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EXHIBIT 10.71
ADVANCE FORMULA AGREEMENT
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As of February 7, 2001, 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:
$33,000,000 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, without duplication,
of:
(a) Eighty five percent (85%) of their Eligible Accounts, as defined
below, with respect to which the Account Debtor is an Account Debtor
listed on attached Schedule 1 ("OEM Account Debtors"); and
(b) Eighty percent (80%) of their Eligible Accounts with respect to which
the Account Debtor is not an OEM Account Debtor; and
(c) the lesser of fifty percent (50%) of their Eligible Inventory, as
defined below, or Nine Million Dollars ($9,000,000); and
(d) the Overformula Amount.
"Overformula Amount" shall initially mean Ten Million Dollars
($10,000,000). On the first day of each September and March (commencing
September 1, 2001), the Overformula
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Amount shall be decreased by One Million Two Hundred Fifty Thousand Dollars
($1,250,000) until its has been reduced to zero; provided that the decrease
on September 1, 2001 shall be in the amount of One Million Dollars
($1,000,000) and the last decrease shall be in the amount of One Million
Five Hundred Thousand Dollars ($1,500,000).
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;
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(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 or Mexican subsidiary of General Motors,
Ford or DaimlerChrysler, 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 ▇▇▇▇▇▇▇▇, 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
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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.
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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*
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*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:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ JPE, INC.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Chairman and Chief
Its: Executive Officer
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BRAKE, AXLE AND TANDEM
COMPANY CANADA, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Its: Director
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DAYTON PARTS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Its: Chief Executive Officer
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JPE FINISHING, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Its: Chief Executive Officer
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PLASTIC TRIM, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Its: Chief Executive Officer
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STARBOARD INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Its: Chief Executive Officer
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Accepted and Approved:
COMERICA BANK
By:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Vice President
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JPE, Inc. (d/b/a ASC Exterior Technologies)
Schedule 1 "OEM Debtors"
DaimlerChrysler Corporation
DaimlerChrysler de Mexico
DaimlerChrysler of Canada
Delphi Automotive Systems
Ford Motor Company
Ford Motor of Canada
Ford Parts & Service
General Motors Corporation (including NAO, CPC, BOC, GMC Truck)
General Motors Service Parts Corporation
General Motors de Mexico
General Motors of Canada
Visteon
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