-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HsMg+wcvWNNjwacqpJsblGjLXHGWW/E8ZKhFcKATaA9UGNKhkheGkX1ERRYfNGHA 6XbEyhmQ2KVXhAUkLRZ7qw== 0000950144-96-002524.txt : 19960619 0000950144-96-002524.hdr.sgml : 19960619 ACCESSION NUMBER: 0000950144-96-002524 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: HARVARD INDUSTRIES INC CENTRAL INDEX KEY: 0000046012 STANDARD INDUSTRIAL CLASSIFICATION: 3060 IRS NUMBER: 210715310 STATE OF INCORPORATION: FL FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-21362 FILM NUMBER: 96566329 BUSINESS ADDRESS: STREET 1: 2502 N ROCKY POINT DR STE 960 CITY: TAMPA STATE: FL ZIP: 33607 BUSINESS PHONE: 8132885000 MAIL ADDRESS: STREET 1: 2502 N ROCKY POINT DRIVE STREET 2: SUITE 960 CITY: TAMPA STATE: FL ZIP: 33607 FORMER COMPANY: FORMER CONFORMED NAME: HARVARD BREWING CO DATE OF NAME CHANGE: 19710315 10-Q 1 HARVARD INDUSTRIES, INC. FORM 10-Q 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 15, 1996 =============================================================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------ FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NO. 0-21362 ---------------- HARVARD INDUSTRIES, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 21-0715310 (STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER IDENTIFICATION NO.) OF INCORPORATION OR ORGANIZATION) 2502 N. ROCKY POINT DRIVE, SUITE 960 TAMPA, FLORIDA 33607 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(813) 288-5000 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) ------------------- INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES [X] NO [ ] APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: INDICATE BY CHECK MARK WHETHER THE REGISTRANT HAS FILED ALL DOCUMENTS AND REPORTS REQUIRED TO BE FILED BY SECTION 12, 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 SUBSEQUENT TO THE DISTRIBUTION OF SECURITIES UNDER A PLAN CONFIRMED BY A COURT. YES [X] NO [ ] APPLICABLE ONLY TO CORPORATE ISSUERS: THE NUMBER OF SHARES OUTSTANDING OF REGISTRANT'S COMMON STOCK, AS OF MAY 15, 1996, WAS 6,998,907. =============================================================================== 2 HARVARD INDUSTRIES, INC. INDEX
PAGE ---- PART I. FINANCIAL INFORMATION: Item 1. Financial Statements: Consolidated Balance Sheets March 31, 1996 (Unaudited) and September 30, 1995 (Audited)..................................... 2 Consolidated Statements of Operations (Unaudited) Three and Six Months Ended March 31, 1996 and 1995.............................................. 3 Consolidated Statements of Cash Flows (Unaudited) Six Months Ended March 31, 1996 and 1995....................................................... 4 Notes to Consolidated Financial Statements - (Unaudited)................................................. 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............................................................................................... 16 PART II. OTHER INFORMATION: Item 1. Legal Proceedings...................................................................... 21 Item 4. Submission of Matters to a Vote of Security Holders.................................... 21 Item 5. Other Information...................................................................... 22 Item 6. Exhibits and Reports on Form 8-K....................................................... 22 SIGNATURES............................................................................................... 24
- 1 - 3 HARVARD INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS MARCH 31, 1996 AND SEPTEMBER 30, 1995 (In thousands of dollars)
March 31, September 30, 1996 1995 ASSETS (Unaudited) (Audited) ------------ ------------ Current assets: Cash and cash equivalents........................................... $ 3,733 $ 19,925 Accounts receivable, net............................................ 100,843 102,714 Inventories......................................................... 61,889 63,742 Net assets of discontinued operations............................... - 7,621 Prepaid expenses and other current assets........................... 1,248 1,415 ---------- ---------- Total current assets......................................... 167,713 195,417 Property, plant and equipment, net.................................... 307,834 307,247 Intangible assets, net................................................ 137,398 132,537 Net assets of discontinued operations................................. 4,948 - Other assets,net...................................................... 23,631 27,061 ---------- ---------- $ 641,524 $ 662,262 ========== ========== LIABILITIES AND STOCKHOLDERS' DEFICIENCY Current liabilities: Current portion of long-term debt................................... $ 2,359 $ 2,801 Accounts payable.................................................... 72,832 79,702 Accrued expenses.................................................... 76,355 85,232 Income taxes payable................................................ 7,857 8,265 ---------- ---------- Total current liabilities.................................... 159,403 176,000 Revolving working capital loan........................................ 18,000 - Long-term debt........................................................ 321,076 322,000 Postretirement benefits other than pensions........................... 99,490 95,642 Other ................................................................ 28,919 31,175 ---------- ---------- Total liabilities............................................ 626,888 624,817 ---------- ---------- 14 1/4% Pay-In-Kind Exchangeable Preferred Stock, ($108,063 liquidation value at March 31, 1996 - includes $7,188 of undeclared dividends payable on September 30, 1996)............................................ 107,073 99,651 ---------- ---------- Stockholders' deficiency: Common Stock, $.01 par value; 30,000,000 shares authorized; shares issued and outstanding : 6,998,407 at March 31, 1996 and 6,994,907 at September 30, 1995........................ 70 70 Additional paid-in capital.......................................... 49,506 56,899 Additional minimum pension liability............................... (1,836) (1,836) Foreign currency translation adjustment............................. (1,895) (1,743) Accumulated deficit................................................. (138,282) (115,596) ---------- ---------- Total stockholders' deficiency............................. (92,437) (62,206) ---------- ---------- Commitments and contingent liabilities................................ $ 641,524 $ 662,262 ========== ==========
See accompanying Notes to Consolidated Financial Statements (Unaudited). - 2 - 4 HARVARD INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS THREE AND SIX MONTHS ENDED MARCH 31, 1996 AND 1995 (Unaudited) (In thousands of dollars, except share and per share data)
Three months ended Six months ended ------------------------------ ----------------------------- March 31, March 31, March 31, March 31, 1996 1995 1996 1995 ------------- ------------- ------------- ------------- Sales........................................................ $ 200,821 $ 157,981 $ 411,357 $ 307,840 ------------- ------------- ------------- ------------- Costs and expenses: Cost of sales............................................. 196,426 137,128 384,776 271,628 Selling, general and administrative....................... 11,945 7,316 22,199 14,740 Interest expense.......................................... 10,311 4,054 20,361 7,769 Other (income) expense, net............................... 2,552 (171) 5,258 (197) ------------- ------------- ------------- ------------- Total costs and expenses.............................. 221,234 148,327 432,594 293,940 ------------- ------------- ------------- ------------- Income (loss) before income taxes............................ (20,413) 9,654 (21,237) 13,900 Provision for income taxes................................... 549 3,887 1,449 5,629 ------------- ------------- ------------- ------------- Net income (loss)............................................ $ (20,962) $ 5,767 $ (22,686) $ 8,271 ============= ============= ============= ============= Net income (loss) attributable to common shareholders (a).... $ (24,674) $ 2,001 $ (30,108) $ 738 ============= ============= ============= ============ Net income (loss) per common share (a)....................... $ (3.53) $ 0.28 $ (4.30) $ 0.10 ============= ============= ============= ============= Weighted average number of common shares outstanding......... 6,997,157 7,242,462 6,996,032 7,134,295 ============= ============= ============= =============
(a) After deducting accrued dividends and accretion related to the Company's 14 1/4% PIK Exchangeable Preferred Stock. See accompanying Notes to Consolidated Financial Statements (Unaudited). - 3 - 5 HARVARD INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED MARCH 31, 1996 AND 1995 (Unaudited) (In thousands of dollars)
Six months ended ------------------------ March 31, March 31, 1996 1995 ---------- ---------- Cash flows related to operating activities: Net income (loss).................................................... $ (22,686) $ 8,271 Add back (deduct) items not affecting cash and cash equivalents: Income tax allocation charge....................................... - 3,665 Depreciation and amortization...................................... 25,901 15,373 Loss on disposition of property, plant and equipment and property held for sale........................................ 982 683 Postretirement benefits............................................ 3,848 1,800 Changes in operating assets and liabilities : Accounts receivable............................................... 1,871 (6,047) Inventories....................................................... 1,853 5,557 Other current assets.............................................. 167 (751) Accounts payable.................................................. (6,870) 4,836 Accrued expenses and income taxes payable........................ (16,064) (16,374) Other noncurrent liabilities...................................... 474 - ---------- ---------- Net cash provided by (used in) operations............................ (10,524) 17,013 ---------- ---------- Cash flows related to investing activities: Acquisition of property, plant and equipment......................... (20,787) (7,687) Proceeds to date from sale of discontinued operations................ 2,673 4,224 Proceeds from disposition of property, plant and equipment........... 663 928 Net change in other noncurrent accounts.............................. (1,070) 497 ---------- ---------- Net cash used in investing activities................................ (18,521) (2,038) ---------- ---------- Cash flows related to financing activities: Proceeds from exercise of stock options.............................. 29 2,400 Net borrowings under credit agreement................................ 18,000 - Repayments of long-term debt......................................... (1,366) (4,815) Pension fund payment pursuant to PBGC settlement agreement........... (3,000) (3,000) Payment of EPA settlements........................................... (810) - ---------- ---------- Net cash provided by (used in) financing activities.................. 12,853 (5,415) ---------- ---------- Net increase (decrease) in cash and cash equivalents................... (16,192) 9,560 Beginning of period................................................... 19,925 60,360 ---------- ---------- End of period......................................................... $ 3,733 $ 69,920 ========== ==========
See accompanying Notes to Consolidated Financial Statements (Unaudited). - 4 - 6 HARVARD INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1996 AND 1995 (UNAUDITED) (IN THOUSANDS OF DOLLARS, EXCEPT SHARE AND PER SHARE DATA) NOTE 1 The interim consolidated financial statements are unaudited but, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the results for the periods presented. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended September 30, 1995 included in the Company's Annual Report on Form 10-K. NOTE 2 On three separate occasions in fiscal 1994, the Company became aware that certain products of its discontinued ESNA division were not manufactured and/or tested in accordance with required specifications at its Union, New Jersey and/or Pocahontas, Arkansas facilities. These fastener products were sold to the United States government and other customers for application in the construction of aircraft engines and air frames. In connection therewith, the Company notified the Department of Defense Office of Inspector General ("DoD/OIG") and, upon request, was admitted into the Voluntary Disclosure Program of the Department of Defense. The Company also notified ESNA's customers, including the Defense Industrial Supply Center, of these matters and has offered to retest and/or reprocess affected parts. The Company, with the assistance of outside counsel and a fastener specialist, investigated this matter and the Company recorded a provision of $21,000 as of September 30, 1993. The Company retested and/or reprocessed affected parts, including affected parts in its inventory, from September 1993 until July 31, 1995, when such activities terminated with respect to those parts which were returned by customers. For those fasteners which had been destroyed during retesting, credits were issued to affected customers' accounts. As a result of its admission into the Voluntary Disclosure Program, the Company expects that it will receive favorable consideration from the government with respect to whether or not criminal charges should be brought, administrative sanctions should be imposed and civil penalties should be sought in connection with sales of affected parts to the government. There is no assurance, however, that the Company will receive such treatment with respect to any of the disclosures made by the Company in connection with its admission to the Voluntary Disclosure Program. The Company may also be subject to civil damages which could result from claims made by other customers. In May 1995, a major customer, Harco Division of VSI Corporation ("Harco"), filed a complaint in United States District Court seeking damages. The Company has also received notification of possible claims from other customers similar to Harco. In April 1996, the Company and Harco negotiated a settlement whereby Harco dismissed its complaint against the Company and the proceedings are now concluded. The Company has agreed to indemnify Harco against any future claims relating to the ESNA matter, if any, that may be asserted against Harco by its customers. Additionally, the Company agreed to indemnify Harco for certain future costs, if any, which may result from non-performance by the Company's sub-contractor in filling Harco's orders. - 5 - 7 At March 31, 1996, the remaining accrued costs of discontinued operations are primarily related to legal costs, fines and penalties, subcontractor costs, severance pay and the Harco settlement (which settlement was charged against the accrued costs of discontinued operations). The ultimate cost of disposition of the ESNA matter, as well as the required funding of such cost, is dependent upon future events, the outcomes of which are not determinable at the present time. Such outcomes could have a material effect on the Company's financial condition, results of operations and/or liquidity. If it is ultimately determined that the deviations from specifications and certifications made in connection therewith, constitute violations of various statutory and regulatory provisions, the Company may, among other things, be subject to criminal prosecution, treble damages and penalties under the Civil False Claims Act or Racketeer Influenced and Corrupt Organization Act, as well as administrative sanctions, such as debarment from future government contracting. Net assets of discontinued operations reflect the estimated net realizable value of remaining assets consisting primarily of the Union, New Jersey facility and certain royalty receivables. The Company has reclassified such net assets as noncurrent since current facts indicate that realization will not occur during the current operating cycle. On May 6,1996, the Company entered into an Agreement to sell the ESNA property in Union, New Jersey (the "Property") to a New Jersey developer, subject to certain conditions including (i) the developer obtaining all necessary development approvals and permits so as to permit the construction of a 200 unit townhouse complex on the Property, (ii) the Company obtaining applicable environmental clearances for the Property from the New Jersey Department of Environmental Protection and (iii) the Company demolishing and removing the building and related structures which are currently on the Property. The Agreement calls for the developer to purchase the Property in two (2) sections. While the closing dates for this transaction are contingent upon the satisfaction of the aforementioned conditions and, therefore, are not certain at this time, the Company estimates that the closing on the first section will take place within the next 24 months and the closing on the second section will take place within the next 36 months. NOTE 3 As of October 1, 1995, the Company changed its accounting for certain inventory (which comprised approximately 25% of the Company's total reported inventory balance of $62,465 at September 30, 1995) from the last-in, first-out (LIFO) method to the first-in, first-out (FIFO) method. As a result of changes in the Company's manufacturing and inventory management processes, which are attributable to a continuing emphasis on cost reduction in the automotive industry, the Company believes that the FIFO method provides for a better matching of inventory costs with product sales for all of the Company's inventory. These changes include an emphasis on cost reduction programs, promotion of production efficiencies and the implementation of inventory reduction programs. The change from the LIFO method to the FIFO method has been applied retroactively by restating the financial statements of prior periods which are summarized as follows:
Decrease In Beginning Reduction Increase Decrease Accumulated In Cost Net In Loss Deficit Of Sales Income Per Share ----------- -------- ------ --------- Six months ended March 31, 1995 previously reported $1,126 $163 $98 $.01 Three months ended March 31, 1995 previously reported $1,141 $138 $83 $.02
- 6 - 8 NOTE 4 On July 28, 1995, the Company acquired Doehler-Jarvis Inc. ("Doehler-Jarvis") for a purchase cost aggregating approximately $107,000. The acquisition was accounted for under the purchase method of accounting. The purchase cost and repayment of existing Doehler-Jarvis debt aggregated approximately $218,000 and was financed through the proceeds from the private placement of $200,000 principal amount of 11 1/8% Senior Notes Due 2005 and cash on hand. In July 1995, Doehler-Jarvis initiated production of lower intake manifolds for one of its major customers (hereinafter "The Manifold Program"). The Manifold Program, subject to customer demands, is expected to produce approximately $110,000 in revenues for the period September 30, 1995 through September 30, 1999. In fiscal 1996, the Company finalized its purchase accounting analysis and determined that the estimated manufacturing costs of fulfilling the Manifold Program will exceed estimated revenues to be generated by $10,000. Accordingly, the Company adjusted the goodwill initially recorded at the July 28, 1995 date of acquisition of Doehler-Jarvis by $10,000 and established a liability (accrued program costs) to reflect the operating loss under the Manifold Program. Such accrued program costs at March 31, 1996 were $3,061. The cost for the Manifold Program in the second quarter of fiscal year 1996 reflected an additional negative gross margin of $2,111, due to cost overruns in excess of the established liability. The Company has entered into intensive discussions with its customer seeking modifications to the Manifold Program. Pro forma unaudited results of operations for the six months ended March 31, 1995, assuming the acquisition of Doehler-Jarvis had occurred on October 1, 1994, are as follows: Sales $445,910 Net income $ 3,099 Net loss attributable to common stockholders $ (4,434) Net loss per share $ (.67)
The summary pro forma financial data do not purport to represent what the Company's results of operations would actually have been had the transaction, in fact, occurred on such date or to project the Company's results of operations at any future date or for any future period. NOTE 5 During the six months ended March 31, 1996, the Company recorded an increase of $7,422 in its 14 1/4% Pay-In-Kind Exchangeable Preferred Stock ("PIK Preferred Stock") and a corresponding deduction in additional paid-in-capital to recognize (i) an accrual of 50% of the required 1996 dividend which is payable in shares of PIK Preferred Stock on September 30, 1996 and (ii) the accretion of the related difference between the fair value of such stock at August 23, 1992 and redemption value. NOTE 6 Loss per common share is computed by dividing net loss (after deducting accrued dividends and accretion related to PIK Preferred Stock) by the weighted average number of common shares outstanding. No consideration was given to equivalent shares related to stock options since such shares are anti-dilutive. - 7 - 9 NOTE 7 The Company is also a party to various claims and routine litigation arising in the normal course of its business. Based on information currently available, management of the Company believes, after consultation with legal counsel, that the result of such claims and litigation, except for the uncertainties related to ESNA discussed in Note 2, will not have a material effect on the financial position or results of operations of the Company. NOTE 8 The differences between the statutory federal income tax rate and the Company's effective income tax rates result principally from the fact of having an operating profit in Canada and an operating loss in the U.S. NOTE 9 As of March 31, 1996, the Company had $18,000 of revolving working capital loans outstanding pursuant to its Credit Agreement. Because the Company anticipates utilizing such working capital loans over the next twelve months and the Credit Agreement expires on September 30, 1998, the Company has classified the outstanding revolving working capital loans as a long-term liability. As a result of the adverse operating results during the quarter ended March 31, 1996, the Company was not in compliance with the minimum consolidated interest coverage ratio of 2.0 to 1.0, nor the maximum consolidated total debt ratio of 3.5 to 1.0 required by its Credit Agreement. However, on May 14, 1996, the Company obtained a "Waiver and Consent" from the lenders under such Credit Agreement whereby the Company's non-compliance with the March 31, 1996 financial covenants was waived. In addition, the "waiver" provides for the Company to continue having the ability to make revolving working capital loans, subject to "Borrowing Base" availability. The Company anticipates negotiating an Amendment to the Credit Agreement by June 30, 1996. NOTE 10 Both the 12% Notes and the 11 1/8% Notes are guarantied on a senior unsecured basis, pursuant to guaranties (the Guaranties) by all of the Company's wholly-owned direct and certain of its wholly-owned indirect domestic subsidiaries (the Guarantors). The Notes are unconditionally guarantied, jointly and severally, on a senior unsecured basis, by each of the Guarantors under such Guarantor's guaranty (a Guaranty). Each Guaranty by a Guarantor is limited in amount to an amount not to exceed the maximum amount that can be guarantied by that Guarantor without rendering the Guaranty, as it relates to such Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer. As such, a Guaranty could be effectively subordinated to all other indebtedness (including guaranties and other contingent liabilities) of the applicable Guarantor, and, depending on the amount of such indebtedness, a Guarantor's liability on its Guaranty could be reduced to zero. The Company conducts all of its automotive business through and derives virtually all of its income from its subsidiaries. Therefore, the Company's ability to make required principal and interest payments with respect to the Company's indebtedness (including the Notes) and other obligations depends on the earnings of its subsidiaries and on its ability to receive funds from its subsidiaries through dividends or other payments. The ability of its subsidiaries to pay such dividends or make payments on intercompany indebtedness or otherwise will be subject to applicable state laws. Upon the sale or other disposition of a Guarantor or the sale or disposition of all or substantially all of the assets of a Guarantor (in each case other than to the Company or an affiliate of the Company) permitted by the indentures governing the Notes, such Guarantor will be released and relieved from all of its obligations under its Guaranty. - 8 - 10 The following condensed consolidating information presents: 1. Condensed balance sheets as of March 31, 1996 and September 30, 1995 and condensed statements of operations and cash flows for the six months ended March 31, 1996 and 1995. 2. The Parent Company and Combined Guarantor Subsidiaries with their investments in subsidiaries accounted for on the equity method. 3. Elimination entries necessary to consolidate the Parent Company and all of its subsidiaries. 4. The Parent Company, pursuant to the terms of an interest bearing note with Guarantor Subsidiaries, has included in their allocation of expenses, interest expense for the six months ended March 31, 1996 and 1995, respectively. The Company believes that providing the following condensed consolidating information is of material interest to investors in the Notes and has not presented separate financial statements for each of the Guarantors. - 9 - 11 HARVARD INDUSTRIES, INC. CONSOLIDATING BALANCE SHEET MARCH 31, 1996 (In thousands of dollars)
Combined Combined Parent Guarantor Non-Guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated ASSETS --------- ------------ ------------ ------------ ------------ Current assets: Cash and cash equivalents........................ $ 1,822 $ 936 $ 975 $ - $ 3,733 Accounts receivable, net......................... 5,371 88,876 6,596 - 100,843 Inventories...................................... 5,263 54,837 1,789 - 61,889 Prepaid expenses and other current assets........ 729 504 15 - 1,248 ---------- ---------- ----------- ---------- ---------- Total current assets........................... 13,185 145,153 9,375 0 167,713 Investment in Subsidiaries......................... 326,152 45,357 - (371,509) - Property, plant and equipment, net................. 5,017 295,404 7,413 - 307,834 Intangible assets, net............................. - 137,398 - - 137,398 Net assets of discontinued operations.............. 4,948 - - - 4,948 Intercompany receivables........................... 363,829 323,553 48,191 (735,573) - Other assets....................................... 17,367 6,024 240 - 23,631 ---------- ---------- ----------- ---------- ---------- $ 730,498 $ 952,889 $ 65,219 $(1,107,082) $ 641,524 LIABILITIES AND STOCKHOLDERS' ========== ========== =========== =========== ========== EQUITY (DEFICIT) Current liabilities: Current portion of long-term debt................ $ 15 $ 2,344 $ - $ - $ 2,359 Accounts payable................................. 2,957 65,009 4,866 - 72,832 Accrued expenses ................................ 18,253 57,889 213 - 76,355 Income taxes payable ............................ 2,271 1,095 4,491 - 7,857 ---------- ---------- ----------- ----------- ---------- Total current liabilities................... 23,496 126,337 9,570 0 159,403 Revolving working capital loan................... $ 18,000 $ - $ - $ - $ 18,000 Long-term debt..................................... 300,000 21,076 - - 321,076 Postretirement benefits other than pensions......................................... - 99,490 - - 99,490 Intercompany payables.............................. 369,015 358,327 8,231 (735,573) - Other.............................................. 5,351 21,507 2,061 - 28,919 ---------- ---------- ----------- ----------- ---------- Total liabilities........................... 715,862 626,737 19,862 (735,573) 626,888 ---------- ---------- ----------- ----------- ---------- PIK Preferred...................................... 107,073 - - - 107,073 ---------- ---------- ----------- ----------- ---------- Stockholders' equity (deficiency): Common stock and additional paid-in-capital................................ 49,576 73,054 135 (73,189) 49,576 Additional minimum pension liability............. (1,836) (1,836) - 1,836 (1,836) Foreign currency translation adjustment.......... (1,895) (1,881) (1,881) 3,762 (1,895) Retained earnings (deficit)...................... (138,282) 256,815 47,103 (303,918) (138,282) ---------- ---------- ----------- ----------- ---------- Total stockholders' equity (deficit)........ (92,437) 326,152 45,357 (371,509) (92,437) ---------- ---------- ----------- ----------- ---------- $ 730,498 $ 952,889 $ 65,219 $ 1,107,082 $ 641,524 ========== ========== =========== =========== ==========
- 10 - 12 HARVARD INDUSTRIES, INC. CONSOLIDATING BALANCE SHEET SEPTEMBER 30, 1995 (In thousands of dollars)
Combined Combined Parent Guarantor Non-Guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated ASSETS --------- ------------ ------------ ------------ ------------ Current assets: Cash and cash equivalents...................... $ 18,645 $ (2,180) $ 3,491 $ (31) $ 19,925 Accounts receivable, net....................... 6,138 89,589 6,987 - 102,714 Inventories.................................... 5,304 57,286 1,152 - 63,742 Net assets of discontinued operations.......... 7,621 - - - 7,621 Prepaid expenses and other current assets...... 341 1,073 1 - 1,415 ---------- ---------- ---------- ---------- ---------- Total current assets......................... 38,049 145,768 11,631 (31) 195,417 Investment in Subsidiaries....................... 328,523 45,266 - (373,789) - Property, plant and equipment, net............... 5,527 296,047 5,673 - 307,247 Intangible assets, net........................... - 132,537 - - 132,537 Intercompany receivables......................... 322,282 260,511 41,659 (624,452) - Other assets..................................... 18,859 7,962 240 - 27,061 ---------- ---------- ---------- ---------- ---------- $ 713,240 $ 888,091 $ 59,203 $ (998,272) $ 662,262 LIABILITIES AND STOCKHOLDERS' ========== ========== ========== ========== ========= EQUITY (DEFICIT) Current liabilities: Current portion of long-term debt.............. $ 31 $ 2,770 $ - $ - $ 2,801 Accounts payable............................... 3,273 72,089 4,340 - 79,702 Accrued expenses............................... 27,199 57,422 611 - 85,232 Income taxes payable........................... 3,133 2,428 2,715 (11) 8,265 ---------- ---------- ---------- ---------- ---------- Total current liabilities.................. 33,636 134,709 7,666 (11) 176,000 Long-term debt................................... 300,000 22,000 - - 322,000 Postretirement benefits other than pensions..... - 95,642 - - 95,642 Intercompany payables............................ 337,179 284,983 2,290 (624,452) - Other............................................ 4,980 22,234 3,961 - 31,175 ---------- ---------- ---------- ---------- ---------- Total liabilities......................... 675,795 559,568 13,917 (624,463) 624,817 ---------- ---------- ---------- ---------- ---------- PIK Preferred.................................... 99,651 - - - 99,651 ---------- ---------- ---------- ---------- ---------- Stockholders' equity (deficiency): Common stock and additional paid-in-capital.............................. 56,969 73,054 135 (73,189) 56,969 Additional minimum pension liability........... (1,836) (1,836) - 1,836 (1,836) Foreign currency translation adjustment........ (1,743) (1,727) (1,743) 3,470 (1,743) Retained earnings (deficit).................... (115,596) 259,032 46,894 (305,926) (115,596) ---------- ---------- ---------- ---------- ---------- Total stockholders' equity (deficit)......... (62,206) 328,523 45,286 (373,809) (62,206) ---------- ---------- ---------- ---------- ---------- $ 713,240 $ 888,091 $ 59,203 $ (998,272) $ 662,262 ========== ========== ========== ========== =========
- 11 - 13 HARVARD INDUSTRIES, INC. CONSOLIDATING INCOME STATEMENTS OF OPERATIONS SIX MONTHS ENDED MARCH, 1996 (In thousand of dollars)
Combined Combined Parent Guarantor Non-Guarantor Company Subsidiaries Subsidiaries Elimination Consolidated ---------- ------------ ------------- ------------ ------------ Sales............................................. $ 16,644 $ 380,524 $ 14,189 $ - $ 411,357 ---------- ---------- ----------- ------------ ---------- Costs and expenses: Cost of sales................................... 15,721 356,856 12,199 - 384,776 Selling, general and administrative............. 5,323 16,872 4 - 22,199 Interest expense................................ 18,773 1,568 20 - 20,361 Other (income) expense, net..................... (18) 5,464 (188) - 5,258 Equity in (income) loss of subsidiaries........ 11,809 (368) - (11,441) - Allocated expenses.............................. (12,278) 11,299 979 - - ---------- ---------- ---------- ----------- ---------- Total costs and expenses.................... 39,330 391,691 13,014 (11,441) 432,594 ---------- ---------- ---------- ----------- ---------- Income (loss) before provision for income taxes ................................... (22,686) (11,167) 1,175 11,441 (21,237) Provision for income taxes........................ - 642 807 - 1,449 ---------- ---------- ---------- ----------- ---------- Net income (loss)................................. $ 22,686 $ (11,809) $ 368 $ 11,441 $ (22,686) ========== ========== ========== =========== ==========
- 12 - 14 HARVARD INDUSTRIES, INC. CONSOLIDATING INCOME STATEMENTS OF OPERATIONS SIX MONTHS ENDED MARCH 31, 1995 (In thousand of dollars)
Combined Combined Parent Guarantor Non-Guarantor Company Subsidiaries Subsidiaries Elimination Consolidated ---------- ------------- ------------ ----------- ------------ Sales............................................... $ 17,046 $ 273,192 $ 17,602 $ - $ 307,840 Intercompany sales.................................. - - 8,507 (8,507) - ---------- ---------- ---------- ---------- ---------- Total sales................................... 17,046 273,192 26,109 (8,507) 307,840 ---------- ---------- ---------- ---------- ---------- Costs and expenses: Cost of sales..................................... 15,456 243,449 21,230 (8,507) 271,628 Selling, general and administrative............... 5,643 9,097 - - 14,740 Interest expense.................................. 6,815 949 5 - 7,769 Other (income) expense, net....................... (919) (241) 963 - (197) Equity in (income) loss of subsidiaries.................................... (11,582) (1,793) - 13,375 - Allocated expenses................................ (6,638) 6,146 492 - ---------- ---------- ---------- ---------- ---------- Total costs and expenses...................... 8,775 257,607 22,690 4,868 293,940 ---------- ---------- ---------- ---------- ---------- Income (loss) before income taxes................... 8,271 15,585 3,419 (13,375) 13,900 Provision for income taxes.......................... - 4,003 1,626 - 5,629 ---------- ---------- ---------- ---------- ---------- Net income (loss)................................ $ 8,271 $ 11,582 $ 1,793 $ (13,375) $ 8,271 ========== ========== ========== ========== =========
- 13 - 15 HARVARD INDUSTRIES, INC. CONSOLIDATING STATEMENT OF CASH FLOWS SIX MONTHS ENDED MARCH 31, 1996 (In thousands of dollars)
Combined Combined Parent Guarantor Non-Guarantor Company Subsidiaries Subsidiaries Elimination Consolidated ---------- ------------ ------------ ----------- ------------ Cash flows related to operating activities: Net income (loss)........................................ $ (22,686) (11,809) 368 11,441 $ (22,686) Add back (deduct) items not affecting cash and cash equivalents: Equity in (income) loss of subsidiaries................ 11,809 (368) - (11,441) - Depreciation and amortization.......................... 1,790 23,608 503 - 25,901 Loss on disposition of property, plant and equipment and property held for sale.................. - 982 - - 982 Postretirement benefits................................ - 3,848 - - 3,848 Changes in operating assets and liabilities: Accounts receivable.................................... 767 713 391 - 1,871 Inventories............................................ 41 2,449 (637) - 1,853 Other current assets................................... (388) 569 (14) - 167 Accounts payable....................................... (316) (7,080) 526 - (6,870) Accrued expenses and income taxes payable.............. (17,584) (843) 2,352 11 (16,064) Other noncurrent liabilities........................... 474 - - 474 ----------- ---------- ---------- --------- ---------- Net cash provided by operations.................. (26,567) 12,543 3,489 11 (10,524) ----------- ---------- ---------- --------- ---------- Cash flows related to investing activities: Acquisition of property, plant and equipment............. 22 (18,489) (2,320) - (20,787) Proceeds to date from sale of discontinued operations.... 2,673 - - - 2,673 Proceeds from disposition of property, plant and equipment - 663 - - 663 Net change in other noncurrent accounts................... (472) 2,581 (3,199) 20 (1,070) ----------- ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities......... 2,223 (15,245) (5,519) 20 (18,521) ----------- ---------- ---------- ---------- ---------- Cash flows related to financing activities: Proceeds from exercise of stock options................... 29 - - - 29 Net borrowings under revolving working capital loan....... 18,000 - - - 18,000 Repayments of long-term debt.............................. (16) (1,350) - - (1,366) Pension fund payment pursuant to PBGC settlement agreement - (3,000) - - (3,000) Payment of EPA settlement agreements...................... (781) (134) 105 - (810) Net changes in intercompany balances...................... (9,711) 10,302 (591) - - ------------ ----------- ---------- ---------- ---------- Net cash provided by (used in) financing activities........ 7,521 5,818 (486) - 12,853 ------------ ----------- ---------- ---------- ---------- Net increase (decrease) in cash and cash equivalents........ (16,823) 3,116 (2,516) 31 (16,192) Cash and cash equivalents : Beginning of period....................................... 18,645 (2,180) 3,491 (31) 19,925 ----------- ----------- ---------- ---------- ---------- End of period.............................................$ 1,822 $ 936 $ 975 $ - $ 3,733 ============ =========== ========== ========== ==========
- 14 - 16 HARVARD INDUSTRIES, INC. CONSOLIDATING STATEMENT OF CASH FLOWS SIX MONTHS ENDED MARCH 31, 1995 (In thousands of dollars)
Combined Combined Parent Guarantor Non-Guarantor Company Subsidiaries Subsidiaries Elimination Consolidated ---------- ------------ ------------ ----------- ------------- Cash flows related to operating activities: Net income (loss)............................................ $ 8,271 $ 11,582 $ 1,793 $ (13,375) $ 8,271 Add back (deduct) items not affecting cash and cash equivalents: Income tax allocation charge............................... - 3,665 - - 3,665 Equity in (income) loss of subsidiaries.................... (11,582) (1,793) - 13,375 - Depreciation and amortization.............................. 1,441 13,293 639 - 15,373 Disposition of property, plant and equipment and property held for sale...................... - 683 - - 683 Postretirement benefits.................................... - 1,800 - - 1,800 Changes in operating assets and liabilities : Accounts receivable........................................ (2,178) (4,154) 285 - (6,047) Inventories................................................ (741) 5,489 809 - 5,557 Other current assets....................................... (899) 156 (8) - (751) Accounts payable........................................... 1,480 3,541 (185) - 4,836 Accrued expenses and income taxes payable.................. (11,804) (771) (3,824) 25 (16,374) ---------- ---------- ---------- ---------- ---------- Net cash provided by (used in) operations.................. (16,012) 33,491 (491) 25 17,013 ---------- ---------- ---------- ---------- --------- Cash flows related to investing activities: Acquisition of property, plant and equipment................. (35) (7,652) - - (7,687) Proceeds to date from sale of discontinued operations........ 4,224 - 625 (625) 4,224 Proceeds from disposition of property, plant and equipment........................................ - 928 - - 928 Net change in other noncurrent accounts...................... (1,542) 244 1,112 683 497 ---------- ---------- ---------- --------- -------- Net cash provided by (used in) investing activities............ 2,647 (6,480) 1,737 58 (2,038) ---------- ---------- ---------- --------- -------- Cash flows related to financing activities: Proceeds from exercise of stock options...................... 2,400 - - - 2,400 Repayments of long-term debt................................. (1,131) (3,684) - - (4,815) Pension fund payment pursuant to PBGC settlement agreement... - (3,000) - - (3,000) Net changes in intercompany balances......................... 10,857 (9,660) (1,197) - - ---------- ---------- ---------- --------- -------- Net cash provided by (used in) financing activities........... 12,126 (16,344) (1,197) 0 (5,415) ---------- ---------- ---------- --------- -------- Net increase (decrease) in cash and cash equivalents........... (1,239) 10,667 49 83 9,560 Cash and cash equivalents : Beginning of period.......................................... 4,218 54,417 1,839 (114) 60,360 ---------- ---------- ---------- ---------- ---------- End of period................................................ $ 2,979 $ 65,084 $ 1,888 $ (31) $ 69,920 ========== ========== ========== ========== ==========
- 15 - 17 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (IN THOUSANDS OF DOLLARS) FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q contains forward-looking statements. Additional written or oral forward-looking statements may be made by the Company from time to time, in filings with the Securities and Exchange Commission or otherwise. Such forward-looking statements are within the meaning of that term in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements may include, but not be limited to, projections of revenues, income or losses, capital expenditures, plans for future operations, financing needs or plans, plans relating to products or services of the Company, as well as assumptions relating to the foregoing. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. Statements in this Quarterly Report, particularly the Notes to Consolidated Financial Statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations," describe factors, among others, that could contribute to or cause such differences. GENERAL The volume of the Company's business has changed significantly due principally to the acquisition of Doehler- Jarvis on July 28, 1995. The acquisition was accounted for under the purchase method of accounting and, accordingly, this operation is reflected in the consolidated financial results of the Company only since the date of acquisition. For this reason, comparison of financial results may not be meaningful. The Company's results of operations have been adversely impacted during the three and six months ended March 31, 1996 by the following conditions: decline in large passenger car sales, the effects of the March 1996 General Motors "GM" strike, adverse weather conditions in January and February 1996, increased launch costs related to new and replacement business, and losses related to two of the Doehler-Jarvis Programs with one of its major customers which were launched in fiscal 1995. During the three months ended March 31, 1996, the cost of sales exceeded revenues (negative gross margin) for Doehler-Jarvis, primarily reflecting continued losses under the Manifold Program and a program for Bell Housings ("the Programs"). Presently, the Company is in intensive discussions with one of its major customers seeking modifications to these Programs. RESULTS OF OPERATIONS Six Months Ended March 31, 1996 Compared to Six Months Ended March 31, 1995 Sales. Excluding $149,000 of Doehler-Jarvis sales, consolidated sales decreased $46,000. The automotive accessories segment sales accounted for 96% and 95%, respectively, of consolidated sales for the six months ended March 31, 1996 and 1995. Automotive component sales, excluding $145,000 of such sales by Doehler-Jarvis, decreased $44,000, of which $17,000 was due to lower volumes for existing light vehicle platforms, principally for passenger cars, $11,000 due to the effects of the March 1996 Strike at GM and $16,000 attributable to the inclusion in 1995 of sales to Ford phased out in June 1995, as previously disclosed. Nonautomotive sales decreased $402 due to a decrease in furniture sales. - 16 - 18 Gross Profit. The consolidated gross profit expressed as a percentage of sales (the "gross profit margin") decreased from 11.8% to 6.5%. The gross profit margin of the automotive segment decreased from 11.9% to 6.5%. However, excluding Doehler-Jarvis' gross profit margin, the automotive segment would have decreased from 11.9% to 6.8%. The decrease in the gross profit margin was due principally to the lower passenger car sales mentioned above, effects of the March 1996 GM Strike, January and February 1996 adverse weather conditions, and excess launch costs for new and replacement products. Doehler-Jarvis had sales of the Programs aggregating $22,000 for which a negative gross margin of $3,200 was incurred. The nonautomotive segment had a decrease in gross profit of $684, due principally to the fact that the prior year's gross profit included a one time favorable settlement with a supplier amounting to $475, as well as a product mix change in 1996. Selling, General and Administrative Expenses. Selling, general and administrative expenses increased $2,633, or 20.7% , after excluding $6,826 of such expenses of Doehler-Jarvis, and due to the fact that 1996 does not include any bonus provision with respect to the Company's key management and operating personnel, as compared to $2,000 in 1995. The current year includes salary increases and additional nonautomotive selling costs incurred to penetrate the mass merchandising furniture market. As a percentage of sales, such consolidated expenses were 5.4% and 4.8% for the six months ended March 31, 1996 and 1995, respectively. Interest Expense. Interest expense increased from $7,769 to $20,361 for the six months ended March 31, 1996. The increase in interest expense was the result of the issuance in July 1995 of the 11 1/8% Senior Notes, capital leases which were assumed in the Doehler-Jarvis acquisition and the revolving working capital loans under its Credit Agreement. Other (income) Expense, Net. The change in this caption was due, principally, to the increase in goodwill amortization of $4,372 due to the acquisition of Doehler-Jarvis and the reduction in interest income due to the use of approximately $26,300 of cash on hand in the acquisition of Doehler-Jarvis. Provision for Income Taxes. The differences between the statutory federal income tax rate and the Company's effective income tax rates result, principally, from generating an operating profit in Canada and an operating loss in the U.S. Net Income (Loss). Net loss for the six months ended March 31, 1996 was $22,686 compared to a net income of $8,271 in the comparable prior year six month period. The change is because operating results (as described above), were insufficient to cover increases in interest expense and amortization of goodwill. Three Months Ended March 31, 1996 Compared to Three Months Ended March 31, 1995 Sales. Excluding $75,000 of Doehler-Jarvis sales, consolidated sales decreased $32,000. The automotive accessories segment sales accounted for 96% and 94%, respectively, of consolidated sales for the three months ended March 31, 1996 and 1995. Automotive component sales, excluding $74,000 of such sales by Doehler-Jarvis, decreased $30,000, of which $10,000 was due to lower volumes for existing light vehicle platforms, principally passenger cars, $11,000 was due to the effects of the March 1996 strike at GM and $9,000 was attributable to the inclusion in 1995 of sales to Ford phased out in June 1995, as previously disclosed. Doehler-Jarvis had sales of the Programs aggregating $13,000 for which a negative gross margin of $2,600 was incurred. Nonautomotive sales reflected a decrease in furniture sales of $2,000. - 17 - 19 Gross Profit. The consolidated gross profit expressed as a percentage of sales (the "gross profit margin") decreased from 13.2% to 2.2%. The gross profit margin of the automotive segment decreased from 13.7% to 2.2%. However, if Doehler-Jarvis' negative gross margin for the quarter was eliminated, the automotive segment would have decreased from 13.7% to 3.9%. The decrease in the gross profit margin was due principally to the lower passenger car sales volumes mentioned above, the effects of the March 1996 GM strike, January and February weather related problems and excess launch costs for new and replacement products. Cost of sales exceeded revenues for Doehler-Jarvis operations during the second fiscal quarter as a result of losses incurred related to the Programs previously discussed. Additionally, the nonautomotive segment had a decrease in gross profit of $382, principally due to the second quarter 1996 decline in sales volume. Selling, General and Administrative Expenses. Selling, general and administrative expenses increased $1,984, or 32.7%, after excluding $3,895 of such expenses of Doehler-Jarvis, and due to the fact that 1996 does not include any bonus provision with respect to the Company's key management and operating personnel, as compared to $1,250 in 1995. The current year includes salary increases and additional nonautomotive selling costs incurred to penetrate the mass merchandising furniture market. As a percentage of sales, such consolidated expenses were 5.9% and 4.6% for the three months ended March 31, 1996, and 1995, respectively. Interest Expense. Interest expense increased from $4,054 to $10,311 for the quarter ended March 31, 1996. The increase in interest expense was the result of the issuance in July 1995 of the 11 1/8% Senior Notes, capital leases which were assumed in the Doehler-Jarvis acquisition, and the revolving working capital loans under its Credit Agreement. Other (Income) Expense, Net. The change in this caption was due, principally, to the increase in goodwill amortization of $2,186 attributable to the acquisition of Doehler-Jarvis and the reduction in interest income due to the use of approximately $26,300 of cash on hand in the acquisition of Doehler-Jarvis. Provision for Income Taxes. The differences between the statutory federal income tax rate and the Company's effective income tax rates result, principally, from generating an operating profit in Canada and an operating loss in the U.S. Net Income (Loss). Net loss for the three months ended March 31, 1996 was $20,962 compared to a net income of $5,767 in the comparable prior year quarter. The change is because operating results (as described above) were insufficient to cover increased interest costs and goodwill amortization related to the acquisition. LIQUIDITY AND CAPITAL RESOURCES For the six months and three months ended March 31, 1996, the Company had negative cash flow from operations of $10,524 and $20,361, respectively. Proceeds from the sale of discontinued operations and a sale of a building generated cash of $3,336 during the six months ended March 31, 1996. The negative cash flow from operations for the three months ended March 31, 1996 resulted in requirements for the Company to borrow under its Credit Agreement. At March 31, 1996, such working capital loans amounted to $18,000. These working capital loans, together with cash on hand at September 30, 1995, were used primarily to fund working capital needs, the purchase of property, plant and equipment of $20,787, to meet debt service obligations (principal and interest) of $20,008, and to fund pension payments pursuant to the PBGC settlement agreement and EPA payments of $3,810. The Company had a deficiency of earnings over fixed charges and dividends on preferred stock of $28,659 and $24,125, respectively, for the six months and three months ended March 31, 1996. - 18 - 20 Capital Expenditures. Company expenditures for property, plant and equipment during the first six months ended March 31, 1996 and 1995 were $20,787 and $7,687, respectively, principally for machinery and equipment required in the ordinary course of operating the Company's business. Approximately, $7,211 of the increase in capital expenditures was attributable to Doehler-Jarvis. The Company revised its use of anticipated funds from operations from $45,000 to $30,000, with respect to 1996 capital expenditures which excludes certain equipment which may be leased pursuant to operating leases. The Company does not anticipate any material effect upon operations as a result of such revised use of anticipated funds. General. In addition to its debt service and capital expenditures' requirements, the Company will have requirements during the last six months of fiscal 1996 to fund: (i) costs associated with the ESNA matter, estimated to be $3,000, (ii) restructuring costs of approximately $2,250, (iii) costs associated with legal proceedings and claims relating to environmental matters estimated to be approximately $1,000 and (iv) contributions of an additional $3,000 to be made to certain pension plans (in addition to the Company's minimum funding requirements with respect to each such plan). ESNA. Although the Company has projected that the 1996 estimated cost of the ESNA matter will not be material, the ultimate cost of disposition of this matter, as well as the required funding of such costs, is dependent upon future events, the outcomes of which are not determinable at the present time. Such outcomes could have a material effect on the Company's financial condition, results of operations and/or liquidity. If it is ultimately determined that the deviations from specifications and certifications made in connection therewith, constitute violations of various statutory and regulatory provisions, the Company may, among other things, be subject to criminal prosecution, treble damages and penalties under the Civil False Claims Act or Racketeer Influenced and Corrupt Organization Act, as well as administrative sanctions, such as debarment from future government contracting. Credit Agreement. The Company borrowed under its Credit Agreement during the second quarter and anticipates continuing to borrow working capital for the next twelve months. Under its Credit Agreement, which expires on September 30, 1998, the Company may borrow up to $100,000, $70,000 of which may be used for revolving working capital loans. In this regard, the Company had $18,000 of working capital loans outstanding as of March 31, 1996, and as of May 10, 1996, had working capital loans of $28,000 outstanding. The working capital loans resulted from negative operating cash flow. Because the Company anticipates continued use of working capital loans under its Credit Agreement for the next twelve months, and the Credit Agreement expires on September 30, 1998, the Company has classified the revolving working capital loans as a long-term liability. Due to the negative operating results generated during the quarter ended March 31, 1996, the Company was not in compliance with the minimum consolidated interest coverage ratio of 2.0 to 1.0 nor the maximum consolidated total debt ratio of 3.5 to 1.0 required under the Credit Agreement. However, on May 14, 1996, the Company obtained from the lenders a "Waiver and Consent" to its Credit Agreement whereby the Company's non-compliance with the financial covenants as of March 31, 1996 was waived. The Company continues to have the ability to make revolving working capital loans, subject to "Borrowing Base" availability. The Company anticipates negotiating by June 30, 1996 an Amendment to the Credit Agreement to modify future financial covenants. Borrowings available under the existing Credit Agreement are anticipated to provide necessary liquidity through fiscal year 1997. PIK Preferred Stock. The Company continues to explore various financing alternatives, including capital market alternatives with respect to its 14 1/4% PIK Preferred Stock outstanding, which shares are required to be redeemed on or before November 16, 1998. If the Company fails to redeem the PIK Preferred Stock on said date, or otherwise fails to make a dividend payment, then the number of directors constituting the Board shall be increased by two and the outstanding shares of the PIK Preferred Stock shall vote as a class, with each shareholder entitled to one vote, to elect two Directors to fill such newly created directorships. - 19 - 21 Outlook for Third Quarter. The Company currently expects that sales, operating income and cash flow for the third quarter ending June 30, 1996 will again be negatively impacted by the continued reduction and inconsistent demands for large passenger cars, as compared to last year's third quarter. The Company also expects continuation of losses on the Programs, subject to obtaining modifications from its customer, currently the subject of discussions. These factors will require the Company to continue to use working capital loans to fund operations. While the Company anticipates that the discussions will result in favorable modifications of the Programs, there is no assurance that there will be favorable modifications or the extent of such modifications, if any. - 20 - 22 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. As previously disclosed, a complaint was filed in the United States District Court, Central District of California, in May, 1995, entitled VSI Corporation d/b/a/Harco vs. Harvard Industries, Inc. d/b/a ESNA, and Does 1 - 50. The complaint alleged that as a result of certain actions at the Company's discontinued ESNA division, including the facts discussed in Note 2 of the notes to consolidated financial statements as of and for the period ended March 31, 1996 and 1995, included in this report, the Harco Division of VSI Corporation ("Harco") was damaged and sought damages, including treble damages under the Federal Racketeer Influenced and Corrupt Organizations Act, in an amount to be determined at trial. In April, 1996, the Company and Harco negotiated a settlement whereby the Company paid Harco cash and forgave accounts receivable (in an aggregate amount that is not material to the Company) and, the Company agreed to indemnify Harco against future claims relating to the ESNA matter, if any, that may be asserted against Harco by its customers, and to indemnify Harco for certain future costs, if any, that may result from non-performance by the Company's sub-contractor in filling Harco's orders. As part of the settlement, Harco dismissed its complaint against the Company and the proceedings are now concluded. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. On March 18, 1996, the Company held an Annual Meeting of Shareholders at which the following action was taken: 1. The following individuals were elected at the meeting (with the voting results reflected for each such individual) to serve until the next Annual Meeting and until their successors are elected and qualified:
ABSTENTIONS AND BROKER FOR WITHHELD NON-VOTES ----------- -------- --------- Vincent J. Naimoli 6,122,638 900 900 John W. Adams 6,122,638 900 900 C. Scott Bartlett, Jr. 6,122,638 900 900 Joseph P. Hoar 6,122,638 900 900 Michael Hoffman 6,095,338 28,200 900
2. A proposal to amend the Restated Certificate of Incorporation of the Company to increase the number of authorized shares of Common Stock, par value $.01 per share, from 15,000,000 shares to 30,000,000 shares: 6,055,038 shares were voted "For" the proposal, 67,600 shares were voted "Against" the proposal, and 900 shares abstained or otherwise represented broker non-votes. 3. A proposal to change the Company's state of incorporation from Delaware to Florida through a merger of the Company with a newly-formed and wholly-owned Florida subsidiary: 4,557,124 shares were voted "For" the proposal, 109,800 shares were voted "Against" the proposal, and 1,300 shares abstained or otherwise represented broker non-votes. 4. A proposal to adopt the Company's 1995 Employee Stock Purchase Plan: 4,660,404 shares were voted "For"the proposal, 2,830 shares were voted "Against" the proposal, and 1,100 shares abstained or otherwise represented broker non-votes. - 21 - 23 5. A proposal to adopt the Company's Stock Plan for Non-Employee Directors: 4,633,214 shares were voted "For" the proposal, 37,330 shares were voted "Against" the proposal, and 2,540 shares abstained or otherwise represented broker non-votes. ITEM 5. OTHER INFORMATION. The Ratio of Earnings to Fixed Charges and Dividends on Preferred Stock, and the supporting computation thereof, are filed as Exhibit 12.1 to this Quarterly Report on Form 10-Q and are incorporated herein by reference. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits: 3.1 Articles of Merger, dated as March 20, 1996, between Harvard Industries, Inc. and Harvard Merger Corporation, and filed with the Secretary of State of Florida on March 22, 1996. 3.2 Certificate of Merger of Harvard Industries, Inc. into Harvard Merger Corporation, dated as of March 20, 1996, and filed with the Secretary of State of Delaware on March 25, 1996. 3.3 Articles of Incorporation of Harvard Industries, Inc. (incorporated under the name of Harvard Merger Corporation), and filed with the Secretary of State of Florida on February 8, 1996. 3.4 Amendment to Articles of Incorporation of Harvard Industries, Inc. and filed with the Secretary of State of Florida on March 22, 1996. 3.5 By-Laws of Harvard Industries, Inc.. 10. Amendment No. 1, Waiver and Consent, dated as of March 31, 1996, to the Credit Agreement, dated as of July 28, 1995, among the Company and certain of its subsidiaries with Chemical Bank, for itself and as agent for the other lenders party thereto. 12.1 Computation of Ratio of Earnings to Fixed Charges and Dividends on Preferred Stock. 27. Financial Data Schedule (for SEC use only) (b) Reports on Form 8-K: None - 22 - 24 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION PAGE NO. 3.1 Articles of Merger, dated as of March 20, 1996, between Harvard Industries, Inc. and Harvard Merger Corporation, and filed with the Secretary of State of Florida on March 22, 1996. 3.2 Certificate of Merger of Harvard Industries, Inc. into Harvard Merger Corporation, dated as of March 20, 1996, and filed with the Secretary of State of Delaware on March 25, 1996. 3.3 Articles of Incorporation of Harvard Industries, Inc. (incorporated under the name of Harvard Merger Corporation), and filed with the Secretary of State of Florida on February 8, 1996. 3.4 Amendment to Articles of Incorporation of Harvard Industries, Inc. and filed with the Secretary of State of Florida on March 22, 1996. 3.5 By-Laws of Harvard Industries, Inc.. 10. Amendment No. 1, Waiver and Consent, dated as of March 31, 1996, to the Credit Agreement dated as of July 28, 1995, among the Company and certain of its subsidiaries with Chemical Bank, for itself and as agent for the other lenders party thereto. 12.1 Computation of Ratio of Earnings to Fixed Charges and Dividends on Preferred Stock. 27. Financial Data Schedule (for SEC use only) - 23 - 25 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto authorized. HARVARD INDUSTRIES, INC. ----------------------------------------- (Registrant) May 14, 1996 /s/ Joseph J. Gagliardi ----------------------------------------- Joseph J. Gagliardi Vice President Finance and Chief Financial Officer (Principal Financial Officer) May 14, 1996 /s/ William J. Warren ----------------------------------------- William J. Warren Vice President and Chief Accounting Officer (Principal Accounting Officer) - 24 - EX-3.1 2 ARTICLES OF MERGER 1 EXHIBIT 3.1 ARTICLES OF MERGER BETWEEN HARVARD INDUSTRIES, INC., AND HARVARD MERGER CORPORATION Pursuant to Section 607.1105 of the Florida Business Corporation Act and Section 252 of the General Corporation Law of the State of Delaware, Harvard Merger Corporation, a Florida corporation ("Survivor") and Harvard Industries, Inc., a Delaware corporation ("Merging Corporation"), hereby adopt the following Articles of Merger for the purpose of effecting the merger of the Merging Corporation into its subsidiary, the Survivor, which will be the surviving corporation (the "Merger"). ARTICLE I The Agreement and Plan of Merger effecting the Merger of the Merging Corporation with and into the Survivor is attached hereto and made a part of these Articles of Merger as Exhibit "A". ARTICLE II The name of the surviving corporation is Harvard Merger Corporation which, pursuant to the Agreement and Plan of Merger, will change its name from and after the effective date, as hereinafter provided, to Harvard Industries, Inc. ARTICLE III The effective date of the Merger shall be upon the filing of these Articles of Merger with the Secretary of State of Florida. ARTICLE IV The Agreement and Plan of Merger was adopted by the unanimous written consent of the Board of Directors of Survivor on February 9, 1996 and by the written consent of Merging Corporation, as the sole shareholder of Survivor, on behalf of Survivor on February 9, 1996. The Agreement and Plan of Merger was adopted by the unanimous written consent of the Board of Directors of Merging Corporation and by the affirmative vote of the holders of a majority of the aggregate number of outstanding shares of Common Stock of Merging Corporation on March 18, 1996. 2 IN WITNESS WHEREOF, the undersigned has executed this document as of the 20th day of March, 1996. HARVARD MERGER CORPORATION, a Florida corporation By: --------------------------------- Title: President HARVARD INDUSTRIES, INC., a Delaware corporation By: --------------------------------- Title: Vice President 3 EXHIBIT "A" AGREEMENT AND PLAN OF MERGER THIS AGREEMENT AND PLAN OF MERGER dated March 20, 1996 (the "Agreement"), is entered into between Harvard Merger Corporation, a Florida corporation ("Harvard-Florida"), and Harvard Industries, Inc., a Delaware corporation ("Harvard-Delaware"). BACKGROUND Harvard-Delaware has an aggregate authorized capital stock of (i) 15,000,000 shares of Common Stock, par value $.01 per share (the "Harvard-Delaware Common Stock"), of which, as of February 1, 1996, 6,994,907 shares were issued and outstanding, (ii) 12,000,000 shares of Pay-in-Kind Exchangeable Preferred Stock, par value $.01 per share (the "Harvard-Delaware PIK Preferred"), of which, as of February 1, 1996, 4,035,000 shares were issued and outstanding, (iii) 500,000 shares of Series A Junior Preferred Stock, par value $.01 per share, of which, as of February 1, 1996, no shares were issued and outstanding, and (iv) 2,500,000 shares of Preferred Stock, par value $.01 per share, of which, as of February 1, 1996, no shares were issued and outstanding. Harvard-Florida has an aggregate authorized capital stock of (i) 15,000,000 shares of Common Stock, par value of $.01 per share (the "Harvard-Florida Common Stock"), of which 100 shares were duly issued and are now outstanding, and held by Harvard-Delaware, (ii) 12,000,000 shares of Pay-in-Kind Exchangeable Preferred Stock, par value $.01 per share (the "Harvard-Florida PIK Preferred"), of which, as of February 1, 1996, no shares were issued and outstanding, (iii) 500,000 shares of Series A Junior Preferred Stock, par value $.01 per share, of which, as of February 1, 1996, no shares were issued and outstanding, and (iv) 2,500,000 shares of Preferred Stock, par value $.01 per share, of which, as of February 1, 1996, no shares were issued and outstanding. The respective Boards of Directors of Harvard-Florida and Harvard- Delaware believe that the best interests of Harvard-Florida and Harvard-Delaware and their respective stockholders will be served by the merger of Harvard-Delaware with and into Harvard-Florida under and pursuant to the provisions of this Agreement and the Delaware General Corporation Law and the Florida Business Corporation Act. AGREEMENT In consideration of the mutual agreements contained in this Agreement, the parties hereto agree as set forth below. 1. Merger. Harvard-Delaware shall be merged with and into Harvard-Florida (the "Merger"). 4 2. Effective Date. The Merger shall become effective immediately upon the later of the filing of this Agreement or a certificate of merger with the Secretary of State of Delaware in accordance with the Delaware General Corporation Law and the filing of articles of merger with the Secretary of State of Florida in accordance with the Florida Business Corporation Act. The time of such effectiveness is hereinafter called the "Effective Date." 3. Surviving Corporation. Harvard-Florida shall be the surviving corporation of the Merger and shall continue to be governed by the laws of the State of Florida. On the Effective Date, the separate corporate existence of Harvard-Delaware shall cease. 4. Name of Surviving Corporation. On the Effective Date, the Articles of Incorporation of Harvard-Florida shall be amended to change the name of Harvard-Florida to "Harvard Industries, Inc." 5. Certificate of Incorporation. Except as provided in Section 4, the Articles of Incorporation of Harvard-Florida as it exists on the Effective Date shall be the Articles of Incorporation of Harvard-Florida following the Effective Date, unless and until the same shall thereafter be amended or repealed in accordance with the laws of the State of Florida. 6. By-Laws. The By-Laws of Harvard-Florida as they exist on the Effective Date shall be the By-Laws of Harvard-Florida following the Effective Date, unless and until the same shall be amended or repealed in accordance with the provisions thereof and the laws of the State of Florida. 7. Board of Directors and Officers. The members of the Board of Directors and the officers of Harvard-Delaware immediately prior to the Effective Date shall be the members of the Board of Directors and the officers, respectively, of Harvard-Florida following the Effective Date, and such persons shall serve in such offices for the terms provided by law or in the By-Laws, or until their respective successors are elected and qualified. 8. Retirement of Outstanding Harvard-Florida Stock. On the Effective Date, each of the 100 shares of the Harvard-Florida Common Stock presently issued and outstanding shall be retired, and no shares of Harvard-Florida Common Stock or other securities of Harvard-Florida shall be issued in respect thereof. 9. Conversion of Outstanding Harvard-Delaware Stock. On the Effective Date, each issued and outstanding share of Harvard-Delaware Common Stock and all rights in respect thereof shall be converted into one fully-paid and nonassessable share of Harvard-Florida Common Stock, and each certificate representing shares of Harvard-Delaware Common Stock shall for all purposes be deemed to evidence the ownership of the same number of shares of Harvard-Florida Common Stock as are set forth in such certificate. 5 Also on the Effective Date, each issued and outstanding share of Harvard-Delaware PIK Preferred and all rights in respect thereof shall be converted into one fully-paid and nonassessable share of Harvard- Florida PIK Preferred, and each certificate representing shares of Harvard-Delaware PIK Preferred shall for all purposes be deemed to evidence the ownership of the same number of shares of Harvard-Florida PIK Preferred as are set forth in such certificate. After the Effective Date, each holder of an outstanding certificate representing shares of Harvard-Delaware capital stock may surrender the same to Harvard-Florida's registrar and transfer agent for cancellation, and each such holder shall be entitled to receive in exchange therefore a certificate(s) evidencing the ownership of the same number and class of shares of Harvard-Florida capital stock as are represented by the Harvard-Delaware certificate(s) surrendered to Harvard-Florida's registrar and transfer agent. 10. Stock Options, Warrants, Etc. On the Effective Date, each stock option, stock warrant, and other right to subscribe for or purchase shares of Harvard-Delaware Common Stock shall be converted into a stock option, stock warrant, or other right to subscribe for or purchase the same number of shares of Harvard-Florida Common Stock, and each certificate, agreement, note or other document representing such stock option, stock warrant, convertible debt instrument or other right to subscribe for or purchase shares of Harvard-Delaware Common Stock shall for all purposes be deemed to evidence the ownership of a stock option, stock warrant, or other right to subscribe for or purchase shares of Harvard-Florida Common Stock. 11. Rights and Liabilities of Harvard-Florida. At and after the Effective Date, and all in the manner of and as more fully set forth in the Florida Business Corporation Act and the Delaware General Corporation Law, the title to all real estate and other property, or any interest therein, owned by each of Harvard-Delaware and Harvard-Florida shall be vested in Harvard-Florida without reversion or impairment; Harvard-Florida shall succeed to and possess, without further act or deed, all estates, rights, privileges, powers, and franchises, both public and private, and all of the property, real, personal and mixed, of each of Harvard-Delaware and Harvard-Florida without reversion or impairment; Harvard-Florida shall thenceforth be responsible and liable for all the liabilities and obligations of each of Harvard-Delaware and Harvard-Florida; any claim existing or action or proceeding pending by or against Harvard-Delaware or Harvard-Florida may be continued as if the Merger did not occur or Harvard-Florida may be substituted for Harvard-Delaware in the proceeding; neither the rights of creditors nor any liens upon the property of Harvard-Delaware or Harvard-Florida shall be impaired by the Merger; and Harvard-Florida shall indemnify and hold harmless the officers and directors of each of the parties hereto against all such debts, liabilities and duties and against all claims and demands arising out of the Merger. 6 12. Termination. This Agreement may be terminated and abandoned by action of the respective Boards of Directors of Harvard-Delaware and Harvard-Florida at any time prior to the Effective Date, whether before or after approval by the stockholders of either or both of the parties hereto. 13. Amendment. The Boards of Directors of the parties hereto may amend this Agreement at any time prior to the Effective Date; provided that an amendment made subsequent to the approval of this Agreement by the stockholders of either of the parties hereto shall not: (a) alter or change the number or kind of shares to be received in exchange for or on conversion of all or any of the shares of the parties hereto, (b) change any term of the Articles of Incorporation of Harvard-Florida (except as contemplated below), or (c) change any other terms or conditions of this Agreement if such change would adversely affect the holders of any capital stock of either party hereto. Notwithstanding the foregoing, the Articles of Incorporation of Harvard-Florida may be amended to increase the number of shares of authorized capital stock if such an amendment is adopted by the stockholders of Harvard-Delaware with respect to the Articles of Incorporation of Harvard-Delaware. 14. Conditions. The obligations of the parties to consummate the Merger are subject to the satisfaction of the following conditions: (i) no action, suit or proceeding shall be pending before any court or quasi-judicial or administrative agency of any federal, state or foreign jurisdiction or before any arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling or charge would (a) prevent consummation of the Merger, (b) cause the Merger to be rescinded following consummation, or (c) adversely affect the business, assets, properties, operations (financial or otherwise), or prospects of Harvard-Florida as a result of the Merger (and no such injunction, judgment, order, decree, ruling or charge shall be in effect); and (ii) the parties shall have received all consents of third parties that have agreements with Harvard-Delaware and whose consent is required for the assumption of such agreements by Harvard-Florida. 15. Governing Law. This Agreement shall in all respects be construed, interpreted and enforced in accordance with and governed by the laws of the State of Florida. IN WITNESS WHEREOF, each of the parties hereto has caused this Plan and Agreement of Merger to be executed as of the date first written above. HARVARD MERGER CORPORATION, a Florida corporation By: /s/ Richard T. Dawson ------------------------- Title: President 7 HARVARD INDUSTRIES, INC., a Delaware corporation By: /s/ Joseph J. Gagliardi -------------------------- Title: Vice President EX-3.2 3 CERTIFICATE OF MERGER 1 EXHIBIT 3.2 CERTIFICATE OF MERGER OF HARVARD INDUSTRIES INC. INTO HARVARD MERGER CORPORATION (UNDER SECTION 252 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE) Harvard Merger Corporation hereby certifies that: 1. The name and state of incorporation of each of the constituent business entities are: (a) Harvard Industries, Inc., a Delaware corporation; and (b) Harvard Merger Corporation, a Florida corporation. 2. The Agreement and Plan of Merger (the "Agreement") has been approved, adopted, certified, executed and acknowledged by Harvard Merger Corporation and by Harvard Industries, Inc. in accordance with the provisions of Section 252 of the General Corporation Law of the State of Delaware 3. The name of the surviving corporation is Harvard Merger Corporation, which, pursuant to the Agreement, will change its name from and after the effective date, as hereinafter provided, to Harvard Industries, Inc. 4. The merger shall become effective upon the filing of this Certificate of Merger. 5. The certificate of incorporation of Harvard Merger Corporation, including all amendments made thereto, shall be the certificate of incorporation of the surviving corporation. 6. The surviving corporation is a corporation of the State of Florida. 7. The executed Agreement is on file at the principal place of business of Harvard Merger Corporation at 2502 North Rocky Point Drive, Tampa, Florida 33607. 8. A copy of the Agreement will be furnished by Harvard Merger Corporation, on request and without cost, to any stockholder of Harvard Industries, Inc. or Harvard Merger Corporation. 9. Harvard Merger Corporation hereby agrees that it may be served with process in Delaware in any proceeding for enforcement of any obligation of Harvard Industries, Inc., as well as for enforcement of any obligation of Harvard Merger 2 Corporation arising from the merger, including any suit or other proceeding to enforce the right of any stockholders as determined in appraisal proceedings pursuant to Section 262 of the General Corporation Law of the State of Delaware, and Harvard Merger Corporation hereby irrevocably appoints the Secretary of State of the State of Delaware as its agent to accept service of process in any such suit or other proceedings and a copy of such process shall be mailed by the Secretary of State to Harvard Merger Corporation at the following address: 2502 North Rocky Point Drive, Tampa, Florida 33607. IN WITNESS WHEREOF, Harvard Merger Corporation has caused this certificate to be signed by Richard T. Dawson, the President of Harvard Merger Corporation, on the 20th day of March, 1996. HARVARD MERGER CORPORATION By: ----------------------- Title: President 3 EXHIBIT "A" AGREEMENT AND PLAN OF MERGER THIS AGREEMENT AND PLAN OF MERGER dated March 20, 1996 (the "Agreement"), is entered into between Harvard Merger Corporation, a Florida corporation ("Harvard-Florida"), and Harvard Industries, Inc., a Delaware corporation ("Harvard-Delaware"). BACKGROUND Harvard-Delaware has an aggregate authorized capital stock of (i) 15,000,000 shares of Common Stock, par value $.01 per share (the "Harvard-Delaware Common Stock"), of which, as of February 1, 1996, 6,994,907 shares were issued and outstanding, (ii) 12,000,000 shares of Pay-in-Kind Exchangeable Preferred Stock, par value $.01 per share (the "Harvard-Delaware PIK Preferred"), of which, as of February 1, 1996, 4,035,000 shares were issued and outstanding, (iii) 500,000 shares of Series A Junior Preferred Stock, par value $.01 per share, of which, as of February 1, 1996, no shares were issued and outstanding, and (iv) 2,500,000 shares of Preferred Stock, par value $.01 per share, of which, as of February 1, 1996, no shares were issued and outstanding. Harvard-Florida has an aggregate authorized capital stock of (i) 15,000,000 shares of Common Stock, par value of $.01 per share (the "Harvard-Florida Common Stock"), of which 100 shares were duly issued and are now outstanding, and held by Harvard-Delaware, (ii) 12,000,000 shares of Pay-in-Kind Exchangeable Preferred Stock, par value $.01 per share (the "Harvard-Florida PIK Preferred"), of which, as of February 1, 1996, no shares were issued and outstanding, (iii) 500,000 shares of Series A Junior Preferred Stock, par value $.01 per share, of which, as of February 1, 1996, no shares were issued and outstanding, and (iv) 2,500,000 shares of Preferred Stock, par value $.01 per share, of which, as of February 1, 1996, no shares were issued and outstanding. The respective Boards of Directors of Harvard-Florida and Harvard- Delaware believe that the best interests of Harvard-Florida and Harvard-Delaware and their respective stockholders will be served by the merger of Harvard-Delaware with and into Harvard-Florida under and pursuant to the provisions of this Agreement and the Delaware General Corporation Law and the Florida Business Corporation Act. AGREEMENT In consideration of the mutual agreements contained in this Agreement, the parties hereto agree as set forth below. 10. Merger. Harvard-Delaware shall be merged with and into Harvard-Florida (the "Merger"). 4 11. Effective Date. The Merger shall become effective immediately upon the later of the filing of this Agreement or a certificate of merger with the Secretary of State of Delaware in accordance with the Delaware General Corporation Law and the filing of articles of merger with the Secretary of State of Florida in accordance with the Florida Business Corporation Act. The time of such effectiveness is hereinafter called the "Effective Date." 12. Surviving Corporation. Harvard-Florida shall be the surviving corporation of the Merger and shall continue to be governed by the laws of the State of Florida. On the Effective Date, the separate corporate existence of Harvard-Delaware shall cease. 13. Name of Surviving Corporation. On the Effective Date, the Articles of Incorporation of Harvard-Florida shall be amended to change the name of Harvard-Florida to "Harvard Industries, Inc." 14. Certificate of Incorporation. Except as provided in Section 4, the Articles of Incorporation of Harvard-Florida as it exists on the Effective Date shall be the Articles of Incorporation of Harvard-Florida following the Effective Date, unless and until the same shall thereafter be amended or repealed in accordance with the laws of the State of Florida. 15. By-Laws. The By-Laws of Harvard-Florida as they exist on the Effective Date shall be the By-Laws of Harvard-Florida following the Effective Date, unless and until the same shall be amended or repealed in accordance with the provisions thereof and the laws of the State of Florida. 16. Board of Directors and Officers. The members of the Board of Directors and the officers of Harvard-Delaware immediately prior to the Effective Date shall be the members of the Board of Directors and the officers, respectively, of Harvard-Florida following the Effective Date, and such persons shall serve in such offices for the terms provided by law or in the By-Laws, or until their respective successors are elected and qualified. 17. Retirement of Outstanding Harvard-Florida Stock. On the Effective Date, each of the 100 shares of the Harvard-Florida Common Stock presently issued and outstanding shall be retired, and no shares of Harvard-Florida Common Stock or other securities of Harvard-Florida shall be issued in respect thereof. 18. Conversion of Outstanding Harvard-Delaware Stock. On the Effective Date, each issued and outstanding share of Harvard-Delaware Common Stock and all rights in respect thereof shall be converted into one fully-paid and nonassessable share of Harvard-Florida Common Stock, and each certificate representing shares of Harvard-Delaware Common Stock shall for all purposes be deemed to evidence the ownership of the same number of shares of Harvard-Florida Common Stock as are set forth in such certificate. 5 Also on the Effective Date, each issued and outstanding share of Harvard-Delaware PIK Preferred and all rights in respect thereof shall be converted into one fully-paid and nonassessable share of Harvard- Florida PIK Preferred, and each certificate representing shares of Harvard-Delaware PIK Preferred shall for all purposes be deemed to evidence the ownership of the same number of shares of Harvard-Florida PIK Preferred as are set forth in such certificate. After the Effective Date, each holder of an outstanding certificate representing shares of Harvard-Delaware capital stock may surrender the same to Harvard-Florida's registrar and transfer agent for cancellation, and each such holder shall be entitled to receive in exchange therefore a certificate(s) evidencing the ownership of the same number and class of shares of Harvard-Florida capital stock as are represented by the Harvard-Delaware certificate(s) surrendered to Harvard-Florida's registrar and transfer agent. 19. Stock Options, Warrants, Etc. On the Effective Date, each stock option, stock warrant, and other right to subscribe for or purchase shares of Harvard-Delaware Common Stock shall be converted into a stock option, stock warrant, or other right to subscribe for or purchase the same number of shares of Harvard-Florida Common Stock, and each certificate, agreement, note or other document representing such stock option, stock warrant, convertible debt instrument or other right to subscribe for or purchase shares of Harvard-Delaware Common Stock shall for all purposes be deemed to evidence the ownership of a stock option, stock warrant, or other right to subscribe for or purchase shares of Harvard-Florida Common Stock. 20. Rights and Liabilities of Harvard-Florida. At and after the Effective Date, and all in the manner of and as more fully set forth in the Florida Business Corporation Act and the Delaware General Corporation Law, the title to all real estate and other property, or any interest therein, owned by each of Harvard-Delaware and Harvard-Florida shall be vested in Harvard-Florida without reversion or impairment; Harvard-Florida shall succeed to and possess, without further act or deed, all estates, rights, privileges, powers, and franchises, both public and private, and all of the property, real, personal and mixed, of each of Harvard-Delaware and Harvard-Florida without reversion or impairment; Harvard-Florida shall thenceforth be responsible and liable for all the liabilities and obligations of each of Harvard-Delaware and Harvard-Florida; any claim existing or action or proceeding pending by or against Harvard-Delaware or Harvard-Florida may be continued as if the Merger did not occur or Harvard-Florida may be substituted for Harvard-Delaware in the proceeding; neither the rights of creditors nor any liens upon the property of Harvard-Delaware or Harvard-Florida shall be impaired by the Merger; and Harvard-Florida shall indemnify and hold harmless the officers and directors of each of the parties hereto against all such debts, liabilities and duties and against all claims and demands arising out of the Merger. 6 21. Termination. This Agreement may be terminated and abandoned by action of the respective Boards of Directors of Harvard-Delaware and Harvard-Florida at any time prior to the Effective Date, whether before or after approval by the stockholders of either or both of the parties hereto. 22. Amendment. The Boards of Directors of the parties hereto may amend this Agreement at any time prior to the Effective Date; provided that an amendment made subsequent to the approval of this Agreement by the stockholders of either of the parties hereto shall not: (a) alter or change the number or kind of shares to be received in exchange for or on conversion of all or any of the shares of the parties hereto, (b) change any term of the Articles of Incorporation of Harvard-Florida (except as contemplated below), or (c) change any other terms or conditions of this Agreement if such change would adversely affect the holders of any capital stock of either party hereto. Notwithstanding the foregoing, the Articles of Incorporation of Harvard-Florida may be amended to increase the number of shares of authorized capital stock if such an amendment is adopted by the stockholders of Harvard-Delaware with respect to the Articles of Incorporation of Harvard-Delaware. 23. Conditions. The obligations of the parties to consummate the Merger are subject to the satisfaction of the following conditions: (i) no action, suit or proceeding shall be pending before any court or quasi-judicial or administrative agency of any federal, state or foreign jurisdiction or before any arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling or charge would (a) prevent consummation of the Merger, (b) cause the Merger to be rescinded following consummation, or (c) adversely affect the business, assets, properties, operations (financial or otherwise), or prospects of Harvard-Florida as a result of the Merger (and no such injunction, judgment, order, decree, ruling or charge shall be in effect); and (ii) the parties shall have received all consents of third parties that have agreements with Harvard-Delaware and whose consent is required for the assumption of such agreements by Harvard-Florida. 24. Governing Law. This Agreement shall in all respects be construed, interpreted and enforced in accordance with and governed by the laws of the State of Florida. IN WITNESS WHEREOF, each of the parties hereto has caused this Plan and Agreement of Merger to be executed as of the date first written above. HARVARD MERGER CORPORATION, a Florida corporation By: /s/ Richard T. Dawson ------------------------ Title: President 7 HARVARD INDUSTRIES, INC., a Delaware corporation By: /s/ Joseph J. Gagliardi ------------------------- Title: Vice President EX-3.3 4 ARTICLES OF INCORPORATION 1 EXHIBIT 3.3 ARTICLES OF INCORPORATION OF HARVARD MERGER CORPORATION The undersigned, acting as incorporator of Harvard Merger Corporation, under the Florida Business Corporation Act, adopts the following Articles of Incorporation. FIRST: The name of the Corporation is Harvard Merger Corporation (hereinafter, the "Corporation"). SECOND: The mailing address of the Corporation is 2502 North Rocky Point Drive, Tampa, Florida 33607. THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the laws of the United States and the Florida Business Corporation Act (the "FBCA"). FOURTH: The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is thirty million (30,000,000), consisting of fifteen million (15,000,000) shares of Common Stock, each having a par value of $.01 per share (the "Common Stock"), twelve million (12,000,000) shares of Pay-in-Kind Exchangeable Preferred Stock, par value $.01 per share (the "PIK Preferred"), five hundred thousand (500,000) shares of Series A Junior Preferred Stock, each having a par value of $.01 per share (the "Series A Junior Preferred Stock") and two million five hundred thousand (2,500,000) shares of Preferred Stock, par value $.01 per share (the "Preferred Stock"). The Board of Directors is expressly authorized to provide for the issuance of all or any shares of the Preferred Stock in one or more classes or series, and to fix for each such class or series such voting powers, full or limited, or no voting powers, and such distinctive designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors providing for the issuance of such class or series and as may be permitted by the FBCA, including, without limitation, the authority to provide that any such class or series may be (i) subject to redemption at such time or times and at such price or prices; (ii) entitled to receive dividends (which may be cumulative or non-cumulative) at such rates, on such conditions, and at such times, and payable in preference to, or in such relation to, the dividends payable on any other class or classes or any other series; or (iii) entitled to such rights upon the dissolution of, or upon any distribution of the assets of, the Corporation; all as may be stated in such resolution or resolutions. 2 The following is a statement of the designations and powers, preferences and rights, and qualifications, limitations and restrictions thereof, in respect of the capital stock of the Corporation. 1. Common Stock. Except as otherwise required by law, the holders of Common Stock shall be entitled to one vote per share on all matters upon which holders of shares of Common Stock shall be entitled to vote. 2. PIK Preferred. The voting powers, preferences and relative, participating, optional and other special rights of the PIK Preferred are as follows: (a) Rank. The PIK Preferred shall, with respect to dividend rights and rights on liquidation, winding up and dissolution, rank senior to the Corporation's Common Stock, and to all classes and series of stock of the Corporation now or hereafter authorized, issued or outstanding which by their terms expressly provide that they are junior to the PIK Preferred. All of the foregoing classes of securities, other than the PIK Preferred, are hereinafter referred to as the "Junior Securities." (b) Dividends. The holders of shares of the PIK Preferred shall be entitled to receive, when, as and if declared by the Board of Directors of the Corporation, out of funds legally available therefor, dividends at the rate per annum of $3.5625 per share, and no more, payable, at the option of the Corporation, in cash (subject to the limitations in subparagraph 1(b) of this Article Fourth) or in additional shares of PIK Preferred at the rate of 0.1425 share of PIK Preferred for each share of PIK Preferred. Subject to the provisions of the following paragraph, such dividends shall be cumulative and shall accrue from October 1, 1991 and be payable annually commencing September 30, 1992 and on September 30 annually thereafter (each of such dates being a "Dividend Payment Date"), to holders of record at the close of business on the date specified by the board of Directors at the time such dividend is declared (the "Record Date"), which Record Date shall not be more than 60 days prior to the applicable Dividend Payment Date. All dividends paid with respect to shares of PIK Preferred shall be paid pro rata to the holders entitled thereto. All shares of PIK Preferred issued as a dividend with respect to the PIK Preferred will thereupon be duly authorized, validly issued, fully paid and nonassessable. Accrued but unpaid dividends for any past dividend periods may be declared by the Board of Directors and paid on any date fixed by the Board of Directors, whether or not a regular Dividend Payment Date, to holders of record on the books of the Corporation on such record date as may be fixed by the Board of Directors. Holders of PIK Preferred will not be entitled to any dividends, whether payable in cash, property or stock, in excess of full cumulative dividends provided for herein. Additional shares of PIK Preferred, in an amount per share equal to the dividends 3 accruing on issued and outstanding shares of PIK Preferred shall accrue and be payable in respect of any accrued but unpaid dividends. Dividends payable on the PIK Preferred which would result in fractional shares of PIK Preferred may be paid, at the option of the Corporation, in cash (subject to the limitations in subparagraph 1(b) of this Article Fourth) or fractional shares of PIK Preferred. Dividends payable on the PIK Preferred for any period less than a full annual dividend period shall be computed on the basis of a 365-day year and the actual number of days elapsed in the period for which it is payable. (c) Liquidation Preference. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, then, before any distribution or payment shall be made to the holders of any Junior Securities, including the Common Stock, the holders of the PIK Preferred then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its shareholders an amount in cash equal to $25.00 for each share of PIK Preferred outstanding (which amount is hereinafter referred to as the "Liquidation Preference"), together with an amount in cash equal to all accrued and unpaid dividends thereon to the date fixed for liquidation, dissolution or winding up. Except as provided in the preceding sentence, holders of PIK Preferred shall not be entitled to any distribution in the event of liquidation, dissolution or winding up of the affairs of the Corporation. If the assets of the Corporation available for distribution to its shareholders are not sufficient to pay in full the Liquidation Preference plus accrued and unpaid dividends payable to the holders of outstanding shares of PIK Preferred, then the holders of all such shares shall share ratably in any distribution of assets in accordance with the amount which would be payable on such distribution if the amounts to which the holders of outstanding shares of PIK Preferred are entitled were paid in full. After payment of the full amount of the Liquidation Preference plus accrued and unpaid dividends to which each holder of PIK Preferred is entitled as aforesaid, holders of any class or classes of Junior Securities shall be entitled, to the exclusion of the holders of shares of PIK Preferred, to share, according to their respective rights and preferences, in all remaining assets of the Corporation available for distribution to its shareholders. For the purposes of this subparagraph (2)(c) of Article Fourth, neither the voluntary sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property or assets of the Corporation nor the consolidation or merger of the Corporation with any other corporation shall be deemed to be a voluntary or involuntary liquidation, dissolution or winding up of the Corporation, unless such voluntary sale, conveyance, exchange or transfer shall be pursuant to a plan of liquidation, dissolution or winding up of the Corporation. 4 (d) Redemption. To the extent the Corporation shall have funds legally available therefor, the Corporation, at the option of the Board of Directors, may redeem, in whole or in part, the shares of PIK Preferred at the time outstanding, at any time or from time to time, upon notice given as hereinafter specified, at a redemption price equal to the Liquidation Preference per share, together with accrued and unpaid dividends thereon to the redemption date. On and after the redemption date of a share of PIK Preferred, unless the Corporation defaults in the payment of the redemption price, dividends will cease to accrue on shares of PIK Preferred called for redemption and all rights of holders of such shares will terminate except for the right to receive the redemption price. On November 16, 1998 (the "Mandatory Redemption Date"), the Corporation shall redeem, out of funds legally available therefor, all of the shares of PIK Preferred outstanding, at a redemption price equal to the outstanding Liquidation Preference per share plus all accrued and unpaid dividends on such shares to the redemption date. In the event the Corporation fails to redeem all of the outstanding shares of PIK Preferred on the Mandatory Redemption Date, the outstanding shares of PIK Preferred shall have the voting rights specified in subparagraph (2)(f) of this Article Fourth. (e) Procedure for Redemption. In the event that less than all outstanding shares of PIK Preferred are to be redeemed, the shares of PIK Preferred to be redeemed shall be selected, at the option of the Corporation, pro rata or by lot, except that the Corporation may redeem all shares held by any holders of a number of shares of PIK Preferred not to exceed 1,000 as may be specified by the Corporation. In the event that the Corporation shall redeem shares of PIK Preferred, notice of such redemption shall be mailed by first-class mail, postage prepaid, and mailed not less than 30 days nor more than 60 days prior to the redemption date, addressed to the holders of record of the shares to be redeemed at their respective addresses as they shall appear on the books of the Corporation; provided, however, that failure to give such notice or any defect therein or in the mailing thereof shall not affect the validity of the proceeding for the redemption of any shares so to be redeemed except as to the holder(s) to whom the Corporation has failed to give such notice or except as to the holder(s) to whom notice was defective. Each such notice shall state: (i) the redemption date; (ii) the number of shares of PIK Preferred to be redeemed and, if less than all the shares held by such holder are to be redeemed, the number of such holder's shares to be redeemed; (iii) the redemption price; (iv) the place or places where certificates for such shares are to be surrendered for payment of the redemption price; and (v) that dividends on the shares to be redeemed will cease to accrue on such redemption date. 5 Notice having been mailed as aforesaid and provided that on or before the redemption date funds necessary for such redemption shall have been set aside by the Corporation, separate and apart from its other funds, in trust for the pro rata benefit of the holders of the shares so called for redemption, so as to be and to continue to be available therefor, then, from and after the redemption date, dividends on the shares of PIK Preferred so called for redemption shall cease to accrue, and said shares shall no longer be deemed to be outstanding and shall not have the status of shares of PIK Preferred, and all rights of the holders thereof as shareholders of the Corporation (except the right to receive the redemption price from the Corporation) shall cease. Upon surrender in accordance with said notice of the certificates for any shares so redeemed (properly endorsed or assigned for transfer, if the Board of Directors of the Corporation shall so require and the notice shall so state), such shares shall be redeemed by the Corporation at the redemption price as aforesaid. In case fewer than all the shares represented by any such certificate are redeemed, a new certificate or certificates shall be issued representing the unredeemed shares without cost to the holder thereof. (f) Voting Rights. Except as otherwise provided by law, the holders of shares of PIK Preferred shall not be entitled to any voting rights except as hereinafter provided in this subparagraph (2)(f). (i) If the Corporation shall have failed to meet the mandatory redemption obligation as provided in subparagraph (2)(d) of this Article Fourth (the "Redemption Obligation") or shall be in arrears and have failed to pay a dividend payment as provided in subparagraph (2)(b) of this Article Fourth (the "Dividend Obligation"), then the number of directors constituting the Board of Directors shall, without further action, be increased by two and the holders of PIK Preferred shall have the exclusive right, voting separately as a class, to elect two directors of the Corporation to fill such newly created directorships, the remaining directors to be elected by the other class or classes of stock entitled to vote therefor, at each meeting of shareholders held for the purpose of electing directors. (ii) Whenever such voting right shall have vested, such right may be exercised initially either at a special meeting of the holders of the PIK Preferred, called as hereinafter provided, or any annual meeting of shareholders held for the purpose of electing directors, and thereafter at such annual meetings. Such voting right shall continue, in the event of a failure of a Redemption Obligation, until such time as no shares of PIK Preferred shall remain outstanding, and, in the event of a failure of a Dividend Obligation, until such time as all current dividends have been declared and paid on the outstanding shares of PIK Preferred, at which time such voting right of the holders of the PIK Preferred shall terminate 6 until the next occurrence of a failure of a Redemption Obligation or a Dividend Obligation. (iii) At any time when such voting right shall have vested in the holders of the PIK Preferred Stock, and if such right shall not already have been initially exercised, a proper officer of the Corporation shall, upon the written request of any holder of record of PIK Preferred then outstanding, addressed to the Secretary of the Corporation, call a special meeting of the holders of the PIK Preferred for the purpose of electing directors. Such meeting shall be held at the earliest practicable date upon the notice required for annual meetings of shareholders at the place for holding annual meetings of shareholders of the Corporation or, if none, at a place designated by the Secretary of the Corporation. If such meeting shall not be called by a proper officer of the Corporation within 10 days after the personal service of such written request upon the Secretary of the Corporation, or within 10 days after mailing the same within the United States, by registered mail, addressed to the Secretary of the Corporation at its principal office (such mailing to be evidenced by the registry receipt issued by the postal authorities), then the holders of record of 10% of the shares of the PIK Preferred then outstanding may designate in writing a holder of PIK Preferred Stock to call such meeting at the expense of the Corporation, and such meeting may be called by such person so designated upon the notice required for annual meetings of shareholders and shall be he at the same place as is elsewhere provided in this subparagraph (2)(f)(iii). Any holder of the PIK Preferred shall have access to the stock books of the Corporation for the purpose of causing a meeting of shareholders to be called pursuant to the provisions of this paragraph. (iv) At any meeting held for the purpose of electing directors at which the holders of PIK Preferred shall have the right to elect directors as provided herein, the presence in person or by proxy of the holders of 33-1/3% of the then outstanding shares of PIK Preferred shall be required and be sufficient to constitute a quorum of such class for the election of directors by such class. At any such meeting or adjournment thereof (a) the absence of a quorum of the holders of the PIK Preferred shall not prevent the election of directors other than those to be elected by the holders of stock of such class and the absence of a quorum or quorums of the holders of capital stock entitled to elect such other directors shall not prevent the election of directors to be elected by the holders of the PIK Preferred and (b) in the absence of a quorum of the holders of any class of stock entitled to vote for the election of directors, a majority of the holders present in person or by proxy of such class shall have the power to adjourn the meeting for the election of directors which the holders of such class are entitled to elect, from time to time, without notice other than announcement at the meeting, until a quorum shall be present. 7 (v) The term of office of all directors elected by the holders of the PIK Preferred pursuant to subparagraph (2)(f)(i) in office at any time when the aforesaid voting rights are vested in the holders of the PIK Preferred shall terminate upon the election of their successors at any meeting of shareholders for the purpose of electing directors. Upon any termination of the aforesaid voting rights the term of office of all directors elected by the holders of the PIK Preferred pursuant to subparagraph (2(f)(i) then in office shall thereupon terminate and upon such termination the number of directors constituting the Board of Directors shall, without further action, be reduced by two. (vi) In exercising the voting rights set forth in this subparagraph (2)(f), each outstanding share of PIK Preferred shall be entitled to one vote. (g) Limitation on Restricted Payments. The Corporation shall not, so long as any shares of PIK Preferred are outstanding, (i) declare or pay any dividend or make any distribution on account of Junior Securities (other than dividends or distributions payable in Junior Securities or rights to acquire Junior Securities) or (ii) repurchase any shares of Junior Securities. (h) Reporting Requirements. The Corporation shall send to holders of Common Stock and PIK Preferred by first-class mail, postage prepaid, to their respective addresses as the same shall appear on the stock register of the Corporation, the audited annual financial statements of the Corporation, including the notes thereto and an auditor's report, within 90 days after the end of each fiscal year, and unaudited quarterly financial statements for each of the first three quarters in each fiscal year, within 45 days after the end of each such quarter. (i) Exchange. (i) The Corporation may, at its option, at any time, exchange the Corporation's 14-1/4% Subordinated Notes due November 16, 1998 (the "Exchange Notes") for all (and not less than all) of the PIK Preferred. Holders of outstanding shares of PIK Preferred will be entitled to receive $25 principal amount of Exchange Notes (in denominations as set forth in the Indenture) for each share of PIK Preferred held by them at the time of exchange and each share of PIK Preferred accrued as a dividend on such shares of PIK Preferred on the date of exchange, up to but not including the date of exchange and, for any fractional share of PIK Preferred, such fraction of $25 principal amount of Exchange Notes as such fractional share is a fraction of a whole share of PIK Preferred. (ii) The Corporation will mail to each holder of record of the shares of PIK Preferred written notice of its intention to exchange not less than 30 nor more than 60 days prior to the date fixed for the exchange (the "Exchange Date"). Such notice shall state: (A) the Exchange Date, (B) the place or places where certificates for such shares are to be surrendered 8 for exchange, and (C) that dividends on the shares to be exchanged will cease to accrue on such Exchange Date. Prior to giving the notice of intention to exchange, the Corporation shall authorize the Exchange Notes in an aggregate principal amount equal to the aggregate liquidation amount of all shares of PIK Preferred then outstanding or accrued and execute and deliver with a bank or trust company, with capital and surplus of not less than $50,000,000 selected by the Corporation, and qualify under the Trust Indenture Act of 1939 (the "TIA"), if required, an indenture (the "Indenture") in substantially the form filed as an appendix to the Corporation's Plan of Reorganization filed in connection with its bankruptcy cases, which form is on file with the Secretary of the Corporation, with such changes as would not adversely affect any of the preferences, rights, powers or privileges of any holders of the PIK Preferred, or that may be required by law (including the TIA) or usage, except that prior to the execution of the Indenture (x) the affirmative vote or consent of the holders of at least a majority of the outstanding shares of PIK Preferred shall be required to approve any amendment or supplement that would have required the written consent of the holders of at least a majority in principal amount of the Exchange Notes pursuant to the first sentence of Section 9.02 of the form of the Indenture; and (y) the affirmative vote or consent of each of the holders of the PIK Preferred shall be required to effect any amendment or supplement of any provision in the form of the Indenture having the effects described in the third sentence of Section 9.02 of the form of the Indenture. The Exchange Notes to be issued in exchange for the PIK Preferred shall be duly executed in exchange for the PIK Preferred shall be duly executed and authenticated on or prior to the Exchange Date and the Corporation will pay interest on the Exchange Notes at the rate and on the dates specified in such Indenture from the Exchange Date. (iii) If notice of any exchange by the Corporation pursuant to subparagraph (2)(i) of this Article Fourth shall have been mailed as provided therein, and if on or before the Exchange Date the Exchange Notes shall have been duly executed and authenticated, then on and after the close of business on the Exchange Date, the shares of PIK Preferred to be exchanged, notwithstanding that any certificate therefor shall not have been surrendered for cancellation, shall no longer be deemed outstanding, and all rights with respect to such shares shall forthwith cease and terminate, except the right of the holders thereof to receive upon surrender of their certificates the Exchange Notes. (j) Limitation on Preferred Stock Issuance. The Corporation shall not, so long as any shares of PIK Preferred are outstanding, issue any shares of Preferred Stock which: (i) specify a dividend rate in excess of 14-1/4% of the liquidation preference of such Preferred Stock, (ii) may be redeemed or are subject to sinking fund requirements which must be satisfied prior to the redemption or repurchase of all outstanding shares of the 9 PIK Preferred, (iii) have a mandatory redemption date prior to January 1, 1999, or (iv) rank senior to the PIK Preferred or, unless the net proceeds of the issuance of the Preferred Stock are used to redeem or repurchase PIK Preferred or Exchange Notes, rank pari passu with the PIK Preferred, with respect to dividend rights and rights on liquidation, winding up and dissolution. 3. Series A Junior Preferred Stock. The voting powers, preferences and relative, participating, optional and other special rights of the Series A Junior Preferred Stock are as follows: (a) Dividends and Distributions. The holders of shares of Series A Junior Preferred stock shall entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the last day of March, June, September and December in each year (each such date being referred to herein as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Junior Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $0.01 or (b) subject to the provision for adjustment hereinafter set forth, 100 times the aggregate per share amount of all cash dividends, and 100 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock, par value $0.01 per share, of the Corporation (the "Common Stock") since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Junior Preferred Stock. In the event the Corporation shall at any time after October 18, 1994 (the "Rights Declaration Date") (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount to which holders of shares of Series A Junior Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. The Corporation shall declare a dividend or distribution on the Series A Junior Preferred Stock as provided in the preceding paragraph immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per 10 share on the Series A Junior Preferred stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date. Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Junior Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series A Junior Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Junior Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Junior Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Junior Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 30 days prior to the date fixed for the payment thereof. (b) Voting Rights. Subject to the provision for adjustment hereinafter set forth, each share of Series A Junior Preferred stock shall entitle the holder thereof to 100 votes on all matters submitted to a vote of the shareholders of the Corporation. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the number of votes per share to which holders of shares of Series A Junior Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. Except as otherwise provided herein or by law, the holders of shares of Series A Junior Preferred Stock and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of shareholders of the Corporation. (i) If any time dividends on any Series A Junior Preferred Stock shall be in arrears in an amount equal to six quarterly dividends thereon, the occurrence of such contingency shall mark the beginning of a period (herein called a "default 11 period") which shall extend until such time when all accrued and unpaid dividends for all previous quarterly dividend periods and for the current quarterly dividend period on all shares of Series A Junior Preferred Stock then outstanding shall have been declared and paid or set apart for payment. During each default period, all holders of Preferred Stock (including holders of the Series A Junior Preferred Stock) with dividends in arrears in an amount equal to six quarterly dividends thereon, voting as a class, irrespective of series, shall have the right to elect two directors. (ii) During any default period, such voting right of the holders of Series A Junior Preferred Stock may be exercised initially at a special meeting called pursuant to subparagraph (3)(b)(iii) or at any annual meeting of shareholders, and thereafter at annual meetings of shareholders, provided that such voting right shall not be exercised unless the holders of ten percent (10%) in number of shares of Preferred Stock outstanding shall be present in person or by proxy. The absence of a quorum of the holders of Common Stock shall not affect the exercise by the holders of Preferred Stock of such voting right. At any meeting at which the holders of Preferred Stock shall exercise such voting right initially during an existing default period, they shall have the right, voting as a class, to elect Directors to fill such vacancies, if any, in the Board of Directors as may then exist up to two Directors or, if such right is exercised at an annual meeting, to elect two Directors. If the number which may be so elected at any special meeting does not amount to the required number, the holders of the Preferred Stock shall have the right to make such increase in the number of Directors as shall be necessary to permit the election by them of the required number. After the holders of the Preferred Stock shall have exercised their right to elect Directors in any default period and during the continuance of such period, the number of Directors shall not be increased or decreased except by vote of the holders of Preferred Stock as herein provided or pursuant to the rights of any equity securities ranking senior to or pari passu with the Series A Junior Preferred Stock. (iii) Unless the holders of Preferred Stock shall, during an existing default period, have previously exercised their right to elect Directors, the Board of Directors may order, or any shareholder or shareholders owning in the aggregate not less than ten percent (10%) of the total number of shares of Preferred Stock outstanding, irrespective of series, may request, the calling of special meeting of the holders of Preferred Stock, which meeting shall thereupon be called by the President, a Vice-President or the Secretary of the Corporation. Notice of such meeting and of any annual meeting at which holders of Preferred Stock are entitled to vote pursuant to this subparagraph (iii) shall be given to each holder of record of Preferred Stock by mailing a copy of such notice to him at his last address as the same appears on the books of the Corporation. 12 Such meeting shall be called for a time not earlier than 20 days and not later than 60 days after such order or request or in default of the calling of such meeting within 60 days after such order or request, such meeting may be called on similar notice by any shareholder or shareholders owning in the aggregate not less than ten percent (10%) of the total number of shares of Preferred Stock outstanding. Notwithstanding the provisions of this subparagraph (iii), no such special meeting shall be called during the period within 60 days immediately preceding the date fixed for the next annual meeting of the shareholders. (iv) In any default period, the holders of Common Stock, and other classes of stock of the Corporation if applicable, shall continue to be entitled to elect the whole number of Directors until the holders of Preferred Stock shall have exercised their right to elect two (2) Directors voting as a class, after the exercise of which right (x) the Directors so elected by the holders of Preferred Stock shall continue in office until their successors shall have been elected by such holders or until the expiration of the default period, and (y) any vacancy in the Board of Directors may (except as provided in subparagraph 3(b)(ii)) be filled by vote of a majority of the remaining Directors theretofore elected by the holders of the class of stock which elected the Director whose office shall have become vacant. References in this subparagraph (3)(b) to Directors elected by the holders of a particular class of stock shall include Directors elected by such Directors to fill vacancies as provided in clause (y) of the foregoing sentence. (v) Immediately upon the expiration of a default period, (x) the right of the holders of Preferred Stock as a class to elect Directors shall cease, (y) the term of any Directors elected by the holders of Preferred Stock as a class shall terminate, and (z) the number of Directors shall be such number as may be provided for in the certificate of incorporation or by-laws irrespective of any increase made pursuant to the provisions of subparagraph (3)(b)(ii) (such number being subject, however, to change thereafter in any manner provided by law or in the certificate of incorporation or by-laws). Any vacancies in the Board of Directors effected by the provisions of clauses (y) and (z) in the preceding sentence may be filled by a majority of the remaining Directors. Except as set forth herein, holders of Series A Junior Preferred stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action. (c) Certain Restrictions. Whenever quarterly dividends or other dividends or distributions payable on the Series A Junior Preferred Stock as provided in subparagraph (3)(a) are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A 13 Junior Preferred Stock outstanding shall have been paid in full, the Corporation shall not (i) declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Junior Preferred Stock; (ii) declare or pay dividends on or make any other distributions on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Junior Preferred Stock, except dividends paid ratably on the Series A Junior Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled; (iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Junior Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Junior Preferred Stock; or (iv) purchase or otherwise acquire for consideration any shares of Series A Junior Preferred Stock, or any shares of stock ranking on a parity with the Series A Junior Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes. The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under this subparagraph 3(c), purchase or otherwise acquire such shares at such time and in such manner. (d) Reacquired Shares. Any shares of Series A Junior Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized by unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board of 14 Directors, subject to the conditions and restrictions on issuance set forth herein. (e) Liquidation, Dissolution or Winding Up. Upon any liquidation (voluntary or otherwise), dissolution or winding up of the Corporation, no distribution shall be made to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Junior Preferred Stock unless, prior thereto, the holders of shares of Series A Junior Preferred Stock shall have received an amount equal to 100 times the Exercise Price, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment (the "Series A Liquidation Preference"). Following the payment of the full amount of the Series A Liquidation Preference, no additional distributions shall be made to the holders of shares of Series A Junior Preferred Stock unless, prior thereto, the holders of shares of Common Stock shall have received an amount per share (the "Common Adjustment") equal to the quotient obtained by dividing (i) the Series A Liquidation Preference by (ii) 100 (as appropriately adjusted as set forth under this subparagraph 3(e) to reflect such events as stock splits, stock dividends and recapitalization with respect to the Common Stock) (such number in clause (ii), the "Adjustment Number"). Following the payment of the full amount of the Series A Liquidation Preference and the Common Adjustment in respect of all outstanding shares of Series A Junior Preferred Stock and Common Stock, respectively, holders of Series A Junior Preferred Stock and holders of shares of Common Stock shall receive their ratable and proportionate share of the remaining assets to be distributed in the ratio of the Adjustment Number to 1 with respect to such Preferred Stock and Common Stock, on a per share basis, respectively. In the event, however, that there are not sufficient assets available to permit payment in full of the Series A Liquidation Preference and the liquidation preferences of all other series of preferred stock, if any, which rank on a parity with the Series A Junior Preferred Stock, then such remaining assets shall be distributed ratably to the holders of such parity shares in proportion to their respective liquidation preferences. In the event, however, that there are not sufficient assets available to permit payment in full of the Common Adjustment, then such remaining assets shall be distributed ratably to the holders of Common Stock. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the Adjustment Number in effect immediately prior to such event shall be adjusted by multiplying such Adjustment Number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the 15 number of shares of Common Stock that were outstanding immediately prior to such event. (f) Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Series A Junior Preferred Stock shall at the same time be similarly exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 100 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Junior Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (g) No Redemption. The shares of Series A Junior Preferred Stock shall not be redeemable. (h) Amendment. The Articles of Incorporation of the Corporation shall not be further amended in any manner which would materially alter or change the powers, preferences or special rights of the Series A Junior Preferred Stock so as to affect them adversely without the affirmative vote of the holders of a majority or more of the outstanding shares of Series A Junior Preferred Stock, voting separately as a class. (i) Fractional Shares. Series A Junior Preferred Stock may be issued in fractions of a share which shall entitle the holder, in proportion to such holder's fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Series A Junior Preferred Stock. SIXTH: The following provisions are inserted for the management of the business and the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and shareholders: (1) The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. 16 (2) The directors shall have concurrent power with the shareholders to make, alter, amend, change, add to or repeal the By-Laws of the Corporation. (3) The number of directors of the Corporation shall be as from time to time fixed by, or in the manner provided in, the By-Laws of the Corporation. Election of directors need not be by written ballot unless the By-Laws so provide. (4) In addition to the powers and authority hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the FBCA, these Articles of Incorporation, and any By-Laws adopted by the shareholders; provided, however, that no By-Laws hereafter adopted by the shareholders shall invalidate any prior act of the directors which would have been valid if such By-Laws had not been adopted. SEVENTH: Meetings of shareholders may be held within or without the State of Florida, as the By-Laws may provide. The books of the Corporation may be kept (subject to any provision contained in the FBCA) outside the State of Florida at such place or places as may be designated from time to time by the Board of Directors or in the By-Laws of the Corporation. EIGHTH: The existence of the Corporation will commence on the date of filing of these Articles of Incorporation. NINTH: The street address of the initial registered office of the Corporation is 2502 North Rocky Point Drive, Tampa, Florida 33607, and the name of the Corporation's initial registered agent at that address is Richard T. Dawson. TENTH: The number of directors of the Corporation shall be set in the manner described in the By-Laws, but shall never be less than one. The name of the initial director of the Corporation is Richard T. Dawson, whose street address is 2502 North Rocky Point Drive, Tampa, Florida 33607. ELEVENTH: The name of the incorporator of the Corporation is Michael L. Jamieson, whose street address is 400 North Ashley Drive, Suite 2050, Tampa, Florida 33602. The incorporator of the Corporation assigns to the Corporation his rights under Section 607.0201, Florida Statutes, to constitute a corporation, and he assigns to those persons designated by the Board of Directors any rights he may have as incorporator to acquire any of the capital stock of the Corporation, this assignment becoming effective on the date corporate existence begins. TWELFTH: The power to adopt, alter, amend or repeal By-Laws shall be vested in the Board of Directors and the shareholders, except that the Board of Directors may not amend or repeal any By- 17 Law adopted by the shareholders if the shareholders specifically provide that the By-Law is not subject to amendment or repeal by the directors. THIRTEENTH: The Corporation reserves the right to amend, alter, change or repeal any provision contained in these Articles of Incorporation, in the manner now or hereafter prescribed by statute and in accordance with the provisions of Article Fourth hereof, and all rights conferred upon shareholders herein are granted subject to this reservation. The undersigned incorporator, for the purpose of forming a corporation under the laws of the State of Florida, has executed these Articles of Incorporation this 7th day of February, 1996. INCORPORATOR: /s/ MICHAEL L. JAMIESON ----------------------- Michael L. Jamieson 18 CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED. Pursuant to Chapter 48.091, Florida Statutes, the following is submitted: That Harvard Merger Corporation, desiring to organize under the laws of the State of Florida with its initial registered office, as indicated in the Articles of Incorporation, at 2502 North Rocky Point Drive, City of Tampa, State of Florida, has named Richard T. Dawson as its agent to accept service of process within this state. ACKNOWLEDGMENT: Having been named to accept service of process for the corporation named above, at the place designated in this certificate, I agree to act in that capacity, to comply with the provisions of the Florida Business Corporation Act, and am familiar with, and accept, the obligations of that position. Richard T. Dawson EX-3.4 5 AMENDMENT OF ARTICLES OF INCORPORATION 1 EXHIBIT 3.4 ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION OF HARVARD MERGER CORPORATION Pursuant to the provisions of Section 607.1006 of the Florida Business Corporation Act, Harvard Merger Corporation (the "Corporation") adopts the following Articles of Amendment to its Articles of Incorporation: FIRST: The name of the Corporation is: Harvard Merger Corporation SECOND: The first sentence of Article Fourth of the Articles of Incorporation shall be amended in its entirety to read as follows: The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is forty-five million (45,000,000), consisting of thirty million (30,000,000) shares of Common Stock, each having a par value of $.01 per share ("Common Stock"), twelve million (12,000,000) shares of Pay-in-Kind Exchangeable Preferred Stock, par value $.01 per share (the "PIK Preferred"), five hundred thousand (500,000) shares of Series A Junior Preferred Stock, each having a par value of $.01 per share (the "Series A Junior Preferred Stock") and two million five hundred thousand (2,500,000) shares of Preferred Stock, par value $.01 per share (the "Preferred Stock") FOURTH: The amendment was duly adopted by the directors and shareholders of the Corporation on March 18, 1996. FIFTH: The number of votes cast for the amendment by the shareholders was sufficient for approval. IN WITNESS WHEREOF, these Articles of Amendment have been executed as of March 20, 1996. ---------------------------- Richard T. Dawson, President EX-3.5 6 BY-LAWS OF HARVARD INDUSTRIES, INC 1 EXHIBIT 3.5 BY-LAWS OF HARVARD INDUSTRIES, INC. (hereinafter called the "Corporation") Article I OFFICES Section 1. Registered Office. The registered office of the Corporation shall be in the City of Tampa, State of Florida. Section 2. Other Offices. The Corporation may also have offices at such other places both within and without the State of Florida as the Board of Directors may from time to time determine. Article II MEETING OF SHAREHOLDERS Section 1. Place of Meeting. Meetings of the shareholders for the election of directors or for any other purpose shall be held at such time and place, either within or without the State of Florida as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual Meeting. The Annual Meetings of Shareholders shall be held on such date and at such time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting, at which meetings the shareholders shall, unless otherwise provided by the Articles of Incorporation, elect by a plurality vote a Board of Directors, and transact such other business as may properly be brought before the meeting. Written notice of the Annual Meeting stating the place, date and hour of the meeting shall be given to each shareholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting. Section 3. Special Meetings. Unless otherwise prescribed by law or by the Articles of Incorporation, Special Meetings of Shareholders, for any purpose or purposes, may be called by either (i) the Chairman, if there be one, or (ii) the President, and shall be called by any such officer at the request in writing of a majority of the Board of Directors or at the request in writing of shareholders owning a majority of the capital stock of the Corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Written notice of a Special Meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called shall be given not less than ten nor more than sixty days before the date of the meeting to each shareholder entitled to vote at such meeting. 2 Section 4. Quorum. Except as otherwise provided by law or by the Articles of Incorporation, the holders of a majority of the capital stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the shareholders for the transaction of business. If, however, such quorum shall not be present or represented at any meeting of the shareholders, the shareholders entitled to vote thereat, present in person or represented by proxy, shall, by a majority of those present, have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder to vote at the meeting. Section 5. Voting. Unless otherwise required by law, the Articles of Incorporation or these By-Laws, any question brought before any meeting of shareholders shall be decided by the vote of the holders of a majority of the stock represented and entitled to vote thereat. Each shareholder represented at a meeting of shareholders shall be entitled to cast one vote for each share of the capital stock entitled to vote thereat held by such shareholder. Such votes may be cast in person or by proxy but no proxy shall be voted on or after three years from its date, unless such proxy provides for a longer period. The Board of Directors, in its discretion, or the officer of the Corporation presiding at a meeting of shareholders, in his discretion, may require that any votes cast at such meeting shall be cast by written ballot. Section 6. Consent of Shareholders in Lieu of Meeting. Unless otherwise provided in the Articles of Incorporation, any action required or permitted to be taken at any Annual or Special Meeting of Shareholders of the Corporation, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to these shareholders who have not consent in writing. Section 7. List of Shareholders Entitled to Vote. The officer of the Corporation who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before every meeting of shareholders, a complete list of the shareholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each shareholder and the number of shares registered in the name of each shareholder. Such list shall 3 be open to the examination of any shareholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any shareholder of the Corporation who is present. Section 8. Stock Ledger. The stock ledger of the Corporation shall be the only evidence as to who are the shareholders entitled to examine the stock ledger, the list required by Section 7 of this Article II or the books of the Corporation, or to vote in person or by proxy at any meeting of shareholders. Article III DIRECTORS Section 1. Number and Election of Directors. The Board of Directors shall consist of not less than three nor more than fifteen members, the exact number of which shall be adjusted from time to time by the Board of Directors. Except as provided in Section 2 of this Article or in the Articles of Incorporation, directors shall be elected by a plurality of the votes cast at Annual Meetings of Shareholders, and each director so elected shall hold office until the next Annual Meeting and until his successor is duly elected and qualified, or until his earlier resignation or removal. Any director may resign at any time upon notice to the Corporation. Directors need not be shareholders. Section 2. Vacancies. Unless otherwise provided in the Articles of Incorporation, vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and qualified, or until their earlier resignation or removal. Section 3. Duties and Powers. The business of the Corporation shall be managed by or under the direction of the Board of Directors which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Articles of Incorporation or by these By-Laws directed or required to be exercised or done by the shareholders. Section 4. Meetings. The Board of Directors of the Corporation may hold meetings, both regular and special, either within or without the State of Florida. Regular meetings of the Board of Directors may be held without notice at such time and at such place as may from time to time be determined by the Board of Directors. Special meetings of the Board of Directors may be 4 called by the Chairman, if there be one, the President, or any director. Notice thereof stating the place, date and hour of the meeting shall be given to each director either by mail not less than 48 hours before the date of the meeting, by telephone or telegram on 24 hours notice, or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances. Section 5. Quorum. Except as may be otherwise specifically provided by law, the Articles of Incorporation or these By-Laws, at all meetings of the Board of Directors, a majority of the entire Board of Directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors. If a quorum shall not be present at any meeting of the Board of Directors, a majority of the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 6. Actions of Board. Unless otherwise provided by the Articles of Incorporation or these By-Laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all the members of the Board of Directors or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors or committee. Section 7. Meetings by Means of Conference Telephone. Unless otherwise provided by the Articles of Incorporation or these By-Laws, members of the Board of Directors of the Corporation, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors or such committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 7 shall constitute presence in person at such meeting. Section 8. Committees. The Board of Directors may, by resolution passed by a majority of the entire Board of Directors, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of any such committee. In the absence or disqualification of a member of a committee, and in the absence of a designation by the Board of Directors of an alternate member to replace the absent or disqualified member, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any absent or disqualified member. Any committee, to the extent allowed by law and provided in the resolution establishing such committee, shall have and may exercise 5 all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation. Each committee shall keep regular minutes and report to the Board of Directors when required. (a) Compensation Committee. The Board of Directors shall appoint a Compensation Committee of the Board of Directors (the "Compensation Committee"), which shall be responsible for reviewing (but not approving) all salaries and bonuses paid by the Corporation or its Subsidiaries to the executive officers of the Corporation or its Subsidiaries, employment agreements with a duration of more than one year and all bonus and incentive plans. The Compensation Committee shall consist of three members of the Board of Directors. (b) Audit Committee. The Board of Directors shall appoint an audit committee of the Board of Directors (the "Audit Committee"). Until the audit for fiscal year 1994 is completed, the Audit Committee (i) shall be responsible for determining the scope of the audit conducted by the Corporation's independent public accountants, but shall not have the authority to discharge the Corporation's independent public accountants, (ii) shall review, and may request the Corporation's independent public accountants to substantiate, any bankruptcy expenses incurred by the Corporation, and (iii) shall be allotted reasonable funds for the purpose of retaining such legal counsel and financial and accounting advisors, on terms not in excess of standard hourly rates, bills for which shall be submitted to the Corporation monthly, as the Audit Committee shall determine to be necessary and desirable. In the event the Board of Directors determines that the funds requested by the Audit Committee pursuant to subsection (iii) of the preceding sentence are in excess of that required by the terms of such subsection, the Board of Directors shall submit the determination of the amount of reasonable funds to be allotted to the Audit Committee to an independent arbitrator, selected pursuant to and whose decision shall be made in accordance with the rules of the American Arbitration Association, and who shall reach a decision within 60 days of the time such question is submitted to such independent arbitrator. In making a determination as to an amount of reasonable funds an arbitrator may consider and provide appropriate funds for reasonably probable future developments. Following such decision the Corporation shall not be required to allocate funds to the Audit Committee in excess of the amount determined by such arbitrator to be reasonable, provided, that expenses accrued with respect to legal counsel and financial and accounting advisors to the Audit Committee prior to the arbitrator's decision, not in excess of standard hourly rates, for which bills have been submitted to the Corporation on a monthly basis, shall be paid by the Corporation. In the event of a substantial change in circumstances after the decision of such arbitrator, either the Audit Committee or the Board of Directors may resubmit the determination of the amount of reasonable funds to be allotted to the Audit Committee to an independent arbitrator in the manner described and, after such arbitrator's determination, 6 the Corporation shall allocate funds in accordance with such determination. In addition to the foregoing, the Corporation shall pay the fees and expenses, not in excess of standard rates, incurred by the Audit Committee in connection with any arbitration proceeding provided for by this Section 8, including, but not limited to, fees of legal counsel and financial and accounting advisors. The Audit Committee shall consist of three members of the Board of Directors. Section 9. Compensation. Directors of the Corporation, other than directors who are employees of the Corporation, shall be paid an annual fee in an amount determined by the Board of Directors which, until the later of (i) the time at which no shares of Pay-In-Kind Exchangeable Preferred Stock, par value $.01 per share, of the Corporation and no 14-1/4% Subordinated Notes due November 16, 1988 of the Corporation are outstanding and (ii) September 30, 1994, shall be not less than $25,000 per annum for each such director. The directors shall be paid their reasonable expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. Section 10. Interested Directors. No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose if (i) the material facts as to his or their relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (ii) the material facts as to his or their relationship or interest and as to the contract or transaction are disclosed or are known to the shareholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the shareholders; or (iii) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee thereof or the shareholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction. 7 Section 11. Expenses. Until the later of the date on which (i) no shares of Pay-In-Kind Exchangeable Preferred Stock, par value $.01 per share, of the Corporation and no 14-1/4% Subordinated Notes due November 16, 1998 of the Corporation are outstanding, or (ii) the audit for fiscal year 1994 is completed and accepted by the Board of Directors, the Board of Directors of the Corporation shall be allotted reasonable funds for the purposes of retaining legal counsel and financial and accounting advisors, on terms not in excess of standard hourly rates, bills for which shall be submitted to the Corporation monthly, in the event any Director shall dispute the determinations of the entire Board of Directors relating to any of the provisions of Articles Fourth or Fifth of the Corporation's Articles of Incorporation. In the event the Board of Directors determines that the funds requested pursuant to the first sentence of this Section 11 are in excess of that required by the terms of such sentence, the Board of Directors shall submit the determination of the amount of reasonable funds to be allotted to the directors to an independent arbitrator, selected pursuant to and whose decision shall be made in accordance with the rules of the American Arbitration Association, and who shall reach a decision within 60 days of the time such question is submitted to such independent arbitrator. In making a determination as to an amount of reasonable funds an arbitrator may consider and provide appropriate funds for reasonably probable future developments. Following such decision the Corporation shall not be required to allocate funds to the directors in excess of the amount determined by such arbitrator to be reasonable, provided, that expenses accrued with respect to legal counsel and financial and accounting advisors to the directors prior to the arbitrator's decision, not in excess of standard hourly rates, for which bills have been submitted to the Corporation on a monthly basis, shall be paid by the Corporation. In the event of a substantial change in circumstances after the decision of such arbitrator, the Board of Directors may resubmit the determination of the amount of reasonable funds to be allotted to the directors to an independent arbitrator in the manner described above and, after such arbitrator's determination, the Corporation shall allocate funds in accordance with such determination. In addition to the foregoing, the Corporation shall pay the fees and expenses, not in excess of standard rates, incurred by the directors in connection with any arbitration proceeding provided for by this Section 11, including, but not limited to, fees of legal counsel and financial and accounting advisors. Section 12. Reports to Directors. Unless otherwise directed by the Audit Committee, the Corporation shall provide monthly reports to the Directors of the Corporation with respect to the following: (a) an executive summary report on the month's operating results. 8 (b) a monthly updated budget for balance of fiscal year and next fiscal year, as available. (c) the Consolidated and Consolidating Balance Sheets, Income Statements and Cash Flow Statements on a monthly and year-to-date basis (including comparison with projections and explanation of variances). (d) the results of all financial covenant tests (including but not limited to Bank covenants). (e) a summary of working capital items (accounts receivable, inventory, prepaid expenses and accounts payable) including: (i) a calculation of days and a comparison with projections, actual results for the prior month and actual results for the same month last year. (ii) an explanation of significant variances from projections. (iii) a breakdown of inventory components by raw materials, work in progress and finished goods. (iv) the amount and percentage of accounts payables past due, a summary of the aging of accounts payable by dollar amount and percent of total. (f) the details of components of Other (Income)/Expense (including comparison with projected and explanation of variance). (g) copies of all reports prepared for the Corporation's leaders. (h) copies of all financial reports prepared for dissemination to shareholders and/or the SEC. In addition, annually, the Corporation shall provide to the Directors of the Corporation the annual budget, including subsidiary budgets. Article IV OFFICERS Section 1. General. The officers of the Corporation shall be chosen by the Board of Directors and shall be a President, a Secretary and a Treasurer. The Board of Directors, in its discretion, may also choose a Chairman of the Board of Directors (who must be a director) and one or more Vice Presidents, Assistant Secretaries, Assistant Treasurers and other officers. Any number of offices may be held by the same person, unless otherwise prohibited by law, the Articles of Incorporation or these By-Laws. 9 The officers of the Corporation need not be shareholders of the Corporation nor, except in the case of the Chairman of the Board of Directors, need such officers be directors of the Corporation. Section 2. Election. The Board of Directors at its first meeting held after each Annual Meeting of Shareholders shall elect the officers of the Corporation who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors; and all officers of the Corporation shall hold office until their successors are chosen and qualified, or until their earlier resignation or removal. Any officer elected by the Board of Directors may be removed at any time by the affirmative vote of a majority of the Board of Directors. Any vacancy occurring in any office of the Corporation shall be filled by the Board of Directors. The salaries of all officers of the Corporation shall be fixed by the Board of Directors. Section 3. Voting Securities Owned by the Corporation. Powers of attorney, proxies, waivers of notice of meeting, consents and other instruments relating to securities owned by the Corporation may be executed in the name of and on behalf of the Corporation by the President or any Vice President and any such officer may, in the name of and on behalf of the Corporation, take all such action as any such officer may deem advisable to vote in person or by proxy at any meeting of security holders of any corporation in which the Corporation may own securities and at any such meeting shall possess and may exercise any and all rights and power incident to the ownership of such securities and which, as the owner thereof, the Corporation might have exercised and possessed if present. The Board of Directors may, by resolution, from time to time confer like powers upon any other person or persons. Section 4. Chairman of the Board of Directors. The Chairman of the Board of Directors, if there be one, shall preside at all meetings of the shareholders and of the Board of Directors. He shall be the Chief Executive Officer of the Corporation, and except where by law the signature of the President is required, the Chairman of the Board of Directors shall possess the same power as the President to sign all contracts, certificates and other instruments of the Corporation which may be authorized by the Board of Directors. During the absence or disability of the President, the Chairman of the Board of Directors shall exercise all the powers and discharge all the duties of the President. The Chairman of the Board of Directors shall also perform such other duties and may exercise such other powers as from time to time may be assigned to him by these By-Laws or by the Board of Directors. Section 5. President. The President shall, subject to the control of the Board of Directors and, if there be one, the Chairman of the Board of Directors, have general supervision of the business of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. He 10 shall execute all bonds, mortgages, contracts and other instruments of the Corporation requiring a seal, under the seal of the Corporation, except where required or permitted by law to be otherwise signed and executed and except that the other officers of the Corporation may sign and execute documents when so authorized by these By-Laws, the Board of Directors or the President. In the absence or disability of the Chairman of the Board of Directors, or if there be none, the President shall preside at all meetings of the shareholders and the Board of Directors. If there be no Chairman of the Board of Directors, the President shall be the Chief Executive Officer of the Corporation. The President shall also perform such other duties and may exercise such other powers as from time to time may be assigned to him by these By- Laws or by the Board of Directors. Section 6. Vice Presidents. At the request of the President or in his absence or in the event of his inability or refusal to act (and if there be no Chairman of the Board of Directors), the Vice President or the Vice Presidents if there is more than one (in the order designated by the Board of Directors) shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. Each Vice President shall perform such other duties and have such other powers as the Board of Directors from time to time may prescribe. If there be no Chairman of the Board of Directors and no Vice President, the Board of Directors shall designate the officer of the Corporation who, in the absence of the President or in the event of the inability or refusal of the President to act, shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. Section 7. Secretary. The Secretary shall attend all meetings of the Board of Directors and all meetings of shareholders and record all the proceedings thereat in a book or books to be kept for that purpose; the Secretary shall also perform like duties for the standing committees when required. The Secretary shall give, or cause to be given, notice of all meetings of the shareholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or President, under whose supervision he shall be. If the Secretary shall be unable or shall refuse to cause to be given notice of all meetings of the shareholders and special meetings of the Board of Directors, and if there be no Assistant Secretary, then either the Board of Directors or the President may choose another officer to cause such notice to be given. The Secretary shall have custody of the seal of the Corporation and the Secretary or any Assistant Secretary, if there be one, shall have authority to affix the same to any instrument requiring it, and when so affixed, it may be attested by the signature of the Secretary or by the signature of any such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by his signature. The Secretary shall see that all books, reports, 11 statements, certificates and other documents and records required by law to be kept or filed are properly kept or filed, as the case may be. Section 8. Treasurer. The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the President and the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all his transactions as Treasurer and of the financial condition of the Corporation. If required by the Board of Directors, the Treasurer shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his office and for the restoration to the Corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the Corporation. Section 9. Assistant Secretaries. Except as may be otherwise provided in these By-Laws, Assistant Secretaries, if there be any, shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, the President, any Vice President, if there be one, or the Secretary, and in the absence of the Secretary or in the event of his disability or refusal to act, shall perform the duties of the Secretary, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Secretary. Section 10. Assistant Treasurers. Assistant Treasurers, if there be any, shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, the President, any vice President, if there be one, or the Treasurer, and in the absence of the Treasurer or in the event of his disability or refusal to act, shall perform the duties of the Treasurer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Treasurer. If required by the Board of Directors, an Assistant Treasurer shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his office and for the restoration to the Corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the Corporation. Section 11. Other officers. Such other officers as the Board of Directors may choose shall perform such duties and have such 12 powers as from time to time may be assigned to them by the Board of Directors. The Board of Directors may delegate to any other officer of the Corporation the power to choose such other officers and to prescribe their respective duties and powers. Article V STOCK Section 1. Form of Certificates. Every holder of stock in the Corporation shall be entitled to have a certificate signed, in the name of the Corporation (i) by the Chairman of the Board of Directors, the President or a Vice President and (ii) by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation, certifying the number of shares owned by him in the Corporation. Section 2. Signatures. Where a certificate is countersigned by (i) a transfer agent other than the Corporation or its employee, or (ii) a registrar other than the Corporation or its employee, any other signature on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. Section 3. Lost Certificates. The Board of Directors may direct a new certificate to be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate, or his legal representative, to advertise the same in such manner as the Board of Directors shall require and/or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed. Section 4. Transfers. Stock of the Corporation shall be transferable in the manner prescribed by law and in these By-Laws. Transfers of stock shall be made on the books of the Corporation only by the person named in the certificate or by his attorney lawfully constituted in writing and upon the surrender of the certificate therefor, which shall be cancelled before a new certificate shall be issued. Section 5. Record Date. In order that the Corporation may determine the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to 13 express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty days nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. Section 6. Beneficial Owners. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law. Article VI NOTICES Section 1. Notices. Whenever written notice is required by law, the Articles of Incorporation or these By-Laws, to be given to any director, member of a committee or shareholder, such notice may be given by mail, addressed to such director, member of a committee or shareholder, at his address as it appears on the records of the Corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Written notice may also be given personally or by telegram, telex or cable. Section 2. Waivers of Notice. Whenever any notice is required by law, the Articles of Incorporation or these By-Laws, to be given to any director, member of a committee or shareholder, a waiver thereof in writing, signed, by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. Article VII GENERAL PROVISIONS Section 1. Dividends. Dividends upon the capital stock of the Corporation subject to the provisions of the Articles of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, and may be paid in cash, in property, or in shares of the capital stock. Before payment of any 14 dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, deems proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for any proper purpose, and the Board of Directors may modify or abolish any such reserve. Section 2. Disbursements. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. Section 3. Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors. Section 4. Corporate Seal. The corporate seal shall have inscribed thereon the name of the Corporation. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. Article VIII INDEMNIFICATION Section 1. Power to Indemnify in Actions, Suits or Proceedings other Than Those by or in the Right of the Corporation. Subject to Section 3 of this Article VIII, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan of other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. 15 Section 2. Power to Indemnify in Actions, Suits or Proceedings by or in the Right of the Corporation. Subject to Section 3 of this Article VIII, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the circuit court or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the circuit court or such other court shall deem proper. Section 3. Authorization of Indemnification. Any indemnification under this Article VIII (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in Section 1 or Section 2 of this Article VIII, as the case may be. Such determination shall be made (i) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (ii) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (iii) by the shareholders, or (iv) as otherwise provided by law. To the extent, however, than a director, officer, employee or agent of the Corporate has been successful on the merits or otherwise in defense of any action, suit or proceeding described above, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith, without the necessity of authorization in the specific case. Section 4. Good Faith Defined. For purposes of any determination under Section 3 of this Article VIII, a person shall be deemed to have acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, or, with respect to any criminal action or proceeding, to have had no reasonable cause to believe his conduct was unlawful, if his action is based on the records or books of account 16 of the Corporation or another enterprise, or on information supplied to him by the officers of the Corporation or another enterprise in the course of their duties, or on the advice of legal counsel for the Corporation or another enterprise or on information or records given or reports made to the Corporation or another enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Corporation or another enterprise. The term "another enterprise" as used in this Section 4 shall mean any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise of which such person is or vas serving at the request of the Corporation as a director, officer, employee or agent. The provisions of this Section 4 shall not be deemed to be exclusive or to limit in any way the circumstances in which a person may be deemed to have met the applicable standard of conduct set forth in Sections 1 or 2 of this Article VIII, as the case may be. Section 5. Indemnification by a Court. Notwithstanding any contrary determination in the specific case under Section 3 of this Article VIII, and notwithstanding the absence of any determination thereunder, any director, officer, employee or agent may apply to any court of competent jurisdiction in the State of Florida for indemnification to the extent otherwise permissible under Sections 1 and 2 of this Article VIII. The basis of such indemnification by a court shall be a determination by such court that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standards of conduct set forth in Sections 1 or 2 of this Article VIII, as the cost may be. Neither a contrary determination in the specific case under Section 3 of this Article VIII nor the absence of any determination thereunder shall be a defense to such application or create a presumption that the director, officer, employee or agent seeking indemnification has not met any applicable standard of conduct. Notice of any application for indemnification pursuant to this Section 5 shall be given to the Corporation promptly upon the filing of such application. If successful, in whole or in part, the director, employee or agent seeking indemnification shall also be entitled to be paid the expense of prosecuting such application. Section 6. Expenses Payable in Advance. Expenses incurred by a director, officer, employee or agent in defending or investigating a threatened or pending action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director, officer, employee or agent to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized in this Article VIII. Section 7. Nonexclusivity of Indemnification and Advancement of Expenses. The indemnification and advancement of expenses provided by or granted pursuant to this Article VIII shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under 17 any By-Law, agreement, contract, vote of shareholders or disinterested directors or pursuant to the direction (howsoever embodied) of any court of competent jurisdiction or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, it being the policy of the Corporation that indemnification of the persons specified in Sections 1 and 2 of this Article VIII shall be made to the fullest extent permitted by law. The provisions of this Article VIII shall not be deemed to preclude the indemnification of any person who is not specified in Sections 1 or 2 of this Article VIII but whom the Corporation has the power or obligation to indemnify under the provisions of the Florida Business Corporation Act, or otherwise. Section 8. Insurance. The Corporation shall purchase and maintain a reasonable level of insurance (but in no event in an amount less than that provided for on September 30, 1991) on behalf of any person who is or was a director or officer of the Corporation, and may purchase and maintain insurance on behalf of any person who is or was an employee or agent, of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power or the obligation to indemnify him against such liability under the provisions of this Article VIII. Section 9. Certain Definitions. For purposes of this Article VIII, references to "the Corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was a director or officer of such constituent corporation serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, shall stand in the same position under the provisions of this Article VIII with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued. For purposes of this Article VIII, references to "fines" shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to "serving at the request of the Corporation" shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to 18 have acted in a manner "not opposed to the best interests of the Corporation" as referred to in this Article VIII. Section 10. Survival of Indemnification and Advancement of Expenses. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VIII shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. Section 11. Limitation on Indemnification. Notwithstanding anything contained in this Article VIII to the contrary, except for proceedings to enforce rights to indemnification (which shall be governed by Section 5 hereof), the Corporation shall not be obligated to indemnify any director, officer, employee or agent in connection with a proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized or consented to by the Board of Directors of the Corporation. Article IX AMENDMENTS Section 1. These By-Laws may be altered, amended or repealed, in whole or in part, or new By-Laws may be adopted by the shareholders or by the Board of Directors, provided, however, that notice of such alteration, amendment, repeal or adoption of new By-Laws be contained in the notice of such meeting of shareholders or Board of Directors as the case may be. All such amendments must be approved by either the holders of a majority of the outstanding capital stock entitled to vote thereon or by a majority of the entire Board of Directors then in office. Section 2. Entire Board of Directors. As used in this Article IX and in these By-Laws generally, the term "entire Board of Directors" means the total number of directors which the Corporation would have if there were no vacancies. EX-10 7 AMENDMENT NO. 1, WAIVERS & CONSENT 1 EXHIBIT 10 CONFORMED COPY AMENDMENT No. 1, WAIVER AND CONSENT dated as of March 31, 1996 (this "AMENDMENT"), to the Credit Agreement dated as of July 28, 1995 (the "CREDIT AGREEMENT"), among HARVARD INDUSTRIES, INC., a Delaware corporation ("HARVARD"), DOEHLER-JARVIS, INC., a Delaware corporation ("DOEHLER-JARVIS"), the Borrowers named therein (the "BORROWERS"), the several banks and other financial institutions party to the Credit Agreement (the "LENDERS"), CHEMICAL BANK, a New York banking corporation ("CHEMICAL BANK"), as administrative agent (in such capacity, the "ADMINISTRATIVE AGENT") and as collateral agent (in such capacity, the "COLLATERAL AGENT") for the Lenders, and CHEMICAL BANK OF DELAWARE, a Delaware banking corporation, as issuing bank (in such capacity, the "ISSUING BANK"). A. Pursuant to the Credit Agreement, the Lenders and the Issuing Bank have extended credit to the Borrowers, and have agreed to extend credit to the Borrowers, in each case pursuant to the terms and subject to the conditions set forth therein. B. Harvard, Doehler-Jarvis and the Borrowers have requested that the Credit Agreement be amended and that the Lenders grant a limited waiver of Sections 6.09 and 6.11 of the Credit Agreement, in each case as set forth herein. C. Harvard has also requested that the Lenders consent to its reincorporation in the State of Florida. D. The Required Lenders are willing so to amend the Credit Agreement, grant such limited waiver and grant such consent, in each case pursuant to the terms and subject to the conditions set forth herein. E. Capitalized terms used but not defined herein shall have the meanings assigned to them in the Credit Agreement, as amended hereby. Accordingly, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. AMENDMENT TO SECTION 1.01 OF THE CREDIT AGREEMENT. (a) Section 1.01 of the Credit Agreement is hereby amended by adding immediately following the word "Indebtedness" in the second line of the definition of the term "Consolidated Current Liabilities" the phrase "and, for the fiscal quarter ending on March 31, 1996, Revolving Loans." 2 SECTION 2. WAIVER. (a) The Required Lenders hereby waive compliance by Harvard with the provisions of Section 6.09 of the Credit Agreement for the two-fiscal-quarter period ending on March 31, 1996, PROVIDED that the ratio described therein is not less than 1.40 to 1.00 for such period. (b) The Required Lenders hereby waive compliance by Harvard with the provisions of Section 6.11 of the Credit Agreement for the fiscal quarter ending on March 31, 1996, PROVIDED that the ratio described therein does not exceed 4.75 to 1.00 for such period. SECTION 3. CONSENT. The Required Lenders hereby consent to Harvard's reincorporation in the State of Florida, PROVIDED, HOWEVER, that (a) the certificate or articles of incorporation filed in connection with such reincorporation and the by-laws adopted in connection therewith do not differ in any material respect from the existing certificate or articles of incorporation and by-laws, (b) such reincorporation shall not adversely affect the Lenders, (c) the Administrative Agent shall have received a favorable written opinion of counsel for Harvard to such effect and (d) the Administrative Agent shall have received a certified copy of the certificate or articles of incorporation and by-laws filed in the State of Florida. SECTION 4. REPRESENTATIONS AND WARRANTIES. To induce the other parties hereto to enter into this Amendment, each of Harvard, Doehler-Jarvis and the Borrowers represents and warrants to each of the Lenders, the Administrative Agent, the Collateral Agent and the Issuing Bank that, following giving effect to this Amendment, (a) the representations and warranties set forth in Article III of the Credit Agreement are true and correct in all material respects on and as of the date hereof with the same effect as though made on and as of the date hereof, except to the extent such representations and warranties expressly relate to an earlier date, and (b) no Default or Event of Default has occurred and is continuing. SECTION 5. CONDITIONS TO EFFECTIVENESS. This Amendment shall become effective on the date that the Administrative Agent shall have received counterparts of this Amendment that, when taken together, bear the signatures of Harvard, Doehler-Jarvis, the Borrowers and the Required Lenders. SECTION 6. EFFECT OF AMENDMENT. Except as expressly set forth herein, this Amendment shall not by implication or otherwise limit, impair, constitute a waiver of, or otherwise affect the rights and remedies of the Lenders, the Administrative Agent, the Collateral Agent, the Issuing Bank, Harvard, Doehler-Jarvis or the Borrowers under the Credit Agreement or any other Loan Document, and shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement, or any other Loan Document, all of which are ratified and affirmed in all respects and shall continue in full force and effect. Nothing herein shall be deemed to entitle 3 Harvard, Doehler-Jarvis or the Borrowers to a consent to, or a waiver, amendment, modification or other change of, any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement, or any other Loan Document in similar or different circumstances. This Amendment shall apply and be effective only with respect to the provisions of the Credit Agreement specifically referred to herein. Any default under this Amendment shall constitute an Event of Default under the Credit Agreement. SECTION 7. COUNTERPARTS. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. Delivery of any executed counterpart of a signature page of this Amendment by facsimile transmissions shall be as effective as delivery of a manually executed counterpart hereof. SECTION 8. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. SECTION 9. HEADINGS. The headings of this Amendment are for purposes of reference only and shall not limit or otherwise affect the meaning hereof. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their duly authorized officers, all as of the date and year first above written. HARVARD INDUSTRIES, INC., By: /s/ JOSEPH J. GAGLIARDI --------------------------- Name: Joseph J. Gagliardi Title: Vice President-Finance and Chief Financial Officer HARMAN AUTOMOTIVE, INC., By: /s/ Authorized Officer --------------------------- Name: Title: HAYES-ALBION CORPORATION, By: /s/ Authorized Officer --------------------------- Name: Title: 4 THE KINGSTON-WARREN CORPORATION, By: /s/ Authorized Officer --------------------------- Name: Title: DOEHLER-JARVIS, INC., By: /s/ Authorized Officer --------------------------- Name: Title: DOEHLER-JARVIS GREENEVILLE, INC., By: /s/ Authorized Officer --------------------------- Name: Title: DOEHLER-JARVIS POTTSTOWN, INC., By: /s/ Authorized Officer --------------------------- Name: Title: DOEHLER-JARVIS TECHNOLOGIES, INC., By: /s/ Authorized Officer --------------------------- Name: Title: DOEHLER-JARVIS TOLEDO, INC., By: /s/ Authorized Officer --------------------------- Name: Title: CHEMICAL BANK, individually and as Administrative Agent, Collateral Agent and Swingline Lender, By: /s/ Authorized Officer --------------------------- Name: Title: 5 CHEMICAL BANK DELAWARE, as Issuing Bank, By: /s/ --------------------------- Name: Title: COMERICA BANK, By: /s/ --------------------------- Name: Title: FIRST UNION COMMERCIAL CORPORATION By: /s/ Authorized Officer --------------------------- Name: Title: IBJ SCHRODER BANK AND TRUST COMPANY By: /s/ Authorized Officer --------------------------- Name: Title: MIDLANTIC BANK, N.A., By: /s/ Authorized Officer --------------------------- Name: Title: NBD BANK, By: /s/ --------------------------- Name: Title: SANWA BUSINESS CREDIT CORPORATION, By: /s/ Authorized Officer --------------------------- Name: Title: EX-12.1 8 COMPUTATION OF EARNINGS 1 EXHIBIT 12.1 HARVARD INDUSTRIES INC. COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND DIVIDENDS ON PREFERRED STOCK (In thousands of dollars)
Three months ended Six months ended March 31, March 31, --------------------- ---------------------- 1996 1995 1996 1995 ---------- ---------- ---------- ---------- Pre-tax income (loss)..................................... $ (20,413) $ 9,654 $ (21,237) $ 13,900 Add: Fixed charges........................................ 10,545 4,210 20,829 8,081 ---------- ---------- ---------- ---------- Income as adjusted........................................ $ (9,868) $ 13,864 $ (408) $ 21,981 ========== ========== ========== ========== Fixed charges: Interest on indebtedness.............................. $ 10,311 $ 4,054 $ 20,361 $ 7,769 Portion of rents representative of the interest factor 234 156 468 312 ---------- ---------- ---------- ---------- Fixed charges......................................... 10,545 4,210 20,829 8,081 Dividends on preferred stock and accretion................ 3,712 3,766 7,422 7,533 ---------- ---------- ---------- ---------- Fixed charges and dividends on preferred stock............ $ 14,257 $ 7,976 $ 28,251 $ 15,614 ========== ========== ========== ========== Ratio of earnings over fixed charges and dividends on preferred stock ................................... 1.74 x 1.41 x ========== ========== Deficiency of earnings over fixed charges and dividends on preferred stock.......................... $ (24,125) $ (28,659) ========== ==========
EX-27 9 FINANCIAL DATA SCHEDULE (FOR SEC USE ONLY)
5 1,000 6-MOS SEP-30-1996 OCT-01-1995 MAR-31-1996 3,733 0 100,843 0 61,889 167,713 408,860 101,026 641,524 159,403 300,000 107,073 0 70 (92,367) 641,524 411,357 411,357 384,776 406,975 5,258 0 20,361 (21,237) 1,449 (22,686) 0 0 0 (22,686) (4.30) (4.30)
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