-----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, AXe3SzFVpTASgLM17TpYrGxAWHSMV818/43syISBulqsNwkWGpei4iTCEsZnCBOn LC7wIrlTRgUervswTcvWsw== 0001047469-99-032212.txt : 19990817 0001047469-99-032212.hdr.sgml : 19990817 ACCESSION NUMBER: 0001047469-99-032212 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990816 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACCURIDE CORP CENTRAL INDEX KEY: 0000817979 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 611109077 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-15435 FILM NUMBER: 99690650 BUSINESS ADDRESS: STREET 1: 2315 ADAMS LN STREET 2: BOX 40 CITY: HENDERSON STATE: KY ZIP: 42420 BUSINESS PHONE: 5028265000 10-Q 1 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 for the Quarterly Period Ended June 30, 1999. OR [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Transition Period From __________ to ________. Commission file number 333-50239 ACCURIDE CORPORATION -------------------- (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 61-1109077 - -------- ---------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 2315 ADAMS LANE HENDERSON, KY 42420 - --------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number including area code: (270) 826-5000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- There were 24,884 common shares outstanding as of June 30, 1999. 1 ACCURIDE CORPORATION TABLE OF CONTENTS
PAGE PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets as of June 30, 1999 (unaudited) and December 31, 1998 3 Consolidated Statements of Income for Six Months Ended June 30, 1999 and 1998 (Unaudited) 4 Consolidated Statement of Stockholders' Equity (Deficiency) for the Six Months Ended June 30, 1999 (Unaudited) 5 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1999 and 1998 (Unaudited) 6 Notes to Unaudited Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 Item 3. Quantitative and Qualitative Disclosures about Market Risk 18 PART II. OTHER INFORMATION Item 1. Legal Proceedings 21 Item 2. Changes in Securities 21 Item 3. Defaults Upon Senior Securities 21 Item 4. Submission of Matters to a Vote of Security Holders 21 Item 5. Other Information 21 Item 6. Exhibits and Reports on Form 8-K 21 Signatures 23
2 ITEM I. FINANCIAL STATEMENTS ACCURIDE CORPORATION CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
JUNE 30, DECEMBER 31, ASSETS 1999 1998 (UNAUDITED) ------------------------------ CURRENT ASSETS: Cash and cash equivalents $ 22,601 $ 3,471 Customer receivables, net of allowance for doubtful accounts of $496 and $1,008 69,867 52,287 Other receivables 12,567 8,372 Inventories, net 44,562 36,980 Supplies 7,898 7,187 Prepaid expenses 791 139 Income taxes receivable 104 458 Deferred income taxes 793 611 --------- --------- Total current assets 159,183 109,505 PROPERTY, PLANT AND EQUIPMENT, NET 200,088 159,826 OTHER ASSETS: Goodwill, net of accumulated amortization of $32,880 and $30,942 135,103 83,317 Investment in affiliates 2,763 25,855 Deferred financing costs, net of accumulated amortization of $2,538 and $1,634 12,397 12,609 Deferred income taxes 3,287 Other 11,435 10,526 --------- --------- TOTAL $ 520,969 $ 404,925 --------- --------- --------- --------- LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) CURRENT LIABILITIES: Accounts payable $ 41,640 $ 27,008 Current portion of long-term debt 2,350 1,350 Short term notes payable 7,500 3,911 Accrued payroll and compensation 8,552 8,149 Accrued interest payable 11,533 9,807 Accrued and other liabilities 10,168 6,606 --------- --------- Total current liabilities 81,743 56,831 LONG-TERM DEBT, less current portion 455,355 387,939 DEFERRED INCOME TAXES 3,179 OTHER LIABILITIES 16,986 12,021 MINORITY INTEREST 6,321 6,230 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY (DEFICIENCY): Preferred stock, $.01 par value; 5,000 shares authorized and unissued Common stock and additional paid in capital, $.01 par value; 45,000 shares authorized, 24,884 and 24,768 shares issued and outstanding in 1999 and 1998 24,738 24,158 Stock subscriptions receivable (1,624) (1,644) Retained earnings (deficit) (65,729) (80,610) --------- --------- Total stockholders' equity (deficiency) (42,615) (58,096) --------- --------- TOTAL $ 520,969 $ 404,925 --------- --------- --------- ---------
See notes to unaudited consolidated financial statements. 3 ACCURIDE CORPORATION CONSOLIDATED STATEMENTS OF INCOME (DOLLARS IN THOUSANDS) (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30 JUNE 30 -------------------------- -------------------------- 1999 1998 1999 1998 NET SALES $ 136,052 $ 97,675 $ 247,585 $ 191,583 COST OF GOODS SOLD 104,826 74,447 190,267 148,199 --------- --------- --------- --------- GROSS PROFIT 31,226 23,228 57,318 43,384 OPERATING: Selling, general and administrative 7,695 5,799 14,174 11,153 Start-up costs - 1,665 - 2,811 Management retention bonuses - 870 - 1,680 Recapitalization professional fees - - - 2,240 --------- --------- --------- --------- INCOME FROM OPERATIONS 23,531 14,894 43,144 25,500 OTHER INCOME (EXPENSE): Interest income 165 203 230 343 Interest (expense) (10,005) (8,672) (18,961) (15,375) Equity in earnings (losses) of affiliates 11 2,155 2,326 (545) Other (expense), net (556) 180 (924) (421) --------- --------- --------- --------- INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 13,146 8,760 25,815 9,502 INCOME TAX PROVISION 5,522 3,482 10,843 3,829 MINORITY INTEREST 67 481 91 395 --------- --------- --------- --------- NET INCOME $ 7,557 $ 4,797 $ 14,881 $ 5,278 --------- --------- --------- --------- --------- --------- --------- ---------
See notes to unaudited consolidated financial statements. 4 ACCURIDE CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY) (DOLLARS IN THOUSANDS)
COMMON STOCK AND ADDITIONAL STOCK RETAINED PAID IN SUBSCRIPTIONS EARNINGS CAPITAL RECEIVABLE (DEFICIT) TOTAL ----------------------------------------------------------- BALANCE AT DECEMBER 31, 1998 $ 24,158 $ (1,644) $ (80,610) $ (58,096) Net income (Unaudited) 14,881 14,881 Issuance of shares (Unaudited) 580 (580) - Proceeds from stock subscriptions receviable (Unaudited) - 600 - 600 -------- -------- --------- --------- BALANCE AT June 30, 1999 (Unaudited) $ 24,738 $ (1,624) $ (65,729) $ (42,615) -------- -------- --------- --------- -------- -------- --------- ---------
See notes to unaudited consolidated financial statements. 5 ACCURIDE CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS)
SIX MONTHS ENDED JUNE 30 ------------------------------ 1999 1998 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 14,881 $ 5,278 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation 11,120 9,947 Amortization 3,016 2,217 Bonuses payable by a principal stockholder - 1,680 Deferred income taxes 6,284 (901) Equity in (earnings) losses of affiliates (2,326) 545 Minority interest 91 395 Changesin certain assets and liabilities (Net of effects from Purchase of AKW L.P.): Receivables (766) (10,184) Inventories and supplies (937) (1,681) Prepaid expenses and other assets (997) (3,028) Accounts payable 8,576 3,966 Accrued and other liabilities 37 7,736 --------- --------- Net cash provided by operating activities 38,979 15,970 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment (21,364) (21,675) Capitalized interest - (146) Payment for purchase of AKW L.P. (70,591) Net cash distribution from AKW L.P. 265 407 Other (18) - --------- --------- Net cash used in investing activities (91,708) (21,414) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of short term notes payable 4,589 3,000 Principal payments on short-term notes payable (1,340) Net increase(decrease) in revolving line of credit (32,638) 27,750 Proceeds from issuance of long-term debt 100,000 333,918 Deferred financing costs (692) (13,898) Issuance of shares - 108,000 Proceeds from stock subscriptions receivable 600 1,009 Redemption of shares - (454,315) --------- --------- Net cash provided by financing activities 71,859 4,124 Increase(decrease) in cash and cash equivalents 19,130 (1,320) Cash and cash equivalents, beginning of period 3,471 7,418 --------- --------- Cash and cash equivalents, end of period $ 22,601 $ 6,098 --------- --------- --------- ---------
See notes to unaudited consolidated financial statements. 6 ACCURIDE CORPORATION NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) AS OF JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 - ------------------------------------------------------------------------------- Note 1 - BASIS OF PRESENTATION - The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles, except that the unaudited consolidated financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. However, in the opinion of Accuride Corporation (the "Company"), all adjustments (consisting of normal recurring accruals) considered necessary to present fairly the consolidated financial statements have been included. The results of operations for the six months ended June 30, 1999 are not necessarily indicative of the results to be expected for the year ending December 31, 1999. The unaudited consolidated financial statements and notes thereto should be read in conjunction with the audited financial statements and notes thereto disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 1998. Note 2- AKW ACQUISITION - On April 1, 1999, the Company acquired Kaiser's 50% interest in AKW, pursuant to the terms of a Purchase Agreement by and among the Company, Kaiser and Accuride Ventures, Inc., a wholly owned subsidiary of Accuride. In connection with the acquisition, AKW and Kaiser amended and restated an existing lease agreement pursuant to which AKW leases certain property from Kaiser. AKW was formed in 1997 as a 50-50 joint venture between Kaiser and Accuride to design, manufacture, and sell heavy-duty aluminum wheels. The acquisition gives the Company, through its wholly owned subsidiary, 100% control of AKW. Total consideration paid to Kaiser for the 50% interest was approximately $70 million. The acquisition has been accounted for by the purchase method of accounting. Under purchase accounting, the total purchase price has been allocated to the tangible and intangible assets and liabilities of AKW based upon their respective fair values as of the date of the acquisition based upon valuations and other studies. A preliminary allocation of the purchase price has been made to major categories of assets and liabilities based on available information. The actual allocation of purchase price and the resulting effect on income from operations may differ significantly from the amounts recorded by the Company. Goodwill recorded by the Company in connection with the acquisition is being amortized on the straight-line method over 40 years. The following unaudited pro forma financial data illustrates the estimated effects as if the acquisition had been completed as of the beginning of the periods presented, after including the impact of certain adjustments, such as goodwill amortization, depreciation, interest expense, the elimination of equity in earnings of affiliates arising from the Company's 50% interest in AKW owned prior to the acquisition, and the related income tax effects.
JUNE 30, ----------------------------- 1999 1998 ---- ---- Net Sales $ 271,531 $ 233,688 Net Income $ 15,182 $ 3,336
Excluding the $6,800 AKW Product Recall, the unaudited pro forma net income for the six months ended June 30, 1998 would have been $7,008. The pro forma results are not necessarily indicative of the actual results if the transactions had been in effect for the entire period presented. In addition, they are not intended 7 to be a projection of future results and do not reflect, among other things, any synergies that might have been achieved from combined operations. Note 3 - INVENTORIES - Inventories were as follows:
JUNE 30, DECEMBER 31, 1999 1998 ---------- ------------ Raw materials $ 7,982 $ 8,920 Work in process 8,834 7,757 Finished manufactured goods 26,800 20,060 LIFO adjustment 2,177 1,122 Other (1,231) (879) -------- -------- Inventories, net $ 44,562 $ 36,980 -------- -------- -------- --------
Note 4 - LABOR RELATIONS -The Company's prior contract with the UAW covering employees at the Henderson Facility expired in February 1998 and the Company was not able to negotiate a mutually acceptable agreement with the UAW. Therefore, a strike occurred at the Henderson Facility on February 20, 1998. On March 31, 1998, the Company began an indefinite lock-out. The members of the UAW have rejected all of the Company's offers for a new contract. The Company is continuing to operate with its salaried employees and contractors. Currently, there is, and the Company believes that there will be, no supply disruption to the Company's customer base; however, there can be no assurance to that effect. Note 5 - SUPPLEMENTAL CASH FLOW DISCLOSURE - During the six months ended June 30, 1999 and 1998, the Company paid $16,331 and $4,566 for interest and $4,205 and $6,312 for income taxes, respectively. Non-cash transactions resulting from the issuance of common stock and the related stock subscriptions receivable of $1,539 and $2,511 occurred during the six months ended June 30, 1999 and 1998, respectively. Effective January 21, 1998 the Company entered into a stock subscription and redemption agreement (the "Redemption") with Phelps Dodge Corporation and Hubcap Acquisition L.L.C. ("Hubcap Acquisition"), wherein Hubcab Acquisition acquired 90% of the common shares of the Company. Non-cash transactions that resulted from the Redemption in 1998 included the increase in stockholders' equity and the net deferred tax asset in the amount of $18,480 from the increase in the tax basis of assets. Note 6 - NEW ACCOUNTING PRONOUNCEMENT - Statement of Financial Standards No. 133 ("SFAS 133"), "ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES," was issued in June 1998 and was amended by Statement of Financial Standards No. 137 ("SFAS 137"), "ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES-DEFERRAL OF THE EFFECTIVE DATE OF SFAS 133." SFAS 133, as amended by SFAS 137, is effective for all fiscal quarters of all fiscal years beginning after June 15, 2000. This statement establishes accounting and reporting standards for derivative instruments and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial condition and measure those instruments at fair value. If certain conditions are met, a derivative may be specifically designated as a fair value hedge, a cash flow hedge, or a hedge of a foreign currency exposure. The accounting for changes in the fair value of a derivative (that is, gains and losses) depends on the intended use of the derivative and the resulting designation. Management has not yet fully evaluated the effect of the new standard on the financial statements. Note 7 - FOREIGN CURRENCY - As of January 1, 1999, the Mexican economy was determined not to be highly inflationary. Accordingly, management has reviewed the primary economic environment in which Accuride de Mexico, S.A. de C.V. ("AdM") operates and determined AdM's functional currency to be the U.S. dollar. 8 Note 8- SEGMENT REPORTING - The Company operates in one business segment - the design, manufacture and distribution of wheels and rims for trucks, trailers, and other vehicles. GEOGRAPHIC SEGMENTS - The Company has foreign operations in the United States, Canada, and Mexico, for the three and six months ended June 30, 1999 and 1998, respectively, which are summarized below. Sales between geographic areas are made at negotiated selling prices.
United THREE MONTHS ENDED JUNE 30, 1999 States Canada Mexico Eliminations Combined Net Sales: Sales to unaffiliated customers-Domestic $ 123,061 $ 4,319 $ 5,806 $ - $ 133,186 Sales to unaffiliated customers-Export 811 - 2,055 - 2,866 Sales among geographic segments 9,180 35,546 2,505 (47,231) - -------------------------------------------------------------------- Total $ 133,052 $ 39,865 $ 10,366 $ (47,231) $ 136,052 -------------------------------------------------------------------- -------------------------------------------------------------------- Income from operations: $ 20,102 $ 2,399 $ 1,030 $ - $ 23,531 THREE MONTHS ENDED JUNE 30, 1998 Net Sales: Sales to unaffiliated customers-Domestic $ 83,096 $ 4,434 $ 7,964 $ - $ 95,494 Sales to unaffiliated customers-Export 593 - 1,588 2,181 Sales among geographic segments 2,033 35,682 443 (38,158) - -------------------------------------------------------------------- Total $ 85,722 $ 40,116 $ 9,995 $ (38,158) $ 97,675 -------------------------------------------------------------------- -------------------------------------------------------------------- Income from operations: $ 9,531 $ 4,080 $ 1,283 $ - $ 14,894 SIX MONTHS ENDED JUNE 30, 1999 Net Sales: Sales to unaffiliated customers-Domestic $ 224,184 $ 8,219 $ 10,325 $ - $ 242,728 Sales to unaffiliated customers-Export 1,201 30 3,626 - 4,857 Sales among geographic segments 17,342 71,145 5,011 (93,498) - -------------------------------------------------------------------- Total $ 242,727 $ 79,394 $ 18,962 $ (93,498) $ 247,585 -------------------------------------------------------------------- -------------------------------------------------------------------- Income from operations: $ 36,378 $ 4,640 $ 2,126 $ - $ 43,144 Assets: Identifiable assets $ 366,622 $ 112,845 $ 52,776 $ (14,037) $ 518,206 Investments in affiliates 2,763 - - 2,763 -------------------------------------------------------------------- Total $ 369,385 $ 112,845 $ 52,776 $ (14,037) $ 520,969 -------------------------------------------------------------------- -------------------------------------------------------------------- SIX MONTHS ENDED JUNE 30, 1998 Net Sales: Sales to unaffiliated customers-Domestic $ 156,073 $ 16,341 $ 14,583 $ - $ 186,997 Sales to unaffiliated customers-Export 1,009 175 3,402 - 4,586 Sales among geographic segments 4,324 65,740 944 (71,008) - -------------------------------------------------------------------- Total $ 161,406 $ 82,256 $ 18,929 $ (71,008) $ 191,583 -------------------------------------------------------------------- -------------------------------------------------------------------- Income from operations: $ 15,124 $ 8,558 $ 1,818 $ - $ 25,500 Assets: Identifiable assets $ 239,503 $ 111,895 $ 35,723 $ (14,037) $ 373,084 Investments in affiliates 23,813 23,813 -------------------------------------------------------------------- Total $ 263,316 $ 111,895 $ 35,723 $ (14,037) $ 396,897 -------------------------------------------------------------------- --------------------------------------------------------------------
9 Sales to three customers exceeded 10% of total net sales for the three months and six months ended June 30, as follows:
Three months ended June 30, 1999 % of 1998 % of Amount Sales Amount Sales Customer one $ 23,045 16.9 % $ 16,771 17.2 % Customer two 23,780 17.5 % 10,494 10.7 % Customer three 18,432 13.5 % 12,561 12.9 % -------- ------ -------- ------ $ 65,257 47.9 % $ 39,826 40.8 % -------- ------ -------- ------ -------- ------ -------- ------ Six months ended June 30, Customer one $ 50,839 20.5 % $ 29,087 15.2 % Customer two 36,706 14.8 % 18,830 9.8 % Customer three 30,142 12.2 % 24,731 12.9 % -------- ------ -------- ------ $117,687 47.5 % $ 72,648 37.9 % -------- ------ -------- ------ -------- ------ -------- ------
Each geographic segment made sales to all three major customers in the three and six months ended June 30, 1999 and 1998. Note 9 - SUBSEQUENT EVENTS - On July 16, 1999, the Company acquired from Industria Automotriz S.A. de C.V. ("IaSa") the remaining 49% minority interest of AdM, pursuant to the terms of a Purchase Agreement by and among the Company and the other parties listed thereto. The purchase price of the acquisition was $7,300. 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following discussion should be read in conjunction with the consolidated financial statements and notes included in Item 1 of Part I of this form. Except for the historical information contained herein, this report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. The Company's actual results may differ materially from those indicated by such forward-looking statements. AKW ACQUISITION On April 1, 1999, the Company acquired Kaiser Aluminum & Chemical Corporation's ("Kaiser") 50% interest in AKW L.P., a Delaware limited partnership ("AKW"), pursuant to the terms of a Purchase Agreement by and among the Company, Kaiser and Accuride Ventures, Inc., a wholly owned subsidiary of Accuride. In connection with the acquisition, AKW and Kaiser amended and restated an existing lease agreement pursuant to which AKW leases certain property from Kaiser. AKW was formed in 1997 as a 50-50 joint venture between Accuride and Kaiser to design, manufacture, and sell heavy-duty aluminum wheels. The acquisition gives the Company 100% ownership of AKW. Total consideration paid to Kaiser for the 50% interest was approximately $70 million. The Company initially financed the acquisition through the Company's $140 million senior secured revolving credit facility, which was subsequently replaced by permanent financing through the Amended and Restated Credit Facility described below in "Capital Resources and Liquidity." The acquisition has been accounted for by the purchase method of accounting. Goodwill recorded by the Company in connection with the acquisition is being amortized on the straight-line method over 40 years. RESULTS OF OPERATIONS THREE MONTHS ENDED JUNE 30, 1999 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 1998. NET SALES. Net sales increased by $38.4 million, or 39.3%, for the three months ended June 30, 1999 to $136.1 million, compared to $97.7 million for the three months ended June 30, 1998. The increase in net sales is primarily due to (i) including total sales from AKW with consolidated sales effective April 1, 1999, the date of the acquisition, (ii) new products sold at the Columbia, Tennessee facility and (iii) an increase in industry volumes. Sales from AKW for the second quarter 1999 were $24.5 million compared to $0 for the second quarter 1998 as AKW was previously accounted for on the equity method as "equity in earnings of affiliates" and was not consolidated prior to the acquisition. Sales of products from the new Columbia, Tennessee facility, which started operations in the third quarter of 1998, were $6.4 million during the second quarter of 1999. Excluding the $24.5 million in sales at AKW and $6.4 million sales from the Columbia, Tennessee facility, net sales would have increased by $7.5 million, or 7.7%, for the three months ended June 30, 1999 to $105.2 million, compared to $97.7 million for the three months ended June 30, 1998. GROSS PROFIT. Gross profit increased by $8.0 million, or 34.5% to $31.2 million for the three months ended June 30, 1999 from $23.2 million for the three months ended June 30, 1998. The $8.0 million increase in gross profit was primarily due to $6.3 million gross profit at AKW, which has been accounted for on a consolidated basis effective with the acquisition on April 1, 1999, and an increase in gross profit at the Henderson, Kentucky facility as a result of increased volumes and reducing the costs associated with the labor strike. Partially offsetting this increase were lower gross profits at AdM and the Columbia, Tennessee facility. Gross profit as a percentage of net sales decreased to 23.0% for the three months ended June 30, 1999 from 23.8% for the three months ended June 30, 1998. The decrease in gross profit as a percentage of sales is due to lower margins at AdM and the Columbia, Tennessee facility. Excluding the sales and gross profit from AKW of $6.3 million and the gross loss at the Columbia facility of $0.4 million, gross profit 11 would have increased by $2.1 million, or 9.1% to $25.3 million for the three months ended June 30, 1999 from $23.2 million for the three months ended June 30, 1998. OPERATING EXPENSES. Operating expenses decreased by $0.6 million, or 7.2%, to $7.7 million for the three months ended June 30, 1999 from $8.3 million for the three months ended June 30, 1998. This decrease was primarily due to one time operating expenses incurred during the second quarter of 1998 for start-up costs of $1.7 million relating to the new Columbia, Tennessee facility, and the management retention bonuses of $0.9 million paid by Phelps Dodge Corporation, a previous principal stockholder ("Phelps Dodge") in conjunction with the Company's recapitalization. Excluding the expenses recorded for the three months ended June 30, 1998 start-up costs and management retention bonuses, operating expenses increased by $1.9 million to $7.7 million for the three months ended June 30, 1999 from $5.8 million for the three months ended June 30, 1998. As a percentage of net sales, operating expenses, excluding the expenses for start-up costs and management retention bonuses, for the three months ended June 30, 1999 were 5.7% as compared to 5.9% for the three months ended June 30, 1998. OTHER INCOME (EXPENSE). Interest expense increased to $10.0 million for the three months ended June 30, 1999 compared to $8.7 million for the three months ended June 30, 1998, due primarily to the debt incurred for the acquisition of Kaiser's 50% share of AKW on April 1, 1999. Equity in earnings (losses) of affiliates decreased by $2.2 million for the three months ended June 30, 1999 from $2.2 million for the three months ended June 30, 1998. The decrease was due to ownership change of AKW, from 50% to 100% and the resultant change in accounting to begin consolidating the results of AKW effective April 1, 1999. ADJUSTED EBITDA. Adjusted EBITDA increased by $5.7 million, or 22.7%, to $30.8 million for the three months ended June 30, 1999 from $25.1 million for the three months ended June 30, 1998 due to higher steel product sales volume and the inclusion of 100% of AKW earnings. In determining Adjusted EBITDA for the three months ended June 30, 1999, income from operations has been adjusted by (i) depreciation and amortization (except for amortization of deferred financing costs) and (ii) equity in earnings of affiliates. In determining Adjusted EBITDA for the three months ended June 30, 1998, income from operations has been adjusted by (i) depreciation and amortization (except for amortization of deferred financing costs), (ii) equity in earnings (losses) of affiliates, (iii) $0.9 million of management retention bonuses paid by Phelps Dodge, and (iv) an estimated cost of $0.5 million incurred in connection with the labor strike at the Company's facility in Henderson, Kentucky. NET INCOME. Net income increased by $2.8 million to $7.6 million for the three months ended June 30, 1999 from $4.8 million for the three months ended June 30, 1998 due to higher pretax earnings, as described above. SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1998. NET SALES. Net sales increased by $56.0 million, or 29.2%, for the six months ended June 30, 1999 to $247.6 million, compared to $191.6 million for the six months ended June 30, 1998. The increase in net sales is primarily due to increased industry volume, including $24.5 million of aluminum sales from AKW since April 1, 1999 (previously accounted for under the equity method prior to the acquisition date) and $18.8 million of new products sales from the new Columbia, Tennessee facility which started operations in the third quarter of 1998. Excluding $24.5 million of AKW sales and the Columbia, Tennessee facility sales of $18.8 million, net sales would have increased $12.7 million or 6.6% to $204.3 million for the six months ended June 30, 1999 from $191.6 for the six months ended June 30, 1998. GROSS PROFIT. Gross profit increased by $13.9 million, or 32.0% to $57.3 million for the six months ended June 30, 1999 from $43.4 million for the six months ended June 30, 1998. The gross profit increase was due 12 to an overall increase in industry sales volume and due to including $6.3 million of gross profit from AKW, which has been accounted for on a consolidated basis effective with the acquisition on April 1, 1999. Gross profit as a percentage of net sales increased to 23.2% for the six months ended June 30, 1999 from 22.6% for the six months ended June 30, 1998. The increase in gross profit as a percentage of sales is due to an overall increase in volume and improved margins at the Henderson, Kentucky facility. The improvements at Henderson, Kentucky were achieved by effectively controlling the costs associated with the labor strike. Increased industry volumes also favorably impacted gross profit. Excluding gross profit from AKW of $6.3 million and the gross loss at the Columbia facility of $0.2 million, gross profit would have increased by $7.8 million, or 18.0% to $51.2 million for the six months ended June 30, 1999 from $43.4 million for the six months ended June 30, 1998. OPERATING EXPENSES. Operating expenses decreased by $3.7 million, or 20.7%, to $14.2 million for the six months ended June 30, 1999 from $17.9 million for the six months ended June 30, 1998. This decrease was primarily due to one time operating expenses incurred in the first six months of 1998 for professional fees of $2.2 million related to the Company's recapitalization, for start-up costs of $2.8 million relating to the Columbia, Tennessee facility, and the management retention bonuses of $1.7 million paid by Phelps Dodge in conjunction with the Company's recapitalization. Excluding the expenses recorded for the six months ended June 30, 1998 for professional fees, start-up costs, and management retention bonuses, operating expenses increased by $3.0 million to $14.2 million for the six months ended June 30, 1999 from $11.2 million for the six months ended June 30, 1998. As a percentage of net sales, operating expenses, excluding the expenses for professional fees, start-up costs, and management retention bonuses, for the six months ended June 30, 1999 were 5.7% as compared to 5.8% for the six months ended June 30, 1998. OTHER INCOME (EXPENSE). Interest expense increased to $19.0 million for the six months ended June 30, 1999 compared to $15.4 million for the six months ended June 30, 1998, due to the debt incurred in the recapitalization of the Company on January 21, 1998, being outstanding for the first six months of 1999 compared to an outstanding amount from January 21, 1998 to June 30, 1998. Interest expense also increased due to the debt incurred for the acquisition of Kaiser's 50% share of AKW on April 1, 1999. Equity in earnings (losses) of affiliates increased by approximately $2.8 million to $2.3 million for the six months ended June 30, 1999 from a loss of $0.5 million for the six months ended June 30, 1998. The increase was due to the increased equity earnings from the AKW joint venture which contributed $2.3 million of earnings in the first half of 1999 as compared to a loss of $0.5 million in the first half of 1998 which was due to the $3.4 million effect of a product recall campaign implemented at AKW in the first quarter of 1998. Beginning April 1, 1999, when the Company acquired the remaining 50% ownership of AKW, earnings from AKW were reported on a consolidated basis and were not recorded as equity earnings. ADJUSTED EBITDA. Adjusted EBITDA increased by $11.2 million, or 23.6%, to $58.6 million for the six months ended June 30, 1999 from $47.4 million for the six months ended June 30, 1998. The Adjusted EBITDA increase was due to higher steel product sales volume and the addition of all AKW income on a consolidated basis as of April 1, 1999. In determining Adjusted EBITDA for the six months ended June 30, 1999, income from operations has been adjusted by (i) depreciation and amortization (except for amortization of deferred financing costs) and (ii) equity in earnings of affiliates. In determining Adjusted EBITDA for the six months ended June 30, 1998, income from operations has been adjusted by (i) depreciation and amortization (except for amortization of deferred financing costs), (ii) equity in earnings (losses) of affiliates, (iii) $2.2 million of professional fees related to the Company's recapitalization, (iv) $3.4 million relating to the AKW product recall, (v) $1.7 million of management retention bonuses paid by Phelps Dodge, and (vi) $3.0 million incurred in connection with the labor strike at the Company's facility in Henderson, Kentucky. 13 NET INCOME. Net income increased by $9.6 million to $14.9 million for the six months ended June 30, 1999 from $5.3 million for the six months ended June 30, 1998 due primarily to higher pretax earnings, as described above. CHANGES IN FINANCIAL CONDITION At June 30, 1999, the Company's total assets amounted to $521.0 million, as compared to $404.9 million at December 31, 1998. The $116.1 million or 28.7% increase in total assets during the six months ended June 30, 1999 was primarily the result of a $19.1 million increase in cash, an increase in net property, plant and equipment of $40.3 million, a $17.6 million increase in customer receivables, a $4.2 million increase in other receivables, a $7.6 million increase in net inventories, a $0.7 million increase in supplies, a $0.7 million increase in prepaid expenses, a $0.9 million increase in other assets and a $51.8 million increase in net goodwill, offset by a decrease of $23.1 in investment of affiliates, a decrease of $3.3 million in deferred income taxes and a $0.4 million decrease in income taxes receivable. The increase in net property, plant and equipment is primarily due to $30.0 million worth of equipment acquired at AKW on April 1, 1999 and a $9.0 million investment in AdM's new facility. The increase in customer receivables resulted from increased sales volume from U.S. customers and the acquisition of aluminum wheel receivables from AKW. The other receivables increase was primarily due to inclusion of AKW's other receivables, an increase in a receivable from IaSa and an increase in an unrealized gain associated with the foreign currency forward contracts entered into by the Company. The increase in net inventories is primarily due to the addition of AKW's aluminum inventory. The $51.8 million increase in net goodwill is attributable to the purchase of AKW, as is the decrease in investment of affiliates. At June 30, 1999, the Company's total liabilities amounted to $557.3 million, as compared to $456.8 million at December 31, 1998. The $100.5 million or 22.0% increase in total liabilities was primarily due to a $67.5 million increase in long-term debt, a $14.6 million increase in accounts payable, a $3.6 million increase in short term notes payable at AdM, a $1.7 million increase in accrued interest, a $3.6 million increase in accrued and other current liabilities, a $5.0 million increase in other non-current liabilities and an increase in deferred income taxes of $3.2 million. The $67.5 million increase in long-term debt was due to a $100.0 million increase in the Company's term loan through the Amended and Restated Credit Facility described below in "Capital Resources and Liquidity," partially offset by a $32.5 million repayment of the Revolver. The increase in accounts payable was due to increased production volumes and acquiring $9.2 million of AKW's payables. The increase in accrued interest payable resulted from the additional debt acquired. The increase in other non-current liabilities was mostly due to acquiring approximately $3.8 million of AKW's pension liabilities. CAPITAL RESOURCES AND LIQUIDITY The Company's primary sources of liquidity are cash flow from operations and borrowings under the Revolver. The Company's primary uses of cash are funding working capital, capital expenditures under the Company's expansion plans and debt service. As of June 30, 1999, the Company had cash and short-term investments of $22.6 million compared to $3.5 million at the beginning of the year. The Company's operating activities provided $39.0 million and the financing activities provided $71.9 million which was used to fund the Company's investing activities of $91.7 million and to increase its cash and short-term investments $19.1 million in order to fund the purchase of AKW. 14 Investing activities during the six months ended June 30, 1999 were $91.7 million compared to $21.4 million for the six months ended June 30, 1998. Cash flow from financing activities during the six months ended June 30, 1999 were $71.9 million compared to $4.1 million for the six months ended June 30, 1998. The Company incurred capital expenditures in 1998 (excluding capital expenditures by AdM) of $29.9 million. The Company expects its capital expenditures (excluding capital expenditures by AdM) to decrease to approximately $20.0 million in 1999. It is anticipated that these expenditures will fund (i) approximately $4.1 million of technology advancement projects; (ii) investments in productivity improvements in 1999 to the Company's steel wheel business of approximately $7.1 million and (iii) maintenance of business expenditures of approximately $8.8 million. Future investments in productivity improvements are expected to be focused on additional automation, shop floor and engineering systems and improved coating capabilities. The Company anticipates that AdM will require additional capital expenditures of approximately $3.5 million for the remainder of 1999 to finalize construction and equip the Monterrey, Mexico facility. The Monterrey, Mexico facility is expected to be operational in late-1999 at an approximate cost for land and building of $9.2 million. Total project cost through 1999 is expected to be approximately $29.4 million, of which approximately $25.9 million was spent as of June 30, 1999. The Company finalized a $32.5 million credit facility for AdM on July 9, 1998. This is comprised of a term loan of $25.0 million and a working capital facility of $7.5 million. As of June 30, 1999 the $32.5 million credit facility was fully drawn. AMENDED AND RESTATED CREDIT FACILITY. On April 16, 1999 the Company entered into an amended and restated credit facility (the "Amended Credit Facility") with a syndicate of banks and other financial institutions (the "Lenders") led by Citicorp USA, Inc., as administrative agent (the "administrative agent"), Salomon Smith Barney, Inc., as arranger, Bankers Trust Company, as syndication agent, and Wells Fargo Bank N.A. as documentation agent. The Amended Credit Facility provides for an additional $100.0 million term loan ("Tranche C") to be added to the previous term loans of (i) $60.0 million that matures on January 21, 2005 ("Tranche A") and (ii) $75.0 million that matures on January 21, 2006 ("Tranche B"). The Company's Canadian subsidiary is the borrower under Tranche A, and the Company has guaranteed the repayment of such borrowing under Tranche A and all other obligations of such Canadian subsidiary under the Amended Credit Facility. The Company also has a $140.0 million revolver, which declines to $100.0 million on January 21, 2003 and matures on January 21, 2004. As of June 30, 1999, no amounts were outstanding under the Revolver. The Tranche A and B term loans provide for 1% annual amortization prior to maturity and the Tranche C term loan provides for 1% annual amortization through January 21, 2005, with the final two years each providing for 47% amortization. The loans are secured by, among other things, the shares of stock, partnership interests and limited liability company ownership interests of the Company's subsidiaries. DESCRIPTION OF THE NOTES. In January 1998 the Company issued $200 million of notes (the "Notes") pursuant to an indenture (the "Indenture") between the Company and U.S. Trust Company, N. A., as trustee (the "Trustee"). The Indenture is limited in aggregate principal amount to $300.0 million, of which $200.0 million were issued as Private Notes and subsequently exchanged for Exchange Notes, which exchange has been registered under the Securities Act of 1933, as amended. Additional notes may be issued in one or more series from time to time, subject to the limitations set forth under the Indenture. The Indenture provides certain restrictions on the payment of dividends by the Company. The Indenture is subject to and governed by the Trust Indenture Act of 1939, as amended. The Notes are general unsecured obligations of the Company and are subordinated in right of payment to all existing and future Senior Indebtedness (as defined 15 in the Indenture) of the Company. The Notes mature on February 1, 2008. Interest on the Notes accrues at the rate of 9.25% per annum and is due and payable semi-annually in arrears on February 1 and August 1, commencing on August 1, 1998, to holders of record of the Notes on the immediately preceding January 15 and July 15. Management believes that cash flow from operations and availability under the Revolver will provide adequate funds for the Company's foreseeable working capital needs for 1999, planned capital expenditures and debt service obligations. Any future acquisitions, joint ventures or other similar transactions will likely require additional capital, and there can be no assurance that any such capital will be available to the Company on acceptable terms or at all. The Company's ability to fund its working capital needs, planned capital expenditures and scheduled debt payments, to implement its expansion plans, to refinance indebtedness and to comply with all of the financial covenants under its debt agreements, depends on its future operating performance and cash flow, which in turn, are subject to prevailing economic conditions and to financial, business and other factors, some of which are beyond the Company's control. YEAR 2000 COMPLIANCE In 1997, a comprehensive project plan to address the Year 2000 issue as it relates to the Company's operation was developed and implemented. The scope of the plan includes seven phases including Awareness, Identification, Impact Analysis, Risk Evaluation, Remediation, Testing and Contingency Planning. A project team that consists of key members of the technology staff, representatives of functional business units and senior management was developed. An assessment of the impact of the Year 2000 issue on the Company's computer systems was completed in the fourth quarter of 1997. From the assessment, the Company identified and prioritized those systems deemed to be mission critical or those that have a significant impact on normal operations. The Company relies on third party vendors and service providers for certain data processing capabilities. Formal communications with these providers were initiated in 1997 to assess the Year 2000 readiness of their products and services. Responses indicate that the significant providers currently have compliant versions available or are well into the renovation and testing phases. However, the Company can give no guarantee that the systems of these service providers and vendors on which the Company's systems rely will be timely Year 2000 compliant. Additionally, the Company has implemented a plan to manage the potential risk posed by the impact of the Year 2000 issue on its major customers and suppliers. Formal communications are continuing and the assessment is moving forward on schedule. CURRENT STATUS. The project team estimates that the Company's Year 2000 readiness project is approximately 95% complete. The following table provides a summary of the current status of the seven phases involved and a projected timetable for completion. 16
PROJECT PHASE % COMPLETED COMPLETION COMMENTS Awareness 100% Completed Identification 100% Completed Impact Analysis 100% Completed Risk Evaluation 100% Completed Remediation 95% Oct. 31, 1999 All critical systems are completed. Testing 90% Sept. 30, 1999 Involves ongoing testing of critical systems. Contingency Plan 90% Aug. 31, 1999
COSTS. The Company has thus far primarily used and expects to continue to use internal resources to implement its readiness plan and to upgrade or replace and test systems affected by the Year 2000 issue. During 1998, the Company incurred approximately $1.3 million of direct and indirect costs for company-owned systems and applications related to Year 2000 remediation. A majority of these costs are currently believed to be incremental expenses that will not recur in the Year 2000 or thereafter. Year 2000 remediation costs were approximately $1.4 million in 1997. The Company estimates that its additional costs for Year 2000 remediation and testing of its computer systems through the end of 1999 will not exceed $1.1 million. The costs and the timetable in which the Company plans to complete the Year 2000 readiness activities are based on management's estimates, which were derived using numerous assumptions of future events including the continued availability of certain resources, third party readiness plans and other factors. The Company can make no guarantee that these estimates will be achieved, and actual results could differ from such plans. RISK ASSESSMENT. Given information known at this time about the Company's systems that are non-compliant, coupled with the Company's ongoing, normal course of business efforts to upgrade or replace critical systems, as necessary, management does not expect Year 2000 compliance costs to have a material adverse impact on the Company. Although the Company believes that internal Year 2000 compliance will be achieved by December 31, 1999, there can be no assurance that the Year 2000 problem affecting the Company, its customers and suppliers will not have a material adverse effect on the Company's business, financial condition and results of operations. In light of the many adverse conditions that could happen to the Company associated with Year 2000 compliance, along with the speculation that some or many of them may not happen, it is difficult to hypothesize a most reasonably likely worst case Year 2000 scenario with any degree of certainty. With that in mind, the Company currently believes the most reasonably likely worst case scenario would be the failure of certain key production capabilities or similar failures occurring within the Company's supply chain. These types of catastrophic failures, although unlikely, would result in the inability of the Company to supply products to customers for a period of time. CONTINGENCY PLAN. Realizing that some disruption may occur despite its efforts, the Company is in the process of developing contingency plans for each critical system in the event that one or more of those systems fail. Although not yet complete, the Company is considering the following items, among others, as key pieces of the contingency plans: the creation of special "rapid response" technology teams; scheduling availability of key personnel, additional testing and simulation activities, establishment of rapid decision processes, development of support critical customer functions in the event information systems or mechanized processes experience Year 2000 disruptions, determination of alternative suppliers and implementation of data retention and recovery procedures for customers and critical business data with on- 17 site (primary) as well as off-site (secondary) data copies. While this is an ongoing process, the Company expects to have the contingency plan substantially completed by August 31, 1999. SUBSEQUENT EVENTS On July 16, 1999, the Company acquired Industria Automotriz S.A. de C.V.'s ("IaSa") pursuant to the terms of a Purchase Agreement by and among the Company and the other parties listed thereto. The acquisition gives Accuride 100 % ownership of AdM. The purchase price of the acquisition was $7.3 million. FACTORS AFFECTING FUTURE RESULTS The factors discussed below, among others, could cause actual results to differ materially from those contained in forward-looking statements made in this report, including, without limitation, in "Management's Discussion and Analysis of Financial Condition and Results of Operations," in the Company's related press release and in oral statements made by authorized officers of the Company. When used in this report, any press release or oral statements, the words "estimate," "project," "anticipate," "expect," "intend," "believe" and similar expressions are intended to identify forward-looking statements. All of these forward-looking statements are based on estimates and assumptions made by management of the Company, which, although believed to be reasonable, are inherently uncertain. Therefore, undue reliance should not be placed upon such estimates and statements. No assurance can be given that any of such statements or estimates will be realized and actual results will differ from those contemplated by such forward-looking statements. Accordingly, the Company hereby identifies the following important factors which could cause the Company's financial results to differ materially from any such results which might be projected, forecast, estimated or budgeted by the Company in forward-looking statements: - - significant indebtedness of the Company may have important consequences, including, but not limited to, impairment of the Company's ability to obtain additional financing, reduction of funds available for operations and business opportunities or limitation on the Company's ability to dispose of assets; - - the Company's ability to service its indebtedness is dependent upon operating cash flow of its subsidiaries; - - loss of a major customer could have material adverse effect on the Company's business; - - original equipment manufacturers' demands for price reduction may adversely affect profitability; - - cyclical nature of industry could cause fluctuations in demand for Company's products; - - labor strike may disrupt the Company's supply to its customer base; - - interruption in supply of steel or aluminum could reduce Company's ability to obtain favorable sourcing of such raw materials; - - Company's competitors could reduce the market share of the Company's product; - - potential liability of the Company for environmental matters and the costs of compliance with certain governmental regulations could have a material adverse effect on the Company's financial condition and may adversely affect the Company's ability to sell or rent such property or to borrow using such property as collateral; - - Company may have difficulty in achieving growth strategies and there is no assurance that such strategies will be successful or will improve operating results; - - continued service of key management personnel is not guaranteed; - - interests of the principal stockholder of the Company may conflict with the interests of the holders of securities of the Company; and - - no assurance that the Company's computer software and operating systems, or those of its customers or suppliers, will be Year 2000 compliant. 18 The foregoing review of the factors should not be construed as exhaustive or as any admission regarding the adequacy of disclosures made by the Company prior to this filing. For further information, refer to the "Risk Factors" section included in the Company's Annual Report on Form 10-K for the Fiscal Year ended December 31, 1998 filed with the Securities and Exchange Commission. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company, in the normal course of doing business, is exposed to the risks associated with changes in foreign exchange rates, interest rates and raw material prices. The Company selectively uses derivative financial instruments to manage these risks. The Company uses foreign exchange contracts to hedge foreign currency commitments. Specifically, these foreign exchange contracts offset foreign currency denominated purchase commitments to suppliers, accounts receivable from and future committed sales to customers, and operating expenses. Management believes the use of foreign currency financial instruments reduces the risks that arise from doing business in international markets. At June 30, 1999, the Company had open foreign exchange forward contracts and options with a notional amount of $119.8 million. Foreign exchange forward contract maturities were from one to eleven months, and option contract maturites were from eight to seventeen months. The Company's hedging activities provide only limited protection against currency risks. Factors that could impact the effectiveness of the Company's hedging programs include accuracy of sales estimates, volatility of currency markets and the cost and availability of hedging instruments. The counterparties to the foreign exchange contracts are financial institutions with investment grade credit ratings. The Company monitors its foreign currency cash flow transactions and executes contracts to hedge its foreign exchange exposures. The use of forward contracts and options protects the Company's cash flows against unfavorable movements in exchange rates, to the extent of the amount under contract. A 10% adverse change in currency exchange rates for the Company's foreign currency derivatives held at June 30, 1999, would have an impact of approximately $10.0 million on the fair value of such instruments. This quantification of exposure to the market risk associated with foreign exchange financial instruments does not take into account the offsetting impact of changes in the fair value of the Company's foreign denominated assets, liabilities and firm commitments. The Company uses long-term debt as a primary source of capital in its business. The following table presents the principal cash repayments and related weighted average interest rates by maturity date for its long-term fixed-rate debt and other types of long-term debt at June 30, 1999:
(Dollars in thousands) 1999 2000 2001 2002 2003 Thereafter Total Fair Value ---- ---- ---- ---- ---- ---------- ----- ---------- Long-Term Debt: Fixed $200,000 $200,000 $197,500 Avg. Rate 9.25% 9.25% Variable $0 $2,350 $11,725 $14,850 $5,475 $224,250 $258,650 $258,650 Avg. Rate 7.32% 8.31% 8.36% 8.03% 7.32% 7.44%
The Company has used an interest rate swap to alter interest rate exposures between fixed and floating rates on a portion of the Company's long-term debt. As of June 30, 1999, $100.0 million notional amount of interest rate swap was outstanding. On average during the six month period ended June 30, 1999, the Company paid 5.75% as a fixed rate and received 5.0083% on the interest rate swap. Under the terms of the 19 interest rate swap, the Company agrees with the counterparty to exchange, at specified intervals, the difference between the fixed rate and floating rate interest amounts calculated by reference to the agreed notional principal amount. The interest rate swap matures in January, 2001. The Company also used an interest rate cap to set a ceiling on the maximum floating interest rate the Company would incur on a portion of the Company's long term debt. As of June 30, 1999, $35.0 million notional amount of interest rate cap was outstanding. Under the terms of the interest rate cap, the Company is entitled to receive from the counterparty on a quarterly basis the amount, if any, by which the three-month Eurodollar interest rate exceeds 7.5%. The interest rate cap matures in January, 2001. The Company is exposed to credit related losses in the event of nonperformance by the counterparties to the interest rate swap and interest rate cap, although no such losses are expected as the counterparties are financial institutions having an investment grade credit rating. The Company relies upon the supply of certain raw materials in its production processes and has entered into firm purchase commitments for steel and aluminum. The exposures associated with these commitments are primarily managed through the terms of its supply and procurement contracts. Additionally, the Company uses commodity price swaps and options to hedge against changes in certain commodity prices. At June 30, 1999, the Company had open commodity price swaps and option contracts with a notional amount of $13.0 million. These commodity price swaps and option contracts had maturities from one to fifteen months. A 10% adverse change in commodity prices would have an impact of approximately $1.1 million on the fair value of these contracts. The Company is exposed to credit related losses in the event of nonperformance by the counterparties to the commodity price swaps and option contracts, although no such losses are expected as the counterparties are financial institutions having an investment grade credit rating. 20 PART II. OTHER INFORMATION Item 1. Legal Proceedings The Company does not believe that there are any pending or threatened legal proceedings other than non-material legal proceedings incidental to the Company's business. Item 2. Changes in Securities During the thirteen weeks ended June 30, 1999, the Company issued 116 shares of the Company's common stock, par value $.01 per share ("Common Stock") to certain members of management for aggregate consideration in cash and secured promissory notes of approximately $580,000. During such period, the Company also issued options to purchase 221 shares of Common Stock to such members of management. The exercise price of such options was $5,000 per share. None of these securities were registered under the Securities Act of 1933, as amended. Such issuances of Common Stock and options to purchase Common Stock were made pursuant to the 1998 Stock Purchase and Option Plan for Employees of Accuride Corporation and Subsidiaries. In each of the above instances, exemption from registration under the Securities Act was based upon the grounds that the issuance of such securities did not involve a public offering within the meaning of Section 4(2) of the Securities Act. Item 3. Defaults Upon Senior Securities Not applicable. Item 4. Submissions of Matters to a Vote of Security Holders Not applicable. Item 5. Other Information Not applicable. Item 6. Exhibits and Reports on Form 8-K
Exhibit No Description - ---------- ----------- 10.1 Purchase Agreement date July 16, 1999 between the Company and IaSa regarding the purchase of 49% interest in AdM. 10.2 Amended and Restated Completion Guarantee Agreement dated July 16, 1999 between the Company, AdM, and Citibank Mexico, S.A., Grupo Financiero
21 Citibank 27.1 Financial Data Schedule
(b) Form 8-K The following 8-K reports were filed during the quarter ended June 30, 1999. Form 8-K filed April 12, 1999 regarding the acquisition of 50% interest of AKW, LP from Kaiser Form 8-K/A filed June 10, 1999 regarding the financial information related to the acquisition of 50% of AKW, LP from Kaiser. 22 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ACCURIDE CORPORATION /s/ WILLIAM P. GREUBEL Dated: August 13, 1999 - ------------------------------- William P. Greubel President and Chief Executive Officer /s/ JOHN R. MURPHY Dated: August 13, 1999 - ------------------------------- John R. Murphy Vice President - Finance and Chief Financial Officer Principal Accounting Officer 23 EX-10.1 2 EXHIBIT 10.1 EXHIBIT 10.1 PURCHASE AGREEMENT dated July 16, 1999 by and among ACCURIDE CORPORATION ("ACCURIDE"), SERVICIOS AISA, S.A. DE C.V. ("SERVICIOS AISA"), ACCURIDE DE MEXICO, S.A. DE C.V. (the "COMPANY"), INDUSTRIA AUTOMOTRIZ, S.A. DE C.V. ("IASA") and GRUPO INDUSTRIAL RAMIREZ, S.A. ("GIR") PURCHASE AGREEMENT THIS PURCHASE AGREEMENT (the "AGREEMENT") is entered into as of July 16, 1999, by and among Accuride Corporation, a Delaware corporation ("ACCURIDE"), Servicios AISA, S.A. de C.V., a Mexican corporation ("SERVICIOS AISA" and, together with Accuride, the "PURCHASERS"), Accuride de Mexico, S.A. de C.V., a Mexican corporation (the "COMPANY"), and Grupo Industrial Ramirez, S.A., a Mexican corporation ("GIR") and Industria Automotriz, S.A. de C.V., a Mexican corporation ("IASA" and, together with GIR, the "SELLERS"). RECITALS A. Pursuant to a Joint Venture Agreement dated as of November 5, 1997 among Accuride, IASA, GIR and the Company (the "JV AGREEMENT"), Accuride and IASA created a joint venture and incorporated the Company as a variable capital corporation under the laws of the United Mexican States to produce, market and sell all kinds of steel wheels, rims, side rings, lock rings, adapter rings, spacer bands, mounting bands and related components, replacements and products ("WHEELS"). B. The parties entered into a Wheel Requirements Agreement (the "WHEEL REQUIREMENTS AGREEMENT") and a Bailment Agreement (the "BAILMENT AGREEMENT") whereby (i) the Company has installed its equipment at IASA's manufacturing facility in San Nicolas de los Garza, Nuevo Leon, Mexico (the "IASA FACILITY"), (ii) the Company supplies IASA with raw materials, (iii) IASA then manufactures Wheels using the Company's equipment and sells the Wheels back to the Company at cost plus 3.25% of the gross sales revenues (but excluding the applicable VAT (as defined in the JV Agreement)) that the Company actually invoices for sales of finished Wheels to its customers. C. The total authorized capital stock of the Company consists of the fixed portion represented by 50,000 registered no par value common shares and the variable portion represented by 75,000,000 registered no par value common shares. D. Accuride owns 100,147 shares, or 51%, of the fixed capital stock of the Company and 39,936,831 shares, or 51%, of the variable capital stock of the Company. E. IASA owns 96,219 shares, or 49%, of the fixed capital stock of the Company and 38,370,680 shares, or 49%, of the variable capital stock of the Company (such shares being collectively referred to herein as the "IASA SHARES"). F. In reliance on and subject to the terms, conditions, representations, warranties, covenants and agreements herein contained, Purchasers desire to acquire the IASA Shares from the Sellers and the Sellers desire to sell the IASA Shares to Purchasers. ------------- ---------------- --------- --------- ----------- Accuride Servicios AISA IASA GIR Company AGREEMENT NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants herein contained, and other good and valuable consideration, the receipt and sufficiency of which the parties hereby acknowledge, the parties hereby agree as follows: ARTICLE I. PURCHASE AND SALE Section 1.01 AGREEMENT TO PURCHASE AND SELL IASA SHARES. Subject to the terms and conditions of this Agreement, the Sellers agree to sell to the Purchasers, and the Purchasers agree to purchase from the Sellers, at Closing (as defined below), the IASA Shares, to be allocated 96,218 shares of the fixed capital stock and 38,370,680 shares of the variable capital stock to Accuride and 1 share of the fixed capital stock to Servicios AISA. Section 1.02 ACQUISITION OF THE IASA SHARES. Subject to the adjustments provided in the Escrow Agreement (as defined below), in exchange for the IASA Shares, at the Closing, Purchasers shall pay, or shall cause to be paid, a total of $7,300,000 which represents the amount of $.18973409 U.S. Dollars per share to be distributed as indicated in Section 1.01 above, (the "PURCHASE PRICE"), comprised of the following: (i) $2,750,000 in immediately available funds to the account or accounts specified in writing by the Sellers. (ii) $4,550,000 (the "ESCROW AMOUNT") in immediately available funds, pursuant to the Escrow Agreement, in substantially the form attached hereto as Exhibit A (the "ESCROW AGREEMENT"), to an escrow account (the "ESCROW ACCOUNT") established in accordance with the Escrow Agreement. The Escrow Amount shall be governed by this Sections 1.02 and 1.03 and the provisions of the Escrow Agreement. The Escrow Amount shall be allocated as follows in three separate accounts: (i) $300,000 (the "MAINTENANCE FUNDS"), (ii) $250,000 (the "RAW MATERIALS FUNDS") and (iii) $4,000,000 (the "TAX LIEN FUNDS"). Section 1.03 ESCROW AMOUNT. (a) The Maintenance Funds shall be administered by a committee of four individuals (the "MAINTENANCE COMMITTEE"), of which two shall be elected by Accuride (which initially shall be Robert J. Fagerlin and Raul Gonzalez Valdes) and two shall be elected by the Sellers (which initially shall be Gregorio Ramirez Jauregui and Pedro Sanchez). All decisions of the Maintenance Committee shall be made by the majority vote of the Maintenance Committee; provided, however, that in the event that the Maintenance Committee is unable to concur on a decision, Robert J. Fagerlin or his successor shall make the final decision on behalf of the Maintenance Committee in his sole discretion. The Maintenance Committee shall determine a ------------- ---------------- --------- --------- ----------- Accuride Servicios AISA IASA GIR Company 2 schedule (the "MAINTENANCE SCHEDULE") establishing certain maintenance costs at the IASA Facility that are not considered to be incurred in the ordinary course of business (the "EXTRAORDINARY MAINTENANCE COSTS"). The Maintenance Committee shall deliver a notice to the Escrow Agent (as defined in the Escrow Agreement), providing instructions to deliver from the Maintenance Funds an amount equal to such Extraordinary Maintenance Costs to the appropriate party as set forth in the Maintenance Schedule. The term of the Maintenance Fund shall be for a period of thirty days after the Closing Date (the "MAINTENANCE FUNDS EXPIRATION DATE"). If the total sum of all Extraordinary Maintenance Costs set forth in the Maintenance Schedule is less than the Maintenance Funds, the Maintenance Committee shall deliver a notice to the Escrow Agent, instructing the Escrow Agent to deliver to IASA any amount remaining in the Maintenance Funds as of the Maintenance Funds Expiration Date. (b) The Raw Materials Funds shall be subject to the following: (i) Pursuant to the terms of the Wheel Requirements Agreement, the Company has been selling raw materials (the "Raw Materials") to IASA for IASA to manufacture Wheels for sale to the Company. IASA and the Company have agreed to amend the terms of the Wheel Requirements Agreement whereby the Company will continue providing Raw Materials to IASA, but retaining title thereto, for IASA to provide the corresponding Wheel manufacturing services to the Company, pursuant to the Wheel Requirements Agreement, as amended by Amendment No. 1 to the Wheel Requirements Agreement executed on the date hereof, a copy of which is attached hereto as Exhibit B. Therefore, IASA hereby agrees to sell, and as of the Closing Date shall sell, and transfer and assign to the Company title to the existing inventory of Raw Materials, pursuant to an invoice in substantially the form attached hereto as Exhibit C. (ii) The parties agree that as of the Closing Date, there should be a fixed amount of Raw Materials as determined on the books and records of the Company (the "ESTIMATED RAW MATERIALS") at the IASA Facility. As soon as practicable after the Closing (but no later than 10 days thereafter), the Company and IASA shall perform an audit (the "Audit Date") of the actual Raw Materials (the "ACTUAL RAW MATERIALS") at the IASA Facility (and reconcile such amount taking into consideration the Raw Material provided from the Closing Date to the Audit Date). If the Actual Raw Materials is less than the Estimated Raw Materials and such difference is not reasonably resolved (i.e., allowance for steel and steel section scraps) subject to the Purchasers' satisfaction, such difference shall be distributed to the Company from the Raw Materials Funds, and any remaining amounts in the Raw Materials Funds shall be distributed to IASA; within five days of the final determination of the Actual Raw Materials, the Seller Representative and the Purchaser Representative shall deliver to the Escrow Agent a notice providing instructions for such distributions. (c) The Tax Lien Funds shall be governed by Section 4(c) of the Escrow Agreement. ------------- ---------------- --------- --------- ----------- Accuride Servicios AISA IASA GIR Company 3 Section 1.04 CLOSING. The closing of the transactions contemplated in this Agreement (the "CLOSING") shall take place at the offices of the Company no later than three days after the conditions set forth in Article IV have been satisfied or otherwise waived by the applicable party or such other date or place as shall be mutually acceptable to the parties (the "CLOSING DATE"). ARTICLE II. REPRESENTATIONS AND WARRANTIES OF IASA AND GIR As an inducement to Purchasers to enter into this Agreement, IASA and GIR, jointly and severally, hereby represent and warrant to Purchasers, which representations and warranties are, as of the date hereof, true and correct: Section 2.01 DISCLOSURE SCHEDULE. IASA and GIR have heretofore delivered to Purchasers a schedule (the "DISCLOSURE SCHEDULE") containing certain information regarding GIR, IASA and the Company as indicated at various places in this Agreement. All information set forth in the Disclosure Schedule is true, correct and complete as of the date of this Agreement, and shall be true, correct and complete on and as of the Closing Date, and shall be deemed for all purposes of this Agreement to constitute an integral part of this Agreement and of the representations and warranties of GIR and IASA contained herein. Section 2.02 INCORPORATION AND QUALIFICATION OF THE SELLERS AND THEIR SUBSIDIARIES. (a) Each of GIR and IASA is a corporation duly incorporated and validly existing under the laws of the Untied Mexican States. (b) Each of GIR and IASA has all necessary corporate power and authority and has taken all corporate actions necessary or appropriate to enter into this Agreement and the Escrow Agreement, to carry out its obligations hereunder and thereunder, to consummate the transactions contemplated hereby and thereby and to perform its obligations hereunder and thereunder. Each of GIR and IASA has taken all actions necessary to secure all approvals required in connection herewith and therewith. The execution and delivery of each of the Agreement and the Escrow Agreement and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action of each of GIR and IASA. Each of IASA and GIR further represents and warrants, jointly and severally, that none of the following documents has been amended or revoked, but each remains in full force and effect: (i) the Power of Attorney granted to Gregorio Ramirez Jauregui by IASA and formalized by means of public deed 2151 dated September 18, 1998 before Ms. Maria Atala Martinez, Notary Public 127 in Monterrey, N.L.; and (ii) the Power of Attorney granted to Gregorio Ramirez Jauregui by GIR and formalized by means of public deed 2183 dated October 19, 1998 before Ms. Maria Atala Martinez, Notary Public 127 in Monterrey, N.L. Upon execution and delivery (assuming due execution and delivery by the other parties hereto), each of ------------- ---------------- --------- --------- ----------- Accuride Servicios AISA IASA GIR Company 4 the Agreement and the Escrow Agreement will be the valid and legally binding agreement of each of GIR and IASA, enforceable against GIR and IASA in accordance with its terms and conditions. Without limiting the generality of the foregoing, GIR further represents and warrants that it does not need to obtain approval of its stockholders to enter into this Agreement and the Escrow Agreement, to consummate the transactions contemplated hereby and thereby and to perform its obligations hereunder and thereunder. (c) GIR is the legal beneficial owner of at least 90% of the outstanding voting capital stock of Trailers de Monterrey, S.A. de C.V, a Mexican corporation ("TRAILERS"), free and clear of any and all Liens (as defined below). Trailers is a corporation duly organized and validly existing under the laws of the United Mexican States. (d) GIR is the legal beneficial owner of at least 90% of the outstanding voting capital stock of Distribuidora Automotriz Ramirez, S.A. de C.V, a Mexican corporation ("DIARSA"), free and clear of any and all Liens. DIARSA is a corporation duly organized and validly existing under the laws of the Untied Mexican States. Section 2.03 CONSENTS; NO CONFLICT. Except as set forth in Section 2.03 of the Disclosure Schedule, no consents, approvals, assignments, releases, termination statements, filings, notifications or other similar authorizations or filings ("CONSENTS") to the transactions contemplated by this Agreement or the Escrow Agreement are required from or with any person or entity, whether an individual, trustee, corporation, partnership, limited partnership, limited liability company, trust, unincorporated organization, business association, firm, joint venture or Governmental Authority (as defined below) (collectively, a "PERSON"). Without limiting the generality of the foregoing, the Consents of the IASA stockholders and the holders of the Obligaciones con Garantia Fiduciaria (IASASA) 1992 formalized by means of the acta de emision (Indenture) contained in public deed 14,956 dated September 2, 1992, granted before Mr. Gilberto Allen, Notary Public 33 in Monterrey, N.L., (as amended from time to time "Debentures"), to the transactions contemplated by this Agreement and the Escrow Agreement are not required to consummate the transactions contemplated by this Agreement and the Escrow Agreement. Assuming all Consents and other actions described in Section 2.03 of the Disclosure Schedule have been obtained and all filings and notifications listed in Section 2.03 of the Disclosure Schedule have been made, the execution, delivery and performance of this Agreement and the Escrow Agreement by the Sellers, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) violate or conflict with the respective ESCRITURA CONSTITUTIVA or Bylaws (or other similar applicable charter document) of the Sellers; (b) conflict with or violate any law, statute, ordinance, rule, regulation, order, writ, judgment, injunction, decree, ruling, stipulation, determination or award (collectively, a "GOVERNMENTAL ORDER") entered by or with any federal, state or local governmental authority, ------------- ---------------- --------- --------- ----------- Accuride Servicios AISA IASA GIR Company 5 regulatory or administrative agency, or governmental commission, court, tribunal or arbitral body (collectively, the "GOVERNMENTAL AUTHORITY") applicable to either of the Sellers; (c) conflict with, result in any breach of, or constitute a Default (as defined below) under any material Contracts (as defined below) relating to the business or assets of either of the Sellers or to or by which either of the Sellers is a party or is otherwise bound or affected, or result in the creation of any claim, security interest, lien, option, subscription, call, or encumbrance of any kind ("LIEN") on either of the Sellers, or any of their respective assets; (d) require either of the Sellers to notify or obtain any License (as defined below) or Consent from any Person; or (e) result in any other event that would, or is reasonably likely to, affect the ability of either Seller to consummate the transactions contemplated by this Agreement or the Escrow Agreement, except for such violations, conflicts, Defaults, Licenses, Consents or other events which, in the aggregate would not materially affect the ability of either Seller to consummate the transactions contemplated hereby or thereby. "DEFAULT" shall mean (a) any actual breach or default, (b) the occurrence of an event that with the passage of time or the giving of notice or both would constitute a breach or default or (c) the occurrence of an event that with or without the passage of time or the giving of notice or both would give rise to a right of termination, renegotiation or acceleration. "CONTRACTS" shall mean any agreement, contract, note, loan, evidence of indebtedness, purchase order, letter of credit, indenture, security or pledge agreement, franchise agreement, undertaking, practice, covenant not to compete, employment agreement, severance agreement, license, instrument, obligation or commitment to which a Person is a party or is bound and which relates to the Person's business or assets, whether oral or written. "LICENSE" shall mean all licenses, authorizations, permits and certificates. Section 2.04 TITLE IASA is the legal and beneficial owner of, and has the complete and unrestricted power and the unqualified right to transfer, and is transferring, the IASA Shares, free and clear of all Liens. With respect to the IASA Shares, "LIENS" shall include any agreement limiting or restricting Sellers' right to vote, transfer or otherwise dispose of the IASA Shares. Upon the delivery of and payment of the amount indicated in Paragraph (a) of Section 1.02 herein, the Purchasers will acquire good and valid title to the IASA Shares, free and clear of all Liens. Section 2.05 LITIGATION. There are no pending or, to the Sellers' knowledge, threatened or anticipated judicial or administrative claims, actions, suits, criminal prosecutions, governmental audits or investigations, administrative proceedings, arbitrations, mediations or ------------- ---------------- --------- --------- ----------- Accuride Servicios AISA IASA GIR Company 6 proceedings ("LITIGATION") which (i) would reasonably be expected, individually or in the aggregate, to have a material adverse effect on the ability of the Sellers to consummate the transactions contemplated by this Agreement or the Escrow Agreement or (ii) question the validity of this Agreement, the Escrow Agreement or any action taken or to be taken by the Sellers in connection herewith or therewith. Section 2.06 NO MATERIAL ADVERSE EFFECT. Since December 31, 1998, to the Sellers' knowledge, there has not been any Company Material Adverse Effect nor has there been any material failure by the Company to operate its business in the ordinary course. "COMPANY MATERIAL ADVERSE EFFECT" means any event, fact, effect or change which, individually or in the aggregate, has, or is reasonably likely to have, a material adverse effect on the condition (financial or other), business, prospects, results of operations, assets, liabilities or operations of the Company. ------------- ---------------- --------- --------- ----------- Accuride Servicios AISA IASA GIR Company 7 Section 2.07 NO UNDISCLOSED LIABILITIES. To Sellers' knowledge, the Company does not have any debts, liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) that would be required to be reflected on, or disclosed or reserved against in, a balance sheet of the Company or in the notes thereto, prepared in accordance with generally accepted United States accounting principles consistently applied, except for (a) debts, liabilities and obligations that were so reserved on, or disclosed or reflected in, the balance sheet of the Company as of December 31, 1998 and the notes thereto and (b) debts, liabilities or obligations arising in the ordinary course of business since December 31, 1998. Section 2.08 CERTAIN PAYMENTS. Each of the Sellers or each of the directors, officers or agents of such Seller has not, directly or indirectly, (a) made any contribution, gift, bribe, rebate, payoff, influence payment, kickback or other payment to any Person, private or public, regardless of form, whether in money, property or services (i) to obtain favorable treatment in securing business, (ii) to pay for favorable treatment for business secured, (iii) to obtain special concessions or for special concessions already obtained, for or in respect of the Company or any Affiliate (as defined below) of the Company or (iv) in violation of any Governmental Order or (b) established or maintained any fund or asset that has not been recorded in the books and records of the Company. "AFFILIATE" of a Person means any other Person that directly or indirectly controls, or is controlled by, or under common control with, the first Person. Section 2.09 AGREEMENTS. Section 2.09 of the Disclosure Schedule sets forth all agreements, contracts, leases, purchase orders, undertakings, understandings, covenants not to compete, confidentiality agreements, licenses, obligations or other commitments, whether oral or written, between each of the Sellers or any of its Affiliates, on one hand, and each of the Purchasers or any of its Affiliates, on the other hand. Section 2.10 JOINT VENTURE AGREEMENTS. Each of the Sellers is in compliance in all material respects under each of the agreements contemplated by and entered into pursuant to the JV Agreement (together with the JV Agreement, the "ADM AGREEMENTS"). Section 2.11 SELLERS' PROPRIETARY RIGHTS. Except as contributed or licensed to the Company pursuant to Section 4.1(a) of the JV Agreement, the Company does not use any of Sellers' Proprietary Rights (as defined below) in the conduct of the Company's business as presently conducted and as presently contemplated to be conducted. The Company has no obligation to compensate any Person, including without limitation, the Sellers, for the use of any of the Sellers' Proprietary Rights. "PROPRIETARY RIGHTS" mean all (a) U.S. and foreign patents, patent applications, patent disclosures and improvements thereto, including petty patents and utility models and applications therefor, (b) U.S. and foreign trademarks, service marks, trade dress, logos, trade names and corporate names and the goodwill associated therewith and registrations and applications for registration thereof, (c) U.S. and foreign copyrights and registrations and applications for registration thereof, (d) U.S. and foreign mask work rights and registrations and applications for registration thereof, (e) trade secrets and confidential business ------------- ---------------- --------- --------- ----------- Accuride Servicios AISA IASA GIR Company 8 information (including ideas, formulas, compositions, inventions (whether patentable or unpatentable and whether or not reduced to practice), know-how, manufacturing and production processes and techniques, research and development information, drawings, specifications, designs, plans, proposals, technical data, copyrightable works, financial, marketing and business data, pricing and cost information, business and marketing plans and customer and supplier lists and information), (f) other proprietary rights, (g) copies and tangible embodiments thereof (in whatever form or medium) and (h) licenses granting any rights with respect to any of the foregoing. Section 2.12 CLAIMS. Section 2.12 of the Disclosure Schedule sets forth all actions, suits or other claims of the Sellers against any of the Purchasers or any of their respective Affiliates. Section 2.13 [INTENTIONALLY LEFT BLANK]. Section 2.14 BROKERS' FEES. All negotiations relating to this Agreement and the Escrow Agreement have been carried out without the intervention of any Person acting on behalf of the Sellers in such manner as to give rise to any valid claim against the Purchasers for any brokerage or finder's commission, fee or similar compensation. Section 2.15 SUFFICIENCY OF THE TAX LIEN FUNDS. The amount allocated to the Tax Lien Funds is sufficient to pay for any amounts due under and cancellation of the embargo (attachment) in favor of the Secretariat of Finance and Public Credit for non-payment of taxes, which was recorded in the Public Registry of Property and Commerce in Monterrey on October 15, 1998, under entry 1206, volume 150, Book 13, Section II (the "Embargo"). Section 2.16 MATERIAL MISSTATEMENTS OR OMISSIONS. No representations or warranties by GIR or IASA in this Agreement, nor any document, exhibit, statement, certificate or schedule furnished to Purchasers pursuant hereto, including, without limitation, the Disclosure Schedule, contains or will contain any untrue statement of a material fact, or omits or will omit to state any material fact necessary to make the statements or facts contained therein not misleading. ARTICLE III. REPRESENTATIONS AND WARRANTIES OF PURCHASERS As an inducement to GIR and IASA to enter into this Agreement, Purchasers, jointly and severally, hereby represent and warrant to GIR and IASA, which representations and warranties are, as of the date hereof, true and correct: ------------- ---------------- --------- --------- ----------- Accuride Servicios AISA IASA GIR Company 9 Section 3.01 INCORPORATION AND AUTHORITY OF PURCHASERS (a) Accuride is a corporation duly formed and validly existing under the laws of the State of Delaware and has all necessary power and authority to enter into this Agreement and the Escrow Agreement, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. (b) Servicios AISA is a corporation duly formed and validly existing under the laws of the United Mexican States and has all necessary power and authority to enter into this Agreement and the Escrow Agreement, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby pursuant to public deed 50,510 dated April 15, 1998, granted before Mr. Carlos Montano Pedraza, Notary Public 130 in Monterrey, Mexico and recorded in the Public Registry of Property and Commerce in Monterrey, N.L. on April 20, 1998 under entry 2232, volume 207-45, Book 4, Commerce Section. (c) Each of the Purchasers has taken all actions necessary to secure all approvals required in connection herewith and therewith. The execution and delivery of each of the Agreement and the Escrow Agreement and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action of each of the Purchasers (including, without limitation, the resolutions of the Board of Directors of Accuride dated as of May 18, 1999), and upon execution and delivery (assuming due execution and delivery by the other parties hereto), each of the Agreement and the Escrow Agreement will be the valid and legally binding agreement of each of the Purchasers, enforceable against each of the Purchasers in accordance with its terms and conditions. Section 3.02 NO CONFLICT; CONSENTS Except as set forth in Section 3.02 of the Disclosure Schedule, no Consents to the transactions contemplated by this Agreement or the Escrow Agreement are required from or with any Person. Assuming all Consents and other actions described in Section 3.02 of the Disclosure Schedule have been obtained and all filings and notifications listed in Section 3.02 of the Disclosure Schedule have been made, the execution, delivery and performance of this Agreement and the Escrow Agreement by Purchasers and the consummation of the transactions contemplated hereby and thereby do not and will not: (a) violate or conflict with the respective charter documents of each of the Purchasers; (b) conflict with or violate any Governmental Order applicable to either of the Purchasers; ------------- ---------------- --------- --------- ----------- Accuride Servicios AISA IASA GIR Company 10 (c) conflict with, result in any breach of, or constitute a Default under, any material Contract relating to the business or assets of either of the Purchasers or to or by which either of the Purchasers is a party or is otherwise bound or affected, or result in the creation of any Lien on either of the Purchasers or any of their respective assets; (d) require either of the Purchasers to notify or obtain any License or Consent from any Person; or (e) result in any other event that would, or is reasonably likely to, affect the ability of either of the Purchasers to consummate the transactions contemplated by the Agreement or the Escrow Agreement, except for such violations, conflicts, Defaults, Licenses, Consents or other events which, in the aggregate, would not materially affect its ability to consummate the transactions contemplated hereby or thereby. ------------- ---------------- --------- --------- ----------- Accuride Servicios AISA IASA GIR Company 11 Section 3.03 AGREEMENTS. Section 3.03 of the Disclosure Schedule sets forth all agreements, contracts, leases, purchase orders, undertakings, understandings, covenants not to compete, confidentiality agreements, licenses, obligations or other commitments, whether oral or written, between each of the Sellers or any of its Affiliates, on one hand, and each of the Purchasers or any of its Affiliates, on the other hand. Section 3.04 CLAIMS. Section 3.04 CLAIMS. Section 3.04 of the Disclosure Schedule sets forth all actions, suits or other claims of the Purchasers against any of the Sellers or any of their respective Affiliates. Section 3.05 CERTAIN PAYMENTS. Each of the Purchasers or each of the directors, officers or agents of such Purchasers has not, directly or indirectly, (a) made any contribution, gift, bribe, rebate, payoff, influence payment, kickback or other payment to any Person, private or public, regardless of form, whether in money, property or services (i) to obtain favorable treatment in securing business, (ii) to pay for favorable treatment for business secured, (iii) to obtain special concessions or for special concessions already obtained, for or in respect of the Company or any Affiliate of the Company or (iv) in violation of any Governmental Order or (b) established or maintained any fund or asset that has not been recorded in the books and records of the Company. Section 3.06 JOINT VENTURE AGREEMENTS. Each of the Purchasers is in compliance in all material respects under each of the AdM Agreements. Section 3.07 BROKERS' FEES. All negotiations relating to this Agreement and the Escrow Agreement have been carried out without the intervention of any Person acting on behalf of the Purchasers in such manner as to give rise to any valid claim against the Sellers for any brokerage or finder's commission, fee or similar compensation. Section 3.08 MATERIAL MISSTATEMENTS OR OMISSIONS. No representations or warranties by the Purchasers in this Agreement, nor any document, exhibit, statement, certificate or schedule furnished to the Sellers pursuant hereto, including, without limitation, the Disclosure Schedule, contains or will contain any untrue statement of a material fact, or omits or will omit to state any material fact necessary to make the statements or facts contained therein not misleading. ARTICLE IV. CONDITIONS Section 4.01 CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASERS. The obligations of the Purchasers to consummate the transactions provided for hereby are subject, in the reasonable discretion of the Purchasers, to the satisfaction, on or prior to the Closing Date, of each of the following conditions, any of which may be waived by the Purchasers: ------------- ---------------- --------- --------- ----------- Accuride Servicios AISA IASA GIR Company 12 (a) the representations and warranties in Article II shall be true and correct in all material respects when made and at and as of the Closing Date as if such representations and warranties were made at such time (except that those representations and warranties which are made as of a specific date shall be true and correct only as of such date); (b) GIR and IASA shall have performed and satisfied in all material respects all agreements and covenants required hereby to be performed or satisfied by them prior to or at the Closing Date; (c) no Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Governmental Order which is in effect as of the Closing and which results in (i) a restraint, prohibition or other interference with the ownership or operation by the Purchasers or any of their Affiliates of all or any material portion of the business of the Company, (ii) the imposition or confirmation of any material limitations on the ability of the Purchasers effectively to exercise full rights of ownership of the IASA Shares, including, without limitation, the right to vote the IASA Shares on any matters properly presented to the stockholders, (iii) a requirement that the Purchasers or any of their Affiliates divest any securities of the Company or any material part of the Company's business, (iv) of making the transactions contemplated by this Agreement illegal or otherwise prohibiting consummation of the such transactions or (v) is reasonably likely to result in a Company Material Adverse Effect (each of (i) through (v), a "SUBSTANTIAL DETRIMENT"); (d) all material Licenses or Consents from any Person, and all filings, registrations and notifications necessary to permit GIR and IASA to consummate the transactions contemplated by this Agreement shall have been obtained or made. All such Licenses and Consents which have been obtained shall be on terms that are not reasonably likely, directly or indirectly, to result in a Substantial Detriment; (e) no Person who or which is not a party to this Agreement shall have commenced or threatened to commence any Litigation seeking to restrain or prohibit, or to obtain damages in connection with, the transactions contemplated by this Agreement; (f) from the date of this Agreement, there shall not have occurred any event, change or condition that, individually or in the aggregate, has had or could reasonably be expected to have a Company Material Adverse Effect; (g) the Company shall have received a written consent as well as any other necessary documents from Citibank Mexico, S.A. to the consummation of the transactions contemplated by this Agreement and the Escrow Agreement; and ------------- ---------------- --------- --------- ----------- Accuride Servicios AISA IASA GIR Company 13 (h) GIR and IASA shall have delivered the documents required to be delivered by them pursuant to Section 5.02 in form and content reasonably satisfactory to Purchasers. Section 4.02 CONDITIONS PRECEDENT TO OBLIGATIONS OF GIR AND IASA. The obligations of GIR and IASA to consummate the transactions provided for hereby are subject, in the reasonable discretion of GIR and IASA, to the satisfaction, on or prior to the Closing Date, of each of the following conditions, any of which may be waived by GIR or IASA: (a) the representations and warranties in Article III shall be true and correct in all material respects when made and at and as of the Closing Date as if such representations and warranties were made at such time (except that those representations and warranties which are made as of a specific date shall be true and correct only as of such date); (b) Purchasers shall have performed and satisfied in all material respects all agreements and covenants required hereby to be performed or satisfied by it prior to or at the Closing Date; (c) the Company shall have received a written consent as well as any other necessary documents from Citibank Mexico, S.A. to the consummation of the transactions contemplated by this Agreement and the Escrow Agreement; (d) IASA shall have received a release of its liability with respect to the Completion Guaranty Agreement and the Credit Agreement with Citibank de Mexico, S.A.; (e) no Governmental Order, action or proceeding shall have been instituted or threatened which makes the transactions contemplated by this Agreement illegal or otherwise prohibited; (f) no Person who or which is not a party to this Agreement shall have commenced or threatened to commence any Litigation seeking to restrain or prohibit, or to obtain damages in connection with the transactions contemplated by this Agreement; and (g) Purchasers shall have delivered the documents required to be delivered by it pursuant to Section 5.01 in form and content reasonably satisfactory to GIR and IASA. ------------- ---------------- --------- --------- ----------- Accuride Servicios AISA IASA GIR Company 14 ARTICLE V. DELIVERIES AT CLOSING Section 5.01 DELIVERIES BY PURCHASERS AT CLOSING. Purchasers shall deliver the following items at the Closing: (a) $2,750,000 in immediately available funds to the account or accounts specified in writing by the Sellers; (b) $4,550,000 in immediately available funds to the Escrow Account; (c) a certificate, dated the Closing Date and signed by the authorized officers of each of the Purchasers as to the fulfillment of the conditions set forth in Section 4.02 (a) and (b); (d) Escrow Agreement; (e) the Long-term Purchase Agreement (as defined below); and (f) such other documents and items as GIR and IASA may reasonably request. Section 5.02 DELIVERIES BY GIR AND IASA AT CLOSING. IASA and GIR (as indicated) shall deliver or cause to be delivered the following items to Purchasers at the Closing: (a) Escrow Agreement executed by IASA; (b) a certificate, dated the Closing Date and signed by the authorized officers of each of GIR and IASA as to the fulfillment of the conditions set forth in Section 4.01(a) and (b); (c) a legal opinion from Daniel Sierra, counsel of IASA and GIR, in substantially the form of Exhibit D hereto; (d) certificates representing the IASA Shares, endorsed for transfer to the Purchasers, free and clear of any and all Liens; (e) copies of the Powers of Attorney described in Section 2.02(b); (f) the Long-term Purchase Agreement executed by DIARSA and Trailers; and (g) such other documents and items as Purchasers may reasonably request. ------------- ---------------- --------- --------- ----------- Accuride Servicios AISA IASA GIR Company 15 Section 5.03 FURTHER DELIVERIES. At any time on or after the date of this Agreement, each party will execute and deliver any further assignments, conveyances and other assurances, documents and instruments of transfer reasonably requested by another party to consummate the transactions contemplated hereby. ARTICLE VI. ADDITIONAL AGREEMENTS Section 6.01 FURTHER ASSURANCES. Upon the terms and subject to the conditions contained herein, the parties agree, after the execution of this Agreement, (i) to use all reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement, (ii) to execute any documents, assignments, assurances, instruments or conveyances of any kind which may be reasonably necessary or advisable to carry out any of the transactions contemplated hereunder, and (iii) to cooperate with each other in connection with the foregoing. Without limiting the foregoing, the parties agree to use their respective reasonable efforts (i) to obtain all necessary Consents from any Person; PROVIDED, HOWEVER that Purchasers and the Sellers shall not be required to make any payments, commence litigation or agree to modifications of the terms thereof in order to obtain any such Consents, (ii) to give all notices to and make all registrations and filings with any Person and (iii) to fulfill all conditions to this Agreement. Section 6.02 NO SHOP. From the date hereof through the Closing or the earlier termination of this Agreement, each of the Sellers shall not, and shall cause its Affiliates and their respective employees, agents or advisors (including without limitation investment bankers, attorneys and accountants), not to, directly or indirectly, solicit, initiate or continue any discussions or negotiations with, or encourage or respond to any inquiries or proposals by, or participate in any negotiations with, or provide any information to, or otherwise cooperate in any other way with, any corporation, partnership, person or other entity or group, other than the Purchasers concerning any sale of all or a portion of the IASA Shares (a "PROPOSED ACQUISITION TRANSACTION"). From the date hereof through the Closing or the earlier termination of this Agreement, the Sellers shall not, directly or indirectly, through any officer, director, partner, member, shareholder, consultant, advisor, accountant, employee, agent or other representative ("REPRESENTATIVE") otherwise, solicit, initiate or encourage the submission of any proposal or offer from any person relating to any Proposed Acquisition Transaction or participate in any negotiations regarding, or furnish to any other person any information with respect to the Company or otherwise cooperate in any way with, or assist or participate in, facilitate or encourage, any effort or attempt by any other person to seek or effect a Proposed Acquisition Transaction. Section 6.03 NO SOLICITATION. ------------- ---------------- --------- --------- ----------- Accuride Servicios AISA IASA GIR Company 16 (a) Attached hereto as Exhibit E is a list of employees that are considered initial employees of the Company, Servicios AISA, or Rims y Ruedas AdM, S.A. de C.V. ("RIMS AdM") (the "INITIAL EMPLOYEES"), which list may include employees who are currently employees of the Sellers or Ruedas AISA, S.A. de C.V. or other Affiliates of the Sellers. For a period of five years following the Closing Date, each of the Sellers shall not, and shall cause its Affiliates not to, directly or indirectly, hire or retain, or offer to hire or retain any of the Initial Employees or any employees subsequently hired by the Company, Servicios AISA Rims AdM or their future Affiliates, regardless of whether such employee is paid a wage, commission, fee or otherwise, except for those employees who have been terminated by, or who have resigned from, the Company, Servicios AISA, Rims AdM or their future Affiliates prior to commencement of employment discussions with the Sellers or their Affiliates. Notwithstanding the foregoing, the Sellers may not, and the Sellers shall cause their Affiliates not to, hire those employees who have resigned from the Company, Servicios AISA, Rims AdM or their future Affiliates until the expiration of three months from such employee's effective date of resignation, which provision shall not apply if such provision violates Mexican laws. In case the Sellers or their Affiliates fail to comply with this provision, Sellers, jointly and severally, shall pay to Purchasers, per employee hired, an amount equal to two times the annual remuneration that such employee was receiving upon termination of his or her relationship with the Company, Servicios AISA, Rims AdM or their future Affiliates. (b) For a period of five years following the Closing Date, each of the Purchasers and the Company shall not, and shall cause its Affiliates not to, directly or indirectly, hire or retain, or offer to hire or retain any employee of GIR, IASA or their Affiliates, regardless of whether paid a wage, commission, fee or otherwise, except for the Initial Employees and employees who have been terminated by, or who have resigned from, GIR, IASA or their Affiliates prior to commencement of employment discussions with the Purchasers or their Affiliates. Notwithstanding the foregoing, the Purchasers may not, and the Purchasers shall cause their Affiliates not to, hire those employees who have resigned from GIR, IASA or their Affiliates until the expiration of three months from such employee's effective date of resignation, which provision shall not apply if such provision violates Mexican laws. In case the Purchasers or their Affiliates fail to comply with this provision, Purchasers shall pay to Sellers, per employee hired, an amount equal to two times the annual remuneration that such employee was receiving upon termination of his or her relationship with GIR, IASA or their Affiliates. Section 6.04 NOTIFICATION OF CERTAIN MATTERS. From the date hereof through the Closing, each of the parties hereto shall give prompt notice to the other party of (a) the occurrence, or failure to occur, of any event which occurrence or failure would be likely to cause any representation or warranty contained in this Agreement or in any exhibit or schedule hereto to be untrue or inaccurate in any material respect and (b) any failure of such party or its respective Affiliates or Representatives, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it under this Agreement or any exhibit or schedule hereto; PROVIDED, HOWEVER, that such disclosure shall not be deemed to cure any breach of a ------------- ---------------- --------- --------- ----------- Accuride Servicios AISA IASA GIR Company 17 representation, warranty, covenant or agreement or to satisfy any condition. GIR and IASA shall promptly notify Purchasers of any Default, the threat or commencement of any Litigation, or any development that occurs before the Closing that could in any way materially affect the Company or its business. Section 6.05 CONTINUATION OF RIGHTS AND OBLIGATIONS. Except as otherwise specifically set forth in this Agreement, the rights and obligations of the parties hereto under each of the AdM Agreements, including, without limitation, the indemnification provisions set forth in the JV Agreement, shall continue in full force and effect in accordance with the terms, conditions and limitations set forth therein. The parties hereto agree that the representations and warranties set forth in this Agreement shall not amend, limit or otherwise modify in any manner any of the respective parties' rights and obligations under any of the AdM Agreements. It being further understood by the parties that the foregoing shall not preclude a claim under this Agreement by any party hereto based upon the breach of any such representation or warranty. Section 6.06 [INTENTIONALLY LEFT BLANK] Section 6.07 CONTINUATION OF SERVICES. Except as modified in this Agreement, the Sellers hereby agree to continue to provide all services provided under the Technical Services Agreement (as defined below), the Wheel Requirements Agreement and the Bailment Agreement in accordance with such agreements until the proper termination of such agreements, in accordance therewith or as provided in this Agreement. Section 6.08 CONFIDENTIAL INFORMATION (a) PROTECTION OF CONFIDENTIAL AND PROPRIETARY INFORMATION. The parties acknowledge and agree that the prospects for the present and future success of the Company depend upon the protection by the Company and the Purchasers of the confidential and proprietary business information, trade secrets, technology and know-how ("CONFIDENTIAL INFORMATION") of the Company, irrespective of the manner in which the Company may obtain it (e.g., whether developed independently by the Company, obtained from Accuride, IASA or GIR or otherwise); and each of the parties acknowledges and agrees that irreparable harm to the Company will result if any Confidential Information of the Company is disclosed to any Person that is neither a party to this Agreement nor a duly authorized Representative of any Person that is a party hereto, or if any of the parties uses Confidential Information anywhere for any purpose or in any context other than in connection with and for the purpose of advancing the legitimate interests of the Company. (b) CERTAIN COVENANTS REGARDING THE TREATMENT OF CONFIDENTIAL INFORMATION GENERALLY. For the reasons stated in Section 6.08(a), the Sellers hereby covenant and agree that they and each and every one of their Representatives and Affiliates, including any future ------------- ---------------- --------- --------- ----------- Accuride Servicios AISA IASA GIR Company 18 Affiliates and any Affiliates that cease to be such, during the period commencing as of the Closing Date and continuing for ten years, shall: (i) not disclose any Confidential Information of the Company or of any other party to the JV Agreement or this Agreement to any Person who is not a party to the JV Agreement or this Agreement or a duly authorized Representative of any party hereto; and (ii) maintain and protect, and cause each and every Representative and other Person under its control to maintain and protect, the confidentiality, secrecy, integrity and quality of the Confidential Information at issue. The Sellers shall be liable for any failure of strict compliance with this Section 6.08 either by the Sellers or by any of their Representatives; notwithstanding the foregoing, however, the Sellers shall not be held liable for any unauthorized disclosure of or failure to protect Confidential Information under this Section 6.08 in cases where: (1) at the time of disclosure, such Confidential Information was available to the general public in a manner not involving any breach of the JV Agreement or this Agreement or of any other Agreement between the parties, thus rendering such information no longer confidential; or (2) the information was made available to the disclosing party by a Person not bound by any covenant of confidentiality with any of the parties hereto with respect thereto; or (3) disclosure was compelled by applicable law or the order of any court of competent jurisdiction. (c) CERTAIN ACTIVITIES DEEMED UNAUTHORIZED USE OF CONFIDENTIAL INFORMATION TO THE DETRIMENT OF THE COMPANY AND THE PURCHASERS. Each of the IASA and GIR covenants and agrees that, during the period beginning the Closing Date and ending ten years thereafter, if it or any of its respective Affiliates engages within the territory of the United Mexican States, directly or indirectly, in any activity or operation involving or relating in any manner whatsoever to compete with the Company's business as conducted as of the date of this Agreement will, compete with the business of the Company as currently being conducted or otherwise, whether by ownership interest (the "PROHIBITED OWNERSHIP INTEREST") or otherwise, then such activity or operation shall be deemed automatically to constitute: (1) an unauthorized use of Confidential Information of the Company, and therefore a breach of this Agreement; and (2) an injury to the Company in which the amount of damages cannot be assessed and which injury may be compensated only upon assessment and payment of the damages described in Section 6.08(d). For purposes of this Agreement, business of the Company shall include the tire and wheel assembling and sequencing for sales to original equipment manufacturers. Notwithstanding the foregoing, the parties hereto agree that (i) DIARSA may operate in accordance with the terms of Section 5.6 of the JV Agreement; provided, however, that DIARSA may sell Wheels to vehicle manufacturers or Wheel distributors in an amount not to exceed $250,000 per year (the "CAP"); provided, further, however, that the Cap shall be increased annually by 10%, (ii) Prohibited Ownership Interest shall not apply to or as a result of fundamental corporate transactions, ------------- ---------------- --------- --------- ----------- Accuride Servicios AISA IASA GIR Company 19 including mergers, spin-offs and sales of substantially all of the capital stock or assets of the Sellers or its Affiliates (provided, that any such successor or acquirer agrees in writing to be bound by the terms of this Section 6.08(c)), except that the Sellers and their Affiliates shall not acquire any businesses which have more than 25% of their revenues derived from businesses which compete with the Company in the business currently conducted by the Company, and with respect to businesses which derive less than 25% of their revenue from businesses which compete with the Company in the business currently conducted by the Company, the Sellers or their Affiliates will dispose of any competing businesses acquired within 12 months of such acquisition and (iii) tire and wheel assembling and sequencing in connection with sales of trailers, trucks, tractors, buses and chassis by GIR or its Affiliates shall not be prohibited under this Section 6.08(c). (d) Damages for Breach of Covenant to Refrain from Activities Constituting Unauthorized Use of Confidential Information to the Detriment of the Company and the Purchasers. Any breach of the covenants in Section 6.08(c) shall empower the Company to claim and obtain damages from the Sellers in the amount of ten million dollars (U.S. $10,000,000). Section 6.09 EQUIPMENT MAINTENANCE. Notwithstanding anything to the contrary in the Wheel Requirements Agreement and the Bailment Agreement, (i) the Company shall instruct IASA, and IASA shall comply with the Company's reasonable instructions as indicated, regarding all maintenance work to all Wheel manufacturing equipment to keep them in good working order in accordance with the terms of the Wheel Requirements Agreement and the Bailment Agreement until such time as the Company has completed its relocation of such equipment to New Facility (as defined below), and (ii) the maintenance costs relating to the materials shall not be included as Conversion Costs (as defined in the Wheel Requirements Agreement) for purposes of the Wheel Requirements Agreement. "NEW FACILITY" means the new manufacturing facility the Company is completing in Cienega de Flores, Mexico as provided in the Transfer Schedule to be determined in good faith by the parties hereto (the "TRANSFER SCHEDULE"), which the parties shall use their respective reasonable efforts to effect. IASA shall provide full access to any personnel, employees and contractors of the Company during normal working days and hours at IASA Facility, in order to verify proper maintenance of all Wheel manufacturing equipment. If the relocation to the New Facility is not completed by December 31, 1999 as contemplated in the Transfer Schedule, the parties shall revise the Transfer Schedule in good faith and use their respective reasonable efforts to effect such revised Transfer Schedule. Section 6.10 INFORMATION TECHNOLOGY SERVICES. IASA and the Company hereby agree to extend the duration of the Technical Services Agreement (contrato de prestacion de servicios tecnicos) (the "TECHNICAL SERVICES AGREEMENT") dated as of November 5, 1997 between IASA and the Company, to provide information technology services, including computer hardware support and software support, until the earlier of March 31, 2000 or the date that the Company provides written notice to IASA terminating the Technical Services ------------- ---------------- --------- --------- ----------- Accuride Servicios AISA IASA GIR Company 20 Agreement. After the Closing, the Company shall pay IASA for services rendered the applicable hourly rate set forth in the Technical Services Agreement. The Technical Services Agreement shall continue in full force and effect in accordance with the terms and conditions agreed to therein, except as modified herein. Section 6.11 LONG-TERM PURCHASE AGREEMENTS. GIR and IASA will cause each of Trailers and DIARSA to enter into a Long-term Purchase Agreement (the "LONG-TERM PURCHASE AGREEMENT") in substantially the form attached hereto as Exhibit E. Section 6.12 LEASE AGREEMENTS. (a) IASA, the Company and Servicios AISA hereby extend the term of the lease agreements (contratos de arrendamiento) executed on November 5, 1997 (the "LEASES"), for the use of 837 square meters of office space located at Avenida Universidad 1011 Norte, San Nicolas de los Garza, Nuevo Leon (the "MONTERREY OFFICE") through December 31, 1999, unless sooner terminated by written notice from the Company or Servicios AISA to IASA; PROVIDED, HOWEVER, that the Company or Servicios AISA may at its option extend the term of the Leases for an additional period not to exceed 45 days; PROVIDED, FURTHER, HOWEVER, that the Company or Servicios AISA may reduce the area under the Leases based on the actual needs of the Company or Servicios AISA by providing written notice of such reduction to IASA; PROVIDED, FURTHER; HOWEVER, that upon such reduction, there shall be a corresponding reduction in the rent payable under the Leases. The Leases shall continue in full force and effect subject to the terms and conditions agreed to therein, except as modified herein. (b) The rights and obligations of the parties hereto under the lease agreement (contrato de arrendamiento) executed on November 5, 1997 for the use of 120 square meters of office space located at Homero 1425, Suite 402, Colonia Polanco in Mexico City, Federal District shall continue in full force and effect until termination of such lease, which shall occur 30 days after the Closing Date; PROVIDED, that the Company shall have the option to extend this period for an additional 30 days by providing written notice to IASA. Section 6.13 LABOR MATTERS. The parties hereto agree to the matters set forth in the Addendum Regarding Labor Matters attached hereto as Addendum 1. Section 6.14 TAXES. The Sellers shall be responsible for all income taxes relating to the sale, transfer and assignment of the IASA Shares. Section 6.15 EMPLOYEE PARKING. Sellers agree that the employees of the Company shall have the right to continue to use IASA's parking lot as currently being used by them for a period of 90 days following the Closing; PROVIDED, that the Company shall have the option to extend this period for an additional 30 days, and further provided that any Company ------------- ---------------- --------- --------- ----------- Accuride Servicios AISA IASA GIR Company 21 employees who continue to work at the Monterrey Office shall have the right to continue to use IASA's parking lot as currently being used by them until the proper termination of the Leases. Section 6.16 TERMINATION OF WHEEL REQUIREMENTS AGREEMENT. The parties agree that the Wheel Requirements Agreement will terminate at such time, as the Company has completed its relocation to the New Facility as provided in the Transfer Schedule, which the parties shall use their respective reasonable efforts to effect. Section 6.17 ALLOCATION OF WRITTEN OFF EQUIPMENT AND REMOVAL OF EQUIPMENT. (a) The parties agree that the assets which have been previously retired and written off by the Company shall be allocated between the Company and IASA as provided in EXHIBIT F. (b) Prior to the time the Company has completed its relocation to the New Facility as provided in the Transfer Schedule, which the parties shall use their respective reasonable efforts to effect, the Company, at its sole expense, shall have removed or caused the removal of its remaining Wheel-related equipment and inventory currently located at the IASA Facility. Absent a written agreement to the contrary between the Company and IASA, IASA may remove any equipment or inventory remaining after such relocation, and the Company will reimburse IASA for reasonable expenses associated with the removal and storage of such equipment and inventory. Section 6.18 MANAGEMENT OF THE IASA FACILITY; MONTHLY MEETINGS. Notwithstanding the provisions of the Wheel Requirements Agreement, after the Closing and until the Company has completed its relocation to the New Facility as provided in the Transfer Schedule, the Company shall have the temporary right to supervise the management of the Wheel-production operations of the IASA Facility. After the Closing, the parties hereto shall attend monthly meetings to discuss matters related to the Wheel-production operation of the IASA Facility and the completion of the relocation to the New Facility. Except as otherwise set forth in Addendum 1, all labor obligations and liabilities regarding all personnel of the Wheel-production operations at the IASA Facility shall remain IASA's sole responsibility, regardless of the provisions in this Section 6.18. Section 6.19 CANCELLATION OF THE EMBARGO. If for any reason the Tax Lien Funds are insufficient for cancellation of the Embargo, the Sellers, jointly and severally, agree to reimburse the Purchasers for any amount in excess of the Tax Lien Funds necessary to cancel the Embargo, as well as any costs and expenses, including, without limitation, attorneys' fees, incurred by the Purchasers in connection with such cancellation. Anything in this Agreement to the contrary notwithstanding, the Purchasers shall be entitled to withhold and set off against any amount due to the Sellers under any agreement between either of the Sellers, on the one hand, ------------- ---------------- --------- --------- ----------- Accuride Servicios AISA IASA GIR Company 22 and either of the Purchasers, on the other hand, any amount as to which the Sellers are obligated to pay pursuant to this Section 6.19. ARTICLE VII. INDEMNIFICATION Section 7.01 INDEMNIFICATION. (a) Sellers, jointly and severally, shall indemnify, defend and save and hold harmless the Purchasers, the Company and their respective officers, directors, employees and other agents (collectively, the "PURCHASERS INDEMNIFIED PARTIES"), jointly and severally, from and against any and all losses, liabilities, adverse claims, causes of action, damages, demands, contingencies, settlement, fines, assessments, penalties, charges, costs, obligations and expenses of every kind and description whatsoever (including, without limitation, attorneys' fees and litigation, arbitration and other dispute resolution costs), whether known or unknown, foreseen or unforeseen, or foreseeable or unforeseeable (a "LOSS"), arising directly or indirectly from, attributable to, as a result of or otherwise in connection with (a) any breach by the Sellers of any of their covenants or obligations contained in this Agreement or in any of the other documents delivered hereunder to be performed by the Sellers, (b) any breach by the Sellers of, or any inaccuracy in, any representation or warranty made by the Sellers in this Agreement or any other documents delivered hereunder by the Sellers, or (c) the Sellers' past, current or future operations at the IASA Plant (as defined in the JV Agreement) in connection with the Wheel business, including, without limitation, all Losses relating to or arising in any manner out of any matter involving contamination or pollution of any land, site, surface water, ground water, air or soil, or of equipment or machinery, or of buildings and other structures of any kind, located at the IASA Plant or in the vicinity thereof. The indemnity obligations under this Section 7.01(a) shall be construed and applied in the broadest manner permitted under applicable law and shall survive any termination of this Agreement for so long as it remains possible that any Purchasers Indemnified Party indemnified under this Section 7.01(a) may incur any Loss or Losses of the kind described or referred to herein. (b) Purchasers, jointly and severally, shall indemnify, defend and save and hold harmless the Sellers and their respective officers, directors, employees and other agents (collectively, the "SELLERS INDEMNIFIED PARTIES"), jointly and severally, from and against any and all Losses arising directly or indirectly from, attributable to, as a result of or otherwise in connection with (a) any breach by the Purchasers of any of its covenants or obligations contained in this Agreement or in any of the other documents delivered hereunder to be performed by the Purchasers or (b) any breach by the Purchasers of, or any inaccuracy in, any representation or warranty made by the Purchasers in this Agreement or any other documents delivered hereunder by the Purchasers. The indemnity obligations under this Section 7.01(b) shall be construed and applied in the broadest manner permitted under applicable law and shall survive any termination of this Agreement for so long as it remains possible that any Sellers Indemnified Party ------------- ---------------- --------- --------- ----------- Accuride Servicios AISA IASA GIR Company 23 indemnified under this Section 7.01(b) may incur any Loss or Losses of the kind described or referred to herein. Section 7.02 INDEMNIFICATION PROCEDURES. For purposes of this Section 7.02, the party seeking indemnification shall be known as the "INDEMNIFIED PARTY" and the party from whom indemnification is sought shall be known as the "INDEMNIFYING PARTY." As soon as reasonably practicable after receipt by an Indemnified Party of notice of any Loss in respect of which an Indemnifying Party may be liable under this Article VII, the Indemnified Party shall give notice thereof to the Indemnifying Party, setting forth in reasonable detail the facts and circumstances pertaining thereto, but the failure to give such notice shall not relieve the Indemnifying Party of its obligations under this Article VII unless and to the extent that the Indemnifying Party is prejudiced by such failure. In the event that the Loss arises out of or results from a claim by any third party, the Indemnified Party shall permit the Indemnifying Party, at its option and expense, to assume the defense of, and subject to the consent of the Indemnified Party, which shall not be unreasonably withheld, in each case settle or otherwise dispose of such claim by counsel reasonably satisfactory to the Indemnified Party, provided that the Indemnified Party may participate in such defense by counsel of its own choice, but the fees, expenses and other charges of such counsel will be solely for the account of the Indemnified Party, unless: (a) the employment of counsel by the Indemnified Party has been authorized in writing by the Indemnifying Party, (b) there is a conflict or potential conflict (based on advice of counsel to the Indemnified Party reasonably acceptable to the Indemnifying Party) between the Indemnified Party and the Indemnifying Party, or (c) the Indemnifying Party has not in fact employed counsel to assume the defense of such action within a reasonable time after receiving notice of the commencement of the action, and provided, further, that the Indemnified Party shall be entitled to control such defense jointly with the Indemnifying Party in the case of any litigation referred to in clause (b) of the immediately preceding proviso to this sentence. Notwithstanding anything to the contrary in this Section 7.02, without the prior written consent of each Indemnified Party (or of each Indemnifying Party if the Indemnified Party is defending such third party claim), which consent shall not be unreasonably withheld, the Indemnifying Party (or Indemnified Party, as the case may be) shall not consent to the entry of any judgment or enter into any settlement that does not include an unconditional release of each Indemnified Party (or Indemnifying Party) from all liabilities in respect of such Losses. The Indemnifying Party shall pay for any Loss promptly in cash once its responsibility has been established. Section 7.03 SPECIFIC PERFORMANCE. Each of the parties acknowledges and agrees that the other parties would be irreparably damaged in the event the provisions of this Agreement are not performed in accordance with its specific terms or otherwise are breached. Therefore, notwithstanding anything to the contrary in this Agreement, each of the parties agrees that the other parties shall be entitled to enforce specifically the performance by such first party under this Agreement. The ------------- ---------------- --------- --------- ----------- Accuride Servicios AISA IASA GIR Company 24 remedies described in this Section 7.03 shall be in addition to, and not in lieu of, any other remedies that the parties hereto may elect to pursue. ARTICLE VIII. GENERAL PROVISIONS Section 8.01 TERMINATION (a) This Agreement and the transactions contemplated hereby may be terminated or abandoned at any time prior to the Closing Date: (i) by the mutual written agreement of the parties hereto; (ii) by the written notice from the Purchasers to the Sellers if the conditions set forth in Section 4.01 have not been satisfied on or prior to July 31, 1999; (iii) by the written notice from the Sellers to the Purchasers if the conditions set forth in Section 4.02 have not been satisfied on or prior to July 31, 1999; or (iv) by any party if a final nonappealable judgment has been entered against such party or any of its Affiliates restraining, prohibiting, or declaring illegal the consummation of this Agreement or the transactions contemplated hereby or which imposes or awards damages which would have a material adverse effect on the economic benefits contemplated hereby. Notwithstanding the above, a party shall not be allowed to exercise any right of termination pursuant to this Section 8.01(a) if the event giving rise to the termination right shall be due to the failure of such party to perform or observe in any material respect any of the covenants or agreements to be performed or observed by such party. (b) In the event this Agreement is terminated in accordance with Section 8.01(a), no party shall have any further liability hereunder, except for willful breach of this Agreement. Section 8.02 EXPENSES. Except as otherwise specified in this Agreement, each party hereto shall pay its own legal, accounting, out-of-pocket and other expenses incident to this Agreement and to any action taken by such party in preparation for carrying this Agreement into effect. Section 8.03 NOTICES. All notices and other communications given or made pursuant hereto shall be in writing, with all postage and other delivery charges prepaid, and shall be deemed to have been duly given or made (i) as of the date delivered, if delivered personally, (ii) as of the day after being deposited with a recognized overnight courier, or (iii) when ------------- ---------------- --------- --------- ----------- Accuride Servicios AISA IASA GIR Company 25 transmitted if transmitted by facsimile with electronic confirmation; provided that all such notices and other communications must be addressed to the parties at the following addresses (or at such other address for a party as shall be specified by like notice). (a) if to IASA or GIR: Industria Automotriz, S.A. de C.V. Avenida Universidad 1011 Norte, Planta Baja San Nicolas de los Garza, Nuevo Leon C.P. 66450 Mexico Attention: Chairman Fax: 52-8-376-9098 With a copy to: Grupo Industrial Ramirez, S.A. Avenida Universidad 1004 Norte San Nicolas de los Garza, Nuevo Leon C.P. 66450 Mexico Attention: Chairman Fax: 52-8-376-5949 (b) if to Purchasers or the Company: Accuride Corporation 2315 Adams Lane P.O. Box 40 Henderson, Kentucky 42420 Attention: David K. Armstrong Fax: (502) 827-7601 With a copy to: Latham & Watkins 135 Commonwealth Drive Menlo Park, California 94025 Attention: Peter F. Kerman, Esq. Fax: 650-463-2600 and Santamarina y Steta, S.C. ------------- ---------------- --------- --------- ----------- Accuride Servicios AISA IASA GIR Company 26 Torre Comercial America Batallon de San Patricio 111-1102 Garza Garcia, N.L. 66269 Attention: Jorge Barrero Stahl Fax: 528.368.0111 ------------- ---------------- --------- --------- ----------- Accuride Servicios AISA IASA GIR Company 27 Section 8.04 PUBLIC ANNOUNCEMENTS. No party to this Agreement shall make any public announcements in respect of this Agreement or otherwise communicate with any news media without prior notification to the other party, and the parties shall cooperate as to the timing and contents of any such announcement, subject to the requirements of Mexican laws with respect to a public company's disclosure requirements. Section 8.05 HEADINGS. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Section 8.06 SEVERABILITY. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the greatest extent possible. Section 8.07 ENTIRE AGREEMENT. This Agreement (including the Exhibits hereto), the Disclosure Schedule and the Escrow Agreement constitute the entire agreement among the parties and supersede all prior agreements and undertakings with respect to the subject matter hereof. Section 8.08 ASSIGNMENT. Neither this Agreement nor any of the rights or obligations hereunder may be assigned by a party without the prior written consent of the other parties hereto, except that the parties may assign their rights hereunder (either before or after the Closing Date), to an Affiliate of such party with the prior written consent of the other party, which consent shall not be unreasonably withheld. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Section 8.09 DISPUTE RESOLUTION. (a) PRE-ARBITRATION EFFORTS TO RESOLVE DISPUTES. Each of the parties hereto agrees to attempt in good faith to resolve any dispute, controversy or claim that may arise in any manner whatsoever with respect to this Agreement, the Escrow Agreement and the transactions contemplated hereby and thereby (collectively, the "DISPUTE") and each party hereby designates its chief executive officer as the individual who has primary authority and responsibility therefor. Each such designated officer of a party involved in any Dispute shall attempt in good faith to resolve such Dispute within 30 days after becoming aware of the Dispute. ------------- ---------------- --------- --------- ----------- Accuride Servicios AISA IASA GIR Company 28 (b) REQUIREMENTS OF BINDING ARBITRATION; SCOPE. Each and every Dispute shall be solely and finally settled by binding, non-appealable arbitration at Dallas, Texas, U.S.A. not later than six months following the initial notice of arbitration (which notice shall be given in writing to the party against whom the claim is being made, and to the arbitration administrator, by the party initiating the arbitration) in accordance with the International Arbitration Rules of the American Arbitration Association ("AAA"), as modified by the provisions of this Section 8.09. (c) SELECTION OF ARBITRATORS. Each and every arbitration hereunder shall be conducted by a panel of three arbitrators. The Purchasers shall select one arbitrator, and the Sellers shall select one arbitrator, not later than 10 days after the initial notice of arbitration. The AAA shall have power to select either or both such arbitrators if they have not been selected by the parties as required within the time specified. Not later than 20 days after the selection and appointment of the two arbitrators, the two appointees shall choose a third arbitrator to serve as the chairperson of the arbitration panel. If the two party-appointees cannot agree regarding the selection of the third arbitrator within such 20 day period, then the AAA shall have the power to select the third arbitrator. Each arbitrator appointed to hear any Dispute shall have no relationship or connection with any party to this Agreement or with any of their respective Affiliates or with legal counsel to any such party or Affiliate. In the event of the death or disability of an arbitrator, a new arbitrator shall be selected in the same manner as, and by the same party that selected, the previous arbitrator. (d) GOVERNING LAW AND ARBITRATION RULES. The provisions of this Section 8.09, the International Arbitration Rules of the AAA, and the contract and other substantive laws of the United Mexican States, as modified by the terms of this Section 8.09, shall govern the arbitration of any and all Disputes, and in the event of any conflict between the laws of Mexico and the Federal Arbitration Act, 9 U.S.C. ss.ss.1 et. seq. (1990) (tHE "ARBITRATION Act"), in connection with any arbitration of any Dispute hereunder, it is the express intent of the parties that the substantive laws of Mexico, as modified by this Section 8.09, shall govern to the maximum extent permitted by law. (e) BINDING ARBITRATION. The award rendered in connection with any arbitration conducted in accordance with this Section 8.09 shall be final and binding upon the parties, and any judgment upon such award may be entered and enforced by any court of competent jurisdiction in any country without any further proceedings on the merits of the case. The parties agree that the award of the arbitral tribunal shall be the sole and exclusive remedy between them with respect to the Dispute. The parties hereby waive all jurisdictional defenses in connection with any arbitration instituted under this Section 8.09 and the enforcement of any award or judgment rendered pursuant thereto. (f) EXPLANATION OF AWARD. Promptly following the rendering of an order or award in the arbitration of any Dispute, the arbitrators shall issue to the interested parties ------------- ---------------- --------- --------- ----------- Accuride Servicios AISA IASA GIR Company 29 hereunder a written explanation in the English language, with a certified translation thereof in the Spanish language, of the reasons for such order or award and a full statement of the facts found and the rules of law applied in reaching the decision. (g) ENFORCEMENT OF AWARD. With respect to any award issued by the arbitrators pursuant to this Agreement, the parties expressly agree: (1) to the prosecution of an action by one or more parties against any other party or parties in any court of the United States of America, or in any court of the State of Nuevo Leon or of the United Mexican States located in Monterrey, Nuevo Leon, to confirm and enforce such arbitration award; (2) that any such arbitration award shall constitute conclusive proof of the validity of the determinations of the arbitrators underlying such award; and (3) that any court of the United States of America, or any court of the State of Nuevo Leon or of the United Mexican States, may enter judgment upon and enforce such award, whether pursuant to the Inter-American Convention on International Commercial Arbitration (9 U.S.C. Sections 301-307), the Arbitration Act, the other laws of the United States of America or of the United Mexican States or of the State of Nuevo Leon, respectively, or otherwise, without any further proceedings on the merits of the case. (h) LANGUAGE OF ARBITRATION. All proceedings in any arbitration conducted hereunder shall be conducted in the English language, and all documents, exhibits and other evidence submitted in Spanish by any party shall be accompanied by a certified English translation thereof; PROVIDED, HOWEVER, that upon request by any party to the arbitration all such proceedings, hearings and evidence shall be translated simultaneously into the Spanish language for the convenience of such party. (i) DISCOVERY; PRESENTATION OF CASE. Not later than 60 days following the delivery of the notice of arbitration, each side shall produce and deliver to the arbitrators and to the other parties copies of all documents and witness testimony upon which it plans to rely, as well as a list identifying such documents and witnesses, which list shall contain all information necessary for a full understanding of the legitimate issues raised in the arbitration, including, without limitation, the following: (1) a written statement of the factual basis of the claim or defense and the legal theories upon which each claim or defense is based; (2) the names and addresses of all individuals, including witnesses whom the disclosing party expects to call to present testimony or other evidence during the arbitration proceeding and other individuals whom the party believes may have knowledge or information relevant to the arbitration, description of the nature of the knowledge or information that each such individual is believed to possess, and a summary of each such witness' expected testimony; (3) the names and addresses of all individuals who have given statements, along with copies of those statements; (4) a written computation of the measure of damages alleged by the disclosing party and the documents or summary of the testimony upon which such computation or measure is based; and (5) the existence, location, custodian and general description of any relevant documents or other tangible evidence that the disclosing party plans to use at the arbitration hearing. Each side shall be permitted five hours of witness depositions, to be allocated as that side sees fit. No ------------- ---------------- --------- --------- ----------- Accuride Servicios AISA IASA GIR Company 30 interrogatories or requests for admission shall be permitted. The arbitration hearing shall take place no later than 90 days following the initial notice of arbitration. Each side shall have no more than 10 hours to make its arguments and present its evidence to the arbitration panel. The parties also may submit pre- and post-hearing memoranda, each not to exceed 20 double-spaced pages. (j) CONFIDENTIALITY. All papers, documents and other evidence, whether written or oral, filed with or presented to the arbitrators, shall be deemed by the parties and the arbitrators to be confidential information. No party, witness or arbitrator shall disclose in whole or in part to any other Person any confidential information submitted in connection with arbitration proceedings hereunder, except to the extent: (1) required by applicable law or regulation; (2) reasonably necessary to assist counsel in or preparation for arbitration of the dispute; or (3) that such "confidential" information was previously known or subsequently became known to the disclosing party without restrictions on disclosure, that it was developed independently by such disclosing party, or that it became publicly known through no fault of the disclosing party. (k) ARBITRATION EXPENSES. The non-prevailing party in the arbitration shall bear the fees and expenses of the arbitrators, the reasonable costs of the arbitration, the expense of any award rendered therein and of its enforcement, and the reasonable attorneys' fees and expenses of the prevailing party; and the non-prevailing party shall reimburse the prevailing party for all such fees, costs and expenses incurred by the prevailing party prior to the date of the award. All expenses, fees, costs and charges, and any award, shall be expressed in U.S. dollars. (l) INTEGRATED ARBITRATION CLAUSE. To the extent, if any, that this Section 8.09 may be deemed a separate contract, independent from this Agreement, Sections 8.03 and 8.10 (concerning notices and governing law, respectively) shall be deemed incorporated into this Section 8.09 by this reference. ------------- ---------------- --------- --------- ----------- Accuride Servicios AISA IASA GIR Company 31 Section 8.10 GOVERNING LAW. This Agreement shall be construed in accordance with, and governed by the substantive laws of, the United Mexican States and the state of Nuevo Leon, without reference to principles governing choice or conflicts of laws. All Exhibits hereto shall be governed by and construed in accordance with the laws of jurisdiction specified therein. Section 8.11 NO THIRD-PARTY BENEFICIARIES. This Agreement is for the sole benefit of the parties hereto and nothing herein expressed or implied shall give, or be construed to give, to any Person, other than the parties hereto and such assigns, any legal or equitable rights hereunder. Section 8.12 AMENDMENT. This Agreement may not be amended or modified except by an instrument in writing signed by the Company, the Purchasers and IASA and GIR. Section 8.13 COUNTERPARTS. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Section 8.14 SURVIVAL. The representations and warranties in this Agreement and in any of the document executed and delivered in connection with the transactions contemplated herein shall survive the Closing and remain in full force and effect for the longer of the following periods: (a) as long as it is possible that any party to this Agreement could suffer any Loss or Losses of the kind referred to in Section 7.01(a) or (b) five years after the Closing Date. ------------- ---------------- --------- --------- ----------- Accuride Servicios AISA IASA GIR Company 32 IN WITNESS WHEREOF, the parties hereto have caused this Purchase Agreement to be executed as of the date first written above. ACCURIDE CORPORATION By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- ACCURIDE DE MEXICO, S.A. DE C.V. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- SERVICIOS AISA, S.A. DE C.V. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- INDUSTRIA AUTOMOTRIZ, S.A. DE C.V. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- GRUPO INDUSTRIAL RAMIREZ, S.A. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- EX-10.2 3 EXHIBIT 10.2 EXHIBIT 10.2 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- AMENDED AND RESTATED COMPLETION GUARANTY AGREEMENT BY AND AMONG ACCURIDE CORPORATION, ACCURIDE DE MEXICO, S.A. DE C.V. and CITIBANK MEXICO, S.A., GRUPO FINANCIERO CITIBANK, as Lender Dated as of July 16, 1999 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 TABLE OF CONTENTS
SECTION PAGE PARTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ARTICLE I COMPLETION SECTION 1.01 COMPLETION . . . . . . . . . . . . . . . . . . . . . . . . 2 SECTION 1.02 COMPLETION CERTIFICATES. . . . . . . . . . . . . . . . . . 2 SECTION 1.03 COMPLETION UNDERTAKING . . . . . . . . . . . . . . . . . . 2 SECTION 1.04 WAIVER OF COMPLETION CONDITIONS. . . . . . . . . . . . . . 2 SECTION 1.05 COMPLETION OF NON-CONFORMING PLANT . . . . . . . . . . . . 3 ARTICLE II FUNDS TO COMPLETE SECTION 2.01 FUNDS TO COMPLETE. . . . . . . . . . . . . . . . . . . . . 3 SECTION 2.02 NOTICE OF DEFAULT. . . . . . . . . . . . . . . . . . . . . 4 SECTION 2.03 OBLIGATIONS ABSOLUTE . . . . . . . . . . . . . . . . . . . 4 SECTION 2.04 WAIVERS AND ACKNOWLEDGMENTS. . . . . . . . . . . . . . . . 5 SECTION 2.05 SEPARATE UNDERTAKING . . . . . . . . . . . . . . . . . . . 6 SECTION 2.06 RELEASE UPON PREPAYMENT OF ADVANCES. . . . . . . . . . . . 6 SECTION 2.07. COMPLETION GUARANTY NOT APPLICABLE TO OBLIGATIONS UNDER THE CREDIT AGREEMENT OR THE NOTES . . . . . . . . . . . . . . . 6 ARTICLE III TERMINATION OF OBLIGATIONS SECTION 3.01 TERMINATION UPON COMPLETION. . . . . . . . . . . . . . . . 7 SECTION 3.02 TERMINATION PRIOR TO COMPLETION. . . . . . . . . . . . . . 7 SECTION 3.03 EFFECT OF TERMINATION. . . . . . . . . . . . . . . . . . . 7 ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.01 REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER. . . . . 7 ARTICLE V COVENANTS SECTION 5.01 COVENANTS OF THE SHAREHOLDER . . . . . . . . . . . . . . . 9 ARTICLE VI COMPLETION DEFAULTS SECTION 6.01 COMPLETION DEFAULTS. . . . . . . . . . . . . . . . . . . .11 3 SECTION 6.02 COMPLETION DEFAULT REMEDIES. . . . . . . . . . . . . . . .12 ARTICLE VII MISCELLANEOUS SECTION 7.01 AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . .12 SECTION 7.02 NOTICES, ETC.. . . . . . . . . . . . . . . . . . . . . . .12 SECTION 7.03 NO WAIVER; REMEDIES. . . . . . . . . . . . . . . . . . . .13 SECTION 7.04 BINDING EFFECT . . . . . . . . . . . . . . . . . . . . . .13 SECTION 7.05 EXECUTION IN COUNTERPARTS. . . . . . . . . . . . . . . . .13 SECTION 7.06 [Intentionally omitted] . . . . . . . . . . . . . . . . . .13 SECTION 7.07 JURISDICTION, ETC. . . . . . . . . . . . . . . . . . . . .13 SECTION 7.08 JUDGMENT . . . . . . . . . . . . . . . . . . . . . . . . .14 SECTION 7.09 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . .15 SECTION 7.10 THIRD PARTY BENEFICIARIES. . . . . . . . . . . . . . . . .15 SECTION 7.11 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . .15 SECTION 7.12 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . .15 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
4 AMENDED AND RESTATED COMPLETION GUARANTY AGREEMENT This Amended and Restated Completion Guaranty Agreement (this "AGREEMENT"), dated as of July 16, 1999, is made by and among ACCURIDE CORPORATION, a Delaware corporation ("ACCURIDE", or the "SHAREHOLDER"), ACCURIDE DE MEXICO, S.A. DE C.V., a corporation organized and existing under the laws of the United Mexican States (the "BORROWER"), and CITIBANK MEXICO, S.A., GRUPO FINANCIERO CITIBANK, as Lender (the "LENDER") party to the Credit Agreement (as defined below). PRELIMINARY STATEMENTS: (1) The Borrower and the Lender have entered into that certain Credit Agreement dated as of July 9, 1998 (such Credit Agreement, as it hereafter may be amended, supplemented or otherwise modified from time to time, being referred to herein as the "CREDIT AGREEMENT"; capitalized terms defined in the Credit Agreement and not otherwise defined herein will be used herein as defined in the Credit Agreement. (2) The Borrower, Accuride, a 51% owner of the Borrower, and Industria Automotriz, S.A. de C.V., a corporation organized and existing under the laws of the United Mexican States and a 49% owner of the Borrower ("IASA"), entered into the Completion Guaranty Agreement dated as of July 9, 1998 (the "ORIGINAL COMPLETION GUARANTY") in favor of the Lender. (3) Accuride has proposed to purchase IASA's ownership interests in the Borrower, and the Borrower, Accuride and IASA have requested that the Lender consent to release IASA from its obligations under the Original Completion Guaranty by executing a Consent dated as of the date hereof (the "Consent") among the Borrower, Accuride, IASA and the Lender. (4) It is a condition precedent to the effectiveness of the Consent by the Lender to the release of IASA from its obligations under the Original Completion Guaranty that Accuride, as the sole Shareholder, and the Borrower shall have executed and delivered this Agreement. NOW, THEREFORE, in consideration of the premises, the Shareholder, the Borrower and the Lender hereby agree as follows: 5 ARTICLE I COMPLETION SECTION 1.01 COMPLETION. Subject to Section 1.05 hereof, completion of the Plant (the "COMPLETION") shall occur on the first date (the "COMPLETION DATE") on which the Lender receives from the Borrower all of the certificates contemplated by Section 1.02 hereof. The Completion Certificates required by Section 1.02 may be delivered together or separately in any order and at any time and from time to time on or prior to the Completion Date, PROVIDED THAT the Legal Conditions Certificate referred to in clause (c) of Section 1.02 and the Insurance Certificate referred to in clause (d) of Section 1.02 shall be dated as of a date not earlier than the latest of the dates of the Physical Facilities Certificate referred to in clause (a) of Section 1.02 and the Operations Certificate referred to in clause (b) of Section 1.02. SECTION 1.02 COMPLETION CERTIFICATES. Completion shall occur on the first date on which the Lender receives from the Borrower all of the following certificates: (a) PHYSICAL FACILITIES CERTIFICATE. A certificate of the Borrower, executed by a Senior Officer and acknowledged by the Independent Engineer, substantially in the form set forth in Appendix A-1. (b) OPERATIONS CERTIFICATE. A certificate of the Borrower, executed by a Senior Officer and acknowledged by the Independent Engineer, substantially in the form set forth in Appendix A-2. (c) LEGAL CONDITIONS CERTIFICATE. A certificate of the Borrower, executed by a Senior Officer, substantially in the form set forth in Appendix A-3. (d) INSURANCE CERTIFICATE. A certificate of the Borrower, executed by a Senior Officer and acknowledged by the Insurance Consultant, substantially in the form set forth in Appendix A-4. SECTION 1.03 COMPLETION UNDERTAKING. The Shareholder undertakes to use its best efforts to cause the Completion Date to occur by March 31, 2000. SECTION 1.04 WAIVER OF COMPLETION CONDITIONS. Completion shall be deemed to have occurred, even if the conditions set forth in Section 1.01 have not been 6 satisfied, if the Lender delivers a notice to the Borrower and the Shareholder stating that Completion has occurred. SECTION 1.05 COMPLETION OF NON-CONFORMING PLANT. If the Lender shall receive from the Borrower all the certificates required in Section 1.02 hereof other than the certificate required by Section 1.02(b), Completion shall nonetheless be deemed to have occurred if the following conditions are met: (a) The Lender shall have received a certificate of the Borrower, executed by a Senior Officer and acknowledged by the Independent Engineer, substantially in the form set forth in Appendix A-2 except that the "90%" in paragraph (e) thereof shall be replaced by such other percentage as shall apply (such other percentage being the "ACTUAL CAPACITY"). (b) The Commitments under the Credit Agreement shall have been reduced ratably by an aggregate amount equal to the following formula: AMOUNT = Cx 90-P(100) x1.25 --------- 100 where AMOUNT is the aggregate amount by which the Commitments should be ratably reduced, C is the aggregate amount of the Commitments immediately prior to such reduction and P is the Actual Capacity expressed as a fraction (E.G., 80% would be "0.80"). (c) If, in giving effect to the reduction of the Commitments pursuant to subsection (b) above, the aggregate principal amount of the outstanding Term Advances exceeds the reduced Term Commitment or the aggregate principal amount of the outstanding Working Capital Advances exceed the Working Capital Commitment, then the Shareholder shall have made a prepayment of the Term Advances and/or the Working Capital Advances, as the case may be, in an amount of principal equal to such excess, together with accrued and unpaid interest thereon and all other amounts due and payable under the Credit Agreement with respect to such amount of principal. ARTICLE II 7 FUNDS TO COMPLETE SECTION 2.01 FUNDS TO COMPLETE. (a) Prior to Completion, the Shareholder shall provide (or cause to be provided) Shareholder funding, at such times and in such amounts as may be necessary (taking into account all Advances made and those to be made to the Borrower under the Credit Agreement in accordance with the terms thereof) in order to pay when required or due all costs and expenses incurred by or on behalf of the Borrower in connection with the construction, development, design, engineering, acquisition, financing, outfitting, testing, start-up and completion of the Plant, including the cost of Plant equipment and each of the following (such funding being the "FUNDS TO COMPLETE"): (i) all amounts payable by the Borrower to its contractors, suppliers and subcontractors pursuant to the Construction Documents; (ii) the costs and expenses of all engineering, legal, accounting and other professional advisers properly incurred by the Borrower in connection with and attributable to the Plant; (iii) costs of Required Insurance; (iv) administration and maintenance costs incurred during the construction period; and (vi) value-added tax, other taxes and customs charges payable in respect of any of the above. (b) The Funds To Complete shall be paid by the Shareholder in the form of either (i) the subscription to additional shares of common stock of the Borrower or other additional contributions to the owners' equity of the Borrower or (ii) the lending of such funds to the Borrower, PROVIDED that (A) on the date of such lending no event shall have occurred and shall be continuing, or would result from such lending, that constitutes a Default and (B) the obligation of the Borrower to repay such funds (and interest thereon) is duly subordinated in right of payment, in writing and upon terms (including, without limitation, terms regarding maturity) satisfactory to the Lender, to the obligations of the Borrower under the Credit Agreement and the Notes. (c) The Shareholder agrees punctually to pay all Funds To Complete. SECTION 2.02 NOTICE OF DEFAULT. The Borrower or the Shareholder, as the case may be, shall notify the Lender, promptly, but in any event within three Business Days, of the failure of the Shareholder to make a timely payment in respect of Funds To Complete which the Shareholder is obligated to pay, and of the subsequent payment thereof. SECTION 2.03 OBLIGATIONS ABSOLUTE. The Shareholder will perform its obligations under this Agreement regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of the terms of the Loan Documents or 8 Construction Documents or any other document related thereto or the rights of the Lender with respect thereto. The obligations of the Shareholder under this Agreement are independent of the Loan Documents and Construction Documents, and a separate action or actions may be brought and prosecuted against the Shareholder to enforce this Agreement, irrespective of whether any action is brought against the Borrower or whether the Borrower is joined in any such action or actions. The obligations of the Shareholder under this Agreement shall be absolute and unconditional irrespective of: (ERROR! UNKNOWN SWITCH ARGUMENT.) any lack of validity or enforceability of any Loan Document, any Construction Document or any other agreement or instrument relating thereto or any collateral therefor; (ERROR! UNKNOWN SWITCH ARGUMENT.) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations of any Loan Party under the Loan Documents or Construction Documents, or any other amendment or waiver of or any consent to departure from the Loan Documents or Construction Documents, including, without limitation, any increase in the Notes or the obligations of the Borrower under the Credit Agreement resulting from the extension of additional credit to the Borrower or any of its subsidiaries or otherwise; (ERROR! UNKNOWN SWITCH ARGUMENT.) any taking, exchange, release or non-perfection of any collateral, or any taking, release or amendment or waiver of or consent to departure from any guaranty, whether for payment, collection or performance, for the Loan Documents or Construction Documents; (ERROR! UNKNOWN SWITCH ARGUMENT.) any manner of application of collateral, or proceeds thereof, to all or any of the obligations evidenced by the Loan Documents or Construction Documents, or any manner of sale or other disposition of any collateral for all or any of the obligations evidenced by the Loan Documents or Construction Documents or any other assets of the Borrower or any of its subsidiaries; (ERROR! UNKNOWN SWITCH ARGUMENT.) any change, restructuring or termination of the corporate structure or existence of the Borrower or any of its subsidiaries; or (ERROR! UNKNOWN SWITCH ARGUMENT.) any other circumstance (including, without limitation, any statute of limitations) which might otherwise constitute a defense available to, or a discharge of, the Borrower or a surety. 9 This Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Obligations of the Borrower under the Loan Documents or Construction Documents is rescinded or must otherwise be returned by the Lender or any other Person upon the insolvency, bankruptcy or reorganization of the Borrower or any other Loan Party or otherwise, all as though such payment had not been made. SECTION 2.04 WAIVERS AND ACKNOWLEDGMENTS. (a) The Shareholder hereby waives promptness, diligence, notice of acceptance and any other notice with respect to the Loan Documents or Construction Documents and any requirement that the Lender protect, secure, perfect or insure any Lien or any property subject thereto or exhaust any right to take any action against the Borrower or any other Person or any collateral. (b) The Shareholder hereby waives any right to revoke this Agreement, and acknowledges that this Agreement is continuing in nature and relates to all Obligations under the Loan Documents and Construction Documents, whether existing now or in the future. (c) The Shareholder acknowledges that it will receive substantial direct and indirect benefits from the financing arrangements contemplated by the Loan Documents and that the waivers set forth in this Section 2.04 are knowingly made in contemplation of such benefits. SECTION 2.05 SEPARATE UNDERTAKING. Without limiting the generality of any of the foregoing provisions of this Agreement, the Shareholder irrevocably waives, to the full extent permitted by applicable law and for the benefit of, and as a separate undertaking with, the Lender, any defense to the performance of this Agreement which may be available to the Shareholder as a consequence of this Agreement being rejected or otherwise not assumed by the Borrower or any trustee or other similar official for the Borrower or for any substantial part of the property of the Borrower, or as a consequence of this Agreement being otherwise terminated or modified, in any proceeding seeking to adjudicate the Borrower a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of the Borrower or the debts of the Borrower under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, whether such rejection, non-assumption, termination or modification be by reason of this Agreement being held to be an executory contract or by reason of any other circumstance. If the Shareholder is prevented from performing its Obligations under this Agreement to or for the benefit of the Borrower 10 because this Agreement shall be so rejected or otherwise not assumed, or so terminated or modified, the Shareholder agrees for the benefit of, and as a separate undertaking with, the Lender that it will be unconditionally liable to pay to the Lender an amount equal to each payment which would otherwise be payable by the Shareholder under or in connection with this Agreement if this Agreement were not so rejected or otherwise not assumed or were otherwise not so terminated or modified. SECTION 2.06 RELEASE UPON PREPAYMENT OF ADVANCES. Notwithstanding anything to the contrary herein, the Shareholder shall be released of its obligations under Section 2.01 hereof upon (a) payment or prepayment in full of all Advances then outstanding under the Credit Agreement, together with all accrued and unpaid interest thereon and all other amounts due and payable under the Credit Agreement and (b) termination of all the Lender's obligations under the Credit Agreement, including without limitation the Lender's obligation to make Advances thereunder. SECTION 2.07. COMPLETION GUARANTY NOT APPLICABLE TO OBLIGATIONS UNDER THE CREDIT AGREEMENT OR THE NOTES. The Shareholder (whether as guarantor or otherwise) shall not be required pursuant to this Agreement to pay or otherwise discharge any Obligation of the Borrower arising under the Credit Agreement or any of the Notes, and no provision in this Agreement shall be interpreted as imposing any such requirement on the Shareholder. ARTICLE III TERMINATION OF OBLIGATIONS SECTION 3.01 TERMINATION UPON COMPLETION. This Agreement shall terminate upon Completion. Promptly, but in any case within three Business Days after such termination, the Lender shall notify the Shareholder and the Borrower of such termination; provided, however, that no failure on the part of the Lender to so notify the Shareholder and the Borrower will extend or otherwise delay the date of such termination. SECTION 3.02 TERMINATION PRIOR TO COMPLETION. The Borrower may arrange at any time for insurance, a guaranty or another comparable arrangement in form and substance, and from a Person or Persons, acceptable to the Lender as a replacement for the Obligations of the Shareholder under this Agreement. This Agreement shall terminate upon acceptance in writing by the Lender of any such replacement arrangement. 11 SECTION 3.03 EFFECT OF TERMINATION Upon any termination of this Agreement, all Obligations of the Borrower and of the Shareholder under this Agreement shall terminate. ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.01 REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER. The Shareholder hereby represents and warrants as follows: (a) The Shareholder (i) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, and (ii) has all requisite corporate power and authority (including, without limitation, all material governmental licenses, permits and other approvals) to own its shares of stock of the Borrower and to enter into this Agreement. (b) The execution, delivery and performance of this Agreement and each Related Document to which the Shareholder is or is to be a party have been duly authorized by all necessary corporate action on the part of the Shareholder, and do not (i) contravene its charter or bylaws, (ii) violate any applicable provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award applicable to it, (iii) result in the breach of, or constitute a default under, any loan agreement, indenture, mortgage, deed of trust or other financial instrument, or any other material contract or agreement, binding on or affecting it or any of its properties or (iv) except for the Liens created under the Loan Documents, result in or require the creation or imposition of any Lien upon or with respect to any of its properties. (c) Other than those that have already been obtained and as set forth in Schedule 4.01(c) and are in full force and effect, no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required for the due execution, delivery or performance by the Shareholder of this Agreement or any Related Document to which it is or is to be a party. (d) Each of this Agreement and the Related Documents to which the Shareholder is a party has been duly executed and delivered by the Shareholder 12 and is the legal, valid and binding obligation of the Shareholder, enforceable against the Shareholder in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditor's rights generally or by general principles of equity. (e) The Consolidated balance sheet of each of Accuride and its respective Subsidiaries as at December 31, 1998, and the related Consolidated statements of income and cash flow of Accuride and its Subsidiaries for the fiscal year then ended, accompanied by an opinion of Deloitte & Touche LLP, independent public accountants, copies of which have been furnished to the Lender, fairly present in all material respects the Consolidated financial condition of Accuride and its respective Subsidiaries as at such date and the Consolidated results of the operations of Accuride and its Subsidiaries for the fiscal year ended on such date, all in accordance with generally accepted accounting principles applied on a consistent basis (unless otherwise expressly noted therein), and since December 31, 1998, there has been no Material Adverse Change. (f) No information, exhibit or report furnished by the Shareholder to the Lender in writing in connection with the negotiation of this Agreement or the other Loan Documents or pursuant to the terms of this Agreement contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements made herein and therein, taken as a whole, not misleading at such time in light of the circumstances in which the same were made, it being understood that for purposes of this Section 4.01(f), such factual information does not include projections and pro forma financial information. (g) There is no action, suit, investigation, litigation or proceeding affecting the Shareholder pending or, to the knowledge of the Shareholder, threatened before any court, governmental agency or arbitrator that (i) could reasonably be expected to have a Material Adverse Effect or (ii) purports to affect the legality, validity or enforceability of this Agreement, any other Loan Document or any Related Document or the consummation of the transactions contemplated hereby. (h) There are no conditions precedent to the effectiveness of this Agreement that have not been satisfied or waived. (i) The Shareholder has, independently and without reliance upon the Lender and based on documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. 13 ARTICLE V COVENANTS SECTION 5.01 COVENANTS OF THE SHAREHOLDER. So long as any Advance shall remain unpaid or the Lender shall have any Commitment, the Shareholder will: (a) PRESERVATION OF CORPORATE EXISTENCE, ETC. Preserve and maintain its existence, legal structure, legal name, rights (charter and statutory), permits, licenses, approvals, privileges and franchises, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; PROVIDED, HOWEVER, that the Shareholder shall not be required to preserve any right, permit, license, approval, privilege or franchise if the Board of Directors of the Shareholder shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Shareholder and that the loss thereof is not disadvantageous in any material respect to the Shareholder or the Lender. (b) CONDUCT OF BUSINESS. Engage primarily in the vehicle component business and any activity or business incidental, directly related or similar thereto, and any other lines of business carried on by the Shareholder on the date hereof or utilizing the Shareholder's manufacturing capabilities on the date hereof, and/or such other businesses or activities that constitute a reasonable extension, development or expansion thereof or that are ancillary or reasonably related thereto. (c) VISITATION RIGHTS. At any reasonable time and from time to time, upon reasonable notice and during normal business hours, permit any authorized representatives designated by the Lender to examine and make abstracts from the records and books of account of, and visit the properties of, the Shareholder and to discuss the affairs, finances and accounts of the Shareholder with any of its officers or directors and with their independent certified public accountants, PROVIDED that the Shareholder may, if it so chooses, be present at or participate in any such discussion. (d) KEEPING OF BOOKS. Keep proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of the Shareholder in accordance with GAAP. 14 (e) REPORTING REQUIREMENTS. Furnish to the Lender: (i) DEFAULT OR LITIGATION NOTICE. Promptly upon any Senior Officer of the Shareholder obtaining knowledge thereof, notice of (i) the occurrence of any event that constitutes a Completion Default, which notice shall specify the nature thereof, the period of existence thereof and what action the Shareholder proposes to take with respect thereto, and (ii) any litigation or governmental proceeding pending against the Shareholder that could reasonably be expected to result in a Material Adverse Effect. (ii) QUARTERLY FINANCIALS. As soon as available and in any event within 60 days after the end of each of the first three fiscal quarters of each fiscal year of the Shareholder, a Consolidated balance sheet of Accuride and its Subsidiaries as of the end of such fiscal quarter and the related Consolidated statements of income and cash flow for the period commencing at the end of the previous fiscal quarter and ending with the end of such fiscal quarter and for the period commencing at the end of the previous fiscal year and ending with the end of such fiscal quarter, setting forth in each case in comparative form the corresponding figures for the corresponding period of the preceding fiscal year of the Shareholder, all in reasonable detail and duly certified (subject to year-end audit adjustments) by the chief financial officer of Accuride as having been prepared in accordance with GAAP, and a certificate of an officer of the Shareholder stating that no Completion Default has occurred and is continuing or, if a Completion Default has occurred and is continuing, a statement as to the nature thereof and the action that the Shareholder has taken and proposes to take with respect thereto. (iii) ANNUAL FINANCIALS. As soon as available and in any event within 120 days after the end of each fiscal year of the Shareholder, a Consolidated balance sheet of the Shareholder and its Subsidiaries as of the end of such fiscal year and the related Consolidated statements of income and cash flow for such fiscal year setting forth in each case in comparative form the corresponding figures for the previous fiscal year of the Shareholder, accompanied by an opinion which shall be unqualified as to the scope of the audit and as to the going concern status of the Shareholder and its Subsidiaries taken as a whole, of independent public accountants of recognized standing, together with a certificate of such accounting firm to the Lender stating that in the course of the regular audit of the business of the Shareholder and its Subsidiaries, which audit was conducted by such 15 accounting firm in accordance with applicable generally accepted auditing standards, such accounting firm has obtained no knowledge that a Completion Default has occurred and is continuing, or if, in the opinion of such accounting firm, a Completion Default has occurred and is continuing, a statement as to the nature thereof. (iv) Promptly after the sending or filing thereof, copies of all proxy statements, financial statements and reports that the Shareholder sends to its stockholders, and copies of all regular, periodic and special reports, and all registration statements, that the Shareholder files with the Securities and Exchange Commission or any governmental authority that may be substituted therefor or any equivalent governmental authority in Mexico, or with any national securities exchange in the United States or Mexico (in each case to the extent not theretofore delivered to the Lender pursuant to this Agreement), and with reasonable promptness such other information (financial or otherwise) as the Lender may reasonably request in writing from time to time. (f) Within 30 days after the date hereof, provide to the Lender a Spanish translation of this Agreement, duly executed and delivered by the Shareholder and in form and substance satisfactory to the Lender. ARTICLE VI COMPLETION DEFAULTS SECTION 6.01 COMPLETION DEFAULTS. Each of the following events shall be a default of the Shareholder (each a "COMPLETION DEFAULT"): (a) PAYMENT DEFAULT. The Shareholder fails to pay or cause to be paid, or to have paid on its behalf, on the date on which the same is due and payable, any amount due pursuant to this Agreement and such default is not remedied within 30 days. (b) BREACH OF REPRESENTATION OR WARRANTY UNDER THIS AGREEMENT. A representation or warranty made by the Shareholder in this Agreement proves to have been false in any material respect as and when made and the condition causing such falsity has a material adverse effect on the ability of the Shareholder to meet its obligations under this Agreement. 16 (c) BREACH OF COVENANT, ETC. The Shareholder fails to perform or observe in any material respect any other term, covenant or agreement contained herein to be performed or observed by it and such failure continues unremedied for 30 days after notice thereof is given by the Lender to the Shareholder. (d) BANKRUPTCY EVENT. The Bankruptcy of the Shareholder. (e) AGREEMENT UNENFORCEABLE. This Agreement is declared in a final, non-appealable judgment of a court of competent jurisdiction to be unenforceable against the Shareholder or the Shareholder shall have repudiated its obligations hereunder. For this purpose a statement or a dispute regarding the scope or nature of the parties' rights and obligations under this Agreement or a failure to perform any particular obligation as a result of such statement or dispute shall not by itself be deemed to be a repudiation thereof other than a failure that would otherwise constitute a Completion Default. SECTION 6.02 COMPLETION DEFAULT REMEDIES. Upon the occurrence and during the continuance of a Completion Default, the Lender shall be entitled to the remedies afforded to it as set forth in the Credit Agreement. ARTICLE VII MISCELLANEOUS SECTION 7.01 AMENDMENTS. This Agreement may be amended only by an agreement in writing signed by each party hereto. SECTION 7.02 NOTICES, ETC. All notices and other communications provided for hereunder shall be in writing (including telegraphic, telecopy or telex communication) in the English language (or accompanied by an accurate English language translation upon which any recipient shall have the right to rely for all purposes) and mailed, telegraphed, telecopied, telexed or delivered, if to a party hereto, at its address indicated on the signature pages hereto, or at such other address as shall be designated by such party in a written notice to the other parties. All such notices and communications shall, when mailed, telegraphed, telecopied or telexed, be effective when deposited in the mails, delivered to the telegraph company, transmitted by telecopier or confirmed by telex answerback, respectively. Delivery by telecopier of an executed counterpart of any amendment or waiver of any provision of this Agreement or of any 17 Exhibit hereto to be executed and delivered hereunder shall be effective as delivery of a manually executed counterpart thereof. SECTION 7.03 NO WAIVER; REMEDIES. No failure on the part of the Lender to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. SECTION 7.04 BINDING EFFECT. This Agreement shall become effective when executed and delivered by the parties hereto and shall thereafter be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. SECTION 7.05 EXECUTION IN COUNTERPARTS. This Agreement 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 a signature page to this Agreement by telecopier shall be effective as delivery of a manually executed counterpart of this Agreement. SECTION 7.06 [Intentionally omitted]. SECTION 7.07 JURISDICTION, ETC. (a) Each of the parties hereto irrevocably agrees that any legal action, suit or proceeding arising out of or relating to this Agreement may be brought in the courts of the State of New York. Final judgment against the Borrower or the Shareholder in any such action, suit or proceeding shall be conclusive and may be enforced in any other jurisdiction, including Mexico, by suit on the judgment, a certified or exemplified copy of which shall be conclusive evidence of the judgment, or in any other manner provided by law. (b) By the execution and delivery of this Agreement, the each of the parties irrevocably submits to the non-exclusive jurisdiction of the courts of the State of New York and of the United States of America located in the Southern District of New York in any such action, suit or proceeding and designates, appoints and empowers CT Corporation Systems, at 1633 Broadway, New York, NY 10019 as its authorized agent to receive for and on its behalf service of any summons, complaint or other legal process in any such action, suit or proceeding in the State of New York for so long as any obligation of the Borrower or the Shareholder shall remain outstanding hereunder. The Borrower and the Shareholder shall grant an irrevocable power of attorney to CT Corporation Systems in respect of such appointment and shall maintain such power of attorney in full 18 force and effect for so long as any obligation of the Borrower or the Shareholder shall remain outstanding hereunder. (c) Nothing in this Agreement shall affect the right of the Lender to commence legal proceedings or otherwise sue the Borrower in Mexico or any other appropriate jurisdiction, or to serve process, pleadings and other legal papers upon the Borrower or the Shareholder in any manner authorized by the laws of any such jurisdiction. (d) As long as this Agreement remains in force, the Borrower and the Shareholder shall maintain a duly appointed agent for the service of summons, complaint and other legal process in New York, New York, United States, for purposes of any legal action, suit or proceeding the Lender may bring in respect of this Agreement. The Borrower shall keep the Lender advised of the identity and location of such agent. (e) The Borrower and the Shareholder also irrevocably consent, if for any reason its authorized agent for service of process of summons, complaint and other legal process in any such action, suit or proceeding is not present in New York, New York, service of such papers may be made out of those courts by mailing copies of the papers by registered United States air mail, postage prepaid, to the Borrower and the Shareholder at its address specified on the signature pages hereto. In such a case, the Lender shall also send by telex or facsimile, or have sent by telex or facsimile, a copy of the papers to the Borrower and the Shareholder. (f) Service in the manner provided in subsection (e) above in any such action, suit or proceeding will be deemed personal service, will be accepted by the Borrower and the Shareholder as such and will be valid and binding upon the Borrower and the Shareholder for all purposes of any such action, suit or proceeding. (g) The Borrower and the Shareholder hereby irrevocably waive: (i) any objection which it may have now or in the future to the laying of the venue of any such action, suit or proceedings in any court referred to in this Section; and (ii) any claim that any such action, suit or proceedings has been brought in an inconvenient forum. SECTION 7.08 JUDGMENT. (a) If for the purposes of obtaining judgment in any court it is necessary to convert a sum due hereunder in Dollars into another currency, the parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures the Lender could purchase Dollars with such other currency at Citibank in New York, New York on the Business Day preceding that on which final judgment is given. 19 (b) The obligations of the Borrower and the Shareholder in respect of any sum due from it to the Lender hereunder held by the Lender shall, notwithstanding any judgment in a currency other than Dollars be discharged only to the extent that on the Business Day of receipt by the Lender of any sum adjudged to be so due in such other currency the Lender may in accordance with normal banking procedures purchase Dollars with such other currency; if the Dollars so purchased are less than the sum originally due by the Borrower or the Shareholder to the Lender in Dollars, the Borrower and the Shareholder agree, as a separate obligation and notwithstanding any such judgment, to indemnify the Lender against such loss, and if the Dollars so purchased exceed the sum originally due by the Borrower or the Shareholder to the Lender in Dollars, the Lender agrees to remit to the relevant party such excess. SECTION 7.09 GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, United States of America. SECTION 7.10 THIRD PARTY BENEFICIARIES. This Agreement is for the benefit of the parties hereto and their successors and permitted assigns and nothing herein expressed or implied shall give or be construed to give any person or entity, other than the parties hereto and such successors and assigns, any legal or equitable rights hereunder, except that the parties hereto agree that each Participant is a third party beneficiary to this Agreement, entitled to all the rights accruing thereto. SECTION 7.11 ENTIRE AGREEMENT. This Agreement and the Exhibits and Schedules hereto amend and restate in its entirety the Original Completion Guaranty, constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior and contemporaneous agreements, understandings, negotiations, correspondence, undertakings and communications, both oral and written, between the parties with respect to the subject matter hereof, including, without limitation, those provisions of the Accuride de Mexico, S.A. de C.V. Summary of Terms and Conditions (finally negotiated by the parties in May 1998) that deal with the subject of a "Completion Guaranty". There are no restrictions, promises, representations, warranties, covenants or undertakings by or between the parties with respect to the subject matter hereof other than those expressly set forth or referred to herein. SECTION 7.12 WAIVER OF JURY TRIAL. The Borrower, the Shareholder and the Lender irrevocably waive all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to 20 this Agreement or the actions of the Lender in the negotiation, administration, performance or enforcement thereof. 21 IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date first above written. ACCURIDE CORPORATION By: ---------------------------------------- Name: Title: Address: 2315 Adams Lane P.O. Box 40 Henderson, KY 42420 United States of America Attn: William Geubel with a copy to: Kohlberg Kravis Roberts & Co., L.P. 2800 Sand Hill Road, Suite 200 Menlo Park, CA 94205 Attn: Todd Fisher CITIBANK MEXICO, S.A., GRUPO FINANCIERO CITIBANK By: ---------------------------------------- Name: Title: Address: Reforma 390 Mexico City, D.F. 06696 Mexico Accepted and agreed to as of the 22 date first written above: ACCURIDE DE MEXICO, S.A. DE C.V. By: -------------------------- Name: Title: Address: Avenida Universidad 1011 Norte, Planta Baja San Nicolas de los Garza Nuevo Leon C.P. 66450 Mexico 23 Appendix A-1 to Completion Guaranty FORM OF PHYSICAL FACILITIES CERTIFICATE CITIBANK MEXICO, S.A., GRUPO FINANCIERO CITIBANK, as Lender Grupo Financiero Citibank Reforma 390, Mexico City, Mexico, D.F. 06695 Attention: Doug Schmidt Re: ACCURIDE DE MEXICO, S.A. DE C.V. Ladies and Gentlemen: This is the certificate referred to in clause (a) of Section 1.02 of the Amended and Restated Completion Guaranty Agreement, dated as of May __, 1999 among the Borrower, ACCURIDE CORPORATION, a Delaware corporation, and CITIBANK, S.A., GRUPO FINANCIERO CITIBANK, as the same may be amended, supplemented or otherwise modified from time to time (the "COMPLETION GUARANTY"). Capitalized terms herein and in the appendices hereto, except as otherwise defined herein, shall have the meanings assigned to them in the Completion Guaranty. I, [Name of Senior Officer], as [_______________________] of the Borrower, hereby certify after due inquiry that: (a) As of the date hereof, the physical facilities and utilities of the Plant as described in Appendix A-1-A (the "PHYSICAL FACILITIES") have been installed substantially in accordance with the design documents, as amended in accordance with the provisions of Appendix A-1-A, are substantially complete and have become operational. (b) As of the date hereof, each of the Physical Facilities has been substantially completed, and each has been accepted by the Borrower from the A-1-24 contractors or sub-contractors in accordance with the contracts or sub-contracts for the construction or installation of each such facility. (c) Attached to this Physical Facilities Certificate is a true and complete copy of the Acknowledgment of the Independent Engineer in connection with this Physical Facilities Certificate. The Borrower hereby certifies, after due inquiry, that the facts stated by the Borrower in this Certificate are true and complete. IN WITNESS WHEREOF, I, [name of Senior Officer], have caused this certificate to be duly executed. Dated: ACCURIDE DE MEXICO, S.A. DE C.V. By: ----------------------------------- Name: Title: [Senior Officer] ACKNOWLEDGMENT This Acknowledgment is being delivered by the undersigned, [Name of Independent Engineer], a [________________] duly organized and validly existing under the laws of the [State] of [_______________], in connection with the Amended and Restated Completion Guaranty Agreement, dated as of May __, 1999, among the Borrower, ACCURIDE CORPORATION, a Delaware corporation, and CITIBANK MEXICO, S.A., GRUPO FINANCIERO CITIBANK, as the same may be amended, supplemented or otherwise modified from time to time. [Name of Independent Engineer] hereby certifies that it has reviewed the Physical Facilities Certificate dated ______________ and has performed such inspections which we have, in our reasonable judgment, deemed necessary for purposes of this acknowledgment. Such inspections, including the names of our employees or agents who performed them, are described in Appendix A-1-B to this acknowledgment. Based on such inspections, we hereby certify that, to the best of our knowledge, each of the certifications of the Borrower set forth in the Physical Facilities Certificates is true and correct in all material respects as of the date hereof. IN WITNESS WHEREOF, [Name of Independent Engineer] has caused this acknowledgment to be duly executed. Dated: [Name of Independent Engineer] By: ------------------------------ Name: Title: Appendix A-1-A to Completion Guaranty PLANT PHYSICAL FACILITIES The Plant's physical facilities shall comprise at a minimum those facilities described hereafter. Physical facilities shall include facilities installed by the Plant to connect to third parties. Design modifications and improvements, as may be approved by the Borrower from time to time, will be accommodated within this appendix provided that these amendments are documented, transmitted to the Independent Engineer, approved by the Independent Engineer, if required, and a final complete listing of these changes is provided to the Independent Engineer prior to Completion. Approval of the Independent Engineer is required for: (i) Modifications to the physical facilities including but not limited to changes in: - Manufacturing equipment - Environmental facilities - Product lines provided that only such modifications which individually or in the aggregate materially impair the Plant's performance shall require the Independent Engineer's approval. (ii) Those modifications which could materially impair the expected operating or maintenance costs or expected ongoing capital expenditures. (iii) Modifications which could impair environmental compliance or any permit or license (in place or required). (iv) Modifications or contractor change orders which are estimated to cost in aggregate more than $500,000 for changes to the facilities or which could affect schedule sequencing by more than 20 days. REQUIRED PHYSICAL FACILITIES 1. New Spinner #1 2. New Truing Machine 3. Line A-8 4. Washer 5. Waste Water Treatment Facility 6. E-Coat System 7. Line 427 8. Line 468 or equivalent 9. Raw Material Crane 10. Emergency Electrical Plant to Protect E-Coat System 11. 600 T Press or equivalent 12. Decoiler 13. New Spinner #2 14. New Spinner #3 15. SARA Line with Decoiler 16. Light Disc Press Line (L-4) 17. Line A-11 with New Truing Machine and Washer Appendix A-2 to Completion Guaranty FORM OF OPERATIONS CERTIFICATE CITIBANK MEXICO, S.A., GRUPO FINANCIERO CITIBANK, as Lender Grupo Financiero Citibank Reforma 390, Mexico City, Mexico, D.F. 06695 Attention: Doug Schmidt Re: ACCURIDE DE MEXICO, S.A. DE C.V. Ladies and Gentlemen: This is the certificate referred to in clause (b) of Section 1.02 of the Amended and Restated Completion Guaranty Agreement, dated as of May __, 1999, among the Borrower, ACCURIDE CORPORATION, a Delaware corporation, and CITIBANK MEXICO, S.A., GRUPO FINANCIERO CITIBANK, as the same may be amended, supplemented or otherwise modified from time to time (the "COMPLETION GUARANTY"). Capitalized terms herein and in the appendices hereto, except as otherwise defined herein, shall have the meanings assigned to them in the Completion Guaranty. I, [Name of Senior Officer], as [________________] of the Borrower, hereby certify after due inquiry that: (a) Attached to this certificate as Appendix B-2-A are copies of operating records, test results, inspection reports and other documentation relating to production by the Plant during the periods referred to in clause (c) below. Such documentation accurately reflects, in all material respects, the production of the Plant during the period to which it relates. (b) All sampling procedures relevant to the matters covered by this certificate were conducted by Borrower in accordance with Prudent Industry Practices. (c) For purposes of this Operations Certificate, the first test period (the "FIRST TEST PERIOD") began on [date] and ended on [date] and was comprised of 5 consecutive Business Days [or such shorter period reasonably acceptable to the Independent Engineer, to the extent reasonably justified based upon the Borrower's current sales volume and other relevant factors], each of which days was a scheduled operating day, and the second test period (the"SECOND TEST PERIOD", and together with the First Test Period, the "TEST PERIODS") began on [date] and ended on [date] and was comprised of 5 consecutive Business Days [or such shorter period reasonably acceptable to the Independent Engineer, to the extent reasonably justified based upon the Borrower's current sales volume and other relevant factors], each of which days was a scheduled operating day. Approximately one month elapsed between the first day of the First Test Period and the last day of the Second Test Period. (d) All product units manufactured during the Test Periods completed required qualification testing, and processes were verified to insure that parts met dimensional requirements. (e) Hourly production rates during the Test Periods were determined by the total number of good parts that were completed on the specific lines for the hours scheduled for the production run during the Test Period. Total hours included set-up and required maintenance completed during the Test Period ("TOTAL HOURS"). The average hourly rates of production, expressed in units produced per hour, for the Total Hours, for each of the lines or operations listed below, were each within 90% of the hourly rate listed after such line or operation: Line/Operation Hour Rate (Units) -------------- ----------------- Line 427 150 Spinners 52 light discs (each Spinner) E-Coat 570 (Wheels and Rims) [Line A-8 138] SARA 225 All the foregoing tests, except as specifically otherwise provided herein, in this Section (e) have been performed during each of the Test Periods. (f) During the First Test Period the actual quantities were:
Scheduled Scheduled Actual Production Quantities Actual Quantities Production Hours Hours ---------- ----------------- ---------------- -----------------
(g) During the Second Test Period the actual quantities were:
Scheduled Scheduled Actual Production Quantities Actual Quantities Production Hours Hours ---------- ----------------- ---------------- -----------------
(h) Attached to this Operations Certificate is a true and complete copy of an Acknowledgment of the Independent Engineer in connection with this Operations Certificate. (i) The Plant is being operated by the Borrower in accordance with Prudent Industry Practices. The Borrower hereby certifies, after due inquiry, that the facts stated by the Borrower in this Certificate are true and complete. IN WITNESS WHEREOF, I, [name of Senior Officer], have caused this certificate to be duly executed. Dated: ACCURIDE DE MEXICO, S.A. DE C.V. By: --------------------------- Name: Title: [Senior Officer] ACKNOWLEDGMENT This Acknowledgment is being delivered by the undersigned, [Name of Independent Engineer], a [________________] duly organized and validly existing under the laws of the [State] of [_______________], in connection with the Amended and Restated Completion Guaranty Agreement, dated as of May __, 1999, among the Borrower, ACCURIDE CORPORATION, a Delaware corporation, and CITIBANK MEXICO, S.A., GRUPO FINANCIERO CITIBANK, as the same may be amended, supplemented or otherwise modified from time to time. [Name of Independent Engineer] hereby certifies that it has reviewed the Operations Certificate dated [___________] and has performed such inspections, observations, analyses and other procedures which we have, in our reasonable judgment, deemed necessary for purposes of this acknowledgment. Such procedures, including the names of our employees or agents who performed them, are described in Appending B-2-B to this acknowledgment. Based on such procedures described above, we hereby certify that, to the best of our knowledge, each of the certifications of the Borrower set forth in the Operations Certificate is true and correct in all material respects as of the date hereof. IN WITNESS WHEREOF, [name of Independent Engineer] has caused this acknowledgment to be duly executed. Dated: [Name of Independent Engineer] By: --------------------------- Name: Title: Appendix A-3 to Completion Guaranty FORM OF LEGAL CONDITIONS CERTIFICATE CITIBANK MEXICO, S.A. GRUPO FINANCIERO CITIBANK, as Lender Grupo Financiero Citibank Reforma 390, Mexico City, Mexico, D.F. 06695 Attention: Doug Schmidt Re: ACCURIDE DE MEXICO, S.A. DE C.V. Ladies and Gentlemen: This is the certificate referred to in clause (c) of Section 1.02 of the Amended and Restated Completion Guaranty Agreement, dated as of May __, 1999, among the Borrower, ACCURIDE CORPORATION, a Delaware corporation, and CITIBANK MEXICO, S.A., GRUPO FINANCIERO CITIBANK, as the same may be amended, supplemented or otherwise modified from time to time (the "COMPLETION GUARANTY"). Capitalized terms herein and in the appendices hereto, except as otherwise defined herein, shall have the meanings assigned to them in the Completion Guaranty. I, [Name], as _________________________ of the Borrower, hereby certify after due inquiry that, to the best of my knowledge, as of the date hereof: (a) Each of the Construction Documents remains in full force and effect. (b) The authorizations, approvals and consents from governmental authorities in the United Mexican States listed in Schedule 4.01(d)(ii) to the Credit Agreement that are still required as of the date hereof, any others that as of the date hereof have become required for, and in each case are material to, operation of the Plant substantially as it was operated during the Test Period referred to in the Operations Certificate, and those which are necessary for the current stage of development of the Plant are in full force and effect and not subject to appeal. A-3-33 (c) The security interests required to be created by or pursuant to the Collateral Documents are in full force and effect. (d) No Default has occurred and is continuing. (e) There are no contractors' liens (other than Permitted Liens as such term is defined in the Credit Agreement) under Mexican law or under any Construction Documents on any of the Physical Facilities of the Borrower. The Borrower hereby certifies, after due inquiry, that the facts stated by the Borrower in this Certificate are true and complete. IN WITNESS WHEREOF, I, [name] have caused this certificate to be duly executed. Dated: ACCURIDE DE MEXICO, S.A. DE C.V. By: --------------------------- Name: Title: A-3-34 Appendix A-4 to Completion Guaranty FORM OF INSURANCE CERTIFICATE CITIBANK MEXICO, S.A. GRUPO FINANCIERO CITIBANK, as Lender Grupo Financiero Citibank Reforma 390, Mexico City, Mexico, D.F. 06695 Attention: Doug Schmidt Re: ACCURIDE DE MEXICO, S.A. DE C.V. Ladies and Gentlemen: This is the certificate referred to in clause (d) of Section 1.02 of the Amended and Restated Completion Guaranty Agreement, dated as of May __, 1999, among the Borrower, ACCURIDE CORPORATION, a Delaware corporation, and CITIBANK MEXICO, S.A., GRUPO FINANCIERO CITIBANK, as the same may be amended, supplemented or otherwise modified from time to time (the "COMPLETION GUARANTY"). Capitalized terms herein and in the appendices hereto, except as otherwise defined herein, shall have the meanings assigned to them in the Completion Guaranty. I, [Name], as _________________________ of the Borrower, hereby certify after due inquiry that, as of the date hereof all minimum insurance coverage required to be now in effect pursuant to Section 5.01(d) of the Credit Agreement is in full force and effect. Attached to this Insurance Certificate is a true and complete copy of the Acknowledgment of the Insurance Consultant in connection with this Insurance Certificate. The Borrower hereby certifies, after due inquiry, that the facts stated by the Borrower in this Certificate are true and complete. A-4-35 IN WITNESS WHEREOF, I, [name] have caused this certificate to be duly executed. Dated: ACCURIDE DE MEXICO, S.A. DE C.V. By: --------------------------- Name: Title: ACKNOWLEDGMENT This Acknowledgment is being delivered by the undersigned, [Name of Insurance Consultant], a [________________] duly organized and validly existing under the laws of the [State] of [_______________], in connection with the Amended and Restated Completion Guaranty Agreement, dated as of May __, 1999 among the Borrower, ACCURIDE CORPORATION, a Delaware corporation, and CITIBANK MEXICO, S.A., GRUPO FINANCIERO CITIBANK, as the same may be amended, supplemented or otherwise modified from time to time. [Name of Insurance Consultant], hereby certifies that it has reviewed the Insurance Certificate dated [___________] and has performed such reviews and other procedures which we have, in our reasonable judgment, deemed necessary for purposes of this acknowledgment. Such procedures, including the names of our employees or agents who performed them, are described in Appendix A-4-A to this acknowledgment. Based on such procedures, we hereby certify that, to the best of our knowledge, each of the certifications of the Borrower set forth in the Insurance Certificate is true and correct in all material respects as of the date hereof. IN WITNESS WHEREOF, [name of Insurance Consultant] has caused this acknowledgment to be duly executed. Dated: [Name of Insurance Consultant] By: --------------------------- Name: Title: EX-27.1 4 EXHIBIT 27.1
5 The schedule contains summary financial information extracted from the consolidated financial statements of Accuride Corporation and is qualified in its entirety by reference to such financial statements. 6-MOS DEC-31-1999 JUN-30-1999 22,601 0 70,363 496 44,562 159,183 370,754 170,666 520,969 81,743 455,355 0 0 24,738 (67,353) 520,969 247,585 247,585 190,267 14,174 924 0 18,961 25,815 10,843 14,881 0 0 0 14,881 598 598
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