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EXHIBIT 10
SECOND AMENDMENT
TO CREDIT AGREEMENT
This Second Amendment to Credit Agreement dated as of March _____, 1999
by and between Talon Automotive Group, Inc., a Michigan corporation ("TAG"),
Xxxxxx Metal Products Co., a Nova Scotia corporation ("Xxxxxx") (Xxxxxx, called
together with TAG, the "Borrowers"), the Banks party hereto, and Comerica Bank,
a Michigan banking corporation, as agent for the Banks (in such capacity,
"Agent").
WHEREAS, Borrowers, Agent and the Banks entered into a certain Credit
Agreement dated as of April 28, 1998 and a certain First Amendment to Credit
Agreement dated as of August 31, 1998 (as so amended, the "Agreement"), pursuant
to which Borrowers incurred certain indebtedness and obligations and granted the
Agent, on behalf of the Banks, certain security for such indebtedness and
obligations; and
WHEREAS, Borrowers, Agent and Banks desire to amend certain provisions
of the Agreement on the terms and conditions hereof;
NOW, THEREFORE, it is agreed:
1. DEFINITIONS
1.1 Capitalized terms used herein and not defined to the contrary have the
meanings given them in the Agreement.
2. AMENDMENT
2.1 Section 1.12 of the Agreement is hereby amended and restated by replacing
the pricing grid set forth therein in its entirety with the following pricing
grid:
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Prime-based Loans
Prime-based Loans denominated in Eurocurrency-based Loans
Denominated in U.S. Canadian Dollars and Letter of Credit Fees
Leverage Ratio Dollars Facility Fees
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Level I 1.00% 2.00% 2.5% .50%
- 6.0
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Level II 1.00% 2.00% 2.25% .50%
- 5.5 but < 6.0
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Level III 0.75% 1.75% 2.00% 0.50%
- 5.0 but < 5.5
2
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Level IV 0.50% 1.50% 1.75% 0.50%
- 4.5 but <5.0
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Level V 0.25% 1.25% 1.55% 0.45%
- 3.5 but <4.5
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2.2 Section 1.29 of the Agreement is hereby amended and restated
in its entirety as follows:
"1.29 'EBITDA' shall mean, as of the last day of any fiscal
quarter, Net Income plus the aggregate amounts deducted in
determining Net Income for such period in respect of taxes
based on income, Michigan single business tax, interest
expense and depreciation and amortization, all determined in
accordance with GAAP determined in the following described
manner during the periods mentioned below:
(i) with respect to any calculation of EBITDA as of the
end of the fiscal quarter of Borrowers ending
December 31, 1998 by adding (x) the EBITDA for the
rolling four quarter period then ended and (y) in
each case, other than for the determination of the
Leverage Ratio for the purpose of establishing the
Applicable Margin, Four Million Eight Hundred
Thousand Dollars ($4,800,000);
(ii) with respect to any calculation of EBITDA as of the
end of the fiscal quarter of Borrowers ending April
3, 1999 by adding (x) EBITDA for the rolling four
quarter period then ended and (y) in each case, other
than for the determination of the Leverage Ratio for
the purpose of establishing the Applicable Margin,
Four Million Eight Hundred Thousand Dollars
($4,800,000);
(iii) with respect to any calculation of EBITDA as of the
end of the fiscal quarter of Borrowers ending July 3,
1999 by adding (x) EBITDA for the rolling four
quarter period then ended and (y) in each case, other
than for the determination of the Leverage Ratio for
the purpose of establishing the Applicable Margin,
Three Million Two Hundred Thousand Dollars
($3,200,000), and
(iv) with respect to any subsequent determination thereof,
on a rolling four quarter basis,
provided, however, solely for the purpose of calculating
Leverage Ratio during any four quarter
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period during which a Permitted Acquisition has occurred (x)
EBITDA determined for the entity or business acquired in
such Permitted Acquisition (without any annualization
pursuant to clauses (i) through (iii) above) shall be
included in the calculation hereof, as if such Permitted
Acquisition occurred on the first day of such four quarter
period, and (y) any Permitted Adjustments related to a
Permitted Acquisition shall be added back during the rolling
four quarter period which includes the date of the Permitted
Acquisition."
2.3 Section 1.31 of the Agreement is hereby amended and restated
as follows:
"1.31 'EDC Financing' shall mean loans and advances provided
to Xxxxxx by the EDC, (i) for the purpose and on the terms
described in that certain loan agreement dated as of December
17, 1997, as amended, between the EDC and Xxxxxx ('EDC Honda
Financing'), (ii) loans and advances that may hereafter be
extended by the EDC to Xxxxxx for the purpose of financing the
manufacturer of tooling for the KJ Program ('EDC KJ Program
Financing') and (iii) loans and advances that may hereafter be
extended by the EDC to Xxxxxx for the purpose of financing the
manufacture of tooling for the RS Program ('EDC RS Program
Financing')."
2.4 Section 1.32 of the Agreement is hereby amended and restated
in its entirety as follows:
"1.32 'EDC Financing Collateral' shall mean with respect to
any particular EDC Financing, the rights and interests of
Xxxxxx in and to tangible and intangible personal property of
the types described on Exhibit J hereto, to the extent arising
out of tools, molds, fixtures and dies financed pursuant to
the relevant EDC Financing; it being understood that EDC
Collateral for each EDC Financing shall be separate, and no
EDC Financing shall be cross collateralized with any other EDC
Financing."
2.5 Section 1.60 of the Agreement is hereby amended and restated
in its entirety as follows:
"1.60 'Interest Expense' shall mean, for any Person,
consolidated interest expense plus interest expense on capital
lease obligations, capitalized interest, non-cash interest
expense (except for capitalized loan financing costs and
non-cash interest expense on indebtedness with respect to
which no payment of principal is required to be made prior to
the Maturity Date in effect at the time of the relevant
calculation of Interest Expense), all Facility Fees or other
recurring fees associated with this
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Agreement, less interest expense (including capitalized
interest expense associated with equipping the KJ Program
and the RS Program) associated with Tooling Loans and EDC
Financing; provided however, that during the first four
quarters ending after the date of this Agreement interest
expense (except to the extent attributable to a Person
acquired pursuant to a Permitted Acquisition) shall be
annualized as if this Agreement and the Senior Subordinated
Notes were in effect at all times during the four quarter
period of calculation hereof, using actual interest rates
and Facility Fee rates in effect as of the Closing Date.
2.6 The following Section 1.63.1 is hereby added to the Agreement
immediately after Section 1.63 of the Agreement:
"1.63.1 'KJ Program' shall mean the production by Borrowers,
pursuant to a contract with Daimler-Chrysler Motor Company of
tooling for production platforms to be utilized in the
production of model year 2001.5 Jeep Cherokees."
2.7 Section 1.72 of the Agreement is hereby amended and restated
in its entirety as follows:
"1.72 'Leverage Ratio' shall mean, as of any date, the ratio
of:
(a) an amount equal to the difference between the Borrowers'
Indebtedness less a sum equal to (i) the amount of cash and
cash equivalents then on hand, plus (ii) the lesser of Fifteen
Million Dollars ($15,000,000) or an amount equal to fifty
percent (50%) of the then existing Eligible Tooling Invoices,
plus (iii) only for the purpose of calculating Borrowers'
compliance with subsection (b) of Section 10.4 hereof, the
amount of the EDC Financing then outstanding; to
(b) EBITDA."
2.8 The following Section 1.104.1 is hereby added to the Agreement
immediately after Section 1.05 of the agreement:
"1.104.1 'RS Program' shall mean the production by Borrowers,
pursuant to a contract with Daimler-Chrysler Motor Company, of
tooling for production platforms to be used in the production
of model year 2000 Chrysler Mini Vans."
2.9 Section 1.120 of the Agreement is hereby amended and restated
in its entirety as follows:
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"1.120 'Tooling Maximum' shall mean Thirty Eight
Million Dollars ($38,000,000)."
2.10 Clause (g) of Section 10.3 of the Agreement is hereby amended
and restated in its entirety as follows:
"(g) the EDC Financing and EDC Indemnifications to the extent
that the obligations thereunder (i) do not exceed Twenty Eight
Million Dollars ($28,000,000) and (ii) when added to the
Tooling Loans, do not exceed the Tooling Maximum;"
2.11 Section 10.4 of the Agreement is hereby amended and restated
in its entirety as follows:
"10.4 Financial Covenants. Permit:
(a) the Interest Coverage Ratio to be less than:
(i) from the date hereof to and including the
end of Borrower's third fiscal quarter for Borrowers' 1999
fiscal year: 1.6:1;
(ii) thereafter until and including the last day of
the second quarter of Borrowers' 2000 fiscal year: 1.75:1;
(iii) thereafter to and including the last day of the
first quarter of Borrowers' 2001 fiscal year: 1.6:1;
(iv) thereafter until the last day of the third
fiscal quarter of Borrowers' 2001 fiscal year: 1.75:1; and
(v) at all times thereafter 2.0:1.
(b) the Leverage Ratio to exceed:
(i) from the date hereof to and including
the last day of the third quarter for Borrowers' 1999 fiscal
year: 7.0:1;
(ii) thereafter until and including the last day of
the second fiscal quarter of Borrowers' 2001 fiscal year:
6.5:1;
(iii) thereafter until and including the last day of
Borrowers' 2001 fiscal year: 5.5:1; and
(iv) at all times thereafter, 5.0:1.
(c) the Net Worth to be less than the sum of (i) (x) at all
times to and including the last day of Borrower's 1999
fiscal year, negative Eight Million
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Dollars (-$8,000,000) , and (y) at all times thereafter,
negative Thirteen Million Dollars (-$13,000,000), plus (ii)
fifty percent (50%) of Net Income for each quarter of
Borrowers in which Net Income is a positive amount
commencing the quarter ended December 31, 1998, plus (iii)
one hundred percent (100%) of Net Proceeds of the Initial
Public Offering."
2.12 Exhibit "J" is hereby amended to the Agreement in the form
attached as Exhibit "J" hereto.
3. REPRESENTATIONS
Borrowers hereby represents and warrants that:
3.1 Execution, delivery and performance of this Amendment and any
other documents and instruments required under this Amendment or the Agreement
are within Borrowers' powers, have been duly authorized, are not in
contravention of law or the terms of Borrowers' Articles of Incorporation or
Bylaws, and do not require the consent or approval of any governmental body,
agency, or authority.
3.2 This Amendment, and the Agreement as amended by this
Amendment, and any other documents and instruments required under this Amendment
or the Agreement, when issued and delivered under this Amendment or the
Agreement, will be valid and binding in accordance with their terms.
3.3 The continuing representations and warranties of Borrowers
set forth in Sections 8.1 through 8.7 and 8.9 through 8.19 of the Agreement are
true and correct on and as of the date hereof with the same force and effect as
made on and as of the date hereof.
3.4 The continuing representations and warranties ofBorrowers
set forth in Section 8.8 of the Agreement are true and correct as of the date
hereof with respect to the most recent financial statements furnished to Bank by
Borrowers in accordance with Section 9.1 of the Agreement.
3.5 To the best of Borrowers' knowledge, no Event of Default, or
condition or event which, with the giving of notice or the running of time, or
both, would constitute an Event of Default under the Agreement, has occurred and
is continuing as of the date hereof.
4. WAIVER
4.1 This Amendment, when it becomes effective in accordance
with Section 5.1 hereof shall constitute the waiver by Agent and the Banks of
Borrowers failure to comply with Subsection (c) of Section 10.4 of the Agreement
as of the last day of Borrower's 1998 fiscal year.
5. MISCELLANEOUS
5.1 This Amendment may be executed in as many counterparts as
Agent, Banks and Borrowers deem convenient and shall be deemed to be effective
upon satisfaction of the following conditions: (a) delivery to Agent of
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counterparts hereof executed by each of the parties; (b) delivery by Borrowers
to Agent, in form and substance satisfactory to Agent and the Banks, of each of
the documents and instruments listed on the Checklist attached as Exhibit "A"
hereto; and (c) payment by Borrowers to the Agent, for distribution to each Bank
executing this Amendment, an amendment and waiver fee in the amount of 20 basis
points on each such executing Bank's share of the Revolving Loan Commitment.
5.2 Borrowers, Agent and the Banks acknowledge and agree that,
except as specifically amended and/or waived herein and hereby, all of the terms
and conditions of the Agreement and the Loan Documents, remain in full force and
effect in accordance with their original terms.
5.3 Borrowers shall pay all of Agent's legal costs and expenses
(including attorneys' fees and expenses) incurred in the negotiation,
preparation and closing hereof, including, without limitation, costs of all lien
searches and financing statement filings.
5.4 Except as specifically set forth herein, nothing set forth in
this Amendment shall constitute, or be interpreted or construed to constitute, a
waiver of any right or remedy of Agent or the Banks, or of any default or Event
of Default whether now existing or hereafter arising.
[SIGNATURE PAGE FOLLOWS]
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WITNESS the due execution hereof as of the day and year first above
written.
TALON AUTOMOTIVE GROUP, INC. XXXXXX METAL PRODUCTS CO.
By: By:
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Its: Its:
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COMERICA BANK, as Agent and Bank LASALLE NATIONAL BANK
By: By:
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Its: Its:
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NATIONAL BANK OF CANADA, PARIBAS
NEW YORK BRANCH
By: By:
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Its: Its:
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And
By:
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Its:
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MICHIGAN NATIONAL BANK BANK BOSTON, N.A.
By: By:
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Its: Its:
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DRESDNER BANK AG NEW YORK and
GRAND CAYMEN BRANCHES
By:
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Its:
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