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EXHIBIT 10.42
TWELFTH AMENDMENT TO LOANS AND SECURITY AGREEMENT,
MODIFICATION OF NOTES AND REAFFIRMATION OF GUARANTIES
This TWELFTH AMENDMENT TO LOANS AND SECURITY AGREEMENT AND
REAFFIRMATION OF GUARANTIES, dated as of November 25, 1998 (this "AMENDMENT") is
by and among FLEET NATIONAL BANK F/K/A FLEET NATIONAL BANK OF CONNECTICUT F/K/A
SHAWMUT BANK CONNECTICUT, N.A., a national banking association with a place of
business at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("LENDER"), EDAC
TECHNOLOGIES CORPORATION, a Wisconsin corporation with a principal place of
business at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("BORROWER"),
APEX MACHINE TOOL COMPANY, INC., a Connecticut corporation with a mailing
address c/o Borrower at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
("APEX") and GROS-ITE INDUSTRIES, INC., a Connecticut corporation with a mailing
address c/o Borrower at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
("GROS-ITE" and collectively with Apex, "GUARANTOR").
On October 3, 1985, Lender and Borrower entered into a certain
Revolving Loan and Security Agreement which has been amended and restated in its
entirety by a certain Fifth Amended and Restated Revolving Loan, Term Loan,
Equipment Loan and Security Agreement dated February 28, 1995, as amended by a
certain Sixth Amendment to Revolving Loan, Term Loan, Equipment Loan and
Security Agreement dated July 31, 1995, as further amended by a certain Seventh
Amendment to Revolving Loan, Term Loan, Equipment Loan and Security Agreement
and Reaffirmation of Guaranties dated as of January 26, 1996, as further amended
by a certain Eighth Amendment to Revolving Loan, Term Loan, Equipment Loan and
Security Agreement and Reaffirmation of Guaranties dated as of April 10, 1996,
as further amended by a certain Ninth Amendment to Revolving Loan, Term Loan,
Equipment Loan, Security Agreement, Modification of Notes and Reaffirmation of
Guaranties dated May 27, 1997 between Borrower and Lender, as further amended by
a certain Tenth Amendment to Revolving Loan, Term Loan, Equipment Loan and
Security Agreement and Reaffirmation of Guaranties dated May 22, 1998 and as
further amended by a certain Eleventh Amendment to Loan and Security Agreement,
Modification of Notes and Reaffirmation of Guaranties dated as of June 30, 1998
(as amended and in effect from time to time, the "LOAN AGREEMENT"). Capitalized
terms used herein and not defined herein shall have the meanings given to them
in the Loan Agreement.
Pursuant to the Loan Agreement, the Lender has made: (i) a
$13,000,000.00 revolving loan (the "REVOLVING LOAN") as evidenced by a certain
Second Amended and Restated Revolving Promissory Note dated as of June 30, 1998
(the "REVOLVING Note"), (ii) a $14,000,000.00 term loan (the "ACQUISITION TERM
LOAN") as evidenced by a certain Term Promissory Note dated June 30, 1998 (the
"ACQUISITION TERM NOTE"), (iii) a $541,153.34 term loan (the "CONSOLIDATED
EQUIPMENT LOAN") as evidenced by a certain Amended and Restated Promissory Note
dated March 27, 1997 (the "CONSOLIDATED EQUIPMENT NOTE"), (iv) a $4,000,000.00
term loan (the "TERM LOAN") as evidenced by a certain Term Promissory Note dated
March 22, 1993 (the "TERM NOTE"), (v) a $1,000,000.00 construction to permanent
loan (the "CONSTRUCTION LOAN") as evidenced by a certain Construction to
Permanent Loan Promissory Note dated July 31, 1995 (the "CONSTRUCTION NOTE"),
(vi) a $3,000,000.00 equipment loan (the "THIRD EQUIPMENT LOAN") as evidenced by
a certain Equipment Promissory Note III dated as of March 27, 1997 (the "THIRD
EQUIPMENT NOTE") and (vii) a $3,000,000 equipment loan (the "FOURTH EQUIPMENT
LOAN") as evidenced by a certain Equipment Promissory Note IV dated as of May
22, 1998 (the "FOURTH EQUIPMENT NOTE").
Borrower has requested that Lender amend the Loan Agreement and the
Loan Documents in order to, among other things, make amendments to the financial
covenants in the Loan Agreement as set forth herein. Lender has advised Borrower
that Lender is prepared to make the amendments requested on the condition that
Borrower join with Lender in this Amendment upon the terms and conditions set
forth herein.
In consideration of this Amendment and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Lender, Borrower and Guarantor hereby agree as follows.
I. Acknowledgments, Affirmations and Representations and Warranties.
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A. The Borrower and Guarantor acknowledge and affirm that:
1. All of the statements contained herein are true and
correct and that they understand that the Lender is relying on the truth and
completeness of such statements to enter into this Amendment.
2. As of November 16, 1998 and without regard to the
financial accommodations contemplated herein, the Borrower is legally and
validly indebted to the Lender in the principal amount of $8,681,543.00 with
respect to the Revolving Loan, $14,000,000.00 with respect to the Acquisition
Term Loan, $369,773.00 with respect to the Consolidated Equipment Loan,
$2,600,000.00 with respect to the Third Equipment Loan, $1,618,737.00 with
respect to the Fourth Equipment Loan, $2,983,848.00 with respect to the Term
Loan and $805,555.00 with respect to the Construction Loan, plus interest and
fees accrued and accruing thereon and costs and expenses of collection,
including without limitation, attorneys' fees, and there is no defense, offset
or counterclaim with respect to any of the foregoing or independent claim or
action against the Lender.
3. Each Guarantor is legally and validly indebted to the
Lender by virtue of its Guaranty and there is no defense, offset or counterclaim
with respect thereto or claim or independent against the Lender.
B. The Borrower and each Guarantor represent and warrant to the
Lender that:
1. The resolutions previously adopted by the Board of
Directors of the Borrower and each Guarantor and provided to the Lender have not
in any way been rescinded or modified and have been in full force and effect
since their adoption to and including the date hereof and are now in full force
and effect, except to the extent that they have been modified or supplemented to
authorize this Amendment and the documents and transactions described herein.
2. The Borrower and each Guarantor have the corporate
power and authority to enter into, and have taken all necessary corporate action
to authorize, this Amendment and the transactions contemplated hereby.
3. All representations, warranties and covenants contained
in, and schedules and exhibits attached to, the Loan Documents are true and
correct on and as of the date hereof, are incorporated herein by reference and
are hereby remade.
4. The Borrower and each Guarantor are not currently in
default under any of the Loan Documents, and no condition exists which would
constitute an event of default under any of the Loan Documents but for the
giving of notice or passage of time, or both.
5. The consummation of the transactions contemplated
hereby is not prevented or limited by, nor does it conflict with or result in a
breach of terms, conditions or provisions of the Borrower's or each Guarantor's
respective Certificates of Incorporation or Bylaws or any evidence of
indebtedness, agreement or instrument of whatever nature to which the Borrower
or any of the Guarantors is a party or by which any of them is bound, does not
constitute a default under any of the foregoing and does not violate any
federal, state or local law, regulation or order or any order of any court or
agency which is binding upon the Borrower or each Guarantor.
II. Amendments to Loan Documents.
A. Amendments to the Loan Agreement.
1. Amendment to Exhibit A of the Loan Agreement.
Exhibit A of the Loan Agreement is hereby amended by:
a. Deleting Section 10 of Exhibit "A" to the
Loan Agreement in its entirety and
substituting the following in lieu thereof:
Debt Service Ratio. The Borrower shall
maintain as of the end of each calendar
quarter, for the year to date period, a
ratio of [(earnings before interest, taxes,
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depreciation and amortization) minus
(Unfunded Capital Expenditures (pro rated
based upon the percentage of the calendar
year elapsed at the time of the covenant
testing)) to [(Current Maturities of
Long-Term Debt paid or scheduled to be paid
during the period to be tested) plus
(interest) plus (taxes) plus (dividends)] of
not less than (a) 1.05 to 1.0 as of December
31, 1998, and (b) 1.2 to 1.0 as of March 31,
1999 and at all times thereafter. "CURRENT
MATURITIES OF LONG TERM DEBT" shall mean all
indebtedness of Borrower (excluding the
Revolving Loan) which, in accordance with
GAAP may be properly classified as long term
debt, the portion of which is due within one
(1) year from the date of determination
thereof. "UNFUNDED CAPITAL EXPENDITURES"
means all Capital Expenditures which are not
funded with the proceeds of the Equipment
Loan IV, the Acquisition Term Loan, or the
▇▇▇▇▇▇ Debt. "CAPITAL EXPENDITURES" shall
mean amounts paid by the Borrower in
connection with the purchase by the Borrower
of Capital Assets that would be required to
be capitalized and shown on the balance
sheet of the Borrower in accordance with
GAAP. "CAPITAL ASSETS" shall mean fixed
assets, both tangible (such as land,
buildings, fixtures, machinery and
equipment) and intangible (such as patents,
copyrights, trademarks, franchises and good
will); provided that Capital Assets shall
not include any item customarily charged
directly to expense or depreciated over a
useful life of twelve (12) months or less in
accordance with GAAP.
b. Deleting Section 13 of Exhibit "A" to the
Loan Agreement in its entirety and
substituting the following in lieu thereof:
Operating Leverage Ratio. The Borrower shall
maintain on a rolling four quarter basis a
ratio of [Funded Senior Debt] to [earnings
before interest, taxes, depreciation and
amortization] of not greater than (a) 5.25
to 1.0 as of December 31, 1998, (b) 4.9 to
1.0 as of March 31, 1999 and at all times
through September 30, 1999, (c) 3.75 to 1.0
as of December 31, 1999 and at all times
through September 30, 2000 and (d) 2.9 to
1.0 as of December 31, 2000 and at all times
thereafter. "FUNDED SENIOR DEBT" shall mean
all outstanding indebtedness of Borrower to
Lender and to ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇▇▇▇▇▇.
III. Reaffirmation of Guaranty.
To induce the Lender to enter into this Amendment, each Guarantor
hereby (a) consents to this Amendment and (b) affirms and ratifies its Guaranty
and confirms that (i) each Guarantor does irrevocably and unconditionally
guarantee to the Lender the payment and performance from the Borrower of the
Obligations (as defined in each Guaranty) from the Borrower to the Lender, upon
the terms and conditions set forth in the respective Guaranty, (ii) the term
Obligations includes, without limitation, this Amendment (the "MODIFICATION"),
the Term Loan, the Construction Loan, the Consolidated Equipment Loan, the Third
Equipment Loan, the Fourth Equipment Loan, the Revolving Loan and the
Acquisition Term Loan, and (iii) each Guaranty remains in full force and effect.
IV. Miscellaneous.
A. Ratifications, Etc. Except as otherwise expressly set forth herein,
all terms and conditions of the Loan Agreement, the Guaranty and the Loan
Documents are ratified and shall remain in full force and effect. Nothing herein
shall be construed to be a waiver of any requirements of the Loan Agreement and
the Loan Documents except as expressly set forth herein.
B. Conditions Precedent. The effectiveness of this Amendment shall be
subject to the Lender's prior receipt of each of the following in form and
substance satisfactory to Lender and its counsel:
1. This Amendment, duly executed and delivered by the
Borrower and each Guarantor;
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2. Copies of all corporate action taken by the Borrower
and each Guarantor, including resolutions of their
Board of Directors, authorizing the execution,
delivery, and performance of the Loan Documents to
which each is a party and each other document to be
delivered pursuant to this Amendment, certified as of
the date of this Amendment by the Secretary of the
Borrower and each Guarantor;
3. A certificate or certificates, dated as of the date
of this Amendment, of the Secretary of the Borrower
and each Guarantor certifying the names and true
signatures of the officers of the Borrower and each
Guarantor authorized to sign the Loan Documents to
which the Borrower and each Guarantor is a party;
4. Opinion of counsel for Borrower and each Guarantor in
form and substance satisfactory to Lender.
5. All fees and expenses, including legal fees and
related disbursements incurred by Lender in
connection with the structuring, negotiation,
preparation and closing of this Amendment and the
transactions related hereto;
C. Counterparts. This Amendment may be executed in any number of
counterparts, which together shall constitute one instrument.
D. Governing Law. This Amendment shall be construed and
interpreted in accordance with the laws of the State of Connecticut.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
an instrument under seal.
LENDER:
FLEET NATIONAL BANK F/K/A FLEET NATIONAL
BANK OF CONNECTICUT F/K/A
SHAWMUT BANK CONNECTICUT, N.A.
By:/s/ ▇▇▇▇▇ Exerins
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▇▇▇▇▇ ▇▇▇▇▇▇▇
Its Vice President
Duly Authorized
BORROWER:
EDAC TECHNOLOGIES CORPORATION
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Its Vice President
Duly Authorized
GUARANTOR:
GROS-ITE INDUSTRIES, INC.
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Its Secretary
APEX MACHINE TOOL COMPANY, INC. F/K/A
APEX ACQUISITION CORPORATION
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Its Vice President