AMENDMENT NO. 2 AND CONSENT
TO
POST-PETITION LOAN AND SECURITY AGREEMENT
THE CIT GROUP/BUSINESS CREDIT, INC.
AS AGENT AND LENDER
AND
CONGRESS FINANCIAL CORPORATION
GENERAL ELECTRIC CAPITAL CORPORATION
XXXXXX FINANCIAL, INC.
FINOVA CAPITAL CORPORATION
FOOTHILL CAPITAL CORPORATION
AND
BANKBOSTON, N.A.
AS LENDERS
AND
HARVARD INDUSTRIES, INC.,
THE XXXXXXXX-XXXXXX CORPORATION,
XXXXXX AUTOMOTIVE, INC.,
XXXXX-ALBION CORPORATION,
XXXXXXX-XXXXXX, INC.,
XXXXXXX-XXXXXX GREENEVILLE, INC.,
XXXXXXX-XXXXXX POTTSTOWN, INC.,
XXXXXXX-XXXXXX TECHNOLOGIES, INC.,
AND
XXXXXXX-XXXXXX TOLEDO, INC.
(AS COMPANIES)
DATED AS OF: JANUARY 16, 1998
AMENDMENT NO. 2 AND CONSENT (the "Amendment") dated as of
January 16, 1998, by and among HARVARD INDUSTRIES, INC., a Florida corporation
and a debtor and debtor in possession under chapter 11 of the Bankruptcy Code
(herein "Harvard"), XXXXXXX-XXXXXX, INC., a Delaware corporation and a debtor
and debtor in possession under chapter 11 of the Bankruptcy Code ("DJ Inc."),
THE XXXXXXXX-XXXXXX CORPORATION, a New Hampshire corporation and a debtor and
debtor in possession under chapter 11 of the Bankruptcy Code ("Xxxxxxxx
Xxxxxx"), XXXXXX AUTOMOTIVE, INC., a Michigan corporation and a debtor and
debtor in possession under chapter 11 of the Bankruptcy Code ("Xxxxxx
Automotive"), XXXXX-ALBION CORPORATION, a Michigan corporation and a debtor and
debtor in possession under chapter 11 of the Bankruptcy Code ("Xxxxx- Albion"),
XXXXXXX-XXXXXX GREENEVILLE, INC., a Delaware corporation and a debtor and
debtor in possession under chapter 11 of the Bankruptcy Code, XXXXXXX-XXXXXX
POTTSTOWN, INC., a Delaware corporation and a debtor and debtor in possession
under chapter 11 of the Bankruptcy Code ("DJ Pottstown"), XXXXXXX-XXXXXX
TECHNOLOGIES. INC., a Delaware corporation and a debtor and debtor in
possession under chapter 11 of the Bankruptcy Code ("DJ Technologies"), and
XXXXXXX-XXXXXX TOLEDO, INC., a Delaware corporation and a debtor and debtor in
possession under chapter 11 of the Bankruptcy Code ("XX Xxxxxx"), THE CIT
GROUP/BUSINESS CREDIT, INC. ("CITBC") as agent for the Lenders whose names are
set forth on the signature pages hereto (each a "Lender" and collectively the
"Lenders" and CITBC as such agent being the "Agent") and the Lenders. Harvard
and each of the entities subsequently identified above (other than the Agent
and the Lenders) are referred to herein individually as a "Company" and
collectively as the "Companies").
W I T N E S S E T H
WHEREAS, each Company has filed a separate petition for
relief under chapter 11 of title 11 of the United States Code (the "Chapter 11
Cases") with the United States Bankruptcy Court for the District of Delaware
(the "Court") and continues to operate its business as a debtor-in-possession;
and
WHEREAS, the Companies, the Lenders and CITBC, as Agent, are
parties to that certain Post-Petition Loan and Security Agreement, dated as of
May 8, 1997 (as amended hereby and by Amendment No. 1, Waiver and Consent dated
December 29, 1997, and as further amended, extended, supplemented or otherwise
modified from time to time, the "DIP Financing Agreement" and capitalized terms
defined in the DIP Financing Agreement and not otherwise defined herein having
the meanings provided therein), providing for, inter alia, Term Loans and
Revolving
Credit Loans to the Companies in the aggregate principal amounts of $65,000,000
for the Term Loans and up to $110,000,000 for the Revolving Credit Loans; and
WHEREAS, pursuant to the Final Order dated June 12, 1997 (the
"Final Order") the Court, inter alia, approved the DIP Financing Agreement and
all transactions contemplated by the DIP Financing Agreement; and
WHEREAS, pursuant to the Final Order and the DIP Financing
Agreement, the Post-Petition Obligations (as defined in the Final Order) (i)
are secured by fully perfected and subsisting first priority liens on and
security interests in all assets and properties of the Companies (subject only
to the Carve-Out, Superior Existing Liens and Permitted Purchase Money Liens
(each as defined in the Final Order)) and (ii) constitute in accordance with
section 364(c)(1) of the Bankruptcy Code, claims against each of the Companies
which are administrative expense claims having priority over any and all
administrative expenses of the kind specified in sections 503(b) or 507(b) of
the Bankruptcy Code, subject only to the Carve-Out; and
WHEREAS, pursuant to that certain Term Loan Agreement, dated
as of January 16, 1998, (the "Junior Loan Agreement") the lenders named therein
(the "Junior Lenders") have agreed to loan $25,000,000 (the "Junior Loan") to
the Companies, on a subordinated basis, to be used by the Companies, inter
alia, to repay Revolving Credit Loans which are outstanding on the Effective
Date (as hereinafter defined); and
WHEREAS, the Companies have requested the Agent and the
Lenders to enter into this Amendment, inter alia, (i) to permit the incurrence
of the Indebtedness and the creation of the Liens under the Junior Loan
Agreement, (ii) to amend certain provisions of the DIP Financing Agreement and
(iii) to consent to certain asset sales, each upon the terms and subject to the
conditions contained in this Amendment; and
WHEREAS, it is a condition precedent to the Agent and the
Lenders agreeing to amend the DIP Financing Agreement as requested by the
Companies that (i) the parties hereto enter into the Amendment and (ii) the
Junior Lenders, the Agent and the Lenders, enter into an Intercreditor
Agreement substantially in the form attached as Exhibit A hereto (the
"Intercreditor Agreement"), duly acknowledged by the Companies, in order to
establish, inter alia, the relative priority of their respective claims,
security interests and liens and the procedures for enforcing such claims,
security interests and liens; and
2
WHEREAS, the Lenders have agreed with the Companies to enter
into this Amendment upon the terms and subject to the conditions contained
herein;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Amendments to the DIP Financing Agreement. Upon
the satisfaction of the conditions in Section 3 of this Amendment relating to
the effectiveness of this Section 1, the DIP Financing Agreement is hereby
amended as follows:
(i) Section 1 is hereby amended by:
(a) Deleting the existing definition of "Availability
Reserve" and replacing it in its entirety with the following:
"Availability Reserve" means $15,000,000, as such amount may
be reduced from time to time in accordance with Section 2.11 of this
Agreement.
(b) Deleting the existing definition of "Permitted
Encumbrances" and replacing it in its entirety with the following:
"Permitted Encumbrances" means (i) the Existing Liens; (ii)
any Lien created under the Post-Petition Loan Documents; (iii)
Permitted Purchase Money Liens; (iv) Customarily Permitted Liens; (v)
any Lien created under the Junior Loan Documents; and (v) the
arrangements contemplated by the Customer Transition Agreements.
(c) Deleting the existing definition of "Permitted
Indebtedness" and replacing it in its entirety with the following:
"Permitted Indebtedness" means: (i) Indebtedness in existence
on the Petition Date; (ii) Indebtedness secured by Permitted Purchase
Money Liens; (iii) Obligations; (iv) Indebtedness between or among the
Companies; (v) the obligations of the Companies pursuant to Interest
Rate Protection Agreements and hedging arrangements covering aluminum
and other raw materials, in either case entered into with the Agent's
consent; and (vi) Indebtedness arising under the Junior Loan Agreement
in an aggregate principal amount at any one time outstanding not to
exceed $25,000,000.
(d) Deleting the existing definition of "Termination Date"
and replacing it in its entirety with the following:
3
"Termination Date" means the earliest of (i) the date
occurring two (2) years from the Closing Date, (ii) the date the Line
of Credit is terminated, and (iii) the Consummation Date.
(e) Adding the following new definitions in appropriate
alphabetical order:
"Consummation Date" means the earlier to occur of (i) the
effective date of a Plan of Reorganization confirmed by an order of
the Bankruptcy Court and (ii) the date on which any distributions are
made under a Plan of Reorganization that is confirmed by an order of
the Bankruptcy Court.
"Customer Transition Agreements" means the agreements which
may be entered into among the Companies and certain customers of XX
Xxxxxx which shall be in form and substance satisfactory to the
Lenders, relating to the reimbursement or payment by such customers of
certain costs and expenses related to the continued operation of XX
Xxxxxx, including without limitation, the Ford Transition Agreement
and the GM Transition Agreement.
"Ford Transition Agreement" means the agreement to be entered
into among the Companies and Ford Motor Company ("Ford") which shall
be in form and substance satisfactory to the Lenders, relating to (i)
the reimbursement or payment by Ford of certain costs and expenses
related to the continued operation of XX Xxxxxx, and (ii) the
assurance by Ford of the receipt by the Companies of a residual value
of the fixed assets of XX Xxxxxx of not less than $15,000,000.
"GM Transition Agreement" means the agreement to be entered
into among the Companies and General Motors Corporation ("GM") which
shall be in form and substance satisfactory to the Lenders, relating
to the reimbursement or payment by GM of certain costs and expenses
related to the continued operation of XX Xxxxxx.
"Intercreditor Agreement" means the Intercreditor Agreement,
dated as of January 16, 1998 between the Lenders and the Junior
Lenders and acknowledged by the Companies.
"Junior Lenders" means those Persons who are party to the
Junior Loan Agreement as "Term Lenders" and the Intercreditor
Agreement as "Junior Lenders".
4
"Junior Loan Agreement" means the Term Loan Agreement dated
as of January 16, 1998 among the Companies and the Junior Lenders.
"Junior Loan" means the loan of $25,000,000 to the Companies
to be made pursuant to the Junior Loan Agreement.
"Junior Loan Documents" means the Junior Loan Agreement and
each document and instrument executed or delivered in connection
therewith or pursuant thereto or under which rights or remedies with
respect to any such document or instrument are governed, as the same
may from time to time be amended, supplemented or otherwise modified.
"Plan of Reorganization" means a proposed plan or plans of
reorganization for any one or more of the Companies whether filed with
or confirmed by order of the Bankruptcy Court.
"Toledo Proceeds" has the meaning set forth in Section 2.11.
(ii) Section 2 is hereby amended as follows:
(a) Deleting Section 2.4(c) and replacing it in its entirety
with the following:
(c) The Companies shall use Asset Sale Proceeds (other than
the Toledo Proceeds) to prepay principal in respect of Pre-Petition
Revolving Credit Loans and then Revolving Credit Loans to the extent
necessary so that after giving effect thereto the Aggregate Net
Availability is the same as existed immediately prior to the
transaction giving rise to such Asset Sale Proceeds; and then to
prepay scheduled Repayment Installments, to be applied fifty percent
(50%) in inverse order of their maturities and fifty percent (50%) in
direct order of their maturities. The Companies shall apply the Toledo
Proceeds as required by Section 2.11 of this Agreement.
(b) Adding a new Section 2.11 as follows:
2.11 Reduction in Availability Reserve; Application of Toledo
Proceeds. The Availability Reserve shall be reduced as follows: (a) to
$5,000,000 upon the application to the Revolving Credit Loans of not
less than $20,000,000 of the net proceeds of the Junior Loan; and (b)
to $0, upon the receipt by the Agent of not less than $15,000,000 from
the sale or other disposition of XX Xxxxxx (the "Toledo Proceeds")
(whether received as Asset
5
Sale Proceeds, pursuant to Ford's obligations under the Ford
Transition Agreement or any combination thereof). The Companies shall
use the Toledo Proceeds to prepay remaining Repayment Installments,
50% in direct order and 50% in inverse order of their maturities.
(iii) Section 9 is hereby amended by adding a new Section
9.9 as follows:
9.9 XX Xxxxxx. Notwithstanding anything to the contrary
contained in this Agreement, no Company shall borrow any money or
incur any obligation hereunder or under any of the Post-Petition Loan
Documents for the purpose of funding any costs or expenses incurred in
connection with the closing of the manufacturing facilities and/or
premises of XX Xxxxxx in Toledo, Ohio, unless such Company has been or
will be reimbursed for all of such costs and expenses under and in
accordance with the terms and provisions of the Customer Transition
Agreements.
(iv) Section 11 is hereby amended by deleting the period at
the end of Section 11.1(s) and replacing it with "; or" and by adding the
following additional Events of Default as Sections 11.1(t) and (u):
(t) Any "Event of Default" shall have occurred under the
Junior Loan Agreement; or
(u) the Bankruptcy Court shall not have approved the
transactions contemplated by the Ford Transition Agreement and the GM
Transition Agreement by April 30, 1998.
SECTION 2. Representations and Warranties. Each of the
Companies hereby represents and warrants as to itself and its Subsidiaries that
(a) the execution, delivery and performance of this Amendment have been duly
authorized by all necessary corporate action on the part of such Company and
this Amendment constitutes a legal, valid and binding obligation of such
Company, enforceable against it in accordance with its terms, (b) except as
disclosed in writing to the Agent and the Lenders, no event has occurred and is
continuing on the date hereof that constitutes a Default or an Event of Default
or would constitute a Default or an Event of Default after giving effect to
this Amendment, and (c) the representations and warranties of such Company
contained in Section 6 of the DIP Financing Agreement are true and correct both
before and after giving effect to this Amendment, except to the extent such
representations and warranties are stated to be true only as of a particular
date,
6
in which case such representations and warranties were correct on and as of such
date.
SECTION 3. Conditions to Effectiveness. The amendments and
consents in Sections 1, 4 and 6 of this Amendment shall become effective on the
date (the "Effective Date") when counterparts hereof shall have been executed
by all of the Lenders, the Agent and the Companies, and the following
conditions precedent shall have been satisfied:
(i) The Agent shall have received the following, each in form
and substance satisfactory to the Agent and the Lenders:
(a) The Intercreditor Agreement, duly executed by the Lenders
and the Junior Lenders and acknowledged by the Companies;
(b) The Junior Loan Agreement, duly executed by the Junior
Lenders and the Companies;
(c) A certificate of the secretary or an assistant secretary
of each of the Companies, dated the Effective Date, in form and
substance satisfactory to the Agent, certifying the names and true
signatures of each officer of such Company who have been authorized to
execute and deliver any document required to be executed and delivered
hereunder by or on behalf of such Company; and
(d) An order of the Bankruptcy Court authorizing and
approving the Junior Loan Agreement and this Amendment (the "Order").
(ii) The Order shall have been entered by the Bankruptcy
Court and shall be in full force and effect and shall not have been vacated,
reversed, modified, amended or stayed in any respect.
(iii) The Agent shall have received for application to the
Revolving Credit Loans net proceeds of not less than $20,000,000 from the
Junior Loan.
SECTION 4. Consent to Certain Asset Sales. The Lenders hereby
consent with effect from the Effective Date, to the extent required under the
DIP Financing Agreement, to the following transactions:
(i) The sale of Xxxxxx Automotive for net proceeds of not
less than $2,000,000, subject to (a) the entry of an order of the
Bankruptcy Court, in
7
form and substance satisfactory to the Lenders, approving the sale,
and (b) Asset Sale Proceeds of not less than $2,000,000 being applied
50% towards remaining scheduled Repayment Installments in inverse
order of their maturities and 50% towards the Revolving Credit Loans.
(ii) The sale or disposition of XX Xxxxxx for net proceeds of
not less than $15,000,000, subject to (a) the entry of an order of the
Bankruptcy Court, in form and substance satisfactory to the Lenders,
approving the sale, and (b) Toledo Proceeds of not less than
$15,000,000 being applied to the remaining Repayment Installments as
required by Section 2.11 of the DIP Financing Agreement (as amended by
this Amendment).
(iii) The sale of Harvard Interiors for net proceeds of not
less than $2,000,000, subject to (a) the entry of an order of the
Bankruptcy Court, in form and substance satisfactory to the Lenders,
approving the sale, and (b) Asset Sale Proceeds of not less than
$1,000,000 being applied to prepay Revolving Credit Loans and Term
Loans as required by Sections 2.4 and 8.7 of the DIP Financing
Agreement (as amended by this Amendment).
SECTION 5. Effect on the DIP Financing Agreement. Except as
amended hereby, the DIP Financing Agreement and the other Post-Petition Loan
Documents shall remain in full force and effect. Nothing in this Amendment
shall be deemed to (i) constitute a waiver of compliance by any of the
Companies of any term, provision or condition of the DIP Financing Agreement or
any other instrument or agreement referred to therein or under the
Post-Petition Loan Documents or (ii) prejudice any right or remedy that Agent
or any Lender may now have or may have in the future under or in connection
with the DIP Financing Agreement or any other Post-Petition Loan Document.
SECTION 6. Consent to Junior Loan Agreement. The Lenders
hereby consent to the execution and delivery by the Companies of the Junior
Loan Agreement and the performance by the Companies of their obligations
thereunder.
SECTION 7. Counterparts. This Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which taken together constitute one and the same
agreement.
SECTION 8. Governing Law. The validity, interpretation and
enforcement of this Amendment shall be governed by the law of the State of New
York.
8
SECTION 9. Headings. Section headings in this Amendment are
included herein for the convenience of reference only and shall not constitute
part of this Amendment for any other purpose.
SECTION 10. References. References herein and in the
Post-Petition Loan Documents and the Final Order to the "DIP Financing
Agreement", the "Post-Petition Loan and Security Agreement", the "Postpetition
Loan Agreement", "this Agreement", "hereunder", "hereof", or words of like
import referring to the DIP Financing Agreement, shall mean and be a reference
to the DIP Financing Agreement as amended hereby.
9
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed and delivered by their proper and duly authorized
officers as of the date set forth above. This Amendment shall take effect as of
the date set forth above after being accepted below by an officer of the Agent
and the Lenders after which, the Agent shall forward to Harvard a fully
executed original for its files.
HARVARD INDUSTRIES, INC.
THE XXXXXXXX-XXXXXX CORPORATION
XXXXXX AUTOMOTIVE, INC.
XXXXX-ALBION CORPORATION
XXXXXXX-XXXXXX, INC.
XXXXXXX-XXXXXX GREENEVILLE, INC.
XXXXXXX-XXXXXX POTTSTOWN, INC.
XXXXXXX-XXXXXX TECHNOLOGIES, INC.
XXXXXXX-XXXXXX TOLEDO, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Chief Financial Officer
THE CIT GROUP/BUSINESS CREDIT, INC.,
AS AGENT AND LENDER
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Vice President
CONGRESS FINANCIAL CORPORATION,
AS LENDER
By: /s/ Xxxxxxxx X. Xxxxx
----------------------------
Name: Xxxxxxxx X. Xxxxx
Title: First Vice President
GENERAL ELECTRIC CAPITAL
CORPORATION, AS LENDER
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Duly Authorized Signatory
10
XXXXXX FINANCIAL, INC., AS LENDER
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Senior Vice President
FINOVA CAPITAL CORPORATION,
AS LENDER
By: /s/ Xxxxx Xxxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxxx
Title: Assistant Vice President
FOOTHILL CAPITAL CORPORATION,
AS LENDER
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
BANKBOSTON, N.A. AS LENDER
By: /s/ Xxxxxxx X. Xxxxx
------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
11
EXHIBIT A
Intercreditor Agreement
