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EXHIBIT 10.2
FIRST AMENDMENT AND CONSENT
FIRST AMENDMENT AND CONSENT, dated as of December 8, 1995
(this "Amendment"), to the Credit Agreement, dated as of August 17, 1995 (as
amended, supplemented or otherwise modified, the "Credit Agreement"), among
▇▇▇▇ Seating Corporation, a Delaware corporation (the "Borrower"), the several
financial institutions parties thereto (the "Banks"), Chemical Bank, as
administrative agent for the Banks (in such capacity, the "Agent"), and the
Managing Agents, Co-Agents and Lead Managers identified therein.
W I T N E S S E T H :
WHEREAS, pursuant to the Credit Agreement, the Banks have
agreed to make, and have made, extensions of credit to the Borrower; and
WHEREAS, the Borrower has requested that certain provisions of
the Credit Agreement and other Loan Documents be modified in the manner
provided for in this Amendment, and the Banks are willing to agree to such
modifications as provided for in this Amendment;
NOW, THEREFORE, in consideration of the premises and mutual
agreements contained herein, and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. Defined Terms. Unless otherwise defined herein,
terms defined in the Credit Agreement and used herein shall have the meanings
given to them in the Credit Agreement.
2. Amendments to Credit Agreement. (a) Subsection 1.1
of the Credit Agreement is hereby amended by (i) deleting the definition of
"Security Documents" contained therein in its entirety and (ii) adding the
following new definitions in correct alphabetical order:
"`Additional Subsidiary Guarantee': the Additional Subsidiary
Guarantee made by ▇▇▇▇ Operations Corporation and NAB Corporation in
favor of the Agent, substantially in the form of Exhibit A of the
First Amendment and Consent, dated December 8, 1995, to this
Agreement, as the same may be amended, supplemented or otherwise
modified from time to time.
`Security Documents': the collective reference to the
Security Agreements, the Pledge Agreements, the Mortgages, the
Subsidiary Guarantee and the Additional Subsidiary Guarantee."
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(b) Subsection 8.4(a) of the Credit Agreement is hereby
amended by deleting it in its entirety and inserting in lieu thereof the
following:
"(a) Guarantee Obligations in respect of the Subsidiary
Guarantee and the Additional Subsidiary Guarantee;"
(c) Subsection 8.5 of the Credit Agreement is hereby amended
by adding the following sentence to the end of such subsection:
"Notwithstanding any provision contained in paragraphs (a) and (c) of
this subsection, no Subsidiary of the Borrower may (i) be merged or
consolidated with or into either ▇▇▇▇ Operations Corporation or NAB
Corporation or any Subsidiary thereof or (ii) sell, lease, transfer or
otherwise dispose of any or all of its assets (upon voluntary
liquidation or otherwise) to either Lear Operations Corporation or NAB
Corporation or any Subsidiary thereof unless, in each case, (A) the
Additional Subsidiary Guarantee shall have been amended in writing to
remove the limitation on such transferee's liability thereunder
contained in clause (ii) of paragraph 2(b) of the Additional
Subsidiary Guarantee or (B) the Agent shall have received a
certificate of a Responsible Officer of the Borrower in form and
substance satisfactory to the Agent describing such sale, lease,
transfer or other disposition and certifying the fair market value of
the assets to be so sold, leased, transferred or otherwise disposed.
Upon the Agent's approval of the certificate described in clause (B)
of the preceding sentence, the limitation on the transferee's
liability under clause (ii) of paragraph 2(b) of the Additional
Subsidiary Guarantee shall automatically increase by an amount equal
to the fair market value of the assets described in such certificate.
For purposes of the preceding two sentences, if the transferee is a
Subsidiary of either Lear Operations Corporation or NAB Corporation,
the term transferee in such two sentences shall refer to either ▇▇▇▇
Operations Corporation or NAB Corporation, whichever is the parent of
such Subsidiary."
(d) Subsection 8.6 of the Credit Agreement is hereby
amended by (i) deleting the word "and" at the end of paragraph (e) thereof,
(ii) deleting the period at the end of paragraph (f) thereof and inserting in
lieu thereof the word "; and" and (iii) adding the following to the end of such
subsection:
"(g) the transfer or other disposition of assets permitted
pursuant to subsection 8.9(e) to any Subsidiary."
(e) Subsection 8.8 of the Credit Agreement is hereby
amended by deleting the table contained therein in its entirety and inserting
in lieu thereof the following table:
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"Fiscal Year Amount
----------- ------
1995 $150,000,000
1996 160,000,000
1997 125,000,000
1998 125,000,000
1999 100,000,000
2000 100,000,000
2001 100,000,000;"
(f) Subsection 8.9 of the Credit Agreement is hereby
amended by (i) deleting paragraph (d) thereof in its entirety and inserting in
lieu thereof the following:
"(d) investments, loans and advances listed on Schedule
8.9, together with any replacements, substitutions or refinancings
thereof that do not increase the amount thereof;",
(ii) deleting the word "and" at the end of paragraph (s) thereof, (iii)
deleting the period at the end of paragraph (t) thereof and inserting in lieu
thereof the word "; and" and (iv) adding the following to the end of such
subsection:
"(u) the contribution by the Borrower to a Subsidiary of the
Borrower formed under the laws of the Cayman Islands of loans or
participating interests in loans made to Lear Italia and permitted
pursuant to paragraph (o) of this subsection 8.9."
3. Consents and Waivers. (a) Notwithstanding any
provision contained in subsections 8.5 and 8.6 of the Credit Agreement,
paragraph 5(j) of the Security Agreement or any Mortgage to which the Borrower
is a party, the Banks consent to the Borrower's transfer of (i) substantially
all of its non-Michigan assets to Lear Operations Corporation, a Delaware
corporation and a newly formed, Wholly Owned Subsidiary of the Borrower
("LOC"), (ii) all of its assets obtained in connection with the November 1993
acquisition of Ford Motor Company's North American seat cover and seat systems
business, and assets currently used in the operation of such business, to NAB
Corporation, a Delaware corporation and a newly formed and Wholly Owned
Subsidiary of the Borrower ("NAB Co."), (iii) the Borrower's existing
participating interest in loans made to Lear Italia to a direct Subsidiary of
the Borrower to be formed under the laws of the Cayman Islands ("Cayman Co."),
provided that simultaneously with such transfer described in this clause (iii),
(A) the Borrower shall have executed and delivered a pledge agreement in form
and substance reasonably satisfactory to the Agent whereby the Borrower shall
have pledged 65% of the stock of Cayman Co. to the Agent, (B) the Agent shall
have received certificates of Cayman Co. representing such pledged stock
together with related executed stock transfer forms and (C) the Agent shall
have received, with a copy for each Bank, (I) the
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opinion of Cayman Islands counsel in form and substance reasonably satisfactory
to the Agent and (II) the opinion of Winston & ▇▇▇▇▇▇ in form and substance
reasonably satisfactory to the Agent.
(b) Notwithstanding any provision contained in any Loan
Document, but subject to the adjustments provided in subsection 8.5 of the
Credit Agreement, the maximum liability of each of LOC and NAB Co. under the
Additional Subsidiary Guarantee and, without duplication, the maximum amount of
Obligations secured pursuant to the Security Agreements or Mortgages to which
either LOC or NAB Co. is a party or by assets owned or held by LOC or NAB Co.
(including, without limitation, any real property transferred by the Borrower
to either LOC or NAB Co., whether or not subject to a Mortgage) shall in no
event exceed $54,000,000, in the case of LOC, and $59,000,000, in the case of
NAB Co.
(c) Notwithstanding any provision contained in subsection 8.5
of the Credit Agreement or any provision of the Pledge Agreements, AIHI and any
of its Subsidiaries may merge, in one or more transactions, into Automotive
Industries Manufacturing Inc., a Delaware corporation and a newly formed and
Wholly Owned Subsidiary of the Borrower ("AII"), which shall be the surviving
corporation of such mergers.
(d) The Banks hereby waive compliance with the provisions
of subsection 8.18 of the Credit Agreement with respect to (i) each of LOC and
NAB Co. being parties to a Guarantee Supplement and (ii) having the stock of
each of LOC and NAB Co. pledged to the Agent, for the ratable benefit of the
Banks; provided that such waiver is given subject to the condition that the
Borrower, LOC and NAB Co., as applicable, execute and deliver the Additional
Subsidiary Guarantee, the First Amendment to the Domestic Pledge Agreement and
the Additional Security Agreement (as such documents are described in Section
5(b), (c) and (e) hereof).
(e) Notwithstanding any provision contained in the ▇▇▇▇
Seating Canada Ltd. Share Pledge Agreement, dated as of August 17, 1995, made
by the Borrower in favor of the Agent, the Banks consent to the amalgamation of
▇▇▇▇ Seating Canada Ltd. and 115335 Ontario Inc., a newly formed Subsidiary of
the Borrower ("Holdco"), provided that such consent is given subject to the
condition that upon the amalgamation of ▇▇▇▇ Seating Canada Ltd. and Holdco
(the continuing corporation after such amalgamation being referred to herein as
"▇▇▇▇ Canada"), the Borrower and ▇▇▇▇ Canada shall deliver the First Amendment
to the ▇▇▇▇ Seating Canada Ltd. Share Pledge Agreement in substantially the
form of Exhibit E hereto, and the Borrower shall deliver to the Agent share
certificates in the name of the Agent representing 65% of the issued and
outstanding shares of each class of capital stock of Lear Canada.
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4. Agreements of Banks. The Banks hereby consent to (a)
the First Amendment to Domestic Pledge Agreement in substantially the form of
Exhibit D hereto, (b) the First Amendment to ▇▇▇▇ Seating Canada Ltd. Share
Pledge Agreement in substantially the form of Exhibit E hereto and (c) after
the contribution of the capital stock of ▇▇▇▇ Seating (U.K.) Limited into
Automotive Industries Holdings Limited ("AIHL"), the release of the charge over
65% of the stock of ▇▇▇▇ Seating (U.K.) Limited pursuant to the Charge Over
Shares, dated August 17, 1995 (the "Old Charge"), between the Borrower and the
Agent, provided that simultaneously with such release (i) AII and the Agent
shall have executed and delivered a new Charge Over Shares in substantially the
form of the Old Charge whereby AII shall have pledged 65% of the stock of AIHL
to the Agent, (ii) the Agent shall have received certificates of AIHL
representing such pledged stock, together with related executed stock transfer
forms and (iii) the Agent shall have received, with a copy for each Bank, (A)
the opinion of English counsel to the Agent in form and substance reasonably
satisfactory to the Agent and (B) the opinion of Winston & ▇▇▇▇▇▇ in form and
substance reasonably satisfactory to the Agent.
5. Conditions to Effectiveness. This Amendment shall
become effective on the date (the "Amendment Effective Date") on which all of
the following conditions precedent have been satisfied or waived:
(a) execution and delivery of this Amendment by the
Borrower, the Agent and the Required Banks;
(b) receipt by the Agent, with a counterpart for each
Bank, of the Additional Subsidiary Guarantee in substantially the form
of Exhibit A hereto duly executed by each of LOC and NAB Co.;
(c) receipt by the Agent, with a counterpart for each
Bank, of the Additional Security Agreement in substantially the form
of Exhibit B hereto duly executed by each of LOC and NAB Co.;
(d) receipt by the Agent, with a counterpart for each Bank,
of the Second Additional Security Agreement in substantially the form
of Exhibit C hereto, duly executed by AII;
(e) receipt by the Agent, with a counterpart for each
Bank, the First Amendment to Domestic Pledge Agreement in
substantially the form of Exhibit D hereto duly executed by the
Borrower and consented to by AII, LOC and NAB Co.;
(f) receipt by the Agent of certificates representing
shares pledged pursuant to the First Amendment to Domestic Pledge
Agreement, together with an undated stock power for
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each such certificate executed in blank by a duly authorized officer
of the Borrower;
(g) receipt by the Agent of evidence in form and
substance satisfactory to it that all filings, recordings,
registrations and other actions, including, without limitation, the
filing of duly executed financing statements on form UCC-1, necessary
or, in the opinion of the Agent, desirable to perfect the Liens
created by the Additional Security Agreement, the Second Additional
Security Agreement and the First Amendment to Domestic Pledge
Agreement shall have been completed;
(h) receipt by the Agent of the results of a recent
search by a Person satisfactory to the Agent, of the Uniform
Commercial Code, judgment and the tax lien filings which may have been
filed with respect to personal property of each of LOC, NAB Co. and
AII, and the results of such search shall be reasonably satisfactory
to the Agent;
(i) receipt by the Agent, with a counterpart for each
Bank, of a certificate of the Secretary or Assistant Secretary of each
of the Borrower, LOC, NAB Co. and AII, dated the Amendment Effective
Date, as to the incumbency and signature of their respective officers
executing each of this Amendment, the Additional Subsidiary Guarantee,
the Additional Security Agreement, the Second Additional Security
Agreement and the First Amendment to Domestic Pledge Agreement, as
applicable, together with satisfactory evidence of the incumbency of
such Secretary or Assistant Secretary;
(j) receipt by the Agent, with a counterpart for each
Bank, of a copy of the resolutions in form and substance satisfactory
to the Agent, of the Board of Directors of each of the Borrower, LOC,
NAB Co., and AII authorizing (i) the execution, delivery and
performance of this Amendment and the other documents being executed
and delivered in connection herewith and (ii) the granting by it of
the pledge and security interest granted by it pursuant to such
documents, certified by their respective Secretary or an Assistant
Secretary as of the Amendment Effective Date, which certificate shall
state that the resolutions therein certified have not been amended,
modified revoked or rescinded as of the date of such certificate; and
(k) receipt by the Agent, with a copy for each Bank, of
an opinion, dated the Amendment Effective Date, of Winston & ▇▇▇▇▇▇ in
substantially the form of Exhibit F hereto.
6. Representations and Warranties. The Borrower
represents and warrants that the representations and warranties made by the
Borrower in the Loan Documents are true and correct
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in all material respects on and as of the Amendment Effective Date, before and
after giving effect to the effectiveness of this Amendment, as if made on and
as of the Amendment Effective Date, except to the extent such representations
and warranties expressly relate to an earlier date.
7. Payment of Expenses. The Borrower agrees to pay or
reimburse the Agent for all of its out-of-pocket costs and reasonable expenses
incurred in connection with this Amendment and any other documents prepared in
connection herewith and the transactions contemplated hereby, including,
without limitation, the reasonable fees and disbursements of counsel to the
Agent.
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8. No Other Amendments; Confirmation. Except as
expressly amended, modified and supplemented hereby, the provisions of the
Credit Agreement, the Notes and the other Loan Documents are and shall remain
in full force and effect.
9. Governing Law; Counterparts. (a) This Amendment and
the rights and obligations of the parties hereto shall be governed by, and
construed and interpreted in accordance with, the laws of the State of New
York.
(b) This Amendment may be executed by one or more of the
parties to this Amendment on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Amendment signed by all the parties
shall be lodged with the Borrower and the Agent. This Amendment may be
delivered by facsimile transmission of the relevant signature pages hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their respective proper and duly
authorized officers as of the day and year first above written.
▇▇▇▇ SEATING CORPORATION
By:_____________________________
Title:
CHEMICAL BANK, as Agent and as a
Bank
By:____________________________
Title:
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ABN AMRO BANK N.V.
By:____________________________
Title:
By:____________________________
Title:
THE ASAHI BANK, LTD.
By:____________________________
Title:
BANKERS TRUST COMPANY
By:____________________________
Title:
BANK OF AMERICA ILLINOIS
By:____________________________
Title:
BANK OF MONTREAL
By:____________________________
Title:
THE BANK OF NEW YORK
By:____________________________
Title:
THE BANK OF NOVA SCOTIA
By:____________________________
Title:
THE BANK OF TOKYO TRUST COMPANY
By:____________________________
Title:
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BANQUE PARIBAS
By:____________________________
Title:
By:____________________________
Title:
CAISSE NATIONALE DE CREDIT AGRICOLE
By:____________________________
Title:
CIBC INC.
By:____________________________
Title:
CITICORP USA, INC.
By:____________________________
Title:
COMERICA BANK
By:____________________________
Title:
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE
By:____________________________
Title:
By:____________________________
Title:
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COOPERATIEVE CENTRALE RAIFFEISEN -
BOERENLEENBANK B.A., "RABOBANK
NEDERLAND", NEW YORK BRANCH
By:____________________________
Title:
By:____________________________
Title:
CREDITANSTALT CORPORATE FINANCE,
INC.
By:____________________________
Title:
By:____________________________
Title:
CREDIT LYONNAIS CHICAGO BRANCH
By:____________________________
Title:
CREDIT LYONNAIS CAYMAN ISLANDS
BRANCH
By:____________________________
Title:
THE DAI-ICHI KANGYO BANK, LTD.
By:____________________________
Title:
DEUTSCHE BANK AG, CHICAGO AND/OR
CAYMAN ISLANDS BRANCHES
By:____________________________
Title:
By:____________________________
Title:
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DRESDNER BANK AG, CHICAGO AND GRAND
CAYMAN BRANCHES
By:____________________________
Title:
By:____________________________
Title:
FIRST AMERICAN NATIONAL BANK
By:____________________________
Title:
FIRST BANK NATIONAL ASSOCIATION
By:____________________________
Title:
THE FIRST NATIONAL BANK OF BOSTON
By:____________________________
Title:
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA
By:____________________________
Title:
THE FUJI BANK, LIMITED
By:____________________________
Title:
THE INDUSTRIAL BANK OF JAPAN, LTD.,
CHICAGO BRANCH
By:____________________________
Title:
▇▇
▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇
By:____________________________
Title:
By:____________________________
Title:
KREDIETBANK N.V.
By:____________________________
Title:
By:____________________________
Title:
▇▇▇▇▇▇ COMMERCIAL PAPER INC.
By:____________________________
Title:
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., CHICAGO BRANCH
By:____________________________
Title:
THE MITSUBISHI BANK, LIMITED
(CHICAGO BRANCH)
By:____________________________
Title:
THE MITSUBISHI TRUST & BANKING
CORPORATION, CHICAGO BRANCH
By:____________________________
Title:
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▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇
By:____________________________
Title:
By:____________________________
Title:
NATIONSBANK, N.A. (CAROLINAS)
By:____________________________
Title:
NBD BANK
By:____________________________
Title:
THE NIPPON CREDIT BANK, LTD.
By:____________________________
Title:
ROYAL BANK OF CANADA
By:____________________________
Title:
THE ROYAL BANK OF SCOTLAND, PLC.
By:____________________________
Title:
THE SAKURA BANK, LIMITED
By:____________________________
Title:
THE SANWA BANK, LIMITED, CHICAGO
BRANCH
By:____________________________
Title:
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SOCIETE GENERALE, CHICAGO BRANCH
By:____________________________
Title:
SOCIETY NATIONAL BANK
By:____________________________
Title:
THE SUMITOMO BANK, LIMITED,
CHICAGO BRANCH
By:____________________________
Title:
By:____________________________
Title:
THE SUMITOMO TRUST & BANKING CO.,
LTD., NEW YORK BRANCH
By:____________________________
Title:
THE TOKAI BANK, LTD. (CHICAGO
BRANCH)
By:____________________________
Title:
VIA BANQUE
By:____________________________
Title:
By:____________________________
Title:
WESTPAC BANKING CORPORATION
By:____________________________
Title:
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THE YASUDA TRUST & BANKING COMPANY,
LTD.
By:____________________________
Title:
▇▇▇ ▇▇▇▇▇▇ AMERICAN CAPITAL PRIME
RATE INCOME TRUST
By:____________________________
Title:
MITSUI TRUST & BANKING COMPANY,
LIMITED,NEW YORK BRANCH
By:____________________________
Title:
THE TOYO TRUST AND BANKING
COMPANY, LIMITED
By:____________________________
Title:
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ACKNOWLEDGEMENT AND CONSENT
Each of the undersigned corporations as guarantors under the
Subsidiary Guarantee, dated as of August 17, 1995, made by LS Acquisition Corp.
No. 14, ▇▇▇▇ Seating Holdings Corp. No. 50, Progress Pattern Corp., Lear
Plastics Corp., LS Acquisition Corporation No. 24, Fair Haven Industries, Inc.
and Automotive Industries Holding, Inc. (as successor by merger to AIHI
Acquisition Corp.) in favor of the Agent as supplemented by the Guarantor
Supplements, each dated September 12, 1995, by ASAA, Inc., Gulfstream
Automotive, Inc. and Automotive Industries, Inc. hereby (a) consents to the
transaction contemplated by this Amendment and (b) acknowledges and agrees that
the guarantees contained in such Subsidiary Guarantee as supplemented by such
Guarantor Supplements (and all collateral security therefor) are, and shall
remain, in full force and effect after giving effect to this Amendment and all
prior modifications to the Credit Agreement.
LS ACQUISITION CORP., NO. 14
By:__________________________
Title:
▇▇▇▇ SEATING HOLDINGS CORP.
No. 50
By:__________________________
Title:
PROGRESS PATTERN CORP.
By:__________________________
Title:
LEAR PLASTICS CORP.
By:__________________________
Title:
LS ACQUISITION CORPORATION
NO. 24
By:__________________________
Title:
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FAIR HAVEN INDUSTRIES, INC.
By:__________________________
Title:
AUTOMOTIVE INDUSTRIES HOLDING,
INC. (as successor by merger to
AIHI Acquisition Corp.)
By:__________________________
Title:
ASSA, INC.
By:__________________________
Title:
GULFSTREAM AUTOMOTIVE, INC.
By:__________________________
Title:
AUTOMOTIVE INDUSTRIES, INC.
By:__________________________
Title:
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EXHIBIT A
FORM OF ADDITIONAL SUBSIDIARY GUARANTEE
ADDITIONAL SUBSIDIARY GUARANTEE, dated as of ________, 199_
(this "Guarantee"), made by each of the corporations that are signatories
hereto other than Chemical Bank (the "Guarantors"), in favor of CHEMICAL BANK,
as administrative agent (in such capacity, the "Agent") for the Banks parties
to the Credit Agreement referred to below.
W I T N E S S E T H:
WHEREAS, ▇▇▇▇ Seating Corporation (the "Borrower") is a party
to the Credit Agreement, dated as of August 17, 1995 (as amended, supplemented
or otherwise modified from time to time, the "Credit Agreement") with the
financial institutions parties thereto (the "Banks"), the Agent and the
Managing Agents, Co-Agents and Lead Managers identified therein;
WHEREAS, pursuant to the Credit Agreement and the other Loan
Documents (as defined in the Credit Agreement), the Banks have agreed to make
certain Loans (as defined in the Credit Agreement) to or for the benefit of the
Borrower and, in the case of the Issuing Bank (as defined in the Credit
Agreement), issue and, in the case of the Participating Banks (as defined in
the Credit Agreement), participate in certain Letters of Credit (as defined in
the Credit Agreement);
WHEREAS, it is a condition precedent to the effectiveness of
the First Amendment and Consent, dated as of December 8, 1995 (the "First
Amendment"), to the Credit Agreement that each Guarantor shall have executed
and delivered this Guarantee to the Agent for the ratable benefit of the Banks;
and
WHEREAS, the Borrower and the Guarantors are engaged in
related businesses and each Guarantor will derive substantial direct and
indirect benefits from the making of the Loans and issuances of the Letters of
Credit;
NOW, THEREFORE, in consideration of the premises contained
herein and to induce the Agent, and the Banks to enter into the First Amendment
and to induce the Banks to make the Loans and to issue and participate in the
Letters of Credit under the Credit Agreement, each Guarantor hereby agrees with
the Agent, for the ratable benefit of the Banks, as follows:
1. Defined Terms. (a) Unless otherwise defined herein,
terms defined in the Credit Agreement and used herein shall have the meanings
given to them in the Credit Agreement.
(b) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Guarantee shall refer to this Guarantee as a
whole and not to any particular provision
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of this Guarantee, and Section and paragraph references are to this Guarantee
unless otherwise specified.
(c) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
2. Guarantee. (a) Subject to the provisions of paragraph
2(b), each of the Guarantors hereby, jointly and severally, unconditionally and
irrevocably, guarantees to the Agent, for the ratable benefit of the Banks and
their respective successors, indorsees, transferees and assigns, the prompt and
complete payment and performance by the Borrower when due (whether at the
stated maturity, by acceleration or otherwise) of the Obligations.
(b) Anything herein or in any other Loan Document to the
contrary notwithstanding, the maximum liability of each Guarantor hereunder and
under the other Loan Documents, and, without duplication, the maximum amount of
Obligations secured pursuant to the Security Documents by assets of such
Guarantor, shall in no event exceed the lesser of (i) the amount which can be
guaranteed by such Guarantor under applicable federal and state laws relating
to the insolvency of debtors and (ii) in the case of Lear Operations
Corporation, $54,000,000, and, in the case of NAB Corporation, $59,000,000,
provided that the amounts contained in this clause (ii) shall automatically
increase in accordance with subsection 8.5 of the Credit Agreement.
(c) Subject to the provisions of paragraph 2(b), each
Guarantor further agrees to pay any and all expenses (including, without
limitation, all fees and disbursements of counsel) which may be paid or
incurred by the Agent or any Bank in enforcing, or obtaining advice of counsel
in respect of, any rights with respect to, or collecting, any or all of the
Obligations and/or enforcing any rights with respect to, or collecting against,
such Guarantor under this Guarantee. This Guarantee shall remain in full force
and effect until the Obligations are paid in full and the Commitments are
terminated, notwithstanding that from time to time prior thereto the Borrower
may be free from any Obligations.
(d) Each Guarantor agrees that the Obligations may at any
time and from time to time exceed the amount of the liability of such Guarantor
hereunder without impairing this Guarantee or affecting the rights and remedies
of the Agent or any Bank hereunder.
(e) No payment or payments made by the Borrower, any of the
Guarantors, any other guarantor or any other Person or received or collected by
the Agent or any Bank from the Borrower, any of the Guarantors, any other
guarantor or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application at any time or from time to time in
reduction of or in payment of the Obligations shall be deemed to
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modify, reduce, release or otherwise affect the liability of any Guarantor
hereunder which shall, notwithstanding any such payment or payments other than
payments made by such Guarantor in respect of the Obligations or payments
received or collected from such Guarantor in respect of the Obligations, remain
liable for the Obligations up to the maximum liability of such Guarantor
hereunder until the Obligations are paid in full and the Commitments are
terminated.
(f) Each Guarantor agrees that whenever, at any time, or from
time to time, it shall make any payment to the Agent or any Bank on account of
its liability hereunder, it will notify the Agent in writing that such payment
is made under this Guarantee for such purpose.
3. Right of Contribution. Each Guarantor hereby agrees that
to the extent that a Guarantor shall have paid more than its proportionate
share of any payment made hereunder, such Guarantor shall be entitled to seek
and receive contribution from and against any other Guarantor hereunder who has
not paid its proportionate share of such payment. Each Guarantor's right of
contribution shall be subject to the terms and conditions of Section 5 hereof.
The provisions of this Section shall in no respect limit the obligations and
liabilities of any Guarantor to the Agent and the Banks, and each Guarantor
shall remain liable to the Agent and the Banks for the full amount guaranteed
by such Guarantor hereunder.
4. Right of Set-off. Upon the occurrence of any Event of
Default, each Guarantor hereby irrevocably authorizes each Bank at any time and
from time to time without notice to such Guarantor or any other Guarantor, any
such notice being expressly waived by each Guarantor, to set-off and
appropriate and apply any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Bank to or
for the credit or the account of such Guarantor, or any part thereof in such
amounts as such Bank may elect, against and on account of the obligations and
liabilities of such Guarantor to such Bank hereunder and claims of every nature
and description of such Bank against such Guarantor, in any currency, whether
arising hereunder, under the Credit Agreement, any Note, any other Loan
Documents or otherwise, as such Bank may elect, whether or not the Agent or any
Bank has made any demand for payment and although such obligations, liabilities
and claims may be contingent or unmatured. The Agent and each Bank shall
notify such Guarantor promptly of any such set-off and the application made by
the Agent or such Bank, provided that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of the Agent
and each Bank under this Section are in addition to other rights and remedies
(including,
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without limitation, other rights of set-off) which the Agent or such Bank may
have.
5. No Subrogation. Notwithstanding any payment or payments
made by any of the Guarantors hereunder or any set-off or application of funds
of any of the Guarantors by any Bank, no Guarantor shall be entitled to be
subrogated to any of the rights of the Agent or any Bank against the Borrower
or any other Guarantor or any collateral security or guarantee or right of
offset held by the Agent or any Bank for the payment of the Obligations, nor
shall any Guarantor seek or be entitled to seek any contribution or
reimbursement from the Borrower or any other Guarantor in respect of payments
made by such Guarantor hereunder, until all amounts owing to the Agent and the
Banks by the Borrower on account of the Obligations are paid in full and the
Commitments are terminated. If any amount shall be paid to any Guarantor on
account of such subrogation rights at any time when all of the Obligations
shall not have been paid in full, such amount shall be held by such Guarantor
in trust for the Agent and the Banks, segregated from other funds of such
Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over
to the Agent in the exact form received by such Guarantor (duly indorsed by
such Guarantor to the Agent, if required), to be applied against the
Obligations, whether matured or unmatured, in such order as the Agent may
determine.
6. Amendments, etc. with respect to the Obligations; Waiver
of Rights. Each Guarantor shall remain obligated hereunder and under any other
Loan Document to which it is a party notwithstanding that, without any
reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any demand for payment of any of the Obligations made
by the Agent or any Bank may be rescinded by such party and any of the
Obligations continued, and the Obligations, or the liability of any other party
upon or for any part thereof, or any collateral security or guarantee therefor
or right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised,
waived, surrendered or released by the Agent or any Bank, and the Credit
Agreement, the Notes and the other Loan Documents and any other documents
executed and delivered in connection therewith may be amended, modified,
supplemented or terminated, in whole or in part, as the Agent, the Required
Banks or all the Banks, as the case may be, may deem advisable from time to
time, and any collateral security, guarantee or right of offset at any time
held by the Agent or any Bank for the payment of the Obligations may be sold,
exchanged, waived, surrendered or released. Neither the Agent nor any Bank
shall have any obligation to protect, secure, perfect or insure any Lien at any
time held by it as security for the Obligations or for this Guarantee or any
property subject thereto. When making any demand hereunder against any of the
Guarantors, the Agent or any Bank may, but shall be under no obligation to,
make a similar demand on the Borrower or any other Guarantor or guarantor, and
any failure by
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the Agent or any Bank to make any such demand or to collect any payments from
the Borrower or any such other Guarantor or guarantor or any release of the
Borrower or such other Guarantor or guarantor shall not relieve any of the
Guarantors in respect of which a demand or collection is not made or any of the
Guarantors not so released of their several obligations or liabilities
hereunder, and shall not impair or affect the rights and remedies, express or
implied, or as a matter of law, of the Agent or any Bank against any of the
Guarantors. For the purposes hereof "demand" shall include the commencement
and continuance of any legal proceedings.
7. Guarantee Absolute and Unconditional. Each Guarantor
waives any and all notice of the creation, renewal, extension or accrual of any
of the Obligations and notice of or proof of reliance by the Agent or any Bank
upon this Guarantee or acceptance of this Guarantee; the Obligations, and any
of them, shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon this
Guarantee; and all dealings between the Borrower and any of the Guarantors, on
the one hand, and the Agent and the Banks, on the other hand, likewise shall be
conclusively presumed to have been had or consummated in reliance upon this
Guarantee. Each Guarantor waives diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon the Borrower or any of
the Guarantors with respect to the Obligations. Each Guarantor understands and
agrees that this Guarantee shall be construed as a continuing, absolute and
unconditional guarantee of payment without regard to (a) the validity,
regularity or enforceability of the Credit Agreement, any Note or any other
Loan Document, any of the Obligations or any other collateral security therefor
or guarantee or right of offset with respect thereto at any time or from time
to time held by the Agent or any Bank, (b) any defense, set-off or counterclaim
(other than a defense of payment or performance) which may at any time be
available to or be asserted by the Borrower against the Agent or any Bank, or
(c) any other circumstance whatsoever (with or without notice to or knowledge
of the Borrower or such Guarantor) which constitutes, or might be construed to
constitute, an equitable or legal discharge of the Borrower for the
Obligations, or of such Guarantor under this Guarantee, in bankruptcy or in any
other instance. When pursuing its rights and remedies hereunder against any
Guarantor, the Agent and any Bank may, but shall be under no obligation to,
pursue such rights and remedies as it may have against the Borrower or any
other Person or against any collateral security or guarantee for the
Obligations or any right of offset with respect thereto, and any failure by the
Agent or any Bank to pursue such other rights or remedies or to collect any
payments from the Borrower or any such other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or
any release of the Borrower or any such other Person or any such collateral
security, guarantee or right of offset, shall not relieve such Guarantor of any
liability
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hereunder, and shall not impair or affect the rights and remedies, whether
express, implied or available as a matter of law, of the Agent and the Banks
against such Guarantor. This Guarantee shall remain in full force and effect
and be binding in accordance with and to the extent of its terms upon each
Guarantor and the successors and assigns thereof, and shall inure to the
benefit of the Agent and the Banks, and their respective successors, indorsees,
transferees and assigns, until all the Obligations and the obligations of each
Guarantor under this Guarantee shall have been satisfied by payment in full and
the Commitments shall be terminated, notwithstanding that from time to time
during the term of the Credit Agreement the Borrower may be free from any
Obligations.
8. Reinstatement. This Guarantee shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by the Agent or any Bank upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower or any Guarantor, or
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, the Borrower or any Guarantor or any
substantial part of its property, or otherwise, all as though such payments had
not been made.
9. Payments. Each Guarantor hereby guarantees that payments
hereunder will be paid to the Agent without set-off or counterclaim in Dollars
at the office of the Agent located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇.
10. Representations and Warranties. Each Guarantor hereby
represents and warrants that:
(a) it is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation and
has the corporate power and authority and the legal right to own and operate
its property, to lease the property it operates and to conduct the business in
which it is currently engaged;
(b) it has the corporate power and authority and the legal
right to execute and deliver, and to perform its obligations under, this
Guarantee and each other Loan Document to which it is a party, and has taken
all necessary corporate action to authorize the execution, delivery and
performance of this Guarantee and each other Loan Document to which it is a
party;
(c) this Guarantee and each other Loan Document to which it
is a party constitutes a legal, valid and binding obligation of such Guarantor
enforceable in accordance with its terms, except as affected by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting the enforcement of creditors' rights
25
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generally, general equitable principles and an implied covenant of good faith
and fair dealing;
(d) the execution, delivery and performance of this Guarantee
and each other Loan Document to which it is a party will not violate any
provision of any Requirement of Law or Contractual Obligation of such Guarantor
and will not result in or require the creation or imposition of any Lien on any
of the properties or revenues of such Guarantor pursuant to any Requirement of
Law or Contractual Obligation of the Guarantor; and
(e) no consent or authorization of, filing with, or other act
by or in respect of, any arbitrator or Governmental Authority and no consent of
any other Person (including, without limitation, any stockholder or creditor of
such Guarantor) is required in connection with the execution, delivery,
performance, validity or enforceability of this Guarantee and each other Loan
Document to which it is a party.
Each Guarantor agrees that the foregoing representations and
warranties shall be deemed to have been made by such Guarantor on the date of
each borrowing or issuance of a Letter of Credit under the Credit Agreement and
as of such date of borrowing or issuance, as the case may be, as though made
hereunder on and as of such date. Each Guarantor hereby confirms that each of
the Mortgages and each other Security Document to which such Guarantor is a
party stands as collateral security for the payment and performance of such
Guarantor's obligations and liabilities under this Guarantee.
11. Authority of Agent. Each Guarantor acknowledges that the
rights and responsibilities of the Agent under this Guarantee with respect to
any action taken by the Agent or the exercise or non-exercise by the Agent of
any option, right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Guarantee shall, as between the
Agent and the Banks, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Agent and such Guarantor, the Agent shall be conclusively
presumed to be acting as agent for the Banks with full and valid authority so
to act or refrain from acting, and no Guarantor shall be under any obligation,
or entitlement, to make any inquiry respecting such authority.
12. Notices. All notices, requests and demands to or upon
the Agent, any Bank or any Guarantor to be effective shall be in writing (or by
telex or telecopy confirmed in writing) and shall be deemed to have been duly
given or made (1) when delivered by hand or (2) if given by mail, five days
after being deposited in the mails by certified mail, return receipt requested
or (3) if by telex or telecopy, when sent and receipt has been confirmed,
addressed as follows:
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(a) if to the Agent or any Bank, at its address or
transmission number for notices provided in subsection 11.2 of the Credit
Agreement; and
(b) if to any Guarantor, at its address or transmission
number for notices set forth under its signature below.
The Agent, each Bank and each Guarantor may change its address
and transmission numbers for notices by notice in the manner provided in this
Section.
13. Counterparts. This Guarantee may be executed by one or
more of the parties to this Guarantee on any number of separate counterparts,
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument. A set of the counterparts of this Guarantee signed by
all the parties hereto shall be lodged with the Agent.
14. Severability. Any provision of this Guarantee which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
15. Integration. This Guarantee represents the agreement of
each Guarantor with respect to the subject matter hereof and there are no
promises or representations by the Agent or any Bank relative to the subject
matter hereof not reflected herein.
16. Amendments in Writing; No Waiver; Cumulative Remedies.
(a) None of the terms or provisions of this Guarantee may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
each Guarantor and the Agent in accordance with subsection 11.1 of the Credit
Agreement, provided that any provision of this Guarantee may be waived by the
Agent and the Banks in a letter or agreement executed by the Agent or by
telecopy from the Agent.
(b) Neither the Agent nor any Bank shall by any act (except
by a written instrument pursuant to paragraph 16.(a) hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. No failure to exercise, nor
any delay in exercising, on the part of the Agent or any Bank, any right, power
or privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Agent or any Bank of any right or remedy
27
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hereunder on any one occasion shall not be construed as a bar to any right or
remedy which the Agent or such Bank would otherwise have on any future
occasion.
(c) The rights and remedies herein provided are cumulative,
may be exercised singly or concurrently and are not exclusive of any other
rights or remedies provided by law.
17. Section Headings. The section headings used in this
Guarantee are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation
hereof.
18. Successors and Assigns. This Guarantee shall be binding
upon the successors and assigns of each Guarantor and shall inure to the
benefit of the Agent and the Banks and their successors and assigns.
19. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
20. Submission to Jurisdiction; Waivers. Each Guarantor
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal
action or proceeding relating to this Guarantee or any other Loan
Document to which it is a party, or for recognition and enforcement of
any judgment in respect thereof, to the non- exclusive general
jurisdiction of the courts of the State of New York, the courts of the
United States of America for the Southern District of New York, and
appellate courts from any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives trial by jury and any objection that
it may now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding was
brought in an inconvenient court and agrees not to plead or claim the
same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to such Guarantor at its address set forth under its
signature below or at such other address of which the Agent shall have
been notified pursuant to Section 12; and
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner
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permitted by law or shall limit the right to ▇▇▇ in any other
jurisdiction.
IN WITNESS WHEREOF, each of the undersigned has caused this
Guarantee to be duly executed and delivered as of the day and year first above
written.
▇▇▇▇ OPERATIONS CORPORATION
By:_________________________
Title:
NAB CORPORATION
By:_________________________
Title:
Address for Notices:
c/o Lear Seating Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
29
EXHIBIT B
FORM OF ADDITIONAL SECURITY AGREEMENT
ADDITIONAL SECURITY AGREEMENT, dated as of _________, 199_,
made by each of the corporations that are signatories hereto other than
Chemical Bank (the "Grantors"), in favor of CHEMICAL BANK, as administrative
agent (in such capacity, the "Agent") for the Banks parties to the Credit
Agreement referred to below.
W I T N E S S E T H :
WHEREAS, ▇▇▇▇ Seating Corporation (the "Borrower") is a party
to the Credit Agreement, dated as of August 17, 1995 (as amended, supplemented
or otherwise modified from time to time, the "Credit Agreement") with the
financial institutions parties thereto (the "Banks"), the Agent and the
Managing Agents, Co-Agents and Lead Managers identified therein;
WHEREAS, pursuant to the Credit Agreement and the other Loan
Documents (as defined in the Credit Agreement), the Banks have agreed to make
certain Loans (as defined in the Credit Agreement) to or for the benefit of the
Borrower and, in the case of the Issuing Bank (as defined in the Credit
Agreement), issue and, in the case of the Participating Banks (as defined in
the Credit Agreement), participate in certain Letters of Credit (as defined in
the Credit Agreement); and
WHEREAS, it is a condition precedent to the effectiveness of
the First Amendment and Consent, dated as of December 8, 1995 (the "First
Amendment"), to the Credit Agreement that the Grantors shall have executed and
delivered this Security Agreement to the Agent for the ratable benefit of the
Banks;
NOW, THEREFORE, in consideration of the premises contained
herein and to induce the Agent, and the Banks to enter into the First Amendment
and to induce the Banks to make the Loans and to issue and participate in the
Letters of Credit under the Credit Agreement, the Grantors hereby agree with
the Agent, for the ratable benefit of the Banks, as follows:
1. Defined Terms. (a) Unless otherwise defined herein,
terms which are defined in the Credit Agreement and used herein shall have the
meanings given to them in the Credit Agreement; the following terms which are
defined in the Uniform Commercial Code in effect in the State of New York on
the date hereof are used herein as so defined: Accounts, Chattel Paper,
Documents, Farm Products, General Intangibles, Instruments, Inventory and
Proceeds; and the following terms shall have the following meanings:
"Code" shall mean the Uniform Commercial Code as from time to
time in effect in the State of New York.
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2
"Collateral" shall have the meaning assigned to it in Section
2 of this Security Agreement.
"Contracts" shall mean each of the agreements listed on
Schedules I-A through B, as the same may from time to time be amended,
supplemented or otherwise modified, including, without limitation, (a)
all rights for each Grantor to receive monies due and to become due to
it thereunder or in connection therewith, (b) all rights of each
Grantor to damages arising out of, or for, breach or default in
respect thereof and (c) all rights of each Grantor to perform and to
exercise all remedies thereunder.
"Equipment" shall mean all equipment, as such term is defined
in Section 9-109(2) of the Code, now or hereafter acquired by each
Grantor, and, in any event, shall mean and include, but shall not be
limited to, all machinery, equipment, furnishings and fixtures now or
hereafter used in connection with the businesses of each Grantor or
located at the locations set forth on Schedules IV-A through B, and
any and all additions, substitutions and replacements of any of the
foregoing, together with all attachments, components, parts (including
spare parts), equipment and accessories installed thereon or affixed
thereto.
"Security Agreement" shall mean this Additional Security
Agreement, as amended, supplemented or otherwise modified from time to
time.
(b) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Security Agreement shall refer to this
Security Agreement as a whole and not to any particular provision of this
Security Agreement, and Section, paragraph and Schedule references are to this
Security Agreement unless otherwise specified.
(c) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
2. Grant of Security Interest. As collateral security for
the prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations (subject to the
limitations set forth in paragraph 2(b) of the Additional Subsidiary Guarantee)
and in order to induce the Agent and the Banks to enter into the Credit
Agreement, each Grantor hereby sells, assigns, conveys, mortgages, pledges,
hypothecates and transfers to the Agent, and hereby grants to the Agent, for
the ratable benefit of the Banks, a security interest in all of the following
property now owned or at any time hereafter acquired by such Grantor or in
which such Grantor now has or at any time in the future may acquire any right,
title or interest (collectively, the "Collateral"):
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(i) all Accounts;
(ii) all Chattel Papers;
(iii) all Contracts;
(iv) all Documents;
(v) all Equipment;
(vi) all General Intangibles;
(vii) all Instruments;
(viii) all Inventory; and
(ix) to the extent not otherwise included, all Proceeds,
products, substitutions and replacements of any and all of the
foregoing.
3. Rights of Agent and Banks; Limitations on Agent's and
Banks' Obligations. (a) Anything herein to the contrary notwithstanding,
each Grantor shall remain liable under each of its respective Accounts and the
Contracts to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the terms of
any agreement giving rise to each such Account and in accordance with and
pursuant to the terms and provisions of the Contracts. Neither the Agent nor
any Bank shall have any obligation or liability under any Account (or any
agreement giving rise thereto) or under the Contracts by reason of or arising
out of this Security Agreement or the receipt by the Agent or any such Bank of
any payment relating to such Account or the Contracts pursuant hereto, nor
shall the Agent or any Bank be obligated in any manner to perform any of the
obligations of any Grantor under or pursuant to any Account (or any agreement
giving rise thereto), or under or pursuant to the Contracts, to make any
payment, to make any inquiry as to the nature or the sufficiency of any payment
received by it or as to the sufficiency of any performance by any party under
any Account (or any agreement giving rise thereto) or under the Contracts, to
present or file any claim, to take any action to enforce any performance or to
collect the payment of any amounts which may have been assigned to it or to
which it may be entitled at any time or times.
(b) At the Agent's request, each Grantor shall deliver to
the Agent all original and other documents evidencing, and relating to, the
sale and delivery of Inventory or the performance of labor or service which
created the Accounts, including, but not limited to, all Chattel Paper,
original purchase orders, invoices, shipping documents and delivery receipts
and duplicate copies of credit memoranda.
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(c) The Agent may at any time after the occurrence and
during the continuance of an Event of Default notify account debtors and
parties to Accounts that the Accounts have been assigned to the Agent, for the
ratable benefit of the Banks, and that payments shall be made directly to the
Agent. Upon the request of the Agent at any time after the occurrence and
during the continuance of an Event of Default, each Grantor will so notify such
account debtors and such parties to the Accounts. Upon prior notice to the
Grantors, the Agent may in its own name or in the name of others communicate
with account debtors and parties to Accounts in order to verify with them to
the Agent's satisfaction the existence, amount and terms of any Accounts.
(d) Upon prior notice to the Grantors, the Agent shall
have the right to make test verifications of the Collateral in any matter and
through any medium that it considers advisable, and each Grantor agrees to
furnish all such assistance and information as the Agent may require in
connection therewith. Each Grantor at its expense will furnish, or will cause
independent public accountants satisfactory to the Agent to furnish, to the
Agent at any time and from time to time promptly upon the Agent's request, the
following reports: (i) reconciliation of all Collateral, (ii) an aging of all
Collateral, (iii) trial balances, (iv) a test verification of such Collateral
and (v) a physical inventory of the Collateral by certified accountants
reasonably satisfactory to the Agent.
4. Representations and Warranties. Each Grantor hereby
represents and warrants that:
(a) Title; No Other Liens. Except for the Lien granted
to the Agent for the ratable benefit of the Banks pursuant to this
Security Agreement, such Grantor owns each item of the Collateral free
and clear of any and all Liens or claims of others other than Liens
permitted under subsection 8.3 of the Credit Agreement. No security
agreement, financing statement or other public notice with respect to
all or any part of such Collateral is on file or of record in any
public office, except (i) such as may have been filed in favor of the
Agent, for the ratable benefit of the Banks, pursuant to this Security
Agreement, (ii) financing statements filed with respect to equipment
leases or (iii) as may otherwise be permitted pursuant to the Credit
Agreement.
(b) Perfected First Priority Liens. Appropriate
financing statements having been filed in the jurisdictions listed on
Schedules II-A through B and all other appropriate action having been
duly taken, the Liens granted pursuant to this Security Agreement
constitute perfected Liens on the Collateral in favor of the Agent,
for the ratable benefit of the Banks, which are prior to all other
Liens on such Collateral created by such Grantor other than Liens
permitted under subsection 8.3 of the Credit Agreement and
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which are enforceable as such against all creditors of and purchasers
from such Grantor and against any owner or purchaser of the real
property where any of the Equipment or Inventory is located and any
present or future creditor obtaining a Lien on such real property.
(c) Accounts. The amount represented by such Grantor to
the Banks from time to time as owing by each account debtor or by all
account debtors in respect of the Accounts will at such time be the
correct amount actually owing by such account debtor or debtors
thereunder. No amount in excess of $100,000 payable to such Grantor
under or in connection with any of the Accounts is evidenced by any
Instrument or Chattel Paper which has not been delivered to the Agent.
The place where such Grantor keeps its records concerning the Accounts
is set forth on Schedule III-A through B.
(d) Consents. Except as previously disclosed to the
Banks in writing: (i) no consent of any party (other than such
Grantor) to each Contract is required, or purports to be required, in
connection with the execution, delivery and performance of this
Security Agreement by such Grantor; (ii) each Contract is in full
force and effect and constitutes a valid and legally enforceable
obligation of the parties thereto, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally;
(iii) no consent or authorization of, filing with or other act by or
in respect of any Governmental Authority is required in connection
with the execution, delivery, performance, validity or enforceability
of any Contract by any party thereto other than those which have been
duly obtained, made or performed, are in full force and effect and do
not subject the scope of any Contract to any material adverse
limitation, either specific or general in nature; (iv) neither such
Grantor nor (to the best of such Grantor's knowledge) any other party
to any Contract is in default or is likely to become in default in the
performance or observance of any of the terms thereof; (v) such
Grantor has fully performed all its obligations under each Contract;
(vi) the right, title and interest of such Grantor in, to and under
each Contract is not subject to any defense, offset, counterclaim or
claim which could materially adversely affect the value of such
Contract as Collateral, nor have any of the foregoing been asserted or
alleged against such Grantor as to each Contract; (vii) such Grantor
has delivered to the Agent a complete and correct copy of each
Contract, including all amendments, supplements and other
modifications thereto; and (viii) no amount payable to such Grantor
under or in connection with any Contract is evidenced by any
Instrument or Chattel Paper which has not been delivered to the Agent.
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6
(e) Inventory and Equipment. The Inventory and the
Equipment are kept only at the locations listed on Schedules IV-A
through B.
(f) Chief Executive Office. Such Grantor's chief executive
office and chief place of business is located at the address listed on
Schedules V-A through B.
(g) Farm Products. None of the Collateral constitutes, or is
the Proceeds of, Farm Products.
5. Covenants. Each Grantor covenants and agrees with the
Agent and the Banks that, from and after the date of this Security Agreement
until the Obligations have been paid in full:
(a) Further Documentation; Pledge of Instruments and Chattel
Paper. At any time and from time to time, upon the reasonable request
of any Bank, and at the sole expense of such Grantor, such Grantor
will promptly and duly execute and deliver such further instruments
and documents and take such further action as such Bank may reasonably
request for the purpose of obtaining or preserving the full benefits
of this Security Agreement and of the rights and powers herein
granted, including, without limitation, the filing of any financing or
continuation statements under the Uniform Commercial Code in effect in
any jurisdiction with respect to the Liens created hereby. Such
Grantor also hereby authorizes the Agent to file any such financing or
continuation statement without the signature of such Grantor to the
extent permitted by applicable law. A carbon, photographic or other
reproduction of this Security Agreement shall be sufficient as a
financing statement for filing in any jurisdiction.
(b) Pledge of Instruments and Chattel Paper. If any amount
in excess of $100,000 payable under or in connection with any of the
Collateral shall be or become evidenced by any Instrument or Chattel
Paper, such Instrument or Chattel Paper shall be immediately delivered
to the Agent, duly endorsed by such Grantor in a manner satisfactory
to the Agent, to be held as Collateral pursuant to this Security
Agreement.
(c) Indemnification. Such Grantor agrees to pay, and to save
the Agent and the Banks harmless from, any and all liabilities, costs
and expenses (including, without limitation, legal fees and expenses)
(i) with respect to, or resulting from, any delay in paying, any and
all excise, sales or other taxes which may be payable or determined to
be payable with respect to any of the Collateral, (ii) with respect
to, or resulting from, any delay in complying with any Requirement of
Law applicable to any of the Collateral or (iii) in connection with
any of the transactions contemplated by this Security Agreement. In
any suit,
35
7
proceeding or action brought by the Agent or any Bank under any of the
Accounts for any sum owing thereunder, or to enforce any provisions of
any such Account, such Grantor will save, indemnify and keep the Agent
and such Bank harmless from and against all expense, loss or damage
suffered by reason of any defense, setoff, counterclaim, recoupment or
reduction or liability whatsoever of the account debtor or obligor
thereunder, arising out of a breach by such Grantor of any obligation
thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of such account debtor or
obligor or its successors from such Grantor.
(d) Maintenance of Records. Such Grantor will keep and
maintain at its own cost and expense satisfactory and complete
records of the Collateral, including, without limitation, a record of
all payments received and all credits granted with respect to the
Accounts. Such Grantor will ▇▇▇▇ its books and records pertaining to
the Collateral to evidence this Security Agreement and the security
interests granted hereby. For the Agent's and the Banks' further
security, the Agent, for the ratable benefit of the Banks, shall have
a security interest in all of such Grantor's books and records
pertaining to the Collateral, and, subject to subsection 11.13 of the
Credit Agreement, such Grantor shall turn over any such books and
records to the Agent or to its representatives during normal business
hours at the request of the Agent.
(e) Right of Inspection. The Agent and the Banks shall at
all times, upon reasonable notice, have full and free access during
normal business hours to all the books, correspondence and records of
such Grantor, and the Agent and the Banks and their respective
representatives may examine the same, take extracts therefrom and make
photocopies thereof, and such Grantor agrees to render to the Agent
and the Banks, at such Grantor's cost and expense, such clerical and
other assistance as may be reasonably requested with regard thereto.
The Agent and the Banks and their respective representatives shall,
upon reasonable notice and at any reasonable time, also have the right
to enter into and upon any premises where any of the Inventory or
Equipment is located for the purpose of inspecting the same, observing
its use or otherwise protecting its interests therein.
(f) Compliance with Laws, etc. Such Grantor will comply in
all material respects with all Requirements of Law applicable to the
Collateral or any part thereof or to the operation of such Grantor's
business; provided that such Grantor may contest any Requirement of
Law in any reasonable manner which shall not, in the sole opinion of
the Agent, adversely affect the Agent's or the Banks' rights or the
priority of their Liens on the Collateral.
36
8
(g) Compliance with Terms of Contracts, etc. Such Grantor
will perform and comply in all material respects with all its
obligations under the Contracts and all its other Contractual
Obligations relating to the Collateral.
(h) Payment of Obligations. Such Grantor will pay promptly
when due all taxes, assessments and governmental charges or levies
imposed upon the Collateral or in respect of its income or profits
therefrom, as well as all claims of any kind (including, without
limitation, claims for labor, materials and supplies) against or with
respect to such Collateral, except that no such charge need be paid if
(i) the validity thereof is being contested in good faith by
appropriate proceedings, and such charge is adequately reserved
against on such Grantor's books in accordance with GAAP or (ii) such
proceedings do not involve any danger of the sale, forfeiture or loss
of any of such Collateral or any interest therein.
(i) Limitations on Liens on Collateral. Such Grantor will
not create, incur or permit to exist, will defend the Collateral
against, and will take such other action as is necessary to remove,
any Lien or claim on or to such Collateral, other than the Liens
created hereby or Liens permitted under subsection 8.3 of the Credit
Agreement, and will defend the right, title and interest of the Agent
and the Banks in and to any of such Collateral against the claims and
demands of all Persons whomsoever.
(j) Limitations on Dispositions of Collateral. Such Grantor
will not sell, transfer, lease or otherwise dispose of any of the
Collateral, or attempt, offer or contract to do so except for
dispositions of assets permitted by subsection 8.6 of the Credit
Agreement.
(k) Limitations on Modifications, Waivers, Extensions of the
Contracts and Agreements Giving Rise to Accounts. Such Grantor will
not (i) amend, modify, terminate or waive any provision of any
Contract or any agreement giving rise to any of the Accounts in any
manner which could reasonably be expected to materially adversely
affect the value of any such Contract or Account as Collateral, (ii)
fail to exercise promptly and diligently each and every material right
which it may have under each agreement giving rise to the Accounts
(other than any right of termination) or (iii) fail to deliver to the
Agent a copy of each material demand, notice or document received by
it relating in any way to any Contract or any agreement giving rise to
an Account.
(l) Limitations on Discounts, Compromises, Extensions of
Accounts. Other than in the ordinary course of business as generally
conducted by the Grantor over a period of time, such Grantor will not
grant any extension of the time of payment of any of the Accounts,
compromise, compound or
37
9
settle the same for less than the full amount thereof, release, wholly
or partially, any Person liable for the payment thereof, or allow any
credit or discount whatsoever thereon.
(m) Maintenance of Equipment. Such Grantor will maintain
each material item of the Equipment useful and necessary in its
business in good operating condition, ordinary wear and tear and
immaterial impairments of value and damage by the elements excepted,
and will provide all maintenance, service and repairs necessary for
such purpose.
(n) Maintenance of Insurance. Such Grantor will maintain,
with financially sound and reputable companies, insurance policies (i)
insuring the Inventory and Equipment against loss by fire, explosion,
theft and such other casualties customary for business of the same
type and (ii) insuring such Grantor, the Agent and the Banks against
liability for personal injury and property damage relating to the
Inventory and Equipment, such policies to be in the form and amounts
and having such coverage customary for business of the same type with
losses payable to such Grantor and the Agent as their respective
interests may appear. All such insurance shall (i) contain a breach
of warranty clause in favor of the Agent, (ii) provide that no
cancellation, material reduction in amount or material change in
coverage thereof shall be effective until at least 30 days after
receipt by the Agent and the Banks of written notice thereof, (iii)
name the Agent and the Banks as insured parties and (iv) be reasonably
satisfactory in all other respects to the Agent. Such Grantor shall
deliver to the Agent and the Banks a report of a reputable insurance
broker with respect to such insurance as the Agent may from time to
time reasonably request.
(o) Further Identification of Collateral. Upon the
reasonable request of the Agent, such Grantor will furnish to the
Agent and the Banks from time to time statements and schedules further
identifying and describing the Collateral and such other reports in
connection with the Collateral, all in reasonable detail.
(p) Notices. Such Grantor will advise the Agent and the
Banks promptly, in reasonable detail, at their respective addresses
set forth in the Credit Agreement, (i) of any Lien (other than Liens
created hereby or permitted under the Credit Agreement) on, or claim
asserted against, any of the Collateral and (ii) of the occurrence of
any other event which could reasonably be expected to have a material
adverse effect on the aggregate value of the Collateral or on the
Liens created hereunder.
(q) Changes in Locations, Name, etc. Such Grantor will not
(i) change the location of its chief executive
38
10
office/chief place of business from that specified in paragraph 4(f)
or remove its books and records from the location specified in
paragraph 4(c), (ii) permit any of the Inventory or Equipment to be
kept at a location other than those listed in respect to such Grantor
on Schedules IV-A through or (iii) change its name, identity or
corporate structure to such an extent that any financing statement
filed by the Agent in connection with this Security Agreement could
become seriously misleading.
6. Agent's Appointment as Attorney-in-Fact. (a) Powers.
Each Grantor hereby irrevocably constitutes and appoints the Agent and any
officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of such Grantor and in the name of such Grantor or in its own name,
from time to time in the Agent's discretion, for the purpose of carrying out
the terms of this Security Agreement, to take any and all appropriate action
and to execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Security Agreement, and, without
limiting the generality of the foregoing, each Grantor hereby gives the Agent
the power and right, on behalf of such Grantor, without notice to or assent by
such Grantor, to do the following:
(i) upon the occurrence and during the continuance of
any Event of Default, in the name of such Grantor or its own name, or
otherwise, to take possession of and indorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of
moneys due under any Accounts, Instruments, General Intangibles or any
Contract or with respect to any other of the Collateral and to file
any claim or to take any other action or proceeding in any court of
law or equity or otherwise deemed appropriate by the Agent for the
purpose of collecting any and all such moneys due under any such
Account, Instrument or General Intangible or Contract or with respect
to any other such Collateral whenever payable;
(ii) to pay or discharge taxes and Liens levied or
placed on or threatened against the Collateral, to effect any repairs
or any insurance called for by the terms of this Security Agreement
and to pay all or any part of the premiums therefor and the costs
thereof; and
(iii) upon the occurrence and during the continuance of
any Event of Default, (A) to direct any party liable for any payment
under any of the Collateral to make payment of any and all moneys due
or to become due thereunder directly to the Agent or as the Agent
shall direct; (B) to ask or demand for, collect, receive payment of
and receipt for, any and all moneys, claims and other amounts due or
to become due at any time in respect of or arising out of any of the
Collateral; (C) to sign and indorse any invoices, freight or
39
11
express bills, bills of lading, storage or warehouse receipts, drafts
against debtors, assignments, verifications, notices and other
documents in connection with any of the Collateral; (D) to commence
and prosecute any suits, actions or proceedings at law or in equity in
any court of competent jurisdiction to collect the Collateral or any
thereof and to enforce any other right in respect of any such
Collateral; (E) to defend any suit, action or proceeding brought
against such Grantor with respect to any Collateral; (F) to settle,
compromise or adjust any suit, action or proceeding described in
clause (E) above and, in connection therewith, to give such discharges
or releases as the Agent may deem appropriate; and (G) generally, to
sell, transfer, pledge and make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely as
though the Agent were the absolute owner thereof for all purposes, and
to do, at the Agent's option and such Grantor's expense, at any time,
or from time to time, all acts and things which the Agent deems
necessary to protect, preserve or realize upon the Collateral and the
Agent's and the Banks' Liens thereon and to effect the intent of this
Security Agreement, all as fully and effectively as the Grantor might
do.
Each Grantor hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.
(b) Other Powers. Each Grantor also authorizes the Agent and
the Banks, at any time and from time to time, to execute, in connection with
the sale provided for in Section 9 hereof, any endorsements, assignments or
other instruments of conveyance or transfer with respect to the Collateral.
(c) No Duty on Agent or Banks' Part. The powers conferred on
the Agent and the Banks hereunder are solely to protect the Agent's and the
Banks' interests in the Collateral and shall not impose any duty upon the Agent
or any Bank to exercise any such powers. The Agent and the Banks shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to any Grantor for any act or failure
to act hereunder, except for their own gross negligence or willful misconduct.
7. Performance by Agent of Grantor's Obligations. If any
Grantor fails to perform or comply with any of its agreements contained herein
and the Agent, as provided for by the terms of this Security Agreement, shall
itself perform or comply, or otherwise cause performance or compliance, with
such agreement, the expenses of the Agent incurred in connection with such
performance or compliance, together with interest thereon at a
40
12
rate per annum 2% above the ABR, shall be payable by such Grantor to the Agent
on demand and shall constitute Obligations secured hereby.
8. Proceeds. If an Event of Default shall occur and be
continuing:
(a) all Proceeds received by any Grantor consisting of cash,
checks and other near-cash items shall be held by such Grantor in
trust for the Agent and the Banks, segregated from other funds of the
Grantor, and shall, forthwith upon receipt by such Grantor, be turned
over to the Agent in the exact form received by such Grantor (duly
indorsed by such Grantor to the Agent, if required) and
(b) any and all such Proceeds received by the Agent (whether
from any Grantor or otherwise) may, in the sole discretion of the
Agent, be held by the Agent for the ratable benefit of the Banks as
collateral security for, and/or then or at any time thereafter may be
applied by the Agent against, the Obligations (whether matured or
unmatured), such application to be in such order as the Agent shall
elect. Any balance of such Proceeds remaining after the Obligations
shall have been paid in full and the Commitments shall have been
terminated shall be paid over to the Grantors or to whomsoever may be
lawfully entitled to receive the same.
9. Remedies. If an Event of Default shall occur and be
continuing, the Agent, on behalf of the Banks, may exercise, in addition to all
other rights and remedies granted to them in this Security Agreement and in any
other instrument or agreement securing, evidencing or relating to the
Obligations or any Obligations, all rights and remedies of a secured party
under the Code. Without limiting the generality of the foregoing, the Agent,
without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law referred
to below) to or upon the Grantors or any other Person (all and each of which
demands, defenses, advertisements and notices are hereby waived), may in such
circumstances forthwith collect, receive, appropriate and realize upon any
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give
an option or options to purchase, or otherwise dispose of and deliver any
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, at any exchange or broker's
board or office of the Agent or any Bank or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk.
The Agent and each Bank shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale or
sales, to purchase the whole or any part of any Collateral so sold, free of any
right or equity of redemption in
41
13
the Grantors, which right or equity is hereby waived or released. Each Grantor
further agrees, at the Agent's request, to assemble the Collateral and make it
available to the Agent at places which the Agent shall reasonably select,
whether at the Grantor's premises or elsewhere. The Agent shall apply the net
proceeds of any such collection, recovery, receipt, appropriation, realization
or sale, after deducting all reasonable costs and expenses of every kind
incurred therein or incidental to the care or safekeeping of any of such
Collateral or in any way relating to such Collateral or the rights of the Agent
and the Banks hereunder, including, without limitation, attorneys' fees and
disbursements, to the payment in whole or in part of the Obligations, in such
order as the Agent may elect, and only after such application and after the
payment by the Agent of any other amount required by any provision of law,
including, without limitation, Section 9-504(1)(c) of the Code, need the Agent
account for the surplus, if any, to the Grantors. To the extent permitted by
applicable law, the Grantor waives all claims, damages and demands it may
acquire against the Agent or any Bank arising out of the exercise by them of
any rights hereunder. If any notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice shall be deemed reasonable and
proper if given at least ten days before such sale or other disposition. Each
Grantor shall remain liable for any deficiency if the proceeds of any sale or
other disposition of the Collateral are insufficient to pay the Obligations and
the fees and disbursements of any attorneys employed by the Agent or any Bank
to collect such deficiency.
10. Limitation on Duties Regarding Preservation of
Collateral. The Agent's sole duty with respect to the custody, safekeeping and
physical preservation of the Collateral in its possession, under Section 9-207
of the Code or otherwise, shall be to deal with it in the same manner as the
Agent deals with similar property for its own account. Neither the Agent, any
Bank, nor any of their respective directors, officers, employees or agents
shall be liable for failure to demand, collect or realize upon all or any part
of the Collateral or for any delay in doing so or shall be under any obligation
to sell or otherwise dispose of any Collateral upon the request of any Grantor
or otherwise.
11. Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
12. Severability. Any provision of this Security Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
42
14
13. Section Headings. The Section headings used in this
Security Agreement are for convenience of reference only and are not to affect
the construction hereof or be taken into consideration in the interpretation
hereof.
14. No Waiver; Cumulative Remedies. Neither the Agent nor
any Bank shall by any act (except by a written instrument pursuant to Section
15 hereof), delay, indulgence, omission or otherwise be deemed to have waived
any right or remedy hereunder or to have acquiesced in any Default or Event of
Default or in any breach of any of the terms and conditions hereof. No failure
to exercise, nor any delay in exercising, on the part of the Agent or any Bank,
any right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by the Agent or any Bank of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Agent or such Bank would otherwise have on any future
occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any rights or
remedies provided by law.
15. Waivers and Amendments; Successors and Assigns; Governing
Law. None of the terms or provisions of this Security Agreement may be waived,
amended, supplemented or otherwise modified except by a written instrument
executed by each Grantor and the Agent in accordance with subsection 11.1 of
the Credit Agreement; provided that any provision of this Security Agreement
may be waived by the Agent and the Banks in a letter or agreement executed by
the Agent or by telecopy from the Agent. This Security Agreement shall be
binding upon the successors and assigns of each Grantor and shall inure to the
benefit of the Agent and the Banks and their respective successors and assigns.
THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
16. Notices. All notices, requests and demands to or upon
the Agent, any Bank or any Grantor to be effective shall be in writing (or by
telegraph or telecopy confirmed in writing) and shall be deemed to have been
duly given or made (a) when delivered by hand or (b) if given by mail, when
deposited in the mails by certified mail, return receipt requested or (c) if by
telegraph or telecopy, when sent and receipt has been confirmed, addressed at
its address or transmission number for notices provided in subsection 11.2 of
the Credit Agreement or Section 12 of the Subsidiary Guarantee. The Agent,
each Bank and the Grantor may change its address and transmission numbers for
notices by notice in the manner provided in this Section.
17. Authority of Agent. Each Grantor acknowledges that the
rights and responsibilities of the Agent under this
43
15
Security Agreement with respect to any action taken by the Agent or the
exercise or non-exercise by the Agent of any option, right, request, judgment
or other right or remedy provided for herein or resulting or arising out of
this Security Agreement shall, as between the Agent and the Banks, be governed
by the Credit Agreement and by such other agreements with respect thereto as
may exist from time to time among them, but, as between the Agent and each
Grantor, the Agent shall be conclusively presumed to be acting as agent for the
Banks with full and valid authority so to act or refrain from acting, and each
Grantor shall not be under any obligation, or entitlement, to make any inquiry
respecting such authority.
18. Release of Liens. In the event that any Grantor conveys,
sells, leases, assigns, transfers or otherwise disposes of any portion of the
Collateral in accordance with subsection 8.6 of the Credit Agreement or grants
a Lien with respect to any of the Collateral which Lien is permitted pursuant
to subsection 8.3(m) of the Credit Agreement, and so long as no Default or
Event of Default shall have occurred and be continuing, the Agent shall
promptly take such action as may be reasonably requested by such Grantor to
release, to the extent necessary, any Liens created by this Security Agreement
in respect of such Collateral.
19. Counterparts. This Security Agreement may be executed by
one or more of the parties to this Security Agreement on any number of separate
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the counterparts of this
Security Agreement signed by all the parties hereto shall be lodged with the
Agent.
IN WITNESS WHEREOF, each of the undersigned has caused this
Security Agreement to be duly executed and delivered as of the date first above
written.
▇▇▇▇ OPERATIONS CORPORATION
By:______________________________
Title:
NAB CORPORATION
By:______________________________
Title:
44
SCHEDULE I-A
▇▇▇▇ OPERATIONS CORPORATION
Contracts
None.
SCHEDULE I-B
NAB CORPORATION
Contracts
None.
45
SCHEDULE II-A
▇▇▇▇ OPERATIONS CORPORATION
Financing Statements Filed
State Location
1. [To be provided] 1. [To be provided]
SCHEDULE II-B
NAB CORPORATION
Financing Statements Filed
State Location
1. [To be provided] 1. [To be provided]
46
SCHEDULE III-A
▇▇▇▇ OPERATIONS CORPORATION
Location of Records Concerning Accounts
[To be provided]
SCHEDULE III-B
NAB CORPORATION
Location of Records Concerning Accounts
[To be provided]
47
SCHEDULE IV-A
▇▇▇▇ OPERATIONS CORPORATION
Location of Inventory and Equipment
[To be provided]
48
SCHEDULE IV-B
NAB CORPORATION
Locations of Inventory and Equipment
[To be provided]
49
SCHEDULE V-A
LEAR OPERATIONS CORPORATION
Chief Executive Office
[21557 ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇]
SCHEDULE V-B
NAB CORPORATION
Chief Executive Office
[21557 ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇]
50
EXHIBIT C
FORM OF SECOND ADDITIONAL SECURITY AGREEMENT
SECOND ADDITIONAL SECURITY AGREEMENT, dated as of _________,
199_, made by AUTOMOTIVE INDUSTRIES MANUFACTURING INC. (the "Grantor"), in
favor of CHEMICAL BANK, as administrative agent (in such capacity, the "Agent")
for the Banks parties to the Credit Agreement referred to below.
W I T N E S S E T H :
WHEREAS, ▇▇▇▇ Seating Corporation (the "Borrower") is a party
to the Credit Agreement, dated as of August 17, 1995 (as amended, supplemented
or otherwise modified from time to time, the "Credit Agreement") with the
financial institutions parties thereto (the "Banks"), the Agent and the
Managing Agents, Co-Agents and Lead Managers identified therein;
WHEREAS, pursuant to the Credit Agreement and the other Loan
Documents (as defined in the Credit Agreement), the Banks have agreed to make
certain Loans (as defined in the Credit Agreement) to or for the benefit of the
Borrower and, in the case of the Issuing Bank (as defined in the Credit
Agreement), issue and, in the case of the Participating Banks (as defined in
the Credit Agreement), participate in certain Letters of Credit (as defined in
the Credit Agreement); and
WHEREAS, it is a condition precedent to the effectiveness of
the First Amendment and Consent, dated as of December 8, 1995 (the "First
Amendment"), to the Credit Agreement that the Grantor shall have executed and
delivered this Security Agreement to the Agent for the ratable benefit of the
Banks;
NOW, THEREFORE, in consideration of the premises contained
herein and to induce the Agent, and the Banks to enter into the First Amendment
and to induce the Banks to make the Loans and to issue and participate in the
Letters of Credit under the Credit Agreement, the Grantor hereby agrees with
the Agent, for the ratable benefit of the Banks, as follows:
1. Defined Terms. (a) Unless otherwise defined herein,
terms which are defined in the Credit Agreement and used herein shall have the
meanings given to them in the Credit Agreement; the following terms which are
defined in the Uniform Commercial Code in effect in the State of New York on
the date hereof are used herein as so defined: Accounts, Chattel Paper,
Documents, Farm Products, Instruments, Inventory and Proceeds; and the
following terms shall have the following meanings:
"Code" shall mean the Uniform Commercial Code as from time to
time in effect in the State of New York.
"Collateral" shall have the meaning assigned to it in Section
2 of this Security Agreement.
51
2
"Security Agreement" shall mean this Second Additional
Security Agreement, as amended, supplemented or otherwise modified
from time to time.
(b) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Security Agreement shall refer to this
Security Agreement as a whole and not to any particular provision of this
Security Agreement, and Section, paragraph and Schedule references are to this
Security Agreement unless otherwise specified.
(c) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
2. Grant of Security Interest. (a) As collateral security
for the prompt and complete payment and performance when due (whether at the
stated maturity, by acceleration or otherwise) of the Obligations, the Grantor
hereby sells, assigns, conveys, mortgages, pledges, hypothecates and transfers
to the Agent, and hereby grants to the Agent, for the ratable benefit of the
Banks, a security interest in all of the following property now owned or at any
time hereafter acquired by the Grantor or in which the Grantor now has or at
any time in the future may acquire any right, title or interest (collectively,
the "Collateral"):
(i) all Accounts;
(ii) all Chattel Paper evidencing or constituting
Proceeds of an Account;
(iii) all Instruments evidencing or constituting Proceeds
an Account; and
(iv) to the extent not otherwise included, all Proceeds,
products, substitutions and replacements of any and all of the
foregoing.
(b) Anything herein to the contrary notwithstanding, this
Security Agreement shall terminate at such time the Additional Subsidiary
Guarantee shall be amended to remove the limitation contained in clause (ii) of
paragraph 2(b) thereof.
3. Rights of Agent and Banks; Limitations on Agent's and
Banks' Obligations. (a) Anything herein to the contrary notwithstanding, the
Grantor shall remain liable under each of its Accounts to observe and perform
all the conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement giving rise to
each such Account. Neither the Agent nor any Bank shall have any obligation or
liability under any Account (or any agreement giving rise thereto) by reason of
or arising out of this Security Agreement or the receipt by the Agent or any
such Bank of any
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payment relating to such Account pursuant hereto, nor shall the Agent or any
Bank be obligated in any manner to perform any of the obligations of any
Grantor under or pursuant to any Account (or any agreement giving rise
thereto), to make any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by it or as to the sufficiency of any
performance by any party under any Account (or any agreement giving rise
thereto) to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
(b) At the Agent's request, the Grantor shall deliver to
the Agent all original and other documents evidencing, and relating to, the
sale and delivery of Inventory or the performance of labor or service which
created the Accounts, including, but not limited to, all Chattel Paper,
original purchase orders, invoices, shipping documents and delivery receipts
and duplicate copies of credit memoranda.
(c) The Agent may at any time after the occurrence and
during the continuance of an Event of Default notify account debtors and
parties to Accounts that the Accounts have been assigned to the Agent, for the
ratable benefit of the Banks, and that payments shall be made directly to the
Agent. Upon the request of the Agent at any time after the occurrence and
during the continuance of an Event of Default, the Grantor will so notify such
account debtors and such parties to the Accounts. Upon prior notice to the
Grantor, the Agent may in its own name or in the name of others communicate
with account debtors and parties to Accounts in order to verify with them to
the Agent's satisfaction the existence, amount and terms of any Accounts.
(d) Upon prior notice to the Grantor, the Agent shall
have the right to make test verifications of the Collateral in any matter and
through any medium that it considers advisable, and the Grantor agrees to
furnish all such assistance and information as the Agent may require in
connection therewith. The Grantor at its expense will furnish, or will cause
independent public accountants satisfactory to the Agent to furnish, to the
Agent at any time and from time to time promptly upon the Agent's request, the
following reports: (i) reconciliation of all Collateral, (ii) an aging of all
Collateral, (iii) trial balances, (iv) a test verification of such Collateral
and (v) a physical inventory of the Collateral by certified accountants
reasonably satisfactory to the Agent.
4. Representations and Warranties. The Grantor hereby
represents and warrants that:
(a) Title; No Other Liens. Except for the Lien granted
to the Agent for the ratable benefit of the Banks pursuant to this
Security Agreement, the Grantor owns each item of the Collateral free
and clear of any and all Liens
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or claims of others other than Liens permitted under subsection 8.3 of
the Credit Agreement. No security agreement, financing statement or
other public notice with respect to all or any part of such Collateral
is on file or of record in any public office, except (i) such as may
have been filed in favor of the Agent, for the ratable benefit of the
Banks, pursuant to this Security Agreement, (ii) financing statements
filed with respect to equipment leases or (iii) as may otherwise be
permitted pursuant to the Credit Agreement.
(b) Perfected First Priority Liens. Appropriate
financing statements having been filed in the jurisdictions listed on
Schedule I and all other appropriate action having been duly taken,
the Liens granted pursuant to this Security Agreement constitute
perfected Liens on the Collateral in favor of the Agent, for the
ratable benefit of the Banks, which are prior to all other Liens on
such Collateral created by the Grantor other than Liens permitted
under subsection 8.3 of the Credit Agreement and which are enforceable
as such against all creditors of and purchasers from the Grantor and
against any owner or purchaser of the real property where any of the
Equipment or Inventory is located and any present or future creditor
obtaining a Lien on such real property.
(c) Accounts. The amount represented by the Grantor to
the Banks from time to time as owing by each account debtor or by all
account debtors in respect of the Accounts will at such time be the
correct amount actually owing by such account debtor or debtors
thereunder. No amount in excess of $100,000 payable to the Grantor
under or in connection with any of the Accounts is evidenced by any
Instrument or Chattel Paper which has not been delivered to the Agent.
The place where the Grantor keeps its records concerning the Accounts
is set forth on Schedule III-A through B.
(d) Chief Executive Office. The Grantor's chief executive
office and chief place of business is located at
___________________________.
(e) Farm Products. None of the Collateral constitutes, or is
the Proceeds of, Farm Products.
5. Covenants. The Grantor covenants and agrees with the
Agent and the Banks that, from and after the date of this Security Agreement
until the Obligations have been paid in full:
(a) Further Documentation; Pledge of Instruments and Chattel
Paper. At any time and from time to time, upon the reasonable request
of any Bank, and at the sole expense of the Grantor, the Grantor will
promptly and duly execute and deliver such further instruments and
documents and take such
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further action as such Bank may reasonably request for the purpose of
obtaining or preserving the full benefits of this Security Agreement
and of the rights and powers herein granted, including, without
limitation, the filing of any financing or continuation statements
under the Uniform Commercial Code in effect in any jurisdiction with
respect to the Liens created hereby. The Grantor also hereby
authorizes the Agent to file any such financing or continuation
statement without the signature of the Grantor to the extent permitted
by applicable law. A carbon, photographic or other reproduction of
this Security Agreement shall be sufficient as a financing statement
for filing in any jurisdiction.
(b) Pledge of Instruments and Chattel Paper. If any amount
in excess of $100,000 payable under or in connection with any of the
Collateral shall be or become evidenced by any Instrument or Chattel
Paper, such Instrument or Chattel Paper shall be immediately delivered
to the Agent, duly endorsed by the Grantor in a manner satisfactory to
the Agent, to be held as Collateral pursuant to this Security
Agreement.
(c) Indemnification. The Grantor agrees to pay, and to save
the Agent and the Banks harmless from, any and all liabilities, costs
and expenses (including, without limitation, legal fees and expenses)
(i) with respect to, or resulting from, any delay in paying, any and
all excise, sales or other taxes which may be payable or determined to
be payable with respect to any of the Collateral, (ii) with respect
to, or resulting from, any delay in complying with any Requirement of
Law applicable to any of the Collateral or (iii) in connection with
any of the transactions contemplated by this Security Agreement. In
any suit, proceeding or action brought by the Agent or any Bank under
any of the Accounts for any sum owing thereunder, or to enforce any
provisions of any such Account, the Grantor will save, indemnify and
keep the Agent and such Bank harmless from and against all expense,
loss or damage suffered by reason of any defense, setoff,
counterclaim, recoupment or reduction or liability whatsoever of the
account debtor or obligor thereunder, arising out of a breach by the
Grantor of any obligation thereunder or arising out of any other
agreement, indebtedness or liability at any time owing to or in favor
of such account debtor or obligor or its successors from the Grantor.
(d) Maintenance of Records. The Grantor will keep and
maintain at its own cost and expense satisfactory and complete
records of the Collateral, including, without limitation, a record of
all payments received and all credits granted with respect to the
Accounts. The Grantor will ▇▇▇▇ its books and records pertaining to
the Collateral to evidence this Security Agreement and the security
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interests granted hereby. For the Agent's and the Banks' further
security, the Agent, for the ratable benefit of the Banks, shall have
a security interest in all of the Grantor's books and records
pertaining to the Collateral, and, subject to subsection 11.13 of the
Credit Agreement, the Grantor shall turn over any such books and
records to the Agent or to its representatives during normal business
hours at the request of the Agent.
(e) Right of Inspection. The Agent and the Banks shall at
all times, upon reasonable notice, have full and free access during
normal business hours to all the books, correspondence and records of
the Grantor, and the Agent and the Banks and their respective
representatives may examine the same, take extracts therefrom and make
photocopies thereof, and the Grantor agrees to render to the Agent and
the Banks, at the Grantor's cost and expense, such clerical and other
assistance as may be reasonably requested with regard thereto.
(f) Compliance with Laws, etc. The Grantor will comply in
all material respects with all Requirements of Law applicable to the
Collateral or any part thereof or to the operation of the Grantor's
business; provided that the Grantor may contest any Requirement of Law
in any reasonable manner which shall not, in the sole opinion of the
Agent, adversely affect the Agent's or the Banks' rights or the
priority of their Liens on the Collateral.
(g) Payment of Obligations. The Grantor will pay promptly
when due all taxes, assessments and governmental charges or levies
imposed upon the Collateral or in respect of its income or profits
therefrom, as well as all claims of any kind (including, without
limitation, claims for labor, materials and supplies) against or with
respect to such Collateral, except that no such charge need be paid if
(i) the validity thereof is being contested in good faith by
appropriate proceedings, and such charge is adequately reserved
against on the Grantor's books in accordance with GAAP or (ii) such
proceedings do not involve any danger of the sale, forfeiture or loss
of any of such Collateral or any interest therein.
(h) Limitations on Liens on Collateral. The Grantor will not
create, incur or permit to exist, will defend the Collateral against,
and will take such other action as is necessary to remove, any Lien or
claim on or to such Collateral, other than the Liens created hereby or
Liens permitted under subsection 8.3 of the Credit Agreement, and will
defend the right, title and interest of the Agent and the Banks in and
to any of such Collateral against the claims and demands of all
Persons whomsoever.
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(i) Limitations on Dispositions of Collateral. The Grantor
will not sell, transfer, lease or otherwise dispose of any of the
Collateral, or attempt, offer or contract to do so except for
dispositions of assets permitted by subsection 8.6 of the Credit
Agreement.
(j) Limitations on Modifications, Waivers, Extensions of
Agreements Giving Rise to Accounts. The Grantor will not (i) amend,
modify, terminate or waive any provision of any agreement giving rise
to any of the Accounts in any manner which could reasonably be
expected to materially adversely affect the value of any such Account
as Collateral, (ii) fail to exercise promptly and diligently each and
every material right which it may have under each agreement giving
rise to the Accounts (other than any right of termination) or (iii)
fail to deliver to the Agent a copy of each material demand, notice or
document received by it relating in any way to any agreement giving
rise to an Account.
(k) Limitations on Discounts, Compromises, Extensions of
Accounts. Other than in the ordinary course of business as generally
conducted by the Grantor over a period of time, the Grantor will not
grant any extension of the time of payment of any of the Accounts,
compromise, compound or settle the same for less than the full amount
thereof, release, wholly or partially, any Person liable for the
payment thereof, or allow any credit or discount whatsoever thereon.
(l) Further Identification of Collateral. Upon the
reasonable request of the Agent, the Grantor will furnish to the Agent
and the Banks from time to time statements and schedules further
identifying and describing the Collateral and such other reports in
connection with the Collateral, all in reasonable detail.
(m) Notices. The Grantor will advise the Agent and the Banks
promptly, in reasonable detail, at their respective addresses set
forth in the Credit Agreement, (i) of any Lien (other than Liens
created hereby or permitted under the Credit Agreement) on, or claim
asserted against, any of the Collateral and (ii) of the occurrence of
any other event which could reasonably be expected to have a material
adverse effect on the aggregate value of the Collateral or on the
Liens created hereunder.
(n) Changes in Locations, Name, etc. The Grantor will not
(i) change the location of its chief executive office/chief place of
business from that specified in paragraph 4(f) or remove its books and
records from the location specified in paragraph 4(c) or (ii) change
its name, identity or corporate structure to such an extent that any
financing statement filed by the Agent in connection
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with this Security Agreement could become seriously misleading.
6. Agent's Appointment as Attorney-in-Fact. (a) Powers.
The Grantor hereby irrevocably constitutes and appoints the Agent and any
officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of the Grantor and in the name of the Grantor or in its own name,
from time to time in the Agent's discretion, for the purpose of carrying out
the terms of this Security Agreement, to take any and all appropriate action
and to execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Security Agreement, and, without
limiting the generality of the foregoing, the Grantor hereby gives the Agent
the power and right, on behalf of the Grantor, without notice to or assent by
the Grantor, to do the following:
(i) upon the occurrence and during the continuance of
any Event of Default, in the name of the Grantor or its own name, or
otherwise, to take possession of and indorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of
moneys due under any Account or with respect to any other of the
Collateral and to file any claim or to take any other action or
proceeding in any court of law or equity or otherwise deemed
appropriate by the Agent for the purpose of collecting any and all
such moneys due under any such Account or with respect to any other
such Collateral whenever payable;
(ii) to pay or discharge taxes and Liens levied or
placed on or threatened against the Collateral, to effect any repairs
or any insurance called for by the terms of this Security Agreement
and to pay all or any part of the premiums therefor and the costs
thereof; and
(iii) upon the occurrence and during the continuance of
any Event of Default, (A) to direct any party liable for any payment
under any of the Collateral to make payment of any and all moneys due
or to become due thereunder directly to the Agent or as the Agent
shall direct; (B) to ask or demand for, collect, receive payment of
and receipt for, any and all moneys, claims and other amounts due or
to become due at any time in respect of or arising out of any of the
Collateral; (C) to sign and indorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications, notices and other documents in
connection with any of the Collateral; (D) to commence and prosecute
any suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any thereof and to
enforce any other right in respect of any such Collateral; (E) to
defend any suit, action or proceeding brought against the Grantor with
respect to any
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Collateral; (F) to settle, compromise or adjust any suit, action or
proceeding described in clause (E) above and, in connection therewith,
to give such discharges or releases as the Agent may deem appropriate;
and (G) generally, to sell, transfer, pledge and make any agreement
with respect to or otherwise deal with any of the Collateral as fully
and completely as though the Agent were the absolute owner thereof for
all purposes, and to do, at the Agent's option and the Grantor's
expense, at any time, or from time to time, all acts and things which
the Agent deems necessary to protect, preserve or realize upon the
Collateral and the Agent's and the Banks' Liens thereon and to effect
the intent of this Security Agreement, all as fully and effectively as
the Grantor might do.
The Grantor hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.
(b) Other Powers. The Grantor also authorizes the Agent and
the Banks, at any time and from time to time, to execute, in connection with
the sale provided for in Section 9 hereof, any endorsements, assignments or
other instruments of conveyance or transfer with respect to the Collateral.
(c) No Duty on Agent or Banks' Part. The powers conferred on
the Agent and the Banks hereunder are solely to protect the Agent's and the
Banks' interests in the Collateral and shall not impose any duty upon the Agent
or any Bank to exercise any such powers. The Agent and the Banks shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to any Grantor for any act or failure
to act hereunder, except for their own gross negligence or willful misconduct.
7. Performance by Agent of Grantor's Obligations. If any
Grantor fails to perform or comply with any of its agreements contained herein
and the Agent, as provided for by the terms of this Security Agreement, shall
itself perform or comply, or otherwise cause performance or compliance, with
such agreement, the expenses of the Agent incurred in connection with such
performance or compliance, together with interest thereon at a rate per annum
2% above the ABR, shall be payable by the Grantor to the Agent on demand and
shall constitute Obligations secured hereby.
8. Proceeds. If an Event of Default shall occur and be
continuing:
(a) all Proceeds received by any Grantor consisting of cash,
checks and other near-cash items shall be held by the
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Grantor in trust for the Agent and the Banks, segregated from other
funds of the Grantor, and shall, forthwith upon receipt by the
Grantor, be turned over to the Agent in the exact form received by the
Grantor (duly indorsed by the Grantor to the Agent, if required) and
(b) any and all such Proceeds received by the Agent (whether
from any Grantor or otherwise) may, in the sole discretion of the
Agent, be held by the Agent for the ratable benefit of the Banks as
collateral security for, and/or then or at any time thereafter may be
applied by the Agent against, the Obligations (whether matured or
unmatured), such application to be in such order as the Agent shall
elect. Any balance of such Proceeds remaining after the Obligations
shall have been paid in full and the Commitments shall have been
terminated shall be paid over to the Grantor or to whomsoever may be
lawfully entitled to receive the same.
9. Remedies. If an Event of Default shall occur and be
continuing, the Agent, on behalf of the Banks, may exercise, in addition to all
other rights and remedies granted to them in this Security Agreement and in any
other instrument or agreement securing, evidencing or relating to the
Obligations or any Obligations, all rights and remedies of a secured party
under the Code. Without limiting the generality of the foregoing, the Agent,
without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law referred
to below) to or upon the Grantor or any other Person (all and each of which
demands, defenses, advertisements and notices are hereby waived), may in such
circumstances forthwith collect, receive, appropriate and realize upon any
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give
an option or options to purchase, or otherwise dispose of and deliver any
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, at any exchange or broker's
board or office of the Agent or any Bank or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk.
The Agent and each Bank shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale or
sales, to purchase the whole or any part of any Collateral so sold, free of any
right or equity of redemption in the Grantor, which right or equity is hereby
waived or released. The Grantor further agrees, at the Agent's request, to
assemble the Collateral and make it available to the Agent at places which the
Agent shall reasonably select, whether at the Grantor's premises or elsewhere.
The Agent shall apply the net proceeds of any such collection, recovery,
receipt, appropriation, realization or sale, after deducting all reasonable
costs and expenses of every kind incurred therein or incidental to the care or
safekeeping of any of such Collateral or in any way relating
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to such Collateral or the rights of the Agent and the Banks hereunder,
including, without limitation, attorneys' fees and disbursements, to the
payment in whole or in part of the Obligations, in such order as the Agent may
elect, and only after such application and after the payment by the Agent of
any other amount required by any provision of law, including, without
limitation, Section 9-504(1)(c) of the Code, need the Agent account for the
surplus, if any, to the Grantor. To the extent permitted by applicable law,
the Grantor waives all claims, damages and demands it may acquire against the
Agent or any Bank arising out of the exercise by them of any rights hereunder.
If any notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given at
least ten days before such sale or other disposition. The Grantor shall remain
liable for any deficiency if the proceeds of any sale or other disposition of
the Collateral are insufficient to pay the Obligations and the fees and
disbursements of any attorneys employed by the Agent or any Bank to collect
such deficiency.
10. Limitation on Duties Regarding Preservation of
Collateral. The Agent's sole duty with respect to the custody, safekeeping and
physical preservation of the Collateral in its possession, under Section 9-207
of the Code or otherwise, shall be to deal with it in the same manner as the
Agent deals with similar property for its own account. Neither the Agent, any
Bank, nor any of their respective directors, officers, employees or agents
shall be liable for failure to demand, collect or realize upon all or any part
of the Collateral or for any delay in doing so or shall be under any obligation
to sell or otherwise dispose of any Collateral upon the request of any Grantor
or otherwise.
11. Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
12. Severability. Any provision of this Security Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
13. Section Headings. The Section headings used in this
Security Agreement are for convenience of reference only and are not to affect
the construction hereof or be taken into consideration in the interpretation
hereof.
14. No Waiver; Cumulative Remedies. Neither the Agent nor
any Bank shall by any act (except by a written instrument pursuant to Section
15 hereof), delay, indulgence, omission or
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otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default or in any breach of any of the
terms and conditions hereof. No failure to exercise, nor any delay in
exercising, on the part of the Agent or any Bank, any right, power or privilege
hereunder shall operate as a waiver thereof. No single or partial exercise of
any right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. A
waiver by the Agent or any Bank of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which the Agent
or such Bank would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any rights or remedies provided by law.
15. Waivers and Amendments; Successors and Assigns; Governing
Law. None of the terms or provisions of this Security Agreement may be waived,
amended, supplemented or otherwise modified except by a written instrument
executed by the Grantor and the Agent in accordance with subsection 11.1 of the
Credit Agreement; provided that any provision of this Security Agreement may be
waived by the Agent and the Banks in a letter or agreement executed by the
Agent or by telecopy from the Agent. This Security Agreement shall be binding
upon the successors and assigns of the Grantor and shall inure to the benefit
of the Agent and the Banks and their respective successors and assigns. THIS
SECURITY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
16. Notices. All notices, requests and demands to or upon
the Agent, any Bank or any Grantor to be effective shall be in writing (or by
telegraph or telecopy confirmed in writing) and shall be deemed to have been
duly given or made (a) when delivered by hand or (b) if given by mail, when
deposited in the mails by certified mail, return receipt requested or (c) if by
telegraph or telecopy, when sent and receipt has been confirmed, addressed at
its address or transmission number for notices provided in subsection 11.2 of
the Credit Agreement or Section 12 of the Subsidiary Guarantee. The Agent,
each Bank and the Grantor may change its address and transmission numbers for
notices by notice in the manner provided in this Section.
17. Authority of Agent. The Grantor acknowledges that the
rights and responsibilities of the Agent under this Security Agreement with
respect to any action taken by the Agent or the exercise or non-exercise by the
Agent of any option, right, request, judgment or other right or remedy provided
for herein or resulting or arising out of this Security Agreement shall, as
between the Agent and the Banks, be governed by the Credit Agreement and by
such other agreements with respect thereto as may exist from time to time among
them, but, as between the Agent and the Grantor, the Agent shall be
conclusively presumed to be
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acting as agent for the Banks with full and valid authority so to act or
refrain from acting, and the Grantor shall not be under any obligation, or
entitlement, to make any inquiry respecting such authority.
18. Release of Liens. In the event that any Grantor conveys,
sells, leases, assigns, transfers or otherwise disposes of any portion of the
Collateral in accordance with subsection 8.6 of the Credit Agreement or grants
a Lien with respect to any of the Collateral which Lien is permitted pursuant
to subsection 8.3(m) of the Credit Agreement, and so long as no Default or
Event of Default shall have occurred and be continuing, the Agent shall
promptly take such action as may be reasonably requested by the Grantor to
release, to the extent necessary, any Liens created by this Security Agreement
in respect of such Collateral.
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19. Counterparts. This Security Agreement may be executed by
one or more of the parties to this Security Agreement on any number of separate
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the counterparts of this
Security Agreement signed by all the parties hereto shall be lodged with the
Agent.
IN WITNESS WHEREOF, each of the undersigned has caused this
Security Agreement to be duly executed and delivered as of the date first above
written.
AUTOMOTIVE INDUSTRIES MANUFACTURING
INC.
By:______________________________
Title:
64
SCHEDULE I
Financing Statements Filed
State Location
1. [To be provided] 1. [To be provided]
65
SCHEDULE II
Location of Records Concerning Accounts
[To be provided]
66
EXHIBIT D
FORM OF FIRST AMENDMENT TO DOMESTIC PLEDGE AGREEMENT
FIRST AMENDMENT, dated as of _____________, 199__ (this
"Amendment"), to the Domestic Pledge Agreement, dated as of August 17, 1995 (as
amended, supplemented or otherwise modified from time to time, the "Pledge
Agreement"), made by ▇▇▇▇ Seating Corporation, a Delaware corporation (the
"Pledgor"), in favor of Chemical Bank, as administrative agent (in such
capacity, the "Agent").
W I T N E S S E T H :
WHEREAS, the Pledgor has formed three new Subsidiaries, Lear
Operations Corporation, NAB Corporation and Automotive Industries
Manufacturing, Inc.; and
WHEREAS, it is a condition precedent to the effectiveness of
the First Amendment and Consent, dated as of December 8, 1995, to the Credit
Agreement (as defined in the Pledge Agreement) that the Pledgor shall have
executed and delivered this Amendment;
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein, and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the Pledgor and the Agent agree as
follows:
1. Defined Terms. Unless otherwise defined herein,
terms defined in the Pledge Agreement shall have such meanings when used
herein.
2. Amendment to Pledge Agreement. Schedule I to the
Pledge Agreement is hereby amended by deleting it in its entirety and
substituting in lieu thereof Schedule I attached hereto.
3. Representations and Warranties. To induce the Agent
to enter into this Amendment, the Pledgor hereby represents and warrants that
the representations and warranties contained in the Pledge Agreement will be,
after giving effect to the modification provided herein, true and correct in
all material respects as if made on and as of the date hereof.
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4. No Other Modifications. Except as expressly modified
hereby, the Pledge Agreement is and shall continue to be in full force and
effect in accordance with its terms.
5. Counterparts. This Amendment may be executed by one
or more of the parties hereof on any number of separate counterparts and all
such counterparts shall be deemed to be one and the same instrument.
6. Effectiveness. This Amendment shall be effective
upon the execution and delivery of this Amendment by the Pledgor, the Agent,
Automotive Industries Corporation, ▇▇▇▇ Industries Inc., and NAB Corporation.
7. Payment of Expenses. The Pledgor agrees to pay and
reimburse the Agent for all its costs and out-of-pocket expenses incurred in
connection with the preparation, execution and delivery of this Amendment,
including, without limitation, the reasonable fees and disbursements of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel to the Administrative Agent.
8. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
▇▇▇▇ SEATING CORPORATION
By:_____________________________
Title:
CHEMICAL BANK, as Agent
By:______________________________
Title:
68
ACKNOWLEDGEMENT AND CONSENT
Each of the undersigned Issuers referred to in the Pledge
Agreement hereby acknowledge receipt of a copy thereof, as amended by this
Amendment, and agree to be bound thereby and to comply with the terms thereof
insofar as such terms are applicable to it. Each of the undersigned agree to
notify the Agent promptly in writing of the occurrence of any of the events
described in paragraph 5(a) of the Pledge Agreement. Each of the undersigned
further agree that the terms of paragraph 9(c) of the Pledge Agreement shall
apply to it, mutatis mutandis, with respect to all actions that may be required
of it under or pursuant to or arising out of Section 9 of the Pledge Agreement.
AUTOMOTIVE INDUSTRIES MANUFACTURING
INC.
By:_______________________________
Title:
LEAR OPERATIONS CORPORATION
By:_______________________________
Title:
NAB CORPORATION
By:_______________________________
Title:
69
SCHEDULE I
DESCRIPTION OF PLEDGED STOCK
Class of Stock No. of Pct. of
Issuer Stock Certificate No. Shares Shares
------ -------- --------------- ------ ------
Progress Pattern Corp. Common 2 100 100%
Lear Plastics Corp. Common 2 100 100%
LS Acquisition Common 1 100 100%
Corporation No. 24
LS Acquisition Corp. No. 14 Common 3 100 100%
▇▇▇▇ Seating Holdings Corp. Common 3 100 100%
No. 50
Automotive Industries Common 1 100 100%
Manufacturing Inc.
▇▇▇▇ Operations Corporation Common 1 100 100%
NAB Corporation Common 1 100 100%
▇▇▇▇ Seating Common 10501- 19,500 65%
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
70
EXHIBIT E
FORM OF FIRST AMENDMENT
TO
▇▇▇▇ SEATING CANADA LTD.
SHARE PLEDGE AGREEMENT
FIRST AMENDMENT, dated as of ____________, 199__ (this
"Amendment"), to the ▇▇▇▇ Seating Canada Ltd. Share Pledge Agreement, dated as
of August 17, 1995 (as amended, supplemented or otherwise modified, the "Share
Pledge Agreement"), made by ▇▇▇▇ Seating Corporation, a Delaware corporation
(the "Pledgor"), in favor of Chemical Bank, as administrative agent (the
"Agent").
W I T N E S S E T H :
WHEREAS, ▇▇▇▇ Seating Canada Ltd. ("▇▇▇▇ Canada") and 115335
Ontario Inc., a subsidiary of the Pledgor and a corporation governed by the
Business Corporations Act (Ontario) ("Holdco"), plan to amalgamate pursuant to
an Arrangement Agreement, dated as of December 8, 1995 (the "Arrangement
Agreement"), among Lear Canada, Holdco and the Pledgor; and
WHEREAS, the Pledgor has requested, and upon this amendment
becoming effective, the Agent has agreed, that certain provisions of the Share
Pledge Agreement be modified in the manner provided for in this Amendment;
NOW, THEREFORE, in consideration of the premises and mutual
agreements contained herein, and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Defined Terms. Unless otherwise defined herein,
terms defined in the Share Pledge Agreement shall have such meanings when used
herein.
2. Amendments to Share Pledge Agreement. (a) The term
"Issuer" as defined in the Share Pledge Agreement shall mean ▇▇▇▇ Seating
Canada Ltd., the continuing corporation constituted upon the amalgamation of
▇▇▇▇ Canada and Holdco pursuant to the Arrangement Agreement.
(b) Schedule I to the Share Pledge Agreement is hereby
amended by deleting it in its entirety and substituting in lieu thereof
Schedule I attached hereto.
3. Representations and Warranties. To induce the Agent
to enter into this Amendment, the Pledgor hereby represents and warrants that
the representations and warranties contained in the Share Pledge Agreement will
be, after giving effect to the
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modifications provided herein, true and correct in all material respects as if
made on and as of the date hereof.
4. No Other Modifications. Except as expressly modified
hereby, the Share Pledge Agreement is and shall continue to be in full force
and effect in accordance with its terms.
5. Counterparts. This Amendment may be executed by one
or more of the parties hereof on any number of separate counterparts and all
such counterparts shall be deemed to be one and the same instrument.
6. Effectiveness. This Amendment shall be effective
upon the execution and delivery of this Amendment by the Pledgor and the Agent
and ▇▇▇▇ Seating Canada Ltd.
7. Payment of Expenses. The Pledgor agrees to pay and
reimburse the Agent for all its costs and out-of-pocket expenses incurred in
connection with the preparation, execution and delivery of this Amendment,
including, without limitation, the reasonable fees and disbursements of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel to the Agent.
8. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
▇▇▇▇ SEATING CORPORATION
By:_____________________________
Title:
CHEMICAL BANK, as Agent
By:______________________________
Title:
72
ACKNOWLEDGEMENT AND CONSENT
The undersigned Issuer referred to in the Share Pledge
Agreement hereby acknowledges receipt of a copy thereof, as amended by this
Amendment, and agrees to be bound thereby and to comply with the terms thereof
insofar as such terms are applicable to it. The undersigned agrees that it
shall not, without the prior written consent of the Agent, issue any shares or
other equity securities of any nature or to issue any other securities
convertible into or granting the right to purchase or exchange for any shares
or other equity securities of any nature. The undersigned further agrees that
the terms of paragraph 9(b) of the Share Pledge Agreement shall apply to it,
mutatis mutandis, with respect to all actions that may be required of it under
or pursuant to or arising out of Section 9 of the Share Pledge Agreement.
Dated: _______________, 199_
Address for Notices: ▇▇▇▇ SEATING CANADA LTD.
▇▇▇▇ Seating Canada Ltd.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ By: ___________________________
Name:
Title:
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
73
SCHEDULE I
LIST OF PLEDGED SHARE CERTIFICATES
Certificate Class and
Issuer Number Number of Shares
-----------------------------------------------------------------------------------------
▇▇▇▇ Seating Canada Ltd. P-__ 10,747 preference
▇▇▇▇ Seating Canada Ltd. C-__ 170,682 common
74
EXHIBIT F
FORM OF OPINION OF WINSTON & ▇▇▇▇▇▇
[LETTERHEAD OF WINSTON & ▇▇▇▇▇▇]
______________, 199_
Chemical Bank, as Agent
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
And each of the Banks parties to the Credit
Agreement referred to below
We have acted as special counsel to ▇▇▇▇ Seating Corporation, a
Delaware corporation (the "Borrower"), ▇▇▇▇ Operations Corporation, a Delaware
corporation ("Newco"), NAB Corporation, a Delaware corporation ("NAB Co.") and
Automotive Industries Manufacturing Inc., a Delaware corporation ("New AIHI")
in connection with the First Amendment and Consent, dated as of December 8,
1995 (the "First Amendment"), to the Credit Agreement, dated as of August 17,
1995 (as amended, supplemented or otherwise modified, the "Credit Agreement"),
among the Borrower, the financial institutions parties thereto (the "Banks"),
Chemical Bank, as administrative agent for the Banks (in such capacity, the
"Agent"), and the Managing Agents, Co-Agents and Lead Managers (collectively,
the "Lead Banks") named therein.
The opinions expressed below are furnished to you pursuant to Section
5(l) of the First Amendment. Unless otherwise defined herein, terms defined in
the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement.
In arriving at the opinions expressed below,
(a) we have examined and relied on the originals, or copies
certified or otherwise identified to our satisfaction, of
(i) the Borrower's certificate of incorporation and
bylaws;
(ii) the certificates of incorporation and bylaws of each
of Newco, NAB Co. and New AIHI;
(iii) resolutions of the board of directors of the Borrower
and each of Newco, NAB Co. and New AIHI with respect
to the transactions referred to herein;
(iv) the Credit Agreement; and
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(v) the First Amendment and the other documents listed on
Schedule 1 attached hereto (collectively, the
"Transaction Documents").
(b) we have examined such corporate documents and records of the
Borrower, Newco, NAB Co. and New AIHI and such other instruments and
certificates of public officials, officers and representatives of the Borrower,
Newco, NAB Co. and New AIHI and other Persons as we have deemed necessary or
appropriate to enable us to render the opinions set forth herein; and
(c) we have made such inquiries of officers and representatives
of the Borrower, Newco, NAB Co. and New AIHI as we have deemed relevant or
necessary as the basis for the opinions set forth herein.
In rendering the opinions expressed below, we have assumed, with your
permission, without independent investigation or inquiry, (a) the authenticity
of all documents submitted to us as originals, (b) the genuineness of all
signatures on all documents that we examined (other than those of the Borrower,
Newco, NAB Co. and New AIHI and the officers of the Borrower, Newco, NAB Co.
and New AIHI) and (c) the conformity to authentic originals of documents
submitted to us as certified, conformed or photostatic copies. Additionally,
we have assumed and relied upon, the following:
(a) the accuracy of all certificates and other statements,
representations, documents, records, financial statements and papers reviewed
by us, and the accuracy and completeness of all representations, warranties,
schedules and exhibits contained in the Transaction Documents, with respect to
the factual matters set forth therein;
(b) all parties to the documents reviewed by us (other than the
Borrower, Newco, NAB Co. and New AIHI) are duly organized, validly existing
and in good standing under the laws of all jurisdictions where they are
conducting their businesses or otherwise required to be so qualified, and have
full power and authority to execute, deliver and perform under such documents
and all such documents have been duly authorized, executed and delivered by
such parties;
(c) each of Newco, NAB Co. and New AIHI has rights in each item of
Collateral (as such term is defined in the Additional Security Agreement and
the Second Additional Security Agreement (as defined in Schedule 1 attached
hereto)) existing on the date hereof and will have rights in each item of
Collateral arising after the date hereof;
(d) all items of Collateral for which possession must be taken by
a secured party in order to perfect its security interest under Section 9-304
of the Uniform Commercial Code of New York (the
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3
"Code") are in the possession or constructive possession of the Agent and not
in the possession of Newco or NAB Co., affiliates or agents or any other Person
acting on behalf of Newco or NAB Co.;
(e) each Transaction Document constitutes the valid and binding
obligation of each party thereto (other than the Borrower, Newco, NAB Co. and
New AIHI) enforceable against such party in accordance with its terms; and
(f) the description of the Collateral reasonably describes the
property intended to be described as Collateral.
When our opinions expressed below are stated "to our knowledge," we
are referring to the actual knowledge of the lawyers in this firm who have
given substantive legal attention to the representation of the Borrower, Newco,
NAB Co. and New AIHI in connection with the execution and delivery of the
Transaction Documents. Except as expressly set forth herein, we have not
undertaken any independent investigation, examination or inquiry to determine
the existence of any facts (and have not caused the review of any court file or
indices) and no inference as to our knowledge concerning any facts should be
drawn as a result of the representation undertaken by us.
Based upon the foregoing and subject to the qualifications and matters
of reliance set forth herein, we are of the opinion that:
1. Each of the Borrower, Newco, NAB Co. and New AIHI (a) is duly
organized, validly existing and in good standing under the laws of the State of
Delaware, (b) has the corporate power and authority to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged and (c) is duly qualified as a
foreign corporation and in good standing under the laws of each jurisdiction
where its ownership, lease or operation of property or the conduct of its
business requires such qualification, except where the failure to be so
qualified and in good standing would not have a material adverse effect on the
business, operations, property or financial condition of the Borrower and its
Subsidiaries taken as a whole and would not adversely affect the ability of any
of the Borrower, Newco, NAB Co. and New AIHI to perform its respective
obligations under the Transaction Documents to which it is a party.
2. Each of the Borrower, Newco, NAB Co. and New AIHI has the
corporate power and authority to execute, deliver and perform its obligations
under the Transaction Documents to which it is a party. Each of the Borrower,
Newco, NAB Co. and New AIHI has taken all necessary corporate action to
authorize the execution, delivery and performance of the Transaction Documents
to which it is a party. No consent or authorization of, filing with or other
act by or in respect of, any federal, State of Illinois or ▇▇▇▇▇
▇▇
▇
▇▇ ▇▇▇ ▇▇▇▇ governmental or public body or authority or under the General
Corporation Law of the State of Delaware is required by the Borrower, Newco,
NAB Co. and New AIHI in connection with the execution, delivery and performance
of the First Amendment and the other Transaction Documents, or the consummation
of any of the transactions contemplated by the Transaction Documents, except
for consents, authorizations, or filings which have been obtained and are in
full force and effect. We express no opinion, however, as to any such consent,
authorization or filing which may be required as a result of the involvement of
the Agent, the Lead Banks, the Banks or any of their respective affiliates in
the transactions contemplated by the Transaction Documents or because of their
legal or regulatory status.
3. Each of the Transaction Documents to which any of the
Borrower, Newco, NAB Co. and New AIHI is a party has been duly executed and
delivered on behalf of such party and each of the Transaction Documents to
which any of the Borrower, Newco, NAB Co. and New AIHI is a party constitutes a
valid and binding obligation of such party, enforceable against such party in
accordance with its terms.
4. The execution, delivery and performance by each of the
Borrower, Newco, NAB Co. and New AIHI of the Transaction Documents to which it
is a party (a) will not violate any Requirement of Law of the United States of
America, the State of Illinois, the State of New York or the General
Corporation Law of the State of Delaware applicable to such party (except we
express no opinion as to any law (i) which might be violated by any
misrepresentation or omission or a fraudulent act or (ii) to which such party
may be subject as a result of your, the Lead Banks' or the Banks' legal or
regulatory status, your syndication of the Loans or your involvement in the
transactions contemplated by the Transaction Documents), (b) will not violate
any Contractual Obligation of the Borrower, Newco, NAB Co. and New AIHI which
has been identified to us pursuant to an Officer's Certificate of the Borrower
and listed on such Certificate as being material (except we express no opinion
as to (i) violations under Contractual Obligations listed on such Certificate
where such violations would not have a material adverse effect on the
Borrower's consolidated financial condition or business, (ii) violations
resulting from cross-default provisions relating to defaults under an agreement
not listed on such Certificate or (iii) violations of financial covenants), and
(c) will not result in, or require, the creation or imposition of any Lien
(other than the Liens created by the Transaction Documents) on any of its or
their respective properties or revenues pursuant to any Requirement of Law of
the United States of America, the State of Illinois, the State of New York or
the General Corporation Law of the State of Delaware applicable to such party
or Contractual Obligations listed on such Certificate.
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5
5. To our knowledge, no litigation, investigation or proceeding
of or before any arbitrator or Governmental Authority is pending or threatened
by or against the Borrower, Newco, NAB Co. and New AIHI or against any of its
or their respective properties or revenues (a) with respect to any Transaction
Document or any of the transactions contemplated thereby, (b) which, if
adversely determined, would have a material adverse effect on the business,
operations, property or financial or other condition of the Borrower and its
Subsidiaries taken as a whole or (c) which could adversely affect the ability
of any of the Borrower, Newco, NAB Co. and New AIHI to perform its obligations
under any of the Transaction Documents to which it is a party.
6. Based on our understanding that the Agent has taken and is
retaining possession of the stock certificates (the "Pledged Stock") evidencing
the shares of stock described in the Domestic Pledge Agreement (as amended by
the First Amendment thereto) and the ▇▇▇▇ Seating Canada Ltd. Share Pledge
Agreement (as amended by the First Amendment thereto), and the Agent has taken
such Pledged Stock in good faith without notice (actual or constructive) of any
adverse claim within the meaning of the Code, there has been created
thereunder, and there has been granted to the Agent, for the benefit of the
Banks, a valid and perfected security interest and lien upon the Pledged Stock.
Assuming the Agent acquires its interest in the Pledged Stock in good faith and
without notice (actual or constructive) of any adverse claims and the Pledged
Stock is either in bearer form or in registered form, duly issued or indorsed
in the name of the Agent or in blank, the Agent will acquire its security
interest in the Pledged Stock free of adverse claims.
7. The shares of Pledged Stock of Newco, NAB Co. and New AIHI
have been duly authorized and validly issued by such corporations and are fully
paid and nonassessable.
8. The provisions of the Additional Security Agreement and the
Second Additional Security Agreement (as defined in Schedule 1 attached hereto)
create in favor of the Agent, for the benefit of the Banks, a security interest
in the Collateral (as such term is defined therein) in which a security
interest may be created under the Code. We express no opinion regarding the
perfection or priority of such security interests.
The opinions as expressed herein are subject to the following
qualifications:
(a) our opinions set forth in paragraphs 3, 6 and 7 hereof are
subject to the effect of bankruptcy, fraudulent conveyance or transfer,
insolvency, reorganization, arrangement and moratorium laws and limitations
imposed by other laws and judicial decisions relating to or affecting the
rights of creditors or secured creditors generally, and general principles of
equity (regardless of whether enforcement is considered in proceedings at law
or in
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equity), including, without limitation, where (i) the breach of such covenants
or provisions imposes restrictions or burdens upon a debtor and it cannot be
demonstrated that the enforcement of such remedies, restrictions or burdens is
reasonably necessary for the protection of a creditor; (ii) a creditor's
enforcement of such remedies, covenants or provisions under the circumstances,
or the manner of such enforcement, would violate such creditor's implied
covenant of good faith and fair dealing, or would be commercially unreasonable;
or (iii) a court having jurisdiction finds that such remedies, covenants or
provisions were, at the time made, or are in application, unconscionable as a
matter of law or contrary to public policy;
(b) as to our opinions set forth in paragraph 3 hereof, we express
no opinion as to the enforceability of cumulative remedies to the extent such
cumulative remedies purport to or would have the effect of compensating the
party entitled to the benefits thereof in amounts in excess of the actual loss
suffered by such party;
(c) we express no opinion as to any Collateral (as such term is
defined in the Security Documents) as to which the creation of security
interests therein are not governed by Article 9 of the Code or any Collateral
consisting of goods that are or may become fixtures on any premises, nor do we
express any opinion with respect to the creation of security interests in
property in which it is illegal or violative of governmental rules or
regulations to grant a security interest, or "general intangibles" (as defined
in the Code) which terminate or become terminable (pursuant to the terms of an
agreement) if a security interest is granted therein, or any security interest
in any "accounts," "chattel paper," "documents," "instruments" or "general
intangibles" (as defined in the Code) with respect to which the account debtor
or obligor is the United States of America, any state, county, city,
municipality or other governmental body, or any department, agency or
instrumentality thereof, unless the same has been assigned to the Agent
pursuant to and in accordance with the Assignment of Claims Act of 1940, as
amended, or any similar law or regulation relating to the assignment or pledge
thereof;
(d) any purported assignment of any agreement or any governmental
approval, license or permit may be subject to restrictions upon assignment or
transfer which, although not necessarily applicable to assignments intended as
security, may be required to be satisfied before you will be treated as an
assignee (other than a collateral assignee) thereof, except to the extent that
consents to or approvals of such assignment have been obtained from the
appropriate governmental body or third party;
(e) the rights of debtors, guarantors and other secured parties to
receive notices under Sections 9-504 and 9-505 of the Code may not be waived
prior to default and the failure to comply with such notice requirements may
bar or limit the recovery of any
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deficiency remaining after the retention or sale of repossessed collateral and
further, we express no opinion as to the right of the Agent to enforce any of
its rights without notice to the Borrower and without judicial hearing or
without bond, nor do we express any opinion as to whether the periods of notice
set forth in the Transaction Documents are enforceable;
(f) certain provisions of the Transaction Documents regarding the
application of proceeds realized from the sale of Collateral (as such term is
defined therein) do not make reference (although they do not have to in order
to enable you to exercise the rights and remedies of a secured party under the
Code) to your obligations to satisfy indebtedness due to the holders of
subordinate security interests in such Collateral under certain conditions
under Section 9-504 (1) (c) of the Code or to account to the Borrower for any
surplus proceeds;
(g) notwithstanding certain language of the Transaction Documents,
the Agent and the Banks may be limited to recovering only reasonable expenses
with respect to the retaking, holding, preparing for sale or lease, selling,
leasing and the like of collateral and reasonable attorneys' fees and legal
expenses and only reasonable compensation for funding losses, increased costs
or yield protection;
(h) the duties to exercise reasonable care in the custody and
preservation of Collateral (as such term is defined in the Additional Security
Agreement and the Second Additional Security Agreement) in a secured party's
possession, to deal with and to dispose of Collateral (as such term is defined
in the Additional Security Agreement and the Second Additional Security
Agreement) in a commercially reasonable manner as required by the Code or other
applicable law may not be disclaimed by agreement, waived or released prior to
a default;
(i) any rights of the Agent to foreclose its lien or enforce its
remedies against the personal property described in the Additional Security
Agreement and the Second Additional Security Agreement must be enforced
pursuant to the provisions of the Code;
(j) we express no opinion as to the enforceability of the
indemnification provisions of the Transaction Documents to the extent the same
purport to cover violations of the federal securities laws;
(k) requirements in the Transaction Documents specifying that
provisions thereof may only be waived in writing may not be valid, binding or
enforceable to the extent that an oral agreement or an implied agreement by
trade practice or course of conduct has been created modifying any provision of
such documents;
(l) we express no opinion with respect to the validity, binding
effect or enforceability of any provision which purports
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to authorize the Agent to sign or file financing statements or other documents
without the signature of the Borrower, Newco, NAB Co. and New AIHI (except to
the extent a secured party may execute and file financing statements without
the signature of the debtor under Section 9-402(2) of the Code);
(m) the opinions contained herein are subject to limitations based
upon statutes or upon public policy regarding a person's right to waive the
benefit of statutory provisions or of a common law right;
(n) we express no opinion as to the Agent's ability to use
"self-help" remedies to repossess the Collateral (as such term is defined in
the Additional Security Agreement and the Second Additional Security Agreement)
if a breach of the peace were to occur;
(o) provisions in the Transaction Documents deemed to impose the
payment of interest on interest may be unenforceable, void or voidable under
applicable law;
(p) we express no opinion with respect to the validity, binding
effect or enforceability of any provision of the Transaction Documents
purporting to establish evidentiary standards or a consent to jurisdiction and
venue or waiving service of process or demand or notice and hearing or
constitutional rights (including jury trial) or purporting to eliminate any
obligation to ▇▇▇▇▇▇▇▇ assets;
(q) we express no opinion with respect to any provisions of the
Transaction Documents purporting to appoint the Agent as attorney-in-fact or
agent for the Borrower, Newco, NAB Co. and New AIHI; and
(r) certain other rights, remedies and waivers contained in the
Transaction Documents may be rendered ineffective, or limited by, applicable
laws, rules, regulations, constitutional requirements or judicial decisions
governing such provisions, but such laws, rules, regulations, constitutional
requirements and judicial decisions do not, in our opinion, make the
Transaction Documents inadequate for the practical realization of the benefits
and/or security provided by such Transaction Documents, although they may
result in a delay thereof (and we express no opinion with respect to the
economic consequences of any such delay).
We are members of the bar of the States of Illinois and New York and
we express no opinion as to the laws of any jurisdiction other than the laws of
the States of Illinois and New York, the General Corporation Law of the State
of Delaware and the Federal laws of the United States of America to the extent
specifically referred to herein.
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This opinion is solely for the benefit of the addressees hereof in
connection with the execution and delivery of the First Amendment and, other
than permitted successors and assigns, may not be relied upon in any manner by
any other person without our prior written consent. In addition, this opinion
is as of the date hereof and we undertake no, and disclaim any, obligation to
advise you of any changes in any matter set forth herein.
Very truly yours,
83
Schedule 1
TRANSACTION DOCUMENTS
1. Additional Subsidiary Guarantee, dated as of ________, 199_, made by
Newco and NAB Co. in favor of the Agent.
2. Domestic Pledge Agreement, dated as of August 17, 1995, made by the
Borrower in favor of the Agent, as amended by the First Amendment
thereto, dated as of __________, 199_.
3. ▇▇▇▇ Seating Canada Ltd. Share Pledge Agreement, dated as of August
17, 1995, made by the Borrower in favor of the Agent, as amended by
the First Amendment thereto, dated as of _____, 199_.
4. Additional Security Agreement, dated as of _________, 199_, made by
Newco and NAB Co. in favor of the Agent (the "Additional Security
Agreement").
5. Second Additional Security Agreement, dated as of _______, 199_, made
by New AIHI in favor of the Agent (the "Second Additional Security
Agreement").