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EXHIBIT 10.4
SECURITY AGREEMENT
THIS AGREEMENT made as of April 28, 1998, by and between Talon
Automotive Group, Inc. (herein called "Company") and Comerica Bank, a Michigan
banking association, in its capacity as Agent ("Agent") under the Credit
Agreement of even date herewith by and between Talon Automotive Group, Inc. and
certain other borrowers, Agent and the lenders signatory thereto ("Credit
Agreement").
Capitalized terms used herein and not defined to the contrary, have the
meanings given them in the Credit Agreement.
For and in consideration of certain loans and extensions of credit now
or hereafter made pursuant to the terms of the Credit Agreement by Agent, on
behalf of the Banks, to or for the benefit or account of Borrowers, and for
other good and valuable consideration, Company agrees as follows:
1. GRANT OF SECURITY INTEREST
1.1 Company hereby assigns, transfers, mortgages, pledges, delivers,
conveys and grants to Agent, on behalf of Agent and the Banks, a continuing
security interest in the following described property of Company whether it is
now owned or existing or hereafter arising or acquired (all of which is herein
called "Collateral"):
(a) all accounts, accounts receivable, rights under contracts,
chattel paper, tax refunds, general intangibles, instruments,
and all obligations due Company for goods sold or to be sold,
or leased or to be leased, or services rendered or to be
rendered, ("Accounts");
(b) all inventory, whether raw materials, work-in-process,
finished goods, parts or supplies or otherwise; all goods,
merchandise and other property held for sale or lease or to be
furnished under any contract of service; and all documents of
title covering any goods which are or are to become inventory
("Inventory");
(c) all leases and rental agreements for personal property between
Company as lessor (whether by origination or derivation) and
any and all persons or parties as lessee(s), and all rentals,
purchase option amounts, and other sums due thereunder
("Chattel Paper");
(d) all machinery, equipment, furniture, fixtures, tools, motor
vehicles, and all accessories, parts and equipment now or
hereafter affixed thereto or used in connection therewith, and
all other tangible personal property (all of the foregoing
being herein called "Equipment"); and
(e) all cash and non-cash proceeds of any of the foregoing
received upon the sale, exchange, collection or other
disposition of same including without limitation all insurance
payable by reason of loss or damage to any of the foregoing.
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2. OBLIGATIONS
2.1 The Collateral shall be security for the following described
obligations of Company and all full or part extensions and renewals thereof (all
of which is herein called "Indebtedness"):
(a) all liabilities and obligations of Company under the Credit
Agreement and all present and future amendments thereto;
(b) the Notes made by Company payable to any of the Banks pursuant
to the Credit Agreement and all present and future amendments
thereto or extensions thereof;
(c) all of the obligations and liabilities of Company under or in
connection with any Letters of Credit now existing or
hereafter arising, executed and delivered by Company to Agent
and/or any of the Banks, and any extensions or renewals
thereof, and any agreements or instruments given in connection
therewith or in substitution therefor and all other
obligations and liabilities of Company to repay Agent and/or
any of the Banks for any and all drafts and/or demands for
payment honored;
(d) any and all other present and future liabilities and
obligations of Company to Agent or any of the Banks, howsoever
evidenced, existing, arising, or acquired, whether direct or
indirect, joint or several, absolute or contingent, due or to
become due, now existing or hereafter arising; including
without limitation all present or future amendments thereto;
(e) any and all of Agent's costs and expenses (including
reasonable attorneys' fees and legal expenses) incurred in the
preparation hereof, the filing or recording of any financing
statement or other document, and all of the costs and expenses
of Agent and any of the Banks (including reasonable attorneys
fees and legal expenses) incurred in the protection or
preservation of the Collateral, the collection and/or
repossession of the Collateral, or the enforcement of its
rights hereunder.
3. REPRESENTATIONS AND WARRANTIES
Company represents and warrants that:
3.1 Except as specifically permitted by the Credit Agreement, Company
owns the Collateral free and clear of all liens, encumbrances and security
interests other than in favor of Bank and no financing statements other than to
Agent, on behalf of the Banks has been given or has been filed with any
recording officer with respect to any of the Collateral.
3.2 The Collateral and all records concerning the Collateral are
located as specified in the Credit Agreement.
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3.3 The accounts and accounts receivable included in the Accounts are
genuine and valid obligations due or to become due to Company, and Company
hereby confirms that the value of same is as has been represented to the Agent
and the Banks and that, when taken as a whole, said accounts and accounts
receivable are not subject to offsets or counterclaims materially reducing the
aggregate value thereof.
3.4 The Equipment is and will continue to be used by Company in the
operation of its business and is not held for sale or lease and does not
constitute inventory or fixtures as such terms are defined in the Uniform
Commercial Code as adopted in Michigan.
4. PERFECTION OF SECURITY INTEREST
4.1 Company agrees to furnish such financing statements (and amendments
thereto and continuations thereof) as Agent may at any time request, to cause
same to be filed in all public offices deemed necessary by Agent, to pay all
costs of filing, and to do such other acts and things as Agent may at any time
reasonably request to establish and maintain for Agent on behalf of the Banks
valid, first priority, perfected security interests in the Collateral.
4.2 Company agrees to notify Agent of all changes in Company's name,
legal structure, or chief executive office, or in the location of the Collateral
or Company's records concerning same and to file or cause to be filed all
financing statements or amendments necessary or appropriate to establish and
maintain a valid first priority security interest in all the Collateral for
Agent on behalf of the Banks.
4.3 Company agrees that Agent may change the registration of any
registerable Collateral to any other name or form and hereby authorizes Agent to
endorse sign, date or otherwise complete any of the Collateral or papers in
connection with the transfer thereof in Company's name or otherwise, all as
Agent reasonably deems necessary or appropriate.
5. COVENANTS
Company covenants and agrees that so long as the Agent or the Banks
have any obligation or commitment to lend or extend credit to Company and so
long thereafter as any part of the Indebtedness remains unpaid it will:
5.1 Keep the Collateral and all records concerning the Collateral at
the locations set forth in the Credit Agreement.
5.2 Maintain insurance on the Inventory and the Equipment with an
insurance company satisfactory to Agent and the Banks against such risks and in
such amounts as Agent and the Banks may require (or if they shall make no
specific requirement, against such risks and in such amounts as are customary
and prudent for businesses similar to Company in size and nature) with the loss
payable under any such policy to Company and Agent on behalf of the Banks as
their interests may appear; all said policies or copies thereof, with all
endorsements
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thereon, to be deposited with Agent. The proceeds of any such insurance shall be
applied, at the option of Agent, on behalf of the Banks, to replacement of the
Collateral or payment of the Indebtedness, whether or not then due.
5.3 Maintain the Inventory and the Equipment in good condition, subject
to processing and waste and other matters generally affecting Company's type of
inventory, and subject to normal wear, tear and obsolescence and use with
respect to Equipment, pay all taxes and assessments applicable thereto, and not
use them or permit their use for any unlawful purpose.
5.4 Timely perform its obligations and take all other necessary actions
under any and all contracts and agreements which are or will be part of the
Collateral to insure that all persons or parties obligated to Company thereon
may not avail themselves of defense, offsets or counterclaims, and take all
action necessary and appropriate to enforce and collect all obligations due
Company on the Accounts or any other part of the Collateral.
5.5 Not sell, transfer, assign or otherwise dispose of any part of the
Collateral (other than inventory, but in such case only in the ordinary course
of Company's business) or give up possession or control thereof or create or
permit to exist any lien or encumbrance on or security interest in any part
thereof except to Agent on behalf of the Banks and except as permitted or
contemplated by the Credit Agreement.
5.6 Furnish the Agent and/or Banks such information concerning Company
and the Collateral as either of them may at any time reasonably request.
5.7 Permit Agent and/or the Banks, through their respective attorneys,
accountants, and representatives, at all reasonable times and upon reasonable
notice to examine and inspect the Collateral and to inspect, audit and make
copies of and extracts from all records and documents pertaining to the
Collateral.
5.8 Promptly notify Agent and the Banks of any fact or circumstance
materially and adversely affecting the value of the Accounts or Inventory,
except routine market fluctuations, payments of Accounts in the ordinary course
of the Company's business, or sales of Inventory in the ordinary course of the
Company's business.
5.9 Immediately upon Agent's request deliver to Agent, appropriately
endorsed to the order of Agent on behalf of the Banks, any note, trade
acceptance, chattel paper or other instrument or writing for the payment of
money which shall be received by Company arising from any of the Accounts.
5.10 Reimburse Agent and the Banks for all costs and expenses
(including reasonable attorneys' fees and legal expenses) incurred by them in
preserving or protecting the Collateral (including without limitation payment of
taxes, insurance premiums, and costs of maintenance and repairs, provided that
the Company has received notice and a 30 day period to cure such default unless
the Agent, in its sole discretion, must act promptly in order to preserve or
protect the Collateral) or in seeking to collect or enforce any rights under the
Collateral or collecting the
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Indebtedness and enforcing its rights hereunder, together with interest thereon
from the date of advance thereof at the highest rate per annum then borne by any
part of the Indebtedness.
6. REMITTANCE BASIS LOANS
6.1 So long as any Event of Default exists, at the sole discretion of
Agent, the Indebtedness may be put on a Remittance Basis, and the following
provisions shall be applicable:
(a) Company will: (i) establish (at its own expense) and maintain
at all times lockbox arrangements; (ii) notify account debtors
to make payments of receivables only to the lockbox accounts
established and maintained pursuant to such arrangements;
(iii) continue to transfer (or cause to be transferred) all
funds deposited into such lockbox accounts directly into the
Company's account or, into accounts designated by the Agent at
such bank but under the sole dominion and control of the
Agent; and (iv) direct each bank (each, a "lockbox bank") that
maintains such lockboxes to transfer to an account designated
by the Agent under the sole dominion and control of the Agent
on a daily basis, all funds deposited from time to time in the
accounts of the Company maintained with the lockbox bank, and
to confirm to the Agent that the Company has no access to the
funds in any such account.
(b) All items or accounts which are delivered to Agent pursuant to
subparagraph (a) above, or any other amount payable with
respect to, any of the Collateral shall, at Agent's option, be
applied to payment of the Indebtedness whether then due or
not, in such order of applications as Agent may determine or,
at Agent's option, shall be deposited to the credit of a
deposit account (herein called the "Assignee Deposit Account")
of Company with Agent, as security for payment of the
Indebtedness. Company shall have no right to withdraw any
funds deposited in the Assignee Deposit Account. Agent may,
from time to time, in its discretion, and shall upon request
of Company made not more than once in any week, apply all or
any of the balance then representing collected funds in the
Assignee Deposit Account, toward payment of the Indebtedness,
whether or not then due, in such order of application as Agent
may determine, and from time to time, in its discretion, may
release all or any of such balance to Company.
(c) Whenever Company obtains possession (by return, repossession
or otherwise) of any goods, the sale or lease of which by
Company shall have given rise to any of the Collateral, it
will (unless Agent otherwise consents in writing) segregate,
label and hold such goods as subject to the security interest
of Agent hereunder, and will, at its own expense, dispose of
such goods in such manner as Agent may from time to time
request. Company will, not later than ten days after obtaining
possession of such goods, pay to Agent, on behalf of the
Banks, in addition to all amounts payable by Company
hereunder, an amount equal to the greater of the unpaid
purchase price or lease rental of such goods or any rebate,
refund or adjustment granted by Company in connection with
obtaining possession of such goods, and if at the time of such
payment no default exists, such goods shall be discharged of
any security interest hereunder.
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7. DEFAULTS
7.1 Any Event of Default under the Credit Agreement shall be a default
under this Agreement.
8. REMEDIES
8.1 In the event of a default hereunder and the continuation thereof,
in addition to any rights Agent or the Banks may have under any other agreement
or by law, Agent may, upon the direction of the Banks, take any or all of the
following actions subject to notice and expiration of the applicable cure period
(if any) set forth in the Credit Agreement:
(a) declare all of the Indebtedness immediately due and payable;
(b) require Company to assemble the Collateral or any part thereof
and deliver same to Agent at a place designated by Agent
reasonably convenient to Company;
(c) take possession of the Collateral and any records concerning
same wherever it or they may be found, with or without process
of law, using such force as may be necessary, and at Agent's
option, leave any part of the Collateral on Company's premises
(rendered unusable, if Agent shall so elect, by any reasonable
means which causes no damage to the Collateral) and dispose of
the Collateral from said premises;
(d) sell, transfer and otherwise dispose of the Collateral or any
part thereof in any way permitted or not prohibited by
applicable law;
(e) notify, or require Company, at Company's expense, to notify,
any person or party obligated on any of the Collateral to make
payment to Agent on behalf of the Banks of any amounts due or
to become due thereunder; enforce collection of any of the
Collateral by suit or otherwise; and surrender, release or
exchange all or any part thereof or settle, adjust or
compromise or extend or renew for any period (whether or not
longer than the original period) any claim or indebtedness
thereunder or evidenced thereby; and endorse Company's name on
any commercial paper given in payment, and generally do in
Company's name, place and stead anything which Company could
do itself, all as the Banks, in their sole discretion, shall
deem necessary or appropriate to realize on the Collateral;
(f) complete, in Agent's sole discretion, any work in process
prior to disposition thereof;
(g) make or effect any necessary repairs to or maintenance on any
of the Collateral;
(h) obtain insurance coverage, conforming to the requirements of
this Agreement, on
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any of the Collateral;
(i) pay any taxes applicable to any of the Collateral.
8.2 Any disposition by Agent of the Collateral or any part thereof
shall be deemed made with reasonable and sufficient notice thereof, if Agent, at
least seven (7) days prior to the specified date of disposition, shall deposit
in the mail, postage prepaid, addressed to Company's last address known to
Agent, a notice of the time, place and manner of such disposition. Company
agrees that no such notice need be given if Agent in its sole discretion
determines that the Collateral is perishable or threatens to decline speedily in
value or is of a type customarily sold on a stock or commodity exchange or other
recognized market.
8.3 Any proceeds of any collection or disposition by Agent of any of
the Collateral may be applied by Agent to the reasonable expenses of retaking,
conserving, collecting (by suit or otherwise) or disposing of (by sale or
otherwise) the Collateral, including reasonable attorneys' fees and legal
expenses incurred, and then to the satisfaction of the Indebtedness in such
order of application as the Banks elect. After such application, Agent will
account to Company for any surplus and Company shall remain liable to Agent and
the Banks for any deficiency.
9. MISCELLANEOUS
9.1 Agent and the Banks shall have no duty to protect, preserve or
enforce rights under or to the Collateral or with respect to any goods evidenced
thereby, other than a duty of reasonable customary care of the Collateral in its
possession.
9.2 Company hereby makes, constitutes and appoints Agent its true and
lawful attorney-in-fact with full power of substitution to take any action, in
the event of a default under this Agreement and the continuation thereof, in
furtherance of this Agreement, including, without limitation, the signing of
financing statements, endorsing of instruments, and the execution and delivery
of all documents and agreements necessary to obtain or accomplish any protection
for or collection or disposition of any part of the Collateral. Such appointment
shall be deemed irrevocable and coupled with an interest.
9.3 Any transferee of, or endorser, guarantor or surety or any pledgor
or other party providing security paying the Indebtedness secured hereby may
take over all or any part of the Collateral subject hereto, and shall succeed to
all rights of the Agent and the Banks in respect thereto, and the Agent and the
Banks shall be under no further responsibility therefor, but no party shall
succeed to any of such rights so long as any part of the Indebtedness remains
unpaid.
9.4 Except as provided in the Credit Agreement, Company hereby waives
all defenses otherwise available to parties secondarily or in any other degree
liable or whose property stands as security, including, without being limited
to, presentment, demand, protest and notice of dishonor and nonpayment with
respect to any of the Indebtedness, the enforcement and preservation of any lien
or right of setoff otherwise held by the Agent or either of the Banks, nd the
enforcement and preservation of any of the Indebtedness or of any guaranty or
other
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undertaking. Company agrees that the security interests granted hereunder may be
enforced without any other security interest, mortgage, guaranty or other
source of collection whether granted by Company or any other person.
9.5 This Agreement shall not be construed in any way to obligate Agent
or the Banks to take any action with respect to any of Company's obligations or
duties for or under any part of the Collateral, including without limitation all
of Company's obligations under this Agreement or under any contract or agreement
which is a will be or will give rise to any part of the Collateral.
9.6 No delay on the part of Agent or the Banks in the exercise of any
right or remedy shall operate as a waiver thereof, and no single or partial
exercise by Agent or the Banks of any right or remedy shall preclude other or
further exercise thereof or the exercise of any other right or remedy.
9.7 This Agreement has been delivered at Detroit, Michigan, and shall
be construed in accordance with the laws of the State of Michigan.
9.8 Whenever possible each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
9.9 The rights granted hereunder are cumulative and in addition to any
other rights which Agent or the Banks may have by other agreement or under
applicable law.
9.10 Any notice to Company, if mailed, shall be deemed to be completed
two (2) Business Days after deposit in the mail, postage prepaid, addressed to
Company at its chief executive office, or the address set forth below, or at any
other address of Company appearing on Agent's records.
9.11 This Agreement shall be binding upon Company and its successors
and assigns and shall inure to the benefit of Agent and the Banks and their
respective successors and assigns.
9.12 This Security Agreement shall be deemed to amend and restate the
Prior Security Agreements, and nothing herein shall impair or otherwise affect
the liens and security interests created thereunder, which liens and security
interests continue in full force and effect.
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WITNESS the due execution hereof as of the day and year first above written.
TALON AUTOMOTIVE GROUP, INC.
By:
---------------------------------
Its:
---------------------------------
900 Wilshire Drive, Suite 203
Troy, Michigan 48084
Attn: David Woodward
Telephone No. (248) 362-7600
Facsimile No. (248) 362-7612
COMERICA BANK, as Agent and Bank
By:
---------------------------------
Its:
---------------------------------
500 Woodward Avenue
M.C. 3241
Detroit, MI 48226
Attn: ______________________
Telephone No. (313) 222-0242
Facsimile No. (313) 222-5759
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SECURITY AGREEMENT
THIS AGREEMENT made as of April 28, 1998, by and between Veltri
Holdings USA, Inc. (herein called "Company") and Comerica Bank, a Michigan
banking association, in its capacity as Agent ("Agent") under the Credit
Agreement of even date herewith by and between Talon Automotive Group, Inc. and
certain other borrowers, Agent and the lenders signatory thereto ("Credit
Agreement").
Capitalized terms used herein and not defined to the contrary, have the
meanings given them in the Credit Agreement.
For and in consideration of certain loans and extensions of credit now
or hereafter made pursuant to the terms of the Credit Agreement by Agent, on
behalf of the Banks, to or for the benefit or account of Borrowers, and for
other good and valuable consideration, Company agrees as follows:
1. GRANT OF SECURITY INTEREST
1.1 Company hereby assigns, transfers, mortgages, pledges, delivers,
conveys and grants to Agent, on behalf of Agent and the Banks, a continuing
security interest in the following described property of Company whether it is
now owned or existing or hereafter arising or acquired (all of which is herein
called "Collateral"):
(a) all accounts, accounts receivable, rights under contracts,
chattel paper, tax refunds, general intangibles, instruments,
and all obligations due Company for goods sold or to be sold,
or leased or to be leased, or services rendered or to be
rendered, ("Accounts");
(b) all inventory, whether raw materials, work-in-process,
finished goods, parts or supplies or otherwise; all goods,
merchandise and other property held for sale or lease or to be
furnished under any contract of service; and all documents of
title covering any goods which are or are to become inventory
("Inventory");
(c) all leases and rental agreements for personal property between
Company as lessor (whether by origination or derivation) and
any and all persons or parties as lessee(s), and all rentals,
purchase option amounts, and other sums due thereunder
("Chattel Paper");
(d) all machinery, equipment, furniture, fixtures, tools, motor
vehicles, and all accessories, parts and equipment now or
hereafter affixed thereto or used in connection therewith, and
all other tangible personal property (all of the foregoing
being herein called "Equipment"); and
(e) all cash and non-cash proceeds of any of the foregoing
received upon the sale, exchange, collection or other
disposition of same including without limitation all insurance
payable by reason of loss or damage to any of the foregoing.
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2. OBLIGATIONS
2.1 The Collateral shall be security for the following described
obligations of Company and all full or part extensions and renewals thereof (all
of which is herein called "Indebtedness"):
(a) all liabilities and obligations of Company under the Credit
Agreement and all present and future amendments thereto;
(b) the Notes made by Company payable to any of the Banks pursuant
to the Credit Agreement and all present and future amendments
thereto or extensions thereof;
(c) all of the obligations and liabilities of Company under or in
connection with any Letters of Credit now existing or
hereafter arising, executed and delivered by Company to Agent
and/or any of the Banks, and any extensions or renewals
thereof, and any agreements or instruments given in connection
therewith or in substitution therefor and all other
obligations and liabilities of Company to repay Agent and/or
any of the Banks for any and all drafts and/or demands for
payment honored;
(d) any and all other present and future liabilities and
obligations of Company to Agent or any of the Banks, howsoever
evidenced, existing, arising, or acquired, whether direct or
indirect, joint or several, absolute or contingent, due or to
become due, now existing or hereafter arising; including
without limitation all present or future amendments thereto;
(e) any and all of Agent's costs and expenses (including
reasonable attorneys' fees and legal expenses) incurred in the
preparation hereof, the filing or recording of any financing
statement or other document, and all of the costs and expenses
of Agent and any of the Banks (including reasonable attorneys
fees and legal expenses) incurred in the protection or
preservation of the Collateral, the collection and/or
repossession of the Collateral, or the enforcement of its
rights hereunder.
3. REPRESENTATIONS AND WARRANTIES
Company represents and warrants that:
3.1 Except as specifically permitted by the Credit Agreement, Company
owns the Collateral free and clear of all liens, encumbrances and security
interests other than in favor of Bank and no financing statements other than to
Agent, on behalf of the Banks has been given or has been filed with any
recording officer with respect to any of the Collateral.
3.2 The Collateral and all records concerning the Collateral are
located as specified in the Credit Agreement.
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3.3 The accounts and accounts receivable included in the Accounts are
genuine and valid obligations due or to become due to Company, and Company
hereby confirms that the value of same is as has been represented to the Agent
and the Banks and that, when taken as a whole, said accounts and accounts
receivable are not subject to offsets or counterclaims materially reducing the
aggregate value thereof.
3.4 The Equipment is and will continue to be used by Company in the
operation of its business and is not held for sale or lease and does not
constitute inventory or fixtures as such terms are defined in the Uniform
Commercial Code as adopted in Michigan.
4. PERFECTION OF SECURITY INTEREST
4.1 Company agrees to furnish such financing statements (and amendments
thereto and continuations thereof) as Agent may at any time request, to cause
same to be filed in all public offices deemed necessary by Agent, to pay all
costs of filing, and to do such other acts and things as Agent may at any time
reasonably request to establish and maintain for Agent on behalf of the Banks
valid, first priority, perfected security interests in the Collateral.
4.2 Company agrees to notify Agent of all changes in Company's name,
legal structure, or chief executive office, or in the location of the Collateral
or Company's records concerning same and to file or cause to be filed all
financing statements or amendments necessary or appropriate to establish and
maintain a valid first priority security interest in all the Collateral for
Agent on behalf of the Banks.
4.3 Company agrees that Agent may change the registration of any
registerable Collateral to any other name or form and hereby authorizes Agent to
endorse sign, date or otherwise complete any of the Collateral or papers in
connection with the transfer thereof in Company's name or otherwise, all as
Agent reasonably deems necessary or appropriate.
5. COVENANTS
Company covenants and agrees that so long as the Agent or the Banks
have any obligation or commitment to lend or extend credit to Company and so
long thereafter as any part of the Indebtedness remains unpaid it will:
5.1 Keep the Collateral and all records concerning the Collateral at
the locations set forth in the Credit Agreement.
5.2 Maintain insurance on the Inventory and the Equipment with an
insurance company satisfactory to Agent and the Banks against such risks and in
such amounts as Agent and the Banks may require (or if they shall make no
specific requirement, against such risks and in such amounts as are customary
and prudent for businesses similar to Company in size and nature) with the loss
payable under any such policy to Company and Agent on behalf of the Banks as
their interests may appear; all said policies or copies thereof, with all
endorsements
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thereon, to be deposited with Agent. The proceeds of any such insurance shall be
applied, at the option of Agent, on behalf of the Banks, to replacement of the
Collateral or payment of the Indebtedness, whether or not then due.
5.3 Maintain the Inventory and the Equipment in good condition, subject
to processing and waste and other matters generally affecting Company's type of
inventory, and subject to normal wear, tear and obsolescence and use with
respect to Equipment, pay all taxes and assessments applicable thereto, and not
use them or permit their use for any unlawful purpose.
5.4 Timely perform its obligations and take all other necessary actions
under any and all contracts and agreements which are or will be part of the
Collateral to insure that all persons or parties obligated to Company thereon
may not avail themselves of defense, offsets or counterclaims, and take all
action necessary and appropriate to enforce and collect all obligations due
Company on the Accounts or any other part of the Collateral.
5.5 Not sell, transfer, assign or otherwise dispose of any part of the
Collateral (other than inventory, but in such case only in the ordinary course
of Company's business) or give up possession or control thereof or create or
permit to exist any lien or encumbrance on or security interest in any part
thereof except to Agent on behalf of the Banks and except as permitted or
contemplated by the Credit Agreement.
5.6 Furnish the Agent and/or Banks such information concerning Company
and the Collateral as either of them may at any time reasonably request.
5.7 Permit Agent and/or the Banks, through their respective attorneys,
accountants, and representatives, at all reasonable times and upon reasonable
notice to examine and inspect the Collateral and to inspect, audit and make
copies of and extracts from all records and documents pertaining to the
Collateral.
5.8 Promptly notify Agent and the Banks of any fact or circumstance
materially and adversely affecting the value of the Accounts or Inventory,
except routine market fluctuations, payments of Accounts in the ordinary course
of the Company's business, or sales of Inventory in the ordinary course of the
Company's business.
5.9 Immediately upon Agent's request deliver to Agent, appropriately
endorsed to the order of Agent on behalf of the Banks, any note, trade
acceptance, chattel paper or other instrument or writing for the payment of
money which shall be received by Company arising from any of the Accounts.
5.10 Reimburse Agent and the Banks for all costs and expenses
(including reasonable attorneys' fees and legal expenses) incurred by them in
preserving or protecting the Collateral (including without limitation payment of
taxes, insurance premiums, and costs of maintenance and repairs, provided that
the Company has received notice and a 30 day period to cure such default unless
the Agent, in its sole discretion, must act promptly in order to preserve or
protect the Collateral) or in seeking to collect or enforce any rights under the
Collateral or collecting the
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Indebtedness and enforcing its rights hereunder, together with interest thereon
from the date of advance thereof at the highest rate per annum then borne by any
part of the Indebtedness.
6. REMITTANCE BASIS LOANS
6.1 So long as any Event of Default exists, at the sole discretion of
Agent, the Indebtedness may be put on a Remittance Basis, and the following
provisions shall be applicable:
(a) Company will: (i) establish (at its own expense) and maintain
at all times lockbox arrangements; (ii) notify account debtors
to make payments of receivables only to the lockbox accounts
established and maintained pursuant to such arrangements;
(iii) continue to transfer (or cause to be transferred) all
funds deposited into such lockbox accounts directly into the
Company's account or, into accounts designated by the Agent at
such bank but under the sole dominion and control of the
Agent; and (iv) direct each bank (each, a "lockbox bank") that
maintains such lockboxes to transfer to an account designated
by the Agent under the sole dominion and control of the Agent
on a daily basis, all funds deposited from time to time in the
accounts of the Company maintained with the lockbox bank, and
to confirm to the Agent that the Company has no access to the
funds in any such account.
(b) All items or accounts which are delivered to Agent pursuant to
subparagraph (a) above, or any other amount payable with
respect to, any of the Collateral shall, at Agent's option, be
applied to payment of the Indebtedness whether then due or
not, in such order of applications as Agent may determine or,
at Agent's option, shall be deposited to the credit of a
deposit account (herein called the "Assignee Deposit Account")
of Company with Agent, as security for payment of the
Indebtedness. Company shall have no right to withdraw any
funds deposited in the Assignee Deposit Account. Agent may,
from time to time, in its discretion, and shall upon request
of Company made not more than once in any week, apply all or
any of the balance then representing collected funds in the
Assignee Deposit Account, toward payment of the Indebtedness,
whether or not then due, in such order of application as Agent
may determine, and from time to time, in its discretion, may
release all or any of such balance to Company.
(c) Whenever Company obtains possession (by return, repossession
or otherwise) of any goods, the sale or lease of which by
Company shall have given rise to any of the Collateral, it
will (unless Agent otherwise consents in writing) segregate,
label and hold such goods as subject to the security interest
of Agent hereunder, and will, at its own expense, dispose of
such goods in such manner as Agent may from time to time
request. Company will, not later than ten days after obtaining
possession of such goods, pay to Agent, on behalf of the
Banks, in addition to all amounts payable by Company
hereunder, an amount equal to the greater of the unpaid
purchase price or lease rental of such goods or any rebate,
refund or adjustment granted by Company in connection with
obtaining possession of such goods, and if at the time of such
payment no default exists, such goods shall be discharged of
any security interest hereunder.
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15
7. DEFAULTS
7.1 Any Event of Default under the Credit Agreement shall be a default
under this Agreement.
8. REMEDIES
8.1 In the event of a default hereunder and the continuation thereof,
in addition to any rights Agent or the Banks may have under any other agreement
or by law, Agent may, upon the direction of the Banks, take any or all of the
following actions subject to notice and expiration of the applicable cure period
(if any) set forth in the Credit Agreement:
(a) declare all of the Indebtedness immediately due and payable;
(b) require Company to assemble the Collateral or any part thereof
and deliver same to Agent at a place designated by Agent
reasonably convenient to Company;
(c) take possession of the Collateral and any records concerning
same wherever it or they may be found, with or without process
of law, using such force as may be necessary, and at Agent's
option, leave any part of the Collateral on Company's premises
(rendered unusable, if Agent shall so elect, by any reasonable
means which causes no damage to the Collateral) and dispose of
the Collateral from said premises;
(d) sell, transfer and otherwise dispose of the Collateral or any
part thereof in any way permitted or not prohibited by
applicable law;
(e) notify, or require Company, at Company's expense, to notify,
any person or party obligated on any of the Collateral to make
payment to Agent on behalf of the Banks of any amounts due or
to become due thereunder; enforce collection of any of the
Collateral by suit or otherwise; and surrender, release or
exchange all or any part thereof or settle, adjust or
compromise or extend or renew for any period (whether or not
longer than the original period) any claim or indebtedness
thereunder or evidenced thereby; and endorse Company's name on
any commercial paper given in payment, and generally do in
Company's name, place and stead anything which Company could
do itself, all as the Banks, in their sole discretion, shall
deem necessary or appropriate to realize on the Collateral;
(f) complete, in Agent's sole discretion, any work in process
prior to disposition thereof;
(g) make or effect any necessary repairs to or maintenance on any
of the Collateral;
(h) obtain insurance coverage, conforming to the requirements of
this Agreement,
- 6 -
16
any of the Collateral;
(i) pay any taxes applicable to any of the Collateral.
8.2 Any disposition by Agent of the Collateral or any part thereof
shall be deemed made with reasonable and sufficient notice thereof, if Agent, at
least seven (7) days prior to the specified date of disposition, shall deposit
in the mail, postage prepaid, addressed to Company's last address known to
Agent, a notice of the time, place and manner of such disposition. Company
agrees that no such notice need be given if Agent in its sole discretion
determines that the Collateral is perishable or threatens to decline speedily in
value or is of a type customarily sold on a stock or commodity exchange or other
recognized market.
8.3 Any proceeds of any collection or disposition by Agent of any of
the Collateral may be applied by Agent to the reasonable expenses of retaking,
conserving, collecting (by suit or otherwise) or disposing of (by sale or
otherwise) the Collateral, including reasonable attorneys' fees and legal
expenses incurred, and then to the satisfaction of the Indebtedness in such
order of application as the Banks elect. After such application, Agent will
account to Company for any surplus and Company shall remain liable to Agent and
the Banks for any deficiency.
9. MISCELLANEOUS
9.1 Agent and the Banks shall have no duty to protect, preserve or
enforce rights under or to the Collateral or with respect to any goods evidenced
thereby, other than a duty of reasonable customary care of the Collateral in its
possession.
9.2 Company hereby makes, constitutes and appoints Agent its true and
lawful attorney-in-fact with full power of substitution to take any action, in
the event of a default under this Agreement and the continuation thereof, in
furtherance of this Agreement, including, without limitation, the signing of
financing statements, endorsing of instruments, and the execution and delivery
of all documents and agreements necessary to obtain or accomplish any protection
for or collection or disposition of any part of the Collateral. Such appointment
shall be deemed irrevocable and coupled with an interest.
9.3 Any transferee of, or endorser, guarantor or surety or any pledgor
or other party providing security paying the Indebtedness secured hereby may
take over all or any part of the Collateral subject hereto, and shall succeed to
all rights of the Agent and the Banks in respect thereto, and the Agent and the
Banks shall be under no further responsibility therefor, but no party shall
succeed to any of such rights so long as any part of the Indebtedness remains
unpaid.
9.4 Except as provided in the Credit Agreement, Company hereby waives
all defenses otherwise available to parties secondarily or in any other degree
liable or whose property stands as security, including, without being limited
to, presentment, demand, protest and notice of dishonor and nonpayment with
respect to any of the Indebtedness, the enforcement and preservation of any lien
or right of setoff otherwise held by the Agent or either of the Banks,
and the enforcement and preservation of any of the Indebtedness or of any
guaranty or other
- 7 -
17
undertaking. Company agrees that the security interests granted hereunder may be
enforced without any other security interest, mortgage, guaranty or other source
of collection whether granted by Company or any other person.
9.5 This Agreement shall not be construed in any way to obligate Agent
or the Banks to take any action with respect to any of Company's obligations or
duties for or under any part of the Collateral, including without limitation all
of Company's obligations under this Agreement or under any contract or agreement
which is a will be or will give rise to any part of the Collateral.
9.6 No delay on the part of Agent or the Banks in the exercise of any
right or remedy shall operate as a waiver thereof, and no single or partial
exercise by Agent or the Banks of any right or remedy shall preclude other or
further exercise thereof or the exercise of any other right or remedy.
9.7 This Agreement has been delivered at Detroit, Michigan, and shall
be construed in accordance with the laws of the State of Michigan.
9.8 Whenever possible each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
9.9 The rights granted hereunder are cumulative and in addition to any
other rights which Agent or the Banks may have by other agreement or under
applicable law.
9.10 Any notice to Company, if mailed, shall be deemed to be completed
two (2) Business Days after deposit in the mail, postage prepaid, addressed to
Company at its chief executive office, or the address set forth below, or at any
other address of Company appearing on Agent's records.
9.11 This Agreement shall be binding upon Company and its successors
and assigns and shall inure to the benefit of Agent and the Banks and their
respective successors and assigns.
9.12 This Security Agreement shall be deemed to amend and restate the
Prior Security Agreements, and nothing herein shall impair or otherwise affect
the liens and security interests created thereunder, which liens and security
interests continue in full force and effect.
- 8 -
18
WITNESS the due execution hereof as of the day and year first above written.
VELTRI HOLDINGS USA, INC.
By:
-----------------------------------
Its:
-----------------------------------
900 Wilshire Drive, Suite 203
Troy, Michigan 48084
Attn: David Woodward
Telephone No. (248) 362-7600
Facsimile No. (248) 362-7612
COMERICA BANK, as Agent and Bank
By:
-----------------------------------
Its:
-----------------------------------
500 Woodward Avenue
M.C. 3241
Detroit, MI 48226
Attn: ______________________
Telephone No. (313) 222-0242
Facsimile No. (313) 222-5759
- 9 -
19
SECURITY AGREEMENT
THIS AGREEMENT made as of April 28, 1998, by and between VS Holdings,
Inc. (herein called "Company") and Comerica Bank, a Michigan banking
association, in its capacity as Agent ("Agent") under the Credit Agreement of
even date herewith by and between Talon Automotive Group, Inc. and certain other
borrowers, Agent and the lenders signatory thereto ("Credit Agreement").
Capitalized terms used herein and not defined to the contrary, have the
meanings given them in the Credit Agreement.
For and in consideration of certain loans and extensions of credit now
or hereafter made pursuant to the terms of the Credit Agreement by Agent, on
behalf of the Banks, to or for the benefit or account of Borrowers, and for
other good and valuable consideration, Company agrees as follows:
1. GRANT OF SECURITY INTEREST
1.1 Company hereby assigns, transfers, mortgages, pledges, delivers,
conveys and grants to Agent, on behalf of Agent and the Banks, a continuing
security interest in the following described property of Company whether it is
now owned or existing or hereafter arising or acquired (all of which is herein
called "Collateral"):
(a) all accounts, accounts receivable, rights under contracts,
chattel paper, tax refunds, general intangibles, instruments,
and all obligations due Company for goods sold or to be sold,
or leased or to be leased, or services rendered or to be
rendered, ("Accounts");
(b) all inventory, whether raw materials, work-in-process,
finished goods, parts or supplies or otherwise; all goods,
merchandise and other property held for sale or lease or to be
furnished under any contract of service; and all documents of
title covering any goods which are or are to become inventory
("Inventory");
(c) all leases and rental agreements for personal property between
Company as lessor (whether by origination or derivation) and
any and all persons or parties as lessee(s), and all rentals,
purchase option amounts, and other sums due thereunder
("Chattel Paper");
(d) all machinery, equipment, furniture, fixtures, tools, motor
vehicles, and all accessories, parts and equipment now or
hereafter affixed thereto or used in connection therewith, and
all other tangible personal property (all of the foregoing
being herein called "Equipment"); and
(e) all cash and non-cash proceeds of any of the foregoing
received upon the sale, exchange, collection or other
disposition of same including without limitation all insurance
payable by reason of loss or damage to any of the foregoing.
20
2. OBLIGATIONS
2.1 The Collateral shall be security for the following described
obligations of Company and all full or part extensions and renewals thereof (all
of which is herein called "Indebtedness"):
(a) all liabilities and obligations of Company under the Credit
Agreement and all present and future amendments thereto;
(b) the Notes made by Company payable to any of the Banks pursuant
to the Credit Agreement and all present and future amendments
thereto or extensions thereof;
(c) all of the obligations and liabilities of Company under or in
connection with any Letters of Credit now existing or
hereafter arising, executed and delivered by Company to Agent
and/or any of the Banks, and any extensions or renewals
thereof, and any agreements or instruments given in connection
therewith or in substitution therefor and all other
obligations and liabilities of Company to repay Agent and/or
any of the Banks for any and all drafts and/or demands for
payment honored;
(d) any and all other present and future liabilities and
obligations of Company to Agent or any of the Banks, howsoever
evidenced, existing, arising, or acquired, whether direct or
indirect, joint or several, absolute or contingent, due or to
become due, now existing or hereafter arising; including
without limitation all present or future amendments thereto;
(e) any and all of Agent's costs and expenses (including
reasonable attorneys' fees and legal expenses) incurred in the
preparation hereof, the filing or recording of any financing
statement or other document, and all of the costs and expenses
of Agent and any of the Banks (including reasonable attorneys
fees and legal expenses) incurred in the protection or
preservation of the Collateral, the collection and/or
repossession of the Collateral, or the enforcement of its
rights hereunder.
3. REPRESENTATIONS AND WARRANTIES
Company represents and warrants that:
3.1 Except as specifically permitted by the Credit Agreement, Company
owns the Collateral free and clear of all liens, encumbrances and security
interests other than in favor of Bank and no financing statements other than to
Agent, on behalf of the Banks has been given or has been filed with any
recording officer with respect to any of the Collateral.
3.2 The Collateral and all records concerning the Collateral are
located as specified in the Credit Agreement.
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21
3.3 The accounts and accounts receivable included in the Accounts are
genuine and valid obligations due or to become due to Company, and Company
hereby confirms that the value of same is as has been represented to the Agent
and the Banks and that, when taken as a whole, said accounts and accounts
receivable are not subject to offsets or counterclaims materially reducing the
aggregate value thereof.
3.4 The Equipment is and will continue to be used by Company in the
operation of its business and is not held for sale or lease and does not
constitute inventory or fixtures as such terms are defined in the Uniform
Commercial Code as adopted in Michigan.
4. PERFECTION OF SECURITY INTEREST
4.1 Company agrees to furnish such financing statements (and amendments
thereto and continuations thereof) as Agent may at any time request, to cause
same to be filed in all public offices deemed necessary by Agent, to pay all
costs of filing, and to do such other acts and things as Agent may at any time
reasonably request to establish and maintain for Agent on behalf of the Banks
valid, first priority, perfected security interests in the Collateral.
4.2 Company agrees to notify Agent of all changes in Company's name,
legal structure, or chief executive office, or in the location of the Collateral
or Company's records concerning same and to file or cause to be filed all
financing statements or amendments necessary or appropriate to establish and
maintain a valid first priority security interest in all the Collateral for
Agent on behalf of the Banks.
4.3 Company agrees that Agent may change the registration of any
registerable Collateral to any other name or form and hereby authorizes Agent to
endorse sign, date or otherwise complete any of the Collateral or papers in
connection with the transfer thereof in Company's name or otherwise, all as
Agent reasonably deems necessary or appropriate.
5. COVENANTS
Company covenants and agrees that so long as the Agent or the Banks
have any obligation or commitment to lend or extend credit to Company and so
long thereafter as any part of the Indebtedness remains unpaid it will:
5.1 Keep the Collateral and all records concerning the Collateral at
the locations set forth in the Credit Agreement.
5.2 Maintain insurance on the Inventory and the Equipment with an
insurance company satisfactory to Agent and the Banks against such risks and in
such amounts as Agent and the Banks may require (or if they shall make no
specific requirement, against such risks and in such amounts as are customary
and prudent for businesses similar to Company in size and
nature) with the loss payable under any such policy to Company and Agent on
behalf of the Banks as their interests may appear; all said policies or copies
thereof, with all endorsements
- 3 -
22
thereon, to be deposited with Agent. The proceeds of any such insurance shall be
applied, at the option of Agent, on behalf of the Banks, to replacement of the
Collateral or payment of the Indebtedness, whether or not then due.
5.3 Maintain the Inventory and the Equipment in good condition, subject
to processing and waste and other matters generally affecting Company's type of
inventory, and subject to normal wear, tear and obsolescence and use with
respect to Equipment, pay all taxes and assessments applicable thereto, and not
use them or permit their use for any unlawful purpose.
5.4 Timely perform its obligations and take all other necessary actions
under any and all contracts and agreements which are or will be part of the
Collateral to insure that all persons or parties obligated to Company thereon
may not avail themselves of defense, offsets or counterclaims, and take all
action necessary and appropriate to enforce and collect all obligations due
Company on the Accounts or any other part of the Collateral.
5.5 Not sell, transfer, assign or otherwise dispose of any part of the
Collateral (other than inventory, but in such case only in the ordinary course
of Company's business) or give up possession or control thereof or create or
permit to exist any lien or encumbrance on or security interest in any part
thereof except to Agent on behalf of the Banks and except as permitted or
contemplated by the Credit Agreement.
5.6 Furnish the Agent and/or Banks such information concerning Company
and the Collateral as either of them may at any time reasonably request.
5.7 Permit Agent and/or the Banks, through their respective attorneys,
accountants, and representatives, at all reasonable times and upon reasonable
notice to examine and inspect the Collateral and to inspect, audit and make
copies of and extracts from all records and documents pertaining to the
Collateral.
5.8 Promptly notify Agent and the Banks of any fact or circumstance
materially and adversely affecting the value of the Accounts or Inventory,
except routine market fluctuations, payments of Accounts in the ordinary course
of the Company's business, or sales of Inventory in the ordinary course of the
Company's business.
5.9 Immediately upon Agent's request deliver to Agent, appropriately
endorsed to the order of Agent on behalf of the Banks, any note, trade
acceptance, chattel paper or other instrument or writing for the payment of
money which shall be received by Company arising from any of the Accounts.
5.10 Reimburse Agent and the Banks for all costs and expenses
(including reasonable attorneys' fees and legal expenses) incurred by them in
preserving or protecting the Collateral (including without limitation payment of
taxes, insurance premiums, and costs of maintenance and repairs, provided that
the Company has received notice and a 30 day period to cure such default unless
the Agent, in its sole discretion, must act promptly in order to preserve or
protect the Collateral) or in seeking to collect or enforce any rights under the
Collateral or collecting the
- 4 -
23
Indebtedness and enforcing its rights hereunder, together with interest thereon
from the date of advance thereof at the highest rate per annum then borne by any
part of the Indebtedness.
6. REMITTANCE BASIS LOANS
6.1 So long as any Event of Default exists, at the sole discretion of
Agent, the Indebtedness may be put on a Remittance Basis, and the following
provisions shall be applicable:
(a) Company will: (i) establish (at its own expense) and maintain
at all times lockbox arrangements; (ii) notify account debtors
to make payments of receivables only to the lockbox accounts
established and maintained pursuant to such arrangements;
(iii) continue to transfer (or cause to be transferred) all
funds deposited into such lockbox accounts directly into the
Company's account or, into accounts designated by the Agent at
such bank but under the sole dominion and control of the
Agent; and (iv) direct each bank (each, a "lockbox bank") that
maintains such lockboxes to transfer to an account designated
by the Agent under the sole dominion and control of the Agent
on a daily basis, all funds deposited from time to time in the
accounts of the Company maintained with the lockbox bank, and
to confirm to the Agent that the Company has no access to the
funds in any such account.
(b) All items or accounts which are delivered to Agent pursuant to
subparagraph (a) above, or any other amount payable with
respect to, any of the Collateral shall, at Agent's option, be
applied to payment of the Indebtedness whether then due or
not, in such order of applications as Agent may determine or,
at Agent's option, shall be deposited to the credit of a
deposit account (herein called the "Assignee Deposit Account")
of Company with Agent, as security for payment of the
Indebtedness. Company shall have no right to withdraw any
funds deposited in the Assignee Deposit Account. Agent may,
from time to time, in its discretion, and shall upon request
of Company made not more than once in any week, apply all or
any of the balance then representing collected funds in the
Assignee Deposit Account, toward payment of the Indebtedness,
whether or not then due, in such order of application as Agent
may determine, and from time to time, in its discretion, may
release all or any of such balance to Company.
(c) Whenever Company obtains possession (by return, repossession
or otherwise) of any goods, the sale or lease of which by
Company shall have given rise to any of the Collateral, it
will (unless Agent otherwise consents in writing) segregate,
label and hold such goods as subject to the security interest
of Agent hereunder, and will, at its own expense, dispose of
such goods in such manner as Agent may from time to time
request. Company will, not later than ten days after obtaining
possession of such goods, pay to Agent, on behalf of the
Banks, in addition to all amounts payable by Company
hereunder, an amount equal to the greater of the unpaid
purchase price or lease rental of such goods or any rebate,
refund or adjustment granted by Company in connection with
obtaining possession of such goods, and if at the time of such
payment no default exists, such goods shall be discharged of
any security interest hereunder.
- 5 -
24
7. DEFAULTS
7.1 Any Event of Default under the Credit Agreement shall be a default
under this Agreement.
8. REMEDIES
8.1 In the event of a default hereunder and the continuation thereof,
in addition to any rights Agent or the Banks may have under any other agreement
or by law, Agent may, upon the direction of the Banks, take any or all of the
following actions subject to notice and expiration of the applicable cure period
(if any) set forth in the Credit Agreement:
(a) declare all of the Indebtedness immediately due and payable;
(b) require Company to assemble the Collateral or any part thereof
and deliver same to Agent at a place designated by Agent
reasonably convenient to Company;
(c) take possession of the Collateral and any records concerning
same wherever it or they may be found, with or without process
of law, using such force as may be necessary, and at Agent's
option, leave any part of the Collateral on Company's premises
(rendered unusable, if Agent shall so elect, by any reasonable
means which causes no damage to the Collateral) and dispose of
the Collateral from said premises;
(d) sell, transfer and otherwise dispose of the Collateral or any
part thereof in any way permitted or not prohibited by
applicable law;
(e) notify, or require Company, at Company's expense, to notify,
any person or party obligated on any of the Collateral to make
payment to Agent on behalf of the Banks of any amounts due or
to become due thereunder; enforce collection of any of the
Collateral by suit or otherwise; and surrender, release or
exchange all or any part thereof or settle, adjust or
compromise or extend or renew for any period (whether or not
longer than the original period) any claim or indebtedness
thereunder or evidenced thereby; and endorse Company's name on
any commercial paper given in payment, and generally do in
Company's name, place and stead anything which Company could
do itself, all as the Banks, in their sole discretion, shall
deem necessary or appropriate to realize on the Collateral;
(f) complete, in Agent's sole discretion, any work in process
prior to disposition thereof;
(g) make or effect any necessary repairs to or maintenance on
any of the Collateral;
(h) obtain insurance coverage, conforming to the requirements of
this Agreement, on
- 6 -
25
any of the Collateral;
(i) pay any taxes applicable to any of the Collateral.
8.2 Any disposition by Agent of the Collateral or any part thereof
shall be deemed made with reasonable and sufficient notice thereof, if Agent, at
least seven (7) days prior to the specified date of disposition, shall deposit
in the mail, postage prepaid, addressed to Company's last address known to
Agent, a notice of the time, place and manner of such disposition. Company
agrees that no such notice need be given if Agent in its sole discretion
determines that the Collateral is perishable or threatens to decline speedily in
value or is of a type customarily sold on a stock or commodity exchange or other
recognized market.
8.3 Any proceeds of any collection or disposition by Agent of any of
the Collateral may be applied by Agent to the reasonable expenses of retaking,
conserving, collecting (by suit or otherwise) or disposing of (by sale or
otherwise) the Collateral, including reasonable attorneys' fees and legal
expenses incurred, and then to the satisfaction of the Indebtedness in such
order of application as the Banks elect. After such application, Agent will
account to Company for any surplus and Company shall remain liable to Agent and
the Banks for any deficiency.
9. MISCELLANEOUS
9.1 Agent and the Banks shall have no duty to protect, preserve or
enforce rights under or to the Collateral or with respect to any goods evidenced
thereby, other than a duty of reasonable customary care of the Collateral in its
possession.
9.2 Company hereby makes, constitutes and appoints Agent its true and
lawful attorney-in-fact with full power of substitution to take any action, in
the event of a default under this Agreement and the continuation thereof, in
furtherance of this Agreement, including, without limitation, the signing of
financing statements, endorsing of instruments, and the execution and delivery
of all documents and agreements necessary to obtain or accomplish any protection
for or collection or disposition of any part of the Collateral. Such appointment
shall be deemed irrevocable and coupled with an interest.
9.3 Any transferee of, or endorser, guarantor or surety or any pledgor
or other party providing security paying the Indebtedness secured hereby may
take over all or any part of the Collateral subject hereto, and shall succeed to
all rights of the Agent and the Banks in respect thereto, and the Agent and the
Banks shall be under no further responsibility therefor, but no party shall
succeed to any of such rights so long as any part of the Indebtedness remains
unpaid.
9.4 Except as provided in the Credit Agreement, Company hereby waives
all defenses otherwise available to parties secondarily or in any other degree
liable or whose property stands as security, including, without being limited
to, presentment, demand, protest and notice of dishonor and nonpayment with
respect to any of the Indebtedness, the enforcement and preservation of any lien
or right of setoff otherwise held by the Agent or either of the Banks, and the
enforcement and preservation of any of the Indebtedness or of any guaranty or
other
- 7 -
26
undertaking. Company agrees that the security interests granted hereunder may be
enforced without any other security interest, mortgage, guaranty or other source
of collection whether granted by Company or any other person.
9.5 This Agreement shall not be construed in any way to obligate Agent
or the Banks to take any action with respect to any of Company's obligations or
duties for or under any part of the Collateral, including without limitation all
of Company's obligations under this Agreement or under any contract or agreement
which is a will be or will give rise to any part of the Collateral.
9.6 No delay on the part of Agent or the Banks in the exercise of any
right or remedy shall operate as a waiver thereof, and no single or partial
exercise by Agent or the Banks of any right or remedy shall preclude other or
further exercise thereof or the exercise of any other right or remedy.
9.7 This Agreement has been delivered at Detroit, Michigan, and shall
be construed in accordance with the laws of the State of Michigan.
9.8 Whenever possible each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
9.9 The rights granted hereunder are cumulative and in addition to any
other rights which Agent or the Banks may have by other agreement or under
applicable law.
9.10 Any notice to Company, if mailed, shall be deemed to be completed
two (2) Business Days after deposit in the mail, postage prepaid, addressed to
Company at its chief executive office, or the address set forth below, or at any
other address of Company appearing on Agent's records.
9.11 This Agreement shall be binding upon Company and its successors
and assigns and shall inure to the benefit of Agent and the Banks and their
respective successors and assigns.
9.12 This Security Agreement shall be deemed to amend and restate the
Prior Security Agreements, and nothing herein shall impair or otherwise affect
the liens and security interests created thereunder, which liens and security
interests continue in full force and effect.
- 8 -
27
WITNESS the due execution hereof as of the day and year first above written.
VS HOLDINGS, INC.
By:
-----------------------------
Its:
-----------------------------
900 Wilshire Drive, Suite 203
Troy, Michigan 48084
Attn: David Woodward
Telephone No. (248) 362-7600
Facsimile No. (248) 362-7612
COMERICA BANK, as Agent and Bank
By:
-----------------------------
Its:
-----------------------------
500 Woodward Avenue
M.C. 3241
Detroit, MI 48226
Attn: ______________________
Telephone No. (313) 222-0242
Facsimile No. (313) 222-5759
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