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EXHIBIT 10.55
SF106000.MCA
Note No. 0250024274
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STANDARD FEDERAL BANK
PROMISSORY NOTE
(Term Loan)
$5,300,000.00 Troy, Michigan
Due Date: March 1, 2002 Dated: August 29, 1996
FOR VALUE RECEIVED, the undersigned, jointly and severally (collectively,
"Borrower"), promise to pay to the order of Standard Federal Bank, a federal
savings bank ("Standard Federal"), at its office set forth below, or at such
other place as Standard Federal may designate in writing, the principal sum of
Five Million Three Hundred Thousand and 00/100 Dollars ($5,300,000.00), plus
interest on all amounts from time to time outstanding hereunder, as hereinafter
provided, all in lawful money of the United States of America.
The principal outstanding under this Note from time to time shall bear
interest ("Effective Interest Rate"), on a basis of a year of 360 days for the
actual number of days amounts are outstanding hereunder, at a rate per annum
equal to One-Eighth of One percent (0.125%) in excess of the Wall Street
Journal Prime Rate. As used herein the phrase "Wall Street Journal Prime Rate"
shall mean the "Prime Rate" published by the Wall Street Journal as the base
rate on corporate loans posted by at least 75% of the nation's 30 largest banks
as the same may be changed from time to time. If more than one Prime Rate is
published, the highest rate published shall be deemed the Wall Street Journal
Prime Rate. If the publishing of the Wall Street Journal Prime Rate is
discontinued during the term hereof, then the Effective Interest Rate shall be
based upon the index which is published by The Wall Street Journal in
replacement thereof based on similar base rates on corporate loans or, if no
such replacement index is published, the index which, in Standard Federal's
sole determination, most nearly corresponds to the Wall Street Journal Prime
Rate. If, in such event, Standard Federal selects an index which, in the
Borrower's opinion, does not correspond to the Wall Street Journal Prime Rate,
Borrower's sole remedy shall be to prepay this Note in full without penalty or
premium. Until such prepayment has been received by Standard Federal, the
index selected by Standard Federal shall apply for all purposes of this Note.
It is understood and agreed by Borrower that the Effective Interest
Rate shall be determined by reference to the "Wall Street Journal Prime Rate"
and not by reference to the actual rate of interest charged by any particular
bank to any particular borrower or borrowers and shall automatically increase
or decrease when and to the extent that the Wall Street Journal Prime Rate
shall have been increased or decreased.
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Accrued interest only shall be due and payable on the first day of each
month, commencing on October 1, 1996 and continuing on the same day of each
consecutive month thereafter, through and including February 1, 1997.
Commencing March 1, 1997, and continuing on the same day of each consecutive
month thereafter, monthly payments of principal in the amount of $88,333.00
each, plus interest accrued to the due date of each payment, shall be due and
payable. In addition to the monthly payments of principal and interest
provided for above, the Borrower shall be required to make additional principal
payments, which shall be due and payable on February 1, 1998 and February 1,
1999. The additional principal payment due February 1, 1998 shall be in the
amount of the lesser of: (a) Six Hundred Thousand and 00/100 Dollars
($600,000.00), or (b) Fifty percent (50.0%) of the Excess Cash Flow, as
hereinafter defined, for the Borrower's fiscal year ending September 30, 1997.
The additional principal payment due February 1, 1999 shall be in the amount of
the lesser of: (a) Six Hundred Thousand and 00/100 Dollars ($600,000.00), or
(b) Fifty percent (50.0%) of the Excess Cash Flow, as hereinafter defined, for
the Borrower's fiscal year ending September 30, 1998. The term "Excess Cash
Flow" shall mean the Borrower's net income, plus depreciation and amortization
expense, less fixed payments and unfinanced capital expenditures, all as
reflected in the Borrower's annual audited financial statement, which the
Borrower is required to furnish to Standard Federal as provided in the Loan
Agreement hereinafter described, for the applicable fiscal year. A final
payment shall be due and payable on the Due Date in an amount equal to the then
unpaid principal and accrued interest.
All payments required to be paid hereunder shall first be applied to costs
and expenses required to be paid hereunder, then to accrued interest hereunder
and the balance shall be applied against the principal. This Note may be
prepaid, in full or in part, at any time, without the payment of any
prepayment fee or penalty. All partial prepayments shall be applied against
the last accruing installment or amount due under this Note; and no prepayments
shall affect the obligation of the undersigned to continue the regular
installments hereinbefore mentioned, until the entire unpaid principal and
accrued interest has been paid in full. Borrower understands that the
installment payments of principal provided for herein are not sufficient to
fully amortize the outstanding principal balance of this Note by the Due Date
and that the final payment due on the Due Date will be a balloon payment of all
then outstanding principal and accrued interest.
shall be construed or so operate as to require the Borrower to pay, or charge,
interest at a greater rate than the maximum allowed by the applicable law
relating to this Note. Should any interest, or other charges, charged, paid or
payable by the Borrower in connection with this Note, or any other document
delivered in connection herewith, result in the charging,
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compensation, payment or earning of interest in excess of the maximum allowed
by applicable law, then any and all such excess shall be and the same is hereby
waived by Standard Federal, and any and all such excess paid shall be
automatically credited against and in reduction of the principal due under this
Note. If Standard Federal shall reasonably determine that the Effective
Interest Rate (together with all other charges or payments related hereto that
may be deemed interest) stipulated under this Note is, or may be, usurious or
otherwise limited by law, the unpaid balance of this Note, with accrued
interest at the highest rate permitted to be charged by stipulation in writing
between Standard Federal and Borrower, at the option of Standard Federal, shall
immediately become due and payable.
The Borrower represents and warrants that it is duly organized, validly
existing and in good standing and is duly authorized to make and perform this
Note, which constitutes its valid and binding legal obligation enforceable in
accordance with its terms. All financial data furnished to Standard Federal
in connection with this Note fairly present the financial condition of the
Borrower and its subsidiaries, if any, as of the dates thereof and there has
been no material adverse change in the condition (financial or otherwise) of
the Borrower since such dates.
An Event of Default shall be deemed to have occurred hereunder if any
indebtedness of the Borrower to Standard Federal hereunder is not paid when
due, regardless of whether such indebtedness has arisen pursuant to the terms
of this Note, the Loan Agreement or any mortgage, security agreement, guaranty,
instrument or other agreement executed in conjunction herewith, or if an Event
of Default shall otherwise occur under the Loan Agreement.
Upon the occurrence of any Event of Default, after the giving of any
notice and the expiration of any grace, cure or notice period provided for in
the Loan Agreement, if any, and if no such notice or grace, cure or notice
period is so provided for in the Loan Agreement, then immediately, Standard
Federal may declare the entire unpaid and outstanding principal balance
hereunder and all accrued interest to be due and payable in full forthwith,
without presentment, demand or notice of any kind and may exercise any one or
more of the rights and remedies provided herein or in the Loan Agreement or in
any mortgage, guaranty, security agreement or other document relating hereto or
by applicable law. The remedies provided for hereunder are cumulative to the
remedies for collection of the amounts owing hereunder as provided by law or by
the Loan Agreement, or by any mortgage, guaranty, security agreement or other
document relating hereto. Nothing herein is intended, nor should it be
construed, to preclude Standard Federal from pursuing any other remedy for the
recovery of any other sum to which Standard Federal may be or become entitled
for breach of the terms of this Note or the Loan Agreement, or any mortgage,
guaranty, security agreement or other instrument relating hereto.
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Borrower agrees, in case of an Event of Default under the terms of this
Note or under any loan agreement, security or other agreement executed in
connection herewith, to pay all costs of Standard Federal for collection of the
Note and all other liabilities of Borrower to Standard Federal and enforcement
of rights hereunder, including reasonable attorney fees and legal expenses
including participation in Bankruptcy proceedings. During any period(s) this
Note is in default, or after the Due Date, or after acceleration of maturity,
the outstanding principal amount hereof shall bear interest at a rate equal to
two percent (2.0%) per annum greater than the interest rate otherwise charged
hereunder. If any required payment is not made within ten (10) days after the
date it is due, then, at the option of Standard Federal, a late charge of not
more than four cents ($.04) for each dollar of the payment so overdue may be
charged. In addition to any other security interests granted to Standard
Federal, Borrower hereby grants Standard Federal a security interest in all of
Borrower's bank deposits, instruments, negotiable documents, and chattel paper
which at any time are in the possession or control of Standard Federal. After
the occurrence of an Event of Default hereunder, Standard Federal may hold and
apply at any time its own indebtedness or liability to Borrower in payment of
any indebtedness hereunder.
Acceptance by Standard Federal of any payment in an amount less than the
amount then due shall be deemed an acceptance on account only, and the failure
to pay the entire amount then due shall be and continue to be an Event of
Default. Upon any Event of Default, neither the failure of Standard Federal
promptly to exercise its right to declare the outstanding principal and accrued
unpaid interest hereunder to be immediately due and payable, nor the failure of
Standard Federal to demand strict performance of any other obligation of the
Borrower or any other person who may be liable hereunder shall constitute a
waiver of any such rights, nor a waiver of such rights in connection with any
future default on the part of the Borrower or any other person who may be
liable hereunder.
Borrower and all endorsers and guarantors hereof, hereby jointly and
severally waive presentment for payment, demand, notice of non- payment, notice
of protest or protest of this Note, diligence in collection or bringing suit,
and hereby consent to any and all extensions of time, renewals, waivers, or
modifications that may be granted by Standard Federal with respect to payment
or any other provisions of this Note, and to the release of any collateral or
any part thereof, with or without substitution. The liability of the Borrower
shall be absolute and unconditional, without regard to the liability of any
other party hereto.
This Note is executed pursuant to a Loan Agreement of even date
herewith (the "Loan Agreement"), and is secured by a Security Agreement, dated
September 15, 1994, and by a Security Agreement,
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dated July 19, 1995, and by an Assignment of Policy as Collateral Security,
dated August 16, 1996, and by a Security Agreement and a Commercial Mortgage,
Assignment of Leases and Rents, Security Agreement and Financing Statement, of
even date herewith. Reference is hereby made to such documents for additional
terms relating to the transaction giving rise to this Note, the security given
for this Note and additional terms and conditions under which this Note
matures, may be accelerated or prepaid.
Advances hereunder may be requested by telephone, in writing or in any
other manner acceptable to Standard Federal. Borrower understands and agrees
that any telephone conversation with Standard Federal may be recorded for
accuracy.
BORROWER:
MCCLAIN INDUSTRIES, INC., a Michigan
corporation
Robert J. Gordon By: Carl L. Jaworski
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Robert J. Gordon Carl L. Jaworski
Its: Secretary
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38-1867649
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Taxpayer Identification Number
MCCLAIN OF GEORGIA, INC., a Georgia
corporation
Robert J. Gordon By: Carl L. Jaworski
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Robert J. Gordon Carl L. Jaworski
Its: Secretary
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58-1738825
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Taxpayer Identification Number
SHELBY STEEL PROCESSING COMPANY, a
Michigan corporation
Robert J. Gordon By: Carl L. Jaworski
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Robert J. Gordon Carl L. Jaworski
Its: Secretary
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38-2205216
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Taxpayer Identification Number
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MCCLAIN TUBE COMPANY d/b/a QUALITY
TUBE, a Michigan corporation
Robert J. Gordon By: Carl L. Jaworski
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Robert J. Gordon Carl L. Jaworski
Its: Secretary
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Taxpayer Identification Number
MCCLAIN INDUSTRIES OF OHIO, INC., a
Michigan corporation
Robert J. Gordon By: Carl L. Jaworski
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Robert J. Gordon Carl L. Jaworski
Its: Treasurer
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Taxpayer Identification Number
MCCLAIN EPCO, INC., a New York
corporation
Robert J. Gordon By: Carl L. Jaworski
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Robert J. Gordon Carl L. Jaworski
Its: Treasurer
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Taxpayer Identification Number
MCCLAIN OF ALABAMA, INC., a Michigan
corporation
Robert J. Gordon By: Carl L. Jaworski
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Robert J. Gordon Carl L. Jaworski
Its: Treasurer
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63-1176560
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Taxpayer Identification Number
Standard Federal Bank, a
federal savings bank
2600 West Big Beaver Road
Troy, Michigan 48084
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