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EXHIBIT 10.41
SECOND AMENDMENT TO LOAN AGREEMENT
BETWEEN
STANDARD FEDERAL BANK
AND
MCCLAIN INDUSTRIES, INC., MCCLAIN OF GEORGIA, INC.,
SHELBY STEEL PROCESSING COMPANY,
MCCLAIN TUBE COMPANY D/B/A QUALITY TUBE,
MCCLAIN INDUSTRIES OF OHIO, INC. AND
EPCO MANUFACTURING, INC.
THIS AMENDMENT AGREEMENT made and delivered this 22nd day of June,
1995, by and between McClain Industries, Inc., a Michigan corporation,
McClain of Georgia, Inc., a Georgia corporation, Shelby Steel Processing
Company, a Michigan corporation, McClain Tube Company d/b/a Quality Tube, a
Michigan corporation, McClain Industries of Ohio, Inc., a Michigan corporation
(collectively, "Borrower"), and Epco Manufacturing, Inc. ("Epco"), a New York
corporation, 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, as amended by a First Amendment to Loan
Agreement, dated February 16, 1995 (the "Loan Agreement"), pursuant to which
the Borrower opened a revolving line of credit facility with Standard Federal,
Loan No. 0250006199, with a credit limit of up to $9,500,000.00 (the "Line of
Credit"), as evidenced by an Amended and Restated Promissory Note (Line of
Credit), dated February 16, 1995, in the principal amount of $9,500,000.00 (the
"Note"), secured by a Security Agreement dated September 15, 1994 (the
"Security Agreement").
B. The Borrower has requested an increase in the credit limit of
the Line of Credit and a change in the advance formula thereunder, as herein
provided, and Standard Federal is willing to supply such financing subject to
the terms and conditions set forth in this Amendment Agreement.
C. The Borrower has also requested the extension of an additional
equipment purchase line of credit and a term loan, 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 prom-
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ises 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 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. 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) Eleven Million
and 00/100 Dollars ($11,000,000.00), 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) Seven Million Five Hundred
Thousand and 00/100 Dollars ($7,500,000.00), or (2) an amount equal to
50% 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.
4. Simultaneously with the execution of this Amendment Agreement,
the Borrower shall execute and deliver to Standard Federal a Second Amended and
Restated Promissory Note (Line of Credit) in the stated principal amount of
$11,000,000.00 (the "Amended Note") to evidence the Line of Credit as hereby
amended
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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.
5. Epco is hereby added as a borrower under the Loan Agreement
and the term "Borrower," as used in the Loan Agreement, shall hereafter be
deemed to refer to Epco, jointly and severally with the other entities referred
to as "Borrower" in the Loan Agreement. Epco shall also execute and deliver
the Amended Note, jointly and severally, with the other entities referred to as
"Borrower" in the Loan Agreement. Epco shall also execute and deliver to
Standard Federal with this Amendment Agreement a Security Agreement whereby
Epco shall grant to Standard Federal a security interest of first priority in
all personal property of Epco, in accordance with the provisions of Section
5.1(b) of the Loan Agreement.
6. The following new sections are hereby added to the Loan
Agreement:
SECTION 1A1. EQUIPMENT PURCHASE LINES OF CREDIT
1A1A.1 First Line of Credit
1A1A.1(a) Standard Federal hereby extends to the Borrower a revolving
line of credit (the "First Line of Credit") which shall not exceed at
any one time outstanding the principal amount of Four Hundred Twenty
Six Thousand and 00/100 Dollars ($426,000.00) (the "First Credit
Limit").
1A1A.1(b) The First Line of Credit herein extended shall be subject
to the terms and conditions of a Promissory Note (Line of Credit with
Term Provisions) (First Line of Credit), in the principal amount of
Four Hundred Twenty Six Thousand and 00/100 Dollars ($426,000.00), of
even date herewith and all renewals and amendments thereof (the "First
Line of Credit Note"). This Loan Agreement and the First Line of
Credit Note are of equal materiality and shall each be construed in
such manner as to give full force and effect to all provisions of both
documents.
1A1A.1(c) If at any time the amount outstanding under the First
Line of Credit shall exceed the First Credit Limit, Borrower shall, on
demand, forthwith pay to Standard Federal such sums as are necessary
to reduce the amount outstanding to an amount not greater than the
First Credit Limit.
1A1A.1(d) Each advance under the First Line of Credit shall be
used solely for the purchase of equipment. Each advance shall be in
an amount not in excess of Eighty Five percent (85.0%) of the cost to
the Borrower of the equipment to be purchased with such advance.
Standard Federal shall make advances under
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the First Line of Credit only upon receipt by it in a form
satisfactory to it of a true and authentic copy of the dealer invoice
for the equipment purchased or to be purchased with the advance.
1A1A.1(e) Standard Federal shall, from time to time to and
until January 1, 1996 (the "First Term Date"), make advances to
Borrower under the First Line of Credit upon request therefor by
Borrower, subject to the other conditions contained in the First Line
of Credit Note.
1A1A.1(f) Accrued interest shall be payable under the First
Line of Credit Note on the 1st day of each month beginning on August
1, 1995 through and including the First Term Date. From and after the
First Term Date, Standard Federal shall make no further advances under
the First Line of Credit and the outstanding principal balance
thereunder as of the First Term Date, with interest, shall be repaid
in consecutive monthly payments of principal, each in the amount
determined by dividing the outstanding principal balance under the
First Line of Credit Note as of the First Term Date by 78, plus
interest accrued to the due date of each such payment, commencing on
February 1, 1996 and continuing on the same day of each consecutive
month thereafter and a final payment on July 1, 2002 in an amount
equal to the then unpaid principal and accrued interest under the
First Line of Credit Note.
1A1B.2 Second Line of Credit
1A1B.2(a) Standard Federal hereby extends to the Borrower an
additional revolving line of credit (the "Second Line of Credit") (the
First Line of Credit and the Second Line of Credit are sometimes
herein collectively referred to as the "Line of Credit") which shall
not exceed at any one time outstanding the principal amount of Four
Hundred Twenty Six Thousand and 00/100 Dollars ($426,000.00), less the
principal outstanding under the First Line of Credit as of the First
Term Date (the "Second Credit Limit").
1A1B.2(b) The Second Line of Credit herein extended shall be subject
to the terms and conditions of a Promissory Note (Line of Credit with
Term Provisions) (Second Line of Credit), in the principal amount of
Four Hundred Twenty Six Thousand and 00/100 Dollars ($426,000.00), of
even date herewith and all renewals and amendments thereof (the
"Second Line of Credit Note") (the First Line of Credit Note and the
Second Line of Credit Note are sometimes herein collectively referred
to as the "Line of Credit Notes"). This Loan Agreement and the Second
Line of Credit Note are of equal materiality and shall each be
construed in such manner as to give full force and effect to all
provisions of both documents.
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1A1B.2(c) If at any time the amount outstanding under the Second Line
of Credit shall exceed the Second Credit Limit, Borrower shall, on
demand, forthwith pay to Standard Federal such sums as are necessary
to reduce the amount outstanding to an amount not greater than the
Second Credit Limit.
1A1B.2(d) Each advance under the Second Line of Credit shall be used
solely for the purchase of equipment. Each advance shall be in an
amount not in excess of Eighty Five percent (85.0%) of the cost to
the Borrower of the equipment to be purchased with such advance.
Standard Federal shall make advances under the Second Line of Credit
only upon receipt by it in a form satisfactory to it of a true and
authentic copy of the dealer invoice for the equipment purchased or to
be purchased with the advance.
1A1B.2(e) Standard Federal shall, from time to time after the First
Term Date and to and until July 1, 1996 (the "Second Term Date"), make
advances to Borrower under the Second Line of Credit upon request
therefor by Borrower, subject to the other conditions contained in the
Second Line of Credit Note.
1A1B.2(f) Accrued interest shall be payable under the Second Line of
Credit Note on the 1st day of each month beginning on February 1, 1996
through and including the Second Term Date. From and after the Second
Term Date, Standard Federal shall make no further advances under the
Second Line of Credit and the outstanding principal balance thereunder
as of the Second Term Date, with interest, shall be repaid in
consecutive monthly payments of principal, each in the amount
determined by dividing the outstanding principal balance under the
Second Line of Credit Note as of the Second Term Date by 78, plus
interest accrued to the due date of each such payment, commencing on
August 1, 1996 and continuing on the same day of each consecutive
month thereafter and a final payment on January 1, 2003 in an amount
equal to the then unpaid principal and accrued interest under the
Second Line of Credit Note.
SECTION 1A2. MCCLAIN/EPCO TERM LOAN
1A2.1 Standard Federal hereby extends to the Borrower a term loan
(the "McClain/Epco Term Loan") in the principal amount of Two Hundred
Forty Thousand and 00/100 Dollars ($240,000.00).
1A2.2 The McClain/Epco Term Loan herein extended shall be subject
to the terms and conditions of a Promissory Note (Term Loan) of even
date herewith and all renewals and amendments thereof (the
"McClain/Epco Term Note"). The McClain/Epco Term Loan shall be
payable and shall bear interest as set forth in the McClain/Epco Term
Note. This Loan Agreement and the
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McClain/Epco Term Note are of equal materiality and shall each be
construed in such manner as to give full force and effect to all
provisions of both documents.
7. Except as herein amended, the Loan Agreement and Security
Agreement 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.
BORROWER:
MCCLAIN INDUSTRIES, INC., a Michigan
corporation
By:
- -------------------------- ------------------------------
E. James Zabinski
Its: Treasurer
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38-1867649
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Taxpayer Identification Number
MCCLAIN OF GEORGIA, INC., a Georgia
corporation
By:
- -------------------------- -----------------------------
Carl L. Jaworski
Its: Secretary
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58-1738825
----------------------------------
Taxpayer Identification Number
SHELBY STEEL PROCESSING COMPANY, a
Michigan corporation
By:
- -------------------------- -----------------------------
Carl L. Jaworski
Its: Secretary
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38-2205216
----------------------------------
Taxpayer Identification Number
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MCCLAIN TUBE COMPANY d/b/a QUALITY
TUBE, a Michigan corporation
By:
- -------------------------- -----------------------------
E. James Zabinski
Its: Treasurer
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--------------------------------
Taxpayer Identification Number
MCCLAIN INDUSTRIES OF OHIO, INC., a
Michigan corporation
By:
- -------------------------- -----------------------------
E. James Zabinski
Its: Treasurer
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--------------------------------
Taxpayer Identification Number
EPCO MANUFACTURING, INC., a New York
corporation
By:
- -------------------------- -----------------------------
E. James Zabinski
Its: Treasurer
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38-
--------------------------------
Taxpayer Identification Number
STANDARD FEDERAL BANK, a
federal savings bank
By:
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Its:
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