Security Agreement
(All Assets)
As of May 27, 1999, for value received, the undersigned ("Debtor") grants to
Comerica Bank ("Bank"), a Michigan banking corporation, a continuing security
interest in the Collateral (as defined below) to secure payment when due,
whether by stated maturity, demand, acceleration or otherwise, of all existing
and future indebtedness ("Indebtedness") to the Bank of the obligors listed in
attached Schedule 1 (collectively, "Borrower") and/or Debtor. Indebtedness
includes without limit any and all obligations or liabilities of the Borrower
and/or Debtor to the Bank, whether absolute or contingent, direct or indirect,
voluntary or involuntary, liquidated or unliquidated, joint or several, known or
unknown; any and all obligations or liabilities for which the Borrower and/or
Debtor would otherwise be liable to the Bank were it not for the invalidity or
unenforceability of them by reason of any bankruptcy, insolvency or other law,
or for any other reason; any and all amendments, modifications, renewals and/or
extensions of any of the above; all costs incurred by Bank in establishing,
determining, continuing, or defending the validity or priority of its security
interest, or in pursuing its rights and remedies under this Agreement or under
any other agreement between Bank and Borrower and/or Debtor or in connection
with any proceeding involving Bank as a result of any financial accommodation to
Borrower and/or Debtor; and all other costs of collecting Indebtedness,
including without limit attorney fees. Debtor agrees to pay Bank all such costs
incurred by the Bank, immediately upon demand, and until paid all costs shall
bear interest at the highest per annum rate applicable to any of the
Indebtedness, but not in excess of the maximum rate permitted by law. Any
reference in this Agreement to attorney fees shall be deemed a reference to
reasonable fees, costs, and expenses of both in-house and outside counsel and
paralegals, whether or not a suit or action is instituted, and to court costs if
a suit or action is instituted, and whether attorney fees or court costs are
incurred at the trial court level, on appeal, in a bankruptcy, administrative or
probate proceeding or otherwise.
1. Collateral shall mean all of the following property Debtor now or later
owns or has an interest in, wherever located:
(a) all Accounts Receivable (for purposes of this Agreement, "Accounts
Receivable" consists of all accounts, general intangibles, chattel
paper, contract rights, deposit accounts, documents and instruments),
(b) all Inventory,
(c) all Equipment and Fixtures,
(d) all goods, instruments, documents, policies and certificates of
insurance, deposits, money, investment property or other property
(except real property which is not a fixture) which are now or later
in possession or control of Bank, or as to which Bank now or later
controls possession by documents or otherwise, and
(e) all additions, attachments, accessions, parts, replacements,
substitutions, renewals, interest, dividends, distributions, rights of
any kind (including but not limited to stock splits, stock rights,
voting and preferential rights), products, and proceeds of or
pertaining to the above including, without limit, cash or other
property which were proceeds and are recovered by a bankruptcy trustee
or otherwise as a preferential transfer by Debtor.
2. Warranties, Covenants and Agreements. Debtor warrants, covenants and
agrees as follows:
2.1 Debtor shall furnish to Bank, in form and at intervals as Bank may
reasonably request, any information Bank may reasonably request and allow
Bank at all reasonable times during normal business hours to examine,
inspect, and copy any of Debtor's books and records. Debtor shall, at the
request of Bank, mark its records and the Collateral to clearly indicate
the security interest of Bank under this Agreement.
2.2 At the time any Collateral becomes, or is represented to be,
subject to a security interest in favor of Bank, Debtor shall be deemed to
have warranted that (a) Debtor is the lawful owner of the Collateral and
has the right and authority to subject it to a security interest granted to
Bank; (b) none of the Collateral is subject to any security interest other
than that in favor of Bank and Permitted Liens (as defined in attached
Exhibit "A") and there are no financing statements on file, other than in
favor of Bank and those filed with respect to Permitted Liens; and (c)
Debtor acquired its rights in the Collateral in the ordinary course of its
business.
2.3 Debtor will keep the Collateral free at all times from all claims,
liens, security interests and encumbrances other than those in favor of
Bank and the Permitted Liens. Debtor will not, without the prior written
consent of Bank, sell, transfer or lease, or permit to be sold, transferred
or leased, any or all of the Collateral, except for Inventory in the
ordinary course of its business and except for obsolete or worn out
property and property no longer useful in the operation of Debtor's
business and will not return any Inventory to its supplier. Bank or its
representatives may at all reasonable times inspect the Collateral and may
enter upon all premises where the Collateral is kept or might be located.
2.4 Debtor will do all acts and will execute or cause to be executed
all writings reasonably requested by Bank to establish, maintain and
continue a perfected and first security interest of Bank in the Collateral.
Debtor agrees that Bank has no obligation to acquire or perfect any lien on
or security interest in any asset(s), whether realty or personalty, to
secure payment of the Indebtedness.
2.5 Debtor will pay within the time that they can be paid without
interest or penalty all taxes, assessments and similar charges which at any
time are or may become a lien, charge, or encumbrance upon any Collateral,
except to the extent contested in good faith and bonded in a manner
reasonably satisfactory to Bank. If Debtor fails to pay any of these taxes,
assessments, or other charges in the time provided above, Bank has the
option (but not the obligation) to do so and Debtor agrees to repay all
amounts so expended by Bank immediately upon demand, together with interest
at the highest per annum rate applicable to any of the Indebtedness but not
in excess of the maximum rate allowed by applicable law.
2.6 Debtor will keep the Collateral in good condition (subject to
ordinary wear and tear) and will protect it from loss, damage, or
deterioration from any cause (other than ordinary wear and tear). Debtor
has and will maintain at all times (a) with respect to the Collateral,
insurance under an "all risk" policy against fire and other risks
customarily insured against, and (b) public liability insurance and other
insurance as may be required by law or reasonably required by Bank, all of
which insurance shall be in amount, form and content, and written by
companies as may be reasonably satisfactory to Bank, containing a lender's
loss payable endorsement reasonably acceptable to Bank. Debtor will deliver
to Bank immediately upon demand evidence reasonably satisfactory to Bank
that the required insurance has been procured. If Debtor fails to maintain
satisfactory insurance, Bank has the option (but not the obligation) to do
so and Debtor agrees to repay all amounts so expended by Bank immediately
upon demand, together with interest at the highest lawful default rate
which could be charged by Bank on any Indebtedness.
2.7 On each occasion on which Debtor evidences to Bank the account
balances on and the nature and extent of the Accounts Receivable, Debtor
shall be deemed to have warranted that except as otherwise indicated (a)
each of those Accounts Receivable is valid and enforceable without
performance by Debtor of any act; (b) each of those account balances are in
fact owing, (c) there are no setoffs, recoupments, credits, contra
accounts, counterclaims or defenses against any of those Accounts
Receivable, (d) as to any Accounts Receivable represented by a note, trade
acceptance, draft or other instrument or by any chattel paper or document,
the same have been endorsed and/or delivered by Debtor to Bank, (e) Debtor
has not received with respect to any Account Receivable, any notice of the
death of the related account debtor, nor of the dissolution, liquidation,
termination of existence, insolvency, business failure, appointment of a
receiver for, assignment for the benefit of creditors by, or filing of a
petition in bankruptcy by or against, the account debtor, and (f) as to
each Account Receivable, the account debtor is not an affiliate of Debtor,
the United States of America or any department, agency or instrumentality
of it, or a citizen or resident of any jurisdiction outside of the United
States. Debtor will do all acts and will execute all writings requested by
Bank to perform, enforce performance of, and collect all Accounts
Receivable. Debtor shall neither make nor permit any modification,
compromise or substitution for any Account Receivable without the prior
written consent of Bank. Debtor shall, at Bank's request, arrange for
verification of Accounts Receivable directly with account debtors or by
other methods acceptable to Bank.
2.8 Debtor at all times shall be in compliance in all material
respects with all applicable laws, including without limit any laws,
ordinances, directives, orders, statutes, or regulations an object of which
is to regulate or improve health, safety, or the environment
("Environmental Laws").
2.9 If Bank, acting in its sole discretion, redelivers Collateral to
Debtor or Debtor's designee for the purpose of (a) the ultimate sale or
exchange thereof; or (b) presentation, collection, renewal, or registration
of transfer thereof; or (c) loading, unloading, storing, shipping,
transshipping, manufacturing, processing or otherwise dealing with it
preliminary to sale or exchange; such redelivery shall be in trust for the
benefit of Bank and shall not constitute a release of Bank's security
interest in it or in the proceeds or products of it unless Bank
specifically so agrees in writing. If Debtor requests any such redelivery,
Debtor will deliver with such request a duly executed financing statement
in form and substance satisfactory to Bank. Any proceeds of Collateral
coming into Debtor's possession as a result of any such redelivery shall be
held in trust for Bank and immediately delivered to Bank for application on
the Indebtedness. Bank may (in its sole discretion) deliver any or all of
the Collateral to Debtor, and such delivery by Bank shall discharge Bank
from all liability or responsibility for such Collateral. Bank, at its
option, may require delivery of any Collateral to Bank at any time with
such endorsements or assignments of the Collateral as Bank may request.
2.10 Following the occurrence and during the continuance of an Event
of Default, at any time and without notice, Bank may (a) cause any or all
of the Collateral to be transferred to its name or to the name of its
nominees; (b) receive or collect by legal proceedings or otherwise all
dividends, interest, principal payments and other sums and all other
distributions at any time payable or receivable on account of the
Collateral, and hold the same as Collateral, or apply the same to the
Indebtedness, the manner and distribution of the application to be in the
sole discretion of Bank; (c) enter into any extension, subordination,
reorganization, deposit, merger or consolidation agreement or any other
agreement relating to or affecting the Collateral, and deposit or surrender
control of the Collateral, and accept other property in exchange for the
Collateral and hold or apply the property or money so received pursuant to
this Agreement.
2.11 Bank may assign any of the Indebtedness and deliver any or all of
the Collateral to its assignee, who then shall have with respect to
Collateral so delivered all the rights and powers of Bank under this
Agreement, and after that Bank shall be fully discharged from all liability
and responsibility with respect to Collateral so delivered.
2.12 Debtor delivers this Agreement based solely on Debtor's
independent investigation of (or decision not to investigate) the financial
condition of Borrower and is not relying on any information furnished by
Bank. Debtor assumes full responsibility for obtaining any further
information concerning the Borrower's financial condition, the status of
the Indebtedness or any other matter which the undersigned may deem
necessary or appropriate now or later. Debtor waives any duty on the part
of Bank, and agrees that Debtor is not relying upon nor expecting Bank to
disclose to Debtor any fact now or later known by Bank, whether relating to
the operations or condition of Borrower, the existence, liabilities or
financial condition of any guarantor of the Indebtedness, the occurrence of
any default with respect to the Indebtedness, or otherwise, notwithstanding
any effect such fact may have upon Debtor's risk or Debtor's rights against
Borrower. Debtor knowingly accepts the full range of risk encompassed in
this Agreement, which risk includes without limit the possibility that
Borrower may incur Indebtedness to Bank after the financial condition of
Borrower, or Borrower's ability to pay debts as they mature, has
deteriorated.
2.13 Debtor shall defend, indemnify and hold harmless Bank, its
employees, agents, shareholders, affiliates, officers, and directors from
and against any and all claims, damages, fines, expenses, liabilities or
causes of action of whatever kind, including without limit consultant fees,
legal expenses, and attorney fees, suffered by any of them as a direct or
indirect result of any actual or asserted violation of any law (other than
a violation by Bank), including, without limit, Environmental Laws, or of
any remediation relating to any property required by any law, including
without limit Environmental Laws.
3. Collection of Proceeds.
3.1 Debtor agrees to collect and enforce payment of all Collateral
until Bank shall direct Debtor to the contrary. Immediately upon notice to
Debtor by Bank and at all times after that, Debtor agrees to fully and
promptly cooperate and assist Bank in the collection and enforcement of all
Collateral and to hold in trust for Bank all payments received in
connection with Collateral and from the sale, lease or other disposition of
any Collateral, all rights by way of suretyship or guaranty and all rights
in the nature of a lien or security interest which Debtor now or later has
regarding Collateral. Immediately upon and after such notice, during the
continuance of an Event of Default Debtor agrees to (a) endorse to Bank and
immediately deliver to Bank all payments received on Collateral or from the
sale, lease or other disposition of any Collateral or arising from any
other rights or interests of Debtor in the Collateral, in the form received
by Debtor without commingling with any other funds, and (b) immediately
deliver to Bank all property in Debtor's possession or later coming into
Debtor's possession through enforcement of Debtor's rights or interests in
the Collateral. During the continuance of an Event of Default, Debtor
irrevocably authorizes Bank or any Bank employee or agent to endorse the
name of Debtor upon any checks or other items which are received in payment
for any Collateral, and to do any and all things necessary in order to
reduce these items to money. Bank shall have no duty as to the collection
or protection of Collateral or the proceeds of it, nor as to the
preservation of any related rights, beyond the use of reasonable care in
the custody and preservation of Collateral in the possession of Bank.
Debtor agrees to take all steps necessary to preserve rights against prior
parties with respect to the Collateral. Nothing in this Section 3.1 shall
be deemed a consent by Bank to any sale, lease or other disposition of any
Collateral.
3.2 Debtor agrees that immediately upon Bank's request (whether or not
any Event of Default exists) the Indebtedness shall be on a "remittance
basis" as follows: Debtor shall at its sole expense establish and maintain
(and Bank, at Bank's option may establish and maintain at Debtor's
expense): (a) an United States Post Office lock box (the "Lock Box"), to
which Bank shall have exclusive access and control. Debtor expressly
authorizes Bank, from time to time, to remove contents from the Lock Box,
for disposition in accordance with this Agreement. Debtor agrees to notify
all account debtors and other parties obligated to Debtor that all payments
made to Debtor (other than payments by electronic funds transfer) shall be
remitted, for the credit of Debtor, to the Lock Box, and Debtor shall
include a like statement on all invoices; and (b) a non-interest bearing
deposit account with Bank which shall be titled as designated by Bank (the
"Cash Collateral Account") to which Bank shall have exclusive access and
control. Debtor agrees to notify all account debtors and other parties
obligated to Debtor that all payments made to Debtor by electronic funds
transfer shall be remitted to the Cash Collateral Account, and Debtor, at
Bank's request, shall include a like statement on all invoices. Debtor
shall execute all documents and authorizations as required by Bank to
establish and maintain the Lock Box and the Cash Collateral Account.
3.3 All items or amounts which are remitted to the Lock Box, to the
Cash Collateral Account, or otherwise delivered by or for the benefit of
Debtor to Bank on account of partial or full payment of, or with respect
to, any Collateral shall, at Bank's option, (i) be applied to the payment
of the Indebtedness, whether then due or not, in such order or at such time
of application as Bank may determine in its sole discretion, or, (ii) be
deposited to the Cash Collateral Account. Debtor agrees that Bank shall not
be liable for any loss or damage which Debtor may suffer as a result of
Bank's processing of items or its exercise of any other rights or remedies
under this Agreement, including without limitation indirect, special or
consequential damages, loss of revenues or profits, or any claim, demand or
action by any third party arising out of or in connection with the
processing of items or the exercise of any other rights or remedies under
this Agreement. Debtor agrees to indemnify and hold Bank harmless from and
against all such third party claims, demands or actions, and all related
expenses or liabilities, including, without limitation, attorney fees.
4. Defaults, Enforcement and Application of Proceeds.
4.1 Upon the occurrence and during the continuance of any of the
following events (each an "Event of Default"), Debtor shall be in default
under this Agreement:
(a) Any failure to pay the Indebtedness or any other indebtedness
when due, or such portion of it as may be due, by acceleration or
otherwise; or
(b) Any failure or neglect to comply with, or breach of or default
under, any term of this Agreement, or any other agreement or
commitment between Borrower, Debtor, or any guarantor of any of
the Indebtedness ("Guarantor") and Bank; or
(c) Any warranty, representation, financial statement, or other
information made, given or furnished to Bank by or on behalf of
Borrower, Debtor, or any Guarantor shall be, or shall prove to
have been, false or materially misleading when made, given, or
furnished; or
(d) Any loss, theft, substantial damage or destruction to or of any
material part of the Collateral which is not covered by
insurance, or the issuance or filing of any attachment, levy,
garnishment or the commencement of any proceeding in connection
with any Collateral or of any other judicial process of, upon or
in respect of Borrower, Debtor, any Guarantor, or any Collateral
which is not contested in good faith and bonded to Bank's
reasonable satisfaction; or
(e) Sale or other disposition by Borrower, Debtor, or any Guarantor
of any substantial portion of its assets or property or voluntary
suspension of the transaction of business by Borrower, Debtor, or
any Guarantor, or death, dissolution, termination of existence,
merger, consolidation, insolvency, business failure, or
assignment for the benefit of creditors of or by Borrower,
Debtor, or any Guarantor; or commencement of any proceedings
under any state or federal bankruptcy or insolvency laws or laws
for the relief of debtors by or against Borrower, Debtor, or any
Guarantor; or the appointment of a receiver, trustee, court
appointee, sequestrator or otherwise, for all or any part of the
property of Borrower, Debtor, or any Guarantor.
In the event of an express conflict between any provision of this Section
4.1 and the corresponding provision of any of the promissory notes
evidencing a portion or all of the Indebtedness, the provisions of such
promissory notes shall control.
4.2 Upon the occurrence and during the continuance of any Event of
Default, Bank may at its discretion and without prior notice to Debtor
declare any or all of the Indebtedness to be immediately due and payable,
and shall have and may exercise any one or more of the following rights and
remedies:
(a) Exercise all the rights and remedies upon default, in foreclosure
and otherwise, available to secured parties under the provisions
of the Uniform Commercial Code and other applicable law;
(b) Institute legal proceedings to foreclose upon the lien and
security interest granted by this Agreement, to recover judgment
for all amounts then due and owing as Indebtedness, and to
collect the same out of any Collateral or the proceeds of any
sale of it;
(c) Institute legal proceedings for the sale, under the judgment or
decree of any court of competent jurisdiction, of any or all
Collateral; and/or
(d) Personally or by agents, attorneys, or appointment of a receiver,
enter upon any premises where Collateral may then be located, and
take possession of all or any of it and/or render it unusable;
and without being responsible for loss or damage to such
Collateral, hold, operate, sell, lease, or dispose of all or any
Collateral at one or more public or private sales, leasings or
other disposition, at places and times and on terms and
conditions as Bank may deem fit, without any previous demand or
advertisement; and except as provided in this Agreement, all
notice of sale, lease or other disposition, and advertisement,
and other notice or demand, any right or equity of redemption,
and any obligation of a prospective purchaser or lessee to
inquire as to the power and authority of Bank to sell, lease, or
otherwise dispose of the Collateral or as to the application by
Bank of the proceeds of sale or otherwise, which would otherwise
be required by, or available to Debtor under, applicable law are
expressly waived by Debtor to the fullest extent permitted.
At any sale pursuant to this Section 4.2, whether under the power of sale,
by virtue of judicial proceedings or otherwise, it shall not be necessary
for Bank or a public officer under order of a court to have present
physical or constructive possession of Collateral to be sold. The recitals
contained in any conveyances and receipts made and given by Bank or the
public officer to any purchaser at any sale made pursuant to this Agreement
shall, to the extent permitted by applicable law, conclusively establish
the truth and accuracy of the matters stated (including, without limit, as
to the amounts of the principal of and interest on the Indebtedness, the
accrual and nonpayment of it and advertisement and conduct of the sale);
and all prerequisites to the sale shall be presumed to have been satisfied
and performed. Upon any sale of any Collateral, the receipt of the officer
making the sale under judicial proceedings or of Bank shall be sufficient
discharge to the purchaser for the purchase money, and the purchaser shall
not be obligated to see to the application of the money. Any sale of any
Collateral under this Agreement shall be a perpetual bar against Debtor
with respect to that Collateral.
4.3 Debtor shall at the request of Bank, notify the account debtors or
obligors of Bank's security interest in the Collateral and direct payment
of it to Bank. Bank may, itself, upon the occurrence and during the
continuance of any Event of Default so notify and direct any account debtor
or obligor.
4.4 The proceeds of any sale or other disposition of Collateral
authorized by this Agreement shall be applied by Bank first upon all
expenses authorized by the Uniform Commercial Code and all reasonable
attorney fees and legal expenses incurred by Bank; the balance of the
proceeds of the sale or other disposition shall be applied in the payment
of the Indebtedness, first to interest, then to principal, then to
remaining Indebtedness and the surplus, if any, shall be paid over to
Debtor or to such other person(s) as may be entitled to it under applicable
law. Debtor shall remain liable for any deficiency, which it shall pay to
Bank immediately upon demand.
4.5 Nothing in this Agreement is intended, nor shall it be construed,
to preclude Bank from pursuing any other remedy provided by law for the
collection of the Indebtedness or for the recovery of any other sum to
which Bank may be entitled for the breach of this Agreement by Debtor.
Nothing in this Agreement shall reduce or release in any way any rights or
security interests of Bank contained in any existing agreement between
Borrower, Debtor, or any Guarantor and Bank.
4.6 No waiver of default or consent to any act by Debtor shall be
effective unless in writing and signed by an authorized officer of Bank. No
waiver of any default or forbearance on the part of Bank in enforcing any
of its rights under this Agreement shall operate as a waiver of any other
default or of the same default on a future occasion or of any rights.
4.7 Debtor irrevocably appoints Bank or any agent of Bank (which
appointment is coupled with an interest) the true and lawful attorney of
Debtor (with full power of substitution) in the name, place and stead of,
and at the expense of, Debtor:
(a) to demand, receive, sue for, and give receipts or acquittances
for any moneys due or to become due on any Collateral and to
endorse any item representing any payment on or proceeds of the
Collateral;
(b) to execute and file in the name of and on behalf of Debtor all
financing statements or other filings deemed necessary or
desirable by Bank to evidence, perfect, or continue the security
interests granted in this Agreement; and
(c) to do and perform any act on behalf of Debtor permitted or
required under this Agreement.
4.8 Upon the occurrence and during the continuance of an Event of
Default, Debtor also agrees, upon request of Bank, to assemble the
Collateral and make it available to Bank at any place designated by Bank
which is reasonably convenient to Bank and Debtor.
5. Miscellaneous.
5.1 Until Bank is advised in writing by Debtor to the contrary, all
notices, requests and demands required under this Agreement or by law shall
be given to, or made upon, Debtor at the first address indicated in Section
5.15 below.
5.2 Debtor will give Bank not less than 30 days prior written notice
of all contemplated changes in Debtor's name, chief executive office
location, and/or location of any Collateral.
5.3 Bank assumes no duty of performance or other responsibility under
any contracts contained within the Collateral.
5.4 Bank has the right to sell, assign, transfer, negotiate or grant
participations or any interest in, any or all of the Indebtedness and any
related obligations, including without limit this Agreement. In connection
with the above, but without limiting its ability to make other disclosures
to the full extent allowable, Bank may disclose all documents and
information which Bank now or later has relating to Debtor, the
Indebtedness or this Agreement, however obtained. Debtor further agrees
that Bank may provide information relating to this Agreement or relating to
Debtor to the Bank's parent, affiliates, subsidiaries, and service
providers.
5.5 In addition to Bank's other rights, any indebtedness owing from
Bank to Debtor can be set off and applied by Bank on any Indebtedness at
any time(s) either before or after maturity or demand without notice to
anyone.
5.6 Debtor waives any right to require the Bank to: (a) proceed
against any person or property; (b) give notice of the terms, time and
place of any public or private sale of personal property security held from
Borrower or any other person, or otherwise comply with the provisions of
Section 9-504 of the Uniform Commercial Code; or (c) pursue any other
remedy in the Bank's power. Debtor waives notice of acceptance of this
Agreement and presentment, demand, protest, notice of protest, dishonor,
notice of dishonor, notice of default, notice of intent to accelerate or
demand payment of any Indebtedness, any and all other notices to which the
undersigned might otherwise be entitled, and diligence in collecting any
Indebtedness, and agree(s) that the Bank may, once or any number of times,
modify the terms of any Indebtedness, compromise, extend, increase,
accelerate, renew or forbear to enforce payment of any or all Indebtedness,
or permit Borrower to incur additional Indebtedness, all without notice to
Debtor and without affecting in any manner the unconditional obligation of
Debtor under this Agreement. Debtor unconditionally and irrevocably waives
each and every defense and setoff of any nature which, under principles of
guaranty or otherwise, would operate to impair or diminish in any way the
obligation of Debtor under this Agreement, and acknowledges that such
waiver is by this reference incorporated into each security agreement,
collateral assignment, pledge and/or other document from Debtor now or
later securing the Indebtedness, and acknowledges that as of the date of
this Agreement no such defense or setoff exists.
5.7 Debtor waives any and all rights (whether by subrogation,
indemnity, reimbursement, or otherwise) to recover from Borrower any
amounts paid or the value of any Collateral given by Debtor pursuant to
this Agreement.
5.8 In the event that applicable law shall obligate Bank to give prior
notice to Debtor of any action to be taken under this Agreement, Debtor
agrees that a written notice given to Debtor at least five days before the
date of the act shall be reasonable notice of the act and, specifically,
reasonable notification of the time and place of any public sale or of the
time after which any private sale, lease, or other disposition is to be
made, unless a shorter notice period is reasonable under the circumstances.
A notice shall be deemed to be given under this Agreement when delivered to
Debtor or when placed in an envelope addressed to Debtor and deposited,
with postage prepaid, in a post office or official depository under the
exclusive care and custody of the United States Postal Service or delivered
to an overnight courier. The mailing shall be by overnight courier,
certified, or first class mail.
5.9 Notwithstanding any prior revocation, termination, surrender, or
discharge of this Agreement in whole or in part, the effectiveness of this
Agreement shall automatically continue or be reinstated in the event that
any payment received or credit given by Bank in respect of the Indebtedness
is returned, disgorged, or rescinded under any applicable law, including,
without limitation, bankruptcy or insolvency laws, in which case this
Agreement, shall be enforceable against Debtor as if the returned,
disgorged, or rescinded payment or credit had not been received or given by
Bank, and whether or not Bank relied upon this payment or credit or changed
its position as a consequence of it. In the event of continuation or
reinstatement of this Agreement, Debtor agrees upon demand by Bank to
execute and deliver to Bank those documents which Bank determines are
appropriate to further evidence (in the public records or otherwise) this
continuation or reinstatement, although the failure of Debtor to do so
shall not affect in any way the reinstatement or continuation.
5.10 This Agreement and all the rights and remedies of Bank under this
Agreement shall inure to the benefit of Bank's successors and assigns and
to any other holder who derives from Bank title to or an interest in the
Indebtedness or any portion of it, and shall bind Debtor and the heirs,
legal representatives, successors, and assigns of Debtor. Nothing in this
Section 5.10 is deemed a consent by Bank to any assignment by Debtor.
5.11 If there is more than one Debtor, all undertakings, warranties
and covenants made by Debtor and all rights, powers and authorities given
to or conferred upon Bank are made or given jointly and severally.
5.12 Except as otherwise provided in this Agreement, all terms in this
Agreement have the meanings assigned to them in Article 9 (or, absent
definition in Article 9, in any other Article) of the Uniform Commercial
Code. "Uniform Commercial Code" means Act No. 174 of the Michigan Public
Acts of 1962, as amended.
5.13 No single or partial exercise, or delay in the exercise, of any
right or power under this Agreement, shall preclude other or further
exercise of the rights and powers under this Agreement. The
unenforceability of any provision of this Agreement shall not affect the
enforceability of the remainder of this Agreement. This Agreement
constitutes the entire agreement of Debtor and Bank with respect to the
subject matter of this Agreement. No amendment or modification of this
Agreement shall be effective unless the same shall be in writing and signed
by Debtor and an authorized officer of Bank. This Agreement shall be
governed by and construed in accordance with the internal laws of the State
of Michigan, without regard to conflict of laws principles.
5.14 To the extent that any of the Indebtedness is payable upon
demand, nothing contained in this Agreement shall modify the terms and
conditions of that Indebtedness nor shall anything contained in this
Agreement prevent Bank from making demand, without notice and with or
without reason, for immediate payment of any or all of that Indebtedness at
any time(s), whether or not an Event of Default has occurred.
5.15 Debtor's chief executive office is located and shall be
maintained at 775 Technology Drive, Suite 200, Ann Arbor, Michigan 48108.
If Collateral is located at other than the chief executive office, such
Collateral is located and shall be maintained at
See Attached List of Collateral Locations
STREET ADDRESS
CITY STATE ZIP CODE COUNTY
Collateral shall be maintained only at the locations identified in this
Section 5.15.
5.16 A carbon, photographic or other reproduction of this Agreement
shall be sufficient as a financing statement under the Uniform Commercial
Code and may be filed by Bank in any filing office.
5.17 This Agreement shall be terminated only by the filing of a
termination statement in accordance with the applicable provisions of the
Uniform Commercial Code, but the obligations contained in Section 2.13 of
this Agreement shall survive termination.
6. DEBTOR AND BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING (OR
HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY
AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT TO TRIAL BY JURY
IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN
ANY WAY RELATED TO, THIS AGREEMENT OR THE INDEBTEDNESS.
Special Provisions Applicable to this Agreement. (*None, if left blank)
Debtor:
--------------------------------------
By: /s/ Richard R. Chrysler
---------------------------------
Richard R. Chrysler
Its:
---------------------------------
SCHEDULE 1
JPE, Inc.
Brake, Axle and Tandem
Company Canada Inc.
Dayton Parts, Inc.
Plastic Trim, Inc.
SAC Corporation
Starboard Industries, Inc.
JPE Finishing, Inc.
SCHEDULE 2
Permitted Liens
[to be provided by Borrower's Counsel]
LIST OF COLLATERAL LOCATIONS
[to be provided by Borrower's Counsel]
EXHIBIT "A"
"Permitted Liens" shall mean:
(a) liens for taxes, assessments or governmental charges or levies not yet
due or delinquent, or which can thereafter be paid without penalty, or
which are being contested in good faith by appropriate proceedings
diligently pursued, provided that provision for the payment of all
such taxes has been made on Debtor's books as may be required by
generally accepted accounting principles consistently applied
("GAAP");
(b) unfiled, inchoate construction liens for construction work in
progress;
(c) workmen's, repairmen's, warehousemen's and carrier's liens and other
similar liens, if any, arising in the ordinary course of business,
which are paid in full when due or which are being contested in good
faith by appropriate proceedings diligently pursued, provided that in
the case of any such contest (i) any levy, execution or other
enforcement of such liens shall have been duly suspended and (ii)
provision for the payment of such liens has been made on Debtor's
books as may be required by GAAP;
(d) the liens, if any, shown on Schedule 2 attached hereto;
(e) liens incurred or deposits made in connection with workers'
compensation unemployment insurance, appeal bonds, bids or government
contracts, or to secure the performance of leases; and
(f) any other liens consented to in writing by Bank (which consent may be
granted or withheld in the sole discretion of Bank).