Exhibit 10.1
------------
AMENDMENT NO. 2 AND WAIVER AGREEMENT
------------------------------------
THIS AMENDMENT NO. 2 AND WAIVER AGREEMENT (this "Agreement") is
entered into as of October 31, 1997 by and among ABC Rail Products Corporation
("Rail"), ABC Deco Inc. ("Deco"), American System Technologies, Inc. ("AST;"
AST, Rail and Deco being the "Borrowers"), the financial institutions named on
the signature pages hereto (collectively, the "Lenders") and American National
Bank and Trust Company of Chicago, as agent for the Lenders (the "Agent").
RECITALS
--------
WHEREAS, the Borrowers, the Lenders and the Agent have entered into
that certain Second Amended and Restated Loan and Security Agreement dated as of
January 31, 1997 (as heretofore amended, supplemented or otherwise modified, the
"Loan Agreement");
WHEREAS, the Borrowers desire that Rail acquire United Railway Signal
Group, Inc., a Florida corporation ("United");
WHEREAS, Rail proposes that the acquisition (the "Acquisition") of
United be accomplished by merging United with and into ABC Rail Acquisition II
Corporation, a Delaware corporation wholly owned by Rail ("Acquisition II
Corporation") and that immediately after giving effect thereto Acquisition II
Corporation will change its name to "United Railway Signal Group, Inc.;"
WHEREAS, Rail further proposes that the Acquisition be consummated
pursuant to (1) that certain Plan of Merger dated October 31, 1997 between
Acquisition II Corporation and United (the "Merger Agreement") in the form
attached as Exhibit A to the Supplemental Agreement referred to below, and (2)
that certain Supplemental Agreement dated as of October 31, 1997 among Rail and
the shareholders of United (the "Supplemental Agreement") substantially (in
every material respect) in the form attached hereto as Exhibit A (the Merger
Agreement and Supplemental Agreement being, collectively, referred to as the
"Acquisition Agreement");
WHEREAS, United has liabilities under certain bank loan facilities in
an aggregate amount not in excess of $235,000 (the "United Bank Debt");
WHEREAS, in order to consummate the Acquisition, the Borrowers have
requested that the Agent and the Lenders amend and/or waive certain provisions
of the Loan Agreement as provided herein; and
WHEREAS, the Agent and the Lenders are willing to enter into this
Agreement, but only on the terms and subject to the conditions set forth below;
NOW, THEREFORE, in consideration of the premises set forth above, the
terms and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Definitions. Terms defined in the Loan Agreement which are used
herein shall have the same meaning as are set forth in the Loan Agreement for
such terms unless otherwise defined herein.
2. Amendments. Subject to Section 5 below:
(a) Subsection 1.1 is hereby amended by adding thereto the
following (in appropriate alphabetical order):
"Acquisition II" shall mean ABC Rail Acquisition II Corporation,
a Delaware corporation.
"Old United" shall mean United Railway Signal Group, Inc., a
Florida corporation.
"United Merger" shall mean that certain Plan of Merger dated
October 31, 1997 between Acquisition II and Old United.
"United Supplemental Agreement" shall mean that certain
Supplemental Agreement dated as of October 31, 1997 among Rail and the
shareholders of Old United.
(b) Subsection 3.13 is hereby amended by adding after the last
sentence thereof the following: "No Borrower or Subsidiary of a Borrower
shall hold or possess any raw materials, work-in-process or other inventory
owned by a Person other than such Borrower or such Subsidiary as the case
may be ("Third Party Goods"), whether on consignment or otherwise, unless
(i) the Agent has received prior written notice thereof and such further
information relating thereto as it may reasonably request, (ii) all Third
Party Goods are at all times segregated from such Borrower's or such
Subsidiary's (as the case may be) other property, clearly marked as
consigned goods or otherwise non-owned property and maintained in manner so
as to be readily identifiable, (iii) all Third Party Goods are excluded
from Eligible Inventory and separately reported as such in the Monthly
Reports and Collateral Reports of each Borrower (as applicable) and (iv)
the value (determined at the lesser of cost, determined in a first-in,
first-out basis, or market) of all Third Party Goods for all Borrowers and
their Subsidiaries does not exceed $5,000,000 at any one time."
(c) Subsection 8.2 is hereby amended by adding after the last
word of clause (iv) thereof the following: "and indebtedness owed by
Acquisition II to Rail permitted under Subsection 8.4(x)."
-2-
(d) Subsection 8.4 is hereby amended by adding after the last
word of clause (x) thereof the following:
"; and an intercompany loan by Rail to its wholly owned
subsidiary, Acquisition II, in an amount up to $2,050,000
for the purpose of (1) funding the $1,000,000 cash
consideration to be paid pursuant to the United Merger, (2)
funding the $550,000 consideration to be paid in connection
with certain employment and non-compete agreements pursuant
to the United Supplemental Agreement and (3) funding up to
$500,000 from time to time of working capital of Acquisition
II, provided that such intercompany loan is evidenced by a
promissory note duly pledged to Agent to secure payment and
performance of Rail's Liabilities"
(e) Schedules 6.1, 6.12 and 8.5 to the Loan Agreement are hereby
amended and restated in the form of Schedules 6.1, 6.12 and 8.5 hereto.
3. Waivers. Subject to Section 5 below, the Agent and the Lenders
hereby waive:
(a) the terms of Subsection 8.3 of the Loan Agreement insofar as
such terms would be breached by consummation of the Acquisition; provided
that the Acquisition is consummated in accordance with the terms of the
Acquisition Agreement.
(b) the terms of Subsection 8.1 and Subsection 8.2 of the Loan
Agreement insofar as such terms would be breached by the existence of the
United Bank Debt, provided that immediately after consummating the
Acquisition, the United Bank Debt is paid in full and any and all Liens
securing the United Bank Debt are unconditionally and completely released;
and
(c) the terms of Subsection 8.4 of the Loan Agreement insofar as
the terms thereof were breached by the investment by Rail of not more than
$1,000 in Acquisition II Corporation in order to capitalize and create
Acquisition II Corporation, provided that Acquisition II Corporation prior
to the merger with United shall have no assets or liabilities of any kind
and shall have conducted no business or operations of any kind.
4. Acknowledgment. Subject to Section 5 below, the Agent, the
Lenders and the Borrowers acknowledge that immediately after giving effect to
the Acquisition in accordance with the terms hereof, United shall constitute a
Subsidiary of the Borrower and not an Excluded Subsidiary.
-3-
5. Conditions of Effectiveness. Sections 2, 3 and 4 of this
Agreement shall become effective as of the date hereof on the date (the
"Effective Date") that the Agent has received all of the following documents,
each such document to be in form and substance satisfactory to the Agent:
(a) eight (8) copies of this Agreement duly executed by each of
the parties hereto;
(b) eight (8) copies of a Guaranty and Security Agreement duly
executed by United substantially in the form of Exhibit B attached hereto;
(c) UCC Financing Statements duly executed by Acquisition II (in
the name of "ABC Rail Acquisition II Corporation" and "United Railway
Signal Group, Inc.") substantially as required by the Agent;
(d) eight (8) copies of a Pledge Amendment duly executed by the
Borrower substantially in the form of Exhibit C attached hereto;
(e) evidence, satisfactory to the Agent, that the United Bank
Debt has been paid in full and that any and all Liens securing such
indebtedness have been released;
(f) the originally executed intercompany note described in
Section 2(d) above together with an assignment thereof executed by Rail;
(g) eight (8) copies of a Secretary's Certificate duly executed
by the corporate secretary of United as to its charter, by-laws, board
resolutions and incumbency of relevant officers; and
(h) such other documents, certificates, amendments, agreements,
opinions, endorsements to title insurance policies and other items as the
Agent may reasonably request in connection with this Agreement.
6. Representations, Warranties and Agreements of the Borrowers.
(a) Each Borrower represents and warrants that this Agreement and
the Loan Agreement as amended hereby, constitute legal, valid and binding
obligations of such Borrower and are enforceable against such Borrower in
accordance with their terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally or by general equitable
principles.
(b) Each Borrower hereby reaffirms all covenants, representations
and warranties made in the Loan Agreement as amended hereby and after
giving effect hereto.
-4-
Each Borrower hereby agrees that all covenants, representations and
warranties made in the Loan Agreement and all other Financing Agreements
shall be deemed to have been remade as of the date hereof and (if
different) the Effective Date.
(c) Each Borrower represents and warrants that as of the date
hereof, and (if different) as of the Effective Date, there exists no
Default or Event of Default after giving effect to this Agreement and
consummation of the transactions contemplated thereby.
(d) Promptly after the Effective Date, the Borrowers will cause
to be delivered to the Agent: (i) a copy of the executed and final
Acquisition Agreement together with a copy of executed and final material
agreements and other documents relating thereto, certified as true and
complete by an appropriate officer; and (ii) a stock certificate evidencing
the shares described in the Pledge Amendment referred to in Section 5(d)
above, together with a stock power duly executed by Rail in blank with
respect to such pledged stock certificate.
7. Reference to the Effect on the Loan Agreement.
(a) On and after the Effective Date, (i) each reference in the
Loan Agreement to "this Agreement," "hereunder," "hereof," "herein," or
words of like import shall mean and be a reference to the Loan Agreement as
amended hereby, and (ii) each reference to the Loan Agreement in all other
Financing Agreements shall mean and be a reference to the Loan Agreement,
as amended hereby.
(b) Except as specifically amended above, the Loan Agreement, and
all other Financing Agreements and other documents, instruments and
agreements executed and/or delivered in connection therewith, shall remain
in full force and effect, and are hereby ratified and confirmed.
(c) Except as expressly set forth herein, the execution, delivery
and effectiveness of this Agreement shall not operate as a waiver of any
right, power or remedy of the Agent or the Lenders, nor constitute a waiver
of, or consent to and departure from, any provision of the Loan Agreement,
any other Financing Agreement, or any other documents, instruments and
agreements executed and/or delivered in connection therewith.
8. Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws (without giving effect to conflicts of law
principles) of the State of Illinois.
9. Headings. Section headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
-5-
10. Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery by any party of an executed counterpart hereof by telecopy
of similar facsimile transmission shall constitute valid and effective delivery
hereof by such party.
-6-
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
day and year first above written.
ABC RAIL PRODUCTS CORPORATION
By:_________________________________
Title:______________________________
ABC DECO INC.
By:_________________________________
Title:______________________________
AMERICAN SYSTEMS TECHNOLOGIES, INC.
By:_________________________________
Title:______________________________
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO, individually and as
Agent
By:_________________________________
Title:______________________________
-7-
BTM CAPITAL CORPORATION
By:_________________________________
Title:______________________________
LASALLE NATIONAL BANK
By:_________________________________
Title:______________________________
NATIONS BANK OF TEXAS, N.A.
By:_________________________________
Title:______________________________
MELLON BANK, N.A.
By:_________________________________
Title:______________________________
-8-