Subordination Agreement
(All Indebtedness and Liens)
_____________________________("Borrower") is indebted to the undersigned
("Creditor") in the principal sum of__________________________________ Dollars
($____________ ) evidenced by an open account a promissory note other
(describe)_______________________ which indebtedness is unsecured secured
by_______________________________, and Creditor is or may become financially
interested in Borrower and desires to aid Borrower in obtaining or having
continued financial accommodations, whether by way of loan, commitment to loan,
discounting of instruments, extensions of credit or the obtaining of any other
financial aid from Comerica Bank ("Bank").
In order to induce the Bank to extend or to continue to extend financial
accommodations to Borrower from time to time, whether by way of a loan,
commitment to loan, discounting of instruments, extension of credit or otherwise
and in consideration of any of these financial accommodations, Creditor agrees
as follows:
1. Any and all obligations and liabilities of Borrower to Creditor, including,
without limit, principal and interest payments, whether direct or indirect,
absolute or contingent, joint or several, secured or unsecured, due or to
become due, now existing or later arising and whatever the amount and however
evidenced (the "Subordinated Indebtedness"), are subordinated in right of
payment to any and all obligations and liabilities of Borrower to the Bank,
including, without limit, principal and interest payments, whether direct or
indirect, absolute or contingent, joint or several, secured or unsecured, due
or to become due, now existing or later arising and however evidenced,
together with all other sums due thereon and all costs of collecting the same
(including, without limit, reasonable attorney fees) for which Borrower is
liable (the "Senior Indebtedness").
2. Creditor will not ask for, demand, xxx for, take or receive (by way of
voluntary payment, acceleration, set-off or counterclaim, foreclosure or
other realization on security, dividends in bankruptcy or otherwise), or
offer to make any discharge or release of, any of the Subordinated
Indebtedness, and Creditor waives any such rights with respect to the
Subordinated Indebtedness nor shall Creditor exercise any rights of
subrogation or other similar rights with respect to the Senior Indebtedness.
3. Creditor will not exercise any of Creditor's rights in any collateral now or
later securing the Subordinated Indebtedness. All rights of Creditor in any
collateral now or later securing the Subordinated Indebtedness are
subordinated to all rights of the Bank now or later existing in any of the
same collateral securing the Senior Indebtedness.
4. Creditor authorizes and empowers the Bank to demand, enforce payment by legal
proceedings, receive and give acquittances for the Subordinated Indebtedness
and to exercise all rights of Creditor in any security (other than a deed of
trust, mortgage or security interest covering real property or a principal
dwelling) now or later held for the Subordinated Indebtedness. As collateral
for the Senior Indebtedness, Creditor hereby pledges, assigns and grants to
Bank a security interest in the Subordinated Indebtedness, any collateral or
other security (other than a deed of trust, mortgage or security interest
covering real property or a principal dwelling) for the Subordinated
Indebtedness, and all claims or demands of Creditor in connection therewith,
with full right on the part of the Bank, in its own name or in the name of
Creditor, to collect and enforce these claims or demands, by suit, proof of
debt in bankruptcy, or in any other proceeding involving dissolution,
insolvency, liquidation or an adjustment of the indebtedness of Borrower. The
Bank has no obligation to the Creditor to take any steps with regard to these
claims or demands, the Subordinated Indebtedness, or any collateral or other
security for the Subordinated Indebtedness.
5. Should any payment, distribution or security or proceeds from these be
received by Creditor upon or with respect to the Subordinated Indebtedness
prior to the satisfaction in full of the Senior Indebtedness, Creditor shall
immediately deliver same to the Bank in the form received (except for
endorsement or assignment by Creditor where required by the Bank), for
application on the Senior Indebtedness (whether or not then due and in such
order of maturity as Bank elects) and, until so delivered, the same shall be
held in trust by Creditor as the property of the Bank.
6. Creditor represents and warrants that it has not made or permitted to be made
and shall not make or permit any assignment, transfer, pledge, or disposition
for collateral purposes or otherwise, of all or any part of the Subordinated
Indebtedness or any collateral or other security for the Subordinated
Indebtedness so long as this Agreement remains in effect. Creditor shall, on
the date of this Agreement or promptly upon receipt if not yet delivered to
Creditor, deliver to the Bank, endorsed if required by the Bank, all notes
and other instruments evidencing any Subordinated Indebtedness. Creditor
agrees to execute all financing statements deemed necessary by the Bank to
perfect the Bank's rights and interests under this Agreement. The Bank is to
have all the rights and remedies of a secured creditor under the Michigan
Uniform Commercial Code, as amended from time to time, with respect to such
interests. Creditor further makes, constitutes and appoints Bank its true and
lawful attorney-in-fact with full power of substitution to take any action in
furtherance of this Agreement, including, but not limited to, 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 any
collateral. Such appointment shall be deemed irrevocable and coupled with an
interest.
7. This Agreement constitutes a continuing agreement of subordination, even
though at times Borrower is not indebted to the Bank. The Bank may continue,
in reliance on this Agreement, without notice to Creditor, to lend monies,
extend credit, modify, renew or make other financial accommodations, to or
for the account of Borrower until the fifth (5th) day ("effective date")
following written acknowledgment by an officer of the Bank that the Bank
received written notice of revocation of this Agreement from Creditor. Any
such notice of revocation shall not be effective as to any Senior
Indebtedness existing at the effective date of revocation or any Senior
Indebtedness created after that pursuant to any commitment or agreement of
the Bank or pursuant to any Borrower loan (whether advances or readvances by
the Bank after the effective date of revocation are optional or obligatory)
existing at the effective date of revocation or any modifications or renewals
of any such Senior Indebtedness, whether in whole or in part. Possession by
the Bank of any note or other evidence of indebtedness made, endorsed or
guaranteed by Borrower shall be conclusive evidence (but not the only means
of establishing) that Borrower is indebted to the Bank.
8. Creditor shall indemnify the Bank against all claims, damages, costs, and
expenses, including, without limit, reasonable attorneys' fees, incurred by
the Bank in connection with any suit, claim or action against the Bank
arising out of any modification or termination of a Borrower loan or any
refusal by the Bank to extend additional credit relating to the revocation of
this Agreement.
9. Creditor delivers this Agreement based solely on Creditor's independent
investigation of (or decision not to investigate) the financial condition of
Borrower and is not relying on any information furnished by the Bank.
Creditor assumes full responsibility for obtaining any further information
concerning Borrower's financial condition, the status of the Senior
Indebtedness or any other matter which Creditor may deem necessary or
appropriate now or later. Creditor waives any duty on the part of the Bank,
and agrees that Creditor is not relying upon nor expecting the Bank to
disclose to Creditor any fact now or later known by the Bank, whether
relating to the operations or condition of Borrower, the existence,
liabilities or financial condition of any guarantor of the Senior
Indebtedness, the occurrence of any default with respect to the Senior
Indebtedness, or otherwise, notwithstanding any effect such fact may have
upon Creditor's risk or Creditor's rights against Borrower. Creditor
knowingly accepts the full range of risk encompassed in this Agreement, which
risk includes, without limit, the possibility that Borrower may incur Senior
Indebtedness to the Bank after the financial condition of Borrower, or its
ability to pay Borrower's debts as they mature, has deteriorated. Creditor
acknowledges and agrees that the Bank's rights under this Agreement are not
conditioned upon pursuit by the Bank of any remedy the Bank may have against
Borrower or any other person or any other security. The absence of Borrower's
signature at the end of this Agreement shall in no way impair or affect the
validity of this Agreement.
10.The Bank, in its sole discretion, without notice to Creditor, may release,
exchange, enforce and otherwise deal with any security now or later held by
the Bank for payment of the Senior Indebtedness or release any party now or
later liable for payment of the Senior Indebtedness without affecting in any
manner the Bank's rights under this Agreement. Creditor acknowledges and
agrees that the 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 Senior Indebtedness, and Creditor is not relying upon assets
in which the Bank has or may have a lien or security interest for payment of
the Senior Indebtedness.
11.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 the Bank in respect of the Senior Indebtedness is
returned, disgorged, or rescinded under any applicable state or federal law,
including, without limitation, laws pertaining to bankruptcy or insolvency,
in which case this Agreement, shall be enforceable against the Creditor as if
the returned, disgorged, or rescinded payment or credit had not been received
or given by the Bank, and whether or not the 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, the Creditor agrees upon
demand by the Bank to execute and deliver to the Bank those documents which
the Bank determines are appropriate to further evidence (in the public
records or otherwise) this continuation or reinstatement, although the
failure of the Creditor to do so shall not affect in any way the
reinstatement or continuation.
12.Creditor waives any right to require the Bank to: (a) proceed against any
person or property; (b) give notice of the terms, time and place of any
public or private sale of personal property security held from Borrower or
any other person, or otherwise comply with the provisions of Section 9-504 of
the Michigan or other applicable Uniform Commercial Code; or (c) pursue any
other remedy in the Bank's power. Creditor 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 Senior Indebtedness, any and all other notices to which
the undersigned might otherwise be entitled, and diligence in collecting any
Senior Indebtedness, and agrees that the Bank may, once or any number of
times, modify the terms of any Senior Indebtedness, compromise, extend,
increase, accelerate, renew or forbear to enforce payment of any or all
Senior Indebtedness, or permit the Borrower to incur additional Senior
Indebtedness, all without notice to Creditor and without affecting in any
manner the unconditional obligations of Creditor under this Agreement.
13.Creditor acknowledges that the Bank has the right to sell, assign, transfer,
negotiate or grant participations or any interest in, any or all of the
Senior 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, the Bank may disclose
all documents and information which the Bank now or later has or acquires
relating to Creditor and this Agreement, however obtained. Creditor further
agrees that the Bank may disclose such documents and information to Borrower.
Creditor further agrees that the Bank may provide information relating to
this Agreement or relating to Creditor to the Bank's parent, affiliates,
subsidiaries and service providers.
00.Xx waiver or modification of any of its rights under this Agreement shall be
effective unless the waiver or modification shall be in writing and signed by
an authorized officer on behalf of the Bank. Each waiver or modification
shall be a waiver or modification only with respect to the specific matter to
which the waiver or modification relates and shall in no way impair the
rights of the Bank or the obligations of Creditor to the Bank in any other
respect.
15.This Agreement shall bind and be for the benefit of Creditor and the Bank
and their respective successors and assigns, and shall be construed according
to the laws of the State of Michigan, without regard to conflict of laws
principles. If this Agreement is executed by two or more persons, it shall
bind each of them individually as well as jointly.
16.The term "Borrower", as used in this Agreement, includes any person,
corporation, partnership or other entity which succeeds to the interests or
business of Borrower named above, and the terms "Senior Indebtedness" and
"Subordinated Indebtedness" include indebtedness of any successor Borrower to
the Bank and Creditor.
17.Creditor agrees to reimburse the Bank upon demand 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 or appellate level, in
a bankruptcy, probate or administrative proceeding, or otherwise) incurred in
enforcing any of the duties and obligations of Creditor under this Agreement.
18.Creditor waives any defense against the enforceability of this Agreement
based upon or arising by reason of the application by Borrower of the
proceeds of any Indebtedness for purposes other than the purposes represented
by Borrower to the Bank or intended or understood by the Bank or Creditor.
Creditor waives all rights to require the Bank to xxxxxxxx the Collateral or
any other property the Bank may at any time have as security for the
Indebtedness and waives all right to require the Bank to first proceed
against any guarantor or other person before proceeding against the
Collateral.
19.The relative priorities of the Bank and Creditor in the Collateral as set
forth in this Agreement control irrespective of the time, method or order of
attachment or perfection of the liens and security interests acquired by the
parties in the Collateral and irrespective of the priorities as would
otherwise be determined by reference to the Uniform Commercial Code or other
applicable laws. Creditor shall not contest the validity, priority or
perfection of the Bank's security interest in the Collateral (regardless of
whether the Bank's security interest in the Collateral is valid or
perfected). The priorities of any liens or security interests of the parties
in any property of the Borrower other than the Collateral are not affected by
this Agreement and shall be determined by reference to applicable law. The
Bank's rights under this Agreement are in addition to, and not in
substitution of, its rights under any other subordination agreement with
Creditor.
20. Special Provisions: [None if left blank.]
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THE UNDERSIGNED AND THE 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.
IN WITNESS WHEREOF, Creditor has caused this Agreement to be executed as of
___________________________.
___________________________ CREDITOR'S ADDRESS
[CREDITOR]
BY:
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SIGNATURE OF STREET ADDRESS
ITS:
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TITLE (if applicable) CITY STATE
---------------------------------
ZIP
BORROWER'S ACKNOWLEDGMENT
____________________________________ ("Borrower") accepts notice of
subordination created by this Agreement and agrees that it will take no action
inconsistent with this Agreement and that, except with the prior written
approval of Bank, no payment or distribution shall be made by Borrower on or
with respect to the Subordinated Indebtedness, so long as this Agreement remains
in effect. Borrower agrees that the Bank may, at its option, without notice and
without limiting Bank's other rights, upon any breach by Creditor of, or
purported termination by the Creditor of, this Agreement, declare all Senior
Indebtedness to be immediately due and payable and/or terminate any commitments
of Bank to Borrower.
______________________________ BORROWER'S ADDRESS
[BORROWER]
BY:
-------------------------------- --------------------------------
SIGNATURE OF STREET ADDRESS
ITS:
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TITLE (if applicable) CITY STATE
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ZIP
Dated:__________________________
