March 15, 1997
Xxxxxx Xxxxxxxxxxx
Xxxxx International, Ltd.
00 Xxxxxxxxxx Xxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
Dear Xxx:
The purpose of this letter is to set forth the terms upon which Noble
International, Ltd. ("Noble") shall acquire the remaining shares in DCT
Component Systems, Inc. ("Components") from DCT Companies, Inc. ("DCT") and/or
Xxxxx Xxxxxx Xxxxxxxxx, III ("Xxxxxxxxx") and Xxxxx X. Xxxxx ("Xxxxx")
(collectively the ("Parties").
The terms as set forth below shall serve to modify the relationship of
Noble, Component, DCT, Xxxxxxxxx and Xxxxx as described in the Shareholder
Agreement dated July 1, 1996, Stock Purchase Agreement dated July 1, 1996,
Management Agreement dated July 1, 1996, License Agreement dated July 1, 1996,
Voting Agreement dated July l, 1996, Irrevocable Proxy of Xxxxx X. Xxxxx dated
July 1, 1996, Irrevocable Proxy of Xxxxx Xxxxxx Xxxxxxxxx, III dated July 1,
1996, Indemnification Agreement of Noble International, Ltd. and Xxxxx Xxxx
dated July 1, 1996, Indemnification Agreement of DCT Companies, Inc. dated July
1, 1996, Assignment and Assumption of Claim as to General Motors Corporation
dated July 1, 1996, Assignment and Assumption of Claim as to TRW dated July 1,
1996, Line of Credit Promissory Note to DCT Component Systems dated July 1, 1996
and the Memorandum of Understanding dated July 1, 1996 (collectively the
"Agreements").
Under the terms of the Agreements, Xxxxxxxxx and Stone would continue to be
Shareholders in Components subject to Noble's option rights and the "put" and
"call" provisions of the Agreements. The Parties now wish to modify their
rights, duties and obligations under the Agreements as follows:
1. Noble intends to complete a private placement or initial public offers
on or about June 30, 1997 ("Settlement Date");
Xxxxxx Xxxxxxxxxxx
Xxxxx International, Ltd.
March 15, 1997
Page 2
2. Noble wishes to acquire on or before the Settlement Date, the
remaining shares of Xxxxxxxxx, Xxxxx and/or DCT in Components not
covered by its option and Xxxxxxxxx'x and Stone's remaining interest
in Competitive Technology Investment Company ("Competitive");
3. Xxxxxxxxx, Xxxxx and/or DCT are willing to allow Noble to acquire
their remaining shares in Components and Competitive on the following
terms and conditions:
(i) On or before the Settlement Date, Noble shall pay the entire
principal balance plus accrued interest if any under the Line of
Credit Promissory Note dated July 1, 1996 between Components and
DCT ("Note");
(ii) On or before the Settlement Date Noble shall obtain the release
of the personal guaranty of Xxxxxxxxx and Xxxxx and the keepwell
provision as to DCT from CIT;
(iii) On or before the Settlement Date Noble shall refinance the Bank
of Bloomfield as to the term note to Xxxxxxxxx and Xxxxx or
obtain a release as to them and shall obtain the release of their
guaranty on the real estate mortgage;
(iv) On or before the Settlement Date Noble shall use its best efforts
to obtain the release of the guaranty of Xxxxxxxxx, Xxxxx and DCT
to Deutsche Credit Corporation ("Deutsche"). In the event Noble
is unsuccessful in obtaining the releases from Deutsche, Noble
shall enter into a lease agreement for the equipment covered by
the Deutsche financing which shall be sufficient to fully
amortize the entire Deutsche debt and all fees, costs and
expenses attendant thereto; upon the expiration of the lease
agreement, Noble shall have the right to purchase the leased
equipment for $1.00;
(v) On or before the Settlement Date Noble shall use its best efforts
to obtain the release of the guaranty of Xxxxxxxxx and Xxxxx to
Xxxx and Xxxx Xxxxxxxxx ("Xxxxxxxxx") in the event Noble is
unsuccessful in obtaining the
Xxxxxx Xxxxxxxxxxx
Xxxxx International, Ltd.
March 15, 1997
Page 3
releases from Xxxxxxxxx, it shall indemnify Xxxxxxxxx, Xxxxx and
DCT against all judgments, costs, expenses (including attorney
fees), settlements, principal, interest and expenses due
Xxxxxxxxx under the Xxxxxxxxx Agreements or incurred by them with
respect to Xxxxxxxxx;
(vi) Noble shall indemnify Xxxxxxxxx and Xxxxx individually and as
partners in Competitive for all principal, interest, taxes,
assignments, waste, costs, expenses (including attorney fees)
fines, penalties and remediation expenses related to or arising
from the land contracts from Xxxxxxxxx Land Company or imposed as
a result of any legal, regulatory or administrative action
relative to the ownership or use of the real and personal
property by Components, Competitive and its partners;
(vii) If applicable, on or before the Settlement Date Noble shall
obtain a release from Xxxx Xxxxxx of any personal guaranty of
Xxxxxxxxx and Stone of Components' debt to him;
(viii) Noble shall be responsible for all monies due Chrysler, Xxxxxxxxx
and Xxxxx X. Xxxxx shall have no further duty or obligation under
the Memorandum of Understanding dated July l, 1996 ("Memorandum")
whether or not the balance of the transaction as contemplated
herein occurs or not;
(ix) Noble shall acquire the remaining shares of Xxxxxxxxx, Xxxxx
and/or DCT on the Settlement Date in exchange for a promissory
note, the promissory note shall provide that the shares acquired
by Noble shall be valued as of December 31, 1998 utilizing the
Put Value as defined in the Agreements, provided, however, in no
event shall the aggregate price to be paid for the shares be less
than One Million and no/100 ($1,000,000.00) Dollars, the
promissory note shall pay interest at the minimum applicable
federal rate, all principal and interest shall be due and payable
not later than February 15, 1999 as security for
Xxxxxx Xxxxxxxxxxx
Xxxxx International, Ltd.
March 15, 1997
Page 4
the note Noble shall pledge the acquired shares upon such terms
and conditions as shall be mutually agreed upon. "Put Value"
shall mean three (3) times Adjusted EBITDA, the product of which
shall be reduced by (i) the outstanding principal and accrued
interest owing by Components to The CIT Group/Credit Finance Inc.
or Components' then current primary lender(s), on the Valuation
Date, to a maximum reduction of the sum of Five Million Dollars
($5,000,000.00); and (ii) any acquisition debt of Components
approved by the Board of Directors of Components. "Adjusted
EBITDA" shall mean the sum of the earnings of Components,
calculated in accordance with G.A.A.P., consistently applied, by
the independent certified public accountant(s) who last audited
Components' financial statement, except as set forth below before
payment of interest and taxes and before deducting depreciation
and amortization, for the twelve (12) month period ended on the
last day of the month immediately preceding the Valuation Date,
plus all payments made by Components to Noble in excess of One
Hundred Thousand Dollars ($100,000.00) for the twelve (12) month
period ended on the last day of the month immediately preceding
the Valuation Date, plus all payments made as increased salary
for the twelve (12) month period ended on the last day of the
month immediately preceding the Valuation Date. The following
shall be subtracted from earnings for the calculation of Adjusted
EBITDA: the interest or dividend paid during the aforementioned
twelve (12) month look-back period on the balance of any debt or
face value of preferred stock on the books of Components on July
1, 1996, or subsequently placed into an alternative vehicle, due
and owing to Xxxxxxx X. Reason, RJR Investments, Xxxxxxx Xxxxxx,
and/or the Nine Hundred Sixty Thousand Dollars ($960,000.00)
which is owed to DCT.
(x) In addition to the use of Components' NOL's to provide for the
tax consequences of the forgiveness of debt by DCT in 1996, any
excess NOL's not utilized by forgiveness of the DCT
Xxxxxx Xxxxxxxxxxx
Xxxxx International, Ltd.
March 15, 1997
Page 5
debt, may be used by Xxxxxxxxx and Stone for the settlement of
the Internal Revenue Service audit of their personal returns
relative to the inventory adjustments, travel and entertainment
adjustments and valuation of the covenants not to compete for
Xxxx and Xxxx Xxxxxxxxx;
(xi) The transactions as contemplated herein shall be structured so as
to minimize the tax consequences to Xxxxxxxxx and Stone;
(xii) The indemnification and right to reimbursement from Components
granted to Stone and Stone, Biber & X'Xxxxx, P.C. under the
Bylaws and applicable Michigan statute as to the claims of Xxxxxx
XxXxxxxxx and Ninowski, Wood & XxXxxxxxx, Inc. against Stone and
Stone, Biber and X'Xxxxx, P.C. shall remain in full force and
effect against Components;
(xiii) Xxxxxxxxx agrees to serve as a member of Noble's Board of
Directors and its Chairman until December 31, 1999;
(xiv) In addition to any other shares which Xxxxxxxxx and Xxxxx may
have in Noble and as consideration for Xxxxxxxxx'x and Xxxxx'x
service as members of Noble's Board of Directors, Xxxxxxxxx and
Stone shall also be eligible to participate in any stock option
programs for the outside directors of Noble;
(xv) Noble may, if it chooses, continue to use "DCT" as a part of
Components' name so long as Xxxxxxxxx is a member of its Board of
Directors, Noble agrees to discontinue the use of "DCT" as part
of Components' name following Xxxxxxxxx leaving the Noble Board
of Directors;
(xvi) Immediately upon payment in full of the principal plus accrued
interest, if any, under the Note, and the satisfaction of each of
the preceding items, all supermajority voting provisions
regarding the votes of shareholders or directors contained within
the Agreements, including among others, Article II, Section
Xxxxxx Xxxxxxxxxxx
Xxxxx International, Ltd.
March 15, 1997
Page 6
2.1, Article III, Section 3.2 and 3.3, and Article IV, Section
4.9 of the Shareholders Agreement shall be terminated and of no
further force and effect and subsequent votes of Shareholders and
Directors shall be governed by the Corporation's Bylaws; and
(xvii) Immediately upon the payment in full of the principal plus
accrued interest, if any, under the Note, and upon the
satisfaction of each of the preceding items, without affecting
the forgiveness of Debt as provided for in Section 4.3 of the
Shareholder Agreement, the Corporation's obligation to pay DCT
one-half (1/2) of the Bonus Pool Amount as defined in the
Execution Bonus Pool Plan shall be immediately terminated.
4. Except as specifically modified herein all other terms and conditions
of the Agreements shall remain in full force and effect; and
5. Noble's rights to acquire Xxxxxxxxx'x, Xxxxx'x and or DCT's shares as
provided herein shall expire on December 31, 1997 unless otherwise
mutually agreed in writing by the Parties.
As your acknowledgment and consent to the terms and conditions set forth
herein, please sign as indicated below and return a copy to me.
Yours Sincerely,
DCT Companies, Inc.
/s/ Xxxxxx Xxxxxxxxx
-----------------------------------------
Xxxxxx Xxxxxxxxx
C.E.O.
/s/ Xxxxx Xxxxxx Xxxxxxxxx, III
-----------------------------------------
Xxxxx Xxxxxx Xxxxxxxxx, III
Individually
/s/ Xxxxx X. Xxxxx
------------------------------------------
Xxxxx X. Xxxxx
Individually
Xxxxxx Xxxxxxxxxxx
Xxxxx International, Ltd.
March 15, 1997
Page 7
ACKNOWLEDGMENT AND CONSENT
Noble International, Ltd. hereby consents to the terms and conditions as set
forth herein.
Noble International, Ltd.
By: /s/ Xxxxxxx X. Xxxx
--------------------------------------
Xxxxxxx X. Xxxx
Its: Secretary
Dated: 3/15/97
