FINANCING AGREEMENT
-------------------
Hilco Capital LP
(as Lender)
Harvard Industries, Inc.,
Xxxxxxx-Xxxxxx, Inc.,
Harvard Transportation Corporation,
Xxxxxxx-Xxxxxx Greeneville, Inc.,
Pottstown Precision Casting, Inc.,
Harvard Industries Risk Management, Inc.,
Xxxxxxx-Xxxxxx Toledo, Inc.,
Xxxxxx Automotive, Inc.,
Xxxxx-Albion Corporation
and
KWCI Liquidating Corporation
(as Companies)
and
Trim Trends Canada Limited
and
000000 Xxxxxx Inc.
(as Guarantors)
Dated: As of May 31, 2001
TABLE OF CONTENTS
Page
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SECTION 1. Definitions.................................................................................1
1.1 Certain Defined Terms...........................................................................1
1.2 Construction of Certain Terms..................................................................21
1.3 GAAP Terminology...............................................................................21
1.4 No Presumption in Construction.................................................................22
1.5 Independence of Provisions.....................................................................23
1.6 Inactive Guarantor.............................................................................23
SECTION 2. Conditions Precedent.......................................................................23
2.1 Conditions relating to the Closing Date........................................................23
SECTION 3. Term Loan..................................................................................30
3.1 Term Loan......................................................................................30
3.2 Borrowing Request and Procedure................................................................30
3.3 Payment of Principal of Term Loan..............................................................30
3.4 Payment of Term Loan Upon Termination..........................................................30
3.5 Loan Account...................................................................................30
3.6 Joint and Several Liability of Companies.......................................................32
SECTION 4. Termination of the Commitment of the Lender................................................34
SECTION 5. Prepayments of Term Loan...................................................................34
5.1 Optional Prepayment of Term Loan...............................................................34
5.2 Mandatory Application of Certain Proceeds......................................................34
5.3 Mandatory Application of Insurance Proceeds and Sale of Asset Proceeds.........................35
SECTION 6. Collateral for Obligations.................................................................37
6.1 Security Interest..............................................................................37
6.2 Related Collateral Matters and Financing Statements............................................37
6.3 Certain Dealings, Rights and Matters Relating to Collateral....................................38
6.4 Continuing Nature of Security Interest and Rights..............................................40
6.5 Lender's Exercise of Rights and Remedies.......................................................40
6.6 Security; Loan Account Charges.................................................................40
6.7 Insurance on Collateral........................................................................40
6.8 Taxes Relating to Collateral...................................................................42
6.9 Mortgages......................................................................................42
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SECTION 7. Representations; Warranties and Covenants..................................................42
7.1 Representations and Warranties.................................................................42
7.2 Covenants......................................................................................48
7.3 Covenants Involving Accounts and Inventory.....................................................60
7.4 Representations Regarding Accounts and Inventory...............................................61
7.5 Matters Relating to Accounts...................................................................62
7.6 Reports Involving Accounts and Related Matters.................................................63
7.7 Indemnification................................................................................63
SECTION 8. Interest, Fees and Expenses Involving Obligations..........................................64
8.1 Term Loan......................................................................................64
8.2 Other Expenses.................................................................................65
8.3 Commitment Fee.................................................................................65
8.4 Closing Fee....................................................................................65
8.5 Anniversary Fee................................................................................65
8.6 Facility Fee...................................................................................65
8.7 Success Fee....................................................................................65
8.8 Management Fee.................................................................................66
8.9 Other Charges..................................................................................66
8.10 Taxes..........................................................................................66
8.11 Loan Account Charges...........................................................................67
SECTION 9. Powers Involving Obligations...............................................................67
9.1 Power of Attorney..............................................................................67
9.2 Waivers........................................................................................68
SECTION 10. Events of Default and Remedies.............................................................68
10.1 Events of Default..............................................................................68
10.2 Remedies Upon an Event of Default..............................................................71
10.3 Additional Remedies Upon an Event of Default...................................................71
10.4 Right of Set-Off...............................................................................73
SECTION 11. Observation Rights.........................................................................73
SECTION 12. Termination................................................................................74
SECTION 13. Miscellaneous..............................................................................74
13.1 Waivers........................................................................................74
13.2 Entire Agreement...............................................................................74
13.3 Usury..........................................................................................74
13.4 Severability...................................................................................75
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13.5 WAIVER OF JURY TRIAL...........................................................................75
13.6 Notices........................................................................................75
13.7 GOVERNING LAWS.................................................................................76
13.8 Submission to Jurisdiction; Service of Process.................................................77
13.9 Intentionally Omitted..........................................................................77
13.10 Headings.......................................................................................77
13.11 Replacement of Promissory Note.................................................................77
13.12 Counterparts...................................................................................77
13.13 Assignments....................................................................................77
13.14 Participants...................................................................................78
13.15 Currency.......................................................................................78
13.16 Rate of Interest for Canadian Companies........................................................79
13.17 Amendments; Waivers............................................................................79
13.18 Confidentiality................................................................................79
13.19 Contribution...................................................................................79
13.20 Relationship...................................................................................80
SECTION 14. Guaranty...................................................................................80
14.1 Guaranty.......................................................................................80
14.2 Guaranty Obligations Unconditional.............................................................81
14.3 Waivers........................................................................................83
14.4 Subrogation....................................................................................83
14.5 Canadian Debenture.............................................................................84
EXHIBITS
Exhibit A - Form of Promissory Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Borrowing Base Certificate
SCHEDULES
Schedule 1 - Collateral Information
Schedule 2 - Litigation
Schedule 3 - Capital Stock
Schedule 4 - Certain Indebtedness and Permitted Encumbrances
Schedule 5 - Real Estate
Schedule 6 - Liabilities and Asset Dispositions
Schedule 7 - Defaults
Schedule 8 - Taxes
Schedule 9 - ERISA Matters
Schedule 10 - Environmental Matters
Schedule 11 Intellectual Property Matters
Schedule 12 Eligible Equipment
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FINANCING AGREEMENT
-------------------
This Financing Agreement is made as of the 31st day of May,
2001 by and among HILCO CAPITAL LP, a Delaware limited partnership, with offices
located at One Northbrook Place, 0 Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx
00000 (herein "Lender"), HARVARD INDUSTRIES, INC., a Delaware corporation
(herein "Harvard"), XXXXXXX-XXXXXX, INC., a Delaware corporation, HARVARD
TRANSPORTATION CORPORATION, a Michigan corporation, XXXXXXX-XXXXXX GREENEVILLE,
INC., a Delaware corporation, POTTSTOWN PRECISION CASTING, INC., a Delaware
corporation (herein "Pottstown"), HARVARD INDUSTRIES RISK MANAGEMENT, INC., a
Delaware corporation, XXXXXXX-XXXXXX TOLEDO, INC., a Delaware corporation,
XXXXXX AUTOMOTIVE, INC., a Michigan corporation, XXXXX-ALBION CORPORATION, a
Michigan corporation (herein "Xxxxx-Albion"), and KWCI LIQUIDATING CORPORATION,
a New Hampshire corporation (each individually a "Company" and collectively, the
"Companies") and TRIM TRENDS CANADA, LIMITED, a Canadian corporation (herein
"Trim Trends") and 000000 XXXXXX INC., an Ontario corporation (each individually
a "Guarantor" and collectively, the "Guarantors" and together with the
Companies, each an "Obligor" and collectively, the Obligors).
SECTION 1. Definitions
1.1 Certain Defined Terms
The following terms shall have the meanings indicated below.
Access and Security Agreement shall mean the Access and
Security Agreement dated as of January 1, 2001, between Harvard, and Pottstown,
on the one hand, and General Motors Corporation, on the other hand, and each of
the three Access and Security Agreements dated as of the same date between
Harvard and Xxxxx-Albion, on the one hand, and General Motors Corporation, on
the other hand, relating to the Xxxxx-Albion facility in Jackson, Michigan, the
Trim-Trend facility in Bryan, Ohio, and the Trim-Trend facility in Spencerville,
Ohio.
Accounts shall mean all of an Obligor's now existing and
future: (a) accounts (as defined in the UCC), and any and all other receivables
(whether or not specifically listed on schedules furnished to the Lender),
including, without limitation, all accounts created by, or arising from, all of
each of such Obligor's sales, leases, rentals of goods or renditions of services
to its customers, including but not limited to, those accounts arising under any
of such Obligor's trade names or styles, or through any of such Obligor's
divisions; (b) any and all instruments, documents, chattel paper (including
electronic chattel paper) (all as defined in the UCC); (c) unpaid seller's or
lessor's rights (including rescission, replevin, reclamation, repossession and
stoppage in transit) relating to the foregoing or arising therefrom; (d) rights
to any goods represented by any of the foregoing, including rights to returned,
reclaimed or repossessed goods; (e) reserves and credit balances arising in
connection with or pursuant hereto; (f) guarantees, supporting obligations,
payment intangibles and letter of credit rights (all as defined in the UCC); (g)
insurance policies or rights relating to any of the foregoing; (h) general
intangibles pertaining to any and all of the foregoing (including all rights to
payment, including those arising in connection with bank and non-bank credit
cards), and including books and
records and any electronic media and software thereto; (i) notes, deposits or
property of account debtors securing the obligations of any such account debtors
to such Obligor; and (j) cash and non-cash proceeds (as defined in the UCC) of
any and all of the foregoing.
Anniversary Date shall mean the date occurring one (1) year
from the Closing Date and the same date in every year thereafter.
Anniversary Fee shall have the meaning set forth in Paragraph
8.5 of Section 8 hereof.
Authorized Officer shall mean with respect to any Obligor, the
chairman of the board of directors, the chief executive officer or the president
of such Obligor or, with respect to financial matters, the chief financial
officer or comptroller of such Obligor, in each case, acting in that Person's
capacity as such (or any other officer of the relevant Obligor who is duly
authorized to take the relevant action or issue the relevant certification or
other document on behalf of such Obligor as contemplated herein or in another
relevant Loan Document).
Availability Reserves shall mean such reserves to the
Borrowing Base and/or the Senior Lien Borrowing Base as the Lender determines
from time to time in its reasonable discretion based upon the lending practices
of the Lender, which reserves may relate to the assets the value of which are
used to determine the Borrowing Base, the assets the value of which are used to
determine the Senior Lien Borrowing Base or any other assets or other matter or
circumstance deemed appropriate by the Lender in its reasonable discretion based
upon the lending practices of the Lender.
Bankruptcy Code shall mean each of the United States
Bankruptcy Code, 11 U.S.C. xx.xx. 101 et seq. and the Bankruptcy and Insolvency
Act (Canada).
Base Rate shall mean the rate of interest per annum announced
by LaSalle National Bank from time to time as its prime rate in effect at its
principal office in Chicago, Illinois. The prime rate is not intended to be the
lowest rate of interest charged by LaSalle National Bank to its borrowers. Each
change in the Base Rate shall be effective from and including the date such
change is publicly announced as being effective.
Blocked Account Agreements shall have the meaning set forth in
Paragraph 7.5(b) of Section 7 hereof.
Blocked Accounts shall have the meaning set forth in Paragraph
7.5(b) of Section 7 hereof.
Board of Directors shall have the meaning set forth in Section
11 hereof.
Borrowing Base shall mean, at any time, eighty two and
two-tenths percent (82.2%) of the orderly liquidation value of the Companies'
Eligible Equipment at such time, as such orderly liquidation value is determined
by an independent third party appraiser acceptable to the Lender.
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Borrowing Base Certificate shall mean a certificate,
substantially in the form of Exhibit C hereto, signed by an Authorized Officer
of Harvard and setting forth the calculation of the Senior Lien Borrowing Base
on the date of such certificate, in compliance with Paragraph 7.2(g)(v) of
Section 7 hereof.
Borrowing Base Excess shall have the meaning set forth in
Paragraph 7.2(j)(xvi) of Section 7 hereof.
Business Day shall mean any day on which the Lender and the
principal office in Chicago, Illinois of LaSalle National Bank are open for
business.
Canadian Debenture shall have the meaning set forth in
Paragraph 14.5 of Section 14 hereof.
Canadian Deposit Account shall have the meaning set forth in
Paragraph 2.1(ff) of Section 2 hereof.
Capital Expenditures shall mean, for any period, the aggregate
expenditures of the Obligors during such period on account of, property, plant,
equipment or similar fixed assets that, in conformity with GAAP, are required to
be reflected in the balance sheets of the Obligors, including, without
limitation, each Capital Lease.
Capital Lease shall mean any lease of property (whether real,
personal or mixed) to the extent that, in conformity with GAAP, it is or should
be accounted for as a capital lease or a Capital Expenditure in the balance
sheets of the Obligors.
Cash Collateral Account shall have the meaning set forth in
Paragraph 2.1(gg) of Section 2 hereof.
Change in Control shall mean (a) the acquisition by any person
or group (within the meaning given to the term in the Exchange Act), other than
Contrarian Capital Management, of beneficial ownership (within the meaning of
Rule 13d-3 promulgated by the Securities and Exchange Commission under the
Exchange Act) of more than fifty percent (50%) of the issued and outstanding
shares of the capital stock of Harvard having the right to vote for the election
of directors of Harvard under ordinary circumstances; (b) during any period of
twelve (12) consecutive calendar months, individuals who at the beginning of
such period constituted the board of directors of Harvard (together with any new
directors whose election by the board of directors of Harvard or nomination for
election by the stockholders of Harvard was approved by a vote of at least
two-thirds of the directors then still in office who were either directors at
the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason other than death or disability to
constitute a majority of the directors then in office; or (c) 100% of the
capital stock of any Obligor (other than Harvard) presently held (directly or
indirectly) by Harvard is transferred to any Person other than any Obligor.
Closing Date shall mean the date that this Financing Agreement
has been duly executed by the parties hereto and delivered to the Lender and
each condition set forth in Section 2.1 is satisfied in a manner satisfactory to
the Lender.
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Closing Fee shall have the meaning set forth on Paragraph 8.4
of Section 8 hereof.
Code shall mean the Internal Revenue Code of 1986, as amended
from time to time, and the rules and regulations promulgated thereunder from
time to time.
Collateral shall have the meaning set forth in Paragraph 6.1
of Section 6 hereof.
Collective Borrowers shall mean each and all of the Companies,
as specified in Paragraph 3.5(b) of Section 3 hereof.
Combined Borrowing Base Excess shall have the meaning set
forth in Paragraph 7.2(j)(xvii) of Section 7 hereof.
Commitment shall mean the Lender's commitment to make the Term
Loan on the Closing Date in accordance with this Financing Agreement.
Commitment Fee shall have the meaning set forth in Paragraph
8.3 of Section 8 hereof.
Commitment Letter shall mean the Commitment Letter, dated
April 17, 2001, issued by the Lender to, and accepted by, Harvard.
Consolidated Balance Sheet shall mean a consolidated or
compiled, as applicable, balance sheet for the Obligors and their consolidated
subsidiaries, eliminating all inter-company transactions and prepared in
accordance with GAAP.
Consolidating Balance Sheet shall mean (subject to Paragraph
1.3 of this Section 1) a Consolidated Balance Sheet plus individual balance
sheets for the Obligors and their consolidated subsidiaries, showing all
eliminations of inter-company transactions, including a balance sheet for each
of the Obligors exclusively, all prepared in accordance with GAAP.
Contaminant means any substance (including, without
limitation, any product) regulated, restricted or addressed by or under
Environmental Law, including, without limitation, any pollutant, contaminant,
hazardous substance, radioactive substance, toxic substance, hazardous waste,
medical waste, radioactive waste, or special waste, petroleum (including,
without limitation, crude-oil) or petroleum-derived substance or waste asbestos,
lead, polychlorinated biphenyls, or any hazardous or toxic constituent or
breakdown product thereof.
Contractual Obligations shall mean, as to any Person, any
provision of any security issued by such Person or any agreement, instrument or
other undertaking to which such Person is a party or by which it or any of its
property is bound.
Copyrights shall mean, as to any Obligor, such Obligor's
present and hereafter acquired copyrights, copyright registrations, recordings,
copyright applications, designs, styles, marks, prints and labels bearing any of
the foregoing, copyright licenses, and all cash and non-cash proceeds thereof.
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Current Assets shall mean those assets of the Obligors which,
in accordance with GAAP, are classified as "current."
Current Liabilities shall mean those liabilities of the
Obligors which, in accordance with GAAP, are classified as "current," provided,
however, that, notwithstanding GAAP, the revolving loans under the Senior Lien
Financing Agreement and the current portion of Permitted Indebtedness shall be
considered "current liabilities."
Default shall mean any event specified in Paragraph 10.1 of
Section 10 hereof, whether or not any requirement for the giving of notice, the
lapse of time, or both, or any other condition, event or act, has been
satisfied.
Default Rate of Interest shall mean a rate of interest per
annum equal to the sum of: (a) seven percent (7%) and (b) the greater of (x) the
applicable increment over the Base Rate (as set forth in Paragraph 8.1(a)(i) of
Section 8 hereof) plus the Base Rate and (y) fifteen percent (15%), which the
Lender shall be entitled to charge the Companies on all Obligations due to the
Lender, by the Companies, as further set forth in Paragraph 10.2 of Section 10
hereof.
Depository Account shall mean a collection account, subject to
the Senior Lien Administrative Agent's control.
Disposition shall mean any transaction, or series of related
transactions, pursuant to which any Obligor or any of its subsidiaries sells,
assigns, transfers or otherwise disposes of any property or assets (whether now
owned or hereafter acquired) to any other Person, in each case, whether or not
the consideration therefor consists of cash, securities or other assets owned by
the acquiring Person, excluding any sales of Inventory in the ordinary course of
business on ordinary business terms.
Xxxxxxx-Xxxxxx Plan shall mean the Xxxxxxx-Xxxxxx Pension Plan
for Wage-Basis Employees.
Documents of Title shall mean all of each of the Obligors'
present and future documents (as defined in the UCC), and any and all warehouse
receipts, bills of lading, shipping documents, chattel paper, instruments and
similar documents, all whether negotiable or not and all goods and Inventory
relating thereto and all cash and non-cash proceeds of the foregoing.
EBITDA shall mean, for any applicable period, consolidated net
income minus (to the extent included in determining net income) each of the
following: (A) income tax credits, (B) interest income, (C) gains from
extraordinary items, (D) aggregate non-cash net gains (but not any aggregate net
loss) arising from the sale, exchange or other disposition of capital assets,
(E) any other non-cash gains that would have been included in consolidated net
income under GAAP but for this provision, and (F) any other income that does not
arise in the ordinary course of business; plus (to the extent included in
determining net income) each of the following: (A) any provision for income
taxes, (B) interest expense, (C) the amount of any non-cash charges (including
amortization, depreciation and the non-cash portion of imputed interest on
employee post-retirement benefits other than pension benefits), (D) amortized
debt discount and (E) any aggregate non-cash net loss arising from the sale,
exchange or other disposition of capital assets. All items and classifications
relevant to the determination of EBITDA for a period shall
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be determined in accordance with GAAP applied on a basis consistent with its
application in the audited financial statements of the Obligors for the 2000
Fiscal Year.
Eligible Equipment shall mean the Equipment listed on Schedule
12 hereto and located at the locations listed on Schedule 12 hereto which meets
all of the following specifications: (i) the Lender shall have received (A) the
most recent appraisal of such Equipment requested by the Lender pursuant to the
terms of this Financing Agreement, which appraisal shall be based upon the
orderly liquidation value of such Equipment and shall be in form and substance
and from an independent third party appraiser in each case acceptable to the
Lender in its sole discretion, (B) evidence satisfactory to the Lender that
there are no Liens on such Equipment other than Permitted Encumbrances, (C) a
written Phase I environmental site assessment ("ESA") report, in scope and
substance satisfactory to the Lender in its sole discretion, for each location
listed on Schedule 12, and a reliance letter in form and substance and from an
environmental firm satisfactory to the Lender in its sole discretion, relating
to each such ESA, and (D) evidence of property insurance and such other
information, agreements and documents with respect to such Equipment as the
Lender may reasonably request; (ii) the Lender shall be satisfied, in its
discretion, that the Lender has the right to dispose of such Equipment after an
Event of Default; and (iii) such Equipment is not furnishings, fixtures, parts,
and is not otherwise regarded by the Lender, in its discretion, as unsuitable
Collateral for the Obligations and is, and at all times shall continue to be,
acceptable to the Lender in all respects, in each case as Schedule 12 may from
time to time be amended by Harvard with the prior written consent of the Lender.
Environmental Laws shall mean all international, national,
state, provincial, regional, federal, municipal and local laws (including,
without limitation, principles of common law and decisional law), statutes,
treaties, codes, ordinances, rules, regulations, decrees, judgments, directives,
binding policies, permits, authorizations, consents, licenses, or orders
relating to or addressing the environment (including, without limitation,
natural resources) or the health or safety of humans or other living organisms.
Equipment shall mean, as to any Obligor, all of such Obligor's
present and hereafter acquired equipment (as defined in the UCC) including,
without limitation, all machinery, equipment, furnishings and fixtures, and all
additions, substitutions and replacements thereof, wherever located, together
with all attachments, components, parts, equipment and accessories installed
thereon or affixed thereto and all proceeds thereof of whatever sort.
ERISA shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the rules and regulations promulgated
thereunder from time to time.
ERISA Affiliate shall mean any corporation or trade or
business which is a member of the same controlled group of corporations (within
the meaning of Section 414(b) of the Code) as any Obligor or is under common
control (within the meaning of Section 414(c) of the Code) with any Obligor.
ERISA Event shall mean (a) with respect to a Plan subject to
Title IV of ERISA, a Reportable Event or an event described in Section 4068 of
ERISA, (b) the withdrawal of any
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Company or ERISA Affiliate from a Multiple Employer Plan during a plan year in
which it was a "substantial employer", as such term is defined in Section
4001(a)(2) of ERISA, or the incurrence of liability by any Company or ERISA
Affiliate under Section 4064 of ERISA upon the termination of a Multiple
Employer Plan, (c) providing notice of intent to terminate a Plan pursuant to
Section 4041(c) of ERISA or the treatment of a Plan amendment as a termination
under Section 4041 of ERISA, (d) the institution of proceedings to terminate a
Plan by the PBGC under Section 4042 of ERISA, (e) a complete or partial
withdrawal by any Company or ERISA Affiliate from a Multiemployer Plan, (f) a
failure by any Company or ERISA Affiliate to make required contributions to a
Plan, (g) the imposition of any liability under Title IV of ERISA, other than
PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any
Company or ERISA Affiliate, (h) an application for a funding waiver or an
extension of any amortization period pursuant to Section 412 of the Code with
respect to any Single Employer Plan, (i) the imposition of a Lien upon any
Company or ERISA Affiliate pursuant to Section 412 of the Code or Section 302 of
ERISA, (j) any event or condition that results in the reorganization or
insolvency of a Multiemployer Plan under Section 4241 or 4245 of ERISA, (k) any
Company or ERISA Affiliate engages in a Prohibited Transaction or otherwise
becomes liable with respect to a Prohibited Transaction or (l) any breach by
Harvard of the Agreement between Harvard and the PBGC, dated October 15, 1998,
and as hereafter amended, or any action by the PBGC to enforce the terms of such
agreement.
Event(s) of Default shall have the meaning set forth in
Paragraph 10.1 of Section 10 hereof.
Exchange Act shall mean the Securities Exchange Act of 1934,
as amended.
Excluded Property shall mean any contract, lease, license or
other agreement that contains a provision prohibiting the assignment or grant of
a security interest therein without the consent of another Person to the extent
(but only to the extent) that such consent has not been obtained and the
prohibition either exists on the date of this Financing Agreement or, after the
date of this Financing Agreement is included in such contract, lease, license or
other agreement with the prior written consent of the Lender (other than any of
the foregoing constituting an account or a general intangible for money due or
to become due to which Section 9-318(4) of the UCC applies). Notwithstanding
anything set forth herein to the contrary, the Lender will be deemed to have,
and at all times to have had, a security interest in the proceeds of such
Excluded Property.
Excluded Stock shall mean capital stock of the subsidiaries of
the Companies that are organized outside the United States representing
thirty-five percent (35%) of their capital stock on the Closing Date.
Existing Credit Agreements shall have the meaning set forth in
Paragraph 2.1(s) of Section 2 hereof.
Existing Lender shall have the meaning set forth in Paragraph
2.1(s) of Section 2 hereof.
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Expense Deposit shall have the meaning set forth in Paragraph
2.1(cc) of Section 2 hereof.
Facility Fee shall have the meaning set forth in Paragraph 8.6
of Section 8 hereof.
Federal Reserve Board shall mean the Board of Governors of the
Federal Reserve System.
Fiscal Quarter shall mean, with respect to the Obligors, each
three (3) month period ending on or about December 31, March 31, June 30 or
September 30 of each Fiscal Year.
Fiscal Year shall mean each twelve (12) month period
commencing on October 1 of each year and ending on September 30 of the following
year.
Fixed Charge Coverage Ratio shall mean, for the relevant
period, the ratio determined by dividing EBITDA by the sum of (a) all interest
obligations paid or due, (b) the amount of principal repaid or scheduled to be
repaid on the Term Loan, the Senior Lien Obligations and all other Indebtedness
of the Obligors and their subsidiaries other than (i) the revolving loans and
reimbursement obligations in respect of letters of credit under the Senior Lien
Financing Documents and (ii) principal prepayments of the Term Loan made
pursuant to Section 3 hereof and the principal prepayments of the term loan
under the Senior Lien Financing Agreement made pursuant to Section 7 of the
Senior Lien Financing Agreement (as such Section is in effect on the date
hereof), (c) Capital Expenditures actually incurred which were not financed or
refinanced hereunder, (d) all mandatory dividends and other distributions of a
similar nature made in cash by the Obligors to anyone other than Harvard or the
other Obligors, and (e) all federal, state, provincial and local income tax
expenses due and payable.
Funded Debt shall mean, with respect to the Obligors, without
duplication, the aggregate of all Indebtedness of the Obligors (including
obligations in respect of interest that is capitalized or paid in kind) other
than any Indebtedness referred to in clause (b) of the definition of
"Indebtedness" or in clause (e) of that definition, to the extent that such
Indebtedness under clause (e) arises in respect of Indebtedness under clause (b)
or clause (e) of that definition. Without limiting the foregoing, Funded Debt
shall include the Obligations, the Guaranty Obligations and the obligations of
the Obligors under the Senior Lien Financing Documents.
GAAP shall mean generally accepted accounting principles in
the United States as in effect from time to time and for the period as to which
such accounting principles are to apply, provided that in the event any of the
Obligors modifies its accounting principles and procedures as applied as of the
Closing Date, such Obligor shall provide to the Lender such statements of
reconciliation as shall be in form and substance acceptable to the Lender.
GECC shall have the meaning set forth in Paragraph 2.1(s) of
Section 2 hereof.
General Intangibles shall mean, as to any Obligor, all of such
Obligor's present and hereafter acquired general intangibles (as defined in the
UCC), and shall include, without limitation, all present and future right, title
and interest in and to: (a) all Trademarks, tradenames, corporate names,
business names, logos and any other designs or sources of business identities,
(b) Patents, together with any improvements on said Patents, utility models,
industrial models,
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and designs, (c) Copyrights, (d) trade secrets, (e) licenses, permits and
franchises, (f) all applications with respect to the foregoing, (g) all right,
title and interest in and to any and all extensions and renewals, (h) goodwill
with respect to any of the foregoing, (i) any other forms of similar
intellectual property, (j) all customer lists, distribution agreements, supply
agreements, blue prints, indemnification rights and Tax refunds, together with
all monies and claims for monies now or hereafter due and payable in connection
with any of the foregoing or otherwise, and all cash and non-cash proceeds
thereof, including, without limitation, the proceeds or royalties of any
licensing agreements between such Obligor and any licensee of any such Obligor's
General Intangibles other than Excluded Property.
GM Transition Supply Agreement shall mean the Transition
Supply Agreement, dated as of January 1, 2001, between Harvard and Pottstown, on
the one hand, and General Motors Corporation, on the other hand.
Governmental Authority shall mean any nation or government,
any state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
Guarantors shall mean each of the subsidiaries of Harvard
identified as a "Guarantor" in the preamble hereto and each other direct and
indirect subsidiary of Harvard that from time to time becomes a "Guarantor"
hereto pursuant to Paragraph 7.2(q) of Section 7 of this Financing Agreement.
Guaranty shall mean the guaranty made by each Guarantor
pursuant to Section 14 hereof.
Guaranty Obligations shall have the meaning set forth in
Paragraph 14.2(b) of Section 14 hereof.
Harvard Obligations shall have the meaning set forth in
Paragraph 14.1(a) of Section 14 hereof.
Hedging Agreement shall mean in relation to any Person (a) any
interest rate protection agreement, interest rate future, interest rate option,
interest rate swap, interest rate cap or other interest rate hedge or
arrangement to which that Person is a party and (b) any other agreement,
transaction or other arrangement for the transfer or assumption of risk and/or
exposure to fluctuations in currency exchange rates, credit risk or any other
variable that is not within that Person's control.
Inactive Guarantor shall mean 177192 Canada Inc.
Indebtedness shall mean, without duplication, in relation to
any Person, all liabilities, contingent or otherwise, which are any of the
following: (a) obligations in respect of borrowed money (including obligations
in respect of interest that is capitalized or paid in kind), (b) obligations in
respect of the deferred purchase price of property, services or assets, other
than Inventory, (c) all obligations in respect of Capital Leases, (d)
liabilities, contingent or other, arising under Hedging Agreements, (e) the
maximum available amount of all standby letters of credit or acceptances issued
or created for the account of such Person and (f) all other indebtedness
- 9 -
of another Person assumed or guaranteed by such Person, in respect of which such
Person is secondarily liable, or which are secured by a Lien on any property of
such Person, to the extent there is recourse to such Person in respect of such
liabilities, or to the extent of the fair market value of the property which is
subject to such Lien, if less. The Indebtedness of a Person shall include the
Indebtedness of any partnership or joint venture in which such Person is a
general partner or joint venturer, but only to the extent to which there is
recourse to such Person for the payment of such Indebtedness.
Insurance Proceeds shall mean proceeds or payments from an
insurance carrier with respect to any loss, casualty or damage to Collateral.
Intercompany Transfer shall mean any sale, lease, license,
assignment, transfer or other disposition of assets (including without
limitation any dividend or distribution) made by any Obligor or any subsidiary
of any Obligor to another Obligor.
Intercreditor Agreement shall mean an intercreditor agreement,
in form and substance satisfactory to the Lender, among the Lender, the Senior
Lien Lenders and the Senior Lien Administrative Agent, in its capacity as such.
Interest Expense shall mean the total interest obligations
(paid or accrued) of the Obligors, determined in accordance with GAAP applied on
a consistent basis with the latest audited financial statements of the Obligors.
Inventory shall mean, as to any Obligor, all of such Obligor's
present and hereafter acquired inventory (as defined in the UCC) and including,
without limitation, all merchandise, inventory and goods, and all additions,
substitutions and replacements thereof, wherever located, together with all
goods and materials used or usable in manufacturing, processing, packaging or
shipping same in all stages of production from raw materials through
work-in-process to finished goods.
Investment Property shall mean all present and hereafter
acquired investment property (as defined in the UCC), including, without
limitation, (a) all securities and capital stock or other interests in any other
Person whether certificated or uncertificated; all warrants, options and other
rights to acquire securities, capital stock or other interests in any other
Person; all securities entitlements; and all securities accounts, together with
all financial assets credited thereto; (b) all accessions and additions to,
substitutions for, and replacements, products and proceeds of any of the
foregoing, and, to the extent not otherwise included, all (c) payments under
insurance, or (d) any indemnity, warranty, guaranty or letter of credit, payable
by reason of loss or damage to or otherwise with respect to any of the
foregoing; and (e) any and all supporting obligations in respect of any of the
foregoing.
IP Security Agreement shall mean a security agreement, in form
and substance satisfactory to the Lender, pursuant to which each of Harvard,
Xxxxxxx-Xxxxxx, Inc., Xxxxx-Albion, Xxxxxx Automotive, Inc. and Harvard
Industries Risk Management, Inc. grants to the Lender, a security interest in
certain patents and other intellectual property rights and interests and related
Collateral to secure the Obligations.
Lender shall have the meaning set forth in the preamble
hereto.
- 10 -
Lien shall mean any interest in property securing an
obligation owed to, or a claim by, any Person other than the owner of the
property, whether such interest shall be based on the common law, statute, or
contract, whether such interest shall be recorded or perfected, and whether such
interest shall be contingent upon the occurrence of some future event or events
or the existence of some future circumstance or circumstances, including the
Lien or security interest arising from a mortgage, deed of trust, encumbrance,
pledge, hypothecation, assignment, deposit arrangement, security agreement,
conditional sale or trust receipt, or from a lease, consignment, or bailment for
security purposes and also including reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases, and other
title exceptions and encumbrances affecting real property.
Loan Account shall mean the account on the Lender's books, in
the joint name of the Companies, in which the Companies will be charged with all
applicable Obligations under this Financing Agreement.
Loan Documents shall mean this Financing Agreement, the
Promissory Note, the Security Documents, the Stock Purchase Agreement, the
Intercreditor Agreement, the other closing documents and any other ancillary
loan and security agreements executed from time to time in connection with the
Obligations, the Guaranty Obligations or this Financing Agreement, all as may be
renewed, amended, extended, increased or supplemented from time to time.
Management Fee shall have the meaning set forth in Paragraph
8.8 of Section 8 hereof.
Material Adverse Change shall mean a material adverse change
in (i) the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Obligors and their subsidiaries,
taken as a whole, since Xxxxx 00, 0000, (xx) the ability of the Obligors to
perform their respective obligations under the Loan Documents or the Senior Lien
Financing Documents or (iii) the ability of the Lender to enforce the Loan
Documents.
Material Adverse Effect shall mean a material adverse effect
on (i) the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Obligors and their subsidiaries,
taken as a whole, or, for the purposes of Paragraphs 7.1(o) and 7.2(l)(ii) of
Section 7, of any Obligor taken individually, in any case, since Xxxxx 00, 0000,
(xx) the ability of the Obligors to perform their respective obligations under
the Loan Documents or the Senior Lien Financing Documents or (iii) the ability
of the Lender to enforce, or the validity or enforceability of, the Loan
Documents.
Maturity Date shall mean May 31, 2004.
Maximum Senior Lien Borrowing Base Debt means an amount equal
to the lesser of (i) $45,000,000 and (ii) the Senior Lien Borrowing Base.
Mortgage shall have the meaning set forth in Paragraph 2.1(t)
of Section 2 hereof.
Multiemployer Plan shall mean a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA to which any Company or ERISA Affiliate
is making or accruing an obligation to make contributions, or with respect to
which it has any liability.
- 11 -
Multiple Employer Plan shall mean a Single Employer Plan,
which (a) is maintained for employees of any Company or ERISA Affiliate and at
least one Person other than any of the Companies or ERISA Affiliates or (b) was
so maintained and in respect of which any Company or ERISA Affiliate could have
liability under Section 4064 or 4069 of ERISA in the event such Plan has been or
were to be terminated.
Net Cash Proceeds shall mean, (i) with respect to any
Disposition by any Obligor or any of its subsidiaries, the amount of cash
received (directly or indirectly) from time to time (whether as initial
consideration or through the payment of deferred consideration) by or on behalf
of such Obligor or such subsidiary, in connection therewith after deducting
therefrom only (A) the amount of any Indebtedness secured by any Lien permitted
by Section 7.2(j)(i) on any asset (other than Indebtedness assumed by the
purchaser of such asset) which is required to be, and is, repaid in connection
with such Disposition (other than Indebtedness under this Financing Agreement),
(B) reasonable expenses related thereto incurred by such Obligor or such
subsidiary in connection therewith, (C) transfer taxes paid to any taxing
authorities by such Obligor or such subsidiary in connection therewith, and (D)
net income taxes to be paid in connection with such Disposition (after taking
into account any tax credits or deductions and any tax sharing arrangements) and
(ii) with respect to the issuance or incurrence of any Indebtedness by any
Obligor or any of its subsidiaries, or the sale or issuance by any Obligor or
any of its subsidiaries of any shares of its capital stock, the aggregate amount
of cash received (directly or indirectly) from time to time (whether as initial
consideration or through the payment of deferred consideration) by or on behalf
of such Obligor or such subsidiary in connection therewith, after deducting
therefrom only (A) reasonable brokerage commissions, underwriting fees and
discounts, legal fees and similar fees and commissions, (B) transfer taxes paid
by such Obligor or such subsidiary in connection therewith and (C) net income
taxes to be paid in connection therewith (after taking into account any tax
credits or deductions and any tax sharing arrangements).
Net Worth shall mean, at any date of determination, an amount
equal to (a) Total Assets minus (b) Total Liabilities, and shall be determined
(i) by amortizing intangible assets applying on a consistent basis the
principles and practices applied in the Obligors' audited financial statements
for the 2000 Fiscal Year, (ii) by excluding any extraordinary gains in any
period beginning after March 31, 2001, and (iii) otherwise in accordance with
GAAP, on a consistent basis with the latest audited financial statements of the
Obligors.
Notice of Borrowing shall have the meaning set forth in
Paragraph 3.2 of Section 3 hereof.
Obligations shall mean all loans, advances and extensions of
credit made or to be made hereunder or under any of the other Loan Documents by
the Lender to the Companies, or any one of them, or to others for the Companies'
account in respect of the Term Loan; any and all Indebtedness and obligations
which may at any time be owing by the Companies or any one of them to the Lender
howsoever arising, whether now in existence or incurred by the Companies or any
one of them from time to time hereafter; whether principal, interest (including,
without limitation, all interest that accrues after the commencement of any
case, proceeding or other action relating to bankruptcy, insolvency or
reorganization of any Obligor), fees, costs, expenses or otherwise; whether
secured by pledge, Lien upon or security interest in any of the
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Collateral, or any assets or property of any Person; whether such Indebtedness
is absolute or contingent, joint or several, matured or unmatured, direct or
indirect and whether the Companies are liable to the Lender for such
Indebtedness as principal, surety, endorser, guarantor or otherwise. Obligations
shall also include Indebtedness owing to the Lender by the Companies or any one
of them under any Loan Document (including the obligations owing from time to
time by the Companies to the Lender under any other agreement or arrangement now
or hereafter entered into between the Companies and the Lender in connection
with any of the Loan Documents); Indebtedness or obligations incurred by, or
imposed on, the Lender as a result of environmental claims arising out of any of
the Companies' operations, premises or waste disposal practices or sites; the
Companies' liability to the Lender as maker or endorser of any promissory note
or other instrument for the payment of money; the Companies' liability to the
Lender under any instrument of guaranty or indemnity, or arising under any
guaranty, endorsement or undertaking which the Lender may make or issue to
others for the Companies' account, including any accommodation extended with
respect to the Lender's acceptance of drafts or the Lender's endorsement of
notes or other instruments for the Companies' account and benefit in connection
with other Obligations.
Obligor shall mean each of the Companies and each of the
Guarantors.
Observer shall have the meaning given to it in Section 11
hereof.
Operating Cash Flow shall mean EBITDA less Capital
Expenditures consistently applied.
Operating Leases shall mean all leases of property (whether
real, personal or mixed) other than Capital Leases.
Other Collateral shall mean, as to any Obligor, the Cash
Collateral Account and all of such Obligor's now owned and hereafter acquired
lockboxes, blocked accounts and any other deposit accounts maintained with any
bank or financial institutions into which the proceeds of Collateral are or may
be deposited; all cash and other monies and property in the possession or
control of the Lender; all books, records, ledger cards, disks and related data
processing software at any time evidencing or containing information relating to
any of the Collateral described herein or otherwise necessary or helpful in the
collection thereof or realization thereon; and all cash and non-cash proceeds of
the foregoing; and all contract rights, letters of credit, letter of credit
rights, claims and causes of action, all governmental approvals, licenses,
franchises and authorizations, to the maximum extent permitted by applicable
law, in each case other than Excluded Property.
Out-of-Pocket Expenses shall mean all of the Lender's present
and future reasonable expenses (including reasonable fees and expenses of
counsel) incurred relative to this Financing Agreement or any other Loan
Documents (including without limitation, all due diligence efforts and all
efforts in connection with monitoring and/or enforcing compliance with the terms
of this Financing Agreement or any other Loan Document) whether incurred
heretofore or hereafter; which expenses shall include, without limitation, the
cost of record searches, all costs and expenses incurred by the Lender in
opening bank accounts, depositing checks, receiving and transferring funds, and
wire transfer charges, any charges imposed on the Lender
- 13 -
due to returned items and "insufficient funds" of deposited checks and the
Lender's standard fees relating thereto, any amounts paid by, incurred by or
charged to, the Lender in connection with travel, lodging and similar expenses
of the Lender's personnel in connection with inspecting and monitoring the
Collateral for the Obligations and the Guaranty Obligations from time to time
hereunder, any applicable counsel fees and disbursements relating to
documenting, advising and enforcing the Obligations and the Guaranty Obligations
(which shall be understood to include, without limitation, subsequent to the
Closing Date, the Lender's standard fees and its standard allocated fees and
expenses of internal counsel relating to any and all modifications, waivers,
releases, amendments or additional collateral with respect to this Financing
Agreement, the Collateral and/or the Obligations and the Guaranty Obligations),
fees and Taxes relative to the filing of financing statements, all expenses,
costs and fees set forth in Paragraph 7.7 of Section 7 hereof, and title
insurance premiums, real estate survey costs, costs of preparing and recording
mortgages/deeds of trust against the Real Estate.
Patents shall mean, as to any Obligor, such Obligor's present
and hereafter acquired patents, patent applications, patent registrations, any
reissues or renewals thereof, any inventions and improvements claimed
thereunder, patent licenses, and all patent rights with respect thereto, and all
income, royalties, cash and non-cash proceeds thereof.
PBGC shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA or any successor
thereto.
Permitted Asset Transfer shall mean any sale, lease, license,
assignment, transfer or other disposition of assets of any of the Obligors that
is any of the following:
(i) an Intercompany Transfer;
(ii) a sale of Inventory in the ordinary course of
business;
(iii) a license of intellectual property in the
ordinary course of business;
(iv) a sale, exchange or other disposition of
obsolete or worn-out Equipment in the ordinary course of business; or
(v) a sale, exchange or other disposition of assets
the fair market value of which, when added to all other dispositions
not otherwise permitted by clauses (i) through (iv) hereof or any other
provision of this Financing Agreement, does not exceed $250,000 in any
consecutive period of twelve (12) months;
provided, that (x) both before and immediately after giving effect to any such
sale, lease, license, assignment, transfer or other disposition, the Obligors
are in compliance with the covenants contained in Sections 7.2(j)(xv), (xvi) and
(xvii) and (y) the aggregate Net Cash Proceeds received by any Obligor from such
sales, exchange, license or other dispositions of assets, if identified in any
of clauses (ii) through (v) above, are paid upon consummation of the sale,
exchange, license or disposition thereof to the Senior Lien Administrative Agent
for application to repayment of the revolving loans under the Senior Lien
Financing Agreement or, if applicable, as otherwise required by Section 5 of
this Financing Agreement.
- 14 -
Permitted Encumbrances shall mean:
(a) Liens existing on the date hereof on specific
items of Equipment (other than Eligible Equipment) and other Liens expressly
permitted, or consented to in writing by the Lender, as identified in Schedule
4;
(b) Purchase Money Liens;
(c) Liens of local or state authorities for franchise
or other like Taxes, provided that the aggregate amount of all such Taxes
secured by such Liens shall not exceed $100,000.00 at any one time;
(d) statutory Liens of landlords and Liens of
carriers, warehousemen, bailees, mechanics, materialmen and other like Liens
imposed by law, except for Liens imposed by any Environmental Laws, created in
the ordinary course of business and for amounts not yet due (or which are being
contested in good faith, by appropriate proceedings or other appropriate actions
which are sufficient to prevent imminent foreclosure of such Liens) and with
respect to which adequate reserves or other appropriate provisions are being
maintained by each of the Obligors, as applicable, in accordance with GAAP;
(e) deposits made (and the Liens thereon) in the
ordinary course of business of any of the Obligors (including, without
limitation, security deposits for leases, indemnity bonds, surety bonds and
appeal bonds) in connection with workers' compensation, unemployment insurance
and other types of social security benefits or to secure the performance of
tenders, bids, contracts (other than for the repayment or guarantee of borrowed
money or purchase money obligations), statutory obligations and other similar
obligations arising as a result of progress payments under government contracts;
(f) easements (including, without limitation,
reciprocal easement agreements and utility agreements), encroachments, minor
defects or irregularities in title, variation and other restrictions, charges or
encumbrances (whether or not recorded) affecting the Real Estate, if applicable,
and which in the aggregate (A) do not materially interfere with the occupation,
use or enjoyment by any of the Obligors of its business or property so
encumbered and (B) do not materially and adversely affect the value of such Real
Estate in the reasonable business judgment of the Lender;
(g) Liens granted to the Lender by the Obligors or
any one of them to secure the Obligations and/or the Guaranty Obligations
arising under this Financing Agreement or the other Loan Documents;
(h) Liens granted to the Senior Lien Administrative
Agent by the Obligors or any one of them to secure the Senior Lien Obligations,
in the Senior Lien Financing Agreement or any other Senior Lien Financing
Document as approved by the Lender and in existence on the Closing Date (but no
further or different Lien, or change in any such Lien, for the benefit of the
Senior Lien Lenders, shall be a Permitted Encumbrance unless its creation or
existence has received the prior written consent of the Lender);
- 15 -
(i) Liens of judgment creditors, provided that the
aggregate amount secured by all such Liens shall not exceed $50,000.00 at any
one time (other than Liens bonded or insured to the reasonable satisfaction of
the Lender);
(j) Tax Liens for Taxes which are not yet due and
payable or which are being diligently contested in good faith by the Obligors by
appropriate proceedings, and which Liens are not (x) filed on any public
records, (y) other than with respect to Real Estate, senior to the Liens of the
Lender or the Senior Lien Administrative Agent for the benefit of the Senior
Lien Lenders; or (z) for Taxes due the United States or Canada or any state or
province thereof having similar priority statutes, as further set forth in
Paragraph 6.8 of Section 6 hereof;
(k) set-off rights arising in the ordinary course of
business; and
(l) Liens granted to General Motors Corporation in
the Access and Security Agreements as in effect on the Closing Date (but no
further or different Lien, or change in any such Lien, for the benefit of the
General Motors Corporation, shall be a Permitted Encumbrance unless its creation
or existence has received the prior written consent of the Lender).
Permitted Indebtedness shall mean: (a) current Indebtedness
maturing in less than one year and incurred in the ordinary course of business
for raw materials, supplies, equipment, services, Taxes or labor; (b) the
Indebtedness secured by Purchase Money Liens; (c) Indebtedness arising under
this Financing Agreement; (d) the Senior Lien Obligations, on the terms provided
for in the Senior Lien Financing Documents as approved by the Lender on the
Closing Date; (e) deferred Taxes and other expenses incurred in the ordinary
course of business; (f) other Indebtedness existing on the date of execution of
this Financing Agreement and listed in the most recent financial statements
delivered to the Lender or otherwise disclosed to the Lender in writing prior to
the Closing Date; (g) Indebtedness between or among the Obligors (provided that
any instruments evidencing such Indebtedness are Pledged Notes); and (h)
unsecured Indebtedness of the Guarantors in an aggregate principal amount not to
exceed $1,000,000.00 at any one time outstanding.
Permitted Liquidation shall mean, in relation to any Obligor,
its dissolution or liquidation at or after the transfer of all its remaining
assets in an Intercompany Transfer or otherwise as agreed upon in writing in
advance by the Lender.
Permitted Senior Lien Overadvance means the aggregate
principal amount of all Overadvances as such term is defined in the Senior Lien
Financing Agreement (as such agreement is in effect on the date hereof)
outstanding at any time under the Senior Lien Financing Agreement in an amount
not to exceed at any time the lesser of (a) $1,000,000 and (b) 5% of the Senior
Lien Borrowing Base at such time, provided that (A) the proceeds of such
Overadvances may only be used to fund the Companies' employee compensation,
employee benefit plans and employee expense reimbursements and, with the prior
consent of the Lender (which consent shall not be unreasonably withheld or
delayed), key vendor payments up to an aggregate amount not to exceed $500,000,
(B) Overadvances shall not be outstanding for more than 30 days, and (C)
Overadvances may only be made by the Senior Lien Lenders to the
- 16 -
Companies within the forty-five (45) consecutive day period commencing on the
date of the initial Overadvance.
Person shall mean an individual, corporation, limited
liability company, partnership, association, joint-stock company, trust,
unincorporated organization, joint venture or other enterprise or entity or
Governmental Authority.
Plan shall mean any Single Employer Plan or Multiemployer
Plan.
Pledge Agreement shall mean a Pledge Agreement, in form and
substance satisfactory to the Lender, dated as of the Closing Date, executed by
certain Obligors in favor of the Lender, which is to be delivered as provided in
Paragraph 2.1(m) of Section 2 hereof.
Pledged Notes shall mean all promissory notes now or hereafter
owned by any of the Obligors.
Pledged Stock shall mean any and all of the capital stock
(other than Excluded Stock) of all subsidiaries of the Companies and the
Guarantors now or hereafter held by any of the Companies or the Guarantors.
PPSA shall mean the Personal Property Security Act (Ontario)
as in effect from time to time.
Prohibited Transaction shall mean any transaction set forth in
Section 406 of ERISA or Section 4975 of the Code for which there is no
applicable statutory, regulatory or administrative exemption (including a class
exemption or an individual exemption).
Promissory Note shall mean the promissory note, in the form of
Exhibit A hereto, delivered by the Companies to the Lender to evidence the Term
Loan pursuant to, and repayable in accordance with, the provisions of Section 3
hereof.
Purchase Money Liens shall mean Liens on any item of Equipment
(other than Eligible Equipment) (i) acquired after the date of this Financing
Agreement provided that (a) each such Lien shall attach only to the property to
be acquired, (b) a description of the Equipment so acquired is furnished to the
Lender, and (c) the Indebtedness incurred in connection with such acquisitions
shall not, in the aggregate, exceed in any Fiscal Year the maximum amount of
Capital Expenditures for such Fiscal Year permitted pursuant to Paragraph
7.2(i)(ii) of Section 7 of this Financing Agreement, unless consented to by the
Lender or (ii) identified on Schedule 4, in the case of Liens on any item of
Equipment existing on the date of this Financing Agreement.
Real Estate shall mean each of the Obligors' fee and/or
leasehold interests in real property, including any real property (other than
the Miami Street, St. Louis, Missouri property) which has been, or will be,
encumbered, mortgaged, pledged or assigned to the Lender or its designee.
Reorganization shall mean, with respect to any Multiemployer
Plan, the condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
- 17 -
Reportable Event shall mean any of the events set forth in
Section 4043(c) of ERISA other than those events for which the notice
requirement has been waived under applicable regulations.
Requirements of Law shall mean, as to any Person, the
certificate of incorporation or by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
Secured Transaction Laws shall mean the Uniform Commercial
Code as the same may be amended and in effect from time to time in the State of
New York, and the Personal Property Security Act (Ontario), the expression
Secured Transaction Laws meaning each and every of these personal security
statutes.
Securities Act shall mean the Securities Act of 1933, as
amended, and all rules and regulations promulgated thereunder.
Security Documents shall mean the Pledge Agreement and the IP
Security Agreement to be executed and delivered as provided in Paragraph 2(m) of
Section 2 hereof and the Mortgages to be executed and delivered as provided in
Paragraph 2(t) of Section 2 hereof.
Senior Lien Administrative Agent shall mean The CIT
Group/Business Credit, Inc., as administrative agent for the Senior Lien Lenders
and any successor administrative agent for the Senior Lenders under the Senior
Lien Financing Agreement.
Senior Lien Agents' Commitment Letter shall mean the
Commitment Letter, dated April 19, 2001, issued by the Senior Lien
Administrative Agent and the Senior Lien Syndication Agent to, and accepted by,
the Companies.
Senior Lien Availability shall mean "Availability" as such
term is defined in the Senior Lien Financing Agreement as such agreement is in
effect on the date hereof.
Senior Lien Availability Reserve shall mean "Availability
Reserve" as such term is defined in the Senior Lien Financing Agreement as such
agreement is in effect on the date hereof.
Senior Lien Borrowing Base shall mean the "Borrowing Base" as
such term is defined in the Senior Lien Financing Agreement as such agreement is
in effect on the date hereof.
Senior Lien Financing Agreement shall mean a financing
agreement substantially in the form of this Financing Agreement and, insofar as
it is different, in form and substance satisfactory to the Lender, among the
Senior Lien Lenders, the Senior Lien Administrative Agent, the Senior Lien
Syndication Agent, The CIT Group/Business Credit, Inc. and Xxxxxxx Xxxxx Xxxxxx,
Inc., as arrangers, Citibank, N.A., as issuing bank in respect of letters of
credit, and the Obligors, and providing for loans (including a subfacility for
the issuance of letters of credit) in an amount up to $65,000,000.00 to be made
by the Senior Lien Lenders to the
- 18 -
Companies on the terms and subject to the conditions set forth therein and in
the Senior Lien Agents' Commitment Letter.
Senior Lien Financing Documents shall mean the Senior Lien
Financing Agreement, the promissory notes provided for therein, the Security
Documents (as defined in the Senior Lien Financing Agreement), the Intercreditor
Agreement, the other closing documents substantially in the respective forms
contemplated or required thereunder, and any other ancillary loan and security
agreements executed from time to time in connection with the Senior Lien
Obligations or the Senior Lien Financing Agreement.
Senior Lien Issuing Bank shall mean Citibank, N.A.
Senior Lien Lenders means, collectively, The CIT
Group/Business Credit, Inc., Citicorp USA, Inc. and each other party which
hereafter becomes a lender under the Senior Lien Financing Agreement.
Senior Lien Obligations shall mean all Indebtedness and other
obligations of the Obligors, or any one of them, which may at any time be owing
by the Obligors or any one of them to any of the Senior Lien Lenders, the Senior
Lien Issuing Bank, the Senior Lien Administrative Agent or the Senior Lien
Syndication Agent under or in respect of any of the Senior Lien Financing
Documents or the transactions or interests contemplated therein (including
reimbursement obligations in respect of letters of credit), whether such
Indebtedness is absolute or contingent, joint or several, matured or unmatured,
direct or indirect and whether the Obligors are liable to the Senior Lien
Lenders, the Senior Lien Administrative Agent or the Senior Lien Syndication
Agent for such Indebtedness and obligations as principal, surety, endorser,
guarantor or otherwise. Senior Lien Obligations shall also include Indebtedness
owing to the Senior Lien Lenders, the Senior Lien Administrative Agent and the
Senior Lien Syndication Agent by the Obligors or any one of them under any
Senior Lien Financing Document; Indebtedness or obligations incurred by, or
imposed on, the Senior Lien Lenders, the Senior Lien Administrative Agent or the
Senior Lien Syndication Agent as a result of environmental claims arising out of
any of the Obligors' operations, premises or waste disposal practices or sites
in accordance with Paragraph 9.3 of Section 9 of the Senior Lien Financing
Agreement and the Obligors' liability to the Senior Lien Lenders, the Senior
Lien Administrative Agent or the Senior Lien Syndication Agent as maker or
endorser of any promissory note or other instrument for the payment of money in
connection with other Senior Lien Obligations.
Senior Lien Syndication Agent shall mean Citicorp USA, Inc.,
as syndication agent for the Senior Lien Lenders and any successor syndication
agent for the Senior Lien Lenders under the Senior Lien Financing Agreement.
Single Employer Plan shall mean a "single-employer plan", as
defined in Section 4001(a)(15) of ERISA, which any Company or ERISA Affiliate
maintains, administers, contributes to or is required to contribute to, or under
which any Company or ERISA Affiliate has any liability.
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Stock Purchase Agreement shall mean a Securities Purchase
Agreement, in form and substance satisfactory to the Lender, dated as of the
Closing Date, between Harvard and Hilco Finance LLC.
Success Fee shall have the meaning set forth in Paragraph 8.7
of Section 8 hereof.
Surplus Cash shall mean, for any Fiscal Year, without
duplication, EBITDA plus, without duplication, each of the following: (a) any
income excluded in calculating EBITDA that does not arise in the ordinary course
of business, (b) any cash gains arising from the sale, exchange or other
disposition of assets other than any Permitted Asset Transfer, (c) cash interest
income, and (d) any cash tax refund, less, without duplication, each of the
following: (a) all cash interest for such Fiscal Year, (b) any cash loss from
the sale, exchange or other disposition of assets, (c) the aggregate scheduled
amounts of principal paid or payable on the Term Loan and the term loans under
the Senior Lien Financing Agreement, (d) the aggregate scheduled payments on
Capital Leases, (e) all Capital Expenditures actually made during such Fiscal
Year which are not financed, (f) all cash income Taxes for such Fiscal Year, (g)
cash payments due in respect of post-retirement employee benefit pension and
workers compensation obligations, and (h) mandatory prepayments made pursuant to
Section 5 hereof or Section 7 of the Senior Lien Financing Agreement (as such
agreement is in effect on the date hereof) in such Fiscal Year.
Taxes shall mean all federal, state, provincial, municipal and
other governmental taxes, levies, charges, claims and assessments which are or
may be due from any Obligor with respect to its business, operations, Collateral
or otherwise.
Term Loan shall mean the term loan in the principal amount of
$10,000,000.00 made by the Lender pursuant to, and repayable in accordance with,
the provisions of Section 3 hereof.
Tooling shall mean all tooling, fixtures, gauges, jigs,
patterns, casting patterns, dyes, cavities, moulds and documentation together
with any accessions, attachments, parts, accessories, substitutions,
replacements and appurtenances to any of the foregoing, but excluding machinery,
Equipment and Equipment spare parts.
Total Assets shall mean total assets of the Obligors
determined in accordance with GAAP on a basis consistent with the latest audited
financial statements of the Obligors.
Total Liabilities shall mean total liabilities of the Obligors
determined in accordance with GAAP on a basis consistent with the latest audited
financial statements of the Obligors.
Trade Accounts Receivable shall mean, with respect to any
Obligor, that portion of such Obligor's Accounts which arises from the sale of
Inventory or the rendition of services in the ordinary course of such Obligor's
business.
Trademarks shall mean, as to any Obligor, all of such
Obligor's present and hereafter acquired trademarks, trademark registrations,
trademark applications, tradenames, trade styles, service marks, prints and
labels (on which any of the foregoing may appear), reissues and renewals of the
foregoing, trademark licenses, internet domain names and URLs, and any
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trademark rights pertaining to any of the foregoing, together with the goodwill
associated therewith, and all cash and non-cash proceeds thereof.
UCC shall mean the Uniform Commercial Code as the same may be
amended and in effect from time to time in the State of New York.
Unfunded Pension Liabilities shall mean, with respect to any
Single Employer Plan, any amount by which the present value of the aggregate
benefit liabilities under the Plan (whether or not vested), determined as of the
date of such Plan's most recent actuarial report on the basis of the actuarial
assumptions specified for funding purposes in such report, exceeds the aggregate
current value of the assets of such Plan allocable to such benefit liabilities
as specified in such report. For purposes of this definition of "Unfunded
Pension Liabilities," the term "benefit liabilities" has the meaning specified
in Section 4001 of ERISA and the terms "current value" and "present value" have
the meaning specified in Xxxxxxx 0 xx XXXXX.
Xxxxxx Xxxxxx shall mean the United States of America.
U.S. dollar shall mean lawful currency of the United States.
Withdrawal Liability shall have the meaning set forth under
Part I of Subtitle E of Title IV of ERISA.
Working Capital shall mean Current Assets in excess of Current
Liabilities.
1.2 Construction of Certain Terms. (a) As used in this
Financing Agreement, (i) the words "hereof," "herein" and "hereunder" and words
of similar import refer to this Financing Agreement as a whole and not to any
particular provision of this Financing Agreement, and Paragraph, Section,
Schedule and Exhibit references are to this Financing Agreement unless otherwise
specified; (ii) the words "include," "includes" and "including" shall be deemed
to be followed by the phrase "without limitation," (iii) the word "or" shall not
be exclusive, (iv) the word "will" shall be construed to have the same meaning
and effect as the word "shall" and (v) the plural form of any term defined in
the singular in this Financing Agreement shall merely express the grammatical
plural of that defined term unless otherwise expressly provided herein.
(b) Unless the context requires otherwise (i) any
definition of or reference to any agreement, instrument or other document herein
shall be construed as referring to that agreement, instrument or other document
as from time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(ii) any reference herein to any Person shall be construed to include that
Person's successors and assigns (without prejudice to any restrictions on
transfer or other consequences of a transfer contemplated herein), and (iii) the
words "asset" and "property" shall be construed to have the same meaning and
effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights.
1.3 GAAP Terminology. (a) As used herein, and in the other
Loan Documents, accounting terms relating to any Obligor or any of its
subsidiaries that are not defined in Paragraph 1.1 of Section 1 and accounting
terms that are partly defined in Paragraph
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1.1 of Section 1, to the extent not defined, shall have the respective meanings
given to them under GAAP, except as otherwise provided in such Loan Documents.
All financial statements that any Obligor is required to deliver hereunder shall
be prepared in accordance with GAAP applied on a consistent basis, except as
otherwise expressly prescribed herein, subject to the following paragraph and
except that any financial statements which are not audited shall not be required
to have footnotes.
(b) If GAAP changes while any of the Obligations or
the Guaranty Obligations remains outstanding and, as a result, the financial
covenants set forth in subparagraphs (h) and (i) of Paragraph 7.2 of Section 7
would be calculated in a manner or with components different from those
applicable prior to the change, (i) the Obligors and the Lender will enter into
good faith negotiations to amend this Financing Agreement in such respects as
are necessary to conform those financial covenants as criteria for evaluating
the Obligors financial condition to substantially the same criteria as were
effective prior to the relevant change in GAAP and (ii) the Obligors shall be
deemed to be in compliance with those financial covenants during the period of
30 days beginning with the effective date of that change in GAAP if and to the
extent that the Obligors would have been in compliance therewith under GAAP if
the change had not occurred and compliance were tested applying GAAP as in
effect immediately before the change. At the end of that period of 30 days, if
an amendment of the kind described above has not been executed by all parties to
this Financing Agreement, GAAP as modified by the relevant change shall
automatically be taken into account in determining whether the Obligors are in
compliance with those financial covenants.
(c) Any reference in this Financing Agreement or the
other Loan Documents to "consolidating" balance sheets or other financial
statements or to "consolidating" borrowing base computations shall mean such
balance sheets, financial statements or borrowing base computations (in a format
submitted to and accepted by the Lender) showing consolidating entries only for
the major entities listed below, some of which consist of multiple entities (and
such other entities as may become successors or transferees of any of the
business owned or operated on the date of this Financing Agreement by any entity
listed below (if such business would be consolidated in accordance with GAAP)
and any other direct or indirect subsidiary of Harvard, if consolidating balance
sheets or other financial statements are hereafter prepared by any such other
subsidiary):
Xxxxx-Albion (excluding Trim Trends)
Trim Trends
Harvard Electronics
Pottstown
Harvard Corporate/Other
1.4 No Presumption in Construction. Neither this Financing
Agreement nor any other Loan Document nor any uncertainty or ambiguity herein or
therein shall be construed or resolved against the Lender under any rule of
construction or otherwise merely by virtue of being a party involved in its
drafting. On the contrary, this Financing Agreement and the other Loan Documents
have been reviewed by each of the parties and their counsel and shall be
construed and interpreted according to the ordinary meaning of the words used so
as to fairly accomplish the purposes and intentions of the parties.
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1.5 Independence of Provisions. All agreements and covenants
herein and in the other Loan Documents shall be given independent effect so
that, if a particular action or condition is prohibited by the terms of any such
agreement or covenant, the fact that such action or condition would be permitted
within the limitations of another agreement or covenant shall not be construed
as allowing such action to be taken or condition to exist.
1.6 Inactive Guarantor. Notwithstanding anything else to the
contrary elsewhere in this Financing Agreement (including the definitions of the
term "Permitted Asset Transfer" and "Intercompany Transfer") none of the terms
of this Financing Agreement or any other Loan Documents shall be interpreted to
permit, or constitute the consent by the Lender to any transaction or action by
the Inactive Guarantor (other than those incidental to maintaining its existence
and compliance with the Loan Documents and the Senior Lien Financial Documents
or its liquidation or dissolution) or by any other Obligor with the Inactive
Guarantor.
SECTION 2. Conditions Precedent
2.1 Conditions relating to the Closing Date.
The obligation of the Lender to make the Term Loan to be made
by it hereunder is subject to the satisfaction of, extension of or waiver in
writing of, on or prior to, the Closing Date, the following conditions
precedent:
(a) Lien Searches - The Lender shall have received
Tax, judgment and Secured Transaction Laws searches satisfactory to the Lender
for all locations presently occupied or used by each of the Obligors.
(b) Casualty Insurance - Each of the Obligors shall
have delivered to the Lender evidence satisfactory to the Lender that casualty
insurance policies listing the Lender as an additional insured, loss payee or
mortgagee, as the case may be, are in full force and effect, all as set forth in
Paragraph 7.2(d) of Section 7 hereof (and the certificates evidencing such
insurance shall be issued on form Xxxxx 27).
(c) UCC Filings - Any financing statements required
to be filed in order to create in favor of the Lender, a perfected security
interest in the Collateral shall have been properly filed in each office in each
jurisdiction required in order to create in favor of the Lender a perfected Lien
on the Collateral, subject only to Permitted Encumbrances. The Lender shall have
received acknowledgment copies of all such filings (or, in lieu thereof, the
Lender shall have received other evidence satisfactory to the Lender that all
such filings have been made) and the Lender shall have received evidence that
all necessary filing fees and all Taxes or other expenses related to such
filings have been paid in full.
(d) Board Resolution - The Lender shall have received
a copy of the resolutions of the Board of Directors or shareholders of each of
the Obligors authorizing the execution, delivery and performance of each Loan
Document to which it is a party, certified by the Secretary or Assistant
Secretary of each of the Obligors as of the date hereof, together with a
certificate of the Secretary or Assistant Secretary of each of the Obligors as
to the incumbency and signature of the officers of each of the Obligors
executing such Loan Documents and any
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certificate or other documents to be delivered by them pursuant hereto, together
with evidence of the incumbency of such Secretary or Assistant Secretary.
(e) Corporate Organization - The Lender shall have
received (i) a copy of the certificate or articles of incorporation of each of
the Obligors certified by the Secretary of State or equivalent authority of the
jurisdiction of their incorporation, (ii) a copy of the by-laws of each of the
Obligors certified by the respective Secretary or Assistant Secretary thereof,
all as amended through the date hereof, and (iii) evidence that each of the
Obligors is in good standing in the jurisdiction of its organization and duly
qualified to carry on business in each jurisdiction in which the character of
the properties owned or leased by it therein or in which the transaction of its
business makes such qualification necessary.
(f) Officer's Certificate - The Lender shall have
received a certificate of each of the Obligors, executed by an Authorized
Officer in each case, satisfactory in form and substance to the Lender,
certifying that (i) the representations and warranties of such Obligor contained
herein and in the other Loan Documents to which such Obligor is a party are true
and correct in all material respects on and as of the Closing Date; (ii) such
Obligor is in compliance with all of the terms and provisions set forth herein
and in the other Loan Documents to which such Obligor is a party, and (iii) no
Default or Event of Default has occurred.
(g) Opinions - Counsel for the Obligors shall have
delivered to the Lender opinions satisfactory to the Lender addressing and
opining to such matters as the Lender shall reasonably request, including,
without limitation, that, subject to (i) the filing, priority and remedies
provisions of the Secured Transaction Laws and any applicable state or other
laws relating to the recording of the mortgage Liens on Real Estate created by
the Security Documents, (ii) the provisions of the Bankruptcy Code, insolvency
statutes or other like laws, (iii) the equity powers of a court of law and (iv)
such other matters as may be agreed upon with the Lender: (x) this Financing
Agreement and all other Loan Documents of each of the Obligors (A) are valid,
binding and enforceable according to their terms, (B) are duly authorized,
executed and delivered, and (C) do not violate any terms, provisions,
representations or covenants in the charter or by-laws of any of the Obligors
or, to the best knowledge of such counsel, of any loan agreement, mortgage, deed
of trust, note, security or pledge agreement, indenture or other contract to
which the Obligors, or any one of them, are signatories or by which the relevant
Obligors, or any one of them, or their assets are bound; and (y) the perfection
of all security interests purported to be granted in this Financing Agreement or
under any other Loan Document.
(h) Absence of Default; No Material Adverse Change -
No Default or Event of Default shall have occurred and be continuing and no
Material Adverse Change shall have occurred.
(i) Legal Restraints/Litigation - As of the Closing
Date, there shall be no: (x) litigation, investigation or proceeding (judicial
or administrative) pending or threatened against the Obligors, or any one of
them, or their assets, by any agency, division or department of any county,
city, state, provincial or federal government arising out of this Financing
Agreement or any of the other Loan Documents; (y) injunction, writ or
restraining order restraining or prohibiting the financing arrangements
contemplated under this Financing
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Agreement and the other Loan Documents; or (z) suit, action, investigation or
proceeding (judicial or administrative) pending against the Obligors, or any one
of them, or their assets, which, in the opinion of the Lender (i) could
reasonably be expected to result in a Material Adverse Change or, (ii) except as
set forth in Schedule 2 hereto, if adversely determined, could reasonably be
expected to have a Material Adverse Effect.
(j) Intercreditor Agreement. The Senior Lien Lenders,
the Senior Lien Administrative Agent and the Senior Lien Syndication Agent shall
have executed and delivered the Intercreditor Agreement to the Lender, in form
and substance satisfactory to the Lender.
(k) Senior Lien Financing Documents The Senior Lien
Lenders and the Obligors shall have executed and delivered the Senior Lien
Financing Documents, which shall in all respects be satisfactory in form and
substance to the Lender, as delivered to the Lender, together with a certificate
of Harvard certifying that the copies of the Senior Lien Financing Documents
delivered to the Lender are true, correct and complete and represent the entire
agreement among the parties thereto relating to the Senior Lien Obligations and
Liens and other interests granted for the benefit of the Senior Lien Lenders in
relation to the Senior Lien Obligations.
(l) Financials; Projections - The Lender shall have
received and the Lender shall be satisfied with (i) a pro forma estimated
balance sheet of the Obligors at the Closing Date giving effect to the
termination of the Existing Credit Agreements and the transactions contemplated
hereby, (ii) interim unaudited consolidated and consolidating monthly and
quarterly financial statements of the Obligors through the fiscal month ending
no earlier than forty-five (45) days prior to the Closing Date and (iii) the
Obligors' business plan, which shall include a financial forecast, including,
without limitation, cash projections and projections of Senior Lien
Availability, in a form previously submitted to and accepted by the Lender and
in substance reasonably satisfactory to the Lender, on a monthly basis through
June 30, 2002 and on an annual basis thereafter through the year of the Maturity
Date.
(m) Security Documents - (i) Each of Harvard,
Xxxxxxx-Xxxxxx, Inc., Xxxxx-Albion and Trim Trends shall have executed and
delivered to the Lender, a Pledge Agreement granting a security interest to the
Lender as collateral for the Obligations (in the case of the Companies) and the
Guaranty Obligations (in the case of Trim Trends) in, (A) all of the Pledged
Notes held by the Obligors and (B) all of the Pledged Stock owned by the
Obligors and (ii) each of Harvard, Xxxxxxx-Xxxxxx, Inc., Xxxxx-Albion, Xxxxxx
Automotive, Inc. and Harvard Industries Risk Management, Inc. shall have
executed and delivered to the Lender, an IP Security Agreement.
(n) Stock Certificates and Notes. Each of the
Obligors which is a party to the Pledge Agreement shall have delivered to the
Senior Lien Administrative Agent the stock certificates evidencing the Pledged
Stock, together with duly executed stock powers (undated and in-blank) with
respect thereto, and all instruments evidencing the Pledged Notes, together with
duly executed instruments of assignment (undated and in-blank) with respect
thereto, all in form and substance satisfactory to the Lender. In addition, each
Obligor which holds any of the capital stock of any Guarantor shall deliver to
the Lender such documents
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(including evidence of the adoption of such resolutions) as the Lender may
require to protect and preserve its rights and enable the Lender to enforce its
rights and remedies in respect of such Pledged Stock.
(o) Loan Documents; Additional Documents - (i) The
Lender shall have received an original of each Loan Document necessary to
consummate the lending arrangement contemplated between the Obligors and the
Lender, each of which Loan Documents shall be duly executed by the respective
parties thereto, in each case in form and substance satisfactory to the Lender,
and each such Loan Document shall be in full force and effect; and (ii) the
Lender shall have received such other certificates, opinions and other documents
as the Lender reasonably may require.
(p) Notice of Borrowing - Harvard, on behalf of the
Companies, shall have delivered to the Lender a Notice of Borrowing containing
all information necessary for the Lender to issue wire transfer instructions on
behalf of the Companies for the Term Loan to be made under this Financing
Agreement.
(q) Examination & Verification - The Lender shall
have completed, to its satisfaction, an examination and verification of the
Accounts, Inventory, financial statements, books and records of each of the
Obligors which examination shall indicate that, after giving effect to all
loans, advances and extensions of credit to be made at closing as contemplated
hereunder and under the Senior Lien Financing Documents, (i) the Companies shall
have an aggregate opening Senior Lien Availability of at least $20,000,000.00,
as evidenced by a Borrowing Base Certificate delivered by Harvard to the Lender
as of the Closing Date, and (ii) the sum of (A) the Senior Lien Borrowing Base
and (B) the Borrowing Base shall exceed the Term Loan made under this Financing
Agreement and the initial loans, advances and other extensions of credit made
under the Senior Lien Financing Agreement by at least $20,000,000. It is
understood that such requirement contemplates that all debts, obligations, taxes
and dividends are current, and that all payables are being handled in the normal
course of the Obligors' business and consistent with their past practice.
(r) Existing Accounts; Depository Accounts- Each of
the Obligors and each of their subsidiaries shall have used its best efforts to
cause each Existing Lender, or if applicable, its agent, to assign its rights
under the concentration accounts existing on the date of this Financing
Agreement to the Senior Lien Administrative Agent.
(s) Existing Credit Agreements - The Companies'
existing credit agreement with General Electric Capital Corporation ("GECC"), as
agent, and the existing credit agreement of Trim-Trends with Canadian Imperial
Bank of Commerce ("CIBC" and, together with GECC, the "Existing Lenders" and
each an "Existing Lender," and those agreements, the "Existing Credit
Agreements") shall be: (i) terminated; (ii) all loans and obligations of the
Obligors thereunder shall be paid and satisfied in full, including through
utilization of the proceeds of the initial loans to be made under this Financing
Agreement and the Senior Lien Financing Documents; and (iii) all Liens or
security interests in favor of the Existing Lenders (which, in the case of GECC,
shall include any Liens and security interests in favor of any agent acting on
its behalf) which are on the Collateral and otherwise in connection therewith
shall be terminated and/or released upon such payment, all to the satisfaction
of the Lender.
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(t) Mortgages/Deeds of Trust - Each Obligor shall
have executed and delivered to the Lender, an agent of the Lender or to a title
insurance company acceptable to the Lender, such mortgages and/or deeds of trust
(including, without limitation, the Canadian Debenture on the Real Estate and
personal property in Canada), in form and substance satisfactory to the Lender
(each a "Mortgage"), as the Lender may reasonably require to obtain Liens on the
Real Estate owned by such Obligor on the Closing Date (which is identified in
Schedule 5), subject only to Permitted Encumbrances.
(u) Title Insurance Policies - The Lender shall have
received, in respect of each Mortgage referred to in the preceding paragraph (t)
other than the Canadian Debenture, a mortgagee's title policy or marked-up
unconditional binder for such insurance. Each such policy shall (i) be in an
amount satisfactory to the Lender and (ii) insure that the Mortgage insured
thereby creates a valid Lien on the property covered by such Mortgage for the
benefit of the Lender, free and clear of all defects and encumbrances except
Permitted Encumbrances and all other defects and encumbrances acceptable to the
Lender. Each such policy delivered to the Lender shall name the Lender as the
insured thereunder and contain such endorsements and effective coverage as the
Lender may reasonably request. The Lender shall also have received evidence that
all premiums in respect of such policies have been paid and that all charges for
mortgage recording Taxes, if any, shall have been paid.
(v) Surveys - The Lender and, where applicable, the
title insurance company issuing each policy referred to in the immediately
preceding paragraph (each, a "Title Insurance Company") shall have received (or
the Lender shall be satisfied with the arrangements and a committed schedule for
the subsequent receipt of) maps or plats of a perimeter or boundary of the site
of each of the properties covered by the Mortgages covered by such policy, dated
a date satisfactory to the Lender and the relevant Title Insurance Company and
prepared by an independent professional licensed land surveyor satisfactory to
the Lender and the relevant Title Insurance Company; and, there shall be
surveyed and shown on the maps or plats or surveys the following: (i) the
locations on such sites of all the buildings, structures and other improvements;
(ii) any encroachments on any adjoining property by the building, structures and
improvements on the sites; (iii) if the site is designated as being on a filed
map, a legend relating the survey to said map; and (iv) such other matters as
are covered by the surveys prepared in connection with the Existing Credit
Agreements and the related mortgages. Further, each survey shall be certified to
the Lender and the Title Insurance Company.
(w) Appraisals - The Lender shall have received
satisfactory appraisals on each of the Obligors' Equipment and Real Estate,
which appraisals: (i) shall be by an appraiser acceptable to the Lender, and
(ii) shall indicate (A) with respect to Equipment, an orderly liquidation value
of not less than $41,125,000.00, and (B) with respect to Real Estate, a fair
market value of not less than $22,500,000.00.
(x) Environmental Report - The Lender shall have
received environmental audit reports on (i) all of each of the Obligors'
leasehold and fee interests, and (ii) the Obligors' operations and waste
disposal practices. The reports must (x) be satisfactory to the Lender and (y)
not disclose or indicate any material liability (real or potential) stemming
from the Obligors' premises, their operations, their waste disposal practices or
waste disposal sites used by the Obligors.
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(y) Schedules - The Obligors or their counsel shall
have provided the Lender with schedules of: (i) each Obligor's and its
subsidiaries' (A) Trademarks, (B) Patents, and (C) Copyrights, as applicable,
and all in such detail as to provide appropriate recording information with
respect thereto, (ii) any tradenames, (iii) monthly rental payments for any
leased premises or any other premises where any Collateral may be stored or
processed, (iv) all insurance policies of any nature maintained by any Obligor;
(v) all joint ventures or partnerships engaged in by any Obligor with any other
Person, and (vi) existing Indebtedness and Permitted Encumbrances, as well as
all other schedules required by this Financing Agreement or any of the other
Loan Documents, all of the foregoing in form and substance satisfactory to the
Lender.
(z) The Commitment Letter - Each of the Obligors
shall have fully complied, to the reasonable satisfaction of the Lender, with
all of the terms and conditions of the Commitment Letter.
(aa) Consents; Requirements of Law - All necessary
governmental and third party consents and approvals necessary in connection with
this Financing Agreement and the transactions contemplated hereby shall have
been obtained (without the imposition of any conditions that are not reasonably
acceptable to the Lender) and shall remain in effect, unless the failure to
obtain and keep in effect any such third-party consent and approval has been
disclosed to the Lender, and such failure could not reasonably be expected to
result in a Material Adverse Change; and all applicable governmental filings
shall have been made and all applicable waiting periods shall have expired
without in either case any action being taken by any competent authority; and no
law or regulation shall be applicable in the judgment of the Lender that
restrains, prevents or imposes materially adverse conditions upon this Financing
Agreement or the transactions contemplated hereby.
(bb) Fees; Expenses - All fees and expenses
(including, without limitation, reasonable fees and expenses of counsel)
required to be paid to the Lender on or before the Closing Date shall have been
paid.
(cc) Expense Deposit - The Lender shall have deducted
from the proceeds of the Term Loan an expense deposit in the amount of $50,000
(the "Expense Deposit"), which Expense Deposit shall be held by the Lender and
may be applied by the Lender to the fees and expenses incurred by the Lender in
connection with the exercise of any of its rights under this Financing
Agreement, including, without limitation, monitoring the Obligors' compliance
with the terms of this Financing Agreement and the other Loan Documents and any
appraisals, audits, collateral reviews and field examinations conducted by the
Lender during the term of this Financing Agreement. In no event shall prior
recourse to the Expense Deposit be a prerequisite to the Lender's right to
demand reimbursement for any such fees and expenses. The Expense Deposit will
not be segregated and may be commingled with other funds of the Lender and the
Obligors will not be entitled to receive any interest on the Expense Deposit.
The unused portion of the Expense Deposit shall be returned to the Companies
upon the earlier of the Maturity Date or the payment in full in cash of all of
the Obligations.
(dd) ERISA - The Lender shall be satisfied that, as
of the Closing Date, no event or condition constituting an ERISA Event has
occurred or exists with respect to any Plan that could result in a Material
Adverse Effect.
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(ee) Access and Security; Agreements; Transition
Agreement - All matters relating to each Access and Security Agreement and the
GM Transition Supply Agreement shall be satisfactory to the Lender. Without
limiting the foregoing, the Lender shall have received a certification from the
chief executive officer of Harvard that the Obligors are not in violation of any
terms of the Access and Security Agreements or Transition Agreement and that, to
the best knowledge of the Obligors, General Motors Corporation has not asserted
any rights of set-off against amounts due to any of the Obligors by GM other
than in the ordinary course of business, as well as certified copies of
amendments to each such agreement satisfactory to the Lender, reflecting the
security interests provided under the Loan Documents to the Lender.
(ff) Canadian Collateral Account. - The Lender shall
be satisfied with all matters relating to arrangements for payment of Accounts
due from time to time to Trim Trends, and any other active Obligor organized in
Canada, directly to an account of Trim Trends established and maintained with
Canadian Imperial Bank of Commerce (the "Canadian Deposit Account"), with
acknowledgment by that depositary of the security interest granted herein by the
relevant Guarantor to the Lender (including waiver by that depositary of any
right of setoff that it might otherwise have in respect of that account).
(gg) Cash Collateral Account. - The Lender shall be
satisfied with all arrangements relating to the establishment of an account
subject to the lien created by the Senior Lien Financing Agreement and the
control of the Senior Lien Administrative Agent, with a depository institution
satisfactory to the Lender, established for amounts that the Companies may be
required to maintain as cash Collateral pursuant to the Senior Lien Financing
Agreement (the "Cash Collateral Account").
(hh) Stock Purchase Agreement. Harvard shall have
executed and delivered the Stock Purchase Agreement.
(ii) Inactive Guarantor Certificate. The Lender shall
have received a certificate of an Authorized Officer of Harvard, in form and
substance satisfactory to the Lender, certifying that the Inactive Guarantor (i)
is not currently actively engaged in business and (ii) currently has no assets
whatsoever (other than its corporate name, corporate charter and goodwill) and
the Lender shall be satisfied with the truth and accuracy of such
certifications.
(jj) Process Agent Acceptance. The Lender shall have
received evidence satisfactory to the Lender that the agent for service of
process appointed by each of the Obligors in Paragraph 13.8(d) of this Financing
Agreement, Section 9.9(d) of the Pledge Agreement and Section 5.06(d) of the IP
Security Agreement, has irrevocably accepted such appointment.
Upon the execution of this Financing Agreement and the making
of the Term Loan, all of the above Conditions Precedent shall have been deemed
satisfied or waived as set forth in the introductory paragraph of Paragraph 2.1
of this Section 2 or as the Obligors and the Lender shall otherwise agree in
writing.
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SECTION 3. Term Loan
3.1 Term Loan. On the Closing Date, each Company hereby agrees
to jointly and severally execute and deliver to the Lender the Promissory Note
to evidence the Term Loan to be extended by the Lender.
3.2 Borrowing Request and Procedure. The request for the Term
Loan by the Lender hereunder may be made by Harvard as agent for the Collective
Borrowers and the Lender is hereby authorized and directed to accept, honor and
rely on such instructions and requests, subject to the limitation and provisions
set forth in this Financing Agreement. Harvard shall give the Lender prior
written notice (substantially in the form of Exhibit B hereto (a "Notice of
Borrowing")) no later than 11:00 a.m. at least two (2) Business Days prior to
the date of the Term Loan. The Notice of Borrowing shall be executed by Harvard,
shall be irrevocable and shall specify or include the date of the Term Loan,
which must be a Business Day and shall be the Closing Date. On the date
specified in the Notice of Borrowing and upon receipt by the Lender of the
Promissory Note and the fulfillment by the Companies of the conditions set forth
in Section 2 hereof, the Lender will make available the requested Term Loan to
the Companies by causing an amount, in immediately available funds, to be
deposited into the account designated by Harvard in the Notice of Borrowing to
the Lender on the date and in the amount set forth in the Notice of Borrowing.
3.3 Payment of Principal of Term Loan. The principal amount of
the Term Loan shall be repaid to the Lender by the Companies, as their joint and
several obligation, on the Maturity Date.
3.4 Payment of Term Loan Upon Termination. In the event this
Financing Agreement is terminated by the Lender in accordance with the terms of
this Financing Agreement, the Term Loan shall become due and payable on the
effective date of such termination, notwithstanding any provision to the
contrary in the Promissory Note.
3.5 Loan Account. (a) Subject to the provisions of
subparagraph (b) below, the Lender shall maintain a Loan Account on its books in
which each of the Companies will be charged with the Term Loan, and with any
other Obligations, including any and all costs, expenses and reasonable
attorney's fees which the Lender may incur in connection with the exercise by or
for the Lender of any of the rights or powers herein or in any other Loan
Document conferred upon the Lender, or in the prosecution or defense of any
action or proceeding to enforce or protect any rights of the Lender in
connection with this Financing Agreement, the other Loan Documents or the
Collateral assigned hereunder or thereunder, or any Obligations. The Companies
will be credited with all amounts received by the Lender from the Companies or
from others for the Companies' account, and such amounts will be applied to
payment of the Obligations as set forth herein. In no event shall prior recourse
to any security granted to or by the Obligors be a prerequisite to the Lender's
right to demand payment of any Obligation. Further, it is understood that the
Lender shall have no obligation whatsoever to perform in any respect any of the
Obligors contracts or obligations relating to the Accounts.
(b) In order to utilize the collective borrowing
powers of the Companies (collectively, the "Collective Borrowers") in the most
efficient and economical
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manner, and in order to facilitate the handling of the accounts of the
Collective Borrowers on the Lender's books, the Collective Borrowers have
requested, and the Lender has agreed to handle accounts of the Collective
Borrowers on the Lender's books on a combined basis, all in accordance with the
following provisions:
(i) In lieu of maintaining separate accounts
on the Lender's books in the name of each of the Collective Borrowers, the
Lender shall maintain one account under the name: Harvard Industries et al.
(herein, the "Collective Account"). The Term Loan will be the joint and several
obligation of the Companies and charged to the Collective Account indicated
above, along with any charges and expenses under this Financing Agreement and
the other Loan Documents made in relation to any of the Obligations. The
Collective Account will be credited with all amounts received by the Lender from
any of the Collective Borrowers or from others for their account.
(ii) Each month, the Lender will render to
the Collective Borrowers one extract of the combined Collective Account, which
shall be deemed to be an account stated as to each of the Collective Borrowers
and which will be deemed correct and accepted by all of the Collective
Borrowers, unless the Lender receives a written statement of exceptions from
them, through Harvard, within thirty (30) days after such extract has been
rendered by the Lender. It is expressly understood and agreed by each of the
Collective Borrowers that the Lender shall have no obligation to account
separately to any of the Collective Borrowers.
(iii) It is expressly understood and agreed
by each of the Collective Borrowers that the Lender shall have no responsibility
to inquire into the correctness of the apportionment, allocation, or disposition
of (x) the Term Loan or (y) any of the expenses and charges of the Lender
relating thereto. The Term Loan is to be made for the Collective Account.
(iv) The Collective Borrowers jointly and
severally and unconditionally guarantee to the Lender the prompt payment in full
of (A) the Term Loan, as well as (B) all other Obligations of the Collective
Borrowers to the Lender and hereby expressly confirm in all respects the
agreements and/or instruments executed by each of the Collective Borrowers in
the Lender's favor as more fully set forth therein.
(v) Any collateral security now or hereafter
given to the Lender by any of the Collective Borrowers, shall secure the Term
Loan, and shall be deemed to be pledged to the Lender as security for any and
all Obligations of the Collective Borrowers and each of them to the Lender as
set forth under this Financing Agreement, the other Loan Documents, or any other
agreements between the Lender and any of the Collective Borrowers.
(vi) The handling of the accounts of the
Collective Borrowers in a combined fashion, as more fully set forth herein, is
done solely as an accommodation to the Collective Borrowers and at their
request, and the Lender shall incur no liability to the Collective Borrowers as
a result hereof.
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It is further expressly understood that the foregoing request was made because
the Collective Borrowers are engaged in an integrated operation that requires
financing on a basis permitting the availability of credit from time to time to
each of the Collective Borrowers as required for the continued successful
operation of each of the Collective Borrowers. Each of the Collective Borrowers
expects to derive benefit, directly or indirectly, from such availability since
the successful operation of each of the Collective Borrowers is dependent on the
continued successful performance of the functions of the integrated group. In
addition, the Companies have informed the Lender that:
(A) Harvard, in order to increase
the efficiency and productivity of each of the other Collective Borrowers, has
centralized in itself a cash management system which entails, in part, central
disbursement and operating accounts in which it provides the working capital
needs of each of the other Collective Borrowers and manages and timely pays the
accounts payable of each of the other Collective Borrowers;
(B) Harvard is further enhancing
the operating efficiencies of the other Collective Borrowers by purchasing, or
causing to be purchased, in its name for its account all materials, supplies,
inventory and services required by the other Collective Borrowers which will
result in reducing the operating costs of the other Collective Borrowers; and
(C) Since all of the Collective
Borrowers are now engaged in an integrated operation that requires financing on
an integrated basis and since each Collective Borrower expects to benefit from
the continued successful performance of such integrated operations and in order
to best utilize the collective borrowing powers of each Collective Borrower in
the most effective and cost efficient manner and to avoid adverse effects on the
operating efficiencies of each Collective Borrower and the existing back-office
practices of the Collective Borrowers, each Collective Borrower has requested
that the Term Loan be disbursed solely upon the request of Harvard and to bank
accounts managed solely by Harvard and that Harvard will manage for the benefit
of each Collective Borrower the expenditure and usage of the Term Loan.
3.6 Joint and Several Liability of Companies. (a)
Notwithstanding anything in this Financing Agreement or any other Loan Document
to the contrary, each of the Companies hereby accepts joint and several
liability hereunder and under the other Loan Documents in consideration of the
financial accommodations to be provided by the Lender under this Financing
Agreement and the other Loan Documents, for the mutual benefit, directly and
indirectly, of each of the Companies and in consideration of the undertakings of
the other Companies to accept joint and several liability for the Term Loan and
the other Obligations hereunder. Each of the Companies, jointly and severally,
hereby irrevocably and unconditionally accepts, not merely as a surety but also
as a co-debtor, joint and several liability with the other Companies, with
respect to the payment and performance of all of the Obligations (including,
without limitation, any Obligations arising under this Paragraph 3.6), it being
the intention of the parties hereto that all of the Obligations shall be the
joint and several obligations of each of the Companies without preferences or
distinction among them. If and to the extent that any of the Companies shall
fail to make any payment with respect to any of the Obligations as and when
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due or to perform any of the Obligations in accordance with the terms thereof,
then in each such event the other Companies will make such payment with respect
to, or perform, such Obligation.
(b) Subject to the terms and conditions hereof, the
Obligations of each of the Companies under the provisions of this Paragraph 3.6
constitute the absolute and unconditional, full recourse Obligations of each of
the Companies enforceable against each Company to the full extent of its
properties and assets, irrespective of all of the following:
(i) any lack of validity or enforceability,
any irregularity, default or omission in any relevant documentation, including
any Loan Document, or of the Obligations, or any delay, failure or omission to
enforce or agreement not to enforce, or the stay or enjoining, by order of
court, by operation of law or otherwise, of the exercise of any right with
respect to the foregoing (including, in each case, without limitation, as a
result of the insolvency, bankruptcy or reorganization of the Lender or any
other Person);
(ii) any change in the time, manner or place
of payment of, or in any other term in respect of, all or any of the Loan
Documents;
(iii) any exchange or release of, or
non-perfection of any lien on or in, any Collateral, any release or amendment or
waiver of or consent to any departure from any guaranty or security, for all or
any of the Obligations or any release of any other Obligor from all or any part
of its obligations under this Financing Agreement or any of the terms of any
other Loan Document;
(iv) any claim, set-off, counterclaim,
defense or other rights, including any as to marshalling of any security or
guaranties that any Obligor may have at any time and from time to time against
the Lender or any other Person, whether in connection with the transactions
contemplated in the Loan Documents or any other transaction; or
(v) any other circumstances which might
otherwise constitute a defense based on suretyship or otherwise available to, or
a discharge of, any Company in respect of (A) the Obligations of any Company,
(B) the release of or waiver of any rights against any other Obligor and the
settlement, compromise or release of any Obligations of any of them or (C) the
failure by the Lender to attempt, or delay by it in attempting, to collect any
Obligations from any other Company or Guaranty Obligations from any Guarantor or
to realize upon any Collateral; and the Lender may deal with any of the Obligors
as it sees fit without prejudice or effect on this Financing Agreement or the
security for the Obligations;
and each Company hereby irrevocably waives all defenses that might otherwise
have based on any of the matters identified above in this Paragraph 3.6 or based
on any other circumstances other than the full, final and indefeasible payment
of all Obligations; provided that the foregoing provisions of this sentence
relating to any Company and any Obligation shall not be understood to constitute
a waiver of any defense based on the full and final release of all
responsibility of such Company for such Obligation given by the Lender.
(c) The provisions of this Paragraph 3.6 are made for
the benefit of the Lender and its successors and assigns, and may be enforced by
it or them from time to time against any or all of the Companies as often as
occasion therefor may arise and without
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requirement on the part of the Lender or such successors or assigns first to
xxxxxxxx any of its or their claims or to exercise any of its or their rights
against any other Company or to exhaust any remedies available to it or them
against any other Company or to resort to any other source or means of obtaining
payment of any of the Obligations hereunder or to elect any other remedy. The
provisions of this Paragraph 3.6 shall remain in effect until all of the
Obligations shall have been paid in full or otherwise fully satisfied.
(d) Each of the Companies hereby agrees that it will
not enforce any of its rights of contribution or subrogation against the other
Companies with respect to any liability incurred by it hereunder or under any of
the other Loan Documents, any payments made by it to the Lender with respect to
any of the Obligations or any Collateral until such time as all of the
Obligations have been paid in full in cash. Any claim which any Company may have
against the other Company with respect to any payments to the Lender hereunder
or under any other Loan Documents are hereby expressly made subordinate and
junior in right of payment, without limitation, as to any increases in the
Obligations arising hereunder or thereunder, to the prior payment in full in
cash of the Obligations and, in the event of any insolvency, bankruptcy,
receivership, liquidation, reorganization or other similar proceeding under the
laws of any jurisdiction relating to any Company, its debts or its assets,
whether voluntary or involuntary, all such Obligations shall be paid in full in
cash before any payment or distribution of any character, whether in cash,
securities or other property, shall be made to the other Companies therefor.
SECTION 4. Termination of the Commitment of the Lender. The Commitment
of the Lender shall terminate upon the making of the Term Loan on the Closing
Date.
SECTION 5. Prepayments of Term Loan
5.1 Optional Prepayment of Term Loan. The Companies may, upon
at least three (3) Business Days' notice, prepay, at their option, in whole or
in part, and without penalty or premium of any kind, the Term Loan, provided
that on each such prepayment, the Companies shall pay accrued interest on the
principal so prepaid to the date of such prepayment. Each such partial
prepayment shall be in an aggregate principal amount of $1,000,000.00 or an
integral multiple of $1,000,000.00 in excess thereof. The principal amount of
the Term Loan that has been prepaid may not be reborrowed.
5.2 Mandatory Application of Certain Proceeds. To the extent
that (x) there is any Surplus Cash for any Fiscal Year beginning after September
30, 2001 or (y) on any date on which any of the Obligors receives Net Cash
Proceeds from
(i) the incurrence or issuance by any of the Obligors
of any balance sheet debt other than Permitted Indebtedness, or
(ii) the sale or issuance of any equity securities
and capital contributions (other than in connection with (x) the capital stock
of Harvard issued pursuant to the Stock Purchase Agreement and any warrants
outstanding on the date of this Financing Agreement, (y) the exercise of
employee stock options or (z) securities issued or capital contributions made to
any Obligor), or
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(iii) any payment due under (x) the GM Transition
Supply Agreement, (y) the Stock Purchase Agreement or (z) the letter agreement
with GECC with respect to, among other things, the release of all Liens and
security interests in favor of GECC, for itself or as agent, under any Existing
Credit Agreement,
the Companies shall (A) apply an amount equal to 100% of the payment referred to
in clause (iii) first, to prepay the outstanding revolving loans under the
Senior Lien Financing Agreement (without any corresponding decrease in the
Senior Lien Lenders' commitments thereunder), second, to prepay the principal
installments of the term loan B under the Senior Lien Financing Agreement, such
prepayment to be applied to such installments in the inverse order of maturity
until the Senior Lien Obligations in respect of such term loan B have been
repaid-in-full, and third, to prepay the principal installments of the term loan
A under the Senior Lien Financing Agreement, such prepayment to be applied to
such installments in the inverse order of maturity until the Senior Lien
Obligations in respect of such term loan A have been repaid-in-full, (B) apply
an amount equal to 100% of the other Net Cash Proceeds and Surplus Cash referred
to in this Paragraph 5.2 to prepay the aggregate principal amount of the term
loans and the revolving loans under the Senior Lien Financing Agreement and (C)
after the Senior Lien Obligations have been paid in full, apply the Net Cash
Proceeds referred to in clauses (A) and (B) above to prepay the aggregate
principal amount of the Term Loan. Each such prepayment under clause (B) above
shall be applied first to prepay the principal installments of the term loan B
under the Senior Lien Financing Agreement, such prepayment to be applied to such
installments in the inverse order of maturity until the Senior Lien Obligations
in respect of such term loan B have been repaid-in-full, second to prepay the
principal installments of the term loan A under the Senior Lien Financing
Agreement, such prepayment to be applied to such installments in the inverse
order of maturity until the Senior Lien Obligations in respect of such term loan
A have been repaid-in-full, and third to repay the revolving loans under the
Senior Lien Financing Agreement. The application of any such Surplus Cash shall
be applied as set forth above not later than one hundred (100) days after the
end of the Fiscal Year in which such Surplus Cash was generated. Notwithstanding
anything to the contrary contained herein, in the event that the Senior Lien
Administrative Agent or the Senior Lien Lenders shall waive any right to receive
any payments required to be made pursuant to Paragraph 7.3 of Section 7 of the
Senior Lien Financing Agreement as such agreement is in effect on the date
hereof, then all such payments shall be made to the Lender and applied (without
penalty or premium of any kind) to the aggregate principal amount of the Term
Loan in accordance with this Paragraph 5.2.
5.3 Mandatory Application of Insurance Proceeds and Sale of
Asset Proceeds. (a) On the date of receipt by any Obligor of:
(i) Insurance Proceeds, (other than Insurance
Proceeds that are reinvested in compliance with Paragraphs 6.7 of Section 6) or
(ii) Net Cash Proceeds from the sale, lease, transfer
or other disposition of any assets of any of the Obligors (other than a
Permitted Asset Transfer and Net Cash Proceeds that are reinvested in compliance
with Paragraphs 6.7(c) and (d) of Section 6),
the Companies shall prepay the aggregate principal amount of the term loans and
the revolving loans under the Senior Lien Financing Agreement in an amount equal
to 100% of the amount of
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said Insurance Proceeds and/or Net Cash Proceeds, each such prepayment to be
applied (A) in the case of Net Cash Proceeds of Accounts and/or Inventory, to
repay the revolving loans under the Senior Lien Financing Agreement and (B) in
all other cases (x) if the Companies do not (or cannot) use Insurance Proceeds
for the repair, replacement or restoration of any Real Estate and/or Equipment,
first to prepay the principal installments of the term loan B under the Senior
Lien Financing Agreement, such prepayment to be applied to such installments in
the inverse order of maturity, until the obligations of the Obligors in respect
of such term loan B have been paid-in-full, second to prepay the principal
installments of the term loan A under the Senior Lien Financing Agreement, such
prepayment to be applied to such installments in the inverse order of maturity,
until the obligations of the Obligors under such term loan A have been
paid-in-full, and third to repay the revolving loans under the Senior Lien
Financing Agreement (without any corresponding decrease in the Senior Lien
Lenders' commitments thereunder) or (y) if the Companies do (and may) elect to
use Insurance Proceeds for the repair, replacement or restoration of Real Estate
and/or Equipment, to repay the revolving loans under the Senior Lien Financing
Agreement (without any corresponding decrease in the Lenders' commitments under
the Revolving Line of Credit), provided, however, that (x) with respect to any
Net Cash Proceeds from the sale of all or any substantial portion of the assets
(other than Accounts and Inventory) of Pottstown, such Net Cash Proceeds shall
be applied to repay the Senior Lien Obligations equally in respect of the
revolving loans and the installments of the term loan B under the Senior Lien
Financing Agreement with all such prepayments to be applied to such installments
in the inverse order of maturity and (y) with respect to Net Cash Proceeds from
the sale of Accounts and/or Inventory of Pottstown, such Net Cash Proceeds shall
be applied to repay the revolving loans under the Senior Lien Financing
Agreement, provided, however, that, notwithstanding anything to the contrary,
after the Senior Lien Obligations have been paid in full, the aggregate
principal amount of the Term Loan shall be prepaid (without penalty or premium
of any kind) in an amount equal to 100% of the amount of Insurance Proceeds
and/or Net Cash Proceeds received by any Obligor under clauses (i) and/or (ii)
above.
(b) Notwithstanding anything to the contrary in subparagraph
(a) of this Paragraph 5.3, so long as no Default or Event of Default is
continuing at the time any of the Obligors receives Net Cash Proceeds from the
sale of the Real Estate identified in Schedule 5 as the Salem Property or the
Xxxxxx Property, $300,000 of the Net Cash Proceeds of each such sale need not be
applied to any repayment or prepayment contemplated in subparagraph (a) of this
Paragraph 5.3 but shall be applied to prepay the revolving loans under the
Senior Lien Financing Agreement (without any corresponding decrease in the
Senior Lien Lenders' commitments thereunder).
(c) Notwithstanding anything to the contrary contained herein,
in the event that the Senior Lien Administrative Agent or the Senior Lien
Lenders shall waive any right to receive any payments required to be made
pursuant to Paragraph 7.4 of Section 7 of the Senior Lien Financing Agreement as
such agreement is in effect on the date hereof, then all such payments shall be
made to the Lender and applied to the aggregate principal amount of the Term
Loan in accordance with this Paragraph 5.3.
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SECTION 6. Collateral for Obligations
6.1 Security Interest. As security for the prompt payment in
full of all Obligations (in the case of each Company) or all Guaranty
Obligations (in the case of each Guarantor), each of the Obligors hereby pledges
and grants to the Lender a continuing general Lien upon, and security interest
in, all the assets of such Obligor, including, without limitation, in the case
of Harvard, all of its rights and interests in and under the Access and Security
Agreements and the GM Transition Supply Agreement, and in the case of all
Obligors, all of their:
(a) Accounts;
(b) Inventory;
(c) General Intangibles;
(d) Documents of Title;
(e) Equipment;
(f) Real Estate;
(g) Investment Property other than the Excluded
Stock;
(h) Other Collateral; and
all cash and non-cash proceeds of any and all of the foregoing Collateral and,
to the extent not otherwise included, all payments under insurance (whether or
not the Lender is the loss payee thereof) and any indemnity, warranty or
guaranty payable by reason of loss or damage to or otherwise with respect to any
of the foregoing (all of the foregoing, collectively, the "Collateral").
6.2 Related Collateral Matters and Financing Statements. The
security interests granted hereunder shall extend and attach to:
(a) All Collateral which is owned by any of the
Obligors or in which the Obligors have any interest, whether held by the
Obligors or held by others for their account, and, if any Collateral is
Equipment, whether the Obligors' interest in such Equipment is as owner, finance
lessee or conditional vendee;
(b) All Equipment, whether the same constitutes
personal property or fixtures, including, but without limiting the generality of
the foregoing, all Tooling dies, jigs, tools, benches, molds, tables,
accretions, component parts thereof and additions thereto, as well as all
accessories, motors, engines and auxiliary parts used in connection with, or
attached to, the Equipment; and
(c) All Inventory and any portion thereof which may
be returned, rejected, reclaimed or repossessed by either the Lender or any of
the Obligors from the Obligors'
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customers, as well as to all supplies, goods, incidentals, packaging materials,
labels and any other items which contribute to the finished goods or products
manufactured or processed by the Obligors, or to the sale, promotion or shipment
thereof.
(d) The Lender is hereby authorized by each of the
Obligors to file (including pursuant to the applicable terms of the Secured
Transaction Laws) from time to time any financing statements, registrations,
continuations or amendments covering the Collateral whether or not the Obligors'
signature(s) appears thereon. Each Obligor hereby consents to and ratifies any
and all execution and/or filing of financing statements and or registrations on
or prior to the Closing Date by the Lender with respect to the Collateral.
6.3 Certain Dealings, Rights and Matters Relating to
Collateral.
(a) Inventory. Each Obligor shall safeguard, protect
and hold all Inventory for the Lender's account and make no disposition thereof
except Permitted Asset Transfers. Each of the Obligors shall sell and ship
Inventory to its customers only in the ordinary course of such Obligor's
business, and then only on open account and on terms currently being extended by
such Obligor to its customers, provided that, absent the prior written consent
of the Lender, such Obligor shall not sell Inventory on a consignment basis nor
retain any Lien or security interest in any sold Inventory. Upon the sale,
exchange, or other disposition of Inventory, as herein provided, the security
interest in the Inventory provided for herein shall, without break in continuity
and without further formality or act, continue in, and attach to, all proceeds,
including any instruments for the payment of money, Trade Accounts Receivable,
documents of title, shipping documents, chattel paper and all other cash and
non-cash proceeds of such sale, exchange or disposition. As to any such sale,
exchange or other disposition, the Lender shall have all of the rights of an
unpaid seller, including stoppage in transit, replevin, rescission and
reclamation. Each of the Companies shall immediately forward any and all
proceeds of any sale or other disposition of Inventory to the Depository
Account, and to hold any such proceeds (including any notes and instruments), in
trust for the Senior Lien Administrative Agent and the Lender pending delivery
to the Senior Lien Administrative Agent, provided that, after the payment in
full of the Senior Lien Obligations, all such proceeds of any sale or other
disposition of Inventory shall be forwarded to the Lender or as the Lender may
direct. Irrespective of the Lender's perfection status in any and all of the
General Intangibles, including, without limitation, any Patents, Trademarks,
Copyrights or licenses with respect thereto, each of the Obligors hereby
irrevocably grants to the Lender, subject to the terms of the Intercreditor
Agreement, a royalty free license to sell, or otherwise dispose of or transfer,
in accordance with Paragraph 10.3 of Section 10 hereof, and the applicable terms
hereof, any of the Inventory upon the occurrence of an Event of Default which
has not been waived in writing by the Lender.
(b) General Intangibles. Each of the Obligors shall
maintain its rights in, and the value of, its General Intangibles in the
ordinary course of its business, including, without limitation, by making timely
payment with respect to any applicable licensed rights, except for Permitted
Asset Transfers. Each of the Obligors shall deliver to the Lender, and/or shall
cause the appropriate party to deliver to the Lender, from time to time such
pledge or security agreements with respect to General Intangibles (now or
hereafter acquired) of such Obligor as the Lender shall (except as to Excluded
Property) require to obtain valid Liens thereon, subject only to Permitted
Encumbrances. In furtherance of the foregoing, each of the
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Obligors shall provide timely notice to the Lender of any additional Patents,
Trademarks, tradenames, service marks, Copyrights, brand names, trade names,
logos and other trade designations acquired or applied for by such Obligor
subsequent to the Closing Date and each of the Obligors shall execute such
documentation as the Lender may reasonably require to obtain and perfect the
Lender's Lien thereon. Each of the Obligors hereby irrevocably grants to the
Lender a royalty-free, non-exclusive license in the General Intangibles,
including tradenames, Trademarks, Copyrights, Patents, licenses, and any other
proprietary and intellectual property rights and any and all right, title and
interest in any of the foregoing, for the sole purpose, upon the occurrence of
an Event of Default, of the right to: (i) advertise for sale and sell or
transfer any Inventory bearing any of the General Intangibles, and (ii) make,
assemble, prepare for sale or complete, or cause others to do so, any applicable
raw materials or Inventory bearing any of the General Intangibles, including use
of the Equipment and Real Estate for the purpose of completing the manufacture
of unfinished goods, raw materials or work-in-process comprising Inventory, and
apply the proceeds thereof to the Obligations (in the case of a Company) or the
Guaranty Obligations (in the case of a Guarantor) hereunder, all as further set
forth in this Financing Agreement and irrespective of the Lender's Lien and
perfection in any General Intangibles. Notwithstanding any of the foregoing, an
Obligor may, in the ordinary course of its business, abandon any of its rights,
title and interest in certain Trademarks, Copyrights, Patents, licenses or any
other proprietary or intellectual property rights (collectively, the "IP
Interest") if such IP Interest has ceased to be useful to such Obligor;
provided, that any abandonment of an Obligor's IP Interest which is (x)
identified in schedule A or schedule B to the IP Security Agreement or (y)
otherwise necessary for the operation of any material portion of such Obligor's
business shall be subject to the delivery by such Obligor to the Lender of a
certificate of an Authorized Officer of such Obligor (which certificate shall be
in form and substance satisfactory to the Lender) explaining the circumstances
causing the applicable IP Interest to cease to be useful; provided further that
no such abandonment shall be allowed with respect to any IP Interest described
in clause (x) or clause (y) of the preceeding proviso which is maintainable
merely by the payment of maintenance fees.
(c) Equipment. Each of the Obligors shall use the
Equipment owned by such Obligor only in the business of the Obligors and such
Equipment shall not be held for sale or lease, or removed from their premises,
or otherwise disposed of by any Obligors except for Permitted Asset Transfers.
Each of the Obligors shall, at such Obligor's own cost and expense, keep the
Equipment in as good and substantial repair and condition as the same is now or
at the time the Lien and security interest granted herein shall attach thereto,
reasonable wear and tear excepted, making any and all repairs and replacements
when and where necessary. Each of the Obligors shall safeguard, protect and hold
all Equipment in accordance with the terms hereof and subject to the Lender's
security interest. The proceeds of any Permitted Asset Transfers of Equipment
shall be held in trust by the Obligors for the Senior Lien Administrative Agent
and the Lender and shall be immediately delivered to the Senior Lien
Administrative Agent by deposit to the Depository Account designated by the
Senior Lien Administrative Agent (or, after the Senior Lien Obligations have
been paid in full, such proceeds shall be forwarded to the Lender or as the
Lender may direct), except that the Obligors may retain and use such proceeds to
purchase forthwith replacement Equipment which the Obligors determine in their
reasonable business judgment to have a collateral value at least equal to the
Equipment so disposed of or sold; provided, however, that the aforesaid right
shall automatically cease upon the occurrence of a Default or an Event of
Default which is not waived in writing by the Lender.
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Upon the sale, exchange, or other disposition of the Equipment, as herein
provided, the security interest provided for herein shall, without break in
continuity and without further formality or act, continue in, and attach to, all
proceeds, including any instruments for the payment of money, Accounts,
documents of title, shipping documents, chattel paper and all other cash and
non-cash proceeds of such sale, exchange or disposition. As to any such sale,
exchange or other disposition, the Lender shall have all of the rights of an
unpaid seller, including stoppage in transit, replevin, rescission and
reclamation.
(d) Pledged Stock and Pledged Notes. Each of the
Obligors hereby confirms that, if it is not a party to the Pledge Agreement on
the date of this Financing Agreement but thereafter obtains any Pledged Stock or
Pledged Notes, it shall promptly give notice to that effect to the Senior Lien
Administrative Agent and the Lender and become a party to the Pledge Agreement
through an amendment thereto, in form and substance satisfactory to the Lender,
and, pursuant to the Pledge Agreement, it shall deliver, or cause to be
delivered, all such Pledged Stock or Pledged Notes to the Senior Lien
Administrative Agent (or, after the Senior Lien Obligations have been paid in
full, to the Lender) in accordance with the applicable terms of the Pledge
Agreement and, prior to such delivery, shall hold any such stock in trust for
the Senior Lien Administrative Agent and the Lender.
6.4 Continuing Nature of Security Interest and Rights. The
rights and security interests granted to the Lender hereunder are to continue in
full force and effect until the final payment in full to the Lender of all
Obligations and the termination of this Financing Agreement.
6.5 Lender's Exercise of Rights and Remedies. Notwithstanding
the Lender's security interest in the Collateral and to the extent that the
Obligations or the Guaranty Obligations, as the case may be, are now or
hereafter secured by any assets or property other than the Collateral or by the
guarantee, endorsement, assets or property of any other Person, the Lender shall
have the right to determine which rights, Liens, security interests or remedies
the Lender shall at any time pursue, foreclose upon, relinquish, subordinate,
modify or take any other action with respect to, without in any way modifying or
affecting any of them, or any of the Lender's rights hereunder.
6.6 Security; Loan Account Charges. Any property or assets of
the Obligors, or any one of them, in the possession or control of the Lender may
be held by the Lender as security for any Obligations or any Guaranty
Obligations, as the case may be, and applied in whole or partial satisfaction of
such Obligors or such Guaranty Obligations when due. The Liens and security
interests granted herein, and any other Lien or security interest the Lender may
have in any other assets of the Obligors, shall secure payment and performance
of all now existing and future Obligations and Guaranty Obligations. The Lender
may in its discretion charge any or all of the Obligations to the Loan Account
when due.
6.7 Insurance on Collateral. (a) At the request of any
Obligor, or if any Obligor fails to maintain insurance in respect of any of the
Collateral as required by Paragraph 7.2(d) of Section 7, or fails to provide the
Lender with timely evidence, acceptable to the Lender, of its maintenance of
such insurance coverage, the Lender may purchase, at the Companies' expense (as
contemplated in subparagraph (d) of this Paragraph of 6.7), arrange for and
acquire insurance to protect the Lender's interests in the Collateral, but at
the Companies' expense and
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without any responsibility on the Lender's part for: (i) obtaining the
insurance; (ii) the solvency of the insurance companies; (iii) the adequacy of
the coverage; or (iv) the collection of claims. Upon the occurrence of an Event
of Default which is not waived in writing by the Lender, the Lender shall,
subject to the rights of any holders of Permitted Encumbrances holding claims
senior to the Lender, have the sole right and at its option, in the name of the
Lender or the Obligors or any of them, to file claims under any insurance
policies, to receive, receipt and give acquittance for any payments that may be
payable thereunder, and to execute any and all endorsements, receipts, releases,
assignments, reassignments or other documents that may be necessary to effect
the collection, compromise or settlement of any claims under any such insurance
policies.
(b) In the event of any loss or damage by fire or
other casualty, Insurance Proceeds relating to the Obligors' or an Obligor's
Inventory shall be applied as provided by and in accordance with Paragraph 5.3
of Section 5. Upon the occurrence of a Default or Event of Default, such
Insurance Proceeds may be applied to the Obligations in such order as the Lender
may elect.
(c) In the event any part of the Obligors' or an
Obligor's Real Estate or Equipment is damaged by fire or other casualty and the
Insurance Proceeds for such damage or other casualty is less than or equal to
$100,000.00, the Lender shall promptly apply such proceeds in accordance with
Paragraph 5.3 of Section 5. Upon the occurrence of a Default or Event of
Default, such Insurance Proceeds may be applied to the Obligations in such order
as the Lender may elect.
(d) Absent the occurrence of an Event of Default
(which has not been waived in writing by the Lender), and provided that (x) the
Obligors have sufficient business interruption insurance to replace the lost
profits of any of the Obligors' facilities, and (y) the Insurance Proceeds are
in excess of $100,000.00, Harvard may request the consent of the Lender (by
delivering a written request to the Lender) to replace, repair or restore such
Real Estate or Equipment to substantially the equivalent condition prior to such
fire or other casualty as set forth herein. If Harvard is not permitted by the
Lender to, or cannot, elect to use the Insurance Proceeds as set forth above,
the Lender may, subject to the rights of any holders of Permitted Encumbrances
holding claims senior to the Lender, apply the Insurance Proceeds to the payment
of the Obligations in such manner and in such order as the Lender may reasonably
elect.
(e) If Harvard receives the written consent of the
Lender and elects to use the Insurance Proceeds for the repair, replacement or
restoration of any Real Estate and/or Equipment, and there is then no Event of
Default, Harvard shall, prior to the commencement of any such material
restoration, repair or replacement, provide the Lender with a restoration plan
and a total budget certified by an independent third party experienced in
construction costing. If there are insufficient Insurance Proceeds to cover the
cost of restoration as so determined, the Companies shall be responsible for the
amount of any such insufficiency and shall demonstrate evidence of such prior to
the commencement of restoration. Completion of restoration shall be evidenced by
a final, unqualified certification of the design architect employed, if any; an
unconditional Certificate of Occupancy, if applicable; such other certification
as may be required by law; or if none of the above is applicable, a written good
faith determination of completion by Harvard.
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(f) Any insurance acquired by the Lender as
contemplated in subparagraph (a) of this Paragraph 6.7 may, but need not,
protect the Obligor's respective interests in the Collateral, and therefore the
Obligors acknowledge that such insurance may not pay claims which the Obligors
may have with respect to the Collateral or pay any claim which may be made
against the Obligors in connection with the Collateral. In the event the Lender
purchases, obtains or acquires insurance covering all or any portion of the
Collateral, the Companies shall be responsible for all of the applicable costs
of such insurance, including premiums, interest (at the applicable rate of
interest set forth in Paragraph 8.1 of Section 8 hereof), fees and any other
charges with respect thereto, until the effective date of the cancellation or
the expiration of such insurance. The Lender may charge all of such premiums,
fees, costs, interest and other charges to the Loan Account. Each of the
Companies hereby acknowledges that the costs of the premiums of any insurance
acquired by the Lender may exceed the costs of insurance which the Companies may
be able to purchase on their own. In the event that the Lender purchases such
insurance, the Lender will notify Harvard of said purchase within thirty (30)
days of the date of such purchase. If, within thirty (30) days after the date of
such notice, Harvard provides the Lender with proof that the Obligors had the
insurance coverage required pursuant to Paragraph 7.2(d) of Section 7 (in form
and substance satisfactory to the Lender) as of the date on which the Lender
purchased insurance and the Obligors continued at all times to have such
insurance, then the Lender agrees to cancel the insurance purchased by the
Lender and credit the Loan Account with the amount of all costs, interest and
other charges associated with any insurance purchased by the Lender, including
with any amounts previously charged to the Loan Account.
6.8 Taxes Relating to Collateral. If, notwithstanding the
Obligors' covenants regarding the payment of Taxes, in Paragraph 7.2(e), any
Lien shall be filed or claimed (i) for Taxes due the United States or Canada or
any state or province of either such jurisdiction, or (ii) which in the Lender's
opinion might create a valid obligation having priority over the rights granted
to the Lender herein (exclusive of Real Estate), such Lien shall not be deemed
to be a Permitted Encumbrance hereunder and the Companies shall immediately pay
such Taxes and remove the Lien of record. If the Companies or any one of them
fails to do so promptly, then the Lender may, pay such Taxes on the Obligors'
behalf, and the amount thereof shall be an Obligation secured hereby and due on
demand.
6.9 Mortgages. (a) This Financing Agreement and the obligation
of the Obligors to perform all of their covenants and obligations hereunder are
further secured by mortgage(s), deed(s) of trust or assignment(s) on the Real
Estate.
(b) Each of the Obligors shall give to the Lender
from time to time such mortgage(s), deed(s) of trust or assignment(s) on the
Real Estate or real estate acquired by such Obligor after the date hereof as the
Lender shall require to obtain for the Lender a valid Lien thereon, subject only
to Permitted Encumbrances and to those exceptions of title as set forth in
future title insurance policies that are satisfactory to the Lender.
SECTION 7. Representations; Warranties and Covenants
7.1 Representations and Warranties. Each of the Obligors
hereby makes the representations and warranties set forth in each of the
following subparagraphs of this Paragraph 7.1 to the Lender.
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(a) Financial Condition. (i) The fair value of the
Obligors' Total Assets exceeds the book value of their Total Liabilities on a
consolidated basis; (ii) the Obligors are generally able to pay their debts as
they become due and payable; and (iii) the Obligors do not have unreasonably
small capital to carry on their business as it is currently conducted absent
extraordinary and unforeseen circumstances.
(b) Perfection and Related Matters. (i) Schedule 1
hereto correctly and completely sets forth such Obligor's (A) chief executive
office, (B) Collateral locations, (C) tradenames, and (D) all the other
information listed on said Schedule; and (ii) upon filing of financing
statements which name the Companies as debtors in the applicable filing clerks'
offices, this Financing Agreement creates a valid and perfected security
interest in the Collateral (other than Real Estate) securing the Obligations or
the Guaranty Obligations, as the case may be, to the extent that a security
interest may be perfected by the filing of a financing statement under the UCC
(in the case of the Companies) or the PPSA (in the case of the Guarantors) and
the security interests granted herein constitute in favor of the Lender, and
shall at all times constitute, perfected Liens in the assets of such Obligor
(subject only to Permitted Encumbrances) other than (1) Real Estate and (2) any
such Collateral for which possession or control is required under the UCC (in
the case of the Companies) or the PPSA (in the case of the Guarantors) for
perfection of a security interest, including any Pledged Stock or Pledged Notes
or proceeds thereof. The Pledge Agreement creates a valid security interest in
the Pledged Stock and Pledged Notes of such Obligor, which, upon delivery by
such Obligor of such Pledged Stock and Pledged Notes to the Senior Lien
Administrative Agent as required pursuant to the Senior Lien Financing
Agreement, will constitute a perfected security interest in favor of the Lender,
subject to the first priority Lien of the Senior Lien Administrative Agent (on
behalf of the Senior Lien Lenders and the Senior Lien Issuing Bank) pursuant to
the terms of the Intercreditor Agreement. Upon the recordation of the Mortgages,
the security interest granted in such Mortgage will create (and shall at all
times constitute) a valid and perfected lien in favor of the Lender, securing
the Obligations, in the case of a Company, or the Guaranty Obligations of Trim
Trends, in the case of Real Estate of Trim Trends, subject only to Permitted
Encumbrances.
(c) Collateral and Related Matters. (i) Except for
the Permitted Encumbrances, such Obligor is, or will be, at the time additional
Collateral is acquired by it, the absolute owner of the Collateral owned by such
Obligor with full right to pledge, sell, consign, transfer and create a security
interest therein, free and clear of any and all claims or Liens in favor of
others (other than Permitted Encumbrances).
(ii) The Equipment constituting Collateral
does not comprise a part of such Obligor's Inventory.
(iii) Such Obligor possesses all General
Intangibles and rights thereto necessary to conduct its business as conducted as
of the Closing Date.
(d) Organization and Qualification. Such Obligor and
each of its subsidiaries is a corporation, duly incorporated and validly
existing in good standing under the laws of the jurisdiction of its
incorporation; each has the corporate power to own its property and to carry on
its business as now being conducted; and each is duly qualified to do business
and is in good standing in each jurisdiction in which the character of the
properties owned or leased by
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it therein or in which the transaction of its business makes such qualification
necessary, except where the failure to so qualify would not have a Material
Adverse Effect or would not have a material adverse effect on its ability to
enforce collection of Accounts due from customers residing in such jurisdiction.
(e) Loan Documents. Such Obligor and each of its
subsidiaries has full corporate power and authority to execute and deliver, and
to incur and perform its obligations under, each of the Loan Documents to which
it is party, all of which have been duly authorized by all proper and necessary
corporate action. No consent or approval of stockholders is required as a
condition to the validity or performance of, or the exercise by the Lender of
any of its rights or remedies under any Loan Document. Such Obligor has duly
executed and delivered this Financing Agreement, and this Financing Agreement
constitutes, and upon such Obligor's execution and delivery of each other Loan
Document that it is required hereunder to execute and deliver, such other Loan
Document will constitute, the legal, valid and binding obligation of such
Obligor, enforceable against it in accordance with the terms of this Financing
Agreement or such other Loan Document, as the case may be, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
generally and to general principles of equity.
(f) Governmental Action. All authorizations,
consents, approvals, registrations, notices, exceptions, licenses with or from
any Governmental Authority or other Person necessary for the execution, delivery
and performance by such Obligor or any of its subsidiaries, and the incurrence
and performance of each of its obligations under, each of the Loan Documents,
and the exercise by the Lender of its remedies under each of the Loan Documents
have been effected or obtained and are in full force and effect.
(g) Litigation. There are no proceedings or
investigations now pending or, to the knowledge of such Obligor, threatened
before any court or arbitrator or before or by any Governmental Authority which,
individually or in the aggregate, if determined adversely to the interests of
the Obligors or any of their subsidiaries, could reasonably be expected to have
a Material Adverse Effect.
(h) No Conflicts. There is no statute, regulation,
rule order or judgment, and no provision of any agreement or instrument binding
upon such Obligor or any of its subsidiaries, or affecting their properties, and
no provision of the certificate of incorporation or by-laws (or similar
constitutive instruments) of such Obligor or any of its subsidiaries, that would
prohibit, conflict with or in any way impair the execution or delivery of, or
the incurrence or performance of any obligations of the Obligors under, any Loan
Document, or result in or require the creation or imposition of any Lien on
property of the Obligors or any of their subsidiaries as a consequence of the
execution, delivery and performance of the Loan Documents, other than the Liens
in favor of the Lender or in favor of the Senior Lien Lenders expressly provided
for in this Financing Agreement and the other Loan Documents or in the Senior
Lien Financing Documents as approved by the Lender on the Closing Date.
(i) No Material Adverse Change. No Material Adverse
Change has occurred.
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(j) Regulatory Status. Neither such Obligor nor any
of its subsidiaries is (i) an "investment company" registered or required to be
registered under the Investment Company Act of 1940, as amended, or (ii) subject
to regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, each as amended, or any foreign, federal, state or local statute or
regulation limiting its ability to incur indebtedness for money borrowed as
contemplated hereby.
(k) Intellectual Property. Except as set forth on
Schedule 11, (i) such Obligor and each of its subsidiaries owns, or is licensed
to use, all Trademarks, Copyrights, technology, know-how and processes necessary
for the conduct of its business as currently conducted (the "Intellectual
Property") except for those the failure to own or license which could not have a
Material Adverse Effect, (ii) no claim has been asserted in writing (or is
otherwise known to such Obligor to exist) and is pending by any Person
challenging or questioning the use of any such Intellectual Property or the
validity or effectiveness of any such Intellectual Property, nor does such
Obligor know of any valid basis for any such claim, and (iii) the use of such
Intellectual Property by such Obligor and its subsidiaries does not infringe the
rights of any Person, except for such claims and infringements that, in the
aggregate do not have a Material Adverse Effect. The Obligors, however, make no
representations or warranties regarding the Intellectual Property identified in
the schedules of Intellectual Property entitled "Schedule Foreign Patents" and
"Schedule Foreign Trademarks" delivered pursuant to Paragraph 2.1(y) of Section
2 hereof.
(l) Requirements of Law and Contractual Obligations.
No Requirements of Law or Contractual Obligation of the Obligors or any of their
subsidiaries has a Material Adverse Effect.
(m) Capital Stock. Schedule 3 identifies (i) all
capital stock of each Obligor other than Harvard, the respective jurisdictions
in which they are organized and how and by whom such stock is owned and (ii) all
of the authorized capital stock of such Obligor, by class, and, as of the
Closing Date, the number of shares of each such class that are issued and
outstanding. All such issued shares of the capital stock of such Obligor which
constitute Pledged Stock have been validly issued and, as of the Closing Date,
are fully paid, non-assessable shares free of preemptive rights or other similar
rights suffered or permitted by such Obligor. Other than as described on
Schedule 3, (A) there are no subscriptions, options, warrants, rights to
subscribe for, or calls or commitments or similar rights relating to any shares
of such Obligor's capital stock, including any right of conversion or exchange
under any outstanding security or other instrument, (B) such Obligor is not
subject to any obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any shares of its capital stock or any security convertible
into or exchangeable for any of its capital stock, and (C) there are no
agreements or arrangements under which such Obligor or any of its affiliates is
obligated to register the sale of any of their securities under the Securities
Act. Harvard may amend Schedule 3 from time to time to reflect any Permitted
Asset Transfer, merger or liquidation effected in accordance with the terms of
this Financing Agreement and the Senior Lien Financing Agreement (as such
agreement is in effect on the date hereof).
(n) Indebtedness. Schedule 4 identifies all
Indebtedness for borrowed money of such Obligor and all its subsidiaries which
is outstanding on the date of this Financing
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Agreement as well as all other Indebtedness of such Obligor and its subsidiaries
which is secured by any Lien or other encumbrance on any of the property of any
of such Obligor or any of its Subsidiaries.
(o) Environmental Matters. Except as disclosed in
Schedule 10, such Obligor and each of its subsidiaries (i) is in compliance in
all material respects with all applicable Environmental Laws; (ii) has obtained
or has taken steps to obtain all necessary permits, consents, licenses, and
other approvals applicable under any Environmental Laws; (iii) is not subject to
any investigation, or any judicial or administrative proceeding, notice, order,
judgment, decree or settlement alleging or pertaining to any violation of
Environmental Laws that could result in a Material Adverse Effect; (iv) is not
subject to any claims or liabilities arising from any Environmental Laws that
could result in a Material Adverse Effect; and (v) does not have any Lien
attached based on any Environmental Laws that could result in a Material Adverse
Effect. Except for certain summary reports in respect of the environmental
database research results performed in 1998 (and referenced in the Financing
Transaction Checklist, dated September 30, 1999 in connection with the financing
set forth in the Existing Credit Agreement with GECC, as "Environmental Reports
(done in 1998)"), such Obligor has provided all environmental reports relating
to the Real Estate to the Lender or has disclosed the information in such
reports in Schedule 10.
(p) Federal Margin Regulations. None of the
transactions contemplated in this Financing Agreement will violate or result in
a violation of Section 7 of the Exchange Act, or any regulations issued pursuant
thereto, including, without limitation, Regulations T, U and X of the Federal
Reserve Board. If the Lender so requests, the Obligors will furnish to the
Lender a statement to the foregoing effect in conformity with the requirements
of an applicable form referred to in Regulation U.
(q) Financial Statements and Other Information. (i)
Except as set forth in Schedule 8 or reflected in financial statements delivered
to the Lender on or before the date of this Financing Agreement, (A) neither
such Obligor nor any of its subsidiaries has, on the date of this Financing
Agreement, any material obligation, contingent liability or liability for Taxes,
or any long-term lease or unusual forward or long-term exchange transaction, any
Hedging Agreement or other financial derivative which is not reflected in those
financial statements; and (B) there has been no sale, transfer or other
disposition by such Obligor or any of its subsidiaries of any material part of
its business or property (other than a Permitted Asset Transfer) and no purchase
or other acquisition of any business or property, including capital stock of any
other Person (other than another Obligor), that is material in relation to the
consolidated financial position of the Obligors at September 30, 2000, as
reflected in those financial statements, except, on a date after the date of
this Financing Agreement on which this representation is repeated or deemed
repeated or required to be true as if then made, for any other acquisition or
transfer made after the date of this Financing Agreement which at the time was
expressly permitted in or pursuant to this Financing Agreement and reported as
required herein to the Lender.
(ii) The audited consolidated and unaudited
consolidating balance sheets of such Obligor and its subsidiaries as of
September 30, 2000, and the related consolidated and consolidating statements of
operations, changes in stockholder's equity and cash flows for the fiscal year
ended on that date, copies of which have been furnished to the
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Lender, fairly present in all material respects the consolidated condition of
such Obligor and its consolidated subsidiaries as at such date, and the results
of their operations and their retained earnings and cash flows for the fiscal
year then ended. All such financial statements, including the related schedules
and notes thereto relating to those financial statements, have been prepared in
accordance with GAAP applied consistently throughout the periods involved,
except as disclosed therein.
(iii) The operating forecast and cash flow
projections of such Obligor and its subsidiaries which have been furnished to
the Lender have been prepared in good faith under the direction of Authorized
Officers of such Obligor and the relevant subsidiaries. Those forecasts and
projections with respect to such Obligor and its subsidiaries were prepared and
presented in good faith based upon facts and assumptions that such Obligor
believes to have been reasonable in light of current and foreseeable conditions,
it being understood that projections are subject to significant uncertainties
and contingencies, many of which are beyond the control of such Obligor and its
subsidiaries and that no assurance can be given that the financial results set
forth in those forecasts and projections will actually be realized.
(iv) All information, reports and other
papers and data (other than projections) with respect to such Obligor and its
subsidiaries furnished by such Obligor or Harvard, on behalf of such Obligor, to
the Lender in connection with the negotiation, preparation or execution of this
Financing Agreement or any of the other Loan Documents was, at the time
furnished, complete and correct in all material respects. The information,
reports and other papers and data (other than projections) with respect to such
Obligor and its subsidiaries, and the representations made by or on behalf of
such Obligor therein or in any other document delivered by or on behalf of such
Obligor under or in connection with any Loan Document after the date of this
Financing Agreement were, in each case, at the time furnished complete and
correct or, in the case of a representation, as at the time made, true and
correct, in all material respects.
(r) No Default. Except as set forth in Schedule 7, no
Default or Event of Default has occurred and is continuing and neither such
Obligor nor any of its subsidiaries is in default in any material respect in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument material to its business.
(s) Taxes. Except as set forth in Schedule 8, such
Obligor and each of its subsidiaries has filed or caused to be filed all
federal, state, provincial and other material tax returns which are required to
be filed and has paid all Taxes shown to be due and payable on those returns or
on any assessments made against it or any of its property and all other Taxes,
fees or other charges imposed on it or any of its property by any Governmental
Authority (other than any Tax, fee or other charge the amount or validity of
which is currently being contested in good faith by appropriate proceedings and
with respect to which reserves in conformity with GAAP have been provided on the
books of such Obligor or subsidiary. No Tax Lien has been filed, and, to the
knowledge of such Obligor, no claim is being asserted, with respect to any such
Tax, fee or other charge. Neither such Obligor nor any of its subsidiaries has
waived or extended or has been requested to waive or extend the statute of
limitations relating to the payment of any Taxes.
- 47 -
(t) ERISA. Each Plan has been and is being maintained
and funded in accordance with its terms and in material compliance with all
provisions of ERISA and the Code applicable thereto. No Obligor nor any ERISA
Affiliate has incurred any liability (other than routine liability for premiums)
under Title IV of ERISA which could reasonably be expected to have a Material
Adverse Effect. No ERISA Event has occurred, nor has any other event occurred
that may result in an ERISA Event, which could reasonably be expected to have a
Material Adverse Effect. Each Single Employer Plan has been determined by the
Internal Revenue Service to qualify under Section 401 of the Code, and the
trusts created thereunder have been determined to be exempt from Tax under the
provisions of Section 501 of the Code, and to the best knowledge of the Obligors
nothing has occurred which would cause the loss of such qualification or
tax-exempt status. No Single Employer Plan subject to Title IV of ERISA has any
Unfunded Pension Liability as to which any Obligor, or ERISA Affiliate is or may
be liable and which could reasonably be expected to have a Material Adverse
Effect. No Plan maintained or sponsored by any Obligor or ERISA Affiliate
provides medical or other welfare benefits or extends coverage relating to such
benefits beyond the date of a participant's termination of employment with such
Obligor or ERISA Affiliate, except to the extent required by Section 4980B of
the Code or as otherwise set forth in Schedule 9 hereto. Each Obligor and ERISA
Affiliate has complied in all material respects with the notice and continuation
coverage requirements of Section 4980B of the Code. There are no pending or, to
the best knowledge of the Obligors, threatened claims, actions or lawsuits,
other than routine claims for benefits in the usual and ordinary course, with
respect to any Single Employer Plan for which any Obligor ERISA Affiliate may be
directly or indirectly liable, through indemnification obligations or otherwise,
which could reasonably be expected to have a Material Adverse Effect. Neither
any Obligor nor any ERISA Affiliate has transferred any Unfunded Pension
Liability to an entity other than an ERISA Affiliate or otherwise engaged in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA. Each Plan
that is not subject to the laws of the United States (a "Foreign Plan") is being
maintained and funded in compliance with its terms and in compliance with any
and all provisions of the laws applicable thereto, and there are no unfunded
pension or benefit liabilities or claims or causes of action (other than routine
claims for benefits) with respect to such Foreign Plan which, in the aggregate
and together with the liabilities, claims or causes of action with respect to
any other Foreign Plans, could reasonably be expected to have a Material Adverse
Effect.
7.2 Covenants. Each of the Obligors shall perform and comply
with each of the covenants and agreements set forth in following subparagraphs
of this Paragraph 7.2 (it being understood that, where the relevant covenant
calls for compliance by the Obligors on a consolidated basis, each Obligor shall
take or refrain from taking such action as is necessary to cause compliance by
the Obligors on a consolidated basis).
(a) Books and Records Relating to Collateral; Change
in Location. Such Obligor shall, and shall cause each of its subsidiaries to,
maintain books and records pertaining to the Collateral in such detail, form and
scope as the Lender shall reasonably require, shall maintain such financial
books and records as shall be required to enable it to provide the financial
statements required by paragraph (g) of this Paragraph 7.2 and shall cause the
books and records of such Obligor to reflect the Lender's interest in the
Accounts, Inventory and other assets of such Obligor. Such Obligor shall permit
and cause each of its subsidiaries to permit the Lender or its agents at the
Obligors' cost and expense, upon reasonable notice to enter upon such
- 48 -
Obligor's premises at any time during normal business hours, and from time to
time in its reasonable business judgment, for the purpose of inspecting the
Collateral and any and all records pertaining thereto, and shall make all such
books and records available in such inspections, including any records handled
or maintained for such Obligor by any other company or entity. Such Obligor
shall afford the Lender thirty (30) days' prior written notice of any (i) change
in the location of any such Collateral, other than to locations, that as of the
Closing Date, are known to the Lender and at which the Lender has filed
financing statements and otherwise fully perfected its Liens thereon, (ii)
change in the location of its chief executive office/chief place of business
from its address specified for notices herein, or (iii) change of its name
(including the adoption of any new trade name), jurisdiction of incorporation,
identity or corporate structure. In addition, such Obligor shall not make any of
the changes described in this paragraph (a) of this Paragraph 7.2 until such
filings and other measures as may be required under applicable law to continue
uninterrupted the perfected Lien or security interest created hereunder shall
have been taken, and until the Lender shall have received such opinions of
counsel with respect thereto as it may have reasonably requested. Such Obligor
shall also advise the Lender promptly, in sufficient detail, of any material
adverse change relating to the type, quantity or quality of the Collateral or on
the security interests granted to the Lender herein or in any other Loan
Document.
(b) Information Regarding Collateral. Such Obligor
shall, and shall cause each of its subsidiaries to, execute and deliver to the
Lender, from time to time, solely for the Lender's convenience in maintaining a
record of the Collateral, such written statements, and schedules as the Lender
may reasonably require, designating, identifying or describing the Collateral.
Any failure, however, to promptly give the Lender such statements, or schedules
shall not affect, diminish, modify or otherwise limit the Lender's security
interests in the Collateral.
(c) Action Relating to Security Interest. Such
Obligor shall, and shall cause each of its subsidiaries to, comply with the
requirements of all state, provincial and federal laws in order to grant to the
Lender valid and perfected first security interests in the Collateral, subject
only to the Permitted Encumbrances. Such Obligor shall do whatever the Lender
may reasonably request, from time to time, by way of: (i) filing notices of
Liens, financing statements, registrations, amendments, renewals and
continuations thereof; (ii) cooperating with the Lender's agents and employees;
(iii) keeping Collateral records; (iv) transferring proceeds of Collateral to
the Lender's possession; (v) performing such further acts as the Lender may
reasonably require in order to effect the purposes of this Financing Agreement
and the Security Documents; and (vi) defend the Collateral against all claims
and demands of all Persons (other than the Lender and the holders of Permitted
Encumbrances) claiming an interest therein.
(d) Insurance. Such Obligor shall maintain insurance
on its Real Estate, Equipment and Inventory under such policies of insurance,
with such insurance companies, in such reasonable amounts and covering such
insurable risks as are at all times reasonably satisfactory to the Lender. All
policies covering the Real Estate, Equipment and Inventory of such Obligor
shall, subject to the rights of any holders of Permitted Encumbrances holding
claims senior to the Lender, be made payable to the Lender, in case of loss,
under a standard non-contributory "mortgagee", "lender" or "secured party"
clause and are to contain such other provisions as the Lender may require to
fully protect the Lender's interest in the Real Estate, Inventory and Equipment
and to any payments to be made under such policies. All
- 49 -
original policies or true copies thereof shall be delivered by such Obligor to
the Lender, premium prepaid, with the loss payable endorsement in the Lender's
favor, and shall provide for not less than thirty (30) days' prior written
notice to the Lender of the exercise of any right of cancellation.
(e) Taxes. Such Obligor shall pay, when due, all
Taxes, including sales taxes, assessments, claims and other charges lawfully
levied or assessed upon such Obligor or the Collateral unless such Taxes are
being diligently contested in good faith by the applicable Obligor by
appropriate proceedings and adequate reserves are established in accordance with
GAAP.
(f) Compliance with Requirements of Law. Such
Obligor: (i) shall comply with all acts, rules, regulations and orders of any
legislative, administrative or judicial body or official and other Requirements
of Law, which the failure to comply with would have a Material Adverse Effect,
provided that such Obligor may contest any acts, rules, regulations, orders and
directions of such bodies or officials in any reasonable manner which will not,
in the Lender's reasonable opinion, materially and adversely effect the Lender's
rights or priority in the Collateral; (ii) shall comply with all Environmental
Laws, applicable to the Collateral, the ownership and/or use of their real
property and operation of their business, which the failure to comply with would
have a material adverse effect on the Collateral, or any material part thereof,
or on the operation of the business of such Obligor or any other Obligor; and
(iii) shall not be deemed to have breached any provision of this Paragraph
7.2(f) if (x) the failure to comply with the requirements of this Paragraph
7.2(f) resulted from good faith error or innocent omission, (y) the Obligors
promptly commence and diligently pursue a cure of such breach, and (z) such
failure is cured within (30) days following such Obligor's receipt of notice of
such failure, or if such failure cannot in good faith be cured within thirty
(30) days, then such breach is cured within a reasonable time frame based upon
the extent and nature of the breach and the necessary remediation, and in
conformity with any applicable consent order, consensual agreement and
applicable law.
(g) Financial Information. The Obligors (or in the
case of clauses (i) and (ii), Harvard) shall furnish to the Lender, at the times
indicated, each of the following:
(i) within ninety (90) days after the end of each
Fiscal Year, an audited Consolidated Balance Sheet, with a Consolidating Balance
Sheet attached thereto, as at the close of such year, and consolidated and
consolidating statements of profit and loss, cash flow and reconciliation of
surplus of the Obligors and their subsidiaries for such year, audited by
independent public accountants selected by Harvard and satisfactory to the
Lender;
(ii) within forty-five (45) days after the end of
each of the first three Fiscal Quarters of each Fiscal Year, a Consolidated
Balance Sheet and Consolidating Balance Sheet as at the end of such period and
consolidated and consolidating statements of profit and loss, cash flow and
surplus of the Obligors and their subsidiaries, certified by an authorized
financial or accounting officer of Harvard;
(iii) within thirty (30) days after the end of each
month, a Consolidated Balance Sheet as at the end of such period and
consolidated and consolidating
- 50 -
statements of profit and loss, cash flow and surplus of the Obligors and their
subsidiaries for such period, certified by an authorized financial or accounting
officer of Harvard;
(iv) within fifteen (15) days after the end
of each month, a statement setting forth each of the following for the Obligors:
(i) all Accounts (including and distinguishing Accounts that are not Eligible
Accounts Receivable (as defined in the Senior Lien Financing Agreement as such
agreement is in effect on the date hereof); (ii) accounts payable; (iii)
Inventory (including and distinguishing Inventory that is not Eligible Inventory
(as defined in the Senior Lien Financing Agreement as such agreement is in
effect on the date hereof); and (iv) any sales or dispositions of, or any other
changes with respect to the condition or operation of, the Eligible Equipment
from the prior month (or Schedule 12 in the case of the first month after the
Closing Date) together with a certification as to all such matters prepared by
an Authorized Officer of Harvard;
(v) on the second Business Day of each week
and at such other times as the Lender shall request, a Borrowing Base
Certificate showing Eligible Accounts (as defined in the Senior Lien Financing
Agreement as such agreement is in effect on the date hereof) as of the close of
business on the last Business Day of the preceding week and Eligible Inventory
(as defined in the Senior Lien Financing Agreement as such agreement is in
effect on the date hereof) as of the close of business on the last Business Day
of the preceding month and as of such other times as the Lender in its
reasonable business judgment shall require; provided, however, that upon the
occurrence of any change in the information provided on the most recently
provided Borrowing Base Certificate which could have or could reasonably be
expected to have a Material Adverse Effect, Harvard shall promptly provide to
the Lender a new Borrowing Base Certificate reflecting such change;
(vi) from time to time, such further
information regarding the business affairs and financial condition of the
Obligors and/or any subsidiaries thereof as the Lender may reasonably request,
including, without limitation (A) the accountant's management practice letter
and (B) not later than the 45th day of each Fiscal Year, annual cash flow
projections in form satisfactory to the Lender.
Each of the financial statements which the Obligors are required to submit as
provided above in clauses (i) and (ii) of this Paragraph 7.2(g) must be
accompanied by an officer's certificate, signed by the President, Vice
President, Controller, or Treasurer or other Authorized Officer, pursuant to
which any one such officer must certify that: (x) the financial statement(s)
present fairly, in all material respects, the relevant Obligors' financial
condition at the end of the particular accounting period, as well as such
Obligors' operating results during such accounting period, subject to year-end
audit adjustments; and (y) during the particular accounting period: (A) there
has been no Default or Event of Default under this Financing Agreement or
default or event of default under the Senior Lien Financing Agreement, provided,
however, that if any such officer has knowledge that any such Default, Event of
Default, default or event of default has occurred during such period, the
existence of and a detailed description of same shall be set forth in such
officer's certificate; (B) the Obligors have not received any notice of
cancellation with respect to their property insurance policies; (C) the Obligors
have not received any notice that could result in a material adverse effect on
the value of the Collateral taken as a whole; and
- 51 -
(D) the exhibits attached to such financial statement(s) constitute detailed
calculations showing compliance with all financial covenants contained in this
Financing Agreement.
(h) Affirmative Financial Covenants. The Obligors, on
a consolidated basis, shall:
(i) maintain a Fixed Charge Coverage Ratio
of not less than that specified below at the end of each Fiscal Quarter
specified, which, for the Fiscal Quarters ending June 30, September 30 and
December 31, 2001, shall be determined on a cumulative basis for the periods of
three (3), six (6) and nine (9) months, respectively, so ending, and, for each
Fiscal Quarter thereafter shall be determined for the period of four consecutive
Fiscal Quarters ending with such Fiscal Quarter specified below:
Fiscal Quarter Ratio
-------------- -----
(i) Ending June 30, 2001 0.80
(ii) Ending September 30, 2001 1.45
(iii) Ending December 31, 2001 1.00
(iv) Ending March 31, 2002 1.00
(v) Ending June 30, 2002 1.00
(vi) Ending September 30, 2002 0.85
(vii) Ending December 31, 2002 1.00
(viii) Ending March 31, 2003 1.00
(ix) Ending June 30, 2003 1.00
(x) Ending September 30, 2003 1.00
(xi) Thereafter 1.00
(ii) maintain at the end of each Fiscal
Quarter specified below, a ratio of Adjusted Funded Debt (as defined below) to
cumulative EBITDA for the period of four consecutive Fiscal Quarters ending with
such Fiscal Quarter (calculated on an annualized basis for the first three
Fiscal Quarters indicated) of not greater than the ratio specified below. For
purposes of this financial covenant (A) in relation to each Fiscal Quarter,
"Adjusted Funded Debt" shall mean Funded Debt on the last day of such Fiscal
Quarter, reduced by the aggregate amount of cash received by the Obligors from
General Motors Corporation during the relevant period of five (5) Business Days
after the last day of such Fiscal Quarter, and (B) for the Fiscal Quarters
ending June 30, 2001, September 30, 2001 and December 31, 2001 the EBITDA for
such Fiscal Quarters shall be multiplied by four (4), two (2) and four thirds
(4/3), respectively, to obtain the cumulative EBITDA for such Fiscal Quarters.
Fiscal Quarter Ratio
-------------- -----
(i) Ending June 30, 2001 3.80
(ii) Ending September 30, 2001 3.10
(iii) Ending December 31, 2001 3.45
(iv) Ending March 31, 2002 3.30
(v) Ending June 30, 2002 3.00
(vi) Ending September 30, 2002 3.00
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Fiscal Quarter Ratio
-------------- -----
(vii) Ending December 31, 2002 2.90
(viii) Ending March 31, 2003 2.90
(ix) Ending June 30, 2003 2.90
(x) Ending September 30, 2003 2.50
(xi) Thereafter 2.50
(iii) maintain EBITDA of at least
$2,900,000.00 at the end of the Fiscal Quarter ending June 30, 2001, determined
on a cumulating basis for the period of three (3) months ending on that date.
(i) Negative Financial Covenants. Such Obligor shall
not, and shall not permit any of its subsidiaries to do any of the following:
(i) incur expenses under or relating to any
Operating Lease (understood to mean any lease other than a Capital Lease) if, as
a result of such incurrence, the aggregate obligations with respect to Operating
Leases of the Obligors during any Fiscal Year would exceed $3,600,000;
(ii) contract for, purchase, make
expenditures for, lease pursuant to a Capital Lease or otherwise incur
obligations with respect to Capital Expenditures (whether subject to a security
interest or otherwise) if, as a result, the aggregate of Capital Expenditures
for the Obligors during any period specified below would exceed the amount set
forth below for such period:
(A) $6,500,000.00 for the 2001 Fiscal
Year; and
(B) $7,000,000.00 for each Fiscal Year
thereafter;
provided that, if the aggregate amount of the Capital Expenditures made by the
Obligors in a Fiscal Year is less than the amount permitted above in this
provision, up to $750,000 of the difference shall automatically be added to the
amount specified above as the maximum permitted for the following Fiscal Year;
or
(iii) for any Fiscal Quarter ended on or
after June 30, 2001, permit Net Worth to be less than the Net Worth for the
immediately preceding Fiscal Quarter by an amount in excess of the amount
specified below in relation to such Fiscal Quarter:
Fiscal Quarter Amount
-------------- ------
(i) Ending June 30, 2001 $12,500,00
(ii) Ending September 30, 2001 $10,800,00
(iii) Ending December 31, 2001 $12,200,00
(iv) Ending March 31, 2002 $11,350,00
(v) Ending June 30, 2002 $11,000,00
(vi) Ending September 30, 2002 $12,100,00
(vii) Ending December 31, 2002 $11,600,00
(viii) Ending March 31, 2003 $10,700,00
- 53 -
Fiscal Quarter Amount
-------------- ------
(ix) Ending June 30, 2003 $10,100,00
(x) Ending September 30, 2003 $11,000,00
(xi) Ending after September 30, 2003 $11,000,00
(j) Other Negative Covenants. Such Obligor shall not,
and shall not permit its subsidiaries to, do any of the following, except as
otherwise expressly permitted in this Financing Agreement:
(i) Mortgage, assign, pledge, transfer or
otherwise permit any Lien, charge, security interest, encumbrance or judgment
(whether as a result of a purchase money or title retention transaction, or
other security interest, or otherwise), to exist on any of the Collateral or any
other assets, whether now owned or hereafter acquired, of such Obligor or
subsidiary, except for the Liens granted herein and in the other Loan Documents
and for Permitted Encumbrances;
(ii) Enter into, or permit any subsidiary to
enter into, any Hedging Agreement, or incur or create any Indebtedness other
than the Permitted Indebtedness;
(iii) Except for Permitted Asset Transfers,
sell, lease, assign, transfer or otherwise dispose of any of its assets or any
beneficial interest therein or, in the case of any capital stock owned by an
Obligor, in any way relinquish control over any related voting power except
pursuant to the Security Documents and the Senior Lien Financing Documents (as
such documents are in effect on the date hereof);
(iv) Except with respect to the transfer of
Pledged Stock of one Obligor to another and except for a Permitted Liquidation,
merge, amalgamate, consolidate or otherwise alter or modify their respective
corporate names, principal places of business, structure, or existence,
re-incorporate or re-organize, or enter into or engage in any operation or
activity materially different from that presently being conducted by such
Obligor (or such subsidiary), except that (A) an Obligor may change its
corporate name or address, or (B) a Company may merge or amalgamate with and
into any other Company or a Guarantor may merge or amalgamate with or into any
other Guarantor (other than the Inactive Guarantor) or Company (provided that a
Company is the survivor of such merger or amalgamation), provided that: (i) in
any such instance under clause (A) or (B) above, Harvard shall give the Lender
thirty (30) days' prior written notice thereof; and (ii) the relevant Obligors
shall execute and deliver, prior to or simultaneously with any such action, any
and all documents and agreements reasonably requested by the Lender to confirm
the continuation and preservation of all security interests and Liens granted to
the Lender hereunder or under any other Loan Document;
(v) Assume, guarantee, endorse, or otherwise
become liable upon the obligations of any Person (other than any obligation of
another Obligor which such Obligor is permitted hereunder to incur), except by
the endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business for any Obligations under the
Loan Documents and the Senior Lien Financing Documents or otherwise permitted
herein;
- 54 -
(vi) Declare or pay any dividend or
distributions of any kind on, or purchase, acquire, redeem or retire, any
capital stock or equity interest, of any class whatsoever, whether now or
hereafter outstanding, except that the Obligors may declare and pay dividends or
distributions on their capital stock, (A) in the case of Obligors other than
Harvard, to Harvard or any other Obligor that, directly or indirectly, is a
wholly owned subsidiary of Harvard, and, (B) in the case of Harvard, in an
amount sufficient to enable Harvard to (i) redeem the capital stock owned by its
retired, deceased or terminated officers or shareholders which Harvard is
contractually obligated to redeem, provided that in no event shall the aggregate
amount of such dividends under this clause (i), exceed $100,000.00 in the
aggregate in any Fiscal Year, provided, further, that, such redemptions may be
made only if (x) no Default or Event of Default has occurred hereunder, (y)
after giving effect to such redemption, no Default and/or Event of Default has
occurred or would occur hereunder and (z) the Obligor making such redemption has
sufficient Working Capital to pay its debts as they come due; or (ii) pay income
or franchise Taxes of the Obligors due as a result of the filing of a
consolidated, combined or unitary tax return in which the operations of any of
the Obligors are included;
(vii) Except with respect to advances or
loans to or investments in other Obligors and advances in respect of travel
expenses to directors, officers and employees in the ordinary course of
business, make any advance or loan to, or any investment in, any Person or
purchase or acquire all or substantially all of the stock or assets of any
Person, provided, however, with respect to loans to other Obligors, a promissory
note in form and substance satisfactory to the Lender shall, on the date such
loan is made, be delivered to the Senior Lien Administrative Agent (or, after
the Senior Lien Obligations are paid in full, the Lender); and provided,
further, that the aggregate outstanding principal amount of all advances made by
the Obligors to directors, officers and employees in respect of travel expenses
shall not at any time exceed $100,000;
(viii) Pay any management, consulting or
other similar fees to any Person affiliated with any Obligor other than a
guarantee fee payable to the Guarantors for the Guaranty in Section 14 hereof or
Section 17 of the Senior Lien Financing Agreement or any other guaranty
permitted under this Financing Agreement;
(ix) Intentionally omitted.
(x) Permit any change in accounting
treatment or reporting practices of such Obligor, except as required by
applicable GAAP or as permitted by applicable GAAP existing on the Closing Date
and as otherwise permitted by this Financing Agreement;
(xi) Prepay, redeem, purchase, defease,
exchange or repurchase any debt (other than the Term Loan and any loan under the
Senior Lien Financing Agreement) (as such agreement is in effect on the date
hereof) or amend or modify any of the terms of any such debt or other similar
agreements entered into by such Obligor or its subsidiaries;
(xii) Except with respect to loans or
investments permitted under clause (vii) of this Paragraph 7.2(j), enter into
any transaction, including, without limitation, any purchase, sale, lease, loan
or exchange of property with any subsidiary or affiliate of any of the Obligors,
provided that, except as otherwise set forth in this Financing Agreement, the
Obligors
- 55 -
or any one of them may enter into sale and service transactions in the ordinary
course of their business and pursuant to the reasonable requirements of any such
Obligor, provided that any such transaction involving the price paid by an
Obligor in any such sale of Inventory is no greater than the prevailing market
price therefor or the price that could be obtained in a comparable arms' length
transaction with an unrelated third party, provided further that no Default or
Event of Default exists or will occur hereunder prior to and after giving effect
to any such transaction;
(xiii) use the proceeds of the Term Loan to
purchase or carry margin stock (as defined in Regulation U of the Federal
Reserve Board) or to extend credit to others for the purpose of purchasing or
carrying any margin stock (as so defined) in violation of Regulation T, U or X
of the Federal Reserve Board; or permit the aggregate value of margin stock (as
so defined) at any time owned or held by such Obligor or any of its subsidiaries
to exceed an amount equal to 25% of the value of all consolidated assets subject
at such time to any "arrangement" (as such term is used in the definition of
"indirectly secured" in Section 221.2 of Regulation U of the Federal Reserve
Board);
(xiv) amend, modify or waive, or request an
amendment, modification or waiver of any provision of the Senior Lien Financing
Agreement (including, without limitation, with respect to the due dates of or a
decrease in the amounts of any principal payments in respect of the term loans
or a waiver of any event of default thereunder as a result of the failure of the
Companies to make any payment of principal in respect of any term loan when due)
or any other Senior Lien Financing Document (except for any such amendment to
correct a manifest error);
(xv) permit the outstanding principal amount
of all loans and letters of credit under the Senior Lien Financing Agreement to
exceed the sum of (A) Maximum Senior Lien Borrowing Base Debt and (B)
$20,000,000 as reduced from time to time by scheduled principal payments and
prepayments of the term loans as set forth in the Senior Lien Financing
Agreement (as such agreement is in effect on the date hereof);
(xvi) permit (A) the outstanding principal
amount of the Term Loan (without giving effect to interest that is capitalized
or paid in kind) to exceed (B) the difference between (x) eighty-five percent
(85%) of the orderly liquidation value of the Companies' Eligible Equipment at
such time, as such orderly liquidation value is determined by an independent
third party appraiser acceptable to the Lender and (y) the sum of (1) the
outstanding principal amount of the term loans under the Senior Lien Financing
Agreement plus (2) the Availability Reserves (the amount by which the amount of
clause (A) above exceeds the amount of clause (B) above is hereafter referred to
as the "Borrowing Base Excess"), provided that, if any Borrowing Base Excess
exists, the Companies shall, immediately upon the occurrence of such Borrowing
Base Excess, take the following actions in the following order:
(1) prepay the outstanding
principal amount of the term loans under the Senior
Lien Financing Agreement in the amount of the
Borrowing Base Excess; and
- 56 -
(2) prepay the Term Loan in the
amount of the Borrowing Base Excess;
Each such prepayment under clause (1) above shall be applied first to prepay the
principal installments of the term loan B under the Senior Lien Financing
Agreement in the inverse order of maturities until the obligations of the
Companies in respect of such term loan B have been repaid-in-full and second to
prepay the principal installments of the term loan A under the Senior Lien
Financing Agreement in the inverse order of maturities until the obligations of
the Companies in respect of such term loan A have been repaid-in-full.
(xvii) permit (A) the sum of (x) the
outstanding principal amount of the Term Loan (without giving effect to interest
that is capitalized or paid in kind), (y) the outstanding aggregate principal
amount of all loans under the Senior Lien Financing Agreement and (z) the
undrawn amount of all letters of credit issued under the Senior Lien Financing
Agreement to exceed (B) the difference between (x) the sum of (1) the Maximum
Senior Lien Borrowing Base Debt plus (2) the Borrowing Base and (y) the
Availability Reserves (the amount by which the amount of clause (A) above
exceeds the amount of clause (B) above is hereafter referred to as the "Combined
Borrowing Base Excess"), provided that, if any Combined Borrowing Base Excess
exists, the Companies shall, immediately upon the occurrence of such Combined
Borrowing Base Excess, take the following actions in the following order:
(1) prepay the term loans
outstanding under the Senior Lien Financing Agreement
in the amount of such Combined Borrowing Base Excess;
(2) prepay the revolving loans
outstanding under the Senior Lien Financing Agreement
in the amount of such Combined Borrowing Base Excess;
(3) cash collateralize the undrawn
amount of the letters of credit outstanding under the
Senior Lien Financing Agreement in the amount of such
Combined Borrowing Base Excess; and
(4) prepay the Term Loan in the
amount of such Combined Borrowing Base Excess;
Each such prepayment under clause (1) above shall be applied ratably first to
prepay the principal installments of the term loan B under the Senior Lien
Financing Agreement in the inverse order of maturities until the obligations of
the Companies in respect of such term loan B have been repaid-in-full and second
to prepay the principal installments of the term loan A under the Senior Lien
Financing Agreement in the inverse order of maturities until the obligations of
the Companies in respect of such term loan A have been repaid-in-full.
(xviii) permit Senior Lien Availability less
Availability Reserves to be less than $5,000,000.00 at any time after the
Closing Date, it being understood that such requirement contemplates that all
debts, obligations, taxes and dividends shall be current, and that all payables
shall be handled in the normal course of the Obligors' business and consistent
with their past practice.
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(k) Inventories, Appraisals, and Field Examinations.
(i) The Obligors, at their own expense,
shall cause not less than one (1) physical inventory to be undertaken in each
twelve (12) month period during which this Financing Agreement is in effect
which shall be conducted by such inventory takers and following such methodology
as is consistent with the Obligors' past practices.
(A) Harvard shall provide the
Lender with a copy of the preliminary results of each such inventory (as well as
of any other physical inventory undertaken by any Obligor) within ten (10) days
following the completion of such inventory.
(B) Harvard shall provide the
Lender with a reconciliation of the results of each such inventory (as well as
of any other physical inventory undertaken by any Obligor) within thirty (30)
days following the completion of such inventory, and shall post such results to
the Obligors' stock ledger and, as applicable, to the Obligors' other financial
books and records.
(C) Upon the occurrence and during
the continuance of a Default or an Event of Default, the Lender may, at the
expense of the Obligors, cause such additional inventories to be taken as the
Lender may determine in its discretion.
(ii) The Lender shall obtain appraisals of
the Collateral from time to time (in all events, at the Obligors' expense),
conducted by such appraisers as are satisfactory to the Lender, including,
without limitation, desktop appraisals and full appraisals of the Collateral.
The Obligors agree to cooperate with and provide information relating to the
Collateral reasonably requested by each of the appraisers engaged by the Lender
to conduct the appraisals of the Collateral.
(iii) The Lender shall conduct four (4)
commercial finance field examinations (in each event, at the Obligors' expense)
of the Obligors' books and records during each twelve (12) month period during
which this Financing Agreement is in effect, provided that upon the occurrence
and during the continuance of a Default or an Event of Default, the Lender may,
at the expense of the Obligors, undertake such additional field examinations as
the Lender may determine in its discretion.
(iv) The Obligors, at their own expense,
shall arrange for a Phase I environmental assessment, by a consultant
satisfactory to the Lender, with respect to the properties and operations of the
Obligors, from time to time as requested by the Lender or shall permit the
Lender to arrange for such assessments, and copies of the results of such
assessments shall be delivered to the Lender upon request. The Obligors shall
cooperate with the conduct of the assessments and arrange for consultations
between the consultant and the Lender during the conduct of such assessments.
(l) Reports. Harvard shall advise the Lender in
writing of each of the following promptly upon learning of the relevant event,
circumstance or condition:
(i) all expenditures (actual or anticipated)
in excess of $150,000.00 from the budgeted amount therefor in any Fiscal Year
for (x) environmental clean-
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up, (y) environmental compliance or (z) environmental testing and the impact of
said expenses on such Obligor's Working Capital;
(ii) (A) any notices such Obligor and each
of its subsidiaries receives from any local, state, provincial or federal
authority advising such Obligor or any of its subsidiaries of any environmental
liability (real or potential) arising from any of such Person's operations,
premises, waste disposal practices, or waste disposal sites used by any such
Person that could result in a Material Adverse Effect, together with copies of
all such notices if so required, and (B) any formal notice, violation, order or
service of any lawsuit which contains an allegation of a violation of an
Environmental Law or responsibility for any environmental remedial liabilities
that could result in a Material Adverse Effect, together with copies of all such
notices if so required.
(iii) any material labor dispute to which
such Obligor or any of its subsidiaries may become a party and which involves
any group of employees, any strikes or walkouts relating to any of its
facilities and the expiration or termination of any labor contract to which such
Obligor or subsidiary is a party or by which such Obligor or subsidiary is
bound, if the dispute could reasonably be expected to materially disrupt the
operations of such Obligor or subsidiary;
(iv) any Obligor or ERISA Affiliate knows or
has reason to know that any ERISA Event has occurred or exists, (y) any Single
Employer Plan (other than the Xxxxxxx-Xxxxxx Plan) subject to Title IV of ERISA
has any Unfunded Pension Liabilities or (z) the Xxxxxxx-Xxxxxx Plan has Unfunded
Pension Liabilities in excess of $10,000,000.00;
(v) receipt by any Obligor or ERISA
Affiliate from the PBGC of any notice of the PBGC's intention to terminate any
Single Employer Plan or to have a trustee appointed to administer such Plan;
(vi) any notice is given or required to be
given to the PBGC under Section 302(f)(4)(A) of ERISA of the failure of any
Obligor or ERISA Affiliate to make timely payments to a Plan;
(vii) receipt by any Obligor or ERISA
Affiliate, from a Multiemployer Plan sponsor, of any notice concerning (a) the
imposition of Withdrawal Liability by a Multiemployer Plan, (b) the
determination that a Multiemployer Plan is, or is expected to be, in
reorganization or insolvent within the meaning of Title IV of ERISA, (c) the
termination of a Multiemployer Plan within the meaning of Title IV of ERISA, or
(d) the amount of liability incurred, or which may be incurred, by such Obligor
or ERISA Affiliate in connection with any event described in clause (a), (b) or
(c) above;
Each notice pursuant to this Paragraph 7.2(l) shall be accompanied by a
statement of an Authorized Officer setting forth details of the occurrence
referred to therein and stating what action the relevant Obligor or subsidiary
has taken or proposes to take with respect thereto. For the purposes of this
Paragraph 7.2(l), an Obligor shall be deemed to have knowledge when any officer
of such Obligor charged with responsibility for any matter that is the subject
of such notice requirement knows that such notice was required.
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(m) RICO. Each Obligor shall comply, and cause each
of its subsidiaries to comply with all applicable laws, rules, regulations and
orders, such compliance to include, without limitation, compliance with the
Racketeer Influenced and Corrupt Organizations Chapter of the Organized Crime
Control Act of 1970.
(n) Perform Obligations. Each Obligor shall perform,
and cause each of its subsidiaries to perform, its respective obligations under
the Loan Documents, and its material obligations under other material agreements
(it being understood that any obligation under any such other agreement will be
deemed material if its nonperformance could reasonably be expected to have a
Material Adverse Effect or result in a Material Adverse Change).
(o) Maintain Existence, Structure and Licenses.
Except for a Permitted Liquidation or as permitted by Paragraph 7.2(j)(iv) of
this Section 7, each Obligor shall preserve and maintain, and cause each of its
subsidiaries to preserve and maintain, its existence, legal structure, legal
name, rights (charter and statutory), and all permits, licenses, approvals,
privileges and franchises used or useful in the conduct of its business.
(p) Use of Proceeds. Each Company shall use, and
cause each of its subsidiaries to use the proceeds of the Term Loan and the
proceeds of the loans contemplated in the Senior Lien Financing Agreement for
the sole purposes of (i) repaying the Indebtedness incurred and paying the other
amounts owing under Existing Credit Agreements, (ii) paying transaction costs,
fees and expenses incurred hereunder and under the Senior Lien Financing
Agreement, (iii) providing Working Capital from time to time for the Companies
and their subsidiaries and (iv) other general corporate purposes.
(q) Additional Obligors. Each Obligor shall cause
each entity that becomes a subsidiary of such Obligor after the date of this
Financing Agreement, if such subsidiary is organized in the United States, to
become a joint and several obligor as a Company hereunder in respect of the
Obligations, or, if such subsidiary is organized outside the United States, to
become a joint and several obligor as a Guarantor in respect of the Guaranty
Obligations and, in each case, cause such subsidiary to secure its obligations
in the relevant capacity referred to above by executing and delivering to the
Lender, an amendment to this Financing Agreement and all other Loan Documents,
to the extent determined by Lender to be necessary or desirable to implement the
intent of this subparagraph. All such amendments shall be in form and substance
satisfactory to the Lender.
(r) Canadian Real Estate Title Insurance. Trim Trends
shall deliver, on or before June 5, 2001, the title insurance policy in respect
of the Canadian Debenture, which title insurance policy shall satisfy the
criteria set forth in Paragraph 2.1(u) of Section 2 hereof and shall otherwise
be in form and substance satisfactory to the Lender.
7.3 Covenants Involving Accounts and Inventory. (a) In
furtherance of the continuing assignment and security interest by each Obligor
in such Obligor's Accounts and Inventory in favor of the Lender as security for
the Obligations, in the case of the Companies, or as security for the Guaranty
Obligations, in the case of the Guarantors, each of the Obligors will, upon the
creation of Accounts and purchase or acquisition of Inventory, execute and
deliver to the Lender in such form and manner as the Lender may reasonably
require, solely for the
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Lender's convenience in maintaining records of Collateral, such confirmatory
schedules of Accounts and Inventory as the Lender may reasonably request,
including, without limitation, weekly schedules of Accounts and monthly
schedules of Inventory, all in form and substance satisfactory to the Lender,
and such other appropriate reports designating, identifying and describing the
Accounts and Inventory as the Lender may reasonably request, and provided
further that the Lender may request any such information more frequently, from
time to time, upon its reasonable prior request.
(b) In addition, upon the Lender's request, each of
the Obligors shall provide the Lender with copies of agreements with, or
purchase orders from, such Obligor's customers, and copies of invoices to
customers, proof of shipment or delivery, access to their computers, electronic
media and software programs associated therewith (including any electronic
records, contracts and signatures) and such other documentation and information
relating to said Accounts and other Collateral as the Lender may reasonably
require. Failure to provide the Lender with any of the foregoing shall in no way
affect, diminish, modify or otherwise limit the security interests granted
herein. Each of the Obligors hereby authorizes the Lender to regard the printed
name or rubber stamp signature of such Obligor on assignment schedules or
invoices as the equivalent of a manual signature by an Authorized Officer or
agent of such Obligor.
(c) Each of the Obligors agrees to maintain such
books and records regarding Accounts and Inventory as the Lender may reasonably
require and agrees that the books and records of such Obligor will reflect the
Lender's interest in the Accounts and Inventory of such Obligor. Each Obligor
shall make all of the books and records of such Obligor available to the Lender
at normal business hours, including any records handled or maintained for such
Obligor by any other company or entity.
7.4 Representations Regarding Accounts and Inventory. Each of
the Obligors hereby represents and warrants to the Lender that: each Trade
Account Receivable of such Obligor is based on an actual and bona fide sale and
delivery of Inventory or rendition of services to their respective customers,
and any other Account of such Obligor is bona fide, made by such Obligor in the
ordinary course of its business; the Inventory of such Obligor being sold, and
Trade Accounts Receivable created, are the exclusive property of such Obligor
and are not and shall not be subject to any Lien, consignment arrangement,
encumbrance, security interest or financing statement whatsoever, other than the
Permitted Encumbrances; the invoices evidencing such Trade Accounts Receivable
are in the name of such Obligor, and the customers of the relevant Obligor have
accepted the Inventory or services, owe and are obligated to pay the full
amounts stated in the invoices according to their terms, without dispute,
offset, defense, counterclaim or contra, except for disputes and other matters
arising in the ordinary course of business with respect to which such Obligor
has complied with the notification requirements of Paragraph 7.6 of this Section
7. Each Obligor confirms to the Lender that any and all Taxes or fees relating
to its business, its sales, or the Accounts or Inventory relating thereto, are
their sole responsibility and that same will be paid by such Obligor when due,
subject to Paragraph 7.2(e) of this Section 7, and that none of said Taxes or
fees represents a Lien on or claim against the Accounts. Each of the Obligors
hereby further represents and warrants to the Lender that such Obligor shall not
acquire any Inventory on a consignment basis, nor co-mingle its Inventory with
any inventory of any of its customers or any other Person (other than Inventory
of another
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Obligor which constitutes Collateral), including pursuant to any xxxx and hold
sale or otherwise, and that such Obligor's Inventory is marketable to its
customers in the ordinary course of business of such Obligor, except as such
Obligor may otherwise report in writing to the Lender pursuant to Paragraph 7.6
of this Section 7 from time to time.
7.5 Matters Relating to Accounts. (a)(i) Until the Lender has
advised the Obligors to the contrary after the occurrence of an Event of
Default, the Obligors, at their own expense, will enforce, collect and receive
all amounts owing on their respective Accounts in the ordinary course of their
business and any proceeds they so receive shall be subject to the terms hereof,
and held on behalf of and in trust for the Lender and the Senior Lien
Administrative Agent on behalf of the Senior Lien Lenders and the Senior Lien
Issuing Bank. Such privilege shall terminate at the election of the Lender, upon
the occurrence of an Event of Default, and until such Event of Default is waived
in writing by the Lender or cured to the Lender's satisfaction.
(ii) Each Obligor shall ensure that any
checks, cash, credit card sales and receipts, notes or other instruments or
property received by such Obligor with respect to any Collateral, including
Accounts, shall be held by such Obligor in trust for the Lender and the Senior
Lien Administrative Agent, on behalf of the Senior Lien Lenders, separate from
such Obligor's own property and funds, and promptly turned over to the Senior
Lien Administrative Agent with proper assignments or endorsements by deposit to
the Depository Account (or, after the Senior Lien Obligations have been paid in
full, to the Lender or as the Lender may direct), subject to subparagraph (c) of
this Paragraph 7.5, where Trim Trends is concerned.
(iii) The Companies shall provide the Lender
with prior written notice of any and all deposit accounts opened or to be opened
subsequent to the Closing Date.
(b) Establishment of Blocked Accounts. (i) The
Obligors shall establish and maintain, in their name and at their expense, the
deposit accounts, including the Canadian Deposit Account, with such banks as are
acceptable to the Senior Lien Administrative Agent and the Lender (the "Blocked
Accounts") into which each of the Obligors shall promptly cause to be deposited:
(i) all proceeds of Collateral received by any of the Obligors, including all
amounts payable to the Obligors from credit card issuers and credit card
processors, and (ii) all amounts on deposit in deposit accounts used by the
Obligors at each of their locations, all as further provided in Paragraph 7.5(a)
above.
(ii) The Obligors shall cause each of the
banks at which any of the Blocked Accounts is established to enter into an
agreement, in form and substance satisfactory to the Senior Lien Administrative
Agent and the Lender (the "Blocked Account Agreements"), which Blocked Account
Agreements shall (x) be assignable by the Senior Lien Administrative Agent to
the Lender upon payment in full of all Senior Lien Obligations and (y) provide
that the depository bank has no Lien upon, or right of set off against, the
Blocked Accounts and (z) otherwise comply with the terms of this Financing
Agreement and the Senior Lien Financing Agreement (as such agreement is in
effect on the date hereof). The Obligors shall deposit into the Blocked Accounts
all checks, cash, credit card sales and receipts, notes or other instruments or
property received by them in accordance with the Senior Lien Financing Agreement
(as such agreement is in effect on the date hereof).
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7.6 Reports Involving Accounts and Related Matters. The
Obligors shall notify the Lender: (a) of any matters affecting the value,
enforceability or collectibility of any Account and of all customer disputes,
offsets, defenses, counterclaims, returns, rejections and all reclaimed or
repossessed merchandise or goods, and of any adverse effect in the value of
their Inventory, in their weekly and monthly collateral reports (as applicable)
provided to the Lender hereunder, in such detail and format as the Lender may
reasonably require from time to time and (b) promptly of any such matters which
are material, as a whole, to the Accounts and/or the Inventory. The Obligors
agree to issue credit memoranda promptly (with duplicates to the Lender upon
request after the occurrence of an Event of Default) upon accepting returns or
granting allowances. Upon the occurrence of an Event of Default (which is not
waived in writing by the Lender or cured to the satisfaction of the Lender) and
on notice from the Lender, the Obligors agree to ensure that all returned,
reclaimed or repossessed merchandise or goods shall be set aside by the
Obligors, marked with the Senior Lien Administrative Agent's and the Lender's
names (as secured parties) and held by the Obligors for the account of the
Lender and the Senior Lien Administrative Agent.
7.7 Indemnification. (a) Each of the Companies hereby, jointly
and severally, agrees to indemnify and hold harmless the Lender and each of its
affiliates and each of its officers, directors, employees, attorneys and agents
(each an "Indemnified Party") from and against any and all claims, damages,
losses, liabilities, obligations, any payments made or required to be made by
the Lender pursuant to any indemnity provided by the Lender and reasonable
expenses (including, without limitation, reasonable fees and disbursements of
counsel) that may be incurred by or asserted or awarded against any Indemnified
Party (including, without limitation, in connection with or by reason of (a)
this Financing Agreement, (b) the other Loan Documents or any of the
transactions contemplated thereby, (c) the Loan Account or any deposit account
and/or the agreements executed in connection therewith; and (d) any violation or
alleged violation of any Environmental Law by any Obligor or any of its
subsidiaries; or any claim or expense which results from any Obligor's or any of
its subsidiaries' operations, or from the release or threatened release at, to,
or from any Real Estate of any Contaminants, or remedial action (as defined
under the Comprehensive, Environmental Response, Compensation and Liability Act,
42 U.S.C.A ss. 9601 et seq., or any equivalent state, local or foreign law) or
corrective action (as this term is used in Section 3004(u), 3004(v), and 3008(h)
of the Resource Conservation and Recovery Act or any equivalent state, local or
foreign law), and (e) any other matter relating to or arising in connection with
this Financing Agreement or any of the other Loan Documents or any part of the
Collateral, which such Indemnified Party may sustain or incur, all whether
through the alleged or actual negligence of such Person or otherwise, except and
to the extent that the same results solely and directly from the gross
negligence or willful misconduct of such Indemnified Party, as finally
determined in a non-appealable judgment by a court of competent jurisdiction.
The Companies hereby agree that this indemnity shall survive termination of this
Financing Agreement, as well as payments of the Obligations and the Guaranty
Obligations which may be due hereunder. The Lender may, in its sole business
judgment, establish such Availability Reserves with respect to the indemnities
provided for in this Paragraph 7.7 as it may deem advisable under the
circumstances. In the case of an investigation, litigation or other proceeding
to which the indemnity in this paragraph applies, such indemnity shall be
effective whether or not such investigation, litigation or proceeding is brought
by any of the Obligors, any of their respective directors, securityholders or
creditors, an Indemnified Party or any other Person, or an Indemnified Party is
otherwise a party
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thereto and whether or not the transactions contemplated by the Loan Documents
are consummated. The Obligors further agree that no Indemnified Party shall have
any liability (whether direct or indirect, in contract, tort or otherwise) to
any of the Obligors or any of their respective securityholders or creditors for
or in connection with the transactions contemplated by the Loan Documents,
except for direct damages (as opposed to special, indirect, consequential or
punitive damages (including, without limitation, any loss of profits, business
or anticipated savings) that are determined in a final non-appealable judgment
by a court of competent jurisdiction to have resulted from such Indemnified
Party's gross negligence or willful misconduct.
(b) Each of the Companies hereby indemnifies the
Lender and holds the Lender harmless from any and all costs, expenses, claims,
liabilities, Out-of-Pocket Expenses or otherwise, incurred or imposed on the
Lender by reason of the exercise of any of its rights, remedies and interests
hereunder, including, without limitation, from any sale or transfer of
Collateral, preserving, maintaining or securing the Collateral, defending its
interests in Collateral (including pursuant to any claims brought by the
Companies, any of the Companies as debtor-in-possession, the Senior Lien Lenders
or any other secured or unsecured creditors of any of the Companies or
Guarantors, any trustee or receiver in bankruptcy, or otherwise) or dealing with
any of the Collateral as provided in the Loan Documents or the Intercreditor
Agreement (or any claim brought against the Lender by the Senior Lien Lenders in
respect of any of the foregoing), and the Companies hereby agree to so indemnify
and hold the Lender harmless, absent the Lender's gross negligence or willful
misconduct as finally determined in a non-appealable judgment by a court of
competent jurisdiction. The foregoing indemnification shall survive termination
of this Financing Agreement until such time as all Obligations (including the
foregoing) have been fully, finally and indefeasibly paid in full. In
furtherance thereof the Lender may establish such reserves for Obligations
hereunder (including any contingent Obligations) as it may deem advisable in its
reasonable business judgment.
SECTION 8. Interest, Fees and Expenses Involving Obligations
8.1 Term Loan. (a) Interest on the principal amount of the
Term Loan shall be payable monthly as of the end of each month on the unpaid
balance or on payment in full prior to maturity and shall accrue at a rate per
annum for each day in the relevant month equal to the sum of (i) the greater of
(A) the sum of the Base Rate for such day plus seven percent (7%) per annum and
(B) fifteen percent (15%) per annum and (ii) four percent (4%) per annum;
provided, however, that interest on the principal amount of the Term Loan at a
per annum rate equal to four percent (4%) shall, in the absence of a continuing
Event of Default or an election by Harvard on behalf of the Companies to pay
such interest in cash as provided above, be paid by capitalizing such interest
and adding such capitalized amount to the then outstanding principal amount of
the Term Loan. Any such interest to be capitalized shall be capitalized on each
Anniversary Date and added to the then outstanding principal amount of the Term
Loan and thereafter shall bear interest as provided hereunder as if it had
originally been part of the outstanding principal of the Term Loan. The Lender
shall be entitled to charge the Loan Account at the rate provided for herein
when due until all Obligations have been paid in full.
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(b) Upon and after the occurrence of an Event of
Default and the giving of any required notice by the Lender in accordance with
the provisions of Paragraph 10.2 of Section 10 hereof, all Obligations shall
bear interest at the Default Rate of Interest.
(c) All interest and fees under this Financing
Agreement shall be calculated based on a 360 day year.
(d) All payments and prepayments of principal made
pursuant to this Financing Agreement shall be accompanied by accrued interest on
the principal amount being payed or prepaid to the date of payment or
prepayment, and if such payment or prepayment would reduce the outstanding
principal amount of the Term Loan to zero, such payment or prepayment shall be
accompanied by the payment of all fees accrued to such date pursuant to this
Financing Agreement.
8.2 Other Expenses. Each of the Companies shall reimburse or
pay the Lender for (a) all Out-of-Pocket Expenses, (b) an audit fee in the
amount of $750.00 per person per day or such higher amount as at the time is
being charged by the Lender or the agent or agents used by it for the purpose,
for each person who, for or at the request of the Lender, is engaged in
appraising, valuing, inspecting or monitoring the Collateral from time to time
hereunder, and (c) reasonable fees and costs incurred in connection with the
enforcement and protection of the rights of the Lender under this Financing
Agreement or any other Loan Document, including the protection of the rights of
the Lender in any bankruptcy, reorganization, liquidation or insolvency
proceeding, whether or not litigation is commenced.
8.3 Commitment Fee. On the Closing Date, the Companies shall
pay to the Lender, to the extent not previously paid in accordance with the
Commitment Letter, a non-refundable commitment fee (the "Commitment Fee") in the
amount of $300,000.00, which Commitment Fee shall be deemed fully earned when
paid.
8.4 Closing Fee. On the Closing Date, the Companies shall pay
to the Lender a non-refundable closing fee (the "Closing Fee") in the amount of
$100,000.00, which Closing Fee shall be deemed fully earned when paid.
8.5 Anniversary Fee. On each Anniversary Date (including the
Maturity Date), the Companies shall pay to the Lender a non-refundable
anniversary fee (the "Anniversary Fee") in the amount of $250,000.00, and each
Anniversary Fee shall be deemed fully earned on the Closing Date, provided that
to the extent not already paid, each Anniversary Fee shall be paid on the date
on which all Obligations are paid in full.
8.6 Facility Fee. On each of the second Anniversary Date and
the Maturity Date, the Companies shall pay to the Lender a non-refundable
facility fee (the "Facility Fee") in the amount of $500,000.00, and each
Facility Fee shall be deemed fully earned on the Closing Date, provided that to
the extent not already paid, each Facility Fee shall be paid on the date on
which all Obligations are paid in full.
8.7 Success Fee. Upon the earliest to occur of (i) the
payment-in-full of all Obligations, (ii) the Maturity Date or (iii) the sale of
all or substantially all of the assets of Xxxxx Albion or Trim Trends, the
Companies shall pay to the Lender a non-refundable success fee (the
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"Success Fee") in the amount of $975,000.00, which Success Fee shall be deemed
fully earned on the Closing Date.
8.8 Management Fee. On the Closing Date, and monthly in
advance thereafter on the first day of each calendar month, the Companies shall
pay to the Lender a non-refundable management fee (the "Management Fee") in the
amount of $5,000, which Management Fee shall be deemed fully earned when paid.
8.9 Other Charges. The Companies shall pay the Lender's
standard charges and fees for the professionals used by the Lender for reviewing
the books and records of the Companies and for appraising, valuing, examining,
verifying, testing, protecting, safeguarding, preserving or disposing of all or
any part of the Collateral (which fees shall be in addition to any other fees
and Out-of-Pocket Expenses payable by the Companies to the Lender).
8.10 Taxes. (a) Each payment by each Obligor under this
Financing Agreement or any other Loan Document shall be made without withholding
on account of any present or future Tax, levy, impost, duty, charge, assessment
or fee of any nature that is imposed by any Governmental Authority or taxing
authority unless withholding is required by applicable law. If applicable law
requires any such withholding by any Obligor, such Obligor shall give notice to
that effect to the Lender, make the necessary withholding and make timely
payment of the amount withheld to the appropriate Governmental Authority. All
amounts so withheld shall be paid before penalties attach thereto or interest
accrues thereon. If any such penalties or interest nonetheless become due, the
Companies shall make prompt payment thereof to the appropriate Governmental
Authority. If the Lender pays any amount in respect of any such Tax, levy,
impost, duty, charge, assessment or fee that is not a net income or net receipts
tax or a franchise tax imposed in lieu of such net income or receipt taxes (each
such non-excluded tax, an "Indemnifiable Tax") which is imposed on any payment
due from any Obligor hereunder or penalties or interest thereon, the Companies
shall reimburse the Lender in U.S. Dollars for that payment on demand. If any
Obligor pays any such Indemnifiable Taxes or penalties or interest thereon, it
shall deliver official tax receipts evidencing the payment or certified copies
thereof to the Lender not later than the thirtieth (30th) day after payment.
(b) If the Lender is or becomes entitled to a reduced
withholding rate or a complete exemption from withholding with respect to
Indemnifiable Taxes on payments to it by an Obligor under this Financing
Agreement or any of the other Loan Documents, within [30] days after receipt of
a request from such Obligor, the Lender shall, as promptly as practicable, and
provided that it is not burdensome for it to do so, complete and deliver from
time to time to such Obligor such form as such Obligor is required to obtain
from the Lender in order to give effect to the reduced rate or exemption.
(c) If any Indemnifiable Taxes are withheld from a
payment due to the Lender in accordance with this Paragraph 8.10, the Companies
shall promptly pay to the Lender, such additional amount as is necessary to
ensure that the net amount actually received by the Lender free and clear of
those Indemnifiable Taxes is equal to the amount that the Lender would have
received had those Indemnifiable Taxes not been withheld, except that no such
additional amount shall be payable to the extent that the relevant Indemnifiable
Taxes would not have been imposed but for failure by the Lender to comply with
the provisions of Paragraph 8.10(b) hereof. The
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obligation of the Companies to pay these additional amounts shall constitute
Obligations and shall survive the termination of the Lender's Commitment,
repayment of the principal of the Term Loan and payment of all other
Obligations.
(d) The Companies shall pay any registration or
transfer taxes, stamp duties or similar levies, and any penalties or interest
that may be due with respect thereto, that may be imposed by any jurisdiction in
connection with this Financing Agreement or the other Loan Documents. If the
Lender pays any amount in respect of any such Taxes, duties, levies, penalties
or interest, the Companies shall reimburse the Lender for that payment on
demand.
8.11 Loan Account Charges. Each of the Companies hereby
authorizes the Lender to charge the Loan Account with the amount of all
Obligations due hereunder as such payments become due. The Companies hereby
confirm and agree that they shall promptly pay the Obligations to the Lender
upon its request therefor. Each of the Companies confirms that (i) its liability
for any and all of the fee obligations (including without limitation, those set
forth in Paragraphs 8.3 through 8.9 above) and Out-of-Pocket Expenses, set forth
in this Financing Agreement and in any of the other Loan Documents is joint and
several, (ii) the Companies, as between themselves, shall determine how to
pro-rate any such payments due hereunder, and (iii) for ease of administration,
the Lender may charge the Loan Account with the amount of any such fee payments
and any such charges which the Lender may so make to the Loan Account as herein
provided will be made as an accommodation to the Companies and solely at the
Lender's discretion.
SECTION 9. Powers Involving Obligations
9.1 Power of Attorney. Each Obligor hereby appoints the
Lender, or any person or agent the Lender may designate, as its
attorney-in-fact, at the Obligors' cost and expense, to exercise all of the
following powers, which being coupled with an interest, shall be irrevocable
until all Obligations and Guaranty Obligations have been fully, finally and
indefeasibly paid in full:
(a) To receive, take, endorse, sign, assign and
deliver, all in the name of the Lender or the Obligors or any one of them, any
and all checks, notes, drafts, and other documents or instruments relating to
the Collateral;
(b) To receive, open and dispose of all mail
addressed to the Obligors or any one of them and to notify postal authorities to
change the address for delivery thereof to such address as the Lender may
designate;
(c) To request from customers indebted on Accounts at
any time, in the name of the Lender information concerning the amounts owing on
the Accounts;
(d) To request from customers indebted on Accounts at
any time, in the name of the Obligors or any one of them, in the name of
certified public accountant designated by the Lender or in the name of the
Lender's designee, information concerning the amounts owing on the Accounts;
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(e) To transmit to customers indebted on Accounts
notice of the Lender's interest therein and to notify customers indebted on
Accounts to make payment directly to the Lender for the Obligors' account;
(f) To take or bring, in the name of the Lender or
the Obligors or any one of them, all steps, actions, suits or proceedings deemed
by the Lender necessary or desirable to enforce or effect collection of the
Accounts; and
(g) To take and refrain from taking any and all
actions contemplated for it in the Intercreditor Agreement or any Security
Document.
Notwithstanding anything hereinabove contained to the contrary, the powers set
forth in clauses (b), (c), (e) and (f) of this Paragraph 9.1 may only be
exercised after the occurrence of an Event of Default or a Default of a kind
referred to in subparagraph (c) or (g) of Paragraph 10.1 of Section 10 hereof,
and until such time as such Default is remedied or, in the case of any Event of
Default, until such time as it is waived in writing by the Lender, subject to
the following. If, in connection with any such Event of Default, the Lender has
(as provided in Paragraph 10.2) declared all Obligations to be immediately due
and payable (or it has, as contemplated in Section 10 hereof, become so payable
without need for any such declaration), the Lender shall not be limited in the
further exercise of the powers set forth in this Paragraph 9.1, regardless of
any subsequent remedy of any such Event of Default, until all the Obligations
and Guaranty Obligations have been fully, finally and indefeasibly paid.
9.2 Waivers. Each Obligor acknowledges that the Obligations or
the Guaranty Obligations, as the case may be, and its joint and several
responsibility for them are those of a principal obligor, and not merely a
surety, and to the fullest extent permitted by applicable law, each Obligor
hereby expressly and irrevocably waives and agrees not to assert against the
Lender:
(i) any right of setoff or counterclaim
which any Obligor may have, against the Obligations or the Guaranty Obligations,
as the case may be;
(ii) any defense that might otherwise be
available to it as a guarantor or surety (other than final payment in full of
the Obligations), and any right to any notice that it might otherwise have, in
connection with any and all of the following: (A) the release of or waiver of
any rights against any other Obligor and the settlement, compromise or release
of any of the Obligations or the Guaranty Obligations, as the case may be; and
(B) failure by the Lender to attempt, or delay by it in attempting, to collect
any of the Obligations or the Guaranty Obligations, as the case may be from any
other Obligor or to realize upon any Collateral.
SECTION 10. Events of Default and Remedies
10.1 Events of Default. Notwithstanding anything hereinabove
to the contrary, the Lender in its sole discretion may, take such actions as are
contemplated in Paragraph 10.2, immediately upon the occurrence of any of the
following (each an "Event of Default"):
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(a) cessation of the business of any Obligor or the
calling of a meeting of the creditors of any Obligor, in each case, for purposes
of compromising the debts and obligations of such Obligor;
(b) the failure of any Obligor to generally meet its
debts as they mature or its admission of its inability to do so;
(c) (i) the liquidation of any Obligor (other than in
a Permitted Liquidation); (ii) the commencement by any Obligor of any
bankruptcy, insolvency, arrangement, reorganization, receivership or similar
proceedings under any federal, provincial or state law; (iii) the commencement
against any Obligor of any bankruptcy, insolvency, arrangement, reorganization,
receivership or similar proceeding under any federal, provincial or state law by
creditors of such Obligor, which proceeding shall not have been controverted
within forty-five (45) days or shall not have been dismissed and vacated within
sixty (60) days of commencement, or any of the actions sought in any such
proceeding shall occur or any Obligor shall take action to authorize or effect
any of the actions in any such proceeding; or (iv) the commencement (x) by any
of the subsidiaries of any Obligor which itself is not a party hereto, of any
bankruptcy, insolvency, arrangement, reorganization, receivership or similar
proceeding under any applicable state or provincial law, or (y) against any
subsidiary of any Obligor, of any involuntary bankruptcy, insolvency,
arrangement, reorganization, receivership or similar proceeding under applicable
law, which proceeding shall not have been controverted within forty-five (45)
days and shall not have been dismissed or vacated within sixty (60) days of
commencement, or any of the actions sought in any such proceeding shall occur or
any of the subsidiaries of any Obligor shall take action to authorize or effect
any of the actions in any such proceeding;
(d) any warranty or representation of any Obligor set
forth in any of the Loan Documents shall prove to have been incorrect in any
material respect when made or, if applicable, deemed made or repeated
thereunder;
(e) any Obligor fails to perform or be in compliance
with any of its covenants or other agreements contained herein, other than those
referred to in subparagraph (f) or subparagraph (g) below, or in any other Loan
Document or other written agreement between such Obligor and the Lender,
provided that such failure of performance or noncompliance by such Obligor of
any of the covenants referred in this subparagraph (e) shall not be deemed to be
an Event of Default unless and until it shall remain unremedied to the Lender's
satisfaction for a period of ten (10) days from the date the failure of
performance or noncompliance occurs;
(f) (i) any Obligor fails to perform or be in
compliance with any of its covenants or other agreements set forth in any of the
following provisions: Paragraphs 5.2 and 5.3 of Section 5 hereof, Paragraph 6.3
(other than the second sentence of subparagraph (c) thereof) of Xxxxxxx 0
xxxxxx, xxxxxxxxxxxxx (x), (x), (x), (x), (x) (except for clauses (i), (ii) and
(iii) thereof), (h), (i), (j), (k), (l), (m). (p) and (q) of Paragraph 7.2 or
paragraph (a) (other than the second sentence of subclause (i) and the second,
third and fourth sentences of subclause (iv) thereof) of Paragraph 7.5 of
Section 7 hereof; or (ii) this Financing Agreement or any of the Security
Documents fails or ceases for any reason to create a perfected mortgage or
security
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interest in and Lien on any of the Collateral, except as expressly permitted by
this Financing Agreement or any Security Document;
(g) failure by any of the Companies to make a
prepayment as and when required in Paragraph 5.2 or Paragraph 5.3 of Section 5
hereof or failure of the Obligors or any one of them to pay any of the
Obligations or the Guaranty Obligations, as the case may be, on the due date
thereof;
(h) an event or condition constituting an ERISA Event
or Unfunded Pension Liabilities shall occur or exist with respect to any Plan,
which event or condition could reasonably be expected to have a Material Adverse
Effect;
(i) except as expressly permitted in any Loan
Document or in the Intercreditor Agreement, the Obligors or any one of them
shall amend or otherwise modify any of the Senior Lien Obligations or Senior
Lien Financing Documents;
(j) the occurrence or existence of any event or
circumstance the effect of which is to cause, or to permit the holder or holders
or beneficiary or beneficiaries of (x) the Senior Lien Obligations or (y) any
other Indebtedness of the Obligors or any one of them (other than the
Obligations and the Guaranty Obligations) having an aggregate principal amount
in excess of $250,000 (or a trustee or agent on behalf of such holder or holders
or beneficiary or beneficiaries) to cause, with the giving of notice or the
lapse of time, or both, such Senior Lien Obligations or other Indebtedness to
become due prior to its stated maturity or which constitutes a failure to pay
when due (whether at maturity, by acceleration or otherwise) such an aggregate
amount of such Indebtedness;
(k) (i) any of Xxxxx X. Xxxxxxxx, Xxxxx X. Xxxx,
Xxxxxxxx X. Xxxxxxx or J. Xxxxxxx Xxxxxxx ceases for any reason whatsoever
(other than as a result of death) to be actively engaged in the management of
the Companies or (ii) a Change in Control occurs;
(l) General Motors Corporation gives notice that it
proposes to take, or General Motors Corporation takes, any action to exercise
the Rights of Access contemplated in section 3 of any Access and Security
Agreement or any similar right in any similar agreement involving any of the
properties of any of the Obligors;
(m) one or more judgments or decrees shall be entered
against one or more of the Obligors (or any subsidiary of any of them that is
not a party to this Financing Agreement) involving in the aggregate a liability
(to the extent not covered by third-party insurance as to which the insurer has
acknowledged coverage) of $50,000 or more and all such judgments or decrees
shall not have been vacated, discharged, stayed or bonded pending appeal within
thirty (30) days from the entry thereof; or
(n) The Inactive Guarantor shall, at any time after
the date of this Financing Agreement, engage in any business or receive any
assets or be involved in any transaction whatsoever other than those incidental
to maintaining its existence and compliance with the Loan Documents and the
Senior Lien Financing Documents (as such documents are in effect on the date
hereof) or its own orderly liquidation and dissolution.
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10.2 Remedies Upon an Event of Default. Upon the occurrence of
an Event of Default, the Lender in its sole discretion may:
(i) declare that all Obligations are
immediately due and payable; provided, however, that upon the occurrence of an
Event of Default listed in Paragraph 10.1(c) of this Section 10, all Obligations
shall become due and payable, without any action, declaration, notice or demand
by the Lender; and
(ii) charge the Companies the Default Rate
of Interest on all then outstanding or thereafter incurred Obligations in lieu
of the interest at any lower rate provided for in Section 8 of this Financing
Agreement, provided that, with respect to this clause "(ii)" the Lender has
given the Companies written notice of the Event of Default, provided, further,
however, that no notice is required if the Event of Default is an event or
circumstance listed in any of subparagraphs (a) through (c) of Paragraph 10.1 of
this Section 10.
The exercise of any of these options or alternatives is not exclusive of any
other option or alternative or right or remedy, which may be exercised at any
time by the Lender.
10.3 Additional Remedies Upon an Event of Default. Immediately
upon the occurrence of any Event of Default, the Lender may, to the extent
permitted by law and subject to the terms of the Intercreditor Agreement:
(a) remove from any premises where same may be
located any and all books and records, computers, electronic media and software
programs associated with any Collateral (including any electronic records,
contracts and signatures pertaining thereto), documents, instruments, files and
records, and any receptacles or cabinets containing same, relating to the
Accounts, or the Lender may use, at the Obligors' expense, such of the Obligors'
personnel, supplies or space at the Obligors' places of business or otherwise,
as may be necessary to properly administer and control the Accounts or the
handling of collections and realizations thereon or on any other Collateral, and
the Obligors hereby irrevocably grant the Lender right of access to their
premises therefor;
(b) bring suit, in the name of the Obligors (or any
of them) or the Lender, and generally shall have all other rights respecting
said Accounts, including, without limitation, the right to: extend the time of
payment, settle, compromise, release in whole or in part any amounts owing on
any Accounts and issue credits in the name of the Obligors (or any of them) or
the Lender;
(c) sell, assign and deliver the Collateral and any
returned, reclaimed or repossessed Inventory, with or without advertisement, at
public or private sale, for cash, on credit or otherwise, at the Lender's sole
option and discretion, and the Lender may bid or become a purchaser at any such
sale, free from any right of redemption, which right is hereby expressly waived
by the Obligors (or any of them);
(d) foreclose the security interests in the
Collateral created herein or by any of the other Loan Documents to secure the
Obligations by any available judicial procedure, or to take possession of any or
all of the Collateral, including any Inventory, Equipment and/or Other
Collateral without judicial process, and to enter any premises where any
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Inventory and Equipment and/or Other Collateral may be located for the purpose
of taking possession of or removing the same;
(e) exercise all rights and remedies provided in any
Mortgage or other Security Document; and
(f) exercise any other rights and remedies provided
in law, in equity, by contract or otherwise.
The Lender shall have the right, without notice or
advertisement, to sell, lease, or otherwise dispose of all or any part of the
Collateral, whether in its then condition or after further preparation or
processing, in the name of any Obligor or the Lender, or in the name of such
other party as the Lender may designate, either at public or private sale or at
any broker's board, in lots or in bulk, for cash or for credit, with or without
warranties or representations, and upon such other terms and conditions as the
Lender in its sole discretion may deem advisable, and the Lender shall have the
right to purchase at any such sale. If any Inventory and Equipment shall require
rebuilding, repairing, maintenance or preparation, the Lender shall have the
right, at its option, to do such of the aforesaid as is necessary, for the
purpose of putting the Inventory and Equipment in such saleable form as the
Lender shall deem appropriate and any such costs shall be deemed an Obligation
hereunder. The Obligors agree, at the request of the Lender, to assemble the
Inventory and Equipment and to make it available to the Lender at premises of
the Obligors or elsewhere and to make available to the Lender the premises and
facilities of the Obligors for the purpose of the Lender's taking possession of,
removing or putting the Inventory and Equipment in saleable form. If notice of
intended disposition of any Collateral is required by law, it is agreed that ten
(10) days' notice shall constitute reasonable notification and full compliance
with the law. The net cash proceeds resulting from the Lender's exercise of any
of the foregoing rights (after deducting all charges, costs and expenses,
including reasonable attorneys' fees) shall be applied by the Lender to the
payment of the Obligations, whether due or to become due, in such order as the
Lender may elect or as may be required by the Intercreditor Agreement, and the
Obligors shall remain liable to the Lender for any deficiencies remaining. The
Lender shall remit to the Obligors or their successors or assigns, any surplus
resulting therefrom, subject to the terms of the Intercreditor Agreement
relating to remittance thereof to or to the order of the Senior Lien Lenders,
except as may otherwise be required by order of a court of competent
jurisdiction. The enumeration of the foregoing rights is not intended to be
exhaustive and the exercise of any right shall not preclude the exercise of any
other rights, all of which shall be cumulative. Any applicable mortgage(s),
deed(s) of trust or assignment(s) issued to the Lender on the Real Estate shall
govern the rights and remedies of the Lender thereto. Notwithstanding anything
to the contrary elsewhere in this Financing Agreement, if the Obligations are
declared or automatically become immediately due and payable pursuant to
Paragraph 10.2 of this Financing Agreement, in connection with an Event of
Default, the rights and remedies of the Lender provided for herein, including,
without limitation, the Lender's rights to exercise the powers granted to it in
the power of attorney included in this Financing Agreement, shall continue and
shall not cease to be effective until the full, final and indefeasible payment
of all the Obligations, regardless of whether such Event of Default is
subsequently remedied.
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10.4 Right of Set-Off. Upon the occurrence and during the
continuance of any Event of Default, the Lender is hereby authorized at any time
and from time to 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 Lender
to or for the credit or the account of any Obligor against any and all of the
Obligations (in the case of a Company) or against any and all of the Guaranty
Obligations (in the case of a Guarantor) now or hereafter existing under the
Loan Documents, irrespective of whether or not the Lender shall have made any
demand under any Loan Document and although such Obligations or Guaranty
Obligations (as the case may be) may be unmatured. The Lender agrees promptly to
notify the Obligors after any such set-off and application made by the Lender;
provided that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of the Lender under this Paragraph 10.4
are in addition to other rights and remedies which the Lender may have upon the
occurrence and during the continuance of any Event of Default.
SECTION 11. Observation Rights
Prior to the Maturity Date (and thereafter to the extent that
the Lender shall not be entitled to designate directors pursuant to a written
agreement between Harvard and the Lender), the Lender shall have the right
(effective upon the Closing Date) to designate by written notice to Harvard one
employee or agent of the Lender, who will receive reasonable notice of, and be
entitled to attend, all meetings of the Board of Directors of Harvard (the
"Board of Directors") as a nonvoting observer (the "Observer"). Harvard or the
applicable members of the Board of Directors will give the Observer oral or
written notice of each meeting of the Board of Directors (whether annual or
special) at the same time and in the same manner as oral or written notice is
given to the applicable members of the Board of Directors (which notice may be
waived by the Observer). Notwithstanding the foregoing, if the Observer attends
(or, in the case of a telephonic meeting, listens by telephone to) any such
meeting of the Board of Directors, then the Observer shall be deemed to have had
proper notice of such meeting. Notwithstanding anything contained herein to the
contrary, the failure of the Observer to be given notice of a meeting of the
Board of Directors pursuant to the immediately preceding two sentences or to
attend such meeting shall not in any way affect the authority of the Board of
Directors to have or to adopt resolutions at such meeting or the legitimacy of
any actions taken by the Board of Directors at such meeting. Subject to the
foregoing, Harvard will permit the Observer to attend (or, in the case of a
telephonic meeting, to listen by telephone to) each meeting of the Board of
Directors as a non-voting observer. Harvard shall provide the Observer all
written materials and other information (including copies of meeting minutes)
given to the members of the Board of Directors in connection with any such
meeting at the same time as such information is delivered to the members of the
Board of Directors and, if the Observer does not attend (or, in the case of a
telephonic meeting, does not listen by telephone to) a meeting of the Board of
Directors, Harvard shall, promptly following such meeting of the Board of
Directors, provide the written minutes or an oral summary of the meeting from
the Secretary of Harvard to the Observer. Prior to attending or listening to any
meeting of the Board of Directors or obtaining any documents or summaries of
such meetings, the Observer shall agree in writing to be bound by the same
duties of confidentiality, good faith and loyalty as if such Observer were a
director of Harvard. If Harvard wishes to take any action by written consent of
the Board of Directors in lieu of a meeting, then Harvard shall circulate such
written consent to the Observer at the same time it
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circulates such instrument for signature by the directors, and shall give prompt
written notice of any action taken pursuant thereto to the Observer.
SECTION 12. Termination
The Companies or any one of them may terminate this Financing
Agreement at any time with such advance notice as is required and otherwise as
contemplated in the provisions of this Financing Agreement providing for the
prepayment in full of all Obligations. Notice of termination, as aforesaid, by
Harvard shall be deemed to be notice by the Companies for purposes hereof. All
Obligations shall become due and payable as of any termination under this
provision or under Section 10 hereof. All of the Lender's rights, Liens and
security interests shall continue after any termination until all Obligations
have been paid and satisfied in full. Upon satisfaction of the Lender as to all
of the foregoing, the Lender, at the expense of the Companies, shall execute and
deliver such releases, termination statements or other documents and take such
actions as Harvard may reasonably request, to confirm the release of the
security interest and liens created in the Collateral by this Financing
Agreement and the other Loan Documents and to confirm the termination of this
Financing Agreement.
SECTION 13. Miscellaneous
13.1 Waivers. Each Obligor hereby waives diligence, notice of
intent to accelerate, notice of acceleration, demand, presentment and protest
and any notices thereof as well as notice of nonpayment except as otherwise
expressly provided in this Financing Agreement. No delay or omission of the
Lender or any Obligor to exercise any right or remedy hereunder, whether before
or after the happening of any Event of Default, shall impair any such right or
shall operate as a waiver thereof or as a waiver of any such Event of Default.
No single or partial exercise by the Lender of any right or remedy precludes any
other or further exercise thereof, or precludes any other right or remedy. A
waiver on any one occasion shall not be construed as a bar to, or waiver of, any
right or remedy on any future occasion. No waiver of any right or remedy
provided for herein shall be effective as a waiver unless it is in writing and
signed by the Lender.
13.2 Entire Agreement. This Financing Agreement and the Loan
Documents executed and delivered in connection therewith constitute the entire
agreement between the Obligors and the Lender relating to the subject matter
hereof and thereof; supersede any agreements relating to such subject matter
existing on the date of this Financing Agreement other than the Commitment
Letter; may be changed only by a writing signed by the Obligors and the Lender;
and shall bind the Obligors and the Lender and their respective successors and
assigns, and shall benefit the Obligors and the Lender and their respective
successors and assigns.
13.3 Usury. In no event shall an Obligor, upon demand by the
Lender for payment of any Indebtedness relating to any Obligation or Guaranty
Obligation by acceleration of the maturity thereof, or otherwise, be obligated
to pay interest and fees in excess of the amount permitted by applicable law.
Regardless of any provision herein or in any agreement made in connection
herewith, the Lender shall never be entitled to receive, charge or apply, as
interest on any indebtedness relating hereto, any amount in excess of the
maximum amount of interest permissible under applicable law. If the Lender ever
receives, collects or applies any
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such excess, it shall be deemed a partial repayment of principal owed to it
hereunder and treated as such; and if principal is paid in full, any remaining
excess shall be refunded to the Obligors. This paragraph shall control every
other provision hereof, the Loan Documents and of any other agreement made in
connection herewith. As used herein, the term "applicable law" shall mean the
law in effect as of the date hereof, provided, however, that in the event there
is a change in the law which results in a higher permissible rate of interest,
then this Financing Agreement and the Loan Documents shall be governed by such
new law insofar as it relates to the permissible rate of interest as of its
effective date.
13.4 Severability. If any provision hereof or of any other
agreement made in connection herewith is held to be illegal or unenforceable,
such provision shall be fully severable, and the remaining provisions of the
applicable agreement shall remain in full force and effect and shall not be
affected by such provision's severance. Furthermore, in lieu of any such
provision, there shall be added automatically as a part of the applicable
agreement a legal and enforceable provision as similar in terms to the severed
provision as may be possible.
13.5 WAIVER OF JURY TRIAL. NONE OF THE OBLIGORS OR THE LENDER
AND NO SUCCESSOR, ASSIGN OR PERSONAL REPRESENTATIVE OF ANY OF THEM SHALL SEEK A
JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER LITIGATION
PROCEDURE INVOLVING ANY OF THE OBLIGORS OR THE LENDER (OR ANY OFFICER, DIRECTOR,
EMPLOYEE OR AGENT OF ANY OF THEM) BASED UPON OR ARISING OUT OF THIS FINANCING
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, ANY COLLATERAL FOR THE PAYMENT OF
ANY OF THE OBLIGATIONS OR THE DEALINGS OR THE RELATIONSHIP BETWEEN OR AMONG SUCH
PERSONS OR ENTITIES, OR ANY OF THEM. NONE OF THE OBLIGORS OR THE LENDER WILL
SEEK TO CONSOLIDATE ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH
ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT OR HAS NOT BEEN WAIVED. THE
PROVISIONS OF THIS PARAGRAPH 13.5 OF THIS SECTION 13 HAVE BEEN FULLY DISCUSSED
BY THE COMPANIES AND THE LENDER, AND THE PROVISIONS HEREOF SHALL BE SUBJECT TO
NO EXCEPTIONS. NO PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER
PARTY THAT THE PROVISIONS OF THIS PARAGRAPH 13.5 OF THIS SECTION 13 WILL NOT BE
FULLY ENFORCED IN ALL INSTANCES.
13.6 Notices. Except as otherwise herein provided, any notice
or other communication required hereunder or relating to this Financing
Agreement or any other Loan Document shall except as otherwise expressly
provided herein or in such other Loan Document be in writing and may be given by
personal delivery, including by any commercial courier or overnight delivery
service, or by United States registered or certified mail, return receipt
requested, with all postage and fees fully prepaid. Notices shall be effective
upon receipt by the party being given notice, as indicated by the return receipt
if mailed; except that if a party has relocated without providing the other
party with its new address for service of notices, or if a party refuses
delivery of a notice upon its tender, the notice shall be effective upon the
attempt to serve the notice at the last address given for service of notices
upon that party. In addition to (but not in lieu of) the foregoing, notice may
be served by facsimile transmission, in which case service shall be deemed
effective only upon receipt by the party serving the notice of telephonic
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or return facsimile transmission confirmation that the party to whom the notice
is directed has received a complete and legible copy of the notice (provided
that, any electronic communications from any of the Obligors with respect to any
request, transmission, document, electronic signature, electronic mail or
facsimile transmission shall be deemed binding on the Obligors for purposes of
this Financing Agreement, provided further that any such transmission shall not
relieve the Obligors from any other obligation hereunder to communicate further
in writing). Notices shall be addressed to the party to be notified as follows
or to such other address as that party may designate for itself by notice to the
sender:
if to the Lender, at:
Hilco Capital LP
One Northbrook Place
0 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Portfolio Administrator
Fax No.: 000-000-0000
with a courtesy copy of any material notice to the Lender's counsel at:
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxxx, Esq.
Fax No.: 000-000-0000
if to any of the Obligors at:
Harvard Industries, Inc.
0 Xxxxxx Xxx
Xxxxxxx, Xxx Xxxxxx 00000
Attn: Xx. Xxxxx Xxxxxxxx
Fax No.: 000-000-0000
with a courtesy copy of any material notice to the Companies' counsel
at:
Xxxxxxxxxx & Xxxxx LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxxxx, Esq.
Fax No. 000-000-0000
(provided, however, that the failure of the Lender to provide the Obligors'
counsel with a copy of such notice shall not invalidate any notice given to the
Obligors and shall not give the Obligors any rights, claims or defenses due to
the failure of the Lender to provide such additional notice).
13.7 GOVERNING LAWS. THE VALIDITY, INTERPRETATION AND
ENFORCEMENT OF THIS FINANCING AGREEMENT AND THE OTHER LOAN
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DOCUMENTS SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAWS, EXCEPT TO THE EXTENT THAT ANY OTHER LOAN
DOCUMENT INCLUDES AN EXPRESS ELECTION TO BE GOVERNED BY THE LAWS OF ANOTHER
JURISDICTION AND EXCEPT AS OTHERWISE REQUIRED BY THE UNIFORM COMMERCIAL CODE.
13.8 Submission to Jurisdiction; Service of Process. Each of
the Obligors hereby irrevocably: (a) Submits for itself and its property in any
legal action or proceeding relating to this Financing Agreement and the other
Loan Documents to which it is a party, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general jurisdiction of the
courts of the State of New York in the county of New York or of the United
States District Court for the Southern District of New York, and the appellate
courts from any thereof;
(b) consents that any such action or proceeding may
be brought in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court or that
such action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that nothing contained herein shall affect
the right to effect service of process in any other manner permitted by law or
shall limit the right to xxx in any other jurisdiction;
(d) appoints CT Corporation, Inc., at 000 Xxxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, as its agent to receive service of
process or other summons in connection with any such action or proceeding and
waives personal service of process and consents to service of process by
certified or registered mail, return receipt requested, addressed to such
Obligor at its address for notices hereunder.
13.9 Intentionally Omitted
13.10 Headings. The headings of this Financing Agreement are
solely for the purpose of identification and shall not be construed as a part of
the paragraphs or sections they head.
13.11 Replacement of Promissory Note. Upon receipt of an
affidavit of an officer of the Lender as to the loss, theft, destruction or
mutilation of the Promissory Note or any other Loan Document, and, in the case
of any such loss, theft, destruction or mutilation, upon cancellation of the
Promissory Note or other Loan Document, the Companies will issue, in lieu
thereof, a replacement Promissory Note or other Loan Document in the same
principal amount thereof and otherwise of like tenor.
13.12 Counterparts. This Financing Agreement may be signed in
any number of counterparts with the same effect as if the signatures hereto were
upon the same instrument.
13.13 Assignments. (a) The Obligors may not assign or transfer
any of their rights under this Financing Agreement, the Promissory Note or the
other Loan Documents without the prior written consent of the Lender, and any
such assignment or transfer without the
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Lender's prior written consent shall be null and void. The Lender shall have the
right at any time to (i) assign or transfer to any Person all or a portion of
its rights and obligations under this Financing Agreement and the other Loan
Documents (including, without limitation, the Term Loan) and (ii) pledge the
Term Loan and all of its rights under this Financing Agreement, the Promissory
Note and the other Loan Documents to its lenders in support of borrowings made
by the Lender from such lenders, in each case without the consent of the
Obligors.
(b) The Obligors shall, if necessary, execute any
documents reasonably required to effectuate an assignment or transfer by the
Lender contemplated by subparagraph (a) above, including, without limitation,
amendments to this Financing Agreement, the Promissory Note or any other Loan
Document, as the Lender shall reasonably deem necessary to effect the foregoing.
In addition, at the request of the Lender and any such assignee or transferee,
the Companies shall issue a new Promissory Note to such assignee or transferee
and, if the Lender has retained any of its rights and obligations hereunder
following such assignment or transfer, to the Lender, which new Promissory
Note(s) shall be issued in replacement of, but not in discharge of, the
liability evidenced by the Promissory Note held by the Lender prior to such
assignment and shall reflect the amount of the respective amounts of the Term
Loan of the Lender and the assignee or transferee after giving effect to such
assignment or transfer.
13.14 Participants. (a) The Obligors acknowledge that the
Lender may at any time sell, assign or participate to an Affiliate of the Lender
or to any other Person its rights and obligations under this Financing Agreement
and the other Loan Documents (including, without limitation, its Term Loan). The
Obligors further acknowledge that in doing so, the Lender may grant to such
participants certain rights which would require the participant's consent to
certain waivers, amendments and other actions with respect to the provisions of
this Financing Agreement.
(b) The Obligors authorize the Lender to disclose to
any participant or purchasing lender (each, a "Transferee") and any prospective
Transferee any and all financial information in the Lender's possession
concerning the Obligors and their affiliates which has been delivered to the
Lender by or on behalf of the Obligors pursuant to this Financing Agreement or
any other Loan Document or which has been delivered to the Lender by or on
behalf of the Obligors in connection with the Lender's credit evaluation of the
Obligors and their affiliates prior to entering into this Financing Agreement,
provided that such Transferee agrees to hold such information in confidence in
the ordinary course of its business.
13.15 Currency. All Obligations and Guaranty Obligations shall
be payable in lawful currency of the United States ("U.S. Dollars"). The
foregoing reference to U.S. Dollars is of the essence. The Obligations and
Guaranty Obligations shall, notwithstanding any payment in any other currency
(whether pursuant to a judgment or otherwise), be discharged only to the extent
of the amount in U.S. Dollars that the Lender may, in accordance with normal
banking procedures, purchase with the sum paid in that other currency (after
deducting any premium and costs of exchange) on the Business Day immediately
following the day on which the Lender receives that payment. If the amount in
U.S. Dollars that may be so purchased for any reason falls short of the amount
originally due, the Obligors shall pay to the Lender such additional amount, in
U.S. Dollars, as is necessary to compensate for the shortfall. Any Obligation or
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Guaranty Obligations not discharged by that payment shall, to the fullest extent
permitted by applicable law, be due as a separate and independent Obligation or
Guaranty Obligation and, until discharged as provided herein, shall continue in
full force and effect.
13.16 Rate of Interest for Canadian Companies. For purposes of
disclosure pursuant to the Interest Act (Canada), the yearly rate of interest to
which any rate of interest payable under this Financing Agreement which is to be
calculated on any basis other than a full calendar year is equivalent may be
determined by multiplying such rate by a fraction, the numerator of which is the
number of days in the calendar year in which the period for which the interest
at such rate is payable ends and the denominator of which is the number of days
comprising such other basis.
13.17 Amendments; Waivers. No amendment or waiver of any
provision of this Financing Agreement or any other Loan Document nor consent to
any departure by any Obligor therefrom shall in any event be effective unless
the same shall be in writing and signed by the Lender and, in the case of any
amendment, by the Companies or, if a party to the relevant Loan Documents, the
Guarantors, and then any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
13.18 Confidentiality. The Lender agrees to maintain the
confidentiality of any non-public information provided by the Obligors to it, in
the ordinary course of its business, provided that the foregoing confidentiality
provision shall terminate one (1) year after the payment in full of the Term
Loan, and provided further that the Lender may disclose such information (a)
after such information shall have become public other than through a violation
of this Paragraph 13.18 of this Section 13, (b) to the extent required by
statute, rule, regulation or judicial process, (c) to counsel for the Lender,
(d) to bank examiners or any other regulatory authority having jurisdiction over
the Lender, or to auditors or accountants, (e) to the Senior Lien Lenders; (f)
in connection with any litigation to which the Lender is a party, or in
connection with the enforcement of rights or remedies hereunder or under any
other Loan Document, (g) to a subsidiary or affiliate of the Lender or (h) to
any assignee or participant (or prospective assignee or participant) so long as
such assignee or participant agrees to be bound by the provisions hereof.
13.19 Contribution. (a) Notwithstanding anything to the
contrary in Paragraph 3.6 of Section 3 or Paragraph 14.4 of Section 14, if any
Obligor makes any payment in respect of any of the Obligations or Guaranty
Obligations, other than Obligations in respect of the Term Loan to the extent
the proceeds thereof were received by or for such Obligor, through any Company
or otherwise (an "Obligor Payment") and, taking into account all other Obligor
Payments then previously made or concurrently being made by any of the other
Obligors, the amount of such Obligor Payment exceeds the amount such Obligor
would otherwise have paid if each Obligor had paid the aggregate Obligations
satisfied by such Obligor Payment in the same proportion as such Obligor's
Allocable Amount (as defined below), determined immediately prior to such
Obligor Payment, bore to the aggregate Allocable Amounts of all the Obligors as
determined immediately prior to the making of such Obligor Payment, then,
following full, final and indefeasible payment of the Obligations and the
Guaranty Obligations, such Obligor shall be entitled to receive contribution and
indemnification payments from, and be reimbursed by, each
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other Obligor for the amount of the excess, pro rata, based upon their
respective Allocable Amounts of the Obligors in effect immediately prior to such
Obligor Payment.
(b) As of any date of determination, the "Allocable
Amount" of each Obligor shall be equal to the maximum amount of the claim that
could then be recovered from such Obligor under this Paragraph without rendering
such claim voidable or avoidable under Section 548 of Chapter 11 of the
Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act,
Uniform Fraudulent Conveyance Act or similar statute or common law.
(c) This Paragraph 13.19 is intended only to define
certain relative rights of the Obligors vis-a-vis each other, and nothing set
forth in this Paragraph 13.19 is intended to or shall impair the obligations of
the Obligors to pay any amounts as and when the same shall become due and
payable in accordance with the terms of this Financing Agreement, as their joint
and several obligations in respect of the Obligations, in the case of the
Companies, as their joint and several obligations in respect of the Harvard
Obligations, in the case of the Guarantors, and as their own Guaranty
Obligations, in the case of the Guarantors (to the extent those Guaranty
Obligations exceed the Harvard Obligations). Nothing in this Paragraph 13.19
shall limit the liability of any Company to pay the Term Loan and accrued
interest and expenses with respect thereto, for which such Company shall be
primarily liable.
(d) The parties hereto acknowledge that the rights of
contribution and indemnification provided for in this Paragraph 13.19 shall
constitute assets of the Obligor to which such contribution and indemnification
is owing.
(e) The rights of the indemnifying Obligors against
other Obligors under this Paragraph 13.18 shall only be exercisable upon the
full, final and indefeasible payment of the Obligations and the Guaranty
Obligations.
13.20 Relationship. The Obligors acknowledge that the
relationship between and among the Lender, on the one hand, and the Senior Lien
Lenders, on the other hand, pursuant to the Intercreditor Agreement shall not be
construed as giving rise to or constituting a joint venture, and the Lender and
the Obligors agree that the Lender is not a partner or joint venturer with the
Obligors or with any entity comprising the Obligors, in any manner whatsoever.
SECTION 14. Guaranty
14.1 Guaranty.
(a) Each Guarantor, as primary obligor and not merely
as surety, hereby irrevocably, absolutely and unconditionally guarantees to the
Lender the prompt and full payment in cash as and when due (whether at stated
maturity or by required or optional prepayment, acceleration, demand or
otherwise), of all existing and future Obligations payable by Harvard hereunder
and under the other Loan Documents, including but not limited to the Obligations
payable by Harvard in respect of the principal of and interest (including,
without limitation, all interest that accrues after the commencement of any
case, proceeding or other action relating to bankruptcy, insolvency or
reorganization of Harvard) on the Term Loan, and the fees, expenses and other
amounts payable under this Financing Agreement or any other Loan
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Document and specifically including all amounts payable by Harvard arising from
its joint and several obligations as a co-obligor in respect of the Obligations,
whether its obligations in respect of such amounts are in the nature of a
guaranty or otherwise (all such amounts payable by Harvard in respect of the
Obligations, the "Harvard Obligations"). The guaranty set forth in this Section
14 is hereinafter referred to as the "Guaranty."
(b) If any Harvard Obligation is not paid as and when
due by Harvard, each Guarantor shall pay such Harvard Obligation on demand,
together with interest thereon, which shall accrue from and including the date
such Harvard Obligation fell due, to but excluding the date such Harvard
Obligation is paid in full, at the highest rate of interest then applicable to
any of the Harvard Obligations at the time overdue and unpaid. This interest
shall be calculated on the basis of a year of 360 days for the actual number of
days elapsed in the relevant period. The statement of account issued by the
Lender to Harvard shall, absent manifest error, be conclusive as to the amount
and status of Harvard Obligations.
(c) Each Guarantor shall, on demand, pay to the
Lender any and all expenses (including reasonable fees and expenses of counsel)
which may be paid or incurred by the Lender in collecting any or all of the
Harvard Obligations and/or enforcing the rights of the Lender against such
Guarantor under the Guaranty, and the Guaranty specifically includes all such
expenses, as well as all obligations of such Guarantor (in respect of Taxes and
otherwise) provided for in this Financing Agreement or any other Loan Document
(together with the Harvard Obligations, such obligations, in relation to each
Guarantor, its "Guaranty Obligations").
14.2 Guaranty Obligations Unconditional.
(a) Each Guarantor shall perform its obligations
under this Guaranty in respect of the Harvard Obligations so that they are paid
strictly in accordance with the terms of the Loan Documents.
(b) Without limiting the foregoing, this Guaranty is
a guaranty of payment by each Guarantor, and not merely a guaranty of
collection, and shall not be affected in any way by the absence of, or
conditioned or contingent upon, any action to obtain payment of any of Harvard
Obligations (by way of setoff or otherwise) from Harvard or any other Person who
now or hereafter may be responsible for all or any part of the Harvard
Obligations, including any other Guarantor or any Company, or from any
Collateral or other property and each Guarantor specifically waives any argument
or defense that the Lender seek or exhaust any recourse of any nature,
including, without limitation, any right to realize as to security held, against
any other Person before making demands under this Guaranty. In addition, this
Guaranty shall be absolute and unconditional irrespective of:
(i) any change in, or in the interpretation
or application of, the law in any jurisdiction which affects or purports to
affect any of the terms giving rise to any of the Harvard Obligations or the
rights of the Lender with respect thereto;
(ii) any lack of validity or enforceability,
any irregularity, default or omission in any relevant documentation, including,
without limitation, any Loan Document, or of any of the Harvard Obligations, or
any delay, failure or omission to enforce or agreement not to
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enforce, or the stay or enjoining, by order of court, by operation of law or
otherwise, of the exercise of any right with respect to the foregoing
(including, in each case, without limitation, as a result of the insolvency,
bankruptcy or reorganization of Harvard, any other Obligor or any other Person);
(iii) any change in the time, manner or
place of payment of, or in any other term in respect of, all or any of the Loan
Documents;
(iv) any exchange or release of, or
non-perfection of any Lien on or in, any Collateral, any release or amendment or
waiver of or consent to any departure from any other guaranty or security, for
all or any of the Harvard Obligations or any release of any Obligor from all or
any part of its obligations under this Guaranty, any other part of this
Financing Agreement or any of the terms of any other Loan Document;
(v) any claim, set-off, counterclaim,
defense or other rights, including, without limitation, any as to marshalling of
any security or other guaranties, that any Guarantor may have at any time and
from time to time against the Lender or any other Person, whether in connection
with the transactions contemplated in the Loan Documents or any other
transaction;
(vi) any other circumstances which might
otherwise constitute a defense based on suretyship or otherwise available to, or
a discharge of, any other Obligor in respect of (A) the Harvard Obligations or
the Guaranty Obligations, (B) the release of or waiver of any rights against any
other Obligor and the settlement, compromise or release of any other Obligor, or
(C) the failure by the Lender to attempt, or delay by the Lender in attempting,
to collect any Guaranty Obligations from any other Guarantor or any Obligations
from any Company or to realize upon any Collateral; and the Lender may deal with
any of the Obligors as it sees fit without prejudice to or effect on the
Guaranty or the security for the Guaranty Obligations; or
(vii) the merger, consolidation or
amalgamation of Harvard with or into any other Person or the loss by Harvard or
any other Obligor of its separate legal identity, or its ceasing to exist;
and each Guarantor hereby irrevocably waives all defenses that it might
otherwise have based on any of the matters identified above in this Paragraph
14.2(b) or based on any other circumstances other than, in each case, the full,
final and indefeasible payment of all Harvard Obligations and all Guaranty
Obligations of such Guarantor.
(c) This Guaranty is a continuing guaranty and shall
remain in full force and effect in relation to each Guarantor until the payment
in full and indefeasible satisfaction of (i) all the Harvard Obligations and
(ii) all of such Guarantor's Guaranty Obligations. This Guaranty shall continue
to be effective or shall be reinstated, as the case may require, if at any time
any payment, or any part thereof, of any of the Harvard Obligations is rescinded
or must otherwise be returned by the Lender upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of any Obligor or otherwise, all as
though such payment had not been made. This Guaranty shall not be affected by
any change in status, of any kind, of any Obligor or of the Lender.
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(d) Each Guarantor confirms that there has been no
agreement, promise, representation or stipulation by any Person which in any way
affects the Guaranties hereunder.
(e) Without the necessity of any reservation of
rights against any Obligor and without notice to or further assent by any
Obligor, any demand for payment of any of the Harvard Obligations made by the
Lender to any Guarantor may be rescinded by the Lender and any of the Harvard
Obligations continued after such rescission.
14.3 Waivers. To the extent permitted by applicable law (and
without limiting the waivers of defenses of the Guarantors in Paragraph 9.2 of
Section 9), each Guarantor hereby waives:
(a) promptness and diligence;
(b) notice of or proof of reliance by the Lender upon
this Guaranty or acceptance of this Guaranty;
(c) notice of the incurrence of any Harvard
Obligation or of any Guaranty Obligation of any Guarantor, or of the renewal,
extension or accrual of any Harvard Obligation or Guaranty Obligation;
(d) notice of any actions taken by the Lender, any
Obligor or any other party to any Loan Document;
(e) all other notices, demands and protests, and all
other formalities of every kind in connection with the enforcement of the
Harvard Obligations or the Guaranty Obligations of any Guarantor, the omission
of or delay in which, but for the provisions of this Paragraph 14.3, might
constitute grounds for relieving Harvard of any of its Harvard Obligations or
any Guarantor of any of its Guaranty Obligations;
(f) any requirement that the Lender protect, secure,
perfect or insure any Lien on any Collateral or other property subject thereto
or exhaust any right or take any action against any Obligor or any other Person
or any Collateral; and
(g) each other circumstance, other than the payment
of the Harvard Obligations in full, that might otherwise result in a discharge
or exoneration of, or constitute a defense to, such Guarantor's obligations
under this Guaranty.
14.4 Subrogation. Each Guarantor hereby waives and releases
any rights which it may acquire by way of subrogation under or in respect of
this Guaranty, whether acquired by any payment made hereunder, by any setoff or
application of funds of Harvard or any Guarantor by the Lender or otherwise.
Each Guarantor further hereby agrees that, if any of the Harvard Obligations is
paid (by way of setoff or otherwise) by such Guarantor, any claim or right that
such Guarantor may, as a result, have against any other Obligor, for
contribution or otherwise, shall be subordinate to the rights and claims of the
Lender in respect of all Harvard Obligations and the Guaranty Obligations of
each Guarantor, without limitation, as to any increases in the Harvard
Obligations or the Guaranty Obligations arising hereunder or thereunder, and
shall not
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be payable until all the Harvard Obligations and the Guaranty Obligations of
each Guarantor have been fully, finally and indefeasibly paid in full in cash
and, in the event of any insolvency, bankruptcy, receivership, liquidation,
reorganization or other similar proceeding under the laws of any jurisdiction
relating to any Guarantor, its debts or its assets, whether voluntary or
involuntary, all such Harvard Obligations and Guaranty Obligations shall be
fully, finally and indefeasibly paid in cash before any payment or distribution
of any character, whether in cash, securities or other property, shall be made
by any Guarantor to any other Obligor therefor. If, notwithstanding the
foregoing, any Guarantor receives, in respect of any payment made by it under
this Guaranty, any amount from Harvard or any Guarantor, such Guarantor shall
promptly pay such amount received by it to the Lender for application to the
Harvard Obligations or the Guaranty Obligations in such order as the Lender
shall elect and, until such payment is paid to the Lender, such amount shall be
held by such Guarantor for the benefit of the Lender.
14.5 Canadian Debenture. If there is an inconsistency between
the terms of this Financing Agreement and the terms of the Security Document
entered into by Trim Trends on the Closing Date in the form of a debenture (the
"Canadian Debenture"), the provisions hereof shall prevail to the extent of the
inconsistency, but the foregoing shall not apply to limit or restrict in any way
the rights and remedies of the Lender under the terms of the Canadian Debenture
after the security thereby constituted shall have become enforceable. For
greater certainty:
(a) Notwithstanding that the rate of interest
stipulated in the Canadian Debenture may exceed the rate of interest stipulated
in this Financing Agreement in respect of the Harvard Obligations and the
Guaranty Obligations, the rate or rates of interest applicable to the
Obligations shall be as stipulated herein;
(b) Notwithstanding that the Canadian Debenture may
contain a promise by Trim Trends to pay to the Lender a principal amount which
may be in excess of the Harvard Obligations, Trim Trends shall only be liable to
pay to the Lender, the amount of the Harvard Obligations and Trim Trends'
Guaranty Obligations (which shall, however, include such expenses and
indemnities as are provided for in the Canadian Debenture in connection with the
protection, preservation and enforcement of the interest created therein and
rights and remedies thereunder of the Lender (and such stamp, documentation,
recordation, value added and other taxes and duties related to the foregoing)).
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IN WITNESS WHEREOF, the parties hereto have caused this
Financing Agreement to be effective, executed, accepted and delivered by their
proper and duly authorized officers as of the date set forth above.
LENDER
------
HILCO CAPITAL LP
By:
--------------------------------
Name:
Title:
COMPANIES
---------
HARVARD INDUSTRIES, INC.
By:
--------------------------------
Name:
Title:
XXXXXXX-XXXXXX, INC.
By:
--------------------------------
Name:
Title:
HARVARD TRANSPORTATION
CORPORATION
By:
--------------------------------
Name:
Title:
XXXXXXX-XXXXXX GREENEVILLE, INC.
By:
--------------------------------
Name:
Title:
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POTTSTOWN PRECISION CASTING, INC.
By:
--------------------------------
Name:
Title:
HARVARD INDUSTRIES RISK
MANAGEMENT, INC.
By:
--------------------------------
Name:
Title:
XXXXXXX-XXXXXX TOLEDO, INC.
By:
--------------------------------
Name:
Title:
XXXXXX AUTOMOTIVE, INC.
By:
--------------------------------
Name:
Title:
XXXXX-ALBION CORPORATION
By:
--------------------------------
Name:
Title:
KWCI LIQUIDATING CORPORATION
By:
--------------------------------
Name:
Title:
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GUARANTORS
----------
TRIM TRENDS CANADA LIMITED
By:
--------------------------------
Name:
Title:
177192 CANADA INC.
By:
--------------------------------
Name:
Title:
- 87 -
EXHIBIT A
PROMISSORY NOTE
$10,000,000.00 Dated: May 31, 0000
Xxx Xxxx, Xxx Xxxx
FOR VALUE RECEIVED, the undersigned, HARVARD INDUSTRIES, INC., a Delaware
corporation, XXXXXXX-XXXXXX, INC., a Delaware corporation, HARVARD
TRANSPORTATION CORPORATION, a Michigan corporation, XXXXXXX-XXXXXX GREENEVILLE,
INC., a Delaware corporation, POTTSTOWN PRECISION CASTING, INC., a Delaware
corporation, HARVARD INDUSTRIES RISK MANAGEMENT, INC., a Delaware corporation,
XXXXXXX-XXXXXX TOLEDO, INC., a Delaware corporation, XXXXXX AUTOMOTIVE, INC., a
Michigan corporation, XXXXX-ALBION CORPORATION, a Michigan corporation, and KWCI
LIQUIDATING CORPORATION, a New Hampshire corporation (each individually a
"Company" and collectively, the "Companies"), HEREBY JOINTLY AND SEVERALLY
PROMISE TO PAY to the order of HILCO CAPITAL LP (herein the "Lender") at its
office located at One Northbrook Place, 0 Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxx,
Xxxxxxxx 00000, in lawful money of the United States of America and in
immediately available funds, the principal amount of TEN MILLION DOLLARS
($10,000,000.00), or if less, the aggregate unpaid principal amount of the Term
Loan (as defined in the Financing Agreement hereinafter referred to) made by the
Lender to the Companies, payable in such installments and at such times as are
specified in the Financing Agreement.
Each Company further agrees to pay interest at said office, in like money, on
the unpaid principal amount owing hereunder from time to time from the date
hereof on the date and at the rate specified in Section 8 of the Financing
Agreement, of even date herewith between the Companies and the Lender (the
"Financing Agreement"). Capitalized terms used herein and defined in the
Financing Agreement shall have the same meanings as set forth therein unless
otherwise specifically defined herein.
THE PRINCIPAL AMOUNT OF THIS PROMISSORY NOTE MAY BE INCREASED IN ACCORDANCE WITH
SECTION 8 OF THE FINANCING AGREEMENT. SUCH INCREASED PRINCIPAL AMOUNT SHALL BE
DUE AND PAYABLE AND SHALL BEAR INTEREST AS PROVIDED IN SUCH SECTION 8.
If any payment on this Promissory Note becomes due and payable on a day other
than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day, and with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension.
This Promissory Note is the Promissory Note referred to in the Financing
Agreement, evidences the joint and several obligations of the Companies in
respect of Term Loan thereunder, and is subject to, and entitled to, all
provisions and benefits thereof and is subject to optional and mandatory
prepayment, in whole or in part, as provided therein.
A-1
Upon the occurrence of any Event of Default specified in the Financing Agreement
or upon termination of the Financing Agreement in accordance with the terms
thereof, all amounts then remaining unpaid on this Promissory Note may become,
or be declared to be, at the sole election of the Lender, immediately due and
payable as provided in the Financing Agreement.
The Companies acknowledge that the Lender shall have the right at any time to
(i) assign or transfer to any Person all or a portion of its rights and
obligations under this Promissory Note pursuant to Paragraph 13.13 of Section 13
of the Financing Agreement and (ii) pledge this Promissory Note to its lenders
in support of borrowings made by the Lender from such lenders.
For purposes of disclosure pursuant to the Interest Act (Canada), the yearly
rate of interest to which any rate of interest payable under this Promissory
Note which is to be calculated on any basis other than a full calendar year is
equivalent may be determined by multiplying such rate by a fraction, the
numerator of which is the number of days in the calendar year in which the
period for which the interest at such rate is payable ends and the denominator
of which is the number of days comprising such other basis.
A-2
This Promissory Note shall be governed by, and construed and interpreted in
accordance with, the internal laws of the State of New York applicable to
contracts made and to be performed therein without consideration as to choice of
law.
HARVARD INDUSTRIES, INC.
By:
--------------------------------
Name:
Title:
XXXXXXX-XXXXXX, INC.
By:
--------------------------------
Name:
Title:
HARVARD TRANSPORTATION
CORPORATION
By:
--------------------------------
Name:
Title:
XXXXXXX-XXXXXX GREENEVILLE, INC.
By:
--------------------------------
Name:
Title:
POTTSTOWN PRECISION CASTING, INC.
By:
--------------------------------
Name:
Title:
A-3
HARVARD INDUSTRIES RISK
MANAGEMENT, INC.
By:
--------------------------------
Name:
Title:
XXXXXXX-XXXXXX TOLEDO, INC.
By:
--------------------------------
Name:
Title:
XXXXXX AUTOMOTIVE, INC.
By:
--------------------------------
Name:
Title:
XXXXX-ALBION CORPORATION
By:
--------------------------------
Name:
Title:
KWCI LIQUIDATING CORPORATION
By:
--------------------------------
Name:
Title:
A-4
