May 27, 1999
The Borrowers listed
in attached Schedule 1
000 Xxxxxxxxxx Xxxxx
Xxxxx 000
Xxx Xxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxxx
Dear Mr. Chrysler:
This letter constitutes an agreement by and between COMERICA BANK, a
Michigan banking corporation (herein called "Bank"), and the borrowers listed in
attached Schedule 1 (collectively, "Borrowers" and individually "Borrower"),
pertaining to certain loans and other credit which Bank has made or may from
time to time hereafter make available to Borrowers.
In consideration of all present and future loans and credit made available
by Bank to Borrowers, and all present and future liabilities, obligations and
indebtedness of Borrowers to Bank, howsoever created, evidenced, existing or
arising, whether direct or indirect, absolute or contingent, joint or several,
now or hereafter existing or arising, or due or to become due (herein
collectively called the "Liabilities"), Borrowers covenant and agree as follows:
1. Each loan or other extension of credit made by Bank to or otherwise in
favor of Borrowers shall be evidenced by and subject to a promissory note or
other agreement or evidence of indebtedness acceptable to Bank and executed and
delivered by Borrowers to Bank (any and all notes, instruments, documents and
agreements at any time evidencing, governing, securing or otherwise relating to
any of the Liabilities are herein collectively called the "Loan Documents").
2. So long as Bank shall have any commitment or obligation, if any, to make
or extend loans or other credit to or in favor of Borrowers, and thereafter, so
long as any Liabilities remain unpaid and/or outstanding, Borrowers covenant and
agree that they shall:
(a) Furnish, or cause to be furnished, to Bank, (i) within one hundred
twenty (120) days after and as of the end of each fiscal year of
Borrowers, audited consolidated and consolidating financial statements
of JPE, Inc. and its consolidated subsidiaries, in each case certified
by independent certified public accountants satisfactory to Bank; (ii)
within forty five (45) days after and as of the end of each month
unaudited consolidated and consolidating financial statements of JPE,
Inc., and its consolidated subsidiaries, as of the end of such month
and for the portion of the fiscal year of Borrowers then ending, in
each case, certified by a duly authorized officer of Borrowers on
behalf of Borrowers; (iii) on or before December 31 of each year,
annual financial projections for Borrowers for the next fiscal year;
and (iv) within twenty (20) days after and as of the end of each
month, an accounts receivable aging, an accounts payable aging, an
inventory report, and a borrowing base report; and (v) promptly, such
other information and reports as Bank may reasonably request from time
to time or as may be required under any of the Loan Documents. All of
such financial statements and other reports and information to be
furnished to Bank hereunder, to the extent applicable, should be
prepared in accordance with generally accepted accounting principles
consistently applied ("GAAP"), and all such financial statements and
other information and reports to be furnished to Bank pursuant to the
provisions hereof shall be in form and detail reasonably satisfactory
to Bank.
(b) Promptly inform Bank of the occurrence of any event of default, or any
condition or event which, with the giving of notice or the passage of
time, or both, would constitute an event of default under any of the
Liabilities or Loan Documents, or of any condition or event which
would reasonably be expected to have a material adverse effect upon
any Borrower's business, properties, financial condition or ability to
comply with its obligations hereunder or otherwise in respect of any
of the Liabilities.
(c) Maintain all of their principal bank accounts with the Bank.
(d) Pay to Bank quarterly in arrears a facility fee with respect to
Borrowers' working capital line of credit in an amount equal to three
eighths of one percent (3/8%) per annum of the average daily amount by
which $30,000,000 exceeds advances and letters of credit outstanding
under the working capital line of credit. The fee shall be calculated
on the basis of a year of 360 days, for the actual number of days
elapsed.
3. Any failure by Borrowers to fully observe, perform or otherwise comply
with any of the covenants or agreements of Borrowers set forth in this Agreement
shall constitute an event of default under the Liabilities, and Bank shall be
entitled to exercise any and all rights and remedies available to or otherwise
conferred upon Bank as a result thereof, whether by agreement, by law or
otherwise.
4. Borrowers hereby acknowledge and agree that Borrowers' compliance with
the terms and conditions set forth herein, and the absence of any default by
Borrowers in the observance or performance of any of the covenants or agreements
of Borrowers hereunder, shall not in any way limit, restrict or otherwise affect
or impair Bank's right or ability to deem itself to be insecure or make demand
for payment of any or all of the Liabilities which may be on a demand basis at
any time in Bank's sole and absolute discretion, with or without reason or
cause, and the existence of any default hereunder shall not be the sole reason
or basis for enabling Bank to deem itself to be insecure or make demand for
payment of all or any part of such Liabilities.
5. Borrowers shall pay to Bank on the date of execution of this letter
agreement a closing fee equal to $563,000. Such fee shall be deemed fully earned
upon execution of this letter agreement and shall be non-refundable; provided,
however, if (a) the Dayton Parts, Inc. operation is sold on or before May 27,
2000, and the credit facilities have not been terminated before such time (and
no demand for payment thereunder has been made and no default thereunder
occurred and is continuing), or (b) Borrowers obtain cash equity contributions
after the date of execution of this letter agreement, then upon payment to the
Bank of the proceeds of the sale of the Dayton Parts operation or the proceeds
of such cash equity contributions, Bank shall refund to the Borrowers an amount
equal to one percent (1%) of the amount of such net proceeds applied to
permanent reduction of the Liabilities, multiplied by a fraction the numerator
of which is the number of days from the date of application of the proceeds
until May 27, 2000 and the denominator of which is 365.
6. No forbearance on the part of the Bank in enforcing any of its rights or
remedies under this Agreement or any other Loan Document, nor any renewal,
extension or rearrangement of any payment or covenant to be made or performed by
Borrowers hereunder or any such other Loan Document, shall constitute a waiver
of any of the terms of this Agreement or such Loan Document or of any such right
or remedy.
7. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Michigan.
8. Except to the extent expressly stated herein to the contrary, where the
character or amount of any asset or liability or item of income or expense is
required to be determined or other accounting computation is required to be made
for purposes of this Agreement, it shall be done in accordance with GAAP.
Furthermore, all accounting terms not specifically defined in this Agreement
shall be construed in accordance with GAAP.
9. Borrowers agree that it will pay upon demand all reasonable costs and
expenses in connection with the preparation of this Agreement and any other Loan
Documents contemplated hereby, including, without limitation, reasonable
attorneys' fees and disbursements of counsel for the Bank.
10. BORROWERS AND BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING (OR
HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY
AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVE ANY RIGHT TO TRIAL BY JURY
IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN
ANY WAY RELATED TO, THIS AGREEMENT OR THE LIABILITIES.
11. The obligations of the Borrowers under this Agreement are the joint and
several obligations of the Borrowers.
12. This Agreement shall inure to the benefit of and shall be binding upon
the parties hereto and their respective successors and assigns; provided,
however, that Borrowers shall not assign or transfer any of their rights or
obligations hereunder or otherwise in respect of any of the Liabilities without
the prior written consent of Bank.
13. The Bank agrees that it will not disclose without the prior consent of
Borrowers (other than to Bank's employees, its subsidiaries or to its auditors
or counsel) any information with respect to Borrowers which is furnished
pursuant to the Loan Documents; provided that the Bank may disclose any such
information (a) as has become generally available to the public or has been
lawfully obtained by Bank from any third party under no duty of confidentiality
to Borrowers, (b) as may be required or appropriate in any report, statement or
testimony submitted to, or in respect to any inquiry, by, any municipal, state
or federal regulatory body having or claiming to have jurisdiction over Bank,
including the Board of Governors of the Federal Reserve System of the United
States, the Office of the Comptroller of the Currency or the Federal Deposit
Insurance Corporation or similar organizations (whether in the United States or
elsewhere) or their successors, (c) as may be required or appropriate in respect
to any summons or subpoena or in connection with any litigation, (d) in order to
comply with any law, order, regulation or ruling applicable to Bank, and (e) to
any transferee or assignee or to any participant of, or with respect to, the
Loan Documents.
14. To the extent any provision of any Loan Document is in express conflict
with the terms of this letter agreement, the terms of this letter agreement
shall control. If the foregoing is acceptable to Borrowers, please indicate with
the authorized signature of Borrowers as provided below.
Very truly yours,
COMERICA BANK
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Xxxxxxx X. Xxxxxx
Its: Vice President
ACCEPTED, ACKNOWLEDGED AND AGREED
ON MAY 27, 1999
JPE, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------
Xxxxxxx X. Xxxxxxxx
Its: President and Chief Executive Officer
BRAKE, AXLE AND TANDEM COMPANY CANADA INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------
Xxxxxxx X. Xxxxxxxx
Its: Chief Executive Officer
DAYTON PARTS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------
Xxxxxxx X. Xxxxxxxx
Its: Chief Executive Officer
PLASTIC TRIM, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------
Xxxxxxx X. Xxxxxxxx
Its: President
STARBOARD INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------
Xxxxxxx X. Xxxxxxxx
Its: President
JPE FINISHING, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------
Xxxxxxx X. Xxxxxxxx
Its: President
SCHEDULE 1
Borrowers
JPE, Inc.
Brake, Axle and Tandem Company Canada Inc.
Dayton Parts, Inc.
Plastic Trim, Inc.
Starboard Industries, Inc.
JPE Finishing, Inc.
