EXHIBIT 10(dd)
SUBORDINATED LOAN AGREEMENT
This Subordinated Loan Agreement is made as of December 23, 2002, by
FIFTH THIRD BANK, a Michigan banking corporation f/k/a Old Kent Bank (the
SUBORDINATED LENDER), Xxx Xxxxxxxxxx Xxxxxx, Xxxxx Xxxxxx, Xxxxxxxx 00000, and
RIVIERA TOOL COMPANY, a Michigan corporation (the BORROWER), 0000 Xxxxxxxxx
Xxxxxxx, Xxxxx Xxxxxx, Xxxxxxxx 00000.
RECITALS:
A. Immediately before the parties executed and delivered this
Agreement, the Borrower was indebted to the Subordinated Lender in the principal
amount of $9,909,394.26, plus accrued and unpaid interest, pursuant to a First
Restated Loan Agreement dated as of August 31, 1999, as amended by the First
through Seventh Amendments thereto (the FORMER LOAN AGREEMENT) and the related
loan documents referred to in the Former Loan Agreement.
B. Simultaneously with the execution and delivery of this Agreement,
the Borrower refinanced all of its debt outstanding under the Former Loan
Agreement, other than the Subordinated Debt (defined below), with the proceeds
of a loan extended to the Borrower by Comerica Bank (the SENIOR LENDER).
C. This Agreement supersedes and replaces the Former Loan Agreement
and, together with the other Subordinated Loan Documents (defined below), sets
forth the terms and conditions upon which the Subordinated Lender has agreed to
extend the Subordinated Debt to the Borrower, all of which are acceptable to the
Borrower.
The Subordinated Lender and the Borrower agree that:
SECTION 1 - DEFINITIONS
As used in this Agreement, unless the context otherwise requires, the
following terms have the following meanings:
1.1 EVENT OF DEFAULT has the meaning given such term in Section 7.1
below.
1.2 GAAP means generally accepted accounting principles as in
existence on the date of this Agreement, consistently applied.
1.3 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 under the lease
pursuant to which the Borrower occupies its office and plant facilities in Grand
Rapids, MI, shall not constitute Indebtedness.
1.4 INTERCREDITOR AGREEMENT means the Intercreditor Agreement dated
December 23, 2002, to which the Senior Lender and the Subordinated Lender are
parties relating to the Senior Debt and the Subordinated Debt, and all
modifications to or replacements of any such documents.
1.5 MATERIAL ADVERSE EFFECT means any material adverse effect
whatsoever upon (a) the validity, performance or enforceability of any of the
Senior Loan Documents or Subordinated Loan Documents, (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 Senior Loan Documents and the Subordinated Loan Documents.
1.6 ORDINARY COURSE means, with respect to the Borrower, any activity
performed in accordance with the Borrower's historical and customary practices.
1.7 PERMITTED LIENS means (a) security interests, mortgages, and
liens in favor of the Senior Lender; (b) liens for taxes not delinquent or, in a
jurisdiction where payment of taxes is deferred during the period of any
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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; (f) leases permitted under Section 6.10 of this Agreement; and (f)
liens securing any Indebtedness of the Borrower to third parties permitted under
Section 6.9(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.
1.8 SENIOR LOAN and SENIOR DEBT each mean all of the Borrower's
indebtedness and obligations, now owing or hereafter arising, under the Senior
Loan Documents.
1.9 SENIOR LOAN DOCUMENTS means each and every document that now or
hereafter evidences or secures the Senior Debt, and all amendments or
modifications to or replacements of any such documents.
1.10 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.
1.11 SUBORDINATED LOAN and SUBORDINATED DEBT each mean the
$1,414,985.80 loan from the Subordinated Lender to the Borrower evidenced by the
Subordinated Note, together with interest and other costs accruing under the
Subordinated Note and all of the Borrower's other obligations and liabilities
arising under any of the Subordinated Loan Documents.
1.12 SUBORDINATED LOAN DOCUMENTS means this Agreement, the
Subordinated Note, and each and every other document evidencing the Subordinated
Debt, and all amendments or modifications to or replacements of any of the
foregoing.
1.13 SUBORDINATED NOTE means the $1,414,985.80 Subordinated Unsecured
Promissory Note dated December 23, 2002, executed and delivered by the Borrower
to the Subordinated Lender to evidence the Subordinated Loan, together with any
renewals, extensions, or modifications thereof.
1.14 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.
1.15 TO BORROWER'S KNOWLEDGE means the actual knowledge, after due
inquiry, of Xxxxxxx X. Xxxxx or Xxxxx X. Xxxxxx, and their respective successors
in office.
SECTION 2 - WARRANTIES AND REPRESENTATIONS
To induce the Subordinated Lender to enter into this Agreement, the
Borrower represents and warrants to the Subordinated Lender that the following
statements are true, correct and accurate both before and after giving effect to
the transactions contemplated by the Senior Loan Documents and the Subordinated
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 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 Subordinated Lender have been prepared in accordance with GAAP, subject
to normal year-end adjustments and footnotes for interim, unaudited statements,
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 and the liabilities set forth in the Senior Loan Documents
and the Subordinated Loan Documents, the Borrower has
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no material contingent liability or liability for taxes, long-term lease or
unusual forward or long-term commitment; provided, however, that the footnotes
contained in the audited financial statements provide information necessary to
complete a review of the Borrower's entire liabilities, contingent and
non-contingent, that is not contained in interim statements.
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 Senior Lender in connection with the Senior Loans or to
the Subordinated Lender in connection with the Subordinated Loan, 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
Subordinated Lender in writing that has, or in the future is likely to have, a
Material Adverse Effect.
2.5 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,
modifications or amendments to any of such leases except as previously disclosed
in writing to the Subordinated Lender.
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 Senior Loan Documents and the Subordinated Loan
Documents; the execution, delivery, and performance of the Subordinated Loan
Documents 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
Subordinated Loan Documents have been duly executed and delivered by the
Borrower, and are the valid and binding obligations of the Borrower, 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.
2.14 The execution, delivery and performance by the Borrower of each
Subordinated Loan Document 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
Subordinated Lender) 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.
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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 SUBORDINATED LOAN
3.1 As of the date of this Agreement, the Subordinated Loan is the
only outstanding indebtedness of the Borrower to the Lender. The Subordinated
Loan is evidenced by the Subordinated Note. The Borrower acknowledges that the
Lender has not agreed and is not otherwise committed or required to make any
other loans to the Borrower or to extend credit in any other form to the
Borrower. The Borrower acknowledges that the Subordinated Loan is not a
revolving loan, and that amounts repaid on the Subordinated Loan cannot be
re-borrowed and will not be re-advanced or otherwise made available to the
Borrower. The Subordinated Loan is subject in all respects to the terms and
conditions of this Agreement and the other Subordinated Loan Documents.
SECTION 4 - SECURITY
4.1 The Subordinated Loan is unsecured.
SECTION 5 - AFFIRMATIVE COVENANTS
From the date hereof and until the Subordinated Loan has been paid in
full, the Borrower shall:
5.1 Furnish to the Subordinated Lender whatever information, books,
and records the Subordinated Lender 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, 2003,
an audited financial report prepared in accordance with GAAP by
independent certified public accountants satisfactory to the
Subordinated Lender, 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 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 Subordinated Lender may reasonably request from the
Borrower's independent certified public accountants to confirm the
Subordinated Lender's entitlement to rely upon such audited financial
report and accompanying materials;
(b) within 30 days after the end of each calendar month,
beginning with January 31, 2003, 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) 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
(d) within 30 days after the end of each fiscal quarter,
beginning with February 28, 2003, 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 Subordinated Lender.
5.2 Promptly inform the Subordinated Lender of any occurrence that is
an Event of Default 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 Subordinated Lender or its representatives
the right to examine its books and records 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 Subordinated
Lender any information
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that it may reasonably request concerning the Borrower's financial affairs
within 10 days after receipt of a request for that information.
5.3 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 required from time
to time by the Senior Lender (but if the Senior Lender fails at any time to
impose requirements relating to insurance coverages, the Borrower shall maintain
such insurance coverages as are customarily maintained by similar businesses);
furnish to the Subordinated Lender 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 Subordinated Lender, obtain
any additional insurance that the Subordinated Lender may reasonably request.
5.4 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.
5.5 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.
5.6 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.
5.7 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.
5.8 Maintain Tangible Net Worth of not less than $11,000,000 for the
period beginning the date of this Agreement and continuing until all of the
Borrower's indebtedness to the Subordinated Lender has been repaid in full, with
interest.
5.9 Notify the Subordinated Lender 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.
5.10 Promptly provide to the Subordinated Lender 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.
5.11 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 service marks, the loss of which
could have a Material Adverse Effect; and preserve, renew and keep in full force
and effect the lease pursuant to which the Borrower occupies its office and
plant facilities in Grand Rapids, MI.
5.12 Permit representatives of the Subordinated Lender, during the
Subordinated Lender'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 Subordinated Lender to conduct periodic audits of
the Borrower's business and the Borrower's compliance with its obligations under
this Agreement.
5.13 Duly and punctually observe and perform all of the Borrower's
obligations under each and every one of the Senior Loan Documents.
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SECTION 6 - NEGATIVE COVENANTS
From the date hereof and until the Subordinated Loan has been paid in
full, the Borrower shall not, without the prior written consent of the
Subordinated Lender, which may not be unreasonably withheld:
6.1 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.
6.2 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.
6.3 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 by the endorsement of negotiable instruments for
deposit or collection in the Ordinary Course of business.
6.4 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.
6.5 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.
6.6 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 declare and pay stock (i.e., non-cash) dividends without the
Subordinated Lender's consent if such actions will not cause the Borrower to be
in breach of any other covenant, term or provision of the Senior Loan Documents
or the Subordinated Loan Documents.
6.7 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.
6.8 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.
6.9 Issue, incur, assume, or permit to remain outstanding any
Indebtedness, other than the Indebtedness owing under (a) the Senior Loan
Documents and the Subordinated Loan Documents, and (b) additional Indebtedness
incurred after the date of this Agreement in connection with the Borrower's
acquisition of machinery or equipment, to the extent permitted under the Senior
Loan Documents, and then only if the incurrence of such additional Indebtedness
by the Borrower will not cause a breach of any other provision of this
Agreement.
6.10 Use or acquire the use or possession of any real or personal
property from any person under any lease or lease arrangement, except (a) leases
or lease arrangements in existence as of the date of this Agreement and
identified in Schedule 7.10 to the Former Loan Agreement, and (b) any other
lease which (i) has a term of less than 7 years, and (ii) 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 Subordinated Lender copies
of any leases entered into by the Borrower, together with any amendments
thereto, upon request of the Subordinated Lender.
6.11 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.
6.12 Change its fiscal year or method of accounting except as
required by GAAP, as hereafter modified.
6.13 Change its name unless, at least 60 days before the effective
date of any such name change, Borrower has notified the Subordinated Lender in
writing Borrower's new name and the date upon which it will become effective.
6.14 Engage in any act or conduct, or do any thing, that is
prohibited by the Senior Loan Documents, or fail to act in any way or do any
thing that is required by the Senior Loan Documents.
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SECTION 7 - EVENTS OF DEFAULT AND REMEDIES
7.1 The following events shall constitute an Event of Default under
this Agreement, the occurrence of which shall entitle the Subordinated Lender to
pursue any and all rights and remedies available to it under this Agreement, any
of the other Subordinated Loan Documents, by statute or in law or equity. The
Subordinated Lender's rights and remedies are cumulative and may be exercised
concurrently or successively from time to time. Any action by the Subordinated
Lender 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 make any payment as and when due under the
Subordinated Note, 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 make any payment as and when under any document
evidencing indebtedness of the Borrower to the Subordinated Lender other than
the Subordinated Note, 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 Subordinated Loan Document, other than as
provided in subsections 7.1(a) and 7.1(b) above; 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 observe, perform and comply with any of the
Borrower's obligations under any Senior Loan Document, provided that such
default has not been cured after the expiration of any applicable cure period
provided by the Senior Loan Documents.
(e) The existence of a 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
Subordinated Loan Document.
(f) The filing of a petition by or against the Borrower
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 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 Adverse Effect.
7.2 Upon the occurrence of any Event of Default, the Subordinated
Lender shall have the right to declare all principal, interest and other sums
owing by the Borrower to the Subordinated Lender, including but not necessarily
limited to that evidenced by the Subordinated Note, to be immediately due and
payable, without presentment, demand, or notice of any kind, all of which are
hereby expressly waived by the Borrower.
7.3 Upon the occurrence of any Event of Default, the Subordinated
Lender shall have the right to exercise any and all remedies that it may have
for default under any Subordinated Loan Document or by statute, 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 Subordinated Loan
Documents has been fully satisfied.
SECTION 8 - MISCELLANEOUS
8.1 The Borrower shall pay all out-of-pocket expenses incurred by the
Subordinated Lender in connection with making and collecting the Subordinated
Loan and enforcing the Subordinated 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 Subordinated Loan Documents, (b) the
collection of the Subordinated Loan, 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 Subordinated Lender in
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connection with making the Subordinated Loan (as contrasted with collecting the
Subordinated Loan, foreclosing the liens and security interests securing the
Subordinated Loan, and otherwise enforcing or attempting to enforce the
Subordinated Loan Documents, as to which the Borrower shall be obligated to pay
all reasonable attorneys' fees and other costs incurred by the Subordinated
Lender, in addition to reimbursing the Subordinated Lender for reasonable
attorneys' fees, not to exceed $5,000, in connection with making the
Subordinated Loan).
8.2 Upon the occurrence of 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, the Subordinated Lender shall be entitled to set off any
indebtedness from time to time owing to the Borrower by the Subordinated Lender,
including any indebtedness represented by any account maintained with the
Subordinated Lender by the Borrower, against any indebtedness that shall at any
time be due and payable by the Borrower to the Subordinated Lender.
8.3 Each and every right granted to the Subordinated Lender under
this Agreement or any other Subordinated Loan Document, or allowed by statute or
at law or in equity, shall be cumulative and may be exercised from time to time.
No failure on the part of the Subordinated Lender 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 Subordinated Lender 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 Subordinated Lender
of any default shall be effective unless in writing and signed by the
Subordinated Lender, 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.
8.4 The relationship between the Borrower and the Subordinated Lender
is solely that of borrower and lender. The Subordinated Lender has no fiduciary
responsibilities to the Borrower as a result of this Agreement or any other
Subordinated Loan Document, or the consummation of the transactions contemplated
hereby or thereby. The Subordinated Lender 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
Subordinated Lender is for the protection of the Subordinated Lender and neither
the Borrower nor any third party is entitled to rely thereon.
8.5 This Agreement is made in the State of Michigan. The validity of
this Agreement, and the validity of the other Subordinated Loan Documents, 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.
8.6 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
as follows:
if to the Borrower:
Riviera Tool Company
0000 Xxxxxxxxx Xxxxxxx
Xxxxx Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, President
and if to the Subordinated Lender:
Fifth Third Bank
Xxx Xxxxxxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Attention: Xxxxxxxxxxx X. Xxxxxxx
or such other place or places as any party shall designate by written notice
served upon other parties.
8
8.7 This Agreement shall be binding upon and shall inure to the
benefit of the Borrower and the Subordinated Lender 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
Subordinated Lender, which consent may be withheld in the sole discretion of the
Subordinated Lender. There are no third party beneficiaries of this Agreement.
The Subordinated Lender may assign, negotiate, pledge or otherwise hypothecate
all or any portion of this Agreement, or grant participations herein and in the
Subordinated 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 no such assignment,
negotiation, pledge or other hypothecation by the Subordinated Lender will
relieve the Subordinated Lender of its obligation under this Agreement. In
connection with any assignment or participation, the Subordinated Lender may
disclose to the proposed assignee or participant any information that the
Borrower is required to deliver to the Subordinated Lender pursuant to this
Agreement.
8.8 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.
8.9 Should any part, term or provision of this Agreement or any of
the other Subordinated Loan Documents 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.
8.10 The Borrower shall execute any and all additional or
supplemental documentation, and provide such further assistance and assurances
as the Subordinated Lender may reasonably require, to give full effect to the
terms, conditions and intentions of this Agreement and the other Subordinated
Loan Documents.
8.11 Time is of the essence with respect to all provisions of this
Agreement.
8.12 The headings in this Agreement have been inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement.
8.13 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.
8.14 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.
8.15 The Recitals are incorporated into and form a part of this
Agreement.
8.16 The Subordinated Lender 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 other Subordinated
Loan Document, or any of the transactions contemplated by this Agreement or the
other Subordinated Loan Documents, or any course of conduct, dealing, statements
(whether oral or written), or actions of either of them. Neither the
Subordinated Lender 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 Subordinated Lender or Borrower except by a written
instrument executed by both of them.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK;
SIGNATURES APPEAR ON FOLLOWING PAGE S-1]
9
[SIGNATURE PAGE TO SUBORDINATED LOAN AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Subordinated Loan
Agreement as of the day and year first above written.
WITNESSES:
RIVIERA TOOL COMPANY
-----------------------------
By: /s/ Xxxxx X. Xxxxxx
----------------------------- -----------------------
Xxxxx X. Xxxxxx
FIFTH THIRD BANK
-----------------------------
By: /s/ Xxxxxxx X. Xxxxx
----------------------------- -----------------------
Xxxxxxx X. Xxxxx
10
THE INDEBTEDNESS EVIDENCED BY THIS PROMISSORY NOTE IS UNSECURED.
PAYMENT OF THE INDEBTEDNESS EVIDENCED BY THIS PROMISSORY NOTE IS
SUBORDINATE TO PAYMENT OF THE UNDERSIGNED BORROWER'S INDEBTEDNESS TO
COMERICA BANK TO THE EXTENT SET FORTH IN AN INTERCREDITOR AGREEMENT
DATED DECEMBER 23, 2002, BETWEEN COMERICA BANK AND FIFTH THIRD BANK.
PAYMENT OF THE INDEBTEDNESS EVIDENCED BY THIS PROMISSORY NOTE IS ALSO
SUBORDINATE TO PAYMENT OF THE UNDERSIGNED BORROWER'S INDEBTEDNESS TO
CERTAIN GUARANTORS TO THE EXTENT SET FORTH IN A SUBORDINATION
AGREEMENT DATED DECEMBER 23, 2002, BETWEEN FIFTH THIRD BANK AND SUCH
GUARANTORS.
SUBORDINATED UNSECURED PROMISSORY NOTE
$1,414,985.80 December 23, 2002
For value received, RIVIERA TOOL COMPANY, a Michigan corporation
(BORROWER), promises to pay to the order of FIFTH THIRD BANK, a Michigan banking
corporation f/k/a Old Kent Bank (the SUBORDINATED LENDER), the principal sum of
ONE MILLION FOUR HUNDRED FOURTEEN THOUSAND NINE HUNDRED EIGHTY-FIVE AND 80/100
DOLLARS ($1,414,985.80), plus interest on the outstanding principal indebtedness
evidenced by this Promissory Note from time to time at the rate of eleven
percent (11.0%) per year, except during default. Interest shall be computed on
the basis of a 360-day year and the actual number of days elapsed during the
period for which the computation is made.
Following maturity or acceleration of the indebtedness evidenced by
this Promissory Note, the interest rate on the entire principal balance of this
Promissory Note shall be 200 basis points higher than the interest rate
otherwise in effect. In addition, if any payment required by this Promissory
Note 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 percent (5%) of the monthly
payment due, except that in no event shall the late payment charge exceed $2,000
and in no event shall a late payment charge be assessed as to any payment that
falls due during a Blockage Period, as defined in the Intercreditor Agreement
dated December 23, 2002 (the INTERCREDITOR AGREEMENT), between the Subordinated
Lender and Comerica Bank (the SENIOR LENDER). The late payment charge shall
apply individually to all payments past due (except as provided in the preceding
sentence), without proration. All such default interest and late payment
charges, if any, shall be paid upon demand by the holder of this Promissory Note
(the HOLDER.)
The indebtedness evidenced by this Promissory Note, unless sooner
prepaid or accelerated as provided in the Subordinated Loan Agreement dated
December 23, 2002, between the Borrower and the Subordinated Lender (the
SUBORDINATED LOAN AGREEMENT), shall be paid in monthly installments of principal
and interest in the amount of THIRTY-ONE THOUSAND AND 00/100 DOLLARS
($31,000.00) each, except that the final monthly payment shall be an amount
equal to all then unpaid principal and accrued and unpaid interest. Such
payments of principal and interest shall be due and payable on the first (1st)
day of each month, beginning February 1, 2003, and continuing on the same day of
each month thereafter through and including January 1, 2008, when all then
unpaid principal and accrued and unpaid interest shall be due and payable in
full, unless sooner accelerated by the Holder.
The indebtedness evidenced by this Promissory Note may be prepaid in
whole or in part at any time without premium. Partial prepayments shall be
applied to the payments required by this Promissory Note in the inverse order of
their respective maturities, therefore no partial prepayment shall postpone the
due date of any of the regularly scheduled payments called for by this
Promissory Note or reduce the amount of any such payments.
All payments under this Promissory Note shall be made in lawful money
of the United States of America to the Subordinate Lender at its principal
office in Grand Rapids, Michigan, or at such other place as the Holder may from
time to time specify.
11
Except as otherwise provided in the Intercreditor Agreement, the
Holder shall have the right, upon the occurrence of: (a) a default in making any
payment when due in accordance with this Promissory Note; or (b) a default under
the Subordinated Loan Agreement; or (c) a default under any of the other
Subordinated Loan Documents, provided in each case that such default has not
been cured after notice and within the applicable cure period, to the extent the
Subordinated Loan Agreement requires the giving of notice or provides for a cure
period, to declare all then unpaid indebtedness evidenced by this Promissory
Note to be immediately due and payable in full, and to immediately pursue any
and all other remedies available to the Holder pursuant to this Promissory Note,
any of the other Subordinated Loan Documents, by statute or at law or in equity.
Capitalized terms used but not defined in this Promissory Note shall have the
meanings given them in the Subordinated Loan Agreement.
Neither the failure of the Holder promptly to exercise its right to
declare the outstanding principal and accrued and unpaid interest and other
charges under this Promissory Note to be immediately due and payable, nor the
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 under
this Promissory Note, 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. Further, acceptance by the Holder of
partial payments following due acceleration of the indebtedness evidenced by
this Promissory Note 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 Promissory Note.
12
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 Promissory Note or any payment of interest
required by this Promissory Note is not paid when due, or in case it becomes
necessary to protect the security for this Promissory Note, whether suit is
brought or not, or in case of any other default under this Promissory Note.
Any payment (including prepayments) upon this Promissory Note shall
be applied first to any expenses, charges or fees then due and payable to the
Holder in connection with the indebtedness evidenced by this Promissory Note or
any collateral for such indebtedness, then to any accrued and unpaid interest
under this Promissory Note, and then to the unpaid principal balance.
In no event shall the Borrower be required to make any payment under
this Promissory Note that would violate any applicable law regulating or
limiting the rate of interest that the Holder may lawfully charge or collect. If
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 lawfully may
charge or collect, be applied toward reduction of the principal balance of the
indebtedness evidenced by this Promissory Note.
This Promissory 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 of this Promissory Note
shall not affect the validity, legality or enforceability of the remaining
provisions of this Promissory Note, all of which shall remain in full force and
effect.
RIVIERA TOOL COMPANY
By: /s/ Xxxxx X. Xxxxxx
-----------------------
Xxxxx X. Xxxxxx
13
