LOAN AND SECURITY AGREEMENT
by and among
CONGRESS FINANCIAL CORPORATION (SOUTHERN)
and
GALION, INC.
SAFETY COMPONENTS FABRIC TECHNOLOGIES, INC.
AUTOMOTIVE SAFETY COMPONENTS INTERNATIONAL, INC.
AUTOMOTIVE SAFETY COMPONENTS INTERNATIONAL GmbH & Co. KG
AUTOMOTIVE SAFETY COMPONENTS INTERNATIONAL LIMITED
VALENTEC INTERNATIONAL CORPORATION, LLC
as Borrowers
SAFETY COMPONENTS INTERNATIONAL, INC.
ASCI HOLDINGS GERMANY (DE), INC.
ASCI HOLDINGS U.K. (DE), INC.
ASCI HOLDINGS MEXICO (DE), INC.
ASCI HOLDINGS CZECH (DE), INC.
AUTOMOTIVE SAFETY COMPONENTS INTERNATIONAL, S.A. de C.V.
AUTOMOTIVE SAFETY COMPONENTS INTERNATIONAL S.R.O.
as Guarantors
Dated: October 11, 2000
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS......................................................2
SECTION 2. CREDIT FACILITIES...............................................29
2.1 Revolving Loans.................................................29
2.2 Letter of Credit Accommodations.................................30
2.3 Term Loans......................................................32
2.4 Increase in Maximum Credit......................................33
2.5 Liabilities of Foreign Borrowers and Subsidiaries...............33
SECTION 3. INTEREST AND FEES...............................................34
3.1 Interest........................................................34
3.2 Fee.............................................................35
3.3 Changes in Laws and Increased Costs of Loans....................35
3.4 Maximum Interest................................................36
SECTION 4. CONDITIONS PRECEDENT............................................37
4.1 Conditions Precedent to Initial Loans and
Letter of Credit Accommodations...............................37
4.2 Conditions Precedent to All Loans and
Letter of Credit Accommodations...............................40
4.3 Conditions Precedent to Term Loan to German Borrower............41
SECTION 5. GRANT OF SECURITY INTEREST......................................41
5.1 Grant of Security Interest......................................41
5.2 Special Provisions Regarding Collateral.........................42
5.3 Release of Certain Liens........................................42
5.4 Liens on German Collateral......................................42
SECTION 6. COLLECTION AND ADMINISTRATION...................................42
6.1 Borrowers' Loan Accounts........................................42
6.2 Statements......................................................43
6.3 Collection of Accounts..........................................43
6.4 Payments........................................................45
6.5 Taxes...........................................................46
6.6 Authorization to Make Loans.....................................47
6.7 Illegality......................................................47
6.8 Euro............................................................48
6.9 Appointment of Agent for Receipts of Statements and Notices.....48
(i)
6.10 Use of Proceeds.................................................49
SECTION 7. COLLATERAL REPORTING AND COVENANTS..............................49
7.1 Collateral Reporting............................................49
7.2 Accounts Covenants..............................................51
7.3 Inventory Covenants.............................................52
7.4 Equipment and Real Property Covenants...........................53
7.5 Power of Attorney...............................................54
7.6 Right to Cure...................................................55
7.7 Access to Premises..............................................55
SECTION 8. REPRESENTATIONS AND WARRANTIES..................................55
8.1 Corporate Existence, Power and Authority; Subsidiaries..........56
8.2 Financial Statements; No Material Adverse Change................56
8.3 Chief Executive Office; Collateral Locations....................56
8.4 Priority of Liens; Title to Properties..........................57
8.5 Tax Returns.....................................................57
8.6 Litigation......................................................57
8.7 Compliance with Other Agreements and Applicable Laws;
Governmental Approval.........................................57
8.8 Environmental Compliance........................................58
8.9 Employee Benefits...............................................59
8.10 Capitalization..................................................60
8.11 Bank Accounts...................................................60
8.12 Intellectual Property...........................................60
8.13 Labor Disputes..................................................61
8.14 Corporate Name; Prior Transactions..............................61
8.15 Restrictions on Subsidiaries....................................61
8.16 Material Contracts..............................................61
8.17 Payable Practices...............................................61
8.18 Retention of Title..............................................62
8.19 Plan of Reorganization..........................................62
8.20 Inactive Subsidiaries...........................................62
8.21 Accuracy and Completeness of Information........................62
8.22 Survival of Warranties; Cumulative..............................62
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS..............................63
9.1 Maintenance of Existence........................................63
9.2 New Collateral Locations........................................63
9.3 Compliance with Laws, Regulations, Etc..........................63
9.4 Payment of Taxes and Claims.....................................64
9.5 Insurance.......................................................65
9.6 Financial Statements and Other Information......................65
(ii)
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc.........67
9.8 Encumbrances....................................................68
9.9 Indebtedness....................................................70
9.10 Loans, Investments, Guarantees, Etc.............................72
9.11 Dividends and Redemptions.......................................75
9.12 Transactions with Affiliates....................................76
9.13 Additional Bank Accounts........................................76
9.14 Compliance with ERISA...........................................76
9.15 License Agreements..............................................77
9.16 Adjusted Tangible Net Worth.....................................78
9.17 Changes in Business.............................................78
9.18 Applications under Insolvency Statutes..........................78
9.19 After Acquired Real Property....................................78
9.20 Costs and Expenses..............................................78
9.21 Limitation of Restrictions Affecting Subsidiaries...............79
9.22 Inactive Subsidiaries...........................................80
9.23 Litigation......................................................80
9.24 Further Assurances..............................................80
SECTION 10. EVENTS OF DEFAULT AND REMEDIES..................................81
10.1 Events of Default...............................................81
10.2 Remedies........................................................83
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW ..................................84
11.1 Governing Law; Choice of Forum;
Service of Process; Jury Trial Waiver.........................84
11.2 Waiver of Notices...............................................86
11.3 Amendments and Waivers..........................................86
11.4 Waiver of Counterclaims.........................................86
11.5 Indemnification.................................................87
11.6 Currency Indemnity..............................................87
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS................................87
12.1 Term............................................................87
12.2 Interpretative Provisions.......................................89
12.3 Notices.........................................................90
12.4 Partial Invalidity..............................................90
12.5 Successors......................................................90
12.6 Entire Agreement................................................91
12.7 Counterparts, etc...............................................91
12.8 Confidentiality.................................................91
(iii)
INDEX TO
EXHIBITS AND SCHEDULES
Exhibit A Information Certificate for Galion, Inc.
Information Certificate for Safety Components Fabric
Technologies, Inc.
Information Certificate for Automotive Safety Components
International, Inc.
Information Certificate for Automotive Safety Components
International GmbH & Co. KG
Information Certificate for Automotive Safety Components
International Limited
Information Certificate for Valentec International
Corporation, LLC
Information Certificate for Safety Components International,
Inc.
Information Certificate for ASCI Holdings Germany (DE), Inc.
Information Certificate for ASCI Holdings U.K. (DE), Inc.
Information Certificate for ASCI Holdings Mexico (DE), Inc.
Information Certificate for ASCI Holdings Czech (DE), Inc.
Information Certificate for Automotive Safety Components
International, S.A. de C.V.
Information Certificate for Automotive Safety Components
International s.r.o.
Exhibit B Form of Borrowing Base Certificate
Exhibit C Conditions to German Term Loan
Schedule 1.49 Existing Lenders
Schedule 1.50 Existing Letters of Credit
Schedule 1.89 Permitted Holders
Schedule 6.6 Designated Bank Accounts
Schedule 8.4 Existing Liens
Schedule 8.7(b) Permits
Schedule 8.7(c) Government Contracts
(i)
Schedule 8.8 Environmental Compliance
Schedule 8.10 Capitalization
Schedule 8.11 Bank Accounts
Schedule 8.12 Intellectual Property
Schedule 8.13 Labor Disputes
Schedule 8.16 Material Contracts
Schedule 8.18 Retention of Title Creditors
Schedule 8.19 Plan of Reorganization
Schedule 9.9 Existing Indebtedness
Schedule 9.10 Loans, Advances and Guarantees
(ii)
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement dated October 11, 2000 is entered into by
and among Congress Financial Corporation (Southern), a Georgia corporation
("Lender"), Galion, Inc., a Delaware corporation ("Galion"), Valentec
International Corporation, LLC, a Delaware limited liability company ("Valentec
International"), Safety Components Fabric Technologies, Inc., a Delaware
corporation ("SCFT"), Automotive Safety Components International, Inc., a
Delaware corporation ("Automotive International", and together with Galion,
Valentec International and SCFT, individually each a "US Borrower" and
collectively, "US Borrowers"), Automotive Safety Components International GmbH &
Co. KG, a limited partnership organized under the laws of the Federal Republic
of Germany ("German Borrower"), Automotive Safety Components International
Limited, a company incorporated under the laws of England and Wales with company
number 02640241 ("UK Borrower" and, together with US Borrowers and German
Borrower, individually each a "Borrower" and collectively, "Borrowers"), Safety
Components International, Inc., a Delaware corporation ("Safety"), ASCI Holdings
Germany (DE), Inc., a Delaware corporation ("ASCI Germany"), ASCI Holdings U.K.
(DE), Inc., a Delaware corporation ("ASCI UK"), ASCI Holdings Mexico (DE), Inc.,
a Delaware corporation ("ASCI Mexico"), ASCI Holdings Czech (DE), Inc., a
Delaware corporation ("ASCI Czech"), Automotive Safety Components International,
S.A. de C.V., a corporation organized under the laws of Mexico ("Automotive
Safety Mexico"), Automotive Safety Components International s.r.o., a limited
liability company organized under the laws of the Czech Republic ("Automotive
Safety Czech" and together with Safety, ASCI Germany, ASCI UK, ASCI Mexico, ASCI
Czech and Automotive Safety Mexico, each individually a "Guarantor" and
collectively, "Guarantors").
W I T N E S S E T H:
WHEREAS, Borrowers and Guarantors have requested that Lender enter into
certain financing arrangements with Borrowers pursuant to which Lender may make
loans and provide other financial accommodations to Borrowers;
WHEREAS, Lender is willing to make such loans and advances and provide such
financial accommodations on the terms and conditions set forth herein; and
WHEREAS, prior to the date of the initial Loan hereunder (a) the Bankruptcy
Court (as hereinafter defined) shall have entered the Confirmation Order (as
hereinafter defined), (b) the Confirmation Order shall be a Final Order (as
hereinafter defined) and shall be in full force and effect and (c) subject to
the terms and conditions herein and concurrently with the making of the initial
Loan hereunder, the Plan of Reorganization (as hereinafter defined) shall have
become effective.
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
respective meanings given to them below:
1.1 "Account Debtor" shall mean any Person who is or may become obligated
on or in respect of any Receivable or other Collateral.
1.2 "Accounts" shall mean all present and future rights of each Borrower to
payment for goods or other property sold or leased or for services rendered,
whether or not evidenced by instruments or chattel paper, and whether or not
earned by performance.
1.3 "Adjusted Eurodollar Rate" shall mean, with respect to each Interest
Period for any Eurodollar Rate Loan, the rate per annum (rounded upwards, if
necessary, to the next one-sixteenth (1/16th) of one (1%) percent) determined by
dividing (a) the Eurodollar Rate for such Interest Period by (b) a percentage
equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes hereof,
"Reserve Percentage" shall mean the reserve percentage, expressed as a decimal,
prescribed by any applicable United States or foreign banking authority for
determining the reserve requirement which is or would be applicable to deposits
of United States dollars in a non-United States or an international banking
office of Reference Bank used to fund a Eurodollar Rate Loan or any Eurodollar
Rate Loan made with the proceeds of such deposit, whether or not the Reference
Bank actually holds or has made any such deposits or loans. The Adjusted
Eurodollar Rate shall be adjusted on and as of the effective day of any change
in the Reserve Percentage.
1.4 "Adjusted Pre-Tax Income" shall mean, with respect to any Person for
any period, (a) the aggregate of the net income (loss) of such Person for such
period (excluding to the extent included therein any extraordinary or one time
or non-recurring gains or non-cash losses) after deducting all charges which
should be deducted before arriving at the net income (loss) for such period and
before deducting the Provision for Taxes for such period, all as determined in
accordance with GAAP, plus (b) depreciation for such period (to the extent
deducted in the determination of net income of such Person), minus (c) Fixed
Charges of such Person for such period, minus (d) the Capital Expenditures of
such Person for such period; provided, that, the effect of any change in
accounting principles adopted by such Person after the date hereof shall be
excluded. For the purposes of this definition, (i) net income excludes any gain
together with any related Provision for Taxes for such gain realized upon the
sale or other disposition of any assets that are not sold in the ordinary course
of business (including, without limitation, dispositions pursuant to sale and
leaseback transactions) or of any Capital Stock of such Person, and (ii) the
term "Provision for Taxes" shall mean an amount equal to all taxes imposed on or
measured by net income, whether Federal, State, Provincial, county or local, and
whether foreign or domestic, that are paid or payable by any Person in respect
of any period in accordance with GAAP.
1.5 "Adjusted Tangible Net Worth" shall mean as to any Person, at any time,
in accordance with GAAP (except as otherwise specifically set forth below), on a
consolidated basis for such Person and its Subsidiaries (if any), the amount
equal to the difference between:
2
(a) the aggregate net book value of all assets of such Person and its
Subsidiaries (excluding the value of patents, trademarks, tradenames,
copyrights, licenses, goodwill, leasehold improvements, prepaid assets and other
intangible assets), calculating the book value of inventory for this purpose on
a basis consistent with past practice and in accordance with GAAP, after
deducting from such book values all appropriate reserves in accordance with GAAP
(including all reserves for doubtful receivables, obsolescence, depreciation and
amortization) and (b) the aggregate amount of the Indebtedness and other
liabilities of such Person and its Subsidiaries (including tax and other proper
accruals).
1.6 "Affiliate" shall mean, with respect to a specified Person, a
partnership, corporation, limited liability company, limited partnership, or any
other Person which directly or indirectly, through one or more intermediaries,
controls or is controlled by or is under common control with such Person, and
without limiting the generality of the foregoing, includes any director or
officer of such Person. For the purposes of this definition, the term "control"
(including with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities or by contract or otherwise.
1.7 "Applicable Margin" shall mean, at any time, as to the Interest Rate
for Prime Rate Loans and the Interest Rate for Eurodollar Rate Loans, the
applicable percentage (on a per annum basis) set forth below if either the
Quarterly Average Excess Availability for the immediately preceding Test Period
is at or within the amounts indicated for such percentage or the Fixed Charge
Coverage Ratio as of the last day of the immediately preceding Test Period
(which ratio for this purpose shall be calculated based on the immediately
preceding Test Period) is at or within the levels indicated for such percentage:
Fixed Charge Applicable Prime Applicable Euro-
Excess Availability Coverage Ratio Rate Margin dollar Rate Margin
------------------- -------------- ---------------- ------------------
(a) $10,000,000 or Greater than or 0% 2%
more equal to 1.50 to 1.00
(b) Equal to or Equal to or greater 0% 2.25%
greater than than 1.15 to 1.00 but
$5,000,000 but less than 1.50 to
less than 1.00
$10,000,000
(c) less than less than 1.15 to .25% 2.50%
$5,000,000 1.00
provided, that, (i) the Applicable Margin shall be calculated and established
once each month prior to February 1, 2001, (ii) the Applicable Margin shall be
calculated and established once each fiscal quarter (commencing with the fiscal
quarter beginning January 1, 2001) and (iii) the
3
Applicable Margin shall be the lower percentage set forth above based on the
Quarterly Average Excess Availability or the Fixed Charge Coverage Ratio.
1.8 "Bankruptcy Case" shall mean the jointly administered cases under
Chapter 11 of the Bankruptcy Code of Safety Components International, Inc.,
Safety Components Fabric Technologies, Inc., Automotive Safety Components
International Inc., ASCI Holdings Germany (DE), Inc., ASCI Holdings U.K. (DE),
Inc., ASCI Holdings Mexico (DE), Inc. and ASCI Holdings Czech (DE), Inc. pending
in the Bankruptcy Court, designated Case Nos. 00-1644 (JJF) through 00-1650
(JJF).
1.9 "Bankruptcy Code" shall mean the United States Bankruptcy Code (11
U.S.C.ss.101 et seq.), as amended, and any successor statute.
1.10 "Bankruptcy Court" shall mean the United States Bankruptcy Court for
the District of Delaware.
1.11 "Blocked Accounts" shall have the meaning set forth in Section 6.3
hereof.
1.12 "Borrower Agent" shall mean Safety.
1.13 "Borrowers" shall mean, collectively, US Borrowers, German Borrower
and UK Borrower (together with their respective successors and assigns); each
sometimes being referred to herein individually as a "Borrower".
1.14 "Borrowing Base" shall mean, as to each Borrower, the amount equal to:
(a) eighty-five (85%) percent of the US Dollar Equivalent of the Net
Amount of Eligible Accounts of such Borrower, plus
(b) sum of (i) sixty (60%) percent of the US Dollar Equivalent of the
Value of Eligible Inventory of such Borrower consisting of finished goods
plus (ii) fifty (50%) percent of the US Dollar Equivalent of the Value of
Eligible Inventory of such Borrower consisting of raw materials for such
finished goods, plus
(c) one hundred (100%) percent of the Eligible Cash Collateral of such
Borrower, less
(d) any Reserves applicable to such Borrower.
The term "Borrowing Base" as used herein shall mean amount of the Loans and
Letter of Credit Accommodations available to each Borrower based on the
foregoing, without regard to the amount of Loans and Letter of Credit
Accommodations then outstanding. For purposes only of applying the Inventory
Loan Limit of a Borrower pursuant to Section 2.1(c)(ii), Lender may treat the
then undrawn amounts of outstanding Letter of Credit Accommodations established
for such Borrower for the purpose of purchasing Eligible Inventory as Revolving
Loans to such Borrower to the extent Lender is in effect relying on the Eligible
Inventory being purchased with such Letter of Credit Accommodations. In
determining the actual amounts of such Letter of Credit
4
Accommodations to be so treated for purposes of the sublimits, the outstanding
Revolving Loans and Reserves shall be attributed first to any components of the
lending formulas in this definition of the Borrowing Base that are not subject
to such sublimits, before being attributed to the components of the lending
formulas subject to such sublimits.
1.15 "Borrowing Base Certificate" shall mean a certificate substantially in
the form of Exhibit B hereto, as such form may from time to time be reasonably
modified by Lender, which is duly completed (including all schedules thereto)
and executed by the chief financial officer or other appropriate financial
officer of the applicable Borrower and delivered to Lender.
1.16 "Business Day" shall mean (a) in connection with any loans or Letter
of Credit Accommodations made or provided to German Borrower, or other matters
related exclusively to German Borrower, any day (i) other than a Saturday,
Sunday or other day in which commercial banks are authorized or required to
close under the laws of the State of New York or of Frankfurt, Germany, and (ii)
on which Lender's New York office and banks in Frankfurt, Germany are open for
the transaction of business, (b) in connection with any Loans or Letter of
Credit Accommodations made or provided to UK Borrower, or other matters related
exclusively to UK Borrower, any day (i) other than a Saturday, Sunday or other
day on which commercial banks are authorized or required to close under the laws
of the State of New York or of the United Kingdom, and (ii) on which Lender's
New York office and Barclays Bank in London, England are open for the
transaction of business and (c) in all cases except as otherwise provided in
clause (a) or (b) of this definition, any day (i) other than a Saturday, Sunday
or other day on which commercial banks are authorized or required to close under
the laws of the State of New York or the State of North Carolina, and (ii) on
which Lender's New York office and the Reference Bank are open for the
transaction of business; provided, that, in any case (whether under clause (a),
(b) or (c) of this definition or otherwise), if a determination of a Business
Day shall relate to any Eurodollar Rate Loans, the term Business Day shall also
exclude any day on which banks are closed for dealings in dollar deposits in the
London interbank market or other applicable Eurodollar Rate market.
1.17 "Capital Expenditures" shall mean, with respect to any Person, all
expenditures made and liabilities incurred for the acquisition of assets which
are in accordance with GAAP, treated as capital expenditures for such Person.
1.18 "Capital Leases" shall mean, as applied to any Person, any lease of
(or any agreement conveying the right to use) any property (whether real,
personal or mixed) by such Person as lessee which in accordance with GAAP, is
required to be reflected as a liability on the balance sheet of such Person.
1.19 "Capital Stock" shall mean any and all shares, interests (including
partnership interests), participations, or other equivalents (however
designated) of corporate stock and any options or warrants with respect to any
of the foregoing; and with respect to any Person, any and all shares, interests,
participations or other equivalents (however designated) of such Person's
capital stock, partnership interests or interests in any limited liability
company at any time outstanding, and any and all rights, warrants or options
exchangeable for or convertible into such capital stock or other interests (but
excluding any debt security that is exchangeable for or convertible into such
capital stock).
5
1.20 "Cash Equivalents" shall mean, at any time, (a) any evidence of
Indebtedness with a maturity date of one hundred eighty (180) days or less
issued or directly and fully guaranteed or insured by the United States of
America or any agency or instrumentality thereof, the United Kingdom or any
agency or instrumentality thereof, or the Federal Republic of Germany or any
agency or instrumentality thereof; provided, that, the full faith and credit of
the United States of America, the United Kingdom or the Federal Republic of
Germany, as the case may be, is pledged in support thereof; (b) certificates of
deposit or bankers' acceptances with a maturity of one hundred eighty (180) days
or less (after the date of the purchase thereof) of any financial institution
that is a member of the Federal Reserve System or a bank organized under the
laws of England or Wales or the Federal Republic of Germany, in any case having
combined capital and surplus and undivided profits of not less than the US
Dollar Equivalent of US$250,000,000; (c) commercial paper (including variable
rate demand notes) with a maturity of one hundred eighty (180) days or less
(after the date of the purchase thereof) issued or guaranteed by a corporation
(except an Affiliate of any Borrower or Guarantor) organized under the laws of
any State of the United States of America, the District of Columbia, any state
or territory of the Federal Republic of Germany, England or Wales, or a bank
organized under the laws of any State of the United States of America, the laws
of England or Wales or the laws of the Federal Republic of Germany or
constituting a national banking association under the laws of the United States
of America, in each case having a rating of at least A-1 by Standard & Poor's
Ratings Service, a division of The XxXxxx-Xxxx Companies, Inc. or at least P-1
by Xxxxx'x Investors Service, Inc.; (d) repurchase obligations with a term of
not more than thirty (30) days (after the date of the purchase thereof) for
underlying securities of the types described in clause (a) above entered into
with any financial institution having combined capital and surplus and undivided
profits of not less than the US Dollar Equivalent of US$250,000,000; (e)
repurchase agreements and reverse repurchase agreements relating to marketable
direct obligations issued or unconditionally guaranteed by the United States of
America, England or Wales or the Federal Republic of Germany or issued by any
governmental agency thereof and backed by the full faith and credit of the
United States of America, England or Wales or the Federal Republic of Germany,
in each case maturing within one hundred eighty (180) days or less from the date
of acquisition; provided, that, the terms of such agreements comply with the
guidelines set forth in the Federal Financial Agreements of Depository
Institutions with Securities Dealers and Others, as adopted by the Comptroller
of the Currency on October 31, 1985; and (f) investments in money market funds
and mutual funds which invest substantially all of their assets in securities of
the types described in clauses (a) through (e) above.
1.21 "Change of Control" shall mean the occurrence of any of the following
at any time after the Effective Date: (a) the transfer (in one transaction or a
series of related transactions) of all or substantially all of the assets of any
Borrower or Guarantor to any Person or group (as such term is used in Section
13(d)(3) of the Exchange Act) other than to the extent permitted hereunder; (b)
the liquidation or dissolution of any Borrower or Guarantor or the adoption of a
plan by the stockholders or partners of any Borrower or Guarantor relating to
the dissolution or liquidation of such Borrower or Guarantor (except pursuant to
a merger, consolidation or amalgamation permitted hereunder); (c) the
acquisition by any Person or group (as such term is used in Section 13(d)(3) of
the Exchange Act) of beneficial ownership, directly or indirectly, of fifty
(50%) percent or more of the voting power of the total outstanding Voting Stock
of any Borrower or Guarantor (other than Safety), other than any other Borrower
or Guarantor to the extent otherwise permitted hereunder and other than a
Permitted Holder; and (d) during any
6
period of two (2) years, individuals who at the beginning of such period
constituted the Board of Directors (or similar governing body) of any Borrower
or Guarantor (together with any new directors whose nomination for election was
approved by a vote of at least a majority 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 to
constitute a majority of the Board of Directors (or similar governing body) of
such Borrower or Guarantor, then still in office.
1.22 "Code" shall mean the United States Internal Revenue Code of 1986, as
the same now exists or may from time to time hereafter be amended, modified,
recodified or supplemented, together with all rules, regulations and
interpretations thereunder or related thereto.
1.23 "Collateral" shall have the meaning set forth in Section 5 hereof.
1.24 "Collateral Access Agreement" shall mean an agreement in writing, in
form and substance satisfactory to Lender in good faith, from any lessor of
premises to a Borrower or Guarantor, or any other person to whom any Collateral
(including Inventory, Equipment, bills of lading or other documents of title) is
consigned or who has custody, control or possession of any such Collateral or is
otherwise the owner, mortgagee or operator of any premises on which any of such
Collateral is located, pursuant to which such lessor, consignee, mortgagee or
other person, inter alia, (unless otherwise expressly agreed in writing by
Lender) acknowledges the security interest of Lender in such Collateral, agrees
to waive any and all claims such lessor, consignee, mortgagee or other person
may, at any time, have against such Collateral, whether for processing, storage
or otherwise, and agrees to permit Lender access to, and the right to remain on,
the premises of such lessor, consignee, mortgagee or other person so as to
exercise the rights and remedies of Lender and otherwise deal with such
Collateral.
1.25 "Confirmation Order" shall mean the Order pursuant to Section 1129 of
the Bankruptcy Code confirming the Plan of Reorganization in the Bankruptcy
Case.
1.26 "Consolidated Net Income" shall mean, with respect to any Person for
any period, the aggregate of the net income (loss) of such Person and its
Subsidiaries, on a consolidated basis, for such period (excluding to the extent
included therein any extraordinary and/or one time or unusual and non-recurring
gains or any non-cash losses) after deducting all charges which should be
deducted before arriving at the net income (loss) for such period and, without
duplication, after deducting the Provision for Taxes for such period, all as
determined in accordance with GAAP; provided, that, (a) the net income of any
Person that is not a Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid or payable to such Person or a Subsidiary of such Person; (b)
except to the extent included pursuant to the foregoing clause, the net income
of any Person accrued prior to the date it becomes a Subsidiary of such Person
or is merged into or consolidated with such Person or any of its Subsidiaries or
that Person's assets are acquired by such Person or by its Subsidiaries shall be
excluded; and (c) the net income (if positive) of any Subsidiary (other than a
Borrower or Guarantor) to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary to such Person or to any
other wholly-owned Subsidiary of such Person is not at the time permitted by
operation of the terms of its
7
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such Subsidiary shall be excluded. For the
purposes of this definition, net income excludes any gain or non-cash loss,
together with any related Provision for Taxes for such gain or non-cash loss,
realized upon the sale or other disposition of any assets that are not sold in
the ordinary course of business (including, without limitation, dispositions
pursuant to sale and leaseback transactions) or of any Capital Stock of such
Person or a Subsidiary of such Person and any net income realized or loss
incurred as a result of changes in accounting principles or the application
thereof to such Person.
1.27 "Currency Exchange Convention" shall mean in the calculation of the US
Dollar Equivalent, a procedure used by Lender to value in US Dollars (a) the
obligations or assets of any Borrower or Obligor that are originally measured in
Sterling, German Marks or any other currency and (b) any other amount expressed
in Sterling, German Marks or any other currency, other than US Dollars, in each
case by using the Exchange Rate for the purchase of US Dollars with Sterling,
German Marks or such other currency, as the case may be.
1.28 "Customs Broker" shall mean the persons selected by any Borrower after
written notice by such Borrower to Lender who are reasonably acceptable to
Lender to perform port of entry services to process Inventory imported by such
Borrower from outside the United States of America and to supply facilities,
labor and materials to such Borrower in connection therewith, provided, that, as
to each such person (a) Lender shall have received a Collateral Access Agreement
duly authorized, executed and delivered by such person, (b) such agreement is in
full force and effect and (c) such person shall be in compliance in all material
respects with the terms thereof.
1.29 "Debenture" shall mean the Debenture between UK Borrower and Lender
executed in connection with this Agreement.
1.30 "Dilution" shall mean, as to any Person for any period, the fraction,
expressed as a percentage, the numerator of which is the aggregate amount of
non-cash reductions in the Accounts of such Person for such period and the
denominator of which is the aggregate US Dollar Equivalent of the amount of the
gross sales of such Person for such period.
1.31 "Dilution Reserve" shall mean, as to each Borrower, a Reserve in
amounts established by Lender to reflect that Dilution with respect to the
Eligible Accounts of such Borrower as calculated by Lender for any period is
greater than five (5%) percent.
1.32 "EBITDA" shall mean, as to any Person, with respect to any period, an
amount equal to: (a) the Consolidated Net Income of such Person and its
Subsidiaries for such period, plus (b) depreciation, amortization and other
non-cash charges (including, but not limited to, imputed interest and deferred
compensation) for such period (to the extent deducted in the computation of
Consolidated Net Income of such Person), all in accordance with GAAP, plus (c)
Interest Expense for such period (to the extent deducted in the computation of
Consolidated Net Income of such Person), plus (d) the Provision of Taxes for
such period (to the extent deducted in the computation of Consolidated Net
Income of such Person).
8
1.33 "Effective Date" shall mean the date on which (a) the "Effective Date"
(as defined in the Plan of Reorganization) shall have occurred, (b) all of the
conditions precedent set forth in the Plan of Reorganization and the
Confirmation Order with respect to the effectiveness of the Plan of
Reorganization shall have been satisfied or waived in accordance with the terms
thereof, (c) the Confirmation Order shall have been entered, and (d) the
Confirmation Order shall be a Final Order.
1.34 "Eligible Accounts" shall mean, as to each Borrower, the US Dollar
Equivalent of Accounts created by such Borrower which are and continue to
satisfy the criteria set forth below as determined by Lender in good faith. In
general, Accounts shall be Eligible Accounts if:
(a) such Accounts arise from the actual and bona fide sale and
delivery of goods by a Borrower or rendition of services by a Borrower in
the ordinary course of its business which transactions are completed in
accordance with the terms and provisions contained in any documents related
thereto; provided, that, Accounts relating to xxxx and hold invoices shall
not be deemed to be ineligible by virtue of this clause (a) if Lender shall
have received an agreement in writing from the Account Debtor, in form and
substance satisfactory to Lender in good faith, confirming the
unconditional obligation of the Account Debtor to take the goods related
thereto and pay such invoice;
(b) (i) such Accounts (other than Accounts subject to prox dating) are
not unpaid more than the earlier of (A) sixty (60) days after the original
due date for them, or (B) ninety (90) days after the date of the original
invoice for them and (ii) such Accounts subject to prox dating are not
unpaid more than the earlier of (A) seventy-five (75) days after the
original due date for them, or (B) one hundred five (105) days after the
original invoice date for them;
(c) such Accounts comply with the terms and conditions contained in
Section 7.2(c) of this Agreement;
(d) such Accounts do not arise from sales on consignment, guaranteed
sale, sale and return, sale on approval, or other terms under which payment
by the Account Debtor may be conditional or contingent;
(e) with respect to Accounts of US Borrowers, the chief executive
office and principal place of business of the Account Debtor with respect
to such Accounts is located in the United States of America or Canada
(provided, that, at any time promptly upon Lender's request, Borrower shall
execute and deliver, or cause to be executed and delivered, such other
agreements, documents and instruments as may be required by Lender to
perfect the security interests or other interests of Lender in those
Accounts of an Account Debtor with its chief executive office or principal
place of business in Canada in accordance with the applicable laws of the
Province of Canada in which such chief executive office or principal place
of business is located and take or cause to be taken such other and further
actions as Lender may request to enable Lender as secured party with
respect thereto to collect such Accounts under the applicable Federal or
Provincial laws of Canada) or, at Lender's option, if the chief executive
office and principal place of business of the Account Debtor with respect
to such Accounts is located other than in the United States of America or
Canada, then either: (i) the Account Debtor has delivered to such US
Borrower an irrevocable letter of credit issued or confirmed by a bank
9
satisfactory to Lender and payable only in the United States of America and
in US Dollars, sufficient to cover such Account, in form and substance
satisfactory to Lender and, if required by Lender, the original of such
letter of credit has been delivered to Lender and the issuer thereof
notified of the assignment of the proceeds of such letter of credit to
Lender, or (ii) such Account is subject to credit insurance payable to
Lender issued by an insurer and on terms and in an amount acceptable to
Lender, or (iii) such Account is otherwise acceptable in all respects to
Lender (subject to such lending formula with respect thereto as Lender may
determine);
(f) with respect to Accounts of UK Borrower, the chief executive
office and principal place of business of the Account Debtor with respect
to such Accounts is located in the United Kingdom or the Federal Republic
of Germany, or, at Lender's option, if the chief executive office and
principal place of business of the Account Debtor with respect to such
Accounts is located other than in the United Kingdom or the Federal
Republic of Germany, then if either: (i) the Account Debtor has delivered
to UK Borrower an irrevocable letter of credit issued or confirmed by a
bank satisfactory to Lender and payable only in the United Kingdom and in
Sterling or in the Federal Republic of Germany and in German Marks,
sufficient to cover such Account, in form and substance satisfactory to
Lender and, if required by Lender, the original of such letter of credit
has been delivered to Lender and the issuer thereof notified of the
assignment of the proceeds of such letter of credit to Lender, or (ii) such
Account is subject to credit insurance payable to Lender issued by an
insurer and on terms and in an amount acceptable to Lender, or (iii) such
Account is otherwise acceptable in all respects to Lender (subject to such
lending formula with respect thereto as Lender may determine);
(g) with respect to Accounts of German Borrower, the chief executive
office and principal place of business of the Account Debtor with respect
to such Accounts is located in the Federal Republic of Germany, or, at
Lender's option, if the chief executive office and principal place of
business of the Account Debtor with respect to such Accounts is located
other than in the Federal Republic of Germany, then if either: (i) the
Account Debtor has delivered to German Borrower an irrevocable letter of
credit issued or confirmed by a bank satisfactory to Lender and payable
only in the Federal Republic of Germany and in German Marks, sufficient to
cover such Account, in form and substance satisfactory to Lender and, if
required by Lender, the original of such letter of credit has been
delivered to Lender and the issuer thereof notified of the assignment of
the proceeds of such letter of credit to Lender, or (ii) such Account is
subject to credit insurance payable to Lender issued by an insurer and on
terms and in an amount acceptable to Lender, or (iii) such Account is
otherwise acceptable in all respects to Lender (subject to such lending
formula with respect thereto as Lender may determine);
(h) such Accounts do not consist of progress xxxxxxxx (such that the
obligation of the Account Debtors with respect to such Accounts is
conditioned upon a Borrower's satisfactory completion of any further
performance under the agreement giving rise thereto), xxxx and hold
invoices or retainage invoices, except as to xxxx and hold invoices if
Lender shall have received an agreement in writing from the Account Debtor,
in form and substance satisfactory to Lender, confirming the unconditional
obligation of the Account Debtor to take the goods related thereto and pay
such invoice;
10
(i) the Account Debtor with respect to such Accounts has not asserted
a counterclaim, defense or dispute and does not have, and does not engage
in transactions which may give rise to any right of setoff or recoupment
against such Accounts (but the portion of the Accounts of such Account
Debtor in excess of the amount at any time and from time to time owed by a
Borrower to such Account Debtor or claimed owed by such Account Debtor may
be deemed Eligible Accounts);
(j) there are no facts, events or occurrences known to Lender or any
Borrower which would impair the validity, enforceability or collectability
of such Accounts or reduce the amount payable or delay payment thereunder
(including, without limitation, any restriction or limitation on the
assignability of such Accounts); provided, that, to the extent there are
facts, events or occurrences which have only reduced the amount payable
under any Account, the portion of such Account which is not so reduced may
still be eligible;
(k) such Accounts are subject to the first priority, valid and
perfected security interest of Lender (and as to Accounts of UK Borrower,
are subject to the first ranking security interest in favor of Lender and
as to Accounts of German Borrower have been validly assigned to Lender for
security purposes with first priority) and without any prohibition on the
assignment of such Accounts, and in any case any goods giving rise thereto
are not, and were not at the time of the sale thereof, subject to any liens
except those permitted in this Agreement;
(l) neither the Account Debtor nor any officer or employee of the
Account Debtor with respect to such Accounts is an officer, employee, agent
or other Affiliate of a Borrower or Guarantor;
(m) the Account Debtors with respect to such Accounts are not any
foreign government, the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, unless, if the
Account Debtor is the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, upon Lender's
request, the Federal Assignment of Claims Act of 1940, as amended or any
similar State or local law, if applicable, has been complied with in a
manner satisfactory to Lender;
(n) there are no proceedings or actions which are threatened or
pending against the Account Debtors with respect to such Accounts which
could be reasonably expected to result in any material adverse change in
any such Account Debtor's financial condition, as determined by Lender in
good faith;
(o) such Accounts of a single Account Debtor or its Affiliates do not
constitute at any time more than (i) in the case of an Account Debtor
(excluding TRW, Autoliv, Petri and Delphi Automotive) with a chief
executive office or principal place of business located in the United
States of America or Canada, fifteen (15%) percent of all Eligible Accounts
of any US Borrower owed at such time by Account Debtors with chief
executive offices or principal places of business in the United States of
America or Canada, (ii) in the case of an Account Debtor (excluding TRW,
Autoliv, Petri and Delphi Automotive) with a chief executive office or
principal place of business located in the Federal Republic of Germany,
fifteen (15%) percent of all Eligible Accounts of German Borrower owed at
such time by Account Debtors with chief executive offices or principal
places of business located in the Federal Republic of Germany, (iii) in the
case of an Account Debtor (excluding TRW, Autoliv, Petri and Delphi
Automotive) with a chief executive office or principal place of business
located in the United Kingdom, fifteen (15%) percent of all Eligible
Accounts of UK Borrower owed at such time by Account Debtors with chief
11
executive offices or principal places of business in the United Kingdom,
(iv) in the case of each of Petri and Delphi Automotive, twenty-five (25%)
percent of all Eligible Accounts of Borrowers owed at such time by all
Account Debtors and (v) in the case of each of TRW and Autoliv, thirty five
(35%) percent of all Eligible Accounts of Borrowers owned at such time by
all Account Debtors;
(p) (i) with respect to Account Debtors not subject to prox dating,
such Accounts are not owed by an Account Debtor who has Accounts unpaid
more than the earlier of (A) sixty (60) days after the original due date
for them, or (B) ninety (90) days after the date of the original invoice
for them, which constitute more than fifty (50%) percent of the total
Accounts of such Account Debtor and (ii) with respect to Account Debtors
subject to prox dating, such Accounts are not owed by an Account Debtor who
has Accounts unpaid more than the earlier of (A) seventy-five (75) days
after the original due date for them, or (B) one hundred five (105) days
after the date of the original invoice for them, which constitute more than
fifty (50%) percent of the total Accounts of such Account Debtor;
(q) the Account Debtor is not located in a state or country requiring
the filing of a Notice of Business Activities Report or similar report in
order to permit the Borrower to which an Account is owed to seek judicial
enforcement in such state or country of payment of such Account, unless
such Borrower has qualified to do business in such state or country or has
filed a Notice of Business Activities Report or equivalent report for the
then current year or such failure to file and inability to seek judicial
enforcement is capable of being remedied without any material delay or
material cost;
(r) such Accounts are owed by Account Debtors whose total indebtedness
to Borrower to which such Account is owed does not exceed the credit limit
with respect to such Account Debtors as determined by such Borrower, from
time to time and as is reasonably acceptable to Lender (but the portion of
the Accounts not in excess of such credit limit may be deemed Eligible
Accounts);
(s) such Accounts are owed by Account Debtors deemed creditworthy at
all times by Borrowers, consistent with their current practices and who are
reasonably acceptable to Lender;
(t) such Accounts are not evidenced by instruments or chattel paper;
and
(u) with respect to the Accounts of German Borrower, such Accounts are
described in the list most recently delivered to Lender pursuant to Section
7.1(a)(ii)(H).
General criteria for Eligible Accounts may be established and revised from time
to time by Lender in good faith based on an event, condition or other
circumstance arising after the date hereof, or existing on the date hereof to
the extent Lender has no written notice thereof from
12
Borrower Agent, which adversely affects or could reasonably be expected to
adversely affect the Accounts in the good faith determination of Lender. Any
Accounts of Borrowers which are not Eligible Accounts shall nevertheless be part
of the Collateral.
1.34A "Eligible Cash Collateral" shall mean, with respect to a Borrower,
the cash or Cash Equivalents (in each case denominated in US Dollars) of such
Borrower which are: (a) held in a securities account in the United States of
America in the name of such Borrower at First Union National Bank or one of its
affiliates (the "Collateral Account") or held by Lender subject to a cash
collateral pledge agreement by such Borrower in favor of Lender, in form and
substance satisfactory to Lender; (b) free and clear of any lien, security
interest, claim or other encumbrance or restriction, except in favor of Lender;
(c) subject to the first priority, valid and perfected security interest and
pledge in favor of Lender; (d) if held at First Union National Bank or one of
its affiliates, subject to an account control agreement by and among First Union
National Bank or one of its affiliates, such Borrower and Lender, in form and
substance satisfactory to Lender and duly authorized, executed and delivered by
First Union National Bank or one of its affiliates, and such Borrower; and (e)
available to such Borrower without condition or restriction except those arising
pursuant to the pledge in favor of Lender.
1.35 "Eligible Inventory" shall mean Inventory of US Borrowers located in
the United States of America, Inventory of UK Borrower located in the United
Kingdom and Inventory of German Borrower located in the Federal Republic of
Germany or which is in transit as provided in clause 1.35(e) below, in each case
consisting of finished goods held for resale in the ordinary course of the
business of such Borrower and raw materials for such finished goods, which is
acceptable to Lender based on the criteria set forth below, as determined by
Lender in good faith. Eligible Inventory shall not include (a) work-in-process,
chemicals or dyes; (b) spare parts for equipment; (c) packaging and shipping
materials; (d) supplies used or consumed in the business of such Borrower; (e)
Inventory at premises other than those owned and controlled by any Borrower,
except (i) any Inventory which would otherwise be Eligible Inventory at
locations which are leased by a Borrower may nevertheless be considered Eligible
Inventory if Lender shall have received a Collateral Access Agreement, duly
authorized, executed and delivered by the owner and lessor of such premises,
(ii) any Inventory which would otherwise be Eligible Inventory at locations
operated by an Affiliate may nevertheless be considered Eligible Inventory if
Lender shall have received a Collateral Access Agreement, and any filings or
agreements that may be required to notify creditors of such Affiliate that the
Inventory on its premises is not the property of such Affiliate, in each case as
duly authorized, executed and delivered by such Affiliate, (iii) Inventory
having a Value of up to the US Dollar Equivalent of US $500,000 which would
otherwise be Eligible Inventory in transit to a location owned and controlled by
any Borrower or leased by any Borrower (and as to which Lender has received a
Collateral Access Agreement, duly authorized executed and delivered by the owner
and lessor thereof) from a third party used by such Borrower in the ordinary
course of business to process or assemble such Inventory, may nevertheless be
considered Eligible Inventory and (iv) Inventory which would otherwise be
Eligible Inventory located outside the United States of America which is in
transit to either the premises of a Customs Broker in the United States or
premises of a Borrower or Guarantor in the United States of America, the United
Kingdom or the Federal Republic of Germany, as the case may be, which are either
owned and controlled by such Borrower or leased by such Borrower (but only if
Lender has received a Collateral Access Agreement duly authorized, executed and
delivered by such Customs Broker or the owner and lessor of such
13
leased premises, as the case may be), provided, that, (A) Lender has a first
priority perfected security interest in and lien upon, and control and
possession of, all originals of documents of title with respect to such
Inventory, (B) Lender has received (1) a Collateral Access Agreement, duly
authorized, executed and delivered by the Customs Broker handling the shipping
and delivery of such Inventory, (2) a copy of the certificate of marine cargo
insurance in connection therewith in which it has been named as an additional
insured and loss payee in a manner acceptable to Lender and (3) a copy of the
invoice and manifest with respect thereto, and (C) such Inventory is not subject
to any Letter of Credit Accommodation; (f) Inventory of a US Borrower located
outside the continental United States of America or Canada, Inventory of UK
Borrower located outside the United Kingdom or Inventory of German Borrower
located outside the Federal Republic of Germany, unless such Inventory is in
transit to the extent provided in Section 1.35(e)(iii) above; (g) Inventory
subject to a security interest, lien, hypothec, charge or other encumbrance in
favor of any person other than Lender except those expressly permitted by this
Agreement; (h) xxxx and hold goods; (i) unserviceable or obsolete Inventory; (j)
display units which are not provided to customers in the ordinary course of
business; (k) Inventory which is not subject to the first priority, valid and
perfected security interest and lien (and valid first ranking fixed or floating
charge) of Lender; (l) returned and/or defective Inventory, except for returned
Inventory which upon being returned is added back to the other Inventory of such
Borrower to be held for resale in the ordinary course of business; (m) Inventory
held on consignment or sold on consignment; (n) Inventory which uses or to which
is affixed or incorporated any Intellectual Property owned by another Person
except for Inventory which uses or to which is affixed or incorporated any such
Intellectual Property to the extent that there is a License Agreement with
respect to such Intellectual Property pursuant to which such Borrower has the
right to use such Intellectual Property to manufacture, distribute, use and sell
such Inventory under the terms thereof; (o) Inventory subject to retention of
title, Romalpa or verlaengerter Eigentumsvorbehalt (prolongated retention of
title) provisions in favor of any person where Lender has determined that such
Inventory subject to retention of title shall not be Eligible Inventory; (p) any
Inventory consisting of finished goods that is not subject to a written purchase
order; and (q) Inventory of German Borrower unless such Inventory is described
in the perpetual inventory report most recently delivered to Lender pursuant to
Section 7.1(a)(ii)(A). Notwithstanding that Lender shall not have received a
Collateral Access Agreement for a particular leased location, Borrower's
Inventory at such leased location shall not be deemed to be ineligible solely by
virtue of the absence of such Collateral Access Agreement and Lender may at any
time establish such Reserves as Lender may determine in respect of amounts at
any time payable by such Borrower to the owner or lessor of such location,
without limiting any other rights and remedies of Lender under this Agreement or
under the other Financing Agreements with respect to the establishment of
Reserves or otherwise. General criteria for Eligible Inventory may be
established and revised from time to time by Lender in good faith based on an
event, condition, or other circumstance arising after the date hereof, or
existing on the date hereof as to which Lender has no written notice thereof
from Borrower Agent, which adversely affects or could reasonably be expected to
adversely affect the Inventory in the good faith determination of Lender. Any
Inventory which is not Eligible Inventory shall nevertheless be part of the
Collateral.
Notwithstanding the foregoing or any other provision of this Agreement or
any of the other Financing Agreements to the contrary, none of the Inventory of
German Borrower located in Germany and none of the Inventory of UK Borrower
located in the United Kingdom shall be
14
Eligible Inventory until Lender shall have determined in good faith that the
systems and procedures of German Borrower and UK Borrower with respect to the
monitoring and reporting of such Inventory are reasonably satisfactory to
Lender.
1.36 "Environmental Laws" shall mean all foreign, Federal, State,
Provincial, district and local laws (including common law), legislation, rules,
codes, licenses, permits (including any conditions imposed therein),
authorizations, judicial or administrative decisions, injunctions or agreements
between each Borrower and any Governmental Authority, (a) relating to pollution
and the protection, preservation or restoration of the environment (including
air, water vapor, surface water, ground water, drinking water, drinking water
supply, surface land, subsurface land, plant and animal life or any other
natural resource), (b) relating to the exposure to, or the use, storage,
recycling, treatment, generation, manufacture, processing, distribution,
transportation, handling, labeling, production, release or disposal, or
threatened release, of Hazardous Materials, or (c) with regard to recordkeeping,
notification, disclosure and reporting requirements respecting Hazardous
Materials. The term "Environmental Laws" includes (i) the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Federal
Superfund Amendments and Reauthorization Act, the Federal Water Pollution
Control Act of 1972, the Federal Clean Water Act, the Federal Clean Air Act, the
Federal Resource Conservation and Recovery Act of 1976 (including the Hazardous
and Solid Waste Amendments thereto), the Federal Solid Waste Disposal and the
Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and
Rodenticide Act, and the Federal Safe Drinking Water Act of 1974, (ii)
applicable state, provincial or local counterparts to such laws, and (iii) any
common law or equitable doctrine that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the presence of or
exposure to any Hazardous Materials.
1.37 "Equipment" shall mean all of each Borrower's now owned and hereafter
acquired equipment, machinery, computers and computer hardware and software
(whether owned or licensed), vehicles, tools, furniture, fixtures, all
attachments, accessions and property now or hereafter affixed thereto or used in
connection therewith, and substitutions and replacements thereof, wherever
located.
1.38 "ERISA" shall mean the United States Employee Retirement Income
Security Act of 1974, together with all rules, regulations and interpretations
thereunder or related thereto.
1.39 "ERISA Affiliate" shall mean any person required to be aggregated with
any Borrower or Guarantor or any Subsidiary of any Borrower or Guarantor under
Sections 414(b), 414(c), 414(m) or 414(o) of the Code.
1.40 "ERISA Event" shall mean (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder, with respect to any
Plan subject to Title IV of ERISA or any Multiemployer Plan; (b) the adoption of
any amendment to a Plan that would require the provision of security pursuant to
Section 401(a)(29) of the Code or Section 307 of ERISA; (c) the existence with
respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (d) the
filing pursuant to Section 412 of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (e) the occurrence of a "prohibited transaction" with respect to which
Borrower or any of its Subsidiaries is a
15
"disqualified person" (within the meaning of Section 4975 of the Code) or with
respect to which Borrower or any of its Subsidiaries could otherwise be liable
for amounts in excess of $250,000; (f) a complete or partial withdrawal by the
Borrower or any ERISA Affiliate from a Multiemployer Plan or a cessation of
operations which is treated as such a withdrawal or notification that a
Multiemployer Plan is in reorganization; (g) the filing of a notice of intent to
terminate, the treatment of a Plan amendment as a termination under Section 4041
or 4041A of ERISA, or the commencement of proceedings by the Pension Benefit
Guaranty Corporation to terminate a Plan or Multiemployer Plan; (h) an event or
condition which might reasonably be expected to constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan subject to Title IV of ERISA or Multiemployer Plan; (i) the
imposition of any liability in excess of $250,000 under Title IV of ERISA, other
than the Pension Benefit Guaranty Corporation premiums due but not delinquent
under Section 4007 of ERISA, upon Borrower or any ERISA Affiliate; and (j) any
other event or condition with respect to a Plan or Multiemployer Plan or any
Plan subject to Title IV of ERISA maintained, or contributed to, by any ERISA
Affiliate that could reasonably be expected to result in liability of any
Borrower or Guarantor for amounts in excess of $250,000.
1.41 "Eurodollar Rate" shall mean with respect to the Interest Period for a
Eurodollar Rate Loan, the interest rate per annum equal to the arithmetic
average of the rates of interest per annum (rounded upwards, if necessary, to
the next one-sixteenth (1/16th) of one (1%) percent) at which Reference Bank is
offered deposits of United States dollars in the London interbank market (or
other Eurodollar Rate market selected by a Borrower and approved by Lender) on
or about 10:00 a.m. (New York time) two (2) Business Days prior to the
commencement of such Interest Period in amounts substantially equal to the
principal amount of the Eurodollar Rate Loans requested by and available to such
Borrower in accordance with this Agreement, with a maturity of comparable
duration to the Interest Period selected by or on behalf of such Borrower.
1.42 "Eurodollar Rate Loans" shall mean, any Loans or portion thereof on
which interest is payable based on the Adjusted Eurodollar Rate in accordance
with the terms thereof.
1.43 "Event of Default" shall mean the occurrence or existence of any event
or condition described in Section 10.1 hereof.
1.44 "Excess Availability" shall mean, as to each Borrower at any time, the
US Dollar Equivalent of the amount at such time equal to: (a) the lesser of (i)
the Borrowing Base of such Borrower or (ii) the amount equal to: (A) the Maximum
Credit (which shall be deemed to be $35,000,000 solely for purposes of computing
the Applicable Margin pursuant to Section 1.7 and the amount of Excess
Availability pursuant to Sections 4.1(1) and 6.3(b)(iv)) minus the then
outstanding amount of Loans and Letter of Credit Accommodations provided to the
other Borrowers, minus (b) the sum of: (i) the amount of all then outstanding
and unpaid Obligations of such Borrower (other than the Obligations arising
pursuant to the guarantee by such Borrower of the Obligations of the other
Borrowers), plus (ii) the aggregate amount of all trade payables and other
obligations of such Borrower which are more than sixty (60) days past due (in
the case of payables and obligations not subject to prox dating) or 75 days
16
past due (in the case of payables and obligations subject to prox dating) as of
such time plus (iii) the amount of checks issued by such Borrower to pay trade
payables and other obligations which are more than sixty (60) days past due (in
the case of payables and obligations not subject to prox dating) or 75 days past
due (in the case of payables and obligations subject to prox dating), but not
yet sent (without duplication of amounts included in clause (b)(ii) of this
definition). Calculations of Excess Availability shall be based on the most
recently delivered Borrowing Base Certificate to the extent Borrowers have
timely prepared and delivered such certificate to Lender in accordance with the
terms hereof, or in the event of the failure of Borrowers to so deliver such
Borrowing Base Certificate, then as otherwise determined by Lender in good
faith.
1.45 "Exchange Act" shall mean the Securities Exchange Act of 1934, as the
same now exists or may from time to time hereafter be amended, modified,
recodified or supplemented, together with all rules, regulations and
interpretations thereunder or related thereto.
1.46 "Exchange Rate" shall mean the prevailing spot rate of exchange of
such bank as Lender may select for the purpose of conversion of one currency to
another, at or around 11:00 a.m. New York City time, on the date on which any
such conversion of currency is to be made under this Agreement or the amount of
assets in any one currency are to be determined in another currency under this
Agreement.
1.47 "Existing Agent" shall mean KeyBank National Association, a national
banking association, in its capacity as administrative agent pursuant to the
Existing Loan Agreements, and its successors and assigns (and including any
successor, assignee, replacement or additional person at any time acting as
trustee or agent for the benefit or on behalf of the Existing Lenders).
1.48 "Existing Credit Agreement" shall mean the Subordinated Secured Credit
Agreement, dated on or about the date hereof, by and among Safety, UK Borrower
and German Borrower, as borrowers, certain of their affiliates, as guarantors,
Existing Lenders and Existing Agent, as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
1.49 "Existing Lenders" shall mean the lenders listed on Schedule 1.49
hereto and their respective successors and assigns.
1.50 "Existing Letters of Credit" shall mean, collectively, the letters of
credit issued for the account of a Borrower or Guarantor or for which such
Borrower or Guarantor is otherwise liable listed on Schedule 1.50 hereto, as the
same now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.51 "Existing Loan Agreements" shall mean, collectively, the following (as
the same now or may hereafter exist or may thereafter be amended, modified,
supplemented, extended, renewed, restated or replaced): (a) the Existing Credit
Agreement; (b) the Existing Notes; and (c) all agreements, documents and
instruments at any time executed and/or delivered in connection with any of the
foregoing.
1.52 "Existing Notes" shall mean the Term Notes, dated on or about the date
hereof, payable to the Existing Lenders in connection with the Existing Credit
Agreement, as the same now exist or may hereafter be amended, supplemented,
extended, renewed, restated or replaced.
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1.53 "Fee Letter" shall mean the letter agreement, dated on or about the
date hereof, by and among Borrowers and Lender setting forth certain fees
payable by Borrowers to Lender, as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
1.54 "Final Order" shall mean an order (a) which has been duly entered by
the Bankruptcy Court, (b) which has not been modified, vacated, reversed,
revoked, rescinded, stayed or appealed from, (c) with respect to which no
petition, application or motion for reversal, stay or modification thereof or
for a writ of certiorari with respect thereto shall have been filed or granted,
and (d) which is no longer subject to any or further appeal or petition,
application or motion for reversal, stay or modification thereof or for any writ
of certiorari with respect thereto or further judicial review in any form.
1.55 "Financing Agreements" shall mean, collectively, this Agreement and
all notes, guarantees, security agreements, debentures, hypothecs and other
agreements, documents and instruments now or at any time hereafter executed
and/or delivered by any Borrower or Obligor in connection with this Agreement,
as the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
1.56 "Fixed Charge Coverage Ratio" shall mean, with respect to Safety and
its Subsidiaries, on a consolidated basis, at any time the ratio of (a) the
amount equal to (i) EBITDA during the immediately preceding Test Period as of
the last day of such Test Period less (ii) the Capital Expenditures for such
Test Period to (b) Fixed Charges of Safety and its Subsidiaries for such Test
Period.
1.57 "Fixed Charges" for any period shall mean the sum of, without
duplication, (a) all Interest Expense, plus (b) all regularly scheduled (as
determined at the beginning of the respective period) principal payments of
Indebtedness for borrowed money and Indebtedness with respect to Capital Leases
(and without duplicating amounts in item (a) of this definition, the interest
component with respect to Indebtedness under Capital Leases and any payments of
principal under Section 2.3 hereof and under Section 2.1(c) hereof required as a
result of the Loans exceeding the Borrowing Base shall be included in this
clause (b)) plus (c) the fees paid to any lender (including Lender) in respect
of any financing arrangements, including unused line fees and monthly servicing
fees. The foregoing shall not be construed to include principal payments on
Indebtedness arising pursuant to revolving loans and advances, except for
payments hereunder provided for in Section 2.1(c) hereof.
1.58 "GAAP" shall mean, generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board which are applicable to the
circumstances as of the date of determination consistently applied, except that,
for purposes of Section 9.16 hereof, GAAP shall be determined on the basis of
such principles in effect on the date hereof and consistent with those used in
the preparation of the audited financial statements delivered to Lender prior to
the date hereof.
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1.59 "German Borrower" shall mean Automotive Safety Components
International GmbH & Co. KG, a limited partnership organized under the laws of
the Federal Republic of Germany, and its successors and assigns.
1.60 "German Marks" shall mean the lawful currency of the Federal Republic
of Germany.
1.61 "Governmental Authority" shall mean any nation or government, any
state, province, or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
1.62 "Guarantors" shall mean, collectively, the following, together with
their respective successors and assigns: (a) Safety Components International,
Inc., a Delaware corporation, (b) ASCI Holdings Germany (DE), Inc., a Delaware
corporation, (c) ASCI Holdings U.K. (DE), Inc., a Delaware corporation, (d) ASCI
Holdings Mexico (DE), Inc., a Delaware corporation, (e) ASCI Holdings Czech
(DE), Inc., a Delaware corporation, (f) Automotive Safety Components
International, S.A. de C.V., a corporation organized under the laws of Mexico
and (g) Automotive Safety Components International s.r.o., a limited liability
company organized under the laws of the Czech Republic (together with their
respective successors and assigns); each sometimes being individually referred
to herein individually as a "Guarantor".
1.63 "Hazardous Materials" shall mean any hazardous, toxic or dangerous
substances, materials and wastes, including hydrocarbons (including naturally
occurring or man-made petroleum and hydrocarbons), flammable explosives,
asbestos, urea formaldehyde insulation, radioactive materials, biological
substances, polychlorinated biphenyls, pesticides, herbicides and any other kind
and/or type of pollutants or contaminants (including materials which include
hazardous constituents), sewage, sludge, industrial slag, solvents and/or any
other similar substances, materials, or wastes, including any other substances,
materials or wastes that are or become regulated under any Environmental Law
(including any that are or become classified as hazardous or toxic under any
Environmental Law).
1.64 "Inactive Subsidiaries" shall mean collectively (together with their
respective successors and assigns): (a) ASCI Holdings Asia (DE), Inc., a
Delaware corporation; (b) ASCI Holdings Poland (DE), Inc., a Delaware
corporation; (c) ASCI Holdings Brazil (DE), Inc., a Delaware corporation; (d)
Automotive Safety Components Asia - Pacific Ltd., a company organized under the
laws of Hong Kong; (e) CSSC, Inc., an Arizona corporation; (f) Xxxxx &
Associates, Inc., a California corporation; (g) VIC Finance, Inc., a Delaware
corporation; and (h) Automotive Safety Components - Polska SP. Zo.o, a company
incorporated under the laws of Poland; each sometimes being individually
referred to as an "Inactive Subsidiary."
1.65 "Indebtedness" shall mean, with respect to any Person, without
duplication, any liability of such Person, whether or not contingent, (a) in
respect of borrowed money (whether or not the recourse of the Lender is to the
whole of the assets of such Person or only to a portion thereof) or evidenced by
bonds, notes, debentures or similar instruments; (b) representing the balance
deferred and unpaid of the purchase price of any property or services (except
any such
19
balance that constitutes an account payable to a trade creditor (whether or not
an Affiliate) created, incurred, assumed or guaranteed by such Person in the
ordinary course of business of such Person in connection with obtaining goods or
materials that is not overdue by more than ninety (90) days unless the trade
payable is being contested in good faith); (c) as lessee under leases which have
been, or should be, in accordance with GAAP recorded as Capital Leases; (d) in
respect of any contractual obligation, contingent or otherwise, of such Person
to pay or be liable for the payment of any indebtedness described in this
definition of another Person, including, without limitation, any such
indebtedness, directly or indirectly guaranteed, or any agreement to purchase,
repurchase, or otherwise acquire such indebtedness, obligation or liability or
any security therefor, or to provide funds for the payment or discharge thereof,
or to maintain solvency, assets, level of income, or other financial condition;
(e) with respect to mandatorily redeemable stock and redemption or repurchase
obligations under any Capital Stock or other equity securities issued by such
Person which redemption and repurchase obligations are mandatory or are
exercisable at the election of the holder thereof; (f) in respect of
reimbursement obligations and other liabilities of such Person with respect to
surety bonds (whether bid, performance or otherwise), letters of credit,
banker's acceptances or similar documents or instruments issued for such
Person's account; (g) in respect of indebtedness of another Person for borrowed
money or indebtedness of another Person otherwise described in this definition
which is secured by any consensual lien, security interest, collateral
assignment, conditional sale, hypothec, charge, mortgage, deed of trust, or
other encumbrance on any asset of such Person, whether or not such obligations,
liabilities or indebtedness are assumed by or are a personal liability of such
Person, all as of such time; and (h) in respect of all obligations, liabilities
and indebtedness of such Person (marked to market) arising under swap
agreements, cap agreements and collar agreements and other agreements or
arrangements designed to protect such person against fluctuations in interest
rates or currency or commodity values.
1.66 "Information Certificate" shall mean the Information Certificate with
respect to each Borrower and Guarantor constituting Exhibit A hereto containing
material information with respect to such Borrower and Guarantor, its business
and assets provided by or on behalf of Borrowers or Guarantors to Lender in
connection with the preparation of this Agreement and the other Financing
Agreements and the financing arrangements provided for herein.
1.67 "Intellectual Property" shall mean all of each Borrower's now owned
and hereafter arising or acquired: patents, patent rights, patent applications,
copyrights, works which are the subject matter of copyrights, copyright
registrations, trademarks, trade names, trade styles, trademark and service xxxx
applications, and licenses and rights to use any of the foregoing; all
extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing; all rights to xxx for past,
present and future infringement of any of the foregoing; inventions, trade
secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys,
reports, manuals, and operating standards; goodwill; customer and other lists in
whatever form maintained; and trade secret rights, copyright rights, rights in
works of authorship, and contract rights relating to computer software programs,
in whatever form created or maintained.
1.68 "Intercreditor Agreement" shall mean the Intercreditor and
Subordination Agreement, dated on or about the date hereof, by and among Lender,
Existing Agent and
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Existing Lenders, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.69 "Interest Expense" shall mean, for any period, as to any Person, as
determined in accordance with GAAP, the total interest expense of such Person,
whether paid or accrued during such period (including the interest component of
Capital Leases for such period), including, without limitation, discounts in
connection with the sale of any Accounts and bank fees, commissions, discounts
and other fees and charges owed with respect to letters of credit, banker's
acceptances or similar instruments, but excluding interest paid in property
other than cash and any other interest expense not payable in cash.
1.70 "Interest Period" shall mean for any Eurodollar Rate Loan, a period of
approximately one (1), two (2), or three (3) months duration as a Borrower may
elect, the exact duration to be determined in accordance with the customary
practice in the applicable Eurodollar Rate market; provided, that, such Borrower
may not elect an Interest Period which will end after the last day of the
then-current term of this Agreement.
1.71 "Interest Rate" shall mean:
(a) Subject to clauses (b) and (c) of this definition below:
(i) as to Prime Rate Loans, a rate equal to the Prime Rate,
(ii) as to Eurodollar Rate Loans, a rate equal to two (2.00%)
percent per annum in excess of the Adjusted Eurodollar Rate (in each
case, based on the Eurodollar Rate applicable for the Interest Period
selected by a Borrower as in effect three (3) Business Days after the
date of receipt by Lender of the request of such Borrower for such
Eurodollar Rate Loans in accordance with the terms hereof, whether
such rate is higher or lower than any rate previously quoted to such
Borrower).
(b) Subject to clause (c) of this definition below, the Interest Rate
payable by Borrowers shall be increased or decreased, as the case may be,
(i) as to Prime Rate Loans, to the rate equal to the Applicable Margin on a
per annum basis in excess of the Prime Rate, and (ii) as to Eurodollar Rate
Loans, to the rate equal to the Applicable Margin on a per annum basis in
excess of the Adjusted Eurodollar Rate ; provided, that, the effective date
of any such increase or decrease shall be (A) the first day of each month
(commencing on November 1, 2000 and ending on January 1, 2001) and (B) the
first day of the second month of each fiscal quarter (commencing with the
fiscal quarter beginning January 1, 2001).
(c) Notwithstanding anything to the contrary contained in clauses (a)
and (b) of this definition, the Applicable Margin otherwise used to
calculate the Interest Rate for Prime Rate Loans and Eurodollar Rate Loans
shall be the highest percentage set forth in the definition of the term
Applicable Margin for each category of Loans (without regard to the amount
of Excess Availability or the Fixed Charge Coverage Ratio) plus two (2%)
percent per annum, at Lender's option, (i) for the period (A) from and
after the effective date of termination or non-renewal hereof until Lender
has received full and final payment of all outstanding and unpaid
Obligations (notwithstanding entry of a judgment against a Borrower) and
(B) from and after the date of the
21
occurrence of an Event of Default for so long as such Event of Default is
continuing, and (ii) on Loans to any Borrower at any time outstanding in
excess of the Borrowing Base of such Borrower or the Loan Limit of such
Borrower (whether or not such excess(es), arise or are made with or without
Lender's knowledge or consent and whether made before or after an Event of
Default).
1.72 "Inventory" shall mean all of each Borrower's now owned and hereafter
existing or acquired inventory, wherever located, including, without limitation,
all raw materials, work-in- process, finished and semi-finished inventory of any
kind, nature or description, including, without limitation, all wrapping,
packaging, advertising and shipping materials, and any other personal property
(whether tangible or intangible) held for sale, exchange or lease or furnished
or to be furnished or used or consumed in the business or in connection with the
manufacturing, packaging, shipping, advertising, selling or furnishing of such
goods, inventory, merchandise and other personal property, and all rights in
names or marks affixed to or to be affixed thereto for purposes of selling same
by the seller, manufacturer, lessor or licensor thereof and all right, title and
interest therein and thereto.
1.73 "Inventory Loan Limit" shall mean, at any time, as to all Borrowers in
the aggregate, the amount equal to the US Dollar Equivalent of US $10,000,000.
1.74 "Letter of Credit Accommodations" shall mean the letters of credit,
merchandise purchase or other guaranties denominated in US Dollars or such other
currency as Reference Bank may make available in the ordinary course of
business, which are from time to time either (a) issued or opened by a Lender
for the account of any Borrower or Obligor or (b) with respect to which a Lender
has, for the benefit of any Borrower or its Subsidiaries, agreed to indemnify
the issuer or guaranteed to the issuer the performance by any Borrower or its
Subsidiaries of its obligations to such issuer (including, without limitation,
the Existing Letters of Credit unless and until such Existing Letters of Credit
are cancelled or have expired and Lender has received evidence satisfactory to
it that there was no draw thereunder prior to such cancellation or expiration
and in the case of cancellation, the issuer thereof shall have received
instructions from the beneficiary thereof satisfactory to it to so cancel such
letter of credit).
1.75 "License Agreements" shall have the meaning set forth in Section 8.12
hereof.
1.76 "Loans" shall mean, collectively, the Revolving Loans and the Term
Loans.
1.77 "Loan Limit" shall mean, as to each Borrower, at any time, the amount
equal to the Maximum Credit then in effect less the then aggregate outstanding
principal amount of the Loans and Letter of Credit Accommodations to the other
Borrowers.
1.78 "Material Adverse Effect" shall mean a material adverse effect on (a)
the condition (financial or otherwise), business, performance, operations or
properties of the Borrowers taken as a whole or the Borrowers and the Guarantors
taken as a whole; (b) the legality, validity or enforceability of this Agreement
or any of the other Financing Agreements; (c) the legality, validity,
enforceability, perfection or priority of the security interests, liens,
charges, equitable assignment or hypothecs of Lender upon a material portion of
the Collateral; (d) a material portion of the Collateral or the aggregate value
of a material portion of the Collateral; (e) the
22
ability of the Borrowers to repay the Obligations or to perform their
obligations under this Agreement or any of the other Financing Agreements; or
(f) the ability of Lender to enforce the Obligations or realize upon a material
portion of the Collateral or otherwise with respect to the rights and remedies
of Lender under this Agreement or any of the other Financing Agreements.
1.79 "Material Contract" shall mean (a) any contract or other agreement
(other than the Financing Agreements), written or oral, of any Borrower
involving monetary liability of or to any Person in an amount in excess of the
US Dollar Equivalent of US$500,000 in any fiscal year and (b) any other contract
or other agreement (other than the Financing Agreements), whether written or
oral, to which any Borrower is a party as to which the breach, nonperformance,
cancellation or failure to renew by any party thereto would have a Material
Adverse Effect.
1.80 "Maximum Credit" shall mean the amount of US $20,000,000, as such
amount may from time to time be increased in accordance with Section 2.4 hereof.
1.81 "Maximum Interest Rate" shall mean the non-usurious rate of interest
under applicable Federal or State law as in effect from time to time that may be
contracted for, taken, reserved, charged or received in respect of the
indebtedness of Borrower to Lender, or to the extent that at any time such
applicable law may thereafter permit a higher maximum non- usurious rate of
interest, than such higher rate. Notwithstanding any other provision hereof, the
Maximum Interest Rate shall be calculated on a daily basis (computed on the
actual number of days elapsed over a year of three hundred sixty-five (365) or
three hundred sixty-six (366) days, as the case may be).
1.82 "Mortgages" shall mean (a) the Open-End Mortgage and Security
Agreement, dated of even date herewith, by SCFT in favor of Lender with respect
to the Real Property and related assets of SCFT located in Greenville, South
Carolina and (b) the Open-End Mortgage and Security Agreement, dated of even
date herewith by Galion in favor of Lender with respect to the Real Property and
related assets of Galion located in Galion, Ohio, as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
1.83 "Multiemployer Plan" shall mean a "multi-employer plan" as defined in
Section 4001(a)(3) of ERISA which is or was at any time during the current year
or the immediately preceding six (6) years contributed to by Borrower or any
ERISA Affiliate.
1.84 "Net Amount of Eligible Accounts" shall mean, as to each Borrower, the
gross amount of the Eligible Accounts of such Borrower less (a) sales, excise,
value added or similar taxes included in the amount thereof and (b) returns,
discounts, claims, credits and allowances of any nature at any time issued,
owing, granted, outstanding, available or claimed with respect thereto.
1.85 "Noteholders" shall mean the beneficial holders of the 10-1/8% Senior
Subordinated Notes due 2007, Series B, issued by Safety under the Indenture,
dated as of July 24, 1997, by and among Safety, certain of its affiliates, and
IBJ Xxxxxxxx Bank & Trust Company, as Trustee.
1.86 "Obligations" shall mean any and all Revolving Loans, Term Loans,
Letter of Credit Accommodations and all other obligations, liabilities and
indebtedness of every kind, nature and
23
description owing by Borrowers to Lender, including principal, interest,
charges, fees, indemnities, costs and expenses, however evidenced, as principal,
surety, endorser or guarantor arising under this Agreement or any of the other
Financing Agreements, whether now existing or hereafter arising, whether arising
before, during or after the initial or any renewal term of this Agreement or
after the commencement of any case or proceeding with respect to any Borrower
under the United States Bankruptcy Code or any similar statute in any other
jurisdiction (including, without limitation, the payment of interest and other
amounts which would accrue and become due but for the commencement of such case
or proceeding and whether or not allowed in such case or proceeding), whether
direct or indirect, absolute or contingent, joint or several, due or not due,
primary or secondary, liquidated or unliquidated, secured or unsecured, and
however acquired by Lender.
1.87 "Obligor" shall mean any guarantor, surety or other person (other than
Borrowers) liable to make payments on the Obligations or who is the owner of any
property which has been pledged to secure any of the Obligations (including
Guarantors).
1.88 "Other Taxes" shall mean any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any of the
other Financing Agreements.
1.89 "Permitted Holders" shall mean the Persons listed on Schedule 1.89
hereto and their respective successors and assigns.
1.90 "Person" or "person" shall mean any individual, sole proprietorship,
partnership, corporation (including, without limitation, any corporation which
elects subchapter S status under the Code), limited liability company, limited
liability partnership, business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.
1.91 "Plan" shall mean an employee benefit plan (as defined in Section 3(3)
of ERISA) which any Borrower sponsors, maintains, or to which it makes, is
making, or is obligated to make contributions, or in the case of a Multiemployer
Plan has made contributions at any time during the immediately preceding six (6)
plan years.
1.92 "Plan of Reorganization" shall mean the First Amended Joint Plan of
Reorganization of Safety Components Debtors under Chapter 11 of the Bankruptcy
Code, dated July 18, 2000, together with all amendments and supplements thereto.
1.93 "PPSA" shall mean the Personal Property Security Act as in effect in
the Province of Ontario, the Civil Code of Quebec as in effect in the Province
of Quebec or any other Canadian Federal or Provincial statute pertaining to the
granting, perfecting, priority or ranking of security interests, liens,
hypothecs on personal property, and any successor statutes, together with any
regulations thereunder, in each case as in effect from time to time. References
to sections of the PPSA shall be construed to also refer to any successor
sections.
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1.94 "Prime Rate" shall mean the rate from time to time publicly announced
by Reference Bank, as its prime rate, whether or not such announced rate is the
best rate available at such bank.
1.95 "Prime Rate Loans" shall mean any Loans or portion thereof in which
interest is payable based on the Prime Rate in accordance with the terms
thereof.
1.96 "Priority Payables" shall mean, as to any Borrower at any time, (a)
the full amount of the liabilities of such Borrower at such time which (i) have
a trust imposed to provide for payment or a security interest, pledge, lien or
charge ranking or capable of ranking senior to or pari passu with security
interests, liens or charges securing the Obligations on any of the Eligible
Accounts or Eligible Inventory of such Borrower under Federal, Provincial,
State, county, district, municipal, or local law in Canada and/or the United
Kingdom and/or the Federal Republic of Germany or (ii) have a right imposed to
provide for payment ranking or capable of ranking senior to or pari passu with
the Obligations under local or national law, regulation or directive, including,
but not limited to, claims for unremitted and/or accelerated rents, taxes
(including claims for debts due to Inland Revenue or Customs and Excise), wages,
withholding taxes, VAT and other amounts payable to an insolvency administrator,
employee withholdings or deductions and vacation pay, workers' compensation
obligations, government royalties or pension fund obligations in each case to
the extent such trust, or security interest, lien or charge has been or may be
imposed and (b) the amount equal to the inventory lending formula set forth in
Section 1.14(b) hereof multiplied by the aggregate Value of the Eligible
Inventory of such Borrower which Lender, in good faith, considers is or may be
subject to retention of title (or Romalpa or verlaengerter Eigentumsvorbehalt
provisions) by a supplier or a right of a supplier to recover possession
thereof, where such supplier's right has priority over the security interests,
liens or charges securing the Obligations, including, without limitation,
Eligible Inventory subject to a right of a supplier to repossess goods pursuant
to Section 81.1 of the Bankruptcy and Insolvency Act (Canada) or any applicable
laws granting revendication or similar rights to unpaid suppliers or any similar
laws of the United Kingdom or the Federal Republic of Germany (provided, that,
to the extent such Inventory has been identified and has been excluded from
Eligible Inventory, the amount owing to the supplier shall not be considered a
Priority Payable).
1.97 "Provision for Taxes" shall mean an amount equal to all taxes imposed
on or measured by net income, whether Federal, State, Provincial, municipal or
local, and whether foreign or domestic, that are paid or payable by any Person
in respect of any period in accordance with GAAP.
1.98 "Provincial" shall mean of or pertaining to a Province of Canada.
1.99 "Quarterly Average Excess Availability" shall mean, at any time, the
weekly average of the aggregate Excess Availability of Borrowers for the
immediately preceding Test Period as calculated by Lender in good faith.
1.100 "Real Property" shall mean all now owned and hereafter acquired real
property of each Borrower and Guarantor, including leasehold interests, together
with such Borrower's or Guarantor's interests in all buildings, structures, and
other improvements located thereon and all licenses, easements and appurtenances
relating thereto, wherever located.
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1.101 "Receivables" shall mean: (a) all Accounts; (b) all amounts at any
time payable to any Borrower in respect of the sale or other disposition by such
Borrower of any Account or other obligation for the payment of money; (c) all
interest, fees, late charges, penalties, collection fees and other amounts due
or to become due or otherwise payable in connection with any Account; (d) all
letters of credit, indemnities, guarantees, security or other deposits and
proceeds thereof issued payable to any Borrower or otherwise in favor of or
delivered to such Borrower in connection with any Account; or (e) all other
contract rights, chattel paper, instruments, notes, credit card sales drafts,
credit card sales slips or charge slips or receipts, general intangibles and
other forms of obligations owing to any Borrower, whether from the sale and
lease of goods or other property, licensing of any property (including
Intellectual Property or other general intangibles), rendition of services or
from loans or advances by any Borrower or to or for the benefit of any third
person (including loans or advances to any Affiliates or Subsidiaries) or
otherwise associated with any Accounts, Inventory or general intangibles of any
Borrower, including, without limitation, choses in action, causes of action, tax
refunds, tax refund claims, any funds which may become payable to any Borrower
in connection with the termination of any employee benefit plan and any other
amounts payable to any Borrower from any employee benefit plan, rights and
claims against carriers and shippers, rights to indemnification, business
interruption insurance and proceeds thereof, casualty or any similar types of
insurance and any proceeds thereof and proceeds of insurance covering the lives
of employees on which such Borrower is beneficiary.
1.102 "Records" shall mean all of each Borrower's present and future books
of account of every kind or nature, purchase and sale agreements, invoices,
ledger cards, bills of lading and other shipping evidence, statements,
correspondence, memoranda, credit files and other data relating to the
Collateral or any Account Debtor, together with the tapes, disks, diskettes and
other data and software storage media and devices, file cabinets or containers
in or on which the foregoing are stored (including any rights of Borrowers with
respect to the foregoing maintained with or by any other person).
1.103 "Reference Bank" shall mean First Union National Bank, or such other
bank having capital and surplus of at least US$250,000,000, as Lender may from
time to time designate.
1.104 "Renewal Date" shall have the meaning set forth in Section 12.1(a)
hereof.
1.105 "Reserves" shall mean, as of any date of determination, such amounts
as Lender may from time to time establish and revise in good faith reducing the
amount of Loans and Letter of Credit Accommodations which would otherwise be
available to any Borrower under the lending formula(s) provided for herein: (a)
to reflect events, conditions, contingencies or risks which, as determined by
Lender in good faith, adversely affect or have a reasonable likelihood of
adversely affecting either (i) the Collateral or any other property which is
security for the Obligations or its value, (ii) the assets or business of any
Borrower or (iii) the security interests and other rights of Lender in the
Collateral (including the enforceability, perfection and priority thereof); (b)
to reflect Lender's good faith belief that any collateral report or financial
information furnished by or on behalf of any Borrower to Lender is or may have
been incomplete, inaccurate or misleading; (c) to reflect outstanding Letter of
Credit Accommodations as provided in Section 2.2 hereof; (d) in respect of any
state of facts which Lender determines in good faith constitutes an Event of
Default or which, with notice or passage of time or both, is reasonably
26
likely to constitute an Event of Default; (e) to reflect the amounts of advance
payments received by any Borrower from any Account Debtor or other deferred
income in respect of and to the extent of any Eligible Accounts of such Account
Debtor; (f) to reflect the amounts of the Priority Payables; (g) to reflect the
amount of the Dilution Reserve; (h) to reflect Lender's good faith estimate of
the amount of any reserve necessary to reflect changes in applicable currency
exchange rates or currency exchange markets; or (i) to reflect amounts payable
as royalties, fees or other charges in respect of licenses or other agreements
to use Intellectual Property owned by third parties. The amount of any Reserve
established by Lender shall have a reasonable relationship to the event,
condition or circumstance which is the basis for such Reserve as determined by
Lender in good faith.
1.106 "Revolving Loans" shall mean loans now or hereafter made by Lender
hereunder to or for the benefit of a Borrower on a revolving basis (involving
advances, repayments and readvances) as set forth in Section 2.1 hereof.
1.107 "Solvent" shall mean, at any time with respect to any Person, that at
such time such Person (a) is able to pay its debts as they mature and has (and
has reason to believe it will continue to have) sufficient capital (and not
unreasonably small capital) to carry on its business consistent with its current
practices as of the date hereof, and (b) the assets and properties of such
Person at a fair valuation and at their present fair salable value are greater
than the Indebtedness of such Person, and including subordinated and contingent
liabilities computed at the amount which, to the best of such Person's
knowledge, represents an amount which can reasonably be expected to become an
actual or matured liability.
1.108 "Sterling" shall mean the lawful currency of the United Kingdom.
1.109 "Subsidiary" or "subsidiary" shall mean, with respect to any Person,
any corporation, limited or general partnership, trust, association or other
business entity of which an aggregate of at least a majority of the outstanding
Capital Stock or other interests entitled to vote in the election of the board
of directors of such corporation (irrespective of whether, at the time, Capital
Stock of any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency), managers, trustees
or other controlling persons, or an equivalent controlling interest therein, of
such Person is, at the time, directly or indirectly, owned by such Person and/or
one or more subsidiaries of such Person.
1.110 "Taxes" shall mean any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of Lender, such taxes (including income taxes,
franchise taxes or capital taxes) as are imposed on or measured by Lender's net
income or capital by any jurisdiction (or any political subdivision thereof).
1.111 "Test Period" (a) with respect to the Quarterly Average Excess
Availability at any time, shall mean the immediately preceding fiscal quarter;
provided, that, at any time prior to January 1, 2001, Test Period shall mean the
immediately preceding month (or, if shorter, the period from the date of the
initial Loan hereunder to the last day of the immediately preceding month), and
(b) with respect to the Fixed Charge Coverage Ratio at any time, shall mean the
immediately preceding four (4) full fiscal quarters; provided, that, (i) at any
time prior to January
27
1, 2001, Test Period shall mean the immediately preceding month, commencing with
the first full month following the date of the initial Loan hereunder and (ii)
at any time between January 1, 2001 and September 30, 2001, Test Period shall
mean the period from the first day of the first full month following the date of
the initial Loan hereunder to the last day of the immediately preceding fiscal
quarter.
1.112 "Term Promissory Note" shall mean each term promissory note, dated on
or about the date hereof, made by a Borrower in favor of Lender in connection
with the Term Loans made pursuant to Section 2.3, as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
1.113 "Term Loans" shall mean the term loans made by Lender to US
Borrowers, German Borrower and UK Borrower as provided for in Section 2.3;
sometimes being referred herein as a "Term Loan".
1.114 "UCC" shall mean the Uniform Commercial Code as in effect in the
State of New York, and any successor statute, together with any regulations
thereunder, in each case as in effect from time to time. References to sections
of the UCC shall be construed to also refer to any successor sections.
1.115 "UK Borrower" shall mean Automotive Safety Components International
Limited, a company incorporated under the laws of England and Wales with company
number 02640241 and its successors and assigns.
1.116 "US Borrowers" shall mean collectively (together with their
respective successors and assigns): (a) Galion, Inc, a Delaware corporation, (b)
Valentec International Corporation, LLC, a Delaware limited liability company,
(c) Safety Components Fabric Technologies, Inc., a Delaware corporation, and (d)
Automotive Safety Components International, Inc., a Delaware corporation; each
sometimes being individually referred to herein as a "US Borrower".
1.117 "US Dollar Equivalent" shall mean at any time (a) as to any amount
denominated in US Dollars, the amount thereof at such time, and (b) as to any
amount denominated in any other currency, the equivalent amount in US Dollars
calculated by Lender at such time using the Currency Exchange Convention in
effect on the Business Day of determination.
1.118 "US Dollars", "US$" and "$" shall each mean lawful currency of the
United States of America.
1.119 "Value" shall mean the US Dollar Equivalent, as determined by Lender
in good faith, with respect to Inventory, equal to the lower of (a) cost
computed in accordance with GAAP under the method historically used by Borrowers
and previously disclosed to Lender or (b) market value (calculated in accordance
with GAAP), provided, that, for purposes of the calculation of the Borrowing
Base, the Value of the Inventory shall not include: (i) the portion of the value
of Inventory equal to the profit earned by any Affiliate on the sale thereof to
a Borrower or (ii) adjustments in value with respect to currency exchange rates.
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1.120 "VAT" shall mean Value Added Tax imposed in the United Kingdom,
Canada, the Federal Republic of Germany or any other jurisdiction and any
equivalent tax applicable in any jurisdiction and including any goods and
services tax.
1.121 "Voting Stock" shall mean with respect to any Person, (a) one (1) or
more classes of Capital Stock of such Person having general voting powers to
elect at least a majority of the board of directors, managers or trustees of
such Person, irrespective of whether at the time Capital Stock of any other
class or classes have or might have voting power by reason of the happening of
any contingency, and (b) any Capital Stock of such Person convertible or
exchangeable without restriction or further investment at the option of the
holder thereof into Capital Stock of such Person described in clause (a) of this
definition.
SECTION 2. CREDIT FACILITIES
2.1 Revolving Loans.
(a) Subject to and upon the terms and conditions contained herein,
Lender agrees to make Revolving Loans in US Dollars to each Borrower from
time to time in amounts requested by such Borrower, in each case up to the
amount equal to the lesser of (i) the Borrowing Base of such Borrower or
(ii) the Loan Limit of such Borrower.
(b) Lender may, in its discretion, from time to time, upon not less
than ten (10) days prior notice to Borrower Agent, (i) reduce the lending
formula with respect to Eligible Accounts to the extent that Lender
determines in good faith that: (A) the Dilution with respect to the
Accounts for any period has increased in any material respect or may be
reasonably anticipated to increase in any material respect above historical
levels, or (B) the general creditworthiness of account debtors has declined
in any material respect, or (ii) reduce the lending formula(s) with respect
to Eligible Inventory to the extent that Lender determines that: (A) the
number of days of the turnover of the Inventory for any period has
increased in any material respect, (B) the liquidation value of the
Eligible Inventory, or any category thereof, has decreased in any material
respect, or (C) the nature, quality or mix of the Inventory has
deteriorated in any material respect. The amount of any decrease in the
lending formulas shall have a reasonable relationship to the event,
condition or circumstance which is the basis for such decrease as
determined by Lender in good faith. In determining whether to reduce the
lending formula(s), Lender may consider events, conditions, contingencies
or risks which are also considered in determining Eligible Accounts,
Eligible Inventory or in establishing Reserves.
(c) Except in Lender's discretion, (i) the aggregate amount of the
Loans and Letter of Credit Accommodations outstanding at any time shall not
exceed the Maximum Credit as then in effect, (ii) the amount of Revolving
Loans to all Borrowers based on the aggregate amount of Eligible Inventory
of all Borrowers shall not exceed the Inventory Loan Limit and (iii) amount
of Revolving Loans to German Borrower based on the Eligible Inventory of
German Borrower shall not exceed the US Dollar Equivalent of US $750,000.
In the event the outstanding amount of any component of the Loans, or the
aggregate amount of the Loans and Letter of Credit Accommodations, exceed
the amounts available under the lending formulas, the sublimit for Letter
of Credit Accommodations set forth in Section 2.2 or the Maximum Credit as
at any time
29
in effect, as applicable, such event shall not limit, waive or otherwise
affect any rights of Lender in that circumstance or on any future occasions
and Borrowers shall, upon demand by Lender, which may be made at any time
or from time to time, immediately prepay to Lender the entire amount of any
such excess(es) for which payment is demanded.
2.2 Letter of Credit Accommodations.
(a) Subject to and upon the terms and conditions contained herein, at
the request of any Borrower, Lender agrees to provide or arrange for Letter
of Credit Accommodations denominated in US Dollars (or such other currency
as Reference Bank may make available in the ordinary course of business
with Lender's prior consent) for the account of such Borrower containing
terms and conditions acceptable to Lender and the issuer thereof. Any
payments made by Lender to any issuer thereof and/or related parties in
connection with the Letter of Credit Accommodations shall constitute
additional Revolving Loans to the Borrower on behalf of which such Letter
of Credit Accommodations were extended pursuant to this Section 2.
(b) In addition to any charges, fees or expenses charged by any bank
or issuer in connection with the Letter of Credit Accommodations, each
Borrower shall pay to Lender a letter of credit fee in respect of Letter of
Credit Accommodations issued for the benefit of such Borrower, in each case
at a rate equal to one and three quarters (1 3/4%) percent per annum on the
daily outstanding balance of such Letter of Credit Accommodations for the
immediately preceding month (or part thereof), payable in arrears as of the
first day of each succeeding month, except that such Borrower shall pay to
Lender such letter of credit fee, at Lender's option, at a rate equal to
three and three quarters (3 3/4%) percent per annum or such daily
outstanding balance for: (i) the period from and after the effective date
of termination or non-renewal of this Agreement until Lender has received
full and final payment of all outstanding and unpaid Obligations
(notwithstanding entry of a judgment against any Borrower) and (ii) the
period from and after the date of the occurrence of an Event of Default and
for so long as such Event of Default is continuing. Such letter of credit
fee shall be calculated on the basis of a three hundred sixty (360) day
year and actual days elapsed and the obligation of Borrowers to pay such
fee shall survive the termination or non-renewal of this Agreement.
(c) No Letter of Credit Accommodations shall be available unless on
the date of the proposed issuance of any Letter of Credit Accommodations
(and immediately prior to the issuance thereof), the Excess Availability of
the Borrower for whom such Letter of Credit Accommodations is to be issued
is equal to or greater than: (i) if the proposed Letter of Credit
Accommodation is for the purpose of purchasing Eligible Inventory, the sum
of (A) the percentage equal to one hundred (100%) percent of the US Dollar
Equivalent thereof minus the then applicable percentage set forth in
Section 1.14(b) multiplied by the US Dollar Equivalent of the Value of such
Eligible Inventory, plus (B) freight, taxes, duty and other amounts that
Lender reasonably estimates must be paid in connection with such Inventory
upon arrival and for delivery to one of such Borrower's locations for
Eligible Inventory within the United States of America, Canada, the United
Kingdom or the Federal Republic of Germany and (ii) if the proposed Letter
of Credit Accommodation is for any other purpose, an amount equal to one
hundred (100%) percent of the US Dollar Equivalent of the face amount
thereof and all other commitments and obligations made or incurred by
Lender with respect thereto. Effective on the
30
issuance of each Letter of Credit Accommodation, a Reserve shall be
established in the applicable amount set forth in Section 2.2(c)(i) or
Section 2.2(c)(ii).
(d) Except in the discretion of Lender, the amount of all outstanding
Letter of Credit Accommodations and all other commitments and obligations
made or incurred by Lender in connection therewith with respect to all
Borrowers shall not at any time exceed the US Dollar Equivalent of US
$3,000,000. At any time an Event of Default exists or has occurred and is
continuing, upon Lender's request, Borrowers will either furnish cash
collateral to secure the reimbursement obligations to the issuer in
connection with any Letter of Credit Accommodations or furnish cash
collateral to Lender for the Letter of Credit Accommodations, and in either
case, the Revolving Loans otherwise available to such Borrower shall not be
reduced by a Reserve as provided in Section 2.2(c) to the extent of such
cash collateral.
(e) Each Borrower and Guarantor shall jointly and severally indemnify
and hold Lender harmless from and against any and all losses, claims,
damages, liabilities, costs and expenses suffered or incurred by Lender in
connection with any Letter of Credit Accommodations and any documents,
drafts or acceptances relating thereto, including, but not limited to, any
losses, claims, damages, liabilities, costs and expenses due to any action
taken by any issuer or correspondent with respect to any Letter of Credit
Accommodation. Each Borrower assumes all risks with respect to the acts or
omissions of the drawer under or beneficiary of any Letter of Credit
Accommodation and for such purposes the drawer or beneficiary shall be
deemed such Borrower's Lender. Each Borrower assumes all risks for, and
agrees to pay, all foreign, Federal, State, provincial and local taxes,
duties and levies relating to any goods subject to any Letter of Credit
Accommodations or any documents, drafts or acceptances thereunder. Each
Borrower and Guarantor hereby releases and holds Lender harmless from and
against any acts, waivers, errors, delays or omissions, whether caused by
such Borrower, by any issuer or correspondent or otherwise with respect to
or relating to any Letter of Credit Accommodation except for Lender's own
gross negligence or wilful misconduct as determined pursuant to a final
non-appealable order of a court of competent jurisdiction. The provisions
of this Section 2.2(e) shall survive the payment of Obligations and the
termination or non-renewal of this Agreement.
(f) Nothing contained herein shall be deemed or construed to grant
Borrowers or Guarantors any right or authority to pledge the credit of
Lender in any manner. Lender shall have no liability of any kind with
respect to any Letter of Credit Accommodation provided by an issuer unless
Lender has duly executed and delivered to such issuer the application or a
guarantee or indemnification in writing with respect to such Letter of
Credit Accommodation. Borrowers and Guarantors shall be bound by any
interpretation made in good faith by Lender, or any other issuer or
correspondent under or in connection with any Letter of Credit
Accommodation or any documents, drafts or acceptances thereunder,
notwithstanding that such interpretation may be inconsistent with any
instructions of Borrowers and Guarantors. Lender shall have the sole and
exclusive right and authority to, and Borrowers and Guarantors shall not:
(i) at any time an Event of Default exists or has occurred, (A) approve or
resolve any questions of non-compliance of documents, (B) give any
instructions as to acceptance or rejection of any documents or goods or (C)
execute any and all applications for steamship or airway guaranties,
indemnities or delivery orders, and (ii) at all times, (A) grant any
extensions of the maturity of, time of payment for, or time of presentation
of, any drafts, acceptances, or documents, and (B) agree to any amendments,
renewals, extensions, modifications, changes or cancellations of any of the
terms or conditions of
31
any of the applications, Letter of Credit Accommodations, or documents,
drafts or acceptances thereunder or any letters of credit included in the
Collateral. Lender may take such actions either in its own name or in any
Borrower's name.
(g) Any rights, remedies, duties or obligations granted or undertaken
by any Borrower or Guarantor to any issuer or correspondent in any
application for any Letter of Credit Accommodation, or any other agreement
in favor of any issuer or correspondent relating to any Letter of Credit
Accommodation, shall be deemed to have been granted or undertaken by such
Borrower or Guarantor to Lender. Any duties or obligations reasonably
undertaken by Lender to any issuer or correspondent in any application for
any Letter of Credit Accommodation, or any other agreement by Lender in
favor of any issuer or correspondent relating to any Letter of Credit
Accommodation, shall be deemed to have been undertaken by Borrowers and
Guarantors to Lender and to apply in all respects to Borrowers.
2.3 Term Loans. Lender is making Term Loans to: (a) SCFT in the original
principal amount of US$2,700,000, (b) Galion in the original principal amount of
US$1,692,000, (c) Valentec International in the original principal amount of
US$887,000 and (d) UK Borrower in the original principal amount of US$1,020,000.
Subject to and upon the terms and conditions contained herein (including,
without limitation, Section 4.3), Lender agrees to make a one-time Term Loan to
German Borrower in the original principal amount equal to the lesser of the Loan
Limit of German Borrower and US$1,328,000. Each Term Loan is (or, in the event
the Term Loan to German Borrower is made, shall be) (i) evidenced by a Term
Promissory Note in the original principal amount of such Term Loan duly executed
and delivered to Lender by the applicable Borrower with respect thereto
concurrently herewith; (ii) to be repaid, together with interest and other
amounts, in accordance with this Agreement, such Term Promissory Note, and the
other Financing Agreements and (iii) secured by all of the Collateral. The
principal amount of each Term Loan shall be repaid in sixty equal and
consecutive monthly installments, payable on the first day of each month,
commencing with the first full month immediately following the date in which
such Term Loan is made; provided, that, the entire unpaid principal amount of
each Term Loan and all accrued and unpaid interest thereon shall be due and
payable upon the effective date of termination or non-renewal of the Financing
Agreements. The amount of each such monthly installment shall be US$45,000 with
respect to the Term Loan to SCFT, US$28,200 with respect to the Term Loan to
Galion, US$14,783 with respect to the Term Loan to Valentec International,
US$22,133 with respect to the Term Loan to German Borrower and US$17,000 with
respect to the Term Loan to UK Borrower.
2.4 Increase in Maximum Credit. At any time after the date hereof, upon not
less than ten (10) Business Days prior written notice to Lender, Borrower Agent
may from time to time, at its option, request on behalf of Borrowers, that the
Maximum Credit be increased from US$20,000,000 to an amount not to exceed
US$35,000,000 and the Maximum Credit shall be irrevocably so increased;
provided, that, upon the effective date of such increase each of the following
conditions is satisfied as determined by Lender in good faith: (a) the requested
amount of the increase in the Maximum Credit shall be not less than
US$5,000,000, (b) no Event of Default, or act, condition or event which with
notice or passage of time or both would constitute an Event of Default shall
exist or have occurred and (c) such written notice shall specify the requested
amount of such increase (but in no event to an amount in excess of
US$35,000,000) and the effective date of such increase.
32
2.5 Liabilities of Foreign Borrowers and Subsidiaries. (a) The obligations
under this Agreement of any Person which is not incorporated under the laws of
any State of the United States of America shall be several and not joint and
several, and shall not be liable for, or be required to execute a guarantee of,
nor be deemed a guarantor of, the Obligations of any US Borrower nor shall any
of such Person's assets secure the Obligations of any other Borrower or Obligor
except that this Section 2.5 shall not preclude any Subsidiary of Safety from
guaranteeing, and being a guarantor of, and pledging its assets to secure, the
Obligations of its direct or indirect Subsidiaries and any Subsidiary of Safety
which is not incorporated under the laws of any State of the United States of
America.
(b) With respect to any joint liability of the German Borrower for the
obligations of the other Borrowers (if any), Lender agrees not to enforce
its rights under this Agreement with respect to such joint liability if and
to the extent such enforcement (i) reduces or further reduces the net
assets (Reinvermogen) of the German Borrower's general partner below the
amount of its stated share capital (Stammkapital) as provided for in
Section 30 para.1 of the German Act on Limited Liability Companies (GmbHG)
and would result in a claim of such general partner against its
shareholder(s) under Section 31 of the German Act on Limited Liability
Companies, or (ii) would be considered to be repayment of the contribution
of the limited partners of German Borrower as provided for in Section 172
para. 4 sub-sentence 1 German Commercial Code (HGB); it being understood
that the obligation of German Borrower to pay principal and interest under
this Agreement is not such joint liability and that, therefore, this
limitation of liability does not apply thereto.
SECTION 3. INTEREST AND FEES
3.1 Interest.
(a) Each Borrower shall pay to Lender interest on the outstanding
principal amount of the Loans at the applicable Interest Rate. All interest
accruing hereunder on and after the date of any Event of Default or the
effective date of the termination or non-renewal hereof shall be payable on
demand.
(b) A Borrower may from time to time request that Prime Rate Loans be
converted to Eurodollar Rate Loans or that any existing Eurodollar Rate
Loans continue for an additional Interest Period. Such request from or on
behalf of a Borrower shall specify the amount of the Prime Rate Loans which
will constitute Eurodollar Rate Loans (subject to the limits set forth
below) and the Interest Period to be applicable to such Eurodollar Rate
Loans. Subject to the terms and conditions contained herein, three (3)
Business Days after receipt by Lender of such a request from or on behalf
of a Borrower, such Prime Rate Loans shall be converted to Eurodollar Rate
Loans or such Eurodollar Rate Loans shall continue, as the case may be,
provided, that, (i) no Event of Default, or act, condition or event which
with notice or passage of time or both would constitute an Event of Default
shall exist or have occurred and be continuing, (ii) no party hereto shall
have sent any notice of termination or non-renewal of this Agreement, (iii)
the Borrower requesting such Eurodollar Rate Loan shall have complied with
such customary procedures as are established by Lender and specified by
Lender to Borrowers from time to time for requests by a Borrower for
Eurodollar Rate Loans, (iv) no more than four (4) Interest Periods
33
may be in effect at any one time, (v) the aggregate amount of the
Eurodollar Rate Loans must be in an amount not less than US$5,000,000 if
there is only one Eurodollar Rate Loan outstanding or an integral multiple
of US$1,000,000 in excess thereof for additional outstanding Eurodollar
Rate Loans, (vi) the maximum amount of the Eurodollar Rate Loans at any
time requested by Borrowers shall not exceed the amount equal to (A) the
aggregate principal amount of the Term Loans (which it is anticipated will
be outstanding as of the last day of the applicable Interest Period) plus
eighty (80%) percent of the average daily principal amount of the Revolving
Loans which it is anticipated will be outstanding during the applicable
Interest Period, in each case as determined by Lender (but with no
obligation of Lender to make such Revolving Loans), and (vii) Lender shall
have determined that the Interest Period or Adjusted Eurodollar Rate is
available to Lender through the Reference Bank and can be readily
determined as of the date of the request for such Eurodollar Rate Loan by
or on behalf of such Borrower. Any request by or on behalf of a Borrower to
convert Prime Rate Loans to Eurodollar Rate Loans or to continue any
existing Eurodollar Rate Loans, as the case may be, shall be irrevocable.
Notwithstanding anything to the contrary contained herein, neither Lender
nor Reference Bank shall be required to purchase US Dollar deposits in the
London interbank market or other applicable Eurodollar Rate market to fund
any Eurodollar Rate Loans, but the provisions hereof shall be deemed to
apply as if Lender and Reference Bank had purchased such deposits to fund
the Eurodollar Rate Loans.
(c) Any Eurodollar Rate Loans shall automatically convert to Prime
Rate Loans upon the last day of the applicable Interest Period, unless
Lender has received and approved a request to continue such Eurodollar Rate
Loan at least three (3) Business Days prior to such last day in accordance
with the terms hereof and the conditions set forth in Section 3.1(b) are
satisfied with respect thereto as determined by Lender. Any Eurodollar Rate
Loans to a Borrower shall, at Lender's option, upon notice by Lender to
Borrower Agent, convert to Prime Rate Loans (i) upon an Event of Default or
(ii) upon the effective date of the termination or non- renewal of this
Agreement. Each US Borrower shall pay to Lender, upon demand by Lender (or
Lender may, at its option, charge any loan account of the applicable
Borrower) any amounts required to compensate Lender, the Reference Bank or
any participant with Lender for any loss (including loss of anticipated
profit), cost or expense incurred by such person, as a result of the
conversion of Eurodollar Rate Loans to such Borrower to Prime Rate Loans
pursuant to any of the foregoing.
(d) Interest shall be calculated and payable monthly in arrears in US
Dollars not later than the first day of each calendar month and shall be
calculated on the basis of a three hundred sixty (360) day year and actual
days elapsed. The interest rate on non-contingent Obligations (other than
Eurodollar Rate Loans) shall increase or decrease by an amount equal to
each increase or decrease in the Prime Rate effective on the first day of
the month after any change in such Prime Rate is announced based on the
Prime Rate in effect on the last day of the month in which any such change
occurs. In no event shall charges constituting interest payable by Borrower
to Lender exceed the maximum amount or the rate permitted under any
applicable law or regulation, and if any such part or provision of this
Agreement is in contravention of any such law or regulation, such part or
provision shall be deemed amended to conform thereto.
3.2 Fee. Borrowers agree to pay to Lender the fees and other amounts set
forth in the Fee Letter in the amounts and at the times specified therein.
34
3.3 Changes in Laws and Increased Costs of Loans.
(a) Notwithstanding anything to the contrary contained herein, all
Eurodollar Rate Loans shall, upon notice by Lender to any Borrower, convert
to Prime Rate Loans in the event that (i) any change in applicable law or
regulation (or the interpretation or administration thereof) shall either
(A) make it unlawful for Lender, Reference Bank or any participant with
Lender to make or maintain Eurodollar Rate Loans or to comply with the
terms hereof in connection with the Eurodollar Rate Loans, or (B) shall
result in the increase in the costs to Lender, Reference Bank or any
participant of making or maintaining any Eurodollar Rate Loans by an amount
deemed by Lender to be material, or (C) reduce the amounts received or
receivable by Lender in respect thereof, by an amount determined by Lender
in good faith to be material or (ii) the cost to Lender, Reference Bank or
any participant of making or maintaining any Eurodollar Rate Loans shall
otherwise increase by an amount determined by Lender in good faith to be
material. Borrowers shall pay to Lender, upon demand by Lender (or Lender
may, at its option, charge any loan account of a Borrower) any amounts
required to compensate Lender, the Reference Bank or any participant with
Lender for any loss (including loss of anticipated profits), cost or
expense incurred by such person as a result of the foregoing, including,
without limitation, any such loss, cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
person to make or maintain the Eurodollar Rate Loans or any portion
thereof. A certificate of Lender setting forth the basis for the
determination of such amount necessary to compensate Lender as aforesaid
shall be delivered to a Borrower and shall be conclusive, absent manifest
error.
(b) If any payments or prepayments in respect of the Eurodollar Rate
Loans are received by Lender other than on the last day of the applicable
Interest Period (whether pursuant to acceleration, upon maturity or
otherwise), including any payments pursuant to the application of
collections under Section 6.3 or any other payments made with the proceeds
of Collateral, Borrowers shall pay to Lender upon demand by Lender (or
Lender may, at its option, charge any loan account of a Borrower) any
amounts required to compensate Lender, the Reference Bank or any
participant with Lender for any additional loss (including loss of
anticipated profits), cost or expense incurred by such person as a result
of such prepayment or payment, including, without limitation, any loss,
cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such person to make or maintain such
Eurodollar Rate Loans or any portion thereof.
3.4 Maximum Interest.
(a) Notwithstanding anything to the contrary contained in this
Agreement or any of the other Financing Agreements, in no event whatsoever
shall the aggregate of all amounts that are contracted for, charged or
received by Lender pursuant to the terms of this Agreement or any of the
other Financing Agreements and that are deemed interest under applicable
law exceed the Maximum Interest Rate (including, to the extent applicable,
the provisions of Section 5197 of the Revised Statutes of the United States
of America as amended, 12 U.S.C. Section 85, as amended). No agreements,
conditions, provisions or stipulations contained in this Agreement or any
of the other Financing
35
Agreements, or any Event of Default, or the exercise by Lender of the right
to accelerate the payment or the maturity of all or any portion of the
Obligations, or the exercise of any option whatsoever contained in this
Agreement or any of the other Financing Agreements, or the prepayment by
Borrowers of any of the Obligations, or the occurrence of any event or
contingency whatsoever, shall entitle Lender to contract for, charge or
receive in any event, interest or any charges, amounts, premiums or fees
deemed interest by applicable law in excess of the Maximum Interest Rate.
In no event shall Borrowers be obligated to pay interest or such amounts as
may be deemed interest under applicable law in amounts which exceed the
Maximum Interest Rate. All agreements, conditions or stipulations, if any,
which may in any event or contingency whatsoever operate to bind, obligate
or compel Borrowers to pay interest or such amounts which are deemed to
constitute interest in amounts which exceed the Maximum Interest Rate shall
be without binding force or effect, at law or in equity, to the extent of
the excess of interest or such amounts which are deemed to constitute
interest over such Maximum Interest Rate.
(b) In the event any Interest is charged or received in excess of the
Maximum Interest Rate ("Excess"), each Borrower acknowledges and stipulates
that any such charge or receipt shall be the result of an accident and bona
fide error, and that any Excess received by Lender shall be applied, first,
to the payment of the then outstanding and unpaid principal hereunder;
second to the payment of the other Obligations then outstanding and unpaid;
and third, returned to Borrowers, it being the intent of the parties hereto
not to enter into a usurious or otherwise illegal relationship. The right
to accelerate the maturity of any of the Obligations does not include the
right to accelerate any interest that has not otherwise accrued on the date
of such acceleration, and Lender does not intend to collect any unearned
interest in the event of any such acceleration. Each Borrower recognizes
that, with fluctuations in the rates of interest set forth in this
Agreement and the Maximum Interest Rate, such an unintentional result could
inadvertently occur. All monies paid to Lender hereunder or under any of
the other Financing Agreements, whether at maturity or by prepayment, shall
be subject to any rebate of unearned interest as and to the extent required
by applicable law.
(c) By the execution of this Agreement, each Borrower agrees that (i)
the credit or return of any Excess shall constitute the acceptance by each
Borrower of such Excess, and (ii) no Borrower shall seek or pursue any
other remedy, legal or equitable, against Lender, based in whole or in part
upon contracting for, charging or receiving any interest or such amounts
which are deemed to constitute interest in excess of the Maximum Interest
Rate. For the purpose of determining whether or not any Excess has been
contracted for, charged or received by Lender, all interest at any time
contracted for, charged or received from any Borrower in connection with
this Agreement or any of the other Financing Agreements shall, to the
extent permitted by applicable law, be amortized, prorated, allocated and
spread during the entire term of this Agreement in accordance with the
amounts outstanding from time to time hereunder and the Maximum Interest
Rate from time to time in effect in order to lawfully charge the maximum
amount of interest permitted under applicable laws.
(d) Each Borrower and Lender shall, to the maximum extent permitted
under applicable law, (i) characterize any non-principal payment as an
expense, fee or premium rather than as interest and (ii) exclude voluntary
prepayments and the effects thereof.
(e) The provisions of this Section 3.4 shall be deemed to be
incorporated into each of the other Financing Agreements (whether or not
any provision of this Section is referred to therein). Each of the
Financing Agreements and communications relating to any interest owed
36
by any Borrower and all figures set forth therein shall, for the sole
purpose of computing the extent of the Obligations, be automatically
recomputed by such Borrower, and by any court considering the same, to give
effect to the adjustments or credits required by this Section.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to Initial Loans and Letter of Credit
Accommodations. Each of the following is a condition precedent to Lender making
the initial Loans and providing the initial Letter of Credit Accommodations
hereunder:
(a) Lender shall (i) have received the Plan of Reorganization, in form
and substance satisfactory to Lender, and (ii) have received a certified
copy of the Confirmation Order, in form and substance satisfactory to
Lender, which Confirmation Order shall be a Final Order;
(b) Lender shall have received evidence, in form and substance to
Lender, that prior to the date hereof or concurrently herewith, (i) the
Effective Date shall have occurred and the Plan of Reorganization shall be
in full force and effect and all conditions precedent to the effectiveness
of the Plan of Reorganization shall have been fulfilled, or validly waived,
including, without limitation, the execution, delivery and performance of
all of the conditions thereof other than conditions that have been validly
waived, and (ii) no motion, action or proceeding shall be pending or filed
by any creditor or other party-in-interest to the Bankruptcy Case which
could adversely affect the Plan of Reorganization, the business or
operations of any Borrower or Guarantor or the transactions contemplated by
the Financing Agreements, as determined by Lender in good faith;
(c) Lender shall have received evidence, in form and substance
satisfactory to Lender, that each claim of the Noteholders that is
"Allowed" (as defined in the Plan of Reorganization) has been irrevocably
released, discharged, settled and satisfied in exchange for each
Noteholder's ratable share of the 4,840,000 shares of Capital Stock of
Safety authorized by Safety on the Effective Date;
(d) Lender shall have received evidence (including without limitation,
any subordinations, discharge or releases of any other liens or security
interests in the Collateral that may be required by Lender), in form and
substance satisfactory to Lender, that Lender has valid, perfected and
first priority security interests in and liens upon the Collateral of US
Borrowers and Guarantors, first ranking fixed and floating charges upon the
Collateral of UK Borrower and valid, perfected first priority security
interests in and first ranking liens upon the Collateral (excluding
Inventory) of German Borrower, subject only to the security interests and
liens permitted herein or in the other Financing Agreements (it being
understood that the security interests of Lender in the Collateral of
Automatic Safety Mexico shall not be perfected under the laws of Mexico);
(e) all requisite corporate action and proceedings in connection with
this Agreement and the other Financing Agreements shall be satisfactory in
form and substance to Lender, and Lender shall have received all
information and copies of all documents, including, without limitation,
records of requisite limited liability company and corporate action and
37
proceedings (and extracts from the commercial registers of German
companies) which Lender may have requested in connection therewith, such
documents where requested by Lender or its counsel to be certified by
appropriate corporate officers or Governmental Authorities;
(f) no material adverse change shall have occurred in the assets or
business of any Borrower since the date of Lender's latest field
examination and no change or event shall have occurred which would impair
the ability of any Borrower or Obligor in any material respect to perform
its obligations hereunder or under any of the other Financing Agreements to
which it is a party or of Lender to enforce the Obligations or realize upon
the Collateral;
(g) Lender shall have (i) completed a field review of the Collateral,
the Records and such other information with respect to the Collateral as
Lender may request in good faith to determine the amount of Loans available
to Borrowers (including, without limitation, roll- forwards of Accounts
through a date not more than three (3) Business Days prior to the date
hereof (or such earlier date which is acceptable to Lender), together with
such supporting documentation as may be necessary or appropriate, and other
documents and information that will enable Lender to accurately identify
and verify the Collateral), the results of which each case shall be
satisfactory to Lender, not more than three (3) Business Days prior to the
date hereof and (ii) received appraisals, addressed to Lender, of the
Equipment and Real Property from an appraiser and revealing results
satisfactory to Lender;
(h) Lender shall have received, in form and substance satisfactory to
Lender, all consents, waivers, acknowledgments and other agreements from
third persons which Lender may deem necessary or desirable in good faith in
order to permit, protect and perfect the security interests and liens of
Lender upon the Collateral of US Borrowers, first ranking fixed and
floating charges upon the Collateral of UK Borrower and the security
interests in and first ranking liens upon the Collateral (excluding
Inventory) of German Borrower or to effectuate the provisions or purposes
of this Agreement and the other Financing Agreements, including, without
limitation, Collateral Access Agreements by lessors, mortgagees and
warehousemen;
(i) Lender shall have received an environmental audit of the Real
Property of SCFT located in Greenville, South Carolina conducted by an
independent environmental engineering firm acceptable to Lender, and in
form, scope and methodology satisfactory to Lender, confirming that (i)
SCFT is in compliance with all material applicable Environmental Laws and
(ii) the absence of any material environmental problems;
(j) Lender shall have received, in form and substance satisfactory to
Lender, (i) a valid and effective title insurance policy issued by a
company acceptable to Lender (A) insuring the priority, amount and
sufficiency of the Mortgage made by SCFT, (B) insuring against matters that
would be disclosed by surveys and (C) containing any legally available
endorsements, assurances or affirmative coverage requested by Lender for
protection of its interests and the interests, and (ii) a title report
issued by a company acceptable to Lender with respect to the Real Property
located in Galion, Ohio;
(k) Lender shall have received originals of the shares of the stock
certificates representing all of the issued and outstanding shares of the
Capital Stock of the direct Subsidiaries of Guarantors and Borrowers
incorporated under the laws of any State of the United
38
States of America and stock certificates representing sixty-five (65%)
percent of the issued and outstanding shares of Capital Stock of the direct
Subsidiaries of Guarantors and Borrowers which are not incorporated under
the laws of a State of the United States of America (excluding the Capital
Stock of German Borrower, Valentec International and Automotive Safety
Czech), in each case together with stock powers duly executed in blank with
respect thereto;
(l) the aggregate amount of the Excess Availability of Borrowers shall
be not less than $8,000,000, as of the date hereof, after giving effect to
the initial Loans made or to be made and initial Letter of Credit
Accommodations issued or to be issued in connection with the initial
transactions hereunder;
(m) Lender shall have received a Borrowing Base Certificate setting
forth the Loans available to each Borrower as of the date hereof as
completed in a manner satisfactory to Lender and duly authorized, executed
and delivered on behalf of such Borrower;
(n) Lender shall have received evidence of insurance and loss payee
endorsements required hereunder and under the other Financing Agreements,
in form and substance satisfactory to Lender, and certificates of insurance
policies and/or endorsements naming Lender as loss payee;
(o) Lender shall have received, in form and substance satisfactory to
Lender, such opinion letters of counsels to Borrowers and Guarantors with
respect to the Financing Agreements and the security interests, liens,
charges and hypothecs of Lender with respect to the Collateral and such
other matters as Lender may request (and including opinion letters of US
counsel, German counsel and English counsel to Borrowers and Guarantors and
counsel of such other foreign jurisdictions as Lender may request);
(p) the initial Loan hereunder shall have been made on or before
October 30, 2000;
(q) the Borrowers' and Guarantors' relationship with, and the level of
trade support from, their vendors shall be satisfactory to Lender in good
faith;
(r) Lender shall have received the Intercreditor Agreement, an access
and use agreement from Deutsche Bank and the other Financing Agreements and
all instruments and documents hereunder and thereunder shall have been duly
executed and delivered to Lender, in form and substance satisfactory to
Lender; and
(s) Lender shall have received (i) an ALTA survey certified to Lender,
in form and substance acceptable to Lender, with respect of the Real
Property of SCFT located in Greenville, South Carolina and (ii) a letter
from the applicable municipal authority, in form and substance acceptable
to Lender, addressing the issuance of a Certificate of Occupancy.
4.2 Conditions Precedent to All Loans and Letter of Credit Accommodations.
Each of the following is an additional condition precedent to Lender making
Loans and/or providing Letter of Credit Accommodations to Borrowers, including
the initial Loans and Letter of Credit Accommodations and any future Loans and
Letter of Credit Accommodations:
39
(a) all representations and warranties contained herein and in the
other Financing Agreements shall be true and correct in all material
respects with the same effect as though such representations and warranties
had been made on and as of the date of the making of each such Loan or
providing each such Letter of Credit Accommodation and after giving effect
thereto, except to the extent that such representations and warranties
expressly relate solely to an earlier date (in which case such
representations and warranties shall have been true and accurate on and as
of such earlier date);
(b) no law, regulation, order, judgment or decree of any Governmental
Authority shall exist, and no action, suit, investigation, litigation or
proceeding shall be pending or threatened in any court or before any
arbitrator or Governmental Authority, which (i) purports to enjoin,
prohibit, restrain or otherwise affect (A) the making of the Loans or
providing the Letter of Credit Accommodations, or (B) the consummation of
the transactions contemplated pursuant to the terms hereof or the other
Financing Agreements or (ii) has or could reasonably be expected to have a
Material Adverse Effect;
(c) no Event of Default and no act, condition or event which, with
notice or passage of time or both, would constitute an Event of Default,
shall exist or have occurred and be continuing on and as of the date of the
making of such Loan or providing each such Letter of Credit Accommodation
and after giving effect thereto.
4.3 Conditions Precedent to Term Loan to German Borrower. Each of the
conditions set forth on Exhibit C hereto is a condition precedent to Lender
making the Term Loan to German Borrower hereunder (in addition to any other
conditions precedent set forth in this Agreement).
SECTION 5. GRANT OF SECURITY INTEREST
5.1 Grant of Security Interest. To secure payment and performance of all of
the Obligations, each Borrower hereby grants to Lender a continuing security
interest in, a lien upon, and a right of set off against, and hereby assigns to
Lender as security the following property and interests in property, whether now
owned or hereafter acquired or existing, and wherever located (together with all
other collateral security for the Obligations of such Borrower at any time
granted to or held or acquired by Lender, collectively, the "Collateral"):
(a) Receivables;
(b) all other present and future general intangibles (including
Intellectual Property and existing and future leasehold interests in
equipment, real estate and fixtures), chattel paper, documents,
instruments, investment property (including securities, whether
certificated or uncertificated, securities accounts, security entitlements,
commodity contracts or commodity accounts), letters of credit, bankers'
acceptances and guaranties;
(c) all present and future monies, securities and other investment
property, credit balances, deposits, deposit accounts and other property of
such Borrower now or hereafter held or received by or in transit to Lender
or its Affiliates or at any other depository or other institution from or
for the account of such Borrower, whether for safekeeping, pledge, custody,
40
transmission, collection or otherwise, and all present and future liens,
security interests, rights, remedies, title and interest in, to and in
respect of Receivables and other Collateral, including (i) rights and
remedies under or relating to guaranties, contracts of suretyship, letters
of credit and credit and other insurance related to the Collateral, (ii)
rights of stoppage in transit, replevin, repossession, reclamation and
other rights and remedies of an unpaid vendor, lien or secured party, (iii)
goods described in invoices, documents, contracts or instruments with
respect to, or otherwise representing or evidencing, Receivables or other
Collateral, including returned, repossessed and reclaimed goods, and (iv)
deposits by and property of account debtors or other persons securing the
obligations of account debtors;
(d) Inventory;
(e) Equipment;
(f) Real Property;
(g) Records; and
(h) all products and proceeds of the foregoing, in any form, including
insurance proceeds and all claims against third parties for loss or damage
to or destruction of any or all of the foregoing.
5.2 Special Provisions Regarding Collateral. Notwithstanding anything to
the contrary contained in this Section 5, (i) the Collateral of UK Borrower
shall secure only the Obligations of UK Borrower and the other Borrowers and
Obligors incorporated outside the United States of America, (ii) the pledge of
shares of Capital Stock of any Subsidiary of a Borrower that is not incorporated
or formed under the laws of the United States of America shall not exceed
sixty-five (65%) percent of all of the issued and outstanding shares of Capital
Stock of such Subsidiary, (iii) the Collateral of German Borrower pledged under
this Agreement (but not any other Financing Agreement) shall be limited to
Receivables the perfection of which is governed by the Uniform Commercial Code
in effect in any State of the United States of America and all proceeds thereof,
(iv) the Collateral of German Borrower shall secure only the Obligations of
German Borrower and other Borrowers and Obligors incorporated or formed outside
the United States of America, (v) the Collateral pledged hereunder shall not
include any Real Property located in the Republic of Germany and (vi) the
Collateral pledged hereunder shall not include any assets of Automotive Safety
Czech.
5.3 Release of Certain Liens. If Automotive Safety Czech or Automotive
Safety Mexico enters into financing arrangements with another lender as
permitted under Section 9.9(d) and such lender requires a pledge of the assets
of such Person in connection therewith, Lender agrees to release its lien (if
any) on the assets of such Person (in the case of Automotive Safety Mexico) and
permit such Person to grant liens on its assets to such other lender on the
closing date of such financing arrangements; provided, that, (a) no Event of
Default or act, event or condition which with notice or passage of time would
constitute an Event of Default shall exist or have occurred and (b) such Person
shall repay all loans and advances made after the date hereof owing by it to any
Borrower or Guarantor.
41
5.4 Liens on German Collateral. The grant of a security interest in the
Collateral by German Borrower in favor of Lender under the laws of the Federal
Republic of Germany is further evidenced by other Financing Agreements. The
grant of a security interest in the Collateral by UK Borrower in favor of Lender
under laws of England and Wales is further evidenced by other Financing
Agreements.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 Borrowers' Loan Accounts. Lender shall maintain one or more loan
account(s) on its books for each Borrower in which shall be recorded (a) all
Loans, Letter of Credit Accommodations and other Obligations of such Borrower
and the Collateral of such Borrower, (b) all payments made by or on behalf of
such Borrower and (c) all other appropriate debits and credits as provided in
this Agreement, including, without limitation, fees, charges, costs, expenses
and interest payable by such Borrower. All entries in the loan account(s) shall
be made in accordance with Lender's customary practices as in effect from time
to time.
6.2 Statements. Lender shall render to Borrower Agent each month a
statement setting forth the balance in each Borrower's loan account(s)
maintained by Lender for such Borrower pursuant to the provisions of this
Agreement, including principal, interest, fees, costs and expenses. Each such
statement shall be subject to subsequent adjustment by Lender but shall, absent
fraud, mistake or manifest errors or omissions, be considered correct and deemed
accepted by Borrower Agent and Guarantors and conclusively binding upon
Borrowers and Guarantors as an account stated except to the extent that Lender
receives a written notice from Borrowers of any specific exceptions of Borrowers
thereto within thirty (30) days after the date such statement has been mailed by
Lender. Until such time as Lender shall have rendered to Borrowers or Borrower
Agent a written statement as provided above, the balance in a Borrower's loan
account(s) shall be presumptive evidence of the amounts due and owing to Lender
by such Borrower.
6.3 Collection of Accounts.
(a) Each Borrower shall establish and maintain, at its expense,
blocked accounts or lockbox and related blocked accounts (in either case,
"Blocked Accounts"), as Lender may specify, with such banks as are
reasonably acceptable to Lender into which such Borrower shall promptly
deposit all payments on Receivables and all payments constituting proceeds
of its Inventory or other Collateral in the identical form in which such
payments are made, whether by cash, check or other manner. The banks at
which the Blocked Accounts are established shall enter into an agreement,
in form and substance reasonably satisfactory to Lender, providing that all
items received or deposited in the Blocked Accounts are the property of
Lender on and after the date that Lender is entitled to notify such banks
to remit funds in the Blocked Accounts to the Payment Account, that the
depository bank has no lien upon, or right to setoff against, the Blocked
Accounts, the items received for deposit therein, or the funds from time to
time on deposit therein and that on and after the date of written notice
from Lender, the depository bank will wire, or otherwise transfer, in
immediately available funds, on a daily basis, all funds received or
deposited into the Blocked Accounts to such bank account of Lender as
Lender may from time to time designate for such purpose ("Payment
Account").
42
(b) Lender shall instruct the depository banks at which the Blocked
Accounts of each Borrower are maintained to transfer the funds on deposit
in such Blocked Accounts to such operating bank account of such Borrower as
the applicable Borrower may specify in writing to Lender until such time as
Lender shall notify the depository bank otherwise. Lender may instruct the
depository banks at which the Blocked Accounts of any Borrower are
maintained to transfer all funds received or deposited into such Blocked
Accounts to the Payment Account at any time that either: (i) an Event of
Default shall exist or have occurred and be continuing, (ii) Borrowers
shall have failed to deliver any Borrowing Base Certificate in accordance
with the terms hereof, (iii) upon Lender's good faith belief that any
information contained in any Borrowing Base Certificate is incomplete,
inaccurate or misleading, or (iv) the aggregate amount of the Excess
Availability of all Borrowers shall be less than US$5,000,000.
(c) For the purposes of calculating interest on the Obligations, all
payments or other funds received for application to the Obligations will be
applied (conditional upon final collection) to the Obligations of the
applicable Borrower one (1) Business Day following the date of receipt of
immediately available funds by Lender in the Payment Account (the
"Collection Period") provided such payments or other funds and notice
thereof are received in accordance with Lender's usual and customary
practices as in effect from time to time and within sufficient time to
credit such Borrower's loan account on such day, and if not, then on the
next Business Day. In addition to any other fees or charges provided for
herein, at such time or times as funds received in the Blocked Accounts of
any Borrower are not sent to the Payment Account, Lender shall be entitled
to charge such Borrower an administrative fee equivalent to the interest
Lender would have received for the Collection Period had the proceeds of
Receivables and other Collateral from the Blocked Accounts been sent to the
Payment Account. For purposes of calculating the amount of the Loans
available to Borrowers, such payments will be applied (conditional upon
final collection) to the Obligations of the applicable Borrower on the
Business Day of receipt by Lender of immediately available funds in the
Payment Account provided such payments and notice thereof are received in
accordance with Lender's usual and customary practices as in effect from
time to time and within sufficient time to credit such Borrower's loan
account on such day, and if not, then on the next Business Day.
(d) Each Borrower and all of its directors, employees, agents,
Subsidiaries and other Affiliates shall, acting as trustee for Lender,
receive, as the property of Lenders on and after the date that Lender
notifies any bank at which a Blocked Account is maintained to remit funds
in such Blocked Account to the Payment Account, any monies, checks, notes,
drafts or any other payment relating to and/or proceeds of Receivables or
other Collateral which come into their possession or under their control
and, immediately upon receipt thereof, shall deposit or cause the same to
be deposited in the Blocked Accounts, or on and after the date that Lender
notifies any bank at which a Blocked Account is maintained to remit funds
in such Blocked Account to the Payment Account, remit the same or cause the
same to be remitted, in kind, to Lender. In no event shall the same be
commingled with a Borrower's own funds. In the event that the Debenture in
respect of any bank at which a Blocked Account in the United Kingdom is
maintained by UK Borrower is not, at any time, effective or is not in full
force and effect, Borrowers will (unless otherwise directed by Lender and
without prejudice to Lender's rights and remedies hereunder or under the
other Financing Agreements), for so long as the Debenture by UK Borrower in
favor of Lender is ineffective or not in full force and effect and ending
on the date when all Obligations have been repaid or discharged in full and
this Agreement terminated,
43
collect as agent and trustee for Lender all Receivables which would
otherwise have been payable into the Blocked Account and immediately pay
(or procure the payment of) all amounts due in respect of those Receivables
into the Payment Account. Borrowers will not be entitled to close or vary
the operation of the Blocked Accounts without the prior written consent of
Lender or to withdraw funds from the Blocked Accounts other than strictly
in accordance with this Agreement and the other the Financing Agreements.
Borrowers will take such steps as are necessary to ensure that the Blocked
Accounts are at all times operated by the relevant bank at which such
Blocked Accounts are maintained so as to give effect to the arrangements
set out in this Agreement and the other Financing Agreements and will at
all times procure that the Blocked Accounts of UK Borrower in the United
Kingdom are subject to the Debenture by UK Borrower, in each case in favor
of Lender. Each Borrower agrees to reimburse Lender on demand for any
amounts owed or paid to any bank at which a Blocked Account is established
for it or any other bank or person involved in the transfer of funds to or
from its Blocked Accounts arising out of Lender's payments to or
indemnification of such bank or person in connection with such Blocked
Account or any amounts received therein or transferred therefrom. The
obligation of Borrowers to reimburse Lender for such amounts pursuant to
this Section 6.3 shall survive the termination or non-renewal of this
Agreement.
6.4 Payments. All Obligations shall be payable to the Payment Account as
provided in Section 6.3 or such other place as Lender may designate from time to
time. Lender shall apply payments received or collected from any Borrower or
Guarantor or for the account of any Borrower or Guarantor (including the
monetary proceeds of collections or of realization upon any Collateral) as
follows: first, to pay any fees, indemnities or expense reimbursements then due
to Lender from Borrowers; second, to pay interest due in respect of any Loans;
third, to pay principal due in respect of the Loans; fourth, to pay or prepay
any other Obligations whether or not then due, in such order and manner as
Lender determines; provided, that, unless an Event of Default exists or shall
have occurred, (a) Lender shall not apply amounts in the Payment Account to
prepay the Term Loans unless such prepayment is required under this Agreement or
the Borrower Agent consents thereto and (b) proceeds of Collateral of UK
Borrower and German Borrower shall be applied only to pay the Obligations of UK
Borrower and German Borrower, respectively. Notwithstanding anything to the
contrary contained in this Agreement, unless so directed by Borrowers, or unless
an Event of Default shall exist or have occurred and be continuing, Lender shall
not apply any payments which it receives to any Eurodollar Rate Loans, except
(i) on the expiration date of the Interest Period applicable to any such
Eurodollar Rate Loans, or (ii) in the event that there are no outstanding Prime
Rate Loans. At Lender's option, all principal, interest, fees, costs, expenses
and other charges provided for in this Agreement or the other Financing
Agreements may be charged directly to the loan account(s) of Borrowers. To the
extent Lender receives any payments or collections in respect of the Obligations
in a currency other than US Dollars, Lender may, at its option (but is not
obligated to), convert such other currency to US Dollars at the Exchange Rate on
such date and in such market as Lender may select (regardless as to whether such
rate is the best available rate). The Borrower whose Obligations are thereby
paid shall pay the costs of such conversion (or Lender may, at its option,
charge such costs to the loan account of such Borrower maintained by Lender).
Payments and collections received in any currency other than the currency in
which any outstanding Obligations are denominated will be accepted and/or
applied at the discretion of Lender. At Lender's option, all principal,
interest, fees, costs, expenses and other charges provided for in this Agreement
or the other Financing Agreements may be charged directly to the loan
44
account(s) of Borrowers. Each Borrower shall make all payments to Lender free
and clear of, and without deduction or withholding for or on account of, any
setoff, counterclaim or defense of any kind, except, that German Borrower shall
retain its rights of setoff but only to the extent that Lender consents thereto
or such right has been fully adjudicated in favor of German Borrower by a court
of competent jurisdiction in the Federal Republic of Germany. If after receipt
of any payment of, or proceeds of Collateral applied to the payment of, any of
the Obligations, Lender is required to surrender or return such payment or
proceeds to any Person for any reason, then the Obligations intended to be
satisfied by such payment or proceeds shall be reinstated and continue and this
Agreement shall continue in full force and effect as if such payment or proceeds
had not been received by Lender. Each Borrower shall be liable to pay to Lender,
and does hereby indemnify and hold Lender harmless for the amount of any
payments made by it or on its behalf or proceeds of its Collateral surrendered
or returned. This Section 6.4 shall remain effective notwithstanding any
contrary action which may be taken by Lender in reliance upon such payment or
proceeds. This Section 6.4 shall survive the payment of the Obligations and the
termination or non-renewal of this Agreement.
6.5 Taxes.
(a) Any and all payments by each Borrower and Guarantor to Lender
under this Agreement and any of the other Financing Agreements shall be
made free and clear of, and without deduction or withholding for any Taxes.
In addition, Borrowers shall pay all Other Taxes (or Lender may, at its
option, pay such Other Taxes and charge the loan account of any Borrower
for such amounts so paid).
(b) Each Borrower and Guarantor shall indemnify and hold harmless
Lender for the full amount of Taxes or Other Taxes paid by Lender
(including any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section, but not including Other Taxes that arise as a
result of Lender's arrangements with the applicable taxing jurisdiction, if
any, and not as a result of this Agreement) and any liability (including
penalties, interest and expenses (including reasonable attorney's fees and
expenses) other than those resulting solely from a failure by Lender to pay
any Taxes or Other Taxes which it is required to pay and for which it
received an indemnity payment) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted
by the relevant Governmental Authority. Payment under this indemnification
shall be made within ten (10) days after the date Lender makes written
demand therefor. If such Taxes or Other Taxes were not correctly or legally
asserted, Lender shall, upon Borrower Agent's request and at Borrowers'
expense, provide such documents to Borrower Agent, in form and substance
satisfactory to Lender, as Borrower Agent may reasonably request, to enable
Borrowers to contest such Taxes or Other Taxes pursuant to appropriate
proceedings then available to such Borrower (so long as providing such
documents shall not, in the good faith determination of Lender, have a
reasonable likelihood of resulting in any liability of Lender).
(c) If any Borrower or Guarantor shall be required by law to deduct or
withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder to Lender, then:
(i) the sum payable shall be increased as necessary so that after
making all required deductions and withholdings (including deductions
and withholdings applicable to
45
additional sums payable under this Section) Lender receives an amount
equal to the sum it would have received had no such deductions or
withholdings been made;
(ii) such Borrower or Guarantor shall make such deductions and
withholdings;
(iii) such Borrower or Guarantor shall pay the full amount
deducted or withheld to the relevant taxing authority or other
authority in accordance with applicable law; and
(iv) such Borrower or Guarantor shall also pay to Lender, at the
time interest is paid, all additional amounts which Lender specifies
as necessary to preserve the after-tax yield Lender would have
received if such Taxes or Other Taxes had not been imposed.
(d) such Borrower or Guarantor shall promptly furnish to Lender the
original or a certified copy of a receipt evidencing payment thereof, or
other evidence of payment satisfactory to Lender.
(e) If any Borrower or Guarantor otherwise would be required to pay
additional amounts to Lender pursuant to subsection (c) of this Section,
then upon Borrower's written request Lender shall use reasonable efforts at
Borrowers' expense (consistent with legal and regulatory restrictions) to
file such forms or documents and take such other action, including changing
the jurisdiction of its lending office so as to eliminate any such
additional payment by such Borrower or Guarantor which may thereafter
accrue.
6.6 Authorization to Make Loans.
(a) Lender is authorized to make the Loans and provide the Letter of
Credit Accommodations based upon telephonic or other instructions received
from anyone purporting to be an officer of Borrower or other authorized
person or, at the discretion of Lender, if such Loans are necessary to
satisfy any Obligations then due and payable. All requests for Loans or
Letter of Credit Accommodations hereunder shall specify: (i) the Borrower
to whom such Loan is being made, (ii) the date on which the requested
advance is to be made or Letter of Credit Accommodations established (which
day shall be a Business Day) and (iii) the amount of the requested Loan.
Requests received after 12:30 p.m. New York City time on any day shall be
deemed to have been made as of the opening of business on the immediately
following Business Day. All Loans and Letter of Credit Accommodations under
this Agreement shall be conclusively presumed to have been made to, and at
the request of and for the benefit of a Borrower when deposited to the bank
account of such Borrower as is specified by such Borrower in accordance
with the terms hereof or otherwise disbursed or established in accordance
with the instructions of any Borrower or in accordance with the terms and
conditions of this Agreement.
(b) All Loans shall be in or denominated in US Dollars and shall be
disbursed only to bank accounts in the United States of America. Set forth
on Schedule 6.6 hereof are the bank accounts of each Borrower used by such
Borrower for making payments of its Indebtedness and other obligations to
which, as of the date hereof, proceeds of Loans may be disbursed.
6.7 Illegality. In the event that any change in or introduction of or
change in the interpretation or application of any law, regulation, treaty, or
official directive or official request
46
(whether or not having the force of law but, if not, being of a type with which
Lender is accustomed to comply) makes it unlawful (or contrary to such directive
or request) in any jurisdiction applicable to Lender to make available or
maintain the financing arrangements provided for herein (or any of them) to UK
Borrower, German Borrower or any other Borrower that is not incorporated under
the laws of a State of the United States of America or to give effect to its
obligations hereunder or under the other Financing Agreements to such Borrower,
Lender may give seven (7) Business Days written notice to that effect to
Borrower Agent (as agent for Borrowers) and at the end of such period (or such
longer period as may be allowed under the applicable law, regulation, treaty or
official directive or official request), this Agreement, as to the Borrower
specified in such notice, as the case may be, shall terminate (without affecting
or otherwise changing any of the terms or provisions with respect to any other
Borrower). In such event, UK Borrower, German Borrower or such other Borrower
which is affected by such law, regulation, treaty or official directive or
official request, as the case may be, shall on and after the payment and
satisfaction in full in cash or other immediately available funds of its
Obligations no longer be deemed a Borrower or Obligor under this Agreement or
any other Financing Agreements.
6.8 Euro.
(a) Unless otherwise prohibited by law, if more than one currency or
currency unit are at the same time recognized by the central bank of any
country in Europe as the lawful currency of that country, then:
(i) any reference in the Financing Agreements to, and any
obligations arising under the Financing Agreements in, the
currency of that country shall be translated into, or paid
in, the currency or currency unit of that country designated
by Lender; and
(ii) any translation from one currency or currency unit of such
country to another shall be at the official rate of exchange
recognized by the central bank for the conversion of that
currency or currency unit into the other, rounded up or down
by Lender.
(b) If a change in any currency of a country in Europe occurs, this
Agreement will, to the extent Lender deems it reasonably to be necessary,
be amended to comply with any generally accepted conventions and market
practice and otherwise to reflect the change in currency in such country.
6.9 Appointment of Agent for Receipts of Statements and Notices.
(a) Each Borrower hereby irrevocably appoints and constitutes Borrower
Agent as its agent (i) to receive statements on account and all other
notices from Lender with respect to the Obligations or otherwise under or
in connection with this Agreement and the other Financing Agreements and
(ii) to request and receive Loans and Letter of Credit Accommodations
pursuant to this Agreement and the other Financing Agreements from Lender
in the name of or on behalf of such Borrower; provided, that, each request
by Borrower Agent for any Loan or Letter of Credit Accommodation shall
indicate the name of the Borrower for whom the request is made.
47
Borrower Agent hereby accepts the appointment by Borrowers to act as the
agent of Borrowers pursuant to this Section 6.9. Unless Lender receives any
written notice from a Borrower to the contrary, Lender may rely on any
notice or instruction from Borrower Agent on behalf of any Borrower as if
such notice or instruction were from such Borrower.
(b) Lender may disburse the Loans to such bank account of a Borrower
or Borrower Agent or otherwise make such Loans to a Borrower and provide
such Letter of Credit Accommodations to a Borrower as Borrower Agent may
direct, without notice to any other Borrower or Obligor; provided, that,
Lender shall not be obligated to honor any request by Borrower Agent for
Loans and Letter of Credit Obligations and shall not be obligated to
disburse any Loans as Borrower Agent may direct at any time that Lender has
the right to notify any bank at which a Blocked Account is maintained to
remit funds in such Blocked Account to the Payment Account. Borrower Agent
shall ensure that the disbursement of any Loans to each Borrower or the
issuance of any Letter of Credit Accommodations for each Borrower that are
requested by or paid to Borrower Agent shall, after giving effect to the
making and repayment of any intercompany loans in accordance with Section
9.10(e), be paid to or for the account of such Borrower.
(c) No purported termination of the appointment of Borrower Agent as
agent as aforesaid shall be effective, except after ten (10) days' prior
written notice to Lender.
6.10 Use of Proceeds. Borrowers shall use the initial proceeds of the Loans
provided by Lender to Borrowers hereunder only for: (a) payments to each of the
persons listed in the disbursement direction letter furnished by Borrowers to
Lender on or about the date hereof (which may include payments required to be
made and reserves required to be established under the Plan of Reorganization)
and (b) in connection with the preparation, negotiation, execution and delivery
of this Agreement and the other Financing Agreements. All other Loans made or
Letter of Credit Accommodations provided by or on behalf of a Lender to
Borrowers pursuant to the provisions hereof shall be used by Borrowers only for
general operating and working capital purposes of Borrowers not otherwise
prohibited by the terms hereof. None of the proceeds will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin security or for
the purposes of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security or for any other purpose which
might cause any of the Loans to be considered a "purpose credit" within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System,
as amended.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
7.1 Collateral Reporting.
(a) Borrowers shall provide Lender with the following documents in a
form satisfactory to Lender:
(i) on a weekly basis, a schedule (broken down by each Borrower)
of sales made, credits issued and cash received, together with such
supporting documentation and detail with respect thereto as Lender may
request in good faith;
48
(ii) on a monthly basis so long as aggregate Excess Availability
of Borrowers is equal to or greater than $5,000,000 or more frequently
as Lender may request if aggregate Excess Availability of Borrowers is
less than $5,000,000, (A) perpetual inventory reports for each
Borrower, (B) separate inventory reports for each Borrower and (solely
with respect to UK Borrower and German Borrower) Equipment reports by
location and category, (C) agings of accounts payable for each
Borrower (and including information indicating the status of payments
to owners and lessors of the leased premises of Borrowers), (D) agings
of accounts receivable for each Borrower (together with a
reconciliation to the previous month's aging and general ledger), (E)
a report with respect to all Inventory acquired by each Borrower on
consignment or approval, which lists the location of such Inventory
and such other information with respect thereto as Lender shall
request, (F) a report listing the amounts and payee of all trade
payables owing by German Borrower (together with the address of each
payee), (G) a report of the Priority Payables of each Borrower and (H)
with respect to German Borrower, a list in reasonable detail of all
Accounts;
(iii) such other reports as to the Collateral as Lender shall
request in good faith from time to time, including, without limitation
(A) copies of customer statements and credit memos, remittance advices
and reports, and copies of deposit slips and bank statements, (B)
copies of shipping and delivery documents, and (C) copies of purchase
orders, invoices and delivery documents for Inventory and Equipment
acquired by a Borrower; and
(iv) on a monthly basis so long as aggregate Excess Availability
of Borrowers is equal to or greater than $5,000,000 (or more
frequently as Lender may request if aggregate Excess Availability of
Borrowers is less than $5,000,000), a Borrowing Base Certificate
setting forth the calculation of the Borrowing Base of each Borrower
as of the last Business Day of the immediately preceding week as to
the Accounts and the Eligible Cash Collateral and as of the last day
of the preceding month as to Inventory, duly completed and executed by
the chief financial officer or other appropriate financial officer of
Borrowers acceptable to Lender, together with all schedules required
pursuant to the terms of the Borrowing Base Certificate duly completed
(including a schedule of all Accounts created, collections received
and credit memos issued for each day of the immediately preceding one
(1) week period;
(b) Nothing contained in any Borrowing Base Certificate shall be
deemed to limit, impair or otherwise affect the rights of Lender contained
herein and in the event of any conflict or inconsistency between the
calculation of the Borrowing Base as set forth in any Borrowing Base
Certificate and as determined by Lender in good faith, the determination of
Lender shall govern and be conclusive and binding upon Borrowers and
Guarantors. Without limiting the foregoing, Borrowers shall furnish to
Lender any information which Lender may reasonably request regarding the
determination and calculation of any of the amounts set forth in any
Borrowing Base Certificate.
(c) All of the documents, reports and schedules provided by Borrowers
to Lender hereunder for Receivables payable in any currency other than US
Dollars and Inventory located outside the United States of America shall
set forth the US Dollar Equivalent for the amount of the Receivables and
Value of the Inventory included in any such documents, reports or
schedules. For purposes hereof, Lender may, at its option, provide to
Borrower Agent, at least five (5) Business Days prior to the date any such
documents, reports or schedules are required to
49
be provided by Borrowers to Lender hereunder, the Exchange Rates required
to set forth the US Dollar Equivalent in such documents, reports and
schedules and in the event Lender shall fail to do so, Borrowers shall use
such rates of exchange with respect to the applicable currencies as
Borrowers use for such purpose in the ordinary course of business
consistent with current practices as of the date hereof and shall identify
such rates of exchange in any such documents, reports and schedules.
(d) If any of Borrower's or Guarantor's records or reports of the
Collateral are prepared or maintained by an accounting service, contractor,
shipper or other agent, each Borrower and Guarantor hereby irrevocably
authorizes such service, contractor, shipper or Lender to deliver such
records, reports, and related documents to Lender and to follow Lender's
instructions with respect to further services at any time that an Event of
Default exists or has occurred and is continuing. Lender shall notify
Borrower Agent of the exercise of its rights under this Section 7.1(d), so
long as Borrowers and Guarantors agree not to send any instructions to such
service, contractor, shipper or agent which are inconsistent with the
instructions of Lender or otherwise interfere with the exercise by Lender
of its right to obtain any information pursuant hereto.
7.2 Accounts Covenants.
(a) Borrowers shall notify Lender promptly of: (i) the assertion of
any material claims, offsets, defenses or counterclaims by any Account
Debtor, or any disputes with Account Debtors, or any settlement, adjustment
or compromise thereof, (ii) all material adverse information relating to
the financial condition of any Account Debtor and (iii) any event or
circumstance which, to a Borrower's knowledge, could be reasonably be
expected to cause Lender to consider any then existing Accounts as no
longer constituting Eligible Accounts. No credit, discount, allowance or
extension, or agreement with respect to any of the foregoing, shall be
granted by any Borrower to any Account Debtor without Lender's consent,
except in the ordinary course of such Borrower's business in accordance
with such Borrower's past practices and policies. So long as no Event of
Default exists or has occurred and is continuing, each Borrower in its
discretion shall have the right to settle, adjust or compromise any claim,
offset, counterclaim or dispute with any Account Debtor. At any time that
an Event of Default exists or has occurred and is continuing, Lender shall,
at its option, have the exclusive right to settle, adjust or compromise any
claim, offset, counterclaim or dispute with Account Debtors.
(b) At any time that Inventory is returned, reclaimed or repossessed,
the Account (or portion thereof) which arose from the sale of such
returned, reclaimed or repossessed Inventory shall not be deemed an
Eligible Account. In the event any Account Debtor returns Inventory when an
Event of Default exists or has occurred and is continuing, Borrowers shall,
upon Lender's request, (i) hold the returned Inventory in trust for Lender,
(ii) segregate all returned Inventory from all of its other property, (iii)
dispose of the returned Inventory solely according to Lender's instructions
in good faith, and (iv) not issue any credits, discounts or allowances with
respect thereto without Lender's prior written consent.
(c) With respect to each Account: (i) the amounts shown on any invoice
or schedule thereof delivered to Lender shall be true and complete, (ii) no
payments shall be made thereon except payments immediately delivered to
Lender in accordance with this Agreement
50
and any agreements with respect to the Blocked Accounts, (iii) no credit,
discount, allowance or extension or agreement for any of the foregoing
shall be granted to any Account Debtor except as reported to Lender in
accordance with this Agreement and except for credits, discounts,
allowances or extensions made or given in the ordinary course of business
of Borrowers in accordance with Borrowers' past practices and policies,
(iv) there shall be no setoff, deductions, contras, defenses, counterclaims
or disputes existing or asserted with respect thereto except as reported to
Lender in accordance with the terms of this Agreement, and (v) none of the
transa ctions giving rise thereto will violate any applicable State,
Provincial or Federal laws or regulations or similar laws or regulations of
any country, including the United Kingdom and the Federal Republic of
Germany, all documentation relating thereto will be legally sufficient
under such laws and regulations, all such documentation will be legally
enforceable in accordance with its terms (except as may be limited by the
events described in Sections 8.1(a) and (b)) and all recording, filing and
other requirements of giving public notice under any applicable law have
been complied with.
(d) Lender shall have the right at any time or times, in Lender's name
or in the name of a nominee of Lender, to verify the validity, amount or
any other matter relating to any Account or other Collateral, by mail,
telephone, facsimile transmission or otherwise.
(e) Each Borrower shall deliver or cause to be delivered to Lender as
Lender may specify, immediately upon such Borrower's receipt thereof, with
appropriate endorsement and assignment, with full recourse to such
Borrower, all chattel paper and instruments constituting Collateral which
such Borrower now owns or may at any time hereafter acquire, except as
Lender may otherwise agree.
(f) Lender may, at any time or times that an Event of Default exists
or has occurred and is continuing, (i) notify any or all Account Debtors or
other obligors in respect thereof that the Receivables have been assigned
to Lender and that Lender has a security interest therein and Lender may
direct any or all Account Debtors to make payment of Receivables directly
to Lender, (ii) extend the time of payment of, compromise, settle or adjust
for cash, credit, return of merchandise or otherwise, and upon any terms or
conditions, any and all Receivables or other obligations included in the
Collateral and thereby discharge or release the Account Debtor or any other
party or parties in any way liable for payment thereof without affecting
any of the Obligations, (iii) demand, collect or enforce payment of any
Receivables or such other obligations, but without any duty to do so, and
Lender shall not be liable for any failure to collect or enforce the
payment thereof nor for the negligence of its agents or attorneys with
respect thereto and (iv) take whatever other action Lender may in good
xxxxx xxxx necessary or desirable for the protection of its interests. At
any time that an Event of Default exists or has occurred and is continuing,
at Lender's request, all invoices, statements or other reports or materials
sent to any Account Debtor shall state that the Receivables and such other
obligations have been assigned to Lender and are payable directly and only
to Lender and Borrowers shall deliver to Lender such originals of documents
evidencing the sale and delivery of goods or the performance of services
giving rise to any Receivables as Lender may require.
7.3 Inventory Covenants. With respect to the Inventory: (a) each Borrower
shall at all times maintain inventory records reasonably satisfactory to Lender,
keeping in all material respects correct and accurate records itemizing and
describing the kind, type, quality and quantity
51
of Inventory, the cost therefor and daily withdrawals therefrom and additions
thereto; (b) each Borrower shall conduct a physical count of its Inventory at
least once each year, but at any time or times as Lender may request on and
after an Event of Default, and promptly following such physical inventory shall
supply Lender with a report in the form and with such specificity as may be
reasonably satisfactory to Lender concerning such physical count; (c) each
Borrower shall not remove any Inventory from the locations set forth or
permitted herein, without the prior written consent of Lender, except (i) for
sales of Inventory in the ordinary course of the business of such Borrower and
(ii) to move Inventory directly from one location of a Borrower set forth or
permitted herein to another location of such Borrower or any other Borrower (so
long as a financing statement between Lender, as secured party (as to assets of
US Borrowers) covering such Inventory has previously been recorded in the
appropriate governmental offices of the jurisdiction of such location); (d) upon
Lender's request, Borrowers shall, at their expense, no more than once in any
twelve (12) month period, but at any time or times as Lender may request on or
after an Event of Default, deliver or cause to be delivered to Lender written
reports or appraisals as to the Inventory in form, scope and methodology
reasonably acceptable to Lender and by an appraiser acceptable to Lender,
addressed to Lender, and upon which Lender is expressly permitted to rely; (e)
each Borrower shall produce, use, store and maintain the Inventory with all
reasonable care and caution and in accordance with applicable standards of any
insurance and in conformity with applicable laws in all material respects
(including, but not limited to, the requirements of the Federal Fair Labor
Standards Act of 1938, as amended and all rules, regulations and orders related
thereto); (f) each Borrower will promptly notify Lender in writing if any
creditor of a Borrower imposes retention of title provisions on such Borrower as
part of its conditions of supply to such Borrower in addition to those reported
to Lender pursuant to Section 7.1(a)(i); (g) each Borrower assumes all
responsibility and liability arising from or relating to the production, use,
sale or other disposition of the Inventory, (h) each Borrower shall not sell
Inventory to any customer on approval, or any other basis which entitles the
customer to return or may obligate a Borrower to repurchase such Inventory; (i)
each Borrower shall keep the Inventory in good and marketable condition; and (j)
each Borrower shall not acquire or accept any Inventory on consignment or
approval unless such Inventory is marked as being consigned and segregated from
the other Inventory of Borrowers.
7.4 Equipment and Real Property Covenants. With respect to the Equipment
and Real Property: (a) upon Lender's request, Borrowers shall, at their expense,
no more than once in any twelve (12) month period, but at any time or times as
Lender may request on or after an Event of Default, deliver or cause to be
delivered to Lender written appraisals as to the Equipment and/or the Real
Property in form, scope and methodology acceptable to Lender and by an appraiser
acceptable to Lender, addressed to Lender and upon which Lender is expressly
permitted to rely; (b) each Borrower shall keep the Equipment in good order,
repair, running and marketable condition (ordinary wear and tear excepted); (c)
each Borrower shall use the Equipment and Real Property with all reasonable care
and caution and in accordance with applicable standards of any insurance and in
conformity with all applicable laws; (d) the Equipment is and shall be used in
Borrowers' businesses and not for personal, family, household or farming use;
(e) each Borrower shall not remove any Equipment from the locations set forth or
permitted herein, except to the extent necessary to have any Equipment repaired
or maintained in the ordinary course of the respective businesses of Borrowers
or to move Equipment directly from one location set forth or permitted herein to
another such location and except for the movement of motor vehicles used by or
for the benefit of Borrowers in the ordinary course of business; (f) the
Equipment is now and
52
shall remain personal property and each Borrower shall not permit any of the
Equipment to be or become a part of or affixed to real property; (g) each
Borrower assumes all responsibility and liability arising from the use of the
Equipment and Real Property; and (h) promptly upon Lender's request, UK Borrower
shall promptly furnish to Lender a list, in reasonable detail, of all Equipment
owned by UK Borrower or German Borrower. As of the date hereof, Borrowers
represent and warrant that, since the date of the performance of the desk top
Equipment appraisals that have been previously furnished to Lender, no Equipment
of any Borrower has been disposed of or materially altered, except for obsolete
or worn out Equipment disposed of in the ordinary course of business and except
for other Equipment having a book value of not more than $200,000.00 in the
aggregate. German Borrower represents, warrants and covenants that, from and
after the date (if any) on which Lender makes a Term Loan to German Borrower,
none of its Equipment is or will become a fixture or is or will be deemed to be
part of any real property, and no Person (including, without limitation,
Deutsche Bank) has any security interest in, claim to or lien on any Equipment
of German Borrower, other than Lender.
7.5 Power of Attorney. Each Borrower hereby irrevocably designates and
appoints Lender (and all persons designated by Lender) as Borrower's true and
lawful attorney-in-fact, and authorizes Lender, in such Borrower's or Lender's
name, to: (a) at any time an Event of Default or act, condition or event which
with notice or passage of time or both would constitute an Event of Default
exists or has occurred and is continuing (i) demand payment on Receivables or
other Collateral, (ii) enforce payment of Receivables by legal proceedings or
otherwise, (iii) exercise all of such Borrower's rights and remedies to collect
any Receivable or other Collateral, (iv) sell or assign any Receivable upon such
terms, for such amount and at such time or times as the Lender deems advisable,
(v) settle, adjust, compromise, extend or renew a Receivable, (vi) discharge and
release any Receivable, (vii) prepare, file and sign such Borrower's name on any
proof of claim in bankruptcy or other similar document against an account debtor
or other obligor in respect of any Receivables or other Collateral, (viii)
notify the post office authorities to change the address for delivery of
remittances from account debtors or other obligors in respect of Receivables or
other proceeds of Collateral to an address designated by Lender, and open and
dispose of all mail addressed to such Borrower and handle and store all mail
relating to the Collateral; and (ix) do all acts and things which are necessary,
in Lender's determination, to fulfill such Borrower's obligations under this
Agreement and the other Financing Agreements and (b) at any time to (i) take
control in any manner of any item of payment in respect of Receivables or
constituting Collateral or otherwise received in or for deposit in the Blocked
Accounts or otherwise received by Lender, (ii) have access to any lockbox or
postal box into which remittances from Account Debtors or other obligors in
respect of Receivables or other proceeds of Collateral are sent or received,
(iii) endorse such Borrower's name upon any items of payment in respect of
Receivables or constituting Collateral or otherwise received by Lender and
deposit the same in Lender's account for application to the Obligations, (iv)
endorse such Borrower's name upon any chattel paper, document, instrument,
invoice, or similar document or agreement relating to any Receivable or any
goods pertaining thereto or any other Collateral, including any warehouse or
other receipts, or bills of lading and other negotiable or non-negotiable
documents, (v) clear Inventory the purchase of which was financed with Letter of
Credit Accommodations through U.S. Customs in such Borrower's name, Lender's
name or the name of Lender's designee, and to sign and deliver to customs
officials powers of attorney in such Borrower's name for such purpose, and to
complete in such Borrower's or Lender's name, any order, sale or transaction,
obtain the necessary documents in connection therewith and collect
53
the proceeds thereof, (vi) sign such Borrower's name on any verification of
Receivables and notices thereof to account debtors or other obligors in respect
thereof and (vii) execute in such Borrower's name and file any UCC financing
statements (or similar filings and registrations) or amendments thereto. Each
Borrower hereby releases Lender and its officers, employees and designees from
any liabilities arising from any act or acts under this power of attorney and in
furtherance thereof, whether of omission or commission, except as a result of
Lender's own gross negligence or wilful misconduct as determined pursuant to a
final non-appealable order of a court of competent jurisdiction.
7.6 Right to Cure. Lender may, at its option, (a) upon notice to any
Borrower, cure any default by any Borrower under any agreement with a third
party which affects any Collateral, the value of such Collateral or the ability
of Lender to collect, sell or otherwise dispose of such Collateral or the rights
and remedies of Lender hereunder or under any of the other Financing Agreements
or the ability of any Borrower or Guarantor to perform its obligations hereunder
or under any of the other Financing Agreements, (b) pay or bond on appeal any
judgment entered against any Borrower or Guarantor, (c) discharge taxes, liens,
security interests or other encumbrances at any time levied on or existing with
respect to the Collateral and (d) pay any amount, incur any expense or perform
any act which, in Lender's good faith judgment, is necessary or appropriate to
preserve, protect, insure or maintain the Collateral and the rights of Lender
with respect thereto. Lender may add any amounts so expended to the Obligations
and charge a Borrower's account therefor, such amounts to be repayable by such
Borrower on demand. Lender shall be under no obligation to effect such cure,
payment or bonding and shall not, by doing so, be deemed to have assumed any
obligation or liability of Borrowers. Any payment made or other action taken by
Lender under this Section 7.6 shall be without prejudice to any right to assert
an Event of Default hereunder and to proceed accordingly.
7.7 Access to Premises. From time to time as requested by Lender in good
faith, at the cost and expense of Borrowers, (a) Lender or its designee shall
have complete access to all premises of Borrowers and Guarantors during normal
business hours and after reasonable notice to Borrower Agent, or at any time and
without notice to any Borrower or Borrower Agent if an Event of Default exists
or has occurred and is continuing, for the purposes of inspecting, verifying and
auditing the Collateral and all of any Borrower's and Guarantor's books and
records, including, without limitation, the Records, and (b) each Borrower and
Guarantor shall promptly furnish to Lender such copies of such books and records
or extracts therefrom as Lender may reasonably request, and (c) following
reasonable notice to Borrower Agent unless an Event of Default exists or has
occurred and is continuing, Lender or its designee may use during normal
business hours such of each Borrower's and Guarantor's personnel, equipment,
supplies and premises as may be reasonably necessary for the foregoing and, if
an Event of Default exists or has occurred and is continuing, for the collection
of Receivables and realization of other Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Each Borrower and Guarantor hereby jointly and severally represents and
warrants to Lender the following (which shall survive the execution and delivery
of this Agreement), the
54
truth and accuracy of which are a continuing condition of the making of Loans
and providing Letter of Credit Accommodations by Lender to Borrowers:
8.1 Corporate Existence, Power and Authority; Subsidiaries. Each Borrower
and Guarantor is a corporation, limited liability company or limited
partnership, as the case may be, and is duly organized and validly existing
under the laws of its State or country of incorporation or organization. Each
Borrower and Guarantor is in good standing under the laws of its jurisdiction of
organization and is duly qualified as a foreign or extra-provincial corporation,
limited liability company or limited partnership and in good standing in all
states, provinces, or other jurisdictions (domestic or foreign) where the nature
and extent of the business transacted by it or the ownership of assets makes
such qualification necessary where the failure to so qualify would have a
Material Adverse Effect. The execution, delivery and performance of this
Agreement and the other Financing Agreements to which it is a party and the
transactions contemplated hereunder and thereunder are all within each
Borrower's or Guarantor's powers, have been duly authorized and are not in
contravention of applicable law or the terms of such Borrower's or Guarantor's
partnership agreement, certificate of incorporation, by-laws, or other
organizational documentation, or any material indenture, agreement or
undertaking to which such Borrower or Guarantor (or any general partner of such
Borrower or Guarantor) is a party or by which such Borrower or Guarantor or its
property are bound. This Agreement and the other Financing Agreements to which
any Borrower or Guarantor is a party constitute legal, valid and binding
obligations of such Borrower or Guarantor enforceable in accordance with their
respective terms except as such enforceability may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium or similar laws of general applicability
affecting the enforcement of creditors' rights and (b) the application of
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). Borrowers and Guarantors do not
have any Subsidiaries except as set forth on the Information Certificates.
Safety has heretofore sold all of the issued and outstanding shares of Capital
Stock of Valentec Systems, Inc.
8.2 Financial Statements; No Material Adverse Change. All financial
statements relating to Borrowers and Guarantors which have been or may hereafter
be delivered by Borrowers or Guarantors to Lender have been prepared in
accordance with GAAP (except as to any interim financial statements, to the
extent such statements are subject to normal year-end adjustments and do not
include any notes), and fairly present in all material respects the financial
condition and the results of operation of Borrowers and Guarantors as at the
dates and for the periods set forth therein. Except as disclosed in any interim
financial statements furnished by Borrowers or Guarantors to Lender prior to the
date of this Agreement, there has been no material adverse change in the assets,
liabilities and condition, financial or otherwise of Borrowers and Guarantors,
since the date of the most recent audited financial statements furnished by
Borrowers or Guarantors to Lender prior to the date of this Agreement.
8.3 Chief Executive Office; Collateral Locations. The chief executive
office of each Borrower and Guarantor and each Borrower's and Guarantor's
Records concerning Accounts are located only at the addresses set forth in its
Information Certificate and its only other places of business and the only other
locations of Collateral, if any, are (a) the addresses set forth in the
Information Certificates, subject to the right of each Borrower and Guarantor to
establish new locations in accordance with Section 9.2 below, and (b) Inventory
purchased by a Borrower or
55
Guarantor which is in transit to a location of such Borrower or Guarantor
permitted herein (and the amount of which Inventory of a Borrower is separately
identified as in-transit in any report with respect to Inventory provided by
such Borrower to Lender). The Information Certificates correctly identify any of
such locations which are not owned by Borrowers or Guarantors and sets forth the
owners and/or operators thereof.
8.4 Priority of Liens; Title to Properties. The security interests, liens,
charges and hypothecs granted to Lender under this Agreement and the other
Financing Agreements constitute valid and perfected first priority liens and
security interests and first ranking fixed or floating charges and first ranking
hypothecs in and upon the Collateral subject only to the liens indicated on
Schedule 8.4 hereto and the other liens permitted under Section 9.8 hereof,
provided, that, security interests which require perfection by the filing of
financing statements shall only be perfected upon the filing thereof, mortgages
which require perfection by the filing of Mortgages shall only be perfected upon
the filing thereof and security interests in patents which require the filing of
security interests with the Patent and Trademark Office shall only be perfected
upon the filing thereof. Each Borrower and Guarantor has good and marketable
title to all of its properties and assets subject to no liens, mortgages,
pledges, security interests, encumbrances or charges of any kind, except those
granted to Lender and such others as are specifically listed on Schedule 8.4
hereto or permitted under Section 9.8 hereof.
8.5 Tax Returns. Each Borrower and Guarantor has filed, or caused to be
filed, in a timely manner all material tax returns, reports and declarations
which are required to be filed by it. All information in such tax returns,
reports and declarations is complete and accurate in all material respects. Each
Borrower and Guarantor has paid or caused to be paid all material taxes due and
payable or claimed due and payable in any assessment received by it, except
taxes the validity of which are being contested in good faith by appropriate
proceedings diligently pursued and available to such Borrower or Guarantor and
with respect to which adequate reserves have been set aside on its books.
Adequate provision has been made for the payment of all material accrued and
unpaid Federal, State, Provincial, county, local, foreign and other taxes of
each Borrower and Guarantor whether or not yet due and payable and whether or
not disputed. Each Borrower has collected and remitted to the appropriate tax
authority all sales and/or use taxes applicable to its business required to be
collected and remitted under the laws of the United States and each possession
or territory thereof, and each State or political subdivision thereof or any
other jurisdiction, including any State in which such Borrower owns any
Inventory or owns or leases any other property.
8.6 Litigation. Except as set forth on the Information Certificates, there
is no present investigation by any Governmental Authority pending, or to the
best of each Borrower's and Guarantor's knowledge threatened, against or
involving any Borrower or Guarantor, or its assets or business and there is no
action, suit, proceeding or claim by any Person pending, or to the best of each
Borrower's and Guarantor's knowledge threatened, against any Borrower or
Guarantor or its assets or goodwill, or against or affecting any transactions
contemplated by this Agreement, which if adversely determined against such
Borrower or Guarantor would have a Material Adverse Effect.
8.7 Compliance with Other Agreements and Applicable Laws; Governmental
Approval.
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(a) Each Borrower and Guarantor is not in default in any material
respect under, or in violation in any material respect of any of the terms
of, any material agreement, contract, instrument, lease or other commitment
to which it is a party or by which it or any of its assets are bound. Each
Borrower and Guarantor is in compliance in any material respect with the
requirements of all applicable laws, rules, regulations and orders of any
Governmental Authority relating to its business, including, without
limitation, those set forth in or promulgated pursuant to the Occupational
Safety and Health Act of 1970, as amended, the Fair Labor Standards Act of
1938, as amended, ERISA, the Code, as amended, and the rules and
regulations thereunder, and all Environmental Laws.
(b) Each Borrower and Guarantor has obtained all material permits,
licenses, approvals, consents, certificates, orders or authorizations of
any Governmental Authority required for the lawful conduct of its business
(the "Permits"). Schedule 8.7(b) hereto sets forth all of the Permits
issued to or held by each Borrower and Guarantor as of the date hereof by
any Federal, State, Provincial, local or other Governmental Authority and
any applications pending by Borrower or Guarantor with such Federal, State,
Provincial, local or other Governmental Authority. The Permits constitute
all permits, licenses, approvals, consents, certificates, orders or
authorizations necessary for each Borrower and Guarantor to own and operate
its business as presently conducted or proposed to be conducted, except
where the failure to have such Permits would not have a Material Adverse
Effect. All of the Permits are valid and subsisting and in full force and
effect. There are no actions, claims or proceedings pending or, to the best
knowledge of the Borrowers and Guarantors, threatened that seek the
revocation, cancellation, suspension or modification of any of the Permits.
(c) No consent, approval or other action of, or filing with, or notice
to any Governmental Authority is required in connection with the execution,
delivery and performance of this Agreement, the other Financing Agreements
or any of the instruments or documents to be delivered pursuant hereto or
thereto, except for the filing of UCC financing statements and similar
instruments under the laws of the United Kingdom and the Federal Republic
of Germany, and the filing of the Mortgage. Any Receivables arising from
contracts of Borrowers or Guarantors with the United States or any agency,
authority or instrumentality thereof are of the type that can be assigned
in accordance with the Federal Assignment of Claims Act and there are no
restrictions or prohibitions on the right of Borrowers or Guarantors to
assign such Receivables under the terms thereof, except for the
restrictions on the assignment of Receivables of German Borrower that are
subject to title retention (verlaengerter Eigentumsvorbehalt provisions).
Set forth on Schedule 8.7(c) hereto is a true and correct list of all of
the contracts of Borrowers and Guarantors with the United States or any
agency, authority or instrumentality thereof that are in effect on the date
hereof.
8.8 Environmental Compliance.
(a) Except as set forth on Schedule 8.8 hereto, each Borrower and
Guarantor has not, and has not permitted any Subsidiary to, generate, use,
store, treat, transport, manufacture, handle, produce or dispose of any
Hazardous Materials, on or off its premises (whether or not owned by it) in
any manner which at any time violates any applicable Environmental Law or
any license, certificate, approval or similar authorization thereunder or
other Permit and the operations of each Borrower and Guarantor and such
Subsidiary complies in all material respects
57
with all Environmental Laws and all licenses, certificates, approvals and
similar authorizations thereunder or other Permit.
(b) Except as set forth on Schedule 8.8 hereto, there has been no
investigation, proceeding, complaint, order, directive, claim, citation or
notice by any Governmental Authority or any other person nor is any pending
or to the best of each Borrower's and Guarantor's knowledge threatened,
with respect to any non-compliance with or violation of the requirements of
any Environmental Law by any Borrower or Guarantor or the release, spill or
discharge, threatened or actual, of any Hazardous Material or the
generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials or any other
environmental, health or safety matter, which affects any Borrower or
Guarantor or its business, operations or assets or any properties at which
any Borrower or Guarantor has transported, stored or disposed of any
Hazardous Materials, which would have a Material Adverse Effect.
(c) No Borrower or Guarantor has material liability (contingent or
otherwise) in connection with a release, spill or discharge, threatened or
actual, of any Hazardous Materials or the generation, use, storage,
treatment, transportation, manufacture, handling, production or disposal of
any Hazardous Materials.
(d) Each Borrower and Guarantor has all licenses, certificates,
approvals or similar authorizations or other Permits required to be
obtained or filed in connection with the operations of such Borrower or
Guarantor under any Environmental Law and all of such licenses, certif
icates, approvals or similar authorizations or other Permits are valid and
in full force and effect where the failure to have any of the foregoing
would have a Material Adverse Effect.
8.9 Employee Benefits.
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law.
Each Plan which is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the Internal Revenue Service
and to the best of each Borrower's and Guarantor's knowledge, nothing has
occurred which would cause the loss of such qualification. Each Borrower
and Guarantor and their ERISA Affiliates have made all required
contributions to any Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan
which could subject any Borrower or Guarantor to any material liability.
(b) There are no pending or to the best of each Borrower's and
Guarantor's knowledge, threatened claims, actions or lawsuits, or action by
any Governmental Authority, with respect to any Plan. There has been no
prohibited transaction or violation of the fiduciary responsibility rules
with respect to any Plan.
(c) (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) the current value of each Plan's assets (determined in
accordance with the assumptions used for funding such Plan pursuant to
Section 412 of the Code) do not exceed such Plan's liabilities under
Section 400(a)(16) of ERISA; (iii) each Borrower, Guarantor and its ERISA
Affiliates
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have not incurred and do not reasonably expect to incur, any material
liability under Title IV of ERISA with respect to any Plan (other than
premiums due and not delinquent under Section 4007 of ERISA); (iv) each
Borrower, Guarantor and its ERISA Affiliates have not incurred and do not
reasonably expect to incur, any material liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA,
would result in such liability) under Section 4201 or 4243 of ERISA with
respect to a Multiemployer Plan; and (v) each Borrower, Guarantor and its
ERISA Affiliates have not engaged in a transaction that could be subject to
Section 4069 or 4212(c) of ERISA.
8.10 Capitalization.
(a) All of the issued and outstanding shares of capital stock of each
Borrower and Guarantor (other than Safety) is owned by the Persons listed
on Schedule 8.10 and in each case all of such shares referred to above have
been duly authorized, are fully paid, non-assessable, free and clear of all
claims, liens, pledges and encumbrances of any kind, except as disclosed in
Section 8.4.
(b) Each Borrower (other than Valentec International) is, as of the
date hereof, Solvent after the creation of the Obligations, the security
interests of Lender and the other transactions contemplated hereunder.
8.11 Bank Accounts. All of the deposit accounts, investment accounts or
other accounts in the name of or used by any Borrower or Guarantor maintained at
any bank or other financial institution are set forth on Schedule 8.11 hereto,
subject to the rights of Borrowers and Guarantors to establish new accounts in
accordance with Section 9.13 below. No Borrower or Guarantor maintains any
account with KeyBank National Association or Fleet Bank, other than payroll
accounts.
8.12 Intellectual Property. Schedule 8.12 sets forth all of the agreements
or other arrangements as in effect on the date hereof that is material to the
business of each Borrower and Guarantor pursuant to which such Borrower or
Guarantor has a license or other right to use any Intellectual Property owned by
another person (collectively, together with any such agreements or arrangements
entered into by any Borrower or Guarantor after the date hereof, the "License
Agreements", sometimes being referred to herein individually as a "License
Agreement") and the dates of the expiration of such agreements or other
arrangements of such Borrower or Guarantor as in effect on the date hereof.
Schedule 8.12 also sets forth all Intellectual Property of each Borrower and
Guarantor which is registered with the U.S. Patent and Trademark Office,
Canadian Intellectual Property Office or any other Governmental Authority. To
the best of its knowledge, each Borrower owns or licenses all Intellectual
Property which is necessary for the operation of its business as presently
conducted or proposed to be conducted. To the best of the knowledge of each
Borrower and Guarantor, no product, process, method, substance, or other
Intellectual Property or goods bearing or using any Intellectual Property
presently contemplated to be sold by or employed by any Borrower infringes any
patent, trademark, service-xxxx, tradename, copyright, license or other
Intellectual Property owned by any other Person and no claim or litigation is
pending or threatened against or affecting any Borrower or Guarantor contesting
its right to sell or use any such product, process, method, substance or other
Intellectual Property.
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8.13 Labor Disputes
(a) Set forth on Schedule 8.13 hereto is a list (including dates of
termination) of all collective bargaining or similar agreements between or
applicable to each Borrower and any union, labor organization or other
bargaining agent in respect of the employees of such Borrower on the date
hereof.
(b) There is (i) no significant unfair labor practice complaint
pending against a Borrower or, to the best of each Borrower's and
Guarantor's knowledge, threatened against it, before the National Labor
Relations Board (or any other foreign or domestic Governmental Authority),
and no significant grievance or significant arbitration or court proceeding
arising out of or under any collective bargaining agreement is pending on
the date hereof against a Borrower or, to best of each Borrower's and
Guarantor's knowledge, threatened against it, and (ii) no significant
strike, labor dispute, slowdown or stoppage is pending against a Borrower
or, to the best of each Borrower's and Guarantor's knowledge, threatened
against a Borrower.
8.14 Corporate Name; Prior Transactions. Each Borrower and Guarantor has
not, during the past five years, been known by or used by any other corporate or
fictitious name or been a party to any merger or consolidation, or acquired all
or substantially all of the assets of any Person, or acquired any of its
property or assets out of the ordinary course of business, except as set forth
in the Information Certificate.
8.15 Restrictions on Subsidiaries. Except for restrictions contained in
this Agreement or any other agreement with respect to Indebtedness of any
Borrower or Guarantor permitted hereunder as in effect on the date hereof, there
are no contractual or consensual restrictions on any Borrower or Guarantor or
any of its respective Subsidiaries which prohibit or otherwise restrict (a) the
transfer of cash or other assets (i) between any Borrower or Guarantor and any
of its respective Subsidiaries or (ii) between any Subsidiaries of any Borrower
or Guarantor or (b) the ability of any Borrower or Guarantor or any of its
respective Subsidiaries to incur Indebtedness or grant security interests to
Lender in the Collateral.
8.16 Material Contracts. Schedule 8.16 hereto sets forth all Material
Contracts to which any Borrower or Guarantor is a party or is bound as of the
date hereof. Borrowers have delivered true, correct and complete copies of such
Material Contracts to Lender on or before the date hereof. No Borrower or
Guarantor is in breach of or in default under any Material Contract or has
received any notice of the intention of any other party thereto to terminate any
Material Contract.
8.17 Payable Practices. Except as disclosed to Lender in writing prior to
the date hereof, each Borrower has not made any material change in the
historical accounts payable practices from those in effect immediately prior to
the date hereof.
8.18 Retention of Title. Schedule 8.18 hereto contains a list detailing all
creditors of German Borrower or UK Borrower as of the date of this Agreement (if
any) whose standard conditions of supply include retention of title, Romalpa or
verlaengerter Eigentumsvorbehalt provisions.
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8.19 Plan of Reorganization. As of the Closing Date, Borrowers have
delivered to Lender a complete and correct copy of the Plan of Reorganization
and the Confirmation Order (including all schedules, exhibits, amendments,
supplements, modifications, assignments and all other documents delivered
pursuant thereto or in connection therewith). No Borrower or Guarantor is in
default in the performance of or compliance with any provisions of the Plan of
Reorganization. The Plan of Reorganization is in full force and effect as of the
Closing Date and has not been terminated, rescinded or withdrawn. The
Confirmation Order is a Final Order and is in full force and effect, and has not
been amended, modified or stayed and no appeal therefrom or request for hearing
with respect thereto is pending. All conditions to confirmation and
effectiveness of the Plan of Reorganization have been satisfied or validly
waived pursuant to the Plan of Reorganization. Set forth on Schedule 8.19 hereto
is a true and correct (a) list of the sources and uses with respect to all cash
amounts payable by Borrowers and Guarantors on the effective date of the Plan of
Reorganization and (b) list of all cash payments (and the approximate due dates
therefor) required to be made by Borrowers and Guarantors in connection with the
Plan of Reorganization after the effective date of the Plan of Reorganization.
8.20 Inactive Subsidiaries. No Inactive Subsidiary (a) engages in any
business or conducts any operations, (b) owns assets with a book value of more
than $10,000 in the aggregate or (c) is obligated to any Borrower or Guarantor
in respect of any indebtedness or liabilities.
8.21 Accuracy and Completeness of Information. All information furnished by
or on behalf of any Borrower or Guarantor in writing to Lender pursuant to this
Agreement or any of the other Financing Agreements or any transaction
contemplated hereby or thereby, including, without limitation, all information
on the Information Certificate is true and correct in all material respects on
the date as of which such information is dated or certified and does not omit
any material fact necessary in order to make such information not misleading in
light of the circumstances under which they were made. No event or circumstance
has occurred which has had or could reasonably be expected to have a Material
Adverse Affect which has not been accurately disclosed to Lender in writing.
8.22 Survival of Warranties; Cumulative. All representations and warranties
contained in this Agreement or any of the other Financing Agreements shall
survive the execution and delivery of this Agreement and shall be deemed to have
been made again to Lender on the date of each additional borrowing or other
credit accommodation hereunder and shall be conclusively presumed to have been
relied on by Lender regardless of any investigation made or information
possessed by Lender. The representations and warranties set forth herein shall
be cumulative and in addition to any other representations or warranties which
Borrowers or Guarantors shall now or hereafter give, or cause to be given, to
Lender.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 Maintenance of Existence. Each Borrower and Guarantor shall at all
times preserve, renew and keep in full force and effect its corporate, limited
partnership or limited liability company existence and rights and franchises
with respect thereto (other than pursuant to a merger or liquidation expressly
permitted hereunder) and maintain in full force and effect all
61
material licenses, trademarks, tradename, approvals, authorizations, leases,
contracts and Permits necessary to carry on its business as presently or
proposed to be conducted. Each Borrower and Guarantor shall give Lender thirty
(30) days' prior written notice of any proposed change in its name, which notice
shall set forth the new name and such Borrower or Guarantor shall deliver to
Lender a copy of the amendment to the certificate of incorporation or other
organizational document of such Borrower or Guarantor providing for the name
change certified by the Secretary of State or other Governmental Authority of
the jurisdiction of incorporation or organization of such Borrower or Guarantor
as soon as it is available.
9.2 New Collateral Locations. US Borrowers may open any new location within
the continental United States or Canada, German Borrower may open any new
location within the Federal Republic of Germany, and UK Borrower may open any
new location within the United Kingdom, in each case provided that such Borrower
or Guarantor (a) gives Lender thirty (30) days' prior written notice of the
intended opening of any such new location and (b) executes and delivers, or
causes to be executed and delivered, to Lender such agreements, documents, and
instruments as Lender may deem necessary or desirable to create, perfect or
protect the interests of Lender in the Collateral at such location, including
UCC financing statements, PPSA financing statements and other security
instruments or agreements.
9.3 Compliance with Laws, Regulations, Etc.
(a) Each Borrower shall at all times comply in all material respects
with all applicable provisions of laws, rules, regulations, licenses,
permits, approvals and orders and duly observe all requirements, of any
foreign, Federal, State, Provincial or local Governmental Authority,
including, without limitation, the Occupational Safety and Health Act of
1970, as amended, the Fair Labor Standards Act of 1938, as amended, the
Employment Standards Act (Ontario), the Occupational Health & Safety Act
(Ontario), ERISA, the Code, as amended, and the rules and regulations
thereunder and all statutes, rules, regulations, orders, permits and
stipulations relating to environmental pollution and employee health and
safety, including, without limitation, all Environmental Laws.
(b) Borrowers and Guarantors shall give written notice to Lender
promptly upon a Borrower's or Guarantor's receipt of any notice of, or a
Borrower's or Guarantor's otherwise obtaining knowledge of, (i) the
occurrence of any event involving the material release, spill or discharge,
threatened or actual, of any Hazardous Material or (ii) any investigation,
proceeding, complaint, order, directive, claims, citation or notice with
respect to: (A) any material non- compliance with or violation of any
Environmental Law by a Borrower or Guarantor or (B) the material release,
spill or discharge, threatened or actual, of any Hazardous Material or (C)
the generation, use, storage, treatment, transportation, manufacture,
handling, production or disposal of any Hazardous Materials other than in
accordance with applicable Environmental Laws or (D) any other
environmental, health or safety matter, which materially and adversely
affects a Borrower or Guarantor or its business, operations or assets or
any properties at which a Borrower or Guarantor transported, stored or
disposed of any Hazardous Materials. Copies of all environmental surveys,
audits, assessments, feasibility studies and results of remedial
investigations shall be promptly furnished, or caused to be furnished, by
Borrowers and Guarantors to Lender. Borrowers and Guarantors shall take
prompt and appropriate action to
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respond to any material non-compliance with any of the Environmental Laws
and shall regularly report to Lender on such response.
(c) Without limiting the generality of the foregoing, whenever Lender
determines that there is material non-compliance, or any condition which
requires any action by or on behalf of any Borrower or Guarantor in order
to avoid any material non-compliance, with any Environmental Law, such
Borrower or Guarantor shall, at Lender's request and such Borrower's or
Guarantor's expense: (i) cause an independent environmental engineer
acceptable to Lender to conduct such tests of the site where such
Borrower's or Guarantor's material non-compliance or alleged material
non-compliance with such Environmental Laws has occurred as to such
material non-compliance and prepare and deliver to Lender a report as to
such non-compliance setting forth the results of such tests, a proposed
plan for responding to any environmental problems described therein, and an
estimate of the costs thereof and (ii) provide to Lender a supplemental
report of such engineer whenever the scope of such non-compliance, or such
Borrower's or Guarantor's response thereto or the estimated costs thereof,
shall change in any material respect.
(d) Each Borrower and Guarantor shall indemnify and hold harmless
Lender and its respective directors, officers, employees, agents, invitees,
representatives, successors and assigns, from and against any and all
losses, claims, damages, liabilities, costs, and expenses (including
attorneys' fees and legal expenses) directly or indirectly arising out of
or attributable to the use, generation, manufacture, reproduction, storage,
release, threatened release, spill, discharge, disposal or presence of a
Hazardous Material, including the costs of any required or necessary
repair, cleanup or other remedial work with respect to any property of any
Borrower or Guarantor and the preparation and implementation of any
closure, remedial or other required plans. All representations, warranties,
covenants and indemnifications in this Section 9.3 shall survive the
payment of the Obligations and the termination or non-renewal of this
Agreement.
9.4 Payment of Taxes and Claims. Each Borrower and Guarantor shall, and
shall cause each Subsidiary to, duly pay and discharge all taxes, assessments,
contributions and governmental charges upon or against it or its properties or
assets, except for taxes the validity of which are being contested in good faith
by appropriate proceedings diligently pursued and available to such Borrower or
Guarantor and with respect to which adequate reserves have been set aside on its
books. Each Borrower and Guarantor shall be liable for any tax or penalties
imposed on Lender as a result of the financing arrangements provided for herein
and except as otherwise may be provided in Section 6.5 hereof, each Borrower and
Guarantor agrees to indemnify and hold Lender harmless with respect to the
foregoing, and to repay to Lender on demand the amount thereof, and until paid
by Borrowers such amount shall be added and deemed part of the Loans; provided,
that, nothing contained herein shall be construed to require Borrowers or
Guarantors to pay any income, capital or franchise taxes attributable to the
income or capital of Lender from any amounts charged by or paid hereunder to
Lender. The foregoing indemnity shall survive the payment of the Obligations and
the termination or non-renewal of this Agreement.
9.5 Insurance. Each Borrower and Guarantor shall, at all times, maintain,
or cause to be maintained, with reputable insurers insurance with respect to the
Collateral against loss or damage and all other insurance of the kinds and in
the amounts customarily insured against or carried by corporations of
established reputation engaged in the same or similar businesses and
63
similarly situated. Said policies of insurance shall be reasonably satisfactory
to Lender as to form, amount and insurer. Each Borrower and Guarantor shall
furnish certificates, policies or endorsements to Lender as lender shall require
proof of such insurance, and, if any Borrower or Guarantor fails to do so,
Lender is authorized, but not required, to obtain such insurance at the expense
of Borrowers. All such policies shall provide for at least thirty (30) days'
prior written notice to Lender of any cancellation or reduction of coverage and
that Lender may act as attorney for any Borrower or Guarantor in obtaining, and
at any time an Event of Default exists or has occurred and is continuing,
adjusting, settling, amending and canceling such insurance. Each Borrower and
Guarantor shall cause Lender to be named as a loss payee and an additional
insured (but without any liability for any premiums) under such insurance
policies and each Borrower and Guarantor shall obtain non-contributory lender's
loss payable endorsements to all insurance policies in form and substance
satisfactory to Lender. Such lender's loss payable endorsements shall specify
that the proceeds of such insurance shall be payable to Lender and further
specify that Lender shall be paid regardless of any act or omission by
Borrowers, Guarantors or any of their Affiliates.
9.6 Financial Statements and Other Information.
(a) Each Borrower and Guarantor shall, and shall cause any Subsidiary
to, keep proper books and records in which true and complete entries shall
be made of all dealings or transactions of or in relation to the Collateral
and the businesses of Borrowers and Guarantors and their Subsidiaries in
accordance with GAAP and Borrowers and Guarantors shall furnish or cause to
be furnished to Lender: (i) within thirty (30) days after the end of each
fiscal month, monthly unaudited consolidated financial statements and
unaudited consolidating financial statements (including in each case
balance sheets, statements of income and loss, statements of cash flow and
statements of shareholders' equity on a consolidating basis), all in
reasonable detail, fairly presenting in all material respects the financial
position and the results of the operations of Safety and its consolidated
Subsidiaries as of the end of and through such fiscal month, and (ii)
within ninety (90) days after the end of each fiscal year, audited
consolidated financial statements and unaudited consolidating financial
statements of Safety and its consolidated Subsidiaries (including in each
case balance sheets, statements of income and loss, statements of cash flow
and statements of shareholders' equity), and the accompanying notes
thereto, all in reasonable detail, fairly presenting in all material
respects the financial position and the results of the operations of Safety
and its consolidated Subsidiaries as of the end of and for such fiscal
year, together with the opinion of independent certified public or
chartered accountants, as appropriate, which accountants shall be an
independent accounting firm selected by Borrowers and reasonably acceptable
to Lender, that such financial statements have been prepared in accordance
with GAAP, and present fairly in all material respects the results of
operations and financial condition of Safety and its consolidated
Subsidiaries as of the end of and for the fiscal year then ended.
(b) Borrower and Guarantors shall promptly notify Lender in writing of
the details of (i) any loss, damage, investigation, action, suit,
proceeding or claim that involves amounts in excess of $250,000 relating to
the Collateral or any other property which is security for the Obligations
or which could result in any material adverse change in the business,
properties, assets, goodwill or condition, financial or otherwise of any
Borrower or Guarantor, (ii) any Material Contract of any Borrower or
Guarantor being terminated or amended or any new
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Material Contract entered into (in which event such Borrower or Guarantor
shall provide Lender with a copy of such Material Contract), (iii) any
order, judgment, settlement or decree in excess of the US Dollar Equivalent
of $200,000 shall have been entered against any Borrower or Guarantor or
any of its properties or assets, (iv) any notification of violation of laws
or regulations received by any Borrower or Guarantor, and (vi) the
occurrence of any Event of Default or act, condition or event which, with
notice or the passage of time or giving of notice or both, would constitute
an Event of Default.
(c) Borrowers and Guarantors shall promptly after the sending or
filing thereof furnish or cause to be furnished to Lender copies of all
reports which any Borrower or Guarantor sends to its partners or
shareholders generally and copies of all reports and registration
statements which any Borrower or Guarantor files with the Securities and
Exchange Commission, any national securities exchange, the National
Association of Securities Dealers, Inc. or securities commission or
exchange in the Federal Republic of Germany or the United Kingdom.
(d) Borrowers and Guarantors shall furnish or cause to be furnished to
Lender such budgets, forecasts, projections and other information
respecting the Collateral and the businesses of Borrowers and Guarantors,
as Lender may, from time to time, reasonably request. Lender is hereby
authorized to deliver a copy of any financial statement or any other
information relating to the businesses of Borrowers and Guarantors to any
court or other Governmental Authority or to any participant or assignee or
prospective participant or assignee. Each Borrower and Guarantor hereby
irrevocably authorizes and directs all accountants or auditors to deliver
to Lender, at Lender's expense, copies of the financial statements of
Borrowers and Guarantors and any reports or management letters prepared by
such accountants or auditors on behalf of Borrowers and Guarantors and to
disclose to Lender such information as they may have regarding the
businesses of Borrowers and Guarantors. Each Borrower and Guarantor hereby
authorizes and directs any depository bank or other financial institution
(including, without limitation, First Union National Bank or any of its
Affiliates) at which any cash or Cash Equivalents of Borrowers or
Guarantors constituting Eligible Cash Collateral are maintained to provide
directly to Lender such information with respect to the accounts in which
such cash or Cash Equivalents are held and with respect to the cash or Cash
Equivalents therein as Lender may request and Borrowers and Guarantors
shall so notify such banks or other financial institutions promptly upon
Lender's request. Any documents, schedules, invoices or other papers
delivered to Lender may be destroyed or otherwise disposed of by Lender one
(1) year after the same are delivered to Lender, except as otherwise
designated by Borrowers to Lender in writing.
(e) Safety shall deliver to Lender (i) on or before March 30, 2002, a
report (in reasonable detail) describing Safety's plan of action with
respect to pending maturity of the Existing Notes, (ii) on or before July
30, 2002, a commitment letter, in form and substance satisfactory to
Lender, for subordinated Indebtedness to be used to repay all amounts owing
in connection with the Existing Notes, which Indebtedness (and the Liens
securing the same) shall be subject to the terms of the Intercreditor
Agreement and otherwise in form and substance satisfactory to Lender and
(iii) promptly upon Lender's request, such other information with respect
to the Indebtedness under the Existing Notes as Lender may from time to
time request.
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(f) German Borrower and UK Borrower shall promptly notify Lender in
writing if any creditor imposes retention of title, romalpa of
verlaengerter Eigentumsvorbehalt provisions in connection with its sale or
supply of goods that are not set forth on Schedule 8.18. German Borrower
shall promptly notify Lender in writing of the occurrence or existence of
any default or event of default under any of the financing arrangements of
German Borrower with Deutsche Bank, and furnish such other information
relating thereto as Lender may request.
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. Each Borrower
and Guarantor shall not, and shall not permit any Subsidiary to, directly or
indirectly:
(a) merge into or with or consolidate or amalgamate with any other
Person or permit any other Person to merge into or with or consolidate or
amalgamate with it, except that (i) any Inactive Subsidiary may dissolve in
accordance with Section 9.22 and (ii) any Borrower or Guarantor may merge
with and into or consolidate with any other Borrower or Guarantor,
provided, that, each of the following conditions is satisfied as determined
by Lender in good faith: (A) Lender shall have received not less than five
(5) days prior written notice of the intention of such Borrower or
Guarantor to so merge or consolidate and such information with respect
thereto as Lender may request in good faith, (B) as of the effective date
of the merger or consolidation and after giving effect thereto, no Event of
Default or act, condition or event which with notice or passage of time or
both would constitute an Event of Default, shall exist or have occurred,
and (C) the terms of the Capital Stock resulting from such merger or
consolidation, and the terms and conditions of the purchase and sale
thereof, shall not include any limitation on the right of any Borrower or
Guarantor to request or receive Loans or Letter of Credit Accommodations or
the right of any Borrower or Guarantor to amend or modify any of the terms
and conditions of this Agreement or any of the other Financing Agreements
or otherwise in any way adversely affect the arrangements of any Borrower
or Guarantor with Lender; or
(b) wind up, liquidate or dissolve, except that any Subsidiary of
Safety which is not a Borrower or Guarantor may wind up, liquidate or
dissolve, provided, that, each of the following conditions is satisfied as
determined by Lender in good faith: (i) no Borrower or Guarantor shall
assume any obligations or liabilities as a result of such winding up,
liquidation or dissolution, or otherwise become liable in respect of any
obligations or liabilities of the Subsidiary which is winding up,
liquidating or dissolving, (ii) Lender shall have received not less than
ten (10) Business Days prior written notice of the intention of such
Subsidiary to wind up, liquidate or dissolve, and (iii) all assets of the
Subsidiary which is winding up, liquidating or dissolving shall be promptly
distributed to it shareholders or partners, as the case may be; or
(c) sell, assign, lease, transfer, abandon or otherwise dispose of any
Capital Stock or Indebtedness to any other Person or any of its assets to
any other Person, except for (i) sales of Inventory in the ordinary course
of business, (ii) the disposition of worn-out or obsolete Equipment so long
as any proceeds are paid to Lender for application to the Obligations and
such sales do not involve Equipment having an aggregate fair market value
in excess of $250,000 for all such Equipment disposed of in any fiscal
year, (iii) the issuance and sale by such Person of Capital Stock of such
Person after the date hereof; provided, that, (A) Lender shall have
received not less than ten (10) Business Days prior written notice of such
issuance and sale by such Person, which notice shall specify the parties to
whom such shares are to be sold, the terms of such sale, the total amount
which it is anticipated will be realized from the issuance and sale
66
of such stock and the net cash proceeds which it is anticipated will be
received by such Person from such sale, (B) such Person shall not be
required to pay any cash dividends or repurchase or redeem such Capital
Stock or make any other payments in respect thereof, (C) the terms of such
Capital Stock, and the terms and conditions of the purchase and sale
thereof, shall not include any terms that include any limitation on the
right of Borrowers to request or receive Loans or Letter of Credit
Accommodations, or the right of any Borrower or Guarantor to amend or
modify any of the terms and conditions of this Agreement, or any of the
other Financing Agreements, or otherwise in any way adversely affect the
arrangements of any Borrower or Guarantor with Lender, or are more
restrictive or burdensome to such Person than the terms of any Capital
Stock in effect on the date hereof, and (D) as of the date of such issuance
and sale and after giving effect thereto, no Event of Default or act,
condition or event which with notice or passage of time or both would
constitute an Event of Default shall exist or have occurred and (iv) the
sale or other disposition of Equipment by a Borrower for fair market value
in an arms-length transaction in an aggregate amount not to exceed
$2,000,000 per year so long as (A) all proceeds are promptly delivered to
Lender to be held as cash collateral for the Obligations; provided, that,
after such proceeds are delivered to Lender, such Borrower may, within 180
days of the date of such sale or disposition, request that Lender release
the cash collateral to the extent that such cash is promptly applied by
such Borrower to replace the Equipment so sold or otherwise disposed of,
and Lender shall release such cash collateral for such purpose if (x)
Lender shall have a first perfected Lien on the replacement Equipment and
(y) as of the date of such release, no Event of Default or act, event or
condition which with notice or passage of time or both would constitute an
Event of Default shall exist or have occurred; provided, that if such cash
is not so applied within 180 days, Lender shall apply such cash to repay
first, the Term Loans (if any) in the inverse order of maturity and second,
the Revolving Loans and (B) as of the date of such sale and after giving
effect thereto, no Event of Default or act, event or condition which with
notice or passage of time or both would constitute an Event of Default; or
(d) agree to do any of the foregoing in violation of this Section 9.7.
9.8 Encumbrances. Each Borrower and Guarantor shall not, and shall not
permit any Subsidiary to, create, incur, assume or suffer to exist any security
interest, mortgage, hypothec, pledge, lien, hypothecation, charge or other
encumbrance of any nature whatsoever on any of its assets or properties,
including, without limitation, the Collateral, except:
(a) liens, security interests and charges of Lender with respect to
the assets of each Borrower and Guarantor and their respective
Subsidiaries;
(b) liens securing the payment of taxes, either not yet overdue or the
validity of which are being contested in good faith by appropriate
proceedings diligently pursued and available to such Borrower or Guarantor
and with respect to which adequate reserves have been set aside on its
books;
(c) non-consensual statutory liens (other than liens securing the
payment of taxes) arising in the ordinary course of such Borrower's or
Guarantor's business (including carriers', warehousemen's, materialmen's
and mechanics' liens) to the extent: (i) such liens secure Indebtedness or
obligations which are not overdue or (ii) such liens secure Indebtedness
relating to claims or liabilities which are fully insured and being
defended at the sole cost and expense
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and at the sole risk of the insurer or being contested in good faith by
appropriate proceedings diligently pursued and available to such Borrower
or Guarantor, in each case prior to the commencement of foreclosure or
other similar proceedings and with respect to which adequate reserves have
been set aside on its books;
(d) pledges and deposits of cash by any Borrower or Guarantor after
the date hereof in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security benefits consistent with the current practices of Borrowers and
Guarantors as of the date hereof;
(e) zoning restrictions, easements, reservations, exceptions,
encroachments, rights of way, licenses, covenants and other restrictions or
encumbrances affecting the use of Real Property which do not interfere in
any material respect with the use of such Real Property or ordinary conduct
of the business of such Borrower as presently conducted thereon or
materially impair the value of the Real Property which may be subject
thereto;
(f) purchase money security interests in Equipment (including Capital
Leases) and purchase money mortgages on Real Property (including
improvements thereto) arising after the date hereof in the aggregate for
all Borrowers and Guarantors not to exceed the US Dollar Equivalent of
US$1,000,000 during each fiscal year so long as such security interests and
mortgages do not apply to any property of such Borrower or Guarantor other
than the Equipment or Real Property so acquired, and the Indebtedness
secured thereby does not exceed the cost of the Equipment or Real Property
so acquired, as the case may be;
(g) the security interests and liens upon any assets of Automatic
Safety Mexico and Automotive Safety Czech to secure Indebtedness of such
Person permitted under Section 9.9(d) hereof;
(h) security interests and liens in existence on the date hereof which
are set forth on Schedule 8.4 hereto;
(i) liens and security interests of Existing Agent for the benefit of
itself and Existing Lenders to secure Indebtedness of Borrowers to Existing
Lenders permitted under Section 9.9(g) and the guaranties of such
Indebtedness permitted under Section 9.10(o); provided, that such liens and
security interests shall be subject to the Intercreditor Agreement; and
(j) liens and security interests of Bank of America, N.A. on cash of
Automotive International in an amount not to exceed $694,134 held as of the
date hereof in a bank account at Bank of America, N.A. to secure
reimbursement obligations in respect of the Existing Letters of Credit.
9.9 Indebtedness. Each Borrower and Guarantor shall not, and shall not
permit any Subsidiary to, incur, create, assume, become or be liable in any
manner with respect to, or permit to exist, any Indebtedness, except for:
(a) the Obligations;
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(b) purchase money Indebtedness (including Capital Leases) to the
extent incurred or secured by liens (including Capital Leases) permitted
under Section 9.8 hereof;
(c) Indebtedness of any Borrower, Guarantor or any of their respective
Subsidiaries arising pursuant to loans or guarantees permitted under
Section 9.10 hereof;
(d) Indebtedness of Automotive Safety Czech or Automotive Safety
Mexico, provided, that, as to any such Indebtedness (i) Borrowers and
Guarantors and their Subsidiaries shall not be directly or indirectly
liable (by virtue of such Borrower or Guarantor or Subsidiary being the
primary obligor on, guarantor of, or otherwise liable) in any respect of
such Indebtedness, (ii) the occurrence of a default with respect thereto
shall not result in, or permit any holder of any Indebtedness of any
Borrower or Guarantor or Subsidiary to declare a default on Indebtedness of
any Borrower or other Guarantor or cause the payment thereof to be
accelerated or payable prior to its stated maturity, (iii) the aggregate
amount of all such Indebtedness shall not exceed the US Dollar Equivalent
of US$20,000,000 at any time outstanding and (iv) prior or
contemporaneously with the incurrence of any such Indebtedness by
Automotive Safety Czech or Automotive Safety Mexico, such Person shall
repay all loans and advances made to it by any Borrower or Guarantor after
the date hereof;
(e) Indebtedness of Borrowers, Guarantors or any of their respective
Subsidiaries under interest rate swap agreements, interest rate cap
agreements, interest rate collar agreements, interest rate exchange
agreements or similar contractual arrangements intended to protect such
Person against fluctuations in interest rates and currency swap agreements,
forward currency purchase agreements or similar contractual arrangements
intended to protect such Person against fluctuations in currency exchange
rates; provided, that, (i) such arrangements are with banks or other
financial institutions that have combined capital and surplus and undivided
profits of not less than the US Dollar Equivalent of US $250,000,000 and
are not for speculative purposes and (ii) such Indebtedness shall be
unsecured;
(f) Indebtedness of any Borrower or Guarantor (or any of their
respective Subsidiaries) existing on the date hereof and set forth on
Schedule 9.9 hereto; provided, that, (i) such Borrower, Guarantor or
Subsidiary (as the case may be) may only make regularly scheduled payments
of principal, interest and fees, if any, in respect of such Indebtedness in
accordance with the terms of the agreement or instrument evidencing or
giving rise to such Indebtedness as in effect on the date hereof, (ii) such
Borrower, Guarantor or Subsidiary (as the case may be) shall not, directly
or indirectly, (A) amend, modify, alter or change in any material respect
the terms of such Indebtedness or any agreement, document or instrument
related thereto as in effect on the date hereof, except, that, such
Borrower, Guarantor or Subsidiary may, after prior written notice to
Lender, (x) amend, modify, alter or change the terms thereof so as to
extend the maturity thereof, or defer the timing of any payments in respect
thereof, or to forgive or cancel any portion of such Indebtedness (other
than pursuant to payments thereof), or to reduce the interest rate or any
fees in connection therewith, or to make any covenants contained therein
less restrictive or burdensome as to Borrowers and Guarantors or otherwise
more favorable to Borrowers and Guarantors and (y) convert all outstanding
indebtedness owing under the 12% Revolving Demand Note dated August 1, 1996
made by Automotive Safety Czech in favor of ASCI Czech to an equity
investment in Automotive Safety Czech in accordance with
69
Section 9.10(p), or (B) redeem, retire, defease, purchase or otherwise
acquire such Indebtedness, or set aside or otherwise deposit or invest any
sums for such purpose except as set forth on Schedule 9.9 hereto and (iii)
Borrowers and Guarantors shall furnish to Lender all notices or demands in
connection with such Indebtedness received by any Borrower or Guarantor or
on its behalf, promptly after the receipt thereof, or sent by any Borrower
or Guarantor, concurrently with the sending thereof, as the case may be;
and
(g) Indebtedness of Borrowers to the Existing Lenders evidenced by or
arising under the Existing Notes (as in effect on the date hereof);
provided, that:
(i) the principal amount of such Indebtedness shall not exceed
US$21,000,000, less the aggregate amount of all repayments,
repurchases or redemptions thereof, whether optional or mandatory, and
interest thereon shall not exceed the rate provided for in the
Existing Notes (including the default rate referred to therein) as in
effect on the date hereof,
(ii) Borrowers and Guarantor shall not, directly or indirectly,
make any payments in respect of such Indebtedness, except that
Borrowers may make regularly scheduled payments of interest and
mandatory prepayments of principal when due and the payment in full of
principal on the scheduled maturity due, in each case in accordance
with the terms of the Intercreditor Agreement,
(iii) such Indebtedness shall be subject to the Intercreditor
Agreement,
(iv) Lender shall have received true, correct and complete copies
of the Existing Loan Agreements, as duly executed and delivered by the
parties thereto,
(v) Borrowers and Guarantor shall not, directly or indirectly,
(A) amend, modify, alter or change any of the terms of such
Indebtedness or any of the Existing Notes or the other Existing Loan
Agreements, as in effect on the date hereof, except that, Borrowers
may, after prior written notice to Lender, amend, modify, alter or
change the terms thereof so as to extend the maturity thereof or defer
the timing of any payments in respect thereof, or to forgive or cancel
any portion of such Indebtedness other than pursuant to payments
thereof, or to reduce the interest rate or any fees in connection
therewith, or (B) redeem, retire, defease, purchase or otherwise
acquire such Indebtedness, or set aside or otherwise deposit or invest
any sums for such purpose, except for payments expressly permitted by
Section 9.9(g)(ii), and
(vi) Borrowers and Guarantor shall furnish to Lender all notices
or demands in connection with such Indebtedness either received by a
Borrower or Guarantor or on its behalf promptly after the receipt
thereof, or sent by a Borrower or Guarantor or on its behalf
concurrently with the sending thereof, as the case may be.
9.10 Loans, Investments, Guarantees, Etc. Each Borrower and Guarantor shall
not, and shall not permit any Subsidiary to, directly or indirectly, make any
loans or advance money or property to any Person, or invest in (by capital
contribution, dividend or otherwise) or purchase or repurchase the Capital Stock
or Indebtedness or all or a substantial part of the assets or property of any
person, or guarantee, assume, endorse, or otherwise become responsible for
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(directly or indirectly) the Indebtedness, performance, obligations or dividends
of any Person, or form or acquire any Subsidiaries or agree to do any of the
foregoing, except:
(a) the endorsement of instruments for collection or deposit in the
ordinary course of business;
(b) investments in cash or Cash Equivalents, provided, that, (i) if an
Event of Default exists, no Revolving Loans are then outstanding and (ii)
as to any of the foregoing, unless waived in writing by Lender, each
Borrower and Guarantor shall take such actions as are deemed necessary by
Lender to perfect the security interest of Lender in such investments;
(c) the guarantee by each Borrower and Guarantor of the Obligations of
any Borrower in favor of Lender;
(d) the existing equity investments of Borrowers and Guarantors as of
the date hereof in their respective Subsidiaries, provided, that, no
Borrower or Guarantor shall have any obligation to make any other
investment in or loans to, or other payments in respect of, any such
Subsidiaries;
(e) unsecured loans by any Borrower to any other Borrower, provided,
that, as to any such loan, each of the following conditions is satisfied as
determined by Lender (i) each month Borrowers shall provide to Lender a
report in form and substance satisfactory to Lender of the amount of such
loans made in the immediately preceding month, any repayments in connection
therewith and the outstanding amount thereof as of the last day of the
immediately preceding month, (ii) the Indebtedness arising pursuant to any
such loan shall not be evidenced by a promissory note or other instrument,
unless, the single original of such note or other instrument is delivered
to Lender to hold as part of the Collateral, with such endorsement and/or
assignment by the payee of such note or other instrument as Lender may
require, (iii) as of the date of the making of such loan and after giving
effect thereto, the Borrower making such loan is and shall be Solvent, (iv)
as of the date of the making of such loan and after giving effect thereto,
the weekly average Excess Availability of the Borrower making such loan for
each of the immediately preceding four weeks shall have been not less than
the US Dollar Equivalent of US$1,000,000 as to such loans by any Borrower
(other than Galion) or the US Dollar Equivalent of US$250,000 as to such
loans by Galion, (v) in the case of any loans to UK Borrower or German
Borrower, as of the date of the making of such loan and after giving effect
thereto, the aggregate weekly average Excess Availability of all US
Borrowers for each of the immediately preceding four weeks shall have been
not less than the US Dollar Equivalent of US$3,500,000, (vi) such loans are
permitted under the laws and regulations applicable to each such Borrower
and (vii) as of the date of the making of such loan and after giving effect
thereto, no Event of Default or act, condition or event which with notice
or passage of time or both would constitute an Event of Default shall exist
or have occurred;
(f) unsecured loans by any Subsidiary of Safety (other than Borrowers)
to any Borrower after the date hereof, provided, that, as to any such loan,
each of the following conditions is satisfied as determined by Lender: (i)
the Indebtedness arising pursuant to such loan is subject to, and
subordinate in right of payment to, the right of Lender to receive the
prior indefeasible payment and satisfaction in full of all of the
Obligations on terms and conditions
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acceptable to Lender, (ii) Lender shall have received, in form and
substance satisfactory to Lender, a subordination agreement providing for
the terms of the subordination in right of payment of such Indebtedness of
such Borrower to the prior final payment and satisfaction in full of all of
the Obligations, duly authorized, executed and delivered by such Subsidiary
and such Borrower, (iii) such Borrower shall not, directly or indirectly
make, or be required to make, any payments in respect of such Indebtedness,
except as Lender may otherwise specifically agree in writing, (iv) each
month Borrowers shall provide to Lender a report in form and substance
satisfactory to Lender of the amount of such loans made in the immediately
preceding month, any repayments in connection therewith and the outstanding
amount thereof as of the last day of the immediately preceding month, and
(v) Indebtedness arising pursuant to such loans shall not be evidenced by a
promissory note or other instrument, unless the single original of such
note or other instrument is delivered to Lender to hold as part of the
Collateral, with such endorsement and/or assignment by the payee of such
note or other instrument as Lender may require;
(g) loans by any Subsidiary of Safety (other than a Borrower or
Guarantor) to any other Subsidiary of Safety (other than a Borrower or
Guarantor);
(h) stock or obligations issued to any Borrower or Guarantor (or any
of their respective Subsidiaries) by any Person (or the representative of
such Person) in respect of Indebtedness of such Person owing to such
Borrower, Guarantor or Subsidiary in connection with the insolvency,
bankruptcy, receivership or reorganization of such Person or a composition
or readjustment of the debts of such Person; provided, that, if it is
issued to a Borrower or a Guarantor, the original of any such stock or
instrument evidencing such obligations shall be promptly delivered to
Lender, upon Lender's request, together with such stock power, assignment
or endorsement by such Borrower or Guarantor as Lender may request;
(i) obligations of Account Debtors to any Borrower or Guarantor (or
any of their respective Subsidiaries) arising from Accounts which are
evidenced by chattel paper or a promissory note made by such Account Debtor
payable to such Borrower, Guarantor or Subsidiary (as the case may be);
provided, that, promptly upon the receipt of the original of any such
chattel paper or promissory note by such Borrower or Guarantor such chattel
paper shall be delivered to Lender and such promissory note shall be
endorsed to the order of Lender by such Borrower, Guarantor or Subsidiary
(as the case may be) and delivered to Lender as so endorsed;
(j) any investments of any Borrower, Guarantor or any of their
respective Subsidiaries in interest rate swap agreements, interest rate cap
agreements, interest rate collar agreements, interest rate exchange
agreements or similar contractual arrangements intended to protect such
Person against fluctuations in interest rates and currency swap agreements,
forward currency purchase agreements or similar contractual arrangements
intended to protect such Person against fluctuations in currency exchange
rates provided, that, such arrangements are with banks or other financial
institutions that have combined capital and surplus and undivided profits
of not less than the US Dollar Equivalent of US$250,000,000 and are not for
speculative purposes and are unsecured;
(k) loans or advances by a Borrower or Guarantor to any of its
employees, after the date hereof, not to exceed the principal amount of
$250,000 in the aggregate at any time outstanding in the ordinary course of
such Borrower's or Guarantor's business for reasonable and
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necessary work-related travel and other ordinary business expenses to be
incurred by such employees in connection with their employment with such
Borrower or Guarantor; provided, that, (i) the Indebtedness of any such
employee to such Borrower or Guarantor arising pursuant to such loan is
not, and shall not be, evidenced by any promissory note or other
instrument, unless the original of such note or instrument is promptly
delivered to Lender, upon the issuance thereof, duly indorsed and assigned
by such Borrower or Guarantor to Lender, and (ii) as of the date of any
such loan and after giving effect thereto, no Event of Default or act,
event or condition which with notice or passage of time or both would
constitute an Event of Default shall exist or have occurred;
(l) the existing loans, advances and guarantees set forth on Schedule
9.10 hereto, provided, that, as to such loans, advances and guarantees, (i)
Borrowers, Guarantors, or their respective Subsidiaries, as the case may
be, shall not, directly or indirectly, (A) amend, modify, alter or change
in any material respect the terms of such loans, advances or guarantees or
any agreement, document or instrument related thereto, or (B) as to such
guarantees, redeem, retire, defease, purchase or otherwise acquire such
guarantee or set aside or otherwise deposit or invest any sums for such
purpose (except in respect of regularly scheduled payments permitted
herein) and (ii) Borrowers shall furnish to Lender all notices or demands
in connection with such loans, advances or guarantees received by a
Borrower, Guarantor or Subsidiary or on its behalf, promptly after the
receipt thereof;
(m) unsecured loans by any Borrower to Automotive Safety Czech and
Automotive Safety Mexico, provided, that, as to any such loan, each of the
following conditions is satisfied as determined by Lender in good faith:
(i) each month Borrowers shall provide to Lender a report in form and
substance satisfactory to Lender of the amount of such loans made in the
immediately preceding month, any repayments in connection therewith and the
outstanding amount thereof as of the last day of the immediately preceding
month, (ii) the Indebtedness arising pursuant to any such loan shall not be
evidenced by a promissory note or other instrument, unless, the single
original of such note or other instrument is delivered to Lender to hold as
part of the Collateral, with such endorsement and/or assignment by the
payee of such note or other instrument as Lender may require, (iii) as of
the date of the making of such loan and after giving effect thereto, the
Borrower making such loan is and shall be Solvent, (iv) as of the date of
the making of such loan and after giving effect thereto, the weekly average
Excess Availability of the Borrower making such loan for each of the
immediately preceding four weeks shall have been not less than the US
Dollar Equivalent of US$1,000,000, (v) such loans are permitted under the
laws and regulations applicable to each such Borrower, (vi) as of the date
of the making of such loan and after giving effect thereto, no Event of
Default or act, condition or event which with notice or passage of time or
both would constitute an Event of Default shall exist or have occurred,
(vii) as of the date of the making of such loan and after giving effect
thereto, the aggregate weekly average Excess Availability of all US
Borrowers for each of the immediately preceding four weeks shall have been
not less than the US Dollar Equivalent of US$5,000,000, (viii) the amount
of all such loans to Automotive Safety Czech and Automotive Safety Mexico
shall not exceed $10,000,000 in the aggregate and (ix) as of the date of
the making of such loan, Adjusted Pre-Tax Income of the Borrower making
such loan for each of the two most recently ended fiscal quarters shall
have been greater than zero;
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(n) other unsecured guaranties in the aggregate amount not to exceed
$500,000, provided, that, as to any such guarantee, each of the following
conditions is satisfied as determined by Lender in good faith: as of the
date of the making of such guarantee and after giving effect thereto, (i)
no Event of Default or act, condition or event which with notice or passage
of time or both would constitute an Event of Default shall exist or have
occurred and (ii) in the case of a guarantee made by any Borrower, the
weekly average Excess Availability of such Borrower for each of the
immediately preceding four weeks shall have been not less than the US
Dollar Equivalent of US$1,000,000;
(o) the guarantee by each Borrower and Guarantor of the Indebtedness
permitted under Section 9.9(g); and
(p) following prior written notice to Lender, all outstanding
indebtedness owing under the 12% Revolving Demand Note dated August 1, 1996
made by Automotive Safety Czech in favor of ASCI Czech may be converted to
an equity investment by ASCI Czech in Automotive Safety Czech; provided,
that, ASCI Czech shall not make any cash payments in connection therewith.
9.11 Dividends and Redemptions. Each Borrower and Guarantor shall not, and
shall not permit any of their respective Subsidiaries to, directly or
indirectly, make any distribution on any partnership interest or declare or pay
any dividends on account of any shares of class of Capital Stock of such
Borrower or Guarantor (or Subsidiary) now or hereafter outstanding, or set aside
or otherwise deposit or invest any sums for such purpose, or redeem, retire,
defease, purchase or otherwise acquire any partnership interests or shares of
any class of Capital Stock (or set aside or otherwise deposit or invest any sums
for such purpose) for any consideration other than common stock or apply or set
apart any sum, or make any other distribution (by reduction of capital or
otherwise) in respect of any such shares or agree to do any of the foregoing,
except any Subsidiary of a Borrower or Guarantor may pay dividends or other
distributions to such Borrower or Guarantor.
9.12 Transactions with Affiliates. Each Borrower and Guarantor shall not,
and shall not permit any Subsidiary to, directly or indirectly,
(a) purchase, acquire or lease any property from, or sell, transfer or
lease any property to, any partner, officer, director, Lender or other
Affiliate of any Borrower or Guarantor, except in the ordinary course of
and pursuant to the reasonable requirements of such Borrower's, Guarantor's
or Subsidiary's business and upon fair and reasonable terms no less
favorable to such Borrower, Guarantor or Subsidiary, as the case may be,
than such Borrower, Guarantor or Subsidiary, as the case may be, would
obtain in a comparable arm's length transaction with a person who is not an
Affiliate; or
(b) make any payments of management, consulting or other fees for
management or similar services, any payments of sales commissions or other
fees for marketing goods or services, any payments of taxes under any tax
sharing agreements, or of any Indebtedness owing to any partner, officer,
employee, shareholder, director or other Affiliate of any Borrower or
Guarantor, except:
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(i) compensation to officers, employees and directors for
services rendered to Borrowers, Guarantors or any of their respective
Subsidiaries in the ordinary course of business consistent with the
current practices of Borrowers, Guarantors or any of their respective
Subsidiaries as of the date hereof as previously disclosed to Lender;
(ii) a Borrower may repay the Indebtedness of such Borrower to
the other Borrowers arising pursuant to loans made by such other
Borrower permitted under Section 9.10 hereof;
(iii) any Subsidiary of Safety (other than Borrowers or
Guarantors) may repay the Indebtedness of such Subsidiary to any other
Subsidiary or to any Borrower or Guarantor; or
(iv) payments of management fees by any Subsidiary of Safety
(other than Borrowers and Guarantors) to Safety or any other
Subsidiary of Safety.
9.13 Additional Bank Accounts. Each Borrower and Guarantor shall not,
directly or indirectly, open, establish or maintain any deposit account,
investment account or any other account with any bank or other financial
institution, other than the Blocked Accounts and the accounts set forth in
Schedule 8.11 hereto, except: (a) as to any new or additional Blocked Accounts
and other such new or additional accounts which contain any Collateral or
proceeds thereof, with the prior written consent of Lender and subject to such
conditions thereto as Lender may establish and (b) as to any accounts used by
such Borrower or Guarantor to make payments of payroll, taxes or other
obligations to third parties, after prior written notice to Lender.
9.14 Compliance with ERISA. Each Borrower shall and shall cause each of its
ERISA Affiliates to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other Federal and
State law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; (c) not terminate any of such Plans so as
to incur any material liability to the Pension Benefit Guaranty Corporation; (d)
not allow or suffer to exist any prohibited transaction involving any of such
Plans or any trust created thereunder which would subject Borrower or such ERISA
Affiliate to a material tax or penalty or other liability on prohibited
transactions imposed under Section 4975 of the Code or ERISA; (e) make all
required contributions to any Plan which it is obligated to pay under Section
302 of ERISA, Section 412 of the Code or the terms of such Plan; (f) not allow
or suffer to exist any accumulated funding deficiency, whether or not waived,
with respect to any such Plan; or (g) allow or suffer to exist any occurrence of
a reportable event or any other event or condition which presents a material
risk of termination by the Pension Benefit Guaranty Corporation of any such Plan
that is a single employer plan, which termination could result in any material
liability to the Pension Benefit Guaranty Corporation.
9.15 License Agreements.
(a) Each Borrower shall (i) promptly and faithfully observe and
perform all of the material terms, covenants, conditions and provisions of
the material License Agreements to be observed and performed by it, at the
times set forth therein, if any, (ii) not do, permit, suffer or refrain
from doing anything could reasonably be expected to result in a default
under or breach of any of the terms of any material License Agreement,
(iii) not cancel, surrender, modify, amend,
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waive or release any material License Agreement in any material respect or
any term, provision or right of the licensee thereunder in any material
respect, or consent to or permit to occur any of the foregoing; except,
that, subject to Section 9.15(b) below, such Borrower may cancel, surrender
or release any material License Agreement in the ordinary course of the
business of such Borrower; provided, that, such Borrower shall give Lender
not less than thirty (30) days prior written notice of its intention to so
cancel, surrender and release any such Material License Agreement, (iv)
give Lender prompt written notice of any material License Agreement entered
into by such Borrower after the date hereof, together with a true, correct
and complete copy thereof and such other information with respect thereto
as Lender may request, (v) give Lender prompt written notice of any
material breach of any obligation, or any default, by any party under any
material License Agreement, and deliver to Lender (promptly upon the
receipt thereof by such Borrower in the case of a notice to such Borrower,
and concurrently with the sending thereof in the case of a notice from such
Borrower) a copy of each notice of default and every other notice and other
communication received or delivered by such Borrower in connection with any
material License Agreement which relates to the right of Borrower to
continue to use the property subject to such License Agreement, and (vi)
furnish to Lender, promptly upon the request of Lender, such information
and evidence as Lender may require from time to time concerning the
observance, performance and compliance by such Borrower or the other party
or parties thereto with the terms, covenants or provisions of any material
License Agreement.
(b) Each Borrower will either exercise any option to renew or extend
the term of each material License Agreement in such manner as will cause
the term of such material License Agreement to be effectively renewed or
extended for the period provided by such option and give prompt written
notice thereof to Lender or give Lender prior written notice that such
Borrower does not intend to renew or extend the term of any such material
License Agreement or that the term thereof shall otherwise be expiring, not
less than sixty (60) days prior to the date of any such non-renewal or
expiration. In the event of the failure of any Borrower to extend or renew
any material License Agreement, Lender shall have, and is hereby granted,
the irrevocable right and authority, at its option, to renew or extend the
term of such material License Agreement, whether in its own name and
behalf, or in the name and behalf of a designee or nominee of Lender or in
the name and behalf of such Borrower, as Lender shall determine at any time
that an Event of Default shall exist or have occurred and be continuing.
Lender may, but shall not be required to, perform any or all of such
obligations of any Borrower under any of the License Agreements, including,
but not limited to, the payment of any or all sums due from Borrower
thereunder. Any sums so paid by Lender shall constitute part of the
Obligations.
9.16 Adjusted Tangible Net Worth. Safety and its Subsidiaries shall at all
times maintain Adjusted Tangible Net Worth of not less than US$40,000,000.
9.17 Changes in Business. Safety and its Subsidiaries shall not engage in
any business other than the businesses of Safety and its Subsidiaries on the
date hereof and any businesses reasonably related, ancillary or complementary to
the businesses in which Safety and its Subsidiaries are engaged on the date
hereof.
9.18 Applications under Insolvency Statutes. Each Borrower acknowledges
that its business and financial relationships with Lender is unique from its
relationship with any other of
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its creditors, and agrees that it shall not make any proposal under the
Bankruptcy Case which provides for, or would permit directly or indirectly,
Lender to be classified with any other creditor for purposes of such plan or
proposal or otherwise.
9.19 After Acquired Real Property. If any Borrower or Guarantor hereafter
acquires any Real Property, fixtures or any other property that is of the kind
or nature described in the Mortgages (except if acquired with the proceeds of
Indebtedness permitted under Section 9.9(b)) and such Real Property, fixtures or
other property at any one location has a fair market value in an amount equal to
or greater than the Dollar Equivalent of US$250,000 (or if an Event of Default,
or act, condition or event which with notice or passage of time or both would
constitute an Event of Default exists, then regardless of the fair market value
of such assets), without limiting any other rights of Lender, or duties or
obligations of any Borrower, upon Lender's request, such Borrower or Guarantor
shall execute and deliver to Lender a mortgage, deed of trust or deed to secure
debt, as Lender may determine, in form and substance substantially similar to
the Mortgages and including any provisions relating to specific state and
foreign laws satisfactory to Lender and in form appropriate for recording in the
real estate records of the jurisdiction in which such Real Property or other
property is located granting to Lender a first priority lien and mortgages on
and security interest in such Real Property, fixtures or other property (except
as such Borrower or Guarantor would otherwise be permitted to incur hereunder or
under the Mortgages or as otherwise consented to in writing by Lender) and such
other agreements, documents and instruments as Lender may require in connection
therewith.
9.20 Costs and Expenses. Borrowers and Guarantors shall pay to Lender on
demand all reasonable costs, expenses, filing fees and taxes paid or payable in
connection with the preparation, negotiation, execution, delivery, recording,
administration, collection, liquidation, enforcement and defense of the
Obligations, Lender's rights in the Collateral, this Agreement, the other
Financing Agreements and all other documents related hereto or thereto,
including any amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof and
thereof, including, but not limited to: (a) all costs and expenses of filing or
recording (including any UCC financing statement and PPSA financing statement
and similar filings in other jurisdictions, taxes and fees, documentary taxes,
intangibles taxes, stamp taxes and mortgage recording taxes and fees, if
applicable); (b) costs and expenses and fees for insurance premiums for
insurance coverage paid by Lender as permitted hereunder, environmental audits,
surveys, assessments, engineering reports and inspections, appraisal fees and
search fees; (c) all appraisal fees and search fees; (d) costs and expenses of
remitting loan proceeds, collecting checks and other items of payment, and
establishing and maintaining the Blocked Accounts, together with Lender's
customary charges and fees with respect thereto; (e) charges, fees or expenses
charged by any bank or issuer in connection with the Letter of Credit
Accommodations; (f) any VAT incurred by Lender; (g) costs and expenses of
preserving and protecting the Collateral; (h) costs and expenses paid or
incurred in connection with obtaining payment of the Obligations, enforcing the
security interests and liens of Lender, selling or otherwise realizing upon the
Collateral, and otherwise enforcing the provisions of this Agreement and the
other Financing Agreements or defending any claims made or threatened against
Lender arising out of the transactions contemplated hereby and thereby
(including, without limitation, preparations for and consultations concerning
any such matters); (i) all out-of- pocket expenses and costs heretofore and from
time to time hereafter incurred by Lender during the course of periodic field
examinations of the Collateral and Borrowers' and Guarantors'
77
operations, plus a per diem charge at the rate of US$750 per person per day for
Lender's examiners in the field and office in the United States and Canada and
(pound)500 per person per day for Lender's examiners in the field and office
outside the United States and Canada; and (j) the reasonable fees and
disbursements of counsels (including legal assistants) to Lender in connection
with any of the foregoing.
9.21 Limitation of Restrictions Affecting Subsidiaries. Borrowers and
Guarantors shall not, directly or indirectly, create or otherwise cause or
suffer to exist any encumbrance or restriction which prohibits or limits the
ability of any Subsidiary of any Borrower or Guarantor to (a) pay dividends or
make other distributions or pay any Indebtedness owed to such Borrower or
Guarantor or any Subsidiary of such Borrower or Guarantor; (b) make loans or
advances to such Borrower or Guarantor or any Subsidiary of such Borrower or
Guarantor, (c) transfer any of its properties or assets to such Borrower or
Guarantor or any Subsidiary of such Borrower or Guarantor; or (d) create, incur,
assume or suffer to exist any lien upon any of its property, assets or revenues,
whether now owned or hereafter acquired, other than encumbrances and
restrictions arising under (i) applicable law, (ii) this Agreement, (iii)
customary provisions restricting subletting or assignment of any lease governing
a leasehold interest of such Borrower or Guarantor or any of their respective
Subsidiaries, (iv) customary restrictions on dispositions of real property
interests found in reciprocal easement agreements of such Borrower or Guarantor
or their respective Subsidiaries, (v) any agreement relating to permitted
Indebtedness incurred by a Subsidiary of any Borrower or Guarantor prior to the
date on which such Subsidiary was acquired by such Borrower and outstanding on
such acquisition date, (vi) any Indebtedness existing on the date hereof, and
(vii) any agreement relating to Indebtedness of Automotive Safety Mexico or
Automotive Safety Czech arising after the date hereof with respect to such
Person, provided, that, in no event shall any such agreement include any
prohibition, limitation or restriction on the payment by such Person of
dividends or other distributions, or loans or advances to any Borrower or
Guarantor, or the repayment of loans or advances to any Borrower or Guarantor,
or the repayment of loans or advances to any Borrower or Guarantor prior to an
event of default under such agreement.
9.22 Inactive Subsidiaries.
(a) Borrowers and Guarantors will not permit any Inactive Subsidiary
to (i) engage in any business or conduct any operations, (ii) own assets
with a book value of more than $10,000 in the aggregate and (iii) incur any
obligations or liabilities owing to any Borrower or Guarantor.
(b) Borrowers and Guarantors shall, on or prior to December 31, 2000,
cause each Inactive Subsidiary to be dissolved; provided, that as to each
Inactive Subsidiary (i) all of the assets of such Inactive Subsidiary shall
be promptly transferred to a Borrower or Guarantor and (ii) promptly
following the dissolution of such Inactive Subsidiary, Borrowers and
Guarantor shall furnish to Lender a certificate of dissolution (or its
equivalent) issued by the appropriate Governmental Authority.
9.23 Litigation. Borrowers and Guarantors will not settle any legal
proceeding if such settlement results in liability to Borrowers and Guarantors
in excess of $250,000 (which liability is not covered by insurance).
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9.24 Further Assurances. At the request of Lender at any time and from time
to time, each Borrower and Guarantor shall, at its expense, duly execute and
deliver, or cause to be duly executed and delivered, such further agreements,
documents and instruments, and do or cause to be done such further acts as may
be necessary or proper to evidence, perfect, maintain and enforce the security
interests and the priority thereof in the Collateral and to otherwise effectuate
the provisions or purposes of this Agreement or any of the other Financing
Agreements. Lender may at any time and from time to time request a certificate
from an officer of Borrowers representing that all conditions precedent to the
making of Loans and providing Letter of Credit Accommodations contained herein
are satisfied in all material respects. In the event of such request by Lender,
Lender may, at its option, cease to make any further Loans or provide any
further Letter of Credit Accommodations until Lender has received such
certificate and, in addition, Lender has determined that such conditions are
satisfied in all material respects. Where permitted by law, each Borrower hereby
authorizes Lender or Lender's representative to execute and file one or more UCC
financing statements or PPSA financing statements or notices signed only by
Lender or Lender's representative such budgets, forecasts, projections and other
information respecting the Collateral and the businesses of Borrowers and
Guarantors, as Lender may, from time to time, request. Lender is hereby
authorized to deliver a copy of any financial statement or any other information
relating to the businesses of Borrowers and Guarantors to any court or other
Governmental Authority or to any participant or assignee or prospective
participant or assignee. Each Borrower and Guarantor hereby irrevocably
authorizes and directs all accountants or auditors to deliver to Lender, at
Lender's expense, copies of the financial statements of Borrowers and Guarantors
and any reports or management letters prepared by such accountants or auditors
on behalf of Borrowers and Guarantors and to disclose to Lender such information
as they may have regarding the businesses of Borrowers and Guarantors. Any
documents, schedules, invoices or other papers delivered to Lender may be
destroyed or otherwise disposed of by Lender one (1) year after the same are
delivered to Lender, except as otherwise designated by Borrowers to Lender in
writing.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default. The occurrence or existence of any one or more of
the following events are referred to herein individually as an "Event of
Default", and collectively as "Events of Default":
(a) (i) any Borrower or Guarantor fails to pay when due any of the
Obligations; (ii) any Borrower or Obligor fails to perform any of the
covenants contained in sections 9.3, 9.4, 9.6, 9.14, 9.15, 9.17 or 9.22(b)
of this Agreement and such failure shall continue for ten (10) days;
provided, that, such ten (10) day period shall not apply in the case of:
(A) any failure to observe any such covenant which is not capable of being
cured at all or within such ten (10) day period or which has been the
subject of a prior failure within a six (6) month period or (B) an
intentional breach by any Borrower or Obligor of any such covenant; or
(iii) any Borrower or Obligor fails to perform, or otherwise breaches or
violates, any of the terms, covenants, conditions or provisions contained
in this Agreement or any of the other Financing Agreements, other than
those described in Sections 10.1(a)(i) and 10.1(a)(ii) above;
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(b) any representation, warranty or statement of fact made by any
Borrower or Obligor to Lender in this Agreement or the other Financing
Agreements shall when made or deemed made be false or misleading in any
material respect;
(c) any Obligor revokes, terminates or fails to perform any of the
terms, covenants, conditions or provisions of any guarantee, endorsement or
other agreement of such party in favor of Lender;
(d) any judgment, order or decree for the payment of money (other than
those orders entered in connection with the Plan of Reorganization and set
forth in the Information Certificates) is rendered against any Borrower or
any Obligor in excess of the US Dollar Equivalent of $500,000 in any one
case or in excess of the US Dollar Equivalent of $500,000 in the aggregate
and shall remain undischarged or unvacated for a period in excess of thirty
(30) days or execution shall at any time not be effectively stayed, or any
judgment, order or decree other than for the payment of money, or
injunction, attachment, garnishment or execution is rendered against any
Borrower or any Obligor or any of their assets;
(e) any Borrower or other Obligor dissolves or suspends or
discontinues doing business (other than pursuant to a merger, consolidation
or amalgamation permitted hereunder);
(f) any Borrower or any Obligor becomes overindebted or fails to be
Solvent, makes an assignment for the benefit of creditors, makes or sends
notice of a bulk transfer or calls a meeting of its creditors or principal
creditors in connection with a moratorium or adjustment of indebtedness due
to them;
(g) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under the bankruptcy or
insolvency laws of the Federal Republic of Germany or the United Kingdom
(including the Insolvency Act of 1986) or any similar law now or hereafter
in effect in any jurisdiction or under any insolvency, reorganization,
administration, receivership, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction now or hereafter in effect
(whether at law or in equity) is filed against any Borrower or any Obligor
or all or any part of its properties and such petition or application is
not dismissed within thirty (30) days after the date of its filing or any
Borrower or any Obligor shall file any answer admitting or not contesting
such petition or application or indicates its consent to, acquiescence in
or approval of, any such action or proceeding or the relief requested is
granted sooner;
(h) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect, or a petition, case,
application or proceeding under any bankruptcy or insolvency laws of the
Federal Republic of Germany or the United Kingdom (including the Insolvency
Act of 1986) or any similar law now or hereafter in effect in any
jurisdiction or under any insolvency, arrangement, reorganization,
moratorium, administration, receivership, readjustment of debt, dissolution
or liquidation law or statute of any jurisdiction now or hereafter in
effect (whether at a law or equity) is filed, taken or commenced after the
date hereof by any Borrower or Obligor or for all or any part of its
property, including, without limitation, if any Borrower or Obligor shall:
(i) apply for, request or consent to the appointment of a receiver,
administrative receiver, receiver and manager, examiner, judicial
custodian, trustee, liquidator, official manager, administrator, controller
or any other similar official of it or of all or a
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substantial part of its property and assets, (ii) be generally unable, or
admit in writing its inability, to pay its debts as they become due, or
commit any other act of bankruptcy, (iii) make a general assignment for the
benefit of creditors, (iv) file a voluntary petition or assignment in
bankruptcy or a proposal seeking a reorganization, compromise, moratorium
or arrangement with its creditors, (v) take advantage of any insolvency or
other similar law pertaining to arrangements, moratoriums, compromises or
reorganizations, or admit the material allegations of a petition or
application filed in respect of it in any bankruptcy, reorganization or
insolvency proceeding, or (vi) take any corporate action for the purpose of
effecting any of the foregoing;
(i) any default by any Borrower or any Obligor under any agreement,
document or instrument relating to any Indebtedness for borrowed money
owing to any person other than Lender, or any capitalized lease
obligations, contingent Indebtedness in connection with any guarantee,
letter of credit, indemnity or similar type of instrument in favor of any
person other than Lender, in any case in an amount in excess of the US
Dollar Equivalent of $250,000, which default continues for more than the
applicable cure period, if any, with respect thereto, or any material
default by any Borrower or any Obligor under any Material Contract, which
default continues for more than the applicable cure period, if any, with
respect thereto;
(j) an ERISA Event shall occur which results in or could reasonably be
expected to result in liability of Borrowers or Guarantors in an aggregate
amount in excess of the US Dollar Equivalent of $250,000;
(k) any Change of Control shall occur;
(l) the indictment by any Governmental Authority, or as Lender may
reasonably and in good faith determine, the threatened indictment by any
Governmental Authority of any Borrower of which any Borrower or Lender
receives notice, in either case, as to which there is a reasonable
possibility of an adverse determination, in the good faith determination of
Lender, under any criminal statute, or commencement or threatened
commencement of criminal or civil proceedings against Borrower, pursuant to
which statute or proceedings the penalties or remedies sought or available
include forfeiture of (i) any material portion of the Collateral or (ii)
any other property of Borrower which is necessary or material to the
conduct of its business;
(m) there shall be any event, condition or circumstance which has a
Material Adverse Effect; or
(n) there shall be an event of default under any of the other
Financing Agreements.
10.2 Remedies.
(a) At any time an Event of Default exists or has occurred and is
continuing, Lender shall have all rights and remedies provided in this
Agreement, the other Financing Agreements (including the Debenture), UCC,
the PPSA and other applicable law, all of which rights and remedies may be
exercised without notice to or consent by any Borrower or any Obligor,
except as such notice or consent is expressly provided for hereunder or
required by applicable law. All rights, remedies and powers granted to
Lender hereunder, under any of the other Financing Agreements, the UCC,
PPSA or other applicable law, are cumulative, not
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exclusive and enforceable, in Lender's discretion, alternatively,
successively, or concurrently on any one or more occasions, and shall
include, without limitation, the right to apply to a court of equity for an
injunction to restrain a breach or threatened breach by any Borrower or
Guarantor of this Agreement or any of the other Financing Agreements.
Lender may, at any time or times, proceed directly against any Borrower or
any Obligor to collect the Obligations without prior recourse to the
Collateral.
(b) Without limiting the foregoing, at any time an Event of Default
exists or has occurred and is continuing, Lender may, in its discretion and
without limitation, (i) accelerate the payment of all Obligations and
demand immediate payment thereof to Lender (provided, that, upon the
occurrence of any Event of Default described in Sections 10.1(g) and
10.1(h), all Obligations shall automatically become immediately due and
payable), (ii) with or without judicial process or the aid or assistance of
others, enter upon any premises on or in which any of the Collateral may be
located and take possession of the Collateral or complete processing,
manufacturing and repair of all or any portion of the Collateral, (iii)
require any Borrower or Obligor, at Borrowers' expense, to assemble and
make available to Lender any part or all of the Collateral at any place and
time designated by Lender, (iv) collect, foreclose, receive, appropriate,
setoff and realize upon any and all Collateral, (v) remove any or all of
the Collateral from any premises on or in which the same may be located for
the purpose of effecting the sale, foreclosure or other disposition thereof
or for any other purpose, (vi) sell, lease, transfer, assign, deliver or
otherwise dispose of any and all Collateral (including entering into
contracts with respect thereto, public or private sales at any exchange,
broker's board, at any office of Lender or elsewhere) at such prices or
terms as Lender may deem reasonable, for cash, upon credit or for future
delivery, with the Lender having the right to purchase the whole or any
part of the Collateral at any such public sale, all of the foregoing being
free from any right or equity of redemption of Borrowers or Obligors, which
right or equity of redemption is hereby expressly waived and released by
Borrowers and Obligors and/or (vii) terminate this Agreement. If any of the
Collateral is sold or leased by Lender upon credit terms or for future
delivery, the Obligations shall not be reduced as a result thereof until
payment therefor is finally collected by Lender. If notice of disposition
of Collateral is required by law, ten (10) days' prior notice by Lender to
Borrowers or Obligors designating the time and place of any public sale or
the time after which any private sale or other intended disposition of
Collateral is to be made, shall be deemed to be reasonable notice thereof
and each Borrower and Obligors waives any other notice. In the event Lender
institutes an action to recover any Collateral or seeks recovery of any
Collateral by way of prejudgment remedy, each Borrower and Obligors waives
the posting of any bond which might otherwise be required.
(c) For the purpose of enabling Lender to exercise the rights and
remedies hereunder, each Borrower and Guarantor hereby grants to Lender, to
the extent assignable, upon the occurrence of an Event of Default, an
irrevocable, non-exclusive license (exercisable without payment of royalty
or other compensation to Borrowers or Guarantors) to use, assign, license
or sublicense any of the trademarks, service-marks, trade names, business
names, trade styles, designs, logos and other source of business
identifiers and other Intellectual Property and general intangibles now
owned or hereafter acquired by any Borrower or Guarantor, wherever the same
maybe located, including in such license reasonable access to all media in
which any of the licensed items may be recorded or stored and to all
computer programs used for the compilation or printout thereof.
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(d) Lender may apply the cash proceeds of Collateral actually received
by Lender from any sale, lease, foreclosure or other disposition of the
Collateral to payment of the Obligations, in whole or in part and in such
order as Lender may elect, whether or not then due. Each Borrower shall
remain liable to Lender for the payment of any deficiency with interest at
the highest rate provided for herein and all costs and expenses of
collection or enforcement, including attorneys' fees and legal expenses.
(e) Without limiting the foregoing, upon the occurrence of an Event of
Default or an event which with notice or passage of time or both would
constitute an Event of Default, Lender may, at its option, without notice,
(i) cease making Loans or arranging for Letter of Credit Accommodations or
reduce the lending formulas or amounts of Revolving Loans and Letter of
Credit Accommodations available to Borrower and/or (ii) terminate any
provision of this Agreement providing for any future Loans or Letter of
Credit Accommodations to be made by Lender to Borrowers.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.
(a) The validity, interpretation and enforcement of this Agreement and
the other Financing Agreements and any dispute arising out of the
relationship between the parties hereto, whether in contract, tort, equity
or otherwise, shall be governed by the internal laws of the State of New
York (without giving effect to principles of conflicts of law), unless a
Financing Agreement expressly provides that the laws of another
jurisdiction shall govern such Financing Agreement.
(b) Borrowers, Guarantors and Lender irrevocably consent and submit to
the non-exclusive jurisdiction of the Supreme Court of the State of New
York for New York County and the United States District Court for the
Southern District of New York and waive any objection based on venue or
forum non conveniens with respect to any action instituted therein arising
under this Agreement or any of the other Financing Agreements or in any way
connected with or related or incidental to the dealings of the parties
hereto in respect of this Agreement or any of the other Financing
Agreements or the transactions related hereto or thereto, in each case
whether now existing or hereafter arising, and whether in contract, tort,
equity or otherwise, and agree that any dispute with respect to any such
matters shall be heard only in the courts described above (except that
Lender shall have the right to bring any action or proceeding against any
Borrower, Guarantor or its property in the courts of any other jurisdiction
which Lender deems necessary or appropriate in order to realize on the
Collateral or to otherwise enforce its rights against any Borrower,
Guarantor or its property).
(c) Each Borrower and Guarantor hereby waives personal service of any
and all process upon it and consents that all such service of process may
be made by certified mail (return receipt requested) directed to its
address set forth on the signature pages hereof and service so made shall
be deemed to be completed five (5) days after the same shall have been so
deposited in the U.S. mails, or, at Lender's option, by service upon any
Borrower or Guarantor in
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any other manner provided under the rules of any such courts. Within thirty
(30) days after such service, such Borrower or Guarantor shall appear in
answer to such process, failing which such Borrower or Guarantor shall be
deemed in default and judgment may be entered by Lender against such
Borrower or Guarantor for the amount of the claim and other relief
requested. Each Borrower and Guarantor that is not incorporated under the
laws of the United States of America or any State thereof hereby
irrevocably appoints Borrower Agent as its agent to accept service of
process under and in connection with the Financing Agreements and the
transactions contemplated thereby.
(d) BORROWERS, GUARANTORS AND LENDER EACH HEREBY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING
UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING
AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT,
EQUITY OR OTHERWISE. BORROWERS, GUARANTORS AND LENDER EACH HEREBY AGREES
AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL
BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT A BORROWER, GUARANTOR OR
LENDER MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Lender shall not have any liability to Borrowers or Guarantors
(whether in tort, contract, equity or otherwise) for losses suffered by
Borrowers or Guarantors in connection with, arising out of, or in any way
related to the transactions or relationships contemplated by this
Agreement, or any act, omission or event occurring in connection herewith,
unless it is determined by a final and non-appealable judgment or court
order binding on Lender, that the losses were the result of acts or
omissions constituting gross negligence or willful misconduct. In any such
litigation, Lender shall be entitled to the benefit of the rebuttable
presumption that it acted in good faith and with the exercise of ordinary
care in the performance by it of the terms of this Agreement.
11.2 Waiver of Notices. Each Borrower and Guarantor hereby expressly waives
demand, presentment, protest and notice of protest and notice of dishonor with
respect to any and all instruments and commercial paper, included in or
evidencing any of the Obligations or the Collateral, and any and all other
demands and notices of any kind or nature whatsoever with respect to the
Obligations, the Collateral and this Agreement, except such as are expressly
provided for herein. No notice to or demand on Borrowers or Guarantors which
Lender may elect to give shall entitle any Borrower or Guarantor to any other or
further notice or demand in the same, similar or other circumstances. Without
limiting the generality of the foregoing, Borrower waives (a) notice prior to
Lender's taking possession or control of any of the Collateral or any bond or
security which might be required by any court prior to allowing Lender to
exercise any of Lender's remedies, including the issuance of an immediate writ
of possession and (b) the benefit of all valuation, appraisement and exemption
laws.
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11.3 Amendments and Waivers. Neither this Agreement nor any provision
hereof shall be amended, modified, waived or discharged orally or by course of
conduct, but only by a written agreement signed by an authorized officer of
Lender, and as to amendments, as also signed by an authorized officer of each
Borrower and Guarantor. Lender shall not, by any act, delay, omission or
otherwise be deemed to have expressly or impliedly waived any of its rights,
powers and/or remedies unless such waiver shall be in writing and signed by an
authorized officer of Lender. Any such waiver shall be enforceable only to the
extent specifically set forth therein. A waiver by Lender of any right, power
and/or remedy on any one occasion shall not be construed as a bar to or waiver
of any such right, power and/or remedy which Lender would otherwise have on any
future occasion, whether similar in kind or otherwise.
11.4 Waiver of Counterclaims. Each Borrower and Guarantor waives all rights
to interpose any claims, deductions, setoffs or counterclaims of any nature
(other then compulsory counterclaims) in any action or proceeding with respect
to this Agreement, the Obligations, the Collateral or any matter arising
therefrom or relating hereto or thereto, except, that German Borrower shall
retain its rights of setoff but only to the extent that Lender consents thereto
or such right has been fully adjudicated in favor of German Borrower by a court
of competent jurisdiction in the Federal Republic of Germany.
11.5 Indemnification. Borrowers and Guarantors shall indemnify and hold
Lender, and its directors, agents, employees and counsel, harmless from and
against any and all losses, claims, damages, liabilities, costs or expenses
imposed on, incurred by or asserted against any of them in connection with any
litigation, investigation, claim or proceeding commenced or threatened related
to the negotiation, preparation, execution, delivery, enforcement, performance
or administration of this Agreement, any other Financing Agreements, or any
undertaking or proceeding related to any of the transactions contemplated hereby
or any act, omission, event or transaction related or attendant thereto,
including, without limitation, amounts paid in settlement, court costs, and the
fees and expenses of counsel. To the extent that the undertaking to indemnify,
pay and hold harmless set forth in this Section may be unenforceable because it
violates any law or public policy, Borrowers and Guarantors shall pay the
maximum portion which it is permitted to pay under applicable law to Lender in
satisfaction of indemnified matters under this Section. The foregoing indemnity
shall survive the payment of the Obligations and the termination or non-renewal
of this Agreement.
11.6 Currency Indemnity. If, for the purposes of obtaining judgment in any
court in any jurisdiction with respect to this Agreement or any of the other
Financing Agreements, it becomes necessary to convert into the currency of such
jurisdiction (the "Judgment Currency") any amount due under this Agreement or
under any of the other Financing Agreements in any currency other than the
Judgment Currency (the "Currency Due"), then conversion shall be made at the
Exchange Rate at which Lender is able, on the relevant date, to purchase the
Currency Due with the Judgment Currency prevailing on the Business Day before
the day on which judgment is given. In the event that there is a change in the
rate of Exchange Rate prevailing between the Business Day before the day on
which the judgment is given and the date of receipt by Lender of the amount due,
Borrowers will, on the date of receipt by Lender, pay such additional amounts,
if any, or be entitled to receive reimbursement of such amount, if any, as may
be necessary to ensure that the amount received by Lender on such date is the
amount in the Judgment Currency which when converted at the rate of exchange
prevailing on the date of receipt by Lender is the
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amount then due under this Agreement or such other of the Financing Agreements
in the Currency Due. If the amount of the Currency Due which Lender is able to
purchase is less than the amount of the Currency Due originally due to it,
Borrowers shall indemnify and save Lender harmless from and against loss or
damage arising as a result of such deficiency. The indemnity contained herein
shall constitute an obligation separate and independent from the other
obligations contained in this Agreement and the other Financing Agreements,
shall give rise to a separate and independent cause of action, shall apply
irrespective of any indulgence granted by Lender from time to time and shall
continue in full force and effect notwithstanding any judgment or order for a
liquidated sum in respect of an amount due under this Agreement or any of the
other Financing Agreements or under any judgment or order.
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS
12.1 Term.
(a) This Agreement and the other Financing Agreements shall become
effective as of the date set forth on the first page hereof and shall
continue in full force and effect for a term ending on the date three (3)
years from the date of the initial Loan hereunder (the "Renewal Date"), and
from year to year thereafter, unless sooner terminated pursuant to the
terms hereof. Lender or Borrower Agent may terminate this Agreement and the
other Financing Agreements effective on the Renewal Date or on the
anniversary of the Renewal Date in any year by giving to the other party at
least sixty (60) days prior written notice; provided, that, this Agreement
and all other Financing Agreements must be terminated simultaneously. Upon
the effective date of termination or non-renewal of the Financing
Agreements, Borrower shall pay to Lender, in full, all outstanding and
unpaid Obligations and shall furnish cash collateral to Lender in such
amounts as Lender determines are reasonably necessary to secure Lender from
loss, cost, damage or expense, including reasonable attorneys' fees and
legal expenses, in connection with any contingent Obligations, including
issued and outstanding Letter of Credit Accommodations and checks or other
payments provisionally credited to the Obligations and/or as to which
Lender has not yet received final and indefeasible payment. Such payments
in respect of the Obligations and cash collateral shall be remitted by wire
transfer in Federal funds to such bank account of Lender, as Lender may, in
its discretion, designate in writing to Borrower for such purpose. Interest
shall be due until and including the next business day, if the amounts so
paid by Borrower to the bank account designated by Lender are received in
such bank account later than 12:00 noon, New York City time.
(b) No termination of this Agreement or the other Financing Agreements
shall relieve or discharge any Borrower or Guarantor of its respective
duties, obligations and covenants under this Agreement or the other
Financing Agreements until all Obligations have been fully and finally
discharged and paid, and Lender's continuing security interest in the
Collateral and the rights and remedies of Lender hereunder, under the other
Financing Agreements and applicable law, shall remain in effect until all
such Obligations have been fully and finally discharged and paid.
(c) If for any reason this Agreement is terminated by any Borrower or
Guarantor prior to the end of the then current term or renewal term of this
Agreement or this Agreement is
86
terminated by Lender in good faith prior to the end of the then current
term or renewal term of this Agreement, in view of the impracticality and
extreme difficulty of ascertaining actual damages and by mutual agreement
of the parties as to a reasonable calculation of Lender's lost profits as a
result thereof, Borrowers agree to pay to Lender, upon the effective date
of such termination, an early termination fee in the amount set forth below
if such termination is effective in the period indicated:
Amount Period
------ ------
(i) two (2%) percent of the From the date of the initial
Maximum Credit Loan hereunder to and excluding
the first anniversary thereof
(ii) one (1%) percent of the From the first anniversary of the
date of Maximum Credit the initial
Loan hereunder to and excluding the
second anniversary thereof
(iii) three-fourths (3/4%) From the second anniversary of the
percent of the Maximum date of the initial Loan hereunder
Credit to and excluding the third
anniversary thereof
Such early termination fee shall be presumed to be the amount of damages
sustained by Lender as a result of such early termination and Borrowers agree
that it is reasonable under the circumstances currently existing. In addition,
Lender shall be entitled to such early termination fee upon the occurrence of
any Event of Default described in Sections 10.1(g) and 10.1(h) hereof, even if
Lender does not exercise its right to terminate this Agreement, but elects, at
its option, to provide financing to Borrowers or permit the use of cash
collateral under the United States Bankruptcy Code. The early termination fee
provided for in this Section 12.1 shall be deemed included in the Obligations.
12.2 Interpretative Provisions.
(a) All terms used herein which are defined in Article 1 or Article 9 of
the Uniform Commercial Code shall have the meanings given therein unless
otherwise defined in this Agreement.
(b) All references to the plural herein shall also mean the singular and to
the singular shall also mean the plural unless the context otherwise requires.
(c) All references to Borrowers, Guarantors and Lender pursuant to the
definitions set forth in the recitals hereto, or to any other person herein,
shall include their respective successors and assigns.
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(d) The words "hereof", "herein", "hereunder", "this Agreement" and words
of similar import when used in this Agreement shall refer to this Agreement as a
whole and not any particular provision of this Agreement and as this Agreement
now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
(e) The word "including" when used in this Agreement shall mean "including,
without limitation".
(f) An Event of Default shall exist or continue or be continuing until such
Event of Default is waived in accordance with Section 11.3 or is cured in a
manner satisfactory to Lender, if such Event of Default is capable of being
cured as determined by Lender.
(g) Any accounting term used in this Agreement shall have, unless otherwise
specifically provided herein, the meaning customarily given in accordance with
GAAP, and all financial computations hereunder shall be computed unless
otherwise specifically provided herein, in accordance with GAAP as consistently
applied and using the same method for inventory valuation as used in the
preparation of the financial statements of Safety, Borrowers and Guarantors most
recently received by Lender prior to the date hereof.
(h) In the computation of periods of time from a specified date to a later
specified date, the word "from" means "from and including", the words "to" and
"until" each mean "to but excluding" and the word "through" means "to and
including".
(i) Unless otherwise expressly provided herein, (i) references herein to
any agreement, document or instrument shall be deemed to include all subsequent
amendments, modifications, supplements, extensions, renewals, restatements or
replacements with respect thereto, but only to the extent the same are not
prohibited by the terms hereof or of any other Financing Agreement, and (ii)
references to any statute or regulation are to be construed as including all
statutory and regulatory provisions consolidating, amending, replacing,
recodifying, supplementing or interpreting the statute or regulation.
(j) The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement.
(k) This Agreement and other Financing Agreements may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms.
(l) This Agreement and the other Financing Agreements are the result of
negotiations among and have been reviewed by counsel to Lender and the other
parties, and are the products of all parties. Accordingly, this Agreement and
the other Financing Agreements shall not be construed against Lender merely
because of Lender's involvement in their preparation.
12.3 Notices. All notices, requests and demands hereunder shall be in
writing and (a) made to Lender at its address set forth below and to any
Borrower or Guarantor at its chief
88
executive office set forth below, or to such other address as either party may
designate by written notice to the other in accordance with this provision, and
(b) deemed to have been given or made: if delivered in person, immediately upon
delivery; if by telex, telegram or facsimile transmission, immediately upon
sending and upon confirmation of receipt; if by nationally recognized overnight
courier service with instructions to deliver the next Business Day, one (1)
Business Day after sending; and if by certified mail, return receipt requested,
five (5) days after mailing.
12.4 Partial Invalidity. If any provision of this Agreement is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
12.5 Successors. This Agreement, the other Financing Agreements and any
other document referred to herein or therein shall be binding upon and inure to
the benefit of and be enforceable by Lender, Borrowers, Guarantors and their
respective successors and assigns, except that Borrowers and Guarantors may not
assign any of their rights under this Agreement, the other Financing Agreements
and any other document referred to herein or therein without the prior written
consent of Lender. Lender may, after notice to any Borrower or Guarantor, assign
its rights and delegate its obligations under this Agreement and the other
Financing Agreements and further may assign, or sell participations in, all or
any part of the Loans, the Letter of Credit Accommodations or any other interest
herein to another financial institution or other person, in which event, the
assignee or participant shall have, to the extent of such assignment or
participation, the same rights and benefits as it would have if it were the
Lender hereunder, except as otherwise provided by the terms of such assignment
or participation.
12.6 Entire Agreement. This Agreement, the other Financing Agreements, any
supplements hereto or thereto, and any instruments or documents delivered or to
be delivered in connection herewith or therewith represents the entire agreement
and understanding concerning the subject matter hereof and thereof between the
parties hereto, and supersede all other prior agreements, understandings,
negotiations and discussions, representations, warranties, commitments,
proposals, offers and contracts concerning the subject matter hereof, whether
oral or written. In the event of any inconsistency between the terms of this
Agreement and any schedule or exhibit hereto, the terms of this Agreement shall
govern.
12.7 Counterparts, etc. This Agreement (a) may be executed in separate
counterparts, each of which taken together shall constitute one and the same
instrument and (b) may be executed and delivered by telecopier with the same
force and effect if it were as a manually executed and delivered counterpart.
12.8 Confidentiality.
(a) Lender shall use all reasonable efforts to keep confidential, in
accordance with its customary procedures for handling confidential information
and safe and sound lending practices, any non-public information supplied to it
by Borrowers and Guarantors pursuant to this Agreement which is marked as
confidential at the time such information is furnished by Borrowers and
Guarantors to Lender, provided, that, nothing contained herein shall limit the
disclosure of any such information: (i) to the extent required by statute, rule,
regulation, subpoena or court order, (ii) to bank examiners and other
regulators, auditors and/or accountants,
89
(iii) in connection with any litigation to which Lender is a party, (iv) to any
assignee or participant (or prospective assignee or participant) so long as such
assignee or participant (or prospective assignee or participant) shall have
agreed to treat such information as confidential in accordance with this Section
12.8, or (v) to counsel for Lender or any participant or assignee (or
prospective participant or assignee).
(b) In no event shall this Section 12.8 or any other provision of this
Agreement or applicable law be deemed: (i) to apply to or restrict disclosure of
information that has been or is made public by any Borrower or Guarantor or any
third party without breach of this Section 12.8 or otherwise become generally
available to the public other than as a result of a disclosure in violation
hereof, or in violation of any other confidentiality agreement in favor of a
Borrower or Guarantor to the extent Lender has actual knowledge of such
agreement and the violation thereof at the time it receives such information,
(ii) to apply to or restrict disclosure of information that was or becomes
available to Lender on a non-confidential basis from a person other than
Borrowers and Guarantors other than in violation of a confidentiality agreement
in favor of a Borrower or Guarantor by such person to the extent Lender has
actual knowledge of such agreement and the violation thereof at the time it
receives such information, (iii) to require Lender to return any materials
furnished by Borrowers and Guarantors to Lender or (iv) prevent Lender from
responding to routine informational requests in accordance with the Code of
Ethics for the Exchange of Credit Information promulgated by The Xxxxxx Xxxxxx
Associates or other applicable industry standards relating to the exchange of
credit information.
[[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, Lender, Borrowers and Guarantors have caused these
presents to be duly executed as of the day and year first above written.
LENDER
CONGRESS FINANCIAL CORPORATION
(SOUTHERN)
By:________________________________
Title:_____________________________
Address:
000 Xxxxxxxx Xxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Telecopy: (000) 000-0000
BORROWERS
GALION, INC.
By:________________________________
Title:_____________________________
Chief Executive Office:
000 Xxxxx Xxxx Xxxxxx
Xxxxxx, Xxxx 00000
Telecopy: (000) 000-0000
SAFETY COMPONENTS FABRIC
TECHNOLOGIES, INC.
By:________________________________
Title:_____________________________
Chief Executive Office:
00 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Telecopy: (000) 000-0000
[SIGNATURES CONTINUE ON NEXT PAGE]
91
[SIGNATURES CONTINUED FROM PRIOR PAGE]
AUTOMOTIVE SAFETY COMPONENTS
INTERNATIONAL, INC.
By:________________________________
Title:_____________________________
Chief Executive Office:
0000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
AUTOMOTIVE SAFETY COMPONENTS
INTERNATIONAL GmbH & Co. KG
By:________________________________
Title:_____________________________
Chief Executive Office:
Xxxxxxxxxxxxxx 0
X-00000 Xxxxxxxxx
Xxxxxxx
Telecopy: 49 5121 748 287
49 5121 748 215
AUTOMOTIVE SAFETY COMPONENTS
INTERNATIONAL LIMITED
By:________________________________
Title:_____________________________
Chief Executive Office:
Xxxxxxx Xxxxxxxxxx Xxxxxx
Xxxxxxx
Xxxxx, Xxxxx
XX0 0XX XX
Telecopy: 00 (0) 0000 000 000
[SIGNATURES CONTINUE ON NEXT PAGE]
92
[SIGNATURES CONTINUED FROM PRIOR PAGE]
VALENTEC INTERNATIONAL
CORPORATION, LLC
By:________________________________
Title:_____________________________
Chief Executive Office:
0000 Xxxxxxx Xxxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
GUARANTORS
SAFETY COMPONENTS INTERNATIONAL,
INC.
By:________________________________
Title:_____________________________
Chief Executive Office:
00 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Telecopy: (000) 000-0000
ASCI HOLDINGS GERMANY (DE), INC.
By:________________________________
Title:_____________________________
Chief Executive Office:
00 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Telecopy: (000) 000-0000
[SIGNATURES CONTINUE ON NEXT PAGE]
93
[SIGNATURES CONTINUED FROM PRIOR PAGE]
ASCI HOLDINGS U.K. (DE), INC.
By:________________________________
Title:_____________________________
Chief Executive Office:
00 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Telecopy:(000) 000-0000
ASCI HOLDINGS MEXICO (DE), INC.
By:________________________________
Title:_____________________________
Chief Executive Office:
00 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Telecopy:(000) 000-0000
ASCI HOLDINGS CZECH (DE), INC.
By:________________________________
Title:_____________________________
Chief Executive Office:
00 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Telecopy:(000) 000-0000
[SIGNATURES CONTINUE ON NEXT PAGE]
94
[SIGNATURES CONTINUED FROM PRIOR PAGE]
AUTOMOTIVE SAFETY COMPONENTS
INTERNATIONAL, S.A. de C.V.
By:________________________________
Title:_____________________________
Chief Executive Office:
Xxxxxxxxx Xxxxxxxxx, Xxxxxxx 0X0
Xxxxxxx Xxxxxx Xxxxxxx
Xxxxxxxx, XX Xxxxxx 00000
Telecopy: 52 617 67533
52 617 38488
AUTOMOTIVE SAFETY COMPONENTS
INTERNATIONAL S.R.O.
By:________________________________
Title:_____________________________
Chief Executive Office:
Xxxxxxxxx 000
000 00 Xxxxxxx
Xxxxx Xxxxxxxx
Telecopy: 420 462 327 833
420 462 325 198
95
EXHIBIT C
Conditions to German Term Loan
Lender shall have received the following documents and instruments, each in
form and substance satisfactory to Lender:
(i) Term Promissory Note, duly authorized, executed and delivered by
German Borrower;
(ii) either (a) Mortgagee Waiver, duly authorized, executed and
delivered by Deutsche Bank or (b) evidence satisfactory to Lender that
neither Deutsche Bank nor any other third party has any claim to, security
interest or lien on any Equipment of German Borrower;
(iii) Security Transfer Agreement with respect to Equipment, duly
authorized, executed and delivered by German Borrower;
(iv) Legal opinion of Beiten Xxxxxxxxx, counsel to German Borrower;
and
(v) such other agreements, documents and instruments as Lender may
request.
