PATENT AND TRADEMARK SECURITY AGREEMENT
PATENT AND TRADEMARK SECURITY AGREEMENT, dated as of May 27, 1999, made by
JPE, Inc., a Michigan corporation (the "Grantor") in favor of COMERICA BANK, a
Michigan banking corporation (the "Bank").
W I T N E S S E T H:
WHEREAS, Grantor is a party to the Notes (as defined below) dated as of the
date hereof between the Bank and Grantor;
WHEREAS, the Grantor owns certain Trademarks and Trademark Licenses listed
on Schedule I hereto;
WHEREAS, the Grantor owns certain Patents and Patent Licenses listed on
Schedule II;
WHEREAS, it is a condition precedent to the obligation of the Bank to make
credit advances to Grantor under the Notes that the Grantor shall have executed
and delivered this Agreement to the Bank;
NOW, THEREFORE, in consideration of the premises and to induce the Bank to
enter into the Notes and to make advances to Grantor thereunder, the Grantor
hereby agrees with the Bank, as follows:
1. Defined Terms. (a) Unless otherwise defined herein, capitalized terms
defined in the Notes are used herein as defined therein. The following terms
shall have the following meanings:
"Agreement": this Patent and Trademark Security Agreement, as the same
may be amended, supplemented, waived or otherwise modified from time to
time.
"Code": the Uniform Commercial Code as from time to time in effect in
the State of Michigan.
"Collateral": as defined in Section 2 of this Agreement.
"Event of Default": any default or event of default described in the
Notes and lapse of any applicable grace and/or cure periods.
"General Intangibles": as defined in Section 9-106 of the Code,
including, without limitation, all Patents and Trademarks now or hereafter
owned by the Grantor to the extent such Patents and Trademarks would be
included in General Intangibles under the Code.
"Lien": any lien, security interest, pledge, encumbrance or other
similar charge, whether voluntary or involuntary and however created.
"Notes": the $20,000,000 Eurodollar Note dated May 27, 1999 made by
Grantor, Dayton Parts, Inc., Starboard Industries, Inc., Plastic Trim,
Inc., JPE Finishing, Inc. and Brake, Axle and Tandem Company Canada, Inc.
(collectively, "Borrowers") payable to Bank, that certain $30,000,000
Promissory Note-Demand dated May 27, 1999 made by Borrowers payable to Bank
and that certain $6,300,000 Euorodollar Installment Note dated May 27, 1999
made by Borrowers payable to Bank each as may be amended, replaced,
supplemented or modified from time to time, and "Note" shall mean anyone of
them.
"Obligations": the collective reference to the unpaid principal of and
interest on (including, without limitation, interest accruing after the
maturity of each of the Notes and interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Grantor whether or not a
claim for post-filing or post-petition interest is allowed in such
proceeding) each Note, and all other obligations and liabilities of the
Grantor to the Bank, whether direct or indirect, absolute or contingent,
due or to become due, or now existing or hereafter incurred, including,
without limitation, obligations and liabilities which may arise under, out
of, or in connection with, the Notes or any other document made, delivered
or given in connection therewith, in each case whether on account of
principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all reasonable fees
and disbursements of counsel to the Bank).
"Patent License": all United States license agreements with any other
person in connection with any of the Patents or such other person's
patents, whether the Grantor is a licensor or a licensee under any such
license agreement, including, without limitation, the license agreements
listed on Schedule II hereto and made a part hereof, subject, in each case,
to the terms of such license agreements and the right to prepare for sale,
sell and advertise for sale, all inventory now or hereafter covered by such
licenses.
"Patents": all United States patents, patent applications and
patentable inventions, including, without limitation, all patents and
patent applications identified in Schedule II attached hereto and made a
part hereof, and including without limitation (a) all inventions and
improvements described and claimed therein, and patentable inventions, (b)
the right to sue or otherwise recover for any and all past, present and
future infringements and misappropriations thereof, (c) all income,
royalties, damages and other payments now and hereafter due and/or payable
with respect thereto (including, without limitation, payments under all
licenses entered into in connection therewith, and damages and payments for
past or future infringements thereof), and (d) all rights corresponding
thereto in the United States and all reissues, divisions, continuations,
continuations-in-part, substitutes, renewals, and extensions thereof, all
improvements thereon, and all other rights of any kind whatsoever of the
Grantor accruing thereunder or pertaining thereto (Patents and Patent
Licenses being, collectively, the "Patent Collateral").
"Trademark License": all United States license agreements with any
other person in connection with any of the Trademarks or such other
person's names or trademarks, whether the Grantor is a licensor or a
licensee under any such license agreement, including, without limitation,
the license agreements listed on Schedule I hereto and made a part hereof,
subject, in each case, to the terms of such license agreements, and the
right to prepare for sale, sell and advertise for sale, all inventory now
or hereafter covered by such licenses.
"Trademarks": all trademarks, service marks, trade names, trade dress
or other indicia of trade origin, trademark and service mark registrations,
and applications for trademark or service mark registrations (except for
"intent to use" applications for trademark or service mark registrations
filed pursuant to Section 1(b) of the Lanham Act, unless and until an
Amendment to Allege Use or a Statement of Use under Sections 1(c) and 1(d)
of said Act has been filed), and any renewals thereof, including, without
limitation, each registration and application identified in Schedule I
attached hereto and made a part hereof, and including without limitation
(a) the right to sue or otherwise recover for any and all past, present and
future infringements and misappropriations thereof, (b) all income,
royalties, damages and other payments now and hereafter due and/or payable
with respect thereto (including, without limitation, payments under all
licenses entered into in connection therewith, and damages and payments for
past or future infringements thereof) and (c) all rights corresponding
thereto in the United States and all other rights of any kind whatsoever of
the Grantor accruing thereunder or pertaining thereto, together in each
case with the goodwill of the business connected with the use of, and
symbolized by, each such trademark, service mark, trade name, trade dress
or other indicia of trade origin (Trademarks and Trademark Licenses being,
collectively, the "Trademark Collateral").
(b) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section and paragraph
references are to this Agreement unless otherwise specified.
(c) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
2. Grant of Security Interest. As collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Obligations, the Grantor hereby assigns,
pledges and grants to the Bank a security interest in all of the following
property now owned or at any time hereafter acquired by the Grantor or in which
the Grantor now has or at any time in the future may acquire any right, title or
interest (collectively, the "Collateral"):
(i) all Trademarks;
(ii) all Trademark Licenses;
(iii) all Patents;
(iv) all Patent Licenses;
(v) all general intangibles connected with the use of or symbolized
by the Trademarks and Patents; and
(vi) to the extent not otherwise included, all proceeds and products
of any and all of the foregoing;
3. Grantor Remains Liable; Limitations on Bank's Obligations. Anything
herein to the contrary notwithstanding, (a) the Grantor shall remain liable
under the contracts and agreements included in the Collateral to the extent set
forth therein to perform all of its duties and obligations thereunder to the
same extent as if this Agreement had not been executed, (b) the exercise by the
Bank of any of the rights hereunder shall not release the Grantor from any of
its duties or obligations under the contracts and agreements included in the
Collateral, and (c) the Bank shall not have any obligation or liability under
the contracts and agreements included in the Collateral by reason of this
Agreement, nor shall the Bank be obligated to perform any of the obligations or
duties of the Grantor thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder.
4. Representations and Warranties. The Grantor represents and warrants as
follows:
(a) Title; No Other Liens. Except for the Liens granted to the Bank
and liens permitted by the Notes, if any, to the best knowledge of the
Grantor, the Grantor is (or, in the case of after-acquired Collateral, will
be) the sole, legal and beneficial owner of the entire right, title and
interest in and to the Trademarks set forth on Schedule I hereto and the
Patents set forth in Schedule II hereto free and clear of any and all
liens. No security agreement, financing statement or other public notice
similar in effect with respect to all or any part of the Collateral is on
file or of record in any public office (including, without limitation, the
United States Patent and Trademark Office) except such as may have been
filed in favor of the Bank pursuant to this Agreement or as may have been
filed with respect to liens permitted by the Notes, if any.
(b) [Intentionally Left Blank]
(c) Consents. No consent of any party (other than such Grantor) to any
Patent License or Trademark License constituting Collateral is required to
be obtained by or on behalf of such Grantor in connection with the
execution, delivery and performance of this Agreement that has not been
obtained. Each Patent License and Trademark License constituting Collateral
is in full force and effect and constitutes a valid and legally enforceable
obligation of the Grantor and (to the knowledge of the Grantor) each other
party thereto except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditor's rights generally and by general equitable
principles (whether enforcement is sought by proceedings in equity or at
law). No consent or authorization of, filing with or other act by or in
respect of any governmental authority is required in connection with the
execution, delivery, performance, validity or enforceability of any of the
Patent Licenses or Trademark Licenses by any party thereto other than those
which have been duly obtained, made or performed and are in full force and
effect. Neither the Grantor nor (to the knowledge of the Grantor) any other
party to any Patent License or Trademark License constituting Collateral is
in default in the performance or observance of any of the terms thereof,
except for such defaults as would not reasonably be expected, in the
aggregate, to have a material adverse effect on the value of the
Collateral. The right, title and interest of the Grantor in, to and under
each Patent License and Trademark License constituting Collateral are not
subject to any defense, offset, counterclaim or claim.
(d) Schedules I and II are Complete; All Filings Have Been Made. Set
forth in Schedules I and II is a complete and accurate list of the
Trademarks and Patents owned by the Grantor of the date hereof. The Grantor
shall promptly make all necessary filings and recordations to protect and
maintain its interest in the Trademarks and Patents set forth in Schedules
I and II, including, without limitation, all necessary filings and
recordings, and payments of all maintenance fees, in the United States
Patent and Trademark Office to the extent such Trademarks and Patents are
material to the Grantor's business. Set forth in Schedules I and II is a
complete and accurate list of all of the material Trademark Licenses and
Patent Licenses owned by the Grantor as of the date hereof.
(e) [Intentionally Left Blank]
(f) The Patent and Patent Licenses are Subsisting and Not Adjudged
Invalid. As of the date hereof, each Patent and patent application of the
Grantor set forth in Schedule II is subsisting and has not been adjudged
invalid, unpatentable or unenforceable, in whole or in part, and, to the
best of the Grantor's knowledge, is valid, patentable and enforceable. As
of the date hereof, each of the Patent Licenses set forth in Schedule II is
validly subsisting and has not been adjudged invalid or unenforceable, in
whole or in part, and, to the best of the Grantor's knowledge, is valid and
enforceable. As of the date hereof, the Grantor has notified the Bank in
writing of all uses of any item of Patent Collateral material to the
Grantor's business of which the Grantor is aware which could reasonably be
expected to lead to such item becoming invalid or unenforceable.
(g) No Previous Assignments or Releases. As of the date hereof, the
Grantor has not made a previous assignment, sale, transfer or agreement
constituting a present or future assignment, sale, transfer or encumbrance
of any of the Collateral, except with respect to exclusive licenses granted
in the ordinary course of business or as permitted by this Agreement or the
Loan Documents. As of the date hereof, the Grantor has not granted any
license, shop right, release, covenant not to sue, or non-assertion
assurance to any person with respect to any part of the Collateral.
(h) Proper Statutory Notice. The Grantor has marked its products with
the trademark registration symbol the numbers of all appropriate patents,
the common law trademark symbol or the designation "patent pending," as the
case may be, to the extent that it is reasonably and commercially
practicable.
(i) No Knowledge of Claims Likely to Arise. Except for the Trademark
Licenses and Patent Licenses listed in Schedules I and II hereto, the
Grantor has no knowledge of the existence of any right or any claim (other
than as provided by this Agreement) that is likely to be made under or
against any item of Collateral contained on Schedules I and II.
(j) No Knowledge of Existing or Threatened Claims. No claim has been
made and is continuing or, to the best of the Grantor's knowledge,
threatened that the use by the Grantor of any item of Collateral is invalid
or unenforceable or that the use by the Grantor of any Collateral does or
may violate the rights of any person. To the best of the Grantor's
knowledge, there is currently no infringement or unauthorized use of any
item of Collateral contained on Schedules I and II.
5. Covenants. The Grantor covenants and agrees with the Bank that, from and
after the date of this Agreement until the payment in full of the Obligations:
(a) Further Documentation; Pledge of Instruments and Chattel Paper. At
any time and from time to time, upon the written request of the Bank or the
Grantor, as the case may be, and at the sole expense of the Grantor, the
Grantor or the Bank, as the case may be, will promptly and duly execute and
deliver such further instruments and documents and take such further action
as the Bank or the Grantor may reasonably request for the purpose of
obtaining or preserving the full benefits of this Agreement and of the
rights and powers herein granted, including, without limitation, the filing
of any financing or continuation statements under the Uniform Commercial
Code in effect in any jurisdiction with respect to the Liens created
hereby. The Grantor also hereby authorizes the Bank to file any such
financing or continuation statement without the signature of the Grantor to
the extent permitted by applicable law. A carbon, photostatic or other
reproduction of this Agreement shall be sufficient as a financing statement
for filing in any jurisdiction. The Bank agrees to notify the Grantor and
the Grantor agrees to notify the Bank of any financing or continuation
statement filed by it pursuant to this Section 5(a), provided that any
failure to give any such notice shall not affect the validity or
effectiveness of any such filing.
(b) Indemnification and Expenses. The Grantor agrees to pay, and to
save the Bank harmless from, any and all liabilities and reasonable costs
and expenses (including, without limitation, reasonable legal fees and
expenses) (i) with respect to, or resulting from, any delay by the Grantor
in complying with any material requirement of law applicable to any of the
Collateral, or (ii) in connection with any of the transactions contemplated
by this Agreement, provided that such indemnity shall not be available to
the extent that such liabilities, costs and expenses resulted from the
gross negligence or willful misconduct of the Bank. In any suit, proceeding
or action brought by the Bank under any of the Collateral for any sum owing
thereunder, or to enforce any of the Collateral, the Grantor will save,
indemnify and keep the Bank harmless from and against all reasonable
expenses, losses or damages suffered by reason of any defense or
counterclaim raised in any such suit, proceeding or action.
(c) Maintenance of Records. (i) The Grantor will keep and maintain at
its own cost and expense reasonably satisfactory and complete records of
the Collateral, and shall mark such records to evidence this Agreement and
the Liens and the security interests created hereby. For the Bank's further
security, the Bank shall have a security interest in all of the Grantor's
books and records pertaining to the Collateral, and the Grantor shall
permit the Bank or its representatives to review such books and records
upon reasonable advance notice during normal business hours at the location
where such books and records are kept and at the reasonable request of the
Bank.
(d) [Intentionally Left Blank]
(e) Compliance with Laws, etc. The Grantor will comply in all material
respects with all requirements of law applicable to the Collateral or any
part thereof, except to the extent that the failure to so comply would not
be reasonably expected to materially adversely affect in the aggregate the
Bank's rights hereunder, the priority of its Liens on the Collateral or the
value of the Collateral.
(f) Further Identification of Collateral. The Grantor will furnish to
the Bank from time to time such statements and schedules further
identifying and describing the Collateral, and such other reports in
connection with the Collateral, as the Bank may reasonably request, all in
reasonable detail.
(g) Security Interest in Any Newly Acquired Collateral. The Grantor
agrees that should it obtain an ownership interest in any Trademark,
Patent, Trademark License or Patent License which is not now a part of the
Collateral, (i) the provisions of Section 2 shall automatically apply
thereto, (ii) any such Trademark, Patent, Trademark License and Patent
License shall automatically become part of the Collateral, and (iii) with
respect to any ownership interest in any Trademark, Patent, Trademark
License or Patent License that the Grantor should obtain which the Grantor
reasonably deems is material to its business, it shall give notice thereof
to the Bank in writing, in reasonable detail, within 30 days after
acquiring such ownership interest. The Grantor authorizes the Bank to
modify this Agreement by amending Schedules I and II (and will cooperate
reasonably with the Bank in effecting any such amendment) to include on
Schedule I any Trademark and Trademark License and on Schedule II any
Patent or Patent License of which it receives notice under this Section.
(h) Maintenance of the Trademark Collateral. The Grantor agrees to
take all necessary steps, including, without limitation, in the United
States Patent and Trademark Office or in any court, to (i) maintain each
trademark registration and each Trademark License identified on Schedule I
hereto, and (ii) pursue each trademark application now or hereafter
identified in Schedule I hereto, including, without limitation, the filing
of responses to office actions issued by the United States Patent and
Trademark Office, the filing of applications for renewal, the filing of
affidavits under Sections 8 and 15 of the United States Trademark Act, and
the participation in opposition, cancellation, infringement and
misappropriation proceedings, except, in each case in which the Grantor has
reasonably determined that any of the foregoing is not of material economic
value to it. The Grantor agrees to take corresponding steps with respect to
each new or acquired trademark registration, trademark application or any
rights obtained under any Trademark License, in each case, which it is now
or later becomes entitled, except in each case in which the Grantor has
reasonably determined that any of the foregoing is not of material economic
value to it. Any expenses incurred in connection with such activities shall
be borne by the Grantor.
(i) Maintenance of the Patent Collateral. The Grantor agrees to take
all necessary steps, including, without limitation, in the United States
Patent and Trademark Office or in any court, to (i) maintain each Patent
and each Patent License identified on Schedule II hereto, and (ii) pursue
each patent application, now or hereafter identified in Schedule II hereto,
including, without limitation, the filing of divisional, continuation,
continuation-in-part and substitute applications, the filing of
applications for reissue, renewal or extensions, the payment of maintenance
fees, and the participation in interference, reexamination, opposition,
infringement and misappropriation proceedings, except in each case in which
the Grantor has reasonably determined that any of the foregoing is not of
material economic value to it. The Grantor agrees to take corresponding
steps with respect to each new or acquired Patent, patent application, or
any rights obtained under any Patent License, in each case, which it is now
or later becomes entitled, except in each case in which the Grantor has
reasonably determined that any of the foregoing is not of material economic
value to it. Any expenses incurred in connection with such activities shall
be borne by the Grantor.
(j) Grantor Shall Not Abandon any Collateral. The Grantor shall not
abandon any trademark registration, Patent or any pending trademark or
patent application, without the written consent of the Bank, unless the
Grantor shall have previously determined that such use or the pursuit or
maintenance of such trademark registration, Patent or pending trademark or
patent application is not of material economic value to it, in which case,
the Grantor will, at least annually, give notice of any such abandonment to
the Bank in writing.
(k) Infringement of Any Collateral. In the event that the Grantor
becomes aware that any item of the Collateral which the Grantor has
reasonably determined to be material to its business is infringed or
misappropriated by a third party, the Grantor shall promptly notify the
Bank promptly and in writing, in reasonable detail, and shall take such
actions as the Grantor or the Bank deems reasonably appropriate under the
circumstances to protect such Collateral, including, without limitation,
suing for infringement or misappropriation and for an injunction against
such infringement or misappropriation. Any expense incurred in connection
with such activities shall be borne by the Grantor. The Grantor will advise
the Bank promptly and in writing, in reasonable detail, of any adverse
determination or the institution of any proceeding (including, without
limitation, the institution of any proceeding in the United States Patent
and Trademark Office or any court) regarding any item of the Collateral.
(l) Limitation on Liens on Collateral. The Grantor will not create,
incur or permit to exist, will defend the Collateral against, and will take
such other action as is reasonably necessary to remove, any Lien or
material adverse claim on or to any of the Collateral, other than the liens
created by this Agreement and those permitted by the Notes, if any, and
will defend the right, title and interest of the Bank in and to any of the
Collateral against the claims and demands of all persons whomsoever.
(m) Limitations on Dispositions of Collateral. Without the prior
written consent of the Bank, the Grantor will not sell, assign, transfer,
exchange or otherwise dispose of, or grant any option with respect to, the
Collateral, or attempt, offer or contract to do so.
(n) Notices. The Grantor will advise the Bank promptly, in reasonable
detail, (i) of any Lien (other than Liens created hereby) on, or material
adverse claim asserted against, Patents or Trademarks and (ii) of the
occurrence of any other event which would reasonably be expected in the
aggregate to have a material adverse effect on the aggregate value of the
Collateral or the Liens created hereunder.
6. Bank's Appointment as Attorney-in-Fact.
(a) Powers. The Grantor hereby irrevocably constitutes and appoints
the Bank, and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Grantor and in the name
of the Grantor or in its own name, from time to time in the Bank's
discretion during the continuance of an Event of Default, for the purpose
of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments
which may be necessary or desirable to accomplish the purposes of this
Agreement, and, without limiting the generality of the foregoing, the
Grantor hereby gives the Bank the power and right, on behalf of the
Grantor, without notice to or assent by the Grantor, to do the following
during the continuance of an Event of Default, and to the extent permitted
by law:
(i) to execute and deliver any and all agreements, instruments,
documents, and papers as the Bank may reasonably request to evidence
the Bank's security interest in any of the Collateral;
(ii) in the name of the Grantor or its own name, or otherwise, to
take possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under
any general intangible (to the extent that any of the foregoing
constitute Collateral) or with respect to any other Collateral and to
file any claim or to take any other action or institute any proceeding
in any court of law or equity or otherwise deemed appropriate by the
Bank for the purpose of collecting any and all such moneys due under
any such General Intangible or with respect to any such other
Collateral whenever payable;
(iii) to pay or discharge Liens placed on the Collateral, other
than Liens permitted under this Agreement; and
(iv) (A) to direct any party liable for any payment under any of
the Collateral to make payment of any and all moneys due or to become
due thereunder directly to the Bank or as the Bank shall direct; (B)
to ask for, or demand, collect, receive payment of and receipt for,
any and all moneys, claims and other amounts due or to become due at
any time in respect of or arising out of any of the Collateral; (C) to
sign and indorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications, notices and other documents in connection
with any of the Collateral; (D) to commence and prosecute any suits,
actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any thereof and to enforce
any other right in respect of any Collateral; (E) to defend any suit,
action or proceeding brought against the Grantor with respect to any
of the Collateral; (F) to settle, compromise or adjust any suit,
action or proceeding described in clause (E) above and, in connection
therewith, to give such discharges or releases as the Bank may deem
appropriate; (G) subject to any pre-existing rights or licenses, to
assign any Patent or Trademark constituting Collateral (along with the
goodwill of the business to which any such Patent or Trademark
pertains), for such term or terms, on such conditions, and in such
manner, as the Bank shall in its sole discretion determine; and (H)
generally, to sell, transfer, pledge and make any agreement with
respect to or otherwise deal with any of the Collateral as fully and
completely as though the Bank were the absolute owner thereof for all
purposes, and to do, at the Bank's option and the Grantor's expense,
at any time, or from time to time, all acts and things which the Bank
deems necessary to protect, preserve or realize upon the Collateral
and the Bank's Liens thereon and to effect the intent of this
Agreement, all as fully and effectively as the Grantor might do.
The Grantor hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof. This power of attorney is a power
coupled with an interest and shall be irrevocable until payment in full of
the Obligations.
(b) Other Powers. The Grantor also authorizes the Bank, from time to
time if an Event of Default shall have occurred and be continuing, to
execute, in connection with any sale provided for in Section 8 hereof, any
endorsements, assignments or other instruments of conveyance or transfer
with respect to the Collateral. (c) No Duty on the Part of Bank. The powers
conferred on the Bank hereunder are solely to protect the Bank's interests
in the Collateral and shall not impose any duty upon the Bank to exercise
any such powers. The Bank shall be accountable only for amounts that it
actually receives as a result of the exercise of such powers, and neither
it nor any of its officers, directors, employees or agents shall be
responsible to the Grantor for any act or failure to act hereunder, except
for their own gross negligence or willful misconduct.
7. Performance by Bank of Grantor's Obligations. If the Grantor fails to
perform or comply with any of its agreements contained herein and the Bank, as
provided for by the terms of this Agreement, shall itself perform or comply, or
otherwise cause performance or compliance, with such agreement, the reasonable
expenses of the Bank incurred in connection with such performance or compliance,
together with interest thereon at the rate provided in the Notes, shall be
payable by the Grantor to the Bank on demand and shall constitute Obligations
secured hereby.
8. Proceeds. It is agreed that if an Event of Default shall occur and be
continuing, (a) all proceeds of any Collateral received by the Grantor
consisting of cash, checks and other near-cash items shall be held by the
Grantor in trust for the Bank, segregated from other funds of the Grantor, and
at the request of the Bank shall, forthwith upon receipt by the Grantor, be
turned over to the Bank in the exact form received by the Grantor (duly indorsed
by the Grantor to the Bank, if required by the Bank) and (b) any and all such
proceeds received by the Bank (whether from the Grantor or otherwise) may, in
the sole discretion of the Bank, be held by the Bank as collateral security for
the Obligations (whether matured or unmatured) and/or then or at any time
thereafter may be applied by the Bank against, the Obligations then due and
owing. Any balance of such proceeds remaining after the payment in full of the
Obligations shall be paid over to the Grantor or to whomsoever may be lawfully
entitled to receive the same.
9. Remedies. If an Event of Default shall occur and be continuing, the Bank
may exercise all rights and remedies of a secured party under the Code, and, to
the extent permitted by law, all other rights and remedies granted to it in this
Agreement and in any other instrument or agreement securing, evidencing or
relating to the Obligations. Without limiting the generality of the foregoing,
the Bank, without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law referred
to below) to or upon the Grantor or any other person (all and each of which
demands, defenses, advertisements and notices are hereby waived) may in such
circumstances, to the extent permitted by law, forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, lease, assign, give option or options to purchase, or otherwise
dispose of and deliver the Collateral or any part thereof (or contract to do any
of the foregoing) in one or more parcels at public or private sale or sales, at
any exchange, broker's board or office of the Bank or elsewhere upon such terms
and conditions as it may deem advisable and at such prices as it may deem best,
for cash or on credit or for future delivery without assumption of any credit
risk. The Bank shall have the right, to the extent permitted by law, upon any
such sale or sales, to purchase the whole or any part of the Collateral so sold,
free of any right or equity of redemption in the Grantor, which right or equity
is hereby waived or released. The Grantor further agrees, at the Bank's request,
upon the occurrence and during the continuance of an Event of Default, to
assemble the Collateral and make it available to the Bank at places which the
Bank shall reasonably select, whether at the Grantor's premises or elsewhere. In
the event of any sale, assignment, or other disposition of any of the
Collateral, the goodwill of the business connected with and symbolized by any
Trademark Collateral subject to such disposition shall be included, and the
Grantor shall supply to the Bank or its designee the Grantor's know-how and
expertise relating to the Collateral subject to such disposition, and the
Grantor's notebooks, studies, reports, records, documents and things embodying
the same or relating to the inventions, processes or ideas covered by, and to
the manufacture of any products under or in connection with, the Collateral
subject to such disposition, and the Grantor's customer's lists, studies and
surveys and other records and documents relating to the distribution, marketing,
advertising and sale of products relating to the Collateral subject to such
disposition. The Bank shall apply the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale, after deducting all
reasonable costs and expenses of every kind incurred therein or incidental to
the care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the Bank, including, without limitation, reasonable
attorneys' fees and disbursements, to the payment in whole or in part of the
Obligations then due and owing, and only after such application and after the
payment by the Bank of any other amount required by any provision of law,
including, without limitation, Section 9-504(1) (c) of the Code, need the Bank
account for the surplus, if any, to the Grantor. To the extent permitted by
applicable law, the Grantor waives all claims, damages and demands it may
acquire against the Bank arising out of the repossession, retention or sale of
the Collateral, other than any such claims, damages and demands that may arise
from the gross negligence or willful misconduct of the Bank. If any notice of a
proposed sale or other disposition of Collateral shall be required by law, such
notice shall be deemed reasonable and proper if given at least 10 days before
such sale or other disposition. The Grantor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the Collateral
are insufficient to pay the then outstanding Obligations, including the
reasonable fees and disbursements of any attorneys employed by the Bank to
collect such deficiency.
10. Limitation on Duties Regarding Preservation of Collateral. The Bank's
sole duty with respect to the custody, safekeeping and physical preservation of
the Collateral in its possession, under Section 9-207 of the Code or otherwise,
shall be to deal with it in the same manner as the Bank deals with similar
property for its own account. Neither the Bank nor any of its directors,
officers, employees or agents shall be liable for failure to demand, collect or
realize upon all or any part of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of the Grantor or any other person.
11. Powers Coupled with an Interest. All authorizations and agencies herein
contained with respect to the Collateral are powers coupled with an interest and
are irrevocable until payment in full of the Obligations.
12. Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
13. Section Headings. The Section headings used in this Agreement are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
14. No Waiver; Cumulative Remedies. The Bank shall not by any act (except
by a written instrument pursuant to Section 15 hereof), delay, indulgence,
omission or otherwise be deemed to have waived any right or remedy hereunder or
to have acquiesced in any Event of Default or in any breach of any of the terms
and conditions hereof. No failure to exercise, nor any delay in exercising, on
the part of the Bank, any right, power or privilege hereunder shall operate as a
waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Bank of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Bank would otherwise have on any future occasion. The
rights and remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any rights or remedies provided by law.
15. Waivers and Amendments; Successors and Assigns. None of the terms or
provisions of this Agreement may be waived, amended, supplemented or otherwise
modified except by a written instrument executed by the Grantor and the Bank.
This Agreement shall be binding upon the successors and assigns of the Grantor
and shall inure to the benefit of the Bank and its successors and assigns,
except that the Grantor may not assign, transfer or delegate any of its rights
or obligations under this Agreement without the prior written consent of the
Bank.
16. Notices. Except as expressly provided otherwise in this Agreement, all
notices and other communications provided to any party hereto under this
Agreement shall be in writing and shall be given by personal delivery, by mail,
by reputable overnight courier, by telex or by facsimile and addressed or
delivered to it at its address set forth on Schedule 16 or at such other address
as may be designated by such party in a notice to the other parties that
complies as to delivery with the terms of this Section 16. Any notice, if
personally delivered or if mailed and properly addressed with postage prepaid
and sent by registered or certified mail, shall be deemed given when received or
when delivery is refused; any notice, if given to a reputable overnight courier
and properly addressed, shall be deemed given 2 Business Days after the date on
which it was sent, unless it is actually received sooner by the named addressee;
and any notice, if transmitted by telex or facsimile, shall be deemed given when
received (answer back confirmed in the case of telexes and receipt confirmed in
the case of telecopies). Bank may, but, except as specifically provided herein,
shall not be required to, take any action on the basis of any notice given to it
by telephone, but the giver of any such notice shall promptly confirm such
notice in writing or by telex or facsimile, and such notice will not be deemed
to have been received until such confirmation is deemed received in accordance
with the provisions of this Section set forth above. If such telephonic notice
conflicts with any such confirmation, the terms of such telephonic notice shall
control.
17. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF MICHIGAN WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.
18. Waiver of Jury Trial. The Grantor hereby waives any right to trial by
jury in the event of litigation regarding the performance or enforcement of, or
in any way related to, this Agreement.
IN WITNESS WHEREOF, the Grantor has caused this Agreement to be duly
executed and delivered as of the date first above written.
JPE, INC.
By: /s/ Richard R. Chrysler
------------------------------
Richard R. Chrysler
Its: President and Chief Executive
Officer