March 30, 2000
Acceptance Insurance Companies Inc.
000 X. 00xx Xxxxxx
Xxxxx 000 Xxxxx
Xxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
This letter constitutes an agreement by and between COMERICA BANK, a
Michigan banking corporation (herein called "Bank"), and ACCEPTANCE INSURANCE
COMPANIES INC., a Delaware corporation (herein called "Company"), pertaining to
certain credit which Bank has made and/or may from time to time hereafter make
available to Company.
In consideration of the issuance by Bank of the letter of credit
described in attached Exhibit "A" (the "Letter of Credit"), and in
consideration of all present and future liabilities, obligations and
indebtedness of Company to Bank, howsoever created, evidenced, existing or
arising, whether direct or indirect, absolute or contingent, joint or several,
now or hereafter existing or arising, or due or to become due (herein
collectively called the "Liabilities"), Company represents, warrants, covenants
and agrees as follows:
This Agreement supercedes and replaces the Amended and Restated Credit
Agreement dated December 22, 1999 between Company, Comerica Bank, as Agent and
the lenders party thereto ("Credit Agreement"). Upon the execution of this
Agreement, the Credit Agreement, the Guaranty, the Pledge Agreements and the
Subordination and Contribution Agreement (each as defined in the Credit
Agreement) shall be terminated and Bank in its capacity as Agent shall arrange
for the prompt return to Company of the Revolving Credit Notes marked
"Cancelled" and the Pledged Surplus Notes and pledged stock collateral.
1. Company hereby represents and warrants, and such
representations and warranties shall be deemed to be continuing representations
and warranties during the entire life of this Agreement, and thereafter, so
long as any Liabilities remain unpaid and outstanding:
(a) It is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, it is
duly qualified and authorized to do business in each
jurisdiction where the character of its assets or the nature
of its activities makes such qualification necessary, and it
has the legal power and authority to own its properties and
assets and to carry out its business in each such
jurisdiction wherein such qualification is necessary and
where the failure to so qualify would have a material adverse
effect on the Company; execution, delivery and performance of
this Agreement, the Standby Letter of Credit Application and
Agreement dated December 20, 1999 and the Security Agreement
(Negotiable Collateral) dated March 30, 2000 by Company in
favor of Bank (collectively the "Loan Documents") are within
Company's corporate powers and authorities, have been duly
authorized by all requisite corporate or other necessary or
appropriate action, and are not in contravention or violation
of law or the terms of Company's Articles of Incorporation or
Bylaws, and do not require the consent or approval of any
governmental body, agency or authority; and this Agreement,
and any other Loan Documents contemplated hereby, when
executed, issued and/or delivered by Company, or by which
Company is otherwise bound, will be valid and binding and
legally enforceable against Company in accordance with their
terms.
(b) The execution, delivery and performance of this Agreement,
and any other Loan Documents required under or contemplated
by this Agreement to which Company is a party or by which it
is otherwise bound, and the issuance of this Agreement and
any such other Loan Documents by Company, and the
transactions contemplated hereby and thereby, are not in
contravention or violation of the unwaived terms of any
indenture, agreement or undertaking to which Company is a
party or by which it or any of its property or assets is
bound, and will not result in the creation or imposition of
any lien or encumbrance of any nature whatsoever upon any of
the property or assets of Company, except to or in favor of
Bank.
(c) There exists no Event of Default (as hereinafter defined), or
any condition or event which, with the giving of notice or
the passage of time, or both, would constitute an Event of
Default (any such condition or event is herein called a
"Default") under any of the Liabilities. The term
"Liabilities" shall not include liabilities under the Credit
Agreement.
2. So long as the Letter of Credit is outstanding and so long as
any Liabilities remain unpaid and outstanding, Company covenants and agrees
that it shall:
(a) Furnish to Bank, or cause to be furnished to Bank, in each
case, in form and detail and on a reporting basis
satisfactory to Bank, the following:
(i) As soon as available and in any event within 45 days
after the end of each of the first three fiscal
quarters of each fiscal year of the Company, the
consolidated balance sheet of the Company and its
Subsidiaries as of the end of such quarter, and the
related consolidated statements of income, retained
earnings and cash flows of the Company and its
Subsidiaries for the period commencing at the end of
the previous fiscal year and ending with the end of
such quarter, setting forth in each case in
comparative form the corresponding figures for the
corresponding date or period of the preceding fiscal
year, all in reasonable detail and duly certified
(subject to year-end audit adjustments)by the chief
financial officer of the Company as having been
prepared in accordance with generally accepted
accounting principles;
(ii) As soon as available and in any event within 120
days after the end of each fiscal year of the
Company, a copy of the consolidated balance sheets
of the Company and its Subsidiaries as of the end of
such fiscal year and the related consolidated
statements of income, retained earnings and cash
flows of the Company and its Subsidiaries for such
fiscal year, with an audit report of Deloitte &
Touche, or other independent certified public
accountants of comparable standing selected by the
Company, with respect to such consolidated
statements, which report shall be without
qualifications unacceptable to the Bank;
(iii) as soon as possible, and in any event within three
(3) Business Days after becoming aware of the
occurrence or existence of any Default or Event of
Default, a written statement of an authorized
officer of Company setting forth the details of such
Default or Event of Default and the action which
Company has taken or caused to be taken, or proposes
to take or cause to be taken with respect thereto.
(b) Do or cause to be done all things necessary to preserve and
keep in full force and effect Company's corporate existence,
rights and franchises.
3. So long as the Letter of Credit is outstanding, and so long
as any Liabilities remain unpaid and outstanding, Company covenants and agrees
that it shall not, without the prior written consent of Bank:
(a) Consolidate with or merge into any other corporation or
permit any other corporation to merge into it, except for any
merger in which Company is the survivor.
(b) Furnish Bank with any certificate or other document that
contains any untrue statement of a material fact or omits to
state a material fact necessary to make such certificate or
document not misleading in light of the circumstances under
which it was furnished.
4. The Company shall pay to the Bank Letter of Credit fees as
follows:
(a) A per annum Letter of Credit fee with respect to the undrawn
amount of the Letter of Credit equal to 1% per annum
multiplied by the undrawn amount of the Letter of Credit,
exclusive of the issuance fee of one-quarter of one
percentage point (1/4%)per annum on the face amount thereof
to be paid to Bank under paragraph 4(c)hereof.
(b) If any change in any law or regulation or in the
interpretation thereof by any court or administrative or
governmental authority charged with the administration
thereof shall either (i) impose, modify or cause to be
deemed applicable any reserve, special deposit, limitation or
similar requirement against letters of credit issued by, or
assets held by, or deposits in or for the account of, Bank or
any of the lenders having a risk participation in the Letter
of Credit (each a "Participant") or (ii) impose on Bank or
any Participant any other condition regarding this Agreement
or the Letter of Credit, and the result of any event referred
to in clause (i) or (ii) above shall be to increase in an
amount deemed material by Bank or any Participant the cost or
expense to Bank or any Participant of issuing or maintaining
or participating in the Letters of Credit (which increase in
cost or expense shall be determined by the Bank's or such
Participant's reasonable allocation of the aggregate of such
cost increases and expense resulting from such events), then,
upon demand by the Bank or such Participant, as the case may
be, the Company shall, within ten days following demand for
payment, pay to Bank or such Participant, as the case may be,
from time to time as specified by the Bank or such
Participant, additional amounts which shall be sufficient to
compensate the Bank or such Participant for such increased
cost and expense, together with interest on each such amount
from ten days after the date demanded until payment in full
thereof at the Bank's Prime Rate. A certificate as to such
increased cost or expense incurred by the Bank or such
Participant, as the case may be, as a result of any event
mentioned in clause (i) or (ii) above, shall be promptly
submitted to the Company and shall be conclusive, absent
manifest error, as to the amount thereof. The Bank shall give
the Company reasonable notice of any change contemplated by
this paragraph if the Bank has advance notice of such change.
(c) All payments by the Company to the Bank or any Participant
under this paragraph 4 shall be made in United States Dollars
and in immediately available funds at the Bank's office
located in Detroit, Michigan or such other office of the Bank
as may be designated from time to time by written notice to
the Company by the Bank. The aforesaid fees shall be
nonrefundable under all circumstances, shall be payable
quarter annually in arrears on the 1st day of each January,
April, July and October (commencing January 1, 2000) and on
the expiry date of the Letter of Credit, and shall be
calculated on the basis of a 360 day year and assessed for
the actual number of days from the date of the issuance
thereof to the stated expiration thereof.
(d) In connection with the Letter of Credit, the Company shall
pay to Bank a letter of credit issuance fee of one-quarter
percentage point (1/4%) per annum on the face amount of the
Letter of Credit. In addition to the Letter of Credit fees,
the Company shall pay, for the sole account of the Bank,
standard documentation, administration, payment and
cancellation charges assessed by Bank or its issuing office,
at the times, in the amounts and on the terms set forth or to
be set forth from time to time in the standard fee schedule
of Bank's issuing office in effect from time to time.
5. An "Event of Default" shall be deemed to have occurred or
exist under this Agreement upon the occurrence and/or existence of any
"Default" or "Event of Default", as the case may be, set forth in any other
Loan Document, as such term is defined in paragraph 1(a) hereof.
6. Upon the occurrence and at any time during the continuance or
existence of any Event of Default, Bank may give notice to Company declaring
all outstanding Liabilities to be due and payable, whereupon all such
Liabilities then outstanding shall immediately become due and payable, without
further notice or demand, and any commitment or obligation, if any, on the part
of Bank to extend credit to or in favor of Company shall immediately terminate.
Further, upon the occurrence or at any time during the continuance or existence
of any Event of Default hereunder, Bank may collect, deal with and dispose of
all or any part of any security in any manner permitted or authorized by the
Michigan Uniform Commercial Code or other applicable law (including public or
private sale), and after deducting expenses (including, without limitation,
reasonable attorneys' fees and expenses), Bank may apply the proceeds thereof
in part or full payment of any of the Liabilities, whether due or not, in any
manner or order Bank elects. In addition to the foregoing, upon the occurrence
and at any time during the continuance or existence of any Event of Default
hereunder, Bank may exercise any and all rights and remedies available to it as
a result thereof, whether by agreement, by law, or otherwise.
7. No forbearance on the part of the Bank in enforcing any of
its rights or remedies under this Agreement or any other Loan Document, nor any
renewal, extension or rearrangement of any payment or covenant to be made or
performed by Company hereunder or any such other Loan Document, shall
constitute a waiver of any of the terms of this Agreement or such Loan Document
or of any such right or remedy.
8. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Michigan.
9. All covenants, agreements, representations and warranties by
or on behalf of Company made in connection with this Agreement and any other
Loan Documents shall survive the borrowing hereunder or thereunder and shall be
deemed to have been relied upon by Bank. All statements contained in any
certificate or other document delivered to Bank at any time by or on behalf of
Company pursuant hereto shall constitute representations and warranties by
Company.
10. Company agrees that it will pay all costs and expenses
incurred by Bank in connection with the preparation of this Agreement and any
other Loan Documents contemplated hereby, including, without limitation,
reasonable attorneys' fees and distributions of counsel for the Bank.
11. This Agreement shall inure to the benefit of and shall be
binding upon the parties hereto and their respective successors and assigns;
provided, however, that Company shall not assign or transfer any of its rights
or obligations hereunder or otherwise in respect of any of the Liabilities
without the prior written consent of Bank.
12. COMPANY 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, WAIVE 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 LIABILITIES.
13. Company agrees that any legal action or proceeding with
respect to this Agreement or any other Loan Document or the transactions
contemplated hereby may be brought in any court of the State of Michigan, or in
any court of the United States of America sitting in Michigan, and Company
hereby submits to and accepts generally and unconditionally the non-exclusive
jurisdiction of those courts with respect to its person and property, and
irrevocably consents to the service of process in connection with any such
action or proceeding by personal delivery to Company or by the mailing thereof
by registered or certified mail, postage prepaid to Company, at the address set
forth above. Nothing in this paragraph shall affect the right of the Bank to
serve process in any other manner permitted by law or limit the right of the
Bank to bring any such action or proceeding against Company or property in the
courts of any other jurisdiction. Company hereby irrevocably waives any
objection to the laying of venue of any such suit or proceeding in the above
described courts.
If the foregoing is acceptable to Company, please indicate such with
the authorized signature(s) of Company as provided below.
Very truly yours,
COMERICA BANK
By:
Its: Vice President
ACCEPTED AND AGREED:
ACCEPTANCE INSURANCE
COMPANIES INC.
/S/ Xxxxxxx X. Xxxx
By:______________________
CFO
Its:______________________
Dated: March 30, 2000
[GRAPHIC OMITTED]
Security Agreement
(Negotiable Collateral)
-------------------------------------------------------------------------------
As of March 30, 2000, for value received, the undersigned ("Debtor") grants to
Comerica Bank ("Bank"), a Michigan banking corporation, a continuing 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 Debtor arising under or
in connection with the Standby Letter of Credit Application and Agreement dated
December 20, 1999 by Debtor in favor of Bank, the letter of credit issued
pursuant thereto, the letter agreement dated March 30, 2000 between Debtor and
Bank or this Agreement (collectively, the "Loan Documents"). Indebtedness
includes without limit any and all obligations or liabilities of 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 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 Debtor or in connection with any proceeding involving Bank as a result
of any financial accommodation to 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.
1. Collateral shall mean all of the following property Debtor now or
later owns or has an interest in, wherever located:
(a) specific items listed below:
time deposit accounts # 385103874363, 385103874371, 385103874397,
385103874389, 385103874058 in the name of Debtor maintained with
Bank; and
(b) all additions, replacements, substitutions, renewals,
interest, distributions, 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.
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 with respect to the Collateral. Debtor
shall, at the request of Bank, xxxx its records 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 and there are no financing
statements on file, other than in favor of Bank.
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 or transfer, or permit to be
sold or transferred, any or all of the Collateral.
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 a perfected and first security interest
of Bank in the Collateral.
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 [Intentionally Left Blank]
2.7 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;
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.
2.8 At any time after the occurrence of an Event of Default and
without notice, Bank may (a) cause any or all of the
Collateral to be transferred to its name or to the name of
its nominees; (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) 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.
2.9 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.
2.10 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 attorney fees, suffered by any of them as a
direct or indirect result of any actual or asserted violation
by Debtor of any law.
3. Collection of Proceeds. 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 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 shall be deemed a consent by Bank to any
sale or other disposition of any Collateral.
4. Defaults, Enforcement and Application of Proceeds.
4.1 Upon the occurrence of any of the following events (each an
"Event of Default"), Debtor shall be in default under this
Agreement:
(a) Any failure to pay the Indebtedness or any other
indebtedness when due, or such portion of it as may
be due, by acceleration or otherwise; or
(b) Any failure or neglect to comply with, or breach of
or default under, any term of this Agreement, or any
of the other Loan Documents; or
(c) Any warranty, representation, financial statement,
or other information made, given or furnished to
Bank by or on behalf of Debtor shall be, or shall
prove to have been, false or materially misleading
when made, given, or furnished; or
(d) The issuance or filing of any attachment, levy,
garnishment or the commencement of any proceeding
in connection with any Collateral or of any other
judicial process of, upon or in respect of Debtor or
any Collateral; or
(e) Voluntary suspension of the transaction of business
by Debtor, or dissolution, termination of existence,
merger, consolidation, insolvency, business failure,
or assignment for the benefit of creditors of or by
Debtor; or commencement of any proceedings under any
state or federal bankruptcy or insolvency laws or
laws for the relief of debtors by or against Debtor;
or the appointment of a receiver, trustee, court
appointee, sequestrator or otherwise, for all or
any part of the property of Debtor; or
(f) Bank deems the margin of Collateral insufficient or
itself insecure, in good faith believing that the
prospect of payment of the Indebtedness or
performance of this Agreement is impaired.
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) Take possession of all or any of the Collateral; and
without being responsible for loss to such
Collateral, sell or dispose of all or any Collateral
at one or more public or private sales or other
dispositions, 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 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 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.
4.3 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
to it under applicable law. Debtor shall remain liable for
any deficiency, which it shall pay to Bank immediately upon
demand.
4.4 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 Debtor and Bank.
4.5 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.
4.6 Debtor 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:
(a) to demand, receive, xxx for, and give receipts or
acquittances for any moneys due or to become due
with respect to any Collateral and to endorse any
item representing any payment on or proceeds of
the Collateral;
(b) 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
(c) to do and perform any act on behalf of Debtor
permitted or required under this Agreement.
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 5.13 below.
5.2 Debtor will give Bank not less than 90 days prior written
notice of all contemplated changes in Debtor's name, chief
executive office location, 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.
5.6 Debtor 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
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, and diligence in
collecting any Indebtedness.
5.7 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 five 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.
5.8 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 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.
5.9 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 5.9 is deemed a consent by Bank to any
assignment by Debtor.
5.10 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.
5.11 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 of the date of this
Agreement. "Uniform Commercial Code" means Act No. 174 of
the Michigan Public Acts of 1962, as amended.
5.12 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.
5.13 Debtor's chief executive office is located and shall be
maintained at Xxxxx 000 Xxxxx, 000 X.00xx Xxxxxx
__________________________________
XXXXXX XXXXXXX
Xxxxx Xxxxxxxx 00000
__________________________________________________________
CITY STATE ZIP CODE COUNTY
5.14 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.
5.15 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 2.10 of this Agreement shall
survive termination.
5.16 The security interest granted under this Agreement is a
continuation of the security interest in the Collateral
granted by Debtor to Bank under the terms of the Amended and
Restated Credit Agreement dated December 22, 1999 and nothing
contained herein shall be deemed to adversely affect such
security interest (which remains in full force and effect).
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.
Debtor:
ACCEPTANCE INSURANCE COMPANIES INC.
DEBTOR NAME TYPED/PRINTED
By: /S/ Xxxxxxx X. Xxxx
______________________
SIGNATURE OF
Its: CFO
________________________
TITLE (If applicable)
