Exhibit 10.86

 

SECOND OMNIBUS AMENDMENT AGREEMENT

 

THIS SECOND OMNIBUS AMENDMENT AGREEMENT, dated as of March 13, 2009 (this
“Amendment”), is by and among BRAD FOOTE GEAR WORKS, INC. (f/k/a BFG Acquisition
Corp.), an Illinois corporation (the “Borrower”), 1309 SOUTH CICERO AVENUE, LLC,
a Delaware limited liability company (“1309”), 5100 NEVILLE ROAD, LLC, a
Delaware limited liability company (“5100” and, together with 1309, the
“Subsidiaries”) and BANK OF AMERICA, N.A., (f/k/a LaSalle Bank National
Association, f/k/a LaSalle National Bank, f/k/a LaSalle Bank N.I.) (the
“Lender”).

 

WHEREAS, the Borrower is party to (i) that certain Loan and Security Agreement,
dated as of January 17, 1997 (as amended to date, the “Loan Agreement”;
capitalized terms used herein, but not otherwise defined herein, shall have the
meanings given them in (or by reference in) the Loan Agreement ), by and between
the Borrower and the Lender, (ii) that certain Amended and Restated Renewal
Revolving Note, dated as of December 9, 2008 (as amended or otherwise modified
from time to time, the “Revolving Note”) in favor of the Lender, (iii) that
certain Consolidated Term Note, dated as of February 1, 2006 (as amended or
otherwise modified from time to time, the “Term Note”) in favor of the Lender,
(iv) that certain Amended and Restated Equipment Line Note, dated as of
November 10, 2006 (as amended or otherwise modified from time to time, the
“Equipment Note”) in favor of the Lender and (v) that certain Equipment Line
Note, dated as of June 30, 2007 (as amended or otherwise modified from time to
time, the “Equipment Note No. 2”) in favor of the Lender;

 

WHEREAS, the Subsidiaries are party to that certain Term Note, dated as of
January 31, 2008 (as amended or otherwise modified from time to time, the
“Subsidiary Note”) and the Borrower has guaranteed the obligations of the
Subsidiary Note pursuant to that certain Unconditional Guaranty, dated as of
January 31, 2008 (as amended or otherwise modified from time to time, the
“Subsidiary Guaranty”);

 

NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties hereto agree to amend the above referenced documents as follows:

 

SECTION 1.                                AMENDMENTS TO LOAN AGREEMENT. 
Effective as of the Amendment Effective Date (as hereinafter defined), the Loan
Agreement shall be amended as follows:

 

1.1                                 Section 1.1 of the Loan Agreement shall be
amended as follows:

 

(a)                                  The following definition of “Intercompany
Trade Payable” shall be added in the appropriate alphabetical order:

 

“Intercompany Trade Payable” shall mean any trade debt incurred in the ordinary
course of business owing by the Borrower to any Affiliate of the Borrower or by
any Affiliate of the Borrower to the Borrower.”

 

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(b)                                 The definition of “Intercompany Debt” shall
be amended by deleting the current definition and replacing the same in its
entirety as follows:

 

“Intercompany Debt” shall mean all indebtedness owed by the Borrower to
Affiliates.”

 

(c)                                  The definition of “Subordinated Debt” shall
be amended to delete the parenthetical therein in its entirety.

 

(d)                                 The definitions of “Borrowing Base”,
“Borrowing Base Certificate”, “Cash Flow Coverage”, “Cash Interest Expense”,
“Commitment Amount”, “Disbursement Date”, “Eligible Accounts”, “Eligible
Inventory”, “EBIT”, “Equipment Lease”, “Leased Equipment”, “Reserve”, “Reserve
Elimination Date”, “Seller/Bank Intercreditor Agreement”, “Seller Note”,
“Security Agreement-Leased Equipment”, “Tangible Net Worth” and “Termination
Date” and all references to such terms contained in the Loan Agreement shall be
deleted in their entireties.

 

1.2                                 Section 2.1 of the Loan Agreement shall be
amended and restated in its entirety to read as follows:

 

“Revolving Credit Commitment.  The Revolving Credit Commitment is terminated and
the Lender shall have no obligation to make additional Revolving Loans to the
Borrower and the Borrower shall not request additional Revolving Loans to be
made.”

 

1.3                                 Sections 2.2, 2.6, 2.6A, 2.6A.1, 2.7, 2.8,
2.9 (including the paragraphs appearing after the heading “2.9” and before
Section 3), 3.2, 13.2, 13.2A and 13.3 of the Loan Agreement shall be deleted in
their entirety and replaced with the following:

 

“[Intentionally Deleted]”.

 

1.4                                 Section 2.3 of the Loan Agreement shall be
amended and restated in its entirety to read as follows:

 

“THE REVOLVING LOAN SHALL BE EVIDENCED BY AN AMENDED AND RESTATED RENEWAL
REVOLVING NOTE, EXECUTED BY THE BORROWER, DATED DECEMBER 9, 2008 AND IN THE
PRINCIPAL SUM OF SEVEN MILLION AND 00/100 ($7,000,000.00) DOLLARS (TOGETHER WITH
ANY AND ALL EXTENSIONS, RENEWALS, AMENDMENTS, REFINANCINGS, MODIFICATIONS,
CONVERSIONS OR CONSOLIDATIONS THEREOF OR THERETO, HEREAFTER, THE “REVOLVING
NOTE”).  THE AGGREGATE UNPAID PRINCIPAL AMOUNT OF THE REVOLVING NOTE AS OF
MARCH 13, 2009, AFTER GIVING EFFECT TO THE PAYDOWN OF PRINCIPAL ON SUCH DATE, IS
$2,500,000.  THE REVOLVING NOTE SHALL BE PAYABLE TO THE ORDER OF THE LENDER IN
SUCCESSIVE MONTHLY INSTALLMENTS OF PRINCIPAL IN THE SUM OF $113,637.00, WHICH
SHALL BE DUE AND PAYABLE ON THE LAST BUSINESS DAY OF EACH MONTH COMMENCING
APRIL 2009.

 

Interest on the Revolving Note shall be payable at the times, in the manner, and
at the applicable rates set forth in the Revolving Note. Interest on the
Revolving Note shall be calculated on the basis of a 360-day year for the actual
number of days the principal is outstanding.  In addition, a late charge equal
to five percent (5%) of each late payment may be charged on any payment not
received by the Lender within five (5) calendar days

 

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after the payment due date, but acceptance of payment of this charge shall not
waive any Default or Event of Default.”

 

1.5                                 Section 3 of the Loan Agreement shall be
amended and restated in its entirety to read as follows:

 

“The Lender has previously made the following loans to Borrower:  (i) a
consolidated term loan in the principal sum of $6,096,791.00 evidenced by
Borrower’s amended and restated consolidated term note dated April 29, 2004 in
said principal sum, payable to the order of Lender in installments of principal
plus interest as therein described, and (ii) a $3,000,000.00 non-revolving
equipment line of credit loan with term conversion evidenced by Borrower’s
amended and restated equipment line note dated November 15, 2004 payable to the
order of Lender in installments of principal plus interest as therein described,
and (iii) a $1,500,000.00 non-revolving equipment line of credit loan with term
conversion evidenced by Borrower’s equipment line note dated June 15, 2005
payable to the order of Lender in installments of principal plus interest as
therein described.  Lender consolidated the outstanding principal balances of
such loans into one consolidated term loan in the amount of $7,899,332.98 and
extended such loan (hereafter, such consolidated and extended loan, together
with any and all extensions, renewals, amendments, refinancings, modifications,
conversions or consolidations thereof or thereto, hereafter called the “Term
Loan”).  The Term Loan is evidenced by a consolidated term note dated
February 1, 2006 executed by Borrower, in the principal sum of Seven Million
Eight Hundred Ninety Nine Thousand Three Hundred Thirty Two and 98/100
($7,899,332.98) Dollars (such note, together with any and all extensions,
renewals, amendments, refinancings, modifications, conversions or consolidations
thereof or thereto, hereafter called the (“Term Note”), payable to the order of
the Lender in successive monthly installments of principal in the sum of
$131,655.55 each, by a final payment of the entire unpaid principal balance and
accrued interest due on January 31, 2011.  Interest on the Term Note is payable
at the times, in the manner, and at the applicable rates set forth in the Term
Note.  Interest on the Term Note is calculated on the basis of a 360-day year
for the actual number of days the principal is outstanding.”

 

1.6                                 (a)  Section 3A of the Loan Agreement shall
be amended and restated in its entirety to read as follows:

 

“The Lender extended to the Borrower a non-revolving equipment line of credit
(such loan, together with any and all extensions, renewals, amendments,
refinancings, modifications, conversions or consolidations thereof or thereto,
the “Equipment Loan”). The Equipment Loan is evidenced by an amended and
restated equipment line note dated November 10, 2006 executed by Borrower, in
the principal sum of Eleven Million and 00/100 ($11,000,000.00) Dollars (such
note, together with any and all extensions, renewals, amendments, refinancings,
modifications, conversions or consolidations thereof or thereto, the “Equipment
Note”).  The Equipment Note is payable to the order of the Lender in
installments of principal and interest, calculated at the applicable rate set
forth in the Equipment Note, the terms of which are incorporated herein by
reference.”

 

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(b)                                 There shall be only one Section 3A of the
Loan Agreement to read as stated above, and any additional Section 3A that may
have been added by a prior amendment is hereby deleted in its entirety.

 

1.7                                 (a)  Section 3B of the Loan Agreement shall
be amended and restated in its entirety to read as follows:

 

“The Lender extended to the Borrower a non-revolving equipment line of credit
(such loan, together with any and all extensions, renewals, amendments,
refinancings, modifications, conversions or consolidations thereof or thereto,
the “Equipment Loan No. 2”). The Equipment Loan No. 2 is evidenced by an
equipment line note dated June 30, 2007 executed by Borrower, in the principal
sum of Nine Million and 00/100 ($9,000,000.00) Dollars (such note, together with
any and all extensions, renewals, amendments, refinancings, modifications,
conversions or consolidations thereof or thereto, the “Equipment Note No. 2”). 
The Equipment Note No. 2 is payable to the order of the Lender in installments
of principal and interest, calculated at the applicable rate set forth in the
Equipment Note No. 2, the terms of which are incorporated herein by reference.”

 

(b)                             There shall be only one Section 3B of the Loan
Agreement to read as stated above, and any additional Section 3B that may have
been added by a prior amendment is hereby deleted in its entirety.

 

1.8                                 Section 8.2 of the Loan Agreement shall be
amended and restated in its entirety to read as follows:

 

“Borrower shall keep accurate and complete records of its Accounts.  Borrower
shall deliver to Lender upon demand, the original copy of all documents,
including, without limitation, repayment histories, present status reports and
shipment reports, relating to the Accounts and such other matters and
information relating to the status of then existing Accounts as Lender shall
reasonably request.”

 

1.9                                 Section 8.3 of the Loan Agreement shall be
amended and restated in its entirety to read as follows:

 

“Borrower shall give Lender prompt written notice of any Accounts in excess of
Twenty-Five Thousand and no/100 ($25,000.000) Dollars which are in dispute
between any Account Debtor and Lender.”

 

1.10                           Section 9.4 of the Loan Agreement shall be
amended by deleting the first sentence thereof in its entirety.

 

1.11                           Section 10 of the Loan Agreement shall be amended
and restated in its entirety to read as follows:

 

“                                          As soon as available, but not later
than February 15 of each year, Borrower shall deliver to the Lender preliminary,
internally prepared, unaudited financial statements of Borrower and its
Subsidiaries, containing the balance sheet of the Borrower and its

 

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Subsidiaries as of the close of the prior fiscal year, statements of income and
retained earnings and a statement of cash flows for the prior fiscal year; and
such other comments and financial details as are usually included in similar
reports.  Such financial statements shall be in form and reporting basis
satisfactory to the Lender and be prepared in accordance with GAAP.

 

As soon as available, but not later than one hundred twenty (120) days after the
end of each fiscal year of Parent and its Subsidiaries (hereafter, collectively
“Broadwind”), Borrower shall deliver to the Lender annual financial statements
of Broadwind, consisting of audited consolidated balance sheets, statements of
income, cash flows and changes in shareholders’ equity and, unaudited
consolidating balance sheets and statements of income, setting forth in
comparative form the consolidated figures for the previous fiscal year; and such
other comments and financial details as are usually included in similar
reports.  Such financial statements shall (a) be prepared in accordance with
GAAP by an independent certified public accounting firm selected by the Borrower
and acceptable to the Lender (“Borrower’s Accounting Firm”) and (b) contain
unqualified opinions as to the fairness of the statements therein contained. 
Borrower shall also provide to the Lender any management letters that may
accompany such statements.

 

As soon as available, but not later than forty-five (45) days after the end of
each fiscal quarter, Borrower shall deliver to the Lender (i) internally
prepared quarterly financial statements of Borrower, in form and content
satisfactory to Lender, and (ii) a quarterly covenant compliance certificate, in
form and content satisfactory to Lender (including a certificate by the chief
executive or financial officer of Borrower containing a computation of, and
showing compliance with, each of the financial covenants contained in
Section 14.1 hereof).  The validity and accuracy of said financial statements
shall be certified by the chief executive or financial officer of the Borrower,
in a form satisfactory to the Lender.

 

As soon as available, not later than forty-five (45) days after the close of
each of the first three fiscal quarters of each fiscal year of Broadwind, the
Borrower shall deliver to the Lender a copy of the unaudited consolidated
balance sheet of Broadwind, as of the close of such quarter and the related
consolidated statements of income, cash flows and changes in shareholders’
equity for that portion of the fiscal year ending as of the close of such fiscal
quarter, all prepared in accordance with GAAP (subject to normal year-end
adjustments and except that footnote and schedule disclosure may be
abbreviated)  accompanied by the certification of the chief executive or
financial officer of Broadwind that all such financial statements are complete
and correct in all material respects and present fairly in accordance with GAAP
(subject to normal year-end adjustments and except that footnote and schedule
disclosure may be abbreviated) of Broadwind as at the end of such fiscal
quarter.

 

As soon as available, but not later than fifteen (15) days after the end of each
calendar month, Borrower shall deliver to the Lender (i) a monthly accounts
receivable aging and a monthly accounts payable aging and (ii) internally
prepared monthly financial statements of Borrower and Parent, in form and
content satisfactory to Lender,

 

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which monthly statements shall include an income statement, balance sheet and
cash flow statement.  The validity and accuracy of said financial statements
shall be certified by the chief executive or financial officer of the Borrower,
in a form satisfactory to the Lender.

 

As soon as available, but not later than the second (2nd) Business Day of each
calendar week, Borrower shall deliver to the Lender a rolling 13-week cash flow
forecast beginning with such week, that shall detail all sources and uses of
cash on a weekly basis, shall report any variances from such report delivered in
the prior week and shall report a comparison of actual cash flow versus the
forecast in the prior week.

 

As soon as available, but not later than the second (2nd) Business Day after the
end of every calendar quarter, Borrower shall deliver to the Lender an updated
Schedule 10.1 setting forth the identified material accounting weaknesses of the
Borrower and the Parent, including necessary steps to correct such issues, the
timeframe to correct such issues and the Person responsible for each corrective
step to correct such issues indicating the current status of the items listed
thereon.

 

As soon as available, but not later than November 30 of each year, Borrower
shall deliver to the Lender a business plan and projected annual budget for the
following fiscal year, in each case in form and substance satisfactory to the
Lender.

 

Borrower shall also promptly provide the Lender with such other information,
financial or otherwise, concerning the Borrower or Parent, as the Lender may
reasonably request from time to time.

 

The Lender shall make any and all audits and investigations which it deems
reasonably necessary in connection with the Collateral.  For the purposes of
this Agreement, the Lender shall have free and ready access at all times during
normal business hours, upon reasonable advance oral or written notice (unless in
the Lender’s reasonable judgment a rapid deterioration or loss to any Collateral
is threatened, in which case no notice shall be given and access shall not be
limited to normal business hours), to the books of account, records, papers and
documents of Borrower.  Without limiting the generality of the foregoing, the
Lender shall be entitled to conduct (i) two (2) annual field audits of the
Borrower, (ii) one (1) annual equipment appraisal, (iii) one (1) annual real
estate appraisal per Real Property or (iv) in each case, more frequent audits if
deemed reasonably necessary by the Lender under the circumstances then existing,
including, without limitation, at any time prior to the payment in full of all
Indebtedness.  The Borrower shall reimburse the Lender for all reasonable costs
and expenses incurred by Lender for such audits and, during the continuation of
an Event of Default, there shall be no limit on the number of audits or
appraisals.”

 

1.12                           Section 13.1(g) of the Loan Agreement shall be
amended and restated in its entirety to read as follows:

 

“No financing statement covering the Collateral or any part thereof, is on file
in any public office (other than financing statements in favor of Lender and
financing statements filed in connection with Permitted Liens).  The security
interest in the

 

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Collateral granted by Borrower to Lender is valid and enforceable and
constitutes a first priority security interest therein subject to permitted
Liens.  The security interest in the Pledged Stock granted by the Parent to
Lender is valid and enforceable and constitutes a first priority security
interest therein; and”

 

1.13                           Section 14.1 of the Loan Agreement shall be
amended and restated in its entirety to read as follows:

 

“Borrower covenants to Lender and agrees that so long as any Indebtedness shall
remain unpaid:

 

(a)                              No Distributions.  Borrower will make no
distributions or dividends of any kind, including without limitation, any loans
or advances to employees or officers, except as expressly permitted by
Section 14.3(i) hereof.

 

(b)                                 Limitation on Intercompany Debt and
Intercompany Trade Payables.

 

(i)                                     All Intercompany Debt as of March 13,
2009 is set forth on Part 1 of Schedule 14.1(b) hereto.  Upon the incurrence of
any additional Intercompany Debt, the Borrower shall promptly, and in any event
within five (5) Business Days provide an updated Schedule 14.1(b).  All
Intercompany Debt shall be (A) subordinated to all present and future
Indebtedness owed by the Borrower and/or the Guarantors to Lender in a manner
satisfactory to the Lender and (B) evidenced by a promissory note or other
instrument.

 

(ii)                              All Intercompany Trade Payables as of
February 28, 2009 are set forth on Part 2 of Schedule 14.1(b) hereto.  At no
time shall the aggregate amount of outstanding Intercompany Trade Payables
exceed $350,000 (without giving any effect to offset).

 

(c)                                  Subordinated Debt Payments.  Borrower will
not make any payments on Subordinated Debt or on Intercompany Debt, other than
non-cash payments of interest booked as capitalized interest by the Parent and
Borrower in respect of the Intercompany Debt owed to the Parent.

 

(d)                                 Senior Debt to EBITDA.  As of the end of
each fiscal quarter set forth below, the Borrower shall maintain a ratio of
Senior Debt to trailing twelve (12) month EBITDA of not greater than the ratio
set forth below across from such period:

 

Period

 

Maximum Ratio

 

 

 

fiscal quarter ended March 31, 2009

 

3.0 to 1.0

 

 

 

fiscal quarter ended June 30, 2009

 

3.9 to 1.0

 

 

 

fiscal quarter ended September 30, 2009 and each fiscal quarter thereafter

 

3.0 to 1.0

 

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(e)                                    Cash Flow Coverage.  As of the end of
each fiscal quarter set forth below, the Borrower shall maintain a Cash Flow
Coverage of not less than the ratio set forth below across from such period:

 

Period

 

Minimum Ratio

 

 

 

fiscal quarter ended March 31, 2009

 

1.25 to 1.0

 

 

 

fiscal quarter ended June 30, 2009

 

1.05 to 1.0

 

 

 

fiscal quarter ended September 30, 2009 and each fiscal quarter thereafter

 

1.25 to 1.0

 

(f)                                Minimum EBITDA.  As of the end of each
calendar month set forth below, the Borrower shall maintain a minimum cumulative
EBITDA commencing January 1 of each calendar year and ending on the last day of
such calendar month of not less than the amount set forth below across from such
month in any such calendar year.

 

Period

 

Minimum EBITDA

 

 

 

 

 

January

 

$

1,046,000

 

 

 

 

 

February

 

$

1,838,000

 

 

 

 

 

March

 

$

2,571,000

 

 

 

 

 

April

 

$

2,340,000

 

 

 

 

 

May

 

$

3,312,000

 

 

 

 

 

June

 

$

4,099,000

 

 

 

 

 

July

 

$

4,940,000

 

 

 

 

 

August

 

$

5,878,000

 

 

 

 

 

September

 

$

6,982,000

 

 

 

 

 

October

 

$

8,044,000

 

 

 

 

 

November

 

$

8,835,000

 

 

 

 

 

December

 

$

9,919,000

 

 

(g)                                 [Intentionally deleted.]

 

(h)                                 Capital Expenditure.  Borrower shall not
make any Capital Expenditures, except with respect to (i) the Hofler Agreement,
(ii) those Capital Expenditures set forth on Schedule 14.1(h) hereto and
(iii) those made with equity contributions from the Parent.

 

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The following definitions shall have the following meanings, including for
purposes of the foregoing financial covenants:

 

“Affiliate” of any Person shall mean (a) any other Person which, directly or
indirectly, controls or is controlled by or is under common control with such
Person (b) any officer or director of such Person, and (c) with respect to the
Lender, any entity administered or managed by the Lender, or an Affiliate or
investment advisor thereof and which is engaged in making, purchasing, holding
or otherwise investing in commercial loans.  A Person shall be deemed to be
“controlled by” any other Person if such Person possesses, directly or
indirectly, power to direct or cause the direction of the management and
policies of such Person whether by contract, ownership of voting securities,
membership interests or otherwise.  The term “Affiliate” shall include, without
limitation, the Borrower’s parent company.

 

“Capital Expenditures” shall mean all expenditures (including capitalized lease
obligations) which, in accordance with GAAP, would be required to be capitalized
and shown on the consolidated balance sheet of the Borrower, but excluding
expenditures made in connection with the replacement, substitution or
restoration of assets to the extent financed (i) from insurance proceeds (or
other similar recoveries) paid on account of the loss of or damage to the assets
being replaced or restored or (ii) with awards of compensation arising from the
taking by eminent domain or condemnation of the assets being replaced.

 

“Cash Flow Coverage” shall mean for any fiscal quarter (i) during calendar year
2009, the product of (A) cumulative EBITDA on a year to date basis as of the end
of such fiscal quarter over (B) all scheduled payments of principal and interest
on a year to date basis (excluding non-cash capitalized interest) as of the end
of such fiscal quarter and (ii) during calendar year 2010 and thereafter, the
product of trailing twelve (12) month EBITDA as of the end of such fiscal
quarter over all scheduled payments of principal and interest on a trailing
twelve (12) month basis (excluding non-cash capitalized interest) as of the end
of such fiscal quarter; provided, however, that the paydown of principal of the
Revolving Loan in connection with the Second Omnibus Amendment, dated as of
March 13, 2009, shall not be counted for purposes of clauses (i)(B) or
(ii)(B) above.

 

“Debt” shall mean, as to any Person, without duplication, (a) all indebtedness
of such Person; (b) all borrowed money of such Person (including principal,
interest, fees and charges), whether or not evidenced by bonds, debentures,
notes or similar instruments; (c) all obligations to pay the deferred purchase
price of property or services; (d) all obligations, contingent or otherwise,
with respect to the maximum face amount of all letters of credit (whether or not
drawn), bankers’ acceptances and similar obligations issued for the account of
such Person, and all unpaid drawings in respect of such letters of credit,
bankers’ acceptances and similar obligations; (e) all indebtedness secured by
any lien on any property owned by such Person, whether or not such indebtedness
has been assumed by such Person (provided, however, if such Person has not
assumed or otherwise become liable in respect of such indebtedness, such
indebtedness shall be deemed to be in an amount equal to the fair market value
of the property subject to such

 

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lien at the time of determination); (f) the aggregate amount of all capitalized
lease obligations of such Person; (g) all contingent liabilities of such Person,
whether or not reflected on its balance sheet; (h) all hedging obligations of
such Person; (i) all Debt of any partnership of which such Person is a general
partner; and (j) all monetary obligations of such Person under (i) a so-called
synthetic, off-balance sheet or tax retention lease, or (ii) an agreement for
the use or possession of property creating obligations that do not appear on the
balance sheet of such Person but which, upon the insolvency or bankruptcy of
such Person, would be characterized as the indebtedness of such Person (without
regard to accounting treatment).  Notwithstanding the foregoing, Debt shall not
include trade payables and accrued expenses incurred by such Person in
accordance with customary practices and in the ordinary course of business of
such Person.

 

“Depreciation” shall mean the total amounts added to depreciation, amortization,
obsolescence, valuation and other proper reserves, as reflected on the
Borrower’s financial statements and determined in accordance with GAAP.

 

“EBITDA” shall mean, for any period, (a) the sum for such period of:  (i) Net
Income, plus (ii) Interest Charges, plus (iii) federal and state income taxes
(including the Illinois replacement tax), plus (iv) Depreciation and
amortization expense, plus (v) non-cash management compensation expense, plus
(vi) all other non-cash charges, minus (b) the sum for such period of
(i) Unfinanced Capital Expenditures and (ii) income or loss attributable to
equity in any Affiliate or Subsidiary, in each case to the extent included in
determining Net Income for such period.

 

“Interest Charges” shall mean, for any period, the sum of:  (a) all interest,
charges and related expenses payable with respect to that fiscal period to a
lender in connection with borrowed money or the deferred purchase price of
assets that are treated as interest in accordance with GAAP, plus (b) the
portion of capitalized lease obligations with respect to that fiscal period that
should be treated as interest in accordance with GAAP, plus (c) all charges paid
or payable (without duplication) during that period with respect to any hedging
agreements.

 

“Net Income” shall mean, with respect to the Borrower for any period, the net
income (or loss) of the Borrower for such period as determined in accordance
with GAAP, excluding any extraordinary gains and any gains from discontinued
operations.

 

“Senior Debt” shall mean all Debt of the Borrower excluding Subordinated Debt.

 

“Unfinanced Capital Expenditures” shall mean all Capital Expenditures that are
financed solely from working capital of the Borrower and are not otherwise
financed in whole or in part by any third party; notwithstanding the generality
of the foregoing, for clarification, “Unfinanced Capital Expenditures” shall not
include any Capital Expenditures financed directly by the Parent or with the
proceeds of Intercompany Debt owed to the Parent or other equity contributions
from the Parent.”

 

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The financial covenants set forth hereinabove shall be computed on a
consolidated basis in accordance with GAAP.”

 

1.14                           Section 14.2 of the Loan Agreement shall be
amended by adding the following as a new clause (aa) thereto:

 

“(aa)  The Borrower shall continue to retain the High Ridge Partners or another
consultant reasonably acceptable to the Lender.”

 

1.15                           Section 14 of the Loan Agreement shall be amended
by adding the following as a new Section 14.4:

 

“The Borrower shall pay to the Lender an extension fee, which shall be fully
earned on March 13, 2009, on the dates set forth below in the amount set forth
from below across from such date:

 

Due Date

 

Installment Amount

 

 

 

 

 

April 30, 2009

 

$

5,000

 

 

 

 

 

May 31, 2009

 

$

5,000

 

 

 

 

 

June 30, 2009

 

$

5,000

 

 

 

 

 

July 31, 2009

 

$

5,000

 

 

 

 

 

August 31, 2009

 

$

20,000

 

 

 

 

 

September 30, 2009

 

$

20,000

 

 

 

 

 

October 31, 2009

 

$

20,000

 

 

 

 

 

November 30, 2009

 

$

20,000

 

 

 

 

 

December 31, 2009

 

$

20,000

”

 

1.16                           Exhibit A to the Loan Agreement is hereby deleted
in its entirety.

 

1.17                           Schedule 14.1(b) to this Amendment shall be added
to the Loan Agreement as Schedule 14.1(b) thereto.

 

1.18                           Schedule 14.1(h) to this Amendment shall be added
to the Loan Agreement as Schedule 14.1(h) thereto.

 

SECTION 2.                                AMENDMENTS TO NOTES.

 

2.1                                 Notwithstanding any other provision of any
of the Notes to the contrary, the Borrower may not select to have the Notes bear
interest at a fixed rate.

 

2.2                                 Notwithstanding any other provision of any
of the Notes to the contrary, the Notes shall bear interest at a rate equal to
the greater of (A) LIBOR plus five percent (5%) and (ii) six percent (6%);
provided, that for the purposes of clause (ii) above, “LIBOR” shall be defined
as

 

11

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the rate per annum equal to the British Bankers Association LIBOR Rate (“BBA
LIBOR”), as published by Reuters (or other commercially available source
providing quotations of BBA LIBOR as designated by the Lender from time to time)
at approximately 11:00 a.m., London time, two (2) Business Days prior to the
commencement of such Interest Period, for U.S. dollar deposits in an amount
comparable to the relevant Loan (for delivery on the first day of such Interest
Period) with a term equivalent to such Interest Period.

 

2.3                                 Notwithstanding any other provision of any
of the Notes or the Loan Agreement to the contrary, the Borrower shall not incur
and the Lender shall not charge any prepayment penalty.

 

2.4                                 Notwithstanding any other provision of the
Revolving Note or the Loan Agreement to the contrary, the “Maturity Date” (as
such term is defined in the Revolving Note) shall be January 15, 2011.

 

2.5                                 Notwithstanding any other provision of the
Equipment Note or the Loan Agreement to the contrary, the “Maturity Date” (as
such term is defined in the Equipment Note) shall be December 31, 2011.

 

2.6                                 Notwithstanding any other provision of the
Equipment Note No. 2 or the Loan Agreement to the contrary, the “Maturity Date”
(as such term is defined in the Equipment Note No. 2) shall be December 31, 2011

 

SECTION 3.                                AMENDMENTS TO SUBSIDIARY NOTE.

 

3.1                                 Notwithstanding any other provision of the
Subsidiary Note to the contrary, the Subsidiary Note shall bear interest at a
rate equal to the greater of (A) LIBOR plus five percent (5%) and (ii) six
percent (6%); provided, that for the purposes of clause (ii) above, “LIBOR”
shall be defined as the rate per annum equal to the British Bankers Association
LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other commercially
available source providing quotations of BBA LIBOR as designated by the Lender
from time to time) at approximately 11:00 a.m., London time, two (2) Business
Days prior to the commencement of such Interest Period, for U.S. dollar deposits
in an amount comparable to the relevant Loan (for delivery on the first day of
such Interest Period) with a term equivalent to such Interest Period.

 

3.2                                 Notwithstanding any other provision of the
Subsidiary Note or the Loan Agreement to the contrary, the “Maturity Date” (as
such term is defined in the Subsidiary Note) shall be December 31, 2011.

 

SECTION 4.                                WAIVER.  The Lender hereby waives the
Borrower’s violation of the financial covenants set forth in Sections
14.1(f) solely for the period ending December 31, 2008 and only to the extent
that the Borrower had a minimum EBITDA of $9,500,000 for the twelve (12) months
ending on such date; provided, however, such waiver is limited solely to such
specific covenant violations for such periods and shall not waive, suspend or
effect any other default by Borrower under the Loan Agreement, and the Lender
expressly reserves all of its rights with respect to any such other default(s).

 

12

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SECTION 5.                                CONDITIONS PRECEDENT.  This Amendment
shall become effective on the date (the “Amendment Effective Date”) when the
Lender shall have received the following:

 

5.1                                 Amendment.  This Amendment, duly executed by
the parties hereto.

 

5.2                                 Resolutions.  A copy of the resolutions, in
form and substance satisfactory to the Lender, of the Borrower and each
Guarantor, as applicable, authorizing (i) the execution, delivery and
performance of this Amendment, the Subsidiary Loan Documents and the other Loan
Documents to which it is a party and (ii) the transactions contemplated under
this Amendment, the Subsidiary Loan Documents and the other Loan Documents.

 

5.3                                 Organizational Documents.  A certificate of
the secretary or assistant secretary of the Borrower and each Guarantor
certifying that all of the organizational documents of the Borrower and each
Guarantor remain in full force and effect on the Amendment Effective Date in
form and substance as previously delivered to the Lender on January 15, 2009,
without modification or supplement of any kind.

 

5.4                                 Incumbency.  A certificate of the secretary
or assistant secretary of the Borrower and each Guarantor, certifying the names
and true signatures of the officers authorized to sign this Amendment and the
Reaffirmation.

 

5.5                                 Paydown.  Payment of a paydown of the
principal of the Revolving Loan in an amount equal to $1,500,000, in immediately
available funds, which shall not be available for re-borrowing; provided, that
$500,000 of the paydown shall come as proceeds of new Intercompany Debt from
Parent, on terms and conditions reasonably satisfactory to the Lender.

 

5.6                                 Reaffirmation.  A Reaffirmation,
substantially in the form attached hereto as Exhibit A hereto, executed by the
Parent, 1309 and 5100.

 

SECTION 6.                                REPRESENTATIONS AND WARRANTIES.  To
induce the Lender to enter into this Amendment, the Borrower and each Guarantor
hereby represents and warrants to the Lender as follows:

 

6.1                                 Due Authorization, Non-Contravention, etc. 
The execution, delivery and performance by the Borrower and each Guarantor of
this Amendment are within such party’s corporate or company powers, as
applicable, have been duly authorized by all necessary corporate or company
action, as applicable, and do not

 

(a)                                  contravene such party’s organizational
documents;

 

(b)                                 contravene any contractual restriction, law
or governmental regulation or court decree or order binding on or affecting such
party; or

 

(c)                                  result in, or require the creation or
imposition of, any Lien on any of the Borrower’s or any Guarantors’ properties,
other than the Permitted Liens.

 

13

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6.2                                 Government Approval, Regulation, etc.  No
authorization or approval or other action by, and no notice to or filing with,
any governmental authority or regulatory body or other Person is required for
the due execution, delivery or performance by the Borrower of this Amendment.

 

6.3                                 Validity, etc.  This Amendment constitutes
the legal, valid and binding obligation of the Borrower and each Guarantor
enforceable in accordance with its terms.

 

6.4                                 Event of Default.  No Event of Default shall
occur as a result of, or after giving effect to, this Amendment.

 

6.5                                 Acknowledgements.  The Borrower and each of
the Guarantors acknowledge that the amount of principal owing with respect to
the Indebtedness arising under the Loan Agreement, the Subsidiary Loan Documents
or the other Loan Documents as of date of this Agreement, after giving effect to
the $1,500,000 paydown of principal of the Revolving Loan pursuant to
Section 5.7 hereof, is $21,961,942.21.  Notwithstanding anything to the contrary
in the Notes, the Subsidiary Notes, the Loan Agreement, the Loan Documents or
the Subsidiary Loan Documents, the monthly required principal payment owing
under each of the Notes and the Subsidiary Notes shall be as follows:

 

Note

 

Required Monthly Principal Payment

 

 

 

 

 

Revolving Note

 

$

113,637.00

 

 

 

 

 

Term Note

 

$

131,655.55

 

 

 

 

 

Equipment Note

 

$

183,333.33

 

 

 

 

 

Equipment Note No. 2

 

$

147,958.00

 

 

 

 

 

Subsidiary Note

 

$

34,583.22

 

 

Such monthly principal payments will be made on the last Business Day of each
month.  Any principal amount outstanding on the Maturity Date of any Note shall
be due and payable on such Maturity Date.

 

Without in any manner limiting the generality of the release set forth in
Section 7.4 hereof, the Borrower and the Guarantors hereby represent, warrant,
covenant and agree that there exist no offsets, counterclaims or defenses to
payment or performance of the obligations set forth in the Loan Agreement, the
Subsidiary Loan Documents or the other Loan Documents and, in consideration
hereof, expressly waive any and all such offsets, counterclaims and defenses
arising out of any alleged acts, transactions or omissions on the part of the
Lender arising (or otherwise relating to the period) on or prior to the
Amendment Effective Date.

 

SECTION 7.                                MISCELLANEOUS.

 

7.1                                 Continuing Effectiveness, etc.  This
Amendment shall be deemed to be an amendment to the Loan Agreement, the
Subsidiary Loan Documents and the other Loan Documents, each of which shall
remain in full force and effect and is hereby ratified, approved and confirmed
in each and every respect.  After the effectiveness of this Amendment in

 

14

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accordance with its terms, all references to the Loan Agreement, the Subsidiary
Loan Documents and each Loan Document in the Loan Documents or the Subsidiary
Loan Documents or in any other document, instrument, agreement or writing shall
be deemed to refer to the Loan Agreement or such other Loan Document or
Subsidiary Loan Document as amended hereby.

 

7.2                                 Payment of Costs and Expenses.  The Borrower
agrees to pay on demand all expenses of the Lender (including the fees and
out-of-pocket expenses of counsel to the Lender) in connection with the
drafting, negotiation, execution, delivery and effectiveness of this Amendment.

 

7.3                                 Mayer Brown Expenses.  Without limiting the
generality of Section 7.2, the Borrower agrees to pay, within five (5) Business
Days of receipt of an invoice, the fees and expenses of Mayer Brown LLP, counsel
to the Lender, incurred in connection with the representation of the Lender in
this matter.

 

7.4                                 General Credit Agreement Compliance.  All
provisions of the Loan Agreement, the Subsidiary Loan Documents and the other
Loan Documents (as expressly amended in Sections 1, 2 and 3) shall continue in
full force and effect in accordance with the provisions thereof and the Borrower
and the Guarantors reaffirm all their agreements under the Loan Agreement, the
Subsidiary Loan Documents and the other Loan Documents.  The Borrower and the
Guarantors shall comply with the provisions of their respective Loan Documents
and Subsidiary Loan Documents, including, without limitation, the timely payment
of all scheduled principal and interest payments.

 

7.5                                 Release and Covenant Not to Sue.  In
consideration of the agreements and understandings in this Agreement, the
Borrower and each Guarantor jointly and severally, for itself and on behalf of
the Borrower’s Derivative/Successor Persons, hereby knowingly and voluntarily,
unconditionally and irrevocably, absolutely, finally and forever releases,
acquits and discharges each Lender Released Party from any Claim relating in any
manner whatsoever to any of the Loan Documents, including any transaction
contemplated thereby or undertaken in connection therewith, or otherwise to the
Borrower’s or Guarantors’ credit relationship with the Lender, which relates or
may relate in any manner whatsoever to any facts, known or unknown, in existence
on or at any time prior to the Amendment Effective Date (each a
“Borrower-Related Claim”).

 

The Borrower and each Guarantor hereby knowingly and voluntarily,
unconditionally and irrevocably, absolutely finally and forever covenants that
it shall refrain, and further shall direct any Derivative/Successor Person to
refrain, from commencing or otherwise prosecuting any action, suit or other
proceeding of any kind, nature, character, or description, including in law or
in equity, against any Lender Released Party on account of any Borrower-Related
Claim.  Each Lender Released Party shall be entitled to enforce this covenant
through specific performance.  In addition to any other liability which shall
accrue upon the breach of this covenant, the breaching party (including, any
Derivative/Successor Person of the Borrower or any Guarantor that commences or
prosecutes any such action, suit or other proceeding) shall be liable to such
Lender Released Party for all reasonable attorneys’ fees and costs incurred by
such party in the defense of any such action, suit or other proceeding.

 

15

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The following terms shall have the following definitions when used in this
Section 7.5:

 

“Claims” shall mean, with respect to the Borrower and/or any Guarantor, any and
all claims, counterclaims, actions, causes of action (including, any relating in
any manner to any existing litigation or investigation), suits, obligations,
controversies, defenses, debts, liens, contracts, agreements, covenants,
promises, liabilities, damages, penalties, demands, threats, compensation,
losses, costs, judgments, orders, interest, fee, or expense (including
attorneys’ fees and expenses) or other similar items of any kind, type, nature,
character or description, including, whether in law, equity or otherwise,
whether now known or unknown, whether in contract or in tort, whether choate or
inchoate, whether contingent or vested, whether liquidated or unliquidated,
whether fixed or unfixed, whether matured or unmatured, whether suspected or
unsuspected, and whether or not concealed, sealed or hidden, of any of the
Borrowers and/or which may be asserted by the Borrower and/or any Guarantor,
through the Borrower and/or any Guarantor or otherwise on the behalf of the
Borrower and/or any Guarantor (including those which may be asserted on any
derivative basis), which have existed at any time on or prior to the date
hereof.

 

“Derivative/Successor Person” shall mean, with respect to the Borrower or any
Guarantor, any person or other entity (including any former, current, or future
employee, officer, agent, attorney, board member, shareholder, parent,
subsidiary, partnership, joint venture, other affiliate, spouse, relative, heir,
beneficiary, legal representative, creditor, successor or assign) that may
assert or may attempt to assert any Claim by or otherwise belonging to the
Borrower or any such Guarantor, through the Borrower or such Guarantor or
otherwise on behalf of the Borrower or such Guarantor (including on any
derivative basis).

 

“Lender Released Parties” shall mean the Lender and each of its former, current,
and future subsidiaries, parents, partnerships, joint ventures, other
affiliates, officers, directors, employees, attorneys, agents (including
consultants), assigns, heirs, executors, administrators, predecessors,
successors and assigns.

 

7.6                                 Severability.  Any provision of this
Amendment which is prohibited or unenforceable in any jurisdiction shall, as to
such provision and such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions of
this Amendment or affecting the validity or enforceability of such provision in
any other jurisdiction.

 

7.7                                 Headings.  The various headings of this
Amendment are inserted for convenience only and shall not affect the meaning or
interpretation of this Amendment or any provisions hereof.

 

7.8                                 Execution in Counterparts.  This Amendment
may be executed by the parties hereto in several counterparts, each of which
shall be deemed to be an original and all of which shall constitute together but
one and the same agreement.

 

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7.9                                 Governing Law.  THIS AMENDMENT SHALL BE
DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF ILLINOIS (INCLUDING 735 ILCS SECTION 105/5-5), BUT OTHERWISE WITHOUT
GIVING EFFECT TO ANY OF SUCH STATE’S CONFLICTS-OF-LAW PROVISIONS.

 

7.10                           Successors and Assigns.  This Amendment shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns.

 

17

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IN WITNESS WHEREOF, the undersigned have duly executed this Omnibus Amendment
Agreement as of the date first set forth above.

 

 

BRAD FOOTE GEAR WORKS, INC.

 

 

 

 

 

By:

 /s/  Ralph Placzek

 

Name:

  Ralph Placzek

 

Title:

   VP-Finance and Treasurer

 

 

 

 

 

1309 SOUTH CICERO AVENUE, LLC

 

 

 

 

 

By:

 /s/  Ralph Placzek

 

Name:

  Ralph Placzek

 

Title:

   Authorized Signatory

 

 

 

 

 

5100 NEVILLE ROAD, LLC

 

 

 

 

 

By:

 /s/  Ralph Placzek

 

Name:

  Ralph Placzek

 

Title:

   Authorized Signatory

 

Omnibus Amendment Signature Page

 

S-1

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BANK OF AMERICA, N.A., as Lender

 

 

 

By:

 /s/  Sandra H. Bennett

 

Name:

  Sandra H. Bennett

 

Title:

   Senior Vice President

 

Omnibus Amendment Signature Page

 

S-2

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