LIEN INTERCREDITOR AGREEMENT
LIEN INTERCREDITOR AGREEMENT (this "Agreement") dated as of May 31, 2001,
by and among the Working Capital Lenders referred to below, The CIT
Group/Business Credit, Inc., a New York corporation, as administrative agent and
collateral agent for the Working Capital Lenders (in such capacity, together
with its successors and assigns, hereinafter referred to as the "Working Capital
Agent"), and Hilco Capital LP, a Delaware limited partnership (together with its
successors and assigns, including any other lender or lenders that at any time
refinance or replace the Term Loan Debt referred to below, hereinafter referred
to as the "Term Loan Lender").
W I T N E S S E T H:
WHEREAS, Harvard Industries, Inc., a Delaware corporation (together with
its successors and assigns, including any receiver, trustee or
debtor-in-possession, hereinafter referred to as the "Lead Borrower"), its
wholly owned subsidiaries (together with each of their successors and assigns,
including any receivers, trustees or debtors-in-possession, and with the Lead
Borrower, each a "Borrower" and collectively, the "Borrowers"), the financial
institutions from time to time party thereto (together with their successors and
assigns, including any other lender or lenders that at any time refinance or
replace the Working Capital Debt referred to below, each a "Working Capital
Lender" and collectively, the "Working Capital Lenders"), Citicorp USA, Inc., as
syndication agent for the Working Capital Lenders, and the Working Capital Agent
are parties to a Financing Agreement, dated as of May 31, 2001 (as amended or
otherwise modified from time to time, the "Working Capital Loan Agreement"),
pursuant to which the Working Capital Lenders have made and will from time to
time make loans and provide other financial accommodations to the Borrowers;
WHEREAS, the Borrowers and the Term Loan Lender are parties to a Financing
Agreement, dated as of May 31, 2001 (as amended or otherwise modified from time
to time, the "Term Loan Agreement" and together with the Working Capital Loan
Agreement, the "Loan Agreements"), pursuant to which the Term Loan Lender has
made a term loan to the Borrowers;
WHEREAS, the Borrowers and the other Obligors (as hereinafter defined)
have granted to the Working Capital Agent and the Working Capital Lenders a lien
on, and security interest in, substantially all of the assets and properties of
the Borrowers and the other Obligors, all as more particularly described in the
Working Capital Loan Documents (as defined below), and the Term Loan Lender
hereby acknowledges and consents to such lien and security interest;
WHEREAS, the Borrowers and the other Obligors have granted to the Term
Loan Lender a lien on, and security interest in, substantially all of the assets
and properties of the Borrowers and the other Obligors, all as more particularly
described in the Term Loan Documents (as defined below), and the Working Capital
Agent and the Working Capital Lenders hereby acknowledge and consent to such
lien and security interest;
WHEREAS, the Term Loan Lender, the Working Capital Agent and the Working
Capital Lenders wish to set forth their agreement as to certain of their
respective rights and obligations with respect to the assets and properties of
the Borrowers and the other Obligors and their understanding relative to their
respective positions in certain assets and properties of the Borrowers and the
other Obligors;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
SECTION 1. Definitions. As used in this Agreement, the following terms
shall have the respective meanings indicated below, such meanings
to be applicable equally to both the singular and the plural forms of the terms
defined:
"Aggregate Principal Exposure" means, with respect to the Working Capital
Debt, the sum of the aggregate principal amount of loans outstanding under the
Working Capital Loan Documents, all letter of credit accommodations (including
the face amount of all undrawn letters of credit plus all unpaid reimbursement
obligations) under the Working Capital Loan Documents and all other financial
accommodations under the Working Capital Loan Documents.
"Borrower" shall have the meaning set forth in the recitals hereof.
"Collateral" means all assets and properties of any kind whatsoever, real
or personal, tangible or intangible and wherever located, of the Borrowers or
any other Obligor, whether now owned or hereafter acquired, upon which a Lien is
now or hereafter granted or purported to be granted by such Person in favor of a
Lender, as security for all or any part of the Obligations.
"Commitment" means the commitment of any Lender to make a loan, issue a
letter of credit or provide any other financial accommodation pursuant to any
Document.
"Documents" means the Working Capital Loan Documents and the Term Loan
Documents, collectively.
"Event of Default" means each "Event of Default" or similar term, as such
term is defined in any Working Capital Loan Document or any Term Loan Document,
so long as any such Document is in effect.
"Excluded Portion" means, at any time, (i) the portion of the Aggregate
Principal Exposure in excess of the Maximum WC Debt, provided that, the amount
set forth in this clause (i) shall not include that portion of the Aggregate
Principal Exposure that exceeds the Maximum WC Debt solely as a result of (A) a
decline in the value of any Collateral, (B) any act or omission of any Obligor
in violation of any Working Capital Loan Document, or (C) any other similar
circumstance not caused by the Working Capital Agent or the Working Capital
Lenders, provided that, if any of the events described in clauses (A) through
(C) above result in the Aggregate Principal Exposure exceeding the Maximum W/C
Debt, any additional loans, letter of credit accommodations or other financial
accommodations provided by the Working Capital Agent or the Working Capital
Lenders during such period while the Working Capital Agent has knowledge that
the Aggregate Principal Exposure exceeds the Maximum W/C Debt shall not be
excluded from the Excluded Portion, (ii) interest, charges, fees, costs,
indemnities and expenses with respect to the portion of the Aggregate Principal
Exposure described in clause (i) of this definition, and (iii) any early
termination fee, prepayment fee or other similar fee payable pursuant to the
Working Capital Loan Agreement, except to the extent such early termination fee,
prepayment fee or other similar fee is payable to the Working Capital Lenders
pursuant to Section 4(c) hereof. The amount of the Excluded Portion shall be
determined on the date of the occurrence of a Release Event, immediately prior
to the occurrence of such Release Event.
"Insolvency Proceeding" means, as to any Person, any of the following: (i)
any case or proceeding with respect to such Person under the U.S. Bankruptcy
Code or any other Federal or State bankruptcy, insolvency, reorganization or
other law affecting creditors' rights or any other or similar proceedings
seeking any stay, reorganization, arrangement, composition or readjustment of
the obligations and indebtedness of such Person, (ii) any proceeding seeking the
appointment of any trustee, receiver, liquidator, custodian or other insolvency
official with
similar powers with respect to such Person or any of its assets, (iii) any
proceeding for liquidation, dissolution or other winding up of the business of
such Person or (iv) any assignment for the benefit of creditors or any
marshalling of assets of such Person.
"Lead Borrower" shall have the meaning set forth in the recitals hereof.
"Lenders" means the Working Capital Agent, the Working Capital Lenders and
the Term Loan Lender, collectively.
"Lien" means any mortgage, deed of trust, pledge, lien (statutory or
otherwise), security interest, charge or other encumbrance or security or
preferential arrangement of any nature, including, without limitation, any
conditional sale or title retention arrangement, any capitalized lease and any
assignment, deposit arrangement or financing lease intended as, or having the
effect of, security.
"Lien Enforcement Action" means (i) any action by any Lender to foreclose
on the Lien of such Person in all or a material portion of the Collateral, (ii)
any action by any Lender to take possession of, sell or otherwise realize upon
all or any material portion of the Collateral; and/or (iii) the commencement by
any Lender of any legal proceedings or actions against or with respect to all or
any material portion of the Collateral to facilitate the actions described in
(i) and (ii) above.
"Maximum WC Debt" means the sum of (i) lesser of (a) $45,000,000 and (b)
an amount equal to (x) the WC Borrowing Base plus (y) the Permitted Overadvance,
and (ii) $20,000,000 as reduced from time to time by payments actually received
by the Working Capital Agent and the Working Capital Lenders in respect of the
term loans.
"Obligations" means the "Obligations" (as defined in the Working Capital
Loan Documents as such documents are in effect on the date hereof), and the
"Obligations" (as defined in the Term Loan Documents as such documents are in
effect on the date hereof), collectively, provided that "Obligations" shall
exclude any loans, letter of credit accommodations or other financial
accommodations not made or extended pursuant to a Document.
"Obligor" means a Person liable on or in respect of the Term Loan Debt or
the Working Capital Debt or that has granted a Lien on any property or assets as
collateral for any of the Obligations, together with such Person's successors
and assigns, including a receiver, trustee or debtor-in-possession on behalf of
such Person.
"Permitted Overadvance" means the aggregate principal amount of all
Overadvances as such term is defined in the Working Capital Loan Agreement (as
such agreement is in effect on the date hereof) outstanding at any time under
the Working Capital Loan Agreement in an amount not to exceed the lesser of (a)
$1,000,000 and (b) 5% of the WC Borrowing Base, provided that (A) any
Overadvance outstanding from the first date that an Overadvance is made until
the date that such Overadvance no longer exists shall constitute a single
occurrence of an Overadvance, (B) there shall not be more than three (3)
separate occurrences of an Overadvance during the term of the Working Capital
Loan Agreement and (C) there shall not be more than an aggregate of thirty (30)
days on which an Overadvance is outstanding during the term of the Working
Capital Loan Agreement.
"Person" means an individual, corporation, partnership, limited liability
company, limited liability partnership, association, joint-stock company, trust,
unincorporated organization, joint venture, governmental authority or other
regulatory body.
"Release Event" means (i) prior to the occurrence of an Insolvency
Proceeding by or against any Borrower or Obligor, the occurrence of an Event of
Default and the taking of any Lien Enforcement Action by any Lender, provided
that any Release Event occurring prior to an Insolvency Proceeding by or against
any Borrower or Obligor shall cease to constitute a Release Event as of the
occurrence of such Insolvency Proceeding if the Working Capital Agent and/or the
Working Capital Lenders continue making loans or providing letter of credit
accommodations or other financial accommodations (whether pursuant to the
Working Capital Loan Documents or otherwise) or consent to the use of cash
collateral after the occurrence of such Insolvency Proceeding or (ii) after the
occurrence of an Insolvency Proceeding by or against any Borrower or Obligor,
the occurrence of any of the following: (A) the entry of an order of the
Bankruptcy Court pursuant to Section 363 of the U.S. Bankruptcy Code authorizing
the sale of all or substantially all of the Borrowers' and Obligors' assets or
(B) the taking of any Lien Enforcement Action described in clauses (i) and (ii)
of the definition of such term by any Lender or the entry of an order of the
Bankruptcy Court pursuant to Section 362 of the U.S. Bankruptcy Code vacating
the automatic stay and authorizing any Lender to take any Lien Enforcement
Action.
"Standstill Period" means the one-hundred and five (105) day period
commencing on the date that the Working Capital Agent receives, in accordance
with Section 3(b) hereof, a copy of the notice by the Term Loan Lender to the
Borrowers or any other Obligor of an Event of Default under the Term Loan
Documents and written demand for the accelerated payment by the Borrowers or
such Obligor of all Term Loan Debt; provided that, if any Borrower or any other
Obligor is subject to an Insolvency Proceeding by reason of which the making of
such demand for accelerated payment is stayed, the Standstill Period shall
commence on the date of the commencement of such Insolvency Proceeding.
"Term Loan Agreement" shall have the meaning set forth in the recitals
hereof.
"Term Loan Debt" means all obligations, liabilities and indebtedness of
every kind, nature and description owing by the Borrowers or any Obligor to the
Term Loan Lender evidenced by or arising under the Term Loan Documents, whether
direct or indirect, absolute or contingent, joint or several, due or not due,
primary or secondary, liquidated or unliquidated, including principal, interest,
charges, fees, costs, indemnities and reasonable expenses, however evidenced,
whether as principal, surety, endorser, guarantor or otherwise, whether now
existing or hereafter arising, whether arising before, during or after the
initial or any renewal term of the Term Loan Agreement, whether arising before,
during or after the commencement of any Insolvency Proceeding with respect to
any Borrower or any Obligor (and including, without limitation, the payment of
interest which would accrue and become due but for the commencement of such
Insolvency Proceeding, whether or not such interest is allowed or allowable in
whole or in part in any such Insolvency Proceeding), provided that "Term Loan
Debt" shall exclude any Obligations of the Borrowers under the Stock Purchase
Agreement (as such term is defined in the Term Loan Agreement).
"Term Loan Documents" means the Term Loan Agreement, all Loan Documents
(as such term is defined in the Term Loan Agreement) and all other agreements,
documents and instruments at any time executed and/or delivered by any Borrower
or any other Obligor or any other Person with, to or in favor of the Term Loan
Lender in connection therewith or related thereto, in each case, as amended or
otherwise modified from
time to time, provided that "Term Loan Documents" shall exclude the Stock
Purchase Agreement (as such term is defined in the Term Loan Agreement).
"Term Loan Lender" shall have the meaning set forth in the preamble
hereof.
"Uniform Commercial Code" means the Uniform Commercial Code as in effect
from time to time in the State of New York.
"WC Borrowing Base" means the "Borrowing Base" as such term is defined in
the Working Capital Loan Agreement as such agreement is in effect on the date
hereof.
"Working Capital Debt" means all obligations, liabilities and indebtedness
of every kind, nature and description owing by the Borrowers or any Obligor to
the Working Capital Agent or any Working Capital Lender evidenced by or arising
under the Working Capital Loan Documents, whether direct or indirect, absolute
or contingent, joint or several, due or not due, primary or secondary,
liquidated or unliquidated, including principal, interest, charges, fees, costs,
indemnities and reasonable expenses, however evidenced, whether as principal,
surety, endorser, guarantor or otherwise, whether now existing or hereafter
arising, whether arising before, during or after the initial or any renewal term
of the Working Capital Loan Agreement whether arising before, during or after
the commencement of any Insolvency Proceeding with respect to any Borrower or
any Obligor (and including, without limitation, the payment of interest which
would accrue and become due but for the commencement of such Insolvency
Proceeding whether or not such interest is allowed or allowable in whole or in
part in any such Insolvency Proceeding). Notwithstanding anything to the
contrary in this definition or in any other provision of this Agreement,
"Working Capital Debt" shall not include the Excluded Portion. The foregoing
limitation shall not apply to, and the term "Working Capital Debt" shall
include, obligations consisting of interest, fees, costs or expenses, in each
case in respect of the Working Capital Debt (excluding the Excluded Portion)
whether or not charged by the Working Capital Agent to the loan account of the
Borrowers maintained by Working Capital Agent pursuant to the Working Capital
Loan Agreement.
"Working Capital Agent" shall have the meaning set forth in the preamble
hereof.
"Working Capital Lenders" shall have the meaning set forth in the recitals
hereof.
"Working Capital Loan Agreement" shall have the meaning set forth in the
recitals hereof.
"Working Capital Loan Documents" means the Working Capital Loan Agreement,
all Loan Documents (as such term is defined in the Working Capital Loan
Agreement) and all other agreements, documents and instruments at any time
executed and/or delivered by any Borrower or any other Obligor or any other
Person with, to or in favor of the Working Capital Agent or any Working Capital
Lender in connection therewith or related thereto, in each case, as amended or
otherwise modified from time to time.
SECTION 2. Priorities.
(a) The Liens of the Working Capital Agent and the Working Capital
Lenders, to the extent that such Liens secure the Working Capital Debt, have and
shall be senior and prior in right to the Liens of the Term Loan Lender, and
such Liens of the Term Loan Lender are and shall be junior and subordinate to
the Liens of the Working Capital Agent and the Working Capital Lenders, to the
extent that such Liens secure the
Working Capital Debt, subject to the immediately following sentence.
Notwithstanding the foregoing, Section 2(e), Section 2(g) and any other
provision to the contrary contained in this Agreement, (i) the subordination of
Liens provided for in this Section 2(a) shall not be effective on any date with
respect to any part of the Collateral in which the Term Loan Lender, but not the
Working Capital Agent and the Working Capital Lenders, holds on such date a
valid, perfected and enforceable Lien and the Term Loan Lender shall be entitled
to receive and retain all proceeds of such Collateral, and (ii) the Liens of the
Working Capital Agent and the Working Capital Lenders, to the extent that such
Liens secure the Excluded Portion, are and shall be junior and subordinate in
all respects to the Liens of the Term Loan Lender.
(b) The priorities of the Liens provided in Section 2(a) shall not be
altered or otherwise affected by any amendment, modification, supplement,
extension, renewal, restatement, replacement or refinancing of the Working
Capital Debt or the Term Loan Debt, nor by any action or inaction which any of
the Lenders may take or fail to take in respect of the Collateral so long as the
Liens of the Working Capital Agent and the Working Capital Lenders are valid,
perfected and enforceable. The Working Capital Agent and each Working Capital
Lender agrees not to: (i) subordinate, or otherwise voluntarily relinquish the
benefits of, its Lien in any Collateral to the Lien, indebtedness or claim of
any other creditor of any Borrower or any Obligor, (ii) eliminate any category
of, or change the methodology of the calculation of, any Availability Reserves
(as such term is defined in the Working Capital Loan Agreement as in effect on
the date hereof), (iii) increase the Revolving Credit Commitment (as such term
is defined in the Working Capital Loan Agreement as in effect on the date
hereof) or the advance rates with respect to receivables and inventory under the
Working Capital Loan Agreement as in effect on the date hereof or (iv) amend the
due dates or decrease the amounts of any principal payments in respect of the
term loan portions of the Working Capital Debt or waive any Event of Default
under the Working Capital Loan Agreement as a result of the failure of the
Borrowers to make any payment of principal in respect of any term loan when due.
(c) The priorities set forth in this Agreement are applicable irrespective
of the order or time of attachment, or the order, time or manner of perfection,
or the order or time of filing or recordation of any document or instrument, or
other method of perfecting a Lien in favor of each Lender in any Collateral, and
notwithstanding any conflicting terms or conditions which may be contained in
any of the Documents.
(d) The priorities set forth in this Agreement are premised upon the
assumption that any liens and security interests which are provided herein to be
senior and prior in right to other liens and security interests have been duly
and properly created and perfected pursuant to the applicable Documents or
otherwise, and are not avoidable for any reason. Each of the Working Capital
Agent, the Working Capital Lenders and the Term Loan Lender agrees not to
contest, or to bring (or voluntarily join in or permit) any action or proceeding
for the purpose of contesting, the validity, perfection or priority (as herein
provided) of, or seeking to avoid, the Working Capital Agent's, any Working
Capital Lender's or the Term Loan Lender's liens and security interests in the
Collateral, and provided, further, that nothing herein shall be deemed or
construed to prevent the Working Capital Agent, any Working Capital Lender or
the Term Loan Lender from asserting any right
or claim it may have arising under or in connection with this Agreement.
(e) Subject to Section 2(a), all proceeds of the Collateral received by
the Term Loan Lender shall be forthwith paid over, in the funds and currency
received, to the Working Capital Agent and the Working Capital Lenders for
application to the Working Capital Debt (except to the extent of the Excluded
Portion or as otherwise required by law). All proceeds of the Collateral
received by the Working Capital Agent or any Working Capital Lender after the
Working Capital Debt (other than the Excluded Portion) has been paid in full in
cash and the Working Capital Agent and the Working Capital Lenders have received
as cash collateral an amount equal to 105% of the aggregate undrawn face amount
of letters of credit provided under the Working Capital Loan Agreement for the
account of any Borrower or any Obligor shall be forthwith paid over, in the
funds and currency received, to the Term Loan Lender for application to the Term
Loan Debt (unless otherwise required by law, provided that the Working Capital
Agent and the Working Capital Lenders shall promptly pay over to the Term Loan
Lender any such cash collateral in respect of letters of credit which have
expire undrawn or have been returned to the issuer thereof for cancellation).
For purposes of this Section 2(e), payments made by any Borrower to the Term
Loan Lender in respect of the Term Loan Debt with proceeds of loans by the
Working Capital Agent or the Working Capital Lenders to any Borrower shall not
be construed to constitute proceeds of Collateral.
(f) Each Lender shall be solely responsible for perfecting and maintaining
the perfection of its Lien in and to each item constituting the Collateral in
which such Lender has been granted a Lien. The foregoing provisions of this
Agreement are intended solely to govern the respective Lien priorities as
between the Lenders and shall not impose on any Lender any obligations in
respect of the disposition of proceeds of any Collateral that would conflict
with prior perfected claims therein in favor of any other Person or any order or
decree of any court or governmental authority or any applicable law.
(g) The Term Loan Lender shall, at any time during the continuance of a
Release Event while Working Capital Debt (other than the Excluded Portion)
remains unpaid: (i) upon the request of the Working Capital Agent with respect
to such Collateral or other disposition as set forth below (which request shall
specify the proposed terms of the sale or other disposition and the type and
amount of consideration to be received in connection therewith), release or
otherwise terminate its Liens on such Collateral, to the extent such Collateral
is to be sold or otherwise disposed of either by (A) the Working Capital Agent
or its agents, or (B) any Borrower or any other Obligor with the consent of the
Working Capital Agent and the Working Capital Lenders; (ii) deliver such release
documents as Working Capital Agent may reasonably require in connection
therewith; provided that, (A) such release by the Term Loan Lender shall not
extend to or otherwise affect any of the rights of the Term Loan Lender to the
proceeds from any such sale or other disposition of Collateral, (B) the Working
Capital Agent and the Working Capital Lenders shall promptly apply such proceeds
to the Working Capital Debt (other than the Excluded Portion), including the
cash collateralization of any undrawn letters of credit provided under the
Working Capital Loan Agreement for the account of the Borrowers or any Obligor),
(C) after such application, the Working Capital Agent and the Working Capital
Lenders shall promptly deliver any excess proceeds from such sale or disposition
of Collateral to the Term Loan Lender,
and (D) no such release documents shall be delivered (1) to any Borrower or any
other Obligor or (2) more than three (3) business days prior to the date of the
closing of the sale or disposition of the Collateral; provided further that if
the closing of the sale or disposition of the Collateral is not consummated, the
Working Capital Agent shall promptly return all release documents to the Term
Loan Lender; and (iii) be deemed to have consented under the Documents to which
the Term Loan Lender is a party to such sale or other disposition. The
effectiveness of any such release or termination by the Term Loan Lender shall
lapse in the event such sale or other disposition does not occur within ten (10)
days of the anticipated closing date. In any sale or other disposition of any of
the Collateral by the Working Capital Agent or any Working Capital Lender, the
Working Capital Agent or such Working Capital Lender shall conduct such sale or
other disposition in a commercially reasonable manner. Without intending to
expand or alter the standards of commercial reasonableness of a lender in the
exercise of its remedies under applicable law, the Working Capital Agent and the
Working Capital Lenders acknowledge and agree that it is their intention that
the Working Capital Agent or the Working Capital Lender conducting any Lien
Enforcement Action will use reasonable efforts to regularly advise the Term Loan
Lender of the status of any Lien Enforcement Action, to consult with the Term
Loan Lender from time to time with respect to the various options available to
the Working Capital Agent or such Working Capital Lender with respect to any
such Lien Enforcement Action, and advise the Term Loan Lender of any and all
offers which may be made from time to time by prospective purchasers of the
Collateral.
SECTION 3. Enforcement of Security.
(a) Subject to the other terms and conditions of this Agreement, the
Working Capital Agent and the Working Capital Lenders shall have the exclusive
right to manage, perform and enforce the terms of the Working Capital Loan
Documents with respect to the Collateral, to exercise and enforce all privileges
and rights thereunder according to their discretion and the exercise of their
business judgment, including, without limitation, the exclusive right to take or
retake control or possession of such Collateral and to hold, prepare for sale,
process, sell, lease, dispose of, or liquidate such Collateral. Except as
specifically provided in Section 3(c) below, notwithstanding any rights or
remedies available to the Term Loan Lender under any of the Term Loan Documents,
applicable law or otherwise, prior to the time that the Working Capital Agent
and the Working Capital Lenders shall have received the payment in full of all
Working Capital Debt (other than the Excluded Portion) in cash, the Term Loan
Lender shall not, directly or indirectly, take any Lien Enforcement Action.
Notwithstanding anything in the preceding sentence or in this Agreement to the
contrary, during the occurrence and continuance of any Event of Default under
any Term Loan Document, subject at all times to the provisions of Sections 2(a)
and 2(e) of this Agreement, upon the expiration of the Standstill Period, the
Term Loan Lender may take any Lien Enforcement Action, but only so long as the
Working Capital Agent or the Working Capital Lenders are not diligently pursuing
in good faith the exercise and enforcement of their rights or remedies against,
or diligently attempting to vacate any stay or enforcement of their Liens on,
all or a material portion of the Collateral (including, without limitation,
commencement of any Lien Enforcement Action). If the Term Loan Lender commences
any action to enforce its Lien on any Collateral to the extent permitted
hereunder and is diligently pursuing in good faith
such actions, neither the Working Capital Agent nor any Working Capital Lender
shall take any action of a similar nature with respect to such Collateral.
(b) Each Lender shall give to the other Lender concurrently with the
giving thereof to any Borrower or any other Obligor (i) a copy of any written
notice by such Lender of an Event of Default under any of its Documents,
including, without limitation, written notice of demand of payment from any
Borrower or any other Obligor, and (ii) a copy of any written notice sent by
such Lender to any Borrower or any other Obligor, stating such Lender's
intention to exercise any of its enforcement rights or remedies against such
Borrower or Obligor, including, without limitation, written notice pertaining to
any foreclosure on any of the Collateral or other judicial or non-judicial
remedy in respect thereof to the extent permitted hereunder, and any legal
process served or filed in connection therewith; provided that the failure of
any Lender to give such required notice shall not affect the relative priorities
of the Liens of the Lenders as provided herein or the validity or effectiveness
of any such notice as against any Borrower or any other Obligor. In addition, if
the Working Capital Agent or any Working Capital Lender shall receive possession
or control of any books and records of any Borrower or any other Obligor that
contain information identifying or pertaining to any Collateral in which the
Term Loan Lender has been granted a Lien (whether in the exercise of its rights
under its Documents or otherwise), the Working Capital Agent or such Working
Capital Lender shall notify the Term Loan Lender that it has received such books
and records and shall, as promptly as practicable thereafter, make available to
the Term Loan Lender such books and records for inspection and duplication.
(c) Section 3(a) shall not be construed to limit or impair in any way the
right of: (i) any Lender to bid for or purchase Collateral at any private or
judicial foreclosure upon such Collateral initiated by any Lender, (ii) the Term
Loan Lender to join (but not control) any foreclosure or other judicial lien
enforcement proceeding with respect to the Collateral initiated by the Working
Capital Agent or any Working Capital Lender, so long as it does not delay or
interfere in any material respect with the exercise by the Working Capital Agent
or such Working Capital Lender of its rights under this Agreement, and (iii) the
Term Loan Lender's right to receive any remaining proceeds of Collateral after
satisfaction and payment in full in cash of all Working Capital Debt (other than
the Excluded Portion), including the cash collateralization of any undrawn
letter of credit provided under the Working Capital Loan Agreement for the
account of the Borrowers or any Obligor. Each right, power and remedy of each
Lender provided for in this Agreement, any Document, or any other loan document
relating to any of the foregoing, whether now existing or hereafter available at
law or in equity or by statute or otherwise, shall be cumulative (except to the
extent otherwise provided in any such Document) and shall be in addition to
every other such right, power or remedy. Except to the extent otherwise provided
in this Agreement, any Document or any other loan document relating to any of
the foregoing, the exercise by or on behalf of a Lender of any one or more of
such rights, powers or remedies shall not preclude the simultaneous or later
exercise of all other such rights, powers and remedies, and no course of dealing
or failure or delay on the part of any Lender in exercising any such right,
power or remedy shall operate as a waiver thereof or otherwise prejudice its
rights, powers or remedies.
(d) Each of the Working Capital Agent, the Working Capital Lenders and the
Term Loan Lender agrees to hold, or cause to be held on its behalf, any
Collateral received by or on behalf of it, or under its dominion and control, in
or against which a Lien may be perfected by possession or the exercise of
dominion and control, on behalf of all others entitled thereto, and to turn over
to the Working Capital Agent, Working Capital Lenders or the Term Loan Lender,
as appropriate, all such Collateral and all other Collateral, which shall be
dealt with pursuant to the terms and conditions of the relevant Document. Each
Lender hereby appoints the other Lender as agent for the purposes of perfecting
the other Lender's Liens in and on any of the Collateral in the possession or
under the dominion and control of such Lender; provided that the Lender in the
possession of, or exercising dominion and control over, any Collateral shall not
have any duty or liability to protect or preserve any rights pertaining to any
of the Collateral and, except for gross negligence or willful misconduct as
finally determined by a court of competent jurisdiction, the non-possessing or
non-controlling Lender hereby waives and releases the other Lender from all
claims and liabilities arising pursuant to the possessing or controlling
Lender's role as bailee with respect to the Collateral, so long as the
possessing or controlling Lender shall use the same degree of care with respect
thereto as the possessing or controlling Lender uses for similar property
pledged to the possessing or controlling Lender as collateral for indebtedness
of others to the possessing or controlling Lender. After the Working Capital
Agent and the Working Capital Lenders have received final payment in full of all
of the Working Capital Debt (other than the Excluded Portion), including the
cash collateralization of any undrawn letter of credit provided under the
Working Capital Loan Agreement for the account of the Borrowers or any Obligor,
the Working Capital Agent and the Working Capital Lenders shall deliver the
remainder of the Collateral, if any, in their possession or under their dominion
and control to the Term Loan Lender and assign to the Term Loan Lender all of
the Working Capital Agent's interest in any blocked depository accounts of the
Obligors or any depository accounts of the Obligors under the dominion and
control of the Working Capital Agent, except as may otherwise be required by
applicable law or court order. It is understood and agreed that this paragraph
(d) is intended solely to assure continuous perfection of the Liens granted
under the applicable Documents, and nothing in this paragraph (d) shall be
deemed or construed as altering the priorities or obligations set forth
elsewhere in this Agreement.
SECTION 4. Term Loan Lender Purchase Option
(a) Upon the occurrence and during the continuance of an Event of Default
under a Working Capital Loan Document, the Term Loan Lender shall have the
option at any time upon five business days' prior written notice to the Working
Capital Agent to purchase all of the Working Capital Debt from the Working
Capital Agent and the Working Capital Lenders. Such notice from the Term Loan
Lender to the Working Capital Agent shall be irrevocable.
(b) On the date specified by the Term Loan Lender in such notice (which
shall not be less than five business days, nor more than twenty days, after the
receipt by the Working Capital Agent of the notice from the Term Loan Lender of
its election to exercise such option), the Working Capital Lenders shall sell to
the Term Loan Lender, and the Term Loan Lender shall purchase from the Working
Capital Lenders, the Working Capital Debt. The Working Capital Agent and each
Working Capital Lender hereby represents and warrants that, as of the date
hereof, no approval of any governmental authority, other regulatory body or
other Person is required for such sale.
(c) Upon the date of such purchase and sale, the Term Loan Lender shall
(i) pay to the Working Capital Agent for the benefit of the Working Capital
Lenders as the purchase price therefor the full amount of all the Working
Capital Debt then outstanding and unpaid (including principal, interest, fees
and expenses, including reasonable attorneys' fees and legal expenses but
excluding the Excluded Portion and any early termination fee, prepayment fee or
other similar fee payable pursuant to Section 10 of the Working Capital Loan
Agreement), (ii) furnish cash collateral to the Working Capital Agent in such
amounts as the Working Capital Agent determines is reasonably necessary to
secure the Working Capital Agent and the Working Capital Lenders in connection
with any issued and outstanding letters of credit provided by the Working
Capital Agent and the Working Capital Lenders (or letters of credit that the
Working Capital Agent or the Working Capital Lenders have arranged to be
provided by third parties pursuant to the financing arrangements of the Working
Capital Agent and the Working Capital Lenders with any Borrower or any other
Obligor) to any Borrower or any Obligor (but not in any event in an amount
greater than 105% of the aggregate undrawn face amount of such letters of
credit), (iii) agree to reimburse the Working Capital Agent and the Working
Capital Lenders for any loss, cost, damage or expense (including reasonable
attorneys' fees and legal expenses) in connection with any commissions, fees,
costs or expenses related to any issued and outstanding letters of credit as
described above and any checks or other payments provisionally credited to the
Working Capital Debt, and/or as to which the Working Capital Agent or the
Working Capital Lenders have not yet received final payment, and (iv) agree to
pay to the Working Capital Agent for the benefit of the Working Capital Lenders
any early termination fee, prepayment fee or other similar fee payable pursuant
to Section 10 of the Working Capital Loan Agreement within three (3) business
days after receipt by the Term Loan Lender of amounts sufficient to pay such
early termination fee, prepayment fee or other similar fee after the payment in
full in cash to the Term Loan Lender of the Term Loan Debt and the Working
Capital Debt purchased by the Term Loan Lender pursuant to this Section 4,
including principal, interest and fees thereon and costs and expense of
collection thereof (including reasonable attorneys' fees and legal expenses),
provided that the payment of the fee occurs within sixty (60) days after the
effective date of the purchase of the Working Capital Debt by the Term Loan
Lender. Such purchase price and cash collateral shall be remitted by wire
transfer in federal funds to such bank account of the Working Capital Agent in
New York, New York, as the Working Capital Agent may designate in writing to the
Term Loan Lender for such purpose. Interest shall be calculated to but excluding
the business day on which such purchase and sale shall occur if the amounts so
paid by the Term Loan Lender to the bank account designated by Working Capital
Agent are received in such bank account prior to 1:00 p.m., New York City time
and interest shall be calculated to and including such business day if the
amounts so paid by the Term Loan Lender to the bank account designated by
Working Capital Agent are received in such bank account later than 1:00 p.m.,
New York City time.
(d) Such purchase shall be expressly made without representation or
warranty of any kind by the Working Capital Agent or any Working Capital Lender
as to the Working Capital Debt or otherwise and without recourse to the Working
Capital Agent or any Working Capital Lender,
except for representations and warranties as to the following: (i) the amount of
the Working Capital Debt being purchased (including, without limitation, as to
the principal of and accrued and unpaid interest on such Working Capital Debt,
fees and expenses thereof), (ii) that the Working Capital Lenders own the
Working Capital Debt free and clear of any Liens, and (iii) the Working Capital
Lenders have the full right and power to assign the Working Capital Debt, such
assignment has been duly authorized, and no approval of any governmental
authority, other regulatory body or other Person is required in connection with
such assignment.
(e) The Working Capital Agent and each Working Capital Lender agrees that
it will give the Term Loan Lender five business days prior written notice of its
intention to commence any Lien Enforcement Action. If during such five business
day period, the Term Loan Lender shall send to the Working Capital Agent the
irrevocable notice of the Term Loan Lender's intention to exercise the purchase
option given by the Working Capital Lenders to the Term Loan Lender under
Section 4(a), the Working Capital Agent and the Working Capital Lenders shall
not accelerate payment of the Working Capital Debt or commence any Lien
Enforcement Action, provided that the purchase and sale with respect to the
Working Capital Debt provided for herein shall have closed within five business
days thereafter and the Working Capital Agent and the Working Capital Lenders
shall have received payment in full of the Working Capital Debt as provided for
herein (other than the Excluded Portion) within such five business day period.
The Working Capital Agent shall not be required to provide such five business
days prior written notice if in the good faith determination of the Working
Capital Agent (i) a fraud has been committed by any Borrower or any other
Obligor in connection with its obligations under the Working Capital Loan
Documents, including, without limitation, any withholding of collections of
accounts receivable or other proceeds of Collateral in violation of the terms of
the Working Capital Loan Documents, or (ii) providing such notice would have a
reasonable likelihood of (A) causing a material diminution in the value of the
Collateral, or (B) materially endangering the Working Capital Agent's or the
Working Capital Lenders' ability to realize upon the Collateral; provided,
however, that in the each such case the Working Capital Agent nonetheless shall
give the Term Loan Lender concurrent or prompt subsequent notice (which shall
indicate in reasonable detail the nature and circumstances of any fraud or other
event described in clause (i) or (ii) above that is applicable) of its
acceleration or commencement of Lien Enforcement Action.
SECTION 5. Waiver of Marshalling and Similar Rights. Each Lender, to the
fullest extent permitted by applicable law, waives any requirement regarding,
and agrees not to demand, request, plead or otherwise claim the benefit of, any
marshalling, appraisement, valuation or other similar right that may otherwise
be available under applicable law.
SECTION 6. Notices, etc. Each Lender agrees to give, or cause to be given,
to the other Lender written notice of the time and place of any public or
private sale of the Collateral or the time after which any such sale or other
intended disposition is to be made of the Collateral, and agrees to use
reasonable efforts to make available, or cause to be made available (but shall
have no liability for failure to do so), information received by it from any
Borrower or any other Obligor with respect to the Collateral. This Agreement is
intended, in part, to constitute a request for notice and a written notice of a
claim by each party hereto to the other parties hereto of an interest
in the Collateral in accordance with the provisions of Sections 9-504 and 9-505
of the Uniform Commercial Code.
SECTION 7. Termination. This Agreement shall terminate and be of no
further force and effect upon either (a) the payment in full of all of the
Obligations (as defined in the Working Capital Loan Documents), other than the
Excluded Portion, and the termination or expiration of (i) any commitment of the
Working Capital Lenders to make any loan or provide letter of credit or other
financial accommodations under any Working Capital Loan Documents and (ii) any
letters of credit issued by the Working Capital Agent or the Working Capital
Lenders (except to the extent within the Excluded Portion), including the cash
collateralization of any undrawn letter of credit provided under the Working
Capital Loan Agreement for the account of the Borrowers or any Obligor or (b)
payment in full of all of the Obligations (as defined in the Term Loan
Documents) and the termination or expiration of any commitment of the Term Loan
Lender under the Term Loan Agreement.
SECTION 8. Successors and Assigns
(a) This Agreement shall be binding upon each Lender and its respective
successors and assigns and shall inure to the benefit of each Lender and its
respective successors, participants and assigns.
(b) Each Lender reserves the right to grant participations in, or
otherwise sell, assign, transfer or negotiate all or any part of, or any
interest in, the Working Capital Debt or the Term Loan Debt, as the case may be;
provided that no Lender shall be obligated to give any notices to or otherwise
in any manner deal directly with any participant in the Working Capital Debt or
the Term Loan Debt, as the case may be, and no participant shall be entitled to
any rights or benefits under this Agreement except through the Lender with which
it is a participant and any sale of a participation in the Working Capital Debt
shall be expressly made subject to the provisions of this Agreement (including,
without limitation, Section 4).
(c) In connection with any participation or other transfer or assignment,
a Lender (i) may, subject to its respective Documents, disclose to such
assignee, participant or other transferee or assignee all documents and
information which such Lender now or hereafter may have relating to any Borrower
or any other Obligor or the Collateral and (ii) shall disclose to such
participant or other transferee or assignee the existence and terms and
conditions of this Agreement.
(d) In the case of an assignment or transfer, the assignee or transferee
acquiring any interest in the Term Loan Debt or the Working Capital Debt, as the
case may be, shall execute and deliver to each Lender a written acknowledgment
of receipt of a copy of this Agreement and the written agreement by such Person
to be bound by the terms of this Agreement. In addition, in the event of an
assignment or transfer by the Term Loan Lender of less than all of the Term Loan
Debt, the Term Loan Lender shall agree with the assignee to appoint one Person
as an agent to act on its behalf under this Agreement for purposes of receiving
payments and notices hereunder and shall notify the other parties hereto of the
Person who shall act in such capacity.
(e) In connection with any assignment or transfer of any or all of the
Obligations of a Lender or any or all rights of such Lender in the property of
any Borrower or any other Obligor (other than pursuant to a participation), the
other Lender agrees to execute and deliver an agreement identical to this
Agreement (subject to changing names of parties, documents and addresses, as
appropriate) in favor of any such assignee or transferee and, in addition, will
execute and deliver an agreement identical to this Agreement (subject to
changing names of
parties, documents and addresses, as appropriate) in favor of any third Person
who succeeds to or refinances, replaces or substitutes for any or all of such
Lender's financing of any Borrower or any other Obligor, whether such successor
or replacement financing occurs by transfer, assignment or any other means.
SECTION 9. Miscellaneous.
(a) All notices and other communications provided for hereunder shall be
in writing and shall be mailed, sent by overnight courier, telecopied, or
delivered, as follows:
if to the Working Capital Agent, to it at the following address:
The CIT Group/Business Credit, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Regional Manager
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to
Xxxxx Xxxxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
if to the Term Loan Lender, to it at the following address:
Hilco Capital LP
One Northbrook Place
0 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Portfolio Administrator
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other parties complying as to delivery with the terms
of this Section 9(a). All such notices and other communications shall be
effective (i) if sent by registered mail, return receipt requested, when
received or three business days after mailing, whichever first occurs, (ii) if
telecopied, when transmitted and a confirmation is received, provided the same
is on a business day and, if not, on the next business day, or (iii) if
delivered by messenger or overnight courier, upon delivery, provided the same is
on a business day and, if not, on the next business day.
(b) This Agreement may be executed by the parties hereto in several
counterparts, and each such counterpart shall be deemed to be an original and
all of which shall constitute together but one and the same agreement.
(c) This Agreement shall be applicable both before and after the filing of
any petition by or against any Borrower or any Obligor under the U.S. Bankruptcy
Code and all converted or succeeding cases in respect thereof, and all
references herein to any Borrower or any other Obligor shall be deemed to apply
to the trustee for such Borrower or such Obligor and such Borrower or such
Obligor as debtor-in-possession. The relative rights of the Working Capital
Agent, the Working Capital Lenders and the Term Loan Lender in or to any
distributions from or in respect of any Collateral or proceeds of Collateral
shall continue after the filing thereof on the same basis as prior to the date
of the petition, subject to any court order approving the financing of, or use
of cash collateral by, any Borrower or any Obligor as debtor-in-possession.
(d) If any Borrower or any other Obligor shall become subject to a case
under the U.S. Bankruptcy Code and if as debtor(s)-in-possession move for
approval of financing to be provided in good faith by the Working Capital Agent
or any Working Capital Lender (the "DIP Lender") under Section 364 of the U.S.
Bankruptcy Code or the use of cash collateral with the consent of the DIP Lender
under Section 363 of the U.S. Bankruptcy Code, the Term Loan Lender agrees that
no objection will be raised by Term Loan Lender to any such financing on the
grounds of a failure to provide "adequate protection" for the Liens of the Term
Loan Lender so long as (i) the interest rate, fees, advance rates, lending
sublimits and limits and other terms are commercially reasonable under the
circumstances, (ii) the Term Loan Lender retains a Lien on the Collateral
(including proceeds thereof arising after the commencement of such proceeding)
with the same priority as existed prior to the commencement of the case under
the U.S. Bankruptcy Code, (iii) the Term Loan Lender receives a replacement Lien
on post-petition assets to the same extent granted to the DIP Lender, with the
same priority as existed prior to the commencement of the case under the U.S.
Bankruptcy Code, (iv) the aggregate principal amount of loans and letter of
credit accommodations outstanding under such post-petition financing, together
with the aggregate principal amount of the pre-petition Working Capital Debt,
shall not exceed the Maximum WC Debt, and (v) such financing or use of cash
collateral is subject to the terms of this Agreement. Nothing contained herein
shall be deemed to limit the rights of the Term Loan Lender to object to
post-petition financing or use of cash collateral on any grounds other than the
failure to provide "adequate protection" for the Liens of the Term Loan Lender.
For purposes of this Section, notice of a proposed financing or use of cash
collateral shall be deemed given when provided in the manner prescribed by
Section 6 hereof.
(e) Nothing in this Agreement (including, without limitation, the
definitions of Working Capital Debt or Term Loan Debt) shall be deemed to
subordinate the right of Term Loan Lender to receive payment to the right of the
Working Capital Agent or any Working Capital Lender to receive payment (whether
before or after the occurrence of any Insolvency Proceeding).
(f) This Agreement shall be governed by, and construed in accordance with,
the law of the State of New York.
(g) Except as herein otherwise specifically provided, the rights and
priorities of the parties shall be determined in accordance with applicable law.
(h) This Agreement is intended to establish the relative rights and
obligations of each of the Working Capital Agent, the Working Capital Lenders
and the Term Loan Lender with respect to the subject matter
hereof and shall not be deemed to create any rights or priorities in any other
Person.
(i) No amendment or waiver of any provision of this Agreement, and no
consent to any departure by any Person from the terms hereof, shall in any event
be effective unless it is in writing and signed by the Lenders. In no event
shall the consent of any Borrower or any other Obligor be required in connection
with any amendment or other modification of this Agreement.
(j) No failure or delay on the part of any Lender in exercising any power
or right under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power or right preclude any other or
further exercise thereof or the exercise of any other power or right.
(k) Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provisions in any other jurisdiction.
(l) Each of the Lenders agrees to cooperate fully with each other party
hereto to effectuate the intent and provisions of this Agreement and, from time
to time, to execute and deliver any and all other agreements, documents or
instruments, and to take such other actions, as may be reasonably necessary or
desirable to effectuate the intent and provisions of this Agreement.
(m) Any legal action or proceeding with respect to this Agreement or any
document related thereto may be brought in the courts of the State of New York
located in New York City or the United States of America for the Southern
District of New York, and, by execution and delivery of this Agreement, each of
the Borrowers, the Working Capital Agent, the Working Capital Lenders and the
Term Loan Lender hereby accepts generally and unconditionally the jurisdiction
of the aforesaid courts. Each of the Borrowers, the Working Capital Agent, the
Working Capital Lenders and the Term Loan Lender hereby irrevocably waives any
objection, including, without limitation, any objection to the laying of venue
or based on the grounds of forum non conveniens, which it may now or hereafter
have to the bringing of any such action or proceeding in such respective
jurisdictions and consents to the granting of such legal or equitable relief as
is deemed appropriate by the court.
(n) EACH OF THE PARTIES HERETO WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS Intercreditor AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, VERBAL OR WRITTEN STATEMENT OR OTHER ACTION IN CONNECTION HEREWITH.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
Working Capital Agent and
Working Capital Lender:
THE CIT GROUP/BUSINESS CREDIT, INC.
By:
-------------------------------------
Name:
Title:
Syndication Agent and
Working Capital Lender:
CITICORP USA, INC.
By:
-------------------------------------
Name:
Title:
Issuing Bank:
CITIBANK, N.A.
By:
-------------------------------------
Name:
Title:
Term Loan Lender:
HILCO CAPITAL LP
By:
-------------------------------------
Name:
Title:
Each of the undersigned hereby
acknowledges and agrees to the foregoing
terms and provisions.
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:
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:
TRIM TRENDS CANADA LIMITED
By:
-------------------------------------
Name:
Title:
177192 CANADA INC.
By:
-------------------------------------
Name:
Title:
