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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d)
of the Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): February 8, 1999
JPE, INC.
(Exact name of registrant as specified in its charter)
MICHIGAN
(State or Other Jurisdiction of Incorporation)
0-22580 38-2958730
(Commission File No.) (IRS Employer Identification No.)
775 Technology Drive, Suite 200
Ann Arbor, Michigan 48108
(Address of Principal Executive Offices) (Zip Code)
(734) 662-2323
(Registrant's Telephone Number, Including Area Code)
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<PAGE>
ITEM 1 CHANGES IN CONTROL OF REGISTRANT
In accordance with the terms of an Investment Agreement (the "Investment
Agreement") dated April 28, 1999 among JPE, Inc. (the "Company"), ASC Holdings
LLC, and Kojaian Holdings LLC, the Company issued 1,952,352.19 shares of First
Series Preferred Shares on May 27, 1999 (the "Closing Date"), in equal
proportions to ASC Holdings LLC (50%) and Kojaian Holdings LLC (50%), for an
aggregate purchase price of $16,413,274 payable in cash. In addition, the
Investment Agreement provides that the shareholders of record of JPE, Inc.
common stock on June 11, 1999 (the "Record Date") are entitled to receive
warrants (the "Warrants") entitling the holder the right to purchase .075 shares
of First Series Preferred Shares of the Company for each share of common stock
held on the Record Date. The Warrants will be distributed as a dividend to such
shareholders. The Warrants carry an initial exercise price of $9.99 per First
Series Preferred Share, subject to price adjustments based on the Final Actual
EBITDA and the cost of certain environmental remediation. The Warrants are
exercisable for the 90 day period following the providing of notice by the
Company to the holders thereof of the Final Actual EBITDA after the JPE
Determination (as defined in the Investment Agreement).
In addition, pursuant to the Investment Agreement, on May 27, 1999 ASC Holdings
LLC and Kojaian Holdings LLC (in equal proportions) subscribed and paid for
9,441,420 newly issued shares of common stock for an aggregate purchase price of
$1,986,726 payable in cash. These newly issued shares of common stock will be
distributed to ASC Holdings LLC and Kojaian Holdings LLC on June 12, 1999.
As a precondition to consummation of the above transaction, the Company's
existing bank lenders (the "Bank Group") agreed on May 27, 1999 to a $16.5
million forgiveness of the Company's existing bank debt, under the terms of the
Company's Forbearance Agreement dated August 10, 1998, as amended. In
consideration for the debt forgiveness and pursuant to the Investment Agreement,
the Company issued 20,650.115 shares of Preferred Stock to the Bank Group on May
27, 1999 for $1,000 of consideration. In addition, the Company granted the
existing bank lenders 77,437.937 Warrants (which Warrants contain the same terms
and conditions as granted to the shareholders of common stock of the Company on
the Record Date).
The immediate effect of these transactions transferred (a) approximately 47.5%
of the voting securities of the Company to Kojaian Holdings LLC, (b)
approximately 47.5% of the voting securities of the Company to ASC Holdings LLC,
and (c) approximately 1% of the voting securities of the Company to the Bank
Group. The remaining amount of the voting securities continues to be held by the
public shareholders of the Company. If all of the Warrants described above are
exercised, ASC Holdings LLC would own approximately 40% of the voting securities
of the Company, Kojaian Holdings LLC would own approximately 40% of the voting
securities of the Company, the Bank Group would own approximately 3.7% of the
voting securities of the Company, and the shareholders of record on June 11,
1999 (other than ASC Holdings LLC, Kojaian Holdings LLC and the Bank Group) and
any other public shareholders would own approximately 16.3% of the voting
securities of the Company.
Pursuant to the terms of a Shareholders Agreement dated as of May 27, 1999
between ASC Holdings LLC and Kojaian Holdings LLC, the parties, among other
things, are to cooperate in the voting of their shares of the Company, including
regarding the nomination and election of members to the Board of Directors and
at shareholder meetings. The Shareholders Agreement also provides that neither
ASC Holdings LLC nor Kojaian Holdings LLC may sell their securities in the
Company without the prior written consent of the other. In addition, the
Shareholders Agreement provides that upon a deadlock or an impasse between the
parties or their nominees to the Board of Directors regarding a material issue
lasting longer than 90 days, that the parties shall sell to a third party
purchaser the Company or all or substantially all of its assets, subject to
certain terms and conditions (all as more particularly defined in the
Shareholders Agreement). Thus, each of ASC Holdings LLC and Kojaian Holdings LLC
currently beneficially own approximately 95% of the voting securities of the
Company, and after the exercise of all of the Warrants, would beneficially own
approximately 80% of the voting securities of the Company.
The sources of funds for the purchase of the common stock and the First Series
Preferred Stock (a) by ASC Holdings LLC was an affiliate (Heritage Newspaper,
Inc.) pursuant to a one year, non-interest bearing demand loan, and (b) by
Kojaian Holdings LLC were personal accounts of Mike Kojaian and C. Michael
Kojaian (the members of Kojaian Holdings LLC).
In connection with this transaction, the reorganization plans of the Company's
subsidiaries, Plastic Trim, Inc. and Starboard Industries, Inc., which were
confirmed by the Bankruptcy Court on April 16, 1999, became effective on May 27,
1999. Certain vendors of these subsidiaries agreed to accept 30% of their
pre-bankruptcy account balances as a part of the reorganization plans. The
interim financing provided to these subsidiaries by GMAC Business Credit was
satisfied in full (including prepayment penalties) as a condition to closing the
transaction.
The Company is now operating under the assumed name of ASCET INC, which
represents ASC Exterior Technologies. New financing in the amount of $56.3
million was arranged with Comerica Bank to pay off the indebtedness of the
Company owed to the Bank Group (other than the debt forgiveness described above)
and provide for current working capital needs. The new financing provides for
various borrowing and interest rate options based on prime or LIBOR rates.
Advances are subject to a borrowing limitation based on customer receivables and
inventory levels and the loan is secured by the Company's assets, including
stock of the Company's subsidiaries. The new financing is a one year demand loan
and is jointly guaranteed in full by ASC Holdings LLC and Kojaian Holdings LLC
(including a pledge of the Company's stock owned by each of them).
In connection with the consummation of the Investment Agreement, on May 27,
1999, the existing Directors of the Company tendered their resignations and
Heinz C. Prechter, Mike Kojaian, C. Michael Kojaian and David L. Treadwell were
elected Directors of the Company. Richard R. Chrysler, President and Chief
Executive Officer, will continue in that capacity pursuant to a two-year
Employment Agreement executed in connection with the Investment Agreement. Mr.
Treadwell was also elected Chairman of the Company and the Board of Directors.
James J. Fahrner, Executive Vice President and Chief Financial Officer of the
Company, resigned his officer positions effective as of May 27, 1999, but will
remain in the employ of the Company through June 25, 1999.
ITEM 2 ACQUISITION AND DISPOSITION OF ASSETS
As a result of the transaction described in Item 1 above, ASC Holdings LLC and
Kojaian Holdings LLC acquired control of the assets of the Company on May 27,
1999. The Company intends to maintain continued use of the assets in its
existing businesses, specifically the manufacture of automotive exterior trim
parts and heavy duty truck aftermarket parts.
ITEM 7 FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
The Financial Statements and Pro Forma Financial Information of the Company
reflecting the transaction, as more fully described in Items 1 and 2 above, are
not filed herewith because they are currently unavailable to Registrant.
Registrant intends to file such Financial Statements and Pro Forma Financial
Information under cover of an amendment to Form 8-K as soon as practicable, but
not later than August 10, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
JPE, INC.
Date: June 8, 1999 /s/ Karen A. Radtke
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Karen A. Radtke
Secretary and Treasurer
<PAGE>
Exhibits Index
Exhibit
Number Description
- ------- -----------
4.1 Form of Certificate for Shares of Preferred Stock, filed with this
report.
4.2 Form of Preferred Stock Warrant issued to Bank Group, filed with this
report.
4.3 Form of Preferred Stock Warrant to be issued to shareholders of record
of JPE, Inc. Common Stock as of June 11, 1999, filed with this report.
10.1 Investment Agreement dated April 28, 1999 among ASC Holdings LLC,
Kojaian Holdings LLC and JPE, Inc. incorporated by reference to
Exhibit 10.4 to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1999.
10.2 Tenth Amendment, dated May 21, 1999, to Forbearance Agreement, filed
with this report.
10.3 Letter Agreement, dated May 26, 1999, among Comerica Bank, as Agent,
JPE, Inc. and its subsidiaries, filed with this report.
10.4 Letter Agreement, dated May 27, 1999, among Comerica Bank, JPE, Inc.
and its subsidiaries, filed with this report.
10.5 Form of Promissory Note dated May 27, 1999 in the principal amount of
$20,000,000 executed by JPE, Inc. and its subsidiaries, filed with
this report.
10.6 Form of Promissory Note dated May 27, 1999 in the principal amount of
$6,300,000 executed by JPE, Inc. and its subsidiaries, filed with this
report.
10.7 Form of Promissory Note dated May 27, 1999 in the principal amount of
$30,000,000 executed by JPE, Inc. and its subsidiaries, filed with
this report.
10.8 Advance Formula Agreement, dated May 27, 1999 between JPE, Inc. and
its subsidiaries and Comerica Bank, filed with this report.
10.9 Form of Security Agreement (All Assets), dated as of May 27, 1999,
executed by JPE, Inc. and each of its subsidiaries, filed with this
report.
10.10 Patent and Trademark Security Agreement, dated as of May 27, 1999,
made by JPE, Inc. in favor of Comerica Bank, filed with this report.
10.11 Security Agreement (Negotiable Collateral), dated as of May 27, 1999,
executed by each of ASC Holdings LLC, Kojaian Holdings LLC, JPE, Inc.
and its wholly-owned subsidiary, SAC Corporation, filed with this
report.
10.12 Guaranty, dated as of May 27, 1999, executed by ASC Holdings LLC,
Kojaian Holdings LLC, API/JPE, Inc. and SAC Corporation, filed with
this report.
10.13 Letter Agreement, dated May 27, 1999, among Heinz C. Prechter, Mike
Kojaian and C. Michael Kojaian, filed with this report.
10.14 Shareholders Agreement, dated May 27, 1999, between ASC Holdings LLC
and Kojaian Holdings LLC, filed with this report.
10.15 Employment Agreement, dated May 27, 1999, between Richard R. Chrysler
and JPE, Inc., filed with this report.
10.16 Termination Agreement and Release of All :Liability, dated May 27,
1999, between Richard R. Chrysler and JPE, Inc., filed with this
report.
10.17 Termination Agreement and Release of All Liability, dated May 27,
1999, between Richard P. Eidswick and JPE, Inc., filed with this
report.
10.18 Letter Agreement among GMAC Business Crdit LLC, Comerica Bank and
Plastic Trim, Inc.
10.19 Letter Agreement among GMAC Business Credit LLC, Comerica Bank and
Starboard Industries, Inc.
NO. SHARES
JPE, INC.
This Certifies that is the owner of
full paid and non-assessable PREFERRED Shares
par value, of JPE, Inc., transferable only on the books of the Corporation
by the holder hereof in person or by duly authorized Attorney upon the surrender
of this Certificate properly endorsed.
The designations, preferences, qualifications, limitation, restrictions,
and special or relative rights of the Preferred Shares and Common Shares,
respectively, are set forth on the back of this certificate, and the holder
hereof, by accepting this certificate expressly assents to and is bound by all
of said provisions.
IN WITNESS WHEREOF, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and to be sealed with the Seal of the
Corporation, this day of A.D. 19 .
- --------------------------------- -----------------------------------
Karen A. Radtke, Secretary Richard R. Chrysler, President
FOR VALUE RECEIVED, hereby sell, assign and transfer unto
Shares represented by the within Certificate, and
do hereby irrevocably constitute and appoint Attorney
to transfer the said Shares on the books of the within named Corporation with
full power of substitution in the premises.
Dated 19
In presence of
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Except as provided by resolutions of the Board of Directors dated May 17, 1999,
each share of the First Series Preferred Shares shall possess rights equal to 50
common shares of JPE, Inc. Except as required by the Michigan Business
Corporation Act, the First Series Preferred Shares shall have no preferential
rights and the holders of First Series Preferred Shares and common shares shall
vote together and not as separate classes.
The shares represented by this certificate have not been registered under the
Securities Act of 1933, as amended, the Michigan Uniform Securities Act or the
securities statutes of any other State or jurisdiction (collectively, the
"Securities Acts"). The shares are restricted securities and may not be pledged,
hypothecated, sold or transferred in the absence of an effective registration
statement for the shares under the Securities Acts or an opinion of counsel,
satisfactory to the corporation, that registration is not required under the
Securities Acts.
NO. _____ ____________ WARRANTS
NEITHER THE WARRANTS REPRESENTED HEREBY (THE "WARRANTS") NOR THE
SECURITIES WHICH MAY BE OBTAINED PURSUANT TO THE EXERCISE OF SUCH WARRANTS HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND
THE SECURITIES MAY NOT BE CONVEYED, SOLD OR TRANSFERRED IN ANY MANNER WHATSOEVER
IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE ACT; AND
UNLESS SUCH EXEMPTION OR REGISTRATION IS APPLICABLE, ANY ATTEMPT TO SELL OR
TRANSFER SUCH SECURITIES SHALL BE NULL AND VOID AB INITIO. THE EXERCISE OF THE
WARRANTS REPRESENTED HEREBY ARE SUBJECT TO COMPLIANCE WITH APPLICABLE FEDERAL
AND STATE SECURITIES LAWS.
JPE, INC.
CUSIP 466230109
THIS CERTIFIES THAT,
(the "Registered Holder") is the owner of the number of Warrants specified
above. Each Warrant initially entitles the Registered Holder to purchase,
subject to the terms and conditions set forth in this Warrant Certificate
("Certificate") and the Investment Agreement (as hereinafter defined), one fully
paid and nonassessable Preferred Share (as defined in the Investment Agreement)
of JPE, Inc., a Michigan corporation ("JPE"), at any time during the Warrant
Exercise Period (as defined in the Investment Agreement) upon the presentation
and surrender of this Certificate with the Subscription Form on the reverse
hereof duly executed, to the Secretary of JPE accompanied by payment of $9.99,
subject to adjustment as provided in the Investment Agreement (the "Exercise
Price"), in lawful money of the United States of America in cash or by check
made payable to JPE, which Preferred Share (along with all other Preferred
Shares obtained through the exercise of Warrants by the Registered Holder) shall
be represented by a certificate delivered by JPE (at its expense) to the
Registered Holder in the name of the Registered Holder no later than twenty (20)
days after the end of the Warrant Exercise Period.
This Certificate and each Warrant represented hereby are issued pursuant to
and are subject in all respect to the terms and conditions set forth in the
Investment Agreement (the "Investment Agreement") dated April 28, 1999 between
JPE, ASC Holdings LLC, a Michigan limited liability company, and Kojaian
Holdings LLC, a Michigan limited liability company, which Investment Agreement
is on file with the Secretary of JPE and a copy of which may obtained upon
request by the Registered Holder thereto.
In the event of certain contingencies provided for in the Investment
Agreement, the Exercise Price and the number of Preferred Shares subject to
purchase upon the exercise of each Warrant represented hereby are subject to
modification or adjustment.
Each Warrant represented hereby is exercisable at the option of the
Registered Holder solely during the Warrant Exercise Period, which Warrant
Exercise Period shall end at 5:00 P.M. Detroit, Michigan Time on the last day of
the Warrant Exercise Period. If such date shall in the State of Michigan be a
holiday or a day on which the banks are authorized to close, then such date
shall be 5:00 P.M. (Detroit, Michigan Time) the next following day which in the
State of Michigan is not a holiday or a day on which banks are authorized to
close. In the case of the exercise of less than all of the Warrants represented
hereby, JPE shall cancel this Certificate upon the surrender hereof and shall
execute and deliver a new Certificate or Certificates of like tenor, which the
Secretary of JPE shall countersign for the balance of such Warrants
If JPE at any time shall, by subdivision, combination or reclassification
of securities or otherwise, change any of the securities to which purchase
rights under the Warrants exist into the same or a different number of
securities of any class or classes, this Certificate shall thereafter permit the
Registered Holder to acquire such number and kind of securities as would have
been issuable as the result of such change with respect to the securities which
were subject to the purchase rights under this Certificate immediately prior to
such subdivision, combination, reclassification or other change. If the
Preferred Shares for which this Certificate is being exercised are subdivided or
combined into a greater or smaller number of shares, the Exercise Price shall be
proportionately reduced in case of subdivision of shares or proportionately
increased in the case of combination of shares, in both cases by the ratio which
the total number of shares of such class to be outstanding immediately after
such event bears to the total number of shares of such class outstanding
immediately prior to such event. No adjustment shall be made on account of any
dividends or distributions except those payable in the securities to which the
purchase rights under this Certificate exist. If JPE possesses a sufficient
number of authorized but unissued Common Shares (as defined in the Investment
Agreement) of JPE to convert some or all of the Preferred Shares which were
subject to the purchase rights under this Certificate, JPE may, at its option,
convert all or a portion of the Preferred Shares that may be purchased under
this Certificate to Common Shares; provided that the Registered Holder shall
receive the right to purchase fifty (50) Common Shares for each Preferred Share
so converted and that the Exercise Price per Common Share shall be one-fiftieth
(1/50) of the Exercise Price per Preferred Share so converted. In the event of
any adjustments to the Exercise Price or the number or types of securities to be
obtained upon the exercise of the Warrants, JPE shall, no less than ten (10)
days prior to the beginning of the Warrant Exercise Period, provide the
Registered Holder with notice of such events and the calculation of the number
and type of securities that may be obtained upon exercise of the Warrants.
JPE shall not be obligated to deliver any securities pursuant to the
exercise of this Certificate unless a registration statement under the Act with
respect to such securities is effective or an exemption thereunder is available.
JPE has agreed that it will effect a registration statement under the Federal
securities laws, if required under the Act, prior to the beginning of the
Warrant Exercise Period. This Certificate shall not be exercisable by a
Registered Holder in any State where such exercise would be unlawful. This
Certificate is exchangeable upon the surrender hereof by the Registered Holder
to the Secretary of JPE for a new Certificate or Certificates of like tenor
representing an equal aggregate number of Warrants, each of such new
Certificates to represent such number of Warrants as shall be designated by such
Registered Holder at the time of such surrender. Upon due presentment and
payment of any tax or other charge imposed in connection therewith or incident
thereto, for registration of transfer of this Certificate at such office, a new
Certificate or Certificates representing an equal aggregate number of Warrants
will be issued to the transferee in exchange therefor, subject to the
limitations provided in the Investment Agreement.
Prior to the exercise of any Warrant represented hereby, the Registered
Holder with respect to the Warrants shall not be entitled to any rights of a
shareholder of JPE solely on account of the Warrants, including, without
limitation, the right to vote or to receive dividends or other distributions,
and shall not be entitled to receive any notice of any proceedings of JPE,
except as provided in the Investment Agreement.
Prior to due presentment for registration of transfer hereof, JPE and the
Secretary of JPE may deem and treat the Registered Holder as the absolute owner
hereof and of each Warrant represented hereby (notwithstanding any notations of
ownership or writing hereon made by anyone other than a duly authorized officer
of JPE) for all purposes and shall not be affected by any notice to the
contrary, except as provided in the Investment Agreement.
This Certificate shall be governed by and construed in accordance with the
laws of the State of Michigan without giving effect to conflict of laws.
This Certificate is not valid unless countersigned by the Secretary of JPE.
IN WITNESS WHEREOF, the Company has caused this Certificate to be duly
executed, manually or in facsimile by two of its officers thereunder duly
authorized and a facsimile of its corporate seal to be imprinted thereon.
DATED: JPE, INC.
By
---------------------------------
Richard R. Chrysler, President
By
---------------------------------
Karen A. Radtke, Secretary
FORM OF ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise the right, represented by
this Certificate, to purchase Preferred Shares of JPE (or such other securities
which are subject to exercise under this Certificate at the time of exercise)
and herewith tenders in payment for such securities a certified or cashier's
check or money order payable to the order of JPE, Inc. in the amount of
$_____________, all in accordance with the terms hereof. The undersigned
requests that certificates for such securities be registered in the name of
________________________ whose address is ______________________________. This
form is null and void at 5:00 P.M., Eastern Standard Time, on the last day of
the Warrant Exercise Period.
Signature
(Signature must conform in all
respects to the name of the holder
holder as specified on the face of
the Certificate.)
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(Insert Social Security or Other
Identifying Number of Holders)
NO. ____ ______ WARRANTS
THE WARRANTS REPRESENTED HEREBY (THE "WARRANTS") HAVE BEEN DISTRIBUTED
TO THE HOLDER AS A DIVIDEND OF JPE, INC., A MICHIGAN CORPORATION ("JPE").
NEITHER THE WARRANTS NOR THE SECURITIES WHICH MAY BE OBTAINED PURSUANT TO THE
EXERCISE OF SUCH WARRANTS HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), AND THE SECURITIES MAY NOT BE CONVEYED, SOLD OR
TRANSFERRED IN ANY MANNER WHATSOEVER IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER THE ACT; AND UNLESS SUCH EXEMPTION OR REGISTRATION IS
APPLICABLE, ANY ATTEMPT TO SELL OR TRANSFER SUCH SECURITIES SHALL BE NULL AND
VOID AB INITIO. THE EXERCISE OF THE WARRANTS REPRESENTED HEREBY ARE SUBJECT TO
COMPLIANCE WITH APPLICABLE FEDERAL AND STATE SECURITIES LAWS.
JPE, INC.
CUSIP 466230109
THIS CERTIFIES THAT,
(the "Registered Holder") is the owner of the number of Warrants specified
above. Each Warrant initially entitles the Registered Holder to purchase,
subject to the terms and conditions set forth in this Warrant Certificate
("Certificate") and the Investment Agreement (as hereinafter defined), one fully
paid and nonassessable Preferred Share (as defined in the Investment Agreement)
of JPE, Inc., a Michigan corporation ("JPE"), at any time during the Warrant
Exercise Period (as defined in the Investment Agreement) upon the presentation
and surrender of this Certificate with the Subscription Form on the reverse
hereof duly executed, to the Secretary of JPE accompanied by payment of $9.99,
subject to adjustment as provided in the Investment Agreement (the "Exercise
Price"), in lawful money of the United States of America in cash or by check
made payable to JPE, which Preferred Share (along with all other Preferred
Shares obtained through the exercise of Warrants by the Registered Holder) shall
be represented by a certificate delivered by JPE (at its expense) to the
Registered Holder in the name of the Registered Holder no later than twenty (20)
days after the end of the Warrant Exercise Period.
This Certificate and each Warrant represented hereby are issued pursuant to
and are subject in all respect to the terms and conditions set forth in the
Investment Agreement (the "Investment Agreement") dated April 28, 1999 between
JPE, ASC Holdings LLC, a Michigan limited liability company, and Kojaian
Holdings LLC., a Michigan limited liability company, which Investment Agreement
is on file with the Secretary of JPE and a copy of which may obtained upon
request by the Registered Holder thereto.
In the event of certain contingencies provided for in the Investment
Agreement, the Exercise Price and the number of Preferred Shares subject to
purchase upon the exercise of each Warrant represented hereby are subject to
modification or adjustment.
Each Warrant represented hereby is exercisable at the option of the
Registered Holder solely during the Warrant Exercise Period, which Warrant
Exercise Period shall end at 5:00 P.M. Detroit, Michigan Time on the last day of
the Warrant Exercise Period. If such date shall in the State of Michigan be a
holiday or a day on which the banks are authorized to close, then such date
shall be 5:00 P.M. (Detroit, Michigan Time) the next following day which in the
State of Michigan is not a holiday or a day on which banks are authorized to
close. In the case of the exercise of less than all of the Warrants represented
hereby, JPE shall cancel this Certificate upon the surrender hereof and shall
execute and deliver a new Certificate or Certificates of like tenor, which the
Secretary of JPE shall countersign for the balance of such Warrants
If JPE at any time shall, by subdivision, combination or reclassification
of securities or otherwise, change any of the securities to which purchase
rights under the Warrants exist into the same or a different number of
securities of any class or classes, this Certificate shall thereafter permit the
Registered Holder to acquire such number and kind of securities as would have
been issuable as the result of such change with respect to the securities which
were subject to the purchase rights under this Certificate immediately prior to
such subdivision, combination, reclassification or other change. If the
Preferred Shares for which this Certificate is being exercised are subdivided or
combined into a greater or smaller number of shares, the Exercise Price shall be
proportionately reduced in case of subdivision of shares or proportionately
increased in the case of combination of shares, in both cases by the ratio which
the total number of shares of such class to be outstanding immediately after
such event bears to the total number of shares of such class outstanding
immediately prior to such event. No adjustment shall be made on account of any
dividends or distributions except those payable in the securities to which the
purchase rights under this Certificate exist. If JPE possesses a sufficient
number of authorized but unissued Common Shares (as defined in the Investment
Agreement) of JPE to convert some or all of the Preferred Shares which were
subject to the purchase rights under this Certificate, JPE may, at its option,
convert all or a portion of the Preferred Shares that may be purchased under
this Certificate to Common Shares; provided that the Registered Holder shall
receive the right to purchase fifty (50) Common Shares for each Preferred Share
so converted and that the Exercise Price per Common Share shall be one-fiftieth
(1/50) of the Exercise Price per Preferred Share so converted. In the event of
any adjustments to the Exercise Price or the number or types of securities to be
obtained upon the exercise of the Warrants, JPE shall, no less than ten (10)
days prior to the beginning of the Warrant Exercise Period, provide the
Registered Holder with notice of such events and the calculation of the number
and type of securities that may be obtained upon exercise of the Warrants.
JPE shall not be obligated to deliver any securities pursuant to the
exercise of this Certificate unless a registration statement under the Act with
respect to such securities is effective or an exemption thereunder is available.
JPE has agreed that it will effect a registration statement under the Federal
securities laws, if required under the Act, prior to the beginning of the
Warrant Exercise Period. This Certificate shall not be exercisable by a
Registered Holder in any State where such exercise would be unlawful.
This Certificate is exchangeable upon the surrender hereof by the
Registered Holder to the Secretary of JPE for a new Certificate or Certificates
of like tenor representing an equal aggregate number of Warrants, each of such
new Certificates to represent such number of Warrants as shall be designated by
such Registered Holder at the time of such surrender. Upon due presentment and
payment of any tax or other charge imposed in connection therewith or incident
thereto, for registration of transfer of this Certificate at such office, a new
Certificate or Certificates representing an equal aggregate number of Warrants
will be issued to the transferee in exchange therefor, subject to the
limitations provided in the Investment Agreement.
Prior to the exercise of any Warrant represented hereby, the Registered
Holder with respect to the Warrants shall not be entitled to any rights of a
shareholder of JPE solely on account of the Warrants, including, without
limitation, the right to vote or to receive dividends or other distributions,
and shall not be entitled to receive any notice of any proceedings of JPE,
except as provided in the Investment Agreement.
Prior to due presentment for registration of transfer hereof, JPE and the
Secretary of JPE may deem and treat the Registered Holder as the absolute owner
hereof and of each Warrant represented hereby (notwithstanding any notations of
ownership or writing hereon made by anyone other than a duly authorized officer
of JPE) for all purposes and shall not be affected by any notice to the
contrary, except as provided in the Investment Agreement.
This Certificate shall be governed by and construed in accordance with the
laws of the State of Michigan without giving effect to conflict of laws.
This Certificate is not valid unless countersigned by the Secretary of JPE.
IN WITNESS WHEREOF, the Company has caused this Certificate to be duly
executed, manually or in facsimile by two of its officers thereunder duly
authorized and a facsimile of its corporate seal to be imprinted thereon.
DATED: JPE, INC.
By
--------------------------------------
Richard R. Chrysler, President
By
--------------------------------------
Karen A. Radtke, Secretary
FORM OF ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise the right, represented by
this Certificate, to purchase Preferred Shares of JPE (or such other securities
which are subject to exercise under this Certificate at the time of exercise)
and herewith tenders in payment for such securities a certified or cashier's
check or money order payable to the order of JPE, Inc. in the amount of
$_____________, all in accordance with the terms hereof. The undersigned
requests that certificates for such securities be registered in the name of
________________________ whose address is ______________________________. This
form is null and void at 5:00 P.M., Eastern Standard Time, on the last day of
the Warrant Exercise Period.
Signature
-------------------------------
(Signature must conform in all respects to
the name of the holder as specified on the
face of the Certificate.)
----------------------------------------
(Insert Social Security or Other
Identifying Number of Holders)
May 21, 1999
JPE, Inc.
775 Technology Drive
Suite 200
Ann Arbor, Michigan 48108
Attention: Messrs. Richard P. Eidswick, Richard Chrysler and James J. Fahrner
RE: FORBEARANCE AGREEMENT AMONG COMERICA BANK, NBD BANK, NATIONAL BANK OF
CANADA, HARRIS TRUST AND SAVINGS BANK, AND BANK ONE, DAYTON, N.A.
(COLLECTIVELY, THE "BANKS"), COMERICA BANK, AS AGENT FOR THE BANKS
("AGENT"), JPE, INC. ("COMPANY") AND API/JPE, INC. (FORMERLY KNOWN AS
ALLPARTS, INCORPORATED) ("API"), DAYTON PARTS, INC. ("DPI"), SAC
CORPORATION, STARBOARD INDUSTRIES, INC. ("SBI"), INDUSTRIAL & AUTOMOTIVE
FASTENERS, INC. ("IAF"), PLASTIC TRIM, INC. ("PTI"), BRAKE, AXLE AND TANDEM
COMPANY CANADA INC. AND JPE FINISHING, INC. (COLLECTIVELY, "GUARANTORS")
DATED AUGUST 10, 1998, AND AMENDED BY A FIRST AMENDMENT DATED AUGUST 31,
1998, A SECOND AMENDMENT DATED SEPTEMBER 4, 1998, A THIRD AMENDMENT DATED
SEPTEMBER 16, 1998, A FOURTH AMENDMENT DATED OCTOBER 1, 1998, A FIFTH
AMENDMENT DATED DECEMBER 1, 1998, A SIXTH AMENDMENT DATED MARCH 26, 1999, A
SEVENTH AMENDMENT DATED APRIL 14, 1999, AN EIGHTH AMENDMENT DATED MAY 3,
1999, AND A NINTH AMENDMENT DATED MAY 7, 1999 (AS AMENDED, THE "FORBEARANCE
AGREEMENT")
Dear Messrs. Eidswick, Chrysler and Fahrner:
Company and Guarantors have requested that Banks amend the Forbearance Agreement
to amend the Overformula Amount.
Subject to written acceptance by Company and Guarantors of the following terms
and conditions, Agent and Banks are willing to amend the Forbearance Agreement,
as follows:
1. All capitalized terms not defined in this tenth amendment ("Tenth
Amendment") to the Forbearance Agreement shall have the meanings described
in the Forbearance Agreement and/or the Loan Documents.
2. Except as modified by this Tenth Amendment, the Indebtedness and the
financing arrangements among Agent, Banks, Company and Guarantors shall
continue to be governed by the covenants, terms and conditions of the
Forbearance Agreement and the Loan Documents, which are ratified and
confirmed. The liens and security interests granted to Agent and Banks
under the Loan Documents and the Forbearance Agreement are also ratified
and confirmed by Company and the undersigned Guarantors. This Tenth
Amendment shall be binding upon and shall inure to the benefit of Agent,
Banks, Company and the undersigned Guarantors, and their respective
successors and assigns.
3. Banks agree that the Overformula Amount for May 24-27, 1999 is adjusted as
follows:
Date Overformula Amount
---- ------------------
May 24 $37,986,113
May 25 38,260,863
May 26 38,439,613
May 27 38,571,113
Agent in it sole discretion may allow Company up to two business days'
grace in applying reductions in the Overformula Amount scheduled above. For
example, Agent may in its sole discretion delay imposing the stepdown shown
on May 24 until May 26.
4. Company and Guarantors represent that this Tenth Amendment has been duly
authorized by each corporation's Board of Directors. Attached as Exhibit A
is a certified resolution and a certificate of incumbency for each.
5. This Tenth Amendment is not a waiver by Banks of any defaults under the
Forbearance Agreement and/or the Loan Documents.
6. Company and the undersigned Guarantors hereby represent and warrant that
(a) execution, delivery and performance of this Tenth Amendment are not in
contravention of law or the terms of any agreement by which they are bound,
and do not require the consent or approval of any governmental body,
agency, or authority, and this Tenth Amendment will be valid and binding in
accordance with its terms; (b) the continuing representations and
warranties of Company and the undersigned Guarantors set forth in Loan
Documents are true and correct on and as of the date hereof with the same
force and effect as made on and as of the date hereof other than as
previously specified in writing to Agent and Banks; and (c) no event of
default, or condition or event which, with the giving of notice or the
running of time, or both, would constitute an event of default under the
Forbearance Agreement, has occurred and is continuing as of the date hereof
other than as previously specified in writing to Agent and Banks.
7. COMPANY, THE UNDERSIGNED GUARANTORS, AGENT AND BANKS ACKNOWLEDGE AND AGREE
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 WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF
LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY
RELATED TO, THIS TENTH AMENDMENT, THE FORBEARANCE AGREEMENT, THE LOAN
DOCUMENTS OR THE INDEBTEDNESS.
8. COMPANY AND THE UNDERSIGNED GUARANTORS, IN EVERY CAPACITY, INCLUDING, BUT
NOT LIMITED TO, AS SHAREHOLDERS, PARTNERS, OFFICERS, DIRECTORS, INVESTORS
AND/OR CREDITORS OF COMPANY AND/OR GUARANTORS, OR ANY ONE OR MORE OF THEM,
HEREBY WAIVE, DISCHARGE AND FOREVER RELEASE AGENT, BANKS, AND THEIR
EMPLOYEES, OFFICERS, DIRECTORS, ATTORNEYS, STOCKHOLDERS AND SUCCESSORS AND
ASSIGNS, FROM AND OF ANY AND ALL CLAIMS, CAUSES OF ACTION, DEFENSES,
COUNTERCLAIMS OR OFFSETS AND/OR ALLEGATIONS COMPANY AND/OR GUARANTORS MAY
HAVE, OR MAY HAVE MADE, OR ARE BASED ON FACTS OR CIRCUMSTANCES ARISING, AT
ANY TIME UP THROUGH AND INCLUDING THE DATE OF THIS TENTH AMENDMENT, WHETHER
KNOWN OR UNKNOWN, AGAINST ANY OR ALL OF AGENT, BANKS, THEIR EMPLOYEES,
OFFICERS, DIRECTORS, ATTORNEYS, STOCKHOLDERS AND SUCCESSORS AND ASSIGNS.
Very truly yours,
COMERICA BANK, Agent
By: /s/ Cynthia B. Jones
--------------------------
Cynthia B. Jones
Its: Vice President
Special Assets Group
P.O. Box 75000
Detroit, Michigan 48275-3205
(313) 222-3780
(313) 222-5706 Fax
COMERICA BANK NBD BANK
By: /s/ Cynthia B. Jones By: /s/ Scott E. Roman
-------------------------- --------------------------
As Agent for NBD Bank
Its: Vice President Its: Vice President
NATIONAL BANK OF CANADA HARRIS TRUST and SAVINGS BANK
By: /s/ Loriann Curnyn By: /s/ Deana Miller
-------------------------- --------------------------
Its: Group Vice President Its: Sr. Vice President
By: /s/
--------------------------
Its: Vice President
BANK ONE, DAYTON, N.A.
By: /s/ Scott E. Roman
--------------------------
Its: Vice President
ACKNOWLEDGED AND AGREED:
JPE, INC. API/JPE, INC. (formerly known as
ALLPARTS, INCORPORATED)
By: /s/ Richard R. Chrysler By: /s/ Richard R. Chrysler
-------------------------- --------------------------
Its: President & CEO Its: President
Date: 5/25/99 Date: 5/25/99
BRAKE, AXLE AND TANDEM DAYTON PARTS, INC.
COMPANY CANADA INC.
By: /s/ Richard R. Chrysler By: /s/ Richard R. Chrysler
-------------------------- --------------------------
Its: Chief Executive Officer Its: Chief Executive Officer
Date: 5/25/99 Date: 5/25/99
JPE FINISHING, INC. SAC CORPORATION
By: /s/ Richard R. Chrysler By: /s/ Richard R. Chrysler
-------------------------- --------------------------
Its: President Its: President
Date: 5/25/99 Date: 5/25/99
May 26, 1999
Richard R. Chrysler, President
JPE, Inc.
775 Technology Drive, Suite 200
Ann Arbor, Michigan 48108
RE: FORBEARANCE AGREEMENT AMONG COMERICA BANK, NBD BANK, NATIONAL BANK OF
CANADA, HARRIS TRUST AND SAVINGS BANK, AND BANK ONE, DAYTON, N.A.
(COLLECTIVELY, THE "BANKS"), COMERICA BANK, AS AGENT FOR THE BANKS
("AGENT"), JPE, INC. ("COMPANY") AND API/JPE, INC. (FORMERLY KNOWN AS
ALLPARTS, INCORPORATED) ("API"), DAYTON PARTS, INC. ("DPI"), SAC
CORPORATION, STARBOARD INDUSTRIES, INC. ("SBI"), INDUSTRIAL & AUTOMOTIVE
FASTENERS, INC. ("IAF"), PLASTIC TRIM, INC. ("PTI"), BRAKE, AXLE AND TANDEM
COMPANY CANADA INC. AND JPE FINISHING, INC. (COLLECTIVELY, "GUARANTORS")
DATED AUGUST 10, 1998, AND AMENDED BY A FIRST AMENDMENT DATED AUGUST 31,
1998, A SECOND AMENDMENT DATED SEPTEMBER 4, 1998, A THIRD AMENDMENT DATED
SEPTEMBER 16, 1998, A FOURTH AMENDMENT DATED OCTOBER 1, 1998, A FIFTH
AMENDMENT DATED DECEMBER 1, 1998, A SIXTH AMENDMENT DATED MARCH 26, 1999, A
SEVENTH AMENDMENT DATED APRIL 14, 1999, AN EIGHTH AMENDMENT DATED MAY 3,
1999, A NINTH AMENDMENT DATED MAY 7, 1999, AND A TENTH AMENDMENT DATED MAY
21, 1999 (AS AMENDED, THE "FORBEARANCE AGREEMENT")
Dear Mr. Chrysler.
All capitalized terms are defined in the Forbearance Agreement.
This letter acknowledges your request for a payoff balance as of May 27, 1999 of
the portion of the Company's Liabilities to the Banks consisting of direct
indebtedness. As more particularly described below, upon the condition that the
Agent receives (1) an executed original of this letter from Company and
Guarantors; and (2) wire transfer or transfers in the amount of the Payoff
Amount in accordance with the instructions set forth below, then this letter
constitutes Agent's agreement to prepare, execute and deliver to Company
discharges of mortgages and UCC termination statements terminating all liens
granted to Agent by Company and Guarantors to secure the Liabilities. (For
convenience, the UCC termination statements and the mortgage discharges are
identified collectively as the "Discharges").
It is a condition precedent to Agent's obligation hereunder that an executed
facsimile copy of this letter, with the original to follow by mail, and a wire
transfer in the aggregate amount of the Payoff Amount be received by Agent.
Company acknowledges that Agent will not discharge any of its liens or
encumbrances until all such events have occurred.
A. The direct indebtedness as of May27, 1999, assuming no activity on May 27,
1999, will be $66,463,771.22. This amount consists of the following:
Principal Interest Total
--------- -------- -----
Revolving Credit $65,554,194.34 $464,117.33 $66,018,311.67
Swing Line 415,776.68 5,364.24 421,140.92
Facility Fee 24,318.63 --- 24,318.63
--------------
TOTAL $66,463,771.22
B. Costs and Expenses
Reimbursement of legal expenses
through May 25, 1999 $ 7,428.68
Reserve 5,000.00
-----------
12,428.68
--------------
GRAND TOTAL $66,476,199.90
The "Payoff Amount" is $49,988,170.90 which is the amount of the Liabilities
described above, less $1,000 for the preferred stock and a discount of
$16,487,029.
The Payoff Amount must be received by Agent in the form of a wire transfer, or
intrabank transfer, from Comerica Bank to Agent on or before 2:00 p.m. EDST on
the date of closing, which is scheduled for May 27, 1999. The wire transfer
should be directed as follows:
Comerica Bank
ABA No.
Account No.
Attn:
Reference Payoff for JPE, Inc.
Comerica Bank maintains various controlled disbursement accounts and lock boxes
for the benefit of Company and Guarantors and is willing to maintain them,
subject to reaching agreements and receiving documentation for the maintenance
of those accounts and lock boxes satisfactory to Comerica Bank. Also, Company
maintains general accounts at Comerica which accrue fees, service charges and
other charges (collectively, the "Charges").
The financing arrangement with Company is such that the above payoff balance may
not represent all amounts owing to Banks because of adjustments for returned
items, insufficient funds checks, partial credits, provisional credits and like
items taken into consideration in calculating the payoff (collectively, the
"Adjustments"). Until Company closes its accounts with Comerica, these fees will
accrue. Moreover, additional legal fees and expenses (the "Legal Fees") may be
incurred in connection therewith. We have made a good faith attempt to identify
the full amount of the Liabilities, including all Adjustments, Charges and Legal
Fees and other expenses as of the date hereof (other than Charges payable in the
ordinary course of business), and have included such amounts in the Payoff
Amount, but if these amounts are not accurate, Company and Guarantors remain
liable and must pay the full amount of all Liabilities due Agent and Banks.
Company and Guarantors agree that any of these Adjustments, fees and Charges may
be charged to any account maintained by Company or Guarantors with Comerica
Bank.
Because of the possibility of Adjustments, Company and Guarantors herewith
indemnity Agent and Banks from any and all losses, damages, deficiencies,
liabilities, and expenses relating to or caused by any Adjustments, and agrees
to pay, and hold Agent and Banks harmless, with respect to all Adjustments.
In consideration of Agent delivering the Discharges, Company and Guarantors
accept the responsibility and expenses for filing the Discharges with all
applicable filing offices.
Nothing in this letter releases Company and Guarantors from any Liabilities to
Agent or the Banks arising under any term or provision of any loan and security
document among the Company and Agent and Banks, but none of the collateral
granted to Agent or the Banks by Company or Guarantors secures any such
Liabilities.
The facsimile or other electronically transmitted copy of this letter is to be
treated the same as an originally executed copy of this letter.
INDEMNITY
The Company and Guarantors acknowledge and agree that it shall pay immediately
on demand any and all costs and expenses of the Agent and Banks, including, but
not limited to, all counsel fees of the Agent and Banks in relation to defense
of Claims (as defined below) by any person against the Agent and Banks arising
from or related to the business relationship among the Agent and Banks and the
Company and Guarantors or any affiliates of the Company and Guarantors. The
Company and Guarantors' agreement to be responsible for the Agent and Banks'
attorneys' fees and costs applies regardless of whether the Agent and Banks
prevail in whole or in part in any action, proceeding, litigation, or otherwise,
and regardless of the nature of any action or litigation or the theories or
bases of recovery or defense. The Company and Guarantors agree to indemnify the
Agent and Banks for all Claims (as defined below) which may be imposed on,
incurred by, or asserted against the Agent and Banks in connection with the
Transaction (as defined below), or the business relationship among the Agent and
Banks, on the one hand, and the Company and Guarantors or any affiliates of the
Company and Guarantors on the other hand. "Claims" means any demand, claim,
action or cause of action, damage, liability, loss, cost, debt, expenses,
obligation, tax, assessment, charge, lawsuit, contract, agreement, undertaking
or deficiency, of any kind or nature, whether known or unknown, fixed, actual,
accrued or contingent, liquidated or unliquidated (including interest,
penalties, attorneys' fees and other costs and expenses incident to proceedings
or investigations relating to any of the foregoing or the defense of any of the
foregoing), whether or not litigation has commenced, arising from or related to
the Transaction (as defined below) or the business relationship among the Agent
and Banks and the Company and Guarantors or any affiliates of the Company and
Guarantors only. "Transaction" means the transactions contemplated by the
Investment Agreement dated April 28, 1999 among ASC Holdings LLC, Kojaian
Holdings LLC and JPE, Inc.
RELEASE
AS FURTHER CONSIDERATION FOR THE AGREEMENTS AND UNDERSTANDINGS HEREIN, COMPANY
AND EAC GUARANTOR HEREBY RELEASES AGENT AND BANKS AND THEIR RESPECTIVE OFFICERS,
DIRECTORS, EMPLOYEES, AGENS, ATTORNEYS, AFFILIATES, SUBSIDIARIES, SUCCESSORS AND
ASSIGNS FROM ANY LIABILITY, CLAIM, RIGHT OR CAUSE OF ACTION WHICH NOW EXISTS, OR
HEREAFTER ARISES, WHETHER KNOWN OR UNKNOWN, ARISING FROM OR IN ANY WAY RELATED
TO FACTS IN EXISTENCE AS OF THE DATE HEREOF. BY WAY OF EXAMPLE AND NOT
LIMITATION, THE FOREGOING INCLUDES ANY CLAIMS IN ANY WAY RELATED TO ACTIONS
TAKEN OR OMITTED TO BE TAKEN BY AGENT OR THE BANKS UNDER THE LOAN DOCUMENTS WITH
THE COMPANY, THE BUSINESS RELATIONSHIP WITH AGENT OR THE BANKS AND ALL OTHER
LIABILITIES OF ANY NATURE OR UNDERSTANDINGS (ACTUAL OR ALLEGED), ANY BANKING
RELATIONSHIPS THAT THE COMPANY HAS OR MAY HAVE HAD WITH COMERICA AT ANY TIME AND
FOR ANY REASON INCLUDING, BUT NOT LIMITED TO, DEMAND DEPOSIT ACCOUNTS OR
OTHERWISE.
This letter agreement may be executed in counterparts, each of which shall be
deemed to constitute an original document. If you have any questions concerning
this matter, please feel free to contact me.
Very truly yours,
COMERICA BANK, Agent
By: /s/ Cynthia B. Jones
----------------------------
Its: Vice President
ACKNOWLEDGED AND AGREED:
JPE, INC. API/JPE, INC. (formerly known as
ALLPARTS, INCORPORATED)
By: /s/ Richard r. Chrysler By: /s/ Richard R. Chrysler
---------------------------- ---------------------------
Its: President & CEO Its: President
Date: Date:
BRAKE, AXLE AND TANDEM DAYTON PARTS, INC.
COMPANY CANADA INC.
By: /s/ Richard R. Chrysler By: /s/ Richard R. Chrysler
---------------------------- ---------------------------
Its: Chief Executive Officer Its: Chief Executive Officer
Date: Date:
JPE FINISHING, INC. SAC CORPORATION
By: /s/ Richard R. Chrysler By: /s/ Richard R. Chrysler
---------------------------- ---------------------------
Its: President Its: President
Date: Date:
May 27, 1999
The Borrowers listed
in attached Schedule 1
775 Technology Drive
Suite 200
Ann Arbor, Michigan 48108
Attention: Mr. Richard R. Chrysler
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/ Richard S. Arceci
------------------------------
Richard S. Arceci
Its: Vice President
ACCEPTED, ACKNOWLEDGED AND AGREED
ON MAY 27, 1999
JPE, INC.
By: /s/ Richard R. Chrysler
-----------------------------
Richard R. Chrysler
Its: President and Chief Executive Officer
BRAKE, AXLE AND TANDEM COMPANY CANADA INC.
By: /s/ Richard R. Chrysler
-----------------------------
Richard R. Chrysler
Its: Chief Executive Officer
DAYTON PARTS, INC.
By: /s/ Richard R. Chrysler
-----------------------------
Richard R. Chrysler
Its: Chief Executive Officer
PLASTIC TRIM, INC.
By: /s/ Richard R. Chrysler
-----------------------------
Richard R. Chrysler
Its: President
STARBOARD INDUSTRIES, INC.
By: /s/ Richard R. Chrysler
-----------------------------
Richard R. Chrysler
Its: President
JPE FINISHING, INC.
By: /s/ Richard R. Chrysler
-----------------------------
Richard R. Chrysler
Its: President
<PAGE>
SCHEDULE 1
Borrowers
JPE, Inc.
Brake, Axle and Tandem Company Canada Inc.
Dayton Parts, Inc.
Plastic Trim, Inc.
Starboard Industries, Inc.
JPE Finishing, Inc.
EURODOLLAR NOTE
(Demand Basis)
Tax I.D. No.:________________
PROMISSORY NOTE
$20,000,000 Detroit, Michigan
May 27, 1999
FOR VALUE RECEIVED, the undersigned (herein called "Borrowers"), jointly and
severally promise to pay, ON DEMAND, to the order of COMERICA BANK, a Michigan
banking corporation (herein called "Bank"), the principal sum of TWENTY MILLION
DOLLARS ($20,000,000), in lawful money of the United States of America. Without
in any way limiting, restricting or otherwise affecting Bank's right to make
demand for payment of all or any part of the indebtedness of the Borrowers under
this Note at any time in Bank's sole discretion, the Borrowers agree to pay to
the Bank, without any necessity of notice or demand by the Bank upon the
Borrower, quarterly principal installments each equal to seventy five percent
(75%) of Excess Cash Flow for the preceeding fiscal quarter, commencing on
November 15, 1999, and on the fifteenth (15th) day of each February, May, August
and November thereafter, until such time that Bank makes demand for payment of
all outstanding Indebtedness under this Note, at which time, the entire unpaid
balance of principal and interest hereunder shall be due and payable.
"Excess Cash Flow" shall mean for any fiscal quarter of JPE, Inc., the net
income of JPE, Inc. and its consolidated subsidiaries determined in accordance
with generally accepted accounting principles consistently applied, plus to the
extent deducted in determining such net income all depreciation and amortization
expense for such period, less all payments of principal made by JPE, Inc. and
its consolidated subsidiaries with respect to indebtedness for borrowed money
and the principal component of capital lease obligations (excluding any payments
with respect to any revolving credit facility to the extent such facility is not
permanently reduced by such payment) during such period.
The entire indebtedness outstanding hereunder from time to time shall bear
interest either at the Eurodollar-based Rate or the Prime-based Rate, as elected
by Borrowers from time to time, or as otherwise determined under the terms and
conditions of this Note. Interest shall be payable on each principal installment
due date and on the last day of any Interest Period applicable hereto, including
any such Interest Period ending before a principal installment due date;
provided, however, if such Interest Period is more than three (3) months,
interest thereon shall also be payable at intervals of three (3) months.
Interest accruing at the Prime-Based Rate shall be computed on the basis of
a 360 day year and shall be assessed for the actual number of days elapsed, and
in such computation, effect shall be given to any change in the Prime-Based Rate
as a result of any change in the Prime-based Rate on the date of each such
change.
Interest accruing at the Eurodollar-based Rate shall be computed on the
basis of a 360 day year and shall be assessed for the actual number of days
elapsed from the first day of the Interest Period applicable thereto, but not
including the last day thereof.
The amount from time to time outstanding under this Note, the Applicable
Interest Rate, the Interest Period, if applicable, and the amount and date of
any repayment shall be noted on Bank's books and records, which shall be
conclusive evidence thereof, absent manifest error; provided, however, any
failure by Bank to make any such notation, or any error in any such notation,
shall not relieve Borrowers of their obligations to repay Bank all principal,
all accrued and unpaid interest thereon, and all other amounts payable by
Borrowers to Bank under or pursuant to this Note in accordance with the terms
hereof.
Borrowers may elect from time to time the Eurodollar-based Rate as the
Applicable Interest Rate for all or any portion of the indebtedness outstanding
under this Note by delivering to Bank, by 11:00 a.m. (Detroit, Michigan time),
two (2) Business Days prior to the proposed effective date of such
Eurodollar-based Rate, a Notice of Eurodollar-based Rate executed by a duly
authorized officer of Borrowers. Without limiting any other provisions of this
Note, the Borrowers' right and ability to elect the Eurodollar-based Rate as the
Applicable Interest Rate hereunder shall be subject to the following:
(a) the principal indebtedness outstanding under this Note must be at
least Five Hundred Thousand Dollars ($500,000);
(b) no Event of Default, or any condition or event which, with the giving
of notice or the running of time, or both, would constitute an Event
of Default, shall have occurred and be continuing as of the date of
such Notice of Eurodollar-based Rate;
(c) the principal amount of the portion of the indebtedness for which
Borrowers have elected the Eurodollar-based Rate shall be at least
$500,000 and, in the case of a larger amount, shall be a larger
multiple of $50,000; and
(d) any election by Borrowers of the Eurodollar-based Rate as the
Applicable Interest Rate under this Note is not revocable by
Borrowers.
For any period of time for which a Notice of Eurodollar-based Rate has not
been delivered to Bank, or for any period of time during which Borrowers are not
entitled to elect the Eurodollar-based Rate in accordance with the terms hereof
or the Eurodollar-based Rate is not otherwise available to Borrowers as the
Applicable Interest Rate in accordance with the terms of this Note, the
Prime-based Rate shall automatically be the Applicable Interest Rate hereunder,
subject to the provisions hereof with regard to the payment of interest at the
Default Rate.
This Note may be prepaid in whole or in part without penalty or premium on
any principal installment due date, on the last day of an Interest Period, and
at any time with respect to any portion of this Note for which the Prime-based
Rate is the Applicable Interest Rate. In the event that the Eurodollar-based
Rate is the Applicable Interest Rate with respect to any portion of the
principal indebtedness outstanding under this Note, and any payment or
prepayment of such portion of the indebtedness shall occur on any day other than
the last day of the Interest Period then applicable thereto (whether
voluntarily, by acceleration, or otherwise), or if an Applicable Interest Rate
shall be changed during any Interest Period under or otherwise in accordance
with the terms of this Note, or if Borrowers shall fail to make any payment of
principal or interest hereunder at any time that, and with respect to any amount
for which the Eurodollar-based Rate is the Applicable Interest Rate hereunder,
Borrowers shall reimburse Bank on demand for any resulting loss, cost or expense
incurred by Bank as a result thereof, including, without limitation, any such
loss, cost or expense incurred in obtaining, liquidating, employing or
redeploying deposits from third parties. Such amount payable by Borrowers to
Bank hereunder may include, without limitation, an amount equal to the excess,
if any, of (a) the amount of interest which would have accrued on the amounts so
prepaid for the period from the date of such prepayment through the last day of
the relevant Interest Period therefor, at the Applicable Interest Rate for such
indebtedness, as provided under this Note, over (b) the amount of interest (as
reasonably determined by Bank) which would have accrued to Bank on such amount
by placing such amount on deposit for a comparable period with leading banks in
the interbank eurodollar market. Calculation of any amounts payable to Bank
under this paragraph shall be made as though Bank shall have actually funded or
committed to fund the relevant indebtedness hereunder through the purchase of an
underlined deposit in an amount equal to the amount of such indebtedness and
having a maturity comparable to the relevant Interest Period; provided, however,
that Bank may fund the indebtedness hereunder in any manner it deems fit, and
the foregoing assumption shall be utilized only for the purpose of the
calculation of amounts payable under this paragraph. Upon the written request of
Borrowers, Bank shall deliver to Borrowers a certificate setting forth bases for
determining such losses, costs and expenses, which certificate shall be
conclusively presumed correct, absent manifest effort. Any partial prepayment
under this Note shall be applied to the installments due under this Note in the
inverse order of their maturities.
For any Interest Period for which the Applicable Interest Rate is the
Eurodollar-based Rate, if Bank shall designate a Eurodollar Lending Office which
maintains books separate from those of the rest of Bank, Bank shall have the
option of maintaining and carrying this Note, and the indebtedness hereunder, on
the books of such Eurodollar Lending Office.
If, with respect to any Interest Period, Bank determines that, (a) by
reason of circumstances affecting the foreign exchange and interbank markets
generally, deposits in Eurodollars in the applicable amounts or for the relative
maturities are not being offered to the Bank for such Interest Period, or (b)
that the Eurodollar-based Rate will not adequately reflect the cost to Bank of
maintaining the indebtedness under this Note at the Eurodollar-based Rate for
such Interest Period, then Bank shall forthwith give notice thereof to the
Borrowers. Thereafter, until Bank notifies Borrowers that such circumstances no
longer exist, the obligation of Bank to maintain the indebtedness outstanding
under this Note at the Eurodollar-based Rate, and the right of Borrowers to
elect the Eurodollar-based Rate as the Applicable Interest Rate for the
indebtedness under this Note, shall be suspended.
If, after the date hereof, the introduction of, or any change in, any
applicable law, rule or regulation or in the interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof, or compliance by Bank (or its Eurodollar Lending Office)
with any request or directive (whether or not having the force of law) of any
such authority, shall make it unlawful or impossible for the Bank (or its
Eurodollar Lending office) to honor its obligations hereunder to maintain the
indebtedness under this Note with interest at the Eurodollar-based Rate, Bank
shall forthwith give notice thereof to Borrowers. Thereafter, (a) the obligation
of Bank to maintain the indebtedness outstanding under this Note at the
Eurodollar-based Rate, and the right of Borrowers to elect the Eurodollar-based
Rate as the Applicable Interest Rate for the indebtedness under this Note, shall
be suspended, and thereafter, until Bank gives notice to Borrowers that the
conditions or circumstances causing or giving rise to such suspension no longer
exist, the Prime-based Rate shall be the Applicable Interest Rate for the
indebtedness outstanding under this Note; and (b) if Bank may not lawfully
continue to maintain the indebtedness outstanding under this Note at the
Eurodollar-based Rate to the end of the then current Interest Period applicable
thereto, the Prime-based Rate shall be the Applicable Interest Rate for the
remainder of such Interest Period.
If the adoption after the date hereof, or any change after the date hereof
in, any applicable law, treaty, rule, or regulation (whether domestic or
foreign) of any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by Bank
(or its Eurodollar Lending office) with any request or directive (whether or not
having the force of law) made by any such authority, central bank or comparable
agency after the date hereof, including, without limitation, any risk based
capital guidelines:
(a) shall subject Bank (or its Eurodollar Lending Office) to any tax, duty
or other charge with respect to this Note or the indebtedness
hereunder or shall change the basis of taxation of payments to Bank
(or its Eurodollar Lending Office) of the principal of or interest on
this Note or any other amounts due under this Note in respect thereof
(except for changes in the rate of tax on the overall net income of
Bank or its Eurodollar Lending office imposed by the jurisdiction in
which Bank's principal executive office or Eurodollar Lending Office
is located); or
(b) shall impose, modify or deem applicable any reserve (including,
without limitation, any imposed by the Board of Governors of the
Federal Reserve System) , special deposit or similar requirement
against assets of, deposits with or for the account of, or credit
extended by Bank (or its Eurodollar Lending Office) or shall impose on
Bank (or its Eurodollar Lending Office) or the foreign exchange and
interbank markets of any other condition affecting this Note or the
indebtedness hereunder; or
and the result of any of the foregoing is to increase the cost to Bank of
maintaining any part of the indebtedness hereunder or to reduce the amount of
any sum received or receivable by Bank under this Note by an amount deemed by
Bank to be material, then Bank shall promptly notify Borrowers of such fact and
demand compensation therefor from Borrowers, and, within fifteen (15) days after
such demand by Bank, Borrowers agree to pay to Bank such additional amounts as
are sufficient to compensate Bank for such increased cost or reduction. A
certificate of Bank, prepared in good faith and in reasonable detail by Bank and
submitted by the Bank to the Borrowers, setting forth the basis for determining
such additional amount or amounts necessary to compensate Bank shall be
conclusively presumed, absent manifest error. Bank agrees that, as promptly as
practical after it becomes aware of the occurrence of any event or the existence
of a condition that will cause Bank to be entitled to compensation under this
paragraph, it will, to the extent not inconsistent with Bank's internal
policies, use reasonable efforts to make, fund or maintain any affected portion
of the loan under this Note through another lending office of Bank if as a
result thereof the additional monies which would otherwise be required to be
paid in respect of such portion of the loan under this Note would be materially
reduced and if, as determined by Bank, in its reasonable discretion, the making,
funding or maintaining of such portion of the loan under this Note through such
other lending office would not materially adversely affect such portion of the
loan under this Note or Bank. Borrowers shall pay all reasonable expenses
incurred by Bank in utilizing another lending office pursuant to this paragraph.
In the event that any applicable law, treaty, rule or regulation (whether
domestic or foreign) now or hereafter in effect and whether or not presently
applicable to the Bank, or any interpretation or administration thereof by any
governmental authority charged with the interpretation or administration
thereof, or compliance by the Bank with any guideline, request or directive of
any such authority (whether or not having the force of law), including any
risk-based capital guidelines, affects or would affect the amount of capital
required or expected to be maintained by the Bank (or any corporation
controlling the Bank), and the Bank determines that the amount of such capital
is increased by or based upon the existence of any obligations of the Bank
hereunder or the making of the loan under this Note or maintaining the
indebtedness hereunder and such increase has the effect of reducing the rate of
return on the Bank's (or such controlling corporation's) capital as a
consequence of such obligations or the making of such loan or maintaining of
such indebtedness hereunder to a level below that which the Bank (or such
controlling corporation) could have achieved but for such circumstances (taking
into consideration its policies with respect to capital adequacy) by an amount
deemed by the Bank to be material, then the Borrowers shall pay to the Bank,
within fifteen (15) days of Borrowers' receipt of written notice from Bank
demanding such compensation, additional amounts sufficient to compensate the
Bank (or such controlling corporation) for any increase in the amount of capital
and reduced rate of return which the Bank reasonably determines to be allocable
to the existence of any obligations of the Bank hereunder or to the making of
such loan or maintaining the indebtedness hereunder. A certificate of Bank as to
the amount of such compensation, prepared in good faith and in reasonable detail
by the Bank and submitted by the Bank to the Borrowers, shall be conclusive and
binding for all purposes, absent manifest error. Bank agrees that, as promptly
as practical after it becomes aware of the occurrence of any event or the
existence of a condition that will cause Bank to be entitled to compensation
under this paragraph, it will, to the extent not inconsistent with Bank's
internal policies, use reasonable efforts to make, fund or maintain any affected
portion of the loan under this Note through another lending office of Bank if as
a result thereof the additional monies which would otherwise be required to be
paid in respect of such portion of the loan under this Note would be materially
reduced and if, as determined by Bank, in its reasonable discretion, the making,
funding or maintaining of such portion of the loan under this Note through such
other lending office would not materially adversely affect such portion of the
loan under this Note or Bank. Borrowers shall pay all reasonable expenses
incurred by Bank in utilizing another lending office pursuant to this paragraph.
If Borrowers or any guarantor under a guaranty of all or part of the
indebtedness hereunder ("guarantor") (a) fail(s) to pay this Note, or any part
thereof, or any of the Indebtedness when due, by maturity, acceleration or
otherwise, or fail(s) to pay any indebtedness owing on a demand basis upon
demand; or (b) fail(s) to comply with any of the terms or provisions of any
agreement between Borrowers or any guarantor and Bank; or (c) become(s) the
subject of a voluntary or involuntary proceeding in bankruptcy (and if it is an
involuntary proceeding, it is not dismissed neither within sixty (60) days of
the commencement thereof), or a reorganization, arrangement or creditor
composition proceeding, cease(s) doing business as a going concern, or is the
subject of a dissolution, merger or consolidation; or (d) if any warranty or
representation made by Borrowers or any guarantor in connection with this Note
or any of the indebtedness hereunder shall be discovered to be have been untrue
or incomplete in any material respect when made; (e) or if there is any
termination, notice of termination, or breach (which the Bank in its sole
discretion deems material) of any guaranty, pledge, collateral assignment or
subordination agreement relating to all or any part of the Indebtedness; or (f)
if there is any failure by any Borrower or any guarantor to pay, when due, any
of its indebtedness (other than to the Bank) in an amount exceeding $100,000 in
the aggregate or in the observance or performance of any term, covenant or
condition in any document evidencing, securing or relating to such indebtedness;
or (g) if there is filed or issued a levy or writ of attachment or garnishment
or other like judicial process upon any Borrower or any guarantor or any of the
collateral, including, without limit, any accounts of any Borrower or any
guarantor with Bank, then Bank, upon the occurrence and at any time during the
continuance or existence of any of these conditions or events (each an "Event of
Default"), may at its option and without prior notice to Borrowers, declare any
or all of the indebtedness hereunder to be immediately due and payable
(notwithstanding any provisions contained in the evidence of it to the
contrary), sell or liquidate all or any portion of the collateral, set off
against the indebtedness hereunder any amounts owing by Bank to any Borrower,
and exercise any one or more of the rights and remedies granted to Bank by any
agreement with Borrowers given to it under applicable law, or otherwise.
Upon the occurrence and during the continuance of any Event of Default,
Bank may at any time and from time to time, without notice to the Borrowers (any
requirement for such notice being expressly waived by the Borrowers), set off
and apply against any and all of the indebtedness of Borrowers to Bank, any and
all deposits (general or special, time or demand, provisional or final) at any
time held and other indebtedness at any time owing by Bank to or for. the credit
or the account of any Borrower and any property of any Borrower from time to
time in possession of Bank, irrespective of whether or not Bank shall have made
any demand hereunder and although such obligations may be contingent and
unmatured. The rights of Bank under this paragraph are in addition to other
rights and remedies (including, without limitation, other rights of setoff)
which Bank may otherwise have.
Upon the occurrence and during the continuance of an Event of Default, Bank
may declare this Note due forthwith and collect, deal with and dispose of all or
any part of any security in any manner permitted or authorized by the Michigan
Uniform Commercial Code or other applicable law (including public or private
sale) and after deducting reasonable expenses (including, without limitation,
reasonable attorneys' fees and expenses), Bank may apply the proceeds and any
deposits or credits in part of full payment of any said liabilities, whether due
or not, in any manner or order Bank elects.
So long as any Event of Default shall be continuing, the indebtedness
outstanding under this Note shall bear interest at the Default Rate.
For the purposes of this Note the following terms will have the following
meanings:
"Applicable Interest Rate" shall mean the Eurodollar-based Rate or the
Prime-based Rate, as selected by Borrowers from time to time, subject to the
terms and conditions of this Note.
"Business Day" shall mean any day other than a Saturday, Sunday or holiday
on which Bank is open for all or substantially all of its domestic and
international commercial banking business (including dealings in foreign
exchange) in Detroit, Michigan.
"Eurodollar-based Rate" shall mean a per annum interest rate which is three
and one half percent (3 1/2%), plus the quotient of:
(a) the per annum interest rate at which Bank's Eurodollar Lending Office
offers deposits in dollars to prime banks in the eurodollar market in
an amount comparable to the principal amount outstanding under this
Note for which a Eurodollar-based Rate has been requested and for a
period equal to the relevant Interest Period at approximately 11:00
a.m., Detroit, Michigan time, two (2) Business Days prior to the first
day of such Interest Period;
divided by
(b) a percentage equal to 100% minus the maximum rate on such date at
which Bank is required to maintain reserves on "Euro-currency
Liabilities" as defined in and pursuant to Regulation D of the Board
of Governors of the Federal Reserve System or, if such regulation or
definition is modified, and as long as Bank is required to maintain
reserves against a category of liabilities which includes eurodollar
deposits or includes a category of assets which includes eurodollar
loans, the rate at which such reserves are required to be maintained
on such category.
"Default Rate" means the sum of three percent (3%) and the Applicable
Interest Rate under this Note.
"Eurodollar Lending Office" shall mean Bank's office located in the Grand
Cayman Islands, British West Indies, or such other branch of Bank, domestic or
foreign, as it may hereafter designate as its Eurodollar Lending Office by
notice to Borrowers.
"Interest Period" shall mean a period of one (1), two (2), three (3) or six
(6) months (or any lesser or greater number of days agreed to in advance by
Borrowers and Bank, commencing on the effective date of an election of the
Eurodollar-based Rate made in accordance with the terms of this Agreement,
provided that:
(a) any Interest Period which would otherwise end on a day which is not a
Business Day shall be extended to the next succeeding Business Day,
except that if the next succeeding Business Day falls in another
calendar month, the Interest Period shall end on the next preceding
Business Day, and when an Interest Period begins on a day which has no
numerically corresponding day in the calendar month during which such
Interest Period is to end, it shall end on the last Business Day of
such calendar month;
(b) no Interest Period shall extend beyond the next occurring principal
installment payment date under this Note.
"Notice of Eurodollar-based Rate" shall mean a Notice of Eurodollar-based
Rate in form similar to that attached to this Note as Exhibit "A" issued and
delivered by Borrowers to Bank in accordance with the terms of this Note.
"Prime Rate" means the per annum interest rate established by Bank as its
prime rate for its Borrowers, as such rate may vary from time to time, which
rate is not necessarily the lowest rate on loans made by Bank at any such time.
"Prime-based Rate" shall mean a per annum interest rate which is equal to
the sum of one percent (1%) plus the greater of (i) the Prime Rate; or (ii) the
rate of interest equal to the sum of (a) one percent (1%) and (b) the rate of
interest equal to the average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers (the "Overnight Rates"), as published by the Federal Reserve Bank
of New York, or, if the overnight Rates are not so published for any day, the
average of the quotations for the Overnight Rates received by Bank from three
(3) Federal funds brokers of recognized standing selected by Bank, as the same
may be changed from time to time. Effect shall be given to any change in the
Prime-based Rate as a result of any change in the Prime Rate or Overnight Rates
on the date of any such change in the Prime Rate or Overnight Rates, as
applicable.
All payments to be made by Borrowers to Bank under or pursuant to this Note
shall be in immediately available funds, without setoff or counterclaim, and in
the event that any payments submitted hereunder are in funds not available until
collected, said payments shall continue to bear interest until collected.
Borrowers hereby authorize Bank to charge any account of Borrowers with Bank for
all sums due hereunder when due in accordance with the terms hereof.
The Borrowers acknowledge that this Note matures upon issuance, and that
the Bank, at any time, without notice, and without reason, may demand that this
Note be immediately paid in full. The demand nature of this Note shall not be
deemed modified by reference to a Default in this Note or in any agreement to a
default by the Borrowers or to the occurrence of an event of default
(collectively an "Event of Default"). For purposes of this Note, to the extent
there is reference to an Event of Default this reference is for the purpose of
permitting the Bank to accelerate indebtedness not on a demand basis and to
receive interest at the default rate provided in the document evidencing the
relevant indebtedness. It is expressly agreed that the Bank may exercise its
demand rights under this Note whether or not an Event of Default has occurred
and regardless of whether an Interest Period is in effect. The Bank, with or
without reason and without notice, may from time to time make demand for partial
payments under this Note and these demands shall not preclude the Bank from
demanding at any time that this Note be immediately paid in full.
No delay or failure of Bank in exercising any right, power or privilege
hereunder shall affect such right, power or privilege, nor shall any single or
partial exercise thereof preclude any further exercise thereof, or the exercise
of any other power, right or privilege. The rights of Bank under this Agreement
are cumulative and not exclusive of any right or remedies which Bank would
otherwise have, whether by other instruments or by law.
If this Note is signed by two or more parties (whether by all as makers or
by one or more as an accommodation party or otherwise), the obligations and
undertakings under this Note shall be that of all and any two or more jointly
and also of each severally. This Note shall bind the Borrowers, and the
Borrowers' respective successors and assigns.
THE BORROWERS AND THE 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, WAIVES ANY RIGHT TO TRIAL BY JURY
IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN
ANY WAY RELATED TO, THIS NOTE.
The obligations of the Borrowers under this Note are the joint and several
obligations of the Borrowers; provided, however, with respect to Brake, Axle and
Tandem Company Canada Inc., its obligations shall be several and not joint with
any other Borrower.
This Note has been deemed to have been delivered at Detroit, Michigan, and
shall be governed by and construed and enforced in accordance with the laws of
the State of Michigan. Whenever possible each provision of this Note shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Note shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Note.
JPE, INC.
By: /s/ Richard R. Chrysler
--------------------------------
Richard R. Chrysler
Its: President and Chief Executive
Officer
DAYTON PARTS, INC.
By: /s/ Richard R. Chrysler
--------------------------------
Richard R. Chrysler
Its: Chief Executive Officer
STARBOARD INDUSTRIES, INC.
By: /s/ Richard R. Chrysler
--------------------------------
Richard R. Chrysler
Its: President
PLASTIC TRIM, INC.
By: /s/ Richard R. Chrysler
--------------------------------
Richard R. Chrysler
Its: President
JPE FINISHING, INC.
By: /s/ Richard R. Chrysler
--------------------------------
Richard R. Chrysler
Its: President
BRAKE, AXLE AND TANDEM COMPANY
CANADA INC.
By: /s/ Richard R. Chrysler
--------------------------------
Richard R. Chrysler
Its: Chief Executive Officer
EURODOLLAR INSTALLMENT NOTE
(Demand Basis)
Tax I.D. No.:________________
PROMISSORY NOTE
$6,300,000 Detroit, Michigan
May 27, 1999
FOR VALUE RECEIVED, the undersigned (herein called "Borrowers"), jointly and
severally promise to pay, ON DEMAND, to the order of COMERICA BANK, a Michigan
banking corporation (herein called "Bank"), the principal sum of Six Million
Three Hundred Thousand DOLLARS ($6,300,000), in lawful money of the United
States of America. Without in any way limiting, restricting or otherwise
affecting Bank's right to make demand for payment of all or any part of the
indebtedness of the Borrowers under this Note at any time in Bank's sole
discretion, the Borrowers agree to pay to the Bank, without any necessity of
notice or demand by the Bank upon the Borrower, monthly principal installments
equal to One Hundred Thirty One Thousand Two Hundred Fifty Dollars ($131,250)
each, commencing on July 1, 1999, and on the first day of each succeeding month
thereafter, until such time that Bank makes demand for payment of all
outstanding Indebtedness under this Note, at which time, the entire unpaid
balance of principal and interest hereunder shall be due and payable.
The entire indebtedness outstanding hereunder from time to time shall bear
interest either at the Eurodollar-based Rate or the Prime-based Rate, as elected
by Borrowers from time to time, or as otherwise determined under the terms and
conditions of this Note. Interest shall be payable on each principal installment
due date and on the last day of any Interest Period applicable hereto, including
any such Interest Period ending before a principal installment due date;
provided, however, if such Interest Period is more than three (3) months,
interest thereon shall also be payable at intervals of three (3) months.
Interest accruing at the Prime-Based Rate shall be computed on the basis of
a 360 day year and shall be assessed for the actual number of days elapsed, and
in such computation, effect shall be given to any change in the Prime-Based Rate
as a result of any change in the Prime-based Rate on the date of each such
change.
Interest accruing at the Eurodollar-based Rate shall be computed on the
basis of a 360 day year and shall be assessed for the actual number of days
elapsed from the first day of the Interest Period applicable thereto, but not
including the last day thereof.
The amount from time to time outstanding under this Note, the Applicable
Interest Rate, the Interest Period, if applicable, and the amount and date of
any repayment shall be noted on Bank's books and records, which shall be
conclusive evidence thereof, absent manifest error; provided, however, any
failure by Bank to make any such notation, or any error in any such notation,
shall not relieve Borrowers of their obligations to repay Bank all principal,
all accrued and unpaid interest thereon, and all other amounts payable by
Borrowers to Bank under or pursuant to this Note in accordance with the terms
hereof.
Borrowers may elect from time to time the Eurodollar-based Rate as the
Applicable Interest Rate for all or any portion of the indebtedness outstanding
under this Note by delivering to Bank, by 11:00 a.m. (Detroit, Michigan time),
two (2) Business Days prior to the proposed effective date of such
Eurodollar-based Rate, a Notice of Eurodollar-based Rate executed by a duly
authorized officer of Borrowers. Without limiting any other provisions of this
Note, the Borrowers' right and ability to elect the Eurodollar-based Rate as the
Applicable Interest Rate hereunder shall be subject to the following:
(a) the principal indebtedness outstanding under this Note must be at
least Five Hundred Thousand Dollars ($500,000);
(b) no Event of Default, or any condition or event which, with the giving
of notice or the running of time, or both, would constitute an Event
of Default, shall have occurred and be continuing as of the date of
such Notice of Eurodollar-based Rate;
(c) the principal amount of the portion of the indebtedness for which
Borrowers have elected the Eurodollar-based Rate shall be at least
$500,000 and, in the case of a larger amount, shall be a larger
multiple of $50,000; and
(d) any election by Borrowers of the Eurodollar-based Rate as the
Applicable Interest Rate under this Note is not revocable by
Borrowers.
For any period of time for which a Notice of Eurodollar-based Rate has not
been delivered to Bank, or for any period of time during which Borrowers are not
entitled to elect the Eurodollar-based Rate in accordance with the terms hereof
or the Eurodollar-based Rate is not otherwise available to Borrowers as the
Applicable Interest Rate in accordance with the terms of this Note, the
Prime-based Rate shall automatically be the Applicable Interest Rate hereunder,
subject to the provisions hereof with regard to the payment of interest at the
Default Rate.
This Note may be prepaid in whole or in part without penalty or premium on
any principal installment due date, on the last day of an Interest Period, and
at any time with respect to any portion of this Note for which the Prime-based
Rate is the Applicable Interest Rate. In the event that the Eurodollar-based
Rate is the Applicable Interest Rate with respect to any portion of the
principal indebtedness outstanding under this Note, and any payment or
prepayment of such portion of the indebtedness shall occur on any day other than
the last day of the Interest Period then applicable thereto (whether
voluntarily, by acceleration, or otherwise), or if an Applicable Interest Rate
shall be changed during any Interest Period under or otherwise in accordance
with the terms of this Note, or if Borrowers shall fail to make any payment of
principal or interest hereunder at any time that, and with respect to any amount
for which the Eurodollar-based Rate is the Applicable Interest Rate hereunder,
Borrowers shall reimburse Bank on demand for any resulting loss, cost or expense
incurred by Bank as a result thereof, including, without limitation, any such
loss, cost or expense incurred in obtaining, liquidating, employing or
redeploying deposits from third parties. Such amount payable by Borrowers to
Bank hereunder may include, without limitation, an amount equal to the excess,
if any, of (a) the amount of interest which would have accrued on the amounts so
prepaid for the period from the date of such prepayment through the last day of
the relevant Interest Period therefor, at the Applicable Interest Rate for such
indebtedness, as provided under this Note, over (b) the amount of interest (as
reasonably determined by Bank) which would have accrued to Bank on such amount
by placing such amount on deposit for a comparable period with leading banks in
the interbank eurodollar market. Calculation of any amounts payable to Bank
under this paragraph shall be made as though Bank shall have actually funded or
committed to fund the relevant indebtedness hereunder through the purchase of an
underlined deposit in an amount equal to the amount of such indebtedness and
having a maturity comparable to the relevant Interest Period; provided, however,
that Bank may fund the indebtedness hereunder in any manner it deems fit, and
the foregoing assumption shall be utilized only for the purpose of the
calculation of amounts payable under this paragraph. Upon the written request of
Borrowers, Bank shall deliver to Borrowers a certificate setting forth bases for
determining such losses, costs and expenses, which certificate shall be
conclusively presumed correct, absent manifest effort. Any partial prepayment
under this Note shall be applied to the installments due under this Note in the
inverse order of their maturities.
For any Interest Period for which the Applicable Interest Rate is the
Eurodollar-based Rate, if Bank shall designate a Eurodollar Lending Office which
maintains books separate from those of the rest of Bank, Bank shall have the
option of maintaining and carrying this Note, and the indebtedness hereunder, on
the books of such Eurodollar Lending Office.
If, with respect to any Interest Period, Bank determines that, (a) by
reason of circumstances affecting the foreign exchange and interbank markets
generally, deposits in Eurodollars in the applicable amounts or for the relative
maturities are not being offered to the Bank for such Interest Period, or (b)
that the Eurodollar-based Rate will not adequately reflect the cost to Bank of
maintaining the indebtedness under this Note at the Eurodollar-based Rate for
such Interest Period, then Bank shall forthwith give notice thereof to the
Borrowers. Thereafter, until Bank notifies Borrowers that such circumstances no
longer exist, the obligation of Bank to maintain the indebtedness outstanding
under this Note at the Eurodollar-based Rate, and the right of Borrowers to
elect the Eurodollar-based Rate as the Applicable Interest Rate for the
indebtedness under this Note, shall be suspended.
If, after the date hereof, the introduction of, or any change in, any
applicable law, rule or regulation or in the interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof, or compliance by Bank (or its Eurodollar Lending Office)
with any request or directive (whether or not having the force of law) of any
such authority, shall make it unlawful or impossible for the Bank (or its
Eurodollar Lending office) to honor its obligations hereunder to maintain the
indebtedness under this Note with interest at the Eurodollar-based Rate, Bank
shall forthwith give notice thereof to Borrowers. Thereafter, (a) the obligation
of Bank to maintain the indebtedness outstanding under this Note at the
Eurodollar-based Rate, and the right of Borrowers to elect the Eurodollar-based
Rate as the Applicable Interest Rate for the indebtedness under this Note, shall
be suspended, and thereafter, until Bank gives notice to Borrowers that the
conditions or circumstances causing or giving rise to such suspension no longer
exist, the Prime-based Rate shall be the Applicable Interest Rate for the
indebtedness outstanding under this Note; and (b) if Bank may not lawfully
continue to maintain the indebtedness outstanding under this Note at the
Eurodollar-based Rate to the end of the then current Interest Period applicable
thereto, the Prime-based Rate shall be the Applicable Interest Rate for the
remainder of such Interest Period.
If the adoption after the date hereof, or any change after the date hereof
in, any applicable law, treaty, rule, or regulation (whether domestic or
foreign) of any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by Bank
(or its Eurodollar Lending office) with any request or directive (whether or not
having the force of law) made by any such authority, central bank or comparable
agency after the date hereof, including, without limitation, any risk based
capital guidelines:
(a) shall subject Bank (or its Eurodollar Lending Office) to any tax, duty
or other charge with respect to this Note or the indebtedness
hereunder or shall change the basis of taxation of payments to Bank
(or its Eurodollar Lending Office) of the principal of or interest on
this Note or any other amounts due under this Note in respect thereof
(except for changes in the rate of tax on the overall net income of
Bank or its Eurodollar Lending office imposed by the jurisdiction in
which Bank's principal executive office or Eurodollar Lending Office
is located); or
(b) shall impose, modify or deem applicable any reserve (including,
without limitation, any imposed by the Board of Governors of the
Federal Reserve System) , special deposit or similar requirement
against assets of, deposits with or for the account of, or credit
extended by Bank (or its Eurodollar Lending Office) or shall impose on
Bank (or its Eurodollar Lending Office) or the foreign exchange and
interbank markets of any other condition affecting this Note or the
indebtedness hereunder; or
and the result of any of the foregoing is to increase the cost to -Bank of
maintaining any part of the indebtedness hereunder or to reduce the amount of
any sum received or receivable by Bank under this Note by an amount deemed by
Bank to be material, then Bank shall promptly notify Borrowers of such fact and
demand compensation therefor from Borrowers, and, within fifteen (15) days after
such demand by Bank, Borrowers agree to pay to Bank such additional amounts as
are sufficient to compensate Bank for such increased cost or reduction. A
certificate of Bank, prepared in good faith and in reasonable detail by Bank and
submitted by the Bank to the Borrowers, setting forth the basis for determining
such additional amount or amounts necessary to compensate Bank shall be
conclusively presumed, absent manifest error. Bank agrees that, as promptly as
practical after it becomes aware of the occurrence of any event or the existence
of a condition that will cause Bank to be entitled to compensation under this
paragraph, it will, to the extent not inconsistent with Bank's internal
policies, use reasonable efforts to make, fund or maintain any affected portion
of the loan under this Note through another lending office of Bank if as a
result thereof the additional monies which would otherwise be required to be
paid in respect of such portion of the loan under this Note would be materially
reduced and if, as determined by Bank, in its reasonable discretion, the making,
funding or maintaining of such portion of the loan under this Note through such
other lending office would not materially adversely affect such portion of the
loan under this Note or Bank. Borrowers shall pay all reasonable expenses
incurred by Bank in utilizing another lending office pursuant to this paragraph.
In the event that any applicable law, treaty, rule or regulation (whether
domestic or foreign) now or hereafter in effect and whether or not presently
applicable to the Bank, or any interpretation or administration thereof by any
governmental authority charged with the interpretation or administration
thereof, or compliance by the Bank with any guideline, request or directive of
any such authority (whether or not having the force of law), including any
risk-based capital guidelines, affects or would affect the amount of capital
required or expected to be maintained by the Bank (or any corporation
controlling the Bank), and the Bank determines that the amount of such capital
is increased by or based upon the existence of any obligations of the Bank
hereunder or the making of the loan under this Note or maintaining the
indebtedness hereunder and such increase has the effect of reducing the rate of
return on the Bank's (or such controlling corporation's) capital as a
consequence of such obligations or the making of such loan or maintaining of
such indebtedness hereunder to a level below that which the Bank (or such
controlling corporation) could have achieved but for such circumstances (taking
into consideration its policies with respect to capital adequacy) by an amount
deemed by the Bank to be material, then the Borrowers shall pay to the Bank,
within fifteen (15) days of Borrowers' receipt of written notice from Bank
demanding such compensation, additional amounts sufficient to compensate the
Bank (or such controlling corporation) for any increase in the amount of capital
and reduced rate of return which the Bank reasonably determines to be allocable
to the existence of any obligations of the Bank hereunder or to the making of
such loan or maintaining the indebtedness hereunder. A certificate of Bank as to
the amount of such compensation, prepared in good faith and in reasonable detail
by the Bank and submitted by the Bank to the Borrowers, shall be conclusive and
binding for all purposes, absent manifest error. Bank agrees that, as promptly
as practical after it becomes aware of the occurrence of any event or the
existence of a condition that will cause Bank to be entitled to compensation
under this paragraph, it will, to the extent not inconsistent with Bank's
internal policies, use reasonable efforts to make, fund or maintain any affected
portion of the loan under this Note through another lending office of Bank if as
a result thereof the additional monies which would otherwise be required to be
paid in respect of such portion of the loan under this Note would be materially
reduced and if, as determined by Bank, in its reasonable discretion, the making,
funding or maintaining of such portion of the loan under this Note through such
other lending office would not materially adversely affect such portion of the
loan under this Note or Bank. Borrowers shall pay all reasonable expenses
incurred by Bank in utilizing another lending office pursuant to this paragraph.
If Borrowers or any guarantor under a guaranty of all or part of the
indebtedness hereunder ("guarantor") (a) fail(s) to pay this Note, or any part
thereof, or any of the Indebtedness when due, by maturity, acceleration or
otherwise, or fail(s) to pay any indebtedness owing on a demand basis upon
demand; or (b) fail(s) to comply with any of the terms or provisions of any
agreement between Borrowers or any guarantor and Bank; or (c) become(s) the
subject of a voluntary or involuntary proceeding in bankruptcy (and if it is an
involuntary proceeding, it is not dismissed within sixty (60) days of the
commencement thereof), or a reorganization, arrangement or creditor composition
proceeding, cease(s) doing business as a going concern, or is the subject of a
dissolution, merger or consolidation; or (d) if any warranty or representation
made by Borrowers or any guarantor in connection with this Note or any of the
indebtedness hereunder shall be discovered to be have been untrue or incomplete
in any material respect when made; (e) or if there is any termination, notice of
termination, or breach (which the Bank in its sole discretion deems material) of
any guaranty, pledge, collateral assignment or subordination agreement relating
to all or any part of the Indebtedness; or (f) if there is any failure by any
Borrower or any guarantor to pay, when due, any of its indebtedness (other than
to the Bank) in an amount exceeding $100,000 in the aggregate or in the
observance or performance of any term, covenant or condition in any document
evidencing, securing or relating to such indebtedness; or (g) if there is filed
or issued a levy or writ of attachment or garnishment or other like judicial
process upon any Borrower or any guarantor or any of the collateral, including,
without limit, any accounts of any Borrower or any guarantor with Bank, then
Bank, upon the occurrence and at any time during the continuance or existence of
any of these conditions or events (each an "Event of Default"), may at its
option and without prior notice to Borrowers, declare any or all of the
indebtedness hereunder to be immediately due and payable (notwithstanding any
provisions contained in the evidence of it to the contrary), sell or liquidate
all or any portion of the collateral, set off against the indebtedness hereunder
any amounts owing by Bank to any Borrower, and exercise any one or more of the
rights and remedies granted to Bank by any agreement with Borrowers given to it
under applicable law, or otherwise.
Upon the occurrence and during the continuance of any Event of Default,
Bank may at any time and from time to time, without notice to the Borrowers (any
requirement for such notice being expressly waived by the Borrowers), set off
and apply against any and all of the indebtedness of Borrowers to Bank, any and
all deposits (general or special, time or demand, provisional or final) at any
time held and other indebtedness at any time owing by Bank to or for. the credit
or the account of any Borrower and any property of any Borrower from time to
time in possession of Bank, irrespective of whether or not Bank shall have made
any demand hereunder and although such obligations may be contingent and
unmatured. The rights of Bank under this paragraph are in addition to other
rights and remedies (including, without limitation, other rights of setoff)
which Bank may otherwise have.
Upon the occurrence and during the continuance of an Event of Default, Bank
may declare this Note due forthwith and collect, deal with and dispose of all or
any part of any security in any manner permitted or authorized by the Michigan
Uniform Commercial Code or other applicable law (including public or private
sale) and after deducting reasonable expenses (including, without limitation,
reasonable attorneys' fees and expenses), Bank may apply the proceeds and any
deposits or credits in part of full payment of any said liabilities, whether due
or not, in any manner or order Bank elects.
So long as any Event of Default shall be continuing, the indebtedness
outstanding under this Note shall bear interest at the Default Rate.
For the purposes of this Note the following terms will have the following
meanings:
"Applicable Interest Rate" shall mean the Eurodollar-based Rate or the
Prime-based Rate, as selected by Borrowers from time to time, subject to the
terms and conditions of this Note.
"Business Day" shall mean any day other than a Saturday, Sunday or holiday
on which Bank is open for all or substantially all of its domestic and
international commercial banking business (including dealings in foreign
exchange) in Detroit, Michigan.
"Eurodollar-based Rate" shall mean a per annum interest rate which is three
percent (3%), plus the quotient of:
(a) the per annum interest rate at which Bank's Eurodollar Lending Office
offers deposits in dollars to prime banks in the eurodollar market in
an amount comparable to the portion of the principal amount
outstanding under this Note for which a Eurodollar-based Rate has been
requested and for a period equal to the relevant Interest Period at
approximately 11:00 a.m., Detroit, Michigan time, two (2) Business
Days prior to the first day of such Interest Period;
divided by
(b) a percentage equal to 100% minus the maximum rate on such date at
which Bank is required to maintain reserves on "Euro-currency
Liabilities" as defined in and pursuant to Regulation D of the Board
of Governors of the Federal Reserve System or, if such regulation or
definition is modified, and as long as Bank is required to maintain
reserves against a category of liabilities which includes eurodollar
deposits or includes a category of assets which includes eurodollar
loans, the rate at which such reserves are required to be maintained
on such category.
"Default Rate" means the sum of three percent (3%) and the Applicable
Interest Rate under this Note.
"Eurodollar Lending Office" shall mean Bank's office located in the Grand
Cayman Islands, British West Indies, or such other branch of Bank, domestic or
foreign, as it may hereafter designate as its Eurodollar Lending Office by
notice to Borrowers.
"Interest Period" shall mean a period of one (1), two (2), three (3) or six
(6) months (or any lesser or greater number of days agreed to in advance by
Borrowers and Bank), commencing on the effective date of an election of the
Eurodollar-based Rate made in accordance with the terms of this Agreement,
provided that:
(a) any Interest Period which would otherwise end on a day which is not a
Business Day shall be extended to the next succeeding Business Day,
except that if the next succeeding Business Day falls in another
calendar month, the Interest Period shall end on the next preceding
Business Day, and when an Interest Period begins on a day which has no
numerically corresponding day in the calendar month during which such
Interest Period is to end, it shall end on the last Business Day of
such calendar month;
(b) no Interest Period shall extend beyond the next occurring principal
installment payment date under this Note.
"Notice of Eurodollar-based Rate" shall mean a Notice of Eurodollar-based
Rate in form similar to that attached to this Note as Exhibit "A" issued and
delivered by Borrowers to Bank in accordance with the terms of this Note.
"Prime Rate" means the per annum interest rate established by Bank as its
prime rate for its Borrowers, as such rate may vary from time to time, which
rate is not necessarily the lowest rate on loans made by Bank at any such time.
"Prime-based Rate" shall mean a per annum interest rate which is equal to
the sum of one half of one percent (1/2%) plus the greater of (i) the Prime
Rate; or (ii) the rate of interest equal to the sum of (a) one percent (1%) and
(b) the rate of interest equal to the average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers (the "Overnight Rates"), as published by the Federal
Reserve Bank of New York, or, if the overnight Rates are not so published for
any day, the average of the quotations for the Overnight Rates received by Bank
from three (3) Federal funds brokers of recognized standing selected by Bank, as
the same may be changed from time to time. Effect shall be given to any change
in the Prime-based Rate as a result of any change in the Prime Rate or Overnight
Rates on the date of any such change in the Prime Rate or Overnight Rates, as
applicable.
All payments to be made by Borrowers to Bank under or pursuant to this Note
shall be in immediately available funds, without setoff or counterclaim, and in
the event that any payments submitted hereunder are in funds not available until
collected, said payments shall continue to bear interest until collected.
Borrowers hereby authorize Bank to charge any account of Borrowers with Bank for
all sums due hereunder when due in accordance with the terms hereof.
The Borrowers acknowledge that this Note matures upon issuance, and that
the Bank, at any time, without notice, and without reason, may demand that this
Note be immediately paid in full. The demand nature of this Note shall not be
deemed modified by reference to a Default in this Note or in any agreement to a
default by the Borrowers or to the occurrence of an event of default
(collectively an "Event of Default"). For purposes of this Note, to the extent
there is reference to an Event of Default this reference is for the purpose of
permitting the Bank to accelerate indebtedness not on a demand basis and to
receive interest at the default rate provided in the document evidencing the
relevant indebtedness. It is expressly agreed that the Bank may exercise its
demand rights under this Note whether or not an Event of Default has occurred
and regardless of whether an Interest Period is in effect. The Bank, with or
without reason and without notice, may from time to time make demand for partial
payments under this Note and these demands shall not preclude the Bank from
demanding at any time that this Note be immediately paid in full.
No delay or failure of Bank in exercising any right, power or privilege
hereunder shall affect such right, power or privilege, nor shall any single or
partial exercise thereof preclude any further exercise thereof, or the exercise
of any other power, right or privilege. The rights of Bank under this Agreement
are cumulative and not exclusive of any right or remedies which Bank would
otherwise have, whether by other instruments or by law.
If this Note is signed by two or more parties (whether by all as makers or
by one or more as an accommodation party or otherwise), the obligations and
undertakings under this Note shall be that of all and any two or more jointly
and also of each severally. This Note shall bind the Borrowers, and the
Borrowers' respective successors and assigns.
THE BORROWERS AND THE 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, WAIVES ANY RIGHT TO TRIAL BY JURY
IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN
ANY WAY RELATED TO, THIS NOTE.
The obligations of the Borrowers under this Note are the joint and several
obligations of the Borrowers; provided, however, with respect to Brake, Axle and
Tandem Company Canada Inc., its obligations shall be several and not joint with
any other Borrower.
This Note has been deemed to have been delivered at Detroit, Michigan, and
shall be governed by and construed and enforced in accordance with the laws of
the State of Michigan. Whenever possible each provision of this Note shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Note shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Note.
JPE, INC.
By: /s/ Richard R. Chrysler
-----------------------------------
Richard R. Chrysler
Its: President and Chief Executive Officer
DAYTON PARTS, INC.
By: /s/ Richard R. Chrysler
-----------------------------------
Richard R. Chrysler
Its: Chief Executive Officer
STARBOARD INDUSTRIES, INC.
By: /s/ Richard R. Chrysler
-----------------------------------
Richard R. Chrysler
Its: President
PLASTIC TRIM, INC.
By: /s/ Richard R. Chrysler
-----------------------------------
Richard R. Chrysler
Its: President
JPE FINISHING, INC.
By: /s/ Richard R. Chrysler
-----------------------------------
Richard R. Chrysler
Its: President
BRAKE, AXLE AND TANDEM COMPANY CANADA INC.
By: /s/ Richard R. Chrysler
-----------------------------------
Richard R. Chrysler
Its: Chief Executive Officer
TAX I.D. NO.____________________
PROMISSORY NOTE-DEMAND
(Eurodollar Rate)
$30,000,000 Detroit, Michigan
May 27, 1999
ON DEMAND, FOR VALUE RECEIVED, the undersigned (herein called "Borrowers"),
jointly and severally promise to pay to the order of COMERICA BANK, a Michigan
banking corporation (herein called "Bank"), in lawful currency of the United
States of America, the principal sum of THIRTY MILLION DOLLARS ($30,000,000), or
so much of said sum as has been advanced and is then outstanding under this
Note, together with interest thereon as hereinafter set forth.
This Note is a note under which Advances, repayments and re-Advances may be
made from time to time, subject to the terms and conditions of this Note. At no
time shall the Bank be under any obligation to make any Advances to the
Borrowers pursuant to this Note (notwithstanding anything expressed or implied
in this Note or elsewhere to the contrary, including without limit if the Bank
supplies the Borrowers with a borrowing formula) and the Bank, at any time and
from time to time, without notice, and in its sole discretion, may refuse to
make Advances or re-advances to the Borrowers without incurring any liability
due to this refusal and without affecting the Borrowers' liability under this
Note for any and all amounts advanced.
Each of the Advances made hereunder shall bear interest at the
Eurodollar-based Rate or the Prime-based Rate, as elected by Borrowers or as
otherwise determined under this Note.
Accrued and unpaid interest on the unpaid balance of each outstanding
Prime-based Advance shall be payable monthly, in arrears, commencing on June 1,
1999, and on the first Business Day of each succeeding month thereafter, until
maturity (whether as stated herein, by acceleration, or otherwise). Interest
accruing at the Prime-based Rate shall be computed on the basis of a year of 360
days, and shall be assessed for the actual number of days elapsed, and in such
computation, effect shall be given to any change in the Applicable Interest Rate
as a result of any change in the Prime-based Rate on the date of each such
change in the Prime-based Rate.
Accrued and unpaid interest on each Eurodollar-based Advance shall be
payable on the last day of the Interest Period applicable thereto (unless sooner
accelerated in accordance with the terms of this Note); provided, however, if
such Interest Period in respect of any such Eurodollar-based Advance is more
than three (3) months, interest thereon shall also be payable at intervals of
three (3) months from the date of such Advance. Interest accruing at the
Eurodollar-based Rate shall be computed on the basis of a 360 day year and shall
be assessed for the actual number of days elapsed from the first day of the
Interest Period applicable thereto but not including the last day thereof.
From and after the occurrence of any Default hereunder, and so long as any
such Default remains unremedied or uncured thereafter, the Indebtedness
outstanding under this Note shall bear interest at a per annum rate of three
percent (3%) above the otherwise Applicable Interest Rate, which interest shall
be payable upon demand.
The amount and date of each Advance, its Applicable Interest Rate, its
Interest Period, if any, and the amount and date of any repayment shall be noted
on Bank's records, which records shall be conclusive evidence thereof, absent
manifest error; provided, however, any failure by Bank to make any such
notation, or any error in any such notation, shall not relieve Borrowers of
their obligations to repay Bank all amounts payable by Borrowers to Bank under
or pursuant to this Note, when due in accordance with the terms hereof.
Borrowers may request an Advance hereunder, including the refunding of an
outstanding Advance as the same type of Advance or the conversion of an
outstanding Advance as the same type of Advance, upon the delivery to Bank of a
Request for Advance executed by an authorized officer of Borrowers, subject to
the following:
(a) no Default, and no condition or event which, with the giving of notice
or the running of time, or both, would constitute a Default, shall
have occurred and be continuing or exist under this Note;
(b) each such Request for Advance shall set forth the information required
on the Request for Advance form annexed hereto as Exhibit "A";
(c) each such Request for Advance shall be delivered to Bank by 11:00 a.m.
(Detroit, Michigan time) two (2) Business Days prior to the proposed
date of Advance in the case of Eurodollar-based Advances, and by 1:00
p.m. (Detroit, Michigan time) on the proposed date of Advance in the
case of Prime-based Advances;
(d) the principal amount of each Eurodollar-based Advance shall be at
least Five Hundred Thousand Dollars ($500,000);
(e) the proposed date of any refunding of any outstanding Eurodollar-based
Advance as another Eurodollar-based Advance or the conversion of any
outstanding Eurodollar-based Advance to a Prime-based Advance shall
only be on the last day of the Interest Period applicable to such
outstanding Eurodollar-based Advance; and
(f) a Request for Advance, once delivered to Bank, shall not be revocable
by Borrowers; provided, however, as aforesaid, Bank shall not be
obligated to make any Advance under this Note.
If, as to any outstanding Eurodollar-based Advance, Bank shall not receive
a timely Request for Advance in accordance with the foregoing requesting the
refunding of such Advance as a Eurodollar-based Advance, the principal amount of
such Advance which is not then repaid shall be automatically converted to a
Prime-based Advance on the last day of the Interest Period applicable thereto,
subject in all respects to the terms and conditions of this Note. The foregoing
shall not in any way whatsoever limit or otherwise affect any of Bank's rights
or remedies under this Note upon the occurrence of any Default hereunder, or any
condition or event which, with the giving of notice or the running of time, or
both, would constitute a Default.
Borrowers may prepay all or part of the outstanding balance of any
Prime-based Advance under this Note at any time. Borrowers may prepay all or
part of any Eurodollar-based Advance on the last day of the Interest Period
applicable thereto, provided that the aggregate balance of Eurodollar-based
Advances outstanding after such prepayment shall be at least Five Hundred
Thousand Dollars ($500,000), and the unpaid portion of such Eurodollar-based
Advance which is then refunded or converted shall be subject to the limitations
set forth in this Note. Any prepayment made in accordance with this paragraph
shall be without premium or penalty. Any other prepayment shall be otherwise
restricted by and subject to the terms of this Note.
Subject to the definition of an "Interest Period" hereunder, in the event
that any payment under this Note becomes due and payable on any day which is not
a Business Day, the due date thereof shall be extended to the next succeeding
Business Day, and, to the extent applicable, interest shall continue to accrue
and be payable thereon during such extension at the rates set forth in this
Note.
All payments to be made by Borrowers to Bank under or pursuant to this Note
shall be in immediately available funds, without setoff or counterclaim, and in
the event that any payments submitted hereunder are in funds not available until
collected, said payments shall continue to bear interest until collected.
Borrowers hereby authorize Bank to charge any account of Borrowers with Bank for
all sums due hereunder when due in accordance with the terms hereof.
If Borrowers make any payment of principal with respect to any
Eurodollar-based Advance on any day other than the last day of the Interest
Period applicable thereto (whether voluntarily, by acceleration, demand, or
otherwise), or if Borrowers fail to borrow any Eurodollar-based Advance after
notice has been given by Borrowers to Bank in accordance with the terms of this
Note requesting such Advance, or if Borrowers fail to make any payment of
principal or interest in respect of a Eurodollar-based Advance when due,
Borrowers shall reimburse Bank, on demand, for any resulting loss, cost or
expense incurred by Bank as a result thereof, including, without limitation, any
such loss, cost or expense incurred in obtaining, liquidating, employing or
redeploying deposits from third parties, whether or not Bank shall have funded
or committed to fund such Advance. Such amount payable by Borrowers to Bank may
include, without limitation, an amount equal to the excess, if any, of (a) the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, refunded or converted, for the period from the date of such prepayment
or of such failure to borrow, refund or convert, through the last day of the
relevant Interest Period, at the applicable rate of interest for said Advance(s)
provided under this Note, over (b) the amount of interest (as reasonably
determined by Bank) which would have accrued to Bank on such amount by placing
such amount on deposit for a comparable period with leading banks in the
interbank eurodollar market. Calculation of any amounts payable to Bank under
this paragraph shall be made as though Bank shall have actually funded or
committed to fund the relevant Eurodollar-based Advance through the purchase of
an underlying deposit in an amount equal to the amount of such Advance and
having a maturity comparable to the relevant Interest Period; provided, however,
that Bank may fund any Eurodollar-based Advance in any manner it deems fit and
the foregoing assumptions shall be utilized only for the purpose of the
calculation of amounts payable under this paragraph. Upon the written request of
Borrowers, Bank shall deliver to Borrowers a certificate setting forth the basis
for determining such losses, costs and expenses, which certificate shall be
conclusively presumed correct, absent manifest error.
For any Eurodollar-based Advance, if Bank shall designate a Eurodollar
Lending Office which maintains books separate from those of the rest of Bank,
Bank shall have the option of maintaining and carrying such Advance on the books
of such Eurodollar Lending Office.
If, with respect to any Interest Period, Bank determines that, (a) by
reason of circumstances affecting the foreign exchange and interbank markets
generally, deposits in Eurodollars in the applicable amounts or for the relative
maturities are not being offered to Bank for such Interest Period, or (b) if the
rate of interest referred to in the definition of "Eurodollar-based Rate" upon
the basis of which the rate of interest for a Eurodollar-based Advance is to be
determined does not accurately or fairly cover or reflect the cost to Bank of
making or maintaining a Eurodollar-based Advance hereunder, then Bank shall
forthwith give notice thereof to the Borrowers. Thereafter, until Bank notifies
Borrowers that such conditions or circumstances no longer exist, the right of
Borrowers to request a Eurodollar-based Advance and to convert an Advance to or
refund an Advance as a Eurodollar-based Advance shall be suspended.
If, after the date hereof, the introduction of, or any change in, any
applicable law, rule or regulation or in the interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof, or compliance by Bank (or its Eurodollar Lending Office)
with any request or directive (whether or not having the force of law) of any
such authority, shall make it unlawful or impossible for the Bank (or its
Eurodollar Lending Office) to make or maintain any Advance with interest at the
Eurodollar-based Rate, Bank shall forthwith give notice thereof to Borrowers.
Thereafter, (a) until Bank notifies Borrowers that such conditions or
circumstances no longer exist, the right of Borrowers to request a
Eurodollar-based Advance and to convert an Advance to or refund an Advance as a
Eurodollar-based Advance shall be suspended, and thereafter, Borrowers may
select only the Prime-based Rate as the Applicable Interest Rate hereunder, and
(b) if Bank may not lawfully continue to maintain an outstanding Advance to the
end of the then current Interest Period applicable thereto, the Prime-based Rate
shall be the Applicable Interest Rate for the remainder of such Interest Period
with respect to such outstanding Advance.
If the adoption after the date hereof, or any change after the date hereof
in, any applicable law, rule or regulation of any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by Bank (or its Eurodollar Lending Office)
with any request or directive (whether or not having the force of law) made by
any such authority, central bank or comparable agency after the date hereof:
(a) shall subject Bank (or its Eurodollar Lending Office) to any tax, duty
or other charge with respect to this Note or any Advance hereunder or
shall change the basis of taxation of payments to Bank (or its
Eurodollar Lending Office) of the principal of or interest on any
Advance or any other amounts due under this Note in respect thereof
(except for changes in the rate of tax on the overall net income of
Bank or its Eurodollar Lending Office imposed by the jurisdiction in
which Bank's principal executive office or Eurodollar Lending Office
is located); or
(b) shall impose, modify or deem applicable any reserve (including,
without limitation, any imposed by the Board of Governors of the
Federal Reserve System), special deposit or similar requirement
against assets of, deposits with or for the account of, or credit
extended by Bank (or its Eurodollar Lending Office) or shall impose on
Bank (or its Eurodollar Lending Office) or the foreign exchange and
interbank markets any other condition affecting any Advance under this
Note;
and the result of any of the foregoing is to increase the cost to Bank of
maintaining any part of the indebtedness hereunder or to reduce the amount of
any sum received or receivable by Bank under this Note by an amount deemed by
the Bank to be material, then Borrowers shall pay to Bank, within fifteen (15)
days of Borrowers' receipt of written notice from Bank demanding such
compensation, such additional amount or amounts as will compensate Bank for such
increased cost or reduction. A certificate of Bank, prepared in good faith and
in reasonable detail by Bank and submitted by Bank to Borrowers, setting forth
the basis for determining such additional amount or amounts necessary to
compensate Bank shall be conclusive and binding for all purposes, absent
manifest error in computation. Bank agrees that, as promptly as practical after
it becomes aware of the occurrence of any event or the existence of a condition
that will cause Bank to be entitled to compensation under this paragraph, it
will, to the extent not inconsistent with Bank's internal policies, use
reasonable efforts to make, fund or maintain any affected Eurodollar-based
Advance through another lending office of Bank if as a result thereof the
additional monies which would otherwise be required to be paid in respect of
such Eurodollar-based Advance would be materially reduced and if, as determined
by Bank, in its reasonable discretion, the making, funding or maintaining of
such Eurodollar-based Advance through such other lending office would not
materially adversely affect such Advance or Bank. Borrowers shall pay all
reasonable expenses incurred by Bank in utilizing another lending office
pursuant to this paragraph.
In the event that any applicable law, treaty, rule or regulation (whether
domestic or foreign) now or hereafter in effect and whether or not presently
applicable to Bank, or any interpretation or administration thereof by any
governmental authority charged with the interpretation or administration
thereof, or compliance by Bank with any guideline, request or directive of any
such authority (whether or not having the force of law), including any
risk-based capital guidelines, affects or would affect the amount of capital
required or expected to be maintained by Bank (or any corporation controlling
Bank), and Bank determines that the amount of such capital is increased by or
based upon the existence of any obligations of Bank hereunder or the making or
maintaining any Advances hereunder, and such increase has the effect of reducing
the rate of return on Bank's (or such controlling corporation's) capital as a
consequence of such obligations or the making or maintaining of such Advances
hereunder to a level below that which Bank (or such controlling corporation)
could have achieved but for such circumstances (taking into consideration its
policies with respect to capital adequacy), then Borrowers shall pay to Bank,
within fifteen (15) days of Borrowers' receipt of written notice from Bank
demanding such compensation, additional amounts as are sufficient to compensate
Bank (or such controlling corporation) for any increase in the amount of capital
and reduced rate of return which Bank reasonably determines to be allocable to
the existence of any obligations of the Bank hereunder or to the making or
maintaining any Advances hereunder. A certificate of Bank as to the amount of
such compensation, prepared in good faith and in reasonable detail by the Bank
and submitted by Bank to Borrowers, shall be conclusive and binding for all
purposes absent manifest error in computation. Bank agrees that, as promptly as
practical after it becomes aware of the occurrence of any event or the existence
of a condition that will cause Bank to be entitled to compensation under this
paragraph, it will, to the extent not inconsistent with Bank's internal
policies, use reasonable efforts to make, fund or maintain any affected
Eurodollar-based Advance through another lending office of Bank if as a result
thereof the additional monies which would otherwise be required to be paid in
respect of such Eurodollar-based Advance would be materially reduced and if, as
determined by Bank, in its reasonable discretion, the making, funding or
maintaining of such Eurodollar-based Advance through such other lending office
would not materially adversely affect such Advance or Bank. Borrowers shall pay
all reasonable expenses incurred by Bank in utilizing another lending office
pursuant to this paragraph.
The Borrowers acknowledge that this Note matures upon issuance, and that
the Bank, at any time, without notice, and without reason, may demand that this
Note be immediately paid in full. The demand nature of this Note shall not be
deemed modified by reference to a Default in this Note or in any agreement to a
default by the Borrowers or to the occurrence of an event of default
(collectively an "Event of Default"). For purposes of this Note, to the extent
there is reference to an Event of Default this reference is for the purpose of
permitting the Bank to accelerate indebtedness not on a demand basis and to
receive interest at the default rate provided in the document evidencing the
relevant indebtedness. It is expressly agreed that the Bank may exercise its
demand rights under this Note whether or not an Event of Default has occurred
and regardless of whether an Interest Period is in effect. The Bank, with or
without reason and without notice, may from time to time make demand for partial
payments under this Note and these demands shall not preclude the Bank from
demanding at any time that this Note be immediately paid in full. All payments
under this Note shall be in immediately available United States funds, without
setoff or counterclaim.
This Note and any other indebtedness and liabilities of any kind of
Borrowers to Bank, and any and all modifications, renewals or extensions
thereof, whether joint or several, contingent or absolute, direct or indirect,
now existing or later arising, and however evidenced (collectively the
"Indebtedness"), are secured by and Bank is granted a security interest in all
items at any time deposited in any account of Borrowers with Bank and by all
proceeds of these items (cash or otherwise), all account balances of Borrowers
from time to time with Bank, by all property of Borrowers from time to time in
the possession of Bank, and by any other collateral, rights and properties
described in each and every mortgage, security agreement, pledge, assignment and
other security or collateral agreement which has been, or will at any time(s)
later be, executed by Borrowers or others to or for the benefit of Bank
(collectively the "Collateral").
If Borrowers or any guarantor under a guaranty of all or part of the
Indebtedness ("guarantor") (a) fail(s) to pay this Note, or any part thereof, or
any of the Indebtedness when due, by maturity, acceleration or otherwise, or
fail(s) to pay any Indebtedness owing on a demand basis upon demand; or (b)
fail(s) to comply with any of the terms or provisions of any agreement between
Borrowers or any guarantor and Bank; or (c) become(s) the subject of a voluntary
or involuntary proceeding in bankruptcy )(and if it is an involuntary
proceeding, it is not dismissed within sixty (60) days of the commencement
thereof), or a reorganization, arrangement or creditor composition proceeding,
cease(s) doing business as a going concern, or is the subject of a dissolution,
merger or consolidation; or (d) if any warranty or representation made by
Borrowers or any guarantor in connection with this Note or any of the
Indebtedness shall be discovered to have been untrue or incomplete in any
material respect when made; (e) or if there is any termination, notice of
termination, or breach (which the Bank in its sole and absolute discretion deems
material) of any guaranty, pledge, collateral assignment or subordination
agreement relating to all or any part of the Indebtedness; or (f) if there is
any failure by Borrowers or any guarantor to pay, when due, any of its
indebtedness (other than to the Bank) in an amount exceeding $100,000 in the
aggregate or in the observance or performance of any term, covenant or condition
in any document evidencing, securing or relating to such indebtedness; or (g) if
there is filed or issued a levy or writ of attachment or garnishment or other
like judicial process upon any Borrower or any guarantor or any of the
Collateral, including, without limit, any accounts of any Borrower or any
guarantor with Bank, then Bank, upon the occurrence and at any time during the
continuance or existence of any of these conditions or events (each an "Event of
Default"), may at its option and without prior notice to any Borrower, declare
any or all of the Indebtedness to be immediately due and payable
(notwithstanding any provisions contained in the evidence of it to the
contrary), sell or liquidate all or any portion of the Collateral, set off
against the Indebtedness any amounts owing by Bank to any Borrower, and exercise
any one or more of the rights and remedies granted to Bank by any agreement with
Borrowers given to it under applicable law, or otherwise.
Borrowers waive presentment, demand, protest, notice of dishonor, notice of
demand or intent to demand, notice of acceleration or intent to accelerate, and
all other notices, and agrees that no extension or indulgence to Borrowers, or
release, substitution or nonenforcement of any security, or release or
substitution of any guarantor or any other party, whether with or without
notice, shall affect the obligations of Borrowers. Borrowers waive all defenses
or right to discharge available under Section 3-605 of the Uniform Commercial
Code and waives all other suretyship defenses or right to discharge. Borrowers
agree that Bank has the right to sell, assign, or grant participations, or any
interest, in any or all of the Indebtedness, and that, in connection with such
right, but without limiting its ability to make other disclosures to the full
extent allowable, Bank may disclose all documents and information which the Bank
now or later has relating to Borrowers and the Indebtedness.
Borrowers agree to reimburse Bank, or any other holder or owner of this
Note, for any and all reasonable costs and expenses (including, without limit,
court costs, legal expenses and reasonable attorneys' fees, whether inside or
outside counsel is used, whether or not suit is instituted, and, if suit is
instituted, whether at the trial court level, appellate level, in a bankruptcy,
probate or administrative proceeding or otherwise) incurred in collecting or
attempting to collect this Note or the Indebtedness or incurred in any other
matter or proceeding relating to this Note or the Indebtedness.
Borrowers acknowledge and agree that there are no contrary agreements, oral
or written, establishing a term of this Note and agrees that the terms and
conditions of this Note may not be amended, waived or modified except in a
writing signed by a duly authorized officer of Bank expressly stating that the
writing constitutes an amendment, waiver or modification of the terms of this
Note. If any provision of this Note is unenforceable in whole or part for any
reason, the remaining provisions shall continue to be effective. THIS NOTE SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
MICHIGAN. All extensions of credit under this Note shall be made from Bank's
principal office located in Detroit, Michigan.
This Note shall bind Borrowers and Borrowers' respective successors and
assigns.
For the purposes of this Note, the following terms have the following
meanings:
"Advance" means a borrowing requested by Borrowers and made by Bank under
this Note, including any refunding of an outstanding Advance as the same type of
Advance or the conversion of any such outstanding Advance to another type of
Advance, and shall include a Eurodollar-based Advance and a Prime-based Advance.
"Applicable Interest Rate" means the Eurodollar-based Rate or the
Prime-based Rate, as selected by Borrowers from time to time or as otherwise
determined in accordance with the terms and conditions of this Note.
"Business Day" means any day, other than a Saturday, Sunday or holiday, on
which Bank is open for all or substantially all of its domestic and
international business (including dealings in foreign exchange) in Detroit,
Michigan.
"Eurodollar-based Advance" means an Advance which bears interest at the
Eurodollar-based Rate.
"Eurodollar-based Rate" means a per annum interest rate which is equal to
the sum of three percent (3%), plus the quotient of:
(a) the per annum interest rate at which Bank's Eurodollar Lending Office
offers dollar deposits to prime banks in the eurodollar market in an
amount comparable to the relevant Eurodollar-based Advance and for a
period equal to the relevant Interest Period at or about 11:00 a.m.
(Detroit, Michigan time) (or as soon thereafter as practical) two (2)
Business Days prior to the first day of such Interest Period;
divided by
(b) a percentage equal to 100% minus the maximum rate during such Interest
Period at which Bank is required to maintain reserves on
"Euro-currency Liabilities" as defined in and pursuant to Regulation D
of the Board of Governors of the Federal Reserve System or, if such
regulation or definition is modified, and as long as Bank is required
to maintain reserves against a category of liabilities which includes
eurodollar deposits or includes a category of assets which includes
eurodollar loans, the rate at which such reserves are required to be
maintained on such category.
"Eurodollar Lending Office" means Bank's office located in the Cayman
Islands, British West Indies, or such other branch of Bank, domestic or foreign,
as it may hereafter designate as its Eurodollar Lending Office by notice to
Borrowers.
"Interest Period" means a period of one (1) month, two (2) months, three
(3) or six (6) months (or any lesser or greater number of days agreed to in
advance by Borrowers and Bank), as selected by Borrowers pursuant to the terms
of this Note, commencing on the day a Eurodollar-based Advance is made, provided
that (a) any Interest Period which would otherwise end on a day which is not a
Business Day shall be extended to the next succeeding Business Day, except that
if the next succeeding Business Day falls in another calendar month, the
Interest Period shall end on the next preceding Business Day, and when an
Interest Period begins on a day which has no numerically corresponding day in
the calendar month during which such Interest Period is to end, it shall end on
the last Business Day of such calendar month.
"Prime-based Advance" shall mean an Advance which bears interest at the
Prime-based Rate.
"Prime Rate" means the per annum interest rate established by Bank as its
prime rate for its borrowers, as such rate may vary from time to time, which
rate is not necessarily the lowest rate on loans made by Bank at any such time.
"Prime-based Rate" shall mean a per annum interest rate which is equal to
the sum of one half of one percent (1/2%) plus the greater of (i) the Prime
Rate; or (ii) the rate of interest equal to the sum of (a) one percent (1%) and
(b) the rate of interest equal to the average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers (the "Overnight Rates"), as published by the Federal
Reserve Bank of New York, or, if the overnight Rates are not so published for
any day, the average of the quotations for the Overnight Rates received by Bank
from three (3) Federal funds brokers of recognized standing selected by Bank, as
the same may be changed from time to time.
"Request for Advance" means a Request for Advance issued by Borrowers under
this Note in the form annexed to this Note as Exhibit "A".
Borrowers agree to make all payments to Bank of any and all amounts due and
owing by Borrowers to Bank hereunder, including, without limitation, the payment
of principal and interest on any Advance, on the date provided for such payment,
in United States Dollars in immediately available funds, at the office of Bank
located at Comerica Tower at Detroit Center, 500 Woodward Avenue, Detroit,
Michigan 48226, or such other address as Bank may notify Borrowers in writing.
No delay or failure of Bank in exercising any right, power or privilege
hereunder shall affect such right, power or privilege, nor shall any single or
partial exercise thereof preclude any further exercise thereof, or the exercise
of any other power, right or privilege. The rights of Bank under this Agreement
are cumulative and not exclusive of any right or remedies which Bank would
otherwise have, whether by other instruments or by law.
The obligations of the Borrowers under this Note are the joint and several
obligations of the Borrowers; provided, however, with respect to Brake, Axle and
Tandem Company Canada Inc., its obligations shall be several and not joint with
any other Borrower.
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, WAIVES ANY RIGHT TO TRIAL BY JURY
IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN
ANY WAY RELATED TO, THIS NOTE OR THE INDEBTEDNESS HEREUNDER.
JPE, INC.
By: /s/ Richard R. Chrysler
-----------------------------------
Richard R. Chrysler
Its: President and Chief Executive Officer
DAYTON PARTS, INC.
By: /s/ Richard R. Chrysler
-----------------------------------
Richard R. Chrysler
Its: Chief Executive Officer
STARBOARD INDUSTRIES, INC.
By: /s/ Richard R. Chrysler
----------------------------------
Richard R. Chrysler
Its: President
PLASTIC TRIM, INC.
By: /s/ Richard R. Chrysler
---------------------------------
Richard R. Chrysler
Its: President
JPE FINISHING, INC.
By: /s/ Richard R. Chrysler
--------------------------------
Richard R. Chrysler
Its: President
BRAKE, AXLE AND TANDEM COMPANY CANADA INC.
By: /s/ Richard R. Chrysler
--------------------------------
Richard R. Chrysler
Its: Chief Executive Officer
ADVANCE FORMULA AGREEMENT
As of May 27, 1999, this Agreement is made between the undersigned borrowers
(collectively, "Debtors") and COMERICA BANK ("Bank"). For and in consideration
of the loans and other credit which Debtor may now or hereafter obtain from Bank
which are secured pursuant to a certain Security Agreements dated May 27, 1999,
("Security Agreement"), and for other good and valuable consideration, Debtors
agree as follows:
1. FORMULA LOANS. The credit which Bank may now or hereafter extend to
Debtors subject to the limitations of this Agreement and to the conditions and
limitations of any other agreement between Debtors and Bank is identified as
follows:
$30,000,000 secured line of credit
and any extensions, renewals or substitutions, whether in a greater or lesser
amount, including any letters of credit issued thereunder ("Formula Loans").
2. ADVANCE FORMULA. Debtors warrant and agree that Debtors' indebtedness to
Bank for the Formula Loans shall never exceed the sum of:
(a) Eighty percent (80%) of their Eligible Accounts, as defined below; and
(b) the lesser of fifty percent (50%) of their Eligible Inventory, as
defined below, or Nine Million Dollars ($9,000,000).
3. FORMULA COMPLIANCE. If the limitations in paragraph 2, above, are
exceeded at any time, Debtors shall immediately pay Bank sums sufficient to
reduce the Formula Loans by the amount of such excess.
4. ELIGIBLE ACCOUNT. "Eligible Account" shall mean an Account (as defined
in the Michigan Uniform Commercial Code, as amended ("UCC"), but shall not
include interest and service charges) arising in the ordinary course of a
Debtor's business which meets each of the following requirements:
(a) it is not owing more than ninety (90) days after the date of the
original invoice or other writing evidencing such Account;
(b) it is not owing by an Account Debtor (as defined in the UCC) who has
failed to pay twenty five percent (25%) or more of the aggregate
amount of its Accounts owing to Debtors within ninety (90) days after
the date of the respective invoices or other writings evidencing such
Accounts;
(c) it arises from the sale or lease of goods and such goods have been
shipped or delivered to the Account Debtor under such Account; or it
arises from services rendered and such services have been performed;
(d) it is evidenced by an invoice, dated not later than the date of
shipment or performance, rendered to such Account Debtor or some other
evidence of billing acceptable to Bank;
(e) it is not evidenced by any note, trade acceptance, draft or other
negotiable instrument or by any chattel paper, unless such note or
other document or instrument previously has been endorsed and
delivered by Debtors to Bank;
(f) it is a valid, legally enforceable obligation of the Account Debtor
thereunder, and is not subject to any offset, counterclaim or other
defense on the part of such Account Debtor or to any claim on the part
of such Account Debtor denying liability thereunder in whole or in
part;
(g) it is not subject to any sale of accounts, any rights of offset,
assignment, lien or security interest whatsoever other than to Bank;
(h) it is not owing by a subsidiary or affiliate of a Debtor, nor by an
Account Debtor which (i) does not maintain its chief executive office
in the United States of America, (ii) is not organized under the laws
of the United States of America, or any state thereof, unless such
Account Debtor is a Canadian subsidiary of General Motors, Ford or
Chrysler, or (iii) is the government of any foreign country or
sovereign state, or of any state, province, municipality or other
instrumentality thereof;
(i) it is not an account owing by the United States of America or any
state or political subdivision thereof, or by any department, agency,
public body corporate or other instrumentality of any of the
foregoing, unless all necessary steps are taken to comply with the
Federal Assignment of Claims Act of 1940, as amended, or with any
comparable state law, if applicable, and all other necessary steps are
taken to perfect Bank's security interest in such account;
(j) it is not owing by an Account Debtor for which a Debtor has received a
notice of (i) the death of the Account Debtor, (ii) the dissolution,
liquidation, termination of existence, insolvency or business failure
of the Account Debtor, (iii) the appointment of a receiver for any
part of the property of the Account Debtor, or (iv) an assignment for
the benefit of creditors, the filing of a petition in bankruptcy, or
the commencement of any proceeding under any bankruptcy or insolvency
laws by or against the Account Debtor;
(k) it is not an account billed in advance, payable on delivery, for
consigned goods, for guaranteed sales, for unbilled sales, for
progress billings, payable at a future date in accordance with its
terms, subject to a retainage or holdback by the Account Debtor or
insured by a surety company; and
(l) it is not owing by any Account Debtor whose obligations Bank, acting
in its reasonable discretion based on a belief that the prospects for
payment of the Accounts owing by such Account Debtor are impaired,
shall have notified Debtors are not deemed to constitute Eligible
Accounts.
An Account which is at any time an Eligible Account, but which subsequently
fails to meet any of the foregoing requirements, shall forthwith cease to be an
Eligible Account.
5. ELIGIBLE INVENTORY. Unless stated otherwise in paragraph 12 below,
"Eligible Inventory" shall be valued at the lesser of cost or present market
value in accordance with generally accepted accounting principles, consistently
applied, and shall mean all of Debtors' Inventory (as defined in the UCC) which
is in good and merchantable condition, is not obsolete or discontinued, and
which would properly be classified as "raw materials" or as "finished goods
inventory" under generally accepted accounting principles, consistently applied,
excluding (a) Debtors' work in process, consigned goods, inventory located
outside the United States of America, (b) inventory covered by or subject to a
seller's right to repurchase, or any consensual or nonconsensual lien or
security interest (including without limitation purchase money security
interests) other than in favor of Bank, whether senior or junior to Bank's
security interest, and (c) inventory that Bank, acting in its sole discretion,
after having notified Debtors, excludes. Inventory which is at any time Eligible
Inventory, but which subsequently fails to meet any of the foregoing
requirements, shall forthwith cease to be Eligible Inventory.
6. CERTIFICATES, SCHEDULES AND REPORTS. Debtors will within ten (10) days
after and as of the end of each month (and at such other times as Bank may
request), deliver to Bank agings of the Accounts and a schedule identifying each
Eligible Account (not previously so identified) and reports as to the amount of
Eligible Inventory. Debtors will from time to time deliver to Bank such
additional schedules, certificates and reports respecting all or any of the
Collateral (as defined in the Security Agreement), the items or amounts received
by Debtors in full or partial payment of any of the Collateral, and any goods
(the sale or lease of which by Debtors shall have given rise to any of the
Collateral) possession of which has been obtained by Debtors, all and as to such
extent as Bank may request. Any such schedule, certificate or report shall be
executed by a duly authorized officer of Debtors and shall be in such form and
detail as Bank may specify. Any such schedule identifying any Eligible Account
shall be accompanied (if Bank so requests) by a true and correct copy of the
invoice evidencing such Eligible Account and by evidence of shipment or
performance.
7. INSPECTIONS; COMPLIANCE. Debtors shall permit Bank and its designees
from time to time to make such inspections and audits, and to obtain such
confirmations or other information, with respect to any of the Collateral or any
Account Debtor as Bank is entitled to make or obtain under the Security
Agreement, and shall reimburse Bank on demand for all costs and expenses
incurred by Bank in connection with such inspections and audits. Debtors shall
further comply with all of the other terms and conditions of the Security
Agreement.
8. DEFAULT. Any failure by Debtors to comply with this Agreement shall
constitute a default under the Formula Loans and under the Security Agreement
and the Indebtedness, as defined therein.
9. AMENDMENTS; WAIVERS. This Agreement may be amended, modified or
terminated only in writing duly executed by Debtors and Bank. No delay by Bank
in requiring Debtor's compliance herewith shall constitute a waiver of such
right. The rights granted to Bank hereunder are cumulative, and in addition to
any other rights Bank may have by agreement or under applicable law. This
Agreement shall supersede and replace in their entirety any prior advance
formula agreements in effect between Bank and Debtors. This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
Michigan, without regard to conflict of laws principles.
10. DEMAND BASIS FORMULA LOANS. Notwithstanding anything to the contrary
set forth in this Agreement, in the event that the Formula Loans are at any time
on a demand basis, Debtors hereby acknowledge and agree that the formula set
forth in paragraph 2 hereof is merely for advisory and guidance purposes and
Bank shall not be obligated to make any loans or advances under the Formula
Loans, and, notwithstanding the terms of paragraph 3 above, Bank may at any
time, at its option, demand payment of any or all of the Formula Loans,
whereupon the same shall become due and payable.
11. JURY WAIVER. DEBTORS 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 WAIVES 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 INDEBTEDNESS.
12. SPECIAL PROVISIONS*
*None, if left blank.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and year
first above written.
Debtors' Chief Executive Office Address: DEBTORS:
775 Technology Drive JPE, INC.
Suite 200
Ann Arbor, MI 48108 By: /s/ Richard R. Chrysler
------------------------------
Richard R. Chrysler
Its: President and Chief Executive
Officer
BRAKE, AXLE AND TANDEM COMPANY
CANADA, INC.
By: /s/ Richard R. Chrysler
------------------------------
Richard R. Chrysler
Its: Chief Executive Officer
DAYTON PARTS, INC.
By: /s/ Richard R. Chrysler
------------------------------
Richard R. Chrysler
Its: Chief Executive Officer
JPE FINISHING, INC.
By: /s/ Richard R. Chrysler
------------------------------
Richard R. Chrysler
Its: President
PLASTIC TRIM, INC.
By: /s/ Richard R. Chrysler
------------------------------
Richard R. Chrysler
Its: President
STARBOARD INDUSTRIES, INC.
By: /s/ Richard R. Chrysler
------------------------------
Richard R. Chrysler
Its: President
Accepted and Approved:
COMERICA BANK
By: /s/ Richard S. Arceci
----------------------------
Richard S. Arceci
Its: Vice President
Security Agreement
(All Assets)
As of May 27, 1999, for value received, the undersigned ("Debtor") grants to
Comerica Bank ("Bank"), a Michigan banking corporation, a continuing security
interest in the Collateral (as defined below) to secure payment when due,
whether by stated maturity, demand, acceleration or otherwise, of all existing
and future indebtedness ("Indebtedness") to the Bank of the obligors listed in
attached Schedule 1 (collectively, "Borrower") and/or Debtor. Indebtedness
includes without limit any and all obligations or liabilities of the Borrower
and/or Debtor to the Bank, whether absolute or contingent, direct or indirect,
voluntary or involuntary, liquidated or unliquidated, joint or several, known or
unknown; any and all obligations or liabilities for which the Borrower and/or
Debtor would otherwise be liable to the Bank were it not for the invalidity or
unenforceability of them by reason of any bankruptcy, insolvency or other law,
or for any other reason; any and all amendments, modifications, renewals and/or
extensions of any of the above; all costs incurred by Bank in establishing,
determining, continuing, or defending the validity or priority of its security
interest, or in pursuing its rights and remedies under this Agreement or under
any other agreement between Bank and Borrower and/or Debtor or in connection
with any proceeding involving Bank as a result of any financial accommodation to
Borrower and/or Debtor; and all other costs of collecting Indebtedness,
including without limit attorney fees. Debtor agrees to pay Bank all such costs
incurred by the Bank, immediately upon demand, and until paid all costs shall
bear interest at the highest per annum rate applicable to any of the
Indebtedness, but not in excess of the maximum rate permitted by law. Any
reference in this Agreement to attorney fees shall be deemed a reference to
reasonable fees, costs, and expenses of both in-house and outside counsel and
paralegals, whether or not a suit or action is instituted, and to court costs if
a suit or action is instituted, and whether attorney fees or court costs are
incurred at the trial court level, on appeal, in a bankruptcy, administrative or
probate proceeding or otherwise.
1. Collateral shall mean all of the following property Debtor now or later
owns or has an interest in, wherever located:
(a) all Accounts Receivable (for purposes of this Agreement, "Accounts
Receivable" consists of all accounts, general intangibles, chattel
paper, contract rights, deposit accounts, documents and instruments),
(b) all Inventory,
(c) all Equipment and Fixtures,
(d) all goods, instruments, documents, policies and certificates of
insurance, deposits, money, investment property or other property
(except real property which is not a fixture) which are now or later
in possession or control of Bank, or as to which Bank now or later
controls possession by documents or otherwise, and
(e) all additions, attachments, accessions, parts, replacements,
substitutions, renewals, interest, dividends, distributions, rights of
any kind (including but not limited to stock splits, stock rights,
voting and preferential rights), products, and proceeds of or
pertaining to the above including, without limit, cash or other
property which were proceeds and are recovered by a bankruptcy trustee
or otherwise as a preferential transfer by Debtor.
2. Warranties, Covenants and Agreements. Debtor warrants, covenants and
agrees as follows:
2.1 Debtor shall furnish to Bank, in form and at intervals as Bank may
reasonably request, any information Bank may reasonably request and allow
Bank at all reasonable times during normal business hours to examine,
inspect, and copy any of Debtor's books and records. Debtor shall, at the
request of Bank, mark its records and the Collateral to clearly indicate
the security interest of Bank under this Agreement.
2.2 At the time any Collateral becomes, or is represented to be,
subject to a security interest in favor of Bank, Debtor shall be deemed to
have warranted that (a) Debtor is the lawful owner of the Collateral and
has the right and authority to subject it to a security interest granted to
Bank; (b) none of the Collateral is subject to any security interest other
than that in favor of Bank and Permitted Liens (as defined in attached
Exhibit "A") and there are no financing statements on file, other than in
favor of Bank and those filed with respect to Permitted Liens; and (c)
Debtor acquired its rights in the Collateral in the ordinary course of its
business.
2.3 Debtor will keep the Collateral free at all times from all claims,
liens, security interests and encumbrances other than those in favor of
Bank and the Permitted Liens. Debtor will not, without the prior written
consent of Bank, sell, transfer or lease, or permit to be sold, transferred
or leased, any or all of the Collateral, except for Inventory in the
ordinary course of its business and except for obsolete or worn out
property and property no longer useful in the operation of Debtor's
business and will not return any Inventory to its supplier. Bank or its
representatives may at all reasonable times inspect the Collateral and may
enter upon all premises where the Collateral is kept or might be located.
2.4 Debtor will do all acts and will execute or cause to be executed
all writings reasonably requested by Bank to establish, maintain and
continue a perfected and first security interest of Bank in the Collateral.
Debtor agrees that Bank has no obligation to acquire or perfect any lien on
or security interest in any asset(s), whether realty or personalty, to
secure payment of the Indebtedness.
2.5 Debtor will pay within the time that they can be paid without
interest or penalty all taxes, assessments and similar charges which at any
time are or may become a lien, charge, or encumbrance upon any Collateral,
except to the extent contested in good faith and bonded in a manner
reasonably satisfactory to Bank. If Debtor fails to pay any of these taxes,
assessments, or other charges in the time provided above, Bank has the
option (but not the obligation) to do so and Debtor agrees to repay all
amounts so expended by Bank immediately upon demand, together with interest
at the highest per annum rate applicable to any of the Indebtedness but not
in excess of the maximum rate allowed by applicable law.
2.6 Debtor will keep the Collateral in good condition (subject to
ordinary wear and tear) and will protect it from loss, damage, or
deterioration from any cause (other than ordinary wear and tear). Debtor
has and will maintain at all times (a) with respect to the Collateral,
insurance under an "all risk" policy against fire and other risks
customarily insured against, and (b) public liability insurance and other
insurance as may be required by law or reasonably required by Bank, all of
which insurance shall be in amount, form and content, and written by
companies as may be reasonably satisfactory to Bank, containing a lender's
loss payable endorsement reasonably acceptable to Bank. Debtor will deliver
to Bank immediately upon demand evidence reasonably satisfactory to Bank
that the required insurance has been procured. If Debtor fails to maintain
satisfactory insurance, Bank has the option (but not the obligation) to do
so and Debtor agrees to repay all amounts so expended by Bank immediately
upon demand, together with interest at the highest lawful default rate
which could be charged by Bank on any Indebtedness.
2.7 On each occasion on which Debtor evidences to Bank the account
balances on and the nature and extent of the Accounts Receivable, Debtor
shall be deemed to have warranted that except as otherwise indicated (a)
each of those Accounts Receivable is valid and enforceable without
performance by Debtor of any act; (b) each of those account balances are in
fact owing, (c) there are no setoffs, recoupments, credits, contra
accounts, counterclaims or defenses against any of those Accounts
Receivable, (d) as to any Accounts Receivable represented by a note, trade
acceptance, draft or other instrument or by any chattel paper or document,
the same have been endorsed and/or delivered by Debtor to Bank, (e) Debtor
has not received with respect to any Account Receivable, any notice of the
death of the related account debtor, nor of the dissolution, liquidation,
termination of existence, insolvency, business failure, appointment of a
receiver for, assignment for the benefit of creditors by, or filing of a
petition in bankruptcy by or against, the account debtor, and (f) as to
each Account Receivable, the account debtor is not an affiliate of Debtor,
the United States of America or any department, agency or instrumentality
of it, or a citizen or resident of any jurisdiction outside of the United
States. Debtor will do all acts and will execute all writings requested by
Bank to perform, enforce performance of, and collect all Accounts
Receivable. Debtor shall neither make nor permit any modification,
compromise or substitution for any Account Receivable without the prior
written consent of Bank. Debtor shall, at Bank's request, arrange for
verification of Accounts Receivable directly with account debtors or by
other methods acceptable to Bank.
2.8 Debtor at all times shall be in compliance in all material
respects with all applicable laws, including without limit any laws,
ordinances, directives, orders, statutes, or regulations an object of which
is to regulate or improve health, safety, or the environment
("Environmental Laws").
2.9 If Bank, acting in its sole discretion, redelivers Collateral to
Debtor or Debtor's designee for the purpose of (a) the ultimate sale or
exchange thereof; or (b) presentation, collection, renewal, or registration
of transfer thereof; or (c) loading, unloading, storing, shipping,
transshipping, manufacturing, processing or otherwise dealing with it
preliminary to sale or exchange; such redelivery shall be in trust for the
benefit of Bank and shall not constitute a release of Bank's security
interest in it or in the proceeds or products of it unless Bank
specifically so agrees in writing. If Debtor requests any such redelivery,
Debtor will deliver with such request a duly executed financing statement
in form and substance satisfactory to Bank. Any proceeds of Collateral
coming into Debtor's possession as a result of any such redelivery shall be
held in trust for Bank and immediately delivered to Bank for application on
the Indebtedness. Bank may (in its sole discretion) deliver any or all of
the Collateral to Debtor, and such delivery by Bank shall discharge Bank
from all liability or responsibility for such Collateral. Bank, at its
option, may require delivery of any Collateral to Bank at any time with
such endorsements or assignments of the Collateral as Bank may request.
2.10 Following the occurrence and during the continuance of an Event
of Default, at any time and without notice, Bank may (a) cause any or all
of the Collateral to be transferred to its name or to the name of its
nominees; (b) receive or collect by legal proceedings or otherwise all
dividends, interest, principal payments and other sums and all other
distributions at any time payable or receivable on account of the
Collateral, and hold the same as Collateral, or apply the same to the
Indebtedness, the manner and distribution of the application to be in the
sole discretion of Bank; (c) enter into any extension, subordination,
reorganization, deposit, merger or consolidation agreement or any other
agreement relating to or affecting the Collateral, and deposit or surrender
control of the Collateral, and accept other property in exchange for the
Collateral and hold or apply the property or money so received pursuant to
this Agreement.
2.11 Bank may assign any of the Indebtedness and deliver any or all of
the Collateral to its assignee, who then shall have with respect to
Collateral so delivered all the rights and powers of Bank under this
Agreement, and after that Bank shall be fully discharged from all liability
and responsibility with respect to Collateral so delivered.
2.12 Debtor delivers this Agreement based solely on Debtor's
independent investigation of (or decision not to investigate) the financial
condition of Borrower and is not relying on any information furnished by
Bank. Debtor assumes full responsibility for obtaining any further
information concerning the Borrower's financial condition, the status of
the Indebtedness or any other matter which the undersigned may deem
necessary or appropriate now or later. Debtor waives any duty on the part
of Bank, and agrees that Debtor is not relying upon nor expecting Bank to
disclose to Debtor any fact now or later known by Bank, whether relating to
the operations or condition of Borrower, the existence, liabilities or
financial condition of any guarantor of the Indebtedness, the occurrence of
any default with respect to the Indebtedness, or otherwise, notwithstanding
any effect such fact may have upon Debtor's risk or Debtor's rights against
Borrower. Debtor knowingly accepts the full range of risk encompassed in
this Agreement, which risk includes without limit the possibility that
Borrower may incur Indebtedness to Bank after the financial condition of
Borrower, or Borrower's ability to pay debts as they mature, has
deteriorated.
2.13 Debtor shall defend, indemnify and hold harmless Bank, its
employees, agents, shareholders, affiliates, officers, and directors from
and against any and all claims, damages, fines, expenses, liabilities or
causes of action of whatever kind, including without limit consultant fees,
legal expenses, and attorney fees, suffered by any of them as a direct or
indirect result of any actual or asserted violation of any law (other than
a violation by Bank), including, without limit, Environmental Laws, or of
any remediation relating to any property required by any law, including
without limit Environmental Laws.
3. Collection of Proceeds.
3.1 Debtor agrees to collect and enforce payment of all Collateral
until Bank shall direct Debtor to the contrary. Immediately upon notice to
Debtor by Bank and at all times after that, Debtor agrees to fully and
promptly cooperate and assist Bank in the collection and enforcement of all
Collateral and to hold in trust for Bank all payments received in
connection with Collateral and from the sale, lease or other disposition of
any Collateral, all rights by way of suretyship or guaranty and all rights
in the nature of a lien or security interest which Debtor now or later has
regarding Collateral. Immediately upon and after such notice, during the
continuance of an Event of Default Debtor agrees to (a) endorse to Bank and
immediately deliver to Bank all payments received on Collateral or from the
sale, lease or other disposition of any Collateral or arising from any
other rights or interests of Debtor in the Collateral, in the form received
by Debtor without commingling with any other funds, and (b) immediately
deliver to Bank all property in Debtor's possession or later coming into
Debtor's possession through enforcement of Debtor's rights or interests in
the Collateral. During the continuance of an Event of Default, Debtor
irrevocably authorizes Bank or any Bank employee or agent to endorse the
name of Debtor upon any checks or other items which are received in payment
for any Collateral, and to do any and all things necessary in order to
reduce these items to money. Bank shall have no duty as to the collection
or protection of Collateral or the proceeds of it, nor as to the
preservation of any related rights, beyond the use of reasonable care in
the custody and preservation of Collateral in the possession of Bank.
Debtor agrees to take all steps necessary to preserve rights against prior
parties with respect to the Collateral. Nothing in this Section 3.1 shall
be deemed a consent by Bank to any sale, lease or other disposition of any
Collateral.
3.2 Debtor agrees that immediately upon Bank's request (whether or not
any Event of Default exists) the Indebtedness shall be on a "remittance
basis" as follows: Debtor shall at its sole expense establish and maintain
(and Bank, at Bank's option may establish and maintain at Debtor's
expense): (a) an United States Post Office lock box (the "Lock Box"), to
which Bank shall have exclusive access and control. Debtor expressly
authorizes Bank, from time to time, to remove contents from the Lock Box,
for disposition in accordance with this Agreement. Debtor agrees to notify
all account debtors and other parties obligated to Debtor that all payments
made to Debtor (other than payments by electronic funds transfer) shall be
remitted, for the credit of Debtor, to the Lock Box, and Debtor shall
include a like statement on all invoices; and (b) a non-interest bearing
deposit account with Bank which shall be titled as designated by Bank (the
"Cash Collateral Account") to which Bank shall have exclusive access and
control. Debtor agrees to notify all account debtors and other parties
obligated to Debtor that all payments made to Debtor by electronic funds
transfer shall be remitted to the Cash Collateral Account, and Debtor, at
Bank's request, shall include a like statement on all invoices. Debtor
shall execute all documents and authorizations as required by Bank to
establish and maintain the Lock Box and the Cash Collateral Account.
3.3 All items or amounts which are remitted to the Lock Box, to the
Cash Collateral Account, or otherwise delivered by or for the benefit of
Debtor to Bank on account of partial or full payment of, or with respect
to, any Collateral shall, at Bank's option, (i) be applied to the payment
of the Indebtedness, whether then due or not, in such order or at such time
of application as Bank may determine in its sole discretion, or, (ii) be
deposited to the Cash Collateral Account. Debtor agrees that Bank shall not
be liable for any loss or damage which Debtor may suffer as a result of
Bank's processing of items or its exercise of any other rights or remedies
under this Agreement, including without limitation indirect, special or
consequential damages, loss of revenues or profits, or any claim, demand or
action by any third party arising out of or in connection with the
processing of items or the exercise of any other rights or remedies under
this Agreement. Debtor agrees to indemnify and hold Bank harmless from and
against all such third party claims, demands or actions, and all related
expenses or liabilities, including, without limitation, attorney fees.
4. Defaults, Enforcement and Application of Proceeds.
4.1 Upon the occurrence and during the continuance of any of the
following events (each an "Event of Default"), Debtor shall be in default
under this Agreement:
(a) Any failure to pay the Indebtedness or any other indebtedness
when due, or such portion of it as may be due, by acceleration or
otherwise; or
(b) Any failure or neglect to comply with, or breach of or default
under, any term of this Agreement, or any other agreement or
commitment between Borrower, Debtor, or any guarantor of any of
the Indebtedness ("Guarantor") and Bank; or
(c) Any warranty, representation, financial statement, or other
information made, given or furnished to Bank by or on behalf of
Borrower, Debtor, or any Guarantor shall be, or shall prove to
have been, false or materially misleading when made, given, or
furnished; or
(d) Any loss, theft, substantial damage or destruction to or of any
material part of the Collateral which is not covered by
insurance, or the issuance or filing of any attachment, levy,
garnishment or the commencement of any proceeding in connection
with any Collateral or of any other judicial process of, upon or
in respect of Borrower, Debtor, any Guarantor, or any Collateral
which is not contested in good faith and bonded to Bank's
reasonable satisfaction; or
(e) Sale or other disposition by Borrower, Debtor, or any Guarantor
of any substantial portion of its assets or property or voluntary
suspension of the transaction of business by Borrower, Debtor, or
any Guarantor, or death, dissolution, termination of existence,
merger, consolidation, insolvency, business failure, or
assignment for the benefit of creditors of or by Borrower,
Debtor, or any Guarantor; or commencement of any proceedings
under any state or federal bankruptcy or insolvency laws or laws
for the relief of debtors by or against Borrower, Debtor, or any
Guarantor; or the appointment of a receiver, trustee, court
appointee, sequestrator or otherwise, for all or any part of the
property of Borrower, Debtor, or any Guarantor.
In the event of an express conflict between any provision of this Section
4.1 and the corresponding provision of any of the promissory notes
evidencing a portion or all of the Indebtedness, the provisions of such
promissory notes shall control.
4.2 Upon the occurrence and during the continuance of any Event of
Default, Bank may at its discretion and without prior notice to Debtor
declare any or all of the Indebtedness to be immediately due and payable,
and shall have and may exercise any one or more of the following rights and
remedies:
(a) Exercise all the rights and remedies upon default, in foreclosure
and otherwise, available to secured parties under the provisions
of the Uniform Commercial Code and other applicable law;
(b) Institute legal proceedings to foreclose upon the lien and
security interest granted by this Agreement, to recover judgment
for all amounts then due and owing as Indebtedness, and to
collect the same out of any Collateral or the proceeds of any
sale of it;
(c) Institute legal proceedings for the sale, under the judgment or
decree of any court of competent jurisdiction, of any or all
Collateral; and/or
(d) Personally or by agents, attorneys, or appointment of a receiver,
enter upon any premises where Collateral may then be located, and
take possession of all or any of it and/or render it unusable;
and without being responsible for loss or damage to such
Collateral, hold, operate, sell, lease, or dispose of all or any
Collateral at one or more public or private sales, leasings or
other disposition, at places and times and on terms and
conditions as Bank may deem fit, without any previous demand or
advertisement; and except as provided in this Agreement, all
notice of sale, lease or other disposition, and advertisement,
and other notice or demand, any right or equity of redemption,
and any obligation of a prospective purchaser or lessee to
inquire as to the power and authority of Bank to sell, lease, or
otherwise dispose of the Collateral or as to the application by
Bank of the proceeds of sale or otherwise, which would otherwise
be required by, or available to Debtor under, applicable law are
expressly waived by Debtor to the fullest extent permitted.
At any sale pursuant to this Section 4.2, whether under the power of sale,
by virtue of judicial proceedings or otherwise, it shall not be necessary
for Bank or a public officer under order of a court to have present
physical or constructive possession of Collateral to be sold. The recitals
contained in any conveyances and receipts made and given by Bank or the
public officer to any purchaser at any sale made pursuant to this Agreement
shall, to the extent permitted by applicable law, conclusively establish
the truth and accuracy of the matters stated (including, without limit, as
to the amounts of the principal of and interest on the Indebtedness, the
accrual and nonpayment of it and advertisement and conduct of the sale);
and all prerequisites to the sale shall be presumed to have been satisfied
and performed. Upon any sale of any Collateral, the receipt of the officer
making the sale under judicial proceedings or of Bank shall be sufficient
discharge to the purchaser for the purchase money, and the purchaser shall
not be obligated to see to the application of the money. Any sale of any
Collateral under this Agreement shall be a perpetual bar against Debtor
with respect to that Collateral.
4.3 Debtor shall at the request of Bank, notify the account debtors or
obligors of Bank's security interest in the Collateral and direct payment
of it to Bank. Bank may, itself, upon the occurrence and during the
continuance of any Event of Default so notify and direct any account debtor
or obligor.
4.4 The proceeds of any sale or other disposition of Collateral
authorized by this Agreement shall be applied by Bank first upon all
expenses authorized by the Uniform Commercial Code and all reasonable
attorney fees and legal expenses incurred by Bank; the balance of the
proceeds of the sale or other disposition shall be applied in the payment
of the Indebtedness, first to interest, then to principal, then to
remaining Indebtedness and the surplus, if any, shall be paid over to
Debtor or to such other person(s) as may be entitled to it under applicable
law. Debtor shall remain liable for any deficiency, which it shall pay to
Bank immediately upon demand.
4.5 Nothing in this Agreement is intended, nor shall it be construed,
to preclude Bank from pursuing any other remedy provided by law for the
collection of the Indebtedness or for the recovery of any other sum to
which Bank may be entitled for the breach of this Agreement by Debtor.
Nothing in this Agreement shall reduce or release in any way any rights or
security interests of Bank contained in any existing agreement between
Borrower, Debtor, or any Guarantor and Bank.
4.6 No waiver of default or consent to any act by Debtor shall be
effective unless in writing and signed by an authorized officer of Bank. No
waiver of any default or forbearance on the part of Bank in enforcing any
of its rights under this Agreement shall operate as a waiver of any other
default or of the same default on a future occasion or of any rights.
4.7 Debtor irrevocably appoints Bank or any agent of Bank (which
appointment is coupled with an interest) the true and lawful attorney of
Debtor (with full power of substitution) in the name, place and stead of,
and at the expense of, Debtor:
(a) to demand, receive, sue for, and give receipts or acquittances
for any moneys due or to become due on any Collateral and to
endorse any item representing any payment on or proceeds of the
Collateral;
(b) to execute and file in the name of and on behalf of Debtor all
financing statements or other filings deemed necessary or
desirable by Bank to evidence, perfect, or continue the security
interests granted in this Agreement; and
(c) to do and perform any act on behalf of Debtor permitted or
required under this Agreement.
4.8 Upon the occurrence and during the continuance of an Event of
Default, Debtor also agrees, upon request of Bank, to assemble the
Collateral and make it available to Bank at any place designated by Bank
which is reasonably convenient to Bank and Debtor.
5. Miscellaneous.
5.1 Until Bank is advised in writing by Debtor to the contrary, all
notices, requests and demands required under this Agreement or by law shall
be given to, or made upon, Debtor at the first address indicated in Section
5.15 below.
5.2 Debtor will give Bank not less than 30 days prior written notice
of all contemplated changes in Debtor's name, chief executive office
location, and/or location of any Collateral.
5.3 Bank assumes no duty of performance or other responsibility under
any contracts contained within the Collateral.
5.4 Bank has the right to sell, assign, transfer, negotiate or grant
participations or any interest in, any or all of the Indebtedness and any
related obligations, including without limit this Agreement. In connection
with the above, but without limiting its ability to make other disclosures
to the full extent allowable, Bank may disclose all documents and
information which Bank now or later has relating to Debtor, the
Indebtedness or this Agreement, however obtained. Debtor further agrees
that Bank may provide information relating to this Agreement or relating to
Debtor to the Bank's parent, affiliates, subsidiaries, and service
providers.
5.5 In addition to Bank's other rights, any indebtedness owing from
Bank to Debtor can be set off and applied by Bank on any Indebtedness at
any time(s) either before or after maturity or demand without notice to
anyone.
5.6 Debtor waives any right to require the Bank to: (a) proceed
against any person or property; (b) give notice of the terms, time and
place of any public or private sale of personal property security held from
Borrower or any other person, or otherwise comply with the provisions of
Section 9-504 of the Uniform Commercial Code; or (c) pursue any other
remedy in the Bank's power. Debtor waives notice of acceptance of this
Agreement and presentment, demand, protest, notice of protest, dishonor,
notice of dishonor, notice of default, notice of intent to accelerate or
demand payment of any Indebtedness, any and all other notices to which the
undersigned might otherwise be entitled, and diligence in collecting any
Indebtedness, and agree(s) that the Bank may, once or any number of times,
modify the terms of any Indebtedness, compromise, extend, increase,
accelerate, renew or forbear to enforce payment of any or all Indebtedness,
or permit Borrower to incur additional Indebtedness, all without notice to
Debtor and without affecting in any manner the unconditional obligation of
Debtor under this Agreement. Debtor unconditionally and irrevocably waives
each and every defense and setoff of any nature which, under principles of
guaranty or otherwise, would operate to impair or diminish in any way the
obligation of Debtor under this Agreement, and acknowledges that such
waiver is by this reference incorporated into each security agreement,
collateral assignment, pledge and/or other document from Debtor now or
later securing the Indebtedness, and acknowledges that as of the date of
this Agreement no such defense or setoff exists.
5.7 Debtor waives any and all rights (whether by subrogation,
indemnity, reimbursement, or otherwise) to recover from Borrower any
amounts paid or the value of any Collateral given by Debtor pursuant to
this Agreement.
5.8 In the event that applicable law shall obligate Bank to give prior
notice to Debtor of any action to be taken under this Agreement, Debtor
agrees that a written notice given to Debtor at least five days before the
date of the act shall be reasonable notice of the act and, specifically,
reasonable notification of the time and place of any public sale or of the
time after which any private sale, lease, or other disposition is to be
made, unless a shorter notice period is reasonable under the circumstances.
A notice shall be deemed to be given under this Agreement when delivered to
Debtor or when placed in an envelope addressed to Debtor and deposited,
with postage prepaid, in a post office or official depository under the
exclusive care and custody of the United States Postal Service or delivered
to an overnight courier. The mailing shall be by overnight courier,
certified, or first class mail.
5.9 Notwithstanding any prior revocation, termination, surrender, or
discharge of this Agreement in whole or in part, the effectiveness of this
Agreement shall automatically continue or be reinstated in the event that
any payment received or credit given by Bank in respect of the Indebtedness
is returned, disgorged, or rescinded under any applicable law, including,
without limitation, bankruptcy or insolvency laws, in which case this
Agreement, shall be enforceable against Debtor as if the returned,
disgorged, or rescinded payment or credit had not been received or given by
Bank, and whether or not Bank relied upon this payment or credit or changed
its position as a consequence of it. In the event of continuation or
reinstatement of this Agreement, Debtor agrees upon demand by Bank to
execute and deliver to Bank those documents which Bank determines are
appropriate to further evidence (in the public records or otherwise) this
continuation or reinstatement, although the failure of Debtor to do so
shall not affect in any way the reinstatement or continuation.
5.10 This Agreement and all the rights and remedies of Bank under this
Agreement shall inure to the benefit of Bank's successors and assigns and
to any other holder who derives from Bank title to or an interest in the
Indebtedness or any portion of it, and shall bind Debtor and the heirs,
legal representatives, successors, and assigns of Debtor. Nothing in this
Section 5.10 is deemed a consent by Bank to any assignment by Debtor.
5.11 If there is more than one Debtor, all undertakings, warranties
and covenants made by Debtor and all rights, powers and authorities given
to or conferred upon Bank are made or given jointly and severally.
5.12 Except as otherwise provided in this Agreement, all terms in this
Agreement have the meanings assigned to them in Article 9 (or, absent
definition in Article 9, in any other Article) of the Uniform Commercial
Code. "Uniform Commercial Code" means Act No. 174 of the Michigan Public
Acts of 1962, as amended.
5.13 No single or partial exercise, or delay in the exercise, of any
right or power under this Agreement, shall preclude other or further
exercise of the rights and powers under this Agreement. The
unenforceability of any provision of this Agreement shall not affect the
enforceability of the remainder of this Agreement. This Agreement
constitutes the entire agreement of Debtor and Bank with respect to the
subject matter of this Agreement. No amendment or modification of this
Agreement shall be effective unless the same shall be in writing and signed
by Debtor and an authorized officer of Bank. This Agreement shall be
governed by and construed in accordance with the internal laws of the State
of Michigan, without regard to conflict of laws principles.
5.14 To the extent that any of the Indebtedness is payable upon
demand, nothing contained in this Agreement shall modify the terms and
conditions of that Indebtedness nor shall anything contained in this
Agreement prevent Bank from making demand, without notice and with or
without reason, for immediate payment of any or all of that Indebtedness at
any time(s), whether or not an Event of Default has occurred.
5.15 Debtor's chief executive office is located and shall be
maintained at 775 Technology Drive, Suite 200, Ann Arbor, Michigan 48108.
If Collateral is located at other than the chief executive office, such
Collateral is located and shall be maintained at
See Attached List of Collateral Locations
STREET ADDRESS
CITY STATE ZIP CODE COUNTY
Collateral shall be maintained only at the locations identified in this
Section 5.15.
5.16 A carbon, photographic or other reproduction of this Agreement
shall be sufficient as a financing statement under the Uniform Commercial
Code and may be filed by Bank in any filing office.
5.17 This Agreement shall be terminated only by the filing of a
termination statement in accordance with the applicable provisions of the
Uniform Commercial Code, but the obligations contained in Section 2.13 of
this Agreement shall survive termination.
6. DEBTOR 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 WAIVES 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 INDEBTEDNESS.
Special Provisions Applicable to this Agreement. (*None, if left blank)
Debtor:
--------------------------------------
By: /s/ Richard R. Chrysler
---------------------------------
Richard R. Chrysler
Its:
---------------------------------
<PAGE>
SCHEDULE 1
JPE, Inc.
Brake, Axle and Tandem
Company Canada Inc.
Dayton Parts, Inc.
Plastic Trim, Inc.
SAC Corporation
Starboard Industries, Inc.
JPE Finishing, Inc.
<PAGE>
SCHEDULE 2
Permitted Liens
[to be provided by Borrower's Counsel]
<PAGE>
LIST OF COLLATERAL LOCATIONS
[to be provided by Borrower's Counsel]
<PAGE>
EXHIBIT "A"
"Permitted Liens" shall mean:
(a) liens for taxes, assessments or governmental charges or levies not yet
due or delinquent, or which can thereafter be paid without penalty, or
which are being contested in good faith by appropriate proceedings
diligently pursued, provided that provision for the payment of all
such taxes has been made on Debtor's books as may be required by
generally accepted accounting principles consistently applied
("GAAP");
(b) unfiled, inchoate construction liens for construction work in
progress;
(c) workmen's, repairmen's, warehousemen's and carrier's liens and other
similar liens, if any, arising in the ordinary course of business,
which are paid in full when due or which are being contested in good
faith by appropriate proceedings diligently pursued, provided that in
the case of any such contest (i) any levy, execution or other
enforcement of such liens shall have been duly suspended and (ii)
provision for the payment of such liens has been made on Debtor's
books as may be required by GAAP;
(d) the liens, if any, shown on Schedule 2 attached hereto;
(e) liens incurred or deposits made in connection with workers'
compensation unemployment insurance, appeal bonds, bids or government
contracts, or to secure the performance of leases; and
(f) any other liens consented to in writing by Bank (which consent may be
granted or withheld in the sole discretion of Bank).
PATENT AND TRADEMARK SECURITY AGREEMENT
PATENT AND TRADEMARK SECURITY AGREEMENT, dated as of May 27, 1999, made by
JPE, Inc., a Michigan corporation (the "Grantor") in favor of COMERICA BANK, a
Michigan banking corporation (the "Bank").
W I T N E S S E T H:
WHEREAS, Grantor is a party to the Notes (as defined below) dated as of the
date hereof between the Bank and Grantor;
WHEREAS, the Grantor owns certain Trademarks and Trademark Licenses listed
on Schedule I hereto;
WHEREAS, the Grantor owns certain Patents and Patent Licenses listed on
Schedule II;
WHEREAS, it is a condition precedent to the obligation of the Bank to make
credit advances to Grantor under the Notes that the Grantor shall have executed
and delivered this Agreement to the Bank;
NOW, THEREFORE, in consideration of the premises and to induce the Bank to
enter into the Notes and to make advances to Grantor thereunder, the Grantor
hereby agrees with the Bank, as follows:
1. Defined Terms. (a) Unless otherwise defined herein, capitalized terms
defined in the Notes are used herein as defined therein. The following terms
shall have the following meanings:
"Agreement": this Patent and Trademark Security Agreement, as the same
may be amended, supplemented, waived or otherwise modified from time to
time.
"Code": the Uniform Commercial Code as from time to time in effect in
the State of Michigan.
"Collateral": as defined in Section 2 of this Agreement.
"Event of Default": any default or event of default described in the
Notes and lapse of any applicable grace and/or cure periods.
"General Intangibles": as defined in Section 9-106 of the Code,
including, without limitation, all Patents and Trademarks now or hereafter
owned by the Grantor to the extent such Patents and Trademarks would be
included in General Intangibles under the Code.
"Lien": any lien, security interest, pledge, encumbrance or other
similar charge, whether voluntary or involuntary and however created.
"Notes": the $20,000,000 Eurodollar Note dated May 27, 1999 made by
Grantor, Dayton Parts, Inc., Starboard Industries, Inc., Plastic Trim,
Inc., JPE Finishing, Inc. and Brake, Axle and Tandem Company Canada, Inc.
(collectively, "Borrowers") payable to Bank, that certain $30,000,000
Promissory Note-Demand dated May 27, 1999 made by Borrowers payable to Bank
and that certain $6,300,000 Euorodollar Installment Note dated May 27, 1999
made by Borrowers payable to Bank each as may be amended, replaced,
supplemented or modified from time to time, and "Note" shall mean anyone of
them.
"Obligations": the collective reference to the unpaid principal of and
interest on (including, without limitation, interest accruing after the
maturity of each of the Notes and interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Grantor whether or not a
claim for post-filing or post-petition interest is allowed in such
proceeding) each Note, and all other obligations and liabilities of the
Grantor to the Bank, whether direct or indirect, absolute or contingent,
due or to become due, or now existing or hereafter incurred, including,
without limitation, obligations and liabilities which may arise under, out
of, or in connection with, the Notes or any other document made, delivered
or given in connection therewith, in each case whether on account of
principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all reasonable fees
and disbursements of counsel to the Bank).
"Patent License": all United States license agreements with any other
person in connection with any of the Patents or such other person's
patents, whether the Grantor is a licensor or a licensee under any such
license agreement, including, without limitation, the license agreements
listed on Schedule II hereto and made a part hereof, subject, in each case,
to the terms of such license agreements and the right to prepare for sale,
sell and advertise for sale, all inventory now or hereafter covered by such
licenses.
"Patents": all United States patents, patent applications and
patentable inventions, including, without limitation, all patents and
patent applications identified in Schedule II attached hereto and made a
part hereof, and including without limitation (a) all inventions and
improvements described and claimed therein, and patentable inventions, (b)
the right to sue or otherwise recover for any and all past, present and
future infringements and misappropriations thereof, (c) all income,
royalties, damages and other payments now and hereafter due and/or payable
with respect thereto (including, without limitation, payments under all
licenses entered into in connection therewith, and damages and payments for
past or future infringements thereof), and (d) all rights corresponding
thereto in the United States and all reissues, divisions, continuations,
continuations-in-part, substitutes, renewals, and extensions thereof, all
improvements thereon, and all other rights of any kind whatsoever of the
Grantor accruing thereunder or pertaining thereto (Patents and Patent
Licenses being, collectively, the "Patent Collateral").
"Trademark License": all United States license agreements with any
other person in connection with any of the Trademarks or such other
person's names or trademarks, whether the Grantor is a licensor or a
licensee under any such license agreement, including, without limitation,
the license agreements listed on Schedule I hereto and made a part hereof,
subject, in each case, to the terms of such license agreements, and the
right to prepare for sale, sell and advertise for sale, all inventory now
or hereafter covered by such licenses.
"Trademarks": all trademarks, service marks, trade names, trade dress
or other indicia of trade origin, trademark and service mark registrations,
and applications for trademark or service mark registrations (except for
"intent to use" applications for trademark or service mark registrations
filed pursuant to Section 1(b) of the Lanham Act, unless and until an
Amendment to Allege Use or a Statement of Use under Sections 1(c) and 1(d)
of said Act has been filed), and any renewals thereof, including, without
limitation, each registration and application identified in Schedule I
attached hereto and made a part hereof, and including without limitation
(a) the right to sue or otherwise recover for any and all past, present and
future infringements and misappropriations thereof, (b) all income,
royalties, damages and other payments now and hereafter due and/or payable
with respect thereto (including, without limitation, payments under all
licenses entered into in connection therewith, and damages and payments for
past or future infringements thereof) and (c) all rights corresponding
thereto in the United States and all other rights of any kind whatsoever of
the Grantor accruing thereunder or pertaining thereto, together in each
case with the goodwill of the business connected with the use of, and
symbolized by, each such trademark, service mark, trade name, trade dress
or other indicia of trade origin (Trademarks and Trademark Licenses being,
collectively, the "Trademark Collateral").
(b) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section and paragraph
references are to this Agreement unless otherwise specified.
(c) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
2. Grant of Security Interest. As collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Obligations, the Grantor hereby assigns,
pledges and grants to the Bank a security interest in all of the following
property now owned or at any time hereafter acquired by the Grantor or in which
the Grantor now has or at any time in the future may acquire any right, title or
interest (collectively, the "Collateral"):
(i) all Trademarks;
(ii) all Trademark Licenses;
(iii) all Patents;
(iv) all Patent Licenses;
(v) all general intangibles connected with the use of or symbolized
by the Trademarks and Patents; and
(vi) to the extent not otherwise included, all proceeds and products
of any and all of the foregoing;
3. Grantor Remains Liable; Limitations on Bank's Obligations. Anything
herein to the contrary notwithstanding, (a) the Grantor shall remain liable
under the contracts and agreements included in the Collateral to the extent set
forth therein to perform all of its duties and obligations thereunder to the
same extent as if this Agreement had not been executed, (b) the exercise by the
Bank of any of the rights hereunder shall not release the Grantor from any of
its duties or obligations under the contracts and agreements included in the
Collateral, and (c) the Bank shall not have any obligation or liability under
the contracts and agreements included in the Collateral by reason of this
Agreement, nor shall the Bank be obligated to perform any of the obligations or
duties of the Grantor thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder.
4. Representations and Warranties. The Grantor represents and warrants as
follows:
(a) Title; No Other Liens. Except for the Liens granted to the Bank
and liens permitted by the Notes, if any, to the best knowledge of the
Grantor, the Grantor is (or, in the case of after-acquired Collateral, will
be) the sole, legal and beneficial owner of the entire right, title and
interest in and to the Trademarks set forth on Schedule I hereto and the
Patents set forth in Schedule II hereto free and clear of any and all
liens. No security agreement, financing statement or other public notice
similar in effect with respect to all or any part of the Collateral is on
file or of record in any public office (including, without limitation, the
United States Patent and Trademark Office) except such as may have been
filed in favor of the Bank pursuant to this Agreement or as may have been
filed with respect to liens permitted by the Notes, if any.
(b) [Intentionally Left Blank]
(c) Consents. No consent of any party (other than such Grantor) to any
Patent License or Trademark License constituting Collateral is required to
be obtained by or on behalf of such Grantor in connection with the
execution, delivery and performance of this Agreement that has not been
obtained. Each Patent License and Trademark License constituting Collateral
is in full force and effect and constitutes a valid and legally enforceable
obligation of the Grantor and (to the knowledge of the Grantor) each other
party thereto except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditor's rights generally and by general equitable
principles (whether enforcement is sought by proceedings in equity or at
law). No consent or authorization of, filing with or other act by or in
respect of any governmental authority is required in connection with the
execution, delivery, performance, validity or enforceability of any of the
Patent Licenses or Trademark Licenses by any party thereto other than those
which have been duly obtained, made or performed and are in full force and
effect. Neither the Grantor nor (to the knowledge of the Grantor) any other
party to any Patent License or Trademark License constituting Collateral is
in default in the performance or observance of any of the terms thereof,
except for such defaults as would not reasonably be expected, in the
aggregate, to have a material adverse effect on the value of the
Collateral. The right, title and interest of the Grantor in, to and under
each Patent License and Trademark License constituting Collateral are not
subject to any defense, offset, counterclaim or claim.
(d) Schedules I and II are Complete; All Filings Have Been Made. Set
forth in Schedules I and II is a complete and accurate list of the
Trademarks and Patents owned by the Grantor of the date hereof. The Grantor
shall promptly make all necessary filings and recordations to protect and
maintain its interest in the Trademarks and Patents set forth in Schedules
I and II, including, without limitation, all necessary filings and
recordings, and payments of all maintenance fees, in the United States
Patent and Trademark Office to the extent such Trademarks and Patents are
material to the Grantor's business. Set forth in Schedules I and II is a
complete and accurate list of all of the material Trademark Licenses and
Patent Licenses owned by the Grantor as of the date hereof.
(e) [Intentionally Left Blank]
(f) The Patent and Patent Licenses are Subsisting and Not Adjudged
Invalid. As of the date hereof, each Patent and patent application of the
Grantor set forth in Schedule II is subsisting and has not been adjudged
invalid, unpatentable or unenforceable, in whole or in part, and, to the
best of the Grantor's knowledge, is valid, patentable and enforceable. As
of the date hereof, each of the Patent Licenses set forth in Schedule II is
validly subsisting and has not been adjudged invalid or unenforceable, in
whole or in part, and, to the best of the Grantor's knowledge, is valid and
enforceable. As of the date hereof, the Grantor has notified the Bank in
writing of all uses of any item of Patent Collateral material to the
Grantor's business of which the Grantor is aware which could reasonably be
expected to lead to such item becoming invalid or unenforceable.
(g) No Previous Assignments or Releases. As of the date hereof, the
Grantor has not made a previous assignment, sale, transfer or agreement
constituting a present or future assignment, sale, transfer or encumbrance
of any of the Collateral, except with respect to exclusive licenses granted
in the ordinary course of business or as permitted by this Agreement or the
Loan Documents. As of the date hereof, the Grantor has not granted any
license, shop right, release, covenant not to sue, or non-assertion
assurance to any person with respect to any part of the Collateral.
(h) Proper Statutory Notice. The Grantor has marked its products with
the trademark registration symbol the numbers of all appropriate patents,
the common law trademark symbol or the designation "patent pending," as the
case may be, to the extent that it is reasonably and commercially
practicable.
(i) No Knowledge of Claims Likely to Arise. Except for the Trademark
Licenses and Patent Licenses listed in Schedules I and II hereto, the
Grantor has no knowledge of the existence of any right or any claim (other
than as provided by this Agreement) that is likely to be made under or
against any item of Collateral contained on Schedules I and II.
(j) No Knowledge of Existing or Threatened Claims. No claim has been
made and is continuing or, to the best of the Grantor's knowledge,
threatened that the use by the Grantor of any item of Collateral is invalid
or unenforceable or that the use by the Grantor of any Collateral does or
may violate the rights of any person. To the best of the Grantor's
knowledge, there is currently no infringement or unauthorized use of any
item of Collateral contained on Schedules I and II.
5. Covenants. The Grantor covenants and agrees with the Bank that, from and
after the date of this Agreement until the payment in full of the Obligations:
(a) Further Documentation; Pledge of Instruments and Chattel Paper. At
any time and from time to time, upon the written request of the Bank or the
Grantor, as the case may be, and at the sole expense of the Grantor, the
Grantor or the Bank, as the case may be, will promptly and duly execute and
deliver such further instruments and documents and take such further action
as the Bank or the Grantor may reasonably request for the purpose of
obtaining or preserving the full benefits of this Agreement and of the
rights and powers herein granted, including, without limitation, the filing
of any financing or continuation statements under the Uniform Commercial
Code in effect in any jurisdiction with respect to the Liens created
hereby. The Grantor also hereby authorizes the Bank to file any such
financing or continuation statement without the signature of the Grantor to
the extent permitted by applicable law. A carbon, photostatic or other
reproduction of this Agreement shall be sufficient as a financing statement
for filing in any jurisdiction. The Bank agrees to notify the Grantor and
the Grantor agrees to notify the Bank of any financing or continuation
statement filed by it pursuant to this Section 5(a), provided that any
failure to give any such notice shall not affect the validity or
effectiveness of any such filing.
(b) Indemnification and Expenses. The Grantor agrees to pay, and to
save the Bank harmless from, any and all liabilities and reasonable costs
and expenses (including, without limitation, reasonable legal fees and
expenses) (i) with respect to, or resulting from, any delay by the Grantor
in complying with any material requirement of law applicable to any of the
Collateral, or (ii) in connection with any of the transactions contemplated
by this Agreement, provided that such indemnity shall not be available to
the extent that such liabilities, costs and expenses resulted from the
gross negligence or willful misconduct of the Bank. In any suit, proceeding
or action brought by the Bank under any of the Collateral for any sum owing
thereunder, or to enforce any of the Collateral, the Grantor will save,
indemnify and keep the Bank harmless from and against all reasonable
expenses, losses or damages suffered by reason of any defense or
counterclaim raised in any such suit, proceeding or action.
(c) Maintenance of Records. (i) The Grantor will keep and maintain at
its own cost and expense reasonably satisfactory and complete records of
the Collateral, and shall mark such records to evidence this Agreement and
the Liens and the security interests created hereby. For the Bank's further
security, the Bank shall have a security interest in all of the Grantor's
books and records pertaining to the Collateral, and the Grantor shall
permit the Bank or its representatives to review such books and records
upon reasonable advance notice during normal business hours at the location
where such books and records are kept and at the reasonable request of the
Bank.
(d) [Intentionally Left Blank]
(e) Compliance with Laws, etc. The Grantor will comply in all material
respects with all requirements of law applicable to the Collateral or any
part thereof, except to the extent that the failure to so comply would not
be reasonably expected to materially adversely affect in the aggregate the
Bank's rights hereunder, the priority of its Liens on the Collateral or the
value of the Collateral.
(f) Further Identification of Collateral. The Grantor will furnish to
the Bank from time to time such statements and schedules further
identifying and describing the Collateral, and such other reports in
connection with the Collateral, as the Bank may reasonably request, all in
reasonable detail.
(g) Security Interest in Any Newly Acquired Collateral. The Grantor
agrees that should it obtain an ownership interest in any Trademark,
Patent, Trademark License or Patent License which is not now a part of the
Collateral, (i) the provisions of Section 2 shall automatically apply
thereto, (ii) any such Trademark, Patent, Trademark License and Patent
License shall automatically become part of the Collateral, and (iii) with
respect to any ownership interest in any Trademark, Patent, Trademark
License or Patent License that the Grantor should obtain which the Grantor
reasonably deems is material to its business, it shall give notice thereof
to the Bank in writing, in reasonable detail, within 30 days after
acquiring such ownership interest. The Grantor authorizes the Bank to
modify this Agreement by amending Schedules I and II (and will cooperate
reasonably with the Bank in effecting any such amendment) to include on
Schedule I any Trademark and Trademark License and on Schedule II any
Patent or Patent License of which it receives notice under this Section.
(h) Maintenance of the Trademark Collateral. The Grantor agrees to
take all necessary steps, including, without limitation, in the United
States Patent and Trademark Office or in any court, to (i) maintain each
trademark registration and each Trademark License identified on Schedule I
hereto, and (ii) pursue each trademark application now or hereafter
identified in Schedule I hereto, including, without limitation, the filing
of responses to office actions issued by the United States Patent and
Trademark Office, the filing of applications for renewal, the filing of
affidavits under Sections 8 and 15 of the United States Trademark Act, and
the participation in opposition, cancellation, infringement and
misappropriation proceedings, except, in each case in which the Grantor has
reasonably determined that any of the foregoing is not of material economic
value to it. The Grantor agrees to take corresponding steps with respect to
each new or acquired trademark registration, trademark application or any
rights obtained under any Trademark License, in each case, which it is now
or later becomes entitled, except in each case in which the Grantor has
reasonably determined that any of the foregoing is not of material economic
value to it. Any expenses incurred in connection with such activities shall
be borne by the Grantor.
(i) Maintenance of the Patent Collateral. The Grantor agrees to take
all necessary steps, including, without limitation, in the United States
Patent and Trademark Office or in any court, to (i) maintain each Patent
and each Patent License identified on Schedule II hereto, and (ii) pursue
each patent application, now or hereafter identified in Schedule II hereto,
including, without limitation, the filing of divisional, continuation,
continuation-in-part and substitute applications, the filing of
applications for reissue, renewal or extensions, the payment of maintenance
fees, and the participation in interference, reexamination, opposition,
infringement and misappropriation proceedings, except in each case in which
the Grantor has reasonably determined that any of the foregoing is not of
material economic value to it. The Grantor agrees to take corresponding
steps with respect to each new or acquired Patent, patent application, or
any rights obtained under any Patent License, in each case, which it is now
or later becomes entitled, except in each case in which the Grantor has
reasonably determined that any of the foregoing is not of material economic
value to it. Any expenses incurred in connection with such activities shall
be borne by the Grantor.
(j) Grantor Shall Not Abandon any Collateral. The Grantor shall not
abandon any trademark registration, Patent or any pending trademark or
patent application, without the written consent of the Bank, unless the
Grantor shall have previously determined that such use or the pursuit or
maintenance of such trademark registration, Patent or pending trademark or
patent application is not of material economic value to it, in which case,
the Grantor will, at least annually, give notice of any such abandonment to
the Bank in writing.
(k) Infringement of Any Collateral. In the event that the Grantor
becomes aware that any item of the Collateral which the Grantor has
reasonably determined to be material to its business is infringed or
misappropriated by a third party, the Grantor shall promptly notify the
Bank promptly and in writing, in reasonable detail, and shall take such
actions as the Grantor or the Bank deems reasonably appropriate under the
circumstances to protect such Collateral, including, without limitation,
suing for infringement or misappropriation and for an injunction against
such infringement or misappropriation. Any expense incurred in connection
with such activities shall be borne by the Grantor. The Grantor will advise
the Bank promptly and in writing, in reasonable detail, of any adverse
determination or the institution of any proceeding (including, without
limitation, the institution of any proceeding in the United States Patent
and Trademark Office or any court) regarding any item of the Collateral.
(l) Limitation on Liens on Collateral. The Grantor will not create,
incur or permit to exist, will defend the Collateral against, and will take
such other action as is reasonably necessary to remove, any Lien or
material adverse claim on or to any of the Collateral, other than the liens
created by this Agreement and those permitted by the Notes, if any, and
will defend the right, title and interest of the Bank in and to any of the
Collateral against the claims and demands of all persons whomsoever.
(m) Limitations on Dispositions of Collateral. Without the prior
written consent of the Bank, the Grantor will not sell, assign, transfer,
exchange or otherwise dispose of, or grant any option with respect to, the
Collateral, or attempt, offer or contract to do so.
(n) Notices. The Grantor will advise the Bank promptly, in reasonable
detail, (i) of any Lien (other than Liens created hereby) on, or material
adverse claim asserted against, Patents or Trademarks and (ii) of the
occurrence of any other event which would reasonably be expected in the
aggregate to have a material adverse effect on the aggregate value of the
Collateral or the Liens created hereunder.
6. Bank's Appointment as Attorney-in-Fact.
(a) Powers. The Grantor hereby irrevocably constitutes and appoints
the Bank, and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Grantor and in the name
of the Grantor or in its own name, from time to time in the Bank's
discretion during the continuance of an Event of Default, for the purpose
of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments
which may be necessary or desirable to accomplish the purposes of this
Agreement, and, without limiting the generality of the foregoing, the
Grantor hereby gives the Bank the power and right, on behalf of the
Grantor, without notice to or assent by the Grantor, to do the following
during the continuance of an Event of Default, and to the extent permitted
by law:
(i) to execute and deliver any and all agreements, instruments,
documents, and papers as the Bank may reasonably request to evidence
the Bank's security interest in any of the Collateral;
(ii) in the name of the Grantor or its own name, or otherwise, to
take possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under
any general intangible (to the extent that any of the foregoing
constitute Collateral) or with respect to any other Collateral and to
file any claim or to take any other action or institute any proceeding
in any court of law or equity or otherwise deemed appropriate by the
Bank for the purpose of collecting any and all such moneys due under
any such General Intangible or with respect to any such other
Collateral whenever payable;
(iii) to pay or discharge Liens placed on the Collateral, other
than Liens permitted under this Agreement; and
(iv) (A) to direct any party liable for any payment under any of
the Collateral to make payment of any and all moneys due or to become
due thereunder directly to the Bank or as the Bank shall direct; (B)
to ask for, or demand, collect, receive payment of and receipt for,
any and all moneys, claims and other amounts due or to become due at
any time in respect of or arising out of any of the Collateral; (C) to
sign and indorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications, notices and other documents in connection
with any of the Collateral; (D) to commence and prosecute any suits,
actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any thereof and to enforce
any other right in respect of any Collateral; (E) to defend any suit,
action or proceeding brought against the Grantor with respect to any
of the Collateral; (F) to settle, compromise or adjust any suit,
action or proceeding described in clause (E) above and, in connection
therewith, to give such discharges or releases as the Bank may deem
appropriate; (G) subject to any pre-existing rights or licenses, to
assign any Patent or Trademark constituting Collateral (along with the
goodwill of the business to which any such Patent or Trademark
pertains), for such term or terms, on such conditions, and in such
manner, as the Bank shall in its sole discretion determine; and (H)
generally, to sell, transfer, pledge and make any agreement with
respect to or otherwise deal with any of the Collateral as fully and
completely as though the Bank were the absolute owner thereof for all
purposes, and to do, at the Bank's option and the Grantor's expense,
at any time, or from time to time, all acts and things which the Bank
deems necessary to protect, preserve or realize upon the Collateral
and the Bank's Liens thereon and to effect the intent of this
Agreement, all as fully and effectively as the Grantor might do.
The Grantor hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof. This power of attorney is a power
coupled with an interest and shall be irrevocable until payment in full of
the Obligations.
(b) Other Powers. The Grantor also authorizes the Bank, from time to
time if an Event of Default shall have occurred and be continuing, to
execute, in connection with any sale provided for in Section 8 hereof, any
endorsements, assignments or other instruments of conveyance or transfer
with respect to the Collateral. (c) No Duty on the Part of Bank. The powers
conferred on the Bank hereunder are solely to protect the Bank's interests
in the Collateral and shall not impose any duty upon the Bank to exercise
any such powers. The Bank shall be accountable only for amounts that it
actually receives as a result of the exercise of such powers, and neither
it nor any of its officers, directors, employees or agents shall be
responsible to the Grantor for any act or failure to act hereunder, except
for their own gross negligence or willful misconduct.
7. Performance by Bank of Grantor's Obligations. If the Grantor fails to
perform or comply with any of its agreements contained herein and the Bank, as
provided for by the terms of this Agreement, shall itself perform or comply, or
otherwise cause performance or compliance, with such agreement, the reasonable
expenses of the Bank incurred in connection with such performance or compliance,
together with interest thereon at the rate provided in the Notes, shall be
payable by the Grantor to the Bank on demand and shall constitute Obligations
secured hereby.
8. Proceeds. It is agreed that if an Event of Default shall occur and be
continuing, (a) all proceeds of any Collateral received by the Grantor
consisting of cash, checks and other near-cash items shall be held by the
Grantor in trust for the Bank, segregated from other funds of the Grantor, and
at the request of the Bank shall, forthwith upon receipt by the Grantor, be
turned over to the Bank in the exact form received by the Grantor (duly indorsed
by the Grantor to the Bank, if required by the Bank) and (b) any and all such
proceeds received by the Bank (whether from the Grantor or otherwise) may, in
the sole discretion of the Bank, be held by the Bank as collateral security for
the Obligations (whether matured or unmatured) and/or then or at any time
thereafter may be applied by the Bank against, the Obligations then due and
owing. Any balance of such proceeds remaining after the payment in full of the
Obligations shall be paid over to the Grantor or to whomsoever may be lawfully
entitled to receive the same.
9. Remedies. If an Event of Default shall occur and be continuing, the Bank
may exercise all rights and remedies of a secured party under the Code, and, to
the extent permitted by law, all other rights and remedies granted to it in this
Agreement and in any other instrument or agreement securing, evidencing or
relating to the Obligations. Without limiting the generality of the foregoing,
the Bank, without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law referred
to below) to or upon the Grantor or any other person (all and each of which
demands, defenses, advertisements and notices are hereby waived) may in such
circumstances, to the extent permitted by law, forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, lease, assign, give option or options to purchase, or otherwise
dispose of and deliver the Collateral or any part thereof (or contract to do any
of the foregoing) in one or more parcels at public or private sale or sales, at
any exchange, broker's board or office of the Bank or elsewhere upon such terms
and conditions as it may deem advisable and at such prices as it may deem best,
for cash or on credit or for future delivery without assumption of any credit
risk. The Bank shall have the right, to the extent permitted by law, upon any
such sale or sales, to purchase the whole or any part of the Collateral so sold,
free of any right or equity of redemption in the Grantor, which right or equity
is hereby waived or released. The Grantor further agrees, at the Bank's request,
upon the occurrence and during the continuance of an Event of Default, to
assemble the Collateral and make it available to the Bank at places which the
Bank shall reasonably select, whether at the Grantor's premises or elsewhere. In
the event of any sale, assignment, or other disposition of any of the
Collateral, the goodwill of the business connected with and symbolized by any
Trademark Collateral subject to such disposition shall be included, and the
Grantor shall supply to the Bank or its designee the Grantor's know-how and
expertise relating to the Collateral subject to such disposition, and the
Grantor's notebooks, studies, reports, records, documents and things embodying
the same or relating to the inventions, processes or ideas covered by, and to
the manufacture of any products under or in connection with, the Collateral
subject to such disposition, and the Grantor's customer's lists, studies and
surveys and other records and documents relating to the distribution, marketing,
advertising and sale of products relating to the Collateral subject to such
disposition. The Bank shall apply the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale, after deducting all
reasonable costs and expenses of every kind incurred therein or incidental to
the care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the Bank, including, without limitation, reasonable
attorneys' fees and disbursements, to the payment in whole or in part of the
Obligations then due and owing, and only after such application and after the
payment by the Bank of any other amount required by any provision of law,
including, without limitation, Section 9-504(1) (c) of the Code, need the Bank
account for the surplus, if any, to the Grantor. To the extent permitted by
applicable law, the Grantor waives all claims, damages and demands it may
acquire against the Bank arising out of the repossession, retention or sale of
the Collateral, other than any such claims, damages and demands that may arise
from the gross negligence or willful misconduct of the Bank. If any notice of a
proposed sale or other disposition of Collateral shall be required by law, such
notice shall be deemed reasonable and proper if given at least 10 days before
such sale or other disposition. The Grantor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the Collateral
are insufficient to pay the then outstanding Obligations, including the
reasonable fees and disbursements of any attorneys employed by the Bank to
collect such deficiency.
10. Limitation on Duties Regarding Preservation of Collateral. The Bank's
sole duty with respect to the custody, safekeeping and physical preservation of
the Collateral in its possession, under Section 9-207 of the Code or otherwise,
shall be to deal with it in the same manner as the Bank deals with similar
property for its own account. Neither the Bank nor any of its directors,
officers, employees or agents shall be liable for failure to demand, collect or
realize upon all or any part of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of the Grantor or any other person.
11. Powers Coupled with an Interest. All authorizations and agencies herein
contained with respect to the Collateral are powers coupled with an interest and
are irrevocable until payment in full of the Obligations.
12. Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
13. Section Headings. The Section headings used in this Agreement are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
14. No Waiver; Cumulative Remedies. The Bank shall not by any act (except
by a written instrument pursuant to Section 15 hereof), delay, indulgence,
omission or otherwise be deemed to have waived any right or remedy hereunder or
to have acquiesced in any Event of Default or in any breach of any of the terms
and conditions hereof. No failure to exercise, nor any delay in exercising, on
the part of the Bank, any right, power or privilege hereunder shall operate as a
waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Bank of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Bank would otherwise have on any future occasion. The
rights and remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any rights or remedies provided by law.
15. Waivers and Amendments; Successors and Assigns. None of the terms or
provisions of this Agreement may be waived, amended, supplemented or otherwise
modified except by a written instrument executed by the Grantor and the Bank.
This Agreement shall be binding upon the successors and assigns of the Grantor
and shall inure to the benefit of the Bank and its successors and assigns,
except that the Grantor may not assign, transfer or delegate any of its rights
or obligations under this Agreement without the prior written consent of the
Bank.
16. Notices. Except as expressly provided otherwise in this Agreement, all
notices and other communications provided to any party hereto under this
Agreement shall be in writing and shall be given by personal delivery, by mail,
by reputable overnight courier, by telex or by facsimile and addressed or
delivered to it at its address set forth on Schedule 16 or at such other address
as may be designated by such party in a notice to the other parties that
complies as to delivery with the terms of this Section 16. Any notice, if
personally delivered or if mailed and properly addressed with postage prepaid
and sent by registered or certified mail, shall be deemed given when received or
when delivery is refused; any notice, if given to a reputable overnight courier
and properly addressed, shall be deemed given 2 Business Days after the date on
which it was sent, unless it is actually received sooner by the named addressee;
and any notice, if transmitted by telex or facsimile, shall be deemed given when
received (answer back confirmed in the case of telexes and receipt confirmed in
the case of telecopies). Bank may, but, except as specifically provided herein,
shall not be required to, take any action on the basis of any notice given to it
by telephone, but the giver of any such notice shall promptly confirm such
notice in writing or by telex or facsimile, and such notice will not be deemed
to have been received until such confirmation is deemed received in accordance
with the provisions of this Section set forth above. If such telephonic notice
conflicts with any such confirmation, the terms of such telephonic notice shall
control.
17. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF MICHIGAN WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.
18. Waiver of Jury Trial. The Grantor hereby waives 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.
IN WITNESS WHEREOF, the Grantor has caused this Agreement to be duly
executed and delivered as of the date first above written.
JPE, INC.
By: /s/ Richard R. Chrysler
------------------------------
Richard R. Chrysler
Its: President and Chief Executive
Officer
SECURITY AGREEMENT
(Negotiable Collateral)
As of May 27, 1999, for value received, the undersigned ("Debtor") grants to
Comerica Bank ("Bank"), a Michigan banking corporation, a continuing security
interest in the Collateral (as defined below) to secure payment when due,
whether by stated maturity, demand acceleration or otherwise, of all existing
and future indebtedness ("Indebtedness") to the Bank of the borrowers listed in
attached Schedule 1 (collectively "Borrower") and/or Debtor. Indebtedness
includes without limit any and all obligations or liabilities of the Borrower
and/or Debtor to the Bank, whether absolute or contingent, direct or indirect,
voluntary or involuntary, liquidated or unliquidated, joint or several, known or
unknown; any and all obligations or liabilities for which the Borrower and/or
Debtor would otherwise be liable to the Bank were it not for the invalidity or
unenforceability of them by reason of any bankruptcy, insolvency or other law,
or for any other reason; any and all amendments, modifications, renewals and/or
extensions of any of the above; all costs incurred by Bank in establishing,
determining, continuing, or defending the validity or priority of its security
interest, or in pursuing its rights and remedies under this Agreement or under
any other agreement between Bank and Borrower and/or Debtor or in connection
with any proceeding involving Bank as a result of any financial accommodation to
Borrower and/or Debtor; and all other reasonable costs of collecting
Indebtedness, including without limit attorney fees. Debtor agrees to pay Bank
all such costs incurred by the Bank, immediately upon demand, and until paid all
costs shall bear interest at the highest per annum rate applicable to any of the
Indebtedness, but not in excess of the maximum rate permitted by law. Any
reference in this Agreement to attorney fees shall be deemed a reference to
reasonable fees, costs, and expenses of both in-house and outside counsel and
paralegals, whether or not a suit or action is instituted, and to court costs if
a suit or action is instituted, and whether attorney fees or court costs are
incurred at the trial court level, on appeal, in a bankruptcy, administrative or
probate proceeding or otherwise.
1. Collateral shall mean all of the following property Debtor now or later
owns or has an interest in, wherever located:
(a) the securities listed on attached Schedule 2;
(b) all goods, instruments, documents, policies and certificates of
insurance, deposits, money, investment property or other property
(except the stock of JPE Canada, Inc. and the real property which is
not a fixture) which are now or later in possession or control of
Bank, or as to which Bank now or later controls possession by
documents or otherwise, and
(c) all additions, attachments, accessions, parts, replacements,
substitutions, renewals, interest, dividends, distributions, rights of
any kind (including but not limited to stock splits, stock rights,
voting and preferential rights), products, and proceeds of or
pertaining to the above including, without limit, cash or other
property which were proceeds and are recovered by a bankruptcy trustee
or otherwise as a preferential transfer by Debtor.
2. Warranties, Covenants and Agreements. Debtor warrants, covenants and agrees
as follows:
2.1 Debtor shall furnish to Bank, in form and at intervals as Bank may
reasonably request, any information Bank may reasonably request and
allow Bank at all times during normal business hours to examine,
inspect, and copy any of Debtor's books and records. Debtor shall, at
the request of Bank, mark its records and the Collateral to clearly
indicate the security interest of Bank under this Agreement.
2.2 At the time any Collateral becomes, or is represented to be, subject
to a security interest in favor of Bank, Debtor shall be deemed to
have warranted that (a) Debtor is the lawful owner of the Collateral
and has the right and authority to subject it to a security interest
granted to Bank; (b) none of the Collateral is subject to any security
interest other than that in favor of Bank and Permitted Liens (as
defined in attached Exhibit "A") and there are no financing statements
on file, other than in favor of Bank and those filed with respect to
Permitted Liens; and (c) Debtor acquired its rights in the Collateral
in the ordinary course of its business.
2.3 Debtor will keep the Collateral free at all times from all claims,
liens, security interests and encumbrances other than Permitted Liens
and those in favor of Bank. Debtor will not, without the prior written
consent of Bank, sell, transfer or lease, or permit to be sold,
transferred or leased, any or all of the Collateral. Bank or its
representatives may at all reasonable times inspect the Collateral and
may enter upon all premises where the Collateral is kept or might be
located.
2.4 Debtor will do all acts and will execute or cause to be executed all
writings requested by Bank to establish, maintain and continue a
perfected and first security interest of Bank in the Collateral.
Debtor agrees that Bank has no obligation to acquire or perfect any
lien on or security interest in any asset(s), whether realty or
personalty, to secure payment of the Indebtedness.
2.5 Debtor will pay within the time that they can be paid without interest
or penalty all taxes, assessments and similar charges which at any
time are or may become a lien, charge, or encumbrance upon any
Collateral, except to the extent contested in good faith and bonded in
a manner reasonably satisfactory to Bank. If Debtor fails to pay any
of these taxes, assessments, or other charges in the time provided
above, Bank has the option (but not the obligation) to do so and
Debtor agrees to repay all amounts so expended by Bank immediately
upon demand, together with interest at the highest per annum rate
applicable to any of the Indebtedness but not in excess of the maximum
rate allowed by applicable law. 2.6 Debtor will keep the Collateral in
good condition and will protect it from loss, damage, or deterioration
from any cause. Debtor has and will maintain at all times (a) with
respect to the Collateral, insurance under an "all risk" policy
against fire and other risks customarily insured against, and (b)
public liability insurance and other insurance as may be required by
law or reasonably required by Bank, all of which insurance shall be in
amount, form and content, and written by companies as may be
reasonably satisfactory to Bank, containing a lender's loss payable
endorsement reasonably acceptable to Bank. Debtor will deliver to Bank
immediately upon demand evidence reasonably satisfactory to Bank that
the required insurance has been procured. If Debtor fails to maintain
satisfactory insurance, Bank has the option (but not the obligation)
to do so and Debtor agrees to repay all amounts so expended by Bank
immediately upon demand, together with interest at the highest lawful
default rate which could be charged by Bank on any Indebtedness.
2.7 Debtor at all times shall be in compliance in all material respects
with all applicable laws, including without limit any laws,
ordinances, directives, orders, statutes, or regulations an object of
which is to regulate or improve health, safety, or the environment
("Environmental Laws").
2.8 [Intentionally Left Blank]
2.9 If Bank, acting in its sole discretion, redelivers Collateral to
Debtor or Debtor's designee for the purpose of (a) the ultimate sale
or exchange thereof; or (b) presentation, collection, renewal, or
registration of transfer thereof; or (c) loading, unloading, storing,
shipping, transshipping, manufacturing, processing or otherwise
dealing with it preliminary to sale or exchange; such redelivery shall
be in trust for the benefit of Bank and shall not constitute a release
of Bank's security interest in it or in the proceeds or products of it
unless Bank specifically so agrees in writing. If Debtor requests any
such redelivery, Debtor will deliver with such request a duly executed
financing statement in form and substance satisfactory to Bank. Any
proceeds of Collateral coming into Debtor's possession as a result of
any such redelivery shall be held in trust for Bank and immediately
delivered to Bank for application on the Indebtedness. Bank may (in
its sole discretion) deliver any or all of the Collateral to Debtor,
and such delivery by Bank shall discharge Bank from all liability or
responsibility for such Collateral. Bank, at its option, may require
delivery of any Collateral to Bank at any time with such endorsements
or assignments of the Collateral as Bank may request.
2.10 Bank may (a) following the occurrence and during the continuance of an
Event of Default cause any or all of the Collateral to be transferred
to its name or to the name of its nominees; (b) receive or collect by
legal proceedings or otherwise all dividends, interest, principal
payments and other sums and all other distributions at any time
payable or receivable on account of the Collateral, and hold the same
as Collateral, or apply the same to the Indebtedness, the manner and
distribution of the application to be in the sole discretion of Bank;
provided, however, while no Event of Default exists, Debtor may retain
cash dividends paid in the ordinary course of business with respect to
the Collateral; (c) following the occurrence and during the
continuance of an Event of Default enter into any extension,
subordination, reorganization, deposit, merger or consolidation
agreement or any other agreement relating to or affecting the
Collateral, and deposit or surrender control of the Collateral, and
accept other property in exchange for the Collateral and hold or apply
the property or money so received pursuant to this Agreement. Unless
an Event of Default shall have occurred and be continuing, Debtor
shall have the exclusive right to exercise all voting power with
respect to any shares of stock constituting the Collateral. After any
Event of Default shall have occurred and be continuing and Bank has
notified Debtor of Bank's intention to exercise its voting power with
respect to the Collateral.
(i) Bank may exercise (to the exclusion of Debtor) the voting power
and all other incidental rights of ownership with respect to any
shares of stock constituting Collateral and Debtor hereby grants
Bank an irrevocable proxy, exercisable under such circumstances,
to vote such Collateral; and
(ii) Debtor shall promptly deliver to Bank such additional proxies and
other documents as may be necessary to allow Bank to exercise
such voting power.
2.11 Bank may assign any of the Indebtedness and deliver any or all of the
Collateral to its assignee, who then shall have with respect to
Collateral so delivered all the rights and powers of Bank under this
Agreement, and after that Bank shall be fully discharged from all
liability and responsibility with respect to Collateral so delivered.
2.12 Debtor delivers this Agreement based solely on Debtor's independent
investigation of (or decision not to investigate) the financial
condition of Borrower and is not relying on any information furnished
by Bank. Debtor assumes full responsibility for obtaining any further
information concerning the Borrower's financial condition, the status
of the Indebtedness or any other matter which the undersigned may deem
necessary or appropriate now or later. Debtor waives any duty on the
part of Bank, and agrees that Debtor is not relying upon nor expecting
Bank to disclose to Debtor any fact now or later known by Bank,
whether relating to the operations or condition of Borrower, the
existence, liabilities or financial condition of any guarantor of the
Indebtedness, the occurrence of any default with respect to the
Indebtedness, or otherwise, notwithstanding any effect such fact may
have upon Debtor's risk or Debtor's rights against Borrower. Debtor
knowingly accepts the full range of risk encompassed in this
Agreement, which risk includes without limit the possibility that
Borrower may incur Indebtedness to Bank after the financial condition
of Borrower, or Borrower's ability to pay debts as they mature, has
deteriorated.
2.13 Debtor shall defend, indemnify and hold harmless Bank, its employees,
agents, shareholders, affiliates, officers, and directors from and
against any and all claims, damages, fines, expenses, liabilities or
causes of action of whatever kind, including without limit consultant
fees, legal expenses, and attorney fees, suffered by any of them as a
direct or indirect result of any actual or asserted violation of any
law (other than a violation by Bank), including, without limit,
Environmental Laws, or of any remediation relating to any property
required by any law, including without limit Environmental Laws.
3. Collection of Proceeds. Debtor agrees to collect and enforce payment of all
Collateral until Bank shall direct Debtor to the contrary. Immediately upon
notice to Debtor by Bank and at all times after that, Debtor agrees to
fully and promptly cooperate and assist Bank in the collection and
enforcement of all Collateral and to hold in trust for Bank all payments
received in connection with Collateral and from the sale, lease or other
disposition of any Collateral, all rights by way of suretyship or guaranty
and all rights in the nature of a lien or security interest which Debtor
now or later has regarding Collateral. Immediately upon and after such
notice, Debtor agrees to (a) endorse to Bank and immediately deliver to
Bank all payments received on Collateral or from the sale, lease or other
disposition of any Collateral or arising from any other rights or interests
of Debtor in the Collateral, in the form received by Debtor without
commingling with any other funds, and (b) immediately deliver to Bank all
property in Debtor's possession or later coming into Debtor's possession
through enforcement of Debtor's rights or interests in the Collateral.
During the continuance of an Event of Default, Debtor irrevocably
authorizes Bank or any Bank employee or agent to endorse the name of Debtor
upon any checks or other items which are received in payment for any
Collateral, and to do any and all things necessary in order to reduce these
items to money. Bank shall have no duty as to the collection or protection
of Collateral or the proceeds of it, nor as to the preservation of any
related rights, beyond the use of reasonable care in the custody and
preservation of Collateral in the possession of Bank. Debtor agrees to take
all steps necessary to preserve rights against prior parties with respect
to the Collateral. Nothing in this Section 3 shall be deemed a consent by
Bank to any sale, lease or other disposition of any Collateral.
4. Defaults, Enforcement and Application of Proceeds.
4.1 Upon the occurrence of any of the following events (each an "Event of
Default"), Debtor shall be in default under this Agreement:
(a) Any failure to pay the Indebtedness or any other indebtedness
when due, or such portion of it as may be due, by acceleration or
otherwise; or
(b) Any failure or neglect to comply with, or breach of or default
under, any term of this Agreement, or any other agreement or
commitment between Borrower, Debtor, or any guarantor of any of
the Indebtedness ("Guarantor") and Bank; or
(c) Any warranty, representation, financial statement, or other
information made, given or furnished to Bank by or on behalf of
Borrower, Debtor, or any Guarantor shall be, or shall prove to
have been, false or materially misleading when made, given, or
furnished; or
(d) Any loss, theft, substantial damage or destruction to or of any
material part of the Collateral, or the issuance or filing of any
attachment, levy, garnishment or the commencement of any
proceeding in connection with any Collateral or of any other
judicial process of, upon or in respect of Borrower, Debtor, any
Guarantor, or any Collateral which is not contested in good faith
and bonded to the Bank's reasonable satisfaction; or
(e) Sale or other disposition by Borrower, Debtor, or any Guarantor
of any substantial portion of its assets or property or voluntary
suspension of the transaction of business by Borrower, Debtor, or
any Guarantor, or death, dissolution, termination of existence,
merger, consolidation, insolvency, business failure, or
assignment for the benefit of creditors of or by Borrower,
Debtor, or any Guarantor; or commencement of any proceedings
under any state or federal bankruptcy or insolvency laws or laws
for the relief of debtors by or against Borrower, Debtor, or any
Guarantor; or the appointment of a receiver, trustee, court
appointee, sequestrator or otherwise, for all or any part of the
property of Borrower, Debtor, or any Guarantor.
In the event of any express conflict between any provision of this
Section 4.1 and the corresponding provision of any of the promissory
notes evidencing the Indebtedness, the provisions of such promissory
notes shall control.
4.2 Upon the occurrence of any Event of Default, Bank may at its
discretion and without prior notice to Debtor declare any or all of
the Indebtedness to be immediately due and payable, and shall have and
may exercise any one or more of the following rights and remedies:
(a) Exercise all the rights and remedies upon default, in foreclosure
and otherwise, available to secured parties under the provisions
of the Uniform Commercial Code and other applicable law;
(b) Institute legal proceedings to foreclose upon the lien and
security interest granted by this Agreement, to recover judgment
for all amounts then due and owing as Indebtedness, and to
collect the same out of any Collateral or the proceeds of any
sale of it;
(c) Institute legal proceedings for the sale, under the judgment or
decree of any court of competent jurisdiction, of any or all
Collateral; and/or
(d) Personally or by agents, attorneys, or appointment of a receiver,
enter upon any premises where Collateral may then be located, and
take possession of all or any of it and/or render it unusable;
and without being responsible for loss or damage to such
Collateral, hold, operate, sell, lease, or dispose of all or any
Collateral at one or more public or private sales, leasings or
other dispositions, at places and times and on terms and
conditions as Bank may deem fit, without any previous demand or
advertisement; and except as provided in this Agreement, all
notice of sale, lease or other disposition, and advertisement,
and other notice or demand, any right or equity of redemption,
and any obligation of a prospective purchaser or lessee to
inquire as to the power and authority of Bank to sell, lease, or
otherwise dispose of the Collateral or as to the application by
Bank of the proceeds of sale or otherwise, which would otherwise
be required by, or available to Debtor under, applicable law are
expressly waived by Debtor to the fullest extent permitted.
At any sale pursuant to this Section 4.2, whether under the power of
sale, by virtue of judicial proceedings or otherwise, it shall not be
necessary for Bank or a public officer under order of a court to have
present physical or constructive possession of Collateral to be sold.
The recitals contained in any conveyances and receipts made and given
by Bank or the public officer to any purchaser at any sale made
pursuant to this Agreement shall, to the extent permitted by
applicable law, conclusively establish the truth and accuracy of the
matters stated (including, without limit, as to the amounts of the
principal of and interest on the Indebtedness, the accrual and
nonpayment of it and advertisement and conduct of the sale); and all
prerequisites to the sale shall be presumed to have been satisfied and
performed. Upon any sale of any Collateral, the receipt of the officer
making the sale under judicial proceedings or of Bank shall be
sufficient discharge to the purchaser for the purchase money, and the
purchaser shall not be obligated to see to the application of the
money. Any sale of any Collateral under this Agreement shall be a
perpetual bar against Debtor with respect to that Collateral.
4.3 Debtor shall at the request of Bank, notify the account debtors or
obligors of Bank's security interest in any Collateral and direct
payment of it to Bank. Bank may, itself, upon the occurrence and
during the continuance of any Event of Default so notify and direct
any account debtor or obligor.
4.4 The proceeds of any sale or other disposition of Collateral authorized
by this Agreement shall be applied by Bank first upon all expenses
authorized by the Uniform Commercial Code and all reasonable attorney
fees and legal expenses incurred by Bank; the balance of the proceeds
of the sale or other disposition shall be applied in the payment of
the Indebtedness, first to interest, then to principal, then to
remaining Indebtedness and the surplus, if any, shall be paid over to
Debtor or to such other person(s) as may be entitled to it under
applicable law. Debtor shall remain liable for any deficiency, which
it shall pay to Bank immediately upon demand.
4.5 Nothing in this Agreement is intended, nor shall it be construed, to
preclude Bank from pursuing any other remedy provided by law for the
collection of the Indebtedness or for the recovery of any other sum to
which Bank may be entitled for the breach of this Agreement by Debtor.
Nothing in this Agreement shall reduce or release in any way any
rights or security interests of Bank contained in any existing
agreement between Borrower, Debtor, or any Guarantor and Bank.
4.6 No waiver of default or consent to any act by Debtor shall be
effective unless in writing and signed by an authorized officer of
Bank. No waiver of any default or forbearance on the part of Bank in
enforcing any of its rights under this Agreement shall operate as a
waiver of any other default or of the same default on a future
occasion or of any rights.
4.7 Debtor irrevocably appoints Bank or any agent of Bank (which
appointment is coupled with an interest) the true and lawful attorney
of Debtor (with full power of substitution) in the name, place and
stead of, and at the expense of, Debtor:
(a) to demand, receive, sue for, and give receipts or acquittances
for any moneys due or to become due with respect to any
Collateral and to endorse any item representing any payment on or
proceeds of the Collateral;
(b) to execute and file in the name of and on behalf of Debtor all
financing statements or other filings deemed necessary or
desirable by Bank to evidence, perfect, or continue the security
interests granted in this Agreement; and
(c) to do and perform any act on behalf of Debtor permitted or
required under this Agreement.
4.8 Upon the occurrence and during the continuance of an Event of Default,
Debtor also agrees, upon request of Bank, to assemble the Collateral
and make it available to Bank at any place designated by Bank which is
reasonably convenient to Bank and Debtor.
5. Miscellaneous.
5.1 Until Bank is advised in writing by Debtor to the contrary, all
notices, requests and demands required under this Agreement or by law
shall be given to, or made upon, Debtor at the first address indicated
in Section 5.15 below.
5.2 Debtor will give Bank not less than 30 days prior written notice of
all contemplated changes in Debtor's name, chief executive office
location, and/or location of any Collateral.
5.3 Bank assumes no duty of performance or other responsibility under any
contracts contained within the Collateral.
5.4 Bank has the right to sell, assign, transfer, negotiate or grant
participations or any interest in, any or all of the Indebtedness and
any related obligations, including without limit this Agreement. In
connection with the above, but without limiting its ability to make
other disclosures to the full extent allowable, Bank may disclose all
documents and information which Bank now or later has relating to
Debtor, the Indebtedness or this Agreement, however obtained. Debtor
further agrees that Bank may provide information relating to this
Agreement or relating to Debtor to the Bank's parent, affiliates,
subsidiaries, and service providers.
5.5 In addition to Bank's other rights, any indebtedness owing from Bank
to Debtor can be set off and applied by Bank on any Indebtedness at
any time(s) either before or after maturity or demand without notice
to anyone.
5.6 Debtor waives any right to require the Bank to: (a) proceed against
any person or property; (b) give notice of the terms, time and place
of any public or private sale of personal property security held from
Borrower or any other person, or otherwise comply with the provisions
of Section 9-504 of the Uniform Commercial Code; or (c) pursue any
other remedy in the Bank's power. Debtor waives notice of acceptance
of this Agreement and presentment, demand, protest, notice of protest,
dishonor, notice of dishonor, notice of default, notice of intent to
accelerate or demand payment of any Indebtedness, any and all other
notices to which the undersigned might otherwise be entitled, and
diligence in collecting any Indebtedness, and agree(s) that the Bank
may, once or any number of times, modify the terms of any
Indebtedness, compromise, extend, increase, accelerate, renew or
forbear to enforce payment of any or all Indebtedness, or permit
Borrower to incur additional Indebtedness, all without notice to
Debtor and without affecting in any manner the unconditional
obligation of Debtor under this Agreement. Debtor unconditionally and
irrevocably waives each and every defense and setoff of any nature
which, under principles of guaranty or otherwise, would operate to
impair or diminish in any way the obligation of Debtor under this
Agreement, and acknowledges that such waiver is by this reference
incorporated into each security agreement, collateral assignment,
pledge and/or other document from Debtor now or later securing the
Indebtedness, and acknowledges that as of the date of this Agreement
no such defense or setoff exists.
5.7 Debtor waives any and all rights (whether by subrogation, indemnity,
reimbursement, or otherwise) to recover from Borrower any amounts paid
or the value of any Collateral given by Debtor pursuant to this
Agreement.
5.8 In the event that applicable law shall obligate Bank to give prior
notice to Debtor of any action to be taken under this Agreement,
Debtor agrees that a written notice given to Debtor at least five days
before the date of the act shall be reasonable notice of the act and,
specifically, reasonable notification of the time and place of any
public sale or of the time after which any private sale, lease, or
other disposition is to be made, unless a shorter notice period is
reasonable under the circumstances. A notice shall be deemed to be
given under this Agreement when delivered to Debtor or when placed in
an envelope addressed to Debtor and deposited, with postage prepaid,
in a post office or official depository under the exclusive care and
custody of the United States Postal Service or delivered to an
overnight courier. The mailing shall be by overnight courier,
certified, or first class mail.
5.9 Notwithstanding any prior revocation, termination, surrender, or
discharge of this Agreement in whole or in part, the effectiveness of
this Agreement shall automatically continue or be reinstated in the
event that any payment received or credit given by Bank in respect of
the Indebtedness is returned, disgorged, or rescinded under any
applicable law, including, without limitation, bankruptcy or
insolvency laws, in which case this Agreement, shall be enforceable
against Debtor as if the returned, disgorged, or rescinded payment or
credit had not been received or given by Bank, and whether or not Bank
relied upon this payment or credit or changed its position as a
consequence of it. In the event of continuation or reinstatement of
this Agreement, Debtor agrees upon demand by Bank to execute and
deliver to Bank those documents which Bank determines are appropriate
to further evidence (in the public records or otherwise) this
continuation or reinstatement, although the failure of Debtor to do so
shall not affect in any way the reinstatement or continuation.
5.10 This Agreement and all the rights and remedies of Bank under this
Agreement shall inure to the benefit of Bank's successors and assigns
and to any other holder who derives from Bank title to or an interest
in the Indebtedness or any portion of it, and shall bind Debtor and
the heirs, legal representatives, successors, and assigns of Debtor.
Nothing in this Section 5.10 is deemed a consent by Bank to any
assignment by Debtor.
5.11 If there is more than one Debtor, all undertakings, warranties and
covenants made by Debtor and all rights, powers and authorities given
to or conferred upon Bank are made or given jointly and severally.
5.12 Except as otherwise provided in this Agreement, all terms in this
Agreement have the meanings assigned to them in Article 9 (or, absent
definition in Article 9, in any other Article) of the Uniform
Commercial Code, as of the date of this Agreement. "Uniform Commercial
Code" means Act No. 174 of the Michigan Public Acts of 1962, as
amended.
5.13 No single or partial exercise, or delay in the exercise, of any right
or power under this Agreement, shall preclude other or further
exercise of the rights and powers under this Agreement. The
unenforceability of any provision of this Agreement shall not affect
the enforceability of the remainder of this Agreement. This Agreement
constitutes the entire agreement of Debtor and Bank with respect to
the subject matter of this Agreement. No amendment or modification of
this Agreement shall be effective unless the same shall be in writing
and signed by Debtor and an authorized officer of Bank. This Agreement
shall be governed by and construed in accordance with the internal
laws of the State of Michigan, without regard to conflict of laws
principles.
5.14 To the extent that any of the Indebtedness is payable upon demand,
nothing contained in this Agreement shall modify the terms and
conditions of that Indebtedness nor shall anything contained in this
Agreement prevent Bank from making demand, without notice and with or
without reason, for immediate payment of any or all of that
Indebtedness at any time(s), whether or not an Event of Default has
occurred.
5.15 Debtor's chief executive office is located and shall be maintained at
775 Technology Drive, Suite 200, Ann Arbor, Michigan 48108.
If Collateral is located at other than the chief executive office,
such Collateral is located and shall be maintained at: See attached
Schedule 3.
Collateral shall be maintained only at the locations identified in
this Section 5.15.
5.16 A carbon, photographic or other reproduction of this Agreement shall
be sufficient as a financing statement under the Uniform Commercial
Code and may be filed by Bank in any filing office.
5.17 This Agreement shall be terminated only by the filing of a termination
statement in accordance with the applicable provisions of the Uniform
Commercial Code, but the obligations contained in Section 2.13 of this
Agreement shall survive termination.
6. DEBTOR 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 WAIVES 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
INDEBTEDNESS.
7. Special Provisions Applicable to this Agreement. (*None, if left blank)
Debtor:
------------------------------------
By:
-------------------------------
Its:
<PAGE>
SCHEDULE 1
Borrowers
JPE, Inc.
Dayton Parts, Inc.
Starboard Industries, Inc.
Plastic Trim, Inc.
JPE Finishing, Inc.
Brake, Axle and Tandem Company Canada, Inc.
<PAGE>
SCHEDULE 2
1. 100 shares of the stock of API/JPE, Inc. and all other shares of stock
thereof now owned or hereafter acquired by Debtor.
2. 4,000 shares of the stock of Dayton Parts, Inc. and all other shares of
stock thereof now owned or hereafter acquired by Debtor.
3. 100 shares of the stock of Fastener Acquisition, Inc. and all other shares
of stock thereof now owned or hereafter acquired by Debtor.
4. 100 shares of the stock of JPE Finishing, Inc. and all other shares of
stock thereof now owned or hereafter acquired by Debtor.
5. 100 shares of the stock of Plastic Trim, Inc. and all other shares of stock
thereof now owned or hereafter acquired by Debtor.
6. 50,000 shares of the stock of SAC Corporation and all other shares of stock
thereof now owned or hereafter acquired by Debtor.
<PAGE>
SCHEDULE 3
Other Locations
[to be prepared by Borrower's counsel]
<PAGE>
EXHIBIT "A"
"Permitted Liens" shall mean:
(a) liens for taxes, assessments or governmental charges or levies not yet
due or delinquent, or which can thereafter be paid without penalty, or
which are being contested in good faith by appropriate proceedings
diligently pursued, provided that provision for the payment of all
such taxes has been made on Debtor's books as may be required by
generally accepted accounting principles consistently applied
("GAAP");
(b) the liens, if any, shown on Schedule 4 attached hereto;
(c) any other liens consented to in writing by Bank (which consent may be
granted or withheld in the sole discretion of Bank).
<PAGE>
SCHEDULE 4
Permitted Liens
[to be provided by Borrower's counsel]
Guaranty
As of May 27, 1999, the undersigned, for value received, unconditionally and
absolutely guarantee(s) to Comerica Bank ("Bank"), a Michigan banking
corporation, payment when due, whether by stated maturity, demand, acceleration
or otherwise, of all existing and future indebtedness ("Indebtedness") to the
Bank of the borrowers listed in attached Schedule 1 (collectively, "Borrower").
Indebtedness includes without limit any and all obligations or liabilities of
the Borrower to the Bank, whether absolute or contingent, direct or indirect,
voluntary or involuntary, liquidated or unliquidated, joint or several, known or
unknown; any and all indebtedness, obligations or liabilities for which Borrower
would otherwise be liable to the Bank were it not for the invalidity,
irregularity or unenforceability of them by reason of any bankruptcy, insolvency
or other law or order of any kind, or for any other reason; any and all
amendments, modifications, renewals and/or extensions of any of the above; and
all costs of collecting Indebtedness, including, without limit, attorney fees.
Any reference in this Guaranty to attorney fees shall be deemed a reference to
reasonable fees, charges, costs and expenses of both in-house and outside
counsel and paralegals, whether or not a suit or action is instituted, and to
court costs if a suit or action is instituted, and whether attorney fees or
court costs are incurred at the trial court level, on appeal, in a bankruptcy,
administrative or probate proceeding or otherwise. All costs shall be payable
immediately by the undersigned when incurred by the Bank, without demand, and
until paid shall bear interest a the highest per annum rate applicable to any of
the Indebtedness, but not in excess of the maximum rate permitted by law.
1. LIMITATION: The total obligation of the undersigned under this Guaranty is
UNLIMITED unless specifically limited in the Additional Provisions of this
Guaranty, and this obligation (whether unlimited or limited to the extent
specified in the Additional Provisions) shall include, IN ADDITION TO any
limited amount of principal guaranteed, all interest on that limited
amount, and all costs incurred by the Bank in collection efforts against
the Borrower and/or the undersigned or otherwise incurred by the Bank in
any way relating to the Indebtedness, or this Guaranty, including without
limit attorney fees. The undersigned agree(s) that (a) this limitation
shall not be a limitation on the amount of Borrower's Indebtedness to the
Bank; (b) any payments by the undersigned shall not reduce the maximum
liability of the undersigned under this Guaranty unless written notice to
that effect is actually received by the Bank at, or prior to, the time of
the payment; and (c) the liability of the undersigned to the Bank shall at
all times be deemed to be the aggregate liability of the undersigned under
this Guaranty and any other guaranties previously or subsequently given to
the Bank by the undersigned and not expressly revoked, modified or
invalidated in writing.
2. NATURE OF GUARANTY: This is a continuing Guaranty of payment and not of
collection and remains effective whether the Indebtedness is from time to
time reduced and later increased or entirely extinguished and later
reincurred. The undersigned deliver(s) this Guaranty based solely on the
undersigned's independent investigation of (or decision not to investigate)
the financial condition of Borrower and is (are) not relying on any
information furnished by the Bank. The undersigned assume(s) full
responsibility for obtaining any further information concerning the
Borrower's financial condition, the status of the Indebtedness or any other
matter which the undersigned may deem necessary or appropriate now or
later. The undersigned knowingly accept(s) the full range of risk
encompassed in this Guaranty, which risk includes, without limit, the
possibility that Borrower may incur Indebtedness to the Bank after the
financial condition of the Borrower, or the Borrower's ability to pay debts
as they mature, has deteriorated.
3. APPLICATION OF PAYMENTS: The undersigned authorize(s) the Bank, either
before or after termination of this Guaranty, without notice to or demand
on the undersigned and without affecting the undersigned's liability under
this Guaranty, from time to time to: (a) apply any security and direct the
order or manner of sale; and (b) apply payments received by the Bank from
the Borrower to any indebtedness of the Borrower to the Bank, in such order
as the Bank shall determine in its sole discretion, whether or not this
indebtedness is covered by this Guaranty, and the undersigned waive(s) any
provision of law regarding application of payments which specifies
otherwise. The undersigned agree(s) to provide to the Bank copies of the
undersigned's financial statements upon request.
4. SECURITY: The undersigned grant(s) to the Bank a security interest in and
the right of setoff as to any and all property of the undersigned now or
later in the possession of the Bank. The undersigned further assign(s) to
the Bank as collateral for the obligations of the undersigned under this
Guaranty all claims of any nature that the undersigned now or later has
(have) against the Borrower (other than any claim under a deed of trust or
mortgage covering California real property) with full right on the part of
the Bank, in its own name or in the name of the undersigned, to collect and
enforce these claims. The undersigned agree(s) that no security now or
later held by the Bank for the payment of any Indebtedness, whether from
the Borrower, any guarantor, or otherwise, and whether in the nature of a
security interest, pledge, lien, assignment, setoff, suretyship, guaranty,
indemnity, insurance or otherwise, shall affect in any manner the
unconditional obligation of the undersigned under this Guaranty, and the
Bank, in its sole discretion, without notice to the undersigned, may
release, exchange, enforce and otherwise deal with any security without
affecting in any manner the unconditional obligation of the undersigned
under this Guaranty. The undersigned acknowledge(s) and agree(s) that the
Bank has no obligation to acquire or perfect any lien on or security
interest in any asset(s), whether realty or personalty, to secure payment
of the Indebtedness, and the undersigned is (are) not relying upon any
asset(s) in which the Bank has or may have a lien or security interest for
payment of the Indebtedness.
5. OTHER GUARANTORS: If any Indebtedness is guaranteed by two or more
guarantors, the obligation of the undersigned shall be several and also
joint, each with all and also each with any one or more of the others, and
may be enforced at the option of the Bank against each severally, any two
or more jointly, or some severally and some jointly. The Bank, in its sole
discretion, may release any one or more of the guarantors for any
consideration which it deems adequate, and may fail or elect not to prove a
claim against the estate of any bankrupt, insolvent, incompetent or
deceased guarantor; and after that, without notice to any guarantor, the
Bank may extend or renew any or all Indebtedness and may permit the
Borrower to incur additional Indebtedness, without affecting in any manner
the unconditional obligation of the remaining guarantor(s). The undersigned
acknowledge(s) that the effectiveness of this Guaranty is not conditioned
on any or all of the indebtedness being guaranteed by anyone else.
6. TERMINATION: Any of the undersigned may terminate their obligation under
this Guaranty as to future Indebtedness (except as provided below) by (and
only by) delivering written notice of termination to an officer of the Bank
and receiving from an officer of the Bank written acknowledgement of
delivery; provided, however, the termination shall not be effective until
the opening of business on the fifth (5th) day ("effective date") following
written acknowledgement of delivery. Any termination shall not affect in
any way the unconditional obligations of the remaining guarantor(s),
whether or not the termination is known to the remaining guarantor(s). Any
termination shall not affect in any way the unconditional obligations of
the terminating guarantor(s) as to any Indebtedness existing at the
effective date of termination or any Indebtedness created after that
pursuant to any commitment or agreement of the Bank or pursuant to any
Borrower loan with the Bank existing at the effective date of termination
(whether advances or readvances by the Bank after the effective date of
termination are optional or obligatory), or any modifications, extensions
or renewals of any of this Indebtedness, whether in whole or in part, and
as to all of this Indebtedness and modifications, extensions or renewals of
it, this Guaranty shall continue effective until the same shall have been
fully paid. The Bank has no duty to give notice of termination by any
guarantor(s) to any remaining guarantor(s). The undersigned shall indemnify
the Bank against all claims, damages, costs and expenses, including,
without limit, attorney fees, incurred by the Bank in connection with any
suit, claim or action against the Bank arising out of any modification or
termination of a Borrower loan or any refusal by the Bank to extend
additional credit in connection with the termination of this Guaranty.
7. REINSTATEMENT: Notwithstanding any prior revocation, termination, surrender
or discharge of this Guaranty (or of any lien, pledge or security interest
securing this Guaranty) in whole or in part, the effectiveness of this
Guaranty, and of all liens, pledges and security interests securing this
Guaranty, shall automatically continue or be reinstated in the event that
any payment received or credit given by the Bank in respect of the
Indebtedness is returned, disgorged or rescinded under any applicable state
or federal law, including, without limitation, laws pertaining to
bankruptcy or insolvency, in which case this Guaranty, and all liens,
pledges and security interests securing this Guaranty, shall be enforceable
against the undersigned as if the returned, disgorged or rescinded payment
or credit had not been received or given by the Bank, and whether or not
the Bank relied upon this payment or credit or changed its position as a
consequence of it. In the event of continuation or reinstatement of this
Guaranty and the liens, pledges and security interests securing it, the
undersigned agree(s) upon demand by the Bank, to execute and deliver to the
Bank those documents which the Bank determines are appropriate to further
evidence (in the public records or otherwise) this continuation or
reinstatement, although the failure of the undersigned to do so shall not
affect in any way the reinstatement or continuation. If the undersigned
do(es) not execute and deliver to the Bank upon demand such documents, the
Bank and each Bank officer is irrevocably appointed (which appointment is
coupled with an interest) the true and lawful attorney of the undersigned
(with full power of substitution) to execute and deliver such documents in
the name and on behalf of the undersigned.
8. WAIVERS: The undersigned waive(s) any right to require the Bank to: (a)
proceed against any person or property; (b) give notice of the terms, time
and place of any public or private sale of personal property security held
from the Borrower or any other person, or otherwise comply with the
provisions of Section 9-504 of the Michigan or other applicable Uniform
Commercial Code; or (c) pursue any other remedy in the Bank's power. The
undersigned waive(s) notice of acceptance of this Guaranty and presentment,
demand, protest, notice of protest, dishonor, notice of dishonor, notice of
default, notice of intent to accelerate or demand payment of any
Indebtedness, any and all other notices to which the undersigned might
otherwise be entitled, and diligence in collecting any Indebtedness, and
agree(s) that the Bank may, once or any number of times, modify the terms
of any Indebtedness, compromise, extend, increase, accelerate, renew or
forbear to enforce payment of any or all Indebtedness, or permit the
Borrower to incur additional Indebtedness, all without notice to the
undersigned and without affecting in any manner the unconditional
obligation of the undersigned under this Guaranty.
The undersigned unconditionally and irrevocably waive(s) each and every
defense and setoff of any nature which, under principles of guaranty or
otherwise, would operate to impair or diminish in any way the obligation of
the undersigned under this Guaranty, and acknowledge(s) that each such
waiver is by this reference incorporated into each security agreement,
collateral assignment, pledge and/or other document from the undersigned
now or later securing this Guaranty and/or the Indebtedness, and
acknowledge(s) that as of the date of this Guaranty no such defense or
setoff exists.
9. WAIVER OF SUBROGATION: The undersigned waive(s) any and all rights (whether
by subrogation, indemnity, reimbursement, or otherwise) to recover from the
Borrower any amounts paid by the undersigned pursuant to this Guaranty.
10. SALE/ASSIGNMENT: The undersigned acknowledge(s) that the Bank has the right
to sell, assign, transfer, negotiate, or grant participations in all or any
part of the Indebtedness and any related obligations, including, without
limit, this Guaranty, without notice to the undersigned and that the Bank
may disclose any documents and information which the Bank now has or later
acquires relating to the undersigned or to the Borrower in connection with
such sale, assignment, transfer, negotiation, or grant. The undersigned
agree(s) that the Bank may provide information relating to this Guaranty or
relating to the undersigned to the Bank's parent, affiliates, subsidiaries
and service providers.
11. GENERAL: This Guaranty constitutes the entire agreement of the undersigned
and the Bank with respect to the subject matter of this Guaranty. No
waiver, consent, modification or change of the terms of the Guaranty shall
bind any of the undersigned or the Bank unless in writing and signed by the
waiving party or an authorized officer of the waiving party, and then this
waiver, consent, modification or change shall be effective only in the
specific instance and for the specific purpose given. This Guaranty shall
inure to the benefit of the Bank and its successors and assigns and shall
be binding on the undersigned and the undersigned's heirs, legal
representatives, successors and assigns including, without limit, any
debtor in possession or trustee in bankruptcy for any of the undersigned.
The undersigned has (have) knowingly and voluntarily entered into this
Guaranty in good faith for the purpose of inducing the Bank to extend
credit or make other financial accommodations to the Borrower. If any
provision of this Guaranty is unenforceable in whole or in part for any
reason, the remaining provisions shall continue to be effective. THIS
GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF MICHIGAN, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES.
12. HEADINGS: Headings in this Agreement are included for the convenience of
reference only and shall not constitute a part of this Agreement for any
purpose.
13. ADDITIONAL PROVISIONS: The total obligations of ASC Holdings LLC and
Kojaian Holdings LLC under the Guaranty shall be limited to the Collateral
(as defined in and) provided pursuant to that certain Security Agreement
(Negotiable Collateral) dated May 27, 1999 executed by ASC Holdings LLC in
favor of Bank and that certain Security Agreement (Negotiable Collateral)
dated May 27, 1999 executed by Kojaian Holdings LLC in favor of Bank,
respectively.
14. JURY TRIAL WAIVER: THE UNDERSIGNED 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 WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION
REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS
GUARANTY OR THE INDEBTEDNESS.
IN WITNESS WHEREOF, Guarantor(s) has (have) signed and delivered this Guaranty
the day and year first written above.
GUARANTOR(S): ASC HOLDINGS LLC
WITNESSES:
- ---------------------------- By: /s/ David L. Treadwell
SIGNATURE OF --------------------------------
David L. Treadwell
Its: President
- ----------------------------
SIGNATURE OF
KOJAIAN HOLDINGS LLC
By: /s/ C. Michael Kojaian
--------------------------------
C. Michael Kojaian
Its: President
API/JPE, INC.
By: /s/ Richard R. Chrysler
--------------------------------
Richard R. Chrysler
Its: President
SAC CORPORATION
By: /s/ Richard R. Chrysler
--------------------------------
Richard R. Chrysler
Its: President
GUARANTOR'S ADDRESS:
775 Technology Drive
Suite 200
` Ann Arbor, Michigan 48108
<PAGE>
Schedule 1
JPE, Inc.
Brake, Axle and Tandem
Company Canada, Inc.
Dayton Parts, Inc.
JPE Finishing, Inc.
Plastic Trim, Inc.
Starboard Industries, Inc.
Mike Kojaian
C. Michael Kojaian
1400 North Woodward Avenue
Suite 250
Bloomfield Hills, Michigan 48304
May 27, 1999
Mr. Heinz C. Prechter
One Heritage Place
Suite 400
Southgate, Michigan 48195
Re: JPE, Inc. Put
Dear Heinz:
1. Background. As you are aware, Kojaian Holdings LLC, a Michigan limited
liability company (100% owned by Mike Kojaian ("Mike") and C. Michael Kojaian
("Michael")), and ASC Holdings LLC, a Michigan limited liability company (100%
owned by you), have entered into an Investment Agreement dated April 28, 1999
(the "Investment Agreement") to purchase a controlling number of Common Shares
and Preferred Shares of JPE. This letter agreement reflects our agreement in
connection with Kojaian Holdings LLC's participation as part of Buyer in
connection with the Transaction. All capitalized terms not defined in this
letter agreement shall have the meanings set forth in the Investment Agreement.
2. The Dott Acquisition. It is contemplated that following the consummation
of the Transaction, all of the outstanding shares of capital stock or all of the
assets of Dott Industries, Inc., a Michigan corporation ("Dott"), would be
purchased (the "Dott Acquisition") by one or more of the JPE Companies or one
half by ASC Holdings LLC (and one-half of Kojaian Holdings LLC) (the
"Purchaser") for an aggregate purchase price of no less than $28-$30 million
(the "Purchase Price"). In the event the Dott Acquisition is structured as an
acquisition of stock or a merger, the Purchase Price would be no less than $28
to $30 million, less the amount of the existing indebtedness of Dott, and at the
closing, the Purchaser would arrange financing to pay off all existing
indebtedness of Dott, including indebtedness of Dott to its shareholders. In the
event the transaction is structured as an asset purchase, the aggregate Purchase
Price would be no less than $28 to $30 million, and Dott would use a portion of
the Purchase Price to pay off all existing indebtedness.
3. The Put. As a condition precedent to Kojaian Holdings LLC's
participation in the Transaction as part of Buyer, Michael, Mike, ASC Holdings
LLC, and you (in your individual capacity) agreed that if the Dott Acquisition
is not consummated (for any reason whatsover) on or before June 30, 1999 (the
"Trigger Date"), Michael and/or Mike shall have the right to require you
(through ASC Holdings LLC or otherwise) to purchase all of the Subscribed Shares
then owned by Kojaian Holdings LLC (the "Put Shares") for 50% of the
Subscription Price, plus interest beginning on the Closing Date and ending on
the consummation of the purchase of the Put Shares calculated at the prime rate
of interest announced by Comerica Bank as its prime rate (the "Put"). Michael
and/or Mike may exercise the Put at any time beginning on the Trigger Date and
ending on the thirtieth day following the Trigger Date (the "Put Exercise
Period"), by written notice to you at the address set forth above in the manner
provided for in the Investment Agreement (the "Put Notice") (except that
personal delivery shall be valid and shall be considered to have been delivered
the date of delivery and the copy shall be sent (only) to: David L. Treadwell).
If no Put Notice is given during the Put Exercise Period, the Put shall expire.
4. The Closing of the Put. Subject to paragraph 3, the purchase of the Put
Shares shall take place at a closing, at such date as may be mutually agreed by
the parties, but in no event later than fifteen days after the delivery of the
Put Notice or, if a longer time is required under applicable Law, within three
business days after the earliest date permissible under applicable Law. Such
closing shall occur at Michael's primary place of business, or at any other
place the parties agree. At such closing, (a) the Purchasers shall pay for the
Put Shares as provided above by wire transfer of cash, and (b) Kojaian Holdings
LLC shall deliver the certificates representing all of the Put Shares, duly
endorsed in blank (or accompanied by assignments separate from certificate, duly
endorsed in blank).
5. No Waiver. No waiver of any breach of any provision of this letter
agreement shall be deemed a waiver of any preceding or succeeding breach or of
any other provision of this letter agreement. No extension of time for
performance of any obligations or acts under this letter agreement shall be
deemed an extension of the time for performance of any other obligations or acts
under this letter agreement.
6. Successors and Assigns. This letter agreement shall bind and inure to
the benefit of the parties and their successors and assigns; provided that
neither party may assign this letter agreement without the prior written consent
of the other.
7. Severability. The provisions of this letter agreement shall be deemed
severable, and if any provision or part of this letter agreement is held
illegal, void or invalid under applicable Law, such provision or part may be
construed or deemed changed by a court of competent jurisdiction to the extent
reasonably necessary to make the provision or part, as so construed or changed,
legal, valid and binding. If any provision of this letter agreement is held
illegal, void or invalid in its entirety, the remaining provisions of this
letter agreement shall not in any way be affected or impaired but shall remain
binding in accordance with their terms.
8. Entire Agreement; Amendment. This letter agreement contains the entire
agreement of the parties with respect to the Put. This letter agreement may be
altered or amended only by an instrument in writing, duly executed by each
party.
9. Cost of Litigation. If any party breaches this letter agreement and if
counsel is employed to enforce this letter agreement, the successful party shall
be entitled to Fees and Costs associated with such enforcement.
10. Interpretation. This letter agreement is being entered into among
competent and experienced business persons, represented by counsel, and have
been reviewed by the parties and their counsel. Therefore, any ambiguous
language in this letter agreement shall not necessarily be construed against any
particular party as the drafter of such language.
11. Counterparts. This letter agreement may be executed in counterparts (by
facsimile transmission or otherwise), each of which when so executed shall be
deemed an original, but both of such counterparts together shall constitute one
and the same instrument.
12. Applicable Law; Venue. This letter agreement shall be construed in
accordance with and governed by the laws of the State of Michigan without regard
to principles of conflicts of law. The parties acknowledge that the United
States District Court for the Eastern District of Michigan or the Circuit Court
for the County of Oakland shall have exclusive jurisdiction over any case or
controversy arising out of or relating to this letter agreement and that all
litigation arising out of or relating to this letter agreement shall be
commenced in the United States District Court for the Eastern District of
Michigan or in the Oakland County Circuit Court.
13. Expenses. Except as otherwise provided in this letter agreement, each
party shall bear his or its own expenses in connection with this letter
agreement and the Put, including costs and expenses of his or its respective
attorneys, accountants, consultants and other professionals. Notwithstanding the
foregoing, the Purchasers shall pay (a) all costs, filing fees and expenses
incurred in connection with meeting the requirements of Hart-Scott-Rodino, and
(b) any applicable transfer or other Taxes imposed on the parties due to the
consummation of the Put.
Sincerely,
Mike Kojaian
C. Michael Kojaian
Accepted and agreed to on May ___, 1999:
By:
-----------------------------------
Heinz C. Prechter
JPE, INC.
SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT (this "Shareholders Agreement"), is made as of
the 27th day of May, 1999, between ASC Holdings LLC, a Michigan limited
liability company ("ASC"), and Kojaian Holdings LLC, a Michigan limited
liability company ("Kojaian") (each of ASC and Kojaian, a "Shareholder", and
together, the "Shareholders").
RECITALS
A. Simultaneously with the execution of this Shareholders Agreement and
pursuant to an Investment Agreement dated April 28, 1999 among JPE, Inc., a
Michigan corporation ("JPE"), ASC and Kojaian (the "Investment Agreement"), each
of ASC and Kojaian have, among other things, subscribed for shares of common
capital stock (the "Common Shares") of JPE and shares of preferred capital stock
of JPE (the "Preferred Shares") (the Preferred Shares and the Common Shares,
together, the "Shares") (the "Subscription").
B. As a result of the Subscription, ASC and Kojaian, together, currently
own a majority of the issued and outstanding Common Shares and Preferred Shares.
Each of ASC and Kojaian have determined that it is in their mutual best
interests to enter into this Shareholders Agreement to set forth certain
agreements with respect to the corporate governance of JPE, transfers of the
Shares and certain other matters.
THEREFORE, the parties hereto, intending to be legally bound hereby, and in
consideration of the mutual promises and covenants hereinafter made, agree as
follows:
1. VOTING; SOLICITATION OF VOTES.
(a) Neither Shareholder shall, without the prior written consent of the
other Shareholder, (1) cast its votes at any meeting (whether annual or special
and whether or not an adjourned or postponed meeting) of the shareholders of JPE
(a "Shareholders Meeting") or consent (or cause to be consented) any of its
Shares in a consent of the shareholders of JPE (a "Consent") unless at least
sixty days prior to such Shareholders Meeting or Consent such Shareholder (the
"Voting Shareholder") consults with the other Shareholder regarding the issues
to be addressed at such Shareholders Meeting or by such Consent and the Voting
Shareholder discloses to the other Shareholder its intention regarding how the
Voting Shareholder intends to cast its Shares at such Shareholders Meeting or in
such Consent or (2) vote or consent any of its Shares in a manner contrary to
the intention it disclosed pursuant to Section 1(a)(1).
(b) Subject to the other terms of this Shareholders Agreement, (i) at any
Shareholders Meeting, each Shareholder shall appear at the Shareholders Meeting
or otherwise cause its Shares to be counted as present thereat for the purpose
of establishing a quorum, (ii) in connection with any Consent, each Shareholder
shall cause its Shares to be cast in the Consent, (iii) neither Shareholder
shall solicit the votes of (or enter into a voting or shareholders agreement
(written or otherwise) with) any shareholder who is not a party to this
Shareholders Agreement without the prior written consent of the other
Shareholder, and (iv) each Shareholder shall vote or consent (or cause to be
voted or consented) all of its Shares in accordance with Section 1(a) and
Section 2 of this Shareholders Agreement.
(c) Notwithstanding Section 2(b), in the event that there exists a
disagreement between the Shareholders regarding a potential vote at a
Shareholders Meeting or Consent, whether such disagreement is disclosed pursuant
to Section 1(a) or otherwise (a "Shareholders Deadlock"), each Shareholder shall
abstain from voting or consenting any of its Shares with regard to the issue
underlying the Shareholder Deadlock, and, if practical, shall use its best
efforts to prevent such issue from coming to a vote before a Shareholders
Meeting or Consent, including by failing to appear at a Shareholders Meeting or
otherwise causing its Shares not to be counted as present thereat for the
purpose of establishing a quorum at which such issue is to be presented for a
vote or by failing to allow its Shares to be counted or cast in any Consent
addressing such issue.
(d) Neither Shareholder shall enter into any agreement or commitment
(written or otherwise) to vote the shares of JPE with any shareholder of JPE who
is not a party to this Shareholders Agreement without the prior written consent
of the other Shareholder.
2. BOARD OF DIRECTORS.
(a) Number of Directors. In accordance with the Bylaws of JPE and each of
its subsidiaries (JPE and each such subsidiary, a "JPE Company"), the
Shareholders shall use their best efforts to establish a Board of Directors of
each JPE Company (with regard to each JPE Company, the "Board of Directors")
consisting of four members.
(b) Election of Directors. In accordance with the Bylaws of each JPE
Company, ASC shall nominate two individuals to serve on the Board of Directors
of each JPE Company (the "ASC Nominees") and Kojaian shall nominate two
individuals to serve on the Board of Directors of each JPE Company (the "Kojaian
Nominees"). Each of ASC and Kojaian shall, at each election of the directors,
vote all Shares owned by such Shareholder, on the record date fixed for a
determination of those shareholders entitled to vote in any election of
directors of each JPE Company, or will cause such shares to be voted, in favor
of the election as directors of each JPE Company of the ASC Nominees and the
Kojaian Nominees. With regard to each JPE Company, the ASC Nominee designated,
from time to time, by ASC as the Chairman of the Board of Directors of such JPE
Company shall be appointed the Chairman of the Board of Directors of such JPE
Company by the applicable Board of Directors. With regard to each JPE Company,
the Kojaian Nominee designated, from time to time, by Kojaian as the Vice
Chairman of the Board of Directors of such JPE Company shall be appointed the
Vice Chairman of the Board of Directors of such JPE Company by the applicable
Board of Directors. As soon as practicable following the execution of this
Shareholders Agreement, the Shareholders shall take such action as is necessary
to reconstitute the Boards of Directors as contemplated by Section 2(a) and this
Section 2(b).
(c) Filling Vacancies. At any time a vacancy is created on any of Board of
Directors of a JPE Company by the death, removal or resignation of any one of
the directors, (i) no action shall be taken by the applicable Board of Directors
which would have an adverse effect on the party that nominated such director,
until such vacancy on such Board of Directors has been filled in accordance with
this Shareholders Agreement, and (ii) ASC and Kojaian shall cause the remaining
directors to meet as quickly as possible for the purpose of approving and
appointing a director to fill such vacancy in a manner so as to reconstitute
such Board pursuant to the requirements of Section 2(b).
(d) Subject to the other terms of this Shareholders Agreement, (i) no
meeting of the Board of Directors of any JPE Company (for each JPE Company a
"Board Meeting") may occur without the presence of all four (4) directors of
such JPE Company at the Board Meeting and, subject to a consent described in
Section 2(d)(ii), in the event a director is incapable of attending an otherwise
duly called Board Meeting, each other director shall use his or her best efforts
to prevent such Board Meeting from being held, including by failing to appear at
such Board Meeting, and (ii) any action taken at a Board Meeting without the
presence of all four (4) directors shall be null and void ab initio without the
prior written consent of the Shareholder which one or two nominees are not
present at such Board Meeting (which consent may be limited to certain topics to
be addressed and actions to be taken as set forth in such consent).
3. TRANSFER OF SHARES. Neither Shareholder shall, directly or indirectly,
Transfer or enter into any commitment to directly or indirectly convey or
Transfer (as defined below), all or any portion of its Shares, or any interest
therein, now held or hereafter acquired by such Shareholder, as the case may be,
without the express prior written consent of the other Shareholder, which
consent may be granted or withheld in the sole discretion of such other
Shareholder. Any such Transfer may be conditioned upon the continued application
of this Shareholders Agreement to any Shares subject to such Transfer. Any
purported Transfer not expressly authorized by the terms of this Shareholders
Agreement shall be void ab initio and of no force and effect. As used in this
Section 3, the term "Transfer" shall mean any transfer or conveyance whatsoever,
including any sale, assignment, transfer, pledge, encumbrance, hypothecation or
any other alienation (whether voluntary, involuntary or by operation of law).
4. DISPUTES. Upon the event of (a) an impasse between the ASC Nominees, on
the one hand, and the Kojaian Nominees, on the other hand, regarding any
material issue lasting longer than ninety (90) days or (b) a Shareholder
Deadlock lasting longer than ninety (90) days, the Shareholders shall use good
faith, reasonable efforts to sell their ownership of JPE (whether by stock sale,
asset sale, merger, consolidation, stock subscription or in any other manner
whatsoever) to a third party purchaser (a "Divestiture"). Notwithstanding the
foregoing, a Divestiture shall not be consummated unless (A) both Shareholders
approve of the material terms of the Divestiture which approval shall not be
unreasonably withheld and (B) the approval and/or the consummation of
Divestiture is not a breach of the fiduciary duties of the Board of Directors of
JPE and complies with all applicable laws and, in the event there are
Shareholders of JPE other than the Shareholders, at the request of either
Shareholder, the Board of Directors of JPE shall have received a "fairness
opinion" from Roney & co. stating that the Divestiture is fair to the
shareholders of JPE from a financial point of view.
5. REPRESENTATIONS AND WARRANTIES OF ASC. ASC hereby represents and
warrants to Kojaian as follows:
(a) Due Organization. ASC is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Michigan.
ASC has all requisite power and authority to enter into and to perform this
Shareholders Agreement.
(b) Due Execution. The execution and performance by ASC of this
Shareholders Agreement have been duly authorized by all requisite limited
liability company action of ASC. The execution and performance by ASC of this
Shareholders Agreement will not (i) violate any law, rule, regulation or any
order of any court or other agency of government applicable to ASC or its
business or assets, or ASC's Articles of Organization or Operating Agreement or
(ii) violate, cause the termination or acceleration of, or require consent
under, any material indenture, agreement or other instrument to which ASC is a
party or by which it is bound.
6. REPRESENTATIONS AND WARRANTIES OF KOJAIAN. Kojaian hereby represents and
warrants to ASC as follows:
(a) Due Organization. Kojaian is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Michigan. Kojaian has all requisite power and authority to enter into and to
perform this Shareholders Agreement.
(b) Due Execution. The execution and performance by Kojaian of this
Shareholders Agreement have been duly authorized by all requisite limited
liability company action of Kojaian. The execution and performance by Kojaian of
this Shareholders Agreement will not (i) violate any law, rule, regulation or
any order of any court or other agency of government applicable to Kojaian or
its business or assets, or Kojaian's Articles of Organization or Operating
Agreement or (ii) violate, cause the termination or acceleration of, or require
consent under, any material indenture, agreement or other instrument to which
Kojaian is a party or by which it is bound.
7. LEGEND ON SHARES.
(a) Endorsement on Certificates. Each of ASC and Kojaian shall use its best
efforts to ensure that the certificates for all of the Shares owned by either
ASC or JPE, whether now owned or hereafter acquired, shall, during the term of
this Shareholders Agreement, bear a conspicuous legend in substantially the
following form:
"The shares of capital stock represented by this certificate are subject
to, and are transferable only upon compliance with, a certain Shareholders
Agreement dated as of May 27, 1999, between ASC Holdings, LLC, a Michigan
limited liability company, and Kojaian Holdings LLC, a Michigan limited
liability company, the provisions of which are incorporated herein by
reference. A copy of said agreement is on file in the office of the
Secretary of JPE, Inc."
(b) Removal of Legend. If any of the Shares shall cease to be subject to
this Shareholders Agreement, the applicable shareholder may request to JPE, Inc.
that it issue to such shareholder a new certificate evidencing such Shares
without the legend required by Section 7(a) endorsed thereon. In addition, if
any of the Shares are transferred to successors or assigns of a Shareholder
pursuant to either Section 3 or Section 9.3 and such Shares continue to remain
subject to the terms of this Shareholders Agreement, the legend set forth in
Section 7(a) shall be amended to reflect the names of such successors or
assigns.
8. EQUITABLE REMEDIES. The obligations of ASC, on the one hand, and
Kojaian, on the other hand, under this Shareholders Agreement are of a special
and unique character and the failure to perform such obligations under this
Shareholders Agreement by ASC, on the one hand, or Kojaian, on the other hand,
shall cause irreparable injury to the other party, the amount of which would be
extremely difficult, if not impossible, to estimate or determine and which may
not be adequately compensable by monetary damages alone. Therefore, any injured
party shall be entitled, as a matter of course, to an injunction, restraining
order, writ of mandamus or other equitable relief from any court of competent
jurisdiction, including specific performance, restraining any violation or
threatened violation of any term of this Shareholders Agreement, or requiring
compliance with or performance of any obligations under this Shareholders
Agreement, or requiring compliance with or performance of any obligations under
this Shareholders Agreement, by the violating party or parties, or such other
persons as a court of competent jurisdiction may order. The parties' rights
under this Section 8 are cumulative and are in addition to the rights and
remedies otherwise available to them under any other provision of this
Shareholders Agreement, any other agreement or applicable law.
9. MISCELLANEOUS.
9.1 Notices. Any notice required or permitted to be given under this
Shareholders Agreement must be sent by (a) recognized overnight courier (such as
Airborne or Federal Express), (b) by certified or registered mail, postage
prepaid or (c) by facsimile, with confirmation of transmission by the sender's
machine, followed by further notice under (a) or (b) above the following
business day, as follows:
(a) To ASC: ASC Holdings LLC
One Heritage Place
Suite 400
Southgate, MI 48195
Attn: David L. Treadwell
Facsimile: (734) 285-6702
with a copy to: ASC Holdings LLC
One Heritage Place
Suite 400
Southgate, MI 48195
Attn: Steven J. Morello
Facsimile: (734) 285-6702
(b) To Kojaian: Kojaian Holdings LLC
c/o Kojain Management
1400 N. Woodward Avenue, #350
Bloomfield Hills, MI 48304
Attn: C. Michael Kojaian
Facsimile: (248) 644-7620
with a copy to: Honigman Miller Schwartz and Cohn
2290 First National Building
660 Woodward Avenue
Detroit, MI 48226
Attn: G. Scott Romney
Facsimile:
Notice shall be considered given (a) the next business day upon sending by a
recognized overnight carrier, (b) three business days after deposit with
certified or registered mail or (c) the next business day upon transmission by
facsimile.
Addresses for notices may be changed by notice given pursuant to this Section
9.1.
9.2 No Waiver. No waiver of any breach of any provision of this
Shareholders Agreement shall be deemed a waiver of any preceding or succeeding
breach or of any other provision of this Shareholders Agreement. No extension of
time for performance of any obligations or acts under this Shareholders
Agreement shall be deemed an extension of the time for performance of any other
obligations or acts under this Shareholders Agreement.
9.3 Successors and Assigns. This Shareholders Agreement shall bind and
inure to the benefit of the parties and their successors and assigns; provided
that each Shareholder shall have the right to assign (including by operation of
law) this Shareholders Agreement only with the prior written consent of the
other Shareholder.
9.4 Severability. The provisions of this Shareholders Agreement shall be
deemed severable, and if any provision or part of this Shareholders Agreement is
held illegal, void or invalid under applicable law, such provision or part may
be construed or deemed changed by a court of competent jurisdiction to the
extent reasonably necessary to make the provision or part, as so construed or
changed, legal, valid and binding. If any provision of this Shareholders
Agreement is held illegal, void or invalid in its entirety, the remaining
provisions of this Shareholders Agreement shall not in any way be affected or
impaired but shall remain binding in accordance with their terms.
9.5 Entire Agreement; Amendment. This Shareholders Agreement contains the
entire agreement of the parties with respect to the subject matter addressed
herein, and no representations made by either Shareholder may be relied on
unless set forth in this Shareholders Agreement. This Shareholders Agreement may
be altered or amended only by an instrument in writing, duly executed by each of
ASC and Kojaian.
9.6 Cost of Litigation. If either party breaches this Shareholders
Agreement and if counsel is employed to enforce this Shareholders Agreement, the
successful party shall be entitled to Fees and Costs (as defined in the
Investment Agreement) associated with such enforcement.
9.7 Interpretation. This Shareholders Agreement is being entered into among
competent and experienced business persons, represented by counsel, and have
been reviewed by the parties and their counsel. Therefore, any ambiguous
language in this Shareholders Agreement shall not necessarily be construed
against any particular party as the drafter of such language.
9.8 Counterparts. This Shareholders Agreement may be executed in two
counterparts (by facsimile transmission or otherwise), each of which when so
executed shall be deemed an original, but both of such counterparts together
shall constitute one and the same instrument.
9.9 Applicable Law; Venue. This Shareholders Agreement shall be construed
in accordance with and governed by the laws of the State of Michigan without
regard to principles of conflicts of law. The parties acknowledge that the
United States District Court for the Eastern District of Michigan or the Circuit
Court for the County of Oakland shall have exclusive jurisdiction over any case
or controversy arising out of or relating to this Shareholders Agreement and
that all litigation arising out of or relating to this Shareholders Agreement
shall be commenced in the United States District Court for the Eastern District
of Michigan or in the Oakland County Circuit Court.
9.10 Expenses. Except as otherwise provided in this Shareholders Agreement,
each party shall bear its own expenses in connection with this Shareholders
Agreement, including costs and expenses of its respective attorneys,
accountants, consultants and other professionals.
9.11 Further Assurances. If at any time after the execution of this
Shareholders Agreement, ASC or Kojaian reasonably considers or is advised that
any further actions, assignments or assurances on its part are necessary or
desirable to carry out the intent and accomplish the purposes of this
Shareholders Agreement, it shall, at its own expense, take such actions, execute
and make all such assignments and assurances and do all things necessary or
appropriate to carry out the intent and accomplish the purposes of this
Shareholders Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Shareholders
Agreement as of the day and year first written above.
ASC HOLDINGS LLC,
a Michigan limited liability company
By: /s/ David L. Treadwell
-------------------------------------
Name: David L. Treadwell
Its: President
KOJAIAN HOLDINGS LLC,
a Michigan limited liability company
By: /s/ C. Michael Kojaian
-------------------------------------
Name: C. Michael Kojaian
Its: President
JPE, INC.
775 Technology Drive
Suite 200
Ann Arbor, Michigan 48018
May 27, 1999
Mr. Richard Chrysler
775 Technology Drive
Suite 200
Ann Arbor, MI 48018
Re: Your Employment Agreement with JPE, Inc.
Dear Mr. Chrysler:
We are pleased to offer you the position of President and Chief Executive
Officer of JPE, Inc. upon the following terms:
1. Background. As you know, pursuant to an Investment Agreement dated April
28, 1999 (the "Investment Agreement") among JPE, Inc., a Michigan corporation
("JPE"), ASC Holdings LLC, a Michigan limited liability company ("ASC"), and
Kojaian Holdings LLC, a Michigan limited liability company ("Kojaian"), each of
ASC and Kojaian are, among other things, today subscribing for a controlling
number of Common Shares and Preferred Shares of JPE. This employment agreement
(the "Agreement"), is being entered into pursuant to Section 6.2(h) of the
Investment Agreement. All capitalized terms not otherwise defined in this
Agreement shall have the meanings given them in the Investment Agreement.
2. Duties. During the Employment Term (as defined in paragraph 4), you
shall be employed as the President and Chief Executive Officer of JPE and such
JPE Companies as determined by JPE (collectively, the "Companies"). Subject to
direct reporting to and supervision by the Chairman of the Board of Directors of
JPE, your duties shall include the duties to be performed by the President and
Chief Executive Officer of the Companies. During the Employment Term you shall
devote your full working time and attention to the duties described in this
paragraph 2.
3. Compensation. Your annual salary as President and Chief Executive
Officer of the Companies shall be $300,000 payable in accordance with payroll
practices of the Companies in effect from time to time. All compensation and
benefits shall be subject to applicable federal, State and local withholding
taxes.
4. Term. The term of your employment (the "Employment Term") shall continue
until the earlier of (a) your death; (b) JPE's termination of your employment
with the Companies; (c) your voluntary termination of your employment with the
Companies; and (d) the two year anniversary of this Agreement.
5. Benefits. During the Employment Term:
(a) You shall be entitled to four (4) weeks paid vacation and you shall be
eligible to participate in the employee benefits coverages of JPE on the same
basis as other employees of JPE.
(b) The Companies shall reimburse you for all necessary and reasonable
business, travel and entertainment expenses incurred by you in the course of
performing your duties for the Companies. Reimbursement shall occur upon your
submission of written vouchers or expense statements indicating the amount of
the expense, the date the expense was incurred, the place the expense was
incurred, the purpose of the expense and when entertaining any client, the
referral source, prospective client or prospective referral source, and
identification of persons (including the names of the individuals present and
their businesses).
6. Termination; Termination Benefits.
(a) JPE is free to terminate your employment with the Companies for any
reason whatsoever, with fourteen (14) days' prior written notice to you. The
termination benefits described in this paragraph 6 shall be in lieu of any
termination or severance benefits required by the policy of the Companies or
applicable law, and shall constitute your sole and exclusive rights and remedies
with respect to the termination of your employment with the Companies. The
Companies may withhold from any payments made to you under this paragraph 6 all
federal, State, city or other taxes to the extent required by law.
(b) Upon your termination without Cause (as defined below), you shall
receive the difference between (1) $600,000 minus (2) the total salary paid to
you pursuant to this Agreement prior to the last day of your employment under
this Agreement, payable as if your employment continued throughout the full
Employment Term.
(c) If JPE terminates your employment for Cause, you shall receive the pro
rata portion of your salary under Paragraph 3 through the date of your
employment.
(d) For purposes of this Agreement:
(i) Termination for "Cause" means termination for (A) your material
breach of this Agreement, (B) fraud, (C) theft, (D) any other intentional
act or omission of moral turpitude which you know or reasonably should have
known would materially injure one or more of the Companies, or (E) any
deliberate action (or omission) by you which, in the reasonable
determination of JPE, you should have known constitutes malfeasance,
dereliction of duty, insubordination or refusal to follow direct, explicit
instructions or policies of one or more of the Companies; and
(ii) "Disability" means your inability, whether mental or physical, to
render services reasonably requested by JPE consistent with your positions
for two (2) consecutive months or eight (8) weeks during any four (4) month
period. If JPE and you are unable to agree whether you are Disabled, the
question shall be decided by a physician mutually agreed upon by JPE and
you and paid by JPE, whose determination shall be final and binding. If you
and JPE are unable to agree on a physician, you and JPE shall each choose
one physician who shall mutually choose a third physician, whose
determination shall be final and binding (which decision shall not be
subject to collateral attack for any reason absent manifest error, perjury
or misconduct) and which shall be enforceable by any Michigan Circuit
Court, which such court may render a judgment thereon.
(e) Notwithstanding anything in this Agreement to the contrary, upon the
termination of your employment you shall execute a release in the form of
Exhibit I to this Agreement (the "Release"); and you shall not be entitled to
receive any termination benefits under this paragraph 6 or otherwise unless you
have executed and delivered the Release.
7. Confidential Information.
(a) You recognize the unique value of the Companies' business and its
clients and agree that at such time as your employment with the Companies
terminate, you shall not for a period of one (1) year after the date of
termination (i) engage or attempt to engage, directly or indirectly, in the
solicitation of any business competitive with the business of the Companies,
(ii) divert (directly or indirectly) or attempt to divert in any manner
whatsoever from the Companies any business, employees, representatives, agents,
clients, suppliers or customers, distributors, or (iii) influence the Companies'
business relationships with any of its customers, employees or agents.
Notwithstanding the foregoing, if your employment was terminated for reasons
other than Cause, you may engage in the activities set forth in clause
(a)(i)-(ii) (other than the diversion or attempted diversion in any manner
whatsoever from the Companies of any employees, representatives or agents), upon
the earlier of (I) your notice to the Company to end any further payments under
paragraph 6(b) (and upon such notice, the Company shall be released from any
payments due and outstanding under paragraph 6(b)), or (II) upon the full
payment to you of the termination benefits set forth in paragraph 6(b).
Additionally, you shall not, at any time, either during or subsequent to the
termination of your employment by the Companies, disclose or use, directly or
indirectly, any confidential or proprietary information of the Companies which
you gained by reason of your employment, relating to the property, business and
affairs of the Companies, including, but not limited to, information concerning
the Companies' marketing and business methods, procedures and strategies,
products, services, manufacturing techniques, operations, businesses,
representatives, suppliers, distributors, employees, customers, fees, rates,
clients, mailing lists, trade secrets, plans for the development of new
services, and plans for the expansion into new areas or markets, financial
records, data, results of operations, billings and Propertiary Rights (the
"Confidential and Proprietary Information").
(b) Because of the special and unique character of the matters addressed in
paragraph 7(a), the violation of such paragraph may cause irreparable injury to
the Companies, the amount of which shall be extremely difficult, if not
impossible to determine and may not be adequately compensable by monetary
damages alone. Accordingly, the Companies may, in addition to pursuing its other
remedies, seek to obtain equitable and injunctive relief (including, but not
limited to, preliminary and permanent injunctions) from any court of competent
jurisdiction, as may be necessary to enjoin any such violation of the foregoing
restraints, and further, no bond or other security shall be required to obtain
such relief and shall be entitled to receive from you all costs associated with
its enforcement of such paragraph (including Fees and Costs).
8. Inventions, etc.
(a) Any inventions, improvements, discoveries, formulas or processes
relating to the business or products of the Companies, which you discover or
learn while employed by the Companies, at any time, shall be the sole and
absolute property of the applicable Company, which shall be the sole and
absolute owner of all patents and other rights associated therewith. In
addition, you shall assign to the applicable Company, all right, title and
interest to any and all information and ideas relating to the business and
products of such Company, discovered or learned by you while employed by such
Company.
(b) Because of the special and unique character of the matters addressed in
paragraph 8(a), the violation of such paragraph may cause irreparable injury to
the Companies, the amount of which shall be extremely difficult, if not
impossible to determine and may not be adequately compensable by monetary
damages alone. Accordingly, the Companies may, in addition to pursuing its other
remedies, seek to obtain equitable and injunctive relief (including, but not
limited to, preliminary and permanent injunctions) from any court of competent
jurisdiction, as may be necessary to enjoin any such violation of the foregoing
restraints, and further, no bond or other security shall be required to obtain
such relief.
9. Arbitration.
(a) The arbitration procedure set forth in this paragraph 9 shall be the
sole and exclusive method for resolving and remedying monetary claims arising
out of disputes regarding this Agreement (the "Disputes"); provided that nothing
in this paragraph 9 shall prohibit a party from instituting litigation to
enforce any Final Determination (as defined below) or to obtain injunctive
relief. Except as otherwise provided in this paragraph 9 or in the Commercial
Arbitration Rules of the American Arbitration Association as in effect at the
pertinent time, the arbitration procedures and any Final Determination hereunder
shall be governed by, and shall be enforced pursuant to, the Uniform Arbitration
Act.
(b) In the event that either party asserts that there exists a Dispute,
such party shall deliver a written notice to the other party specifying the
nature of the asserted Dispute and requesting a meeting to attempt to resolve
the same. If no such resolution is reached within ten (10) business days after
such delivery of such notice, the party delivering such notice of Dispute (the
"Disputing Person") may, within forty-five (45) business days after delivery of
such notice, commence arbitration by delivering to the other party a notice of
arbitration (a "Notice of Arbitration"). Such Notice of Arbitration shall
specify the matters as to which arbitration is sought, the nature of any
Dispute, the claims of the party and shall specify the amount and nature of any
damages, if any, sought to be recovered as a result of any alleged claim, and
any other matters required by the Commercial Arbitration Rules of the American
Arbitration Association as in effect at the pertinent time to be included
therein, if any.
(c)(i) The parties shall in good faith select one arbitrator to arbitrate
the dispute who shall resolve the dispute according to the procedures set forth
in this paragraph 9.
(c)(ii) If the parties are unable to agree upon an arbitrator pursuant to
paragraph 9(c)(i) within fifteen (15) business days, then each party shall
select one arbitrator within the next fifteen (15) business days. In the event
that either party fails to select an arbitrator as provided in this paragraph
9(c)(ii), then the matter shall be resolved by the arbitrator selected by the
other party. If each party chooses an arbitrator, then those arbitrators shall
select a third independent, neutral arbitrator expert in the subject matter of
the dispute, and the three arbitrators so selected shall resolve the matter
according to the procedures set forth in this paragraph 9. If the arbitrators
selected by the parties are unable to agree on a third arbitrator within fifteen
(15) business days, after their selection, the third arbitrator shall be
selected by the President of the American Arbitration Association.
(d) The arbitration shall be conducted in Ann Arbor, Michigan, under the
Commercial Arbitration Rules of the American Arbitration Association as in
effect from time to time, except as modified by the written agreement of the
parties, to this Agreement. The arbitrator(s) shall so conduct the arbitration
that a final result, determination, finding, judgment and/or award (the "Final
Determination") shall be made or rendered as soon as practicable, but in no
event later than one hundred (100) business days after the delivery of the
Notice of Arbitration nor later than ten (10) business days following completion
of the arbitration. The Final Determination must be agreed upon and signed by
the sole arbitrator or by at least two of the three arbitrators (as applicable).
The Final Determination shall be final and binding on all parties and there
shall be no appeal from or reexamination of the Final Determination, except for
fraud, perjury, or misconduct by an arbitrator prejudicing the rights of any
party and to correct manifest clerical errors. The prevailing party or parties
shall be entitled to Fees and Costs.
(e) Judgment may be entered upon the Final Determination by any court of
competent jurisdiction.
10. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance with
the laws of the State of Michigan without regard to principles of conflicts of
law.
(b) The provisions of this Agreement shall be severable, and if any part of
any provision is held illegal, void, unreasonable in scope or otherwise
unenforceable, such provision may be changed or construed to the extent
reasonably necessary to make the provision, as so changed, legal, valid and
binding. If any provision of this Agreement is held illegal, void or invalid in
its entirety, the remaining provisions of this Agreement shall not in any way be
affected or impaired but shall remain binding in accordance with their terms.
(c) There is not, nor shall there be, unless in writing signed by both of
us, any express or implied agreement as to your continued employment with any of
the Companies after the Employment Term, as applicable, and any employment after
such Term shall be "at will" (i.e., terminable by either of us at any time with
or without cause or notice), with your position, salary, duties, and benefits to
be as we may mutually determine.
(d) This Agreement is personal to you and cannot be sold, assigned or
pledged by you; this Agreement may be assigned by JPE, provided that no such
assignment will relieve JPE of its obligations under this Agreement.
(e) Upon termination of your employment with JPE for any reason, you shall
immediately deliver and return to the Companies all memoranda, notes, records,
agreements, documents and other materials constituting Confidential and
Proprietary Information.
(f) This Agreement, the Investment Agreement and the Related Agreements (as
defined in the Investment Agreement), constitute the entire agreement between
the parties in connection with the subject matter addressed by this Agreement,
supercedes any and all other agreements, either oral or written, between the
parties with respect to the subject matter so addressed, and this Agreement may
not be modified orally, and no modification shall be effective unless in writing
and signed by JPE and you.
(g) This Agreement may be executed in counterparts, both of which together
shall be deemed to be an original of this Agreement.
(i) Paragraphs 6-10 shall survive the expiration of the Employment Term.
Again, we are pleased to offer you the employment and consultant positions
and hope to receive a positive response from you. Please indicate your
acceptance of this Agreement by dating and signing below.
Sincerely,
JPE, INC.,
a Michigan corporation
By: /s/ David L. Treadwell
---------------------------------
Name: David L. Treadwell
Its: Chairman
Dated: May 27, 1999
Accepted and Agreed to:
May 27, 1999
/s/ Richard R. Chrysler
- -----------------------------
Richard Chrysler
EXHIBIT I
SEPARATION AGREEMENT
AND RELEASE OF ALL LIABILITY
This Separation Agreement and Release of All Liability (this
"Agreement") is made on [________], between (i) Richard Chrysler ("Chrysler")
and (ii) JPE, Inc., a Michigan corporation. As used in this agreement, "JPE"
means JPE, Inc., its predecessors, successors, Subsidiaries, Divested
Subsidiaries, ASC, Kojaian, assigns, parents, subsidiaries, divisions and/or
affiliates (whether incorporated or unincorporated), and all of the past and
present directors, officers, trustees, employees and agents (in their individual
and representative capacities) of each and any and all persons acting by,
through, or in concert with any of them. All capitalized terms not defined in
this Agreement shall have the meanings given them in the Investment Agreement
dated April 28, 1999 among JPE, Inc., ASC Holdings LLC, a Michigan limited
liability company, and Kojaian Holdings LLC, a Michigan limited liability (the
"Investment Agreement"). This Agreement is being delivered pursuant to paragraph
6(e) of the Employment Agreement.
RECITALS
A. Chrysler has worked in the employ of JPE in various capacities.
B. Chrysler's employment with JPE terminated on [____________] (the
"Termination Date").
C. In consideration of certain payments to be made, and benefits to be
provided, by JPE to Chrysler, Chrysler has agreed to release JPE from any
liability to Chrysler.
Therefore, Chrysler and JPE agree as follows:
1. Chrysler resigned from all his positions with JPE, effective on the
Termination Date.
2. As Chrysler's sole and exclusive consideration, payments and benefits
with respect to the termination of his employment, he shall receive (a)
$________, payable as provided in paragraph 6(a) of the Employment Agreement,
plus (b) $1,000.00, which he acknowledges is sufficient consideration.
3. For the consideration described in this Agreement, Chrysler hereby fully
and forever releases, acquits and discharges JPE from all suits, claims or
actions, or any pending actions, claims or suits, in law or in equity, against
JPE on account of any employment related action or cause of action based upon
any facts, whether known or unknown, including all claims for wrongful
discharge, breach of contract, violation of the penal statutes, negligence of
any kind, intentional infliction of emotional distress, defamation and/or
discrimination on account of sex, age, race, disability, religion or nationality
which has or could have been alleged under any Law, including: Title VII of the
Civil Rights Act of 1964; the Age Discrimination in Employment Act; the
Rehabilitation Act of 1973; the Older Workers Benefit Protection Act; the
Americans With Disabilities Act; the Family and Medical Leave Act of 1993; and
all analogous Michigan Laws, including the Elliot-Larsen Civil Rights Act; and
any and all amendments to any of the foregoing. Chrysler is completely able to
perform the duties of his position at JPE, and has no disability recognized
under the Workers' Compensation Act or otherwise.
4. Except for actions or suits based upon breaches of the terms of this
Agreement, Chrysler hereby shall fully and forever refrain from commencing any
suits, claims or actions, or prosecuting any pending actions, claims or suits,
in law or in equity, against JPE on account of any employment related action or
cause of action based upon any facts, whether known or unknown, including all
claims for wrongful discharge, breach of contract, violation of the penal
statutes, negligence of any kind, intentional infliction of emotional distress,
defamation and/or discrimination on account of sex, age, race, handicap or
nationality which has or could have been alleged under any Law, including: Title
VII of the Civil Rights Act of 1964; the Age Discrimination in Employment Act;
the Rehabilitation Act of 1973; the Older Workers Benefit Protection Act; the
Americans With Disabilities Act; the Family and Medical Leave Act of 1993; and
all analogous Michigan Laws including the Elliot-Larsen Civil Rights Act; and
any and all amendments to any of the foregoing.
5. Chrysler shall maintain for all time as confidential, all Confidential
and Proprietary Information of JPE.
6. To the fullest extent permitted by Law, Chrysler shall not assist, aid
or communicate with, either orally or in writing, in any manner whatsoever, any
other person, corporation, firm, partnership or other entity, in or about any
action, cause of action, suit, claim, proceeding, litigation or other matter
against JPE unless required by lawfully issued subpoena power or court order. In
the event Chrysler is served with a subpoena or is required by court order to
testify in any type of proceeding involving JPE, Chrysler shall immediately
notify JPE by providing written notice within three (3) days in the manner and
to the addresses for ASC, Kojaian and JPE set forth for the delivery of notices
in the Investment Agreement.
7. This Agreement, which shall be effective and irrevocable immediately
upon the time limits described herein, reflects the entire agreement of Chrysler
and JPE relative to the subject matter hereof, and supersedes any previous
employment, consulting or similar agreement and other prior or contemporaneous
oral or written understandings, statements, representations or promises.
8. Chrysler understands that by this Agreement he is waiving any rights he
may presently have under the Age Discrimination in Employment Act, as amended.
Chrysler enters into this Agreement freely and voluntarily without any duress or
coercion, and after he has carefully and completely read all of the terms and
provisions of this Agreement. He has been advised to consult with legal counsel
and understands he shall be allowed to consider this Agreement for 21 days prior
to signing it. Chrysler understands that this Agreement shall not become
effective for seven days following the date it is signed, during which time he
may revoke this Agreement by written notice to ASC, Kojaian and JPE at the
addresses and in the manner set forth in the Investment Agreement. Chrysler
understands that payments to be made to him as provided in this Agreement shall
not commence until the expiration of such seven days.
9. Arbitration.
(a) The arbitration procedure set forth in this paragraph 9 shall be the
sole and exclusive method for resolving and remedying monetary claims arising
out of disputes regarding this Agreement (the "Disputes"); provided that nothing
in this paragraph 9 shall prohibit a party from instituting litigation to
enforce any Final Determination (as defined below) or to obtain injunctive
relief. Except as otherwise provided in this paragraph 9 or in the Commercial
Arbitration Rules of the American Arbitration Association as in effect at the
pertinent time, the arbitration procedures and any Final Determination hereunder
shall be governed by, and shall be enforced pursuant to, the Uniform Arbitration
Act.
(b) In the event that either party asserts that there exists a Dispute,
such party shall deliver a written notice to the other party specifying the
nature of the asserted Dispute and requesting a meeting to attempt to resolve
the same. If no such resolution is reached within ten (10) business days after
such delivery of such notice, the party delivering such notice of Dispute (the
"Disputing Person") may, within forty-five (45) business days after delivery of
such notice, commence arbitration by delivering to the other party a notice of
arbitration (a "Notice of Arbitration"). Such Notice of Arbitration shall
specify the matters as to which arbitration is sought, the nature of any
Dispute, the claims of the party and shall specify the amount and nature of any
damages, if any, sought to be recovered as a result of any alleged claim, and
any other matters required by the Commercial Arbitration Rules of the American
Arbitration Association as in effect at the pertinent time to be included
therein, if any.
(c)(i) The parties shall in good faith select one arbitrator to arbitrate
the dispute who shall resolve the dispute according to the procedures set forth
in this paragraph 9.
(c)(ii) If the parties are unable to agree upon an arbitrator pursuant to
paragraph 9(c)(i) within fifteen (15) business days, then each party shall
select one arbitrator within the next fifteen (15) business days. In the event
that either party fails to select an arbitrator as provided in this paragraph
9(c)(ii), then the matter shall be resolved by the arbitrator selected by the
other party. If each party chooses an arbitrator, then those arbitrators shall
select a third independent, neutral arbitrator expert in the subject matter of
the dispute, and the three arbitrators so selected shall resolve the matter
according to the procedures set forth in this paragraph 9. If the arbitrators
selected by the parties are unable to agree on a third arbitrator within fifteen
(15) business days, after their selection, the third arbitrator shall be
selected by the President of the American Arbitration Association.
(d) The arbitration shall be conducted in Ann Arbor, Michigan, under the
Commercial Arbitration Rules of the American Arbitration Association as in
effect from time to time, except as modified by the written agreement of the
parties, to this Agreement. The arbitrator(s) shall so conduct the arbitration
that a final result, determination, finding, judgment and/or award (the "Final
Determination") shall be made or rendered as soon as practicable, but in no
event later than one hundred (100) business days after the delivery of the
Notice of Arbitration nor later than ten (10) business days following completion
of the arbitration. The Final Determination must be agreed upon and signed by
the sole arbitrator or by at least two of the three arbitrators (as applicable).
The Final Determination shall be final and binding on all parties and there
shall be no appeal from or reexamination of the Final Determination, except for
fraud, perjury, or misconduct by an arbitrator prejudicing the rights of any
party and to correct manifest clerical errors. The prevailing party or parties
shall be entitled to Fees and Costs.
(e) Judgment may be entered upon the Final Determination by any court of
competent jurisdiction.
10. Nothing in this Agreement shall be construed as an admission of
liability by JPE of any wrongdoing and all liability is hereby expressly denied
by JPE.
11. Chrysler shall not disparage JPE or articulate in any manner any
negative fact or opinion concerning JPE.
12. If any provision of this Agreement is deemed invalid or illegal, all
other provisions shall remain in full force and effect.
13. This Agreement shall be construed in accordance with and governed by
the Laws of the State of Michigan.
--------------------------------
Richard Chrysler
Date: --------------------------
JPE, Inc.,
a Michigan corporation
By:
-----------------------------
Name:
--------------------------
Title:
--------------------------
Date:
--------------------------
TERMINATION AGREEMENT
AND RELEASE OF ALL LIABILITY
This Termination Agreement and Release of All Liability (this
"Agreement") is made on May 27, 1999, between (i) Richard Chrysler ("Chrysler")
and (ii) JPE, Inc., a Michigan corporation. As used in this agreement, "JPE"
means JPE, Inc., its predecessors, successors, Subsidiaries, Divested
Subsidiaries, assigns, parents, subsidiaries, divisions and/or affiliates
(whether incorporated or unincorporated), and all of the past and present
directors, officers, trustees, employees and agents (in their individual and
representative capacities) of each and any and all persons acting by, through,
or in concert with any of them. All capitalized terms not defined in this
Agreement shall have the meanings given them in the Investment Agreement dated
April 28, 1999 among JPE, Inc., ASC Holdings LLC, a Michigan limited liability
company, and Kojaian Holdings LLC, a Michigan limited liability (the "Investment
Agreement"). This Agreement is being delivered pursuant to Section 6.2(e) of the
Investment Agreement.
RECITALS
A. Chrysler has worked in the employ of JPE as President and Chief
Executive Officer effective as of November 9, 1998, pursuant to employment terms
approved by the Board of Directors as reflected in their Minutes of November 6,
1998 (the "Original Employment Agreement"). Pursuant to the Original Employment
Agreement, Chrysler has been granted certain stock options to purchase 200,000
Common Shares (whether or not exercisable, the "Options").
B. Pursuant to the Investment Agreement, Chrysler and JPE have agreed to
enter into the Employment Agreement on the Closing Date. The Investment
Agreement also requires, as a condition precedent, among other things, the
delivery of this Agreement. Accordingly, Chrysler and JPE have, pursuant to the
Investment Agreement, agreed to terminate the Original Employment Agreement and
the Options on the terms set forth in this Agreement. Each of JPE and Chrysler
agree that the entering into this Agreement and the Employment Agreement and
consummating the Transaction is in the mutual best interests of JPE and
Chrysler.
C. In consideration of the foregoing and the consideration provided below,
Chrysler has agreed to release JPE from any liability to Chrysler, including any
liability arising as a result of the termination of the Original Employment
Agreement and the Options.
Therefore, Chrysler and JPE agree as follows:
1. Chrysler and JPE hereby render null and void the Original Employment
Agreement and the Options (the "Termination").
2. As Chrysler's sole and exclusive consideration, payments and benefits
with respect to the Termination, subject to the terms and conditions of the
Investment Agreement, (a) JPE shall consummate the Transaction, (b) JPE shall
enter into the Employment Agreement and, pursuant to the terms of the Employment
Agreement, be obligated to pay his salary thereunder, and (c) JPE shall pay
Chrysler $1,000.00, which he acknowledges is sufficient consideration.
3. For the consideration described in this Agreement, Chrysler hereby fully
and forever releases, acquits and discharges JPE from all suits, claims or
actions, or any pending actions, claims or suits, in law or in equity, against
JPE on account of the Termination or any other employment related action or
cause of action based upon any facts existing on or prior to the Closing Date,
whether known or unknown, including all claims for wrongful discharge, breach of
contract, violation of the penal statutes, negligence of any kind, intentional
infliction of emotional distress, defamation and/or discrimination on account of
sex, age, race, disability, religion or nationality which has or could have been
alleged under any Law, including: Title VII of the Civil Rights Act of 1964; the
Age Discrimination in Employment Act; the Rehabilitation Act of 1973; the Older
Workers Benefit Protection Act; the Americans With Disabilities Act; the Family
and Medical Leave Act of 1993; and all analogous Michigan Laws, including the
Elliot-Larsen Civil Rights Act; and any and all amendments to any of the
foregoing. Chrysler is completely able to perform the duties of his position at
JPE, and has no disability recognized under the Workers' Compensation Act or
otherwise.
4. Except for actions or suits based upon breaches of the terms of this
Agreement, Chrysler hereby shall fully and forever refrain from commencing any
suits, claims or actions, or prosecuting any pending actions, claims or suits,
in law or in equity, against JPE on account of the Termination or any other
employment related action or cause of action based upon any facts existing on or
prior to the Closing Date, whether known or unknown, including all claims for
wrongful discharge, breach of contract, violation of the penal statutes,
negligence of any kind, intentional infliction of emotional distress, defamation
and/or discrimination on account of sex, age, race, handicap or nationality
which has or could have been alleged under any Law, including: Title VII of the
Civil Rights Act of 1964; the Age Discrimination in Employment Act; the
Rehabilitation Act of 1973; the Older Workers Benefit Protection Act; the
Americans With Disabilities Act; the Family and Medical Leave Act of 1993; and
all analogous Michigan Laws including the Elliot-Larsen Civil Rights Act; and
any and all amendments to any of the foregoing.
5. Chrysler shall maintain for two years following the date of this
Agreement as confidential, all Confidential and Proprietary Information of JPE.
6. To the fullest extent permitted by Law, Chrysler shall not assist, aid
or communicate with, either orally or in writing, in any manner whatsoever, any
other person, corporation, firm, partnership or other entity, in or about any
action, cause of action, suit, claim, proceeding, litigation or other matter
against JPE unless required by lawfully issued subpoena power or court order. In
the event Chrysler is served with a subpoena or is required by court order to
testify in any type of proceeding involving JPE, Chrysler shall immediately
notify JPE by providing written notice within three (3) days in the manner and
to the addresses for ASC, Kojaian and JPE set forth for the delivery of notices
in the Investment Agreement.
7. This Agreement, which shall be effective and irrevocable immediately
upon the time limits described herein, reflects the entire agreement of Chrysler
and JPE relative to the subject matter hereof, and supersedes any previous
employment, consulting or similar agreement and other prior or contemporaneous
oral or written understandings, statements, representations or promises;
provided, however, that the parties acknowledge that Chrysler and JPE, Inc. have
today entered into the Employment Agreement.
8. Chrysler understands that by this Agreement he is waiving any rights he
may presently have under the Age Discrimination in Employment Act, as amended.
Chrysler enters into this Agreement freely and voluntarily without any duress or
coercion, and after he has carefully and completely read all of the terms and
provisions of this Agreement. He has been advised to consult with legal counsel
and understands he shall be allowed to consider this Agreement for 21 days prior
to signing it. Chrysler understands that this Agreement shall not become
effective for seven days following the date it is signed, during which time he
may revoke this Agreement by written notice to ASC, Kojaian and JPE at the
addresses and in the manner set forth in the Investment Agreement. Chrysler
understands that payments to be made to him as provided in this Agreement shall
not commence until the expiration of such seven days.
9. Arbitration.
(a) The arbitration procedure set forth in this paragraph 9 shall be the
sole and exclusive method for resolving and remedying monetary claims arising
out of disputes regarding this Agreement (the "Disputes"); provided that nothing
in this paragraph 9 shall prohibit a party from instituting litigation to
enforce any Final Determination (as defined below) or to obtain injunctive
relief. Except as otherwise provided in this paragraph 9 or in the Commercial
Arbitration Rules of the American Arbitration Association as in effect at the
pertinent time, the arbitration procedures and any Final Determination hereunder
shall be governed by, and shall be enforced pursuant to, the Uniform Arbitration
Act.
(b) In the event that either party asserts that there exists a Dispute,
such party shall deliver a written notice to the other party specifying the
nature of the asserted Dispute and requesting a meeting to attempt to resolve
the same. If no such resolution is reached within ten (10) business days after
such delivery of such notice, the party delivering such notice of Dispute (the
"Disputing Person") may, within forty-five (45) business days after delivery of
such notice, commence arbitration by delivering to the other party a notice of
arbitration (a "Notice of Arbitration"). Such Notice of Arbitration shall
specify the matters as to which arbitration is sought, the nature of any
Dispute, the claims of the party and shall specify the amount and nature of any
damages, if any, sought to be recovered as a result of any alleged claim, and
any other matters required by the Commercial Arbitration Rules of the American
Arbitration Association as in effect at the pertinent time to be included
therein, if any.
(c)(i) The parties shall in good faith select one arbitrator to arbitrate
the dispute who shall resolve the dispute according to the procedures set forth
in this paragraph 9.
(c)(ii) If the parties are unable to agree upon an arbitrator pursuant to
paragraph 9(c)(i) within fifteen (15) business days, then each party shall
select one arbitrator within the next fifteen (15) business days. In the event
that either party fails to select an arbitrator as provided in this paragraph
9(c)(ii), then the matter shall be resolved by the arbitrator selected by the
other party. If each party chooses an arbitrator, then those arbitrators shall
select a third independent, neutral arbitrator expert in the subject matter of
the dispute, and the three arbitrators so selected shall resolve the matter
according to the procedures set forth in this paragraph 9. If the arbitrators
selected by the parties are unable to agree on a third arbitrator within fifteen
(15) business days, after their selection, the third arbitrator shall be
selected by the President of the American Arbitration Association.
(d) The arbitration shall be conducted in Ann Arbor, Michigan, under the
Commercial Arbitration Rules of the American Arbitration Association as in
effect from time to time, except as modified by the written agreement of the
parties, to this Agreement. The arbitrator(s) shall so conduct the arbitration
that a final result, determination, finding, judgment and/or award (the "Final
Determination") shall be made or rendered as soon as practicable, but in no
event later than one hundred (100) business days after the delivery of the
Notice of Arbitration nor later than ten (10) business days following completion
of the arbitration. The Final Determination must be agreed upon and signed by
the sole arbitrator or by at least two of the three arbitrators (as applicable).
The Final Determination shall be final and binding on all parties and there
shall be no appeal from or reexamination of the Final Determination, except for
fraud, perjury, or misconduct by an arbitrator prejudicing the rights of any
party and to correct manifest clerical errors. The prevailing party or parties
shall be entitled to Fees and Costs.
(e) Judgment may be entered upon the Final Determination by any court of
competent jurisdiction.
10. If any provision of this Agreement is deemed invalid or illegal, all
other provisions shall remain in full force and effect.
11. This Agreement shall be construed in accordance with and governed by
the Laws of the State of Michigan.
/s/ Richard R. Chrysler
------------------------------------
Richard Chrysler
Date:
-------------------------------
JPE, Inc.,
a Michigan corporation
By: /s/ Karen A. Radtke
--------------------------------
Name: Karen A. Radtke
Title: Secretary and Treasurer
Date:
-------------------------------
TERMINATION AGREEMENT
AND RELEASE OF ALL LIABILITY
This Termination Agreement and Release of All Liability (this
"Agreement") is made on May 27, 1999 between (i) Richard Eidswick ("Eidswick")
and (ii) JPE, Inc., a Michigan corporation. As used in this agreement, "JPE"
means JPE, Inc., its predecessors, successors, Subsidiaries, Divested
Subsidiaries, assigns, parents, subsidiaries, divisions and/or affiliates
(whether incorporated or unincorporated), and all of the past and present
directors, officers, trustees, consultants and agents (in their individual and
representative capacities) of each and any and all persons acting by, through,
or in concert with any of them. All capitalized terms not defined in this
Agreement shall have the meanings given them in the Investment Agreement dated
April 28, 1999 among JPE, Inc., ASC Holdings LLC, a Michigan limited liability
company, and Kojaian Holdings LLC, a Michigan limited liability (the "Investment
Agreement"). This Agreement is being delivered pursuant to Section 6.2(e) of the
Investment Agreement.
RECITALS
A. Eidswick has provided various consulting services to JPE pursuant to a
consulting agreement dated November 9, 1998 between Eidswick and JPE, Inc. (the
"Consulting Agreement"). In addition, Eidswick and JPE are parties to a Stock
Option Agreement dated November 9, 1998 (the "Stock Option Agreement") by which
Eidswick was granted the option to purchase 50,000 Common Shares under certain
circumstances (whether or not currently exercisable, the "Options").
B. On the date of this Agreement, JPE is Closing the Investment Agreement
that requires, as a condition precedent, the delivery of this Agreement. Each of
Eidswick and JPE agree that JPE's Closing of the Investment Agreement is in the
mutual best interests of JPE and Eidswick. Accordingly, each of JPE and
Eidswick, pursuant to the Investment Agreement, have agreed to terminate the
Consulting Agreement, the Stock Option Agreement and the Options on the terms
set forth in this Agreement.
C. In consideration of the foregoing and for the consideration provided
below, Eidswick has agreed to release JPE from any liability to Eidswick,
including any liability arising as a result of the termination of the Consulting
Agreement, the Stock Option Agreement and the Options.
Therefore, Eidswick and JPE agree as follows:
1. Eidswick and JPE hereby render null and void the Consulting Agreement,
the Stock Option Agreement and the Options (the "Termination").
2. As Eidswick's sole and exclusive consideration, payments and benefits
with respect to the Termination (a) subject to the terms and conditions of the
Investment Agreement, JPE shall consummate the Transaction, and (b) JPE shall
pay Eidswick $1,000.00, which he acknowledges is sufficient consideration.
3. For the consideration described in this Agreement, Eidswick hereby fully
and forever releases, acquits and discharges JPE from all suits, claims or
actions, or any pending actions, claims or suits, in law or in equity, against
JPE on account of the Termination or any other consulting related action or
cause of action based upon any facts existing on or prior to the Closing Date,
whether known or unknown, including all claims for wrongful discharge, breach of
contract, violation of the penal statutes, negligence of any kind, intentional
infliction of emotional distress, defamation and/or discrimination on account of
sex, age, race, disability, religion or nationality which has or could have been
alleged under any Law, including: Title VII of the Civil Rights Act of 1964; the
Age Discrimination in Employment Act; the Rehabilitation Act of 1973; the Older
Workers Benefit Protection Act; the Americans With Disabilities Act; the Family
and Medical Leave Act of 1993; and all analogous Michigan Laws, including the
Elliot-Larsen Civil Rights Act; and any and all amendments to any of the
foregoing. Eidswick is completely able to perform the duties under the
Consulting Agreement, and has no disability recognized under the Workers'
Compensation Act or otherwise.
4. Except for actions or suits based upon breaches of the terms of this
Agreement, Eidswick hereby shall fully and forever refrain from commencing any
suits, claims or actions, or prosecuting any pending actions, claims or suits,
in law or in equity, against JPE on account of the Termination or any other
consulting related action or cause of action based upon any facts existing on or
prior to the Closing Date, whether known or unknown, including all claims for
wrongful discharge, breach of contract, violation of the penal statutes,
negligence of any kind, intentional infliction of emotional distress, defamation
and/or discrimination on account of sex, age, race, handicap or nationality
which has or could have been alleged under any Law, including: Title VII of the
Civil Rights Act of 1964; the Age Discrimination in Employment Act; the
Rehabilitation Act of 1973; the Older Workers Benefit Protection Act; the
Americans With Disabilities Act; the Family and Medical Leave Act of 1993; and
all analogous Michigan Laws including the Elliot-Larsen Civil Rights Act; and
any and all amendments to any of the foregoing.
5. Eidswick shall maintain for all time as confidential, all Confidential
and Proprietary Information of JPE (as defined in the Employment Agreement).
6. To the fullest extent permitted by Law, Eidswick shall not assist, aid
or communicate with, either orally or in writing, in any manner whatsoever, any
other person, corporation, firm, partnership or other entity, in or about any
action, cause of action, suit, claim, proceeding, litigation or other matter
against JPE unless required by lawfully issued subpoena power or court order. In
the event Eidswick is served with a subpoena or is required by court order to
testify in any type of proceeding involving JPE, Eidswick shall immediately
notify JPE by providing written notice within three (3) days in the manner and
to the addresses for ASC, Kojaian and JPE set forth for the delivery of notices
in the Investment Agreement; provided, however, notwithstanding the foregoing,
that nothing in this paragraph 6 shall preclude Eidswick from (a) fully
complying with and fulfilling his duties and obligations under Section 3.3 of
the Investment Agreement or (b) participating in any judgment, settlement or
award granted to members of a class action lawsuit by or for the benefit of the
shareholders of JPE, Inc. provided that Eidswick otherwise participates in such
lawsuit solely as a passive member of such class.
7. This Agreement, which shall be effective and irrevocable immediately
upon the time limits described herein, reflects the entire agreement of Eidswick
and JPE relative to the subject matter hereof (i.e., regarding his options and
consulting) and supersedes any previous employment, consulting or similar
agreement and other prior or contemporaneous oral or written understandings,
statements, representations or promises.
8. Nothing in this Agreement shall be construed as an admission of
liability by JPE of any wrongdoing and all liability is hereby expressly denied
by JPE.
9. Arbitration.
(a) The arbitration procedure set forth in this paragraph 9 shall be the
sole and exclusive method for resolving and remedying monetary claims arising
out of disputes regarding this Agreement (the "Disputes"); provided that nothing
in this paragraph 9 shall prohibit a party from instituting litigation to
enforce any Final Determination (as defined below) or to obtain injunctive
relief. Except as otherwise provided in this paragraph 9 or in the Commercial
Arbitration Rules of the American Arbitration Association as in effect at the
pertinent time, the arbitration procedures and any Final Determination hereunder
shall be governed by, and shall be enforced pursuant to, the Uniform Arbitration
Act.
(b) In the event that either party asserts that there exists a Dispute,
such party shall deliver a written notice to the other party specifying the
nature of the asserted Dispute and requesting a meeting to attempt to resolve
the same. If no such resolution is reached within ten (10) business days after
such delivery of such notice, the party delivering such notice of Dispute (the
"Disputing Person") may, within forty-five (45) business days after delivery of
such notice, commence arbitration by delivering to the other party a notice of
arbitration (a "Notice of Arbitration"). Such Notice of Arbitration shall
specify the matters as to which arbitration is sought, the nature of any
Dispute, the claims of the party and shall specify the amount and nature of any
damages, if any, sought to be recovered as a result of any alleged claim, and
any other matters required by the Commercial Arbitration Rules of the American
Arbitration Association as in effect at the pertinent time to be included
therein, if any.
(c)(i) The parties shall in good faith select one arbitrator to arbitrate
the dispute who shall resolve the dispute according to the procedures set forth
in this paragraph 9.
(c)(ii) If the parties are unable to agree upon an arbitrator pursuant to
paragraph 9(c)(i) within fifteen (15) business days, then each party shall
select one arbitrator within the next fifteen (15) business days. In the event
that either party fails to select an arbitrator as provided in this paragraph
9(c)(ii), then the matter shall be resolved by the arbitrator selected by the
other party. If each party chooses an arbitrator, then those arbitrators shall
select a third independent, neutral arbitrator expert in the subject matter of
the dispute, and the three arbitrators so selected shall resolve the matter
according to the procedures set forth in this paragraph 9. If the arbitrators
selected by the parties are unable to agree on a third arbitrator within fifteen
(15) business days, after their selection, the third arbitrator shall be
selected by the President of the American Arbitration Association.
(d) The arbitration shall be conducted in Ann Arbor, Michigan, under the
Commercial Arbitration Rules of the American Arbitration Association as in
effect from time to time, except as modified by the written agreement of the
parties, to this Agreement. The arbitrator(s) shall so conduct the arbitration
that a final result, determination, finding, judgment and/or award (the "Final
Determination") shall be made or rendered as soon as practicable, but in no
event later than one hundred (100) business days after the delivery of the
Notice of Arbitration nor later than ten (10) business days following completion
of the arbitration. The Final Determination must be agreed upon and signed by
the sole arbitrator or by at least two of the three arbitrators (as applicable).
The Final Determination shall be final and binding on all parties and there
shall be no appeal from or reexamination of the Final Determination, except for
fraud, perjury, or misconduct by an arbitrator prejudicing the rights of any
party and to correct manifest clerical errors. The prevailing party or parties
shall be entitled to Fees and Costs.
(e) Judgment may be entered upon the Final Determination by any court of
competent jurisdiction.
(f) Notwithstanding anything to the contrary in this Agreement, any dispute
with respect to Eidswick's actions (or inaction) under Section 3.3 of the
Investment Agreement shall not be subject to the arbitration requirements of
this Section 9.
10. If any provision of this Agreement is deemed invalid or illegal, all
other provisions shall remain in full force and effect.
11. This Agreement shall be construed in accordance with and governed by
the Laws of the State of Michigan.
/s/ Richard P. Eidswick
-------------------------------
Richard Eidswick
Date:
--------------------------
JPE, Inc.,
a Michigan corporation
By: /s/ Richard R. Chrysler
---------------------------
Name: Richard R. Chrysler
Title: President
Date:
--------------------------
GMAC Business Credit
300 Galleria Officentre, Suite 110, Southfield, MI 48034
Telephone: 248-356-4622
Karen Radtke Comerica Bank
Plastic Trim, Inc. One Detroit Center
c/o JPE, Inc. Detroit, Michigan 48226
775 Technology Drive, Suite 200
Ann Arbor, Michigan 48108
Re: Payoff of Obligations of Plastic Trim, Inc. ("Borrower") to GMAC Business
Credit, LLC ("Lender")
Dear Ladies and Gentlemen:
This letter is in response to your request for a payoff balance of the
Borrower's obligations to Lender. We understand that Borrower will be paying off
all of its obligations to Lender.
If we receive (1) an executed copy of this letter from you, and (2) a wire
transfer in the amount set forth below, then this letter constitutes Lender's
agreement that this amount will satisfy all of the Borrower's indebtedness and
obligations to Lender. The payoff amount is $13,709,464.00 (the "Payoff
Amount"), which assumes no borrowings or repayments after 4:00 p.m. E.S.T. on
May 26, 1999. This amount consists of the following:
Principal $13,312,138.75
Interest 77,770.25
Facility Fee 52,500.00
Service Fee (May) 3,500.00
Reserve for Unpaid Legal Fees and Costs 3,000.00
Early Termination Fee (reduced per
agreement) 260,555.00
Total $13,709,464.00
The Payoff amount must be received by Lender by transfer in immediately
available funds by 1:00 p.m. E.S.T. on May 27, 1999, to the following account:
Bank One, Michigan
Detroit, Michigan
ABA #
Account #
Reference: Plastic Trim, Inc.
The financing arrangement with Borrower is such that the above payoff
balance may not represent all amounts owing to Lender because of adjustments for
returned items, insufficient funds checks, partial credits and provisional
credits taken into consideration in calculating the Payoff Amount (collectively,
the "Adjustments"). Likewise, we have included a $3,000 reserve for unpaid legal
fees and costs; if actual legal fees and costs are less than $3,000, we will
remit the balance of the reserve to you within the next 60 days.
Because of the possibility of Adjustments, Lender and Comerica Bank agree
to indemnify Lender from any and all losses or deficiencies caused by an
Adjustment, and to agree to pay, and hold Lender harmless with respect to all
Adjustments, but Comerica's obligation to Lender with respect to Adjustments is
limited to Adjustments occurring on or before June 15, 1999. Borrower agrees
that any such payments made by Comerica Bank may be charged to its loan account
with Comerica.
Upon receipt of the Payoff Amount, Lender will deliver to Comerica UCC-3
termination statements to terminate all financing statements filed against
Borrower or its assets, together with a "Satisfaction of Post-Petition Loans" to
be filed with the Bankruptcy Court.
The facsimile or other electronically transmitted copy of this letter is to
be treated the same as an originally executed copy of this letter.
This letter agreement may be executed in counterparts, each of which shall
be deemed to constitute an original document. If you have any questions
concerning this matter, please feel free to contact me.
Very truly ours,
GMAC Business Credit, LLC
By: /s/ Mark R. Matheson
---------------------------
Name: Mark R. Matheson
Title: Vice President
Agreed to and accepted by: Agreed to and accepted by:
Plastic Trim, Inc. Comerica Bank
By: /s/ Richard R. Chrysler By: /s/ Richard S. Arceci
-------------------------- --------------------------
Name: Richard R. Chrysler Name: Richard S. Arceci
Title: President Title: President
GMAC Business Credit
300 Galleria Officentre, Suite 110, Southfield, MI 48034
Telephone: 248-356-4622
Karen Radtke Comerica Bank
Starboard Industries, Inc. One Detroit Center
c/o JPE, Inc. Detroit, Michigan 48226
775 Technology Drive, Suite 200
Ann Arbor, Michigan 48108
Re: Payoff of Obligations of Starboard Industries, Inc. ("Borrower") to GMAC
Business Credit, LLC ("Lender")
Dear Ladies and Gentlemen:
This letter is in response to your request for a payoff balance of the
Borrower's obligations to Lender. We understand that Borrower will be paying off
all of its obligations to Lender.
If we receive (1) an executed copy of this letter from you, and (2) a wire
transfer in the amount set forth below, then this letter constitutes Lender's
agreement that this amount will satisfy all of the Borrower's indebtedness and
obligations to Lender. The payoff amount is $3,102,733.97 (the "Payoff Amount"),
which assumes no borrowings or repayments after 4:00 p.m. E.S.T. on May 26,
1999. This amount consists of the following:
Principal $2,993,294.57
Interest 15,638.40
Facility Fee 15,000.00
Service Fee (May) 1,000.00
Reserve for Unpaid Legal Fees and Costs 3,000.00
Early Termination Fee (reduced per
agreement) 74,445.00
Total $3,102,377.97
The Payoff amount must be received by Lender by transfer in immediately
available funds by 1:00 p.m. E.S.T. on May 27, 1999, to the following account:
Bank One, Michigan
Detroit, Michigan
ABA #
Account #
Reference: Starboard Industries, Inc.
The financing arrangement with Borrower is such that the above payoff
balance may not represent all amounts owing to Lender because of adjustments for
returned items, insufficient funds checks, partial credits and provisional
credits taken into consideration in calculating the Payoff Amount (collectively,
the "Adjustments"). Likewise, we have included a $3,000 reserve for unpaid legal
fees and costs; if actual legal fees and costs are less than $3,000, we will
remit the balance of the reserve to you within the next 60 days.
Because of the possibility of Adjustments, Lender and Comerica Bank agree
to indemnify Lender from any and all losses or deficiencies caused by an
Adjustment, and to agree to pay, and hold Lender harmless with respect to all
Adjustments, but Comerica's obligation to Lender with respect to Adjustments is
limited to Adjustments occurring on or before June 15, 1999. Borrower agrees
that any such payments made by Comerica Bank may be charged to its loan account
with Comerica.
Upon receipt of the Payoff Amount, Lender will deliver to Comerica UCC-3
termination statements to terminate all financing statements filed against
Borrower or its assets, together with a "Satisfaction of Post-Petition Loans" to
be filed with the Bankruptcy Court.
The facsimile or other electronically transmitted copy of this letter is to
be treated the same as an originally executed copy of this letter.
This letter agreement may be executed in counterparts, each of which shall
be deemed to constitute an original document. If you have any questions
concerning this matter, please feel free to contact me.
Very truly ours,
GMAC Business Credit, LLC
By: /s/ Mark R. Matheson
--------------------------------
Name: Mark R. Matheson
Title: Vice President
Agreed to and accepted by: Agreed to and accepted by:
Starboard Industries, Inc. Comerica Bank
By: /s/ Richard R. Chrysler By: /s/ Richard S. Arceci
--------------------------- --------------------------
Name: Richard R. Chrysler Name: Richard S. Arceci
Title: President Title: President