Exhibit 10.6
[COMERICA LOGO] SECURITY AGREEMENT
(All Assets)
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As of September 20, 2004, for value received, the undersigned ("Debtor") grants
to Comerica Bank, a Michigan banking corporation ("Bank"), whose address is
00000 Xxx Xxxx Xxxx, Xxxxxxx, Xxxxxxxx 00000, Attention: Commercial Loan
Documentation, Mail Code 7578, a continuing security interest and lien (any
pledge, assignment, security interest or other lien arising hereunder is
sometimes referred to herein as a "security interest") in the Collateral (as
defined below) to secure payment when due, whether by stated maturity, demand,
acceleration or otherwise, of all existing and future indebtedness
("Indebtedness") to the Bank of N//A ("Borrower") and/or Debtor. Indebtedness
includes without limit any and all obligations or liabilities of the Borrower
and/or Debtor to the Bank, whether absolute or contingent, direct or indirect,
voluntary or involuntary, liquidated or unliquidated, joint or several, known or
unknown; any and all obligations or liabilities for which the Borrower and/or
Debtor would otherwise be liable to the Bank were it not for the invalidity or
unenforceability of them by reason of any bankruptcy, insolvency or other law,
or for any other reason; any and all amendments, modifications, renewals and/or
extensions of any of the above; all costs incurred by Bank in establishing,
determining, continuing, or defending the validity or priority of its security
interest, or in pursuing its rights and remedies under this Agreement or under
any other agreement between Bank and Borrower and/or Debtor or in connection
with any proceeding involving Bank as a result of any financial accommodation to
Borrower and/or Debtor; and all other costs of collecting Indebtedness,
including without limit attorney fees. Debtor agrees to pay Bank all such costs
incurred by the Bank, immediately upon demand, and until paid all costs shall
bear interest at the highest per annum rate applicable to any of the
Indebtedness, but not in excess of the maximum rate permitted by law. Any
reference in this Agreement to attorney fees shall be deemed a reference to
reasonable fees, costs, and expenses of both in-house and outside counsel and
paralegals, whether or not a suit or action is instituted, and to court costs if
a suit or action is instituted, and whether attorney fees or court costs are
incurred at the trial court level, on appeal, in a bankruptcy, administrative or
probate proceeding or otherwise. Debtor further covenants, agrees and represents
as follows:
1. COLLATERAL shall mean all of the following property Debtor now or later
owns or has an interest in, wherever located:
(a) all Accounts Receivable (for purposes of this Agreement,
"Accounts Receivable" consists of all accounts; general
intangibles; chattel paper (including without limit electronic
chattel paper and tangible chattel paper); contract rights;
deposit accounts; documents; instruments; rights to payment
evidenced by chattel paper, documents or instruments; health
care insurance receivables; commercial tort claims; letters of
credit; letter of credit rights; supporting obligations; and
rights to payment for money or funds advanced or sold),
(b) all Inventory,
(c) all Equipment and Fixtures,
(d) all Software (for purposes of this Agreement, "Software"
consists of all (i) computer programs and supporting
information provided in connection with a transaction relating
to the program, and (ii) computer programs embedded in goods
and any supporting information provided in connection with a
transaction relating to the program whether or not the program
is associated with the goods in such a manner that it
customarily is considered part of the goods, and whether or
not, by becoming the owner of the goods, a person acquires a
right to use the program in connection with the goods, and
whether or not the program is embedded in goods that consist
solely of the medium in which the program is embedded),
(e) specific items listed on attached Schedule A, if any, is/are
also included in Collateral.
(f) all goods, instruments, documents, policies and certificates
of insurance, deposits, money, investment property or other
property (except real property which is not a fixture) which
are now or later in possession or control of Bank, or as to
which Bank now or later controls possession by documents or
otherwise, and
(g) all additions, attachments, accessions, parts, replacements,
substitutions, renewals, interest, dividends, distributions,
rights of any kind (including but not limited to stock splits,
stock rights, voting and preferential rights), products, and
proceeds of or pertaining to the above including, without
limit, cash or other property which were proceeds and are
recovered by a bankruptcy trustee or otherwise as a
preferential transfer by Debtor.
In the definition of Collateral, a reference to a type of
collateral shall not be limited by a separate reference to a
more specific or narrower type of that collateral.
2. WARRANTIES, COVENANTS AND AGREEMENTS. Debtor warrants, covenants and
agrees as follows:
2.1 Debtor shall furnish to Bank, in form and at intervals as Bank
may request, any information Bank may reasonably request and
allow Bank to examine, inspect, and copy any of Debtor's books
and records. Debtor shall, at the request of Bank, xxxx its
records and the Collateral to clearly indicate the security
interest of Bank under this Agreement.
2.2 At the time any Collateral becomes, or is represented to be,
subject to a security interest in favor of Bank, Debtor shall
be deemed to have warranted that (a) Debtor is the lawful
owner of the Collateral and has the right and authority to
subject it to a security interest granted to Bank; (b) none of
the Collateral is subject to any security interest other than
that in favor of Bank; (c) there are no financing statements
on file, other than in favor of Bank; (d) no person, other
than Bank, has possession or control (as defined in the
Uniform Commercial Code) of any Collateral of such nature that
perfection of a security interest may be accomplished by
control; and (e) Debtor acquired its rights in the Collateral
in the ordinary course of its business.
2.3 Debtor will keep the Collateral free at all times from all
claims, liens, security interests and encumbrances other than
those in favor of Bank. Debtor will not, without the prior
written consent of Bank, sell, transfer or lease, or permit to
be sold, transferred or leased, any or all of the Collateral,
except for Inventory in the ordinary course of its business
and will not return any Inventory to its supplier. Bank or its
representatives may at all reasonable times inspect the
Collateral and may enter upon all premises where the
Collateral is kept or might be located.
2.4 Debtor will do all acts and will execute or cause to be
executed all writings requested by Bank to establish, maintain
and continue an exclusive, perfected and first security
interest of Bank in the Collateral. Debtor agrees that Bank
has no obligation to acquire or perfect any lien on or
security interest in any asset(s), whether realty or
personalty, to secure payment of the Indebtedness, and Debtor
is not relying upon assets in which the Bank may have a lien
or security interest for payment of the Indebtedness.
2.5 Debtor will pay within the time that they can be paid without
interest or penalty all taxes, assessments and similar charges
which at any time are or may become a lien, charge, or
encumbrance upon any Collateral, except to the extent
contested in good faith and bonded in a manner satisfactory to
Bank. If Debtor fails to pay any of these taxes, assessments,
or other charges in the time provided above, Bank has the
option (but not the obligation) to do so and Debtor agrees to
repay all amounts so expended by Bank immediately upon demand,
together with interest at the highest lawful default rate
which could be charged by Bank on any Indebtedness.
2.6 Debtor will keep the Collateral in good condition and will
protect it from loss, damage, or deterioration from any cause.
Debtor has and will maintain at all times (a) with respect to
the Collateral, insurance under an "all risk" policy against
fire and other risks customarily insured against, and (b)
public liability insurance and other insurance as may be
required by law or reasonably required by Bank, all of which
insurance shall be in amount, form and content, and written by
companies as may be satisfactory to Bank, containing a
lender's loss payable endorsement acceptable to Bank. Debtor
will deliver to Bank immediately upon demand evidence
satisfactory to Bank that the required insurance has been
procured. If Debtor fails to maintain satisfactory insurance,
Bank has the option (but not the obligation) to do so and
Debtor agrees to repay all amounts so expended by Bank
immediately upon demand, together with interest at the highest
lawful default rate which could be charged by Bank on any
Indebtedness.
2.7 On each occasion on which Debtor evidences to Bank the account
balances on and the nature and extent of the Accounts
Receivable, Debtor shall be deemed to have warranted that
except as otherwise indicated (a) each of those Accounts
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Receivable is valid and enforceable without performance by
Debtor of any act; (b) each of those account balances are in
fact owing, (c) there are no setoffs, recoupments, credits,
contra accounts, counterclaims or defenses against any of
those Accounts Receivable, (d) as to any Accounts Receivable
represented by a note, trade acceptance, draft or other
instrument or by any chattel paper or document, the same have
been endorsed and/or delivered by Debtor to Bank, (e) Debtor
has not received with respect to any Account Receivable, any
notice of the death of the related account debtor, nor of the
dissolution, liquidation, termination of existence,
insolvency, business failure, appointment of a receiver for,
assignment for the benefit of creditors by, or filing of a
petition in bankruptcy by or against, the account debtor, and
(f) as to each Account Receivable, except as may be expressly
permitted by Bank to the contrary in another document, the
account debtor is not an affiliate of Debtor, the United
States of America or any department, agency or instrumentality
of it, or a citizen or resident of any jurisdiction outside of
the United States. Debtor will do all acts and will execute
all writings requested by Bank to perform, enforce performance
of, and collect all Accounts Receivable. Debtor shall neither
make nor permit any modification, compromise or substitution
for any Account Receivable without the prior written consent
of Bank. Debtor shall, at Bank's request, arrange for
verification of Accounts Receivable directly with account
debtors or by other methods acceptable to Bank.
2.8 Debtor at all times shall be in strict compliance with all
applicable laws, including without limit any laws, ordinances,
directives, orders, statutes, or regulations an object of
which is to regulate or improve health, safety, or the
environment ("Environmental Laws").
2.9 If Bank, acting in its sole discretion, redelivers Collateral
to Debtor or Debtor's designee for the purpose of (a) the
ultimate sale or exchange thereof; or (b) presentation,
collection, renewal, or registration of transfer thereof; or
(c) loading, unloading, storing, shipping, transshipping,
manufacturing, processing or otherwise dealing with it
preliminary to sale or exchange; such redelivery shall be in
trust for the benefit of Bank and shall not constitute a
release of Bank's security interest in it or in the proceeds
or products of it unless Bank specifically so agrees in
writing. If Debtor requests any such redelivery, Debtor will
deliver with such request a duly executed financing statement
in form and substance satisfactory to Bank. Any proceeds of
Collateral coming into Debtor's possession as a result of any
such redelivery shall be held in trust for Bank and
immediately delivered to Bank for application on the
Indebtedness. Bank may (in its sole discretion) deliver any or
all of the Collateral to Debtor, and such delivery by Bank
shall discharge Bank from all liability or responsibility for
such Collateral. Bank, at its option, may require delivery of
any Collateral to Bank at any time with such endorsements or
assignments of the Collateral as Bank may request.
2.10 At any time and without notice following the occurrence of an
Event of Default, Bank may (a) cause any or all of the
Collateral to be transferred to its name or to the name of its
nominees; and (b) receive or collect by legal proceedings or
otherwise all dividends, interest, principal payments and
other sums and all other distributions at any time payable or
receivable on account of the Collateral, and hold the same as
Collateral, or apply the same to the Indebtedness, the manner
and distribution of the application to be in the sole
discretion of Bank; (c) At any time and without notice Bank
may enter into any extension, subordination, reorganization,
deposit, merger or consolidation agreement or any other
agreement relating to or affecting the Collateral, and deposit
or surrender control of the Collateral, and accept other
property in exchange for the Collateral and hold or apply the
property or money so received pursuant to this Agreement; and
(d) take such actions in its own name or in Debtor's name as
Bank, in its sole but reasonable discretion, deems necessary
or appropriate to establish exclusive control (as defined in
the Uniform Commercial Code) over any Collateral of such
nature that perfection of Bank's security interest may be
accomplished by control.
2.11 Bank may assign any of the Indebtedness and deliver any or all
of the Collateral to its assignee, who then shall have with
respect to Collateral so delivered all the rights and powers
of Bank under this Agreement, and after that Bank shall be
fully discharged from all liability and responsibility with
respect to Collateral so delivered.
2.12 Reserved.
2.13 Debtor shall defend, indemnify and hold harmless Bank, its
employees, agents, shareholders, affiliates, officers, and
directors from and against any and all claims, damages, fines,
expenses, liabilities or causes of action of whatever kind,
including without limit consultant fees, legal expenses, and
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attorney fees, suffered by any of them as a direct or indirect
result of any actual or asserted violation of any law,
including, without limit, Environmental Laws, or of any
remediation relating to any property required by any law,
including without limit Environmental Laws.
3. COLLECTION OF PROCEEDS.
3.1 Debtor agrees to collect and enforce payment of all Collateral
until Bank shall direct Debtor to the contrary. Immediately
upon notice to Debtor by Bank and at all times after that,
Debtor agrees to fully and promptly cooperate and assist Bank
in the collection and enforcement of all Collateral and to
hold in trust for Bank all payments received in connection
with Collateral and from the sale, lease or other disposition
of any Collateral, all rights by way of suretyship or guaranty
and all rights in the nature of a lien or security interest
which Debtor now or later has regarding Collateral.
Immediately upon and after such notice, Debtor agrees to (a)
endorse to Bank and immediately deliver to Bank all payments
received on Collateral or from the sale, lease or other
disposition of any Collateral or arising from any other rights
or interests of Debtor in the Collateral, in the form received
by Debtor without commingling with any other funds, and (b)
immediately deliver to Bank all property in Debtor's
possession or later coming into Debtor's possession through
enforcement of Debtor's rights or interests in the Collateral.
Debtor irrevocably authorizes Bank or any Bank employee or
agent to endorse the name of Debtor upon any checks or other
items which are received in payment for any Collateral, and to
do any and all things necessary in order to reduce these items
to money. Bank shall have no duty as to the collection or
protection of Collateral or the proceeds of it, nor as to the
preservation of any related rights, beyond the use of
reasonable care in the custody and preservation of Collateral
in the possession of Bank. Debtor agrees to take all steps
necessary to preserve rights against prior parties with
respect to the Collateral. Nothing in this Section 3.1 shall
be deemed a consent by Bank to any sale, lease or other
disposition of any Collateral.
3.2 Debtor agrees that immediately upon Bank's request (whether or
not any Event of Default exists) the Indebtedness shall be on
a "remittance basis" as follows: Debtor shall at its sole
expense establish and maintain (and Bank, at Bank's option may
establish and maintain at Debtor's expense): (a) an United
States Post Office lock box (the "Lock Box"), to which Bank
shall have exclusive access and control. Debtor expressly
authorizes Bank, from time to time, to remove contents from
the Lock Box, for disposition in accordance with this
Agreement. Debtor agrees to notify all account debtors and
other parties obligated to Debtor that all payments made to
Debtor (other than payments by electronic funds transfer)
shall be remitted, for the credit of Debtor, to the Lock Box,
and Debtor shall include a like statement on all invoices; and
(b) a non-interest bearing deposit account with Bank which
shall be titled as designated by Bank (the "Cash Collateral
Account") to which Bank shall have exclusive access and
control. Debtor agrees to notify all account debtors and other
parties obligated to Debtor that all payments made to Debtor
by electronic funds transfer shall be remitted to the Cash
Collateral Account, and Debtor, at Bank's request, shall
include a like statement on all invoices. Debtor shall execute
all documents and authorizations as required by Bank to
establish and maintain the Lock Box and the Cash Collateral
Account.
3.3 All items or amounts which are remitted to the Lock Box, to
the Cash Collateral Account, or otherwise delivered by or for
the benefit of Debtor to Bank on account of partial or full
payment of, or with respect to, any Collateral shall, at
Bank's option, (a) be applied to the payment of the
Indebtedness, whether then due or not, in such order or at
such time of application as Bank may determine in its sole
discretion, or, (b) be deposited to the Cash Collateral
Account. Debtor agrees that Bank shall not be liable for any
loss or damage which Debtor may suffer as a result of Bank's
processing of items or its exercise of any other rights or
remedies under this Agreement, including without limitation
indirect, special or consequential damages, loss of revenues
or profits, or any claim, demand or action by any third party
arising out of or in connection with the processing of items
or the exercise of any other rights or remedies under this
Agreement. Debtor agrees to indemnify and hold Bank harmless
from and against all such third party claims, demands or
actions, and all related expenses or liabilities, including,
without limitation, attorney fees, unless caused by the
willful misconduct or gross negligence of the Bank.
4. DEFAULTS, ENFORCEMENT AND APPLICATION OF PROCEEDS.
4.1 Upon the occurrence of any Event of Default, as defined in the
Credit Agreement dated as of the date hereof between Bank and
Debtor, as amended from time to time, Debtor shall be in
default under this Agreement.
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4.2 Upon the occurrence of any Event of Default, Bank may at its
discretion and without prior notice to Debtor declare any or
all of the Indebtedness to be immediately due and payable, and
shall have and may exercise any one or more of the following
rights and remedies:
(a) Exercise all the rights and remedies upon default, in
foreclosure and otherwise, available to secured
parties under the provisions of the Uniform
Commercial Code and other applicable law;
(b) Institute legal proceedings to foreclose upon the
lien and security interest granted by this Agreement,
to recover judgment for all amounts then due and
owing as Indebtedness, and to collect the same out of
any Collateral or the proceeds of any sale of it;
(c) Institute legal proceedings for the sale, under the
judgment or decree of any court of competent
jurisdiction, of any or all Collateral; and/or
(d) Personally or by agents, attorneys, or appointment of
a receiver, enter upon any premises where Collateral
may then be located, and take possession of all or
any of it and/or render it unusable; and without
being responsible for loss or damage to such
Collateral, hold, operate, sell, lease, or dispose of
all or any Collateral at one or more public or
private sales, leasings or other disposition, at
places and times and on terms and conditions as Bank
may deem fit, without any previous demand or
advertisement; and except as provided in this
Agreement, all notice of sale, lease or other
disposition, and advertisement, and other notice or
demand, any right or equity of redemption, and any
obligation of a prospective purchaser or lessee to
inquire as to the power and authority of Bank to
sell, lease, or otherwise dispose of the Collateral
or as to the application by Bank of the proceeds of
sale or otherwise, which would otherwise be required
by, or available to Debtor under, applicable law are
expressly waived by Debtor to the fullest extent
permitted.
At any sale pursuant to this Section 4.2, whether
under the power of sale, by virtue of judicial
proceedings or otherwise, it shall not be necessary
for Bank or a public officer under order of a court
to have present physical or constructive possession
of Collateral to be sold. The recitals contained in
any conveyances and receipts made and given by Bank
or the public officer to any purchaser at any sale
made pursuant to this Agreement shall, to the extent
permitted by applicable law, conclusively establish
the truth and accuracy of the matters stated
(including, without limit, as to the amounts of the
principal of and interest on the Indebtedness, the
accrual and nonpayment of it and advertisement and
conduct of the sale); and all prerequisites to the
sale shall be presumed to have been satisfied and
performed. Upon any sale of any Collateral, the
receipt of the officer making the sale under judicial
proceedings or of Bank shall be sufficient discharge
to the purchaser for the purchase money, and the
purchaser shall not be obligated to see to the
application of the money. Any sale of any Collateral
under this Agreement shall be a perpetual bar against
Debtor with respect to that Collateral. At any sale
or other disposition of Collateral pursuant to this
Section 4.2, Bank disclaims all warranties which
would otherwise be given under the Uniform Commercial
Code, including without limit a disclaimer of any
warranty relating to title, possession, quiet
enjoyment or the like, and Bank may communicate these
disclaimers to a purchaser at such disposition. This
disclaimer of warranties will not render the sale
commercially unreasonable.
4.3 Debtor shall at the request of Bank, notify the account
debtors or obligors of Bank's security interest in the
Collateral and direct payment of it to Bank. Bank may, itself,
upon the occurrence of any Event of Default so notify and
direct any account debtor or obligor. At the request of Bank,
whether or not an Event of Default shall have occurred, Debtor
shall immediately take such actions as Bank shall request to
establish exclusive control (as defined in the Uniform
Commercial Code) by Bank over any Collateral which is of such
a nature that perfection of a security interest may be
accomplished by control.
4.4 The proceeds of any sale or other disposition of Collateral
authorized by this Agreement shall be applied by Bank first
upon all expenses authorized by the Uniform Commercial Code
and all reasonable attorney fees and legal expenses incurred
by Bank; the balance of the proceeds of the sale or other
disposition shall be applied in the payment of the
Indebtedness, first to interest, then to principal, then to
remaining Indebtedness and the surplus, if any, shall be paid
over to Debtor or to such other person(s) as may be entitled
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to it under applicable law. Debtor shall remain liable for any
deficiency, which it shall pay to Bank immediately upon
demand. Debtor agrees that Bank shall be under no obligation
to accept any noncash proceeds in connection with any sale or
disposition of Collateral unless failure to do so would be
commercially unreasonable. If Bank agrees in its sole
discretion to accept noncash proceeds (unless the failure to
do so would be commercially unreasonable), Bank may ascribe
any commercially reasonable value to such proceeds. Without
limiting the foregoing, Bank may apply any discount factor in
determining the present value of proceeds to be received in
the future or may elect to apply proceeds to be received in
the future only as and when such proceeds are actually
received in cash by Bank.
4.5 Nothing in this Agreement is intended, nor shall it be
construed, to preclude Bank from pursuing any other remedy
provided by law for the collection of the Indebtedness or for
the recovery of any other sum to which Bank may be entitled
for the breach of this Agreement by Debtor. Nothing in this
Agreement shall reduce or release in any way any rights or
security interests of Bank contained in any existing agreement
between Borrower, Debtor, or any Guarantor and Bank.
4.6 No waiver of default or consent to any act by Debtor shall be
effective unless in writing and signed by an authorized
officer of Bank. No waiver of any default or forbearance on
the part of Bank in enforcing any of its rights under this
Agreement shall operate as a waiver of any other default or of
the same default on a future occasion or of any rights.
4.7 Debtor (a) irrevocably appoints Bank or any agent of Bank
(which appointment is coupled with an interest) the true and
lawful attorney of Debtor (with full power of substitution) in
the name, place and stead of, and at the expense of, Debtor
and (b) authorizes Bank or any agent of Bank, in its own name,
at Debtor's expense, to do any of the following, as Bank, in
its sole discretion, deems appropriate:
(i) to demand, receive, xxx for, and give receipts or
acquittances for any moneys due or to become due on
any Collateral (including without limit to draft
against Collateral) and to endorse any item
representing any payment on or proceeds of the
Collateral;
(ii) to execute and file in the name of and on behalf of
Debtor all financing statements or other filings
deemed necessary or desirable by Bank to evidence,
perfect, or continue the security interests granted
in this Agreement; and
(iii) to do and perform any act on behalf of Debtor
permitted or required under this Agreement.
4.8 Upon the occurrence of an Event of Default, Debtor also
agrees, upon request of Bank, to assemble the Collateral and
make it available to Bank at any place designated by Bank
which is reasonably convenient to Bank and Debtor.
4.9 The following shall be the basis for any finder of fact's
determination of the value of any Collateral which is the
subject matter of a disposition giving rise to a calculation
of any surplus or deficiency under Section 9.615 (f) of the
Uniform Commercial Code (as in effect on or after July 1,
2001): (a) the Collateral which is the subject matter of the
disposition shall be valued in an "as is" condition as of the
date of the disposition, without any assumption or expectation
that such Collateral will be repaired or improved in any
manner; (b) the valuation shall be based upon an assumption
that the transferee of such Collateral desires a resale of the
Collateral for cash promptly (but no later than 30 days)
following the disposition; (c) all reasonable closing costs
customarily borne by the seller in commercial sales
transactions relating to property similar to such Collateral
shall be deducted including, without limitation, brokerage
commissions, tax prorations, attorneys' fees, whether inside
or outside counsel is used, and marketing costs; (d) the value
of the Collateral which is the subject matter of the
disposition shall be further discounted to account for any
estimated holding costs associated with maintaining such
Collateral pending sale (to the extent not accounted for in
(c) above), and other maintenance, operational and ownership
expenses; and (e) any expert opinion testimony given or
considered in connection with a determination of the value of
such Collateral must be given by persons having at least 5
years experience in appraising property similar to the
Collateral and who have conducted and prepared a complete
written appraisal of such Collateral taking into consideration
the factors set forth above. The "value" of any such
Collateral shall be a factor in determining the amount of
proceeds which would have been realized in a disposition to a
transferee other than a secured party, a person related to a
secured party or a secondary obligor under Section 9-615(f).
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5. MISCELLANEOUS.
5.1 Until Bank is advised in writing by Debtor to the contrary,
all notices, requests and demands required under this
Agreement or by law shall be given to, or made upon, Debtor at
the first address indicated in Section 5.15 below.
5.2 Debtor will give Bank not less than 90 days prior written
notice of all contemplated changes in Debtor's name, location,
chief executive office, principal place of business, and/or
location of any Collateral, but the giving of this notice
shall not cure any Event of Default caused by this change.
5.3 Bank assumes no duty of performance or other responsibility
under any contracts contained within the Collateral.
5.4 Bank has the right to sell, assign, transfer, negotiate or
grant participations or any interest in, any or all of the
Indebtedness and any related obligations, including without
limit this Agreement. In connection with the above, but
without limiting its ability to make other disclosures to the
full extent allowable, Bank may disclose all documents and
information which Bank now or later has relating to Debtor,
the Indebtedness or this Agreement, however obtained. Debtor
further agrees that Bank may provide information relating to
this Agreement or relating to Debtor to the Bank's parent,
affiliates, subsidiaries, and service providers.
5.5 In addition to Bank's other rights, any indebtedness owing
from Bank to Debtor can be set off and applied by Bank on any
Indebtedness at any time(s) either before or after maturity or
demand without notice to anyone. Any such action shall not
constitute an acceptance of collateral in discharge of the
Indebtedness.
5.6 Debtor, to the extent not expressly prohibited by applicable
law, waives any right to require the Bank to: (a) proceed
against any person or property; (b) comply with the provisions
of Sections 9-611 or 9-621 of the Uniform Commercial Code; or
(c) pursue any other remedy in the Bank's power. Debtor waives
notice of acceptance of this Agreement and presentment,
demand, protest, notice of protest, dishonor, notice of
dishonor, notice of default, notice of intent to accelerate or
demand payment of any Indebtedness, any and all other notices
to which the undersigned might otherwise be entitled except as
provided in this Agreement or the Credit Agreement, and
diligence in collecting any Indebtedness. Debtor
unconditionally and irrevocably waives each and every defense
and setoff of any nature which, under principles of guaranty
or otherwise, would operate to impair or diminish in any way
the obligation of Debtor under this Agreement, and
acknowledges that such waiver is by this reference
incorporated into each security agreement, collateral
assignment, pledge and/or other document from Debtor now or
later securing the Indebtedness, and acknowledges that as of
the date of this Agreement no such defense or setoff exists.
5.7 Reserved.
5.8 In the event that applicable law shall obligate Bank to give
prior notice to Debtor of any action to be taken under this
Agreement, Debtor agrees that a written notice given to Debtor
at least ten days before the date of the act shall be
reasonable notice of the act and, specifically, reasonable
notification of the time and place of any public sale or of
the time after which any private sale, lease, or other
disposition is to be made, unless a shorter notice period is
reasonable under the circumstances. A notice shall be deemed
to be given under this Agreement when delivered to Debtor or
when placed in an envelope addressed to Debtor and deposited,
with postage prepaid, in a post office or official depository
under the exclusive care and custody of the United States
Postal Service or delivered to an overnight courier. The
mailing shall be by overnight courier, certified, or first
class mail.
5.9 Notwithstanding any prior revocation, termination, surrender,
or discharge of this Agreement in whole or in part, the
effectiveness of this Agreement shall automatically continue
or be reinstated in the event that any payment received or
credit given by Bank in respect of the Indebtedness is
returned, disgorged, or rescinded under any applicable law,
including, without limitation, bankruptcy or insolvency laws,
in which case this Agreement, shall be enforceable against
Debtor as if the returned, disgorged, or rescinded payment or
credit had not been received or given by Bank, and whether or
not Bank relied upon this payment or credit or changed its
position as a consequence of it. In the event of continuation
or reinstatement of this Agreement, Debtor agrees upon demand
by Bank to execute and deliver to Bank those documents which
Bank determines are appropriate to further evidence (in the
7
public records or otherwise) this continuation or
reinstatement, although the failure of Debtor to do so shall
not affect in any way the reinstatement or continuation.
5.10 This Agreement and all the rights and remedies of Bank under
this Agreement shall inure to the benefit of Bank's successors
and assigns and to any other holder who derives from Bank
title to or an interest in the Indebtedness or any portion of
it, and shall bind Debtor and the heirs, legal
representatives, successors, and assigns of Debtor. Nothing in
this Section 5.10 is deemed a consent by Bank to any
assignment by Debtor.
5.11 If there is more than one Debtor, all undertakings, warranties
and covenants made by Debtor and all rights, powers and
authorities given to or conferred upon Bank are made or given
jointly and severally.
5.12 Except as otherwise provided in this Agreement, all terms in
this Agreement have the meanings assigned to them in Article 9
(or, absent definition in Article 9, in any other Article) of
the Uniform Commercial Code, as those meanings may be amended,
revised or replaced from time to time. "Uniform Commercial
Code" means Act No. 174 of the Michigan Public Acts of 1962,
as amended, revised or replaced from time to time, including
without limit as amended by Act No. 348 of the Michigan Public
Acts of 2000. Notwithstanding the foregoing, the parties
intend that the terms used herein which are defined in the
Uniform Commercial Code have, at all times, the broadest and
most inclusive meanings possible. Accordingly, if the Uniform
Commercial Code shall in the future be amended or held by a
court to define any term used herein more broadly or
inclusively than the Uniform Commercial Code in effect on the
date of this Agreement, then such term, as used herein, shall
be given such broadened meaning. If the Uniform Commercial
Code shall in the future be amended or held by a court to
define any term used herein more narrowly, or less
inclusively, than the Uniform Commercial Code in effect on the
date of this Agreement, such amendment or holding shall be
disregarded in defining terms used in this Agreement.
5.13 No single or partial exercise, or delay in the exercise, of
any right or power under this Agreement, shall preclude other
or further exercise of the rights and powers under this
Agreement. The unenforceability of any provision of this
Agreement shall not affect the enforceability of the remainder
of this Agreement. This Agreement constitutes the entire
agreement of Debtor and Bank with respect to the subject
matter of this Agreement. No amendment or modification of this
Agreement shall be effective unless the same shall be in
writing and signed by Debtor and an authorized officer of
Bank. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Michigan,
without regard to conflict of laws principles.
5.14 To the extent that any of the Indebtedness is payable upon
demand, nothing contained in this Agreement shall modify the
terms and conditions of that Indebtedness nor shall anything
contained in this Agreement prevent Bank from making demand,
without notice and with or without reason, for immediate
payment of any or all of that Indebtedness at any time(s),
whether or not an Event of Default has occurred.
5.15 Debtor represents and warrants that Debtor's exact name is the
name set forth in this Agreement. Debtor further represents
and warrants the following and agrees that Debtor is, and at
all times shall be, located in the following place [xxxx
applicable provision]:
[ ] Debtor is an individual, and Debtor is located (as
determined pursuant to the Uniform Commercial Code)
at Debtor's principal residence which is (street
address, state and county or parish):
_________________________________________________.
[X] Debtor is a registered organization which is
organized under the laws of one of the states
comprising the United States (e.g. corporation,
limited partnership, registered limited liability
partnership or limited liability company), and Debtor
is located (as determined pursuant to the Uniform
Commercial Code) in the state under the laws of which
it was organized, which is (street address, state and
county or parish): [Insert address of Debtor].
[ ] Debtor is a domestic organization which is not a
registered organization under the laws of the United
States or any state thereof (e.g. general
partnership, joint venture, trust, estate or
association), and Debtor is located (as determined
pursuant to the Uniform Commercial Code) at its sole
place of business or, if it has more than one place
of business, at its chief executive office, which is
(street address, state and county or
parish):____________________________.
8
[ ] Debtor is a registered organization organized under
the laws of the United States, and Debtor is located
in the state that United States law designates as its
location or, if United States law authorizes the
Debtor to designate the state for its location, the
state designated by Debtor, or if neither of the
foregoing are applicable, at the District of
Columbia. Debtor is located (as determined pursuant
to the Uniform Commercial Code) at (street address,
state and county or
parish):____________________________________________.
[ ] Debtor is a foreign individual or foreign
organization or a branch or agency of a bank that is
not organized under the laws of the United States or
a state thereof. Debtor is located (as determined
pursuant to the Uniform Commercial Code) at:
_______________________.
[ ] If Collateral is located at other than the address
specified above, such Collateral is located and shall
be maintained at the locations listed on Schedule
5.15. Collateral shall be maintained only at the
locations identified in this Section 5.15.
5.16 A carbon, photographic or other reproduction of this Agreement
shall be sufficient as a financing statement under the Uniform
Commercial Code and may be filed by Bank in any filing office.
5.17 This Agreement shall be terminated only by the filing of a
termination statement in accordance with the applicable
provisions of the Uniform Commercial Code, but the obligations
contained in Section 2.13 of this Agreement shall survive
termination.
6. DEBTOR AND BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER
CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF
THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT
WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING
THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS
AGREEMENT OR THE INDEBTEDNESS.
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7. SPECIAL PROVISIONS APPLICABLE TO THIS AGREEMENT. From and after the
date of this Agreement (and unless and until Bank notifies Debtor in
writing to the contrary), all of the Indebtedness shall be on a
remittance basis and all of the provisions of Section 3.2 shall be
immediately applicable, including without limitation, the requirement
to establish and maintain a Lock Box and Cash Collateral Account.
Debtor:
NECI ACQUISITION, INC.
By: /s/Xxxxxx Xxxxxxx
----------------------------
SIGNATURE OF
Its: /s/President
----------------------------
TITLE (If applicable)
10
SCHEDULE 5.15
ADDITIONAL LOCATIONS OF COLLATERAL
1. 000 XXX XXXXXX XXXXXX
XXXXXX, XX 00000
2. 000 XXXXXXXX XXXXXX
XXXXXXX, XX 00000
