EXHIBIT 4(c) to Form 10-Q EXHIBIT 4(c) SECOND AMENDMENT TO AMENDED AND RESTATED LETTER AGREEMENT THIS SECOND AMENDMENT TO AMENDED AND RESTATED LETTER AGREEMENT, dated as of March 30, 2000 (this "Amendment"), is between HASTINGS MANUFACTURING COMPANY,...

EXHIBIT 4(c) to Form 10-Q




EXHIBIT 4(c)

SECOND AMENDMENT TO AMENDED AND RESTATED LETTER AGREEMENT



          THIS SECOND AMENDMENT TO AMENDED AND RESTATED LETTER AGREEMENT, dated as of March 30, 2000 (this "Amendment"), is between HASTINGS MANUFACTURING COMPANY, a Michigan corporation (the "Company"), and BANK ONE, MICHIGAN,
a Michigan banking corporation, formerly known as NBD Bank (the "Bank").

RECITALS


          A.          The Company and the Bank are parties to an Amended and Restated Letter Agreement dated as of August 28, 1998, as amended by the First Amendment to Amended and Restated Letter
Agreement, dated as of November 11, 1999 (as now and hereafter amended, the "Letter Agreement") pursuant to which the Bank agreed, subject to the terms and conditions thereof, to extend credit to the Company in a term loan in the original principal amount
of $6,600,000 and a Credit Authorization in a maximum aggregate principal amount of $3,000,000.

          B.          The parties now desire to amend certain terms and provisions of the Letter Agreement as set forth herein.


TERMS


          In consideration of the premises and of the mutual agreements herein contained, the parties agree as follows:


ARTICLE 1.    AMENDMENTS. Effective upon the date that the conditions of effectiveness set forth in Article III of this Amendment are satisfied, which date (the "Amendment Date") shall be determined by the Bank in its sole discretion,
the Letter Agreement is amended as follows:

          1.1          The definitions of the terms "Applicable Margin," "Debt Service Coverage Ratio," "Maturity Date A," "Maximum Amount" and "Tangible Net Worth" in Section 1 are amended and restated
in their entirety, respectively, as follows:


          "Applicable Margin" shall mean, with the respect to any Eurodollar Rate Loan, Floating Rate Loan, commitment fees payable under paragraph 4 or standby letter of credit fees payable pursuant to paragraph 3(d),
as the case may be, the applicable margin set forth in the table below based on the Net Funded Debt Ratio and the ratio of Total Liabilities to Tangible Net Worth, as adjusted on the first day of each fiscal quarter based on each such ratio as of the last
day of the fiscal quarter immediately preceding such fiscal quarter, provided that the Applicable Margin in effect on the first day of any Eurodollar Interest Period for any Eurodollar Rate Loan shall remain in effect for the entire Eurodollar Interest Period and, notwithstanding anything herein to the contrary,
upon or during the








continuance of any Event of Default the Applicable Margin shall be based on the highest possible Applicable Margin described in the table below, regardless of the Net Funded Debt Ratio or the ratio of Total Liabilities to Tangible Net Worth:



Applicable Margin
  
Other Fees



  
Net
Funded
Debt to
EBITDA
  
Total
Liabilities
to Tangible
Net Worth
  
Prime
  
LIBOR
  
Commitment
Fee
  
Standby Letter
of Credit
Commission



  
>2.50:1.00
  
or
  
>2.00:1.00
  
0 b.p.
  
225 b.p.
  
37.5 b.p.
  
225 b.p.



  
>2.00:1.00
  
or
  
>1.75:1.00
  
0 b.p.
  
225 b.p.
  
35 b.p.
  
225 b.p.



  
>1.25:1.00
  
or
  
>1.50:1.00
  
0 b.p.
  
175 b.p.
  
30 b.p.
  
175 b.p.



  
<1.25:1.00
  
and
  
<1.50:1.00
  
0 b.p.
  
150 b.p.
  
25 b.p.
  
150 b.p.





          "Debt Service Coverage Ratio" shall mean, as of any date, the ratio of (a) the remainder of (i) EBITDA less (ii) depreciation expense for the period of four consecutive fiscal quarters then ended, to (b) the
sum of (i) Interest Expense for such period plus (ii) the Current Portion-Net Funded Debt as of such date all determined for the Company and its Subsidiaries on a consolidated basis in accordance with generally accepted accounting principles.



          "Maturity Date A" shall mean the earlier to occur of (a) September 30, 2002, and (b) the date on which the Advances shall be due and payable pursuant to paragraph 13 of this Agreement.



          "Maximum Amount" shall mean the maximum amount of the Advances that may be made hereunder pursuant to paragraph 2(a), which shall be $3,500,000 as such amount may be amended from time to time.



          "Tangible Net Worth" of any person shall mean, as of any date, (a) the amount of any capital stock, paid in capital and similar equity accounts plus (or minus in the case of a deficit) the capital surplus and
retained earnings of such person and the amount of any foreign currency translation adjustment account shown as a capital account of such person, less (b) the net book value of all items of the following character which are included in the assets of such
person: (i) goodwill, including without limitation, the excess of cost over book value of any asset, (ii) organization or experimental expenses, (iii) unamortized debt discount and expense, (iv) patents, trademarks, trade names and copyrights, (v)
treasury stock, (vi) deferred charges, (vii) franchises, licenses and permits, and (viii) other assets which are deemed intangible assets under generally accepted accounting principles, but not deferred taxes.





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          1.2          The definition of the term "Funded Debt Ratio" in Section 1 is deleted in its entirety.

          1.3          The following definitions of the terms "Current Portion-Net Funded Debt," "Net Funded Debt," "Net Funded Debt Ratio," "Rate Management Transaction," "Security Agreements" and
"Security Documents" are added to Section 1 in alphabetical order:


          "Current Portion-Net Funded Debt" of any person, as of any date, shall mean that portion of Net Funded Debt which is scheduled to come due within one year of such date.



          "Net Funded Debt" of any person, as of any date, shall mean the remainder of (a) Funded Debt of such person, less (b) cash on hand of such person.



          "Net Funded Debt Ratio" shall mean, as of any date, the ratio of (a) Net Funded Debt as of such date to (b) EBITDA for period of four consecutive fiscal quarters then ended, determined for the Company and its
Subsidiaries on a consolidated basis in accordance with generally accepted accounting principles.



          "Rate Management Transaction" means any transaction (including an agreement with respect thereto) now existing or hereafter entered into between the Company or any Subsidiary of the Company and the Bank which is
a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar
transaction, forward transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions) or any combination thereof, whether linked
to one or more interest rates, foreign currencies, commodity prices, equity prices or other financial measures.



          "Security Agreements" shall mean each security agreement entered into by the Company and the Guarantors for the benefit of the Bank pursuant to this Agreement in substantially the form of Exhibit D hereto, as
amended or modified from time to time.



          "Security Documents" shall mean, collectively, the Security Agreements and the Guaranties and all other related agreements and documents, including financing statements and similar documents, delivered pursuant
to this Agreement or otherwise entered into by any person to secure the Advances.


          1.4          The second sentence of Section 2(b) of the Letter Agreement shall be amended and restated as follows:



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          The Term Loan shall be evidenced by the Term Note, and, unless earlier payment is required under this Agreement, shall be payable in six consecutive quarterly principal payments of $330,000, plus interest (at the
Negotiated Rate, the Eurodollar Rate or the Floating Rate, as elected by the Company hereunder and during such periods as may be permitted hereunder, and after maturity, whether by demand or otherwise on demand at the Overdue Rate, the "Applicable Rate"),
followed by four consecutive quarterly principal payments of $240,000, plus interest (at the Applicable Rate), followed by four consecutive quarterly principal payments of $275,000, plus interest (at the Applicable Rate), followed by eight consecutive
quarterly principal payments of $320,000, plus interest (at the Applicable Rate).


          1.5          The following Section 8(aa) is added immediately following Section 8 of the Letter Agreement:


          8(aa).    Security and Collateral. To secure the payment when due of the Revolving Credit Note and the Term Note and all other obligations of the Company under this Agreement to the Bank, the Company
shall execute and deliver, or cause to be executed and delivered, to the Bank Security Documents granting the following:



          (a)          Security interests in all present and future accounts, chattel paper, inventory, machinery and equipment, fixtures, general intangibles and all other personal property of the
Company.



          (b)          Guaranties of all Subsidiaries of the Company.



          (c)          Security interests in all present and future accounts, chattel paper, inventory, machinery and equipment, fixtures, general intangibles and all other personal property of the
Guarantors.



          (d)          All other security and collateral described in the Security Documents.


          1.6          Subsections (f) and (g) are added to the end of Section 9 of the Letter Agreement as follows:


          (f)          Additional Security and Collateral. Promptly (i) execute and deliver and cause each Subsidiary of the Company and any of the Guarantors to execute and deliver, additional
Security Documents, within 30 days after request therefor by the Bank, sufficient to grant to the Bank liens and security interests in any after acquired property of the type described in Section 8(aa), and (ii) cause each person becoming a Subsidiary of
the Company or any of the Guarantors from time to time to execute




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and deliver to the Bank, within 30 days after such person becomes a Subsidiary, a Guaranty and other Security Documents, together with other related documents described in Section 8, sufficient to grant to the Bank liens and security interests in all
collateral of the type described in Section 8(aa). The Company shall notify the Bank, within 10 days after the occurrence thereof, of the acquisition of any property by the Company or any Guarantor that is not subject to the existing Security Documents,
any person's becoming a Subsidiary and any other event or condition that may require additional action of any nature in order to preserve the effectiveness and perfected status of the liens and security interests of the Bank with respect to such property
pursuant to the Security Documents.



          (g)          Further Assurances. Will, and will cause each Guarantor to, execute and deliver within 30 days after request therefor by the Bank, all further instruments and documents and
take all further action that may be necessary or desirable, or that the Bank may request, in order to give effect to, and to aid in the exercise and enforcement of the rights and remedies of the Bank under, this Agreement, the Revolving Credit Note, the
Term Note and the Security Documents, including without limitation causing each lessor of real property to the Company, the Guarantor or any of their respective Subsidiaries to execute and deliver to the Bank, prior to or upon the commencement of any
tenancy, an agreement in form and substance acceptable to the Bank duly executed on behalf of such lessor waiving any distraint, lien and similar rights with respect to any property subject to the Security Documents and agreeing to permit the Bank to
enter such premises in connection therewith.


          1.7          Section 10(a), (b) and (c) of the Letter Agreement shall be amended and restated, respectively, as follows:


          (a)          Net Funded Debt Ratio. Permit or suffer the Net Funded Debt Ratio of the Company and its Subsidiaries to be greater than: (i) 2.95 to 1.00 until June 29, 2000, or (ii) 2.75
to 1.00 from and including June 30, 2000 to December 30, 2000, or (iii) 2.25 to 1.00 from and including December 31, 2000 to December 30, 2001, or (iv) 1.75 to 1.00 on December 31, 2001 and thereafter.



          (b)          Debt Service Coverage Ratio. Permit or suffer the Debt Service Coverage Ratio of the Company and its Subsidiaries to be less than (i) 0.75 to 1.00 until September 29, 2000,
(ii) 1.00 to 1.00 from and including September 30, 2000 to Xxxxxxxx 00, 0000, (xxx) 1.20 to 1.00 from and including December 31, 2000 to December 30, 2001, and (iv) 1.30 to 1.00 on December 31, 2001 and thereafter.



          (c)          Total Liabilities to Tangible Net Worth. Permit or suffer the ratio of the consolidated Total Liabilities of the Company and its Subsidiaries to the consolidated Tangible
Net Worth of the Company and its Subsidiaries to be greater




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than (i) 2.10 to 1.00 until December 30, 2000, (ii) 2.00 to1.00 from and including December 31, 2000 to December 30, 2001, and (iii) 1.75 to 1.00 on December 31, 2001 and thereafter.


          1.8          Section 10(h) of the Letter Agreement is amended and restated in its entirety as follows:


          (h)          Dividends and Other Restricted Payments. Make, pay, declare or authorize any dividend, payment or other distribution in respect of any class of its capital stock or any
dividend, payment or distribution in connection with the redemption, purchase, retirement or other acquisition, directly or indirectly, of any shares of its capital stock other than such dividends, payments or other distributions to the extent payable
solely in shares of the capital stock of the Company, provided, however, that, if no Default or Event of Default shall exist or shall have occurred and be continuing, the Company may (i) repurchase 100,000 shares of the Company's common stock as approved by the Board of Directors of the Company
at the regular meeting of the Board of Directors on February 8, 2000, provided that such repurchase is completed by August 31, 2000 and (ii) make, pay, declare or authorize dividends, payments and other such distributions made after January 1, 2000 which,
in the aggregate (excluding the repurchase allowed under clause (i) above), do not exceed the sum of (A) $1,000,000 at any time plus (B) fifty percent (50%) of the Cumulative Net Income of the Company and its Subsidiaries commencing January 1, 2000. For
purposes of this paragraph 10(h), "capital stock" shall include capital stock and any securities exchangeable for or convertible into capital stock and any warrants, rights or other options to purchase or otherwise acquire capital stock or such securities.


          1.9          The portion of the first sentence the last paragraph of Section 10 of the Letter Agreement, from the words "For purposes of " through the words "provided, however,
that" shall be amended and restated as follows:


          For purposes of this paragraph 10 and the determination of the Applicable Margin from time to time, the financial covenants and ratios, and the related defined terms, shall be determined in accordance with generally
accepted accounting principles; provided, however, that


          1.10          The following subsection (k) is added to the end of Section 11 of the Letter Agreement as follows:


          (k)          (i) Each of the Company and the Guarantors has all requisite corporate power to execute and deliver the Security Documents to which it is a party and to engage in the transactions
contemplated by this Agreement; (ii) the execution, delivery and performance by each of the Company and the Guarantors of the






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Security Documents to which it is a party have been duly authorized by all necessary corporate action and are not in contravention of any law, rule or regulation, or any judgment, decree, writ, injunction, order or award of any arbitrator, court or
governmental authority, or of the terms of the Company's or any Guarantor's charter or by-laws, or of any contract or undertaking to which the Company or any Guarantor is a party or by which the Company or any Guarantor or any of its property may be bound
or affected and will not result in the imposition of any Lien on any of its property or of any of its Subsidiaries except for Permitted Liens; (iii) the Security Documents to which each of the Company and the Guarantors is a party when delivered hereunder
will be, legal, valid and binding obligations of the Company and each such Guarantor enforceable against the Company and each such Guarantor in accordance with their respective terms; and (iv) no consent, approval or authorization of or declaration,
registration or filing with any governmental authority or any nongovernmental person or entity, including without limitation any creditor, lessor or stockholder of the Company, any Guarantor or any of their respective Subsidiaries, is required on the part
of the Company or any Guarantor in connection with the execution, delivery and performance of the Security Documents or the transactions contemplated hereby or as a condition to the legality, validity or enforceability of any of the Security Documents.


          1.11          The following subsections (k), (1) and (m) are added to the end of Section 13 of the Letter Agreement as follows:


          (k)          Any representation or warranty made by the Company or any Guarantor in any Security Document or any other certificate, report, financial statement or other document furnished by
or on behalf of the Company or any Guarantor in connection with this Agreement, shall prove to have been incorrect in any material respect when made or deemed made; or



          (l)          The Company or any Guarantor shall fail to perform or observe any other term, covenant or agreement contained in any Security Document, and any such failure	shall remain
unremedied for 15 calendar days after notice thereof shall have been given to the Company or any Guarantor by the Bank (or such longer or shorter period of time as may be specified in such Security Document); or



          (m)          Any event of default described in any Security Document shall have occurred and be continuing, or any material provision of any Security Document shall at any time for any reason
cease to be valid and binding and enforceable against any obligor thereunder, or the validity, binding effect or enforceability thereof shall be contested by any person, or any obligor, shall deny that it has any or further liability or obligation
thereunder, or any material provision thereof shall be terminated, invalidated or set aside, or be declared ineffective or inoperative or in



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