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EXHIBIT 10.37
Loan No. 0250024084
SECOND AMENDMENT AGREEMENT
Loan Agreement
Promissory Note (Line of Credit)
THIS AGREEMENT made this 16 day of April, 1998 by and among Standard
Federal Bank, a federal savings bank ("Standard Federal"), McClain Group
Leasing, Inc., a Michigan corporation ("Borrower"), and McClain Industries,
Inc., a Michigan corporation ("Guarantor").
RECITALS:
A. Borrower and Standard Federal entered into a Loan Agreement, dated
July 17, 1996, as amended April 28, 1997 (the "Loan Agreement"), pursuant to
which Standard Federal opened a line of credit in favor of the Borrower, as
evidenced by a Promissory Note (Line of Credit), dated July 17, 1996, as amended
April 28, 1997 in the principal amount of $10,500,000.00 (the "Note"), secured
by an Assignment of Equipment Leases and Security Agreement dated July 17, 1996,
as amended April 28, 1997, and all Schedule A's thereto (the "Security
Agreement"), and guaranteed by the Guarantor pursuant to a Guaranty dated July
17, 1996 (the "Guaranty").
B. Borrower has requested an amendment and decrease in the credit limit
of the line of credit evidenced by the Note, an extension of the maturity date
thereof and a change in the interest rate applicable to the line of credit and
Standard Federal and the Guarantor are agreeable thereto, on the terms and
conditions herein provided.
NOW, THEREFORE, in consideration of Standard Federal's forbearance to
enforce payment of the Note except as herein provided, of the mutual covenants
herein contained and of other good and valuable consideration the receipt and
sufficiency whereof are hereby acknowledged, the parties hereto hereby warrant,
represent and 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 Agreement and the Loan Agreement and Note (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 interests in the collateral described in
the Security Agreement are valid and perfected and Borrower is aware of no
claims or interests in such collateral prior or paramount to Standard Federal's.
3. The Guaranty is valid and enforceable in accordance with its terms
and the Guarantor presently has no valid and existing defense to liability
thereunder.
4. Section 1 of the Loan Agreement is hereby deleted in its entirety
and replaced by the following new Section 1:
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SECTION 1. EQUIPMENT LEASE LINE OF CREDIT
1.1 The following terms shall have the meanings stated below when used
in this Loan Agreement:
"Base LIBOR Rate" shall mean, with respect to a LIBOR
Borrowing for an Interest Period, LIBOR as of 11:00 a.m. two (2) London
Business Days prior to the first day of such Interest Period for
deposits with maturities approximately equal to such Interest Period
and in an amount approximately equal to the amount of such LIBOR
Borrowing.
"Borrowing" shall mean an advance of all or any portion of the
Line of Credit.
"Borrowing Notice" shall mean a notice by Borrower to Standard
Federal that Borrower wishes to make a Borrowing.
"Business Day" shall mean a day on which the main office of
Standard Federal is open for business.
"Consolidated Funded Debt" shall mean, as of any date, the sum
of the following (without duplication): (i) all Indebtedness of the
McClain Group as of such date, other than Consolidated Current
Liabilities, (ii) all Indebtedness which would be classified as "funded
indebtedness" or "long-term indebtedness" on a consolidated balance
sheet of the McClain Group prepared as of such date in accordance with
generally accepted accounting principles, (iii) all Indebtedness,
whether secured or unsecured, of the McClain Group, having a final
maturity (or which is renewable or extendable at the option of the
obligor for a period ending) more than one year after the date of
creation thereof, notwithstanding the fact that payments in respect
thereof (whether installment, serial maturity or sinking fund payments,
or otherwise) are required to be made by the obligor less than one year
after the date of the creation thereof and notwithstanding the fact
that any amount thereof is at the time included also in current
liabilities of such obligor, (iv) all Indebtedness of the McClain Group
outstanding under a revolving credit or similar agreement providing for
borrowings (and renewals and extensions thereof) over a period of more
than one year, notwithstanding the fact that any such Indebtedness is
created within one year of the expiration of such agreement, (v) the
present value (discounted at the implicit rate, if known, or 10% per
annum otherwise) of all obligations is respect of Capital Leases of the
McClain Group and (vi) all obligations under Guaranties of the McClain
Group. "Indebtedness" shall mean all indebtedness, obligations and
liabilities, including, without limitation, all "liabilities" which
would be reflected on a balance sheet prepared in accordance with
generally accepted accounting principles, all obligations in respect of
any Guaranty and all obligations in respect of any Capital Lease.
"Consolidated Current Liabilities" shall mean, as of any date, the
current liabilities which would be reflected on a consolidated balance
sheet of the McClain Group prepared as of such date in accordance with
generally accepted accounting principles, but excluding current
maturities of Consolidated Funded Debt. "Capital Lease" shall mean, as
of any date, any lease of property, real or personal, which would be
capitalized on a balance sheet of the lessee prepared as of such date
in accordance with generally accepted accounting principles, together
with any other lease by such lessee which is in substance a financing
lease, including without limitation, any lease under which (i) such
lessee has or will have an option to purchase the property subject
thereto at a
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nominal amount or an amount less than a reasonable estimate of the fair
market value of such property as of the date such lease is entered into
or (ii) the term of the lease approximates or exceeds the expected
useful life of the property leased thereunder. "Guaranty" shall mean
any contract, agreement or understanding pursuant to which any
Indebtedness of another person or entity is guaranteed or in effect
guaranteed in any manner, whether directly or indirectly.
"Credit Limit" shall mean the lesser of: (a) Ten Million and
00/100 Dollars ($10,000,000.00), or (b) an amount equal to 80% of
Eligible Lease Receivables.
"Earnings Before Interest and Taxes Plus Depreciation and
Amortization" shall mean the McClain Group's net income, computed in
accordance with generally accepted accounting principles as in effect
as of the date hereof consistently applied, before provision for
federal and state income taxes, plus interest, depreciation and
amortization expense, as reflected in the financial statements to be
furnished as required herein.
"Effective Date" shall mean the date designated by Borrower in
a Borrowing Notice as the date the Borrowing covered by such Borrowing
Notice shall be funded and shall also mean, where applicable, the first
day of the Interest Period applicable to a LIBOR Borrowing. An
Effective Date for a Prime Rate Borrowing must be a Business Day. An
Effective Date for a LIBOR Borrowing must be a London Business Day.
"Eligible Lease Receivables" shall mean lease receivables
which are less than 90 days old and are not doubtful as to
collectibility or disputed as to existence or amount or subject to
offset, contra-indebtedness or return, exclusive of discounts and
rebates, and are otherwise acceptable to Standard Federal in its sole
discretion, and may include up to $382,000.00 in lease receivables from
Galion Holding Company but shall not otherwise be intra-company or
owing from any affiliated or related company or other entity, as such
lease receivables are disclosed in the statements timely furnished to
Standard Federal pursuant to Section 3 below.
"Funded Debt Ratio" shall mean the ratio of the McClain
Group's Consolidated Funded Debt to Earnings Before Interest and Taxes
Plus Depreciation and Amortization as of the end of each quarter of
each fiscal year of the McClain Group.
"Interest Period" shall mean, with respect to a LIBOR
Borrowing, a period of one (1) month, two (2) months or three (3)
months, commencing on the Effective Date with respect to such LIBOR
Borrowing. If any Interest Period would otherwise end on a day which is
not a London Business Day, such Interest Period shall be extended to
end on the next succeeding London Business Day.
"Interest Rate Selection Notice" shall mean a notice in the
form attached to this Loan Agreement as Exhibit A, by which the
Borrower shall notify Standard Federal that a Borrowing hereunder shall
be a LIBOR Borrowing, specifying the Interest Period and Effective Date
applicable to such LIBOR Borrowing and the principal amount of the
LIBOR Borrowing.
"LIBOR" shall mean, with respect to an Interest Period, the
British Bankers'
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Association ("BBA") interest settlement rate based on an average of
rates quoted by BBA designated banks as being, in BBA's view, the
offered rate at which deposits in U.S. Dollars are being quoted to
prime banks in the London interbank market at 11:00 a.m. (London time)
two (2) London Business Days prior to the first day of such Interest
Period, such deposits being for a period of time equal or comparable to
such Interest Period and in an amount equal or comparable to the
principal amount of the Borrowing to which the Interest Period relates,
as such rates are determined by the BBA and displayed on the Reuter's
Screen.
"LIBOR Borrowing" shall mean the principal amount of any
portion of any Borrowing bearing interest at the Line of Credit LIBOR
Rate.
"LIBOR Borrowing Fail" shall mean a LIBOR Borrowing which is
not made on the date specified in a Borrowing Notice for any reason
other than default by Standard Federal in funding the Borrowing.
"LIBOR Rate" shall mean, with respect to an Interest Period,
the quotient of: (i) the Base LIBOR Rate applicable to that Interest
Period, divided by (ii) one (1) minus the Reserve Requirement
(expressed as a decimal) applicable to the Interest Period. The LIBOR
Rate shall be rounded up to 4 decimal places where the fifth decimal
place is 5 or more.
"Line of Credit" shall mean the revolving line of credit made
available by Standard Federal to the Borrower on the terms and
conditions contained in this Loan Agreement.
"Line of Credit LIBOR Rate" shall mean, with respect to a
LIBOR Borrowing and an Interest Period, a rate per annum determined in
accordance with the following table:
Funded Debt Ratio Line of Credit LIBOR Rate
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4.25 to 1.00 or greater Add 2.15 (215 basis points) to the LIBOR Rate
3.50 to 1.00 up to 4.24 to 1.00 Add 2.00 (200 basis points) to the LIBOR Rate
3.00 to 1.00 up to 3.49 to 1.00 Add 1.75 (175 basis points) to the LIBOR Rate
2.99 to 1.00 or less Add 1.50 (150 basis points) to the LIBOR Rate
"Line of Credit Maturity Date" shall mean March 1, 2000, or
any extension or renewal thereof.
"Line of Credit Note" shall mean the Promissory Note, dated
July 17, 1996, as amended of even date herewith and all renewals and
amendments thereof, evidencing the Line of Credit.
"London Business Day" shall mean a Business Day on which
dealings in dollar deposits are carried out in the London Interbank
market and on which banks, generally, in New York, New York are open
for business.
"McClain Group" shall mean McClain Industries, Inc., a
Michigan corporation; McClain of Alabama, Inc., a Michigan corporation;
McClain of Georgia, Inc., a Georgia corporation; McClain of Ohio, Inc.,
a Michigan corporation; McClain of Oklahoma, Inc., a
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Michigan corporation; McClain Epco, Inc., a New York corporation;
Shelby Steel Processing Company, a Michigan corporation; McClain Tube
Company d/b/a Quality Tube, a Michigan corporation; Galion Holding
Company, a Michigan corporation; McClain E-Z Pack Inc., a Michigan
corporation; Galion Dump Bodies, Inc., a Michigan corporation; McClain
Group Sales, Inc., a Michigan corporation; and McClain Group Sales of
Florida, Inc., a Florida corporation.
"Prepayment Premium" shall mean a premium payable in
connection with a Principal Prepayment or a LIBOR Borrowing Fail. In
the case of a Principal Prepayment, the Prepayment Premium shall be an
amount equal to the positive difference, if any, between (i) the
aggregate amount of interest which would otherwise be payable on the
prepaid principal amount during the Prepayment Interest Period, as
herein defined, and (ii) the aggregate amount of interest Standard
Federal would earn if the prepaid principal amount were reinvested for
the Prepayment Interest Period at the Treasury Rate. In the case of a
LIBOR Borrowing Fail, the Prepayment Premium shall be an amount equal
to the positive difference, if any, between (i) the aggregate amount of
interest which would otherwise be payable on the principal amount of
the LIBOR Borrowing during the Prepayment Interest Period, and (ii) the
aggregate amount of interest Standard Federal would earn if the
principal amount of the LIBOR Borrowing were reinvested for the
Prepayment Interest Period at the Treasury Rate. In the case of a
Principal Prepayment, the term "Prepayment Interest Period" shall mean
the period from the prepayment date to the last day of the current
Interest Period applicable to the prepaid Borrowing. In the case of a
LIBOR Borrowing Fail, the term "Prepayment Interest Period" shall mean
the period from the Effective Date specified in the Borrowing Notice
applicable to the LIBOR Borrowing to the last day of the Interest
Period specified in such Borrowing Notice. The term "Treasury Rate"
means the yield on U.S. Treasury securities at constant maturity as
interpolated by the U.S. Treasury from the daily yield curve, based on
the closing market bid yields on actively-traded U.S. Treasury
securities in the over-the-counter market, as such yields are stated
under the heading referred to as "U.S. Government Securities, Treasury
Constant Maturities" in Document H.15(519), presently published by the
Board of Governors of the Federal Reserve System and titled "Federal
Reserve Statistical Release." The Treasury Rate used to calculate a
Prepayment Premium shall be the constant maturity yield value read from
the yield curve at the fixed maturity which is the same as, or is the
next closest period which is longer than the Prepayment Interest
Period. If the publishing of the Treasury Rate is discontinued during
the term of the Line of Credit, then the Treasury Rate shall be based
upon the index which is published by the Board of Governors of the
Federal Reserve System in replacement thereof or, if no such
replacement index is published, the index which, in Standard Federal's
sole determination most nearly corresponds to the Treasury Rate. The
Treasury Rate used to calculate a Prepayment Premium shall be computed
utilizing the Treasury Rate for the day which is two Business Days
prior to the due date of the Prepayment Premium.
"Prime-Based Rate" shall mean a rate per annum equal to the
Wall Street Journal Prime Rate, which rate shall increase or decrease
automatically when and to the extent that the Wall Street Journal Prime
Rate shall be increased or decreased.
"Prime Rate Borrowing" shall mean the principal amount of any
portion of any Borrowing bearing interest at the Prime-Based Rate.
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"Principal Prepayment" shall mean a payment of principal with
respect to a LIBOR Borrowing on a day which is not the last day of an
Interest Period applicable to such LIBOR Borrowing.
"Rate Conversion Date" shall mean the date on which a Prime
Rate Borrowing shall convert to a LIBOR Borrowing.
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System from time to time in effect and
shall include any successor or other regulation or official
interpretation of the Board of Governors relating to reserve
requirements applicable to member banks of the Federal Reserve System.
"Reserve Requirement" shall mean, with respect to an Interest
Period, the daily average during such Interest Period of the aggregate
reserve requirement (including all basic, supplemental, marginal and
other reserves and taking into account any transitional adjustments or
other scheduled changes in reserve requirements during such Interest
Period) which may be imposed on Standard Federal under Regulation D on
Eurocurrency liabilities, in the case of LIBOR Borrowings.
"Reuter's Screen" means the display designated as page "LIBO"
on the Reuter Monitor System or such other display on the Reuter
Monitor System as shall display LIBOR.
"Revolving Credit Period" means the period from the date of
this Loan Agreement through the Line of Credit Maturity Date.
"Unused Line" shall mean the amount available for draw but not
advanced from time to time on the Line of Credit.
"Unused Line Fee" shall mean a fee in the amount of 0.25% per
annum of the Unused Line. The amount of the Unused Line Fee payable on
the first day of each month will be determined by multiplying the
average daily balance of the Unused Line for the calendar month which
ends one month prior to the due date of such Unused Line Fee by
.020833%.
"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, then the Prime-Based 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.
1.2 Standard Federal hereby extends the Line of Credit to the
Borrower, which shall not exceed at any one time outstanding the Credit
Limit.
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1.3 The Borrower shall be obligated to repay all advances made
hereunder with respect to any lease which becomes 90 days or more
delinquent and such repayment shall be due and payable 15 days after
the lease receivable statement which discloses such delinquency is
timely furnished to Standard Federal pursuant to Section 3 below.
1.4 The Line of Credit herein extended shall be subject to the
terms and conditions of the Line of Credit Note. This Loan Agreement
and the 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.
1.5 Standard Federal shall, from time to time during the term
hereof, make advances to Borrower under the Line of Credit upon request
therefor by Borrower, provided that upon giving effect to such advance
no Event of Default (as defined in the Line of Credit Note or this
Agreement) and no event which with notice and/or the passage of time
would become an Event of Default shall exist at the time the advance is
to be made; and provided further that upon giving effect to such
advance and at the time the advance is to be made all of the
representations and warranties of Borrower contained in this Agreement
and all other documents executed in connection with the Line of Credit
are true and correct in all material respects; and provided further
that at the time the advance is to be made Standard Federal shall not
have previously or concurrently declared all amounts owing under the
Line of Credit Note to be immediately due and payable; and provided
further the amount requested shall not cause the total amount
outstanding under the Line of Credit to exceed the Credit Limit.
1.6 LIBOR Borrowings under the Line of Credit shall bear
interest at the Line of Credit LIBOR Rate and Prime Rate Borrowings
under the Line of Credit shall bear interest at the Prime-Based Rate.
Borrower shall have the option to designate whether Borrowings shall
consist of LIBOR Borrowings or Prime Rate Borrowings, to be exercised
as hereinafter described. Interest shall be calculated on the basis of
a year of 360 days for the actual number of days amounts are
outstanding.
1.7 If at any time the amount outstanding under the Line of
Credit shall exceed the 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 Credit Limit.
1.8 Borrower shall pay to Standard Federal, on the first day of
each month, commencing on the first payment date after the date hereof,
and continuing on the same day of each consecutive month thereafter
until the termination of the Line of Credit and all sums owing for
principal and interest with respect to the Line of Credit are paid in
full, the Unused Line Fee.
1.9 In all events, unless earlier terminated, the Line of
Credit shall terminate March 1, 2000. Upon termination, Borrower shall
forthwith pay to Standard Federal all sums owing for principal and
interest with respect to the Line of Credit.
1.10 To effect a Borrowing under the Line of Credit, Borrower
shall give Standard Federal a Borrowing Notice.
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1.11 A Borrowing Notice may be made in writing, by telefacsimile
or by telephone by an authorized representative of the Borrower and
shall specify the aggregate amount of the requested Borrowing and the
Effective Date of the Borrowing. Any Borrowing Notice by telephone may
be recorded by Standard Federal for accuracy. A Borrowing Notice for a
LIBOR Borrowing must be accompanied by one or more Interest Rate
Selection Notices, specifying the principal amount and the Interest
Period applicable to each LIBOR Borrowing.
1.12 To effect a LIBOR Borrowing, the Borrower must furnish
Standard Federal an Interest Rate Selection Notice.
1.13 Interest Rate Selection Notices must be given no later than
11:00 a.m. Detroit time on a day which is at least two (2) London
Business Days prior to the Effective Date of a LIBOR Borrowing. A
Borrowing Notice for a Prime Rate Borrowing must be given no later than
3:00 p.m. Detroit time on the Effective Date of such Borrowing.
1.14 Prior to making a Request for Borrowing or giving an
Interest Rate Selection Notice, the Borrower may (without specifying
whether the anticipated Borrowing will be a Prime Rate Borrowing or a
LIBOR Borrowing) request that Standard Federal provide the Borrower
with the most recent LIBOR available to Standard Federal for each
Interest Period requested by Borrower. Standard Federal shall endeavor
to provide such quoted rates to the Borrower on the date of the
request.
1.15 LIBOR Borrowings shall be made only in minimum increments
of Five Hundred Thousand and 00/100 Dollars ($500,000.00).
1.16 If the Borrower wishes to roll a LIBOR Borrowing into
anther LIBOR Borrowing at the end of the Interest Period applicable to
such LIBOR Borrowing, it shall give Standard Federal an Interest Rate
Selection Notice no later than 11:00 a.m. Detroit time on the day which
is two (2) London Business Days prior to the termination of the
applicable Interest Period. The Interest Rate Selection Notice shall
specify the Interest Period(s) to be applicable to principal amounts
which will continue as LIBOR Borrowings. Each Interest Rate Selection
Notice shall be irrevocable and effective upon the giving thereof to
Standard Federal. If the Borrower shall fail to give Standard Federal
an Interest Rate Selection Notice by 11:00 a.m. Detroit time on the day
which is two (2) London Business Days prior to the termination of an
Interest Period with respect to any LIBOR Borrowing, specifying the
interest option to be applicable to such Borrowing as of the end of
such Interest Period, the LIBOR Borrowing shall convert to a Prime Rate
Borrowing at the end of the Interest Period.
1.17 The Borrower may convert Prime Rate Borrowings to LIBOR
Borrowings at any time by giving an Interest Rate Selection Notice to
Standard Federal specifying the Rate Conversion Date. The Interest Rate
Selection Notice must be given no later than 11:00 a.m. Detroit time on
the day which is two (2) London Business Days prior to the Rate
Conversion Date. Each Interest Rate Selection Notice shall specify the
principal amount of the Prime Rate Borrowing to be converted to a LIBOR
Borrowing and the Interest Period to be applicable to such LIBOR
Borrowing. Each Interest Rate Selection Notice shall be irrevocable and
effective upon the giving thereof to Standard Federal.
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1.18 If the Borrower makes a Principal Prepayment or a LIBOR
Borrowing Fail occurs, Borrower will pay to Standard Federal the
Prepayment Premium. In the case of a Principal Prepayment, the
Prepayment Premium shall be due at the time the Principal Prepayment is
made. In the case of a LIBOR Borrowing Fail, the Prepayment Premium
shall be due on the Effective Date specified in the applicable
Borrowing Notice.
1.19 If, with respect to an Interest Period for any LIBOR
Borrowing, Standard Federal determines, in its sole discretion, that,
by reason of circumstances affecting the interbank Eurodollar market
generally, deposits in United States dollars (in the applicable
amounts) are not being offered to banks in the interbank Eurodollar
market for such Interest Period, or the Line of Credit LIBOR Rate will
not adequately and fairly reflect the cost to Standard Federal of
maintaining or funding the LIBOR Borrowing for such Interest Period,
Standard Federal shall promptly give notice thereof to Borrower.
Thereafter, until Standard Federal gives notice to the Borrower that
such circumstances no longer exist, (a) the obligation of Standard
Federal to fund LIBOR Borrowings shall be suspended and (b) the
Borrower shall either (i) repay in full the then-outstanding principal
amount of LIBOR Borrowings, together with accrued interest thereon on
the last day of the then-current Interest Period applicable to such
LIBOR Borrowings, or (ii) convert such LIBOR Borrowings to Prime Rate
Borrowings on the last day of the then-current Interest Period
applicable to each LIBOR Borrowing.
1.20 If, after the date of this Loan Agreement, the adoption of
any applicable law, rule or regulation, or any change therein, or any
change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance by Standard
Federal with any request or directive (whether or not having the force
of law) of any such authority, central bank or comparable agency shall
make it unlawful or impossible for Standard Federal to make, maintain
or fund LIBOR Borrowings, Standard Federal shall promptly give notice
thereof to the Borrower. Thereafter, (a) the obligation of Standard
Federal to fund LIBOR Borrowings shall be suspended and (b) the
Borrower shall either (i) repay in full the then-outstanding principal
amount of LIBOR Borrowings, together with accrued interest thereon, or
(ii) convert such LIBOR Borrowings to Prime Rate Borrowings, either:
(1) on the last day of the then-current Interest Period applicable to
such LIBOR Borrowings, if Standard Federal may lawfully continue to
maintain and fund such LIBOR Borrowings until such date, or (2)
immediately, if Standard Federal may not lawfully continue to fund and
maintain such LIBOR Borrowings until such date, in which case Borrower
will pay the Prepayment Premium.
1.21 If any governmental authority or regulatory agency, central
bank or other comparable authority, shall at any time impose, modify or
deem applicable any reserve (including, without limitation, the Reserve
Requirement or any other reserve imposed by the Board of Governors of
the Federal Reserve System), special deposit or similar requirement
against assets of, deposits with or for the account of, or credit
extended by, Standard Federal, or shall impose on Standard Federal or
the interbank Eurodollar market any other condition, guideline or
request affecting LIBOR Borrowings, the Note or Standard Federal's
obligation to make advances of LIBOR Borrowings, and the result of any
of the foregoing, in the reasonable judgment of Standard Federal shall
be to increase the cost to Standard Federal of making or maintaining
LIBOR Borrowings, or to reduce the amount of any sum
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received or receivable by Standard Federal under this Loan Agreement,
or under the Note, by an amount deemed by Standard Federal to be
material, then, within five (5) days after demand by Standard Federal,
Borrower shall pay to Standard Federal as additional interest such
additional amount or amounts as will compensate Standard Federal for
such increased cost or reduction. Standard Federal will promptly notify
the Borrower of any event of which it has knowledge, occurring after
the date hereof, which will entitle Standard Federal to compensation
pursuant to this Section. A certificate of Standard Federal claiming
compensation under this Section and setting forth the additional amount
or amounts to be paid to it hereunder shall be conclusive in the
absence of manifest error. Standard Federal will, on request, provide
evidence supporting such certificate. If Standard Federal demands
compensation under this Section, then Borrower may at any time, upon at
least five (5) days prior notice to Standard Federal, either (i) pay
such compensation to Standard Federal, (ii) repay in full the then
outstanding LIBOR Borrowings of Standard Federal, together with accrued
interest thereon to the date of prepayment, or (iii) convert such LIBOR
Borrowings to Prime Rate Borrowings in accordance with the provisions
of this Loan Agreement; provided, however, that if the Borrower prepays
or converts LIBOR Borrowings it shall be liable for any applicable
Prepayment Premium. Standard Federal's determination of amounts payable
under this Section shall be calculated as though Standard Federal
funded the applicable LIBOR Borrowings through the purchase of a
eurodollar deposit of the type, maturity and amount corresponding to
the deposit used as a reference in determining the Base LIBOR Rate with
respect to such LIBOR Borrowing, whether or not Standard Federal in
fact purchased such deposit. If the additional amounts payable under
this Section shall be construed or so operate as to require the
Borrower to pay, or be charged, interest at a rate which is 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 outstanding under the Note, as applicable.
In such event, Standard Federal shall have the option to immediately
terminate Borrower's right to request LIBOR Borrowings, and the unpaid
balance of any outstanding LIBOR Borrowings, 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 obligations of
the Borrower under this Section shall survive payment of the Line of
Credit and termination of this Loan Agreement.
1.22 If Standard Federal shall determine that the adoption,
amendment or revision of any applicable law, rule or regulation
affecting Standard Federal's capital requirements or adequacy, or the
interpretation or administration thereof by any governmental authority
or regulatory agency, central bank or other comparable authority, or
compliance by Standard Federal with any applicable law, rule or
regulation affecting Standard Federal's capital requirements or
adequacy, or any request, interpretation or directive (whether or not
having the force of law) of any governmental authority or regulatory
agency, central bank or other comparable authority which affects
Standard Federal's capital requirements, has or would have the effect
of reducing the rate of return on Standard Federal's capital to a level
below the rate of return Standard Federal would have realized in the
absence of such adoption, amendment, revision, interpretation,
administration or compliance (taking into account Standard Federal's
policies with respect to capital adequacy) by an amount considered by
Standard Federal to be material, then, beginning five (5) days after
demand by Standard Federal, Borrower shall pay to Standard
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Federal as additional interest or as fees, as determined by Standard
Federal in its sole discretion, such additional amount or amounts as
will compensate Standard Federal for such reduction in its rate of
return. Such adjustments in interest or fees shall be imposed effective
five (5) days after Standard Federal's demand and shall apply to the
then outstanding principal balance of the Line of Credit and to
subsequent advances under this Loan Agreement. In determining such
amount or amounts, Standard Federal may use any reasonable averaging
and attribution methods. Standard Federal will promptly notify the
Borrower of any event of which it has knowledge, occurring after the
date hereof, which will entitle Standard Federal to compensation
pursuant to this Section. A certificate of Standard Federal claiming
compensation under this Section and setting forth the additional amount
or amounts to be paid to it hereunder shall be conclusive in the
absence of manifest error. Standard Federal will, on request, provide
evidence supporting such certificate.
5. The Loan Agreement is hereby amended so as to include a Form
of Interest Rate Selection Notice as an Exhibit A, in the form attached hereto
as Exhibit A.
6. The Note is hereby amended in the following respects only:
a. The Due Date provided for in the Note is hereby
amended and extended from March 31, 1999 to March 1, 2000.
b. The principal amount stated in the Note is hereby
decreased to the sum of Ten Million and 00/100 Dollars
($10,000,000.00). Borrower hereby promises to pay to the order of
Standard Federal the principal amount of the Note, as hereby amended,
together with interest thereon, in accordance with the terms and
provisions of the Note, as hereby amended.
c. The principal outstanding under the Note from time to
time shall bear interest, on a basis of a year of 360 days for the
actual number of days amounts are outstanding, at Borrower's option, to
be exercised in accordance with the procedures outlined in the Loan
Agreement, at the Prime-Based Rate or the Line of Credit LIBOR Rate.
7. Except as amended herein and in the amendment to the Security
Agreement executed herewith, the Note, Security Agreement and Guaranty shall
remain in full force and effect. This Amendment Agreement may be attached to the
Note as a rider, but such attachment shall not be necessary to the validity
thereof.
8. Guarantor acknowledges and consents to the amendment to the
Note herein provided and agrees that the Guaranty shall continue and remain in
full force and effect with respect to the Note as herein amended.
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IN WITNESS WHEREOF the parties hereto have executed this agreement the
day and date first above written.
Witness: BORROWER:
MCCLAIN GROUP LEASING, INC., a Michigan
corporation
By: /s/ Mark S. Mikelait
- --------------------- -------------------------------------
Mark S. Mikelait
Its: Treasurer
- --------------------- -------------------------
6200 Elmridge
----------------------------------------
Address
Sterling Heights, Michigan 48310
----------------------------------------
38-2969462
----------------------------------------
Tax Identification Number
GUARANTOR:
MCCLAIN INDUSTRIES, INC., a Michigan
corporation
By: /s/ Mark S. Mikelait
- --------------------- -------------------------------------
Mark S. Mikelait
Its: Treasurer
- --------------------- -------------------------
STANDARD FEDERAL:
STANDARD FEDERAL BANK, a federal savings
bank
By: /s/ [SIG]
- --------------------- -------------------------------------
Its: Vice President
- --------------------- -------------------------
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EXHIBIT A
[FORM OF INTEREST RATE SELECTION NOTICE]
- --------------------------------------------------------------------------------
STANDARD FEDERAL BANK
Member ABN AMRO Group
2600 West Big Beaver Road
P.O. Box 3703
Troy, Michigan 48007-3703
248/643-9600
Loan No.:
--------------
Borrowing No.:
--------------
INTEREST RATE SELECTION NOTICE
TO: STANDARD FEDERAL BANK
In accordance with the provisions of the Loan Agreement, dated July 17,
1996, as amended April 28, 1997 and ________________ , 1998 (the "Loan
Agreement"), executed in connection with the referenced loan, the undersigned
hereby notifies you that it has selected the Interest Period commencing on the
Effective Date stated below with respect to the Borrowing outstanding under the
referenced Borrowing No. in the principal amount indicated below (capitalized
terms used in this notice shall have the meanings given such terms in the Loan
Agreement):
Interest Period:
-------------------
Effective Date:
-------------------
Principal Amount:
-------------------
LIBOR:
-------------------
LIBOR Rate:
-------------------
Last Day of Interest Period:
-------------------
BORROWER:
McClain Group Leasing, Inc.
By: EXHIBIT - DO NOT SIGN
-----------------------
Its:
----------------------
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