SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)*
The United Illuminating Company
- -------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, no par value
- -------------------------------------------------------------------------------
(Title of Class of Securities)
910637
- -------------------------------------------------------------------------------
(CUSIP Number)
Terry Kasuga
Chase Enterprises
One Commercial Plaza, Hartford, Connecticut 06103-3585
(860) 549-1674
- -------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
December 24, 1997
-------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
(Continued on the following pages)
(Page 1 of 11 Pages)
**FOOTNOTES**
*The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the subject
class of securities, and for any subsequent amendment containing
information which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of the
Act (however, see the Notes).
<PAGE>
Page 2 of 11
CUSIP No. 901637
1 NAME OF REPORTING PERSONS
IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
American Ranger, Inc.
52-1488240
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X /
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) OR 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF 200,000 shares
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 0 shares
REPORTING
PERSON 9 SOLE DISPOSITIVE POWER
WITH 200,000 shares
10 SHARED DISPOSITIVE POWER
0 shares
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
200,000 shares
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* /X/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.4%
14 TYPE OF REPORTING PERSON*
CO, HC
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
AMENDMENT NO. 2 TO STATEMENT ON SCHEDULE 13D
The reporting person hereby amends in part its Statement on Schedule 13D
dated September 26, 1997, as previously amended by Amendment No. 1 thereto
dated December 8, 1997 (the "Prior Schedule 13D"), with respect to the common
stock, no par value (the "Common Stock"), of The United Illuminating Company
("UI"). This amendment amends only those portions of the information
previously reported that have changed since the prior filing.
Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The reporting person purchased an aggregate of 25,000 shares of Common
Stock in open market transactions from December 30, 1997 through January 6,
1998. All such transactions are set forth on Schedule I hereto, which is
incorporated herein by reference. The aggregate consideration for all such
purchases (including commissions) was $1,126,968. The funds to purchase such
shares came from the reporting person's working capital.
On December 24, 1997, David T. Chase, the Chairman of the Board of
Directors, President and Treasurer of the reporting person, borrowed 100,000
shares of Common Stock (the "Borrowed Securities") from his wife, Rhoda L.
Chase, pursuant to a loan agreement (the "Loan Agreement") dated December 24,
1997 between David T. Chase and Rhoda L. Chase. In exchange for Rhoda L.
Chase lending such shares of Common Stock, David T. Chase has agreed to pay
quarterly to Rhoda L. Chase a service fee (the "Service Fee") equal to six
percent (6%) per annum of the average monthly market value of the Borrowed
Securities prorated over the number of days the Loan Agreement is in effect.
The terms of the Loan Agreement are more fully described in Item 6 hereof.
David T. Chase intends to use his personal funds to pay the Service Fee.
David T. Chase is a beneficial owner of the 50,000 shares of Common Stock
purchased by Rhoda L. Chase in open market transactions from January 7, 1998
through January 22, 1998. All such transactions are set forth on Schedule II
hereto, which is incorporated herein by reference. The aggregate
consideration (including commissions) for all such purchases was $2,164,439.
The funds to purchase such shares of Common Stock were personal funds of Rhoda
L. Chase. All such shares are held by Rhoda L. Chase in the brokerage account
to which her Trading Authorization described in the Prior Schedule 13D
relates.
Item 4. PURPOSE OF TRANSACTION.
The reporting person is holding the 200,000 shares of Common Stock it
owns of record for investment purposes. Based on the reporting person's
ongoing evaluation of the business, prospects and financial condition of UI,
the market for and price of the Common Stock, other opportunities available to
the reporting person, offers for the reporting person's shares of Common
Stock, general economic conditions and other future developments, the
reporting person reserves the right to change its plans and intentions at any
time, as it deems appropriate. In particular, the reporting person may decide
to sell or seek the sale of all or part of its present or future beneficial
holdings of Common Stock, or may decide to acquire additional Common Stock, or
securities convertible into or exchangeable for Common Stock, either in the
open market, in private transactions, or by any other permissible means. The
reporting person may also decide to enter into derivative transactions
relating to the Common Stock. Any such transactions may be effected at any
time and from time to time. David T. Chase pledged the 100,000 Shares of
Common Stock loaned to him by Rhoda L. Chase to secure a loan with Comerica
Bank pursuant to a security agreement (the "Security Agreement") dated
December 30, 1997. The terms of the Security Agreement are more fully
described in Item 6 hereof. The executive officers, directors and controlling
persons of the reporting person are each holding the shares of Common Stock
owned by them for investment purposes. Such persons reserve the same rights
and may make the same evaluations as the reporting person.
Other than the above, as of the date hereof, the reporting person, its
executive officers, directors and controlling persons do not have any plans or
proposals that relate to or would result in any of the following:
(a) The acquisition by any person of additional securities of UI, or the
disposition of securities of UI;
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving UI or any of its subsidiaries;
(c) A sale or transfer of a material amount of assets of UI or any of
its subsidiaries;
(d) Any change in the present board of directors or management of UI,
including any plans or proposals to change the number or term of directors or
to fill any existing vacancies on the board;
(e) Any material change in the present capitalization or dividend policy
of UI;
(f) Any other material change in UI's business or corporate structure;
(g) Changes in UI's charter, bylaws or instruments corresponding thereto
or other actions which may impede the acquisition of control of UI by any
person;
(h) Causing a class of securities of UI to be delisted from a national
securities exchange or to cease to be authorized to be quoted in an inter-
dealer quotation system of a registered national securities association;
(i) A class of equity securities of UI becoming eligible for termination
of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"); or
(j) Any action similar to any of those enumerated above.
Item 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) As of the date hereof, the reporting person owns of record and
beneficially 200,000 shares of Common Stock, representing approximately 1.4%
of the 14,101,291 shares of Common Stock reported to be outstanding as of
September 30, 1997 (as reported in UI's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997). As of the date hereof, D.T. Chase
Enterprises, Inc. ("DTCE"), the holder of all of the reporting person's
outstanding capital stock, does not own any Common Stock. Information with
respect to the Common Stock owned by the executive officers, directors and
controlling persons of the reporting person and DTCE is set forth on Schedule
III hereto, which is incorporated herein by reference, and in the following
paragraph.
In accordance with Rule 13d-4 under the Exchange Act, the reporting
person expressly declares that the filing of this statement shall not be
construed as an admission that it is, for purposes of Section 13(d) or 13(g)
of the Exchange Act, the beneficial owner of any of the (i) 79,000 shares of
Common Stock, or 0.6% of the shares of Common Stock reported to be outstanding
as of September 30, 1997, owned by Cheryl A. Chase, (ii) 350,000 shares of
Common Stock, or 2.5% of the shares of Common Stock reported to be outstanding
as of September 30, 1997, owned by Rhoda L. Chase, the mother of Cheryl A.
Chase and Arnold L. Chase and the wife of David T. Chase, (iii) 225,000 shares
of Common Stock, or 1.6% of the Common Stock reported to be outstanding as of
September 30, 1997, owned by Arnold L. Chase, or (iv) 146,000 shares of Common
Stock, or 1.0% of the shares of Common Stock reported to be outstanding as of
September 30, 1997, owned by The Darland Trust (the "Trust"), a trust of which
Cheryl A. Chase and her children are the beneficiaries. David T. Chase may be
deemed to be a beneficial owner of all of the shares of Common Stock referred
to in the immediately preceding sentence.
(b) The reporting person has the sole power to vote or to direct the
vote of, and the sole power to dispose or to direct the disposition of, the
200,000 shares of Common Stock owned by it.
Cheryl A. Chase has the sole power to vote and to direct the vote of the
79,000 shares of Common Stock owned by her. Arnold L. Chase has the sole
power to vote and to direct the vote of the 225,000 shares of Common Stock
owned by him. Cheryl A. Chase and Arnold L. Chase each share the power to
dispose or to direct the disposition of their respective shares of Common
Stock with David T. Chase.
As described in greater detail in Item 6 hereof, David T. Chase has the
sole power to vote, direct the vote of, dispose of, and direct the disposition
of the 100,000 shares of Common Stock he borrowed from Rhoda L. Chase during
the term of the Loan Agreement. David T. Chase does not have the shared power
to vote or direct the vote of any Shares of Common Stock. David T. Chase
shares the power to dispose or to direct the disposition of (i) 250,000
shares of Common Stock owned by Rhoda L. Chase with Rhoda L. Chase, (ii)
79,000 shares of Common Stock owned by Cheryl A. Chase with Cheryl A. Chase,
(iii) 225,000 shares of Common Stock owned by Arnold L. Chase with Arnold L.
Chase and (iv) 146,000 shares of Common Stock owned by the Trust with the
Trust.
Rhoda L. Chase's residence is at 96 High Ridge Road, West Hartford
Connecticut 06117. She is not employed. Rhoda L. Chase is a citizen of the
United States of America. The Trust is a trust for which Rothschild Trust
Cayman Limited serves as trustee and of which Cheryl A. Chase and her children
are the beneficiaries. The Trust's address is FBO: The Darland Trust, P.O.
Box 472, St. Peter's House, Le Bordage, St. Peter Port, Guernsey GYI6AX,
Channel Islands. The Trust is an entity of the Cayman Islands.
During the past five years, neither Rhoda L. Chase nor the Trust has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors). During the past five years, neither Rhoda L. Chase nor the
Trust has been a party to a civil proceeding of a judicial or an
administrative body of competent jurisdiction and as a result of such
proceeding is or was subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with respect to such
laws.
(c) All transactions in the Common Stock effected by or on behalf of the
reporting person during the past 60 days are set forth on Schedule I hereto,
which is incorporated herein by reference. All such transactions were
effected in the open market. To the reporting person's knowledge, all
transactions in the Common Stock effected by or for the benefit of executive
officers, directors and controlling persons of the reporting person and DTCE
in the past 60 days are set forth on Schedule II hereto, which is incorporated
herein by reference. All such transactions were effected in the open market.
(d) No other person is known to have the right to receive or the power
to direct the receipt of dividends from, or the proceeds from the sale of, the
shares of Common Stock owned by the reporting person.
Each of David T. Chase and, with respect to the (i) 250,000 shares of
Common Stock owned by Rhoda L. Chase, Rhoda L. Chase, (ii) 79,000 shares of
Common Stock owned by Cheryl A. Chase, Cheryl A. Chase, (iii) 225,000 shares
of Common Stock owned by Arnold L. Chase, Arnold L. Chase and (iv) 146,000
shares of Common Stock owned by the Trust, the Trust, has the power to direct
the dividends from, and the proceeds from the sale of, the shares of Common
Stock owned by such person. As described in greater detail in Item 6 hereof,
Rhoda L. Chase may be deemed to have the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of, the
100,000 shares of Common Stock David T. Chase borrowed from Rhoda L. Chase
during the term of the Loan Agreement. No other person is known to have the
right to receive or the power to direct the receipt of dividends from, or the
proceeds from the sale of, the shares of Common Stock owned by such persons.
(e) Not applicable.
Item 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
David T. Chase borrowed the Borrowed Securities from Rhoda L. Chase
pursuant to the Loan Agreement. Under the terms of the Loan Agreement, David
T. Chase has full use of the Borrowed Securities, including the right to sell,
pledge or otherwise transfer or encumber the Borrowed Securities, until
termination of the Loan Agreement. In exchange for Rhoda L. Chase's lending
the Borrowed Securities to David T. Chase, David T. Chase is to pay Rhoda L.
Chase the Service Fee. In addition, David T. Chase is to pay to Rhoda L.
Chase any cash dividends or distributions declared on the Borrowed Securities
during the term of the Loan Agreement. Upon the termination of the Loan
Agreement, David T. Chase is to deliver to Rhoda L. Chase securities that are
identical in kind and amount to the Borrowed Securities loaned under the Loan
Agreement and including all dividends and distributions in the form of stocks,
rights, warrants or other securities which UI makes during the term of the
Loan Agreement. The Loan Agreement is to terminate December 31, 2001 unless
terminated sooner by one of the parties pursuant to the terms of the Loan
Agreement.
David T. Chase has pledged the Borrowed Securities to secure a loan
with Comerica Bank ("Comerica") pursuant to the Security Agreement. In
connection with the Security Agreement, David T. Chase has executed and
delivered to Comerica Securities, Inc. ("CSI"), the brokerage company
through which he holds the Borrowed Securities, a Notice to Financial
Intermediary of Security Interest in Securities and Brokerage Account (the
"Notice to Financial Intermediary") dated December 30, 1997, informing CSI
of the pledge and instructing CSI (i) not to sell, transfer or take any
other action with respect to the Borrowed Securities until it receives
written instructions to the contrary from Comerica and (ii) to follow the
instructions of Comerica with respect to the Borrowed Securities.
The foregoing description of the Loan Agreement, the Security
Agreement and the Notice to Financial Intermediary is subject to, and is
qualified in its entirety by reference to the Loan Agreement, the Security
Agreement and the Notice to Financial Intermediary, each of which is filed
as an exhibit to this Statement on Schedule 13D.
Except as described in this Statement on Schedule 13D, the reporting
person knows of no contracts, arrangements, understandings or relationships
(legal or otherwise) between any of the persons named in Item 2 or between
such persons and any other person with respect to any securities of UI,
including, but not limited to, transfer or voting of any of the securities,
finder's fees, joint ventures, loan or option arrangements, puts or calls,
guarantees of profits, division of profits or loss, or the giving or
withholding of proxies.
The reporting person has not agreed to act together with any other person
or entity for the purpose of acquiring, holding, voting or disposing of shares
of Common Stock and the reporting person disclaims membership in any "group"
with respect to the Common Stock for purposes of Section 13(d)(3) of the
Exchange Act and Rule 13d-5(b)(1) adopted thereunder.
Item 7. MATERIAL TO BE FILED AS EXHIBITS.
(1) Loan Agreement
(2) Security Agreement
(3) Notice to Financial Intermediary
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief, the
reporting person certifies that the information set forth in this statement is
true, complete and correct.
Dated: February 10, 1998 American Ranger, Inc.
By: /s/ Cheryl A. Chase
Name: Cheryl A. Chase
Title: Executive Vice President
<PAGE>
SCHEDULE I
Transactions in The United Illuminating Company
Common Stock by American Ranger, Inc.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Date Action Price Shares
12/30/97 Buy 45.130 1,300
01/02/98 Buy 45.029 3,700
01/05/98 Buy 45.382 3,500
01/06/98 Buy 44.945 16,500
TOTAL 25,000
</TABLE>
<PAGE>
SCHEDULE II
Transactions in The United Illuminating Company
Common Stock by Rhoda L. Chase
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Date Action Price Shares
01/07/98 Buy 43.543 9,500
01/08/98 Buy 43.000 1,000
01/09/98 Buy 43.392 14,500
01/12/98 Buy 42.669 6,000
01/15/98 Buy 42.982 6,000
01/16/98 Buy 43.813 500
01/20/98 Buy 43.232 3,500
01/21/98 Buy 43.228 7,000
01/22/98 Buy 43.188 2,000
TOTAL 50,000
</TABLE>
<PAGE>
SCHEDULE III
Directors and Executive Officers of American Ranger, Inc. and
D.T. Chase Enterprises, Inc.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Name Residence Principal Titles At Aggregate # Percentage
or Business Address Occupation American of Shares of of
or Employment and Ranger, Inc. Common Stock Common Stock
Title at D.T. Chase Owned Owned
Enterprises, Inc.
David T. Chase c/o Chase Chairman of the Chairman of the 800,000{1} 5.7%
Enterprises Board of Directors Board of Directors,
One Commercial Plaza and President, President and
Hartford, CT 06103 D.T. Chase Treasurer
Enterprises, Inc.
Arnold L. Chase c/o Chase Executive Vice Director and 225,000 1.6%
Enterprises President and Executive Vice
One Commercial Plaza Director, President
Hartford, CT 06103 D.T. Chase
Enterprises, Inc.
Cheryl A. Chase c/o Chase Executive Vice Director, 79,000 0.6%
Enterprises President, Executive Vice
One Commercial Plaza General Counsel President and
Hartford, CT 06103 and Director, Secretary
D.T. Chase
Enterprises, Inc.
John P. Redding c/o Chase Senior Vice Vice President None 0.0%
Enterprises President, David
One Commercial Plaza T. Chase Enterprises,
Hartford, CT 06103 Inc. and Vice
President, D.T. Chase
Enterprises, Inc.
</TABLE>
**FOOTNOTES**
(1) Includes 250,000 shares owned by Rhoda L. Chase, 225,000 shares
owned by Arnold L. Chase, 79,000 shares owned by Cheryl A. Chase
and 146,000 shares owned by The Darland Trust as to which David
T. Chase shares dispositive power, and 100,000 shares borrowed
from Rhoda L. Chase pursuant to the Loan Agreement over which
David T. Chase may be deemed to have been temporarily transferred
sole voting and dispositive power.
EXHIBIT 1
RHODA L. CHASE
c/o Chase Enterprises
One Commercial Plaza
Hartford, CT 06103
December 24, 1997
David T. Chase
c/o Chase Enterprises
One Commercial Plaza
Hartford, CT 06103
Re: LOAN OF COMMON STOCK OF THE UNITED ILLUMINATING COMPANY
This letter will set forth and confirm the agreement entered into between
David T. Chase ("Borrower") and Rhoda L. Chase ("Lender") regarding shares of
common stock of The United Illuminating Company (the "Company").
1. Lender hereby confirms that it has loaned to Borrower 100,000 shares
of the common stock, no par value, of the Company ("Borrowed Securities").
2. Until this Agreement is terminated, Borrower shall have the full use
of the Borrowed Securities including the right to sell, pledge or otherwise
transfer or encumber such securities to others.
3. Upon the termination of this Agreement, Borrower shall deliver to
Lender securities identical in kind and amount to the Borrowed Securities and
including all dividends and distributions in the form of stock, rights,
warrants or other securities which the Company has made during the term of
this Agreement with respect to the Borrowed Securities. During the term of
this Agreement and from time to time, but in no event later than ten (10) days
after the date of any distributions, Borrower shall pay over to Lender in cash
the amount of any cash dividends or distributions made by the Company
respecting the Borrowed Securities. In the event of a recapitalization, stock
split or other exchange by the Company with respect to the Borrowed
Securities, the exchanged or newly issued shares shall be deemed identical in
kind to the Borrowed Securities.
4. Borrower agrees to pay Lender a service fee for the use of the
Borrowed Securities. The service fee shall be six percent (6%) per annum of
the average monthly market value of the Borrowed Securities pro rated over the
number of days this Agreement is in effect. Such fee shall be due and payable
Borrowed Securities pro rated over the number of days this Agreement is in
effect. Such feel shall be due and payable quarterly on the last day of each
March, June, September and December for which this Agreement is in effect.
5. Upon demand, Borrower will secure its obligations under this
agreement by delivering to Lender marketable securities or other property
having a market value of at least one hundred and five percent (105%) of the
market value of the Borrowed Securities. Such transfer of property as
security shall be accompanied by such instruments and documents as shall be
adequate to provide Lender with a good and valid security interest therein.
The said security interest shall give Borrower the right to substitute
collateral. Except in the event of a default by Borrower, Lender shall not
have any right to sell or otherwise dispose of the collateral.
6. Lender and Borrower agree that the loan of the Borrowed Securities
shall not reduce Lender's risk of loss or opportunity for gain respecting the
Borrowed Securities.
7. Borrower and Lender agree that they shall maintain their respective
books and records with respect to the Borrowed Securities to reflect the
transfer of said securities under this Agreement; to record any obligation
that may arise with respect to any dividends or distributions respecting the
Borrowed Securities which may be made by the Company; to record the transfer
of any property or cash in satisfaction of any dividend or distribution
obligation; and to record the transfer of stock in whole or partial
satisfaction of the obligation respecting return of the Borrowed Securities.
Borrower and Lender further agree that they will, upon reasonable request,
confirm to the other or any auditors of the other their respective obligations
with respect to the Borrowed Securities. The obligation hereunder regarding
the records of the parties shall also apply with respect to any collateral
which may be transferred to secure Borrower's obligation.
8. Unless otherwise sooner terminated as herein provided, this
Agreement shall terminate on December 31, 2001. Borrower reserves the right
to terminate this Agreement by return of the Borrowed Securities upon two (2)
days' notice to Lender. Such right of termination shall be exercisable in
whole or in part. Lender reserves the right to terminate this Agreement on
written notice to Borrower of five (5) business days at which time Borrower
shall fulfill its obligations to Lender as provided in paragraph 3 hereof.
9. This Agreement shall be binding upon the respective successors and
assigns of Lender and Borrower.
Please confirm that the foregoing sets forth our understanding regarding
the Borrowed Securities by signature below.
Very truly yours,
/s/ Rhoda L. Chase
Rhoda L. Chase
THE FOREGOING IS HEREBY
CONFIRMED AND AGREED TO:
/S/ DAVID T. CHASE
David T. Chase
EXHIBIT 2
SECURITY AGREEMENT
(Negotiable Collateral)
For value received, the undersigned ("Debtor") assigns, transfers,
delivers, and pledges to Comerica Bank, a Michigan banking corporation, whose
address is 500 Woodward Avenue, Detroit, Michigan 48226 ("Bank"), a continuing
security interest in (a) the following securities, stocks, bonds, notes,
instruments, documents of title, and/or other property; (b) interest,
dividends, increase, profits, new securities or other increments,
distributions or rights of any kind received on account of this property; (c)
Debtor's Property in Possession of Bank; and (d) all property substituted
therefor or for any part thereof, all records (including computer software)
pertaining thereto and all rights, products or Proceeds thereof (whether cash
or non-cash Proceeds) resulting from any sale or exchange or transfer thereof
or arising by virtue of ownership thereof (such as, but not limited to, the
rights to additional or other securities or property upon any corporate
reorganization, merger, consolidation, liquidation, or dissolution, offering
of stock rights, stock split or stock or liquidating dividend or the rights to
any goods evidenced by such property or insurance proceeds with respect
thereto), and all subscription, voting, and preferential rights:
See Exhibit "A"
to secure payment of any and all indebtedness of Debtor to Bank under that
certain Installment Note dated as of the date hereof made in the principal
amount of Twelve Million Dollars ($12,000,000) by Debtor payable to Bank, and
any and all renewals, extensions or modifications thereof (the
"Indebtedness").
1. Definitions. As used in this Agreement:
1.1 "Collateral" means any and all property of Debtor in which Bank now
has or by this Agreement now or later acquires a security interest.
1.2 "Debtor's Property in Possession of Bank" means goods, instruments,
documents, policies and certificates of insurance, deposits, money
or other property now owned or later acquired by Debtor or in which
Debtor now has or later acquires an interest and which are now or
later in possession of Bank, or as to which Bank now or later
controls possession by documents or otherwise.
1.3 "Proceeds" has the meaning assigned it in Article 9 of the Uniform
Commercial Code, as of the date of this Agreement, and also
includes, without limit, cash or other property which were proceeds
and are recovered by a bankruptcy trustee or otherwise as a
preferential transfer by Debtor.
1.4 "Uniform Commercial Code" means Act No. 174 of the Michigan Public
Acts of 1962, as amended.
1.5 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.
2. Warranties, Covenants and Agreements. Debtor warrants, covenants and
agrees as follows:
2.1 Bank at its option may disburse loan proceeds directly to the seller
of any Collateral to be acquired with proceeds of loans from Bank.
2.2 Bank, at its option, may require delivery of any Collateral to Bank
at any time with such endorsement or assignments of the Collateral
as Bank may request.
2.3 Debtor shall (a) keep adequate records of the Collateral and other
records as Bank shall determine to be appropriate; and (b) allow
Bank to examine, inspect and make abstracts from, or copy any of
Debtor's books and records (relating to the Collateral or otherwise
and whether printed or in magnetic tape or discs or in other machine
readable form).
2.4 At any time and without notice during the continuation of an Event
of Default, the Bank may (a) cause the Collateral or any portion of
it to be transferred to its name or to the name of its nominee or
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 the Bank; (c) enter into an
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 in accordance
with the provisions of this Agreement.
2.5 The Bank may assign any of the Indebtedness and deliver all or any
part of the Collateral to its assignee, who then shall have with
respect to the Collateral so delivered all the rights and powers of
the Bank under this Agreement, and after that the Bank shall be
fully discharged from all liability and responsibility with respect
to the Collateral so delivered.
2.6 If Bank, acting in its sole discretion, redelivers Collateral to
Debtor or Debtor's designee for the purpose of
(a) the ultimate sale or exchange thereof, or
(b) presentation, collection, renewal, or registration of transfer thereof,
or
(c) loading, unloading, storing, shipping, transshipping, manufacturing,
processing or otherwise dealing therewith preliminary to sale or
exchange, such redelivery shall be in trust for the benefit of Bank and
shall not constitute a release of Bank's security interest therein or in
the proceeds or products thereof 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 forthwith delivered to Bank for application on the
Indebtedness. Bank may (if, in its sole discretion, it elects to do so)
deliver the Collateral or any part of the Collateral to Debtor, and such
delivery by Bank shall discharge Bank from any and all liability or
responsibility for such Collateral.
2.7 Debtor 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 Indebtedness,
and Debtor is not relying upon assets in which the Bank has or may
have a lien or security interest for payment of the Indebtedness.
2.8 Debtor shall at the request of Bank (a) mark its records and the
Collateral to clearly indicate the security interest of Bank under
this Agreement, and (b) deliver to Bank all accounting and other
records pertaining to, and all writings evidencing, the Collateral
or any portion of it, together with all books, records and documents
of Debtor related to it in whatever form kept by Debtor, whether
printed or in magnetic tape or discs or in other machine readable
form or otherwise, and all forms, programs, software and other
materials and instructions necessary or useful to Bank, to monitor
the Collateral or enforce its rights under this Agreement.
2.9 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 has the right and authority to
subject it to a security interest granted to Bank and (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.
2.10 Debtor will keep the Collateral free at all times from any and all
claims, liens, security interests and encumbrances other than those
in favor of Bank. Debtor will not, without the prior written
consent of Bank, sell, transfer or lease, or permit or suffer to be
sold, transferred or leased, any or all of the Collateral. Bank or
its agents or attorneys may at all reasonable times inspect the
Collateral and may enter upon all premises where the Collateral is
kept or might be located.
2.11 Debtor shall take or cause to be taken and execute or cause to be
executed all financing statements, endorsements, assignments and
other writings requested by Bank to establish, maintain, reinstate,
and/or continue the perfected and first priority status of the
security interest of Bank in the Collateral or to implement or
further effectuate the terms or purpose of this Agreement, although
the failure of the Debtor to do so shall not affect in any way
Bank's perfected and first priority security interest in the
Collateral, and will on demand pay all costs and expenses of filing
and recording, including the costs of any record searches, deemed
necessary by Bank from time to time, to establish or determine the
validity and the priority of Bank's security interest. Debtor
further makes, constitutes and appoints Bank its true and lawful
attorney-in-fact with full power of substitution during the
continuation of an Event of Default to take any action in
furtherance of this Agreement, including, without limitation, 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 the Collateral. Such appointment shall be deemed
irrevocable and coupled with an interest.
2.12 Debtor will pay promptly and within the time that they can be paid
without interest or penalty all taxes, assessments and similar
imposts and charges which at any time are or may become a lien,
charge, or encumbrance upon any of the 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 default rate which could be charged by Bank to Debtor
on any Indebtedness.
2.13 [Reserved]
2.14 [Reserved]
2.15 Debtor agrees to reimburse Bank upon demand for all fees and
expenses incurred by Bank (a) in seeking to collect the Indebtedness
or any part of it (through formal or informal collection actions,
workouts or otherwise), in 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; (b)
in connection with any proceeding (including, without limit,
bankruptcy, insolvency, administrative, appellate, or probate
proceedings or any lawsuit) in which Bank at any time is involved as
a result of any lending relationship or other financial
accommodation involving Bank and Debtor; or (c) incurred by Bank
during the continuance of an Event of Default, which fees and
expenses relate to or would not have been incurred but for any
lending relationship or other financial accommodation involving Bank
and Debtor. The fees and expenses include, without limit, court
costs, legal expenses, reasonable attorneys' fees, paralegal fees,
internal transfer charges for in-house attorneys and paralegals and
other services, and audit expenses.
2.16 Debtor at all times shall be in material compliance with all
applicable laws with respect to which Debtor's failure to comply
would have a material adverse effect on the value of the Collateral
or Bank's rights with respect to the Collateral.
2.17 [Reserved].
2.18 Debtor acknowledges and agrees that if any Guaranty is executed by
the Debtor in connection with or related to this Agreement, all
waivers contained in that Guaranty shall be and are incorporated by
reference into this Agreement.
3. Collection of Proceeds.
3.1 Upon the occurrence and during the continuance of an Event of
Default, immediately upon notice to Debtor by Bank, Debtor agrees to
hold in trust for Bank all payments received in connection with the
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 mortgage, lien or security interest which
Debtor now has or may later acquire regarding the Collateral.
Debtor agrees to collect and enforce payment of all Collateral until
Bank shall direct Debtor to the contrary and, from and after this
direction, Debtor agrees to fully and promptly cooperate and assist
Bank (or any other person as Bank shall designate) in the collection
and enforcement of all Collateral. Immediately upon notice to such
effect to Debtor by Bank and at all times after that, Debtor agrees
to (a) endorse to Bank and immediately deliver to Bank all payments
received by Debtor on Collateral or from the sale, lease or other
disposition of any Collateral or arising from any other rights or
interests of Debtor in the Collateral, in the form received by
Debtor without commingling with any other funds, and (b) immediately
deliver to Bank all property in Debtor's possession or later coming
into Debtor's possession through enforcement of Debtor's rights or
interests.
3.2 During the continuation of an Event of Default, Debtor irrevocably
authorizes Bank or any Bank employee or agent to endorse the name of
Debtor upon any Collateral, checks, or other items which are
received in payment of any Collateral, and to do any and all things
necessary in order to reduce these items to money.
3.3 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 Debtor's Property in Possession of Bank.
3.4 For the purpose of calculating interest on the Indebtedness, Debtor
understands that Bank imposes a minimum one business day delay in
crediting payments received by Bank against the Indebtedness to
allow time for collection and Debtor agrees that Bank may, at Bank's
option, make such credits only when payments are actually collected
by Bank in immediately available funds. Any credit of payment by
Bank prior to receipt by Bank of immediately available funds is
conditional upon Bank's receipt of those funds. For the purpose of
calculating the principal amount which Debtor may request to borrow
from Bank under any borrowing arrangements with Bank, Debtor
understands that Bank may, at Bank's option, use a method different
from that used for the purpose of calculating interest.
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 or neglect to comply with, or breach of, the provisions of
Sections 2.10 or 8.1 hereof,
(b) Any failure or neglect to comply with, or breach of, any of the other
terms, provisions, warranties or covenants of this Agreement, or any
other agreement or commitment between Debtor or any guarantor of any of
the Indebtedness ("guarantor") and Bank which is not cured within fifteen
(15) days after notice by Bank to Debtor; or
(c) Any failure to pay the Indebtedness when due, or such portion of it as
may be due, by acceleration or otherwise; or
(d) Any warranty, representation, financial statement or other information
made, given or furnished to Bank by or on behalf of Debtor or any
guarantor shall be, or shall prove to have been, false in any material
respect or materially misleading when made, given, or furnished; or
(e) Any loss, theft, substantial damage or destruction to or of any of the
Collateral, or the issuance or filing of any attachment, levy,
garnishment or the commencement of any proceeding in connection with any
of the Collateral or of any other judicial process of, upon or in respect
of Debtor or any guarantor or any of the Collateral which proceeding or
judicial process is not stayed, lifted, dismissed or bonded within thirty
(30) days after commencement; or
(f) Sale or other disposition by Debtor of any substantial portion of his
assets or property or assignment for the benefit of creditors of or by
Debtor or any guarantor; 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 any guarantor; or the appointment of a
receiver, trustee, court appointee, sequestrator or otherwise, for all or
any part of the property of Debtor or any guarantor which proceedings are
not dismissed or stayed within forty-five (45) days after commencement;
or
(g) Any termination or notice of termination of any guaranty of collection or
payment of, or any breach, termination or notice of termination of any
subordination agreement, pledge, or collateral assignment relating to,
all or any part of the Indebtedness; or
(h) Any failure by Debtor to pay when due any of his direct indebtedness for
money borrowed by him (other than to Bank) in excess of One Million
Dollars ($1,000,000) or in the observance or performance of any term,
covenant or condition in any agreement evidencing, securing or relating
to that indebtedness which results in an acceleration of such
indebtedness in an amount in excess of One Million Dollars ($1,000,000).
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, after
giving Debtor ten (10) days notice, if notice is required by law,
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 and against 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 of the 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 of the Collateral;
and/or
(d) personally or by agents, attorneys, or appointment of a receiver, enter
upon any premises where the Collateral or any part of it may then be
located, and take possession of all or any part of it and/or render it
unusable; and without being responsible for loss or damage to such
Collateral,
(i) hold, store, and keep idle, or lease, operate, remove or
otherwise use or permit the use of the Collateral or any
part of it, for that time and upon those terms as Bank,
in its sole discretion, deems to be in its own best
interest, and demand, collect and retain all resulting
earnings and other sums due and to become due from any
party, accounting only for net earnings, if any (unless
the Collateral is retained in satisfaction of the
Indebtedness, in which case no accounting will be
necessary), arising from that use (which net earnings may
be applied against the Indebtedness) and charging against
all receipts from the use of the Collateral or from its
sale, by court proceedings or pursuant to subsection (ii)
below, all other costs, expenses, charges, damages and
other losses resulting from that use; and/or
(ii) sell, lease, dispose of, or cause to be sold, leased or
disposed of, all or any part of the Collateral at one or
more public or private sales, leasings 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, lease or other
disposition, and advertisement, and other notice or
demand, any right or equity of redemption, and any
obligation of a prospective purchaser or lessee to
inquire as to the power and authority of Bank to sell,
lease or otherwise dispose of the Collateral or as to the
application by Bank of the proceeds of sale or otherwise,
which would otherwise be required by, or available to
Debtor under, applicable law are expressly waived by
Debtor to the fullest extent permitted.
At any sale pursuant to this Section 4.2, whether under the
power of sale, by virtue of judicial proceedings or otherwise,
it shall not be necessary for Bank or a public officer under
order of a court to have present physical or constructive
possession of the 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 of the 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 of the Collateral
under this Agreement shall be a perpetual bar against Debtor
with respect to that Collateral.
4.3 Debtor shall (at any time) at the request of Bank, notify the
obligors of the security interest of Bank in any Collateral and
direct payment of it to Bank. Bank may, itself, upon the occurrence
of any Event of Default so notify and direct any obligor and may
take control of any proceeds to which it may be entitled under this
Agreement.
4.4 The proceeds of any sale or other disposition of Collateral
authorized by this Agreement shall be applied by Bank first upon all
expenses authorized by the Uniform Commercial Code and all
reasonable attorney fees and legal expenses incurred by Bank; the
balance of the proceeds of the sale or other disposition shall be
applied in the payment of the Indebtedness, first to interest, then
to principal, then to remaining Indebtedness and the surplus, if
any, shall be paid over to Debtor or to such other person(s) as may
be entitled to it under applicable law. Debtor shall remain liable
for any deficiency, which it shall pay to Bank immediately upon
demand.
4.5 Nothing in this Agreement is intended, nor shall it be construed, to
preclude Bank from pursuing any other remedy provided by law for the
collection of any or all of the Indebtedness or for the recovery of
any other sum to which Bank may be or become 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, nor
shall anything in this Agreement modify the terms of any
Indebtedness owing to Bank on a demand basis.
4.6 No waiver of default or consent to any act by Debtor shall be
effective unless in writing and signed by an authorized officer of
Bank. No waiver of any default or forbearance on the part of Bank
in enforcing any of its rights under this Agreement shall operate as
a waiver of any other default or of the same default on a future
occasion or of any rights.
4.7 Debtor irrevocably appoints Bank or any employee or 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 to do any of the
following during a continuation of an Event of Default:
(a) to demand, receive, sue for and give receipts or acquittances for any
moneys due or to become due on any Collateral and to endorse any item
representing any payment on or proceeds of the Collateral;
(b) with respect to any Collateral, to assent to any or all extensions or
postponements of the time of its payment or any other indulgence in
connection with it, to the substitution, exchange, or release of
Collateral, to the addition or release of any party primarily or
secondarily liable, to the acceptance of partial payments on it and the
settlement, compromise or adjustment of it, all in a manner and at times
as Bank shall deem advisable;
(c) to make all necessary transfers of all or any part of the Collateral in
connection with any sale, lease or other disposition made pursuant to
this Agreement;
(d) to adjust and compromise any insurance loss on the Collateral and to
endorse checks or drafts payable to Debtor in connection with the
insurance;
(e) to execute and deliver for value all necessary or appropriate bills of
sale, assignments and other instruments in connection with any sale,
lease or other disposition of the Collateral. Debtor ratifies and
confirms all that its said attorney (or any substitute) shall lawfully do
under this Agreement. Nevertheless, if requested by Bank or a purchaser
or lessee, Debtor shall ratify and confirm any sale, lease or other
disposition by executing and delivering to Bank or the purchaser or
lessee all proper bills of sale, assignments, releases, leases and other
instruments as may be designated in any request; and
(f) 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.
4.8 Upon the occurrence and continuation of an Event of Default, Debtor
also agrees, upon request of Bank, to assemble the Collateral and
make it available to Bank at any place designated by Bank which is
reasonably convenient to Bank and Debtor.
5. Miscellaneous.
5.1 This Agreement shall in all respects be governed by and construed in
accordance with the laws of the State of Michigan.
5.2 This Agreement shall be terminated only by the filing of a
termination statement in accordance with and when required under the
applicable provisions of the Uniform Commercial Code, but the
obligations contained in Section 2.17 of this Agreement shall
survive termination. Until terminated, the security interest
created by this Agreement shall continue in full force and effect
and shall secure and be applicable to all advances now or later made
by Bank to Debtor, whether or not Debtor is indebted to Bank
immediately prior to the time of any advance, and to all other
Indebtedness.
5.3 Notwithstanding any prior revocation, termination, surrender or
discharge of this Agreement, the effectiveness of this Agreement
shall automatically continue or be reinstated, as the case may be,
in the event that (a) any payment received or credit given by the
Bank in respect of the Indebtedness is returned, disgorged or
rescinded as a preference, impermissible setoff, fraudulent
conveyance, diversion of trust funds, or otherwise 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 Debtor as if the returned, disgorged or
rescinded payment or credit had not been received or given, whether
or not the Bank relied upon this payment or credit or changed its
position as a consequence of it; or (b) any liability is imposed, or
sought to be imposed, against the Bank relating to the environmental
condition of, or the presence of Hazardous Materials on, in or
about, any Property given as Collateral to the Bank whether this
condition is known or unknown, now exists or subsequently arises
(excluding only conditions which arise after any acquisition by the
Bank of any such Property, by foreclosure, in lieu of foreclosure or
otherwise, to the extent due to the wrongful act or omission of the
Bank), in which case this Agreement shall be enforceable to the
extent of all liability, costs and expenses (including without limit
reasonable attorney fees) incurred by the Bank as the direct or
indirect result of any environmental condition or Hazardous
Materials. In the event of continuation or reinstatement of this
Agreement, Debtor agree(s) 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 Debtor
to do so shall not affect in any way the reinstatement or
continuation. If Debtor does not execute and deliver to the Bank
upon demand such documents, the Bank and each Bank officer is
irrevocably appointed (which appointment is coupled with an
interest) the true and lawful attorney of Debtor (with full power of
substitution) to execute and deliver such documents in the name and
on behalf of Debtor.
5.4 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.
5.5 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.
5.6 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.
5.7 Bank assumes no duty of performance or other responsibility under
any contracts contained within the Collateral.
5.8 In the event that applicable law shall obligate Bank to give prior
notice to Debtor of any action to be taken under this Agreement,
Debtor agrees that a written notice given to it at least ten days
before the date of the act shall be reasonable notice of the act
and, specifically, reasonable notification of the time and place of
any public sale or of the time after which any private sale, lease
or other disposition is to be made, unless a shorter notice period
is reasonable under the circumstances. A notice shall be deemed to
be given under this Agreement when delivered to Debtor or when
placed in an envelope addressed to Debtor and deposited, with
postage prepaid, in a post office or official depository under the
exclusive care and custody of the United States Postal Service. The
mailing shall be registered, certified, or first class mail.
5.9 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.
5.10 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.
5.11 The unenforceability of any provision of this Agreement shall not
affect the enforceability of the remainder of this Agreement.
5.12 No waiver, consent, modification or change of the terms of this
Agreement shall bind the Debtor or the Bank unless in writing and
signed by the waiving party or an authorized officer of the waiving
party, and then this waiver, consent, modification or change shall
be effective only in the specific instance and for the specific
purpose given.
5.13 This Agreement constitutes the entire agreement of Debtor and Bank
with respect to the subject matter of this Agreement.
5.14 To the extent that any of the Indebtedness is payable upon demand,
nothing contained in this Agreement shall modify the terms and
conditions of that Indebtedness nor shall anything contained in this
Agreement prevent Bank from making demand, without notice and with
or without reason, for immediate payment of any or all of that
Indebtedness at any time(s), whether or not an Event of Default has
occurred.
6. Statement of Business Name, Residence and Location of Collateral. Debtor
warrants, covenants and agrees as follows:
6.1 Debtor's principal residence is located at 96 High Ridge Road, West
Hartford, Connecticut, 06117 in the County of Hartford.
6.2 [Reserved]
6.3 Any other residence of Debtor is indicated below: None.
6.4 Debtor's correct legal name is set forth at the end of this
Agreement.
6.5 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 address indicated
in Section 6.1 above, with a copy to:
John P. Redding
DT Chase Enterprises
One Commercial Plaza
Hartford, Connecticut 06103
and to:
Kronish, Lieb, Weiner & Hellman LLP
1114 Avenue of the Americas
New York, New York 10036
Attention: Chet F. Lipton, Esq.
6.6 The Collateral (or any records concerning the Collateral) will be
kept at Debtor's address(es) above and/or in the County of Hartford.
Mailing Address: DT Chase Enterprises, One Commercial Plaza, Hartford, CT
06103.
6.7 Debtor will give Bank not less than ninety (90) days prior written
notice of all contemplated changes in Debtor's name, identity,
corporate structure, and/or any of the above addresses, but the
giving of this notice shall not cure any default caused by this
change.
7. JURY WAIVER.
7.1 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.
8. Special Provisions Applicable to this Agreement.
8.1 If at any time the value of the Collateral consisting of the money
market investment account described in Exhibit "A" hereto ("Cash
Collateral Account") and the shares of stock described in Exhibit
"A" hereto ("Pledged Shares"), as such value is determined from time
to time in the sole, but reasonable discretion of Bank, is less than
fifty percent (50%) of the outstanding principal balance of the
Indebtedness ("Collateral Value Requirement"), Debtor shall, upon
ten (10) days prior written notice from Bank, pay or cause to be
paid to Bank an amount sufficient to reduce the Indebtedness such
that the value of the Collateral is equal to or greater than fifty
percent (50%) of the outstanding principal balance of the
Indebtedness. Bank shall apply payments made under this paragraph
in payment of the Indebtedness in such order and manner of
application as Bank in its sole discretion elects. In the
alternative, Debtor may, at his election, provide or cause to be
provided to Bank additional collateral in the form of cash or other
property acceptable to Bank and with a value, as determined by Bank,
that when added to the Collateral will constitute compliance with
the Collateral Value Requirement. Shares of capital stock of Accel
International Corporation and The United Illuminating Company shall
be deemed acceptable additional collateral, provided that, in the
Bank's sole discretion, there is no material adverse change in the
value of such shares after the date of this Agreement.
8.2 If the value of the Collateral consisting of the Cash Collateral
Account and the Pledged Shares, as determined by Bank in its sole
but reasonable discretion, at any time exceeds seventy-five percent
(75%) of the outstanding principal balance of the Indebtedness,
Debtor may remove Pledged Shares from the Brokerage Account (as
defined in Exhibit "A" hereto), provided that the quantity of shares
of each type of stock to be removed is acceptable to the Bank in its
sole discretion, and provided further that after such removal, the
value of such Collateral shall not be less than 75% of the
outstanding principal balance of the Indebtedness.
8.3 Subject to Section 8.1, and provided there is no Event of Default,
Debtor may withdraw from the Brokerage Account dividends paid in the
ordinary course of business on account of the Pledged Shares.
<PAGE>
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<PAGE>
Dated and delivered on this 30th day of December, 1997 at Detroit,
Michigan.
WITNESS:
/S/ [ILLEGIBLE] /S/ DAVID T. CHASE
David T. Chase
/S/ SCOTT UNSWORTH
STATE OF CT )
)
COUNTY OF HARTFORD )
The foregoing instrument was acknowledged before me this 30 day of
December, 1997 by David T. Chase.
/S/ SCOTT UNSWORTH
Notary Public
_________County, ______________
My Commission expires: _________
SCOTT D. UNSWORTH
NOTARY PUBLIC
MY COMMISSION EXPIRES OCT. 31, 1998
EXHIBIT 3
NOTICE TO FINANCIAL INTERMEDIARY OF SECURITY
INTEREST IN SECURITIES AND BROKERAGE ACCOUNT
TO: Comerica Securities, Inc.
100 Renaissance Center
13th Floor
Mail Code 3089
Detroit, Michigan 48243
The undersigned is the registered or present owner(s) of the following
securities ("Securities") that you hold in Account No. ORJ-605727 ("Account")
for the undersigned:
1,000,000 shares of Accel International Corporation
100,000 shares of The United Illuminating Company
On December 30, 1997, the undersigned granted a security interest in the
Securities, the Account, all cash, securities or other financial assets at any
time deposited in the Account and any brokerage accounts substituted therefor
and the proceeds of all of the above (collectively, the "Collateral") to
Comerica Bank of 500 Woodward Avenue, MC 3239, Detroit, Michigan 48226,
taxpayer identification no. 38-0477375 ("Secured Party") pursuant to a
Security Agreement, a copy of which is attached hereto. The Secured Party has
required that the undersigned obtain your confirmation that you will hold the
Collateral subject to the security interest in favor of the Secured Party.
Until you receive written instructions to the contrary from the Security
Party, you shall not sell, transfer or take any action with respect to any of
the Collateral, notwithstanding any direction by the undersigned to the
contrary. You are authorized and directed to follow the instructions of the
Secured Party with respect to Collateral or any part thereof. The Secured
Party will notify you when its security interest in the Collateral has been
terminated.
Please sign the enclosed Confirmation to confirm that you hold the
Collateral subject to the security interest in favor of the Secured Party and
that you have identified the Collateral in your records as being subject to
the security interest. Please deliver or send the Confirmation to the Secured
Party at the following address:
Comerica Bank, 500 Woodward Avenue, MC 3239, Detroit, Michigan 48226, attn:
Eric Rolf ((313) 222-4865).
WITNESSES: Very truly yours,
/S/ [ILLEGIBLE] /S/ DAVID T. CHASE
David T. Chase
/S/ SCOTT UNSWORTH
One Commercial Plaza
Hartford, CT 06103
Taxpayer ID No.______________________
Dated: December 30, 1997
Signature Guaranteed:
/S/ [ILLEGIBLE], V.P. NEAL CHORNEY
(Name of Guarantor)
By:/S/ [ILLEGIBLE]
(Authorized Signature)
Title: ________________________________
<PAGE>
STATE OF CT )
)SS.
COUNTY OF HARTFORD )
The foregoing instrument was acknowledged before me this 30 day of
December, 1997, by David T. Chase.
/S/ SCOTT UNSWORTH
Notary Public
_____________ County, __________
My commission expires:___________
SCOTT D. UNSWORTH
Notary Public
My Commission Expires Oct. 31, 1998
