SECURITY AGREEMENT
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AM GENERAL Corporation, a Delaware corporation, for valuable considerations,
receipt of which is hereby acknowledged, grants General Motors Corporation, a
Delaware corporation, a purchase money security interest in the properties
described below in accordance with the following terms and conditions:
I. Definitions. As used in this Security Agreement, the following terms shall
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have the following respective meanings:
(A) The term "AMG" shall mean AM GENERAL Corporation, a Delaware
corporation, its successors or assigns.
(B) The term "GM" shall mean General Motors Corporation, a Delaware
corporation, its successors or assigns.
(C) The term "Promissory Note" shall mean that certain Promissory Note
executed by AMG and dated December 21, 1999, payable to the order of
GM.
(D) The term "Event of Default" shall mean any of the events set forth in
Section VI below.
II. Grant of Security Interest. As collateral security for the prompt and
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complete payment, when due, of the Promissory Note, AMG hereby grants to GM a
purchase money security interest in and to the property of AMG identified on
Exhibit A hereto (hereinafter collectively the "Collateral").
III. Obligations Secured. The security interest granted secures the payment
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of any and all indebtedness, obligations, and liabilities of AMG to GM as
evidenced by the Promissory Note (hereinafter called the "Obligations") whether
direct or indirect, joint or several, absolute or contingent, due or to become
due, whether now existing or hereafter arising and all renewals, extensions and
rearrangements of all such items of indebtedness and including costs, expenses
and attorneys' fees and legal expenses, all in accordance with the terms of the
Promissory Note and this Security Agreement.
IV. Warranties, Covenants and Agreements of AMG. AMG warrants, covenants and
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agrees that:
(A) Except for the security interest granted hereby and Permitted Liens as
defined in Schedule A, AMG is or will be the owner and holder of all the
Collateral free from any adverse claim, security interest, financing statement,
encumbrance or other right, title or interest of any person and AMG has full
power and lawful authority to sell and assign the Collateral and to grant to GM
a security interest therein as herein provided, and the execution, delivery and
performance hereof is not in contravention of any indenture, agreement or
undertaking to which AMG is a party or by which it is bound; and AMG will defend
the Collateral against all claims and demands of all persons at any time
claiming the same or any interest therein.
(B) Except for Permitted Liens as defined in Schedule A, AMG has not
signed any financing statement, and no financing statement is now on file in any
public office covering the Collateral. AMG authorizes GM to file, in
jurisdictions where this authorization will be given effect, a financing
statement signed only by GM covering the Collateral; and at the request of GM,
AMG will join GM in executing one or more financing statements, pursuant to the
Uniform Commercial Code, in form satisfactory to GM, and will pay the cost of
filing the same or filing or recording this Security Agreement
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in all public offices at any time and from time to time whenever filing or
recording of any such financing statement or of this Security Agreement is
deemed by GM to be necessary or desirable, it being further stipulated in this
regard that GM may also at any time or times sign any counterpart of this
Security Agreement signed by AMG and file same as a financing statement if GM
shall elect so to do.
(C) Unless otherwise agreed in writing, AMG shall at all times keep the
Collateral separate and distinct from the other property of AMG or that of any
third party and shall keep accurate and complete records of the Collateral and
its location. AMG promises that it will not, without securing the permission of
GM, move these records securing the Collateral from the below address:
Section 11. 00000 XxXxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxx 00000
(D) AMG will take all reasonable actions necessary to maintain and
preserve all security for the Collateral at all times as valid, subsisting and
perfected security as to all the property affected and covered thereby and to
maintain the priority and validity of the security interest in the Collateral as
against the rights, claims and interests of any other persons and parties
whomsoever.
(E) AMG will have and maintain insurance at all times with respect to
the Collateral against risks of fire (including so-called extended coverage),
theft, and such other risks as GM may reasonably require, and in the case of
motor vehicles, collision, containing such terms, in such form, for such
periods, and written by such companies as may be reasonably satisfactory to GM,
such insurance to be payable to GM and AMG as their interest may appear; all
policies of insurance shall provide for at least thirty (30) days' written
cancellation notice to GM; AMG shall furnish GM with certificates or other
evidence reasonably satisfactory to GM of compliance with the foregoing
insurance provisions. If at any time or times AMG shall fail to take out or
maintain insurance as required under the terms of the last preceding sentence,
GM may (but shall not be obligated to), without in anyway waiving such failure
by AMG, take out or maintain such insurance, and all premiums and other costs
paid by GM incident thereto shall be repayable by AMG to GM, upon demand by GM,
with interest thereon from the date expended by GM until repaid at the rate of
ten percent (10%) per annum, and shall be and become a part of the Obligations
secured hereby.
(F) AMG agrees that it shall give GM ninety (90) days' advance written
notice of any change in AMG's name, corporate form, or address of its principal
place of business.
(G) AMG will keep the Collateral free from any adverse lien, security
interests, or encumbrance, except for Permitted Liens as defined in Schedule A,
and in good order and repair and will not waste, destroy, misuse or abuse the
Collateral or any part thereof or allow any of same to deteriorate except for
normal wear and tear from its normal intended primary use; AMG will not use the
Collateral in violation of any statute or ordinance; and GM may examine and
inspect the Collateral at any time (during normal business hours) following
reasonable notice, wherever located, and may enter upon any premises where same
is situated for such purpose.
(H) AMG will pay promptly when due all taxes and assessments upon the
Collateral or for its use or operation.
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(I) At its option, following due consultation with AMG, GM may use or may
permit to be used any insurance proceeds received by GM for the reconstruction
or repair of the Collateral without in anyway impairing or affecting its rights
hereunder; provided, however, that if AMG is not in default under this Security
Agreement, GM shall pay such proceeds to AMG and AMG shall apply such proceeds
to the purchase, re-construction or repair of the Collateral.
V. Further Agreements Between AMG and GM.
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(A) GM shall never be under any obligation to collect, attempt to collect,
protect or enforce the Collateral or any security therefor, which AMG agrees and
undertakes to do at AMG's expense; but upon the occurrence of an Event of
Default under the Security Agreement and for as long as such Event of Default is
continuing, GM may do so in its discretion at any time or times, and GM shall
have the right to take any steps by judicial process or otherwise it may deem
proper from time to time to effect the sale, use, removal and/or disposition of
all or any portion of the Collateral or to protect or to enforce the Collateral
or any security therefor. All expenses (including, without limitation,
attorneys' fees and legal expenses) incurred or paid by GM in connection with or
incident to any such sale, use, removal and/or disposition or attempt to collect
the Collateral or actions to protect or enforce the Collateral or any security
therefor shall be borne by AMG or reimbursed by AMG to GM upon demand. The
proceeds of sale, use, removal and/or disposition of the Collateral shall be
held by GM without liability for interest thereon and may be applied by GM as GM
may reasonably deem appropriate toward payment of any of the Obligations secured
hereby, whether or not then due, in such order or manner as GM may elect.
(B) Except for Permitted Liens as defined in Schedule A, if any taxes or
governmental assessments of any kind or character shall be levied upon or
against the Collateral or the Obligations, the same shall be promptly paid
before delinquency by AMG, and if any such taxes or governmental assessments are
not paid by AMG prior to delinquency thereof, GM may at its option pay such
taxes or assessments and any interests, costs or penalties in connection
therewith.
(C) In the event GM shall pay any such taxes, assessments, interests,
costs, penalties, or expenses incident to or in connection with the collection
of the Collateral or protection or enforcement of the Collateral or any security
therefor, AMG, upon demand of GM, shall pay to GM the full amount thereof with
interest at the rate of ten percent (10%) per annum from their respective dates
of payment by GM until repaid to GM in full; and so long as GM shall be entitled
to any such payment, this Security Agreement shall operate as security therefor
as fully and to the same extent as it operates as security for payment of the
other Obligations secured hereunder, and for the enforcement of such repayment
GM shall have every right and remedy provided for enforcement of payment of the
Obligations secured hereunder.
(D) When all of the Obligations shall have been paid in full or otherwise
satisfied in full, if this Security Agreement has not theretofore been
foreclosed, GM or other holder of the Obligations shall reassign and release to
AMG, without recourse or warranty, express or implied, the then existing rights,
titles and interest of GM in and to the Collateral, the costs of such
reassignment to be borne by AMG, and GM shall pay to AMG the surplus money, if
any, then in the hands of GM representing collections on or proceeds of the
Collateral (net of any fees or expenses associated with such collections,
including but not limited to reasonable attorney's fees) not theretofore applied
toward payment of the Obligations. GM shall promptly execute and deliver to AMG
any and all documents reasonably necessary to evidence such release.
(E) AMG shall provide GM with quarterly financial statements, the form and
content to be mutually agreed by the parties.
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VI. Events of Default
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The happening of any of the following events or conditions shall be an event of
default under this Security Agreement ("Event of Default"):
(A) The offsetting credits to GM against the Assembly Fees paid or
otherwise payable to AMG per unit of New Vehicle assembled by AMG pursuant to
the New Vehicle Assembly Agreement is insufficient to fully reimburse GM for the
principal amount of the Promissory Note (without interest) during the term of
the New Vehicle Assembly Agreement and AMG shall undertake to sell or transfer
to any party other than GM without GM's consent any New Vehicle or any other
motor vehicle manufactured (excluding the painting of the Current Vehicle),
produced or assembled in the New Vehicle Facilities; or
(B) A voluntary or involuntary petition under the Bankruptcy Code is filed
by or against AMG and a final order for relief under Chapter 7 of the Bankruptcy
Code is entered, or any Chapter 11 proceedings under Chapter 11 of the
Bankruptcy Code is converted to proceedings under Chapter 7 of the Bankruptcy
Code pursuant to a final order for relief; or
(C) AMG shall make a general assignment for the benefit of creditors or a
similar transfer or shall take action involving a material portion of the
Collateral for purposes of liquidating such assets; or
(D) Any secured or lien creditor of AMG shall commence a foreclosure
action of its liens, security interest(s) and/or mortgage(s) against, and shall
obtain the right to possession or control over, a material portion of the
Collateral.
VII. Remedies
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(A) Upon the occurrence of an Event of Default and for so long as such
Event of Default is continuing or the non-payment of any of the Obligations,
when due, and at any time thereafter, at GM's option, GM shall have and may
exercise with reference to the Collateral any or all of the rights and remedies
of a secured party under the Uniform Commercial Code as adopted in the State of
Michigan, and as otherwise granted herein or under any other applicable law
including, without limitation, the right and power to sell, at public or private
sale or sales, or otherwise dispose of, lease or otherwise utilize the
Collateral and any part or parts thereof in any manner authorized or permitted
under said Uniform Commercial Code after default by a debtor, and to apply the
proceeds thereof toward payment of any costs and expenses and attorneys' fees
and legal expenses thereby incurred by GM and toward payment of the Obligations
in such order or manner as GM may elect. Specifically and without limiting the
foregoing, GM may require AMG to assemble the Collateral or any security
therefor and make it available to GM at the address specified in Section 4(C)
above ; and GM shall have the right to take possession of all or part of the
Collateral or any security therefor and of all books, records, papers, and
documents of AMG or in AMG's possession or control relating to the Collateral
which are not already in GM's possession, and for such purpose may enter upon
any premises upon which any of the Collateral or any security therefor or any of
said books, records, papers and documents are situated and remove the same
therefrom without any liability for trespass or damages thereby occasioned.
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(B) To the extent permitted by law, AMG expressly waives any notice of
sale or other disposition of the Collateral and all other rights or remedies of
AMG or formalities prescribed by law relative to sale or disposition of the
Collateral or exercise of any other right or remedy of GM existing after default
hereunder; and to the extent any such notice is required and cannot be waived,
AMG agrees that if such notice is mailed, postage prepaid, to AMG at the address
shown herein above at least twenty (20) days before the time of the sale or
disposition, such notice shall be deemed reasonable and shall fully satisfy any
requirement for giving of said notice.
(C) GM is expressly granted the right, at its option, to transfer, at any
time, following the occurrence of an Event of Default and for as long as such
Event of Default is continuing, to itself or to its nominee the Collateral, or
any part thereof, and to receive the payments, collections, monies, income,
proceeds or benefits attributable or accruing thereto and to hold the same as
security for the Obligations or to apply it on the principal and interest or
other amounts owing on any of the Obligations, whether or not then due, in such
order or manner as GM may elect.
(D) All rights to marshaling the Collateral, are hereby waived.
(E) All recitals in any instrument of assignment or any other instrument
executed by GM incident to sale, lease, transfer, assignment or other
disposition, lease or utilization of the Collateral or any part thereof
hereunder shall be full proof of the matters stated therein and no other proof
shall be requisite to establish full legal propriety of the sale or other action
taken by GM or of any fact, condition or thing incident thereto and all
prerequisites of such sale or other action or of any fact, condition or thing
incident thereto shall be presumed conclusively to have been performed or to
have occurred.
VIII. General
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(A) The execution and delivery of this Security Agreement in no manner
shall impair or affect any other security (by endorsement or otherwise) for the
payment of the Obligations and no security taken hereafter as security for
payment of the Obligations shall impair in any manner or affect this Security
Agreement, all such present and future additional security to be considered as
cumulative security. Any of the Collateral may be released from this Security
Agreement without altering, varying or diminishing in any way the force, effect,
lien, security interest, or charge of this Security Agreement as to the
Collateral not expressly released, and this Security Agreement shall continue as
a first and prior lien, security interest and charge on all of the Collateral
not expressly released until all the Obligations secured hereby have been paid
in full or otherwise satisfied. Any future assignment or attempted assignment of
the interest of AMG in and to any of the Collateral shall not deprive GM of the
right to sell or otherwise dispose of or utilize all of the Collateral as above
provided or necessitate the sale or disposition thereof in parcels or in
severalty.
(B) This Security Agreement shall not be construed as relieving AMG from
liability on the Obligations and any and all future and other indebtedness
secured hereby.
(C) Upon the occurrence of an Event of Default hereunder, GM is hereby
subrogated to all of AMG's interests, rights and remedies in respect to the
Collateral and all security now or hereafter existing with respect thereto and
all guaranties and endorsements thereof and with respect thereto.
(D) Any notice or demand to AMG hereunder or in connection herewith may be
given and shall conclusively be deemed and considered to have been given and
received upon the fifth day following the deposit thereof, in writing, duly
stamped and addressed to AMG at the address first shown below, in the U.S.
Mails; but actual notice, however given or received, shall always be effective.
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(E) The provisions of Section VIII(B) above notwithstanding, AMG shall
have no obligation to pay off the Obligations in cash other than through the
direct offset to the Assembly Fee set forth in the New Vehicle Assembly
Agreement unless otherwise mutually agreed by the Parties in writing; provided,
however, that subject to the terms of the Equity Conversion Agreement between
the Parties, AMG may elect at anytime to pre-pay the Promissory Note without
notice, additional interest or penalty.
(F) GM shall not be obligated to take any steps necessary to preserve any
rights in the Collateral or in any security therefor against other parties,
which AMG hereby assumes to do.
(G) No delay or omission on the part of GM in exercising any right
hereunder shall operate as a waiver of any such right or any other right. A
waiver on any one or more occasions shall not be construed as a bar to or waiver
of any right or remedy on any future occasion. The remedies of GM hereunder are
cumulative, and the exercise of any one or more of the remedies provided for
herein shall not be construed as an election or as a waiver of any of the other
remedies of GM provided for herein or existing by law or otherwise.
(H) All rights of GM hereunder shall inure to the benefit of its
successors and assigns; and all obligations of AMG shall bind its successors or
assigns.
(I) As used in this Security Agreement and when required by the context,
each number (singular and plural) shall include all numbers, and each gender
shall include all genders; and unless the context otherwise requires, the word
"person" shall include "corporation, firm or association."
(J) The laws governing this secured transaction shall be that of the State
of Michigan existing as of the date hereof; provided that if any additional
rights or remedies are hereafter are granted to secured parties by the laws of
Michigan, GM shall also have and may exercise any such additional rights or
remedies.
IN WITNESS WHEREOF, the undersigned AMG has executed this Security Agreement by
its duly authorized officer this 21st the day of December, 1999.
AM GENERAL Corporation
By: _______________________
Title: ____________________
STATE OF )
)SS:
COUNTY OF )
On December 21, 1999, before me _______________________, a Notary Public in and
for said state, personally appeared ___________________________________________,
______________________________________ of AM GENERAL Corporation, known to me to
be the person who executed the within Security Agreement in behalf of said
Corporation and acknowledged to me that he/she executed the same for the
purposes therein stated.
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_______________________________
Notary Public
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