1
EXHIBIT 10.72
[COMERICA LOGO] SUBORDINATION AGREEMENT
(All Indebtedness and Liens)
--------------------------------------------------------------------------------
JPE, Inc., a Michigan corporation ("Borrower") is indebted to the undersigned
("Creditor") in the principal sum of up to Eighteen Million Dollars
($18,000,000) evidenced by [ ] AN OPEN ACCOUNT [X] PROMISSORY NOTES [ ] OTHER
(DESCRIBE)_____________________________ which indebtedness is [ ]
UNSECURED [X] SECURED by a lien on the assets of the Borrower, 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. Subject to the provisions of paragraph 20, 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. Subject to the provisions of paragraph 20, Creditor will not ask for,
demand, ▇▇▇ 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. Creditor waives all
rights to require the Bank to ▇▇▇▇▇▇▇▇ the collateral for the Senior
Indebtedness or any other property the Bank may at any time have as
security for the Senior Indebtedness and waives all right to require the
Bank to first proceed against any guarantor or other person before
proceeding against such collateral. Creditor shall not contest the
validity, priority or perfection of the Bank's security interest in any
collateral in which the Creditor may also have an interest. The priorities
of the Bank and the Creditor in such collateral shall be in accordance with
this Agreement, regardless of whether the Bank's security interest or lien
in such collateral is valid or perfected. The Bank may take action to
foreclose or otherwise realize upon, or protect their interest in, the
collateral, in accordance with their agreements with the Borrower, at any
time, without the consent of Creditor, and Creditor agrees not to interfere
in a manner which would defeat the purpose of this Agreement in connection
therewith. So long as any part of the Senior Indebtedness is outstanding,
if the Bank has agreed to release its security interest in any of the
collateral in connection with the realization of any of its rights with
respect to such collateral, the Bank is hereby authorized as Creditor's
attorney in fact to execute releases and discharges of Creditor's liens and
security interests in such collateral provided that the Bank is releasing
or discharging the Bank's security interest in such collateral as part of
the same transaction and provided that the Bank gives Creditor ten days
prior written notice of such release during which such ten day period
Creditor does not sign and deliver to the Bank any such releases and
discharges. The subordination and postponement in priority, operation and
effect of the security interests of the Creditor shall have the same force
and effect as though the security interests of the Bank had attached and
were perfected by filing or otherwise prior to the time the security
interests of the Creditor attached and/or were perfected. Creditor agrees
that its liens and security interests in the Collateral shall secure only
the Creditor loan and no other obligations or liabilities of Borrower to
Creditor.
2
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. Subject to the provisions of paragraph 20, 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
2
3
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.
14. No 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
3
4
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 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: Notwithstanding anything to the contrary in this
Agreement, Creditor may ask for, demand, ▇▇▇ for, take or receive from
Borrower (a) regularly scheduled monthly payments of interest (but not
prepayments, whether voluntary or by acceleration or otherwise) which may
come due under the above-described promissory note ("Note"); and (b)
payments of principal and interest with respect to the $3,000,000 short
term line of credit by Creditor in favor of Borrower, provided, however,
that Creditor may not ask for, demand, ▇▇▇ for, take or receive from
Borrower or any other person any such payments after Creditor is given
written notice by the Bank that a Default or Event of Default exists or has
occurred under any note(s), guaranty(ies), and/or agreement(s) between the
Bank and the Borrower or that any loan(s) between Borrower and Bank has
(have) been called. All such payments due Creditor with respect to the
Subordinated Indebtedness must be suspended until such time (if ever) as
Creditor receives subsequent written notice from the Bank stating that the
Default has been cured and/or the loan(s) has (have) been paid. The Bank
agrees to give Borrower copies of the notices, but the Bank's failure to do
so shall not affect its rights under this Agreement or any other Agreement
with Borrower.
The documents evidencing the Subordinated Indebtedness may not be modified,
prepaid or accelerated without the prior written consent of the Bank.
-------------------------------------
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
4
5
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
February 7, 2001.
ASC INCORPORATED CREDITOR'S ADDRESS
BY: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ One Sunroof Ctr
---------------------------------
SIGNATURE OF STREET ADDRESS
ITS: Vice Chairman
--------------------------------
TITLE (if applicable) ▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇
BORROWER'S ACKNOWLEDGMENT
JPE, Inc. ("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.
JPE, INC. BORROWER'S ADDRESS
BY: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
------------------------------------ --------------------------------
SIGNATURE OF STREET ADDRESS
ITS: Chairman & Chief Executive Officer ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------- --------------------------------
TITLE (if applicable) CITY STATE ZIP
Dated: February 7, 2001
5