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EXHIBIT 10(L)
LOAN AGREEMENT
This Loan Agreement is made on the 12th day of June, 1997, between OLD
KENT BANK, a Michigan banking corporation (the "Bank"), ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and RIVIERA TOOL COMPANY, a Michigan corporation
("Borrower"), ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
RECITALS:
A. The Borrower has requested the Bank to extend the credit facilities
described below, the proceeds of which will be used by the Borrower in its
business as set forth in this Agreement.
B. The Bank is willing to extend the credit facilities on the terms and
subject to the conditions set forth in this Agreement.
The parties agree as follows:
SECTION 1 - DEFINITIONS
As used in this Agreement, unless the context otherwise requires, the
following terms have the following meanings:
1.1 "Affiliate" means (a) any person, corporation, partnership, limited
partnership or other legal entity who at any time during which any indebtedness
of the Borrower to the Bank under this Agreement remains outstanding owns ten
percent (10%) or more of the Borrower's outstanding capital stock, and (b) any
corporation, partnership, limited partnership or other legal entity of which
the Borrower owns ten percent (10%) or more of the outstanding voting power.
Notwithstanding the foregoing, Motor Wheel Corporation, an Ohio corporation
("Motor Wheel"), shall not be an Affiliate.
1.2 "Agreement" means this Loan Agreement, as now and hereafter amended.
1.3 "Asset Sale" means the sale, transfer or other disposition by the
Borrower outside the ordinary course of the Borrower's business (including,
without limitation, (a) transfer or other disposition by way of merger or
consolidation, (b) sale-leaseback, or (c) a transaction that is the equivalent
of a mortgage or pledge), in any transaction or group of transactions that are
part of a common plan (collectively, a "sale"), of any asset or interest
therein to any person or entity.
1.4 "Business Day" means any day, excluding (a) Saturday, (b) Sunday, and
(c) any day that (i) is a legal holiday under the laws of the State of
Michigan, or (ii) is a day on which
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banking institutions located in Michigan are authorized or required by law or
other governmental action to close.
1.5 "Capitalized Lease Obligation" means any obligation of the Borrower to
pay future rentals under a lease which, in accordance with GAAP, is required to
be shown as a liability on the balance sheet of the Borrower.
1.6 "Capital Expenditure" means an expenditure of the Borrower that could
constitute a capital expenditure under GAAP or the Internal Revenue Code of
1986, as amended.
1.7 "Collateral" means all of the real and personal property now or
hereafter serving as security for the obligations of the Borrower to the Bank,
as described in Section 5 below.
1.8 "Contamination" or "Contaminated" means, when used with reference to
any real or personal property, that a Hazardous Substance is present on or in
the property in any amount or level.
1.9 "Current Assets" and "Current Liabilities" mean, at any time, all
assets or liabilities, respectively, that, in accordance with GAAP, should be
classified as current assets or current liabilities, respectively, on a balance
sheet of the Borrower.
1.10 "Debt Service" means, for any period, the current portion of the
Borrower's long-term debt plus interest expense.
1.11 "EBITDA" means, for any period, Borrower's earnings before interest,
taxes, depreciation and amortization.
1.12 "Eligible Accounts Receivable" means the aggregate of the Borrower's
accounts receivable from any source other than: (a) accounts receivable which
remain unpaid for more than 120 days (180 days with written approval from the
Bank) from the earlier of the original invoice date or the date of shipment of
the goods that gave rise to the accounts receivable; (b) accounts receivable
with respect to which the account debtor is an officer, employee or agent of
Borrower; (c) accounts receivable which arise under arrangements known as a
sale and return or guaranteed sale, a sale on consignment, approval, or C.O.D.,
or on such other terms by reason of which the payment by the account debtor may
be conditional; (d) accounts receivable with respect to which the account
debtor is located outside the continental United States or Canada and not
supported by credit insurance or letter of credit; (e) accounts receivable with
respect to which the account debtor is the United States or any department,
agency or instrumentality of the United States, any state of the United States
or any city, town, municipality or division thereof; (f) accounts receivable
with respect to which the account debtor is an Affiliate with the exception of
▇▇▇▇▇ Wheels International, Inc.; (g) accounts receivable with respect to which
Borrower is or may
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become liable to the account debtor thereof for goods or services rendered or
loans made by such account debtor to Borrower; (h) accounts receivable which
are due more than thirty (30) days after the date the invoice is issued (not
due date), i.e., accounts receivable which arise from a "dated invoice"; (i)
accounts receivable with respect to which the Bank reasonably believes the
collateral value thereof to be impaired or with respect to which the Borrower
has received notice of an inability of the account debtor to pay its debts as
they mature; (j) accounts receivable which are not owned by the Borrower or
which are subject to any prior security interest or claim in favor of a person
other than the Bank; and (k) unless otherwise approved by the Bank in writing,
accounts receivable where 25% or more of the total receivable balance remains
unpaid for more than 120 days (180 days with written approval from the Bank)
from the earlier of the original invoice date or the date of shipment of the
goods that gave rise to the account receivable.
1.13 "ERISA" means the Employee Retirement Income Security Act of 1974, as
now and hereafter amended, together with all regulations issued pursuant
thereto.
1.14 "Environmental Laws" means all applicable laws, ordinances, rules,
regulations, and orders that regulate or are intended to protect public health
or the environment, or that establish liability for the investigation, removal,
or clean up of, or damage caused by any Contamination including, without
limitation, any law, ordinance, rule, regulation, or order that regulates, or
prescribes requirements for, air quality, water quality, or the disposition,
transportation, or management of waste materials or toxic substances.
1.15 "Five (5)-Year Treasury Rate" means, with respect to a Loan made
pursuant to this Agreement as to which interest is to be calculated with
reference to the Five (5)-Year Treasury Rate, the yield (as quoted in the Wall
Street Journal or comparable source) on United States Treasury bills, notes or
bonds having maturities of five (5) years (or as nearly so as possible) from
the Interest Rate Determination Date. The Five (5)-Year Treasury Rate, as so
determined, will be fixed when calculating the interest rate on the Loan with
respect to which it applies until the date of maturity of such Loan.
1.16 "Funding Date" means a Business Day on which the Borrower has
requested in accordance with this Agreement that a Loan advance be made
hereunder.
1.17 "GAAP" means generally accepted accounting principles as in existence
on the date of this Agreement, consistently applied.
1.18 "Hazardous Substances" means any substance or waste which is (a)
included in the definition of "hazardous substance" in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 USC Sec.
9601, et seq,; (b) included in the definition of "hazardous substance" in the
Michigan Environmental Response Act, MCLA Sec. 299.601, et seq.; (c) included
in the definition of "hazardous waste" in the Resource Conservation and
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Recovery Act, 42 USC Sec. 6901, et seq.; or (d) included in the definition of
the same or any similar term found within any local, state or federal law,
statute, rule, or regulation, including, without limitation, asbestos and
polychlorinated biphenyls.
1.19 "Indebtedness" means indebtedness for borrowed money, indebtedness
representing the deferred purchase price of property or services (excluding
indebtedness under normal trade credit for property or services purchased in
the normal course of operations), obligations under notes payable or drafts
accepted representing extensions of credit, indebtedness (whether or not
assumed) secured by mortgages, security interests, or other liens on property
owned by the Borrower, and any Capitalized Lease Obligation; deferred rent
payable under the lease listed on Schedule 7.10 to this Agreement shall not
constitute Indebtedness.
1.20 "Interest Rate Determination Date" means, with respect to a T-▇▇▇▇
Rate Loan or a T-▇▇▇▇ Rate Advance, the second Business Day prior to the
Funding Date of a T-▇▇▇▇ Rate Loan or a T-▇▇▇▇ Rate Advance.
1.21 "Liabilities" means all Indebtedness that, in accordance with GAAP,
is required to be classified as liabilities on a balance sheet of the Borrower.
1.22 "Loan Documents" means this Agreement, the Notes evidencing the
Borrower's indebtedness to the Bank incurred pursuant to this Agreement, each
and every Security Agreement pursuant to which the Bank holds a lien or
security interest for the Borrower's indebtedness to the Bank incurred pursuant
to this Agreement and each and every other document evidencing, securing or
otherwise relating to the Borrower's indebtedness to the Bank incurred pursuant
to this Agreement, and all amendments or modifications to or replacements of
any of the foregoing.
1.23 "Material Adverse Effect" means any material adverse effect
whatsoever upon (a) the validity, performance, or enforceability of any Loan
Document, (b) the properties, contracts, business operations, profits, or
condition (financial or otherwise) of the Borrower, or (c) the ability of the
Borrower to fulfill its obligations under the Loan Documents.
1.24 "Net Income" means, with respect to the Borrower for any period, the
net income (or loss) of the Borrower for such period taken as a single
accounting period determined in conformity with GAAP; provided that there shall
be excluded therefrom any after-tax gains or losses attributable to Asset Sales
to the extent such gains or losses exceed $250,000 in the aggregate during the
four fiscal quarters immediately preceding the date of measurement.
1.25 "Note" means any form of promissory note executed and delivered by
the Borrower pursuant to this Agreement, together with any renewals,
extensions, or modifications thereof, including without limitation each of the
forms of Promissory Note attached hereto as
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Exhibits A - C.
1.26 "Ordinary Course" means, with respect to the Borrower, any activity
performed in accordance with the Borrower's historical and customary practices.
1.27 "Permitted Liens" means (a) security interests, mortgages, and liens
in favor of the Bank; (b) liens for taxes not delinquent or, in a jurisdiction
where payment of taxes is deferred during the period of any contest, being
contested in good faith by appropriate proceedings as prescribed by law, with
adequate reserves therefor being set aside on the Borrower's books; (c)
inchoate materialmens', mechanics', workmens', repairmens', or other like liens
arising in the Ordinary Course of business and, in each case, not delinquent;
(d) leases permitted under Section 7.10 of this Agreement; (e) the pledge of
the proceeds of a policy of insurance on the life of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and
certain proceeds that may recovered from the litigation referred to in Schedule
2.5 to this Agreement made pursuant to the Settlement and Forbearance Agreement
dated March 3, 1997, among the Borrower, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, individually, and
NBD Bank, N.A. (the "Settlement and Forbearance Agreement"); and (f) liens
securing any Indebtedness of the Borrower to third parties permitted under
Section 7.9(b) of this Agreement, but only to the extent such liens encumber
only the machinery or equipment acquired by the Borrower with the proceeds of
such Indebtedness to third parties.
1.28 "Plan" means an employee pension benefit plan with respect to which
the Borrower or any Affiliate is an "employer" or "party in interest," as those
terms are defined in ERISA.
1.29 "Prime Rate" means the variable rate of interest announced publicly
from time to time by the Bank to be its prime commercial lending rate.
Reference to the Prime Rate will not be affected by the fact that the Bank may
make loans at different rates from time to time with respect to the class of
loans for which the Prime Rate is established. Any interest rate under this
Agreement determined by reference to the Prime Rate shall be fully-floating,
and any change in any of the interest rates chargeable hereunder resulting from
a change in the Prime Rate will become effective on the day on which each
change in the Prime Rate is effective.
1.30 "Prime Rate Advance" means any advance made by the Bank bearing
interest at rates determined by reference to the Prime Rate as provided in
Section 4.
1.31 "Six (6)-Year Treasury Rate" means, with respect to a Loan or Loan
advance made pursuant to this Agreement as to which interest is to be
calculated with reference to the Six (6)-Year Treasury Rate, the yield (as
quoted in the Wall Street Journal or comparable source) on United States
Treasury bills, notes or bonds having maturities of six (6) years (or as nearly
so as possible) from the Interest Rate Determination Date. The Six (6)-Year
Treasury Rate, as so determined, will be fixed when calculating the interest
rate on the Loan or Loan advance with
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respect to which it applies until the date of maturity of such Loan or Loan
advance.
1.32 "Stockholders' Equity" means, at any time, the sum of the following
accounts set forth in a balance sheet of the Borrower, prepared in accordance
with GAAP: (a) the par or stated value of all outstanding capital stock; (b)
capital surplus; and (c) retained earnings.
1.33 "Tangible Net Worth" means, at any time, Stockholders' Equity, less
the sum of: (a) goodwill, including any amounts, however designated on a
balance sheet of the Borrower, representing the excess of the purchase price
paid for assets or stock acquired over the value assigned thereto on the books
of the Borrower; (b) patents, trademarks, trade names, and copyrights; (c)
loans and advances to, or amounts otherwise due from, the Borrower's
stockholders, directors, officers, or employees or any of them to the extent
the sum of such loans and advances exceeds $50,000; and (d) other intangible
assets.
1.34 "T-▇▇▇▇ Rate Loan" and "T-▇▇▇▇ Rate Advance" mean a Loan or Loan
advance bearing interest at the Five (5)-Year Treasury Rate or the Six (6)-Year
Treasury Rate.
1.35 "To Borrower's Knowledge" means the actual knowledge, after due
inquiry, of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ or ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, and their respective
successors in office.
1.36 "Work in Process Inventory" means "work in process", as that term is
customarily used in the tool and die industry. In any event, Work in Process
Inventory shall include "Contracts in Process" and shall not include
"Inventories", as such asset categories historically have been identified on
the Borrower's balance sheet.
1.37 "Working Capital" means Current Assets minus Current Liabilities.
SECTION 2 - WARRANTIES AND REPRESENTATIONS
To induce the Bank to enter into this Agreement and to make the Loans, the
Borrower represents and warrants to the Bank that the following statements are
true, correct and accurate both before and after giving effect to the
transactions contemplated by the Loan Documents:
2.1 The Borrower is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Michigan. The Borrower is duly
qualified and authorized to do business, and is in good standing as a foreign
corporation, in all jurisdictions in which the failure to be so qualified or
authorized to do business would have a Material Adverse Effect.
2.2 The Borrower has all requisite corporate power and authority and all
necessary licenses and permits to own and operate its properties and to carry
on its business as now conducted and as it contemplates that business to be
conducted in the future. The Borrower is in
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compliance with all laws, rules, and regulations, the non-compliance with which
would have a Material Adverse Effect.
2.3 All financial statements of the Borrower that have been delivered to
the Bank, including the internally prepared financial statements for the period
ending March 31, 1997, have been prepared in accordance with GAAP and present
fairly the financial position of the Borrower as of the dates indicated, and
the results of its operations for the periods indicated. No changes having a
Material Adverse Effect have occurred since the date of the most recent of such
financial statements. Except as expressly set forth in such financial
statements, the Borrower has no material contingent liability or liability for
taxes, long-term lease or unusual forward or long-term commitment.
2.4 Neither this Agreement nor the financial statements referred to in
Section 2.3 above, nor any other written statement furnished by or on behalf of
the Borrower to the Bank in connection with the negotiation of the Loans
provided for herein, contains any untrue statement of a material fact or omits
a material fact necessary to make the statements contained therein or herein
not misleading. To Borrower's Knowledge, there is no fact that the Borrower
has not disclosed to the Bank in writing that has, or in the future is likely
to have, a Material Adverse Effect.
2.5 Except as disclosed on Schedule 2.5 to this Agreement, there are no
proceedings pending, or to Borrower's Knowledge threatened, before any court,
governmental authority, or arbitration board or tribunal, against or affecting
the Borrower, the outcome of which may reasonably be expected to have a
Material Adverse Effect. The Borrower is not in default with respect to any
order, judgment, or decree of any court, governmental authority, or arbitration
board or tribunal.
2.6 All of the outstanding capital stock of the Borrower is validly
issued, fully paid and nonassessable.
2.7 The Borrower has good and marketable title to all of the assets that
it purports to own, including the assets described in the financial statements
referred to in Section 2.3 hereof, free and clear from all liens, encumbrances,
security interests, claims, charges, and restrictions whatever, except
Permitted Liens. The Borrower owns no real property. All real property leased
by the Borrower is suitable for its current intended purposes and is served by
such utilities and has such access to public roadways and other transportation
structures and systems as are necessary for the proper and efficient use,
operation and maintenance thereof. The Borrower enjoys peaceful and
undisturbed possession under all real property leases to which it is a party,
and all such leases are valid and subsisting and in full force and effect and
no default (nor any event which, with notice or lapse of time or both, would
constitute such a default) has occurred or is continuing under any of such
leases on the part of the Borrower or, to Borrower's Knowledge, on the part of
the landlord. There have been no renewals or extensions of or supplements,
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modifications or amendments to any of such leases except as previously
disclosed in writing to the Bank.
2.8 The Borrower owns and controls all of the patents, trademarks, service
marks, trade names, copyrights, licenses, and rights necessary for the present
and planned future conduct of its business, without any conflict with the right
of any other person, firm, or corporation.
2.9 The Borrower has full corporate power and authority to execute,
deliver, and perform the Loan Documents; the execution, delivery, and
performance of the Loan Documents required to be given hereunder by the
Borrower have been duly authorized by appropriate corporate action of the
Borrower and will not violate the provisions of the articles of incorporation
or bylaws of the Borrower or of any law, rule, judgment, order, agreement, or
instrument to which the Borrower is a party or by which it is bound, or to
which any of its assets are subject, nor do the same require any approval or
consent of any public authority or other third party; and the Loan Documents
have been duly executed and delivered by, and are the valid and binding
obligations of, the parties thereto, enforceable in accordance with their
terms.
2.10 All tax returns required to be filed by the Borrower in any
jurisdiction have been filed, and all taxes, assessments, fees, and other
governmental charges upon the Borrower or upon its assets, income, or
franchises have been paid before the time that those taxes became delinquent.
The Borrower knows of no proposed additional tax assessment against it.
2.11 The Borrower has no investments in the securities of any other
corporation or business entity. The Borrower does not intend to carry or
purchase any "margin security" within the meaning of Regulation U of the Board
of Governors of the Federal Reserve System, 12 C.F.R. Chapter II.
2.12 Attached hereto as Schedule 2.12 is a list of all Plans. No Plan has
been terminated since the effective date of ERISA. No Plan is a
"multi-employer plan" within the meaning of Section 3(37)(A) of ERISA. No
"accumulated deficiency" (within the meaning of Section 412 of ERISA) or
"reportable event" (as defined in Title IV of ERISA) has occurred with respect
to any Plan. Neither the Borrower nor any Affiliate has incurred any material
liability to the Pension Benefit Guaranty Corporation ("PBGC") or otherwise
under ERISA. The PBGC has not started or threatened to institute a proceeding
against the Borrower or any Affiliate under ERISA.
2.13 All of the Borrower's assets, operations and activities are in
compliance with all Environmental Laws; and none of the Borrower's property is
(a) in violation of Environmental Laws, (b) Contaminated by, or the site of,
the disposal or release of any Hazardous Substance; (c) the source of any
Contamination of any adjacent property or of any groundwater or surface water;
or (d) the source of any air emissions in excess of any legal limit now or
hereafter in effect. There
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is no civil, criminal or administrative action, suit, demand, claim, hearing,
notice of violation or deficiency, investigation, proceeding, notice or demand
letter pending or, to Borrower's Knowledge, threatened against the Borrower
under any Environmental Law which could reasonably be expected to result in a
fine, penalty or other cost or expense.
2.14 The execution, delivery and performance by the Borrower of each Loan
Document, the issuance, delivery and performance of the Notes, and the
consummation of the transactions contemplated hereby or related hereto do not
and will not (a) conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any contractual obligation of
the Borrower, (b) result in or require the creation or imposition of any lien
(other than liens in favor of the Bank) upon any of its properties or assets,
or (c) require any approval of stockholders that has not been obtained or any
approval or consent of any person under any actual or purported contractual
obligation of the Borrower.
2.15 The Borrower is not in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
actual or purported contractual obligation of the Borrower, and no condition
exists that, with the giving of notice or the lapse of time or both, would
constitute such a default, which default could have a Material Adverse Effect.
SECTION 3 - THE LOANS
3.1 Subject to the terms and conditions of this Agreement and the other
Loan Documents, and so long as there shall not have occurred any Event of
Default as defined in Section 9 hereof, or any event which with the giving of
notice or lapse of time, or both, would constitute an Event of Default, the
Bank shall extend to the Borrower the following loans:
(a) Revolving Line of Credit Loan (the "Revolving L/C Loan")
Loan Maximum: $10,000,000
Availability: At no time shall the outstanding balance of the
Revolving L/C Loan exceed the lesser of (1) the Loan
Maximum, or (2) the sum of (a) 85% of Eligible
Accounts Receivable plus (b) the lesser of
(i) $3,500,000, or (ii) 40% of the Work in Process
Inventory.
Payments: To be repaid in accordance with a Promissory Note
substantially in the form attached to this
Agreement as Exhibit A (the "Revolving L/C Loan
Note"). All payments shall made by automatically
debiting an account maintained by the Borrower at
the Bank and
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specified by the Borrower in writing
to be used for such purpose.
Interest Rate: As set forth in Section 4 below.
Unused Fee: The Borrower shall pay the Bank an annual
fee in an amount equal to one-quarter ( 1/4) of
one (1) percentage point (i.e., 25 basis points)
of the amount by which $10,000,000 exceeds the
average outstanding principal balance of the
Revolving L/C Loan during the twelve (12)-month
period beginning September 1, 1997, and ending
August 31, 1998. For the period beginning on the
date of this Agreement and ending August 31, 1997,
and for the period beginning September 1, 1998, and
ending January 1, 1999 (each such period is
referred to as a "Stub Period"), the Borrower shall
pay the Bank a fee in an amount equal to (1) the
product obtained by multiplying one-quarter ( 1/4)
of one (1) percentage point (i.e., 25 basis points)
by the amount by which $10,000,000 exceeds the
average outstanding principal balance of the
Revolving L/C Loan during the relevant Stub Period
multiplied by (2) a fraction, the numerator of
which shall be equal to the number of days in the
relevant Stub Period and the denominator of which
shall be 360.
Maturity: January 1, 1999.
Purpose: General Working Capital.
(b) Existing Equipment Term Loan (the "Existing Equipment Term Loan")
Loan Maximum: $3,250,000
Payments: To be repaid in accordance with a Promissory Note
substantially in the form attached to this
Agreement as Exhibit B (the "Existing Equipment
Term Loan Note"). All payments shall made by
automatically debiting an account maintained by the
Borrower at the Bank and specified by the Borrower
in writing to be used for such purpose.
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Interest: As set forth in Section 4 below.
Maturity: The fifth anniversary of the date of the Existing
Equipment Term Loan Note.
Purpose: Refinance existing term debt.
(c) Non-Revolving Equipment Line of Credit Loan (the "Non-Revolving
Equipment L/C Loan")
Loan Maximum: $4,000,000.
Payments: To be repaid in accordance with a Promissory Note
substantially in the form attached to this
Agreement as Exhibit C (the "Non-Revolving
Equipment L/C Loan Note"). All payments shall made
by automatically debiting an account maintained by
the Borrower at the Bank and specified by the
Borrower in writing to be used for such purpose.
Interest: As set forth in Section 4 below.
Maturity: As provided in the Non-Revolving Equipment L/C Loan
Note.
Purpose: Finance future equipment purchases.
3.2 The Revolving L/C Loan, the Existing Equipment Term Loan, and the
Non-Revolving Equipment L/C Loan may each be referred to in this Agreement as a
"Loan", and are collectively referred to in this Agreement as the "Loans", and
the Revolving L/C Loan Note, the Existing Equipment Term Loan Note, the
Non-Revolving Equipment L/C Note may each be referred to in this Agreement as a
"Note", and are collectively referred to in this Agreement as the "Notes".
Each of the Loans is subject to the terms and conditions contained in this
Agreement and all of the other Loan Documents.
SECTION 4 - INTEREST RATES AND ADVANCE PROCEDURES
4.1 The Loans shall bear interest through maturity (whether by
acceleration or otherwise) as follows:
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(a) The Revolving L/C Loan shall bear interest at the Prime Rate plus 25
basis points.
(b) The Existing Equipment Term Loan shall bear interest at the Prime Rate
plus 25 basis points; provided, however, that so long as there is no Event of
Default under this Agreement, the Borrower shall have the option to change the
interest rate applicable to the Existing Equipment Loan to the rate of interest
that is equal to the Five (5)-Year Treasury Rate on the Interest Rate
Determination Date plus 275 basis points. The Borrower shall exercise such
right by giving the Bank written notification of the Borrower's election to
change the rate of interest applicable to the Existing Equipment Term Loan; the
change in such applicable rate of interest shall become effective two (2)
Business Days after the delivery of such written notice to the Bank. The Five
(5)-Year Treasury Rate, as determined by the Bank, shall, absent manifest
error, be final, conclusive and binding upon all parties. The Bank shall
promptly give notice thereof (in writing or by telephone confirmed in writing)
to the Borrower. The Borrower shall have no right to change the interest rate
on the Existing Equipment Term Loan from a rate of interest that is based on
the Five (5)-Year Treasury Rate to a rate of interest that is based on the
Prime Rate.
(c) The Non-Revolving Equipment L/C Loan shall bear interest at the Prime
Rate plus 25 basis points; provided, however, that so long as there is no Event
of Default under this Agreement, the Borrower shall have the option to change
the interest rate applicable to the Non-Revolving Equipment L/C Loan, or to any
advance of such Loan, to the rate of interest that is equal to the Six (6)-Year
Treasury Rate on the Interest Rate Determination Date plus 275 basis points.
The Borrower shall exercise such right by giving the Bank written notification
of the Borrower's election to change the rate of interest applicable to the
Non-Revolving Equipment L/C Loan, or to any advance of such Loan; the change in
such applicable rate of interest shall become effective two (2) Business Days
after the delivery of such written notice to the Bank. The Six (6)-Year
Treasury Rate, as determined by the Bank, shall, absent manifest error, be
final, conclusive and binding upon all parties. The Bank shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to the
Borrower The Borrower shall have no right to change the interest rate on the
Non-Revolving Equipment L/C Loan or any advance of such Loan, from a rate of
interest that is based on the Six (6)-Year Treasury Rate to a rate of interest
that is based on the Prime Rate.
4.2 The Borrower shall give the Bank notice of its request for each Loan
advance (each a "Notice of Borrowing") not later than 12:00 noon, Grand Rapids,
Michigan time, on the date such advance is requested to be made. The Notice of
Borrowing shall (a) state whether the advance is requested under the Revolving
L/C Loan, the Existing Equipment Term Loan, or the Non-Revolving Equipment L/C
Loan, and (b) specify, in the case of the Existing Equipment Term Loan and any
advances to be made under the Non-Revolving Equipment L/C Loan, the interest
rate option chosen with respect to such Loan or Loan advance. Subject to the
terms and
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conditions of this Agreement, the proceeds of each such requested advance shall
be made available to the Borrower by depositing the proceeds thereof, in
immediately available funds, in an account maintained and designated by
Borrower at an office of the Bank.
4.3 Except in the case of the initial Loan advances, for which the
applicable basis for determining the rate of interest must have been provided
in writing to the Bank not less than three Business Days prior to such
advances, and subject to the terms and conditions of this Agreement, the
applicable basis for determining the rate of interest with respect to advances
under the Existing Equipment Term Loan and the Non-Revolving Equipment L/C Loan
shall be selected by the Borrower at the time a Notice of Borrowing is given
pursuant to Section 4.2.
4.4 Unless otherwise requested in writing by the Borrower, the interest
rate on all Loans shall be determined with reference to the Prime Rate.
4.5 Notwithstanding anything to the contrary contained in the Loan
Documents, following acceleration or maturity of any Indebtedness evidenced by
a Note, the outstanding principal balance of such Loan will bear interest at
the rate of 300 basis points above the rate that would otherwise be in effect.
4.6 The Borrower may prepay any part of the principal balance of a Prime
Rate Advance at any time, without prior notice to the Bank and without
prepayment penalty or premium. The Borrower may prepay all or any part of the
principal balance of a T-▇▇▇▇ Rate Advance on one (1) Business Day's notice
provided that, in addition to all principal, interest and costs owing at the
time of prepayment, there shall be due and owing from the Borrower a prepayment
premium in an amount equal to:
(a) Five percent (5%) of the principal amount paid, if the T-▇▇▇▇ Rate
Advance is paid more than 48 months prior to its scheduled maturity;
(b) Four percent (4%) of the principal amount paid, if the T-▇▇▇▇ Rate
Advance is paid more than 36 months but less than 49 months prior to its
scheduled maturity;
(c) Three percent (3%) of the principal amount paid, if the T-▇▇▇▇ Rate
Advance is paid more than 24 months but less than 37 months prior to its
scheduled maturity;
(d) Two percent (2%) of the principal amount paid, if the T-▇▇▇▇ Rate
Advance is paid more than 12 months but less than 25 months prior to its
scheduled maturity; and
(e) One percent (1%) of the principal amount paid, if the T-▇▇▇▇ Rate
Advance is paid 12 months, or less, prior to its scheduled maturity.
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Notwithstanding the foregoing, the Borrower shall not be obligated to pay
a prepayment premium if the Indebtedness evidenced by a Note is prepaid after
acceleration by the Bank.
4.7 Any amounts applied to the outstanding principal of a T-▇▇▇▇ Rate
Advance prior to its maturity or acceleration shall be deemed to be a
prepayment of principal to which the prepayment notice and premium provisions
of this Agreement shall apply. Prior to maturity or acceleration of any
Indebtedness under this Agreement, amounts repaid by the Borrower shall be
applied to the outstanding indebtedness under this Agreement as designated by
the Borrower. If, prior to maturity or acceleration of any Indebtedness under
this Agreement, the Borrower fails to designate how Loan repayments should be
applied, the Loan repayments automatically shall be applied first to interest,
then to Prime Rate Advances principal, and then to T-▇▇▇▇ Rate Advances
principal. Any Loan repayments received by the Bank after maturity or
acceleration of any Indebtedness under this Agreement may be applied by the
Bank in any manner determined by the Bank, in its sole discretion.
4.8 Interest on advances shall be computed on the basis of a 360-day year
and the actual number of days elapsed in the period during which it accrues.
In computing interest on any advance, the date of the making of the advance
shall be included and the date payment is received shall be excluded; provided
that if an advance is repaid on the same day on which it is made, one day's
interest shall be paid on that advance.
4.9 The Borrower acknowledges that the Bank shall at no time ever be
obligated pursuant to this Agreement to advance to the Borrower more than (a) a
total of $3,250,000 under the Existing Equipment Term Loan, and (b) a total of
$4,000,000 under the Non-Revolving Equipment L/C Loan, and that the Existing
Equipment Term Loan and the Non-Revolving Equipment L/C Loan are not revolving
Loans. Once repaid, amounts borrowed under the Existing Equipment Term Loan
and the Non-Revolving Equipment L/C Loan may not be reborrowed.
4.10 Subject to the terms and conditions of this Agreement, amounts
borrowed under the Revolving L/C Loan may be repaid and reborrowed.
SECTION 5 - SECURITY
5.1 Without limiting the terms and conditions of any of the Loan
Documents, to secure payment of all obligations and indebtedness of the
Borrower to the Bank under this Agreement and all other indebtedness and
obligations now and hereafter owing by the Borrower to the Bank, the Borrower
shall execute and deliver to the Bank:
(a) security agreements, in form and substance satisfactory to the Bank,
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granting to the Bank valid first security interests in all accounts receivable,
machinery, equipment, inventory, furniture and trade fixtures of the Borrower,
and all additions thereto and substitutions, increments, proceeds and products
thereof;
(b) an assignment of a policy of life insurance on the life of ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇ in the amount of $3,000,000 (such life insurance policy shall be
acceptable in form and substance to the Bank and shall be issued by a life
insurance company approved by the Bank); and
(c) all financing statements, assignments, document of title, and other
documents, agreements, and instruments as the Bank may reasonably request in
connection with the creation, perfection and priority of any security described
above.
5.2 To further secure payment of the Loans and all of the Borrower's
liabilities and obligations to the Bank, the Borrower grants to the Bank a
continuing security interest in (a) all securities and other property of the
Borrower in the custody, possession or control of the Bank (other than property
held by the Bank solely in a fiduciary capacity) and (b) all balances of
deposit accounts of the Borrower with the Bank. The Bank shall have the right
at any time after an Event of Default, or any event which with the giving of
notice or lapse of time, or both, would constitute an Event of Default, to
apply its own debt or liability to the Borrower in whole or partial payment of
such Loans or other present or future liabilities, without any requirement of
mutual maturity.
5.3 Any of the Borrower's other property in which the Bank has a security
interest to secure payment of any other debt, whether absolute, contingent,
direct or indirect, including the Borrower's guaranties of the debts of others,
shall also secure payment of and be part of the collateral for the Loans.
SECTION 6 - AFFIRMATIVE COVENANTS
From the date hereof and until the Bank has no further obligation to
extend Loans hereunder and all Loans provided for under this Agreement have
been fully paid, the Borrower shall:
6.1 Furnish to the Bank whatever information, books, and records the Bank
may reasonably request, including at a minimum:
(a) within 90 days after the end of each of the Borrower's fiscal
years, beginning with its fiscal year ending August 31, 1997, an audited
financial report prepared in accordance with GAAP by independent certified
public accountants satisfactory to the Bank, containing the Borrower's balance
sheet as of the end of that year, its related profit and loss, and a statement
of shareholder's equity for that year, its statement of cash flows for that
year, together
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with any management letter prepared by those certified public accountants, and
such comments and financial details as are customarily included in reports of
like character and the unqualified opinion of the certified public accountants
as to the fairness of the statements therein, and together with such written
assurances as the Bank may reasonably request from the Borrower's independent
certified public accountants to confirm the Bank's entitlement to rely upon
such audited financial report and accompanying materials;
(b) within 21 days after the end of each calendar month, beginning with
June 30, 1997, a financial report, the accuracy of which is certified to by the
President or the Chief Financial Officer of the Borrower, prepared in
accordance with GAAP, containing the Borrower's balance sheet as of the end of
such period and its income statement showing the results of its operations for
the portion of its fiscal year then elapsed;
(c) weekly compliance reports in the form attached as Exhibit "D" to
this Agreement, due no later than Monday for the week ending the preceding
Friday, the accuracy of which is certified to by the Chief Financial Officer of
the Borrower;
(d) monthly work in process reports, due no later than the 7th day of
each month for the preceding month, the accuracy of which is certified to by
the Chief Financial Officer of the Borrower; and
(e) within 30 days after the end of each fiscal quarter, beginning with
August 31, 1997, a certificate executed by the Chief Financial Officer of the
Borrower stating whether all of the financial covenants contained in this
Agreement are satisfied, showing the calculations for making such
determinations, and otherwise in a form acceptable to Bank.
6.2 Promptly inform the Bank of any occurrence that is an Event of Default
as defined in Section 9 hereof or that, with the giving of notice or the lapse
of time, or both, would be an Event of Default and of any other occurrence
which has a Material Adverse Effect; grant to the Bank or its representatives
the right to examine its books and records or the Collateral at any reasonable
time or times; maintain complete and accurate books and records of its
transactions in accordance with good accounting practices; and furnish to the
Bank any information that it may reasonably request concerning the Borrower's
financial affairs within 10 days after receipt of a request for that
information.
6.3 Maintain insurance, including, but not limited to, fire and extended
coverage insurance, workers' compensation insurance, and casualty and liability
insurance with responsible insurance companies on such of its properties and
against such risks and in such amounts as is customarily maintained by similar
businesses; furnish to the Bank upon its request the details with respect to
that insurance and satisfactory evidence of that insurance coverage; and,
within 30 days after receipt of a written request from the Bank, obtain any
additional insurance that the Bank may reasonably request. Each insurance
policy required under this Section shall be so written or
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endorsed as to make losses, if any, payable to the Borrower and the Bank as
their respective interests may appear and shall include, where appropriate, a
mortgage clause or endorsement in favor of the Bank in form and substance
satisfactory to the Bank.
6.4 Pay and discharge, as often as the same may become due and payable,
all taxes, assessments and other governmental monetary obligations, of whatever
nature, that may be levied or assessed against it or any of its properties,
unless and to the extent only that in a jurisdiction where payment of taxes and
assessments is abated during the period of any contest, those taxes or
assessments shall be contested in good faith by appropriate proceedings and
that the Borrower shall have set aside on its books adequate reserves with
respect to those taxes and assessments.
6.5 Pay and perform at the time such payment or performance is due, all
indebtedness and obligations owing by it, and pay all claims (including,
without limitation, claims for labor, services, materials and supplies) for
sums which have become due and payable, except any indebtedness, obligation or
claim being contested in good faith by appropriate proceedings and for which
the Borrower shall have set aside on its books adequate reserves with respect
to such indebtedness, obligation or claim.
6.6 Maintain its corporate existence in good standing in the State of
Michigan and its qualification in good standing in every other jurisdiction in
which the failure to be so qualified or authorized to do business would have a
Material Adverse Effect; continue to conduct and operate its business
substantially as presently conducted and operated; and comply with all
governmental laws, rules, regulations, and orders applicable to it, the failure
to comply with which would or may have a Material Adverse Effect.
6.7 Act prudently and in accordance with customary industry standards in
managing or operating its assets, properties, business, and investments; and
keep in good working order and condition, ordinary wear and tear excepted, all
of its assets and properties that are necessary to the conduct of its business.
6.8 Maintain Tangible Net Worth (the applicable amount for each date of
determination being referred to herein as the "Minimum Net Worth") of:
(a) not less than $10,800,000 for the period beginning on the date of
this Agreement and ending on August 30, 1997;
(b) not less than $11,500,000 for the period beginning on August 31,
1997 and ending on August 30, 1998;
(c) not less than $12,250,000 for the period beginning on August 31,
1998 and ending on August 30, 1999; and
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(d) not less than $13,000,000 for the period beginning August 31, 1999
and ending August 30, 2000.
6.9 Maintain Working Capital of not less than $7,500,000.
6.10 Maintain a ratio of total Liabilities to Tangible Net Worth of not
more than 1.3:1.
6.11 Maintain a ratio of EBITDA to Debt Service for the trailing 12-month
period of not less than 1.5:1.
6.12 Maintain all of its commercial deposit accounts with the Bank.
6.13 Comply in all material respects with the requirements of ERISA,
including, without limitation, all provisions regarding minimum funding
requirements and requirements as to plan termination insurance; furnish to the
Bank, upon the Bank's request, a copy of each annual report and annual return,
as well as all schedules and attachments required to be filed with the
Department of Labor or the Internal Revenue Service pursuant to ERISA in
connection with each of its Plans for each Plan year; notify the Bank
immediately of any fact, including, but not limited to, any "reportable event"
(as defined in Title IV of ERISA) arising in connection with any of its Plans,
that might be grounds for termination thereof by the PBGC or for the
appointment by the appropriate United States District Court of a trustee to
administer the Plan, together with a statement, if requested by the Bank, as to
the reason therefor and the action, if any, proposed to be taken with respect
thereto; and furnish to the Bank, upon its request, any additional information
concerning any of its Plans that the Bank may reasonably request.
6.14 Notify the Bank in writing within 10 days after receipt whenever the
Borrower receives written notice of (a) the commencement of formal proceedings
or any investigation by a federal or state environmental agency against the
Borrower regarding the Borrower's compliance with Environmental Laws, or (b)
any other judicial or administrative proceeding or litigation commenced by or
against the Borrower, or (c) any other potential liability or claim regarding
the Borrower's compliance with Environmental Laws, in each case, as a possible
result of which (i) the loss by, or liability of, the Borrower could exceed
$100,000, or (ii) the operations of the Borrower could be materially affected.
6.15 Promptly provide to the Bank copies of any correspondence received by
the Borrower from any governmental authority regarding any alleged violation of
law by the Borrower that could have a Material Adverse Effect.
6.16 At all times preserve, renew and keep in full force and effect the
rights, licenses, permits, franchises, agency agreements, trade names, patents,
trademarks, copyrights, licenses and
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service marks, the loss of which could have a Material Adverse Effect.
6.17 Permit representatives of the Bank, during the Bank's normal business
hours, to enter the Borrower's premises, review the Borrower's business
records, and interview the Borrower's employees as reasonably required by the
Bank to conduct periodic audits of the Borrower's business and the Borrower's
compliance with its obligations under this Agreement.
SECTION 7 - NEGATIVE COVENANTS
From the date hereof and until all Loans provided for under this Agreement
are fully paid and the Bank has no further obligation to extend loans
hereunder, the Borrower agrees that it will not, without the prior written
consent of the Bank, which may not be unreasonably withheld:
7.1 Create or permit to exist any lien, mortgage, pledge, attachment,
garnishment, execution, or other legal process, or encumbrance on any of its
assets to any party, except Permitted Liens.
7.2 Sell, lease, transfer or otherwise dispose of any asset (including,
without limitation, (a) transfer or other disposition by way of merger or
consolidation, (b) sale-leaseback, or (c) a transaction that is the equivalent
of a mortgage or pledge), except in the Ordinary Course of its business as
conducted on the date of this Agreement.
7.3 Guarantee, endorse, assume, or otherwise incur or suffer to exist any
contingent liability in respect of, any obligation of any other person, firm,
or corporation, except (a) by the endorsement of negotiable instruments for
deposit or collection in the Ordinary Course of business, and (b) as disclosed
on Schedule 2.5 to this Agreement and in connection with the Settlement and
Forbearance Agreement (defined in Section 1.27).
7.4 Purchase or otherwise acquire all, or substantially all, of the
assets, obligations, or capital stock of or any other interest in any other
person, firm, or corporation.
7.5 Purchase or acquire any securities of, or make any liens or advances
to, or investments in, any person, firm or corporation, except obligations of
the United States Government, open market commercial paper rated one of the top
two ratings by a rating agency of recognized standing, or certificates of
deposit in insured financial institutions.
7.6 Purchase, retire, redeem, or otherwise acquire any of its shares of
capital stock or declare or pay dividends or make any other distribution of its
assets, by reduction of capital or otherwise; provided, however, that the
Borrower may take the actions described in clauses (a), (b), (c) and (d) below
without the Bank's consent if such actions will not cause the Borrower to be in
breach of any other covenant, term or provision of the Loan Documents: (a)
declare and
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pay stock (i.e., non-cash) dividends; and (b) pay an amount not to exceed
$50,000 in connection with the redemption in July 1997 of the Borrower's 8%
cumulative preferred stock; (c) exercise its option to purchase up to 730,000
shares of the Borrower's issued and outstanding common stock owned by Motor
Wheel pursuant to a Stock Option Agreement dated October 31, 1996, between
Riviera Holding Company and Motor Wheel (the interest of Riviera Holding
Company under such Stock Option Agreement having been assigned to the
Borrower), and pay all sums, not to exceed $3 million, that may be required to
consummate such purchase, but only to the extent that the purchase price for
such stock is paid from equity contributions to the Borrower, in the form of
cash, made after the date of this Agreement for the express purpose of funding
the purchase price of such stock to be acquired from Motor Wheel; and (d) use
not more than $250,000 of the Borrower's operating cash to purchase up to
125,000 shares of the Borrower's issued and outstanding common stock from NBD
Bank; to the extent the purchase price for any such stock acquired by the
Borrower from NBD Bank exceeds $250,000, the Borrower must use equity
contributions to the Borrower, in the form of cash, made after the date of this
Agreement for the express purpose of funding the purchase price of such stock
to be acquired from NBD Bank.
7.7 Subordinate any indebtedness owing to the Borrower by any person,
firm, or corporation to indebtedness of that person, firm, or corporation owing
to any other person, firm, or corporation.
7.8 Engage, directly or indirectly, in any line of business other than the
lines of business presently engaged in by the Borrower or a line of business
related thereto.
7.9 Issue, incur, assume, or permit to remain outstanding any
Indebtedness, other than Indebtedness (a) owing to the Bank, and (b) owing to
others in connection with the Borrower's acquisition of machinery or equipment;
provided, however, that Indebtedness to others shall be permitted under clause
(b) of this Section 7.9 only if (i) such Indebtedness was incurred by the
Borrower after the date of this Agreement, and (ii) prior to incurring such
Indebtedness, the Borrower submitted to the Bank a written description of the
economic terms of the proposed financing transaction and the Bank failed,
within two Business Days after receipt of such written description, to agree to
offer such financing to the Borrower on equivalent or better terms from the
Borrower's perspective, and (iii) the proposed financing transaction thereafter
was consummated on the terms set forth in the written description thereof
submitted by the Borrower to the Bank, and (iv) the incurrence of such
Indebtedness by the Borrower will not cause a breach of any other provision of
this Agreement.
7.10 Use or acquire the use or possession of any real or personal property
from any person under any lease or lease arrangement, except (i) leases or
lease arrangements in existence as of the date of this Agreement and identified
in Schedule 7.10 to this Agreement, (ii) any financing leases authorized in
Section 7.9, and (iii) any other lease which (a) has a term of less
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than 7 years, and (b) provides for less than $250,000 in total payments by the
Borrower during each year of the term thereof. The Borrower shall from time to
time provide to the Bank copies of any leases entered into by the Borrower,
together with any amendments thereto, upon request of the Bank.
7.11 Become a contributing employer with respect to a multi-employer
employee benefit plan within the meaning of Section 3(37)(A) of ERISA (29
U.S.C. Section 1002), as amended, by Section 302 of the Multi-Employer Pension
Plan Amendments Act of 1980; or establish for any of its employees any employee
benefit plan that has, or may in the future incur, any unfunded past service
liability.
7.12 Change its fiscal year or method of accounting except as required by
GAAP, as hereafter modified.
7.13 Change its name without prior written approval from the Bank; except
that the Borrower may change its name if the Borrower has given 60 days' prior
written notice of the name change and has taken such action as the Bank deems
necessary to continue the perfection of the security interests and liens
granted to the Bank under the Loan Documents.
SECTION 8 - APPLICATION OF PROCEEDS
The proceeds of each Loan shall be used by the Borrower solely for the
purpose set forth for such Loan in Section 3, and for no other purpose.
SECTION 9 - EVENTS OF DEFAULT AND REMEDIES
9.1 The following events shall constitute an "Event of Default" under this
Agreement, the occurrence of which shall entitle the Bank to pursue any and all
rights and remedies available to it under this Agreement, the Notes, the other
Loan Documents, and under applicable law. The Bank's rights and remedies are
cumulative and may be exercised concurrently or successively from time to time.
Any action by the Bank against any property or party shall not serve to
release or discharge any other security, property or party in connection with
this transaction. The Events of Default are as follows:
(a) Failure to pay the principal or interest on any loan provided for
under this Agreement when and as the same shall be due and payable, whether by
acceleration or otherwise, provided in each case that such default has not been
cured prior to the expiration of 10 days following the date of personal
delivery or mailing of written notice of such default to the Borrower.
(b) Failure to pay the principal or interest on any other
indebtedness now or
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hereafter owed by the Borrower to the Bank as the same shall be due and
payable, whether by acceleration or otherwise, provided in each case that such
default has not been cured prior to the expiration of 10 days following the
date of personal delivery or mailing of written notice of such default to the
Borrower.
(c) Failure to observe, perform and comply with any of the Borrower's
obligations under any Loan Document or failure to observe, perform and comply
with any of the Borrower's other obligations under any other document that
evidences, secures or otherwise relates to indebtedness of the Borrower to the
Bank, whether arising under this Agreement or otherwise, and failure to
observe, perform and comply with any and all other agreements between the
Borrower and the Bank to be observed, performed or complied with by the
Borrower; provided that such default has not been cured prior to the expiration
of 20 days following the date of personal delivery or mailing of written notice
of such default.
(d) Failure to pay any Indebtedness or trade debt of the Borrower to any
third party (i) when due upon agreed upon terms, unless a grace period applies
or the Borrower satisfies the conditions described in 9.1(d)(iii) below, (ii)
upon the expiration of an applicable grace period, unless the Borrower
satisfies the conditions described in 9.1(d)(iii), or (iii) provided that the
payment of such Indebtedness or trade debt is being contested in good faith by
appropriate proceedings, and the Borrower shall have set aside on its books
adequate reserves with respect to such Indebtedness or debt, at the time that a
final non-appealable decision is rendered in such proceedings.
(e) The discovery by the Bank of any material inaccuracy in any statement,
assurance, representation, covenant, warranty, term or condition by the
Borrower contained in this Agreement or in any document delivered or to be
delivered by or on behalf of the Borrower pursuant to this Agreement, or in any
other Loan Document, or in any other agreement between the Borrower and the
Bank.
(f) The filing of a petition by or against the Borrower or any other
obligor of any Loan seeking relief under the Federal Bankruptcy Code, 11 U.S.C.
Section 101, et seq., and any amendments thereto (the "Code"), or any similar
law or regulation, whether federal, state or local, not dismissed within 30
days.
(g) The commencement of a proceeding by or against the Borrower or other
obligor of a Loan under any statute or other law providing for an assignment
for the benefit of creditors, the appointment of a receiver, or any other
similar law or regulation, whether federal, state or local, not dismissed
within 30 days.
(h) The garnishment, attachment, levy or other similar action taken by or
on behalf of any creditor of the Borrower or any of its properties which could
have a Material
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Adverse Effect.
(i) The determination by the Bank or any one of its agents or
representatives that there exists any Hazardous Substances in violation of any
Environmental Laws on, in or under any of the collateral in which the Bank
holds an interest as security for any loan made pursuant to this Agreement.
9.2 Upon the occurrence of any Event of Default set forth in subsections
9.1(a) through 9.1(i) above, at the option of the Bank, the Bank's obligation
to make additional loan advances under this Agreement shall terminate and the
Bank shall have the right to declare all or any part of the unpaid principal
balance of, and accrued interest on, outstanding loans hereunder to be
immediately due and payable, without presentment, demand, or notice of any
kind, all of which are hereby expressly waived by the Borrower.
9.3 Upon the occurrence of any Event of Default set forth in subsections
9.1(a) through 9.1(i) above, the Bank shall have the right to exercise any and
all remedies that it may have for default under any Loan Document or at law or
in equity, and such remedies may be exercised concurrently or separately until
each and every one of the Borrower's obligations under the Loan Documents has
been fully satisfied. In connection with the enforcement of any such remedies
of the Bank, the Bank and its employees, attorneys, agents, and other persons
and entities designated by the Bank, shall have the right, without notice, to
enter the Borrower's plant and other places of business for such purposes as
may be reasonably required to permit the Bank to preserve, protect, take
possession of and/or sell or otherwise dispose of any Collateral, and to store
the Collateral at the Borrower's plant and other places of business, without
charge, for such periods as may be determined by the Bank.
SECTION 10 - CONDITIONS PRECEDENT TO ADVANCES UNDER THE LOANS.
In addition to the other conditions precedent to advances described in
this Agreement, each Loan advance requested under this Agreement shall be
subject to prior satisfaction of the following conditions:
10.1 The representations and warranties contained herein and in the other
Loan Documents shall be true, correct and accurate in all material respects on
and as of the Funding Date of such requested advance.
10.2 No event shall have occurred and be continuing or would result from
the consummation of such borrowing or the application of the proceeds thereof
that would constitute a default, or any circumstance with which the passing of
time or the giving of notice could constitute a default, under this Agreement
or any Loan Document.
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10.3 The Borrower shall have performed in all material respects all
agreements and satisfied all conditions that this Agreement and each other Loan
Document provides shall be performed by it on or before such Funding Date.
10.4 No order, judgment or decree of any court, arbitrator or governmental
authority shall purport to enjoin or restrain the Bank from making such
advance.
10.5 There shall not be pending or, to Borrower's Knowledge threatened,
any action, suit, proceeding, governmental investigation or arbitration against
or affecting the Borrower or any property of the Borrower (other than as
disclosed in Schedule 2.5 attached hereto), and there shall have occurred no
development in any such action, suit, proceeding, governmental investigation or
arbitration previously disclosed to the Bank pursuant to this Agreement, that,
in the opinion of the Bank, would in any such case, reasonably be expected to
have a Material Adverse Effect upon the Borrower. No injunction or other
restraining order shall have been issued and no hearing to cause an injunction
or other restraining order shall be pending or noticed with respect to any
action, suit or proceeding seeking to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain relief as a result of,
this Agreement or the making of Loans hereunder.
10.6 Since the date of the most recent financial statements submitted to
the Bank by or on behalf of the Borrower, nothing shall have occurred or become
known which the Bank shall have determined has a Material Adverse Effect upon
the Borrower.
10.7 The Bank shall have received a Notice of Borrowing at the time and in
form required by Section 4.2 above. The furnishing by the Borrower of a Notice
of Borrowing shall be deemed to constitute a representation and warranty of the
Borrower to the effect that all the conditions set forth in this Agreement for
the requested advance are satisfied as of the date of delivery and will be
satisfied on the applicable Funding Date.
SECTION 11 - LIMITATION ON NON-REVOLVING EQUIPMENT L/C LOAN ADVANCES.
Notwithstanding anything to the contrary contained herein or in any of the
other Loan Documents, the Non-Revolving Equipment L/C Loan is subject to the
following additional terms and conditions:
11.1 The principal amount of each Non-Revolving Equipment L/C Loan advance
shall not exceed an amount equal to eighty percent (80%) of the Borrower's
actual cost for the equipment that will be purchased with the proceeds of such
advance (excluding tax, insurance, delivery and set-up charges, the cost of
maintenance contracts, and any other costs not paid or payable by the Borrower
to the equipment manufacturer as a direct cost of acquiring the equipment).
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11.2 The proceeds of each Non-Revolving Equipment L/C Loan advance shall
be advanced by the Bank to the Borrower only after (i) receipt by the Bank of
such security agreements and financing statements (or supplements or amendments
thereto) covering the equipment, duly executed by the Borrower, (ii) receipt by
the Bank of such other documents as the Bank may reasonably require to create
and perfect its security interest therein, together with such evidence as the
Bank may reasonably require in order to establish the cost of such equipment to
the Borrower and that the equipment is completed and ready for shipment to the
Borrower, and (iii) the Borrower's compliance with the conditions described in
Section 10 above.
SECTION 12 - ACCEPTANCE OF PROCEEDS.
The acceptance of the proceeds of each Loan shall constitute the
representation and warranty by the Borrower to the Bank that all of the
applicable conditions specified herein have been satisfied as of that time,
except for such conditions that have been expressly waived in writing hereunder
by the Bank.
SECTION 13 - MISCELLANEOUS
13.1 The Borrower shall pay all out-of-pocket expenses incurred by the
Bank in connection with making and collecting the Loans and enforcing the Loan
Documents, including, but not limited to, reasonable attorneys' fees relating
to (a) the enforcement, or attempted enforcement, of any provision of any of
the Loan Documents, (b) the collection of any of the Loans, and (c) the
foreclosure of any security interests or other liens given with respect
thereto. Notwithstanding the foregoing, the Borrower shall not be obligated to
pay more than $5,000 in attorneys' fees incurred by the Bank in connection with
making the Loans (as contrasted with collecting the Loans, foreclosing the
liens and security interests securing the Loans, and otherwise enforcing or
attempting to enforce the Loan Documents, as to which the Borrower shall be
obligated to pay all reasonable attorneys' fees and other costs incurred by the
Bank, in addition to reimbursing the Bank for reasonable attorneys' fees, not
to exceed $5,000, in connection with making the Loans).
13.2 The Borrower acknowledges that the Bank has and shall have the right,
upon an Event of Default, or any event which with the giving of notice or lapse
of time, or both, would constitute an Event of Default, to set off any
indebtedness from time to time owing to the Borrower by the Bank, including any
indebtedness represented by any account maintained with the Bank by the
Borrower, against any indebtedness that shall at any time be due and payable by
the Borrower to the Bank.
13.3 Each and every right granted to the Bank hereunder or under any other
document delivered hereunder, or in connection herewith, or allowed it by law
or equity, shall be cumulative
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26
and may be exercised from time to time. No failure on the part of the Bank to
exercise, and no delay in exercising, any right shall operate as a waiver
thereof or as a waiver of any other right. No single or partial exercise by
the Bank of any right or remedy shall preclude any other future exercise of it
or the exercise of any other right or remedy. No waiver or indulgence by the
Bank of any default shall be effective unless in writing and signed by the
Bank, nor shall a waiver on one occasion be construed as a bar to or waiver of
that right on any future occasion. This Agreement may not be amended except by
a writing signed by all the parties hereto.
13.4 The relationship between the Borrower and the Bank is solely that of
borrower and lender. The Bank has no fiduciary responsibilities to the
Borrower as a result of this Loan Agreement, the Loan Documents or the
consummation of the transactions contemplated hereby or thereby. The Bank does
not undertake any responsibility to the Borrower to review or inform the
Borrower of any matter in connection with any phase of the Borrower's business
or operations. The Borrower shall rely entirely upon its own judgment with
respect to its business, and any review, inspection, supervision, or
information supplied to the Borrower by the Bank is for the protection of the
Bank and neither the Borrower nor any third party is entitled to rely thereon.
13.5 This Agreement is made in the State of Michigan. The validity of
this Agreement, and the validity of any documents incorporated herein or
executed in connection herewith, and the construction, interpretation and
enforcement thereof, and the rights of the parties thereto, shall be determined
under and construed in accordance with the internal laws of the State of
Michigan, without regard to principles of conflicts of law.
13.6 Any and all notices or other communications required or permitted
under this Agreement shall be in writing, and shall be served either personally
or by certified United States mail with postage thereon full prepaid addressed
to the Borrower as:
Riviera Tool Company
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
and to the Bank as:
Old Kent Bank
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
or such other place or places as any party shall designate by written notice
served upon other
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27
parties.
13.7 This Agreement shall be binding upon and shall inure to the benefit
of the Borrower and the Bank and their respective successors and assigns;
provided, however, the Borrower may not assign, transfer, hypothecate or
otherwise dispose of its rights hereunder or in connection herewith or any
interest herein (voluntarily, by operation of law, as security, by gift or
otherwise) without the prior written consent of the Bank, which consent may be
withheld in the sole discretion of the Bank. There are no third party
beneficiaries of this Agreement. The Bank may assign, negotiate, pledge or
otherwise hypothecate all or any portion of this Agreement, or grant
participations herein and in the Loan Documents, or in any of its rights or
security hereunder or thereunder, including, without limitation, the
instruments securing the Borrower's obligations hereunder, provided, however,
that the Bank promptly will inform the Borrower of any such assignment,
negotiation, pledge or other hypothecation and of the parties involved
therewith and, provided further, that no such assignment, negotiation, pledge
or other hypothecation by the Bank will relieve the Bank of its obligation
under this Agreement. In connection with any assignment or participation, the
Bank may disclose to the proposed assignee or participant any information that
the Borrower is required to deliver to the Bank pursuant to this Agreement.
Notwithstanding the foregoing, the Bank shall not assign all or any portion of
its right or interest under the Loan Documents to NBD Bank or any person who is
a successor in interest to NBD Bank. The Borrower acknowledges that the Bank
has granted a participation in the Revolving L/C Loan and the Existing
Equipment Term Loan to be made pursuant to this Agreement, and in all related
Loan Documents, to Norwest Bank Minnesota, National Association, and the
Borrower consents thereto.
13.8 The Borrower waives and releases any and all right that it may have
to require that the Bank marshal any of the collateral in which it holds an
interest as security for a loan made pursuant to this Agreement. The Borrower
shall upon the request of the Bank promptly execute and deliver to the Bank a
written statement, in form and substance reasonably satisfactory to the Bank,
identifying all of the collateral in which the Bank holds an interest as
security for a loan made pursuant to this Agreement. The Bank may file or
record such written statements in the appropriate public records as determined
by the Bank in its sole and absolute discretion.
13.9 Upon any change in generally accepted accounting principles that, if
reflected in the financial statements or covenants required or established in
this Agreement, would have a material effect on such statements or covenants,
either party may request that the parties enter into negotiations to amend the
financial covenants or other terms of this Agreement so as to equitably reflect
such changes with the desired result that the criteria for evaluating the
Borrower's financial condition shall be the same after such changes as if the
changes had not been made.
13.10 Should any part, term or provision of this Agreement, or of any
documents
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28
incorporated herein or executed in connection herewith, be determined by the
courts to be illegal, unenforceable or in conflict with any law of the State of
Michigan, federal law or any other applicable law, the validity and
enforceability of the remaining portions or provisions of such document(s)
shall not be affected thereby.
13.11 The Borrower shall execute any and all additional or supplemental
documentation, and provide such further assistance and assurances as the Bank
may reasonably require, to give full effect to the terms, conditions and
intentions of this Agreement.
13.12 Time is of the essence with respect to all provisions of this
Agreement.
13.13 The headings in this Agreement have been inserted for convenience
only and shall not affect the meaning or interpretation of this Agreement.
13.14 This Agreement may be executed in one or more counterparts, each of
which shall be considered an original and all of which shall constitute the
same instrument.
13.15 This Agreement contains the entire agreement of the parties hereto
with respect to the subject matter hereof. The parties hereto shall not be
bound by any other different, additional or further agreements or
understandings except as consented to in writing by them.
13.16 The Recitals are incorporated into and form a part of this
Agreement.
13.17 The Bank and the Borrower, after consulting or having had the
opportunity to consult with counsel, knowingly, voluntarily and intentionally
waive any right either of them may have to a trial by jury in any litigation
based upon or arising out of this Agreement or any related instrument or
agreement or any of the transactions contemplated by this Agreement or any
course of conduct, dealing, statements (whether oral or written), or actions of
either of them. Neither the Bank nor the Borrower shall seek to consolidate,
by counterclaim or otherwise, any such action in which a jury trial has been
waived with any other action in which a jury trial cannot be or has not been
waived. These provisions shall not be deemed to have been modified in any
respect or relinquished by either the Bank or Borrower except by a written
instrument executed by both of them.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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29
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
WITNESSES:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ RIVIERA TOOL COMPANY
-------------------
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------- -----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ OLD KENT BANK
-------------------
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------- -----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
30
30
THIS NOTE HAS BEEN EXECUTED AND DELIVERED PURSUANT TO A LOAN
AGREEMENT BETWEEN THE BANK AND THE BORROWER. REFERENCE IS MADE TO
SUCH LOAN AGREEMENT FOR, AMONG OTHER THINGS, A STATEMENT OF THE
OCCURRENCES WHICH MAY CONSTITUTE AN EVENT OF DEFAULT UNDER THIS
NOTE.
EXHIBIT A TO LOAN AGREEMENT
REVOLVING LINE OF CREDIT LOAN NOTE
$10,000,000 June 12, 1997
For value received, RIVIERA TOOL COMPANY, a Michigan corporation (the
"Borrower"), promises to pay to the order of OLD KENT BANK, a Michigan banking
corporation (the "Bank"), the principal sum of TEN MILLION AND NO/100 DOLLARS
($10,000,000), or such lesser sum as may have been advanced with respect to the
loan evidenced by this Note by the Bank to the Borrower pursuant to a certain
Loan Agreement dated June 12, 1997 (such Loan Agreement, together with all
amendments, renewals and replacements thereof, if any, is referred to as the
"Loan Agreement"), plus interest on the outstanding principal indebtedness
evidenced hereby from time to time at a rate per annum which, except during
default, is equal to the Prime Rate (as defined in the Loan Agreement) plus 25
basis points from time to time on all principal indebtedness evidenced by this
Note. Interest shall be calculated in accordance with the Loan Agreement.
Following maturity or acceleration of the indebtedness evidenced by this
Note, the interest rate on the entire principal balance of this Note shall be
300 basis points higher than the interest rate otherwise in effect. In
addition, if any payment required hereby is not made within 15 days of its due
date, the Borrower shall be liable for a late payment charge in an amount equal
to five (5%) percent of the monthly payment due, except that in no event shall
the late payment charge exceed $2,000. The late payment charge shall apply
individually to all payments past due, without proration. All such default
interest and late payment charges, if any, shall be paid upon demand by the
holder hereof.
Accrued interest on the outstanding principal balance of the indebtedness
represented by this Note shall be due and payable on the 1st day of each month,
beginning July 1, 1997. The principal balance of the indebtedness represented
by this Note, and all accrued and unpaid interest thereon, shall in any event
be due and payable on January 1, 1999, unless sooner accelerated by the Bank
pursuant to the Loan Agreement. The indebtedness evidenced by this Note may be
prepaid, in whole or in part, at any time without penalty or premium.
31
All payments hereunder shall be made in lawful money of the United States
of America to the Bank at its principal office in Grand Rapids, Michigan, or at
such other place as the holder hereof may from time to time specify.
Upon the occurrence of an Event of Default under the Loan Agreement that
has not been cured after notice and within the applicable grace period set
forth in the Loan Agreement, the entire principal balance of this Note
remaining at that time unmatured, together with all accrued interest thereon,
shall, at the election of the holder hereof and without notice of such election
and without demand or presentment, become immediately due and payable, anything
contained herein or in any other document or instrument to the contrary
notwithstanding.
Neither the failure of the holder hereof promptly to exercise its right to
declare the outstanding principal and accrued and unpaid interest and other
charges hereunder to be immediately due and payable, nor failure to exercise
any other right or remedy the holder may have for default, nor the acceptance
by the holder of late or partial payments, nor the failure of the holder to
demand strict performance of any obligation of the Borrower hereunder, shall
constitute a waiver of any such rights while such default continues, nor a
waiver of any such rights in connection with any future default on the part of
the Borrower hereunder. Further, acceptance by the holder of partial payments
following due acceleration of the indebtedness evidenced hereby shall not
constitute a waiver by the holder of the acceleration of such indebtedness or
of any other right or remedy otherwise available to the holder in such
circumstance.
The Borrower waives presentment, protest and demand, notice of protest,
demand, dishonor and nonpayment of this Note.
The Borrower agrees to pay all costs incurred by the holder, including
without limitation costs of collection and reasonable attorney's fees, in case
the principal of this Note or any payment of interest thereon is not paid at
the respective due date or maturity thereof, or in case it becomes necessary to
protect the security for this Note, whether suit is brought or not, or in case
of any other default under this Note.
Any payment (including prepayments) upon this Note shall be applied first
to any expenses, charges or fees then due and payable to the Bank in connection
with the indebtedness evidenced hereby or any collateral for such indebtedness,
then to any accrued and unpaid interest hereunder, and then to the unpaid
principal balance.
In no event shall the Borrower be required to make any payment hereunder
which would violate any applicable law regulating or limiting the rate of
interest that the holder of the Note may lawfully charge or collect. In the
event any such payment is made by or for the account of the Borrower, such
payment shall, to the extent it exceeds the maximum payment that the holder
hereof lawfully may charge or collect, be applied toward reduction of the
principal balance hereof.
2
32
This Note is secured by a first lien on certain of the Borrower's accounts
receivable, machinery, equipment, furniture and fixtures, as set forth in the
Loan Agreement and in one or more Security Agreements between the Bank and the
Borrower dated June 12, 1997, all of which are incorporated herein by
reference.
This Note shall be governed by and enforced and construed in accordance
with the laws of Michigan. The invalidity, illegality or unenforceability of
any one or more of the provisions hereof shall not affect the validity,
legality or enforceability of the remaining provisions hereof, all of which
shall remain in full force and effect.
RIVIERA TOOL COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
3
33
THIS NOTE HAS BEEN EXECUTED AND DELIVERED PURSUANT TO A LOAN
AGREEMENT BETWEEN THE BANK AND THE BORROWER. REFERENCE IS MADE TO
SUCH LOAN AGREEMENT FOR, AMONG OTHER THINGS, A STATEMENT OF THE
OCCURRENCES WHICH MAY CONSTITUTE AN EVENT OF DEFAULT UNDER THIS
NOTE.
EXHIBIT B TO LOAN AGREEMENT
EXISTING EQUIPMENT TERM LOAN NOTE
$3,250,000 June 12, 1997
For value received, RIVIERA TOOL COMPANY, a Michigan corporation (the
"Borrower"), promises to pay to the order of OLD KENT BANK, a Michigan banking
corporation (the "Bank"), the principal sum of THREE MILLION TWO HUNDRED FIFTY
THOUSAND AND NO/100 DOLLARS ($3,250,000), or such lesser sum as may have been
advanced with respect to the loan evidenced by this Note by the Bank to the
Borrower pursuant to a certain Loan Agreement dated June 12, 1997 (such Loan
Agreement, together with all amendments, renewals and replacements thereof, if
any, is referred to as the "Loan Agreement"), plus interest on the outstanding
principal indebtedness evidenced hereby from time to time at a rate per annum
which, except during default, is equal to:
(a) The Prime Rate (as defined in the Loan Agreement) plus 25 basis points
from time to time on all principal indebtedness evidenced by this Note; or
(b) At that fixed rate of interest that is equal to the Five (5)-Year
Treasury Rate (as defined in the Loan Agreement) plus 275 basis points, but
only if the Borrower has so elected pursuant to Section 4.1(b) of the Loan
Agreement.
Following maturity or acceleration of the indebtedness evidenced by this
Note, the interest rate on the entire principal balance of this Note shall be
300 basis points higher than the interest rate otherwise in effect. In
addition, if any payment required hereby is not made within 15 days of its due
date, the Borrower shall be liable for a late payment charge in an amount equal
to five (5%) percent of the monthly payment due, except that in no event shall
the late payment charge exceed $2,000. The late payment charge shall apply
individually to all payments past due, without proration. All such default
interest and late payment charges, if any, shall be paid upon demand by the
holder hereof.
The indebtedness evidenced by this Note, unless sooner prepaid or
accelerated as provided in the Loan Agreement, shall be paid in monthly
installments of principal in the mount of FIFTY-
34
FOUR THOUSAND ONE HUNDRED SIXTY-SIX AND 67/100 DOLLARS ($54,166.67) each plus
accrued and unpaid interest on the outstanding principal balance of the
indebtedness evidenced by this Note. Such payments of principal and interest
shall be due and payable on the 19th day of each month, beginning July 19,
1997. The principal balance of the indebtedness represented by this Note, and
all accrued and unpaid interest thereon, shall in any event be due and payable
on July 19, 2002, unless sooner accelerated by the Bank pursuant to the Loan
Agreement.
The indebtedness evidenced by this Note may be prepaid in whole or in part
upon notice and with the prepayment premium provided for in Section 4.6 of the
Loan Agreement.
All payments hereunder shall be made in lawful money of the United States
of America to the Bank at its principal office in Grand Rapids, Michigan, or at
such other place as the holder hereof may from time to time specify.
Upon the occurrence of an Event of Default under the Loan Agreement that
has not been cured after notice and within the applicable grace period set
forth in the Loan Agreement, the entire principal balance of this Note
remaining at that time unmatured, together with all accrued interest thereon,
shall, at the election of the holder hereof and without notice of such election
and without demand or presentment, become immediately due and payable, anything
contained herein or in any other document or instrument to the contrary
notwithstanding.
Neither the failure of the holder hereof promptly to exercise its right to
declare the outstanding principal and accrued and unpaid interest and other
charges hereunder to be immediately due and payable, nor failure to exercise
any other right or remedy the holder may have for default, nor the acceptance
by the holder of late or partial payments, nor the failure of the holder to
demand strict performance of any obligation of the Borrower hereunder, shall
constitute a waiver of any such rights while such default continues, nor a
waiver of any such rights in connection with any future default on the part of
the Borrower hereunder. Further, acceptance by the holder of partial payments
following due acceleration of the indebtedness evidenced hereby shall not
constitute a waiver by the holder of the acceleration of such indebtedness or
of any other right or remedy otherwise available to the holder in such
circumstance.
The Borrower waives presentment, protest and demand, notice of protest,
demand, dishonor and nonpayment of this Note.
The Borrower agrees to pay all costs incurred by the holder, including
without limitation costs of collection and reasonable attorney's fees, in case
the principal of this Note or any payment of interest thereon is not paid at
the respective due date or maturity thereof, or in case it becomes necessary to
protect the security for this Note, whether suit is brought or not, or in case
of any other default under this Note.
2
35
Any payment (including prepayments) upon this Note shall be applied first
to any expenses, charges or fees then due and payable to the Bank in connection
with the indebtedness evidenced hereby or any collateral for such indebtedness,
then to any accrued and unpaid interest hereunder, and then to the unpaid
principal balance.
In no event shall the Borrower be required to make any payment hereunder
which would violate any applicable law regulating or limiting the rate of
interest that the holder of the Note may lawfully charge or collect. In the
event any such payment is made by or for the account of the Borrower, such
payment shall, to the extent it exceeds the maximum payment that the holder
hereof lawfully may charge or collect, be applied toward reduction of the
principal balance hereof.
This Note is secured by a first lien on certain of the Borrower's accounts
receivable, machinery, equipment, furniture and fixtures, as set forth in the
Loan Agreement and in one or more Security Agreements between the Bank and the
Borrower dated June 12, 1997, all of which are incorporated herein by
reference.
This Note shall be governed by and enforced and construed in accordance
with the laws of Michigan. The invalidity, illegality or unenforceability of
any one or more of the provisions hereof shall not affect the validity,
legality or enforceability of the remaining provisions hereof, all of which
shall remain in full force and effect.
RIVIERA TOOL COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
3
36
THIS NOTE HAS BEEN EXECUTED AND DELIVERED PURSUANT TO A LOAN
AGREEMENT BETWEEN THE BANK AND THE BORROWER. REFERENCE IS MADE TO
SUCH LOAN AGREEMENT FOR, AMONG OTHER THINGS, A STATEMENT OF THE
OCCURRENCES WHICH MAY CONSTITUTE AN EVENT OF DEFAULT UNDER THIS
NOTE.
EXHIBIT C TO LOAN AGREEMENT
NON-REVOLVING EQUIPMENT LINE OF CREDIT LOAN NOTE
$4,000,000 June 12, 1997
For value received, RIVIERA TOOL COMPANY, a Michigan corporation (the
"Borrower"), promises to pay to the order of OLD KENT BANK, a Michigan banking
corporation (the "Bank"), the principal sum of FOUR MILLION AND NO/100 DOLLARS
($4,000,000), or such lesser sum as may have been advanced by the Bank to the
Borrower with respect to the loan evidenced by this Note pursuant to a certain
Loan Agreement dated June 12, 1997 (such Loan Agreement, together with all
amendments, renewals and replacements thereof, if any, is referred to as the
"Loan Agreement"), plus interest on the outstanding principal indebtedness
evidenced hereby from time to time at a rate per annum which, except during
default, is equal to:
(a) The Prime Rate (as defined in the Loan Agreement) plus 25 basis points
from time to time on principal indebtedness evidenced by this Note; or
(b) At that fixed rate of interest that is equal to the Six (6)-Year
Treasury Rate (as defined in the Loan Agreement) plus 275 basis points, but
only if the Borrower has so elected pursuant to Section 4.1(c) of the Loan
Agreement.
It is anticipated that the Bank will from time to time make advances of
the indebtedness evidenced hereby pursuant the Loan Agreement. As to each such
advance, the Borrower shall, subject to the Loan Agreement, have the option to
elect whether interest is to accrue on the amount of such advance at the rate
set forth in clause (a) or clause (b) above.
Following maturity or acceleration of the indebtedness evidenced by this
Note, the interest rate on the entire principal balance of this Note shall be
300 basis points higher than the interest rate otherwise in effect. In
addition, if any payment required hereby is not made within 15 days of its due
date, the Borrower shall be liable for a late payment charge in an amount equal
to five (5%) percent of the monthly payment due, except that in no event shall
the late payment charge exceed $2,000. The late payment charge shall apply
individually to all payments past due, without proration. All such default
interest and late payment charges, if any, shall be paid upon demand
37
by the holder hereof.
The indebtedness evidenced by this Note shall be paid as follows:
(a) Accrued interest at the applicable rate on the outstanding principal
balance of the indebtedness represented by this Note shall be due and payable
on the 1st day of each month, beginning July 1, 1997.
(b) On the ___ day of the first month following the date upon which the
outstanding principal indebtedness evidenced by this Note equals or exceeds
$500,000 (the "First Term-Out Election Date"), the Borrower shall have the
option to begin making payments of principal in an amount equal to the quotient
obtained by dividing the outstanding principal indebtedness evidenced by this
Note on the First Term-Out Election Date by seventy-two (72). The monthly
principal payment as so determined shall be made simultaneously with and in
addition to the interest payment due under clause (a) above. Unless sooner
accelerated by the Bank pursuant to the Loan Agreement, all such principal and
accrued and unpaid interest thereon shall, in any event, be due and payable on
the sixth (6th) anniversary of the First Term-Out Election Date. Promptly
after the Borrower notifies the Bank in writing that the Borrower has elected
to begin making payments of principal as provided in this clause (b), the Bank
shall prepare and the Borrower shall sign an amortization schedule showing the
required monthly principal payments resulting from the Borrower's election
under this clause (b), which election shall be irrevocable.
(c) The difference between the aggregate outstanding principal
indebtedness evidenced by this Note from time to time and any portion of such
indebtedness as to which the Borrower has elected to begin making principal
payments is referred as the "Remaining Principal Balance of this Note". The
Borrower shall have the option, exercisable six months after the First Term-Out
Election Date and at six-month intervals thereafter (each such date is referred
to as a "Subsequent Term-Out Election Date"), provided that the Remaining
Principal Balance of this Note on the Subsequent Term-Out Election Date equals
or exceeds $500,000, to begin making additional payments of principal in an
amount equal to the quotient obtained by dividing the Remaining Principal
Balance of this Note on the Subsequent Term-Out Election Date in question by
seventy-two (72). The monthly principal payment as so determined shall be made
simultaneously with and in addition to the interest payment due under clause
(a) and any principal payment due under clause (b) above. Unless sooner
accelerated by the Bank pursuant to the Loan Agreement, all such principal and
accrued and unpaid interest thereon shall, in any event, be due and payable on
the sixth (6th) anniversary of the Subsequent Term-Out Election Date as of
which the election was made. Promptly after the Borrower notifies the Bank in
writing that the Borrower has elected to begin making payments of principal as
provided in this clause (c), the Bank shall prepare and the Borrower shall sign
an amortization schedule showing the required monthly principal payments
resulting from the Borrower's election under this clause (c), which election
shall be irrevocable.
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(d) All principal indebtedness represented by this Note (other than such
principal indebtedness as is being repaid on the basis of a written
amortization schedule resulting from an election made by the Borrower pursuant
to clause (b) or (c) above), and all accrued and unpaid interest thereon shall,
in any event, be due and payable on July 1, 2003, unless sooner accelerated by
the Bank pursuant to the Loan Agreement.
The indebtedness evidenced by this Note may be prepaid in whole or in part
upon notice and with the prepayment premium provided for in Section 4.6 of the
Loan Agreement.
All payments hereunder shall be made in lawful money of the United States
of America to the Bank at its principal office in Grand Rapids, Michigan, or at
such other place as the holder hereof may from time to time specify.
Upon the occurrence of an Event of Default under the Loan Agreement that
has not been cured after notice and within the applicable grace period set
forth in the Loan Agreement, the entire principal balance of this Note
remaining at that time unmatured, together with all accrued interest thereon,
shall, at the election of the holder hereof and without notice of such election
and without demand or presentment, become immediately due and payable, anything
contained herein or in any other document or instrument to the contrary
notwithstanding.
Neither the failure of the holder hereof promptly to exercise its right to
declare the outstanding principal and accrued and unpaid interest and other
charges hereunder to be immediately due and payable, nor failure to exercise
any other right or remedy the holder may have for default, nor the acceptance
by the holder of late or partial payments, nor the failure of the holder to
demand strict performance of any obligation of the Borrower hereunder, shall
constitute a waiver of any such rights while such default continues, nor a
waiver of any such rights in connection with any future default on the part of
the Borrower hereunder. Further, acceptance by the holder of partial payments
following due acceleration of the indebtedness evidenced hereby shall not
constitute a waiver by the holder of the acceleration of such indebtedness or
of any other right or remedy otherwise available to the holder in such
circumstance.
The Borrower waives presentment, protest and demand, notice of protest,
demand, dishonor and nonpayment of this Note.
The Borrower agrees to pay all costs incurred by the holder, including
without limitation costs of collection and reasonable attorney's fees, in case
the principal of this Note or any payment of interest thereon is not paid at
the respective due date or maturity thereof, or in case it becomes necessary to
protect the security for this Note, whether suit is brought or not, or in case
of any other default under this Note.
Any payment (including prepayments) upon this Note shall be applied first
to any
3
39
expenses, charges or fees then due and payable to the Bank in connection
with the indebtedness evidenced hereby or any collateral for such indebtedness,
then to any accrued and unpaid interest hereunder, and then to the unpaid
principal balance.
In no event shall the Borrower be required to make any payment hereunder
which would violate any applicable law regulating or limiting the rate of
interest that the holder of the Note may lawfully charge or collect. In the
event any such payment is made by or for the account of the Borrower, such
payment shall, to the extent it exceeds the maximum payment that the holder
hereof lawfully may charge or collect, be applied toward reduction of the
principal balance hereof.
This Note is secured by a first lien on certain of the Borrower's accounts
receivable, machinery, equipment, furniture and fixtures, as set forth in the
Loan Agreement and in one or more Security Agreements between the Bank and the
Borrower dated June 12, 1997, all of which are incorporated herein by
reference.
This Note shall be governed by and enforced and construed in accordance
with the laws of Michigan. The invalidity, illegality or unenforceability of
any one or more of the provisions hereof shall not affect the validity,
legality or enforceability of the remaining provisions hereof, all of which
shall remain in full force and effect.
RIVIERA TOOL COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
4
40
EXHIBIT D TO LOAN AGREEMENT
Exhibit D consists of compliance reports in the forms attached hereto
as Schedules A, B and C, respectively, which are to be submitted to the Bank on
a weekly basis as required by Section 6.1(c) of the Loan Agreement.
41
SCHEDULE 2.5
PENDING LITIGATION
Riviera Die & Tool Company, Inc., et al v. Durametallic Corporation, et al.,
Kent County Circuit Court Case No. 94-2809-CZ
42
SCHEDULE 2.12
EMPLOYEE PENSION BENEFIT PLANS
43
SCHEDULE 7.10
REAL AND PERSONAL PROPERTY OPERATING LEASES
1. GE Capital Fleet -- Semi-tractor and trailer
2. Fleet Capital Corp. -- two surface grinders
3. ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ -- computer equipment
4. IBM -- Cadam and Catia software (license and maintenance)
5. ▇▇▇▇▇▇-▇▇▇▇▇ Credit Corp. -- postage meter
6. AT+T -- telephone equipment lease
7. Greenbrook Limited Partners/Riviera, a Michigan limited partnership
and Riviera Die & Tool, Inc. Lease Under Agreement 11/1/88
44
ADDENDUM TO SECURITY AGREEMENT
The provisions of this Addendum to Security Agreement (this "Addendum")
modify, and are a part of, a Security Agreement dated even date herewith (the
"Original Security Agreement") between Riviera Tool Company, a Michigan
corporation, as Debtor, and Old Kent Bank, a Michigan banking corporation, as
Bank.
The parties agree as follows:
1. This Addendum is incorporated into and made a part of the
Original Security Agreement. If there is any conflict between the Original
Security Agreement and this Addendum, this Addendum shall control. Unless
otherwise defined herein, capitalized terms shall have the meanings assigned to
them in the Original Security Agreement. Each reference to "Security
Agreement" or "Agreement" in the Original Security Agreement or this Addendum
means the Original Security Agreement, as modified and supplemented hereby.
2. The indebtedness and obligations now owing or to be owed by
Debtor to Bank and secured by the Collateral, include, without limitation,
the indebtedness and obligations evidenced by the following agreements,
instruments and documents:
(a) Loan Agreement dated June 12, 1997, between Riviera and Old
Kent;
(b) $10,000,000 Revolving Line of Credit Loan Note dated June 12,
1997, from Riviera to Old Kent;
(c) $3,250,000 Existing Equipment Term Loan Note dated June 12,
1997, from Riviera to Old Kent;
(d) $4,000,000 Non-Revolving Equipment Line of Credit Loan Note
dated June 12, 1997, from Riviera to Old Kent;
(e) Security Agreement (Equipment and Fixtures) dated June 12,
1997, from Riviera to Old Kent;
(f) Security Agreement (Accounts, Contract Rights, Chattel Paper,
General Intangibles) dated June 12, 1997, from Riviera to Old
Kent;
(g) Security Agreement (Inventory) dated June 12, 1997, from
Riviera to Old Kent;
(h) UCC-1 Financing Statements relating to the collateral pledged to
Old Kent pursuant to the Security Agreements listed above;
(i) Collateral Assignment of Insurance Policy on the life of
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇;
45
3. Debtor shall be in default under the Security Agreement
immediately upon the occurrence of any Event of Default, as that phrase is
defined in the Loan Agreement. Upon any such default, in addition to the
remedies contained in the Original Security Agreement, Bank may exercise the
remedies contained in the Loan Agreement.
4. If there is any conflict, or differences in notice, cure,
default or permitted lien provisions, between the Security Agreement and the
Loan Agreement, the Loan Agreement shall control.
This Addendum is entered into by the parties on June 12, 1997.
OLD KENT BANK
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
RIVIERA TOOL COMPANY
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
2
46
Affiliate #___________________
SECURITY AGREEMENT
(Accounts, Contract Rights, Chattel Paper, General Intangibles)
The undersigned ("Debtor") hereby grant(s) to OLD KENT BANK, a Michigan
banking corporation, of ▇▇▇ ▇▇▇▇ ▇▇., ▇.▇., ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
("Bank") a continuing security interest in, and hereby transfers and assigns to
Bank, for security, all accounts, contract rights, chattel paper, instruments,
and general intangibles, wherever located, now owned and hereafter acquired by
Debtor, including, but not limited to, all acccounts receivable, notes and
loans receivable, all rights of Debtor to payment for goods sold or leased, or
to be sold or leased or for services rendered, or to be rendered, together with
all rights, title and interest of Debtor, including the right of stoppage in
transit, in and to all goods the sale, delivery, or lease of which by Debtor
gave rise to such rights to payment, and all other obligations to and rights of
Debtor for the payment of money, and all proceeds thereof, and all books,
records and documents at any time evidencing or relating to any of the
foregoing, (collectively called "Collateral"). THIS SECURITY INTEREST SECURES
PAYMENT AND PERFORMANCE OF ALL INDEBTEDNESS AND OBLIGATIONS NOW AND HEREAFTER
OWING BY DEBTOR TO BANK, including all obligations of Debtor under this
Agreement, and all indebtedness and obligations now and hereafter owing to Bank
that are evidenced by any instruments, documents and agreements listed below
that have been executed by another person or persons, including any and all
renewals, extensions and modifications thereof (collectively called the
"Indebtedness"). The indebtedness and obligations now owing by Debtor to Bank
include, BUT ARE NOT NECESSARILY LIMITED TO, the indebtedness and obligations
evidenced by any instruments, documents and agreements listed below.
INSTRUMENT, DOCUMENT PRINCIPAL AMOUNT MAKER
OR AGREEMENT DATE (IF ANY) (IF OTHER THAN DEBTOR)
See Addendum attached
hereto.
This security interest secures all present and future indebtedness and
obligations owing by Debtor to Bank, regardless of whether any such
indebtedness or obligation is (a) not listed above, (b) not presently intended
or contemplated by Debtor or Bank, (c) indirect, contingent or secondary, (d)
unrelated to the Collateral or to any financing of the Collateral by Bank, (e)
of a kind or class that is different from any indebtedness or obligation now
owing by Debtor to Bank, or (f) evidenced by a note or other document that does
not refer to this security interest or this Agreement.
If Debtor is more than one person, the indebtedness includes all
indebtedness and obligations now and hereafter owing to Bank by any one or more
of such persons, regardless of whether the remaining person or persons are not
liable for such indebtedness and obligations or whether any one or more persons
who are not parties to this Agreement are also liable for all or part of such
indebtedness and obligations.
Additional provisions: See Addendum.
---------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
THE ADDITIONAL PROVISIONS PRINTED ON THE REVERSE SIDE ARE PART OF THIS
AGREEMENT AND ARE INCORPORATED IN THIS AGREEMENT BY REFERENCE.
Executed this 12th day of June, 1997.
OLD KENT BANK NONINDIVIDUAL DEBTOR:
Riviera Tool Company
--------------------------------------
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ A Michigan
---------------------- ------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (State or Organization)
Its Vice President corporation
------------------ ------------------------------------
(Type of Entity)
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Its: President
--------------------------------
Taxpayer Ident. No.: ▇▇-▇▇▇▇▇▇▇
--------------------------------
Individual Debtor(s):
--------------- ---------------------
Social Security No.
47
ASSIGNMENT OF LIFE INSURANCE POLICY AS COLLATERAL
A. The undersigned ("Assignor") assign(s) and transfer(s) to
OLD KENT BANK of GRAND RAPIDS, MI
---------------------------------------, ------------------------------
("Assignee"), as security, Policy No. U009,869
--------------------------------------
issued by PHOENIX MUTUAL LIFE INSURANCE COMPANY ("Insurer")
-------------------------------------------------------
upon the life of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------------------- and
any supplementary contracts issued in connection with the policy (the policy
and the supplementary contracts are called the "Policy") and all claims,
options, privileges, rights, title and interest in and under the Policy
(except as provided in Paragraph C), subject to all the terms and conditions
of the Policy and to all superior liens, if any, that the Insurer may have
against the Policy.
B. Without detracting from the generality of the foregoing, the following
specific rights are included in this Assignment and pass to Assignee:
1. The sole right to collect from Insurer the net proceeds of the Policy
when it becomes a claim by death or maturity;
2. The sole right to surrender the Policy and receive its surrender value
at any time provided by the terms of the Policy and at any other times
as Insurer may allow;
3. The sole right to obtain one or more loans or advances on the Policy,
either from Insurer or from other persons, and to pledge or assign the
Policy as security for those loans or advances;
4. The sole right to collect and receive all distributions or shares of
surplus, dividend deposits or additions to the Policy now or in the
future made or apportioned to it, and to exercise any and all options
contained in the Policy with respect to those distributions, shares,
deposit; or additions but unless and until Assignee shall notify Insurer
in writing to the contrary, the distributions or shares of surplus,
dividend deposits and additions shall continue on the plan
in force at the time of this Assignment; and
5. The sole right to exercise all nonforfeiture rights permitted by the
terms of the Policy or allowed by Insurer and to receive all benefits
and advantages derived from those rights.
C. The following specific rights, so long as the Policy has not been
surrendered, are reserved and excluded from this Assignment and do not
pass to Assignee:
1. The right to collect from Insurer any disability benefit payable in cash
that does not reduce the amount of insurance;
2. The right to designate and change the beneficiary; and
3. The right to elect any optional mode of settlement permitted by the
Policy or allowed by Insurer; but the reservation of these rights shall
not impair the right of the Assignee to surrender the Policy completely
with all its incidents or any other right of the Assignee under this
Assignment, and any designation or change of beneficiary or election of
a mode of settlement shall be made subject to this Assignment and to the
rights of the Assignee under it.
D. THIS ASSIGNMENT IS MADE AND THE POLICY IS TO BE HELD AS COLLATERAL SECURITY
FOR ANY AND ALL INDEBTEDNESS AND OBLIGATIONS NOW OR IN THE FUTURE OWING TO
ASSIGNEE BY ASSIGNOR AND FOR ANY AND ALL INDEBTEDNESS AND OBLIGATIONS NOW OR
IN THE FUTURE OWING TO ASSIGNEE BY Riviera Tool Company
----------------------------------------
("DEBTOR"), regardless of whether any such indebtedness or obligation is
(a) not presently intended or contemplated by Assignee, Assignor or
Debtor, (b) indirect, contingent or secondary, (c) unrelated to the Policy,
(d) of a kind or class that is different from any indebtedness or
obligation now owing to Assignee by Assignor or Debtor, or (e) evidenced
by a note or other document that does not refer to this Assignment
(collectively, the "INDEBTEDNESS").
E. Assignee agrees as follows:
1. Any balance of sums received under this Assignment from Insurer
remaining after payment of the then-existing Indebtedness, matured or
unmatured, shall be returned by Assignee to Insurer, which shall pay the
balance to the persons who would be entitled to it under the terms of
the Policy in this Assignment had not been made;
2. Assignee will not exercise either the right to surrender the Policy or
(except for the purpose of paying premiums) the right to obtain policy
loans from Insurer until there has been default in payment of any of the
Indebtedness or a failure to pay any premium when due; and
3. Upon the request of the undersigned owner of the Policy, Assignee will
send the Policy to Insurer for endorsement of any designation or change
of beneficiary or any election of an optional mode of settlement.
F. Insurer is authorized to recognize the Assignee's claims to rights under
this Assignment without investigating the reason for any action taken by
Assignee or the validity or the amount of the Indebtedness or the existence
of any default in the Indebtedness or the application to be made by Assignee
of any amounts to be paid to Assignee. The sole signature of Assignee shall
be sufficient for the exercise of any rights under the Policy assigned by
this Assignment and the sole receipt of Assignee for any sums received
shall be a full discharge and release to Insurer. Checks for all or any
part of the sums payable under the Policy and assigned in this Assignment
shall be drawn to the exclusive order of Assignee if, when, and in such
amounts as Assignee shall request.
G. Assignee shall be under no obligation to pay any premium or the principal
of or interest on any loans or advances on the Policy, whether or not
obtained by Assignee, or any other charges on the Policy, but any
amounts so paid by the Assignee from its own funds shall become a part
of the Indebtedness secured by this Assignment, payable by Assignor on
demand, together with interest at an annual rate equal to the lesser of (i)
five percent (5%) above the rate of interest announced from time to time by
Assignee as its "prime" rate of interest, or (ii) the highest rate to which
the undersigned could lawfully agree in writing.
H. The exercise of any right, option, privilege or power given in this
Assignment to Assignee shall be at the option of Assignee, but (except as
restricted by Paragraph E (2) above) Assignee may exercise any such right,
option, privilege or power without notice to, or assent by, or affecting the
liability of, or releasing any interest assigned in this Assignment by,
Assignor.
I. If Paragraph D provides that this Assignment secures indebtedness and
obligations owing to Assignee by a third party named in that paragraph
("DEBTOR"), then the Additional Provisions of Assignment set forth on the
reverse side are a part of this Assignment and are incorporated in it by
reference.
J. Notwithstanding the foregoing, the maximum amount of net proceeds of the
Policy that Assignee shall be entitled to receive under this Assignment is
500,000.00. If no amount, zero or the words "No Limit," "None" or
similar words are inserted in the blank space in this paragraph,then
there is no limit on the amount of net proceeds of the Policy that
Assignee may receive under this Assignment.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
RIVIERA TOOL COMPANY Policy Owner
Signed as of June 13, 1997 . ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------- -------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-------------------------------------
[SIG] Address
-------------------------------------- -------------------------------------
Witness Policy Beneficiary
[SIG] -------------------------------------
--------------------------------------
Witness -------------------------------------
48
ADDITIONAL PROVISIONS OF ASSIGNMENT
K. The effectiveness of this Assignment is not subject to the satisfaction of
any conditions, including, without limitation, the granting of any other
security by any other person, firm, or corporation. Assignee shall not be
obligated at any time to make any disclosure to Assignor concerning
Debtor's financial condition, assets, liabilities, activities, or
operations or the status of the Indebtedness or of any other security for
the Indebtedness. This Assignment does not create any obligation or duty
of Assignee to grant or continue credit to Debtor or to give notice to or
obtain the consent of Assignor before doing so.
L. Assignee in its sole discretion may, without affecting or impairing this
Assignment, apply payments or collections received from any source other
than the policy to the payment of indebtedness other than the Indebtedness,
even though Assignee could have applied those payments to the
Indebtedness. Any payments that Assignee receives from Insurer under this
Assignment shall be applied to the interest on or principal of the
Indebtedness or to other components of the Indebtedness in any manner that
Assignee in its sole discretion shall determine.
M. Assignor waives (a) notice of the acceptance of this Assignment; (b)
presentment, protest, notice, demand, or action with respect to any default
in payment of all or any part of the Indebtedness, and (c) any right to
require Assignee to ▇▇▇ Debtor or any other person obligated with respect
to all or any part of the Indebtedness or to foreclose or realize upon any
security for all or any part of the Indebtedness.
N. The validity and enforceability of this Assignment shall not be impaired or
affected by the invalidity or unenforceability of any of the Indebtedness
or of any guaranty or other security for it or by any act or omission by
Assignee with respect to all or part of the Indebtedness or any agreement
relating to the Indebtedness or with respect to any present or future
guaranty or other security for all or part of the Indebtedness, including,
but not limited to, (a) any extension, modification, renewal, indulgence,
or substitution, (b) any failure or omission to enforce any right, power, or
remedy, (c) any waiver of any right, power, or remedy or of any default, (d)
any release, surrender, compromise, settlement, subordination, or
modification, with or without consideration, or (e) any consent by Assignee
to any sale or transfer of any security; all whether or not Assignor shall
have had notice or knowledge of any act, omission, or circumstance referred
to in this paragraph.
O. This Assignment is independent of any other obligations at any time in
effect with respect to all or any part of the Indebtedness and may be
enforced regardless of the existence, validity, enforcement, or
nonenforcement of any such other obligations.
INDIVIDUAL ACKNOWLEDGEMENT
STATE OF ____________)
:ss.
COUNTY OF ___________)
The Assignment of Life Insurance Policy as Collateral on the
reverse side, including the Additional Provisions on this side, was
acknowledged before me on ________________, 199____, by _________________.
__________________________________
Notary Public
_____________ County, ____________
My commission expires ____________
ACKNOWLEDGEMENT BY ENTITY
STATE OF Michigan )
:ss.
COUNTY OF Kent )
The Assignment of Life Insurance Policy as Collateral on the reverse
side, including the Additional Provisions on this side, was acknowledged before
me on June 12, 1997, by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ the President of Riviera Tool Company,
a Michigan Corporation, on its behalf.
--------------------
(type of entity)
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇
----------------------------------
Notary Public
Kent County, Michigan
My commission expires Feb. 2, ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇
My Commission Expires Feb. 2, 2002
INSURER'S ACKNOWLEDGMENT, CERTIFICATION AND AGREEMENT
The undersigned Insurer acknowledges having received and filed, at its
home office in ____________________________ on _______________, 199__, the
Assignment of Life Insurance Policy as Collateral on the reverse side. Insurer
certifies to the Assignee named in the Assignment and agrees that (a) the
Policy described in the Assignment is in full force and effect; (b) there are
no other assignments of the Policy on file with the Insurer, except in favor of
Assignee; and (c) Insurer will not cancel the Policy or permit it to lapse
(whether for nonpayment of premiums or otherwise) without giving Assignee at
least 30 days' prior written notice and the opportunity to cure any default in
premium payments or otherwise.
_______________________________________
(Name of Insurer)
By ____________________________________
Authorized Officer
49
ASSIGNMENT OF LIFE INSURANCE POLICY AS COLLATERAL
A. The undersigned ["Assignor"] assign(s) and transfer(s) to Old Kent Bank
of Grand Rapids, MI ["Assignee"], as security, Policy No. 0011750620 issued
by ▇▇▇▇▇▇▇ National Life Insurance Company ["Insurer"] upon the life of
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and any supplementary contracts issued in connection with
the policy (the policy and the supplementary contracts are called the
"Policy") and all claims, options, privileges, rights, title and interest in
and under the Policy (except as provided in Paragraph C), subject to all the
terms and conditions of the Policy and to all superior liens, if any, that
the Insurer may have against the Policy.
B. Without detracting from the generality of the foregoing, the following
specific rights are included in this Assignment and pass to Assignee:
1. The sole right to collect from Insurer the net proceeds of the Policy
when it becomes a claim by death or maturity;
2. The sole right to surrender the Policy and receive its surrender value at
any time provided by the terms of the Policy and at any other times as
Insurer may allow:
3. The sole right to obtain one or more loans or advances on the Policy,
either from Insurer or from other persons, and to pledge or assign the
Policy as security for those loans or advances;
4. The sole right to collect and receive all distributions or shares of
surplus, dividend deposits or additions to the Policy now or in the
future made or apportioned to it, and to exercise any and all options
contained in the Policy with respect to those distributions, shares,
deposits or additions; but unless and until Assignee shall notify
Insurer in writing to the contrary, the distributions or shares of
surplus, dividend deposits and additions shall continue on the plan in
force at the time of this Assignment; and
5. The sole right to exercise all nonforfeiture rights permitted by the
terms of the Policy or allowed by Insurer and to receive all benefits and
advantages derived from those rights.
C. The following specific rights, so long as the Policy has not been
surrendered, are reserved and excluded from this Assignment and do not pass
to Assignee:
1. The right to collect from Insurer any disability benefit payable in cash
that does not reduce the amount of insurance;
2. The right to designate and change the beneficiary; and
3. The right to elect any optional mode of settlement permitted by the
Policy or allowed by Insurer; but the reservation of these rights shall
not impair the right of the Assignee to surrender the Policy completely
with all its incidents or any other right of the Assignee under this
Assignment, and any designation or change of beneficiary or election of
a mode of settlement shall be made subject to this Assignment and to
the rights of the Assignee under it.
D. THIS ASSIGNMENT IS MADE AND THE POLICY IS TO BE HELD AS COLLATERAL SECURITY
FOR ANY AND ALL INDEBTEDNESS AND OBLIGATIONS NOW OR IN THE FUTURE OWING TO
ASSIGNEE BY ASSIGNOR AND FOR ANY AND ALL INDEBTEDNESS AND OBLIGATIONS NOW OR
IN THE FUTURE OWING TO ASSIGNEE BY
Riviera Tool Company ("DEBTOR"), regardless of whether any such indebtedness
or obligation is (a) not presently intended or contemplated by Assignee,
Assignor or Debtor, (b) indirect, contingent or secondary, (c) unrelated to
the Policy, (d) of a kind or class that is different from any indebtedness
or obligation now owing to Assignee by Assignor or Debtor, or (e) evidenced
by a note or other document that does not refer to this Assignment
(collectively, the "INDEBTEDNESS").
E. Assignee agrees as follows:
1. Any balance of sums received under this Assignment from Insurer
remaining after payment of the then-existing Indebtedness, matured or
unmatured, shall be returned by Assignee to Insurer, which shall pay the
balance to the persons who would be entitled to it under the terms of
the Policy in this Assignment had not been made;
2. Assignee will not exercise either the right to surrender the Policy or
(except for the purpose of paying premiums) the right to obtain policy
loans from Insurer until there has been default in payment of any of the
Indebtedness or a failure to pay any premium when due; and
3. Upon the request of the undersigned owner of the Policy, Assignee will
send the Policy to Insurer for endorsement of any designation or change
of beneficiary or any election of an optional mode of settlement.
F. Insurer is authorized to recognize the Assignee's claims to rights under
this Assignment without investigating the reason for any action taken by
Assignee or the validity or the amount of the Indebtedness or the existence
of any default in the Indebtedness or the application to be made by Assignee
of any amounts to be paid to Assignee. The sole signature of Assignee shall
be sufficient for the exercise of any rights under the Policy assigned by
this Assignment and the sole receipt of Assignee for any sums received shall
be a full discharge and release to Insurer. Checks for all or any part of
the sums payable under the Policy and assigned in this Assignment shall be
drawn to the exclusive order of Assignee if, when, and in such amounts as
Assignee shall request.
G. Assignee shall be under no obligation to pay any premium or the principal of
or interest on any loans or advances on the Policy, whether or not obtained
by Assignee, or any other charges on the Policy, but any amounts so paid by
the Assignee from its own funds shall become a part of the Indebtedness
secured by this Assignment, payable by Assignor on demand, together with
interest at an annual rate equal to the lesser of (i) five percent (5%)
above the rate of interest announced from time to time by Assignee as its
"prime" rate of interest, or (iii) the highest rate to which the undersigned
could lawfully agree in writing.
H. The exercise of any right, option, privilege or power given in this
Assignment to Assignee shall be at the option of Assignee, but (except as
restricted by Paragraph E (2) above) Assignee may exercise any such right,
option, privilege or power without notice to, or assent by, or affecting the
liability of, or releasing any interest assigned in this Assignment by,
Assignor.
I. If Paragraph D provides that this Assignment secures indebtedness and
obligations owing to Assignee by a third party named in that paragraph
("DEBTOR"), then the Additional Provisions of Assignment set forth on the
reverse side are a part of this Assignment and are incorporated in it by
reference.
J. Notwithstanding the foregoing, the maximum amount of net proceeds of the
Policy that Assignee shall be entitled to receive under this Assignment is
1,000,000.00. If no amount, zero or the words "No Limit," "None" or similar
words are inserted in the blank space in this paragraph, then there is no
limit on the amount of net proceeds of the Policy that Assignee may receive
under this Assignment.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
RIVIERA TOOL COMPANY Policy Owner
Signed as of June 12, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------- ------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
------------------------------------
[SIG] Address
-----------------------------------
Witness ------------------------------------
Policy Beneficiary
[SIG]
----------------------------------- ------------------------------------
Witness
------------------------------------
50
ADDITIONAL PROVISIONS OF ASSIGNMENT
K. The effectiveness of this Assignment is not subject to the satisfaction of
any conditions, including, without limitation, the granting of any other
security by any other person, firm, or corporation. Assignee shall not be
obligated at any time to make any disclosure to Assignor concerning
Debtor's financial condition, assets, liabilities, activities, or
operations or the status of the Indebtedness or of any other security for
the Indebtedness. This Assignment does not create any obligation or duty
of Assignee to grant or continue credit to Debtor or to give notice to or
obtain the consent of Assignor before doing so.
L. Assignee in its sole discretion may, without affecting or impairing this
Assignment, apply payments or collections received from any source other
than the policy to the payment of indebtedness other than the
Indebtedness, even though Assignee could have applied those payments to
the Indebtedness. Any payments that Assignee receives from Insurer under
this Assignment shall be applied to the interest on or principal of the
Indebtedness or to other components of the Indebtedness in any manner that
Assignee in its sole discretion shall determine.
M. Assignor waives (a) notice of the acceptance of this Assignment, (b)
presentment, protest, notice, demand, or action with respect to any
default in payment of all or any part of the Indebtedness, and (c) any
right to require Assignee to ▇▇▇ Debtor or any other person obligated with
respect to all or any part of the Indebtedness or to foreclose or realize
upon any security for all or any part of the Indebtedness.
N. The validity and enforceability of this Assignment shall not be impaired
or affected by the invalidity or unenforceability of any of the
Indebtedness or of any guaranty or other security for it or by any act or
omission by Assignee with respect to all or part of the Indebtedness or
any agreement relating to the Indebtedness or with respect to any present
or future guaranty or other security for all or part of the Indebtedness,
including, but not limited to, (a) any extension, modification, renewal,
indulgence, or substitution, (b) any failure or omission to enforce any
right, power, or remedy, (c) any waiver of any right, power, or remedy or
of any default, (d) any release, surrender, compromise, settlement,
subordination, or modification, with or without consideration, or (e) any
consent by Assignee to any sale or transfer of any security; all whether
or not Assignor shall have had notice or knowledge of any act, omission,
or circumstance referred to in this paragraph.
O. This Assignment is independent of any other obligations at any time in
effect with respect to all or any part of the Indebtedness and may be
enforced regardless of the existence, validity, enforcement, or
nonenforcement of any such other obligations.
INDIVIDUAL ACKNOWLEDGEMENT
STATE OF ____________________)
:ss.
COUNTY OF ___________________)
The Assignment of Life Insurance Policy as Collateral on the reverse side,
including the Additional Provisions on this side, was acknowledged before me on
_______________________, 199_____, by ________________________________.
______________________________________
Notary Public
______________ County,_______________
My commission expires ________________
ACKNOWLEDGEMENT BY ENTITY
STATE OF MICHIGAN )
:ss.
COUNTY OF KENT )
The Assignment of Life Insurance Policy as Collateral on the reverse
side, including the Additional Provisions on this side, was acknowledged
before me on June 12, 1997, by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ the President of Riviera Tool
Company a Michigan Corporation, on its behalf.
--------------------
(type of entity)
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇
-----------------------------------
Notary Public
Kent County, Michigan
My commission expires Feb. 2, ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇
My Commission Expires Feb. 2, 2002
INSURER'S ACKNOWLEDGEMENT, CERTIFICATION AND AGREEMENT
The undersigned insurer acknowledges having received and filed, at its
home office in ___________________________ on ______________, 199_____, the
Assignment of Life Insurance Policy as Collateral on the reverse side. Insurer
certifies to the Assignee named in the Assignment and agrees that (a) the
Policy described in the Assignment is in full force and effect; (b) there are
no other assignments of the Policy on file with the Insurer, except in favor of
Assignee; and (c) Insurer will not cancel the Policy or permit it to lapse
(whether for nonpayment of premiums or otherwise) without giving Assignee at
least 30 days' prior written notice and the opportunity to cure any default in
premium payments or otherwise.
_____________________________________
(Name of Insurer)
By___________________________________
Authorized Officer
