EXHIBIT 10.41
CONSENT AND AMENDMENT NO. 4
TO
LOAN AND SECURITY AGREEMENT
THIS CONSENT AND AMENDMENT NO. 4 (this "Amendment") is entered into as
of January 15, 2004, by and between EDAC TECHNOLOGIES CORPORATION, a Wisconsin
corporation ("Leading Borrower"), APEX MACHINE TOOL COMPANY, INC, a Connecticut
corporation ("Second Borrower") (Leading Borrower and Second Borrower being
collectively referred to as "Borrowers" and each a "Borrower") and GENERAL
ELECTRIC CAPITAL CORPORATION, a Delaware corporation ("Lender").
BACKGROUND
Borrowers, Gros-Ite and Lender are parties to a Loan and Security
Agreement, dated as of September 29, 2000 (as amended, restated, supplemented or
otherwise modified from time to time, the "Loan Agreement") pursuant to which
Lender provides Borrowers with certain financial accommodations.
Borrowers have requested that Lender amend the Loan Agreement and
Lender is willing to do so on the terms and conditions hereafter set forth.
NOW, THEREFORE, in consideration of any loan or advance or grant of
credit heretofore or hereafter made to or for the account of Borrowers by
Lender, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Definitions. All capitalized terms not otherwise defined
herein shall have the meanings given to them in the Loan Agreement.
2. Amendment to Loan Agreement. Subject to satisfaction of the
conditions precedent set forth in Section 4 below, the Loan Agreement is hereby
amended as follows:
(a) Schedule A is amended as follows:
(i) the following definitions are amended in
their entirety to provide as follows:
"Change of Control" means, (a) with respect to any
Person on or after the Closing Date, that any change
in the composition of such Person's stockholders as
of the Closing Date shall occur which would result in
any stockholder or group acquiring 49.9% or more of
any class of Stock of such Person, or that any Person
(or group of Persons acting in concert) shall
otherwise acquire, directly or indirectly (including
through Affiliates), the power to elect a majority of
the Board of Directors of such Person or otherwise
direct the management or affairs of such Person by
obtaining proxies, entering into voting agreements or
trusts, acquiring securities or otherwise or (b)
Dominic Pagano ceases to maintain the duties and
responsibilities maintained by him as of the
Amendment No. 4 Effective Date with respect to the
management of the Borrowers.
"Projected Budget" means the Projections and Budget
attached as Exhibit A to Amendment No. 4 as Exhibit
A.
(ii) the following defined terms and added in
their appropriate alphabetical order:
"Amendment No. 4" shall mean the Consent and
Amendment No. 4 to the Loan and Security Agreement
between Borrowers and Lender dated Amendment No. 4
Effective Date.
"Amendment No. 4 Effective Date" shall have the
meaning given to the term "Effective Date" in
Amendment No. 4.
(b) Section 5(b)(xi) is amended in its entirety to
provide as follows:
"(xi) additional Indebtedness for Purchase Money
Indebtedness incurred after the Closing Date in an
aggregate amount not to exceed $1,050,000 for all
Corporate Credit Parties combined and additional
Indebtedness for Capital Expenditures financed other
than through the Revolving Credit Loan incurred after
the Closing in an aggregate amount not to exceed
$1,050,000 for all Corporate Credit Parties combined
provided, that, the aggregate amount of all such
Indebtedness for Purchase Money Indebtedness and
Capital Expenditures shall not at any time
outstanding exceed $1,050,000 for all Corporate
Credit Parties combined;"
(c) Paragraph (1) of Schedule G is amended in its
entirety to provide as follows:
"1. Fixed Charge Coverage Ratio.
Leading Borrower and its Subsidiaries on a
consolidated basis shall have at the end of each
Fiscal Quarter (i) during the 2004 Fiscal Year, a
Fixed Charge Coverage Ratio of not less than ninety
percent (90%) of the projected Fixed Charge Coverage
Ratio set forth on the Projected Budget for the
Fiscal Quarter then ended and (ii) after the 2004
Fiscal Year, a Fixed Charge Coverage Ratio of not
less than 1.0 to 1.0 for the Fiscal Quarter then
ended."
(d) Paragraph 2 of Schedule G is amended in its entirety
to provide as follows:
"2. Capital Expenditures. Leading
Borrower and its Subsidiaries on a consolidated basis
shall not make aggregate Capital Expenditures, other
than Capital Expenditures financed through the
incurrence of Indebtedness (excluding Revolving
Credit Loan), in (a) the 2004 Fiscal Year in excess
of $750,000 (b) any other Fiscal Year in excess of
$250,000."
3. Consent. (a) Lender informed Borrowers pursuant to letters
from Lender to Borrowers dated June 4, 2002 and July 15, 2002, that in addition
to other reserves established by Lender in accordance with the terms of the Loan
Agreement, Lender was establishing reserves against Borrowing Availability in an
aggregate amount of $700,000 ("Reserve Amount"). Pursuant to the Forbearance and
Consent (the "Forbearance Agreement") dated as of November 26, 2002 by and among
Borrowers and Lender, Lender agreed to reduce the Reserve Amount to $550,000.
Lender also agreed that it would further reduce the Reserve Amount provided that
Borrowers comply with certain requirements set forth in Section 4.2(a) of the
Forbearance Agreement (the "Reserve Reduction Trigger Events"). Borrowers have
failed to comply with the Reserve Reduction Trigger Events. Notwithstanding
Borrowers' failure to comply with the Reserve Reduction Trigger Events,
Borrowers have requested that Lender reduce the Reserve Amount to $150,000.
Lender is agreeable to such request provided, that at the time of such reduction
no Default shall have occurred and be continuing.
(b) Borrowers have also requested that Lender consent to
the sale of the various pieces of equipment set forth on Exhibit B hereto (the
"Surplus Equipment") and agree to release its Liens on such Surplus Equipment.
Lender is agreeable to such request provided, that at the time of such release
(i) no Default shall have occurred and be continuing, (ii) the sale of any such
Surplus Equipment is on terms and conditions satisfactory to Lender and (iii)
the net cash proceeds of any sale of such Surplus Equipment shall be remitted to
Lender to be applied in accordance with Section 1.2(c) of the Loan Agreement.
4. Conditions of Effectiveness. This Amendment shall become
effective (the "Effective Date") upon satisfaction of the following conditions
precedent, each in form and substance satisfactory to Lender: (i) Lender's
receipt of four (4) copies of this Amendment executed by Borrowers and Lender
and consented and agreed to by Guarantor and (ii) Lender shall have received a
fee in the amount of $20,000
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and all attorney's fees of Lender in connection with this Amendment, each of
which shall be charged to Borrowers' loan account as a Revolving Credit Loan on
the date of this Amendment.
5. Representations and Warranties. Borrowers hereby represent and
warrant as follows:
(a) This Amendment and the Loan Agreement, as amended
hereby, constitute legal, valid and binding obligations of Borrowers and are
enforceable against Borrowers in accordance with their respective terms.
(b) Upon the effectiveness of this Amendment, Borrowers
hereby reaffirm all covenants, representations and warranties made in the Loan
Agreement to the extent the same are not amended hereby and agree that all such
covenants, representations and warranties shall be deemed to have been remade as
of the effective date of this Amendment.
(c) No Event of Default or Default has occurred and is
continuing or would exist after giving effect to this Amendment.
(d) Borrowers have no defense, counterclaim or offset
with respect to the Loan Agreement.
6. Effect on the Loan Agreement.
(a) Upon the effectiveness of Section 2 hereof, 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.
(b) Except as specifically amended herein, the Loan
Agreement, and all 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) The execution, delivery and effectiveness of this
Amendment shall not, except to the extent set forth herein, operate as a waiver
of any right, power or remedy of Lender, nor constitute a waiver of any
provision of the Loan Agreement, or any other documents, instruments or
agreements executed and/or delivered under or in connection therewith.
7. Governing Law. This Amendment shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns
and shall be governed by and construed in accordance with the laws of the State
of New York.
8. Headings. Section headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.
9. Counterparts; Facsimile. This Amendment may be executed by the
parties hereto in one or more counterparts, each of which shall be deemed an
original and all of which when taken together shall constitute one and the same
agreement. Any signature delivered by a party by facsimile transmission shall be
deemed to be an original signature hereto.
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IN WITNESS WHEREOF, this Amendment has been duly executed as of the day
and year first written above.
EDAC TECHNOLOGIES CORPORATION.
By: /s/ Glenn L. Purple
Name: Glenn L. Purple
Title: V.P. Finance
APEX MACHINE TOOL COMPANY, INC.
By: /s/ Glenn L. Purple
Name: Glenn L. Purple
Title: Secretary
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ James M. Cunningham
Name: James M. Cunningham
Duly Authorized Signatory
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CONSENT OF GUARANTOR
The undersigned as a guarantor of the Obligations of EDAC Technologies
Corporation and Apex Machine Tool Company, Inc. to Lender hereby consents to the
foregoing Amendment No. 4 and acknowledges that its guaranty agreement remains
in full force and effect.
GROS-ITE INDUSTRIES, INC.
By: /s/ Glenn L. Purple
Name: Glenn L. Purple
Title: Secretary
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