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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended APRIL 1, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
----------------- -----------------
COMMISSION FILE NUMBER: 1-11311
LEAR SEATING CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 13-3386776
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
21557 TELEGRAPH ROAD, SOUTHFIELD, MI 48034
(Address of principal executive offices) (zip code)
(810) 746-1500
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to the
filing requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Approximate number of shares of Common Stock, $0.01 par value per share,
outstanding at April 29, 1995: 46,090,123
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LEAR SEATING CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED APRIL 1, 1995
INDEX
Part I - Financial Information: Page No.
Item 1 - Consolidated Financial Statements
Introduction to the Consolidated Financial Statements 3
Consolidated Balance Sheets - April 1, 1995 and
December 31, 1994 4
Consolidated Statements of Income - Three Month Periods
ended April 1, 1995 and April 2, 1994 5
Consolidated Statements of Cash Flows - Three Month
Periods ended April 1, 1995 and April 2, 1994 6
Notes to Consolidated Financial Statements 7
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Part II - Other Information:
Item 6 - Exhibits and Reports on Form 8-K 13
Signatures 14
Exhibit Index 15
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LEAR SEATING CORPORATION
PART I - FINANCIAL INFORMATION
ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS
INTRODUCTION TO THE CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated financial statements of Lear Seating Corporation and
subsidiaries (Note 1) have been prepared by Lear Seating Corporation ("the
Company"), without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. The Company believes that the
disclosures are adequate to make the information presented not misleading when
read in conjunction with the financial statements and the notes thereto
included in the Company's Form 10-K as filed with the Securities and Exchange
Commission for the period ended December 31, 1994.
The financial information presented reflects all adjustments (consisting only
of normal recurring adjustments) which are, in the opinion of management,
necessary for a fair statement of the results of operations and statements of
financial position for the interim periods presented. These results are not
necessarily indicative of a full year's results of operations.
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LEAR SEATING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT SHARE DATA)
April 1, December 31,
1995 1994
---- ----
(Unaudited)
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ 16.2 $ 32.0
Accounts receivable 675.2 579.8
Inventories 114.8 126.6
Unbilled customer tooling 56.4 53.5
Other 41.7 26.4
------- -------
904.3 818.3
------- -------
PROPERTY, PLANT AND EQUIPMENT:
Land 37.0 36.6
Buildings and improvements 151.6 141.1
Machinery and equipment 332.1 326.8
------- -------
520.7 504.5
Less-Accumulated depreciation (162.7) (150.3)
------- -------
358.0 354.2
------- -------
OTHER ASSETS:
Goodwill, net 496.0 499.5
Deferred financing fees and other 39.6 43.1
------- -------
535.6 542.6
------- -------
$ 1,797.9 $ 1,715.1
======= =======
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
CURRENT LIABILITIES:
Short-term borrowings $ 23.8 $ 84.1
Cash overdrafts 25.7 27.6
Accounts payable 686.8 656.7
Accrued liabilities 218.9 210.9
Current portion of long-term debt 1.6 1.9
------- -------
956.8 981.2
------- -------
LONG-TERM LIABILITIES:
Deferred national income taxes 25.4 25.3
Long-term debt 519.9 418.7
Other 78.7 76.3
------- -------
624.0 520.3
------- -------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value, 150,000,000 authorized at April 1,
1995 and December 31, 1994; 46,089,103 issued at April 1, 1995
and 46,088,278 issued at December 31, 1994 .5 .5
Additional paid-in capital 274.3 274.3
Notes receivable from sale of common stock (1.0) (1.0)
Less- Common stock held in treasury, 10,230 shares at
April 1, 1995 and December 31, 1994, at cost (.1) (.1)
Retained deficit (32.4) (49.4)
Minimum pension liability adjustment (5.8) (5.8)
Cumulative translation adjustment (18.4) (4.9)
------- -------
217.1 213.6
------- -------
$ 1,797.9 $ 1,715.1
======= =======
The accompanying notes are an integral part of this balance sheet.
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LEAR SEATING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS, EXCEPT PER SHARE DATA)
Three Months Ended
------------------
April 1, April 2,
1995 1994
---- ----
(Unaudited)
Net sales $ 1,043.5 $ 686.7
Cost of sales 966.9 636.7
Selling, general and administrative expenses 25.8 16.9
Amortization of goodwill 3.1 2.8
-------- --------
Operating income 47.7 30.3
Interest expense 14.2 13.9
Other expense, net 2.1 2.6
-------- --------
Income before provision for
national income taxes 31.4 13.8
Provision for national income taxes 14.4 7.3
-------- --------
Net income $ 17.0 $ 6.5
======== ========
Net income per common share $ .34 $ .16
======== ========
The accompanying notes are an integral part of these statements.
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LEAR SEATING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
Three Months Three Months
Ended Ended
April 1, 1995 April 2, 1994
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 17.0 $ 6.5
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization of goodwill 18.4 13.1
Amortization of deferred financing fees .6 .5
Deferred national income taxes .1 (.9)
Other, net 5.8 2.0
Change in working capital items (77.2) (59.5)
------- -------
Net cash used by operating activities (35.3) (38.3)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (23.6) (15.4)
Other, net .1 3.6
------- -------
Net cash used by investing activities (23.5) (11.8)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in long-term debt, net 101.2 6.6
Short-term borrowings, net (57.0) (1.4)
Increase (decrease) in cash overdrafts (2.0) 25.0
Other, net -- .1
------- -------
Net cash provided by financing activities 42.2 30.3
------- -------
Effect of foreign currency translation .8 (.8)
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NET CHANGE IN CASH AND CASH EQUIVALENTS (15.8) (20.6)
------- -------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 32.0 55.0
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 16.2 $ 34.4
======= =======
CHANGES IN WORKING CAPITAL
Accounts receivable $ (111.7) $ (57.3)
Inventories 5.0 4.1
Accounts payable 40.2 .3
Accrued liabilities and other (10.7) (6.6)
------- -------
$ (77.2) $ (59.5)
======= =======
SUPPLEMENTARY DISCLOSURE:
Cash paid for interest $ 19.1 $ 11.8
======= =======
Cash paid for income taxes $ 19.0 $ 6.5
======= =======
The accompanying notes are an integral part of these statements.
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LEAR SEATING CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Lear Seating
Corporation, a Delaware corporation ("the Company"), and its wholly-owned and
majority-owned subsidiaries. Investments in less than majority-owned
businesses are generally accounted for under the equity method.
A 33-for-1 split of the Company's common stock was effective as of the
Company's initial public offering in April, 1994. All references to the
numbers of shares of common stock, stock options, warrants and income (loss)
per share in the accompanying consolidated financial statements and notes
thereto have been adjusted to give effect to the split.
(2) ACQUISITION OF FIAT SEAT BUSINESS
On December 15, 1994, the Company purchased from Gilardini S.p.A., an
Italian Corporation, all of the outstanding common stock of Sepi S.p.A., an
Italian Corporation, all of the outstanding common stock of Sepi Poland
S.p. Z.o.o. and a 35% interest in a Turkish joint venture (collectively, the
"Fiat Seat Business," or "FSB"). The FSB is engaged in the design and
manufacture of automotive seating, with its principal customers being Fiat
S.p.A. and its affiliates ("Fiat"). In connection with this transaction, the
Company and Fiat entered into a long-term supply agreement for certain products
produced by the FSB.
This acquisition was accounted for as a purchase, and accordingly, the
operating results of the FSB have been included in the accompanying financial
statements since the date of the acquisition. Because the Company consolidates
the FSB on a one month lag, the results of operations for the quarter ended
April 1, 1995 includes only the results of operations of the FSB from the
acquisition date to the end of February 1995.
Assuming the acquisition had taken place as of the beginning of the
fiscal quarter ending April 2, 1994, the consolidated pro forma results of
operations of the Company for the first quarter of 1994 would have been as
follows, after giving effect to certain adjustments, including certain
operations adjustments consisting principally of management's estimates of the
effects of product pricing adjustments negotiated in connection with the
acquisition, increased interest expense, depreciation adjustments of certain
costs assumed by the seller and the related income tax effects (Unaudited: in
millions, except per share data):
Net sales $793.2
Net income 1.1
Net income per share $ 0.03
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LEAR SEATING CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(3) INVENTORIES
Inventories are stated at the lower of cost or market. Cost is
determined principally using the first-in, first out method. Finished goods
and work-in-process inventories include material, labor and manufacturing
overhead costs.
Inventories are comprised of the following (in millions):
April 1, December 31,
1995 1994
---- ----
Raw materials $ 84.6 $ 93.4
Work-in-process 11.8 13.9
Finished goods 18.4 19.3
----- -----
$ 114.8 $ 126.6
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(4) LONG-TERM DEBT
Long term debt is comprised of the following (in millions):
April 1, December 31,
1995 1994
---- ----
Domestic revolving credit loan $ 219.9 $ 121.9
German term loan 7.2 7.1
Industrial Revenue Bonds 19.0 19.0
Loans from Governmental Agencies 5.4 2.6
----- -----
251.5 150.6
Less- Current portion (1.6) (1.9)
----- -----
249.9 148.7
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Subordinated Debt:
8 1/4 % Subordinated Notes 145.0 145.0
11 1/4 % Senior Subordinated Notes 125.0 125.0
----- -----
270.0 270.0
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$ 519.9 $ 418.7
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LEAR SEATING CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(5) POST-RETIREMENT BENEFITS FOR FOREIGN PLANS
On January 1, 1995, the Company adopted Statement of Financial Accounting
Standards No. 106, "Employers' Accounting for Post-Retirement Benefits" for its
foreign plans. The Company adopted this statement for its domestic plans in
July, 1993. This standard requires that the expected cost of post-retirement
benefits be charged to expense during the years in which the employees render
service to the Company. The adoption of this statement for the Company's
foreign plans did not have a material effect on the Company's financial
position or results of operations.
(6) COMMON SHARES OUTSTANDING
The weighted average number of shares of common stock after giving effect
to the split of the Company's common stock (Note 1) is as follows for the
periods presented:
Three Months Ended
------------------
April 1, 1995 April 2, 1994
------------- -------------
Primary 49,422,847 41,963,565
Fully Diluted 49,422,847 42,014,029
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ITEM 2 - MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED APRIL 1, 1995 VS. THREE MONTHS ENDED APRIL 2, 1994.
Net sales of $1,043.5 million in the quarter ended April 1, 1995 surpassed
the first quarter of calendar 1994 by $356.8 million or 52.0%. Sales in the
first quarter of the current fiscal year benefited from incremental volume on
mature seating programs in North America and Europe, increased seat content per
vehicle, new business in the United States and Europe and the acquisition of
the Fiat Seat Business in December 1994.
Net sales in the United States of $499.4 million increased in the first
quarter of calendar 1995 as compared to the first quarter of the prior year by
$31.0 million or 6.6%. Sales in the current quarter reflect the benefit of
new General Motors passenger car and Ford truck programs as well as modest
vehicle production increases by domestic automotive manufacturers on carryover
seat programs. Partially offsetting the increases in sales was the relocation
of a passenger car program to Canada.
Net sales in Canada increased by $148.5 million to $215.0 million in the
quarter ended April 1, 1995 compared to $66.5 million in the quarter ended
April 2, 1994. Sales in 1995 benefited from the attainment of targeted levels
for a General Motors replacement passenger car program as compared to downtime
in the prior year. Further contributing to the increase in sales was the
relocation of a passenger car program, incremental volume on a new Ford truck
program and improved production activity on mature seating programs.
Net sales in Europe of $276.5 million in the current fiscal quarter
surpassed the first quarter of calendar 1994 by $173.2 million or 167.7%.
Sales in the quarter ended April 1, 1995 benefited from the contribution of
$82.9 million in sales from the FSB acquisition, as well as new business in
England, additional volumes on existing programs in Germany and Sweden. In
addition, favorable exchange rate fluctuations accounted for $19.3 million of
the increase.
Net sales in Mexico of $52.6 million in the quarter ended April 1, 1995
exceeded sales during the comparable period in the prior year by $4.1 million
or 8.4% largely as a result of increased production requirements on carryover
Ford passenger car and Chrysler truck programs which offset reduced sales to
Volkswagen.
Gross profit (net sales less cost of sales) and gross margin (gross profit
as a percentage of sales) were $76.6 million and 7.3%, respectively, for the
quarter ended April 1, 1995 as compared to $50.0 million and 7.3%,
respectively, in the first quarter of 1994. Gross profit in the first quarter
of 1995 benefited from increased volumes on mature North American seating
programs, along with improved performance at the Company's Scandinavian
operations, and cost reduction programs. These benefits were partially offset
by delayed new program start-up expenses, increased engineering expenses, and
pre-production and facility costs associated with new ventures in the Pacific
Rim.
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Selling, general and administrative expenses as a percentage of net sales
for the current quarter remained the same as the prior year at 2.5%. Actual
selling, general and administrative expenses increased by $8.9 million largely
as a result of the acquisition of FSB, engineering and support expenses
associated with the expansion of business and expenses related to the pursuit
of new business opportunities.
Operating income and operating margin (operating income as a percentage of
net sales) were $47.7 million or 4.6%, respectively, for the first quarter of
1995 as compared to $30.3 million or 4.4%, respectively, for the first quarter
of 1994. For the quarter ended April 1, 1995 as compared to the prior year,
the increase in operating income was largely attributable to the increase in
sales volumes on North American and Scandinavian mature seating programs,
partially offset by higher engineering and administrative support expenses and
operating losses associated with the integration of FSB into the Company's
operations. Non-cash depreciation and amortization charges were $18.4 million
during the quarter ended April 1, 1995 compared to $13.1 million in the
comparable period in the prior year.
During the first quarter of 1995, interest expense increased slightly in
comparison to the prior year. This was the result of additional interest
incurred on debt used to finance the FSB acquisition.
Other expense, including state and local taxes, foreign exchange gains and
losses, minority interests and equity in income of affiliates, decreased
slightly in comparison to the prior year. This was primarily due to increased
income derived from joint ventures accounted for under the equity method.
Net income for the first quarter of 1995 was $17.0 million, or $.34 per
share, as compared to net income of $6.5 million, or $.16 per share, in the
prior year first quarter. The provision for income taxes in the current
quarter was $14.4 million translating into an effective tax rate of 45.9%,
below the 52.9% rate for the first quarter of last year. Earnings per share
increased by 113% as compared to the prior year quarter, despite the fact that
the number of shares outstanding increased from 42 million shares to 49.4
million shares. The increase in shares outstanding is primarily the result of
the initial public offering in April, 1994.
LIQUIDITY AND CAPITAL RESOURCES
As of April 1, 1995, the Company had a $500.0 million revolving credit
facility (the "Credit Agreement") under which $219.9 million was borrowed and
outstanding and $61.7 million was committed and outstanding under letters of
credit, leaving $218.4 million unused and available. The Company also had
$19.0 million of Industrial Revenue Bonds (IRBs) outstanding, payable in 2024,
as well a term loan in Germany of $7.2 million, and governmental agency loans
in Canada and Italy of approximately $3.2 and $2.2 million, respectively. As
of April 1, 1995, the Company had net cash and cash equivalents of $16.2
million.
Amounts available under the Credit Agreement will be reduced by $58.8
million every six months beginning November 30, 1997, and the Credit Agreement
will expire on November 30, 1999. Excluding amounts outstanding under the
Credit Agreement which will be due upon the expiration of the Credit Agreement,
the Company's scheduled principal payments for the
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remainder of calendar year 1995 are $1.3 million and are $1.9 million for each
of the next three calendar years and $1.3 million in 1999.
On April 19, 1995, Lear Seating Canada, Ltd. entered into a revolving
term credit facility with The Bank of Nova Scotia, making available for the
Company's Canadian operations funds of up to $25 million Canadian. This
agreement replaced the Canadian Credit Agreement dated March 8, 1989.
Net cash flows used by operating activities were $35.3 million during the
quarter ended April 1, 1995 compared to $38.3 million during the comparable
period in 1994, principally due to higher earnings in 1995 which was partially
offset by the change in working capital.
The net change in working capital increased from a $59.5 million net use
of funds for the quarter ended April 2, 1994 to a $77.2 million use of funds
for the quarter ended April 1, 1995 primarily as a result of the increase in
receivable levels caused by the 52% increase in net sales and the lower level
of European receivable factoring. The cash provided from the increase in
accounts payable and cash overdrafts combined was $38.2 million compared to
$25.3 million for the same period in 1994 and is consistent with the increased
sales levels. Also contributing to the decrease in operating cash flows were
higher reimbursable preproduction development and production tooling costs
attributable to new programs.
In the quarter ended April 1, 1995, net cash used by investing activities
increased by $11.7 million to $23.5 million due to a significant number of new
programs scheduled to begin production during calendar 1995. During the first
quarter of 1995, the Company's capital expenditures totaled $23.6 million and
the Company currently anticipates an additional $80 million during the
remainder of fiscal 1995. Potential new business in South America and South
Africa would further increase capital expenditures.
The Company believes that cash flows from operations and available credit
facilities will be sufficient to meet its debt service obligations, projected
capital expenditures and working capital requirements.
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LEAR SEATING CORPORATION
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
No exhibits or reports on Form 8-K were filed during the quarter ended
April 1, 1995.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused the report to be signed on its behalf by the
undersigned thereunto duly authorized.
LEAR SEATING CORPORATION
Dated: May 15, 1995 By: /s/ James H. Vandenberghe
--------------------------
James H. Vandenberghe
Executive Vice President
Chief Financial Officer
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LEAR SEATING CORPORATION
FORM 10-Q
EXHIBIT INDEX
FOR THE QUARTER ENDED APRIL 1, 1995
EXHIBIT
NUMBER
10.1 Credit Agreement dated April 19, 1995 between Lear Seating Canada,
Ltd. and The Bank of Nova Scotia with respect to the establishment
of credit facilities, filed herewith.
27. Financial Data Schedule for the Quarter Ended April 1, 1995.
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EXHIBIT 10.1
[SCOTIABANK LETTERHEAD]
April 19, 1995
Lear Seating Canada Ltd.
536 Manitou Drive
Kitchener, Ontario
N2G 4C2
Attention: Mr. Donald J. Stebbins
Dear Sirs:
RE: ESTABLISHMENT OF REVOLVING TERM CREDIT FACILITY
IN FAVOUR OF LEAR SEATING CANADA LTD.
The Bank of Nova Scotia (the "Bank") is pleased to advise that,
subject to your acceptance, the Bank will make available to Lear Seating
Canada Ltd. (the "Borrower") the revolving term credit facility described in
this Agreement upon the following terms and conditions, and that this Agreement
shall replace the existing loan agreement dated March 8,1989, as amended to
date, between the parties, together with the grid promissory note therefor,
which loan agreement and grid promissory note shall terminate and cease to be of
effect (whereupon the Borrower shall be released from its obligation to provide
a letter of credit in favour of the Bank as collateral security therefor), with
outstanding availments thereunder constituting outstanding applicable
Availments (as defined below) under this Agreement:
CREDIT Revolving Term Credit.
FACILITY
$25,000,000 Cdn., under which are available
Canadian and U.S.dollar
advances and
bankers' acceptances of Canadian
dollar bills of exchange (each
a"BA"), together with standby
and commercial letters of credit
and letters of guarantee (each a
"Documentary Instrument"), the
terms and conditions of which
are contained in Schedules "A"
and "B" hereto;
(the "Credit", with each availment thereunder
being an "Availment").
BOOKING POINT Kitchener Main Branch
64 King Street West
Kitchener, Ontario
N2G 3X1
(the "Branch")
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PURPOSES General corporate purposes.
INTEREST RATE/ The interest rate for each type of advance, the
FEE ADJUSTMENTS issuance fees for BA's and the stand-by fee shall
all fluctuate in accordance with the Parent
Company's Coverage Ratio and Debt Ratio, and
together such ratios shall be determinative as to
the applicable "Pricing Level" in effect for
certain interest rates and fees hereunder at any
time and from time to time as follows:
Coverage Ratio Debt Ratio Pricing Level
-------------- ------------------ -------------
Less than 4.0:1 Greater than 3.25:1 Level 1
4.0:1 or greater 3.25:1 or less but
but less than greater than
5.0:1 1.75:1 Level 2
5.0:1 or greater 1.75 or less Level 3
If a discrepancy arises between the Coverage Ratio
and the Debt Ratio such that one ratio falls
within one of the above Pricing Levels and the
other ratio falls within a different Pricing
Level, then the Pricing Level with the higher
interest rates and fees will prevail for the
purposes of determining the affected interest
rates and fees.
Subject to the limitations expressed in this
section, any change in the interest rates and fees
hereunder (a "Pricing Change") shall be effective
on the second Business Day (as defined below in
the section captioned NOTICE) following the
earlier of:
(i) the Bank's receipt of a quarterly
compliance certificate (as required by the
REPORTING section hereof) indicating that
a change has occurred in the above ratios
such that the Pricing Level should be
adjusted; and
(ii) the due date for a quarterly compliance
certificate, if that certificate, whenever
actually received by the Bank, discloses
that a change has occurred in the above
ratios such that the Pricing Level should
be adjusted.
The interest rates and fees payable by virtue of
any Pricing Change shall continue to be payable
until the second Business Day following the
earlier of the Bank's receipt and the due date for
the next quarterly compliance certificate
indicating that a further Pricing Change should
occur as a result of changes in the above ratios
as at the end of the applicable fiscal period.
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No Pricing Change which results in a reduction of
interest rates and fees hereunder shall be
permitted at any time that an Event of Default has
occurred and is continuing hereunder. Further,
notwithstanding the foregoing, in the event that
any compliance certificate is not provided to the
Bank within 95 days of the end of any fiscal
quarter of the Borrower in any of its fiscal
years, other than any last fiscal quarter, or
within 105 days of any last fiscal quarter of the
Borrower in any of its fiscal years, a Pricing
Change shall be deemed to have occurred on the
second Business Day following such date, with all
affected interest rates and fees increasing
automatically to the next Pricing Level having
higher interest rates and fees (unless Pricing
Level 1 is already then in effect) and such
increased interest rates and fees shall remain in
effect subject to the terms of this section or
until receipt by the Bank of the relevant overdue
compliance certificate, whereupon, in the latter
event only, a further Pricing Change shall occur
on the second Business Day following the date of
the Bank's receipt thereof if warranted by the
particulars disclosed in such certificate.
For the purposes of this Agreement:
(a) "Parent Company" shall mean Lear Seating
Corporation, the U.S. parent company of
the Borrower;
(b) "Coverage Ratio" and "Debt Ratio", and all
defined terms used in each such definition
shall have the respective meanings
ascribed to them in the Syndicated Credit
Agreement, provided that each such term
shall be read for the purposes of this
Agreement as if to exclude the term
"Adjustment Date"; and
(c) "Syndicated Credit Agreement" shall mean
the second amended and restated credit
agreement dated as of November 29, 1994 by
and among the Parent Company, as borrower,
Chemical Bank, as administrative agent for
the lenders, certain managing agents
including the Bank (the Bank being a
lender thereunder also) and the other
lenders signatory thereto pursuant to
which loan commitments currently in the
maximum principal amount of $500,000,000
U.S. are available to the Parent Company.
LIMITATION ON The aggregate amount, expressed in Canadian
AVAILABILITY dollars, of Availments outstanding under the
Credit at any time and of all Obligations of the
Borrower known by the Borrower to exist at such
time shall not exceed the committed limit of the
Credit at such time. If this restriction is
exceeded, the Bank may require the
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applicable excess to be repaid within a period of
not more than 30 days of the date that such excess
first arises. For the purposes of this Agreement:
(a) "Obligations" shall have the meaning
ascribed to such term in the General
Security Agreement; and
(b) "General Security Agreement" shall mean
the amended and restated general security
agreement by and among the Borrower, as
obligor, Chemical Bank, as administrative
agent for the lenders and the lenders
party to the Syndicated Credit Agreement,
including the Bank.
CREDIT Advances. Canadian and U.S. dollar advances may be
AVAILMENTS obtained under the Credit by the Borrower
selecting in respect of each such advance one of
the interest options as follows:
(1) Canadian dollars as Prime Rate Advances in
whole multiples of $100,000 Cdn.: Prime
Lending Rate (as defined below) plus a per
annum margin fluctuating in accordance
with the applicable Pricing Level
(determined above) as follows:
Pricing Interest Rate
Level Margin (%)
------- ------------
Level 1 1/2
Level 2 1/4
Level 3 -
(2) U.S. dollars as Base Rate Advances in
whole multiples of $100,000 U.S.:
Alternate Base Rate (as defined below)
plus a per annum margin fluctuating in
accordance with the applicable Pricing
Level (determined above) as follows:
Pricing Interest Rate
Level Margin (%)
------- ------------
Level 1 1/2
Level 2 1/4
Level 3 -
(3) U.S. dollars as LIBOR Advances in whole
multiples of $100,000 U.S.: LIBO Rates
(as defined below) for 1, 2, 3 or 6 month
LIBOR Periods plus a per annum margin
fluctuating in accordance with the
applicable Pricing Level (determined
above) as follows:
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Pricing Interest Rate
Level Margin (%)
------- -------------
Level 1 1 1/4
Level 2 1
Level 3 3/4
A conversion from a LIBOR Advance to another
Availment may only be made on the expiry of the
applicable LIBOR Period, unless the Borrower
indemnifies the Bank for the costs of the Bank
resulting from the early termination of such LIBOR
Period. No LIBOR Period may extend beyond the
maturity date of the Credit as provided for below
in the section captioned MATURITY, except as
provided in paragraph (5) under the section
captioned COVENANTS.
BA's. BA's may be obtained by the Borrower under
the Credit, provided that each such BA shall be
denominated in a whole multiple of $100,000 Cdn.
and shall have a term to maturity of 30 to 180
days. The Borrower shall pay, upon issuance of
each BA, a per annum fee determined as set out
below, calculated on the basis of a 365 day year
on the face amount of such BA for the number of
days to elapse to maturity (exclusive of days of
grace), subject to a minimum fee of $100 Cdn. per
BA transaction. Each BA may be converted to
another Availment, but only on the maturity date
of such BA. Any BA not paid by the Borrower on
its maturity date will be paid by the Bank and
such payment shall constitute a Prime Rate Advance
under the Credit. No term of a BA may extend
beyond the maturity date of the Credit as provided
for below in the section captioned MATURITY,
except as provided in paragraph (5) under the
section captioned COVENANTS. The issuance fee for
BA's shall fluctuate in accordance with the
applicable Pricing Level (determined above) as
follows:
Pricing Issuance Fee
Level Per Annum (%)
------- -------------
Level 1 1 1/4
Level 2 1
Level 3 3/4
Documentary Instruments. Refer to the attached
Schedules "A" and "B" to this Agreement.
STAND-BY FEE The Borrower shall pay, on the last Business Day
of each calendar quarter, a per annum stand-by fee
determined as set out below, computed on the
unused
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portion of the committed limit of the Credit as it
may be reduced from time to time, calculated daily
in arrears on the basis of a 365 day year for the
actual number of days elapsed from the date of the
Borrower's execution of this Agreement. For
purposes of calculating the amount of stand-by fee
payable in respect of U.S. dollar Availments
outstanding hereunder, the Canadian dollar
exchange equivalent thereof shall be determined by
the Bank on and for each Business Day in
accordance with the spot rate of exchange for U.S.
dollars as announced by the Bank of Canada not
later than 12:00 noon (Toronto time) on such day,
or, if such rate is not announced by the Bank of
Canada by such time on any Business Day, the
applicable rate of exchange for the relevant
currency conversion shall be that which was last
announced by the Bank of Canada. The Borrower
shall be entitled to cancel all or any of the
unused portion of the committed limit of the
Credit at any time and from time to time without
penalty on not less than 30 days' written notice
to the Bank and upon payment of all accrued
stand-by fee to such date of cancellation,
whereupon the committed limit of the Credit shall
be permanently reduced accordingly. The stand-by
fee shall fluctuate in accordance with the
applicable Pricing Level (determined above) as
follows:
Pricing Stand-by Fee
Level Per Annum (%)
------- -------------
Level 1 3/8
Level 2 1/4
Level 3 1/5
MATURITY Termination. The Credit shall revolve and may be
drawn down until the earlier of (a) March 31, 1997
inclusive and (b) the date of expiry of the loan
commitments under the Syndicated Credit Agreement
or any successor thereto, when all amounts then
outstanding or accrued hereunder shall be payable.
The term of the Credit may be extended for
successive periods of up to one year in the
absolute discretion of the Bank, upon the
Borrower's written request therefor received not
later than January 31 of each year, provided that,
in no event shall the term of the Credit be
extended beyond November 30, 1999. If the Bank
does not give written notice to the Borrower of
its consent to any such requested extension on or
before March 1 in any year, neither the requested
extension nor any further extension shall be
permitted thereafter and the term of the Credit
shall expire as otherwise provided. No extension
shall be effective if maturity of the Credit shall
first occur for the reason specified above in
clause (b) of this section
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or if the Bank terminates the Credit at any time
prior to the commencement of any extended term
upon the occurrence of any Event of Default
hereunder. If any scheduled date of termination
should not fall on a Business Day, then all
amounts otherwise payable under this Agreement
upon termination of the Credit shall instead be
payable on the Business Day immediately preceding
such date.
Outstanding BA's. If, at any time prior to the
maturity date of any BA issued hereunder, the
Credit is terminated, the Borrower shall pay to
the Bank, on demand, an amount with respect to
each such BA equal to the total of amounts which
would be required to purchase in the Canadian
money market, as of 10:00 a.m. (Eastern time) on
the date of payment of such demand, Government of
Canada treasury bills in an aggregate amount equal
to the face amount of such BA and having in each
case a term to maturity similar to the period from
such demand to maturity of such BA; provided that,
subject to the provisions of paragraph (5) of the
section below captioned COVENANTS, no such payment
shall be required to be made by the Borrower with
respect to any BA prior to its date of maturity if
such BA is outstanding at the time of the
Borrower's receipt of any notice of repayment
given by the Bank to the Borrower in accordance
with the aforesaid paragraph (5) of the section
captioned COVENANTS. Upon payment by the Borrower
as required under this paragraph, the Borrower
shall have no further liability in respect of each
such BA and the Bank shall be entitled to all of
the benefits of, and be responsible for all
payments to third parties under, such BA and the
Bank shall indemnify and hold harmless the
Borrower in respect of all amounts which the
Borrower may be required to pay under each such BA
to any party other than the Bank.
Outstanding Documentary Instruments. Refer to the
attached Schedule "A" to this Agreement.
CALCULATION Determination of Rates. "Prime Lending Rate" is a
& PAYMENT variable per annum reference rate of interest (as
announced and adjusted by the Bank from time to
time) for loans made by the Bank in Canada in
Canadian dollars. "Alternate Base Rate" is a
fluctuating interest rate per annum (as shall be
in effect from time to time) (rounded to the
nearest 1/100 of 1%) for loans made by the Bank in
Canada in U.S. dollars equal to the greater of:
(a) the annual rate of interest announced from
time to time by the Bank in Canada as its "Base
Rate Canada"; and (b) 0.5% per annum above the
rate set forth for such date opposite the caption
"Federal Funds (Effective)" in the weekly
statistical release designated as "H.15(519)", or
any successor publication, published by the
Federal
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Reserve System. If for any reason the Bank shall
have determined (which determination shall be
conclusive, absent manifest error) that it is
unable to ascertain the Federal Funds (Effective)
for any reason, including without limitation, the
inability or failure of the Bank to obtain
sufficient bids or publications in accordance with
the terms hereof, the rate announced by the Bank
in Canada as its "Base Rate Canada" shall be the
Alternate Base Rate until the circumstances giving
rise to such inability no longer exist. The "LIBO
Rate" for each LIBOR Period (being the applicable
interest period chosen by the Borrower for a LIBOR
Advance) means the rate of interest per annum at
which the Bank is offered deposits by prime banks
in the London interbank market, as at 11:00 a.m.
(London, England time), on the second Business Day
prior to the commencement of such LIBOR Period, in
an amount of U.S. dollars similar to the amount of
the applicable LIBOR Advance for a deposit period
comparable to such LIBOR Period. LIBOR Advances
are offered subject to the availability to the
Bank of appropriate LIBO Rate quotations.
Interest Calculation and Payment. Interest
computed with reference to Prime Lending Rate or
Alternate Base Rate shall accrue from day to day
for the actual number of days elapsed and shall be
calculated and payable quarterly, not in advance,
on the last Business Day of each calendar quarter.
Interest computed with reference to a LIBO Rate
shall accrue from day to day for the actual number
of days elapsed and shall be calculated and
payable at the end of the applicable LIBOR Period
and, if such LIBOR Period is in excess of 3
months, at the end of each 3 month period during
such LIBOR Period. If the last day of any LIBOR
Period should not fall on a Business Day, then all
interest payable in respect of the applicable
advance upon maturity thereof shall instead be
payable on the Business Day immediately preceding
the last day of such LIBOR Period. Interest
computed with reference to Prime Lending Rate
shall be calculated on the basis of a 365 day
year, but interest computed with reference to the
Alternate Base Rate or a LIBO Rate shall be
calculated on the basis of a year of 360 days.
Change In Margin. Whenever this Agreement calls
for an increase or decrease on a certain date in a
margin over a reference rate in respect of
interest on an advance or the fees for issuance of
a BA, the Borrower shall pay interest or fees or
shall be entitled to receive a refund from the
Bank on interest or fees already paid, as
applicable, calculated proportionately with
reference to the new margin effective from such
date, notwithstanding that, in the case of an
advance, such advance was made prior to
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such date and, in the case of a BA, the fee is to
be calculated and paid prior to such date.
LIBOR Periods. The Borrower shall designate the
LIBOR Period to apply to each LIBOR Advance in its
notice of any drawdown of such advance, any
conversion to such advance and any renewal of an
existing LIBOR Period, provided that, upon failure
of the Borrower to give notice of any such
designation, when applicable, as required under
this Agreement, the Bank shall convert the
affected LIBOR Advance to a Base Rate Advance for
the purpose of determining the interest rate with
respect to same.
Default of Payment. Amounts not paid when due in
respect of a Prime Rate Advance or a Base Rate
Advance shall bear interest at the rates
applicable thereto, plus 2% per annum. Amounts
not paid when due in respect of a LIBOR Advance
may be constituted a Base Rate Advance by the Bank
and the Bank may so convert such advance. Any
other monetary obligation of the Borrower arising
under this Agreement which is not paid when due
shall be deemed to be an amount not paid when due
in respect of a Prime Rate Advance or a Base Rate
Advance, as applicable. Interest payable under
this paragraph shall accrue from day to day for
the actual number of days elapsed, shall be
calculated and payable upon demand, and shall be
compounded monthly until paid. The rights of the
Bank under this paragraph shall continue to apply
from the date of such default for so long as such
default shall continue, both before and after
demand and judgment.
Interest Act (Canada). Whenever a rate of
interest hereunder is calculated on the basis of a
year (the "deemed year") which contains fewer days
than the actual number of days in the calendar
year of calculation, such rate of interest shall
be expressed as a yearly rate for purposes of the
Interest Act (Canada) by multiplying such rate of
interest by the actual number of days in the
calendar year of calculation and dividing it by
the number of days in the deemed year.
REPAYMENTS The Borrower may make any repayment of an advance
in a whole multiple of $100,000 Cdn. in the case
of Prime Rate Advances and of $100,000 U.S. in the
case of a Base Rate Advance, but any repayment in
respect of a LIBOR Advance may be made only in a
whole multiple of $100,000 U.S. and shall be
subject to the terms and conditions set out in the
section below captioned INDEMNITY PROVISIONS. No
repayment of any advance made by way of overdraft
(if such advance is permitted by the Bank
hereunder) shall be subject to any limitation that
it be in a whole multiple or minimum of any
amount.
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SECURITY Unsecured.
CONDITIONS TO Initial Drawdown. The right of the Borrower to
UTILIZATION obtain the initial drawdown hereunder is subject
to the condition precedent that the Bank has
received, in form and substance satisfactory to
it, evidence of authority to borrow hereunder and
to execute and deliver this Agreement, together
with executed copies of such documentation and,
if requested by the Bank, opinions of counsel as
to the validity and enforceability of the same.
Each Utilization. The right of the Borrower to
obtain at any time any drawdown of an Availment
(including the initial drawdown) or any conversion
from one Availment to another or any renewal of a
LIBOR Period hereunder (each a "Utilization") is
subject to the further conditions precedent that
at the time of such Utilization:
(1) in the case where such Utilization is a
drawdown, a conversion to a LIBOR Advance
or a renewal of any LIBOR Advance, no
event or circumstance has occurred and is
continuing, or would result from the
making of such Utilization, which
constitutes an Event of Default or would
constitute an Event of Default but for the
requirement that notice be given or time
elapse, or both, or, which when considered
by itself or together with other past or
then existing events or circumstances,
constitutes or would constitute a material
adverse change in the business prospects
or financial condition of the Borrower and
its subsidiaries on a consolidated basis;
(2) the Limitation on Availability hereunder
has not been exceeded and shall not be
exceeded as a result of such Utilization;
and
(3) the Bank has received such other
information as the Bank may have
reasonably requested upon giving prior
reasonable notice thereof to the Borrower.
NOTICE The Borrower shall give to the Bank 2 Business
Days' notice of each Utilization or repayment in
respect of a LIBOR Advance and same Business Day's
notice of each Utilization or repayment in respect
of any other type of Availment. As used herein, a
"Business Day" means any day other than a
Saturday, or a Sunday, or a day that banks are
lawfully closed for business in Toronto, Ontario,
or, if in respect of a Base Rate Advance, New York
City, or, if in respect of a LIBOR Advance, any
other day on which transactions cannot be carried
out by and between banks in the London interbank
market.
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Any notice or communication shall be deemed to
have been given to a party hereunder (i) upon
delivery in writing to such party at its address
as noted on page 1 hereof or at the address of
which such party last notified the other, or (ii)
upon oral (including telephone) transmission to an
appropriate officer of such party, provided that
such officer believed at such time in good faith
that such notice or communication was given by an
appropriate officer of the notifying or
communicating party, or (iii) upon receipt by the
Bank of a Canadian or U.S. dollar cheque or wire
transfer drawn on an account of the Borrower
maintained at the Branch, which receipt, in the
absolute discretion of the Bank, may constitute
notice to the Bank of drawdown by way of a Prime
Rate Advance or a Base Rate Advance, as
applicable, under the Credit. Notice or
communication to the Bank hereunder (other than
notice given in the manner as set out in (iii) of
this section) to be effective on a certain
Business Day must be given prior to 11:00 a.m.
(Eastern time) on that Business Day. Each notice
or communication given by a party hereunder shall
be binding on it and shall not be revocable
without the other party's consent.
REPRESENTATIONS The Borrower represents and warrants that:
AND WARRANTIES
(a) this Agreement is a legal, valid and
binding obligation of the Borrower
enforceable against it in accordance with
its terms; is not contrary to any
contractual restriction binding on it; and
its execution and delivery of the same
neither requires a third party consent nor
would entitle any third party to
accelerate any debt owing to it; and
(b) it does not have outstanding, as of the
date hereof, any indebtedness for borrowed
money, nor any liability for borrowed
money (including, without limitation,
contingent liability under any guarantee),
other than indebtedness incurred to the
Province of Ontario having a maximum
aggregate principal amount of $4,500,000
Cdn., indebtedness and liability incurred
to the Bank and contingent liability under
a guarantee in a maximum principal amount
of $6,000,000 Cdn. dated April 26, 1989,
as amended on August 11, 1992, in respect
of the indebtedness and liability of
General Seating of Canada Ltd. incurred to
Dai-Ichi Kangyo Bank (Canada) Ltd.
All of the representations and warranties of the
Borrower contained herein shall survive the
execution and delivery of this Agreement
notwithstanding any investigation made at any time
by or on behalf of the Bank.
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COVENANTS The Borrower hereby covenants:
(1) to maintain, and cause its material
subsidiaries to maintain, their respective
corporate existences and conduct their
respective businesses in the normal
course;
(2) to promptly notify the Bank of the
occurrence of any event or circumstance
which constitutes an Event of Default or
would constitute an Event of Default but
for the requirement that notice be given
or time elapse or both and to provide to
the Bank a detailed statement of a senior
officer of the Borrower of the steps, if
any, being taken to cure or remedy such
default;
(3) to maintain, or cause to be maintained, a
minimum Consolidated Net Worth of
$55,000,000 Cdn. at all times during the
first three fiscal quarters of the
Borrower's 1995 fiscal year and of
$65,000,000 Cdn. at all times thereafter.
For the purposes of this Agreement,
"Consolidated Net Worth" shall mean, at
any particular time, Shareholders' Equity,
where "Shareholders' Equity" means all
amounts which would be included under
shareholders' equity on a consolidated
balance sheet of the Borrower and its
subsidiaries determined on a consolidated
basis plus inter-company indebtedness of
the Borrower and its subsidiaries which is
postponed and subordinated to the Bank in
a form and manner satisfactory to the Bank
in its sole discretion, all calculated as
at the date of determination in accordance
with generally accepted accounting
principles established by the Canadian
Institute of Chartered Accountants or any
successor thereto ("Canadian GAAP");
provided that any amortization of
goodwill, deferred financing fees or
license fees (including any write-offs of
deferred financing fees and license fees)
shall not be taken into account in
determining Consolidated Net Worth;
(4) to maintain a ratio of Consolidated
Operating Profit to net interest expense
of at least 3.0:1 at all times. For the
purposes of this paragraph, "Consolidated
Operating Profit" shall mean, without
duplication, at any particular time and
with respect to the previous four
consecutive fiscal quarters of the
Borrower ended on the last day of the most
recently-ended fiscal quarter,
consolidated net income of the Borrower
and its subsidiaries for such period
excluding (i) extraordinary gains and
losses arising from the sale of material
assets and other extraordinary and/or
non-recurring gains and losses, (ii)
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charges, premiums and expenses associated
with the discharge of indebtedness, (iii)
other non-cash items reducing net income,
(iv) license fees (and any write-offs
thereof), (v) stock compensation expense,
(vi) deferred financing fees (and any
write-offs thereof), (vii) foreign
exchange gains and losses, (viii)
miscellaneous income and expenses and (ix)
miscellaneous gains and losses arising
from the sale of assets plus, to the
extent deducted in determining
consolidated net income, the excess of (i)
the sum of (A) consolidated interest
expense, (B) any expenses for taxes, (C)
depreciation and amortization expense and
(D) minority interests in income of
subsidiaries over (ii) net equity earnings
in affiliates (excluding subsidiaries).
For the purposes of this Agreement,
"affiliate" and "affiliates" means an
affiliated body corporate within the
meaning ascribed to such term in the
Business Corporations Act (Ontario), as
amended;
(5) to repay all of its indebtedness and
liability incurred or accrued under this
Agreement if the Bank should at any time
withdraw as a party to the Syndicated
Credit Agreement, subject to the Bank
giving the Borrower not less than 60 days'
prior written notice of the due date for
any such repayment, the date thereof not
to be earlier in any event than the date
that the Bank's withdrawal from the
Syndicated Credit Agreement becomes
effective; provided that, if any Availment
(excluding any Prime Rate Advance and any
Base Rate Advance) is outstanding on the
date of receipt by the Borrower of any
such notice and if the maturity or expiry
date of such Availment should not occur
until after the aforesaid 60-day period
has expired, then, all payments in respect
of such Availment, which, if not for the
giving of the notice provided for in this
Covenant (5), would otherwise be due after
expiry of the 60-day period, shall instead
be made as and when otherwise required by
this Agreement, except that, in the case
of any applicable Documentary Instrument,
payments of principal, interest and other
amounts arising from any drawing
thereunder shall be made on the second
Business Day following such drawing.
Notwithstanding any other term or
condition of this Agreement, the Borrower
agrees that no further credit shall be
available to the Borrower under this
Agreement after the date of its receipt of
the notice referred to above and that, if
all amounts payable under this Covenant
(5) are received by the Bank within the
aforesaid 60-day period, the Credit shall
terminate on the date of final
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payment thereof; provided further that,
the Borrower's entitlement to obtain
credit hereunder shall be re- instated and
the Credit shall expire on the maturity
date as otherwise provided subject to the
terms and conditions of this Agreement, if
(i) at any time prior to the due date for
repayment specified in any such notice by
the Bank, the Borrower provides an
irrevocable standby letter of credit, in
form and substance satisfactory to the
Bank in its sole discretion, for a
principal amount not less than the
committed limit of the Credit at such
time, plus interest, fees and other
amounts outstanding and payable under this
Agreement and (ii) no Event of Default or
material adverse change in the financial
condition of the Borrower has occurred at
any time prior to or upon the Bank's
receipt of such letter of credit. The
giving of any notice by the Bank under
this Covenant (5) shall not affect the
respective rights, privileges or
obligations of the parties to this
Agreement except as expressly set out in
this Covenant (5);
(6) not to incur, nor to permit its
subsidiaries to incur, directly or
indirectly, any indebtedness or liability
for borrowed money after the date hereof,
whether actual or contingent (including,
without limitation, liability under any
guarantee) other than the re-financing of
any existing obligation of the Borrower as
disclosed above in clause (b) of the
section hereof captioned REPRESENTATIONS
AND WARRANTIES, amounts that the Bank is
satisfied are incurred in the normal
course of business and indebtedness and
liability for borrowed money incurred to
affiliates; and
(7) to notify the Bank in writing of the
amount and currency of each additional
Obligation incurred or to be incurred by
or on behalf of the Borrower under the
General Security Agreement, with such
written notice to include the date that
the applicable Obligation was or will be
incurred and to be given not later than 2
Business Days after the date that such
Obligation was incurred; provided that, if
advance notice of any additional
Obligation is given to the Bank, and the
date, amount or currency thereof as
specified in such notice does not
correspond with the actual date, amount or
currency of that Obligation as and when
incurred, the Borrower further covenants
to correct the affected notice in a
supplementary written notice to the Bank
within 2 Business Days of the date that
the applicable Obligation was incurred, or
if
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appropriate, to advise the Bank that no
such additional Obligation will be
incurred.
EVENTS OF Upon the occurrence and continuation of any Event
DEFAULT of Default, the Bank may terminate the Credit
and/or demand payment of all indebtedness and
liability outstanding and accrued hereunder to
the date of demand and proceed to take such steps
as it deems fit.
An Event of Default shall occur if:
(1) the Borrower fails to pay any amount of
principal within 3 Business Days of when
due or fails to pay any amount of
interest, fees or other amounts within 5
Business Days of when due under the
Credit, or makes any representation or
warranty hereunder which is incorrect in
any material respect;
(2) the Borrower breaches any material
covenant hereof (including, without
limitation, any covenant made hereunder in
the above section captioned COVENANTS) or
fails to comply with any other material
term or condition hereof and such breach
of covenant or material non-compliance
(other than a covenant to pay or a
covenant impossible to remedy or a
material breach of any representation or
warranty) continues for 10 Business Days
or more after notice to remedy same, or
the Borrower fails to pay any excess
amount due in respect of the Limitation On
Availability hereunder within the time
period specified in any demand therefor;
or
(3) the Borrower or any subsidiary of the
Borrower admits its inability to pay its
debts generally; becomes a bankrupt
(voluntarily or involuntarily); or,
becomes subject to any proceeding seeking
liquidation, rearrangement, relief of
creditors or the appointment of a receiver
or trustee over, or any judgment or order
which has or might have a material and
adverse effect on, any substantial part of
its property or undertaking; unless, in
the event of an involuntary bankruptcy or
a proceeding for any of the remedies
specified above in this section (other
than a voluntary bankruptcy), the affected
corporation has obtained a dismissal,
permanent stay or other similar
disposition not more than 60 days from (i)
the date of the filing of a petition, in
the case of an involuntary bankruptcy, or
(ii) the date of service of the relevant
statement of claim, application or other
process, in the case of any other
proceeding; or
(4) The Borrower or any subsidiary of the
Borrower:
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(a) fails to pay any of its (other)
indebtedness or liability when
due, such failure continues
after any applicable grace
period specified in an
agreement or instrument
relating to such (other)
indebtedness or liability and,
as a result thereof, the
Borrower or applicable
subsidiary is then in default
of payment of an aggregate
principal amount of
indebtedness and liability of
$10,000,000 U.S. (or the
Canadian dollar equivalent
thereof) or more; or
(b) permits any material default
under any agreement or
instrument relating to its
(other) indebtedness or
liability, or any other event,
to occur and to continue after
any applicable grace period
specified in such agreement or
instrument and the effect of
such default or event is to
accelerate, or to permit the
acceleration of, the maturity
of that indebtedness or
liability such that the
aggregate principal amount of
the indebtedness and liability
incurred by the Borrower or
applicable subsidiary which
then has been or may be
accelerated by the relevant
creditor(s) exceeds $10,000,000
U.S. (or the Canadian dollar
equivalent thereof);
(irrespective of whether either of the
aforesaid aggregate principal amounts, or
any portion thereof, is incurred jointly,
severally or jointly and severally,
provided that the calculation of such
aggregate principal amounts shall be made
without duplication); or
(5) subject to the above paragraphs (1) and
(4) of this section, an "Event of Default"
within the meaning of the Syndicated
Credit Agreement occurs thereunder as a
result of any of the events or
circumstances specified in Section 9 (h)
thereof; or
(6) subject to the above paragraphs (1), (4)
and (5) of this section, any other event
of default occurs under the Syndicated
Credit Agreement or any successor thereto
which results in the acceleration of any
amount of the Parent Company's
indebtedness or liability outstanding
thereunder and/or the termination of the
lenders' commitments thereunder; or
(7) any of Sections 8.2 (l), 8.2 (o) or 8.3 of
the Syndicated Credit Agreement as each
relates to the Borrower is amended,
substituted or abolished
17
To: Lear Seating Canada Ltd. Page 17
at any time without the prior written
consent of the Bank; or
(8) any course of action is undertaken by the
Borrower or any material subsidiary of the
Borrower, or with respect to such
corporation or its capital stock by
another party, which is intended to result
in, or would result (in the reasonable
opinion of the Bank) in, its
reorganization or reconstruction, or its
consolidation, amalgamation or merger with
another corporation, or the transfer of
all or substantially all of the
undertaking and assets of such
corporation; or
(9) there occurs or is announced or is
scheduled any change in the ownership of
the Borrower such that the Parent Company
or any wholly-owned subsidiary of the
Parent Company ceases, or would cease, to
beneficially own 100% of the issued and
outstanding capital stock in the Borrower
at any time; or
(10) any affiliate of the Borrower or of a
subsidiary of the Borrower which is a
party to a postponement and subordination
agreement entered into with the Bank (a
"Postponement and Subordination
Agreement") fails to substantially
perform, observe or otherwise comply with
any material term or condition of that
Postponement and Subordination Agreement
and such failure continues for 15 Business
Days or more after notice given by the
Bank to the applicable affiliate to remedy
same; or any such affiliate party to a
Postponement and Subordination Agreement
denies, to any extent, its obligations
under such Postponement and Subordination
Agreement or claims such Postponement and
Subordination Agreement to be, with
respect to itself or any other party
thereto, invalid or withdrawn in whole or
in part; or any Postponement and
Subordination Agreement is invalidated in
whole or in part by any Act, regulation or
governmental action; or any Postponement
and Subordination Agreement ceases to be
the valid, binding and enforceable
obligation of the applicable affiliate(s).
CHANGE OF No amendment or other modification, substitution,
INTERPRETATION abolition or waiver to or of:
(i) any provision of the Syndicated Credit
Agreement or the General Security
Agreement, or any portion of any provision
of either such agreement, which is
specifically referenced in this Agreement,
including, without limitation, any defined
term
18
To: Lear Seating Canada Ltd. Page 18
of the Syndicated Credit Agreement or of
the General Security Agreement referenced
herein (each a "Referenced Term"); or
(ii) any defined term of the Syndicated Credit
Agreement or the General Security
Agreement which is used in or is otherwise
relevant to any Referenced Term but which
is not specifically referenced in this
Agreement (each a "Referenced Term" also)
shall be binding upon the Bank for the purposes of
this Agreement unless the Bank gives its prior
written consent thereto for the express purpose of
the relevant amendment, modification,
substitution, abolition or waiver. Each
Referenced Term shall survive termination of or
the Bank's withdrawal from the Syndicated Credit
Agreement or the General Security Agreement, as
applicable, and shall survive the invalidity of
the Syndicated Credit Agreement or the General
Security Agreement or any portion of any provision
or defined term of either such agreement which
constitutes a Referenced Term for the purposes of
this Agreement.
DETERMINATION The Bank shall have the right to determine at any
time, and in its discretion reasonably exercised,
as to whether any event, circumstance or thing
envisaged in this Agreement is or would be
"material", "adverse" or "substantial", as such
terms are used herein. Any accounting terms used
and not specifically defined herein shall be
construed in accordance with Canadian GAAP or, as
applicable, generally accepted U.S. accounting
principles, consistently applied, and except as
may be otherwise provided herein all financial
data and statements submitted pursuant to this
Agreement shall be prepared in accordance with
such principles.
INDEMNITY If the introduction or implementation of or any
PROVISIONS change in or in the interpretation of, or any
change in its application to the Borrower of,
any law or any regulation or guideline issued by
any central bank or other governmental authority
(whether or not having the force of law),
including, without limitation, any reserve or
special deposit requirement or any tax (other
than tax on the Bank's general income) or any
capital requirement, has due to the Bank's
compliance the effect, directly or indirectly, of
(i) increasing the cost to the Bank of performing
its obligations hereunder or under any BA or
Documentary Instrument; (ii) reducing any amount
received or receivable by the Bank or its
effective return hereunder or in respect of any
BA or Documentary Instrument or on its capital;
or (iii) causing the Bank to make any payment or
to forgo any return based on any amount received or
19
To: Lear Seating Canada Ltd. Page 19
receivable by the Bank hereunder or in respect
of any BA or Documentary Instrument, then upon
receipt by the Borrower of a certificate from the
Bank setting forth in reasonable detail any
additional costs, reduced amount receivable or
foregone return, the Borrower shall pay such
amount as shall compensate the Bank for any such
cost, reduction, payment or forgone return. The
Borrower shall further indemnify the Bank for all
costs, losses and expenses which may at any time
be imposed on, incurred by or asserted against the
Bank in any way relating to or arising out of the
execution, delivery or enforcement of this
Agreement, the transactions contemplated hereby
(including, without limitation, the making and
maintaining of any Availment hereunder) and/or the
early termination of any LIBOR Period and agrees
that the Bank shall have no liability to the
Borrower for any reason in respect of any
Availment other than on account of the Bank's
gross negligence or wilful misconduct. Any
certificate of the Bank in respect of the
foregoing will be conclusive and binding upon the
Borrower, except for manifest error, provided that
the Bank shall determine the amounts owing to it
in good faith using any reasonable averaging and
attribution methods.
INDEMNITY FOR The Borrower hereby represents and warrants that
ENVIRONMENTAL its business and assets and those of its material
HAZARDS subsidiaries are operated in substantial
compliance with applicable environmental laws,
rules, regulations and orders ("Environmental
Laws") and that no enforcement action in respect
thereof is threatened or pending, to the best of
the knowledge, information and belief, after due
enquiry, of each and every senior officer of the
Borrower who could reasonably be expected to have
knowledge of such matters. The Borrower covenants
to and to cause its subsidiaries to continue to so
operate and permit the Bank to conduct inspections
and appraisals of all or any of its and its
subsidiaries' records, business and assets at
reasonable times upon prior written notice to the
Borrower at any time and from time to time at the
Borrower's expense to ensure such compliance. If
the Bank is required to expend any funds in
compliance with Environmental Laws, the Borrower
shall indemnify the Bank in respect of such
expenditures as if an advance had been made to the
Borrower under this Agreement for such purpose;
provided that the Bank shall have delivered to the
Borrower a certificate setting forth in reasonable
detail the basis for its expenditures, including
the Environmental Laws implicated and the amount
and nature of such expenditures.
20
To: Lear Seating Canada Ltd. Page 20
REPORTING The Borrower shall provide to the Bank, to the
attention of Unit Head, Corporate Banking -
Ontario, 44 King Street West, Toronto, Ontario M5H
1H1:
(1) unaudited, quarterly, consolidated
financial statements of the Borrower
within 60 days of the end of each of the
first 3 quarters of each of its fiscal
years;
(2) audited, annual, consolidated financial
statements of the Borrower within 150 days
of each of its fiscal year-ends;
(3) quarterly certificates of compliance,
supported by detailed calculations:
(i) demonstrating that the Borrower
has maintained all financial
performance tests prescribed in
this Agreement and confirming
that no Event of Default has
occurred or is continuing
hereunder;
(ii) demonstrating that the Parent
Company has maintained all
financial performance tests
prescribed in the Syndicated
Credit Agreement and further
confirming that no event of
default has occurred or is
continuing thereunder;
(iii) to confirm the Coverage and
Debt Ratios affecting the
Pricing Levels for certain
interest rates and fees
hereunder (determined in
accordance with the Interest
Rate/Fee Adjustments section
hereof) which will be in
effect, subject to the terms of
the Interest Rate/Fee
Adjustments section hereof, for
the 90-day period commencing on
the second Business Day
immediately following the
earlier of the Bank's receipt
of a certificate and the due
date therefor; and
(iv) to specify the aggregate amount
of Obligations which are known
by the Borrower to be
outstanding as at the end of
the applicable fiscal period,
including, the aggregate amount
of all Obligations which were
incurred during such fiscal
period;
with each certificate to be signed by a
senior executive officer of the Borrower
and the Parent Company and to be provided
as soon as feasible after the end of each
fiscal quarter of the Borrower and in any
event (if not already provided) within 60
days of the end of each of the first 3
quarters of each of the Borrower's
21
To: Lear Seating Canada Ltd. Page 21
fiscal years and within 105 days of each
of the Borrower's fiscal year-ends; and
(4) such other information as the Bank may
reasonably request.
EXPENSES All reasonable fees and out-of-pocket expenses of
the Bank in respect of preparation and enforcement
of this Agreement will be for the account of the
Borrower.
EXCHANGE Except as otherwise provided hereunder, the
EQUIVALENCIES Canadian dollar exchange equivalent of U.S.
dollars shall be determined by the Bank in
accordance with its normal practices from time to
time. The aggregate amount of Canadian dollar
Availments and the Canadian dollar exchange
equivalent of U.S. dollar Availments outstanding
at any time under the Credit shall not exceed the
Canadian dollar committed limit of the Credit at
such time, and for such purposes the Bank may
require any such excess resulting for any reason
to be repaid within 30 days of notice thereof to
the Borrower and until such repayment may refuse
to allow a drawdown under the Credit.
PAYMENTS Unless otherwise directed by the appropriate
party, all disbursements to the Borrower shall be
made into an account designated by the Borrower
and all payments to the Bank shall be made in the
currency in respect of which the obligations
requiring such payment arose by depositing such
payments (whether by wire transfer or otherwise)
into an account designated by the Bank at the
Branch for value on the due date. Upon the
occurrence and continuation of any Event of
Default hereunder, the Borrower hereby
acknowledges that the Bank shall be entitled, from
time to time and at any time, to the fullest
extent permitted by law, to set off and apply any
and all deposits (general or special, time or
demand, provisional or final) at any time held and
other indebtedness at any time owing by the Bank
to or for the credit or the account of the
Borrower against any and all of the obligations of
the Borrower now or hereafter existing under this
Agreement, irrespective of whether or not the Bank
shall have made any demand under this Agreement.
The currency of account of all payments
contemplated hereunder shall be of the essence of
this Agreement.
EVIDENCE OF The Borrower acknowledges that the actual
INDEBTEDNESS recording of any Availment under the Credit and
interest, fees and other amounts due therefor
under this Agreement in an account of the
Borrower maintained by the Bank in respect thereof
and payments made under the Credit in accordance
with this Agreement shall constitute, except for
manifest error, conclusive evidence of the
Borrower's indebtedness and liability from time
to time under this Agreement in respect of the
Credit;
22
To: Lear Seating Canada Ltd. Page 22
provided that the failure of the Bank to record
the indebtedness and liability of the Borrower in
such account shall not affect the obligation of
the Borrower to pay or repay such indebtedness and
liability in accordance with this Agreement.
JUDGMENT The obligation of the Borrower hereunder to make
CURRENCY payments in U.S. dollars shall not be discharged
or satisfied by any tender or recovery pursuant to
any judgment expressed in or converted into
Canadian dollars except to the extent to which
such tender or recovery shall result in the
effective receipt by the Bank of the full amount
of U.S. dollars so payable hereunder.
Accordingly, the obligation of the Borrower shall
be enforceable as an alternative or additional
cause of action for the purpose of recovery in
Canadian dollars of the amount (if any) by which
such effective receipt shall fall short of the
full amount of U.S. dollars so payable hereunder
and shall not be affected by any judgment being
obtained for any other sums due hereunder.
SEVERABILITY The invalidity or unenforceability of any
particular provision of this Agreement shall not
affect any other provision herein and the
Agreement shall be construed as if the invalid or
unenforceable provision had been omitted.
ASSIGNABILITY The Borrower may not assign this Agreement. The
& GOVERNING LAW Bank may assign or grant participation in its
rights and obligations hereunder to any of its
subsidiaries or affiliates without the consent of
the Borrower, and may assign or grant
participation in its rights and obligations
hereunder to any other third party with the prior
written consent of the Borrower (not to
unreasonably withheld), with each such assignee or
participant to be entitled to rely on the section
headed INDEMNITY PROVISIONS as set out above.
This Agreement shall be construed in accordance
with the law of the Province of Ontario.
* * *
23
To: Lear Seating Canada Ltd. Page 23
Please indicate your acceptance of this Agreement by signing
and returning to the Bank the enclosed duplicate copy of this letter,
together with Schedules "A" and "B" hereto, on or before April 19, 1995,
failing which the provisions hereof shall be of no force or effect.
Yours truly,
Accepted this ____ day of THE BANK OF NOVA SCOTIA
of April, 1995.
LEAR SEATING CANADA LTD. by:
------------------------
S.P. Hart
by: by:
---------------------------- ------------------------
M.L. Ness
Name:
----------------------
Title:
----------------------
by:
----------------------------
Name:
-----------------------
Title:
----------------------
24
SCHEDULE "A"
DOCUMENTARY INSTRUMENTS
This Schedule is part of the letter loan agreement (the "Agreement")
dated April 19, 1995, between The Bank of Nova Scotia (the "Bank") and Lear
Seating Canada Ltd. (the "Applicant"). Canadian and U.S. dollar denominated
commercial and standby letters of credit and letters of guarantee (each a
"Documentary Instrument") shall be Availments which may be obtained under the
Revolving Term Credit referred to in the Agreement, provided that each
Documentary Instrument shall be in form satisfactory to the Bank and have a
term to expiry of not more than 365 days and further provided that the issuance
thereof will not contravene any law, regulation or order applicable to such
Documentary Instrument in any jurisdiction. Each Commercial Documentary
Instrument shall be issued subject to the additional terms set forth in
Schedule "B" attached hereto. All other capitalized terms not defined herein
shall have the respective meanings given to them in the Agreement.
IN CONSIDERATION of the Bank issuing each Documentary Instrument,
the Applicant hereby agrees as follows:
1. The availability of the Credit shall be reduced by the face amount
of each Documentary Instrument for and during the period of time that the Bank
has a contingent liability thereunder. The Applicant shall pay, upon issuance
of each Documentary Instrument for the guarantee of performance of the
Applicant's contractual obligations, a fee of 1/2 of 1% per annum, and upon
issuance of each Documentary Instrument for any other purpose, a fee of 3/4 of
1% per annum, calculated in each case on the face amount of such Documentary
Instrument for the actual number of days to elapse, based upon a year of 365
days, from and including the date of issuance thereof to the applicable date of
expiry. The issuance fee shall be recalculated each time a particular
Documentary Instrument is reduced and the Bank will refund to the Borrower any
unearned issuance fee as a result of reductions in or cancellations of the
particular Documentary Instrument from the date of recalculation hereunder,
provided that in no event shall the minimum issuance fee paid in respect of the
particular Documentary Instrument be less than the greater of $100 Cdn. or
U.S., as applicable, or 1/4 of 1% per annum of the face amount of the
Documentary Instrument issued or renewed. Each Documentary Instrument may be
converted to another Availment, but only on the expiry or cancellation of such
Documentary Instrument. All drafts, bills of exchange, receipts, acceptances,
demands and other requests for payment drawn or issued under a Documentary
Instrument (any such instrument being a "Draft") and all other amounts paid by
the Bank under or in connection with any Documentary Instrument shall
constitute under the Credit a Prime Rate Advance to the extent that such
amounts are in Canadian dollars and a Base Rate Advance to the extent that such
amounts are in U.S. dollars.
2. The Applicant shall pay to the Bank all of the Bank's contingent
liability in respect of (i) any Documentary Instrument outstanding upon any
termination of the Credit, and (ii) any Documentary Instrument which becomes
the subject matter of any order,
25
- 2 -
judgment, injunction or other such determination (an "Order"), or any petition
or other application for any Order by the Applicant or any other party,
restricting payment by the Bank under and in accordance with such Documentary
Instrument or extending the Bank's liability under such Documentary Instrument
beyond the expiration date stated therein, provided that payment in respect of
each such Documentary Instrument shall be due forthwith upon demand and in the
currency in which such Documentary Instrument is denominated (the "Instrument
Currency"); provided that, subject to the provisions of paragraph (5) of the
section below captioned COVENANTS, no such payment shall be required to be made
by the Applicant with respect to any Documentary Instrument prior to its date
of expiry if such Documentary Instrument is outstanding at the time of the
Applicant's receipt of any notice of repayment given by the Bank to the
Applicant in accordance with the aforesaid paragraph (5) of the section of the
Agreement captioned COVENANTS.
3. The Bank hereby agrees that it will, with respect to each
Documentary Instrument subjected to any such demand for payment under the
preceding section, upon the later of:
(a) the date on which any final and non-appealable order,
judgment or other such determination has been rendered or
issued either terminating any applicable Order, or
permanently enjoining the Bank from paying under such
Documentary Instrument; and
(b) the earlier of:
(i) the date on which either the original counterpart
of such Documentary Instrument is returned to the
Bank for cancellation or the Bank is released by
the beneficiary thereof from any further
obligations in respect of such Documentary
Instrument; and,
(ii) the expiry of such Documentary Instrument;
pay to the Applicant an amount in the applicable Instrument Currency equal to
any excess of the amount received by the Bank hereunder in respect of the
Bank's contingent liability under such Documentary Instrument (the "Received
Amount") over the equivalent in such Instrument Currency of the total of
amounts applied to reimburse the Bank for amounts paid by it under or in
connection with such Documentary Instrument (the Bank having the right to so
appropriate an aggregate sum equal to the amounts paid by it under the
applicable Documentary Instrument), together with an additional amount in such
Instrument Currency computed by applying a per annum rate as set out below to
the amount of such excess from time to time. The applicable per annum rate
shall equal 3% per annum less than the Prime Lending Rate, if the applicable
Documentary Instrument is denominated in Canadian dollars or 3% less than the
Bank's Base Rate Canada, if the applicable Documentary Instrument is
denominated in U.S. dollars. Such additional amount shall be calculated daily
on the basis of a 365 day year for the actual number of days elapsed from and
including the date
26
- 3 -
of payment to the Bank of the Received Amount to (but not including) the date
of return to the Applicant of the excess.
4. Amounts not paid when due hereunder shall, for the purposes of the
Agreement, be deemed to be amounts not paid when due for Prime Rate Advances if
in respect of Canadian dollars and Base Rate Advances if in respect of U.S.
dollars.
5. The obligations of the Applicant hereunder shall be absolute,
unconditional and irrevocable and shall not be reduced by any event or
occurrence including, without limitation, any lack of validity or
enforceability of a Documentary Instrument, or any Draft paid or acted upon by
the Bank or any of its correspondents being fraudulent, forged, invalid or
insufficient in any respect, or any claims which the Applicant may have against
any beneficiary or transferee of any Documentary Instrument; provided that the
Bank shall indemnify the Borrower for any cost, expense or other liability
resulting from the Bank's negligence or wilful misconduct. The obligations of
the Applicant hereunder shall remain in full force and effect and shall apply
to any alteration to or extension of the expiration date of any Documentary
Instrument or any standby letter of credit issued to replace, extend or alter
any Documentary Instrument.
6. Any action, inaction or omission taken or suffered by the Bank or
any of the Bank's correspondents under or in connection with a Documentary
Instrument or any Draft made thereunder, if in good faith and in conformity
with foreign or domestic laws, regulations or customs applicable thereto shall
be binding upon the Applicant and shall not place the Bank or any of its
correspondents under any resulting liability to the Applicant. Without
limiting the generality of the foregoing, the Bank and its correspondents may
receive, accept or pay as complying with the terms of a Documentary Instrument,
any Draft thereunder, otherwise in order which may be signed by, or issued to,
the administrator or any executor of, or the trustee in bankruptcy of, or the
receiver for any property of, or other person or entity acting as the
representative or in the place of, such beneficiary or its successors and
assigns. The Applicant covenants that it will not take any steps against the
Bank or any of its correspondents, issue any instructions to the Bank or any of
its correspondents or institute any proceedings against the Bank or any of its
correspondents intended to derogate from the right or ability of the Bank or
its correspondents to honour and pay any Draft or Drafts.
7. The Applicant agrees to pay, upon 10 days' prior written notice
thereof, all reasonable costs and expenses of the Bank incurred in the
enforcement of the Bank's rights under this Agreement and, further, will
indemnify the Bank on demand against all loss or damage to the Bank arising out
of the issuance of or other action taken by the Bank in connection with any
Documentary Instrument including, without limitation, the costs relating to any
legal process instituted by any party restraining or seeking to restrain the
Bank from accepting or paying any Draft; provided that the Bank shall have
delivered to the Borrower a certificate setting forth in reasonable detail all
such costs, expenses or damages. The Applicant also agrees that the Bank shall
have no liability to it for any reason in respect of the issuance of any
Documentary Instrument other than on account of the Bank's
27
- 4 -
negligence or wilful misconduct. All payments to be made to the Bank hereunder
shall be made for value on the date due and free of any withholding tax or
levy, other than taxes imposed on the net income of the Bank, and such taxes or
levies, other than as excepted, shall be paid by the Applicant. The provisions
of this paragraph will survive payment in full hereunder.
8. This Schedule and Schedule "B" shall be binding upon the Applicant,
its successors and assigns and shall enure to the benefit of the Bank, its
successors, transferees and assigns. Any provision of this Schedule and any
provision of Schedule "B" which is void or unenforceable shall be ineffective
to the extent void or unenforceable and shall be severable from the other
provisions of the applicable Schedule and this Schedule and Schedule "B" shall
be interpreted as if such provision were not included in Schedule "A" or
Schedule "B", as applicable. Time and the currency of payment hereunder shall
be deemed to be of the essence hereof. None of the terms of this Schedule or
of Schedule "B" shall be amended except in writing signed by the Bank and the
Applicant and any waiver by the Bank shall not constitute any further waiver.
The Uniform Customs and Practice for Documentary Credits as most recently
published by the International Chamber of Commerce (the "UCP") shall in all
respects apply to each standby or commercial letter of credit and shall be
deemed for such purpose to be a part hereof as if fully incorporated herein.
In the event of any conflict between the UCP and the governing law of the
Agreement, the UCP shall prevail to the extent necessary to remove the
conflict.
28
SCHEDULE "B"
COMMERCIAL DOCUMENTARY INSTRUMENTS
This Schedule is part of the letter loan agreement (the "Agreement")
dated April 19, 1995, between The Bank of Nova Scotia (the "Bank") and Lear
Seating Canada Ltd. (the "Applicant"). Canadian and U.S. dollar denominated
commercial letters of credit (each a "Commercial Documentary Instrument") shall
be Availments which may be obtained under the Revolving Term Credit referred to
in the Agreement, provided that each Commercial Documentary Instrument shall be
in form satisfactory to the Bank and have a term to expiry of not more than 365
days and further provided that the issuance thereof will not contravene any
laws, regulations or orders applicable to such Documentary Instrument in any
jurisdiction. All other capitalized terms not defined herein shall have the
respective meanings given to them in the Agreement.
IN CONSIDERATION of the issue by the Bank from time to time of one
or more Commercial Documentary Instruments prepared in accordance with an
application or applications which have been or will be entered into by the
Applicant from time to time during the term of the Agreement and in addition to
the terms contained in Schedule "A" hereto, the Applicant hereby agrees with
the Bank as follows:
1. If a Commercial Documentary Instrument does not specify the unit
price of the goods, wares and merchandise and other commodities which may be
purchased or shipped under or by virtue of such Commercial Documentary
Instrument (the "Goods") and does not state that partial shipments are not
permitted, the Bank shall be entitled to be paid the full amount of any Draft
honoured in respect of a partial shipment notwithstanding that it is for an
amount that is disproportionate to the relative partial shipment.
2. All users of a Commercial Documentary Instrument shall be deemed to
be agents of the Applicant and neither the Bank nor its agents or
correspondents shall be responsible for the negligence or fraudulence of any
user of a Commercial Documentary Instrument, for the existence, nature,
condition, description, value, quality or quantity of the Goods, for the
packing, shipment, export, import, handling, storage or delivery thereof, or
for the safety or preservation thereof at any time, and neither the Bank nor
its agents or correspondents shall be liable for any loss resulting from the
total or partial destruction of or damage to or deterioration or fall in value
of the Goods, or from the delay in arrival or failure to arrive of either the
Goods or of any of the documents relating thereto, or from the inadequacy or
invalidity of any document or insurance, or from the default or insolvency of
any insurer, carrier or other person issuing any document with respect to the
Goods, or from failure to give or delay in giving notice of arrival of the
Goods or any other notice, or from any error in or misinterpretation of or
default or delay in the sending, transmission, arrival or delivery of any
message, whether in cipher or not, by post, telegraph, cable, wireless or
otherwise, and the obligations hereunder of the Applicant to the Bank shall not
be in any way lessened or affected if any Draft or document accepted, paid or
acted upon by the Bank or its agents or correspondents does not bear a
29
- 2 -
reference or sufficient reference to a Commercial Documentary Instrument or if
no note thereof is made on a Commercial Documentary Instrument.
5
1,000,000
3-MOS
DEC-31-1995
JAN-01-1995
APR-01-1995
16
0
675
0
115
904
521
163
1798
957
520
1
0
0
216
1798
1044
1044
967
967
31
0
14
31
14
17
0
0
0
17
.34
.34
