Document:

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                                                                   EXHIBIT 10.37

                                                                       EXECUTION

                          FIRST AMENDMENT TO REVOLVING
                          CREDIT AND GUARANTY AGREEMENT

         This FIRST AMENDMENT TO REVOLVING CREDIT AND GUARANTY AGREEMENT, dated
as of January 15, 2002, (this "Amendment"), is among Hayes Lemmerz
International, Inc. (the "Borrower"), each of the direct and indirect
subsidiaries of the Borrower listed as Guarantors on the signature pages hereto
(collectively, the "Guarantors"), Bank of America, N.A., CIBC, Inc. and Citicorp
USA, Inc. (collectively, the "Lenders") and Canadian Imperial Bank of Commerce,
as administrative agent (in such capacity, the "Administrative Agent") for the
Lenders.

                                   WITNESSETH

         WHEREAS, the Borrower, the Guarantors, the Lenders and the
Administrative Agent are parties to that certain Revolving Credit and Guaranty
Agreement, dated as of December 17, 2001 (as amended, restated or otherwise
modified from time to time, the "Credit Agreement")

         WHEREAS, the Borrower has requested, and the Lenders and the
Administrative Agent have, on terms and conditions set forth herein, agreed to
certain modifications of the Credit Agreement; and

         WHEREAS, from and after the Effective Date (as hereinafter defined) of
this First Amendment, the Credit Agreement shall be amended, subject to and upon
the terms and conditions set forth herein;

         NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, and subject to the fulfillment of the
conditions set forth below, the parties hereto agree as follows:

         Section 1. Definitions. Unless otherwise defined herein, or the context
otherwise requires, capitalized terms used in this Amendment shall have the
meanings ascribed to such terms in the Credit Agreement.

         Section 2. Amendments to the Credit Agreement. Subject to the terms and
conditions set forth herein, the Credit Agreement is hereby amended as follows:

         (a) Section 1.1 of the Credit Agreement is hereby amended to included
the following defined terms in alphabetical order:

                  "BORROWING BASE PROPERTIES" means all Eligible Real Property
         of the Borrower and the Guarantors that is included in accordance with
         this Agreement in the determination of the PP&E Component.

                  "CONTAMINANT" means any waste, pollutant, Hazardous Substance,
         toxic substance, Hazardous Waste, special waste, petroleum or
         petroleum-derived substance or waste, asbestos in any form or
         condition, polychlorinated biphenyls, or any constituent of any such
         substance or waste.

                  "ELIGIBLE REAL PROPERTY" means real property located in the
         United States and owned by the Borrower or a Guarantor as to which (i)
         the Administrative Agent shall have received an

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         appraisal and a Phase I environmental report, in each case that is
         satisfactory in form and substance to the Administrative Agent and the
         Initial Lenders, (ii) no casualty has occurred that affects the value,
         use or operation which has not been restored or repaired, (iii) no
         condemnation or taking shall be pending which would materially
         adversely affect the value, use or operation of such real property,
         (iv) the Administrative Agent shall have received title reports,
         surveys and such other reports or information reasonably requested by
         the Administrative Agent or the Initial Lenders and (v) no
         representation or warranty contained in any of the Loan Documents has
         been breached (or will be breached) by inclusion of such real property
         in the PP&E Component.

                  "ENVIRONMENTAL CLAIMS" means all claims, however asserted, by
         any Governmental Authority or other Person alleging potential liability
         or responsibility for violation of any Environmental Law, or for a
         Release or other injury to the environment.

                  "ENVIRONMENTAL LAWS" means all federal, state or local laws,
         statutes, common law duties, rules, regulations, ordinances and codes,
         together with all administrative orders, licenses, authorizations and
         permits of, and agreements with, any Governmental Authority, in each
         case relating to protection of the environment or protection of human
         health in connection with exposure to any Hazardous Waste or Hazardous
         Substance.

                  "HAZARDOUS SUBSTANCE" shall have the meaning given such term
         in Section 3.7(a).

                  "HAZARDOUS WASTE" shall have the meaning given such term in
         Section 3.7(a).

                  "RELEASE" means a release, spill, emission, leaking, pumping,
         injection, deposit, disposal, discharge, dispersal, leaching or
         migration of a Contaminant into or out of the Borrowing Base
         Properties, including the movement of Contaminants through or in the
         air, soil, surface water, groundwater of the Borrowing Base Properties
         or otherwise.

         (b) The following definitions set forth in Section 1.1 of the Credit
Agreement are hereby amended to read in their entirety as follows:

                  "BORROWING BASE" shall mean, at the time of any determination,
         an amount equal to the sum, without duplication, of (a) 85% of Eligible
         Accounts Receivable plus (b) the sum of 45% of Eligible Finished Goods
         plus 21% of Eligible Raw Materials, plus (c) the PP&E Component, minus
         (d) the Carve-Out. The Borrowing Base at any time shall be determined
         by reference to the most recent Borrowing Base Certificate delivered to
         the Administrative Agent pursuant to Section 5.8 of the Agreement.
         Subject to the limitations and requirements set forth in Section
         10.10(a) of the Agreement, the Administrative Agent, in its sole
         discretion after consultation with the Initial Lenders, may, and at the
         direction of at least two of the Initial Lenders shall, adjust and
         revise from time to time standards of eligibility and reserves and
         advance rates of the Borrowing Base, with any changes in such standards
         to be effective three (3) Business Days after delivery of notice
         thereof to the Borrower.

                  "BORROWING BASE ADDENDUM" shall mean the First Amendment to
         Revolving Credit and Guaranty Agreement dated as of January 15, 2002.

                  "ENVIRONMENTAL LIEN" means a Lien in favor of any Governmental
         Authority for (a) any liability under Environmental Laws, or (b)
         damages arising from, or costs incurred by such Governmental Authority
         in response to, a Release or threatened Release of a Contaminant into
         the environment.

                                       2
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                  "PP&E COMPONENT" shall mean, at the time of any determination,
         an amount equal to the lesser of (i) the sum of (x) 75% of the orderly
         liquidation value of certain machinery and equipment owned by the
         Borrower and the Guarantors and (y) 50% of the market value of the
         Eligible Real Property, in each case as determined by the Initial
         Lenders, (ii) $40,000,000, or (iii) 20% of the Borrowing Base,
         inclusive of the PP&E Component as determined under clause (i) or
         clause (ii) above. For purposes of determining the PP&E Component as of
         the effective date of the Borrowing Base Addendum, (i) the orderly
         liquidation value of certain machinery and equipment owned by the
         Borrower and the Guarantors shall be determined by using the valuations
         of such machinery and equipment set forth in the appraisal by DoveBid
         Valuation Services, Inc. dated November 13, 2001, and (ii) the market
         value of the Borrowing Base Properties shall be determined by using the
         valuations of such real property set forth in the letter dated December
         26, 2001 and the related appraisals referred to therein prepared by
         Binswanger.

         (c) Section 1.1 of the Credit Agreement is hereby further amended by
deleting the period at the end of the definition of "Eligible Inventory",
inserting the phrase "; or" in lieu thereof and adding at the end thereof a new
item (m) as follows:

                  "(m) it is Work-in-Process."

         (d) Section 1.1 of the Credit Agreement is hereby further amended by
deleting in its entirety the definition of "Eligible Work-in-Process".

         (e) Section 1.1 of the Credit Agreement is hereby further amended by
adding at the end of the definition of "Critical Trade Vendors" the following:

                  "as modified from time to time in a manner acceptable to the
                  Administrative Agent and the Initial Lenders."

         (f) Section 2.2(d) of the Credit Agreement is hereby amended by
deleting the reference to "2.25%" on the fourth line thereof and replacing such
reference with "2.0%" and by deleting the reference to "4.25%" on the fifth line
thereof and replacing such reference with "4.0%".

         (g) Section 2.7(a) of the Credit Agreement is hereby amended by
deleting the reference to "2.25%" at the end thereof and replacing such
reference with "2.0%".

         (h) Section 2.7(b) of the Credit Agreement is hereby amended by
deleting the reference to "3.75%" at the end thereof and replacing such
reference with "3.50%".

         (i) Section 2.20 of the Credit Agreement is hereby amended by deleting
the reference to "3.75%" on the third line thereof and replacing such reference
with "3.50%".

         (j) Section 3.7(a) of the Credit Agreement is hereby amended by
deleting the parenthetical phrase in the sixth and seventh lines thereof and
replacing it with the following parenthetical phrase:

                  "(as such terms are defined under any applicable Environmental
                  Laws)"

         (k) Section 3 of the Credit Agreement is hereby amended to include the
following new Section 3.14:

                                       3
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                  SECTION 3.14 Real Estate; Leases. Schedule 3.14 sets forth, as
         of the Closing Date, a correct and complete list of all Borrowing Base
         Properties owned by the Borrower and the Guarantors. The Borrower and
         each Guarantor has good and marketable title in fee simple to the
         Borrowing Base Properties identified on Schedule 3.14 as owned by the
         Borrower or such Guarantor, or valid leasehold interests in all
         Borrowing Base Properties designated therein as "leased" by the
         Borrower or such Guarantor and each such lease is valid and enforceable
         in accordance with its terms and is in full force and effect, and no
         default by any party to any such lease exists. The Borrower and each
         Guarantor has good, indefeasible, and merchantable title to all of its
         respective Borrowing Base Properties, free of all Liens except
         Permitted Liens.

         (l) Section 3 of the Credit Agreement is hereby amended to include the
following new Section 3.15:

                  SECTION 3.15 Environmental Laws. Except as otherwise disclosed
         on Schedule 3.15:

                  (a) The Borrower and the Guarantors have complied in all
         material respects with all Environmental Laws applicable to the
         Borrowing Base Properties and neither the Borrower nor any Guarantor
         nor any of their presently owned Borrowing Base Properties or presently
         conducted operations, nor, to the best of their knowledge, their prior
         operations, is subject to any enforcement order from or liability
         agreement with any Governmental Authority or private Person respecting
         (i) compliance with any Environmental Law or (ii) any potential
         liabilities and costs or remedial action arising from the Release or
         threatened Release of a Contaminant.

                  (b) The Borrower and the Guarantors have obtained or applied
         for all permits necessary for their current operations under all
         Environmental Laws applicable to the Borrowing Base Properties, and all
         such permits (to the extent obtained) are in good standing and the
         Borrower and the Guarantors are in compliance with all material terms
         and conditions of such permits.

                  (c) Neither the Borrower nor any of the Guarantors, nor, to
         the best of their knowledge, any of their predecessors in interest, has
         in violation of any applicable Environmental Laws stored, treated or
         disposed of any Hazardous Waste or Hazardous Substance in, on or under
         any of the Borrowing Base Properties.

                  (d) Except to the extent previously disclosed to the
         Administrative Agent and the Initial Lenders in writing, neither the
         Borrower nor any of the Guarantors has, with respect to the Borrowing
         Base Properties, received any summons, complaint, order or similar
         written notice indicating that it is not currently in compliance with,
         or that any Governmental Authority is investigating its compliance
         with, any applicable Environmental Laws or that it is or may be liable
         to any other Person as a result of a Release or threatened Release of a
         Contaminant.

                  (e) To the best knowledge of the Borrower and the Guarantors,
         none of the Borrowing Base Properties nor any of the present or past
         operations of the Borrower and the Guarantors is the subject of any
         investigation by any Governmental Authority evaluating whether any
         remedial action is needed to respond to a Release or threatened Release
         of a Contaminant.

                  (f) Neither the Borrower nor any of the Guarantors has, with
         respect to the Borrowing Base Properties, within the immediately
         preceding three (3) years filed any notice under any requirement of
         Environmental Law applicable to it reporting a spill or accidental and
         unpermitted Release or discharge of a Contaminant.

                                       4
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                  (g) Except to the extent previously disclosed to the
         Administrative Agent and the Initial Lenders in writing, neither the
         Borrower nor any of the Guarantors has, with respect to the Borrowing
         Base Properties, entered into any negotiations or settlement agreements
         with any Person (including the prior owner of its property) imposing
         material obligations or liabilities on the Borrower or any of the
         Guarantors with respect to any remedial action in response to the
         Release of a Contaminant or environmentally related claim.

                  (h) No Environmental Lien has attached to any of the Borrowing
         Base Properties.

         (m) Section 5.1(b) of the Credit Agreement is hereby amended by
deleting a reference to "December 31, 2001" on the last line thereof and
replacing it with a reference to "January 31, 2002."

         (n) Section 5.10 of the Credit Agreement is hereby amended by inserting
the following parenthetical language immediately after the words "Governmental
Authority":

                           "(including any Environmental Laws)"

         (o) Section 5 of the Credit Agreement is hereby amended to include the
following new Section 5.13:

         SECTION 5.13 Flood Insurance. In the event that any of the Borrowing
Base Properties is determined to be located within an area that has been
identified by the Director of the Federal Emergency Management Agency as a
Special Flood Hazard Area ("SFHA"), the Borrower shall purchase and maintain
flood insurance on such Borrowing Base Properties and any Inventory or other
PP&E Component located on such Borrowing Base Properties. The amount of said
flood insurance will be reasonably determined by the Administrative Agent, and
shall, at a minimum, comply with applicable federal regulations as required by
the Flood Disaster Protection Act of 1973, as amended.

         (p) Section 5 of the Credit Agreement is hereby amended to include the
following new Section 5.14:

         SECTION 5.14 Environmental Laws. Without limiting the generality of
Section 5.10, the Borrower and each Guarantor shall conduct its business and
maintain its respective Borrowing Base Properties in compliance, in all material
respects, with all Environmental Laws, including those relating to the
generation, handling, use, storage, and disposal of any Contaminant. The
Borrower and each Guarantor shall, with respect to the Borrowing Base
Properties, take prompt and appropriate action to respond to any non-compliance
with Environmental Laws and shall regularly report to the Administrative Agent
on any such responses.

         (q) Section 6.3 of the Credit Agreement is hereby amended by deleting
the reference to "$2,000,000" on the sixth line thereof and replacing such
reference with "$4,000,000".

         (r) Section 6.3 of the Credit Agreement is hereby further amended by
deleting the word "and" appearing immediately before the reference to "(viii)"
on the twelfth line from the bottom thereof and replacing it with a comma and
adding at the end thereof the following:

         "and (ix) from and after the entry of the Final Order, Indebtedness of
the Borrower in connection with a local development agency bond financing to
finance the Borrower's purchase from Wheland Foundry LLC and its affiliates of
certain assets located in Chatanooga, Tennessee used to manufacture parts of the
Borrower's "Centrifuse Drums" products, in an amount not to exceed $4,100,000
and otherwise on terms and conditions satisfactory to the Administrative Agent
and the Initial Lenders."

                                       5
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         (s) Section 6.10 of the Credit Agreement is hereby amended to read in
its entirety as follows:

         SECTION 6.10 Investments, Loans and Advances. Purchase, hold or acquire
any capital stock, evidences of Indebtedness or other securities of, make or
permit to exist any loans or advances to, or make or permit to exist any
investment in, any other Person (all of the foregoing, "INVESTMENTS"), except
for (i) Permitted Investments and investments by Foreign Subsidiaries in the
ordinary course of business and consistent with past practice; (ii) Intercompany
Indebtedness owing from the Borrower or a Guarantor to the Borrower or a
Guarantor incurred in the ordinary course of business consistent with past
practice; (iii) existing Intercompany Indebtedness listed on Schedule 6.3 (which
describes all Intercompany Loans from the Borrower and the Guarantors to the
Foreign Subsidiaries as of the date hereof); (iv) Intercompany Loans to Foreign
Subsidiaries in Germany and Mexico in accordance with Section 2.29 and (v)
Intercompany Loans from Foreign Subsidiaries (other than the Mexican Debtor) to
other Foreign Subsidiaries in the ordinary course of business, consistent with
past practices and documented by an executed promissory note evidencing such
Intercompany Loans, provided that no such Intercompany Loan shall be made for
the purpose of prepaying or redeeming, or used to prepay or redeem, any
Indebtedness of such Foreign Subsidiaries. Neither the Borrower nor any
Guarantor may (x) make any additional Investments in its Foreign Subsidiaries
except as permitted hereunder nor (y) transfer any assets or the proceeds of any
Loans to any jurisdiction outside of the United States of America, except for
the collection and disbursement in the ordinary course of business and
consistent with past practice of payments owing to Borlem S.A. Empreendimentos
Industriais or the Mexican Debtor, purchases of Inventory by the Borrower or a
Guarantor from Foreign Subsidiaries in the ordinary course of business and
consistent with past practices or as otherwise expressly permitted hereunder.
All post-petition Intercompany Loans from the Borrower or any Guarantor to any
Foreign Subsidiary shall be made in accordance with Section 2.29 and shall be
secured by liens on assets of such Foreign Subsidiary to the extent set forth in
Section 2.29.

         (t) Section 7.1(g) of the Credit Agreement is hereby amended by
deleting the phrase "leases," set forth on the fifth line thereof.

         (u) Section 10.6 of the Credit Agreement is hereby amended to include
the following parenthetical language immediately following the word
"liabilities" in the fourth line thereof:

         "(including without limitation any loss or liability directly or
indirectly arising out of the use, generation, manufacture, production, storage,
release, threatened release, discharge, disposal or presence of any Hazardous
Waste or Hazardous Substance relating to the operations, business or property of
the Borrower and the Guarantors).

         (v) The Credit Agreement is hereby amended to include a new "Schedule
3.14" attached hereto as Exhibit A.

         (w) The Credit Agreement is hereby amended to include a new "Schedule
3.15" attached hereto as Exhibit B.

         (x) Exhibit C to the Credit Agreement is hereby amended in its entirety
and replaced with a new Exhibit C in the form attached hereto as Exhibit C.

         (y) A new Section 10.21 to the Credit Agreement is hereby added at the
end thereof as follows:

                  "SECTION 10.21 Final Order. The parties acknowledge and agree
                  that the terms of the Final Order may modify or supplement the
                  terms of this Agreement

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                  and the other Loan Documents. To the extent the terms of the
                  Final Order entered by the Bankruptcy Court conflict with the
                  terms of this Agreement or the other Loan Documents, the
                  parties agree that the terms of the Final Order shall be
                  controlling."

Section 3. Waiver. Pursuant to the request of the Borrower, the Initial Lenders
hereby waive the provisions of Section 7.1(g) of the Credit Agreement solely as
such provisions apply to the one-time payment by the Borrower to Borlem S.A.
Empreendimentos Industriais ("BORLEM") of an amount not in excess of $4,500,000
in respect of pre-petition claims of Borlem against the Borrower.

Section 4. Representation and Warranties. The Borrower and each of the
Guarantors represents and warrants (which representations and warranties shall
survive the execution and delivery hereof) to the Administrative Agent and
Lenders that:

         (a) It has the corporate power and authority to execute, deliver and
perform the terms and provisions of this Amendment and the transactions
contemplated hereby and has taken or caused to be taken all necessary corporate
action to authorize the execution, delivery and performance of this Amendment
and the transactions contemplated hereby;

         (b) Other than the Final Order, no consent of any person (including,
without limitation, shareholders or creditors of the Borrower or any Guarantor),
and no action of, or filing with any governmental or public body or authority is
required to authorize, or is otherwise required in connection with the
execution, delivery and performance of this Amendment and the other instruments
and documents contemplated hereby which has not been obtained;

         (c) Subject to the entry of the Final Order, each of this Amendment and
any other instruments and documents contemplated hereby has been duly executed
and delivered by a duly authorized officer on behalf of such party, and
constitutes a legal, valid and binding obligation of such party enforceable
against such party in accordance with its terms, subject to bankruptcy,
reorganization, insolvency, moratorium and other similar laws affecting the
enforcement of creditors' rights generally and the exercise of judicial
discretion in accordance with general principles of equity;

         (d) Subject to the entry of the Final Order, the execution, delivery
and performance of this Amendment, and the other instruments and documents
contemplated hereby will not violate any law, statute or regulation, or any
order or decree of any court or governmental instrumentality, or conflict with,
or result in the breach of, or constitute a default under any contractual
obligation of such party;

         (e) After giving effect to this Amendment, there does not exist any
Default or Event of Default; and

         (f) After giving effect to this Amendment, the representations and
warranties contained in the Credit Agreement and in the other Loan Documents are
true and correct in all material respects on and as of the Effective Date as if
such representations and warranties had been made on and as of the Effective
Date (except to the extent such representations and warranties expressly relate
to an earlier date in which case such representations and warranties shall be
true and correct in all material aspects as of such earlier date).

Section 5. Conditions to Effectiveness.

         (a) This Amendment shall become effective on the date (the "EFFECTIVE
DATE") upon which the following conditions have been satisfied in full or waived
by the Administrative Agent in writing:

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                  (i) the Administrative Agent shall have received in form and
substance satisfactory to the Administrative Agent and its counsel, counterparts
of this Amendment executed by the Borrower, the Guarantors, and the Lenders and
such other approvals or documents as the Administrative Agent may reasonably
request;

                  (ii) all representations and warranties contained in this
Amendment or otherwise made in writing to the Administrative Agent in connection
herewith shall be true and correct in all material respects;

                  (iii) no Default or Event of Default, shall have occurred and
be continuing;

                  (iv) the Administrative Agent shall have received such other
instruments, documents, opinions and assurances as the Administrative Agent or
its counsel may reasonably request.

Section 6. Ratification: Waiver of Defenses; and Release.

         (a) The Credit Agreement and the other Loan Documents remain in full
force and effect and are hereby ratified and affirmed. The Borrower and each
Guarantor hereby (i) confirms and agrees that the Borrower is truly and justly
indebted to the Administrative Agent and the Lenders in the aggregate amount of
the Obligations without defense, counterclaim or offset of any kind whatsoever;
and (ii) reaffirms and admits the validity and enforceability of the Credit
Agreement and the other Loan Documents and the Liens in the Collateral which
were granted pursuant to the Loan Documents, the Interim Order and otherwise.

         (b) This Amendment shall be limited precisely as written and shall not
be deemed (i) to be a consent granted pursuant to, or a waiver or modification
of, any other term or condition of the Credit Agreement or any of the
instruments or agreements referred to therein or a waiver of any Default or
Event of Default under the Credit Agreement, whether or not known to the
Administrative Agent or the Lenders or (ii) to prejudice any other right or
rights which the Administrative Agents or the Lenders may now have or have in
the future under or in connection with the Credit Agreement or any of the
instruments or agreements referred to therein. Except to the extent hereby
waived or modified, the Credit Agreement and each of the other Loan Documents
shall continue in full force and effect in accordance with the provisions
thereof on the date hereof.

Section 7. References. All references to the "Credit Agreement", "thereunder",
"thereof" or words of like import in the Credit Agreement or any other Loan
Document and the other documents and instruments delivered pursuant to or in
connection therewith shall mean and be a reference to the Credit Agreement as
modified hereby and as each may in the future be amended, restated, supplemented
or modified from time to time. This Amendment shall constitute a Loan Document.

Section 8. Counterparts. This Amendment may be executed by the parties hereto
individually or in combination, in one or more counterparts, each of which shall
be an original and all of which, taken together, shall constitute one and the
same agreement. Delivery of an executed counterpart of a signature page by
telecopier shall be effective as delivery of a manually executed counterpart.

Section 9. Governing Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK.

Section 10. Successors and Assigns. The provisions of this Amendment shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.

                                       8
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Section 11. Acknowledgement by Guarantors. Each of the Guarantors hereby
acknowledge that it has read this Amendment and consents to the terms hereof and
further confirms and agrees that the Security and Pledge Agreement to which such
Guarantor is a party and all of the Collateral, as the case may be, described
therein do, and shall continue to, secure the payment of all of the Secured
Obligations (in each case, as defined in the Security and Pledge Agreement).

Section 12. Severability. If any provisions of this Amendment shall be held
invalid or unenforceable in whole or in part in any jurisdiction, such provision
shall, as to such jurisdiction, be ineffective to the extent of such invalidity
or enforceability without in any manner affecting the validity or enforceability
of such provision in any other jurisdiction or the remaining provisions of this
Amendment in any jurisdiction.

Section 13. Survival. All representations, warranties, covenants, agreements,
undertakings, waivers and releases of the Borrower and the Guarantors contained
herein shall survive the Termination Date and the indefeasible payment in full
in cash of the Obligations.

Section 14. Miscellaneous. The parties hereto shall, at any time and from time
to time following the execution of this Amendment, execute and deliver all such
further instruments and take all such further instruments and take all such
further action as may be reasonably necessary or appropriate in order to carry
out the provisions of this Amendment.

Section 15. Headings. Section headings in this Amendment are included herein for
convenience of reference only and are not to affect the construction of, or to
be taken into consideration in interpreting, this Amendment.

            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

                                       9
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         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and the year first written.

                                            BORROWER:

                                            HAYES LEMMERZ INTERNATIONAL, INC.

                                            By:  _______________________________
                                                 Name:  ________________________
                                                 Title:  _______________________

                                            GUARANTORS:

                                            HAYES LEMMERZ INTERNATIONAL --
                                            CALIFORNIA, INC.

                                            HLI (EUROPE), LTD.

                                            HAYES LEMMERZ INTERNATIONAL --
                                            MEXICO, INC.

                                            HAYES LEMMERZ INTERNATIONAL --
                                            OHIO, INC.

                                            HAYES LEMMERZ INTERNATIONAL --
                                            HOWELL, INC.

                                            HAYES LEMMERZ INTERNATIONAL --
                                            GEORGIA, INC.

                                            HAYES LEMMERZ INTERNATIONAL --
                                            CMI, INC.

                                            HAYES LEMMERZ INTERNATIONAL --
                                            TEXAS, INC.

                                            HAYES LEMMERZ INTERNATIONAL --
                                            HUNTINGTON, INC.

                                            HAYES LEMMERZ INTERNATIONAL --
                                            HOMER, INC.

                                            HAYES LEMMERZ INTERNATIONAL --
                                            KENTUCKY, INC.

                                            HAYES LEMMERZ INTERNATIONAL --
                                            CADILLAC, INC.

                                            HLI -- SUMMERFIELD REALTY CORP.

                                            HAYES LEMMERZ INTERNATIONAL --
                                            MONTAGUE, INC.

FIRST AMENDMENT
<PAGE>

                                            HAYES LEMMERZ INTERNATIONAL --
                                            BRISTOL, INC.

                                            HAYES LEMMERZ INTERNATIONAL --
                                            EQUIPMENT & ENGINEERING, INC.

                                            HAYES LEMMERZ INTERNATIONAL -- PCA,
                                            INC.

                                            HAYES LEMMERZ INTERNATIONAL --
                                            WABASH, INC.

                                            HAYES LEMMERZ INTERNATIONAL --
                                            SOUTHFIELD, INC.

                                            HLI -- VENTURES, INC.

                                            HAYES LEMMERZ INTERNATIONAL --
                                            LAREDO, INC.

                                            HAYES LEMMERZ INTERNATIONAL --
                                            TRANSPORTATION, INC.

                                            HAYES LEMMERZ INTERNATIONAL --
                                            TECHNICAL CENTER, INC.

                                            HAYES LEMMERZ INTERNATIONAL --
                                            PETERSBURG, INC.

                                            HLI REALTY, INC.

                                            HLI NETHERLANDS HOLDINGS, INC.

                                            HAYES LEMMERZ INTERNATIONAL IMPORT,
                                            INC.

                                            CMI -- QUAKER ALLOY, INC.

                                            By:  _______________________________
                                                 Name:  ________________________
                                                 Title:  _______________________

FIRST AMENDMENT
<PAGE>

                                            ADMINISTRATIVE AGENT:

                                            CANADIAN IMPERIAL BANK OF COMMERCE,
                                            as Administrative Agent

                                            By:  _______________________________
                                                 Name:  ________________________
                                                 Title:  _______________________

                                            LENDERS:

                                            CIBC, INC.

                                            By:  _______________________________
                                                 Name:  ________________________
                                                 Title:  _______________________

                                            BANK OF AMERICA, N.A.

                                            By:  _______________________________
                                                 Name:  ________________________
                                                 Title:  _______________________

                                            CITICORP USA, INC.

                                            By:  _______________________________
                                                 Name:  ________________________
                                                 Title:  _______________________

FIRST AMENDMENT
<PAGE>

                                Exhibits OmittedExhibit 10.1

EXHIBIT 10.1

LOAN MODIFICATION AGREEMENT DATED FEBRUARY 13, 2002, BETWEEN VSI HOLDINGS,
INC. AND STANDARD FEDERAL BANK, N.A.

LOAN MODIFICATION AGREEMENT

 

THIS LOAN MODIFICATION AGREEMENT is made as of February 13, 2002 (the
"Effective Date"), and executed and delivered on February 13, 2002 (the
"Execution Date") by and among:

Standard Federal Bank, N.A., a national banking association (formerly known
as Michigan National Bank) ("Standard Federal" or "Lender");

VSI Holdings, Inc., a Georgia corporation ("VSIH" or "Borrower");

 

RECITALS

This Loan Modification Agreement is made and entered into in reliance on the
accuracy of the following recitals, which are acknowledged by Borrower and
Standard Federal to be true and accurate:

A. Liabilities and Loan Documents. Schedule 1 sets forth the principal
amount of liabilities of Borrower and its affiliates to Standard Federal as of
the date set forth therein. The instruments, documents and agreements that
evidence such obligations include, without limitation, those set forth on
Schedule 1 (the "Original Loan Documents"). The Original Loan Documents, this
Loan Modification Agreement, the New Collateral Documents, and any and all
written agreements and documents executed heretofore or hereafter pursuant or
relating to any of the foregoing instruments, documents and agreements are
herein collectively referred to as the "Loan Documents." All liabilities of
Borrower to Standard Federal arising under the Loan Documents are referred to,
collectively, as the "Liabilities." The definitions set forth in Schedule 1 are
incorporated herein as though set forth in full.

B. Existing Collateral. To secure all of Borrower's obligations to
Standard Federal, including, but not limited to, the Liabilities, Borrower has
granted to Standard Federal mortgages and other security interests in certain of
its assets ("Existing Collateral") pursuant to the Original Loan Documents.
Standard Federal has valid, perfected liens with a first priority upon the
Existing Collateral.

C. No Oral Agreements. The Loan Documents are the only agreements
among the parties hereto and there are no oral agreements in existence. Other
than as modified by this Loan Modification Agreement, the terms of the Original
Loan Documents are hereby ratified and confirmed, and shall remain in full force
and effect. This Loan Modification Agreement is made and entered into as part of
and pursuant to the Original Loan Documents.

D. Default. Borrower acknowledges that certain Events of Default under
the Original Loan Documents have occurred and are continuing. Certain of the
Events of Default are summarized in Schedule 1 hereto; the Events of Default
summarized in Schedule 1 are together referred to as the "Designated Defaults."
The enumeration of the Designated Defaults in Schedule 1 hereto shall not be
construed as a waiver by Standard Federal of any other Events of Default that
may have occurred and may be continuing. Standard Federal reserves all rights
and remedies that it may have with respect to such other Events of Default, if
any, from and after the Forbearance Termination Date.

E. Default Rights. Because of the existence of the Designated
Defaults, Standard Federal has no obligation to make any further advances or
other extensions of credit under the Original Loan Documents and has the current
right to exercise all of its rights and remedies against Borrower under the
Original Loan Documents and applicable law. Such remedies include, without
limitation, the right to charge (and is currently charging, subject to Section
4.3 below) interest at the post-default or post-maturity rates established in
the Original Loan Documents, to charge a default fee as set forth in the
Original Loan Documents and to foreclose upon the Existing Collateral.

F. No Dispute. There exists no dispute with regard to any of the
statements made in these recitals.

G. Forbearance; New Revolving Loan. Borrower requests that Standard
Federal forbear from exercising its default rights and remedies against Borrower
while Borrower attempts to sell the business of the Borrower as a going concern.
Borrower has also requested that Standard Federal provide additional borrowing
availability to fund projected working capital needs. Although Standard Federal
is under no obligation to do so, Standard Federal is willing to forbear from
exercising its default rights against Borrower (which default rights have arisen
because of the Designated Defaults) during the Forbearance Period and Standard
Federal is willing to provide additional borrowing availability on the terms and
subject to the conditions set forth in this Loan Modification Agreement.

AGREEMENT

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

1. Incorporation of Recitals. Each of the above recitals, together
with the schedule(s) referred to therein, are (i) incorporated herein and deemed
to be part of this Loan Modification Agreement, (ii) relied upon by each party
to this Loan Modification Agreement in agreeing to the terms of this Loan
Modification Agreement, and (iii) true and correct as of the Execution Date.

2. Forbearance. Subject to the terms and conditions of this Loan
Modification Agreement, beginning as of the Effective Date and continuing until
the earlier of (i) July 1, 2002, (ii) the date Borrower files, or has filed
against it, a petition under any chapter of the Bankruptcy Code or institutes,
or is subject to, a similar proceeding in any Federal or State court, or (iii)
the date of the occurrence of any Loan Modification Agreement Event of Default
(the "Forbearance Period", with the last day of the Forbearance Period referred
to as the "Forbearance Termination Date"), Standard Federal will forbear from
exercising its rights and remedies against Borrower, which rights and remedies
exist because of the Designated Defaults and the Excluded Defaults designated on
Schedule 1 (but Standard Federal need not forbear from exercising rights or
remedies arising out of any other Event of Default which may now exist or
hereafter occur).

3. Confirmation of Existing Collateral. Borrower hereby grants and
confirms that all obligations of Borrower to Standard Federal, including the
Liabilities, whether now existing or hereafter arising, are and shall continue
to be secured by perfected first priority security interests in the Existing
Collateral. Notwithstanding the foregoing, Standard Federal acknowledges that
Standard Federal's security interest in the Existing Collateral, as a matter of
applicable law, may be primed by certain liens arising as a consequence of
Unpaid Taxes, if any. Within fifteen (15) days from the date hereof, Borrower
shall deliver to Standard Federal a schedule of all Unpaid Taxes.

4. Revision of Formula and Related Matters. The Third Amended and
Restated Business Loan Agreement dated October 26, 2001, as amended (the
"Existing Loan Agreement") is amended for the duration of the Forbearance
Period, as follows.

4.1 Section II(D) is hereby amended to read:

D. Advance Formula. All Advances and Credit Advances to Borrower under the
Line of Credit Note shall be made under the following Advance Formula:

1. A Borrowing Base (the "Borrowing Base") equal to the lesser of

(a) Fifty percent (50%) of unbilled accounts receivable and work in process,
as determined by the Bank in its reasonable judgment, and

(b) $10,000,000.00;

plus

2. Eighty percent (80%) of the Borrower's Eligible Accounts (as defined in
subparagraph G below);

plus

3. (a) $2,000,000, representing the value (for purposes of calculating
availability only) of real estate owned by CLT Associates Limited Partnership, a
Michigan limited partnership being mortgaged to Standard Federal by CLT
Associates Limited Partnership to secure that portion of the indebtedness of
Borrower to Standard Federal consisting of that portion of advances made under
the Loan Modification Agreement between Borrower and Standard Federal dated
February 13, 2002 (the Loan Modification Agreement") that exceeds that portion
of the Borrowing Base set forth in Sections D(1) and D(2) above outstanding as
of the Forbearance Termination Date (the "Mortgage Security Amount"), plus

(b) The value of liquid collateral pledged by Steve Toth, Jr., individually
and/or as trustee of his revocable living trust under agreement dated December
20, 1979, to Standard Federal securing that portion of the indebtedness of
Borrower to Standard Federal consisting of the portion of advances made under
the Loan Modification Agreement that exceeds that portion of the Borrowing Base
set forth in Sections D(1) and D(2) above outstanding as of the Forbearance
Termination Date, (as defined in the Loan Modification Agreement). The Bank
shall determine such liquidation value in its sole discretion, provided,
however, that: (i) with regard to any pledge of marketable securities, the
liquidation value shall be equal to 80% of the market value of such marketable
securities at the close of business on any day; and (ii) the value of pledged
cash deposits shall be the dollar amount of the accounts so pledged.

In no event shall any unbilled account receivable or work in process included
in subparagraph1 above be deemed to be an Eligible Account under subparagraph 2
above.

If the aggregate of all Advances and Credit Advances outstanding on the Line
of Credit Note at any time exceed the maximum amount available under the Advance
Formula, Borrower shall, within twenty-four hours of submitting a Borrowing Base
Certificate showing such excess Advances, pay Bank all excess Advances and
submit a new Borrowing Base Certificate showing that there is no excess Advances
remaining (the "Twenty-Four Hour Rule").

 

4.2 Section II(G)(1)(l) is hereby added. Such section shall read:

l. No Account owing from General Motors Corp. or any of its subsidiaries or
affiliates shall be an Eligible Account.

 

4.3 Standard Federal will continue to accrue, and Borrower shall continue to
be liable for, default interest and the "default fee" referenced in Paragraph E
of the recitals herein under the Loan Documents, except that: (a) if Borrower
successfully completes the sale of its business during the Forbearance Period,
Standard Federal will waive its right to collect such default interest and
default fee as accrued beginning on the Effective Date and ending on the date
Borrower's sale of its business is complete and all Liabilities (except such
default interest and default fee) are paid in full; (b) default interest and the
default fee will not be paid during the Forbearance Period; and (c) during the
Forbearance Period, accrual of default interest and the default fee will not be
treated as Advances or Credit Advances for purposes of the Advance Formula.

4.4 Borrower acknowledges and agrees that in providing the additional
availability, Standard Federal is relying on the representations, covenants and
agreements of the Borrower contained in this Loan Modification Agreement, and
the Existing Loan Agreement shall be subject to the terms and provisions
hereof.

4.5 When Standard Federal has been finally and fully paid on the Liabilities,
the guaranty of Steve Toth, Jr., both individually and as trustee of his
revocable living trust under agreement dated December 20, 1979, as amended
(sometimes collectively referred to herein as "Toth") shall be released and
discharged, subject, however, to reinstatement in accordance with the provisions
of the guaranty. Toth shall be subrogated to payments made under the guaranty,
but only in accordance with the terms of the guaranty.

4.6 The maturities of each of the following notes owing to Standard Federal
are hereby extended to the Forbearance Termination Date.

(a) Amended and Restated Promissory Note made by VSI Holdings, Inc. dated
October 26, 2001 and due June 1, 2002, as amended.

(b) Amended and Restated Promissory Note made by Visual Services, Inc. dated
October 26, 2001 due June 1, 2002, as amended.

5. Collateral. Repayment of such additional advances as are permitted
under this Loan Modification Agreement and the other Loan Documents and all
other obligations of Borrower to Standard Federal, now existing or hereafter
arising, including, without limitation, the Liabilities, shall be secured by
security interests in and liens on (i) the Existing Collateral and (ii) to the
extent of the portion of advances made under this Loan Modification Agreement
that exceeds that portion of the Borrowing Base set forth in Sections II(D)(1)
and (D)(2) of the Existing Loan Agreement, as hereby amended, outstanding as of
the Forbearance Termination Date, certain new collateral that will secure a
portion of the guaranty by Toth of the Liabilities, which new collateral is set
forth in Schedule 2 (the "New Collateral"). In order to grant Standard Federal a
security interest in the New Collateral, Toth has executed, or caused to be
executed, the documents identified on Schedule 3 hereof. In addition, Borrower
and Toth agree from time to time at the request of Standard Federal to promptly
execute such additional UCC financing statements or other documents as Standard
Federal reasonably determines are necessary or appropriate to perfect, or
continue the perfection of, Standard Federal's security interest in the Existing
Collateral and the New Collateral. All documents executed by Borrower pursuant
to this Section are herein referred to as the "New Collateral Documents."

6. Conditions Precedent and Other Agreements. Borrower understands and
agrees that (i) this Loan Modification Agreement shall not be effective and
Standard Federal shall have no obligation to forbear as set forth in this Loan
Modification Agreement, (ii) Standard Federal shall have no obligation
whatsoever to make any advances as provided in Section 4, and (iii) Standard
Federal shall not be precluded from exercising any rights or remedies as a
consequence of the Designated Defaults, unless and until each of the following
conditions precedent has been satisfied or waived in writing by Standard Federal
in its sole discretion, for whose benefit such conditions exist:

6.1 Borrower shall have executed this Loan Modification Agreement.

6.2
The security interest of Standard Federal in the New Collateral shall be
perfected in a manner reasonably deemed by Standard Federal to be necessary or
desirable.

6.3 The Borrower shall have retained the services of a financial advisor
acceptable to Standard Federal (the "Financial Advisor") to advise the Borrower
and provide reporting and other services. Conway Mackenzie & Dunleavy is
acceptable to Standard Federal as the Financial Advisor.

6.4 The Borrower shall have retained the services of Deloitte Touche
Tohmatsu's Global Transaction Services Division or another investment banker
acceptable to Standard Federal (the "Investment Banker") for the purposes of
selling the business of Borrower. Borrower shall provide to Standard Federal, on
or before the Execution Date, a copy of the engagement letter of the Investment
Banker.

7. Additional Covenants and Agreements of Borrower

7.1 Borrower hereby agrees that it shall (i) continue to use its best efforts
to sell the business of the Borrower, utilizing the services of the Investment
Banker and meeting the time table provided herein, and (ii) continue to utilize
Borrower's consultants and counsel, or such other consultants and counsel as are
reasonably satisfactory to Standard Federal.

7.2 Borrower acknowledges and agrees that from and after the date hereof
Standard Federal is not obligated to make any advances under the Original Loan
Documents that are not contemplated by this Loan Modification Agreement; and the
Original Loan Documents are hereby amended to confirm that no such advances
shall be made thereunder (except to the extent that Standard Federal in its sole
discretion elects to make advances under its Original Collateral Documents).

7.3 Borrower shall provide, by 10:00 a.m. Detroit time on each Tuesday during
the Forbearance Period, a certificate (the "Borrowing Base Certificate"), in a
form acceptable to Standard Federal, certifying its compliance with the Advance
Formula as of the previous Friday, as the Advance Formula is described in the
Existing Loan Agreement as hereby amended.

7.4 Borrower shall provide on a weekly basis, within five (5) days of the end
of each week, a projection of cash receipts and expenses for the 13-week period
beginning with the then-current week (the "Projection"). In addition, Borrower
shall promptly provide any other information or reports which Standard Federal
may reasonably request relating to the operation of its business, its financial
affairs, its efforts to sell or otherwise dispose of any of the Collateral, or
its efforts to sell its business as a going concern (the "Other Documents", with
the Borrowing Base Certificate, the Projection and the Other Documents referred
to herein as the "Deliverables").

7.5 If Borrower sells any real property subject to a mortgage in favor of
Standard Federal, the first proceeds shall be used to pay the outstanding
indebtedness pursuant to the mortgage indebtedness, and the remaining proceeds
from such sale shall be made available to the Borrower for use in its business,
but the amount of such proceeds made available to the Borrower for use in its
business shall permanently reduce the Borrowing Base under the Existing Loan
Agreement.

7.6 Upon receipt, Borrower shall turn over to Standard Federal
any and all tax refunds it receives, in kind, to be applied to the Borrower's
lines of credit with Standard Federal. While no Loan Modification Agreement
Event of Default exists, the Borrowing Base under the Existing Loan Agreement
shall not be reduced by the amount of such proceeds made available to the
Borrower for use in its business. In the event of a Loan Modification Agreement
Event of Default, the Borrowing Base under the Existing Loan Agreement shall be
reduced by the amount of such proceeds made available to the Borrower for use in
its business.

7.7 Borrower shall deliver to Standard Federal, by 5:00 p.m. on February 14,
2002, a personal financial statement of Steve Toth, Jr. (which shall be a
statement of Steve Toth Jr.'s own assets, liabilities, net worth, and income,
and shall not include any assets, liabilities, net worth, or income of his
spouse or any other person), and of Steve Toth, Jr. as trustee of his revocable
living trust under agreement dated December 20, 1979, as amended, in each case
as of a date less than 30 days prior to the Effective Date.

8. Loan Modification Agreement Events of Default. The occurrence of
any of the following shall be a Loan Modification Agreement Event of
Default:

8.1 Borrower shall default in any payment of any of the Liabilities when and
as the same shall become due and payable, whether at maturity, by acceleration
or otherwise, subject, however, to the Twenty-Four Hour Rule.

8.2 Borrower shall (a) deliver a Borrowing Base Certificate as required by
Section 7 that indicates that the Borrower has failed to comply with the Advance
Formula and fail to repay the over-advance as provided herein under the
Twenty-Four Hour Rule, or (b) fail to comply with the Advance Formula whether
such a certificate is delivered or not, and fail to repay the over-advance
amount within 24 hours after the most recent preceding due date for the
Borrowing Base Certificate.

8.3 An Event of Default, other than a Designated Default, or an Excluded
Default (as defined in Schedule 1) now exists or hereafter occurs under any of
the Original Loan Documents.

8.4 The failure of Borrower to pay all reasonable fees and expenses incurred
by Standard Federal in connection with this Loan Modification Agreement and the
negotiations and expenses leading up to it, including, without limitation,
reasonable legal fees incurred by Standard Federal for its counsel, and all fees
and charges incurred by Standard Federal to obtain any required appraisal,
provided, however, (i) if Borrower does not object to such fees within three
days of Standard Federal's submitting a bill, with redactions as deemed
appropriate by Standard Federal's counsel to protect the attorney client
privilege, such amount will be deemed reasonable and may be charged by Standard
Federal as a Advance, (ii) if Borrower objects to such fees, the in-house
counsel for Standard Federal will make the final decision whether such fees are
reasonable, and the amount, as so determined, shall be charged as an Advance,
and (iii) after a default hereunder, Standard Federal may charge such fees it
deems reasonable to Advances. Upon receiving payment of the fees for the
appraisals, Standard Federal will provide a copy of its appraisal to
Borrower.

8.5 Borrower shall fail to perform or observe any other term, covenant or
agreement contained in this Loan Modification Agreement or any of the New
Collateral Documents on its part to be performed or observed, and, any such
failure shall remain unremedied for three (3) days after written notice thereof
shall have been given to Borrower by Standard Federal or such other period as
may be specified under the applicable New Collateral Document, provided,
however, if during such three (3) day or other period the liens and security
interests that are required hereunder may be extinguished or subject to
forfeiture, or may become subordinated to the interests of others, no prior
written notice of default shall be required in any case, and, further provided,
no notice is required if a violation of the Twenty-Four Hour Rule occurs. No
prior written notice of any default shall be required with regard to defaults
based upon events or occurrences that cannot be cured. Standard Federal may
refuse to make advances to Borrower during any such three (3) day or other
period.

8.6. Borrower fails to (i) continue to retain the Investment
Banker, (ii) provide to Standard Federal access to the Investment Banker (with
the participation of management of Borrower) as reasonably requested by Standard
Federal, and (ii) have received (and deliver a copy to Standard Federal) a
reasonably acceptable letter of intent by March 31, 2002 which provides proceeds
to pay Standard Federal in full, (iii) execute (and deliver a copy to Standard
Federal) a definitive agreement with a purchaser or purchasers which provide for
proceeds sufficient to pay Standard Federal in full by May 15, 2002, and (iv)
close such transactions and fully pay Standard Federal on or before June 30,
2002.

9. Amendment to Existing Loan Documents. Each of the Original Loan
Documents is hereby amended to provide that any Loan Modification Agreement
Event of Default shall be an Event of Default thereunder.

10. Waiver. Provided that no Loan Modification Agreement Event of
Default occurs, Standard Federal hereby waives any right to exercise any rights
or remedies with respect to the Designated Defaults until the end of the
Forbearance Period. Standard Federal shall be free to exercise all rights and
remedies that it may have with respect to the Designated Defaults (i) at any
time if a Loan Modification Agreement Event of Default occurs, and (ii) in any
event, after the end of the Forbearance Period.

11. Remedies Upon the Occurrence of a Loan Modification Agreement Event of
Default. Upon the occurrence of any Loan Modification Agreement Event of
Default, and at any time thereafter, Standard Federal shall have, in addition to
any and all other rights and remedies available to it under the provisions
hereof, the New Collateral Documents or any other agreement between the parties
or applicable law, all rights and remedies set forth in the Original Loan
Documents and all rights and remedies of a secured party under the Michigan
Uniform Commercial Code and, where applicable, under the laws of any state
(regardless of whether the Uniform Commercial Code has been enacted in the
jurisdiction where rights or remedies are asserted). In addition to, and not in
limitation of the foregoing, upon the occurrence of any Loan Modification
Agreement Event of Default, and at all times thereafter, Standard Federal may
(a) return any and all checks drawn against Borrower's account at Standard
Federal, and (b) apply all funds in Borrower's account at Standard Federal to
the Liabilities. All rights and remedies of Standard Federal shall be
cumulative. No failure or delay on the part of Standard Federal in exercising
any power, right or remedy under any of the Loan Documents shall operate as a
waiver thereof, and no single or partial exercise of any such power, right or
remedy shall preclude any further exercise thereof or the exercise of any other
power, right or remedy. Notwithstanding anything to the contrary stated in this
agreement, Standard Federal shall not have any right to offset, collect, or
apply the funds in those certain Borrower's accounts at Standard Federal that
are identified in Schedule 4 to this agreement.

12. Representations and Warranties. To induce Standard Federal to
enter into this Loan Modification Agreement, Borrower hereby represents and
warrants to Standard Federal as follows:

12.1 Representations and Warranties True and Correct; Survival. All
representations and warranties contained in this Loan Modification Agreement are
true and correct as of the date of this Loan Modification Agreement, and all
such representations and warranties shall survive the execution of this Loan
Modification Agreement.

12.2 No Violation. The execution, delivery and performance by Borrower
of this Loan Modification Agreement and all documents contemplated hereunder are
within Borrower's powers, have been duly authorized, and are not in conflict
with Borrower's Articles of Incorporation or Bylaws and all such documents
constitute valid and binding obligations of Borrower, enforceable in accordance
with their terms. In addition, such execution, delivery and performance by
Borrower does not and will not violate any law, rule or order of any court or
governmental agency or body to which Borrower is subject, and will not (except
as expressly provided or contemplated herein) result in the creation or
imposition of any lien, security interest or encumbrance on any now owned or
hereafter acquired property of Borrower.

12.3 No Breach. With the exception of the Designated Defaults and the
Excluded Defaults (as defined in Schedule 1 to this Loan Modification
Agreement), no event has occurred or failed to occur that is, or with notice or
lapse of time or both, would constitute a default, an Event of Default, a Loan
Modification Event of Default or a breach or failure of any condition under any
of the Loan Documents.

12.4 Unconditional Obligation; No Defenses. The Loan Documents represent
unconditional, absolute, valid and enforceable obligations against Borrower.
Borrower has no claims or defenses against Standard Federal or any other person
or entity that would or might affect the amounts owing to Standard Federal,
including, without limitation, the Liabilities, the enforceability of any
provisions of the Loan Documents, or the collectibility of any sums advanced by
Standard Federal in connection with the Liabilities. Borrower understands and
acknowledges that Standard Federal is entering into this Loan Modification
Agreement in reliance upon, and in partial consideration for, this
acknowledgment and representation, and agrees that such reliance is reasonable
and appropriate.

12.5 Cooperation of Borrower. Borrower shall take any and all actions of any
kind or nature whatsoever, either directly or indirectly, that are necessary to
prevent Standard Federal from suffering a loss with respect to the Liabilities
or being deprived of the Collateral or of any rights or remedies of Standard
Federal with respect to the Liabilities, the Loan Documents or this Loan
Modification Agreement in the event of a default by Borrower under this Loan
Modification Agreement. Additionally, Borrower shall give Standard Federal full
access to the Investment Banker and consultant(s) with participation of
Borrower's management. Borrower shall have the affirmative duty to timely
provide Standard Federal copies of all analyses, reports, strategic plans and
other work product of the Investment Banker and consultant(s).

13. BORROWER HEREBY, FOR ITSELF, ITS SUCCESSORS, HEIRS, EXECUTORS,
SHAREHOLDERS, PARTNERS, PRINCIPALS, AGENTS, OFFICERS, DIRECTORS, ADMINISTRATORS
AND ASSIGNS ("RELEASORS"), RELEASES, ACQUITS AND FOREVER DISCHARGES STANDARD
FEDERAL AND EACH OF ITS PRESENT AND PAST DIRECTORS, OFFICERS, EMPLOYEES, AGENTS,
ATTORNEYS, AFFILIATES, SUCCESSORS, ADMINISTRATORS AND ASSIGNS ("RELEASED
PARTIES") OF AND FROM ANY AND ALL CLAIMS, ACTIONS, CAUSES OF ACTION, DEMANDS,
RIGHTS, DAMAGES, COSTS, LOSS OF SERVICE, EXPENSES AND COMPENSATION WHATSOEVER
THAT BORROWER OR ANY OF THE RELEASORS, HAS OR MIGHT HAVE BECAUSE OF ANYTHING
DONE, OMITTED TO BE DONE, OR ALLOWED TO BE DONE BY ANY OF RELEASED PARTIES OR IN
ANY WAY CONNECTED WITH THE LIABILITIES, THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AS OF THE DATE OF EXECUTION OF THIS AGREEMENT, WHETHER KNOWN OR
UNKNOWN, FORESEEN OR UNFORESEEN, OR ANY SETTLEMENT NEGOTIATIONS, OR ANY OTHER
FACTS EXISTING AS OF THE DATE OF THIS AGREEMENT, AND ALSO INCLUDING WITHOUT
LIMITATION, ANY DAMAGES AND THE CONSEQUENCES THEREOF RESULTING OR TO RESULT FROM
ANY OF THE EVENTS, MATTERS OR DOCUMENTS DESCRIBED, REFERRED TO OR INFERRED
HEREINABOVE ("RELEASED MATTERS"). BORROWER FURTHER AGREES NEVER TO COMMENCE, AID
OR PARTICIPATE IN (EXCEPT TO THE EXTENT REQUIRED BY ORDER OR LEGAL PROCESS
ISSUED BY A COURT OR GOVERNMENTAL AGENCY OF COMPETENT JURISDICTION) ANY LEGAL
ACTION OR OTHER PROCEEDING BASED IN WHOLE OR IN PART UPON THE FOREGOING.
BORROWER AGREES THAT THIS WAIVER AND RELEASE IS AN ESSENTIAL AND MATERIAL TERM
OF THIS AGREEMENT AND THAT THE AGREEMENTS IN THIS PARAGRAPH ARE INTENDED TO BE
IN FULL SATISFACTION OF ANY ALLEGED INJURIES OR DAMAGES IN CONNECTION WITH THE
RELEASED MATTERS. BORROWER REPRESENTS AND WARRANTS THAT IT HAS NOT PURPORTED TO
CONVEY, TRANSFER OR ASSIGN ANY RIGHT, TITLE OR INTEREST IN ANY RELEASED MATTER
TO ANY OTHER PERSON OR ENTITY AND THAT THE FOREGOING CONSTITUTES A FULL AND
COMPLETE RELEASE OF THE RELEASED MATTERS. BORROWER ALSO UNDERSTANDS THAT THIS
RELEASE SHALL APPLY TO ALL UNKNOWN OR UNANTICIPATED RESULTS OF THE TRANSACTIONS
AND OCCURRENCES DESCRIBED ABOVE, AS WELL AS THOSE KNOWN AND ANTICIPATED.
BORROWER REPRESENTS THAT IT HAS AUTHORITY TO MAKE THIS RELEASE BINDING TO ITS
FULL LITERAL SCOPE, AND AGREES TO INDEMNIFY AND DEFEND STANDARD FEDERAL AGAINST
ANY CLAIMS ASSERTED HEREAFTER WHICH ARE WITHIN THE LITERAL SCOPE OF THIS
RELEASE. BORROWER HAS CONSULTED WITH LEGAL COUNSEL PRIOR TO SIGNING THIS
RELEASE, AND EXECUTES THIS RELEASE VOLUNTARILY, WITH THE INTENTION OF FULLY AND
FINALLY EXTINGUISHING ALL RELEASED MATTERS.

14. Miscellaneous.

14.1 Agreement to Cooperate. Borrower agrees to and will cooperate
fully with Standard Federal in the performance of this Loan Modification
Agreement and the Loan Documents, including without limitation executing any
additional documents reasonably necessary to the full performance of this Loan
Modification Agreement.

14.2 Further Assurance. Borrower agrees to execute such other and
further documents and instruments as Standard Federal may reasonably request to
implement the provisions of this Loan Modification Agreement and to perfect and
protect the liens and security interests of Standard Federal created by any Loan
Document.

14.3 Benefit of Agreement. This Loan Modification Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto, their respective successors and assigns. No other person or entity shall
be entitled to claim any right or benefit hereunder, including without
limitation, the status of a third party beneficiary hereunder.

14.4 Effect of Agreement. Standard Federal and Borrower each agree
that except as expressly provided herein, the Loan Documents shall remain in
full force and effect in accordance with their respective terms, and this Loan
Modification Agreement shall not be construed to:

14.4.1 Impair the validity, perfection or priority of any lien or security
interest securing Borrower's obligations to Standard Federal;

14.4.2 Waive or impair any rights, powers or remedies of Standard Federal
under the Loan Documents upon termination of the Forbearance Period, with
respect to the Designated Defaults or otherwise;

14.4.3 Constitute an agreement by Standard Federal or require Standard
Federal to extend the Forbearance Period, or grant additional Forbearance
Periods, or extend the term of any commitment under the Loan Documents or the
time for payment of any of Borrower's obligations to Standard Federal, none of
which Standard Federal agrees or has agreed to do, and all of which matters are
in Standard Federal's sole and absolute discretion; or

14.4.4 Make any loans or other extensions of credit to Borrower after
termination of the Forbearance Period.

14.5 Inconsistencies. In the event of any inconsistency between the
terms of this Loan Modification Agreement and any other Loan Document, this Loan
Modification Agreement shall govern.

14.6 Advice of Counsel. Borrower and Steve Toth, Jr. (both
individually and as trustee of his revocable living trust under agreement dated
December 20, 1979, as amended) acknowledge that they have consulted with counsel
and with such other experts and advisors as each of them has deemed necessary in
connection with the negotiation, execution and delivery of this Loan
Modification Agreement, or has had an opportunity to so consult and has
knowingly chosen not to do so.

14.7 No Presumption. This Loan Modification Agreement shall be
construed without regard to any presumption or rule requiring that it be
construed against the party causing this Loan Modification Agreement or any part
hereof to be drafted.

14.8 Headings. The headings used in this Loan Modification Agreement
are for convenience only and shall be disregarded in interpreting the
substantive provisions of this Loan Modification Agreement.

14.9 Limitation on Relationship. This Loan Modification Agreement and
the other Loan Documents shall not be deemed or construed to create a
partnership, tenancy in common, joint tenancy, joint venture, co-ownership or
any other relationship aside from a continuing debtor-creditor relationship
between Borrower on the one hand and Standard Federal, or either of them, on the
other.

14.10 Integration. This Loan Modification Agreement and the other Loan
Documents are intended by the parties as the final expression of their agreement
and therefore incorporate all negotiations of the parties hereto and are the
entire agreement of the parties hereto. Borrower acknowledges that it is relying
on no written or oral agreement, representation, warranty, or understanding of
any kind made by Standard Federal or any employee or agent of Standard Federal
except for the agreements of Standard Federal set forth herein or in the other
Loan Documents. Except as expressly set forth in this Loan Modification
Agreement, the other Loan Documents remain unchanged and in full force and
effect.

14.11 Severability. In case any provision in this Loan Modification
Agreement shall be invalid, illegal or unenforceable, such provision shall be
severable from the remainder of this Loan Modification Agreement and the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

14.12 Reversal of Payments. If Standard Federal receives any payments
or proceeds of Collateral which are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be paid to a trustee,
debtor-in-possession, receiver or any other party under any bankruptcy law,
common law, equitable cause or otherwise, then, to such extent, the obligations
or part thereof intended to be satisfied by such payments or proceeds shall be
reversed and continue as if such payments or proceeds had not been received by
Standard Federal, with all of the liens and security interests of Standard
Federal on or in Collateral automatically being revived and continuing in
effect.

14.13 Modification. This Loan Modification Agreement may not be
amended, waived or modified in any manner without the prior written consent of
all parties hereto.

14.14 Costs and Expenses. Borrower shall reimburse Standard Federal
promptly upon demand for all costs and expenses, including without limitation
reasonable attorneys' fees and expenses, expended or incurred by Standard
Federal in any arbitration, judicial reference, legal action or otherwise in
connection with (i) the amendment and enforcement of this Loan Modification
Agreement and the other Loan Documents, including without limitation during any
workout, attempted workout and/or in connection with the rendering of legal
advice as to Standard Federal's rights, remedies and obligations under this Loan
Modification Agreement and the other Loan Documents, whether or not any form of
legal proceeding is commenced, (ii) collecting any sum which becomes due
Standard Federal under this Loan Modification Agreement or any of the other Loan
Documents, (iii) any proceeding for declaratory relief, any counterclaim to any
proceeding, or any appeal, (iv) the protection, preservation or enforcement of
any rights or remedies of Standard Federal or any of the Collateral, whether or
not any form of legal proceeding is commenced, or (v) any action necessary to
defend, protect, assert or preserve any of Standard Federal's rights or remedies
as a result of or related to any case or proceeding under Title 11 of the United
States Code, as amended, or any similar law of any jurisdiction. All of such
costs and expenses shall bear interest from the time of demand at the rate then
in effect under the Loan Documents.

14.15 Applicable Law; Jurisdiction. This Loan Modification Agreement
and all other Loan Documents and the rights and obligations of the parties
hereto shall be governed by the laws of the State of Michigan without regard to
principles concerning choice of law, except (i) as expressly provided in the
other Loan Documents, (ii) to the extent necessary to obtain the benefit of the
rights and remedies set forth herein and therein, and (iii) procedural
requirements which must be governed by the law of another state. In any action
arising out of or connected with this Loan Modification Agreement, Borrower
hereby expressly consents to the personal jurisdiction of any state or federal
court located in the State of Michigan and also consents to service of process
by any means authorized by federal or governing state law.

14.16 Counterparts. This Loan Modification Agreement may be executed
in any number of counterparts which, when taken together, shall constitute but
one agreement. Facsimile signatures shall be treated as original signatures.

14.17 Survival. All representations, warranties, covenants,
agreements, waivers and releases of Borrower contained herein shall survive the
termination of the Forbearance Period and the payment in full of Borrower's
obligations to Standard Federal.

14.18 Notices. Any notices required or contemplated under this Loan
Modification Agreement or any other Loan Document shall be in writing and
personally delivered, sent by United States mail, postage prepaid, or sent by
facsimile or other authenticated message, charges prepaid and addressed as
follows:

If to Borrower:

VSI Holdings, Inc.
41000 Woodward Avenue
Bloomfield Hills, Michigan
48304-2263
Attn: Steve Toth, Jr.
Telephone: 248-644-0500

With a copy to:

Miller, Canfield, Paddock and Stone, P.L.C.
150 West Jefferson
Suite
2500
Detroit, Michigan 48226-4415
Attn: Donald J. Hutchinson
Telephone:
313-496-7536
Fax: 313-496-8451

 

If to Standard Federal:

Standard Federal Bank
2600 West Big Beaver Road
Troy, Michigan
48084
Attn: Otto Wilhelm, Commercial Loan Administration
Telephone:
248-816-0425
Fax:. 248-637-5003

With a copy to:

Dykema Gossett PLLC
55 East Monroe - Suite 3050
Chicago, Illinois
60603
Attn: Ronald L. Rose, Esq.
Telephone: 312-551-4900 
Fax:
312-551-4919

If to Steve Toth, Jr. or Toth

Mr. Steve Toth, Jr.
VSI Holdings, Inc.
41000 Woodward
Avenue
Bloomfield Hills, Michigan 48304-2263

Pepper Hamilton LLP
100 Renaissance Center
Suite 3600
Detroit,
Michigan 48243
Attn: Barbara J. Rom
Telephone: 313-393-7351
Fax:
313-259-7926

 

 

 

 

Notice shall be deemed complete three (3) business days after notice is sent
if it is sent by first class mail or after one business day (that is, the first
business day after the facsimile is sent) if sent by facsimile. Any party may
change the address to which notices, requests and other communications are to be
sent by giving written notice of such change to each other party, which shall be
effective five (5) business days after such notice.

14.19 Singular and Plural; Gender. Whenever the singular is used
herein, it shall be deemed to include the plural, and vice versa, and reference
to one gender shall be construed to include all other genders, including neuter,
whenever the context so requires.

14.20 Waiver of Jury Trial. EACH OF STANDARD FEDERAL AND BORROWER
ACKNOWLEDGE THAT THE RIGHT TO A TRIAL BY JURY IS A CONSTITUTIONAL RIGHT, BUT
THAT IT MAY BE WAIVED. EACH OF THE STANDARD FEDERAL AND BORROWER, AFTER
CONSULTING WITH COUNSEL OF ITS CHOICE, KNOWINGLY AND VOLUNTARILY WAIVES ANY
RIGHT TO TRIAL BY JURY IN THE EVENT OF ANY ACTION OR PROCEEDING OF ANY KIND
ARISING UNDER, OUT OF, BY REASON OF OR RELATING IN ANY WAY TO THIS LOAN
MODIFICATION AGREEMENT OR THE OTHER LOAN DOCUMENTS.

[The remainder of this page is intentionally left blank. Signatures begin on
the next page.]

SIGNATURE PAGES TO LOAN MODIFICATION AGREEMENT
(Page 1 of
2)

 

IN WITNESS WHEREOF, the parties have executed this Loan Modification
Agreement as of the date set forth in the preamble.

VSI Holdings, Inc.

 

By: 
Steve Toth, Jr.
Its: President

Standard Federal Bank

 

By: 
Otto Wilhelm

Its: ____________________________

 

 

 

The below listed person joins in this Loan Modification
Agreement for
purposes of Section 13, Section 14.6, to consent to this Loan Modification
Agreement , and to reaffirm their obligations under their guarantees to Standard
Federal Bank.

Steve Toth, Jr.,both individually and as trustee of his revocable living
trust under agreement dated December 20, 1979, as amended

 

 

SIGNATURE PAGES TO LOAN MODIFICATION AGREEMENT
(Page 2 of
2)

 

The below-listed entities are (a) guarantors, (b) entities whose obligations
to Standard Federal are cross-collateralized or cross-defaulted with those of
Borrower, or (c) other persons affiliated with the Borrower. Each such entity
joins in this Loan Modification Agreement solely for purposes of:

1. Acknowledging and ratifying this Loan Modification Agreement; and

2. Joining in Section 13 of this Loan Modification Agreement as a
Releasor.

 

 

Visual Services, Inc., a Georgia corporation

 

By: 
(Signature)

(Printed name)

Its: 
(Title)

 

Vispac, Inc., a Georgia corporation

 

By: 
(Signature)

(Printed name)

Its: 
(Title)

 

Advanced Animations, Inc., a Georgia corporation

By: 
(Signature)

(Printed name)

Its: 
(Title)

 

PSG International, Inc., a Georgia corporation

By: 
(Signature)

(Printed name)

Its: 
(Title)

 

 

SCHEDULE 1 
TO
LOAN MODIFICATION AGREEMENT

Liabilities, Loan Documents and Designated Defaults as to Standard
Federal

 

Where balances are quoted in this Schedule 1, the balances are as of
January 31, 2001.

1. Liabilities of Borrower to Standard Federal

 

	 Borrower	 Facility	 Outstanding Principal Only
	 VSI Holdings, Inc.	 Line	 $ 5,583,531.84
	 Vispac, Inc.	 Term	 2,223,196.24
	 Vispac, Inc.	 Term	 2,475,763.60
	 Visual Services, Inc.	 Line	 5,307,000.00
	 Visual Services, Inc.	 Term	 2,261,028.92

2.
Original Loan Documents

The "Original Loan Documents" means the following documents. No addition,
omission or characterization in this listing shall operate to reduce or
otherwise affect any document..

Loan Agreement (VSIH). Third Amended and Restated Business Loan
Agreement dated October 26, 2001.

Loan Agreement. Business Loan Agreement between Michigan National Bank
(later Standard Federal Bank) and Visual Services, Inc. dated January 30, 1998,
effective December 1, 1997, as amended by Amendment of Business Loan Agreement
dated September 30, 1998, Second Amendment of Business Loan Agreement dated June
4, 1999, Third Amendment of Business Loan Agreement dated August 21, 2000, and
Fourth Amendment of Business Loan Agreement dated October 26, 2001.

Promissory Notes

(1) $2,480,000 Visual Services note
a. $2,480,000 Promissory Note (Time or
Term Loan) to Michigan National Bank made by Visual Services, Inc. dated October
8, 1998 and due October 8, 2005.

(2) $25,000,000 note to VSI
a. Amended and Restated Promissory Note (Line
of Credit with Rate Option) for $32,000,000 to Michigan National Bank made by
VSI Holdings, Inc. dated October 26, 2001 and due June 1, 2002. Replaces January
30, 1998 note amended and restated May 6, 1999. Addendum to Promissory Note
(LIBOR Rate Loans) dated October 26, 2001.

(3) $5,000,000 (later $6,000,000) note to Visual Services, Inc.
a.
$5,000,000 Amended and Restated Promissory Note (Line of Credit) to Michigan
National Bank made by Visual Services, Inc. dated August 21, 2000 due March 31,
2002. Replaces note dated June 4, 1999 and amended and restated August 21, 2000.
Addendum to Promissory Note (LIBOR Rate Loans).
b. Amended and Restated
Promissory Note (Line of Credit) to Michigan National Bank made by Visual
Services, Inc. dated December 21, 2000 due March 31, 2002. Replaces note dated
June 4, 1999 and amended and restated August 21, 2000. Addendum to Promissory
Note (LIBOR Rate Loans).
c. Amended and Restated Promissory Note (Line of
Credit with Rate Option) to Standard Federal Bank, N.A. made by Visual Services,
Inc. dated October 26, 2001 due June 1, 2002. Replaces note dated June 4, 1999
and amended and restated August 21, 2000. Addendum to Promissory Note (LIBOR
Rate Loans).

Security Agreements

(1) VSI Holdings, Inc.
a. Amended and Restated Security Agreement
between VSI Holdings, Inc. and Standard Federal Bank, N.A. dated October 1, 2001
(All assets: personal property, accounts, chattel paper, documents, instruments,
general intangibles, claims against SPX Corporation, inventory, equipment,
securities, investment property, proceeds, products, accessions). 
(2)
Visual Services, Inc. 
a. Security Agreement between Michigan National
Bank and Visual Services, Inc. dated January 30, 1998.(All assets: accounts,
documents, chattel paper, instruments, general intangibles, inventory,
equipment, fixtures, furniture, vehicles, accessions, etc.)
b. Amended and
Restated Security Agreement between VSI Holdings, Inc. and Standard Federal
Bank, N.A. dated October 1, 2001 (All assets: personal property, accounts,
chattel paper, documents, instruments, general intangibles, inventory,
equipment, securities, investment property, proceeds, products, accessions).

(3) Advanced Animations, Inc.
a. Amended and Restated Security
Agreement between Advanced Animations, Inc. and Standard Federal Bank, N.A.
dated October 1, 2001 (All assets: personal property, accounts, chattel paper,
documents, instruments, general intangibles, inventory, equipment, securities,
investment property, proceeds, products, accessions).
(4) PSG
International, Inc.
a. Amended and Restated Security Agreement between
PSG International, Inc. and Standard Federal Bank, N.A. dated October 1, 2001
(All assets: personal property, accounts, chattel paper, documents, instruments,
general intangibles, inventory, equipment, securities, investment property,
proceeds, products, accessions).
(5) Vispac, Inc.
a. Amended and
Restated Security Agreement between Vispac, Inc. and Standard Federal Bank, N.A.
dated October 1, 2001 (All assets: personal property, accounts, chattel paper,
documents, instruments, general intangibles, inventory, equipment, securities,
investment property, proceeds, products, accessions).

Mortgages

(1) 34000 Plymouth Road - Plymouth - Wayne - Michigan - TIN:
122-99-0024-000.
a. Mortgage given by Visual Services, Inc. to Michigan
National Bank dated September 30, 1998.
b. Mortgage Amendment Agreement
between Visual Services, Inc. and Standard Federal Bank, N.A. dated October 1,
2001. Expands coverage to include loans to Vispac, Inc., VSI Holdings, Inc.,
Advanced Automations, Inc., and PSG International, Inc.
(2) 35901
Schoolcraft Road - Livonia - Wayne - Michigan - TIN: 46-113-99-003.
a.
Mortgage given by Vispac, Inc. to Michigan National Bank dated as of August 29,
1997.
b. Mortgage Amendment Agreement between Vispac, Inc. and Standard
Federal Bank, N.A. dated October 1, 2001. Expands coverage to include loans to
Visual Services, Inc., VSI Holdings, Inc., Advanced Automations, Inc., and PSG
International, Inc. 
(3) 35901 Veronica - Livonia - Wayne - Michigan -
TIN: 46-113-99-0019-006 and 46-113-99-0019-004
a. Mortgage dated February
19, 1985.
b. Amended and Restated Mortgage dated March 30, 1995.
c.
Mortgage Amendment Agreement between Vispac, Inc. and Standard Federal Bank,
N.A. dated June 4, 1999. Changes amount to $2,621,000.00.
d. Mortgage
Amendment Agreement between Vispac, Inc. and Standard Federal Bank, N.A. dated
October 1, 2001. Expands coverage to include loans to Visual Services, Inc., VSI
Holdings, Inc., Advanced Automations, Inc., and PSG International, Inc.

Guaranties
(1) PSG International, Inc.
a. Guaranty by PSG
International of the debt to Michigan National Bank of VSI Holdings, Inc. dated
September 30, 1998.
(2) VSI Holdings, Inc.
a. Guaranty by VSI
Holdings, Inc. of the debt to Standard Federal Bank, N.A. of Visual Services,
Inc. dated October 1, 2001.
(3) Steve Toth, Jr.
a. Limited Guaranty
by Steve Toth, Jr. of the debt to Standard Federal Bank, N.A. of VSI Holdings,
Inc. Amended as of October 1, 2001.

Cross Default and Cross Collateral Issues.

Cross Default and Cross Collateral Agreement between Standard Federal Bank,
N.A. and VSI Holdings, Inc., Visual Services, Inc., Vispac, Inc., Advanced
Animations, Inc. and PSG International, Inc. dated October 1, 2001.
Cross-collaterallizes and cross-defaults all collateral and facilities.

Subordination Agreements.

(1) Subordination Agreement dated January 30, 1998 for $308,807.16 owed by
VSI Holdings, Inc. to Robert Morgan.
(2) Subordination Agreement dated
January 30, 1998 for $70,183.45 owed by VSI Holdings, Inc. to Terry
Sparks.
(3) Subordination Agreement dated January 30, 1998 for $6,556,626.57
owed by VSI Holdings, Inc. to Steve Toth, Jr. as trustee under agreement dated
December 20, 1976 for benefit of Steve Toth, Jr.
(4) Subordination Agreement
dated January 30, 1998 for $996,401.30 owed by VSI Holdings, Inc. to Margaret A.
Toth as trustee under agreement dated July 9, 1982 for benefit of Margaret A.
Toth.
(5) Subordination Agreement dated September 30, 1998 for $2,180,999.80
owed by VSI Holdings, Inc. to Margaret A. Toth as trustee under agreement dated
July 9, 1982 for benefit of Margaret A. Toth.
(6) Subordination Agreement
dated January 30, 1998 for $52,637.58 owed by VSI Holdings, Inc. to Thomas W.
Marquis.
(7) Subordination Agreement dated January 30, 1998 for $345,653.47
owed by VSI Holdings, Inc. to Al Hibbert.
(8) Subordination Agreement dated
January 30, 1998 for $877.293.07 owed by VSI Holdings, Inc. to Terry
Davis.
(9) Subordination Agreement dated January 30, 1998 for $87,729.31 owed
by VSI Holdings, Inc. to Harold Galfano.

3. Designated Defaults

The following are Designated Defaults.

• Failure to meet the Financial Requirements set forth in Article IV.A. of
the Third Amended and Restated Business Loan Agreement dated October 26, 2001 or
as provided in one or more of the Original Loan Documents.

• Non-payment of creditors other than Standard Federal, as provided in one or
more of the Original Loan Documents.

• Material adverse changes to the business of Borrower, as provided in one or
more of the Original Loan Documents

4. Excluded Defaults

The following are Events of Default under the Original Loan Documents that
will not constitute Loan Modification Agreement Events of Default ("Excluded
Defaults"). The sole purpose of the enumeration of each Excluded Default is to
exclude that Event of Default from the definition of Loan Modification Agreement
Event of Default, and no such enumeration shall reduce Standard Federal's rights
with regard to any Excluded Default, except to the extent that Standard
Federal's rights regarding other Events of Default are affected by this Loan
Modification Agreement.

• Non-payment of creditors other than Standard Federal.

• Creation or existence of liens other than Permitted Liens created before
the Effective Date.

• Creation or existence of liens other than Permitted Liens on or after the
Effective Date, but only to the extent that such liens are subordinate to the
security interests of Standard Federal.

• Material adverse changes in the business of Borrower, except financial and
other performance by Borrower that materially fails to meet the Projections.

• Payment of obligations as described in the additional covenant contained in
the Amendment of Business Loan Agreement dated September 30, 1998 between
Standard Federal and Visual Services, Inc.

 

 

 

 

 

SCHEDULE 2
TO
LOAN MODIFICATION AGREEMENT

Additional Property Securing the Liabilities

 

The property listed below, together with all of Borrower's inventory,
equipment and fixtures related thereto. The property is owned by CLT Associates
Limited Partnership, a Michigan Limited Partnership.

1. A parcel of land located in and being a part of the Northwest 1/4 of
Section 28, Town 1 South, Range 9 East, Michigan, described as: Commencing at a
point 920.00 feet South of the Northwest corner of said Section 28; thence
extending south 89 degrees 36 minutes 54 seconds East, 660.01 feet; thence South
400.00 feet; thence North 89 degrees 36 minutes 54 seconds West, 660.01 feet
along the Northerly side line of Industrial Road, 60 feet wide; thence North
400.00 feet along the Westerly section line to the point of beginning.

 

 

SCHEDULE 3
TO
LOAN MODIFICATION AGREEMENT

Documents Executed to Grant Standard Federal a Security Interest in
the New Collateral

 

1. Commercial Mortgage covering the parcel of land described in Schedule
2.

2. UCC Financing statement covering the inventory, equipment and fixtures of
CLT Associates Limited Partnership located on the real property described in the
commercial mortgage.
:

SCHEDULE 4
TO
LOAN MODIFICATION AGREEMENT

BORROWER'S STANDARD FEDERAL ACCOUNTS NOT SUBJECT TO COLLECTION OR OFFSET
BY STANDARD FEDERAL AND NOT SUBJECT TO APPLICATION TO BORROWER'S INDEBTEDNESS TO
STANDARD FEDERAL:

	 ACCOUNT NAME
	 CHRYSLER DIRECT
	 NISSAN DEALER
	 VW
	 VEBA
	 AUDI
	 FORD ESP
	 VSI ACCEPTANCE FOR APCO
	 FORD INSIDER
	 FORD RACING
	 GM FLEETRAC
	 3COM
	 GOODYEAR

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