Exhibit
10.3


 


NOTE MODIFICATION AGREEMENT


 


This Note Modification Agreement
(the “Agreement”) is dated as of December 9, 2008 and is made by and between
BRAD FOOTE GEAR WORKS, INC., f/k/a BFG Acquisition Corp., an Illinois
corporation (“Borrower”) and BANK OF AMERICA, N.A., a national banking
association, as successor by merger to LaSalle Bank National Association f/k/a
LaSalle National Bank f/k/a LaSalle Bank NI (the “Bank”).


 


R E C I T A L S


 


A.            Borrower
has previously delivered to the Bank its Consolidated Term Note dated February
1, 2006 in the principal amount of $7,899,332.98 (the “Note”), evidencing a
consolidated term loan made by the Bank to the Borrower; and


 


B.            The
Note currently bears interest at a variable rate equal to the prime rate option
set forth in the Note; and


 


C.            The
Borrower and Bank have agreed to modify the interest rate charged on the Note;


 


NOW,
THEREFORE, in
consideration of the foregoing, and for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:


 


1.             Effective December 9, 2008 and for
the balance of the term of this Note, the interest rate charged on this Note
shall be Adjusted LIBOR (as hereinafter defined). To effect such change, the
Note is hereby amended to add the following additional provisions thereto:


 


“The term “LIBOR Loan” as
used herein shall mean the outstanding principal balance of this Note at the
beginning of each Interest Period (as hereinafter defined) or any other
applicable time. “Adjusted LIBOR” means a rate of interest equal to two and
one-half percent (2.5%) per annum in excess of the per annum rate of interest
at which U.S. dollar deposits in an amount comparable to the amount of the
relevant LIBOR Loan and for a period equal to the relevant “Interest Period”
(as hereinafter defined) are offered generally to the Bank  in the London Interbank Eurodollar market at
11.00 a.m. (London time) two Banking Days prior to the commencement of each
Interest Period, as displayed in the Bloomberg Financial Markets system, or
other authoritative source selected by the Bank in its sole discretion, divided
by a number determined by subtracting from 1.00 the maximum reserve percentage
for determining reserves to be maintained by member banks of the Federal
Reserve System for Eurocurrency liabilities, such rate to remain fixed for such
Interest Period. “Interest Period” shall mean successive 30 day periods
commencing on December 9, 2008; provided that: (i) each such 30 day period
occurring after such initial period shall commence on the day on which the next
preceding period expires; (ii) the final Interest Period shall be such that its
expiration occurs on or before the Maturity Date; (iii) any Interest Period
which commences on the last Banking Day of a calendar month (or on any day for
which there is no numerically corresponding day in the appropriate subsequent
calendar month) shall end on the last Banking Day of the appropriate subsequent
calendar month; (iv) if the final Interest Period before the Maturity Date is less
then 30 days, this Note shall continue to bear interest at Adjusted LIBOR for
such final Interest Period; and (v)  each
Interest 


 


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Period
which would otherwise end on a day which is not a Banking Day shall end on the
next succeeding Banking Day, or, if such next succeeding Banking Day falls in
the next succeeding calendar month, on the next preceding Banking Day. Interest
on each LIBOR Loan shall be payable on the last Banking Day of each Interest
Period, at maturity, after maturity on demand, and on the date of  any payment hereon on the amount paid. The
Borrower hereby further promises to pay to the order of the Bank, on demand,
interest on the unpaid principal amount of each LIBOR Loan after maturity
(whether by acceleration or otherwise) at the Default Rate (as defined in this
Note). As used herein, “Banking Day(s)” shall mean each and all days other than
a Saturday, Sunday or a legal holiday on which national banks are authorized or
required to be closed for the conduct of commercial banking business in
Chicago, Illinois.


 


The Bank’s determination of
Adjusted LIBOR as provided above shall be conclusive, absent manifest error. Furthermore,
if the Bank determines, in good faith (which determination shall be conclusive,
absent manifest error) prior to the commencement of any Interest Period that:
(a) U.S. dollar deposits of sufficient amount and maturity for funding any
LIBOR Loan are not available to the Bank in the London Interbank Eurodollar
market in the ordinary course of business, or (b) by reason of circumstances
affecting the London Interbank Eurodollar market, adequate and fair means do
not exist for ascertaining the rate of interest to be applicable to the
relevant LIBOR Loan, the Bank shall promptly notify the Borrower and such LIBOR
Loan shall automatically convert on the last day of its then-current Interest
Period to a loan bearing interest at the Prime Rate plus two and one-half
percent (2.5%) per annum.


 


If, after the date hereof,
the introduction of, or any change in, any applicable law, treaty, rule,  regulation, or guideline, or in the
interpretation or administration thereof by any governmental authority or any
central bank or other fiscal, monetary or other authority having jurisdiction
over the Bank or its lending office (a “Regulatory Change”) shall, in the
opinion of counsel to the Bank, make it 
unlawful or impossible for the Bank to make or maintain any LIBOR Loan
evidenced hereby, then the Bank shall promptly notify the Borrower and such
LIBOR Loan shall automatically convert on the last day of its then-current
Interest Period (or earlier if required by such Regulatory Change) to a loan
bearing interest at the Prime Rate plus two and one-half percent (2.5%) per
annum.


 


If, for any reason, any
LIBOR Loan is paid prior to the last Banking Day of its then-current Interest
Period, the Borrower agrees to indemnify the Bank against any loss (including
any loss on redeployment of the funds repaid), cost or expense incurred by the
Bank as a result of such prepayment.


 


If any Regulatory Change
(whether or not having the force of law) shall (a)  impose, modify or deem applicable any
assessment, reserve, special deposit or similar requirement against assets held
by, or deposits in or for the account of, or loans by, or any other acquisition
of funds or disbursements by, the Bank; (b) subject the Bank or any LIBOR Loan
to any tax, duty, charge, stamp tax or fee or change in the basis of taxation
of payments to the Bank of principal or interest due from the Borrower to the
Bank hereunder (other than a change in the taxation of the overall net income
of the Bank); or (c) impose on the Bank any other condition regarding such
LIBOR Loan or the Bank’s funding thereof, and the Bank shall determine (which
determination shall be conclusive, absent manifest error) that the result of
the foregoing is to increase the cost to the Bank of making or maintaining such
LIBOR Loan or to reduce the amount of principal or 


 


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interest
received by the Bank hereunder, then the Borrower shall pay to the Bank, on
demand, such additional amounts as the Bank shall, from time to time, determine
are sufficient to compensate and indemnify the Bank for such increased cost or
reduced amount.


 


The outstanding principal
balance of this Note, the applicable interest rate for each Interest Period, each
applicable Interest Period, and the amount and date of any repayment shall be
noted on Bank’s records, which records shall be conclusive evidence thereof,
absent manifest error; provided, however, any failure by Bank to make any such
notation, or any error in any such notation, shall not relieve Borrower of its
obligations to repay Bank the outstanding principal balance of this Note, all
accrued and unpaid interest thereon, and all other amounts payable by Borrower
to Bank under or pursuant to this Note.”


 


2.             All
references in the Note to an option to convert the interest rate on the Note to
the “Fixed Rate” and all applicable provisions pertaining to such fixed rate
option are hereby deleted without substitution.


 


3.             In
the event of any conflict between the terms of this Agreement and the Note, the
terms of this Agreement shall govern.


 


4.             Borrower
acknowledges and irrevocably agrees that the payment and performance of the
Note, as modified hereby, shall continue to be secured by Collateral Documents
(as such term is defined in the Loan and Security Agreement dated January 17,
1997 between the Borrower and the Bank, as amended from time to time).


 


5.             Except
as expressly modified by this Agreement, all terms and provisions of the Note
shall stand and remain in full force and effect.


 


IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day and  year first above written.


 


	
  BORROWER:

  	
   

  
	
   

  	
   

  
	
  BRAD FOOTE GEAR WORKS,
  INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
        /s/
  Ralph Placzek

  	
   

  
	
   

  	
        Ralph
  Placzek

  	
   

  
	
  Title:

  	
        Vice
  President of Finance

  	
   

  
	
   

  	
   

  	
   

  
	
  BANK:

  	
   

  
	
   

  	
   

  
	
  BANK OF AMERICA, N.A.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
        /s/
  Katherine Novey

  	
   

  
	
   

  	
        Katherine
  Novey

  	
   

  
	
  Title:

  	
        Senior
  Vice President

  	
   

  



 


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