First Union National Bank of North Carolina $37,000,000.00
The Fuji Bank, Limited $37,000,000.00
The Industrial Bank of Japan, Ltd. $37,000,000.00
NationsBank, N.A. (Carolinas) $37,000,000.00
The Nippon Credit Bank, Ltd. $37,000,000.00
Societe Generale $37,000,000.00
Compagnie Financiere de CIC et de $30,000,000.00
l'Union Europeenne
The First National Bank of Boston $30,000,000.00
</TABLE>
<PAGE> 126
2
<TABLE>
<CAPTION>
Bank Commitment
---- ----------
<S> <C>
The Mitsubishi Bank, Limited $30,000,000.00
NBD Bank $30,000,000.00
Royal Bank of Canada $30,000,000.00
The Sanwa Bank, Limited $30,000,000.00
The Sumitomo Bank, Limited $30,000,000.00
The Asahi Bank, Ltd. $25,000,000.00
Banque Paribas $25,000,000.00
Caisse Nationale de Credit Agricole $25,000,000.00
Creditanstalt Corporate Finance, Inc. $25,000,000.00
The Dai-Ichi Kangyo Bank, Ltd. $25,000,000.00
First Bank National Association $25,000,000.00
Istituto Bancario San Paolo di Tornia SPA $25,000,000.00
The Long-Term Credit Bank of Japan, Ltd. $25,000,000.00
The Mitsubishi Trust and Banking $25,000,000.00
Corporation
National Bank of Canada $25,000,000.00
The Royal Bank of Scotland, plc. $25,000,000.00
The Sakura Bank, Limited $25,000,000.00
Society National Bank $25,000,000.00
The Sumitomo Trust & Banking Co., Ltd. $25,000,000.00
The Tokai Bank, Ltd. $25,000,000.00
The Yasuda Trust & Banking Company, Ltd. $25,000,000.00
Cooperatieve Centrale Raiffeisen - $15,000,000.00
Boerenleenbank, B.A. "Rabobank
Nederland", New York Branch
First American National Bank $15,000,000.00
Kredietbank N.V. $15,000,000.00
</TABLE>
<PAGE> 127
3
<TABLE>
<CAPTION>
Bank Commitment
---- ----------
<S> <C>
Via Banque $15,000,000.00
Westpac Banking Corporation $15,000,000.00
-----------------
$1,500,000,000.00
</TABLE>
-3-
<PAGE> 128
SCHEDULE 3.1
EXISTING LETTERS OF CREDIT
<TABLE>
<CAPTION>
L/C FACE EXPIRATION
NUMBER AMOUNT BENEFICIARY DATE
----------- ------ ----------- ----------
<S> <C> <C> <C>
T-294933 $ 4,612,000 National Union Fire Insurance 8/13/95
G-137608 $ 2,287,750 National Union Fire Insurance 9/28/95
T-216189 $ 750,000 Zurich Insurance 9/30/95
T-219868 $ 4,800,000 Zurich Insurance 9/30/95
T-220133 $15,000,000 Citibank 10/31/95
T-232745 $ 9,626,667 NBD Bank, N.A. 10/31/98
T-235091 $ 9,630,137 NBD Bank, N.A. 10/31/98
T-237709 $ 7,000,000 Zurich Insurance 9/30/96
$53,706,554
===========
</TABLE>
<PAGE> 129
SCHEDULE 6.14
SUBSIDIARIES, DIVISIONS, PARTNERSHIPS AND JOINT VENTURES
OF LEAR SEATING CORPORATION
<TABLE>
<CAPTION>
DOMESTIC SUBSIDIARIES:
Jurisdiction of
Name of Entity Incorporation Number of Shares Stock Ownership Record Holder
-------------- ------------- ---------------- ---------------- -------------
<S> <C> <C> <C> <C>
LS Acquisition Corp. No. 14 Delaware 100 Common 100% Lear Seating Corporation
Lear Seating Holdings Corp. No. 50 Delaware 100 Common 100% Lear Seating Corporation
Progress Pattern Corp. Delaware 100 Common 100% Lear Seating Corporation
LS Acquisition Corporation No. 24 Delaware 100 Common 100% Lear Seating Corporation
Fair Haven Industries, Inc. Michigan 19,600 Common 100% LS Acquisition Corporation No. 24
Lear Plastics Corp. Delaware 100 Common 100% Lear Seating Corporation
AIHI Acquisition Corp. Delaware 100 Common 100% Lear Seating Corporation
</TABLE>
<TABLE>
<CAPTION>
FOREIGN SUBSIDIARIES:
Jurisdiction of
Name of Entity Organization Stock Ownership Record Holder
-------------- ------------ --------------- -------------
<S> <C> <C> <C>
Lear Seating Sweden A.B. Sweden 100% Lear Seating Corporation
Equipos Automotrices Totales S.A. de C.V. Mexico 84% Lear Seating Holdings Corp. No. 50
16% Lear Seating Corporation
Central de Industrias S.A. de C.V. Mexico 59.6% Equipos Automotrices Totales S.A. de C.V.
40% Lear Seating Corporation
Lear Seating Canada Ltd. Canada 100% Lear Seating Corporation
Lear Seating International Ltd. Barbados 100% Lear Seating Canada Ltd.
Intertrim S.A. de C.V. Mexico 99.5% Lear Seating Corporation
NS Beteiligungs GmbH Germany 100% LS Acquisition Corp. No. 14
Lear Seating Autositze GmbH Austria 100% NS Beteiligungs GmbH
NS Drahtfedern GmbH Germany 100% NS Beteiligungs GmbH
Lear Seating GmbH Germany 100% NS Drahtfedern GmbH
</TABLE>
<PAGE> 130
2
<TABLE>
<CAPTION>
Jurisdiction of
Name of Entity Organization Stock Ownership Record Holder
-------------- ------------ --------------- -------------
<S> <C> <C> <C>
Lear France E.U.R.L. France 100% Lear Seating Corporation
Societe No Sag Francaise France 55.8% Lear France E.U.R.L.
Souby S.A. France 100% Societe No Sag Francaise
Spitzer Gmbh Austria 62% Lear Seating GmbH & Co. KG
Lear Seating (U.K.) Ltd. U.K. 100% Lear Seating Corporation
Lear Seating Australia PTY. Ltd. Australia 100% Lear Seating Corporation
Favesa S.A. de C.V. Mexico 92% Equipos Automotrices Totales S.A. de C.V.
8% Lear Seating Corporation
Lear Seating Italia, S.r.L. Italy 99% Lear Seating Corporation
1% LS Acquisition Corp. No. 14
Lear Seating (SA) (Pty) Ltd. South Africa 100% Lear Seating Corporation
Lear Seating Italia Sud S.p.A. Italy 100% Lear Seating Italia S.p.A
Lear Seating Italia S.p.A Italy 100% Lear Seating Italia, S.r.L.
Lear Seating Italia Holdings S.r.L. Italy 100% Lear Seating Corporation
L.S. Servicos Ltda. Brazil 100% Lear Seating Corporation
Lear Seating Poland Z o.o. Poland 100% Lear Seating Corporation
Lear Seating (Indonesia) Indonesia 100% Lear Seating Corporation
Pty Ltd.
</TABLE>
<PAGE> 131
3
PARTNERSHIPS/JOINT VENTURES:
<TABLE>
<CAPTION>
Jurisdiction of
Name of Entity Organization Stock Ownership Record Holder
-------------- ------------ --------------- -------------
<S> <C> <C> <C>
PARTNERSHIPS
Lear Seating Autositze GmbH & Co. KG Austria 99% NS Beteiligungs GmbH
1% Lear Seating Autositze GmbH
Lear Seating GmbH & Co. KG Germany Gen'l Pt NS Drahtfedern GmbH
Lim. Pt Lear Seating GmbH
No-Sag Drahtfedern Spitzer & Co. KG Austria 62.5% Lear Seating GmbH & Co. KG
37.5% Spitzer GmbH
JOINT VENTURES AND MINORITY INTERESTS
General Seating of America Michigan 35% (a) Lear Seating Corporation
General Seating of Canada Limited Canada 35% (a) Lear Seating Canada Ltd.
Pacific Trim Corporation Ltd. Thailand 20% Lear Seating Corporation
Probel S.A. Brazil 31% Lear Seating Canada Ltd.
Lear Seating (Thailand) Corp. Ltd. Thailand 49% Lear Seating Corporation
Lear Seating Inespo Comercial e Industrial Brazil 50.01% Lear Seating Corporation
de Brasil
Markol Otomotiv Yan Sanayi Ve Ticaret Turkey 35% Lear Seating Corporation
Anonim Sirketi
Industrias Cousin Freres S.L. Spain 49.9% SEPI S.p.A.
</TABLE>
---------------
(a) An option exists whereby General Motors Corporation may purchase five
percent (5%) of the issued shares from Lear Seating Corporation and
Lear Seating Canada Ltd.
<PAGE> 132
4
IN CONNECTION WITH THE ACQUISITION, THE FOLLOWING ENTITIES WILL BE ACQUIRED:
<TABLE>
<S> <C> <C> <C>
Automotive Industries Holding, Inc. Delaware 100%* Lear Seating Corporation
Automotive Industries, Inc. Virginia 100% Automotive Industries Holding, Inc.
Plastifol Holdings GmbH Germany 100% Automotive Industries, Inc.
Quadresta GmbH Germany 100% Plastifol Holdings GmbH
Plastifol Verwaltungs GmbH Germany 100% Quadresta GmbH
Plastifol GmbH & Co. KG Germany Gen'l Pt. Plastifol Verwaltungs GmbH
Lim. Pt. Quadresta GmbH
Manfred Rothe Verwaltungs GmbH Germany 100% Quadresta GmbH
Plastifol Manfred Rothe Iberia S.A. Spain 71.4% Plastifol Holdings GmbH
Anlagen und Vorrichtungsban GmbH Germany 55% Plastifol Holdings GmbH
Plastifol Beteiligungs GmbH Germany 100% Plastifol Holdings GmbH
Guildford Kast Plastifol Ltd. U.K. 33.3% Plastifol Beteiligungs GmbH
Automotive Industries (Holdings) Ltd. U.K. 100% Automotive Industries, Inc.
Automotive Industries (U.K.) Ltd. U.K. 100% Automotive Industries (Holdings) Ltd.
Simplay Ltd. U.K. 100% Automotive Industries (U.K.) Ltd.
Davart Group Ltd. U.K. 100% Automotive Industries (U.K.) Ltd.
John Cotton (Plastics) Ltd. U.K. 100% Davart Group Ltd.
Automotive Industries Export Ltd. 100% Automotive Industries Holdings, Inc.
Cellasto Plastics Industries, Inc. Delaware 100% Automotive Industries, Inc.
PF Acquisition Co. Delaware 100% Automotive Industries, Inc.
Gulfstream Automotive, Inc. Delaware 100% Automotive Industries, Inc.
AII, Inc. Delaware 100% Automotive Industries, Inc.
Capital Plastics of Ohio, Inc. Ohio 100% Gulfstream Automotive, Inc.
ASAA International, Inc. Delaware 100% Automotive Industries, Inc.
Interiores Automotrices Summa, S.A. de C.V. Mexico 40% ASAA International, Inc.
General Panel, B.V. Wisconsin 100% ASAA International, Inc.
ASAA, Inc. Wisconsin 100% General Panel, B.V.
---------------------
</TABLE>
* Upon consummation of the Tender Offer, the Merger and related
transactions contemplated in connection therewith, Lear Seating
Corporation will own 100% of the issued and outstanding common stock
of Automotive Industries Holdings, Inc.
<PAGE> 133
5
<TABLE>
<S> <C> <C> <C>
American Wood Stock Company, Inc. Wisconsin 100% General Panel, B.V.
ASAA Technologies, Inc. Wisconsin 100% General Panel, B.V.
Snider Mold Company, Inc. Wisconsin 60% General Panel, B.V.
AII Automotive Industries Canada, Inc. Ontario 100% Lear Seating Corporation
</TABLE>
-5-
<PAGE> 134
SCHEDULE 6.18
HAZARDOUS MATERIAL
The facility at Mendon, Michigan was contaminated with
Hazardous Materials in several areas.
1. Soil beneath one of the plant buildings was
contaminated with heavy metals as the result of spills from the former
electroplating operation and leaks in the floor. The Borrower
excavated the most heavily contaminated soil and signed a "Declaration
of Restrictions/Consent Agreement" with MDNR, which requires
maintenance of an impermeable cap (i.e., the current concrete floor)
over the contaminated area.
2. The Borrower believes that it has completed all of
the capital expenditures necessary to remedy the soil and groundwater
contamination identified at the Mendon plant. Monitoring wells
indicate that there has been no migration of contamination toward a
drinking water well located approximately one quarter of a mile from
the plant, but it is remotely possible that MDNR will require the
Borrower to undertake additional remediation actions as a precaution.
<PAGE> 135
SCHEDULE 8.2(s)
EXISTING INDEBTEDNESS
1. Indebtedness evidenced by the Indenture dated as of July 15, 1992,
relating to the Borrower's 11-1/4% Senior Subordinated Notes, in an
aggregate principal amount of $125,000,000, plus accrued and unpaid
interest.
2. Indebtedness evidenced by the Indenture dated February 1, 1994,
relating to the Borrower's 8 1/4% Subordinated Notes, in an aggregate
principal amount of $145,000,000, plus accrued and unpaid interest.
3. Indebtedness of Lear Seating Canada Ltd. under its revolving loan
facility with The Bank of Nova Scotia in the principal amount up to
$25,000,000 (Canadian), plus accrued and unpaid interest.
4. Indebtedness of NS Beteiligungs GmbH to Industriekreditbank AG-Deutsch
Industriebank in the principal amount of DM 9,500,000, plus accrued
and unpaid interest.
5. Indebtedness in Germany to the city of Eisenach, Germany, relating to
a land purchase in Eisenach, Germany, in the principal amount of DM
429,000, plus accrued and unpaid interest.
6. Indebtedness in Austria to Sparkasse under a working capital credit
line in the principal of up to ATS 20,000,000, plus accrued and unpaid
interest.
7. Indebtedness in Mexico to Internacional under a note payable facility
for working capital in the principal amount up to $15,000,000, plus
accrued and unpaid interest.
8. Indebtedness in Mexico to Bancomer, FINAC, Banamex and Citibank under
a note payable facility for working capital in the principal amount up
to 45,000,000 Mexican pesos and $15,325,000, plus accrued and unpaid
interest.
9. Indebtedness of Lear Seating Sweden AB to SE Banken under a working
capital credit facility in the principal amount up to SEK 6,500,000,
plus accrued and unpaid interest.
10. Indebtedness of the Borrower to NBD Bank, N.A. under a capitalized
lease in the amount of $47,399.
11. Indebtedness of the Borrower to the City of Hammond, Indiana under the
loan agreement dated July 1, 1994, in the principal amount of
$9,500,000, plus accrued and unpaid interest.
<PAGE> 136
2
12. Indebtedness of the Borrower to Development Authority of Clayton
County, Georgia under a loan agreement dated September 16, 1994, in
the principal amount of $9,500,000, plus accrued and unpaid interest.
13. Indebtedness of Lear Seating Canada, Ltd. to the government of the
Province of Ontario, Canada under a loan agreement, dated January 27,
1993, in the principal amount up to $2,500,000 (Canadian), plus
accrued and unpaid interest.
14. Indebtedness of Lear Seating Canada, Ltd. to the government of the
Province of Ontario, Canada under a loan agreement, in the principal
amount up to $2,000,000 (Canadian), plus accrued and unpaid interest.
15. Indebtedness of Favesa to Citibank evidenced by a promissory note
dated October 31, 1994 in the principal amount of $15,000,000, plus
accrued and unpaid interest.
16. Indebtedness of the Borrower to AFCO under a loan agreement dated
October 31, 1994 in a principal amount of approximately $1,400,000,
plus accrued and unpaid interest.
17. Indebtedness of Lear Italia to Ministro dell'Industria Commercio E
Artignato of approximately Lit 610,000,000, plus accrued and unpaid
interest.
18. Indebtedness of Lear Italia to Inpool B.N.L. and Efibanca of
approximately Lit 3,200,000,000, plus accrued and unpaid interest.
19. Indebtedness of the Borrower to Gilardini S.p.A. of approximately Lit
20,000,000,000 under a Stock Purchase Agreement, plus accrued and
unpaid interest.
20. Indebtedness of Lear Seating Italia Holdings S.r.L. to San Paolo di
Torino, Banca Commerciale Italiana, Credito Italiano, Banca Nazionale
del Lavono, Banca di Roma and Cassa di Resp. di Parma e Piacenza for
working capital in the principal amount of up to Lit 12,500,000,000,
plus accrued and unpaid interest.
21. Indebtedness of Lear Seating Australia Pty. Ltd. to Citibank for
working capital in the principal up to AUD $2,000,000, plus accrued
and unpaid interest.
22. Indebtedness of NS Beteiligungs GmbH to Dresdner Bank under trade
acceptance facilities for working capital of up to DM 1,350,000, plus
accrued and unpaid interest.
23. Indebtedness of Lear Seating Italia SUD, S.p.A. to the Italian
government and various financial institutions (including EFI Banca)
under a term loan for approximately Lit 15,478,000, plus accrued and
unpaid interest.
<PAGE> 137
3
24. Indebtedness in Mexico to Bancomer under capital leases of
approximately MPS 661,332, plus accrued and unpaid interest.
25. Working capital indebtedness of Lear Seating (Indonesia) Pty Ltd. in
the aggregate principal amount of up to $4,000,000, plus accrued and
unpaid interest.
26. Strasburg, VA
Computer Lease From: NCC Leasing, Inc.-Sub. of NCR
(5 Years) 60 months @ $3,678.24 $7,394
(9/90-8/95)
27. Corporate
Blow Molding Machines from CIT Group/Equipment Financing, Inc.
(5 Years) 60 months @ $92,666.48 $1,925,677
(12/91-11/96)
Orig.-$4,500,000
28. Snider Mold
First National Leasing - division of M and I Bank
(5 Years) 60 months @ $8,038 $61,811
(4/91-3/96)
29. First National Leasing - division of M and I Bank
(5 Years) 60 months @ $5,920 $28,768
(10/90-9/95)
Automotive Industries U.K. (amounts in British Pounds)
30. Press Equipment
Bank: Barclays Mercantile
(5 Years) 20 quarters @ pound sterling 32,153 391,917 pound sterling
From 3/94
Orig.-pound sterling 538,485
31. Pume Extraction Plant
Bank: Barclays Mercantile
(5 Years) 20 quarters @ pound sterling 26,904 4,353 pound sterling
From 12/90
Orig.-pound sterling 388,000
<PAGE> 138
4
<TABLE>
<CAPTION>
<S> <C> <C>
32. CAD System
Bank: Barclays Mercantile
(5 Years) 20 quarters @ pound sterling 14,810 155,106 pound sterling
From 7/93
Orig.-pound sterling 245,695
33. Press & General Production
Bank: Barclays Mercantile
(5 Years) 20 quarters @ pound sterling 68,801 886,691 pound sterling
From 10/94
Orig.-pound sterling 1,086,727
34. Press & General Production
Bank: Forward Asset Finance
(5 Years) 20 quarters @ pound sterling 60,203 827,138 pound sterling
From 11/94
Orig.-pound sterling 966,347
35. Press & General Production
Bank: Barclays Mercantile
(5 Years) 20 Quarters @ pound sterling 147,539 2,083,493 pound sterling
From 2/95
Orig.-pound sterling 2,315,727
36. Door Panel Assembly Equipment
Bank: Forward Asset Finance
(5 Years) 20 quarters @ pound sterling 22,183 304,048 pound sterling
From 12/94
Orig.-pound sterling 355,000
37. Door Panel Press
Bank: Forward Asset Finance
(5 Years) 1 quarter @ pound sterling 160,589 1,092,044 pound sterling
3 quarters @ pound sterling 57,738
16 quarters @ pound sterling 79,126
From 2/95
Orig.-pound sterling 1,283,071
38. Door Panel Press
Bank: Forward Asset Finance
(5 Years) 20 quarters @ pound sterling 3,115 45,442 pound sterling
From 2/95
Orig.-pound sterling 49,422
39. Laminate Cutting Equipment
Bank: Forward Asset Finance
(5 Years) 20 quarters @ pound sterling 7,277 91,764 pound sterling
From 2/95
Orig.-pound sterling 106,316
40. Advance Progress payments to be Converted to a 243,196 pound sterling
Lease by December 1995
</TABLE>
<PAGE> 139
5
<TABLE>
<CAPTION>
<S> <C> <C>
41. 2 Injection Molding Machines 30,825 pound sterling
Bank: Barclays Mercantile
(5 Years) 20 quarters @ pound sterling 4,078
42. Injection Molding Machine 497,855 pound sterling
Bank: Lombard North Central
(5 Years) 20 quarters @ pound sterling 46,817
From 10/93
Orig. pound sterling 795,394
43. Injection Molding Machine 30,694 pound sterling
Bank: Lombard North Central
(5 Years) 20 quarters @ pound sterling 2,009
From 3/94
Orig. pound sterling 795,394
44. Injection Molding Machines 83,164 pound sterling
Bank: Lombard North Central
(5 Years) 20 quarters @ pound sterling 6,231
From 7/94
Orig. pound sterling 100,992
</TABLE>
Fibercraft/DESCon
45. 5 Copiers
Leased From: Ervin Leasing
Monthly @ $2,566.88 $82,611
46. 2 Vehicles
Leased From: Ford Motor Credit
Monthly @ $1,042.05 $14,183
47. $1,213,333 aggregate principal amount of ASAA Technologies, Inc.
mortgage loan issue to Associated Bank Lakeshore, N.A. due December
20, 1997 secured by a first mortgage on the ASAA Tech Center facility.
48. Indebtedness of AIHI to CSM in the amount of $4,726,000 plus accrued
and unpaid interest.
49. Indebtedness of AIHI to O'Sullivan in the amount of $3,870,000 plus
accrued and unpaid interest.
50. Credit Agreement in the aggregate principal amount of up to
pound sterling 6,600,000 among John Cotton (Colne) Ltd., Simplay Ltd.,
Davart Group Ltd., John Cotton (Plastics) Ltd. and Midland Bank plc,
plus accrued and unpaid interest.
51. Industrial Revenue Bonds in the aggregate principal amount of up to
$3,800,000, payable by ASAA International, Inc. ("ASAA") to the
Commonwealth of Virginia, plus accrued and unpaid interest.
<PAGE> 140
6
52. Promissory Note in the aggregate principal amount of $4,900,000
payable to a former sales representative of ASAA, plus accrued and
unpaid interest.
Gulfstream Automotive
53. Forklift and Accompanying Batteries and Charger
Leased From: World Omni Leasing, Inc.
(Lease Assigned to Associated leasing, Inc.)
(5 Years) 60 months @ $545.43 $6,000
(6/91 - 5/96)
Orig.-$32,725.80
54. Forklift
Leased From: World Omni Leasing, Inc.
(Lease Assigned to Associated Leasing, Inc.)
(5 Years) 60 months @ $545.43 $7,636
(9/91 - 8/96)
Orig.-$32,725.80
55. Forklift
Leased From: World Omni Leasing, Inc.
(Lease Assigned to Associated Leasing, Inc.)
(5 Years) 60 months @ $545.43 $7,636
(9/91 - 8/96)
Orig.-$32,725.80
56. Forklift Leased From: Toyota Motor Credit Corp.
Leased From: Toyota Motor Credit Corp.
39 months @ $405.25 $811
(6/92 - 8/95)
Orig.-$60,204.85
57. 3 Forklifts and Accompanying Batteries and Chargers
Leased From: Toyota Motor Credit Corp.
(5 Years) 60 months @ $1,636.33 $16,363
(5/91 - 4/96)
Orig.-$98,179.80
58. 2 Forklifts and Accompanying Batteries and Chargers
Leased From: Toyota Motor Credit Corp.
(5 Years) 60 months @ $1,029.14 $1,029
(8/90 - 7/95)
orig.-$61,748.40
59. $2,058,189 aggregate principal amount of ASAA Technologies, Inc. 0%
Industrial Facilities Agreement issued to Cumberland Plateau Planning
District Commission and Cumberland Plateau Company due November 1,
2004.
<PAGE> 141
SCHEDULE 8.2(t)
AIHI INDEBTEDNESS
1. Amended and Restated Credit Agreement, in the aggregate principal
amount of up to $175 million, as amended among Automotive Industries,
Inc. ("AI"), the financial institutions party thereto and The Bank of
Nova Scotia and Bank of America Illinois, as agents, plus accrued and
unpaid interest.
2. $39,508,007 aggregate principal amount of the 8.75% Senior Notes due
April 3, 2000, plus accrued and unpaid interest.
3. $65,000,000 aggregate principal amount of the 8.89% Senior Notes, plus
accrued and unpaid interest.
4. Shareholder Buyout in the amount of $29,232.
5. Swap-Hedge Agreements between AI and Bank of America National Trust
and Savings Association.
6. $4,750,000 aggregate principal amount of Fibercraft/DESCon
Engineering, Inc. ("Fibercraft") 6.5% exchangeable subordinated
promissory notes issues to sellers in connection with the acquisition
of Fibercraft.
<PAGE> 142
SCHEDULE 8.9
EXISTING INVESTMENTS, LOANS AND ADVANCES
1. Capital contribution by LS Acquisition Corp. No. 14 to NS Beteiligungs
GmbH in the amount of DM 12,884,155.
2. Capital contribution by Lear Seating Corporation to NS Beteiligungs
GmbH in the amount of $6,000,000.
3. Capital contribution by Lear Seating Corporation to NS Beteiligungs
GmbH in the amount of $4,000,000.
4. Capital contribution by Lear Seating Corporation to NS Beteiligungs
GmbH in the amount of $10,825,000.
5. Equity Investment by Lear Seating Holdings Corp. No. 50 in Central de
Industrias S.A. de C.V. in the amount of $13,113,000.
6. Equity Investment by Lear Seating Holdings Corp. No. 50 in Central de
Industrias S.A. de C.V. in the amount of $15,589,000.
7. Equity Investment by Lear Seating Corporation in Lear Seating Sweden
AB in the amount of $1,500,000.
8. Capital contribution by Lear Seating Corporation to Lear Seating
Sweden AB in the amount of $3,905,000.
9. Equity investment by LS Acquisition Corporation No. 24 in Fair Haven
Industries, Inc. in the amount of $750,000.
10. Equity Investment by LS Acquisition Corporation No. 24 in Fair Haven
Industries, Inc. in the amount of $600,000.
11. Equity Investment by Lear Seating Corporation in General Seating of
America, Inc. in the amount of $600,000.
12. Equity Investment by Lear Seating Canada Ltd. in General Seating of
Canada, Ltd. in the amount of $1,800,000 (Canadian).
13. Capital contribution by Lear Seating Corporation in Lear Seating
(U.K.) Ltd. in the amount of $3,890,000.
14. Equity investment in Pacific Trim Corporation Ltd. (Thailand) by Lear
Seating Corporation in the amount of $223,000.
<PAGE> 143
2
15. Capital contribution by Lear Seating Corporation to subsidiaries
organized under the laws of Austria in the amount of $50,000.
16. Capital contribution by Lear Seating Corporation to Lear France
E.U.R.L. in the amount of Fr 50,000.
17. Capital contribution and a loan by Lear Seating Corporation to Lear
Seating Australia PTY Ltd. in the amounts of $1,554,404 and
$1,978,119, respectively.
18. Equity investment by Lear Seating Corporation to Lear Seating Sweden
AB of approximately SEK $3,000,000.
19. Capital contribution by Lear Seating Corporation to Equipos
Automotrices Totales S.A. de C.V. to finance the acquisition of the
North American Business of the Ford Motor Company of approximately
$11,613,691.
20. Capital contribution by Lear Seating Corporation to LS (Thailand)
Corp. Ltd. in the amount of $1,974,715.
21. Equity investment by LS Acquisition Corp. No. 14 in Lear Seating
Italia Holdings, S.r.L. in the amount of Lit 159,259,048.
22. Equity investment by Lear Seating Corporation into Lear Seating Italia
Holdings, S.r.L. in the amount of Lit 47,537,700,000.
23. Loan from Lear Seating Corporation to Lear Seating Italia Holdings,
S.r.L. in the amount of Lit 902,384,223, plus accrued and unpaid
interest.
24. Equity investment by Lear Seating Corporation to Markol A.S. (Turkey)
in the amount of Lit 691,000,000.
25. Equity investment by Lear Seating Corporation in Sepi Poland
S.p.Z.o.o. in the amount of Lit 5,530,000,000.
26. Equity contribution by Lear Seating Corporation to LS Services Ltd.
(Brazil) in the amount of $217,597.
27. Equity investment by Lear Seating Corporation in Lear Seating Inespo
Comercial Do Brasil, Ltd. in the amount of $536,588.
28. Loans and capital contributions by Lear Seating Corporation to Lear
Seating (Indonesia) Pty Ltd. in the amount of $490,000.
29. Equity investment by Lear Seating Canada Ltd. in Probel S.A. in the
amount $2,200,000.
<PAGE> 144
3
30. Equity investment by Lear Seating Italia, S.p.A. in Industrial Cousin
Freres, S.L. in the amount of 637,588,490 Spanish Pesetas.
31. Equity investment by AIHI in Automotive Industries (UK) in the amount
of [GBP] 22,191.
32. Equity investment by AIHI in Plastifol in the amount of DM 26,000,000.
33. Loan from AIHI to Automotive Industries (UK) in the amount of GBP
19,000,000.
34. Loan from AIHI to Plastifol in the amount of DM 60,000,000.
<PAGE> 145
SCHEDULE 8.15
CONTRACTUAL OBLIGATION RESTRICTIONS
1. Indenture, dated July 15, 1992, among Lear Seating Corporation, as
Issuer, Lear Holdings Corporation, as Guarantor and The Bank of New
York, as Trustee, relating to the Borrower's 11-1/4% Senior
Subordinated Notes.
2. Indenture, dated February 1, 1994, between Lear Seating Corporation,
as Issuer and the First National Bank of Boston, as Trustee, relating
to the Borrower's 8 1/4% Subordinated Notes.
3. Loan Agreement between NS Beteilgungs GmbH and Industriekreditbank
AG-Deutsch Industriek.
4. Agreement relating to working capital credit facility provided by SE
Banken to Lear Seating Sweden AB.
5. Capital leases listed on Schedule 8.2(s).
6. Agreements and security instruments with respect to indebtedness
assumed in connection with the Acquisition and the acquisition of the
Fiat Seat Business and agreement governing indebtedness which
refinances such indebtedness.
7. Loan Agreement between Lear Seating Corporation and the Province of
Ontario, Canada relating to indebtedness of up to $2,000,000
(Canadian).
8. Loan Agreement, dated January 27, 1993, between Lear Seating
Corporation and the Province of Ontario, Canada.
9. Term Loan Agreement between Lear Seating Italia and Istituto Bancario
San Paolo di Torino S.p.A. entered into in connection with the
acquisition of the Fiat Seat Business.
10. Industrial Facilities Agreement governing indebtedness of ASAA
Technologies, Inc. to Cumberland Plateau Planning District Commission
and Cumberland Plateau Company.
11. Mortgage loan agreements governing indebtedness and ASAA Technologies,
Inc. to Associated Bank Lakeshore N.A.
12. Revolving Loan Agreement between Lear Seating Canada Ltd. and The Bank
of Nova Scotia.
13. Loan Agreement between NS Beteiligungs GmbH and IndustrieKreditbank
AG-Deutsch Industriebank.
<PAGE> 146
2
14. Agreements governing working capital Indebtedness of Lear Seating
(Indonesia) Pty Ltd. and Lear Australia Pty Ltd. listed on Schedule
8.2(s).
<PAGE> 147
EXHIBIT A
FORM OF
REVOLVING CREDIT NOTE
$__________________
New York, New York
August __, 1995
FOR VALUE RECEIVED, the undersigned, LEAR SEATING CORPORATION,
a Delaware corporation (the "Borrower"), hereby unconditionally promises to pay
to the order of _____________ (the "Bank") at the office of Chemical Bank
located at 270 Park Avenue, New York, New York 10017, in lawful money of the
United States of America and in immediately available funds, on the Termination
Date the principal amount of (a) ____________________________ DOLLARS
($___________), or, if less, (b) the aggregate unpaid principal amount of all
Revolving Credit Loans made by the Bank to the Borrower pursuant to subsection
2.1 of the Credit Agreement referred to below. The Borrower further agrees to
pay interest in like money at such office on the unpaid principal amount hereof
from time to time outstanding at the rates and on the dates specified in
subsection 4.1 of such Credit Agreement.
The holder of this Revolving Credit Note is authorized to
endorse on the schedules annexed hereto and made a part hereof or on a
continuation thereof which shall be attached hereto and made a part hereof the
date, Type, maturity date, interest rate with respect thereto and amount of
each Revolving Credit Loan made pursuant to the Credit Agreement and the date
and amount of each payment or prepayment of principal thereof, each
continuation thereof, each conversion of all or a portion thereof to another
Type and, in the case of Eurodollar Loans, the length of each Interest Period,
with respect thereto. Each such endorsement shall constitute prima facie
evidence of the accuracy of the information endorsed. The failure to make any
such endorsement shall not affect the obligations of the Borrower in respect of
such Revolving Credit Loan.
This Revolving Credit Note (a) is one of the Revolving Credit
Notes referred to in the Credit Agreement, dated as of August 17, 1995 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Borrower, the Bank, the other financial institutions
from time to time parties thereto, Chemical Bank, as Agent ,and the Managing
Agents, Co-Agents and Lead Managers identified therein, (b) is subject to the
provisions of the Credit Agreement and (c) is subject to optional and mandatory
prepayment in whole or in part as provided in the Credit Agreement. This
Revolving Credit Note is guaranteed as provided in the Credit Agreement.
Reference is hereby made to the Credit Agreement for the nature and extent of
the guarantees, the terms and conditions upon which such
<PAGE> 148
guarantees were granted and the rights of the holder of this Revolving Credit
Note in respect thereof.
Upon the occurrence of any one or more of the Events of
Default, all amounts then remaining unpaid on this Revolving Credit Note shall
become, or may be declared to be, immediately due and payable, all as provided
in the Credit Agreement.
All parties now and hereafter liable with respect to this
Revolving Credit Note, whether maker, principal, surety, guarantor, endorser or
otherwise, hereby waive presentment, demand, protest and all other notices of
any kind.
Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the Credit
Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
LEAR SEATING CORPORATION
By___________________________
Title:
<PAGE> 149
Schedule A
to Revolving
Credit Note
LOANS, CONVERSIONS AND REPAYMENTS OF ABR LOANS
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Amount Amount of ABR Loans
Converted to Amount of Principal of Converted to Unpaid Principal Notation Made
Date Amount of ABR Loans ABR Loans ABR Loans Repaid Eurodollar Loans Balance of ABR Loans By
<S> <C> <C> <C> <C> <C> <C>
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</TABLE>
<PAGE> 150
Schedule B
to Revolving
Credit Note
LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Interest Period Amount of Amount of
Amount and Eurodollar Principal Eurodollar Loans Unpaid Principal
Amount of Converted to Rate with of Eurodollar Converted to Balance of Notation
Date Eurodollar Loans Eurodollar Loans Respect Thereto Loans Repaid ABR Loans Eurodollar Loans Made By
<S> <C> <C> <C> <C> <C> <C> <C>
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</TABLE>
<PAGE> 151
EXHIBIT B
FORM OF
SWING LINE NOTE
$65,000,000
New York, New York
August __, 1995
FOR VALUE RECEIVED, the undersigned, LEAR SEATING CORPORATION,
a Delaware corporation (the "Borrower"), hereby unconditionally promises to pay
to the order of CHEMICAL BANK (the "Bank") at the office of Chemical Bank
located at 270 Park Avenue, New York, New York 10017, in lawful money of the
United States of America and in immediately available funds, on the Termination
Date the principal amount of (a) SIXTY-FIVE MILLION ($65,000,000), or, if
less, (b) the aggregate unpaid principal amount of all Swing Line Loans made by
the Bank to the Borrower pursuant to subsection 2.4 of the Credit Agreement
referred to below. The Borrower further agrees to pay interest in like money
at such office on the unpaid principal amount hereof from time to time
outstanding at the rates and on the dates specified in subsection 4.1 of such
Credit Agreement.
The holder of this Swing Line Note is authorized to endorse on
the schedule annexed hereto and made a part hereof or on a continuation thereof
which shall be attached hereto and made a part hereof the date and amount of
each Swing Line Loan made pursuant to the Credit Agreement and the date and
amount of each payment or prepayment of principal thereof. Each such
endorsement shall constitute prima facie evidence of the accuracy of the
information endorsed. The failure to make any such endorsement shall not
affect the obligations of the Borrower in respect of such Swing Line Loan.
This Swing Line Note (a) is the Swing Line Note referred to in
the Credit Agreement, dated as of August 17, 1995 (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"), among the
Borrower, the Bank, the other financial institutions from time to time parties
thereto, Chemical Bank, as Agent, and the Managing Agents, Co-Agents and Lead
Managers identified therein, (b) is subject to the provisions of the Credit
Agreement and (c) is subject to optional and mandatory prepayment in whole or
in part as provided in the Credit Agreement. This Swing Line Note is
guaranteed as provided in the Credit Agreement. Reference is hereby made to
the Credit Agreement for the nature and extent of the guarantees, the terms and
conditions upon which such guarantees were granted and the rights of the holder
of this Swing Line Note in respect thereof.
Upon the occurrence of any one or more of the Events of
Default, all amounts then remaining unpaid on this Swing Line
<PAGE> 152
2
Note shall become, or may be declared to be, immediately due and payable, all
as provided in the Credit Agreement.
All parties now and hereafter liable with respect to this
Swing Line Note, whether maker, principal, surety, guarantor, endorser or
otherwise, hereby waive presentment, demand, protest and all other notices of
any kind.
Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the Credit
Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
LEAR SEATING CORPORATION
By___________________________
Title:
<PAGE> 153
Schedule A to Swing Line Note
LOANS, CONVERSIONS AND REPAYMENTS OF SWING LINE LOANS
<TABLE>
<CAPTION>
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Amount of Principal of Unpaid Principal Notation Made
Date Amount of Loans Loans Repaid Balance of Loans By
<S> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 154
EXHIBIT C
FORM OF
SUBSIDIARY GUARANTEE
SUBSIDIARY GUARANTEE, dated as of August 17, 1995 (this
"Guarantee"), made by each of the corporations that are signatories hereto
other than Chemical Bank (the "Guarantors"), in favor of CHEMICAL BANK, as
administrative agent (in such capacity, the "Agent") for the Banks parties to
the Credit Agreement referred to below.
W I T N E S S E T H:
WHEREAS, Lear Seating Corporation (the "Borrower") is a party
to the Credit Agreement, dated as of August 17, 1995 (as amended, supplemented
or otherwise modified from time to time, the "Credit Agreement") with the
financial institutions parties thereto (the "Banks"), the Agent and the
Managing Agents, Co-Agents and Lead Managers identified therein;
WHEREAS, pursuant to the Credit Agreement and the other Loan
Documents (as defined in the Credit Agreement), the Banks have agreed to make
certain Loans (as defined in the Credit Agreement) to or for the benefit of the
Borrower and, in the case of the Issuing Bank (as defined in the Credit
Agreement), issue and, in the case of the Participating Banks (as defined in
the Credit Agreement), participate in certain Letters of Credit (as defined in
the Credit Agreement);
WHEREAS, it is a condition precedent to the obligation of the
Banks to make the Loans and to issue or participate in the Letters of Credit
under the Credit Agreement that each Guarantor shall have executed and
delivered this Guarantee to the Agent for the ratable benefit of the Banks; and
WHEREAS, the Borrower and the Guarantors are engaged in
related businesses and each Guarantor will derive substantial direct and
indirect benefits from the making of the Loans and issuances of the Letters of
Credit;
NOW, THEREFORE, in consideration of the premises contained
herein and to induce the Agent, and the Banks to enter into the Credit
Agreement and to induce the Banks to make the Loans and to issue and
participate in the Letters of Credit under the Credit Agreement, each Guarantor
hereby agrees with the Agent, for the ratable benefit of the Banks, as follows:
1. Defined Terms. (a) Unless otherwise defined herein,
terms defined in the Credit Agreement and used herein shall have the meanings
given to them in the Credit Agreement.
<PAGE> 155
2
(b) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Guarantee shall refer to this Guarantee as a
whole and not to any particular provision of this Guarantee, and Section and
paragraph references are to this Guarantee unless otherwise specified.
(c) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
2. Guarantee. (a) Subject to the provisions of paragraph
2.(b), each of the Guarantors hereby, jointly and severally, unconditionally
and irrevocably, guarantees to the Agent, for the ratable benefit of the Banks
and their respective successors, indorsees, transferees and assigns, the prompt
and complete payment and performance by the Borrower when due (whether at the
stated maturity, by acceleration or otherwise) of the Obligations.
(b) Anything herein or in any other Loan Document to the
contrary notwithstanding, the maximum liability of each Guarantor hereunder and
under the other Loan Documents, and, without duplication, the maximum amount of
Obligations secured pursuant to the Security Documents by assets of such
Guarantor, shall in no event exceed the amount which can be guaranteed by such
Guarantor under applicable federal and state laws relating to the insolvency of
debtors.
(c) Each Guarantor further agrees to pay any and all expenses
(including, without limitation, all fees and disbursements of counsel) which
may be paid or incurred by the Agent or any Bank in enforcing, or obtaining
advice of counsel in respect of, any rights with respect to, or collecting, any
or all of the Obligations and/or enforcing any rights with respect to, or
collecting against, such Guarantor under this Guarantee. This Guarantee shall
remain in full force and effect until the Obligations are paid in full and the
Commitments are terminated, notwithstanding that from time to time prior
thereto the Borrower may be free from any Obligations.
(d) Each Guarantor agrees that the Obligations may at any
time and from time to time exceed the amount of the liability of such Guarantor
hereunder without impairing this Guarantee or affecting the rights and remedies
of the Agent or any Bank hereunder.
(e) No payment or payments made by the Borrower, any of the
Guarantors, any other guarantor or any other Person or received or collected by
the Agent or any Bank from the Borrower, any of the Guarantors, any other
guarantor or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application at any time or from time to time in
reduction of or in payment of the Obligations shall be deemed to modify,
reduce, release or otherwise affect the liability of any Guarantor hereunder
which shall, notwithstanding any such payment or payments other than payments
made by such Guarantor in respect
<PAGE> 156
3
of the Obligations or payments received or collected from such Guarantor in
respect of the Obligations, remain liable for the Obligations up to the maximum
liability of such Guarantor hereunder until the Obligations are paid in full
and the Commitments are terminated.
(f) Each Guarantor agrees that whenever, at any time, or from
time to time, it shall make any payment to the Agent or any Bank on account of
its liability hereunder, it will notify the Agent in writing that such payment
is made under this Guarantee for such purpose.
3. Right of Contribution. Each Guarantor hereby agrees that
to the extent that a Guarantor shall have paid more than its proportionate
share of any payment made hereunder, such Guarantor shall be entitled to seek
and receive contribution from and against any other Guarantor hereunder who has
not paid its proportionate share of such payment. Each Guarantor's right of
contribution shall be subject to the terms and conditions of Section 5 hereof.
The provisions of this Section shall in no respect limit the obligations and
liabilities of any Guarantor to the Agent and the Banks, and each Guarantor
shall remain liable to the Agent and the Banks for the full amount guaranteed
by such Guarantor hereunder.
4. Right of Set-off. Upon the occurrence of any Event of
Default, each Guarantor hereby irrevocably authorizes each Bank at any time and
from time to time without notice to such Guarantor or any other Guarantor, any
such notice being expressly waived by each Guarantor, to set-off and
appropriate and apply any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Bank to or
for the credit or the account of such Guarantor, or any part thereof in such
amounts as such Bank may elect, against and on account of the obligations and
liabilities of such Guarantor to such Bank hereunder and claims of every nature
and description of such Bank against such Guarantor, in any currency, whether
arising hereunder, under the Credit Agreement, any Note, any other Loan
Documents or otherwise, as such Bank may elect, whether or not the Agent or any
Bank has made any demand for payment and although such obligations, liabilities
and claims may be contingent or unmatured. The Agent and each Bank shall
notify such Guarantor promptly of any such set-off and the application made by
the Agent or such Bank, provided that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of the Agent
and each Bank under this Section are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the Agent or
such Bank may have.
5. No Subrogation. Notwithstanding any payment or payments
made by any of the Guarantors hereunder or any set-off or application of funds
of any of the Guarantors by any Bank, no
<PAGE> 157
4
Guarantor shall be entitled to be subrogated to any of the rights of the Agent
or any Bank against the Borrower or any other Guarantor or any collateral
security or guarantee or right of offset held by the Agent or any Bank for the
payment of the Obligations, nor shall any Guarantor seek or be entitled to seek
any contribution or reimbursement from the Borrower or any other Guarantor in
respect of payments made by such Guarantor hereunder, until all amounts owing
to the Agent and the Banks by the Borrower on account of the Obligations are
paid in full and the Commitments are terminated. If any amount shall be paid
to any Guarantor on account of such subrogation rights at any time when all of
the Obligations shall not have been paid in full, such amount shall be held by
such Guarantor in trust for the Agent and the Banks, segregated from other
funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor,
be turned over to the Agent in the exact form received by such Guarantor (duly
indorsed by such Guarantor to the Agent, if required), to be applied against
the Obligations, whether matured or unmatured, in such order as the Agent may
determine.
6. Amendments, etc. with respect to the Obligations; Waiver
of Rights. Each Guarantor shall remain obligated hereunder and under any other
Loan Document to which it is a party notwithstanding that, without any
reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any demand for payment of any of the Obligations made
by the Agent or any Bank may be rescinded by such party and any of the
Obligations continued, and the Obligations, or the liability of any other party
upon or for any part thereof, or any collateral security or guarantee therefor
or right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised,
waived, surrendered or released by the Agent or any Bank, and the Credit
Agreement, the Notes and the other Loan Documents and any other documents
executed and delivered in connection therewith may be amended, modified,
supplemented or terminated, in whole or in part, as the Agent, the Required
Banks or all the Banks, as the case may be, may deem advisable from time to
time, and any collateral security, guarantee or right of offset at any time
held by the Agent or any Bank for the payment of the Obligations may be sold,
exchanged, waived, surrendered or released. Neither the Agent nor any Bank
shall have any obligation to protect, secure, perfect or insure any Lien at any
time held by it as security for the Obligations or for this Guarantee or any
property subject thereto. When making any demand hereunder against any of the
Guarantors, the Agent or any Bank may, but shall be under no obligation to,
make a similar demand on the Borrower or any other Guarantor or guarantor, and
any failure by the Agent or any Bank to make any such demand or to collect any
payments from the Borrower or any such other Guarantor or guarantor or any
release of the Borrower or such other Guarantor or guarantor shall not relieve
any of the Guarantors in respect of which a demand or collection is not made or
any of the Guarantors not so released of their several obligations or
liabilities hereunder, and shall not impair or affect the rights and remedies,
express or implied, or as a matter of law, of the
<PAGE> 158
5
Agent or any Bank against any of the Guarantors. For the purposes hereof
"demand" shall include the commencement and continuance of any legal
proceedings.
7. Guarantee Absolute and Unconditional. Each Guarantor
waives any and all notice of the creation, renewal, extension or accrual of any
of the Obligations and notice of or proof of reliance by the Agent or any Bank
upon this Guarantee or acceptance of this Guarantee; the Obligations, and any
of them, shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon this
Guarantee; and all dealings between the Borrower and any of the Guarantors, on
the one hand, and the Agent and the Banks, on the other hand, likewise shall be
conclusively presumed to have been had or consummated in reliance upon this
Guarantee. Each Guarantor waives diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon the Borrower or any of
the Guarantors with respect to the Obligations. Each Guarantor understands and
agrees that this Guarantee shall be construed as a continuing, absolute and
unconditional guarantee of payment without regard to (a) the validity,
regularity or enforceability of the Credit Agreement, any Note or any other
Loan Document, any of the Obligations or any other collateral security therefor
or guarantee or right of offset with respect thereto at any time or from time
to time held by the Agent or any Bank, (b) any defense, set-off or counterclaim
(other than a defense of payment or performance) which may at any time be
available to or be asserted by the Borrower against the Agent or any Bank, or
(c) any other circumstance whatsoever (with or without notice to or knowledge
of the Borrower or such Guarantor) which constitutes, or might be construed to
constitute, an equitable or legal discharge of the Borrower for the
Obligations, or of such Guarantor under this Guarantee, in bankruptcy or in any
other instance. When pursuing its rights and remedies hereunder against any
Guarantor, the Agent and any Bank may, but shall be under no obligation to,
pursue such rights and remedies as it may have against the Borrower or any
other Person or against any collateral security or guarantee for the
Obligations or any right of offset with respect thereto, and any failure by the
Agent or any Bank to pursue such other rights or remedies or to collect any
payments from the Borrower or any such other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or
any release of the Borrower or any such other Person or any such collateral
security, guarantee or right of offset, shall not relieve such Guarantor of any
liability hereunder, and shall not impair or affect the rights and remedies,
whether express, implied or available as a matter of law, of the Agent and the
Banks against such Guarantor. This Guarantee shall remain in full force and
effect and be binding in accordance with and to the extent of its terms upon
each Guarantor and the successors and assigns thereof, and shall inure to the
benefit of the Agent and the Banks, and their respective successors, indorsees,
transferees and assigns, until all the Obligations and the obligations of each
Guarantor under this Guarantee shall have been satisfied by payment in full and
the
<PAGE> 159
6
Commitments shall be terminated, notwithstanding that from time to time during
the term of the Credit Agreement the Borrower may be free from any Obligations.
8. Reinstatement. This Guarantee shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by the Agent or any Bank upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower or any Guarantor, or
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, the Borrower or any Guarantor or any
substantial part of its property, or otherwise, all as though such payments had
not been made.
9. Payments. Each Guarantor hereby guarantees that payments
hereunder will be paid to the Agent without set-off or counterclaim in Dollars
at the office of the Agent located at 270 Park Avenue, New York, New York
10017.
10. Representations and Warranties. Each Guarantor hereby
represents and warrants that:
(a) it is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation and
has the corporate power and authority and the legal right to own and operate
its property, to lease the property it operates and to conduct the business in
which it is currently engaged;
(b) it has the corporate power and authority and the legal
right to execute and deliver, and to perform its obligations under, this
Guarantee and each other Loan Document to which it is a party, and has taken
all necessary corporate action to authorize the execution, delivery and
performance of this Guarantee and each other Loan Document to which it is a
party;
(c) this Guarantee and each other Loan Document to which it
is a party constitutes a legal, valid and binding obligation of such Guarantor
enforceable in accordance with its terms, except as affected by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting the enforcement of creditors' rights generally,
general equitable principles and an implied covenant of good faith and fair
dealing;
(d) the execution, delivery and performance of this Guarantee
and each other Loan Document to which it is a party will not violate any
provision of any Requirement of Law or Contractual Obligation of such Guarantor
and will not result in or require the creation or imposition of any Lien on any
of the properties or revenues of such Guarantor pursuant to any Requirement of
Law or Contractual Obligation of the Guarantor; and
<PAGE> 160
7
(e) no consent or authorization of, filing with, or other act
by or in respect of, any arbitrator or Governmental Authority and no consent of
any other Person (including, without limitation, any stockholder or creditor of
such Guarantor) is required in connection with the execution, delivery,
performance, validity or enforceability of this Guarantee and each other Loan
Document to which it is a party.
Each Guarantor agrees that the foregoing representations and
warranties shall be deemed to have been made by such Guarantor on the date of
each borrowing or issuance of a Letter of Credit under the Credit Agreement and
as of such date of borrowing or issuance, as the case may be, as though made
hereunder on and as of such date. Each Guarantor hereby confirms that each of
the Mortgages and each other Security Document to which such Guarantor is a
party stands as collateral security for the payment and performance of such
Guarantor's obligations and liabilities under this Guarantee.
11. Authority of Agent. Each Guarantor acknowledges that the
rights and responsibilities of the Agent under this Guarantee with respect to
any action taken by the Agent or the exercise or non-exercise by the Agent of
any option, right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Guarantee shall, as between the
Agent and the Banks, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Agent and such Guarantor, the Agent shall be conclusively
presumed to be acting as agent for the Banks with full and valid authority so
to act or refrain from acting, and no Guarantor shall be under any obligation,
or entitlement, to make any inquiry respecting such authority.
12. Notices. All notices, requests and demands to or upon
the Agent, any Bank or any Guarantor to be effective shall be in writing (or by
telex or telecopy confirmed in writing) and shall be deemed to have been duly
given or made (1) when delivered by hand or (2) if given by mail, five days
after being deposited in the mails by certified mail, return receipt requested
or (3) if by telex or telecopy, when sent and receipt has been confirmed,
addressed as follows:
(a) if to the Agent or any Bank, at its address or
transmission number for notices provided in subsection 11.2 of the Credit
Agreement; and
(b) if to any Guarantor, at its address or transmission
number for notices set forth under its signature below.
The Agent, each Bank and each Guarantor may change its address
and transmission numbers for notices by notice in the manner provided in this
Section.
13. Counterparts. This Guarantee may be executed by one or
more of the parties to this Guarantee on any number of
<PAGE> 161
8
separate counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the counterparts of
this Guarantee signed by all the parties hereto shall be lodged with the Agent.
14. Severability. Any provision of this Guarantee which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
15. Integration. This Guarantee represents the agreement of
each Guarantor with respect to the subject matter hereof and there are no
promises or representations by the Agent or any Bank relative to the subject
matter hereof not reflected herein.
16. Amendments in Writing; No Waiver; Cumulative Remedies.
(a) None of the terms or provisions of this Guarantee may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
each Guarantor and the Agent in accordance with subsection 11.1 of the Credit
Agreement, provided that any provision of this Guarantee may be waived by the
Agent and the Banks in a letter or agreement executed by the Agent or by
telecopy from the Agent.
(b) Neither the Agent nor any Bank shall by any act (except
by a written instrument pursuant to paragraph 16.(a) hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. No failure to exercise, nor
any delay in exercising, on the part of the Agent or any Bank, any right, power
or privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Agent or any Bank of any right or remedy hereunder
on any one occasion shall not be construed as a bar to any right or remedy
which the Agent or such Bank would otherwise have on any future occasion.
(c) The rights and remedies herein provided are cumulative,
may be exercised singly or concurrently and are not exclusive of any other
rights or remedies provided by law.
17. Section Headings. The section headings used in this
Guarantee are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation
hereof.
18. Successors and Assigns. This Guarantee shall be binding
upon the successors and assigns of each Guarantor and
<PAGE> 162
9
shall inure to the benefit of the Agent and the Banks and their successors and
assigns.
19. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
20. Submission to Jurisdiction; Waivers. Each Guarantor
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal
action or proceeding relating to this Guarantee or any other Loan
Document to which it is a party, or for recognition and enforcement of
any judgment in respect thereof, to the non-exclusive general
jurisdiction of the courts of the State of New York, the courts of the
United States of America for the Southern District of New York, and
appellate courts from any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives trial by jury and any objection that
it may now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding was
brought in an inconvenient court and agrees not to plead or claim the
same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to such Guarantor at its address set forth under its
signature below or at such other address of which the Agent shall have
been notified pursuant to Section 12; and
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction.
IN WITNESS WHEREOF, each of the undersigned has caused this
Guarantee to be duly executed and delivered as of the day and year first above
written.
LEAR ACQUISITION CORP.
NO. 14
By:_________________________
Title:
<PAGE> 163
10
LEAR SEATING HOLDINGS CORP.
NO. 50
By:_________________________
Title:
PROGRESS PATTERN CORP.
By:_________________________
Title:
LEAR PLASTICS CORP.
By:_________________________
Title:
LS ACQUISITION CORPORATION
NO. 24
By:_________________________
Title:
FAIR HAVEN INDUSTRIES, INC.
By:_________________________
Title:
AIHI ACQUISITION CORP.
By:_________________________
Title:
Address for Notices:
c/o Lear Seating Corporation
21557 Telegraph Road
Southfield, Michigan 48034
Attention: Donald J. Stebbins
Telecopy: (810) 746-1593
<PAGE> 164
ANNEX A
FORM OF
GUARANTOR SUPPLEMENT
_____________, 199_
Chemical Bank, As Agent
270 Park Avenue
New York, New York 10017
Attention: Rosemary Bradley
Re: Subsidiary Guarantee, dated as of August 17, 1995 (as amended,
supplemented or otherwise modified from time to time, the
"Subsidiary Guarantee"), originally made by Lear Acquisition
Corp. No. 14, Lear Seating Holdings Corp. No. 50, Progress
Pattern Corp., Lear Plastics Corp., LS Acquisition Corporation
No. 24, Fair Haven Industries, Inc. and AIHI Acquisition Corp.
in favor of Chemical Bank, as Agent
Ladies and Gentlemen:
Reference is made to the Subsidiary Guarantee. Terms defined
in the Subsidiary Guarantee shall be used herein as therein defined.
The undersigned, ___________________________, a
________________ corporation and a Subsidiary of the Borrower, in consideration
of the extensions of credit by the Banks to the Borrower pursuant to the Credit
Agreement, which extensions benefit the undersigned by making funds available
to the undersigned and by enhancing the financial strength of the consolidated
group of which the undersigned is a member, hereby agrees to become an
additional Guarantor for the purposes of the Subsidiary Guarantee and to
perform all the obligations of a Guarantor under, and to be bound in all
respects by the terms of, the Subsidiary Guarantee as if the undersigned were a
signatory party thereto, effective from the date hereof.
The undersigned hereby certifies that (a) this Guarantor
Supplement has been duly authorized, executed and delivered by the undersigned
and constitute its legal, valid and binding obligation enforceable against the
undersigned in accordance with its terms and (b) the representations and
warranties contained in Section 10 of the Subsidiary Guarantee insofar as they
relate to the undersigned are true and correct on and as of the date hereof,
with the same effect as if made on and as of such date (except to the extent
such representations and
<PAGE> 165
2
warranties expressly relate to an earlier date, in which case they are true and
correct as of such earlier date).
The undersigned hereby certifies that attached hereto as Annex
I is a copy of the resolutions of the Board of Directors of the undersigned,
authorizing the undersigned to become a Guarantor under the Subsidiary
Guarantee and to perform its obligations thereunder and to execute, deliver and
perform this Guarantor Supplement.
The undersigned confirms that it has received a copy of the
Subsidiary Guarantee including all amendments thereto, if any.
The address to which all notices to the undersigned under the
Subsidiary Guarantee should be directed is:
c/o Lear Seating Corporation
21557 Telegraph Road
Southfield, Michigan 48034
Attention: Donald J. Stebbins
Telecopy: (810) 746-1593
This Guarantor Supplement shall be effective on and as of the
date first written above. THIS GUARANTOR SUPPLEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
Very truly yours,
[NAME OF SUBSIDIARY OF BORROWER]
By:_____________________________
Title:
<PAGE> 166
ANNEX I
RESOLUTIONS
<PAGE> 167
EXHIBIT D
FORM OF
DOMESTIC PLEDGE AGREEMENT
DOMESTIC PLEDGE AGREEMENT, dated as of August 17, 1995, made
by LEAR SEATING CORPORATION, a Delaware corporation (the "Pledgor"), in favor
of CHEMICAL BANK, as administrative agent (in such capacity, the "Agent") for
the Banks parties to the Credit Agreement referred to below.
W I T N E S S E T H :
WHEREAS, Lear Seating Corporation (the "Borrower") is a party
to the Credit Agreement, dated as of August 17, 1995 (as amended, supplemented
or otherwise modified from time to time, the "Credit Agreement") with the
financial institutions parties thereto (the "Banks"), the Agent and the
Managing Agents, Co-Agents and Lead Managers identified therein;
WHEREAS, pursuant to the Credit Agreement and the other Loan
Documents (as defined in the Credit Agreement), the Banks have agreed to make
certain Loans (as defined in the Credit Agreement) to or for the benefit of the
Pledgor and, in the case of the Issuing Bank (as defined in the Credit
Agreement), issue and, in the case of the Participating Banks (as defined in
the Credit Agreement), participate in certain Letters of Credit (as defined in
the Credit Agreement) for the account of the Pledgor; and
WHEREAS, it is a condition precedent to the obligation of the
Banks to make the Loans and to issue or participate in the Letters of Credit
under the Credit Agreement that the Pledgor shall have executed and delivered
this Pledge Agreement to the Agent for the ratable benefit of the Banks;
NOW, THEREFORE, in consideration of the premises contained
herein and to induce the Agent and the Banks to enter into the Credit Agreement
and to induce the Banks to make the Loans and to issue and participate in the
Letters of Credit under the Credit Agreement, the Pledgor hereby agrees with
the Agent, for the ratable benefit of the Banks, as follows:
1. Defined Terms. (a) Unless otherwise defined herein,
terms which are defined in the Credit Agreement and used herein shall have the
meanings given to them in the Credit Agreement.
(b) The following terms shall have the following meanings:
<PAGE> 168
2
"Code" means the Uniform Commercial Code from time to time in
effect in the State of New York.
"Collateral" means the Pledged Stock and all Proceeds.
"Issuers" means, collectively, the companies identified on
Schedule I as the issuers of the Pledged Stock; individually, each an
"Issuer".
"Pledge Agreement" means this Domestic Pledge Agreement, as
amended, supplemented or otherwise modified from time to time.
"Pledged Stock" means the shares of capital stock listed on
Schedule I, together with all stock certificates, options, warrants or
rights of any nature whatsoever that may be issued or granted by any
Issuer to the Pledgor in respect of the Pledged Stock while this
Pledge Agreement is in effect.
"Proceeds" means all "proceeds" as such term is defined in
Section 9-306(1) of the Code in effect in the State of New York on the
date hereof and, in any event, shall include, without limitation, all
dividends or other income from the Pledged Stock, collections thereon
and distributions with respect thereto.
(c) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Pledge Agreement shall refer to this Pledge
Agreement as a whole and not to any particular provision of this Pledge
Agreement, and Section, paragraph and Schedule references are to this Pledge
Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
2. Pledge; Grant of Security Interest. The Pledgor hereby
delivers to the Agent, for the ratable benefit of the Banks, all the Pledged
Stock and hereby grants to Agent, for the ratable benefit of the Banks, a first
security interest in the Collateral, as collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Obligations.
3. Stock Powers. Concurrently with the delivery to the Agent
of each certificate representing one or more shares of Pledged Stock to the
Agent, the Pledgor shall deliver an undated stock power covering such
certificate, duly executed in blank by the Pledgor with, if the Agent so
requests, signature guaranteed.
<PAGE> 169
3
4. Representations and Warranties. The Pledgor represents
and warrants that:
(a) the Pledged Stock constitutes all the issued and
outstanding shares of all classes of the capital stock of each Issuer
owned by the Pledgor, and the percentage of shares listed on Schedule
I accurately sets forth the respective percentage which such shares
pledged by the Pledgor constitute of all such issued and outstanding
capital stock of the respective Issuers;
(b) the Pledged Stock has been duly and validly issued and is
fully paid and nonassessable;
(c) the Pledgor is the record and beneficial owner of, and
has good and marketable title to, the Pledged Stock, free of any and
all Liens or options in favor of, or claims of, any other Person,
except the Lien created by this Pledge Agreement; and
(d) upon delivery to the Agent of the stock certificates
evidencing the Pledged Stock, the Lien granted pursuant to this Pledge
Agreement will constitute a valid, perfected first priority Lien on
the Collateral, enforceable as such against any Persons purporting to
purchase any Collateral from the Pledgor.
5. Covenants. The Pledgor covenants and agrees with the
Agent and the Banks that, from and after the date of this Pledge Agreement
until the Obligations have been paid in full and the Commitments have been
terminated:
(a) If the Pledgor shall, as a result of its ownership of the
Pledged Stock, become entitled to receive or shall receive any stock
certificate (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any certificate
issued in connection with any reorganization), option or rights,
whether in addition to, in substitution of, as a conversion of, or in
exchange for any shares of the Pledged Stock, or otherwise in respect
thereof, the Pledgor shall accept the same as the agent of the Agent
and the Banks, hold the same in trust for the Agent and the Banks and
deliver the same forthwith to the Agent in the exact form received,
duly indorsed by the Pledgor to the Agent, if required, together with
an undated stock power covering such certificate duly executed in
blank by the Pledgor and with, if the Agent so requests, signature
guaranteed, to be held by the Agent, subject to the terms hereof, as
additional collateral security for the Obligations. Any sums paid
upon or in respect of the Pledged Stock upon the liquidation or
dissolution of any Issuer shall be paid over to the Agent to
<PAGE> 170
4
be held by it hereunder as additional collateral security for the
Obligations, and in case any distribution of capital shall be made on
or in respect of the Pledged Stock or any property shall be
distributed upon or with respect to the Pledged Stock pursuant to the
recapitalization or reclassification of the capital of any Issuer or
pursuant to the reorganization thereof, the property so distributed
shall be delivered to the Agent to be held by it hereunder as
additional collateral security for the Obligations. If any sums of
money or property so paid or distributed in respect of the Pledged
Stock shall be received by the Pledgor, the Pledgor shall, until such
money or property is paid or delivered to the Agent, hold such money
or property in trust for the Agent and the Banks, segregated from
other funds of the Pledgor, as additional collateral security for the
Obligations.
(b) Without the prior written consent of the Agent, the
Pledgor will not (i) vote to enable, or take any other action to
permit, any Issuer to issue any stock or other equity securities of
any nature or to issue any other securities convertible into or
granting the right to purchase or exchange for any stock or other
equity securities of any nature of such Issuer, (ii) sell, assign,
transfer, exchange, or otherwise dispose of, or grant any option with
respect to, the Collateral or (iii) create, incur or permit to exist
any Lien or option in favor of, or any claim of any Person with
respect to, any of the Collateral, or any interest therein, except for
the Lien provided for by this Pledge Agreement. The Pledgor will
defend the right, title and interest of the Agent and the Banks in and
to the Collateral against the claims and demands of all Persons
whomsoever.
(c) At any time and from time to time, upon the written
request of the Agent, and at the sole expense of the Pledgor, the
Pledgor will promptly and duly execute and deliver such further
instruments and documents and take such further actions as the Agent
may reasonably request for the purposes of obtaining or preserving the
full benefits of this Pledge Agreement and of the rights and powers
herein granted. If any amount payable under or in connection with any
of the Collateral shall be or become evidenced by any promissory note,
other instrument or chattel paper, such note, instrument or chattel
paper shall be immediately delivered to the Agent, duly endorsed in a
manner satisfactory to the Agent, to be held as Collateral pursuant to
this Pledge Agreement.
(d) The Pledgor agrees to pay, and to save the Agent and the
Banks harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales
or other taxes which may be payable
<PAGE> 171
5
or determined to be payable with respect to any of the Collateral or
in connection with any of the transactions contemplated by this Pledge
Agreement.
6. Cash Dividends; Voting Rights. Unless an Event of Default
shall have occurred and be continuing and the Agent shall have given notice to
the Pledgor of the Agent's intent to exercise its corresponding rights pursuant
to Section 7 below, the Pledgor shall be permitted to receive all cash
dividends paid in the normal course of business of each Issuer, to the extent
permitted in the Credit Agreement, in respect of the Pledged Stock and to
exercise all voting and corporate rights with respect to the Pledged Stock;
provided, however, that no vote shall be cast or corporate right exercised or
other action taken which would reasonably be expected to (a) impair the
Collateral or (b) be inconsistent with or result in any violation of any
provision of the Credit Agreement or any other Loan Document.
7. Rights of the Banks and the Agent. (a) If an Event of
Default shall occur and be continuing (i) the Agent shall have the right to
receive any and all cash dividends paid in respect of the Pledged Stock and
make application thereof to the Obligations in such order as the Agent may
determine and (ii) all shares of the Pledged Stock shall be registered in the
name of the Agent or its nominee, and the Agent or its nominee may thereafter
exercise (A) all voting, corporate and other rights pertaining to such shares
of the Pledged Stock at any meeting of shareholders of any Issuer or otherwise
and (B) any and all rights of conversion, exchange, subscription and any other
rights, privileges or options pertaining to such shares of the Pledged Stock as
if it were the absolute owner thereof (including, without limitation, the right
to exchange at its discretion any and all of the Pledged Stock upon the merger,
consolidation, reorganization, recapitalization or other fundamental change in
the corporate structure of any Issuer, or upon the exercise by the Pledgor or
the Agent of any right, privilege or option pertaining to such shares of the
Pledged Stock, and in connection therewith, the right to deposit and deliver
any and all of the Pledged Stock with any committee, depositary, transfer
agent, registrar or other designated agency upon such terms and conditions as
it may determine), all without liability except to account for property
actually received by it, but the Agent shall have no duty to the Pledgor to
exercise any such right, privilege or option and shall not be responsible for
any failure to do so or delay in so doing.
(b) The rights of the Agent and the Banks hereunder shall not
be conditioned or contingent upon the pursuit by the Agent or any Bank of any
right or remedy against any Issuer or any other Person which may be or become
liable in respect of all or any part of the Obligations or against any
collateral security therefor, guarantee therefor or right of offset with
respect thereto. Neither the Agent nor any Bank shall be liable for any
<PAGE> 172
6
failure to demand, collect or realize upon all or any part of the Collateral or
for any delay in doing so, nor shall the Agent be under any obligation to sell
or otherwise dispose of any Collateral upon the request of the Pledgor or any
other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof.
8. Remedies. If an Event of Default shall occur and be
continuing, the Agent, on behalf of the Banks, may exercise, in addition to all
other rights and remedies granted in this Pledge Agreement and in any other
instrument or agreement securing, evidencing or relating to the Obligations,
all rights and remedies of a secured party under the Code. Without limiting
the generality of the foregoing, the Agent, without demand of performance or
other demand, presentment, protest, advertisement or notice of any kind (except
any notice required by law referred to below) to or upon the Pledgor, any
Issuer or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, assign, give an option or options to
purchase or otherwise dispose of and deliver the Collateral or any part thereof
(or contract to do any of the foregoing), in one or more parcels at public or
private sale or sales, in the over-the-counter market, at any exchange or
broker's board or office of the Agent or any Bank or elsewhere upon such terms
and conditions as it may deem advisable and at such prices as it may deem best,
for cash or on credit or for future delivery without assumption of any credit
risk. The Agent or any Bank shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale or
sales, to purchase the whole or any part of the Collateral so sold, free of any
right or equity of redemption in the Pledgor, which right or equity is hereby
waived or released. The Agent shall apply any Proceeds from time to time held
by it and the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred in respect thereof or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral
or the rights of the Agent and the Banks hereunder, including, without
limitation, attorneys' fees and disbursements of counsel to the Agent, to the
payment in whole or in part of the Obligations, in such order as the Agent may
elect, and only after such application and after the payment by the Agent of
any other amount required by any provision of law, including, without
limitation, Section 9-504(1)(c) of the Code, need the Agent account for the
surplus, if any, to the Pledgor. To the extent permitted by applicable law,
the Pledgor waives all claims, damages and demands it may acquire against the
Agent or any Bank arising out of the exercise by them of any rights hereunder.
If any notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable
<PAGE> 173
7
and proper if given at least ten days before such sale or other disposition.
The Pledgor shall remain liable for any deficiency if the proceeds of any sale
or other disposition of Collateral are insufficient to pay the Obligations and
the fees and disbursements of any attorneys employed by the Agent or any Bank
to collect such deficiency.
9. Registration Rights; Private Sales. (a) If the Agent
shall determine to exercise its right to sell any or all of the Pledged Stock
pursuant to Section 8 hereof, and if in the reasonable opinion of the Agent it
is necessary or advisable to have the Pledged Stock, or that portion thereof to
be sold, registered under the provisions of the Securities Act of 1933, as
amended (the "Securities Act"), the Pledgor will cause the relevant Issuer(s)
to (i) execute and deliver, and cause the directors and officers of the
relevant Issuer(s) to execute and deliver, all such instruments and documents,
and do or cause to be done all such other acts as may be, in the opinion of the
Agent, necessary or advisable to register the Pledged Stock, or that portion
thereof to be sold under the provisions of the Securities Act, (ii) use its
best efforts to cause the registration statement relating thereto to become
effective and to remain effective for a period of one year from the date of the
first public offering of the Pledged Stock, or that portion thereof to be sold
and (iii) make all amendments thereto and/or to the related prospectus which,
in the opinion of the Agent, are necessary or advisable, all in conformity with
the requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto. The Pledgor agrees to
cause each Issuer to comply with the provisions of the securities or "Blue Sky"
laws of any and all jurisdictions which the Agent shall designate and to make
available to its security holders, as soon as practicable, an earnings
statement (which need not be audited) which will satisfy the provisions of
Section 11(a) of the Securities Act.
(b) The Pledgor recognizes that the Agent may be unable to
effect a public sale of any or all the Pledged Stock, by reason of certain
prohibitions contained in the Securities Act and applicable state securities
laws or otherwise, and may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers which will be obliged to agree,
among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. The
Pledgor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Agent shall
be under no obligation to delay a sale of any of the Pledged Stock for the
period of time necessary to permit the applicable Issuer to register such
securities for public sale under the Securities Act, or under
<PAGE> 174
8
applicable state securities laws, even if such Issuer would agree to do so.
(c) The Pledgor further agrees to use its best efforts to do
or cause to be done all such other acts as may be necessary to make such sale
or sales of all or any portion of the Pledged Stock pursuant to this Section 9
valid and binding and in compliance with any and all other applicable
Requirements of Law. The Pledgor further agrees that a breach of any of the
covenants contained in this Section 9 will cause irreparable injury to the
Agent and the Banks, that the Agent and the Banks have no adequate remedy at
law in respect of such breach and, as a consequence, that each and every
covenant contained in this Section 9 shall be specifically enforceable against
the Pledgor, and the Pledgor hereby waives and agrees not to assert any
defenses against an action for specific performance of such covenants except
for a defense that no Event of Default has occurred under the Credit Agreement.
10. Irrevocable Authorization and Instruction to Issuers.
The Pledgor hereby authorizes and instructs each Issuer to comply with any
instruction received by it from the Agent in writing that (a) states that an
Event of Default has occurred and (b) is otherwise in accordance with the terms
of this Pledge Agreement, without any other or further instructions from the
Pledgor, and the Pledgor agrees that each Issuer shall be fully protected in so
complying.
11. Agent's Appointment as Attorney-in-Fact. (a) The
Pledgor hereby irrevocably constitutes and appoints the Agent and any officer
or agent of the Agent, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of the Pledgor and in the name of the Pledgor or in the Agent's own name,
from time to time (provided an Event of Default has occurred and is continuing)
in the Agent's discretion, for the purpose of carrying out the terms of this
Agreement, to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of this Pledge Agreement, including, without limitation, any financing
statements, endorsements, assignments or other instruments of transfer.
(b) The Pledgor hereby ratifies all that said attorneys shall
lawfully do or cause to be done pursuant to the power of attorney granted in
paragraph 11(a) above. All powers, authorizations and agencies contained in
this Agreement are coupled with an interest and are irrevocable until this
Agreement is terminated and the security interests created hereby are released.
12. Limitation on Duties Regarding Collateral. The Agent's
sole duty with respect to the custody, safekeeping and
<PAGE> 175
9
physical preservation of the Collateral in its possession, under Section 9-207
of the Code or otherwise, shall be to deal with it in the same manner as the
Agent deals with similar securities and property for its own account. Neither
the Agent, any Bank nor any of their respective directors, officers, employees
or agents shall be liable for failure to demand, collect or realize upon any of
the Collateral or for any delay in doing so or shall be under any obligation to
sell or otherwise dispose of any collateral upon the request of the Pledgor or
otherwise.
13. Execution of Financing Statements. Pursuant to Section
9-402 of the Code, the Pledgor authorizes the Agent to file financing
statements with respect to the Collateral without the signature of the Pledgor
in such form and in such filing offices as the Agent reasonably determines
appropriate to perfect the security interests of the Agent under this Pledge
Agreement. A carbon, photographic or other reproduction of this Pledge
Agreement shall be sufficient as a financing statement for filing in any
jurisdiction.
14. Authority of Agent. The Pledgor acknowledges that the
rights and responsibilities of the Agent under this Pledge Agreement with
respect to any action taken by the Agent or the exercise or non-exercise by the
Agent of any option, voting right, request, judgment or other right or remedy
provided for herein or resulting or arising out of this Pledge Agreement shall,
as between the Agent and the Banks, be governed by the Credit Agreement and by
such other agreements with respect thereto as may exist from time to time among
them, but, as between the Agent and the Pledgor, the Agent shall be
conclusively presumed to be acting as agent for the Banks with full and valid
authority so to act or refrain from acting, and neither the Pledgor nor any
Issuer shall be under any obligation, or entitlement, to make any inquiry
respecting such authority.
15. Notices. All notices, requests and demands to or upon
the Agent, any Bank or the Pledgor to be effective shall be in writing (or by
telegraph or telecopy confirmed in writing) and shall be deemed to have been
duly given or made (a) when delivered by hand or (b) if given by mail, five
days after being deposited in the mails by certified mail, return receipt
requested or (c) if by telegraph or telecopy, when sent and receipt has been
confirmed, addressed at its address or transmission number for notices provided
in subsection 11.2 of the Credit Agreement. The Agent, each Bank and the
Pledgor may change its address and transmission numbers for notices by notice
in the manner provided in this Section.
16. Severability. Any provision of this Pledge Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such
<PAGE> 176
10
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
17. Section Headings. The Section headings used in this
Pledge Agreement are for convenience of reference only and are not to affect
the construction hereof or be taken into consideration in the interpretation
hereof.
18. Amendments in Writing; No Waiver; Pledge Cumulative
Remedies. (a) None of the terms or provisions of this Pledge Agreement may be
waived, amended, supplemented or otherwise modified except by a written
instrument executed by the Pledgor and the Agent in accordance with subsection
11.1 of the Credit Agreement, provided that any provision of this Pledge
Agreement may be waived by the Agent and the Banks in a letter or agreement
executed by the Agent or by telecopy from the Agent.
(b) Neither the Agent nor any Bank shall by any act (except
by a written instrument pursuant to paragraph 16.(a) hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. No failure to exercise, nor
any delay in exercising, on the part of the Agent or any Bank, any right, power
or privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Agent or any Bank of any right or remedy hereunder
on any one occasion shall not be construed as a bar to any right or remedy
which the Agent or such Bank would otherwise have on any future occasion.
(c) The rights and remedies herein provided are cumulative,
may be exercised singly or concurrently and are not exclusive of any other
rights or remedies provided by law.
19. Successors and Assigns. This Pledge Agreement shall be
binding upon the successors and assigns of the Pledgor and shall inure to the
benefit of the Agent and the Banks and their successors and assigns.
20. GOVERNING LAW. THIS PLEDGE AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK.
21. Counterparts. This Pledge Agreement may be executed by
one or more of the parties to this Pledge Agreement on any number of separate
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the counterparts of this
Pledge
<PAGE> 177
11
Agreement signed by all parties hereto shall be lodged with the Agent.
IN WITNESS WHEREOF, the undersigned has caused this Pledge
Agreement to be duly executed and delivered as of the date first above written.
LEAR SEATING CORPORATION
By:________________________________
Title:
<PAGE> 178
ACKNOWLEDGEMENT AND CONSENT
Each of the undersigned Issuers referred to in the foregoing
Pledge Agreement hereby acknowledges receipt of a copy thereof and agrees to be
bound thereby and to comply with the terms thereof insofar as such terms are
applicable to it. Each of the undersigned agrees to notify the Agent promptly
in writing of the occurrence of any of the events described in paragraph 5(a)
of the Pledge Agreement. The undersigned further agrees that the terms of
paragraph 9(c) of the Pledge Agreement shall apply to it, mutatis mutandis,
with respect to all actions that may be required of it under or pursuant to or
arising out of Section 9 of the Pledge Agreement.
PROGRESS PATTERN CORP.
By:_______________________________
Title:
LEAR PLASTICS CORP.
By:_______________________________
Title:
LS ACQUISITION CORPORATION NO. 24
By:_______________________________
Title:
LS ACQUISITION CORP. NO. 14
By:_______________________________
Title:
LEAR SEATING HOLDINGS CORP. NO. 50
By:_______________________________
Title:
AIHI ACQUISITION CORP.
By:______________________________
Title:
<PAGE> 179
2
LEAR SEATING SWEDEN AB
By:_______________________________
Title:
<PAGE> 180
SCHEDULE I
DESCRIPTION OF PLEDGED STOCK
<TABLE>
<CAPTION>
Stock
Class of Certificate No. of Pct. of
Issuer Stock No. Shares Shares
------ -------- ----------- ------ ------
<S> <C> <C> <C> <C>
Progress Pattern Corp. Common 2 100 100%
Lear Plastics Corp. Common 2 100 100%
LS Acquisition Corporation No. 24 Common 1 100 100%
LS Acquisition Corp. No. 14 Common 3 100 100%
Lear Seating Holdings Corp. No. 50 Common 3 100 100%
AIHI Acquisition Corp. Common 1 100 100%
Lear Seating Common 10501- 19,500 65%
Sweden AB 30000
</TABLE>
<PAGE> 181
EXHIBIT E
FORM OF
FAIR HAVEN PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of August 17, 1995, made by LS
ACQUISITION CORPORATION NO. 24, a Delaware corporation (the "Pledgor"), in
favor of CHEMICAL BANK, as administrative agent (in such capacity, the "Agent")
for Bank parties to the Credit Agreement referred to below.
W I T N E S S E T H :
WHEREAS, Lear Seating Corporation (the "Borrower") is a party
to the Credit Agreement, dated as of August 17, 1995 (as amended, supplemented
or otherwise modified from time to time, the "Credit Agreement") with the
financial institutions parties thereto (the "Banks"), the Agent and the
Managing Agents, Co-Agents and Lead Managers identified therein;
WHEREAS, pursuant to the Credit Agreement and the other Loan
Documents (as defined in the Credit Agreement), the Banks have agreed to make
certain Loans (as defined in the Credit Agreement) to or for the benefit of the
Borrower and, in the case of the Issuing Bank (as defined in the Credit
Agreement), issue and, in the case of the Participating Banks (as defined in
the Credit Agreement), participate in certain Letters of Credit (as defined in
the Credit Agreement) for the account of the Borrower; and
WHEREAS, it is a condition precedent to the obligation of the
Banks to make the Loans and to issue or participate in the Letters of Credit
under the Credit Agreement that the Pledgor shall have executed and delivered
this Holdings Pledge Agreement to the Agent for the ratable benefit of the
Banks;
NOW, THEREFORE, in consideration of the premises contained
herein and to induce the Agent and the Banks to enter into the Credit Agreement
and to induce the Banks to make the Loans and to issue and participate in the
Letters of Credit under the Credit Agreement, the Pledgor hereby agrees with
the Agent, for the ratable benefit of the Banks, as follows:
1. Defined Terms. (a) Unless otherwise defined herein,
terms which are defined in the Credit Agreement and used herein shall have the
meanings given to them in the Credit Agreement.
(b) The following terms shall have the following meanings:
"Code" means the Uniform Commercial Code from time to time in
effect in the State of New York.
<PAGE> 182
2
"Collateral" means the Pledged Stock and all Proceeds.
"Guarantee" means the Subsidiary Guarantee, dated as of the
date hereof, made by the Pledgor in favor of the Agent, as amended,
supplemented or otherwise modified from time to time.
"Issuer" means Fair Haven Industries, Inc.
"Pledge Agreement" means this Pledge Agreement, as amended,
supplemented or otherwise modified from time to time.
"Pledged Stock" means the shares of capital stock listed on
Schedule I, together with all stock certificates, options, warrants or
rights of any nature whatsoever that may be issued or granted by the
Issuer to the Pledgor in respect of the Pledged Stock while this
Pledge Agreement is in effect.
"Proceeds" means all "proceeds" as such term is defined in
Section 9-306(1) of the Code in effect in the State of New York on the
date hereof and, in any event, shall include, without limitation, all
dividends or other income from the Pledged Stock, collections thereon
and distributions with respect thereto.
(c) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Pledge Agreement shall refer to this Pledge
Agreement as a whole and not to any particular provision of this Pledge
Agreement, and Section, paragraph and Schedule references are to this Pledge
Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
2. Pledge; Grant of Security Interest. The Pledgor hereby
delivers to the Agent, for the ratable benefit of the Banks, all the Pledged
Stock and hereby grants to Agent, for the ratable benefit of the Banks, a first
security interest in the Collateral, as collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Obligations.
3. Stock Powers. Concurrently with the delivery to the Agent
of each certificate representing one or more shares of Pledged Stock to the
Agent, the Pledgor shall deliver an undated stock power covering such
certificate, duly executed in blank by the Pledgor with, if the Agent so
requests, signature guaranteed.
4. Representations and Warranties. The Pledgor represents
and warrants that:
<PAGE> 183
3
(a) the Pledged Stock constitutes all the issued and
outstanding shares of all classes of the capital stock of the Issuer
owned by the Pledgor, and the percentage of shares listed on Schedule
I accurately sets forth the respective percentage which such shares
pledged by the Pledgor constitute of all such issued and outstanding
capital stock of the Issuer;
(b) the Pledged Stock has been duly and validly issued and is
fully paid and nonassessable;
(c) the Pledgor is the record and beneficial owner of, and
has good and marketable title to, the Pledged Stock, free of any and
all Liens or options in favor of, or claims of, any other Person,
except the Lien created by this Pledge Agreement; and
(d) upon delivery to the Agent of the stock certificates
evidencing the Pledged Stock, the Lien granted pursuant to this Pledge
Agreement will constitute a valid, perfected first priority Lien on
the Collateral, enforceable as such against any Persons purporting to
purchase any Collateral from the Pledgor.
5. Covenants. The Pledgor covenants and agrees with the
Agent and the Banks that, from and after the date of this Pledge Agreement
until the Obligations have been paid in full and the Commitments have been
terminated:
(a) If the Pledgor shall, as a result of its ownership of the
Pledged Stock, become entitled to receive or shall receive any stock
certificate (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any certificate
issued in connection with any reorganization), option or rights,
whether in addition to, in substitution of, as a conversion of, or in
exchange for any shares of the Pledged Stock, or otherwise in respect
thereof, the Pledgor shall accept the same as the agent of the Agent
and the Banks, hold the same in trust for the Agent and the Banks and
deliver the same forthwith to the Agent in the exact form received,
duly indorsed by the Pledgor to the Agent, if required, together with
an undated stock power covering such certificate duly executed in
blank by the Pledgor and with, if the Agent so requests, signature
guaranteed, to be held by the Agent, subject to the terms hereof, as
additional collateral security for the Obligations. Any sums paid
upon or in respect of the Pledged Stock upon the liquidation or
dissolution of the Issuer shall be paid over to the Agent to be held
by it hereunder as additional collateral security for the Obligations,
and in case any distribution of capital shall be made on or in respect
of the Pledged Stock or any property shall be distributed upon or with
respect to the
<PAGE> 184
4
Pledged Stock pursuant to the recapitalization or reclassification of
the capital of any Issuer or pursuant to the reorganization thereof,
the property so distributed shall be delivered to the Agent to be held
by it hereunder as additional collateral security for the Obligations.
If any sums of money or property so paid or distributed in respect of
the Pledged Stock shall be received by the Pledgor, the Pledgor shall,
until such money or property is paid or delivered to the Agent, hold
such money or property in trust for the Agent and the Banks,
segregated from other funds of the Pledgor, as additional collateral
security for the Obligations.
(b) Without the prior written consent of the Agent, the
Pledgor will not (i) vote to enable, or take any other action to
permit, the Issuer to issue any stock or other equity securities of
any nature or to issue any other securities convertible into or
granting the right to purchase or exchange for any stock or other
equity securities of any nature of the Issuer, (ii) sell, assign,
transfer, exchange, or otherwise dispose of, or grant any option with
respect to, the Collateral or (iii) create, incur or permit to exist
any Lien or option in favor of, or any claim of any Person with
respect to, any of the Collateral, or any interest therein, except for
the Lien provided for by this Pledge Agreement. The Pledgor will
defend the right, title and interest of the Agent and the Banks in and
to the Collateral against the claims and demands of all Persons
whomsoever.
(c) At any time and from time to time, upon the written
request of the Agent, and at the sole expense of the Pledgor, the
Pledgor will promptly and duly execute and deliver such further
instruments and documents and take such further actions as the Agent
may reasonably request for the purposes of obtaining or preserving the
full benefits of this Pledge Agreement and of the rights and powers
herein granted. If any amount payable under or in connection with any
of the Collateral shall be or become evidenced by any promissory note,
other instrument or chattel paper, such note, instrument or chattel
paper shall be immediately delivered to the Agent, duly endorsed in a
manner satisfactory to the Agent, to be held as Collateral pursuant to
this Pledge Agreement.
(d) The Pledgor agrees to pay, and to save the Agent and the
Banks harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales
or other taxes which may be payable or determined to be payable with
respect to any of the Collateral or in connection with any of the
transactions contemplated by this Pledge Agreement.
<PAGE> 185
5
6. Cash Dividends; Voting Rights. Unless an Event of Default
shall have occurred and be continuing and the Agent shall have given notice to
the Pledgor of the Agent's intent to exercise its corresponding rights pursuant
to Section 7 below, the Pledgor shall be permitted to receive all cash
dividends paid in the normal course of business of the Issuer, to the extent
permitted in the Credit Agreement, in respect of the Pledged Stock and to
exercise all voting and corporate rights with respect to the Pledged Stock;
provided, however, that no vote shall be cast or corporate right exercised or
other action taken which would reasonably be expected to (a) impair the
Collateral or (b) be inconsistent with or result in any violation of any
provision of the Credit Agreement or any other Loan Document.
7. Rights of the Banks and the Agent. (a) If an Event of
Default shall occur and be continuing (i) the Agent shall have the right to
receive any and all cash dividends paid in respect of the Pledged Stock and
make application thereof to the Obligations in such order as the Agent may
determine and (ii) all shares of the Pledged Stock shall be registered in the
name of the Agent or its nominee, and the Agent or its nominee may thereafter
exercise (A) all voting, corporate and other rights pertaining to such shares
of the Pledged Stock at any meeting of shareholders of the Issuer or otherwise
and (B) any and all rights of conversion, exchange, subscription and any other
rights, privileges or options pertaining to such shares of the Pledged Stock as
if it were the absolute owner thereof (including, without limitation, the right
to exchange at its discretion any and all of the Pledged Stock upon the merger,
consolidation, reorganization, recapitalization or other fundamental change in
the corporate structure of the Issuer, or upon the exercise by the Pledgor or
the Agent of any right, privilege or option pertaining to such shares of the
Pledged Stock, and in connection therewith, the right to deposit and deliver
any and all of the Pledged Stock with any committee, depositary, transfer
agent, registrar or other designated agency upon such terms and conditions as
it may determine), all without liability except to account for property
actually received by it, but the Agent shall have no duty to the Pledgor to
exercise any such right, privilege or option and shall not be responsible for
any failure to do so or delay in so doing.
(b) The rights of the Agent and the Banks hereunder shall not
be conditioned or contingent upon the pursuit by the Agent or any Bank of any
right or remedy against the Issuer or any other Person which may be or become
liable in respect of all or any part of the Obligations or against any
collateral security therefor, guarantee therefor or right of offset with
respect thereto. Neither the Agent nor any Bank shall be liable for any
failure to demand, collect or realize upon all or any part of the Collateral or
for any delay in doing so, nor shall the Agent be under any obligation to sell
or otherwise dispose of any Collateral upon the request of the Pledgor or any
other Person or
<PAGE> 186
6
to take any other action whatsoever with regard to the Collateral or any part
thereof.
8. Remedies. If an Event of Default shall occur and be
continuing, the Agent, on behalf of the Banks, may exercise, in addition to all
other rights and remedies granted in this Pledge Agreement and in any other
instrument or agreement securing, evidencing or relating to the Obligations,
all rights and remedies of a secured party under the Code. Without limiting
the generality of the foregoing, the Agent, without demand of performance or
other demand, presentment, protest, advertisement or notice of any kind (except
any notice required by law referred to below) to or upon the Pledgor, the
Issuer or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, assign, give an option or options to
purchase or otherwise dispose of and deliver the Collateral or any part thereof
(or contract to do any of the foregoing), in one or more parcels at public or
private sale or sales, in the over-the-counter market, at any exchange or
broker's board or office of the Agent or any Bank or elsewhere upon such terms
and conditions as it may deem advisable and at such prices as it may deem best,
for cash or on credit or for future delivery without assumption of any credit
risk. The Agent or any Bank shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale or
sales, to purchase the whole or any part of the Collateral so sold, free of any
right or equity of redemption in the Pledgor, which right or equity is hereby
waived or released. The Agent shall apply any Proceeds from time to time held
by it and the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred in respect thereof or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral
or the rights of the Agent and the Banks hereunder, including, without
limitation, attorneys' fees and disbursements of counsel to the Agent, to the
payment in whole or in part of the Obligations, in such order as the Agent may
elect, and only after such application and after the payment by the Agent of
any other amount required by any provision of law, including, without
limitation, Section 9-504(1)(c) of the Code, need the Agent account for the
surplus, if any, to the Pledgor. To the extent permitted by applicable law,
the Pledgor waives all claims, damages and demands it may acquire against the
Agent or any Bank arising out of the exercise by them of any rights hereunder.
If any notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given at
least ten days before such sale or other disposition. The Pledgor shall remain
liable for any deficiency if the proceeds of any sale or other disposition of
Collateral are insufficient to pay the Obligations and the fees and
<PAGE> 187
7
disbursements of any attorneys employed by the Agent or any Bank to collect
such deficiency.
9. Registration Rights; Private Sales. (a) If the Agent
shall determine to exercise its right to sell any or all of the Pledged Stock
pursuant to Section 8 hereof, and if in the reasonable opinion of the Agent it
is necessary or advisable to have the Pledged Stock, or that portion thereof to
be sold, registered under the provisions of the Securities Act of 1933, as
amended (the "Securities Act"), the Pledgor will cause the Issuer to (i)
execute and deliver, and cause the directors and officers of the Issuer to
execute and deliver, all such instruments and documents, and do or cause to be
done all such other acts as may be, in the opinion of the Agent, necessary or
advisable to register the Pledged Stock, or that portion thereof to be sold
under the provisions of the Securities Act, (ii) use its best efforts to cause
the registration statement relating thereto to become effective and to remain
effective for a period of one year from the date of the first public offering
of the Pledged Stock, or that portion thereof to be sold and (iii) make all
amendments thereto and/or to the related prospectus which, in the opinion of
the Agent, are necessary or advisable, all in conformity with the requirements
of the Securities Act and the rules and regulations of the Securities and
Exchange Commission applicable thereto. The Pledgor agrees to cause the Issuer
to comply with the provisions of the securities or "Blue Sky" laws of any and
all jurisdictions which the Agent shall designate and to make available to its
security holders, as soon as practicable, an earnings statement (which need not
be audited) which will satisfy the provisions of Section 11(a) of the
Securities Act.
(b) The Pledgor recognizes that the Agent may be unable to
effect a public sale of any or all the Pledged Stock, by reason of certain
prohibitions contained in the Securities Act and applicable state securities
laws or otherwise, and may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers which will be obliged to agree,
among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. The
Pledgor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Agent shall
be under no obligation to delay a sale of any of the Pledged Stock for the
period of time necessary to permit the applicable Issuer to register such
securities for public sale under the Securities Act, or under applicable state
securities laws, even if such Issuer would agree to do so.
(c) The Pledgor further agrees to use its best efforts to do
or cause to be done all such other acts as may be necessary to make such sale
or sales of all or any portion of the Pledged
<PAGE> 188
8
Stock pursuant to this Section 9 valid and binding and in compliance with any
and all other applicable Requirements of Law. The Pledgor further agrees that
a breach of any of the covenants contained in this Section 9 will cause
irreparable injury to the Agent and the Banks, that the Agent and the Banks
have no adequate remedy at law in respect of such breach and, as a consequence,
that each and every covenant contained in this Section 9 shall be specifically
enforceable against the Pledgor, and the Pledgor hereby waives and agrees not
to assert any defenses against an action for specific performance of such
covenants except for a defense that no Event of Default has occurred under the
Credit Agreement.
10. Irrevocable Authorization and Instruction to Issuers.
The Pledgor hereby authorizes and instructs the Issuer to comply with any
instruction received by it from the Agent in writing that (a) states that an
Event of Default has occurred and (b) is otherwise in accordance with the terms
of this Pledge Agreement, without any other or further instructions from the
Pledgor, and the Pledgor agrees that the Issuer shall be fully protected in so
complying.
11. Agent's Appointment as Attorney-in-Fact. (a) The
Pledgor hereby irrevocably constitutes and appoints the Agent and any officer
or agent of the Agent, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of the Pledgor and in the name of the Pledgor or in the Agent's own name,
from time to time (provided an Event of Default has occurred and is continuing)
in the Agent's discretion, for the purpose of carrying out the terms of this
Agreement, to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of this Pledge Agreement, including, without limitation, any financing
statements, endorsements, assignments or other instruments of transfer.
(b) The Pledgor hereby ratifies all that said attorneys shall
lawfully do or cause to be done pursuant to the power of attorney granted in
paragraph 11(a) above. All powers, authorizations and agencies contained in
this Agreement are coupled with an interest and are irrevocable until this
Agreement is terminated and the security interests created hereby are released.
12. Limitation on Duties Regarding Collateral. The Agent's
sole duty with respect to the custody, safekeeping and physical preservation of
the Collateral in its possession, under Section 9-207 of the Code or otherwise,
shall be to deal with it in the same manner as the Agent deals with similar
securities and property for its own account. Neither the Agent, any Bank nor
any of their respective directors, officers, employees or agents shall be
liable for failure to demand, collect or realize upon any of the Collateral or
for any delay in doing so or shall be
<PAGE> 189
9
under any obligation to sell or otherwise dispose of any collateral upon the
request of the Pledgor or otherwise.
13. Execution of Financing Statements. Pursuant to Section
9-402 of the Code, the Pledgor authorizes the Agent to file financing
statements with respect to the Collateral without the signature of the Pledgor
in such form and in such filing offices as the Agent reasonably determines
appropriate to perfect the security interests of the Agent under this Pledge
Agreement. A carbon, photographic or other reproduction of this Pledge
Agreement shall be sufficient as a financing statement for filing in any
jurisdiction.
14. Authority of Agent. The Pledgor acknowledges that the
rights and responsibilities of the Agent under this Pledge Agreement with
respect to any action taken by the Agent or the exercise or non-exercise by the
Agent of any option, voting right, request, judgment or other right or remedy
provided for herein or resulting or arising out of this Pledge Agreement shall,
as between the Agent and the Banks, be governed by the Credit Agreement and by
such other agreements with respect thereto as may exist from time to time among
them, but, as between the Agent and the Pledgor, the Agent shall be
conclusively presumed to be acting as agent for the Banks with full and valid
authority so to act or refrain from acting, and neither the Pledgor nor any
Issuer shall be under any obligation, or entitlement, to make any inquiry
respecting such authority.
15. Notices. All notices, requests and demands to or upon
the Agent, any Bank or the Pledgor to be effective shall be in writing (or by
telegraph or telecopy confirmed in writing) and shall be deemed to have been
duly given or made (a) when delivered by hand or (b) if given by mail, five
days after being deposited in the mails by certified mail, return receipt
requested or (c) if by telegraph or telecopy, when sent and receipt has been
confirmed, addressed at its address or transmission number for notices provided
in subsection 11.2 of the Credit Agreement. The Agent, each Bank and the
Pledgor may change its address and transmission numbers for notices by notice
in the manner provided in this Section.
16. Severability. Any provision of this Pledge Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
17. Section Headings. The Section headings used in this
Pledge Agreement are for convenience of reference only and are not to affect
the construction hereof or be taken into consideration in the interpretation
hereof.
<PAGE> 190
10
18. Amendments in Writing; No Waiver; Pledge Cumulative
Remedies. (a) None of the terms or provisions of this Pledge Agreement may be
waived, amended, supplemented or otherwise modified except by a written
instrument executed by the Pledgor and the Agent in accordance with subsection
11.1 of the Credit Agreement, provided that any provision of this Pledge
Agreement may be waived by the Agent and the Banks in a letter or agreement
executed by the Agent or by telecopy from the Agent.
(b) Neither the Agent nor any Bank shall by any act (except
by a written instrument pursuant to paragraph 16.(a) hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. No failure to exercise, nor
any delay in exercising, on the part of the Agent or any Bank, any right, power
or privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Agent or any Bank of any right or remedy hereunder
on any one occasion shall not be construed as a bar to any right or remedy
which the Agent or such Bank would otherwise have on any future occasion.
(c) The rights and remedies herein provided are cumulative,
may be exercised singly or concurrently and are not exclusive of any other
rights or remedies provided by law.
19. Successors and Assigns. This Pledge Agreement shall be
binding upon the successors and assigns of the Pledgor and shall inure to the
benefit of the Agent and the Banks and their successors and assigns.
20. GOVERNING LAW. THIS PLEDGE AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this Pledge
Agreement to be duly executed and delivered as of the date first above written.
LS ACQUISITION CORPORATION NO. 24
By:________________________________
Title:
<PAGE> 191
ACKNOWLEDGEMENT AND CONSENT
The undersigned Issuer referred to in the foregoing Pledge
Agreement hereby acknowledges receipt of a copy thereof and agrees to be bound
thereby and to comply with the terms thereof insofar as such terms are
applicable to it. The undersigned agrees to notify the Agent promptly in
writing of the occurrence of any of the events described in paragraph 5(a) of
the Pledge Agreement. The undersigned further agrees that the terms of
paragraph 9(c) of the Pledge Agreement shall apply to it, mutatis mutandis,
with respect to all actions that may be required of it under or pursuant to or
arising out of Section 9 of the Pledge Agreement.
FAIR HAVEN INDUSTRIES, INC.
By:______________________________
Title:
<PAGE> 192
SCHEDULE I
DESCRIPTION OF PLEDGED STOCK
<TABLE>
<CAPTION>
Stock
Class of Certificate No. of Pct. of
Issuer Stock No. Shares Shares
------ -------- ----------- ------ ------
<S> <C> <C> <C> <C>
Fair Haven Common 21 19,600 100%
Industries, Inc.
</TABLE>
<PAGE> 193
EXHIBIT F
FORM OF
ACQUISITION PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of August 17, 1995, made by AIHI
ACQUISITION CORP., a Delaware corporation (the "Pledgor"), in favor of CHEMICAL
BANK, as administrative agent (in such capacity, the "Agent") for the Banks
parties to the Credit Agreement referred to below.
W I T N E S S E T H :
WHEREAS, Lear Seating Corporation (the "Borrower") is a party
to the Credit Agreement, dated as of August 17, 1995 (as amended, supplemented
or otherwise modified from time to time, the "Credit Agreement") with the
financial institutions parties thereto (the "Banks"), the Agent and the
Managing Agents, Co-Agents and Lead Managers identified therein;
WHEREAS, pursuant to the Credit Agreement and the other Loan
Documents (as defined in the Credit Agreement), the Banks have agreed to make
certain Loans (as defined in the Credit Agreement) to or for the benefit of the
Borrower and, in the case of the Issuing Bank (as defined in the Credit
Agreement), issue and, in the case of the Participating Banks (as defined in
the Credit Agreement), participate in certain Letters of Credit (as defined in
the Credit Agreement) for the account of the Borrower;
WHEREAS, it is a condition precedent to the obligation of the
Banks to make the Loans and to issue or participate in the Letters of Credit
under the Credit Agreement that the Pledgor shall have executed and delivered
this Pledge Agreement to the Agent for the ratable benefit of the Banks;
WHEREAS, on the Closing Date, the Pledgor is acquiring certain
shares of Class A Common Stock, par value $0.01 per share, of Automotive
Industries Holding, Inc., a Delaware corporation (the "Issuer") (all such
shares of stock, together with all stock certificates, options or rights of any
nature whatsoever that may be granted by the Issuer to the Pledgor in respect
of such shares of stock being hereinafter called the "Initially Pledged
Stock");
WHEREAS, pursuant to the Credit Agreement, on the date of this
Pledge Agreement, the Pledgor is pledging to the Agent, for the ratable benefit
of the Banks, the Initially Pledged Stock to provide security for the
Obligations; and
WHEREAS, pursuant to the Credit Agreement, on each date after
the Closing Date on which the Pledgor purchases additional shares of capital
stock of the Issuer, the Pledgor shall execute and deliver a Pledge Agreement
Supplement in the form of Exhibit A hereto, pledging the capital stock of the
Issuer being
<PAGE> 194
2
purchased on such date by the Pledgor (such additional shares of stock together
with all stock certificates, options or rights of any nature whatsoever that
may be granted by the Issuer to the Pledgor in respect of such shares of stock
being hereinafter called the "Additional Pledged Stock," and together with the
Initially Pledged Stock, the "Pledged Stock");
NOW, THEREFORE, in consideration of the premises contained
herein and to induce the Agent and the Banks to enter into the Credit Agreement
and to induce the Banks to make the Loans and to issue and participate in the
Letters of Credit under the Credit Agreement, the Pledgor hereby agrees with
the Agent, for the ratable benefit of the Banks, as follows:
1. Defined Terms. (a) Unless otherwise defined herein,
terms which are defined in the Credit Agreement and used herein shall have the
meanings given to them in the Credit Agreement.
(b) The following terms shall have the following meanings:
"Clearing Corporation" means a clearing corporation within the
meaning of Section 8-102(3) of the Code at which the Agent maintains a
securities account.
"Code" means the Uniform Commercial Code from time to time in
effect in the State of New York.
"Collateral" has the meaning given such term in section 2
hereof.
"Depositary" means Bankers Trust Company, as Depositary.
"Depositary Agency Agreement" means the Depositary Agency
Agreement, dated as of the date hereof, among the Depositary, the
Agent, the Borrower and the Pledgor.
"Guarantee" means the Subsidiary Guarantee, dated as of the
date hereof, made by the Pledgor and others in favor of the Agent, as
amended, supplemented or otherwise modified from time to time.
"Pledge Agreement" means this Pledge Agreement, as amended,
supplemented or otherwise modified from time to time.
"Proceeds" means all "proceeds" as such term is defined in
Section 9-306(1) of the Code in effect in the State of New York on the
date hereof and, in any event, shall include, without limitation, all
dividends or other income from the Pledged Stock, collections thereon
and distributions with respect thereto.
<PAGE> 195
3
(c) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Pledge Agreement shall refer to this Pledge
Agreement as a whole and not to any particular provision of this Pledge
Agreement, and Section, paragraph and Schedule references are to this Pledge
Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
2. Pledge; Grant of Security Interest. The Pledgor hereby
delivers to the Agent, for the ratable benefit of the Banks, all the Initially
Pledged Stock and hereby grants to Agent, for the ratable benefit of the Banks,
a first security interest in the following (collectively, the "Collateral") as
collateral security for the prompt and complete payment and performance when
due (whether at the stated maturity, by acceleration or otherwise) of the
Obligations:
(a) all of the Initially Pledged Stock, including without
limitation, the shares of capital stock of the Issuer delivered to the
Agent or its bailee by the Depository pursuant to instructions of the
Pledgor contained in the Depositary Agency Agreement and all
Book-Entry Shares (as hereinafter defined);
(b) all Additional Pledged Stock from time to time acquired
by the Pledgor in any manner, including, without limitation, by the
book-entry delivery thereof;
(c) the certificates representing the share referred to in
clauses (a) and (b) above; and
(d) all rights and privileges of the Pledgor with respect to
the Pledged Stock, all Proceeds of the Pledged Stock, all income and
profits therefrom and all property received in addition thereto or in
exchange or substitution therefor.
3. Stock Powers. (a) The Pledgor shall promptly deliver or
cause to be delivered to the Agent or the Depositary all instruments and stock
certificates representing the Pledged Stock, together with duly executed blank
undated stock powers. The Pledgor shall promptly deliver to the Agent, or
cause the Issuer to deliver directly to the Agent, share certificates or other
documents representing any Collateral acquired or received after the date of
this Pledge Agreement duly endorsed and subscribed or with appropriate transfer
documents duly executed in blank by the Pledgor. If at any time the Agent
notifies the Pledgor that additional stock powers or other transfer documents
endorsed in blank with respect to the Collateral held by the Agent are
required, Pledgor shall promptly execute the same in
<PAGE> 196
4
blank and deliver such stock powers or other transfer documents as the Agent
may request.
(b) In the event that a financial institution that is a
participant in the system of any Book-Entry Transfer Facility (as defined in
Section 2 of the Offer to Purchase), in accordance with the procedures set
forth in the Offer to Purchase, makes a book-entry delivery of any shares of
capital stock of the Issuer tendered and purchased in the Tender Offer by
causing such Book-Entry Transfer Facility to transfer such shares into the
account of the Depositary at such Book-Entry Transfer Facility (each such share
being a "Book-Entry Share"), the Pledgor hereby authorizes, and shall cause,
all such shares to be transferred to an account maintained in the name of
Chemical Bank for the benefit of the Agent at the Clearing Corporation.
4. Additional Pledged Stock. Pursuant to subsection 7.11 of
the Credit Agreement, the Pledgor hereby agrees that on each date it purchases
additional shares of capital stock of the Issuer, the Pledgor will execute a
Pledge Agreement Supplement and either:
(a) in the case of a transfer to the Pledgor of Pledged Stock
effected by delivery of share certificates representing the capital
stock of the Issuer, deliver or cause to be delivered to the Agent
such share certificates representing the capital stock of the Issuer,
being purchased by the Pledgor on such date, together with the
appropriate undated stock powers duly executed in blank by the
Pledgor; or
(b) in the case of a transfer to the Pledgor of shares of
Pledged Stock effected by book-entry delivery thereof, the Pledgor
shall authorize and cause all such shares to be transferred to an
account maintained in the name of Chemical Bank for the benefit of the
Agent at the Clearing Corporation.
5. Representations and Warranties. The Pledgor represents
and warrants that:
(a) the shares of Pledged Stock constitute all the issued and
outstanding shares of all classes of the capital stock of the Issuer
owned by the Pledgor;
(b) all the shares of the Pledged Stock have been duly and
validly issued and are fully paid and nonassessable;
(c) the Pledgor is the record and beneficial owner of, and
has good and marketable title to, the Pledged Stock, free of any and
all Liens or options in favor of, or claims of, any other Person,
except the Lien created by this Pledge Agreement; and
<PAGE> 197
5
(d) upon compliance with the provisions of Sections 3(a) and
(b) and 4(a) and (b) hereof, all actions required to create and
perfect the security interest of the Agent in the Collateral will have
been taken and the delivery to the Agent or the Depositary, as the
case may be, of the Collateral is effective to create a valid,
perfected and exclusive first priority security interest in the
Collateral in favor of the Agent.
6. Covenants. The Pledgor covenants and agrees with the
Agent and the Banks that, from and after the date of this Pledge Agreement
until the Obligations have been paid in full and the Commitments have been
terminated:
(a) If the Pledgor shall, as a result of its ownership of the
Pledged Stock, become entitled to receive or shall receive any stock
certificate (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any certificate
issued in connection with any reorganization), option or rights,
whether in addition to, in substitution of, as a conversion of, or in
exchange for any shares of the Pledged Stock, or otherwise in respect
thereof, the Pledgor shall accept the same as the agent of the Agent
and the Banks, hold the same in trust for the Agent and the Banks and
deliver the same forthwith to the Agent in the exact form received,
duly indorsed by the Pledgor to the Agent, if required, together with
an undated stock power covering such certificate duly executed in
blank by the Pledgor and with, if the Agent so requests, signature
guaranteed, to be held by the Agent, subject to the terms hereof, as
additional collateral security for the Obligations. Any sums paid
upon or in respect of the Pledged Stock upon the liquidation or
dissolution of the Issuer shall be paid over to the Agent to be held
by it hereunder as additional collateral security for the Obligations,
and in case any distribution of capital shall be made on or in respect
of the Pledged Stock or any property shall be distributed upon or with
respect to the Pledged Stock pursuant to the recapitalization or
reclassification of the capital of the Issuer or pursuant to the
reorganization thereof, the property so distributed shall be delivered
to the Agent to be held by it hereunder as additional collateral
security for the Obligations. If any sums of money or property so
paid or distributed in respect of the Pledged Stock shall be received
by the Pledgor, the Pledgor shall, until such money or property is
paid or delivered to the Agent, hold such money or property in trust
for the Agent and the Banks, segregated from other funds of the
Pledgor, as additional collateral security for the Obligations.
(b) Without the prior written consent of the Agent, the
Pledgor will not (i) vote to enable, or take any other
<PAGE> 198
6
action to permit, the Issuer to issue any stock or other equity
securities of any nature or to issue any other securities convertible
into or granting the right to purchase or exchange for any stock or
other equity securities of any nature of the Issuer, (ii) sell,
assign, transfer, exchange, or otherwise dispose of, or grant any
option with respect to, the Collateral or (iii) create, incur or
permit to exist any Lien or option in favor of, or any claim of any
Person with respect to, any of the Collateral, or any interest
therein, except for the Lien provided for by this Pledge Agreement.
The Pledgor will defend the right, title and interest of the Agent and
the Banks in and to the Collateral against the claims and demands of
all Persons whomsoever.
(c) At any time and from time to time, upon the written
request of the Agent, and at the sole expense of the Pledgor, the
Pledgor will promptly and duly execute and deliver such further
instruments and documents and take such further actions as the Agent
may reasonably request for the purposes of obtaining or preserving the
full benefits of this Pledge Agreement and of the rights and powers
herein granted. If any amount payable under or in connection with any
of the Collateral shall be or become evidenced by any promissory note,
other instrument or chattel paper, such note, instrument or chattel
paper shall be immediately delivered to the Agent, duly endorsed in a
manner satisfactory to the Agent, to be held as Collateral pursuant to
this Pledge Agreement.
(d) The Pledgor agrees to pay, and to save the Agent and the
Banks harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales
or other taxes which may be payable or determined to be payable with
respect to any of the Collateral or in connection with any of the
transactions contemplated by this Pledge Agreement.
7. Cash Dividends; Voting Rights. Unless an Event of Default
shall have occurred and be continuing and the Agent shall have given notice to
the Pledgor of the Agent's intent to exercise its corresponding rights pursuant
to Section 8 below, the Pledgor shall be permitted to receive all cash
dividends paid in the normal course of business of the Issuer, to the extent
permitted in the Credit Agreement, in respect of the Pledged Stock and to
exercise all voting and corporate rights with respect to the Pledged Stock;
provided, however, that no vote shall be cast or corporate right exercised or
other action taken which would reasonably be expected to (a) impair the
Collateral or (b) be inconsistent with or result in any violation of any
provision of the Credit Agreement or any other Loan Document. Notwithstanding
the foregoing, the Merger may be consummated.
<PAGE> 199
7
8. Rights of the Banks and the Agent. (a) If an Event of
Default shall occur and be continuing (i) the Agent shall have the right to
receive any and all cash dividends paid in respect of the Pledged Stock and
make application thereof to the Obligations in such order as the Agent may
determine and (ii) all shares of the Pledged Stock shall be registered in the
name of the Agent or its nominee, and the Agent or its nominee may thereafter
exercise (A) all voting, corporate and other rights pertaining to such shares
of the Pledged Stock at any meeting of shareholders of the Issuer or otherwise
and (B) any and all rights of conversion, exchange, subscription and any other
rights, privileges or options pertaining to such shares of the Pledged Stock as
if it were the absolute owner thereof (including, without limitation, the right
to exchange at its discretion any and all of the Pledged Stock upon the merger,
consolidation, reorganization, recapitalization or other fundamental change in
the corporate structure of the Issuer, or upon the exercise by the Pledgor or
the Agent of any right, privilege or option pertaining to such shares of the
Pledged Stock, and in connection therewith, the right to deposit and deliver
any and all of the Pledged Stock with any committee, depositary, transfer
agent, registrar or other designated agency upon such terms and conditions as
it may determine), all without liability except to account for property
actually received by it, but the Agent shall have no duty to the Pledgor to
exercise any such right, privilege or option and shall not be responsible for
any failure to do so or delay in so doing.
(b) The rights of the Agent and the Banks hereunder shall not
be conditioned or contingent upon the pursuit by the Agent or any Bank of any
right or remedy against any other Person which may be or become liable in
respect of all or any part of the Obligations or against any collateral
security therefor, guarantee therefor or right of offset with respect thereto.
Neither the Agent nor any Bank shall be liable for any failure to demand,
collect or realize upon all or any part of the Collateral or for any delay in
doing so, nor shall the Agent be under any obligation to sell or otherwise
dispose of any Collateral upon the request of the Pledgor or any other Person
or to take any other action whatsoever with regard to the Collateral or any
part thereof.
9. Remedies. If an Event of Default shall occur and be
continuing, the Agent, on behalf of the Banks, may exercise, in addition to all
other rights and remedies granted in this Pledge Agreement and in any other
instrument or agreement securing, evidencing or relating to the Obligations,
all rights and remedies of a secured party under the Code. Without limiting
the generality of the foregoing, the Agent, without demand of performance or
other demand, presentment, protest, advertisement or notice of any kind (except
any notice required by law referred to below) to or upon the Pledgor, the
Issuer or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith
<PAGE> 200
8
collect, receive, appropriate and realize upon the Collateral, or any part
thereof, and/or may forthwith sell, assign, give an option or options to
purchase or otherwise dispose of and deliver the Collateral or any part thereof
(or contract to do any of the foregoing), in one or more parcels at public or
private sale or sales, in the over-the-counter market, at any exchange or
broker's board or office of the Agent or any Bank or elsewhere upon such terms
and conditions as it may deem advisable and at such prices as it may deem best,
for cash or on credit or for future delivery without assumption of any credit
risk. The Agent or any Bank shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale or
sales, to purchase the whole or any part of the Collateral so sold, free of any
right or equity of redemption in the Pledgor, which right or equity is hereby
waived or released. The Agent shall apply any Proceeds from time to time held
by it and the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred in respect thereof or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral
or the rights of the Agent and the Banks hereunder, including, without
limitation, attorneys' fees and disbursements of counsel to the Agent, to the
payment in whole or in part of the Obligations, in such order as the Agent may
elect, and only after such application and after the payment by the Agent of
any other amount required by any provision of law, including, without
limitation, Section 9-504(1)(c) of the Code, need the Agent account for the
surplus, if any, to the Pledgor. To the extent permitted by applicable law,
the Pledgor waives all claims, damages and demands it may acquire against the
Agent or any Bank arising out of the exercise by them of any rights hereunder.
If any notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given at
least ten days before such sale or other disposition. The Pledgor shall remain
liable for any deficiency if the proceeds of any sale or other disposition of
Collateral are insufficient to pay the Obligations and the fees and
disbursements of any attorneys employed by the Agent or any Bank to collect
such deficiency.
10. Registration Rights; Private Sales. (a) If the Agent
shall determine to exercise its right to sell any or all of the Pledged Stock
pursuant to Section 9 hereof, and if in the reasonable opinion of the Agent it
is necessary or advisable to have the Pledged Stock, or that portion thereof to
be sold, registered under the provisions of the Securities Act of 1933, as
amended (the "Securities Act"), the Pledgor will cause the Issuer to (i)
execute and deliver, and cause the directors and officers of the Issuer to
execute and deliver, all such instruments and documents, and do or cause to be
done all such other acts as may be, in the opinion of the Agent, necessary or
advisable to register the Pledged Stock, or that portion thereof to be sold
under the provisions of the Securities Act, (ii) use its best
<PAGE> 201
9
efforts to cause the registration statement relating thereto to become
effective and to remain effective for a period of one year from the date of the
first public offering of the Pledged Stock, or that portion thereof to be sold
and (iii) make all amendments thereto and/or to the related prospectus which,
in the opinion of the Agent, are necessary or advisable, all in conformity with
the requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto. The Pledgor agrees to
cause the Issuer to comply with the provisions of the securities or "Blue Sky"
laws of any and all jurisdictions which the Agent shall designate and to make
available to its security holders, as soon as practicable, an earnings
statement (which need not be audited) which will satisfy the provisions of
Section 11(a) of the Securities Act.
(b) The Pledgor recognizes that the Agent may be unable to
effect a public sale of any or all the Pledged Stock, by reason of certain
prohibitions contained in the Securities Act and applicable state securities
laws or otherwise, and may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers which will be obliged to agree,
among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. The
Pledgor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Agent shall
be under no obligation to delay a sale of any of the Pledged Stock for the
period of time necessary to permit the Issuer to register such securities for
public sale under the Securities Act, or under applicable state securities
laws, even if the Issuer would agree to do so.
(c) The Pledgor further agrees to use its best efforts to do
or cause to be done all such other acts as may be necessary to make such sale
or sales of all or any portion of the Pledged Stock pursuant to this Section 10
valid and binding and in compliance with any and all other applicable
Requirements of Law. The Pledgor further agrees that a breach of any of the
covenants contained in this Section 10 will cause irreparable injury to the
Agent and the Banks, that the Agent and the Banks have no adequate remedy at
law in respect of such breach and, as a consequence, that each and every
covenant contained in this Section 9 shall be specifically enforceable against
the Pledgor, and the Pledgor hereby waives and agrees not to assert any
defenses against an action for specific performance of such covenants except
for a defense that no Event of Default has occurred under the Credit Agreement.
11. Irrevocable Authorization and Instruction to Issuers.
The Pledgor hereby authorizes and instructs the Issuer to comply with any
instruction received by it from the Agent in writing that (a) states that an
Event of Default has occurred and
<PAGE> 202
10
(b) is otherwise in accordance with the terms of this Pledge Agreement, without
any other or further instructions from the Pledgor, and the Pledgor agrees that
the Issuer shall be fully protected in so complying.
12. Agent's Appointment as Attorney-in-Fact. (a) The
Pledgor hereby irrevocably constitutes and appoints the Agent and any officer
or agent of the Agent, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of the Pledgor and in the name of the Pledgor or in the Agent's own name,
from time to time (provided an Event of Default has occurred and is continuing)
in the Agent's discretion, for the purpose of carrying out the terms of this
Agreement, to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of this Pledge Agreement, including, without limitation, any financing
statements, endorsements, assignments or other instruments of transfer.
(b) The Pledgor hereby ratifies all that said attorneys shall
lawfully do or cause to be done pursuant to the power of attorney granted in
section 12(a). All powers, authorizations and agencies contained in this
Agreement are coupled with an interest and are irrevocable until this Agreement
is terminated and the security interests created hereby are released.
13. Limitation on Duties Regarding Collateral. The Agent's
sole duty with respect to the custody, safekeeping and physical preservation of
the Collateral in its possession, under Section 9-207 of the Code or otherwise,
shall be to deal with it in the same manner as the Agent deals with similar
securities and property for its own account. Neither the Agent, any Bank nor
any of their respective directors, officers, employees or agents shall be
liable for failure to demand, collect or realize upon any of the Collateral or
for any delay in doing so or shall be under any obligation to sell or otherwise
dispose of any collateral upon the request of the Pledgor or otherwise.
14. Execution of Financing Statements. Pursuant to Section
9-402 of the Code, the Pledgor authorizes the Agent to file financing
statements with respect to the Collateral without the signature of the Pledgor
in such form and in such filing offices as the Agent reasonably determines
appropriate to perfect the security interests of the Agent under this Pledge
Agreement. A carbon, photographic or other reproduction of this Pledge
Agreement shall be sufficient as a financing statement for filing in any
jurisdiction.
15. Authority of Agent. The Pledgor acknowledges that the
rights and responsibilities of the Agent under this Pledge Agreement with
respect to any action taken by the Agent or the exercise or non-exercise by the
Agent of any option, voting
<PAGE> 203
11
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Pledge Agreement shall, as between the Agent
and the Banks, be governed by the Credit Agreement and by such other agreements
with respect thereto as may exist from time to time among them, but, as between
the Agent and the Pledgor, the Agent shall be conclusively presumed to be
acting as agent for the Banks with full and valid authority so to act or
refrain from acting, and neither the Pledgor nor the Issuer shall be under any
obligation, or entitlement, to make any inquiry respecting such authority.
16. Notices. All notices, requests and demands to or upon
the Agent, any Bank or the Pledgor to be effective shall be in writing (or by
telegraph or telecopy confirmed in writing) and shall be deemed to have been
duly given or made (a) when delivered by hand or (b) if given by mail, five
days after being deposited in the mails by certified mail, return receipt
requested or (c) if by telegraph or telecopy, when sent and receipt has been
confirmed, addressed at its address or transmission number for notices provided
in subsection 11.2 of the Credit Agreement. The Agent, each Bank and the
Pledgor may change its address and transmission numbers for notices by notice
in the manner provided in this Section.
17. Severability. Any provision of this Pledge Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
18. Section Headings. The Section headings used in this
Pledge Agreement are for convenience of reference only and are not to affect
the construction hereof or be taken into consideration in the interpretation
hereof.
19. Amendments in Writing; No Waiver; Pledge Cumulative
Remedies. (a) None of the terms or provisions of this Pledge Agreement may be
waived, amended, supplemented or otherwise modified except by a written
instrument executed by the Pledgor and the Agent in accordance with subsection
11.1 of the Credit Agreement, provided that any provision of this Pledge
Agreement may be waived by the Agent and the Banks in a letter or agreement
executed by the Agent or by telecopy from the Agent.
(b) Neither the Agent nor any Bank shall by any act (except
by a written instrument pursuant to section 19(a) hereof), delay, indulgence,
omission or otherwise be deemed to have waived any right or remedy hereunder or
to have acquiesced in any Default or Event of Default or in any breach of any
of the terms and conditions hereof. No failure to exercise, nor any delay in
exercising, on the part of the Agent or any Bank, any
<PAGE> 204
12
right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by the Agent or any Bank of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Agent or such Bank would otherwise have on any future
occasion.
(c) The rights and remedies herein provided are cumulative,
may be exercised singly or concurrently and are not exclusive of any other
rights or remedies provided by law.
20. Successors and Assigns. This Pledge Agreement shall be
binding upon the successors and assigns of the Pledgor and shall inure to the
benefit of the Agent and the Banks and their successors and assigns.
21. GOVERNING LAW. THIS PLEDGE AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this Pledge
Agreement to be duly executed and delivered as of the date first above written.
AIHI ACQUISITION CORP.
By:________________________________
Title:
<PAGE> 205
ACKNOWLEDGEMENT AND CONSENT
The undersigned Issuer referred to in the foregoing Pledge
Agreement hereby acknowledges receipt of a copy thereof and agrees to be bound
thereby and to comply with the terms thereof insofar as such terms are
applicable to it. The undersigned agrees to notify the Agent promptly in
writing of the occurrence of any of the events described in paragraph 6(a) of
the Pledge Agreement. The undersigned further agrees that the terms of
paragraph 10(c) of the Pledge Agreement shall apply to it, mutatis mutandis,
with respect to all actions that may be required of it under or pursuant to or
arising out of Section 10 of the Pledge Agreement.
AUTOMOTIVE INDUSTRIES
HOLDING, INC.
By:_______________________________
Title:
<PAGE> 206
EXHIBIT A
FORM OF
PLEDGE AGREEMENT SUPPLEMENT
PLEDGE AGREEMENT SUPPLEMENT, dated as of ____________, 199_
(this "Supplement"), made by AIHI ACQUISITION CORP. (the "Pledgor"), in favor
of CHEMICAL BANK in its capacity as administrative agent (the "Agent") for the
financial institutions (the "Banks") parties to the Credit Agreement, dated as
of August 17, 1995 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among Lear Seating Corporation, as Borrower (the
"Borrower"), the Banks, the Agent and the Managing Agents, Co-Agents and Lead
Managers identified therein.
1. This Supplement is executed and delivered pursuant to the
terms of that certain Acquisition Pledge Agreement, dated as of August 17, 1995
(as supplemented by this Supplement and as the same has been and may hereafter
be supplemented by any other Pledge Agreement Supplement, amended by any
amendment or otherwise modified, the "Pledge Agreement"), made by the Pledgor
in favor of the Agent. Terms defined in the Pledge Agreement and used herein
are so used as so defined.
2. The Pledgor confirms and reaffirms the security interest
in the Pledged Stock granted to the Agent under the Pledge Agreement and, as
additional collateral security for the prompt and complete payment and
performance when due of all the Pledgor's Obligations and in order to induce
the Banks to make additional Loans to the Borrower in accordance with the terms
of the Credit Agreement, the Pledgor hereby pledges to the Agent, for the
ratable benefit of the Banks, and hereby grants to the Agent, for the ratable
benefit of the Banks, a first priority lien on, and security interest in, all
of the Pledgor's right, title and interest in the Additional Pledged Stock
listed on Schedule I annexed hereto and all proceeds thereof.
3. The Pledgor hereby represents and warrants that the
representations and warranties contained in Section 5 of the Pledge Agreement
are true and correct on the date of this Supplement with references therein to
"Pledged Stock" to include the Additional Pledged Stock listed on Schedule I
hereto.
4. This Supplement is supplemental to the Pledge Agreement,
forms a part thereof and is subject to all the terms thereof. Pledged Stock
does, and shall be deemed to, include each item listed on Schedule I hereto and
each such item shall be and is included within the meaning of the term
"Additional Pledged Stock" as such term is used in the Pledge Agreement.
<PAGE> 207
2
IN WITNESS WHEREOF, the Pledgor has caused this Supplement to
be duly executed and delivered by its duly authorized officer on the date first
set forth above.
AIHI ACQUISITION CORP.
By:_____________________________
Title:
<PAGE> 208
Schedule I
To Pledge
Agreement
Supplement
DESCRIPTION OF ADDITIONAL PLEDGED STOCK
Class A Common Stock of Automotive Industries Holding, Inc.,
$.01 par value per share, either (i) represented by stock certificates as
follows:
Certificate Certificate No. of
No. Date Shares
----------- ----------- ------
or (ii) ________ shares of which have been transferred by book-entry delivery
thereof to an account of Chemical Bank for the benefit of the Agent with a
Clearing Corporation pursuant to Section 4(b) of the Pledge Agreement.
<PAGE> 209
EXHIBIT G
FORM OF
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of August 17, 1995, made by each
of the corporations that are signatories hereto other than Chemical Bank (the
"Grantors"), in favor of CHEMICAL BANK, as administrative agent (in such
capacity, the "Agent") for the Banks parties to the Credit Agreement referred
to below.
W I T N E S S E T H :
WHEREAS, Lear Seating Corporation (the "Borrower") is a party
to the Credit Agreement, dated as of August 17, 1995 (as amended, supplemented
or otherwise modified from time to time, the "Credit Agreement") with the
financial institutions parties thereto (the "Banks"), the Agent and the
Managing Agents, Co-Agents and Lead Managers identified therein;
WHEREAS, pursuant to the Credit Agreement and the other Loan
Documents (as defined in the Credit Agreement), the Banks have agreed to make
certain Loans (as defined in the Credit Agreement) to or for the benefit of the
Borrower and, in the case of the Issuing Bank (as defined in the Credit
Agreement), issue and, in the case of the Participating Banks (as defined in
the Credit Agreement), participate in certain Letters of Credit (as defined in
the Credit Agreement); and
WHEREAS, it is a condition precedent to the obligation of the
Banks to make the Loans and to issue or participate in the Letters of Credit
under the Credit Agreement that the Grantors shall have executed and delivered
this Security Agreement to the Agent for the ratable benefit of the Banks;
NOW, THEREFORE, in consideration of the premises contained
herein and to induce the Agent, and the Banks to enter into the Credit
Agreement and to induce the Banks to make the Loans and to issue and
participate in the Letters of Credit under the Credit Agreement, the Grantors
hereby agree with the Agent, for the ratable benefit of the Banks, as follows:
1. Defined Terms. (a) Unless otherwise defined herein,
terms which are defined in the Credit Agreement and used herein shall have the
meanings given to them in the Credit Agreement; the following terms which are
defined in the Uniform Commercial Code in effect in the State of New York on
the date hereof are used herein as so defined: Accounts, Chattel Paper,
Documents, Farm Products, General Intangibles, Instruments, Inventory and
Proceeds; and the following terms shall have the following meanings:
<PAGE> 210
2
"Code" shall mean the Uniform Commercial Code as from time to
time in effect in the State of New York.
"Collateral" shall have the meaning assigned to it in Section
2 of this Security Agreement.
"Contracts" shall mean each of the agreements listed on
Schedules I-A through G, as the same may from time to time be amended,
supplemented or otherwise modified, including, without limitation, (a)
all rights for each Grantor to receive monies due and to become due to
it thereunder or in connection therewith, (b) all rights of each
Grantor to damages arising out of, or for, breach or default in
respect thereof and (c) all rights of each Grantor to perform and to
exercise all remedies thereunder.
"Equipment" shall mean all equipment, as such term is defined
in Section 9-109(2) of the Code, now or hereafter acquired by each
Grantor, and, in any event, shall mean and include, but shall not be
limited to, all machinery, equipment, furnishings and fixtures now or
hereafter used in connection with the businesses of each Grantor or
located at the locations set forth on Schedules IV-A through G, and
any and all additions, substitutions and replacements of any of the
foregoing, together with all attachments, components, parts (including
spare parts), equipment and accessories installed thereon or affixed
thereto.
"Security Agreement" shall mean this Security Agreement, as
amended, supplemented or otherwise modified from time to time.
"Subsidiary Guarantee" shall mean the Subsidiary Guarantee,
dated as of the date hereof, made by LS Acquisition Corp. No. 14, Lear
Seating Holdings Corp. No. 50, Progress Pattern Corp., Lear Plastics
Corporation, LS Acquisition Corp. No. 24, Fair Haven Industries, Inc.
and AIHI Acquisition Corp. in favor of the Agent, for the ratable
benefit of the Banks, as the same may be amended, supplemented or
otherwise modified from time to time.
(b) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Security Agreement shall refer to this
Security Agreement as a whole and not to any particular provision of this
Security Agreement, and Section, paragraph and Schedule references are to this
Security Agreement unless otherwise specified.
(c) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
<PAGE> 211
3
2. Grant of Security Interest. As collateral security for
the prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations and in order to
induce the Agent and the Banks to enter into the Credit Agreement, each Grantor
hereby sells, assigns, conveys, mortgages, pledges, hypothecates and transfers
to the Agent, and hereby grants to the Agent, for the ratable benefit of the
Banks, a security interest in all of the following property now owned or at any
time hereafter acquired by such Grantor or in which such Grantor now has or at
any time in the future may acquire any right, title or interest (collectively,
the "Collateral"):
(i) all Accounts;
(ii) all Chattel Papers;
(iii) all Contracts;
(iv) all Documents;
(v) all Equipment;
(vi) all General Intangibles;
(vii) all Instruments;
(viii) all Inventory; and
(ix) to the extent not otherwise included, all Proceeds,
products, substitutions and replacements of any and all of the
foregoing.
3. Rights of Agent and Banks; Limitations on Agent's and
Banks' Obligations. (a) Anything herein to the contrary notwithstanding,
each Grantor shall remain liable under each of its respective Accounts and the
Contracts to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the terms of
any agreement giving rise to each such Account and in accordance with and
pursuant to the terms and provisions of the Contracts. Neither the Agent nor
any Bank shall have any obligation or liability under any Account (or any
agreement giving rise thereto) or under the Contracts by reason of or arising
out of this Security Agreement or the receipt by the Agent or any such Bank of
any payment relating to such Account or the Contracts pursuant hereto, nor
shall the Agent or any Bank be obligated in any manner to perform any of the
obligations of any Grantor under or pursuant to any Account (or any agreement
giving rise thereto), or under or pursuant to the Contracts, to make any
payment, to make any inquiry as to the nature or the sufficiency of any payment
received by it or as to the sufficiency of any performance by any party under
any Account (or any agreement
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4
giving rise thereto) or under the Contracts, to present or file any claim, to
take any action to enforce any performance or to collect the payment of any
amounts which may have been assigned to it or to which it may be entitled at
any time or times.
(b) At the Agent's request, each Grantor shall deliver to
the Agent all original and other documents evidencing, and relating to, the
sale and delivery of Inventory or the performance of labor or service which
created the Accounts, including, but not limited to, all Chattel Paper,
original purchase orders, invoices, shipping documents and delivery receipts
and duplicate copies of credit memoranda.
(c) The Agent may at any time after the occurrence and
during the continuance of an Event of Default notify account debtors and
parties to Accounts that the Accounts have been assigned to the Agent, for the
ratable benefit of the Banks, and that payments shall be made directly to the
Agent. Upon the request of the Agent at any time after the occurrence and
during the continuance of an Event of Default, each Grantor will so notify such
account debtors and such parties to the Accounts. Upon prior notice to the
Grantors, the Agent may in its own name or in the name of others communicate
with account debtors and parties to Accounts in order to verify with them to
the Agent's satisfaction the existence, amount and terms of any Accounts.
(d) Upon prior notice to the Grantors, the Agent shall
have the right to make test verifications of the Collateral in any matter and
through any medium that it considers advisable, and the Grantor agrees to
furnish all such assistance and information as the Agent may require in
connection therewith. Each Grantor at its expense will furnish, or will cause
independent public accountants satisfactory to the Agent to furnish, to the
Agent at any time and from time to time promptly upon the Agent's request, the
following reports: (i) reconciliation of all Collateral, (ii) an aging of all
Collateral, (iii) trial balances, (iv) a test verification of such Collateral
and (v) a physical inventory of the Collateral by certified accountants
reasonably satisfactory to the Agent.
4. Representations and Warranties. Each Grantor hereby
represents and warrants that:
(a) Title; No Other Liens. Except for the Lien granted
to the Agent for the ratable benefit of the Banks pursuant to this
Security Agreement, such Grantor owns each item of the Collateral free
and clear of any and all Liens or claims of others other than Liens
permitted under subsection 8.3 of the Credit Agreement. No security
agreement, financing statement or other public notice with respect to
all or any part of such Collateral is on file or of record in any
public office, except (i) such as may have been filed in favor of the
Agent, for the ratable benefit of
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the Banks, pursuant to this Security Agreement, (ii) financing
statements filed with respect to equipment leases or (iii) as may
otherwise be permitted pursuant to the Credit Agreement.
(b) Perfected First Priority Liens. Appropriate
financing statements having been filed in the jurisdictions listed on
Schedules II-A through G and all other appropriate action having been
duly taken, the Liens granted pursuant to this Security Agreement
constitute perfected Liens on the Collateral in favor of the Agent,
for the ratable benefit of the Banks, which are prior to all other
Liens on such Collateral created by such Grantor other than Liens
permitted under subsection 8.3 of the Credit Agreement and which are
enforceable as such against all creditors of and purchasers from such
Grantor and against any owner or purchaser of the real property where
any of the Equipment or Inventory is located and any present or future
creditor obtaining a Lien on such real property.
(c) Accounts. The amount represented by such Grantor to
the Banks from time to time as owing by each account debtor or by all
account debtors in respect of the Accounts will at such time be the
correct amount actually owing by such account debtor or debtors
thereunder. No amount in excess of $100,000 payable to such Grantor
under or in connection with any of the Accounts is evidenced by any
Instrument or Chattel Paper which has not been delivered to the Agent.
The place where such Grantor keeps its records concerning the Accounts
is set forth on Schedule III-A through G.
(d) Consents. Except as previously disclosed to the
Banks in writing: (i) no consent of any party (other than such
Grantor) to each Contract is required, or purports to be required, in
connection with the execution, delivery and performance of this
Security Agreement by such Grantor; (ii) each Contract is in full
force and effect and constitutes a valid and legally enforceable
obligation of the parties thereto, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally;
(iii) no consent or authorization of, filing with or other act by or
in respect of any Governmental Authority is required in connection
with the execution, delivery, performance, validity or enforceability
of any Contract by any party thereto other than those which have been
duly obtained, made or performed, are in full force and effect and do
not subject the scope of any Contract to any material adverse
limitation, either specific or general in nature; (iv) neither such
Grantor nor (to the best of such Grantor's knowledge) any other party
to any Contract is in default or is likely to become in default in the
performance or
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observance of any of the terms thereof; (v) such Grantor has fully
performed all its obligations under each Contract; (vi) the right,
title and interest of such Grantor in, to and under each Contract is
not subject to any defense, offset, counterclaim or claim which could
materially adversely affect the value of such Contract as Collateral,
nor have any of the foregoing been asserted or alleged against such
Grantor as to each Contract; (vii) such Grantor has delivered to the
Agent a complete and correct copy of each Contract, including all
amendments, supplements and other modifications thereto; and (viii) no
amount payable to such Grantor under or in connection with any
Contract is evidenced by any Instrument or Chattel Paper which has not
been delivered to the Agent.
(e) Inventory and Equipment. The Inventory and the
Equipment are kept only at the locations listed on Schedules IV-A
through G.
(f) Chief Executive Office. Such Grantor's chief executive
office and chief place of business is located at the address listed on
Schedules V-A through G.
(g) Farm Products. None of the Collateral constitutes, or is
the Proceeds of, Farm Products.
5. Covenants. Each Grantor covenants and agrees with the
Agent and the Banks that, from and after the date of this Security Agreement
until the Obligations have been paid in full:
(a) Further Documentation; Pledge of Instruments and Chattel
Paper. At any time and from time to time, upon the reasonable request
of any Bank, and at the sole expense of such Grantor, such Grantor
will promptly and duly execute and deliver such further instruments
and documents and take such further action as such Bank may reasonably
request for the purpose of obtaining or preserving the full benefits
of this Security Agreement and of the rights and powers herein
granted, including, without limitation, the filing of any financing or
continuation statements under the Uniform Commercial Code in effect in
any jurisdiction with respect to the Liens created hereby. Such
Grantor also hereby authorizes the Agent to file any such financing or
continuation statement without the signature of such Grantor to the
extent permitted by applicable law. A carbon, photographic or other
reproduction of this Security Agreement shall be sufficient as a
financing statement for filing in any jurisdiction.
(b) Pledge of Instruments and Chattel Paper. If any amount
in excess of $100,000 payable under or in connection with any of the
Collateral shall be or become evidenced by any Instrument or Chattel
Paper, such Instrument or Chattel
<PAGE> 215
7
Paper shall be immediately delivered to the Agent, duly endorsed by
such Grantor in a manner satisfactory to the Agent, to be held as
Collateral pursuant to this Security Agreement.
(c) Indemnification. Such Grantor agrees to pay, and to save
the Agent and the Banks harmless from, any and all liabilities, costs
and expenses (including, without limitation, legal fees and expenses)
(i) with respect to, or resulting from, any delay in paying, any and
all excise, sales or other taxes which may be payable or determined to
be payable with respect to any of the Collateral, (ii) with respect
to, or resulting from, any delay in complying with any Requirement of
Law applicable to any of the Collateral or (iii) in connection with
any of the transactions contemplated by this Security Agreement. In
any suit, proceeding or action brought by the Agent or any Bank under
any of the Accounts for any sum owing thereunder, or to enforce any
provisions of any such Account, such Grantor will save, indemnify and
keep the Agent and such Bank harmless from and against all expense,
loss or damage suffered by reason of any defense, setoff,
counterclaim, recoupment or reduction or liability whatsoever of the
account debtor or obligor thereunder, arising out of a breach by such
Grantor of any obligation thereunder or arising out of any other
agreement, indebtedness or liability at any time owing to or in favor
of such account debtor or obligor or its successors from such Grantor.
(d) Maintenance of Records. Such Grantor will keep and
maintain at its own cost and expense satisfactory and complete
records of the Collateral, including, without limitation, a record of
all payments received and all credits granted with respect to the
Accounts. Such Grantor will mark its books and records pertaining to
the Collateral to evidence this Security Agreement and the security
interests granted hereby. For the Agent's and the Banks' further
security, the Agent, for the ratable benefit of the Banks, shall have
a security interest in all of such Grantor's books and records
pertaining to the Collateral, and, subject to subsection 11.13 of the
Credit Agreement, such Grantor shall turn over any such books and
records to the Agent or to its representatives during normal business
hours at the request of the Agent.
(e) Right of Inspection. The Agent and the Banks shall at
all times, upon reasonable notice, have full and free access during
normal business hours to all the books, correspondence and records of
such Grantor, and the Agent and the Banks and their respective
representatives may examine the same, take extracts therefrom and make
photocopies thereof, and such Grantor agrees to render to the Agent
and the Banks, at such Grantor's cost and expense,
<PAGE> 216
8
such clerical and other assistance as may be reasonably requested with
regard thereto. The Agent and the Banks and their respective
representatives shall, upon reasonable notice and at any reasonable
time, also have the right to enter into and upon any premises where
any of the Inventory or Equipment is located for the purpose of
inspecting the same, observing its use or otherwise protecting its
interests therein.
(f) Compliance with Laws, etc. Such Grantor will comply in
all material respects with all Requirements of Law applicable to the
Collateral or any part thereof or to the operation of such Grantor's
business; provided that such Grantor may contest any Requirement of
Law in any reasonable manner which shall not, in the sole opinion of
the Agent, adversely affect the Agent's or the Banks' rights or the
priority of their Liens on the Collateral.
(g) Compliance with Terms of Contracts, etc. Such Grantor
will perform and comply in all material respects with all its
obligations under the Contracts and all its other Contractual
Obligations relating to the Collateral.
(h) Payment of Obligations. Such Grantor will pay promptly
when due all taxes, assessments and governmental charges or levies
imposed upon the Collateral or in respect of its income or profits
therefrom, as well as all claims of any kind (including, without
limitation, claims for labor, materials and supplies) against or with
respect to such Collateral, except that no such charge need be paid if
(i) the validity thereof is being contested in good faith by
appropriate proceedings, and such charge is adequately reserved
against on such Grantor's books in accordance with GAAP, (ii) such
proceedings do not involve any danger of the sale, forfeiture or loss
of any of such Collateral or any interest therein.
(i) Limitations on Liens on Collateral. Such Grantor will
not create, incur or permit to exist, will defend the Collateral
against, and will take such other action as is necessary to remove,
any Lien or claim on or to such Collateral, other than the Liens
created hereby or Liens permitted under subsection 8.3 of the Credit
Agreement, and will defend the right, title and interest of the Agent
and the Banks in and to any of such Collateral against the claims and
demands of all Persons whomsoever.
(j) Limitations on Dispositions of Collateral. Such Grantor
will not sell, transfer, lease or otherwise dispose of any of the
Collateral, or attempt, offer or contract to do so except for
dispositions of assets permitted by subsection 8.6 of the Credit
Agreement.
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9
(k) Limitations on Modifications, Waivers, Extensions of the
Contracts and Agreements Giving Rise to Accounts. Such Grantor will
not (i) amend, modify, terminate or waive any provision of any
Contract or any agreement giving rise to any of the Accounts in any
manner which could reasonably be expected to materially adversely
affect the value of any such Contract or Account as Collateral, (ii)
fail to exercise promptly and diligently each and every material right
which it may have under each agreement giving rise to the Accounts
(other than any right of termination) or (iii) fail to deliver to the
Agent a copy of each material demand, notice or document received by
it relating in any way to any Contract or any agreement giving rise to
an Account.
(l) Limitations on Discounts, Compromises, Extensions of
Accounts. Other than in the ordinary course of business as generally
conducted by the Grantor over a period of time, such Grantor will not
grant any extension of the time of payment of any of the Accounts,
compromise, compound or settle the same for less than the full amount
thereof, release, wholly or partially, any Person liable for the
payment thereof, or allow any credit or discount whatsoever thereon.
(m) Maintenance of Equipment. Such Grantor will maintain
each material item of the Equipment useful and necessary in its
business in good operating condition, ordinary wear and tear and
immaterial impairments of value and damage by the elements excepted,
and will provide all maintenance, service and repairs necessary for
such purpose.
(n) Maintenance of Insurance. Such Grantor will maintain,
with financially sound and reputable companies, insurance policies (i)
insuring the Inventory and Equipment against loss by fire, explosion,
theft and such other casualties customary for business of the same
type and (ii) insuring such Grantor, the Agent and the Banks against
liability for personal injury and property damage relating to the
Inventory and Equipment, such policies to be in the form and amounts
and having such coverage customary for business of the same type with
losses payable to such Grantor and the Agent as their respective
interests may appear. All such insurance shall (i) contain a breach
of warranty clause in favor of the Agent, (ii) provide that no
cancellation, material reduction in amount or material change in
coverage thereof shall be effective until at least 30 days after
receipt by the Agent and the Banks of written notice thereof, (iii)
name the Agent and the Banks as insured parties and (iv) be reasonably
satisfactory in all other respects to the Agent. Such Grantor shall
deliver to the Agent and the Banks a report of a reputable insurance
broker with respect to such insurance as the Agent may from time to
time reasonably request.
<PAGE> 218
10
(o) Further Identification of Collateral. Upon the
reasonable request of the Agent, such Grantor will furnish to the
Agent and the Banks from time to time statements and schedules further
identifying and describing the Collateral and such other reports in
connection with the Collateral, all in reasonable detail.
(p) Notices. Such Grantor will advise the Agent and the
Banks promptly, in reasonable detail, at their respective addresses
set forth in the Credit Agreement, (i) of any Lien (other than Liens
created hereby or permitted under the Credit Agreement) on, or claim
asserted against, any of the Collateral and (ii) of the occurrence of
any other event which could reasonably be expected to have a material
adverse effect on the aggregate value of the Collateral or on the
Liens created hereunder.
(q) Changes in Locations, Name, etc. Such Grantor will not
(i) change the location of its chief executive office/chief place of
business from that specified in paragraph 4(f) or remove its books and
records from the location specified in paragraph 4(c), (ii) permit any
of the Inventory or Equipment to be kept at a location other than
those listed in respect to such Grantor on Schedules IV-A through H or
(iii) change its name, identity or corporate structure to such an
extent that any financing statement filed by the Agent in connection
with this Security Agreement could become seriously misleading.
6. Agent's Appointment as Attorney-in-Fact. (a) Powers.
Each Grantor hereby irrevocably constitutes and appoints the Agent and any
officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of such Grantor and in the name of such Grantor or in its own name,
from time to time in the Agent's discretion, for the purpose of carrying out
the terms of this Security Agreement, to take any and all appropriate action
and to execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Security Agreement, and, without
limiting the generality of the foregoing, each Grantor hereby gives the Agent
the power and right, on behalf of such Grantor, without notice to or assent by
such Grantor, to do the following:
(i) upon the occurrence and during the continuance of
any Event of Default, in the name of such Grantor or its own name, or
otherwise, to take possession of and indorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of
moneys due under any Accounts, Instruments, General Intangibles or any
Contract or with respect to any other of the Collateral and to file
any claim or to take any other action or proceeding in any court of
law or equity or otherwise deemed appropriate by
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11
the Agent for the purpose of collecting any and all such moneys due
under any such Account, Instrument or General Intangible or Contract
or with respect to any other such Collateral whenever payable;
(ii) to pay or discharge taxes and Liens levied or
placed on or threatened against the Collateral, to effect any repairs
or any insurance called for by the terms of this Security Agreement
and to pay all or any part of the premiums therefor and the costs
thereof; and
(iii) upon the occurrence and during the continuance of
any Event of Default, (A) to direct any party liable for any payment
under any of the Collateral to make payment of any and all moneys due
or to become due thereunder directly to the Agent or as the Agent
shall direct; (B) to ask or demand for, collect, receive payment of
and receipt for, any and all moneys, claims and other amounts due or
to become due at any time in respect of or arising out of any of the
Collateral; (C) to sign and indorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications, notices and other documents in
connection with any of the Collateral; (D) to commence and prosecute
any suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any thereof and to
enforce any other right in respect of any such Collateral; (E) to
defend any suit, action or proceeding brought against such Grantor
with respect to any Collateral; (F) to settle, compromise or adjust
any suit, action or proceeding described in clause (E) above and, in
connection therewith, to give such discharges or releases as the Agent
may deem appropriate; and (G) generally, to sell, transfer, pledge and
make any agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though the Agent were the
absolute owner thereof for all purposes, and to do, at the Agent's
option and such Grantor's expense, at any time, or from time to time,
all acts and things which the Agent deems necessary to protect,
preserve or realize upon the Collateral and the Agent's and the Banks'
Liens thereon and to effect the intent of this Security Agreement, all
as fully and effectively as the Grantor might do.
Each Grantor hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.
(b) Other Powers. Each Grantor also authorizes the Agent and
the Banks, at any time and from time to time, to execute, in connection with
the sale provided for in Section 9
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12
hereof, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral.
(c) No Duty on Agent or Banks' Part. The powers conferred on
the Agent and the Banks hereunder are solely to protect the Agent's and the
Banks' interests in the Collateral and shall not impose any duty upon the Agent
or any Bank to exercise any such powers. The Agent and the Banks shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to any Grantor for any act or failure
to act hereunder, except for their own gross negligence or willful misconduct.
7. Performance by Agent of Grantor's Obligations. If any
Grantor fails to perform or comply with any of its agreements contained herein
and the Agent, as provided for by the terms of this Security Agreement, shall
itself perform or comply, or otherwise cause performance or compliance, with
such agreement, the expenses of the Agent incurred in connection with such
performance or compliance, together with interest thereon at a rate per annum
2% above the ABR, shall be payable by such Grantor to the Agent on demand and
shall constitute Obligations secured hereby.
8. Proceeds. If an Event of Default shall occur and be
continuing:
(a) all Proceeds received by any Grantor consisting of cash,
checks and other near-cash items shall be held by such Grantor in
trust for the Agent and the Banks, segregated from other funds of the
Grantor, and shall, forthwith upon receipt by such Grantor, be turned
over to the Agent in the exact form received by such Grantor (duly
indorsed by such Grantor to the Agent, if required) and
(b) any and all such Proceeds received by the Agent (whether
from any Grantor or otherwise) may, in the sole discretion of the
Agent, be held by the Agent for the ratable benefit of the Banks as
collateral security for, and/or then or at any time thereafter may be
applied by the Agent against, the Obligations (whether matured or
unmatured), such application to be in such order as the Agent shall
elect. Any balance of such Proceeds remaining after the Obligations
shall have been paid in full and the Commitments shall have been
terminated shall be paid over to the Grantors or to whomsoever may be
lawfully entitled to receive the same.
9. Remedies. If an Event of Default shall occur and be
continuing, the Agent, on behalf of the Banks, may exercise, in addition to all
other rights and remedies granted to them in
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13
this Security Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations or any Obligations, all rights and
remedies of a secured party under the Code. Without limiting the generality of
the foregoing, the Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon the Grantors or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon any Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give an option or options to purchase, or otherwise dispose of
and deliver any Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange or broker's board or office of the Agent or any Bank or elsewhere upon
such terms and conditions as it may deem advisable and at such prices as it may
deem best, for cash or on credit or for future delivery without assumption of
any credit risk. The Agent and each Bank shall have the right upon any such
public sale or sales, and, to the extent permitted by law, upon any such
private sale or sales, to purchase the whole or any part of any Collateral so
sold, free of any right or equity of redemption in the Grantors, which right or
equity is hereby waived or released. Each Grantor further agrees, at the
Agent's request, to assemble the Collateral and make it available to the Agent
at places which the Agent shall reasonably select, whether at the Grantor's
premises or elsewhere. The Agent shall apply the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses of every kind incurred therein or
incidental to the care or safekeeping of any of such Collateral or in any way
relating to such Collateral or the rights of the Agent and the Banks hereunder,
including, without limitation, attorneys' fees and disbursements, to the
payment in whole or in part of the Obligations, in such order as the Agent may
elect, and only after such application and after the payment by the Agent of
any other amount required by any provision of law, including, without
limitation, Section 9-504(1)(c) of the Code, need the Agent account for the
surplus, if any, to the Grantors. To the extent permitted by applicable law,
the Grantor waives all claims, damages and demands it may acquire against the
Agent or any Bank arising out of the exercise by them of any rights hereunder.
If any notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given at
least ten days before such sale or other disposition. Each Grantor shall
remain liable for any deficiency if the proceeds of any sale or other
disposition of the Collateral are insufficient to pay the Obligations and the
fees and disbursements of any attorneys employed by the Agent or any Bank to
collect such deficiency.
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14
10. Limitation on Duties Regarding Preservation of
Collateral. The Agent's sole duty with respect to the custody, safekeeping and
physical preservation of the Collateral in its possession, under Section 9-207
of the Code or otherwise, shall be to deal with it in the same manner as the
Agent deals with similar property for its own account. Neither the Agent, any
Bank, nor any of their respective directors, officers, employees or agents
shall be liable for failure to demand, collect or realize upon all or any part
of the Collateral or for any delay in doing so or shall be under any obligation
to sell or otherwise dispose of any Collateral upon the request of any Grantor
or otherwise.
11. Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
12. Severability. Any provision of this Security Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
13. Section Headings. The Section headings used in this
Security Agreement are for convenience of reference only and are not to affect
the construction hereof or be taken into consideration in the interpretation
hereof.
14. No Waiver; Cumulative Remedies. Neither the Agent nor
any Bank shall by any act (except by a written instrument pursuant to Section
15 hereof), delay, indulgence, omission or otherwise be deemed to have waived
any right or remedy hereunder or to have acquiesced in any Default or Event of
Default or in any breach of any of the terms and conditions hereof. No failure
to exercise, nor any delay in exercising, on the part of the Agent or any Bank,
any right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by the Agent or any Bank of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Agent or such Bank would otherwise have on any future
occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any rights or
remedies provided by law.
15. Waivers and Amendments; Successors and Assigns; Governing
Law. None of the terms or provisions of this Security Agreement may be waived,
amended, supplemented or otherwise
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15
modified except by a written instrument executed by each Grantor and the Agent
in accordance with subsection 11.1 of the Credit Agreement; provided that any
provision of this Security Agreement may be waived by the Agent and the Banks
in a letter or agreement executed by the Agent or by telecopy from the Agent.
This Security Agreement shall be binding upon the successors and assigns of
each Grantor and shall inure to the benefit of the Agent and the Banks and
their respective successors and assigns. THIS SECURITY AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.
16. Notices. All notices, requests and demands to or upon
the Agent, any Bank or any Grantor to be effective shall be in writing (or by
telegraph or telecopy confirmed in writing) and shall be deemed to have been
duly given or made (a) when delivered by hand or (b) if given by mail, when
deposited in the mails by certified mail, return receipt requested or (c) if by
telegraph or telecopy, when sent and receipt has been confirmed, addressed at
its address or transmission number for notices provided in subsection 11.2 of
the Credit Agreement or Section 12 of the Subsidiary Guarantee. The Agent,
each Bank and the Grantor may change its address and transmission numbers for
notices by notice in the manner provided in this Section.
17. Authority of Agent. Each Grantor acknowledges that the
rights and responsibilities of the Agent under this Security Agreement with
respect to any action taken by the Agent or the exercise or non-exercise by the
Agent of any option, right, request, judgment or other right or remedy provided
for herein or resulting or arising out of this Security Agreement shall, as
between the Agent and the Banks, be governed by the Credit Agreement and by
such other agreements with respect thereto as may exist from time to time among
them, but, as between the Agent and each Grantor, the Agent shall be
conclusively presumed to be acting as agent for the Banks with full and valid
authority so to act or refrain from acting, and each Grantor shall not be under
any obligation, or entitlement, to make any inquiry respecting such authority.
18. Release of Liens. In the event that any Grantor conveys,
sells, leases, assigns, transfers or otherwise disposes of any portion of the
Collateral in accordance with subsection 8.6 of the Credit Agreement or grants
a Lien with respect to any of the Collateral which Lien is permitted pursuant
to subsection 8.3(m) of the Credit Agreement, and so long as no Default or
Event of Default shall have occurred and be continuing, the Agent shall
promptly take such action as may be reasonably requested by such Grantor to
release, to the extent necessary, any Liens created by this Security Agreement
in respect of such Collateral.
19. Counterparts. This Security Agreement may be executed by
one or more of the parties to this Security Agreement
<PAGE> 224
16
on any number of separate counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. A set of
the counterparts of this Security Agreement signed by all the parties hereto
shall be lodged with the Agent.
IN WITNESS WHEREOF, each of the undersigned has caused this
Security Agreement to be duly executed and delivered as of the date first above
written.
LEAR SEATING CORPORATION
By:______________________________
Title:
LS ACQUISITION CORP. NO. 14
By:______________________________
Title:
LEAR SEATING HOLDINGS CORP. NO.
50
By:______________________________
Title:
PROGRESS PATTERN CORP.
By:______________________________
Title:
LEAR PLASTICS CORP.
By:______________________________
Title:
<PAGE> 225
17
LS ACQUISITION CORPORATION
NO. 24
By:______________________________
Title:
FAIR HAVEN INDUSTRIES, INC.
By:______________________________
Title:
<PAGE> 226
SCHEDULE I-A
------------
LEAR SEATING CORPORATION
Contracts
---------
None.
SCHEDULE I-B
------------
LS ACQUISITION CORP. NO. 14
Contracts
---------
None.
SCHEDULE I-C
------------
LEAR SEATING HOLDINGS CORP. NO. 50
Contracts
---------
None.
SCHEDULE I-D
------------
PROGRESS PATTERN CORP.
Contracts
---------
None.
SCHEDULE I-E
------------
LEAR PLASTICS CORP.
Contracts
---------
None.
<PAGE> 227
SCHEDULE I-F
------------
LS ACQUISITION CORPORATION. NO. 24
Contracts
---------
None.
SCHEDULE I-G
------------
FAIR HAVEN INDUSTRIES, INC.
Contracts
---------
None.
<PAGE> 228
SCHEDULE II-A
LEAR SEATING CORPORATION
Financing Statements Filed
State Location
----- --------
Kentucky 1. Secretary of State
Kentucky 2. Jefferson County
Michigan 3. Secretary of State
Michigan 4. St. Joseph County
Michigan 5. Genesee County
Michigan 6. Oakland County
Michigan 7. Wayne County
Tennessee 8. Secretary of State
Tennessee 9. Hamblen County
Ohio 10. Secretary of State
Ohio 11. Lorain County
Texas 12. Secretary of State
Texas 13. El Paso County
Wisconsin 14. Secretary of State
Wisconsin 15. Rock County
Indiana 16. Secretary of State
Indiana 17. Lake County
South Carolina 18. Secretary of State
South Carolina 19. Spartanburg County
Georgia 20. Clayton County
Missouri 21. Secretary of State
Missouri 22. St. Louis County
<PAGE> 229
SCHEDULE II-B
-------------
LS ACQUISITION CORP. NO. 14
Financing Statements Filed
--------------------------
State Location
----- --------
1. Michigan 1. Secretary of State
2. Michigan 2. Oakland County
SCHEDULE II-C
-------------
LEAR SEATING HOLDINGS CORP. NO. 50
Financing Statements Filed
--------------------------
State Location
----- --------
1. Michigan 1. Secretary of State
2. Michigan 2. Oakland County
SCHEDULE II-D
-------------
PROGRESS PATTERN CORP.
Financing Statements Filed
--------------------------
State Location
----- --------
1. Michigan 1. Secretary of State
2. Michigan 2. Oakland County
<PAGE> 230
SCHEDULE II-E
-------------
LEAR PLASTICS CORP.
Financing Statements Filed
--------------------------
State Location
----- --------
1. Michigan 1. Secretary of State
2. Michigan 2. St. Joseph County
SCHEDULE II-F
-------------
LS ACQUISITION CORPORATION NO. 24
Financing Statements Filed
--------------------------
State Location
----- --------
1. Michigan 1. Secretary of State
2. Michigan 2. Oakland County
SCHEDULE II-G
-------------
FAIR HAVEN INDUSTRIES, INC.
Financing Statements Filed
--------------------------
State Location
----- --------
1. Michigan 1. Secretary of State
2. Michigan 2. St. Clair County
<PAGE> 231
SCHEDULE III-A
LEAR SEATING CORPORATION
Location of Records Concerning Accounts
21557 Telegraph Road
Southfield, Michigan 48034
4600 Nancy Avenue
Detroit, Michigan 48212
36300 Eureka Road
Romulus, Michigan 48174
36310 Eureka Road
Romulus, Michigan 48174
340 Fenway Drive
Fenton, Michigan 48430
236 West Clark Street
Mendon, Michigan 49072
325 Industrial Avenue
Morristown, Tennessee 37814
7425 Industrial Parkway
Building One
Lorain, Ohio 44053
12510 Westport Road
Building One
Louisville, Kentucky 40245
3708 Enterprise Drive
Janesville, Wisconsin 53545
2060 Voorheis Avenue
Grand Rapids, Michigan 49504
45 Corporate Woods Drive
Bridgeton, Missouri 63044
1401 165th Street
Hammond, Indiana 46320
4361 International Boulevard
Atlanta, Georgia 30354
1865 East Main Street
Duncan, South Carolina 29334
<PAGE> 232
21177 Hilltop Street
Southfield, MI 48034
4400 South Saginaw Street
Flint, MI 48507
1900 N. Saginaw Street
Flint, MI 48505
17425 Federal Drive
Allen Park, MI 48101
5800 Enterprise Drive
Warren, MI 48092
1055 West Maple Road
Clawson, MI 48017
13955 Farmington Road
Livonia, MI 48154
Pioneer Engineering Building
2500 E. Nine Mile Road
Warren, MI 48091
28000 Dequindre Road
Warren, MI 48092
3000 Research Drive
Rochester Hills, MI 48309
2298 West Street Road 28
Frankfort, IN 46041-8772
1789 Balley Road
Warren, OH 44481
45 Corporate Woods Drive
Bridgeton, MO 83044
255 Edigar Road
Wentzville, MO 83303
14276 Frazho Road
Warren, MI 48089
(temporary location)
Warehouse Location:
Central Detroit Warehouse
18765 Seaway Drive
Melvindale, MI 48122
<PAGE> 233
SCHEDULE III-B
--------------
LS ACQUISITION CORP. NO. 14
Location of Records Concerning Accounts
---------------------------------------
21557 Telegraph Road
Southfield, Michigan 48034
SCHEDULE III-C
--------------
LEAR SEATING HOLDINGS CORP. NO. 50
Location of Records Concerning Accounts
---------------------------------------
21557 Telegraph Road
Southfield, Michigan 48034
SCHEDULE III-D
--------------
PROGRESS PATTERN CORP.
Location of Records Concerning Accounts
---------------------------------------
21555 Telegraph Road
Southfield, Michigan 48034
SCHEDULE III-E
--------------
LEAR PLASTICS CORP.
Location of Records Concerning Accounts
---------------------------------------
236 West Clark Street
Mendon, Michigan 49072
SCHEDULE III-F
--------------
LS ACQUISITION CORPORATION. NO. 24
Location of Records Concerning Accounts
---------------------------------------
21557 Telegraph Road
Southfield, Michigan 48034
<PAGE> 234
SCHEDULE III-G
--------------
FAIR HAVEN INDUSTRIES, INC.
Location of Records Concerning Accounts
---------------------------------------
7445 Mayer Road
Fair Haven, Michigan 48023
<PAGE> 235
SCHEDULE IV-A
LEAR SEATING CORPORATION
Location of Inventory and Equipment
21557 Telegraph Road
Southfield, Michigan 48034
4600 Nancy Avenue
Detroit, Michigan 48212
36300 Eureka Road
Romulus, Michigan 48174
36310 Eureka Road
Romulus, Michigan 48174
340 Fenway Drive
Fenton, Michigan 48430
236 West Clark Street
Mendon, Michigan 49072
325 Industrial Avenue
Morristown, Tennessee 37814
7425 Industrial Parkway
Lorain, Ohio 44053
12510 Westport Road
Building One
Louisville, Kentucky 40245
3708 Enterprise Drive
Janesville, Wisconsin 53545
2060 Voorheis Avenue
Grand Rapids, Michigan
1401 165th Street
Hammond, Indiana 46320
4361 International Boulevard
Atlanta, Georgia 30354
1725 East Main Street
Duncan, South Carolina 29334
45 Corporate Woods Drive
Bridgeton, Missouri 63044
<PAGE> 236
21177 Hilltop Street
Southfield, MI 48034
4400 South Saginaw Street
Flint, MI 48507
1900 N. Saginaw Street
Flint, MI 48505
17425 Federal Drive
Allen Park, MI 48101
5800 Enterprise Drive
Warren, MI 48092
1055 West Maple Road
Clawson, MI 48017
13955 Farmington Road
Livonia, MI 48154
Pioneer Engineering Building
2500 E. Nine Mile Road
Warren, MI 48091
28000 Dequindre Road
Warren, MI 48092
3000 Research Drive
Rochester Hills, MI 48309
2298 West Street Road 28
Frankfort, IN 46041-8772
1789 Balley Road
Warren, OH 44481
45 Corporate Woods Drive
Bridgeton, MO 83044
255 Edigar Road
Wentzville, MO 83303
14276 Frazho Road
Warren, MI 48089
(temporary location)
Warehouse Location:
Central Detroit Warehouse
18765 Seaway Drive
Melvindale, MI 48122
<PAGE> 237
SCHEDULE IV-B
-------------
LS ACQUISITION CORP. NO. 14
Locations of Inventory and Equipment
------------------------------------
21557 Telegraph Road
Southfield, Michigan 48034
SCHEDULE IV-C
-------------
LEAR SEATING HOLDINGS CORP. NO. 50
Locations of Inventory and Equipment
------------------------------------
21557 Telegraph Road
Southfield, Michigan 48034
SCHEDULE IV-D
-------------
PROGRESS PATTERN CORP.
Locations of Inventory and Equipment
------------------------------------
21555 Telegraph Road
Southfield, Michigan 48034
SCHEDULE IV-E
-------------
LEAR PLASTICS CORP.
Locations of Inventory and Equipment
------------------------------------
236 West Clark Street
Mendon, Michigan 49072
SCHEDULE IV-F
-------------
LS ACQUISITION CORPORATION. NO. 24
Locations of Inventory and Equipment
------------------------------------
21557 Telegraph Road
Southfield, Michigan 48034
<PAGE> 238
SCHEDULE IV-G
-------------
FAIR HAVEN INDUSTRIES, INC.
Locations of Inventory and Equipment
------------------------------------
7445 Mayer Road
Fair Haven, Michigan 48023
<PAGE> 239
SCHEDULE V-A
------------
LEAR SEATING CORPORATION
Chief Executive Office
----------------------
21557 Telegraph Road
Southfield, Michigan 48034
SCHEDULE V-B
------------
LS ACQUISITION CORP. NO. 14
Chief Executive Office
----------------------
21557 Telegraph Road
Southfield, Michigan 48034
SCHEDULE V-C
------------
LEAR SEATING HOLDINGS CORP. NO. 50
Chief Executive Office
----------------------
21557 Telegraph Road
Southfield, Michigan 48034
SCHEDULE V-D
------------
PROGRESS PATTERN CORP.
Chief Executive Office
----------------------
21555 Telegraph Road
Southfield, Michigan 48034
SCHEDULE V-E
------------
LEAR PLASTICS CORP.
Chief Executive Office
----------------------
236 West Clark Street
Mendon, Michigan 49072
<PAGE> 240
SCHEDULE V-F
------------
LS ACQUISITION CORPORATION. NO. 24
Chief Executive Office
----------------------
21557 Telegraph Road
Southfield, Michigan 48034
SCHEDULE V-G
------------
FAIR HAVEN INDUSTRIES, INC.
Chief Executive Office
----------------------
7445 Mayer Road
Fair Haven, Michigan 48023
<PAGE> 241
EXHIBIT H
FORM OF
DEPOSITARY AGENCY AGREEMENT
DEPOSITARY AGENCY AGREEMENT, dated as of August 17, 1995,
among BANKERS TRUST COMPANY, as depositary (in its capacity as depositary, the
"Depositary"), CHEMICAL BANK, as administrative agent under the Credit
Agreement referred to below (in its capacity as administrative agent, the
"Agent"), LEAR SEATING CORPORATION, a Delaware corporation (the "Borrower"),
and AIHI ACQUISITION CORP., a Delaware corporation ("Acquisition Corp.").
W I T N E S S E T H :
WHEREAS, the Borrower has entered into the Credit Agreement,
dated as of August 17, 1995 (as amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"), among the Borrower, the Banks
parties thereto, the Agent and the Managing Agents, Co-Agents and Lead Managers
identified therein;
WHEREAS, Acquisition Corp. has executed and delivered the
Acquisition Pledge Agreement, dated as of August 17, 1995 (as amended,
supplemented or otherwise modified from time to time, the "Pledge Agreement"),
in favor of the Agent (unless otherwise defined herein or the context otherwise
requires, all capitalized terms used herein shall have the meanings assigned
thereto in the Credit Agreement or the Pledge Agreement, as the case may be);
WHEREAS, the Depositary has received (and hereby acknowledges
receipt of) a copy of the Credit Agreement and the Pledge Agreement;
WHEREAS, pursuant to the Depositary Letter Agreement, dated
July 20, 1995 (the "Depositary Agreement"), between the Borrower and the
Depositary, the Depositary will be receiving Class A Common Stock, $.01 par
value per share (the "Company Stock"), of Automotive Industries Holding, Inc.
("AIHI") tendered by the holders thereof for purchase by Acquisition Corp. in a
tender offer (the "Tender Offer") made pursuant to and in accordance with the
Offer to Purchase;
WHEREAS, the Banks are willing to make Loans to finance in
part Acquisition Corp.'s purchases of shares of Company Stock in the Tender
Offer (all shares of Company Stock so purchased being "Purchased Shares") upon
simultaneous satisfaction of the condition, among others, that the Agent obtain
a perfected first priority security interest (the "Security Interest") in the
Purchased Shares pursuant to the Pledge Agreement; and
WHEREAS, pursuant to the requirement set forth in subsection
5.1(y) of the Credit Agreement, it is a condition precedent to the making of
the initial Loans under the Credit
<PAGE> 242
2
Agreement that this Depositary Agency Agreement shall have been duly executed
and delivered by the parties hereto;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Pursuant to the Depositary Agreement, the Borrower has
appointed the Depositary to accept tenders of Company Stock. The Borrower and
Acquisition Corp. hereby designate the Depositary to receive, on behalf of the
Borrower and Acquisition Corp., transfers (within the meaning of Section 8-313
of the Uniform Commercial Code as in effect in the State of New York (the "New
York UCC")) of the Company Stock by the holders thereof simultaneously with the
payment for the Purchased Shares, and the Depositary hereby accepts such
designation.
2. The Borrower and Acquisition Corp. hereby instruct the
Depositary to deliver to the Agent on behalf of the Borrower and Acquisition
Corp. and pursuant to Section 3(a) or 4(a), as the case may be, of the Pledge
Agreement stock certificates representing the Purchased Shares that are held
from time to time by the Depositary on behalf of the Borrower and Acquisition
Corp.
3. The Borrower and Acquisition Corp. hereby instruct the
Depositary as follows: on the Closing Date, with respect to any Purchased
Shares which are not evidenced by stock certificates in the possession of the
Depositary on such date, and thereafter, contemporaneously with each purchase
by Acquisition Corp. of Purchased Shares, with respect to such Purchased Shares
which are not evidenced by stock certificates then in the possession of the
Depositary, the Depositary shall cause such shares to be transferred by
book-entry to an account maintained in the name of Chemical Bank, for the
benefit of the Agent, with a Clearing Corporation as specified by the Agent.
4. The Agent hereby designates the Depositary as its agent
to, and the Depositary shall use reasonable efforts to, as expeditiously as
possible exchange on behalf of the Agent all certificates representing
Purchased Shares for certificates registered in the name of Acquisition Corp.
by delivering such certificates to Norwest Bank Minnesota, National
Association, as transfer agent (the "Transfer Agent"), and obtain from the
Transfer Agent possession of the certificates representing the Purchased Shares
which have been registered in the name of Acquisition Corp. within the period
specified in Section 8-321(4) of the New York UCC (such period currently being
21 days) for transferring a security for the sole purpose of exchange or
registration of transfer; provided, however, that prior to delivering any
Purchased Shares to the Transfer Agent, the Depositary shall have received from
the Transfer Agent a duly executed agreement, in substantially the form of
Annex I hereto, with respect to such Purchased Shares.
<PAGE> 243
3
5. The Depositary shall promptly deliver to the Agent, upon
receipt thereof from the Transfer Agent, all certificates representing
Purchased Shares registered in the name of Acquisition Corp. Acquisition Corp.
shall, upon the request of the Agent, promptly deliver to the Agent an undated
stock power for each such certificate executed in blank.
6. The Depositary agrees to be the Agent's designated bailee
pursuant to the Pledge Agreement for purposes of perfecting, in accordance with
Sections 8-313(1) and 8-321(2) of the New York UCC, the Agent's security
interest in the Purchased Shares with respect to any such shares which are not,
for any reason, delivered to the Agent pursuant to paragraph 2 hereof or
transferred by book-entry to the account referred to in paragraph 3 hereof.
7. The Depositary waives all rights of offset and bank liens
afforded it by law, agreement or otherwise against any funds and amounts
deposited by the Borrower and Acquisition Corp. with it for the purpose of
purchasing Purchased Shares but which at any time shall not have then been paid
to the former holder(s) or any other authorized payee(s) of Purchased Shares.
8. The Depositary represents and warrants to the Agent and
each Bank that (a) it has full power and authority to enter into this
Depositary Agency Agreement and perform its obligations hereunder; (b) the
execution, delivery and performance of this Depositary Agency Agreement by the
Depositary has been duly authorized by all necessary corporate action; and (c)
this Depositary Agency Agreement is the legal, valid and binding obligation of
the Depositary, enforceable against the Depositary in accordance with its
terms.
9. By its execution hereof in the space provided below,
Acquisition Corp. and the Borrower hereby jointly and severally (a) agree to
and authorize all of the foregoing and (b) agree to indemnify and hold free and
harmless each of the Depositary, the Transfer Agent and the Agent from and
against any and all actions, losses, costs, liabilities and damages in
connection with or arising out of or relating to, with respect to the
Depositary, this Depositary Agency Agreement, the Pledge Agreement, the Credit
Agreement and the Depositary Agreement, and, with respect to the Transfer Agent
and the Agent, the Transfer Agent's or the Agent's obligations hereunder or
performance hereof, in each case other than arising out of the gross negligence
or willful misconduct of the indemnified person. The indemnification
obligation set forth in this paragraph shall survive termination of this
Depositary Agency Agreement, the Depositary Agreement, the Credit Agreement and
the Pledge Agreement.
10. (a) The duties and obligations of the Depositary
hereunder shall be determined solely by the express provisions of
<PAGE> 244
4
this Depositary Agency Agreement, and the Depositary shall not be liable except
for the performance of such duties and obligations as are specifically set
forth in this Depositary Agency Agreement, and no implied covenants or
obligations shall be read into this Depositary Agency Agreement against the
Depositary. If the Credit Agreement or the Pledge Agreement as in effect on
the date hereof is amended, supplemented or otherwise modified in a manner
which affects the rights and obligations of the Depositary hereunder, the
Depositary's rights and obligations hereunder shall not be so affected without
the Depositary's prior consent.
(b) The Depositary assumes no responsibility or liability for
and makes no representations as to the validity or sufficiency of this
Depositary Agency Agreement (other than as specified in paragraph 8 above), the
Credit Agreement or the Pledge Agreement, including with respect to the
sufficiency of such agreements to perfect the Security Interest.
11. The Borrower and Acquisition Corp. shall pay the out of
pocket expenses and reasonable administrative fees of the Depositary in
connection with the Depositary's obligations pursuant to this Depositary Agency
Agreement, including the reasonable fees and disbursements of counsel.
12. In no event shall the Depositary be liable for any
consequential, incidental, indirect or special damages, including, without
limitation, lost profits, even if the Depositary has been advised of the
possibility of such damages.
13. This Depositary Agency Agreement may be amended, modified
or supplemented only pursuant to a written instrument executed by all parties.
THIS DEPOSITARY AGENCY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
BANKERS TRUST COMPANY, as Depositary
By:_________________________________
Title:
CHEMICAL BANK, as Agent
By:_________________________________
Title:
<PAGE> 245
5
LEAR SEATING CORPORATION
By:_________________________________
Title:
AIHI ACQUISITION CORP.
By:_________________________________
Title:
<PAGE> 246
ANNEX I to
Depositary
Agency Agreement
____________, 1995
Chemical Bank,
as Agent
270 Park Avenue
New York, New York 10017
Attention: Rosemary Bradley
Ladies and Gentlemen:
Norwest Bank Minnesota, National Association (herein called
the "Transfer Agent") is acting as the transfer agent for Automotive Industries
Holding, Inc., a Delaware corporation (herein called the "Company"), with
respect to shares of Class A Common Stock, par value $.01 per share, of the
Company (herein called "Company Stock"). The Transfer Agent has been informed
that AIHI Acquisition Corp., a Delaware corporation (herein called "Acquisition
Corp.") has made a tender offer (herein called the "Tender Offer") for all
issued and outstanding shares of Company Stock pursuant to an Offer to
Purchase, dated July 20, 1995, and that Bankers Trust Company is acting as
depositary (herein called the "Depositary" when acting in such capacity) in
connection with the Tender Offer.
Lear Seating Corporation, a Delaware corporation (the
"Borrower"), has requested that the Transfer Agent execute and deliver this
letter and has agreed to indemnify the Transfer Agent in a separate letter in
form similar to the attached Exhibit A for any claims which might result from
the Transfer Agent's signing of or any action taken pursuant to this letter.
[Transfer Agent's standard form indemnity to be attached as Exhibit A.]
The Transfer Agent hereby confirms that with respect to all
certificates which the Depositary has advised the Transfer Agent are shares
representing shares of Company Stock purchased by Acquisition Corp. (herein
called the "Purchased Shares") and are delivered to the Transfer Agent for
transfer, properly completed and in good form for transfer, or for which the
Transfer Agent has been instructed by the Depositary to transfer without regard
to the appropriateness of the request and for which the Transfer Agent shall
have been indemnified by the Depositary, the Transfer Agent shall promptly, and
in any event within the period specified in Section 8-321(4) of the Uniform
Commercial Code as from time to time in effect in the State of New York (such
period currently being 21 days) for transferring a security for the sole
purpose of exchange or registration of
<PAGE> 247
2
transfer, transfer such Purchased Shares into the name of Acquisition Corp. and
return all newly issued certificates representing such Purchased Shares to the
Depositary. The Depositary shall have no obligation to instruct the Transfer
Agent to transfer Purchased Shares without regard to the appropriateness of the
request and to indemnify the Transfer Agent, unless the Depositary has been
itself indemnified to the Depositary's satisfaction by the Borrower and
Acquisition Corp.
Very truly yours,
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Transfer Agent
By:___________________________
Title:
<PAGE> 248
EXHIBIT I
FORM OF
BORROWING CERTIFICATE
Pursuant to subsection 5.3(f) of the Credit Agreement, dated
as of August 17, 1995, among Lear Seating Corporation (the "Borrower"), the
several financial institutions parties thereto, Chemical Bank, as Agent, and
the Managing Agents, Co-Agents and Lead Managers identified therein (as
amended, supplemented or otherwise modified from time to time in accordance
with the terms thereof, the "Credit Agreement"), each of the undersigned hereby
certifies as follows:
(a) The representations and warranties made by the
Borrower and each of its Subsidiaries in the Loan Documents are true
and correct in all material respects on and as of the date hereof with
the same effect as if made on the date hereof.
(b) No Default or Event of Default has occurred and is
continuing on the date hereof or after giving effect to the Loans
requested to be made and the Letters of Credit requested to be issued
on the date hereof.
(c) Since the Closing Date, there has been no material
adverse change in the business, operations, assets, financial or other
condition of the Borrower and its Subsidiaries taken as a whole.
Capitalized terms used herein and not otherwise defined shall
have the meanings given to them in the Credit Agreement.
LEAR SEATING CORPORATION
By:________________________
Title:
Date: _______________, _____
<PAGE> 249
EXHIBIT J
FORM OF
SWING LINE LOAN PARTICIPATION CERTIFICATE
______________, 199_
[Name of Bank]
[Address]
Dear Sirs:
Pursuant to subsection 2.4(d) of the Credit Agreement, dated
as of August 17, 1995 (as the same may be amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"; capitalized terms used and
not otherwise defined herein shall have the meanings given to them in the
Credit Agreement) among LEAR SEATING CORPORATION, the several financial
institutions parties thereto or CHEMICAL BANK, as Agent, and the Managing
Agents, Co-Agents and Lead Managers identified therein, the undersigned hereby
acknowledges receipt from you on the date hereof of _______ DOLLARS ($_______)
as payment for a participating interest in the following Swing Line Loan:
Date of Swing Line Loan: _______________
Principal Amount of Swing Line Loan: _______________
Very truly yours,
CHEMICAL BANK
By:___________________________
Title:
<PAGE> 250
EXHIBIT K
FORM OF
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement, dated as of August
17, 1995 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among Lear Seating Corporation (the "Borrower"), the Banks
named therein, Chemical Bank, as administrative agent for the Banks (in such
capacity, the "Agent"), and the Managing Agents, Co-Agents and Lead Managers
identified therein. Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement.
The Assignor identified on Schedule 1 hereto (the "Assignor")
and the Assignee identified on Schedule 1 hereto (the "Assignee") agree as
follows:
1. The Assignor hereby irrevocably sells and assigns to the
Assignee without recourse to the Assignor, and the Assignee hereby irrevocably
purchases and assumes from the Assignor without recourse to the Assignor, as of
the Transfer Effective Date (as defined below), the interest described in
Schedule 1 hereto (the "Assigned Interest") in and to the Assignor's rights and
obligations under the Credit Agreement and the other Loan Documents (the
"Assigned Facility").
2. The Assignor (a) makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or with
respect to the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Credit Agreement, any other Loan Document or any
other instrument or document furnished pursuant thereto, other than that the
Assignor has not created any adverse claim upon the interest being assigned by
it hereunder and that such interest is free and clear of any such adverse
claim; (b) makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Borrower, any of its
Subsidiaries or any other obligor or the performance or observance by the
Borrower, any of its Subsidiaries or any other obligor of any of their
respective obligations under the Credit Agreement or any other Loan Document or
any other instrument or document furnished pursuant hereto or thereto; and (c)
attaches the Note held by it evidencing the Assigned Facility and (i) requests
that the Agent, upon request by the Assignee, exchange the attached Note for a
new Note payable to the Assignee and (ii) if the Assignor has retained any
interest in the Assigned Facility, requests that the Agent exchange the
attached Note for a new Note payable to the Assignor, in each case in amounts
which reflect the assignment being made hereby (and after giving effect
<PAGE> 251
2
to any other assignments which have become effective on the Transfer Effective
Date, as the term is defined below).
3. The Assignee (a) represents and warrants that it is
legally authorized to enter into this Assignment and Acceptance; (b) confirms
that it has received a copy of the Credit Agreement, together with copies of
the financial statements delivered pursuant to subsection 6.1 thereof and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Acceptance; (c)
agrees that it will, independently and without reliance upon the Assignor, 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 the Credit Agreement, the other Loan
Documents or any other instrument or document furnished pursuant hereto or
thereto; (d) appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers and discretion under the Credit
Agreement, the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto as are delegated to the Agent by the terms
thereof, together with such powers as are incidental thereto; and (e) agrees
that it will be bound by the provisions of the Credit Agreement and will
perform in accordance with its terms all the obligations which by the terms of
the Credit Agreement are required to be performed by it as a Lender including,
if it is organized under the laws of a jurisdiction outside the United States,
its obligation pursuant to subsection 2.14(b) of the Credit Agreement.
4. The effective date of this Assignment and Acceptance shall
be the Effective Date of Assignment described in Schedule 1 hereto (the
"Transfer Effective Date"). Following the execution of this Assignment and
Acceptance, it will be delivered to the Agent for acceptance by it and
recording by the Agent pursuant to the Credit Agreement, effective as of the
Transfer Effective Date (which shall not, unless otherwise agreed to by the
Agent, be earlier than five Business Days after the date of such acceptance and
recording by the Agent).
5. Upon such acceptance and recording, from and after the
Transfer Effective Date, the Agent shall make all payments in respect of the
Assigned Interest (including payments of principal, interest, fees and other
amounts) to the Assignee for amounts which have accrued subsequent to the
Transfer Effective Date. The Assignor and the Assignee shall make all
appropriate adjustments in payments by the Agent for periods prior to the
Transfer Effective Date or with respect to the making of this assignment
directly between themselves.
6. From and after the Transfer Effective Date, (a) the
Assignee shall be a party to the Credit Agreement and, to the extent provided
in this Assignment and Acceptance, have the
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3
rights and obligations of a Lender thereunder and under the other Loan
Documents and shall be bound by the provisions thereof and (b) the Assignor
shall, to the extent provided in this Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Credit Agreement.
7. This Assignment and Acceptance shall be governed by and
construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance to be executed as of the date first above written by
their respective duly authorized officers on Schedule 1 hereto.
<PAGE> 253
SCHEDULE 1
TO ASSIGNMENT AND ACCEPTANCE
<TABLE>
<S> <C>
Name of Assignor: ______________________________________
Name of Assignee: ______________________________________
Transfer Effective Date: _______________________________
Principal Commitment Percentage Assigned(1)
Amount Assigned
$_______________ ___._______________%
Assignee: Assignor:
_________________________________________________________________ __________________________________________________________
By:______________________________________________________________ By:________________________________________________________
Title: Title:
Accepted: Consented To:
CHEMICAL BANK, as LEAR SEATING CORPORATION
Agent
By:______________________________________________________________ By:________________________________________________________
Title: Title:
</TABLE>
__________________________________
(1) Calculate the Commitment Percentage that is assigned to at least 15
decimal places adn show as a percentage of the aggregate commitments
of all Banks.
<PAGE> 254
EXHIBIT L-1
MATTERS TO BE COVERED BY OPINION
OF COUNSEL TO THE BORROWER
1. Each of the guarantors (the "New Guarantors") executing
Guarantor Supplements (the "Guarantor Supplements") on the date hereof (a) is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and (b) has the corporate power
and authority and the legal right to own and operate its property, to lease the
property it operates and to conduct the business in which it is currently
engaged.
2. Each of the New Guarantors has the corporate power and
authority and the legal right to execute and deliver, and to perform its
obligations under, the Guarantor Supplements and the Subsidiary Guarantee and
has taken all necessary corporate action to authorize the execution, delivery
and performance of such Guarantor Supplements and the Subsidiary Guarantee.
3. The Guarantee Supplements and the Subsidiary Guarantee
constitute legal, valid and binding obligations of each New Guarantor
enforceable in accordance with their terms.
4. The execution, delivery and performance of the Guarantor
Supplements and the Subsidiary Guarantee will not violate any provision of any
Requirement of Law of the United States of America, the State of Illinois, the
State of New York or the General Corporation Law of the State of Delaware
applicable to such party, or of any Contractual Obligation identified to us
pursuant to an officer's certificate of AIHI as being material of any New
Guarantor, and will not result in or require the creation or imposition of any
Lien on any of the properties or revenues of any New Guarantor pursuant to any
Requirement of Law of the United States of America, the State of Illinois, the
State of New York or the General Corporation Law of the State of Delaware
applicable to such party or any Contractual Obligation of any New Guarantor
which has been identified to us pursuant to an officer's certificate of AIHI as
being material.
5. No consent or authorization of, filing with, or other act
by or in respect of, any arbitrator or Governmental Authority and no consent of
any other Person (including, without limitation, any stockholder or creditor of
any New Guarantor) is required in connection with the execution, delivery,
performance, validity or enforceability of the Guarantee Supplements and the
Subsidiary Guarantee.
6. Based on our understanding that the Agent has taken
and is retaining possession of the stock certificates (the "Pledged Stock")
evidencing the shares of stock described in [LIST PLEDGE AGREEMENTS PLEDGING
STOCK OF MATERIAL DOMESTIC SUBSIDIARIES OF AIHI] (collectively, the "Pledge
Agreements"), there has been created thereunder, and there has been granted to
<PAGE> 255
2
the Agent, for the benefit of the Banks, a valid and perfected security
interest and lien upon the Pledged Stock. Assuming the Agent acquires its
interest in the Pledged Stock in good faith and without notice of any adverse
claims and the Pledged Stock is either in bearer form or in registered form
issued or indorsed in the name of the Agent or in blank, the Agent will acquire
its security interest in the Pledged Stock free of adverse claims.
7. The Pledged Stock of the "Issuers" (as defined in the
Pledge Agreements) has been duly authorized and validly issued by such
"Issuers" and are fully paid and nonassessable.
<PAGE> 256
EXHIBIT L-2
MATTERS TO BE COVERED BY OPINION OF COUNSEL
TO THE BORROWER AND ACQUISITION CORP.
1. The Certificate of Merger of Acquisition Corp. and AIHI
has been duly executed and delivered by, and constitutes the valid, binding and
enforceable obligation of, Acquisition Corp.
2. The Merger has become effective under the General
Corporation Law of the State of Delaware.
