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EXHIBIT 10.8
AGREEMENT
This Agreement is made this day of April, 1998 by and between
Michael T. J. Veltri, individually and as trustee of the Michael T. J. Veltri
Revocable Living Trust u/a/d December 17, 1992 ("Veltri"), Veltri Metal Products
Co., F/K/A VS Acquisition Co. ("VMP"), VS Holdings, Inc. ("VSH"), Veltri
Holdings USA, Inc. ("VHU") and Talon Automotive Group, Inc. ("TAG").
WHEREAS, Veltri, Maria Veltri, and VMP entered into that certain Stock
Purchase Agreement dated November 8, 1996 (the "Stock Purchase Agreement");
WHEREAS, contemporaneously herewith, TAG is undergoing the following
restructuring (the "Restructuring"): Hawthorne Metal Products Company, J & R
Manufacturing and Talon Automotive Group, L.L.C. will be merging with and into
Production Stamping, Inc., and Production Stamping, Inc., as the\surviving
entity, will change its name to Talon Automotive Group, Inc. ("TAG*); VS
Holdings No. 2, Inc. will merge with and into VS Holdings, Inc.; and VS
Holdings, Inc. (which will then be the sole shareholder of VMP), and Veltri
Holdings USA, Inc. will then each become wholly owned subsidiaries of TAG;
WHEREAS, contemporaneously herewith TAG is completing an offering of up
to $125,000,000 in senior subordinated notes pursuant to Rule 144A promulgated
under the Securities Act of 1933, as amended (the "Offering");
WHEREAS, Comerica Bank, a Michigan banking corporation, as Agent under
a certain credit agreement among TAG, VMP and others, as borrowers, and other
banks, from time to time a party thereto, as lenders, will provide TAG with a
senior credit facility (the "Senior Credit Facility");
WHEREAS, under the Stock Purchase Agreement and its related
documentation (the "SPA Documentation"), VMP is indebted to Veltri for the
following (the "Veltri Indebtedness"), (i) the Earn Out Amounts, as defined in
the Stock Purchase Agreement -dated November 8, 1996, as amended, (ii) the
principal and accrued interest due pursuant to the Amended and Restated
Promissory Note of even date herewith, and (iii) the monetary obligations owed
to Veltri pursuant to the Employment Agreement dated as of November 8, 1996
(excluding any obligations under TAG's Equity Ownership Plan and Veltri's
Deferred Compensation Agreement), which Veltri Indebtedness is secured by, among
other things, the assets of VMP ;
WHEREAS, in connection with the Restructuring, Offering, and the Senior
Credit Facility, the parties have agreed, among other things, to amend certain
agreements relating to the Veltri Indebtedness.
NOW THEREFORE, for good and valuable consideration, including the
premises hereof, and the mutual covenants contained herein, the parties agree as
follows:
1. The parties hereby agree to enter into an Amendment of the Stock
Purchase Agreement in the form attached hereto as Exhibit A.
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2. The parties agree to amend and restate, in the form attached hereto
as Exhibit B, that certain promissory note of VS Acquisitions Co. in favor of
Veltri, dated November 8, 1996, in the principal amount of $658,325.00 (the
"Promissory Note").
3. As further consideration to Veltri for his agreement to the
amendments and other accommodations hereof:
(i) TAG will pay all of Veltri's legal fees
incurred in connection with the transactions
contemplated by this Agreement provided
however that TAG shall not pay more than an
aggregate of $5,000.00 for such fees and said
fees shall include only those legal fees
associated with the review, negotiation and
documentation requirements reasonably
foreseeable and anticipated by this
Agreement;
(ii) TAG and all of its Applicable Subsidiaries
(as defined herein) shall enter into a
guarantee of the Veltri Indebtedness, in
substantially the form attached hereto as
Exhibit C.; and
(iii) As security for the Veltri Indebtedness,
TAG, VSH AND VHU shall grant to Veltri a
security interest through a security
agreement in substantially the form attached
hereto as Exhibit D in all of their
respective existing and future assets,
subordinated only to Comerica Bank under the
Senior Credit Facility, and, in addition,
all future Applicable Subsidiaries shall
also grant to Veltri a security interest in
their existing and future assets
subordinated only to the Senior Credit
Facility and, in the case of the acquisition
of such subsidiary, subordinated to any
deferred obligations to the sellers.
4. TAG shall fund or cause to be funded VMP, VSH and VHU loans (in
amounts and upon terms substantially comparable to those previously available
plus additional amounts for new platforms and capital expenditures approved by
the Board of Directors) for working capital and other business purposes as
reasonably required by the Veltri Group from time to time as determined by its
Board of Directors.
5. Veltri shall execute an intercreditor agreement in form attached
hereto as Exhibit E together with any other documents reasonably requested by
Comerica Bank in connection therewith or herewith.
6. The parties agree and covenant to take such action and to execute
such documents as may be necessary, from time to time, to give full and complete
effect to this Agreement and to promptly execute and deliver any such reasonably
requested documentation.
7. (a) The Applicable Subsidiaries for purposes of the Veltri
Indebtedness, shall be VMP, VSH and VHU and all other companies wholly-owned by
TAG, together with all other companies controlled by TAG which receive funding
from the Senior Credit Facility or from TAG
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or any such companies which have their indebtedness guaranteed by TAG or any
other Applicable Subsidiary.
(b) All capitalized terms not herein defined shall have the
meaning assigned to them in the Stock Purchase Agreement.
8. The rights, benefits, and obligations arising under this agreement
shall not arise, vest in or otherwise encumber either party hereto unless and
until the Offering is consummated.
9. All notices, requests, demands and other communication hereunder
shall be in writing, mailed by certified mail, return receipt requested, to the
addresses of the respective parties as they may designate from time to time in a
notice pursuant to this Section, and such notices shall be deemed to have been
duly given on the date of receipt or refusal of receipt.
10. This Agreement shall be governed by and construed in accordance
with the laws of the State of Michigan.
11. This Agreement shall be binding upon and inure to the benefit of
each of the parties hereto and their respective successors and assigns. The
parties shall not have the right to assign their rights and obligations
hereunder without the express written consent of the other parties hereto.
12. This Agreement constitutes the entire agreement and understanding
between the parties with respect to the subject matter hereof. No waiver,
amendment or modification of the terms of this Agreement shall be valid unless
in writing and signed by each of the parties hereto.
13. This Agreement may be executed by facsimile and in one or more
counterparts, each and all of which shall be deemed for all purposes to be one
Agreement enforceable in accordance with its terms.
________________________________________
MICHAEL T.J. VELTRI, Individually and
as Trustee for the Michael T.J. Veltri
Revocable Living Trust u/a/d December 7,
1996
VETRI METAL PRODUCTS CO.
By:___________________________________
Its:__________________________________
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VS HOLDINGS, INC.
By:_________________________
Its:________________________
VELTRI HOLDINGS USA, INC.
By:_________________________
Its:________________________
TALON AUTOMOTIVE GROUP, INC.
By:_________________________
Its:________________________
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EXHIBIT A
FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT
This First Amendment to Stock Purchase Agreement is made this _____
day of April, 1998 by and between Michael T. J. Veltri, individually and as
trustee of the Michael T. J. Veltri Revocable Living Trust u/a/d December 17,
1992 ("Veltri"), Veltri Metal Products Co., F/K/A VS Acquisition Co. ("VMP"), VS
Holdings, Inc. ("VSH"), and Veltri Holdings USA, Inc. ("VHU").
WHEREAS, Veltri, Maria Veltri, VMP, VSH and VHU entered into that
certain Stock Purchase Agreement dated November 8, 1996 (the "Stock Purchase
Agreement");
WHEREAS, contemporaneously herewith, Talon Automotive Group, INc.
("TAG") is undergoing the following restructuring (the "Restructuring"):
Hawthorne Metal Products Company, J & R Manufacturing and Talon Automotive
Group, L.L.C. will be merging with and into Production Stamping, Inc., and
Production Stamping, Inc., as the surviving entity, will change its name to
Talon Automotive Group, Inc. ("TAG"); VS Holdings No. 2, Inc. will merge with
and into VSH; and VSH (which will then be the sole shareholder of VMP), and VHU
will then each become wholly owned subsidiaries of TAG;
WHEREAS, contemporaneously herewith TAG is completing an offering of up
to $125,000,000 in senior subordinated notes (the "Notes") pursuant to Rule 144A
promulgated under the Securities Act of 1933, as amended (the "Offering");
WHEREAS, Comerica Bank, a Michigan banking corporation, as Agent under
a certain credit agreement among TAG, VMP and others, as borrowers, and other
banks from time to time a party thereto, as lenders, will provide TAG with a
senior credit facility (the "Senior Credit Facility"); and
WHEREAS, in connection with the Restructuring, Offering, and the Senior
Credit Facility, the parties have agreed, among other things, to amend the Stock
Purchase Agreement, upon the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the provisions and covenants set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto freely amend
the Stock Purchase Agreement pursuant to ss. 7.3 of the Stock Purchase
Agreement, as follows:
1. Section 1.3(b)(viii) of the Stock Purchase Agreement is hereby
deleted in its entirety and the following shall be substituted
therefor:
"The Earn-Out Amounts shall be paid as follows:
(A) Subject to the foregoing, the Earn-Out Amounts, if
any, payable with
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respect to the calendar year ending December 31,
1998, (the "1998 Earn-Out"), shall be paid on March
31, 1999 (less any applicable withholding required
pursuant to Section 116, as hereinafter defined),
together with interest on the unpaid balance of such
amount at the Prime Rate (as hereinafter defined)
from and after December 31, 1998 until such amount
is paid in full, which interest shall be payable
(less any applicable withholding) on March 31, 1999;
provided, however, in the event (i) any such
installment of interest or the 1998 Earn-Out is not
paid when due, and such failure shall continue for a
period of ten (10) days following written notice
thereof to Buyer, or (ii) of an unwaived event of
default under the Senior Credit Facility, then in
either such event any of the 1998 Earn Out remaining
unpaid after March 31, 1999 shall thereafter bear
interest at a rate equal to the Prime Rate plus Two
percent (2%) until the same is paid in full; and
(B) Subject to the foregoing, the Earn-Out Amounts,
if any, payable with respect to the calendar year
ending December 31, 1999 (the "1999 Earn-Out") shall
be paid on March 31, 2000 (less any applicable
withholding required pursuant to Section 116)
together with interest on the unpaid balance of such
amount at the Prime Rate from and after December 31,
1999 until such amount is paid in full, which
interest shall be payable (less any applicable
withholding) on March 31, 2000; provided, however,
in the event (i) any such installment of interest or
the 1999 Earn-Out is not paid when due, and such
failure shall continue for a period of ten (10) days
following written notice thereof to Buyer, or (ii)
of an unwaived event of default under the Senior
Credit Facility, then in either such event any of
the 1999 Earn Out remaining unpaid after March 31,
2000 shall thereafter bear interest at a rate equal
to the Prime Rate plus Two percent (2%) until the
same is paid in full."
2. Section 6.1 (a)(ii)(d) of the Stock Purchase Agreement
is hereby deleted in its entirety and the following shall
be substituted therefor:
"(d) Redeem or otherwise acquire any of their respective
stock, securities or other equity interests (other than in
connection with any stock option plans for the benefit of
employees), which, when aggregated with the amounts
permitted pursuant to Section 6. 1(a)(ii)(e) hereof, would
exceed an annual amount equal to One Hundred Thousand Cdn.
Dollars (Cdn. $100,000) per year;"
3. Notwithstanding anything contained in the Stock Purchase
Agreement, or any other agreement to the contrary, Veltri
hereby consents to: (a) the Restructuring; (b) VMP's, VSH's
and VHU's guaranty of all of TAG's obligations under the
Senior Credit Facility and all documents executed in
connection therewith; and (c) VMP's, VSH's and VHU's
guaranty of all of TAG's obligations under the Notes to be
issued
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in connection with the Offering and all documents executed in
connection therewith.
4. Every other Section and Sub-Section of the Stock Purchase
Agreement as originally executed and delivered shall remain in
full force and effect as so executed and delivered, and are
hereby confirmed and ratified and shall continue in full force
and effect as provided therein.
5. All capitalized terms not otherwise herein defined shall have
the meaning assigned to them in the Stock Purchase Agreement.
The parties hereto have executed this First Amendment to Stock
Purchase Agreement as of the date written above.
Michael T.J. Veltri
------------------------------------
MICHAEL T.J. VELTRI, Individually and
as Trustee for the Michael T.J. Veltri
Revocable Living Trust u/a/d December
17, 1996
VETRI METAL PRODUCTS CO.
By: Michael T.J. Veltri
--------------------------------
Its: President
-------------------------------
VS HOLDINGS, INC.
By:____________________________________
Its:___________________________________
VELTRI HOLDINGS USA, INC.
By:____________________________________
Its:___________________________________
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EXHIBIT B
AMENDED AND RESTATED
PROMISSORY NOTE
$658,325 (U.S.) TROY, MICHIGAN
NOVEMBER 8, 1996 (ORIGINAL DATE)
APRIL _, 1998 (AMENDED AND RESTATED DATE)
FOR VALUE RECEIVED, which shall include the return of the original
promissory note between the parties hereof which promissory note shall be deemed
canceled with the delivery of this Promissory Note, the undersigned, Veltri
Metal Products Co., F/K/A VS Acquisition Co., a Nova Scotia Company ("Debtor"),
hereby promises to pay to the order of Michael T. J. Veltri, a Michigan
resident, individually and as trustee the Michael T. J. Veltri Revocable Living
Trust u/a/d December 17, 1992 ("Creditor"), the principal sum of Six Hundred
Fifty Eight Thousand Three Hundred Twenty Five Dollars (U.S.) ($658,325.00
U.S.), together with interest on the unpaid principal balance thereof from the
Original Date at a per annum rate equal to the Comerica Bank prime rate of
interest in effect from time to time during the term of this Note ("Note Rate").
The principal sum and any accrued interest shall be paid by Debtor to Creditor
as follows:
The principal balance of this Note and all accrued interest
shall be paid on or before September 17, 1998 (the
"Payment").
The occurrence of any one of the following events shall constitute an
"Event of Default" by Debtor under this Note: (a) Debtor's failure to pay the
Payment when due, whether by maturity, acceleration or otherwise, if such
payment is not made within ten (10) days after receipt of written notice, or any
other breach by Debtor of any term or provision of this Note (other than a
payment failure) if such breach is not cured within thirty (30) days after
receipt of written notice, unless such breach is not capable of cure in such
thirty (30) days of notice and Debtor is diligently and in good faith pursuing
the completion any such cure; (b) an Event of Default shall occur under either
the security agreement entered into by and between Creditor and Veltri Holdings
USA, Inc. on November 8, 1996 or the security agreement among Creditor, Talon
Automotive Group, Inc., VS Holdings, Inc., and Veltri Holdings USA, Inc. in
connection with this Note; and (c) the event of an unwaived event of default
under Debtor's senior credit facility with Comerica Bank as agent for all
participating lenders. From and after any Event of Default, (i) interest shall
accrue on the outstanding principal balance at two percent (2%) above the Note
Rate, until this Note is paid in full, and (ii) Creditor shall have the option,
without notice or demand to Debtor, to declare the entire unpaid principal
balance of this Note, together with all accrued interest, immediately due and
payable.
In the event of Creditor's death, all payments hereunder shall
nevertheless be due and shall be paid to Creditor's personal representative or
to any other person or entity designated by Creditor's personal
representative. This Note may be prepaid in whole or in part on one or more
occasions without penalty. All payments under this Note, whether due by
acceleration or otherwise, shall be
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applied first to any accrued interest, and then to principal. This Note shall be
governed and construed in accordance with the laws of the State of Michigan. If
any provision of this Note is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remaining provision shall nevertheless
continue in full force and effect without being impaired or invalid in any way.
Debtor agrees to pay all costs, attorney fees and expenses incurred by
Creditor in connection with the collection of any amount due under this Note or
the enforcement of any rights of Creditor under this Note.
This Note is given by Debtor in connection with the Stock Purchase
Agreement dated November 8, 1996, as amended and Debtor's obligations pursuant
hereto are subject to Debtor's rights contained in Section 5.2(f) of the Stock
Purchase Agreement.
Debtor waives presentment for payment, demand, notice of non-payment,
protest and notice of protest of this Note. Any forbearance by Creditor in
exercising any right or remedy hereunder or otherwise afforded by applicable
law, shall not be a waiver or preclude the exercise of any right or remedy by
Creditor. The acceptance by Creditor of any sum payable hereunder after the due
date of such payment shall not be a waiver of the right of Creditor to require
prompt payment when due of all other sums payable hereunder or to declare a
Default for failure to make prompt payment.
This Note shall be binding upon the successors and assigns of Debtor,
and shall, together with the rights and remedies of Creditor hereunder, inure to
the benefit of Creditor and his heirs or devisees; provided, however, that
neither Debtor nor Creditor may assign any of their respective rights hereunder
without the prior written consent of the other party (which consent shall not be
unreasonably withheld), except that Creditor may assign his rights to a
revocable living trust of which Creditor is the sole trustee during his
lifetime.
This Note is secured by a security agreement among Talon Automotive
Group, Inc., VS Holdings, Inc., and Veltri Holdings USA, Inc. and the parties
hereof, a mortgage on property located in Royal Oak, Michigan owned by Talon
Automotive Group, Inc., and a guaranty given by Talon Automotive Group, Inc., VS
Holdings, Inc., and Veltri Holdings USA, Inc., all of even date herewith.
IN WITNESS WHEREOF, this Promissory Note is made and entered into on
the day and year first above written as the Amended and Restated Date.
DEBTOR:
VELTRI METAL PRODUCTS CO., F/K/A
VS ACQUISITION CO.
By:_____________________________
Its:____________________________
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EXHIBIT C
UNCONDITIONAL GUARANTY
KNOW ALL MEN BY THESE PRESENTS that Talon Automotive Group, Inc.
("TAG"), VS Holdings, Inc., and Veltri Holdings USA, Inc. all of which share the
mailing address of 900 Wilshire Drive, Suite 203, Troy, Michigan ("Guarantors"),
for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, hereby unconditionally and absolutely guarantee to Michael
T. J. Veltri, individually and as trustee of the Michael T. J. Veltri Revocable
Living Trust u/a/d December 17, 1992, ("Creditor"), his successors and assigns,
the full and prompt payment by Veltri Metal Products Co. ("VMP"), when and as
due, the Veltri Indebtedness, as that term is defined in the offering of up to
$125,000,000 in senior subordinated notes pursuant to Rule 144A promulgated
under the Securities Act of 1933 as amended, provided, however, that for
purposes of this Guaranty, the Veltri Indebtedness shall not include any
obligations to Creditor under the TAG Equity Ownership Plan, Creditor's Deferred
Compensation Agreement or Creditor's Equity Ownership Agreement.
The obligations of Guarantors hereunder shall be absolute and primary,
and shall be complete and binding immediately upon the complete execution hereof
and shall be subject to no other condition whatsoever precedent or otherwise and
notice of acceptance hereof or action in reliance hereon shall not be required.
The obligations of Guarantors shall be continuing and shall continue,
irrespective of any statute of limitations otherwise applicable or defenses of
laches.
Upon the occurrence of VMP's failure to pay any of the Veltri
Indebtedness, Guarantors agree to pay immediately the same, together with all
other charges accruing with respect to said amount and all costs and expenses of
collection, including reasonable attorneys' fees.
As security for this Guaranty and the obligations of Guarantors
hereunder, Guarantors and Creditor have entered into a certain security
agreement of even date herewith, whereby Guarantors have granted security
interests in all of their assets to Creditor.
Guarantors hereby undertake to cause all of their future wholly-owned
subsidiaries, as well as other subsidiaries which receive funding from any of
them directly or under lending arrangements with Comerica Bank, or whose
indebtedness is guaranteed by TAG, or any of them, to execute guaranties of the
Veltri Indebtedness in the same or substantially the same form hereby given.
Guarantors consent to any and all extensions, renewals, waivers or
modifications that may be granted by Creditor with respect to the Veltri
Indebtedness and waive any defenses in connection with such events. Other than
as required by other agreements by and among the parties hereof, Guarantors
further waive any failure of Creditor to give a notice of default, any failure
of Creditor to pursue any other party or its assets with due diligence, any
failure to resort to any other remedy available to Creditor and any and all
defenses whatsoever arising out of this Guaranty.
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This Guaranty and the rights and liabilities of the parties hereunder
shall be governed by and construed under the laws of the State of Michigan.
IN WITNESS WHEREOF, the Guarantors have executed this Unconditional
Guaranty on the_____ day of April, 1998.
IN THE PRESENCE OF: TALON AUTOMOTIVE GROUP, INC.,
a Michigan corporation
__________________________ By:__________________________
Its:_________________________
VS HOLDINGS, INC.
By:__________________________
Its:_________________________
VELTRI HOLDINGS USA, INC.
By:__________________________
Its:_________________________
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EXIHBIT D
SECURITY AGREEMENT
------------------
THIS SECURITY AGREEMENT is made and entered into this day of April,
1998, by and between Talon Automotive Group, Inc., a Michigan corporation
("TAG") and its direct or indirect subsidiaries, VS Holdings, Inc., and Veltri
Holdings USA, Inc., (collectively "Debtor"), and Michael T. J. Veltri,
individually and as trustee of the Michael T. J. Veltri Revocable Living Trust
u/a/d December 17, 1992, a Michigan resident ("Secured Party").
R E C I T A L S :
- - - - - - - -
A. Debtor has entered into that certain Unconditional Guaranty (the
"Guaranty") of even date herewith to guaranty certain obligations of Veltri
Metal Products Co. ("VMP") to Secured Party.
B. In order to secure Debtor's financial obligations to Secured Party
pursuant to the Guaranty ("Veltri Indebtedness"), Debtor wishes to grant Secured
Party a security interest in all of its now owned or hereafter acquired assets
subject to the terms and conditions of this Agreement.
C. Debtor is in the process of completing an offering of up to
$125,000,000 in senior subordinated notes pursuant to Rule 144A promulgated
under the Securities Act of 1933, as amended.
NOW, THEREFORE, in consideration of the above recitals, the mutual
covenants and promises contained herein, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged and
agreed to, Debtor and Secured Party agree as follows:
1. GRANT OF SECURITY INTEREST. As Security for the prompt and complete
payment when due of the Veltri Indebtedness and the obligations of Debtor
pursuant to the Agreement of even date herewith (the "Agreement"). Debtor hereby
grants to Secured Party a security interest in all assets of Debtor, including
but not limited to all of Debtor's right, title and interest in, to and under
the following, whether now owned or hereafter acquired (collectively, the
"Collateral"):
(i) all accounts as defined in ss. 9-106 of the Uniform
Commercial Code (the "UCC") as from time to time
in effect in Michigan;
(ii) all contracts;
(iii) all equipment as defined in ss. 9-109(2) of the UCC;
(iv) all general intangibles as defined in ss.9-106 of the UCC;
(v) all inventory as defined in ss. 9-109(4) of the UCC
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(vi) all books and records, data processing cards, tapes,
tabulating runs, programs and similar material
evidencing, securing or relating to any of the foregoing;
and
(vii) to the extent not otherwise included, all proceeds, as
defined in ss. 9-306 of the UCC, and products of any or
all of the foregoing.
Without limiting the generality of the foregoing, Debtor agrees that the Veltri
Indebtedness shall include: (i) all costs, expenses and attorney fees which are
reasonably paid or incurred by Secured Party in the enforcement, administration
and collection of any Veltri Indebtedness, and in the protection, maintenance
and disposition of any Collateral; and (ii) all amounts payable under this
Security Agreement including, without limitation, Section 3.2 hereof.
2. Representations and Warranties. Debtor hereby represents and
warrants to Secured Party that:
2.1 Good Standing Location and Use of Collateral. Each Debtor is a
company duly organized, validly existing and in good standing under the laws of
the state of their incorporation, and is duly qualified to transact business and
is in good standing in each jurisdiction where such qualification is necessary,
except where the lack of such qualification would not have a material adverse
effect, and each has all the requisite power and authority, corporate or
otherwise, to conduct its business, to own and operate its properties and to
execute, deliver and perform all of its obligations hereunder.
2.2 Authorization; Enforceability. This Security Agreement has been
duly executed and delivered by Debtor and constitutes the legal, valid and
binding obligation of Debtor, enforceable in accordance with its terms. The
execution and delivery of this Security Agreement does not constitute a breach
of any provision contained in Debtor's Article of Incorporation or Bylaws or any
material agreement or instrument to which Debtor is a party or by which Debtor
is bound.
2.3 Threatened or Pending Proceedings. To the best of Debtor's
knowledge, there are no actions or proceedings which are threatened or pending
against Debtor or any of its assets which might result in any material adverse
change in Debtor's financial condition or which might materially adversely
affect the Collateral or Debtor's business.
2.4 Ownership. Debtor owns all right to, title in, and interest in all
of the Collateral free and clear of any liens, pledges or other encumbrances,
except for Permitted liens (as hereinafter defined). As used herein, "Permitted
Liens" shall mean:
(a) the liens, claims, encumbrances and security interests
(collectively, "Liens") on any of the Collateral in favor of Comerica
Bank, as agent for itself and any other institutional lenders which
may participate with Comerica, or their successor lender(s) in
connection with any refinancing thereof (the "Banks"), and any other
person or entity permitted by Secured Party in writing;
(b) In accordance with Section 3.4 below, Liens for taxes,
assessments or governmental charges or claims not yet delinquent, or
Liens for taxes, assessments
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or governmental charges being contested in good faith and by
appropriate proceedings;
(c) Liens in respect of property or assets of Debtor which
were imposed by law in the ordinary course of business, such as
carriers', warehousemen's and construction liens and other similar
liens arising in the ordinary course of business, which are not
delinquent or which are being contested in good faith by appropriate
proceedings;
(d) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other type of social security, or to secure the
performance of tenders, statutory obligations, surety bonds, bids,
leases, governmental contracts, performance and return-of-money bonds
and other similar obligations incurred in the ordinary course of
business (exclusive of obligations in respect to the payment for
borrowed money or the equivalent);
(e) Liens of any judgment rendered which does not give rise
to an Event of Default (as defined below) and Liens created by
deposits of cash or cash equivalents permitting the Debtor to appeal
court judgments that are being contested in good faith by appropriate
proceedings and do not give rise to an Event of Default;
(f) Assignments, leases or subleases granted to others not
interfering in any material respect with the ordinary conduct of the
Debtor's business and not materially affecting the value of the
Collateral; and
(g) With respect to assets which Debtor may acquire after the
date hereof which become Collateral under this Agreement, purchase
money security interest or other Liens which are a result of seller
financing in the acquisition of all or substantially all of the assets
of a new subsidiary.
2.5 No Competing Filings. No security agreement, financing statement
or equivalent security or lien instrument or continuation statement
covering all or any part of the Collateral is on file or of record in any
public office, except with respect to any Permitted Liens or such as may
have been filed in favor of Secured Party, pursuant to this Security
Agreement.
3. COVENANTS. Debtor hereby covenants and agrees to and with Secured
Party, that until all of the Veltri Indebtedness is fully paid:
3.1 Further Documentation: Pledy-e of Instruments. At any time and
from time to time, upon the reasonable request of Secured Party, and at
the sole expense of Debtor, Debtor will execute and deliver any and all
such further documents including, without limitation, the filing of any
financing or continuation statements under the UCC. Debtor also hereby
authorizes Secured Party to file any mortgage, financing or continuation
statements without the signature of Debtor to the extent permitted by
applicable law. Subject to the prior rights of the Banks, if any amount
payable under or in connection with any of the Collateral shall be or
become evidenced by any promissory note or other instrument (other
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than an instrument which constitutes Chattel Paper), such note or instrument
shall be pledged to Secured Party hereunder and shall be duly endorsed in a
manner reasonably satisfactory to Secured Party and delivered to Secured Party.
3.2 Indemnification. In any suit, proceeding or action properly brought
by Secured Party under this Security Agreement relating to the Collateral,
including, without limitation, any license, account, document, Chattel Paper,
contract or lease, for any sum owing thereunder, or to enforce any provisions of
any license, account, document, Chattel Paper, contract or lease, Debtor will
save, indemnify, defend and keep Secured Party harmless from and against any and
all expense, loss or damage suffered by reason of any and all defense, set-off,
counterclaim, recoupment or reduction of liability whatsoever of the obligor
thereunder arising out of a breach by Debtor of any obligation thereunder or
arising out of any other agreement, indebtedness or liability at any time owing
to or in favor of such obligor or its successors from Debtor, and all such
obligations of Debtor shall be and remain enforceable against and only against
Debtor and shall not be enforceable against Secured Party. Debtor promises to
pay, and to hold Secured Party harmless from: (i) any and all liabilities with
respect to, or resulting from, any delay in paying any and all excise, sales,
transfer or other taxes which may be payable or determined to be payable with
respect to any of the Collateral or in connection with any of the transactions
contemplated by this Security Agreement; and (ii) damages (after deduction for
any net tax savings or third party recoveries to the extent either such item
otherwise would result in an excess recovery of Secured Party's damages)
resulting from any default in those transactions contemplated by the Agreement,
except to the extent Debtor is entitled to indemnity from Secured Party under
the Stock Purchase Agreement dated November 8, 1996 among Secured Party, Maria
Veltri and VMP (the "Stock Purchase Agreement").
3.3 Compliance. Debtor will comply, in all material respects, with all
applicable acts, rules, statutes, regulations, orders, judgments, decrees and
directions of any governmental authority applicable to the Collateral or any
part thereof or to the operation of Debtor's business.
3.4 Payment of Taxes. Debtor will pay, prior to the imposition of any
penalties or interest, all taxes, assessments and governmental charges or levies
imposed upon the Collateral or in respect of its income or profits therefrom, as
well as all claims of any kind (including claims for labor, materials and
supplies), except that no such tax, assessment or governmental charge levy or
claim need be paid if the validity thereof is being contested in good faith by
appropriate proceedings, unless such proceedings involve the imminent sale,
seizure, forfeiture or loss or any material portion of the Collateral.
3.5 Limitation on Liens on Collateral. Other than Permitted Liens,
Debtor will not create, permit or suffer to exist, and will defend at its sole
cost and expense the Collateral against and take such other action as is
necessary to remove, any lien, mortgage, pledge, assignment, security interest,
charge or encumbrance of any kind and any agreement to give or refrain from
giving any of the foregoing on the Collateral and, subject to the Permitted
Liens, will defend the right, title and interest of Secured Party in and to any
of the Collateral and in and to the Proceeds and Products thereof against the
claims and demands of any person or entity.
3.6 Maintenance of Insurance. Debtor will maintain insurance policies
insuring
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(i) the Collateral against loss or damage, however caused, and (ii) Debtor
against liability for personal injury and property damage relating to the
Collateral. Such insurance policies shall be in such form and in such amounts
and coverage as shall be reasonably satisfactory to Secured Party, with losses
payable to Secured Party as its interest may appear under a standard
non-contributory "mortgagee," "lender" or "Secured Party" clause. All such
insurance policies shall (i) contain a clause which provides that Secured
Party's interest under the policy will not be invalidated by any act or
omissions of, or any breach of warranty by, the insured, or by any change in the
title, ownership or possession of the insured property, or by the use of the
property for purposes more hazardous than is permitted in the policy, and (ii)
provide that no cancellation, reduction in amount, change in amount of
deductible, or change in coverage thereof shall be effective until at least
thirty (30) days after receipt by Secured Party of written notice thereof.
Debtor shall provide Secured Party with prompt notice of any claim in excess of
$1,000,000 under any such insurance policy. Debtor shall, if so requested by
Secured Party and as often as Secured Party may reasonably so request, provide
Secured Party with "certificates of insurance" or "insurance binders."
3.7 Limitation on Disposition. Debtor will not sell, transfer, lease or
otherwise dispose of any of the Collateral to the Banks or anyone else (except
inventory sold in the ordinary course of its business, except for the sale of
old and obsolete Collateral in connection with the replacement thereof, and, on
an annual basis, except for Collateral having an aggregate value of less than
$1,000,000), or attempt to offer or contract to do so without the prior written
consent of Secured Party.
3.8 Further Identification of Collateral. Debtor will furnish to
Secured Party from time to time, statements and schedules further identifying
and describing the Collateral and such other reports in connection with the
Collateral as Secured Party may reasonably request, all in detail as Secured
Party may reasonably require.
3.9 Performance by Secured Party of Debtor's Veltri Indebtedness. If
Debtor fails to perform or comply with any term or condition contained herein
and such failure shall continue for a period of thirty (30) days after written
notice thereof to Debtor (except where Debtor disputes such notice in good
faith, in which case Secured Party shall have no right to act on behalf of
Debtor until such dispute is resolved), Secured Party shall have the right to
perform or comply, or otherwise cause performance or compliance, with such term
or condition and the reasonable expenses of Secured Party incurred in connection
with such performance or compliance, together with interest thereon at the rate
of two percent (2%) above prime as reported in the Wall Street Journal, shall be
payable by Debtor to Secured Party on demand and shall constitute part of the
Veltri Indebtedness.
3.10 Right of Inspection. Secured Party shall have access upon
reasonable prior notice during normal business hours to the books and records
relating to the Collateral, and Secured Party or its representatives may
examine the same, take extracts therefrom and make photocopies thereof (at
Secured Party's expense), and Debtor agrees to render to Secured Party such
clerical and other assistance as may be reasonably requested with regard
thereto. Secured Party and its representatives shall also have the right upon
reasonable prior notice to enter into and upon any premises where any of the
Collateral is located for the purpose of inspecting the same, observing its use
or otherwise protecting their interests therein.
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3.11 Maintenance of Equipment and Fixtures. Debtor will keep and
maintain each item of the Collateral in good operating condition and repair,
ordinary wear and tear excepted.
3.12 Conduct of Business, Debtor will not, whether in a single
transaction or a series of transactions, declare or pay dividends (other than
stock dividends or stock splits) on any stock, security or other equity
interests of Debtor, except for the (a) dividends to Debtor's shareholders in
payment of the federal and state income taxes payable by such shareholders as a
result of Debtor's election to be taxed as an S Corporation (assuming that such
shareholders are taxed at the highest applicable rates), (b) a dividend in the
amount of $10,000,000 to be paid contemporaneously with the completion of the
Offering, and (c) dividends in amounts not to exceed the income of Debtor and
its subsidiaries (other than VS Holdings, Inc. and Veltri Holdings USA, Inc.),
but only to the extent that the same is replaced with additional equity and/or
indebtedness subordinated to Secured Party.
3.13 Financial Statement and Information. Debtor will deliver or cause
to be delivered, copies of any and all quarterly and annual financial statements
and other financial statements relating to Debtor, its business, its financial
condition and the Collateral as Debtor may prepare or cause to be prepared. Any
such financial statements and information shall be prepared in accordance with
generally accepted accounting principles, consistently applied.
3.14 Name Change. Debtor shall not change its corporate name without
first giving Security Party ten (10) days prior written notice.
3.15 Repayment of Loan. Debtor shall not repay any existing outstanding
loan to its shareholders, except to the extent that the same are repaid out of
the funds received in connection with the Offering.
3.16 Future Subsidiaries. Debtor hereby undertakes to cause all of its
future whollyowned subsidiaries, as well as other subsidiaries which receive
funding from any of them directly or under lending arrangements with Comerica
Bank, or whose indebtedness is guaranteed by Debtor, or any of them, to grant a
security interest in favor of Secured Party and to execute financing statement
and mortgages, where appropriate, to secure payment of the Veltri Indebtedness
in the same or substantially the same form hereby given.
4. EVENTS OF DEFAULT. Debtor shall be in default under this Security
Agreement upon the occurrence of any of the following events (individually
referred to herein as "Event of Default"):
4.1 A failure of the Debtor to pay, as and when due hereunder,
any of the Veltri Indebtedness. Notwithstanding anything herein
contained to the contrary, no Event of Default shall be deemed to have
occurred pursuant to this Section 4.1 unless such Event of Default
remains uncured ten (10) days after receipt of written notice thereof.
4.2 Debtor's failure to observe or perform any of the terms,
conditions and covenants of this Security Agreement, which failure is
not cured within thirty (30) days after receipt of written notice
thereof, unless such failure is not capable of cure in such thirty (30)
day period, in which case, Debtor shall have commenced such cure within
thirty (30) days of notice and be diligently and in good faith pursuing
the completion of any such cure;
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provided, however, that Debtor shall not be given any such additional
time beyond such original thirty (30) days to cure any breach or
violation of Section 3.12 of this Agreement.
4.3 If a judgment, decree or order for money damages in excess
of $1,000,000 (U.S.) not fully covered by insurance shall have been
entered by a court of competent jurisdiction against Debtor, or any writ
or warrant of execution, attachment, garnishment or any similar process
shall have been filed against any material part of the Collateral, and
such judgment, decree, order, writ or warrant of execution, attachment,
garnishment, or similar process shall have remained unsatisfied,
unvacated, unbonded or unstayed for a period of sixty (60) days.
4.4 If Debtor (i) becomes insolvent or files a bankruptcy
petition, (ii) makes an assignment for the benefit of creditors, (iii)
is unable to pay or meet its obligations as they mature, (iv) applies
for or consents to the appointment of a custodian, trustee or receiver
for all or any portion of its properties, assets or the Collateral, if
any such custodian, trustee or receiver shall not be discharged within
sixty (60) days, or (v) bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation proceedings
commenced against it under any law or statute of the United States or
any State thereof, which proceedings are not dismissed within sixty (60)
days.
4.5 If Comerica, as agent for itself and the Banks, shall
accelerate the indebtedness owed to it, and, after such acceleration,
Comerica shall exercise its remedies, or commence foreclosure
proceedings by public or private sale, with respect to all or any
portion of the Collateral.
4.6 VMP's default under its general security agreement with
Secured Party dated November 2, 1996.
5. RIGHTS UPON DEFAULT. In addition to any other rights given to
Secured Party hereunder and applicable law, if any Event of Default shall occur
and be continuing:
5.1 Subject to the prior interests of the Banks pursuant to
the Intercreditor Agreement (as such term is defined in Section 21
below), all payments received by Debtor which are Proceeds of or which
are in connection with any of the Collateral shall be held by Debtor in
trust for Secured Party, shall be segregated from other funds of Debtor
and shall immediately upon receipt by Debtor be turned over to Secured
Party in the same form as received by Debtor (duly endorsed by Debtor
to Secured Party, if required) including all original checks, drafts,
acceptances, notes and other evidence of payment related thereto; and
5.2 Subject to the prior interests of the Banks pursuant to
the Intercreditor Agreement, any and all such payments so received by
Secured Party (whether from Debtor or otherwise) may, in the sole
discretion of Secured Party, be held by Secured Party as collateral
security for, and/or at any time and from time to time thereafter,
applied in whole or in part by Secured Party against, all or any part
of the Veltri Indebtedness in such order and at such times as Secured
Party shall elect in its reasonable discretion. Any balance of such
payments held by Secured Party and remaining after payment in full of
all of the Veltri Indebtedness shall be paid over to the Debtor or to
whomsoever may be lawftilly entitled to receive the same.
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6. REMEDIES UPON AN EVENT OF DEFAULT. If any Event of Default shall
occur and be continuing, subject to the prior interests and remedies of the
Banks pursuant to the Intercreditor Agreement, Secured Party shall have and may
exercise, in addition to all other rights and remedies granted to it in this
Security Agreement or in any other instrument or agreement securing, evidencing
or relating to the Veltri Indebtedness or available at law or in equity, any one
or more of the following rights and remedies:
6.1 All the rights and remedies upon default, in forfeiture
and otherwise available to secured parties under the UCC and other
applicable law.
6.2 Personally or by agents or attorneys, to take possession
of all or any part of the Collateral and/or render it unusable and
furthermore:
6.2.1 Hold, store, keep idle, lease, operate, remove or
otherwise use or permit the use of the Collateral or any part thereof,
for such time and upon such terms as Secured Party may in its
discretion deem to be in its own best interests, and demand, collect
and retain all earnings and other sums due and to become due in respect
to the same from any party arising from such use and charging against
all receipts from the use of the same or from the sale thereof, all
costs, expenses, judgments, damages and other losses resulting from
such use.
6.2.2 Sell, lease, dispose of or cause to be sold, leased and
disposed of, all or any part of the Collateral at one or more public or
private sales, leasings or other dispositions, in such places and times
and on such terms and conditions as Secured Party in its discretion
determines to be in its own best interest. Debtor's rights, if any, to
all of the following are hereby expressly waived by Debtor to the
fullest extent permitted by law: (i) all notice or advertisement of
sale, lease or other disposition; (ii) any right or equity of
redemption; (iii) any obligation of a perspective purchaser or lessee
to inquire as the power and authority of Secured Party to sell, lease
or otherwise dispose of the Collateral; and (iv) the right to direct
the application of the Proceeds of sale.
Without limiting the generality of the foregoing, Debtor expressly
agrees that if any Event of Default exists, Secured Party,
without demand of performance or other demand, advertisement or notice
of any kind (except the notice, specified below, containing the time
and place of any public or private sale) to or upon Debtor or any other
person (all and each of which demands, advertisements and/or notices
are hereby expressly waived), may forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof,
and/or may forthwith sell, lease, assign, give an option or options to
purchase or sell or otherwise dispose of and deliver said Collateral
(or contract to do so), or any part thereof, in one or more units, lots
or parcels, in one or more contracts, at public or private sale or
sales, at any exchange broker's board or at any of Secured Party's
offices or elsewhere at such prices and on such terms as Secured Party
may deem in its reasonable discretion to be in its own best interests,
for cash or on credit or for future delivery without assumption of any
credit risk. Secured Party shall have the right upon any such public
sale or sales, and, to the extent permitted by law, upon any such
private sale or sales, to purchase the whole or any part of said
Collateral so sold, free of any right or equity of redemption, which
equity of redemption Debtor hereby releases.
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Debtor agrees that Secured Party need not give more than twenty (20)
days notice (which notification shall be deemed given when mailed,
postage prepared, addressed to Debtor at its address set forth in this
Security Agreement for the giving of notices) of the time and place of
any public sale or of the time after which a private sale may take
place and that such notice is reasonable notification of such matters.
Debtor agrees to pay all costs of Secured Party, including reasonable
attorneys' fees and expenses, incurred with respect to the enforcement
of any of the Veltri Indebtedness, the enforcement of Secured Party's
rights and remedies upon a violation of Section 3.12 of this Agreement
and the enforcement of any of Secured Party's rights hereunder. Debtor
hereby waives presentment, demand, protest or any notice (to the extent
permitted by applicable law) of any kind in connection with this
Security Agreement or any Collateral. Debtor also expressly waives and
releases all right to direct the order in which any of the Collateral
shall be sold in the event of any sale or sales pursuant hereto and to
have any of the Collateral marshaled upon any foreclosure of any of the
security interests granted in this Security Agreement.
The Proceeds of any sale or other disposition of Collateral shall be
applied by Secured Party first upon all expenses authorized by the UCC
and all reasonable attorneys fees and other expenses incurred by
Secured Party; the balance of the Proceeds of such sale or other
disposition shall be applied to the payment of the Veltri Indebtedness,
first to interest then to principal; then, to any indebtedness of
Debtor secured by a subordinated security interest in the Collateral if
Secured Party is notified thereof in the time and manner provided in
the UCC and the surplus, if any, shall be paid over to Debtor or to
such other person or persons as may be entitled thereto under
applicable law. Debtor shall remain liable for any deficiency if the
Proceeds of any sale or disposition of the Collateral are insufficient
to pay all amounts to which Secured Party is entitled, Debtor shall
also remain liable for the fees and expenses of any attorneys employed
by Secured Party to collect such deficiency.
6.3 To institute legal proceedings to foreclose upon and against
the lien and security interests granted by this Security Agreement and
to recover judgment for all amounts then due and owing, and to collect
the same out of any of the Collateral or from the proceeds of any sale
or disposition thereof.
6.4 To enter upon the premises of Debtor or any other place or
places where the Collateral or any part thereof is found and to take
possession of the Collateral with or without demand and with or without
process of law.
6.5 To be entitled, to the extent provided by law, to have
appointed a custodian, trustee or receiver of the Collateral and to the
rents and profits derived therefrom. The Debtor hereby consents to the
appointment of such a custodian, trustee or receiver. This appointment
shall be in addition to any other rights, relief or remedies afforded
Secured Party. Such custodian, trustee or receiver, in addition to any
other rights to which he shall be entitled, shall be authorized to sell
any and all Collateral for the benefit of Secured Party, pursuant to
provisions of law, and Debtor shall remain liable to Secured Party for
any deficiency resulting from any such sale or disposition; and/or
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6.6 To set off and apply any and all obligations or
indebtedness at any time owing by Secured Party to or for the credit or
the account of Debtor, against any and all of the Veltri Indebtedness.
Notwithstanding anything contained in this Security Agreement
to the contrary, in the exercise of its rights under this Security
Agreement, Secured Party shall use that degree of care required by the
UCC in the handling, storage and disposition and shall take all such
actions as may be reasonably necessary to preserve the value of the
Collateral and mitigate any loss of such value.
7. SECURED PARTY'S APPOINTMENT AS ATTORNEY-IN-FACT.
7.1 Appointment: Powers. Subject to the prior interests and
remedies of the Banks, if an Event of Default shall occur and be
continuing, Debtor irrevocably constitutes and appoints Secured Party,
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 Debtor and in the name of Debtor or in its own name, from
time to time in Secured Party's discretion, for the purpose of carrying
out the terms of this Security 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
Security Agreement and, without limiting the generality of the
foregoing, hereby gives the Secured Party the power and right, on
behalf of Debtor, without notice to or assent by Debtor to do the
following:
7.1.1 Pay or discharge taxes, liens, security interests or
other encumbrances levied, placed on or threatened against the
Collateral, to effect any repairs or any insurance called for by the
terms of this Security Agreement and to pay all or any part of costs
thereof and the premiums therefor; and
7.1.2 (a) ask, direct and demand any party liable for any
payment under any of the Collateral to make payment of any and all
monies due and to become due thereunder directly to Secured Party or as
Secured Party shall direct; (b) collect and receive payment of and
receipt for any and all monies, claims and other amounts due and to
become due at any time in respect of or arising out of any Collateral;
(c) sign and endorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors,
assignments and notices in connection with accounts and other documents
relating to the Collateral; (d) in the name of Debtor, to its own name
or otherwise, take possession of and endorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of
monies due under any Collateral; (e) commence and prosecute any suits,
actions or proceedings at law or in equity in any court of competent
jurisdiction for the purpose of collecting any monies due under any
Collateral or any part thereof or enforcing any other right in respect
of any Collateral; (f) defend any suit, action or proceeding brought
against Debtor with respect to any Collateral; (g) settle, compromise
or adjust any suit, action or proceeding described above and, in
connection therewith, to give such discharges or releases as Secured
Party may deem appropriate; (h) assign any copyright, patent or
trademark owned by Debtor (along with the goodwill of the business to
which such trademark pertains), for such term or terms, on such
conditions and in such manner, as Secured Party shall in its sole
discretion determine;
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(i) direct the appropriate U.S. Postal Service office or offices to
deliver all mail addressed to Debtor with respect to accounts to
Secured Party as such place or places as Secured Party may indicate;
and (j) generally sell, transfer, pledge, make any agreement with
respect to or otherwise deal with any of the Collateral in such manner
as is consistent with the UCC and as fully and completely as though
Secured Party were the absolute owner thereof for all purposes, and do,
at Secured Party's option and Debtor's expense, at any time or from
time to time all acts and things which Secured Party deems reasonably
necessary to protect, preserve or realize upon the Collateral and
Secured Party's security interest therein in order to affect the intent
of this Security Agreement, all as fully and effectively as Debtor
might do.
7.2 LIMITATION ON LIABILITY. The powers conferred on Secured
Party hereunder are solely to protect its interests in the Collateral
and shall not impose any duty upon it to exercise any such powers.
Secured Party 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 Debtor for any act or failure to act, except for Secured
Party's own gross negligence or willful misconduct.
7.3 POWERS COUPLED WITH AN INTEREST. All powers, authorizations
and agencies contained in this Security Agreement with respect to the
Collateral are irrevocable and are deemed powers coupled with an
interest. Debtor hereby ratifies all that said attorney shall lawfully
do or cause to be done by virtue hereof.
8. TERMINATION. This Security Agreement, and all security interests of
Secured Party in the Collateral, shall terminate upon the full and final payment
of the Earn Out Amount and the Note Amount, as defined in the Stock Purchase
Agreement. Upon the full and final termination of this Security Agreement,
Secured Party will execute and deliver to Debtor termination statements,
releases and other documents reasonably requested by Debtor to evidence the
termination of this Security Agreement and of Secured Party's security interest
in the Collateral.
9. VENUE: JURISDICTION. Debtor agrees that all actions or proceedings
arising in connection with this Security Agreement shall be filed and tried only
in the courts of Oakland County, Michigan or of the United States for the
Eastern District of Michigan, Southern Division. Debtor hereby irrevocably and
unconditionally consents to, itself and in respect of its property, the
jurisdiction and venue of such courts. Nothing herein shall affect the right of
Secured Party to serve process in any manner permitted by law or to commence
legal proceedings or otherwise proceed against Debtor in any other jurisdiction.
Debtor irrevocably waives any right it may have to assert the doctrine of forum
non conveniens or to object to venue to the extent any proceeding is brought in
accordance with this Section.
10. WAIVERS VOLUNTARY. Ibe waivers contained in this Agreement are
freely, knowingly and voluntarily given by each party, without any duress or
coercion, after each party has consulted with its counsel and has carefully and
completely read all of the terms and provisions of this Agreement, specifically
including the waivers contained in this Section.
11. NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing and, unless
otherwise expressly provided herein, shall be deemed to have been duly given or
made when delivered by hand, or three days after being deposited in the
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mail, postage prepaid, addressed as follows in the case of Debtor and Secured
Party, or to such other address as may be provided in writing:
Debtor: Talon Automotive Group, Inc.
900 Wilshire Drive
Suite 150
Troy, Michigan 48084
Attn: David Woodward,
Secured Party: Michael T.J. Veltri
4530 River Trail
Bloomfield Hills, MI 48301
12. SEVERABILITY. Any provision of this Security 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 provisions in any other jurisdiction.
13. NO WAIVER, CUMULATIVE REMEDIES. Secured Party shall not by any
act, delay, omission or otherwise be deemed to have waived any of its rights or
remedies hereunder and no waiver shall be valid unless in writing, signed by
Secured Party and then only to the extent therein set forth. A waiver by Secured
Party of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which Secured Party would otherwise
have had on any future occasion. No failure to exercise, nor any delay in
exercising, on the part of Secured Party, any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or future
exercise thereof or the exercise of any other right power or privilege. The
rights and remedies hereunder provided are cumulative and may be exercised
singly or concurrently, and are not exclusive of any rights and remedies
provided by law or in equity. None of the terms or provisions of this Security
Agreement may be waived, altered, modified or amended except by an instrument in
writing, duly executed by Secured Party or Debtor.
14. SUCCESSORS AND ASSIGNS. This Security Agreement and all of the
Veltri Indebtedness shall be binding upon the successors, assigns and
wholly-owned subsidiaries of Debtor, and shall, together with the rights and
remedies of Secured Party hereunder inure to the benefit of Secured Party and
his heirs or devisees; provided, however, that neither Debtor nor Secured Party
may assign any of their respective rights or any of the Veltri Indebtedness
hereunder without the prior written consent of the other party (which consent
shall not be unreasonably withheld), except that Secured Party may assign his
rights and obligations to a revocable living trust of which Secured Party is the
sole trustee during his lifetime.
15. COUNTERPARTS. This Security Agreement may be executed by the
parties hereto in any number of separate counterparts and all of such
counterparts taken together shall be deemed to constitute one and the same
instrument.
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16. CONSTRUCTION. Neither this Security Agreement nor any uncertainty
or ambiguity herein shall be construed or resolved against Secured Party,
whether under any rule of construction or otherwise. On the contrary, this
Security Agreement has been reviewed by each of the parties and their counsel
and shall be construed and interpreted according to the ordinary meaning of the
words used so as to fairly accomplish the purposes and intentions of all parties
hereto.
17. COMPLETE AGREEMENT. This Security Agreement represents the entire
agreement between Debtor and Secured Party relating to the subject matter
hereof, supersedes all prior agreements, commitments and understandings between
the parties hereto relating to the subject matter hereof, cannot be changed or
terminated orally, and shall be deemed effective as of the date hereof.
18. HEADINGS. Headings used in this Security Agreement are for
convenience of reference only and shall not constitute a part of this Security
Agreement for any other purpose or affect the construction of this Security
Agreement.
19. CHOICE OF LAW. The validity of this Security Agreement, its
construction, interpretation and enforcement and the rights of the parties
hereto shall be determined under, governed by and construed in accordance with
the laws of the State of Michigan, without regard to principles of conflicts of
law.
20. WAIVER OF JURY TRIAL. SECURED PARTY AND DEBTOR ACKNOWLEDGE AND
AGREE THAT THERE MAY BE A CONSTITUTIONAL RIGHT TO A JURY TRIAL IN CONNECTION
WITH ANY CLAIM, DISPUTE OR LAWSUIT ARISING BETWEEN THEM, BUT THAT SUCH RIGHT MAY
BE WAIVED. ACCORDINGLY, THE PARTIES AGREE THAT NOTWITHSTANDING SUCH
CONSTITUTIONAL RIGHT, IN THIS COMMERCIAL MATTER THE PARTIES BELIEVE AND AGREE
THAT IT SHALL BE IN THEIR BEST INTEREST TO WAIVE SUCH RIGHT, AND, ACCORDINGLY,
HEREBY WAIVE SUCH RIGHT TO A JURY TRIAL, AND FURTHER AGREE THAT THE BEST FORUM
FOR HEARING ANY CLAIM, DISPUTE OR LAWSUIT, IF ANY, ARISING IN CONNECTION WITH
THIS AGREEMENT OR THE RELATIONSHIP BETWEEN SECURED PARTY AND DEBTOR, SHALL BE A
COURT OF COMPETENT JURISDICTION SITTING WITHOUT A JURY.
21. ACKNOWLEDGEMENT OF SUBORDINATION. Notwithstanding anything
contained herein to the contrary, Secured Party acknowledges and agrees that its
security interest in the Collateral is subordinate in all respects to the
security interest of the Banks in the Collateral to the extent provided in the
Intercreditor Agreement, dated as of the date hereof (the "Intercreditor
Agreement"), between Secured Party and the Banks and that all rights, remedies
and powers of Secured Party hereunder with respect to the Collateral (including
without limitation those set forth in Sections 5, 6 and 7 hereof) shall be
subject to and limited by the superior rights of the Banks to the extent
provided in the Intercreditor Agreement. In furtherance of the foregoing,
Secured Party agrees to execute and deliver to the Banks a subordination
agreement containing such terms as the Banks may reasonably request with respect
to the foregoing and any other matter to be covered thereby.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Security
Agreement to be executed and delivered as of the date first set forth above.
DEBTOR:
TALON AUTOMOTIVE GROUP, INC.
By:
-------------------------
Its: --------------------
OTHER PARTIES:
VS HOLDINGS~ INC.
By:
-------------------------
Its:
------------------------
VELTRI HOLDINGS USA, INC.
By:
-------------------------
Its:
------------------------
SECURED PARTY:
----------------------------
Michael T.J. Veltri
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