APPENDIX B Accommodation Agreement
| Jurisdiction | United States |
APPENDIX B Accommodation Agreement
Chrysler LLC, on behalf of itself and Chrysler Motors LLC ("Chrysler US"), Chrysler Canada Inc. (together with Chrysler US, "Chrysler" or the "Customer"), Cadence Innovation LLC ("Cadence" or "Supplier") and Bank of America, N.A. ("Agent") enter into this Accommodation Agreement (this "Agreement") on August , 2008 (the "Effective Date").
A. Pursuant to various purchase orders, supply agreements and/or releases issued by Customer and accepted by Supplier (the "Purchase Orders" or individually, a "Purchase Order"), Supplier is obligated to manufacture Customer's requirements of certain component parts, service parts or assembled goods (collectively, the "Component Parts" or individually, a "Component Part").
646 In re Cadence Innovation LLC, Case No. 08-11973 (Bankr. D. Del.). Accomodation Agreement was attached to the motion for debtor-in-possession financing at Docket No. 21.
B. Agent, Lenders and Supplier are parties to various loan and security agreements and related documents (the "Loan Documents"). Agent, for the ratable benefit of the Lenders, has a lien on substantially all of Supplier's real and personal property pursuant to the Loan Documents.
C. Supplier has advised Customer and Agent that it faces certain issues which may threaten to cause interruption in the production of Component Parts.
D. Supplier has requested that Customer and the Lenders provide financial and other accommodations to Supplier.
E. Supplier has determined it will file a petition for relief (the "Bankruptcy Case") under Chapter 11 of Title 11 of the United States Code, 11 U.S.C. § 101 et seq. (the "Bankruptcy Code") in the United States Bankruptcy Court for the District of Delaware ("Bankruptcy Court").
F. Customer, Agent, the Lenders, and General Motors Corporation ("GM") are entering into that certain Seconded Amended and Restated Credit Agreement (Debtor-In-Possession) (the "DIP Credit Agreement") in connection with this Agreement. The DIP Credit Agreement will provide debtor-in-possession financing (the "DIP Loan") to Supplier pursuant to a budget agreed to by Supplier, Agent, Customer and GM, which may be amended from time to time by agreement of all of the aforementioned (the "Budget").
G. Supplier and Customers are parties to an Access and Security Agreement of even date herewith ("Access Agreement").
H. Subject to the terms of this Agreement, Customer and Agent, on behalf of the Lenders, have agreed to provide to Supplier certain financial and other accommodations as set forth in this Agreement. References in this Agreement to paragraphs or sections, unless otherwise noted are references to paragraphs or sections of this Agreement.
BASED UPON THE FOREGOING RECITALS and other good and valuable consideration, the receipt and adequacy of which are acknowledged, the parties agree as follows:
1. Term. The term of this Agreement (the "Term") will commence on the Effective Date and terminate on the earliest of (a) the occurrence of an Event of Default (defined below); (ii) the date of the closing of a sale of the Available Operations (as defined below) in accordance with Sections 3.8 and 4.4 of this Agreement; or (iii) completion of substantially all aspects of the Liquidation (as defined below). Notwithstanding termination of this Agreement, except as limited below, the rights and obligations created by this Agreement shall survive.
2. Conditions to Effectiveness. Notwithstanding anything to the contrary, this Agreement will only become effective upon Supplier obtaining an agreement from GM to provide accommodations substantially similar to those set forth in this Agreement.
3. Customer's Accommodations.
3.1 Commercial Issues.
(A) Within two (2) days of entry of an order (the "Approval Order") in the Bankruptcy Case approving this Agreement and the and the Access Agreement on a final basis as a post-petition contracts of Supplier, excluding, however, approval of Sections 3.8, 4.4, 4.5, 8 and 9 on a final basis, Customer shall pay Supplier the aggregate amount set forth in Section A of Schedule 3.1 in full and final satisfaction of all amounts owing from Customer to Supplier in respect of the commercial claims described in Section A of Schedule 3.1.
(B) Customer will continue to investigate and negotiate in good faith with Supplier relating to the commercial claims (the "Disputed Claims") described in Section B of Schedule 3.1. If the parties are unable to reach agreement on the Disputed Claims within twenty-one days of execution of this Agreement, Supplier shall submit the issues to the Bankruptcy Court for resolution.
(C) Notwithstanding any provision of this Agreement, including Section 3.4, the parties agree that Customer may exercise its right of recoupment and setoff relating to cash advances made by Customer to Supplier prior to or during the transition of any production or business from the Venture entities to Supplier (collectively, the "Chrysler Advance") against all retroactive purchase order price adjustments made by Customer for the benefit of Supplier (collectively, the "Legacy Issues") as applied to shipments made prior to July 1, 2008. For the benefit of Agent and the Lenders only, Customer waives the right to setoff the Chrysler Advance against (i) production part payables tooling payables, and $1.8 million agreed to be paid by Customer relating to 092 clauses as set forth in Section A of Schedule 3.1; excluding however, Legacy Issues. Customer and Supplier shall use their respective best commercial efforts to resolve the Legacy Issues on or before thirty (30) days after entry of the Approval Order.
(D) Supplier preserves, and does not waive, nor does this Agreement waive or alter in any way its claims related to the commercial issues listed on Section C of Section 3.1.
3.2 Expedited Payments. Customer will make payment of its accounts payable to Supplier arising during the Term relating to Component Parts purchased from Supplier, Tooling (defined below) and Refresh Program Expenses (as defined in Section 3.9) on terms of "25th instant, 10th prox." or equivalent expedited basis.
For clarity, valid invoices that are accompanied by normal and customary information for payment received by Customer through the Evaluated Receipts System from the 1st day through the 15th day of each month will be paid on the 25th day of that month and valid invoices that are accompanied by normal and customary information for payment received by Customer in Customer's accounts payable system from the le day through the last day of each month will be paid on the 10th day of the following month.
Upon entry of the Approval Order, Customer will accelerate payment of its accounts payable to Supplier to terms of "net instant" or equivalent expedited basis for all accounts payable generated prior to and during the Term. For clarity, valid invoices that are accompanied by normal and customary information for payment received by Customer through the Evaluated Receipts system will be paid approximately 5 days after Customer's receipt of such invoice.
Customer shall be entitled to a 1% payment discount for all accelerated payments made pursuant to this Agreement.
...3.3 Resourcing. Absent an Event of Default, Customer will defer from resourcing Existing Business from Supplier during the Term; provided, however, in the event of a material breach of a Purchase Order and in the absence of an Event of Default, Customer may resource the Component Parts subject to the breached Purchase Order. In no event shall failure to post requested adequate assurance be considered a default. The term "Existing Business" means any programs under the Purchase Orders in production at Supplier during calendar year 2008. Supplier does not waive its right to dispute an alleged material breach with the Bankruptcy Court.
Notwithstanding anything to the contrary herein, in the event that Supplier commences the Liquidation under Section 4.4 of this Agreement, the foregoing non-resourcing covenant will not apply and Customer and Supplier will, for the period from commencement of the Liquidation until completion of substantially all aspects of the Liquidation, cooperate in good faith to plan for, implement and manage the resourcing of the Existing Business in a manner that minimizes the risk of an interruption of Customer's assembly operations and the expense caused by such resourcing, including the expense to Customer, Supplier and Supplier's other customers. Supplier does not waive its right to dispute alleged "material breach" with the Bankruptcy Court.
For greater certainty, the foregoing limitation does not include (a) changes in releases due to normal business fluctuations, (b) cessation of production due to product, engineering (other than standard engineering change orders) or program changes, cancellations or modifications, or (c) changes in factory assist/ offload business. Nothing in this Section 3.3 prohibits Customer from (x) taking action to prepare for resourcing including, without limitation, entering into discussions, negotiations and agreements with third parties regarding the production of the Component Parts, (y) purchasing sample or prototype Component Parts from third parties, or (z) resourcing Component Parts which Supplier and Customer agree may be resourced. Supplier will use commercially reasonable efforts to cooperate with Customer in connection with any resourcing of Component Part production permitted under the terms of this Agreement including, but not limited to, providing Customer and its agents or designee(s), including potential alternate suppliers with reasonable access to Supplier's premises to view all Tooling used in production of Component Parts, view all documents related to Tooling and manufacture of Component Parts including PPAP books, raw material lists and vendor information, and take photographs of the Tooling and operations related to
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