Exhibit 10.66
SUBORDINATED SECURED
SUPERPRIORITY DEBTOR-IN-POSSESSION CREDIT AGREEMENT
Dated as of April 7, 2000
By and Among
SAFETY COMPONENTS INTERNATIONAL, INC.
AUTOMOTIVE SAFETY COMPONENTS INTERNATIONAL LIMITED
and
AUTOMOTIVE SAFETY COMPONENTS INTERNATIONAL GMBH & CO. KG
(as Borrowers)
THE OTHER SUBSIDIARIES OF SAFETY COMPONENTS INTERNATIONAL, INC. NAMED HEREIN
(as Guarantors)
KEYBANK NATIONAL ASSOCIATION
(as Administrative Agent)
and
FLEET BANK
and
KEYBANK NATIONAL ASSOCIATION
(as Lenders)
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SUBORDINATED SECURED SUPERPRIORITY DEBTOR-IN-POSSESSION CREDIT AGREEMENT
dated as of April 7, 2000 by and among (1) SAFETY COMPONENTS INTERNATIONAL,
INC., a Delaware corporation ("Safety Components"), AUTOMOTIVE SAFETY COMPONENTS
INTERNATIONAL LIMITED, a company organized under the laws of the United Kingdom
("ASCL"), and AUTOMOTIVE SAFETY COMPONENTS INTERNATIONAL GMBH & CO. KG, a
company organized under the laws of the Federal Republic of Germany ("GmbH"), as
borrowers (the "Borrowers"), (2) the direct and indirect subsidiaries of Safety
Components listed on Schedule 1 hereto, as guarantors (the "Guarantors"), (3)
KEYBANK NATIONAL ASSOCIATION ("KeyBank") and FLEET BANK ("Fleet"), as lenders
(the "Lenders"), and (4) KeyBank, as administrative agent for the Lenders (the
"Administrative Agent").
W I T N E S S E T H
A. The Borrowers, the Guarantors, the Lenders and the Administrative Agent
are parties to a Credit Agreement dated as of May 21, 1997 (as amended, the
"Prepetition Credit Agreement") pursuant to which, as of the date hereof, the
Borrowers and the Guarantors are indebted to the Lenders and the Administrative
Agent in respect of (i) outstanding revolving credit loans in the aggregate
principal amount of $37,900,000, (ii) certain outstanding letters of credit (the
"Prepetition Letters of Credit") and (iii) certain unpaid interest, fees, costs
and expenses (collectively, the "Prepetition Obligations").
B. On April 7, 2000 (the "Petition Date"), a voluntary petition for relief
under Chapter 11 of Title 11 of the United States Code, 11 U.S.C. ss.ss. 101 et
seq. (the "Bankruptcy Code") was filed by Safety Components and its direct and
indirect subsidiaries listed on Schedule 2 hereto (collectively, the "Debtors")
in the United States Bankruptcy Court for the District of Delaware (the "Court")
(the "Chapter 11 Cases"). The Debtors are and will continue to operate their
respective businesses and manage their respective properties as
debtors-in-possession pursuant to Sections 1107 and 1108 of the Bankruptcy Code.
C. Bank of America, N.A., as agent (the "Senior Agent"), certain financial
institutions, as lenders (the "Senior Lenders"), the Debtors and certain
non-Debtor subsidiaries of Safety Components, as borrowers (the "Senior DIP
Facility Borrowers") or as guarantors (the "Senior DIP Facility Guarantors"),
propose to enter into a $30,600,000 senior debtor-in-possession financing
facility (the "Senior DIP Facility") pursuant to a Senior Secured Super Priority
Debtor-in-Possession Loan and Security Agreement dated as of April 7, 2000 (the
"Senior DIP Facility Credit Agreement") and certain other documents referred to
therein (collectively, the "Senior DIP Facility Documents"). The Senior DIP
Facility Borrowers intend to utilize the Senior DIP Facility to (i) permanently
and indefeasibly repay $17,000,000 of the Prepetition Obligations, (ii) replace
the Prepetition Letters of Credit, (iii) fund their working capital requirements
during the pendency of the Chapter 11 Cases, and (iii) fund general corporate
purposes in the ordinary course of business.
D. Having determined that it is in their respective best interests that the
Senior DIP Facility Borrowers obtain the financing under the Senior DIP Facility
for the purposes stated above, and it being a condition precedent to the Senior
Agent's and the Senior Lenders' agreement to provide the Senior DIP Facility
that the Administrative Agent and the
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Lenders subordinate their claims and security interests under the Prepetition
Credit Documents to the claims and security interests of the Senior Agent and
the Senior Lenders under the Senior DIP Facility on the terms set forth herein,
in the Senior DIP Facility Documents and in the Intercreditor Agreement, the
parties hereto have agreed to enter into this Agreement.
ARTICLE 1
DEFINITIONS
SECTION 1.1. Definitions. All capitalized terms used but not defined herein
will have the meanings specified on Schedule 3 hereto.
ARTICLE 2
SUBORDINATED DIP FACILITY
SECTION 2.1. Term Loans. Upon the terms and subject to the conditions of,
and in reliance upon the representations and warranties made under, this
Agreement, each Lender agrees, severally but not jointly, to make term loans
(the "Term Loans") to the Borrowers on the Closing Date in an aggregate
principal amount equal to the sum of $20,900,000, representing the unpaid
borrowings under the Prepetition Credit Agreement remaining after the Closing
Date Repayment, plus the amount of all accrued and unpaid interest under the
Prepetition Credit Agreement as of the Closing Date (the "Loan Amount"). Fifty
percent (50%) of the Loan Amount will be for the account of Fleet and fifty
percent (50%) will be for the account of KeyBank. The making of the Term Loans
on the Closing Date will be reflected on the books and records of the
Administrative Agent, the Lenders and the Borrowers as a payment and
satisfaction in full of all outstanding Prepetition Obligations (other than in
respect of the Prepetition Letters of Credit) owed to the respective Lenders on
the Closing Date after giving effect to the Closing Date Repayment. No amounts
will actually be funded to the Borrowers in respect of the Term Loans.
SECTION 2.2. Maturity of Term Loans. The Term Loans will be due and payable
in full on the Termination Date. "Termination Date" as used herein has the
meaning assigned to such term in the Senior DIP Facility Credit Agreement;
provided that in no event will the Termination Date be later than the date which
is 18 months after the Closing Date, unless the Administrative Agent and the
Lenders agree to extend the Termination Date pursuant to Section 11.3 hereof.
SECTION 2.3. Interest Rates and Payment Dates. The Borrowers will pay
interest on the unpaid principal amount of the Term Loans for each day from the
Closing Date until the Term Loans are paid in full (whether at maturity, by
reason of acceleration or otherwise) at the rate of 11% per annum; provided
that, if there shall occur and be continuing an Event of Default, the unpaid
principal amount of the Term Loans and all other amounts due hereunder,
including accrued and unpaid interest, will bear interest for each day from the
date of such Event of Default until such Event of Default is cured or waived at
the rate of 13% per annum. Interest will accrue until the Consummation Date, at
which time all accrued interest will be paid in full in cash; provided that, if
the Consummation Date is later than April 7, 2001, interest accruing from and
after April 7, 2001 will be paid monthly in arrears on the last business day of
each month and all other accrued and unpaid interest will be paid on the
Consummation Date; and provided,
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further, that interest accruing at the default rate referred to above will be
payable on demand. The interest rates provided above will be computed on the
basis of a year of 360 days for the actual number of days elapsed.
SECTION 2.4. Term Loan Notes. Each Lender's Term Loans and the joint and
several obligation of the Borrowers to repay such Term Loans will also be
evidenced by a term loan note (a "Term Loan Note") payable to the order of such
Lender substantially in the form of Exhibit A hereto with appropriate insertions
as to date and principal amount.
ARTICLE 3
PREPETITION LETTERS OF CREDIT
SECTION 3.1. Prepetition Letters of Credit. (a) The standby letter of
credit (NSL791866) in the face amount of 400,000 GBP (approximately U.S.
$638,000 as of the date hereof) which was issued by KeyBank as Issuing Bank
under the Prepetition Credit Agreement to Midland Bank plc, as beneficiary, for
the account of ASCL (the "Surviving Letter of Credit") will remain outstanding
after the Closing Date as an obligation of the Obligors hereunder subject to the
Superpriority Claim and secured by the Collateral; provided that the Surviving
Letter of Credit will be replaced not later than May 19, 2000 with a new letter
of credit issued under the Senior DIP Facility as set forth in the Senior DIP
Facility Credit Agreement. Any amount drawn under the Surviving Letter of Credit
prior to its replacement will bear interest for each day until such amount is
reimbursed in full in cash to the Issuing Bank and the Lenders at a rate per
annum equal to the default rate referred to in Section 2.3.
(b) The three letters of credit in the aggregate face amount of $234,000
(NSL892395 for $26,900, NSL892418 for $161,400 and NSL992701 for $42,500) which
were issued by KeyBank as Issuing Bank under the Prepetition Credit Agreement to
various beneficiaries for the account of the Safety Components and/or Valentec
International Corporation, LLC (the "Non-Surviving Letters of Credit") will be
replaced with new letters of credit issued under the Senior DIP Facility on the
Closing Date and such Non-Surviving Letters of Credit will be returned to
KeyBank for cancellation within five days after the Closing Date. If any amount
is drawn under the Non-Surviving Letters of Credit prior to the Closing Date,
such amount and all interest thereon and fees, costs and expenses of the Issuing
Bank and the Lenders associated with such draw will be reimbursed by the
Obligors on the Closing Date.
ARTICLE 4
GENERAL LOAN PROVISIONS
SECTION 4.1. Joint and Several Liability. (a) The Postpetition Obligations
will constitute one joint and several direct and general obligation of all of
the Borrowers. Notwithstanding anything to the contrary contained herein, each
of the Borrowers will be jointly and severally, with each other Borrower,
directly and unconditionally liable to the Administrative Agent and the Lenders
for all Postpetition Obligations, it being agreed that the Administrative Agent
and the Lenders are relying on the joint and several liability of the Borrowers
in entering into this Agreement. Each Borrower hereby unconditionally and
irrevocably agrees that upon default in the payment when due (whether at stated
maturity, by
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acceleration or otherwise) of any principal of, or interest on, any Term Loan or
other Postpetition Obligation, it will forthwith pay the same, without notice or
demand.
(b) No payment or payments made by any of the Borrowers or any other person
or received or collected by the Administrative Agent or any Lender from any of
the Borrowers or any other person by virtue of any action or proceeding or any
setoff or appropriation or application at any time or from time to time in
reduction of or in payment of the Postpetition Obligations will be deemed to
modify, reduce, release or otherwise affect the liability of any Borrower under
this Agreement, each of which will remain liable for all the Postpetition
Obligations until the Postpetition Obligations are paid in full.
SECTION 4.2. Postpetition Obligations Absolute. Each Borrower agrees that
the Postpetition Obligations will be paid strictly in accordance with the terms
hereof, regardless of any law, regulation or order now or hereafter in effect in
any jurisdiction affecting any of such terms or the rights of the Administrative
Agent or any Lender with respect thereto. All Postpetition Obligations will be
conclusively presumed to have been created in reliance hereon. The liabilities
under this Agreement will be absolute and unconditional irrespective of: (a) any
lack of validity or enforceability of this Agreement or the Term Loan Notes or
any other agreement or instrument relating thereto; (b) any change in the time,
manner or place of payment of, or in any other term of, all or any part of the
Postpetition Obligations, or any other amendment or waiver thereof or any
consent to departure therefrom, including any increase in the Postpetition
Obligations resulting from the extension of additional credit to any Borrower or
other Obligor or otherwise; (c) any taking, exchange, release or non-perfection
of any Collateral, or any release or amendment or waiver of or consent to
departure from any guaranty for all or any of the Postpetition Obligations; (d)
any change, restructuring or termination of the corporate structure or existence
of any Borrower or other Obligor; or (e) any other circumstance which might
otherwise constitute a defense available to, or a discharge of, any Borrower or
a Guarantor. This Agreement will continue to be effective or be reinstated, as
the case may be, if at any time any payment of any of the Postpetition
Obligations is rescinded or must otherwise be returned by the Administrative
Agent or any Lender upon the insolvency, bankruptcy or reorganization of any
Borrower or other Obligor or otherwise, all as though such payment had not been
made.
SECTION 4.3. Waiver of Suretyship Defenses. Each Borrower agrees that the
joint and several liability of the Borrowers provided for in Section 4.1 will
not be impaired or affected by any modification, supplement, extension or
amendment of any contract or agreement to which the other Borrowers may
hereafter agree (other than an agreement signed by the Administrative Agent and
the Lenders specifically releasing such liability), nor by any delay, extension
of time, renewal, compromise or other indulgence granted by the Administrative
Agent or any Lender with respect to any of the Postpetition Obligations, nor by
any other agreements or arrangements whatever with the other Borrowers or with
anyone else, each Borrower hereby waiving all notice of such delay, extension,
release, substitution, renewal, compromise or other indulgence, and hereby
consenting to be bound thereby as fully and effectually as if it had expressly
agreed thereto in advance. The liability of each Borrower is direct and
unconditional as to all of the Postpetition Obligations, and may be enforced
without requiring the Administrative Agent or any Lender first to resort to any
other right, remedy or security. Each Borrower hereby expressly waives
promptness, diligence, notice of acceptance and any other
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notice (except to the extent expressly provided for herein) with respect to any
of the Postpetition Obligations, the Term Loan Notes or this Agreement and any
requirement that the Administrative Agent or any Lender protect, secure, perfect
or insure any Lien or any property subject thereto or exhaust any right or take
any action against any Borrower or any other person or any Collateral.
SECTION 4.4. Superpriority Nature of Postpetition Obligations. The
Postpetition Obligations will constitute administrative expenses of the Debtors
in the Chapter 11 Cases having the highest available priority under Sections
364(c) and (d) and 507(b) of the Bankruptcy Code, with priority over all other
costs and expenses of the kind specified in, or ordered pursuant to, any
provision of the Bankruptcy Code (the "Superpriority Claim"), subject and
subordinate only to the superpriority claim of the Senior Lenders under Sections
364(c) and (d) of the Bankruptcy Code. Except for the superpriority claim of the
Senior Lenders, the superpriority claims, if any, permitted under the Senior DIP
Facility Credit Agreement and the Carve-Out, no other claim of any other
creditor will be senior, or equal in priority, to the Postpetition Obligations.
ARTICLE 5
CONDITIONS PRECEDENT
SECTION 5.1. Conditions Precedent. This Agreement will become effective on
the date, which must be not later than May 15, 2000, on which all of the
following conditions are satisfied (the "Closing Date"):
(a) The execution and delivery by the Obligors to the Administrative
Agent and the Lenders of this Agreement;
(b) The execution and delivery by the Borrowers to each Lender of such
Lender's Term Loan Note;
(c) (i) The execution and delivery by the Senior Agent, the Senior
Lenders, the Senior DIP Facility Borrowers and the Senior DIP Facility
Guarantors of the Senior DIP Facility Documents, provided that (x) any
modifications to such documents made after the date hereof, including
without limitation, any modifications to the schedules to the Senior DIP
Facility Credit Agreement and (y) any order approving the Senior DIP
Facility (if different from the Final Order referred to below) must be
reasonably satisfactory to the Administrative Agent and the Lenders in all
material respects; and (ii) the satisfaction of all conditions precedent to
the initial borrowings under the Senior DIP Facility;
(d) (i) The entry of an order of the Court after a final hearing
pursuant to Federal Bankruptcy Rule 4001(c)(2) on a motion by the Debtors
approving the Subordinated DIP Facility, which order (x) shall be
satisfactory to the Administrative Agent, the Lenders and the Obligors in
all respects, (y) shall not have been appealed from prior to the date that
is ten (10) days after the date the order was entered on the docket of the
Court (the "Appeal Period"), and (z) shall not have been modified, amended,
reversed, stayed, vacated or rescinded (the "Final Order") and (ii) the
Appeal Period shall have expired and not have been tolled by the filing of
any motion for rehearing, reconsideration or reargument;
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(e) All "first day orders" entered at the time of commencement of the
Chapter 11 Cases shall be reasonably satisfactory in form and substance to
the Administrative Agent and each Lender;
(f) The Required Noteholder Representatives shall have executed and
delivered the Restructuring Agreement;
(g) No Consenting Holders Termination Event or Safety Components
Termination Event shall have occurred;
(h) The Obligors shall have (i) transferred or caused to be
transferred to the Lenders cash in the amount of $17,000,000 in order to
effect the Closing Date Repayment and (ii) paid to the Administrative Agent
and each Lender all fees and expenses payable by the Obligors pursuant
hereto (including without limitation, all amounts described in Section
11.6) and pursuant to the Prepetition Credit Agreement which have accrued
up to the Petition Date;
(i) The Non-Surviving Letters of Credit shall have been replaced with
new letters of credit issued under the Senior DIP Facility prior to any
draw thereunder or, if any amount is drawn under the Non-Surviving Letters
of Credit prior to the Closing Date, such amount and all interest thereon
and fees, costs and expenses of the Issuing Bank and the other Lenders
associated with such draw shall have been reimbursed by the Obligors;
(j) No draw shall have been made under the Surviving Letter of Credit
or, if such a draw has been made, the amount thereof together with all
fees, costs and expenses associated therewith shall have been reimbursed to
the Issuing Bank and the Lenders in cash; and
(k) No event shall have occurred and no condition shall exist that,
with the giving of notice or the passage of time or both, would constitute
an Event of Default.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
SECTION 6.1. Representations and Warranties. The representations and
warranties set forth in Article 6 of the Senior DIP Facility Credit Agreement,
including all schedules referred to therein, are hereby incorporated by
reference in this Agreement for the benefit of the Administrative Agent and the
Lenders with the same force and effect as if set forth herein in full.
ARTICLE 7
SECURITY INTEREST
SECTION 7.1. Security Interest. (a) To secure the payment, observance and
performance of the Postpetition Obligations, each Obligor hereby restates and
confirms the mortgages, pledges, assignments and grants of Liens and security
interests made by such Obligor in favor of the Administrative Agent and the
Lenders pursuant to the Security Documents and agrees that such mortgages,
pledges, assignments, Liens and security interests will constitute continuing
security interests in and Liens on the Collateral, including without limitation,
all Collateral acquired by the Obligors after the Petition Date, in favor of the
Administrative Agent
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for the ratable benefit of the Lenders, as security for the Postpetition
Obligations. Pursuant to Sections 364(c) and (d) of the Bankruptcy Code, such
Liens and security interests will constitute valid, perfected and enforceable
security interests in and Liens on the Collateral and all proceeds, products,
substitutions and replacements thereof, subject, however, to the first priority
security interests of the Senior Lenders under the Senior DIP Facility Documents
and other Permitted Liens; provided, however, that the Administrative Agent's
and the Lenders' security interests in certain assets of GmbH granted pursuant
to the Security Documents will continue to constitute first priority security
interests securing the Postpetition Obligations. Notwithstanding anything to the
contrary herein, the Collateral will not include any avoidance actions available
to the bankruptcy estates of the Debtors pursuant to sections 542, 544, 545,
547, 548, 549, 550, 551, 553(b) and/or 724(a) of the Bankruptcy Code or the
proceeds thereof.
(b) The security interests in and Liens on the Collateral securing the
Postpetition Obligations will be senior in rank and priority to all other Liens
on and security interests in the Collateral, subject only to (a) any other
valid, perfected and enforceable security interests and Liens (i) existing as of
the Petition Date that are nonavoidable under the Bankruptcy Code or applicable
nonbankruptcy law and not otherwise subject to Section 552(a) of the Bankruptcy
Code, (ii) existing as of the Closing Date in favor of the Senior Lenders, or
(iii) arising after the Petition Date that are expressly permitted under the
Senior DIP Facility Documents, and (b) the Carve-Out. The Liens and security
interests securing the Postpetition Obligations will at all times be senior to
the rights of the Debtors and any successor trustee(s) or estate
representative(s) in any case or proceeding under the Bankruptcy Code and any
Lien or security interest in the Collateral that is avoided or otherwise
preserved for the benefit of the Debtors' estates will be subordinate to such
Liens and security interests. Subject to Section 11.1(c) below, no Liens or
security interests in the Collateral securing the Postpetition Obligations, and
no claim of the Administrative Agent or any Lender hereunder in respect of the
Postpetition Obligations, will be subject to subordination to any other Lien or
security interest or claim or to surcharge, whether under Section 506 or 510 of
the Bankruptcy Code or otherwise provided that the claims and security interests
of the Administrative Agent and the Lenders hereunder in respect of the
Postpetition Obligations will be subordinated to the claims and security
interests of the Senior Lenders as provided herein, in the Senior DIP Facility
Documents and in the Intercreditor Agreement.
(c) The Liens and security interests in the Collateral securing the
Postpetition Obligations and the Superpriority Claim will, following the
occurrence and during the continuation of an Event of Default, be subject to (a)
unpaid professional fees and disbursements allowed by order of the Court and
incurred by the Debtors, any official committee of unsecured creditors appointed
in the Chapter 11 Cases, and any disbursements of any member of such committee
and any Chapter 7 trustee appointed for the Debtors in an aggregate amount not
to exceed $500,000 (determined without regard to fees and expenses which may be
awarded and paid on an interim basis or any prepetition retainer paid to the
Debtors' counsel in connection with or related to the Chapter 11 Cases) at any
time, and (b) fees payable to the United States Trustee pursuant to 28 U.S.C.
ss. 1930(a)(6) and any fees payable to the clerk of the Court (the "Carve-Out").
The Carve-Out will exclude any fees and expenses incurred in connection with the
investigation or prosecution of any claims or causes of action against the
Administrative Agent or any Lender or in connection with any challenge to the
validity, enforceability,
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allowance, perfection or priority of the claims and/or security interests of any
of them, whether existing prior to or after the Petition Date.
(d) Each Obligor will, at its sole cost and expense, take all actions that
may be necessary or desirable, or that the Administrative Agent may reasonably
request, so as at all times to maintain the validity, perfection, enforceability
and priority of the Liens on and security interests in the Collateral in
conformity with the requirements of this Article 7, or to enable the
Administrative Agent and the Lenders to exercise or enforce their rights
hereunder and under the Security Documents, including executing and delivering
financing statements, pledges, designations, hypothecations, notices and
assignments in each case in form and substance satisfactory to the
Administrative Agent relating to the creation, validity, perfection, maintenance
or continuation of such Liens and security interests under the Uniform
Commercial Code or other applicable law.
ARTICLE 8
COVENANTS
SECTION 8.1. Affirmative Covenants. The affirmative covenants set forth in
Article 9 of the Senior DIP Facility Credit Agreement are hereby incorporated by
reference in this Agreement for the benefit of the Administrative Agent and the
Lenders with the same force and effect as if set forth herein in full. In
addition, the Debtors agree to file a Plan of Reorganization consistent with the
terms hereof, including treatment of the Lenders' claims as set forth herein.
SECTION 8.2. Information. The reporting requirements set forth in Article
10 of the Senior DIP Facility Credit Agreement are hereby incorporated by
reference in this Agreement for the benefit of the Administrative Agent and the
Lenders with the same force and effect as if set forth herein in full. The
Obligors will furnish to the Administrative Agent and each Lender, not later
than the date such item is required to be delivered to the Senior Agent and the
Senior Lenders under the Senior DIP Facility Credit Agreement, each financial
statement, certificate, report, document and notice described in Article 10 of
the Senior DIP Facility Credit Agreement.
SECTION 8.3. Negative Covenants. The financial covenants and negative
covenants set forth in Article 11 of the Senior DIP Facility Credit Agreement
are hereby incorporated by reference in this Agreement for the benefit of the
Administrative Agent and the Lenders with the same force and effect as if set
forth herein in full.
ARTICLE 9
EVENTS OF DEFAULT
SECTION 9.1. Events of Default. The "Events of Default" under and as
defined in the Senior DIP Facility Credit Agreement are hereby incorporated by
reference in this Agreement for the benefit of the Administrative Agent and the
Lenders and will constitute Events of Default hereunder unless waived by the
Senior Lenders or cured in accordance with the terms of the Senior DIP Facility
Credit Agreement; provided that no such waiver will be effective for purposes of
limiting the Lenders' rights to receive interest on the Term Loans at the
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default rate as provided in Section 2.3. In addition, the following events will
constitute Events of Default under this Agreement:
(a) Failure by the Obligors to pay any principal of or interest on the
Term Loans when due; or
(b) (i) Unless all the Lenders and the Administrative Agent otherwise
agree, the Court shall enter an order granting another superpriority claim
(other than the Superpriority Claim of the Senior Lenders and other
superpriority claims, if any, permitted under the Senior DIP Facility
Credit Agreement) pari passu with or senior to that granted to the
Administrative Agent and the Lenders pursuant to this Agreement and the
Final Order or (ii) the Final Order shall have been modified, amended,
reversed, stayed, vacated or rescinded; or
(c) The Surviving Letter of Credit shall be drawn in whole or in part
prior to its replacement by a new letter of credit issued under the Senior
DIP Facility and the amount of such draw is not reimbursed to the Issuing
Bank and/or the Lenders in cash within five calendar days; or
(d) Any Obligor or any Consenting Holder shall file any pleading or
otherwise take any action seeking or consenting to the invalidation,
reduction, subordination or other impairment of, or otherwise challenging,
the claims of the Administrative Agent or the Lenders under the Prepetition
Credit Agreement or of the Administrative Agent or the Lenders under this
Agreement or the Liens and security interests granted to secure the
Prepetition Obligations or the Postpetition Obligations, or seeking to
subject such security interest to assessment under Section 506(c) of the
Bankruptcy Code; or
(e) A Consenting Holders Termination Event or a Safety Components
Termination Event shall have occurred and not been waived in accordance
with the terms of the Restructuring Agreement.
SECTION 9.2. Remedies. Upon the occurrence and during the continuance of
any Event of Default, the Administrative Agent may, and at the direction of the
Lenders shall, take any or all of the following actions without further order of
or application to the Court:
(a) declare the principal of and accrued interest on the Term Loans to
be immediately due and payable; and
(b) take any other action or exercise any other right or remedy
provided for under the Security Documents or otherwise permitted under
applicable law, subject, however, to compliance with the Intercreditor
Agreement and the provision of five (5) days' prior written notice to the
Debtors and any official committee of creditors appointed in the Chapter 11
Cases pursuant to Section 1102 of the Bankruptcy Code (a "Creditors
Committee").
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ARTICLE 10
GUARANTEE
SECTION 10.1. Guarantee. (a) The Guarantors hereby jointly and severally
guarantee to the Administrative Agent and the Lenders the prompt payment in full
when due (whether at stated maturity, by acceleration or otherwise) of the Term
Loans and all of the other Postpetition Obligations hereunder, including any
interest, fees and expenses accrued or incurred after the filing by or against
any Obligor of any petition seeking relief in bankruptcy or under any act or law
pertaining to insolvency or debtor relief, regardless of whether such interest,
fees and expenses are allowable in any such proceeding (collectively, the
"Guaranteed Obligations"), in each case strictly in accordance with the terms of
this Agreement and the Term Loan Notes. The Guarantors hereby further jointly
and severally agree that if any Borrower shall fail to pay in full when due
(whether at stated maturity, by acceleration or otherwise) any of the Guaranteed
Obligations, the Guarantors will promptly pay the same, without any demand or
notice whatsoever, and that in the case of any extension of time of payment or
renewal of any of the Guaranteed Obligations, the same will be promptly paid in
full when due (whether at extended maturity, by acceleration or otherwise) in
accordance with the terms of such extension or renewal.
(b) The obligations of the Guarantors hereunder are absolute and
unconditional, joint and several, irrespective of the value, genuineness,
validity, regularity or enforceability of the obligations of the Borrowers under
this Agreement or the Term Loan Notes or any substitution, release or exchange
of any other guarantee of or security for any of the Guaranteed Obligations,
and, to the fullest extent permitted by applicable law, irrespective of any
other circumstance whatsoever that might otherwise constitute a legal or
equitable discharge of defense of a surety or guarantor, it being the intent
hereof that the obligations of the Guarantors hereunder will be absolute and
unconditional, and joint and several, under all circumstances. Without limiting
the generality of the foregoing, it is agreed that each Guarantor's obligations
hereunder will be absolute and unconditional irrespective of: (i) any lack of
validity or enforceability of any of the Borrowers' obligations hereunder or of
any agreement or instrument relating thereto; (ii) any change in the time,
manner or place of payment of, or in any other term of, all or any part of the
Guaranteed Obligations, or any other amendment or waiver thereof or any consent
to departure therefrom, including any increase in the Guaranteed Obligations
resulting from the extension of additional credit to any Borrower or otherwise;
(iii) any taking, exchange, release or non-perfection of any Collateral, or any
release or amendment or waiver of or consent to departure from any guaranty for
all or any of the Guaranteed Obligations; (iv) any change, restructuring or
termination of the corporate structure or existence of any Obligor; or (v) any
other circumstance which might otherwise constitute a defense available to, or a
discharge of, any Guarantor.
(c) Each Guarantor agrees that the joint and several liability of the
Guarantors provided for in this Section 10.1 will not be impaired or affected by
any modification, supplement, extension or amendment or any contract or
agreement to which the other Obligors may hereafter agree (other than an
agreement signed by the Administrative Agent and the Lenders specifically
releasing such liability), nor by any delay, extension of time, renewal,
compromise or other indulgence granted by the Administrative Agent or any Lender
with respect to any of the Guaranteed Obligations, nor by any other agreements
or arrangements whether with
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the other Obligors or with anyone else, each Guarantor hereby waiving all notice
of such delay, extension, release, substitution, renewal, compromise or other
indulgence, and hereby consenting to be bound thereby as fully and effectually
as if it had expressly agreed thereto in advance. The liability of each
Guarantor is direct and unconditional as to all of the Guaranteed Obligations,
and may be enforced without requiring the Administrative Agent or any Lender
first to resort to any other right, remedy or security. Each Guarantor hereby
expressly waives promptness, diligence, notice of acceptance and any other
notice (except to the extent expressly provided for herein) with respect to any
of the Guaranteed Obligations or this Agreement and any requirement that the
Administrative Agent or any Lender protect, secure, perfect or insure any Lien
or any property subject thereto or exhaust any right or take any action against
any Borrower or any other Person or any Collateral.
(d) The obligations of the Guarantors hereunder will be automatically
reinstated if and to the extent that for any reason any payment by or on behalf
of any Obligor in respect of any of the Guaranteed Obligations is rescinded or
must be otherwise restored by any holder of any of the Guaranteed Obligations,
whether as a result of any proceedings in bankruptcy or reorganization or
otherwise, and the Guarantors jointly and severally agree that they will
indemnify the Administrative Agent and each Lender on demand for all reasonable
costs and expenses (including fees of counsel as provided in Section 11.6)
incurred by the Administrative Agent and the Lenders in connection with such
recission or restoration, including any such costs and expenses incurred in
defending against any claim alleging that such payment constituted a preference,
fraudulent transfer or similar payment under any bankruptcy, insolvency or
similar law.
(e) The Guarantors jointly and severally agree that, as between the
Guarantors and the Administrative Agent and the Lenders, the Guaranteed
Obligations may be declared to be forthwith due and payable as provided herein
(and shall be deemed to have become automatically due and payable in the
circumstances provided herein) for purposes hereof, notwithstanding any stay,
injunction or other prohibition preventing such declaration (or such Guaranteed
Obligations from becoming automatically due and payable) as against any Borrower
and that, in the event of such declaration (whether or not the Guaranteed
Obligations are then due and payable by any Borrower), the Guaranteed
Obligations will forthwith become due and payable by the Guarantors for purposes
hereof.
(f) The guaranty set forth herein is a continuing guaranty, and will apply
to all Guaranteed Obligations, whenever and howsoever arising.
ARTICLE 11
MISCELLANEOUS
SECTION 11.1. Obligor Acknowledgment; Release.
(a) The Obligors hereby represent, warrant, acknowledge, covenant and agree
for all purposes hereof that (i) as of the Petition Date, the Prepetition
Obligations totalled not less than $38,867,766, including all principal,
interest, letter of credit fees, other fees, costs, expenses and other charges
and contingent reimbursement obligations in respect of the Prepetition Letters
of Credit, but excluding certain professional fees (such amount being referred
to herein as the
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"Claim Amount"), (ii) the claims comprising the Claim Amount constitute valid
and enforceable allowed claims under the Bankruptcy Code free of defense, offset
or counterclaim, (iii) the mortgages, Liens and security interests in the
Collateral granted in favor of the Administrative Agent for the ratable benefit
of the Lenders pursuant to the Security Documents are valid and enforceable,
duly perfected first priority mortgages, Liens and security interests and are
not subject to any prior Lien, defense, offset or counterclaim, other than
Permitted Liens (as defined in the Prepetition Credit Agreement) existing on the
Petition Date, (iv) the value of the Collateral is not less than the Claim
Amount and (v) each Obligor waives any claim under ss. 506(c) of the Bankruptcy
Code with respect to the Collateral or the Lenders' interests therein.
(b) In consideration of the agreements of the Administrative Agent and the
Lenders provided herein, each Obligor, with the intent of binding itself and its
representatives, agents, directors, officers, employees, affiliates, attorneys,
principals, estate, successors and assigns, hereby releases, remises and forever
discharges the Administrative Agent and each Lender and their respective
representatives, agents, affiliates, attorneys, principals, estates, successors
and assigns, from any and all claims, liabilities, actions, causes of action,
judgments or suits which may now or in the future be alleged or asserted by such
Obligor against the Administrative Agent or any Lender in respect of the
Prepetition Credit Documents, including the financial accommodations extended by
the Lenders (including KeyBank as Issuing Bank) thereunder, all payments made to
the Lenders thereunder (whether prior to or after the Petition Date), the
claims, Liens and security interests granted to the Administrative Agent and the
Lenders thereunder and all other transactions entered into in connection
therewith (collectively, the "Released Claims").
(c) Notwithstanding anything to the contrary contained herein, any
Creditors Committee and any other Person with the requisite standing (other than
the Debtors and the Consenting Holders) shall have 45 calendar days from the
date of appointment of a Creditors Committee to file and serve any complaint or
other pleading asserting any Released Claim, except that such Persons shall have
no recourse to the Closing Date Repayment or the Prepetition Letters of Credit
or any replacements thereof, their only recourse being to the Term Loans
extended hereunder. If no such complaint or other pleading is timely filed, the
full release provided in paragraph (b) above will become final and binding on
all Persons.
SECTION 11.2. Effect on Plan of Reorganization. None of the rights granted
to the Administrative Agent or the Lenders pursuant hereto or pursuant to the
Final Order or any order entered by the Court approving the use of cash
collateral will be modified, altered or impaired in any way by any Plan of
Reorganization, confirmation order or otherwise without the prior written
consent of the Administrative Agent and each Lender.
SECTION 11.3. Exit Facility. In connection with the consummation of a Plan
of Reorganization for the Debtors, and subject to the satisfaction of each of
the conditions set forth on Schedule 4 hereto, the Administrative Agent and each
Lender will agree to extend the Termination Date with respect to the Term Loans
on the terms set forth on Schedule 5 hereto.
SECTION 11.4. Governing Law; Submission to Jurisdiction; Venue; Waiver of
Jury Trial. THIS AGREEMENT AND THE TERM LOAN NOTES AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER WILL
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BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK. THE OBLIGORS, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF
ANY KIND OR NATURE IN ANY COURT IN WHICH AN ACTION MAY BE COMMENCED BY OR
AGAINST THE OBLIGORS (OR ANY OF THEM), THE ADMINISTRATIVE AGENT OR THE LENDERS
ARISING OUT OF THIS AGREEMENT, THE TERM LOAN NOTES, THE COLLATERAL OR ANY
ASSIGNMENT THEREOF OR BY REASON OF ANY OTHER CAUSE OR DISPUTE WHATSOEVER BETWEEN
THE OBLIGORS (OR ANY OF THEM) AND THE ADMINISTRATIVE AGENT OR ANY LENDER OF ANY
KIND OR NATURE. THE OBLIGORS, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY
AGREE THAT THE FEDERAL COURT OF DISTRICT OF DELAWARE OR, AT THE OPTION OF THE
ADMINISTRATIVE AGENT OR ANY LENDER, ANY COURT IN WHICH THE ADMINISTRATIVE AGENT
OR SUCH LENDER SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS
SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY, SHALL HAVE
NONEXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN
THE OBLIGORS (OR ANY OF THEM) AND THE ADMINISTRATIVE AGENT OR SUCH LENDER,
PERTAINING DIRECTLY OR INDIRECTLY TO THIS AGREEMENT, THE TERM LOAN NOTES OR TO
ANY MATTER ARISING THEREFROM. EACH OBLIGOR EXPRESSLY SUBMITS AND CONSENTS IN
ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED IN SUCH
COURTS, HEREBY WAIVING PERSONAL SERVICE OF THE SUMMONS AND COMPLAINT, OR OTHER
PROCESS OR PAPERS ISSUED THEREIN AND AGREEING THAT SERVICE OF SUCH SUMMONS AND
COMPLAINT OR OTHER PROCESS OR PAPERS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO THE OBLIGORS AT THE ADDRESS OF SAFETY COMPONTENTS SET FORTH IN
SECTION 11.7. THE NONEXCLUSIVE CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL
NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT OBTAINED IN SUCH FORUM
OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY
APPROPRIATE JURISDICTION.
SECTION 11.5. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same agreement. A set of counterparts
executed by all the parties hereto shall be lodged with the Safety Components
and the Administrative Agent.
SECTION 11.6. Payment of Expenses etc. The Obligors agree to: (a) whether
or not the transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of the Administrative Agent in connection with
(i) the Chapter 11 Cases and (ii) the negotiation, preparation, execution and
delivery of this Agreement and the documents and instruments referred to herein
and any amendment, waiver or consent relating thereto (including, without
limitation, the reasonable fees and disbursements of Jones, Day, Reavis & Pogue
and Young Conaway Stargatt & Taylor, special counsels to the Administrative
Agent and
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the Lenders, and of Conway MacKenzie & Dunleavy, advisors to Jones, Day, Reavis
& Pogue, as counsel to the Administrative Agent and the Lenders), and of the
Administrative Agent in connection with the enforcement of this Agreement and
the documents and instruments referred to herein (including, without limitation,
the reasonable fees and disbursements of counsel for the Administrative Agent);
(b) pay on demand all reasonable costs and expenses incurred by the
Administrative Agent and for each of the Lenders, including the fees and
disbursements of counsel, experts and other consultants to the Administrative
Agent and each of the Lenders, in connection with any actions taken after the
occurrence of an Event of Default to obtain payment of the Postpetition
Obligations, enforce the Liens and security interests of the Administrative
Agent and the Lenders, sell or otherwise realize upon the Collateral, and
otherwise enforce the provisions hereof and of the Security Documents, or to
prosecute or defend any claim in any way arising out of, related to or connected
with, this Agreement or any of the Security Documents (except to the extent such
may be prohibited by the terms of the Final Order); (c) pay and hold the
Administrative Agent and each of the Lenders harmless from and against any and
all present and future stamp and other similar taxes with respect to the
foregoing matters and save the Administrative Agent and each of the Lenders
harmless from and against any and all liabilities with respect to or resulting
from any delay or omission (other than to the extent attributable to such
Lender) to pay such taxes; and (d) indemnify the Administrative Agent and each
Lender, its officers, directors, employees, representatives and agents
(collectively, the "Indemnitees") from and hold each of them harmless against
any and all losses, liabilities, claims, damages or expenses reasonably incurred
by any of them as a result of, or arising out of, or in any way related to, or
by reason of (i) any investigation, litigation or other proceeding (whether or
not any Lender is a party thereto) related to the entering into and/or
performance of this Agreement or the use of the proceeds of the Term Loans or
the consummation of any transactions contemplated in this Agreement, other than
any such investigation, litigation or proceeding arising out of transactions
solely between any of the Lenders or the Administrative Agent, transactions
solely involving the assignment by a Lender of all or a portion of its Term
Loans, or the granting of participations therein, as provided in this Agreement,
or arising solely out of any examination of a Lender by any regulatory authority
having jurisdiction over it, or relating to the assertion of a Released Claim to
the extent permitted under Section 11.1(c), or (ii) any Environmental Claim in
respect of any real property owned, leased or at any time operated by any
Obligor, including, in each case, without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such investigation,
litigation or other proceeding (but excluding any such losses, liabilities,
claims, damages or expenses to the extent incurred by reason of the gross
negligence or willful misconduct of the person to be indemnified or of any other
Indemnitee who is such person or an affiliate of such person). To the extent
that the undertaking to indemnify, pay or hold harmless any person set forth in
the preceding sentence may be unenforceable because it is violative of any law
or public policy, the Obligors will make the maximum contribution to the payment
and satisfaction of each of the indemnified liabilities which is permissible
under applicable law. All costs and expenses payable by the Obligors pursuant to
this Section 11.6 will be paid on a monthly basis, subject to compliance by the
Administrative Agent and the Lenders with any notice procedures set forth in any
administrative order entered by the Court.
SECTION 11.7. Notices. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder will be in writing
(including telegraphic, telex, facsimile transmission or cable communication)
and mailed, telegraphed,
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telexed, transmitted, cabled or delivered, (a) if to any Obligor to such Obligor
at Safety Components International, Inc., Corporate Center, 40 Emery Street,
Greenville, South Carolina 29605, attention: Brian P. Menezes, Telefax no.:
(864) 240-2726, with a copy to Milbank, Tweed, Hadley & McCloy LLP, 1 Chase
Manhattan Plaza, New York, New York 10005-1413, attention: Luc A. Despins, Esq.,
Telefax no.: (212) 530-5219; (b) if to the Administrative Agent or KeyBank at
KeyBank National Association, 66 S. Pearl Street, 5th Floor, Albany, New York
12207, attention: Leslie A. Jones, Telefax no.: (518) 487-4247, with a copy to
Jones, Day, Reavis & Pogue, 599 Lexington Avenue, New York, New York 10022,
attention: Cindy Tzerman and Michael R. Bassett, Telefax no.: (212) 755-7306;
(c) if to Fleet, at Fleet Bank, 777 Main Street, CTMOH21, Hartford, Connecticut
06115, attention: Scott A. Lessne and Andrew Maidman, Telefax no.: (860)
986-5076; or (d) at such other address as shall be designated by any party in a
written notice to the other parties hereto. All such notices and communications
shall be mailed, telegraphed, telexed, telecopied, or cabled or sent by
overnight courier, and shall be effective when received.
SECTION 11.8. Agency. The provisions set forth in Section 11 of the
Prepetition Credit Agreement are hereby incorporated by reference in this
Agreement for the benefit of the Administrative Agent and the Lenders with the
same effect as if set forth herein in full. Each reference in Section 11 of the
Prepetition Credit Agreement to "Agreement" will mean this Agreement, each
reference to "Credit Documents" will mean this Agreement, the Term Loan Notes
and the Security Documents and each reference to "Default" or "Event of Default"
will mean "Event of Default" as defined in this Agreement.
SECTION 11.9. Amendment or Waiver. Neither this Agreement nor any terms
hereof may be changed, waived, discharged or terminated unless such change,
waiver, discharge or termination is in writing signed by the Obligors, the
Administrative Agent and the Required Lenders, provided that no such change,
waiver, discharge or termination shall, without the consent of each Lender
affected thereby, (i) extend the Termination Date, reduce the rate or extend the
time of payment of interest, or reduce the principal amount of such Lender's
Term Loans, (ii) release any Obligor from its respective obligations under this
Agreement, (iii) release all or substantially all of the Collateral, (iv) amend,
modify or waive any provision of this Section 11.9., (v) reduce the percentage
specified in, or otherwise modify, the definition of Required Lenders, (vi)
consent to the assignment or transfer by any Obligor of any of its rights and
obligations under this Agreement or (vii) modify the Superpriority Claim status
of the Postpetition Obligations. Section 11.8 hereof may not be amended without
the written consent of the Administrative Agent.
SECTION 11.10. Assignments and Participations. The Term Loans and the
rights and interests of the Lenders hereunder will be freely assignable by each
Lender, subject to the prior written consent of the Administrative Agent
(provided that any assignment by KeyBank will require the consent of Fleet),
which consent will not be unreasonably withheld. Each assignment will be by
novation. Each Lender will have the right to sell participations in its Term
Loans, subject to customary voting limitations.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers in several counterparts all as of the
day and year first written above.
BORROWERS: SAFETY COMPONENTS INTERNATIONAL, INC.
By: __________________________________
Its: __________________________________
AUTOMOTIVE SAFETY COMPONENTS
GMBH & CO. KG
By: __________________________________
Its: __________________________________
AUTOMOTIVE SAFETY COMPONENTS
INTERNATIONAL LIMITED
By: __________________________________
Its: __________________________________
GUARANTORS: AUTOMOTIVE SAFETY COMPONENTS
INTERNATIONAL, INC.
By: __________________________________
Its: __________________________________
ASCI HOLDINGS GERMANY (DE), INC.
By: __________________________________
Its: __________________________________
ASCI HOLDINGS CZECH (DE), INC.
By: __________________________________
Its: __________________________________
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ASCI HOLDINGS MEXICO (DE), INC.
By: __________________________________
Its: __________________________________
ASCI HOLDINGS ASIA (DE), INC.
By: __________________________________
Its: __________________________________
ASCI HOLDINGS POLAND (DE), INC.
By: __________________________________
Its: __________________________________
VALENTEC SYSTEMS, INC.
By: __________________________________
Its: __________________________________
GALION, INC.
By: __________________________________
Its: __________________________________
VALENTEC INTERNATIONAL
CORPORATION, LLC
By: __________________________________
Its: __________________________________
SAFETY COMPONENTS FABRIC
TECHNOLOGIES, INC.
By: __________________________________
Its: __________________________________
ASCI HOLDINGS UK (DE), INC.
By: __________________________________
Its: __________________________________
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ADMINISTRATIVE AGENT: KEYBANK NATIONAL ASSOCIATION
By: __________________________________
Its: __________________________________
LENDERS: KEYBANK NATIONAL ASSOCIATION
By: __________________________________
Its: __________________________________
FLEET BANK
By: __________________________________
Its: __________________________________
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Schedule 1
Guarantors
Automotive Safety Components International, Inc.
ASCI Holdings Germany (DE), Inc.
ASCI Holdings Czech (DE), Inc.
ASCI Holdings Mexico (DE), Inc.
ASCI Holdings Asia (DE), Inc.
ASCI Holdings Poland (DE), Inc.
ASCI Holdings UK (DE), Inc.
Valentec Systems Inc.
Galion, Inc.
Valentec International Corporation, LLC
Safety Components Fabric Technologies, Inc.
<PAGE>
Schedule 2
Debtors
Safety Components International, Inc.
Safety Components Fabric Technologies, Inc.
Automotive Safety Components International, Inc.
ASCI Holdings UK (DE), Inc.
ASCI Holdings Mexico (DE), Inc.
ASCI Holdings Germany (DE), Inc.
ASCI Holdings Czech (DE), Inc.
<PAGE>
Schedule 3
Definitions
"Administrative Agent": as defined in the preamble hereto.
"Agreement": this Subordinated Secured Superpriority Debtor-in-Possession Credit
Agreement, including all Schedules hereto, as amended, supplemented or otherwise
modified from time to time.
"Appeal Period": as defined in Section 5.1(d).
"ASCL": as defined in the preamble hereto.
"Bankruptcy Code": as defined in Recital B.
"Borrowers": as defined in the preamble hereto.
"Carve-Out": as defined in Section 7.1(c).
"Chapter 11 Cases": as defined in Recital B.
"Claim Amount": as defined in Section 11.1.
"Closing Date": as defined in Section 5.1.
"Closing Date Repayment": the permanent and indefeasible payment of $17,000,000
of the Prepetition Obligations made by the Obligors to the Lenders on the
Closing Date from the proceeds of the initial borrowings under the Senior DIP
Facility (to the extent such amount is not otherwise paid from funds held by the
Obligors on the Closing Date).
"Collateral": as defined in the Prepetition Credit Documents; provided that the
Collateral will include all Collateral acquired by any Obligor after the
Petition Date and all additional collateral of each Obligor granted to or
pledged to or in favor of, or for the benefit of, the Administrative Agent
and/or the Lenders to secure the Postpetition Obligations. Notwithstanding the
foregoing, the Collateral will not include any avoidance actions available to
the bankruptcy estates of the Debtors pursuant to Sections 542, 544, 545, 547,
548, 549, 550, 551, 553(b) and/or 724(a) of the Bankruptcy Code or the proceeds
thereof.
"Consolidated EBITDA": as defined in Schedule 5.
"Consenting Holders": Noteholders which are signatories to the Restructuring
Agreement.
"Consenting Holders Termination Event": as defined in the Restructuring
Agreement.
<PAGE>
"Consummation Date": the date of substantial consummation of a Plan of
Reorganization in the Chapter 11 Cases (which for purposes hereof will not be
later than the effective date of such Plan of Reorganization).
"Consummation Date Reduction Amount": as defined on Schedule 5.
"Court": as defined in Recital B.
"Creditors Committee": as defined in Section 9.2(b).
"Debtors": as defined in Recital B.
"Event of Default": each "Event of Default" under and as defined in the Senior
DIP Facility Documents and each other event or occurrence described in Section
10.1 hereof.
"Environmental Claim": as defined in the Prepetition Credit Agreement.
"Final Order": as defined in Section 5.1(d).
"Fleet": as defined in the preamble hereto.
"GmbH": as defined in the preamble hereto.
"Guaranteed Obligations": as defined in Section 10.1.
"Guarantors": as defined in the preamble hereto.
"Indemnities": as defined in Section 11.6.
"Intercreditor Agreement": the Intercreditor Subordination Agreement dated as of
April 7, 2000 by and between the Senior Agent and the Administrative Agent.
"Issuing Bank": KeyBank as issuer of the Prepetition Letters of Credit under the
Prepetition Credit Agreement.
"KeyBank": as defined in the preamble hereto.
"Lenders": as defined in the preamble hereto.
"Liens": as defined in the Prepetition Credit Agreement.
"Loan Amount": as defined in Section 2.1.
"Non-Surviving Letters of Credit": as defined in Section 3.1(b).
"Noteholders": the holders (including investment managers or advisors for
certain discretionary accounts that are holders or beneficial owners) of the
Senior Notes.
"Obligors": the collective reference to the Borrowers and the Guarantors.
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"Permitted Liens": as defined in the Senior DIP Facility Credit Agreement.
"Person": an individual, limited liability company, corporation, partnership,
association, trust or unincorporated organization, joint venture or other entity
or a government or any agency or political subdivision thereof.
"Petition Date": as defined in Recital B.
"Plan of Reorganization": a confirmed plan of reorganization in the Chapter 11
Cases.
"Postpetition Obligations": in each case, whether now in existence or hereafter
arising, (a) the principal of and interest on the Term Loans, (b) the
obligations of the Obligors to reimburse the Issuing Bank and/or the Lenders in
respect of any draws under the Prepetition Letters of Credit and all other
obligations of the Obligors in respect of the Prepetition Letters of Credit, and
(c) all indebtedness, liabilities, obligations, covenants and duties of the
Obligors to the Administrative Agent and the Lenders of every kind, nature and
description arising under or in respect of this Agreement or the Term Notes,
whether direct or indirect, absolute or contingent, due or not due, contractual
or tortious, liquidated or unliquidated, and whether or not evidenced by any
note, and whether or not for the payment of money, including expenses required
to be paid pursuant to Section 12.6.
"Prepetition Credit Agreement": as defined in Recital A.
"Prepetition Credit Documents": collectively, the Prepetition Credit Agreement
and the Security Documents.
"Prepetition Letters of Credit": as defined in Recital A.
"Prepetition Obligations": as defined in Recital A.
"Released Claims": as defined in Section 11.1(b).
"Required Lenders": Lenders holding at least 51% of the principal amount of the
outstanding Term Loans.
"Required Noteholder Representatives": Noteholders that collectively hold in
excess of two thirds (66-2/3) in amount of the Senior Notes.
"Restructuring Agreement": the Restructuring Agreement dated as of April 6, 2000
by and among Safety Components and its subsidiaries named therein, Robert A.
Zummo and the Consenting Holders named therein in the form of Exhibit C hereto.
"Safety Components": as defined in the preamble hereto.
"Safety Components Termination Event": as defined in the Restructuring
Agreement.
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"Security Documents": the documents listed on Schedule 7 hereto pursuant to
which the Obligors granted certain Liens and security interests to the
Administrative Agent for the ratable benefit of the Lenders to secure the
Prepetition Obligations.
"Senior Agent": as defined in Recital C.
"Senior DIP Facility": as defined in Recital C.
"Senior DIP Facility Borrowers": as defined in Recital C.
"Senior DIP Facility Credit Agreement": as defined in Recital C.
"Senior DIP Facility Documents": as defined in Recital C.
"Senior DIP Facility Guarantors": as defined in Recital C.
"Senior Exit Facility": as defined on Schedule 4.
"Senior Lenders": as defined in Recital C.
"Senior Notes": Safety Components' 10-1/8% Senior Subordinated Notes due 2007,
Series B.
"Subordinated DIP Facility": the term loan facility provided under this
Agreement.
"Subordinated DIP Facility Documents": collectively, this Agreement and the Term
Loan Notes.
"Subordinated Exit Facility Term Loans": as defined on Schedule 5.
"Superpriority Claim": as defined in Section 4.4.
"Surviving Letter of Credit": as defined in Section 3.1(a).
"Term Loans": as defined in Section 2.1.
"Term Loan Note": as defined in Section 2.4.
"Termination Date": as defined in Section 2.2.
"Uniform Commercial Code": the Uniform Commercial Code as in effect from time to
time in the State of New York or in any other state the laws of which are
required by Section 9-103 thereof to be applied in connection with the issue of
perfection of security interests.
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Schedule 4
Conditions to Exit Facility
Each of the following conditions must be satisfied, unless waived by the
Administrative Agent and the Lenders: (i) Safety Components shall have entered
into a senior credit facility (the "Senior Exit Facility") providing for
extensions of credit in an amount not less than the amount required to repay all
indebtedness under the Senior DIP Facility and otherwise in form and substance
reasonably satisfactory to the Administrative Agent and the Lenders in all
material respects customary for facilities of this type, (ii) none of the
Obligors, any creditor of any Obligor or any other party in interest shall have
(a) challenged the validity, enforceability, allowance, perfection or priority
of any of the claims and security interests of the Lenders under the Prepetition
Credit Documents or the Subordinated DIP Facility Documents or the Closing Date
Repayment (unless such challenge has been withdrawn or dismissed) or (b)
otherwise asserted any Released Claim (unless such claim or assertion thereof
has been withdrawn or dismissed), (iii) the absence of any Event of Default,
(iv) the Administrative Agent and the Lenders shall have received payment of all
accrued and unpaid interest, fees and reasonable expenses (including without
limitation, reasonable attorneys' and other professionals' fees and expenses)
under the Subordinated DIP Facility Documents, including without limitation, all
accrued interest under Section 2.3, and (v) the Plan of Reorganization shall
provide for (a) the conversion to equity of all indebtedness under the Senior
Notes as provided in the Restructuring Agreement, (b) the complete release by
each Obligor, each creditor of each Obligor and each other party in interest of
all Released Claims and all claims of any type or nature that arise out of or
relate to the financial accommodations extended by the Lenders under the
Subordinated DIP Facility Documents and (c) treatment of the Term Loans and the
Subordinated Exit Facility Term Loans consistent with the terms of this
Agreement (including as specified on Schedule 5) and the Final Order.
<PAGE>
Schedule 5
Subordinated Exit Facility Terms and Conditions
Subject to the satisfaction of the terms and conditions set forth on Schedule 4
and the other terms and conditions set forth below, the Lenders will agree that
the Term Loans may remain outstanding after consummation of a Plan of
Reorganization as term loans ("Subordinated Exit Facility Term Loans")
subordinated to the Senior Exit Facility on substantially the same terms and
conditions as provided in this Agreement and the Intercreditor Agreement, with
the following modifications and additional terms:
Type and Amount: Subordinated Exit Facility Term Loans in a principal amount
equal to the principal amount of the Term Loans outstanding
on the Consummation Date less an amount equal to 50% of the
amount by which the availability under the Senior Exit
Facility on the Consummation Date exceeds $35,000,000 (the
"Consummation Date Reduction Amount"). On the Consummation
Date, the Term Loans outstanding on such date will be paid
in an amount equal to the Consummation Date Reduction
Amount.
Maturity Date: The earlier of (i) the third anniversary of the Closing Date
of the Subordinated DIP Facility and (ii) the second
anniversary of the Consummation Date.
Interest: Interest will be paid in cash on a monthly basis.
Prepayments: At the end of each of Safety Component's fiscal quarters, to
the extent Consolidated EBITDA exceeds (i) for the first
full fiscal quarter after the Consummation Date, $4,000,000
or (ii) for each fiscal quarter thereafter, $3,750,000, the
Subordinated Exit Facility Term Loans shall be prepaid in an
amount equal to 65% of the amount in excess of $4,000,000 or
$3,750,000, as the case may be. For purposes hereof,
"Consolidated EBITDA" means with respect to Safety
Components on a consolidated basis with its subsidiaries for
any period, net income for such period (a) plus, without
duplication and to the extent deducted in computing net
income for such period, the sum of (i) income taxes, (ii)
interest expense, (iii) depreciation and amortization
expense and (iv) other non-cash charges reasonably
acceptable to the Administrative Agent, (b) minus, to the
extent included in net income for such period, extraordinary
gains (all such amounts to be determined in accordance with
GAAP).
Collateral and
Subordination: The Subordinated Exit Facility Term Loans will be secured by
the Collateral on substantially the same terms as provided
herein and such security interests will be subordinated to
the security interests granted to secure the Senior Exit
Facility on substantially the same terms and conditions as
provided in the Intercreditor Agreement. In addition, if
required by the terms of the Senior Exit Facility, the
security interest in any assets of the
<PAGE>
Obligors securing the Subordinated Exit Facility Term Loans
which are not included in the collateral for the Senior DIP
Facility will be subordinated to the security interest, if
any, in such assets granted in favor of such providers of
the Senior Exit Facility on substantially the same terms and
conditions as provided in the Intercreditor Agreement with
respect to the other Collateral.
Conditions
Precedent: Safety Components shall have entered into a Senior Exit
Facility satisfactory to the Administrative Agent and the
Lenders (i) satisfying the conditions specified on Schedule
4, (ii) having subordination terms similar to those in the
Intercreditor Agreement, except that the payments and
prepayments described herein, including, without limitation,
interest, costs, expenses, required prepayments and the
payment in full of the outstanding Subordinated Facility
Term Loans on the Maturity Date will be permitted whether or
not any amounts remain outstanding under the Senior Exit
Facility at the time of such payment, and (iv) having other
terms and conditions customarily found in loan documents for
financings of this type. No Obligor shall be obligated with
respect to any indebtedness which is senior to the
Subordinated Exit Facility Term Loans other than the
indebtedness under the Senior Exit Facility.
Covenants: The covenants incorporated by reference herein from the
Senior DIP Facility Documents will be modified to conform to
those contained in the documentation for the Senior Exit
Facility, subject to the Lenders' reasonable satisfaction
therewith.
Other Terms: Such other modifications to this Agreement, and such other
terms and conditions, as may be appropriate for facilities
of this type.
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<PAGE>
Schedule 6
Security Documents
1. Mortgages:
A. Open End Mortgage, Assignment of Leases and Security Agreement from
Galion, Inc. to KeyBank, as Collateral Agent, dated as of May 21, 1997
and recorded in Crawford County, Ohio at book 524, page 470.
B. Open End Mortgage, Assignment of Leases and Security Agreement from
Safety Components Fabric Technologies, Inc. ("SCFTI") to KeyBank, as
Collateral Agent, dated as of July 15, 1997 and recorded in the RMC
Office for Greenville County, South Carolina on July 31, 1997 at 2:23
p.m. in Mortgage Book 2898 at Page 227.
2. Security Agreement among SCI, the other Assignors named therein and
KeyBank, dated as of May 21, 1997.
3. Amendment No. 1 to Security Agreement, dated as of June 2, 1997.
4. Amendment No. 2 to Security Agreement, dated as of July 15, 1997.
5. Amendment No. 3 to Security Agreement, dated as of July 30, 1998.
6. Amendment No. 4 to Security Agreement, dated as of February 9, 1999.
7. Agreement of Creation of Security Interest on Receivables, Inventory and
Equipment between KeyBank and Phoenix Airbag GmbH & Co., dated as of May
21, 1997.
8. Mortgage between ASCI Holdings UK (DE), Inc. and KeyBank, dated as of May
21, 1997. (Pledge by ASCI Holdings UK (DE), Inc. of the shares of stock of
ASCI Ltd.)
9. Pledge Agreement between SCI, the other Pledgors named therein and KeyBank,
dated as of May 21, 1997.
10. Amendment No. 1 to Pledge Agreement, dated as of June 2, 1997.
11. Amendment No. 2 to Pledge Agreement, dated as of July 15, 1997.
12. Amendment No. 3 to Pledge Agreement, dated as of July 30, 1998.
13. Amendment No. 4 to Pledge Agreement, dated as of February 9, 1999.
<PAGE>
14. Assignment of Life Insurance Policy by SCI to KeyBank, dated as of May 21,
1997.
15. Collateral of Assignment of Patents and Security Agreement between SCFTI
and KeyBank, dated as of July 15, 1997.
16. Collateral of Assignment of Trademarks and Security Agreement between SCFTI
and KeyBank, dated as of July 15, 1997.
17. Patent Assignments:
A. Assignment from Valentec International to KeyBank (09/303238)
B. Assignment from SCI to KeyBank (74/735020)
C. Assignment from SCI to KeyBank (08/787743, 08/656661, 08/683758)
D. Assignment from SCI to KeyBank (09/016097, 09/298085, 588176)
18. Cash Collateral Agreement between KeyBank and McDonald Investments Inc.,
dated as of February 7, 2000.
19. UCC-1 Financing Statements with KeyBank National Association as Secured
Party
2
