LOAN AND SECURITY AGREEMENT
This Agreement is between the undersigned Borrower and the undersigned
Lender concerning loans and other credit accommodations to be made by Lender to
Borrower.
SECTION 1. PARTIES
1.1 "Borrower" is the person, firm, corporation or other entity, identified
as the Borrower in Section 10.6(c) and its successors and assigns. If more than
one Borrower is specified in Section 10.6(c), all references to Borrower shall
mean each of them, jointly and severally, individually and collectively, and the
successors and assigns of each.
1.2 "Lender" is The CIT Group/Credit Finance, Inc., a Delaware corporation,
and its successors and assigns.
SECTION 2. LOANS AND OTHER CREDIT ACCOMMODATIONS
2.1 Revolving Loans. Lender shall, subject to the terms and conditions
contained herein, make revolving loans to Borrower ("Revolving Loans") in
amounts requested by Borrower from time to time, but not in excess of the Net
Availability existing immediately prior to the making of the requested loan and
provided the requested loan would not cause the outstanding Obligations to
exceed the Maximum Credit.
(a) The "Maximum Credit" is set forth in Section 10.1(a).
(b) The "Gross Availability" shall be calculated at any time as the
sum of:
(i) the product obtained by multiplying the outstanding amounts
of Eligible Trade Accounts, Eligible Tooling Accounts and Eligible
Chrysler Accounts, in each case net of all taxes, discounts,
allowances and credits given or claimed, by the applicable Eligible
Accounts Percentages described in Section 10.l(b)(l) consisting of the
Eligible Trade Accounts Percentage set forth in Section 10.l(b)(l)(i)
for Eligible Trade Accounts, the Eligible Tooling Accounts Percentage
set forth in Section 10.l(b)(l)(ii) for Eligible Tooling Accounts and
the Eligible Chrysler Accounts Percentage set forth in Section
10.(b)(l)(iii) for Eligible Chrysler Accounts, but the amounts so
added shall not exceed any applicable sublimits set forth in Section
10.1(c), and
(ii) the product(s) obtained by multiplying the applicable
Eligible Inventory Percentage(s), if any, set forth in Section
10.1(b)(2) by the values (as
determined by Lender based on the lower of cost or market value) of
Eligible Inventory, but the amounts so added shall not exceed any
sublimits set forth in Section 10.1(c),
minus any Reserves.
(c) The "Net Availability" shall be calculated at any time as an
amount equal to the Gross Availability minus the aggregate amount of all
then-outstanding Obligations to Lender other than the then outstanding
principal balance of the Term Loan, if any.
(d) "Eligible Accounts" are accounts created by Borrower in the
ordinary course of its business which are and remain acceptable to Lender
for lending purposes. General criteria for Eligible Accounts are set forth
below but may be revised from time to time by Lender, in its sole judgment,
on fifteen (15) days' prior written notice to Borrower. Lender shall, in
general, deem accounts to be Eligible Accounts if:
(1) such accounts arise from bona fide completed transactions and
have not remained unpaid for more than the number of days after the
invoice date set forth in Section 10.1(d);
(2) the amounts of the accounts reported to Lender are absolutely
owing to Borrower and do not arise from sales on consignment,
guaranteed sale or other terms under which payment by the account
debtors may be conditional or contingent;
(3) the account debtor's chief executive office or principal
place of business is located in the continental United States;
(4) such accounts do not arise from progress xxxxxxxx or
retainages or xxxx and hold sales;
(5) there are no contra relationships, setoffs, counterclaims or
disputes existing with respect thereto and there are no other facts
existing or threatened which would impair or delay the collectibility
of all or any portion thereof;
(6) the goods giving rise thereto were not at the time of the
sale subject to any liens except those permitted in this Agreement;
(7) such accounts are not accounts with respect to which the
account debtor or any officer or employee thereof is an officer,
employee or agent of or is affiliated with Borrower, directly or
indirectly, whether by virtue of family membership, ownership,
control, management or otherwise;
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(8) such accounts are not accounts with respect to which the
account debtor is the United States or any State or political
subdivision thereof or any department, agency or instrumentality of
the United States, any State or political subdivision, unless there
has been compliance with the Assignment of Claims Act or any similar
State or local law, if applicable;
(9) Borrower has delivered to Lender or Lender's representative
such original documents as Lender may have requested pursuant to
Section 5.8 hereof in connection with such accounts and Lender shall
have received a verification of such account, satisfactory to it, if
sent to the account debtor or any other obligor or any bailee pursuant
to Section 5.4 hereof;
(10) there are no facts existing or threatened which might result
in any adverse change in the account debtor's financial condition;
(11) such accounts owed by a single account debtor (other than
the account debtors set forth in Section 10.l(f)) or its affiliates do
not represent more than twenty (20%) percent of all otherwise Eligible
Accounts (accounts excluded from Eligible Accounts solely by reason of
this subsection (11) shall nevertheless be considered Eligible
Accounts to the extent of the amount of such accounts which does not
exceed twenty (20%) percent of all otherwise Eligible Accounts);
(12) such accounts are not owed by an account debtor who is or
whose affiliates are past due upon other accounts owed to Borrower
comprising more than fifty percent (50%) of the accounts of such
account debtor or its affiliates owed to Borrower;
(13) such accounts are owed by account debtors whose total
indebtedness to Borrower does not exceed the amount of any customer
credit limits as established by Borrower or credit limits on such
accounts as established by Lender, and changed, from time to time by
Lender on notice to Borrower (accounts excluded from Eligible Accounts
solely by reason of this subsection (13) shall nevertheless be
considered Eligible Accounts to the extent the amount of such accounts
does not exceed such customer credit limit); and
(14) such accounts are owed by account debtors deemed
creditworthy at all times by Lender.
(e) "Eligible Accounts Percentages" shall mean any or all of the
Eligible Trade Accounts Percentage, Eligible Tooling Accounts Percentage
and Eligible Chrysler Accounts Percentage, as defined in Section
10.l(b)(l).
(f) "Chrysler" shall mean Chrysler Corporation, with an address at 000
Xxxxxxxx Xxxxx, Xxxxxx Xxxxx, Xxxxxxxx 0000-0000.
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(g) "DCTWA" shall mean DCT Welding and Assembly, Inc., a Michigan
corporation.
(h) "Eligible Trade Accounts" are any Eligible Accounts which
constitute trade receivables of Borrower, excluding any and all trade
receivables owing to Borrower by Chrysler.
(i) "Eligible Tooling Accounts" are any Eligible Accounts which
constitute tooling receivables of Borrower in which the account debtor of
such account has acknowledged in writing the acceptance of the die.
(j) "Eligible Chrysler Accounts" are any Eligible Accounts which
constitute trade receivables and are owing to Borrower by Chrysler.
(k) "Eligible Inventory" is inventory owned by Borrower which is and
remains acceptable to Lender for lending purposes and is located at one of
the addresses set forth in Section 10.6(e). Eligible Inventory shall not
include (i) inventory in the possession of a bailee, consignee,
warehouseman or processor or located at a location leased by Borrower,
unless such bailee, consignee, warehouseman, processor or landlord, as
applicable, delivers to Lender an agreement in form and substance
satisfactory to Lender, together with such Uniform Commercial Code
financing statements as Lender shall require or (ii) inventory located at a
location owned by Borrower which is subject to a mortgage in favor of any
person other than Lender, unless such person delivers to Lender an
agreement in form and substance satisfactory to Lender.
(1) "Eligible Equipment" is equipment owned by Borrower, which is and
remains acceptable to Lender for lending purposes and is located at one of
the addresses set forth in Section 10.6(f).
(m) "Eligible Raw Materials Inventory" is all Eligible Inventory which
constitutes components and service parts.
(n) "Eligible Finished Goods Inventory" is all Eligible Inventory
which constitutes finished goods and coiled steel.
(o) Lender shall have a continuing right to deduct reserves in
determining the Gross Availability ("Reserves"), and to increase and
decrease such Reserves from time to time, if and to the extent that, in
Lender's sole judgment, such Reserves are necessary to protect Lender
against any state of facts which does, or would, with notice or passage of
time or both, constitute an Event of Default or have an adverse effect on
any Collateral. Lender may, at its option, implement Reserves by
designating as ineligible a sufficient amount of accounts and/or inventory
which would otherwise be Eligible Accounts or Eligible Inventory so as to
reduce Gross Availability by the amount of the intended Reserve.
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(p) Subject to the terms and conditions hereof, including but not
limited to the existence of sufficient Gross Availability and Net
Availability, Borrower agrees to borrow amounts from time to time such that
the aggregate outstanding Revolving Loans and term loans, if any, shall at
all times equal or exceed the principal amount set forth in Section 10.1(e)
as the Minimum Borrowing. Borrower covenants, represents and warrants to
Lender that it will maintain Gross Availability and Net Availability at all
times in amounts sufficient to permit Borrower to comply with the Minimum
Borrowing requirement; provided, however, that if Borrower fails to do so,
whether or not sufficient Gross Availability or Net Availability shall
exist at any time or from time to time, interest shall nevertheless accrue
on the Obligations as if Borrower has at all times borrowed such amounts as
would have been sufficient to maintain the outstanding Revolving Loans at
an amount equal to such Minimum Borrowing (and Lender shall have the right
to charge Borrower's loan account for such additional interest); and,
provided, further, however that such accrual of interest shall not impose
upon Lender any obligation to make loans to Borrower to increase the
outstanding Revolving Loans to such Minimum Borrowing.
2.2 Term Loan. The principal amount of the term loan being made
contemporaneously with the initial Revolving Loans by Lender to Borrower is
$2,819,513.75, as set forth in Section 10.2 (the "Term Loan"). Borrower
unconditionally promises to pay to the order of Lender the principal sum of
$2,819,513.75, which sum shall be payable in 23 consecutive monthly installments
on the first day of each month commencing August, 1996. The first 22
installments shall be in the amount of $46,992.00 each and shall be paid in
addition to any other payments of interest or fees otherwise due and payable to
Lender in connection with the Term Loan. The final installment shall be made on
the first day of June, 1998 in the amount of the then unpaid principal balance
hereof and shall include all accrued and unpaid interest thereon.
2.3 Accommodations.
(a) Lender may, in its sole discretion, issue or cause to be issued,
from time to time at Borrower's request and on terms and conditions and for
purposes satisfactory to Lender, credit accommodations consisting of
letters of credit, merchandise purchase guaranties or other guaranties or
indemnities for Borrower's account ("Accommodations"). Borrower shall
execute and perform additional agreements relating to the Accommodations in
form and substance acceptable to Lender and the issuer of any
Accommodations, all of which shall supplement the rights and remedies
granted herein. Any payments made by Lender or any affiliate of Lender in
connection with the Accommodations shall constitute additional Revolving
Loans to Borrower.
(b) In addition to the fees and costs of any issuer in connection with
issuing or administering Accommodations, Borrower shall pay monthly to
Lender, on the first day of each month, a charge on open Accommodations at
the rate per annum set forth in Section 10.3(a) (the "Accommodation
Charges").
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(c) No Accommodation will be issued unless the full amount of the
Accommodation requested, plus fees and costs for issuance, is less than the
Net Availability existing immediately prior to the issuance of the
requested Accommodation, or if the requested Accommodation would cause the
outstanding Obligations to exceed the Maximum Credit, or cause the open
amount of Accommodations to exceed, at any time, the Accommodation sublimit
set forth in Section 10.3(b).
(d) All indebtedness, liabilities and obligations of any sort
whatsoever, however arising, whether present or future, fixed or
contingent, secured or unsecured, due or to become due, paid or incurred,
arising or incurred in connection with any Accommodation shall be included
in the term "Obligations", as defined herein, and shall include, without
limitation, (i) all amounts due or which may become due under any
Accommodation; (ii) all amounts charged or chargeable to Borrower or to
Lender by any bank, other financial institution or correspondent bank which
opens, issues or is involved with such Accommodations; (iii) Lender's
Accommodation Charges and all fees, costs and other charges of any issuer
of any Accommodation; and (iv) all duties, freight, taxes, costs, insurance
and all such other charges and expenses which may pertain directly or
indirectly to any Obligations or Accommodations or to the goods or
documents relating thereto.
(e) Borrower unconditionally agrees to indemnify and hold Lender
harmless from any and all loss, claim or liability (including reasonable
attorneys' fees) arising from any transactions or occurrences relating to
any Accommodation established or opened for Borrower's account, the
Collateral relating thereto and any drafts thereunder, including any such
loss or claim due to any action taken by an issuer of any Accommodation.
Borrower further agrees to indemnify and hold Lender harmless for any
errors or omissions in connection with the Accommodations, whether caused
by Lender, by the issuer of any Accommodation or otherwise. Borrower's
unconditional obligation to indemnify and hold Lender harmless under this
provision shall not be modified or diminished for any reason or in any
manner whatsoever, except for Lender's gross negligence or wilful
misconduct. Borrower agrees that any charges made to Lender by any issuer
of any Accommodation shall be conclusive on Borrower and may be charged to
Borrower's account.
(f) Lender shall not be responsible for: the conformity of any goods
to the documents presented; the validity or genuineness of any documents;
delay, default, or fraud by the Borrower or shipper and/or anyone else in
connection with the Accommodations or any underlying transaction.
(g) Borrower agrees that any action taken by Lender, if taken in good
faith, or any action taken by an issuer of any Accommodation, under or in
connection with any Accommodation, shall be binding on Borrower and shall
not create any resulting liability to Lender. In furtherance thereof,
Lender shall have the full right and authority to clear and resolve any
questions of non-compliance of documents; to give any instructions as
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to acceptance or rejection of any documents or goods; to execute for
Borrower's account any and all applications for steamship or airway
guarantees, indemnities or delivery orders; to grant any extensions of the
maturity of, time of payment for, or time of presentation of, any drafts,
or documents; and to agree to any amendments, renewals, extensions,
modifications, changes or cancellations of any of the terms or conditions
of any of the applications or Accommodations. All of the foregoing actions
may be taken in Lender's sole name, and the issuer thereof shall be
entitled to comply with and honor any and all such documents or instruments
executed by or received solely from Lender, all without any notice to or
any consent from Borrower. None of the foregoing actions described in this
subsection (g) may be taken by Borrower without Lender's express written
consent.
2.4 Certain Amounts Due on Demand. Lender may, in its sole discretion, make
or permit Revolving Loans, Accommodations or other Obligations in excess of the
Maximum Credit, Gross or Net Availability or applicable formulas or sublimits.
All or any portion of such excess(es) shall become immediately due and payable
upon Lender's demand.
SECTION 3. INTEREST AND FEES
3.1 (a) Interest on the Revolving Loans and the Term Loan shall be payable
by Borrower on the first day of each month and shall be calculated at the per
annum rate set forth as the Interest Rate in Section 10.4(a). Interest on the
Revolving Loans shall be calculated upon the closing daily balances in the loan
account of Borrower for each day during the immediately preceding month. The
Interest Rate shall increase or decrease by an amount equal to each increase or
decrease, respectively, in the Prime Rate, effective as of the date of each such
change. Interest shall be calculated on the basis of a three hundred sixty (360)
day year and actual days elapsed. On and after any Event of Default or
termination or non-renewal hereof, interest on all unpaid matured obligations
shall accrue at a rate equal to two percent (2%) per annum in excess of the
Interest Rate otherwise payable until such time as all Obligations are
indefeasibly paid in full (notwithstanding entry of any judgment against
Borrower or the exercise of any other right or remedy by Lender), and all such
interest shall be payable on demand. In no event shall charges constituting
interest exceed the rate permitted under any applicable law or regulation, and
if any provision of this Agreement is in contravention of any such law or
regulation, such provision shall be deemed amended to conform thereto.
(b) The "Prime Rate" is the rate of interest publicly announced by Chase
Manhattan Bank, or its successor, in New York, New York from time to time as its
prime rate (or the equivalent rate charged from time to time by its successor).
The Prime Rate is not intended to be the lowest rate of interest charged by
Chase Manhattan Bank or its successor to its borrowers.
3.2 Borrower shall pay Lender on the date hereof a Closing Fee in the
amount set forth in Section 10.4(b), which fee is fully earned and payable as of
the date hereof.
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3.3 Borrower shall pay Lender on each anniversary of the date hereof a
Facility Fee in the amount set forth in Section 10.4(c), which fee is fully
earned as of the date hereof.
3.4 Borrower shall pay Lender monthly, on the first day of each month
during the initial and each renewal Term an Account Servicing Fee for the
immediately preceding month (or part thereof) in the amount set forth in Section
10.4(d).
3.5 Borrower shall pay Lender monthly, on the first day of each month, in
arrears, an Unused Line Fee for each month during the initial and each renewal
Term at the rate per annum set forth in Section 10.4(e), calculated upon the
amount, if any, by which the Maximum Credit exceeds the average daily
outstanding principal balance of all Revolving Loans, Accommodations and any
Term Loan, in each case during the preceding month.
3.6 At Lender's option, all principal, interest, fees, costs, expenses and
other charges provided for in this Agreement, or in any other agreement now or
hereafter existing between Lender and Borrower, may be charged to any loan
account of Borrower maintained by Lender. Interest, fees for Accommodations, the
Unused Line Fee and any other amounts payable by Borrower to Lender based on a
per annum rate shall be calculated on the basis of actual days elapsed over a
360-day year.
3.7 For purpose of calculating any interest, fees, balances or expenses,
the outstanding daily principal balance of the Revolving Loans shall be deemed
to be zero in the event the outstanding daily principal balance of the Revolving
Loans is a credit balance (i.e., less than zero).
SECTION 4. GRANT OF SECURITY INTEREST
4.1 To secure the prompt and complete payment and performance in full of
all Obligations, Borrower hereby grants to Lender a continuing security interest
in and lien upon, and a right of setoff against, and Borrower hereby assigns and
pledges to Lender, all of the Collateral, including any Collateral not deemed
eligible for lending purposes.
4.2 "Obligations" shall mean any and all Revolving Loans, Term Loans,
Accommodations and all other indebtedness, liabilities and obligations of every
kind, nature and description owing by Borrower to Lender and/or its affiliates,
including principal, interest, charges, fees and expenses, however evidenced,
whether as principal, surety, endorser, guarantor or otherwise, whether arising
under this Agreement or otherwise, whether now existing or hereafter arising,
whether arising before, during or after the initial or any renewal Term or after
the commencement of any case with respect to Borrower under the United States
Bankruptcy Code or any similar statute, whether direct or indirect, absolute or
contingent, joint or several, due or not due, primary or secondary, liquidated
or unliquidated, secured or unsecured, original, renewed or extended and whether
arising directly or howsoever acquired by Lender including from any other entity
outright, conditionally or as collateral security, by
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assignment, merger with any other entity, participations or interests of Lender
in the obligations of Borrower to others, assumption, operation of law,
subrogation or otherwise and shall also include all amounts chargeable to
Borrower under this Agreement or in connection with any of the foregoing.
4.3 "Collateral" shall mean all of the following property of Borrower:
(a) All now owned and hereafter acquired right, title and interest of
Borrower in, to and in respect of all: accounts, interests in goods
represented by accounts, returned, reclaimed or repossessed goods with
respect thereto and rights as an unpaid vendor; contract rights; chattel
paper; investment property; general intangibles (including, but not limited
to, tax and duty refunds, registered and unregistered patents, trademarks,
service marks, copyrights, trade names, applications for the foregoing,
trade secrets, goodwill, processes, drawings, blueprints, customer lists,
licenses, whether as licensor or licensee, choses in action and other
claims, and existing and future leasehold interests in equipment, real
estate and fixtures); documents (including, but not limited to, any and all
bills of lading, dock warrants, clock receipts, warehouse receipts, and
orders for delivery of goods and all other documents of title);
instruments; letters of credit, bankers' acceptances or guaranties; cash
monies, deposits, securities, bank accounts, deposit accounts, credits and
other property now or hereafter held in any capacity by Lender, its
affiliates or any entity which, at any time, participates in Lender's
financing of Borrower or at any other depository or other institution;
investment property; agreements or property securing or relating to any of
the items referred to above;
(b) All now owned and hereafter acquired right, title and interest of
Borrower in, to and in respect of goods, including, but not limited to:
(i) All inventory, wherever located, whether now owned or
hereafter acquired, of whatever kind, nature or description, including
all raw materials, work-in-process, finished goods, and materials to
be used or consumed in Borrower's business; and all names or marks
affixed to or to be affixed thereto for purposes of selling same by
the seller, manufacturer, lessor or licensor thereof;
(ii) All equipment and fixtures, wherever located, whether now
owned or hereafter acquired, including, without limitation, all
machinery, equipment, motor vehicles, furniture and fixtures, and any
and all additions, substitutions, replacements (including spare
parts), and accessions thereof and thereto; and
(iii) All consumer goods, farm products, crops, timber, minerals
or the line (including oil and gas), wherever located, whether now
owned or hereafter acquired, of whatever land, nature or description;
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(c) All now owned and hereafter acquired right, title and interests of
Borrower in, to and in respect of any other personal property in or upon
which Lender has or may hereafter have a security interest, lien or right
of setoff;
(d) All present and future books and records relating to any of the
above including, without limitation, all computer programs, printed output
and computer readable data in the possession or control of the Borrower,
any computer service bureau or other third party; and
(e) All products and proceeds of the foregoing in whatever form and
wherever located, including, without limitation, all insurance proceeds and
all claims against third parties for loss or destruction of or damage to
any of the foregoing.
SECTION 5. COLLECTION AND ADMINISTRATION
5.1 Borrower is authorized to collect the accounts and any other proceeds
of Collateral on behalf of and in trust for Lender, at Borrower's expense, but
such authority shall automatically terminate upon an Event of Default. Lender
may modify or terminate such authority at any time whether or not an Event of
Default has occurred and directly collect the accounts and other monetary
obligations included in the Collateral. Borrower shall, at Borrower's expense
and in the manner requested by Lender from time to time, direct that remittances
and all other proceeds of accounts and other Collateral shall be (a) sent to a
post office box designated by and/or in the name of Lender, or in the name of
Borrower, but as to which access is limited to Lender and/or (b) deposited into
a bank account maintained in the name of Lender and/or a blocked bank account
under arrangements with the depository bank under which all funds deposited to
such blocked bank account are required to be transferred solely to Lender.
Regardless whether any such bank account is maintained in the name of Borrower
or Lender, Borrower shall bear the risk of loss for any reason of all funds in
such bank account. In connection therewith, Borrower shall execute such post
office box and/or blocked bank account agreements as Lender shall specify.
5.2 All Obligations shall be payable at Lender's office designated in
Section 10.6(a) or at Lender's bank designated in Section 10.6(b) or at such
other bank or place as Lender may expressly designate from time to time for
purposes of this Section 5.2. Lender shall apply all proceeds of accounts or
other Collateral received by Lender and all other payments in respect of the
Obligations to the Revolving Loans whether or not then due or to any other
Obligations then due, in whatever order or manner Lender shall determine. For
purposes of determining Gross Availability and Net Availability, remittances and
other payments with respect to the Collateral and Obligations will be treated as
credited to the loan account of Borrower maintained by Lender and Collateral
balances to which they relate, upon the date of Lender's receipt of advice from
Lender's bank that such remittances or other payments have been credited to
Lender's account or in the case of remittances or other payments received
directly in kind by Lender, upon the date of Lender's deposit thereof at
Lender's bank, subject to final payment and
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collection. In computing interest charges, the loan account of Borrower
maintained by Lender will be credited with remittances and other payments three
(3) Business Days after Lender's receipt of advice of deposit for remittances
and other payments in Lender's account at Lender's bank designated in Section
10.6(b) or at such other financial institution as Lender may designate.
"Business Day" shall mean any day other than a Saturday, Sunday or any other day
on which Lender or banks in Chicago, Illinois or New York, New York are
authorized to close.
5.3 Lender shall render to Borrower monthly a loan account statement. Each
statement shall be considered correct and binding upon Borrower as an account
stated, except to the extent that Lender receives, within sixty (60) days after
the mailing of such statement, written notice from Borrower of any specific
exceptions by Borrower to that statement.
5.4 Lender may, at any time, whether or not an Event of Default has
occurred, without notice to or assent of Borrower, (a) notify any account debtor
that the accounts and other Collateral which includes a monetary obligation have
been assigned to Lender by Borrower and that payment thereof is to be made to
the order of and directly to Lender, (b) send, or cause to be sent by its
designee, requests (which may identify the sender by a pseudonym) for
verification of accounts and other Collateral directly to any account debtor or
any other obligor or any bailee with respect thereto, and (c) demand, collect or
enforce payment of any accounts or such other Collateral, but without any duty
to do so, and Lender shall not be liable for any failure to collect or enforce
payment thereof. At Lender's request, all invoices and statements sent to any
account debtor, other obligor or bailee, shall state that the accounts and such
other Collateral have been assigned to Lender and are payable directly and only
to Lender.
5.5 Borrower hereby appoints Lender and any designee of Lender as
Borrower's attorney-in-fact and authorizes Lender or such designee, at
Borrower's sole expense, to exercise at any times in Lender's or such designee's
discretion all or any of the following powers, which powers of attorney, being
coupled with an interest, shall be irrevocable until all Obligations have been
paid in full: (a) receive, take, endorse, assign, deliver, accept and deposit,
in the name of Lender or Borrower, any and all cash, checks, commercial paper,
drafts, remittances and other instruments and documents relating to the
Collateral or the proceeds thereof, (b) transmit to account debtors, other
obligors or any bailees notice of the interest of Lender in the Collateral or
request from account debtors or such other obligors or bailees at any time, in
the name of Borrower or Lender or any designee of Lender, information concerning
the Collateral and any amounts owing with respect thereto, (c) notify account
debtors or other obligors to make payment directly to Lender, or notify bailees
as to the disposition of Collateral, (d) take or bring, in the name of Lender or
Borrower, all steps, actions, suits or proceedings deemed by Lender necessary or
desirable to effect collection of or other realization upon the accounts and
other Collateral, (e) after an Event of Default, change the address for delivery
of mail to Borrower and to receive and open mail addressed to Borrower, (f)
after an Event of Default, extend the time of payment of, compromise or settle
for cash, credit, return of merchandise, and upon any terms or conditions, any
and all accounts or other Collateral which includes a monetary obligation and
discharge or release the account debtor or other obligor, without
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affecting any of the Obligations and (g) execute in the name of Borrower and
file against Borrower in favor of Lender financing statements or amendments with
respect to the Collateral.
5.6 Borrower hereby releases and exculpates Lender, its officers, employees
and designees, from any liability arising from any acts under this Agreement or
in furtherance thereof, whether as attorney-in-fact or otherwise, whether of
omission or commission, and whether based upon any error of judgment or mistake
of law or fact, except for willful misconduct. Lender shall have no liability to
Borrower for lost profits or other special or consequential damages incurred as
a result of Lender's enforcing its rights and remedies hereunder.
5.7 After written notice by Lender to Borrower and automatically, without
notice, after an Event of Default, Borrower shall not, without the prior written
consent of Lender in each instance, (a) grant any extension of time of payment
of any of the accounts or any other Collateral which includes a monetary
obligation, (b) compromise or settle any of the accounts or any such other
Collateral for less than the full amount thereof, (c) release in whole or in
part any account debtor or other person liable for the payment of any of the
accounts or any such other Collateral or (d) grant any credits, discounts,
allowances, deductions, return authorizations or the like with respect to any of
the accounts or any such other Collateral.
5.8 At such times as Lender may request and in the manner specified by
Lender, Borrower shall deliver to Lender or Lender's representative original
invoices, agreements, proofs of rendition of services and delivery of goods and
other documents evidencing or relating to the transactions which gave rise to
accounts or other Collateral, together with customer statements, schedules
describing the accounts or other Collateral and/or statements of account and
confirmatory assignments to Lender of the accounts or other Collateral, in form
and substance satisfactory to Lender and duly executed by Borrower. Without
limiting the provisions of Section 5.2, Borrower's granting of credits,
discounts, allowances, deductions, return authorizations or the like will be
promptly reported to Lender in writing. In no event shall any such schedule or
confirmatory assignment (or the absence thereof or omission of any of the
accounts or other Collateral therefrom) limit or in any way be construed as a
waiver, limitation or modification of the security interests or rights of Lender
or the warranties, representations and covenants of Borrower under this
Agreement. Any documents, schedules, invoices or other paper delivered to Lender
by Borrower may be destroyed or otherwise disposed of by Lender six (6) months
after receipt by Lender, unless Borrower requests their return in writing in
advance and makes prior arrangements for their return, at Borrower's expense.
5.9 From time to time as requested by Lender, at the sole expense of
Borrower, Lender or its designee shall have access, prior to an Event of Default
during reasonable business hours and on or after an Event of Default at any
time, to all of the premises where Collateral is located for the purposes of
inspecting the Collateral, and all Borrower's books and records, and Borrower
shall permit Lender or its designee to make such copies of such books and
records or extracts therefrom as Lender may request. Without expense to Lender,
Lender may use such of Borrower's personnel, equipment, including computer
equipment, programs, printed output
12
and computer readable media, supplies and premises for the collection of
accounts and realization on other Collateral as Lender, in its sole discretion,
deems appropriate. Borrower hereby irrevocably authorizes all accountants and
third parties to disclose and deliver to Lender at Borrower's expense all
financial information, books and records, work papers, management reports and
other information in their possession regarding Borrower.
SECTION 6. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Borrower hereby represents, warrants and covenants to Lender the following,
the truth and accuracy of which, and compliance with which, shall be continuing
conditions of the making of loans or other credit accommodations by Lender to
Borrower:
6.1 Borrower shall keep and maintain its books and records in accordance
with generally accepted accounting principles, consistently applied. Borrower
shall, at its sole expense (i) on or before the fifteenth (15th) day of each
month, deliver to Lender true and complete monthly agings of its accounts
receivable and accounts and notes payable and monthly internally prepared
interim financial statements and (ii) on the first business day of each week,
deliver to Lender weekly inventory reports for the immediately preceding week,
all in such form, and together with such other information with respect to the
business of Borrower or any guarantor, as Lender may request. Annually, Borrower
shall deliver audited financial statements of Borrower accompanied by the report
and opinion thereon of independent certified public accountants acceptable to
Lender, as soon as available, but in no event later than ninety (90) days after
the end of Borrower's fiscal year, provided that with respect to Borrower's
fiscal year ending December 31, 1995, Borrower shall deliver to Lender audited
financial statements accompanied by the report and opinion of certified public
accounts acceptable to Lender on or before July 31, 1996.
6.2 Borrower may from time to time render invoices to account debtors under
its trade names set forth in Section 10.6(h) after Lender has received prior
written notice from Borrower of the use of such trade names and as to which,
Borrower agrees that: (a) each trade name does not refer to another corporation
or other legal entity, (b) all accounts and proceeds thereof (including any
returned merchandise) invoiced under any such trade names are owned exclusively
by Borrower and are subject to the security interest of Lender and the other
terms of this Agreement and (c) all schedules of accounts and confirmatory
assignments including any sales made or services rendered using the trade name
shall show Borrower's name as assignor and Lender is authorized to receive,
endorse and deposit to any loan account of Borrower maintained by Lender all
checks or other remittances made payable to any trade name of Borrower
representing payment with respect to such sales or services.
6.3 Borrower shall promptly notify Lender in writing of any loss, damage,
investigation, action, suit, proceeding or claim relating to a material portion
of the Collateral or which may result in any material adverse change in
Borrower's business, assets, liabilities or condition, financial or otherwise.
13
6.4 Borrower's books and records concerning accounts and its chief
executive office are and shall be maintained only at the address set forth in
Section 10.6(d). Borrower's only other places of business and the only other
locations of Collateral, if any, are and shall be the addresses set forth in
Section 10.6 hereof, except Borrower may change such locations or open a new
place of business after thirty (30) days prior written notice to Lender. Prior
to any change in location or opening of any new place of business, Borrower
shall execute and deliver or cause to be executed and delivered to Lender such
financing statements, financing documents and security and other agreements as
Lender may reasonably require, including, without limitation, those described in
Section 6.14.
6.5 Borrower has and at all times will continue to have good and marketable
title to all of the Collateral, free and clear of all liens, security interests,
claims or encumbrances of any kind except (i) those in favor of Lender and (ii)
those set forth on Schedule A hereto.
6.6 Borrower shall not directly or indirectly: (a) sell, lease, transfer,
assign, abandon or otherwise dispose of any part of the Collateral or any
material portion of its other assets (other than sales of inventory to buyers in
the ordinary course of business) or (b) consolidate with or merge with or into
any other entity, or permit any other entity to consolidate with or merge with
or into Borrower or (c) form or acquire any interest in any firm, corporation or
other entity.
6.7 Borrower shall at all times maintain, with financially sound and
reputable insurers, casualty insurance with respect to the Collateral and other
assets. All such insurance policies shall be in such form, substance, amounts
and coverage as may be satisfactory to Lender and shall provide for thirty (30)
days' prior written notice to Lender of cancellation or reduction of coverage.
Borrower hereby irrevocably appoints Lender and any designee of Lender as
attorney-in-fact for Borrower to obtain at Borrower's expense, any such
insurance should Borrower fail to do so and, after an Event of Default, to
adjust or settle any claim or other matter under or arising pursuant to such
insurance or to amend or cancel such insurance. Borrower shall deliver to Lender
evidence of such insurance and a lender's loss payable endorsement satisfactory
to Lender as to all existing and future insurance policies with respect to the
Collateral. Borrower shall deliver to Lender, in kind, all instruments
representing proceeds of insurance received by Borrower. Lender may apply any
insurance proceeds received at any time to the cost of repairs to or replacement
of any portion of the Collateral and/or, at Lender's option, to payment of or as
security for any of the Obligations, whether or not due, in any order or manner
as Lender determines.
6.8 Borrower is and at all times will continue to be in compliance with the
requirements of all material laws, rules, regulations and orders of any
governmental authority relating to its business (including laws, rules,
regulations and orders relating to taxes, payment and withholding of payroll
taxes, employer and employee contributions and similar items, securities,
employee retirement and welfare benefits, employee health and safety, or
environmental matters) and all material agreements or other instruments binding
on Borrower or its property. All of Borrower's inventory shall be produced in
accordance with the
14
requirements of the Federal Fair Labor Standards Act of 1938, as amended and all
rules, regulations and orders related thereto. Borrower shall pay and discharge
all taxes, assessments and governmental charges against Borrower or any
Collateral prior to the date on which penalties are imposed or liens attach with
respect thereto, unless the same are being contested in good faith and, at
Lender's option, Reserves are established for the amount contested and penalties
which may accrue thereon.
6.9 With respect to each account deemed an Eligible Account, except as
reported in writing to Lender, Borrower has no knowledge that any of the
criteria for eligibility are not or are no longer satisfied. As to each account,
except as disclosed in writing to Lender at the time such account arises (a)
each is valid and legally enforceable and represents an undisputed bona fide
indebtedness incurred by the account debtor for the sum reported to Lender, (b)
each arises from an absolute and unconditional sale of goods, without any right
of return or consignment, or from a completed rendition of services, (c) each is
not, at the time such account arises, subject to any defense, offset, dispute,
contra relationship, counterclaim, or any given or claimed credit, allowance or
discount and (d) all statements made and all unpaid balances and other
information appearing in the invoices, agreements, proofs of rendition of
services and delivery of goods and other documentation relating to the accounts,
and all confirmatory assignments, schedules, statements of account and books and
records with respect thereto, are true and correct and in all respects what they
purport to be.
6.10 With respect to Borrower's equipment, Borrower shall keep the
equipment in good order and repair, and in running and marketable condition,
ordinary wear and tear excepted.
6.11 Borrower shall at all times maintain working capital and net worth
(each as determined in accordance with generally accepted accounting principles,
in effect on the date hereof, consistently applied) in the amounts set forth in
Section 10.5 and Borrower shall not, directly or indirectly, expend or commit to
expend, for fixed or capital assets (including capital lease obligations) an
amount in excess of the capital expenditure limit set forth in Section 10.5 in
any fiscal year of Borrower.
6.12 Borrower will not, directly or indirectly: (a) lend or advance money
or property to, guarantee or assume indebtedness of, or invest (by capital
contribution or otherwise) in any person, firm, corporation or other entity; or
(b) declare, pay or make any dividend, redemption or other distribution on
account of any shares of any class of stock of Borrower now or hereafter
outstanding; or (c) except as permitted on Schedule B hereto, (1) make any
payment of the principal amount of or interest on any indebtedness owing to any
officer, director, shareholder, or affiliate of Borrower, or (2) make any loans
or advances to any officer, director, employee, shareholder or affiliate of
Borrower, except that Borrower may make loans and advances to an affiliate of
Borrower provided that the aggregate amount of all such loans and advances shall
not exceed $100,000 at any one time; (d) enter into any sale, lease or other
transaction with any officer, director, employee, shareholder or affiliate of
Borrower on terms that are less favorable to Borrower than those which might be
obtained at the time from persons who are not an officer, director, employee,
shareholder or affiliate of Borrower; or (e) enter into any transaction or
15
series of transactions, the effect of which would be to generate accounts
receivable in favor of Borrower from any officer, director, employee,
shareholder or affiliate of Borrower, or any combination thereof, in the
aggregate amount not to exceed $100,000 at any one time.
6.13 Borrower shall pay, on Lender's demand, all costs, expenses, filing,
fees and taxes payable in connection with the preparation, execution, delivery,
recording, administration, collection, liquidation, enforcement and defense of
the Obligations, Lender's rights in the Collateral, this Agreement and all other
existing and future agreements or documents contemplated herein or related
hereto, including any amendments, waivers, supplements or consents which may
hereafter be made or entered into in respect hereof, or in any way involving
claims or defense asserted by Lender or claims or defense against Lender
asserted by Borrower, any guarantor or any third party directly or indirectly
arising out of or related to the relationship between Borrower and Lender or any
guarantor and Lender, including, but not limited to the following, whether
incurred before, during or after the initial or any renewal Term or after the
commencement of any case with respect to Borrower or any guarantor under the
United States Bankruptcy Code or any similar statute: (a) all costs and expenses
of filing or recording (including Uniform Commercial Code financing statement
filing taxes and fees, documentary taxes, intangibles taxes and mortgage
recording taxes and fees, if applicable); (b) all title insurance and other
insurance premiums, appraisal fees, fees incurred in connection with any
environmental report, audit or survey and search fees; (c) all fees relating to
the wire transfer of loan proceeds and other funds and fees for resumed checks;
(d) all expenses and costs heretofore and from time to time hereafter incurred
by Lender during the course of periodic field examinations of the Collateral and
Borrower's operations, plus a per diem charge at the rate of $650 per person,
per day for Lender's examiners in the field and office; and (e) the costs, fees
and disbursements of in-house and outside counsel to Lender.
6.14 At the request of Lender, at any time and from time to time, at
Borrower's sole expense, Borrower shall execute and deliver or cause to be
executed and delivered to Lender, such agreements, documents and instruments,
including, waivers, consents and subordination agreements from mortgagees or
other holders of security interests or liens, landlords or bailees, and do or
cause to be done such further acts as Lender, in its discretion, deems necessary
or desirable to create, preserve, perfect or validate any security interest of
Lender or the priority thereof in the Collateral and otherwise to effectuate the
provisions and purposes of this Agreement. Borrower hereby authorizes Lender to
file financing statements or amendments against Borrower in favor of Lender with
respect to the Collateral, without Borrower's signature and to file as financing
statements any carbon, photographic or other reproductions of this Agreement or
any financing statements signed by Borrower.
6.15 On or before the 90th day after the date hereof, Borrower shall
deliver to Lender evidence satisfactory to Lender, in its sole judgment, of the
resolution or payment of the single business tax and property tax assessments
levied on Xxxxxxxxx Manufacturing owing to the State of Michigan.
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6.16 Except for the Obligations and the indebtedness owed by Borrower
described on Schedule B hereto, Borrower shall not incur, without the prior
written consent of Lender, any indebtedness which exceeds (i) $25,000 to any
individual noteholder and (ii) in the aggregate $100.000.
6.17 Kirmin Die & Tool, Inc. and Kirmin Manufacturing Company jointly and
severally are indebted to Borrower under the terms of a promissory note in the
original principal amount of $70,000. Borrower shall not amend or modify the
terms of payment of the promissory note without the prior written consent of
Lender and shall remit all payments received from Kirmin Die & Tool, Inc. and/or
Kirmin Manufacturing Company on account of the promissory note to the lockbox in
Borrower's name located at X.X. Xxx 000000, Xxxxxxx, Xxxxxxxx 00000-0000.
SECTION 7. EVENTS OF DEFAULT AND REMEDIES
7.1 All Obligations shall be immediately due and payable, without notice or
demand, and any provisions of this Agreement as to future loans and credit
accommodations by Lender shall terminate automatically, upon the termination or
non-renewal of this Agreement or, at Lender's option, upon or at any time after
the occurrence or existence of any one or more of the following "Events of
Default":
(a) Borrower fails to pay when due any of the Obligations or fails to
perform any of the terms of this Agreement or any other existing or future
financing, security or other agreement between Borrower and Lender or any
affiliate of Lender;
(b) Any representation, warranty or statement of fact made by Borrower
to Lender in this Agreement or any other agreement, schedule, confirmatory
assignment or otherwise, or to any affiliate of Lender, shall prove
inaccurate or misleading;
(c) Any default or event of default shall have occurred under any
agreement, document or instrument given to Lender to secure or in
connection with the Obligations.
(d) Any guarantor revokes, terminates or fails to perform any of the
terms of any guaranty, endorsement or other agreement of such party in
favor of Lender or any affiliate of Lender;
(e) DCTWA fails to make any equity contribution to Borrower required
by and pursuant to the terms of that certain Keepwell Agreement of even
date herewith (the "Keepwell Agreement") by DCTWA in favor of Lender or
DCTWA fails to abide by any provision of the Keepwell Agreement, or any
representation or warranty made by DCTWA in the Keepwell Agreement shall
prove inaccurate or misleading;
17
(f) Any judgment or judgments aggregating in excess of $100,000
or any injunction or attachment is obtained against Borrower or any
guarantor which remains unstayed for a period of ten (10) days or is
enforced;
(g) Borrower or any guarantor or a general partner of a guarantor
or Borrower (which is a partnership), being a natural person, dies, or
Borrower or any guarantor which is a partnership or corporation, is
dissolved, or Borrower or any guarantor which is a corporation fails
to maintain its corporate existence in good standing, or the usual
business of Borrower or any guarantor ceases or is suspended;
(h) Any change in the chief executive officer, chief operating
officer, chief financial officer or controlling ownership of Borrower;
(i) Borrower or any guarantor becomes insolvent, makes an
assignment for the benefit of creditors, makes or sends notice of a
bulk transfer or calls a general meeting of its creditors or principal
creditors;
(j) Any petition or application for any relief under the
bankruptcy laws of the United States now or hereafter in effect or
under any insolvency, reorganization, receivership, readjustment of
debt, dissolution or liquidation law or statute of any jurisdiction
now or hereafter in effect (whether at law or in equity) is filed by
or against Borrower or any guarantor;
(k) The indictment or threatened indictment of Borrower or any
guarantor under any criminal statute, or commencement or threatened
commencement of criminal or civil proceedings against Borrower or any
guarantor, pursuant to which statute or proceedings the penalties or
remedies sought or available include forfeiture of any of the property
of Borrower or such guarantor;
(1) Any default or event of default under any financing,
security, intercreditor, subordination or other agreement, document or
instrument at any time executed and/or delivered to, with or in favor
of Lender or any of its affiliates by any affiliate of Borrower;
(m) Any default or event of default under any financing, security
or other agreement, document or instrument, at any time executed
and/or delivered by Borrower to, with or in favor of, any person or
entity other than Lender; or
(n) Lender in good faith believes that either (i) the prospect of
payment or performance of the Obligations is impaired or (ii) the
Collateral is not sufficient to secure fully the Obligations.
7.2 Upon the occurrence of an Event of Default and at any time thereafter,
Lender shall have all rights and remedies provided in this Agreement, any other
agreements between
18
Borrower and Lender, the Uniform Commercial Code or other applicable law, all of
which rights and remedies may be exercised without notice to Borrower, all such
notices being hereby waived, except such notice as is expressly provided for
hereunder or is not waivable under applicable law. All rights and remedies of
Lender are cumulative and not exclusive and are enforceable, in Lender's
discretion, alternatively, successively, or concurrently on any one or more
occasions and in any order Lender may determine. Without limiting the foregoing,
Lender may (a) accelerate the payment of all Obligations and demand immediate
payment thereof to Lender, (b) with or without judicial process or the aid or
assistance of others, enter upon any premises on or in which any of the
Collateral may be located and take possession of the Collateral or complete
processing, manufacturing and repair of all or any portion of the Collateral,
(c) require Borrower, at Borrower's expense, to assemble and make available to
Lender any part or all of the Collateral at any place and time designated by
Lender, (d) collect, foreclose, receive, appropriate, setoff and realize upon
any and all Collateral, (e) extend the time of payment of, compromise or settle
for cash, credit, return of merchandise, and upon any terms or conditions, any
and all accounts or other Collateral which includes a monetary obligation and
discharge or release the account debtor or other obligor, without affecting any
of the Obligations, and/or (f) sell, lease, transfer, assign, deliver or
otherwise dispose of any and all Collateral (including, without limitation,
entering into contracts with respect thereto, by public or private sales at any
exchange, broker's board, any office of Lender or elsewhere) at such prices or
terms as Lender may deem reasonable, for cash, upon credit or for future
delivery, with the Lender having the right to purchase the whole or any part of
the Collateral at any such public sale, all of the foregoing being free from any
right or equity of redemption of Borrower, which right or equity of redemption
is hereby expressly waived and released by Borrower. If any of the Collateral is
sold or leased by Lender upon credit terms or for future delivery, the
Obligations shall not be reduced as a result thereof until payment therefor is
finally collected by Lender. If notice of disposition of Collateral is required
by law, seven (7) days prior notice by Lender to Borrower designating the time
and place of any public sale or the time after which any private sale or other
intended disposition of Collateral is to be made, shall be deemed to be
reasonable notice thereof and Borrower waives any other notice. In the event
Lender institutes an action to recover any Collateral or seeks recovery of any
Collateral by way of prejudgment remedy, Borrower waives the posting of any bond
which might otherwise be required.
7.3 Lender may apply the cash proceeds of Collateral actually received by
Lender from any sale, lease, foreclosure or other disposition of the Collateral
to payment of any of the Obligations, in whole or in part (including reasonable
attorneys' fees and legal expenses incurred by Lender with respect thereto or
otherwise chargeable to Borrower) and in such order as Lender may elect, whether
or not then due. Borrower shall remain liable to Lender for the payment of any
deficiency together with interest at the highest rate provided for herein and
all costs and expenses of collection or enforcement, including reasonable
attorneys' fees and legal expenses.
7.4 Lender may, at its option, cure any default by Borrower under any
agreement with a third party or pay or bond on appeal any judgment entered
against Borrower, discharge taxes, liens, security interests or other
encumbrances at any time levied on or existing with respect to
19
the Collateral and pay any amount, incur any expense or perform any act which,
in Lender's sole judgment, is necessary or appropriate to preserve, protect,
insure, maintain, or realize upon the Collateral. Lender may charge Borrower's
loan account for any amounts so expended, such amounts to be repayable by
Borrower on demand. Lender shall be under no obligation to effect such cure,
payment, bonding or discharge, and shall not, by doing so, be deemed to have
assumed any obligation or liability of Borrower.
SECTION 8. JURY TRIAL WAIVER; CERTAIN OTHER WAIVERS AND CONSENTS
8.1 BORROWER AND LENDER EACH WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING INSTITUTED BY EITHER OF THEM AGAINST THE OTHER WHICH
PERTAINS DIRECTLY OR INDIRECTLY TO THIS AGREEMENT, THE OBLIGATIONS, THE
COLLATERAL, ANY ALLEGED TORTIOUS CONDUCT BY BORROWER OR LENDER, OR, IN ANY WAY,
DIRECTLY OR INDIRECTLY, ARISES OUT OF OR RELATES TO THE RELATIONSHIP BETWEEN
BORROWER AND LENDER. LENDER SHALL NOT BE LIABLE FOR LOST PROFITS OR OTHER
SPECIAL OR CONSEQUENTIAL DAMAGES INCURRED AS A RESULT OF LENDER'S ENFORCING ITS
RIGHTS AND REMEDIES HEREUNDER.
8.2 BORROWER WAIVES ALL RIGHTS TO INTERPOSE ANY CLAIMS, DEDUCTIONS, SETOFFS
OR COUNTERCLAIMS OF ANY KIND, NATURE OR DESCRIPTION IN ANY ACTION OR PROCEEDING
INSTITUTED BY LENDER WITH RESPECT TO THIS AGREEMENT, THE OBLIGATIONS, THE
COLLATERAL OR ANY MATTER ARISING THEREFROM OR RELATING THERETO, EXCEPT
COMPULSORY COUNTERCLAIMS.
8.3 BORROWER HEREBY IRREVOCABLY SUBMITS AND CONSENTS TO THE NONEXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE STATE IN WHICH THE
OFFICE OF LENDER DESIGNATED IN SECTION 10.6(A) IS LOCATED AND ANY OTHER STATE
WHERE ANY COLLATERAL IS LOCATED WITH RESPECT TO ANY ACTION OR PROCEEDING ARISING
OUT OF THIS AGREEMENT, THE OBLIGATIONS, THE COLLATERAL OR ANY MATTER ARISING
THEREFROM OR RELATING THERETO. IN ANY SUCH ACTION OR PROCEEDING, BORROWER WAIVES
PERSONAL SERVICE OF THE SUMMONS AND COMPLAINT OR OTHER PROCESS AND PAPERS
THEREIN AND AGREES THAT THE SERVICE THEREOF MAY BE MADE BY MAIL DIRECTED TO
BORROWER AT ITS CHIEF EXECUTIVE OFFICE SET FORTH HEREIN OR OTHER ADDRESS THEREOF
OF WHICH LENDER HAS RECEIVED NOTICE AS PROVIDED HEREIN, SERVICE TO BE DEEMED
COMPLETE FIVE (5) DAYS AFTER MAILING, OR AS PERMITTED UNDER THE RULES OF EITHER
OF SAID COURTS. ANY SUCH ACTION OR PROCEEDING COMMENCED BY BORROWER AGAINST
LENDER WILL BE LITIGATED ONLY IN A FEDERAL COURT LOCATED IN THE DISTRICT, OR A
STATE COURT IN THE STATE AND COUNTY, IN WHICH THE OFFICE OF LENDER DESIGNATED IN
SECTION 10.6(A) IS
20
LOCATED AND BORROWER WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS AND ANY
OBJECTION TO VENUE IN CONNECTION THEREWITH.
8.4 Lender shall not, by any act, delay, omission or otherwise be deemed to
have expressly or impliedly waived any of its rights or remedies unless such
waiver shall be in writing and signed by an authorized officer of Lender. A
waiver by Lender of any right or remedy on any one occasion shall not be
construed as a bar to or waiver of any such right or remedy which Lender would
otherwise have on any future occasion, whether similar in kind or otherwise.
SECTION 9. TERM OF AGREEMENT; MISCELLANEOUS
9.1 This Agreement shall only become effective upon execution and delivery
by Borrower and Lender and shall continue in full force and effect for a term of
two (2) years from the date hereof and shall be deemed automatically renewed for
successive terms of two (2) years thereafter unless terminated as of the end of
the initial or any renewal term (each a "Term") by either party giving the other
written notice at least sixty (60) days' prior to the end of the then-current
Term.
9.2 Borrower may also terminate this Agreement by giving Lender at least
thirty (30) days prior written notice at any time upon payment in full of all of
the Obligations as provided herein, including the early termination fee provided
below. Lender shall have the right to terminate this Agreement at any time upon
or after the occurrence of an Event of Default. If Lender terminates this
Agreement upon or after the occurrence of an Event of Default, or if Borrower
shall terminate this Agreement as permitted herein effective prior to the end of
the then-current Term, in addition to all other Obligations, including, without
limitation, payment in full of the aggregate then outstanding principal balance
of the Revolving Loans and any Term Loans, Borrower shall pay to Lender, upon
the effective date of termination, in view of the impracticality and extreme
difficulty of ascertaining actual damages and by mutual agreement of the parties
as to a reasonable calculation of Lender's lost profits, an early termination
fee equal to:
(a) if such termination occurs on or prior to the first anniversary of
the date hereof, an amount equal to four percent (4%) of the Maximum
Credit; or
(b) if such termination occurs after (1) such first anniversary or (2)
any automatic renewal of this Agreement pursuant to Section 9.1 hereof, an
amount equal to two percent (2%) of the Maximum Credit.
Notwithstanding anything contained in this Section 9.2 to the contrary, no
early termination fee shall be charged to Borrower if either party terminates
this Agreement pursuant to the terms of Section 9.1 hereof.
21
9.3 Upon termination of this Agreement by Borrower, as permitted herein, in
addition to payment of all Obligations which are not contingent, including,
without limitation, payment in full of the aggregate then outstanding principal
balance of the Revolving Loans and any Term Loans, Borrower shall deposit such
amount of cash collateral as Lender determines is necessary to secure Lender
from loss, cost, damage or expense, including reasonable attorneys' fees, in
connection with any open Accommodations or remittance items or other payments
provisionally credited to the Obligations and/or to which Lender has not yet
received final and indefeasible payment.
9.4 Except as otherwise provided, all notices, requests and demands
hereunder shall be (a) made to Lender at its address set forth in Section
10.6(a) and to Borrower at its chief executive office set forth in Section
10.6(d), or to such other address as either party may designate by written
notice to the other in accordance with this provision, and (b) deemed to have
been given or made: if by hand, immediately upon delivery; if by telex, telegram
or telecopy (fax), immediately upon receipt; if by overnight delivery service,
one day after dispatch; and if by first class or certified mail, three (3) days
after mailing.
9.5 If any provision of this Agreement is held to be invalid or
unenforceable, such provision shall not affect this Agreement as a whole, but
this Agreement shall be construed as though it did not contain the particular
provision held to be invalid or unenforceable.
9.6 This Agreement and the Promissory Note referred to in Section 2.2, if
any, contains the entire agreement of the parties as to the subject matter
hereof, all prior commitments, proposals and negotiations concerning the subject
matter hereof being merged herein. Neither this Agreement nor any provision
hereof shall be amended, modified or discharged orally or by course of conduct,
but only by a written agreement signed by an authorized officer of Lender. This
Agreement shall be binding upon and inure to the benefit of each of the parties
hereto and their respective successors and assigns, except that any obligation
of Lender under this Agreement shall not be assignable nor inure to the
successors and assigns of Borrower. Lender may assign or otherwise participate
to one or more banks or other entities all or a portion of its rights and
obligations under this Agreement and each of the other agreements, documents and
instruments executed and/or delivered pursuant hereto and in connection
herewith.
9.7 No termination of this Agreement shall relieve or discharge Borrower of
its Obligations, grants of Collateral, duties and covenants hereunder or
otherwise until such time as all Obligations to Lender have been indefeasibly
paid and satisfied in full, including, without limitation, the continuation and
survival in full force and effect of all security interests and liens of Lender
in and upon all then-existing and thereafter-arising or acquired Collateral and
all warranties and waivers of Borrower.
9.8 All terms used herein which are defined in the Uniform Commercial Code
shall have the meanings given therein unless otherwise defined in this Agreement
and all references to the singular or plural herein shall also mean the plural
or singular, respectively.
22
9.9 This Agreement shall be governed by and construed in accordance with
the laws of the State in which the office of Lender set forth in Section 10.6(a)
below is located.
SECTION 10. ADDITIONAL DEFINITIONS AND TERMS
10.1 (a) Maximum Credit: $7,000,000
(b) Gross Availability Formulas:
(1) So long as the accounts dilution rate is less than or equal
to four percent (4%), the Eligible Accounts Percentages
shall be equal to the following:
(i) Eligible Trade Accounts: 85%
(ii) Eligible Tooling Accounts: 85%
(iii) Eligible Chrysler Accounts: 80%
In the event and for so long as the accounts dilution rate
is greater than four percent (4%), the Eligible Accounts
Percentages shall be determined from time to time by Lender
in its sole and absolute discretion.
(2) Eligible Inventory Percentages:
(i) Eligible Finished Goods Inventory Percentage: 60%
(ii) Eligible Raw Materials Inventory Percentage: 40%
(c) Sublimits:
(1) Eligible Tooling Accounts: $1,000,000
(2) Eligible Inventory: the lesser of (i) $2,000,000 and (ii)
100% of outstanding advances against Eligible Accounts
(3) Eligible Raw Materials Inventory: the lesser of (i) $300,000
and (ii) 20% of outstanding advances against Eligible
Inventory
(d) Maximum days after Invoice Date for Eligible Accounts: 90 days
(e) Minimum Borrowing: $3,500,000
(f) Account Debtors: Chrysler Corporation
23
General Motors Corporation
Magna International
10.2 Term Loan: $2,189,513.75, repayable in 24 consecutive monthly
installments on the first day of each month commencing July, 1996. The
first 23 monthly installments shall be in the amount of $46,992 each,
and shall be paid in addition to any other payments of interest or
fees otherwise due and payable under the Term Loan. The final
installment shall be made on the first day of June, 1998 in the amount
of the remaining unpaid principal balance and shall include all
accrued and unpaid interest thereon.
10.3 Accommodations:
(a) Lender's Charge for Accommodations: N/A
(b) Sublimit for Accommodations: N/A
10.4 Fees:
(a) Interest Rate: Prime Rate plus 2.625% per annum
(b) Closing Fee: $17,500
(c) Facility Fee: .5% of the Maximum Credit
(d) Account Servicing Fee: N/A
(e) Unused Line Fee: 0.50% per annum
10.5 Financial Covenants: N/A
10.6 (a) Lender's Office:
00 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
(b) Lender's Bank:
Bank of America Illinois
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
(c) Borrower:
24
DCT Component Systems, Inc., a Michigan corporation
(d) Borrower's Chief Executive Office:
00000 Xxxxxxx
Xxxxxxx Xxxxxxxx, Xxxxxxxx 00000
(e) Locations of Eligible Inventory Collateral:
34728 Centaur
Xxxxxxx Xxxxxxxx, Xxxxxxxx 00000
34706 Centaur
Xxxxxxx Xxxxxxxx, Xxxxxxxx 00000
34660 Centaur
Xxxxxxx Xxxxxxxx, Xxxxxxxx 00000
34635 Nova
Xxxxx Xxxxxxx, Xxxxxxxx 00000
34683 Nova
Xxxxx Xxxxxxx, Xxxxxxxx 00000
(f) Locations of Eligible Equipment Collateral:
34728 Centaur
Xxxxxxx Xxxxxxxx, Xxxxxxxx 00000
34706 Centaur
Xxxxxxx Xxxxxxxx, Xxxxxxxx 00000
34660 Centaur
Xxxxxxx Xxxxxxxx, Xxxxxxxx 00000
34635 Nova
Xxxxx Xxxxxxx, Xxxxxxxx 00000
(g) Borrower's Other offices and Locations of Collateral:
All of the locations of the outside processors listed on Schedule
C attached hereto and made a part hereof.
00000 Xxxxxxx
00
Xxxxxxx Xxxxxxxx, Xxxxxxxx 00000
(h) Borrower's Trade Names for Invoicing:
DCT Component Systems, Inc.
Xxxxxxxxx Tool & Manufacturing, Inc.
[remainder of page intentionally left blank]
26
IN WITNESS WHEREOF, Borrower and Lender have duly executed this Agreement
this 27th day of June, 1996.
LENDER: BORROWER:
THE CIT GROUP/CREDIT FINANCE, INC. DCT COMPONENT SYSTEMS, INC.
By: /s/ Xxxx X. Ahusento By: /s/ Xxxxx Xxxx
------------------------------ -----------------------
Title: Sr. Vice Pres. Title: CEO
--------------------------- --------------------
27
IN WITNESS WHEREOF, Borrower and Lender have duly executed this Agreement
this 27th day of June, 1996.
LENDER: BORROWER:
THE CIT GROUP/CREDIT FINANCE, INC. DCT COMPONENT SYSTEMS, INC.
By: By: /s/ Xxxxx XXXX
------------------------------- ---------------------------------
Title: Title: CEO
---------------------------- ------------------------------
27
SCHEDULE A
Permitted Liens
1. Liens in favor of Deutsche Credit Corporation, as evidenced by the
following UCC financing statements:
a. UCC financing statement naming Deutsche Credit Corporation as
secured party and DCT Component Systems, Inc. as debtor, filed with the
Michigan Secretary of State on April 14, 1993 as Document No. 30036B;
b. UCC financing statement naming Deutsche Credit Corporation as
secured party and DCT Component Systems, Inc. as debtor, filed with the
Michigan Secretary of State on October 25, 1993 as Document No. 36359B; and
c. UCC financing statement naming Deutsche Credit Corporation as
secured party and DCT Component systems, Inc. as debtor, filed with the
Michigan Secretary of state on April 4, 1994 as Document No. C824992.
2. Liens in favor of Board of Trustees of the General Retirement System of
the City of Detroit, as evidenced by the following financing statements:
a. UCC financing statement naming Board of Trustees of the General
Retirement System of the City of Detroit as secured party and Xxxxxxxxx
Tool & Manufacturing, Inc. as debtor, filed with the Michigan Secretary of
State on October 14, 1993 as Document No. C895493; and
b. UCC financing statement naming Board of Trustees of the General
Retirement System of the City of Detroit as secured party and Xxxxxxxxx
Tool & Manufacturing, Inc. as debtor, filed in Macomb County, Michigan on
October 17, 1994 as Document No. C131715.
3. Liens in favor of True Industries #1 Incorporated, as evidenced by UCC
Financing Statement naming True Industries #1 Incorporated as secured party and
Xxxxxxxxx Tool & Manufacturing Co. as debtor, filed with the Michigan Secretary
of State on March 24, 1993 as Document No. C698470.
4. Liens in favor of Xxxxx Leasing Company, as evidenced by UCC Financing
Statement naming Xxxxx Leasing Company as secured party and Xxxxxxxxx Tool &
Manufacturing, Inc. as debtor, filed with the Michigan Secretary of State on May
9, 1994 as Document No. C839184.
28
SCHEDULE B
Subordinated Indebtedness
1. Indebtedness owed by Borrower to Deutsche Credit Corporation in the
principal amount not to exceed $1,787,199.
2. indebtedness owed by Borrower to Xxxxx X. Xxxxxxxxx III ("Xxxxxxxxx") in
the principal amount not to exceed $997,559.
3. Indebtedness owed by Borrower to DCTWA in the principal amount not to
exceed $15,786,354.
4. Indebtedness owed by Borrower to RJR Investment in the principal amount
not to exceed $1,000,000.
5. Indebtedness owed by Borrower to Luyckx in the principal amount not to
exceed $412,763.
6. Indebtedness owed by Borrower to Xxxx X. Xxxxxx in the principal amount
not to exceed $65,924.
7. Indebtedness owed by Borrower to Xxxxx Xxxxx in the principal amount not
to exceed $150,000.
8. Indebtedness owed by Borrower to Xxxx Xxxxxxxxx in the principal amount
not to exceed $428,472.
9. Indebtedness owed by Borrower to Xxxx Xxxxxxxxx in the principal amount
not to exceed $428,572.
29
SCHEDULE C
DCT COMPONENT SYSTEMS, INC.
OUTSIDE PROCESSORS
===================================================================================
SUPPLIER PHONE # CONTACT
===================================================================================
AUTOMATED PRODUCTION ASSEMBLIES, INC. 000-000-0000 XXX
-----------------------------------------------------------------------------------
ACE FINISHING, INC. 000-000-0000 XXXX/XXXX
-----------------------------------------------------------------------------------
AMERICAN METAL PROCESSING COMPANY 000-000-0000 XXXXX
-----------------------------------------------------------------------------------
AUTOMATED DEBURRING EAST 000-000-0000 XXXX/XXX
-----------------------------------------------------------------------------------
C & H WELDING, INC. 000-000-0000 XXXXXX
-----------------------------------------------------------------------------------
CADILLAC PLATING CORP. 000-000-0000 XXXX/XXXX
-----------------------------------------------------------------------------------
CONTROLLED ATMOSPHERE PROCESSING, CO., INC. 000-000-0000 XXXX
-----------------------------------------------------------------------------------
COATING REMOVAL TECHNOLOGIES, INC. 000-000-0000 XXXXX
-----------------------------------------------------------------------------------
FINISHING SERVICES, INC. 000-000-0000 XXXX
-----------------------------------------------------------------------------------
FLEXIBLE PRODUCTS CO. 000-000-0000 XXXXX
-----------------------------------------------------------------------------------
HY TECH WELDING, INC. 000-000-0000 XXXX
-----------------------------------------------------------------------------------
HI-TECH COATINGS, INC. 000-000-0000 XXXX/XXXXX
-----------------------------------------------------------------------------------
KIRMIN DIE & TOOL 000-000-0000 XXXX XX.
-----------------------------------------------------------------------------------
XXXX TOOL COMPANY, INC. 000-000-0000 XXXX
-----------------------------------------------------------------------------------
LTC ROLL & ENGINERING CO. 000-000-0000 XXXX
-----------------------------------------------------------------------------------
METAL COTE INC. 000-000-0000 XXX
-----------------------------------------------------------------------------------
METRO WELDING SUPPLY CORPORATION 313-834-1660 XXXX/XXXX
-----------------------------------------------------------------------------------
MIDWEST PRODUCTS FINISHING, INC. 000-000-0000 XXX/XXXXX
-----------------------------------------------------------------------------------
MID-AMERICA PLASTICS, INC. 000-000-0000 XXXXX/XXXX
-----------------------------------------------------------------------------------
OEM COMPANY INC. 000-000-0000 XXXXX
-----------------------------------------------------------------------------------
PRECISIONCRAFT CO. 000-000-0000 XXXX
-----------------------------------------------------------------------------------
PRODUCTION TAPPING CO. 000-000-0000 XXXX/ED
-----------------------------------------------------------------------------------
XXXXXXX INDUSTRIES AND EQUIPMENT SALES, INC. 313-824-6893 XXXXX
-----------------------------------------------------------------------------------
RESPONSE WELDING ENTERPRISES, INC. 000-000-0000 XXXX/XXXX
-----------------------------------------------------------------------------------
SORAMATIC PRECISION MACHINING, INC. 000-000-0000 XXXXX/RICH
-----------------------------------------------------------------------------------
SUPERIOR ENAMELING, INC. 000-000-0000 XXXXXX
-----------------------------------------------------------------------------------
SURECOAT INDUSTRIES 000-000-0000 XXXX/ROB
-----------------------------------------------------------------------------------
THERMO PROCESSING CO., INC. 000-000-0000 XXXXX/XXXXX
-----------------------------------------------------------------------------------
TIODIZE/MICHIGAN, INC. 000-000-0000 XXXX XXXXX
-----------------------------------------------------------------------------------
WOLVERING PLATING, INC. 000-000-0000 XXX
-----------------------------------------------------------------------------------
XXXXX SERVICES, INC. 000-000-0000 XXXX
-----------------------------------------------------------------------------------
UTILASE 000-000-0000 XXXXX/CHARLIE
-----------------------------------------------------------------------------------
==============================================================================================================================
SUPPLIER LOCATION FAX NUMBER
==============================================================================================================================
AUTOMATED PRODUCTION ASSEMBLIES, INC. 00000 XXXXXX, XXXXXX XX 00000 000-000-0000
------------------------------------------------------------------------------------------------------------------------------
ACE FINISHING, INC. 00000 X. XXXXX XXXX XX., XXXXXX XX 00000 000-000-0000
------------------------------------------------------------------------------------------------------------------------------
AMERICAN METAL PROCESSING COMPANY 00000 XXXXX, XXXXXX XX 00000 000-000-0000
------------------------------------------------------------------------------------------------------------------------------
AUTOMATED DEBURRING EAST 0000 XXXX XXX XXXX, XXXXXX, XX 00000 000-000-0000
------------------------------------------------------------------------------------------------------------------------------
C & H WELDING, INC. 0000 XXXXXX, XXXX XX 00000 000-000-0000
------------------------------------------------------------------------------------------------------------------------------
CADILLAC PLATING CORP. 00000 XXXXXXXXX XXX, XXXXXX XX 00000 000-000-0000
------------------------------------------------------------------------------------------------------------------------------
CONTROLLED ATMOSPHERE PROCESSING, CO., INC. 00000 XXXXX, XXXXXXX XX 00000 000-000-0000
------------------------------------------------------------------------------------------------------------------------------
COATING REMOVAL TECHNOLOGIES, INC. 00000 XXXXXXX XXXX XXXX., XXXXXXXXXXXX XX 00000
------------------------------------------------------------------------------------------------------------------------------
FINISHING SERVICES, INC. 000 XXX XX. XXXXXXXXX XX 00000 000-000-0000
------------------------------------------------------------------------------------------------------------------------------
FLEXIBLE PRODUCTS CO. 0000 XXXXXX XXXXX, XXXXXX XXXXX XX 00000
------------------------------------------------------------------------------------------------------------------------------
HY TECH WELDING, INC. 00000 XXXXX XXXXXXXXXX XX., XXXXXXXXXXXX XX 00000 000-000-0000
------------------------------------------------------------------------------------------------------------------------------
HI-TECH COATINGS, INC. 24660 INDUSTRIAL, XXXXXX XX 00000
------------------------------------------------------------------------------------------------------------------------------
KIRMIN DIE & TOOL 00000 XXXXXX XXXX, XXXXXXX XX 00000 000-000-0000
------------------------------------------------------------------------------------------------------------------------------
XXXX TOOL COMPANY, INC. 00000 XXXXX XXXXX, XXXX XX 00000
------------------------------------------------------------------------------------------------------------------------------
LTC ROLL & ENGINERING CO. 00000 XXXX XXXXXXX XX, XX. XXXXXXX XX 00000 810-465-0554
------------------------------------------------------------------------------------------------------------------------------
METAL COTE INC. X.X. XXX 00000, XXXXXXX XX 00000-0000 000-000-0000
------------------------------------------------------------------------------------------------------------------------------
METRO WELDING SUPPLY CORPORATION 00000 XXXXXXXXXX, XXXXXXX XX 00000
------------------------------------------------------------------------------------------------------------------------------
MIDWEST PRODUCTS FINISHING, INC. 0000 XXXXXXX XX, XXXXXX XXXX XX 00000 000-000-0000
------------------------------------------------------------------------------------------------------------------------------
MID-AMERICA PLASTICS, INC. 0000 X. XXXX XXX, XXXXX XX 00000 000-000-0000
------------------------------------------------------------------------------------------------------------------------------
OEM COMPANY INC. 0000 XXXX XX, XXXX XXXXX XX 00000
------------------------------------------------------------------------------------------------------------------------------
PRECISIONCRAFT CO. 00000 XXXXXXXX, XX. XXXXXXX XX 00000 000-000-0000
------------------------------------------------------------------------------------------------------------------------------
PRODUCTION TAPPING CO. 00000 XXXXXXXXXX XXX, XXXXXXXXX XX 00000 000-000-0000
------------------------------------------------------------------------------------------------------------------------------
XXXXXXX INDUSTRIES AND EQUIPMENT SALES, INC. X.X. XXX 00000, XXXXXX XX 00000-0000
------------------------------------------------------------------------------------------------------------------------------
RESPONSE WELDING ENTERPRISES, INC. 00000 XXXXXXXXX XXX, XXXXXXX XXX XX 00000-0000 000-000-0000
------------------------------------------------------------------------------------------------------------------------------
SORAMATIC PRECISION MACHINING, INC. 0000 X. XXX XXXX XX., XXXXXX XX 00000
------------------------------------------------------------------------------------------------------------------------------
SUPERIOR ENAMELING, INC. 0000 X. XXXXX XXXX XX., XXXXXX XX 00000 000-000-0000
------------------------------------------------------------------------------------------------------------------------------
SURECOAT INDUSTRIES 00000 X. XXXXXX XXXXXXX, XXXXXXXXXXXX XXX XX 00000 810-949-2700
------------------------------------------------------------------------------------------------------------------------------
THERMO PROCESSING CO., INC. 00000 XXXXXXXX XX., XXXXXXXXX XX 00000 000-000-0000
------------------------------------------------------------------------------------------------------------------------------
TIODIZE/MICHIGAN, INC. 28966 WALL, XXXXX XX 00000 000-000-0000
------------------------------------------------------------------------------------------------------------------------------
WOLVERING PLATING, INC. 00000 XXXXXXXXX, XXXXXXXXX XX 00000 000-000-0000
------------------------------------------------------------------------------------------------------------------------------
XXXXX SERVICES, INC. 0000 XXXX XX., XXXXXXXX XXXXXXX XX 00000
------------------------------------------------------------------------------------------------------------------------------
UTILASE X.X. XXX 00000, XXXXXXX XX 00000-0000
------------------------------------------------------------------------------------------------------------------------------
