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Exhibit 10.33
BRIDGE LOAN AGREEMENT
This Agreement is between Rockford Corporation, an Arizona corporation
("Borrower") and Xxxxxxxx X. Xxxxxx ("Lender"). Borrower and Lender agree as
follows:
1. RECITALS.
1.1. Borrower Business. Borrower manufactures high quality auto and
professional audio equipment, including amplifiers, speakers, "head
units," and accessories.
1.2. Loan. Borrower has sought and, subject to the conditions in this
agreement, Lender has agreed to provide a $2,000,000 loan to
Borrower to help finance working capital and general corporate needs
of Borrower.
1.3. Purpose. The purpose of this Agreement is to set forth the
terms of Lender's agreement to lend to Borrower $2,000,000.
2. LOAN AGREEMENT. Lender will loan Borrower $2,000,000 (the "Loan") on the
terms set forth in this agreement. Borrower will execute and deliver to
Lender a promissory note (the "Note") in the form of Exhibit A. Lender
will advance the amount of the Loan as of the date of this Agreement.
Borrower will (a) maintain accurate records of the amount advanced,
payments made, and interest and other charges in connection with the Loan
and (b) render to Lender on request, and at least monthly, an account
statement showing such amounts.
3. USE OF MONIES LOANED. Borrower will use the amount loaned to for working
capital, to reduce other debt, and to pay trade accounts payable.
4. INTEREST. The outstanding principal and unpaid interest under this
Agreement will bear interest at the rate of 9% per annum. Interest is
payable monthly on the first day of each month.
5. REPAYMENT OF PRINCIPAL. It is intended that this Loan is a "bridge" loan
in advance of an investment by Lender or its affiliates in Borrower of not
less than the principal amount of the Loan. The Loan will be repaid out of
the investment by Lender or its affiliates. Borrower will pay the
principal on the Note on the earlier of (a) receipt of the proceeds of the
capital investment in Borrower committed by Lender or its affiliates or
(b) September 30, 1996.
6. SUBORDINATION TO BANK LOAN. The Loan is subordinate to Borrower's
obligations under its loan (the "Bank Loan") with its principal lender,
First Interstate Bank of Arizona (the "Bank"). All Borrower's obligations
to Bank must be first paid to Bank in full before any payments may be made
under this Loan, except for:
6.1. payments of interest when due;
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6.2. payments of principal paid from proceeds of the capital investment
by Lender or its affiliates in Borrower; and
6.3. payments of principal when due on September 30, 1996, but only if
(a) Bank has not given Borrower notice that it is in default or
non-compliance under the Bank Loan and (b) the payment of principal
would not cause Borrower to be out of compliance under the Bank Loan
either (i) as of the date made, (ii) as of the most recent quarterly
compliance date under the Bank Loan (assuming the payment had been
made on the last day of such quarter), or (iii) as of the next
quarterly compliance date under the Bank Loan (based on Borrower's
current projected financial statements). If Borrower makes a payment
of principal, Borrower will deliver to Lender and Bank a certificate
confirming that these conditions are satisfied.
6.4. If there is an Event of Default under Section 9.4 below, then
Borrower and its officers, assigns, trustee, receiver, and other
representative are directed to pay Bank the full amount of the Bank
Loan before making any payments to Lender other than payments of
principal out of proceeds of the investment by Lender or its
affiliates in Borrower.
7. NO SECURITY. The Loan is unsecured but constitutes a general obligation of
Borrower.
8. ADDITIONAL DOCUMENTS. Borrower will execute and deliver to Lender
additional documents as necessary to carry out the purposes of this
Agreement.
9. EVENTS OF DEFAULT. The following events are "Events of Default":
9.1. Borrower fails to pay any amount under this Agreement when due and
payable;
9.2. Borrower fails or neglects to perform, keep, or observe any term,
provision, condition, covenant, representation, or warranty
contained in this Agreement;
9.3. Borrower becomes insolvent; or
9.4. A complaint or case is filed by or against borrower under federal
bankruptcy laws and is not dismissed within 60 days of filing;
Borrower admits to inability to pay or fails to pay Borrower's debts
generally as they mature; Borrower makes an assignment for the
benefit of creditors; a receiver is appointed for Borrower; or any
other insolvency proceedings are instituted by or against Borrower
and are not dismissed within 60 days of filing.
10. ACCELERATION OF OBLIGATIONS AND REMEDIES. If there is an event of default,
the outstanding Loan balance and all other amounts owed by Borrower to
Lender will, if Lender elects, become immediately due and payable without
notice to or demand upon
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Borrower of any kind. Any acceleration, if elected by Lender, is subject
to all applicable laws.
11. USURY SAVINGS CLAUSE. Borrower will not, upon acceleration of maturity by
Lender or otherwise, be required to pay any interest in excess of the
maximum amount permitted by law.
12. MISCELLANEOUS.
12.1. Waiver of Defaults. Lender may, in its sole discretion, waive a
default or cure at Borrower's expense a default. Any waiver in a
particular instance or of a particular default is not a waiver of
other defaults or of the same kind of default at another time.
12.2. Entire Agreement; Amendments. This Agreement is the entire Agreement
of the parties with respect to its subject matter and may not be
changed or amended without the written consent of each party.
12.3. Severability. If any part (or parts) of this Agreement is invalid,
illegal, or unenforceable in any respect, such invalidity,
illegality or unenforceability will not effect any other provisions
of this Agreement, and this Agreement will be construed as if the
invalid, illegal, or unenforceable provision were omitted, provided
that such construction and omission is consistent with the general
intent of the parties as evidenced by this Agreement considered as
an entirety.
12.4. Notices. Notices required under this Agreement are effective upon
delivery or three days after mailing by registered or certified
mail, return receipt requested, to the address of the parties shown
on the signature page of this Agreement (which may be changed by
notice).
12.5. Governing Law. This Agreement is governed by the laws of Arizona.
12.6. Assignability. This Agreement may not be assigned without the prior
written consent of each party.
12.7. Counterparts. This Agreement may be executed in counterparts and all
counterparts so executed constitute one Agreement.
12.8. Attorneys' Fees. In any proceeding arising under this Agreement, the
prevailing party is entitled to recover the attorneys' fees, costs,
and expenses in connection with such proceeding.
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13. EXECUTION AND EFFECTIVE DATE. This Agreement is executed and effective
March 18, 1996.
"BORROWER"
Rockford Corporation
By: /s/
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Chief Financial Officer
Address: 000 X. Xxxxx Xxxxx
Xxxxx, Xxxxxxx 00000
"LENDER"
/s/
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Xxxxxxxx X. Xxxxxx
Address: 00000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxx 00000
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