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EXHIBIT 10.38
FIRST AMENDMENT TO LOAN AGREEMENT
BETWEEN
STANDARD FEDERAL BANK
AND
GALION HOLDING COMPANY,
GALION SOLID WASTE EQUIPMENT, INC.
AND GALION DUMP BODIES, INC.
THIS AMENDMENT AGREEMENT made and delivered this 16th day of February,
1995, by and between Galion Holding Company, a Michigan corporation, Galion
Solid Waste Equipment, Inc., a Michigan corporation, and Galion Dump Bodies,
Inc., a Michigan corporation (collectively, "Borrower"), whose
address/principal office is 6200 Elmridge, Sterling Heights, Michigan 48310,
and Standard Federal Bank, a federal savings bank ("Standard Federal"), whose
address is 2600 West Big Beaver Road, Troy, Michigan 48084.
RECITALS:
A. On September 15, 1994, the Borrower and Standard Federal
entered into a Loan Agreement (the "Loan Agreement"), pursuant to which the
Borrower opened a revolving line of credit facility with Standard Federal, Loan
No. 0250012691, with a credit limit of up to $6,000,000.00 (the "Line of
Credit"), as evidenced by a Promissory Note (Line of Credit), dated September
15, 1994, in the principal amount of $6,000,000.00 (the "Note"), secured by a
Security Agreement, dated September 15, 1994 (the "Security Agreement"), and
two Open-End Commercial Mortgages and Assignments of Lease and Rentals, dated
June 29, 1993, as amended September 15, 1994 (the "Mortgages").
B. The Borrower has requested an increase in the credit limit of
the Line of Credit, as herein provided, and Standard Federal is willing to
supply such financing subject to the terms and conditions set forth in this
Amendment Agreement.
NOW, THEREFORE, in reliance upon the representations herein provided and
in consideration of the premises and the mutual promises herein contained, the
Borrower and Standard Federal hereby agree as follows:
1. The Borrower is a Michigan corporation in good standing. All
corporate resolutions heretofore delivered to Standard Federal relative to
borrowing money and granting security interests remain in full force and
effect. Borrower has duly authorized and validly executed and delivered this
Amendment Agreement and such Amendment Agreement and the Loan Agreement (as
hereby amended) are valid and enforceable according to their terms and do not
conflict with or
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violate Borrower's corporate charter or by-laws or any agreement or covenants
to which Borrower is a party.
2. The Security Agreement is valid and enforceable in accordance
with its terms. Standard Federal's security interest in the collateral
described in the Security Agreement is valid and perfected and Borrower is
aware of no claims or interests in such collateral prior or paramount to
Standard Federal's.
3. The Mortgages are valid and enforceable in accordance with
their terms. Standard Federal holds valid first mortgage interests in the real
property described in the Mortgages which are valid and perfected and Borrower
is aware of no claims or interests in such property prior or paramount to
Standard Federal's.
4. Section 1.1 of the Loan Agreement is hereby deleted in its
entirety and replaced by the following new Section 1.1:
1.1 Standard Federal hereby extends to the Borrower a
revolving line of credit (the "Line of Credit") which shall not exceed
at any one time outstanding the Credit Limit as hereafter defined.
The term "Credit Limit" shall mean the lesser of: (a) Seven Million
Five Hundred Thousand and 00/100 Dollars ($7,500,000.00), or (b) an
amount equal to the sum of: (i) an amount equal to 80% of Eligible
Accounts Receivable, plus (ii) an amount equal to the lesser of: (1)
Five Million and 00/100 Dollars ($5,000,000.00), or (2) an amount
equal to 40% of Qualified Inventory. As used herein, the term
"Eligible Accounts Receivable" shall mean accounts receivable of the
Borrower less than 90 days old, not doubtful as to collectibility or
disputed as to existence or amount or subject to offset,
contra-indebtedness or return and not intra-company or owing from any
affiliated or related company or other entity, exclusive of any
account receivable arising under a government contract, the assignment
of which is subject to the Assignment of Claims Act of 1940, as
amended, or any other similar federal or state statute or regulation
governing the assignment of contracts with a governmental agency. The
term "Qualified Inventory" shall mean the inventory of Borrower in
which Standard Federal holds a perfected first security interest
exclusive of any returned or damaged items and work-in-process.
5. Simultaneously with the execution of this Amendment Agreement,
the Borrower shall execute and deliver to Standard Federal an Amended and
Restated Promissory Note (Line of Credit) in the stated principal amount of
$7,500,000.00 (the "Amended Note") to evidence the Line of Credit as hereby
amended and to replace the Note. The "Line of Credit Note" referred to in the
Loan Agreement shall hereafter be deemed to refer to the Amended Note.
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6. Simultaneously with the execution of this Amendment Agreement,
the Borrower shall also execute and deliver amendment agreements whereby the
Mortgages are amended to secure the Line of Credit as hereby amended, and shall
cause McClain Industries, Inc., a Michigan corporation, to executed an
unlimited guaranty of payment of the obligations of the Borrower to Standard
Federal.
7. Except as herein amended, the Loan Agreement, Security
Agreement and Mortgages shall remain in full force and effect.
IN WITNESS WHEREOF, the Borrower and Standard Federal have caused this
Amendment Agreement to be executed as of the day and year first written above.
Witnesses: BORROWER:
GALION HOLDING COMPANY, a Michigan
corporation
By:
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E. James Zabinski
Vice President/Treasurer
Taxpayer Identification Number:
38-3060196
GALION SOLID WASTE EQUIPMENT, INC.,
a Michigan corporation
By:
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E. James Zabinski
Treasurer
Taxpayer Identification Number:
----------------------------------
GALION DUMP BODIES, INC., a Michigan
corporation
By:
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Carl Jaworski
Treasurer
Taxpayer Identification Number:
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STANDARD FEDERAL BANK, a
federal savings bank
By:
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Its:
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