-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CQwEchCQ6x03+NQ2UwNMreBNg3euWDQF6wm0xgso1cmaHVU22CumOefpG37CRNVy 6tL4qMltfJTvLLbsl14G6g== 0000950124-97-004809.txt : 19970927 0000950124-97-004809.hdr.sgml : 19970927 ACCESSION NUMBER: 0000950124-97-004809 CONFORMED SUBMISSION TYPE: S-4/A PUBLIC DOCUMENT COUNT: 19 FILED AS OF DATE: 19970919 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: OXFORD AUTOMOTIVE INC CENTRAL INDEX KEY: 0001040475 STANDARD INDUSTRIAL CLASSIFICATION: METAL FORGING & STAMPINGS [3460] IRS NUMBER: 383262809 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-32975 FILM NUMBER: 97682784 BUSINESS ADDRESS: STREET 1: 2365 FRANKLIN RD CITY: BLOOMFIELD HILLS STATE: MI ZIP: 48203 BUSINESS PHONE: 2487459600 MAIL ADDRESS: STREET 1: 2000 N WOODWARD CITY: BLOOFIELD HILLS STATE: MI ZIP: 48304 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HOWELL INDUSTRIES INC CENTRAL INDEX KEY: 0000048824 STANDARD INDUSTRIAL CLASSIFICATION: METAL FORGING & STAMPINGS [3460] IRS NUMBER: 380479830 STATE OF INCORPORATION: MI FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-32975-10 FILM NUMBER: 97682785 BUSINESS ADDRESS: STREET 1: 17515 W NINE MILE RD STE 650 CITY: SOUTHFIELD STATE: MI ZIP: 48075 BUSINESS PHONE: 8104248220 FORMER COMPANY: FORMER CONFORMED NAME: MACOID INDUSTRIES INC DATE OF NAME CHANGE: 19711215 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LOBDELL EMERY CORP CENTRAL INDEX KEY: 0001042972 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 380768460 STATE OF INCORPORATION: MI FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-32975-01 FILM NUMBER: 97682786 BUSINESS ADDRESS: STREET 1: 2365 FRANKLIN RD CITY: BLOOMFIELD HILLS STATE: MI ZIP: 48203 BUSINESS PHONE: 2487459600 MAIL ADDRESS: STREET 1: 2365 FRANKLIN RD CITY: BLOOMFIELD HILLS STATE: MI ZIP: 48203 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WINCHESTER FABRICATION CORP CENTRAL INDEX KEY: 0001042973 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 380768460 STATE OF INCORPORATION: MI FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-32975-02 FILM NUMBER: 97682787 BUSINESS ADDRESS: STREET 1: 2365 FRANKLIN RD CITY: BLOOMFIELD HILLS STATE: MI ZIP: 48203 BUSINESS PHONE: 2487459600 MAIL ADDRESS: STREET 1: 2365 FRANKLIN RD CITY: BLOOMFIELD HILLS STATE: MI ZIP: 48203 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CREATIVE FABRICATION CORP CENTRAL INDEX KEY: 0001042974 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 380768460 STATE OF INCORPORATION: MI FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-32975-03 FILM NUMBER: 97682788 BUSINESS ADDRESS: STREET 1: 2365 FRANKLIN RD CITY: BLOOMFIELD HILLS STATE: MI ZIP: 48203 BUSINESS PHONE: 2487459600 MAIL ADDRESS: STREET 1: 2365 FRANKLIN RD CITY: BLOOMFIELD HILLS STATE: MI ZIP: 48203 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PARALLEL GROUP INTERNATIONAL INC CENTRAL INDEX KEY: 0001042975 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 380768460 STATE OF INCORPORATION: MI FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-32975-04 FILM NUMBER: 97682789 BUSINESS ADDRESS: STREET 1: 2365 FRANKLIN RD CITY: BLOOMFIELD HILLS STATE: MI ZIP: 48203 BUSINESS PHONE: 2487459600 MAIL ADDRESS: STREET 1: 2365 FRANKLIN RD CITY: BLOOMFIELD HILLS STATE: MI ZIP: 48203 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONCEPT MANAGEMENT CORP CENTRAL INDEX KEY: 0001042976 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 380768460 STATE OF INCORPORATION: MI FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-32975-05 FILM NUMBER: 97682790 BUSINESS ADDRESS: STREET 1: 2365 FRANKLIN RD CITY: BLOOMFIELD HILLS STATE: MI ZIP: 48203 BUSINESS PHONE: 2487459600 MAIL ADDRESS: STREET 1: 2365 FRANKLIN RD CITY: BLOOMFIELD HILLS STATE: MI ZIP: 48203 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LEWIS EMERY CAPITAL CORP CENTRAL INDEX KEY: 0001042977 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 380768460 STATE OF INCORPORATION: MI FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-32975-06 FILM NUMBER: 97682791 BUSINESS ADDRESS: STREET 1: 2365 FRANKLIN RD CITY: BLOOMFIELD HILLS STATE: MI ZIP: 48203 BUSINESS PHONE: 2487459600 MAIL ADDRESS: STREET 1: 2365 FRANKLIN RD CITY: BLOOMFIELD HILLS STATE: MI ZIP: 48203 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LASERWELD INTERNATIONAL LLC CENTRAL INDEX KEY: 0001042979 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 380768460 STATE OF INCORPORATION: MI FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-32975-07 FILM NUMBER: 97682792 BUSINESS ADDRESS: STREET 1: 2365 FRANKLIN RD CITY: BLOOMFIELD HILLS STATE: MI ZIP: 48203 BUSINESS PHONE: 2487459600 MAIL ADDRESS: STREET 1: 2365 FRANKLIN RD CITY: BLOOMFIELD HILLS STATE: MI ZIP: 48203 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BMG HOLDINGS INC CENTRAL INDEX KEY: 0001042980 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 380768460 STATE OF INCORPORATION: MI FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-32975-08 FILM NUMBER: 97682793 BUSINESS ADDRESS: STREET 1: 2365 FRANKLIN RD CITY: BLOOMFIELD HILLS STATE: MI ZIP: 48203 BUSINESS PHONE: 2487459600 MAIL ADDRESS: STREET 1: 2365 FRANKLIN RD CITY: BLOOMFIELD HILLS STATE: MI ZIP: 48203 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BMG NORTH AMERICA LTD CENTRAL INDEX KEY: 0001043162 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 980113060 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-32975-09 FILM NUMBER: 97682794 BUSINESS ADDRESS: STREET 1: 2365 FRANKLIN RD CITY: KLOOMFIELD HILLS STATE: MI ZIP: 48203 BUSINESS PHONE: 2487459600 MAIL ADDRESS: STREET 1: 2365 FRANKLIN RD CITY: KLOOMFIELD HILLS STATE: MI ZIP: 48203 S-4/A 1 S-4/A 1 As filed with the Securities and Exchange Commission on September 19, 1997 Registration No. 333-32975 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 AMENDMENT NO. 1 TO FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 OXFORD AUTOMOTIVE, INC. (Exact Name of Registrant as Specified in its Charter) MICHIGAN 3465 38-3262809 (State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer Incorporation or Organization) Classification Code Number) Identification No.)
2365 FRANKLIN ROAD BLOOMFIELD HILLS, MICHIGAN 48302 (248) 745-9600 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) REX E. SCHLAYBAUGH, JR. OXFORD AUTOMOTIVE, INC. 2365 FRANKLIN ROAD BLOOMFIELD HILLS, MICHIGAN 48203 (248) 745-9600 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service) COPIES TO: Gerald T. Lievois Dykema Gossett PLLC 1577 North Woodward Avenue, Suite 300 Bloomfield Hills, MI 48304-2820 (248) 203-0866 Approximate date of commencement of the proposed sale of the securities to the public: As soon as practicable after the effective date of this Registration Statement. If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. [ ] THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATES AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. 2 TABLE OF ADDITIONAL REGISTRANTS Exact Name of Guarantor Jurisdiction of IRS Employer Primary Standard Industrial Registrant as Specified Incorporation Identification No. Classification Code Number in its Charter Lobdell Emery Corporation Michigan 38-0768460 3465 BMG North America Limited Ontario 98-0113060 3465 BMG Holdings, Inc. Ontario 00-0000000 3465 Winchester Fabrication Corporation Michigan 38-3209840 3465 Creative Fabrication Corporation Tennessee 62-1613148 3465 Parallel Group International, Inc. Indiana 35-1971190 3465 Laserweld International, L.L.C. Indiana 35-1969204 3465 Concept Management Corporation Michigan 38-3209841 3465 Lewis Emery Capital Corporation Michigan 38-6602578 3465 Howell Industries, Inc. Michigan 38-0479830 3465
3 CROSS-REFERENCE SHEET FOR REGISTRATION STATEMENT ON FORM S-4 AND PROSPECTUS.
S-4 ITEM LOCATION IN PROSPECTUS -------- ---------------------- A. INFORMATION ABOUT THE TRANSACTION 1. Forepart of Registration Statement and Outside Front Cover Page of Prospectus........................ Facing Page of Registration Statement; Cross- Reference Sheet; Cover Page 2. Inside Front and Outside Back Cover Pages of Prospectus................................................. Inside Front Cover Page of Prospectus; Table of Contents 3. Risk Factors, Ratio of Earnings to Fixed Charges and Other Information................................. Summary; Risk Factors, Summary Consolidated Historical and Pro Forma Financial Data 4. Terms of the Transaction...................................... Summary; The Exchange Offer; Description of the Notes; Plan of Distribution 5. Pro Forma Financial Information............................... Not Applicable 6. Material Contacts with the Company Being Acquired...................................................... Not Applicable 7. Additional Information Required for Reoffering by Persons and Parties Deemed to be Underwriters............................................ Not Applicable 8. Interests of Named Experts and Counsel........................ Legal Matters; Experts 9. Disclosure of Commission Position on Indemnification for Securities Act Liabilities................ Not Applicable B. INFORMATION ABOUT THE REGISTRANT 10. Information with Respect to S-3 Registrants................... Not Applicable 11. Incorporation of Certain Information by Reference..................................................... Not Applicable 12. Information with Respect to S-2 or S-3 Registrants................................................... Not Applicable
4 13. Incorporation of Certain Information by Reference............................................ Not Applicable 14. Information with Respect to Registrants Other Than S-3 or S-2 Registrants................... Summary; Risk Factors; Capitalization; Pro Forma Combined Financial Data; Selected Consolidated Historical Financial Data; Management's Discussion and Analysis of Financial Condition and Results of Operations; Business, Management; Description of Certain Indebtedness and Preferred Stock; Certain Transactions; Experts; Financial Statements C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED 15. Information with Respect to S-3 Companies............ Not Applicable 16. Information with Respect to S-3 or S-2 Companies............................................ Not Applicable 17. Information with Respect to Companies Other Than S-3 or S-2 Companies...................... Not Applicable D. VOTING AND MANAGEMENT INFORMATION 18. Information if Proxies, Consents or Authorizations are to be Solicited................... Not Applicable 19. Information if Proxies, Consents or Authorizations are not to be Solicited, or in an Exchange Offer.............................. The Exchange Offer; Management; Principal Shareholders, Certain Transactions; Description of Certain Indebtedness and Preferred Stock; Description of the Notes
5 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED SEPTEMBER 19, 1997 PROSPECTUS OFFER FOR ALL OUTSTANDING 10 1/8% SENIOR SUBORDINATED NOTES DUE 2007 IN EXCHANGE FOR 10_% SENIOR SUBORDINATED NOTES DUE 2007 OF [OXFORD AUTOMOTIVE, INC. LOGO] THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME ON ,1997, UNLESS EXTENDED Oxford Automotive, Inc. (the "Company"), hereby offers to exchange an aggregate principal amount of up to $125,000,000 of its 10 1/8% Senior Subordinated Notes Due 2007 (the "New Notes") for a like principal amount of its 10 1/8% Senior Subordinated Notes Due 2007 (the "Old Notes") outstanding on the date hereof upon the terms and subject to the conditions set forth in this Prospectus and in the accompanying Letter of Transmittal (which together constitute the "Exchange Offer"). The New Notes and the Old Notes are collectively hereinafter referred to as the "Notes." The terms of the New Notes are identical in all material respects to those of the Old Notes, except for certain transfer restrictions, registration rights and certain interest rate step-up provisions relating to the Old Notes. The New Notes will be issued pursuant to, and entitled to the benefits of, the Indenture (as defined herein) governing the Old Notes. The New Notes will mature on June 15, 2007. The New Notes will bear interest from and including the date of consummation of the Exchange Offer. Interest on the New Notes will be payable semi-annually on June 15 and December 15 of each year, commencing December 15, 1997. Additionally, interest on the New Notes will accrue from the last interest payment date on which interest was paid on the Old Notes surrendered in exchange therefor or, if no interest has been paid on the Old Notes, from the date of original issue of the Old Notes. The New Notes will be redeemable at the option of the Company, in whole or in part, at any time on or after June 15, 2002, at the redemption prices set forth herein, plus accrued and unpaid interest, if any, to the date of redemption. In addition, at any time and from time to time prior to June 15, 2000, the Company may redeem in the aggregate up to 35% of the original principal amount of the Notes with the net proceeds of one or more Public Equity Offerings (as defined) following which there is a Public Market (as defined), at a redemption price of 110.125% of the principal amount to be redeemed, plus accrued and unpaid interest, if any, to the redemption date, provided that at least 65% of the original principal amount of the Notes remains outstanding after each such redemption. Upon a Change of Control (as defined), each holder of Notes ("Holder") will have the right to require the Company to repurchase all or a portion of such Holder's Notes at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase. See "Description of the Notes -- Change of Control." The New Notes will be general unsecured obligations of the Company, subordinated in right of payment to all existing and future Senior Indebtedness (as defined) of the Company. The New Notes will rank pari passu with or senior to all subordinated indebtedness of the Company. The Company is a holding company that will derive all of its operating income and cash flow from its subsidiaries. The New Notes will be fully and unconditionally guaranteed (collectively, the "Subsidiary Guaranties") on a joint and several basis, and on an unsecured, senior subordinated basis by certain Restricted Subsidiaries (as defined) (collectively, the "Subsidiary Guarantors") of the Company. See "Description of the Notes -- Subsidiary Guaranties." As of June 30, 1997, after giving effect to the offering of the Old Notes (the "Offering"), and the application of the net proceeds thereof, the Company had no outstanding Senior Indebtedness and the 6 Subsidiary Guarantors' outstanding Senior Indebtedness was approximately $17.9 million. See "Description of the Notes -- Subordination." In addition, the Company had available approximately $101.0 million of undrawn borrowings under its Senior Credit Facility. The Indenture governing the Notes (the "Indenture") permits the Company and the Subsidiary Guarantors to incur additional indebtedness, including Senior Indebtedness and indebtedness that will rank pari passu with the New Notes. The New Notes are being offered hereunder in order to satisfy certain obligations of the Company and the Subsidiary Guarantors contained in the Registration Agreement dated June 24, 1997 (the "Registration Agreement"), among the Company, the Subsidiary Guarantors and Salomon Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, McDonald & Company Securities, Inc., First Chicago Capital Markets, Inc., and Schroder Wertheim & Co. Incorporated (the last five named entities collectively referred to herein as the "Initial Purchasers"), with respect to the initial sale of the Old Notes. The Company will not receive any proceeds from the Exchange Offer. The Company will pay all the expenses incident to the Exchange Offer. Tenders of Old Notes pursuant to the Exchange Offer may be withdrawn at any time prior to the Expiration Date (as defined) for the Exchange Offer. In the event the Company terminates the Exchange Offer and does not accept for exchange any Old Notes with respect to the Exchange Offer, the Company will promptly return such Old Notes to the holders thereof. See "The Exchange Offer." Each broker-dealer that receives New Notes for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such New Notes. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act of 1933, as amended (the "Securities Act"). This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of New Notes received in exchange for Old Notes where such Old Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. Each of the Company and the Subsidiary Guarantors has agreed that, starting on the Expiration Date, and ending on the close of business on the first anniversary of the Expiration Date, it will make this Prospectus available to any broker-dealer for use in connection with any such resale. See "Plan of Distribution." Prior to the Exchange Offer, there has been no public market for the Old Notes. If a market for the New Notes should develop, such New Notes could trade at a discount from their principal amount. The Company currently does not intend to list the New Notes on any securities exchange or to seek approval for quotation through any automated quotation system and no active public market for the New Notes is currently anticipated. There can be no assurance that an active public market for the New Notes will develop. The Exchange Offer will expire at 5:00 p.m., New York City time, on , 1997, or such later date and time to which it may be extended by the Company, which in no event shall be later than , 1997. The Exchange Offer is not conditioned upon any minimum principal amount of Old Notes being tendered for exchange pursuant to the Exchange Offer. SEE "RISK FACTORS" BEGINNING ON PAGE , FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY HOLDERS OF THE NOTES IN CONNECTION WITH THE EXCHANGE OFFER. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this Prospectus is , 1997. 7 AVAILABLE INFORMATION The Company and the Subsidiary Guarantors have filed with the Securities and Exchange Commission (the "Commission") a Registration Statement on Form S-4 (the "Exchange Offer Registration Statement," which term shall encompass all amendments, exhibits, annexes and schedules thereto) pursuant to the Securities Act, and the rules and regulations promulgated thereunder, covering the New Notes being offered hereby. This Prospectus does not contain all the information set forth in the Exchange Offer Registration Statement. For further information with respect to the Company, the Subsidiary Guarantors and the Exchange Offer, reference is made to the Exchange Offer Registration Statement. Statements made in this Prospectus as to the contents of any contract, agreement or other document referred to accurately describe the material terms so referred to, but are not necessarily a complete description of the contents of any such contract, agreement or other document. With respect to each such contract, agreement or other document filed as an exhibit to the Exchange Offer Registration Statement, reference is made to the exhibit for a more complete description of the document or matter involved, and each such statement shall be deemed qualified in its entirety by such reference. The Exchange Offer Registration Statement, including the exhibits thereto, can be inspected and copied at the public reference facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Regional Offices of the Commission at Seven World Trade Center, Suite 1300, New York, New York 10048 and at Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials can be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition, the Commission maintains a Web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission. The address of such Web site is: http://www.sec.gov. As a result of the Exchange Offer, the Company will become subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith will be required to file periodic reports and other information with the Commission. In the event the Company ceases to be subject to the informational requirements of the Exchange Act, the Company will be required under the Indenture to continue to file with the Commission the annual and quarterly reports, information, documents or other reports, including, without limitation, reports on Forms 10-K, 10-Q and 8-K, which would be required pursuant to the informational requirements of the Exchange Act. The Company will also furnish such other reports as may be required by law. In addition, for so long as any of the Notes are restricted securities within the meaning of Rule 144(a)(3) under the Securities Act, the Company has agreed to make available to any prospective purchaser of the Notes or beneficial owner of the Notes, in connection with any sale thereof, the information required by Rule 144A(d)(4) under the Securities Act. 2 8 SUMMARY The following summary is qualified in its entirety by the more detailed information and financial statements and notes thereto appearing elsewhere in this Prospectus. For purposes of this Prospectus, the "Company" shall refer to Oxford Automotive, Inc. ("Oxford Automotive") and all of its consolidated subsidiaries, unless the context otherwise requires. THE COMPANY GENERAL The Company is a leading Tier 1 or direct supplier of high-quality, engineered metal components, assemblies and modules used by original equipment automotive manufacturers ("OEMs"). The Company's core products are complex, high value-added products, primarily assemblies containing multiple stamped parts and various welded, hemmed or fastened components. These products which range from large structural stampings and assemblies, including exposed ("Class A") surfaces, to smaller complex welded assemblies, are used in manufacturing a variety of sport utility vehicles ("SUVs"), light and medium trucks, mini-vans, vans and passenger cars. The Company is the sole source supplier of these products to its customers. On a pro forma basis, assuming the acquisition of Lobdell Emery Corporation ("Lobdell") (described below) had occurred on April 1, 1996, the Company would have had net sales of $330.2 million and Adjusted EBITDA (as defined herein) of $28.2 million for the fiscal year ended March 31, 1997. On a pro forma basis for the fiscal year ended March 31, 1997, assuming the acquisitions of Lobdell and Howell Industries, Inc., a Michigan corporation ("Howell") (described below) had occurred on April 1, 1996, net sales and Adjusted EBITDA for the Company would have been $421.7 million and $31.7 million, respectively. The Company had net sales of $92.0 million and Adjusted EBITDA of $12.0 million for the three months ended June 30, 1997. On a pro forma basis, assuming the acquisition of Howell had occurred on April 1, 1997, the Company would have had net sales of $116.6 million and Adjusted EBITDA of $13.8 million for the three months ended June 30, 1997. Based on pro forma net sales of $330.2 million, management believes the Company is one of the ten largest suppliers of stampings to the North American automotive market. The Company's four largest customers, General Motors Corporation ("GM"), Ford Motor Company ("Ford"), CAMI (a joint venture of GM and Suzuki Motor Corporation ("Suzuki")) and The Saturn Corporation ("Saturn"), accounted for approximately 56.0%, 33.0%, 3.0%, and 2.8%, respectively of the Company's net sales for the fiscal year ended March 31, 1997, on a pro forma basis for the Lobdell acquisition, and 55.4%, 31.0%, 2.7%, and 2.8%, respectively, of the Company's net sales for the three months ended June 30, 1997. The Company has been providing products directly to GM and Ford for more than 50 years and has earned outstanding commercial ratings for its high-quality standards, including GM's Supplier of the Year and Mark of Excellence Awards, Ford's Q1 Award and CAMI's President's Award. The Company also sells its products to other Tier 1 suppliers. For the fiscal year ended March 31, 1997, approximately 72.0% of the Company's net sales, on a pro forma basis assuming the acquisition of Lobdell occurred on April 1, 1996, were derived from sales of its products manufactured for SUVs, mini-vans, vans and light trucks. For the three months ended June 30, 1997, approximately 73.0% of the Company's net sales were derived from sales in this sector. In recent years, SUVs, mini-vans, vans and light trucks have experienced stronger growth in vehicle production as compared to the passenger car sector, with a compound annual growth rate ("CAGR") from 1991 to 1996 of approximately 8.7% as compared to (0.1%) for the passenger car sector. This sector includes those platforms and models which have strong consumer demand, such as GM's popular C/K platform (full-size pickups and the Yukon/Tahoe/Suburban models) and the Ford Ranger, Explorer and Windstar. 3 9 Prior to the acquisition of Howell (described below), the Company conducted its business through two principal operations, BMG North America Limited ("BMG") and Lobdell. Since acquiring BMG in October 1995, management of the Company has implemented significant cost reductions and achieved manufacturing efficiencies, including manpower reductions consisting of 49 salaried positions (121 to 72) and 78 hourly employees (570 to 492) and improved materials cost management, which includes purchasing cost savings, reduction of scrap and inventory costs, and improved scheduling of production. These actions resulted in a $4.6 million improvement in Adjusted EBITDA from the fiscal year ended March 31, 1996 to the fiscal year ended March 31, 1997. The same strategy utilized at BMG was implemented at Lobdell immediately following its acquisition in January 1997. Since its acquisition of Lobdell, the Company has achieved cost reductions totaling approximately $13.6 million on an annual basis. In addition to the cost reductions, the Company has been able to implement a number of manufacturing policies that have improved productivity and quality, notwithstanding overall staff reductions. The strategic combination of BMG, Lobdell, and Howell significantly strengthens the Company's position as a leading Tier 1 supplier of assemblies and modules to the OEMs. This combination provides the Company with the critical mass and capabilities in the areas of design and engineering, sales and marketing, and product expertise which provide the basis for the Company's strategy of becoming a fully-integrated, global systems supplier. The Company has already implemented a successful, focused sales and marketing initiative, which commenced concurrently with the operational improvements at BMG. As a result, the Company has been awarded the door assemblies and the side panel package for the new Saturn Innovate Program (the "Innovate Program"), the new vehicle which Saturn is launching in 1999 based upon the current Opel Vectra. Management believes these awards from Saturn will generate approximately $60.0 million of annual net sales beginning with the 1999 model year. The Company currently operates ten manufacturing facilities which offer the latest technologies in metal stamping, welding and assembly production equipment, including fully-automated hydraulic and wide-bed press lines (up to 180 inches), robotic welding cells, robotic hemming and autophoretic corrosion resistant coating. Since 1992, the Company has invested in excess of $93.0 million in capital investments to support sales growth, expand production capabilities and improve efficiency and flexibility. The Company's diverse line of over 300 presses that range up to 2,500 tons and state-of-the-art robotic weld assembly and hemming equipment are capable of manufacturing a broad assortment of parts and assemblies ranging from simple stampings to full-size, Class A door and closure panels. The Company is one of a few independent suppliers that has the ability to produce large, complex stampings, as well as the technical expertise and automated assembly capabilities that provide high value-added modules such as door apertures and assemblies, A-pillars, Class A surface products and control arms. The principal executive offices of the Company are located at 2365 Franklin Road, Bloomfield Hills, Michigan 48302, and its telephone number is (248) 745-9600. BUSINESS STRATEGY The principal objective of the Company is to be a leading, full-service, global Tier 1 supplier of integrated systems based on metal forming and related manufacturing technologies. Management believes that the Company is well positioned to benefit from two significant trends in the stamping and metal forming segments of the automotive industry: outsourcing and consolidation. Outsourcing of metal stamping has increased in response to competitive pressures on OEMs to improve quality and reduce capital requirements, labor costs, overhead and inventory. Consolidation among automotive industry suppliers has occurred as OEMs have more frequently awarded long-term sole source contracts to the most capable global suppliers. In addition, OEMs are increasingly seeking systems suppliers who can provide a complete package of design, engineering, manufacturing and project management support for an integrated system (such as a front-end system). The Company intends 4 10 to capitalize on these trends through internal development and strategic acquisitions. The key elements of the Company's strategy include the following: Provide Full-Service Program Capability. The Company is focused on developing full-service program capabilities. The Company works with OEMs throughout the product development process from concept and prototype development through the design and implementation of manufacturing processes. The Company believes that its ability to provide the package of design, engineering, prototyping, tooling, blanking, stamping, assembly, corrosion resistant coating and custom shipping rack fabrication to its customers creates a unique capability present in only a limited number of suppliers. The Company believes this capability will enable it to manage large programs, assist it in reducing customer program launch time, lower customer costs and increase its margins. Supply Complex, High Value-Added Systems. As a result of the Company's technical design and engineering capabilities and its reputation for highly-efficient manufacturing operations, the Company is able to secure supply relationships for complex, high value-added products, primarily assemblies and modules that contain multiple stamped parts and various welded, hemmed or fastened components. For example, the Company produces the rear door for GM's Yukon/Tahoe/Suburban vehicles, the lower control arm for GM's four wheel drive C/K vehicles, the control arm assemblies for Ford's F-Series pickups and Chrysler's T-300, the radiator support assembly for GM's W-car (Grand Prix, Century, Lumina, Monte Carlo and Intrigue) and complex A-pillar assemblies for the Ford Mustang and the Ford Ranger pickup. These complex products typically generate higher dollar content per vehicle, as well as higher margins for the Company as compared to simple, individual stampings. The Company plans to capitalize on its ability to develop and provide integrated modules and assemblies to deliver to the OEMs an integrated product, such as a complete door or front-end system. In addition to doors, radiator supports, and Class A surface components, the Company believes it has unique expertise with respect to control arms, which will be further developed as a component part of the entire drive control system. Focus on High Growth Vehicle Categories. The Company's sales and marketing efforts have been, and will continue to be, directed toward sectors of the automotive market that have experienced strong consumer demand. For the fiscal year ended March 31, 1997, approximately 72.0% of the Company's net sales on a pro forma basis for the acquisition of Lobdell were derived from sales of products manufactured for SUVs, mini-vans, vans and light trucks. For the three months ended June 30, 1997, approximately 73.0% of the Company's net sales were derived from sales in this sector. The SUV market alone has been the fastest growing segment in the North American new automotive sales market with 1991 to 1996 vehicle production growth at a CAGR of approximately 18.3%. Similarly, the Company's sales to the passenger car market have been, and will continue to be, directed to the segments with stronger sales growth, including Saturn cars. For example, the growth in vehicle production in the passenger car sector has been flat during the past five years while production of Saturn cars grew from 1992 to 1996 at a CAGR of approximately 9.2%. Establish a Global Presence. The Company is actively pursuing strategic acquisitions and joint-venture opportunities in Europe and intends to pursue opportunities which will allow the Company to establish a presence in South America, Asia and other markets in order to serve its customers on a global basis. Several OEMs have announced certain models designed for the world automobile market ("World Car"). As a result, the OEMs have encouraged their existing suppliers to establish foreign production support for World Car programs. This globalization provides access to new customers and technology, as well as economic cycle diversification. At the request of GM de Mexico, the Company is in the process of establishing a presence in Mexico. By October 1, 1997, the Company expects to begin manufacturing and assembling components for business recently awarded by GM de Mexico at the Company's leased facility in Saltillo, Mexico. The Company expects to have a new leased facility in Silao, Mexico operational by February 1, 1998. 5 11 Pursue Strategic Acquisitions. In response to the trend in the OEM market toward "systems suppliers," the Company is focused on making strategic acquisitions that will enhance the Company's ability to provide integrated systems (such as a door or front end system) or otherwise leverage its existing business by providing additional product, manufacturing and service capabilities. The Company also intends to pursue acquisitions which will expand its customer base by providing an entree to new customers, including the North American operations of Asian and European based OEMs. Consistent with this strategy, the recent acquisition of Howell (as described below) provides an entree to Chrysler Corporation ("Chrysler"). The Company believes that the continuing supplier consolidation in the stamping and metal forming segments may also provide attractive opportunities to acquire high-quality companies at favorable prices, including businesses which can be improved financially through overhead elimination, organizational restructuring, plant reconfiguration, labor contract negotiations and management changes. The Company will also pursue acquisitions that enable it to achieve a global presence. RECENT DEVELOPMENTS On August 13, 1997, the Company acquired Howell (the "Merger") pursuant to an Agreement and Plan of Merger (the "Merger Agreement"). Howell is a Tier 1 manufacturer of high-quality welded subassemblies and detailed stampings used primarily in suspension system applications in the production of SUVs, light trucks, mini-vans, vans and passenger cars. Pursuant to the Merger Agreement, the shareholders of Howell received approximately $23.0 million in cash. Pursuant to the terms of a supplement to the Indenture, dated as of August 13, 1997, Howell, a Restricted Subsidiary as defined in the Indenture, became an additional Subsidiary Guarantor. For the nine months ended April 30, 1997, Howell had net sales of $72.4 million and Adjusted EBITDA of $4.2 million. Howell's net sales have grown from $39.4 million for the fiscal year ended July 31, 1992 to $79.2 million for the fiscal year ended July 31, 1996. On a pro forma basis for the fiscal year ended March 31, 1997, assuming the acquisitions of Lobdell and Howell had occurred on April 1, 1996, net sales and Adjusted EBITDA for the Company would have been $421.7 million and $31.7 million, respectively. On a pro forma basis for the three months ended June 30, 1997, net sales and Adjusted EBITDA for the Company would have been $116.6 million and $13.8 million, respectively. The acquisition of Howell is consistent with the strategic objectives of the Company. Howell has a significant relationship with Chrysler and has developed a niche in designing, engineering and manufacturing suspension control arms in a variety of configurations and variations depending on drive-train and suspension application. Approximately 54.0% of Howell's net sales for the nine months ended April 30, 1997, were derived from products used in the control arm suspension applications. On a pro forma basis, assuming the acquisitions of Lobdell and Howell had occurred on April 1, 1996, the Company would have derived approximately 23.0% of its net sales from control arm applications for fiscal 1997. Howell's expertise in this area is complementary to the Company's and will enhance its ability to develop key suspension system components. Further, Howell's sales are principally in the high-growth vehicle categories of SUVs, light trucks, mini-vans and vans, the same market targeted by the Company. The acquisition of Howell has also provided the Company with an entree to Chrysler and will strengthen the Company's existing relationship with Ford. Sales to Chrysler and Ford represented 47.0% and 53.0%, respectively, of Howell's net sales for the nine months ended April 30, 1997. On a pro forma basis for fiscal 1997, assuming the acquisitions of Lobdell and Howell had occurred on April 1, 1996, (i) the SUV, mini-van, van and light truck segment represented approximately 75.0% of net sales and (ii) the Company's net sales by major customers would have been approximately as follows: GM 44.0%; Ford 37.0%; Chrysler 11.0%; CAMI 2.0%, and Saturn 2.0%. On a pro forma basis for the three months ended June 30, 1997, assuming the acquisition of Howell had occurred April 1 1997, (i) the SUV, mini-van and light truck segment represented approximately 78.2% of net sales and (ii) the Company's net sales by major customers would have been approximately as follows: GM 43.9%, Ford 36.2%, Chrysler 9.5%, CAMI 2.1%, and Saturn 2.2%. 6 12 Howell's two manufacturing facilities, located in Masury, Ohio and Lapeer, Michigan, have received Chrysler's Gold Pentastar Award for the 1996 model year and Ford's Q1 rating. In addition, Howell has achieved certification as a registrant under the QS-9000 for its facilities. THE EXCHANGE OFFER Securities Offered .............. Up to $125.0 million aggregate principal amount of 10_% Senior Subordinated Notes Due 2007 (the "New Notes"). The terms of the New Notes and Old Notes (collectively, the "Notes") are identical in all material respects, except for certain transfer restrictions, registration rights and certain interest rate step-up provisions relating to the Old Notes. See "The New Notes" and "The Exchange Offer." The Exchange Offer .............. The New Notes are being offered in exchange for a like principal amount of Old Notes. Old Notes may be exchanged only in integral multiples of $1,000. The issuance of the New Notes is intended to satisfy obligations of the Company and the Subsidiary Guarantors contained in the Registration Agreement. Expiration Date; Withdrawal of Tender....................... The Exchange Offer will expire at 5:00 p.m. New York City time, on , 1997, or such later date and time to which it may be extended by the Company, which in no event shall be later than , 1997. The tender of Old Notes pursuant to the Exchange Offer may be withdrawn at any time prior to the Expiration Date. Any Old Notes not accepted for exchange for any reason will be returned without expense to the tendering holder thereof as promptly as practicable after the expiration or termination of the Exchange Offer. See "The Exchange Offer -- Terms of the Exchange Offer; Period for Tendering Old Notes" and "-- Withdrawal Rights." Certain Conditions to the Exchange Offer.................. The Company's obligation to accept for exchange, or to issue New Notes in exchange for, any Old Notes is subject to certain customary conditions relating to compliance with any applicable law, or order of any governmental agency or any applicable interpretation by the Staff of the Commission, which may be waived by the Company in its reasonable discretion. The Company currently expects that each of the conditions will be 7 13 satisfied and that no waivers will be necessary. See "The Exchange Offer -- Certain Conditions to the Exchange Offer." Procedures for Tendering Old Notes....... Each holder of Old Notes wishing to accept the Exchange Offer must complete, sign and date the Letter of Transmittal, or a facsimile thereof, in accordance with the instructions contained herein and therein, and mail or otherwise deliver such Letter of Transmittal, or such facsimile, together with such Old Notes and any other required documentation, to the Exchange Agent (as defined) at the address set forth herein. See "The Exchange Offer -- Procedures for Tendering Old Notes." Special Procedures for Beneficial Owners.... Any beneficial owner whose Old Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender such Old Notes in the Exchange Offer should contact such registered holder promptly and instruct such registered holder to tender on such beneficial owner's behalf. If such beneficial owner wishes to tender on such owner's own behalf, such owner must, prior to completing and executing the Letter of Transmittal and delivering his or her Old Notes, either make appropriate arrangements to register ownership of the Old Notes in such owner's name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time and may not be completed prior to the Expiration Date. Guaranteed Delivery Procedures ............ Holders of Old Notes who wish to tender their Old Notes and whose Old Notes are not immediately available or who cannot deliver their Old Notes, the Letter of Transmittal or any other documents required by the Letter of Transmittal to the Exchange Agent, prior to the Expiration Date, must tender their Notes according to the guaranteed delivery procedures set forth in "The Exchange Offer -- Guaranteed Delivery Procedures." Use of Proceeds............................ There will be no proceeds to the Company from the exchange of Notes pursuant to the Exchange Offer. Exchange Agent............................. First Trust National Association, is serving as the Exchange Agent in connection with the Exchange Offer. 8 14 Federal Income Tax Consequences................. The Company belives that the exchange of Notes pursuant to the Exchange Offer will not be a taxable event for federal income tax purposes. See "Certain Federal Income Tax Considerations." CONSEQUENCES OF EXCHANGING OLD NOTES PURSUANT TO THE EXCHANGE OFFER Based on certain interpretive letters issued by the staff of the Commission to third parties in unrelated transactions, the Company is of the view that holders of Old Notes (other than any holder who is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act) who exchange their Old Notes for New Notes pursuant to the Exchange Offer generally may offer such New Notes for resale, resell such New Notes, and otherwise transfer such New Notes without compliance with the registration and prospectus delivery provisions of the Securities Act, provided such New Notes are acquired in the ordinary course of the holders' business and such holders have no arrangement with any person to participate in a distribution of such New Notes. Any holder who tenders in the Exchange Offer with the intention or for the purpose of participating in a distribution of the New Notes cannot rely on such interpretation by the Staff of the Commission and must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. Unless an exemption from registration is otherwise available, any such resale transaction should be covered by an effective registration statement containing the information required by the Securities Act. This Prospectus may be used for an offer to resell, resale or other retransfer of New Notes only as specifically set forth herein. Each broker-dealer that receives New Notes for its own account in exchange for Old Notes, where such Old Notes were acquired by such broker-dealer as a result of market-making activities, must acknowledge that it will deliver a prospectus in connection with any resale of such New Notes. See "Plan of Distribution." In addition, to comply with the securities laws of certain jurisdictions, if applicable, the New Notes may not be offered or sold unless they have been registered or qualified for sale in such jurisdiction or in compliance with an available exemption from registration or qualification. The Company has agreed, pursuant to the Registration Agreement and subject to certain specified limitations therein, to register or qualify the New Notes for offer or sale under the securities or blue sky laws of such jurisdictions as any holder of the Notes reasonably requests in writing. If a holder of Old Notes does not exchange such Old Notes for New Notes pursuant to the Exchange Offer, such Old Notes will continue to be subject to the restrictions on transfer contained in the legend thereon. In general, the Old Notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. See "The Exchange Offer -- Consequences of Failure to Exchange; Resales of New Notes." The Old Notes are currently eligible for trading in the Private Offerings, Resales and Trading through Automated Linkages ("PORTAL") market. Following commencement of the Exchange Offer but prior to its consummation, the Old Notes may continue to be traded in the PORTAL market. Following consummation of the Exchange Offer, the New Notes will not be eligible for PORTAL trading. THE NEW NOTES The terms of the New Notes are identical in all material respects to the Old Notes, except for certain transfer restrictions, registration rights and certain interest rate step-up provisions relating to the Old Notes. Unlike the New Notes, the Old Notes were not registered under the Securities Act and were offered in a transaction not involving any public offering within the meaning of the Securities Act, and are therefore subject to certain transfer restrictions under the Securities Act. 9 15 The Old Notes also included certain registration rights relating to the Exchange Offer Registration Statement that are not applicable to the New Notes. Pursuant to the Registration Agreement, the Company agreed to, (i) not later than 45 days after the closing of the sale of the Old Notes on June 24, 1997 (the "Closing Date"), file the Exchange Offer Registration Statement with the Commission and (ii) cause the Exchange Offer Registration Statement to be declared effective under the Securities Act not later than 120 days after the Closing Date. In addition, in the event that applicable interpretations of the staff of the Commission do not permit the Company to effect the Exchange Offer, or if for any other reason the Exchange Offer is not consummated within 150 days after the Closing Date, or in certain other limited circumstances, the Company has agreed to file a shelf registration statement ("Shelf Registration Statement") covering resales of the Old Notes or the New Notes, as the case may be, to use its best efforts to cause the Shelf Registration Statement to be declared effective under the Securities Act, and to keep the Shelf Registration Statement effective until three years after its effective date (or shorter period that will terminate when all Old Notes or New Notes, as the case may be, covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement). The applicable interest rate step-up provisions relating to the Old Notes are not identical with respect to the New Notes. These provisions provide as follows: if (i) within 120 days after the Closing Date, the Exchange Offer Registration Statement has not been declared effective; (ii) within 150 days after the Closing Date, neither the Registered Exchange Offer has been consummated nor the Shelf Registration Statement has been declared effective; or (iii) after either the Exchange Offer Registration Statement or the Shelf Registration Statement has been declared effective, such Registration Statement thereafter ceases to be effective or usable (subject to certain exceptions) in connection with resales of Old Notes or New Notes (each such event referred to in clauses (i) through (iii), a "Registration Default"), interest ("Special Interest") will accrue on the Old Notes and the New Notes, as applicable, (in addition to the stated interest on the Old Notes and the New Notes) from and including the date on which any such Registration Default shall occur to but excluding the date on which all Registration Defaults have been cured. Special Interest will accrue at a rate of 0.25% per annum during the 90-day period immediately following the occurrence of any Registration Default and shall increase by 0.25% per annum at the end of each subsequent 90-day period, but in no event shall such rate exceed 1.00% per annum. Issuer .................................. Oxford Automotive, Inc. Notes .................................. $125.0 million in aggregate principal amount of 10 1/8% Senior Subordinated Notes Due 2007. Maturity ................................ June 15, 2007. Interest Payment Dates................... Each June 15 and December 15, commencing December 15, 1997. 10 16 Subsidiary Guaranties ............. Like the Old Notes, the New Notes will be fully and unconditionally guaranteed on a joint and several basis, and on a senior subordinated basis by each Restricted Subsidiary of the Company (other than certain foreign subsidiaries) that is an obligor or guarantor of any Bank Credit Agreement (the "Subsidiary Guaranties"). See "Description of the Notes -- Subsidiary Guaranties." Subordination of Notes and Subsidiary Guaranties ............. Like the Old Notes, the New Notes and the Subsidiary Guaranties will be general unsecured senior subordinated obligations of the Company and the Subsidiary Guarantors, as applicable. The New Notes and the Subsidiary Guaranties will be subordinated in right of payment to the prior payment in full of all existing and future Senior Indebtedness (as defined) and will rank pari passu with or senior to all present and future subordinated indebtedness of the Company or the relevant Subsidiary Guarantors, as applicable. As of June 30, 1997, the Company had no outstanding Senior Indebtedness and the Subsidiary Guarantors' outstanding Senior Indebtedness was approximately $17.9 million. See "Description of the Notes -- Subordination." Sinking Fund ...................... None. Optional Redemption ............... Like the Old Notes, the New Notes will be redeemable at the option of the Company, in whole or in part at any time on or after June 15, 2002, at the redemption prices set forth herein plus accrued and unpaid interest, if any, to the redemption date. In addition, at any time prior to June 15, 2000, the Company may redeem, at its option, up to an aggregate amount of 35% of the original principal amount of the Notes with the proceeds of one or more Public Equity Offerings following which there is a Public Market at a redemption price of 110.125% of the principal amount thereof plus accrued and unpaid interest, if any, to the redemption date, provided that at least 65% of the original aggregate principal amount of the Notes remains outstanding after each such redemption. See "Description of the Notes -- Optional Redemption." 11 17 Change of Control ................... Upon the occurrence of a Change of Control, each Holder of Notes will have the right to require the Company to purchase all or a portion of such Holder's Notes at a price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase. In the event of a Change of Control, there can be no assurance that the Company will have the financial resources or be permitted under the terms of its other indebtedness to repurchase or redeem the Notes. See "Description of the Notes -- Change of Control." Certain Covenants; Defaults.......... The Indenture contains certain covenants that, among other things, limit the ability of the Company and its Restricted Subsidiaries to (i) incur additional indebtedness, (ii) pay dividends or make other distributions with respect to Capital Stock (as defined) of the Company and its Restricted Subsidiaries, (iii) create certain liens, (iv) sell material assets of the Company or its Restricted Subsidiaries, (v) enter into certain mergers and consolidations and (vi) make capital expenditures. The Indenture also contains certain events of default including payment defaults and a default arising upon an acceleration by the holders of certain other Indebtedness (as defined), including the Senior Credit Facility, because of a default. See "Description of the Notes -- Certain Covenants and -- Defaults." Risk Factors........................ See "Risk Factors" for a discussion of certain factors that should be considered in connection with the Exchange Offer. SENIOR CREDIT FACILITY On June 24, 1997, concurrently with the Offering, the Company entered into a credit agreement with NBD Bank, on behalf of itself and as agent for a syndicate of other lenders, pursuant to which availability under such facility is $110.0 million (such credit facility being referred to herein as the "Senior Credit Facility"). The facility is in the form of a revolving credit line. Approximately $101.0 million was available under the revolver at June 30, 1997, reduced for the effect of a Letter of Credit issued for the IRBs (as defined). The obligations under the Senior Credit Facility are secured by substantially all the assets of the Subsidiary Guarantors and the Company. The Senior Credit Facility contains certain customary covenants, including reporting and other affirmative covenants, financial covenants, and negative covenants, as well as customary events of default, including non-payment of principal, violation of covenants, and cross-defaults to certain other indebtedness, including the indebtedness evidenced by the Notes. See "Description of Certain Indebtedness and Preferred Stock -- Senior Credit Facility." As of June 30, 1997, after giving effect to the Offering, there were no borrowings under the Senior Credit Facility. See "Capitalization" and "Description of Certain Indebtedness and Preferred Stock." 12 18 SUMMARY CONSOLIDATED HISTORICAL AND PRO FORMA FINANCIAL DATA The following table sets forth (i) summary historical financial data of BMG (the "Predecessor") for the year ended March 31, 1995 and the period from April 1, 1995 through October 27, 1995, (ii) summary historical financial data of the Company from October 28, 1995 through March 31, 1996, for the year ended March 31, 1997, and for the three months ended June 30, 1996 and 1997, and (iii) summary pro forma financial data for the year ended March 31, 1997 and for the three months ended June 30, 1997. The summary historical financial data for the year ended March 31, 1995, the period April 1, 1995 through October 27, 1995 and the period October 28, 1995 through March 31, 1996 was derived from the audited consolidated financial statements of the Predecessor and the Company, which are included elsewhere in this Prospectus, together with the report of Deloitte & Touche, independent accountants. The summary historical financial data for the year ended March 31, 1997 was derived from the audited consolidated financial statements of the Company, which are included elsewhere in this Prospectus, together with the report of Price Waterhouse LLP, independent accountants. The summary historical financial data for the three months ended June 30, 1996 and 1997 were derived from unaudited interim financial statements, which, in the opinion of management, have been prepared on the same basis as the audited financial statements and include all adjustments (all of which are of a normal recurring nature) that are necessary for a fair presentation of the results for the period. The summary pro forma statement of operations data and other financial data for the fiscal year ended March 31, 1997 were prepared to illustrate the effect of the Offering and the acquisitions of Lobdell and Howell as if each had occurred on April 1, 1996. The summary pro forma balance sheet data at March 31, 1997 was prepared to illustrate the effect of the Offering and the acquisition of Howell as if each had occurred on March 31, 1997. The summary pro forma statement of operations data and other data for the three months ended June 30, 1997 were prepared to illustrate the effect of the Offering and the acquisition of Howell, as if they had occurred on April 1, 1997 and the summary pro forma balance sheet data at June 30, 1997 was prepared to illustrate the effect of the acquisition of Howell as if they had occurred on June 30, 1997. The pro forma data does not purport to be indicative of the results of operations or the financial position of the Company that would have been obtained if the acquisitions and Offering had in fact been completed as of such dates or to project the results of operations or the financial position of the Company for any future date or period. The following table should be read in conjunction with the "Selected Consolidated Historical Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Pro Forma Combined Financial Data," and the Consolidated Financial Statements of the Company and the related notes and other financial information presented elsewhere in this Prospectus. 13 19
HISTORICAL PRO FORMA ----------------------------------------------------------------------------- ----------- PREDECESSOR COMPANY -------------------------- -------------------------------------------- FISCAL YEAR PERIOD PERIOD FISCAL YEAR THREE MONTHS FISCAL YEAR ENDED APRIL 1, 1995 - OCTOBER 28, 1995 - ENDED ENDED JUNE 30 ENDED MARCH 31, OCTOBER 27, MARCH 31, MARCH 31, MARCH 31, 1995 1995 1996 1997 1996 1997 1997 ----------- ------------- ---------------- ----------- ---- ---- ----------- AUDITED AUDITED AUDITED AUDITED UNAUDITED UNAUDITED UNAUDITED (DOLLARS IN THOUSANDS) Statement of Operations Data: Net sales . . . . . . . . . . . . $75,097 $49,043 $35,572 $136,861 $21,709 $ 91,960 $421,707 Gross profit . . . . . . . . . . 4,206 2,148 3,948 11,773 1,257 9,298 30,269 Equipment impairment and non- recurring charges(a) . . . . . -- -- -- 287 -- -- 5,247 Operating income (loss) . . . . . (348) (1,774) 1,713 3,801 554 7,606 3,238 Interest expense . . . . . . . . 1,267 1,048 1,096 3,388 592 1,798 13,727 Other income (expense) . . . . . -- -- -- 2,201 587 37 3,274 Income (loss) before income (1,615) (2,822) 617 2,614 549 5,845 (7,215) taxes Provision (benefit) for income taxes . . . . . . . . . . . . . . (349) (938) 202 1,065 220 2,338 (2,566) Net income (loss) . . . . . . . . $(1,266) $(1,884) $ 415 $ 1,549 $329 $3,507 $ (4,649) Balance Sheet Data (end of period): Cash and cash equivalents . . . . $ -- $ -- $ -- $ 9,671 $ -- $ 58,883 $ 24,370 Trade accounts receivable, net . . . . . . . . . . . . . . 9,835 13,312 8,338 47,626 11,335 41,511 61,841 Inventories . . . . . . . . . . . 4,170 4,429 3,719 13,411 2,459 14,623 20,681 Total assets . . . . . . . . . . 41,523 59,770 49,200 243,694 50,303 286,653 306,351 Total debt. . . . . . . . . . . . 12,907 23,233 26,758 99,829 25,833 142,678 141,524 Redeemable preferred stock -- -- -- 39,300 -- 39,635 39,300 Total shareholders' equity 10,833 9,329 935(b) 2,341 1,006 5,459 2,341 Financial Ratios and Other Data: Depreciation and amortization 1,413 $ 919 $ 687 $ 5,041 772 4,308 19,916 Capital expenditures . . . . . . 4,384 5,111 3,466 3,326 1,203 3,577 19,674 Ratio of earnings to fixed charges(c) . . . . . . . . . . -- -- 1.5x 1.7x 1.8x 3.6x -- Adjusted EBITDA(d) . . . . . . . 1,065 (855) 2,400 11,330 1,913 11,951 31,675 Gross margin(e) . . . . . . . . 5.60% 4.38% 11.10% 8.60% 5.79% 10.11% 7.18% Adjusted EBITDA margin(f) . . . . 1.42 NM 6.75 8.28 8.81 13.00 7.51 Ratio of Adjusted EBITDA to interest expense(g) . . . . . 0.8x NM 2.2x 3.3x 3.2x 6.6x 2.3x Ratio of net debt to Adjusted EBITDA(h) . . . . . . . . . . . 12.1 NM 4.7 7.6 2.96 1.7 3.6 PRO FORMA ----------- THREE MONTHS ENDED JUNE 30, 1997 ------------- (UNAUDITED) (DOLLARS IN THOUSANDS) Statement of Operations Data: Net sales . . . . . . . . . . . . $116,616 Gross profit . . . . . . . . . . . 11,547 Equipment impairment and non- recurring charges(a) . . . . . . -- Operating income (loss) . . . . . 8,592 Interest expense . . . . . . . . . 3,404 Other income (expense) . . . . . . 333 Income (loss) before income 5,521 taxes . . . . . . . . . . . . . . Provision (benefit) for income taxes . . . . . . . . . . . . . . 2,128 Net income (loss) . . . . . . . . $3,393 Balance Sheet Data (end of period): Cash and cash equivalents . . . . 35,638 Trade accounts receivable, net . . . . . . . . . . . . . . . 56,024 Inventories . . . . . . . . . . . 22,419 Total assets . . . . . . . . . . . 308,034 Total debt . . . . . . . . . . . . 142,678 Redeemable preferred stock . . . . 39,635 Total shareholders' equity . . . . 5,459 Financial Ratios and Other Data: Depreciation and amortization 4,900 Capital expenditures . . . . . . . 4,493 Ratio of earnings to fixed charges(c) . . . . . . . . . . . 2.4x Adjusted EBITDA(d) . . . . . . . . 13,825 Gross margin(e) . . . . . . . . . 9.90% Adjusted EBITDA margin(f) . . . . 11.86 Ratio of Adjusted EBITDA to interest expense(g) . . . . . . 4.1x Ratio of net debt to Adjusted EBITDA(h) . . . . . . . . . . . 1.9
14 20 See Notes to Summary Consolidated Historical and Pro Forma Financial Data on the following page. __________________________________ (a) The provision for equipment impairment and non-recurring charges includes: (i) on a pro forma basis, for the year ended March 31, 1997, a $3.0 million impairment reserve against certain long-lived assets of Laserweld International L.L.C. ("Laserweld") a wholly owned indirect subsidiary of the Company (substantially all of the assets of Laserweld were inactive at December 31, 1996 and the recorded value exceeded the fair value of such assets), a $0.5 million provision for liability under the WARN Act, $0.5 million of excess legal and professional fees associated with the marketing and sale of Lobdell and $1.2 million related to the loss before income taxes for the discontinuance of the Laserweld and Parallel Group International ("Parallel") operations and (ii) for the year ended March 31, 1997, the loss before income taxes for the discontinuance of the Laserweld and Parallel operations of $0.3 million. Management does not anticipate that these costs will be a part of future operations. (b) The reduction in equity of $8.4 million from October 27, 1995 to March 31, 1996 is primarily a result of the elimination of Predecessor equity as a part of the purchase accounting adjustments made upon the acquisition of the Predecessor. (c) For purposes of this computation, earnings consist of income (loss) before income taxes plus fixed charges. Fixed charges consist of interest on indebtedness plus that portion of rental expense representative of the interest factor. For fiscal 1995, the Company's earnings were insufficient to cover fixed charges by $1.6 million. For the period April 1, 1995 to October 27, 1995, the Company's earnings were insufficient to cover fixed charges by $2.8 million. On a pro forma basis for fiscal 1997, earnings were insufficient to cover fixed charges by $5.2 million. (d) Adjusted EBITDA is defined as income (loss) before interest, income taxes, depreciation and amortization and equipment impairment and non-recurring charges. For the fiscal year ended March 31, 1997, equipment impairment and non-recurring charges aggregated $0.3 million and on a pro forma basis, for the fiscal year ended March 31, 1997, equipment impairment and non-recurring charges aggregated $5.2 million, as described in Note (a) above. Adjusted EBITDA should not be construed as a substitute for income from operations, net income or cash flow from operating activities for the purpose of analyzing the Company's operating performance, financial position and cash flows. (e) Gross margin is defined as gross profit as a percent of net sales for each of the applicable periods. (f) Adjusted EBITDA margin is defined as Adjusted EBITDA as a percent of net sales for each of the applicable periods. (g) Defined as the ratio of Adjusted EBITDA to total interest expense. (h) Defined as the ratio of net debt to Adjusted EBITDA with net debt consisting of total debt less cash and cash equivalents and unexpended bond proceeds. 15 21 RISK FACTORS In evaluating the Exchange Offer, Holders of the Old Notes should carefully consider the following risk factors, as well as the other information set forth elsewhere in this Prospectus. The risk factors set forth below are generally applicable to the Old Notes as well as the New Notes. SUBSTANTIAL LEVERAGE AND DEBT SERVICE OBLIGATIONS The Company has, and upon consummation of the Exchange Offer will have, indebtedness which is substantial in relation to the shareholders' equity, as well as interest and debt service requirements which are significant compared to its cash flow from operations. At June 30, 1997, the Company's total indebtedness was $142.7 million (exclusive of unused commitments under the Senior Credit Facility of approximately $101.0 million) and the Company had $39.6 million of preferred stock and $5.5 million of common shareholders' equity. In addition, to the extent that the Company is required to incur or assume additional indebtedness in connection with its acquisition strategy, the Company's interest and debt service requirements will increase. See "Risk Relating to Acquisitions." The degree to which the Company is leveraged could have important consequences to Holders of the Notes, including the following: (i) the Company's ability to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes may be impaired; (ii) a substantial portion of the Company's cash flow from operations must be dedicated to the payment of interest on the Notes and its other existing indebtedness, thereby reducing the funds available to the Company for other purposes; (iii) the agreements governing the Company's long-term indebtedness contain certain restrictive financial and operating covenants; (iv) certain indebtedness under the Senior Credit Facility will be at variable rates of interest, which will cause the Company to be vulnerable to increases in interest rates; (v) all of the indebtedness outstanding under the Senior Credit Facility is secured by substantially all the assets of the Subsidiary Guarantors and the Company and will become due prior to the time the principal on the Notes will become due; (vi) the Company may be hindered in its ability to adjust rapidly to changing market conditions; and (vii) the Company's substantial degree of leverage could make it more vulnerable in the event of a downturn in general economic conditions or in its business. The Indenture permits the Company and the Subsidiary Guarantors to incur additional indebtedness, including Senior Indebtedness and indebtedness that will rank pari passu with the Notes. The Company's ability to pay interest on the Notes and to satisfy its other obligations will depend upon its future operating performance, which will be affected by prevailing economic conditions and financial, business and other factors, many of which are beyond its control. The Company anticipates that its operating cash flow, together with available borrowings under the Senior Credit Facility, will be sufficient to meet its operating expenses, to service interest requirements on its debt obligations as they become due and to implement its business strategy. There can be no assurance, however, that the Company's business will generate sufficient cash flow from operations or that future borrowings will be available in an amount sufficient to enable the Company to service its indebtedness, including the Notes, to make anticipated capital expenditures or to implement its business strategy. Further, the Company is required to redeem the Lobdell Preferred Stock (as defined) prior to the time the principal on the Notes will become due and the maximum aggregate redemption price for such preferred stock, assuming the Company does not commence a public offering of its common stock prior to June 30, 2000, is $40.9 million, plus any accrued and unpaid dividends to the date of redemption. The Company's predecessor experienced a net loss of $1.3 million for the year ended March 31, 1995, experienced a net loss of $1.9 million during the period from April 1, 1995 through October 27, 1995 and, on a pro forma basis for fiscal 1997, the Company's net loss is $4.6 million. In addition, for fiscal 1995, the Company's earnings were insufficient to cover fixed charges by $1.6 million. For the period April 1, 1995 to October 27, 1995, the Company's earnings were insufficient to cover fixed charges by $2.8 million. For fiscal 1997, the Company's earnings exceeded fixed charges by $2.6 million; however, on a pro forma basis for fiscal 1997, earnings were insufficient to cover fixed charges by $5.2 million. See "Management's Discussion and Analysis 16 22 of Financial Condition and Results of Operations -- Liquidity, Capital Resources and Financial Condition" and "Description of Certain Indebtedness and Preferred Stock." The Senior Credit Facility contains certain customary covenants, including without limitation, reporting and other affirmative covenants; financial covenants, including ratio of total debt to EBITDA, net worth, fixed charge coverage ratio, interest coverage ratio (each as defined in and calculated pursuant to the Senior Credit Facility); and negative covenants, including restrictions on incurrence of other indebtedness, payment of cash dividends and other distributions to shareholders, liens in favor of parties other than the lenders under the Senior Credit Facility, certain guaranties of obligations of or advances to others, sales of material assets not in the ordinary course of business, restrictions on mergers and acquisitions, and capital expenditures. There can be no assurance that these requirements will be met in the future. If they are not, the holders of the indebtedness under the Senior Credit Facility would be entitled to declare such indebtedness immediately due and payable or, if the Company were unable to repay such indebtedness, the holders thereunder could proceed against the collateral securing the Senior Credit Facility, which consists of substantially all of the assets of the Company and the Subsidiary Guarantors. In addition, the Senior Credit Facility contains customary events of default including non-payment of principal, violation of covenants and cross-defaults to certain other indebtedness, including the indebtedness evidenced by the Notes. See "Description of Certain Indebtedness and Preferred Stock -- Senior Credit Facility." SUBORDINATION OF NOTES AND THE SUBSIDIARY GUARANTIES; ASSET ENCUMBRANCES; HOLDING COMPANY STRUCTURE Like the Old Notes, the New Notes will be subordinated in right of payment to all present and future Senior Indebtedness of the Company and the Subsidiary Guarantors, including the principal, premium (if any) and interest with respect to the obligations outstanding under the Senior Credit Facility. In addition, the Subsidiary Guaranties will be subordinated in right of payment to all existing and future Senior Indebtedness of the Subsidiary Guarantors. As of June 30, 1997, the Company did not have any Senior Indebtedness outstanding (excluding unused commitments under the Senior Credit Facility) and the Subsidiary Guarantors had approximately $17.9 million of Senior Indebtedness outstanding. Consequently, in the event of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding with respect to the Company or any Subsidiary Guarantor, assets of the Company or such Subsidiary Guarantor will be available to pay obligations of the Notes only after all Senior Indebtedness of the Company or such Subsidiary Guarantor has been paid in full, and there can be no assurance that there will be sufficient assets to pay amounts due on all or any of the Notes. See "Description of the Notes -- Subordination." Like the Old Notes, the New Notes are unsecured and will be effectively subordinated to any secured indebtedness of the Company or any Subsidiary Guarantor. The indebtedness outstanding under the Senior Credit Facility will be secured by liens on substantially all of the assets of the Subsidiary Guarantors and the Company. The ability of the Company to comply with the provisions of the Senior Credit Facility may be affected by events beyond the Company's control. The breach of any such provisions could result in a default under the Senior Credit Facility, in which case, depending upon the actions taken by the lenders thereunder or their successors or assignees, such lenders could elect to declare all amounts borrowed under the Senior Credit Facility, together with accrued interest, to be due and payable, and the Company could be prohibited from making payments of interest and principal on the Notes until the default is cured or all Senior Indebtedness is paid or satisfied in full. If the Company were unable to repay such borrowings, such lenders could proceed against the collateral. If the indebtedness under the Senior Credit Facility were accelerated, there can be no assurance that the assets of the Company and the Subsidiary Guarantors would be sufficient to repay in full such indebtedness and the other indebtedness of the Company, including the Notes. See "Description of Certain Indebtedness and Preferred Stock -- Senior Credit Facility" and "Description of the Notes -- Subordination." The Company is a holding company which derives all of its operating income from its subsidiaries. The Holders of the Notes will have no direct claim against such subsidiaries other than the claim created by the Subsidiary Guaranties, which 17 23 may be subject to legal challenge in the event of the bankruptcy of a subsidiary. See "Risk Factors -- Fraudulent Conveyance." If such a challenge were upheld with respect to any such Subsidiary Guarantee, such Subsidiary Guarantee would be invalidated and unenforceable. To the extent that the Subsidiary Guarantee is not enforceable, the rights of Holders of the Notes to participate in any distribution of assets of the Subsidiary Guarantor upon liquidation, bankruptcy, reorganization or otherwise may, as is the case with other unsecured creditors of the Company, be subject to prior claims of creditors of that Subsidiary Guarantor. The Company must rely on dividends and other payments from its subsidiaries to generate the funds necessary to meet its obligations, including the payment of principal and interest on the Notes. The Indenture contains covenants that restrict the ability of the Company's subsidiaries to enter into any agreement limiting distributions and transfers, including dividends to the Company. Further, the ability of the Company's subsidiaries to pay dividends and make other payments are, and may in the future be, subject to certain statutory, contractual and other restrictions. See "Description of Certain Indebtedness and Preferred Stock." CYCLICALITY; THE OEM SUPPLIER INDUSTRY The OEM supplier industry is highly cyclical and, in large part, impacted by the strength of the economy generally, by prevailing interest rates and by other factors which may have an effect on the level of sales of automotive vehicles. There can be no assurance that the automotive industry for which the Company supplies components will not experience downturns in the future. An economic recession may impact substantially leveraged companies, such as the Company, more than similarly situated companies with less leverage. A decrease in overall consumer demand for SUVs, light trucks, mini-vans, vans or passenger cars could have a material adverse effect on the Company's financial condition and results of operations. The automotive industry is characterized by a small number of OEMs that are able to exert considerable pressure on component and system suppliers to reduce costs, improve quality and provide additional design and engineering capabilities. In the past, OEMs have generally demanded and received price reductions and measurable increases in quality by implementing competitive selection processes, rating programs and various other arrangements. Also, through increased partnering on platform work, OEMs have generally required component and system suppliers to provide more design engineering input at earlier stages of the product development process, the costs of which have, in some cases, been absorbed by the suppliers. Although the Company, historically, has regained the loss caused by price reductions to the OEMs through cost reduction initiatives and assistance from the OEMs, there can be no assurance that future price reductions, increased quality standards or additional engineering capabilities required by OEMs will not have a material adverse effect on the financial condition or results of operations of the Company. Further, although the general trend of the OEMs is to outsource component manufacturing, the OEMs have, from time to time, brought their stamping work back in-house. There can be no assurance that the OEMs may not in-source some of the jobs currently performed by the Company. Many OEMs and their Tier 1 suppliers are unionized. Work stoppages and slowdowns experienced by OEMs and their Tier 1 suppliers, as a result of labor disputes, could have a material adverse effect on the Company's financial condition or results of operations. DEPENDENCE ON PRINCIPAL CUSTOMERS Substantially all of the Company's sales for fiscal 1997 and the three months ended June 30, 1997 were to GM and Ford. Although the Company has ongoing supply relationships with its principal customers and is a long-term supplier to GM and Ford, there can be no assurance that sales to GM and Ford will continue at the same level. Furthermore, continuation of these relationships is dependent upon the customers' satisfaction with the price, quality and delivery of the Company's products. In addition, the Company's agreements to produce parts are assigned to specific models or product lines of its customers. Accordingly, the Company's business, and estimates for future business, are dependent upon consumer demand for the specific models and product lines that incorporate the Company's parts. The Company's arrangements with the OEMs are 18 24 typically in the form of purchase orders that may be canceled by the OEMs. However, the Company believes that cancellation of purchase orders is rare, due, in part, to the OEM production interruptions likely to be caused by changing suppliers. A significant decrease in sales of vehicles using the Company's products or the loss by the Company of the right to supply any of such products to its customers would have a material adverse effect on the Company's financial condition and results of operations. The loss of GM, Ford, or with the acquisition of Howell, Chrysler as a customer would have a material adverse effect on the Company. In addition, the delay or cancellation of material orders from, or design, development, delivery or product projects at, GM, Ford, or Chrysler could have a material adverse effect on the Company. UNIONIZED WORKFORCE Substantially all employees of the Company are covered by collective bargaining agreements with either the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America ("UAW"), United Steelworkers of America ("USW"), International Brotherhood of Teamsters ("Teamsters") or the National Automobile Aerospace, Transportation and General Workers Union of Canada ("CAW"). The Company has not experienced any work stoppages in the last ten years and considers its relationship with its employees to be good. Strikes or work stoppages and the resultant adverse impact on its relationship with the OEMs could have a material adverse effect on the Company's business, financial condition and results of operations. The Company recently negotiated a new agreement with the CAW at the Cambridge, Ontario facility which will expire on September 30, 2000. The Company's agreement with the UAW at the Argos, Indiana facility will expire on March 31, 1998. While the outcome, including the terms of the new UAW contract and its impact on the future results of the Company's operations cannot be predicted, management does not believe that the financial terms of the new contract will have a material adverse effect on the Company. However, there can be no assurance that the Company will be successful in its contract negotiations. FRAUDULENT CONVEYANCE If a court in a lawsuit brought by an unpaid creditor or representative of creditors, such as a trustee in bankruptcy or the Company as a debtor-in-possession, were to find under relevant federal or state fraudulent conveyance statutes that the Company did not receive fair consideration or reasonably equivalent value for incurring the indebtedness, including the Notes, and that, at the time of such incurrence, the Company (i) was insolvent, (ii) was rendered insolvent by reason of such incurrence or grant, (iii) was engaged in a business or transaction for which the assets remaining with the Company constituted unreasonably small capital or (iv) intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they matured, then such court, subject to applicable statutes of limitation, could void the Company's obligations under the Notes, recover payments made under the Notes, subordinate the Notes to other indebtedness of the Company or take other action detrimental to the Holders of the Notes. The measure of insolvency for these purposes will depend upon the governing law of the relevant jurisdiction. Generally, however, a company will be considered insolvent for these purposes if the sum of that company's debts is greater than the fair value of all of that company's property or if the present fair salable value of that company's assets is less than the amount that will be required to pay its probable liability on its existing debts as they become absolute and matured or if the Company is not able to pay its debts as they become due. Moreover, regardless of solvency, a court could void an incurrence of indebtedness, including the Notes, if it determined that such transaction was made with the intent to hinder, delay or defraud creditors. In addition, a court could subordinate the indebtedness, including the Notes, to the claims of all existing and future creditors on similar grounds. The Company believes that, after giving effect to the Offering, the Company (i) has not been rendered insolvent by the incurrence of indebtedness in connection with the Offering, (ii) is in possession of sufficient capital to run its business effectively and (iii) is incurring debts within its ability to pay as the same mature or become due. 19 25 There can be no assurance as to what standard a court would apply in order to determine whether the Company was "insolvent" upon the sale of the Old Notes or that, regardless of the method of valuation, a court would not determine that the Company was insolvent upon consummation of the sale of the Old Notes. In addition, the Subsidiary Guaranties may be subject to review under relevant federal and state fraudulent conveyance and similar statutes in a bankruptcy or reorganization case or a lawsuit brought by or on behalf of creditors of any of the Subsidiary Guarantors. In such a case, the analysis set forth above would generally apply, except that the Subsidiary Guaranties could also be subject to the claim that, since the Subsidiary Guaranties were incurred for the benefit of the Company (and only indirectly for the benefit of the Subsidiary Guarantors), the obligations of the Subsidiary Guarantors thereunder were incurred for less than reasonably equivalent value or fair consideration. A court could void the Subsidiary Guarantors' obligation under the Subsidiary Guaranties, recover payments made under the Subsidiary Guaranties, subordinate the Subsidiary Guaranties to other indebtedness of a Subsidiary Guarantor or take other action detrimental to the Holders of the Notes. CONTROL BY PRINCIPAL SHAREHOLDER Selwyn Isakow (the "Principal Shareholder") beneficially owns 48.9% of the Company's outstanding shares and exercises voting control over those shares not owned by him, including shares held by the directors and officers of the Company. Circumstances may occur in which the interests of the Principal Shareholder could be in conflict with the interests of the Holders of the Notes. For example, if the Company encounters financial difficulties or is unable to pay certain of its debts as they mature, the interests of the Principal Shareholder might conflict with those of the Holders of the Notes. In addition, the Principal Shareholder may have an interest in pursuing acquisitions, divestitures or other transactions that, in his judgment, could enhance his equity investment, even though such transactions might involve risks to the Holders of the Notes. See "Principal Shareholders." RISK RELATING TO ACQUISITIONS To expand its markets and take advantage of the consolidation trend in the automotive parts industry, the Company's business strategy includes growth through acquisitions. The ability of the Company to successfully implement its acquisition strategy depends upon a number of factors. There can be no assurance that the Company will be able to consummate acquisitions in the future on terms acceptable to the Company or to integrate any new acquisitions (including Howell) successfully into its operations and achieve cost savings from such integration. To the extent that any future acquisitions require the incurrence or assumption of additional indebtedness, the Company's interest and debt service requirements will increase, and the Company's increased leverage could have important consequences to Holders of the Notes. In addition, the Company is pursuing acquisitions and strategic alliances in Europe and intends to pursue such acquisitions and alliances in South America, Asia and other markets. The Company is also continually investigating opportunities for domestic acquisitions of other OEM suppliers. There can be no assurance that these acquisitions or strategic alliances will be successful. See "Risk Factors - -- Substantial Leverage and Debt Service Obligations," and "Business -- Business Strategy." COMPETITION The motor vehicle parts industry in which the Company operates is fragmented and competitive. The Company's competitors include divisions or subsidiaries of companies that are larger and have substantially greater resources than the Company as well as divisions of OEMs with internal stamping and assembly operations. There can be no assurance that the Company's products will be able to compete successfully with those of its competitors. See "Business -- Competition." ENVIRONMENTAL RISKS 20 26 The Company's operations and properties are subject to federal, state, local and foreign laws, regulations and ordinances relating to the use, storage, handling, generation, treatment, emission, release, discharge and disposal of certain materials, substances and wastes. In many jurisdictions these laws are complex and change frequently. Such laws, including but not limited to the Comprehensive Environmental Response, Compensation & Liability Act ("CERCLA" or "Superfund") may impose joint and several liability and apply to remediation of contamination at properties presently or formerly owned or operated by an entity or its predecessors, as well as to conditions at properties at which wastes or other contamination attributable to an entity or its predecessors have been sent or otherwise come to be located. The nature of the Company's operations exposes it to the risk of liabilities or claims with respect to environmental matters, including off-site disposal matters, and there can be no assurance that material costs will not be incurred in connection with such liabilities or claims. Based upon the Company's experience to date, the Company believes that the future cost of compliance with existing environmental laws, regulations and ordinances (or liability for known environmental claims) will not have a material adverse effect on the Company's business, financial condition and results of operations. However, future events, such as changes in existing laws and regulations or their interpretation, may give rise to additional compliance costs or liabilities that could have a material adverse effect on the Company's business, financial condition and results of operations. Compliance with more stringent laws or regulations, as well as more vigorous enforcement policies of regulatory agencies or stricter or different interpretations of existing laws, may require additional expenditures by the Company that may be material. See "Business -- Regulatory Matters and -- Legal Proceedings." CHANGE OF CONTROL Upon a Change of Control, each Holder of the Notes will have the right to require the Company to repurchase all or any part of such Notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase. The occurrence of a Change of Control may constitute a default under the Senior Credit Facility. In addition, the Senior Credit Facility will prohibit the purchase of the Notes by the Company in the event of a default thereunder, unless and until such time as the indebtedness under the Senior Credit Facility is repaid in full. The Company's failure to purchase the Notes would result in a default under the Indenture. The inability to repay the indebtedness under the Senior Credit Facility, if accelerated, would also constitute an event of default under the Indenture, which could have adverse consequences for the Company and the Holders of the Notes. In the event of a Change of Control, there can be no assurance the Company would have sufficient financial resources available to satisfy all of its obligations under the Senior Credit Facility and the Notes. See "Description of Certain Indebtedness and Preferred Stock -- Senior Credit Facility." CONSEQUENCES OF FAILURE TO EXCHANGE Holders of Old Notes who do not exchange their Old Notes for New Notes pursuant to the Exchange Offer will continue to be subject to the restrictions on transfer of such Old Notes as set forth in the legend thereon as a consequence of the issuance of the Old Notes pursuant to exemption from, or in transactions not subject to, the registration requirements of, the Securities Act and applicable state laws, or pursuant to an exemption therefrom. Subject to the obligation by the Company to file a shelf registration statement covering resales of Old Notes in certain limited circumstances, the Company does not intend to register the Old Notes under the Securities Act and, after consummation of the Exchange Offer, will not be obligated to do so. In addition, any holder of Old Notes who tenders in the Exchange Offer for the purpose of participating in a distribution of the New Notes may be deemed to have received restricted securities and, if so, will be required to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. Additionally, as a result of the Exchange Offer, it is expected that a substantial decrease in the aggregate principal amount of Old Notes outstanding will occur. As a result, it is unlikely that a liquid trading market will exist for the Old Notes at any time. This lack of liquidity will make transactions more difficult and may reduce the trading price of the Old Notes. See "The Exchange Offer." 21 27 ABSENCE OF PUBLIC MARKET FOR THE NEW NOTES The New Notes are new securities and there is currently no established market for the New Notes. Accordingly, there can be no assurance as to the liquidity of any markets that may develop for the New Notes, the ability of holders to sell the New Notes or the price at which holders would be able to sell the New Notes. Future trading prices of the New Notes will depend on many factors, including, among other things, prevailing interest rates, the Company's operating results and the market for similar securities. Historically, the market for securities similar to the New Notes, including non-investment grade debt, has been subject to disruptions that have caused substantial volatility in the prices of such securities. There can be no assurance that any market for the New Notes, if such market develops, will not be subject to similar disruptions. The Initial Purchasers have advised the Company that they currently intend to make a market in the New Notes offered hereby. However, the Initial Purchasers are not obligated to do so and any market making may be discontinued at any time without notice. The Old Notes currently are eligible for trading by qualified buyers in the Private Offerings, Resale and Trading through Automated Linkages (PORTAL) Market. The Company and the Subsidiary Guarantors do not intend to apply for listing of the New Notes on any national securities exchange or for their quotation through the National Association of Securities Dealers Automated Quotation System. USE OF PROCEEDS The Exchange Offer is intended to satisfy certain of the Company's and the Subsidiary Guarantors' obligations under the Registration Agreement. The Company will not receive any cash proceeds from the issuance of the New Notes in the Exchange Offer. In consideration for issuing the New Notes as contemplated in this Prospectus, the Company will receive Old Notes in like principal amount. The form and terms of the New Notes are identical in all material respects to the form and terms of the Old Notes, except for certain transfer restrictions and registration rights relating to the Old Notes and except for certain provisions providing for an increase in the interest rate on the Old Notes under certain circumstances relating to the timing of the Exchange Offer. The Old Notes surrendered in exchange for the New Notes will be retired and canceled and cannot be reissued. Accordingly, issuance of the New Notes will not result in any increase in the outstanding debt of the Company. The net proceeds to the Company from the sale of the Old Notes were approximately $120.7 million (after the deduction of the discount to the Initial Purchasers and estimated expenses incurred in connection with the Offering and related transactions of approximately $4.1 million). The Company used approximately $83.1 million of the net proceeds to refinance existing indebtedness and approximately $23.2 million in connection with the acquisition of Howell with the remaining $14.4 million for working capital and general corporate purposes, which may include other acquisitions. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Liquidity, Capital Resources and Financial Condition." CAPITALIZATION The following table sets forth the capitalization of the Company as of June 30, 1997. This table should be read in conjunction with the unaudited "Pro Forma Combined Consolidated Financial Data," "Selected Consolidated Historical Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Consolidated Financial Statements and related notes thereto included elsewhere in this Prospectus. See also "Description of Certain Indebtedness and Preferred Stock." 22 28
JUNE 30, 1997 ------------- (IN THOUSANDS) Cash and cash equivalents (a) $ 58,883 ======== Long-term debt (including current portion): Senior Credit Facility (b) -- Lewis Emery 2,441 Industrial Revenue Bonds 8,200 EDC Tooling 4,325 IRDP Loan 457 Mortgage-BMG 2,441 10 1/8% Senior Subordinated Notes Due 2007 (c) 124,814 -------- Total debt 142,678 -------- Redeemable preferred stock (d) Series A 36,305 Series B 3,330 -------- Total redeemable preferred stock 39,635 -------- Shareholders' equity: Common stock (400,000 shares authorized; 309,750 issued and outstanding) 1,050 Foreign currency translation adjustment (82) Reduction in equity for minimum pension liability (253) Retained earnings 4,744 -------- Total shareholders' equity 5,459 -------- Total capitalization $187,772 ========
- ------------- (a) Effective August 13, 1997, the Company acquired all of the issued and outstanding shares of common stock of Howell Industries, Inc. Approximately $23.2 million of bond proceeds were used to fund the acquisition. (b) Concurrently with the issuance of the Old Notes, the Company entered into the Senior Credit Facility pursuant to which up to $110.0 million is available. On June 30, 1997, the Company had no borrowings under the Senior Credit Facility and availability was approximately $101.0 million. See "Description of Certain Indebtedness and Preferred Stock." (c) Notes subject to the Exchange Offer. (d) In connection with the acquisition of Lobdell, redeemable preferred stock was issued with a face value of $50.7 million, of which $10.0 million was placed in escrow pending final determination of the purchase price. The Company and the preferred shareholders of Lobdell have settled certain claims relating to the acquisition which has resulted in the cancellation of 60,002 shares of Lobdell Series A Preferred Stock and 49,938 shares of Lobdell Series B Preferred Stock, which represented all of the outstanding Lobdell Series B Preferred Stock. See Notes 3 and 17 of the "Oxford Automotive, Inc. Notes to Consolidated Financial Statements" for further discussion regarding the carrying value of the redeemable preferred stock and additional terms and conditions. PRO FORMA COMBINED FINANCIAL DATA (UNAUDITED) (DOLLARS IN THOUSANDS) The unaudited pro forma combined balance sheet as of June 30, 1997 (the "Unaudited Pro Forma Balance Sheet") gives pro forma effect to the acquisition of Howell as if it had occurred on June 30, 1997. The acquisition of Howell is 23 29 accounted for by the purchase method of accounting pursuant to which the purchase price is allocated among the acquired tangible and intangible assets and assumed liabilities in accordance with estimates of their fair values on the date of acquisition. The pro forma adjustments represent management's preliminary determination of purchase accounting adjustments and are based upon available information and certain assumptions that the Company believes to be reasonable under the circumstances. Consequently, the amounts reflected in the Unaudited Pro Forma Balance Sheet are subject to change and the final values may differ substantially from these amounts. Management does not expect that differences between the preliminary and final purchase price allocation will have a material impact on the Company's financial position. The Unaudited Pro Forma Balance Sheet does not purport to be indicative of the financial position of the Company had such transactions actually been completed as of the assumed dates and for the periods presented, or which may be obtained in the future. The unaudited pro forma combined statement of operations for the year ended March 31, 1997 gives pro forma effect to the Offering and the acquisitions of Lobdell and Howell as if they had occurred on April 1, 1996 and includes the effect of the following adjustments as if they were realized during the applicable period: (i) reductions in cost of sales through labor and fringe benefit reductions, (ii) reductions in selling, general and administrative labor, professional fees and other non-recurring items achieved as a direct result of the acquisition of Lobdell and (iii) net increase in interest expense to reflect the issuance of the Old Notes. The unaudited pro forma combined statement of operations for the three months ended June 30, 1997 (together with the statement for the year ended March 31, 1997, the "Unaudited Pro Forma Statements of Operations") gives pro forma effect to the Offering and the acquisition of Howell as if they had occurred on April 1, 1997. As the acquisition of Howell was not completed until August 13, 1997, the Unaudited Pro Forma Statements of Operations do not include any amount for anticipated savings as a result of cost reductions expected to be implemented by the Company with respect to the operations of Howell. The Unaudited Pro Forma Statements of Operations do not purport to be indicative of the results of operations of the Company had such transactions actually been completed as of the assumed dates and for the periods presented, or which may be obtained in the future. 24 30 UNAUDITED PRO FORMA COMBINED BALANCE SHEET AS OF THE PERIOD ENDED
JUNE 30, 1997 JUNE 30, 1997 PRO FORMA PRO FORMA COMPANY HOWELL (a) ADJUSTMENTS COMBINED ------- ------------ ----------- -------- (DOLLARS IN THOUSANDS) Cash and cash equivalents................. $ 58,883 $ 1,163 ($24,408)(b)(c) $ 35,638 Trade accounts receivable, net............ 41,511 14,513 -- 56,024 Inventories............................... 14,623 6,290 1,506(c) 22,419 Reimbursable tooling...................... 5,545 2,224 -- 7,769 Refundable income taxes................... 1,212 -- -- 1,212 Prepaid expenses and other current assets.................................. 794 1,266 (185)(c) 1,875 Deferred income taxes..................... 4,364 59 875 (c) 5,298 -------- ------- --------- -------- Total current assets.................... 126,932 25,515 (22,212) 130,235 Unexpended bond proceeds.................. 3,991 -- -- 3,991 Deferred income taxes..................... 4,057 -- -- 4,057 Property, plant and equipment, net...................................... 146,291 9,761 6,425(c) 162,477 Goodwill.................................. -- -- 1,042(c) 1,042 Other noncurrent assets................... 5,382 -- 850(c) 6,232 -------- ------- --------- -------- Total assets............................ $286,653 $35,276 ($13,895) $308,034 ======== ======= ========= ======== Trade accounts payable.................... $ 27,398 $ 8,726 $ -- $ 36,124 Accrued expenses and other liabilities............................. 14,287 4,858 -- 19,145 Restructuring reserve..................... 6,303 47 3,519(c) 9,869 Current portion of long-term debt......... 4,761 -- -- 4,761 -------- ------- --------- -------- Total current liabilities............... 52,749 13,631 3,519 69,899 Deferred income taxes..................... 10,488 124 3,172(c) 13,784 Pension liability......................... 4,205 -- 425(c) 4,630 Postretirement medical benefits........... 34,013 -- -- 34,013 Restructuring reserve..................... -- 120 -- 120 Other noncurrent liabilities.............. 2,187 390 -- 2,577 Long-term debt............................ 137,917 -- -- 137,917 -------- ------- --------- -------- Total liabilities....................... 241,559 14,265 7,116 262,940 -------- ------- --------- -------- Redeemable Series A preferred stock................................... 36,290 -- -- 36,290 Redeemable Series B preferred stock................................... 3,345 -- -- 3,345 Total shareholders' equity ............. 5,459 21,011 (21,011) 5,459 -------- ------- --------- -------- Total liabilities and shareholders' equity.................... $286,653 $35,276 ($13,895) $308,034 ======== ======= ========= ========
- -------------- See accompanying Notes to Unaudited Pro Forma Combined Balance Sheet. 25 31 NOTES TO UNAUDITED PRO FORMA COMBINED BALANCE SHEET (DOLLARS IN THOUSANDS) (a) Represents the adjustments for the Howell acquisition as if it had occurred on June 30, 1997. The June 30, 1997 balance sheet for Howell was derived from Howell's internal financial statements. (b) Reflects the estimated sources and uses of funds for the Offering and the acquisition of Howell as if the acquisition had occurred on June 30, 1997: Use of Funds: Acquisition of Howell: Utilization of Bond Proceeds...................................... $23,245 Utilization of Howell Cash and Equivalents........................ 1,163 ------- Total Uses ....................................................... $24,408 =======
(c) The acquisition of Howell will be accounted for by the purchase method of accounting, pursuant to which the purchase price is allocated among the acquired tangible and intangible assets and assumed liabilities in accordance with their estimated fair market values on the date of acquisition. The estimated purchase price and preliminary adjustments to historical book value of Howell as a result of the transaction are as follows: Decrease in cash for payments made at closing............... $ (1,163) Write off of LIFO inventory reserve......................... 1,506 Write off of prepaid assets................................. (185) Increase in deferred tax asset for restructuring and pension reserves.................................................. 875 Increase in property plant and equipment to estimated fair value..................................................... 6,425 Estimated goodwill.......................................... 1,042 Provision for acquisition fees and expenses................. 850 -------- Net increase in assets...................................... $ 9,350 ======== Reserve for plant restructuring............................. $ 3,519 Increase in deferred tax liability.......................... 3,172 Increase in pension reserve................................. 425 Proceeds from Offering used to finance acquisition.......... 23,245 Elimination of retained earnings as a result of purchase accounting................................................ (21,011) -------- Net increase in liabilities and shareholders' equity........ $ 9,350 ========
26 32 UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
ADJUSTMENTS FOR LOBDELL ACQUISITION ----------------------------------- PRO FORMA COMPANY COMPANY(a) LOBDELL(b) ADJUSTMENTS PRO FORMA ---------- ---------- ----------- --------- PERIOD APRIL 1, 1996 YEAR ENDED THROUGH YEAR ENDED YEAR ENDED MARCH 31, 1997 JANUARY 10, 1997 MARCH 31, 1997 MARCH 31, 1997 -------------- ---------------- -------------- ------------- (DOLLARS IN THOUSANDS) Net sales........................................ $ 136,861 $ 193,303 $ -- $ 330,164 Cost of sales.................................... 125,088 186,707 (6,152)(e) 305,643 --------- --------- -------- --------- Gross profit..................................... 11,773 6,596 6,152 24,521 Selling, general and administrative................................. 7,685 12,398 (2,881)(g) 17,202 Equipment impairment and non-recurring charges.......................... 287 4,960 -- 5,247(i) --------- --------- -------- --------- Operating Income (loss).......................... 3,801 (10,762) 9,033 2,072 Interest expense................................. 3,388 2,729 5,251(j) 11,368 Other Income (expense)........................... 2,201 674 -- 2,875 --------- --------- -------- --------- Income (loss) before income taxes.......................................... 2,614 (12,817) 3,782 (6,421) Provision (benefit) for income taxes.......................................... 1,065 (4,728) 1,513(l) (2,150) --------- --------- -------- --------- Net income (loss)................................ $ 1,549 $ (8,089) $ 2,269 $ (4,271) Financial Ratios and Other Data: Depreciation and amortization.................... $ 5,041 $ 11,635 $ 1,322 $ 17,998 Capital expenditures............................. 3,326 12,862 -- 16,188 Ratio of earnings to fixed charges(n)..................................... 1.7x NM NM -- Adjusted EBITDA(o)............................... 11,330 6,507 10,355 28,192 Ratio of Adjusted EBITDA to interest expense(p)............................ 2.5x Ratio of net debt to Adjusted EBITDA(q)...................................... 3.2
See accompanying Notes to Unaudited Pro Forma Combined Statement of Operations.
ADJUSTMENTS FOR HOWELL ACQUISITION -------------------------------------------- PRO FORMA HOWELL PRO FORMA HOWELL(c) ADJUSTMENTS PRO FORMA(d) COMBINED --------- ----------- ------------ -------- PERIOD MAY 1, 1996 THROUGH YEAR ENDED YEAR ENDED YEAR ENDED APRIL 30, 1997 MARCH 31, 1997 MARCH 31, 1997 MARCH 31, 1997 -------------- -------------- -------------- -------------- Net sales................................... $ 91,543 $ -- $91,543 $ 421,707 Cost of sales............................... 85,477 318 (f) 85,795 391,438 -------- ------- ------- --------- Gross profit................................ 6,066 (318) 5,748 30,269 Selling, general and administrative............................ 4,440 142 (h) 4,582 21,784 Equipment impairment and non-recurring charges..................... -- -- -- 5,247 -------- ------- ------- --------- Operating Income (loss)..................... 1,626 (460) 1,166 3,238 Interest expense............................ 5 2,354 (k) 2,359 13,727 Other Income (expense)...................... 399 -- 399 3,274 -------- ------- ------- --------- Income (loss) before income taxes..................................... 2,020 (2,814) (794) (7,215) Provision (benefit) for income taxes..................................... 710 (1,126)(m) (416) (2,566) -------- ------- ------- --------- Net income (loss)........................... $ 1,310 $(1,688) $ (378) $ (4,649) ======== ======= ======= ========= Financial Ratios and Other Data: Depreciation and amortization............... $ 1,458 $ 460 $ 1,918 $ 19,916 Capital expenditures........................ 3,486 -- 3,486 19,674 Ratio of earnings to fixed charges(n)................................ 16.9x NM NM -- Adjusted EBITDA(o).......................... 3,483 -- 3,483 31,675 Ratio of Adjusted EBITDA to interest expense(p)....................... 2.3x Ratio of net debt to Adjusted EBITDA (q) ............................... 3.6
27 33
ADJUSTMENTS FOR HOWELL ACQUISITION ------------------------------------------------ PRO FORMA COMPANY PRO FORMA COMPANY ADJUSTMENTS PRO FORMA HOWELL ADJUSTMENTS ------------- ----------- --------- ------------ ------------- THREE MONTHS THREE MONTHS THREE MONTHS ENDED ENDED ENDED JUNE 30, 1997 JUNE 30, 1997 JUNE 30, 1997 ------------- ------------- -------------- Net sales $91,960 $91,960 $24,656 $ -- Cost of sales 82,662 82,662 22,327 80 (f) ------- ------- ------- ------- ------ Gross profit 9,298 9,298 2,329 (80) Selling, general and administrative 1,692 $ 92 (r) 1,784 1,135 36 (h) Equipment impairment and non-recurring charges -- -- -- -- -- ------- ------- ------- ------- ------ Operating Income (loss) 7,606 (92) 7,514 1,194 (116) Interest expense 1,798 1,037 (j) 2,835 (19) 588 (k) Other Income (expense) 37 -- 37 296 -- ------- ------- ------- -------- ----- Income (loss) before income taxes 5,845 (1,129) 4,716 1,509 (704) Provision (benefit) for income taxes 2,338 (452) 1,886 524 (282) ------- ------- ------- -------- ----- Net income (loss) $ 3,507 $ (677) $ 2,830 $ 985 $(422) Financial Ratios and Other Data: Depreciation and amortization $ 4,308 $ 92 $ 4,400 $ 384 $ 116 Capital expenditures 3,577 -- 3,577 916 Ratio of earnings to fixed charges (n) 3.6x 151.9x NM Adjusted EBITDA (o) 11,951 -- 11,951 1,874 Ratio of Adjusted EBITDA to interest expense (p) 6.6x Ratio of net debt to Adjusted EBITDA (q) 1.7
HOWELL PRO FORMA PRO FORMA COMBINED -------------- ------------ THREE MONTHS THREE MONTHS ENDED ENDED JUNE 30, 1997 JUNE 30, 1997 ------------- ------------- Net sales $24,656 $116,616 Cost of sales 22,407 105,069 -------- -------- Gross profit 2,249 11,547 Selling, general and administrative 1,171 2,955 Equipment impairment and non-recurring charges -- -- ------- -------- Operating Income (loss) 1,078 8,592 Interest expense 569 3,404 Other Income (expense) 296 333 ------ -------- Income (loss) before income taxes 805 5,521 Provision (benefit) for income taxes 242 2,128 ------ -------- Net income (loss) $ 563 $ 3,393 Financial Ratios and Other Data: Depreciation and amortization $ 500 $ 4,900 Capital expenditures 916 4,493 Ratio of earnings to fixed charges (n) NM 2.4 Adjusted EBITDA (o) 1,874 13,825 Ratio of Adjusted EBITDA to interest expense (p) 4.1x Ratio of net debt to Adjusted EBITDA (q) 1.9
See accompanying Notes to Unaudited Pro Forma Combined Statement of Operations. 28 34 NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS (DOLLARS IN THOUSANDS) (a) Statement of Operations Data for the Company for the year ended March 31, 1997 includes operating data for Lobdell for the period subsequent to acquisition (January 11, 1997 to March 31, 1997). (b) Statement of Operations Data for Lobdell for the period prior to acquisition (April 1, 1996 to January 10, 1997). (c) Represents the adjustments for the Howell acquisition as if it had occurred on April 1, 1996. For purposes of the Unaudited Pro Forma Statement of Operations, it has been assumed that the results of operations of Howell for the twelve months ended April 30, 1997 would have been comparable to the twelve months ended March 31, 1997. The Statement of Operations Data for the twelve months ended April 30, 1997 was derived from Howell's filings with the SEC under the Exchange Act. (d) As the acquisition of Howell has not been completed, the Unaudited Pro Forma Statement of Operations does not include any amount of anticipated cost reductions expected to be implemented by the Company upon the acquisition of Howell. (e) Represents the following cost changes as they relate to cost of sales: Cost savings the Company would have realized from the reduction in direct and indirect hourly and salaried employees in connection with the acquisition of Lobdell. Prior to the acquisition of Lobdell, the Company and Lobdell formulated a plan to reduce the number of employees (the "Workforce Reduction Plan") at Lobdell. Such plan was initially implemented by Lobdell in October 1996 and was continued by the Company subsequent to the acquisition of Lobdell. The Workforce Reduction Plan was a substantive factor in the Company's ultimate decision to acquire Lobdell in addition to its determination of the purchase price. The Company believes the cost savings it has achieved as a result of the Workforce Reduction Plan have been achieved without otherwise effecting or impairing its net sales and believes such cost savings are permanent in nature. This was accomplished by creating more efficient manufacturing and production processes as well as eliminating employees performing duplicate functions. As of the date of acquisition (January 10, 1997), approximately 60% of the employees covered by the Workforce Reduction Plan had been terminated and approximately 90% of the employees covered by the Workforce Reduction Plan had been terminated by January 31, 1997......................... $(6,501) 29 35 In accordance with the purchase method of accounting, the Company recognized Lobdell's unfunded Accumulated Postretirement Benefit Obligation ("APBO"), which included Lobdell's unrecognized transition obligation of approximately $11,500, at January 10, 1997. Accordingly, this adjustment reflects the decrease in net periodic postretirement benefit cost, from April 1, 1996 through January 10, 1997, had Lobdell's unfunded APBO been recognized at the beginning of the fiscal year.............. (564) Increased depreciation expense as a result of the write up of property, plant and equipment to fair market value as a part of the acquisition of Lobdell.......................... 913 ------- $(6,152) ======= (f) Represents increased depreciation expense as a result of the write up of property, plant and equipment to fair market value as a part of the purchase accounting adjustments relating to the acquisition of Howell. (g) Represents the following changes as they relate to selling, general and administrative expenses: Cost savings the Company would have realized from the reduction in selling and administrative staff as a result of the acquisition and the Workforce Reduction Plan. See Note (e).......................................................... $(2,920) Elimination of commissions paid by Lobdell to Grace Emery Sales Corporation ("GESC"), a related Domestic International Sales Corporation. These amounts ultimately represented dividends paid to the prior shareholders of Lobdell. On a pro forma basis, assuming the acquisition of Lobdell on April 1, 1996, GESC was dissolved thereby eliminating the commission payment.......................................... (370) Amortization of bond acquisition fees ...................... 409 ------- $(2,881) ======= (h) Represents amortization of acquisition expenses and goodwill generated by the acquisition. (i) The provision for equipment impairment and non-recurring charges includes: (i) on a pro forma basis, for the year ended March 31, 1997, a $3,000 impairment reserve against certain long-lived assets of Laserweld, a $540 provision for liability under the WARN Act, $500 of excess legal and professional fees associated with the marketing and sale of Lobdell and $1,207 related to the loss before income tax for the discontinuance of the Laserweld and Parallel operations and (ii) for the year ended March 31, 1997, the loss before income tax for the discontinuance of the Laserweld and Parallel operations of $287. Management does not anticipate that these costs will be a part of future operations. (j) Represents the net effect on interest expense as a result of (1) the elimination of historical interest expense after the repayment of the existing senior bank credit facilities and other outstanding debt, using proceeds from the Offering and 30 36 (2) the Offering, using an interest rate of 10.125% per annum. This amount excludes interest on the portion of the proceeds of the Offering used for the Howell acquisition. See Note (k). (k) Represents the net effect on interest expense as a result of the use of proceeds from the Offering for the acquisition of Howell of $23,245. Interest expense is calculated using an interest rate of 10.125% per annum. See Note (j). (l) Represents the estimated income tax effect of the Company's pro forma adjustments using an effective tax rate of 40%. (m) Represents the estimated income tax effect of the Howell pro forma adjustment using an effective rate of 40%. (n) For purposes of this computation, earnings consist of income (loss) before income taxes plus fixed charges. Fixed charges consist of interest on indebtedness plus that portion of rental expense representative of the interest factor. For fiscal 1995, the Company's earnings were insufficient to cover fixed charges by $1.6 million. For the period April 1, 1995 to October 27, 1995, the Company's earnings were insufficient to cover fixed charges by $2.8 million. On a pro forma basis, for the Lobdell acquisition only, for fiscal 1997, earnings were insufficient to cover fixed charges by 6.4 million. On a pro forma basis for the Lobdell and Howell acquisitions for fiscal 1997, earnings were insufficient to cover fixed charges by $5.2 million. (o) Adjusted EBITDA is defined as income (loss) before interest, income taxes, depreciation and amortization and equipment impairment and non-recurring charges. For the fiscal year ended March 31, 1997, equipment impairment and non-recurring charges aggregated $287 and on a pro forma basis, for the fiscal year ended March 31, 1997, equipment impairment and non-recurring charges aggregated $5,247, as described in Note (i) above. Adjusted EBITDA should not be construed as a substitute for income from operations, net income or cash flow from operating activities for the purpose of analyzing the Company's operating performance, financial position and cash flows. (p) Defined as the ratio of Adjusted EBITDA to total interest expense. (q) Ratio of net debt to Adjusted EBITDA with net debt consisting of total debt less cash and cash equivalents and unexpended bond proceeds. (r) Represents amortization of bond acquisition fees ............... $ 92 ===== 31 37 SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA The following table sets forth (i) the selected consolidated historical financial data of the Predecessor for the years ended March 31, 1993 and 1994 which were derived from the audited consolidated financial statements of the Predecessor, (ii) selected consolidated historical financial data of the Predecessor for the year ended March 31, 1995 and the period from April 1, 1995 through October 27, 1995, (iii) selected consolidated historical financial data of the Company from October 28, 1995 through March 31, 1996 and the year ended March 31, 1997, and (iv) selected consolidated historical financial data of the Company for the three months ended June 30, 1996 and 1997. The selected consolidated historical financial data for the year ended March 31, 1995; the period April 1, 1995 through October 27, 1995; and the period October 28, 1995 through March 31, 1996 was derived from the audited consolidated financial statements of the Predecessor and the Company, which are included elsewhere in this Prospectus, together with the report of Deloitte & Touche, independent accountants. The selected consolidated historical financial data for the year ended March 31, 1997 was derived from the audited consolidated financial statements of the Company, which are included elsewhere in this Prospectus, together with the report of Price Waterhouse LLP, independent accountants. The selected consolidated historical financial data for the three months ended June 30, 1996 and 1997 were derived from unaudited interim financial statements which, in the opinion of management, have been prepared on the same basis as the audited financial statements and include all adjustments (all of which are of a normal recurring nature) that are necessary for a fair presentation of the results for the period. The following table should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Pro Forma Combined Financial Data," and the Consolidated Financial Statements of the Company and the related notes and other financial information presented elsewhere in this Prospectus. 32 38
HISTORICAL ---------- PREDECESSOR ---------------------------------------------------- APRIL 1, 1995 - MARCH 31, MARCH 31, MARCH 31, OCTOBER 27, 1993(a) 1994(a) 1995 1995 ---------- ----------- ---------- ------------ (DOLLARS IN THOUSANDS) Statement of Operations Data: Net sales . . . . . . . . . . . . . . . $ 65,169 $ 65,182 $ 75,097 $ 49,043 Gross profit . . . . . . . . . . . . . 5,970 5,955 4,206 2,148 Selling, general and administrative . . . . . . . . . . . 1,889 2,164 4,554 3,922 Equipment impairment and non- recurring charges(b) . . . . . . . . -- -- -- -- -------- ------- ------- -------- Operating income (loss) . . . . . . . . 4,081 3,791 (348) (1,774) Interest expense . . . . . . . . . . . 1,904 1,658 1,267 1,048 Other income (expense) . . . . . . . . -- -- -- -- Income (loss) before income taxes . . . . . . . . . . . . . . . . 2,177 2,133 (1,615) (2,822) Provision (benefit) for income taxes . . . . . . . . . . . . . . . . 56 706 (349) (938) -------- ------- ------- -------- Net income (loss) . . . . . . . . . . . $ 2,121 $ 1,427 $(1,266) $(1,884) ======== ======= ======= ======= Balance Sheet Data (end of period): Cash and cash equivalents . . . . . . . $ 1,683 $ 4,261 $ -- $ -- Accounts receivable . . . . . . . . . . 10,256 7,936 9,835 13,312 Inventories . . . . . . . . . . . . . . 3,205 3,542 4,170 4,429 Total assets . . . . . . . . . . . . . 39,727 36,127 41,523 59,770 Total debt . . . . . . . . . . . . . . 15,595 13,396 12,907 23,233 Redeemable preferred stock . . . . . . -- -- -- -- Total shareholders equity . . . . . . . 12,590 12,406 10,833 9,329 Other Data: Depreciation and amortization . . . . . $ 1,825 $ 1,747 $ 1,413 $ 919 Capital expenditures . . . . . . . . . 870 920 4,384 5,111 Ratio of earnings to fixed charges(d). . . . . . . . . . . . . . 2.1x 2.2x -- -- Adjusted EBITDA(e) . . . . . . . . . . 5,906 5,538 1,065 (855) Gross margin(f) . . . . . . . . . . . . 9.16% 9.14% 5.60% 4.38% Adjusted EBITDA margin(g) . . . . . . . 9.06 8.50 1.42 NM HISTORICAL ---------- COMPANY -------------------------------------------------------- OCTOBER 28, THREE MONTHS 1995 - ENDED JUNE 30 MARCH 31, MARCH 31, ---------------- 1996 1997 1996 1997 ----------- ----------- ---- ---- (DOLLARS IN THOUSANDS) Statement of Operations Data: Net sales . . . . . . . . . . . . . . . $ 35,572 $ 136,861 $ 21,709 $ 91,960 Gross profit . . . . . . . . . . . . . 3,948 11,773 1,257 9,298 Selling, general and administrative . . . . . . . . . . . 2,235 7,685 703 1,692 Equipment impairment and non- recurring charges(b) . . . . . . . . -- 287 -- -- -------- --------- -------- --------- Operating income (loss) . . . . . . . . 1,713 3,801 554 7,606 Interest expense . . . . . . . . . . . 1,096 3,388 592 1,798 Other income (expense) . . . . . . . . -- 2,201 587 37 Income (loss) before income taxes . . . . . . . . . . . . . . . . 617 2,614 549 5,845 Provision (benefit) for income taxes . . . . . . . . . . . . . . . . 202 1,065 220 2,338 -------- --------- -------- --------- Net income (loss) . . . . . . . . . . . $ 415 $ 1,549 $ 329 $ 3,507 ======== ========= ======== ========= Balance Sheet Data (end of period):. . Cash and cash equivalents . . . . . . . $ -- $ 9,671 $ -- $ 58,883 Accounts receivable . . . . . . . . . . 8,338 47,626 11,335 41,511 Inventories . . . . . . . . . . . . . . 3,719 13,411 2,459 14,623 Total assets . . . . . . . . . . . . . 49,200 243,694 50,304 286,653 Total debt . . . . . . . . . . . . . . 26,758 99,829 25,833 142,678 Redeemable preferred stock . . . . . . -- 39,300 -- 39,635 Total shareholders equity . . . . . . . 935(c) 2,341 1,006 5,459 Other Data: Depreciation and amortization . . . . . $ 687 $ 5,041 $ 772 $ 4,308 Capital expenditures . . . . . . . . . 3,466 3,326 1,203 3,577 Ratio of earnings to fixed charges(d). . . . . . . . . . . . . . 1.5x 1.7x 1.8x 3.6x Adjusted EBITDA(e) . . . . . . . . . . 2,400 11,330 1,913 11,951 Gross margin(f) . . . . . . . . . . . . 11.10% 8.60% 5.79% 10.11% Adjusted EBITDA margin(g) . . . . . . . 6.75 8.28 8.81% 13.00%
See Notes to Selected Consolidated Historical Financial Data. 33 39 _______________________________ (a) Reflects the audited financial statements of the Predecessor prepared in accordance with Canadian generally accepted accounting principals, with Canadian dollars being converted to a U.S. dollar equivalent using average Canadian to U.S. foreign currency exchange rates of 1.2326 and 1.3810, respectively, for the periods ended March 31, 1993 and March 31, 1994. (b) This provision includes income before taxes for the discontinuance of Laserweld and Parallel. Management does not anticipate that these costs will be a part of future operations. (c) The reduction in equity of $8.4 million from October 27, 1995 to March 31, 1996, is primarily a result of the elimination of the Predecessor's equity as a part of the purchase accounting adjustments made upon the acquisition of the Predecessor on October 27, 1995. (d) For purposes of this computation, earnings consist of income (loss) before income taxes plus fixed charges. Fixed charges consist of interest on indebtedness plus that portion of rental expense representative of the interest factor. For fiscal 1995, the Company's earnings were insufficient to cover fixed charges by $1.6 million. For the period April 1, 1995 to October 27, 1995, the Company's earnings were insufficient to cover fixed charges by $2.8 million. (e) Adjusted EBITDA is defined as income (loss) before interest, income taxes, depreciation and amortization and equipment impairment and non- recurring charges. For the fiscal year ended March 31, 1997, equipment impairment and non-recurring charges aggregated $0.3 million. Adjusted EBITDA should not be construed as a substitute for income from operations, net income or cash flow from operating activities for the purpose of analyzing the Company's operating performance, financial position and cash flows. (f) Gross margin is defined as gross profit as a percent of net sales for each of the applicable periods. (g) Adjusted EBITDA margin is defined as Adjusted EBITDA as a percent of net sales for each of the applicable periods. 34 40 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The following management's discussion and analysis of financial condition and results of operations should be read in conjunction with the "Pro Forma Combined Financial Data" and the Consolidated Financial Statements of the Company and notes thereto included elsewhere in this Prospectus. The historical information for the fiscal year ended March 31, 1997 includes the Lobdell results of operations for the period subsequent to its acquisition. For comparative purposes, the financial information for the fiscal year ended March 31, 1996 represents the combination of the results of operations for the Predecessor for the period from April 1, 1995 to October 27, 1995 together with the results of operations of the Company from October 28, 1995 through March 31, 1996 (the period subsequent to the acquisition of the Predecessor by the Company). The financial statements of the Predecessor and the Company in the two combined periods are not comparable in certain respects due to differences between the cost basis of certain assets held by the Company versus that of the Predecessor, resulting in reduced depreciation and amortization charges subsequent to October 27, 1995, changes in accounting policies and the recording of certain liabilities at the date of acquisition in connection with the purchase of the Predecessor by the Company. Accordingly, the combination of these two periods does not purport to represent what the results of operations of the Company would have been on a pro forma basis had it acquired the Predecessor on April 1, 1995. The June 30, 1997, financial information includes the results of operations for Lobdell, which was acquired on January 10, 1997 and accounted for using the purchase method of accounting. Therefore, the statement of operations for the three months ended June 30, 1996 does not include the operating results of Lobdell or its subsidiaries. Three Months Ended June 30, 1997 Compared to Three Months Ended June 30, 1996 Net Sales -- Net sales were $92.0 million for three the months ended June 30, 1997, an increase of $70.3 million as compared to $21.7 million for the same period during the prior year. The increase primarily reflects not only the Lobdell acquisition, but also the continued strength of the Company's largest sales segment, SUVs and light trucks. The sales growth was slightly offset by the impact of the GM Pontiac, Michigan truck assembly plant strike. Gross Profit -- Gross profit increased to $9.3 million or 10.1% of net sales for the three months ended June 30, 1997 as compared to $1.3 million or 5.8% of net sales for the prior year. The increase in margins was the result of higher margins on the incremental Lobdell sales as well as extensive cost reduction programs and operational efficiencies implemented since the acquisition of Lobdell. These programs included significant reductions in both hourly and salaried employees, elimination of excessive overtime and premium freight and improvements in material handling, production scheduling, and maintenance programs. Operating Income -- Operating Income increased to $7.6 million or 8.3% of net sales for the three months ended June 30, 1997 as compared to $0.6 million or 2.6% of net sales for the prior year. The increase is a direct result of the Lobdell acquisition and improved gross margin as explained above, the leveraging of administrative costs over a much larger sales base and a focus on efficient management. Net Interest Expense -- Net interest expense was $1.8 million for the three months ended June 30, 1997, an increase of $1.2 million, as compared to $0.6 million for the same period last year. The increase was primarily due to the financing of the Lobdell acquisition on January 10, 1997 ($54.0 million term debt and assumption of additional subsidiary debt) and the effect of the issuance of the Notes on June 24, 1997. While the amount of expense increased from last year, interest expense as a percentage of net sales actually decreased to 2.0% from the prior year's 2.7%. Interest income increased because of the investment of unused Note proceeds after issuance and the inclusion of income on the unexpended IRBs (as defined) proceeds. Net Income -- Net income was $3.5 million for the three months ended June 30, 1997, an increase of $3.2 million as compared to $0.3 million for the same period during the prior year. This is the result of the increased margins on greater net sales and the overall effectiveness of the Company's 35 41 operational, procedural and management policies. Income taxes for each of the three month ending periods were computed using an effective income tax rate of 40%. Adjusted EBITDA -- Adjusted EBITDA was $12.0 million for the three months ended June 30, 1997, an increase of $10.1 million as compared to $1.9 million for the same period during the prior year. The increase reflects the operating income improvements discussed above, combined with the Company's absorption of higher depreciation associated with the Lobdell operations. Including the three months ended June 30, 1997 for Howell, Adjusted EBITDA would increase to $13.8 million. Fiscal Year Ended March 31, 1997 Compared to Fiscal Year Ended March 31, 1996 Net Sales -- Net sales for the year ended March 31, 1997 were $136.9 million, including the net sales of Lobdell from January 10, 1997 (the "Acquisition Date") through March 31, 1997. This was an increase of $52.3 million or 61.8% as compared to net sales for the fiscal year ended March 31, 1996 of $84.6 million. The increase was due principally to the acquisition of Lobdell and was partially offset by lower sales volume due to model changeovers. On a pro forma basis, if Lobdell net sales were included with that of the Company for the entire fiscal year ended March 31, 1997, net sales would have been $330.2 million, an increase of $245.6 million as compared to the prior year, and if Howell net sales were also included for fiscal 1997, net sales would have been $421.7 million, an increase of $337.1 million as compared to the prior year. Gross Profit -- Gross profit was $11.8 million or 8.6% of net sales for the year ended March 31, 1997 as compared to $6.1 million or 7.2% of net sales for the year ended March 31, 1996. This represents an increase of $5.7 million, or 93.4% as compared to the prior year. The increase was primarily a result of higher margins on Lobdell sales for the eighty day period from the Acquisition Date through March 31, 1997. Gross profit also increased due to (i) workforce reductions, (ii) improved materials cost management which resulted in lower raw material costs and (iii) strong sales in the light truck and SUV markets, the Company's largest sales segments and those which produce its highest margins. The increased gross profit was partially offset by costs associated with the production launch of the Saturn Coupe stampings. On a pro forma basis with Lobdell and Howell included for the entire fiscal year, gross profit for the fiscal year ended March 31, 1997 would have been $24.5 million or 7.4% on net sales of $330.2 million and $30.3 million or 7.2% on net sales of $421.7 million, respectively. On a pro forma basis, the Company's gross margin was lower due to operational inefficiencies existing at Lobdell prior to acquisition and lower margins experienced by Howell. Subsequent to the acquisition, actions taken to correct those inefficiencies improved the Company's gross margin as reflected in the historical results for the year ended March 31, 1997 where the acquisition of Lobdell is included only for the period subsequent to the Acquisition Date. Selling, General and Administrative Expenses ("SG&A") -- SG&A expenses were $7.7 million or 5.6% of net sales for the year ended March 31, 1997 as compared to $6.2 million or 7.3% of net sales for the year ended March 31, 1996. The decrease as a percentage of net sales was a result of efficiencies and cost reduction programs undertaken by Company management. Specifically, the reduction in SG&A expenses as a percentage of net sales resulted from a restructuring of the sales and product engineering functions into customer focused business units. Operating Income -- Income from operations was $3.8 million or 2.8% of net sales for the year ended March 31, 1997 as compared to a deficit of $0.1 million for the year ended March 31, 1996. The improvement of $3.9 million was a result of improved gross profit of $5.7 million, partially offset by increased SG&A expenses of $1.5 million. Other Income -- Other income for the year ended March 31, 1997 was $2.2 million or 1.6% of net sales due primarily to foreign currency exchange transactions. No significant other income was earned for the year ended March 31, 1996. Interest Expense -- Interest expense for the year ended March 31, 1997 was $3.4 million or 2.5% of net sales, an increase of $1.3 million over the interest expense for the year ended March 31, 1996. While interest expense for both periods remained constant at 2.5% of net sales, the increase of $1.3 million was a result of variations in base lending rates and additional borrowings resulting from the acquisition of Lobdell. 36 42 Income Tax -- Income tax expense was $1.1 million or 0.8% of net sales for the period ended March 31, 1997 as compared to a benefit of $0.7 million or 0.8% of net sales for the year ended March 31, 1996. The increased income tax expense of $1.8 million is a result of the $4.8 million increase in income before taxes for the year ended March 31, 1997 as compared to the previous year. Net Income -- Net income was $1.5 million or 1.1% of net sales for the year ended March 31, 1997 as compared to a loss of $1.5 million or 1.8% of net sales for the year ended March 31, 1996. The improvement of $3.0 million was a result of improved operating income of $3.9 million and increased other income of $2.2 million. The increase in net income was partially offset by increased interest expense and income taxes of $1.3 million and $1.8 million, respectively. Adjusted EBITDA -- Adjusted EBITDA was $11.3 million or 8.3% of net sales for the year ended March 31, 1997. This represented an increase of $9.8 million over Adjusted EBITDA of $1.5 million or 1.8% of net sales for the year ended March 31, 1996. The increase was a result of: (i) a $5.7 million improvement in gross profit, (ii) an increase in other income of $2.2 million and (iii) $3.4 million in additional depreciation. This increase was partially offset by a $1.5 million increase in SG&A expenses. On a pro forma basis with Lobdell included for the entire fiscal year, Adjusted EBITDA for the year ended March 31, 1997 was $28.2 million or 8.5% of net sales, an increase of $26.7 million as compared to the prior year. On a pro forma basis with Lobdell and Howell included for the entire fiscal year, Adjusted EBITDA for the year ended March 31, 1997 was $31.7 million or 7.5% of net sales, an increase of $30.2 million as compared to the prior year. Fiscal Year Ended March 31, 1996 Compared to Fiscal Year Ended March 31, 1995 Net Sales -- Net sales for the year ended March 31, 1996 were $84.6 million, an increase of $9.5 million or 12.6% from $75.1 million in the year ended March 31, 1995. The increase was due principally to the continued growth of the light truck and SUV market segments, specifically the production launch of the K-truck control arm for GM's full size, four wheel drive light trucks and SUVs. Gross Profit -- Gross profit was $6.1 million, or 7.2% of net sales, for the year ended March 31, 1996 as compared to $4.2 million, or 5.6% of net sales, for the year ended March 31, 1995. This represented an increase of $1.9 million, or 45.2% as compared to the prior year. The increase in gross profit was a result of actions taken by management subsequent to the acquisition of the Predecessor pursuant to which certain manufacturing processes were implemented to improve efficiency in the production of the GM light truck and SUV control arms. The improvement in manufacturing was combined with a reduction in the salary and hourly workforce based upon the implementation of a comprehensive business plan designed to reduce costs. Selling, General and Administrative Expenses -- SG&A expenses were $6.2 million or 7.3% of net sales for the year ended March 31, 1996 as compared to $4.6 million, or 6.1% of net sales, for the year ended March 31, 1995. The increase was a result of the creation of an in-house sales and engineering team dedicated to the development of new business. The Predecessor's sales were primarily handled by a manufacturer's representative firm. Operating Income -- Income from operations was a deficit of $0.1 million for the year ended March 31, 1996 as compared to a deficit of $0.3 million for the year ended March 31, 1995. The improvement of $0.2 million was a result of increased gross profit and continued strong sales of light trucks and SUVs. The increase was partially offset by increased SG&A expenses related to the creation of an in-house sales and engineering group. Interest Expense -- Interest expense was $2.1 million or 2.5% of net sales for the year ended March 31, 1996 as compared to $1.3 million or 1.7% of net sales for the year ended March 31, 1995. The increase of $0.8 million was a result of increased debt related to the acquisition of the Predecessor by the Company. 37 43 Income Tax -- Income tax was a benefit of $0.7 million or 0.8% of net sales for the period ended March 31, 1996 as compared to a benefit of $0.3 million or 0.4% of net sales for the year ended March 31, 1995. The increased benefit of $0.4 million was primarily the result of the increased loss before taxes for the year ended March 31, 1996 and changes in the effective tax rate. Net Income -- The Company had a net loss of $1.5 million or 1.8% of net sales for the period ended March 31, 1996 as compared to a net loss of $1.3 million or 1.7% of net sales for the year ended March 31, 1995. The increased loss of $0.2 million was a result of increased SG&A and interest expense of $1.6 million and $0.8 million, respectively, and was partially offset by improved gross profit. Adjusted EBITDA -- Adjusted EBITDA was $1.5 million or 1.8% of net sales for the year ended March 31, 1996 as compared to $1.1 million, or 1.5% of net sales for the year ended March 31, 1995. The increase of $0.4 million as compared to the prior year was primarily a result of improved gross profit of $1.9 million and $0.2 million in additional depreciation. The increase was partially offset by increased SG&A expenses of $1.6 million. LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL CONDITION Net income adjusted for non-cash charges generated approximately $8.5 million of cash for the year ended March 31, 1997 and $8.1 million for the three months ended June 30, 1997. Offsetting the increase in cash for fiscal 1997 was a net increase in accounts receivable, customer tooling and other noncurrent assets of $7.0 million, a decrease in accrued employee compensation of $6.0 million and other working capital requirements of $3.3 million, resulting in a use of cash from operating activities of $7.8 million for the year ended March 31, 1997. During fiscal 1997, the Company used approximately $12.3 million for investing activities including transaction related expenses incurred in connection with the acquisition of Lobdell and the purchase of property and equipment. These cash requirements were funded by approximately $29.8 million in borrowings. For the three months ended June 30, 1997, cash increased $49.2 million. Excluding the net proceeds of the Notes, cash increased by $11.6 million during the period. The increase was substantially a result of increased net income exclusive of depreciation and amortization, and a level working capital position resulting from decreases in both accounts receivable and trade accounts payable. Cash of $3.5 million was used for capital expenditures during the period, primarily to fulfill existing commitments from the prior year. The Company has $110.0 million available under the Senior Credit Facility. At June 30, 1997, the Company had no borrowings outstanding under this line and $8.5 million in outstanding letters of credit to support the IRBs. During the quarter, the Company received net proceeds from the Notes, after payment of approximately $83.1 million to refinance existing indebtedness and approximately $4.3 million in issuance costs, of $37.6 million. The Company used approximately $23.2 million toward the acquisition of Howell and related expenses. The Company neither incurred nor assumed any indebtedness in addition to the Notes in connection with the acquisition of Howell. The remainder of the proceeds will be used for general corporate purposes, which may include other acquisitions. Capital expenditures were $3.3 million, or 2.4% of net sales for the year ending March 31, 1997 as compared to $8.6 million, or 10.2% of net sales for the year ending March 31, 1996. The decrease of $5.3 million or 61.6%, was due primarily to the timing of capital expenditures relating to major production launches, specifically the production launch of the Saturn Coupe stampings in fiscal 1996. On a pro forma basis including Lobdell for the full year, capital expenditures were $16.2 million or 4.9% of net sales for fiscal 1997 and principally consisted of investments to support new business (primarily the press line for the Saturn Coupe and expansion of K-truck control arm capacity), laser welding equipment, press equipment, safety and maintenance equipment, robotic automation and other productivity improvement expenditures, and other items including computers, welding equipment, vehicles and paint equipment. In addition, on a pro forma basis for Lobdell and the acquisition of Howell the Company would have had capital expenditures of $19.6 million or 4.6% of net sales for fiscal 1997. 38 44 Capital expenditures were $3.5 million, or 3.8% of net sales for the three months ended June 30, 1997 as compared to $1.2 million, or 5.5% of net sales for the three months ended June 30, 1996. The increase was primarily the result of expenditures relating to the final payments on certain laser welding equipment acquired the prior year. For the remainder of fiscal 1998, the Company's capital expenditures are expected to be $16.4 million; consisting of a $6.2 million investment to support new business (primarily the Innovate Program); $3.0 million related to the start up of the Mexican operations; $2.0 million for the purchase of scrap handling systems; $0.7 million for robotic automation upgrades; $1.2 million for press rebuilds; $1.8 million in productivity automation equipment; and $1.5 million in other expenditures including health and maintenance items, welders and water pre-treatment system. The Company has available net operating loss carry forwards at March 31, 1997 and June 30, 1997 for Canadian income taxes. These net operating loss carry forwards have future Canadian tax benefits of approximately $2.9 million. The Canadian net operating losses can be carried forward indefinitely. The Company also has Alternative Minimum Tax Credit carry forwards at March 31, 1997 and June 30, 1997 applicable to U.S. taxes for $3.0 million, which can be carried forward indefinitely. The Company believes that cash generated from operations, together with amounts available under the Senior Credit Facility and unused portions of the proceeds from the Offering, will be adequate to meet its debt service requirements, capital expenditures and working capital needs for the foreseeable future, although no assurance can be given in this regard. The Company's future operating performance and ability to service or refinance the Notes and to extend or refinance its other indebtedness will be subject to future economic conditions and to financial, business and other factors that are beyond the Company's control. 39 45 THE EXCHANGE OFFER Pursuant to the Registration Agreement, the Company agreed (i) to file a registration statement with respect to a registered offer to exchange the Old Notes for the New Notes, which will have terms substantially identical in all material respects to the Old Notes (except that the New Notes will not contain terms with respect to transfer restrictions, registration rights and certain interest rate step-up provisions) within 45 days after the date of original issuance of the Old Notes, and (ii) to use reasonable best efforts to cause such registration statement to become effective under the Securities Act at the earliest possible time but in any event no later than 120 days after issuance of the Old Notes. The interest rate step-up provisions provide that special interest will accrue on the Notes (in addition to the stated interest on the Notes) at a rate of 0.25% per annum during the 90-day period immediately following the occurrence of certain registration defaults relating to the registration of the New Notes, such as the failure of the registration statement with respect to the Exchange Offer not becoming effective within 120 days after the issuance of the Old Notes, and shall increase by 0.25% per annum at the end of each subsequent 90- day period, but in no event shall such rate exceed 1.00% per annum. In the event that applicable law or interpretations of the Staff of the Commission do not permit the Company to file the registration statement containing this Prospectus or to effect the Exchange Offer, or if certain holders of the Old Notes notify the Company that they are prohibited by law or Commission policy from participating in the Exchange Offer, or subject to other restrictions, the Company will use its reasonable best efforts to cause to become effective the shelf registration statement with respect to the resale of the Old Notes and to keep the shelf registration statement effective until the earlier of three years following the date the shelf registration statement is declared effective by the Commission and such time as all the Notes have been sold thereunder. Holders of Old Notes do not have any appraisal or dissenters' rights in connection with the Exchange Offer. TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OLD NOTES Upon the terms and subject to the conditions set forth in this Prospectus and in the accompanying Letter of Transmittal (which together constitute the Exchange Offer), the Company will accept for exchange Old Notes which are properly tendered on or prior to the Expiration Date and not withdrawn as permitted below. As used herein, the term "Expiration Date" means 5:00 p.m., New York City time, on__________________, 1997; provided, however, that if the Company has extended the period of time for which the Exchange Offer is open, which in no event shall be later than _____________________, 1997, the term "Expiration Date" means the latest time and date to which the Exchange Offer is extended. As of the date of this Prospectus, $125.0 million aggregate principal amount of the Old Notes are outstanding. This Prospectus, together with the Letter of Transmittal, is first being sent on or about , 1997 to all holders of Old Notes known to the Company. The Company's obligation to accept Old Notes for exchange pursuant to the Exchange Offer is subject to certain conditions as set forth under "-- Certain Conditions to the Exchange Offer" below. The Company expressly reserves the right, at any time or from time to time, to extend the period of time during which the Exchange Offer is open, and thereby delay acceptance for any exchange of any Old Notes, by giving written notice of such extension to the holders thereof. During any such extension, all Old Notes previously tendered will remain subject to the Exchange Offer and may be accepted for exchange by the Company. Any Old Notes not accepted for exchange for any reason will be returned without expense to the tendering holder thereof as promptly as practicable after the expiration or termination of the Exchange Offer. The Company expressly reserves the right to amend or terminate the Exchange Offer, and not to accept for exchange any Old Notes not theretofore accepted for exchange, upon the occurrence of any of the conditions of the Exchange Offer specified below under "-- Certain Conditions to the Exchange Offer." The Company will give written notice of any extension, amendment, non-acceptance or termination to the holders of the Old Notes as promptly as practicable, such notice in the case of any extension to be issued no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. 40 46 PROCEDURES FOR TENDERING OLD NOTES The tender to the Company of Old Notes by a holder thereof as set forth below and the acceptance thereof by the Company will constitute a binding agreement between the tendering holder and the Company upon the terms and subject to the conditions set forth in this Prospectus and in the accompanying Letter of Transmittal. Except as set forth below, a holder who wishes to tender Old Notes for exchange pursuant to the Exchange Offer must transmit a properly completed and duly executed Letter of Transmittal, including all other documents required by such Letter of Transmittal, to First Trust National Association, (the "Exchange Agent") at one of the addresses set forth below under "Exchange Agent" on or prior to the Expiration Date. In addition, either (i) certificates for such Old Notes must be received by the Exchange Agent along with the Letter of Transmittal, or (ii) a timely confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such Old Notes, if such procedure is available, into the Exchange Agent's account at The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedure for book-entry transfer described below, must be received by the Exchange Agent prior to the Expiration Date, or (iii) the holder must comply with the guaranteed delivery procedures described below. THE METHOD OF DELIVERY OF OLD NOTES, THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY. Any beneficial owner whose Old Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact the registered holder promptly and instruct such registered holder of Old Notes to tender on such beneficial owner's behalf. If such beneficial owner wishes to tender on such owner's own behalf, such owner must, prior to completing and executing the Letter of Transmittal and delivering such owner's Old Notes, either make appropriate arrangements to register ownership of the Old Notes in such owner's name or obtain a properly completed bond power from the registered holder of Old Notes. The transfer of registered ownership may take considerable time and may not be able to be completed prior to the Expiration Date. Signatures on a Letter of Transmittal or a notice of withdrawal, as the case may be, must be guaranteed unless the Old Notes surrendered for exchange pursuant thereto are tendered (i) by a registered holder of the Old Notes who has not completed the box entitled "Special Issuance Instruction" or "Special Delivery Instructions" on the Letter of Transmittal, or (ii) for the account of an Eligible Institution (as defined below). In the event that signatures on a Letter of Transmittal or a notice of withdrawal, as the case may be, are required to be guaranteed, such guarantees must be by a firm which is a member of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc. or by a commercial bank or trust company having an office or correspondent in the United States or an eligible guarantor institution within the meaning of Rule 17Ad-15 under the Exchange Act which is a member of one of the recognized signature guarantee programs identified in the Letter of Transmittal (collectively, "Eligible Institutions"). If Old Notes are registered in the name of a person other than a signer of the Letter of Transmittal, the Old Notes surrendered for exchange must be endorsed by, or be accompanied by a written instrument or instruments of transfer or exchange, in satisfactory form as determined by the Company in its sole discretion, duly executed by, the registered holder with the signature thereon guaranteed by an Eligible Institution. If the Letter of Transmittal or any Old Notes or powers of attorney are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by the Company, proper evidence satisfactory to the Company of their authority to so act must be submitted. All questions as to the validity, form, eligibility (including time of receipt) and acceptance of Old Notes tendered for exchange will be determined by the Company in its sole discretion, which determination shall be final and binding. The Company reserves the absolute right to reject any and all tenders of any particular Old Notes not properly tendered or to not accept any particular Old Notes which acceptance might, in the judgment of the Company or its counsel, be unlawful. The Company also reserves the absolute right to waive any defects or irregularities or conditions of the Exchange Offer as to any particular Old Notes either before or after the Expiration Date (including the right to waive the ineligibility of any holder who 41 47 seeks to tender Old Notes in the Exchange Offer). The interpretation of the terms and conditions of the Exchange Offer as to any particular Old Notes either before or after the Expiration Date (including the Letter of Transmittal and the instructions thereto) by the Company shall be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Old Notes for exchange must be cured within such reasonable period of time as the Company shall determine. Neither the Company, the Exchange Agent nor any other person shall be under any duty to give notification of any defect or irregularity with respect to any tender of Old Notes for exchange, nor shall any of them incur any liability for failure to give such notification. In connection with the tender of the Old Notes, each broker-dealer holder will represent to the Company in writing that, among other things, the New Notes acquired pursuant to the Exchange Offer are being obtained in the ordinary course of business of the holder and any beneficial holder, that neither the holder nor any such beneficial holder has an arrangement or understanding with any person to participate in the distribution of such New Notes and that neither the holder nor any such other person is an "affiliate," as defined under Rule 405 of the Securities Act, of the Company. If the holder is not a broker-dealer, the holder must represent that it is not engaged in nor does it intend to engage in a distribution of the New Notes. ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES For each Old Note accepted for exchange, the holder of such Old Note will receive a New Note having a principal amount equal to that of the surrendered Old Note. For purposes of the Exchange Offer, the Company shall be deemed to have accepted properly tendered Old Notes for exchange when, as and if the Company has given oral and written notice thereof to the Exchange Agent. In all cases, issuance of New Notes for Old Notes that are accepted for exchange pursuant to the Exchange Offer will be made only after timely receipt by the Exchange Agent of certificates for such Old Notes or a timely Book-Entry Confirmation of such Old Notes into the Exchange Agent's account at the Book-Entry Transfer Facility, a properly completed and duly executed Letter of Transmittal and all other required documents. If any tendered Old Notes are not accepted for any reason set forth in the terms and conditions of the Exchange Offer or if Old Notes are submitted for a greater principal amount than the holder desires to exchange, such unaccepted or non-exchanged Old Notes will be returned without expense to the tendering holder thereof (or, in the case of Old Notes tendered by book-entry transfer into the Exchange Agent's account at the Book-Entry Transfer Facility pursuant to the book-entry transfer procedures described below, such non-exchanged Old Notes will be credited to an account maintained with such Book-Entry Transfer Facility) as promptly as practicable after the expiration of the Exchange Offer. BOOK-ENTRY TRANSFER Any financial institution that is a participant in the Book-Entry Transfer Facility's systems may make book-entry delivery of Old Notes by causing the Book-Entry Transfer Facility to transfer such Old Notes into the Exchange Agent's account at the Book-Entry Transfer Facility in accordance with such Book-Entry Transfer Facility's procedures for transfer. However, although delivery of Old Notes may be effected through book-entry transfer at the Book-Entry Transfer Facility, the Letter of Transmittal or facsimile thereof with any required signature guarantees and any other required documents must, in any case, be transmitted to and received by the Exchange Agent at one of the addresses set forth below under "Exchange Agent" on or prior to the Expiration Date or the guaranteed delivery procedures described below must be complied with. GUARANTEED DELIVERY PROCEDURES If a registered holder of the Old Notes desires to tender such Old Notes and the Old Notes are not immediately available, or time will not permit such holder's Old Notes or other required documents to reach the Exchange Agent before the Expiration Date, or the procedure for book- entry transfer cannot be completed on a timely basis, a tender may be effected if (i) the tender is made through an Eligible Institution, and (ii) prior to the Expiration Date, the Exchange Agent received from such Eligible Institution a properly competed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by the 42 48 Company (by telegram, telex, facsimile, mail or hand delivery), setting forth the name and address of the holder of Old Notes and the amount of Old Notes tendered, stating that the tender is being made thereby and guaranteeing that within three New York Stock Exchange ("NYSE") trading days after the Expiration Date, the certificates for all physically tendered Old Notes, in proper form for transfer, or a confirmation of book- entry transfer of such Old Notes into the Exchange Agent's account at the Book-Entry Transfer Facility (a "Book-Entry Confirmation"), as the case may be, a properly completed and duly executed Letter of Transmittal and any other documents required by the Letter of Transmittal will be deposited by the Eligible Institution with the Exchange Agent. WITHDRAWAL RIGHTS Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the business day prior to the Expiration Date. For a withdrawal to be effective, a written notice of withdrawal must be received by the Exchange Agent at one of the addresses set forth below under "Exchange Agent." Any such notice of withdrawal must specify the name of the person having tendered the Old Notes to be withdrawn, identify the Old Notes to be withdrawn (including the principal amount of such Old Notes), and (where certificates for Old Notes have been transmitted) specify the name in which such Old Notes are registered, if different from that of the withdrawing holder. If certificates for Old Notes have been delivered or otherwise identified to the Exchange Agent, then, prior to the release of such certificates, the withdrawing holder must also submit the serial numbers of the particular certificates to be withdrawn and a signed notice of withdrawal with signatures guaranteed by an Eligible Institution unless such holder is an Eligible Institution. If Old Notes have been tendered pursuant to the procedure for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Old Notes and otherwise comply with the procedures of such facility. All questions as to the validity, form and eligibility (including time of receipt) of such notices will be determined by the Company, whose determination shall be final and binding on all parties. Any Old Notes so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the Exchange Offer. Any Old Notes which have been tendered for exchange but which are not exchanged for any reason will be returned to the holder thereof without cost to such holder (or, in the case of Old Notes tendered by book-entry transfer into the Exchange Agent's account at the Book-Entry Transfer Facility pursuant to the book entry transfer described above, such Old Notes will be credited to an account maintained with such Book-Entry Transfer Facility for the Old Notes) as soon as practicable after withdrawal, rejection of tender or termination of the Exchange Offer. Properly withdrawn Old Notes may be retendered by following one of the procedures described under "-- Procedures for Tendering Old Notes" above at any time on or prior to the Expiration Date. CERTAIN CONDITIONS TO THE EXCHANGE OFFER Notwithstanding any other provision of the Exchange Offer, the Company shall not be required to accept for exchange, or to issue New Notes in exchange for, any Old Notes and may terminate or amend the Exchange Offer if, at any time before the acceptance of such Old Notes for exchange or the exchange of New Notes for such Old Notes, the Company determines that the Exchange Offer violates applicable law, any applicable interpretation of the Staff of the Commission or any order of any governmental agency or court of competent jurisdiction. The foregoing conditions are for the sole benefit of the Company and may be asserted by the Company regardless of the circumstances giving rise to any such condition or may be waived by the Company in whole or in part at any time and from time to time in its reasonable discretion. The failure by the Company at any time to exercise any of the foregoing rights shall not be deemed a waiver of such right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. In addition, the Company will not accept for exchange any Old Notes tendered, and no New Notes will be issued in exchange for any such Old Notes, if at such time any stop order shall be threatened or in effect with respect to the Registration Statement of which this Prospectus constitutes a part or the qualification of the Indenture under the Trust Indenture Act of 43 49 1939, as amended (the "TIA"). In any such event the Company is required to use every reasonable effort to obtain the withdrawal of any stop order at the earliest possible time. EXCHANGE AGENT First Trust National Association, has been appointed as the Exchange Agent for the Exchange Offer. All executed Letters of Transmittal should be directed to the Exchange Agent at one of the addresses set forth below. Questions and requests for assistance, requests for additional copies of this Prospectus or of the Letter of Transmittal and requests for Notices of Guaranteed Delivery should be directed to the Exchange Agent addressed as follows. By Hand (New York depository only) By Hand (all others) By Registered, Certified or Overnight Mail: First Trust of New York First Trust National Association First Trust National Association 100 Wall Street, 20th Floor Fourth Floor - Bond Drop Window Attn.: Specialized Finance New York, NY 10005 180 East Fifth Street 180 East Fifth Street Attn.: Cathy Donohue St. Paul, MN 55101 St. Paul, MN 55101 By First Class Mail: By Facsimile: By Telephone First Trust National Association (612) 244-1537 (800) 934-6802 Bondholder Services P.O. Box 64485 (For Eligible Institutions Only) St. Paul, MN 55101
DELIVERY OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. FEES AND EXPENSES The Company will not make any payments to brokers, dealers or others soliciting acceptances of the Exchange Offer. The principal solicitation is being made by mail; however, additional solicitations may be made in person or by telephone by officers and employees of the Company. The expenses to be incurred in connection with the Exchange Offer will be paid by the Company. Such expenses include fees and expenses of the Exchange Agent and Trustee, accounting and legal fees and printing costs, among others. ACCOUNTING TREATMENT The New Notes will be recorded at the same carrying value as the Old Notes, which is the principal amount as reflected in the Company's accounting records on the date of the exchange. Accordingly, no gain or loss for accounting purposes will be recognized. The expenses of the Exchange Offer will be capitalized for accounting purposes. TRANSFER TAXES Holders who tender their Old Notes for exchange will not be obligated to pay any transfer taxes in connection therewith, except that holders who instruct the Company to register New Notes in the name of, or request that Old Notes not tendered or not accepted in the Exchange Offer be returned to, a person other than the registered tendering holder will be responsible for the payment of any applicable transfer tax thereon. CONSEQUENCES OF FAILURE TO EXCHANGE; RESALES OF NEW NOTES Holders of Old Notes who do not exchange their Old Notes for New Notes pursuant to the Exchange Offer will continue to be subject to the restrictions on transfer of such Old Notes as set forth in the legend thereon as a consequence of the issuance 44 50 of the Old Notes pursuant to the exemptions from, or in transactions not subject to, the registration requirements of, the Securities Act and applicable state securities law. Old Notes not exchanged pursuant to the Exchange Offer will continue to accrue interest at 10 1/8% per annum and will otherwise remain outstanding in accordance with their terms. In general, the Old Notes may not be offered or sold unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. The Company does not currently anticipate that it will register the Old Notes under the Securities Act. However if (i) the Initial Purchasers so request with respect to Old Notes held by them following consummation of the Exchange Offer, or (ii) any holder of Old Notes is not eligible to participate in the Exchange Offer because, for example, such holder is an affiliate of the Company, does not acquire the New Notes in the ordinary course of business or has an arrangement to participate in the distribution of the New Notes, or (iii) any holder of Old Notes that participates in the Exchange Offer does not receive freely tradable New Notes in exchange for Old Notes, the Company is obligated to file a shelf registration statement on the appropriate form under the Securities Act relating to the Old Notes held by such persons. Based on certain interpretive letters issued by the staff of the Commission to third parties in unrelated transactions, the Company is of the view that New Notes issued pursuant to the Exchange Offer may be offered for resale, resold or otherwise transferred by holders thereof (other than (i) any such holder which is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act, or (ii) any broker-dealer that purchases Notes from the Company to resell pursuant to Rule 144A or any other available exemption) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such New Notes are acquired in the ordinary course of such holders' business and such holders have no arrangement or understanding with any person to participate in the distribution of such New Notes. If any holder has any arrangement or understanding with respect to the distribution of the New Notes to be acquired pursuant to the Exchange Offer, such holder (i) could not rely on the applicable interpretations of the staff of the Commission, and (ii) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. A broker-dealer who holds Old Notes that were acquired for its own account as a result of market-making or other trading activities may be deemed to be an "underwriter" within the meaning of the Securities Act and must, therefore, deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of New Notes. Each such broker-dealer that receives New Notes for its own account in exchange for Old Notes, where such Old Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge in the Letter of Transmittal that it will deliver a prospectus in connection with any resale of such New Notes. See "Plan of Distribution." In addition, to comply with the securities laws of certain jurisdictions, if applicable, the New Notes may not be offered or sold unless they have been registered or qualified for sale in such jurisdiction or an exemption from registration or qualification is available and is complied with. The Company has agreed, pursuant to the Registration Agreement and subject to certain specified limitations therein, to register or qualify the New Notes for offer or sale under the securities or blue sky laws of such jurisdictions as any holder of the Notes reasonably requests in writing. BUSINESS GENERAL The Company is a leading Tier 1or direct supplier of high-quality, engineered metal components, assemblies and modules used by OEMs. The Company's core products are complex, high value-added products, primarily assemblies containing multiple stamped parts and various welded, hemmed or fastened components. These products which range from large structural stampings and assemblies, including exposed Class A surfaces, to smaller complex welded assemblies, are used in manufacturing of a variety of SUVs, light and medium trucks, mini-vans, vans and passenger cars. The Company is the sole source supplier of these products to its customers. On a pro forma basis, assuming the acquisition of Lobdell had occurred on April 1, 1996, the Company would have had net sales of $330.2 million and Adjusted EBITDA of $28.2 million (adjusted for non- recurring items) for the fiscal year ended March 31, 1997. On a pro forma basis for the fiscal year ended March 31, 1997, assuming the acquisitions of Lobdell and Howell had occurred on April 1, 1996, net sales and Adjusted EBITDA for the Company would have been $421.7 million and $31.7 million, respectively. The Company had net sales of $92.0 million and 45 51 Adjusted EBITDA of $12.0 million for the three months ended June 30, 1997. On a pro forma basis, assuming the acquisition of Howell had occurred on April 1, 1997, the Company would have had net sales of $116.6 million and Adjusted EBITDA of $13.8 million for the three months ended June 30, 1997. Based on pro forma net sales of $330.2 million, management believes the Company is one of the ten largest suppliers of stampings to the North American automotive market. The Company's four largest customers, GM, Ford, CAMI and Saturn, accounted for approximately 56.0%, 33.0%, 3.0%, and 2.8%, respectively, of the Company's net sales for the fiscal year ended March 31, 1997, on a pro forma basis for the Lobdell acquisition, and 55.4%, 31.0%, 2.7%, and 2.8%, respectively, of the Company's net sales for the three months ended June 30, 1997. The Company has been providing products directly to GM and Ford for more than 50 years and has earned outstanding commercial ratings for its high-quality standards, including GM's Supplier of the Year and Mark of Excellence Awards, Ford's Q1 Award, and CAMI's President's Award. The Company also sells its products to other Tier 1 suppliers. For the fiscal year ended March 31, 1997, approximately 72.0% of the Company's net sales, on a pro forma basis, were derived from sales of its products manufactured for SUVs, mini-vans, vans and light trucks. For the three months ended June 30, 1997, approximately 73.0% of the Company's net sales were derived from sales in this sector. In recent years, SUVs, mini-vans, vans and light trucks have experienced stronger growth in vehicle production as compared to the passenger car sector, with a CAGR from 1991 to 1996 of approximately 8.7% as compared to (0.1%) for the passenger car sector. This sector includes those platforms and models which have strong consumer demand, such as GM's popular C/K platform (full-size pickups and the Yukon/Tahoe/Suburban models) and the Ford Ranger, Explorer and Windstar. See Note 15 of the Oxford Automotive, Inc. Notes to Consolidated Financial Statements for a description of the Company's domestic and export sales. Prior to the acquisition of Howell, the Company conducted its business through two principal operations, BMG and Lobdell. Since acquiring BMG in October 1995, management of the Company has implemented significant cost reductions and achieved manufacturing efficiencies, including manpower reductions consisting of 49 salaried positions (121 to 72) and 78 hourly employees (570 to 492) and improved materials cost management, which includes purchasing cost savings, reduction of scrap and inventory costs, and improved scheduling of production. These actions resulted in a $4.6 million improvement in Adjusted EBITDA from the fiscal year ended March 31, 1996 to the fiscal year ended March 31, 1997. The same strategy utilized at BMG was implemented at Lobdell immediately following its acquisition in January 1997. Since its acquisition of Lobdell, the Company has achieved cost reductions totaling $13.6 million on an annual basis. In addition to the cost reductions, the Company has been able to implement a number of manufacturing policies that have improved productivity and quality, notwithstanding overall staff reductions. The strategic combination of BMG, Lobdell, and Howell significantly strengthens the Company's position as a leading Tier 1 supplier of assemblies and modules to the OEMs. This combination provides the Company with the critical mass and capabilities in the areas of design and engineering, sales and marketing, and product expertise which provide the basis for the Company's strategy of becoming a fully-integrated, global systems supplier. The Company has already implemented a successful, focused sales and marketing initiative, which commenced concurrently with the operational improvements at BMG. As a result, the Company has been awarded the door assemblies and the side panel package for the Innovate Program. Management believes these awards from Saturn will generate approximately $60.0 million of annual net sales beginning with the 1999 model year. The Company currently operates ten manufacturing facilities which offer the latest technologies in metal stamping, welding and assembly production equipment, including fully-automated hydraulic and wide-bed press lines (up to 180 inches), robotic welding cells, robotic hemming and autophoretic corrosion resistant coating. Since 1992, the Company has invested in excess of $93.0 million in capital investments to support sales growth, expand production capabilities and improve efficiency and flexibility. The Company's diverse line of over 300 presses that range up to 2,500 tons and state-of-the-art robotic weld assembly and hemming equipment are capable of manufacturing a broad assortment of parts and assemblies ranging from simple stampings to full-size, Class A door and closure panels. The Company is one of a few independent suppliers that has the ability to produce large, complex stampings, as well as the technical expertise and automated assembly capabilities that provide high value-added modules such as door apertures and assemblies, A-pillars, Class A surface products and control arms. 46 52 BUSINESS STRATEGY The principal objective of the Company is to be a leading, full-service, global Tier 1 supplier of integrated systems based on metal forming and related manufacturing technologies. Management believes that the Company is well positioned to benefit from two significant trends in the stamping and metal forming segments of the automotive industry: outsourcing and consolidation. Outsourcing of metal stamping has increased in response to competitive pressures on OEMs to improve quality and reduce capital requirements, labor costs, overhead and inventory. Consolidation among automotive industry suppliers has occurred as OEMs have more frequently awarded long-term sole source contracts to the most capable global suppliers. In addition, OEMs are increasingly seeking systems suppliers who can provide a complete package of design, engineering, manufacturing and project management support for an integrated system (such as a front-end system). The Company intends to capitalize on these trends through internal development and strategic acquisitions. The key elements of the Company's strategy include the following: Provide Full-Service Program Capability. The Company is focused on developing full-service program capabilities. The Company works with OEMs throughout the product development process from concept and prototype development through the design and implementation of manufacturing processes. The Company believes that its ability to provide the package of design, engineering, prototyping, tooling, blanking, stamping, assembly, corrosion resistant coating and custom shipping rack fabrication to its customers creates a unique capability present in only a limited number of suppliers. The Company believes this capability will enable it to manage large programs, assist it in reducing customer program launch time, lower customer costs and increase its margins. Supply Complex, High Value-Added Systems. As a result of the Company's technical design and engineering capabilities and its reputation for highly-efficient manufacturing operations, the Company is able to secure supply relationships for complex, high value-added products, primarily assemblies and modules that contain multiple stamped parts and various welded, hemmed or fastened components. For example, the Company produces the rear door for GM's Yukon/Tahoe/Suburban vehicles, the lower control arm for GM's four wheel drive C/K vehicles, the control arm assemblies for Ford's F-Series pickups and Chrysler's T-300, the radiator support assembly for GM's W-car (Grand Prix, Century, Lumina, Monte Carlo and Intrigue), and complex A-pillar assemblies for the Ford Mustang and the Ford Ranger pickup. These complex products typically generate higher dollar content per vehicle as well as higher margins for the Company as compared to simple, individual stampings. The Company plans to capitalize on its ability to develop and provide integrated modules and assemblies to deliver to the OEMs an integrated product such as a complete door or front-end system. In addition to doors, radiator supports and Class A surface components, the Company believes it has unique expertise with respect to control arms, which will be further developed as a component part of the entire drive control system. Focus on High Growth Vehicle Categories. The Company's sales and marketing efforts have been, and will continue to be, directed toward sectors of the automotive market that have experienced strong consumer demand. For the fiscal year ended March 31, 1997, approximately 72.0% of the Company's net sales on a pro forma basis for the acquisition of Lobdell were derived from sales of products manufactured for SUVs, mini-vans, vans and light trucks. For the three months ended June 30, 1997, approximately 73.0% of the Company's net sales were derived from sales in this sector. The SUV market alone has been the fastest growing segment in the North American new automotive sales market with 1991 to 1996 vehicle production growth at a CAGR of approximately 18.3%. Similarly, the Company's sales to the passenger car market have been, and will continue to be, directed to the segments with stronger sales growth, including Saturn cars. For example, the growth in vehicle production in the passenger car sector has been flat during the past five years while production of Saturn cars grew from 1992 to 1996 at a CAGR of approximately 9.2%. Establish a Global Presence. The Company is actively pursuing strategic acquisitions and joint-venture opportunities in Europe and intends to pursue opportunities which will allow the Company to establish a presence in South America, Asia and other markets in order to serve its customers on a global basis. Several OEMs have announced certain models designed for the World Car. As a result, the OEMs have encouraged their existing suppliers to establish foreign production support for 47 53 World Car programs. This globalization provides access to new customers and technology, as well as economic cycle diversification. At the request of GM de Mexico, the Company is in the process of establishing a presence in Mexico. By October 1, 1997, the Company expects to begin manufacturing and assembling components for business recently awarded by GM de Mexico at the Company's leased facility in Saltillo, Mexico. The Company expects to have a new leased facility in Silao, Mexico operational by February 1, 1998. Pursue Strategic Acquisitions. In response to the trend in the OEM market toward "systems suppliers," the Company is focused on making strategic acquisitions that will enhance the Company's ability to provide integrated systems (such as a door or front end systems) or otherwise leverage its existing business by providing additional product, manufacturing and service capabilities. The Company also intends to pursue acquisitions which will expand its customer base by providing an entree to new customers, including the North American operations of Asian and European based OEMs. Consistent with this strategy, the recent acquisition of Howell provides an entree to Chrysler. The Company believes that the continuing supplier consolidation in the stamping and metal forming segments may also provide attractive opportunities to acquire high- quality companies at favorable prices, including businesses which can be improved financially through overhead elimination, organizational restructuring, plant reconfiguration, labor contract negotiations and management changes. The Company will also pursue acquisitions that enable it to achieve a global presence. RECENT DEVELOPMENTS On August 13, 1997, the Company acquired Howell pursuant to the Merger Agreement. Howell is a Tier 1 manufacturer of high-quality welded subassemblies and detailed stampings used primarily in suspension system applications in the production of SUVs, light trucks, mini-vans, vans and passenger cars. Pursuant to the Merger Agreement, the shareholders of Howell received approximately $23.2 million in cash. Pursuant to the terms of a supplement to the Indenture, dated as of August 13, 1997, Howell, a Restricted Subsidiary as defined in the Indenture, became an additional Subsidiary Guarantor. For the nine months ended April 30, 1997, Howell had net sales of $72.4 million and Adjusted EBITDA of $4.2 million. Howell's net sales have grown from $39.4 million for the fiscal year ended July 31, 1992 to $79.2 million for the fiscal year ended July 31, 1996. On a pro forma basis for fiscal 1997, assuming the acquisitions of Lobdell and Howell had occurred on April 1, 1996, net sales and Adjusted EBITDA for the Company would have been $421.7 million and $31.7 million, respectively. On a pro forma basis for the three months ended June 30, 1997, net sales and Adjusted EBITDA for the Company would have been $116.6 million and $13.8 million, respectively. The acquisition of Howell is consistent with the strategic objectives of the Company. Howell has a significant relationship with Chrysler and has developed a niche in designing, engineering and manufacturing suspension control arms in a variety of configurations and variations depending on drive-train and suspension application. Approximately 54.0% of Howell's net sales for the nine months ended April 30, 1997, were derived from acquisitions products used in the control arm suspension applications. On a pro forma basis assuming the acquisitions of Lobdell and Howell had occurred on April 1, 1996, the Company would have derived approximately 23.0% of its net sales from suspension applications for fiscal 1997. Howell's expertise in this area is complementary to the Company's and will enhance its ability to develop key suspension system components. Further, Howell's sales are principally in the high-growth vehicle categories of SUVs, light trucks, mini-vans and vans, the same market targeted by the Company. The acquisition of Howell has also provided the Company an entree to Chrysler and will strengthen the Company's existing relationship with Ford. Sales to Chrysler and Ford represented 47.0% and 53.0%, respectively, of Howell's net sales for the nine months ended April 30, 1997. On a pro forma basis for fiscal 1997, including the full year effect of Lobdell and Howell, (i) the SUV, mini-van, van and light truck segment represented approximately 75.0% of net sales and (ii) the Company's net sales by major customers would have been approximately as follows: GM 44.0%; Ford 37.0%; Chrysler 11.0%; CAMI 2.0%, and Saturn 2.0%. On a pro forma basis for the three months ended June 30, 1997, assuming the acquisition of Howell had occurred April 1 1997, (i) the SUV, mini-van and light truck 48 54 segment represented approximately 78.2% of net sales and (ii) the Company's net sales by major customers would have been approximately as follows: GM 43.9%, Ford 36.2%, Chrysler 9.5%, CAMI 2.1%, and Saturn 2.2%. Howell's two manufacturing facilities, located in Masury, Ohio and Lapeer, Michigan, have received Chrysler's Gold Pentastar Award for the 1996 model year and Ford's Q1 rating. In addition, Howell has achieved certification as a registrant under the QS-9000 program for its facilities. INDUSTRY TRENDS The OEM market to which the Company sells its products consists of the design, engineering, development, production and sale of parts, components, assemblies and modules or systems (several components assembled together) for use in the manufacture of new motor vehicles. The Company's performance, growth and strategic plan are directly related to certain trends within the OEM market. Since the 1980s, Chrysler, Ford and GM have each been substantially reducing the number of suppliers that may bid for awards and outsourcing an increasing percentage of their production requirements. As a result of these trends, the OEMs are focusing on the development of long-term, sole source relationships with suppliers who can provide more complex parts, as well as complete subassemblies and modules on a just-in-time basis while at the same time meeting strict quality requirements. These requirements are accelerating the trend toward consolidation of the OEMs supplier base as those suppliers who lack the capital and production expertise to meet the OEMs needs, either cease to operate or are merged with larger suppliers. OEMs benefit from outsourcing because outside suppliers generally have significantly lower cost structures and, as described below, suppliers can assist in shortening development periods for new products. In addition to consolidation and outsourcing, suppliers are participating earlier in the design and engineering process, providing research, as well as product development, product testing/validation, prototyping and tooling. OEMs generally expect Tier 1 suppliers to (i) participate in the design and engineering of complex assemblies, (ii) develop the required manufacturing process to deliver these assemblies on a just-in-time basis, and (iii) assume responsibility for quality control. This results in shorter development times for new products, as well as higher quality and lower parts costs. While the focus today by the OEMs is on quality, cost and service, the Company believes that the focus for the future will be on global capabilities, innovation and ability to provide value-added products and systems. The OEMs have been very successful in making high-quality and low cost a minimum requirement to remain in the industry, as opposed to a competitive advantage for certain suppliers. These evolving requirements can best be addressed by suppliers with sufficient resources to meet such demands. For full-service suppliers such as the Company, this environment provides an opportunity to grow by obtaining business previously provided by other suppliers who can no longer meet the current or future requirements and expectations of the OEMs and by acquisitions that further enhance product manufacturing and service capabilities. Although the requirements of the OEMs have already resulted in significant consolidation of component suppliers in many product segments, the Company believes that many opportunities exist for further consolidation within the Company's stamping and metal forming segment. PRODUCTS The Company generates the majority of its net sales from large, complex, high value-added products, primarily assemblies that generally consist of multiple parts, which the Company stamps and combines with various welded or fastened components. The Company is the sole source supplier of these complex modules and assemblies. These products include unexposed components and assemblies that are intrinsic to the structural integrity of the vehicle such as A-pillars, radiator supports, floor pans, toe-to-dash panels, frame and suspension components and reinforcements. In addition to unexposed components and assemblies, the Company has the capability and expertise to produce Class A surfaces such as door assemblies, door apertures, rocker panels, fuel filler doors, and box side outers, which require virtually flawless finishes and more stringent customer requirements than unexposed assemblies. These products require superior engineering and automated manufacturing and assembly capabilities due to their complexity and high volume requirements. 49 55 While the Company has the capability to produce small stampings, such as brackets and braces, it focuses on more complex and larger components and assemblies which typically generate higher dollar content per vehicle as well as higher margins for the Company. These assemblies, such as the A, B and C pillars, control arms, door assemblies, door apertures, deck lids and radiator supports require larger, high tonnage, wide-bed, fully-automated press capabilities, complex automated weld and hemming assembly, autophoretic corrosion resistant coating, machining, and automated assembly of purchased components. The Company was recently awarded the door assembly and side panel packages for the Innovate Program that are expected to generate approximately $60.0 million per annum in net sales over a four to five year model life cycle beginning in 1999. In addition, the Company has been awarded approximately $3.4 million in new business from GM de Mexico providing blanks and assembling floor assemblies. The floor assemblies program commenced in September and the Company expects to begin providing blanks starting in the fourth quarter of fiscal 1998. In addition to these products and services, the Company designs, fabricates, paints and assembles custom shipping containers and racks for the automotive industry. These custom racks and containers are typically designed for specific components and assemblies and are sold both to OEMs as well as Tier 1 and Tier 2 suppliers. Rack sales for fiscal 1997 were approximately $7.8 million on a pro forma basis for the acquisition of Lobdell. Rack sales for the three months ended June 30, 1997 were approximately $0.5 million. The chart below details by major customer the Company's major products, the type of vehicle and the model/platform for which they are produced:
CUSTOMER COMPONENT TYPE MODEL/PLATFORM -------- --------- ---- -------------- General Motors Door Assemblies Sport Utility Suburban/Yukon/Tahoe Door Apertures Suburban/Yukon/Tahoe Rocker Panels Suburban/Yukon/Tahoe Lower Control Arms Suburban/Yukon/Tahoe Door Apertures Light Trucks C/K Full Size Crewcab Pickup Lower Control Arms C/K Full Size Four Wheel Drive Rocker Panels C/K Full Size Crewcab Pickup A-Pillar Inners Mini-Vans Safari/Astro Struts Safari/Astro Lower Control Arms Safari/Astro Toe-to-Dash Panel Medium Duty Commercial Chassis Floor Assembly Kodiak Fuel Straps Kodiak Raised Roof Panel Kodiak Radiator Supports Passenger Grand Prix, Regal, Intrigue, Monte Carlo, Lumina Floor Panels Corvette/EVI Wheel Houses EVI Door Beams Grand Am, Achieva Sun Roof Assembly Malibu, Cutlass Saturn Deck Lid Passenger Sport Coupe Pillar Reinforcement Sport Coupe Inner Door Panel Sport Coupe Window Frame Reinforcement Sport Coupe Body Side Inners Innovate (1999 Launch) Door Assemblies Innovate (1999 Launch) Shelf Panel Innovate (1999 Launch) Wheel House Inner Innovate (1999 Launch)
50 56 Ford Rear Floor Reinforcement Sport Utility Explorer/Mountaineer Reinforced Center Body Pillar Explorer/Mountaineer Rear Seat Back/Floor Assembly Explorer/Mountaineer B-Pillar Assembly Explorer/Mountaineer Control Arms Expedition/Navigator A-Pillar Assemblies Light Trucks Ranger/Mazda Upper/Lower Back Panels Ranger/Mazda Back Panel Inside Upper Ranger/Mazda Roof Panel Assembly Ranger/Mazda Windshield Header Ranger/Mazda Box Side Outers Mazda Control Arms F-Series Load Floors F-Series (250/350 Supercab) Rear Floor Cargo Vans/Mini-Vans Windstar Assemblies Dash Panels Windstar Rear Crossmembers Econoline Cowl Side Windstar/Econoline/Aerostar Radiator Supports Windstar (1999 Model) Roof Rails Econoline A-Pillar Inners Econoline Floor Pans Econoline/Windstar Shock Towers Econoline Fuel Filler Doors Econoline Ford Control Arms-Front Passenger Cars Contour/Mystique/Mondeo & Rear (Europe) Rear Suspension Bar Contour/Mystique/Mondeo Assembly (Europe) A-Pillar Assemblies Mustang/Thunderbird/Cougar/ Mark VIII Pillar Inners Town Car Frame Rails Mustang CAMI Rear Bumper Sport Utility Geo Tracker/Suzuki Sidekick Side Frame Member Geo Tracker/Suzuki Sidekick (Front/Rear) Door Inner Reinforcement Geo Tracker/Suzuki Sidekick Floor Bar Geo Tracker/Suzuki Sidekick Various Underbody Geo Tracker/Suzuki Sidekick Components Rear Cross Members Passenger Cars Geo Metro/Suzuki Swift Side Sill Geo Metro/Suzuki Swift Dash Panel Geo Metro/Suzuki Swift Chrysler Control Arms Sport Utility Jeep Cherokee Control Arms Light Trucks T-300
The Company has received purchase orders for production commencing after the current model year, which production typically continues through the products lifecycle and is subject to the volume requirements of customers, for the following major products: (i) the new Saturn Innovate Program, which management believes will generate approximately $60.0 million of annual net sales beginning with the 1999 model year; and (ii) the 1999 Ford Windstar-radiator support, which management believes will generate approximately $7.2 million of annual net sales. DESIGN AND ADVANCED ENGINEERING The Company strives to maintain a technological advantage through investment in product development and advanced engineering capabilities that utilize structured program management techniques in an effort to exceed the customer's expectations for value and service. The Company's engineering staff encompasses such disciplines as program 51 57 management, computer aided design ("CAD"), advanced engineering, manufacturing feasibility, and tooling and process development. Responsibilities of the Company's engineers include (i) design, (ii) initial prototype development, (iii) design and implementation of manufacturing processes, (iv) production feasibility and improvement, and (v) data management. As the Company's customers continue to outsource larger assembled systems which must be designed at earlier stages of vehicle development rather than the smaller parts which are attached to them, the Company is increasingly required to utilize advanced engineering resources early in the planning process. Advanced engineering resources create improved engineering design, CAD feasibility studies, working prototypes and testing programs to meet customer specifications. Given this increased demand for early involvement in the design and engineering aspects of production development, the Company established a new technical center which houses its engineering and design group. The Company utilizes structured program management based on the Automotive Industry Action Group sanctioned Advanced Part Quality Planning principles to ensure part quality in all phases of design and manufacturing. The Company has established a data management and CAD department which is able to support all major customer systems. The Company provides "gray box" engineering capabilities in which the customer has principal design responsibility while the Company's engineers work closely with the customer in designing the specifications of the product material, the part to be produced and the tooling required to produce the finished product. The Company is also on-line with all major customers which accelerates the process of design changes. The Company's design and advanced engineering expertise is an important differentiating factor in maintaining its relationships with and obtaining new business from Ford and GM and, in management's judgment, was an essential factor in winning the Innovate Program business. CUSTOMERS AND MARKETING The Company supplies its products on a long-term preferred and sole source basis, primarily to GM (56.0%), Ford (33.0%), CAMI (3.0%), and Saturn (2.8%) (percentages are approximates of net sales for the fiscal year ended as of March 31, 1997 on a pro forma basis for the Lobdell acquisition), with the remaining net sales comprised of sales primarily to other automotive suppliers. Through the acquisition of Howell, Chrysler has also become a significant customer of the Company. The Company has been providing products directly to GM and Ford for more than 50 years. The Company has been shipping products to GM de Mexico from its operations in the United States for several years, and during 1997, at the request of GM de Mexico, the Company will begin manufacturing and assembling components for GM de Mexico from facilities to be established in Mexico. The Company believes its presence in Mexico is strategically important and may lead to several significant new opportunities with GM de Mexico and other OEMs doing business in Mexico. The Company maintains very strong relationships with its customers and continually strives to exceed customer expectations and anticipate customer needs. This approach has enabled the Company to maintain its status as a long-term supplier with each of its major customers and as part of a limited group of preferred suppliers invited to bid for platform work. With the efforts by the OEMs to reduce the product development cycle time, top suppliers are increasingly included in the early design and development stages. For example, the Company obtains many of its new orders through a presourcing process by which the customer invites one or a few preferred suppliers to manufacture and design a component, assembly or module that meets certain price, timing and functional parameters. Upon selection at the development stage, the Company and the customer typically agree to cooperate in developing the product to meet the specified parameters. Upon completion of the development stage and the award of the manufacturing business, the Company receives a blanket purchase order for those components, assemblies or modules for the life of a vehicle model or platform, which typically range from five to seven years. Consequently, the key success factors for OEM suppliers now include total program management that encompasses state-of-the-art design, manufacture and delivery of high quality products at competitive prices. The Company believes that the advanced engineering and sales organization at the Company's technical center offers services few other suppliers have available for their customers. The group's primary activities are: (i) Quoting/Cost 52 58 Estimating; (ii) Assembly/Automation; (iii) CAD Design and Data Control; (iv) Tool Process/Design; and (v) Program Management. The sales group is divided into customer oriented business units, each with a business unit manager responsible for all facets of customer needs, as well as strategies for growing their particular customer base. The entire group is dedicated to advanced technical development and servicing a multitude of customers' needs as one team. MANUFACTURING AND FACILITIES The Company's corporate headquarters, engineering, technical center and sales offices are currently located in Bloomfield Hills, a suburb of Detroit, Michigan, close to its core of automotive customers. The Company's ten manufacturing plants are strategically located in Michigan, Ohio, Indiana, Tennessee, and Ontario, Canada near OEM manufacturing sites. These manufacturing plants aggregate approximately 2.1 million square feet in size and are all Company-owned. In addition, the Company currently leases and intends to lease additional manufacturing and assembly facilities in Mexico in connection with the recent award of business from GM de Mexico. The Company operates over 300 presses ranging from under 100 ton to 2,500 ton capabilities. The Company is capable of producing components and assemblies from the smallest brackets to full-size, Class A door and closure panels with its unique wide-bed (180 inch), automated press lines. Production systems include oil feeders, welding robots, pick and place robots and other state-of-the-art automation, as well as autophoretic corrosion resistant coating systems. As OEMs have increased quality standards and implemented just-in-time and sequenced delivery/inventory management methods, the consistency of quality, as well as the timeliness and reliability of shipments by OEM suppliers, have become crucial in meeting logistical demands of the OEMs and reducing operating costs of the supplier. The Company has responded by developing and adopting manufacturing practices that seek to maximize quality and eliminate waste and inefficiency in its own operations and in those of its customers. The Company's manufacturing and engineering capabilities enable it to design and build high-quality, efficient manufacturing systems, processes and equipment. The Company has invested heavily in its commitment to quality through education of employees and implementation of cost management and control systems from the plant floor up. All suppliers are required to meet numerous quality standards in order to qualify as a preferred and long-term supplier to the OEM's. The QS-9000 standards were developed by international and domestic automobile and truck manufacturers to ensure that their suppliers meet consistent quality standards that can be independently audited. The QS-9000 standards provided for the standardization and documentation of a suppliers's policies and procedures to improve supplier efficiencies. Ford, GM and Chrysler require that all suppliers be certified QS-9000 by the end of 1997 and the Company is scheduled to meet that requirement. In addition to the QS-9000 standard, each OEM maintains its own certification or award system for preferred suppliers based on the supplier's demonstrated quality, delivery and certain commercial considerations. Ford requires that all suppliers receive its Q1 rating in order to quote for new business. GM's Supplier of the Year Award provides certain competitive advantages to the recipients but is not a requirement for current GM suppliers to bid on new business. Chrysler allows suppliers who have received its Gold Pentastar Award to retain any current business when it is replaced by a new model without competitive bidding. Other OEM's maintain various award programs for their suppliers that recognize outstanding performance by the supplier. The Company has received Chrysler's Gold Pentastar Award for each of its facilities that have Chrysler as a customer. The Company has the Q1 rating from Ford at 6 of the 7 plants that have Ford as a customer. Since the acquisition of Lobdell, the Company has initiated steps necessary to obtain the Q1 rating at the seventh plant, which management expects to obtain by November 1997. As part of its full-service supplier development program, the Company is also undergoing the process of becoming certified by Ford as a Full-Service Supplier. This certification process, conducted by Ford, ensures that a Full-Service Supplier meets various Ford requirements relating to quality standards. The Company expects to be certified by Ford during 1997. A summary of the Company's major facilities is set forth below:
SIZE FACILITY (SQ. FT.) EXPERTISE PRIMARY PRODUCTS - -------- --------- --------- ---------------- Alma, Michigan 389,000 Class A surfaces, large Radiator Supports, stampings and complex A-Pillars, Floor Pans, Frame stampings and assemblies Rails, Deck Lids Argos, Indiana 386,000 Class A surfaces, large Door Assemblies, Apertures, panels, complex stampings Floor Panels, Roofs,
53 59 and assemblies A-Pillars Corydon, Indiana 200,000 Difficult draw forming Radiator Supports, and complex stampings A-Pillars, Cowl Sides and assemblies Greencastle, 214,000 Large stampings, complex Radiator Supports, Indiana stampings and A-Pillars, Seat Backs, assemblies, Control Arms autophoretic corrosion resistant coating Winchester, 185,000 High strength, low-alloy Rocker Panels, various Indiana material, deep draw structural components forming and complex stampings and assemblies Cambridge, 290,000 Complex assemblies and Radiator Supports, Ontario large stampings Control Arms, Door Inners, A-Pillars Delhi, Ontario 115,000 High strength, low-alloy Rocker Panels, Control material, complex Arms, Cross Members stampings and assemblies Athens, Tennessee 100,000 Welding, painting and Structural steel assembly shipping racks and containers Masury, Ohio 150,000 Complex assemblies and Control Arms, Cross stampings Members, various structural components Lapeer, Michigan 85,000 Complex assemblies and Control Arms, Cross stampings Members, various structural components Bloomfield Hills, Executive Offices, Michigan(1) Sales, Marketing and Advanced Engineering
_________________ (1) All properties above are owned, with the exception of the Bloomfield Hills office. This office is leased for a five-year term ending July 31, 2000 and requires a monthly rent of $8,580. The Company expects to relocate its Executive, Sales, Marketing and Engineering Staffs to approximately 22,700 square feet of office space located in Troy, Michigan. This office will be leased for a five-year term commencing when certain leasehold improvements are completed and will require a monthly rent of $23,646. The Company expects to complete this relocation by November 1997. In addition, certain of the Company's management staff is located at leased office space in Southfield, Michigan. RAW MATERIALS The cost of raw materials represented approximately 53.0% of net sales of the Company for the fiscal year ended March 31, 1997 on a pro forma basis for the Lobdell acquisition and approximately 51.8% of net sales of the Company for the three months ended June 30, 1997. On an annual basis, steel represents approximately 77.0% of total raw materials purchases. The Company expects to purchase nearly 378,000 tons of steel in fiscal 1998 for use in its production. The remaining 23.0% of raw materials purchases is represented by various purchased parts such as forgings, bushings, ball joints, isolators, corrosion resistant coating, and various fasteners. The Company participates in steel purchase programs through Ford, GM and Chrysler wherein the steel is purchased by the OEM from the steel mill and sold to the Company at a negotiated price. These purchase programs effectively neutralize the exposure to steel price increases, as any price increases from the steel mills are either absorbed by the OEM prior to the Company's purchase of the steel or such increases are reflected in the Company's purchase of the steel and passed back to the OEM in the product pricing. The Company currently participates in such a steel purchase program with Ford and Chrysler for substantially all of its Ford and Chrysler steel requirements and its Canadian operations participate in such a program with GM. The Company expects that substantially all of its additional GM steel requirements, which are currently covered by 54 60 annual steel contracts that expire upon the consummation of the GM steel purchase program, will be covered by the GM steel purchase program by December 1997. COMPETITION The market for the Company's products is characterized by strong competition from both captive OEM suppliers and external, non-captive suppliers. The Company competes with a limited number of competitors that have the physical assets and technical resources to produce large bed stampings, complex parts and subassemblies of multiple parts. The Company's largest competitors include The Budd Company, a subsidiary of Thyssen AG; Magna International Inc.; Tower Automotive, Inc.; Aetna Industries, Inc.; Ogihara America Corp., a subsidiary of Marubeni Corp.; Midway Products Corporation; Active Tool & Manufacturing Co., Inc.; A.G. Simpson Automotive, Inc.; Mayflower Vehicle Systems Inc.; L&W Engineering; National Automotive Radiator Manufacturing Company; and divisions of OEMs with internal stamping and assembly operations. The Company competes for business at the beginning of the development for new model platforms, as well as the redesign of current models. This process can begin from two to five years prior to the introduction of the new model. After the customer awards a program, that supplier is generally designated as the sole source supplier for the life of that program, which typically lasts 4 to 5 years for passenger cars and up to 10 years for trucks (particularly for unexposed structural components and assemblies). EMPLOYEES At August 30, 1997, the Company employed approximately 2,600 persons in the United States and Canada, approximately 560 of whom are employed on a salaried basis and the balance of whom are hourly employees. Substantially all of the hourly employees are represented by unions. In the United States, substantially all of the Company's hourly workers are represented by the UAW, USW and Teamsters through collective bargaining agreements with eight local unions. These individual agreements which are from three to five years in length expire over the period March 1998 through September 2000. The agreement with the UAW for the Argos, Indiana facility is currently scheduled to expire on March 31, 1998 and the Company expects to enter into early negotiations regarding the UAW contract at the Argos plant. As of June 30, 1997, substantially all of the Company's hourly Canadian employees were represented by the CAW. The Company recently negotiated a new agreement with the CAW for the Cambridge, Ontario facility which is scheduled to expire on September 30, 2000. The Company has not experienced any organized work stoppages at any time during the past ten years. At the present time, the Company believes that its relations with its employees are good. REGULATORY MATTERS The Company's facilities and operations are subject to a wide variety of federal, state, local, and foreign environmental laws, regulations, and ordinances, including those related to air emissions, wastewater discharges, and chemical and hazardous waste management and disposal ("Environmental Laws"). The Company's operations also are governed by laws relating to workplace safety and worker health, primarily the Occupational Safety and Health Act, and foreign counterparts to such laws. In many jurisdictions, these laws are complex and change frequently. The nature of the Company's operations exposes it to risks of liabilities or claims with respect to environmental and worker health and safety matters. At March 31, 1997, the Company has a liability of approximately $880,000 recorded for estimated costs of known environmental matters. There can be no assurance that material costs will not be incurred in connection with such liabilities or claims. See Note 14 to Oxford Automotive, Inc. Notes to Consolidated Financial Statements. Based on the Company's experience to date, the Company believes that the future cost of compliance with existing Environmental Laws (or liability for known environmental claims) will not have a material adverse effect on the Company's 55 61 business, financial condition or results of operations. However, future events, such as changes in existing Environmental Laws or their interpretation, may give rise to additional compliance costs or liabilities that could have a material adverse effect on the Company's business, financial condition or results of operations. Compliance with more stringent Environmental Laws, as well as more vigorous enforcement policies of regulatory agencies or stricter or different interpretations of existing Environmental Laws, may require additional expenditures by the Company that may be material. Certain Environmental Laws hold current owners or operators of land or businesses liable for their own and for previous owners' or operators' releases of hazardous or toxic substances, materials or wastes, pollutants or contaminants, including petroleum and petroleum products ("Hazardous Substances"). Certain laws, including but not limited to CERCLA, may impose joint and several liability on responsible parties. Because of the Company's operations, the long history of industrial uses at some of its facilities, the operations of predecessor owners or operators of certain of the businesses, and the use, production, and releases of Hazardous Substances at these sites, the Company is affected by such liability provisions of the Environmental Laws. Several of the Company's facilities have experienced some level of regulatory scrutiny in the past and are or may be subject to further regulatory inspections, future requests for investigation or liability for past disposal practices. The Company's Alma, Michigan plant is listed on the Michigan Department of Environmental Quality ("MDEQ") list of Michigan Sites of Environmental Contamination. Based on filings with the MDEQ by the current owner of the petroleum refinery which adjoins the Alma Plant property, the refinery has been determined by the MDEQ to be the source of certain contamination existing in the eastern area of the Alma plant property. While the Company is currently conducting certain remedial activity at its Alma plant in connection with this contamination, the Company may have claims against the refinery owner relating to this contamination. While the Company does not expect to incur significant future costs in connection with this matter, the Company cannot guarantee that such future costs will not be material. The Resource Conservation and Recovery Act and the regulations thereunder ("RCRA") regulates the generation, treatment and disposal of hazardous wastes. In the mid-1980s, the Company, through Lobdell, entered into a Consent Agreement and Final Order with the United States Environmental Protection Agency (the "EPA") relating to the final closure of a surface water impoundment area at the Alma plant under RCRA. The Company has remediated the impoundment soils and sediments and is now implementing a groundwater monitoring program with EPA approval under RCRA. In addition, the Company is conducting groundwater monitoring in a separate section of the Alma plant at which contaminants have been detected by the Company's consultants. Both of these programs may be affected by the suspected contamination from the petroleum refinery described above. While future groundwater remediation costs, if any, are not expected to be material, the Company cannot predict such costs with certainty and no guarantee can be made that these costs will not be material. The Company has been named as a potentially responsible party, along with several other companies, in connection with a former disposal facility located in the St. Louis, Michigan area. The Company and certain other named parties, in cooperation with the State of Michigan, currently are undertaking a remedy for which they are sharing costs. Groundwater at the site is currently being monitored and while the costs of groundwater remediation, if any, are not expected to be material, the Company cannot accurately estimate such costs at this time. See "Risk Factors -- Environmental Risks and -- Legal Proceedings." LEGAL PROCEEDINGS In June 1994, Wilkie Brothers Conveyors, Inc. ("Wilkie") filed a civil action against Howell in the Michigan Circuit Court for the County of St. Clair to recover past and future response costs and for declaratory relief in connection with alleged environmental contamination at a plant formerly owned by Howell in Marysville, Michigan. Howell sold the plant to plaintiff in 1984. In September 1995, the City of Marysville filed a civil action against Howell and Wilkie in the Michigan Circuit Court for the County of St. Clair to require Howell and Wilkie to take certain clean-up and remediation actions in connection with contamination at the plant. In 1996, Howell agreed to pay $575,000 in settlement of the litigation relating to this facility, subject to governmental approvals. The Company has been advised that the settlement has been approved and the required consent decree will be filed prior to September 30, 1997. 56 62 The Company is also subject to various claims, lawsuits and administrative proceedings related to matters arising in the normal course of business. In the opinion of management, after reviewing the information which is currently available with respect to such matters and consulting with legal counsel, any liability which may ultimately be incurred with respect to these matters will not materially affect the financial position of the Company. MANAGEMENT DIRECTORS AND EXECUTIVE OFFICERS The following table sets forth the name, age and position of each of the directors and executive officers of Oxford Automotive. Each director of Oxford Automotive will hold office until the next annual meeting of shareholders or until his successor has been elected and qualified. Officers of Oxford Automotive serve at the discretion of the Board of Directors.
NAME AGE POSITIONS ---- --- --------- Selwyn Isakow................ 45 Chairman of the Board of Directors Rex E. Schlaybaugh, Jr....... 48 Vice Chairman of the Board of Directors and Secretary Steven M. Abelman............. 46 Director, President and Chief Executive Officer Manfred J. Walt............... 44 Director Donald C. Campion............. 49 Senior Vice President-Chief Financial Officer Larry C. Cornwall............. 50 Senior Vice President-Sales and Engineering John H. Ferguson.............. 49 Vice President-Financial Operations and Assistant Secretary
Selwyn Isakow, Chairman of the Board of Directors. Mr. Isakow has been the President and a director of Oxford Automotive since its inception in 1995 and was appointed Chairman of the Board in May 1997. Since 1985, Mr. Isakow has been the President of The Oxford Investment Group, Inc. ("Oxford Investment"), a private investment and corporate development company that acquires majority equity positions on behalf of its principals in industrial products manufacturing, financial services, niche distribution and other selected companies. Mr. Isakow generally serves as Chairman of the Board and a director of all such portfolio companies. Mr. Isakow is also a director of Champion Enterprises, Inc. and Ramco Gershenson Properties Trust, and serves on the boards of numerous community organizations. From 1982 to 1985, Mr. Isakow was the Executive Vice President of Comerica Incorporated, a regional bank holding company, and from 1978 to 1982, was a principal at Booz, Allen and Hamilton, management consultants. Rex E. Schlaybaugh, Jr., Vice Chairman of the Board of Directors and Secretary. Mr. Schlaybaugh has been the Secretary and a director of Oxford Automotive since its inception in 1995 and was appointed Vice Chairman of the Board in May 1997. Mr. Schlaybaugh was appointed the Vice Chairman of Oxford Investment in May 1997. Mr. Schlaybaugh has been a member of the firm of Dykema Gossett PLLC since 1985. Mr. Schlaybaugh is also a director of certain other portfolio companies of Oxford Investment. Mr. Schlaybaugh is currently the Chairman of the Board of Trustees of Oakland University. Steven M. Abelman, Director, President and Chief Executive Officer. Mr. Abelman was appointed President and Chief Executive Officer of Oxford Automotive in May 1997. Prior to joining Oxford Automotive, Mr. Abelman was Deputy Chief 57 63 Executive Officer of Bundy North America ("Bundy"), an automotive supplier of brake and fuel delivery systems, from February 1996 until May 1997 and prior to that he was President of Bundy from September 1995 until February 1996. From December 1991 to September 1995, Mr. Abelman was Vice President and General Manager of Augat Wiring Systems, a manufacturer of automotive wiring systems and components. Manfred J. Walt, Director. Mr. Walt has been a director of Oxford Automotive since May 1997. Mr. Walt has been the Managing Partner-Financial Services of the Edper Group Limited ("Edper"), a diversified Canadian Merchant Bank with operations in natural resources, power generating, financial services and real estate, since 1989. From 1980 to 1989, Mr. Walt served in various capacities with Edper. Mr. Walt is the Chairman of Consolidated Canadian Express Limited and Consolidated Enfield Limited, merchant banking affiliates of Edper. Donald C. Campion, Senior Vice President-Chief Financial Officer. Mr. Campion was appointed Senior Vice President- Chief Financial Officer of Oxford Automotive in July 1997. From June 1996 to March 1997, Mr. Campion was the Senior Vice President and Chief Financial Officer at Delco Electronics Corporation. From November 1993 to May 1996, Mr. Campion was the Chief Financial Officer for the services parts division of GM, and from August 1992 to October 1993 was the Financial Director of Performance Analysis for the North American Operations of GM. Larry C. Cornwall, Senior Vice President-Sales and Engineering. Mr. Cornwall was appointed Vice President-Sales and Engineering of Oxford Automotive in May 1997. From October 1995 to May 1997, Mr. Cornwall was the Senior Vice President-Sales and Engineering at BMG. From 1991 to 1995, Mr. Cornwall was Vice President of Sales and Engineering at Veltri International, an automotive stamper. John H. Ferguson, Vice President-Financial Operations and Assistant Secretary. Mr. Ferguson was appointed as a Vice President-Financial Operations and Assistant Secretary of Oxford Automotive in May 1997. Mr. Ferguson is also the Chief Financial Officer of BMG, a position he has held since April 1996. Prior to that time, Mr. Ferguson was with Bundy, where he acted as Group Plant Manager from 1994 to 1996 and as Corporate Controller from 1992 to 1994. From 1984 to 1992, Mr. Ferguson held several positions with GenCorp. Inc., an automotive tire supplier, including Controller of the Automotive Products Group. Certain of the officers and directors of Oxford Automotive are also directors or officers of Oxford Automotive subsidiaries. BOARD COMMITTEES In the past, the Company has not maintained any committees of the Board of Directors. On August 4, 1997, the Board of Directors established an Audit Committee and a Compensation Committee. The Audit Committee will be responsible for reviewing with management the financial controls and accounting and reporting activities of the Company. The Audit Committee will review the qualifications of the Company's independent auditors, make recommendations to the Board of Directors regarding the selection of independent auditors, review the scope, fees and results of any audit and review non-audit services and related fees. The Audit Committee consists of Messrs. Schlaybaugh and Walt. The Compensation Committee will be responsible for the administration of all salary and incentive compensation plans for the officers and key employees of the Company, including bonuses. Salaries and bonuses will be reviewed by the Compensation Committee and will be adjusted in light of performance of the Company, the responsibilities of each of the Company's officers in meeting corporate performance objectives and other factors, such as length of service and subjective assessments. The Compensation Committee consists of Messrs. Isakow and Walt. DIRECTOR COMPENSATION AND ARRANGEMENTS 58 64 Directors do not currently receive compensation for their services as directors. However, the Company intends to pay fees to its non-employee directors and to reimburse the out-of-pocket expenses related to directors' attendance at each Board and committee meeting. In addition, the Company may elect to adopt a non-employee director option plan or other similar plan to provide for grants of stock options or other benefits as a means of attracting and retaining highly qualified independent directors for the Company. Members of the Board of Directors are elected pursuant to certain shareholder agreements by and among the Company and certain of its shareholders. See "Principal Shareholders -- Shareholder Agreements." COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The Company did not have a Compensation Committee prior to August 4, 1997. Accordingly, all determinations with respect to executive compensation were made by the Board of Directors. Pursuant to the terms of the Indenture, the Company is not permitted to enter into any transaction (including employee compensation arrangements) with any Affiliate (as defined) unless the transaction is arm's length and, if the transaction involves amounts in excess of $1 million in any one year, the terms of the transaction are set forth in writing and approved by a majority of the disinterested members of the Board of Directors. For similar transactions in excess of $5 million in any one year, an opinion of a recognized investment banking firm that such transaction is fair, from a financial standpoint, is also required. See "Description of the Notes -- Certain Covenants." During the last completed fiscal year, Messrs. Isakow and Schlaybaugh participated in deliberations of the Company's Board of Directors concerning executive officers compensation. See "Certain Transactions." EXECUTIVE COMPENSATION The following table sets forth certain information as to the compensation earned by the Company's Chief Executive Officer and the Company's four other most highly paid officers (the "Named Executive Officers") for the last three fiscal years. SUMMARY COMPENSATION TABLE ANNUAL COMPENSATION(1)
OTHER ANNUAL ALL OTHER NAME AND TITLE YEAR SALARY BONUS COMPENSATION COMPENSATION -------------- ---- ------ ----- ------------ ------------ Selwyn Isakow, Chairman(2).... 1997 $ ---- $ ---- $ ---- $ ---- Donald C. Campion, Senior Vice President-Chief Financial Officer (3)........ 1997 ---- ---- ---- ---- Larry C. Cornwall, Senior Vice President-Sales and Engineering (4).......... 1997 124,196 ---- ---- ---- 1996 31,504 24,200 John H. Ferguson, Vice President-Financial Operations and Assistant Secretary (5).. 1997 101,250 ---- ---- ----
- ---------- (1) The Company was formed in October 1995 and, other than as disclosed in the table above, executive officers of the Company have not received any compensation. 59 65 (2) Mr. Isakow was the President of the Company from its inception until May 1997, during which time he did not receive any compensation from the Company. Steven M. Abelman was appointed President and Chief Executive Officer in May 1997. See "-- Employment Agreements." (3) Mr. Campion was appointed Senior Vice President-Chief Financial Officer of Oxford Automotive in July 1997. See "--Employment Agreements." (4) Mr. Cornwall joined the Company in October 1995 and received compensation from the Company for a full fiscal year only in 1997. (5) Mr. Ferguson joined the Company in April 1996 and thus did not receive compensation from the Company for the full 1997 fiscal year. EMPLOYMENT AGREEMENTS As of May 1, 1997, Oxford Automotive and Steven M. Abelman entered into an Employment and Noncompetition Agreement. The agreement provides that Mr. Abelman will serve as President and Chief Executive Officer of Oxford Automotive on an "at-will" basis. The agreement provides that Mr. Abelman will receive an annual salary of $250,000, will be eligible to receive a bonus of up to 60% of his salary as determined by the Board of Directors of Oxford Automotive, and will be entitled to certain fringe benefits. Mr. Abelman has also agreed not to compete with the Company during the period of his employment and for two years following the termination of his employment. Upon the termination of his employment without cause, Mr. Abelman is entitled to severance payments equal to (a) his annual base salary, if such termination is prior to May 1, 1999 or (b) 1.5 times his annual base salary, if such termination is after May 1, 1999. On November 24, 1995, BMG and Larry C. Cornwall entered into an Employment Agreement. The agreement provides that Mr. Cornwall will serve as Senior Vice President-Sales and Marketing of BMG on an "at-will" basis. Mr. Cornwall has subsequently been appointed as Senior Vice President-Sales and Engineering of Oxford Automotive. The agreement provides that Mr. Cornwall will receive an annual salary of $120,000, will be eligible to receive a bonus of up to 50% of his salary as determined by the Board of Directors of BMG, will be eligible to participate in the Company's profit sharing plan, and will be entitled to certain fringe benefits. Upon the termination of the agreement, Mr. Cornwall will be entitled to continue to receive his base salary for the longer of three months or the Canadian statutory requirement. As of July 21, 1997, Oxford Automotive and Donald C. Campion entered into an Employment and Noncompetition Agreement. The agreement provides that Mr. Campion will serve as Senior Vice President-Chief Financial Officer of Oxford Automotive on an "at-will" basis. The agreement provides that Mr. Campion will receive an annual salary of $210,000, will be eligible to receive a bonus of up to 50% of his salary as determined by the Board of Directors of Oxford Automotive, and will be entitled to certain fringe benefits. Mr. Campion has also agreed not to compete with the Company during the period of his employment and for two years following the termination of his employment. Upon termination of his employment without cause, Mr. Campion is entitled to a severance payment of 50% of his annual base salary, payable over six months, plus the continuation of certain benefits during this six-month period. See also "Certain Transactions -- Management Agreements." PRINCIPAL SHAREHOLDERS As of August 31, 1997, there were 309,750 issued and outstanding shares of the Common Stock, without par value, of the Company (the "Common Stock"). The following table sets forth information as of August 31, 1997 with respect to the Common Stock beneficially owned by each director of the Company, the Named Executive Officers, all directors and executive officers of the Company as a group, and by other holders known to the Company as having beneficial ownership 60 66 of more than 5% of the Common Stock. Selwyn Isakow and the Company's other shareholders have entered into certain agreements, each of which contain substantially identical terms, the result of which gives Mr. Isakow voting control of 100% of the Company's Common Stock, except under certain circumstances. See "-- Shareholder Agreements." Unless otherwise specified, the address for each person is 2000 North Woodward Avenue, Suite 130, Bloomfield Hills, Michigan 48304.
NUMBER PERCENT NAME AND ADDRESS OF BENEFICIAL OF OF OWNER SHARES CLASS ----- ------ ----- Selwyn Isakow (1) . . . . . . . . . 151,474 48.9% Robert H. Orley . . . . . . . . . . 23,180 7.5% Rex E. Schlaybaugh, Jr. . . . . . . 12,900 4.2% Steven M. Abelman (2) . . . . . . . 12,326 4.0% 2365 Franklin Road Bloomfield Hills, MI 48203 Manfred J. Walt . . . . . . . . . . 1,500 * Suite 4440 BCE Place 181 Bay Street Toronto, Ontario, Canada M5J 2T3 Donald C. Campion (2) . . . . . . 4,000 1.3% 2365 Franklin Road Bloomfield Hills, MI 48203 John H. Ferguson . . . . . . . . . 6,180 2.0% 2365 Franklin Road Bloomfield Hills, MI 48203 Larry C. Cornwall . . . . . . . . . 7,000 2.3% 2365 Franklin Road Bloomfield Hills, MI 48203 Gregg L. Orley . . . . . . . . . . 21,840 7.1% All directors and officers as a group (7 persons) (1)(2). . . . . 195,380 63.1%
- ------------------------------ *Less than 1.0% (1) Includes 135,874 shares owned by Hilsel Investment Company Limited Partnership, of which Tridec Management, Inc. is General Partner. Mr. Isakow is the President and a shareholder of Tridec Management, Inc. In addition, Mr. Isakow may be deemed to be the beneficial owner of all of the outstanding shares of Common Stock as a result of certain voting power over such shares pursuant to the shareholder agreements described below and certain purchase options that may be exercised by Mr. Isakow with respect to 60,470 outstanding shares of Common Stock. 61 67 (2) Each of Mr. Abelman's and Mr. Campion's Employment and Noncompetition Agreement with Oxford Automotive provides Oxford Automotive with the right to repurchase their respective shares of Common Stock if their employment is terminated for any reason. SHAREHOLDER AGREEMENTS Each holder of Common Stock is a party to a shareholder agreement which provides for certain restrictions on transfer by shareholders and grants certain other shareholders the option to purchase the shares of a shareholder upon his death. Each surviving shareholder has the right to exercise this option within 30 days of the death of a shareholder. The exercising shareholders will divide the deceased shareholder's shares as they agree or, if they are not able to agree, pro rata. If the exercising shareholders are not able to agree on a purchase price with the estate of the deceased shareholder, then the per share purchase price shall be the per share value of the Company based on the greater of the value of the Company as a going concern or on a liquidation basis, as determined by an independent appraisal. The purchase price shall be paid by an initial cash payment of up to 20% of the purchase price with the balance paid pursuant to a five-year, unsecured promissory note bearing interest at the prime rate. The agreements also provide that each shareholder will grant a proxy to Mr. Isakow to vote all of the shareholder's shares at any meeting of the Company; provided, however, that if holders of shares having a majority in interest of the shares of Common Stock determine that it is in the best interest of all of the shareholders to sell all or substantially all of the assets of the Company or to cause the Company to merge or consolidate with or into another corporation, Mr. Isakow shall exercise the proxies provided to him consistent with that decision. As a result, except as described above, Mr. Isakow has voting control of 100% of the Company's Common Stock. CERTAIN TRANSACTIONS MANAGEMENT AGREEMENTS Oxford Investment is a private investment and corporate development company which is controlled by Mr. Isakow. At the time the Company acquired Lobdell, Oxford Investment and Lobdell entered into an agreement (the "Lobdell Agreement") whereby Oxford Investment agreed to perform various consulting, management, and advisory services on behalf of Lobdell with respect to all matters relating to or affecting Lobdell's business. Lobdell paid Oxford Investment an investment banking fee of $300,000 on the date the Company acquired Lobdell and paid Oxford Investment a management fee of $300,000 per year. This agreement was terminated upon completion of the Offering. At the time the Company acquired BMG, Oxford Investment and BMG entered into an agreement (the "BMG Agreement") whereby Oxford Investment agreed to perform certain management services for BMG. BMG paid Oxford Investment an investment banking fee of $200,000 on the date the Company acquired BMG and paid Oxford Investment a management fee of $200,000 per year. This agreement was also terminated upon completion of the Offering. Mr. Schlaybaugh is the Vice Chairman of Oxford Investment. The Company entered into a new management agreement with Oxford Investment upon the termination of the Lobdell Agreement and the BMG Agreement. Pursuant to the terms of this management agreement, Oxford Investment will perform various consulting, management and financial advisory services on behalf of the Company. The Company will pay Oxford Investment a monthly management fee of $83,334 and will pay an investment banking fee, for acquisitions of $2.5 million or more, of 1.0% or 1.25% (for acquisitions outside of North America) of the aggregate acquisition cost for advice and assistance in connection with such acquisition, with a minimum fee of $200,000. No investment banking fee will be paid to Oxford Investment in connection with acquisitions for aggregate consideration of less than $2.5 million. The initial term of the agreement will end on December 31, 2001, but will automatically extend for additional one-year periods thereafter unless either party terminates the agreement. In addition, pursuant to the management agreement, Oxford Investment will license to the Company the name "Oxford Automotive" which is owned by Oxford Investment. 62 68 OTHER TRANSACTIONS As of March 31, 1997, Mr. Abelman issued a note to the Company in connection with his acquisition of shares of the Company's Common Stock. The principal amount of the note was $130,000 and the note bears interest at the prime rate plus 1.0%, which rate is adjusted on March 31 of each year to reflect the then current prime rate. Principal and interest on the note is payable in equal annual installments with interest on the unpaid principal, with the final payment due May 31, 2002. As of March 31, 1997, the Company issued a subordinated demand note to Mr. Robert H. Orley in connection with the redemption of certain shares of the Company's Common Stock. The principal amount of the note was $108,203 and was paid in full subsequent to March 31, 1997. RPI, Inc. ("RPI"), a Michigan corporation controlled by the shareholders of the Company, issued demand notes to Lobdell in the principal amounts of $250,000, $100,000, $150,000, $200,000, and $300,000, respectively, on May 2, 1997, May 21, 1997, June 6, 1997, June 30, 1997, and July 11, 1997, each bearing interest at the prime rate plus 1.0% per annum. The notes were issued in connection with ongoing discussions between RPI and the Company regarding a possible merger or other similar transaction pursuant to which RPI has agreed to deal exclusively with the Company and its affiliates until December 31, 1997. The Company has no immediate plans to demand payment under these notes. The Company has agreed to extend credit to RPI up to a maximum of $1.7 million, including the notes referenced above, in accordance with the restrictions on affiliate transactions set forth in the Indenture. LEGAL Rex E. Schlaybaugh, Jr. is a shareholder, the Vice Chairman of the Board and a director of the Company. Dykema Gossett PLLC, of which Mr. Schlaybaugh is a member, has performed legal services for the Company since its inception, including services performed in connection with this Offering. The Company expects to continue to retain the firm as general counsel after the Exchange Offer. DESCRIPTION OF CERTAIN INDEBTEDNESS AND PREFERRED STOCK SENIOR CREDIT FACILITY General. In connection with the Offering, on June 24, 1997, the Company entered into a credit agreement with NBD Bank, on behalf of itself and as agent for a syndicate of other lenders, providing for up to $110.0 million (the "Commitment Amount") of revolving credit availability including the issuance of letters of credit (the "Senior Credit Facility"). The Company and each principal operating subsidiary (the "Senior Credit Obligors") are parties to or guarantors of the Senior Credit Facility. The obligations under the Senior Credit Facility (the "Obligations") are secured by a first lien on substantially all the assets of the Senior Credit Obligors. The Obligations and guaranties of the Senior Credit Obligors (the "Senior Credit Guaranties") will rank senior to all other indebtedness of the Company, including the Notes. Availability under the revolver at June 30, 1997 was approximately $101.0 million, reduced for the effect of a Letter of Credit issued for the IRB's (as defined). Funds under the Senior Credit Facility are available for general corporate purposes (including acquisitions) and letters of credit. Interest Rates. Interest on outstanding borrowings under the Senior Credit Facility is payable monthly and accrues at an annual rate equal to (a) the Applicable Margin (as defined in the Senior Credit Facility) plus either (i) the higher of the Prime Rate (as defined in the Senior Credit Facility) or 0.5% over the Federal Funds Rate or (ii) with respect to Canadian based borrowings, the higher of the prime rate of First Chicago NBD Bank, Canada or 0.5% over the BA Rate (the one month bankers' acceptance rates, as further defined in the Senior Credit Facility), or (b) the London Interbank Offered Rate plus 63 69 the Applicable Margin (a "LIBOR-based Rate") or, with respect to Canadian based borrowings, the BA Rate. The Applicable Margin will be based upon the Company's trailing four quarter Ratio of Total Debt to EBITDA (as defined in the Senior Credit Facility) as follows:
RATIO OF TOTAL APPLICABLE FUNDED MARGIN DEBT TO EBITDA PRIME/LIBOR -------------- ----------------- > 5.00 .75% / 2.25% 4.51 -- 5.00 .50% / 2.00% 3.76 -- 4.50 .25% / 1.75% 3.01 -- 3.75 0% / 1.50% <= 3.00 0% / 1.25%
Maturity and Optional Prepayments. All borrowings under the Senior Credit Facility mature in June 2003, and the aggregate principal amount outstanding may not exceed the Commitment Amount at any time. Borrowings under the Senior Credit Facility may be prepaid at any time without premium or penalty, except that any prepayment of a LIBOR-based Rate loan that is made prior to the end of the applicable interest period shall be subject to reimbursement of breakage costs. Covenants. The Senior Credit Facility contains certain customary covenants, including without limitation, reporting and other affirmative covenants; financial covenants including: ratios of total debt to EBITDA beginning at not greater than 5.50 to 1.00 and decreasing to not greater than 4.50 to 1.00 after June 30, 1999; net worth of not less than $35.4 million plus a percentage of the Company's net income plus any proceeds from the issuance of capital stock; fixed charge coverage ratio beginning at not less than 1.45 to 1.00 and increasing to not less than 1.60 to 1.00 after March 31, 1998; and interest coverage ratio beginning at not less than 2.00 to 1.00 and increasing to not less than 2.25 to 1.00 after March 31, 1999 (each as defined in and calculated pursuant to the Senior Credit Facility); and negative covenants, including: restrictions on incurrence of indebtedness (other than as provided for in the Senior Credit Facility, purchase money debt, the Notes, tooling debt, and guaranties of certain other debt not to exceed $30.0 million), payment of cash dividends and other distributions to shareholders, liens in favor of parties other than the lenders under the Senior Credit Facility, certain guaranties of obligations of or advances to others, sales of material assets not in the ordinary course of business, restrictions on mergers and acquisitions, and capital expenditures (each as defined in and calculated pursuant to the Senior Credit Facility). The Company remained in compliance with its covenants following the acquisition of Howell. Events of Default. The Senior Credit Facility contains customary events of default including non-payment of principal, interest or fees; violation of covenants; inaccuracy of representations or warranties; cross-defaults to certain other indebtedness, including the indebtedness evidenced by the Notes, and bankruptcy. Fees. The Company will pay, on a quarterly basis, a per annum fee on the unused Commitment Amount ranging from 0.25% to 0.50% and letter of credit fees ranging from 1.25% to 2.25%, in each case based on certain financial ratios of the Company. BMG INDEBTEDNESS The Canadian Department of Regional Industrial Expansion has provided a term loan (the "IRDP Loan") to BMG, bearing interest at 6% with a final maturity date of September 1, 2002. The IRDP Loan is unsecured. As of June 30, 1997, $0.5 million was outstanding with respect to the IRDP Loan. The Export Development Corporation of Canada ("EDC") has provided a tooling line facility to BMG (the "EDC Facility"), bearing interest at a fixed rate of 7.36%. The EDC Facility is secured by tooling at BMG relating to specific Saturn contracts and has a final maturity of September 30, 1999. As of June 30, 1997, $4.3 million was outstanding with respect to the EDC Facility. 64 70 LOBDELL INDEBTEDNESS Lobdell, through Lewis Emery Capital Corporation, its wholly-owned subsidiary, has been provided with a term loan facility from NBD Bank (the "LE Loan"), bearing interest at 0.625% over 90-day LIBOR with a final maturity date of October 1, 1998. This loan is collateralized by a purchase order from Ford, which allows for recovery of the term-debt principal and interest, administrative costs and a predetermined markup. As of June 30, 1997, $2.4 million was outstanding with respect to the LE Loan. Lobdell, through its subsidiary Creative Fabrication Corporation ("Creative"), is financially obligated to the County of McMinn, Tennessee pursuant to certain revenue bonds issued on behalf of Creative. On September 27, 1995, the Industrial Development Board of the County of McMinn issued $8.5 million of its Industrial Development Revenue Bonds ("IRBs") for the purpose of lending the proceeds from the sale of the IRBs to Creative. The IRBs bear interest at a variable rate which was 5.55% at June 30, 1997. The IRBs are collateralized by a letter of credit issued by NBD Bank for the benefit of the trustee under the indenture relating to the IRBs and by a mortgage on the Creative facilities located in Tennessee and are guaranteed by Lobdell. Creative is prohibited from paying, declaring or authorizing any dividend if there is an event of default under the IRB documents. The IRBs mature in September 2010. As of June 30, 1997, $8.2 million principal amount of IRBs were outstanding. PREFERRED STOCK OF LOBDELL In connection with the Company's acquisition of Lobdell, Lobdell issued 457,541 shares of its Series A $3.00 Cumulative Preferred Stock ( the "Series A Preferred Stock") and 49,938 shares of its Series B Preferred Stock (the "Series B Preferred Stock" and together with the Series A Preferred Stock the "Lobdell Preferred Stock"), each having a stated value of $100 per share, and all of which are outstanding. Generally, except as required by law, the holders of Lobdell Preferred Stock have no voting rights. However, the holders of Series A Preferred Stock, voting as a separate class, are entitled to elect (i) one director of Lobdell, and (ii) if Lobdell fails to pay three consecutive semi-annual dividend payments to the holders of Series A Preferred Stock, one additional director until the payment default is cured. Dividends on the Series A Preferred Stock accrue annually at the rate of $3.00 per share and are cumulative, whether or not earned or declared. Lobdell may not declare or pay any dividend or other distribution, other than in Lobdell Common Stock or other stock junior to the Lobdell Preferred Stock ("Junior Stock"), with respect to any Junior Stock unless all accrued, unpaid and current dividends with respect to the Series A Preferred Stock have either been paid or sufficient funds have been set apart for such payment. The Series B Preferred Stock is not entitled to receive any dividends. The Lobdell Preferred Stock has certain liquidation preferences and the Series A Preferred Stock and Series B Preferred Stock rank on a parity as to the receipt of such liquidation payments. The Lobdell Preferred Stock is mandatorily redeemable by Lobdell on December 31, 2006 at a price per share of $100, plus, with respect to the Series A Preferred Stock, accrued and unpaid dividends to the date of redemption. However, if the Company does not commence a public offering of its common stock pursuant to a firm commitment underwritten offering prior to June 30, 2006, the payment for the shares of Series A Preferred Stock to be redeemed will be $103 per share, plus accrued and unpaid dividends to the date of redemption. In addition, at the option of the holders of Series A Preferred Stock, if the Company does not commence such a public offering of its common stock on or before December 31, 2001, Lobdell must redeem on December 31 of each year commencing with 2002 up to 20% of the aggregate number of shares of Series A Preferred Stock held by any such holder immediately prior to December 31, 2002. The Subsidiary Guaranty of Lobdell ranks senior to the Lobdell Preferred Stock. See "Description of the Notes -- Subsidiary Guaranties." In connection with the acquisition of Lobdell by the Company, the Company has agreed to exchange its common stock for the shares of Series A Preferred Stock upon the initial public offering ("Initial Public Offering") of its common stock to the public which is exclusively for cash, subject to an effective registration statement and underwritten on a firm commitment basis by one or more underwriters. The holders of Series A Preferred Stock have the right to exchange up to 50% or some lesser portion of their shares of Series A Preferred Stock (the "Election Amount") for a number of shares of Company 65 71 common stock equal to (i) the Election Amount, multiplied by (ii) the Exchange Ratio (the number equal to the redemption value of a share of Series A Preferred Stock, divided by the price per share to the public of Company common stock in the Initial Public Offering); provided, however, that, in the aggregate, holders of Series A Preferred Stock may not receive more than 25% of the number of shares of Company common stock registered pursuant to the Initial Public Offering. Pursuant to the acquisition of Lobdell, the Company obtained various indemnities for certain purchase price adjustments arising out of a closing balance sheet and for claims relating to representations and warranties made by the former common shareholders of Lobdell in connection with the acquisition. At the closing of such acquisition, 100,000 shares of Series A Preferred Stock were placed with an escrow agent to fund indemnification claims of the Company. The Company and the preferred shareholders of Lobdell have settled certain purchase price adjustments relating to a shareholder's equity adjustment arising out of the closing balance sheet which has resulted in the cancellation of 60,002 shares of the escrowed Series A Preferred Stock and 49,938 shares of Series B Preferred Stock, which represented all of the outstanding Series B Preferred Stock. The remaining 39,998 shares of escrowed Series A Preferred Stock were released to the preferred shareholders of Lobdell. DESCRIPTION OF THE NOTES GENERAL The Old Notes were issued under an Indenture (the "Indenture") dated as of June 15, 1997, among the Company, the Subsidiary Guarantors and First Trust National Association, as Trustee (the "Trustee"). The terms of the Indenture apply to the Old Notes and to the New Notes to be issued in exchange therefor pursuant to the Exchange Offer (all such Notes are referred to herein collectively as the "Notes"). The following is a summary of certain provisions of the Indenture and the Notes, a copy of which Indenture and the form of Notes is available upon request to the Company. The following summary of certain provisions of the Indenture does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the Indenture, including the definitions of certain terms therein and those terms made a part thereof by the Trust Indenture Act of 1939, as amended. Capitalized terms used herein and not otherwise defined have the meanings set forth in the section "-- Certain Definitions." As used in this section, the term "Company" refers to Oxford Automotive, Inc. Principal of, premium, if any, and interest on the Notes will be payable, and the Notes may be exchanged or transferred, at the office or agency of the Company, which, unless otherwise provided by the Company, will be the offices of the Trustee. At the option of the Company, payment of interest may be made by check mailed to the addresses of the Holders as such addresses appear in the Note register. The Notes are issued only in fully registered form, without coupons, in denominations of $1,000 and any integral multiple of $1,000. No service charge will be made for any registration of transfer or exchange of Notes, but the Company may require payment of a sum sufficient to cover any transfer tax or other similar governmental charge payable in connection therewith. TERMS OF THE NOTES The Notes are unsecured senior subordinated obligations of the Company, limited to $160.0 million aggregate principal amount (of which $125.0 million were issued in the Offering), and will mature on June 15, 2007. The Notes bear interest at the rate per annum shown on the cover page hereof from June 24, 1997, or from the most recent date to which interest has been paid or provided for, payable semi-annually to Holders of record at the close of business on the June 1 or December 1 immediately preceding the interest payment date on June 15 and December 15 of each year, commencing December 15, 1997. The Company will pay interest on overdue principal at 1% per annum in excess of such rate, and it will pay interest on overdue installments of interest at such higher rate to the extent lawful. 66 72 OPTIONAL REDEMPTION Except as set forth in the following paragraph, the Notes are not redeemable at the option of the Company prior to June 15, 2002. Thereafter, the Notes are redeemable, at the Company's option, in whole or in part, at any time or from time to time, upon not less than 30 nor more than 60 days' prior notice mailed by first-class mail to each Holder's registered address, at the following redemption prices (expressed in percentages of principal amount), plus accrued and unpaid interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on June 15 of the years set forth below:
REDEMPTION PERIOD PRICE ------ ---------- 2002 . . . . . 105.063% 2003 . . . . . 103.375 2004 . . . . . 101.688 2005 and 100.000 thereafter
In addition, at any time and from time to time prior to June 15, 2000, the Company may redeem in the aggregate up to 35% of the original principal amount of the Notes with the proceeds of one or more Public Equity Offerings following which there is a Public Market, at a redemption price (expressed as a percentage of principal amount) of 110.125% plus accrued and unpaid interest, if any, to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided, however, that at least 65% of the original aggregate principal amount of the Notes must remain outstanding after each such redemption. SELECTION In the case of any partial redemption, selection of the Notes for redemption will be made by the Trustee on a pro rata basis, by lot or by such other method as the Trustee in its sole discretion shall deem to be fair and appropriate, although no Note of $1,000 in original principal amount or less will be redeemed in part. If any Note is to be redeemed in part only, the notice of redemption relating to such Note shall state the portion of the principal amount thereof to be redeemed. A new Note in principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Note. SUBSIDIARY GUARANTIES Each of BMG, BMG Holdings, Inc., an Ontario corporation, Lobdell, Howell, Winchester Fabrication Corporation, a Michigan corporation, Creative Fabrication Corporation, a Tennessee corporation, Parallel Group International, Inc., an Indiana corporation, Laserweld International, L.L.C., an Indiana limited liability company, Concept Management Corporation, a Michigan corporation, and Lewis Emery Capital Corporation, a Michigan corporation (each a "Subsidiary Guarantor"), irrevocably and unconditionally Guarantee, jointly and severally, as primary obligors and not merely as sureties, on an unsecured senior subordinated basis the performance and punctual payment when due, whether at Stated Maturity, by acceleration or otherwise, of all obligations of the Company under the Indenture and the Notes, whether for payment of principal of or interest on the Notes, expenses, indemnification or otherwise (all such obligations guaranteed by the Subsidiary Guarantors being herein called the "Guaranteed Obligations"). The Subsidiary Guarantors agree to pay, in addition to the amount stated above, any and all expenses (including reasonable counsel fees and expenses) incurred by the Trustee or the Holders in enforcing any rights under the Subsidiary Guaranties. Each Subsidiary Guaranty will be limited in amount to an amount not to exceed the maximum amount that can be guaranteed by the applicable Subsidiary Guarantor without rendering such Subsidiary Guaranty voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. After the Issue Date, the Company will cause each Restricted Subsidiary that becomes an obligor or guarantor with respect to any of the obligations under one or more of the Bank Credit 67 73 Agreements to execute and deliver to the Trustee a supplemental indenture pursuant to which such Restricted Subsidiary will Guarantee payment of the Notes. See "Certain Covenants -- Future Subsidiary Guarantors" below. Each Subsidiary Guaranty is a continuing guarantee and shall (a) remain in full force and effect until payment in full of all the Guaranteed Obligations, (b) be binding upon each Subsidiary Guarantor and (c) inure to the benefit of and be enforceable by the Trustee, the Holders and their successors, transferees and assigns. A Subsidiary Guaranty will be released upon the sale of all the capital stock, or all or substantially all of the assets, of the applicable Subsidiary Guarantor if such sale is made in compliance with the Indenture. SUBORDINATION The indebtedness evidenced by the Notes and the Subsidiary Guaranties represents senior subordinated obligations of the Company and the Subsidiary Guarantors, as the case may be. The payment of the principal of, premium (if any) and interest on the Notes, the payment of any Subsidiary Guaranty and all other Obligations under or in connection with the Notes, the Subsidiary Guaranties, the Indenture and/or any related agreements, documents or instruments are subordinate in right of payment, as set forth in the Indenture, to the prior payment in full of all Senior Indebtedness of the Company or the relevant Subsidiary Guarantor, as the case may be, whether outstanding on the Issue Date or thereafter incurred, including all Obligations of the Company and such Subsidiary Guarantor under the Senior Credit Facility. The Notes and the Subsidiary Guaranties are also effectively subordinated to any Secured Indebtedness of the Company and the Subsidiary Guarantors to the extent of the value of the assets securing such Indebtedness and to any liabilities of Subsidiaries other than the Subsidiary Guarantors. As of June 30, 1997, (i) the Company had no outstanding Senior Indebtedness (excluding unused commitments under the Senior Credit Facility) and (ii) Senior Indebtedness of the Subsidiary Guarantors was approximately $17.9 million. Although the Indenture contains limitations on the amount of additional Indebtedness that the Company and its Restricted Subsidiaries may incur, under certain circumstances the amount of such Indebtedness could be substantial and, in any case, such Indebtedness may be Senior Indebtedness. See "Certain Covenants -- Limitation on Indebtedness." Only Indebtedness of the Company or a Subsidiary Guarantor that is Senior Indebtedness will rank senior to the Notes and the relevant Subsidiary Guaranty in accordance with the provisions of the Indenture. The Notes and each Subsidiary Guaranty will in all respects rank pari passu with all other senior subordinated Indebtedness of the Company and the relevant Subsidiary Guarantor, respectively. The Company and each Subsidiary Guarantor has agreed in the Indenture that it will not Incur, directly or indirectly, any Indebtedness that is subordinate or junior in ranking in right of payment to its Senior Indebtedness unless such Indebtedness is pari passu with or is expressly subordinated in right of payment to the Notes. Unsecured Indebtedness is not deemed to be subordinated or junior merely because it is unsecured. The Company may not pay, directly or indirectly, principal of, premium (if any) or interest on, the Notes or any other Obligations under or in connection with the Notes, the Indenture and/or any related agreements, documents or instruments or make any deposit pursuant to the provisions described under "-- Defeasance" below and may not repurchase, redeem or otherwise retire any Notes (collectively, "pay the Subordinated Debt") if (i) any Senior Indebtedness is not paid when due or (ii) any other default on any such Senior Indebtedness occurs and the maturity of such Senior Indebtedness is accelerated in accordance with its terms unless, in either case, the default has been cured or waived and any such acceleration has been rescinded or such Senior Indebtedness has been paid in full in cash. However, the Company may pay the Subordinated Debt without regard to the foregoing if the Company and the Trustee receive written notice approving such payment from the Representative of the Senior Indebtedness with respect to which either of the events set forth in clause (i) or (ii) of the immediately preceding sentence has occurred and is continuing. During the continuance of any default (other than a default described in clauses (i) and (ii) of the second preceding sentence) with respect to any Senior Indebtedness pursuant to which the maturity thereof may be accelerated immediately without further notice (except such notice as may be required to effect such acceleration) or the expiration of any applicable grace periods, the Company may not pay the Subordinated Debt for a period (a "Payment Blockage Period") commencing upon the receipt by the Trustee (with a copy to the Company) of written 68 74 notice (a "Blockage Notice") of such default from the Representative of the holders of such Designated Senior Indebtedness specifying an election to effect a Payment Blockage Period and ending 180 days thereafter (or earlier if such Payment Blockage Period is terminated (i) by written notice to the Trustee and the Company from the Person or Persons who gave such Blockage Notice, (ii) because the default giving rise to such Blockage Notice has been waived in writing or (iii) because such Designated Senior Indebtedness has been repaid in full in cash). Notwithstanding the provisions described in the immediately preceding sentence, unless the holders of such Designated Senior Indebtedness or the Representative of such holders has accelerated the maturity of such Designated Senior Indebtedness, the Company may resume payments on the Notes after the end of such Payment Blockage Period. The Notes shall not be subject to more than one Payment Blockage Period in any consecutive 360-day period, irrespective of the number of such nonpayment defaults with respect to Designated Senior Indebtedness during such period. Upon any payment or distribution of the assets of the Company of any kind or character, whether in cash, property or securities, to creditors upon a total or partial liquidation or dissolution or reorganization of or similar proceeding relating to the Company or its property or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding, the holders of Senior Indebtedness will be entitled to receive payment in full in cash of such Senior Indebtedness before the Noteholders are entitled to receive any payment, and, until the Senior Indebtedness is paid in full in cash, any payment or distribution to which Noteholders would be entitled but for the subordination provisions of the Indenture will be made to holders of such Senior Indebtedness as their interests may appear. If a payment or distribution is made to Noteholders that, due to the subordination provisions, should not have been made to them, such Noteholders are required to hold it in trust for the holders of Senior Indebtedness and pay it over to them as their interests may appear. The obligations of a Subsidiary Guarantor under its Subsidiary Guaranty are senior subordinated obligations. As such, the rights of Noteholders to receive payment by a Subsidiary Guarantor pursuant to its Subsidiary Guaranty will be subordinated in right of payment to the rights of holders of Senior Indebtedness of such Subsidiary Guarantor. The terms of the subordination provisions described above with respect to the Company's obligations under the Notes apply equally to a Subsidiary Guarantor and the obligations of such Subsidiary Guarantor under its Subsidiary Guaranty. By reason of the subordination provisions contained in the Indenture, in the event of insolvency, creditors of the Company or a Subsidiary Guarantor who are holders of Senior Indebtedness of the Company or a Subsidiary Guarantor, as the case may be, may recover more, ratably, than the Noteholders, and creditors of the Company who are not holders of Senior Indebtedness may recover less, ratably, than holders of Senior Indebtedness and may recover more, ratably, than the Noteholders. The terms of the subordination provisions described above will not apply to payments from money or the proceeds of U.S. Government Obligations held in trust by the Trustee for the payment of principal of and interest on the Notes pursuant to and in accordance with the provisions described under "-- Defeasance." CHANGE OF CONTROL Upon the occurrence of a Change of Control, each Holder shall have the right to require that the Company repurchase all or a portion of such Holder's Notes at a purchase price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of repurchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), in accordance with the provisions of the next paragraph. Within 30 days following any Change of Control, the Company shall mail a notice to each Holder with a copy to the Trustee stating: (1) that a Change of Control has occurred and that such Holder has the right to require the Company to purchase such Holder's Notes at a purchase price in cash equal to 101% of the principal amount outstanding at the repurchase date plus accrued and unpaid interest, if any, to the date of repurchase (subject to the right of Holders of record on the relevant record date to receive interest on the relevant interest payment date); (2) the circumstances and relevant facts and relevant financial information regarding such Change of Control; (3) the repurchase date (which shall be no earlier than 30 days nor 69 75 later than 60 days from the date such notice is mailed); and (4) the instructions determined by the Company, consistent with the covenant described hereunder, that a Holder must follow in order to have its Notes repurchased. The Company shall comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to the covenant described hereunder. To the extent that the provisions of any securities laws or regulations conflict with the provisions of the covenant described hereunder, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under the covenant described hereunder by virtue thereof. The occurrence of certain of the events which would constitute a Change of Control would constitute a default under the Senior Credit Facility. Future Senior Indebtedness of the Company may contain prohibitions of certain events which would constitute a Change of Control or require such Senior Indebtedness to be repurchased upon a Change of Control. Moreover, the exercise by the Holders of their right to require the Company to repurchase the Notes could cause a default under such Senior Indebtedness, even if the Change of Control itself does not, due to the financial effect of such repurchase on the Company. Finally, the Company's ability to pay cash to the Holders upon a repurchase may be limited by the Company's then existing financial resources. There can be no assurance that sufficient funds will be available when necessary to make any repurchases required in connection with a Change of Control. The Company's failure to purchase the Notes in connection with a Change in Control would result in a default under the Indenture which would, in turn, constitute a default under the Senior Credit Facility. In such circumstances, the subordination provisions in the Indenture would likely restrict payment to the Holders of the Notes. BOOK-ENTRY, DELIVERY AND FORM Except as set forth below, the Old Notes have been issued and the New Notes will initially be issued in the form of a Global Note. The Global Note will be deposited with, or on behalf of, the Depository and registered in the name of the Depository or its nominee. Except as set forth below, the Global Note may be transferred, in whole and not in part, only to the Depository or another nominee of the Depository. Investors may hold their beneficial interests in the Global Note directly through the Depository if they have an account with the Depository or indirectly through organizations which have accounts with the Depository. New Notes issued in exchange for Old Notes that were (i) originally issued to institutional "accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) who are not qualified institutional buyers ("QIBs") or (ii) issued as described below under "-- Certificated Notes" will be issued in definitive form. Upon the transfer of a Note in definitive form, such Note will, unless the Global Note has previously been exchanged for Notes in definitive form, be exchanged for an interest in the Global Note representing the principal amount of Notes being, transferred. The Depository has advised the Company as follows: The Depository is a limited-purpose trust company and organized under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and "a clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934 (the "Exchange Act"). The Depository was created to hold securities of institutions that have accounts with the Depository ("participants") and to facilitate the clearance and settlement of securities transactions among its participants in such securities through electronic book-entry changes in accounts of the participants, thereby eliminating the need for physical movement of securities certificates. The Depository's participants include securities brokers and dealers (which may include the Initial Purchasers), banks, trust companies, clearing corporations and certain other organizations. Access to the Depository's book-entry system is also available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, whether directly or indirectly. Upon the issuance of a Global Note, the Depository will credit, on its book-entry registration and transfer system, the principal amount of the Notes represented by such Global Note to the accounts of participants. The accounts to be credited 70 76 shall be designated by the Initial Purchasers of such Notes. Ownership of beneficial interests in the Global Note will be limited to participants or persons that may hold interests through participants. Ownership of beneficial interests in the Global Note will be shown on, and the transfer of those ownership interests will be effected only through, records maintained by the Depository (with respect to participants' interest) and such participants (with respect to the owners of beneficial interests in the Global Note other than participants). The laws of some jurisdictions may require that certain purchasers of securities take physical delivery of such securities in definitive form. Such limits and laws may impair the ability to transfer or pledge beneficial interests in a Global Note. So long as the Depository, or its nominee, is the registered holder and owner of such Global Note, the Depository or such nominee, as the case may be, will be considered the sole legal owner and holder of the related Notes for all purposes of such Notes and the Indenture. Except as set forth below, owners of beneficial interests in a Global Note will not be entitled to have the Notes represented by such Global Note registered in their names, will not receive or be entitled to receive physical delivery of certificated Notes in definitive form and will not be considered to be the owners or holders of any Notes under such Global Note. The Company understands that under existing industry practice, in the event an owner of a beneficial interest in a Global Note desires to take any action that the Depository, as the holder of a Global Note, is entitled to take, the Depository would authorize the participants to take such action, and that the participants would authorize beneficial owners owning through such participants to take such action or would otherwise act upon the instructions of beneficial owners owning through them. Payment of principal of and interest on Notes represented by a Global Note registered in the name of and held by the Depository or its nominee will be made to the Depository or its nominee, as the case may be, as the registered owner and holder of such Global Note. The Company expects that the Depository or its nominee, upon receipt of any payment of principal of or interest on a Global Note, will credit participants' accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of such Global Note as shown on the records of the Depository or its nominee. The Company also expects that payments by participants to owners of beneficial interests in a Global Note held through such participants will be governed by standing instructions and customary practices and will be the responsibility of such participants. The Company will not have any responsibility or liability for any aspect of the records relating to, or payments made on account of, beneficial ownership interests in a Global Note for any Note or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests or for any other aspect of the relationship between the Depository and its participants or the relationship between such participants and the owners of beneficial interests in such Global Note owned through such participants. Unless and until it is exchanged in whole or in part for certificated Notes in definitive form, a Global Note may not be transferred except as a whole by the Depository to a nominee of such Depository or by a nominee of such Depository to such Depository or another nominee of such Depository. Although the Depository has agreed to the foregoing procedures in order to facilitate transfers of interests in a Global Note among participants of the Depository, it is under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time. Neither the Trustee nor the Company will have any responsibility for the performance by the Depository or its participants or indirect participants of their respective obligations under the rules and procedures governing their operations. CERTIFICATED NOTES The Notes represented by a Global Note are exchangeable for certificated Notes in definitive form of like tenor as such Notes in denominations of U.S.$1,000 and integral multiples thereof if (i) the Depository notifies the Company that it is unwilling or unable to continue as Depository for such Global Note or if at any time the Depository ceases to be a clearing agency registered under the Exchange Act, (ii) the Company in its discretion at any time determines not to have all of the 71 77 Notes represented by a Global Note or (iii) a default entitling the holders of the Notes to accelerate the maturity thereof has occurred and is continuing. Any Note that is exchangeable pursuant to the preceding sentence is exchangeable for certificated Notes issuable in authorized denominations and registered in such names as the Depository shall direct. Subject to the foregoing, a Global Note is not exchangeable, except for a Global Note of the same aggregate denomination to be registered in the name of the Depository or its nominee. CERTAIN COVENANTS The Indenture contains covenants including, among others, the following: Limitation on Indebtedness. (a) The Company shall not, and shall not permit any Restricted Subsidiary to, Incur, directly or indirectly, any Indebtedness unless, immediately after giving effect to such Incurrence, the Consolidated Coverage Ratio exceeds 2.00 to 1 if such Indebtedness is Incurred prior to June 15, 1999 or 2.25 to 1 if such Indebtedness is Incurred thereafter. (b) Notwithstanding the foregoing paragraph (a), the Company and its Restricted Subsidiaries may Incur any or all of the following Indebtedness: (1) Indebtedness and other Obligations Incurred pursuant to the Bank Credit Agreements; provided, however, that, after giving effect to any such Incurrence, the aggregate principal amount of such Indebtedness and other Obligations then outstanding does not exceed the greater of (i) $110 million and (ii) the sum of (x) 60% of the net book value of the inventory of the Company and its Restricted Subsidiaries, and (y) 90% of the net book value of the accounts receivable of the Company and its Restricted Subsidiaries, in each case determined in accordance with GAAP, and (z) $70 million; (2) Indebtedness represented by the Notes issued in the Offering (and the New Notes); (3) Indebtedness outstanding on the Issue Date (other than Indebtedness described in clause (1) of this paragraph), including, without limitation, the Existing Preferred Stock; (4) Indebtedness of the Company owed to and held by any Wholly Owned Subsidiary or Indebtedness of a Restricted Subsidiary owed to and held by the Company or a Wholly Owned Subsidiary; provided, however, that any subsequent issuance or transfer of any Capital Stock which results in any such Wholly Owned Subsidiary ceasing to be a Wholly Owned Subsidiary or any subsequent transfer of such Indebtedness (other than to the Company or a Wholly Owned Subsidiary) shall be deemed, in each case, to constitute the Incurrence of such Indebtedness by the issuer thereof; (5) Refinancing Indebtedness in respect of Indebtedness Incurred pursuant to paragraph (a) or pursuant to clause (1), (2), (3) or this clause (5); (6) Indebtedness in respect of performance bonds, bankers' acceptances, letters of credit and surety or appeal bonds entered into by the Company and the Restricted Subsidiaries in the ordinary course of their business; (7) Hedging Obligations consisting of Interest Rate Agreements and Currency Agreements entered into in the ordinary course of business and not for the purpose of speculation; provided, however, that, in the case of Currency Agreements and Interest Rate Agreements, such Currency Agreements and Interest Rate Agreements do not increase the Indebtedness of the Company outstanding at any time other than as a result of fluctuations in foreign currency exchange rates or interest rates or by reason of fees, indemnities and compensation payable thereunder; (8) Purchase Money Indebtedness and Capital Lease Obligations Incurred to finance the acquisition or improvement by the Company or a Restricted Subsidiary of any assets in the ordinary course of business and which do not exceed $15 million in the aggregate at any time outstanding; (9) Indebtedness and other Obligations represented by the Subsidiary Guaranties and Guarantees of Indebtedness Incurred pursuant to the Bank Credit Agreements; (10) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business, provided that such Indebtedness is extinguished within five business days of Incurrence; (11) Indebtedness of the Company and its Restricted Subsidiaries arising from agreements providing for indemnification, adjustment of purchase price or similar obligations, in any case Incurred in connection with the disposition of any assets of the Company or any Restricted Subsidiary (other than Guarantees of Indebtedness Incurred by any Person acquiring all or any portion of such assets for the purpose of financing such acquisition), in a principal amount not to exceed the gross proceeds actually received by the Company or any Restricted Subsidiary in connection with such disposition; (12) Tooling Indebtedness; and (13) Indebtedness in an aggregate principal amount which, together with all other Indebtedness of the Company and its Restricted Subsidiaries outstanding on the date of such Incurrence (other than Indebtedness permitted by clauses (1) through (12) above or paragraph (a)), does not exceed $20 million. 72 78 (c) Notwithstanding the foregoing, the Company shall not, and shall not permit any Restricted Subsidiary to, Incur any Indebtedness pursuant to the foregoing paragraph (b) if the proceeds thereof are used, directly or indirectly, to Refinance (i) any Subordinated Obligations unless such Indebtedness shall be subordinated to the Notes and the Subsidiary Guaranties, as applicable, to at least the same extent as such Subordinated Obligations or (ii) any Senior Subordinated Indebtedness unless such Indebtedness shall be Senior Subordinated Indebtedness or shall be subordinated to the Notes and the Subsidiary Guaranties, as applicable. (d) For purposes of determining compliance with the foregoing covenant, (i) in the event that an item of Indebtedness meets the criteria of more than one of the types of Indebtedness described above, the Company, in its sole discretion, will classify such item of Indebtedness and only be required to include the amount and type of such Indebtedness in one of the above clauses and (ii) an item of Indebtedness may be divided and classified in more than one of the types of Indebtedness described above. (e) Notwithstanding paragraphs (a) and (b) above, the Company shall not, and shall not permit any Subsidiary Guarantor to, Incur (i) any Indebtedness if such Indebtedness is subordinate or junior in ranking in any respect to any Senior Indebtedness of the Company or such Subsidiary Guarantor, as applicable, unless such Indebtedness is Senior Subordinated Indebtedness or is expressly subordinated in right of payment to Senior Subordinated Indebtedness or (ii) any Secured Indebtedness that is not Senior Indebtedness of the Company or such Subsidiary Guarantor, as applicable, unless contemporaneously therewith effective provision is made to secure the Notes or the Subsidiary Guaranty, as applicable, equally and ratably with such Secured Indebtedness for so long as such Secured Indebtedness is secured by a Lien. Limitation on Restricted Payments. (a) The Company shall not, and shall not permit any Restricted Subsidiary, directly or indirectly, to make a Restricted Payment if at the time the Company or such Restricted Subsidiary makes such Restricted Payment: (1) a Default shall have occurred and be continuing (or would result therefrom); (2) the Company is not able to Incur an additional $1.00 of Indebtedness pursuant to paragraph (a) of the covenant described under "-- Limitation on Indebtedness"; or (3) the aggregate amount of such Restricted Payment together with all other Restricted Payments (the amount of any payments made in property other than cash to be valued at the fair market value of such property, as determined in good faith by the Board of Directors) declared or made since the Issue Date would exceed the sum of: (A) 50% of the Consolidated Net Income accrued during the period (treated as one accounting period) from the beginning of the fiscal quarter immediately following the fiscal quarter during which the Notes are originally issued to the end of the most recent fiscal quarter prior to the date of such Restricted Payment for which financial statements are available (or, in case such Consolidated Net Income accrued during such period (treated as one accounting period) shall be a deficit, minus 100% of such deficit); (B) the aggregate Net Cash Proceeds received by the Company from the issuance or sale of its Capital Stock (other than Disqualified Stock) subsequent to the Issue Date (other than an issuance or sale to a Subsidiary of the Company); (C) the amount by which Indebtedness of the Company or its Restricted Subsidiaries is reduced on the Company's balance sheet upon the conversion or exchange (other than by a Subsidiary of the Company) subsequent to the Issue Date, of any Indebtedness of the Company or its Restricted Subsidiaries convertible or exchangeable for Capital Stock (other than Disqualified Stock) of the Company (less the amount of any cash, or the fair value of any other property, distributed by the Company or any Restricted Subsidiary upon such conversion or exchange); (D) an amount equal to the sum of (i) the net reduction in Investments in Unrestricted Subsidiaries resulting from dividends, repayments of loans or advances or other transfers of assets subsequent to the Issue Date, in each case to the Company or any Restricted Subsidiary from Unrestricted Subsidiaries, and (ii) the portion (proportionate to the Company's equity interest in such Subsidiary) of the fair market value of the net assets of an Unrestricted Subsidiary at the time such Unrestricted Subsidiary is designated a Restricted Subsidiary; provided, however, that the foregoing sum shall not exceed, in the case of any Unrestricted Subsidiary, the amount of Investments previously made (and treated as a Restricted Payment) by the Company or any Restricted Subsidiary in such Unrestricted Subsidiary; and (E) $5 million. (b) The provisions of the foregoing paragraph (a) shall not prohibit: (i) any purchase or redemption of Capital Stock or Subordinated Obligations of the Company or any Restricted Subsidiary made in exchange for, or out of the proceeds of the 73 79 substantially concurrent sale of, Capital Stock of the Company (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary of the Company); provided, however, that (A) such purchase or redemption shall be excluded from the calculation of the amount of Restricted Payments and (B) the Net Cash Proceeds from such sale shall be excluded from the calculation of amounts under clause (3)(B) of paragraph (a) above; (ii) any purchase or redemption of (A) Subordinated Obligations of the Company made in exchange for, or out of the proceeds of the substantially concurrent sale of, Indebtedness of the Company which is permitted to be Incurred pursuant to paragraphs (b) and (c) of the covenant described under "-- Limitation on Indebtedness" or (B) Subordinated Obligations of a Restricted Subsidiary made in exchange for, or out of the proceeds of the substantially concurrent sale of, Indebtedness of such Restricted Subsidiary or the Company which is permitted to be Incurred pursuant to paragraphs (b) and (c) of the covenant described under "-- Limitation on Indebtedness"; provided, however, that such purchase or redemption shall be excluded from the calculation of the amount of Restricted Payments; (iii) any purchase or redemption of (A) Disqualified Stock of the Company made in exchange for, or out of the proceeds of the substantially concurrent sale of, Disqualified Stock of the Company or (B) Disqualified Stock of a Restricted Subsidiary made in exchange for, or out of the proceeds of the substantially concurrent sale of, Disqualified Stock of such Restricted Subsidiary or the Company; provided, however, that (1) at the time of such exchange, no Default or Event of Default shall have occurred and be continuing or would result therefrom and (2) such purchase or redemption will be excluded from the calculation of the amount of Restricted Payments; (iv) dividends paid within 60 days after the date of declaration thereof if at such date of declaration such dividend would have complied with this covenant; provided, however, that at the time of payment of such dividend, no other Default shall have occurred and be continuing (or would result therefrom); provided, further, however, that such dividend shall be included in the calculation of the amount of Restricted Payments; (v) the repurchase of shares of, or options to purchase shares of, Capital Stock of the Company or any of its Subsidiaries from officers, former officers employees, former employees, directors or former directors of the Company or any of its Subsidiaries (or permitted transferees of such employees, former employees, directors or former directors), pursuant to the terms of the agreements (including employment agreements) or plans (or amendments thereto) approved by the Board of Directors under which such individuals purchase or sell, or are granted the option to purchase or sell, shares of such common stock; provided, however, that the aggregate amount of such repurchases shall not exceed $2.5 million in any one year and $5.0 million in the aggregate; provided, further, however, that (1) at the time of such repurchase, no Default or Event of Default shall have occurred and be continuing or would result therefrom and (2) all such repurchases shall be included in the calculation of the amount of Restricted Payments; or (vi) dividends and redemptions required to be made with respect to the Existing Preferred Stock; provided, however, that (1) at the time of any such dividend or redemption, no Default or Event of Default shall have occurred and be continuing or would result therefrom and (2) all such dividends and redemptions shall be included in the calculation of the amount of Restricted Payments. Limitation on Restrictions on Distributions from Restricted Subsidiaries. The Company shall not, and shall not permit any Restricted Subsidiary to, create or otherwise cause or permit to exist or become effective any consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary (a) to pay dividends or make any other distributions on its Capital Stock to the Company or a Restricted Subsidiary or pay any Indebtedness owed to the Company, (b) to make any loans or advances to the Company or (c) transfer any of its property or assets to the Company, except: (i) any encumbrance or restriction pursuant to an agreement in effect at or entered into on the Issue Date; (ii) any encumbrance or restriction with respect to a Restricted Subsidiary pursuant to an agreement relating to any Indebtedness Incurred by such Restricted Subsidiary which was entered into on or prior to the date on which such Restricted Subsidiary was acquired by the Company (other than as consideration in, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was acquired by the Company) and outstanding on such date; (iii) any encumbrance or restriction pursuant to an agreement effecting a Refinancing of Indebtedness Incurred pursuant to an agreement referred to in clause (i) or (ii) of this covenant (or effecting a Refinancing of such Refinancing Indebtedness pursuant to this clause (iii)) or contained in any amendment to an agreement referred to in clause (i) or (ii) of this covenant or this clause (iii); provided, however, that the encumbrances and restrictions with respect to such Restricted Subsidiary contained in any such refinancing agreement or amendment are no more restrictive in any material respect than the encumbrances and restrictions with respect to such Restricted Subsidiary contained in such agreements; (iv) any such encumbrance or restriction consisting of customary non-assignment provisions in leases governing leasehold interests to the extent such provisions restrict the transfer of the lease or the property leased 74 80 thereunder; (v) in the case of clause (c) above, restrictions contained in security agreements or mortgages securing Indebtedness (other than Tooling Indebtedness) of a Restricted Subsidiary to the extent such restrictions restrict the transfer of the property subject to such security agreements or mortgages; (vi) any restriction with respect to a Restricted Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of all or substantially all the Capital Stock or assets of such Restricted Subsidiary pending the closing of such sale or disposition; and (vii) any restriction imposed by applicable law. Limitation on Sales of Assets and Subsidiary Stock. The Company shall not, and shall not permit any Restricted Subsidiary to, consummate any Asset Disposition unless the Company or such Restricted Subsidiary receives consideration at the time of such Asset Disposition at least equal to the fair market value (including as to the value of all non-cash consideration), as determined in good faith by the Board of Directors, of the shares and assets subject to such Asset Disposition and at least 75% of the consideration therefor received by the Company or such Restricted Subsidiary is in the form of cash or cash equivalents. For the purposes of this covenant, the following are deemed to be cash and cash equivalents: (x) the assumption of Indebtedness of the Company or any Restricted Subsidiary and the release of the Company or such Restricted Subsidiary from all liability on such Indebtedness in connection with such Asset Disposition and (y) securities received by the Company or any Restricted Subsidiary from the transferee that are immediately converted by the Company or such Restricted Subsidiary into cash. With respect to any Asset Disposition occurring on or after the Issue Date from which the Company or any Restricted Subsidiary receives Net Available Cash, the Company or such Restricted Subsidiary shall (i) within 360 days after the date such Net Available Cash is received and to the extent the Company or such Restricted Subsidiary elects (or is required by the terms of any Senior Indebtedness) to (A) apply an amount equal to such Net Available Cash to prepay, repay or purchase Senior Indebtedness of the Company or such Restricted Subsidiary, in each case owing to a Person other than the Company or any Affiliate of the Company, or (B) invest an equal amount, or the amount not so applied pursuant to clause (A), in Additional Assets (including by means of an Investment in Additional Assets by a Restricted Subsidiary with Net Available Cash received by the Company or another Restricted Subsidiary) and (ii) apply such excess Net Available Cash (to the extent not applied pursuant to clause (i)) as provided in the following paragraphs of the covenant described hereunder; provided, however, that in connection with any prepayment, repayment or purchase of Senior Indebtedness pursuant to clause (A) above, the Company or such Restricted Subsidiary shall retire such Senior Indebtedness and shall cause the related loan commitment (if any) to be permanently reduced in an amount equal to the principal amount so prepaid, repaid or purchased. The amount of Net Available Cash required to be applied pursuant to clause (ii) above and not theretofore so applied shall constitute "Excess Proceeds." Pending application of Net Available Cash pursuant to this provision, such Net Available Cash shall be invested in Temporary Cash Investments. If at any time the aggregate amount of Excess Proceeds not theretofore subject to an Excess Proceeds Offer (as defined below) totals at least $5 million, the Company shall, not later than 30 days after the end of the period during which the Company is required to apply such Excess Proceeds pursuant to clause (i) of the immediately preceding paragraph (or, if the Company so elects, at any time within such period), make an offer (an "Excess Proceeds Offer") to purchase from the Holders on a pro rata basis an aggregate principal amount of Notes equal to the Excess Proceeds (rounded down to the nearest multiple of $1,000) on such date, at a purchase price equal to 100% of the principal amount of such Notes, plus, in each case, accrued interest (if any) to the date of purchase (the "Excess Proceeds Payment"). Upon completion of an Excess Proceeds Offer the amount of Excess Proceeds remaining after application pursuant to such Excess Proceeds Offer, (including payment of the purchase price for Notes duly tendered) may be used by the Company for any corporate purpose (to the extent not otherwise prohibited by the Indenture). The Company shall comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations thereunder in the event that such Excess Proceeds are received by the Company under the covenant described hereunder and the Company is required to repurchase Notes as described above. To the extent that the provisions of any securities laws or regulations conflict with the provisions of the covenant described hereunder, the 75 81 Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under the covenant described hereunder by virtue thereof. Limitation on Affiliate Transactions. (a) The Company shall not, and shall not permit any Restricted Subsidiary to, enter into or permit to exist any transaction or series of related transactions (including the purchase, sale, lease or exchange of any property, employee compensation arrangements or the rendering of any service) with any Affiliate of the Company (an "Affiliate Transaction") unless the terms thereof (1) are no less favorable to the Company or such Restricted Subsidiary than those that could be obtained at the time of such transaction in arm's-length dealings with a Person who is not such an Affiliate, (2) if such Affiliate Transaction (or series of related Affiliate Transactions) involve aggregate payments in an amount in excess of $1 million in any one year, (i) are set forth in writing, (ii) comply with clause (1) and (iii) have been approved by a majority of the disinterested members of the Board of Directors and (3) if such Affiliate Transaction (or series of related Affiliate Transactions) involve aggregate payments in an amount in excess of $5 million in any one year, (i) comply with clause (2) and (ii) have been determined by a nationally recognized investment banking firm to be fair, from a financial standpoint, to the Company and its Restricted Subsidiaries. (b) The provisions of the foregoing paragraph (a) shall not prohibit (i) any Restricted Payment permitted to be paid pursuant to the covenant described under "-- Limitation on Restricted Payments," (ii) any issuance of securities, or other payments, awards or grants in cash, securities or otherwise, pursuant to, or the funding of, employment arrangements, stock options and stock ownership plans in the ordinary course of business and approved by the Board of Directors, (iii) the grant of stock options or similar rights to employees and directors of the Company in the ordinary course of business and pursuant to plans approved by the Board of Directors, (iv) loans or advances to employees in the ordinary course of business of the Company or its Restricted Subsidiaries, (v) fees, compensation or employee benefit arrangements paid to and indemnity provided for the benefit of directors, officers or employees of the Company or any Subsidiary in the ordinary course of business, (vi) payments made to The Oxford Investment Group, Inc. for (x) management and consulting services in an aggregate amount not to exceed $1,000,000 in any one year and (y) investment banking services in connection with acquisition of assets or businesses, by the Company or any Subsidiary not to exceed the greater of (A) 1.25% of the purchase price paid by the Company or such Subsidiary for the assets or business acquired (including Indebtedness assumed by the Company or such Subsidiary as part of such acquisition) and (B) $200,000; or (vii) any Affiliate Transaction between the Company and a Restricted Subsidiary or between Restricted Subsidiaries in the ordinary course of business (so long as the other stockholders of any participating Restricted Subsidiaries which are not Wholly Owned Restricted Subsidiaries are not themselves Affiliates of the Company). Limitation on the Issuance or Sale of Capital Stock of Restricted Subsidiaries. The Company shall not (i) sell, pledge, hypothecate or otherwise dispose of any shares of Capital Stock of a Restricted Subsidiary (other than pledges of Capital Stock securing Senior Indebtedness) or (ii) permit any Restricted Subsidiary, directly or indirectly, to issue or sell or otherwise dispose of any shares of its Capital Stock other than (A) to the Company or a Wholly Owned Subsidiary, (B) directors' qualifying shares, (C) if, immediately after giving effect to such issuance or sale, such Restricted Subsidiary would no longer constitute a Restricted Subsidiary or (D) the issuance of Preferred Stock by any Subsidiary Guarantor as partial payment for the acquisition by such Subsidiary Guarantor of Additional Assets. Notwithstanding the foregoing, the Company may sell, and may permit a Restricted Subsidiary to issue and sell, up to 20% of the outstanding Common Stock of a Restricted Subsidiary to officers and employees of such Restricted Subsidiary. The proceeds of any sale of such Capital Stock permitted hereby will be treated as Net Available Cash from an Asset Disposition and must be applied in accordance with the terms of the covenant described under "-- Limitation on Sales of Assets and Subsidiary Stock." Limitation on Liens. The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, Incur or permit to exist any Lien of any nature whatsoever on any property of the Company or any Restricted Subsidiary (including Capital Stock of a Restricted Subsidiary), whether owned at the Issue Date or thereafter acquired, which secures Indebtedness that ranks pari passu with or is subordinated to the Notes or the Subsidiary Guaranties unless (i) if such Lien secures Indebtedness that ranks pari passu with the Notes and the Subsidiary Guaranties, the Notes are secured on an equal and ratable basis with the obligation so secured until such time as such obligation is no longer secured by a Lien or (ii) if such Lien 76 82 secures Indebtedness that is subordinated to the Notes and the Subsidiary Guaranties, such Lien shall be subordinated to a Lien granted to the Holders on the same collateral as that securing such Lien to the same extent as such subordinated Indebtedness is subordinated to the Note and the Subsidiary Guaranties. Merger and Consolidation. The Company shall not consolidate with or merge with or into, or convey, transfer or lease, in one transaction or a series of related transactions, all or substantially all its assets to, any Person, unless: (i) the resulting, surviving or transferee Person (the "Successor Company") shall be a Person organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and the Successor Company (if not the Company) shall expressly assume, by an indenture supplemental thereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of the Company under the Notes and the Indenture; (ii) immediately after giving effect to such transaction on a pro forma basis (and treating any Indebtedness which becomes an obligation of the Successor Company or any Subsidiary as a result of such transaction as having been Incurred by such Successor Company or such Subsidiary at the time of such transaction), no Default shall have occurred and be continuing; (iii) except in the case of a merger the sole purpose of which is to change the Company's jurisdiction of incorporation, immediately after giving effect to such transaction on a pro forma basis, the Successor Company would be able to Incur an additional $1.00 of Indebtedness pursuant to paragraph (a) of the covenant described under "-- Limitation on Indebtedness"; (iv) immediately after giving effect to such transaction on a pro forma basis, the Successor Company shall have Consolidated Net Worth in an amount that is not less than the Consolidated Net Worth of the Company immediately prior to such transaction; and (v) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the Indenture. Notwithstanding the foregoing clauses (ii), (iii) and (iv), any Restricted Subsidiary may consolidate with, merge into or transfer all or part of its properties and assets to the Company. The Successor Company shall be the successor to the Company and shall succeed to, and be substituted for, and may exercise every right and power of, the Company under the Indenture, but the predecessor Company in the case of a conveyance, transfer or lease shall not be released from the obligation to pay the principal of and interest on the Notes. The Company shall not permit any Subsidiary Guarantor to consolidate with or merge with or into, or convey, transfer or lease, in one transaction or a series of transactions, all or substantially all its assets to, any Person, unless: (i) the resulting, surviving or transferee Person (if not such Subsidiary) shall be a Person organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and the Successor Company (if not such Subsidiary) shall expressly assume, by a Guaranty Agreement, in form satisfactory to the Trustee, all the obligations of such Subsidiary under its Subsidiary Guaranty; (ii) immediately after giving effect to such transaction on a pro forma basis (and treating any Indebtedness which becomes an obligation of the resulting, surviving or transferee Person as a result of such transaction as having been Incurred by such Person at the time of such transaction), no Default shall have occurred and be continuing; and (iii) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such Guaranty Agreement comply with the Indenture. The provisions of clauses (i) and (iii) above shall not apply to any transactions which constitute an Asset Disposition if the Company has complied with the applicable provisions of the covenant described under "-- Limitation on Sales of Assets and Subsidiary Stock" above. Future Guarantors. The Company shall cause each Restricted Subsidiary that at any time becomes an obligor or guarantor with respect to any obligations under one or more Bank Credit Agreements to execute and deliver to the Trustee a supplemental indenture pursuant to which such Restricted Subsidiary will Guarantee payment of the Notes on the same terms and conditions as those set forth in the Indenture. Each Subsidiary Guaranty will be limited in amount to an amount not to exceed the maximum amount that can be Guaranteed by the applicable Subsidiary Guarantor without rendering such Subsidiary Guaranty voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. SEC Reports. Until such time as the Company shall become subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company shall provide the Trustee, the Initial Purchasers, the Noteholders and prospective 77 83 Noteholders (upon request) with such annual reports and such information, documents and other reports as are specified in Sections 13 and 15(d) of the Exchange Act and applicable to a U.S. corporation subject to such Sections, such information, documents and other reports to be so provided at the times specified for the filing of such information, documents and reports under such Sections. Thereafter, notwithstanding that the Company may not be required to remain subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company shall file with the SEC and provide the Trustee and Noteholders and prospective Noteholders (upon request) with such annual reports and such information, documents and other reports as are specified in such Sections and applicable to a U.S. corporation subject to such Sections, such information, documents and other reports to be so filed and provided at the times specified for the filing of such information, documents and reports under such Sections; provided, however, that the Company shall not be required to file any report, document or other information with the SEC if the SEC does not permit such filing. DEFAULTS An Event of Default is defined in the Indenture as (i) a default in the payment of interest on the Notes when due (whether or not such payment is prohibited by the provisions described under "Subordination" above), continued for 30 days, (ii) a default in the payment of principal of any Note when due at its Stated Maturity, upon optional redemption, upon required repurchase, upon declaration or otherwise (whether or not such payment is prohibited by the provisions described under "Subordination" above), (iii) the failure by the Company, to comply for 30 days after notice with any of its obligations under the covenants described under "-- Limitation on Indebtedness," "-- Limitation on Restricted Payments," "Limitation on Sales of Assets and Subsidiary Stock," and "Merger, Consolidation and Sale of Assets", (iv) the failure by the Company to comply for 60 days after notice with its other agreements contained in the Indenture, (v) Indebtedness of the Company or any Restricted Subsidiary is not paid within any applicable grace period after final maturity or is accelerated by the holders thereof because of a default and the total amount of such Indebtedness unpaid or accelerated exceeds $5 million (the "cross-acceleration provision"), (vi) certain events of bankruptcy, insolvency or reorganization of the Company or a Significant Subsidiary (the "bankruptcy provisions"), (vii) any judgment or decree for the payment of money in excess of $5 million is rendered against the Company or a Restricted Subsidiary, remains outstanding following such judgment and is not discharged, waived or stayed within 60 days after entry of such judgment or decree (the "judgment default provision"), or (viii) a Subsidiary Guaranty ceases to be in full force and effect (other than in accordance with the terms of such Subsidiary Guaranty) or a Subsidiary Guarantor denies or disaffirms its obligations under its Subsidiary Guaranty. However, a default under clause (iii) or (iv) will not constitute an Event of Default until the Trustee or the Holders of 25% in principal amount of the outstanding Notes notify the Company of the default and the Company does not cure such default within the time specified in clauses (iii) and (iv) hereof after receipt of such notice. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the outstanding Notes may declare the principal of and accrued but unpaid interest on all the Notes to be due and payable. Upon such a declaration, such principal and interest shall be due and payable immediately. If an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company occurs and is continuing, the principal of and interest on all the Notes will ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holders of the Notes. Under certain circumstances, the Holders of a majority in principal amount of the outstanding Notes may rescind any such acceleration with respect to the Notes and its consequences. Subject to the provisions of the Indenture relating to the duties of the Trustee, in case an Event of Default occurs and is continuing, the Trustee will be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee reasonable indemnity or security against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Holder may pursue any remedy with respect to the Indenture or the Notes unless (i) such Holder has previously given the Trustee notice that an Event of Default is continuing, (ii) Holders of at least 25% in principal amount of the outstanding Notes have requested the Trustee to pursue the remedy, (iii) such Holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense, (iv) the Trustee has not complied with such request within 60 days after the receipt thereof and the offer of security or indemnity and (v) the Holders of a majority in principal amount of the outstanding 78 84 Notes have not given the Trustee a direction inconsistent with such request within such 60-day period. Subject to certain restrictions, the Holders of a majority in principal amount of the outstanding Notes are given the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would involve the Trustee in personal liability. The Indenture provides that if a Default occurs and is continuing and is known to the Trustee, the Trustee must mail to each Holder notice of the Default within 90 days after it occurs. Except in the case of a Default in the payment of principal of or interest on any Note, the Trustee may withhold notice if and so long as a committee of its trust officers determines that withholding notice is not opposed to the interest of the Holders. In addition, the Company is required to deliver to the Trustee, within 120 days after the end of each fiscal year, a certificate indicating whether the signers thereof know of any Default that occurred during the previous year. The Company also is required to deliver to the Trustee, within 30 days after the occurrence thereof, written notice of any event which would constitute certain Defaults, their status and what action the Company is taking or proposes to take in respect thereof. AMENDMENTS AND WAIVERS Subject to certain exceptions, the Indenture may be amended with the consent of the Holders of a majority in principal amount of the Notes then outstanding (including consents obtained in connection with a tender offer or exchange for the Notes) and any past default or compliance with any provisions may also be waived with the consent of the Holders of a majority in principal amount of the Notes then outstanding. However, without the consent of each Holder of an outstanding Note affected thereby, no amendment may, among other things, (i) reduce the amount of Notes whose Holders must consent to an amendment, (ii) reduce the rate of or extend the time for payment of interest on any Note, (iii) reduce the principal of or extend the Stated Maturity of any Note, (iv) reduce the premium payable upon the redemption of any Note or change the time at which any Note may be redeemed as described under "-- Optional Redemption" above, (v) make any Note payable in money other than that stated in the Note, (vi) impair the right of any Holder to institute suit for the enforcement of any payment on or with respect to such Holder's Notes or any Subsidiary Guaranty, (vii) make any change in the amendment provisions which require each Holder's consent or in the waiver provisions or (viii) make any change to the subordination provisions of the Indenture that would adversely affect the Noteholders. Without the consent of any Holder, the Company and Trustee may amend the Indenture to cure any ambiguity, omission, defect or inconsistency, to provide for the assumption by a successor corporation of the obligations of the Company under the Indenture, to provide for uncertificated Notes in addition to or in place of certificated Notes (provided that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code), to add guarantees with respect to the Notes, to release Subsidiary Guarantors when permitted by the Indenture, to secure the Notes, to add to the covenants of the Company for the benefit of the Holders or to surrender any right or power conferred upon the Company, to make any change that does not adversely affect the rights of any Holder or to comply with any requirement of the SEC in connection with the qualification of the Indenture under the Trust Indenture Act. However, no amendment may be made to the subordination provisions of the Indenture that adversely affects the rights of any holder of Senior Indebtedness then outstanding unless the holders of such Senior Indebtedness (or their Representative) consents to such change. The consent of the Holders is not necessary under the Indenture to approve the particular form of any proposed amendment. It is sufficient if such consent approves the substance of the proposed amendment. After an amendment under the Indenture becomes effective, the Company is required to mail to Holders a notice briefly describing such amendment. However, the failure to give such notice to all Holders, or any defect therein, will not impair or affect the validity of the amendment. 79 85 TRANSFER Certificated Notes will be issued in registered form and will be transferable only upon the surrender of the Notes being transferred for registration of transfer. The Company may require payment of a sum sufficient to cover any tax, assessment or other governmental charge payable in connection with certain transfers and exchanges. DEFEASANCE The Company at any time may terminate all its obligations under the Notes and the Indenture ("legal defeasance"), except for certain obligations, including those respecting the defeasance trust and obligations to register the transfer or exchange of the Notes, to replace mutilated, destroyed, lost or stolen Notes and to maintain a registrar and paying agent in respect of the Notes. The Company at any time may terminate its obligations under "-- Change of Control" and under the covenants described under "-- Certain Covenants" (other than the covenant described under "-- Merger and Consolidation"), the operation of the cross-acceleration provision, the bankruptcy provisions with respect to Significant Subsidiaries and the judgment default provision described under "-- Defaults" above and the limitations contained in clauses (iii) and (iv) under "Certain Covenants -- Merger and Consolidation" above ("covenant defeasance"). The Company may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option. If the Company exercises its legal defeasance option, payment of the Notes may not be accelerated because of an Event of Default with respect thereto. If the Company exercises its covenant defeasance option, payment of the Notes may not be accelerated because of an Event of Default specified in clause (iii) (but only with respect to clauses (iii) or (iv) under "Certain Covenants -- Merger and Consolidation as it relates to the failure to comply with such covenants), (iv), (v), (vi) or (vii) under "-- Defaults" above or because of the failure of the Company to comply with clause (iii) or (iv) under "Certain Covenants -- Merger and Consolidation" above. If the Company exercises its legal defeasance option or its covenant defeasance option, each Subsidiary Guarantor will be released from all of its obligations with respect to its Subsidiary Guaranty. In order to exercise either defeasance option, (a) such defeasance must not result in a breach of, or otherwise constitute a default under any agreement or investment with respect to any Senior Indebtedness, and no default may exist under any Indebtedness and (b) the Company must irrevocably deposit in trust (the "defeasance trust") with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Notes to redemption or maturity, as the case may be, and must comply with certain other conditions, including delivery to the Trustee of an Opinion of Counsel to the effect that holders of the Notes will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit and defeasance and will be subject to Federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred. CONCERNING THE TRUSTEE First Trust National Association is the Trustee under the Indenture and has been appointed by the Company as Registrar and Paying Agent with regard to the Notes. The Holders of a majority in principal amount of the outstanding Notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee, subject to certain exceptions. The Indenture provides that if an Event of Default occurs (and is not cured), the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any Holder of Notes, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense and then only to the extent required by the terms of the Indenture. GOVERNING LAW 80 86 The Indenture provides that it and the Notes are governed by, and construed in accordance with, the laws of the State of New York without giving effect to applicable principles of conflicts of law to the extent that the application of the law of another jurisdiction would be required thereby. CERTAIN DEFINITIONS "Additional Assets" means (i) any property or assets (other than Indebtedness and Capital Stock) in a Related Business; or (ii) the Capital Stock of a Person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Company or another Restricted Subsidiary; provided, however, that any such Restricted Subsidiary is primarily engaged in a Related Business. "Affiliate" of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. For purposes of the provisions described under "Certain Covenants -- Limitation on Restricted Payments," "Certain Covenants -- Limitation on Affiliate Transactions" and "Certain Covenants -- Limitations on Sales of Assets and Subsidiary Stock" only, "Affiliate" shall also mean any beneficial owner of Capital Stock representing 10% or more of the total voting power of the Voting Stock (on a fully diluted basis) of the Company or of rights or warrants to purchase such Capital Stock (whether or not currently exercisable) and any Person who would be an Affiliate of any such beneficial owner pursuant to the first sentence hereof. "Asset Disposition" means any sale, lease, transfer or other disposition (or series of related sales, leases, transfers or dispositions) by the Company or any Restricted Subsidiary, including any disposition by means of a merger, consolidation or similar transaction (each referred to for the purposes of this definition as a "disposition"), of (i) any shares of Capital Stock of a Restricted Subsidiary (other than directors' qualifying shares and, to the extent required by local ownership laws in foreign countries, shares owned by foreign shareholders), (ii) all or substantially all the assets of any division, business segment or comparable line of business of the Company or any Restricted Subsidiary or (iii) any other assets of the Company or any Restricted Subsidiary outside of the ordinary course of business of the Company or such Restricted Subsidiary. Notwithstanding the foregoing, the term "Asset Disposition" shall not include (x) a disposition by a Restricted Subsidiary to the Company or by the Company or a Restricted Subsidiary to a Wholly Owned Subsidiary, (y) for purposes of the covenant described under "Certain Covenants - -- Limitation on Sales of Assets and Subsidiary Stock", a disposition that constitutes a Permitted Investment or a Restricted Payment permitted by the covenant described under "Certain Covenants -- Limitation on Restricted Payments", and (z) a disposition of assets having a fair market value of less than $1 million. "Attributable Debt" in respect of a Sale/Leaseback Transaction means, as at the time of determination, the present value (discounted at the interest rate borne by the Notes, compounded annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale/Leaseback Transaction (including any period for which such lease has been extended). "Average Life" means, as of the date of determination, with respect to any Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum of the products of numbers of years from the date of determination to the dates of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Preferred Stock multiplied by the amount of such payment by (ii) the sum of all such payments. "Bank Credit Agreements" means the Senior Credit Facility and any other bank credit agreement or similar facility entered into in the future by the Company or any Restricted Subsidiary as any of the same may be amended, waived, modified, Refinanced or replaced from time to time (except to the extent that any such amendment, waiver, modification, replacement or Refinancing would be prohibited by the terms of the Indenture). 81 87 "Bank Indebtedness" means any and all present and future amounts payable under or in respect of the Bank Credit Agreements, including principal, premium (if any), interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization, whether or not a claim for post-filing interest is allowed in such proceedings), fees, charges, expenses, reimbursement obligations, Guarantees and all other amounts and other Obligations payable thereunder or in respect thereof at any time. "Board of Directors" means the Board of Directors of the Company or any committee thereof duly authorized to act on behalf of such Board. "Business Day" means each day which is not a Legal Holiday. "Capital Lease Obligations" means an obligation that is required to be classified and accounted for as a capital lease for financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation shall be the capitalized amount of such obligation determined in accordance with GAAP; and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. "Capital Stock" of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock, but excluding any debt securities convertible into such equity. "Change of Control" means the occurrence of any of the following events: (i) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this clause such person or group shall be deemed to have "beneficial ownership" of all shares that any such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 40% of the total voting power of the Voting Stock of the Company; provided, however, that such event shall not be deemed to be a Change of Control so long as the Permitted Holders beneficially own, directly or indirectly, in the aggregate a greater percentage of the total voting power of the Voting Stock of the Company than such other person or group; (ii) after the first public offering of common stock of the Company, during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors (together with any new directors whose election by such Board of Directors or whose nomination for election by the shareholders of the Company was approved by a majority vote of the directors of the Company then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors then in office; or (iii) the merger or consolidation of the Company with or into another Person or the merger of another Person with or into the Company, or the sale of all or substantially all the assets of the Company to another Person (other than a Person that is controlled by the Permitted Holders), and, in the case of any such merger or consolidation, the securities of the Company that are outstanding immediately prior to such transaction and which represent 100% of the aggregate voting power of the Voting Stock of the Company are changed into or exchanged for cash, securities or property, unless pursuant to such transaction such securities are changed into or exchanged for, in addition to any other consideration, securities of the surviving corporation that represent immediately after such transaction, at least a majority of the aggregate voting power of the Voting Stock of the surviving corporation. "Code" means the Internal Revenue Code of 1986, as amended. 82 88 "Consolidated Coverage Ratio" as of any date of determination means the ratio of (i) the aggregate amount of EBITDA for the period of the most recent four consecutive fiscal quarters ending at least 45 days (or, if less, the number of days after the end of such fiscal quarter as the consolidated financial statements of the Company shall be available) prior to the date of such determination (determined, for the first three fiscal quarters ending subsequent to the Issue Date, by annualizing such quarters to the extent completed) to (ii) Consolidated Interest Expense for such four fiscal quarters; provided, however, that (1) if the Company or any Restricted Subsidiary has Incurred any Indebtedness since the beginning of such period that remains outstanding on such date of determination or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio is an Incurrence of Indebtedness, or both, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such Indebtedness as if such Indebtedness had been Incurred on the first day of such period and the discharge of any other Indebtedness repaid, repurchased, defeased or otherwise discharged with the proceeds of such new Indebtedness as if such discharge had occurred on the first day of such period (except that, in the case of Indebtedness used to finance working capital needs incurred under a revolving credit or similar arrangement, the amount thereof shall be deemed to be the average daily balance of such Indebtedness during such four-fiscal-quarter period), (2) if since the beginning of such period the Company or any Restricted Subsidiary shall have made any Asset Disposition, the EBITDA for such period shall be reduced by an amount equal to the EBITDA (if positive) directly attributable to the assets which are the subject of such Asset Disposition for such period, or increased by an amount equal to the EBITDA (if negative) directly attributable thereto for such period, and Consolidated Interest Expense for such period shall be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased, defeased, assumed by a third person (to the extent the Company and its Restricted Subsidiaries are no longer liable for such Indebtedness) or otherwise discharged with respect to the Company and its continuing Restricted Subsidiaries in connection with such Asset Disposition for such period (or, if the Capital Stock of any Restricted Subsidiary is sold, the Consolidated Interest Expense for such period directly attributable to the Indebtedness of such Restricted Subsidiary to the extent the Company and its continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such sale), (3) if since the beginning of such period the Company shall have consummated a Public Equity Offering following which there is a Public Market, Consolidated Interest Expense for such period shall be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to the Company and its Restricted Subsidiaries in connection with such Public Equity Offering for such period, (4) if since the beginning of such period the Company or any Restricted Subsidiary (by merger or otherwise) shall have made an Investment in any Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary) or an acquisition of assets, which acquisition constitutes all or substantially all of an operating unit of a business, including any such Investment or acquisition occurring in connection with a transaction requiring a calculation to be made hereunder, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto (including the Incurrence of any Indebtedness) as if such Investment or acquisition occurred on the first day of such period and (5) if since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such period) shall have made any Asset Disposition, any Investment or acquisition of assets that would have required an adjustment pursuant to clause (3) or (4) above if made by the Company or a Restricted Subsidiary during such period, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto as if such Asset Disposition, Investment or acquisition occurred on the first day of such period. For purposes of this definition, whenever pro forma effect is to be given to an acquisition of assets, the amount of income, earnings or expense relating thereto and the amount of Consolidated Interest Expense associated with any Indebtedness Incurred in connection therewith, the pro forma calculations shall be prepared in accordance with Article 11 of Regulation S-X promulgated by the Commission as determined in good faith by a responsible financial or accounting Officer of the Company. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest of such Indebtedness shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Interest Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement has a remaining term in excess of 12 months). "Consolidated Interest Expense" means, for any period, the total interest expense of the Company and its consolidated Restricted Subsidiaries, plus, to the extent not included in such total interest expense, and to the extent incurred by the 83 89 Company or its Restricted Subsidiaries, (i) interest expense attributable to Capital Lease Obligations, (ii) amortization of debt discount, (iii) capitalized interest, (iv) non-cash interest expenses, (v) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing, (vi) net costs associated with Hedging Obligations (including amortization of fees), (vii) Preferred Stock dividends in respect of all Preferred Stock held by Persons other than the Company or a Wholly Owned Subsidiary, and (viii) interest actually paid on any Indebtedness of any other Person that is Guaranteed by the Company or any Restricted Subsidiary. Notwithstanding the foregoing, net interest expense attributable to Tooling Indebtedness shall not be included in Consolidated Interest Expense except to the extent such expense would be included in interest expense in accordance with GAAP. "Consolidated Net Income" means, for any period, the net income of the Company and its consolidated Subsidiaries; provided, however, that there shall not be included in such Consolidated Net Income: (i) any net income (or loss) of any Person if such Person is not a Restricted Subsidiary, except that subject to the exclusion contained in clause (iv) below, the Company's equity in the net income of any such Person for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such period to the Company or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution paid to a Restricted Subsidiary, to the limitations contained in clause (iii) below); (ii) for purposes of subclause (a)(3)(A) of the covenant described under "Certain Covenants -- Limitation on Restricted Payments" only, any net income (or loss) of any Person acquired by the Company or a Subsidiary in a pooling of interests transaction for any period prior to the date of such acquisition; (iii) any net income of any Restricted Subsidiary if such Restricted Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions by such Restricted Subsidiary, directly or indirectly, to the Company, except that (A) subject to the exclusion contained in clause (iv) below, the Company's equity in the net income of any such Restricted Subsidiary for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash that could have been distributed by such Restricted Subsidiary consistent with such restriction during such period to the Company or another Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution paid to another Restricted Subsidiary, to the limitation contained in this clause) and (B) the Company's equity in a net loss of any such Restricted Subsidiary for such period shall be included in determining such Consolidated Net Income; (iv) any gain (or loss) realized upon the sale or other disposition of any assets of the Company or its consolidated Subsidiaries (including pursuant to any sale-and-leaseback arrangement) which is not sold or otherwise disposed of in the ordinary course of business and any gain (or loss) realized upon the sale or other disposition of any Capital Stock of any Person; (v) extraordinary gains or losses; and (vi) the cumulative effect of a change in accounting principles. Notwithstanding the foregoing, for the purposes of the covenant described under "Certain Covenants--Limitation on Restricted Payments" only, there shall be excluded from Consolidated Net Income any dividends, repayments of loans or advances or other transfers of assets from Unrestricted Subsidiaries to the Company or a Restricted Subsidiary to the extent such dividends, repayments or transfers increase the amount of Restricted Payments permitted under such covenant pursuant to clause (a)(3)(D) thereof. "Consolidated Net Worth" means the total of the amounts shown on the balance sheet of the Company and its consolidated Subsidiaries, determined on a consolidated basis in accordance with GAAP, as of the end of the most recent fiscal quarter of the Company ending at least 45 days prior to the taking of any action for the purpose of which the determination is being made, as (i) the par or stated value of all outstanding Capital Stock of the Company plus (ii) paid-in capital or capital surplus relating to such Capital Stock plus (iii) any retained earnings or earned surplus less (A) any accumulated deficit and (B) any amounts attributable to Disqualified Stock. "Currency Agreement" means, with respect to any Person, any foreign exchange contract, currency swap agreement or other similar agreement to which such Person is a party or a beneficiary. "Default" means any event which is, or after notice or passage of time or both would be, an Event of Default. "Designated Senior Indebtedness" means (i) the Bank Indebtedness and (ii) any other Senior Indebtedness of the Company which, at the date of determination, has an aggregate principal amount outstanding of, or under which, at the date of 84 90 determination, the holders thereof are committed to lend up to, at least $10 million and is specifically designated by the Company in the instrument evidencing or governing such Senior Indebtedness as "Designated Senior Indebtedness" for purposes of the Indenture. "Disqualified Stock" means, with respect to any Person, any Capital Stock which by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event (i) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise, (ii) is convertible or exchangeable, at the option of the holder thereof, for Indebtedness or Disqualified Stock or (iii) is redeemable at the option of the holder thereof, in whole or in part, in each case on or prior to the first anniversary of the Stated Maturity of the Notes. "EBITDA" for any period means the sum of Consolidated Net Income plus Consolidated Interest Expense plus, without duplication, the following to the extent deducted in calculating such Consolidated Net Income: (i) income tax expense (including Michigan Single Business Tax expense), (ii) depreciation expense, (iii) amortization expense and (iv) all other non-cash items reducing Consolidated Net Income (other than items that will require cash payments and for which an accrual or reserve is, or is required by GAAP to be, made), less all non-cash items increasing Consolidated Net Income, in each case for such period. Notwithstanding the foregoing, the provision for taxes based on the income or profits of, and the depreciation and amortization of, a Subsidiary of the Company shall be added to Consolidated Net Income to compute EBITDA only to the extent (and in the same proportion) that the net income of such Subsidiary was included in calculating Consolidated Net Income. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Existing Preferred Stock" means the Series A $3.00 cumulative Preferred Stock issued by Lobdell and the Series B Preferred Stock issued by Lobdell in the aggregate amount of $50.7 million, less any shares of such preferred stock repurchased, redeemed or canceled subsequent to the Issue Date, as the terms of such preferred stock shall exist as of the Issue Date. "GAAP" means generally accepted accounting principles in the United States of America as in effect as of the Issue Date, including those set forth in (i) the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants, (ii) statements and pronouncements of the Financial Accounting Standards Board and (iii) such other statements by such other entity as approved by a significant segment of the accounting profession. "Guarantee" means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness or other obligation of any Person and any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation of such Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise) or (ii) entered into for the purpose of assuring in any other manner the obligee of such Indebtedness or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided, however, that the term "Guarantee" shall not include endorsements for collection or deposit in the ordinary course of business. The term "Guarantee" used as a verb has a corresponding meaning. The term "Guarantor" shall mean any Person Guaranteeing any obligation. "Hedging Obligations" of any Person means the obligations of such Person pursuant to any Interest Rate Agreement or Currency Agreement. "Holder" or "Noteholder" means the Person in whose name a Note is registered on the Registrar's books. "Incur" means issue, assume, Guarantee, incur or otherwise become liable for; provided, however, that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Subsidiary at the time it becomes a Subsidiary; provided, 85 91 further, however, that in the case of a discount security, neither the accrual of interest nor the accretion of original issue discount shall be considered an Incurrence of Indebtedness, but the entire face amount of such security shall be deemed Incurred upon the issuance of such security. The term "Incurrence" when used as a noun shall have a correlative meaning. "Indebtedness" means, with respect to any Person on any date of determination (without duplication), (i) the principal of and premium (if any) in respect of (A) indebtedness of such Person for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable; (ii) all Capital Lease Obligations of such Person and all Attributable Debt in respect of Sale/Leaseback Transactions entered into by such Person; (iii) all obligations of such Person issued or assumed as the deferred purchase price of property or services, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (but excluding trade accounts payables arising in the ordinary course of business and which are not more than 90 days past due and not in dispute), which purchase price or obligation is due more than six months after the date of placing such property in service or taking delivery and title thereto or the completion of such services (provided that, in the case of obligations of an acquired Person assumed in connection with an acquisition of such Person, such obligations would constitute Indebtedness of such Person); (iv) all obligations of such Person for the reimbursement of any obligor on any letter of credit, banker's acceptance or similar credit transaction (other than obligations with respect to letters of credit securing obligations (other than obligations described in (i) through (iii) above) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the tenth Business Day following receipt by such Person of a demand for reimbursement following payment on the letter of credit); (v) the amount of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock or, with respect to any Subsidiary of such Person, any Preferred Stock (but excluding, in each case, any accrued dividends); (vi) all obligations of the type referred to in clauses (i) through (v) of other Persons and all dividends of other Persons for the payment of which, in either case, such Person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by means of any Guarantee; (vii) all obligations of the type referred to in clauses (i) through (vi) of other Persons secured by any Lien on any property or asset of such Person (whether or not such obligation is assumed by such Person), the amount of such obligation being deemed to be the lesser of the value of such property or assets or the amount of the obligation so secured; and (viii) to the extent not otherwise included in this definition, Hedging Obligations of such Person. The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations as described above at such date; provided, however, that the amount outstanding at any time of any Indebtedness issued with original issue discount shall be deemed to be the face amount of such Indebtedness less the remaining unamortized portion of the original issue discount of such Indebtedness at such time as determined in conformity with GAAP. "Interest Rate Agreement" means any interest rate swap agreement, interest rate cap agreement or other financial agreement or arrangement designed to protect the Company or any Restricted Subsidiary against fluctuations in interest rates. "Investment" in any Person means any direct or indirect advance, loan (other than advances to customers in the ordinary course of business that are recorded as accounts receivable on the balance sheet of such Person) or other extensions of credit (including by way of Guarantee or similar arrangement) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by such Person. For purposes of the definition of "Unrestricted Subsidiary," the definition of "Restricted Payment" and the covenant described under "Certain Covenants -- Limitation on Restricted Payments," (i) "Investment" shall include the portion (proportionate to the Company's equity interest in such Subsidiary) of the fair market value of the net assets of any Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue to have a permanent "Investment" in an Unrestricted Subsidiary equal to an amount (if positive) equal to (x) the Company's "Investment" in such Subsidiary at the time of such redesignation less (y) the portion (proportionate to the Company's equity interest in such Subsidiary) of the fair market value of the net assets of such Subsidiary at the time of such redesignation; and (ii) any property transferred to or from an 86 92 Unrestricted Subsidiary shall be valued at its fair market value at the time of such transfer, in each case as determined in good faith by the Board of Directors. "Issue Date" means the date on which the Notes are originally issued. "Legal Holiday" means a Saturday, a Sunday or a day on which banking institutions are not required to be open in the State of New York. "Lien" means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof). "Net Available Cash" from an Asset Disposition means cash payments received by the Company or any of its Subsidiaries therefrom (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring Person of Indebtedness or other obligations relating to such properties or assets or received in any other noncash form) in each case net of (i) all legal, title and recording tax expenses, commissions and other fees and expenses incurred, and all Federal, state, provincial, foreign and local taxes required to be paid or accrued as a liability under GAAP, as a consequence of such Asset Disposition, (ii) all payments made on any Indebtedness which is secured by any assets subject to such Asset Disposition, in accordance with the terms of any Lien upon or other security agreement of any kind with respect to such assets, or which must by its terms, or in order to obtain a necessary consent to such Asset Disposition, or by applicable law, be repaid out of the proceeds from such Asset Disposition, (iii) all distributions and other payments required to be made to minority interest holders in Subsidiaries or Joint Ventures as a result of such Asset Disposition and (iv) the deduction of appropriate amounts provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the property or other assets disposed in such Asset Disposition and retained by the Company or any Restricted Subsidiary after such Asset Disposition, including without limitation liabilities under any indemnification obligations associated with such Asset Disposition. "Net Cash Proceeds," with respect to any issuance or sale of Capital Stock, means the cash proceeds of such issuance or sale net of attorneys fees, accountants fees, underwriters' or placement agents' fees, discounts or commissions and brokerage, consultant and other fees actually incurred in connection with such issuance or sale and net of taxes paid or payable as a result thereof. "Obligations" means all present and future obligations for principal, premium, interest (including, without limitation, any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law), penalties, fees, indemnifications, reimbursements (including, without limitation, all reimbursement and other obligation pursuant to any letters of credit, bankers acceptances or similar instruments or documents), damages and other liabilities payable under the documentation at any time governing any indebtedness. "Permitted Holders" means (i) any of Selwyn Isakow, his spouse and any of his lineal descendants and their respective spouses (collectively, the "Isakow Family") whether acting in their own name or as one or as a majority of persons having the power to exercise the voting rights attached to, or having investment power over, shares held by others, (ii) any controlled Affiliate of any member of the Isakow Family, and (iii) any trust solely for the benefit of one or more members of the Isakow Family (whether or not any member of the Isakow Family is a trustee of such trust). "Permitted Investment" means an Investment by the Company or any Restricted Subsidiary in (i) the Company, (ii) a Restricted Subsidiary or a Person that will, upon the making of such Investment, become a Restricted Subsidiary; provided, however, that the primary business of such Restricted Subsidiary is a Related Business; (iii) another Person if as a result of such Investment such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all its assets to, the Company or a Restricted Subsidiary; provided, however, that such Person's primary business is a Related 87 93 Business; (iv) Temporary Cash Investments; (v) receivables owing to the Company or any Restricted Subsidiary if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Company or any such Restricted Subsidiary deems reasonable under the circumstances; (vi) payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business; (vii) loans or advances to employees made in the ordinary course of business consistent with past practices of the Company or such Restricted Subsidiary; (viii) stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Company or any Restricted Subsidiary or in satisfaction of judgments; (ix) Persons other than Restricted Subsidiaries that are primarily engaged in a Related Business, in an aggregate amount not to exceed $15 million (to the extent utilized for an Investment, such amount will be reinstated to the extent that the Company or any Restricted Subsidiary receives dividends, repayments of loans or other transfers of assets as a return of such Investment); (x) any Person to the extent such Investment is received in exchange for the transfer to such Person of the assets owned as of the Issue Date by Laserweld International L.L.C.; and (xi) any Person to the extent such Investment represents the non-cash portion of the consideration received for an Asset Disposition as permitted pursuant to the covenant described under "Certain Covenants -- Limitation on Sales of Assets and Subsidiary Stock." "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. "Preferred Stock," as applied to the Capital Stock of any corporation, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such corporation, over shares of Capital Stock of any other class of such corporation. "principal" of a Note means the principal of the Note plus the premium, if any, payable on the Note which is due or overdue or is to become due at the relevant time. "Public Equity Offering" means an underwritten primary public offering of common stock of the Company pursuant to an effective registration statement under the Securities Act. "Public Market" means any time after (i) a Public Equity Offering has been consummated and (ii) at least 10% of the total issued and outstanding common stock of the Company has been distributed by means of an effective registration statement under the Securities Act or sales pursuant to Rule 144 under the Securities Act. "Purchase Money Indebtedness" mean Indebtedness (i) consisting of the deferred purchase price of property, conditional sale obligations, obligations under any title retention agreement, other purchase money obligations and obligations in respect of industrial revenue bonds or similar Indebtedness, in each case where the maturity of such Indebtedness does not exceed the anticipated useful life of the asset being financed, and (ii) incurred to finance the acquisition by the Company or a Restricted Subsidiary of such asset, including additions and improvements; provided, however, that any Lien arising in connection with any such Indebtedness shall be limited to the specified asset being financed or, in the case of real property or fixtures, including additions and improvements, the real property on which such asset is attached; and provided, further, however, that such Indebtedness is Incurred within 90 days after such acquisition of such asset by the Company or Restricted Subsidiary. "Refinance" means, in respect of any Indebtedness, to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue other Indebtedness in exchange or replacement for, such Indebtedness. "Refinanced" and "Refinancing" shall have correlative meanings. "Refinancing Indebtedness" means Indebtedness that Refinances any Indebtedness of the Company or any Restricted Subsidiary existing on the Issue Date or Incurred in compliance with the Indenture; provided, however, that (i) such Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being Refinanced, 88 94 (ii) such Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the Average Life of the Indebtedness being Refinanced and (iii) such Refinancing Indebtedness has an aggregate principal amount (or if Incurred with original issue discount, an aggregate issue price) that is equal to or less than the aggregate principal amount (or if Incurred with original issue discount, the aggregate accreted value) then outstanding or committed (plus fees and expenses, including any premium and defeasance costs) under the Indebtedness being Refinanced; provided further, however, that Refinancing Indebtedness shall not include (x) Indebtedness of a Subsidiary that Refinances Indebtedness of the Company or (y) Indebtedness of the Company or a Restricted Subsidiary that Refinances Indebtedness of an Unrestricted Subsidiary. "Related Business" means any business related, ancillary or complementary (as determined in good faith by the Board of Directors) to the businesses of the Company and the Restricted Subsidiaries on the Issue Date. "Representative" means any trustee, agent or representative (if any) for an issue of Senior Indebtedness of the Company. "Restricted Payment" means, with respect to any Person, (i) the declaration or payment of any dividends or any other distributions on or in respect of its Capital Stock (including any payment in connection with any merger or consolidation involving such Person) or similar payment to the holders of its Capital Stock, except dividends or distributions payable solely in its Capital Stock (other than Disqualified Stock) and except dividends or distributions payable solely to the Company or a Restricted Subsidiary (and, if such Restricted Subsidiary is not wholly owned, to its other shareholders on a pro rata basis or on a basis that results in the receipt by the Company or a Restricted Subsidiary of dividends or distributions of greater value than it would receive on a pro rata basis), (ii) the purchase, redemption or other acquisition or retirement for value of any Capital Stock of the Company held by any Person or of any Capital Stock of a Restricted Subsidiary held by any Affiliate of the Company (other than a Restricted Subsidiary), including the exercise of any option to exchange any Capital Stock (other than into Capital Stock of the Company that is not Disqualified Stock), (iii) the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment of any Subordinated Obligations (other than the purchase, repurchase or other acquisition of Subordinated Obligations purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of acquisition) or (iv) the making of any Investment in any Person (other than a Permitted Investment). "Restricted Subsidiary" means any Subsidiary of the Company that is not an Unrestricted Subsidiary. As of the Issue Date, the following Subsidiaries of the Company were Restricted Subsidiaries: Lobdell Emery Corporation, BMG North America Limited, Winchester Fabrication Corporation, Creative Fabrication Corporation, Parallel Group International, Inc., Laserweld International, L.L.C., Concept Management Corporation, Lewis Emery Capital Corporation and BMG Holdings, Inc. "Sale/Leaseback Transaction" means an arrangement relating to property now owned or hereafter acquired whereby the Company or a Restricted Subsidiary transfers such property to a Person and the Company or a Restricted Subsidiary leases it from such Person. "SEC" means the Securities and Exchange Commission. "Secured Indebtedness" means any Indebtedness of the Company secured by a Lien. "Secured Indebtedness" of any Subsidiary Guarantor has a correlative meaning. "Senior Credit Facility" means the credit agreement dated as of the Issue Date, between the Company, the lenders and other persons party thereto and NBD Bank, as Agent, together with the related documents thereto executed at any time (including, without limitation, any guarantee agreements, security agreements and other collateral documents) and the credit facilities thereunder, in each case as such documents may be amended (including, without limitation, any amendment and restatement thereof), supplemented or otherwise modified from time to time, including any agreement extending the maturity of, refinancing, replacing or otherwise restructuring (including, without limitation, increasing the amount of available 89 95 borrowings thereunder (provided that such increase in borrowings is permitted by the covenant described under "Certain Covenants -- Limitation on Indebtedness") or adding subsidiaries as additional borrowers or guarantors thereunder). "Senior Indebtedness" of the Company means (i) all Bank Indebtedness of the Company, whether outstanding on the Issue Date or thereafter Incurred, including the Guarantees by the Company of all Bank Indebtedness, and (ii) accrued and unpaid interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company whether or not a claim for post-filing interest is allowed in such proceeding) in respect of (A) indebtedness of the Company for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which the Company is responsible or liable unless, in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is provided that such obligations are subordinate in right of payment to the Notes; provided, however, that Senior Indebtedness shall not include (1) any obligation of the Company to any Subsidiary, (2) any liability for Federal, state, local or other taxes owed or owing by the Company, (3) any accounts payable or other liability to trade creditors arising in the ordinary course of business (including guarantees thereof or instruments evidencing such liabilities), (4) any Indebtedness of the Company (and any accrued and unpaid interest in respect thereof) which is subordinate or junior in any respect (other than as a result of the Indebtedness being unsecured) to any other Indebtedness or other obligation of the Company, including any Senior Subordinated Indebtedness and any Subordinated Obligations, (5) any obligations with respect to any Capital Stock or (6) that portion of any Indebtedness which at the time of Incurrence is Incurred in violation of the Indenture. "Senior Indebtedness" of any Subsidiary Guarantor has a correlative meaning. "Senior Subordinated Indebtedness" of the Company means the Notes and any other Obligations under or in connection with the Notes, the Indenture and/or any related agreements, documents or instruments, whether now owing or hereafter incurred or owing and any other Indebtedness of the Company that specifically provides that such Indebtedness is to rank pari passu with the Notes in right of payment and is not subordinated by its terms in right of payment to any Indebtedness or other obligation of the Company which is not Senior Indebtedness. "Senior Subordinated Indebtedness" of any Subsidiary Guarantor has a correlative meaning. "Significant Subsidiary" means any Restricted Subsidiary that would be a "Significant Subsidiary" of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC. "Stated Maturity" means, with respect to any security, the date specified in such security as the fixed date on which the final payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency unless such contingency has occurred). "Subordinated Obligation" means any Indebtedness of the Company (whether outstanding on the Issue Date or thereafter Incurred) which is subordinate or junior in right of payment to the Notes pursuant to a written agreement to that effect. "Subordinated Obligation" of any Subsidiary Guarantor has a correlative meaning. "Subsidiary" means, in respect of any Person, any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of Capital Stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person, (ii) such Person and one or more Subsidiaries of such Person or (iii) one or more Subsidiaries of such Person. "Subsidiary Guaranty" means the Guarantee by a Subsidiary Guarantor of the Company's obligations with respect to the Notes. "Subsidiary Guarantor" means each Subsidiary designated as such on the signature pages of the Indenture and any other Subsidiary that has issued a Subsidiary Guaranty. 90 96 "Temporary Cash Investments" means any of the following: (i) any investment in direct obligations of the United States of America or any agency thereof or obligations guaranteed by the United States of America or any agency thereof, (ii) investments in time deposit accounts, certificates of deposit and money market deposits maturing within 180 days of the date of acquisition thereof issued by a bank or trust company which is organized under the laws of the United States of America, any state thereof or any foreign country recognized by the United States, and which bank or trust company has capital, surplus and undivided profits aggregating in excess of $50,000,000 (or the foreign currency equivalent thereof) and has outstanding debt which is rated "A" (or such similar equivalent rating) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act) or any money-market fund sponsored by an registered broker dealer or mutual fund distributor, (iii) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (i) above entered into with a bank meeting the qualifications described in clause (ii) above, (iv) investments in commercial paper, maturing not more than 90 days after the date of acquisition, issued by a corporation (other than an Affiliate of the Company) organized and in existence under the laws of the United States of America, any State thereof or the District of Columbia or any foreign country recognized by the United States of America with a rating at the time as of which any investment therein is made of "P-1" (or higher) according to Moody's Investors Service, Inc. or "A-1" (or higher) according to Standard and Poor's Ratings Group, and (v) investments in securities with maturities of six months or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, and rated at least "A" by Standard & Poor's Ratings Group or "A" by Moody's Investors Service, Inc. "Tooling Indebtedness" means all present and future Indebtedness of the Company or any Restricted Subsidiary the proceeds of which are utilized to finance dies, molds, tooling and similar items (collectively "Tooling") for which the sales of such Tooling is covered under specific written purchase orders or agreements between the Company or any Restricted Subsidiary and the purchaser of such Tooling. "Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors in the manner provided below and (ii) any Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary of the Company (including any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Capital Stock or Indebtedness of, or holds any Lien on any property of, the Company or any other Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so designated; provided, however, that either (A) the Subsidiary to be so designated has total assets of $1,000 or less or (B) if such Subsidiary has assets greater than $1,000, such designation would be permitted under the covenant described under "Certain Covenants -- Limitation on Restricted Payments." The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that immediately after giving effect to such designation (x) the Company could Incur $1.00 of additional Indebtedness under paragraph (a) of the covenant described under "Certain Covenants -- Limitation on Indebtedness" and (y) no Default shall have occurred and be continuing. Any such designation by the Board of Directors shall be notified by the Company to the Trustee by promptly filing with the Trustee a copy of the board resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing provisions. "U.S. Government Obligations" means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable at the issuer's option. "Voting Stock" of a Person means all classes of Capital Stock or other interests (including partnership interests) of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof. "Wholly Owned Subsidiary" means a Restricted Subsidiary all the Capital Stock of which (other than directors' qualifying shares) is owned by the Company and/or one or more Wholly Owned Subsidiaries. 91 97 CERTAIN FEDERAL INCOME TAX CONSIDERATIONS The following discussion summarizes the certain United States federal income tax consequences of the Exchange Offer to a holder of Old Notes that is an individual citizen or resident of the United States or a United States corporation that purchased the Old Notes pursuant to their original issue (a "U.S. Holder"). It is based on the Internal Revenue Code of 1986, as amended to the date hereof (the "Code"), existing and proposed Treasury regulations, and judicial and administrative determinations, all of which are subject to change at any time, possibly on a retroactive basis. The following relates only to the Old Notes, and the New Notes received therefor, that are held as "capital assets" within the meaning of Section 1221 of the Code by U.S. Holders. It does not discuss state, local, or foreign tax consequences, nor does it discuss tax consequences to categories of holders that are subject to special rules, such as foreign persons, tax-exempt organizations, insurance companies, banks, and dealers in stocks and securities. Tax consequences may vary depending on the particular status of an investor. No rulings will be sought from the Internal Revenue Service with respect to the federal income tax consequences of the Exchange Offer. THIS SECTION DOES NOT PURPORT TO DEAL WITH ALL ASPECTS OF FEDERAL INCOME TAXATION THAT MAY BE RELEVANT TO AN INVESTOR'S DECISION TO EXCHANGE OLD NOTES FOR NEW NOTES. EACH INVESTOR SHOULD CONSULT WITH ITS OWN TAX ADVISOR CONCERNING THE APPLICATION OF THE FEDERAL INCOME TAX LAWS AND OTHER TAX LAWS TO ITS PARTICULAR SITUATION BEFORE DETERMINING WHETHER TO EXCHANGE OLD NOTES FOR NEW NOTES. MARKET DISCOUNT A U.S. Holder of a Note, other than an initial Holder, will be treated as holding the Note at a market discount (a "Market Discount Note") if the amount for which such U.S. Holder purchased the Note is less than the Note's principal amount, subject to a de minimis rule. In general, any partial payment of principal on, or gain recognized on the maturity or disposition of, a Market Discount Note will be treated as ordinary income to the extent that such gain does not exceed the accrued market discount on such Note. Alternatively, a U.S. Holder of a Market Discount Note may elect to include market discount in income currently over the life of the Market Discount Note. Such an election applies to all debt instruments with market discount acquired by the electing U.S. Holder on or after the first day of the first taxable year to which the election applies and may not be revoked without the consent of the Internal Revenue Service. Market discount accrues on a straight-line basis, unless the U.S. Holder elects to accrue such discount on a constant yield to maturity basis. Such an election is applicable only to the Note with respect to which it is made and is irrevocable. A U.S. Holder of a Market Discount Note that does not elect to include market discount in income currently, generally will be required to defer deductions for interest on borrowings allocable to such Note, in an amount not exceeding the accrued market discount on such Note, until the maturity or disposition of such Note. THE EXCHANGE OFFER The exchange of Old Notes pursuant to the Exchange Offer should be treated as a continuation of the corresponding Old Notes because the terms of the New Notes are not materially different from the terms of the Old Notes. Accordingly, it is the Company's belief that such exchange will not constitute a taxable event to U.S. Holders and, therefore, (i) no gain or loss should be realized by a U.S. Holder upon receipt of a New Note, (ii) the holding period of the New Note should include the holding period of the Old Note exchanged therefor and (iii) the adjusted tax basis of the New Note should be the same as the adjusted tax basis of the Old Note exchanged therefor immediately before the exchange. STATED INTEREST 92 98 Stated interest on a Note will be taxable to a U.S. Holder as ordinary interest income at the time that such interest accrues or is received, in accordance with the U.S. Holder's regular method of accounting for federal income tax purposes. The Notes are not considered to have been issued with original issue discount for federal income tax purposes. SALE, EXCHANGE OR RETIREMENT OF THE NOTES A U.S. Holder's tax basis in a Note generally will be its cost. A U.S. Holder generally will recognize gain or loss on the sale, exchange or retirement of a Note in an amount equal to the difference between the amount realized on the sale, exchange or retirement and the tax basis of the Note. Gain or loss recognized on the sale, exchange or retirement of a Note (excluding amounts received in respect of accrued interest, which will be taxable as ordinary interest income) generally will be capital gain or loss and will be long-term capital gain or loss if the Note was held for more than one year. BACKUP WITHHOLDING Under certain circumstances, a U.S. Holder of a Note may be subject to "backup withholding" at a 31% rate with respect to payments of interest thereon or the gross proceeds from the disposition thereof. This withholding generally applies if the U.S. Holder fails to furnish his or her social security number or other taxpayer identification number in the specified manner and in certain other circumstances. Any amount withheld from a payment to a U.S. Holder under the backup withholding rules is allowable as a credit against such U.S. Holder's federal income tax liability, provided that the required information is furnished to the IRS. Corporations and certain other entities described in the Code and Treasury regulations are exempt from backup withholding if their exempt status is properly established. PLAN OF DISTRIBUTION Each broker-dealer that receives New Notes for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such New Notes. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of New Notes received in exchange for Old Notes where such Old Notes were acquired as a result of market-making activities or other trading activities. Each of the Company and the Subsidiary Guarantors has agreed that, starting on the Expiration Date and ending on the close of business on the first anniversary of the Expiration Date, it will make this Prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until , 1997 (90 days after the date of this Prospectus), all dealers effecting transactions in the New Notes may be required to deliver a prospectus. Neither the Company nor any of the Subsidiary Guarantors will receive any proceeds from any sale of New Notes by broker-dealers. New Notes received by broker-dealers for their own account pursuant to the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the New Notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such New Notes. Any broker-dealer that resells New Notes that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such New Notes may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of New Notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. 93 99 For a period of one year after the Expiration Date, the Company will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any broker-dealer that requests such documents in the Letter of Transmittal. The Company and each of the Subsidiary Guarantors have agreed to pay all expenses incident to the Exchange Offer (including the expenses of one counsel for the holders of the Old Notes) other than commissions or concessions of any brokers or dealers and will indemnify the holders of the Old Notes (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act. LEGAL MATTERS The validity of the New Notes offered hereby will be passed upon for the Company by Dykema Gossett PLLC, Bloomfield Hills, Michigan. Rex E. Schlaybaugh, Jr. is a shareholder, the Vice Chairman of the Board and a director of the Company. Mr. Schlaybaugh is a member of Dykema Gossett PLLC. Certain matters relating to the Subsidiary Guaranties and the application of Ontario law to them will be passed upon for the Company by Fasken Campbell Godfrey, Toronto, Ontario. EXPERTS On March 28, 1997, Price Waterhouse LLP, independent auditors, were selected by the Board of Directors to audit the financial statements of the Company for the fiscal year ended March 31, 1997. On March 28, 1997, the Company dismissed its principal accountant, Deloitte & Touche, upon the recommendation of the Company's Board of Directors. There were no disagreements with Deloitte & Touche and the Company during the two most recent fiscal years and subsequent interim periods preceding such dismissal on any matter of accounting principles or practices, financial statement disclosures or auditing scope or procedure. The reports of Price Waterhouse LLP and Deloitte & Touche on the financial statements for each of the past two years have not contained an adverse opinion, disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. The consolidated financial statements of the Company as of and for the year ended March 31, 1997 included in this Prospectus have been so included in reliance on the report of Price Waterhouse LLP, independent auditors, given on the authority of said firm as experts in auditing and accounting. The consolidated financial statements of the Company as of March 31, 1996 and for the period from October 28, 1995 through March 31, 1996 appearing in this Prospectus and the related financial statement schedule included in the Exchange Offer Registration Statement have been audited by Deloitte & Touche, independent auditors, as stated in their report appearing herein, and are included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. The consolidated financial statements of BMG North America Limited (Predecessor) for the period from April 1, 1995 through October 27, 1995 and for the year ended March 31, 1995 appearing in this Prospectus and the related financial statement schedule included in the Exchange Offer Registration Statement have been audited by Deloitte & Touche, independent auditors, as stated in their report appearing herein, and are included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. The consolidated financial statements of Lobdell Emery Corporation as of December 31, 1996 and 1995 and for each year in the three-year period ended December 31, 1996 included in this Prospectus have been so included in reliance on the report of Price Waterhouse LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. 94 100 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE ---- OXFORD AUTOMOTIVE, INC. Report of Independent Accountants................................... F-2 Independent Auditors' Report........................................ F-3 Consolidated Balance Sheets as of March 31, 1997, 1996 and June 30, 1997 (Unaudited)......................................... F-4 Consolidated Statements of Operations for the year ended March 31, 1997, the period from October 28, 1995 through March 31, 1996 and the three months ended June 30, 1997 and 1996 (Unaudited) for the Company; and for the period from April 1, 1995 through October 27, 1995 and for the year ended March 31, 1995 for the Predecessor..................... F-5 Consolidated Statement of Changes in Shareholders' Equity for the year ended March 31, 1997, the period from October 28, 1995 through March 31, 1996 and the three months ended June 30, 1997 (Unaudited) for the Company; and for the period from April 1, 1995 through October 27, 1995 and the year ended March 31, 1995 for the Predecessor.................... F-6 Consolidated Statements of Cash Flows for the year ended March 31, 1997, the period from October 28, 1995 through March 31, 1996 and the three months ended June 30, 1997 and 1996 (Unaudited) for the Company; and for the period from April 1, 1995 through October 27, 1995 and for the year ended March 31, 1995 for the Predecessor.......................... F-7 Notes to Consolidated Financial Statements.......................... F-8 LOBDELL EMERY CORPORATION Report of Independent Accountants................................... F-24 Consolidated Balance Sheets as of December 31, 1996 and 1995.............................................................. F-25 Consolidated Statements of Operations for the years ended December 31, 1996, 1995 and 1994.................................. F-26 Consolidated Statement of Changes in Shareholders' Equity for the years ended December 31, 1996, 1995 and 1994.............. F-27 Consolidated Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994.................................. F-28 Notes to Consolidated Financial Statements.......................... F-29
F-1 101 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders of Oxford Automotive, Inc. In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of operations, of changes in shareholders' equity and of cash flows present fairly, in all material respects, the financial position of Oxford Automotive, Inc. and its subsidiaries (the Company) at March 31, 1997 and the result of their operations and their cash flows for the year ended March 31, 1997 in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for the opinion expressed above. The financial statements of the Company as of March 31, 1996 and for the period from October 28, 1995 through March 31, 1996 and the financial statements of BMG North America Limited (the Predecessor) for the period from April 1, 1995 through October 27, 1995 and for the year ended March 31, 1995 were audited by other independent accountants whose report dated May 21, 1996 expressed an unqualified opinion on those statements. PRICE WATERHOUSE LLP Detroit, Michigan May 19, 1997 F-2 102 INDEPENDENT AUDITORS' REPORT To the Directors of Oxford Automotive, Inc. and BMG North America Limited We have audited the consolidated balance sheet of Oxford Automotive, Inc. as at March 31, 1996 and the consolidated statements of operations, changes in shareholders' equity and cash flows for the period from October 28, 1995 to March 31, 1996 for Oxford Automotive, Inc. and the consolidated statements of operations, changes in shareholders' equity and cash flows for the period from April 1, 1995 to October 27, 1995 and for the year ended March 31, 1995 for BMG North America Limited. These financial statements are the responsibility of the management of Oxford Automotive Inc. and BMG North America Limited. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of Oxford Automotive, Inc., as at March 30, 1996 and the results of its operations and its cash flows for the period from October 28, 1995 to March 31, 1996 and the results of BMG North America Limited's operations and its cash flows for the period from April 1, 1995 to October 27, 1995 and for the year ended March 31, 1995 in accordance with U.S. generally accepted accounting principles. Deloitte & Touche Chartered Accountants Kitchener, Ontario May 21, 1996 F-3 103 OXFORD AUTOMOTIVE, INC. CONSOLIDATED BALANCE SHEETS (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
JUNE 30, MARCH 31, ------------------- ------------------- 1997 1997 1996 ---- ---- ---- (unaudited) ASSETS Current assets Cash and cash equivalents................................. $ 58,883 $ 9,671 $ -- Trade receivables -- less allowance of $1,272 at June 30, 1997 and March 31, 1997 and $39 at March 31, 1996......... 41,511 47,626 8,338 Inventories............................................... 14,623 13,411 3,719 Refundable income taxes................................... 1,212 1,641 Reimbursable tooling...................................... 5,545 4,968 3,298 Deferred income taxes..................................... 4,364 4,633 Prepaid expenses and other current assets................. 794 1,354 1,181 -------- -------- ------- Total current assets................................... 126,932 83,304 16,536 Unexpended bond proceeds.................................... 3,991 3,937 Other noncurrent assets..................................... 5,382 4,588 6,734 Deferred income taxes....................................... 4,057 5,087 6,139 Property, plant and equipment, net.......................... 146,291 146,778 19,791 -------- -------- ------- TOTAL ASSETS........................................... $286,653 $243,694 $49,200 ======== ======== ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Trade accounts payable.................................... $ 27,398 $ 31,421 $14,570 Employee compensation..................................... 7,336 4,986 1,883 Restructuring reserve..................................... 6,303 7,050 608 Accrued expenses and other current liabilities............ 6,951 9,040 3,299 Current portion of borrowings............................. 4,761 24,274 11,258 -------- -------- ------- Total current liabilities.............................. 52,749 76,771 31,618 Pension liability........................................... 4,205 3,631 1,080 Postretirement medical benefits liability................... 34,013 33,467 Deferred income taxes....................................... 10,488 10,442 Other noncurrent liabilities................................ 2,187 2,187 67 Long-term borrowings -- less current portion................ 137,917 75,555 15,500 -------- -------- ------- Total liabilities...................................... 241,559 202,053 48,265 -------- -------- ------- Commitments and contingent liabilities (Note 14) Redeemable Series A $3.00 Cumulative Preferred Stock, $100 stated value -- 457,541 shares authorized, issued and outstanding (Notes 3 and 12).............................. 36,305 36,012 -------- -------- ------- Redeemable Series B Preferred Stock, $100 stated value -- 49,938 shares authorized, issued and outstanding (Notes 3 and 12)................................................... 3,330 3,288 -------- -------- ------- Shareholders' equity Common stock, 400,000 shares authorized; 309,750 issued and outstanding at June 30, 1997 and March 31, 1997 and 75,000, issued and outstanding at March 31, 1996....... 1,050 1,050 750 Foreign currency translation adjustment................... (82) (28) 5 Retained earnings......................................... 4,744 1,572 415 Equity adjustment for minimum pension liability........... (253) (253) (235) -------- -------- ------- 5,459 2,341 935 -------- -------- ------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY............. $286,653 $243,694 $49,200 ======== ======== =======
The accompanying notes are an integral part of the financial statements. F-4 104 OXFORD AUTOMOTIVE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
COMPANY PREDECESSOR ------------------------------------------------------- -------------------------------- PERIOD FROM PERIOD FROM OCTOBER 28, 1995 APRIL 1, 1995 THREE MONTHS ENDED THROUGH THROUGH YEAR ENDED JUNE 30, YEAR ENDED MARCH 31, 1996 OCTOBER 27, 1995 MARCH 31, 1995 1997 1996 MARCH 31, 1997 ---- ---- -------------- ---------------- -------------- --------------- (unaudited) Net sales............................ $ 91,960 $21,709 $136,861 $35,572 $49,043 $75,097 Cost of sales........................ 82,662 20,452 125,375 31,624 46,895 70,891 -------- ------- -------- ------- ------- ------- Gross profit....................... 9,298 1,257 11,486 3,948 2,148 4,206 Selling, general and administrative..................... 1,692 703 7,685 2,235 3,922 4,554 -------- ------- ------- ------- ------- ------- Operating income (loss)............ 7,606 554 3,801 1,713 (1,774) (348) Other income (expense) Interest expense................... (1,798) (592) (3,388) (1,096) (1,048) (1,267) Other income....................... 37 587 2,201 -------- ------- ------- ------- ------- ------- Income (loss) before (provision) benefit for income taxes........... 5,845 549 2,614 617 (2,822) (1,615) (Provision) benefit for income taxes.............................. 2,338 220 (1,065) (202) 938 349 -------- ------- ------- ------- ------- ------- Net income (loss).................... 3,507 329 1,549 415 $(1,884) $(1,266) ======= ======= Accrued dividends and accretion on redeemable preferred stock......... 335 -- 300 -- -------- ------- ------- ------- Net income applicable to common stock.............................. $ 3,172 $ 329 $ 1,249 $ 415 ======== ======= ======= ======= Net income per share................. $ 10.24 4.34 $ 9.37 $ 9.10 ======== ======= ======= =======
The accompanying notes are an integral part of the financial statements. F-5 105 OXFORD AUTOMOTIVE, INC. CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE RELATED DATA)
PREDECESSOR ----------------------------------------------------------------- FOREIGN EQUITY CURRENCY RETAINED ADJUSTMENT FOR COMMON TRANSLATION EARNINGS MINIMUM PENSION STOCK ADJUSTMENT (DEFICIT) LIABILITY TOTAL ------ ----------- --------- --------------- ----- Balances at April 1, 1994............... $14,609 $ -- $(2,203) $ -- $12,406 Net (loss).............................. (1,266) (1,266) Foreign currency translation adjustments........................... (186) 40 (146) Issuance of common stock, net of redemptions........................... (161) (161) ------- ----- ------- ----- ------- Balances at March 31, 1995.............. 14,262 40 (3,469) -- 10,833 Net (loss).............................. (1,884) (1,884) Foreign currency translation adjustments........................... 575 (155) 420 Issuance of common stock, net of redemptions........................... (40) (40) ------- ----- ------- ----- ------- Balances at October 27, 1995............ $14,797 $(115) $(5,353) $ -- $ 9,329 ======= ===== ======= ===== ======= COMPANY ----------------------------------------------------------------- FOREIGN EQUITY CURRENCY RETAINED ADJUSTMENT FOR COMMON TRANSLATION EARNINGS MINIMUM PENSION STOCK ADJUSTMENT (DEFICIT) LIABILITY TOTAL ------- ----------- --------- --------------- ------- Balances at October 28, 1995............ $ 750 $ -- $ -- $ -- $ 750 Net income............................ 415 415 Foreign currency translation adjustments........................ 5 5 Equity adjustment for minimum pension liability.......................... (235) (235) ------- ----- ------- ----- ------- Balances at March 31, 1996.............. 750 5 415 (235) 935 Net income............................ 1,549 1,549 Foreign currency translation adjustments........................ (33) (33) Equity adjustment for minimum pension liability.......................... (18) (18) Accrued dividends and accretion of redeemable preferred stock......... (300) (300) Issuance of common stock, net of redemptions........................ 300 (92) 208 ------- ----- ------- ----- ------- Balances at March 31, 1997.............. $ 1,050 $ (28) $ 1,572 $(253) $ 2,341 Net income.............................. 3,507 3,507 Foreign currency translation adjustment ........................ (54) (54) Accrued dividends and accretion of redeemable preferred stock.................... (335) (335) ----------------------------------------------------------------- Balances at June 30, 1997 (unaudited)... $ 1,050 $ (82) $ 4,744 $(253) $ 5,459 =================================================================
The accompanying notes are an integral part of the financial statements. F-6 106 OXFORD AUTOMOTIVE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS AMOUNTS IN THOUSANDS, EXCEPT SHARE RELATED DATA)
COMPANY PREDECESSOR --------------------------------------------------------------------------------------- PERIOD FROM PERIOD FROM THREE MONTHS OCTOBER 28, 1995 APRIL 1, 1995 ENDED JUNE 30, YEAR ENDED THROUGH THROUGH YEAR ENDED 1997 1996 MARCH 31, 1997 MARCH 31, 1996 OCTOBER 27, 1995 MARCH 31, 1995 ---- ---- -------------- ---------------------------------- -------------- (unaudited) OPERATING ACTIVITIES Net income (loss)........................ 3,507 329 $ 1,549 $ 415 $ (1,884) $(1,266) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities Depreciation and amortization.......... 4,308 772 5,041 687 919 1,413 Deferred income taxes.................. 315 (324) 2,136 230 (1,036) (385) Gain on sale of equipment.............. (62) (195) (2) (14) Changes in operating assets and liabilities affecting cash Trade receivables.................... 6,115 (3,045) (8,953) 6,617 (3,311) (2,286) Inventories.......................... (1,212) 1,260 (299) (277) (259) (635) Reimbursable tooling................. (577) (525) (1,601) 1,824 (760) (3,170) Prepaid expenses and other assets.... 498 1,808 129 1,592 (1,768) (553) Other noncurrent assets.............. 3,544 Trade accounts payable............... (4,023) 1,799 (605) (6,501) 6,417 7,314 Employee compensation................ (6,072) 309 (493) (25) Restructuring reserve................ (747) (196) (398) Accrued expenses and other liabilities........................ 261 (127) (1,885) (1,716) 3,504 110 Income taxes payable/refundable...... 429 (199) Other noncurrent liabilities......... 1,120 193 (39) ------- ------- -------- -------- -------- ------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES............ 9,932 1,944 (7,847) 3,178 1,329 503 ------- ------- -------- -------- -------- ------- INVESTING ACTIVITIES Purchase of business, net of cash acquired............................... (9,309) (1,983) Purchase of property, plant and equipment.............................. (3,515) (1,203) (3,326) (3,466) (5,111) (4,384) Proceeds from sale of equipment.......... 341 33 11 26 ------- ------- -------- -------- -------- ------- NET CASH USED IN INVESTING ACTIVITIES...................... (3,515) (1,203) (12,294) (5,416) (5,100) (4,358) ------- ------- -------- -------- -------- ------- FINANCING ACTIVITIES Issuance of share capital................ 300 750 Proceeds from borrowing arrangements..... 124,814 78,823 23,814 921 Principal payments on borrowing arrangements........................... (81,965) (483) (49,186) (16,482) (7,477) (1,182) Redemption and retirement of common stock.................................. (92) (40) (161) Obligation under capital lease -- net.... (6) (3) 76 ------- ------- -------- -------- -------- ------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES............ 42,849 (483) 29,845 8,076 (6,599) (1,267) ------- ------- -------- -------- -------- ------- Effect of exchange rate changes on cash................................... (54) (258) (33) ------- ------- -------- -------- -------- ------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS............................ 49,212 -- 9,671 5,838 (10,370) (5,122) Cash and cash equivalents at beginning of period................................. 9,671 -- (11,238) (868) 4,254 ------- ------- -------- -------- -------- ------- Cash and cash equivalents at end of period................................. $58,883 $ -- $ 9,671 $ (5,400) $(11,238) $ (868) ======= ======= ======== ======== ======== ======= Cash paid for interest................... $ 1,800 $ 276 $ 3,033 $ 1,096 $ 1,048 $ 1,267 ======= ======= ======== ======== ======== ======= Cash paid for income taxes............... $ 383 $ 39 $ -- $ 42 $ 79 $ 113 ======= ======= ======== ======== ======== =======
The accompanying notes are an integral part of the financial statements. F-7 107 OXFORD AUTOMOTIVE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE RELATED DATA) NOTE 1. NATURE OF OPERATIONS Oxford Automotive, Inc. (the Company) is a full-service supplier of metal stampings and welded assemblies used as original equipment components primarily by North American original equipment automotive manufacturers. The Company's products are used in a wide variety of sport utility vehicles, light and medium trucks, vans and passenger cars. The Company primarily operates from seven plants located in the United States and Canada. The Company's hourly workforce is represented by various locals of the United Auto Workers. Net sales to the Company's two primary customers as a percentage of total sales are as follows:
COMPANY PREDECESSOR ---------------------------------- ---------------------------------- PERIOD FROM PERIOD FROM OCTOBER 28, 1995 APRIL 1, 1995 YEAR ENDED THROUGH THROUGH YEAR ENDED MARCH 31, 1997 MARCH 31, 1996 OCTOBER 27, 1995 MARCH 31, 1995 -------------- ---------------- ---------------- -------------- Ford Motor Company................. 17% -- -- -- General Motors Corporation......... 62% 67% 69% 70%
Accounts receivable from Ford Motor Company and General Motors Corporation represent approximately 30% and 60%, respectively, of the March 31, 1997 accounts receivable balance. Although the Company is directly affected by the economic well being of the automotive industry and customers referred to above, management does not believe significant credit risk exists at March 31, 1997. The Company does not require collateral to reduce such risk and historically has not experienced significant losses related to receivables from individual customers or groups of customers in the automotive industry. NOTE 2. SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The financial statements for the period from April 1, 1995 through October 27, 1995 and for the year ended March 31, 1995 are those of BMG North America Limited (the Predecessor), which was acquired by Oxford Automotive, Inc. (formerly BMG-MI, Inc.) on October 28, 1995, as discussed further in Note 3. The consolidated financial statements as of March 31, 1997 and 1996 and for the year ended March 31, 1997 and for the period from October 28, 1995 through March 31, 1996 are those of the Company and its subsidiaries. The financial statements of the Company and Predecessor are not comparable in certain respects due to differences between the cost bases of certain assets held by the Company versus that of the Predecessor, resulting in reduced depreciation and amortization charges subsequent to October 27, 1995, changes in accounting policies and the recording of certain liabilities at the date of acquisition in connection with the purchase of the Predecessor by the Company, as well as the Company's acquisition of Lobdell Emery Corporation and its wholly-owned subsidiaries on January 10, 1997, as discussed further in Note 3. Principles of Consolidation The consolidated financial statements of the Company include the accounts of Oxford Automotive, Inc. and its wholly-owned subsidiaries, BMG Holdings, Inc. and Lobdell Emery Corporation. The accounts of BMG Holdings, Inc. (BMGH) consist of BMGH and its wholly-owned subsidiaries, BMG North America Limited (BMGNA) and BMGNA's two wholly-owned subsidiaries, 829500 Ontario Limited and 976459 Ontario Limited. The accounts of Lobdell Emery Corporation (Lobdell) consist of Lobdell and its wholly-owned subsidiaries, Lewis Emery Capital Corporation (Lewis), Concept Management Corporation and subsidiaries (Concept), Laserweld International (Laserweld) and Parallel Group International (Parallel). Concept F-8 108 OXFORD AUTOMOTIVE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 2. SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED) Management Corporation also includes the accounts of its wholly-owned subsidiaries, Winchester Fabrication Corporation (Winchester) and Creative Fabrication Corporation (Creative). Intercompany accounts and transactions have been eliminated. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Revenue Recognition Revenue is recognized by the Company upon shipment of product to the customer. Financial Instruments At March 31, 1997 and 1996, the carrying amount of financial instruments such as cash and cash equivalents, trade receivables and payables and unexpended bond proceeds, approximated their fair values. The carrying amount of the long-term customer receivables and borrowings at March 31, 1997 and 1996, approximated their fair values based on the variable interest rates available to the Company for similar arrangements. Cash Equivalents The Company considers all highly-liquid investments with maturity of three months or less when purchased to be cash equivalents. Inventories Inventories are stated at the lower of cost or market. Cost is principally determined by the last-in, first-out (LIFO) method for the Company's United States operations and by the first-in first-out (FIFO) method for the Company's Canadian operations. Reimbursable Tooling Reimbursable tooling represents net costs incurred on tooling projects for which the Company expects to be reimbursed by customers. Ongoing estimates of total costs to be incurred on each tooling project are made by management and losses, if any, are recorded when known. Under certain tooling projects, billings exceed costs incurred and the related tooling gain is recognized upon acceptance of the tooling by the customer. Certain of the Company's tooling costs are financed through lending institutions and are reimbursed by vendors on a piece price basis. These tooling assets are classified as either accounts receivable ($3,695 and $1,809 at March 31, 1997 and 1996, respectively), other noncurrent assets ($3,800 and $6,734 at March 31, 1997 and 1996, respectively) or equipment depending upon the ultimate title holder of the tooling assets. Unexpended Bond Proceeds Unexpended bond proceeds in the accompanying consolidated balance sheet represent unexpended proceeds from the issuance of industrial development revenue bonds by Creative as discussed in Note 7, and are invested in allowable money market accounts and commercial paper with a maturity of 30 days or less. F-9 109 OXFORD AUTOMOTIVE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 2. SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED) Property, Plant and Equipment Property, plant and equipment are stated on the basis of cost and include expenditures for improvements which materially increase the useful lives of existing assets. Expenditures for normal repair and maintenance are charged to operations as incurred. For federal income tax purposes, depreciation is computed using accelerated and straight-line methods. For financial reporting purposes, depreciation is computed principally using the straight-line method over the following estimated useful lives:
YEARS ----- Land improvements........................................... 15 Buildings................................................... 30-40 Machinery and equipment..................................... 3-20
Impairment of Long-Lived Assets The Company accounts for long-lived assets in accordance with Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". This Statement requires that long-lived assets and certain identifiable intangibles to be held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. The Company recognizes impairment losses for assets or groups of assets where the sum of the estimated future cash flows (undiscounted and without interest charges) is less than the carrying amount of the related asset or group of assets. The amount of the impairment loss recognized is the excess of the carrying amount over the fair value of the asset or group of assets being measured. Environmental Compliance and Remediation Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations which do not contribute to current or future revenue generation are expensed. Liabilities are recorded when environmental assessments and/or remedial efforts are probable and the costs can be reasonably estimated. Estimated costs are based upon enacted laws and regulations, existing technology and the most probable method of remediation. The costs determined are not discounted and exclude the effects of inflation and other social and economic factors. Income Taxes Deferred taxes are provided to give recognition to the effect of expected future tax consequences of temporary differences between the carrying amounts for financial reporting purposes and the tax bases for income tax purposes of assets and liabilities. Foreign Exchange Contracts Gains and losses of foreign currency firm commitment hedges are deferred and included in the basis of the transactions underlying the commitments. During fiscal 1997, the Company recognized a gain of approximately $2,000 related to certain foreign currency exchange transactions terminated during the year. The gain is included as a component of other income in the accompanying March 31, 1997 statement of operations. Had the foreign currency exchange transactions not been terminated, the recognized gain would normally have been recorded as a component of sales. Foreign Currency Translation The foreign currency financial statements of BMGH, where the local currency is the functional currency, are translated using exchange rates in effect at period end for assets and liabilities and at weighted average F-10 110 OXFORD AUTOMOTIVE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 2. SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED) exchange rates during the period for operating statement accounts. The resulting foreign currency translation adjustments are recorded as a separate component of shareholders' equity. Exchange gains and losses resulting from foreign currency transactions are included in operating results during the period in which they occur. Per Share Amounts Predecessor period per share amounts have not been presented as the Company's capital structure is not comparable to that of the Predecessor. Reclassifications Certain amounts from the prior year have been reclassified to conform with the current year presentation. NOTE 3. ACQUISITIONS On October 28, 1995, the Company acquired all of the outstanding common stock of the Predecessor for $700 canadian. The acquisition was financed through three promissory notes aggregating $600 canadian. The acquisition has been recorded in accordance with the purchase method of accounting. Accordingly, the purchase price plus direct cost of the acquisition have been allocated to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. On January 10, 1997, pursuant to an Agreement and Plan of Merger among Lobdell Emery Corporation, certain shareholders of Lobdell Emery Corporation, BMG-MI, Inc. and L-E Acquisition, Inc. as amended (the Agreement), certain Lobdell Emery Corporation shareholders and option holders had their respective shares and options redeemed for cash of approximately $8,500 and all outstanding shares of common stock of Lobdell Emery Corporation (Oldco) were exchanged for shares of preferred stock of L-E Acquisition, Inc. with a face value of approximately $40,700. In addition, approximately $3,500 of expenses incurred by Oldco were reimbursed by L-E Acquisition, Inc. Subsequent to the exchange of Oldco's common stock for preferred stock, L-E Acquisition, Inc. was merged with and into Lobdell Emery Corporation (Newco). The acquisition was financed through the issuance of preferred stock described in Note 12 and the term loan described in Note 7. The acquisition has been recorded in accordance with the purchase method of accounting. Accordingly, the purchase price plus direct cost of the acquisition have been allocated to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The fair market value of assets acquired and liabilities assumed, without giving effect to the settlement described in Note 17, is summarized as follows: Current assets....................... $56,993 Property, plant and equipment........ 128,893 Noncurrent assets.................... 9,953 Current liabilities.................. (50,028) Long-term liabilities................ (106,811) ------- Fair value of preferred stock........ 39,000 Discount on preferred stock.......... 1,700 ------- Stated value of preferred stock...... $40,700 =======
In accordance with the purchase method of accounting, Lobdell's operating results have been included with those of the Company since the date of acquisition. The Agreement provides for a purchase price adjustment, depending on net worth on January 10, 1997, to the face value of Series A Preferred Stock, not to exceed $10,000, issued by the Company to the former shareholders of Lobdell in connection with the acquisition. The Company and former shareholders of Lobdell are currently in negotiations as to the purchase price adjustment related to net worth with 100,000 shares of issued Series A Preferred Stock held in escrow. The Company expects the entire 100,000 shares ($10,000) will be returned to the Company and canceled in accordance with the Agreement. Any adjustment to the purchase price resulting from the aforementioned negotiations will be allocated to the assets acquired or goodwill. F-11 111 OXFORD AUTOMOTIVE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 3. ACQUISITIONS -- (CONTINUED) The following unaudited pro forma consolidated results of operations have been prepared as if the acquisition of Lobdell had occurred at the beginning of fiscal 1997 and 1996.
PERIOD FROM OCTOBER 28, 1995 YEAR ENDED THROUGH MARCH 31, 1997 MARCH 31, 1996 -------------- ---------------- Net sales................................................... $ 330,164 $ 150,776 Net loss.................................................... $ (7,090) $ (938) Net loss applicable to common stock......................... $ (8,460) $ (2,308) Net loss per share from continuing operations............... $ (27.32) $ (7.45)
The pro forma information is not intended to be a projection of future results. The pro forma information included above includes adjustments for increased depreciation expense, net of the related tax benefit of $550 and $290 for the year ended March 31, 1997 and for the period from October 28, 1995 through March 31, 1996, respectively. NOTE 4. INVENTORIES Inventories are comprised of the following at March 31:
1997 1996 ---- ---- Raw materials............................................... $ 5,688 $1,557 Finished goods and work-in-process.......................... 7,994 2,162 ------- ------ 13,682 3,719 LIFO and other reserves..................................... (271) ------- ------ $13,411 $3,719 ======= ======
The Company does not separately identify finished goods from work-in-process. NOTE 5. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are comprised of the following at March 31:
1997 1996 ---- ---- Land and land improvements.................................. $ 5,073 $ 779 Buildings................................................... 24,697 3,171 Machinery and equipment..................................... 117,535 7,394 Construction-in-process..................................... 4,393 8,914 -------- ------- 151,698 20,258 Less -- accumulated depreciation............................ (4,920) (467) -------- ------- $146,778 $19,791 ======== =======
F-12 112 OXFORD AUTOMOTIVE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 6. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities are comprised of the following at March 31:
1997 1996 ---- ---- Accrued workers' compensation............................... $3,071 $ 544 Accrued property taxes...................................... 2,350 Accrued medical benefits.................................... 1,827 Foreign exchange gain....................................... 1,975 Other....................................................... 1,792 780 ------ ------ $9,040 $3,299 ====== ======
NOTE 7. BORROWING ARRANGEMENTS Borrowings consist of the following at March 31:
1997 1996 ---- ---- BANK SYNDICATE -- TERM LOAN, LOBDELL EMERY CORPORATION Interest at variable spread over prime (7.44% at March 31, 1997). Quarterly principal payments ranging from $1,250-$2,750 plus interest, with $13,750 due December 31, 2001...................................................... $ 52,750 $ -- BANK SYNDICATE -- REVOLVING CREDIT LINE, LOBDELL EMERY CORPORATION Interest at variable spread over prime (9% at March 31, 1997), matures January 10, 2002........................... 1,250 INDUSTRIAL DEVELOPMENT REVENUE BONDS, CREATIVE $8,500 issued September 27, 1995, floating rate interest (3.6% at March 31, 1997). Quarterly principal payments based on graduated maturity schedule. Backed by NBD Bank letter of credit.......................................... 8,300 BANK SYNDICATE -- TERM LOAN, BMGNA Interest at prime rate plus 1.25% (6% at March 31, 1997). Quarterly payments of $755 plus interest, matures February 28, 2002.................................................. 14,447 REVOLVING CREDIT LINE, BMGNA Interest at prime rate plus 1.25% (6% at March 31, 1997), matures February 28, 2002................................. 10,376 BANK -- TERM LOAN, LEWIS Interest at .625% over 90-day LIBOR (6.19% at March 31, 1997). Quarterly principal payments of approximately $400, matures October 1, 1998................................... 2,833 NATIONS BANK -- SATURN TOOLING, BMGNA Interest at a variable spread over prime (8.71% at March 31, 1997). Payments based on parts shipped, matures November 30, 1998.................................................. 1,380 7,047 EDC TOOLING LOAN, BMGNA Interest at a fixed rate of 7.36%. Payments based on parts shipped, matures September 30, 1999....................... 5,110 CCFL LOAN, BMGNA Interest at 11.11%. Monthly principal payments of $21, matures October 31, 2000.................................. 2,475 2,768
F-13 113 OXFORD AUTOMOTIVE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 7. BORROWING ARRANGEMENTS -- (CONTINUED)
1997 1996 -------- -------- IRDP LOAN, BMGNA Interest at 6%. Monthly principal payments of $7 to October 31, 2000 and $11 thereafter, matures September 1, 2002.... 467 534 TERM LOAN, BMGNA Interest at Canadian Index Rate plus 3% or Canadian Banker's Acceptance Rate plus 3.95%. Quarterly principal payments based on graduated schedule, repaid in full during fiscal 1997...................................................... 7,765 REVOLVING CREDIT LINE, BMGNA Interest at Canadian Banker's Acceptance Rate plus 3.7%, repaid in full during fiscal 1997......................... 2,803 BANK LOAN, BMGNA Interest at either the Canadian Index Rate plus 2.5% or BA rate plus 3.45%, repaid in full during fiscal 1997........ 2,650 TOOLING LINE, BMGNA Interest at the Canadian Index Rate plus 3% or the Canadian Banker's Acceptance Rate plus 3.95%, repaid in full during fiscal 1997............................................... 2,750 SERIES A PROMISSORY NOTE, BMGH Interest at 7%, matures October 26, 2001.................... 441 441 -------- -------- Total.................................................. 99,829 26,758 Less -- current portion of long-term borrowings............. (24,274) (11,258) -------- -------- Long-term borrowings -- less current portion................ $ 75,555 $ 15,500 ======== ========
On January 10, 1997, Lobdell entered into a credit agreement with a syndicate of banks (the Lobdell Credit Agreement), under which Lobdell may borrow up to $110,000, including a term loan of $54,000, a revolving credit line of $38,000, a capital expenditure note of $18,000 and a swingline note of $3,000. At March 31, 1997, no borrowings were outstanding under the capital expenditure note or swingline note. The terms of the Lobdell Credit Agreement contain, among other provisions, requirements for maintaining defined levels of tangible net worth, funded debt to cash flows and cash flow coverage. The Lobdell Credit Agreement also contains certain restrictions on the payment of dividends. Quarterly commitment fees ranging from .25% to .40% are required to be paid on the unused amounts of the revolving credit line and the capital expenditure note. Borrowings are secured by substantially all assets of Lobdell. At March 31, 1997, borrowings supported by the combined lines of credit totaled $1,250, leaving $54,750 unused and available. The proceeds of the industrial development revenue bonds were used to finance the real and personal property of Creative. These bonds are backed by an NBD letter of credit, which carries a rate of 1.50% and is collateralized by substantially all assets of Creative. The letter of credit reimbursement agreement includes covenants requiring minimum tangible capital, debt service coverage and limitations on other indebtedness. On February 11, 1997, BMGNA entered into a credit agreement with a syndicate of banks (the BMGNA Credit Agreement) under which BMGNA may borrow up to $46,000, including a term loan of $20,000, a revolving credit line of $23,000, a capital expenditure note of $3,000 and a swingline note of $3,000. At March 31, 1997, no borrowings were outstanding under the revolving credit line, capital expenditure note or swingline note. F-14 114 OXFORD AUTOMOTIVE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 7. BORROWING ARRANGEMENTS -- (CONTINUED) The terms of the BMGNA Credit Agreement contain, among other provisions, requirements for maintaining defined levels of tangible net worth, funded debt to cash flows and cash flow coverage. The BMGNA Credit Agreement also contains certain restrictions on the payment of dividends. Quarterly commitment fees ranging from .35% to .50% are required to be paid on the unused amounts of the revolving credit line and the capital expenditure note. Borrowings are secured by substantially all assets of BMGNA. The Bank -- term loan, Lewis, Nations Bank -- Saturn tooling, BMGNA and EDC tooling loan, BMGNA are used to finance customer tooling. These loans are collateralized by either a customer purchase order or the tooling assets. The CCFL loan represents a term loan payable through October 31, 2000 which is secured by substantially all the assets of BMGNA. Aggregate maturities of long-term borrowings at March 31, 1997 are as follows: 1998........................................................ $24,274 1999........................................................ 14,886 2000........................................................ 13,687 2001........................................................ 16,975 2002........................................................ 27,206 Thereafter.................................................. 2,801 ------- $99,829 =======
NOTE 8. INCOME TAXES The Company's income tax provision (benefit) consists of the following:
COMPANY PREDECESSOR --------------------------------- --------------------------------- PERIOD FROM PERIOD FROM OCTOBER 28, 1995 APRIL 1, 1995 YEAR ENDED THROUGH THROUGH YEAR ENDED MARCH 31, 1997 MARCH 31, 1996 OCTOBER 27, 1995 MARCH 31, 1995 -------------- ---------------- ---------------- -------------- Current Federal.......................... $ (821) $ -- $ -- $ -- State............................ (124) Foreign.......................... 34 46 49 ------ ------ ------- ----- (945) 34 46 49 ------ ------ ------- ----- Deferred Federal.......................... 899 State............................ 137 Foreign.......................... 974 168 (984) (398) ------ ------ ------- ----- 2,010 168 (984) (398) ------ ------ ------- ----- $1,065 $202 $(938) $(349) ====== ====== ======= =====
F-15 115 OXFORD AUTOMOTIVE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 8. INCOME TAXES -- (CONTINUED) The difference between the statutory rate and the Company's effective rate was as follows:
COMPANY PREDECESSOR ---------------------------------- ---------------------------------- PERIOD FROM PERIOD FROM OCTOBER 28, 1995 APRIL 1, 1995 YEAR ENDED THROUGH THROUGH YEAR ENDED MARCH 31, 1997 MARCH 31, 1996 OCTOBER 27, 1995 MARCH 31, 1995 -------------- ---------------- ---------------- -------------- Statutory rate....................... 34.0% 36.0% 36.0% 36.0% Foreign rates varying from 34%....... 1.8 Large corporation tax................ (2.8) (1.6) (3.1) State taxes, net of federal benefit............................ .3 Nondeductible items.................. 4.1 (.5) (1.2) (11.3) Other................................ .5 ---- ----- ----- ----- Effective income tax rate............ 40.7% 32.7% 33.2% 21.6% ==== ===== ===== =====
Significant components of the Company's deferred tax assets and (liabilities) are as follows at March 31:
1997 1996 ---- ---- Deferred tax liabilities Tax depreciation in excess of book........................ $(30,065) $ -- Inventory reserve......................................... (1,292) -------- ------ Gross deferred tax liabilities.............................. (31,357) -------- ------ Deferred tax assets Postretirement medical benefits........................... 13,387 Impairment reserve........................................ 1,200 Workers' compensation..................................... 1,089 Medical benefits accrual.................................. 702 Allowance for bad debts................................... 502 AMT credit carryforward................................... 3,000 Pension benefits.......................................... 1,606 498 Net operating loss carryforwards.......................... 2,905 3,066 Book depreciation in excess of tax........................ 989 Restructuring reserve..................................... 3,927 311 Foreign exchange.......................................... 46 696 Other..................................................... 2,471 579 -------- ------ Gross deferred tax assets................................. 30,835 6,139 -------- ------ Valuation allowance......................................... (200) -------- ------ Net deferred tax asset (liability).......................... $ (722) $6,139 ======== ======
A valuation allowance is provided on the tax benefits otherwise associated with certain tax attributes unless it is considered more likely than not that the benefit will be realized. The Company has net operating loss carryforwards for Canadian income tax purposes with potential future tax benefits of approximately $2,900 at March 31, 1997. The Canadian net operating losses have the ability to be carried forward indefinitely. In addition, the Company has Alternative Minimum Tax credit carryforwards aggregating $3,000 at March 31, 1997, which can be carried forward indefinitely. F-16 116 OXFORD AUTOMOTIVE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 8. INCOME TAXES -- (CONTINUED) The Company has net operating loss carryforwards with a potential future tax benefit of approximately $150 for state income tax purposes and Tennessee Jobs Tax Credit carryforwards of approximately $200 at March 31, 1997, both of which expire during the years 2010 and 2011. NOTE 9. RESTRUCTURING RESERVES In connection with the acquisition of Lobdell described in Note 3, management began to formulate and assess a plan to exit certain activities of Lobdell and accordingly established certain restructuring reserves aggregating $7,050 in Lobdell's opening balance sheet. Currently, management's restructuring plan includes the sale of certain subsidiaries, closure of a Lobdell owned manufacturing facility and sale of the current Lobdell owned corporate offices. Included in the restructuring reserves at March 31, 1997 are severance and benefits for employees to be relocated and terminated ($5,052) and other restructuring related costs ($1,998). The effect of these initiatives is currently expected to result in the termination of approximately 250 employee positions. Management continues to assess the future manufacturing capacity and corporate office requirements of the Company and expects to complete its assessment and finalization of the restructuring plan within one year of the acquisition date of Lobdell. As noted above, in connection with the Company's restructuring activities, certain employees of Lobdell were terminated. The termination of certain of these employees resulted in a postretirement medical benefit curtailment gain of $957 which, in accordance with the purchase method of accounting, was treated as a reduction in liabilities assumed at the acquisition date. Accordingly, no postemployment medical benefit curtailment gain has been recognized in the Company's statement of operations for the year ended March 31, 1997. NOTE 10. BENEFIT PLANS The Company sponsors eight noncontributory plans and one contributory defined benefit pension plan covering substantially all employees meeting the age and length of service requirements as specified in the plans. The plan covering salaried employees provides pension benefits that are based on a percentage of the employee's average monthly compensation during the five highest consecutive years out of their last ten years, and their years of credited service up to a maximum of 30 years. The hourly plans do not provide for increases in future compensation levels. The Company's funding policy for this plan is to make contributions in amounts sufficient to annually fund the plan's current service cost and the initial past service cost, plus interest, over a period of 30 years. Plans covering hourly employees generally provide benefits of stated amounts based on their unique labor agreements for each year of service. The Company's funding policy for these plans is to make at least the minimum annual contributions required by applicable regulations. F-17 117 OXFORD AUTOMOTIVE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 10. BENEFIT PLANS -- (CONTINUED) The following table sets forth the plans' funded status and amounts recognized on the Company's balance sheets at March 31:
OVERFUNDED PLANS UNDERFUNDED PLANS ------------------- -------------------- 1997 1996 1997 1996 ---- ---- ---- ---- Actuarial present value of benefit obligation Vested benefits.................................... $ 17,573 $ 2,376 $ 34,106 $ 11,539 Nonvested benefits................................. 1,170 74 1,853 356 -------- ------- -------- -------- 18,743 2,450 35,959 11,895 Effect of projected future compensation levels....... 4,060 1,285 -------- ------- -------- -------- Projected benefit obligation for service rendered.... 22,803 3,735 35,959 11,895 Plan assets at fair value (primarily U.S. government securities, bonds and notes and mutual funds)...... (22,854) (4,155) (32,280) (10,525) -------- ------- -------- -------- Plan assets less (greater) than projected benefit obligation......................................... (51) (420) 3,679 1,370 Unrecognized net loss, including asset gains/losses not yet reflected in market values................. 10 (21) Unrecognized prior service cost...................... (20) Unrecognized net obligation being recognized over 15-20 years........................................ 15 Experience gains (losses)............................ (61) 125 (392) (363) Adjustment required to recognize minimum liability... 472 368 -------- ------- -------- -------- (Prepaid) accrued pension cost....................... $ (87) $ (295) $ 3,718 $ 1,375 ======== ======= ======== ========
The minimum pension liability in excess of the allowable intangible asset has been recorded as a separate component of equity, net of tax. F-18 118 OXFORD AUTOMOTIVE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 10. BENEFIT PLANS -- (CONTINUED) Net periodic pension cost for each year and the actuarial assumptions used in determining the projected benefit obligation were as follows:
COMPANY PREDECESSOR ---------------------------------- ---------------------------------- PERIOD FROM PERIOD FROM OCTOBER 28, 1995 APRIL 1, 1995 YEAR ENDED THROUGH THROUGH YEAR ENDED MARCH 31, 1997 MARCH 31, 1996 OCTOBER 27, 1995 MARCH 31, 1995 -------------- ---------------- ---------------- -------------- Service cost......................... $ 1,074 $ 266 $ 344 $ 519 Interest cost........................ 2,127 530 697 1,005 Expected return on assets............ (2,138) (425) (533) (847) Net amortization and deferral........ 15 60 36 ------- ------- ------- ------ Net periodic pension cost............ $ 1,078 $ 371 $ 568 $ 713 ======= ======= ======= ====== Discount rate Lobdell............................ 7.75% -- -- -- BMGH............................... 8.00% 8.50% 8.75% 9.50% Expected return on assets Lobdell............................ 9.00% -- -- -- BMGH............................... 8.50% 8.50% 7.50% 7.50% Salary progression Lobdell............................ 4.50% -- -- -- BMGH............................... 5.50% 5.50% 5.50% 5.50%
The Company sponsors five defined contribution 401(k) plans. The Salaried Employees' Retirement Savings Plan covers all salaried employees of Lobdell and Winchester. The Alma Hourly Employees' Retirement Savings Plan, the Argos Hourly Employees' Retirement Savings Plan, the Creative Fabrication Corporation and the Greencastle Hourly Employees' Plan cover all eligible hourly employees at the respective locations. The Company generally contributes 25% of the first 6% of the base compensation that a participant contributes to the plans. NOTE 11. POSTRETIREMENT MEDICAL BENEFITS In addition to the Company's defined benefit pension plans, Lobdell sponsors unfunded defined benefit medical plans that provide postretirement medical benefits to certain full-time employees meeting the age, length of service and contractual requirements as specified in the plans. The plan covering salaried employees is a contributory plan providing medical benefits to those hired before July 1, 1993. The percentage of cost paid by the retiree currently ranges from 10% for 30 or more years of service at retirement to 55% for 15 years of service at retirement, with Company contributions commencing upon attainment of age 62. Those retiring with less than 15 years of service and those hired after June 30, 1993 may participate in the plan at their own cost. The plan is currently noncontributory for those employees who retired prior to July 1, 1993. The plans covering hourly employees provide medical benefit plan options that are similar to those offered to active hourly employees, with Lobdell contributions limited either to that available under traditional coverage for Alma hourly retirees or to 87% of the total applicable premium for Greencastle retirees. F-19 119 OXFORD AUTOMOTIVE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 11. POSTRETIREMENT MEDICAL BENEFITS -- (CONTINUED) The following table presents the plan's funded status reconciled with amounts recognized in the Company's balance sheet.
MARCH 31, 1997 --------- Accumulated postretirement benefit obligation Retirees.................................................. $14,479 Full eligible active plan participants.................... 4,287 Other active plan participants............................ 13,510 ------- Total unfunded obligation................................. 32,276 Unrecognized gain........................................... 1,191 ------- Postretirement medical benefits liability................... $33,467 =======
Net periodic postretirement benefit cost for the period from January 10, 1997 to March 31, 1997 included the following components: Service cost -- benefits earned during the period........... $272 Interest cost on the accumulated postretirement benefit obligation................................................ 623 ---- Net periodic postretirement benefit cost.................... $895 ====
The weighted average discount rate used in determining the accumulated postretirement benefit obligation was 7.75%. The weighted average annual assumed rate of increase in the per capita cost of covered benefits (i.e., healthcare cost trend rate) is 8.8% in 1997 trending to 6.5% in 2008 and thereafter for retirees less than 65 years of age. For retirees 65 years of age and over, the rate is 8.5% in 1997 trending to 6.5% in 2008 and thereafter. The healthcare cost trend rate assumption has a significant effect on the amounts reported. For example, increasing the assumed healthcare cost trend rates by one percentage point in each year would increase the accumulated postretirement benefit obligation as of March 31, 1997 by approximately $4,624 and net periodic postretirement benefit cost for the period from January 10, 1997 to March 31, 1997 by approximately $140. NOTE 12. REDEEMABLE PREFERRED STOCK In connection with the acquisition of Lobdell described in Note 3, redeemable preferred stock with a face value of $50,748 was issued. Redeemable preferred stock with a face value of $40,748 was delivered to the former shareholders of Lobdell on January 10, 1997. The remaining redeemable preferred stock with a face value of $10,000 was placed in escrow pending final determination of the purchase price. The preferred stock issuance consisted of 457,541 shares of Series A $3.00 Cumulative Preferred Stock (Series A Preferred) and 49,938 shares of Series B Preferred Stock (Series B Preferred). The annual dividend on the Series A Preferred is $3.00 per share, payable semi-annually. Dividends on the Series A Preferred are cumulative, but do not bear interest. The Series B Preferred does not provide for dividends or interest. Under the terms of the issuance of the Series A Preferred and the Series B Preferred (Stock Agreement), the holders of the Series A Preferred and Series B Preferred maintain limited voting rights. Holders are entitled to vote on any provisions that would adversely affect the rights or privileges of the Series A Preferred or Series B Preferred holders or management's plans to issue any equity securities that would rank prior to the Series A Preferred. Holders of the Series A Preferred are entitled to elect at least one director of Lobdell, which, under certain provisions of the Stock Agreement, may increase to two. F-20 120 OXFORD AUTOMOTIVE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 12. REDEEMABLE PREFERRED STOCK -- (CONTINUED) Lobdell is required to redeem all shares of Series A Preferred and Series B Preferred on December 31, 2006 at a price of $100 per share, plus all declared or accumulated but unpaid dividends on the Series A Preferred. If Oxford does not commence an initial public offering of common stock (IPO) prior to June 30, 2006, then the redemption price of the Series A Preferred is $103 per share. If an IPO does not occur by December 31, 2001, each holder of Series A Preferred has the option to redeem annually a maximum of 20 percent of the shares held at a price of $100 per share on each December 31, beginning in 2002. Series A Preferred and Series B Preferred holders are not allowed to transfer, sell or assign the shares prior to February 1, 1999. Subsequent to that date, Lobdell has the right of first refusal to purchase any of the shares transferred, sold or assigned by a holder of Series A Preferred or Series B Preferred. Holders of Series A Preferred are entitled to convert their shares to Oxford common stock issued in connection with an IPO. Individual Series A Preferred holders may convert a maximum of 50% of their shares, but the total of all Series A Preferred shares converted may not exceed 25% of the total Series A Preferred shares outstanding. The Series B Preferred shares have been discounted, as the redemption price of $100 per share was greater than the fair value of the shares at issuance. The recorded value will be accreted to the redemption value at the time redemption first becomes available. The Series A Preferred and Series B Preferred have been included in the accompanying consolidated balance sheet at their respective fair values at the date of issuance of $35,754 and $3,246, respectively, and have been adjusted for accrued dividends and accretion of $258 and $42 respectively. NOTE 13. RELATED PARTY TRANSACTIONS The Company is charged a fee by a related party, The Oxford Investment Group, Inc., for consulting, finance and management services. Fees charged to the Company by The Oxford Investment Group, Inc. approximated $275 for the year ended March 31, 1997. In connection with the acquisitions of BMGNA and Lobdell, investment banking fees of $200 and $300, respectively, were paid to The Oxford Investment Group, Inc. NOTE 14. COMMITMENTS AND CONTINGENCIES Operating Leases As of March 31, 1997, the Company had long-term operating leases covering certain machinery and equipment. The minimum rental commitments under noncancellable operating leases with lease terms in excess of one year are as follows as of March 31, 1997: 1998........................................................ $ 4,695 1999........................................................ 2,813 2000........................................................ 3,159 2001........................................................ 1,140 2002........................................................ 3,088 ------- $14,895 =======
Environmental Matters The Company is subject to federal, state and local laws and regulations which govern environmental matters. These laws regulate the discharge of materials into the environment and may require the Company to remove or mitigate the environmental effects of the disposal or release of petroleum or chemical substances. F-21 121 OXFORD AUTOMOTIVE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 14. COMMITMENTS AND CONTINGENCIES -- (CONTINUED) The Company has identified several environmental matters resulting from prior operations. Due to the relatively early stage of investigation of certain of these identified matters as well as potential indemnification by other potentially responsible parties, management is unable to reasonably estimate the ultimate cost of remediating certain of these identified environmental matters. At March 31, 1997, the Company has a liability of approximately $880 recorded for estimated costs of known environmental matters. General The Company is subject to various claims, lawsuits and administrative proceedings related to matters arising out of the normal course of business. In the opinion of management, after reviewing the information which is currently available with respect to such matters and consulting with legal counsel, any liability which may ultimately be incurred with respect to these matters will not materially affect the financial position, results of operations or cash flows of the Company. NOTE 15. Segment Information The Company operates in one industry segment and all sales are to unaffiliated customers. Net sales by geographic area, identifiable assets by geographic area and net export sales by geographic area are as follows:
Company Predecessor -------------------------------------------------------------------------------------- Period From Period From October 28, 1995 April 1, 1995 Year Ended Through Through Year Ended March 31, 1997 March 31, 1996 October 27, 1995 March 31, 1995 NET SALES United States................ $ 54,660 $ - $ - $ - Canada....................... 82,201 35,572 49,043 75,097 ---------------------------------------------------------------------------- $136,861 $35,572 $49,043 $75,097 ============================================================================ OPERATING INCOME (LOSS) United States................ $ 1,101 $ - $ - $ - Canada....................... 2,700 1,713 ( 1,774) ( 348) ---------------------------------------------------------------------------- $ 3,801 $ 1,713 ($ 1,774) ($ 348) ============================================================================= IDENTIFIABLE ASSETS United States................ $189,308 $ - Canada....................... 57,153 49,200 -------------------------------- $246,461 $49,200 ================================ NET EXPORT SALES United States................ $ - $ - $25,397 $37,620 Canada....................... 41,846 16,476 Mexico....................... 13,573 1,366 664 33 Other........................ 2,120 ----------------------------------------------------------------------------- $ 57,539 $17,842 $26,061 $37,653 =============================================================================
NOTE 16. SUBSEQUENT EVENT On May 21, 1997, the Company signed a definitive Agreement and Plan of Merger (the Merger Agreement) pursuant to which it will acquire (the Merger) Howell Industries, Inc., a Michigan corporation (Howell). Howell is a manufacturer of high-quality welded subassemblies and detailed stampings used as OEM components, primarily in suspension system applications, in the production of light trucks, SUVs, mini-vans, vans and passenger cars. Pursuant to the Merger Agreement, the shareholders of Howell will receive approximately $23,400 in cash. The Company also executed a Shareholder Agreement pursuant to which it has received from the principal shareholder an option to purchase its shares, which constitute approximately 32.6% of the issued and outstanding shares of common stock of Howell (the Shares), at any time prior to December 31, 1997, together with its agreement to vote all such Shares in favor of the Merger. The acquisition will be accounted for by the purchase method. Accordingly, the results of operations of the acquired company will be included with those of the Company for periods subsequent to the date of acquisition. Howell had net sales of $79,211 and net income of $475 for the year ended July 31, 1996. The unaudited pro forma combined condensed balance sheet of the Company and Howell as of March 31, 1997 after giving effect to certain pro forma adjustments is as follows: ASSETS Current assets.............................................. $108,419 Property and equipment, net................................. 162,664 Other assets................................................ 14,462 Goodwill.................................................... 2,013 -------- $287,558 ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities......................................... $ 94,097 Other liabilities........................................... 151,820 Redeemable preferred stock.................................. 39,300 Shareholders' equity........................................ 2,341 -------- $287,558 ======== F-22 122 OXFORD AUTOMOTIVE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The unaudited pro forma combined results of operations of the Company (including Lobdell from January 11, 1997 through March 31, 1997) and Howell for the year ended March 31, 1997 after giving effect to certain pro forma adjustments are as follows: Net sales................................................... $228,404 ======== Net income.................................................. $ 1,158 ======== Net income applicable to common shares...................... $ 858 ======== Net income per common share................................. $ 6.44 ========
The foregoing unaudited pro forma results of operations reflect adjustments for additional interest expense related to the financing of the acquisition and the additional depreciation expense, as a result of the write-up of property, plant and equipment, net of the related tax benefit. NOTE 17. EVENT (UNAUDITED) SUBSEQUENT TO MAY 19, 1997 On July 15, 1997, the Company entered into a Settlement Agreement and Mutual Release with the preferred shareholders of Lobdell (the Settlement Agreement). Pursuant to the Settlement Agreement, 60,002 shares of escrowed Series A Preferred Stock and 49,938 shares of Series B Preferred Stock, which represented all of the outstanding Series B Preferred Stock, were canceled. The remaining 39,998 shares of escrowed Series A Preferred Stock were released to the preferred shareholders of Lobdell. The effect of the aforementioned settlement will be recorded by the Company in the second quarter of fiscal 1998 and will increase property, plant and equipment $956, increase noncurrent deferred tax liabilities $319, increase Redeemable Series A $3.00 Cumulative Preferred Stock $4,000 and decrease Redeemable Series B Preferred Stock $3,363. NOTE 18. INTERIM DATA (UNAUDITED) The accompanying balance sheet as of June 30, 1997 and the unaudited consolidated statements of operations and cash flows for the three month periods ended June 30, 1997 and 1996 include all adjustments, consisting of normal recurring adjustments, which in the opinion of management are necessary for the fair presentation of the financial position, results of operations and cash flows. The results of operations for any interim period are not necessarily indicative of the results of operations for a full year. Inventories are stated at lower of cost or market and consist of the following at June 30, 1997: Raw materials.............................. $ 5,403 Finished goods and work-in-process......... 9,491 ------- Total.............................. 14,894 Less allowance for obsolescence and lower of cost or market......................... (271) ------- Net........................ $14,623 =======
F-23 123 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders of Lobdell Emery Corporation In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, of changes in shareholders' equity and of cash flows after the restatement discussed in Note 16 present fairly, in all material respects, the financial position of Lobdell Emery Corporation and its subsidiaries (the Corporation) at December 31, 1996 and 1995, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Corporation's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. As described in Note 15, on January 10, 1997 all of the outstanding shares of common stock of the Corporation were sold to L-E Acquisition, Inc. Price Waterhouse LLP Detroit, Michigan May 19, 1997 F-24 124 LOBDELL EMERY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
DECEMBER 31, -------------------- 1996 1995 ---- ---- ASSETS Current assets Cash and cash equivalents................................. $ 278 $ 716 Trade receivables -- less allowance of $1,254 and $500, respectively........................................... 28,769 32,514 Inventories............................................... 6,083 10,212 Income taxes receivable................................... 1,282 Reimbursable tooling...................................... 47 407 Deferred income taxes..................................... 3,081 3,038 Prepaid expenses and other current assets................. 191 827 -------- -------- Total current assets................................. 39,731 47,714 -------- -------- Advance under shareholders' redemption agreement............ 1,542 Unexpended bond proceeds.................................... 3,886 4,508 Intangible pension asset.................................... 3,216 2,113 Other noncurrent assets..................................... 2,483 3,825 Deferred income taxes....................................... 2,531 Property, plant and equipment, net.......................... 72,804 72,503 -------- -------- TOTAL ASSETS......................................... $126,193 $130,663 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Trade accounts payable.................................... $ 15,114 $ 11,627 Employee compensation..................................... 5,156 4,614 Accrued expenses and other current liabilities............ 6,511 6,516 Current portion of long-term borrowings................... 2,200 7,169 -------- -------- Total current liabilities............................ 28,981 29,926 -------- -------- Pension liability........................................... 1,855 1,627 Postretirement medical benefits liability................... 19,639 16,889 Deferred income taxes....................................... 1,180 Other noncurrent liabilities................................ 1,950 1,739 -------- -------- 23,444 21,435 -------- -------- Long-term borrowings -- less current portion................ 41,134 39,097 -------- -------- Total liabilities.................................... 93,559 90,458 -------- -------- Commitments and contingent liabilities (Note 13) Redeemable Common stock, Class B nonvoting, $1 par value, outstanding 137,112 shares (Note 11)...................... 1,800 1,297 -------- -------- Shareholders' equity Common stock, Class A voting, $1 par value, authorized 540,000 shares, outstanding 478,255 shares............. 478 478 Common stock, Class B nonvoting, $1 par value authorized 5,400,000 shares; outstanding 3,430,623 shares......... 3,431 3,431 Retained earnings......................................... 27,376 35,730 Equity adjustment for minimum pension liability........... (451) (731) -------- -------- 30,834 38,908 -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.................. $126,193 $130,663 ======== ========
The accompanying notes are an integral part of the financial statements. F-25 125 LOBDELL EMERY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE RELATED DATA)
FOR THE YEAR ENDED DECEMBER 31, -------------------------------- 1996 1995 1994 ---- ---- ---- Net sales................................................... $253,997 $269,260 $270,062 Cost of sales............................................... 244,129 252,671 252,275 -------- -------- -------- Gross profit................................................ 9,868 16,589 17,787 Selling, general and administrative......................... 16,395 14,949 14,438 Equipment impairment........................................ 3,000 -------- -------- -------- Operating income (loss)................................... (9,527) 1,640 3,349 Other income (expense) Interest expense.......................................... (3,557) (3,448) (2,799) Other income.............................................. 664 744 366 -------- -------- -------- Income (loss) before benefit (provision) for income taxes... (12,420) (1,064) 916 Benefit (provision) for income taxes........................ 4,569 264 (442) -------- -------- -------- Income (loss) before cumulative effect of accounting change.................................................... (7,851) (800) 474 Cumulative effect of accounting change -- post-employment benefits, net of income tax benefit ($.12 per share)...... (510) -------- -------- -------- Net loss.................................................... $ (7,851) $ (800) $ (36) ======== ======== ======== Net loss per share.......................................... $ (1.94) $ (.19) $ (.01) ======== ======== ========
The accompanying notes are an integral part of the financial statements. F-26 126 LOBDELL EMERY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE RELATED DATA)
EQUITY ADJUSTMENT CLASS A CLASS B RETAINED FOR MINIMUM VOTING NONVOTING EARNINGS PENSION LIABILITY TOTAL ------- --------- -------- ----------------- ----- Balances at January 1, 1994................ $478 $3,427 $36,715 $ -- $40,620 Net loss for 1994........................ (36) (36) Stock option activity.................... 4 70 74 Dividends ($.06 per share)............... (257) (257) Accretion of redeemable common stock..... (63) (63) Minimum pension liability adjustment..... (492) (492) ---- ------ ------- ------- ------- Balances at December 31, 1994.............. 478 3,431 36,429 (492) 39,846 Net loss for 1995........................ (800) (800) Stock option activity.................... 213 213 Dividends ($.03 per share)............... (124) (124) Accretion of redeemable common stock..... 12 12 Minimum pension liability adjustment..... (239) (239) ---- ------ ------- ------- ------- Balances at December 31, 1995.............. 478 3,431 35,730 (731) 38,908 Net loss for 1996........................ (7,851) (7,851) Accretion of redeemable common stock..... (503) (503) Minimum pension liability adjustment..... 280 280 ---- ------ ------- ------- ------- Balances at December 31, 1996.............. $478 $3,431 $27,376 $(451) $30,834 ==== ====== ======= ======= =======
The accompanying notes are an integral part of the financial statements. F-27 127 LOBDELL EMERY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLAR AMOUNTS IN THOUSANDS)
FOR THE YEAR ENDED DECEMBER 31, -------------------------------- 1996 1995 1994 ---- ---- ---- OPERATING ACTIVITIES Net loss.................................................... $ (7,851) $ (800) $ (36) Adjustments to reconcile net loss to net cash provided by operating activities Depreciation.............................................. 13,746 12,486 12,045 Deferred income taxes..................................... (3,922) (1,332) (1,395) Pension liability......................................... (2,230) 657 159 Postretirement medical benefits liability................. 2,750 2,245 2,923 Equipment impairment...................................... 3,000 Loss (Gain) on sale of equipment.......................... (23) (34) 68 Changes in operating assets and liabilities affecting cash Trade receivables......................................... 3,745 (644) (4,397) Inventories............................................... 4,129 (1,594) (66) Income taxes receivable/payable........................... (1,601) 290 (1,569) Reimbursable tooling...................................... 360 (386) (483) Prepaid expenses and other current assets................. 635 (649) 60 Advance under shareholders' redemption agreement.......... (1,542) 500 113 Other noncurrent assets................................... 3,456 (2,948) 1,619 Trade accounts payable.................................... 3,487 (1,769) (961) Employee compensation..................................... 542 554 72 Accrued expenses and other current liabilities............ (5) 1,241 219 Other noncurrent liabilities.............................. 220 9 850 -------- -------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES............ 18,896 7,826 9,221 -------- -------- -------- INVESTING ACTIVITIES Acquisitions of property, plant and equipment............... (16,439) (14,917) (8,696) Proceeds from sale of equipment............................. 37 276 175 -------- -------- -------- NET CASH USED IN INVESTING ACTIVITIES................ (16,402) (14,641) (8,521) FINANCING ACTIVITIES Proceeds from long-term borrowing arrangements.............. 25,000 8,500 27,020 Principal payments on long-term borrowing arrangements...... (23,932) (5,618) (32,831) Net borrowings (payments) under lines of credit............. (4,000) 5,350 5,550 Proceeds from exercise of stock options..................... 213 74 Dividends................................................... (124) (257) Redemption and retirement of redeemable common stock........ (1,581) (903) -------- -------- -------- NET CASH USED IN FINANCING ACTIVITIES................ (2,932) 6,740 (1,347) -------- -------- -------- NET DECREASE IN CASH AND CASH EQUIVALENTS................... (438) (75) (647) Cash and cash equivalents at beginning of year.............. 716 791 1,438 -------- -------- -------- Cash and cash equivalents at end of year.................... $ 278 $ 716 $ 791 ======== ======== ======== Cash paid for interest...................................... $ 3,774 $ 3,411 $ 2,732 ======== ======== ======== Cash paid for income taxes.................................. $ 963 $ 291 $ 3,067 ======== ======== ========
The accompanying notes are an integral part of the financial statements. F-28 128 LOBDELL EMERY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1996, 1995 AND 1994 (DOLLAR AMOUNTS IN THOUSANDS) NOTE 1. NATURE OF OPERATIONS Lobdell Emery Corporation (the Corporation) is a full-service supplier of metal stampings and welded assemblies used as original equipment components primarily by North American original equipment automotive manufacturers. The Corporation's products are used in a wide variety of sport utility vehicles, light and medium trucks, vans and passenger cars. The Corporation primarily operates from five plants located in the Midwest which account for approximately 98% of the Corporation's sales for the year ended December 31, 1996. The Corporation's hourly workforce is represented by various locals of the United Auto Workers. Sales to the Corporation's two primary customers as a percentage of total sales approximated the following for the years ended December 31:
1996 1995 1994 ---- ---- ---- Ford Motor Company.......................................... 43% 52% 64% General Motors Corporation.................................. 49% 40% 29%
Accounts receivable from Ford Motor Company and General Motors Corporation represent approximately 47% and 49%, respectively, of the December 31, 1996 accounts receivable balance. Although the Corporation is directly affected by the economic well being of the automotive industry and customers referred to above, management does not believe significant credit risk exists at December 31, 1996. The Corporation does not require collateral to reduce such risk and historically has not experienced significant losses related to receivables from individual customers or groups of customers in the automotive industry. NOTE 2. SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated balance sheets include the accounts of Lobdell Emery Corporation and its wholly-owned subsidiaries, Lewis Emery Capital Corporation (Lewis), Concept Management Corporation and subsidiaries (Concept), Laserweld International (Laserweld) and Parallel Group International (Parallel). Concept Management Corporation also includes the accounts of its wholly-owned subsidiaries, Winchester Fabrication Corporation (Winchester) and Creative Fabrication Corporation (Creative). Intercompany accounts and transactions have been eliminated. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Revenue Recognition Revenue is recognized by the Corporation upon shipment of product to the customer. Financial Instruments At December 31, 1996, the carrying amount of financial instruments such as cash and cash equivalents, trade receivables and payables and unexpended bond proceeds, approximated their fair values. The carrying F-29 129 LOBDELL EMERY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 1996, 1995 AND 1994 NOTE 2. SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED) amount of the long-term customer receivables and borrowings at December 31, 1996, approximated their fair values based on the variable interest rates available to the Corporation for similar arrangements. Cash Equivalents The Corporation considers all highly-liquid investments with maturity of three months or less when purchased to be cash equivalents. Inventories Inventories are stated at the lower of cost or market. Cost is principally determined by the last-in, first-out (LIFO) method. Unexpended Bond Proceeds Unexpended bond proceeds in the accompanying consolidated balance sheets represent unexpended proceeds from the issuance of industrial development revenue bonds by Creative as discussed in Note 6, and are invested in allowable money market accounts and commercial paper with a maturity of 90 days or less. Property, Plant and Equipment Property, plant and equipment are stated on the basis of historical cost and include expenditures for improvements which materially increase the useful lives of existing assets. Expenditures for normal repair and maintenance are charged to operations as incurred. For federal income tax purposes, depreciation is computed using accelerated and straight-line methods. For financial reporting purposes, depreciation is computed principally using the straight-line method over the following estimated useful lives:
YEARS ----- Land improvements........................................... 15 Buildings................................................... 30 Machinery and equipment..................................... 3-10
At December 31, 1996, the Corporation had a machine in process at a vendor location. The aggregate cost of the machine will be $5,300, for which the Corporation has recorded approximately $2,700 in the accompanying consolidated balance sheet. The remaining $2,600 will be recorded by the Corporation upon final technical approval of the machine. In accordance with the provisions of Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," the Corporation established an impairment reserve against certain of the assets of Laserweld in the amount of $3,000 at December 31, 1996. The reserve represents the difference between the fair value of the Laserweld assets, based primarily on a recent independent appraisal, and the cost of such assets. Environmental Compliance and Remediation Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations which do not contribute to current or future revenue generation are expensed. Liabilities are recorded when environmental assessments and/or remedial efforts are probable and the costs can be reasonably estimated. Estimated costs are based upon F-30 130 LOBDELL EMERY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 1996, 1995 AND 1994 NOTE 2. SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED) enacted laws and regulations, existing technology and the most probable method of remediation. The costs determined are not discounted and exclude the effects of inflation and other social and economic factors. Income Taxes Deferred taxes are provided to give recognition to the effect of expected future tax consequences of temporary differences between the carrying amounts for financial reporting purposes and the tax bases for income tax purposes of assets and liabilities. Reimbursable Tooling Reimbursable tooling represents net costs incurred on tooling projects for which the Corporation expects to be reimbursed by customers. Ongoing estimates of total costs to be incurred on each tooling project are made by management and losses, if any, are recorded when known. Under certain tooling projects, billings exceed costs incurred and the related tooling gain is recognized upon acceptance of the tooling by the customer. At December 31, 1996, approximately $2,800 of reimbursable tooling was in process at various vendor locations. These amounts, which have not been recorded in the accompanying consolidated balance sheet, will be recorded and paid upon the Corporation's receipt of payment from the owners of the tooling. Net Loss Per Share Net loss per share is determined by dividing net loss by the weighted average number of common shares outstanding during the period. Reclassifications Certain amounts from the prior year have been reclassified to conform with the current year presentation. NOTE 3. INVENTORIES Inventories are comprised of the following at December 31:
1996 1995 ---- ---- Raw materials............................................... $ 3,851 $ 3,861 Finished goods and work-in-process.......................... 5,278 10,177 ------- ------- 9,129 14,038 LIFO reserve................................................ (3,046) (3,826) ------- ------- $ 6,083 $10,212 ======= =======
The Corporation does not separately identify finished goods from work-in-process. During 1996, inventory quantities were reduced. This reduction resulted in a liquidation of LIFO inventory quantities carried at lower costs prevailing in prior years as compared with the cost of 1996 purchases, the effect of which increased net income by approximately $300. F-31 131 LOBDELL EMERY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 1996, 1995 AND 1994 NOTE 4. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are comprised of the following at December 31:
1996 1995 ---- ---- Land and land improvements............................. $ 11,130 $ 10,760 Buildings.............................................. 33,515 32,801 Machinery and equipment, net of impairment reserve of $3,000 in 1996....................................... 137,914 127,389 Construction-in-process................................ 6,495 5,216 --------- --------- 189,054 176,166 Less -- accumulated depreciation....................... (116,250) (103,663) --------- --------- $ 72,804 $ 72,503 ========= =========
NOTE 5. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities are comprised of the following at December 31:
1996 1995 ---- ---- Accrued workers' compensation............................... $2,438 $2,438 Accrued property taxes...................................... 1,950 1,622 Accrued medical benefits.................................... 1,816 1,615 Other....................................................... 307 841 ------ ------ $6,511 $6,516 ====== ======
NOTE 6. BORROWING ARRANGEMENTS Borrowings consist of the following at December 31:
1996 1995 ---- ---- BANK SYNDICATE -- TERM LOAN, LOBDELL EMERY CORPORATION Interest at variable spread over prime (8.25% at December 31, 1996). Quarterly principal payments of $893 plus interest, matures September 12, 1999...................... $24,107 $21,230 BANK -- TERM LOAN, LEWIS Interest at .625% over 90-day LIBOR (6.19% at December 31, 1996). Quarterly principal payments of approximately $400, matures October 1, 1998................................... 3,227 4,936 BANK SYNDICATE -- REVOLVING CREDIT LINE, LOBDELL EMERY CORPORATION Interest at variable spread over prime (8.25% at December 31, 1996)................................................. 7,600 11,600 INDUSTRIAL DEVELOPMENT REVENUE BONDS -- CREATIVE $8,500 issued September 27, 1995, floating rate interest (4.35% at December 31, 1996). Quarterly principal payments based on graduated maturity schedule. Backed by NBD Bank letter of credit.......................................... 8,400 8,500 ------- ------- Total.................................................. 43,334 46,266 Less -- current portion of long-term borrowings............. (2,200) (7,169) ------- ------- Long-term borrowings -- less current portion................ $41,134 $39,097 ======= =======
F-32 132 LOBDELL EMERY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 1996, 1995 AND 1994 NOTE 6. BORROWING ARRANGEMENTS -- (CONTINUED) Subsequent to December 31, 1996, the Bank syndicate term loan and revolving credit line were paid in full, with accrued interest, in connection with the merger described in Note 15. These borrowings were replaced with a $54,000 term loan, $38,000 revolving line of credit and $3,000 swing line of credit, each expiring on January 10, 2002. Accordingly, these amounts are classified as long-term borrowings at December 31, 1996. The term loan bears interest at a variable spread over 90-day LIBOR, and the revolving and swing lines of credit bear interest at a variable spread over the prime rate. The Corporation also entered into an $18,000 capital expenditure line of credit that expires on January 10, 2002. The agreements contain various financial and other covenants. Borrowings are secured by substantially all of the assets of the Corporation. The proceeds of the Lewis term debt were used to finance customer tooling. The debt is collateralized by a customer purchase order which allows for recovery of the term-debt principal and interest, administrative cost and a predetermined markup. The proceeds of the industrial development revenue bonds were used to finance the real and personal property of Creative. These bonds are backed by an NBD Bank letter of credit, which carries a rate of .8% and is collateralized by substantially all assets of Creative. The letter of credit reimbursement agreement includes covenants requiring minimum tangible capital, debt service coverage and limitations on other indebtedness. NOTE 7. STOCK OPTION PLAN The Corporation adopted a stock option plan in 1990 which provides for the granting of discretionary and nondiscretionary options, alternative stock appreciation rights, cash payment rights, incentive stock options, or a combination thereof. Each option granted under the plan is for a unit consisting of one share of Class A and ten shares of Class B common stock. During the years ended December 31, 1995 and 1994 the Corporation recorded compensation expense of $213 and $70, respectively. No options were granted or exercised during the year ended December 31, 1996. Subsequent to December 31, 1996 and in connection with the merger described in Note 15, all of the outstanding stock options were canceled. The costs incurred by the Corporation in connection with the cancellation of the outstanding stock options were reimbursed by L-E Acquisition, Inc. at close. In accordance with Emerging Issues Task Force Issue No. 85-45, "Business Combinations: Settlement of Stock Options and Awards," the Corporation has treated the reimbursement as a credit to compensation expense recognized in connection with the cancellation of the aforementioned stock options. The disclosures required under Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation," have been omitted as all outstanding stock options were canceled subsequent to December 31, 1996. Because the acquiring company (see Note 15) has no stock option plan, the Corporation's management does not believe such disclosure to be relevant to the users of the consolidated financial statements. F-33 133 LOBDELL EMERY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 1996, 1995 AND 1994 NOTE 8. INCOME TAXES The Corporation's benefit for income taxes consists of the following for the years ended December 31:
1996 1995 1994 ---- ---- ---- Current Federal....................................... $ (647) $ 399 $ 1,425 State......................................... 371 375 ------- ------- ------- (647) 770 1,800 ------- ------- ------- Deferred Federal....................................... (3,405) (869) (1,206) State......................................... (517) (165) (152) ------- ------- ------- (3,922) (1,034) (1,358) ------- ------- ------- $(4,569) $ (264) $ 442 ======= ======= =======
A reconciliation between the Corporation's income tax provision (benefit) and the amount computed by applying the statutory income tax rate to income before income taxes is as follows for the years ended December 31:
1996 1995 1994 ---- ---- ---- Statutory rate...................................... $(4,223) $(362) $311 State taxes, net of federal benefit................. (517) 136 147 Nondeductible items................................. 212 104 76 Other............................................... (41) (142) (92) ------- ----- ---- Provision (benefit) for income taxes................ $(4,569) $(264) $442 ======= ===== ====
F-34 134 LOBDELL EMERY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 1996, 1995 AND 1994 NOTE 8. INCOME TAXES -- (CONTINUED) Significant components of the Corporation's deferred tax assets and (liabilities) are as follows at December 31:
1996 1995 ---- ---- Deferred tax liabilities Tax depreciation in excess of book........................ $(8,312) $(8,619) Prepaid pension asset..................................... (427) (574) ------- ------- Gross deferred tax liabilities.............................. (8,739) (9,193) ------- ------- Deferred tax assets Postretirement medical benefits........................... 7,463 6,418 Equipment impairment reserve.............................. 1,140 Workers' compensation..................................... 926 927 Medical benefits accrual.................................. 687 611 Allowance for bad debts................................... 477 190 Environmental reserves.................................... 334 334 Postemployment benefits................................... 323 323 AMT credit carryforward................................... 1,871 1,708 Other..................................................... 1,330 540 ------- ------- Gross deferred tax assets................................... 14,551 11,051 ------- ------- Valuation allowance......................................... (200) ------- ------- Net deferred tax asset...................................... $ 5,612 $ 1,858 ======= =======
A valuation allowance is provided on the tax benefits otherwise associated with certain tax attributes unless it is considered more likely than not that the benefit will be realized. The Corporation has net operating loss carryforwards for state income tax purposes with potential future tax benefits of approximately $150 at December 31, 1996, which expire during the years 2010 and 2011. The Corporation has Tennessee Jobs Tax Credit carryforwards of approximately $200 at December 31, 1996, which expire during the years 2010 and 2011. NOTE 9. BENEFIT PLANS The Corporation sponsors six noncontributory-defined benefit pension plans covering substantially all employees meeting the age and length of service requirements as specified in the plans. The plan covering salaried employees provides pension benefits that are based on a percentage of the employee's average monthly compensation during the five highest consecutive years out of their last ten years, and their years of credited service up to a maximum of 30 years. The Corporation's hourly pension plans do not provide for increases in future compensation levels. The Corporation's funding policy for this plan is to make contributions in amounts sufficient to annually fund the plan's current service cost and the initial past service cost, plus interest, over a period of 30 years. Plans covering hourly employees generally provide benefits of stated amounts based on their unique labor agreements for each year of service. The Corporation's funding policy for these plans is to make at least the minimum annual contributions required by applicable regulations. F-35 135 LOBDELL EMERY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 1996, 1995 AND 1994 NOTE 9. BENEFIT PLANS -- (CONTINUED) The following table sets forth the plans' funded status and amounts recognized on the Corporation's balance sheet at December 31:
1996 1995 ------------------------- ------------------------- OVERFUNDED UNDERFUNDED OVERFUNDED UNDERFUNDED PLANS PLANS PLANS PLANS ---------- ----------- ---------- ----------- Actuarial present value of benefit obligation: Vested benefits................................ $ 14,784 $ 21,270 $ 13,718 $ 18,926 Nonvested benefits............................. 1,174 1,468 1,143 1,597 -------- -------- -------- -------- 15,958 22,738 14,861 20,523 Effect of projected future compensation levels... 3,278 2,866 -------- -------- -------- -------- Projected benefit obligation for service rendered....................................... 19,236 22,738 17,727 20,523 Plan assets at fair value (primarily U.S. government securities, bonds and notes and mutual funds).................................. (18,857) (19,656) (17,092) (17,477) -------- -------- -------- -------- Plan assets less than projected benefit obligation..................................... 379 3,082 635 3,046 Unrecognized net loss............................ (2,080) (865) (2,612) (1,353) Unrecognized prior service cost.................. 174 (2,757) 227 (1,572) Unrecognized net obligation being recognized over 15-20 years.................................... 300 (346) 350 (426) Adjustment required to recognize minimum liability...................................... 3,968 3,332 -------- -------- -------- -------- (Prepaid) accrued pension cost................... $ (1,227) $ 3,082 $ (1,400) $ 3,027 ======== ======== ======== ========
The minimum pension liability in excess of the allowable intangible asset of $751 and $1,218 at December 31, 1996 and 1995, respectively, has been recorded as a separate component of equity, net of tax. Net periodic pension cost included the following components for the year ended December 31:
1996 1995 1994 ---- ---- ---- Service cost.................................... $ 1,100 $ 857 $ 1,142 Interest cost................................... 2,800 2,641 2,418 Actual return on plan assets.................... (4,322) (5,867) (232) Net amortization and deferral................... 1,560 3,606 (1,993) ------- ------- ------- Net periodic pension cost....................... $ 1,138 $ 1,237 $ 1,335 ======= ======= =======
Actuarial assumptions used in determining the projected benefit obligation are as follows:
1996 1995 1994 ---- ---- ---- Discount rate............................................. 7.5% 7.5% 8.5% Rate of increase in future compensation................... 4.5% 4.5% 4.5% Expected long-term rate of return on assets............... 9.0% 9.0% 8.0%
The Corporation sponsors a Supplemental Employee Retirement Plan (SERP) which covers three key officers of the Corporation. At December 31, 1996, the Corporation has accrued a liability of $217 related to the SERP. The Corporation sponsors five defined contribution 401(k) plans. The Salaried Employees' Retirement Savings Plan covers all salaried employees of the Corporation and Winchester. The Alma Hourly Employees' F-36 136 LOBDELL EMERY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 1996, 1995 AND 1994 NOTE 9. BENEFIT PLANS -- (CONTINUED) Retirement Savings Plan, the Argos Hourly Employees' Retirement Savings Plan, the Creative Fabrication Corporation and the Greencastle Hourly Employees' Plan cover all eligible hourly employees at the respective locations. The Corporation generally contributes 25% of the first 6% of the base compensation that a participant contributes to the plans. NOTE 10. POSTRETIREMENT MEDICAL BENEFITS In addition to the Corporation's defined benefit pension plans, the Corporation sponsors unfunded defined benefit medical plans that provide postretirement medical benefits to certain full-time employees meeting the age, length of service and contractual requirements as specified in the plans. The plan covering salaried employees is a contributory plan providing medical benefits to those hired before July 1, 1993. The percentage of cost paid by the retiree currently ranges from 10% for 30 or more years of service at retirement to 55% for 15 years of service at retirement, with Corporation contributions commencing upon attainment of age 62. Those retiring with less than 15 years of service and those hired after June 30, 1993 may participate in the plan at their own cost. The plan is currently noncontributory for those employees who retired prior to July 1, 1993. The plans covering hourly employees provide medical benefit plan options that are similar to those offered to active hourly employees, with Corporation contributions limited either to that available under traditional coverage for Alma hourly retirees or to 87% of the total applicable premium for Greencastle retirees. The following table presents the plans' funded status reconciled with amounts recognized in the Corporation's balance sheets at December 31:
1996 1995 ---- ---- Accumulated postretirement benefit obligation Retirees............................................... $ 14,420 $ 13,132 Full eligible active plan participants................. 4,767 4,408 Other active plan participants......................... 14,613 12,931 -------- -------- Total unfunded obligation......................... 33,800 30,471 Unrecognized loss........................................ (2,618) (1,481) Unrecognized transition obligation....................... (11,543) (12,101) -------- -------- Postretirement medical benefits liability................ $ 19,639 $ 16,889 ======== ========
Net periodic postretirement benefit cost included the following components for the year ended December 31:
1996 1995 1994 ---- ---- ---- Service cost.......................................... $ 947 $ 785 $1,088 Interest cost......................................... 2,216 2,010 2,238 Amortization of transition obligation prior losses.... 722 643 997 ------ ------ ------ Net periodic postretirement benefit cost.............. $3,885 $3,438 $4,323 ====== ====== ======
The weighted average discount rate used in determining the accumulated postretirement benefit obligation was 7.5% in 1996 and 1995. The weighted average annual assumed rate of increase in the per capita cost of covered benefits (i.e., healthcare cost trend rate) is 9.2% in 1997 trending to 6.5% in 2008 and thereafter for retirees less than 65 years of age. For retirees 65 years of age and over, the rate is 8.9% in 1997 trending to 6.5% in 2008 and thereafter. The healthcare cost trend rate assumption has a significant effect on the amounts reported. For example, increasing the assumed healthcare cost trend rates by one percentage F-37 137 LOBDELL EMERY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 1996, 1995 AND 1994 NOTE 10. POSTRETIREMENT MEDICAL BENEFITS -- (CONTINUED) point in each year would increase the accumulated postretirement benefit obligation as of December 31, 1996 and net periodic postretirement benefit cost for the year then ended by approximately $4,861 and $496, respectively. NOTE 11. SHAREHOLDERS' REDEMPTION AGREEMENT AND REDEEMABLE COMMON STOCK Due to the death of a major shareholder, the Corporation entered into an agreement in December, 1988, providing for the redemption from the estate of any class of common stock. The Corporation shall purchase for cash certain shares of common stock as required each year, for the payment by the estate of federal and state taxes and other miscellaneous expenses allowed by Internal Revenue Code Section 6166. The redemption price is based upon the fair value, as previously determined by an independent appraisal at the date of death, adjusted for subsequent increases or decreases in book value as defined in the agreement. Subsequent to December 31, 1996 and in connection with the merger as described in Note 15, a portion of the common stock owned by the estate will be redeemed to cover payment of remaining taxes and administrative expenses. Prior to the merger, $1,542 was advanced to the estate to effectuate a release of an Internal Revenue Service lien. Common shares that are redeemable under that terms of the agreement have been recorded in the consolidated balance sheets as Redeemable Common Stock. During the years ended December 31, 1995 and 1994, the Company redeemed 165,555 shares and 96,597 shares, respectively, at a per share price of $9.55 and $9.34, respectively. The redeemable common stock has been accreted to its redemption value in each of the accompanying consolidated balance sheets. NOTE 12. LEWIS EMERY CAPITAL CORPORATION Lewis was established in order to facilitate the financing of a tooling project for Ford Motor Company (Ford). In 1993, Lewis signed a contract to finance $8,500 of tooling. The transaction was financed with proceeds from the term loan described in Note 6. The receivable from Ford is due in 20 quarterly installments through October 1998. NOTE 13. COMMITMENTS AND CONTINGENCIES Operating Leases As of December 31, 1996, the Corporation had long-term operating leases covering certain machinery and equipment. The minimum rental commitments under noncancellable operating leases with lease terms in excess of one year are as follows as of December 31, 1996: 1997........................................................ $ 4,690 1998........................................................ 3,241 1999........................................................ 3,367 2000........................................................ 1,178 2001........................................................ 3,355 ------- $15,831 =======
Environmental Matters The Corporation is subject to federal, state and local laws and regulations which govern environmental matters. These laws regulate the discharge of materials into the environment and may require the Corporation to remove or mitigate the environmental effects of the disposal or release of petroleum or chemical substances. The Corporation has identified several environmental matters resulting from prior operations. Due to the relatively early stage of investigation of certain of these identified matters as well as potential indemnification F-38 138 LOBDELL EMERY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 1996, 1995 AND 1994 NOTE 13. COMMITMENTS AND CONTINGENCIES -- (CONTINUED) by other potentially responsible parties, management is unable to reasonably estimate the ultimate cost of remediating certain of these identified environmental matters. At December 31, 1996 and 1995, the Corporation has a liability of approximately $880 recorded for estimated costs of known environmental matters. General The Corporation is subject to various claims, lawsuits and administrative proceedings related to matters arising out of the normal course of business. In the opinion of management, after reviewing the information which is currently available with respect to such matters and consulting with legal counsel, any liability which may ultimately be incurred with respect to these matters will not materially affect the financial position of the Corporation. NOTE 14. RELATED-PARTY TRANSACTION During 1996, the Corporation paid sales commissions, based upon qualified foreign sales to Grace Emery Sales Corporation, a Domestic International Sales Corporation (DISC) owned by the shareholders of the Corporation. Commissions payable to the DISC are subject to certain restrictions. Commissions were $369, $521 and $772 in 1996, 1995 and 1994, respectively. NOTE 15. SUBSEQUENT EVENT On January 10, 1997, pursuant to an Agreement and Plan of Merger among Lobdell Emery Corporation, certain shareholders of Lobdell Emery Corporation, BMG-MI, Inc. and L-E Acquisition, Inc. as amended, certain Lobdell Emery Corporation shareholders and option holders had their respective shares and options redeemed for cash of approximately $8,500 and all outstanding shares of common stock of Lobdell Emery Corporation (Oldco) were exchanged for shares of preferred stock of L-E Acquisition, Inc. with a face value of approximately $40,800. In addition, approximately $3,500 of expenses incurred by the Corporation were reimbursed by L-E Acquisition, Inc. Subsequent to the exchange of Oldco's common stock for preferred stock, L-E Acquisition, Inc. was merged with and into Lobdell Emery Corporation (Newco). NOTE 16. RESTATEMENT OF PRIOR YEAR FINANCIAL STATEMENTS The Corporation's management has restated the consolidated financial statements for periods prior to December 31, 1996. The consolidated financial statements have been restated to correct the misstatement of certain assets and liabilities including accounts receivable, accrued employee benefit related costs and accrued environmental costs, net of related tax benefits. The effect of the restatement was to decrease retained earnings at January 1, 1994 by $1,987, decrease net loss by $36 ($.01 per share) for the year ended December 31, 1995, and increase net loss by $647 ($.15 per share) for the year ended December 31, 1994. F-39 139 NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE HEREBY, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION SET FORTH HEREIN OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE AS OF WHICH INFORMATION IS GIVEN IN THIS PROSPECTUS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. _______________ TABLE OF CONTENTS PAGE ---- Available Information...................................... 2 Summary.................................................... 3 Risk Factors............................................... 16 Use of Proceeds............................................ 22 Capitalization............................................. 22 Pro Forma Combined Financial Data.......................... 23 Selected Consolidated Historical Financial Data........................................ 32 Management's Discussion and Analysis of Financial Condition and Results of Operations............................................ 35 The Exchange Offer......................................... 40 Business................................................... 45 Management................................................. 57 Principal Shareholders..................................... 60 Certain Transactions....................................... 62 Description of Certain Indebtedness and Preferred Stock....................................... 63 Description of the Notes................................... 66 Certain Federal Income Tax Considerations.................. 92 Plan of Distribution....................................... 93 Legal Matters.............................................. 94 Experts.................................................... 94 Index to Consolidated Financial Statements................. F-1 $125,000,000 OXFORD AUTOMOTIVE, INC. 10 1/8% SENIOR SUBORDINATED NOTES DUE 2007 [OXFORD AUTOMOTIVE LOGO] OFFER TO EXCHANGE 10 1/8% SENIOR SUBORDINATED NOTES DUE 2007 PROSPECTUS DATED , 1997 140 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a) Exhibits. A list of exhibits included as part of this Registration Statement is set forth in the Exhibit Index which immediately precedes such exhibits and is incorporated herein by reference. (b) Financial Statement Schedules. Previously filed. II-1 141 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this Amendment No. 1 to this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Bloomfield Hills and State of Michigan on September 18, 1997. OXFORD AUTOMOTIVE, INC. By:/s/ Steven M. Abelman ------------------------------------- Steven M. Abelman President and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment No. 1 to this Registration Statement has been signed by the following persons in the capacities indicated on September 18, 1997. SIGNATURE TITLE --------- ----- /s/ Selwyn Isakow Chairman of the Board and Director - --------------------------- Selwyn Isakow /s/ Rex E. Schlaybaugh, Jr. Vice Chairman of the Board and Director - --------------------------- Rex E. Schlaybaugh, Jr. /s/ Steven M. Abelman President, Chief Executive Officer and Director - --------------------------- Steven M. Abelman /s/ Donald C. Campion Senior Vice President-Chief Financial Officer - --------------------------- (Principal Accounting and Financial Officer) Donald C. Campion * Director - --------------------------- Manfred J. Walt *By: /s/ Rex E. Schlaybaugh, Jr. Rex E. Schlaybaugh, Jr., Attorney-In-Fact II-2 142 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this Amendment No. 1 to this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Bloomfield Hills and State of Michigan on September 18, 1997. LOBDELL EMERY CORPORATION By: /s/ Steven M. Abelman ------------------------------------- Steven M. Abelman, President Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment No. 1 to this Registration Statement has been signed by the following persons in the capacities indicated on September 18, 1997. SIGNATURE TITLE --------- ----- /s/ Steven M. Abelman President (Principal Executive Officer) and Director - --------------------- Steven M. Abelman /s/ Donald C. Campion Vice President-Chief Financial Officer, Treasurer - --------------------- (Principal Accounting and Financial Officer) and Donald C. Campion Director /s/ John H. Ferguson Director - --------------------- John H. Ferguson Director - --------------------- D. Kennedy Fesenmyer II-3 143 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this Amendment No. 1 to this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Bloomfield Hills and State of Michigan on September 18, 1997. BMG NORTH AMERICA LIMITED By:/s/ Steven M. Abelman ------------------------------------ Steven M. Abelman, President Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment No. 1 to this Registration Statement has been signed by the following persons in the capacities indicated on September 18, 1997. SIGNATURE TITLE --------- ----- /s/ Steven M. Abelman President (Principal Executive Officer) - ------------------------ Steven M. Abelman /s/ Donald C. Campion Vice President, Chief Financial Officer, and Treasurer - ------------------------ (Principal Accounting and Financial Officer) Donald C. Campion /s/ * Director - ------------------------ Lawrence C. Cornwall /s/ Selwyn Isakow Director - ------------------------ Selwyn Isakow Director - ------------------------ James W. Robinson * Director - ------------------------ Manfred J. Walt - ------------------------ Director Donald Holton *By: /s/ Rex E. Schlaybaugh, Jr. Rex E. Schlaybaugh, Jr., Attorney-In-Fact II-4 144 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this Amendment No. 1 to this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Bloomfield Hills and State of Michigan on September 18, 1997. BMG HOLDINGS, INC. By: /s/ Steven M. Abelman ----------------------------------- Steven M. Abelman, President Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment No. 1 to this Registration Statement has been signed by the following persons in the capacities indicated on September 18, 1997. SIGNATURE TITLE --------- ----- /s/ Steven M. Abelman President (Principal Executive Officer) - --------------------- Steven M. Abelman /s/ Donald C. Campion Vice President, Chief Financial Officer and Treasurer - --------------------- (Principal Accounting and Financial Officer) Donald C. Campion /s/ Selwyn Isakow Director - --------------------- Selwyn Isakow Director - --------------------- James W. Robinson * Director - --------------------- Manfred J. Walt *By: /s/ Rex E. Schlaybaugh, Jr. Rex E. Schlaybaugh, Jr., Attorney-In-Fact II-5 145 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this Amendment No. 1 to this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Bloomfield Hills and State of Michigan on September 18, 1997. WINCHESTER FABRICATION CORPORATION By: /s/ Steven M. Abelman ---------------------------- Steven M. Abelman, President Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment No. 1 to this Registration Statement has been signed by the following persons in the capacities indicated on September 18, 1997. SIGNATURE TITLE --------- ----- /s/ Steven M. Abelman President (Principal Executive Officer) and Director - --------------------- Steven M. Abelman /s/ Donald C. Campion Vice President-Chief Financial Officer, Treasurer - --------------------- (Principal Accounting and Financial Officer) and Director Donald C. Campion /s/ John H. Ferguson Director - -------------------- John H. Ferguson II-6 146 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this Amendment No. 1 to this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Bloomfield Hills and State of Michigan on September 18, 1997. CREATIVE FABRICATION CORPORATION By: /s/ Steven M. Abelman --------------------------------------- Steven M. Abelman, President Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment No. 1 to this Registration Statement has been signed by the following persons in the capacities indicated on September 18, 1997. SIGNATURE TITLE --------- ----- /s/ Steven M. Abelman President (Principal Executive Officer) and Director - --------------------- Steven M. Abelman /s/ Donald C. Campion Vice President-Chief Financial Officer, Treasurer - --------------------- (Principal Accounting and Financial Officer) and Director Donald C. Campion /s/ John H. Ferguson Director - --------------------- John H. Ferguson II-7 147 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this Amendment No. 1 to this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Bloomfield Hills and State of Michigan on September 18, 1997. PARALLEL GROUP INTERNATIONAL, INC. By: /s/ Steven M. Abelman ----------------------------------- Steven M. Abelman, President Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment No. 1 to this Registration Statement has been signed by the following persons in the capacities indicated on September 18, 1997. SIGNATURE TITLE --------- ----- /s/ Steven M. Abelman President (Principal Executive Officer) and Director - --------------------- Steven M. Abelman /s/ Donald C. Campion Vice President-Chief Financial Officer, Treasurer - --------------------- (Principal Accounting and Financial Officer) and Director Donald C. Campion /s/ John H. Ferguson Director - --------------------- John H. Ferguson II-8 148 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this Amendment No. 1 to this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Bloomfield Hills and State of Michigan on September 18, 1997. LASERWELD INTERNATIONAL, L.L.C. By: Lobdell Emery Corporation, its sole member By: /s/ Steven M. Abelman ----------------------------------------- Steven M. Abelman, President Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment No. 1 to this Registration Statement has been signed by the following persons in the capacities indicated on September 18, 1997. SIGNATURE TITLE --------- ----- /s/ Steven M. Abelman President (Principal Executive Officer) and Director - --------------------- of Lobdell Emery Corporation Steven M. Abelman /s/ Donald C. Campion Vice President-Chief Financial Officer, Treasurer - --------------------- (Principal Accounting and Financial Officer) and Donald C. Campion Director of Lobdell Emery Corporation /s/ John H. Ferguson Director of Lobdell Emery Corporation - -------------------- John H. Ferguson II-9 149 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this Amendment No. 1 to this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Bloomfield Hills and State of Michigan on September 18, 1997. CONCEPT MANAGEMENT CORPORATION By: /s/ Steven M. Abelman ----------------------------------- Steven M. Abelman, President Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment No. 1 to this Registration Statement has been signed by the following persons in the capacities indicated on September 18, 1997. SIGNATURE TITLE --------- ----- /s/ Steven M. Abelman President (Principal Executive Officer) and Director - --------------------- Steven M. Abelman /s/ Donald C. Campion Vice President-Chief Financial Officer, Treasurer - --------------------- (Principal Accounting and Financial Officer) and Director Donald C. Campion /s/ John H. Ferguson Director - --------------------- John H. Ferguson II-10 150 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this Amendment No. 1 to this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Bloomfield Hills and State of Michigan on September 18, 1997. LEWIS EMERY CAPITAL CORPORATION By: /s/ Steven M. Abelman ----------------------------------- Steven M. Abelman, President Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment No. 1 to this Registration Statement has been signed by the following persons in the capacities indicated on September 18, 1997. SIGNATURE TITLE --------- ----- /s/ Steven M. Abelman President (Principal Executive Officer) and Director - --------------------- Steven M. Abelman /s/ Donald C. Campion Vice President-Chief Financial Officer, Treasurer - --------------------- (Principal Accounting and Financial Officer) and Director Donald C. Campion /s/ John H. Ferguson Director - --------------------- John H. Ferguson II-11 151 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this Amendment No. 1 to this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Bloomfield Hills and State of Michigan on September 18, 1997. HOWELL INDUSTRIES, INC. By: /s/ Steven M. Abelman ------------------------------------- Steven M. Abelman, President POWER OF ATTORNEY Each person whose signature appears below constitutes and appoints Selwyn Isakow and Rex E. Schlaybaugh, Jr., and each of them, his attorneys-in-fact for him in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as might or could be done in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents, or his substitute or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment No. 1 to this Registration Statement has been signed by the following persons in the capacities indicated on September 18, 1997. SIGNATURE TITLE --------- ----- /s/ Steven M. Abelman President (Principal Executive Officer) and Director - --------------------- Steven M. Abelman /s/ Donald C. Campion Vice President-Chief Financial Officer, Treasurer - --------------------- (Principal Accounting and Financial Officer) and Director Donald C. Campion /s/ John H. Ferguson Director - --------------------- John H. Ferguson II-12 152 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION 2.3 Agreement and Plan of Merger dated as of November 14, 1996, by and between Lobdell Emery Corporation, BMG-MI, Inc. (now known as "Oxford Automotive, Inc."), L-E Acquisition, Inc., the Shareholders of Lobdell Emery Corporation, and D. Kennedy Fesenmyer, as Shareholders' Agent. The Agreement and Plan of Merger does not contain the Disclosure Schedules which include routine background information relating to the parties. The registrant will furnish supplementally a copy of the omitted material to the Commission upon request (previously filed as Exhibit 10.10 to the Registration Statement on Form S-4, Registration No. 333-32975). 2.4 Amendment to Agreement and Plan of Merger, dated December 27, 1996 by and among Lobdell Emery Corporation, BMG-MI, Inc. (now known as "Oxford Automotive, Inc."), L-E Acquisition, Inc., D. Kennedy Fesenmyer, as Shareholders' Agent, and Lobdell Holdings, Inc. (previously filed as Exhibit 10.11 to the Registration Statement on Form S-4, Registration No. 333-32975) 2.5 Agreement and Plan of Merger, dated as of January 8, 1997 among Lobdell Holdings, Inc. and BMG-MI, Inc. (now known as "Oxford Automotive, Inc."). The Agreement and Plan of Merger does not contain the Disclosure Schedules which include routine background information relating to the parties. The registrant will furnish supplementally a copy of the omitted material to the Commission upon request (previously filed as Exhibit 10.12 to the Registration Statement on Form S-4, Registration No. 333-32975). 3.20 Restated Articles of Incorporation of Howell Industries, Inc. 3.21 Bylaws of Howell Industries, Inc. 4.2 Credit Agreement between the Company and NBD Bank, as agent, dated June 24, 1997 4.3 Security Agreement between the Company and NBD Bank, as agent, dated June 24, 1997 4.4 Security Agreement between 829500 Ontario Limited and NBD Bank, as agent, dated June 24, 1997 4.5 Security Agreement between 976459 Ontario Limited and NBD Bank, as agent, dated June 24, 1997 4.6 Security Agreement between BMG Holdings, Inc. and NBD Bank, as agent, dated June 24, 1997 4.7 Security Agreement between BMG North America Limited Inc. and NBD Bank, as agent, dated June 24, 1997 4.8 Security Agreement among Lobdell Emery and its subsidiaries and NBD Bank, as agent, dated June 24, 1997 4.12 Pledge Agreement and Irrevocable Proxy between the Company and NBD Bank, as agent, dated June 24, 1997 4.13 Pledge Agreement and Irrevocable Proxy between Lobdell Emery and NBD Bank, as agent, dated June 24, 1997 4.14 Pledge Agreement and Irrevocable Proxy between Concept Management Corporation and NBD Bank, as agent, dated June 24, 1997 4.17 Supplemental Indenture dated as of August 15, 1997 among Howell Industries, Inc., Oxford Automotive, Inc., First Trust National Association and the Subsidiary Guarantors 16 Letter re Change in Certifying Accountant 23.1 Consent of Price Waterhouse LLP 23.2 Consent of Price Waterhouse LLP 23.3 Consent of Deloitte & Touche 27 Financial Data Schedule II-13 EX-3.20 2 EXHIBIT 3.20 1 EXHIBIT 3.20 MICHIGAN DEPARTMENT OF COMMERCE CORPORATION AND SECURITIES BUREAU RESTATED ARTICLES OF INCORPORATION For Use by Domestic Profit Corporations Pursuant to the provisions of Act 284, Public Acts of 1972, as amended, the undersigned corporation executes the following Articles: 1. The present name of the corporation is: Howell Industries, Inc. 2. The corporation identification number (CID) assigned by the Bureau is: 184-966 3. All former names of the corporation are: Detroit Macoid Corporation Macoid Industries, Inc. 4. The date of filing the original Articles of Incorporation was: July 9, 1934 The following Restates Articles of Incorporation supersede the Articles of Incorporation as amended and shall be the Articles of Incorporation for the corporation: ARTICLE I The name of the corporation is: Howell Industries, Inc. ARTICLE II The purpose or purposes for which the corporation is organized are: To manufacture, purchase, distribute, compound, sell at retail and wholesale and generally deal in plastic materials and plastic products. To manufacture, purchase or otherwise acquire goods, wares, merchandise, and personal property of every class and description, and to hold, own, sell or otherwise dispose of, trade, deal in and deal with the same. To buy, sell, deal in, lease, hold or improve real estate, and the fixtures and personal property incidental thereto or connected therewith, and with that end in view, to acquire by purchase, lease, hire, or otherwise, lands, tenements, hereditaments, or any interest therein, and to improve the same, and generally to hold, manage, deal with, and improve the property of the corporation; and to sell, lease, mortgage, pledge or otherwise dispose of the lands, tenements and hereditaments or other property of the corporation. 2 To borrow or raise moneys for any of the purposes of the corporation and from time to time, without limit as to amount, to draw, make, accept, endorse, execute and issue promissory notes, drafts, bills of exchange, warrants, bonds, debentures and other negotiable and non-negotiable instruments and evidences of indebtedness, and to secure the payment of any thereof and of the interest thereon by mortgage, pledge, conveyance or assignment in trust of the whole or any part of the property of the corporation, whether at the time owned or thereafter acquired, and to sell, pledge, or otherwise dispose of such bonds or other obligations of the corporation for its corporate purposes. In general, to carry on any business in connection therewith and incidental thereto not forbidden by the laws of the State of Michigan, and with all the powers conferred upon corporations by the laws of the State of Michigan. ARTICLE III The total authorized capital stock is: 1. Common Shares N/A Par Value Per Share $ ---------- ----- Preferred Shares 250,000 Par Value Per Share $ 1.00 ---------- ----- and/or shares without par value as follows: 2. Common Shares 2,500,000 Stated Value Per Share $ 1.87 ----------- ----- Preferred Shares N/A Stated Value Per Share $ ----------- ----- 3. A statement of all or any of the relative rights, preferences and limitations of the shares of each of class is as follows: The holders of shares of Common Stock, and the holders of shares of Preferred Stock, shall be entitled to one (1) vote for each share held without distinction between classes except as required by law. All shares of Preferred Stock shall be identical, except that the Board of Directors shall have authority to divide the shares of Preferred Stock into series and fix from time to time before issuance, the number of shares to be included in any series and the designation, relative rights, preferences and limitations of all shares of such series. The authority of the Board of Directors with respect to each series shall include the determination of any or all of the following, and the shares of each series may vary from the shares of any other series in the following respects: (a) the number of shares constituting such series and the designation thereof to distinguish the shares of such series from the shares of all other series; (b) the rate of dividend and the extent of further participation in dividend distribution, if any; (c) the price at and the terms and conditions on which the shares are redeemable; (d) the amount payable upon shares in event of voluntary or involuntary liquidation; (e) the terms and conditions upon which the shares are convertible into other classes of stock of the corporation, if such shares are to be convertible. 2 3 Dividends on all outstanding shares of Preferred Stock must be declared and paid, or set aside for payment, before any dividends can be declared and paid, or set aside for payment, on the shares of Common Stock with respect to the same dividend period. In the event of voluntary or involuntary dissolution, liquidation, or winding up of the corporation, the holders of shares of the Preferred Stock of each series shall be entitled to be paid from the assets of the corporation such amounts as shall have been fixed and determined by the Board of Directors when such shares of Preferred Stock are issued, plus an amount equivalent to all dividends accrued thereon, before any amount shall be paid to the holders of Common Stock. Each share of Common Stock shall be equal in all respects to all other shares of Common Stock. No holders of shares of capital stock shall be entitled as such as a matter of right to subscribe for or purchase any part of any new or additional issue of stock, or securities convertible into stock, of any class whatsoever, whether now or hereafter authorized and whether issued for cash, property, services, by way of dividends or otherwise. ARTICLE IV 1. The address of the current registered office is: 2365 Franklin Road Bloomfield Hills, Michigan 48302 2. The mailing address of the current registered office if different than above: N/A 3. The name of the current resident agent is: Clifford C. Suing ARTICLE V The term of existence of the corporation is perpetual. ARTICLE VI When a compromise or arrangement or a plan of reorganization of this corporation is proposed between this corporation and its creditors or any class of them or between this corporation and its shareholders or any class of them, a court of equity jurisdiction within the state, on application of this corporation or of a creditor or shareholder thereof, or on application of a receiver appointed for the corporation, may order a meeting of the creditors or class of creditors or of the shareholders or class of shareholders to be affected by the proposed compromise or arrangement or reorganization, to be summoned in such manner as the court directs. If a majority in number representing 3/4 in value of the creditors or class of creditors, or of the shareholders or class of shareholders to be affected by the proposed compromise or arrangement or a reorganization, agree to a compromise or arrangement or a reorganization of this corporation as a consequence of the compromise or arrangement, the compromise or arrangement and the reorganization, if sanctioned by the court to which the application has been made, shall be binding on all the creditors or class of creditors, or on all the shareholders or class of shareholders and also on this corporation. 3 4 ARTICLE VII A director of the corporation shall not be personally liable to the corporation or its shareholders for monetary damages for breach of the director's fiduciary duty. However, this Article shall not eliminate or limit the liability of a director for any of the following. (1) A breach of the director's duty of loyalty to the corporation or its shareholders. (2) Acts or omissions not in good faith or that involve intentional misconduct or knowing violation of law. (3) A violation of Section 551(1) of the Michigan Business Corporation Act. (4) A transaction from which the director derived an improper personal benefit. (5) An act or omission occurring before March 1, 1987. Any repeal or modification of this Article VI by the shareholders of the corporation shall not adversely affect any right or protection of any director of the corporation existing at the time of, or for or with respect to, any acts or omissions occurring before such repeal or modification. These Restated Articles of Incorporation were duly adopted on the 23rd day of September, 1988, in accordance with the provisions of Section 642 of the Act and were duly adopted by the Board of Directors without a vote of the shareholders. These Restated Articles of Incorporation only restate and integrate and do not further amend the provisions of the Articles of Incorporation as heretofore amended and there is no material discrepancy between those provisions and the provisions of these Restated Articles. Signed this ____ day of September, 1988. By: _______________________________ _______________________________ (Print or type name and title) 4 EX-3.21 3 EXHIBIT 3.21 1 EXHIBIT 3.21 BY-LAWS OF HOWELL INDUSTRIES, INC. a Michigan corporation ARTICLE I OFFICES Section 1. The registered office of the corporation shall be located at 17515 West Nine Mile Road, in the City of Southfield, County of Oakland, and State of Michigan, or such other place as may be designated as the registered office by the Board of Directors. Section 2. The Corporation may also have offices or branches at such other places, both within and without the State of Michigan, as the Board of Directors may from time to time determine or as the business of the corporation may require. ARTICLE II MEETINGS OF SHAREHOLDERS Section 1. All meetings of the shareholders shall be held at the registered office of the corporation, or at such other place either within or without the State of Michigan as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. Section 2. Annual meetings of shareholders shall be held on the fourth Tuesday in November of each year if not a legal holiday in the state in which the meeting shall be held, and if a legal holiday, then on the next secular day following, at such time as determined by the Board of Directors, or at such other date and time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. At the annual meeting, the shareholders shall elect a Board of Directors and transact such other business as may properly be brought before the meeting. If the annual meeting is not held on the date designated therefor, the Board of Directors shall cause the meeting to be held as soon thereafter as convenient. 2 Section 3. Special meetings of the shareholders, for any purpose or purposes, unless otherwise prescribed by statute or by the Articles of Incorporation, may be called by the chairman of the board or president, and shall be called by the chairman of the board or president at the request in writing of a majority of the Board of Directors or at the request in writing of the holders of not less than ten percent (10%) of all the shares entitled to vote at a meeting. Such request shall state the purpose or purposes of the proposed meeting. Section 4. The officer or agent who has charge of the stock ledger or stock transfer books for shares of the corporation shall make and certify a complete list of the shareholders entitled to vote at a shareholders' meeting, or any adjournment thereof. The list shall be arranged in alphabetical order within each class and series and show the address of each shareholder and the number of shares registered in the name of each shareholder. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any shareholder who is present. Section 5. Except as may be provided by statute, written notice of an annual or special meeting of shareholders stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting, to each shareholder of record entitled to vote at such meeting. Section 6. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the shareholders for the transaction of business except as otherwise expressly required by statute or by the Articles of Incorporation. All shareholders present in person or represented by proxy at such meeting may continue to do business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum. If, however, such quorum shall not be initially present at any meeting of the shareholders, a majority of the shareholders entitled to vote thereat shall nevertheless have power to adjourn the meeting from time to time and to another place, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting, at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than sixty (60) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting. Section 7. When an action other than the election of directors is to be taken by vote of the shareholders, it shall be authorized by a majority of the votes cast by the holders of shares entitled to vote thereon, unless a greater plurality is required by express requirement of the statutes or of the Articles of Incorporation, in which case such express provision shall govern and control the decision of such question. Except as otherwise expressly required by the Articles of Incorporation, directors shall be elected by a plurality of the votes cast at an election. 2 3 Section 8. Each shareholder shall at every meeting of the shareholders be entitled to one (1) vote in person or by proxy for each share of the capital stock having voting power held by such shareholder except as otherwise expressly required in the Articles of Incorporation. A vote may be cast either orally or in writing. Each proxy shall be in writing and signed by the shareholder or his authorized agent or representative. A proxy is not valid after the expiration of three (3) years from its date unless otherwise provided in the proxy. All questions regarding the qualification of voters, the validity of proxies and the acceptance or rejection of votes shall be decided by the presiding officer of the meeting. Section 9. To the extent permitted by the Articles of Incorporation, any action required or permitted to be taken at any annual or special meeting of shareholders of the corporation, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take the action at a meeting at which all shares entitled to vote thereon were present and voted. Section 10. Any action required or permitted to be taken at an annual or special meeting of shareholders of the corporation may be taken without a meeting, without prior notice and without a vote, if all the shareholders entitled to vote thereon consent thereto in writing. Section 11. Attendance of a person at a meeting of shareholders in person or by proxy constitutes a waiver of notice of the meeting except where the shareholder attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting was not lawfully called or convened. ARTICLE III DIRECTORS Section 1. The business and affairs of the corporation shall be managed by its Board of Directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the Articles of Incorporation or by these By-Laws directed or required to be exercised or done by the shareholders. Section 2. The number of directors which shall constitute the whole board shall be not less than three nor more than seven. Within the limits above specified, the number of directors shall be determined from time to time by resolution of the Board of Directors. The directors shall be elected at the annual meeting of the shareholders, except as provided in Sections 3 and 5 of this Article, and each director elected shall hold office until his successor is elected and qualified or until his resignation or removal. Directors need not be shareholders or officers of the corporation. Section 3. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by the affirmative vote of a majority of the directors 3 4 then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election of directors by the shareholders and until their successors are duly elected and qualified, or until their resignation or removal. Section 4. The Board of Directors of the corporation may hold meetings, both regular and special, either within or without the State of Michigan. Unless otherwise restricted by the Articles of Incorporation, members of the Board of Directors, or any committee designated by the Board, may participate in a meeting of the Board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this section shall constitute presence in person at such meeting. Section 5. The first meeting of each newly elected Board of Directors shall be held promptly following the annual meeting of shareholders on the date thereof. No notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event such meeting is not so held, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors. Section 6. Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by the Board or by the chairman of the board or president. Any notice given of a regular meeting need not specify the business to be transacted or the purpose of the meeting. Section 7. Special meetings of the Board may be called by the chairman of the board or president on two (2) days' notice to each director by mail or twenty-four (24) hours' notice either personally, by telephone or by telegram; special meetings shall be called by the chairman of the board or president in like manner and on like notice on the written request of two (2) directors. The notice need not specify the business to be transacted or the purpose of the special meeting. The notice shall specify the place of the special meeting. Section 8. At all meetings of the Board or a committee thereof, one-third (1/3) of the directors then in office or members of such committee, but not less than two (if there are at least two members of the Board or such committee) shall constitute a quorum for the transaction of business. The act of a majority of the members present at any meeting at which there is a quorum shall be the act of the Board of Directors or the committee, unless the vote of a larger number is specifically required by statute, by the Articles of Incorporation, or by these By-Laws. If a quorum shall not be present at any meeting of the Board of Directors or a committee, the members present thereat may adjourn the meeting from time to time and to another place without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise provided by the Articles of Incorporation, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee 4 5 thereof may be taken without a meeting, if, before or after the action, all members of the Board or committee consent thereto in writing. The written consents shall be filed with the minutes of proceedings of the Board or committee. Such consents shall have the same effect as a vote of the Board or committee for all purposes. Section 10. The Board of Directors may, by resolution, designate one (1) or more committees, each committee to consist of one (1) or more of the directors of the corporation. The Board may designate one (1) or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of any member of such committee, the members thereof present at any meeting and not disqualified from voting, whether or not they constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in place of such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the corporation provided, however, such a committee shall not have power or authority to: (a) Amend the Articles of Incorporation. (b) Adopt an agreement of merger or consolidation. (c) Recommend to shareholders the sale, lease or exchange of all or substantially all of the corporation's property and assets. (d) Recommend to shareholders a dissolution of the corporation or a revocation of a dissolution. (e) Amend the By-Laws of the corporation. (f) Fill vacancies in the Board. (g) Fix compensation of the directors for serving on the Board or on a committee. (h) Declare a dividend. (i) Authorize the issuance of stock. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. A committee, and each member thereof, shall serve at the pleasure of the Board. Section 11. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required. 5 6 Section 12. The Board by affirmative vote of a majority of directors in office and irrespective of any personal interest of any of them, may establish reasonable compensation of directors for services to the corporation as directors, officers or members of a committee. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Section 13. A director may resign by written notice to the corporation. The resignation is effective upon its receipt by the corporation or a subsequent time as set forth in the notice of resignation. Section 14. Attendance of a director at a meeting constitutes a waiver of notice of the meeting except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the Articles of Incorporation or of these By-Laws, written notice is required to be given to any director, committee member or shareholder, such notice may be given in writing by mail (registered, certified or other first class mail) addressed to such director, shareholder or committee member at his address as it appears on the records of the corporation, with postage thereon prepaid. Such notice shall be deemed to be given at the time when the same shall be deposited in a post office or official depository under the exclusive care and custody of the United States postal service. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the Articles of Incorporation or of these By-Laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the shareholders, directors or a committee, need be specified in any written waiver of notice. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the Board of Directors at its first meeting after each annual meeting of shareholders and shall be a president, a secretary and a treasurer. The Board of Directors may also create and fill the office of chairman of the board and vice chairman of the board, and may choose one or more vice presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person. 6 7 Section 2. The Board of Directors may from time to time appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board. Section 3. The salaries of all officers of the corporation shall be fixed by the Board of Directors. Section 4. The officers of the corporation shall hold office at the pleasure of the Board of Directors. Any officer elected or appointed by the Board of Directors may be removed at any time by the Board of Directors with or without cause. Any vacancy occurring in any office of the corporation by death, resignation, removal or otherwise shall be filled by the Board of Directors. An officer may resign by written notice to the corporation. The resignation is effective upon its receipt by the corporation or at a subsequent time specified in the notice of resignation. Section 5. Unless otherwise provided by resolution of the Board of Directors, the president shall be the chief executive officer of the corporation, shall preside at all meetings of the shareholders and the Board of Directors (if he shall be a member of the Board), shall have general and active management of the business and affairs of the corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. He shall execute on behalf of the corporation, and may affix or cause the seal to be affixed to, all instruments requiring such execution except to the extent the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the corporation. Section 6. The vice presidents shall act under the direction of the president and in the absence or disability of the president shall perform the duties and exercise the powers of the president. They shall perform such other duties and have such other powers as the president or the Board of Directors may from time to time prescribe. The Board of Directors may designate one or more executive vice presidents. The duties and powers of the president shall descend to the vice presidents in such specified order of seniority. Section 7. The secretary shall act under the direction of the president. Subject to the direction of the president he shall attend all meetings of the Board of Directors and all meetings of the shareholders and record the proceedings. He shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the shareholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the president or the Board of Directors. He shall keep in safe custody the seal of the corporation and, when authorized by the president or the Board of Directors, cause it to be affixed to any instrument requiring it. Section 8. The assistant secretaries shall act under the direction of the president. In the order of their seniority, unless otherwise determined by the president or the Board of Directors, they shall, in the absence or disability of the secretary, perform the duties and exercise the powers of the 7 8 secretary. They shall perform such other duties and have such other powers as the president or the Board of Directors may from time to time prescribe. Section 9. The treasurer shall act under the direction of the president. Subject to the direction of the president he shall have custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors. He shall disburse the funds of the corporation as may be ordered by the president or the Board of Directors, taking proper vouchers for such disbursements, and shall render to the president and the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. He may affix or cause to be affixed the seal of the corporation to documents so requiring the seal. Section 10. The assistant treasurers in the order of their seniority, unless otherwise determined by the president or the Board of Directors shall, in the absence or disability of the treasurer, perform the duties and exercise the powers of the treasurer. They shall perform such other duties and have such other powers as the president or the Board of Directors may from time to time prescribe. Section 11. To the extent the powers and duties of the several officers are not provided from time to time by resolution or other directive of the Board of Directors or by the president (with respect to other officers), the officers shall have all powers and shall discharge the duties customarily and usually held and performed by like officers of corporations similar in organization and business purposes to this corporation. ARTICLE VI CERTIFICATES OF STOCK AND SHAREHOLDERS OF RECORD Section 1. The shares of stock of the corporation shall be represented by certificates signed by, or in the name of the corporation by, the chairman of the board, vice chairman of the board, president, or a vice president, and by the treasurer, assistant treasurer, secretary or assistant secretary of the corporation. Each holder of stock in the corporation shall be entitled to have such a certificate certifying the number of shares owned by him in the corporation. Section 2. Any of or all the signatures on the certificate may be a facsimile if the certificate is countersigned by a transfer agent or registered by a registrar other than the corporation itself or its employee. In case any officer who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer at the date of issue. The seal of the corporation or a facsimile thereof may, but need not, be affixed to the certificates of stock. 8 9 Section 3. The Board of Directors may direct a new certificate for shares to be issued in place of any certificate theretofore issued by the corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost or destroyed. When authorizing such issue of a new certificate, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate, or his legal representative, to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost or destroyed. Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Section 5. In order that the corporation may determine the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or to express consent to or to dissent from a proposal without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or for the purpose of any other action, the Board of Directors may fix, in advance, a date as a record date, which shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action. If no record date is fixed: (a) The record date for determining shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the day on which notice is given, or, if no notice is given, at the close of business on the day next preceding the day on which the meeting is held; and (b) The record date for determining shareholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares for all purposes, including voting and dividends, and shall not be bound to recognize any equitable or other claim to interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Michigan. 9 10 ARTICLE VII INDEMNIFICATION The Corporation shall, to the fullest extent authorized or permitted by the Michigan Business Corporation Act, (a) indemnify any person, and his or her heirs, executors, administrators and legal representatives, who was, is, or is threatened to be made, a party to any threatened, pending or completed action, suit or proceeding (whether civil, criminal, administrative or investigative) by reason of the fact that such person is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (collectively, "Covered Matters"); and (b) pay or reimburse the reasonable expenses incurred by such person and his or her heirs, executors, administrators and legal representatives in connection with any Covered Matter in advance of final disposition of such Covered Matter. The Corporation may provide such other indemnification to directors, officers, employees and agents by insurance, contract or otherwise as is permitted by law and authorized by the Board of Directors. ARTICLE VIII GENERAL PROVISIONS Section 1. All checks, drafts or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies or other depositories as the Board of Directors may from time to time designate. Section 2. The fiscal year of the corporation shall end on the last day of July of each year or such other date as shall be fixed from time to time by resolution of the Board of Directors. Section 3. The Board of Directors may adopt a corporate seal for the corporation. The corporate seal shall have inscribed thereon the name of the corporation and the words "Corporate Seal, Michigan." The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. Section 4. The corporation shall keep within or without the State of Michigan books and records of account and minutes of the proceedings of its shareholders, Board and executive committee, if any. The corporation shall keep at its registered office or at the office of its transfer agent within or without the State of Michigan records containing the names and addresses of all shareholders, the number, class and series of shares held by each and the dates when they respectively became holders of record thereof. Any of such books, records or minutes may be in written form or in any other form capable of being converted into written form within a reasonable time. 10 11 Section 5. These By-Laws shall govern the internal affairs of the corporation to the extent they are consistent with law and the Articles of Incorporation. Nothing contained in the By-Laws shall, however, prevent the imposition by contract of greater voting, notice or other requirements than those set forth in these By-Laws. ARTICLE IX AMENDMENTS Section 1. The By-Laws may be amended or repealed, or new by-laws may he adopted, by action of either the shareholders or the Board of Directors. The shareholders may from time to time specify particular provisions of the By-Laws which shall not be altered or repealed by the Board of Directors. ARTICLE X CONTROL SHARE ACT Chapter 7B of the Michigan Business Corporation Act does not apply to control share acquisitions of shares of the Corporation. 11 EX-4.2 4 EXHIBIT 4.2 1 EXHIBIT 4.2 Execution Copy OXFORD AUTOMOTIVE, INC. ------------------------------------------ CREDIT AGREEMENT dated as of June 24, 1997 ------------------------------------------ THE BORROWING SUBSIDIARIES PARTY HERETO, THE LENDERS PARTY HERETO and NBD BANK, as Agent ARRANGED BY FIRST CHICAGO CAPITAL MARKETS, INC. 2
Article Page - ------- ---- I. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.1 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.2 Other Definitions; Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . 18 II. THE COMMITMENTS, THE SWINGLINE FACILITY AND THE ADVANCES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 2.1 Commitment of the Lenders and Canadian and Swingline Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 2.2 Termination and Reduction of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . 21 2.3 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 2.4 Disbursement of Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 2.5 Conditions for First Disbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 2.6 Further Conditions for Disbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 2.7 Subsequent Elections as to Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . 27 2.8 Limitation of Requests and Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 2.9 Minimum Amounts; Limitation on Number of Borrowings; Etc. . . . . . . . . . . . . . . . . 28 2.10 Borrowing Base Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 2.11 Security and Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 III. PAYMENTS AND PREPAYMENTS OF ADVANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 3.1 Principal Payments and Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 3.2 Interest Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 3.3 Letters of Credit and Acceptances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 3.4 Additional Terms of Acceptances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 3.5 Payment Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 3.6 No Setoff or Deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 3.7 Payment on Non-Business Day; Payment Computations . . . . . . . . . . . . . . . . . . . . 35 3.8 Additional Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 3.9 Illegality and Impossibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 3.10 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 3.11 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 3.12 Substitution of Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 IV. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 4.1 Corporate Existence and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 4.2 Corporate Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 4.3 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 4.4 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 4.5 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 4.6 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 4.7 Use of Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 4.8 Consents, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 4.9 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 4.10 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 4.11 Borrowing Base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 4.12 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 4.13 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 4.14 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 4.15 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 4.16 No Defaults under Certain Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
i 3 4.17 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 4.18 Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 4.19 Investment Company Act; Other Regulations . . . . . . . . . . . . . . . . . . . . . . . . 42 4.20 Subordinated Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 4.21 Unrestricted Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 V. COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 5.1 Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 (a) Preservation of Corporate Existence, Etc. . . . . . . . . . . . . . . . . . . . . 43 (b) Compliance with Laws, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 (c) Maintenance of Properties; Insurance . . . . . . . . . . . . . . . . . . . . . . 43 (d) Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 (e) Accounting; Access to Records, Books, Etc. . . . . . . . . . . . . . . . . . . . 45 (f) Maintenance of Business Lines . . . . . . . . . . . . . . . . . . . . . . . . . . 46 (g) Additional Security and Collateral . . . . . . . . . . . . . . . . . . . . . . . 46 (h) Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 5.2 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 (a) Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 (b) Total Debt to EBITDA Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 (c) Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 (d) Interest Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 (e) Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 (f) Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 (g) Merger; Acquisitions; Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 (h) Disposition of Assets; Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 (i) Nature of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 (j) Dividends and Other Restricted Payments . . . . . . . . . . . . . . . . . . . . . 50 (k) Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 (l) Loans, Advances and Investments . . . . . . . . . . . . . . . . . . . . . . . . . 50 (m) Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . 50 (n) Sale and Leaseback Transactions . . . . . . . . . . . . . . . . . . . . . . . . . 51 (o) Negative Pledge Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 (p) FSC Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 (q) Inconsistent Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 (r) Subsidiary Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 (s) Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 (t) Other Indebtedness and Agreements . . . . . . . . . . . . . . . . . . . . . . . . 52 (u) Management Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 (v) Restricted Subsidiaries.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 5.3 Additional Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 VI. DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 6.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 (a) Nonpayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 (b) Misrepresentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 (c) Certain Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 (d) Other Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 (e) Cross Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 (f) Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 (g) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 (h) Insolvency, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 (i) Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 (j) Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 6.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ii 4 6.3 Distribution of Proceeds of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . 55 VII. THE AGENT AND THE LENDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 7.1 Appointment and Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 7.2 Agent and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 7.3 Scope of Agent's Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 7.4 Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 7.5 Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 7.6 Liability of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 7.7 Nonreliance on Agent and Other Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . 58 7.8 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 7.9 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 7.10 Sharing of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 VIII. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 8.1 Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 8.3 No Waiver By Conduct; Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . 61 8.4 Reliance on and Survival of Various Provisions . . . . . . . . . . . . . . . . . . . . . . 61 8.5 Expenses; Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 8.6 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 8.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 8.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 8.9 Table of Contents and Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 8.10 Construction of Certain Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 8.11 Integration and Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 8.12 Independence of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 8.13 Interest Rate Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 8.14 Judgment and Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 8.15 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
iii 5 EXHIBITS Exhibit A - Borrowing Base Certificate Exhibit B - Company Security Agreement Exhibit C - Environmental Certificate Exhibit D - Guaranty Exhibit E - Guarantor Security Agreement Exhibit F - Revolving Credit Note Exhibit G - Swingline Note Exhibit H - Disbursement of Advances Exhibit I - Disbursement of Swingline Loans Exhibit J - Subsequent Elections as to Borrowings Exhibit K - Assignment and Acceptance SCHEDULES Schedule 1.1(A) - Existing Letters of Credit Schedule 1.1(B) - GM Agreement Schedule 1.1(C) - Senior Subordinated Debt Documents Schedule 4.4 - Subsidiaries Schedule 4.5 - Litigation Schedule 4.17 - Intellectual Property Schedule 4.18 - Lobdell Preferred Stock Schedule 4.20 - Other Subordinated Debt Schedule 5.2(e) - Indebtedness Schedule 5.2(f) - Liens Schedule 5.2(o) - Negative Pledges Schedule 5.2(u) - Management Fees iv 6 THIS CREDIT AGREEMENT, dated as of June 24,1997 (this "Agreement"), is by and among OXFORD AUTOMOTIVE, INC., a Michigan corporation (the "Company"), each of the Subsidiaries of the Company designated in Section 1.1 as a Borrowing Subsidiary (a "Borrowing Subsidiary" and collectively with the Company the "Borrowers"), the lenders set forth on the signature pages hereof, their successors and assigns, and each other Person becoming a lender hereunder from time to time (collectively, together with any Affiliates of such Lenders designated by such Lenders to make Canadian Advances hereunder, the "Lenders" and individually a "Lender"), and NBD BANK, a Michigan banking corporation, as agent (in such capacity, and collectively with any of its Affiliates designated by it to administer any of its functions hereunder at any time, the "Agent") for the Lenders. The parties hereto agree as follows: ARTICLE I. DEFINITIONS 1.1 Certain Definitions. As used herein the following terms shall have the following respective meanings: "Acceptance" shall mean Bankers' Acceptances and BA Equivalent Loans. "Acceptance Fee" shall mean the fee payable at the time of the acceptance of Bankers' Acceptances established by multiplying the face amount of such Bankers' Acceptances by the Applicable Margin and by multiplying the product so obtained by a fraction having a numerator equal to the number of days in the term of such Bankers' Acceptances and a denominator of 365. "Acquisition" is defined in Section 5.2(g). "Advance" shall mean any Loan, any acceptance of any Bankers' Acceptance, any BA Equivalent Loan, and any Letter of Credit Advance. "Affiliate", when used with respect to any Person, shall mean any other Person which, directly or indirectly, controls or is controlled by or is under common control with such Person. For purposes of this definition "control" (including the correlative meanings of the terms "controlled by" and "under common control with"), with respect to any Person, shall mean possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or by contract or otherwise, and a Person shall be deemed to control another Person if the controlling Person owns 10% or more of any class of voting securities (or other ownership interest) of the controlled Person. "Applicable Lending Office" shall mean, with respect to any Loan made by any Lender or with respect to such Lender's Commitments, the office of such Lender or of any Affiliate of such Lender located at the address specified as the applicable lending office for such Lender set forth next to the name of such Lender in the signature pages hereof or any other office or Affiliate of such Lender or of any Affiliate of such Lender hereafter selected and notified in writing to the Company and the Agent by such Lender. Any Affiliate of any such Lender so selected and notified shall have all rights of a Lender hereunder. 7 "Applicable Margin" shall mean, with respect to any Floating Rate Loan, Bankers' Acceptance, LIBOR Loan, commitment fee payable under Section 2.3(a) and Letter of Credit fee payable pursuant to Section 2.3(b), as the case may be, the per annum rate (expressed as a percentage) in accordance with the following:
Total Debt to Floating Rate Bankers' Letter of Credit Commitment Fees EBITDA Ratio Loans Acceptances and Fees LIBOR Loans >5.00 0.75% 2.25% 2.25% 0.50% >4.51 but <5.00 0.50% 2.00% 2.00% 0.45% >3.75 but <4.50 0.25% 1.75% 1.75% 0.375% >3.00 but <3.75 0.0% 1.50% 1.50% 0.30% <3.00 0.0% 1.25% 1.25% 0.25%
The Applicable Margin shall be based upon the Total Debt to EBITDA Ratio as calculated as of the last day of each fiscal quarter of the Company and the Applicable Margin shall be adjusted on (a) the last day of the second month following the close of the fiscal quarter for the first three fiscal quarters, and (b) the last day of the fourth month following the close of the last fiscal quarter, based on the financial statements of the Company and related compliance certificate pursuant to Section 5.1(d) to the Lenders, and shall remain in effect until the next change to be effected pursuant to this definition and shall be adjusted for the first time on the earlier of (i) if requested by the Agent, the date of any Acquisition (other than the Acquisition of Howell) by the Company or any of its Subsidiaries in which any Borrower or Guarantor incurs any Indebtedness or makes any loan, advance or investment in any Unrestricted Subsidiary, based on the pro forma Total Debt to EBITDA Ratio after giving effect to such acquisition, on a pro forma basis acceptable to the Agent, or (ii) based on the financial statements delivered to the Agent for the fiscal quarter ending September 30, 1997; provided that the Applicable Margin shall be based on a Total Debt to EBITDA Ratio of greater than 3.00 to 1.00 but less than or equal to 3.75 to 1.00 until it is adjusted for the first time hereunder. "Assignment and Acceptance" is defined in Section 8.6(d). "Available Commitment" shall mean, as to any Lender at any time, an amount equal to the excess, if any, of (a) the amount of such Lender's Commitment at such time over (b) the aggregate Canadian Advances made by such Lender outstanding at such time. "BA Equivalent Loan" shall mean a Loan contemplated as such in Section 3.4. "BA Rate" shall mean the rate per annum determined as being the arithmetic average (rounded upwards, if necessary, to the nearest .01%) of the rates quoted for NBD Canada for one month bankers' acceptances as appears on the Reuters Screen CDOR (Certificate of Deposit Offered Rate) page, as determined as at 10:00 a.m. (Toronto time) on the relevant Business Day (for non-Business Days, and if no CDOR rate is available for a given Business Day, the CDOR rate for the immediately previous Business Day for which a CDOR rate is available shall be used) 2 8 "BA Interest Period" shall mean, relative to any Bankers Acceptance or BA Equivalent Loan, the period beginning on (and including) the date on which such Bankers Acceptance is accepted or continued or such BA Equivalent Loan is made or continued to (but excluding) the date which is 30, 60 or 90 days thereafter, as selected by the Company. "Bankers' Acceptance" shall mean a non-interest bearing bill of exchange in a form satisfactory to the Agent, denominated in CAD, drawn and endorsed by a Borrowing Subsidiary and presented to each Canadian Lender for acceptance pursuant to this Agreement. "BMG" shall mean BMG North America Limited, a corporation incorporated under the laws of the Province of Ontario, Canada. "Borrowing" shall mean the aggregation of Advances, including each Letter of Credit and Bankers' Acceptance issuance, of the Lenders to be made to any Borrower, or continuations and conversions of any Advances, made pursuant to Article II on a single date and, in the case of any LIBOR Loans or Bankers' Acceptances, for a single Interest Period, which Borrowings may be classified for purposes of this Agreement by reference to the type of Loans or the type of Advance comprising the related Borrowing, e.g., a "LIBOR Borrowing" is a Borrowing comprised of LIBOR Loans and a "Letter of Credit Borrowing" is an Advance comprised of a single Letter of Credit. "Borrowing Base" shall mean, as of any date, the sum of: (a) an amount equal to 85% of the value of Eligible Accounts Receivable, plus (b) an amount equal to 50% of the value of Eligible Tooling Reimbursement Payments, plus (c) an amount equal to 50% of the value of Eligible Inventory, plus (d) an amount equal to 50% of the value of Eligible Tooling, plus (e) an amount equal to (i) 65% of the net book value of Eligible Fixed Assets, other than Eligible Fixed Assets acquired pursuant to an Acquisition (exclusive of the Eligible Fixed Assets of Howell to be acquired in connection with the Acquisition of Howell, which Eligible Fixed Assets of Howell will be included in this clause (i) when Howell becomes a Guarantor hereunder) after the Effective Date, and (ii) the following amount with respect to Eligible Fixed Assets acquired pursuant to an Acquisition (exclusive of the Eligible Fixed Assets of Howell to be acquired in connection with the Acquisition of Howell) after the Effective Date: (A) if appraisals of such Eligible Fixed Assets are not performed, 50% of the net book value of such Eligible Fixed Assets or (B) if appraisals of such Eligible Fixed Assets are performed, then an amount equal to the lesser of (x) 65% of the net book value of such Eligible Fixed Assets or (y) such percentage 3 9 of the net book value of such Eligible Fixed Assets which would equate to 80% of the orderly liquidation value shown in such appraisals for equipment and 80% of the fair market value shown in such appraisals for real estate with respect to such Eligible Fixed Assets, provided that (1) with respect to such Eligible Fixed Assets acquired in connection with an Acquisition after the Effective Date, the net book value of such assets will be the higher of the net book value immediately prior to such Acquisition or immediately after such Acquisition, provided further that if the value is determined by reference to the net book value of such assets immediately prior to such Acquisition the Company shall apply its normal depreciation policies to such assets and (2) such appraisals shall be done by an independent third party appraiser acceptable to the Agent. "Borrowing Base Certificate" for any date shall mean an appropriately completed report as of such date in substantially the form of Exhibit A hereto, certified as true and correct as of such date by the Chief Financial Officer or Treasurer of the Company. "Borrowing Subsidiary" shall mean any Canadian Subsidiary designated by the Company to the Agent as a "Borrowing Subsidiary" hereunder so long as (a) each of the Company and each Guarantor guarantees the obligation of such Borrowing Subsidiary pursuant to a Guaranty, and grants a first priority lien and security interest on its assets to the extent required under Section 2.11 to secure such Guaranty and all obligations of such Borrowing Subsidiary, (b) such Borrowing Subsidiary delivers all corporate or organizational documents and authorizing resolutions and legal opinions requested by the Agent and (c) such Borrowing Subsidiary executes all agreements, instruments and documents and takes such other action requested by the Agent, including without limitation becoming bound by the terms hereof as a Borrowing Subsidiary and granting a first priority lien and security interest on its assets to the extent required under Section 2.11 to secure all Canadian Advances and other obligations of such Borrowing Subsidiary to the Lenders and the Agent. As of the Effective Date, the only Borrowing Subsidiary is BMG. "Business Day" shall mean a day other than a Saturday, Sunday or other day on which the Agent is not open to the public for carrying on substantially all of its banking functions in Detroit, Michigan or, with respect to any Canadian Advance, NBD Canada is not open to the public for carrying on substantially all of its banking functions in Toronto, Ontario. "CAD" or "C$" shall mean the lawful money of Canada. "Canadian Advances" shall mean all Loans, including Acceptances, denominated in CAD. "Canadian Lender" shall mean any Lender which, whether directly or through an Affiliate of such Lender, can make Canadian Advances hereunder free of withholding taxes of Canada and that is designated to the Agent and the Company as a Canadian Lender. "Canadian Percentage" of any Canadian Lender as of any date, shall mean a fraction (expressed as a percentage), the numerator of which is the Commitment of such Canadian Lender and the denominator which is the aggregate Commitments of all Canadian Lenders. 4 10 "Canadian Subsidiary" shall mean any Subsidiary of the Company organized under the laws of Canada or any Province thereof. "Capital Lease" of any Person shall mean any lease which, in accordance with Generally Accepted Accounting Principles, is or should be capitalized on the books of such Person. "Capital Stock" shall mean (i) in the case of any corporation, all capital stock and any securities exchangeable for or convertible into capital stock and any warrants, rights or other options to purchase or otherwise acquire capital stock or such securities or any other form of equity securities, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (iii) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited) and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distribution of assets of, the issuing Person. "Change in Control" shall mean: (a) prior to a primary sale or sales of shares of Capital Stock of the Company resulting in the sale of more than 50% of each class of outstanding Capital Stock of the Company pursuant to any one or more public offerings thereof (a "Majority IPO"), Permitted Holders shall cease to control, directly or indirectly, in each case free and clear of all Liens, a majority (on a fully diluted basis) of the issued and outstanding shares of Voting Stock of the Company and have the right and authority to appoint, designate or otherwise elect a majority of the members of the board of directors of the Company; (b) after a Majority IPO, (i) Permitted Holders shall cease to control, directly, or indirectly, in each case free and clear of all Liens, at least 20% (on a fully diluted basis) of the issued and outstanding shares of Voting Stock of the Company and have the right and authority to appoint, designate or otherwise elect at least 20% of the members of the board of directors of the Company or (ii) any person, or two or more persons acting in concert, acquire or own beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) an amount of the outstanding shares of Voting Stock of the Company or the Company on a fully diluted basis which is equal to or greater than the amount owned by the Permitted Holders free and clear of any Lien; or (c) any "Change of Control" as defined in the Senior Subordinated Note Indenture. "Commitment" shall mean, with respect to each Lender, the commitment of each such Lender to make or accept, as the case may be, Loans and to participate in Letter of Credit Advances made through the Agent pursuant to Section 2.1, in amounts not exceeding in aggregate principal amount outstanding at any time the respective Commitment amounts for each such Lender set forth next to the name of each such Lender in the signature pages hereof, or, as the Lender becoming a party hereto after the Effective Date, as set forth in the applicable Assignment and Acceptance, in each case as reduced or modified pursuant to this Agreement. "Company Security Agreement" shall mean the security agreement entered into by the Company for the benefit of the Agent and the Lenders pursuant to this Agreement in substantially the form of Exhibit B hereto, as amended or modified from time to time. 5 11 "Consolidated" or "consolidated" shall mean, when used with reference to any financial term in this Agreement, the aggregate for two or more persons of the amounts signified by such term for all such persons determined on a consolidated basis in accordance with Generally Accepted Accounting Principles. "Contingent Liabilities" of any Person shall mean, as of any date, all obligations of others for which such Person is contingently liable, as guarantor, surety, accommodation party, partner or in any other capacity, or in respect of which obligations such Person assures a creditor against loss or agrees to take any action to prevent any such loss (other than endorsements of negotiable instruments for collection in the ordinary course of business), including without limitation all reimbursement obligations of such Person in respect of any letters of credit, surety bonds or similar obligations and all obligations of such Person to advance funds to, or to purchase assets, property or services from, any other Person in order to maintain the financial condition of such other Person. "Creative" shall mean Creative Fabrication Corporation, a Tennessee corporation. "Creative Letter of Credit" shall mean the irrevocable letter of credit number 442 issued by NBD Bank on September 27, 1995 for the account of Creative, as renewed or extended or otherwise modified from time to time. "Creative Revenue Bond" shall mean the $8,500,000 Industrial Development Revenue Bond (Creative Fabrication Corporation Project), Series 1995 issued by the Industrial Development Board of the County of McMinn, a public non-profit corporation and public instrumentality of the County of McMinn, Tennessee. "Creative Revenue Bond Documents" shall mean the indenture of trust, loan agreement, reimbursement agreement, irrevocable letter of credit, pledge and security agreement, deed of trust, security agreement, fixture filing and assignment of rents, security agreement, guarantor security agreement, irrevocable guaranty agreement and all other agreements and documents executed or issued in connection with the Creative Revenue Bond, all as amended or modified from time to time. "Default" shall mean any event or condition which might become an Event of Default with notice or lapse of time or both. "Defaulting Lender" shall mean any Lender that fails to make available to the Agent such Lender's Loans required to be made hereunder or shall have not made a payment required to be made to the Agent hereunder. Once a Lender becomes a Defaulting Lender, such Lender shall continue as a Defaulting Lender until such time as such Defaulting Lender makes available to the Agent the amount of such Defaulting Lender's Loans and all other amounts required to be paid to the Agent pursuant to this Agreement. "Discount Rate" shall mean with respect to Bankers' Acceptances issued pursuant to this Agreement with the same maturity date, the rate determined by the Agent as being the discount rate, calculated on the basis of a year of 365 days, of the Agent established in accordance with its normal practices at or about 10:00 a.m. on the date of issue of such Bankers' Acceptances, for bankers' acceptances having a comparable face value and an identical maturity date to the face value and maturity date of the Agent's portion of such issue of Bankers' Acceptances. 6 12 "Discounted Proceeds" shall mean in respect of any Bankers' Acceptance to be accepted and purchased by a Lender hereunder on any day, an amount (rounded to the nearest whole cent, and with one-half of one cent being rounded up) calculated on such day by multiplying (i) the face amount of such Bankers' Acceptance by (ii) the price, where the price is determined by dividing one by the sum of one plus the product of (A) the Discount Rate (expressed as a decimal) and (B) a fraction, the numerator of which is the number of days in the term of such Bankers' Acceptance and the denominator of which is 365. "Disqualified Stock" shall mean any Capital Stock that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, or which otherwise has any mandatory payments with respect thereto. "Dollar Equivalent" shall mean as of any date, with respect to any amount in a currency other than Dollars, the sum in Dollars resulting from the conversion of such amount from such currency into Dollars at the spot exchange rate determined by the Agent to be available to it for the purchase of such currency with Dollars at approximately 11:00 a.m. local time of the Applicable Lending Office on such date as a determination of the Dollar Equivalent is made. "Documents" shall have the meaning ascribed thereto in Section 3.3(b). "Dollars" and "$" shall mean the lawful money of the United States of America. "Domestic Subsidiary" shall mean each present and future Subsidiary of the Company which is not a Foreign Subsidiary. "EBITDA" for any period shall mean the sum of Net Income plus, without duplication, the following to the extent deducted in calculating such Net Income: (i) Interest Expense, (ii) income tax expense (including Michigan Single Business Taxes expense), (iii) depreciation expense, (iv) amortization expense and (v) all other non-cash items reducing Net Income (other than items that will require cash payments and for which an accrual or reserve is, or is required by Generally Accepted Accounting Principles to be, made, except as otherwise consented to by the Agent), less all non-cash items increasing Net Income, in each case for such period. Notwithstanding the foregoing, the provision for taxes based on the income or profits of, and the depreciation and amortization of, a Subsidiary of the Company shall be added to Net Income to compute EBITDA only to the extent (and in the same proportion) that the net income of such Subsidiary was included in calculating Net Income. "Effective Date" shall mean the effective date specified in the final paragraph of this Agreement. "Eligible Accounts Receivable" shall mean, as of any date and without duplication, those trade accounts receivable owned by a Borrower or a Guarantor that are payable in Dollars, CAD or any other readily available and freely tradable currency acceptable to the Agent and in which such Borrower or Guarantor has granted to the Agent for the benefit of the Lenders and the Agent a first-priority perfected security interest pursuant to the Security Agreements, subject to only such Liens as are permitted Section 5.2(f)(i), valued at the face amount thereof less sales, excise or similar taxes and less returns, discounts, claims, credits and allowances of any nature at any time issued, owing, granted, outstanding, available or claimed, but shall not include any such account receivable (a) that is not a bona fide existing obligation created by the sale and actual delivery of inventory, goods or other property, or 7 13 the furnishing of services or other good and sufficient consideration to customers of a Borrower or a Guarantor in the ordinary course of business, (b) that is more than 90 days past due or that remains outstanding more than 90 days after the earlier of the date of the invoice or the shipment of the related inventory, goods or other property or the furnishing of the related services or other consideration, (c) that is subject to any dispute, contra-account, defense, offset or counterclaim or any Lien (except those in favor of the Agent for the benefit of the Lenders and the Agent under the Security Documents), or the inventory, goods, property, services or other consideration of which such account receivable constitutes proceeds is subject to any such Lien, (d) in respect of which the inventory, goods, property, services or other consideration have been rejected, (e) that is due from any Affiliate or Subsidiary of any Borrower or Guarantor, (f) that has been classified by any Borrower or Guarantor as doubtful or has otherwise failed to meet established or customary credit standards of any Borrower or Guarantor, (g) that is payable by any Person located outside the United States or Canada (which shall not be deemed to include any territories of the United States or Canada), other than a Subsidiary of General Motors Corporation, Ford Motor Company or Chrysler Corporation, or any other substantial auto manufacturer or supplier approved by the Agent, (h) with respect to which any representation or warranty contained in Section 4.11 is incorrect at any time, (i) that is payable by the United States or any of its departments, agencies or instrumentalities or by any state or other governmental entity unless such Borrower or Guarantor shall have notified the Agent thereof and shall have executed and delivered any and all instruments and documents and taken such other action required by the Agent to duly effect the assignment thereof to the Agent under the Federal Assignment of Claims Act, as amended, or other applicable law now or hereafter in effect, (j) that is payable by any Person as to which 30% or more of the accounts receivable payable by such Person to any Borrower or Guarantor do not otherwise constitute Eligible Accounts Receivable, (k) that is payable by any Person that is the subject of any proceeding seeking to adjudicate it a bankrupt or insolvent or seeking liquidation, winding up or reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief or protection of debtors or seeking the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property, or that is not generally paying its debts as they become due or has admitted in writing its inability to pay its debts generally or has made a general assignment for the benefit of creditors, (l) that is evidenced by a promissory note or other instrument, (m) that is subordinate or junior in right or priority of payment to any other obligation or claim, (n) arising as a result of or relating to Tooling if such account receivable is not currently due or arising as a result of or relating to Tooling if it arises under any Tooling Contract financed by any lender other than by Advances by the Lenders under this Agreement, or (o) that for any other reason is at any time reasonably deemed by the Agent to be ineligible. "Eligible Fixed Assets" shall mean, as of any date, those tangible fixed assets owned by a Borrower or a Guarantor in which such Borrower or Guarantor has granted to the Agent and Lenders a first-priority perfected security interest pursuant to the Security Agreements, subject to only such Liens as are permitted Section 5.2(f)(i),but not including any such fixed asset (a) that is not usable in the business of a Borrower or Guarantor, (b) that is located outside the United States or Canada or such other jurisdiction approved by the Agent, (c) that is subject to, or any accounts or other proceeds resulting from the sale or other disposition thereof could be subject to, any Lien (except those in favor of the Agent and the Lenders under the Security Agreements, (d) that is not in the possession of the Company, (e) that is held for sale or lease or is the subject of any lease, (f) that is subject to any trademark, trade name or licensing arrangement, or any law, rule or regulation, that could limit or impair the ability of the Agent and the Lenders to promptly exercise all rights of the Agent and the Lenders under the Security Agreements, (g) if such fixed asset is located on premises not owned by the Company and the landlord or other owner of such premises shall not have waived its distraint, lien and similar rights with respect to such fixed asset, and shall not have agreed to permit the Agent to enter such premises after the 8 14 occurrence of an Event of Default pursuant to a waiver and agreement of such person in favor of and in form and substance acceptable to the Agent, (h) with respect to which any insurance proceeds are not payable to the Agent as a lender loss payee or are payable to any loss payee other than the Agent or a Borrower or Guarantor, and (i) that for any other reason is at any time reasonably deemed by the Agent to be ineligible. "Eligible Inventory" shall mean, as of any date, that inventory owned by a Borrower or a Guarantor that constitutes raw materials, work-in-process or finished goods in which such Borrower or Guarantor has granted to the Agent for the benefit of the Lenders and the Agent a first-priority perfected security interest pursuant to the Security Agreements, subject to only such Liens as are permitted Section by 5.2(f)(i), valued at the lower of cost or market on a FIFO basis, but shall not include any such inventory (a) that does not constitute raw materials, work-in-process or finished goods readily salable or usable in the business of a Borrower or a Guarantor, (b) that is located outside the United States or Canada (which shall not be deemed to include any territories of the United States or Canada) or such other jurisdiction approved by the Agent, (c) that is subject to, or any accounts or other proceeds resulting from the sale or other disposition thereof could be subject to, any Lien (except those in favor of the Agent for the benefit of the Lenders and the Agent under the Security Documents), including any sale on approval or sale or return transaction or any consignment, (d) that is not in the possession of such Borrower or Guarantor, (e) that is held for lease or is the subject of any lease, (f) that is subject to any trademark, trade name or licensing arrangement, or any law, rule or regulation, that could limit or impair the ability of the Agent to promptly exercise all rights of the Agent under the Security Documents, (g) if such inventory is located on premises not owned by such Borrower or Guarantor and the landlord or other owner of such premises shall not have waived its distraint, lien and similar rights with respect to such inventory and shall not have agreed to permit the Lenders and the Agent to enter such premises pursuant to a waiver and agreement of such Person in favor of and in form and substance acceptable to the Lenders and the Agent or any other substantial auto manufacturer or supplier approved by the Agent, (h) with respect to which any insurance proceeds are not payable to the Agent for the benefit of the Lenders as a lender loss payee or are payable to any loss payee other than the Agent or such Borrower or Guarantor, (i) that is classified as Eligible Tooling or Eligible Tooling Reimbursement Payments, or (j) that for any other reason is at any time reasonably deemed by the Agent to be ineligible. "Eligible Tooling" shall mean such portion of assets, net of any payments received thereon, of a Borrower or Guarantor which consists of Tooling, provided that each of the following conditions is satisfied: (a) the sale of such Tooling is covered under specific written purchase orders or agreements between a Borrower or Guarantor and the purchaser of such Tooling, and the terms and provisions of all such purchase orders and agreements and the purchaser thereof must be satisfactory to the Agent, (b) the Agent has a first priority, perfected and enforceable security interest in such Tooling and any account receivable or other proceeds of a Borrower or Guarantor relating to such Tooling , subject to only such Liens as are permitted by Section 5.2(f)(i), and (c) the unpaid balance of such Tooling as represented by a Borrower or Guarantor is not subject to any defense, counterclaim, setoff, contra-account, credit, allowance or adjustment. For purposes of this definition, all Tooling of a Borrower or Guarantor which is the subject of any Tooling Contract financed by any lender other than by Advances by the Lenders under this Agreement shall be excluded from this definition, and no (i) accounts receivable included within Eligible Accounts Receivable, (ii) Eligible Tooling Reimbursement Payments or (iii) Eligible Inventory shall be included as part of Eligible Tooling. "Eligible Tooling Reimbursement Payments" shall mean such portion of long term assets, net of any payments received thereon, of a Borrower or Guarantor which consists of Tooling reimbursement payments provided that each of the following conditions are satisfied: (a) the sale of the 9 15 related Tooling is covered under specific written purchase orders or agreements between a Borrower or Guarantor and the purchaser of such Tooling, and the terms and provisions of all such purchase orders and agreements and the purchaser thereof must be satisfactory to the Agent, (b) the Agent has a first priority, perfected and enforceable security interest in such long term assets and any account receivable or other proceeds of a Borrower or Guarantor relating to such long term assets, subject to only such Liens as are permitted by Section 5.2(f)(i), (c) the unpaid balance of such Tooling as represented by a Borrower or Guarantor is not subject to any defense, counterclaim, setoff, contra-account, credit, allowance or adjustment and (d) such Tooling is completed and has been approved by the purchaser thereof. For purposes of this definition, all Tooling reimbursement payments of a Borrower or Guarantor which are the subject of any Tooling Contract financed by any lender other than by Advances by the Lenders under this Agreement shall be excluded from this definition and no (i) Eligible Inventory, (ii), Eligible Tooling or (iii) accounts receivable included within Eligible Accounts Receivable shall be included as part of Eligible Tooling Reimbursement Payments. "Environmental Certificate" shall mean the environmental certificate given by the Borrowers and the Guarantors to the Agent for the benefit of the Lenders pursuant to this Agreement in substantially the form of Exhibit C hereto. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations thereunder. "ERISA Affiliate" shall mean, with respect to any Person, any trade or business (whether or not incorporated) which, together with such Person or any Subsidiary of such Person, would be treated as a single employer under Section 414 of the Code and the regulations promulgated thereunder. "Event of Default" shall mean any of the events or conditions described in Section 6.1. "Existing Letters of Credit" shall mean the letters of credit set forth on Schedule 1.1(A). "Federal Funds Rate" shall mean the per annum rate established and announced by the Agent from time to time as the opening federal funds rate paid by the Agent in its regional federal funds market for overnight borrowings from other banks, which Federal Funds Rate shall change simultaneously with any change in such announced rates. "Fixed Charges" shall mean, for any period, the sum, without duplication, of (a) Interest Expense for such period, plus (b) all payments of principal or other sums paid or payable during such period by the Company or its Restricted Subsidiaries with respect to Indebtedness of the Company or its Restricted Subsidiaries, other than (i) payments on the Advances and (ii) payments on Tooling Indebtedness, plus (c) all debt discount and expense amortized or required to be amortized during such period by the Company or its Restricted Subsidiaries, plus (d) Rental Charges paid or payable during such period by the Company and its Restricted Subsidiaries, plus (e) all dividends, distributions and other obligations paid with respect to any class of the Company's Capital Stock or any dividend, payment or distribution paid in connection with the redemption, purchase, retirement or other acquisition, directly or indirectly, of any shares of the Company's Capital Stock, (f) all net income taxes accrued in such period by the Company or its Restricted Subsidiaries, plus (g) all payments of principal or other sums paid or payable, whether directly or indirectly, during such period by the Company or any of its Restricted Subsidiaries with respect to Indebtedness of any Unrestricted Subsidiary. 10 16 "Fixed Charge Coverage Ratio" shall mean, for any period, the ratio of (a) the sum of (i) the EBITDA for such period (provided that EBITDA as calculated in determining the Fixed Charge Coverage Ratio for (i) the fiscal quarter ending June 30, 1997 shall be equal to the sum of the EBITDA for the fiscal quarter ending June 30, 1997 plus $21,144,000, (ii) the fiscal quarter ending September 30, 1997 shall be equal to the sum of EBITDA for the two quarters ending September 30, 1997 plus $14,096,000 and (iii) the fiscal quarter ending December 31, 1997 shall be equal to the sum of EBITDA for the three fiscal quarters ending December 31, 1997 plus $7,048,000), plus (ii) the Rental Charges for such period (provided that the Rental Charges for (i) the fiscal quarter ending September 30, 1997 shall be equal to the product of the Rental Charges for the two quarters ending September 30, 1997 times two and (iii) the fiscal quarter ending December 31, 1997 shall be equal to the product of the Rental Charges for the three fiscal quarters ending December 31, 1997 times four thirds) to (b) the Fixed Charges for such period (provided that the Fixed Charges for (i) the fiscal quarter ending September 30, 1997 shall be equal to the product of the Fixed Charges for the two quarters ending September 30, 1997 times two and (iii) the fiscal quarter ending December 31, 1997 shall be equal to the product of the Fixed Charges for the three fiscal quarters ending December 31, 1997 times four thirds) "Floating Rate" shall mean the per annum rate equal to the sum of (a) the Applicable Margin, plus (b) (i) with respect to U.S. Advances and other obligations denominated in Dollars, the greater of (x) the Prime Rate in effect from time to time, and (y) the sum of one half of one percent (1/2%) per annum plus the Federal Funds Rate in effect from time to time; and (ii) with respect to Canadian Advances and other obligations denominated in CAD, the greater of (x) the per annum rate of interest quoted, published and commonly known as the "prime rate" of NBD Canada which NBD Canada establishes as the reference rate of interest in order to determine interest rates for loans to its Canadian commercial borrowers, which rate is not necessarily the lowest rate of interest offered by NBD Canada in connection with extensions of credit; and (y) the BA Rate plus 1/2 of 1% per annum; in each case adjusted automatically with each quoted or published change in such rate, all without the necessity of any notice to any Borrower, which Floating Rate shall change simultaneously with any change in any such rates. "Floating Rate Loan" shall mean any Loan which bears interest at the Floating Rate. "Foreign Subsidiary" shall mean any Subsidiary incorporated or formed in any jurisdiction other than any State of the United States of America. "Generally Accepted Accounting Principles" shall mean generally accepted accounting principles applied on a basis consistent with that reflected in the financial statements referred to in Section 4.6. "GM Agreement" shall mean the non-offset agreement of General Motors in the form of Schedule 1.1(B) hereto. "Guaranties" shall mean each guaranty entered into by the Guarantors for the benefit of the Agent and the Lenders pursuant to this Agreement in substantially the form of Exhibit D hereto, as amended or modified from time to time. "Guarantor Security Agreement" shall mean each security agreement entered into by the Guarantors for the benefit of the Agent and the Lenders pursuant to this Agreement in substantially the form of Exhibit E hereto, as amended or modified from time to time. 11 17 "Guarantors" shall mean each Domestic Subsidiary of the Company existing as of the Effective Date, each Canadian Subsidiary, the Company (in its capacity as guarantor of the Borrowing Subsidiaries), and each Person becoming a Restricted Subsidiary of the Company after the Effective Date or otherwise entering into a Guaranty from time to time. "Howell" shall mean Howell Industries, Inc., a Michigan corporation. "Indebtedness" of any Person shall mean, as of any date, (a) all obligations of such Person for borrowed money, and similar monetary obligations evidenced by bonds, notes, debentures, Capital Lease obligations, bankers acceptances or otherwise, (b) all obligations of such Person as lessee under any Capital Lease, (c) all obligations which are secured by any Lien existing on any asset or property of such Person whether or not the obligation secured thereby shall have been assumed by such Person, (d) all obligations of such Person for the unpaid purchase price for goods, property or services acquired by such Person, except for trade accounts payable and taxes arising in the ordinary course of business that are not past due, (e) all obligations of such Person to purchase goods, property or services where payment therefor is required regardless of whether delivery of such goods or property or the performance of such services is ever made or tendered (generally referred to as "take or pay contracts"), (f) all Rate Hedging Obligations, and (g) all Contingent Liabilities. "Intercreditor Agreement" shall mean the Intercreditor Agreement dated on or about the Effective Date in form and substance satisfactory to the Agent among the Agent, BMG and all other material lenders to BMG or any of its Subsidiaries, as amended or modified from time to time. "Interest Coverage Ratio" shall mean, for any period, the ratio of (a) EBITDA for such period to (b) Interest Expense for such period. "Interest Expense" shall mean, for any period, the total interest expense of the Company and its consolidated Restricted Subsidiaries, plus, to the extent not included in such total interest expense, and to the extent incurred by the Company or its Restricted Subsidiaries, (i) interest expense attributable to Capital Lease obligations, (ii) amortization of debt discount, (iii) capitalized interest, (iv) non-cash interest expense, (v) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing, (vi) net costs associated with Rate Hedging Agreements (including amortization of fees), (vii) Preferred Stock dividends in respect of all Preferred Stock held by Persons other than the Company or a Restricted Subsidiary, and (viii) interest actually paid by the Company or any Restricted Subsidiary on any Indebtedness of any other Person. Notwithstanding the foregoing, net interest expense attributable to Tooling Indebtedness shall not be included in Interest Expense. "Interest Payment Date" shall mean (a) with respect to any LIBOR Loan or Acceptance, the last day of each Interest Period with respect thereto and, in the case of any Interest Period exceeding three months, those days that occur during such Interest Period at intervals of three months after the first day of such Interest Period, and (b) in all other cases, the last Business Day of each March, June, September and December occurring after the date hereof, commencing with the first such Business Day occurring after the date of this Agreement. "Interest Period" shall mean any BA Interest Period or LIBOR Interest Period. "Letter of Credit" shall mean a standby or commercial letter of credit issued by the Agent on behalf of the Lenders for the account of the Company under an application and/or other 12 18 documentation acceptable to the Agent requiring, among other things, immediate reimbursement by the Company to the Agent in respect of all drafts or other demand for payment honored thereunder and all expenses paid or incurred by the Agent relative thereto, and shall include the Creative Letter of Credit and all other Existing Letters of Credit. "Letter of Credit Advance" shall mean each issuance of a Letter of Credit. "LIBOR" shall mean, with respect to any LIBOR Loan and the related LIBOR Interest Period, the per annum rate that is equal to the sum of: (a) the Applicable Margin, plus (b) the rate per annum obtained by dividing (i) the per annum rate of interest at which deposits in Dollars for such LIBOR Interest Period and in an aggregate amount comparable to the amount of such LIBOR Loan to be made by the Agent in its capacity as a Lender hereunder are offered to the Agent by other prime banks in the London interbank market, at approximately 11:00 a.m. London time, on the second LIBOR Business Day prior to the first day of such LIBOR Interest Period by (ii) an amount equal to one minus the stated maximum rate (expressed as a decimal) of all reserve requirements (including, without limitation, any marginal, emergency, supplemental, special or other reserves) that are specified on the first day of such LIBOR Interest Period by the Board of Governors of the Federal Reserve System (or any successor agency thereto) for determining the maximum reserve requirement with respect to eurocurrency funding (currently referred to as "Eurocurrency liabilities" in Regulation D of such Board) maintained by a member bank of such System; all as conclusively determined by the Agent, such sum to be rounded up, if necessary, to the nearest whole multiple of one one-hundredth of one percent (1/100 of 1%). "LIBOR Business Day" shall mean, with respect to any LIBOR Loan, a day which is both a Business Day and a day on which dealings in Dollar deposits are carried out in the London interbank market. "LIBOR Interest Period" shall mean, with respect to any LIBOR Loan, the period commencing on the day such LIBOR Loan is made or converted to a LIBOR Loan and ending on the day which is one, two or three months thereafter (or such longer period requested by the Company and acceptable to the Lenders), as the Company may elect under this Agreement, and each subsequent period commencing on the last day of the immediately preceding LIBOR Interest Period and ending on the day which is one, two or three months thereafter (or such longer period requested by the Company and acceptable to the Lenders), as the Company may elect under this Agreement, provided, however, that (a) any LIBOR Interest Period which commences on the last LIBOR Business Day of a calendar month (or on any day for which there is no numerically corresponding day in the appropriate subsequent calendar month) shall end on the last LIBOR Business Day of the appropriate subsequent calendar month, (b) each LIBOR Interest Period which would otherwise end on a day which is not a LIBOR Business Day shall end on the next succeeding LIBOR Business Day or, if such next succeeding LIBOR Business Day falls in the next succeeding calendar month, on the next preceding LIBOR Business Day, and (c) no LIBOR Interest Period which would end after the Termination Date shall be permitted. "LIBOR Loan" shall mean any Loan which bears interest at LIBOR. "Lien" shall mean any pledge, assignment, hypothecation, mortgage, security interest, deposit arrangement, option, conditional sale or title retaining contract, sale and leaseback transaction, 13 19 financing statement filing, lessor's or lessee's interest under any lease, subordination of any claim or right, or any other type of lien, charge, encumbrance, preferential arrangement or other claim or right. "Loan" shall mean any Revolving Credit Loan and any Swingline Loan. Any Loan or any portion thereof may also be denominated as a Floating Rate Loan, a Bankers' Acceptance or BA Equivalent Loan or a LIBOR Loan and such Loans are referred to herein as "types" of Loans. "Loan Documents" shall mean, collectively, this Agreement, the Notes, the Security Documents and any other agreement, instrument or document executed in connection with any of the foregoing at any time. "Lobdell" shall mean Lobdell Emery Corporation, a Michigan corporation. "Lobdell Preferred Stock" shall mean all existing preferred stock issued by Lobdell, including the Series B Preferred Stock and Series A Preferred Stock, in the aggregate amount of $50,700,000. "Lobdell Preferred Stock Documents" shall mean all stock certificates, agreements and other documents relating to the terms of the Preferred Stock or otherwise relating to the Preferred Stock. "Material Adverse Effect" shall mean (i) a material adverse effect on the property, business, operations, financial condition, liabilities or capitalization of the Company and its Restricted Subsidiaries, taken as a whole, (ii) a material adverse effect on the ability of the Company or any Guarantor to perform its obligations under the Loan Documents or (iii) a material adverse effect on the rights and remedies of the Agent or the Lenders under the Loan Documents. "Multiemployer Plan" shall mean any "multiemployer plan" as defined in Section 4001(a)(3) of ERISA or Section 414(f) of the Code. "NBD Canada" shall mean First Chicago NBD Bank, Canada, a Canadian chartered bank. "Net Cash Proceeds" means, without duplication (a) in connection with any sale or other disposition of any asset or any settlement by, or receipt of payment in respect of, any property insurance claim or condemnation award, the cash proceeds (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise, but only as and when received) of such sale, settlement or payment, net of reasonable and documented attorneys' fees, accountants' fees, investment banking fees, amounts required to be applied to the repayment of Indebtedness secured by a Lien expressly permitted hereunder on any asset which is the subject of such sale, insurance claim or condemnation award (other than any Lien in favor of the Agent for the benefit of the Agent and the Lenders) and other customary fees actually incurred in connection therewith and net of taxes paid or reasonably estimated to be payable as a result thereof and (b) in connection with any issuance or sale of any equity securities or debt securities or instruments or the incurrence of loans, the cash proceeds received from such issuance or incurrence, net of investment banking fees, reasonable and documented attorneys' fees, accountants' fees, underwriting discounts and commissions and other reasonable and customary fees and expenses actually incurred in connection therewith. "Net Income" shall mean, for any period, the net income of the Company and its consolidated Restricted Subsidiaries; provided, however, that there shall not be included in such Net 14 20 Income: (i) any net income (or loss) of any Person if such Person is not a Restricted Subsidiary, except that subject to the exclusion contained in clause (iv) below, the Company's equity in the net income of any such Person for such period shall be included in such Net Income up to the aggregate amount of cash actually distributed by such Person during such period to the Company or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution paid to a Restricted Subsidiary, to the limitations contained in clause (iii) below); (ii) any net income (or loss) of any Person acquired by the Company or a Subsidiary in a pooling of interests transaction for any period prior to the date of such acquisition; (iii) any net income of any Restricted Subsidiary if such Restricted Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions by such Restricted Subsidiary, directly or indirectly, to the Company, except that (A) subject to the exclusion contained in clause (iv) below, the Company's equity in the net income of any such Restricted Subsidiary for such period shall be included in such Net Income up to the aggregate amount of cash that could have been distributed by such Restricted Subsidiary consistent with such restriction during such period to the Company or another Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution paid to another Restricted Subsidiary, to the limitation contained in this clause) and (B) the Company's equity in a net loss of any such Restricted Subsidiary for such period shall be included in determining such Net Income; (iv) any gain (or loss) realized upon the sale or other disposition of any assets of the Company or its consolidated Subsidiaries (including pursuant to any sale-and-leaseback arrangement) which is not sold or otherwise disposed of in the ordinary course of business and any gain (or loss) realized upon the sale or other disposition of any Capital Stock of any Person; (v) extraordinary or nonrecurring gains or non-cash losses; and (vi) the cumulative effect of a change in accounting principles. "Net Worth" of any Person shall mean, as of any date, the amount of any capital stock, paid in capital and similar equity accounts plus (or minus in the case of a deficit) the capital surplus and retained earnings of such Person and the amount of any foreign currency translation adjustment account shown as a capital account of such Person, less treasury stock, all as determined under Generally Accepted Accounting Principles. "Non Canadian Lender" is defined is Section 2.1(c)(iii). "Note" shall mean any Revolving Credit Note or any Swingline Note. "Overdue Rate" shall mean (a) in respect of principal of Floating Rate Loans, a rate per annum that is equal to the sum of three percent (3%) per annum plus the Floating Rate, (b) in respect of principal of LIBOR Loans, a rate per annum that is equal to the sum of three percent (3%) per annum plus the per annum rate in effect thereon until the end of the then current Interest Period for such Loan and, thereafter, a rate per annum that is equal to the sum of three percent (3%) per annum plus the Floating Rate, and (c) in respect of other amounts payable by the Company hereunder (other than interest), a per annum rate that is equal to the sum of three percent (3%) per annum plus the Floating Rate. "Oxford" shall mean The Oxford Investment Group, Inc., a Michigan corporation. "PBGC" shall mean the Pension Benefit Guaranty Corporation and any entity succeeding to any or all of its functions under ERISA. "Permitted Disqualified Stock" is defined is Section 5.2(j). 15 21 "Permitted Holders" shall mean (i) any of Selwyn Isakow, his spouse and any of his lineal descendants and their respective spouses (collectively, the "Isakow Family") whether acting in their own name or as one or as a majority of persons having the power to exercise the voting rights attached to, or having investment power over, shares held by others, (ii) any Person wholly owned and controlled by any member of the Isakow Family, and (iii) any trust solely for the benefit of one or more members of the Isakow Family (whether or not any member of the Isakow Family is a trustee of such trust). "Permitted Liens" shall mean Liens permitted by Section 5.2(f) hereof. "Person" shall include an individual, a corporation, an association, a partnership, a limited liability company, a trust or estate, a joint stock company, an unincorporated organization, a joint venture, a trade or business (whether or not incorporated), a government (foreign or domestic) and any agency or political subdivision thereof, or any other entity. "Plan" shall mean, with respect to any Person, any pension plan (including a Multiemployer Plan) subject to Title IV of ERISA or to the minimum funding standards of Section 412 of the Code which has been established or maintained by such Person, any Subsidiary of such Person or any ERISA Affiliate, or by any other Person if such Person, any Subsidiary of such Person or any ERISA Affiliate could have liability with respect to such pension plan. "Pledge Agreements" shall mean each pledge agreement entered into by the Company or any Guarantor for the benefit of the Agent and the Lenders pursuant to this Agreement in form and substance satisfactory to the Agent, as amended or modified from time to time. "Preferred Stock" shall mean all Lobdell Preferred Stock and all other preferred stock or similar Capital Stock issued by the Company or any of its Restricted Subsidiaries at any time. "Prime Rate" shall mean the per annum rate announced by the Agent from time to time as its "prime rate" (it being acknowledged that such announced rate may not necessarily be the lowest rate charged by the Agent to any of its customers); which Prime Rate shall change simultaneously with any change in such announced rate. "Prohibited Transaction" shall mean any transaction involving any Plan which is proscribed by Section 406 of ERISA or Section 4975 of the Code. "Rate Hedging Agreement" shall mean an agreement, device or arrangement entered into by the Company or any of its Restricted Subsidiaries providing for payments which are related to fluctuations of interest rates, exchange rates or forward rates, including, but not limited to, dollar-denominated or cross-currency interest rate exchange agreements, forward currency exchange agreements, interest rate cap or collar protection agreements, forward rate currency or interest rate options, puts and warrants. "Rate Hedging Obligations" of a Person shall mean any and all obligations of such Person, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (i) any and all Rate Hedging Agreements, and (ii) any and all cancellations, buy backs, reversals, terminations or assignments of any Rate Hedging Agreement. 16 22 "Rental Charges" shall mean the maximum amount of all rents and other payments (exclusive of property taxes, property and liability insurance premiums and maintenance costs) paid or required to be paid by the Company or its Restricted Subsidiaries during such period under any lease of real or personal property in respect of which the Company or its Restricted Subsidiaries is obligated as a lessee or user, other than any Capital Lease. "Reportable Event" shall mean a reportable event as described in Section 4043(b) of ERISA including those events as to which the thirty (30) day notice period is waived under Part 2615 of the regulations promulgated by the PBGC under ERISA. "Required Lenders" shall mean Lenders holding not less than (i) 51% (or 100% where required pursuant to Section 8.1) of the Commitments, or (ii) 51% (or 100% where required pursuant to Section 8.1) of the Advances if the Commitments have expired or been terminated. "Restricted Subsidiary" shall mean each Subsidiary of the Company existing as of the Effective Date (including the Guarantors and the Borrowing Subsidiaries) and each other Subsidiary of the Company that is designated by the Company as a Restricted Subsidiary. "Revolving Credit Advance" shall mean any Revolving Credit Loan and any Letter of Credit Advance. "Revolving Credit Loan" shall mean any borrowing, including any Bankers' Acceptance, under Section 2.4 evidenced by Revolving Credit Notes and made pursuant to Section 2.1(a) or (b). "Revolving Credit Note" shall mean any promissory note of a Borrower evidencing the Revolving Credit Loans made to it in substantially the form annexed hereto as Exhibit F, as amended or modified from time to time and together with any promissory note or notes issued in exchange or replacement therefor. "Security Agreements" shall mean the Company Security Agreement and the Guarantor Security Agreements. "Security Documents" shall mean, collectively, the Security Agreements, the Documents, the Environmental Certificate, the Creative Bond Documents, the Guaranties, the Pledge Agreements, the subrogation and contribution agreement and all other related agreements and documents, including financing statements and similar documents, delivered pursuant to this Agreement or otherwise entered into by any Person to secure or guarantee the Advances or otherwise relating hereto. "Senior Subordinated Debt Documents" shall mean the Senior Subordinated Note Indenture, the Senior Subordinated Notes and all agreements and documents executed in connection therewith at any time, including without limitation those agreements and documents listed on Schedule 1.1-C hereto. "Senior Subordinated Notes" shall mean the Senior Subordinated Notes issued by the Company in the aggregate principal amount of $125,000,000 due 2007 issued pursuant to the Senior Subordinated Note Indenture. 17 23 "Senior Subordinated Note Indenture" shall mean the Senior Subordinated Indenture between the Company and First Trust National Association, as trustee, dated as of June 24, 1997, as amended or modified from time to time. "Solvent" when used with respect to any Person, means that, as of any date of determination, (a) the amount of the "present fair saleable value" of the assets of such Person will, as of such date, exceed the amount of all "liabilities of such Person, contingent or otherwise," as of such date, as such quoted terms are determined in accordance with applicable federal and state laws governing determinations of the insolvency of debtors, (b) the present fair saleable value of the assets of such Person will, as of such date, be greater than the amount that will be required to pay the liability of such Person on its debts as such debts become absolute and matured, (c) such Person will not have, as of such date, an unreasonably small amount of capital with which to conduct its business, and (d) such Person will be able to pay its debts as they mature. For purposes of this definition, (i) "debt" means liability on a "claim", and (ii) "claim" means any (x) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured or unsecured. "Subordinated Debt" of any Person shall mean, as of any date, that Indebtedness of such Person for borrowed money which is expressly subordinate and junior in right and priority of payment to the Advances and other Indebtedness of such Person to the Lenders in manner and by agreement satisfactory in form and substance to the Agent and subject to such other terms and provisions, including without limitation maturities, covenants, defaults, rates and fees, acceptable to the Agent, and shall include, without limitation, all indebtedness owing pursuant to the Senior Subordinated Debt Documents and any Permitted Disqualified Stock. "Subordinated Debt Documents" shall mean the Senior Subordinated Debt Documents and any other agreement or document evidencing or relating to any Subordinated Debt, whether under the Senior Subordinated Notes or any other Subordinated Debt. "Subsidiary" of any Person shall mean any other Person (whether now existing or hereafter organized or acquired) in which (other than directors qualifying shares required by law) at least a majority of the securities or other ownership interests of each class having ordinary voting power or analogous right (other than securities or other ownership interests which have such power or right only by reason of the happening of a contingency), at the time as of which any determination is being made, are owned, beneficially and of record, by such Person or by one or more of the other Subsidiaries of such Person or by any combination thereof. Unless otherwise specified, reference to "Subsidiary" shall mean a Subsidiary of the Company. "Swingline Facility" shall have the meaning specified in Section 2.1(c). "Swingline Loan" shall mean any loan under Section 2.4 evidenced by a Swingline Note and made by the Agent (including NBD Canada) to a Borrower pursuant to Section 2.1(c). "Swingline Note" shall mean any promissory note of a Borrower evidencing the Swingline Loans in substantially the form of Exhibit G hereto, as amended or modified from time to time and together with any promissory note or notes issued in exchange or replacement therefor. 18 24 "Tax Sharing Agreement" shall mean any tax sharing or similar agreement, if any, entered into between the Company and its Subsidiaries at any time, as amended or modified from time to time. "Termination Date" shall mean the earlier to occur of (a) June 24, 2003 and (b) the date on which the Commitments shall be terminated pursuant to Section 2.2 or Section 6.2. "Tooling" shall mean dies, molds, tooling and similar items. "Tooling Contract" shall mean any contract for the fabrication or purchase of Tooling. "Tooling Indebtedness" shall mean all Indebtedness of the Company and its Restricted Subsidiaries incurred for the purpose of financing Tooling, which Indebtedness can be and is being fully serviced by payments for such Tooling so financed and which payments are not in dispute, all as reasonably determined by the Agent. "Total Debt" shall mean, as of any date, each of the following, on a consolidated basis for the Company and its Restricted Subsidiaries without duplication: (a) all Indebtedness for borrowed money and similar monetary obligations evidenced by bonds, notes, debentures, Capital Lease obligations, bankers acceptances or otherwise, including without limitation obligations in respect of the deferred purchase price of properties or assets, in each case whether direct or indirect; plus (b) all liabilities secured by any Lien existing on property owned or acquired subject thereto, whether or not the liability secured thereby shall have been assumed; plus (c) all reimbursements obligations under outstanding letters of credit in respect of drafts which may be presented or have been presented and have not yet been paid and are not included in clause (a) above; plus (d) Permitted Disqualified Stock; plus (e) all guarantees and all other Contingent Liabilities with respect to any of the indebtedness, obligations or liabilities described in the foregoing clauses (a), (b), (c)or (d), including without limitation all guarantees and other Contingent Liabilities of the Company or any Restricted Subsidiary with respect to any such indebtedness, obligations or liabilities of any Unrestricted Subsidiaries; less (f) unexpended proceeds of the Creative Revenue Bond; less (g) Tooling Indebtedness; less (h) cash equivalents acceptable to the Agent and cash of the Company and its Restricted Subsidiaries, less any book overdrafts, bank overdrafts or similar items. "Total Debt to EBITDA Ratio" shall mean, at any time, the ratio of (a) Total Debt at such time to (b) EBITDA, calculated as of the four most recently completed fiscal quarters of the Company (provided that EBITDA as calculated in determining the Total Debt to EBITDA Ratio for (i) the fiscal quarter ending June 30, 1997 shall be equal to the sum of the EBITDA for the fiscal quarter ending June 30, 1997 plus $21,144,000, (ii) the fiscal quarter ending September 30, 1997 shall be equal to the sum of EBITDA for the two quarters ending September 30, 1997 plus $14,096,000 and (iii) the fiscal quarter ending December 31, 1997 shall be equal to the sum of EBITDA for the three fiscal quarters ending December 31, 1997 plus $7,048,000), all as determined in accordance with Generally Accepted Accounting Principles. "U.S. Advances" shall mean all Loans denominated in Dollars and all Letters of Credit. "U.S. Percentage" of any Lender as of any date, shall mean a fraction (expressed as a percentage), the numerator of which is the difference of (a) the Commitment of such Lender on such date minus (b) the Canadian Advances made by such Lender (including any Affiliate of such Lender) which 19 25 are outstanding as of such date, after giving effect to any Canadian Advances to be made as of such date, and the denominator of which is the aggregate Commitments of all Lenders. "Unfunded Benefit Liabilities" shall mean, with respect to any Plan as of any date, the net pension liability as determined under FAS 87. "Unrestricted Guaranties" shall mean all Contingent Liabilities of the Company or of any Guarantor with respect to any Indebtedness of any Unrestricted Subsidiaries, which Contingent Liabilities shall be deemed outstanding in an amount equal to the maximum amount that could be payable thereunder. "Unrestricted Subsidiary" shall mean any Subsidiary of the Company (including any newly acquired or newly formed Subsidiary) which is not a Restricted Subsidiary. "Voting Stock" of a Person shall mean all classes of Capital Stock or other interests (including partnership interests) of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof. "Wholly Owned Subsidiary" shall mean a Subsidiary all the Capital Stock of which (other than directors' qualifying shares) is owned by the Company and/or one or more other Wholly Owned Subsidiaries. 1.2 Other Definitions; Rules of Construction. As used herein, the terms "Agent", "Lender", "Lenders", "Company", "Borrowing Subsidiary", "Borrowers" and "this Agreement" shall have the respective meanings ascribed thereto in the introductory paragraph of this Agreement. Such terms, together with the other terms defined in Section 1.1, shall include both the singular and the plural forms thereof and shall be construed accordingly. All computations required hereunder and all financial terms used herein shall be made or construed in accordance with Generally Accepted Accounting Principles unless such principles are inconsistent with the express requirements of this Agreement; provided that, if the Company notifies the Agent that the Company wishes to amend any covenant in Article V to eliminate the effect of any change in Generally Accepted Accounting Principles in the operation of such covenant (or if the Agent notifies the Company that the Required Lenders wish to amend Article V for such purpose), then the Company's compliance with such covenant shall be determined on the basis of Generally Accepted Accounting Principles in effect immediately before the relevant change in Generally Accepted Accounting Principles became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Company and the Required Lenders. Use of the terms "herein", "hereof", and "hereunder" shall be deemed references to this Agreement in its entirety and not to the Section or clause in which such term appears. References to "Sections" and "subsections" shall be to Sections and subsections, respectively, of this Agreement unless otherwise specifically provided. Notwithstanding anything herein, in any financial statements of the Company or in Generally Accepted Accounting Principles to the contrary, for purposes of calculating the Applicable Margin and of calculating and determining compliance with the financial covenants in Sections 5.2(a), (b), (c) and (d), including defined terms used therein, (i) no Unrestricted Subsidiary shall be consolidated with the Company and its other Subsidiaries and each Unrestricted Subsidiary shall be treated as if it were an equity interest and all income, liabilities and assets of each Unrestricted Subsidiary shall be excluded from all such calculations and determinations thereunder except to the extent expressly provided herein, and (ii) any acquisitions made by the Company or any of its Subsidiaries, including through mergers or consolidations and including any related financial transactions, during the period for which such financial covenants were calculated shall be deemed to 20 26 have occurred on the first day of the relevant period for which such financial covenants were calculated on a pro forma basis acceptable to the Agent. ARTICLE II. THE COMMITMENTS, THE SWINGLINE FACILITY AND THE ADVANCES 2.1 Commitment of the Lenders and Canadian and Swingline Facility. (a) U.S. Advances. Each Lender agrees, for itself only, subject to the terms and conditions of this Agreement, to make Loans to the Company pursuant to Section 2.4 and to participate in Letter of Credit Advances to the Company pursuant to Section 2.4 and Section 3.3, from time to time from and including the Effective Date to but excluding the Termination Date, denominated in Dollars and not to exceed in aggregate principal amount at any time outstanding to the Company the respective amounts determined pursuant to Section 2.1(d). (b) Canadian Advances. (i) Each Canadian Lender agrees, for itself only, subject to the terms and conditions of this Agreement, to make Canadian Advances to the Borrowing Subsidiaries pursuant to Section 2.4, from time to time from and including the Effective Date to be excluding the Termination Date, not to exceed an aggregate principal amount at any time outstanding to the Borrowing Subsidiaries the respective amounts determined pursuant to Section 2.1(d). (ii) If on any date a Canadian Advance is to be made to a Borrowing Subsidiary (A) such Canadian Advance may not be made because the aggregate Commitments of the Canadian Lenders would be exceeded and (B) the amount by which such Commitments of the Canadian Lenders would be exceeded is less than or equal to the aggregate unused Commitments of Lenders that are not Canadian Lenders, each Lender that is not a Canadian Lender shall make a U.S. Advance to the Company on such date, if the conditions for such an Advance are satisfied, and the proceeds of such U.S. Advance shall be simultaneously applied to repay the outstanding U.S. Advances of the Canadian Lenders, in each case in amounts such that, after giving effect to such Borrowing and repayments and the Borrowing from the Canadian Lenders of the requested Canadian Advance, the provisions of Section 2.1(d) will not be violated. If any Borrowing of U.S. Advances is required pursuant to this Section 2.1(b)(ii), the Company shall notify the Agent in the manner provided for U.S. Advances in Section 2.4 and the Agent will notify each Lender of the amount to be advanced by such Lender. (c) Swingline Loans. (i) Any Borrower may request the Agent to make, and the Agent may, in its sole discretion, make Swingline Loans to the Borrowers from time to time on any Business Day during the period from the Effective Date until the Termination Date in an aggregate principal amount for all Borrowers not to exceed at any time the lesser of (A) the Dollar Equivalent of $10,000,000 (the "Swingline Facility") and (B) the aggregate amount of Revolving Credit Advances that could be but is not borrowed as of such date. Each Lender's Commitment shall be deemed utilized by an amount equal to such Lender's pro rata share (based on such Lender's Commitment) of each Swingline Loan for purposes of determining the amount of Revolving Credit Advances required to be made by such Lender, but no Lender's (including NBD Bank's) Commitment, shall be deemed utilized for purposes of determining commitment fees under Section 2.3(a). Swingline Loans shall bear interest at the Floating Rate. Within the limits of the Swingline Facility, so long as the Agent, in its sole discretion, elects to make Swingline Loans, the Borrowers may borrow and reborrow under this Section 2.1(c)(i). Swingline Loans to the Borrowing Subsidiaries will be made by the Agent through its Affiliate NBD Canada. 21 27 (ii) The Agent may at any time in its sole and absolute discretion require that any Swingline Loan be refunded by a Floating Rate Borrowing from the Lenders (or the Canadian Lenders in the case of a Swingline Loan to a Borrowing Subsidiary), and upon written notice thereof by the Agent to such Lenders and the relevant Borrower, such Borrower shall be deemed to have requested a Floating Rate Borrowing in an amount equal to the amount of such Swingline Loan, and such Floating Rate Borrowing shall be made to refund such Swing Line Loan. Each such Lender shall be absolutely and unconditionally obligated to fund its pro rata share (based on such Lender's Commitment) of such Floating Rate Borrowing or, if applicable, purchase a participating interest in the Swingline Loans pursuant to Section 2.1(c)(iii) and such obligation shall not be affected by any circumstance, including, without limitation, (A) any set-off, counterclaim, recoupment, defense or other right which such Lender has or may have against the Agent, NBD Canada or the Company or any if its Subsidiaries or anyone else for any reason whatsoever; (B) the occurrence or continuance of a Default or an Event of Default, subject to Section 2.1(c)(iii); (C) any adverse change in the condition (financial or otherwise) of the Company or any of its Subsidiaries; (D) any breach of this Agreement or any other agreement by any other Lender, the Company or any Guarantor; or (E) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing (including without limitation the Company's failure to satisfy any conditions contained in Article II or any other provision of this Agreement). (iii) If Floating Rate Loans may not be made by the Lenders as described in Section 2.1(c)(ii) due to any Event of Default pursuant to Section 6.1(h) or if the Lenders are otherwise legally prohibited from making Floating Rate Loans, then effective on the date each such Floating Rate Loan would otherwise have been made, each Lender (or the Canadian Lenders in the case of a Swingline Loan to a Borrowing Subsidiary) severally agrees that it shall unconditionally and irrevocably, without regard to the occurrence of any Default or Event of Default or any other circumstances, in lieu of deemed disbursement of Loans, to the extent of such Lender's Commitment, purchase a participating interest in the Swingline Loans by paying its participation percentage thereof. Each such Lender will immediately transfer to the Agent, in same day funds, the amount of its participation. After such payment to the Agent, each Lender shall share on a pro rata basis (calculated by reference to its Commitment) in any interest which accrues thereon and in all repayments thereof. If and to the extent that any such Lender shall not have so made the amount of such participating interest available to the Agent, such Lender and the Borrowers severally agree to pay to the Agent forthwith on demand such amount together with interest thereon, for each day from the date of demand by the Agent until the date such amount is paid to the Agent, at (A) in the case of the Borrowers, the interest rate specified above and (B) in the case of such Lender, the Federal Funds Rate for the first five days after the date of demand by the Agent and thereafter at the interest rate specified above. (d) Limitation on Amount of Advances. Notwithstanding anything in this Agreement to the contrary, (i) the Dollar Equivalent to the aggregate principal amount of the Revolving Credit Advances made or participated in by any Lender (which for any Lender includes all U.S. Advances and all Canadian Advances by such Lender, which directly by such Lender or through an Affiliate of such Lender in the case of Canadian Advances) at any time outstanding shall not exceed the amount of its respective Commitment as of the date any such Advance is made, (ii) the aggregate principal amount of Letter of Credit Advances outstanding at any time shall not exceed $15,000,000, (iii) the aggregate Dollar Equivalent of all Canadian Advances shall not exceed $25,000,000 at any time, (iv) the sum of the Dollar Equivalent of the aggregate Advances plus the Dollar Equivalent of the aggregate amount of Unrestricted Guaranties shall not exceed the aggregate Commitments and (v) the sum of the Dollar Equivalent to the aggregate Advances plus the aggregate Dollar Equivalent of the Unrestricted Guaranties shall not exceed the amount of the Borrowing Base. 22 28 2.2 Termination and Reduction of Commitments. (a) The Company shall have the right to terminate or reduce the Commitments at any time and from time to time, provided that (i) the Company shall give three Business Days' prior written notice of such termination or reduction to the Agent specifying the amount and effective date thereof, (ii) each partial reduction of the Commitments shall be in a minimum amount of $1,000,000 and in an integral multiple of $1,000,000 and shall reduce the Commitments of all of the Lenders proportionately in accordance with the respective Commitment amounts for each such Lender set forth in the signature pages hereof next to name of each such Lender, (iii) no such termination or reduction shall be permitted with respect to any portion of the Commitments as to which a request for an Advance pursuant to Section 2.4 is then pending and (iv) the Commitments may not be terminated if any Advance is then outstanding with respect to such Commitments and may not be reduced below the principal amount of Advances with respect to such Commitments then outstanding. The Commitments or any portion thereof terminated or reduced pursuant to this Section 2.2 may not be reinstated. (b) For purposes of this Agreement, a Letter of Credit Advance (i) shall be deemed outstanding in an amount equal to the sum of the maximum amount available to be drawn under the related Letter of Credit on or after the date of determination and on or before the stated expiry date thereof plus the amount of any draws under such Letter of Credit that have not been reimbursed as provided in Section 3.3 and (ii) shall be deemed outstanding at all times on and before such stated expiry date or such earlier date on which all amounts available to be drawn under such Letter of Credit have been fully drawn, and thereafter until all related reimbursement obligations have been paid pursuant to Section 3.3. As provided in Section 3.3, upon each payment made by the Agent in respect of any draft or other demand for payment under any Letter of Credit, the amount of any Letter of Credit Advance outstanding immediately prior to such payment shall be automatically reduced by the amount of each Loan deemed advanced, if any, in respect of the related reimbursement obligation of the Company. 2.3 Fees. (a) The Company agrees to pay to the Agent, for the benefit of each Lender, a commitment fee on the daily average unused amount (with Letter of Credit Advances constituting usage under the Commitment and with Unrestricted Guaranties and Swingline Loans not constituting usage under the Commitment for purposes of this Section 2.3(a)) of its respective Commitment during each calendar quarter or portion thereof, for the period from the Effective Date to but excluding the Termination Date, at a rate equal to the Applicable Margin in effect. Accrued commitment fees shall be payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing on the first such Business Day occurring after the Effective Date, and on the Termination Date. (b) The Company agrees to pay to the Agent, for the benefit of the Lenders, a fee computed at the rate equal to the then Applicable Margin in effect of the maximum amount available to be drawn from time to time under each Letter of Credit for the period from and including the date of issuance, extension or renewal, as the case may be, of such Letter of Credit to and including the expiry date of such Letter of Credit, provided that the Agent shall retain, for its own account from each such fee, a fee computed at the rate of 0.25% per annum of such maximum amount for such period. Such fees are payable quarterly in arrears on the last Business Day of each March, June, September and December. The Company further agrees to pay to the Agent, on demand, such other customary administrative fees, charges and expenses of the Agent in respect of the issuance, negotiation, acceptance, amendment, transfer and payment of such Letter of Credit or otherwise payable pursuant to the application and related documentation under which such Letter of Credit is issued. Notwithstanding 23 29 anything in the Creative Revenue Bond Documents to the contrary, the fees payable for the Creative Letter of Credit shall be governed by this Section 2.3(b) as of and after the Effective Date. (c) The Company further agrees to pay to the Agent and/or its Affiliates such fees in such amounts as may from time to time be agreed upon in writing by the Company and the Agent. 2.4 Disbursement of Advances. (a) The applicable Borrower shall give the Agent notice of its request for an Advance in substantially the form of Exhibit H hereto not later than 1:00 p.m. Detroit time (i) three LIBOR Business Days prior to the date such Borrowing is requested to be made if such Borrowing is to be made as a LIBOR Borrowing, (ii) five Business Days prior to the date any Letter of Credit Borrowing is requested to be made, (iii) three Business Days prior to the date such Borrowing is requested to be made if such Borrowing is to be made as an Acceptance Borrowing and (iv) one Business Day prior to the date such Borrowing is requested to be made in all other cases, which notice shall specify whether a LIBOR Borrowing, Floating Rate Borrowing, Acceptance or Letter of Credit Borrowing is requested and, in the case of each requested LIBOR Borrowing or Acceptance Borrowing, the Interest Period to be initially applicable to such Borrowing and, in the case of each Letter of Credit Borrowing, such information as may be necessary for the issuance thereof by the Agent. The Applicable Borrower shall give the Agent notice of its request for each Swingline Loan in substantially the form of Exhibit I hereto not later than 1:00 p.m. Detroit time on the same Business Day such Swingline Loan is requested to be made. The Agent, not later than the Business Day next succeeding the day such notice is given, shall provide notice of such requested Borrowing (not including Swingline Loans) to each Lender. Subject to the terms and conditions of this Agreement, the proceeds of each such requested Borrowing or Swingline Loan shall be made available to such Borrower by depositing the proceeds thereof in immediately available funds, in an account maintained and designated by such Borrower at the principal office of the Agent in the case of U.S. Advances and at the principal office of NBD Canada in the case of Canadian Advances. Subject to the terms and conditions of this Agreement, the Agent shall, on the date any Letter of Credit Borrowing is requested to be made, issue the related Letter of Credit on behalf of the Lenders for the account of the Company. Notwithstanding anything herein to the contrary, the Agent may decline to issue any requested Letter of Credit on the basis that the beneficiary, the purpose of issuance or the terms or the conditions of drawing are unacceptable to it in its reasonable discretion. (b) Each Lender, on the date any Borrowing is requested to be made, shall make its pro rata share of such Borrowing available in immediately available funds for disbursement to the applicable Borrower pursuant to the terms and conditions of this Agreement. Unless the Agent shall have received notice from any Lender prior to the date such Borrowing is requested to be made under this Section 2.4 that such Lender will not make available to the Agent such Lender's pro rata portion of such Borrowing, the Agent may assume that such Lender has made such portion available to the Agent on the date such Borrowing is requested to be made in accordance with this Section 2.4. Each Lender's pro rata share of any U.S. Advance shall be based on its U.S. Percentage, and each Canadian Advance shall be made by the Canadian Lenders (either directly or through an Affiliate) based on its Canadian Percentage. If and to the extent such Lender shall not have so made such pro rata portion available to the Agent, the Agent may (but shall not be obligated to) make such amount available to such Borrower , and such Lender and such Borrower severally agree to pay to the Agent forthwith on demand such amount together with interest thereon, for each day from the date such amount is made available to such Borrower by the Agent until the date such amount is repaid to the Agent, at a rate per annum equal to the interest rate applicable to such Borrowing during such period. If such Lender shall pay such amount to the Agent together with interest, such amount so paid shall constitute a Loan by such Lender as a part of such Borrowing for purposes of this Agreement. The failure of any Lender to make its pro rata portion 24 30 of any such Borrowing available to the Agent shall not relieve any other Lender of its obligations to make available its pro rata portion of such Borrowing on the date such Borrowing is requested to be made, but no Lender shall be responsible for failure of any other Lender to make such pro rata portion available to the Agent on the date of any such Borrowing. (c) All Revolving Credit Loans made under this Section 2.4 to the Borrowers shall be evidenced by the Revolving Credit Notes issued by the Borrowers and all Swingline Loans under this Section 2.4 shall be evidenced by the Swingline Notes issued by the Borrowers, and all such Loans shall be due and payable and bear interest as provided in Article III. Each Lender is hereby authorized by the Borrowers to record on the schedules attached to the Notes or in its books and records, the date, amount and type of each Loan and the duration of the related Interest Period (if applicable), the amount of each payment or prepayment of principal thereon, and the other information provided for on such schedule, which schedule or books and records, as the case may be, shall constitute prima facie evidence of the information so recorded, provided, however, that failure of any Lender to record, or any error in recording, any such information shall not relieve the Borrowers of their obligations to repay the outstanding principal amount of the Loans, all accrued interest thereon and other amounts payable with respect thereto in accordance with the terms of the Notes and this Agreement. Subject to the terms and conditions of this Agreement, the Borrowers may borrow Loans under this Section 2.4 and under Section 3.3, prepay Loans pursuant to Section 3.1 and reborrow Loans, under this Section 2.4 and under Section 3.3. (d) Nothing in this Agreement shall be construed to require or authorize any Lender to issue any Letter of Credit, it being recognized that the Agent has the sole obligation under this Agreement to issue Letters of Credit on behalf of the Lenders. Upon each issuance, extension and renewal by the Agent, each Lender shall automatically and unconditionally acquire a pro rata risk participation interest in such Letter of Credit Advance based on the amount of its respective Commitment, and each Existing Letter of Credit shall be deemed issued hereunder and each Lender shall automatically and unconditionally acquire a pro rata risk participation interest therein based on the amount of its respective Commitment, upon becoming a Lender hereunder. If the Agent shall honor a draft or other demand for payment presented or made under any Letter of Credit, the Agent shall provide notice thereof to each Lender promptly after such draft or demand is honored unless the Company shall have satisfied its reimbursement obligation under Section 3.3 by payment to the Agent on such date. Each Lender, on the date of such notice, shall absolutely and unconditionally make its pro rata share, (based on its Commitment) of the amount paid by the Agent available in immediately available funds at the principal office of the Agent for the account of the Agent. If and to the extent such Lender shall not have made such pro rata portion available to the Agent, such Lender and the Company severally agree to pay to the Agent forthwith on demand such amount together with interest thereon, for each day from the date such amount was paid by the Agent until such amount is so made available to the Agent at a per annum rate equal to the interest rate applicable during such period to the Floating Rate Loans. If a Loan has been disbursed in respect to the reimbursement obligation of the Company under Section 3.3 in the case of Letter of Credit, then if such Lender shall pay such amount to the Agent together with such interest, such amount so paid shall constitute a Loan by such Lender as part of such Borrowing disbursed in respect of the reimbursement obligation of the Company under Section 3.3 for purposes of this Agreement. The failure of any Lender to make its pro rata portion of any such amount paid by the Agent available to the Agent shall not relieve any other Lender of its obligation to make available its pro rata portion of such amount, but no Lender shall be responsible for failure of any other Lender to make such pro rata portion available to the Agent. 25 31 2.5 Conditions for First Disbursement. The obligation of the Lenders to make the first Borrowing hereunder is subject to receipt by each Lender and the Agent of the following documents and completion of the following matters, in form and substance satisfactory to each Lender and the Agent: (a) Charter Documents. Certificates of recent date of the appropriate authority or official of each Borrower and each Guarantor's respective state or province of organization (listing all charter documents of each Borrower and each Guarantor, respectively, on file in that office if such listing is available) and certifying as to the good standing and existence of each Borrower and each Guarantor, respectively, together with copies of such charter documents of each Borrower and each Guarantor, certified as of a recent date by such authority or official and certified as true and correct as of the Effective Date by a duly authorized officer of each Borrower and each Guarantor, respectively; (b) Operating Agreements, By-Laws and Corporate Authorizations. Copies of the operating agreements or article of incorporation, as the case may be, and by-laws of each Borrower and each Guarantor together with all authorizing resolutions and evidence of other corporate action taken by each Borrower and each Guarantor to authorize the execution, delivery and performance by each Borrower and each Guarantor of the Loan Documents to which each Borrower and such Guarantor, respectively, is a party and the consummation by each Borrower and such Guarantor, respectively, of the transactions contemplated hereby, certified as true and correct as of the Effective Date by a duly authorized officer of each Borrower and each Guarantor, respectively; (c) Incumbency Certificate. Certificates of incumbency of each Borrower and each Guarantor containing, and attesting to the genuineness of, the signatures of those officers authorized to act on behalf of each Borrower and such Guarantor in connection with the Loan Documents to which each Borrower or such Guarantor is a party and the consummation by each Borrower and such Guarantor of the transactions contemplated hereby, certified as true and correct as of the Effective Date by a duly authorized officer of each Borrower and each Guarantor, respectively; (d) Notes. The Revolving Credit Notes duly executed on behalf of the Borrowers for each Lender and the Swingline Notes duly executed on behalf of the Borrowers for the Agent and NBD Canada; (e) Security Documents. The Security Agreements duly executed on behalf of the Company and the Guarantors, the Pledge Agreements duly executed by the Company and, to the extent applicable, each Guarantor and the Guaranties duly executed on behalf of each Guarantor, granting to the Lenders and the Agent the collateral and security intended to be provided pursuant to Section 2.11, together with: (i) Recording, Filing, Etc. Evidence of the recordation, filing and other action (including payment of any applicable taxes or fees) in such jurisdictions as the Lenders or the Agent may deem necessary or appropriate with respect to the Security Documents, including the filing of financing statements, financing statement assignments, financing statement amendments and similar documents which the Lenders and the Agent may deem necessary or appropriate to create, preserve or perfect the liens, security interests and other rights intended to be granted to the Lenders or the Agent thereunder, together with Uniform Commercial Code record and other searches in such offices as the Lenders or the Agent may request; 26 32 (ii) Leased Property; Landlord Waivers. A schedule setting forth all real property leased by the Company and each Guarantor, together with copies of the related leases, certified as true and correct as of the Effective Date by a duly authorized officer of the Company, and an agreement of each landlord under such leases, in form and substance acceptable to the Lenders and the Agent, waiving its distraint, lien and similar rights with respect to any property subject to the Security Documents and agreeing to permit the Lenders and the Agent to enter such premises in connection therewith; (iii) Casualty and Other Insurance. Evidence that the casualty and other insurance required pursuant to Section 5.1(c) and the Security Agreements is in full force and effect; (iv) Stock. The original stock certificates of the Capital Stock of each Restricted Subsidiary and appropriate stock powers, together with any recording and any consents and waivers requested by the Agent with respect to the exercise of any rights under the Pledge Agreements, including without limitation any shareholders' and board of directors' consents so requested; and (v) Environmental Matters. The Environmental Certificate duly executed on behalf of the Borrowers and each of the Guarantors; (f) Legal Opinion. The favorable written opinion of Dykema Gossett PLLC and Fasken Campell Godfrey, counsels for the Borrowers and Guarantors, with respect to such matters as the Agent may reasonably request; (g) Consents, Approvals, Etc. Copies of all governmental and nongovernmental consents, approvals, authorizations, declarations, registrations or filings, if any, required on the part of the Company or any Guarantor in connection with the execution, delivery and performance of the Loan Documents or the transactions contemplated hereby or as a condition to the legality, validity or enforceability of the Loan Documents, certified as true and correct and in full force and effect as of the Effective Date by a duly authorized officer of the Company, or, if none is required, a certificate of such officer to that effect; (h) Fees. Payment of the fees described in Section 2.3(c); (i) Termination of Existing Credit Agreements. Evidence in form and substance satisfactory to the Agent regarding the termination of all commitments and other credit facilities under the Credit Agreement dated as of January 10, 1997 among Lobdell, the lenders party thereto, and NBD Bank, as Agent, and the Credit Agreement dated as of February 11, 1997 among BMG, the lenders party thereto, and NBD Canada, as Agent, together with the payment of all indebtedness and liabilities owing pursuant thereto, and it is acknowledged and agreed that this Agreement is in substitution and replacement for such credit agreements and all liens and security interests granted pursuant thereto shall continue hereunder and all financing statements filed in connection therewith shall remain in effect with respect to the Loan Documents executed in connection herewith; (j) Solvency Certificate. A solvency certificate duly executed by the Company and its Subsidiaries in form and substance satisfactory to the Agent; 27 33 (k) Subordinated Debt. Evidence satisfactory to the Agent that the Company has incurred Subordinated Debt in an amount equal to or greater than $125,000,000 in accordance with the Senior Subordinated Debt Documents, all Senior Subordinated Debt Documents shall have been delivered to the Agent and shall be satisfactory to the Agent and all transactions contemplated pursuant to the Senior Subordinated Debt Documents shall have been completed; (l) Intercreditor Agreement. The Intercreditor Agreement duly executed by all parties thereto, together with any documents required in connection therewith by the Agent; and (m) Miscellaneous. Such other documents, and completion of such other matters, as the Agent may reasonably request. 2.6 Further Conditions for Disbursement. The obligation of the Lenders to make any Advance (including the first Advance), or any continuation or conversion under Section 2.7, is further subject to the satisfaction of the following conditions precedent: (a) The representations and warranties contained in Article IV hereof, and in the other Loan Documents, shall be true and correct on and as of the date such Advance is made (both before and after such Advance is made) as if such representations and warranties were made on and as of such date; (b) No Default or Event of Default shall exist or shall have occurred and be continuing on the date such Advance is made (whether before or after such Advance is made); (c) The Agent shall have received the Borrowing Base Certificate if required pursuant to Section 5.1(d)(v) as of the close of business on the last day of the month next preceding the date such Advance is made; and (d) In the case of any Letter of Credit Advance, the Company shall have delivered to the Agent an application for the related Letter of Credit and other related documentation requested by and acceptable to the Agent appropriately completed and duly executed on behalf of the Company; and (e) In the case of any Acceptance, the Borrowing Subsidiary shall have delivered all documents and agreements required pursuant to Section 3.4. The Borrowers shall be deemed to have made a representation and warranty to the Lenders at the time of the making of, and the continuation or conversion of, each Advance to the effects set forth in clauses (a) and (b). For purposes of this Section 2.6 the representations and warranties contained in Section 4.6 hereof shall be deemed made with respect to both the financial statements referred to therein and the most recent financial statements delivered pursuant to Section 5.1(d)(ii) and (iii). 2.7 Subsequent Elections as to Borrowings. The applicable Borrower may elect (a) to continue a LIBOR Borrowing, or a portion thereof, as a LIBOR Borrowing or (b) to convert a LIBOR Borrowing or a portion thereof to a Floating Rate Borrowing, (c) to convert a Floating Rate Borrowing to a LIBOR Borrowing, (d) to continue an Acceptance or a portion thereof, as an Acceptance or (e) to convert an Acceptance or a portion thereof to a Floating Rate Borrowing, in each case by giving notice thereof to the Agent (with sufficient executed copies for each Lender) in substantially the form of Exhibit J hereto not later than 1:00 p.m. Detroit time three LIBOR Business Days prior to the date any such 28 34 continuation of or conversion to a LIBOR Borrowing is to be effective, not later than 1:00 p.m. Toronto time three Business Days prior to the date any such continuation of or conversion to an Acceptance is to be effective and not later than 1:00 p.m. Detroit time on one Business Day prior to the date of any such continuation or conversion is to be effective in all other cases, provided that an outstanding LIBOR Borrowing or Acceptance Borrowing may only be converted on the last day of the then current Interest Period with respect to such Borrowing, and provided, further, if a continuation of a Borrowing as, or a conversion of a Borrowing to, a LIBOR Borrowing or Acceptance Borrowing is requested, such notice shall also specify the Interest Period to be applicable thereto upon such continuation or conversion. The Agent, not later than the Business Day next succeeding the day such notice is given, shall provide notice of such election to the Lenders. If the applicable Borrower shall not timely deliver such a notice with respect to any outstanding LIBOR Borrowing or Acceptance Borrowing, such Borrower shall be deemed to have elected to convert such LIBOR Borrowing or Acceptance Borrowing to a Floating Rate Borrowing on the last day of the then current Interest Period with respect to such Borrowing. 2.8 Limitation of Requests and Elections. Notwithstanding any other provision of this Agreement to the contrary, (a) if, upon receiving a request for a LIBOR Borrowing pursuant to Section 2.4, or a request for a continuation of a LIBOR Borrowing or a request for a conversion of a Floating Rate Borrowing to a LIBOR Borrowing pursuant to Section 2.7, (i) deposits in Dollars for periods comparable to the LIBOR Interest Period elected by the Company are not available to any Lender in the relevant interbank market, or (ii) LIBOR will not adequately and fairly reflect the cost to any Lender of making, funding or maintaining the related LIBOR Loan or (iii) by reason of national or international financial, political or economic conditions or by reason of any applicable law, treaty or other international agreement, rule or regulation (whether domestic or foreign) now or hereafter in effect, or the interpretation or administration thereof by any governmental authority charged with the interpretation or administration thereof, or compliance by any Lender with any guideline, request or directive of such authority (whether or not having the force of law), including without limitation exchange controls, it is impracticable, unlawful or impossible for, or shall limit or impair the ability of, any Lender to make or fund the relevant Loan or to so continue or convert such Loan then the Company shall not be entitled, so long as such circumstances continue, to request such a Borrowing pursuant to Section 2.4 or a continuation of or conversion to such a Borrowing pursuant to Section 2.7 and (b) if the Agent shall have determined that by reason of circumstances affecting the money market, there is no market for Acceptances, then the right of the Borrowing Subsidiary to request Acceptances and the acceptance thereof shall be suspended until the Agent determines that the circumstances causing such suspension no longer exists and the Agent so notifies the Borrowing Subsidiary. In the event that such circumstances no longer exist, the Lenders shall again consider requests for such Borrowings pursuant to Section 2.4, and requests for continuations of and conversions to such Borrowings pursuant to Section 2.7. 2.9 Minimum Amounts; Limitation on Number of Borrowings; Etc. Except for (a) Borrowings which exhaust the entire remaining amount of the Commitments, and (b) payments required pursuant to Section 3.1(c), each Floating Rate Borrowing in denominated Dollars and each prepayment thereof shall be in a minimum amount of $500,000 and in an integral multiple of $100,000, each LIBOR Borrowing and each continuation or conversion thereof pursuant to Section 2.7 shall be in a minimum amount of $2,000,000 and in an integral multiple of $500,000, each Letter of Credit Advance shall be in a minimum amount of $100,000, each Floating Rate denominated in CAD and each prepayment thereof shall be in a minimum amount of CAD $500,000 and in integral multiple of CAD $100,000, and each Acceptance and each continuation or conversion thereof pursuant to Section 2.7 shall be in a minimum amount of CAD $2,000,000 and in an integral multiple of CAD $500,000. The aggregate number of LIBOR Borrowings and Acceptance Borrowing outstanding at any one time under this Agreement may 29 35 not exceed eight (8). The aggregate number of Letter of Credit Advances outstanding at any time under this Agreement may not exceed five (5). No Letter of Credit shall have a stated expiry date earlier than 30 days after the date of issuance or later than the earlier to occur of (i) the first anniversary of its date of issuance or (ii) the fifth Business Day before the Termination Date. 2.10 Borrowing Base Adjustments. The Borrowers agree that if at any time any trade account receivable, fixed asset, tooling reimbursement obligation or any inventory of the Borrowers or any Guarantor fails to constitute Eligible Accounts Receivable, Eligible Fixed Assets, Eligible Inventory, Eligible Tooling or Eligible Tooling Reimbursement Payments, as the case may be, for any reason, the Agent may, at any time upon written notice to the Company and notwithstanding any prior classification of eligibility, classify such asset or property as ineligible and exclude the same from the computation of the Borrowing Base without in any way impairing the rights of the Lenders and the Agent, in and to the same under the Security Agreements. The Borrowers agree that real estate shall only be included in the Borrowing Base if the Borrowers shall have delivered an appraisal acceptable to the Agent performed by an independent third party appraiser acceptable to the Agent. 2.11 Security and Collateral. To secure the payment when due of the Notes and all other obligations of the Company under this Agreement or any Rate Hedging Agreement to the Lenders and the Agent, the Company shall execute and deliver, or cause to be executed and delivered, to the Lenders and the Agent Security Documents granting the following: (a) Security interests in all present and future accounts, inventory, equipment, general intangibles, instruments, chattel paper, documents, fixtures and all other personal property of each Borrower and each Guarantor, which security interests shall secure all present and future indebtedness, obligations and liabilities of the Borrowers to the Lenders and the Agent. (b) Guarantees of all Guarantors, which Guarantees shall guarantee all present and future indebtedness, obligations and liabilities of the Borrowers to the Lenders and the Agent. (c) Pledges of 100% of the Capital Stock of all Restricted Subsidiaries owned directly or indirectly by the Company. (d) All real property owned at any time by Howell Industries if the Company acquires, directly or indirectly, Howell Industries at any time. (e) All other security and collateral described in the Security Documents. ARTICLE III. PAYMENTS AND PREPAYMENTS OF ADVANCES 3.1 Principal Payments and Prepayments. (a) Unless earlier payment is required under this Agreement, the Borrowers shall pay to the Lenders on the Termination Date the entire outstanding principal amount of the Advances. 30 36 (b) The Company may at any time and from time to time prepay all or a portion of the Loans, without premium or penalty, provided that (i) the Company may not prepay any portion of any Borrowing as to which an election for a continuation of or a conversion to a LIBOR Borrowing or Acceptance Borrowing is pending pursuant to Section 2.7, and (ii) unless earlier payment is required under this Agreement, any LIBOR Borrowing or Acceptance Borrowing may only be prepaid on the last day of the then current Interest Period with respect to such Borrowing, (c) If at any time the aggregate outstanding principal amount of the Advances shall exceed any of the limits provided under Section 2.1(d), the Borrowers shall forthwith pay to the Lenders an amount for application to the outstanding principal amount of the Loans, or provide to the Lenders cash collateral in respect of outstanding Letters of Credit in an amount, such that the aggregate amount of such payments with respect to the Loans and such cash collateral is not less than the amount of such excess. (d) In addition to all other payments of the Advances required hereunder, the Borrowers shall prepay the Advances by an amount equal to 100% of all of the Net Cash Proceeds from any sale or other disposition of any assets, other than the sale of inventory in the ordinary course of business upon customary credit terms, sales of scrap or obsolete material or equipment which are not material in the aggregate, in excess of $2,000,000 in aggregate amount in any fiscal year (other than such Net Cash Proceeds which are used within 180 days of the date received to purchase an asset of comparable value) if after giving effect to such sale the Company is not able to borrow at least $10,000,000 of additional Advances hereunder, which payments shall be due 20 days after the end of each month for all such sales and other dispositions during such month. The Company shall provide a certificate to the Agent within 20 days after each sale of assets, excluding any sale of assets which is not in excess of $2,000,000 in aggregate amount in any fiscal year, which, but for the above parenthetical, would cause a prepayment under this Section 3.1(d), which certificate shall describe such sale of assets and estimate when such Net Cash Proceeds will be used to purchase assets of a comparable value; and if such Net Cash Proceeds are not used within 180 days after such sale or such earlier date when the Company has determined not to purchase assets of comparable value with such Net Cash Proceeds the Company will then prepay the Loans with such Net Cash Proceeds. Notwithstanding the foregoing, upon and during the continuance of any Event of Default, 100% of all the Net Cash Proceeds from any sale or other disposition of any assets shall be used to prepay the Advances. 3.2 Interest Payments. The Borrowers shall pay interest to the Lenders on the unpaid principal amount of each Loan made to them, for the period commencing on the date such Loan is made until such Loan is paid in full, on each Interest Payment Date and at maturity (whether at stated maturity, by acceleration or otherwise), and thereafter on demand, at, in the case of Swingline Loans, the Floating Rate and, in all other cases, the following rates per annum: (a) During such periods that such Loan is a Floating Rate Loan, the Floating Rate. (b) During such periods that such Loan is a LIBOR Loan, the LIBOR applicable to such Loan for each related LIBOR Interest Period. (c) During such periods such Loan is a BA Equivalent Loan, the applicable rate specified in Section 3.4. 31 37 Notwithstanding the foregoing, the Borrowers shall pay interest on demand by the Agent at the Overdue Rate on the outstanding principal amount of any Loan and any other amount payable by the Borrowers hereunder (other than interest) which is not paid in full when due (whether at stated maturity, by acceleration or otherwise) for the period commencing on the due date thereof until the same is paid in full. For the purposes of the Interest Act (Canada) and Canadian Advances hereunder: (i) whenever any interest or fee under this Agreement is calculated using a rate based on a year of 360 days or 365 days, such rate determined pursuant to such calculation, when expressed as an annual rate, is equivalent to (X) the applicable rate based on a year of 360 days or 365 days, as the case may be, (Y) multiplied by the actual number of days in the relevant calendar year, and (Z) divided by 360 or 365 as the case may be; (ii) the principal of deemed reinvestment of interest does not apply to any interest calculation under this Agreement; and (iii) the rates of interest stipulated in this Agreement are intended to be nominal rates and not effective rates or yields. 3.3 Letters of Credit and Acceptances. (a) (i) The Borrowers agree to pay to the Lenders, on the day on which the Agent shall honor a draft or other demand for payment presented or made under any Letter of Credit and on the maturity date of each Bankers' Acceptance, an amount equal to the amount paid by the Agent in respect of such draft or other demand under such Letter of Credit, an amount equal to the face value of each Bankers' Acceptance accepted by such Lender maturing on that day (notwithstanding that a Lender may be the holder thereof at maturity) and all reasonable expenses paid or incurred by the Agent relative thereto. Unless the Borrowers shall have made such payment to the Lenders on such day, upon each such payment by the Agent with respect to a Letter of Credit and each such maturity date of each Banker's Acceptance, the Agent shall be deemed to have disbursed to the relevant Borrowers, and such Borrowers shall be deemed to have elected to satisfy its reimbursement and payment obligation by, a Revolving Credit Borrowing bearing interest at the Floating Rate for the account of the Lenders in an amount equal to the amount so paid by the Agent in respect of such draft or other demand under such Letter of Credit or in the face value of such Banker's Acceptance then maturing. Such Revolving Credit Borrowing shall be disbursed notwithstanding any failure to satisfy any conditions for disbursement of any Loan set forth in Article II hereof and, to the extent of the Revolving Credit Borrowing so disbursed, the reimbursement and payment obligation of the Company under this Section 3.3(a)(i) shall be deemed satisfied; provided, however, that nothing in this Section 3.3 shall be deemed to constitute a waiver of any Default or Event of Default caused by the failure to the conditions for disbursement or otherwise. (ii) If, for any reason (including without limitation as a result of the occurrence of an Event of Default with respect to the Company pursuant to Section 6.1(g)), Floating Rate Loans may not be made by the Lenders as described in Section 3.3(a)(i), then (A) the Borrowers agree that each amount not paid pursuant to the first sentence of Section 3.3(a)(i) shall bear interest, payable on demand by the Agent, at the interest rate then applicable to Floating Rate Borrowings, and (B) effective on the date each such Floating Rate Borrowing would otherwise have been made, each Lender severally agrees that it shall unconditionally and irrevocably, without regard to the occurrence of any Default or Event of Default, in lieu of deemed disbursement of Floating Rate Loans, to the extent of such Lender's Commitment in the case of Letters of Credit, purchase a participating interest in each reimbursement 32 38 amount paid by the Agent with respect to Letters of Credit. Each Lender will immediately transfer to the Agent, in same day funds, the amount of its participation. Each Lender shall share on a pro rata basis (calculated by reference to its Commitment) in any interest which accrues thereon and in all repayments thereof. If and to the extent that any Lender shall not have so made the amount of such participating interest available to the Agent, such Lender and the Borrowers severally agree to pay to the Agent forthwith on demand such amount together with interest thereon, for each day from the date of demand by the Agent until the date such amount is paid to the Agent, at (x) in the case of the Borrowers, the interest rate then applicable to Floating Rate Borrowings and (y) in the case of such Lender, the Federal Funds Rate for the first five days after the date of demand by the Agent and thereafter at the interest rate then applicable to Floating Rate Borrowings. (b) The reimbursement and other payment obligations of the Borrowers under this Section 3.3 shall be absolute, unconditional and irrevocable and shall remain in full force and effect until all obligations of the Borrowers to the Lenders hereunder shall have been satisfied, and such obligations of the Borrowers shall not be affected, modified or impaired upon the happening of any event, including without limitation, any of the following, whether or not with notice to, or the consent of, the Borrowers: (i) Any lack of validity or enforceability of any Letter of Credit, Acceptance or any documentation relating to any Letter of Credit, any Acceptance or to any transaction related in any way thereto (the "Documents"); (ii) Any amendment, modification, waiver, consent, or any substitution, exchange or release of or failure to perfect any interest in collateral or security, with respect to any of the Documents; (iii) The existence of any claim, setoff, defense or other right which the Company or any of its Subsidiaries may have at any time against any beneficiary or any transferee of any Letter of Credit or Acceptance (or any persons or entities for whom any such beneficiary, transferee or holder may be acting), the Agent or any Lender or any other Person or entity, whether in connection with any of the Documents, the transactions contemplated herein or therein or any unrelated transactions; (iv) Any draft or other statement or document presented under any Letter of Credit or Acceptance proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (v) Payment by the Agent to the beneficiary under any Letter of Credit against presentation of documents which do not comply with the terms of the Letter of Credit, including failure of any documents to bear any reference or adequate reference to such Letter of Credit; (vi) Any failure, omission, delay or lack on the part of the Agent or any Lender or any party to any of the Documents to enforce, assert or exercise any right, power or remedy conferred upon the Agent, any Lender or any such party under this Agreement or any of the Documents, or any other acts or omissions on the part of the Agent, any Lender or any such party; (vii) Any defense based on the lack of presentment for payment and any other defense to payment of any amounts due to a Lender in respect of any Acceptance accepted by it pursuant to this Agreement which might exist solely by reason of such Acceptance being held, at the maturity thereof, by such Lender in its own right; 33 39 (viii) Any other event or circumstance that would, in the absence of this clause, result in the release or discharge by operation of law or otherwise of the Company from the performance or observance of any obligation, covenant or agreement contained in this Section 3.3. No setoff, counterclaim, reduction or diminution of any obligation or any defense of any kind or nature which any Borrower has or may have against the beneficiary or holder of any Letter of Credit or Acceptance shall be available hereunder to any Borrower against the Agent or any Lender. Nothing in this Section 3.3 shall limit the liability, if any, of the Agent and the Lenders to the Company pursuant to Section 8.5(b). 3.4 Additional Terms for Acceptances. Subject to the terms and conditions hereof, upon giving to the Agent prior written notice in accordance with Section 2.4 hereof, on any Business Day a Borrowing Subsidiary may borrow from the Lenders by way of Acceptances, provided that: (a) (i) each Lender shall have received a Bankers' Acceptance or Bankers' Acceptances in the aggregate principal amount of such Borrowing from such Lender in due and proper form duly completed and executed by the Borrowing Subsidiary and presented for acceptance to such Lender prior to 10:00 a.m. (Toronto time) on the date for such Borrowing, together with such other document or documents as such Lender may reasonably require (including the execution by the Borrowing Subsidiary of such Lender's usual form of bankers' acceptances) and the Acceptance Fee shall have been paid to such Lender at or prior to such time; (ii) each Bankers' Acceptance shall be stated to mature on a Business Day, no later than the Termination Date, which is 30, 60 or 90 days from the date of its acceptance; (iii) each Bankers' Acceptance shall be stated to mature on a Business Day in such a way that no Lender will be required to incur any costs for the redeployment of funds as a consequence of any repayment required during any period for which such Bankers' Acceptance is outstanding; (iv) no days of grace shall be permitted on any Bankers' Acceptance; and (v) the aggregate face amount of the Bankers' Acceptances to be accepted by a Lender shall be determined by the Agent by reference to the respective relevant Commitments of the Lenders, except that, if the face amount of a Bankers' Acceptance which would otherwise be accepted by a Lender would not be $100,000 or a whole multiple thereof, such face amount shall be increased or reduced by the Agent in its sole discretion to $100,000 or the nearest whole multiple of that amount, as appropriate. (b) The Borrowing Subsidiary acknowledges, agrees and confirms that each Lender may at any time and from time to time hold, sell, rediscount or otherwise dispose of any Acceptance accepted and purchased by it hereunder. The Borrowing Subsidiary acknowledges, agrees and confirms with the Lenders that the records of each Lender in respect of payment of any Banker's Acceptance by such Lender shall be binding on the Borrowing Subsidiary and shall be conclusive evidence (in the absence of manifest error) of a Floating Rate Loan to the Borrowing Subsidiary and of an amount owing by the Borrowing Subsidiary to such lender. 34 40 (c) In the event a Lender is unable to accept Bankers' Acceptances, such Lender shall have the right at the time of accepting drafts to require the Borrowing Subsidiary to accept a Loan from such Lender in lieu of the issue and acceptance of a Bankers' Acceptance requested by the Borrowing Subsidiary to be accepted so that there shall be outstanding while the Bankers' Acceptances are outstanding BA Equivalent Loans from such Lender as contemplated herein. The principal amount of each BA Equivalent Loan shall be that amount which, when added to the amount of interest (calculated at the applicable Discount Rate) which will accrue during the BA Equivalent Interest Period shall be equal, at maturity, to the face amount of the drafts which would have been accepted by such Lender had it accepted Bankers' Acceptances. The "BA EQUIVALENT INTEREST PERIOD" for each BA Equivalent Loan shall be equal to the Interest Period of the drafts presented for acceptance as Bankers' Acceptances on the relevant date of Borrowing. On the relevant date of the Borrowing the Borrowing Subsidiary shall pay to the Administrative Agent a fee equal to the Acceptance Fee which would have been payable to such Lender if it were a Lender accepting drafts having a term to maturity equal to the applicable BA Equivalent Interest Period and an aggregate face amount equal to the sum of the principal amount of the BA Equivalent Loan and the interest payable thereon by the Borrowing Subsidiary for the Applicable BA Equivalent Interest Period. The provisions of this Agreement dealing with Bankers' Acceptances shall apply, mutatis mutandis, to BA Equivalent Loans. (d) Each Bankers' Acceptance issued pursuant to this Agreement shall be purchased by the Lender accepting such Bankers' Acceptance for the Discounted Proceeds thereof. Concurrent with the acceptance of each Bankers' Acceptance, each Lender shall make available to the Agent the Discounted Proceeds thereof for disbursement to the Borrowing Subsidiary in accordance with the terms hereof. In each case, upon receipt of such Discounted Proceeds from the Lenders and upon fulfilment of the applicable conditions set forth herein, the Agent shall make such funds available to the Borrowing Subsidiary in accordance with this Agreement. Upon each issue of Bankers' Acceptances as a result of the conversion of outstanding Borrowings into Bankers' Acceptances, the Borrowing Subsidiary shall, concurrently with the conversion, pay in advance to the Agent on behalf of the Lenders, the amount by which the face value of such Bankers' Acceptances exceeds the Discounted Proceeds of such Bankers' Acceptances, to be applied against the principal amount of the Borrowing being so converted. The Borrowing Subsidiary shall at the same time pay to the Agent the applicable Acceptance Fee. (e) To enable the Lenders to make Advances in the manner specified in this Section 3.4, the Borrowing Subsidiary shall, in accordance with the request of each Lender either (i) provide a power of attorney to complete, sign, endorse and issue Bankers' Acceptances, in such form as such Lender may require; or (ii) supply each Lender with such number of drafts as such Lender may reasonably request, duly endorsed and executed on behalf of the Borrowing Subsidiary. Each Lender shall exercise such care in the custody and safekeeping of drafts as it would exercise in the custody and safekeeping of similar property owned by it. Each Lender will, upon request by the Borrowing Subsidiary, promptly advise the Borrowing Subsidiary of the number and designations, if any, of the uncompleted drafts then held by it. 3.5 Payment Method. (a) All payments with respect to U.S. Advances to be made by the Borrowers hereunder will be made in Dollars and all payments with respect to Canadian Advances to made by the Borrowers hereunder shall be made in CAD, and in each case in immediately available funds to the Agent for the account of the relevant Lenders at its address referred to in Section 8.2 not later than 1:00 p.m. Detroit time on the date on which such payment shall become due and, with respect to Canadian Advances, to NBD Canada for the account of the relevant Lenders at its address referred to in Section 8.2 not later than 1:00 p.m. Toronto time on the date on which such payment shall become due. Payments received after 1:00 p.m. shall be deemed to be payments made prior to 1:00 p.m. on the next succeeding Business Day. The Borrowers hereby authorize the Agent (including NBD Canada) to 35 41 charge their accounts with the Agent (including NBD Canada) in order to cause timely payment of amounts due hereunder to be made (subject to sufficient funds being available in such accounts for that purpose). (b) At the time of making each such payment, the Company shall, subject to the other terms and conditions of this Agreement, specify to the Agent that Borrowing or other obligation of the Company hereunder to which such payment is to be applied. In the event that the Company fails to so specify the relevant obligation or if an Event of Default shall have occurred and be continuing, the Agent may apply such payments as it may determine in its sole discretion. (c) On the day such payments are deemed received, the Agent shall remit to the Lenders their pro rata shares of such payments in immediately available funds. In the case of payments of principal and interest on any Borrowing, such pro rata shares shall be determined with respect to each such Lender by the ratio which the outstanding principal balance of its Loan included in such Borrowing bears to the outstanding principal balance of the Loans of all of the Lenders included in such Borrowing, in the case of fees paid pursuant to Section 2.3 and other amounts payable hereunder (other than the Agent's fees and amounts payable to any Lender under Section 3.8), such pro rata shares shall be determined with respect to each such Lender by the ratio which the Commitments of such Lender bears to the Commitments of all the Lenders or such other pro rata shares as specified in this Agreement. 3.6 No Setoff or Deduction. Subject to Section 3.11, all payments of principal of and interest on the Advances and other amounts payable by the Borrowers hereunder shall be made by the Borrowers without setoff or counterclaim and, subject to the next succeeding sentence, free and clear of, and without deduction or withholding for, or on account of, any present or future taxes, levies, imposts, duties, fees, assessments, or other charges of whatever nature, imposed by any governmental authority, or by any department, agency or other political subdivision or taxing authority. Subject to Section 3.11, any such taxes, levies, imposts, duties, fees, assessments or other charges are imposed, the Borrowers will pay such additional amounts as may be necessary so that payment of principal and of interest on the Loans and other amounts payable hereunder, after withholding or deduction for or on account thereof, will not be less than any amount provided to be paid hereunder and, in any such case, the Borrowers will furnish to the Banks certified copies of all tax receipts evidencing the payment of such amounts within 45 days after the date any such payment is due pursuant to applicable law. 3.7 Payment on Non-Business Day; Payment Computations. Except as otherwise provided in this Agreement to the contrary, whenever any installment of principal of, or interest on, any Loan or any other amount due hereunder becomes due and payable on a day which is not a Business Day, the maturity thereof shall be extended to the next succeeding Business Day and, in the case of any installment of principal, interest shall be payable thereon at the rate per annum determined in accordance with this Agreement during such extension. Computations of interest and other amounts due under this Agreement shall be made on the basis of a year of 360 days (or 365 or 366 days, as the case may be, when determining the Floating Rate or rates or fees with respect to Acceptances) for the actual number of days elapsed, including the first day but excluding the last day of the relevant period. 3.8 Additional Costs. (a) In the event that any applicable law, treaty or other international agreement, rule or regulation (whether domestic or foreign) now or hereafter in effect and whether or not presently applicable to any Lender or the Agent, or any interpretation or administration thereof by any governmental authority charged with the interpretation or administration thereof, or compliance by any Lender or the Agent with any guideline, request or directive of any such authority 36 42 (whether or not having the force of law), shall (i) affect the basis of taxation of payments to any Lender or the Agent of any amounts payable by the Borrowers under this Agreement (other than taxes imposed on the overall net income of any Lender or the Agent, by the jurisdiction, or by any political subdivision or taxing authority of any such jurisdiction, in which any Lender or the Agent, as the case may be, has its principal office), (ii) shall impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by any Lender or the Agent, or (iii) shall impose any other condition with respect to this Agreement, or any of the Commitments, the Notes or the Loans or any Letter of Credit, and the result of any of the foregoing is to increase the cost to any Lender or the Agent, as the case may be, of making, funding or maintaining any LIBOR Loan or any Letter of Credit or to reduce the amount of any sum receivable by any Lender or the Agent, as the case may be, thereon, then the Borrowers shall pay to such Lender or the Agent, as the case may be, from time to time, upon request by such Lender (with a copy of such request to be provided to the Agent) or the Agent, additional amounts sufficient to compensate such Lender or the Agent, as the case may be, for such increased cost or reduced sum receivable to the extent, in the case of any LIBOR Loan, such Lender or the Agent is not compensated therefor in the computation of the interest rate applicable to such LIBOR Loan. A statement as to the amount of such increased cost or reduced sum receivable, prepared in good faith and in reasonable detail by such Lender or the Agent, as the case may be, and submitted by such Lender or the Agent, as the case may be, to the relevant Borrower, shall be prima facie evidence thereof. (b) In the event that any applicable law, treaty or other international agreement, rule or regulation (whether domestic or foreign) now or hereafter in effect and whether or not presently applicable to any Lender or the Agent, or any interpretation or administration thereof by any governmental authority charged with the interpretation or administration thereof, or compliance by any Lender or the Agent with any guideline, request or directive of any such authority (whether or not having the force of law), including any risk-based capital guidelines, affects or would affect the amount of capital required or expected to be maintained by such Lender or the Agent (or any corporation controlling such Lender or the Agent) and such Lender or the Agent, as the case may be, determines that the amount of such capital is increased by or based upon the existence of such Lender's or the Agent's obligations hereunder and such increase has the effect of reducing the rate of return on such Lender's or the Agent's (or such controlling corporation's) capital as a consequence of such obligations hereunder to a level below that which such Lender or the Agent (or such controlling corporation) could have achieved but for such circumstances (taking into consideration its policies with respect to capital adequacy) by an amount deemed by such Lender or the Agent to be material, then the Borrowers shall pay to such Lender or the Agent, as the case may be, from time to time, upon request by such Lender (with a copy of such request to be provided to the Agent) or the Agent, additional amounts sufficient to compensate such Lender or the Agent (or such controlling corporation) for any increase in the amount of capital and reduced rate of return which such Lender or the Agent reasonably determines to be allocable to the existence of such Lender's or the Agent's obligations hereunder. A statement as to the amount of such compensation, prepared in good faith and in reasonable detail by such Lender or the Agent, as the case may be, and submitted by such Lender or the Agent to the relevant Borrower, shall be prima facie evidence thereof. 3.9 Illegality and Impossibility. In the event that any applicable law, treaty or other international agreement, rule or regulation (whether domestic or foreign) now or hereafter in effect and whether or not presently applicable to any Lender, or any interpretation or administration thereof by any governmental authority charged with the interpretation or administration thereof, or compliance by any Lender with any guideline, request or directive of such authority (whether or not having the force of law), including without limitation exchange controls, shall make it unlawful or impossible for any 37 43 Lender to maintain any Loan under this Agreement, the relevant Borrower shall upon receipt of notice thereof from such Lender repay in full the then outstanding principal amount of each Loan so affected, together with all accrued interest thereon to the date of payment and all amounts owing to such Lender under Section 3.10, (a) on the last day of the then current Interest Period applicable to such Loan if such Lender may lawfully continue to maintain such Loan to such day, or (b) immediately if such Lender may not continue to maintain such Loan to such day. 3.10 Indemnification. If any Borrower makes any payment of principal with respect to any LIBOR Loan on any other date than the last day of a LIBOR Interest Period applicable thereto (whether pursuant to Section 3.1(c), Section 3.9, Section 6.2 or otherwise), or if any Borrower fails to borrow any LIBOR Loan after notice has been given to the Lenders in accordance with Section 2.4, or if any Borrower fails to make any payment of principal or interest in respect of a LIBOR Loan when due, such Borrower shall reimburse each Lender on demand for any resulting loss or expense incurred by each such Lender, including without limitation any loss incurred in obtaining, liquidating or employing deposits from third parties, whether or not such Lender shall have funded or committed to fund such Loan. A statement as to the amount of such loss or expense, prepared in good faith and in reasonable detail by such Lender and submitted by such Lender to the relevant Borrower, shall be conclusive and binding for all purposes absent manifest error in computation. Calculation of all amounts payable to such Lender under this Section 3.10 shall be made as though such Lender shall have actually funded or committed to fund the relevant LIBOR Loan through the purchase of an underlying deposit in an amount equal to the amount of such Loan in the relevant market and having a maturity comparable to the related Interest Period and through the transfer of such deposit to a domestic office of such Lender in the United States; provided, however, that such Lender may fund any LIBOR Loan in any manner it sees fit and the foregoing assumption shall be utilized only for the purpose of calculation of amounts payable under this Section 3.10. 3.11 Taxes. (a) Each Lender (which, for purposes of this Section 3.11, shall not include any Affiliate of such Lender used to make Canadian Advances hereunder) that is not organized and incorporated under the laws of the United States or any State thereof making U.S. Advances agrees to file with the Agent and the Company, in duplicate, (a) on or before the later of (i) the Effective Date and (ii) the date such Lender becomes a Lender under this Agreement and (b) thereafter, for each taxable year of such Lender (in the case of a Form 4224) or for each third taxable year of such Lender (in the case of any other form) during which interest or fees arising under this Agreement and the Notes are received, unless not legally able to do so as a result of a change in the United States income tax enacted, or treaty promulgated, after the date specified in the preceding clause (a), on or prior to the immediately following due date of any payment by the Company hereunder, a properly completed and executed copy of either Internal Revenue Service Form 4224 or Internal Revenue Service Form 1001 and Internal Revenue Service Form W-8 or Internal Revenue Service Form W-9 and any additional form necessary for claiming complete exemption from United States withholding taxes (or such other form as is required to claim complete exemption from United States withholding taxes), if and as provided by the Code or other pronouncements of the United States Internal Revenue Service, and such Lender warrants to the Company that the form so filed will be true and complete; provided that such Lender's failure to complete and execute such Form 4224 or Form 1001, or Form W-8 or Form W-9, as the case may be, and any such additional form (or any successor form or forms) shall not relieve the Company of any of its obligations under this Agreement, except as otherwise provided in this Section 3.11. (b) Notwithstanding anything herein to the contrary, for any period with respect to which a Lender has failed to provide the Company with the appropriate form pursuant to Section 3.11(a) (unless such failure is due to a change in treaty, law or regulation occurring subsequent to the date 38 44 on which a form originally was required to be provided), such Lender shall not be entitled to indemnification under Section 3.6 with respect to withholding taxes imposed by the United States; provided, however, that should a Lender, which is otherwise exempt from or subject to a reduced rate of withholding tax, become subject to withholding because of its failure to deliver a form required hereunder, the Borrowers shall take such steps as such Lender shall reasonably request to assist such Lender to recover such taxes. (c) Each Canadian Lender that is created or organized under the laws of a jurisdiction other than Canada or a Province thereof making Canadian Advances shall deliver, or have its designated Affiliate to be used to make Canadian Advances deliver, to the Company and the Agent on the Effective Date (or on the date on which such Canadian Lender becomes a Lender hereunder), evidence that the Minister of National Revenue is satisfied that payments made to such Lender hereunder are not subject to Taxes pursuant to Regulation 805(2) of the Income Tax Act ("Evidence of Canadian Tax Exemption"). In addition, from time to time after the Effective Date (or the date on which such Canadian Lender becomes a Lender hereunder) upon the reasonable request of the Company, each such Canadian Lender further agrees to deliver to the Company and the Agent further Evidence of Canadian Tax Exemption, unless any change in treaty, law, regulation or official interpretation thereof prevents such Lender from duly providing same. Notwithstanding anything in this Section 3.11 to the contrary, the Company shall not have any obligation to pay any withholding taxes or to indemnify any Canadian Lender for any withholding taxes to the extent that such taxes result from the failure of such Lender to comply with its obligations under this paragraph. (d) Notwithstanding anything herein to the contrary, for any period with respect to which a Canadian Lender has failed to provide the Company with the appropriate form pursuant to Section 3.11(c) (unless such failure is due to a change in treaty, law or regulation occurring subsequent to the date on which a form originally was required to be provided), such Canadian Lender shall not be entitled to indemnification under Section 3.6 with respect to withholding taxes imposed by Canada; provided however, that should a Canadian Lender, which is otherwise exempt from or subject to a reduced rate of withholding tax, become subject to withholding taxes because of its failure to deliver a form required hereunder, the Company shall take such steps as such Lender shall reasonably request to assist such Lender to recover such Taxes. (e) If any Borrower is required to pay additional amounts to or for the account of any Lender pursuant to Section 3.6, and each Lender which is not a Canadian Lender shall be entitled to such amounts if it is ever required to make or participate in Canadian Advances under this Agreement, then such Lender will change the jurisdiction of its Applicable Lending Office so as to eliminate or reduce any such additional payment which may thereafter accrue if such change, in the judgment of such Lender, is not otherwise disadvantageous to such Lender. For the purposes of making any Canadian Advances, any Lender may designate any Affiliate of such Lender in Canada to make such Canadian Advances on its behalf, provided that such designation is made in writing to the Agent and the Borrowers. Upon such designation, such Affiliate shall have all rights as a Lender with respect to such Canadian Advances. 3.12 Substitution of Lender. If (i) the obligation of any Lender to make or maintain LIBOR Loans has been suspended pursuant to Section 3.9 when not all Lenders' obligations have been suspended, (ii) any Lender has demanded compensation under Section 3.8 when all Lendershave not done so or (iii) any Lender is a Defaulting Lender, the Company shall have the right, if no Default or Event of Default then exists, to replace such Lender (a "Replaced Lender") with one or more other lenders (collectively, the "Replacement Lender") acceptable to the Agent, provided that (x) at the time of any replacement pursuant to this Section 3.12, the Replacement Lender shall enter into one or more Assignment 39 45 and Acceptances, pursuant to which the Replacement Lender shall acquire the Commitments and outstanding Advances and other obligations of the Replaced Lender and, in connection therewith, shall pay to the Replaced Lender in respect thereof an amount equal to the sum of (A) the amount of principal of, and all accrued interest on, all outstanding Loans of the Replaced Lender, (B) the amount of all accrued, but theretofore unpaid, fees owing to the Replaced Lender under Section 2.3 and (C) the amount which would be payable by the Company to the Replaced Lender pursuant to Section 3.10 if the Company prepaid at the time of such replacement all of the Loans of such Replaced Lender outstanding at such time and (y) all obligations of the Company then owing to the Replaced Lender (other than those specifically described in clause (x) above in respect of which the assignment purchase price has been, or is concurrently being, paid) shall be paid in full to such Replaced Lender concurrently with such replacement. Upon the execution of the respective Assignment and Acceptances, the payment of amounts referred to in clauses (x) and (y) above and, if so requested by the Replacement Lender, delivery to the Replacement Lender of the appropriate Note or Notes executed by the Company, the Replacement Lender shall become a Lender hereunder and the Replaced Lender shall cease to constitute a Lender hereunder. The provisions of this Agreement (including without limitation Sections 3.10 and 8.5) shall continue to govern the rights and obligations of a Replaced Lender with respect to any Loans made or any other actions taken by such lender while it was a Lender. Nothing herein shall release any Defaulting Lender from any obligation it may have to any Borrower, the Agent or any other Lender. ARTICLE IV. REPRESENTATIONS AND WARRANTIES The Borrowers represent and warrant to the Lenders and the Agent that: 4.1 Corporate Existence and Power. Each of the Borrowers and the Guarantors is a corporation duly organized, validly existing and in good standing under the laws of its respective jurisdiction of incorporation or formation, and is duly qualified to do business, and is in good standing, in all additional jurisdictions where such qualification is necessary under applicable law, except for jurisdictions where their failure to be so qualified would not result in any Material Adverse Effect. Each of the Company and the Guarantors has all requisite corporate or other organizational power to own or lease the properties used in its business and to carry on its business as now being conducted and as proposed to be conducted, and to execute and deliver the Loan Documents to which it is a party and to engage in the transactions contemplated by this Agreement. 4.2 Corporate Authority. The execution, delivery and performance by each of the Borrowers and the Guarantors of the Loan Documents to which each of them is a party have been duly authorized by all necessary corporate or other organizational action and are not in contravention of any law, rule or regulation, or any judgment, decree, writ, injunction, order or award of any arbitrator, court or governmental authority, or of the terms of such Borrower's or such Guarantor's charter, operating agreement or by-laws, or of any contract or undertaking to which such Borrower or such Guarantor is a party or by which such Borrower or such Guarantor or any of their property may be bound or affected and will not result in the imposition of any Lien on any of such Borrower's or such Guarantor's property or of any of such Borrower's or such Guarantor's property, except for Permitted Liens. 4.3 Binding Effect. These Loan Documents to which each of the Borrowers and the Guarantors is a party when delivered hereunder will be, legal, valid and binding obligations of such Borrower and such Guarantor, respectively, enforceable against each of them in accordance with their respective terms. 40 46 4.4 Subsidiaries. Schedule 4.4 hereto correctly sets forth the corporate name, jurisdiction of incorporation or formation and ownership of each Subsidiary of the Company. Each such Subsidiary and each corporation or other organization becoming a Subsidiary of the Company after the date hereof is and will be a corporation or other organization duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and is and will be duly qualified to do business in each additional jurisdiction where such qualification is or may be necessary under applicable law, except for such failure which could not have a Material Adverse Effect. Each Subsidiary of the Company has and will have all requisite corporate or other organizational power to own or lease the properties used in its business and to carry on its business as now being conducted and as proposed to be conducted. All outstanding shares of Capital Stock of each Subsidiary of the Company have been and will be validly issued and are and will be fully paid and nonassessable and, except with respect to the Lobdell Preferred Stock or as disclosed in writing to and approved by the Agent from time to time, are and will be owned, beneficially and of record, by the Company or another Subsidiary of the Company free and clear of any Liens. 4.5 Litigation. Except as set forth in Schedule 4.5 hereto, there is no action, suit or proceeding pending or, to the best of the Company's knowledge, threatened against or affecting the Company or any of its Subsidiaries before or by any court, governmental authority or arbitrator, which if adversely decided might result, either individually or collectively, in any Material Adverse Effect and, to the best of the Company's knowledge, there is no basis for any such action, suit or proceeding. 4.6 Financial Condition. The consolidated and consolidating balance sheet of the Company and its Subsidiaries and the consolidated and consolidating statements of income, retained earnings and cash flows of the Company and its Subsidiaries for the fiscal year ended March 31, 1997 and reported on by Price Waterhouse LLP, independent certified public accountants, copies of which have been furnished to the Lenders, fairly present, and the financial statements of the Company and its Subsidiaries delivered pursuant to Section 5.1(d) will fairly present, the consolidated financial position of the Company and its Subsidiaries as at the respective dates thereof, and the consolidated results of operations of the Company and its Subsidiaries for the respective periods indicated, all in accordance with Generally Accepted Accounting Principles consistently applied (subject, in the case of said interim statements, to year-end audit adjustments). There has been no Material Adverse Effect since March 31, 1997. There is no Contingent Liability of the Company or any of its Subsidiaries that is not reflected in such financial statements or in the notes thereto which could have a Material Adverse Effect. Neither the Company nor any Restricted Subsidiary is liable directly or indirectly, for any of the Indebtedness or other liabilities of any Unrestricted Subsidiary or for any Contingent Liabilities with respect to any Unrestricted Subsidiary except as permitted by Section 5.2(e). 4.7 Use of Advances. The Company will use the proceeds of the Advances to refinance existing indebtedness of the Guarantors, to acquire machinery and equipment for the Guarantors and for its and the Guarantors' general corporate purposes. Neither the Company nor any of its Subsidiaries extends or maintains, in the ordinary course of business, credit for the purpose, whether immediate, incidental, or ultimate, of buying or carrying margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System), and no part of the proceeds of any Advance will be used for the purpose, whether immediate, incidental, or ultimate, of buying or carrying any such margin stock or maintaining or extending credit to others for such purpose. After applying the proceeds of each Advance, such margin stock will not constitute more than 25% of the value of the assets (either of the Company alone or of the Company and its Subsidiaries on a consolidated basis) that are subject to 41 47 any provisions of any Loan Document that may cause the Advances to be deemed secured, directly or indirectly, by margin stock. 4.8 Consents, Etc. Except for such consents, approvals, authorizations, declarations, registrations or filings delivered by the Company pursuant to Section 2.5(g), if any, each of which is in full force and effect, no consent, approval or authorization of or declaration, registration or filing with any governmental authority or any nongovernmental Person or entity, including without limitation any creditor, lessor or stockholder of the Company or any of its Subsidiaries, is required on the part of any Borrower or any Guarantor in connection with the execution, delivery and performance of the Loan Documents or the transactions contemplated hereby or as a condition to the legality, validity or enforceability of any of the Loan Documents. 4.9 Taxes. The Company and its Subsidiaries have filed all tax returns (federal, state and local) required to be filed and have paid all taxes shown thereon to be due, including interest and penalties, or have established adequate financial reserves on their respective books and records for payment thereof. Neither the Company nor any of its Subsidiaries knows of any actual or proposed tax assessment or any basis therefor, and no extension of time for the assessment of deficiencies in any federal or state tax has been granted by the Company or any such Subsidiary. The Company will not amend any Tax Sharing Agreement without the prior approval of the Agent. 4.10 Title to Properties. Except as otherwise disclosed in the latest balance sheet referred to in Section 4.6 or delivered pursuant to Section 5.1(d), the Company or one or more of its Subsidiaries have good and marketable fee simple title to all of the real property, and a valid and indefeasible ownership or leasehold interest in all of the other properties and assets (including, without limitation, the collateral subject to the Security Documents to which any of them is a party) reflected in said balance sheet or subsequently acquired by the Company or any such Subsidiary. All of such properties and assets are free and clear of any Lien, except for Permitted Liens. 4.11 Borrowing Base. All trade accounts receivable, fixed assets and inventory of the Borrowers and the Guarantors represented or reported by the Company to be, or otherwise included in, Eligible Accounts Receivable, Eligible Fixed Assets and Eligible Inventory, comply in all respects with the requirements therefor set forth in the respective definitions thereof, and the computation of the Borrowing Base set forth in each Borrowing Base Certificate is true and correct. The aggregate amount of all Advances plus all Unrestricted Guarantees is equal to or less than the Borrowing Base. 4.12 ERISA. The Company and its ERISA Affiliates and their respective Plans are in compliance in all material respects with those provisions of ERISA and of the Code which are applicable with respect to any Plan. No Prohibited Transaction and no Reportable Event has occurred with respect to any such Plan which could, in the aggregate, result in any liability to the Company or any of its ERISA Affiliates in excess of $2,000,000. None of the Company or any of its ERISA Affiliates is an employer with respect to any Multiemployer Plan. The Company and its ERISA Affiliates have met or are meeting in compliance with all laws and regulations the minimum funding requirements under ERISA and the Code with respect to each of their respective Plans, if any, and have not incurred any liability to the PBGC or any Plan. The execution, delivery and performance of the Loan Documents does not constitute a Prohibited Transaction. There is no Unfunded Benefit Liability, with respect to any Plan of the Company or its ERISA Affiliates which could have a Material Adverse Effect. 4.13 Disclosure. No report or other information furnished in writing by or on behalf of the Company or any of its Subsidiaries to any Lender or the Agent in connection with the negotiation 42 48 or administration of this Agreement contains any material misstatement of fact or omits to state any material fact or any fact necessary to make the statements contained therein not misleading in light of the circumstances in which they were made. No Loan Document nor any other document, certificate, or report or statement or other information furnished to any Lender or the Agent by or on behalf of the Company or any of its Subsidiaries in connection with the transactions contemplated hereby contains any untrue statement of a material fact or omits to state a material fact in order to make the statements contained herein and therein not misleading in light of the circumstances in which they were made. There is no fact known to the Company which materially and adversely affects, or which in the future may (so far as the Company can now reasonably foresee) materially and adversely affect, the business, properties, operations or condition, financial or otherwise, of the Company or any of its Subsidiaries, which has not been set forth in this Agreement (including without limitation the schedules hereto) or in the other documents, certificates, statements, reports and other information furnished in writing to the Lenders by or on behalf of the Company or any of its Subsidiaries in connection with the transactions contemplated hereby. 4.14 Environmental Matters. The representations and warranties set forth in the Environmental Certificate are true and complete. 4.15 Solvency. The Company and its Subsidiaries are and, after giving effect to the transactions described herein and the Subordinated Debt Documents and to the incurrence or assumption of all obligations being incurred or assumed in connection herewith, will be Solvent. 4.16 No Defaults under Certain Agreements. Neither the Company nor any of its Subsidiaries is in default or has received any written notice of default under or with respect to any contract or agreement to which it is a party or by which it is bound, including without limitation any agreements for the incurrence of any indebtedness or any tooling or purchase contracts, which could have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing. 4.17 Intellectual Property. Set forth on Schedule 4.17 is a complete and accurate list of all patents, trademarks, trade names, service marks and copyrights, and all applications therefor and licenses thereof, of the Company and each of its Subsidiaries showing as of the Effective Date the jurisdiction in which registered, the registration number and the date of registration. The Company and each of its Subsidiaries owns, or is licensed to use, all trademarks, tradenames, service marks, copyrights, technology, know-how and processes necessary for the conduct of its business as currently conducted (the "Intellectual Property") except for those the failure to own or license which could not reasonably be expected to have a Material Adverse Effect. No claim has been asserted and is pending by any Person challenging or questioning the use of any such Intellectual Property or the validity or effectiveness of any such Intellectual Property, nor does the Company or any of its Subsidiaries know of any valid basis for any such claim, the use of such Intellectual Property by the Company and each of its Subsidiaries does not infringe on the rights of any Person, and, to the knowledge of the Company, no Intellectual Property has been infringed, misappropriated or diluted by any other Person except for such claims, infringements, misappropriation and dilutions that, in the aggregate, could not have a Material Adverse Effect. 4.18 Preferred Stock. All Lobdell Preferred Stock Documents are listed on Schedule 4.18 hereto, and true, correct and complete copies of all Lobdell Preferred Stock Documents have been delivered to the Agent. All dividends, distributions, redemptions and other payments required on the Lobdell Preferred Stock are described on Schedule 4.18. Other than the Lobdell Preferred Stock, there is no other Preferred Stock as of the Effective Date. 43 49 4.19 Investment Company Act; Other Regulations. Neither the Company nor any of its Subsidiaries is an "investment company", or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. Neither the Company nor any of its Subsidiaries is subject to regulation under any federal or state statute or regulation which limits its ability to incur Indebtedness. 4.20 Senior Subordinated Debt Documents. All representations and warranties of the Company contained in any Senior Subordinated Debt Document are true and correct in all material respects. The Company will be receiving net proceeds in the approximate amount of $120,800,000 on the Effective Date from its issuance of the Senior Subordinated Notes, and all agreements, instruments and documents executed or delivered pursuant to the issuance of the Senior Subordinated Notes are described on Schedule 1.1 hereto. All Advances and all other present and future indebtedness, obligations and liabilities pursuant to the Loan Documents and all Rate Hedging Obligations of each Borrower and each Guarantor owed to any Lender is "Senior Debt " and "Designated Senior Debt" as defined in the Senior Subordinated Debt Documents and, other than the Advances and all other present and future indebtedness, obligations and liabilities pursuant to the Loan Documents, there is no other "Designated Senior Debt" thereunder. There is no Event of Default or event or condition which could become an Event of Default with notice or lapse of time or both, under the Senior Subordinated Debt Documents and each of the Senior Subordinated Debt Documents is in full force and effect. Other than pursuant to the Senior Subordinated Notes and as described on Schedule 4.20, there is no obligation pursuant to any Senior Subordinated Debt Document or other document or agreement evidencing or relating to any Subordinated Debt outstanding or to be outstanding on the Effective Date which obligates the Company to pay any principal or interest or redeem any of its Capital Stock or incur any other monetary obligation. 4.21 Unrestricted Subsidiaries. Other than the guaranties permitted by Section 5.2(e)(viii), neither the Company nor any Restricted Subsidiary of the Company is liable, directly or indirectly, for any of the Indebtedness or other liabilities of any Unrestricted Subsidiary or has any Contingent Liabilities with respect to any Unrestricted Subsidiary, other than trade payables for the sale of goods in the ordinary course of business and in compliance with Section 5.2(m). ARTICLE V. COVENANTS 5.1 Affirmative Covenants. The Company covenants and agrees that, until the termination of all Commitments and Letters of Credit and thereafter until payment in full of the principal of and accrued interest on the Notes and the payment and performance of all other obligations of the Company under this Agreement, any agreement executed in connection herewith and any Rate Hedging Agreement with any Lender, unless the Required Lenders shall otherwise consent in writing, it shall, and shall cause each of its Restricted Subsidiaries to: (a) Preservation of Corporate Existence, Etc. Do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and its qualification as a foreign corporation or other organization in good standing in each jurisdiction in which such qualification is necessary under applicable law, and the rights, licenses, permits (including those required under Environmental Laws), franchises, patents, copyrights, trademarks and trade names material to the conduct of its businesses, except to the extent any of the foregoing would not have a Material Adverse Effect; and defend all of the foregoing against all claims, actions, demands, suits or 44 50 proceedings at law or in equity or by or before any governmental instrumentality or other agency or regulatory authority. (b) Compliance with Laws, Etc. Comply in all respects with all applicable laws, rules, regulations and orders of any governmental authority, whether federal, state, local or foreign (including without limitation ERISA, the Code and Environmental Laws), in effect from time to time, except to the extent any of the foregoing would not have a Material Adverse Effect; and pay and discharge promptly when due all taxes, assessments and governmental charges or levies imposed upon it or upon its income, revenues or property, before the same shall become delinquent or in default, as well as all lawful claims for labor, materials and supplies or otherwise, which, if unpaid, might give rise to Liens upon such properties or any portion thereof, except to the extent that payment of any of the foregoing is then being contested in good faith by appropriate legal proceedings and with respect to which adequate financial reserves have been established on the books and records of the Company or any of its Restricted Subsidiaries. (c) Maintenance of Properties; Insurance. Maintain, preserve and protect all property that is material to the conduct of the business of the Company or any of its Restricted Subsidiaries and keep such property in good repair, working order and condition and from time to time make, or cause to be made all needful and proper repairs, renewals, additions, improvements and replacements thereto necessary in order that the business carried on in connection therewith may be properly conducted at all times in accordance with customary and prudent business practices for similar businesses, except to the extent any of the foregoing would not have a Material Adverse Effect; and maintain in full force and effect insurance with responsible and reputable insurance companies or associations in such amounts, on such terms and covering such risks, including fire and other risks insured against by extended coverage, as is usually carried by companies engaged in similar businesses and owning similar properties similarly situated and maintain in full force and effect public liability insurance, insurance against claims for personal injury or death or property damage occurring in connection with any of its activities or any properties owned, occupied or controlled by it, in such amount as it shall reasonably deem necessary, and maintain such other insurance as may be required by law or as may be reasonably requested by the Required Lenders for purposes of assuring compliance with this Section 5.1(c). (d) Reporting Requirements. Furnish to the Lenders and the Agent the following: (i) Promptly and in any event within three calendar days after becoming aware of the occurrence of (A) any Default or Event of Default, (B) the commencement of any material litigation against, by or affecting the Company or any of its Restricted Subsidiaries, and any material developments therein, or (C) entering into any material contract or undertaking that is not entered into in the ordinary course of business or (D) any development in the business or affairs of the Company or any of its Restricted Subsidiaries which has resulted in or which is likely in the reasonable judgment of the Company, to result in a Material Adverse Effect, a statement of the Chief Financial Officer or Treasurer of the Company setting forth details of each such Default or Event of Default or such litigation, material contract or undertaking or development and the action which the Company or such Subsidiary, as the case may be, has taken and proposes to take with respect thereto; (ii) As soon as available and in any event within 45 days after the end of each of the first three fiscal quarters of the Company, the consolidated and consolidating balance sheets of the Company and its Restricted Subsidiaries as of the end of such quarter, and the related 45 51 consolidated and consolidating statements of income, retained earnings and changes in cash flows for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, setting forth in each case in comparative form the corresponding figures for the corresponding date or period of the preceding fiscal year, all in reasonable detail and duly certified (subject to year-end audit adjustments) by the Chief Financial Officer or Treasurer of the Company as having been prepared in accordance with Generally Accepted Accounting Principles, together with a certificate of the Chief Financial Officer or Treasurer of the Company stating (A) that no Default or Event of Default has occurred and is continuing or, if a Default or Event of Default has occurred and is continuing, a statement setting forth the details thereof and the action which the Company has taken and proposes to take with respect thereto, and (B) that a computation (which computation shall accompany such certificate and shall be in reasonable detail) showing compliance with Section 5.2(a), (b), (c) and (d) hereof is in conformity with the terms of this Agreement; (iii) As soon as available and in any event within 100 days after the end of each fiscal year of the Company, a copy of the consolidated balance sheet of the Company and its Subsidiaries as of the end of such fiscal year and the related consolidated statements of income, retained earnings and changes in cash flows of the Company and its Subsidiaries for such fiscal year, with a customary audit report of Price Waterhouse LLP, or other independent certified public accountants selected by the Company and acceptable to the Agent, without qualifications unacceptable to the Agent, together with a certificate of the Chief Financial Officer or the Treasurer of the Company stating (A) that no Default or Event of Default has occurred and is continuing and, if such a Default or Event of Default exists and is continuing, a statement setting forth the nature and status thereof, and (B) that a computation (which computation shall accompany such certificate and shall be in reasonable detail) showing compliance with Sections 5.2(a), (b), (c) and (d) hereof is in conformity with the terms of this Agreement; (iv) Promptly after the sending or filing thereof, copies of all reports, proxy statements and financial statements which the Company or any of its Subsidiaries sends to or files with any of their respective security holders or any securities exchange or the Securities and Exchange Commission or any successor agency thereof; (v) On or before the 15th day after the end of each month during which the Advances exceeded $35,000,000 on any date during such month and at least two Business Days prior to any request for an Advance which would cause the Aggregate Advances to exceed $35,000,000, a Borrowing Base Certificate prepared as of the close of business on the last day of such month or the most recently ended month, as the case may be, together with supporting schedules, in form and detail satisfactory to the Agent, setting forth such information as the Agent may request with respect to the aging, value, location and other information relating to the computation of the Borrowing Base and the eligibility of any property or assets included in such computation, certified as true and correct by the Chief Financial Officer or Treasurer of the Company; (vi) As soon as available and in any event at least 30 days prior to the end of each fiscal year of the Company, copies of preliminary capital and operating budgets and financial forecasts for the Company and its Subsidiaries for the following fiscal year, and as soon as available in any event within 30 days after the end of each fiscal year of the Company, copies of the final capital and operating budgets and financial forecasts for the Company and its Subsidiaries for such fiscal year, in each case prepared on both a consolidated and consolidating basis and for a twelve-month period (or more frequent period if so prepared by the Company in the ordinary course) by or under the direction of the Chief Financial Officer or Treasurer of the Company in form and detail satisfactory to the Agent, 46 52 and, promptly and in any event within 10 days after preparation thereof, copies of any revisions to such budgets and forecasts; (vii) Promptly and in any event within 10 calendar days after receiving or becoming aware thereof (A) a copy of any notice of intent to terminate any Plan of the Company its Subsidiaries or any ERISA Affiliate filed with the PBGC, (B) a statement of the Chief Financial Officer or Treasurer of the Company setting forth the details of the occurrence of any Reportable Event with respect to any such Plan, (C) a copy of any notice that the Company, any of its Subsidiaries or any ERISA Affiliate may receive from the PBGC relating to the intention of the PBGC to terminate any such Plan or to appoint a trustee to administer any such Plan, or (D) a copy of any notice of failure to make a required installment or other payment within the meaning of Section 412(n) of the Code or Section 302(f) of ERISA with respect to any such Plan; (viii) As soon as available and in any event within 30 days after the end of each month, a report with respect to the Company setting forth a summary and aging of accounts payable of the Company, a listing of any checks held after the due date of the related vendor invoice and setting forth the corresponding due dates of such invoices, in form and detail satisfactory to the Agent, certified as true and correct by the Chief Financial Officer or Treasurer of the Company; (ix) Promptly and in any event within 10 days after receipt, a copy of any management letter or comparable analysis prepared by the auditors for the Company or any of its Subsidiaries; and (x) Promptly, such other information respecting the business, properties, operations or condition, financial or otherwise, of the Company or any of its Restricted Subsidiaries or any of its Unrestricted Subsidiaries with respect to which the Company or any of its Restricted Subsidiaries has any Contingent Liabilities as any Lender or the Agent may from time to time reasonably request. (e) Accounting; Access to Records, Books, Etc. Maintain a system of accounting established and administered in accordance with sound business practices to permit preparation of financial statements in accordance with Generally Accepted Accounting Principles and to comply with the requirements of this Agreement and, at any reasonable time and from time to time, (i) during regular business hours, permit any Lender or the Agent or any agents or representatives thereof to examine and make copies of and abstracts from the records and books of account of, and visit the properties of, the Company and its Subsidiaries, and to discuss the affairs, finances and accounts of the Company and its Subsidiaries with their respective directors, officers, employees and independent auditors, and by this provision the Company hereby authorizes such persons to discuss such affairs, finances and accounts with any Lender or the Agent and (ii) during regular business hours, permit the Agent or any of its agents or representatives to conduct a comprehensive field audit of its books, records, properties and assets, including without limitation all collateral subject to the Security Documents; and (f) Maintenance of Business Lines. Maintain all principal lines of business in which the Company or any of its Restricted Subsidiaries is presently engaged. (g) Additional Security and Collateral. Promptly (i) execute and deliver, and cause each Restricted Subsidiary of the Company to execute and deliver, additional Security Documents, within 30 days after request therefor by the Lenders and the Agent, sufficient to grant to the Agent for the benefit of the Lenders and the Agent liens and security interests in any after acquired 47 53 property of the type described in Section 2.11 and (ii) cause each Person becoming a Restricted Subsidiary of the Company from time to time to execute and deliver to the Agent, within 30 days after such Person becomes a Restricted Subsidiary, a Guaranty and Security Documents, together with other related documents described in Section 2.5 sufficient to grant to the Agent for the benefit of the Lenders and the Agent liens and security interests in all collateral of the type described in Section 2.11. The Company shall notify the Agent, within 10 days after the occurrence thereof, of the acquisition of any property by the Company or any Restricted Subsidiary that is not subject to the existing Security Documents, any Person's becoming a Restricted Subsidiary and any other event or condition that may require additional action of any nature in order to preserve the effectiveness and perfected status of the liens and security interests of the Lenders and the Agent with respect to such property pursuant to the Security Documents. (h) Further Assurances. Execute and deliver, and cause each Restricted Subsidiary of the Company to execute and deliver, within 30 days after request therefor by the Lenders and the Agent, all further instruments and documents and take all further action that may be necessary or desirable, or that the Agent may request, in order to give effect to, and to aid in the exercise and enforcement of the rights and remedies of the Lenders under, the Loan Documents, including without limitation causing each lessor of real property to the Company or any of its Restricted Subsidiaries to execute and deliver to the Agent, prior to or upon the commencement of any tenancy, an agreement in form and substance acceptable to the Lenders and the Agent duly executed on behalf of such lessor waiving any distraint, lien and similar rights with respect to any property subject to the Security Documents and agreeing to permit the Lenders and the Agent to enter such premises in connection therewith. 5.2 Negative Covenants. Until the termination of all Commitments and Letters of Credit and thereafter until payment in full of the principal of and accrued interest on the Notes and the payment and performance of all other obligations of the Company under this Agreement, any agreement executed in connection herewith and any Rate Hedging Agreement with any Lender, the Company agrees that, unless the Required Lenders shall otherwise consent in writing, it shall not, and shall not permit any of its Restricted Subsidiaries to: (a) Net Worth. Permit or suffer the Consolidated Net Worth of the Company and its Restricted Subsidiaries to be less than (i) $35,400,000, plus (ii) an amount equal to 50% of Consolidated net income of the Company and its Subsidiaries (without reduction for a net loss) for each fiscal year of the Company subsequent to its fiscal year ended March 31, 1997, plus (iii) an amount equal to 100% of the Net Cash Proceeds in connection with the issuance or other sale by the Company of any of its Capital Stock. (b) Total Debt to EBITDA Ratio. Permit or suffer the Total Debt to EBITDA Ratio to be greater than (i) 5.50 to 1.00 at any time prior to June 30, 1998, or (ii) 5.00 to 1.00 at any time from and including June 30, 1998 to but excluding June 30, 1999 or (iii) 4.50 to 1.00 at any time thereafter. (c) Fixed Charge Coverage Ratio. Permit or suffer the Fixed Charge Coverage Ratio determined as of the end of each fiscal quarter of the Company, commencing with the fiscal quarter ending September 30, 1997, for the period of four fiscal quarters then ended, to be less than (i) 1.45 to 1.0 as of the end of any fiscal quarter of the Company ending on or before March 31, 1998 or (ii) 1.60 to 1.0 as of the end of any fiscal quarter thereafter. 48 54 (d) Interest Coverage Ratio. Permit or suffer the Interest Coverage Ratio, determined as of the end of each fiscal quarter of the Company for the period of the four fiscal quarters then ended, to be less (i) 2.0 to 1.0 as of the end of any fiscal quarter ending on or before March 31, 1999 or (ii) than 2.25 to 1.0 as of the end of any fiscal quarter therafter. (e) Indebtedness. Create, incur, assume or in any manner become liable in respect of, or suffer to exist, any Indebtedness other than: (i) The Advances and the other obligations and liabilities pursuant to any of the Loan Documents; (ii) The Indebtedness described in Schedule 5.2(e), including Contingent Liabilities, provided that no increase in the principal amount thereof shall be permitted; (iii) Indebtedness of the Company or any Restricted Subsidiary owing to the Company or any Guarantor, provided that any such Indebtedness owing by the Company shall be fully subordinate to all Advances and all other obligations of the Company to the Agent and the Lenders, by written agreement pursuant to terms and conditions satisfactory to the Agent and the Required Lenders; (iv) Indebtedness constituting purchase money debt or Capital Leases in aggregate outstanding principal amount not exceeding $10,000,000 at any time; (v) Subordinated Debt under the Senior Subordinated Notes in aggregate principal amount not to exceed $125,000,000; (vi) Other Subordinated Debt of the Company or any Guarantor, provided that (A) after giving effect to such Subordinated Debt, the Company is able to borrow at least $10,000,000 of additional Loans, (B) both before and after giving effect to such Subordinated Debt, no Event of Default or Default exists or would be caused thereby, (C) after giving effect to such Subordinated Debt, the pro forma Total Debt to EBITDA Ratio is at least 0.25 below the level required under Section 5.2(b), on a pro forma basis acceptable to the Agent; (vii) Tooling Indebtedness on terms and in amounts acceptable to the Agent, which consent will not be unreasonably withheld; (viii) Rate Hedging Agreements with any Lender or other person acceptable to the Agent, provided that no Rate Hedging Agreement shall be entered into for purposes of financial speculation; (ix) Guaranties by the Company of Unrestricted Subsidiaries in an aggregate amount (valued at the maximum amount that could be payable thereunder) not to exceed $30,000,000, provided that any such guaranties may not be incurred unless: (A) both before and after giving effect to such guaranty the Company is able to borrow at least $10,000,000 of additional Loans, (B) all such guaranties shall be collection guaranties on terms and conditions satisfactory to the Agent, (C) both before and after giving effect to such guaranty, no Event of Default or Default exists or would be caused thereby, (D) both before and after giving effect to such guaranty, the pro forma Total Debt to EBITDA Ratio is at least 0.25 below the level required under Section 5.2(b), on a pro forma basis 49 55 acceptable to the Agent, and (E) the Company provides such certificates and legal opinions prior to the incurrence of such guaranty as requested by the Agent; and (x) Indebtedness of the Restricted Subsidiaries of BMG in aggregate principal amount not to exceed $2,500,000 and secured by the real property owned by such Subsidiaries as of the Effective Date, provided that the terms of such Indebtedness are no more onerous on such Subsidiaries as the terms of the Indebtedness of such Subsidiaries secured by such real property that existed immediately prior to the Effective Date. (f) Liens. Create, incur or suffer to exist any Lien on any of the assets, rights, revenues or property, real, personal or mixed, tangible or intangible, whether now owned or hereafter acquired, of the Company or any of its Restricted Subsidiaries, other than: (i) Liens for taxes not delinquent or for taxes being contestedb in good faith by appropriate proceedings and as to which adequate financial reserves have been established on its books and records; (ii) Liens (other than any Lien imposed by ERISA or any Environmental Law) created and maintained in the ordinary course of business which do not secure obligations material in the aggregate and which would not have a Material Adverse Effect and which constitute (A) pledges or deposits under worker's compensation laws, unemployment insurance laws or similar legislation, (B) good faith deposits in connection with bids, tenders, contracts or leases to which the Company or any of its Subsidiaries is a party for a purpose other than borrowing money or obtaining credit, including rent security deposits, (C) liens imposed by law, such as those of carriers, warehousemen and mechanics, if payment of the obligation secured thereby is not yet due, (D) Liens securing taxes, assessments or other governmental charges or levies not yet subject to penalties for nonpayment, and (E) pledges or deposits to secure public or statutory obligations of the Company or any of its Subsidiaries, or surety, customs or appeal bonds to which the Company or any of its Subsidiaries is a party; (iii) Liens affecting real property which constitute minor survey exceptions or defects or irregularities in title, minor encumbrances, easements or reservations of, or rights of others for, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of such real property, provided that all of the foregoing, in the aggregate, do not at any time materially detract from the value of said properties or materially impair their use in the operation of the businesses of the Company or any of its Subsidiaries; (iv) Liens created pursuant to the Security Documents and Liens expressly permitted by the Security Documents; (v) Each Lien described in Schedule 5.2(f) hereto may be suffered to exist upon the same terms as those existing on the date hereof, but no increase in the principal amount thereof shall be permitted; (vi) Any Lien created to secure payment of a portion of the purchase price of, or existing at the time of acquisition of, any tangible fixed asset acquired by the Company or any of its Restricted Subsidiaries may be created or suffered to exist upon such fixed asset if the outstanding principal amount of the Indebtedness secured by such Lien does not at any time exceed 100% of the purchase price paid by the Company or such Restricted Subsidiary for such fixed asset and 50 56 the aggregate principal amount of all Indebtedness secured by such Liens does not exceed the amount permitted under Section 5.2(e)(iv), provided that such Lien does not encumber any other asset at any time owned by the Company or such Restricted Subsidiary, and provided, further, that not more than one such Lien shall encumber such fixed asset at any one time; (vii) Liens in favor of the Company or any of its Restricted Subsidiaries as security for Indebtedness of any Subsidiary to the Company or another Restricted Subsidiary; (viii) The interest or title of a lessor under any lease otherwise permitted under this Agreement with respect to the property subject to such lease to the extent performance of the obligations of the Company or its Restricted Subsidiary thereunder are not delinquent; and (ix) Liens on the real property owned by such Subsidiaries as of the Effective Date securing the Indebtedness permitted by Section 5.2(b)(x). (g) Merger; Acquisitions; Etc. Purchase or otherwise acquire, whether in one or a series of transactions, directly or indirectly, all or a substantial portion of the business assets, rights, revenues or property, real, personal or mixed, tangible or intangible, of any Person, or all or a substantial portion of the capital stock of or other ownership interest in any other Person (an "Acquisition"); nor merge or consolidate or amalgamate with any other Person or take any other action having a similar effect; provided, however, that this Section 5.2(g) shall not prohibit any merger or acquisition if (i) such merger involves the Company, the Company shall be the surviving or continuing corporation thereof, (ii) immediately before and after giving effect such merger or acquisition, no Default or Event of Default shall exist or shall have occurred and be continuing and the representations and warranties contained in Article IV and in the other Loan Documents shall be true and correct on and as of the date thereof (both before and after such merger or acquisition is consummated) as if made on the date such merger or acquisition is consummated, (iii) at least 10 Business Days' prior to the consummation of such merger or acquisition, the Company shall have provided to the Lenders an opinion of counsel and a certificate of the Chief Financial Officer or Treasurer of the Company (attaching pro forma computations acceptable to the Agent to demonstrate compliance with all financial covenants hereunder), each stating that such merger or acquisition complies with this Section 5.2(g), all laws and regulations and that any other conditions under this Agreement relating to such transaction have been satisfied, and such certificate shall contain such other information and certifications as requested by the Agent and be in form and substance satisfactory to the Agent, (iv) at least 10 Business Days' prior to the consummation of such merger or acquisition, the Company shall have delivered all acquisition documents and other agreements and documents relating to such merger or acquisition, and the Agent shall have completed a satisfactory review thereof and completed such other due diligence satisfactory to the Agent, provided that if such acquisition is being done by an Unrestricted Subsidiary or such merger involves Unrestricted Subsidiaries only then the requirements of this clause (iv) will be satisfied if the Company provides the Lenders with a certificate representing that neither the Company nor any Restricted Subsidiary shall be liable, directly or indirectly, for any of the Indebtedness or other liabilities of such Unrestricted Subsidiary or for any Contingent Liabilities with respect to any such Unrestricted Subsidiary except as permitted by Section 5.2(e), (v) immediately before and after giving effect to such merger or acquisition, the pro forma Total Debt to EBITDA Ratio is at least 0.25 below the level required under Section 5.2(b), on a pro forma basis acceptable to the Agent, (vi) both before and after giving effect to such merger and acquisition, the Company is able to borrow at least $10,000,000 of additional Loans, (vii) the Company shall, at least 10 Business Days prior to the consummation of 51 57 merger or acquisition, provide such other certificates and documents as requested by the Agent, in form and substance satisfactory to the Agent, and (viii) the target of such merger or acquisition is in the same line of business as the Company. Notwithstanding the foregoing, the requirements listed in clauses (ii), (iii), (iv), (v), (vi) and (vii) of this Section 5.2(g) shall not be required to be satisfied in connection with any acquisition done solely by an Unrestricted Subsidiary, provided that the terms of Section 5.2(e)(ix), Section 5.2(l) and all other terms and provisions hereof shall be applicable. (h) Disposition of Assets; Etc. Sell, lease, license, transfer, assign or otherwise dispose of all or any portion of its business, assets, rights, revenues or property, real, personal or mixed, tangible or intangible, whether in one or a series of transactions, other than inventory sold in the ordinary course of business upon customary credit terms and sales of scrap or obsolete material or equipment which are not material in the aggregate, and shall not permit or suffer any Subsidiary to do any of the foregoing; provided, however, that this Section 5.2(h) shall not prohibit any such sale, lease, license, transfer, assignment or other disposition if (i) the consolidated book value (disregarding any write-downs of such book value other than ordinary depreciation and amortization) of all of the business, assets, rights, revenues and property of the Company and its Restricted Subsidiaries disposed of in any consecutive twelve-month period shall be less than 10% of the consolidated book value of the assets of the Company and its Restricted Subsidiaries as of the beginning of such twelve month period and the aggregate book value of all assets disposed of after the Effective Date shall be less than 25% of the consolidated book value of assets of the Company and its Restricted Subsidiaries at the time of any such disposition and if, immediately after such transaction, no Default or Event of Default shall exist or shall have occurred and be continuing, (ii) sales as to which proceeds are used within 180 days to purchase or construct assets of at least equivalent value to those sold, (iii) transfers of assets from any Subsidiary to the Company or a Guarantor which is a wholly Owned Subsidiary; provided, however, in the case of any of the foregoing permitted sales, leases, licenses, transfers, assignments or other dispositions (an "Asset Sale") the Company shall not, and shall not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless (A) the Company (or the Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the fair market value (evidenced by a resolution of the Board of Directors set forth in an officer's certificate delivered to the Agent) of the assets and (B) at least 75% of the consideration therefor received by the Company or such Restricted Subsidiary is in the form of cash, provided that cash equivalents and the assumption of Indebtedness of the Company or any Guarantor and the unconditional release of the Company or such Guarantor from such Indebtedness in connection with such Asset Sale, in each case acceptable to the Agent, shall be considered cash for purposes of this Section 5.2(h); provided that the amount of (x) any liabilities (as shown on the Company's or such Restricted Subsidiary's' most recent balance sheet), of the Company or any Restricted Subsidiary that are assumed by the transferee of any such assets such that the Company or such Restricted Subsidiary have no further liability and (y) any securities, notes or other obligations received by the Company or any such Restricted Subsidiary from such transferee that are converted by the Company or such Restricted Subsidiary into cash (to the extent of the cash received), shall be deemed to be cash for purposes of this provision and the definition of Net Cash Proceeds, and the Agent promptly shall obtain a first priority security interest in any non cash consideration for any Asset Sale. (i) Nature of Business. Make any material change in the nature of its business from that engaged in on the date of this Agreement or engage in any other businesses other than those in which it is engaged on the date of this Agreement. (j) Dividends and Other Restricted Payments. Make, pay, declare or authorize any dividend, payment or other distribution in respect of any class of its Capital Stock or any dividend, payment or distribution in connection with the redemption, purchase, retirement or other 52 58 acquisition, directly or indirectly, of any Capital Stock other than such dividends, payments or other distributions (i) to the extent payable solely in shares of common stock of the Company, (ii) to the extent payable to the Company by a Restricted Subsidiary of the Company, (iii) dividends and distributions on Preferred Stock to the extent permitted under Section 5.2(s), (iv) if no Event of Default or Default exists or would be caused thereby, an aggregate amount not to exceed $1,000,000 made after the Effective Date, (v) which in aggregate amount do not exceed 25% of the Net Income accrued during fiscal quarters ending after the Effective Date for which the Total Debt to EBITDA Ratio was not greater than 3.0 to 1.0, provided that both before and after the making or declaration of such dividend, payment or other distribution (A) the pro forma Total Debt to EBITDA Ratio is not greater than 3.0 to 1.0, on a pro forma basis acceptable to the Agent, (B) the Company is able to borrow at least $10,000,000 of additional Loans and (C) no Default or Event of Default shall have occurred or be caused thereby, and (vi) if no Event of Default or Default exists or would be caused thereby, an aggregate amount not to exceed $2,000,000 made after the Effective Date for the purpose of redeeming the Capital Stock of the Company owned by any employee of the Company, other than a Permitted Holder, upon the termination of the employment by the Company or any of its Restricted Subsidiaries of such employee, provided that (A) any amounts used to redeem such Capital Stock under this clause (vi) shall first reduce the amount allowed or accumulated under Section 5.2(j)(iv) until the amount allowed thereunder is exhausted and then shall reduce the amount allowed under Section 5.2(j)(v) and (B) the amounts payable for the redemption of such Capital Stock will not be paid any sooner than contractually required. The Company will not, and will not permit any of its Restricted Subsidiaries, to issue any Preferred Stock or any Disqualified Stock, other than (1) any Preferred Stock which does not require any dividends, payments, redemptions or other distributions of any kind until at least one year after the Termination Date, (2) the existing Lobdell Preferred Stock and (3) any other Preferred Stock or Disqualified Stock which meets all of the requirements for the issuance by the Company of Subordinated Debt (i.e. all payments and other obligations thereunder are expressly subordinate and junior in right and priority of payment to the Advances and other Indebtedness of such Person to the Lenders in manner and by agreement satisfactory in form and substance to the Agent and such Preferred Stock or Disqualified Stock is subject to such other terms and provisions, including without limitation maturities, covenants, defaults, rates and fees, acceptable to the Agent), and such Preferred Stock and Disqualified Stock allowed under this clause (3) shall be treated as if it were Subordinated Debt for all purposes of this Agreement and is defined herein as "Permitted Disqualified Stock". (k) Capital Expenditures. Acquire or contract to acquire any fixed asset or make any other capital expenditure if the aggregate purchase price and other acquisition costs of all such fixed assets acquired and other capital expenditures made by the Company or any of its Restricted Subsidiaries during any fiscal year of the Company would exceed, on a consolidated basis, an amount equal to (i) $30,000,000 for the fiscal year of the Company ending March 31, 1998, or (ii) for any fiscal year thereafter, the sum of (A) $30,000,000, plus (B) the amount by which the allowed capital expenditures for the most recently ended fiscal year exceeded the actual capital expenditures for such fiscal year, provided that the amount added pursuant to this clause (B) shall not exceed one third of the allowed capital expenditures for the most recently ended fiscal year, plus (C) 25% of the amount by which EBITDA was in excess of $45,000,000 for the most recently ended fiscal year, plus (D) the depreciation expense for the most recently ended fiscal year relating solely to fixed assets (other than fixed assets of Howell) acquired pursuant to an Acquisition after the Effective Date. (l) Loans, Advances and Investments. Make any loan or advance of any of its funds or property or make any other extension of credit to, or increase its investment or acquire any additional interest whatsoever in, any Person, or enter into any joint venture or similar arrangement with any other person, other than (i) loans and advances to Guarantors which are evidenced by promissory 53 59 notes payable on demand in form and substance satisfactory to the Agent and which are pledged to the Agent for the benefit of the Lenders and investments in Guarantors, and (ii) loans and advances to, and investments in, Unrestricted Subsidiaries, Restricted Subsidiaries which are not Wholly Owned Subsidiaries or joint ventures which do not exceed $40,000,000 for all of foregoing in aggregate outstanding amount (with the outstanding amount thereof being deemed decreased by any cash repayments of such loans or advances or cash dividends paid to the Company or any Restricted Subsidiary with respect to any such investments), provided that (A) if such transaction involves a loan or advance, such loans and advances are evidenced by promissory notes in form and substance satisfactory to the Agent and which are pledged to the Agent for the benefit of the Lenders, (B) both before and after giving effect to such loan, advance or investment, the pro forma Total Debt to EBITDA Ratio is at least 0.25 below the level required under Section 5.2(b), on a pro forma basis acceptable to the Agent, (C) both before and after giving effect to such loan or advance the Company is able to borrow at least $10,000,000 of additional Loans, and (D) no Event of Default or Default exists or would be caused thereby and the Company provides such certificates and legal opinions as requested by the Agent in connection therewith. (m) Transactions with Affiliates. Enter into or permit to exist any transaction or series of related transactions (including without limitation the purchase, sale, lease or exchange of any property, employee compensation arrangements or rendering of any service) with any Affiliate of the Company (an "Affiliate Transaction") unless the terms of such transaction (i) are no less favorable to the Company or such Restricted Subsidiary than those that could be obtained at the time of such transaction in a comparable transaction in arm's-length dealings with a person who is not such an Affiliate, (ii) if such Affiliate Transaction (or series of related Affiliated Transactions) involves aggregate payments in an amount in excess of $1,000,000 in any one year, (A) are set forth in writing, (B) comply with clause (i) of this Section 5.2(m) and (C) have been approved by a majority of disinterested members of the Board of Directors of the Company, and (iii) if such Affiliate Transaction (or series of related Affiliate Transactions) involves aggregate payments in an amount in excess of $5,000,000 in any one year, (A) comply with clause (ii) and (B) have been determined by a nationally recognized investment banking firm to be fair, from a financial standpoint, to the Company and its Restricted Subsidiaries. (n) Sale and Leaseback Transactions. Become or remain liable in any way, whether directly or by assignment or as a guarantor or other contingent obligor, for the obligations of the lessee or user under any lease or contract for the use of any real or personal property if such property is owned on the date of this Agreement or thereafter acquired by the Company or any of its Subsidiaries and has been or is to be sold or transferred to any other Person and was, is or will be used by the Company or any such Subsidiary for substantially the same purpose as such property was used by the Company or such Subsidiary prior to such sale or transfer. (o) Negative Pledge Limitation. Enter into any agreement with any Person, other than the Lenders or the Agent pursuant hereto and other than the existing provisions without amendment contained in the Lobdell Preferred Stock Documents and in the agreements listed on Schedule 5.2(o), which prohibits or limits the ability of the Company or any Restricted Subsidiary to create, incur, assume or suffer to exist any Lien upon any of its assets, rights, revenues or property, real, personal or mixed, tangible or intangible, whether now owned or hereafter acquired. (p) FSC Commissions. Pay or become obligated for the payment during any fiscal year of the Company, commissions to all related wholly owned foreign sales corporations in excess of $550,000 in aggregate amount plus reimbursement of the reasonable administrative expenses of such wholly owned foreign sales corporations. 54 60 (q) Inconsistent Agreements. Enter into any agreement containing any provision which would be violated or breached by this Agreement or any of the transactions contemplated hereby or by performance by the Company or any of its Subsidiaries of its obligations in connection therewith. (r) Subsidiary Dividends. Other than those restrictions existing as of the Effective Date without giving effect to any amendment thereof on or after the Effective Date, permit any of its Restricted Subsidiaries, directly or indirectly, to create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction which by its terms materially restricts the ability of any such Subsidiary to (i) pay dividends or make any other distributions on such Restricted Subsidiary's Capital Stock, (ii) pay any Indebtedness owed to the Company or any of its other Restricted Subsidiaries, (iii) make any loans or advances to the Company or any of such other Restricted Subsidiaries or (iv) transfer any material portion of its assets to the Company or any of such other Restricted Subsidiaries. (s) Preferred Stock. Make any amendment or modification to any Lobdell Preferred Stock Document, other than any adjustment in the price of the Lobdell Preferred Stock based on post closing adjustments and which do not result in any additional obligations of Lobdell or of the Company or any of its Restricted Subsidiaries, or enter into any other agreement or document relating thereto other than the documents listed on Schedule 4.18 hereto or make, pay, declare or authorize any dividend, payment or other distribution with respect to any Preferred Stock or any dividend, payment or distribution in connection with the redemption, purchase, retirement or other acquisition, directly or indirectly, of any Preferred Stock other than as required under the Lobdell Preferred Stock Documents listed on Schedule 4.18 hereto, provided that no dividend, payment or other distribution in respect to the Preferred Stock or dividend, payment or distribution in connection with the redemption, purchase, retirement or other acquisition, directly or indirectly, of any Preferred Stock, including those required under the Lobdell Preferred Stock Documents, will be made if any Event of Default exists under Section 6.1(a) or would be caused thereby. (t) Other Indebtedness and Agreements. Make any amendment or modification to any indenture, note or other agreement evidencing or governing any Indebtedness (other than Indebtedness hereunder of the Company or any of its Subsidiaries) or to the Tax Sharing Agreement, or directly or indirectly voluntarily prepay, defease or in substance defease, purchase, redeem, retire or otherwise acquire any such Indebtedness, (except, when no Default or Event of Default exists, (i) to the extent described on Schedule 4.20 and (ii) for the prepayment of Subordinated Debt solely from the Net Cash Proceeds received by the Company from the primary sale or sales of shares of common stock (which may not be Disqualified Stock)of the Company pursuant to any one or more public offerings thereof), or designate any Indebtedness (other than the Indebtedness under the Loan Documents and under Rate Hedging Agreements with Lenders) as "Designated Senior Debt" under the Senior Subordinated Debt Documents. (u) Management Fees. Pay any management, consulting or similar fees or amounts to any of its Affiliates other than (i) to the Company or a Guarantor and (ii) as described on Schedule 5.2(u), without giving effect to any amendment or modification of the agreement described on Schedule 5.2(u), provided that no such management, consulting or similar fees or amounts (other than out of pocket expenses) shall be paid pursuant to this clause (ii) if any Event of Default or Default exists or would be caused thereby, and Oxford Investment has acknowledged and agreed that no such management, consulting or similar fees or amounts (other than out of pocket expenses) will be so paid. 55 61 (v) Restricted Subsidiaries. Except with the consent of the Agent, which consent will not be unreasonably withheld, permit or suffer any Restricted Subsidiary to not be a Wholly Owned Subsidiary, other than Laserweld International, L.L.C. ("Laserweld") or Creative, provided that no loans or advances to, investments in or sales or other transfers of assets to Laser or Creative have been made by the Company or any Restricted Subsidiary at any time on or after the Effective Date. 5.3 Additional Covenants. (a) Other Terms. If at any time any Borrower or Guarantor shall enter into or be a party to any instrument or agreement with respect to any Indebtedness which in the aggregate, together with any related Indebtedness, exceeds $500,000, including all such instruments or agreements in existence as of the date hereof and all such instruments or agreements entered into after the date hereof, relating to or amending any terms or conditions applicable to any of such Indebtedness which includes covenants, terms, conditions or defaults not substantially provided for in this Agreement or more favorable to the lender or lenders thereunder than those provided for in this Agreement, then the Company shall promptly so advise the Agent and the Lenders. Thereupon, if the Agent shall request, upon notice to the Company, the Agent and the Lenders shall enter into an amendment to this Agreement or an additional agreement (as the Agent may request), providing for substantially the same covenants, terms, conditions and defaults as those provided for in such instrument or agreement to the extent required and as may be selected by the Agent. In addition to the foregoing, any covenants or defaults or similar provisions (which include without limitation any provisions requiring any mandatory prepayments or defeasance under the Senior Subordinated Debt Documents) not substantially provided for in this Agreement or more favorable to the holders of Subordinated Debt issued in connection therewith are hereby incorporated by reference into this Agreement to the same extent as if set forth fully herein, and no subsequent amendment, waiver, termination or modification thereof shall affect any such covenants, terms, conditions or defaults as incorporated herein. (b) Restricted and Unrestricted Subsidiaries. Neither the Company nor any Restricted Subsidiary of the Company shall be liable at any time, directly or indirectly, for any of the Indebtedness or other liabilities of any such Unrestricted Subsidiary or for any Contingent Liabilities with respect to any Unrestricted Subsidiary except as permitted by Section 5.2(e). No Restricted Subsidiary may be designated as an Unrestricted Subsidiary at any time without the prior written approval of the Agent and the Required Lenders. Any Unrestricted Subsidiary may be designated as a Restricted Subsidiary by the Company at any time provided that (i) such designation is approved by the Agent, (ii) no Event of Default or Default exists or would be caused thereby, (iii) immediately before and after giving effect to such designation, the Company is able to borrow on a pro forma basis at least $10,000,000 of additional Loans, and (iv) immediately before and after giving effect to such designation, the pro forma Total Debt to EBITDA Ratio is at least 0.25 below the level required under Section 5.2(b), all on a pro forma basis acceptable to the Agent. ARTICLE VI. DEFAULT 6.1 Events of Default. The occurrence of any one of the following events or conditions shall be deemed an "Event of Default" hereunder unless waived pursuant to Section 8.1: (a) Nonpayment. The Company shall fail to pay when due, whether at stated maturity, by acceleration or otherwise, any principal on the Loans or any reimbursement 56 62 obligation under Section 3.3 (whether by deemed disbursement of a Revolving Credit Borrowing or otherwise), or, within five days after becoming due, any interest on the Loans or any fees or any other amount payable hereunder; or (b) Misrepresentation. Any representation or warranty made by the Company or any of the Guarantors in Article IV hereof, or in any Security Document, or any other certificate, report, financial statement or other document furnished by or on behalf of the Company or any of the Guarantors in connection with this Agreement, shall prove to have been incorrect in any material respect when made or deemed made; or (c) Certain Covenants. The Company shall fail to perform or observe any term, covenant or agreement contained in Article V hereof; or (d) Other Defaults. Any default which remains uncured beyond any applicable cure period shall exist under any material purchase or tooling contract that could have a Material Adverse Effect, or the Company or any Guarantor shall fail to perform or observe any other term, covenant or agreement contained in this Agreement or in any other Loan Document, and any such failure shall remain unremedied for 15 calendar days after written notice thereof shall have been given to the Company by the Agent; or (e) Cross Default. The Company or any of its Restricted Subsidiaries shall fail to pay any part of the principal of, the premium, if any, or the interest on, or any other payment of money due under any of its Indebtedness (other than Indebtedness hereunder), beyond any period of grace provided with respect thereto, which individually or together with other such Indebtedness as to which any such failure exists has an aggregate outstanding principal amount in excess of $2,000,000; or if the Company or any of its Restricted Subsidiaries fails to perform or observe any other term, covenant or agreement contained in, or if any other event or condition occurs or exists under, any agreement, document or instrument evidencing or securing any such Indebtedness having such aggregate outstanding principal amount, or under which any such Indebtedness was incurred, issued or created, beyond any period of grace, if any, provided with respect thereto; or (f) Judgments. One or more judgments or orders for the payment of money in an aggregate amount of $2,000,000 shall be rendered against the Company or any of its Restricted Subsidiaries, or any other judgment or order (whether or not for the payment of money) shall be rendered against or shall affect the Company or any of its Restricted Subsidiaries which causes or could cause a Material Adverse Effect, and either (i) such judgment or order shall have remained unsatisfied and the Company or such Restricted Subsidiary shall not have taken action necessary to stay enforcement thereof by reason of pending appeal or otherwise, prior to the expiration of the applicable period of limitations for taking such action or, if such action shall have been taken, a final order denying such stay shall have been rendered, or (ii) enforcement proceedings shall have been commenced by any creditor upon any such judgment or order; or (g) ERISA. The occurrence of a Reportable Event that results in or could result in liability of the Company or any of its ERISA Affiliates to the PBGC or to any Plan and such Reportable Event is not corrected within 30 days after the occurrence thereof; or the occurrence of any Reportable Event which could constitute grounds for termination of any Plan of the Company or any of its ERISA Affiliates by the PBGC or for the appointment by the appropriate United States District Court of a trustee to administer any such Plan and such Reportable Event is not corrected within 30 days after the occurrence thereof; or the Company or any of its ERISA Affiliates shall fail to pay when due any 57 63 liability to the PBGC or to a Plan; or any Person engages in a Prohibited Transaction with respect to any Plan which results in or could result in liability of the Company, any of its ERISA Affiliates, any Plan of the Company or any of its ERISA Affiliates or any fiduciary of any such Plan; or the PBGC shall have instituted proceedings to terminate, or to cause a trustee to be appointed to administer, any Plan of the Company or any of its ERISA Affiliates; or failure by the Company or any of their ERISA Affiliates to make a required installment or other payment to any Plan within the meaning of Section 302(f) of ERISA or Section 412(n) of the Code that results in or could result in liability of the Company or any of their ERISA Affiliates to the PBGC or any Plan; or the withdrawal of the Company or any of its ERISA Affiliates from a Plan during a plan year in which it was a "substantial employer" as defined in Section 4001(9a)(2) of ERISA; or the Company or any of its ERISA Affiliates becomes an employer with respect to any Multiemployer Plan without the prior written consent of the Agent, and in each case above, such event or condition, together with all other events or conditions, if any, could subject the Company and its Restricted Subsidiaries to any tax, penalties or other liability which in the aggregate may exceed $2,000,000; or (h) Insolvency, Etc. the Company or any of its Restricted Subsidiaries shall be dissolved or liquidated (or any judgment, order or decree therefor shall be entered), or shall generally not pay its debts as they become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors, or shall institute, or there shall be instituted against the Company or any of its Restricted Subsidiaries any proceeding or case seeking to adjudicate it a bankrupt or insolvent or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief or protection of debtors or seeking the entry of an order for relief, or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its assets, rights, revenues or property, and, if such proceeding is instituted against the Company or such Restricted Subsidiary and is being contested by the Company or such Restricted Subsidiary, as the case may be, in good faith by appropriate proceedings, such proceeding shall remain undismissed or unstayed for a period of 60 days; or the Company or such Restricted Subsidiary shall take any action (corporate or other) to authorize or further any of the actions described above in this subsection; or (i) Security Documents. Any event of default described in any Loan Document shall have occurred and be continuing, or any material provision of any Loan Document shall at any time for any reason cease to be valid and binding and enforceable against any obligor thereunder, or the validity, binding effect or enforceability thereof shall be contested by any Person, or any obligor, shall deny that it has any or further liability or obligation thereunder, or any material provision thereof shall be terminated, invalidated or set aside, or be declared ineffective or inoperative or in any way cease to give or provide to the Lenders and the Agent the benefits purported to be created thereby; or (j) Control. Any Change of Control shall occur. 6.2 Remedies. (a) Upon the occurrence and during the continuance of any Event of Default, the Agent may and, upon being directed to do so by the Required Lenders, shall by written notice to the Company (i) terminate the Commitments or (ii) declare the outstanding principal of, and accrued interest on, the Notes, all unpaid reimbursement obligations in respect of drawings under Letters of Credit and all other amounts owing under this Agreement to be immediately due and payable, or (iii) demand immediate delivery of cash collateral, and the Company agrees to deliver such cash collateral upon demand, in an amount equal to the maximum amount that may be available to be drawn at any time prior to the stated expiry of all outstanding Letters of Credit, or any one or more of the foregoing, whereupon the Commitments shall terminate forthwith and all such amounts, including such cash 58 64 collateral, shall become immediately due and payable, provided that in the case of any event or condition described in Section 6.1(h) with respect to the Company or any Guarantor, the Commitments shall automatically terminate forthwith and all such amounts, including such cash collateral, shall automatically become immediately due and payable without notice; in all cases without demand, presentment, protest, diligence, notice of dishonor or other formality, all of which are hereby expressly waived. Such cash collateral delivered in respect of outstanding Letters of Credit shall be deposited in a special cash collateral account to be held by the Agent as collateral security for the payment and performance of the Company's obligations under this Agreement to the Lenders and the Agent. (b) The Agent may and, upon being directed to do so by the Required Lenders, shall, in addition to the remedies provided in Section 6.2(a), exercise and enforce any and all other rights and remedies available to it or the Lenders, whether arising under any Loan Document or under applicable law, in any manner deemed appropriate by the Agent, including suit in equity, action at law, or other appropriate proceedings, whether for the specific performance (to the extent permitted by law) of any covenant or agreement contained in any Loan Document or in aid of the exercise of any power granted in any Loan Document. (c) Upon the occurrence and during the continuance of any Event of Default, each Lender may at any time and from time to time, without notice to the Company (any requirement for such notice being expressly waived by the Company) set off and apply against any and all of the obligations of the Company now or hereafter existing under this Agreement, whether owing to such Lender or any other Lender or the Agent, any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender to or for the credit or the account of the Company and any property of the Company from time to time in possession of such Lender, irrespective of whether or not such Lender shall have made any demand hereunder and although such obligations may be contingent and unmatured. The Company hereby grants to the Lenders and the Agent a lien on and security interest in all such deposits, indebtedness and property as collateral security for the payment and performance of the obligations of the Company under this Agreement. The rights of such Lender under this Section 6.2(c) are in addition to other rights and remedies (including, without limitation, other rights of setoff) which such Lender may have. (d) Notwithstanding anything in this Agreement or any Loan Document to the contrary, on the Termination Date each Lender agrees, unconditionally and irrevocably, that it will purchase, either through an assignment or a participation or such other manner required by the Agent, an interest in all of the Advances then outstanding, including all U.S. Advances and all Canadian Advances (whether or not such Lender is a Canadian Lender), such that each Lender's share of each Advance is equal to its pro rata share thereof based on the amount its Commitment bears to the aggregate Commitment of all Lenders. Such assignments and participations will be made pursuant to such procedures and documents required by the Agent, and all appropriate adjustments among the Lenders will be made. Each Lender shall be absolutely and unconditionally obligated under this Section 6.2(d) and such obligation shall not be affected by any circumstance, including, without limitation, (A) any set-off, counterclaim, recoupment, defense or other right which such Lender has or may have against the Agent, NBD Canada or the Company or any if its Subsidiaries or anyone else for any reason whatsoever; (B) the occurrence or continuance of a Default or an Event of Default; (C) any adverse change in the condition (financial or otherwise) of the Company or any of its Subsidiaries; (D) any breach of this Agreement or any other agreement by any other Lender (provided that any Defaulting Lender shall not be entitled to receive any payments or other transfers under this Section 6.2(d) and the Agent will make all appropriate adjustments hereunder), the Company or any Guarantor; or (E) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. The Borrowers shall be 59 65 liable, jointly and severally, for any withholding taxes, if any which may payable under Section 3.6 as a result of such participations or assignments. 6.3 Distribution of Proceeds of Collateral. All proceeds of any realization on the collateral pursuant to the Security Documents and any payments received by the Agent or any Lender subsequent to and during the continuance of any Event of Default, shall be allocated and distributed by the Agent as follows: (a) First, to the payment of all costs and expenses and other amounts owing to the Agent, including without limitation all attorneys' fees, in connection with the enforcement of the Security Documents and otherwise administering this Agreement; (b) Second, to the payment of all fees, including commitment fees, owing to the Lenders pursuant to this Agreement and the Notes on a pro rata basis (other than fees which are payable solely to the Agent or any Lender directly) in accordance with the respective Advances of the Lenders or any other amounts owing to the Agent, for application to payment of such liabilities; (c) Third, to the Lenders on a pro rata basis in accordance with the respective Advances of the Lenders consisting of interest owing to the Lenders under this Agreement and theNotes and net obligations and liabilities relating to Rate Hedging Agreements, for application to payment of such liabilities; (d) Fourth, to the Lenders on a pro rata basis in accordance with the respective Advances of the Lenders consisting of principal (including without limitation any cash collateral for any outstanding Letters of Credit), for application to payment of such liabilities; (e) Fifth, to the payment of any and all other amounts owing to the Lenders under this Agreement on a pro rata basis in accordance with the respective Advances of the Lenders for application to payment of such liabilities; and (f) Sixth, to the Company, its Restricted Subsidiaries or such other Person as may be legally entitled thereto. Notwithstanding the foregoing, no payments of principal, interest or fees delivered to the Agent for the account of any Defaulting Lender shall be delivered by the Agent to such Defaulting Lender. Instead, such payments shall, for so long as such Defaulting Lender shall be a Defaulting Lender, be held by the Agent, and the Agent is hereby authorized and directed by all parties hereto to hold such funds in escrow and apply such funds as follows: (i) First, if applicable to any payments due to the Agent, and (ii) Second, to Loans required to be made by such Defaulting Lender on any borrowing date to the extent such Defaulting Lender fails to make such Loans. Notwithstanding the foregoing, upon the termination of all Commitments and the payment and performance of all of the Advances and other obligations owing hereunder (other than those owing to a Defaulting Lender), any funds then held in escrow by the Agent pursuant to the preceding sentence shall be distributed to each Defaulting Lender, pro rata in proportion to amounts that would be due to each Defaulting Lender but for the fact that it is a Defaulting Lender. 60 66 ARTICLE VII. THE AGENT AND THE LENDERS 7.1 Appointment and Authorization. Each Lender hereby irrevocably appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to the Agent by the terms hereof or thereof, together with all such powers as are reasonably incidental thereto. The provisions of this Article VII are solely for the benefit of the Agent and the Lenders, and the Borrowers shall not have any rights as a third party beneficiary of any of the provisions hereof. In performing its functions and duties under this Agreement, the Agent shall act solely as agent of the Lenders and does not assume and shall not be deemed to have assumed any obligation towards or relationship of agency or trust with or for any Borrower. 7.2 Agent and Affiliates. NBD Bank in its capacity as a Lender hereunder shall have the same rights and powers hereunder as any other Lender and may exercise or refrain from exercising the same as though it were not the Agent. NBD Bank and its Affiliates may (without having to account therefor to any Lender) accept deposits from, lend money to, and generally engage in any kind of banking, trust, financial advisory or other business with the Company or any of its Subsidiaries as if it were not acting as Agent hereunder, and may accept fees and other consideration therefor without having to account for the same to the Lenders. 7.3 Scope of Agent's Duties. The Agent shall have no duties or responsibilities except those expressly set forth herein, and shall not, by reason of this Agreement, have a fiduciary relationship with any Lender, and no implied covenants, responsibilities, duties, obligations or liabilities shall be read into this Agreement or shall otherwise exist against the Agent. As to any matters not expressly provided for by this Agreement (including, without limitation, collection and enforcement actions under the Notes and the Security Documents), the Agent shall not be required to exercise any discretion or take any action, but the Agent shall take such action or omit to take any action pursuant to the reasonable written instructions of the Required Lenders and may request instructions from the Required Lenders. The Agent shall in all cases be fully protected in acting, or in refraining from acting, pursuant to the written instructions of the Required Lenders (or all of the Lenders, as the case may be, in accordance with the requirements of this Agreement), which instructions and any action or omission pursuant thereto shall be binding upon all of the Lenders; provided, however, that the Agent shall not be required to act or omit to act if, in the judgment of the Agent, such action or omission may expose the Agent to personal liability or is contrary to the Loan Documents or applicable law. 7.4 Reliance by Agent. The Agent shall be entitled to rely upon any certificate, notice, document or other communication (including any cable, telegram, telex, facsimile transmission or oral communication) believed by it to be genuine and correct and to have been sent or given by or on behalf of a proper Person. The Agent may treat the payee of any Note as the holder thereof unless and until the Agent receives written notice of the assignment thereof pursuant to the terms of this Agreement signed by such payee and the Agent receives the written agreement of the assignee that such assignee is bound hereby to the same extent as if it had been an original party hereto. The Agent may employ agents (including without limitation collateral agents and including without limitation NBD Canada with respect to administering the Canadian Advances, acting as collateral agent in Canada and enforcing any of the Agent's rights and remedies under the Loan Documents in Canada) and may consult with legal counsel (who may be counsel for the Borrowers), independent public accountants and other experts selected by it and shall not be liable to the Lenders, except as to money or property received by it or its authorized 61 67 agents, for the negligence or misconduct of any such agent selected by it with reasonable care or for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts. In performing any of the functions of the Agent, NBD Canada or any other Affiliate of the Agent shall be entitled to all of the same powers, immunities, exculpations, indemnifications and other rights of the Agent described in this Article VII and otherwise in the Loan Documents. It is acknowledged and agreed that NBD Canada will be acting as collateral agent for the Lenders with respect to all collateral in Canada, and all liens and security interests in Canada will be in favor of NBD Canada for the benefit of itself and each of the Lenders, and as administrative agent for payments and fundings of Canadian Advances. 7.5 Default. The Agent shall not be deemed to have knowledge of the occurrence of any Default or Event of Default, unless the Agent has received written notice from a Lender or the Borrowers specifying such Default or Event of Default and stating that such notice is a "Notice of Default". In the event that the Agent receives such a notice, the Agent shall give written notice thereto to the Lenders. 7.6 Liability of Agent. Neither the Agent nor any of its directors, officers, agents, or employees shall be liable to the Lenders for any action taken or not taken by it or them in connection herewith with the consent or at the request of the Required Lenders or in the absence of its or their own gross negligence or willful misconduct. Neither the Agent nor any of its directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into or verify (i) any recital, statement, warranty or representation contained in any Loan Document, or in any certificate, report, financial statement or other document furnished in connection with this Agreement, (ii) the performance or observance of any of the covenants or agreements of the Borrowers or any Guarantor, (iii) the satisfaction of any condition specified in Article II hereof, or (iv) the validity, effectiveness, legal enforceability, value or genuineness of any Loan Document or any collateral subject thereto or any other instrument or document furnished in connection herewith. 7.7 Nonreliance on Agent and Other Lenders. Each Lender acknowledges and agrees that it has, independently and without reliance on the Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own credit analysis of the Company and its Subsidiaries and decision to enter into this Agreement and that it will, independently and without reliance upon the Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own analysis and decision in taking or not taking action under this Agreement. The Agent shall not be required to keep itself informed as to the performance or observance by the Company or any of its Subsidiaries of the Loan Documents or any other documents referred to or provided for herein or to inspect the properties or books of the Company or any of its Subsidiaries and, except for notices, reports and other documents and information expressly required to be furnished to the Lenders by the Agent hereunder, the Agent shall not have any duty or responsibility to provide any Lender with any information concerning the affairs, financial condition or business of the Company or any of its Subsidiaries which may come into the possession of the Agent or any of its affiliates. 7.8 Indemnification. The Lenders agree to indemnify the Agent (to the extent not reimbursed by the Borrowers, but without limiting any obligation of the Borrowers to make such reimbursement), ratably according to the respective principal amounts of the Advances then outstanding made by each of them (or if no Advances are at the time outstanding, ratably according to the respective amounts of their Commitments), from and against any and all claims, damages, losses, liabilities, costs or expenses of any kind or nature whatsoever (including, without limitation, fees and disbursements of 62 68 counsel) which may be imposed on, incurred by, or asserted against the Agent in any way relating to or arising out of this Agreement or the transactions contemplated hereby or any action taken or omitted by the Agent under this Agreement, provided, however, that no Lender shall be liable for any portion of such claims, damages, losses, liabilities, costs or expenses resulting from the Agent's gross negligence or willful misconduct. Without limitation of the foregoing, each Lender agrees to reimburse the Agent promptly upon demand for its ratable share of any out-of-pocket expenses (including without limitation fees and expenses of counsel) incurred by the Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, to the extent that the Agent is not reimbursed for such expenses by the Borrowers, but without limiting the obligation of the Borrowers to make such reimbursement. Each Lender agrees to reimburse the Agent promptly upon demand for its ratable share of any amounts owing to the Agent by the Lenders pursuant to this Section. If the indemnity furnished to the Agent under this Section shall, in the judgment of the Agent, be insufficient or become impaired, the Agent may call for additional indemnity from the Lenders and cease, or not commence, to take any action until such additional indemnity is furnished. 7.9 Successor Agent. The Agent may resign as such at any time upon ten days' prior written notice to the Company and the Lenders. In the event of any such resignation, the Required Lenders shall, by an instrument in writing delivered to the Company and the Agent, appoint a successor (which successor shall be approved by the Company provided no Default or Event of Default then exists), which shall be a commercial bank organized under the laws of the United States or any State thereof and having a combined capital and surplus of at least $500,000,000. If a successor is not so appointed or does not accept such appointment before the Agent's resignation becomes effective, the retiring Agent may appoint a temporary successor to act until such appointment by the Required Lenders is made and accepted or if no such temporary successor is appointed as provided above by the retiring Agent, the Required Lenders shall thereafter perform all the duties of the Agent hereunder until such appointment by the Required Lenders is made and accepted. Any successor to the Agent shall execute and deliver to the Borrowers and the Lenders an instrument accepting such appointment and thereupon such successor Agent, without further act, deed, conveyance or transfer shall become vested with all of the properties, rights, interests, powers, authorities and obligations of its predecessor hereunder with like effect as if originally named as Agent hereunder. Upon request of such successor Agent, the Borrowers and the retiring Agent shall execute and deliver such instruments of conveyance, assignment and further assurance and do such other things as may reasonably be required for more fully and certainly vesting and confirming in such successor Agent all such properties, rights, interests, powers, authorities and obligations. The provisions of this Article VII shall thereafter remain effective for such retiring Agent with respect to any actions taken or omitted to be taken by such Agent while acting as the Agent hereunder. 7.10 Sharing of Payments. The Lenders agree among themselves that, in the event that any Lender shall obtain payment in respect of any Advance or any other obligation owing to the Lenders under this Agreement through the exercise of a right of set-off, banker's lien, counterclaim or otherwise in excess of its ratable share of payments received by all of the Lenders on account of the Advances and other obligations (or if no Advances are outstanding, ratably according to the respective amounts of the Commitments), such Lender shall promptly purchase from the other Lenders participations in such Advances and other obligations in such amounts, and make such other adjustments from time to time, as shall be equitable to the end that all of the Lenders share such payment in accordance with such ratable shares. The Lenders further agree among themselves that if payment to a Lender obtained by such Lender through the exercise of a right of set-off, banker's lien, counterclaim or 63 69 otherwise as aforesaid shall be rescinded or must otherwise be restored, each Lender which shall have shared the benefit of such payment shall, by repurchase of participations theretofore sold, return its share of that benefit to each Lender whose payment shall have been rescinded or otherwise restored. The Borrowers agree that any Lender so purchasing such a participation may, to the fullest extent permitted by law, exercise all rights of payment, including set-off, banker's lien or counterclaim, with respect to such participation as fully as if such Lender were a holder of such Advance or other obligation in the amount of such participation. The Lenders further agree among themselves that, in the event that amounts received by the Lenders and the Agent hereunder are insufficient to pay all such obligations or insufficient to pay all such obligations when due, the fees and other amounts owing to the Agent in such capacity shall be paid therefrom before payment of obligations owing to the Lenders under this Agreement. Except as otherwise expressly provided in this Agreement, if any Lender or the Agent shall fail to remit to the Agent or any other Lender an amount payable by such Lender or the Agent to the Agent or such other Lender pursuant to this Agreement on the date when such amount is due, such payments shall be made together with interest thereon for each date from the date such amount is due until the date such amount is paid to the Agent or such other Lender at a rate per annum equal to the rate at which borrowings are available to the payee in its overnight federal funds market. It is further understood and agreed among the Lenders and the Agent that if the Agent shall engage in any other transactions with the Borrowers and shall have the benefit of any collateral or security therefor which does not expressly secure the obligations arising under this Agreement except by virtue of a so-called dragnet clause or comparable provision, the Agent shall be entitled to apply any proceeds of such collateral or security first in respect of the obligations arising in connection with such other transaction before application to the obligations arising under this Agreement. ARTICLE VIII. MISCELLANEOUS 8.1 Amendments, Etc. (a) No amendment, modification, termination or waiver of any provision of this Agreement nor any consent to any departure therefrom shall be effective unless the same shall be in writing and signed by the Required Lenders and, to the extent any rights or duties of the Agent may be affected thereby, the Agent, provided, however, that no such amendment, modification, termination, waiver or consent shall, without the consent of the Agent and all of the Lenders, (i) authorize or permit the extension of time for, or any reduction of the amount of, any payment of the principal of, or interest on, the Notes or any Letter of Credit reimbursement obligation, or any fees or other amount payable hereunder, (ii) amend or extend the respective Commitments of any Lender set forth on the signature pages hereof or modify the provisions of this Section regarding the taking of any action under this Section or the provisions of Section 6.3 or Section 7.10 or the definition of Required Lenders or any provision of this Agreement requiring the consent of all of the Lenders, (iii) provide for the discharge of any material Guarantor under the Guaranties or the release of any substantial amount of the collateral subject to any Security Document, other than the release of Liens on Collateral that is permitted to be sold by this Agreement, and the Agent is hereby authorized to release any such Liens, or (iv) modify any other provision of this Agreement which by its terms requires the consent of all of the Lenders. (b) Any such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. (c) Notwithstanding anything herein to the contrary, no Defaulting Lender shall be entitled to vote (whether to consent or to withhold its consent) with respect to any amendment, 64 70 modification, termination or waiver of any provision of this Agreement or any departure therefrom or any direction from the Lenders to the Agent, and, for purposes of determining the Required Lenders at any time, the Commitments and the Advances of each Defaulting Lenders shall be disregarded. 8.2 Notices. (a) Except as otherwise provided in Section 8.2(c) hereof, all notices and other communications hereunder shall be in writing and shall be delivered or sent to the Borrowers at 2000 N. Woodward Avenue, Bloomfield Hills, Michigan 48304, Attention: President, Facsimile No. (810) 540-7280, Facsimile Confirmation No. (810) 540-0031, and to the Agent and the Lenders at the respective addresses for notices set forth on the signatures pages hereof, or to such other address as may be designated by the Borrowers, the Agent or any Lender by notice to the other parties hereto. All notices and other communications shall be deemed to have been given at the time of actual delivery thereof to such address, or, unless sooner delivered, (i) if sent by certified or registered mail, postage prepaid, to such address, on the third day after the date of mailing, or (ii) if sent by facsimile transmission, upon confirmation of receipt by telephone at the number specified for confirmation, provided, however, that notices to the Agent shall not be effective until received. Each Borrowing Subsidiary agrees that the Company may give any notices or other requests on its behalf under this Agreement, including without limitation requests for Advances, and the Borrowing Subsidiary will be bound thereby. (b) Notices by the Borrowers to the Agent with respect to terminations or reductions of the Commitments pursuant to Section 2.2, requests for Borrowings pursuant to Section 2.4, requests for continuations or conversions of Borrowings pursuant to Section 2.7 and notices of prepayment pursuant to Section 3.1 shall be irrevocable and binding on the Borrowers. (c) Any notice to be given by the Borrowers to the Agent pursuant to Sections 2.4, 2.7 or 3.1 and any notice to be given by the Agent or any Lender hereunder, may be given by telephone, and all such notices must be immediately confirmed in writing in the manner provided in Section 8.2(a). Any such notice given by telephone shall be deemed effective upon receipt thereof by the party to whom such notice is to be given. The Borrowers shall indemnify and hold harmless the Lenders and the Agent from any and all losses, damages, liabilities and claims arising from their good faith reliance on any such telephone notice. 8.3 No Waiver By Conduct; Remedies Cumulative. No course of dealing on the part of the Agent or any Lender, nor any delay or failure on the part of the Agent or any Lender in exercising any right, power or privilege hereunder shall operate as a waiver of such right, power or privilege or otherwise prejudice the Agent's or such Lender's rights and remedies hereunder; nor shall any single or partial exercise thereof preclude any further exercise thereof or the exercise of any other right, power or privilege. No right or remedy conferred upon or reserved to the Agent or any Lender under any Loan Document is intended to be exclusive of any other right or remedy, and every right and remedy shall be cumulative and in addition to every other right or remedy granted thereunder or now or hereafter existing under any applicable law. Every right and remedy granted by any Loan Document or by applicable law to the Agent or any Lender may be exercised from time to time and as often as may be deemed expedient by the Agent or any Lender and, unless contrary to the express provisions of any Loan Document, irrespective of the occurrence or continuance of any Default or Event of Default. 8.4 Reliance on and Survival of Various Provisions. All terms, covenants, agreements, representations and warranties of any Borrower or Guarantor made herein or in any Security Document or in any certificate, report, financial statement or other document furnished by or on behalf of any Borrower or Guarantor in connection with this Agreement shall be deemed to be material and to 65 71 have been relied upon by the Lenders, notwithstanding any investigation heretofore or hereafter made by any Lender or on such Lender's behalf, and those covenants and agreements of the Borrowers set forth in Sections 3.8, 3.10 and 8.5 hereof shall survive the repayment in full of the Advances and the termination of the Commitments. 8.5 Expenses; Indemnification. (a) The Borrowers jointly and severally agree to pay, or reimburse the Agent for the payment of, on demand, (i) the reasonable fees and expenses of counsel to the Agent, including without limitation the fees and expenses of Dickinson, Wright, Moon, Van Dusen & Freeman, in connection with the preparation, execution, delivery and administration of the Loan Documents and in connection with advising the Agent as to its rights and responsibilities with respect thereto, and in connection with any amendments, waivers or consents in connection therewith, (ii) all stamp and other taxes and fees payable or determined to be payable in connection with the execution, delivery, filing or recording of the Loan Documents (or the verification of filing, recording, perfection or priority thereof) or the consummation of the transactions contemplated hereby, and any and all liabilities with respect to or resulting from any delay in paying or omitting to pay such taxes or fees, (iii) all reasonable costs and expenses of the Agent and the Lenders (including reasonable fees and expenses of counsel and whether incurred through negotiations, legal proceedings or otherwise)) in connection with any Default or Event of Default or the enforcement of, or the exercise or preservation of any rights under, any Loan Document or in connection with any refinancing or restructuring of the credit arrangements provided under this Agreement in connection with any Event of Default and (iv) all reasonable costs and expenses of the Agent (including reasonable fees and expenses of counsel) in connection with any action or proceeding relating to a court order, injunction or other process or decree restraining or seeking to restrain the Agent from paying any amount under, or otherwise relating in any way to, any Letter of Credit and any and all costs and expenses which any of them may incur relative to any payment under any Letter of Credit. (b) The Borrowers jointly and severally hereby indemnify and agree to hold harmless the Lenders and the Agent, and their respective officers, directors, employees and agents, from and against any and all claims, damages, losses, liabilities, costs or expenses of any kind or nature whatsoever which the Lenders or the Agent or any such Person may incur or which may be claimed against any of them by reason of or in connection with any Letter of Credit, and neither any Lender nor the Agent or any of their respective officers, directors, employees or agents shall be liable or responsible for: (i) the use which may be made of any Letter of Credit or for any acts or omissions of any beneficiary in connection therewith; (ii) the validity, sufficiency or genuineness of documents or of any endorsement thereon, even if such documents should in fact prove to be in any or all respects invalid, insufficient, fraudulent or forged; (iii) payment by the Agent to the beneficiary under any Letter of Credit against presentation of documents which do not comply with the terms of any Letter of Credit, including failure of any documents to bear any reference or adequate reference to such Letter of Credit; (iv) any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit; or (v) any other event or circumstance whatsoever arising in connection with any Letter of Credit; provided, however, that the Company shall not be required to indemnify the Lenders and the Agent and such other persons, and the Lenders shall be liable to the Company to the extent, but only to the extent, of any direct, as opposed to consequential or incidental, damages suffered by the Company which were caused by (A) the Agent's wrongful dishonor of any Letter of Credit after the presentation to it by the beneficiary thereunder of a draft or other demand for payment and other documentation strictly complying with the terms and conditions of such Letter of Credit, or (B) the payment by the Agent to the beneficiary under any Letter of Credit against presentation of documents which do not comply with the terms of the Letter of Credit to the extent, but only to the extent, that such payment constitutes gross negligence of willful misconduct of the Agent. It 66 72 is understood that in making any payment under a Letter of Credit the Agent will rely on documents presented to it under such Letter of Credit as to any and all matters set forth therein without further investigation and regardless of any notice or information to the contrary, and such reliance and payment against documents presented under a Letter of Credit substantially complying with the terms thereof shall not be deemed gross negligence or willful misconduct of the Agent in connection with such payment. It is further acknowledged and agreed that the Company may have rights against the beneficiary or others in connection with any Letter of Credit with respect to which the Lenders are alleged to be liable and it shall be a precondition of the assertion of any liability of the Lenders under this Section that the Company shall first have exhausted all remedies in respect of the alleged loss against such beneficiary and any other parties obligated or liable in connection with such Letter of Credit and any related transactions. (c) Each Borrower hereby jointly and severally indemnifies and agrees to hold harmless the Lenders and the Agent, and their respective officers, directors, employees and agents, from and against any and all claims, damages, losses, liabilities, costs or expenses of any kind or nature whatsoever (including reasonable attorneys fees and disbursements incurred in connection with any investigative, administrative or judicial proceeding whether or not such Person shall be designated as a party thereto) which the Lenders or the Agent or any such Person may incur or which may be claimed against any of them by reason of or in connection with entering into this Agreement or the transactions contemplated hereby, including without limitation those arising in connection with or relating to any acquisition and the transactions contemplated thereby and under Environmental Laws; provided, however, that the Borrowers shall not be required to indemnify any such Lender and the Agent or such other Person, to the extent, but only to the extent, that such claim, damage, loss, liability, cost or expense is attributable to the gross negligence or willful misconduct of such Lender or the Agent, as the case may be. (d) In consideration of the execution and delivery of this Agreement by each Lender and the extension of the Commitments, each Borrower hereby jointly and severally indemnifies, exonerates and holds the Agent, each Lender and each of their respective affiliates, officers, directors, employees and agents (collectively, the "Indemnified Parties") free and harmless from and against any and all actions, causes of action, suits, losses, costs, liabilities and damages, and expenses incurred in connection therewith (irrespective of whether any such Indemnified Party is a party to the action for which indemnification hereunder is sought), including reasonable attorneys' fees and disbursements (collectively, the "Indemnified Liabilities"), incurred by the Indemnified Parties or any of them as a result of, or arising out of, or relating to: (i) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of any Advance; (ii) the entering into and performance of this Agreement and any other agreement or instrument executed in connection herewith by any of the Indemnified Parties (including any action brought by or on behalf of any Borrower as the result of any determination by the Required Lenders not to fund any Advance unless such determination is determined by a final non appealable order by of competent jurisdiction to be wrongful); (iii) any investigation, litigation or proceeding related to any acquisition or proposed acquisition by the Company or any of its Subsidiaries of any portion of the stock or assets of any Person or any merger, investment, issuance of Capital Stock or any transaction related 67 73 thereto by the Company or any of its Subsidiaries, whether or not the Agent or such Lender is party thereto; (iv) any investigation, litigation or proceeding related to any environmental cleanup, audit, compliance or other matter relating to the protection of the environment or the release by the Company or any of its Subsidiaries of any Hazardous Material; or (v) the presence on or under, or the escape, seepage, leakage, spillage, discharge, emission, discharging or releasing from, any real property owned or operated by the Company or any of its Subsidiaries of any Hazardous Material (including any losses, liabilities, damages, injuries, costs, expenses or claims asserted or arising under any Environmental Law), regardless of whether caused by, or within the control of, the Company or such Subsidiary, except for any such Indemnified Liabilities arising for the account of a particular Indemnified Party by reason of the activities of the Indemnified Party on the property of the Company or such Subsidiary conducted subsequent to a foreclosure on such property by the Lenders or by reason of the relevant Indemnified Party's gross negligence or willful misconduct or breach of this Agreement, and if and to the extent that the foregoing undertaking may be unenforceable for any reason, the Company hereby agrees to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. The Company shall be obligated to indemnify the Indemnified Parties for all Indemnified Liabilities subject to and pursuant to the foregoing provisions, regardless of whether the Company or any of its Subsidiaries had knowledge of the facts and circumstances giving rise to such Indemnified Liability. 8.6 Successors and Assigns. (a) This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, provided that the Borrowers may not, without the prior consent of the Lenders, assign their rights or obligations hereunder or under the Notes or any Security Document and the Lenders shall not be obligated to make any Advance hereunder to any entity other than the Borrowers. (b) Any Lender may sell to any financial institution or institutions, and such financial institution or institutions may further sell, a participation interest (undivided or divided) in, the Advances and such Lender's rights and benefits under the Loan Documents, and to the extent of that participation interest such participant or participants shall have the same rights and benefits against the Borrowers under Section 3.8, 3.10 and 6.2(c) as it or they would have had if such participant or participants were the Lender making the Advances to the Borrowers hereunder, provided, however, that (i) such Lender's obligations under this Agreement shall remain unmodified and fully effective and enforceable against such Lender, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) such Lender shall remain the holder of its Notes for all purposes of this Agreement, (iv) the Borrowers, the Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement, and (v) such Lender shall not grant to its participant any rights to consent or withhold consent to any action taken by such Lender or the Agent under this Agreement other than action requiring the consent of all of the Lenders hereunder. (c) The Agent from time to time in its sole discretion may appoint agents for the purpose of servicing and administering this Agreement and the transactions contemplated hereby and enforcing or exercising any rights or remedies of the Agent provided under any Loan Documents or otherwise. In furtherance of such agency, the Agent may from time to time direct that the Borrowers provide notices, reports and other documents contemplated by this Agreement (or duplicates thereof) to 68 74 such agent. The Borrowers hereby consent to the appointment of such agent and agrees to provide all such notices, reports and other documents and to otherwise deal with such agent acting on behalf of the Agent in the same manner as would be required if dealing with the Agent itself. (d) Each Lender may, with the prior consent of the Company (which shall not be unreasonably withheld and may not be withheld if an Event of Default has occurred and is continuing) and the Agent, assign to one or more banks or other entities all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment, the Advances owing to it and the Notes held by it); provided, however, that (i) each such assignment shall be of a uniform, and not a varying, percentage of all rights and obligations, (ii) except in the case of an assignment of all of a Lender's rights and obligations under this Agreement, the amount of the Commitment of the assigning Lender being assigned pursuant to each such assignment (determined as of the date of the Assignment and Acceptance with respect to such assignment) shall in no event be less than $5,000,000, and in integral multiples of $1,000,000 thereafter, or such lesser amount as the Company and the Agent may consent, (iii) the parties to each such assignment shall execute and deliver to the Agent, for its acceptance and recording in the Register, an Assignment and Acceptance in the form of Exhibit K hereto (an "Assignment and Acceptance"), together with any Note or Notes subject to such assignment and a processing and recordation fee of $4,000, and (iv) any Lender may without the consent of the Company or the Agent, and without paying any fee, assign to any Affiliate of such Lender that is a bank or financial institution all of its rights and obligations under this Agreement. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in such Assignment and Acceptance, (x) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender hereunder and (y) the Lender assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the remaining portion of an assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto). (e) By executing and delivering an Assignment and Acceptance, the Lender assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Company and its Subsidiaries or the performance or observance by the Borrowers and the Guarantors of any of their obligations under this Agreement or any other instrument or document furnished pursuant hereto; (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Section 4.6 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon the Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such assignee appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement as are delegated to the Agent by the terms hereof, together with such powers and discretion as are reasonably incidental thereto; and (vi) such 69 75 assignee agrees that it will perform in accordance with their terms all of the obligations that by the terms of this Agreement are required to be performed by it as a Lender. (f) The Agent shall maintain at its address designated on the signature pages hereof a copy of each Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the names and addresses of the Lenders and the Commitment of, and principal amount of the Advances owing to, each Lender from time to time (the "Register"). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrowers, the Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrowers or any Lender at any reasonable time and from time to time upon reasonable prior notice. (g) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an assignee, together with any Note or Notes subject to such assignment, the Agent shall, if such Assignment and Acceptance has been completed, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Company. Within five Business Days after its receipt of such notice, the Borrowers, at its own expense, shall execute and deliver to the Agent in exchange for the surrendered Note or Notes a new Note or Notes to the order of such assignee in an amount equal to the Commitment assumed by it pursuant to such Assignment and Acceptance and, if the assigning Lender has retained a Commitment hereunder, a new Note to the order of the assigning Lender in an amount equal to the Commitment retained by it hereunder. Such new Note or Notes shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered Note or Notes, shall be dated the effective date of such Assignment and Acceptance and shall otherwise be in substantially the form of Exhibit K hereto. (h) The Borrowers shall not be liable for any costs or expenses of any Lender in effectuating any participation or assignment under this Section 8.6. (i) The Lenders may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 8.6, disclose to the assignee or participant or proposed assignee or participant any information relating to the Company and its Subsidiaries. (j) Notwithstanding any other provision set forth in this Agreement, any Lender may at any time create a security interest in, or assign, all or any portion of its rights under this Agreement (including, without limitation, the Advances owing to it and the Note or Notes held by it) in favor of any Federal Reserve Lender in accordance with Regulation A of the Board of Governors of the Federal Reserve System; provided that such creation of a security interest or assignment shall not release such Lender from its obligations under this Agreement. 8.7 Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute this Agreement by signing any such counterpart. 8.8 Governing Law. This Agreement is a contract made under, and shall be governed by and construed in accordance with, the law of the State of Michigan applicable to contracts made and to be performed entirely within such State and without giving effect to choice of law principles of such State. The Borrowers and the Lenders further agrees that any legal or equitable action or proceeding with respect to any Loan Document or the transactions contemplated hereby shall be brought in any court of the State of Michigan, or in any court of the United States of America sitting in Michigan, 70 76 and each of the Borrowers and the Lenders hereby submits to and accepts generally and unconditionally the jurisdiction of those courts with respect to its Person and property, and, in the case of each Borrower irrevocably appoints the Company as its agent for service of process and irrevocably consents to the service of process in connection with any such action or proceeding by personal delivery to such agent or to the Company, as the case may be, or by the mailing thereof by registered or certified mail, postage prepaid to the Company at its address for notices pursuant to Section 8.2. The Borrowers shall at all times maintain such an agent in Michigan for such purpose and shall notify the Lenders and the Agent of such agent's address in Michigan within ten days of any change of address. Nothing in this paragraph shall affect the right of the Lenders and the Agent to serve process in any other manner permitted by law or limit the right of the Lenders or the Agent to bring any such action or proceeding against the Borrowers or any property in the courts of any other jurisdiction. The Borrowers and the Lenders hereby irrevocably waives any objection to the laying of venue of any such action or proceeding in the above described courts. 8.9 Table of Contents and Headings. The table of contents and the headings of the various subdivisions hereof are for the convenience of reference only and shall in no way modify any of the terms or provisions hereof. 8.10 Construction of Certain Provisions. If any provision of this Agreement refers to any action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person, whether or not expressly specified in such provision. 8.11 Integration and Severability. The Loan Documents embody the entire agreement and understanding between the Borrowers, the Agent and the Lenders, and supersede all prior agreements and understandings, relating to the subject matter hereof. In case any one or more of the obligations of the Borrowers under the Loan Document shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining obligations of the Borrowers shall not in any way be affected or impaired thereby, and such invalidity, illegality or unenforceability in one jurisdiction shall not affect the validity, legality or enforceability of the obligations of the Borrowers under any Loan Document in any other jurisdiction. 8.12 Independence of Covenants. All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any such covenant, the fact that it would be permitted by an exception to, or would be otherwise within the limitations of, another covenant shall not avoid the occurrence of a Default or an Event of Default if such action is taken or such condition exists. 8.13 Interest Rate Limitation. Notwithstanding any provisions of any Loan Document, in no event shall the amount of interest paid or agreed to be paid by the Borrowers exceed an amount computed at the highest rate of interest permissible under applicable law. If, from any circumstances whatsoever, fulfillment of any provision of any Loan Document at the time performance of such provision shall be due, shall involve exceeding the interest rate limitation validly prescribed by law which a court of competent jurisdiction may deem applicable hereto, then, ipso facto, the obligations to be fulfilled shall be reduced to an amount computed at the highest rate of interest permissible under applicable law, and if for any reason whatsoever any Lender shall ever receive as interest an amount which would be deemed unlawful under such applicable law such interest shall be automatically applied to the payment of principal of the Advances outstanding hereunder (whether or not then due and payable) 71 77 and not to the payment of interest, or shall be refunded to the relevant Borrower if such principal and all other obligations of the Borrowers to the Lenders have been paid in full. 8.14 Judgment and Payment. (a) If, for the purpose of obtaining judgment in any court, it is necessary to convert a sum owing hereunder by any Borrower in one currency into another currency, such Borrower agrees, to the fullest extent that it may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures in the relevant jurisdiction the relevant Lender could purchase the first currency with such other currency for the first currency on the Business Day immediately preceding the day on which the final judgment is given. (b) The obligations of any Borrower in respect of any sum due to any party hereto or any holder of the obligations owing hereunder (the "Applicable Creditor") shall, notwithstanding any payment obligation or judgment in a currency (the "Payment Currency") other than applicable currency, be discharged only to the extent that, on the Business Day following receipt by the Applicable Creditor of any sum adjudged to be so due in the Payment Currency, the Applicable Creditor may in accordance with normal banking procedures in the relevant jurisdiction purchase applicable currency with the Payment Currency; if the amount of applicable currency so purchased is less than the sum originally due to the Applicable Creditor in applicable currency, each Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Applicable Creditor against such loss. The obligations of the Borrowers contained in this Section 8.14 shall survive the termination of this Agreement and the payment of all other amounts owing hereunder. 8.15 WAIVER OF JURY TRIAL. THE LENDERS AND THE AGENT AND THE BORROWERS, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY RELATED INSTRUMENT OR AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY OF THEM. NEITHER ANY LENDER, THE AGENT, NOR THE BORROWERS SHALL SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY ANY PARTY HERETO EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY SUCH PARTY. 72 78 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered on the 24th day of June 1997, which shall be the Effective Date of this Agreement. OXFORD AUTOMOTIVE, INC. By: [SIG] ---------------------------------------- Its: Vice President Financial Operations ------------------------------------ BMG NORTH AMERICA LIMITED By: [SIG] ---------------------------------------- Its: Chief Financial Officer ------------------------------------ 79 Address for Notices: NBD BANK, as a Lender and as Agent NBD Bank 611 Woodward Avenue By: [SIG] ------------------------------------ Detroit, Michigan 48226 Its: Authorized Agent --------------------------- Attention: Rick Ellis Facsimile No.: (313) 226-0855 Facsimile Confirmation No.: (313) 225-3743 Commitment: $110,000,000 Percentage of Total Commitments: 100% Applicable Lending Office: NBD Bank 611 Woodward Avenue Detroit, Michigan 48226 Address for Notices: FIRST CHICAGO NBD BANK, CANADA, as the Affiliate designated by NBD Bank to make Canadian Advances on its behalf and as Agent for the purposes specified in this Agreement 161 Bay Street, Suite 4240 Toronto, Ontario M5J 2S1 By: [SIG] ------------------------------------ Attention: Michael Bauer Its: Authorized Agent --------------------------- Facsimile No.: (416) 363-7574 Facsimile Confirmation No.: (416) 865-0466 80 EXHIBITS TO THE CREDIT AGREEMENT 1. Exhibit A: Filed with this Amendment No. 1 2. Exhibit B: Previously filed as Exhibit 4.3 to the Registration Statement 3. Exhibit C: Filed with this Amendment No. 1 4. Exhibit D: Previously filed as Exhibit 4.11 to the Registration Statement 5. Exhibit E: Previously filed as Exhibit 4.8 to the Registration Statement 6. Exhibit F: Filed with this Amendment No. 1 7. Exhibit G: Filed with this Amendment No. 1 8. Exhibit H: Filed with this Amendment No. 1 9. Exhibit I: Filed with this Amendment No. 1 10. Exhibit J: Filed with this Amendment No. 1 11. Exhibit K: Filed with this Amendment No. 1 81 EXHIBIT A BORROWING BASE CERTIFICATE June 24, 1997 NBD Bank, as Agent 611 Woodward Avenue Detroit, Michigan 48226 Reference is made to the Credit Agreement dated as of June 24, 1997 (the "Credit Agreement") among Oxford Automotive, Inc., a corporation incorporated under the laws of the State of Michigan (the "Company"), the Borrowing Subsidiaries party thereto, the lenders parties thereto (the "Lenders") and you as agent for the Lenders (the "Agent"). Capitalized terms used but not defined herein shall have the respective meanings assigned to them in the Credit Agreement. The Company hereby represents and warrants to the Agent and the Lenders that the following computations of the Borrowing Base, and the related supporting schedules attached hereto, and of the mandatory prepayment required pursuant to Section 3.1(c) of the Credit Agreement are true and correct as of the close of business on ___________, ____ and are in conformity with the terms and conditions of the Credit Agreement: Borrowing Base 1. Accounts Receivable: (a) Aggregate Accounts Receivable . . . . . . . $ _______ (b) Less: Ineligible Accounts Receivable . . . $ _______ (c) Eligible Accounts Receivable . . . . . . . $ _______ (d) 85% of Eligible Accounts Receivable . . . . $ _______ 82 2. Inventory: (a) Aggregate Inventory . . . . . . . . . . . . $ _______ (b) Less: Ineligible Inventory . . . . . . . . $ _______ (c) Eligible Inventory . . . . . . . . . . . . $ _______ (d) 50% of Eligible Inventory . . . . . . . . . $ _______ (e) Lesser of item 3(d) and $5,000,000 . . . . $ _______ 3. Eligible Net Tooling in Process: (a) Aggregate Net Tooling in Process . . . . . $ _______ (b) Less: Ineligible Net Tooling in Process . $ _______ (c) Eligible Net Tooling in Process . . . . . $ _______ (d) 50% of Eligible Net Tooling in Process . . $ _______ (e) Lesser of item 3(d) and $5,000,000 . . . . $ _______ 4. Borrowing Base (item 1(d) plus item 2(e) plus item 3(e) . . . . . . . . . . . . . . . . . . $ ======= Determination of Revolving Credit Loan Prepayment ------------------------------------------------- 1. Aggregate Borrowing Base (item 4 above) . . . . . . $ _______ 2. Less: Aggregate principal amount of Revolving Credit Advances Outstanding as of month end . . . . . . . . . . . . . . . . . . . . $ _______ 3. Excess (or deficiency) in Borrowing Base (if deficiency, prepayment required in amount BORROWING BASE CERTIFICATE -2- 83 of deficiency) . . . . . . . . . . . . . . . . . . $ ======= The Company hereby further represents and warrants to the Agent for the benefit of the Lenders that as of _______________, 19___: A. The representations and warranties contained in Article IV of the Credit Agreement, and in the Security Documents, are true and correct on and as of such date, as if such representations and warranties were made on and as of such date. For purposes of this certificate the representations and warranties contained in Section 4.6 of the Credit Agreement shall be deemed made with respect to both the financial statements referred to therein and the most recent financial statements delivered pursuant to Section 5.1(d)(ii) and (iii) of the Credit Agreement. BORROWING BASE CERTIFICATE - 3 - 84 B. No Event of Default and no Default has occurred and is continuing. OXFORD AUTOMOTIVE, INC. By:____________________________________ Its:__________________________________ BORROWING BASE CERTIFICATE - 4 - 85 EXHIBIT C ENVIRONMENTAL CERTIFICATE In consideration of and in order to induce NBD BANK, a Michigan banking corporation, as agent (in such capacity, the "Agent") and the Lenders (the "Lenders"), to loan money, extend credit, or enter into certain other transactions pursuant to a Credit Agreement dated as of June __, 1997 (as amended or modified from time to time, including any agreement entered into in substitution therefor, the "Credit Agreement") among the Lenders, the Agent and OXFORD AUTOMOTIVE, INC. (the "Borrower"), Borrower and Guarantor (if signed by Guarantor below) make the representations, warranties and covenants set forth in this Environmental Certificate (the "Certificate") to the Agent and the Lenders with respect to all Property and activities of Borrower and Guarantor. If there is more than one Borrower or Guarantor, the words "Borrower" and "Guarantor" shall apply to each such party, individually and collectively. I. DEFINITIONS. A. "Environmental Law(s)" means any law, regulation, rule, policy, ordinance or similar requirement which governs or protects the environment, enacted from time to time by the United States, any state, or any county, city or agency or subdivision of the United States or its political subdivisions. B. "Hazardous Material" means any material or substance: (1) which is or becomes defined as a hazardous substance, pollutant, or contaminant, pursuant to the Comprehensive Environmental Response Compensation and Liability Act ("CERCLA") (42 USC Section 9601 et. seq.) as amended and regulations promulgated under it; (2) containing gasoline, oil, diesel fuel or other petroleum products; (3) which is or becomes defined as hazardous waste pursuant to the Resource Conservation and Recovery Act ("RCRA") (42 USC Section 6901 et. seq.) as amended and regulations promulgated under it; (4) containing polychlorinated biphenyls (PCBs); (5) containing asbestos; (6) which is radioactive; (7) the presence of which requires investigation or remediation under any Environmental Law; or (8) which is or becomes defined or identified as a hazardous waste, hazardous substance, hazardous or toxic chemical, pollutant, contaminant, or biologically hazardous material under any Environmental Law. C. "Indebtedness" means all loans made or credit extended to Borrower by any of the Lenders at any time. D. "Property" means all tangible property now or later owned, operated, leased or used by Borrower or Guarantor, including but not limited to, land (including soil, ground water and surface water located on, in or under the such property), buildings, equipment and inventory. 86 II. BORROWER'S REPRESENTATIONS AND WARRANTIES. Except as set forth on the attached SCHEDULE A, to the best of their knowledge after their thorough review, Borrower and Guarantor represent and warrant to the Agent and the Lenders as follows: A. REGULATORY COMPLIANCE; ENFORCEMENT; LITIGATION. (1) They are in substantial compliance with all Environmental Laws; (2) they have never received any notice of any violations of any Environmental Law; (3) no demand, claim, suit, administrative action, or criminal action whether brought by any government authority or private party, arising under or relating to any Environmental Law is pending or threatened against Borrower or Guarantor, or with respect to the Property or any portion thereof; and (4) they have not used Hazardous Materials on or about the Property or any portion thereof in any manner in material violation of any Environmental Law governing the use, storage, treatment, transportation, manufacture, refinement, handling, production or disposal of Hazardous Materials and no prior owner of the Property or any portion thereof, or any existing or prior tenant or occupant, has used Hazardous Materials on or about the Property or any portion thereof in any manner which violates any Environmental Law governing the use, storage, treatment, transportation, manufacture, refinement, handling, production or disposal of Hazardous Materials. B. PERMITS AND LICENSES. All federal, state and local permits, licenses or authorizations required by Environmental Law(s) for present use of the Property or any portion thereof or activities of Borrower or Guarantor have been obtained, are presently in effect and are listed on the attached SCHEDULE A. All federal, state and local permits, licenses or authorizations required by Environmental Law(s) for any permitted or licensed activities or uses that are anticipated at the Property or any portion thereof and for which permits or licenses have been sought but not yet received are also listed on the attached SCHEDULE A. There is and has been substantial compliance with all such permits, licenses or authorizations. C. CONTAMINATION/RELEASE. There has not been in the past, nor are there currently, any releases, spills, discharges or other form of contamination on the Property the aggregate cost of which to remediate exceeded or will exceed $100,000.00, nor is there any accumulation, storage or disposal as defined in RCRA (or any other Environmental Law, of Hazardous Materials on, under or about the Property which violates any Environmental Law. No portion of the Property appears either on the National Priorities List (as defined under CERCLA) or on any state listing which identifies sites for remedial clean-up or investigatory actions. There are no environmental liens on the Property or any portion thereof. D. FACILITIES AND PROGRAMS. The Property has adequate water supply, sewage and waste disposal facilities or will have such facilities upon completion of contemplated ENVIRONMENTAL CERTIFICATE -2- 87 improvements. The appropriate operations and maintenance programs, contingency and emergency plans for environmental hazards are in place. E. The answers set forth in the CUSTOMER ENVIRONMENTAL QUESTIONNAIRE as provided to the Agent are incorporated by reference and such responses are accurate and complete. III. AFFIRMATIVE COVENANTS. Borrower and Guarantor shall: A. Do all things necessary to assure that the representations, warranties and covenants set forth in this Certificate are met and continue to be accurate and correct. B. Assure that all individuals or entities acting on their behalf comply with the obligations under this Certificate. C. Conduct periodic reviews of the use of the Property and the activities on it to assure compliance with the obligations under this Certificate. D. Promptly (i) notify the Agent in writing of any occurrence, development, claim, suit, administrative action, permit revocation or denial filed by or against Borrower or Guarantor that would cause any representation, warranty or covenant set forth in this Certificate to be incorrect, and (ii) take steps necessary to mitigate the effect of such occurrence, development, claim, suit, administrative action or permit revocations or denials. E. Promptly provide the Agent with all non-privileged information, questionnaires,and copies of: environmental compliance reports, policies, handbooks, litigation audit letters, government inspection reports and environmental assessment reports, whenever prepared, that are requested by the Agent in accordance with the Agent's or any Lender's environmental due diligence procedures. F. Keep or cause the Property to be kept free of Hazardous Materials except to the extent that such Hazardous Materials are stored and/or used in compliance with all applicable Environmental Laws; and, without limiting the foregoing, not cause or permit the Property or any portion thereof to be used to generate, manufacture, refine, transport, treat, store, handle, dispose of, transfer, produce, or process Hazardous Materials, except in compliance with all applicable Environmental Laws; and not cause or permit, as a result of any intentional or unintentional act or omission on the part of Borrower or Guarantor or any tenant, subtenant or occupant, a release, spill, leak or emission of Hazardous Materials on, under or about the Property or any portion thereof or onto any other contiguous property in violation of Environmental Laws. G. Conduct and complete all investigations, environmental site assessments, sampling, and testing, and all remedial and removal actions necessary to clean up and remove all ENVIRONMENTAL CERTIFICATE -3- 88 Hazardous Materials on, under, or about the Property or any portion thereof to the extent required by all applicable Environmental Laws and in accordance with the final orders and directives of all federal, state and local governmental authorities, subject to Borrower's and Guarantor's right to appeal and contest any such order or directive. Such testing and remedial and removal actions shall include those required by federal and state regulations governing underground storage tank systems. Borrower and Guarantor shall, upon request, demonstrate their compliance with this Section III.G to the satisfaction of the Agent and the Required Lenders. To the extent that non-privileged written documentation such as reports, studies, or sampling results from the investigation(s) have been or are produced, Borrower and Guarantor shall provide copies of such documentation to the Agent (with sufficient copies for each Lender). Borrower or Guarantor shall demonstrate to the Agent and the Required Lenders to each of their satisfaction that the value of any Property pledged or mortgaged to the Agent, for the benefit of the Lenders, is not materially adversely affected by releases, spills or discharges occurring subsequent to the initial extension of credit under the Credit Agreement. If Borrower or Guarantor fails to conduct an environmental assessment to the satisfaction of the Agent and the Required Lenders as required under this Section III.G., or fails to provide the Agent (with sufficient copies for each Lender) with copies of the written documentation referenced above, then the Agent may at its option and at the expense of Borrower or Guarantor conduct such assessment, without waiver of its other rights and remedies; provided that the Agent provides notice to Borrower and Guarantor of its intent to conduct such assessment. Any such assessment conducted by the Agent shall be conducted solely for the benefit of and to protect the interests of the Agent and the Lenders and shall not be relied upon by Borrower or Guarantor or any third party for any purpose whatsoever, including but not limited to Borrower's, Guarantor's or any third party's obligation, if any, to conduct an independent environmental investigation. By conducting any such assessment, neither the Agent nor any Lender assumes any control over the environmental affairs or operations of Borrower or Guarantor or assumes any obligation or liability to Borrower or Guarantor or any third party. IV. NEGATIVE COVENANT. Borrower and Guarantor shall not take any action or allow the Property or any portion thereof to be used in such a manner that any representation, warranty or covenant set forth in this Certificate becomes inaccurate, incorrect or results in non-compliance. V. DEFAULT AND REMEDIES. If any of the following events occur: A. Borrower or Guarantor makes any materially incorrect or misleading representation, warranty or certification to the Agent or any Lender or provides materially incorrect information to the Agent or any Lender in connection with this Certificate; ENVIRONMENTAL CERTIFICATE -4- 89 B. Borrower or Guarantor defaults under the terms of this Certificate; then, except to the extent this provision is expressly modified by language in the loan documents referring to this Certificate, whether or not the Lenders have made demand, the underlying credit facilities shall terminate and all borrowings under them shall become due immediately at the Required Lenders' option upon thirty (30) days notice by the Agent to Borrower. VI. RIGHT OF ENTRY. Borrower and Guarantor grant the Agent, its employees, agents and contractors the right to enter the Property for the purpose of conducting at the expense of Borrower, an environmental site assessment, sampling, testing, remedial, removal and other actions necessary to investigate or clean up and remove Hazardous Materials on, under or about the Property in accordance with Section III.G. above prior to or during any loan workout, liquidation of collateral, mortgage foreclosure, expiration of a redemption period, abandonment of the Property or any environmental litigation brought against the Agent or any Lender regarding the Property or any portion thereof. The Agent shall notify Borrower or Guarantor prior to its entry and shall use its best efforts to not disturb any ongoing operations on the Property. Borrower or Guarantor at the request of the Agent shall execute any consultant contracts, waste manifests or notices necessary to effectuate the terms of this section. Any expenditures by Agent for activities performed by the Agent in accordance with this section shall be considered an additional advance under the loan or extension of credit. VII. INDEMNIFICATION. Subject to the limitations set forth below, Borrower and Guarantor shall defend, indemnify and hold harmless the Agent and the Lenders, and each of their successors and assigns, employees, agents, officers and directors, from and against any claims, demands, penalties, fines, liabilities, settlements, damages, costs or expenses, including, without limitation, attorneys' and consultants' fees, investigation and laboratory fees, court costs and litigation expenses, known or unknown, contingent or otherwise (individually and collectively, the "Losses"), arising out of or in any way related to (a) the presence, disposal, release or threatened release of any Hazardous Materials on, over, under, from or affecting the Property or any portion thereof or the soil, water, vegetation, buildings, personal property, persons or animals; (b) any personal injury (including wrongful death) or property damage (real or personal) arising out of or related to such Hazardous Materials on the Property; (c) any claim, demand, notice or lawsuit brought or threatened, settlement reached or government order relating to such Hazardous Materials with respect to the Property or any portion thereof regulated wetlands on the Property or any portion thereof; and/or (d) any violation of laws, orders, regulations, requirements or demands of government authorities, which are based upon or in any way related to such Hazardous Materials used on the Property or regulated wetlands on the Property, unless the Losses arise out of the gross negligence or willful misconduct of the Agent or Lenders or any of their successors, assigns, officers, employees and directors. The indemnity obligations under this paragraph are specifically limited as follows: ENVIRONMENTAL CERTIFICATE -5- 90 (i) Borrower and Guarantor shall have no indemnity obligations with respect to Hazardous Materials that are first introduced, as evidenced by reliable documentation, to the Property or any part of the Property subsequent to the date that Borrower's and Guarantor's interest in and possession of the Property or such part of the Property shall have ended or have been fully terminated by foreclosure of any mortgage held by the Agent or any Lender or acceptance by the Agent or any Lender of a deed in lieu of foreclosure or other collateral liquidation procedure; and (ii) Borrower and Guarantor shall have no indemnity obligation with respect to Hazardous Materials that are first introduced, as evidenced by reliable documentation, to the Property solely by the Agent or the Lenders, or their successors or assigns. Borrower and Guarantor agree that in the event any mortgage held by the Agent or any Lender is foreclosed or Borrower or Guarantor tender a deed in lieu of foreclosure, Borrower and Guarantor shall deliver the Property to the Agent or any such Lender free of any and all Hazardous Materials which are then required to be removed (whether over time or immediately) pursuant to applicable Environmental Laws affecting the Property or any portion thereof. Notwithstanding the provisions of Section VIII. below, the provisions of this Section VII. shall be in addition to any and all other obligations and liabilities Borrower and Guarantor may have to the Agent or any Lender under the Indebtedness, any loan document, and in common law, and shall survive (a) the loan closing, (b) the repayment of all sums due for the Indebtedness, (c) the satisfaction of all of the other obligations of Borrower or Guarantor under any loan document, (d) the discharge of any mortgage held by the Agent or any Lender and (e) the foreclosure of any mortgage held by the Agent or any Lender or acceptance of a deed in lieu of foreclosure. The indemnity provisions of this section shall only apply to a demand or action commenced against (a) any owner or operator of the Property or any portion thereof or (b) the Agent or any Lender, in which any interest of the Agent or any Lender is threatened or any claim, demand, notice or action is made or filed against the Agent or any Lender. VIII. MISCELLANEOUS. Except as otherwise specifically provided in this Certificate, all of the representations, warranties and covenants set forth in this Certificate shall be continuing and shall survive the execution of this Certificate until all of the Indebtedness is fully paid to the Agent and the Lenders and Borrower's and Guarantor's obligations to the Agent and the Lenders in connection with the Indebtedness are fully performed. ENVIRONMENTAL CERTIFICATE -6- 91 To be signed by Guarantor if the Property or any portion thereof is titled or held in the name of Guarantor or operated by Guarantor. This Environmental Certificate is executed on June __, 1997. BORROWER: OXFORD AUTOMOTIVE, INC. By:______________________________________ Its:________________________________ BORROWING SUBSIDIARY: BMG NORTH AMERICA LIMITED By:______________________________________ Its:________________________________ GUARANTOR: LOBDELL EMERY CORPORATION CORPORATION By:______________________________________ Its:________________________________ WINCHESTER FABRICATION CORPORATION By:______________________________________ Its:________________________________ ENVIRONMENTAL CERTIFICATE -7- 92 CREATIVE FABRICATION CORPORATION By:______________________________________ Its:________________________________ CONCEPT MANAGEMENT CORPORATION By:______________________________________ Its:________________________________ LASERWELD INTERNATIONAL, L.L.C. By:______________________________________ Its:________________________________ LEWIS EMERY CAPITAL CORPORATION By:______________________________________ Its:________________________________ PARALLEL GROUP INTERNATIONAL, INC. By:______________________________________ Its:________________________________ BMG HOLDINGS, INC. By:______________________________________ ENVIRONMENTAL CERTIFICATE -8- 93 Its:________________________________ 976459 ONTARIO LIMITED By:______________________________________ Its:________________________________ ENVIRONMENTAL CERTIFICATE -9- 94 829500 ONTARIO LIMITED By:______________________________________ Its:________________________________ ENVIRONMENTAL CERTIFICATE -10- 95 SCHEDULE A SCHEDULE OF EXCEPTIONS AND PERMITS SEE ATTACHED. Initials: Agent__________ Borrower Oxford Automotive _____ Borrowing Subsidiary BMG North America _____ Guarantor Lobdell Emery _____ Winchester Fabrication _____ Creative Fabrication _____ Concept Management _____ Laserweld International _____ Lewis Emery Capital _____ Parallel Group _____ BMG Holdings _____ 976459 Ontario _____ 829500 Ontario _____ ENVIRONMENTAL CERTIFICATE -11- 96 EXHIBIT F REVOLVING CREDIT NOTE $110,000,000 June __, 1997 Detroit, Michigan FOR VALUE RECEIVED, OXFORD AUTOMOTIVE, INC., a Michigan corporation (the "Company"), hereby promises to pay to the order of NBD BANK, a Michigan banking corporation (the "Lender"), at the principal banking office of the Agent in lawful money of the United States of America and in immediately available funds, the principal sum of One Hundred Ten Million Dollars ($110,000,000), or such lesser amount as is recorded on the schedule attached hereto, or in the books and records of the Lender, on the Termination Date; and to pay interest on the unpaid principal balance hereof from time to time outstanding, in like money and funds, for the period from the date hereof until the Revolving Credit Loans evidenced hereby shall be paid in full, at the rates per annum and on the dates provided in the Credit Agreement referred to below. The Lender is hereby authorized by the Company to record on the schedule attached to this Revolving Credit Note, or on its books and records, the date, amount and type of each Revolving Credit Loan, the duration of the related Interest Period (if applicable), the amount of each payment or prepayment of principal thereon and the other information provided for on such schedule, which schedule or such books and records, as the case may be, shall constitute prima facie evidence of the information so recorded, provided, however, that any failure by the Lender to record any such information shall not relieve the Company of its obligation to repay the outstanding principal amount of such Revolving Credit Loans, all accrued interest thereon and any amount payable with respect thereto in accordance with the terms of this Revolving Credit Note and the Credit Agreement. The Company and each endorser or guarantor hereof waives demand, presentment, protest, diligence, notice of dishonor and any other formality in connection with this Revolving Credit Note. Should the indebtedness evidenced by this Revolving Credit Note or any part thereof be collected in any proceeding or be placed in the hands of attorneys for collection, the Company agrees to pay, in addition to the principal, interest and other sums due and payable hereon, all costs of collecting this Revolving Credit Note, including attorneys' fees and expenses. This Revolving Credit Note evidences one or more Revolving Credit Loans made under a Credit Agreement, dated as of June __, 1997 (as amended or modified from time to time, the "Credit Agreement"), by and among the Company, the Borrowing Subsidiary identified from time to time therein, the lenders (including the Lender) named therein and NBD Bank, as agent for 97 the Lenders, to which reference is hereby made for a statement of the circumstances under which this Revolving Credit Note is subject to prepayment and under which its due date may be accelerated and for a description of the collateral and security securing this Revolving Credit Note. Capitalized terms used but not defined in this Revolving Credit Note shall have the respective meanings assigned to them in the Credit Agreement. This Revolving Credit Note is made under, and shall be governed by and construed in accordance with, the laws of the State of Michigan in the same manner applicable to contracts made and to be performed entirely within such State and without giving effect to choice of law principles of such State. OXFORD AUTOMOTIVE, INC. By: ______________________________ Its: _________________________ REVOLVING CREDIT NOTE - 2 - 98 Schedule to Revolving Credit Note, dated June __, 1997, made by Oxford Automotive, Inc. in favor of NBD Bank
Principal Amount Trans- Principal Type Interest Paid, Pre- Principal action Amount of of Interest Period (if paid or Balance Notation Date Loan Loan* Rate applicable) Converted Outstanding Made by - ------ --------- ----- -------- ----------- ---------- ----------- --------
_________________________ * E - Eurodollar Rate F - Floating Rate REVOLVING CREDIT NOTE - 3 - 99 EXHIBIT G SWINGLINE NOTE June __, 1997 Detroit, Michigan FOR VALUE RECEIVED, OXFORD AUTOMOTIVE, INC., a Michigan corporation, (the "Borrower"), hereby unconditionally promises to pay to the order of NBD BANK, a Michigan banking corporation (the "Lender"), at the principal banking office of the Lender in lawful money of the United States of America and in immediately available funds, any and all amounts due and owing to the Lender under the Credit Agreement referred to below as is evidenced on the books and records of the Lender, on the Termination Date or such earlier date as the Lender may require under the Credit Agreement referred to below, when the entire outstanding principal amount of the Swingline Loans evidenced hereby, and all accrued interest thereon, shall be due and payable; and to pay interest on the unpaid principal balance hereof from time to time outstanding, in like money and funds, for the period from the date hereof until the Swingline Loans evidenced hereby shall be paid in full, at the rates per annum on and the dates provided in the Credit Agreement referred to below. The Lender is hereby authorized by the Borrower to record on its books and records the date and the amount of each Swingline Loan, the applicable interest rate, the amount of each payment or prepayment of principal thereon, and the other information provided for in such books and records, which books and records shall constitute prime facie evidence of the information so recorded, provided, however, that any failure by the Lender to record any such notation shall not relieve the Borrower of its obligation to repay the outstanding principal amount of this Swingline Note, all accrued interest hereon and any amount payable with respect hereto in accordance with the terms of this Swingline Note and the Credit Agreement. The Borrower and each endorser or guarantor hereof waive presentment, protest, notice of dishonor and any other formality in connection with this Swingline Note. Should the indebtedness evidenced by this Swingline Note or any part thereof be collected in any proceeding or be placed in the hands of attorneys for collection, the Borrower agrees to pay, in addition to the principal, interest and other sums due and payable hereon, all costs of collecting this Swingline Note, including attorneys' fees and expenses. This Swingline Note evidences Swingline Loans made under a Credit Agreement, dated as of June __, 1997 (as amended or modified from time to time, the "Credit Agreement"), by and among the Borrower, the Borrowing Subsidiary identified by the Borrower from time to time, the lenders (including the Lender) named therein, and NBD Bank, as agent for the Lenders, to which reference is hereby made for a statement of the circumstances under which this Swingline Note is subject to prepayment and under which its due date may be accelerated and a description of the collateral and security securing this Swingline Note. Capitalized terms used but not defined in 100 this Swingline Note shall have the respective meanings assigned to them in the Credit Agreement. This Swingline Note is made under, and shall be governed by and construed in accordance with, the laws of the State of Michigan in the same manner applicable to contracts made and to be performed entirely within such State and without giving effect to choice of law principles of such State. OXFORD AUTOMOTIVE, INC. By: ______________________________________ Its: _________________________________ SWINGLINE NOTE - 2 - 101 EXHIBIT H DISBURSEMENT OF ADVANCES NBD Bank, as Agent 611 Woodward Avenue Detroit, Michigan 48226 Oxford Automotive, Inc. (the "Company") hereby requests a [insert Revolving Credit Loan] [Swingline Loan]or [Letter of Credit Advance] pursuant to Section 2.4 of the Credit Agreement, dated as of June __, 1997 (as amended or modified from time to time, the "Credit Agreement"), among the Company, the Borrowing Subsidiaries party thereto, the Lenders referenced therein and you, as Agent for the Lenders. [A Revolving Credit Loan is requested to be made in the amount of $_________, to be made on ____________, 199__ and evidenced by the Company's Revolving Credit Note. Such Loan shall be a ______________________________ and the initial Interest Period, if such requested Loan is an Acceptance, shall be _______________________________.] [A Swingline Loan is requested to be made in the amount of $_________, to be made on ____________, 199__ and evidenced by the Company's Swingline Note. Such Loan shall be a ______________________________ and the initial Interest Period, if such requested Loan is an Acceptance, shall be _______________________________.] [Such Letter of Credit Advance shall be made by issuance by the Agent of its Letter of Credit for the account of the Company in the maximum amount of $____________ to and for the benefit of ____________________ with a stated expiry date of ______________, ____, and containing the further terms and conditions set forth in the attached Letter of Credit Application of the Agent.] In support of this request, the Company hereby represents and warrants to the Agent and the Lenders that: 1. The representations and warranties contained in Article IV of the Credit Agreement, and in the Security Documents, are true and correct in all material respects on and as of the date hereof, and will be true and correct in all material respects on the date such Advance is made (both before and after such Advance is made), as if such representations and warranties were made on and as of such dates. 2. No Event of Default or Default has occurred and is continuing or will exist on the date such Advance is made and such Advance shall not cause an Event of Default or Default. 102 3. All trade accounts receivable, inventory and net tooling assets of the Company or any Subsidiary included in Eligible Accounts Receivable, Eligible Inventory and Eligible Net Tooling in Process comply in all respects with the requirements therefor set forth in the definitions thereof, and the computation of the Borrowing Base is true and correct as set forth in the Borrowing Base Certificate prepared as of _________________ attached hereto. 4. The Credit Agreement, the Notes and the Security Documents remain, and will be on the date such Advance is made, in full force and effect without any defense, set-off or counterclaim. 5. The Borrower has delivered to the Agent, prior to the close of business on the last day of the month next preceding the date such Advance is to be made, the Borrowing Base Certificate required pursuant to Section 5.1(d)(v). Acceptance of the proceeds of such Advance by the Company shall be deemed to be a further representation and warranty that the representations and warranties made herein are true and correct in all material respects at the time such proceeds are disbursed. Capitalized terms used but not defined herein shall have the respective meanings assigned to them in the Credit Agreement. OXFORD AUTOMOTIVE, INC. By: _______________________________ Its: __________________________ Dated: __________________, 19__ DISBURSEMENT OF ADVANCES - 2 - 103 EXHIBIT I DISBURSEMENT OF SWING LINE LOANS NBD Bank, as Agent 611 Woodward Avenue Detroit, Michigan 48226 Oxford Automotive, Inc. (the "Borrower") hereby requests a Swing Line Loan pursuant to Section 2.4(a) of the Credit Agreement, dated as of June __, 1997 (as amended or modified from time to time, the "Credit Agreement"), among the Borrower, the Borrowing Subsidiaries party thereto, the lenders party thereto from time to time (the "Lenders") and you, as Agent for the Lenders. A Swing Line Loan is requested to be made in the amount of $_________, to be made on ____________, 19___ and evidenced by the Borrower's Swing Line Note. In support of this request, the Borrower hereby represents and warrants to the Agent and the Lenders that: 1. The representations and warranties contained in Article IV of the Credit Agreement, and in the Security Documents, are true and correct in all material respects on and as of the date hereof, and will be true and correct in all material respects on the date such Loan is made (both before and after such Loan is made), as if such representations and warranties were made on and as of such dates. 2. No Event of Default or Default has occurred and is continuing or will exist on the date such Loan is made and such Loan shall not cause an Event of Default or Default. 3. The Credit Agreement, the Notes and the Security Documents remain, and will be on the date such Loan is made, in full force and effect without any defense, set-off or counterclaim. DISBURSEMENT OF SWING LINE LOANS -1- 104 4. The Borrower has delivered to the Agent, prior to the close of business on the last day of the month next preceding the date such Loan is to be made, Borrowing Base Certificate required pursuant to Section 5.1(d)(v). Acceptance of the proceeds of such Loan by the Borrower shall be deemed to be a further representation and warranty that the representations and warranties made herein are true and correct in all material respects at the time such proceeds are disbursed. Capitalized terms used but not defined herein shall have the respective meanings assigned to them in the Credit Agreement. OXFORD AUTOMOTIVE, INC. By: ______________________________________ Its: ________________________________ Dated: ________________, 19___ DISBURSEMENT OF SWING LINE LOANS -2- 105 EXHIBIT J SUBSEQUENT ELECTIONS AS TO BORROWINGS [Date] NBD Bank, as Agent 611 Woodward Avenue Detroit, Michigan 48226 Oxford Automotive, Inc. (the "Borrower"), hereby requests that $____________ of the principal amount of the [Revolving Credit Loan] [Swingline Loan] originally made on ____________, 19__, which [Revolving Credit Loan] [Swingline Loan] is currently a [insert type of Loan], be continued as or converted to, as the case may be, a [insert type of Loan requested] on ______________, 19__. If such Loan is requested to be continued as or converted to an Acceptance, the Borrowers hereby elect an Interest Period for such Loan of [insert permitted Interest Period]. In support of this request, the Borrower hereby represents and warrants to the Agent and the Lenders that: 1. The representations and warranties contained in Article IV of the Credit Agreement, and in the Security Documents, are true and correct in all material respects on and as of the date hereof, and will be true and correct in all material respects on the date such Loan is [continued][converted] (both before and after such Loan is [continued][converted]), as if such representations and warranties were made on and as of such dates. 2. No Event of Default or Default has occurred and is continuing or will exist on the date such Loan is [continued][converted] (whether before or after such Loan is [continued][converted]). 3. The Credit Agreement, the Notes and the Security Documents remain, and will be on the date such Loan is [continued][converted], in full force and effect without any defense, set-off or counterclaim. 4. The Borrowers have delivered to the Agent, prior to the close of business on the last day of the month next preceding the date such Loan is to be [continued][converted], the 106 Borrowing Base Certificate required pursuant to Section 5.1(d)(v). The [continuation][conversion] of such Loan by the Borrower shall be deemed to be a further representation and warranty that the representations and warranties made herein are true and correct in all material respects at the time of such [continuation] [conversion]. Capitalized terms used but not defined herein shall have the respective meanings assigned to them in the Credit Agreement, dated as of June __, 1997, as amended or modified from time to time, among the Borrower, the Borrowing Subsidiaries party thereto, the Lenders named therein and you as Agent for such Lenders. OXFORD AUTOMOTIVE, INC. By: __________________________________ Its: _______________________________ SUBSEQUENT ELECTIONS AS TO BORROWINGS - 2 - 107 EXHIBIT K --------- ASSIGNMENT AND ACCEPTANCE [NBD Bank, as Assignor, and __________________, as Assignee] Reference is made to the Credit Agreement dated as of June 24, 1997 (the "Credit Agreement") among OXFORD AUTOMOTIVE, INC., a Michigan corporation, the Borrowing Subsidiaries named therein, the lenders named therein (the "Lenders"), and NBD BANK, a Michigan banking corporation, as agent for the Lenders (the "Agent"). Terms defined in the Credit Agreement are used herein with the same meaning. The "Assignor" and the "Assignee" referred to on Schedule 1 agree as follows: 1. The Assignor hereby sells and assigns (without recourse) to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, an interest in and to the Assignor's rights and obligations under the Credit Agreement as of the date hereof equal to the amount specified on Schedule 1 of all outstanding rights and obligations under the Credit Agreement. After giving effect to such sale and assignment, the Assignee's Commitment will be as set forth on Schedule 1. 2. The Assignor (i) represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim; (ii) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any other instrument or document furnished pursuant thereto; (iii) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Company or the performance or observance by the Company of any of its obligations under the Credit Agreement or any other instrument or document furnished pursuant thereto; and (iv) attaches the Note or Notes held by the Assignor and requests that the Agent exchange such Note or Notes for a new Note or Notes payable to the order of the Assignee in an amount equal to the Commitments assumed by the Assignee pursuant hereto and the Assignor in an amount equal to the Commitments retained by the Assignor under the Credit Agreement, respectively, as specified on Schedule 1. 3. The Assignee (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in Section 4.6 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (ii) agrees that it will, independently and without reliance upon the Agent, the Assignor or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Credit Agreement as are delegated to the Agent by the terms thereof, together with such powers and discretion as are reasonably incidental thereto; (iv) agrees that it will perform in accordance with their terms of all of the obligations that by the terms of the Credit Agreement are required to be performed by it as a Lender; and (v) if the Assignee is organized under the laws of a jurisdiction outside the United States, attaches the forms prescribed by the Internal Revenue Service of the United States certifying as to the Assignee's status for purposes of determining exemption from United States withholding taxes with respect to all payments to be made to the Assignee under the Credit Agreement and the Notes or such other documents as are necessary to indicate that all such payments are subject to such taxes at a rate reduced by an applicable tax treaty. 108 4. Following the execution of this Assignment and Acceptance, it will be delivered to the Agent for acceptance and recording by the Agent. The effective date for this Assignment and Acceptance (the "Effective Date") shall be the date of acceptance hereof by the Agent, unless otherwise specified on Schedule 1. 5. Upon such acceptance and recording by the Agent, as of the Effective Date, (i) the Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and (ii) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement. 6. Upon such acceptance and recording by the Agent, from and after the Effective Date, the Agent shall make all payments under the Credit Agreement and the Notes in respect of the interest assigned hereby (including, without limitation, all payments of principal, interest and commitment fees with respect thereto) to the Assignee. The Assignor and Assignee shall make all appropriate adjustments in payments under the Credit Agreement and the Notes for periods prior to the Effective Date directly between themselves. 7. This Assignment and Acceptance shall be governed by, and construed in accordance with, the laws of the State of Michigan. 8. This Assignment and Acceptance may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of Schedule 1 to this Assignment and Acceptance, by telecopier or otherwise, shall be effective as delivery of a manually executed counterpart of this Assignment and Acceptance. IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule 1 to this Assignment and Acceptance to be executed by their officers thereunto duly authorized as of the date specified thereon. 109 SCHEDULE 1 TO ASSIGNMENT AND ACCEPTANCE Amount of NBD Bank's Revolving Credit Commitment assigned: $11,500,000.00 Effective date: August 20, 1997 The Assignee is not designated as a Canadian Lender NBD BANK, as Assignor By:______________________________ Its: ________________________ ____________________, as Assignee By:______________________________ Its:__________________________ Address for Notices: Attention: Facsimile No.: Telephone No.: Commitment amount of _______ after giving effect to this Assignment and Acceptance: Revolving Credit Commitment: $ th Consented to this __ day of _______, 1997 NBD BANK, as Agent By:______________________________ Its:__________________________ OXFORD AUTOMOTIVE, INC. By:______________________________ Its:__________________________ ASSIGNMENT AND ACCEPTANCE - 3 - 110 OXFORD AUTOMOTIVE, INC. __________________________________________ CREDIT AGREEMENT dated as of June 24, 1997 __________________________________________ THE BORROWING SUBSIDIARIES PARTY THERETO, THE LENDERS PARTY HERETO and NBD BANK, as Agent ARRANGED BY FIRST CHICAGO CAPITAL MARKETS, INC. DISCLOSURE SCHEDULES 111 Schedule 1.1(A) Existing Letters of Credit 1. Irrevocable Letter of Credit with FirstBank, dated January 31, 1996, in the amount of $885,000 regarding workers compensation. 2. Letter of Credit issued by NBD Bank dated September 27, 1995, for the account of Creative Fabrication Corporation in the amount of $8,669,535. 1 112 Schedule 1.1(B) GM Agreement October 18, 1996 General Motors of Canada Limited, 1908 Colonel Sam Drive, Oshawa, Ontario, L1H 8P7 Attention: Mr. Ted Roberts Dear Mr. Roberts: Pursuant to our meeting today, this letter documents the terms of our agreement regarding GM of Canada Limited's ("GMCL") waiver of contra rights as follows: 1. GMCL agrees with BMG North America Limited ("BMG") to waive its right of off-set or contra for the amount owed to GMCL by BMG under the GM Steel Resale Programme. 2. The term of this agreement shall be for 12 months, commencing October 26, 1996. 3. This agreement can be terminated prior to expiration by GMCL (Early Termination) upon 30 days written notice to BMG if BMG fails to materially perform under any of its awarded purchase orders with GM and resolution of the performance issue is not resolved to GM's satisfaction. 4. In the event of early termination of this agreement any amount owed to GMCL that is subject to the waiver of contra (as set forth above) shall remain subject to this agreement until fully repaid by BMG. 5. With effect of this agreement, BMG will reduce the payable to GMCL for the GM Steel Resale Program to sixty (60) days outstanding by December 31, 1996 and to forty-five (45) days outstanding by February 28, 1997. continued . . . 2 113 Please indicate your agreement to the terms above by executing below with the appropriate authorizing signatures. Sincerely, BMG NORTH AMERICA LIMITED /s/ Robert LaCourciere - ------------------------------------- Robert LaCourciere, President and CEO GM of Canada Limited hereby agrees to the terms above. GM of Canada Limited By: /s/ Edward Roberts ------------------------------------ Its. Purchasing Mgr. 10/21/96 By: /s/ Andrew Williams ------------------------------------ Its: Credit Manager 3 114 December 19, 1996 General Motors of Canada Limited, 1508 Colonel Sam Drive, Oshawa, Ontario, L1H8P7 Attention: Mr. Andrew Williams, Credit Manager Dear Mr. Williams: Pursuant to our recent discussion, we have agreed that Paragraph 5 of our letter agreement dated October 18, 1996, shall be amended to read as follows: "5. BMG agrees to reduce the payable to GMCL for the GM Steel Resale Program to sixty (60) days outstanding by January 17, 1997 and to forty-five (45) days outstanding by February 28, 1997." All other terms of the letter agreement of October 18, 1996 shall remain in full force and effect. Please indicate your agreement to the terms above by executing below with the appropriate authorizing signatures. Sincerely, BMG NORTH AMERICA LIMITED /s/Robert LaCourciere - ------------------------------- Robert LaCourciere, President Accepted and Agreed: GENERAL MOTORS OF CANADA LIMITED. By: /s/ Andrew Williams ---------------------------- Its: Credit Manager By: /s/ ---------------------------- Corporate Finance 4 115 Schedule 1.1(D) Senior Subordinated Debt Documents 1. Purchase Agreement by and among the Company, BMG North America Limited, Lobdell Emery Corporation, and the Initial Purchasers, dated June 19, 1997. 2. Registration Agreement by and among the Company and the Initial Purchasers, dated June 24, 1997. 3. Preliminary Offering Memorandum regarding the Senior Subordinated Notes, dated June 4, 1997. 4. Final Offering Memorandum regarding the Senior Subordinated Notes, dated June 20, 1997. 5 116 Schedule 4.4 Subsidiaries 1. Lobdell Emery Corporation Jurisdiction: Michigan corporation Ownership: The Company owns 100% of the issued and outstanding voting securities; various individuals own shares of the preferred stock of the Company (a) Parallel Group International, Inc. Jurisdiction: Indiana corporation Ownership: Lobdell Emery Corporation owns 100% of the issued and outstanding voting securities (b) Lewis Emery Capital Corporation Jurisdiction: Michigan corporation Ownership: Lobdell Emery Corporation owns 100% of the issued and outstanding voting securities (c) Laserweld International, L.L.C. Jurisdiction: Indiana limited liability company Ownership: Lobdell Emery Corporation owns 100% of the interests (d) Concept Management Corporation, f/k/a Concept Fabrication Corporation Jurisdiction: Michigan corporation Ownership: Lobdell Emery Corporation owns 100% of the issued and outstanding voting securities 6 117 (e) Winchester Fabrication Corporation Jurisdiction: Michigan corporation Ownership: Concept Management Corporation owns 100% of the issued and outstanding voting securities (f) Creative Fabrication Corporation Jurisdiction: Tennessee corporation Ownership: Concept Management Corporation owns 100% of the issued and outstanding voting securities 2. BMG Holdings, Inc. Jurisdiction: Ontario corporation Ownership: The Company owns 100% of the issued and outstanding voting securities (a) BMG North America Limited Jurisdiction: Ontario corporation Ownership: BMG Holdings, Inc. owns 100% of the issued and outstanding voting securities (i) 976459 Ontario Limited Jurisdiction: Ontario corporation Ownership: BMG North America Limited owns 100% of the issued and outstanding voting securities (ii) 829500 Ontario Limited, an Ontario corporation Jurisdiction: Ontario corporation Ownership: BMG North America Limited owns 100% of the issued and outstanding voting securities 7 118 3. HI Acquisition, Inc. Jurisdiction: Michigan corporation Ownership: The Company owns 100% of the issued and outstanding voting securities 8 119 Schedule 4.5 Litigation 1. Sturgis Iron & Metal Company, Inc. v Lobdell Emery Corporation 2. Dennis Holton v. Lobdell-Emery Manufacturing Company 3. Cindy Zirgibel v. Lobdell Emery Corporation 4. Lobdell Emery Corporation v. Doug Losey 5. Crisher v. Lobdell Emery Corporation (EEOC) 6. Rich v. Lobdell Emery Corporation (EEOC) 7. Nick Nedry v. Lobdell Emery Corporation 8. ADW Industries, Inc. v. Winchester Fabrication Corporation 9. Sheriff Certificate dated June 18, 1997, indicates that a writ of execution, No. 97-00599, is registered against BMG North America Limited. The details are as follows. Creditor: Workers Compensation Board PO Box 2099, Stn LCD1 Hamilton, Ontario L8N 4C5 Court File: 02838/97A Amount: Cdn$416,526 Comment: Interest at the rate of 1.5% per month on the payments in default commencing on March 6, 1997. Provisions are being made for the immediate payment of the amount owed. 10. Judicial review application brought by the CAW against Butler Metal Products of an arbitration award dated May 30, 1997. The CAW is attempting to overturn an arbitrator's award in Butler's favor. 9 120 Schedule 4.17 Intellectual Property 1. Oxford Automotive (licensed by The Oxford Investment Group, Inc. to the Company) (registration application pending) 2. Oxford Automotive (logo) (licensed by The Oxford Investment Group, Inc. to the Company) (registration application pending) 3. Rack Base Construction; US Patent No. 5,533,456; Canadian Patent File No. 2,147,721 10 121 Schedule 4.18 Preferred Stock 1. Written Consent of the Board of Directors of L-E Acquisition, Inc. In Lieu of Meeting, dated January 6, 1997, designating the series and prescribing the relative rights and preferences of the shares of preferred stock of L-E Acquisition. See Restated Articles of Incorporation of Lobdell Emery Corporation for a complete description of the dividends, distributions, redemptions, and other payments required on the Preferred Stock. 2. Lobdell Emery Corporation, Series A $3.00 Cumulative Preferred Stock, Certificate Nos. 1 through No. 102 3. Lobdell Emery Corporation, Series B Preferred Stock, Certificate Nos. 1 through No. 51 11 122 Schedule 5.2(e) Indebtedness 1. $8,500,000 Industrial Development Revenue Bonds (Creative Fabrication Corporation Project), Series 1995, dated September 27, 1995 of the Industrial Development Board of the County of McMinn and associated reimbursement obligation to NBD Bank, guaranteed by Lobdell Emery Corporation. 2. Credit Agreement between Lewis Emery Capital Corporation and NBD Bank, as successor, dated as of June 8, 1993, and related documents. 3. Industrial and Regional Development Program dated November 30, 1989, as amended by Amendments No. 1, 2, 3, 4 and 5. 4. Demand Loan Agreement between BMG North America and Export Development Corporation dated October 7, 1996. 5. Demand Note payable by BMG North America Limited to Lobdell Emery Corporation, dated January 17, 1997. 6. Non - Negotiable Demand Note payable by the Company to The Oxford Investment Group, Inc., dated March 31, 1997. 7. FUL Incorporated Scrubber Lease, dated September 26, 1996. 8. KeyCorp/USL Capital Lease - SMG - Redline Equipment, dated September 19, 1996. 9. Master Lease Republic Financial Corporation, dated May 20, 1993. 10. USL Capital Lease - SMG Presses, dated March 15, 1996. 11. Senior Subordinated Notes. 12 123 Schedule 5.2(f) Liens ----- Oxford Automotive, Inc. ----------------------
File No. Jurisdiction Registration No. Creditor Collateral - -------- ------------ ---------------- -------- ---------- 811554318 Ontario 950106 1354 Snap on Tools of Equipment, 1629 1101 Canada Ltd. Other
Lobdell Emery Corporation -------------------------
Secured Party Jurisdiction File No. File Date Collateral ------------- ------------ -------- --------- ---------- 1. Clarklift of Michigan Sec'y C601669 05/29/92 Specific Equip. Flint/Saginaw of State 2. Varilease Corporation Michigan Sec'y C623236 08/03/92 Specific Equip. of State C670297 01/04/93 Asgmt of C623236 to NBD Equipmt Finance, Inc. 3. Varilease Corporation Michigan Sec'y C623237 08/03/92 Specific Equip. of State Michigan Sec'y 28192B 02/17/93 Equip. Lease of State 29254B 03/26/93 Asgmt of 28192B to U.S. Leasing Int'l 4. U.S. Leasing Corporation Michigan Sec'y 27844B 02/04/93 Equip. Transfer of State 6. AT&T Commercial Michigan Sec'y 30455B 04/28/93 Equip. Lease Finance Corporation of State
13 124
Secured Party Jurisdiction File No. File Date Collateral ------------- ------------ -------- --------- ---------- C878910 08/30/94 Partial Release of 30455B 7. Republic Financial Michigan Sec'y 34876B 09/07/93 Equip. Lease Corporation, asgn'd to of State Provident Commercial Group C785609 12/08/93 Amdmt of C34876B changing Lobdell's name C903792 11/08/94 Amdmt of 34876B changing Lobdell's name 8. Republic Financial Michigan Sec'y C764199 10/04/93 Equip. Lease Corporation, asgn'd of State to NBD Leasing, Inc. C784591 12/03/93 Amdmt of C764199 changing Lobdell's name 9. Republic Financial Michigan Sec'y 36162B 10/19/93 Equip. Lease Corporation of State C782548 11/29/93 Amdmt of 36162B changing Lobdell's name C782549 11/29/93 Partial Release of C36162B C782550 11/29/93 Asgmt of 36126B to Fleet Credit Corporation
14 125
Secured Party Jurisdiction File No. File Date Collateral ------------- ------------ -------- --------- ---------- 10. Republic Financial Michigan Sec'y 39194B 01/21/94 Equip. Lease Corporation, asgn'd to of State Fleet Credit Corporation 41076B 03/23/94 Amdmt of 39l94B to add serial no's 49169B 11/17/94 Amdmt of 39194B to amend Lobdell's name 11. Republic Financial Michigan Sec'y C847140 05/27/94 Equip. Lease Corporation, asgn'd to of State Colorado Nat'l Leasing 12. Republic Financial Michigan Sec'y C879002 08/30/94 Equip. Lease Corporation, asgn'd of State to NBD Leasing, Inc. 13. Republic Financial Michigan Sec'y C903794 11/08/94 Equip. Lease Corporation, asgn'd to of State Provident Commercial Group 14. Republic Financial Michigan Sec'y 55705B 05/11/95 Equip. Lease Corporation of State C983782 06/20/95 Amdmt of 55705B to correct equip. descriptions C983783 06/20/95 Asgmt of 55705B to Colorado Nat'l Leasing, Inc. 15. NBD Bank Michigan Sec'y 60957B 09/29/95 Blanket of State
15 126
Secured Party Jurisdiction File No. File Date Collateral ------------- ------------ -------- --------- ---------- 16. Sanwa Leasing Michigan Sec'y D054394 01/19/96 Equip. Lease Corporation of State 17. USL Capital Corporation Michigan Sec'y 68702B 03/22/96 Equip. Lease of State 18. Republic Financial Michigan Sec'y D090694 04/29/96 Equip. Lease Corporation of State D105237 06/10/96 Amdmt of D090694 to add serial no's D115209 07/08/96 Partial Asgmt of D090694 19. FUL, Inc. Michigan Sec'y 0309002 10/23/96 Equip. Lease of State 20. NBD Bank Michigan Sec'y 77859B 09/20/96 All assets of State D183790 01/14/97 Amdmt of 77859B 77861B 09/20/96 All assets D183792 01/14/97 Amdmt of 77861B 77860B 09/20/96 All assets D183791 01/14/97 Amdmt of 77860B D183725 01/14/97 Blanket 22. KeyCorp Leasing Michigan Sec'y D147419 10/08/96 Equip. Lease of State 23. KeyCorp Leasing Michigan Sec'y D147418 10/08/96 Equip. Lease of State
16 127
Secured Party Jurisdiction File No. File Date Collateral - ------------- ------------ -------- --------- ---------- 24. Sanwa Leasing Michigan Sec'y D144421 10/02/96 Equip. Lease Corporation of State 25. Sanwa Leasing Michigan Sec'y D117895 07/16/96 Equip. Lease Corporation of State 26. Manufacturers Rubber Michigan Sec'y D103316 06/04/96 Equip. Lease Supply of State 27. Fleet Credit Indiana Sec'y of 1950680 11/17/94 Equip. Lease State amend. 1890658 28. Fleet Credit Indiana Sec'y of 1902655 03/23/94 Equip. Lease State amend. 1890658 29. Republic Financial Indiana Sec'y of 1934965 08/29/94 Equip. Lease State 1997398 06/29/95 Equip. Lease amend. 1986687 30. Colorado Leasing Indiana Sec'y of 1997399 06/29/95 Equip. Lease State assign. of 1986687 31. NBD Bank Indiana Sec'y of 2011885 10/02/95 Blanket State 2011885 10/02/95 Blanket 2068907 07/29/96 Blanket 2080004 09/27/96 Blanket 2080005 09/27/96 Blanket 2080006 09/27/96 Blanket 2080007 09/27/96 Blanket
17 128 Parallel Group International, Inc. ----------------------------------
Secured Party Jurisdiction File No. File Date Collateral ------------- ------------ -------- --------- ---------- 1. NBD Bank Indiana Sec'y 2080008 09/27/96 Blanket of State 2. NBD Bank Michigan Sec'y 77864B 09/20/96 Blanket of State
Lewis Emery Capital Corporation
Secured Party Jurisdiction File No. File Date Collateral ------------- ------------ -------- --------- ---------- 1. NBD Bank Michigan Sec'y 77865B 09/20/96 Blanket of State D183786 01/14/97 Amdmt of 77865B D183720 01/14/97 Blanket
Laserweld International, L.L.C. -------------------------------
Secured Party Jurisdiction File No. File Date Collateral ------------- ------------ -------- --------- ---------- 1. NBD Bank Indiana Sec'y 2080003 09/27/96 Blanket of State 2. NBD Bank Michigan Sec'y 77862B 09/20/96 Blanket of State
Concept Management Corporation, f/k/a Concept Fabrication Corporation
Secured Party Jurisdiction File No. File Date Collateral ------------- ------------ -------- --------- ---------- 1. NBD Bank Michigan Sec'y 77867B 09/20/96 Blanket of State
18 129
Secured Party Jurisdiction File No. File Date Collateral - ------------- ------------ -------- --------- ---------- D183784 01/14/97 Amdmt of 77867B D183724 01/14/97 Blanket 2. Michigan National Bank Michigan Sec'y 60997B 09/29/95 Blanket of State
Winchester Fabrication Corporation ----------------------------------
Secured Party Jurisdiction File No, File Date Collateral ------------- ------------ -------- --------- ---------- 1. Concept Fabrication Indiana Sec'y 1969416 02/24/95 Blanket Corporation of State Michigan Sec'y C939489 01/14/97 Blanket of State 2. Michigan National Bank Indiana Sec'y 2011891 10/02/95 Blanket of State 3. NBD Bank Indiana Sec'y 208009 09/27/96 Blanket of State Michigan Sec'y 77866B 09/20/96 Blanket of State D183785 01/14/97 Amdmt of 77866B D183722 01/14/97 Blanket 4. Lobdell Emery Michigan Sec'y C939488 02/22/95 Blanket Corporation of State D183783 01/14/97 Amdmt of C939488 Michigan Sec'y 77866B 09/20/96 Blanket of State
19 130 Creative Fabrication Corporation --------------------------------
Secured Party Jurisdiction File No. File Date Collateral ------------- ------------ -------- --------- ---------- 1. Michigan National Bank Michigan Sec'y 60996B 09/29/95 Blanket of State 2. NBD Bank Michigan Sec'y 77863B 09/20/96 Blanket of State
BMG Holdings, Inc. ------------------
FILE NUMBER REGISTRATION NUMBER CREDITOR COLLATERAL 075631482 951026 1143 0043 2568 GE Capital Canada Equipment Accounts, Other Financing Inc. 075632706 951026 1143 0043 2569 General Electric Capital Accounts, Other Canada Inc. 075632706 951124 1558 0096 4306
BMG North America Limited -------------------------
FILE NUMBER REGISTRATION NUMBER CREDITOR COLLATERAL 079497603 970207 1509 0043 8340 First Chicago NBD Bank, Inventory, Equipment, Canada Accounts, Other, Motor Vehicle included 825354621 961002 1710 9065 3272 Dana Commercial Credit, Equipment, Other Canada Inc. 074846016 960924 1408 0028 0959 Export Development Inventory, Equipment, Corporation Accounts, Other 824844582 960912 1451 1667 1267 Transportation Lease Systems Equipment, Motor Vehicle Inc. included 075274452 960711 0843 0043 1861 Highview Pontiac Buick GMC Consumer Goods, Equipment, Limited Other, Motor Vehicle included
20 131 822840975 960619 1719 1737 4293 GMAC Leaseco Limited Equipment, Other, Motor Vehicle included 821240073 960419 1343 1737 9165 GMAC Leaseco Limited Equipment, Other, Motor Vehicle included 821240073 961003 1637 1737 0879 817634853 951026 0931 1081 1114 Nationsbank of Tennessee, Inventory, Equipment, N.A. Accounts, Other 072038844 951004 1419 0004 7308 GE Capital Canada Equipment Inventory, Equipment, Financing Inc. Accounts, Other, Motor Vehicle included 078050214 951004 1419 0004 7309 General Electric Capital Inventory, Equipment, Canada Inc. Accounts, Other, Motor Vehicle included 814613751 950612 1930 1529 3971 NTFC Capital, Division of Equipment, Accounts, Other General Electric Canada Inc. 055459998 950324 1138 0024 0088 General Electric Capital Equipment, Accounts, Other Canada Inc. 810972468 941202 2222 1590 5939 Dana Commercial Credit, Equipment, Other Canada Inc. 810972468 950315 1756 1590 8493 810972468 950315 1756 1590 8494 810972468 951023 1323 0024 2828 810027153 941018 2150 1529 0698 IBM Canada Ltd. Equipment, Accounts, Other 077111739 940722 1237 0043 6756 The Royal Trust Company Inventory, Equipment, Accounts, Other, Motor Vehicle included 077111739 951103 1743 1590 3322 803537316 930622 2053 1531 4208 Hewlett-Packard (Canada) Ltd. Equipment, Other 059461524 930218 1107 0043 7709 The Royal Trust Company Inventory, Equipment, Accounts, Other, Motor Vehicle included 059461524 951103 1743 1590 3323 027527715 910516 1405 0043 1372 The Royal Trust Company Inventory, Equipment, Accounts, Other, Motor Vehicle included 027527715 920525 0843 0043 0221
21 132 027527715 930215 1344 0043 6440 027527715 951103 1743 1590 3324 963236493 890529 1417 43 9388 The Royal Trust Company Inventory, Equipment, Book Debts, Other, Motor Vehicle included 963236493 890829 1030 43 8523 963236493 920525 0843 0043 0230 963236493 930215 1343 0043 6434 963236493 951103 1743 1590 3325 963236502 890529 1417 43 9390 The Royal Trust Company Book Debts, Other 963236502 890829 1030 43 8524 963236502 920525 0843 0043 0231 963236502 930215 1344 0043 6436 963236502 951103 1743 1590 3326 963236511 890529 1417 43 9391 The Royal Trust Company Other 963236511 890829 1030 43 8525 963236511 920525 0843 0043 0229 963236511 930215 1344 0043 6437 963236511 951103 1743 1590 3327 900929772 092977 CSRA Registration 920525 0843 0043 0219 930215 1344 0043 6435 951103 1743 1590 3328
829500 Ontario Limited
FILE NUMBER REGISTRATION NUMBER CREDITOR COLLATERAL 079497612 970207 1509 0043 8341 First Chicago NBD Bank, Inventory, Equipment, Canada Accounts, Other, Motor Vehicle included
22 133 817565868 951023 1853 1529 8435 General Electric Capital Inventory, Equipment, Canada Inc. Accounts, Other, Motor Vehicle included 817565877 951023 1853 1529 8436 GE Capital Canada Equipment Inventory, Equipment, Financing Inc. Accounts, Other, Motor Vehicle included 077111694 940722 1237 0043 6755 The Royal Trust Company Inventory, Equipment, Accounts, Other, Motor Vehicle included 059461515 930218 1107 0043 7708 The Royal Trust Company Inventory, Equipment, Accounts, Other, Motor Vehicle included 035456508 910517 1139 0043 2353 The Royal Trust Company Inventory, Equipment, Accounts, Other, Motor Vehicle included 035456508 920525 0843 0043 0223 946379556 890529 1417 43 9389 The Royal Trust Company Inventory, Equipment, Accounts, Other, Motor Vehicle included 946379556 920525 0844 0043 0235 900929772 092977 CSRA Registration 900929772 920525 0843 0043 0219 900929772 930215 1344 0043 6435 900929772 951103 1743 1590 3328
23 134 976459 Ontario Limited
FILE NUMBER REGISTRATION NUMBER CREDITOR COLLATERAL 079490475 970207 1509 0043 8342 First Chicago NBD Bank, Inventory, Equipment, Canada Accounts, Other, Motor Vehicle included 817565886 951023 1853 1529 8437 General Electric Capital Inventory, Equipment, Canada Inc. Accounts, Other, Motor Vehicle included 817565895 951023 1853 1529 8438 GE Capital Canada Equipment Inventory, Equipment, Financing Inc. Accounts, Other, Motor Vehicle included
24 135 Additional Liens 1. Security Agreement between Creative Fabrication Corporation and NBD Bank dated September 1, 1995. 2. Pledge and Security Agreement between Creative Fabrication Corporation and NBD Bank dated September 1, 1995. 3. Deed of Trust, Security Agreement, Fixture Filing and Assignment of Rents dated as of September 1, 1995, from Creative Fabrication Corporation in favor of David Siklosi, Trustee for the benefit of NBD Bank. 25 136 Schedule 5.2(o) Negative Pledges 1. Senior Subordinated Debt Documents 2. Demand Loan Agreement between BMG North America and Export Development Corporation dated October 7, 1996 3. Industrial and Regional Development Program dated November 30, 1989, as amended by Amendments No. 1, 2, 3, 4 and 5 4. Series A Notes payable by BMG Holdings, Inc. to Canadian Pension Capital Corporation ($150,000), Canadian Pension Capital Limited ($150,000), and Canadian Insurers' Capital Corporation ($300,000), each dated October 26, 1995 5. Loan and Security Agreement between Lewis Emery Capital Corporation and NBD Bank, dated as of June 8, 1993 6. 8,500,000 Industrial Development Revenue Bonds (Creative Fabrication Corporation Project), Series 1995, dated September 27, 1995 of the Industrial Development Board of the County of McMinn and associated reimbursement obligation to NBD Bank, guaranteed by Lobdell Emery Corporation 26 137 Schedule 5.2(u) Management Fees 1. Management Agreement between the Company and The Oxford Investment Group, Inc., dated June 24, 1997. 27 EX-4.3 5 EXHIBIT 4.3 1 EXHIBIT 4.3 COMPANY SECURITY AGREEMENT THIS SECURITY AGREEMENT, dated as of June 24, 1997 (this "Security Agreement"), is made by OXFORD AUTOMOTIVE, INC., a Michigan corporation, (the "Debtor"), in favor of NBD BANK, a Michigan banking corporation, as agent (in such capacity, the "Agent") for the benefit of itself and the lenders (the "Lenders") now or hereafter parties to the Credit Agreement described below. RECITALS A. The Debtor and the Borrowing Subsidiary identified from time to time therein have entered into a Credit Agreement of even date herewith (as amended or modified from time to time, including any agreement entered into in substitution therefor, the "Credit Agreement"), with the Lenders and the Agent pursuant to which the Lenders may make Advances (as therein defined) to the Debtor and the Borrowing Subsidiary. B. Under the terms of the Credit Agreement, the Debtor has agreed to grant to the Agent, for the benefit of itself and the Lenders, a first-priority security interest, subject only to security interests expressly permitted by the Credit Agreement, in and to the Collateral hereinafter described. AGREEMENTS To secure (a) the prompt and complete payment of all indebtedness and other obligations of the Debtor or any Subsidiary now or hereafter owing to the Lenders or the Agent under or on account of the Credit Agreement, any Security Document or any Letters of Credit, notes or other instruments issued to the Agent or any Lender pursuant thereto, (b) the performance of the covenants under the Credit Agreement and the Security Documents and any monies expended by the Lender in connection therewith, (c) the prompt and complete payment of all obligations and performance of all covenants of the Debtor under any interest rate or currency swap agreements or similar transactions with any Lender and (d) the prompt and complete payment of any and all other indebtedness, obligations and liabilities of any kind of the Debtor or any Subsidiary to the Agent and the Lenders, or any of them, in all cases, of any kind or nature, howsoever created or evidenced and whether now or hereafter existing, direct or indirect (including without limitation any participation interest acquired by any Lender in any such indebtedness, obligations or liabilities of the Debtor or any Subsidiary to any other person and any interest rate swap, cap or similar 2 agreement), absolute or contingent, joint and/or several, secured or unsecured, arising by operation of law or otherwise, and whether incurred by the Debtor or any Subsidiary as principal, surety, endorser, guarantor, accommodation party or otherwise, including without limitation all principal and all interest (including any interest accruing subsequent to any petition filed by or against the Debtor or any Subsidiary under the U.S. Bankruptcy Code), indemnity and reimbursement obligations, charges, expenses, fees, attorneys' fees and disbursements and any other amounts owing thereunder (all of the aforesaid indebtedness, obligations and liabilities of the Debtor and its Subsidiaries being herein called the "Secured Obligations", and all of the documents, agreements and instruments among the Debtor, the Subsidiaries, the Agent, the Lenders, or any of them, evidencing or securing the repayment of, or otherwise pertaining to, the Secured Obligations including without limitation the Credit Agreement, the Notes, the Letters of Credit and the Security Documents, being herein collectively called the "Operative Documents"), for value received and pursuant to the Credit Agreement, the Debtor hereby grants, assigns and transfers to the Agent for the benefit of the Lenders a first-priority security interest, subject only to Permitted Liens, in and to the following described property whether now owned or existing or hereafter acquired or arising and wherever located (all of which is herein collectively called the "Collateral"): (a) All of the Debtor's present and future accounts, documents, instruments, general intangibles and chattel paper, including, but without limitation, all accounts receivable, all contract rights, all deposit accounts and all monies and claims for money due or to become due to the Debtor, all security held or granted to the Debtor, and all assets described in clause (d) below; (b) All of the Debtor's furniture, fixtures, machinery and equipment, whether now owned or hereafter acquired, and wherever located, and whether used by the Debtor or any other person, or leased by the Debtor to any person and whether the interest of the Debtor is as owner, lessee or otherwise; (c) All of the Debtor's present and future inventory of every type, wherever located, including but not limited to raw materials, work in process, finished goods and all inventory that is available for leasing or leased to others by the Debtor; (d) All other present and future assets of the Debtor (whether tangible or intangible), including but not limited to all trademarks, trade names, patents, industrial designs, masks, trade secrets, copyrights, franchises, customer lists, computer programs, software, tax refund claims, licenses and permits, and the good will associated therewith and all federal, state, foreign and other applications and registrations therefor, all reissues, divisions, continuations, renewals, extensions and continuations-in-part thereof now or hereafter in effect, all income, license royalties, damages and payments now and hereafter due or payable under and with respect thereto, including, without limitation, any damages, proceeds or payments for past or future infringements thereof and all income, royalties, damages and payments under all licenses thereof, the right to sue for past, present and future infringements thereof, all right, title and interest of the Debtor as licensor under any of SECURITY AGREEMENT - 2 - 3 the foregoing whether now owned and existing or hereafter arising, and all other rights and other interests corresponding thereto throughout the world (all of the assets described in this clause (d) collectively referred to as the "Intellectual Property"); (e) All books, records, files, correspondence, computer programs, tapes, disks, cards, accounting information and other data of the Debtor related in any way to the Collateral described in clauses (a), (b), (c) and (d) above, including but not limited to any of the foregoing necessary to administer, sell or dispose of any of the Collateral; (f) All substitutions and replacements for, and all additions and accessions to, any and all of the foregoing; and (g) All products and all proceeds of any and all of the foregoing, and, to the extent not otherwise included, all payments under insurance (whether or not the Agent is the loss payee thereof), and any indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise with respect to any of the foregoing. 1. Representations, Warranties, Covenants and Agreements. The Debtor further represents and warrants to and covenants and agrees with the Agent for the benefit of the Lenders as follows: (a) Ownership of Collateral; Security Interest Priority. At the time any Collateral becomes subject to a security interest of the Agent hereunder, unless the Agent shall otherwise consent, the Debtor shall be deemed to have represented and warranted that (i) the Debtor is the lawful owner of such Collateral and has the right and authority to subject the same to the security interest of the Agent hereunder; (ii) other than Permitted Liens (as defined in the Credit Agreement) and lessors' interest with respect to any security interest in any property leased by the Debtor as lessee, none of the Collateral is subject to any Lien other than that in favor of the Agent for the benefit of the Lenders and there is no effective financing statement or other filing covering any of the Collateral on file in any public office, other than in favor of the Agent for the benefit of the Lenders. This Security Agreement creates in favor of the Agent for the benefit of the Lenders a valid first-priority security interest, subject only to Permitted Liens, in the Collateral enforceable against the Debtor and all third parties and securing the payment of the Secured Obligations. All financing statements necessary to perfect such security interest in the Collateral have been delivered by the Debtor to the Agent for filing. (b) Location of Offices, Records and Facilities. The Debtor's chief executive office and chief place of business and the office where the Debtor keeps its records concerning its accounts, contract rights, chattel paper, instruments, general intangibles and other obligations arising out of or in connection with the sale or lease of goods or the rendering of services or otherwise ("Receivables"), and all originals of all leases and other chattel paper which evidence SECURITY AGREEMENT - 3 - 4 Receivables, is at the location listed on Schedule 1(b)(i) hereto. The Debtor will provide the Agent with prior written notice of any proposed change in the location of its chief executive office. The Debtor's only other offices and facilities are at the locations set forth in Schedule 1(b)(ii) hereto. The Debtor will provide the Agent with prior written notice of any change in the locations of its other offices and the facilities at which any assets of the Debtor are located. The tax identification number of the Debtor is set forth on Schedule 1(b)(i). The name of the Debtor is correctly set forth on the signature pages hereof, and the Debtor operates under no other names. The Debtor shall not change its name without the prior written consent of the Agent. (c) Location of Inventory, Fixtures, Machinery and Equipment. (i) All Collateral consisting of inventory is, and will be, located at the locations listed on Schedule 1(c)(i) hereto, and at no other locations without the prior written consent of the Agent. (ii) All Collateral consisting of fixtures, machinery or equipment, is, and will be, located at the locations listed on Schedule 1(c)(ii) hereto, and at no other locations without the prior written consent of the Agent. If the Collateral described in clauses (i) or (ii) is kept at leased locations or warehoused, the Debtor has obtained appropriate landlord's lien waivers or appropriate warehousemen's notices have been sent, each satisfactory to the Agent, unless waived by the Agent. (d) Liens, Etc. The Debtor will keep the Collateral free at all times from any and all liens, security interests or encumbrances other than those described in paragraph 1(a)(ii) and those consented to in writing by the Required Lenders. The Debtor will not, without the prior written consent of the Agent, sell, lease, license, transfer, assign or otherwise dispose of, or permit or suffer to be sold, leased, licensed, transferred, assigned or otherwise disposed of, any of the Collateral, except for, prior to an Event of Default only (notwithstanding any other agreement), the following: inventory sold in the ordinary course of business and other assets permitted to be sold, leased, licensed, transferred, assigned or otherwise disposed under Section 5.2(f) of the Credit Agreement. The Agent or its attorneys may at any and all reasonable times inspect the Collateral and for such purpose may enter upon any and all premises where the Collateral is or might be kept or located. (e) Insurance. The Debtor shall keep the tangible Collateral insured at all times against loss by theft, fire and other casualties. Said insurance shall be issued by a company rated A or better by A.M. Best and shall be in amounts sufficient to protect the Agent and the Lenders against any and all loss or damage to the Collateral. The policy or policies which evidence said insurance shall be delivered to the Agent upon request, shall contain a lender loss payable clause in favor of the Agent for the benefit of the Lenders, shall name the Agent for the benefit of the Lenders as an additional insured, as its interest may appear, shall not permit amendment, cancellation or termination without giving the Agent at least 30 days' prior written notice thereof, and shall otherwise be in form and substance satisfactory to the Agent. Reimbursement under any liability insurance maintained by the Debtor pursuant to this paragraph 1(e) may be paid directly to the person who shall have incurred liability covered by such insurance, provided that if there is no SECURITY AGREEMENT - 4 - 5 Default or Event of Default (whether before or after any event which caused any reimbursement under any liability insurance) the Debtor may use the proceeds of such insurance solely to repair or replace the property damaged if the insurance proceeds are less than $500,000 and if there is any Event of Default or Default, and if such reimbursement is greater than $500,000 or there is any Default or Event of Default such amounts shall be paid to the Agent for application to the Secured Obligations. (f) Taxes, Etc. The Debtor will pay promptly, and within the time that they can be paid without interest or penalty, any taxes, assessments and similar imposts and charges, not being contested in good faith, which are now or hereafter may become a Lien upon any of the Collateral. If the Debtor fails to pay any such taxes, assessments or other imposts or charges in accordance with this paragraph, the Agent shall have the option to do so and the Debtor agrees to repay forthwith all amounts so expended by the Agent with interest at the Overdue Rate. (g) Further Assurances. The Debtor will do all acts and things and will execute all financing statements and writings reasonably requested by the Agent to establish, maintain and continue a perfected and valid security interest of the Agent for the benefit of the Lenders in the Collateral, and will promptly on demand pay all reasonable costs and expenses of filing and recording all instruments, including the costs of any searches deemed necessary by the Agent, to establish and determine the validity and the priority of the Agent's security interests for the benefit of the Lenders. A carbon, photographic or other reproduction of this Security Agreement or any financing statement covering the Collateral shall be sufficient as a financing statement. (h) List of Patents, Copyrights, Mask Works and Trademarks. Attached hereto as Schedule 1(h)(i) is a list of all patents and patent applications owned by the Debtor. Attached hereto as Schedule 1(h)(ii) is a list of all registered copyrights and all mask works and applications therefor owned by the Debtor. Attached hereto as Schedule 1(h)(iii) is a list of all trademarks and service marks owned by the Debtor. If the Debtor at any time owns any additional patents, copyrights, mask works, trademarks, service marks or any applications therefor not listed on such schedules, the Debtor shall give the Agent prompt written notice thereof and hereby authorizes the Agent to modify this Agreement by amending Schedules 1(h)(i), 1(h)(ii) and 1(h)(iii) hereto to include all future patents, copyrights, mask works, trademarks, service marks and applications therefor and agrees to execute all further instruments and agreements, if any, if requested by the Agent to evidence the Agent's interest for the benefit of the Lenders therein. (i) Maintenance of Tangible Collateral. The Debtor will cause the tangible Collateral material to the conduct of its business to be maintained and preserved in the same condition, repair and working order as when new, ordinary wear and tear excepted, and in accordance with any manufacturer's manual, and shall forthwith, or, in the case of any loss or damage to any of the tangible Collateral as quickly as practicable after the occurrence thereof, make or cause to be made all repairs, replacements, and other improvements which are necessary or SECURITY AGREEMENT - 5 - 6 desirable to such end. The Debtor shall promptly furnish to the Agent a statement respecting any loss or damage to any of the tangible Collateral. (j) Special Rights Regarding Receivables. The Agent or any of its agents may, at any time and from time to time in its sole discretion and irrespective of the existence of any Event of Default under this Security Agreement, verify, directly with each person (collectively, the "Obligors") which owes any Receivables to the Debtor, the Receivables in any manner. The Agent or any of its agents may, at any time from time to time after and during the continuance of an Event of Default under this Security Agreement, notify the Obligors of the security interest of the Agent for the benefit of the Lenders in the Collateral and/or direct such Obligors that all payments in connection with such obligations and the Collateral be made directly to the Agent in the Agent's name. If the Agent or any of its agents shall collect such obligations directly from the Obligors, the Agent or any of its agents shall have the right to resolve any disputes relating to returned goods directly with the Obligors in such manner and on such terms as the Agent or any of its agents shall deem appropriate. The Debtor directs and authorizes any and all of its present and future account debtors to comply with requests for information from the Agent, the Agent's designees and agents and/or auditors, relating to any and all business transactions between the Debtor and the Obligors. The Debtor further directs and authorizes all of its Obligors upon receiving a notice or request sent by the Agent or the Agent's agents or designees to pay directly to the Agent any and all sums of money or proceeds now or hereafter owing by the Obligors to the Debtor, as provided in this paragraph 1(j) and any such payment shall act as a discharge of any debt of such Obligor to the Debtor in the same manner as if such payment had been made directly to the Debtor. The Debtor agrees to take any and all action as the Agent may reasonably request to assist the Agent in exercising the rights described in this paragraph 1(j). (k) Maintenance of Intellectual Property and Other Intangible Collateral. The Debtor shall preserve and maintain all rights of the Debtor and the Agent for the benefit of the Lenders in all material Intellectual Property and all other material intangible Collateral, including without limitation the payment of all maintenance fees and filing fees and the taking of all appropriate action at the Debtor's expense to halt the infringement of any of the Intellectual Property or other Collateral, provided that, with respect to halting the infringement of any Intellectual Property or other Collateral, the Debtor does not need to take all such appropriate action if the Debtor has, or after Event of Default the Agent has, reasonably determined that it is not in its best interest to demand or enforce cessation of such infringement or other conduct because it is either not material or because the adverse consequences to the Debtor would outweigh the benefits gained by such demand or enforcement. 2. Events of Default. The occurrence of any Event of Default shall be deemed an Event of Default under this Security Agreement. SECURITY AGREEMENT - 6 - 7 3. Remedies. Upon the occurrence of any Event of Default, the Agent shall have and may exercise any one or more of the rights and remedies provided to it under this Security Agreement or any of the other Operative Documents or provided by law, including but not limited to all of the rights and remedies of a secured party under the Uniform Commercial Code, and the Debtor hereby agrees to assemble the Collateral and make it available to the Agent at a place to be designated by the Agent which is reasonably convenient to both parties, authorizes the Agent to take possession of the Collateral with or without demand and with or without process of law and to sell and dispose of the same at public or private sale and to apply the proceeds of such sale to the costs and expenses thereof (including reasonable attorneys' fees and disbursements, incurred by the Agent) and then to the payment and satisfaction of the Secured Obligations. Any requirement of reasonable notice shall be met if the Agent sends such notice to the Debtor, by registered or certified mail, at least 10 days prior to the date of sale, disposition or other event giving rise to a required notice. The Agent may be the purchaser at any such sale. The Debtor expressly authorizes such sale or sales of the Collateral in advance of and to the exclusion of any sale or sales of or other realization upon any other collateral securing the Secured Obligations. The Agent shall have no obligation to preserve rights against prior parties. The Debtor hereby waives as to the Agent and each Lender any right of subrogation or marshalling of such Collateral and any other collateral for the Secured Obligations. To this end, the Debtor hereby expressly agrees that any such collateral or other security of the Debtor or any other party which the Agent or any Lender may hold, or which may come to the Agent or any Lender's possession, may be dealt with in all respects and particulars as though this Security Agreement were not in existence. The parties hereto further agree that public sale of the Collateral by auction conducted in any county in which any Collateral is located or in which the Agent or the Debtor does business after advertisement of the time and place thereof shall, among other manners of public and private sale, be deemed to be a commercially reasonable disposition of the Collateral. The Debtor shall be liable for any deficiency remaining after disposition of the Collateral. Such sale shall be on such terms as the Agent may determine, for cash or credit or against future delivery in the discretion of the Agent. 4. Special Remedies Concerning Certain Collateral. (a) Upon the occurrence of any Event of Default, the Debtor shall, if requested to do so in writing, and to the extent so requested (i) promptly collect and enforce payment of all amounts due the Debtor on account of, in payment of, or in connection with, any of the Collateral, (ii) hold all payments in the form received by the Debtor as trustee for the Agent and the Lenders, without commingling with any funds belonging to the Debtor, and (iii) forthwith deliver all such payments to the Agent with endorsement to the Agent's order of any checks or similar instruments. (b) Upon the occurrence of any Event of Default, the Debtor shall, if requested to do so, and to the extent so requested, notify all Obligors and other persons with obligations to the Debtor on account of or in connection with any of the Collateral of the security interest of the SECURITY AGREEMENT - 7 - 8 Agent for the benefit of the Lenders in the Collateral and direct such account debtors and other persons that all payments in connection with such obligations and the Collateral be made directly to the Agent. The Agent itself may, upon the occurrence of an Event of Default, so notify and direct any such account debtor or other person that such payments are to be made directly to the Agent. (c) Upon the occurrence of any Event of Default, for purposes of assisting the Agent in exercising its rights and remedies provided to it under this Security Agreement, the Debtor (i) hereby irrevocably constitutes and appoints the Agent its true and lawful attorney, for and in the Debtor's name, place and stead, to collect, demand, receive, sue for, compromise, and give good and sufficient releases for, any monies due or to become due on account of, in payment of, or in connection with the Collateral, (ii) hereby irrevocably authorizes the Agent to endorse the name of the Debtor, upon any checks, drafts, or similar items which are received in payment of, or in connection with, any of the Collateral, and to do all things necessary in order to reduce the same to money, (iii) with respect to any Collateral, hereby irrevocably assents to all extensions or postponements of the time of payment thereof or any other indulgence in connection therewith, to each substitution, exchange or release of Collateral, to the addition or release of any party primarily or secondarily liable, to the acceptance of partial payments thereon and the settlement, compromise or adjustment (including adjustment of insurance payments) thereof, all in such manner and at such time or times as the Agent shall deem advisable and (iv) hereby irrevocably authorizes the Agent to notify the post office authorities to change the address for delivery of the Debtor's mail to an address designated by the Agent, and the Agent may receive, open and dispose of all mail addressed to the Debtor. Notwithstanding any other provisions of this Security Agreement, it is expressly understood and agreed that the Agent shall have no duty, and shall not be obligated in any manner, to make any demand or to make any inquiry as to the nature or sufficiency of any payments received by it or to present or file any claim or take any other action to collect or enforce the payment of any amounts due or to become due on account of or in connection with any of the Collateral. 5. Remedies Cumulative. No right or remedy conferred upon or reserved to the Agent under any Operative Document is intended to be exclusive of any other right or remedy, and every right and remedy shall be cumulative and in addition to every other right or remedy given hereunder or now or hereafter existing under any applicable law. Every right and remedy of the Agent under any Operative Document or under applicable law may be exercised from time to time and as often as may be deemed expedient by the Agent. To the extent that it lawfully may, the Debtor agrees that it will not at any time insist upon, plead, or in any manner whatever claim or take any benefit or advantage of any applicable present or future stay, extension or moratorium law, which may affect observance or performance of any provisions of any Operative Document; nor will it claim, take or insist upon any benefit or advantage of any present or future law providing for the valuation or appraisal of any security for its obligations under any Operative Document prior to any sale or sales thereof which may be made under or by virtue of any instrument governing the SECURITY AGREEMENT - 8 - 9 same; nor will the Debtor, after any such sale or sales, claim or exercise any right, under any applicable law to redeem any portion of such security so sold. 6. Conduct No Waiver. No waiver shall be effective unless in writing executed by the Agent and any waiver or forbearance on the part of the Agent in enforcing any of its rights under this Security Agreement shall not operate as a waiver of any other default or of the same default on a future occasion or of such right. 7. Governing Law; Consent to Jurisdiction; Definitions. This Security Agreement is a contract made under, and shall be governed by and construed in accordance with, the law of the State of Michigan applicable to contracts made and to be performed entirely within such State and without giving effect to choice of law principles of such State. The Debtor agrees that any legal action or proceeding with respect to this Security Agreement or the transactions contemplated hereby may be brought in any court of the State of Michigan, or in any court of the United States of America sitting in Michigan, and the Debtor hereby submits to and accepts generally and unconditionally the jurisdiction of those courts with respect to its person and property, and irrevocably appoints the President of the Debtor, at the Debtor's address set forth in the Credit Agreement, as its agent for service of process and irrevocably consents to the service of process in connection with any such action or proceeding by personal delivery to such agent or to the Debtor or by the mailing thereof by registered or certified mail, postage prepaid to the Debtor at its address set forth in the Credit Agreement. Nothing in this paragraph shall affect the right of the Agent to serve process in any other manner permitted by law or limit the right of the Agent to bring any such action or proceeding against the Debtor or its property in the courts of any other jurisdiction. The Debtor hereby irrevocably waives any objection to the laying of venue of any such suit or proceeding in the above described courts. Terms used but not defined herein shall have the respective meanings ascribed thereto in the Credit Agreement. Unless otherwise defined herein or in the Credit Agreement, terms used in Article 9 of the Uniform Commercial Code in the State of Michigan are used herein as therein defined on the date hereof. The headings of the various subdivisions hereof are for convenience of reference only and shall in no way modify any of the terms or provisions hereof. 8. Notices. All notices, demands, requests, consents and other communications hereunder shall be delivered in the manner described in the Credit Agreement. 9. Rights Not Construed as Duties. The Agent and the Lenders neither assume nor shall any of them have any duty of performance or other responsibility under any contracts in which the Agent has or obtains, for the benefit of the Lenders, a security interest hereunder. If the Debtor fails to perform any agreement contained herein, the Agent may but is in no way obligated to itself perform, or cause performance of, such agreement, and the reasonable expenses of the Agent incurred in connection therewith shall be payable by the Debtor under paragraph 12 hereof. The powers conferred on the Agent hereunder are solely to protect its interests for the benefit of the SECURITY AGREEMENT - 9 - 10 Lenders in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the safe custody of any Collateral in its possession and accounting for monies actually received by it hereunder, the Agent shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. 10. Amendments. None of the terms and provisions of this Security Agreement may be modified or amended in any way except by an instrument in writing executed by each of the parties hereto. 11. Severability. If any one or more provisions of this Security Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected, impaired or prejudiced thereby. 12. Expenses. (a) The Debtor agrees to indemnify the Agent and the Lenders from and against any and all claims, losses and liabilities growing out of or resulting from this Security Agreement (including, without limitation, enforcement of this Security Agreement), except claims, losses or liabilities resulting from the Agent's or any Lender's gross negligence or willful misconduct. (b) The Debtor will, upon demand, pay to the Agent an amount of any and all reasonable expenses, including the reasonable fees and disbursements of its counsel and of any experts and agents, which the Agent may incur in connection with (i) the administration of this Security Agreement, (ii) the custody, preservation, use or operation of, or the sale of, collection from or other realization upon, any of the Collateral, (iii) the exercise or enforcement of any of the rights of the Agent hereunder or under the Operative Documents, or (iv) the failure of the Debtor to perform or observe any of the provisions hereof. 13. Successors and Assigns; Termination. This Security Agreement shall create a continuing security interest in the Collateral and shall be binding upon the Debtor, its successors and assigns, and inure, together with the rights and remedies of the Agent hereunder, to the benefit of the Agent, the Lenders and their respective successors, transferees and assigns. Upon the payment in full in immediately available funds of all of the Secured Obligations and the termination of all commitments to lend under the Operative Documents, the security interest granted hereunder shall terminate and all rights to the Collateral shall revert to the Debtor. 14. Waiver of Jury Trial. The Agent and the Lenders, in accepting this Security Agreement, and the Debtor, after consulting or having had the opportunity to consult with counsel, knowingly, voluntarily and intentionally waive any right any of them may have to a trial by jury in any litigation based upon or arising out of this Security Agreement or any related instrument or SECURITY AGREEMENT - 10 - 11 agreement or any of the transactions contemplated by this Security Agreement or any course of conduct, dealing, statements (whether oral or written) or actions of any of them. Neither the Agent, the Lenders nor the Debtor shall seek to consolidate, by counterclaim or otherwise, any such action in which a jury trial has been waived with any other action in which a jury trial cannot be or has not been waived. These provisions shall not be deemed to have been modified in any respect or relinquished by the Agent, any Lender or the Debtor except by a written instrument executed by each of them. (space intentionally left blank) SECURITY AGREEMENT - 11 - 12 IN WITNESS WHEREOF, the Debtor has caused this Security Agreement to be duly executed as of the day and year first set forth above. OXFORD AUTOMOTIVE, INC. By: [sig] ------------------------- Its: Vice President - Financial Operations ------------------------------------- Accepted and Agreed: NBD BANK, as Agent on behalf of the Lenders By: Richard C. Ellis ------------------------ Its: Authorized Agent ------------------ SECURITY AGREEMENT - 12 - 13 CERTIFICATE OF ACKNOWLEDGEMENT STATE OF MICHIGAN ) ) ss. COUNTY OF _________ ) The foregoing Security Agreement was acknowledged before me on this 24th day of June, 1997 by John H. Ferguson, the Vice-President -- Financial Operations of Oxford Automotive, Inc., a Michigan corporation, on behalf of said corporation. (Seal) Notary Public Linda M. Anolick -------------------------- LINDA M. ANOLICK NOTARY PUBLIC-WAYNE COUNTY, MICH. MY COMMISSION EXPIRES 08-30-98 STATE OF MICHIGAN ) ) ss. COUNTY OF OAKLAND ) The foregoing Security Agreement was acknowledged before me on this 24th day of June, 1997, by Richard Ellis the Authorized Agent of NBD Bank, a Michigan banking corporation, as Agent, on behalf of said corporation. (Seal) Notary Public Linda M. Anolic -------------------------- LINDA M. ANOLICK NOTARY PUBLIC-WAYNE COUNTY, MICH. MY COMMISSION EXPIRES 08-30-98 SECURITY AGREEMENT - 13 - 14 Company Security Agreement dated as of June 24, 1997 DISCLOSURE SCHEDULES 15 Schedule 1(b) (i) Location of Debtor's Chief Executive Offices Oxford Automotive, Inc. 2365 Franklin Road Bloomfield Hills, MI 48302 Tax Identification No. 38-3262809 Michigan corporation (ii) Other Offices and Facilities (a) Butler Metal Products 1574 Eagle Street North Cambridge, Ontario N3H 4S5 Canada (b) Del-Tech Metal Products 1 Butler Drive Delhi, Ontario N4B 2W8 Canada (c) Lobdell Emery Corporation 1325 East Superior Alma, Michigan 48801 (d) Laserweld International, L.L.C. 950 JFK Drive North Vernon, Indiana 47265 (e) Winchester Fabrication Corporation 200 Inks Drive P.O. Box 270 Winchester, Indiana 47394 (f) Creative Fabrication Corporation 3000 George Price Blvd. Athens, Tennessee 37371 1 16 (g) 10850 West 17th Street Argos, IN 46501 (h) 2190 Landmark Avenue Corydon, IN 47112 (i) 2365 Franklin Road Bloomfield Hills, MI 48302 (j) 135 North Fearing Road PO Box 3416 Toledo, OH 43607 (k) 401 Republic Street Alma, MI 48801 (l) 370 Manhattan Road Greencastle, IN 46135 2 17 Schedule 1(c) (i) Location of Inventory (a) Butler Metal Products 1574 Eagle Street North Cambridge, Ontario N3H 4S5 Canada (b) Del-Tech Metal Products 1 Butler Drive Delhi, Ontario N4B 2W8 Canada (c) Laserweld International, L.L.C. 950 JFK Drive North Vernon, Indiana 47265 (d) Winchester Fabrication Corporation 200 Inks Drive P.O. Box 270 Winchester, Indiana 47394 (e) Creative Fabrication Corporation 3000 George Price Blvd. Athens, Tennessee 37371 (f) 10850 West 17th Street Argos, IN 46501 (g) 2190 Landmark Avenue Corydon, IN 47112 (h) 2365 Franklin Road Bloomfield Hills, MI 48302 (i) 135 North Fearing Road PO Box 3416 Toledo, OH 43607 (j) 401 Republic Street Alma, MI 48801 3 18 (k) 370 Manhattan Road Greencastle, IN 46135 (ii) Locations of Fixtures, Machinery and Equipment (a) See (i) above. (b) Lindert Tool & Die 23 Raglan Place Cambridge, Ontario Canada (c) Fincore 10 Melford Drive Units 1-8 Scarborough, Ontario M1B 2G1 Canada (d) Hinderliter Heat Treating Ltd. 9 Shirley Avenue Kitchener, Ontario Canada (e) Easton Coatings Corporation 97 Easton Road Brantford, Ontario N3P 1J4 Canada (f) Camtron Coatings ___________________ ___________________ (g) Tube Mill Heidtman Steel Processing Butler, Indiana (h) Danly Presses Days Corporation Elkhart, Indiana (i) Laserwelding Plus System VIL/Littel International Addison, Illinois 4 19 (j) Mid States Steel ________ Inks Drive Winchester, Indiana 47394 5 20 Schedule 1(h) (i) Rack Base Construction; US Patent No. 5,533,456; Canadian Patent File No. 2,147,721 (held by Lobdell Emery Corporation) (ii) None (iii) 1. Oxford Automotive (licensed by The Oxford Investment Group, Inc. to the Company) (registration application pending) 2. Oxford Automotive (logo) (licensed by The Oxford Investment Group, Inc. to the Company) (registration application pending) 6 EX-4.4 6 EXHIBIT 4.4 1 EXHIBIT 4.4 GUARANTOR SECURITY AGREEMENT This GUARANTOR SECURITY AGREEMENT, dated as of June 24, 1997 (this "Security Agreement"), is by 829500 ONTARIO LIMITED, a corporation organized under the laws of the Province of Ontario (the "Debtor") in favor of FIRST CHICAGO NBD BANK, CANADA, in its capacity as the Affiliate designated by NBD Bank, a Michigan banking corporation, to make Canadian Advances and as collateral agent for the Lenders for the purpose of holding this security as specified in the Credit Agreement referred to below (the "Secured Party"). 1. CREATION OF SECURITY INTEREST (1) For value received, Debtor hereby grants to Secured Party a security interest (the "Security Interest") in the undertaking of Debtor and in all Goods (including all parts, accessories, attachments, special tools, additions and accessions thereto), Chattel Paper, Documents of Title (whether negotiable or not), Instruments, Intangibles and Securities now owned or hereafter owned or acquired by or on behalf of Debtor (including such as may be returned to or repossessed by Debtor) and in all proceeds and renewals thereof, accretions thereto and substitutions therefor (hereinafter collectively called "Collateral"), including, without limitation, all of the following now owned or hereafter owned or acquired by or on behalf of Debtor: (i) all inventory of whatever kind and wherever situate ("Inventory"); (ii) all equipment (other than Inventory) of whatever kind and wherever situate, including, without limitation, all machinery, tools, apparatus, plant, furniture, fixtures and vehicles of whatsoever nature or kind; (iii) all book accounts and book debts and generally all accounts, debts, dues, claims, choses in action and demands of every nature and kind howsoever arising or secured including letters of credit and advices of credit, which are now due, owing or accruing or growing due to or owned by or which may hereafter become due, owing or accruing or growing due to or owned by Debtor ("Debts"); (iv) all deeds, documents, writings, papers, books of account and other books relating to or being records of Debts, Chattel Paper or Documents of Title or by which such are or may hereafter be secured, evidenced, acknowledged or made payable; (v) all contractual rights and insurance claims and all goodwill, patents, trademarks, copyrights, and other industrial property; (vi) all monies other than trust monies lawfully belonging to others; and 2 (vii) all property described in any schedule now or hereafter annexed hereto. (2) The Security Interest granted hereby shall not extend or apply to and Collateral shall not include the last day of the term of any lease or agreement therefor but upon the enforcement of the Security Interest Debtor shall stand possessed of such last day in trust to assign the same to any person acquiring such term. (3) The terms "Goods", "Chattel Paper", "Documents of Title", "Instruments", "Intangibles", "Securities", "proceeds", "inventory" and "accession" whenever used herein shall be interpreted pursuant to their respective meanings when used in the Personal Property Security Act of Ontario, as amended from time to time, which Act, including amendments thereto and any Act substituted therefor and amendments thereto is herein referred to as the "P.P.S.A." Provided always that the term "Goods" when used herein shall not include "consumer goods" of Debtor as that term is defined in the P.P.S.A., and the term "Inventory" when used herein shall include livestock and the young thereof after conception and crops that become such within the year of execution of this Security Agreement. Any reference herein to "Collateral" shall, unless the context otherwise requires, be deemed a reference to "Collateral or any part thereof". (4) As used herein, the term "Credit Agreement" means the Credit Agreement dated as of the date hereof among Oxford Automotive, Inc., a corporation incorporated under the laws of the State of Michigan (the "Company"), each of the Subsidiaries designated under Section 1.1 of the Credit Agreement as a "Borrowing Subsidiary", the lenders party thereto from time to time ( the "Lenders") and the Agent, as amended or modified from time to time. Capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Credit Agreement. 2. OBLIGATIONS SECURED The Security Interest granted hereby secures payment and satisfaction of any and all of the following (the "Obligations"): any and all existing and future indebtedness, obligation and liability of every kind, nature and character, direct or indirect, absolute or contingent (including without limitation all indebtedness, obligations and liabilities pursuant to any Loans, Letters of Credit, Bankers' Acceptances and other Advances and all interest, fees, and other charges thereon and all renewals, extensions and modifications thereof and all fees, costs and expenses incurred by the Agent or any of the Lenders in connection with the documentation, administration, collection or enforcement thereof), of the Debtor or of the Company to the Agent or any of the Lenders or any branch, subsidiary or affiliate thereof, howsoever and whensoever created, arising, evidenced or acquired pursuant to the Credit Agreement, the Notes, the Security Documents, any Rate Hedging Agreements or any other agreement, instrument or documents executed in connection therewith at any time (all of the foregoing, as amended or modified from time to time, collectively referred to as the "Loan Documents"). The Obligations secured by this Agreement are continuing in nature and include those Obligations secured by the Guarantor Security Agreement dated February 11, 1997 by the Debtor in favor of the Secured Party. -2- 3 3. REPRESENTATIONS AND WARRANTIES OF DEBTOR Debtor represents and warrants and so long as this Security Agreement remains in effect shall be deemed to continuously represent and warrant that: (1) the Collateral is genuine and owned by Debtor free of all security interests, mortgages, liens, claims, charges or other encumbrances (hereinafter collectively called "Liens"), save for the Security Interest and Permitted Liens; (2) to the best of the Debtor's knowledge, other than as disclosed in writing by the Debtor to the Secured Party, each Debt, Chattel Paper and Instrument constituting Collateral is enforceable in accordance with its terms against the party obligated to pay the same (the "Account Debtor"), and the amount represented by Debtor to Secured Party from time to time as owing by each Account Debtor or by all Account Debtors will be the correct amount actually and unconditionally owing by such Account Debtor or Account Debtors, except for normal cash discounts where applicable, and no Account Debtor will have any defence, set off, claim or counterclaim against Debtor which can be asserted against Secured Party, whether in any proceeding to enforce Collateral or otherwise; and (3) the locations specified n Schedule "A" hereto as to business operations and records are accurate and complete and, with respect to Goods (including Inventory) constituting Collateral, the locations specified in Schedule "A" hereto are accurate and complete save for Goods in transit to such locations and Inventory on lease or consignment; and all fixtures or Goods about to become fixtures and all crops and all oil, gas or other minerals to be extracted and all timber to be cut which forms part of the Collateral will be situate at one of such locations. 4. USE OF COLLATERAL BY DEBTOR AND CONFIRMATION OF COLLATERAL BY SECURED PARTY Subject to compliance with Debtor's covenants contained herein, Debtor may, until default, possess, operate, collect, use and enjoy and deal with Collateral in the ordinary course of Debtor's business in any manner not inconsistent with the provisions hereof; provided always that Secured Party shall have the right at any time and from time to time to confirm the existence and state of the Collateral in any manner Secured Party may consider appropriate and Debtor agrees to furnish all assistance and information and to perform all such acts as Secured Party may reasonably request in connection therewith and to all places where Collateral may be located and to all premises occupied by Debtor. 5. RECEIPTS OF INCOME FROM AND INTEREST ON COLLATERAL -3- 4 (1) Until default, Debtor shall have the right to receive any monies constituting income from or interest on Collateral and if Secured Party receives any such monies prior to default, Secured Party shall either credit the same to the account of Debtor or pay the same promptly to Debtor. (2) After default, Debtor will not request or receive any monies constituting income from or interest on Collateral and if Debtor receives any such monies, Debtor will receive the same in trust for and promptly pay the same to Secured Party. 6. INCREASES, PROFITS, PAYMENTS OR DISTRIBUTIONS REGARDING COLLATERAL (1) Whether or not default has occurred, Debtor authorizes Secured Party (i) to receive any increase in or profits on Collateral (other than money) and to hold the same as part of Collateral; money so received shall be treated as income for the purposes of Clause 5 hereof and dealt with accordingly; and (ii) to receive any payment or distribution upon redemption or retirement or upon dissolution and liquidation of the issuer of Collateral; to surrender Collateral in exchange therefor; and to hold any such payment or distribution as part of the Collateral. (2) If Debtor receives any such increase or profits (other than money) or payments or distributions, Debtor will receive the same in trust for and deliver the same promptly to Secured Party to be held by Secured Party as herein provided. 7. SECURITIES FORMING PART OF COLLATERAL If Collateral at any time includes Securities, Debtor authorizes Secured Party to transfer the same or any part thereof into its own name or that of its nominee(s) so that Secured Party or its nominee(s) may appear of record as the sole owner thereof; provided that, until default, Secured Party shall deliver promptly to Debtor all notices or other communications received by it or its nominee(s) as such registered owner and, upon demand and receipt of payment of any necessary expenses thereof, shall issue to Debtor or its order a proxy to vote and take all action with respect to such Securities. After enforcement of remedies hereunder, Debtor waives all rights to receive any notices or communications received by Secured Party or its nominee(s) as such registered owner and agrees that no proxy issued by Secured Party to Debtor or its order as aforesaid shall thereafter be effective. -4- 5 8. COLLECTION OF DEBTS FORMING PART OF COLLATERAL After default, Secured Party may notify all or any Account Debtors of the Security Interest and may also direct such Account Debtors to make all payments on Collateral to Secured Party. Debtor acknowledges that any payments on or other proceeds of Collateral received by Debtor from Account Debtors, before or after notification of this Security Interest to Account Debtors, if received after default, shall be received and held by Debtor in trust for Secured Party and shall be turned over to Secured Party upon request. 9. COVENANTS OF THE DEBTOR So long as this Security Agreement remains in effect, Debtor covenants and agrees: (1) to defend the Collateral against the claims and demands of all other parties claiming the same or an interest therein; to keep the Collateral free from all Liens, except for the Security Interest and Permitted Liens or hereafter approved in writing, prior to their creation or assumption, by Secured Party; and not to sell, exchange, transfer, assign, lease, or otherwise dispose of Collateral or any interest therein without the prior written consent of Secured Party, except to the extent permitted under the Credit Agreement; provided always that, until default, Debtor may, in the ordinary course of Debtor's business, sell or lease Inventory and, subject to Clause 8 hereof, use monies available to Debtor; (2) to notify Secured Party promptly of: (i) any change in the information contained herein or in the Schedules hereto relating to Debtor, Debtor's business or Collateral; and (ii) any material loss of or damage to Collateral; (3) to keep the Collateral in good order, condition and repair and not to use Collateral in violation of the provisions of this Security Agreement or any other agreement relating to Collateral or any policy insuring Collateral or any applicable statute, law, by-law, rule, regulation or ordinance; (4) to do, execute, acknowledge and deliver such financing statements and further assignments, transfers, documents, acts, matters and things (including further schedules hereto) as may be reasonably requested by Secured Party of or with respect to Collateral in order to give effect to these presents and to pay all costs for searches and filings in connection therewith; -5- 6 (5) to pay all taxes, rates, levies, assessments and other charges of every nature which may be lawfully levied, assessed or imposed against or in respect of Debtor or Collateral as and when the same become due and payable; (6) to insure the Collateral for such periods, in such amounts, on such terms and against loss or damage by fire and such other risks as Secured Party shall reasonably direct with loss payable to Secured Party and Debtor, as insured, as their respective interests may appear, and to pay all premiums therefor; (7) to prevent Collateral, save Inventory sold or leased as permitted hereby, from being or becoming an accession to other property not covered by this Security Agreement; (8) to carry on and conduct the business of Debtor in a proper and efficient manner and so as to protect and preserve the Collateral and to keep, in accordance with generally accepted accounting principles, consistently applied, proper books of account for Debtor's business as well as accurate and complete records concerning Collateral, and mark any and all such records and Collateral as Secured Party's request so as to indicate the Security Interest; and (9) to deliver to Secured Party from time to time promptly upon request: (i) any Documents of Title, Instruments, Securities and Chattel Paper constituting, representing or relating to Collateral; (ii) all books of account and all records, ledgers, reports, correspondence, schedules, documents, statements, lists and other writing relating to Collateral for the purpose of inspecting, auditing or copying the same; (iii) all financial statements prepared by or for Debtor regarding Debtor's business; (iv) all policies and certificates of insurance relating to Collateral; and (v) such information concerning Collateral, Debtor and Debtor's business and affairs as Secured Party may reasonably request. 10. EVENTS OF DEFAULT The happening of any of the following events or conditions shall constitute default hereunder which is herein referred to as "default": -6- 7 (1) the nonpayment when due, whether by acceleration or otherwise, of any principal or interest forming part of the Obligations or the failure of Debtor to observe or perform any obligation, covenant, term, provision or condition contained in this Security Agreement; or (2) any Event of Default under the Credit Agreement; 11. ACCELERATION Secured Party, in its sole discretion, may declare all or any part of the Obligations not payable on demand to be immediately due and payable, without demand or notice of any kind, in the event of default. The provisions of this clause are not intended in any way to affect any rights of Secured Party with respect to Obligations which may now or hereafter be payable on demand. 12. REMEDIES (1) Upon default, Secured Party may appoint or reappoint by instrument in writing, any person or persons, whether an officer or officers or an employee or employees of Secured Party or not, to be a receiver or receivers (hereinafter called a "Receiver", which term when used herein shall include a receiver and manager) of Collateral (including any interest, income or profits therefrom) and may remove any Receiver so appointed and appoint another in his stead. Any such Receiver shall, so far as concerns responsibility for his acts, be deemed the agent of Debtor and not Secured Party, and Secured Party shall not be in any way responsible for any misconduct, negligence or nonfeasance on the part of any such Receiver, his servants, agents or employees. Subject to the provisions of the instrument appointing him, any such Receiver shall have power to take possession of Collateral, to preserve Collateral or its value, to carry on or concur in carrying on all or any part of the business of Debtor and to sell, lease or otherwise dispose of or concur in selling, leasing or otherwise disposing of Collateral. To facilitate the foregoing powers, any such Receiver may, to the exclusion of all others, including Debtor, enter upon, use and occupy all premises owned or occupied by Debtor wherein Collateral may be situate, maintain Collateral upon such premises, borrow money on a secured or unsecured basis and use Collateral directly in carrying on Debtor's business or otherwise, as such Receiver shall, in his discretion, determine. Except as may be otherwise directed by Secured Party, all monies received from time to time by such Receiver in carrying out his appointment shall be received in trust for and paid over to Secured Party. Every such Receiver may, in the discretion of Secured Party, be vested with all or any of the rights and powers of Secured Party. (2) Upon default, Secured Party may, either directly or through its agents or nominees, exercise all the powers and rights given to a Receiver by virtue of the foregoing subclause (1). -7- 8 (3) Secured Party may take possession of, collect, demand, sue on, enforce, recover and receive Collateral and give valid and binding receipts and discharges therefor and in respect thereof and, upon default, Secured Party may sell, lease or otherwise dispose of Collateral in such manner, at such time or otherwise dispose of Collateral in such manner, at such time or times and place or places, for such consideration and upon such terms and conditions as to Secured Party may seem reasonable. (4) In addition to those rights granted herein and in any other agreement now or hereafter in effect between Debtor and Secured Party and in addition to any other rights Secured Party may have at law or in equity, Secured Party shall have, both before and after default, all rights and remedies of a secured party under the P.P.S.A. Provided always that Secured Party shall not be liable or accountable for any failure to exercise its remedies, take possession of, collect, enforce, realize, sell, lease or otherwise dispose of Collateral or to institute proceedings for such purposes. Furthermore, Secured Party shall have no obligation to take any steps to preserve rights against prior parties to any Instrument or Chattel Paper, whether Collateral or proceeds and whether or not in Secured Party's possession and shall not be liable or accountable for failure to do so. (5) Debtor acknowledges that Secured Party or any Receiver appointed by it may take possession of Collateral wherever it may be located and by any method permitted by law and Debtor agrees upon request from Secured Party or any such Receiver to assemble and deliver possession of Collateral at such place or places as directed. (6) Debtor agrees to pay all costs, charges and expenses reasonably incurred by Secured Party or any Receiver appointed by it, whether directly or for services rendered (including reasonable solicitors' and auditors' costs and other legal expenses and Receiver remuneration), in operating Debtor's accounts, in preparing or enforcing this Security Agreement, taking custody of, preserving, repairing, processing, preparing for disposition and disposing of Collateral and in enforcing or collecting Obligations and all such costs, charges and expenses together with any monies owing as a result of any borrowing by Secured Party or any Receiver appointed by it, as permitted hereby, shall be a first charge on the proceeds of realization, collection or disposition of Collateral and shall be secured hereby. (7) Unless the Collateral in question is perishable or unless Secured Party believes on reasonable grounds that the Collateral in question will decline speedily in value, Secured Party will give Debtor such notice of the date, time and place of any public sale or of the date after which any private disposition of Collateral is to be made, as may be required by the P.P.S.A. 13. DISPOSITION OF MONIES Subject to any applicable requirements of the P.P.S.A., all monies collected or received by Secured Party pursuant to or in exercise of any right it possesses with respect to Collateral shall be -8- 9 applied on account of the Obligations in such manner as described in the Credit Agreement or, at the option of Secured Party, may be held unappropriated in a collateral account or released to Debtor, all without prejudice to the liability of Debtor or the rights of Secured Party hereunder. Debtor hereby acknowledges that if the disposition of all or any Collateral by Secured Party or a Receiver pursuant hereto does not give rise to sufficient funds to pay all Obligations secured hereby Debtor shall remain liable for any deficiency until all Obligations have been paid or satisfied in full. Any surplus shall be accounted for as required by law. 14. MISCELLANEOUS (1) Debtor hereby authorizes Secured Party to file such financing statements and other documents and do such acts, matters and things (including completing and adding schedules hereto identifying Collateral or any Permitted Liens affecting Collateral or identifying the locations at which Debtor's business is carried on and Collateral and records relating thereto are situate) as Secured Party may deem appropriate to perfect and continue the Security Interest, to protect and preserve Collateral and its Security Interest in the Collateral and to realize upon the Security Interest and Debtor hereby irrevocably constitutes and appoints each Vice-President from time to time of Secured Party the true and lawful attorney of Debtor, with full power of substitution, to do any of the foregoing in the name of Debtor whenever and wherever it may be deemed necessary or expedient. (2) Without limiting any other right of Secured Party, whenever the Obligations are immediately due and payable or Secured Party has the right to declare the Obligations to be immediately due and payable (whether or not it has so declared), Secured Party may, in its sole discretion, set off against the Obligations any and all monies then owed to Debtor by Secured Party in any capacity, whether or not due, and Secured Party shall be deemed to have exercised such right of set off immediately at the time of making its decision to do so even though any charge therefor is made or entered on Secured Party's records subsequent thereto. (3) Upon Debtor's failure to perform any of its duties hereunder, Secured Party may, but shall not be obligated to, perform any or all of such duties, and Debtor shall pay to Secured Party, forthwith upon written demand therefor, an amount equal to the expense incurred by Secured Party in so doing plus interest thereon from the date such expense is incurred until it is paid at the Overdue Rate. (4) After default, Secured Party may grant extensions of time and other indulgences, take and give up security, accept compositions, compound, comprise, settle, grant releases and discharges and otherwise deal with Debtor, debtors of Debtor, sureties and others and with Collateral and other security as Secured Party may see fit without prejudice to the liability of Debtor or Secured Party's right to hold and realize the Security Interest. Furthermore, Secured Party may, after default, demand, collect and sue on Collateral in either Debtor's or Secured Party's name, at Secured Party's -9- 10 option, and may endorse Debtor's name on any and all cheques, commercial paper and any other Instruments pertaining to or constituting Collateral. (5) No delay or omission by Secured Party in exercising any right or remedy hereunder or with respect to any Obligations shall operate as a waiver thereof or of any other right or remedy, and no single or partial exercise thereof shall preclude any other or further exercise thereof or the exercise of any other right or remedy. Furthermore, Secured Party may remedy any default by Debtor hereunder or with respect to any Obligations in any reasonable manner without waiving the default remedied and without waiving any other prior or subsequent default by Debtor. All rights and remedies of Secured Party granted or recognized herein are cumulative and may be exercised at any time and from time to time independently or in combination. (6) Debtor waives protest of any Instrument constituting Collateral at any time held by Secured Party on which Debtor is in any way liable and, subject to Clause 12(7), notice of any other action taken by Secured Party. (7) This Security Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and assigns. In any action brought by an assignee of this Security Agreement and the Security Interest or any part thereof to enforce any rights hereunder, Debtor shall not assert against the assignee any claim or defence which Debtor now has or hereafter may have against Secured Party. (8) Save for any schedules which may be added hereto pursuant to the provisions hereof, no modification, variation or amendment of any provision of this Security Agreement shall be made except by a written agreement executed by the parties hereto and no waiver of any provision hereof shall be effective unless in writing. (9) This Security Agreement and the transactions evidenced hereby shall be governed by and construed in accordance with the laws of the Province of Ontario as the same may from time to time be in effect, including, where applicable, the P.P.S.A. (10) Subject to the requirements of Clauses 12(7) and 14(11) hereof, whenever either party hereto is required or entitled to notify or direct the other or to make a demand or request upon the other, such notice, direction, demand or request shall be in writing shall be sufficiently given only if delivered to the party for whom it is intended at the principal address of such party herein set forth or as changed pursuant hereto or if sent by prepaid registered mail addressed to the party for whom it is intended at the principal address of such party herein set forth or as changed pursuant hereto. Either party may notify the other pursuant hereto of any change in such party's principal address to be used for the purposes hereof. (11) This Security Agreement and the security afforded hereby is in addition to and not in substitution for any other security now or hereafter held by Secured Party and is, and is intended -10- 11 to be, a continuing Security Agreement and shall remain in full force and effect until the Obligations have been paid and satisfied in full. (12) The headings used in this Security Agreement are for convenience only and are not to be considered a part of this Security Agreement and do not in any way limit or amplify the terms and provisions of this Security Agreement. (13) When the context so requires, the singular number shall be read as if the plural were expressed and the provisions hereof shall be read with all grammatical changes necessary dependent upon the person referred to being a male, female, firm or corporation. (14) If any provisions of this Security Agreement, as amended from time to time, shall be deemed invalid or void, in whole or in part, by any court of competent jurisdiction, the remaining terms and provisions of this Security Agreement shall remain in full force and effect. (15) Nothing herein contained shall in any way obligate Secured Party to grant, continue, renew, extend time for payment of or accept anything which constitutes or would constitute Obligations. (16) The Security Interest created hereby is intended to attach when this Security Agreement is signed by Debtor and delivered to Secured Party. 15. COPY OF AGREEMENT Debtor hereby acknowledges receipt of a copy of this Security Agreement. IN WITNESS WHEREOF Debtor has executed this Security Agreement this 24th day of June, 1997. 829500 ONTARIO LIMITED By:___________________________________ Name: Title: Agreed to and Accepted by: FIRST CHICAGO NBD BANK, CANADA, as the Affiliate designated by NBD Bank to make Canadian Advances and as collateral agent for the -11- 12 Lenders for the purpose of holding this security as specified in the Credit Agreement By:___________________________________ Its:_________________________ -12- 13 829500 ONTARIO LIMITED Guarantor Security Agreement Schedule A ---------- 1. Location of Debtor's Business Operations (a) BMG North America 1574 Eagle Street North Cambridge, Ontario N3H 4S5 Canada (b) Butler Metal Products 1574 Eagle Street North Cambridge, Ontario N3H 4S5 Canada (c) Del-Tech Metal Products 1 Butler Drive Delhi, Ontario N4B 2W8 Canada 2. Location of Records Relating to Collateral (a) Butler Metal Products 1574 Eagle Street North Cambridge, Ontario N3H 4S5 Canada (b) Del-Tech Metal Products 1 Butler Drive Delhi, Ontario N4B 2W8 Canada (c) 2365 Franklin Road Bloomfield Hills, MI 48302 (d) 2000 North Woodward Avenue, Suite 130 Bloomfield Hills, MI 48304 1 14 3. Locations of Collateral (a) BMG North America 1574 Eagle Street North Cambridge, Ontario N3H 4S5 Canada (b) Butler Metal Products 1574 Eagle Street North Cambridge, Ontario N3H 4S5 Canada (c) Del-Tech Metal Products 1 Butler Drive Delhi, Ontario N4B 2W8 Canada (d) Lindert Tool & Die 23 Raglan Place Cambridge, Ontario Canada (e) Fincore 10 Melford Drive Units 1-8 Scarborough, Ontario M1B 2G1 Canada (f) Hinderliter Heat Treating Ltd. 9 Shirley Avenue Kitchener, Ontario Canada (g) Easton Coatings Corporation 97 Easton Road Brantford, Ontario N3P 1J4 Canada 2 EX-4.5 7 EXHIBIT 4.5 1 EXHIBIT 4.5 GUARANTOR SECURITY AGREEMENT This GUARANTOR SECURITY AGREEMENT, dated as of June 24, 1997 (this "Security Agreement"), is by 976459 ONTARIO LIMITED, a corporation organized under the laws of the Province of Ontario (the "Debtor") in favor of FIRST CHICAGO NBD BANK, CANADA, in its capacity as the Affiliate designated by NBD Bank, a Michigan banking corporation, to make Canadian Advances and as collateral agent for the Lenders for the purpose of holding this security as specified in the Credit Agreement referred to below (the "Secured Party"). 1. CREATION OF SECURITY INTEREST (1) For value received, Debtor hereby grants to Secured Party a security interest (the "Security Interest") in the undertaking of Debtor and in all Goods (including all parts, accessories, attachments, special tools, additions and accessions thereto), Chattel Paper, Documents of Title (whether negotiable or not), Instruments, Intangibles and Securities now owned or hereafter owned or acquired by or on behalf of Debtor (including such as may be returned to or repossessed by Debtor) and in all proceeds and renewals thereof, accretions thereto and substitutions therefor (hereinafter collectively called "Collateral"), including, without limitation, all of the following now owned or hereafter owned or acquired by or on behalf of Debtor: (i) all inventory of whatever kind and wherever situate ("Inventory"); (ii) all equipment (other than Inventory) of whatever kind and wherever situate, including, without limitation, all machinery, tools, apparatus, plant, furniture, fixtures and vehicles of whatsoever nature or kind; (iii) all book accounts and book debts and generally all accounts, debts, dues, claims, choses in action and demands of every nature and kind howsoever arising or secured including letters of credit and advices of credit, which are now due, owing or accruing or growing due to or owned by or which may hereafter become due, owing or accruing or growing due to or owned by Debtor ("Debts"); (iv) all deeds, documents, writings, papers, books of account and other books relating to or being records of Debts, Chattel Paper or Documents of Title or by which such are or may hereafter be secured, evidenced, acknowledged or made payable; (v) all contractual rights and insurance claims and all goodwill, patents, trademarks, copyrights, and other industrial property; (vi) all monies other than trust monies lawfully belonging to others; and (vii) all property described in any schedule now or hereafter annexed hereto. 2 (2) The Security Interest granted hereby shall not extend or apply to and Collateral shall not include the last day of the term of any lease or agreement therefor but upon the enforcement of the Security Interest Debtor shall stand possessed of such last day in trust to assign the same to any person acquiring such term. (3) The terms "Goods", "Chattel Paper", "Documents of Title", "Instruments", "Intangibles", "Securities", "proceeds", "inventory" and "accession" whenever used herein shall be interpreted pursuant to their respective meanings when used in the Personal Property Security Act of Ontario, as amended from time to time, which Act, including amendments thereto and any Act substituted therefor and amendments thereto is herein referred to as the "P.P.S.A." Provided always that the term "Goods" when used herein shall not include "consumer goods" of Debtor as that term is defined in the P.P.S.A., and the term "Inventory" when used herein shall include livestock and the young thereof after conception and crops that become such within the year of execution of this Security Agreement. Any reference herein to "Collateral" shall, unless the context otherwise requires, be deemed a reference to "Collateral or any part thereof". (4) As used herein, the term "Credit Agreement" means the Credit Agreement dated as of the date hereof among Oxford Automotive, Inc., a corporation incorporated under the laws of the State of Michigan (the "Company"), each of the Subsidiaries of the Company designated under Section 1.1 of the Credit Agreement as a "Borrowing Subsidiary", the lenders party thereto from time to time (the "Lenders") and the Agent, as amended or modified from time to time. Capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Credit Agreement. 2. OBLIGATIONS SECURED The Security Interest granted hereby secures payment and satisfaction of any and all of the following (the "Obligations"): any and all existing and future indebtedness, obligation and liability of every kind, nature and character, direct or indirect, absolute or contingent (including without limitation all indebtedness, obligations and liabilities pursuant to any Loans, Letters of Credit, Bankers' Acceptances and other Advances and all interest, fees, and other charges thereon and all renewals, extensions and modifications thereof and all fees, costs and expenses incurred by the Agent or any of the Lenders in connection with the documentation, administration, collection or enforcement thereof), of the Debtor or of the Company to the Agent or any of the Lenders or any branch, subsidiary or affiliate thereof, howsoever and whensoever created, arising, evidenced or acquired pursuant to the Credit Agreement, the Notes, the Security Documents, any Rate Hedging Agreements or any other agreement, instrument or documents executed in connection therewith at any time (all of the foregoing, as amended or modified from time to time, collectively referred to as the "Loan Documents"). The Obligations secured by this Agreement are continuing in nature and include those Obligations secured by the Guarantor Security Agreement dated February 11, 1997 by the Debtor in favor of the Secured Party. 3. REPRESENTATIONS AND WARRANTIES OF DEBTOR -2- 3 Debtor represents and warrants and so long as this Security Agreement remains in effect shall be deemed to continuously represent and warrant that: (1) the Collateral is genuine and owned by Debtor free of all security interests, mortgages, liens, claims, charges or other encumbrances (hereinafter collectively called "Liens"), save for the Security Interest and Permitted Liens; (2) to the best of the Debtor's knowledge, other than as disclosed in writing by the Debtor to the Secured Party, each Debt, Chattel Paper and Instrument constituting Collateral is enforceable in accordance with its terms against the party obligated to pay the same (the "Account Debtor"), and the amount represented by Debtor to Secured Party from time to time as owing by each Account Debtor or by all Account Debtors will be the correct amount actually and unconditionally owing by such Account Debtor or Account Debtors, except for normal cash discounts where applicable, and no Account Debtor will have any defence, set off, claim or counterclaim against Debtor which can be asserted against Secured Party, whether in any proceeding to enforce Collateral or otherwise; and (3) the locations specified n Schedule "A" hereto as to business operations and records are accurate and complete and, with respect to Goods (including Inventory) constituting Collateral, the locations specified in Schedule "A" hereto are accurate and complete save for Goods in transit to such locations and Inventory on lease or consignment; and all fixtures or Goods about to become fixtures and all crops and all oil, gas or other minerals to be extracted and all timber to be cut which forms part of the Collateral will be situate at one of such locations. 4. USE OF COLLATERAL BY DEBTOR AND CONFIRMATION OF COLLATERAL BY SECURED PARTY Subject to compliance with Debtor's covenants contained herein, Debtor may, until default, possess, operate, collect, use and enjoy and deal with Collateral in the ordinary course of Debtor's business in any manner not inconsistent with the provisions hereof; provided always that Secured Party shall have the right at any time and from time to time to confirm the existence and state of the Collateral in any manner Secured Party may consider appropriate and Debtor agrees to furnish all assistance and information and to perform all such acts as Secured Party may reasonably request in connection therewith and to all places where Collateral may be located and to all premises occupied by Debtor. 5. RECEIPTS OF INCOME FROM AND INTEREST ON COLLATERAL (1) Until default, Debtor shall have the right to receive any monies constituting income from or interest on Collateral and if Secured Party receives any such monies prior to default, Secured Party shall either credit the same to the account of Debtor or pay the same promptly to Debtor. (2) After default, Debtor will not request or receive any monies constituting income from -3- 4 or interest on Collateral and if Debtor receives any such monies, Debtor will receive the same in trust for and promptly pay the same to Secured Party. 6. INCREASES, PROFITS, PAYMENTS OR DISTRIBUTIONS REGARDING COLLATERAL (1) Whether or not default has occurred, Debtor authorizes Secured Party (i) to receive any increase in or profits on Collateral (other than money) and to hold the same as part of Collateral; money so received shall be treated as income for the purposes of Clause 5 hereof and dealt with accordingly; and (ii) to receive any payment or distribution upon redemption or retirement or upon dissolution and liquidation of the issuer of Collateral; to surrender Collateral in exchange therefor; and to hold any such payment or distribution as part of the Collateral. (2) If Debtor receives any such increase or profits (other than money) or payments or distributions, Debtor will receive the same in trust for and deliver the same promptly to Secured Party to be held by Secured Party as herein provided. 7. SECURITIES FORMING PART OF COLLATERAL If Collateral at any time includes Securities, Debtor authorizes Secured Party to transfer the same or any part thereof into its own name or that of its nominee(s) so that Secured Party or its nominee(s) may appear of record as the sole owner thereof; provided that, until default, Secured Party shall deliver promptly to Debtor all notices or other communications received by it or its nominee(s) as such registered owner and, upon demand and receipt of payment of any necessary expenses thereof, shall issue to Debtor or its order a proxy to vote and take all action with respect to such Securities. After enforcement of remedies hereunder, Debtor waives all rights to receive any notices or communications received by Secured Party or its nominee(s) as such registered owner and agrees that no proxy issued by Secured Party to Debtor or its order as aforesaid shall thereafter be effective. 8. COLLECTION OF DEBTS FORMING PART OF COLLATERAL After default, Secured Party may notify all or any Account Debtors of the Security Interest and may also direct such Account Debtors to make all payments on Collateral to Secured Party. Debtor acknowledges that any payments on or other proceeds of Collateral received by Debtor from Account Debtors, before or after notification of this Security Interest to Account Debtors, if received after default, shall be received and held by Debtor in trust for Secured Party and shall be turned over -4- 5 to Secured Party upon request. 9. COVENANTS OF THE DEBTOR So long as this Security Agreement remains in effect, Debtor covenants and agrees: (1) to defend the Collateral against the claims and demands of all other parties claiming the same or an interest therein; to keep the Collateral free from all Liens, except for the Security Interest and Permitted Liens or hereafter approved in writing, prior to their creation or assumption, by Secured Party; and not to sell, exchange, transfer, assign, lease, or otherwise dispose of Collateral or any interest therein without the prior written consent of Secured Party, except to the extent permitted under the Credit Agreement; provided always that, until default, Debtor may, in the ordinary course of Debtor's business, sell or lease Inventory and, subject to Clause 8 hereof, use monies available to Debtor; (2) to notify Secured Party promptly of: (i) any change in the information contained herein or in the Schedules hereto relating to Debtor, Debtor's business or Collateral; and (ii) any material loss of or damage to Collateral; (3) to keep the Collateral in good order, condition and repair and not to use Collateral in violation of the provisions of this Security Agreement or any other agreement relating to Collateral or any policy insuring Collateral or any applicable statute, law, by-law, rule, regulation or ordinance; (4) to do, execute, acknowledge and deliver such financing statements and further assignments, transfers, documents, acts, matters and things (including further schedules hereto) as may be reasonably requested by Secured Party of or with respect to Collateral in order to give effect to these presents and to pay all costs for searches and filings in connection therewith; (5) to pay all taxes, rates, levies, assessments and other charges of every nature which may be lawfully levied, assessed or imposed against or in respect of Debtor or Collateral as and when the same become due and payable; (6) to insure the Collateral for such periods, in such amounts, on such terms and against loss or damage by fire and such other risks as Secured Party shall reasonably direct with loss payable to Secured Party and Debtor, as insured, as their respective interests may appear, and to pay all premiums therefor; -5- 6 (7) to prevent Collateral, save Inventory sold or leased as permitted hereby, from being or becoming an accession to other property not covered by this Security Agreement; (8) to carry on and conduct the business of Debtor in a proper and efficient manner and so as to protect and preserve the Collateral and to keep, in accordance with generally accepted accounting principles, consistently applied, proper books of account for Debtor's business as well as accurate and complete records concerning Collateral, and mark any and all such records and Collateral as Secured Party's request so as to indicate the Security Interest; and (9) to deliver to Secured Party from time to time promptly upon request: (i) any Documents of Title, Instruments, Securities and Chattel Paper constituting, representing or relating to Collateral; (ii) all books of account and all records, ledgers, reports, correspondence, schedules, documents, statements, lists and other writing relating to Collateral for the purpose of inspecting, auditing or copying the same; (iii) all financial statements prepared by or for Debtor regarding Debtor's business; (iv) all policies and certificates of insurance relating to Collateral; and (v) such information concerning Collateral, Debtor and Debtor's business and affairs as Secured Party may reasonably request. 10. EVENTS OF DEFAULT The happening of any of the following events or conditions shall constitute default hereunder which is herein referred to as "default": (1) the nonpayment when due, whether by acceleration or otherwise, of any principal or interest forming part of the Obligations or the failure of Debtor to observe or perform any obligation, covenant, term, provision or condition contained in this Security Agreement; or (2) any Event of Default under the Credit Agreement. 11. ACCELERATION Secured Party, in its sole discretion, may declare all or any part of the Obligations not -6- 7 payable on demand to be immediately due and payable, without demand or notice of any kind, in the event of default. The provisions of this clause are not intended in any way to affect any rights of Secured Party with respect to Obligations which may now or hereafter be payable on demand. 12. REMEDIES (1) Upon default, Secured Party may appoint or reappoint by instrument in writing, any person or persons, whether an officer or officers or an employee or employees of Secured Party or not, to be a receiver or receivers (hereinafter called a "Receiver", which term when used herein shall include a receiver and manager) of Collateral (including any interest, income or profits therefrom) and may remove any Receiver so appointed and appoint another in his stead. Any such Receiver shall, so far as concerns responsibility for his acts, be deemed the agent of Debtor and not Secured Party, and Secured Party shall not be in any way responsible for any misconduct, negligence or nonfeasance on the part of any such Receiver, his servants, agents or employees. Subject to the provisions of the instrument appointing him, any such Receiver shall have power to take possession of Collateral, to preserve Collateral or its value, to carry on or concur in carrying on all or any part of the business of Debtor and to sell, lease or otherwise dispose of or concur in selling, leasing or otherwise disposing of Collateral. To facilitate the foregoing powers, any such Receiver may, to the exclusion of all others, including Debtor, enter upon, use and occupy all premises owned or occupied by Debtor wherein Collateral may be situate, maintain Collateral upon such premises, borrow money on a secured or unsecured basis and use Collateral directly in carrying on Debtor's business or otherwise, as such Receiver shall, in his discretion, determine. Except as may be otherwise directed by Secured Party, all monies received from time to time by such Receiver in carrying out his appointment shall be received in trust for and paid over to Secured Party. Every such Receiver may, in the discretion of Secured Party, be vested with all or any of the rights and powers of Secured Party. (2) Upon default, Secured Party may, either directly or through its agents or nominees, exercise all the powers and rights given to a Receiver by virtue of the foregoing subclause (1). (3) Secured Party may take possession of, collect, demand, sue on, enforce, recover and receive Collateral and give valid and binding receipts and discharges therefor and in respect thereof and, upon default, Secured Party may sell, lease or otherwise dispose of Collateral in such manner, at such time or otherwise dispose of Collateral in such manner, at such time or times and place or places, for such consideration and upon such terms and conditions as to Secured Party may seem reasonable. (4) In addition to those rights granted herein and in any other agreement now or hereafter in effect between Debtor and Secured Party and in addition to any other rights Secured Party may have at law or in equity, Secured Party shall have, both before and after default, all rights and remedies of a secured party under the P.P.S.A. Provided always that Secured Party shall not be -7- 8 liable or accountable for any failure to exercise its remedies, take possession of, collect, enforce, realize, sell, lease or otherwise dispose of Collateral or to institute proceedings for such purposes. Furthermore, Secured Party shall have no obligation to take any steps to preserve rights against prior parties to any Instrument or Chattel Paper, whether Collateral or proceeds and whether or not in Secured Party's possession and shall not be liable or accountable for failure to do so. (5) Debtor acknowledges that Secured Party or any Receiver appointed by it may take possession of Collateral wherever it may be located and by any method permitted by law and Debtor agrees upon request from Secured Party or any such Receiver to assemble and deliver possession of Collateral at such place or places as directed. (6) Debtor agrees to pay all costs, charges and expenses reasonably incurred by Secured Party or any Receiver appointed by it, whether directly or for services rendered (including reasonable solicitors' and auditors' costs and other legal expenses and Receiver remuneration), in operating Debtor's accounts, in preparing or enforcing this Security Agreement, taking custody of, preserving, repairing, processing, preparing for disposition and disposing of Collateral and in enforcing or collecting Obligations and all such costs, charges and expenses together with any monies owing as a result of any borrowing by Secured Party or any Receiver appointed by it, as permitted hereby, shall be a first charge on the proceeds of realization, collection or disposition of Collateral and shall be secured hereby. (7) Unless the Collateral in question is perishable or unless Secured Party believes on reasonable grounds that the Collateral in question will decline speedily in value, Secured Party will give Debtor such notice of the date, time and place of any public sale or of the date after which any private disposition of Collateral is to be made, as may be required by the P.P.S.A. 13. DISPOSITION OF MONIES Subject to any applicable requirements of the P.P.S.A., all monies collected or received by Secured Party pursuant to or in exercise of any right it possesses with respect to Collateral shall be applied on account of the Obligations in such manner as described in the Credit Agreement or, at the option of Secured Party, may be held unappropriated in a collateral account or released to Debtor, all without prejudice to the liability of Debtor or the rights of Secured Party hereunder. Debtor hereby acknowledges that if the disposition of all or any Collateral by Secured Party or a Receiver pursuant hereto does not give rise to sufficient funds to pay all Obligations secured hereby Debtor shall remain liable for any deficiency until all Obligations have been paid or satisfied in full. Any surplus shall be accounted for as required by law. 14. MISCELLANEOUS -8- 9 (1) Debtor hereby authorizes Secured Party to file such financing statements and other documents and do such acts, matters and things (including completing and adding schedules hereto identifying Collateral or any Permitted Liens affecting Collateral or identifying the locations at which Debtor's business is carried on and Collateral and records relating thereto are situate) as Secured Party may deem appropriate to perfect and continue the Security Interest, to protect and preserve Collateral and its Security Interest in the Collateral and to realize upon the Security Interest and Debtor hereby irrevocably constitutes and appoints each Vice-President from time to time of Secured Party the true and lawful attorney of Debtor, with full power of substitution, to do any of the foregoing in the name of Debtor whenever and wherever it may be deemed necessary or expedient. (2) Without limiting any other right of Secured Party, whenever the Obligations are immediately due and payable or Secured Party has the right to declare the Obligations to be immediately due and payable (whether or not it has so declared), Secured Party may, in its sole discretion, set off against the Obligations any and all monies then owed to Debtor by Secured Party in any capacity, whether or not due, and Secured Party shall be deemed to have exercised such right of set off immediately at the time of making its decision to do so even though any charge therefor is made or entered on Secured Party's records subsequent thereto. (3) Upon Debtor's failure to perform any of its duties hereunder, Secured Party may, but shall not be obligated to, perform any or all of such duties, and Debtor shall pay to Secured Party, forthwith upon written demand therefor, an amount equal to the expense incurred by Secured Party in so doing plus interest thereon from the date such expense is incurred until it is paid at the Overdue Rate. (4) After default, Secured Party may grant extensions of time and other indulgences, take and give up security, accept compositions, compound, comprise, settle, grant releases and discharges and otherwise deal with Debtor, debtors of Debtor, sureties and others and with Collateral and other security as Secured Party may see fit without prejudice to the liability of Debtor or Secured Party's right to hold and realize the Security Interest. Furthermore, Secured Party may, after default, demand, collect and sue on Collateral in either Debtor's or Secured Party's name, at Secured Party's option, and may endorse Debtor's name on any and all cheques, commercial paper and any other Instruments pertaining to or constituting Collateral. (5) No delay or omission by Secured Party in exercising any right or remedy hereunder or with respect to any Obligations shall operate as a waiver thereof or of any other right or remedy, and no single or partial exercise thereof shall preclude any other or further exercise thereof or the exercise of any other right or remedy. Furthermore, Secured Party may remedy any default by Debtor hereunder or with respect to any Obligations in any reasonable manner without waiving the default remedied and without waiving any other prior or subsequent default by Debtor. All rights and remedies of Secured Party granted or recognized herein are cumulative and may be exercised at any time and from time to time independently or in combination. -9- 10 (6) Debtor waives protest of any Instrument constituting Collateral at any time held by Secured Party on which Debtor is in any way liable and, subject to Clause 12(7), notice of any other action taken by Secured Party. (7) This Security Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and assigns. In any action brought by an assignee of this Security Agreement and the Security Interest or any part thereof to enforce any rights hereunder, Debtor shall not assert against the assignee any claim or defence which Debtor now has or hereafter may have against Secured Party. (8) Save for any schedules which may be added hereto pursuant to the provisions hereof, no modification, variation or amendment of any provision of this Security Agreement shall be made except by a written agreement executed by the parties hereto and no waiver of any provision hereof shall be effective unless in writing. (9) This Security Agreement and the transactions evidenced hereby shall be governed by and construed in accordance with the laws of the Province of Ontario as the same may from time to time be in effect, including, where applicable, the P.P.S.A. (10) Subject to the requirements of Clauses 12(7) and 14(11) hereof, whenever either party hereto is required or entitled to notify or direct the other or to make a demand or request upon the other, such notice, direction, demand or request shall be in writing shall be sufficiently given only if delivered to the party for whom it is intended at the principal address of such party herein set forth or as changed pursuant hereto or if sent by prepaid registered mail addressed to the party for whom it is intended at the principal address of such party herein set forth or as changed pursuant hereto. Either party may notify the other pursuant hereto of any change in such party's principal address to be used for the purposes hereof. (11) This Security Agreement and the security afforded hereby is in addition to and not in substitution for any other security now or hereafter held by Secured Party and is, and is intended to be, a continuing Security Agreement and shall remain in full force and effect until the Obligations have been paid and satisfied in full. (12) The headings used in this Security Agreement are for convenience only and are not to be considered a part of this Security Agreement and do not in any way limit or amplify the terms and provisions of this Security Agreement. (13) When the context so requires, the singular number shall be read as if the plural were expressed and the provisions hereof shall be read with all grammatical changes necessary dependent upon the person referred to being a male, female, firm or corporation. (14) If any provisions of this Security Agreement, as amended from time to time, shall be -10- 11 deemed invalid or void, in whole or in part, by any court of competent jurisdiction, the remaining terms and provisions of this Security Agreement shall remain in full force and effect. (15) Nothing herein contained shall in any way obligate Secured Party to grant, continue, renew, extend time for payment of or accept anything which constitutes or would constitute Obligations. (16) The Security Interest created hereby is intended to attach when this Security Agreement is signed by Debtor and delivered to Secured Party. 15. COPY OF AGREEMENT Debtor hereby acknowledges receipt of a copy of this Security Agreement. IN WITNESS WHEREOF Debtor has executed this Security Agreement this 24th day of June, 1997. 976459 ONTARIO LIMITED By:______________________ Name: Title: Agreed to and Accepted by: FIRST CHICAGO NBD BANK, CANADA, as the Affiliate designated by NBD Bank to make Canadian Advances and as collateral agent for the Lenders for the purpose of holding this security as specified in the Credit Agreement By:__________________________________ Its:____________________________ -11- 12 976459 ONTARIO LIMITED Guarantor Security Agreement Schedule A 1. Location of Debtor's Business Operations (a) BMG North America 1574 Eagle Street North Cambridge, Ontario N3H 4S5 Canada (b) Butler Metal Products 1574 Eagle Street North Cambridge, Ontario N3H 4S5 Canada (c) Del-Tech Metal Products 1 Butler Drive Delhi, Ontario N4B 2W8 Canada 2. Location of Records Relating to Collateral (a) Butler Metal Products 1574 Eagle Street North Cambridge, Ontario N3H 4S5 Canada (b) Del-Tech Metal Products 1 Butler Drive Delhi, Ontario N4B 2W8 Canada (c) 2365 Franklin Road Bloomfield Hills, MI 48302 (d) 2000 North Woodward Avenue, Suite 130 Bloomfield Hills, MI 48304 1 13 3. Locations of Collateral (a) BMG North America 1574 Eagle Street North Cambridge, Ontario N3H 4S5 Canada (b) Butler Metal Products 1574 Eagle Street North Cambridge, Ontario N3H 4S5 Canada (c) Del-Tech Metal Products 1 Butler Drive Delhi, Ontario N4B 2W8 Canada (d) Lindert Tool & Die 23 Raglan Place Cambridge, Ontario Canada (e) Fincore 10 Melford Drive Units 1-8 Scarborough, Ontario M1B 2G1 Canada (f) Hinderliter Heat Treating Ltd. 9 Shirley Avenue Kitchener, Ontario Canada (g) Easton Coatings Corporation 97 Easton Road Brantford, Ontario N3P 1J4 Canada 2 EX-4.6 8 EXHIBIT 4.6 1 EXHIBIT 4.6 GUARANTOR SECURITY AGREEMENT This GUARANTOR SECURITY AGREEMENT, dated as of June 24, 1997 (this "Security Agreement"), is by BMG HOLDINGS INC., a corporation organized under the laws of the Province of Ontario (the "Debtor") in favor of FIRST CHICAGO NBD BANK, CANADA, in its capacity as the Affiliate designated by NBD Bank, a Michigan banking corporation, to make Canadian Advances and as collateral agent for the Lenders for the purpose of holding this security as specified in the Credit Agreement referred to below (the "Secured Party"). 1. CREATION OF SECURITY INTEREST (1) For value received, Debtor hereby grants to Secured Party a security interest (the "Security Interest") in the undertaking of Debtor and in all Goods (including all parts, accessories, attachments, special tools, additions and accessions thereto), Chattel Paper, Documents of Title (whether negotiable or not), Instruments, Intangibles and Securities now owned or hereafter owned or acquired by or on behalf of Debtor (including such as may be returned to or repossessed by Debtor) and in all proceeds and renewals thereof, accretions thereto and substitutions therefor (hereinafter collectively called "Collateral"), including, without limitation, all of the following now owned or hereafter owned or acquired by or on behalf of Debtor: (i) all inventory of whatever kind and wherever situate ("Inventory"); (ii) all equipment (other than Inventory) of whatever kind and wherever situate, including, without limitation, all machinery, tools, apparatus, plant, furniture, fixtures and vehicles of whatsoever nature or kind; (iii) all book accounts and book debts and generally all accounts, debts, dues, claims, choses in action and demands of every nature and kind howsoever arising or secured including letters of credit and advices of credit, which are now due, owing or accruing or growing due to or owned by or which may hereafter become due, owing or accruing or growing due to or owned by Debtor ("Debts"); (iv) all deeds, documents, writings, papers, books of account and other books relating to or being records of Debts, Chattel Paper or Documents of Title or by which such are or may hereafter be secured, evidenced, acknowledged or made payable; (v) all contractual rights and insurance claims and all goodwill, patents, trademarks, copyrights, and other industrial property; (vi) all monies other than trust monies lawfully belonging to others; and (vii) all property described in any schedule now or hereafter annexed hereto. 2 (2) The Security Interest granted hereby shall not extend or apply to and Collateral shall not include the last day of the term of any lease or agreement therefor but upon the enforcement of the Security Interest Debtor shall stand possessed of such last day in trust to assign the same to any person acquiring such term. (3) The terms "Goods", "Chattel Paper", "Documents of Title", "Instruments", "Intangibles", "Securities", "proceeds", "inventory" and "accession" whenever used herein shall be interpreted pursuant to their respective meanings when used in the Personal Property Security Act of Ontario, as amended from time to time, which Act, including amendments thereto and any Act substituted therefor and amendments thereto is herein referred to as the "P.P.S.A." Provided always that the term "Goods" when used herein shall not include "consumer goods" of Debtor as that term is defined in the P.P.S.A., and the term "Inventory" when used herein shall include livestock and the young thereof after conception and crops that become such within the year of execution of this Security Agreement. Any reference herein to "Collateral" shall, unless the context otherwise requires, be deemed a reference to "Collateral or any part thereof". (4) As used herein, the term "Credit Agreement" means the Credit Agreement dated as of the date hereof among Oxford Automotive, Inc., a corporation incorporated under the laws of the State of Michigan (the "Company"), each of the Subsidiaries of the Company designated under Section 1.1 of the Credit Agreement as a "Borrowing Subsidiary", the lenders party thereto from time to time (the "Lenders") and the Agent, as amended or modified from time to time. Capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Credit Agreement. 2. OBLIGATIONS SECURED The Security Interest granted hereby secures payment and satisfaction of any and all of the following (the "Obligations"): any and all existing and future indebtedness, obligation and liability of every kind, nature and character, direct or indirect, absolute or contingent (including without limitation all indebtedness, obligations and liabilities pursuant to any Loans, Letters of Credit, Bankers' Acceptances and other Advances and all interest, fees, and other charges thereon and all renewals, extensions and modifications thereof and all fees, costs and expenses incurred by the Agent or any of the Lenders in connection with the documentation, administration, collection or enforcement thereof), of the Debtor or of the Company to the Agent or any of the Lenders or any branch, subsidiary or affiliate thereof, howsoever and whensoever created, arising, evidenced or acquired pursuant to the Credit Agreement, the Notes, the Security Documents, any Rate Hedging Agreements or any other agreement, instrument or documents executed in connection therewith at any time (all of the foregoing, as amended or modified from time to time, collectively referred to as the "Loan Documents"). -2- 3 3. REPRESENTATIONS AND WARRANTIES OF DEBTOR Debtor represents and warrants and so long as this Security Agreement remains in effect shall be deemed to continuously represent and warrant that: (1) the Collateral is genuine and owned by Debtor free of all security interests, mortgages, liens, claims, charges or other encumbrances (hereinafter collectively called "Liens"), save for the Security Interest and Permitted Liens; (2) to the best of the Debtor's knowledge, other than as disclosed in writing by the Debtor to the Secured Party, each Debt, Chattel Paper and Instrument constituting Collateral is enforceable in accordance with its terms against the party obligated to pay the same (the "Account Debtor"), and the amount represented by Debtor to Secured Party from time to time as owing by each Account Debtor or by all Account Debtors will be the correct amount actually and unconditionally owing by such Account Debtor or Account Debtors, except for normal cash discounts where applicable, and no Account Debtor will have any defence, set off, claim or counterclaim against Debtor which can be asserted against Secured Party, whether in any proceeding to enforce Collateral or otherwise; and (3) the locations specified n Schedule "A" hereto as to business operations and records are accurate and complete and, with respect to Goods (including Inventory) constituting Collateral, the locations specified in Schedule "A" hereto are accurate and complete save for Goods in transit to such locations and Inventory on lease or consignment; and all fixtures or Goods about to become fixtures and all crops and all oil, gas or other minerals to be extracted and all timber to be cut which forms part of the Collateral will be situate at one of such locations. 4. USE OF COLLATERAL BY DEBTOR AND CONFIRMATION OF COLLATERAL BY SECURED PARTY Subject to compliance with Debtor's covenants contained herein, Debtor may, until default, possess, operate, collect, use and enjoy and deal with Collateral in the ordinary course of Debtor's business in any manner not inconsistent with the provisions hereof; provided always that Secured Party shall have the right at any time and from time to time to confirm the existence and state of the Collateral in any manner Secured Party may consider appropriate and Debtor agrees to furnish all assistance and information and to perform all such acts as Secured Party may reasonably request in connection therewith and to all places where Collateral may be located and to all premises occupied by Debtor. -3- 4 5. RECEIPTS OF INCOME FROM AND INTEREST ON COLLATERAL (1) Until default, Debtor shall have the right to receive any monies constituting income from or interest on Collateral and if Secured Party receives any such monies prior to default, Secured Party shall either credit the same to the account of Debtor or pay the same promptly to Debtor. (2) After default, Debtor will not request or receive any monies constituting income from or interest on Collateral and if Debtor receives any such monies, Debtor will receive the same in trust for and promptly pay the same to Secured Party. 6. INCREASES, PROFITS, PAYMENTS OR DISTRIBUTIONS REGARDING COLLATERAL (1) Whether or not default has occurred, Debtor authorizes Secured Party (i) to receive any increase in or profits on Collateral (other than money) and to hold the same as part of Collateral; money so received shall be treated as income for the purposes of Clause 5 hereof and dealt with accordingly; and (ii) to receive any payment or distribution upon redemption or retirement or upon dissolution and liquidation of the issuer of Collateral; to surrender Collateral in exchange therefor; and to hold any such payment or distribution as part of the Collateral. (2) If Debtor receives any such increase or profits (other than money) or payments or distributions, Debtor will receive the same in trust for and deliver the same promptly to Secured Party to be held by Secured Party as herein provided. 7. SECURITIES FORMING PART OF COLLATERAL If Collateral at any time includes Securities, Debtor authorizes Secured Party to transfer the same or any part thereof into its own name or that of its nominee(s) so that Secured Party or its nominee(s) may appear of record as the sole owner thereof; provided that, until default, Secured Party shall deliver promptly to Debtor all notices or other communications received by it or its nominee(s) as such registered owner and, upon demand and receipt of payment of any necessary expenses thereof, shall issue to Debtor or its order a proxy to vote and take all action with respect to such Securities. After enforcement of remedies hereunder, Debtor waives all rights to receive any notices or communications received by Secured Party or its nominee(s) as such registered owner and agrees that no proxy issued by Secured Party to Debtor or its order as aforesaid shall thereafter be effective. -4- 5 8. COLLECTION OF DEBTS FORMING PART OF COLLATERAL After default, Secured Party may notify all or any Account Debtors of the Security Interest and may also direct such Account Debtors to make all payments on Collateral to Secured Party. Debtor acknowledges that any payments on or other proceeds of Collateral received by Debtor from Account Debtors, before or after notification of this Security Interest to Account Debtors, if received after default, shall be received and held by Debtor in trust for Secured Party and shall be turned over to Secured Party upon request. 9. COVENANTS OF THE DEBTOR So long as this Security Agreement remains in effect, Debtor covenants and agrees: (1) to defend the Collateral against the claims and demands of all other parties claiming the same or an interest therein; to keep the Collateral free from all Liens, except for the Security Interest and Permitted Liens or hereafter approved in writing, prior to their creation or assumption, by Secured Party; and not to sell, exchange, transfer, assign, lease, or otherwise dispose of Collateral or any interest therein without the prior written consent of Secured Party, except to the extent permitted under the Credit Agreement; provided always that, until default, Debtor may, in the ordinary course of Debtor's business, sell or lease Inventory and, subject to Clause 8 hereof, use monies available to Debtor; (2) to notify Secured Party promptly of: (i) any change in the information contained herein or in the Schedules hereto relating to Debtor, Debtor's business or Collateral; and (ii) any material loss of or damage to Collateral; (3) to keep the Collateral in good order, condition and repair and not to use Collateral in violation of the provisions of this Security Agreement or any other agreement relating to Collateral or any policy insuring Collateral or any applicable statute, law, by-law, rule, regulation or ordinance; (4) to do, execute, acknowledge and deliver such financing statements and further assignments, transfers, documents, acts, matters and things (including further schedules hereto) as may be reasonably requested by Secured Party of or with respect to Collateral in order to give effect to these presents and to pay all costs for searches and filings in connection therewith; (5) to pay all taxes, rates, levies, assessments and other charges of every nature which may be lawfully levied, assessed or imposed against or in respect of Debtor or Collateral as and -5- 6 when the same become due and payable; (6) to insure the Collateral for such periods, in such amounts, on such terms and against loss or damage by fire and such other risks as Secured Party shall reasonably direct with loss payable to Secured Party and Debtor, as insured, as their respective interests may appear, and to pay all premiums therefor; (7) to prevent Collateral, save Inventory sold or leased as permitted hereby, from being or becoming an accession to other property not covered by this Security Agreement; (8) to carry on and conduct the business of Debtor in a proper and efficient manner and so as to protect and preserve the Collateral and to keep, in accordance with generally accepted accounting principles, consistently applied, proper books of account for Debtor's business as well as accurate and complete records concerning Collateral, and mark any and all such records and Collateral as Secured Party's request so as to indicate the Security Interest; and (9) to deliver to Secured Party from time to time promptly upon request: (i) any Documents of Title, Instruments, Securities and Chattel Paper constituting, representing or relating to Collateral; (ii) all books of account and all records, ledgers, reports, correspondence, schedules, documents, statements, lists and other writing relating to Collateral for the purpose of inspecting, auditing or copying the same; (iii) all financial statements prepared by or for Debtor regarding Debtor's business; (iv) all policies and certificates of insurance relating to Collateral; and (v) such information concerning Collateral, Debtor and Debtor's business and affairs as Secured Party may reasonably request. 10. EVENTS OF DEFAULT The happening of any of the following events or conditions shall constitute default hereunder which is herein referred to as "default": (1) the nonpayment when due, whether by acceleration or otherwise, of any principal or interest forming part of the Obligations or the failure of Debtor to observe or perform any obligation, covenant, term, provision or condition contained in this Security Agreement; or -6- 7 (2) any Event of Default under the Credit Agreement. 11. ACCELERATION Secured Party, in its sole discretion, may declare all or any part of the Obligations not payable on demand to be immediately due and payable, without demand or notice of any kind, in the event of default. The provisions of this clause are not intended in any way to affect any rights of Secured Party with respect to Obligations which may now or hereafter be payable on demand. 12. REMEDIES (1) Upon default, Secured Party may appoint or reappoint by instrument in writing, any person or persons, whether an officer or officers or an employee or employees of Secured Party or not, to be a receiver or receivers (hereinafter called a "Receiver", which term when used herein shall include a receiver and manager) of Collateral (including any interest, income or profits therefrom) and may remove any Receiver so appointed and appoint another in his stead. Any such Receiver shall, so far as concerns responsibility for his acts, be deemed the agent of Debtor and not Secured Party, and Secured Party shall not be in any way responsible for any misconduct, negligence or nonfeasance on the part of any such Receiver, his servants, agents or employees. Subject to the provisions of the instrument appointing him, any such Receiver shall have power to take possession of Collateral, to preserve Collateral or its value, to carry on or concur in carrying on all or any part of the business of Debtor and to sell, lease or otherwise dispose of or concur in selling, leasing or otherwise disposing of Collateral. To facilitate the foregoing powers, any such Receiver may, to the exclusion of all others, including Debtor, enter upon, use and occupy all premises owned or occupied by Debtor wherein Collateral may be situate, maintain Collateral upon such premises, borrow money on a secured or unsecured basis and use Collateral directly in carrying on Debtor's business or otherwise, as such Receiver shall, in his discretion, determine. Except as may be otherwise directed by Secured Party, all monies received from time to time by such Receiver in carrying out his appointment shall be received in trust for and paid over to Secured Party. Every such Receiver may, in the discretion of Secured Party, be vested with all or any of the rights and powers of Secured Party. (2) Upon default, Secured Party may, either directly or through its agents or nominees, exercise all the powers and rights given to a Receiver by virtue of the foregoing subclause (1). (3) Secured Party may take possession of, collect, demand, sue on, enforce, recover and receive Collateral and give valid and binding receipts and discharges therefor and in respect thereof and, upon default, Secured Party may sell, lease or otherwise dispose of Collateral in such manner, at such time or otherwise dispose of Collateral in such manner, at such time or times and place or places, for such consideration and upon such terms and conditions as to Secured Party may seem -7- 8 reasonable. (4) In addition to those rights granted herein and in any other agreement now or hereafter in effect between Debtor and Secured Party and in addition to any other rights Secured Party may have at law or in equity, Secured Party shall have, both before and after default, all rights and remedies of a secured party under the P.P.S.A. Provided always that Secured Party shall not be liable or accountable for any failure to exercise its remedies, take possession of, collect, enforce, realize, sell, lease or otherwise dispose of Collateral or to institute proceedings for such purposes. Furthermore, Secured Party shall have no obligation to take any steps to preserve rights against prior parties to any Instrument or Chattel Paper, whether Collateral or proceeds and whether or not in Secured Party's possession and shall not be liable or accountable for failure to do so. (5) Debtor acknowledges that Secured Party or any Receiver appointed by it may take possession of Collateral wherever it may be located and by any method permitted by law and Debtor agrees upon request from Secured Party or any such Receiver to assemble and deliver possession of Collateral at such place or places as directed. (6) Debtor agrees to pay all costs, charges and expenses reasonably incurred by Secured Party or any Receiver appointed by it, whether directly or for services rendered (including reasonable solicitors' and auditors' costs and other legal expenses and Receiver remuneration), in operating Debtor's accounts, in preparing or enforcing this Security Agreement, taking custody of, preserving, repairing, processing, preparing for disposition and disposing of Collateral and in enforcing or collecting Obligations and all such costs, charges and expenses together with any monies owing as a result of any borrowing by Secured Party or any Receiver appointed by it, as permitted hereby, shall be a first charge on the proceeds of realization, collection or disposition of Collateral and shall be secured hereby. (7) Unless the Collateral in question is perishable or unless Secured Party believes on reasonable grounds that the Collateral in question will decline speedily in value, Secured Party will give Debtor such notice of the date, time and place of any public sale or of the date after which any private disposition of Collateral is to be made, as may be required by the P.P.S.A. 13. DISPOSITION OF MONIES Subject to any applicable requirements of the P.P.S.A., all monies collected or received by Secured Party pursuant to or in exercise of any right it possesses with respect to Collateral shall be applied on account of the Obligations in such manner as described in the Credit Agreement or, at the option of Secured Party, may be held unappropriated in a collateral account or released to Debtor, all without prejudice to the liability of Debtor or the rights of Secured Party hereunder. Debtor hereby acknowledges that if the disposition of all or any Collateral by Secured Party or a Receiver pursuant hereto does not give rise to sufficient funds to pay all Obligations secured hereby Debtor -8- 9 shall remain liable for any deficiency until all Obligations have been paid or satisfied in full. Any surplus shall be accounted for as required by law. 14. MISCELLANEOUS (1) Debtor hereby authorizes Secured Party to file such financing statements and other documents and do such acts, matters and things (including completing and adding schedules hereto identifying Collateral or any Permitted Liens affecting Collateral or identifying the locations at which Debtor's business is carried on and Collateral and records relating thereto are situate) as Secured Party may deem appropriate to perfect and continue the Security Interest, to protect and preserve Collateral and its Security Interest in the Collateral and to realize upon the Security Interest and Debtor hereby irrevocably constitutes and appoints each Vice-President from time to time of Secured Party the true and lawful attorney of Debtor, with full power of substitution, to do any of the foregoing in the name of Debtor whenever and wherever it may be deemed necessary or expedient. (2) Without limiting any other right of Secured Party, whenever the Obligations are immediately due and payable or Secured Party has the right to declare the Obligations to be immediately due and payable (whether or not it has so declared), Secured Party may, in its sole discretion, set off against the Obligations any and all monies then owed to Debtor by Secured Party in any capacity, whether or not due, and Secured Party shall be deemed to have exercised such right of set off immediately at the time of making its decision to do so even though any charge therefor is made or entered on Secured Party's records subsequent thereto. (3) Upon Debtor's failure to perform any of its duties hereunder, Secured Party may, but shall not be obligated to, perform any or all of such duties, and Debtor shall pay to Secured Party, forthwith upon written demand therefor, an amount equal to the expense incurred by Secured Party in so doing plus interest thereon from the date such expense is incurred until it is paid at the Overdue Rate. (4) After default, Secured Party may grant extensions of time and other indulgences, take and give up security, accept compositions, compound, comprise, settle, grant releases and discharges and otherwise deal with Debtor, debtors of Debtor, sureties and others and with Collateral and other security as Secured Party may see fit without prejudice to the liability of Debtor or Secured Party's right to hold and realize the Security Interest. Furthermore, Secured Party may, after default, demand, collect and sue on Collateral in either Debtor's or Secured Party's name, at Secured Party's option, and may endorse Debtor's name on any and all cheques, commercial paper and any other Instruments pertaining to or constituting Collateral. (5) No delay or omission by Secured Party in exercising any right or remedy hereunder or with respect to any Obligations shall operate as a waiver thereof or of any other right or remedy, -9- 10 and no single or partial exercise thereof shall preclude any other or further exercise thereof or the exercise of any other right or remedy. Furthermore, Secured Party may remedy any default by Debtor hereunder or with respect to any Obligations in any reasonable manner without waiving the default remedied and without waiving any other prior or subsequent default by Debtor. All rights and remedies of Secured Party granted or recognized herein are cumulative and may be exercised at any time and from time to time independently or in combination. (6) Debtor waives protest of any Instrument constituting Collateral at any time held by Secured Party on which Debtor is in any way liable and, subject to Clause 12(7), notice of any other action taken by Secured Party. (7) This Security Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and assigns. In any action brought by an assignee of this Security Agreement and the Security Interest or any part thereof to enforce any rights hereunder, Debtor shall not assert against the assignee any claim or defence which Debtor now has or hereafter may have against Secured Party. (8) Save for any schedules which may be added hereto pursuant to the provisions hereof, no modification, variation or amendment of any provision of this Security Agreement shall be made except by a written agreement executed by the parties hereto and no waiver of any provision hereof shall be effective unless in writing. (9) This Security Agreement and the transactions evidenced hereby shall be governed by and construed in accordance with the laws of the Province of Ontario as the same may from time to time be in effect, including, where applicable, the P.P.S.A. (10) Subject to the requirements of Clauses 12(7) and 14(11) hereof, whenever either party hereto is required or entitled to notify or direct the other or to make a demand or request upon the other, such notice, direction, demand or request shall be in writing shall be sufficiently given only if delivered to the party for whom it is intended at the principal address of such party herein set forth or as changed pursuant hereto or if sent by prepaid registered mail addressed to the party for whom it is intended at the principal address of such party herein set forth or as changed pursuant hereto. Either party may notify the other pursuant hereto of any change in such party's principal address to be used for the purposes hereof. (11) This Security Agreement and the security afforded hereby is in addition to and not in substitution for any other security now or hereafter held by Secured Party and is, and is intended to be, a continuing Security Agreement and shall remain in full force and effect until the Obligations have been paid and satisfied in full. (12) The headings used in this Security Agreement are for convenience only and are not to be considered a part of this Security Agreement and do not in any way limit or amplify the terms -10- 11 and provisions of this Security Agreement. (13) When the context so requires, the singular number shall be read as if the plural were expressed and the provisions hereof shall be read with all grammatical changes necessary dependent upon the person referred to being a male, female, firm or corporation. (14) If any provisions of this Security Agreement, as amended from time to time, shall be deemed invalid or void, in whole or in part, by any court of competent jurisdiction, the remaining terms and provisions of this Security Agreement shall remain in full force and effect. (15) Nothing herein contained shall in any way obligate Secured Party to grant, continue, renew, extend time for payment of or accept anything which constitutes or would constitute Obligations. (16) The Security Interest created hereby is intended to attach when this Security Agreement is signed by Debtor and delivered to Secured Party. 15. COPY OF AGREEMENT Debtor hereby acknowledges receipt of a copy of this Security Agreement. IN WITNESS WHEREOF Debtor has executed this Security Agreement this 24th day of June, 1997. BMG HOLDINGS, INC. By:___________________________________ Name: Title: Agreed to and Accepted by: FIRST CHICAGO NBD BANK, CANADA, as the Affiliate designated by NBD Bank to make Canadian Advances and as collateral agent for the Lenders for the purpose of holding this security as specified in the Credit Agreement -11- 12 BMG HOLDINGS, INC. Guarantor Security Agreement Schedule A ---------- 1. Location of Debtor's Business Operations (a) BMG Holdings, Inc. 2000 North Woodward Avenue, Suite 130 Bloomfield Hills, Michigan 48304 (b) BMG North America 1574 Eagle Street North Cambridge, Ontario N3H 4S5 Canada (c) Butler Metal Products 1574 Eagle Street North Cambridge, Ontario N3H 4S5 Canada (d) Del-Tech Metal Products 1 Butler Drive Delhi, Ontario N4B 2W8 Canada 2. Location of Records Relating to Collateral (a) BMG Holdings, Inc. 2000 North Woodward Avenue, Suite 130 Bloomfield Hills, Michigan 48304 (b) BMG North America 1574 Eagle Street North Cambridge, Ontario N3H 4S5 Canada (c) Butler Metal Products 1574 Eagle Street North Cambridge, Ontario N3H 4S5 Canada 1 13 (d) Del-Tech Metal Products 1 Butler Drive Delhi, Ontario N4B 2W8 Canada (e) 2365 Franklin Road Bloomfield Hills, MI 48302 3. Locations of Collateral (a) BMG North America 1574 Eagle Street North Cambridge, Ontario N3H 4S5 Canada (b) Butler Metal Products 1574 Eagle Street North Cambridge, Ontario N3H 4S5 Canada (c) Del-Tech Metal Products 1 Butler Drive Delhi, Ontario N4B 2W8 Canada (d) Lindert Tool & Die 23 Raglan Place Cambridge, Ontario, Canada (e) Fincore 10 Melford Drive Units 1-8 Scarborough, Ontario M1B 2G1, Canada (f) Hinderliter Heat Treating Ltd. 9 Shirley Avenue Kitchener, Ontario, Canada (g) Easton Coatings Corporation 97 Easton Road Brantford, Ontario N3P 1J4, Canada 2 EX-4.7 9 EXHIBIT 4.7 1 EXHIBIT 4.7 GUARANTOR SECURITY AGREEMENT This GUARANTOR SECURITY AGREEMENT, dated as of June 24, 1997 (this "Security Agreement"), is by BMG NORTH AMERICA LIMITED, a corporation organized under the laws of the Province of Ontario (the "Debtor") in favor of FIRST CHICAGO NBD BANK, CANADA, in its capacity as the Affiliate designated by NBD Bank, a Michigan banking corporation, to make Canadian Advances and as collateral agent for the Lenders for the purpose of holding this security as specified in the Credit Agreement referred to below (the "Secured Party"). 1. CREATION OF SECURITY INTEREST (1) For value received, Debtor hereby grants to Secured Party a security interest (the "Security Interest") in the undertaking of Debtor and in all Goods (including all parts, accessories, attachments, special tools, additions and accessions thereto), Chattel Paper, Documents of Title (whether negotiable or not), Instruments, Intangibles and Securities now owned or hereafter owned or acquired by or on behalf of Debtor (including such as may be returned to or repossessed by Debtor) and in all proceeds and renewals thereof, accretions thereto and substitutions therefor (hereinafter collectively called "Collateral"), including, without limitation, all of the following now owned or hereafter owned or acquired by or on behalf of Debtor: (i) all inventory of whatever kind and wherever situate ("Inventory"); (ii) all equipment (other than Inventory) of whatever kind and wherever situate, including, without limitation, all machinery, tools, apparatus, plant, furniture, fixtures and vehicles of whatsoever nature or kind; (iii) all book accounts and book debts and generally all accounts, debts, dues, claims, choses in action and demands of every nature and kind howsoever arising or secured including letters of credit and advices of credit, which are now due, owing or accruing or growing due to or owned by or which may hereafter become due, owing or accruing or growing due to or owned by Debtor ("Debts"); (iv) all deeds, documents, writings, papers, books of account and other books relating to or being records of Debts, Chattel Paper or Documents of Title or by which such are or may hereafter be secured, evidenced, acknowledged or made payable; (v) all contractual rights and insurance claims and all goodwill, patents, trademarks, copyrights, and other industrial property; (vi) all monies other than trust monies lawfully belonging to others; and 2 (vii) all property described in any schedule now or hereafter annexed hereto. (2) The Security Interest granted hereby shall not extend or apply to and Collateral shall not include the last day of the term of any lease or agreement therefor but upon the enforcement of the Security Interest Debtor shall stand possessed of such last day in trust to assign the same to any person acquiring such term. (3) The terms "Goods", "Chattel Paper", "Documents of Title", "Instruments", "Intangibles", "Securities", "proceeds", "inventory" and "accession" whenever used herein shall be interpreted pursuant to their respective meanings when used in the Personal Property Security Act of Ontario, as amended from time to time, which Act, including amendments thereto and any Act substituted therefor and amendments thereto is herein referred to as the "P.P.S.A." Provided always that the term "Goods" when used herein shall not include "consumer goods" of Debtor as that term is defined in the P.P.S.A., and the term "Inventory" when used herein shall include livestock and the young thereof after conception and crops that become such within the year of execution of this Security Agreement. Any reference herein to "Collateral" shall, unless the context otherwise requires, be deemed a reference to "Collateral or any part thereof". (4) As used herein, the term "Credit Agreement" means the Credit Agreement dated as of the date hereof among Oxford Automotive, Inc., a corporation incorporated under the laws of the State of Michigan (the "Company"), each of the Subsidiaries designated under Section 1.1 of the Credit Agreement as a "Borrowing Subsidiary", the lenders party thereto from time to time ( the "Lenders") and the Agent, as amended or modified from time to time. Capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Credit Agreement. 2. OBLIGATIONS SECURED The Security Interest granted hereby secures payment and satisfaction of any and all of the following (the "Obligations"): any and all existing and future indebtedness, obligation and liability of every kind, nature and character, direct or indirect, absolute or contingent (including without limitation all indebtedness, obligations and liabilities pursuant to any Loans, Letters of Credit, Bankers' Acceptances and other Advances and all interest, fees, and other charges thereon and all renewals, extensions and modifications thereof and all fees, costs and expenses incurred by the Agent or any of the Lenders in connection with the documentation, administration, collection or enforcement thereof), of the Debtor or of the Company to the Agent or any of the Lenders or any branch, subsidiary or affiliate thereof, howsoever and whensoever created, arising, evidenced or acquired pursuant to the Credit Agreement, the Notes, the Security Documents, any Rate Hedging Agreements or any other agreement, instrument or documents executed in connection therewith at any time (all of the foregoing, as amended or modified from time to time, collectively referred to as the "Loan Documents"). The Obligations secured by this Agreement are continuing in nature and include those Obligations secured by the Company Security Agreement dated as of February 11, 1997 by the Debtor in favor of the Secured Party. -2- 3 -3- 4 3. REPRESENTATIONS AND WARRANTIES OF DEBTOR Debtor represents and warrants and so long as this Security Agreement remains in effect shall be deemed to continuously represent and warrant that: (1) the Collateral is genuine and owned by Debtor free of all security interests, mortgages, liens, claims, charges or other encumbrances (hereinafter collectively called "Liens"), save for the Security Interest and Permitted Liens; (2) to the best of the Debtor's knowledge, other than as disclosed in writing by the Debtor to the Secured Party, each Debt, Chattel Paper and Instrument constituting Collateral is enforceable in accordance with its terms against the party obligated to pay the same (the "Account Debtor"), and the amount represented by Debtor to Secured Party from time to time as owing by each Account Debtor or by all Account Debtors will be the correct amount actually and unconditionally owing by such Account Debtor or Account Debtors, except for normal cash discounts where applicable, and no Account Debtor will have any defence, set off, claim or counterclaim against Debtor which can be asserted against Secured Party, whether in any proceeding to enforce Collateral or otherwise; and (3) the locations specified n Schedule "A" hereto as to business operations and records are accurate and complete and, with respect to Goods (including Inventory) constituting Collateral, the locations specified in Schedule "A" hereto are accurate and complete save for Goods in transit to such locations and Inventory on lease or consignment; and all fixtures or Goods about to become fixtures and all crops and all oil, gas or other minerals to be extracted and all timber to be cut which forms part of the Collateral will be situate at one of such locations. 4. USE OF COLLATERAL BY DEBTOR AND CONFIRMATION OF COLLATERAL BY SECURED PARTY Subject to compliance with Debtor's covenants contained herein, Debtor may, until default, possess, operate, collect, use and enjoy and deal with Collateral in the ordinary course of Debtor's business in any manner not inconsistent with the provisions hereof; provided always that Secured Party shall have the right at any time and from time to time to confirm the existence and state of the Collateral in any manner Secured Party may consider appropriate and Debtor agrees to furnish all assistance and information and to perform all such acts as Secured Party may reasonably request in connection therewith and to all places where Collateral may be located and to all premises occupied by Debtor. -4- 5 5. RECEIPTS OF INCOME FROM AND INTEREST ON COLLATERAL (1) Until default, Debtor shall have the right to receive any monies constituting income from or interest on Collateral and if Secured Party receives any such monies prior to default, Secured Party shall either credit the same to the account of Debtor or pay the same promptly to Debtor. (2) After default, Debtor will not request or receive any monies constituting income from or interest on Collateral and if Debtor receives any such monies, Debtor will receive the same in trust for and promptly pay the same to Secured Party. 6. INCREASES, PROFITS, PAYMENTS OR DISTRIBUTIONS REGARDING COLLATERAL (1) Whether or not default has occurred, Debtor authorizes Secured Party (i) to receive any increase in or profits on Collateral (other than money) and to hold the same as part of Collateral; money so received shall be treated as income for the purposes of Clause 5 hereof and dealt with accordingly; and (ii) to receive any payment or distribution upon redemption or retirement or upon dissolution and liquidation of the issuer of Collateral; to surrender Collateral in exchange therefor; and to hold any such payment or distribution as part of the Collateral. (2) If Debtor receives any such increase or profits (other than money) or payments or distributions, Debtor will receive the same in trust for and deliver the same promptly to Secured Party to be held by Secured Party as herein provided. 7. SECURITIES FORMING PART OF COLLATERAL If Collateral at any time includes Securities, Debtor authorizes Secured Party to transfer the same or any part thereof into its own name or that of its nominee(s) so that Secured Party or its nominee(s) may appear of record as the sole owner thereof; provided that, until default, Secured Party shall deliver promptly to Debtor all notices or other communications received by it or its nominee(s) as such registered owner and, upon demand and receipt of payment of any necessary expenses thereof, shall issue to Debtor or its order a proxy to vote and take all action with respect to such Securities. After enforcement of remedies hereunder, Debtor waives all rights to receive any notices or communications received by Secured Party or its nominee(s) as such registered owner and agrees that no proxy issued by Secured Party to Debtor or its order as aforesaid shall thereafter be effective. -5- 6 8. COLLECTION OF DEBTS FORMING PART OF COLLATERAL After default, Secured Party may notify all or any Account Debtors of the Security Interest and may also direct such Account Debtors to make all payments on Collateral to Secured Party. Debtor acknowledges that any payments on or other proceeds of Collateral received by Debtor from Account Debtors, before or after notification of this Security Interest to Account Debtors, if received after default, shall be received and held by Debtor in trust for Secured Party and shall be turned over to Secured Party upon request. 9. COVENANTS OF THE DEBTOR So long as this Security Agreement remains in effect, Debtor covenants and agrees: (1) to defend the Collateral against the claims and demands of all other parties claiming the same or an interest therein; to keep the Collateral free from all Liens, except for the Security Interest and Permitted Liens or hereafter approved in writing, prior to their creation or assumption, by Secured Party; and not to sell, exchange, transfer, assign, lease, or otherwise dispose of Collateral or any interest therein without the prior written consent of Secured Party, except to the extent permitted under the Credit Agreement; provided always that, until default, Debtor may, in the ordinary course of Debtor's business, sell or lease Inventory and, subject to Clause 8 hereof, use monies available to Debtor; (2) to notify Secured Party promptly of: (i) any change in the information contained herein or in the Schedules hereto relating to Debtor, Debtor's business or Collateral; and (ii) any material loss of or damage to Collateral; (3) to keep the Collateral in good order, condition and repair and not to use Collateral in violation of the provisions of this Security Agreement or any other agreement relating to Collateral or any policy insuring Collateral or any applicable statute, law, by-law, rule, regulation or ordinance; (4) to do, execute, acknowledge and deliver such financing statements and further assignments, transfers, documents, acts, matters and things (including further schedules hereto) as may be reasonably requested by Secured Party of or with respect to Collateral in order to give effect to these presents and to pay all costs for searches and filings in connection therewith; (5) to pay all taxes, rates, levies, assessments and other charges of every nature which -6- 7 may be lawfully levied, assessed or imposed against or in respect of Debtor or Collateral as and when the same become due and payable; (6) to insure the Collateral for such periods, in such amounts, on such terms and against loss or damage by fire and such other risks as Secured Party shall reasonably direct with loss payable to Secured Party and Debtor, as insured, as their respective interests may appear, and to pay all premiums therefor; (7) to prevent Collateral, save Inventory sold or leased as permitted hereby, from being or becoming an accession to other property not covered by this Security Agreement; (8) to carry on and conduct the business of Debtor in a proper and efficient manner and so as to protect and preserve the Collateral and to keep, in accordance with generally accepted accounting principles, consistently applied, proper books of account for Debtor's business as well as accurate and complete records concerning Collateral, and mark any and all such records and Collateral as Secured Party's request so as to indicate the Security Interest; and (9) to deliver to Secured Party from time to time promptly upon request: (i) any Documents of Title, Instruments, Securities and Chattel Paper constituting, representing or relating to Collateral; (ii) all books of account and all records, ledgers, reports, correspondence, schedules, documents, statements, lists and other writing relating to Collateral for the purpose of inspecting, auditing or copying the same; (iii) all financial statements prepared by or for Debtor regarding Debtor's business; (iv) all policies and certificates of insurance relating to Collateral; and (v) such information concerning Collateral, Debtor and Debtor's business and affairs as Secured Party may reasonably request. 10. EVENTS OF DEFAULT The happening of any of the following events or conditions shall constitute default hereunder which is herein referred to as "default": (1) the nonpayment when due, whether by acceleration or otherwise, of any principal or -7- 8 interest forming part of the Obligations or the failure of Debtor to observe or perform any obligation, covenant, term, provision or condition contained in this Security Agreement; or (2) any Event of Default under the Credit Agreement; 11. ACCELERATION Secured Party, in its sole discretion, may declare all or any part of the Obligations not payable on demand to be immediately due and payable, without demand or notice of any kind, in the event of default. The provisions of this clause are not intended in any way to affect any rights of Secured Party with respect to Obligations which may now or hereafter be payable on demand. 12. REMEDIES (1) Upon default, Secured Party may appoint or reappoint by instrument in writing, any person or persons, whether an officer or officers or an employee or employees of Secured Party or not, to be a receiver or receivers (hereinafter called a "Receiver", which term when used herein shall include a receiver and manager) of Collateral (including any interest, income or profits therefrom) and may remove any Receiver so appointed and appoint another in his stead. Any such Receiver shall, so far as concerns responsibility for his acts, be deemed the agent of Debtor and not Secured Party, and Secured Party shall not be in any way responsible for any misconduct, negligence or nonfeasance on the part of any such Receiver, his servants, agents or employees. Subject to the provisions of the instrument appointing him, any such Receiver shall have power to take possession of Collateral, to preserve Collateral or its value, to carry on or concur in carrying on all or any part of the business of Debtor and to sell, lease or otherwise dispose of or concur in selling, leasing or otherwise disposing of Collateral. To facilitate the foregoing powers, any such Receiver may, to the exclusion of all others, including Debtor, enter upon, use and occupy all premises owned or occupied by Debtor wherein Collateral may be situate, maintain Collateral upon such premises, borrow money on a secured or unsecured basis and use Collateral directly in carrying on Debtor's business or otherwise, as such Receiver shall, in his discretion, determine. Except as may be otherwise directed by Secured Party, all monies received from time to time by such Receiver in carrying out his appointment shall be received in trust for and paid over to Secured Party. Every such Receiver may, in the discretion of Secured Party, be vested with all or any of the rights and powers of Secured Party. (2) Upon default, Secured Party may, either directly or through its agents or nominees, exercise all the powers and rights given to a Receiver by virtue of the foregoing subclause (1). (3) Secured Party may take possession of, collect, demand, sue on, enforce, recover and receive Collateral and give valid and binding receipts and discharges therefor and in respect thereof -8- 9 and, upon default, Secured Party may sell, lease or otherwise dispose of Collateral in such manner, at such time or otherwise dispose of Collateral in such manner, at such time or times and place or places, for such consideration and upon such terms and conditions as to Secured Party may seem reasonable. (4) In addition to those rights granted herein and in any other agreement now or hereafter in effect between Debtor and Secured Party and in addition to any other rights Secured Party may have at law or in equity, Secured Party shall have, both before and after default, all rights and remedies of a secured party under the P.P.S.A. Provided always that Secured Party shall not be liable or accountable for any failure to exercise its remedies, take possession of, collect, enforce, realize, sell, lease or otherwise dispose of Collateral or to institute proceedings for such purposes. Furthermore, Secured Party shall have no obligation to take any steps to preserve rights against prior parties to any Instrument or Chattel Paper, whether Collateral or proceeds and whether or not in Secured Party's possession and shall not be liable or accountable for failure to do so. (5) Debtor acknowledges that Secured Party or any Receiver appointed by it may take possession of Collateral wherever it may be located and by any method permitted by law and Debtor agrees upon request from Secured Party or any such Receiver to assemble and deliver possession of Collateral at such place or places as directed. (6) Debtor agrees to pay all costs, charges and expenses reasonably incurred by Secured Party or any Receiver appointed by it, whether directly or for services rendered (including reasonable solicitors' and auditors' costs and other legal expenses and Receiver remuneration), in operating Debtor's accounts, in preparing or enforcing this Security Agreement, taking custody of, preserving, repairing, processing, preparing for disposition and disposing of Collateral and in enforcing or collecting Obligations and all such costs, charges and expenses together with any monies owing as a result of any borrowing by Secured Party or any Receiver appointed by it, as permitted hereby, shall be a first charge on the proceeds of realization, collection or disposition of Collateral and shall be secured hereby. (7) Unless the Collateral in question is perishable or unless Secured Party believes on reasonable grounds that the Collateral in question will decline speedily in value, Secured Party will give Debtor such notice of the date, time and place of any public sale or of the date after which any private disposition of Collateral is to be made, as may be required by the P.P.S.A. 13. DISPOSITION OF MONIES Subject to any applicable requirements of the P.P.S.A., all monies collected or received by Secured Party pursuant to or in exercise of any right it possesses with respect to Collateral shall be applied on account of the Obligations in such manner as described in the Credit Agreement or, at the option of Secured Party, may be held unappropriated in a collateral account or released to Debtor, -9- 10 all without prejudice to the liability of Debtor or the rights of Secured Party hereunder. Debtor hereby acknowledges that if the disposition of all or any Collateral by Secured Party or a Receiver pursuant hereto does not give rise to sufficient funds to pay all Obligations secured hereby Debtor shall remain liable for any deficiency until all Obligations have been paid or satisfied in full. Any surplus shall be accounted for as required by law. 14. MISCELLANEOUS (1) Debtor hereby authorizes Secured Party to file such financing statements and other documents and do such acts, matters and things (including completing and adding schedules hereto identifying Collateral or any Permitted Liens affecting Collateral or identifying the locations at which Debtor's business is carried on and Collateral and records relating thereto are situate) as Secured Party may deem appropriate to perfect and continue the Security Interest, to protect and preserve Collateral and its Security Interest in the Collateral and to realize upon the Security Interest and Debtor hereby irrevocably constitutes and appoints each Vice-President from time to time of Secured Party the true and lawful attorney of Debtor, with full power of substitution, to do any of the foregoing in the name of Debtor whenever and wherever it may be deemed necessary or expedient. (2) Without limiting any other right of Secured Party, whenever the Obligations are immediately due and payable or Secured Party has the right to declare the Obligations to be immediately due and payable (whether or not it has so declared), Secured Party may, in its sole discretion, set off against the Obligations any and all monies then owed to Debtor by Secured Party in any capacity, whether or not due, and Secured Party shall be deemed to have exercised such right of set off immediately at the time of making its decision to do so even though any charge therefor is made or entered on Secured Party's records subsequent thereto. (3) Upon Debtor's failure to perform any of its duties hereunder, Secured Party may, but shall not be obligated to, perform any or all of such duties, and Debtor shall pay to Secured Party, forthwith upon written demand therefor, an amount equal to the expense incurred by Secured Party in so doing plus interest thereon from the date such expense is incurred until it is paid at the Overdue Rate. (4) After default, Secured Party may grant extensions of time and other indulgences, take and give up security, accept compositions, compound, comprise, settle, grant releases and discharges and otherwise deal with Debtor, debtors of Debtor, sureties and others and with Collateral and other security as Secured Party may see fit without prejudice to the liability of Debtor or Secured Party's right to hold and realize the Security Interest. Furthermore, Secured Party may, after default, demand, collect and sue on Collateral in either Debtor's or Secured Party's name, at Secured Party's option, and may endorse Debtor's name on any and all cheques, commercial paper and any other Instruments pertaining to or constituting Collateral. -10- 11 (5) No delay or omission by Secured Party in exercising any right or remedy hereunder or with respect to any Obligations shall operate as a waiver thereof or of any other right or remedy, and no single or partial exercise thereof shall preclude any other or further exercise thereof or the exercise of any other right or remedy. Furthermore, Secured Party may remedy any default by Debtor hereunder or with respect to any Obligations in any reasonable manner without waiving the default remedied and without waiving any other prior or subsequent default by Debtor. All rights and remedies of Secured Party granted or recognized herein are cumulative and may be exercised at any time and from time to time independently or in combination. (6) Debtor waives protest of any Instrument constituting Collateral at any time held by Secured Party on which Debtor is in any way liable and, subject to Clause 12(7), notice of any other action taken by Secured Party. (7) This Security Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and assigns. In any action brought by an assignee of this Security Agreement and the Security Interest or any part thereof to enforce any rights hereunder, Debtor shall not assert against the assignee any claim or defence which Debtor now has or hereafter may have against Secured Party. (8) Save for any schedules which may be added hereto pursuant to the provisions hereof, no modification, variation or amendment of any provision of this Security Agreement shall be made except by a written agreement executed by the parties hereto and no waiver of any provision hereof shall be effective unless in writing. (9) This Security Agreement and the transactions evidenced hereby shall be governed by and construed in accordance with the laws of the Province of Ontario as the same may from time to time be in effect, including, where applicable, the P.P.S.A. (10) Subject to the requirements of Clauses 12(7) and 14(11) hereof, whenever either party hereto is required or entitled to notify or direct the other or to make a demand or request upon the other, such notice, direction, demand or request shall be in writing shall be sufficiently given only if delivered to the party for whom it is intended at the principal address of such party herein set forth or as changed pursuant hereto or if sent by prepaid registered mail addressed to the party for whom it is intended at the principal address of such party herein set forth or as changed pursuant hereto. Either party may notify the other pursuant hereto of any change in such party's principal address to be used for the purposes hereof. (11) This Security Agreement and the security afforded hereby is in addition to and not in substitution for any other security now or hereafter held by Secured Party and is, and is intended to be, a continuing Security Agreement and shall remain in full force and effect until the Obligations have been paid and satisfied in full. -11- 12 (12) The headings used in this Security Agreement are for convenience only and are not to be considered a part of this Security Agreement and do not in any way limit or amplify the terms and provisions of this Security Agreement. (13) When the context so requires, the singular number shall be read as if the plural were expressed and the provisions hereof shall be read with all grammatical changes necessary dependent upon the person referred to being a male, female, firm or corporation. (14) If any provisions of this Security Agreement, as amended from time to time, shall be deemed invalid or void, in whole or in part, by any court of competent jurisdiction, the remaining terms and provisions of this Security Agreement shall remain in full force and effect. (15) Nothing herein contained shall in any way obligate Secured Party to grant, continue, renew, extend time for payment of or accept anything which constitutes or would constitute Obligations. (16) The Security Interest created hereby is intended to attach when this Security Agreement is signed by Debtor and delivered to Secured Party. 15. COPY OF AGREEMENT Debtor hereby acknowledges receipt of a copy of this Security Agreement. IN WITNESS WHEREOF Debtor has executed this Security Agreement this 24th day of June, 1997. BMG NORTH AMERICA LIMITED By:___________________________________ Name: Title: Agreed to and Accepted by: FIRST CHICAGO NBD BANK, CANADA, as the Affiliate designated by NBD Bank to make Canadian Advances and as collateral agent for the Lenders for the purpose of holding this security as specified in the Credit Agreement -12- 13 BMG NORTH AMERICA LIMITED Guarantor Security Agreement Schedule A 1. Location of Debtor's Business Operations (a) BMG North America 1574 Eagle Street North Cambridge, Ontario N3H 4S5 Canada (b) Butler Metal Products 1574 Eagle Street North Cambridge, Ontario N3H 4S5 Canada (c) Del-Tech Metal Products 1 Butler Drive Delhi, Ontario N4B 2W8 Canada 2. Location of Records Relating to Collateral (a) Butler Metal Products 1574 Eagle Street North Cambridge, Ontario N3H 4S5 Canada (b) Del-Tech Metal Products 1 Butler Drive Delhi, Ontario N4B 2W8 Canada (c) 2365 Franklin Road Bloomfield Hills, MI 48302 (d) 2000 North Woodward Avenue, Suite 130 Bloomfield Hills, MI 48304 1 14 3. Locations of Collateral (a) BMG North America 1574 Eagle Street North Cambridge, Ontario N3H 4S5 Canada (b) Butler Metal Products 1574 Eagle Street North Cambridge, Ontario N3H 4S5 Canada (c) Del-Tech Metal Products 1 Butler Drive Delhi, Ontario N4B 2W8 Canada (d) Lindert Tool & Die 23 Raglan Place Cambridge, Ontario Canada (e) Fincore 10 Melford Drive Units 1-8 Scarborough, Ontario M1B 2G1 Canada (f) Hinderliter Heat Treating Ltd. 9 Shirley Avenue Kitchener, Ontario Canada (g) Easton Coatings Corporation 97 Easton Road Brantford, Ontario N3P 1J4 Canada 2 EX-4.8 10 EXHIBIT 4.8 1 EXHIBIT 4.8 GUARANTOR SECURITY AGREEMENT THIS SECURITY AGREEMENT, dated as of June 24, 1997 (this "Security Agreement"), is made by LOBDELL EMERY CORPORATION, a Michigan corporation, CREATIVE FABRICATION CORPORATION, a Tennessee corporation, WINCHESTER FABRICATION CORPORATION, a Michigan Corporation, PARALLEL GROUP INTERNATIONAL, INC., an Indiana corporation, LASERWELD INTERNATIONAL, L.L.C., an Indiana limited liability company, CONCEPT MANAGEMENT CORPORATION, a Michigan corporation, and LEWIS EMERY CAPITAL CORPORATION, a Michigan corporation (each individually, a "Grantor" and, collectively, the "Grantors"), in favor of NBD BANK, a Michigan banking corporation, as agent (in such capacity, the "Agent") for the benefit of itself and the lenders (the "Lenders") now or hereafter parties to the Credit Agreement described below. RECITALS A. Oxford Automotive, Inc. (the "Borrower") and the Borrowing Subsidiary identified from time to time therein have entered into a Credit Agreement of even date herewith (as amended or modified from time to time, including any agreement entered into in substitution therefor, the "Credit Agreement"), with the Lenders and the Agent pursuant to which the Lenders may make Advances (as therein defined) to the Borrower and the Borrowing Subsidiary. B. The Grantors are subsidiaries and affiliates of the Borrower, and are engaged in common enterprises with the Borrower and other Grantors. C. The Grantors have guaranteed the Borrower's and the Borrowing Subsidiary's obligations under the Credit Agreement pursuant to a Guaranty Agreement dated as of June __, 1997 (as hereafter amended, modified or restated, the "Guaranty"). D. As a condition to the effectiveness of the obligation of the Lenders under the Credit Agreement, each Grantor has agreed to grant to the Agent, for the benefit of itself and the Lenders, a first-priority security interest, subject only to security interests expressly permitted by the Credit Agreement, in and to the Collateral hereinafter described. AGREEMENTS To secure (a) the prompt and complete payment of all indebtedness and other obligations of the Borrower, the Borrowing Subsidiary or any Grantor now or hereafter owing to the Lenders or the Agent under or on account of the Credit Agreement, any Security Document or any Letter of Credit, notes or other instruments issued to the Agent or any Lender pursuant thereto, (b) the performance of the covenants under the Credit Agreement and the Security Documents and any monies expended by the Lender in connection therewith, (c) the prompt and complete payment of all obligations and performance of all covenants of the Borrower and the Borrowing Subsidiary 2 under any interest rate or currency swap agreements or similar transactions with any Lender, (d) the prompt and complete payment of all indebtedness of any Grantor under the Guaranty and (e) the prompt and complete payment of any and all other indebtedness, obligations and liabilities of any kind of the Borrower, the Borrowing Subsidiary or any Grantor to the Agent and the Lenders, or any of them, in all cases, of any kind or nature, howsoever created or evidenced and whether now or hereafter existing, direct or indirect (including without limitation any participation interest acquired by any Lender in any such indebtedness, obligations or liabilities of the Borrower, the Borrowing Subsidiary or any Grantor to any other person and any interest rate swap, cap or similar agreement), absolute or contingent, joint and/or several, secured or unsecured, arising by operation of law or otherwise, and whether incurred by the Borrower, the Borrowing Subsidiary or any Grantor as principal, surety, endorser, guarantor, accommodation party or otherwise, including without limitation all principal and all interest (including any interest accruing subsequent to any petition filed by or against the Borrower, the Borrowing Subsidiary or any Grantor under the U.S. Bankruptcy Code), indemnity and reimbursement obligations, charges, expenses, fees, attorneys' fees and disbursements and any other amounts owing thereunder (all of the aforesaid indebtedness, obligations and liabilities of the Borrower, the Borrowing Subsidiary and each Grantor being herein called the "Secured Obligations", and all of the documents, agreements and instruments among the Debtors, the Subsidiaries, the Agent, the Lenders, or any of them, evidencing or securing the repayment of, or otherwise pertaining to, the Secured Obligations including without limitation the Credit Agreement, the Notes, the Letters of Credit and the Security Documents, being herein collectively called the "Operative Documents"), for value received and pursuant to the Credit Agreement, each Grantor hereby grants, assigns and transfers to the Agent for the benefit of the Lenders a first-priority security interest, subject only to Permitted Liens, in and to the following described property whether now owned or existing or hereafter acquired or arising and wherever located (all of which is herein collectively called the "Collateral"): (a) All of such Grantor's present and future accounts, documents, instruments, general intangibles and chattel paper, including, but without limitation, all accounts receivable, all contract rights, all deposit accounts and all monies and claims for money due or to become due to such Grantor, all security held or granted to such Grantor, and all assets described in clause (d) below; (b) All of such Grantor's furniture, fixtures, machinery and equipment, whether now owned or hereafter acquired, and wherever located, and whether used by such Grantor or any other person, or leased by such Grantor to any person and whether the interest of such Grantor is as owner, lessee or otherwise; (c) All of such Grantor's present and future inventory of every type, wherever located, including but not limited to raw materials, work in process, finished goods and all inventory that is available for leasing or leased to others by such Grantor; (d) All other present and future assets of such Grantor (whether tangible or intangible), including but not limited to all trademarks, trade names, patents, industrial designs, masks, trade names, trade secrets, copyrights, franchises, customer lists, computer programs, software, tax refund 2 3 claims, licenses and permits, and the good will associated therewith and all federal, state, foreign and other applications and registrations therefor, all reissues, divisions, continuations, renewals, extensions and continuations-in-part thereof now or hereafter in effect, all income, license royalties, damages and payments now and hereafter due or payable under and with respect thereto, including, without limitation, any damages, proceeds or payments for past or future infringements thereof and all income, royalties, damages and payments under all licenses thereof, the right to sue for past, present and future infringements thereof, all right, title and interest of such Grantor as licensor under any of the foregoing whether now owned and existing or hereafter arising, and all other rights and other interests corresponding thereto throughout the world (all of the assets described in this clause (d) collectively referred to as the "Intellectual Property"); (e) All books, records, files, correspondence, computer programs, tapes, disks, cards, accounting information and other data of such Grantor related in any way to the Collateral described in clauses (a), (b), (c) and (d) above, including but not limited to any of the foregoing necessary to administer, sell or dispose of any of the Collateral; (f) All substitutions and replacements for, and all additions and accessions to, any and all of the foregoing; and (g) All products and all proceeds of any and all of the foregoing, and, to the extent not otherwise included, all payments under insurance (whether or not the Agent is the loss payee thereof), and any indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise with respect to any of the foregoing. 1. Representations, Warranties, Covenants and Agreements. Each Grantor further represents and warrants to and covenants and agrees with the Agent for the benefit of the Lenders as follows: (a) Ownership of Collateral; Security Interest Priority. At the time any Collateral becomes subject to a security interest of the Agent hereunder, unless the Agent shall otherwise consent, such Grantor shall be deemed to have represented and warranted that (i) such Grantor is the lawful owner of such Collateral and has the right and authority to subject the same to the security interest of the Agent hereunder; (ii) other than Permitted Liens (as defined in the Credit Agreement) and lessors' interest with respect to any security interest in any property leased by such Grantor as lessee, none of the Collateral is subject to any Lien other than that in favor of the Agent for the benefit of the Lenders and there is no effective financing statement or other filing covering any of the Collateral on file in any public office, other than in favor of the Agent for the benefit of the Lenders. This Security Agreement creates in favor of the Agent for the benefit of the Lenders a valid first-priority security interest, subject only to Permitted Liens, in the Collateral enforceable against such Grantor and all third parties and securing the payment of the Secured Obligations. All financing statements necessary to perfect such security interest in the Collateral have been delivered by such Grantor to the Agent for filing. 3 4 (b) Location of Offices, Records and Facilities. Such Grantor's chief executive office and chief place of business and the office where such Grantor keeps its records concerning its accounts, contract rights, chattel paper, instruments, general intangibles and other obligations arising out of or in connection with the sale or lease of goods or the rendering of services or otherwise ("Receivables"), and all originals of all leases and other chattel paper which evidence Receivables, is at the location listed on Schedule 1(b)(i) hereto. Such Grantor will provide the Agent with prior written notice of any proposed change in the location of its chief executive office. Such Grantor's only other offices and facilities are at the locations set forth in Schedule 1(b)(ii) hereto. Such Grantor will provide the Agent with prior written notice of any change in the locations of its other offices and the facilities at which any assets of such Grantor are located. The tax identification number of such Grantor is set forth on Schedule 1(b)(i). The name of such Grantor is correctly set forth on the signature pages hereof, and such Grantor operates under no other names. Such Grantor shall not change its name without the prior written consent of the Agent. (c) Location of Inventory, Fixtures, Machinery and Equipment. (i) All Collateral consisting of inventory is, and will be, located at the locations listed on Schedule 1(c)(i) hereto, and at no other locations without the prior written consent of the Agent. (ii) All Collateral consisting of fixtures, machinery or equipment, is, and will be, located at the locations listed on Schedule 1(c)(ii) hereto, and at no other locations without the prior written consent of the Agent. If the Collateral described in clauses (i) or (ii) is kept at leased locations or warehoused, such Grantor has obtained appropriate landlord's lien waivers or appropriate warehousemen's notices have been sent, each satisfactory to the Agent, unless waived by the Agent. (d) Liens, Etc. Such Grantor will keep the Collateral free at all times from any and all liens, security interests or encumbrances other than those described in paragraph 1(a)(ii) and those consented to in writing by the Required Lenders. Such Grantor will not, without the prior written consent of the Agent, sell, lease, license, transfer, assign or otherwise dispose of, or permit or suffer to be sold, leased, licensed, transferred, assigned or otherwise disposed of, any of the Collateral, except for, prior to an Event of Default only (notwithstanding any other agreement), the following: inventory sold in the ordinary course of business and other assets permitted to be sold, leased, licensed, transferred, assigned or otherwise disposed under Section 5.2(f) of the Credit Agreement. The Agent or its attorneys may at any and all reasonable times inspect the Collateral and for such purpose may enter upon any and all premises where the Collateral is or might be kept or located. (e) Insurance. Such Grantor shall keep the tangible Collateral insured at all times against loss by theft, fire and other casualties. Said insurance shall be issued by a company rated A or better by A.M. Best and shall be in amounts sufficient to protect the Agent and the Lenders against any and all loss or damage to the Collateral. The policy or policies which evidence said insurance shall be delivered to the Agent upon request, shall contain a lender loss payable clause in favor of the Agent for the benefit of the Lenders, shall name the Agent for the benefit of the Lenders as an additional insured, as its interest may appear, shall not permit amendment, cancellation or termination without giving the Agent at least 30 days' prior written notice thereof, and shall 4 5 otherwise be in form and substance satisfactory to the Agent. Reimbursement under any liability insurance maintained by such Grantor pursuant to this paragraph 1(e) may be paid directly to the person who shall have incurred liability covered by such insurance, provided that if there is no Default or Event of Default (whether before or after any event which caused any reimbursement under any liability insurance) such Grantor may use the proceeds of such insurance solely to repair or replace the property damaged if the insurance proceeds are less than $500,000 and if there is any Event of Default or Default, and if such reimbursement is greater than $500,000 or there is any Default or Event of Default such amounts shall be paid to the Agent for application to the Secured Obligations. (f) Taxes, Etc. Such Grantor will pay promptly, and within the time that they can be paid without interest or penalty, any taxes, assessments and similar imposts and charges, not being contested in good faith, which are now or hereafter may become a Lien upon any of the Collateral. If such Grantor fails to pay any such taxes, assessments or other imposts or charges in accordance with this paragraph, the Agent shall have the option to do so and such Grantor agrees to repay forthwith all amounts so expended by the Agent with interest at the Overdue Rate. (g) Further Assurances. Such Grantor will do all acts and things and will execute all financing statements and writings reasonably requested by the Agent to establish, maintain and continue a perfected and valid security interest of the Agent for the benefit of the Lenders in the Collateral, and will promptly on demand pay all reasonable costs and expenses of filing and recording all instruments, including the costs of any searches deemed necessary by the Agent, to establish and determine the validity and the priority of the Agent's security interests for the benefit of the Lenders. A carbon, photographic or other reproduction of this Security Agreement or any financing statement covering the Collateral shall be sufficient as a financing statement. (h) List of Patents, Copyrights, Mask Works and Trademarks. Attached hereto as Schedule 1(h)(i) is a list of all patents and patent applications owned by such Grantor. Attached hereto as Schedule 1(h)(ii) is a list of all registered copyrights and all mask works and applications therefor owned by such Grantor. Attached hereto as Schedule 1(h)(iii) is a list of all trademarks and service marks owned by such Grantor. If such Grantor at any time owns any additional patents, copyrights, mask works, trademarks, service marks or any applications therefor not listed on such schedules, such Grantor shall give the Agent prompt written notice thereof and hereby authorizes the Agent to modify this Agreement by amending Schedules 1(h)(i), 1(h)(ii) and 1(h)(iii) hereto to include all future patents, copyrights, mask works, trademarks, service marks and applications therefor and agrees to execute all further instruments and agreements, if any, if requested by the Agent to evidence the Agent's interest for the benefit of the Lenders therein. (i) Maintenance of Tangible Collateral. Such Grantor will cause the tangible Collateral material to the conduct of its business to be maintained and preserved in the same condition, repair and working order as when new, ordinary wear and tear excepted, and in accordance with any manufacturer's manual, and shall forthwith, or, in the case of any loss or damage to any of the tangible Collateral as quickly as practicable after the occurrence thereof, make 5 6 or cause to be made all repairs, replacements, and other improvements which are necessary or desirable to such end. Such Grantor shall promptly furnish to the Agent a statement respecting any loss or damage to any of the tangible Collateral. (j) Special Rights Regarding Receivables. The Agent or any of its agents may, at any time and from time to time in its sole discretion and irrespective of the existence of any event of default under this Security Agreement, verify, directly with each person (collectively, the "Obligors") which owes any Receivables to such Grantor, the Receivables in any manner. The Agent or any of its agents may, at any time from time to time after and during the continuance of an event of default under this Security Agreement, notify the Obligors of the security interest of the Agent for the benefit of the Lenders in the Collateral and/or direct such Obligors that all payments in connection with such obligations and the Collateral be made directly to the Agent in the Agent's name. If the Agent or any of its agents shall collect such obligations directly from the Obligors, the Agent or any of its agents shall have the right to resolve any disputes relating to returned goods directly with the Obligors in such manner and on such terms as the Agent or any of its agents shall deem appropriate. Such Grantor directs and authorizes any and all of its present and future account debtors to comply with requests for information from the Agent, the Agent's designees and agents and/or auditors, relating to any and all business transactions between such Grantor and the Obligors. Such Grantor further directs and authorizes all of its Obligors upon receiving a notice or request sent by the Agent or the Agent's agents or designees to pay directly to the Agent any and all sums of money or proceeds now or hereafter owing by the Obligors to such Grantor, as provided in this paragraph 1(j) and any such payment shall act as a discharge of any debt of such Obligor to such Grantor in the same manner as if such payment had been made directly to such Grantor. Such Grantor agrees to take any and all action as the Agent may reasonably request to assist the Agent in exercising the rights described in this paragraph 1(j). (k) Maintenance of Intellectual Property and Other Intangible Collateral. Such Grantor shall preserve and maintain all rights of such Grantor and the Agent for the benefit of the Lenders in all material Intellectual Property and all other material intangible Collateral, including without limitation the payment of all maintenance fees and filing fees and the taking of all appropriate action at such Grantor's expense to halt the infringement of any of the Intellectual Property or other Collateral, provided that, with respect to halting the infringement of any Intellectual Property or other Collateral, such Grantor does not need to take all such appropriate action if such Grantor has, or after Event of Default the Agent has, reasonably determined that it is not in its best interest to demand or enforce cessation of such infringement or other conduct because it is either not material or because the adverse consequences to such Grantor would outweigh the benefits gained by such demand or enforcement. 2. Events of Default. The occurrence of any Event of Default shall be deemed an Event of Default under this Security Agreement. 3. Remedies. Upon the occurrence of any Event of Default, the Agent shall have and may exercise any one or more of the rights and remedies provided to it under this Security 6 7 Agreement or any of the other Operative Documents or provided by law, including but not limited to all of the rights and remedies of a secured party under the Uniform Commercial Code, and each Grantor hereby agrees to assemble the Collateral and make it available to the Agent at a place to be designated by the Agent which is reasonably convenient to both parties, authorizes the Agent to take possession of the Collateral with or without demand and with or without process of law and to sell and dispose of the same at public or private sale and to apply the proceeds of such sale to the costs and expenses thereof (including reasonable attorneys' fees and disbursements, incurred by the Agent) and then to the payment and satisfaction of the Secured Obligations. Any requirement of reasonable notice shall be met if the Agent sends such notice to such Grantors, by registered or certified mail, at least 5 days prior to the date of sale, disposition or other event giving rise to a required notice. The Agent may be the purchaser at any such sale. Each Grantor expressly authorizes such sale or sales of the Collateral in advance of and to the exclusion of any sale or sales of or other realization upon any other collateral securing the Secured Obligations. The Agent shall have no obligation to preserve rights against prior parties. Each Grantor hereby waives as to the Agent and each Lender any right of subrogation or marshalling of such Collateral and any other collateral for the Secured Obligations. To this end, each Grantor hereby expressly agrees that any such collateral or other security of such Grantor or any other party which the Agent or any Lender may hold, or which may come to the Agent or any Lender's possession, may be dealt with in all respects and particulars as though this Security Agreement were not in existence. The parties hereto further agree that public sale of the Collateral by auction conducted in any county in which any Collateral is located or in which the Agent or such Grantor does business after advertisement of the time and place thereof shall, among other manners of public and private sale, be deemed to be a commercially reasonable disposition of the Collateral. Each Grantor shall be liable for any deficiency remaining after disposition of the Collateral. Such sale shall be on such terms as the Agent may determine, for cash or credit or against future delivery in the discretion of the Agent. 4. Special Remedies Concerning Certain Collateral. (a) Upon the occurrence of any Event of Default, each Grantor shall, if requested to do so in writing, and to the extent so requested (i) promptly collect and enforce payment of all amounts due such Grantor on account of, in payment of, or in connection with, any of the Collateral, (ii) hold all payments in the form received by such Grantor as trustee for the Agent and the Lenders, without commingling with any funds belonging to such Grantor, and (iii) forthwith deliver all such payments to the Agent with endorsement to the Agent's order of any checks or similar instruments. (b) Upon the occurrence of any event of default, each Grantor shall, if requested to do so, and to the extent so requested, notify all Obligors and other persons with obligations to such Grantor on account of or in connection with any of the Collateral of the security interest of the Agent for the benefit of the Lenders in the Collateral and direct such account debtors and other persons that all payments in connection with such obligations and the Collateral be made directly 7 8 to the Agent. The Agent itself may, upon the occurrence of an Event of Default, so notify and direct any such account debtor or other person that such payments are to be made directly to the Agent. (c) Upon the occurrence of any event of default, for purposes of assisting the Agent in exercising its rights and remedies provided to it under this Security Agreement, each Grantor (i) hereby irrevocably constitutes and appoints the Agent its true and lawful attorney, for and in such Grantor's name, place and stead, to collect, demand, receive, sue for, compromise, and give good and sufficient releases for, any monies due or to become due on account of, in payment of, or in connection with the Collateral, (ii) hereby irrevocably authorizes the Agent to endorse the name of such Grantor, upon any checks, drafts, or similar items which are received in payment of, or in connection with, any of the Collateral, and to do all things necessary in order to reduce the same to money, (iii) with respect to any Collateral, hereby irrevocably assents to all extensions or postponements of the time of payment thereof or any other indulgence in connection therewith, to each substitution, exchange or release of Collateral, to the addition or release of any party primarily or secondarily liable, to the acceptance of partial payments thereon and the settlement, compromise or adjustment (including adjustment of insurance payments) thereof, all in such manner and at such time or times as the Agent shall deem advisable and (iv) hereby irrevocably authorizes the Agent to notify the post office authorities to change the address for delivery of such Grantor's mail to an address designated by the Agent, and the Agent may receive, open and dispose of all mail addressed to such Grantor. Notwithstanding any other provisions of this Security Agreement, it is expressly understood and agreed that the Agent shall have no duty, and shall not be obligated in any manner, to make any demand or to make any inquiry as to the nature or sufficiency of any payments received by it or to present or file any claim or take any other action to collect or enforce the payment of any amounts due or to become due on account of or in connection with any of the Collateral. 5. Remedies Cumulative. No right or remedy conferred upon or reserved to the Agent under any Operative Document is intended to be exclusive of any other right or remedy, and every right and remedy shall be cumulative and in addition to every other right or remedy given hereunder or now or hereafter existing under any applicable law. Every right and remedy of the Agent under any Operative Document or under applicable law may be exercised from time to time and as often as may be deemed expedient by the Agent. To the extent that it lawfully may, each Grantor agrees that it will not at any time insist upon, plead, or in any manner whatever claim or take any benefit or advantage of any applicable present or future stay, extension or moratorium law, which may affect observance or performance of any provisions of any Operative Document; nor will it claim, take or insist upon any benefit or advantage of any present or future law providing for the valuation or appraisal of any security for its obligations under any Operative Document prior to any sale or sales thereof which may be made under or by virtue of any instrument governing the same; nor will such Grantor, after any such sale or sales, claim or exercise any right, under any applicable law to redeem any portion of such security so sold. 6. Conduct No Waiver. No waiver shall be effective unless in writing executed by the Agent and any waiver or forbearance on the part of the Agent in enforcing any of its rights under this Security Agreement shall not operate as a waiver of any other default or of the same default on a 8 9 future occasion or of such right. 7. Governing Law; Consent to Jurisdiction; Definitions. This Security Agreement is a contract made under, and shall be governed by and construed in accordance with, the law of the State of Michigan applicable to contracts made and to be performed entirely within such State and without giving effect to choice of law principles of such State. Each Grantor agrees that any legal action or proceeding with respect to this Security Agreement or the transactions contemplated hereby may be brought in any court of the State of Michigan, or in any court of the United States of America sitting in Michigan, and each Grantor hereby submits to and accepts generally and unconditionally the jurisdiction of those courts with respect to its person and property, and irrevocably appoints the President of such Grantor, at such Grantor's address set forth in the Credit Agreement, as its agent for service of process and irrevocably consents to the service of process in connection with any such action or proceeding by personal delivery to such agent or to such Grantor or by the mailing thereof by registered or certified mail, postage prepaid to such Grantor at its address set forth in the Credit Agreement. Nothing in this paragraph shall affect the right of the Agent to serve process in any other manner permitted by law or limit the right of the Agent to bring any such action or proceeding against such Grantor or its property in the courts of any other jurisdiction. Each Grantor hereby irrevocably waives any objection to the laying of venue of any such suit or proceeding in the above described courts. Terms used but not defined herein shall have the respective meanings ascribed thereto in the Credit Agreement. Unless otherwise defined herein or in the Credit Agreement, terms used in Article 9 of the Uniform Commercial Code in the State of Michigan are used herein as therein defined on the date hereof. The headings of the various subdivisions hereof are for convenience of reference only and shall in no way modify any of the terms or provisions hereof. 8. Notices. All notices, demands, requests, consents and other communications hereunder shall be delivered in the manner described in the Credit Agreement. 9. Rights Not Construed as Duties. The Agent and the Lenders neither assume nor shall any of them have any duty of performance or other responsibility under any contracts in which the Agent has or obtains, for the benefit of the Lenders, a security interest hereunder. If any Grantor fails to perform any agreement contained herein, the Agent may but is in no way obligated to itself perform, or cause performance of, such agreement, and the reasonable expenses of the Agent incurred in connection therewith shall be payable by such Grantors under paragraph 12 hereof. The powers conferred on the Agent hereunder are solely to protect its interests for the benefit of the Lenders in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the safe custody of any Collateral in its possession and accounting for monies actually received by it hereunder, the Agent shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. 10. Amendments. None of the terms and provisions of this Security Agreement may be modified or amended in any way except by an instrument in writing executed by each of the parties hereto. 9 10 11. Severability. If any one or more provisions of this Security Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected, impaired or prejudiced thereby. 12. Expenses. (a) Each Grantor agrees, jointly and severally, to indemnify the Agent and the Lenders from and against any and all claims, losses and liabilities growing out of or resulting from this Security Agreement (including, without limitation, enforcement of this Security Agreement), except claims, losses or liabilities resulting from the Agent's or any Lender's gross negligence or willful misconduct. (b) Each Grantor will, upon demand, pay to the Agent an amount of any and all reasonable expenses, including the reasonable fees and disbursements of its counsel and of any experts and agents, which the Agent may incur in connection with (i) the administration of this Security Agreement, (ii) the custody, preservation, use or operation of, or the sale of, collection from or other realization upon, any of the Collateral, (iii) the exercise or enforcement of any of the rights of the Agent hereunder or under the Operative Documents, or (iv) the failure of any Grantor to perform or observe any of the provisions hereof. 13. Successors and Assigns; Termination. This Security Agreement shall create a continuing security interest in the Collateral and shall be binding upon each Grantor, its successors and assigns, and inure, together with the rights and remedies of the Agent hereunder, to the benefit of the Agent, the Lenders and their respective successors, transferees and assigns. Upon the payment in full in immediately available funds of all of the Secured Obligations and the termination of all commitments to lend under the Operative Documents, the security interest granted hereunder shall terminate and all rights to the Collateral shall revert to such Grantors. 14. Waiver of Jury Trial. The Agent and the Lenders, in accepting this Security Agreement, and each Grantor, after consulting or having had the opportunity to consult with counsel, knowingly, voluntarily and intentionally waive any right any of them may have to a trial by jury in any litigation based upon or arising out of this Security Agreement or any related instrument or agreement or any of the transactions contemplated by this Security Agreement or any course of conduct, dealing, statements (whether oral or written) or actions of any of them. Neither the Agent, the Lenders nor any Grantor shall seek to consolidate, by counterclaim or otherwise, any such action in which a jury trial has been waived with any other action in which a jury trial cannot be or has not been waived. These provisions shall not be deemed to have been modified in any respect or relinquished by the Agent, any Lender or any Grantor except by a written instrument executed by each of them. IN WITNESS WHEREOF, the Grantors have caused this Security Agreement to be duly executed as of the day and year first set forth above. 10 11 LOBDELL EMERY CORPORATION By: _________________________________ Its: _______________________________ CREATIVE FABRICATION CORPORATION By: _________________________________ Its: _______________________________ WINCHESTER FABRICATION CORPORATION By: _________________________________ Its: _______________________________ PARALLEL GROUP INTERNATIONAL, INC. By: _________________________________ Its: _______________________________ LASERWELD INTERNATIONAL, L.L.C. By: _________________________________ Its: _______________________________ CONCEPT MANAGEMENT CORPORATION By: _________________________________ 11 12 Its: _______________________________ 12 13 LEWIS EMERY CAPITAL CORPORATION By: _________________________________ Its: _______________________________ Accepted and Agreed: NBD BANK, as Agent on behalf of the Lenders By: ___________________________________ Its: _________________________________ 13 14 CERTIFICATE OF ACKNOWLEDGMENT STATE OF MICHIGAN ) ) ss. COUNTY OF WAYNE ) The foregoing Security Agreement was acknowledged before me on this _____ day of June, 1997, by John H. Ferguson, the Assistant Treasurer of Lobdell Emery Corporation, a Michigan corporation, on behalf of said corporation. (Seal) Notary Public ____________________________________ STATE OF MICHIGAN ) ) ss. COUNTY OF WAYNE ) The foregoing Security Agreement was acknowledged before me on this _____ day of June, 1997, by John H. Ferguson, the Assistant Treasurer of Creative Fabrication Corporation, a Tennessee corporation, on behalf of said corporation. (Seal) Notary Public ____________________________________ 14 15 STATE OF MICHIGAN ) ) ss. COUNTY OF WAYNE ) The foregoing Security Agreement was acknowledged before me on this _____ day of June, 1997, by ____________________, the ___________________ of Winchester Fabrication Corporation, a Michigan corporation, on behalf of said corporation. (Seal) Notary Public ____________________________________ STATE OF MICHIGAN ) ) ss. COUNTY OF WAYNE ) The foregoing Security Agreement was acknowledged before me on this _____ day of June, 1997 by ____________________, the ___________________ of Parallel Group International, Inc., an Indiana corporation, on behalf of said corporation. (Seal) Notary Public ____________________________________ 15 16 STATE OF MICHIGAN ) ) ss. COUNTY OF WAYNE ) The foregoing Security Agreement was acknowledged before me on this _____ day of June, 1997 by John H. Ferguson, the Assistant Treasurer of Lobdell Emery Corporation, the sole member of Laserweld International, L.L.C., an Indiana limited liability company, on behalf of said limited liability company. (Seal) Notary Public ____________________________________ STATE OF MICHIGAN ) ) ss. COUNTY OF WAYNE ) The foregoing Security Agreement was acknowledged before me on this _____ day of June, 1997 by John H. Ferguson, the Assistant Treasurer of Concept Management Corporation, a Michigan corporation, on behalf of said corporation. (Seal) Notary Public ____________________________________ 16 17 STATE OF MICHIGAN ) ) ss. COUNTY OF WAYNE ) The foregoing Security Agreement was acknowledged before me on this _____ day of June, 1997 by ____________________, the ___________________ of Lewis Emery Capital Corporation, a Michigan corporation, on behalf of said corporation. (Seal) Notary Public ____________________________________ STATE OF MICHIGAN ) ) ss. COUNTY OF WAYNE ) The foregoing Security Agreement was acknowledged before me on this _____ day of June, 1997, by ____________________, the ___________________ of NBD Bank, a Michigan banking corporation, as Agent, on behalf of said corporation. (Seal) Notary Public ____________________________________ 17 18 SCHEDULE 1(b)(i) TO SECURITY AGREEMENT List of Chief Executive Offices and Tax ID Number Grantor Chief Executive Office Address Tax ID # ------- ------------------------------ -------- Lobdell Emery Corporation 1325 East Superior Street 38-0768460 Alma, Michigan 48801 Creative Fabrication Corporation 1325 East Superior Street 62-1613148 Alma, Michigan 48801 Winchester Fabrication Corporation 1325 East Superior Street 38-3209840 Alma, Michigan 48801 Parallel Group International, Inc. 1325 East Superior Street 35-1971190 Alma, Michigan 48801 Laserweld International, L.L.C. 1325 East Superior Street 35-1969204 Alma, Michigan 48801 Concept Management Corporation 1325 East Superior Street 38-3209841 Alma, Michigan 48801 Lewis Emery Capital Corporation 1325 East Superior Street 38-6602578 Alma, Michigan 48801 BMG Holdings, Inc. 2000 North Woodward Avenue N/A Suite 130 Bloomfield Hills, MI 48304 19 SCHEDULE 1(b)(ii) TO SECURITY AGREEMENT List of Other Office and Facility Locations Grantor Address - ------- ------- Lobdell Emery Corporation 1325 East Superior Alma, Michigan 48801 Laserweld International, L.L.C. 950 JFK Drive North Vernon, Indiana 47265 Winchester Fabrication Corporation 200 Inks Drive P.O. Box 270 Winchester, Indiana 47394 Creative Fabrication Corporation 3000 George Price Blvd. Athens, Tennessee 37371 10850 West 17th Street Argos, IN 46501 2190 Landmark Avenue Corydon, IN 47112 2365 Franklin Road Bloomfield Hills, MI 48302 135 North Fearing Road PO Box 3416 Toledo, OH 43607 401 Republic Street Alma, MI 48801 370 Manhattan Road Greencastle, IN 46135 2000 North Woodward Avenue, Suite 130 Bloomfield Hills, MI 48304 20 Schedule 1(c) (i) Location of Inventory (a) Butler Metal Products 1574 Eagle Street North Cambridge, Ontario N3H 4S5 Canada (b) Del-Tech Metal Products 1 Butler Drive Delhi, Ontario N4B 2W8 Canada (c) Laserweld International, L.L.C. 950 JFK Drive North Vernon, Indiana 47265 (d) Winchester Fabrication Corporation 200 Inks Drive P.O. Box 270 Winchester, Indiana 47394 (e) Creative Fabrication Corporation 3000 George Price Blvd. Athens, Tennessee 37371 (f) 10850 West 17th Street Argos, IN 46501 (g) 2190 Landmark Avenue Corydon, IN 47112 (h) 2365 Franklin Road Bloomfield Hills, MI 48302 (i) 135 North Fearing Road PO Box 3416 Toledo, OH 43607 (j) 401 Republic Street Alma, MI 48801 (k) 370 Manhattan Road Greencastle, IN 46135 21 (ii) Locations of Fixtures, Machinery and Equipment (a) See (i) above. (b) Lindert Tool & Die 23 Raglan Place Cambridge, Ontario Canada (c) Fincore 10 Melford Drive Units 1-8 Scarborough, Ontario M1B 2G1 Canada (d) Hinderliter Heat Treating Ltd. 9 Shirley Avenue Kitchener, Ontario Canada (e) Easton Coatings Corporation 97 Easton Road Brantford, Ontario N3P 1J4 Canada (f) Camtron Coatings ___________________ ___________________ (g) Mid States Steel ______ Inks Drive Winchester, IN 47394 22 Schedule 1(h) (i) Rack Base Construction; US Patent No. 5,533,456; Canadian Patent File No. 2,147,721 (held by Lobdell Emery Corporation) (ii) None (iii) None EX-4.12 11 EXHIBIT 4.12 1 EXHIBIT 4.12 PLEDGE AGREEMENT AND IRREVOCABLE PROXY THIS PLEDGE AGREEMENT dated as of June 24, 1997 (this "Pledge Agreement"), is given by OXFORD AUTOMOTIVE, INC., a Michigan corporation (the "Company"), in favor of NBD Bank, a Michigan banking corporation, as agent (in such capacity, the "Agent") for the benefit of itself and the lenders (the "Lenders") now or hereafter parties to the Credit Agreement described below. RECITALS A. The Company (also occasionally referred to as the "Borrower") and the Borrowing Subsidiary identified from time to time therein (the "Borrowing Subsidiary") have entered into a Credit Agreement, dated as of June 24, 1997, (as amended or modified from time to time, including any agreement entered into in substitution therefor, the "Credit Agreement"), with the Lenders parties thereto and the Agent pursuant to which the Lenders may make Advances (as therein defined) to the Borrower and the Borrowing Subsidiary. B. As a condition precedent to the effectiveness of the Bank's obligations under the Credit Agreement, the Company has agreed to pledge to the Agent, for the benefit of the Lenders, and grant a first-priority security interest to the Agent, for the benefit of the Lenders, in and to the collateral described herein and to execute this Pledge Agreement. For value received and pursuant to the Credit Agreement, the Company hereby grants a first-priority security interest to the Agent, for the benefit of the Lenders, in and to all of the outstanding capital stock of the companies listed on the schedule attached hereto as Schedule 1 (the "Pledged Subsidiaries", and said shares of stock, together with any other shares and securities from time to time receivable or otherwise distributed in respect of or in exchange for any or all of such shares, being called the "Pledged Stock"), to secure, (a) the prompt and complete payment of all indebtedness and other obligations of the Company or any Subsidiary now or hereafter owing to the Lenders or the Agent under or on account of the Credit Agreement, any Security Document or any letters of credit, notes or other instruments issued to the Agent or Lenders pursuant thereto, (b) the performance of the covenants under the Credit Agreement and the Security Documents and any monies expended by the Agent in connection therewith payable under the Credit Agreement and (c) the prompt and complete payment of all obligations and performance of all covenants of the Company under any interest rate or currency swap agreements or similar transactions with any Bank (all of the aforesaid indebtedness, obligations and liabilities of the Company and its Subsidiaries being herein called the "Secured Obligations", and all of the documents, agreements and instruments among the Company, the Subsidiaries, the Agent, the Lenders, or any of them, evidencing or securing the repayment of, or otherwise pertaining to, the Secured Obligations being herein collectively called the "Operative Documents"). The Company is herewith delivering to the Agent for the benefit of the Lenders originals of all stock certificates of the Pledged Stock or taking such other action acceptable to the Agent and the Required Lenders to perfect the security interest in the Pledged Stock granted hereby. 2 The Company further represents and warrants to, and agrees with, the Agent for the benefit of the Lenders as follows: 1. Representations and Warranties. The Company represents and warrants that the Pledged Stock is represented by the stock certificate or certificates or shares described on Schedule 1 hereto, and that such stock certificate or certificates, accompanied by an instrument of assignment or transfer duly executed in blank by the Company as the owner named in such stock certificate or certificates, have been delivered to the Agent by the Company. The Company further represents and warrants that (a) the Pledged Stock is duly authorized and validly issued, fully paid and nonassessable and constitutes 100% of all of the issued and outstanding shares of the capital stock of each Pledged Subsidiary (except with respect to Lobdell Emery Corporation which has Preferred Stock outstanding), (b) the Company is the legal and beneficial owner of the Pledged Stock, free and clear of all Liens other than the Lien of Agent hereunder, with requisite right and power to deliver, pledge and assign the Pledged Stock to the Agent hereunder, and (c) the pledge of the Pledged Stock pursuant to this Pledge Agreement creates in favor of the Agent a valid and perfected first-priority security interest in the Pledged Stock enforceable against the Company and all third parties and securing the payment of the Secured Obligations. 2. Title; Stock Rights, Dividends, Etc. The Company will warrant and defend the Agent's title to the Pledged Stock, and the security interest herein created, against all claims of all persons, and will maintain and preserve such security interest. It is understood and agreed that the collateral hereunder includes any stock rights, stock dividends, liquidating dividends, new securities, payments, distributions and proceeds (including cash dividends and sale proceeds) and other property to which the Company may become entitled by reason of the ownership of the Pledged Stock during the existence of this Pledge Agreement, and any such property received by the Company shall be held in trust and forthwith delivered to the Agent to be held hereunder in accordance with the terms of this Pledge Agreement. 3. Registration Rights. If any Pledged Subsidiary at any time or from time to time proposes to register any of its securities under the Securities Act of 1933, the Company will at each such time give notice to the Agent of such Pledged Subsidiary's intentions so to do. Upon the request of the Agent given 30 days after receipt of such notice, the Company will cause all Pledged Stock of such Pledged Subsidiary to be included in the registration statement proposed to be filed, all to the extent requisite to permit the public sale or other public disposition of such Pledged Stock so registered by the holders thereof. The costs and expenses of all such registrations and qualifications under said Act shall be paid by the Company or such Pledged Subsidiary, except that underwriting discounts and commissions in respect of any Pledged Stock sold pursuant to any such registration statement shall be borne by the sellers thereof. As expeditiously as possible after the effective date of any such registration statement, the Company will deliver in exchange for any certificates representing shares of Pledged Stock so registered pursuant to such registration, which bear any restrictive legend, new Pledged Stock certificates not bearing such legend or any similar legend. In the event of any such registration, the Company hereby agrees to indemnify and hold PLEDGE AGREEMENT AND IRREVOCABLE PROXY -2- 3 harmless the Agent and the Lenders as pledgee of the Pledged Stock against any losses, claims, damages or liabilities to which the Agent and the Lenders may become subject to the extent that such losses, claims, damages or liabilities arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any such registration statement, and any preliminary prospectus or filed prospectus, or in any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Agent and the Lenders for any legal or other expenses reasonably incurred by the Agent and the Lenders in connection with investigating or defending any such loss, claim, damage or liability. The indemnifications contained in this paragraph shall include each person, if any, who controls the Agent or any Bank. 4. Events of Default; Remedies. (a) Upon the occurrence of any Event of Default under the Credit Agreement, which has not been remedied by the Company, the Borrower, or the Borrowing Subsidiary within fifteen (15) days after the Borrower or the Borrowing Subsidiary receives written notice of such occurrence from the Agent (the "Cure Period"), an Event of Default shall be deemed to have occurred hereunder and the Agent shall have all of the rights, remedies and responsibilities provided by law and/or by this Pledge Agreement, including but not limited to all of the rights, remedies and responsibilities of a secured party under the Michigan Uniform Commercial Code, and the Company hereby authorizes the Agent, in accordance with the Michigan Uniform Commercial Code, to sell all or any part of the Pledged Stock at public or private sale and to apply the proceeds of such sale to the costs and expenses thereof (including the reasonable attorneys' fees and disbursements incurred by the Agent) and then to the payment of the other Secured Obligations. Any requirement of reasonable notice in connection with such sale shall be met if the Agent sends such notice to the Company, by registered or certified mail, at least 5 days prior to the date of sale, disposition or other event giving rise to the required notice. The Agent or any Bank may be the purchaser at any such sale. The Agent shall be under no obligation to preserve rights against prior parties. (b) The Company hereby waives as to the Agent and the Lenders any right of subrogation or marshaling of such stock and other collateral for indebtedness or other obligations owed to the Agent and the Lenders. To this end, the Company hereby expressly agrees that any such collateral or other security of the Company or any other party which the Agent or any Bank may hold, or which may come to any of their possession, may be dealt with in all respects and particulars as though this Pledge Agreement were not in existence. The Company agrees and acknowledges that because of applicable securities laws, the Agent may not be able to effect a public sale of the Pledged Stock and sales at a private sale may be on terms less favorable than if such securities were sold at a public sale and may be at a price less favorable than a public sale. (c) The Company irrevocably designates, makes, constitutes and appoints the Agent (and all persons designated by the Agent) as its true and lawful attorney (and agent-in-fact) and the Agent, or the Agent's agent, may, upon and after an Event of Default hereunder which has not been waived, PLEDGE AGREEMENT AND IRREVOCABLE PROXY -3- 4 with notice to the Company if the Secured Obligations have not been accelerated and without notice if the Secured Obligations have been accelerated, take any action as the Agent reasonably deems necessary under the circumstances to enforce or otherwise take action in respect to the Pledged Stock as required hereby, or to carry out any other obligation or duty of the Company under this Agreement. (d) Notwithstanding the foregoing, the Agent, on behalf of the Lenders, agrees that it shall not exercise any remedy hereunder, including the remedies set forth in Section 5, until such time as Agent has exercised its remedies under the Company Security Agreement and Guarantor Security Agreement and has realized upon substantially all of the assets subject thereto to the extent permitted by law; provided that the Agent and the Lenders may exercise all rights and remedies hereunder immediately upon the occurrence of, and nothing in this Section 4(d) shall limit or otherwise impair any of the Agent's and the Lenders' interests, rights and remedies in, any bankruptcy, insolvency or similar proceeding. 5. Additional Remedies; Irrevocable Proxy. (a) After satisfaction of the sale provisions of Section 4 but subject to Section 4(d) herein, the Agent may transfer into its name, or into the name of its nominee or nominees, any or all of the Pledged Stock and may vote any or all of the Pledged Stock (whether or not so transferred) and may otherwise act with respect thereto as though it were the outright owner thereof, the Company hereby irrevocably constituting and appointing the Agent as the proxy and attorney-in-fact of the Company, with full power of substitution, to do so. (b) Upon the occurrence of the events described in Section 5(a) above, the Agent may vote the Pledged Stock to remove the directors and officers of any Pledged Subsidiary, and to elect new directors and officers of any Pledged Subsidiary, who thereafter shall manage the affairs of such Pledged Subsidiary, operate its properties and carry on its business and otherwise take any action with respect to the business, properties and affairs of such Pledged Subsidiary which such new directors shall deem necessary or appropriate, including, but not limited to, the maintenance, repair, renewal or alteration of any or all of the properties of such Pledged Subsidiary, the leasing, subleasing, sale or other disposition of any or all of such properties, the borrowing of money on the credit of such Pledged Subsidiary, and the employment of attorneys, agents or other employees deemed by such new directors to be necessary for the proper operation, conduct, winding up or liquidation of the business, properties and affairs of such Pledged Subsidiary, and all revenues from the operation, conduct, winding up or liquidation of the business, properties and affairs of such Pledged Subsidiary after the payment of expenses thereof shall be applied to the payment of the Secured Obligations. (c) The Company agrees that the proxy granted in this paragraph 5 is coupled with an interest and is and shall be both valid and irrevocable so long as the Pledged Stock is subject to this Pledge Agreement. The Company further acknowledges that the term of said proxy may exceed three years from the date hereof. PLEDGE AGREEMENT AND IRREVOCABLE PROXY -4- 5 6. Remedies Cumulative. No right or remedy conferred upon or reserved to the Agent and the Lenders under any Operative Document is intended to be exclusive of any other right or remedy, and every right and remedy shall be cumulative in addition to every other right or remedy given hereunder or now or hereafter existing under any applicable law. Every right and remedy of the Agent and the Lenders under any Operative Document or under applicable law may be exercised from time to time and as often as may be deemed expedient by the Agent and the Lenders. To the extent that it lawfully may, the Company agrees that it will not at any time insist upon, plead, or in any manner whatever claim or take any benefit or advantage of any applicable present or future stay, extension or moratorium law, which may affect observance or performance of any provisions of any Operative Document; nor will it claim, take or insist upon any benefit or advantage of any present or future law providing for the valuation or appraisal of any security for its obligations under any Operative Document prior to any sale or sales thereof which may be made under or by virtue of any instrument governing the same; nor will it, after any such sale or sales, claim or exercise any right, under any applicable law to redeem any portion of such security so sold. 7. Conduct No Waiver. No waiver of default shall be effective unless in writing executed by the Agent and waiver of any default or forbearance on the part of the Agent in enforcing any of its rights under this Pledge Agreement shall not operate as a waiver of any other default or of the same default on a future occasion or of such right. 8. Governing Law; Definitions. This Pledge Agreement is a contract made under, and shall be governed by and construed in accordance with, the law of the State of Michigan applicable to contracts made and to be performed entirely within such State and without giving effect to choice of law principles of such State. The Company agrees that any legal action or proceeding with respect to this Pledge Agreement or the transactions contemplated hereby may be brought in any court of the State of Michigan, or in any court of the United States of America sitting in Michigan, and the Company hereby submits to and accepts generally and unconditionally the jurisdiction of those courts with respect to its person and property, and irrevocably appoints the Chief Financial Officer of the Company, at the Company's address set forth in the Credit Agreement, as its agent for service of process and irrevocably consents to the service of process in connection with any such action or proceeding by personal delivery to such agent or to the Company or by the mailing thereof by registered or certified mail, postage prepaid to the Company at its address set forth in the Credit Agreement. Nothing in this paragraph shall affect the right of the Agent to serve process in any other manner permitted by law or limit the right of the Agent to bring any such action or proceeding against the Company or its property in the courts of any other jurisdiction. The Company hereby irrevocably waives any objection to the laying of venue of any such suit or proceeding in the above described courts. Terms used but not defined herein shall have the respective meanings ascribed thereto in the Credit Agreement. Unless otherwise defined herein or in the Credit Agreement, terms used in Article 9 of the Uniform Commercial Code in the State of Michigan are used herein as therein defined on the date hereof. The headings of the various subdivisions hereof are for convenience of reference only and shall in no way modify any of the terms or provisions hereof. PLEDGE AGREEMENT AND IRREVOCABLE PROXY -5- 6 9. Notices. All notices, demands, requests, consents and other communications hereunder shall be delivered in the manner described in the Credit Agreement. 10. Rights Not Construed as Duties. The Agent neither assumes nor shall it have any duty of performance or other responsibility under any contracts in which the Agent has or obtains a security interest hereunder. If the Company fails to perform any agreement contained herein, the Agent may but is in no way obligated to itself perform, or cause performance of, such agreement, and the reasonable expenses of the Agent incurred in connection therewith shall be payable by the Company under paragraph 13. The powers conferred on the Agent hereunder are solely to protect its interests in the Pledged Stock and shall not impose any duty upon it to exercise any such powers. Except for the safe custody of any Pledged Stock in its possession and accounting for monies actually received by it hereunder, the Agent shall have no duty as to any Pledged Stock or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Pledged Stock. 11. Amendments. None of the terms and provisions of this Pledge Agreement may be modified or amended in any way except by an instrument in writing executed by each of the parties hereto. 12. Severability. If any one or more provisions of this Pledge Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected, impaired or prejudiced thereby. 13. Expenses. (a) The Company agrees to indemnify the Agent from and against any and all claims, losses and liabilities growing out of or resulting from this Pledge Agreement (including, without limitation, enforcement of this Pledge Agreement), except claims, losses or liabilities resulting from the Agent's gross negligence or willful misconduct. (b) The Company will, upon written demand, pay to the Agent an amount of any and all reasonable and documented expenses, including the reasonable fees and disbursements of its counsel and of any experts and agents, which the Agent may incur in connection with (i) the administration of this Pledge Agreement, (ii) the custody, preservation, use or operation of, or the sale of, collection from or other realization upon, any of the Pledged Stock, (iii) the exercise or enforcement of any of the rights of the Agent hereunder or under the Operative Documents, or (iv) the failure of the Company to perform or observe any of the provisions hereof. 14. Successors and Assigns; Termination. This Pledge Agreement shall create a continuing security interest in the Pledged Stock and shall be binding upon the Company, its successors and assigns, and inure, together with the rights and remedies of the Agent hereunder, to the benefit of the Agent and its successors, transferees and assigns. Upon the payment in full in PLEDGE AGREEMENT AND IRREVOCABLE PROXY -6- 7 immediately available funds of all of the Secured Obligations and the termination of all commitments to lend under the Operative Documents, the security interest granted hereunder shall terminate and upon such termination the Agent shall assign, transfer and deliver without recourse and without warranty the Pledged Stock to the Company (and any property received in respect thereof) as has not theretofore been sold or otherwise applied pursuant to the provisions of this Pledge Agreement. 15. Waiver of Jury Trial. The Agent and the Lenders, in accepting this Pledge Agreement, and the Company, after consulting or having had the opportunity to consult with counsel, knowingly, voluntarily and intentionally waive any right any of them may have to a trial by jury in any litigation based upon or arising out of this Pledge Agreement or any related instrument or agreement or any of the transactions contemplated by this Pledge Agreement or any course of conduct, dealing, statements (whether oral or written) or actions of any of them. Neither the Agent, the Lenders, nor the Company shall seek to consolidate, by counterclaim or otherwise, any such action in which a jury trial has been waived with any other action in which a jury trial cannot be or has not been waived. These provisions shall not be deemed to have been modified in any respect or relinquished by either the Agent and the Lenders or the Company except by a written instrument executed by all of them. IN WITNESS WHEREOF, the Company has caused this Pledge Agreement to be duly executed as of the day and year first above written. OXFORD AUTOMOTIVE, INC. By: ____________________________________ Its: ________________________________ Accepted and Agreed: NBD BANK, as Agent By: ____________________________________ Its: ___________________________________ PLEDGE AGREEMENT AND IRREVOCABLE PROXY -7- 8 SCHEDULE 1
Percentage of Total Common Number of Number of Shares of Jurisdiction of Issued Stock Pledged Percentage Name of Subsidiary Incorporation Shares Certificates Subsidiary Owned - ------------------ --------------- --------- ------------ ---------- ---------- Lobdell Emery Michigan 100 1 100% 100% Corporation BMG Holdings, Ontario 100 1 100% 100% Inc.
EX-4.13 12 EXHIBIT 4.13 1 EXHIBIT 4.13 PLEDGE AGREEMENT AND IRREVOCABLE PROXY THIS PLEDGE AGREEMENT dated as of June 24, 1997 (this "Pledge Agreement"), is given by LOBDELL EMERY CORPORATION, a Michigan corporation (the "Company"), in favor of NBD Bank, a Michigan banking corporation, as agent (in such capacity, the "Agent") for the benefit of itself and the lenders (the "Lenders") now or hereafter parties to the Credit Agreement described below. RECITALS A. Oxford Automotive, Inc., a Michigan corporation (the "Borrower") and the Borrowing Subsidiaries identified from time to time therein (the "Borrowing Subsidiary") have entered into a Credit Agreement, dated as of June 24, 1997, (as amended or modified from time to time, including any agreement entered into in substitution therefor, the "Credit Agreement"), with the Lenders parties thereto and the Agent pursuant to which the Lenders may make Advances (as therein defined) to the Borrower and the Borrowing Subsidiary. B. The Company is a subsidiary of the Borrower, and is engaged in a common enterprise with the Borrower and other subsidiaries of the Borrower. C. The Company, together with the other subsidiaries of the Company, has guaranteed the Borrower's and the Borrowing Subsidiary's obligations under the Credit Agreement pursuant to a Guaranty Agreement dated as of June 24, 1997 (as hereinafter amended, modified or restated, the "Guaranty"). D. As a condition precedent to the effectiveness of the Bank's obligations under the Credit Agreement, the Company has agreed to pledge to the Agent, for the benefit of the Lenders, and grant a first-priority security interest to the Agent, for the benefit of the Lenders, in and to the collateral described herein and to execute this Pledge Agreement. For value received and pursuant to the Credit Agreement, the Company hereby grants a first-priority security interest to the Agent, for the benefit of the Lenders, in and to all of the outstanding capital stock of the companies listed on the schedule attached hereto as Schedule 1 (the "Pledged Subsidiaries", and said shares of stock, together with any other shares and securities from time to time receivable or otherwise distributed in respect of or in exchange for any or all of such shares, being called the "Pledged Stock"), to secure, (a) the prompt and complete payment of all indebtedness and other obligations of the Company or any Subsidiary now or hereafter owing to the Lenders or the Agent under or on account of the Credit Agreement, any Security Document or any letters of credit, notes or other instruments issued to the Agent or Lenders pursuant thereto, (b) the performance of the covenants under the Credit Agreement and the Security Documents and any monies expended by the Agent in connection therewith payable under the Credit Agreement and (c) the prompt and complete payment of all obligations and performance of all covenants of the Company under any interest rate or currency swap agreements or similar transactions with any Bank (all of the aforesaid indebtedness, obligations and liabilities of the Company and its Subsidiaries 2 being herein called the "Secured Obligations", and all of the documents, agreements and instruments among the Company, the Subsidiaries, the Agent, the Lenders, or any of them, evidencing or securing the repayment of, or otherwise pertaining to, the Secured Obligations being herein collectively called the "Operative Documents"). The Company is herewith delivering to the Agent for the benefit of the Lenders originals of all stock certificates of the Pledged Stock or taking such other action acceptable to the Agent and the Required Lenders to perfect the security interest in the Pledged Stock granted hereby. The Company further represents and warrants to, and agrees with, the Agent for the benefit of the Lenders as follows: 1. Representations and Warranties. The Company represents and warrants that the Pledged Stock is represented by the stock certificate or certificates or shares described on Schedule 1 hereto, and that such stock certificate or certificates, accompanied by an instrument of assignment or transfer duly executed in blank by the Company as the owner named in such stock certificate or certificates, have been delivered to the Agent by the Company. The Company further represents and warrants that (a) the Pledged Stock is duly authorized and validly issued, fully paid and nonassessable and constitutes 100% of all of the issued and outstanding shares of the capital stock of each Pledged Subsidiary, (b) the Company is the legal and beneficial owner of the Pledged Stock, free and clear of all Liens other than the Lien of Agent hereunder, with requisite right and power to deliver, pledge and assign the Pledged Stock to the Agent hereunder, and (c) the pledge of the Pledged Stock pursuant to this Pledge Agreement creates in favor of the Agent a valid and perfected first-priority security interest in the Pledged Stock enforceable against the Company and all third parties and securing the payment of the Secured Obligations. 2. Title; Stock Rights, Dividends, Etc. The Company will warrant and defend the Agent's title to the Pledged Stock, and the security interest herein created, against all claims of all persons, and will maintain and preserve such security interest. It is understood and agreed that the collateral hereunder includes any stock rights, stock dividends, liquidating dividends, new securities, payments, distributions and proceeds (including cash dividends and sale proceeds) and other property to which the Company may become entitled by reason of the ownership of the Pledged Stock during the existence of this Pledge Agreement, and any such property received by the Company shall be held in trust and forthwith delivered to the Agent to be held hereunder in accordance with the terms of this Pledge Agreement. 3. Registration Rights. If any Pledged Subsidiary at any time or from time to time proposes to register any of its securities under the Securities Act of 1933, the Company will at each such time give notice to the Agent of such Pledged Subsidiary's intentions so to do. Upon the request of the Agent given 30 days after receipt of such notice, the Company will cause all Pledged Stock of such Pledged Subsidiary to be included in the registration statement proposed to be filed, all to the extent requisite to permit the public sale or other public disposition of such Pledged Stock so registered by the holders thereof. The costs and expenses of all such registrations and PLEDGE AGREEMENT AND IRREVOCABLE PROXY -2- 3 qualifications under said Act shall be paid by the Company or such Pledged Subsidiary, except that underwriting discounts and commissions in respect of any Pledged Stock sold pursuant to any such registration statement shall be borne by the sellers thereof. As expeditiously as possible after the effective date of any such registration statement, the Company will deliver in exchange for any certificates representing shares of Pledged Stock so registered pursuant to such registration, which bear any restrictive legend, new Pledged Stock certificates not bearing such legend or any similar legend. In the event of any such registration, the Company hereby agrees to indemnify and hold harmless the Agent and the Lenders as pledgee of the Pledged Stock against any losses, claims, damages or liabilities to which the Agent and the Lenders may become subject to the extent that such losses, claims, damages or liabilities arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any such registration statement, and any preliminary prospectus or filed prospectus, or in any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Agent and the Lenders for any legal or other expenses reasonably incurred by the Agent and the Lenders in connection with investigating or defending any such loss, claim, damage or liability. The indemnifications contained in this paragraph shall include each person, if any, who controls the Agent or any Bank. 4. Events of Default; Remedies. (a) Upon the occurrence of any Event of Default under the Credit Agreement, which has not been remedied by the Company, the Borrower, or the Borrowing Subsidiary within fifteen (15) days after the Borrower or the Borrowing Subsidiary receives written notice of such occurrence from the Agent (the "Cure Period"), an Event of Default shall be deemed to have occurred hereunder and the Agent shall have all of the rights, remedies and responsibilities provided by law and/or by this Pledge Agreement, including but not limited to all of the rights, remedies and responsibilities of a secured party under the Michigan Uniform Commercial Code, and the Company hereby authorizes the Agent, in accordance with the Michigan Uniform Commercial Code, to sell all or any part of the Pledged Stock at public or private sale and to apply the proceeds of such sale to the costs and expenses thereof (including the reasonable attorneys' fees and disbursements incurred by the Agent) and then to the payment of the other Secured Obligations. Any requirement of reasonable notice in connection with such sale shall be met if the Agent sends such notice to the Company, by registered or certified mail, at least 5 days prior to the date of sale, disposition or other event giving rise to the required notice. The Agent or any Bank may be the purchaser at any such sale. The Agent shall be under no obligation to preserve rights against prior parties. (b) The Company hereby waives as to the Agent and the Lenders any right of subrogation or marshaling of such stock and other collateral for indebtedness or other obligations owed to the Agent and the Lenders. To this end, the Company hereby expressly agrees that any such collateral or other security of the Company or any other party which the Agent or any Bank may hold, or which may come to any of their possession, may be dealt with in all respects and particulars as though this Pledge Agreement were not in existence. The Company agrees and acknowledges that PLEDGE AGREEMENT AND IRREVOCABLE PROXY -3- 4 because of applicable securities laws, the Agent may not be able to effect a public sale of the Pledged Stock and sales at a private sale may be on terms less favorable than if such securities were sold at a public sale and may be at a price less favorable than a public sale. (c) The Company irrevocably designates, makes, constitutes and appoints the Agent (and all persons designated by the Agent) as its true and lawful attorney (and agent-in-fact) and the Agent, or the Agent's agent, may, upon and after an Event of Default hereunder which has not been waived, with notice to the Company if the Secured Obligations have not been accelerated and without notice if the Secured Obligations have been accelerated, take any action as the Agent reasonably deems necessary under the circumstances to enforce or otherwise take action in respect to the Pledged Stock as required hereby, or to carry out any other obligation or duty of the Company under this Agreement. (d) Notwithstanding the foregoing, the Agent, on behalf of the Lenders, agrees that it shall not exercise any remedy hereunder, including the remedies set forth in Section 5, until such time as Agent has exercised its remedies under the Company Security Agreement and Guarantor Security Agreement and has realized upon substantially all of the assets subject thereto to the extent permitted by law; provided that the Agent and the Lenders may exercise all rights and remedies hereunder immediately upon the occurrence of, and nothing in this Section 4(d) shall limit or otherwise impair any of the Agent's and the Lenders' interests, rights and remedies in, any bankruptcy, insolvency or similar proceeding. 5. Additional Remedies; Irrevocable Proxy. (a) After satisfaction of the sale provisions of Section 4, but subject to Section 4(d) herein, the Agent may transfer into its name, or into the name of its nominee or nominees, any or all of the Pledged Stock and may vote any or all of the Pledged Stock (whether or not so transferred) and may otherwise act with respect thereto as though it were the outright owner thereof, the Company hereby irrevocably constituting and appointing the Agent as the proxy and attorney-in-fact of the Company, with full power of substitution, to do so. (b) Upon the occurrence of the events described in Section 5(a) above, the Agent may vote the Pledged Stock to remove the directors and officers of any Pledged Subsidiary, and to elect new directors and officers of any Pledged Subsidiary, who thereafter shall manage the affairs of such Pledged Subsidiary, operate its properties and carry on its business and otherwise take any action with respect to the business, properties and affairs of such Pledged Subsidiary which such new directors shall deem necessary or appropriate, including, but not limited to, the maintenance, repair, renewal or alteration of any or all of the properties of such Pledged Subsidiary, the leasing, subleasing, sale or other disposition of any or all of such properties, the borrowing of money on the credit of such Pledged Subsidiary, and the employment of attorneys, agents or other employees deemed by such new directors to be necessary for the proper operation, conduct, winding up or liquidation of the business, properties and affairs of such Pledged Subsidiary, and all revenues from the operation, conduct, winding up or liquidation of the business, properties and affairs of such PLEDGE AGREEMENT AND IRREVOCABLE PROXY -4- 5 Pledged Subsidiary after the payment of expenses thereof shall be applied to the payment of the Secured Obligations. (c) The Company agrees that the proxy granted in this paragraph 5 is coupled with an interest and is and shall be both valid and irrevocable so long as the Pledged Stock is subject to this Pledge Agreement. The Company further acknowledges that the term of said proxy may exceed three years from the date hereof. 6. Remedies Cumulative. No right or remedy conferred upon or reserved to the Agent and the Lenders under any Operative Document is intended to be exclusive of any other right or remedy, and every right and remedy shall be cumulative in addition to every other right or remedy given hereunder or now or hereafter existing under any applicable law. Every right and remedy of the Agent and the Lenders under any Operative Document or under applicable law may be exercised from time to time and as often as may be deemed expedient by the Agent and the Lenders. To the extent that it lawfully may, the Company agrees that it will not at any time insist upon, plead, or in any manner whatever claim or take any benefit or advantage of any applicable present or future stay, extension or moratorium law, which may affect observance or performance of any provisions of any Operative Document; nor will it claim, take or insist upon any benefit or advantage of any present or future law providing for the valuation or appraisal of any security for its obligations under any Operative Document prior to any sale or sales thereof which may be made under or by virtue of any instrument governing the same; nor will it, after any such sale or sales, claim or exercise any right, under any applicable law to redeem any portion of such security so sold. 7. Conduct No Waiver. No waiver of default shall be effective unless in writing executed by the Agent and waiver of any default or forbearance on the part of the Agent in enforcing any of its rights under this Pledge Agreement shall not operate as a waiver of any other default or of the same default on a future occasion or of such right. 8. Governing Law; Definitions. This Pledge Agreement is a contract made under, and shall be governed by and construed in accordance with, the law of the State of Michigan applicable to contracts made and to be performed entirely within such State and without giving effect to choice of law principles of such State. The Company agrees that any legal action or proceeding with respect to this Pledge Agreement or the transactions contemplated hereby may be brought in any court of the State of Michigan, or in any court of the United States of America sitting in Michigan, and the Company hereby submits to and accepts generally and unconditionally the jurisdiction of those courts with respect to its person and property, and irrevocably appoints the Chief Financial Officer of the Company, at the Company's address set forth in the Credit Agreement, as its agent for service of process and irrevocably consents to the service of process in connection with any such action or proceeding by personal delivery to such agent or to the Company or by the mailing thereof by registered or certified mail, postage prepaid to the Company at its address set forth in the Credit Agreement. Nothing in this paragraph shall affect the right of the Agent to serve process in any other manner permitted by law or limit the right of the Agent to bring any such action or proceeding against the Company or its property in the courts of any other jurisdiction. The Company hereby PLEDGE AGREEMENT AND IRREVOCABLE PROXY -5- 6 irrevocably waives any objection to the laying of venue of any such suit or proceeding in the above described courts. Terms used but not defined herein shall have the respective meanings ascribed thereto in the Credit Agreement. Unless otherwise defined herein or in the Credit Agreement, terms used in Article 9 of the Uniform Commercial Code in the State of Michigan are used herein as therein defined on the date hereof. The headings of the various subdivisions hereof are for convenience of reference only and shall in no way modify any of the terms or provisions hereof. 9. Notices. All notices, demands, requests, consents and other communications hereunder shall be delivered in the manner described in the Credit Agreement. 10. Rights Not Construed as Duties. The Agent neither assumes nor shall it have any duty of performance or other responsibility under any contracts in which the Agent has or obtains a security interest hereunder. If the Company fails to perform any agreement contained herein, the Agent may but is in no way obligated to itself perform, or cause performance of, such agreement, and the reasonable expenses of the Agent incurred in connection therewith shall be payable by the Company under paragraph 13. The powers conferred on the Agent hereunder are solely to protect its interests in the Pledged Stock and shall not impose any duty upon it to exercise any such powers. Except for the safe custody of any Pledged Stock in its possession and accounting for monies actually received by it hereunder, the Agent shall have no duty as to any Pledged Stock or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Pledged Stock. 11. Amendments. None of the terms and provisions of this Pledge Agreement may be modified or amended in any way except by an instrument in writing executed by each of the parties hereto. 12. Severability. If any one or more provisions of this Pledge Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected, impaired or prejudiced thereby. 13. Expenses. (a) The Company agrees to indemnify the Agent from and against any and all claims, losses and liabilities growing out of or resulting from this Pledge Agreement (including, without limitation, enforcement of this Pledge Agreement), except claims, losses or liabilities resulting from the Agent's gross negligence or willful misconduct. (b) The Company will, upon written demand, pay to the Agent an amount of any and all reasonable and documented expenses, including the reasonable fees and disbursements of its counsel and of any experts and agents, which the Agent may incur in connection with (i) the administration of this Pledge Agreement, (ii) the custody, preservation, use or operation of, or the sale of, collection from or other realization upon, any of the Pledged Stock, (iii) the exercise or enforcement of any of PLEDGE AGREEMENT AND IRREVOCABLE PROXY -6- 7 the rights of the Agent hereunder or under the Operative Documents, or (iv) the failure of the Company to perform or observe any of the provisions hereof. 14. Successors and Assigns; Termination. This Pledge Agreement shall create a continuing security interest in the Pledged Stock and shall be binding upon the Company, its successors and assigns, and inure, together with the rights and remedies of the Agent hereunder, to the benefit of the Agent and its successors, transferees and assigns. Upon the payment in full in immediately available funds of all of the Secured Obligations and the termination of all commitments to lend under the Operative Documents, the security interest granted hereunder shall terminate and upon such termination the Agent shall assign, transfer and deliver without recourse and without warranty the Pledged Stock to the Company (and any property received in respect thereof) as has not theretofore been sold or otherwise applied pursuant to the provisions of this Pledge Agreement. 15. Waiver of Jury Trial. The Agent and the Lenders, in accepting this Pledge Agreement, and the Company, after consulting or having had the opportunity to consult with counsel, knowingly, voluntarily and intentionally waive any right any of them may have to a trial by jury in any litigation based upon or arising out of this Pledge Agreement or any related instrument or agreement or any of the transactions contemplated by this Pledge Agreement or any course of conduct, dealing, statements (whether oral or written) or actions of any of them. Neither the Agent, the Lenders, nor the Company shall seek to consolidate, by counterclaim or otherwise, any such action in which a jury trial has been waived with any other action in which a jury trial cannot be or has not been waived. These provisions shall not be deemed to have been modified in any respect or relinquished by either the Agent and the Lenders or the Company except by a written instrument executed by all of them. IN WITNESS WHEREOF, the Company has caused this Pledge Agreement to be duly executed as of the day and year first above written. LOBDELL EMERY CORPORATION By: ____________________________________ Its: __________________________________ Accepted and Agreed: NBD BANK, as Agent By: ___________________________ PLEDGE AGREEMENT AND IRREVOCABLE PROXY -7- 8 Its: _____________________________________ PLEDGE AGREEMENT AND IRREVOCABLE PROXY -8- 9 SCHEDULE 1
Percentage of Total Common Number of Number of Shares of Jurisdiction of Issued Stock Pledged Percentage Name of Subsidiary Incorporation Shares Certificates Subsidiary Owned - ------------------ --------------- ---------- ------------ ---------- ---------- Lewis Emery Michigan 10,000 1 100% 100% Capital Corporation Concept Michigan 400,000 1 100% 100% Management Corporation Parallel Group Indiana 100 1 100% 100% International, Inc. Laserweld Indiana N/A N/A 100% 100% International, L.L.C.
EX-4.14 13 EXHIBIT 4.14 1 EXHIBIT 4.14 PLEDGE AGREEMENT AND IRREVOCABLE PROXY THIS PLEDGE AGREEMENT dated as of June 24, 1997 (this "Pledge Agreement"), is given by CONCEPT MANAGEMENT CORPORATION, a Michigan corporation (the "Company"), in favor of NBD Bank, a Michigan banking corporation, as agent (in such capacity, the "Agent") for the benefit of itself and the lenders (the "Lenders") now or hereafter parties to the Credit Agreement described below. RECITALS A. Oxford Automotive, Inc., a Michigan corporation (the "Borrower") and the Borrowing Subsidiaries identified from time to time therein (the "Borrowing Subsidiary") have entered into a Credit Agreement, dated as of June 24, 1997 (as amended or modified from time to time, including any agreement entered into in substitution therefor, the "Credit Agreement"), with the lenders parties thereto and the Agent pursuant to which the Lenders may make Advances (as therein defined) to the Borrower and the Borrowing Subsidiary. B. The Company is a subsidiary of the Borrower, and is engaged in a common enterprise with the Borrower and other subsidiaries of the Borrower. C. The Company, together with the other subsidiaries of the Company, has guaranteed the Borrower's and the Borrowing Subsidiary's obligations under the Credit Agreement pursuant to a Guaranty Agreement dated as of June 24, 1997 (as hereinafter amended, modified or restated, the "Guaranty"). D. As a condition precedent to the effectiveness of the Bank's obligations under the Credit Agreement, the Company has agreed to pledge to the Agent, for the benefit of the Lenders, and grant a first-priority security interest to the Agent, for the benefit of the Lenders, in and to the collateral described herein and to execute this Pledge Agreement. For value received and pursuant to the Credit Agreement, the Company hereby grants a first-priority security interest to the Agent, for the benefit of the Lenders, in and to all of the outstanding capital stock of the companies listed on the schedule attached hereto as Schedule 1 (the "Pledged Subsidiaries", and said shares of stock and beneficial interests, together with any other shares and securities from time to time receivable or otherwise distributed in respect of or in exchange for any or all of such shares, being called the "Pledged Stock"), to secure, (a) the prompt and complete payment of all indebtedness and other obligations of the Borrower or any Subsidiary now or hereafter owing to the Lenders or the Agent under or on account of the Credit Agreement, any Security Document or any Letter of Credit, notes or other instruments issued to the Agent or any Lender pursuant thereto, (b) the performance of the covenants under the Credit Agreement and the Security Documents and any monies expended by the Agent in connection therewith payable under the Credit Agreement, (c) the prompt and complete payment of all obligations and performance of all covenants of the Borrower under any interest rate or currency swap agreements or similar transactions with any Lender, and (d) the prompt and complete payment of all indebtedness of the 2 Company and any other guarantor under the Guaranty, (all of the aforesaid indebtedness, obligations and liabilities of the Company and its Subsidiaries being herein called the "Secured Obligations", and all of the documents, agreements and instruments among the Company, the Subsidiaries, the Agent, the Lenders, or any of them, evidencing or securing the repayment of, or otherwise pertaining to, the Secured Obligations being herein collectively called the "Operative Documents"). The Company is herewith delivering to the Agent for the benefit of the Lenders originals of all stock certificates of the Pledged Stock or taking such other action acceptable to the Agent and the Required Lenders to perfect the security interest in the Pledged Stock granted hereby. The Company further represents and warrants to, and agrees with, the Agent for the benefit of the Lenders as follows: 1. Representations and Warranties. The Company represents and warrants that the Pledged Stock is represented by the stock certificate or certificates or shares described on Schedule 1 hereto, and that such stock certificate or certificates, accompanied by an instrument of assignment or transfer duly executed in blank by the Company as the owner named in such stock certificate or certificates, have been delivered to the Agent by the Company. The Company further represents and warrants that (a) the Pledged Stock is duly authorized and validly issued, fully paid and nonassessable and constitutes 100% of all of the issued and outstanding shares of the capital stock of each Pledged Subsidiary, (b) the Company is the legal and beneficial owner of the Pledged Stock, free and clear of all Liens other than the Lien of Agent hereunder, with requisite right and power to deliver, pledge and assign the Pledged Stock to the Agent hereunder, and (c) the pledge of the Pledged Stock pursuant to this Pledge Agreement creates in favor of the Agent a valid and perfected first-priority security interest in the Pledged Stock enforceable against the Company and all third parties and securing the payment of the Secured Obligations. 2. Title; Stock Rights, Dividends, Etc. The Company will warrant and defend the Agent's title to the Pledged Stock, and the security interest herein created, against all claims of all persons, and will maintain and preserve such security interest. It is understood and agreed that the collateral hereunder includes any stock rights, stock dividends, liquidating dividends, new securities, payments, distributions and proceeds (including cash dividends and sale proceeds) and other property to which the Company may become entitled by reason of the ownership of the Pledged Stock during the existence of this Pledge Agreement, and any such property received by the Company shall be held in trust and forthwith delivered to the Agent to be held hereunder in accordance with the terms of this Pledge Agreement. 3. Registration Rights. If any Pledged Subsidiary at any time or from time to time proposes to register any of its securities under the Securities Act of 1933, the Company will at each such time give notice to the Agent of such Pledged Subsidiary's intentions so to do. Upon the request of the Agent given 30 days after receipt of such notice, the Company will cause all Pledged Stock of such Pledged Subsidiary to be included in the registration statement proposed to be filed, all to the extent requisite to permit the public sale or other public disposition of such Pledged Stock PLEDGE AGREEMENT AND IRREVOCABLE PROXY -2- 3 so registered by the holders thereof. The costs and expenses of all such registrations and qualifications under said Act shall be paid by the Company or such Pledged Subsidiary, except that underwriting discounts and commissions in respect of any Pledged Stock sold pursuant to any such registration statement shall be borne by the sellers thereof. As expeditiously as possible after the effective date of any such registration statement, the Company will deliver in exchange for any certificates representing shares of Pledged Stock so registered pursuant to such registration, which bear any restrictive legend, new Pledged Stock certificates not bearing such legend or any similar legend. In the event of any such registration, the Company hereby agrees to indemnify and hold harmless the Agent and the Lenders as pledgee of the Pledged Stock against any losses, claims, damages or liabilities to which the Agent and the Lenders may become subject to the extent that such losses, claims, damages or liabilities arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any such registration statement, and any preliminary prospectus or filed prospectus, or in any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Agent and the Lenders for any legal or other expenses reasonably incurred by the Agent and the Lenders in connection with investigating or defending any such loss, claim, damage or liability. The indemnifications contained in this paragraph shall include each person, if any, who controls the Agent or any Bank. 4. Events of Default; Remedies. (a) Upon the occurrence of any Event of Default under the Credit Agreement, which has not been remedied by the Company, the Borrower, or the Borrowing Subsidiary within fifteen (15) days after the Borrower or the Borrowing Subsidiary receives written notice of such occurrence from the Agent (the "Cure Period"), an Event of Default shall be deemed to have occurred hereunder and the Agent shall have an Event of Default shall be deemed to have occurred hereunder and the Agent shall have all of the rights, remedies and responsibilities provided by law and/or by this Pledge Agreement, including but not limited to all of the rights, remedies and responsibilities of a secured party under the Michigan Uniform Commercial Code, and the Company hereby authorizes the Agent, accordance with the Michigan Uniform Commercial Code, to sell all or any part of the Pledged Stock at public or private sale and to apply the proceeds of such sale to the costs and expenses thereof (including the reasonable attorneys' fees and disbursements incurred by the Agent) and then to the payment of the other Secured Obligations. Any requirement of reasonable notice in connection with such sale shall be met if the Agent sends such notice to the Company, by registered or certified mail, at least 5 days prior to the date of sale, disposition or other event giving rise to the required notice. The Agent or any Bank may be the purchaser at any such sale. The Agent shall be under no obligation to preserve rights against prior parties. (b) The Company hereby waives as to the Agent and the Lenders any right of subrogation or marshaling of such stock and other collateral for indebtedness or other obligations owed to the Agent and the Lenders. To this end, the Company hereby expressly agrees that any such collateral or other security of the Company or any other party which the Agent or any Bank may hold, or PLEDGE AGREEMENT AND IRREVOCABLE PROXY -3- 4 which may come to any of their possession, may be dealt with in all respects and particulars as though this Pledge Agreement were not in existence. The Company agrees and acknowledges that because of applicable securities laws, the Agent may not be able to effect a public sale of the Pledged Stock and sales at a private sale may be on terms less favorable than if such securities were sold at a public sale and may be at a price less favorable than a public sale. (c) The Company irrevocably designates, makes, constitutes and appoints the Agent (and all persons designated by the Agent) as its true and lawful attorney (and agent-in-fact) and the Agent, or the Agent's agent, may, upon and after an Event of Default hereunder which has not been waived, with notice to the Company if the Secured Obligations have not been accelerated and without notice if the Secured Obligations have been accelerated, take any action as the Agent reasonably deems necessary under the circumstances to enforce or otherwise take action in respect to the Pledged Stock as required hereby, or to carry out any other obligation or duty of the Company under this Agreement. (d) Notwithstanding the foregoing, the Agent, on behalf of the Lenders, agrees that it shall not exercise any remedy hereunder, including the remedies set forth in Section 5, until such time as Agent has exercised its remedies under the Company Security Agreement and Guarantor Security Agreement and has realized upon substantially all of the assets subject thereto to the extent permitted by law; provided that the Agent and the Lenders may exercise all rights and remedies hereunder immediately upon the occurrence of, and nothing in this Section 4(d) shall limit or otherwise impair any of the Agent's and the Lenders' interests, rights and remedies in, any bankruptcy, insolvency or similar proceeding. 5. Additional Remedies; Irrevocable Proxy. (a) After satisfaction of the sale provisions of Section 4 but subject to Section 4(d) herein, the Agent may transfer into its name, or into the name of its nominee or nominees, any or all of the Pledged Stock and may vote any or all of the Pledged Stock (whether or not so transferred) and may otherwise act with respect thereto as though it were the outright owner thereof, the Company hereby irrevocably constituting and appointing the Agent as the proxy and attorney-in-fact of the Company, with full power of substitution, to do so. (b) Upon the occurrence of the events described in Section 5(a) above, the Agent may vote the Pledged Stock to remove the directors and officers of any Pledged Subsidiary, and to elect new directors and officers of any Pledged Subsidiary, who thereafter shall manage the affairs of such Pledged Subsidiary, operate its properties and carry on its business and otherwise take any action with respect to the business, properties and affairs of such Pledged Subsidiary which such new directors shall deem necessary or appropriate, including, but not limited to, the maintenance, repair, renewal or alteration of any or all of the properties of such Pledged Subsidiary, the leasing, subleasing, sale or other disposition of any or all of such properties, the borrowing of money on the credit of such Pledged Subsidiary, and the employment of attorneys, agents or other employees deemed by such new directors to be necessary for the proper operation, conduct, winding up or PLEDGE AGREEMENT AND IRREVOCABLE PROXY -4- 5 liquidation of the business, properties and affairs of such Pledged Subsidiary, and all revenues from the operation, conduct, winding up or liquidation of the business, properties and affairs of such Pledged Subsidiary after the payment of expenses thereof shall be applied to the payment of the Secured Obligations. (c) The Company agrees that the proxy granted in this paragraph 5 is coupled with an interest and is and shall be both valid and irrevocable so long as the Pledged Stock is subject to this Pledge Agreement. The Company further acknowledges that the term of said proxy may exceed three years from the date hereof. 6. Remedies Cumulative. No right or remedy conferred upon or reserved to the Agent and the Lenders under any Operative Document is intended to be exclusive of any other right or remedy, and every right and remedy shall be cumulative in addition to every other right or remedy given hereunder or now or hereafter existing under any applicable law. Every right and remedy of the Agent and the Lenders under any Operative Document or under applicable law may be exercised from time to time and as often as may be deemed expedient by the Agent and the Lenders. To the extent that it lawfully may, the Company agrees that it will not at any time insist upon, plead, or in any manner whatever claim or take any benefit or advantage of any applicable present or future stay, extension or moratorium law, which may affect observance or performance of any provisions of any Operative Document; nor will it claim, take or insist upon any benefit or advantage of any present or future law providing for the valuation or appraisal of any security for its obligations under any Operative Document prior to any sale or sales thereof which may be made under or by virtue of any instrument governing the same; nor will it, after any such sale or sales, claim or exercise any right, under any applicable law to redeem any portion of such security so sold. 7. Conduct No Waiver. No waiver of default shall be effective unless in writing executed by the Agent and waiver of any default or forbearance on the part of the Agent in enforcing any of its rights under this Pledge Agreement shall not operate as a waiver of any other default or of the same default on a future occasion or of such right. 8. Governing Law; Definitions. This Pledge Agreement is a contract made under, and shall be governed by and construed in accordance with, the law of the State of Michigan applicable to contracts made and to be performed entirely within such State and without giving effect to choice of law principles of such State. The Company agrees that any legal action or proceeding with respect to this Pledge Agreement or the transactions contemplated hereby may be brought in any court of the State of Michigan, or in any court of the United States of America sitting in Michigan, and the Company hereby submits to and accepts generally and unconditionally the jurisdiction of those courts with respect to its person and property, and irrevocably appoints the Chief Financial Officer of the Company, at the Company's address set forth in the Credit Agreement, as its agent for service of process and irrevocably consents to the service of process in connection with any such action or proceeding by personal delivery to such agent or to the Company or by the mailing thereof by registered or certified mail, postage prepaid to the Company at its address set forth in the Credit Agreement. Nothing in this paragraph shall affect the right of the Agent to serve process in any PLEDGE AGREEMENT AND IRREVOCABLE PROXY -5- 6 other manner permitted by law or limit the right of the Agent to bring any such action or proceeding against the Company or its property in the courts of any other jurisdiction. The Company hereby irrevocably waives any objection to the laying of venue of any such suit or proceeding in the above described courts. Terms used but not defined herein shall have the respective meanings ascribed thereto in the Credit Agreement. Unless otherwise defined herein or in the Credit Agreement, terms used in Article 9 of the Uniform Commercial Code in the State of Michigan are used herein as therein defined on the date hereof. The headings of the various subdivisions hereof are for convenience of reference only and shall in no way modify any of the terms or provisions hereof. 9. Notices. All notices, demands, requests, consents and other communications hereunder shall be delivered in the manner described in the Credit Agreement. 10. Rights Not Construed as Duties. The Agent neither assumes nor shall it have any duty of performance or other responsibility under any contracts in which the Agent has or obtains a security interest hereunder. If the Company fails to perform any agreement contained herein, the Agent may but is in no way obligated to itself perform, or cause performance of, such agreement, and the reasonable expenses of the Agent incurred in connection therewith shall be payable by the Company under paragraph 13. The powers conferred on the Agent hereunder are solely to protect its interests in the Pledged Stock and shall not impose any duty upon it to exercise any such powers. Except for the safe custody of any Pledged Stock in its possession and accounting for monies actually received by it hereunder, the Agent shall have no duty as to any Pledged Stock or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Pledged Stock. 11. Amendments. None of the terms and provisions of this Pledge Agreement may be modified or amended in any way except by an instrument in writing executed by each of the parties hereto. 12. Severability. If any one or more provisions of this Pledge Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected, impaired or prejudiced thereby. 13. Expenses. (a) The Company agrees to indemnify the Agent from and against any and all claims, losses and liabilities growing out of or resulting from this Pledge Agreement (including, without limitation, enforcement of this Pledge Agreement), except claims, losses or liabilities resulting from the Agent's gross negligence or willful misconduct. (b) The Company will, upon written demand, pay to the Agent an amount of any and all reasonable and documented expenses, including the reasonable fees and disbursements of its counsel and of any experts and agents, which the Agent may incur in connection with (i) the administration PLEDGE AGREEMENT AND IRREVOCABLE PROXY -6- 7 of this Pledge Agreement, (ii) the custody, preservation, use or operation of, or the sale of, collection from or other realization upon, any of the Pledged Stock, (iii) the exercise or enforcement of any of the rights of the Agent hereunder or under the Operative Documents, or (iv) the failure of the Company to perform or observe any of the provisions hereof. 14. Successors and Assigns; Termination. This Pledge Agreement shall create a continuing security interest in the Pledged Stock and shall be binding upon the Company, its successors and assigns, and inure, together with the rights and remedies of the Agent hereunder, to the benefit of the Agent and its successors, transferees and assigns. Upon the payment in full in immediately available funds of all of the Secured Obligations and the termination of all commitments to lend under the Operative Documents, the security interest granted hereunder shall terminate and upon such termination the Agent shall assign, transfer and deliver without recourse and without warranty the Pledged Stock to the Company (and any property received in respect thereof) as has not theretofore been sold or otherwise applied pursuant to the provisions of this Pledge Agreement. 15. Waiver of Jury Trial. The Agent and the Lenders, in accepting this Pledge Agreement, and the Company, after consulting or having had the opportunity to consult with counsel, knowingly, voluntarily and intentionally waive any right any of them may have to a trial by jury in any litigation based upon or arising out of this Pledge Agreement or any related instrument or agreement or any of the transactions contemplated by this Pledge Agreement or any course of conduct, dealing, statements (whether oral or written) or actions of any of them. Neither the Agent, the Lenders, nor the Company shall seek to consolidate, by counterclaim or otherwise, any such action in which a jury trial has been waived with any other action in which a jury trial cannot be or has not been waived. These provisions shall not be deemed to have been modified in any respect or relinquished by either the Agent and the Lenders or the Company except by a written instrument executed by all of them. IN WITNESS WHEREOF, the Company has caused this Pledge Agreement to be duly executed as of the day and year first above written. CONCEPT MANAGEMENT CORPORATION By: Its: Accepted and Agreed: NBD BANK, as Agent PLEDGE AGREEMENT AND IRREVOCABLE PROXY -7- 8 By: Its: PLEDGE AGREEMENT AND IRREVOCABLE PROXY -8- 9 SCHEDULE 1
Percentage of Total Common Number of Number of Shares of Jurisdiction of Issued Stock Pledged Percentage Name of Subsidiary Incorporation Shares Certificates Subsidiary Owned - ------------------ --------------- ---------- ------------ ---------- ---------- Winchester Michigan 40,000 1 100% 100% Fabrication Corporation Creative Tennessee 48,000 1 100% 100% Fabrication Corporation
EX-4.17 14 EXHIBIT 4.17 1 EXHIBIT 4.17 SUPPLEMENTAL INDENTURE SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of August 15, 1997, among Howell Industries, Inc. (the "New Subsidiary Guarantor"), a subsidiary of Oxford Automotive, Inc., a Michigan corporation (the "Company"), the Company, the Subsidiary Guarantors (the "Existing Subsidiary Guarantors") under the Indenture referred to below, and First Trust National Association, a national banking corporation, as trustee under the Indenture referred to below (the "Trustee"). WHEREAS the Company has heretofore executed and delivered to the Trustee an Indenture (as such may be amended from time to time, the "Indenture"), dated as of June 15, 1997, providing for the issuance of an aggregate principal amount of $160,000,000 of 10 1/8% Senior Subordinated Notes Due 2007 (the "Securities"); WHEREAS Section 4.14 of the Indenture provides that under certain circumstances the Company is required to cause the New Subsidiary Guarantor to execute and deliver to the Trustee a supplemental indenture pursuant to which the New Subsidiary Guarantor shall unconditionally guarantee all of the Company's obligations under the Securities pursuant to a Subsidiary Guaranty on the terms and conditions set forth herein; and WHEREAS pursuant to Section 9.1 of the Indenture, the Trustee, the Company and Existing Subsidiary Guarantors are authorized to execute and deliver this Supplemental Indenture; NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the New Subsidiary Guarantor, the Company, the Existing Subsidiary Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the holders of the Securities as follows: 1. Definitions. (a) Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. (b) For all purposes of this Supplemental Indenture, except as otherwise herein expressly provided or unless the context otherwise requires: (i) the terms and expressions used herein shall have the same meanings as corresponding terms and expressions used in the Indenture; and (ii) the words "herein," "hereof" and "hereby" and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular section hereof. 2. Agreement to Guarantee. The New Subsidiary Guarantor hereby agrees, jointly and severally with all other Subsidiary Guarantors, to guarantee the Company's obligations under the Securities on the terms and subject to the conditions set forth in Article 11 of the Indenture and to be bound by all other applicable provisions of the Indenture. From and after the date hereof, the 2 New Subsidiary Guarantor shall be a Subsidiary Guarantor for all purposes under the Indenture and the Securities. 3. Ratification of Indenture; Supplemental Indentures Part of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every holder of Securities heretofore or hereafter authenticated and delivered shall be bound hereby. 4. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 5. Trustee Makes No Representation. The Trustee makes no representation as to the validity or sufficiency of this Supplemental Indenture. 6. Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 7. Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction thereof. IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written. HOWELL INDUSTRIES, INC. By: /s/ Steven M. Abelman --------------------------- Name: Steven M. Abelman Title: President OXFORD AUTOMOTIVE, INC. By: /s/ Steven M. Abelman --------------------------- Name: Steven M. Abelman Title: President 2 3 SUBSIDIARY GUARANTORS: BMG NORTH AMERICA LIMITED LOBDELL EMERY CORPORATION WINCHESTER FABRICATION CORPORATION CREATIVE FABRICATION CORPORATION PARALLEL GROUP INTERNATIONAL, INC. CONCEPT MANAGEMENT CORPORATION LEWIS EMERY CAPITAL CORPORATION BMG HOLDINGS, INC. By: /s/ Steven M. Abelman --------------------------- Name: Steven M. Abelman Title: President LASERWELD INTERNATIONAL, L.L.C. By: Lobdell Emery Corporation, its sole member By: /s/ Steven M. Abelman --------------------------- Name: Steven M. Abelman Title: President FIRST TRUST NATIONAL ASSOCIATION, as Trustee By: /s/ Nan Packard --------------------------- Name: Nan Packard Title: Assistant Vice President 3 EX-16 15 EXHIBIT 16 1 EXHIBIT 16 September 17, 1997 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Re: Amendment No. 1 to the Oxford Automotive, Inc. Registration Statement on Form S-4 Commission File No. 333-32975 Dear Sir/Madam: We have read the statements made by Oxford Automotive, Inc. in the "Experts" section of Amendment No. 1 to the Oxford Automotive, Inc. Form S-4, Commission File No. 333-32975 ("Amendment No. 1"), which we understand will be filed with the Securities and Exchange Commission as an Exhibit to Amendment No. 1. We agree with the statements concerning our firm in the "Experts" section of Amendment No. 1. Very truly yours, /s/ DELOITTE & TOUCHE EX-23.1 16 EXHIBIT 23.1 1 EXHIBIT 23.1 Consent of Independent Accountants We hereby consent to the use in the Prospectus constituting part of this Registration Statement on Form S-4 of Oxford Automotive, Inc. of our report dated May 19, 1997 relating to the financial statements of Lobdell Emery Corporation as of December 31, 1996 and 1995 and for each year in the three-year period ended December 31, 1996, which appears in such Prospectus. We also consent to the reference to us under the heading "Experts" in such Prospectus. /s/ PRICE WATERHOUSE LLP - ------------------------ PRICE WATERHOUSE LLP Detroit, Michigan September 18, 1997 EX-23.2 17 EXHIBIT 23.2 1 EXHIBIT 23.2 Consent of Independent Accountants We hereby consent to the use in the Prospectus constituting part of this Registration Statement on Form S-4 of Oxford Automotive, Inc. of our report dated May 19, 1997, relating to the financial statements of Oxford Automotive, Inc. as of and for the year ended March 31, 1997, which appears in such Prospectus. We also consent to the application of such as of and for the year ended March 31, 1997 report to the Financial Statement Schedule for the year ended March 31, 1997 listed under Item 21 of this Registration Statement when such schedule is read in conjunction with the financial statements referred to in our report. The audit referred to in such report also included this schedule. We also consent to the references to us under the headings "Experts" and "Selected Consolidated Historical Financial Data" in such Prospectus. However, it should be noted that Price Waterhouse LLP has not prepared or certified such "Selected Consolidated Historical Financial Data." /s/ PRICE WATERHOUSE LLP - ------------------------ PRICE WATERHOUSE LLP Detroit, Michigan September 18, 1997 EX-23.3 18 EXHIBIT 23.3 1 EXHIBIT 23.3 DELOITTE & TOUCHE CONSENT OF INDEPENDENT AUDITORS We consent to the use in this Registration Statement on Form S-4 of Oxford Automotive, Inc. of our report dated May 21, 1996, appearing in the Prospectus, which is part of this Registration Statement, and to the references to us under the headings "Experts" and "Selected Consolidated Historical Financial Data" in such Prospectus. Our audits of the financial statements referred to in our aforementioned report also include the financial statement schedule of Oxford Automotive, Inc. and BMG North America Limited, for the periods October 28, 1995 to March 31, 1996 and April 1, 1995 to October 27, 1995 and for the year ended March 31, 1995 listed in Item 21. This financial statement schedule is the responsibility of the Corporation's management. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedule, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein. /s/ Deloitte & Touche Chartered Accountants Kitchener, Ontario September 17, 1997 EX-27 19 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S UNAUDITED FINANCIAL STATEMENTS AS OF AND FOR THE PERIOD ENDING JUNE 30, 1997 AND AUDITED FINANCIAL STATEMENTS AS OF AND FOR THE PERIOD ENDING MARCH 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 1,000 0001040475 OXFORD AUTOMOTIVE INC. YEAR 3-MOS MAR-31-1997 MAR-31-1998 MAR-31-1996 MAR-31-1997 MAR-31-1997 JUN-30-1997 9,671 58,883 0 0 47,626 41,511 1,272 1,272 13,411 14,623 83,304 126,932 146,778 149,058 4,920 8,922 243,694 289,420 76,771 52,989 0 124,814 39,300 39,635 0 0 1,050 1,050 1,291 4,409 243,694 289,420 136,861 91,960 139,062 91,997 125,375 82,662 133,060 84,354 0 0 0 0 3,388 1,798 2,614 5,845 1,065 2,338 1,549 3,507 0 0 0 0 0 0 1,549 3,507 9.37 10.24 9.37 10.24
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