Document:

EXHIBIT 10.31

 

AMENDED AND RESTATED RENEWAL REVOLVING NOTE

 

	
  Amount:
  $10,000,000.00

  	
   

  	
  Date:
  January 15, 2008

  
	
   

  	
   

  	
  Chicago,
  Illinois

  

 

                On or before June 30, 2008
(the “Maturity Date”), the undersigned, BRAD FOOTE GEAR WORKS, INC., f/k/a BFG
Acquisition Corp., an Illinois corporation (the “Borrower”), with its chief
executive office located at 1309 S. Cicero Avenue, Cicero, Illinois 60804, for
value received, hereby promises to pay to the order of LASALLE BANK NATIONAL
ASSOCIATION f/k/a LaSalle National Bank f/k/a LaSalle Bank NI, a national
banking association (collectively, together with any holder hereof, the “Bank”),
at the Bank’s main offices at 135 South LaSalle Street, Chicago, Illinois
60603, or such other address hereafter designated by the Bank in writing, the
principal sum of Ten Million and 00/100 ($10,000,000.00) Dollars (U.S.), or if
less, the aggregate unpaid principal amount of all advances (“Advances”) made
by the Bank to the Borrower under this Note, plus all accrued and unpaid
interest calculated and payable at the applicable rates and in the manner
described below.  Except as otherwise
specifically provided herein and subject to the terms and conditions set forth
in the Loan Agreement (as hereinafter defined), amounts borrowed hereunder may
be repaid and reborrowed at any time and from time to time until the Maturity
Date.

 

                The outstanding principal
balance of each Advance under this Note shall bear interest, at the Borrower’s
option to be selected in the manner hereinafter set forth, at the Base Rate (as
hereinafter defined) or “Adjusted LIBOR” (as hereinafter defined).  Interest accruing on Advances bearing
interest at the Base Rate shall be calculated on the basis of a year consisting
of 360 days and shall be paid for the actual number of days elapsed.  Interest accruing on Advances bearing
interest at Adjusted LIBOR shall be calculated on the basis of a year
consisting of 360 days and shall be paid for the actual number of days elapsed
from the first day of the applicable Interest Period (as hereinafter defined)
but not including the last day thereof.

 

                Any amount of principal which is
not paid when due, whether at the stated maturity, by acceleration, or
otherwise, shall bear interest payable on demand at a fluctuating interest rate
per annum equal at all times to the Base Rate plus three percent (the “Default
Rate”).  In addition, a late charge equal
to three percent (3%) of each late payment may be charged on any payment not
received by the Bank within five (5) calendar days after the payment due
date, but acceptance of payment of this charge shall not waive any Default or
Event of Default.

 

                Borrower hereby confirms that as
of the execution date of this Note that the outstanding principal balance of
this Note shall bear interest at the Base Rate unless and until Borrower
exercises its option to select the Adjusted LIBOR rate option hereinabove
described.  Borrower furthers
acknowledges and agrees that if no interest rate option is selected by Borrower
for any one or more Advances for any applicable period during the term of this
Note, such Advance(s) shall bear interest at the Base Rate.

 

                Interest on the unpaid balance
of each outstanding Advance bearing interest at the Base Rate shall be payable
monthly on the last Banking Day of each month.

 

 

1

 

                The term “Base Rate” shall mean
the “Prime Rate” minus one hundred (100) basis points.  The term “Prime Rate” at any time means the
rate of interest in effect from time to time as set by the Bank and called its
Prime Rate.  The effective date of any
change in the Prime Rate shall for purposes hereof be the date the rate is
changed by the Bank.  The Bank shall not
be obligated to give notice of any change in the Prime Rate.  It is expressly agreed that the use of the
term “Prime Rate” is not intended nor does it imply that said rate of interest
is a preferred rate of interest or one which is offered by the Bank to its most
creditworthy customers.

 

                At any time and from time to
time, the Borrower may identify no more than five (5) portions of the
outstanding principal balance of this Note (each such portion herein, a “LIBOR
Loan”) which will bear interest at “Adjusted LIBOR”.  Each LIBOR Loan must equal a minimum of
$250,000.00, or if greater, in integral multiples of $50,000.00.  “Adjusted LIBOR” means a rate of interest
equal to one and three-quarters percent (1.75%) per annum in excess of the per
annum rate of interest at which U.S. dollar deposits in an amount comparable to
the amount of the relevant LIBOR Loan and for a period equal to the relevant “Interest
Period” (as hereinafter defined) are offered generally to the Bank in the
London Interbank Eurodollar market at 11.00 a.m. (London time) two Banking
Days prior to the commencement of each Interest Period, as displayed in the
Bloomberg Financial Markets system, or other authoritative source selected by
the Bank in its sole discretion, divided by a number determined by subtracting
from 1.00 the maximum reserve percentage for determining reserves to be maintained
by member banks of the Federal Reserve System for Eurocurrency liabilities,
such rate to remain fixed for such Interest Period.  “Interest Period” shall mean successive 30
day periods as selected from time to time by the Borrower by written notice
given to the Bank not less than three Banking Days prior to the first day of
each respective Interest Period; provided that: 
(i) each such 30 day period occurring after such initial period
shall commence on the day on which the next preceding period expires; (ii) the
final Interest Period shall be such that its expiration occurs on or before the
Maturity Date; (iii) at any time any Interest Period expires less than 30
days before the Maturity Date, then for the period commencing on such
expiration date and ending on the Maturity Date, such LIBOR Loan shall convert
to a loan bearing interest at the Base Rate; (iv) any Interest Period
which commences on the last Banking Day of a calendar month (or on any day for
which there is no numerically corresponding day in the appropriate subsequent
calendar month) shall end on the last Banking Day of the appropriate subsequent
calendar month; and (v) each Interest Period which would otherwise end on
a day which is not a Banking Day shall end on the next succeeding Banking Day,
or, if such next succeeding Banking Day falls in the next succeeding calendar
month, on the next preceding Banking Day. 
Interest on each LIBOR Loan shall be payable on the last Banking Day of
each Interest Period, at maturity, after maturity on demand, and on the date of
any payment hereon on the amount paid. 
The Borrower hereby further promises to pay to the order of the Bank, on
demand, interest on the unpaid principal amount of each LIBOR Loan after maturity
(whether by acceleration or otherwise) at the Default Rate.  As used herein, “Banking Day(s)” shall mean
each and all days other than a Saturday, Sunday or a legal holiday on which
national banks are authorized or required to be closed for the conduct of
commercial banking business in Chicago, Illinois.

 

                The Bank’s determination of
Adjusted LIBOR as provided above shall be conclusive, absent manifest
error.  Furthermore, if the Bank
determines, in good faith (which determination 

 

 

2

 

shall
be conclusive, absent manifest error) prior to the commencement of any Interest
Period that:  (a) U.S. dollar
deposits of sufficient amount and maturity for funding any LIBOR Loan are not
available to the Bank in the London Interbank Eurodollar market in the ordinary
course of business, or (b) by reason of circumstances affecting the London
Interbank Eurodollar market, adequate and fair means do not exist for
ascertaining the rate of interest to be applicable to the relevant LIBOR Loan,
the Bank shall promptly notify the Borrower and such LIBOR Loan shall
automatically convert on the last day of its then-current Interest Period to a
loan bearing interest at the Base Rate.

 

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

 

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

 

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

 

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

 

                Unless otherwise agreed, all
payments shall be first applied to accrued interest to the date of payment,
then to unpaid principal, and any remaining amount toward Bank’s costs and 

 

 

3

 

expenses
incurred in collecting or attempting to collect this Note or incurred in any
other matter or proceeding relating to this Note.

 

                This Note is issued pursuant to,
is entitled to the benefits of, and is secured by, among other documents, the
Loan and Security Agreement dated as of January 17, 1997 between the Bank
and the Borrower (such agreement, as amended, restated, supplemented or
otherwise modified from time to time hereafter, the “Loan Agreement”), to which
reference is hereby made for a more complete statement of the terms and
conditions under which the revolving loan evidenced hereby is made, and the
terms and conditions governing the collateral security for the obligations of
the Borrower hereunder.  Capitalized
terms used in this Note without definition shall have the meaning set forth in
the Loan Agreement.

 

                This Note evidences an amendment
and restatement of, increase to, and replacement and substitution for, that
certain $8,000,000.00 revolving loan extended by the Bank to Borrower
previously evidenced by Borrower’s Renewal Revolving Note dated November 1,
2007 in the principal sum of $8,000,000.00 (the “Prior Note”).  The outstanding indebtedness evidenced by the
Prior Note is continuing indebtedness evidenced hereby, and nothing herein
shall be deemed to constitute a payment, settlement or novation of the Prior
Note, or to release or otherwise adversely affect any lien, mortgage or
security interest securing such indebtedness or any rights of the Bank against
any guarantor, surety or other party primarily or secondarily liable for such
indebtedness.

 

                If any Event of Default shall
occur, then this Note and all other Indebtedness, at the option of the Bank,
shall immediately become due and payable, without notice or demand on the
Borrower, together with all expenses, costs and attorneys’ fees incurred or
expended by the Bank in enforcing its rights hereunder which shall become
additional indebtedness immediately due and payable hereon, and the Bank may
exercise any of the remedies provided by the Loan Agreement, or any other
document securing this Note, or under the Illinois Uniform Commercial Code or other
applicable law.

 

                The Bank may, at any time or
times hereafter, after an Event of Default shall occur, appropriate and apply
toward the payment of this Note any moneys, credits, deposits, checks,
accounts, drafts, securities, certificates of deposit or other property
belonging to the Borrower, in the possession of or under the control of the
Bank, as well as any indebtedness of the Bank to the Borrower, then due or to
become due.

 

                Borrower hereby waives
presentment, demand, notice of dishonor and all other notices and demands in
connection with the enforcement of the Bank’s rights hereunder.  Any failure of the Bank to exercise any right
hereunder shall not be construed as a waiver of the right to exercise the same
or any other right at any other time.

 

                The Borrower hereby authorizes
the Bank to rely upon the telephonic or written instructions of any person
identifying himself or herself as an officer or employee designated by the
Borrower from time to time in any schedule or certificate, which schedule or
certificate shall become effective when received by Bank, and upon any
signature which it believes to be genuine, and the Borrower shall be bound
thereby in the same manner as if such person were 

 

 

4

 

actually
authorized or such signature were genuine. 
The Borrower also agrees to indemnify the Bank and hold it harmless from
any and all claims, damages, liabilities, losses, costs and expenses
(including, without limitation, reasonable attorneys’ fees) which may arise or
be created by the acceptance of instructions for making Advances hereunder, and
to pay all legal and other costs and expenses (including, without limitation,
reasonable attorneys’ fees) incurred by the Bank in obtaining payment of the
amounts payable by the Borrower.  The
Bank will perform a verification as to validity of signatures under its normal
established procedures.

 

                Borrower agrees to reimburse the
holder or owner of this Note upon demand for any and all costs and expenses
(including, without limit, court costs, legal expenses and reasonable attorney’s
fees, whether inside or outside counsel is used, whether or not suit is
instituted, and, if suit is instituted, whether at the trial court level,
appellate level, in a bankruptcy, probate or administrative proceeding or
otherwise) incurred in collecting or attempting to collect this Note or
incurred in any other matter or proceeding relating to this Note.  Any amounts payable with respect to the loan
evidenced by this Note which shall not be paid when due, including, without
limitation, principal, interest and the aforesaid costs and expenses, shall
bear interest at the Default Rate from the date payable until the date they are
paid in full.

 

                Borrower hereby represents that
the principal amount of the loan (including all Advances hereafter made
hereunder) is a business loan, that the proceeds thereof shall be used for
business purposes only and that the same is exempt from limitations upon lawful
interest, pursuant to the terms of Section 205/4 of Chapter 815 of the
Illinois Compiled Statutes.

 

                This Note may not be amended,
modified or changed nor shall any waiver of any of the provisions hereof be
effective, except only by an instrument in writing, signed by the party against
whom enforcement of any waiver, amendment, change, modification or discharge is
sought.

 

                No reference herein to the Loan
Agreement, and no provision of this Note, the Loan Agreement, or any of the
other Loan Documents, shall alter or impair the obligation of the Borrower,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the place, at the respective times, and in the currency herein
prescribed.

 

                The provisions of this Note
shall be binding upon Borrower, its successors and assigns, and shall inure to
the benefit of and extend to the Bank and any holder hereof.

 

                THIS NOTE HAS BEEN EXECUTED AND
DELIVERED TO BANK AND ACCEPTED BY BANK IN THE STATE OF ILLINOIS, IN WHICH STATE
IT SHALL BE PERFORMED BY BORROWER.  THIS
NOTE SHALL, IN ALL RESPECTS, BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAW PROVISIONS) OF THE STATE
OF ILLINOIS, INCLUDING ALL MATTERS OF INTERPRETATION, ENFORCEMENT,
CONSTRUCTION, VALIDITY, PERFORMANCE AND EFFECT.

 

                EXCEPT AS PROVIDED IN THE
FOLLOWING PARAGRAPH, THE BANK AND BORROWER AGREE THAT ALL DISPUTES BETWEEN THEM
ARISING OUT OF, 

 

 

5

 

CONNECTED
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH THIS NOTE, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR
OTHERWISE, SHALL BE RESOLVED ONLY BY STATE OR FEDERAL COURTS LOCATED IN COOK
COUNTY, ILLINOIS.  BORROWER WAIVES IN ALL
DISPUTES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT
CONSIDERING THE DISPUTE.

 

                BORROWER AGREES THAT THE BANK
SHALL HAVE THE RIGHT TO PROCEED AGAINST BORROWER OR ITS PROPERTY IN A COURT IN
ANY LOCATION NECESSARY TO ENABLE THE BANK TO OBTAIN A JUDGMENT AGAINST THE
BORROWER OR TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
INDEBTEDNESS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF
THE BANK.  BORROWER WAIVES ANY OBJECTION
THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE BANK HAS
COMMENCED A PROCEEDING DESCRIBED IN THIS PARAGRAPH.

 

                BORROWER AND THE BANK EACH WAIVE
ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING
IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE BANK AND BORROWER ARISING OUT OF,
CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS NOTE. 
INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE RESOLVED IN A BENCH
TRIAL WITHOUT A JURY.

 

                Bank hereby notifies Borrower
that pursuant to the requirements of the USA Patriot Act (Title III of
Pub.  L. 107-56, signed into law October 26,
2001) (the “Act”), and Bank’s policies and practices, Bank is required to
obtain, verify and record certain information and documentation that identifies
Borrower, which information includes the name and address of Borrower and such
other information that will allow Bank to identify Borrower in accordance with
the Act.  In addition, Borrower shall (a) ensure
that no person who owns a controlling interest in or otherwise controls
Borrower or any subsidiary of Borrower is or shall be listed on the Specially
Designated Nationals and Blocked Person List or other similar lists maintained
by the Office of Foreign Assets Control (“OFAC”), the Department of the
Treasury or included in any Executive Orders, (b) not use or permit the
use of the proceeds of this Note to violate any of the foreign asset control
regulations of OFAC or any enabling statute or Executive Order relating
thereto, and (c) comply, and cause any of its subsidiaries to comply, with
all applicable Bank Secrecy Act (“BSA”) laws and regulations, as amended.

 

[signature
page follows]

 

 

6

 

                IN WITNESS WHEREOF, the Borrower
has caused this Note to be duly executed and delivered as of the date first
above written.

 

	
   

  	
   

  	
  BRAD
  FOOTE GEAR WORKS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:
  

  	
  /s/
  J. Cameron Drecoll

  	
   

  
	
   

  	
   

  	
   

  	
  J.
  Cameron Drecoll

  
	
   

  	
   

  	
  Title:
  

  	
  President

  
	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:
  

  	
  /s/
  Joan M. Drecoll

  	
   

  	
   

  	
   

  
	
   

  	
  Joan
  M. Drecoll

  	
   

  	
   

  
	
  Title:
  

  	
  Secretary

  	
   

  	
   

  
							

 

 

7Exhibit 10.32

 

EQUIPMENT LINE NOTE

(Non-Revolving Line With Conversion)

 

	
  Amount:  $9,000,000.00

  	
   

  	
  Date:  June 30, 2007

  
	
   

  	
   

  	
  Chicago,
  Illinois

  

 

The
undersigned, BRAD FOOTE GEAR WORKS, INC., f/k/a BFG Acquisition Corp., an
Illinois corporation (the “Borrower”), with its chief executive office located
at 1309 S. Cicero Avenue, Cicero, Illinois 60650, for value received, hereby
promises to pay to the order of LASALLE BANK NATIONAL ASSOCIATION f/k/a LaSalle
National Bank f/k/a LaSalle Bank NI, a national banking association
(collectively, together with any holder hereof, the “Bank”), at the Bank’s main
offices at 135 South LaSalle Street, Chicago, Illinois 60603, or such other
address hereafter designated by the Bank in writing, the principal sum of Nine
Million and 00/100 ($9,000,000.00) Dollars (U.S.) or if less, the aggregate
unpaid principal amount of all advances (“Advances”) made by the Bank to the
Borrower under this Note, plus all accrued and unpaid interest calculated and
payable at the applicable rates and in the manner described below.  Amounts borrowed and repaid under this Note
may not be reborrowed.

 

The
term “Conversion Date” shall mean June 30, 2008.

 

Prior
to the Conversion Date, interest shall be payable monthly on this Note,
commencing on July 31, 2007 and continuing on the last Business Day of
each month thereafter, calculated on the unpaid principal balances hereof at a
variable rate per annum equal to the Prime Rate (as hereinafter defined) minus
one percent (1.0%).  The term “Prime Rate”
at any time means the rate of interest then most recently announced or
published by the Bank as its prime rate. 
Each change in the interest rate on this Note shall take effect on the
effective date of the change in the Prime Rate. 
It is expressly agreed that the use of the term “Prime Rate” is not
intended nor does it imply that said rate of interest is a preferred rate of
interest or one which is offered by the Bank to its most creditworthy
customers.  Bank shall be under no
obligation to notify Borrower of any change in the Prime Rate.  Interest shall be computed on the basis of a
year consisting of 360 days and paid for actual days elapsed.

 

Upon
the Conversion Date, the outstanding principal balance of this Note will be
repayable in fifty-nine (59) successive monthly installments of principal
(based on a sixty month amortization), plus interest as hereinafter provided
(except that if the Fixed Interest Rate, as hereinafter defined, is selected by
Borrower, this Note shall be repayable in monthly installments of principal and
interest (or principal plus interest if the Variable Interest Rate option is
chosen), as calculated by the Bank), commencing on July 31, 2008, and
payable on the last Business Day of each month thereafter, followed by a final
payment of the entire unpaid principal balance and accrued interest due on June 30,
2013 (the “Maturity Date”).  Interest on
this Note after the Conversion Date shall be payable concurrently with each
principal payment, and shall at Borrower’s election (which shall be designated
by Borrower in a writing delivered to the Bank prior to the Conversion Date) be
calculated at either (i) a variable rate equal to the Prime Rate minus one
percent (1.0%) (the “Variable Interest Rate”), or (ii) a fixed rate equal
to two percent (2.0%) above the “Swap Rate” (as hereinafter defined) (such
fixed rate, the “Fixed Interest Rate”).

 

 

1

 

Said
election for either the Variable Interest Rate or Fixed Interest Rate shall be
made only once and shall remain in effect for the balance of the term of this
Note.  The term “Swap Rate” shall mean a
rate of interest equal to the per annum rate of interest at which the Bank
determines to be its cost of funds equal to the yield on United States Treasury
Notes or Securities having a maturity closest to the Maturity Date plus a
corresponding swap spread as published in “Bloomberg’s Financial Markets
Commodities News”, in effect on the Conversion Date, and in the absence of such
publication, as determined by the Bank in its sole discretion.

 

Advances
under this Note will be made in accordance with the terms of Section 3B of
the Loan Agreement (as hereafter defined), the terms of which are incorporated
herein by reference.

 

Any
amount of principal which is not paid when due, whether at the stated maturity,
by acceleration, or otherwise, shall bear interest payable on demand at an
interest rate per annum equal at all times to the interest rate otherwise then
prevailing on this Note plus three percent (the “Default Rate”).  In addition, a late charge equal to five
percent (5%) of each late payment may be charged on any payment not received by
the Bank within five (5) calendar days after the payment due date, but
acceptance of payment of this charge shall not waive any Default or Event of
Default.

 

Unless
otherwise agreed, all payments shall be first applied to accrued interest to
the date of payment, then to unpaid principal, and any remaining amount toward
Bank’s costs and expenses incurred in collecting or attempting to collect this
Note or incurred in any other matter or proceeding relating to this Note.

 

All
payments made on account of the principal and interest hereof shall be
evidenced by entries on the books and records of the Bank and shall be
rebuttable presumptive evidence of the principal amount and interest owing
hereon.  The failure to so record any
such amount or any error so recording any such amount shall not, however, limit
or otherwise affect the obligations of the Borrower hereunder to repay the
principal amount borrowed hereunder and all interest accruing thereon.

 

If
Borrower prepays this Note while its bears interest at a variable rate, no
prepayment penalty shall be charged Borrower for any such prepayment.  If Borrower prepays this Note while it bears
interest at the Fixed Interest Rate, such prepayment of the principal balance
of this Note, whether in whole or in part, shall be subject to the following
conditions:

 

(i)                                     Not less than
five (5) days prior to the date upon which Borrower desires to make such
prepayment, Borrower shall deliver to the Bank written notice of its intention
to prepay, which notice shall be irrevocable and state the prepayment amount
and the prepayment date;

 

(ii)                                  Borrower shall
pay to the Bank, concurrently with such prepayment, a prepayment premium
calculated in accordance with the following paragraph.

 

(iii)                               Borrower shall
pay to the Bank all accrued and unpaid interest through the date of such
prepayment on the principal balance being prepaid; and

 

 

2

 

(iv)                              Borrower shall
pay to the Bank any other obligations of Borrower to the Bank then due with
respect to this Note which remain unpaid.

 

Concurrently
with any prepayment on this Note, the Borrower shall pay Bank a prepayment premium
calculated as follows:  (i) an
amount equal to five percent (5%) of the principal amount prepaid if paid in
the first (1st) loan year, (ii) four percent (4%) of the principal amount
prepaid if paid in the second (2nd) loan year, (iii) three percent (3%) of
the principal amount prepaid if paid in the third (3rd) loan year, (iv) two
percent (2%) of the principal amount prepaid if paid in the fourth (4th) loan
year, and (v) one percent (1%) if paid in the fifth (5th) loan year.  For purposes of this Note, a “loan year”
shall mean each 12 month period following the Conversion Date.  Borrower acknowledges that the loan evidenced
hereby was made on the basis and assumption that the Bank would receive the
payments of principal and interest set forth herein for the full term
hereof.  Therefore, whenever the maturity
hereof has been accelerated by the Bank by reason of the occurrence of an Event
of Default or for any other reason, while this Note bears interest at the Fixed
Interest Rate, there shall be due, in addition to the outstanding principal
balance, accrued interest and other sums due hereunder, a premium equal to the
prepayment premium that would be payable pursuant to the preceding paragraph if
such principal balance had voluntarily been prepaid by Borrower.

 

This
Note is issued pursuant to and entitled to the benefits of, and is secured by,
the Loan and Security Agreement dated as of January 17, 1997 between the
Borrower and the Bank (such agreement, as the same may be amended, restated,
supplemented or otherwise modified from time to time hereafter, the “Loan
Agreement”) and the other Loan Documents (as such terms are defined in the Loan
Agreement), to which reference is hereby made for a more complete statement of
the terms and conditions under which the loan evidenced hereby is made, and the
terms and conditions governing the collateral security for the obligations of
the Borrower hereunder.  Capitalized
terms used herein without definition shall have the meaning set forth in the
Loan Agreement.

 

If
any Event of Default shall occur, then this Note and all other Indebtedness, at
the option of the Bank, shall immediately become due and payable, without
notice or demand on the Borrower, together with all expenses, costs and
attorneys’ fees incurred or expended by the Bank in enforcing its rights
hereunder which shall become additional indebtedness immediately due and
payable hereon, and the Bank may exercise any of the remedies provided by the
Loan Agreement, or any other document securing this Note, or under the UCC or
other applicable law.

 

The
Bank may, at any time or times hereafter, after an Event of Default shall
occur, appropriate and apply toward the payment of this Note any moneys,
credits, deposits, checks, accounts, drafts, securities, certificates of
deposit or other property belonging to the Borrower (or any of them), in the
possession of or under the control of the Bank, as well as any indebtedness of
the Bank to the Borrower, then due or to become due.

 

Borrower
hereby waives presentment, demand, notice of dishonor and all other notices and
demands in connection with the enforcement of the Bank’s rights hereunder.  Any failure of the Bank to exercise any right
hereunder shall not be construed as a waiver of the right to exercise the same
or any other right at any other time.

 

 

3

 

Borrower
agrees to reimburse the holder or owner of this Note upon demand for any and
all costs and expenses (including, without limit, court costs, legal expenses
and reasonable attorney’s fees, whether inside or outside counsel is used,
whether or not suit is instituted, and, if suit is instituted, whether at the
trial court level, appellate level, in a bankruptcy, probate or administrative
proceeding or otherwise) incurred in collecting or attempting to collect this
Note or incurred in any other matter or proceeding relating to this Note.  Any amounts payable with respect to the loan
evidenced by this Note which shall not be paid when due, including, without
limitation, principal, interest and the aforesaid costs and expenses, shall
bear interest at the Default Rate from the date payable until the date they are
paid in full.

 

Borrower
hereby represents that the principal amount of the loan is a business loan,
that the proceeds thereof shall be used for business purposes only and that the
same is exempt from limitations upon lawful interest, pursuant to the terms of Section 205/4
of Chapter 815 of the Illinois Compiled Statutes.

 

This
Note may not be amended, modified or changed nor shall any waiver of any of the
provisions hereof be effective, except only by an instrument in writing, signed
by the party against whom enforcement of any waiver, amendment, change,
modification or discharge is sought.

 

No
reference herein to the Loan Agreement, and no provision of this Note, the Loan
Agreement, or any of the other Loan Documents, shall alter or impair the
obligation of the Borrower, which is absolute and unconditional, to pay the
principal of and interest on this Note at the place, at the respective times,
and in the currency herein prescribed.

 

The
provisions of this Note shall be binding upon Borrower, its successors and
assigns, and shall inure to the benefit of and extend to the Bank and any
holder hereof.

 

THIS NOTE HAS BEEN EXECUTED AND DELIVERED TO BANK AND ACCEPTED BY BANK
IN THE STATE OF ILLINOIS, IN WHICH STATE IT SHALL BE PERFORMED BY
BORROWER.  THIS NOTE SHALL, IN ALL
RESPECTS, BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS
OPPOSED TO THE CONFLICTS OF LAW PROVISIONS) OF THE STATE OF ILLINOIS, INCLUDING
ALL MATTERS OF INTERPRETATION, ENFORCEMENT, CONSTRUCTION, VALIDITY, PERFORMANCE
AND EFFECT.

 

EXCEPT AS PROVIDED IN THE FOLLOWING PARAGRAPH, THE BANK AND BORROWER
AGREE THAT ALL DISPUTES BETWEEN THEM ARISING OUT OF, CONNECTED WITH, RELATED
TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION
WITH THIS NOTE, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE,
SHALL BE RESOLVED ONLY BY STATE OR FEDERAL COURTS LOCATED IN COOK COUNTY,
ILLINOIS.  BORROWER WAIVES IN ALL
DISPUTES ANY OBJECTION IT MAY HAVE TO THE LOCATION OF THE COURT
CONSIDERING THE DISPUTE.

 

 

4

 

BORROWER AGREES THAT THE BANK SHALL HAVE THE RIGHT TO PROCEED AGAINST
BORROWER OR ITS PROPERTY IN A COURT IN ANY LOCATION NECESSARY TO ENABLE THE
BANK TO OBTAIN A JUDGMENT AGAINST THE BORROWER OR TO REALIZE ON THE COLLATERAL
OR ANY OTHER SECURITY FOR THE INDEBTEDNESS, OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER ENTERED IN FAVOR OF THE BANK. 
BORROWER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF
THE COURT IN WHICH THE BANK HAS COMMENCED A PROCEEDING DESCRIBED IN THIS
PARAGRAPH.

 

BORROWER AND THE BANK EACH WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE
IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE,
BETWEEN THE BANK AND BORROWER ARISING OUT OF, CONNECTED WITH, RELATED TO OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS
NOTE.  INSTEAD, ANY DISPUTES RESOLVED IN
COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.

 

Bank
hereby notifies Borrower that pursuant to the requirements of the USA Patriot
Act (Title III of Pub.  L. 107-56, signed
into law October 26, 2001) (the “Act”), and Bank’s policies and practices,
Bank is required to obtain, verify and record certain information and
documentation that identifies Borrower, which information includes the name and
address of Borrower and such other information that will allow Bank to identify
Borrower in accordance with the Act.  In
addition, Borrower shall (a) ensure that no person who owns a controlling
interest in or otherwise controls Borrower or any subsidiary of Borrower is or
shall be listed on the Specially Designated Nationals and Blocked Person List
or other similar lists maintained by the Office of Foreign Assets Control (“OFAC”),
the Department of the Treasury or included in any Executive Orders, (b) not
use or permit the use of the proceeds of this Note to violate any of the
foreign asset control regulations of OFAC or any enabling statute or Executive
Order relating thereto, and (c) comply, and cause any of its subsidiaries
to comply, with all applicable Bank Secrecy Act (“BSA”) laws and regulations,
as amended.

 

[signature
page follows]

 

 

5

 

IN
WITNESS WHEREOF, the Borrower has caused this Note to be duly executed and
delivered as of the date first above written.

 

	
   

  	
   

  	
   

  	
  BRAD
  FOOTE GEAR WORKS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/
  J. Cameron Drecoll

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  J.
  Cameron Drecoll

  
	
   

  	
   

  	
   

  	
  Title:
  

  	
  President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Joan M. Drecoll

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Joan
  M. Drecoll

  	
   

  	
   

  	
   

  
	
  Title:
  

  	
  Secretary

  	
   

  	
   

  	
   

  
							

 

 

6

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