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EXHIBIT 10.2
PLEDGE AGREEMENT
The undersigned, Talon Automotive Group, Inc. (called "Debtor" herein ),
in consideration of financial accommodations to be extended or continued to
Borrower pursuant to that certain Credit Agreement of even date herewith by and
between Talon Automotive Group, Inc. and certain other borrowers (collectively,
"Borrower"), Comerica Bank, as Agent ("Agent") and the lenders signatory
thereto ("Credit Agreement") and to secure payment and performance of any and
all indebtedness and liabilities of the Borrower (including Debtor) (and any
successors in interest, including without limit any debtor in possession or
trustee in bankruptcy for or any of them) to the Agent, due or to become due,
whether now existing or later arising, and however evidenced, whether direct or
indirect, absolute or contingent, and whether joint, several or joint and
several, including without limit obligations under the Credit Agreement or any
Note (as defined in the Agreement), and any post bankruptcy petition interest
and attorneys' fees (the "Indebtedness"),hereby assigns, transfers, delivers
and pledges to the Agent the following shares of stock listed on Exhibit A
attached hereto.
Debtor grants the Agent a security interest in all of the above-described
property, and all other property of Debtor coming into Agent's possession in
any manner whatsoever, including, without limitation, all property substituted
therefor or for any part thereof, all records (including computer software)
pertaining thereto and all interest, dividends, increase, profits, new
securities or other increments, distributions or rights of any kind received on
account of this property, products or proceeds thereof (whether cash or
non-cash proceeds) resulting from any sale or exchange or transfer thereof or
arising by virtue of ownership thereof (such as, but not limited to, the rights
to additional or other securities or property upon any corporate
reorganization, merger, consolidation, liquidation or dissolution, offering of
stock rights, stock split or stock or liquidating dividend or the rights to any
goods evidenced by such property or insurance proceeds with respect thereto),
and all subscription, voting and preferential rights (all said property,
products and proceeds herein called the "Collateral"). The creation of a
security interest in proceeds is not to be construed to give Debtor any right
to dispose of the Collateral. Debtor warrants that Debtor has clear title to
the Collateral, free from any liens, claims or encumbrances except the security
interest created by this Pledge Agreement, and has full power and authority to
execute and perform this Pledge Agreement.
Except as otherwise provided herein, all other terms used in this Pledge
Agreement shall have the meanings given under Article 9 of the Michigan Uniform
Commercial Code, or in any other article, if not defined in Article 9.
Michigan Uniform Commercial Code shall mean Act 174 of the Michigan Public Acts
of 1962, as amended from time to time.
Debtor agrees to keep the Collateral free at all times from any and all
claims, liens, security interests, and encumbrances other than those in favor
of Agent.
The Agent agrees to use reasonable care in the custody and preservation of
Collateral in its possession but assumes no duty to take steps necessary to
preserve rights against prior parties.
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If any Default (as defined in the Agreement) shall occur, or if Debtor
shall default in performance of any obligation under this Pledge Agreement for
a period of ten days after written notice thereof by Agent to Debtor (any of
the foregoing being an "Event of Default") then the Agent may enforce its
security interest in the Collateral by retaining the Collateral in satisfaction
of the Indebtedness, by public or private sale of all or any part of the
Collateral or by exercising any other remedy provided by law or applicable
agreement. The parties agree that thirty (30) days written notice sent by
ordinary mail to the undersigned at the address designated below shall be
deemed reasonable notice of any disposition of the Collateral, should notice be
required by law.
Notwithstanding anything contained herein to the contrary, so long as no
Event of Default shall have occurred and be continuing:
a. Debtor shall be entitled to exercise any and all
voting and/or consensual rights and powers relating or
pertaining to the Collateral or any part thereof; provided,
however, upon the occurrence and during the continuance of an
Event of Default, all rights of Debtor to exercise such voting
and/or consensual rights and powers shall cease, and all such
rights shall thereupon become vested in the Agent which shall
then have the sole and exclusive right and authority to
exercise such voting and/or consensual rights;
b. The Debtor shall be entitled to receive and
retain cash dividends payable on the Collateral, but any and
all other dividends, cash or stock liquidating dividends,
distributions in property, returns of capital, rights of any
kind received on account of the Collateral or other
distributions made on or in respect of the Collateral, whether
resulting from a subdivision, combination or reclassification
of the outstanding capital stock of the issuing corporation,
or received in exchange for the Collateral or any part thereof
or as a result of any merger, consolidation, acquisition or
other exchange of assets to which the corporation issuing such
Collateral may be a party or otherwise, and any and all cash
and other property received in exchange for or redemption of
any of the Collateral, shall be and become part of the
Collateral and, if received by Debtor, shall be held in trust
for the benefit of the Agent and shall forthwith be delivered
to the Agent to be held subject to the terms of this Security
Agreement; provided, however, upon the occurrence and during
the continuance of an Event of Default, all rights of Debtor
to receive and retain such cash dividends shall cease, and all
such rights shall thereupon become vested in the Agent which
shall then have the sole and exclusive right and authority to
receive or collect by legal proceedings or otherwise and
retain such dividends and hold the same as Collateral, or
apply the same to the Indebtedness, the manner and
distribution of the application to be in the sole discretion
of the Agent;
c. The Agent shall execute and deliver (or cause to
be executed and delivered) to the Debtor all such proxies,
powers of attorney, dividend
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orders, and other instruments as Debtor may request for
the purpose of enabling Debtor to exercise the voting and/or
consensual rights and powers which Debtor is entitled to
exercise pursuant to paragraph (i) above and/or to receive the
dividends which Debtor is authorized to
receive and retain pursuant to paragraph (ii) above.
The Agent may cause the Collateral or any portion of it to be transferred
to its name or to the name of its nominee or nominees; provided, however, that
the Agent will not cause any such transfer until the earlier of (i) an Event of
Default, or (ii) the Collateral is no longer represented by an instrument which
is in Agent's possession and by which Agent's interest therein is perfected by
such possession.
The Agent may assign any of the Indebtedness and deliver all or any part
of the Collateral to its assignee, who then shall have with respect to the
Collateral so delivered all the rights and powers of the Agent under this
Pledge Agreement and after that the Agent shall be fully discharged from all
liability and responsibility with respect to the Collateral so delivered.
If Agent, acting in its sole discretion, redelivers Collateral to Debtor
or Debtor's designee for the purpose of
(a) the ultimate sale or exchange thereof, or
(b) presentation, collection, renewal, or
registration of transfer thereof, or
(c) loading, unloading, storing, shipping,
transshipping, manufacturing, processing or otherwise dealing
therewith preliminary to sale or exchange,
such redelivery shall be in trust for the benefit of Agent and shall not
constitute a release of Agent's security interest therein or in the proceeds or
products thereof unless Agent specifically so agrees in writing. If Debtor
requests any such redelivery, Debtor will deliver with such request a duly
executed financing statement in form and substance satisfactory to Agent. Any
proceeds of Collateral coming into Debtor's possession as a result of any such
redelivery shall be held in trust for Agent and forthwith delivered to Agent
for application on the Indebtedness. Agent may (if, in its sole discretion, it
elects to do so) deliver the Collateral or any part of the Collateral to
Debtor, and such delivery by Agent shall discharge Agent from any and all
liability or responsibility for such Collateral.
Debtor waives notice of acceptance of this Pledge Agreement and
presentment, demand, protest, notice of protest, dishonor, notice of dishonor,
notice of demand, notice of intent to demand, notice of acceleration, notice of
intent to accelerate, notice of default and diligence in collecting any
Indebtedness, and agrees that the Agent may modify the terms of borrowing,
compromise, extend, increase, accelerate, renew or forbear to enforce payment
of any part or all of any Indebtedness, or permit any Borrower to incur
additional Indebtedness, all without notice to Debtor (except such notice as is
specifically required under the Agreement, if any) and without affecting in any
manner the Agent's rights under this Pledge Agreement. Debtor further waives
any and all other notices to which Debtor might otherwise be entitled. Debtor
acknowledges and
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agrees that the Agent's rights under this Pledge Agreement are not
conditioned upon pursuit by the Agent of any remedy the Agent may have against
any Borrower (including Debtor) or any other person or any other security. No
invalidity, irregularity or unenforceability of any part or all of the
Indebtedness or any documents evidencing the same, by reason of any bankruptcy,
insolvency or other law or order of any kind or for any other reasons, and no
defense or setoff available at any time to the Debtor, shall impair, affect or
be a defense or setoff to the Agent's rights under this Pledge Agreement.
Debtor delivers this Pledge Agreement based solely on the Debtor's
independent investigation of (or decision not to investigate) the financial
condition of the Borrower and is not relying on any information furnished by
the Agent. Debtor assumes full responsibility for obtaining any further
information concerning the financial condition of the Borrower, the status of
the Indebtedness or any other matter which Debtor may deem necessary or
appropriate now or later. Debtor waives any duty on the part of the Agent, and
agrees that it is not relying upon nor expecting the Agent to disclose any fact
now or later known by the Agent, whether relating to the operations or
condition of any Borrower, the existence, liabilities or financial condition of
any co-guarantor of the Indebtedness, the occurrence of any Default, or
otherwise, notwithstanding any effect such fact may have upon Debtor's risk
under this Pledge Agreement or rights against any of the Borrower. Debtor
knowingly accepts the full range of risk encompassed in this Pledge Agreement,
which risk includes without limit the possibility that any of the Borrower may
incur Indebtedness to the Agent after the financial condition of the Borrower,
or their respective abilities to pay debts as they mature, has deteriorated.
Debtor represents that: (a) the Agent has made no representation to the
undersigned as to the creditworthiness of the any Borrower; and (b) Debtor has
established adequate means of obtaining from the Borrower on a continuing basis
financial and other information pertaining to their financial conditions.
Debtor agrees to keep adequately informed of any facts, events or circumstances
which might in any way affect the risks of the undersigned under this Pledge
Agreement.
Debtor acknowledges that the effectiveness of this Pledge Agreement is not
conditioned on any or all of the Indebtedness being guaranteed by anyone else.
The Agent, in its sole discretion, without notice to Debtor, may release,
exchange, enforce and otherwise deal with any security now or later held by the
Agent for payment of the Indebtedness without affecting in any manner the
Agent's rights under this Pledge Agreement. Debtor acknowledges and agrees
that the Agent has no obligation to acquire or perfect any lien on or security
interest in any assets, whether realty or personalty, to secure payment of the
Indebtedness, and Debtor is not relying upon assets in which the Agent has or
may have a lien or security interest for payment of the Indebtedness.
Until the Indebtedness is irrevocably paid in full, Debtor waives any and
all rights to be subrogated to the position of the Agent or to have the benefit
of any lien, security interest or other guaranty now or later held by the Agent
for the Indebtedness or to enforce any remedy which the Agent now has or later
may have against any Borrower or any other person. Until the Indebtedness is
irrevocably paid in full, Debtor shall have no right of reimbursement,
indemnity, contribution or other right or recourse to or with respect to any
Borrower or any other person.
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Debtor agrees to indemnify and hold harmless the Agent from and against
any and all claims, actions, damages, costs and expenses, including without
limit reasonable attorneys' fees, incurred by the Agent in connection with
Debtor's exercise of any right of subrogation, contribution, indemnification or
recourse with respect to this Pledge Agreement. The Agent has no duty to
enforce or protect any rights which Debtor may have against any Borrower or any
other person, and Debtor assumes full responsibility for enforcing and
protecting any of these rights.
Debtor may terminate the Agent's rights under this Pledge Agreement as to
future Indebtedness (except as provided below) by (and only by) delivering
written notice to an officer of the Agent and receiving from an officer of the
Agent written acknowledgment of the delivery; provided, the termination shall
not be effective until the opening of business on the forty-fifth (45th) day
following written acknowledgement of delivery. Any termination shall not
affect in any way the Agent's rights under this Pledge Agreement as to any
Indebtedness existing at the effective date of termination of any Indebtedness
created after that pursuant to any commitment or agreement of the Agent or any
Borrower with the Agent existing at the effective date of such termination
(whether later advances or readvances by the Agent are optional or obligatory),
or any modifications, extensions or renewals of any Indebtedness, whether in
whole or in part, and as to all this Indebtedness and modifications, renewals
and extensions of it, this Pledge Agreement shall continue to be effective
until the same shall have been fully paid. Debtor shall indemnify the Agent
against all claims, damages, costs and expenses, including without limit
reasonable attorneys' fees, incurred by the Agent in connection with any suit,
claim or action against the Agent arising out of any modification or
termination of any Borrower's loans or any refusal by the Agent to extend
additional credit in connection with a termination under this Pledge Agreement.
Notwithstanding any prior revocation, termination, surrender, or discharge
of this Pledge Agreement in whole or part, the effectiveness of this Pledge
Agreement shall automatically continue or be reinstated, as the case may be, in
the event that (a) any payment received or credit given by the Agent in respect
of the Indebtedness is returned, disgorged, or rescinded as a preference,
impermissible setoff, fraudulent conveyance, diversion of trust funds, or
otherwise under any applicable state or federal law, including, without
limitation, laws pertaining to bankruptcy or insolvency, in which case this
Pledge Agreement shall be enforceable against Debtor as if the returned,
disgorged, or rescinded payment or credit had not been received or given by the
Agent, and whether or not the Agent relied upon this payment or credit or
changed its position as a consequence of it; or (b) any liability is imposed,
or sought to be imposed, against the Agent relating to the environmental
condition of, or the presence of hazardous or toxic substances on, in or about,
any property given as collateral to the Agent for the Indebtedness, whether
this condition is known or unknown, now exists or subsequently arises
(excluding only conditions which arise after any acquisition by the Agent of
any such property, by foreclosure, in lieu of foreclosure or otherwise, to the
extent due to the wrongful act or omission of the Agent), in which case this
Pledge Agreement shall be enforceable to the extent of all liability, costs and
expenses (including without limit reasonable attorneys' fees) incurred by the
Agent as the direct or indirect result of any environmental condition or
hazardous or toxic substances. For purposes of this Pledge Agreement,
"environmental condition" includes, without limitation, conditions existing
with respect to the surface or ground water, drinking water supply, land
surface or subsurface and the air; and "hazardous or toxic substances" shall
include any and
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all substances now or subsequently determined by any federal, state or local
authority to be hazardous or toxic, or otherwise regulated by any of these
authorities.
Debtor shall take or cause to be taken and execute or cause to be
executed all financing statements, endorsements, assignments and other writings
requested by Agent to establish, maintain, reinstate, and/or continue the
perfected and first priority status of the security interest of Agent in the
Collateral or implement or further effectuate the terms or purpose of this
Pledge Agreement, although the failure of Debtor to do so shall not affect in
any way Agent's perfected and first priority security interest in the
Collateral, and will on demand pay all costs and expenses of filing and
recording, including the costs of any record searches, deemed necessary by
Agent from time to time, to establish or determine the validity and the
priority of Agent's security interest. Debtor further makes, constitutes and
appoints Agent its true and lawful attorney-in-fact with full power of
substitution to take any action in furtherance of this Pledge 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.
Debtor waives any right to require the Agent to: (a) proceed against any
person, including without limit any Borrower; (b) proceed against or exhaust
any security held from any Borrower or any other person; (c) give notice of the
terms, time and place of any public or private sale of personal property
security held from the Debtor or any other person, or comply with the
provisions of Section 9-504 of the Michigan or other applicable Uniform
Commercial Code; (d) pursue any other remedy in the Agent's power; or (e) make
any presentments or demands for performance, or give any notices of
nonperformance, protests, notices of protest or notices of dishonor in
connection with any obligations or evidences of Indebtedness held by the Agent
as security, in connection with any other obligations or evidences of
Indebtedness which continues in whole or in part of the Indebtedness secured
under this Pledge Agreement, or in connection with the creation of new or
additional Indebtedness.
Debtor waives any defense based upon or arising by reason of (a) any
disability or other defense of the Debtor, any other Borrower, or any other
person; (b) the cessation or limitation from any cause, other than final and
irrevocable payment in full, of the Indebtedness; (c) any lack of authority of
any officer, director, partner, agent or any other person acting or purporting
to act on behalf of the Debtor which is a corporation, partnership or other
type of entity, or any defect in the formation of any Borrower; (d) the
application by any Borrower of the proceeds of any Indebtedness for purposes
other than the purposes represented by such Borrower to the Agent or intended
or understood by the Agent or Debtor; (e) any act or omission by the Agent
which directly or indirectly result in or aids the discharge of the Debtor or
any Indebtedness by operation of law or otherwise; or (f) any modification of
the Indebtedness, in any form, including without modification of the
Indebtedness, in any form, including without limit the renewal, extension,
acceleration or other change in time for payment of the Indebtedness, or other
change in the terms of Indebtedness or any part of it, including without limit
increase or decrease of the rate of interest. Debtor waives any defense Debtor
may have based upon any election of remedies by the Agent which destroys
Debtor's subrogation rights or Debtor's right to proceed against any Borrower
for reimbursement, including without limit any loss of rights Debtor may
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suffer by reason of any rights, powers or remedies of the Debtor in
connection with any anti-deficiency laws or any other laws limiting, qualifying
or discharging the Indebtedness.
Debtor acknowledges that the Agent has the right to sell, assign,
transfer, negotiate or grant participation or any interest in, any or all of
the Indebtedness and any related obligations, including without limit this
Pledge Agreement. In connection with the above, but without limiting its
ability to make other disclosures to the full extent allowable, the Agent may
disclose all documents and information which the Agent now has or later
acquires relating to Debtor, the Indebtedness or this Pledge Agreement, however
obtained.
No waiver, consent, modification, or change of the terms of this Pledge
Agreement shall bind Debtor or the Agent unless in writing and signed by the
waiving party or an authorized officer of the waiving party, and then such
waiver, consent, modification, or change shall be effective only in the
specific instance and for the specific purpose given.
This Pledge Agreement shall inure to the benefit of the Agent and its
successors and assigns. This Pledge Agreement shall be binding on the
undersigned and the undersigned's heirs, legal representatives, successors, and
assigns, including without limit any debtor in possession or trustee in
bankruptcy for any of the undersigned.
Debtor has entered into this Pledge Agreement in good faith for the
purpose of inducing the Agent to extend credit to make other financial
accommodations to the Borrower (including Debtor) and acknowledges that the
terms of this Pledge Agreement are reasonable. If any provision of this Pledge
Agreement is unenforceable in whole or in part for any reason, the remaining
provisions shall continue to be effective.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF MICHIGAN.
Debtor agrees to reimburse the Agent for any and all costs and expenses
(including without limit court costs, legal fees, and reasonable attorney fees
whether inside or outside counsel is used, whether or not suit is instituted
and, if instituted, whether at the trial court level, appellate level, in a
bankruptcy, probate or administrative proceeding or otherwise and audit
expenses) incurred in enforcing any of the duties and obligations of Debtor, or
rights of the Agent, under this Pledge Agreement.
Debtor will give Agent not less than 90 days prior written notice of all
contemplated changes in the location of the Collateral or Debtor's records
concerning same and, prior to making any such changes, 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.
Any notice from the Agent to Debtor, if mailed, shall be deemed given when
mailed, postage paid, addressed to Debtor either at the address shown below.
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THE UNDERSIGNED AND THE AGENT ACKNOWLEDGE THAT THE RIGHT TO
TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH
PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL
OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT,
WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE
PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE
INDEBTEDNESS.
Executed for delivery at Detroit, Michigan as of the 28th day of April,
1998.
TALON AUTOMOTIVE GROUP, INC.
By:
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Its:
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EXHIBIT "A"
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