EX 10.1
Certain information has been excluded from this exhibit because it is both not material and would likely cause competitive harm to the Registrant if publicly disclosed.
ACCOMMODATION AGREEMENT
General Motors LLC, for itself and on behalf of its subsidiaries and affiliates (“GM”), FCA US LLC, on behalf of itself and the final vehicle assembly entities FCA Mexico, S.A. de CV and FCA Canada Inc. (“FCA US”); Yanfeng Automotive Interior Systems Co., for itself and on behalf of its subsidiaries and affiliates (“Yanfeng” and collectively with GM and FCA US, “Customers” and each a “Customer”), Unique Fabricating, Inc., a Delaware corporation, Unique-Intasco Canada, Inc. a British Columbia corporation, Unique Fabricating NA, Inc., a Delaware corporation, Unique-Chardan, Inc., a Delaware corporation, Unique Molded Foam Technologies, Inc., a Delaware corporation, Unique Prescotech, Inc., a Delaware corporation, Unique Fabricating Realty, LLC, a Michigan limited liability company, Unique Fabricating South, Inc., a Michigan corporation, and Unique Fabricating de México, S.A. de C.V., corporation with variable capital, duly incorporated pursuant to the laws of Mexico (individually and collectively, “Supplier”), and Citizens Bank, National Association, a national banking association, in its capacity as agent (in that capacity, “Agent Bank”), for itself and the other financial institutions party to the Loan Documents (as defined below) from time to time as lenders (collectively, together with the Agent Bank, the “Lending Group”). Agent Bank (on behalf of the Lending Group), Customers and Supplier are each referred to herein as a “Party” and collectively as the “Parties.”
RECITALS
A.Supplier is obligated to manufacture for each Customer 100% of Customer’s requirements for certain component parts, service parts, assemblies and/or other products (other than Tooling (defined below)) (collectively, “Component Parts”) for the applicable program and service part lives pursuant to various purchase agreements, supply contracts, release requests or purchase orders (all of which are governed by the Customer’s applicable general terms and conditions), as issued by Customer to Supplier and accepted by Supplier (together with any replacement, substitute and new purchase orders, “Purchase Contracts”).
B.Supplier, certain affiliates of Supplier, and Agent Bank and the Lending Group, including Comerica Bank, KeyBank and Flagstar Bank FSB, are parties to various loan and security agreements including an Amended and Restated Credit Agreement dated November 18, 2018 (collectively, together with any future agreements and amendments which may have been and may be entered into between Agent Bank or the Lending Group and Supplier including the Forbearance Agreement contemplated herein, the “Loan Documents”). The indebtedness outstanding under the Loan Documents is secured by a lien on substantially all of Supplier’s real and personal property assets.
C.Supplier acknowledges that any material lapse in production and/or delay in shipment of the Component Parts or any material breach of any Purchase Contract may cause irreparable harm to the applicable Customer(s).
D.Supplier has informed Customers that the loans available under the Loan Documents, together with the working capital generated by Supplier’s business, are insufficient sources of cash to meet the production schedule for the Component Parts.
E.Subject to the terms of this Agreement, Customers have agreed to provide certain financial and other accommodations to Supplier and the Lending Group to support a sale or restructuring process, Supplier has agreed to provide certain supply protections and acknowledgements and assurances to Customers, and
Agent Bank and the Lending Group have agreed to provide certain accommodations, acknowledgements and assurances to Customers and to provide certain financial and other accommodations to Supplier to support a sale or restructuring of Supplier’s business.
Based on the foregoing recitals, which are incorporated herein as covenants, representations and terms, and for other good and valuable consideration, the accuracy, receipt, and adequacy of which are acknowledged, the Parties agree as follows
TERMS AND CONDITIONS
1.Term. The term of this Agreement (the “Term”) will commence on the date of full execution of this Agreement (the “Effective Date”) and continue through the date that is the earliest of: (a) the closing of a Sale to a Qualified Buyer (each as defined in and pursuant to Section 3.C below), but only with respect to the Supplier location(s) that are covered by such Transaction, (b) solely as to a Customer exercising its right to terminate the Term due to the occurrence of an Event of Default (such term hereafter defined) arising from an interruption in production for the applicable Customer, or if there is a substantiated and imminent threat that Supplier will be unable to produce sufficient Component Parts such that production for the applicable Customer will be interrupted in the Customer’s reasonable discretion, the date on which such Customer delivers written notice of such an Event of Default and election to terminate the Term to Supplier and Agent Bank, (c) solely as to a Customer exercising its right to terminate the Term due to the occurrence of any other Event of Default, the fifth (5th) day following the date of delivery by such Customer of written notice to Supplier and Agent Bank of the occurrence of such an Event of Default and such Customer's election to terminate the Term (subject to any applicable cure periods), or (d) October 31, 2023. For the avoidance of doubt, after the occurrence of an Event of Default, the Term shall continue in effect for all Customers electing not terminate the Term, and the Term will end only as to those Customers electing to terminate the Term. Any Customer may elect to terminate the Term as to such Customer in accordance herewith after the occurrence of an Event of Default affecting or impacting such Customer. Any Termination Notice or other notice or action that is required, or may be given or taken under this Agreement, by a Customer or Agent Bank concerning Supplier which a Customer or Agent Bank reasonably believes is subject to a stay or other injunction is excused, need not be given or taken as a condition precedent to any action, and will be treated as having been given, taken, or occurred under this Agreement upon notice to those Parties which are not reasonably believed to be subject to the stay or injunction; provided that Supplier shall be given prompt notice as given to such other Parties.
2.Customer Accommodations.
A.Price Increases and Accelerated Payment Terms. For Component Parts delivered to the Customers in accordance with the Purchase Contracts during the Term (as consistent with the period identified in the Budget (as defined below)) (the “Price Adjustment Period”), the purchase price to be paid by the Customers for the Component Parts listed on the attached Customer-specific and confidential Exhibit A will be adjusted as set forth on Exhibit A (each a “Price Increase” and collectively the “Price Increases”).1 At the conclusion of the Term or the Price Adjustment Period, whichever is earlier, the purchase price for the Component Parts, to the extent that the Purchase Contracts
1 GM and FCA US will not provide Price Increases and Exhibit A will state zero dollar Price Increases for GM and FCA US to account for the fact that, during the Term, GM and FCA US are providing funding solely through subordinated debt purchases, pursuant to the Participation Agreement (as defined herein) and this Agreement.
applicable thereto have not expired or been terminated in accordance with their respective terms and conditions, will revert to the “Current Price” identified on Exhibit A. The Purchase Contracts will be amended by the Customers to reflect the Price Increases, and reversion to the Current Price, for the period applicable thereto. The full amount of Yanfeng’s Price Increase during the Term (i.e., the difference between the Current Price and the Price Increase to be paid by Yanfeng for the Component Parts) will be remitted to Supplier on an accelerated basis in accordance with the Budget.
i.Further, subject to Section 2.B. below, each Customer shall pay all bona fide accounts payable to Supplier for Component Parts existing on the Effective Date and those arising from Supplier’s delivery of Component Parts that occurs on or after the Effective Date of this Agreement and through the date that is five (5) business days after the end of the Term on accelerated payment terms of [REDACTED]. For clarification, the [REDACTED] terms will be instituted no later than three (3) business days following the Effective Date.
B.Limitation on Setoffs. Customers are entitled under the terms of the Purchase Contracts and may otherwise be entitled under applicable law to exercise rights of setoff, recoupment, deduction and defense. Notwithstanding such rights, for the sole and exclusive benefit of Lending Group, as to all accounts payable owing by Customers to Supplier for Component Parts, whether outstanding as of the Effective Date or generated on or after the Effective Date through the date that is five (5) business days after the end of the Term, each Customer agrees not to exercise its rights of setoff, recoupment, or other deduction of any kind, including, without limitation, with respect to any prior, existing or future defaults under any Purchase Contracts (including, without limitation, claims for any incidental, special or consequential damages) (all of the preceding, each a “Setoff” and collectively “Setoffs”), except for “Allowed Setoffs,” “Material Setoffs,” “Tooling Setoffs” (each defined below), and Setoffs for short shipments, misshipments, improper invoices, mispricing, and duplicate payments or billing errors (collectively, “Billing Errors”). Allowed Setoffs, Material Setoffs, Tooling Setoffs, and Setoffs for Billing Errors are collectively called “Permitted Setoffs”. In the case of Material Setoffs and Tooling Setoffs, Customer must give Agent Bank and Supplier written notice of the amount of the Material Setoff and Tooling Setoff (each, a “Setoff Notice”) and (1) such Material Setoffs may only be asserted against accounts payable arising from shipments made by Supplier more than three (3) business days after Agent Bank’s and Supplier’s receipt of such Setoff Notice and (2) such Tooling Setoffs may only be taken against the Tooling payable to which it relates.
i.“Allowed Setoffs” means Setoffs for (a) any and all defective or nonconforming Component Parts, quality problems, recall costs, warranty costs, unordered or unreleased parts returned to Supplier, premium freight charges (not caused by the applicable Customer) necessary to avoid production interruption, but excluding any incidental, special or consequential damages arising from or relating to such items and (b) Customer’s reasonable professional fees and costs incurred relating to Supplier (“Professional Fees”); provided, however, in no event may Allowed Setoffs exceed [REDACTED] of the face amount of a bona fide invoice or group of invoices (the “Allowed Setoff Cap”). Customers may deduct the amount of the Allowed Setoffs that exceeds the Allowed Setoff Cap against any subsequent invoices or group of invoices, subject to the Allowed Setoff Cap in respect of those subsequent invoices or group of invoices. Upon request by Supplier or Agent Bank, each Customer shall provide reasonably detailed written information regarding any Permitted Setoffs asserted by such Customer. For clarity, Billing Errors, Tooling Setoffs, and Material Setoffs are not subject to the Allowed Setoff Cap.
ii.“Material Setoffs” means Setoffs first arising after the Effective Date for (a) materials or components delivered to Supplier or services performed for Supplier, purchased by a Customer from persons other than Supplier or supplied by a Customer to Supplier for use in connection with the production of Component Parts by Supplier for that Customer, or (b) as determined by the applicable Customer, to the extent necessary to avoid or mitigate an actual or imminent threat to such Customer’s production, direct payment(s) to material or service vendors by or on behalf of a Customer for the purchase of materials or components or services used by Supplier in connection with the production of Component Parts by Supplier for that Customer.
iii.“Tooling Setoffs” means Setoffs for any payment to a tooling vendor or tooling repairman for all or part of the purchase price or repair price of Tooling (defined below) that is used by Supplier in connection with the manufacture, assembly or transportation for a Customer’s Component Parts (existing and future) for which the Customer reasonably determines such payment is necessary to secure the release of, or prevent assertion of, any valid and perfected lien against Tooling or is required to obtain possession of Tooling from the Tooling vendor or tooling repairman. Tooling Setoffs with respect to particular Tooling may be taken only against specific accounts payable due to Supplier with respect to such particular Tooling.
C.Limitation on Resourcing. Notwithstanding anything in the Purchase Contracts to the contrary, during the period commencing on the Effective Date and ending as of the end of the Term, Customers will not resource production of any Component Parts (including those currently in production and awarded programs) to an alternative supplier. Notwithstanding the foregoing, each Customer may (i) take any action that such Customer deems necessary or useful, in its sole discretion, to prepare for a resourcing, which includes, without limitation: (a) discussing, negotiating, and executing agreements with an alternative supplier(s) relating to Component Parts and (b) purchasing sample or prototype Component Parts from an alternative supplier(s); and (ii) Yanfeng may resource production of the Component Parts referenced on Exhibit B hereto. Supplier and Customers may further agree in writing with respect to the resourcing of any other Component Parts, whether pursuant to this Agreement or otherwise, so long as Agent Bank and Customers are provided with notice of such resourcing and an updated Budget that is reasonably acceptable to Lending Group and Customers. This limitation does not prohibit any Customer from reducing or ceasing releases under Purchase Contracts temporarily or permanently because of: (1) ordinary course normal business fluctuations, including, without limitation, reductions in consumer demand or schedule end of production dates; (2) ordinary course product, engineering, or program changes, cancellations or modifications; and (3) the COVID-19 or any other pandemic or other supply chain disruptions. Nothing in this Agreement constitutes a commitment by any Customer to retain any of its business with Supplier after the Term. Including Component Parts that Yanfeng is permitted to resource as set forth on Exhibit B or Component Parts Supplier permits a Customer to resource (subject to the requirements as to notice and an updated acceptable Budget set forth above), if, prior to the end of the Term, a Customer elects to resource any production of Supplier subject to the terms of this Agreement, such Customer shall, prior to such resourcing, deliver to Supplier and Agent Bank a notice identifying the resourced Component Parts and the effective date of such resourcing (the “Resourced Component Parts” and such notice, a “Resourcing Notice”).
D.Inventory Purchase Obligation. “Trigger Event” means the earliest of: (i) a resourcing by a Customer permitted under the terms of this Agreement of some or all of its Component Part production from Supplier (provided that a resourcing by a Customer
of less than all of its Component Parts shall trigger a purchase obligation only as to Inventory related to the Resourced Component Parts); (ii) an Event of Default occurs under this Agreement or the Loan Documents and, in connection with such Event of Default, such Customer invokes its right of access under the Access Agreement (as defined below) (provided that a right of access invoked as to less than all of Supplier’s facilities shall constitute a Trigger Event only as to Inventory located at the facility at which the right of access is invoked); (iii) the date on which the Forbearance Period under the Forbearance Agreement terminates and Agent Bank advises Customers and Supplier in writing that it is declining an advance request by Supplier on two or more consecutive days and that it is exercising its rights under this Section; or (iv) the date on which the Term terminates or expires as to any Customer or any plant (but the Term shall only be deemed terminated with respect to such Customer or such plant) unless and except to the extent the Term ends due to a closing of a Transaction that includes purchase of Supplier’s Inventory. Subject to the terms and conditions hereof including without limitation Section 2.C above, for the sole and exclusive benefit of Lending Group, upon the occurrence of a Trigger Event, Supplier shall utilize good faith efforts to cause all raw materials and work-in-process used in the production of Component Parts for such Customer(s) (or, if a Resourcing Notice has been received prior to the end of the Term, only with respect to such raw materials and work-in-process used in the production of Resourced Component Parts) to be converted to finished goods inventory within ten (10) days thereafter. Upon a Trigger Event, such Customer agrees to purchase from Supplier, Agent Bank, any receiver for Supplier, any bankruptcy trustee, or any other party lawfully acting for the benefit of the Agent Bank or Supplier as applicable (the “Inventory Obligation”) all of Supplier’s raw materials and finished goods inventory wherever located, in each case only to the extent they are “useable” and “merchantable” and related to the Resourced Component Parts (collectively, “Customer Inventory”); provided that (1) in the event of a resourcing, such Customer Inventory is related to the resourced Component Parts, (2) in the event a Customer has exercised access, such Customer Inventory is located at the facility where the Customer has exercised access, and (3) Supplier makes such Customer Inventory available for pick-up by such Customer free and clear of all liens, security interests and encumbrances within ten (10) business days following the occurrence of the Trigger Event (or, in the event that the inventory is sold via a UCC Article 9 secured party sale or via a bankruptcy sale, then, as soon as practicable but in no event later than thirty-five (35) days following the occurrence of the Trigger Event).
i.For purposes of this Agreement, the term “useable” with respect to Customer Inventory means Customer Inventory that is not obsolete and that is useable by the applicable Customer (or by the applicable Customer’s alternative supplier) in the production of its Component Parts in the quantities called for in such Customer’s Unsatisfied Releases. “Unsatisfied Releases” means the quantity of Component Parts provided in the releases, fabrication, raw material or similar authorizations issued by Customer and in effect as of the Trigger Event, minus the quantities of Component Parts shipped by Supplier after receipt of such releases and authorizations. The term “merchantable” with respect to Customer Inventory as used herein shall mean Customer Inventory that is “merchantable” as such term is defined in section 2-314 of the Uniform Commercial Code (as enacted in Michigan) and that is otherwise in conformance in all other respects with the applicable Purchase Contracts of the applicable Customer.
ii.The Customer Inventory purchase price shall be: (i) for raw materials (including purchased components) - [REDACTED] of Supplier’s actual and documented cost and delivery of the raw materials and components; and (ii) for finished Component Parts - [REDACTED] of the existing Purchase Contract price in effect in accordance with Section 2.A hereof, which, for the avoidance of
doubt, will include the Price Increases. The Customer Inventory purchase price will be paid to the Designated Account no later than the date upon which the Customer Inventory is made available to the applicable Customer for pickup, without setoff, recoupment, counterclaim, or deduction of any kind (except, in each case, as expressly permitted herein).
iii.Supplier warrants that all Customer Inventory that a Customer purchases will be sold to such Customer free and clear of all liens, claims, encumbrances, and security interests. The Lending Group warrants that all Customer Inventory that a Customer purchases will be sold to such Customer free and clear of all liens, claims, encumbrances, and security interests of the Lending Group. Customers, Supplier, and the Lending Group agree that any sale under this Section 2.D. is commercially reasonable in all respects, including method, pricing, time, place, and terms.
iv.To the fullest extent permitted under applicable law, any warranties related to the Customer Inventory that are received by Supplier from its suppliers will be deemed to be conveyed and transferred to the Customer upon such Customer’s purchasing its Customer Inventory.
E.Use of Agent Designated Accounts. During the Term, each Customer’s payments to Supplier under any Purchase Contract and this Agreement shall be made to Agent Bank in the applicable account(s) specified on Exhibit C (collectively, the “Designated Account”).
3.Supplier Obligations.
A.Continue to Manufacture. Supplier will continue to manufacture and deliver Component Parts in accordance with the Purchase Contracts and related releases and production schedules. Supplier will immediately notify a Customer and Agent Bank in writing of any interruption, delay, or threat of any interruption or delay, to its timely manufacture and/or delivery of Component Parts for such Customer upon learning of such interruption, delay or threat.
B.Budget. Subject to the Permitted Variance (as defined below), Supplier will conduct its operations and business and pay only ordinary and necessary expenses of its operations, solely in accordance with the budget attached as Exhibit D (the “Budget”). During the Term, each Customer will provide funding to Supplier on a weekly basis pursuant to the Budget;2 provided, however, that no Customer will be required to fund any amount in excess of the weekly amount allocated to such Customer as reflected on Exhibit D.3 The Budget shall not exceed the total amount set forth on Exhibit D; provided, however, that, without exceeding the total amount of the Budget, Supplier may exceed any Budget line item relating to cash outflows by up to ten percent (10%) of the budgeted amount for such line item (the “Permitted Variance”). During the Term, Supplier will provide the other Parties with (i) weekly actual vs. projected Budget reports, (ii) subject to the Customers’ and Lending Group’s approval, a roll-forward of the Budget on a monthly basis with all material updates highlighted, and (iii) such other and further financial reporting as Customers or Agent Bank may reasonably request. Supplier will make no distributions, dividends or other payments (including, but not limited to, management fees, performance bonuses, management incentive payments, interest, principal, or other related fees), to any of its owners, members, shareholders or other related parties of
2 Customers funding through subordinated debt purchases may elect to fund every two (2) weeks during the Term.
3 Customers’ weekly allocation will not exceed the dollar amounts and percentages, all as reflected on Exhibit D. Specifically, GM’s percentage allocation is [REDACTED], FCA US’s is [REDACTED] and Yanfeng’s is [REDACTED].
Supplier without the prior written consent of each Customer and the Lending Group; provided, however, that the foregoing shall not include ordinary course salaries, wages and benefits paid to Supplier’s employees to the extent included in the Budget. The Customers’ approval of the Budget shall not be construed to operate as a waiver of any rights or remedies provided to the Customers under this Agreement or the Purchase Contracts; and the Lending Group’s approval of the Budget shall not be construed to operate as a waiver of any rights or remedies provided to the Lending Group under this Agreement or the Loan Documents.
C.Sale Process.
i.Supplier shall immediately and diligently commence a sale process for a going-concern asset sale of its business (a “Sale”) to a Qualified Buyer (as defined below) on terms and conditions satisfactory to each Customer and the Lending Group (the “Sale Process”). Each sale transaction is defined as a “Transaction.” Each Customer shall use commercially reasonable efforts to cooperate with Supplier and Agent Bank to support the Sale Process, provided that Customers shall not be required to extend any price increases or other accommodations to any purchaser and further provided that Purchase Orders may not be assigned to any purchaser of the assets or business of Supplier (other than Qualified Buyers) without the prior written consent of the applicable Customer (with such consent subject to the terms of the Purchase Orders). By no later than May 23, 2023, Supplier shall retain an investment banker acceptable to Lending Group and the Customers (the “Investment Banker”). Supplier will cause Investment Banker to provide Customers and Lending Group with regular, written weekly updates regarding the progress of the Sale Process and shall otherwise keep the Customers and Lending Group reasonably informed on all material developments in respect to the Sale Process and provide the Customers and Agent Bank with all proposals, IOIs, LOIs, purchase agreements and other related items as requested by Customers or Lending Group. Supplier further agrees to continue the retention of B. Riley Financial, Inc., or another advisor reasonably acceptable to the Customers and the Lending Group, as financial and operational advisors through Supplier’s satisfaction of the Sale Milestones (defined below). Supplier agrees to conduct the Sale Process in accordance with the following sale milestones (each, a “Sale Milestone”, or collectively, the “Sale Milestones”):
a.Out-of-Court Process. If Supplier, after consultation with its Investment Banker, Lending Group, Customers and potential purchasers, determines that the Sale Process can be completed without a court-supervised process:
(1)By no later than July 24, 2023, Supplier shall deliver to each of the Customers and Agent Bank one or more nonbinding expressions of interest on terms and conditions reasonably satisfactory to the Customers and Lending Group;
(2)By no later than August 21, 2023, all interested buyers shall have completed all due diligence with respect to one or more transactions for the sale of Supplier’s assets or business (the “Transaction(s)”) on terms reasonably acceptable to the Lending Group and each of the Customers, and shall have submitted proposed asset purchase agreement(s) therefor;
(3)By no later than August 28, 2023, subject to being deemed a Qualified Buyer, Supplier and the potential purchaser(s) shall have entered into final asset purchase agreement(s) on terms and conditions satisfactory to each of the Customers and the Lending Group and provided evidence of sufficient financial wherewithal, or shall have obtained binding financing commitments from lenders, in each case sufficient to consummate the Transaction(s), which evidence is satisfactory to the Lending Group and Customers in order to be qualified as a Qualified Buyer;
(4)By no later than September 15, 2023, Supplier and the potential purchaser(s) shall have provided to the Customers and Lending Group: (i) a statement of sources and uses of Transaction(s) proceeds; and (ii) evidence that the potential purchaser’s conditions to closing (other than customary closing deliveries) the Transaction(s), such as business commitments from the Customers, are satisfied or waived.
(5)By no later than October 31, 2023, Supplier shall have closed each Transaction with a Qualified Buyer on terms reasonably acceptable to each of the Customers at those locations and the Lending Group.
b.In-Court Process. If Supplier, after consultation with its Investment Banker, Lending Group, Customers and potential purchasers, decides to complete the Sale Process through a court supervised process:
(1)By no later than July 24, 2023, Supplier shall deliver to each of the Customers and Agent Bank one or more nonbinding expressions of interest on terms and conditions reasonably satisfactory to the Customers and Lending Group;
(2)By no later than August 21, 2023, all interested buyers shall have completed all due diligence with respect to one or more transactions for the sale of Supplier’s assets or business (the “Transaction(s)”) on terms reasonably acceptable to the Lending Group and each of the Customers, and shall have submitted proposed asset purchase agreement(s) therefor;
(3)By no later than August 28, 2023, subject to being deemed a Qualified Buyer, Supplier and the potential purchaser(s) shall have entered into final asset purchase agreement(s) on terms and conditions satisfactory to each of the Customers and the Lending Group (and subject to higher and better bids under the process described below);
(4)By no later than August 31, 2023, Supplier shall have filed a bankruptcy petition under Chapter 11 of the U.S. Bankruptcy Code or some other court process (the “Court”);
(5)By no later than September 29, 2023, Supplier shall have obtained an order from the Court approving bidding procedures providing that all bids are due by October 12, 2023, and setting a sale hearing by October 27, 2023;
(6)By no later than October 31, 2023, Supplier shall have closed each Transaction with a Qualified Buyer on terms reasonably acceptable to each of the Customers at those locations and the Lending Group.
In the event Supplier satisfies the first two Sale Milestones under the Out-of-Court or In-Court Sale Process (specifically, Sections 4.C.i.a.(1) and (2) or 4.C.i.b.(1) and (2)), Supplier may request at any time, from Customers and the Lending Group, an extension to any subsequent Sale Milestones except for the October 31, 2023 closing Sale Milestone, which extension will be considered in good faith by Customers and Lending Group in the event Supplier presents reasonably sufficient evidence that such subsequent Sale Milestones will be satisfied on a date that is sufficient to achieve the October 31, 2023 closing Sale Milestone.
ii.For purposes of this Agreement, a “Qualified Buyer” means a buyer that: (a) possesses the financial capabilities, business plan, and management structure to effect the acquisition and subsequent operation of, or otherwise effect a majority investment in, Supplier’s business and operations without interrupting the supply of Component Parts to, and the manufacture or acquisition of Tooling and capital equipment for, Customers; (b) has sufficient working capital, financial stability, and economic resources to meet Customers’ production needs for Component Parts in the future; (c) agrees to assume (to extent there is an asset sale) the Purchase Contracts without modification or with such modifications acceptable to the affected Customers in their discretion; (d) is otherwise acceptable to each Customer, in its reasonable discretion; and (e) has made a purchase commitment sufficient to repay all obligations under the Loan Documents in full or as otherwise agreed with the Agent Bank and Lending Group.
iii.Within the timeline defined by the Sale Milestones, Supplier and Investment Banker will support the Sale Process and Transaction by, among other things: (a) maintaining and making available to Qualified Buyers and their consultants, a data room with financial and legal information about Supplier’s assets and operations; (b) hosting tours of Supplier’s operations and hosting management meetings for Qualified Buyers and their consultants; and (c) using its best efforts to enter into definitive purchase and sale agreements, on commercially reasonable terms and conditions, for the sale to one or more Qualified Buyers.
D.Restructuring Plan. Not later than thirty (30) days following the Effective Date of this Agreement, Supplier shall deliver to each Customer and the Agent Bank an operational improvement and restructuring plan, approved by Supplier’s financial consultants in writing, in form and substance reasonably acceptable to Customers and the Lending Group (the “Restructuring Plan”). The Restructuring Plan shall outline in sufficient detail Supplier’s plan to reach long-term financial and operational viability by no later than the conclusion of the Term and include, without limitation, a description of Supplier’s plan to: (i) restructure the indebtedness and liabilities of Supplier, (ii) obtain financing (if any) and refinance its credit facility under the Loan Documents on or before expiration of the Term, and (iii) meet its ongoing liquidity needs. If acceptable to the Lending Group and the Customers, Supplier shall implement the Restructuring Plan in
accordance with the Budget and performance milestones to be mutually agreed upon by the Parties in writing. Approval of the Restructuring Plan and/or the performance milestones contemplated by this Section 3.D. shall not be construed to operate as a waiver of any rights or remedies provided to the Customers under this Agreement or the Purchase Contracts, or to the Lending Group under this Agreement or the Loan Documents.
E.Chief Restructuring Consultant. Within five (5) business days following the Effective Date, Supplier shall appoint a Chief Restructuring Consultant reasonably acceptable to the Lending Group and the Customers, who will remain in place until the Sale Process or Restructuring Plan is completed. Such Chief Restructuring Consultant will have the authority to oversee Supplier’s compliance with this Agreement, the Purchase Contracts, the Loan Documents, and all financing agreements.
F.Bankruptcy. If, after consultation with the Customers and Agent Bank, Supplier determines to complete its Sale Process or Restructuring Plan through a court-supervised process, Supplier shall obtain an order (the “Order”) from the Bankruptcy Court approving this Agreement as a post-petition agreement of Supplier. Such Order shall be subject to the approval of the Customers and shall provide, in part, that to avoid immediate and irreparable to harm to Supplier, this Agreement is authorized under section 363(b) of the Bankruptcy Code and is deemed reaffirmed, ratified, and remade by Supplier as a postpetition agreement, and Supplier is required to perform its obligations hereunder, all of which constitute postpetition obligations of Supplier.
G.Accommodations from Other Customers. Within five (5) business days following the Effective Date, Supplier shall, except to the extent approved by the Customers (which approval shall not be unreasonably withheld provided that changes to the Budget are not required): (i) obtain commitments from Supplier’s seven (7) largest customers (excluding the Customers) providing Supplier economic benefits equal or greater to those arising under this Agreement; and (ii) obtain commitments from the remainder of Supplier’s customers (collectively, the “Other Key Customers”) providing Supplier economic benefits to support Supplier’s business during the Sale Process. Supplier also agrees that it shall not enter into any agreements with any of its other customers (including, without limitation, the Other Key Customers) on terms more favorable to such other customers than the terms contained in this Agreement, without the prior written consent of Customers. The proceeds of the financial and other accommodations provided by each Customer hereunder may not be used: (a) to pay any liabilities associated with or attributable to cancellations of purchase orders of other customers of Supplier, or (b) to fund production of Component Parts for any other customer of Supplier.
H.Tooling Acknowledgment. The Parties acknowledge and agree that, exclusive of Supplier Tooling and Unpaid Tooling (each as defined below), all Tooling that is now being utilized to manufacture the Component Parts by Supplier for each applicable Customer, whether under direct agreements between Supplier and a Customer or agreements between Supplier and third parties (“Customer Tooling”), is subject to the terms of this Agreement and is (i) owned by a Customer (or affiliates of such Customer, or another supplier to such Customer); and (ii) is being held by Supplier and, to the extent that Supplier has transferred the Customer Tooling to third parties, by such third parties, as bailees-at-will.
i.“Tooling” means collectively all tooling, dies, test and assembly fixtures, gauges, jigs, patterns, casting patterns, cavities, molds, and documentation including engineering specifications and test reports used by Supplier in connection with its manufacture of Component Parts for Customers, together with all appurtenances, accessions, attachments, parts, substitutions, replacements and
accessories, and all returnable dunnage (racks, containers, bins, etc.) used or useable by Supplier in connection with its manufacture, assembly and/or transport of the Component Parts for a Customer.
ii.“Unpaid Tooling” means Tooling manufactured for a Customer for which such Customer has not made full payment under the applicable Tooling purchase order with Supplier.
iii.“Supplier Tooling” means Tooling which Supplier asserts is not owned by a Customer or another customer and which is not subject to a purchase order issued by a Customer or another customer.
iv.Within forty (40) days from the Effective Date, Supplier will provide each Customer and the Agent Bank with a list of all Supplier Tooling and Unpaid Tooling relating to the Component Parts for such Customer (which shall be binding upon Supplier) (“Tooling List”). If, and to the extent that, Supplier does not include any item of Tooling on the Tooling List or fails to provide the Tooling List, then all Tooling that prior to the Effective Date or as is as of the Effective Date being utilized to manufacture the Component Parts by Supplier for such Customer not listed shall be deemed Customer Tooling.
v.Each Customer and the Agent Bank reserve the right to notify Supplier of a dispute regarding the Tooling List for up to sixty (60) days following receipt of such list. To the extent a Customer or the Agent Bank does not timely assert a dispute with respect to an item on such list, such Customer and the Agent Bank shall be deemed to agree with Supplier’s designation of such item. If a dispute regarding the listing of any Tooling as Supplier Tooling or Unpaid Tooling cannot be resolved by Supplier, the Agent Bank and the applicable Customer within thirty (30) days of the date the dispute arises, the matter shall be jointly submitted to a third-party mediator to be selected by Supplier, the Agent Bank and the applicable Customer for expedited resolution, with costs to be shared equally by Supplier on the one hand, and, on the other hand, each of the applicable Customer(s) asserting a dispute in accordance with this Section.
vi.Upon payment of the applicable purchase order price for any item of Unpaid Tooling (a portion of which purchase order price may be satisfied by Tooling Setoffs taken in accordance with this Agreement), such item will thereafter be included in the definition of Customer Tooling under this Agreement. Supplier agrees to assign to the applicable Customer or its designee any agreements with its tiered suppliers relating to Unpaid Tooling at such Customer’s request. Other than as provided herein, nothing in this Agreement modifies obligations of Customers to Supplier on account of Unpaid Tooling.
vii.Neither Supplier nor, to Supplier's knowledge, any other person or entity other than Customers (or their affiliates) will have any right, title or interest in Tooling determined to be Customer Tooling other than Supplier’s rights, subject to the applicable Customer’s discretion, to utilize the Customer Tooling in the manufacture, transport, and delivery of the Component Parts. Subject to the terms contained in this Agreement, Customers and their affiliates have the right to take immediate possession of Customer Tooling at any time without payment of any kind to Supplier, should a Customer elect to exercise such right, and Supplier hereby agrees to cooperate with such exercising Customer in its taking possession of its Customer Tooling including by preparing such Customer Tooling for pick up by the exercising Customer at Supplier’s dock. Any failure to provide a Customer such access to Customer Tooling or any Disputed Tooling in
accordance with this Agreement will result in irreparable harm to the Customer and money damages would be an inadequate remedy. In the event of such failure, the exercising Customer shall be entitled to equitable relief (including injunctive relief) to require Supplier to release such Customer Tooling to such Customer without any requirement to prove irreparable injury or post bond as a condition to the foregoing relief.
viii.If there is a dispute over whether any Tooling is Customer Tooling, Unpaid Tooling, or Supplier Tooling, the Tooling subject to the dispute (the “Disputed Tooling”) will be treated as Customer Tooling subject to the liens of the Agent Bank until the applicable Parties resolve the dispute. Customers will only have the right to take possession of Disputed Tooling pending resolution of the dispute if the applicable Customer places in escrow with an independent third party an amount equal to: (a) for any alleged Supplier Tooling, Supplier’s net book value for such item determined in accordance with generally acceptable accounting principles, but not less than twenty percent (20%) of the original purchase price, or (b) the amount claimed by Supplier as remaining unpaid in connection with the alleged Unpaid Tooling, as the case may be. In such instance, Supplier will cooperate fully with such Customer in such Customer’s taking possession of Disputed Tooling, subject to the liens of the Agent Bank.
ix.Customers shall have the right, at their sole election, to make payments directly to any third-party vendors that have not been paid in full related to Unpaid Tooling or Customer Tooling, and to exercise a corresponding Tooling Setoff pursuant to this Agreement.
x.Supplier grants to Customers permission to record on Supplier’s behalf any notice financing statements with respect to such Customer’s Customer Tooling, as the Customer determines are reasonably necessary to reflect its interest in the Customer Tooling. Supplier also authorizes each Customer to affix any plate, stamp or other evidence the Customer’s ownership upon each item of its Customer Tooling.
xi.The acknowledgements, rights and obligations contained in this Section 3.H. are (i) in addition to and in no way a limitation of the rights of the Customers under the Purchase Contracts or any other agreement between Supplier and a Customer currently in effect, and (ii) will continue in effect after the expiration or termination of this Agreement.
I.IP License. Supplier hereby grants each Customer and its assignees and designees (i) a world-wide, perpetual, non-exclusive, irrevocable, sub-licensable, fully paid, royalty-free license to the Intellectual Property (as defined below) owned by Supplier which is useful or necessary in the manufacture of its Component Parts, including all of Supplier’s processes, methods, documents, and software related to such Intellectual Property or otherwise used in the production of its Component Parts; and (ii) a sublicense to the Intellectual Property licensed to Supplier and useful or necessary for the manufacture of its Component Parts (subject to the terms of any applicable existing licenses and to any licensor’s consent to assignment of such license, if applicable); all of (i) and (ii) which shall extend to the right to make, have made, use, have used, modify, improve, reproduce, prepare derivative works of, distribute, display, offer to sell, sell, import and do all other things and exercise all other rights in the licensed or sublicensed Intellectual Property that is helpful or necessary to manufacture, assemble or transport its Component Parts and any future derivatives thereof (the “License”). Among other things, the License shall apply and extend without limitation to Component Parts supplied or to be supplied under the Purchase Contracts (including in the production of
new vehicles by Customers and service obligations for past-model and used Customer vehicles) and to any (A) new model year changes with respect to the Component Parts, (B) mid-cycle enhancements with respect to the Component Parts or (C) refreshes with respect to the Component Parts incorporating the Intellectual Property. Nothing in this License is intended to limit any rights granted to Customers under the Purchase Contracts, including rights concerning licensing and other Intellectual Property, but is intended to expand those rights. Moreover, nothing in this License may be construed as an admission by any Customer of the validity of a Supplier’s claimed rights to Intellectual Property, including an admission that a license is required by a Customer to make, have made, sell, offer for sale and/or import the Component Parts. Customers will, and will cause their sublicenses to, treat and preserve the Intellectual Property in accordance with the same practices employed by them to safeguard their own intellectual property against unauthorized use and disclosure. The License will be granted and irrevocable as of the Effective Date but will only be exercisable by a Customer upon the occurrence of a Trigger Event. Supplier acknowledges that Customer is entitled to the full protection of the License under 11 U.S.C. § 365(n).
i.The term “Intellectual Property” means (A) all registered and applied for intellectual property, whether currently existing or arising in the future, owned by Supplier (including, without limitation, all patents, patent applications, trademark registrations, trademark applications, copyright registrations, and copyright applications), (B) all agreements for intellectual property licensed to Supplier, and (C) everything defined as “intellectual property” under 11 U.S.C. 101, as amended from time to time, and any other intellectual property (whether or not the intellectual property is identified, including, without limitation, unregistered copyrights, inventions, discoveries, trade secrets and designs, and regardless of whether those items are registerable or patentable now or in the future, and all related documents and software), and (d) all processes, methods, documents, and software related to any of the foregoing.
J.Equipment and Tooling Option. As an expansion of and in no way a limitation of the rights of each Customer under its Purchase Contracts, Supplier grants to each Customer an irrevocable and exclusive option (the “Equipment Option”) to purchase (i) any or all machinery and equipment and/or (ii) any returnable containers or dunnage (along with any related accessions, attachments, parts, accessories, substitutions, replacements, documents, software, and appurtenances, as applicable) used solely in the production of such Customer’s Component Parts (collectively, “Dedicated Equipment”) to the extent such items are not Customer Tooling. In addition to the Equipment Option, Supplier will grant each Customer an irrevocable and exclusive option (the “Tooling Option”) to purchase any Supplier Tooling (defined below) and any rights to Supplier Tooling used solely in the production of such Customer’s Component Parts. The Equipment Option and the Tooling Option may be referred to herein individually as an “Option” and collectively as the “Options.” The Options shall also extend to Supplier Tooling and machinery and equipment that is used in the production of Component Parts for one Customer and also for other Customers, provided that all affected Customers consent. Each Option is exercisable by the Customers in their sole discretion following the occurrence of a Trigger Event. Agent Bank hereby consents to the grant of the Equipment Option and the Tooling Option.
i.The Options may be exercised by a Customer within forty-five (45) days following the occurrence of a Trigger Event.
ii.The Option purchase price for Dedicated Equipment, other machinery and equipment that is not Dedicated Equipment and Supplier Tooling shall be the orderly liquidation value thereof as stated in Agent Bank’s appraisal dated August
18, 2022 (or if such item is not listed on such appraisal, Supplier’s net book value for such item determined in accordance with generally acceptable accounting principles, but not less than twenty percent (20%) of the original purchase price). The purchase price under each Option will be paid “on delivery” by the applicable Customer to the Designated Account and, in consideration of payment of the purchase price by such Customer, the Agent Bank will release the respective liens of the Lending Group in such Tooling and/or Dedicated Equipment subject to the Options that may be consummated by a Customer.
iii.Supplier warrants that all Dedicated Equipment and Supplier Tooling that a Customer purchases using the Options (collectively, the “Purchased Assets”) will be sold to such Customer free and clear of all liens, claims, encumbrances, and security interests. The Lending Group warrants that all Purchased Assets will be sold to such Customer free and clear of all liens, claims, encumbrances, and security interests of the Lending Group. Customers, Supplier, and the Lending Group agree that any sale under this Section 3.I. is commercially reasonable in all respects, including method, pricing, time, place, and terms.
iv.If a Customer exercises any Option, Supplier will grant such Customer and its assignee(s) or designee(s) (for no additional consideration) a royalty-free, irrevocable, and fully transferrable world-wide license or sublicense (as applicable and to the extent Supplier has a right to convey such license and/or sublicense, and provided that such Customer pays any applicable third-party royalty or licensing fees) to use: (A) all Intellectual Property that is necessary to use the Dedicated Equipment and/or Supplier Tooling, as applicable, for the purpose of producing its Component Parts, and any documents or software related to such Intellectual Property; and (B) Supplier’s processes and methods used in the production of such Customer’s Component Parts (the “Dedicated Equipment License”). This Section 3.J.iv is intended to expand, and does not limit any of, such Customer’s rights under its Purchase Contracts.
v.A Customer may exercise each Option by (a) providing written notice to Supplier, the Agent Bank, and the other Customers pursuant to the terms of this Agreement, and (b) payment of the purchase prices identified in Section 3.J.ii above to the Designated Account without Setoffs within ten (10) business days of exercising the Option. The Customer exercising an Option is entitled to take possession of and remove all Purchased Assets from Supplier’s facility(ies) immediately upon payment therefor.
vi.On a Customer’s exercise of the Option(s), such Customer shall have the right to use the Dedicated Equipment License and to take possession of the Purchased Assets and any embodiments of the Dedicated Equipment License at any time, without notice, court order, commencement of court proceedings, or payment of any kind to Supplier or the Lending Group. At such Customer’s request, Supplier shall cooperate fully with such Customer in the Customer’s taking possession of the Purchased Assets, including, without limitation: (i) providing such Customer or its designee(s) with access to Supplier’s manufacturing operations to inspect current production processes; (ii) providing such Customer or its designee(s) with access to Supplier’s facilities to inspect, prepare to transport, and remove Purchased Assets, including access to Supplier’s books and records relating to Purchased Assets; (iii) assisting such Customer or its designee(s), at such Customer’s cost, in preparing, loading, and removing the Purchased Assets from Supplier’s facilities, including allowing such Customer to utilize Supplier’s employees, machinery, and equipment as reasonably necessary
to remove the Purchased Assets; and (iv) executing documents that such Customer reasonably requests to memorialize and implement this Section.
K.Inventory Bank.
i.Supplier shall manufacture, ship and deliver an inventory bank of Component Parts to the extent requested by each Customer in such Customer’s sole discretion, including without limitation a bank past-model service Component Parts (the “Inventory Bank”) in accordance with a schedule and in quantities acceptable to the applicable Customer, subject to material availability and reasonable capacity constraints. The Customer will pay for the Inventory Bank at the applicable Purchase Contract price and in accordance with the terms of the applicable Purchase Contract, both as adjusted by this Agreement.
ii.Each Customer shall reimburse Supplier for its verifiable, incremental, out-of-pocket costs reasonably incurred by Supplier in connection Supplier’s manufacture of the Inventory Bank for such Customer including, without limitation, overtime pay and all special packaging and handling costs (e.g., disposable dunnage, wrapping, coating, etc.) (the “Incremental Bank Costs”). All Incremental Bank Costs must be approved by such Customer in advance and in writing.
iii.Supplier will ship the Inventory Bank Component Parts as produced and as directed by the applicable Customer and in accordance with the terms of the applicable Purchase Contracts.
L.Cooperation with Resourcing.
i.Resourcing Preparation. At a Customer’s request, Supplier will provide such Customer with all information for the Customer to prepare to resource production under one or more of the Purchase Contracts to one or more alternative suppliers, including copies of tool line-ups, tool processing sheets, routings, bills of materials (including vendor contact information), PPAP packages, tool and engineering drawings, CAD data/drawings, vehicle-integration algorithms, lists of returnable containers, and all other general validation and test data.
ii.Resourcing Cooperation. If an Event of Default occurs, and a Customer elects to terminate the Term and resource some or all of its business from Supplier in accordance with and as may be permitted by the terms of this Agreement and the Purchase Contracts (as the same may be modified by this Agreement), Supplier will fully cooperate in such Customer’s immediate resourcing of production of any one or more Component Parts to alternative suppliers, including without limitation by providing such Customer and its agents, representatives, designees, consultants, officers, employees and successor suppliers with: (a) immediate access to Supplier’s facilities to inspect current production processes (but only those portions relating to such Customer’s production) and allowing such Customer, at its sole expense, to utilize Supplier’s employees, machinery, and equipment as is necessary to complete the resourcing; (b) access to Supplier’s facilities to inspect, prepare to transport, and remove such Customer’s Tooling, including access to Supplier’s books and records relating to the Tooling; (c) assistance (at Supplier’s cost) in preparing, loading, and removing the Customer’s Tooling from Supplier’s facilities; and (d) access to Supplier’s employees, operations, books and records (including, but not limited to, tool prints, tool and engineering drawings, processing sheets, PPAP packages, bills of materials (including vendor contact information), and tool line-ups, CAD data/
drawings, vehicle-integration algorithms, lists of returnable containers, and all other general validation and test data), and any other documents in Supplier’s possession or under its control that may be necessary or helpful for the Customer to resource production of any Component Parts.
M.Lending Group Loan.
i.Supplier acknowledges that nothing contained herein alters any of the terms of the Loan Documents including, but not limited to, the amount of the Revolving Commitment (as defined in the Loan Documents) or the voting rights of the members of the Lending Group thereunder.
ii.Supplier acknowledges that the Creditor Collateral (as defined in the Intercreditor Agreement dated October 4, 2022 between Agent Bank, the Creditor and Supplier) remains subject to the security interests of the Agent Bank and Creditor and the proceeds of the Creditor Collateral are not considered cash collateral of Supplier’s accounts receivable or proceeds thereof and are not available for use by the Supplier in the conduct of its business but will be solely applied to reduce the Creditor’s loan and the loans owed to the Lending Group in accordance with the terms of the Intercreditor Agreement.
iii.Customers and Supplier agree that Supplier shall remit to the Agent Bank for application on the outstanding term loans under the Loan Documents principal reduction according to the Budget or occurring due to the application of unusual or extraordinary items as set forth in Credit Agreement and other Loan Documents.
4.Events of Default. The occurrence of any one or more of the following will be an “Event of Default” under this Agreement, unless either: (i) a waiver or deferral is agreed to in writing by the affected Customer(s); or (ii) such Event of Default is cured by Supplier within five (5) days of written notice being provided by a Customer, with a copy to the Agent Bank; provided, however, if any Event of Default results in a substantial likelihood, in a Customer’s reasonable discretion, that such Customer’s production will be materially interrupted at one or more of its assembly facilities worldwide, any such Event of Default will be deemed to immediately occur upon the date identified in a written notice from the affected Customer and will not be subject to a cure period:
A.Supplier repudiates or materially breaches its obligations, or refuses to materially perform, its obligations with respect to any Customer or Customers under this Agreement (in which case the Event of Default applies only to such Customer or Customers);
B.Supplier repudiates or materially breaches its obligations, or refuses to materially perform its obligations under the Purchase Contracts (as modified by this Agreement), the consequence of which is a substantial likelihood that a Customer’s production will be materially interrupted (in which case, if such repudiation or breach results in a substantial likelihood that only that Customer’s production will be materially interrupted, the Event of Default applies only to that Customer);
C.Supplier experiences a material adverse change, the consequence of which is a substantial likelihood that any Customer’s production will be materially interrupted (in which case, if such material adverse change results in a substantial likelihood that only that Customer’s production will be materially interrupted, the Event of Default applies only to that Customer);
D.Any secured or lien creditor (including, but not limited to, Agent Bank on behalf of itself and Lending Group) commences a repossession or foreclosure action against a material portion of the operating assets of Supplier, the consequence of which is a substantial likelihood that a Customer’s production will be materially interrupted (in which case the Event of Default applies only to that Customer);
E.Supplier commences or has commenced against it a case under chapter 7 of the Bankruptcy Code;
F.Supplier breaches the Restructuring Plan; and/or
G.Supplier breaches any of the Sale Milestones.
5.Agent Bank and Lending Group Accommodations.
A.Forbearance. Simultaneously with entering into this Agreement, Agent Bank agrees on behalf of itself and Lending Group to forbear from exercising its rights against Supplier or the collateral as and to the extent set forth in the Forbearance Agreement dated May 22, 2023, among Agent Bank, Lending Group and Supplier (the “Forbearance Agreement”), pursuant to which Agent Bank agrees on behalf of itself and Lending Group, provided no Forbearance Termination Event (as such term shall be defined in the Forbearance Agreement) occurs, to forbear from exercising its rights and remedies against Supplier through the conclusion of the Term. In the event Lending Group decides to (i) cease to forbear or (ii) exercise its rights against Supplier or its assets, Agent Bank shall give contemporaneous written notice of any such action to Supplier and Customers. A copy of the Forbearance Agreement is attached as Exhibit E.
B.Continued Advances. In consideration of the Customer Accommodations, during the Term, absent the occurrence of a Forbearance Termination Event under the Forbearance Agreement, Agent Bank on behalf of itself and Lending Group will continue to advance to Supplier from the Junior Tranche as defined in the Forbearance Agreement in accordance with the terms and conditions of the Loan Documents (including, for the avoidance of doubt, the Participation Agreement (as defined below)) and hereof on all Customer accounts receivable and inventory located in the United States and Canada at the following advance rates: ninety-two percent (92%) on all accounts receivable and eighty-five percent (85%) on finished goods inventory and seventy-five percent (75%) on raw material inventory. For the purpose of distinguishing the inventory value attributable to any Customer to which the higher advance rate(s) apply, the Supplier shall apply such Customer’s prior month’s sales as a percentage of Supplier’s total sales for such month. Except with respect to the Customers’ subordinated debt purchases during the Term, pursuant to the Participation Agreement and Agent Bank and Lending Group’s amendment to the Revolving Credit Aggregate Commitment (as defined in the Loan Documents), nothing herein shall be construed as an agreement by the Agent Bank and Lending Group to increase the amount of the Revolving Credit Aggregate Commitment under the Loan Documents. Agent Bank and the Lending Group will not reduce the advance rates set forth herein or impose any additional reserves or caps that would reduce Supplier’s borrowing availability as it relates to the Customers’ accounts receivable and inventory under the Loan Documents. For avoidance of doubt, the calculation of the amount by Customers, Agent Bank and Supplier of any advances funded by Customer and attributable to the Junior Tranche shall be binding and conclusive absent manifest error. For clarity and without limitation, the Material Setoffs shall be reserved against and reduce the borrowing base under the Loan Documents. In addition, Agent Bank reserves the right to determine the application of the proceeds of all unusual or extraordinary items as in accordance with the terms of the Credit Agreement and other Loan Documents. In the event the borrowing base includes tooling receivables, Agent
Bank may also reserve Tooling Setoffs against the borrowing base under the Loan Documents. Supplier expressly agrees to an amendment to the Revolving Credit Aggregate Commitment in order to permit the Customers’ subordinated debt purchases to occur pursuant to the Participation Agreement and Supplier will execute such necessary documents requested by Agent Bank in connection therewith.
C.Customer Participation. Simultaneously with the execution of this Agreement, GM, FCA US and Agent Bank and the Lending Group shall execute a Subordinated Participation Agreement (“Participation Agreement”). During the Term, GM and FCA shall provide funding to Supplier, consistent with the Budget, through purchases of subordinated, last-out, non-voting participation interests in the Loan, in the aggregate weekly amount not to exceed the amount and percentages set forth on the Budget (as consistent with footnote 3 above), all in accordance with this Agreement and the Participation Agreement. The respective payments of (i) [REDACTED] by each of GM and FCA US to Supplier during the week on April 2, 2023 and (ii) [REDACTED] by each of GM and FCA US to Supplier during the week on April 17, 2023 will be included as participations under the Participation Agreement.
D.Acknowledgements. The Lending Group expressly consents to the Tooling Acknowledgment, Option and the License granted by Supplier to Customers under this Agreement and the corresponding purchase price and terms of each of the foregoing as set forth in this Agreement, in each case free and clear of all liens, claims, encumbrances, and security interests of the Lending Group upon, to the extent due and payable, receipt of payment to the Designated Account. In addition, concurrently with execution of this Agreement, Agent Bank shall execute the acknowledgment to the Access Agreement.
E.Consent to Sale. Agent Bank will consent to the sale to a Qualified Buyer with respect to each Transaction that closes in accordance with the terms of a letter of intent that has been consented to in writing by Lending Group per the Sale Milestone provisions set forth above (or that closes with another Qualified Buyer at net economic cash-benefit to the Lending Group not less than that set forth in such letter of intent and on terms and conditions otherwise satisfactory to the Lending Group) and release its liens on the assets sold in each such Transaction when all proceeds of each such Transaction (net of ordinary and customary closing costs consented to by Agent Bank in its reasonable discretion) have been delivered to Agent Bank for application to Supplier’s obligations to the Lending Group that are secured by such assets.
6.Access and Security Agreement. Concurrently with execution of this Agreement, the Customers and Supplier shall execute an Access and Security Agreement in the form attached as Exhibit F (the “Access Agreement”). Supplier shall use it best efforts to obtain the consent of any landlords of real property in which Component Parts are produced or assembled within five (5) days of execution of the Access Agreement by Supplier. Upon the sale of any plant to a Qualified Buyer the right of access shall automatically terminate with respect to that plant.
7.Continuing Effect of Purchase Contracts. Except as specifically provided in this Agreement, this Agreement is not intended to modify the terms and conditions of the Purchase Contracts, including but not limited to the Customers’ general terms and conditions of purchase, all of which remain in full force and effect. Except as specifically provided in this Agreement, this Agreement does not and will not modify nor affect the rights, obligations or guarantees contained in the Purchase Contracts or any other existing agreements between a Customer and Supplier. To the extent of any conflict between this Agreement and any Purchase Contract or other agreement between a Customer and Supplier, this Agreement shall govern.
8.Confidentiality. The Parties each agree to keep and maintain the existence and terms of this Agreement strictly confidential, and the Parties shall not disclose the existence or terms thereof to any person or entity who is not a party without the prior written consent of the other Parties, except to the extent that such agreements or terms (a) are already known by, become available to, or are in the possession of the third party recipient at the time of disclosure, provided the source of such information was not known by such recipient to be bound by a legal or contractual obligation of ·confidentiality, (b) are or become publicly available (other than through a breach of this Section 8), (c) are in good faith determined by the disclosing Party to be necessary or appropriate to disclose in connection with a legal, regulatory, or administrative case or proceeding (including, without limitation, such an action to enforce the terms and provisions of this Agreement), (d) are in good faith determined by the disclosing Party required to be disclosed by law, court order, subpoena, or other judicial, governmental or regulatory process or request, or (e) are in good faith determined by the disclosing party required to comply with requests of bank regulators, examiners, auditors and other similar oversight and compliance entities. The confidentiality restrictions imposed on the Parties by this Section 8 will be deemed to have expired on the date that is one (1) year following the end of the Term. Notwithstanding the foregoing, in the event and to the extent that Supplier is required by law to include this Agreement or any excerpts from it in any public filing, including without limitation filings with the U.S. Securities and Exchange Commission, Supplier will work in good faith with Agent Bank and the Customers to make appropriate redactions to the Agreement or such excerpts prior to such filing.
9.Reservation of Rights; Cumulative Remedies. Except as expressly set forth in this Agreement, each Party reserves and does not waive any claims, rights, remedies, and/or defenses that it may have under the Purchase Contracts, any other agreements between or among the Parties, or applicable law, and each Party expressly reserves all claims, rights, remedies, and/or defenses it has under this Agreement, the Purchase Contracts, any other agreements between or among the Parties, and applicable law. For the avoidance of doubt, the limitations of Setoff under Section 2.B are only a temporary suspension of Setoffs and each Customer expressly reserves and does not waive any other rights, claims and interests it may have against Supplier, including, without limitation, Setoffs. Further, any and all rights are reserved in respect of any commercial claims asserted by a Customer against Supplier prior to the execution of this Agreement arising from or related to the inability and/or failure on the part of Supplier to timely deliver Component Parts to such Customer in accordance with the Purchase contracts (collectively, the “Asserted Commercial Claims”) and Supplier reserves all defenses related thereto. The rights and remedies under this Agreement are cumulative, may be exercised singly or concurrently, and are not exclusive of any rights and remedies provided by any other agreement or applicable law.
10.Notice. Any notice or other instrument to be given hereunder must be in writing and, except as otherwise provided in this Agreement, will be deemed to be duly given (a) if mailed, three (3) days following the date of mailing, (b) if sent by facsimile or hand delivery, at the time of service on the day on which it was so delivered or (c) if sent by electronic mail to the addresses below with a PDF attachment, at the time of sending the electronic mail. Until changed by notice in the manner described above, the addresses of the Parties for the purpose of notice will be:
If to Supplier: Unique Fabricating, Inc.
800 Standard Parkway, Auburn Hills, MI, 48326
Attn: Doug Cain, President and CEO
Email: DCain@uniquefab.com
with a copy to: Young Conaway Stargatt & Taylor, LLP
Rodney Square
1000 North King Street
Wilmington, Delaware 19801
Attn: Joseph Barry
Email: jbarry@ycst.com
If to FCA US: FCA US LLC
1000 Chrysler Drive
Auburn Hills, MI 48326
Attention: Lisa Clark, Vice President, SRM
Email: lisa.clark@stellantis.com
with a copy to: Dickinson Wright PLLC
424 Church St., Suite 800
Nashville, TN 37219
Attn: Kim Stagg
Email: kstagg@dickinsonwright.com
If to Yanfeng: Yanfeng Automotive Interior Systems
1600 S. Washington Avenue
Holland, MI 49423
Attn: James G. Bos, Vice President – Global Procurement
Email: james.g.bos@yanfeng.com
with a copy to: Dickinson Wright PLLC
500 Woodward Avenue, Suite 4000
Detroit, MI 48226
Attn: James A. Plemmons
Email: jplemmons@dickinsonwright.com
If to GM: General Motors LLC
Cole Engineering Center
29755 Louis Chevrolet Road
Warren, MI 48090-9020
M/C 480-210-8S
Attention: Mark W. Fischer
Email: mark.w.fischer@gm.com
with a copy to: General Motors LLC
300 Renaissance Center, MC482-C23-A68
Detroit, MI 48265
Attention: Aaron Silver, GPSC Legal Counsel
E-Mail: aaron.silver@gm.com
and
Honigman LLP
660 Woodward Avenue
2290 First National Building
Detroit, MI 48226-3506
Attention: E. Todd Sable
E-Mail: tsable@honigman.com
If to Agent Bank: Citizens Bank, N.A.
28 State Street, Mail Stop 2405
Boston, MA 02109
Attention: Michael Flynn, Senior Vice President
E-Mail: Michael.Flynn@citizensbank.com
with a copy to Barris, Sott, Denn & Driker, P.L.L.C.
333 West Fort Street, Suite 1200
Detroit, MI 48226
Attention: C. David Bargamian
E-Mail: dbargamian@bsdd.com
11.General Terms.
A.Entire Agreement. This Agreement, together with the other documents referenced herein or executed in connection herewith constitutes the entire understanding of the Parties in connection with the subject matter hereof and supersedes any prior understandings or agreements concerning the subject matter hereof. This Agreement may not be modified, altered or amended except by an agreement in writing signed by all of the Parties. This Agreement has been mutually drafted by counsel and has been reviewed by the Parties’ counsel. Therefore, any ambiguity in this Agreement will not be construed against any particular Party as the drafter.
B.Modifications. Other customers of Supplier may execute joinders to this Agreement without the consent of Customers provided that no modifications to the Agreement are made in connection with any such joinders. Any revisions or modifications to this Agreement require the prior written consent of Customers.
C.Consents. To the extent that any Party’s consent is required in this Agreement, such consent shall not be unreasonably withheld, conditioned, or delayed; provided however, nothing contained in this Agreement shall require the Lending Group to accept any discount on the obligations owed by the Supplier under the Loan Documents. Any agreement of the Lenders to accept anything less than the full amount of the obligations owing to them by the Supplier shall be made in their sole and absolute discretion.
D.Injunctive Relief. In the event Supplier fails to perform any of its respective obligations as set forth in this Agreement or Supplier takes or threatens any action that would constitute an Event of Default, Supplier acknowledges that the affected Party will suffer irreparable harm, will not have an adequate remedy at law, and may file for preliminary injunctive relief for a court to order specific performance of Supplier’s obligations, and the affected Party shall be entitled to injunctive relief or other equitable relief and/or a decree for specific performance without the posting of any bond or other security, in addition to any remedies it may have for damages or otherwise. Accordingly, provided that Supplier receives at least twenty-four (24) hours actual notice of any request for hearing in connection with such proceedings, Supplier waives, to the fullest extent possible under applicable law, the right to notice in excess hereof and the right to require the posting of any bond or other security by the affected Party in connection with any judicial proceedings instituted by the affected Party to enforce its rights hereunder or the granting of any injunctive relief or other equitable relief and/or decree of specific performance against Supplier. Supplier shall not object to such request for preliminary relief on the grounds that there is no irreparable harm or that the affected Party has an adequate remedy at law.
E.Survival. This Agreement shall terminate and be of no further force and effect on such date that either (i) the Parties have agreed in writing to terminate this Agreement, or (ii) the Term has ended; provided, however, that notwithstanding any such termination, Sections 3.H, 3.I, 3.J, 3.K.(ii) and (iii), 3.L, 6, 7, 8, 9, 10, 11, 12, and 13 of this Agreement shall be deemed to survive the termination or expiration of this Agreement; and Sections 2.A, 2.B., 2.D and 2.E of this Agreement further shall be deemed to survive the termination or expiration solely with respect to each Customer’s express commitment to pay certain amounts after the Term to the Designated Account all to the extent expressly provided in Sections 2.A, 2.B., 2.D and 2.E.
F.Authority. The individuals executing this Agreement warrant that they have the power and authority to execute this Agreement on behalf of the Party they represent and that their signatures bind their respective Parties to the terms of this Agreement.
G.Assignment. Supplier may not assign or transfer, directly or indirectly, any of its rights under this Agreement without the prior written consent of Customers; provided, that, the Customers acknowledge and agree that Supplier’s rights under this Agreement have been collaterally assigned to the Agent Bank. Any purported unpermitted assignment in violation of this section will be null and void. Without limiting its collateral assignment by Supplier to the Agent Bank, this Agreement is not intended for the benefit of any third party including, without limitation, any purchasers of any Supplier’s assets or other customers of Supplier (other than affiliates and subsidiaries of Customers).
H.Waiver. No delay or failure of Agent Bank, Lending Group, Supplier or any Customer to exercise any right, power or privilege hereunder will affect such right, power or privilege, nor will any single or partial exercise thereof preclude any further exercise thereof, nor the exercise of any other right, power or privilege.
I.Headings. The headings in this Agreement are inserted for convenience .and identification only, and are in no way intended to describe, interpret, define or limit the scope, extent, or intent of this Agreement.
J.Interpretation. Any agreement, instrument, statute, law, regulation or rule defined or referred to herein shall be deemed to mean such agreement, instrument, statute, law, regulation or rule as from time to time amended, modified or supplemented, and includes, in the case of agreements and instruments, references to all attachments thereto and instruments incorporated therein. References to “Sections,” “Exhibits,” and “Schedules” are to sections, exhibits, and schedules herein and attached hereto unless otherwise indicated. “Hereof,” “herein” and “hereunder” refer to this Agreement as a whole. “Including” is not limiting and should be followed by the word “without limitation” and “Or” is not necessarily exclusive. Any agreements, covenants, promises, or obligations appearing in the Recitals at the beginning of this Agreement are included in the body of this Agreement as if fully stated herein.
K.Severability. Should any provision of this Agreement be held invalid or unenforceable, the remainder of this Agreement will not be affected thereby.
L.No Impairment. Supplier agrees that it will not enter into any other arrangements or agreements that would in any way materially impair the rights of Customers under this Agreement.
M.No Agency. Supplier is not, and nothing in this Agreement will be interpreted to constitute Supplier as, the agent of any Customer for any purpose.
N.Counterparts. This Agreement may be executed in any number of duplicate originals or counterparts, each of such duplicate originals or counterparts will be deemed to be an original and taken together will constitute one and the same instrument. The Parties agree that their respective signatures may be delivered by facsimile or other electronic mail and that facsimile or PDF signatures will be treated as originals for all purposes.
O.Governing Law. This Agreement is made in the State of Michigan and will be governed by, and construed and enforced in accordance with, the laws of the State of Michigan without regard to conflicts of law principles.
P.Venue. The Parties agree, and Supplier irrevocably consents that, the United States District Court for the Eastern District of Michigan, Southern Division, and the Oakland County Circuit Court in the State of Michigan, United States of America, have personal jurisdiction over the Parties and that the exclusive jurisdiction and venue for any dispute arising from or under this Agreement shall be in the United States District Court for the Eastern District of Michigan, Southern Division, or the Oakland County Circuit Court in the State of Michigan, United States of America, and Supplier waives any right to assert; at any time in any proceeding judicial or otherwise relating to this Agreement that jurisdiction and venue are not proper in those courts.
12.CONSULTATION WITH COUNSEL. THE PARTIES ACKNOWLEDGE THAT THEY HAVE BEEN GIVEN THE OPPORTUNITY TO CONSULT WITH COUNSEL OF THEIR CHOICE BEFORE EXECUTING THIS AGREEMENT AND ARE DOING SO WITHOUT DURESS, INTIMIDATION, OR COERCION AND WITHOUT RELIANCE UPON ANY REPRESENTATIONS, WARRANTIES OR COMMITMENTS OTHER THAN THOSE REPRESENTATIONS, WARRANTIES OR COMMITMENTS SET FORTH IN THIS AGREEMENT.
13.JURY TRIAL WAIVER. THE PARTIES ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL RIGHT, BUT THAT THIS RIGHT MAY BE WAIVED. THE PARTIES EACH KNOWINGLY, VOLUNTARILY, AND WITHOUT DURESS, INTIMIDATION, OR COERCION, WAIVE ALL RIGHTS TO A TRIAL BY JURY OF ALL DISPUTES ARISING OUT OF OR IN RELATION TO THIS AGREEMENT OR ANY OTHER AGREEMENTS BETWEEN THE PARTIES EXECUTED IN CONNECTION WITH THIS AGREEMENT. NO PARTY WILL BE DEEMED TO HAVE RELINQUISHED THE BENEFIT OF THIS JURY TRIAL WAIVER UNLESS THE RELINQUISHMENT IS IN A WRITTEN INSTRUMENT SIGNED BY THE PARTY TO WHICH THE RELINQUISHMENT WILL BE CHARGED.
[signature page follows]
EXHIBITS
Exhibit A: Price Increases
Exhibit B: Resourced Parts
Exhibit C: Designated Accounts
Exhibit D: Budget
Exhibit E: Forbearance Agreement
Exhibit F: Access Agreement
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the Effective Date.
Unique Fabricating, Inc., Unique-Intasco Canada, Inc.,
Unique Fabricating NA, Inc., Unique-Chardan, Inc.,
Unique Molded Foam Technologies, Inc.,
Unique PreScotech, Inc., Unique Fabricating Realty, LLC,
Unique Fabricating South, Inc., and
Unique Fabricating de México, S.A. de C.V.
By: /s/ Byrd Douglas Cain III
Name: Byrd Douglas Cain III
Title: President and Chief Executive Officer
| | | | | |
| FCA US LLC, |
| On behalf of itself and the final vehicle assembly entities FCA Mexico, S.A. de CV and FCA Canada Inc. |
| |
| By: | /s/ Lisa Clark |
| Name: | Lisa Clark |
| Title: | Vice President, Supplier Risk Management |
| | | | | |
| General Motors LLC |
|
| |
| By: | /s/ Mark W. Fischer |
| Name: | Mark W. Fischer |
| Title: | Director, Supply Risk Management |
| | | | | |
| Yanfeng Automotive Interior Systems Co. |
|
| |
| By: | /s/ James G. Bos |
| Name: | James G. Bos |
| Title: | Vice President, Global Procurement |
| | | | | |
| Citizens Bank, National Association |
|
| |
| By: | /s/ Michael Flynn |
| Name: | Michael Flynn |
| Title: | Senior Vice President |
Exhibit A
Price Increases
•GM: $0.00
•FCA: $0.00
•Yanfeng: $0.00. Yanfeng will not increase its prices but rather fund the following amounts through surcharges for the following weeks as per the schedule below.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Yanfeng Funding Schedule |
| | Funding Dates (Week Ending; 2023) | | |
| In $'s | 5/28 | 6/4 | 6/11 | 6/25 | 7/2 | 7/9 | 7/16 | 8/6 | 9/3 | 10/2 | 10/30 | | Total | Funding % |
| Yanfeng | [REDACTED] | [REDACTED] | [REDACTED] | [REDACTED] | [REDACTED] | [REDACTED] | [REDACTED] | [REDACTED] | [REDACTED] | [REDACTED] | [REDACTED] | | [REDACTED] | [REDACTED] |
Exhibit B
Resourced Parts
Yanfeng parts resourced prior to Effective Date per Termination Notice dated March 31, 2023:
[REDACTED]
Additional Yanfeng Parts to be resourced:
[REDACTED]
Additional Yanfeng parts to be resourced (resourcing requested by UFAB):
[REDACTED]
Exhibit C
Designated Account
[REDACTED]
Exhibit D
Budget
[REDACTED]
Exhibit E
Forbearance Agreement
Exhibit F
Access Agreement
EX 10.2
Certain information has been excluded from this exhibit because it is both not material and would likely cause competitive harm to the Registrant if publicly disclosed.
FORBEARANCE AGREEMENT
This Forbearance Agreement (“Agreement” or “Forbearance Agreement”) is made this 22nd day of May, 2023 by and between UNIQUE FABRICATING NA, INC., a Delaware corporation (“US Borrower”), and UNIQUE-INTASCO CANADA, INC., a corporation organized under the laws of the province of British Columbia (“CA Borrower”, called together with US Borrower, the “Borrowers” and each of them referred to herein as a “Borrower”), UNIQUE FABRICATING, INC., a Delaware corporation (“Parent”), UNIQUE-CHARDAN, INC., a Delaware corporation, UNIQUE MOLDED FOAM TECHNOLOGIES, INC., a Delaware corporation, UNIQUE PRESCOTECH, INC., a Delaware corporation, UNIQUE FABRICATING REALTY, LLC, a Michigan limited liability company, UNIQUE FABRICATING SOUTH, INC., a Michigan corporation, and UNIQUE-INTASCO USA, INC., a Michigan corporation (each a “Guarantor” and collectively the “Guarantors”), the financial institutions signatory hereto (individually a “Lender,” and collectively the “Lenders”), CITIZENS BANK, NATIONAL ASSOCIATION, a national banking association, as Agent for the Lenders (in such capacity, the “Agent”). The Borrowers and Guarantors are sometimes hereinafter referred to as the “Obligors”.
Recitals:
Borrowers, Agent and the Lenders are party to an Amended and Restated Credit Agreement dated November 8, 2018, as amended by a Waiver and First Amendment to Credit Agreement and Loan Documents dated May 7, 2019, a Second Amendment to Credit Agreement and Loan Documents dated June 14, 2019, a Third Amendment to Credit Agreement and Loan Documents dated June 28, 2019, a Waiver and Fourth Amendment to Credit Agreement and Loan Documents dated July 16, 2019, a Fifth Amendment to Credit Agreement dated August 7, 2019, a Sixth Amendment to Credit Agreement dated April 3, 2020, a Seventh Amendment to Credit Agreement dated April 23, 2020, an Eighth Amendment to Credit Agreement dated August 7, 2020, a Waiver and Ninth Amendment to Credit Agreement dated November 7, 2022, and a Tenth Amendment to Credit Agreement dated February 3, 2023 (as so amended and further amended by the Forbearance Agreement, as amended, the “Credit Agreement”), pursuant to which the Lenders have made certain Loans available to the Borrowers.
The Loans, Indebtedness, and the Borrowers’ other obligations under the Credit Agreement are secured by, among other documents and instruments: (i) a first priority all-assets security interest granted by the US Borrower and the Guarantors to Agent pursuant to the terms and conditions of the Security Agreement dated April 29, 2016 as affirmed by a Consent and Reaffirmation of Security Agreement dated November 8, 2018 (the “Security Agreement”); (ii) a first priority all-assets security interest granted by the CA Borrower to Agent pursuant to the terms and conditions of the Security Agreement dated April 29, 2016 as affirmed by a Consent and Reaffirmation of Security Agreement dated November 8, 2018 (the “CA Security Agreement”); and (iii) the absolute and unconditional, joint and several Continuing Agreement of Guaranty and Suretyship dated April 29, 2016 of US Borrower and Guarantors, as affirmed by a Consent and Reaffirmation of, and Amendment to, Continuing Agreement of Guaranty and Suretyship dated November 8, 2018 (collectively the “Guaranty”).
As a result of Specified Defaults, the Obligors and the Lenders entered into a Forbearance Agreement dated April 9, 2021, pursuant to which, the Lenders agreed to forbear on a limited basis from exercising their rights and remedies because of the Specified Defaults. The Obligors subsequently requested that the Agent and Lenders extend the Forbearance Period. Accordingly, the Obligors, Agent and Lenders entered into a First Amendment to Forbearance Agreement dated June 14, 2021 (the “First Amendment”). The Obligors then requested that the Lenders and Agent agree to certain further amendments to the Forbearance Agreement in connection with the issuance by the Borrower of additional equity securities. Accordingly, the Borrower and Agent, and Lenders entered into a Second Amendment to Forbearance Agreement dated September 21, 2021 (the “Second Amendment”). Subsequently a Specified Forbearance Termination Event occurred in that the Borrowers failed to meet the required Minimum Consolidated EBITDA Covenant set forth in Section 7(d) of the Credit Agreement. As a result, the Obligors requested that the Lenders forbear with respect to the Specified Forbearance Termination Event in addition to the Specified Defaults and requested certain other modifications to the Forbearance Agreement. Accordingly, the Obligors, Lenders and Agent entered into a Third Amendment to Forbearance Agreement dated December 9, 2021 (the “Third Amendment”). Subsequently, a Second Specified Forbearance Termination Event occurred under the Forbearance Agreement in that the US Borrower failed to meet the minimum Liquidity for the period ended December 31, 2021. As a result, the Obligors requested that the Agent and Lenders waive US Borrower’s failure to meet the required minimum Liquidity for the period ended December 31, 2021. Accordingly, the Obligors, Lenders and Agent entered into a Fourth Amendment to Forbearance Agreement dated February 4, 2022 (the “Fourth Amendment”). Obligors requested that the Agent and Lenders extend the Forbearance Period from February 28, 2022 to March 11, 2022. Agent and Lenders were willing to do so. Accordingly, the Obligors, Agent and Lenders entered into a Fifth Amendment to Forbearance Agreement dated effective as of February 28, 2022 (the “Fifth Amendment”). Obligors further requested that Agent and Lenders extend the Forbearance Period from March 11, 2022 to May 30, 2022. Agent and Lenders were willing to do so. Accordingly, Obligors, Agent and Lenders entered into a Sixth Amendment to Forbearance Agreement dated effective as of March 11, 2022 (the “Sixth Amendment”). Obligors further requested that Agent and Lenders extend the Forbearance Period from May 30, 2022 to June 13, 2022. Agent and Lenders were willing to do so. Accordingly, Obligors, Agent and Lenders entered into a Seventh Amendment to Forbearance Agreement dated effective as of May 30, 2022 (the “Seventh Amendment”). Obligors further requested that the Agent and Lenders extend the Forbearance Period from June 13, 2022 to July 14, 2022, among other revisions to the Forbearance Agreement and other Loan Documents. Agent and Lenders were willing to do so. Accordingly, the Obligors, Agent and Lenders entered into an Eighth Amendment to Forbearance Agreement dated effective as of June 13, 2022 (the “Eighth Amendment”). Obligors further requested that the Agent and Lenders extend the Forbearance Period from July 14, 2022 to September 12, 2022, among other revisions to the Forbearance Agreement and other Loan Documents. Agent and Lenders were willing to do so. Accordingly, the Obligors, Agent and Lender entered into a Ninth Amendment to Forbearance Agreement dated effective as of July 14, 2022 (the “Ninth Amendment”). Obligors further requested that the Agent and Lenders extend the Forbearance Period from September 12, 2022 to October 24, 2022, among other revisions to the Forbearance Agreement and other Loan Documents. Agent and Lenders were willing to do so. Accordingly, the Obligors, Agent and Lender entered into a Tenth Amendment to Forbearance Agreement dated effective as of September 9, 2022 (the “Tenth Amendment”).
The Obligors subsequently requested that the Agent and Lenders consent to: (i) the US Borrower securing two loans (collectively, the “Creditor Loan”) each from Affiliates of one or more shareholders of Parent and others (“Creditors” and singularly a “Creditor”); (ii) the Borrower and certain of its Subsidiaries granting to each Creditor a security interest in US Borrower’s or its Subsidiaries Employee Retention Credit refund (the “ERC Credit”) available to the US Borrower or its Subsidiaries under the CARES Act and the US Borrower’s 5% ownership interest in Entrotech, Inc. and the proceeds US Borrower may realize therefrom (the “Entrotech Collateral”), (iii) subordinating the Agent’s security interest in the ERC Credit and the Entrotech Collateral (collectively, the “Creditor Collateral”) to the Security Interests of Creditors; (iv) extending the Forbearance Period; and (v) amending and restating the monthly sales covenant set forth in Section 7(e) of the Credit Agreement. The Agent and Lenders were willing to do so on the terms and conditions of an Eleventh Amendment to Forbearance Agreement, dated October 4, 2022 (the “Eleventh Amendment”). “First Forbearance Agreement” means the Forbearance Agreement dated April 9, 2021, as amended by the First Amendment, Second Amendment, Third Amendment, Fourth Amendment, Fifth Amendment, Sixth Amendment, Seventh Amendment, Eighth Amendment, Ninth Amendment, the Tenth Amendment, and the Eleventh Amendment.
Obligors subsequently requested that Agent and Lenders Waive the Specified Events of Default and amend certain other terms and conditions of the Credit Agreement. The Agent and Lenders were willing to do so on the terms and conditions of a Waiver and Ninth Amendment to Credit Agreement dated November 7, 2022 (the “Ninth Amendment to Credit Agreement”).
Obligors subsequently requested that the Agent and Lenders Extend the Repayment Date set forth in Section 7A of the Credit Agreement. The Agent and Lenders were willing to do so on the terms and conditions set forth in a Tenth Amendment to Credit Agreement dated February 3, 2023 (the “Tenth Amendment to Credit Agreement”).
Obligors have again defaulted under the terms and conditions of the Credit Agreement in that (i) the Repayment Date has passed and the Obligors have not repaid the Loans as required by Section 7A of the Credit Agreement; (ii) the Obligors did not make the quarterly principal payment on the Amortizing Loans due March 31, 2023; (iii) the Obligors have not timely provided financial statements in violation of Section 6.1 of the Credit Agreement; and (iv) Obligors provided inaccurate financial statements for November, 2022 as disclosed on Schedule 18, attached hereto (clauses (i) through (iv) are collectively the “Third Specified Events of Default”). Specific enumeration of the aforesaid Third Specified Events of Default shall not be interpreted as a waiver of any other Default or Event of Default that may exist under the Loan Documents.
As a result of the Third Specified Events of Default the Agent is entitled to exercise its rights and remedies under the Loan Documents, including but not limited to, accelerating the due date of each of the Loans, commencing litigation against the Guarantors to collect the Loans, or exercising its rights with respect to any security for repayment of the Loans.
In connection with addressing the Third Specified Events of Default, Obligors, Agent, General Motors LLC, for itself and on behalf of its subsidiaries and affiliates (“GM”), FCA US LLC, for itself and on behalf of its subsidiaries and affiliates (“FCA US”), Yanfeng Automotive Interior Systems Co., for itself and on behalf of its subsidiaries and affiliates (“Yanfeng” and collectively with GM and FCA US, “Customers” and each a “Customer”) have entered into an Accommodation Agreement on even date herewith (the “Accommodation Agreement”), pursuant
to which: (i) the Customers agreed to provide certain financial and business accommodations to Obligors; (ii) Lenders agreed to continue to provide Revolving Credit funding to the Obligors in accordance with the Loan Documents as amended by this Agreement (including Section 8 hereof), and the Accommodation Agreement; and (iii) Obligors agreed to engage in and pursue a process to sell the Obligors business and operations and simultaneously develop and implement, if the sale process is unsuccessful and if the Lenders agree, a restructuring plan to reach long-term financial and operational viability and repay the Loans by no later than the expiration of the Forbearance Period. In connection with entering into the Accommodation Agreement, Obligors have requested that the Agent and Lenders forbear from exercising their rights and remedies as a result of the Third Specified Events of Default on the terms and subject to the conditions set forth in this Agreement. Agent and Lenders are willing to continue to forbear from exercising their rights and remedies for the Forbearance Period (hereinafter defined), except as otherwise provided herein, and on the terms and subject to the conditions specified herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged the Obligors, Agent and Lenders hereby agree as follows:
1.RECITALS. The foregoing recitals of facts are true and accurate in all material respects and are incorporated into this Agreement and shall form a part of it. Capitalized terms used herein, but not defined herein, shall have the meaning ascribed to them in the Credit Agreement or the First Forbearance Agreement, as applicable.
2.PRECONDITIONS TO EFFECTIVENESS OF AGREEMENT. The effectiveness of the terms and provisions of this Agreement shall be subject to:
(a)the receipt by the Agent of each of the following, in form and substance satisfactory to the Agent and Majority Lenders:
(i)an original of this Agreement, duly authorized, executed and delivered by each of the Obligors and an original of the Accommodation Agreement executed and delivered by each of the Obligors and the Customers;
(ii)a subordinated participation agreement (the “Participation Agreement”) between the Agent and the Customers pursuant to which GM and FCA will purchase last-out fully subordinated participations in the Revolving Credit in the aggregate amount of Fifteen Million Ten Thousand and 00/100 ($15,010,000.00) Dollars to provide funding of a portion of the Revolving Credit to Borrower;
(iii)a certificate from an authorized officer of each Obligor that is not a natural person certifying, among other things, that attached thereto are true and correct copies of: (i) a resolution of such Obligor authorizing the execution, delivery and performance of this Agreement, and the other documents and certificates to be delivered in connection herewith and (ii) the names, incumbency and certified signatures of those persons
authorized on behalf of such Obligor to sign this Agreement and the other documents and certificates to be delivered in connection herewith;
(iv)receipt by the Lenders of the principal reduction payment that was due under the Credit Agreement on March 31, 2023 in respect of the Amortizing Loans in the amount of One Million Two Hundred Twenty-Eight Thousand One Hundred Twenty-Five and 00/100 ($1,228,125.00) Dollars (and, for the avoidance of doubt, this principal reduction payment shall not have been made from the Creditor Collateral (as defined in the Intercreditor Agreement) but shall have been made from other sources;
(v)payment by the Obligors of all invoiced interest that is overdue on the Loan (except for PIK Interest), if any through the date of this Agreement;
(vi)Obligors’ payment of all outstanding attorneys’ fees and expenses of counsel and financial advisors for the Agent and Lenders and all other fees and expenses payable pursuant to the Credit Agreement; and
(vii)all financial information and financial reports requested by the Lenders in connection with the negotiation and preparation of this Agreement (which Lenders acknowledge and agree have been received).
(b)The occurrence of no Event of Default other than the Third Specified Events of Default under the Loan Documents.
3.ACKNOWLEDGMENT OF OBLIGATIONS. Obligors hereby acknowledge, agree, and confirm that as of the close of business on May 10, 2023, Obligors are indebted to the Lenders in respect of the Loans, as follows:
(a)With respect to the Revolving Credit, the outstanding principal amount of Twenty Million Four Hundred Forty-Seven Thousand One Hundred Thirty-Five and 49/100 ($20,447,135.49) Dollars, plus total accrued interest in respect of the Revolving Credit in the amount of One Hundred Eighty-Three Thousand Nine Hundred Thirty-Two and 62/100 ($183,932.62) Dollars (such amount being exclusive of the Junior Tranche (hereafter defined) provided or to be provided by the Customers); and
(b)With respect to the US Term Loan, the outstanding principal amount of Fifteen Million Five Hundred Twenty-Three Thousand Three Hundred Fourteen and 07/100 ($15,523,314.07) Dollars, plus total accrued interest in respect of the Revolving Credit in the amount of Forty-Eight Thousand Six Hundred Seventy-Six and 04/100 ($48,676.04) Dollars; and
(c)With respect to the CA Term Loan, the outstanding principal amount of Six Million Sixty-Seven Thousand One Hundred Fifty-Three and 12/100 ($6,067,153.12) Dollars, plus total accrued interest in respect of the Revolving
Credit in the amount of Nineteen Thousand Three Hundred Seventy-Eight and 92/100 ($19,378.92) Dollars; and
(d)With respect to the CAPEX Loan, the outstanding principal amount of Nine Hundred Eleven Thousand Five Hundred Forty and 61/100 ($911,540.61) Dollars, plus total accrued interest in respect of the Revolving Credit in the amount of Two Thousand Nine Hundred Eleven and 53/100 ($2,911.53) Dollars; and
(e)Uncapitalized and accrued and unpaid PIK Interest in the amount Eighteen Thousand Five Hundred Seventy-Four and 69/100 ($18,574.69) Dollars.
4.DEFINITIONS. The following definitions are amended and restated and/or inserted into Section 1.1 of the Credit Agreement in appropriate alphabetical order:
“Revolving Credit Aggregate Commitment” shall mean the aggregate sum of the Senior Tranche and the Junior Tranche.
“Senior Tranche” shall mean the amount of the Revolving Credit Aggregate Commitment funded by the Lenders in the amount of up to Twenty-One Million Five Hundred Twenty-Three Thousand and 00/100 ($21,523,000.00) reducing to Eighteen Million One Hundred Eighty-Two Thousand and 00/100 ($18,182,000.00) Dollars from and after May 28, 2023.
“Junior Tranche” shall mean the amount of up to Fifteen Million Ten Thousand and 00/100 ($15,010,000.00) Dollars of the Revolving Credit Aggregate Commitment funded from and after April 6, 2023 by the Lenders through the sale of junior participation interests in the Revolving Credit Aggregate Commitment to General Motors LLC, for itself and on behalf of its subsidiaries and affiliates (“GM”), FCA US LLC, for itself and on behalf of its subsidiaries and affiliates (“FCA US”) and such other customers of Obligors that execute a joinder to the Participation Agreement after the date of this Agreement, pursuant to the terms and conditions of the Participation Agreement.
“Participation Agreement” shall mean the Subordinated Participation Agreement between the Agent and GM and FCA and other customers that execute a joinder to the Participation Agreement after the date of this Agreement, pursuant to which GM and FCA and such other customers of Obligors as execute a joinder agreement have or will purchase last-out fully subordinated participations in the Revolving Credit Aggregate Commitment in the aggregate amount of the Junior Tranche to provide funding of a portion of the Revolving Credit Aggregate Commitment to Borrowers.
5.APPOINTMENT OF CHIEF RESTRUCTURING CONSULTANT. Within five (5) business days following the date of this Agreement, Parent and Borrowers shall appoint a Chief Restructuring Consultant (“CRC”) to the Obligors, reasonably acceptable to the Lenders (Gregory Coppola of B Riley Advisory Services is acceptable to the Lenders),
reporting directly to the Obligors’ Boards of Directors (the “Boards”) according to the scope of services set forth on Exhibit A, which description of the scope of CRC’s duties include, without limitation:
(a)Reporting directly to the Obligors’ Boards to assist the Boards regarding Obligors’ operations, including managing relationships with Obligors’ customers and vendors, and to develop and assist the Investment Banker with undertaking and implementing to conclusion under the direction of Obligors’ Boards, the Sale Process (defined below) and the other initiatives set forth in this Agreement and the Accommodation Agreement and developing and, if necessary and consented to by the Lenders, implementing the restructuring plan required under the Accommodation Agreement (collectively, the “Restructuring”); and
(b)Developing and assuring that Obligors conduct their operations in substantial compliance with the budget attached as Exhibit B (the “Budget”) and pay only ordinary and necessary expenses of their operations, in accordance with the Budget and Section 7.13 of the Credit Agreement.
(c)Communicating regularly with the Lenders, as often as reasonably deemed appropriate by the Agent and Lenders, to provide updates on: (i) the Restructuring process; (ii) the status of customer meetings and a summary of the status customer negotiations; (iii) Obligors’ available liquidity and uses thereof (which must be in compliance with this Agreement) (iv) customer and vendor issues; and (v) the status of Obligors’ business operations and the Restructuring.
6.APPOINTMENT OF INVESTMENT BANKER. On or before May 23, 2023, Borrowers and Parent shall retain an investment banker acceptable to the Majority Lenders (the “Investment Banker”).
(a)Obligors with the aid of the Investment Banker shall commence the Sale Process (as defined in the Accommodation Agreement) for a going-concern asset sale of Obligors business in one or more transactions to a Qualified Buyer (as defined in the Accommodation Agreement) on terms and conditions satisfactory to the Lenders.
(b)Obligors will cause the Investment Banker to provide Lenders with weekly written updates regarding the progress of the Sale Process and shall otherwise keep the Lenders informed of all material developments in respect to the Sale Process, including providing the Lenders with copies of Investment Banker’s contact log, marketing and solicitation materials, proposals, indications of interest, letters of intent, term sheets, purchase agreements, communications, and other related items as requested by Agent or Lenders.
(c)In connection with the Sale Process: (all capitalized terms used in this Section 6(c), unless otherwise defined herein shall have the meanings ascribed thereto in the Accommodation Agreement).
(i)Out-of-Court Process. If Obligors, after consultation with its Investment Banker, Lenders, Customers and potential purchasers, determines that the Sale Process can be completed without a court-supervised process:
1.By no later than July 24, 2023, Obligors shall deliver to each of the Customers and Agent Bank one or more nonbinding expressions of interest on terms and conditions reasonably satisfactory to the Customers and Lenders;
2.By no later than August 21, 2023, all interested buyers shall have completed all due diligence with respect to one or more transactions for the sale of Obligors’ assets or business (the “Transaction(s)”) on terms reasonably acceptable to the Lenders and each of the Customers, and shall have submitted proposed asset purchase agreement(s) therefor;
3.By no later than August 28, 2023, subject to being deemed a Qualified Buyer, Obligors and the potential purchaser(s) shall have entered into final asset purchase agreement(s) on terms and conditions satisfactory to each of the Customers and the Lenders and provided evidence of sufficient financial wherewithal, or shall have obtained binding financing commitments from lenders, in each case sufficient to consummate the Transaction(s), which evidence is satisfactory to the Lenders;
4.By no later than September 15, 2023, Obligors and the potential purchaser(s) shall have provided to the Customers and Lenders: (i) a statement of sources and uses of Transaction(s) proceeds; and (ii) evidence that the potential purchaser’s conditions to closing (other than customary closing deliveries) the Transaction(s), such as business commitments from the Customers, are satisfied or waived.
5.By no later than October 31, 2023, Obligors shall have closed each Transaction with a Qualified Buyer on terms reasonably acceptable to each of the Customers at those locations and the Lenders.
(ii)In-Court Process. If Obligors, after consultation with its Investment Banker, Lender, Customers and potential purchasers, decides to complete the Sale Process through a court supervised process:
1.By no later than July 24, 2023, Obligors shall deliver to each of the Customers and Agent Bank one or more nonbinding expressions of interest on terms and conditions reasonably satisfactory to the Customers and Lenders;
2.By no later than August 21, 2023, all interested buyers shall have completed all due diligence with respect to one or more transactions for the sale of Obligors’ assets or business (the
“Transaction(s)”) on terms reasonably acceptable to the Lenders and each of the Customers, and shall have submitted proposed asset purchase agreement(s) therefor;
3.By no later than August 28, 2023, subject to being deemed a Qualified Buyer, Obligors and the potential purchaser(s) shall have entered into final asset purchase agreement(s) on terms and conditions satisfactory to each of the Customers and the Lenders (and subject to higher and better bids under the process described below) and provided evidence of sufficient financial wherewithal, or shall have obtained binding financing commitments from lenders, in each case sufficient to consummate the Transaction(s), which evidence is satisfactory to the Lenders:
4.By no later than August 31, 2023, Obligors shall have filed a bankruptcy petition under Chapter 11 of the U.S. Bankruptcy Code or some other court process (the “Court”);
5.By no later than September 29, 2023, Obligors shall have obtained an order from the Court approving bidding procedures providing that all bids are due by October 12, 2023, and setting a sale hearing by October 27, 2023;
6.By no later than October 31, 2023, Obligors shall have closed each Transaction with a Qualified Buyer on terms reasonably acceptable to each of the Customers at those locations and the Lenders.
7.CUSTOMER ACCOMMODATIONS. Any other customers of Obligors agreeing to the accommodation terms contained in the Accommodation Agreement after the date of this Agreement and executing and delivering an accommodation agreement in form and substance acceptable to the Agent and Majority Lenders (or a joinder to the Accommodation Agreement) will be deemed to be a “Customer” and the modified Advance rates set forth in Section 8, below will be applicable to such customer’s Eligible Accounts and Eligible Inventory.
8.ADVANCES.
(a)The Obligors acknowledge and agree that as a result of the Third Specified Events of Default Lenders have no further obligation to make any Advances of Revolving Credit (other than the Junior Tranche in compliance with the Participation Agreement). Notwithstanding Lenders’ right to cease Advances of Revolving Credit, the Lenders will make Advances of the Senior Tranche of the Revolving Credit during the Forbearance Period, subject to satisfaction of the terms and conditions to make an Advance of Revolving Credit contained in the Credit Agreement (other than the Third Specified Events of Default) and Section 8 hereof, up to but not exceeding the amount of the Senior Tranche (as reduced
after May 21, 2023) and of the Junior Tranche in compliance with the Participation Agreement. Except as otherwise provided in this Agreement, nothing contained herein shall be construed as an agreement of the Lenders to increase the amount of the Revolving Credit Aggregate Commitment or increase the amount of the Senior Tranche. Funding of additional Advances after the date of this Agreement in excess of the Senior Tranche, or after giving effect to, the request for an Advance of Revolving Credit, shall be provided solely through funds provided by the Customers in respect of the Junior Tranche and within the aggregate amount of the current Revolving Credit Aggregate Commitment.
(b)The Swing Line commitments and the obligation of the Swing Line Lender to make Swing Line Advances are hereby terminated.
(c)Under no circumstances may Borrowers use cash collections realized from Accounts or from any other source (the “Cash Collateral”) to fund Borrowers’ operations without the prior written consent of the Lenders. All such Cash Collateral shall be deposited directly into the Borrower’s operating accounts maintained with Agent for application against the Senior Tranche.
(d)For purposes of calculating the Borrowing Base from and after the effective date of this Agreement and so long as no Forbearance Termination Event has occurred, notwithstanding the advance rates set forth in the definition of Borrowing Base contained in the Credit Agreement, the Lenders shall apply the following advance rates to Eligible Accounts, raw material Eligible Inventory and finished goods Eligible Inventory associated with the Customers only:
Eligible Accounts Receivable 92%
Eligible Inventory (raw materials) 75%
Eligible Inventory (finished goods) 85%
The foregoing increased Advance rates are temporary and shall no longer apply: (i) as to any Customer upon the expiration of the Term as to such Customer under the Accommodation Agreement; or (ii) upon a Forbearance Termination Event. Unless and until a customer (other than the Customers) satisfies the requirements of Section 7 above, the advance rates set forth in the definition of Borrowing Base contained in the Credit Agreement shall apply to Eligible Accounts and Eligible Inventory associated with such customers (and not the advance rates set forth in this Section 8(d)).
9.ADDITIONAL COVENANTS. In addition to the other covenants and conditions contained in the Credit Agreement and the other Loan Documents, the Obligors covenant and agree as follows:
(a)Within five (5) business days of the execution of this Agreement, the Obligors, acting through the CRC, will convoke a meeting or series of meetings with Other Key Customers (as defined in the Accommodation Agreement (the “Additional Customer Meetings”) to present Obligors’ request for accommodations from such
customers. Riveron shall, and any Lender may, participate in such meetings to represent the Agent’s and Lenders regarding any proposed accommodations and the impact thereof on the Loans and Lenders’ Collateral, as well as the administration of the Loans during the Restructuring process. Failure of Obligors to hold the Additional Customer Meetings shall constitute a Forbearance Termination Event under this Agreement entitling the Agent and Lenders to exercise their rights and remedies under the Credit Agreement and other Loan Documents.
(b)Obligors, acting through CRC, will immediately commence a process to initiate, and will diligently pursue the Sale Process as part of the Restructuring in one or more transactions, including, but not limited to: (i) identifying potential Qualified Buyers of Obligors’ businesses; and (ii) preparing solicitations of interest and related marketing materials for potential Qualified Buyers of Obligors’ businesses, all according to the Sale Milestones and other terms set forth in the Accommodation Agreement. Obligors failure to meet any Sale Milestones shall constitute a Forbearance Termination event under this Agreement. CRC shall provide regular updates to the Agent, Lenders, and Riveron regarding the sale process.
(c)Obligors will not, without the prior written consent of the Agent, Majority Lenders, and the Customers discharge the CRC or materially reduce or amend the scope of the CRC’s duties.
(d)Obligors grant to Agent and Lenders and their agents and designees, including Riveron, full access to the CRC, and CRC’s reports, findings, workpapers and analysis of Obligors’ and their businesses at such time and times during business hours and at such locations as the Agent shall reasonably request. This shall include, but not be limited to, written copies of contact logs, and copies of all reports and analysis prepared by CRC summarizing any proposals, indications of interest, and term sheets submitted to or received by CRC, but shall not include access to attorney work product or any other documents subject to attorney-client privilege or other similar privileges. In addition, Obligors will make its other appropriate officers and consultants available to the Agent and its agents and designees, to discuss the information in any reports delivered to the Agent or Lenders and any questions the Agent or Lenders may have.
10.CASH FLOW. Section 7.13 of the Credit Agreement (as set forth in the Ninth amendment to Credit agreement) is hereby deleted and replaced with the following:
Obligors will conduct their operations and business and pay only ordinary and necessary expenses of its operations, solely in accordance with the Budget. The Budget shall not exceed the total amount set forth thereon; provided, however, that, without exceeding the total amount of the Budget, Obligors may exceed any Budget line item relating to cash outflows by up to ten percent (10%) of the budgeted amount for such line item. During the Forbearance Period, Obligors will provide the Agent and Lenders with (i) weekly actual vs. projected Budget reports, (ii) subject to Lenders approval, a roll-forward of the
Budget on a monthly basis with all material updates highlighted, and (iii) such other and further financial reporting as Agent or Lenders may reasonably request.
11.DEBT SERVICE. During the Forbearance Period, the Agent and Lenders agree to accept fifty percent (50%) of the quarterly Amortizing Loan Payments due on June 30, 2023 and September 30, 2023, which shall be remitted by the Obligors in monthly installments in accordance with the Budget without any allowed variance, and failure to do so shall constitute a Forbearance Termination Event. The balance of the June 30, 2023 and September 30, 2023 Amortizing Loan Payments shall be deferred until the earlier of: (i) a Forbearance Termination Event; (ii) the Maturity Date or (iii) repayment of the Amortizing Loans.
12.ACKNOWLEDGMENT OF SECURITY INTERESTS. Each of the Obligors hereby acknowledge, confirm and agree that the Agent has and shall continue to have valid, enforceable and perfected first-priority liens upon and security interests in the Collateral securing the Loans heretofore granted to the Agent pursuant to the Loan Documents or otherwise granted to or held by Agent or Lenders, except to the extent such liens and security interests have been subordinated with respect to the Creditor Collateral.
13.BINDING EFFECT OF DOCUMENTS. Each Obligor hereby acknowledges, confirms and agrees that: (a) each of the Loan Documents to which it is a party has been duly executed and delivered to the Agent or Lenders, as applicable by Obligors, and each is in full force and effect as of the date hereof, (b) the agreements and obligations of Obligors contained in such documents and in this Agreement constitute the legal, valid and binding obligations of Obligors, enforceable against them in accordance with their respective terms, and Obligors have no valid defense to the enforcement of such obligations, and (c) the Agent and Lenders are and shall be entitled to the rights, remedies and benefits provided for in the Loan Documents and applicable law.
14.ACKNOWLEDGMENT RESERVATION OF RIGHTS. Each Obligor hereby acknowledges that the Agent, on behalf of the Lenders is free to exercise its rights and remedies under the Loan Documents, applicable law or otherwise including acceleration or demand of the Indebtedness as all such Indebtedness is payable on demand or subject to acceleration by reason of the Third Specified Events of Default. The Lenders have not waived, presently do not intend to waive, and may never waive any or all remedies or prior acceleration and nothing contained herein or the transactions contemplated hereby shall be deemed to constitute any such waiver, but the Agent and Lenders agree to forbear during the Forbearance Period from exercising their rights and remedies as a result of the Third Specified Events of Default so long as Obligors observe and perform each and every term, covenant, and condition of this Agreement.
15.FORBEARANCE. In reliance upon the representations, warranties and covenants of each of the Obligors contained in this Agreement, and subject to the terms and conditions
of this Agreement and any documents or instruments executed in connection herewith, the Agent and Lenders agree to forbear from enforcing their rights and seeking to collect payment of the Indebtedness or disposing of the Collateral under the Loan Documents or applicable law by reason of the Third Specified Events of Default for a period of time (the “Forbearance Period”) commencing on the date hereof through and including the earlier of; (i) a Forbearance Termination Event; or (ii) any expiration of the Term, as defined in the Accommodation Agreement (or any additional accommodation agreement); or October 31, 2023. Upon expiration or the earlier termination of the Forbearance Period, Agent’s and Lenders’ agreement to forbear shall automatically and without further action terminate and be of no force and effect, it being expressly agreed that the effect of such termination will be to permit the Agent on behalf of the Lenders to exercise all rights and remedies immediately, without any further notice, passage of time or forbearance of any kind including, without limitation, the right to institute, continue or consummate proceedings against the Collateral under the Uniform Commercial Code or otherwise, effect set off of any funds held in deposit accounts and to exercise any and all of the Agent’s and Lenders’ rights and remedies available to them under the Loan Documents or this Agreement, at law, in equity, or otherwise, without further notice, opportunity to cure, demand, presentment, notice of dishonor, notice of acceleration, notice of intent to accelerate, notice of intent to foreclose, notice of sale, notice of protest or other formalities of any kind, all of which, including but not limited to notice and cure periods as set forth in the Credit Agreement, are hereby expressly waived by the Obligors.
16.NO OTHER WAIVERS; RESERVATION OF RIGHTS.
(a)In consideration of the accommodations made in this Agreement Obligors represent to and agree with Agent and Lenders that (i) the Indebtedness is due to Lenders without setoff, defense or counterclaim at law or in equity, of any kind or nature, or to the extent that any of the Obligors believe that they have any such defense, set-off or counterclaim, they have agreed to, and do hereby, waive each and every such defense, set-off or counterclaim, nor have they assigned any of same, (ii) that any potential defenses, counterclaims and setoffs have been freely waived, with full knowledge of all facts and circumstances underlying same; (iii) Agent and the Lenders have fully performed all of their obligations under the Loan Documents; (iv) except as set forth herein, Agent and Lenders have no obligation to forbear from enforcing their rights and remedies available upon default; (v) any future loans or forbearance will be extended in the sole discretion of Lenders; (vi) neither Agent nor any Lender has made any representations of any kind or nature that funding in any amount will continue, or that forbearance by the Agent and Lenders will be extended beyond the date set forth herein; (vii) the actions taken by the Agent and each Lender to date in furtherance of the Loan Documents have been reasonable and appropriate under the circumstances, have not violated any of Obligors’ rights, and were within the rights of Agent and Lenders thereunder; and (viii) the Agent and Lenders have neither violated any of the terms or conditions of any Loan Documents, nor made any representations or commitments, oral or written, or undertaken any obligations to Obligors other than as set forth in the Loan Documents or this Agreement.
(b)The Agent and Lenders have not waived, are not by this Agreement waiving, and have no intention of waiving, any default under the Loan Documents which may be continuing on the date hereof or any such default which may occur after the date hereof (whether the same or similar to the Third Specified Events of Default) and Agent and Lenders have not agreed to forbear with respect to any of their rights or remedies concerning any such default (other than, during the Forbearance Period, the Third Specified Events of Default, to the extent expressly set forth herein), which may have occurred or is continuing as of the date hereof or which may occur after the date hereof.
(c)Subject to Section 15 above (solely with respect to the Third Specified Events of Default), Agent and Lenders reserve the right, in their discretion, to exercise any or all of their rights and remedies under the Loan Documents, and applicable law as a result of any Event of Default which may be continuing on the date hereof or any Event of Default which may occur after the date hereof, and Agent and the Lenders have not waived any of such rights or remedies, and nothing in this Agreement, and no delay on their part in exercising any such rights or remedies, should be construed as a waiver of any such rights or remedies all such rights having been reserved.
(d)Without limiting the generality of the foregoing, Obligors will not claim that any prior action or course of conduct by the Agent or any Lender constitutes an agreement or obligation to continue such action or course of conduct in the future. Obligors acknowledge that, except as set forth herein, the Lenders have made no commitment to make further loans to Obligors and Obligors acknowledge the Indebtedness shall be paid in full and all obligations satisfied upon the end of the Forbearance Period.
(e)Except as otherwise specifically provided herein, nothing in this Agreement shall be construed as an amendment to any Loan Document. The Loan Documents are in full force and effect, and shall remain in full force and effect unless and until an agreement modifying any Loan Document is executed and delivered by the applicable parties, and then only to the extent such agreement actually modifies such documents.
17.REPRESENTATIONS, WARRANTIES AND OTHER COVENANTS. Borrowers and Guarantors represent and warrant that as of the as of the date of this Agreement:
(a)The representations and warranties in the Loan Documents, as modified by this Agreement are true and correct in all material respects.
(b)Other than the Third Specified Events of Default or as otherwise heretofore waived or forborne by Lenders in writing, there is no Event of Default under the Loan Documents, and neither Borrowers nor Guarantors have knowledge of any event or circumstance that with the giving of notice or the passage of time, or both, would constitute an Event of Default under the Loan Documents.
(c)The Loan Documents are in full force and effect, including, but not limited to, the minimum Liquidity covenant set forth in Section 7.1(c) of the Credit Agreement and, following the execution and delivery of this Agreement, the Loan Documents will continue to be the legal, valid and binding obligations of Borrowers and Guarantors, as applicable, enforceable in accordance with their respective terms, subject to limitations imposed by bankruptcy, insolvency, other debtor relief laws and general principles of equity.
(d)Obligors exist under the laws of the jurisdictions of their formation or organization and have the requisite power and authority to execute and deliver this Agreement and to perform their obligations under the Loan Documents as modified hereby.
(e)The execution and delivery of this Agreement by Obligors and the performance by the Obligors of their obligations under the Loan Documents as modified hereby have been duly authorized by all requisite action by or on behalf of Obligors. This Agreement has been duly executed and delivered on behalf of Obligors.
(f)The parties hereto acknowledge, confirm and agree that any misrepresentation by any Obligor or any failure of any Obligor to comply with the covenants, conditions and agreements contained in any Loan Documents, herein or in any other agreement, document or instrument at any time executed and/or delivered by any Obligor with, to or in favor of the Agent or Lenders shall constitute a Forbearance Termination Event hereunder. In the event any person, other than the Agent or Lenders, shall at any time exercise for any reason (including by reason of the Third Specified Events of Default, any other present or future default, or otherwise) any of its rights or remedies against any Obligor or against such Obligor’s properties or assets, such event shall constitute a Forbearance Termination Event hereunder.
(g)Obligors hereby consent to direct communication between any of their agents and (i) Lenders and the Lenders’ agents, or (ii) the Customers and the Customers agents; or (iii) between the Lenders and the Lenders’ agents and the Customers and the Customers’ agents whether or not the Obligors or the Obligors’ agents are party to any such communication, all without the further consent of the Obligors. Obligors agree that they will instruct their agents to fully cooperate with the Agent, Customers, Lenders and their agents and advisors.
(h)No Obligor has received any written notice of any, nor is there any, pending or, to the best of Obligors’ knowledge any threatened, litigation or administrative proceeding involving in any manner the ownership, leasing, operation, management, use, or maintenance of Obligors’ business or this transaction.
(i)As of the date hereof and except as disclosed on Schedule 18, no representation or warranty of the Obligors contained in this Agreement or in support of this Agreement furnished to the Agent or Lenders by or on their behalf with respect to
the business, operations, property or assets of the Obligors, property or assets acquired by any of them, or their business prospects or condition (financial or otherwise) for use in connection with the transactions contemplated by this Agreement, knowingly contain any untrue statement of a material fact or omits to state a material fact at the time such representation or warranty was made to the Agent or Lenders (known to them in the case of any document which they did not furnish) necessary in order to make the statements contained herein or therein not misleading.
(j)Agent and Lenders acknowledge and agree that as a result of the on-going investigation disclosed on Schedule 18, the Borrowers are unable to timely provide financial statements as required by Section 6.1 of the Credit Agreement. Following completion of the investigation and conclusion of the audit for Fiscal Year 2022, Borrowers will provide the financial statements required by Section 6.1 of the Credit Agreement, and will continue to provide thereafter interim financial statements required by Section 6.1 of the Credit Agreement.
18.FORBEARANCE TERMINATION. The Obligors, without further notice or demand of any kind, shall be in default under this Agreement upon the occurrence of any of the following (each a “Forbearance Termination Event”):
(a)Failure to meet the deadlines set forth in the Section 3 of the Accommodation Agreement, or a violation of Section 9 hereof.
(b)Expiration of the Forbearance Period without payment of the Indebtedness or Obligors’ failure to observe and perform each and every other term, covenant and condition of this Agreement and the other Loan Documents from and after the date hereof, or a Forbearance Termination Event noted elsewhere in this Agreement.
(c)Failure to make payment of any amount due and owing which is required to be made under the terms of this Agreement or the other Loan Documents.
(d)Except as noted in Schedule 18, any written warranty, representation, certificate or statement in this Agreement, the Loan Documents or any other agreement with the Agent or Lenders or otherwise made by or for any Obligor to the Agent or Lenders shall be materially false when made or at any time thereafter, or if any financial data or any other information now or hereafter furnished to the Agent by or on behalf of any Obligor shall prove to be knowingly materially false, inaccurate or misleading when made.
(e)Default, however defined, under any of the Loan Documents (other than the Third Specified Events of Default) or an Event of Default under the Accommodation Agreement (or any additional Accommodation Agreement).
(f)Failure of the Customers to fund any installment when due on the purchase of the Junior Tranche under the Participation Agreement.
19.NO NOVATION OR IMPAIRMENT OF SECURITY. As amended by this Agreement, all the terms, covenants, conditions and warranties of the Credit Agreement and other Loan Documents, including the First Forbearance Agreement and this Agreement, shall continue in full force and effect. Neither this Agreement, nor any of the other amendments to the Loan Documents through the date hereof is intended to be and shall not constitute a substitution or novation of the Credit Agreement or of any of the other Loan Documents. Nothing contained in this Agreement or any prior amendment of the Loan Documents shall (a) be construed as (i) invalidating or releasing any security or collateral now or hereafter held by Agent or Lenders for the Loans or other Indebtedness other than Agent’s subordination of its lien to the Creditors in the Creditor Collateral, or (ii) giving any person, other than the parties hereto, any right, remedy or claim under or in respect of this Agreement or any of the other Loan Documents, or (b) impair the priority or perfection of the liens, rights or security interests in favor of Agent or Lenders under any of the Loan Documents.
20.RELEASE.
(a)In consideration of Agent’s and Lenders’ agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Obligors, on behalf of themselves and each of their officers, employees, present and former shareholders, attorneys, agents, affiliates, subsidiaries, divisions, predecessors, successors, assigns, anyone acting on their behalf and other legal representatives (collectively referred to hereinafter as the “Releasors”), hereby absolutely, unconditionally and irrevocably release, remise and forever discharge Agent, each Lender and their successors and assigns, and their present and former shareholders, affiliates, subsidiaries, divisions, predecessors, directors, officers, attorneys, advisors, employees, agents and other representatives (collectively hereinafter referred to as the “Releasees” and individually as a “Releasee”), of and from all demands, actions, causes of action, suits, covenants, contracts, controversies, agreements, promises, sums of money, accounts, bills, reckonings, damages and any and all other claims, counterclaims, defenses, rights of set-off, demands and liabilities whatsoever (individually, a “Claim” and collectively, “Claims”) of every name and nature, known or unknown, suspected or unsuspected, both at law and in equity, which any or all of the Releasors may now or hereafter own, hold, have or claim to have against the Releasees or any of them for, upon, or by reason of any circumstance, action, cause or thing whatsoever which arises at any time on or prior to the day and date of this Agreement, including, without limitation, for or on account of, or in relation to, or in any way in connection with any of the Credit Agreement, the other Loan Documents or this Agreement or transactions thereunder or related thereto.
(b)Obligors understand, acknowledge and agree that the release set forth above may be pleaded as a full and complete defense and may be used as a basis for an
injunction against any action, suit or other proceeding which may be instituted, prosecuted or attempted in breach of the provisions of such release.
(c)Obligors agree that no fact, event, circumstance, evidence or transaction which could now be asserted, or which may hereafter be discovered shall affect in any manner the final, absolute and unconditional nature of the release set forth above.
21.COVENANT NOT TO SUE. Releasors hereby absolutely, unconditionally and irrevocably, covenant and agree with and in favor of each Releasee that it will not sue (at law, in equity, in any regulatory proceeding or otherwise) any Releasee on the basis of any Claim released, remised and discharged by Obligors pursuant to Section 20 above. If any or all of the Releasors violate the foregoing covenant, each Obligor and each of their successors, assigns and legal representatives, agrees to pay, in addition to such other damages as any Releasee may sustain as a result of such violation, all attorneys' fees and costs incurred by any Releasee as a result of such violation.
22.INDEMNIFICATION. Each Obligor agrees to indemnify and hold Agent and each Lender and each of their directors, officers, employees, agents (including attorneys and other professionals providing advice in connection herewith) and Affiliates (each, an “Indemnified Person”) harmless from and against any and all claims, losses, damages, obligations, liabilities, penalties, costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses) of any kind or nature whatsoever, whether direct, indirect or consequential (collectively, “Indemnified Costs”), that may at any time be imposed on, incurred by or asserted against any such Indemnified Person as a result of, arising from or in any way relating to the preparation, execution, performance or enforcement of this Agreement or any agreements prepared, negotiated, executed or delivered in connection with the transactions contemplated hereby or any action, suit or proceeding (including any inquiry or investigation) by any Person, whether threatened or initiated, related to any of the foregoing, and in any case whether or not such Indemnified Person is a party to any such action, proceeding or suit or a subject of any such inquiry or investigation. All of the foregoing Indemnified Costs of any Indemnified Person shall be paid or reimbursed by the each of the Obligors, as and when incurred and upon demand.
23.REAFFIRMATION OF GUARANTY. Each of the Guarantors reaffirms and ratifies its respective obligations under the Guaranty of the Loans and other Indebtedness executed and delivered by any Obligor, all of which remain in full force and effect, consents to the execution and delivery of this Agreement, and agrees and acknowledges that its Guaranty liability shall not be diminished in any way by the execution and delivery of this Agreement or by the consummation of any of the transactions contemplated herein.
24.PAYMENTS OR DOCUMENTS VOIDED.
(a)In the event that any payment or transfer to Agent or any Lender provided by this Agreement or pursuant to the Loan Documents is later avoided, or any document
or other instrument given to Agent according to the terms of this Agreement is ever rendered void or rescinded or any of the Loans or Loan Documents are voided or rescinded, pursuant to either state or federal law, then the Agent or the Lenders may (in their sole discretion) elect to have this Agreement and any lien or other collateral releases, guaranty releases, and other documents delivered in connection herewith become null and void and of no force and effect and in such an event Agent and Lenders shall have the right and power to collect the entire Indebtedness, including all principal and interest, evidenced by the Loan Documents which would have accrued if this Agreement had not been executed and seek enforcement of its liens and such other provisions of the Loan Documents as the Agent or Lenders shall elect, subject to the rights of the Creditors in the Creditor Collateral. Further, in such event, the Obligors shall execute any and all documents deemed necessary by Agent to restore Agent and the Lenders to their status prior to the execution of this Agreement. Upon such avoidance or rescission, Agent shall, in addition to all of its rights and remedies allowed by applicable law, be entitled at its option to declare any lien release provided hereunder null and void, and all claims of Lenders relating to the Indebtedness and the Loan Documents shall be revived in accordance with their original terms.
(b)Notwithstanding anything herein to the contrary, if a claim is made upon the Agent or any Lender, or any subsequent transferee from any Lender or Agent (collectively referred to as the “Transferee”), for repayment or recovery of any amount(s) or property or its equivalent received by any of them pursuant to this Agreement and, if, resulting from such claim, Agent or any Lender pays all or part of said amount or redelivers property or its equivalent to any of the Obligors, or anyone authorized by law to act on behalf of any of them (collectively the “Transferor”) by reason of (a) any judgment, decree or order of any court or administrative body, or (b) any settlement or compromise of any such claim effected by the Transferee, then, in any such event, the Transferor agrees that: (i) any such judgment, decree, order, settlement or compromise shall be binding upon it/them, (ii) the Transferor shall be and remain liable to the Transferee for: (x) any and all damages available to the Transferee under the Loans, the Loan Documents including, without limitation the Credit Agreement, and or this Agreement, plus (y) all amounts so repaid or recovered, to the same extent as if such amount had never originally been received by the Transferee, and (iii) at the Agent’s election (such election being in the sole discretion of the Agent) any partial lien release contemplated by Agent by this Agreement, if any, shall be of no force and effect. The provisions of this paragraph shall survive and continue in effect, notwithstanding any payment of any or all of the amounts, or the transfer or release of any property pursuant to this Agreement.
25.LENDERS’ REMEDIES.
(a)Upon: (i) the expiration of the Forbearance Period; or (ii) Obligor’s failure to observe and perform each and every term, covenant and condition of this Agreement and the other Loan Documents from and after the date of this
Agreement, Lenders and Agent shall have the option, at their sole discretion, of exercising any of their rights and remedies under the Loan Documents, including, but not limited to, instituting litigation against any of the Obligors to collect the outstanding balance of the Loan and other Indebtedness. All of the rights and remedies under this Agreement and the other Loan Documents shall be cumulative and non-exclusive, to the extent permitted by law, and may be exercised successively, concurrently or in any order as Lenders or Agent shall elect.
(b)In addition to Agent and Lenders other remedies set forth in the Credit Agreement, First Forbearance Agreement and other Loan Documents, Borrowers and Guarantors agree that upon the occurrence of any Forbearance Termination Event or Event of Default, Agent and Lenders may enforce their rights under the Loan Documents and applicable law, including, but not limited to, through appointment of a receiver over the Obligors and their respective businesses and assets. Obligors consent to the appointment of a receiver and waive any right to contest the appointment of a receiver. With regard to the appointment of a receiver, Agent and Lenders shall include the following rights: (x) Agent and Lender shall be entitled to appointment of a receiver as a matter of right; (y) the receiver may serve without bond; and (z) all fees and expenses of the receiver and professional advisors employed by the receiver that are paid for by the Lenders shall become part of the Indebtedness and shall be payable on demand, and shall bear interest at the Applicable Interest Rate.
26.FEES AND EXPENSES. As additional consideration for the Lenders’ agreement to forebear contained herein, the Obligors absolutely and unconditionally agree to reimburse the Agent and the consenting Lenders, on demand at any time and as often as the occasion therefore may require, whether or not all or any of the transactions contemplated by this Agreement are consummated, all fees, costs, expenses and disbursements of the Agent and the consenting Lenders and any counsel, appraiser or financial consultant to any of them, if any, including the internally allocated cost of in-house counsel, in connection with the preparation, negotiation, execution, or delivery of this Agreement and administration of the Loans and any agreements delivered in connection with the transactions contemplated hereby and expenses which shall at any time be incurred or sustained by Agent or Lenders as a consequence of or in any way in connection with the preparation, negotiation, execution, or delivery of this Agreement or the administration of the Loans and the enforcement, attempted enforcement or preservation of any rights or remedies under this Agreement, any of the Loan Documents and any agreements prepared, negotiated, executed or delivered in connection with the transactions contemplated hereby. Such fees and expenses shall constitute additional Indebtedness under the Loan Documents until paid notwithstanding any failure by the Obligors to comply with any other term of this Agreement. Upon the occurrence of a Forbearance Termination Event any and all unpaid portions of the unreimbursed expenses outstanding shall be paid within one (1) business day by the Obligors.
27.MISCELLANEOUS.
(a)Extraordinary Items. Notwithstanding anything to the contrary in this Agreement or in the other Loan Documents, proceeds of all unusual or extraordinary items (including, by way of example, excess proceeds of the Entrotech Collateral, the ERC Credit, tax refunds, insurance proceeds, or sale proceeds, other than collection of accounts for inventory sold in the ordinary course of business) shall be applied first to the Term Loans and then to the various obligations of Borrowers to Agent and Lenders in the discretion of Agent and Lenders.
(b)Effect of this Agreement. This Agreement and the Loan Documents constitute and embody the entire agreement between the parties as to the Loans and the temporary forbearance contemplated by this Agreement. Except as specifically set forth herein, no changes or modifications to the Loan Documents are intended or implied or made. To the extent of conflict between the terms of this Agreement and the other Loan Documents, the terms of this Agreement shall control. The parties acknowledge and agree that there are no agreements, understandings, warranties or representations among and between the parties except as set forth in this Agreement and the Loan Documents
(c)Further Assurances. The parties hereto shall execute and deliver such additional documents and take such additional action as may be necessary or desirable to effectuate the provisions and purposes of this Agreement.
(d)Binding Effect. This Agreement shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns. Neither Borrowers nor any Guarantor shall assign any interest in this Agreement.
(e)Survival of Representations and Warranties. All representations and warranties made in this Agreement or any other document furnished in connection with this Agreement shall survive the execution and delivery of this Agreement and the other documents, and no investigation by the Agent or any Lender or any closing shall affect the representations and warranties or the right of the Agent and Lenders to rely upon them.
(f)Severability. Any provision of this Agreement held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Agreement.
(g)Time of Essence. Time is of the essence with respect to Obligors’ obligations under this Agreement.
(h)Reviewed by Attorneys. Each Obligor represents and warrants to the Lenders that it (a) understands fully the terms of this Agreement and the consequences of the execution and delivery of this Agreement, (b) has been afforded an opportunity to have this Agreement reviewed by, and to discuss this Agreement and any documents executed in connection herewith with, such attorneys and other persons as Obligors may wish, and (c) has entered into this Agreement and
executed and delivered all documents in connection herewith of its own free will and accord and without threat, duress or other coercion of any kind. The parties hereto acknowledge and agree that neither this Agreement nor the other documents executed pursuant hereto shall be construed more favorably in favor of one than the other based upon which party drafted the same, it being acknowledged that all parties hereto contributed substantially to the negotiation and preparation of this Agreement and the other documents executed pursuant hereto or in connection herewith.
(i)Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MICHIGAN, WITHOUT REFERENCE TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF.
(j)Consent to Jurisdiction and Venue. Each of the Obligors hereby irrevocably consents to the personal jurisdiction and venue of the state and federal courts located in Wayne County, Michigan, in any action, claim or other proceeding arising out of any dispute in connection with this Agreement or the Loan Documents, any rights or obligations hereunder, or the performance of such rights and obligations. Nothing in this Section shall affect the right of the Agent to serve legal process in any other manner permitted by applicable law or affect the right of the Agent to bring any action or proceeding against the any of the Obligors or their properties in the courts of any other jurisdictions. Additionally, each of the Obligors, if elected by the Agent or Lenders as a remedy upon the occurrence of a Forbearance Termination Event, consents to and will refrain from interfering with the appointment of a Receiver to administer and operate any of the Obligors or any of their properties or assets.
(k)Waiver of Jury Trial. EACH OF THE OBLIGORS, AGENT AND THE LENDERS HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY, AND AFTER AN OPPORTUNITY TO CONSULT WITH LEGAL COUNSEL, (A) WAIVES ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE LOAN DOCUMENTS, THE INDEBTEDNESS, ALL MATTERS CONTEMPLATED HEREBY AND DOCUMENTS EXECUTED IN CONNECTION HEREWITH AND (B) AGREES NOT TO SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE, OR HAS NOT BEEN, WAIVED. EACH OF THE OBLIGORS CERTIFIES THAT NEITHER AGENT NOR ANY LENDER NOR ANY OF THEIR REPRESENTATIVES, AGENTS OR COUNSEL HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT AGENT OR LENDERS WOULD NOT IN THE EVENT OF ANY SUCH PROCEEDING SEEK TO ENFORCE THIS WAIVER OR RIGHT TO TRIAL BY JURY.
(l)Counterparts; Electronic Signature. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of an executed
signature page counterpart hereof by telecopy, emailed .pdf or any other electronic means that reproduces an image of the actual executed signature page shall be effective as delivery of a manually executed counterpart hereof. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to any document to be signed in connection with this Agreement and the transactions contemplated hereby shall be deemed to include electronic signatures, the electronic association of signatures and records on electronic platforms, deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, any other similar state laws based on the Uniform Electronic Transactions Act or the Uniform Commercial Code, each as amended, and the parties hereto hereby waive any objection to the contrary, provided that (x) nothing herein shall require Agent to accept electronic signature counterparts in any form or format and (y) Agent reserves the right to require, at any time and at its sole discretion, the delivery of manually executed counterpart signature pages to this Agreement or any document signed in connection with this Agreement and the parties hereto agree to promptly deliver such manually executed counterpart signature pages.
(m)Notices. All notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier or sent by electronic communication (including e‑mail and Internet or intranet websites) to the parties’ addresses set forth below. Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the "return receipt requested" function, as available, return e-mail or other written acknowledgement); provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient. Notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing sentence of notification that such notice or communication is available and identifying the website address therefor. Notwithstanding the foregoing, electronic communications shall not apply to notices to the Agent if the Agent has notified the Obligors that it is incapable of receiving electronic communication. All notices required to be made under this Agreement or the Loan Documents to Obligors shall be made to the address set forth in the Credit Agreement. Notices to the Agent shall be sent to:
Restructuring Management Group
28 State Street
Mail Code: MS 2405
Boston, MA 02109
Email address: Michael.Flynn@citizensbank.com
Attention: Michael Flynn, Senior Vice President
(n)Amendments. No change, addition to, amendment or modification of the terms of this Agreement shall be effective unless reduced to writing and executed by all the parties hereto.
(o)Other Agreements. The parties understand and agree (i) that the consideration for this Agreement is contractual and not a mere recital, (ii) that neither this Agreement, nor any part thereof, shall be used or construed as an admission of liability on the part of the Agent or Lenders and that this Agreement shall not be admissible in any proceeding or cause of action as an admission of liability by the Agent or any Lender, and (iii) that this Agreement is knowing and voluntary and is executed without reliance on any statement or representation by the Agent or any Lender concerning the nature or extent of any claims, damages or legal liability therefore.
(Balance of Page Intentionally Blank)
IN WITNESS WHEREOF, the Obligors, Agent and Lenders have executed this Forbearance Agreement as of the day and year first-above written.
BORROWERS:
UNIQUE FABRICATING NA, INC.
By: /s/ Byrd Douglas Cain III
Byrd Douglas Cain III
Title: President
UNIQUE-INTASCO CANADA, INC.
By: /s/ Byrd Douglas Cain III
Byrd Douglas Cain III
Title: President
“Borrowers”
UNIQUE FABRICATING, INC., a Delaware corporation
By: /s/ Byrd Douglas Cain III
Byrd Douglas Cain III
Title: President
UNIQUE-CHARDAN, INC., a Delaware corporation,
By: /s/ Byrd Douglas Cain III
Byrd Douglas Cain III
Title: President
(Signatures Continued on Next Page)
UNIQUE MOLDED FOAM TECHNOLOGIES, INC., a Delaware corporation,
By: /s/ Byrd Douglas Cain III
Byrd Douglas Cain III
Title: President
UNIQUE PRESCOTECH, INC., a Delaware corporation,
By: /s/ Byrd Douglas Cain III
Byrd Douglas Cain III
Title: President
UNIQUE FABRICATING REALTY, LLC a Michigan limited liability company,
By: /s/ Byrd Douglas Cain III
Byrd Douglas Cain III
Title: President
UNIQUE FABRICATING SOUTH, INC., a Michigan corporation,
By: /s/ Byrd Douglas Cain III
Byrd Douglas Cain III
Title: President
UNIQUE-INTASCO USA, INC., a Michigan corporation
By: /s/ Byrd Douglas Cain III
Byrd Douglas Cain III
Title: President
“Guarantors”
(Signatures Continued on Next Page)
IN WITNESS WHEREOF, the Obligors, Agent and Lenders have executed this Forbearance Agreement as of the day and year first-above written.
CITIZENS BANK, NATIONAL ASSOCIATION, as Agent and Lender
By: /s/ Michael Flynn
Michael Flynn
Its: Senior Vice President
COMERICA BANK,
as Lender
By: /s/ Jacob Villemure
Jacob Villemure
Its: Vice President
FLAGSTAR BANK, FSB,
as Lender
By: /s/ Robert L. Marsh
Robert L. Marsh
Its: Senior Vice President
KEYBANK NATIONAL ASSOCIATION,
as Lender
By: /s/ Sally Barton
Sally Barton
Its: Senior Vice President
EXHIBIT A
CRC Resolution
Chief Restructuring Consultant would be a Boards of Directors approved non-officer position reporting directly to the Boards of Directors.
Scope of authority/responsibility would be as follows:
•General oversight of business and financial operations;
•Manage compliance with customer and bank group agreements;
•Assist with managing relationships with customers and vendors;
•Support investment banker with undertaking and implementing to conclusion a sale process;
•Lead development, and implementation if approved by constituents, of a restructuring plan;
•Assure company operates in compliance with the weekly cash flow budget;
•Support reporting requirements including, but not limited to, actual to budget analysis and roll forward weekly cash flows; and,
•Regular communications with Lenders and Customers on status of restructuring plan; sales process; customer meetings/negotiations; liquidity and status of general business operations.
EXHIBIT B
Budget
[REDACTED]
SCHEDULE 18
In January 2023, the Unique Fabricating Board of Director’s Audit Committee led an investigation into allegations that the Company’s internally prepared monthly financial statements for November 2022, which are required to be provided to its bank lenders, were reported inaccurately. The investigation is incomplete and ongoing. At this time, no matters have been identified to indicate any previously issued financial statements for any year or interim period should no longer be relied upon. However, based on findings revealed to date, management has determined that the Company has a material weakness in its internal control over financial reporting related to the appropriate review and approval of manual journal entries.
Management is unable to complete the Company’s financial reporting process and preparation of its financial statements for the fiscal year ended December 31, 2022, until the investigation is concluded and any internal control deficiencies are identified and evaluated. The Company is unable to file its Annual Report on Form 10-K on or before the fifteenth calendar day following the prescribed filing date and is not in a position to issue its earnings announcement or to report preliminary unaudited financial data for the 2022 fourth quarter or the 2022 fiscal year as a result of the circumstances described above.
Amendment No. 1 to Forbearance Agreement dated May 22, 2023
This Amendment No. 1 to Forbearance Agreement (“Agreement”) dated May 22, 2023 is made this 31st day of May, 2023 by and between by and between UNIQUE FABRICATING NA, INC., a Delaware corporation (“US Borrower”), and UNIQUE-INTASCO CANADA, INC., a corporation organized under the laws of the province of British Columbia (“CA Borrower”, called together with US Borrower, the “Borrowers” and each of them referred to herein as a “Borrower”), UNIQUE FABRICATING, INC., a Delaware corporation (“Parent”), UNIQUE-CHARDAN, INC., a Delaware corporation, UNIQUE MOLDED FOAM TECHNOLOGIES, INC., a Delaware corporation, UNIQUE PRESCOTECH, INC., a Delaware corporation, UNIQUE FABRICATING REALTY, LLC, a Michigan limited liability company, UNIQUE FABRICATING SOUTH, INC., a Michigan corporation, and UNIQUE-INTASCO USA, INC., a Michigan corporation (each a “Guarantor” and collectively the “Guarantors”), the financial institutions signatory hereto (individually a “Lender,” and collectively the “Lenders”), CITIZENS BANK, NATIONAL ASSOCIATION, a national banking association, as Agent for the Lenders (in such capacity, the “Agent”). The Borrowers and Guarantors are sometimes hereinafter referred to as the “Obligors”.
Recitals:
Obligors, Agent and the Lenders have previously entered into a Forbearance Agreement dated May 22, 2023 (, as amended by this Agreement, the “Forbearance Agreement”). The Forbearance Agreement was entered into by Obligors, Agent and Lenders in connection with an Accommodation Agreement, also dated May 22, 2023, entered into by the Obligors, Agent, General Motors LLC, for itself and on behalf of its subsidiaries and affiliates (“GM”), FCA US LLC, for itself and on behalf of its subsidiaries and affiliates (“FCA US”), Yanfeng Automotive Interior Systems Co., for itself and on behalf of its subsidiaries and affiliates (“Yanfeng” and collectively with GM and FCA US, “Customers” and each a “Customer”), pursuant to which: (i) the Customers agreed to provide certain financial and business accommodations to Obligors; (ii) Lenders agreed to continue to provide Revolving Credit funding to the Obligors in accordance with the Loan Documents as amended by the Forbearance Agreement and the Accommodation Agreement; and (iii) Obligors agreed to engage in and pursue a process to sell the Obligors business and operations and simultaneously develop and implement, if the sale process is unsuccessful and if the Lenders agree, a restructuring plan to reach long-term financial and operational viability and repay the Loans by no later than the expiration of the Forbearance Period.
Obligors, Agent and Lenders desire to amend the Forbearance Agreement on the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged the Obligors, Agent and Lenders hereby agree as follows:
1.RECITALS. The foregoing recitals of facts are true and accurate in all material respects and are incorporated into this Agreement and shall form a part of it. Capitalized terms used herein, but not defined herein, shall have the meaning ascribed to them in the Credit Agreement or the Forbearance Agreement, as applicable.
2.SWING LINE. Paragraph 8(b) of the Forbearance Agreement is hereby deleted and the Swing Line Commitments and the obligation of the Swing Line Lender to make Swing Line Advances as provided in the Credit Agreement is hereby reinstated in its entirety.
3.MISCELLANEOUS.
(a)Effect of this Agreement. Except as amended by this Agreement, the Forbearance Agreement and all the terms, covenants and conditions thereof are hereby ratified and affirmed and remain in full force and effect. This Agreement and the Loan Documents constitute and embody the entire agreement between the parties as to the Loans and the temporary forbearance contemplated by the Forbearance Agreement. Except as specifically set forth herein, no changes or modifications to the Loan Documents are intended or implied or made. To the extent of conflict between the terms of this Agreement and the other Loan Documents, the terms of this Agreement shall control. The parties acknowledge and agree that there are no agreements, understandings, warranties or representations among and between the parties except as set forth in this Agreement and the Loan Documents.
(b)Further Assurances. The parties hereto shall execute and deliver such additional documents and take such additional action as may be necessary or desirable to effectuate the provisions and purposes of this Agreement.
(c)Binding Effect. This Agreement shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns. Neither Borrowers nor any Guarantor shall assign any interest in this Agreement.
(d)Survival of Representations and Warranties. All representations and warranties made in this Agreement or any other document furnished in connection with this Agreement shall survive the execution and delivery of this Agreement and the other documents, and no investigation by the Agent or any Lender or any closing shall affect the representations and warranties or the right of the Agent and Lenders to rely upon them.
(e)Severability. Any provision of this Agreement held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Agreement.
(f)Time of Essence. Time is of the essence with respect to Obligors’ obligations under this Agreement.
(g)Reviewed by Attorneys. Each Obligor represents and warrants to the Lenders that it (a) understands fully the terms of this Agreement and the consequences of the execution and delivery of this Agreement, (b) has been afforded an opportunity to have this Agreement reviewed by, and to discuss this Agreement and any documents executed in connection herewith with, such attorneys and other persons as Obligors may wish, and (c) has entered into this Agreement and executed and delivered all
documents in connection herewith of its own free will and accord and without threat, duress or other coercion of any kind. The parties hereto acknowledge and agree that neither this Agreement nor the other documents executed pursuant hereto shall be construed more favorably in favor of one than the other based upon which party drafted the same, it being acknowledged that all parties hereto contributed substantially to the negotiation and preparation of this Agreement and the other documents executed pursuant hereto or in connection herewith.
(h)Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MICHIGAN, WITHOUT REFERENCE TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF.
(i)Waiver of Jury Trial. EACH OF THE OBLIGORS, AGENT AND THE LENDERS HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY, AND AFTER AN OPPORTUNITY TO CONSULT WITH LEGAL COUNSEL, (A) WAIVES ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE LOAN DOCUMENTS, THE INDEBTEDNESS, ALL MATTERS CONTEMPLATED HEREBY AND DOCUMENTS EXECUTED IN CONNECTION HEREWITH AND (B) AGREES NOT TO SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE, OR HAS NOT BEEN, WAIVED. EACH OF THE OBLIGORS CERTIFIES THAT NEITHER AGENT NOR ANY LENDER NOR ANY OF THEIR REPRESENTATIVES, AGENTS OR COUNSEL HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT AGENT OR LENDERS WOULD NOT IN THE EVENT OF ANY SUCH PROCEEDING SEEK TO ENFORCE THIS WAIVER OR RIGHT TO TRIAL BY JURY.
(j)Counterparts; Electronic Signature. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of an executed signature page counterpart hereof by telecopy, emailed .pdf or any other electronic means that reproduces an image of the actual executed signature page shall be effective as delivery of a manually executed counterpart hereof. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to any document to be signed in connection with this Agreement and the transactions contemplated hereby shall be deemed to include electronic signatures, the electronic association of signatures and records on electronic platforms, deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, any other
similar state laws based on the Uniform Electronic Transactions Act or the Uniform Commercial Code, each as amended, and the parties hereto hereby waive any objection to the contrary, provided that (x) nothing herein shall require Agent to accept electronic signature counterparts in any form or format and (y) Agent reserves the right to require, at any time and at its sole discretion, the delivery of manually executed counterpart signature pages to this Agreement or any document signed in connection with this Agreement and the parties hereto agree to promptly deliver such manually executed counterpart signature pages.
(k)Amendments. No change, addition to, amendment or modification of the terms of this Agreement shall be effective unless reduced to writing and executed by all the parties hereto.
(Balance of Page Intentionally Blank)
IN WITNESS WHEREOF, the Obligors, Agent and Lenders have executed this Amendment No. 1 to Forbearance Agreement dated May 22, 2023 as of the day and year first-above written.
BORROWERS:
UNIQUE FABRICATING NA, INC.
By: /s/ Byrd Douglas Cain III
Byrd Douglas Cain III
Title: President
UNIQUE-INTASCO CANADA, INC.
By: /s/ Byrd Douglas Cain III
Byrd Douglas Cain III
Title: President
“Borrowers”
UNIQUE FABRICATING, INC., a Delaware corporation
By: /s/ Byrd Douglas Cain III
Byrd Douglas Cain III
Title: President
UNIQUE-CHARDAN, INC., a Delaware corporation,
By: /s/ Byrd Douglas Cain III
Byrd Douglas Cain III
Title: President
(Signatures Continued on Next Page)
UNIQUE MOLDED FOAM TECHNOLOGIES, INC., a Delaware corporation,
By: /s/ Byrd Douglas Cain III
Byrd Douglas Cain III
Title: President
UNIQUE PRESCOTECH, INC., a Delaware corporation,
By: /s/ Byrd Douglas Cain III
Byrd Douglas Cain III
Title: President
UNIQUE FABRICATING REALTY, LLC a Michigan limited liability company,
By: /s/ Byrd Douglas Cain III
Byrd Douglas Cain III
Title: President
UNIQUE FABRICATING SOUTH, INC., a Michigan corporation,
By: /s/ Byrd Douglas Cain III
Byrd Douglas Cain III
Title: President
UNIQUE-INTASCO USA, INC., a Michigan corporation
By: /s/ Byrd Douglas Cain III
Byrd Douglas Cain III
Title: President
“Guarantors”
(Signatures Continued on Next Page)
IN WITNESS WHEREOF, the Obligors, Agent and Lenders have executed this Amendment No. 1 to Forbearance Agreement dated May 22, 2023 as of the day and year first-above written.
CITIZENS BANK, NATIONAL ASSOCIATION, as Agent and Lender
By: /s/ Michael Flynn
Michael Flynn
Its: Senior Vice President
COMERICA BANK,
as Lender
By:
Jacob Villemure
Its: Vice President
FLAGSTAR BANK, FSB,
as Lender
By:
Robert L. Marsh
Its: Senior Vice President
KEYBANK NATIONAL ASSOCIATION,
as Lender
By: /s/ Sally Barton
Sally Barton
Its: Senior Vice President
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