**Exhibit 10.2**

 

THIRTY-FIFTH AMENDMENT AND WAIVER TO LOAN AND SECURITY AGREEMENT

 

THIS THIRTY-FIFTH AMENDMENTAND WAIVER TO LOAN AND SECURITY AGREEMENT, dated as of May 8, 2009 (this “Amendment”),is by and between BRAD FOOTE GEAR WORKS, INC. (f/k/a BFG Acquisition Corp.), anIllinois corporation (the “Borrower”) and BANK OF AMERICA, N.A., (f/k/aLaSalle Bank National Association, f/k/a LaSalle National Bank, f/k/a LaSalleBank N.I.) (the “Lender”).

 

WHEREAS, the Borrower andthe Lender are party to that certain Loan and Security Agreement, dated as of January 17,1997 (as amended to date, the “Loan Agreement”; capitalized terms usedherein, but not otherwise defined herein, shall have the meanings given them in(or by reference in) the Loan Agreement);

 

NOW, THEREFORE, inconsideration of the premises and for other good and valuable consideration(the receipt and sufficiency of which are hereby acknowledged), the partieshereto agree to amend the Loan Agreement as follows:

 

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

 

1.1                                 The fifth paragraph of Section 10 ofthe Loan Agreement shall be amended and restated in its entirety to read asfollows:

 

“As soon as available, butnot later than (i) fifteen (15) days after the end of each calendar monthother than March, June, September and December and (ii) twenty-five(25) days after the end of each of the calendar months of March, June, September andDecember, Borrower shall deliver to the Lender (i) a monthly accountsreceivable aging and a monthly accounts payable aging and (ii) internallyprepared monthly financial statements of Borrower and Parent, in form andcontent satisfactory to Lender, which monthly statements shall include anincome statement, balance sheet and cash flow statement for the most recentlyended calendar month and on a year to date basis, and shall show a comparisonfor such calendar month and on a year to date basis versus the same period ofthe prior calendar year.  The validityand accuracy of such financial statements shall be certified by the chiefexecutive or financial officer of the Borrower or Parent, as applicable, in aform satisfactory to the Lender.”

 

1.2                                 Sections 14.1(d) through (f) ofthe Loan Agreement shall be amended and restated in their entirety to read asfollows:

 

“(d)                           Senior Debt toEBITDA.  As of the end of each fiscalquarter set forth below, the Borrower shall maintain a ratio of Senior Debt totrailing twelve (12) month EBITDA of not greater than the ratio set forth belowacross from such period:

 
| **Period**                               | ** ** | **Maximum  Ratio** | ** ** |
|------------------------------------------|------------|--------------------|------------|
| ** **                               | ** ** | ** **         | ** ** |
| fiscal quarter ended March 31, 2009 |       | 3.4 to 1.0         |       |
|                                     |       |               |       |
| fiscal quarter ended June 30, 2009  |       | 8.4 to 1.0         |       |

 

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| fiscal quarter ended September 30, 2009                                    |   | 3.4 to 1.0 |   |
|---------------------------------------------------------------------------------|--------|------------|--------|
|                                                                            |   |       |   |
| fiscal quarter ended December 31, 2009 and each fiscal quarter  thereafter |   | 3.0 to 1.0 |   |

 

(e)                                  Cash FlowCoverage.  As of theend of each fiscal quarter set forth below, the Borrower shall maintain a CashFlow Coverage of not less than the ratio set forth below across from suchperiod; provided, however, that this covenant shall not bemeasured for the fiscal quarter ended June 30, 2009:

 
| **Period**                                                                   | ** ** | **Minimum Ratio** | ** ** |
|------------------------------------------------------------------------------|------------|-------------------|------------|
| ** **                                                                   | ** ** | ** **        | ** ** |
| fiscal quarter ended March 31, 2009                                     |       | 0.35 to 1.0       |       |
|                                                                         |       |              |       |
| fiscal quarter ended June 30, 2009                                      |       | N/A               |       |
|                                                                         |       |              |       |
| fiscal quarter ended September 30, 2009                                 |       | 0.80 to 1.0       |       |
|                                                                         |       |              |       |
| fiscal quarter ended December 31, 2009                                  |       | 1.10 to 1.0       |       |
|                                                                         |       |              |       |
| fiscal quarter ended March 31, 2010 and each fiscal quarter  thereafter |       | 1.25 to 1.0       |       |

 

(f)                                    Minimum EBITDA.  As of the end of each calendar month setforth below, the Borrower shall maintain a minimum cumulative EBITDA commencingJanuary 1 of the applicable calendar year and ending on the last day ofsuch calendar month of not less than the amount set forth below across fromsuch month in the applicable calendar year.

 
| **Period** | ** ** | **Minimum EBITDA  2009** | ** ** | **Minimum EBITDA  2010 and 2011** | ** ** |
|------------|------------|--------------------------|------------|-----------------------------------|------------|
| January    |       |                     |       | $                                 | 1,046,000  |   |
| February   |       |                     |       | $                                 | 1,838,000  |   |
| March      |       | $                        | 611,000    |                              | $          | 2,571,000 |   |
| April      |       | $                        | 1,205,000  |                              | $          | 2,340,000 |   |
| May        |       | $                        | 986,000    |                              | $          | 3,312,000 |   |
| June       |       | $                        | 1,674,000  |                              | $          | 4,099,000 |   |
| July       |       | $                        | 2,527,000  |                              | $          | 4,940,000 |   |
| August     |       | $                        | 3,607,000  |                              | $          | 5,878,000 |   |
| September  |       | $                        | 4,891,000  |                              | $          | 6,982,000 |   |
| October    |       | $                        | 6,167,000  |                              | $          | 8,044,000 |   |
| November   |       | $                        | 7,434,000  |                              | $          | 8,835,000 |   |
| December   |       | $                        | 8,685,000  |                              | $          | 9,919,000 | ” |

 

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SECTION 2.                                WAIVER.

 

2.1                                 The Lender hereby waives:

 

(a)                                  the Borrower’s failure to deliver thedocuments required by and as set forth in the fifth paragraph of Section 10of the Loan Agreement solely for the calendar month of March 2009;

 

(b)                                 the Borrower’s failure to deliver theupdated Schedule 10.1 as set forth in the seventh paragraph of Section 10of the Loan Agreement solely for the quarter ended March 31, 2009;

 

(c)                                  the Borrower’s failure to deliver thecertification by the chief executive or financial officer of the Borrower ofthe validity and accuracy of the Borrower’s financial statements deliveredpursuant to the fifth paragraph of Section 10 of the Loan Agreement solelyfor the calendar months of January 2009, February 2009 and March 2009;

 

(d)                                 the Borrower’s failure to deliver thecertified monthly financial statements of the Parent pursuant to the fifthparagraph of Section 10 of the Loan Agreement at any time prior to thedate hereof;

 

(e)                                  the Borrower’s failure to deliver themonthly accounts receivable aging or the monthly account payable aging pursuantto the fifth paragraph of Section 10 of the Loan Agreement solely for thecalendar month of February 2009; and

 

(f)                                    the Borrower’s violation of the financialcovenants set forth in (i) Section 14.1(d) of the Loan Agreementsolely for the fiscal quarter ended March 31, 2009 but only to the extentthat such failure would not cause any Default or Event of Default under theLoan Agreement as amended hereby, (ii) Section 14.1(e) of theLoan Agreement solely for the fiscal quarter ended March 31, 2009 but onlyto the extent that such failure would not cause any Default or Event of Defaultunder the Loan Agreement as amended hereby, (iii) Section 14.1(f) ofthe Loan Agreement solely for each of the calendar months of January 2009,and February 2009 and (iv) Section 14.1(f) of the LoanAgreement solely for each of the calendar months of March 2009 and April 2009,but only to the extent that such failure would not cause any Default or Eventof Default under the Loan Agreement as amended hereby (each of the foregoing clauses (a), (b), (c),(d), (e) and (f) collectively the “KnownDefaults”).

 

2.2                                 Consistent with the foregoing, nothingcontained herein shall be deemed to be a waiver or abandonment of (i) anyother Event of Default (whether presently or subsequently existing) other thanthe Known Defaults, including any such other Event of Default or breach that isof the same nature or type (or arises under the same provision of the LoanAgreement, Loan Documents or Subsidiary Loan Documents) as any of the KnownDefaults, or (ii) any rights, powers and/or remedies presently orsubsequently available to the Lender against the Borrower or any Guarantor(including any of its property) and/or any other Person or entity (includingany of such Person’s or entity’s property) under the Loan Agreement, any of theSubsidiary Loan Documents or any of the other Loan Documents, applicable law orotherwise, relating to any matter other than solely with respect to the KnownDefaults, each of which rights, powers or remedies is hereby specifically andexpressly reserved.

 

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SECTION 3.                                CONDITIONS PRECEDENT.  This Amendment shall become effective on thedate (the “Amendment Effective Date”) when the Lender shall havereceived the following:

 

3.1                                 Amendment.  ThisAmendment, duly executed by the parties hereto.

 

3.2                                 Amendment and Wavier Fee; Expenses. Payment by the Borrower in immediately available funds of a $25,000amendment and waiver fee, as well as all reasonable fees and expenses requiredto be reimbursed or paid by the Borrower pursuant to Section 5.2hereof, including, without limitation, the fees and expenses of Mayer Brown LLP,counsel to the Lender, incurred in connection with the drafting, negotiation,execution, delivery and effectiveness of this Amendment.  For the avoidance of any doubt, the amendmentand waiver fee payable pursuant to this Section 3.2 shall be inaddition to, and shall not affect the amount or payment dates of, the extensionfee set forth in Section 14.4 of the Loan Agreement.

 

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

 

3.4                                 Outstanding Deliverables. The following items, each in form and substance reasonably satisfactoryto the Lender:

 

(a)                                  internally prepared monthly financialstatements of Borrower for the calendar month of March 2009, which monthlystatements shall include an income statement, balance sheet and cash flowstatement for such month and on a year to date basis, and which shall show acomparison for such calendar month and on a year to date basis versus the sameperiod of the prior calendar year, certified by the chief executive orfinancial officer of the Borrower;

 

(b)                                 internally prepared monthly financialstatements of the Parent for each of the calendar months of January 2009, February 2009and March 2009, which monthly statements shall include an incomestatement, balance sheet and cash flow statement for such month and on a yearto date basis, and which shall show a comparison for such calendar month and ona year to date basis versus the same period of the prior calendar year,certified by the chief executive or financial officer of the Parent; and

 

(c)                                  an updated Schedule 10.1, as of the endof the fiscal quarter ended March 31, 2009, setting forth the identifiedmaterial accounting weaknesses of the Borrower and the Parent, includingnecessary steps to correct such issues, the timeframe to correct such issuesand the Person responsible for each corrective step to correct such issues andthe current status of the items listed thereon.

 

SECTION 4.                                REPRESENTATIONS AND WARRANTIES.  To induce the Lender to enter into thisAmendment, the Borrower hereby represents and warrants to the Lender asfollows:

 

4.1                                 Due Authorization, Non-Contravention, etc. The execution, delivery and performance by the Borrower of thisAmendment are within its corporate powers, have been duly authorized by allnecessary corporate action, and do not:

 

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(a)                                  contravene the Borrower’s organizationaldocuments;

 

(b)                                 contravene any contractual restriction,law or governmental regulation or court decree or order binding on or affectingthe Borrower; or

 

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

 

4.2                                 Government Approval, Regulation, etc. No authorization or approval or other action by, and no notice to orfiling with, any governmental authority or regulatory body or other Person isrequired for the due execution, delivery or performance by the Borrower of thisAmendment.

 

4.3                                 Validity, etc. This Amendment constitutes the legal, valid and binding obligation ofthe Borrower enforceable in accordance with its terms.

 

4.4                                 Event of Default. No Event of Default shall occur as a result of, or after giving effectto, this Amendment.  No Event of Default,other than the Known Defaults, has occurred and is continuing.

 

4.5                                 Acknowledgements. Without in any manner limiting the generality of the release set forthin Section 5.5 hereof, the Borrower hereby represents, warrants,covenants and agrees that there exist no offsets, counterclaims or defenses topayment or performance of the obligations set forth in the Loan Agreement, theSubsidiary Loan Documents or the other Loan Documents and, in considerationhereof, expressly waives any and all such offsets, counterclaims and defensesarising out of any alleged acts, transactions or omissions on the part of theLender arising (or otherwise relating to the period) on or prior to theAmendment Effective Date.

 

SECTION 5.                                MISCELLANEOUS.

 

5.1                                 Continuing Effectiveness, etc. This Amendment shall be deemed to be an amendment to the Loan Agreement,which shall remain in full force and effect and is hereby ratified, approvedand confirmed in each and every respect. After the effectiveness of this Amendment in accordance with its terms,all references to the Loan Agreement in the Loan Documents or the SubsidiaryLoan Documents or in any other document, instrument, agreement or writing shallbe deemed to refer to the Loan Agreement as amended hereby.

 

5.2                                 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) inconnection with the drafting, negotiation, execution, delivery andeffectiveness of this Amendment.

 

5.3                                 Mayer Brown Expenses. Without limiting the generality of Section 5.2, the Borroweragrees to pay, within ten (10) Business Days of receipt of an invoice, thefees and expenses of Mayer Brown LLP, counsel to the Lender, incurred inconnection with the representation of the Lender in this matter.

 

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5.4                                 General Loan Agreement Compliance. All provisions of the Loan Agreement (as expressly amended in Section 1),the Subsidiary Loan Documents and the other Loan Documents shall continue infull force and effect in accordance with the provisions thereof and theBorrower reaffirms all its agreements under the Loan Agreement, the SubsidiaryLoan Documents and the other Loan Documents. The Borrower shall comply with the provisions of the Loan Documents andSubsidiary Loan Documents to which it is a party, including, withoutlimitation, the timely payment of all scheduled principal and interestpayments.

 

5.5                                 Release and Covenant Not to Sue. In consideration of the agreements and understandings in this Agreement,the Borrower, for itself and on behalf of the Borrower’s Derivative/SuccessorPersons, hereby knowingly and voluntarily, unconditionally and irrevocably,absolutely, finally and forever releases, acquits and discharges each LenderReleased Party from any Claim relating in any manner whatsoever to any of theLoan Documents, including any transaction contemplated thereby or undertaken inconnection therewith, or otherwise to the Borrower’s credit relationship with theLender, 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 AmendmentEffective Date (each a “Borrower-Related Claim”).

 

The Borrower herebyknowingly and voluntarily, unconditionally and irrevocably, absolutely finallyand forever covenants that it shall refrain, and further shall direct anyDerivative/Successor Person to refrain, from commencing or otherwiseprosecuting any action, suit or other proceeding of any kind, nature,character, or description, including in law or in equity, against any LenderReleased Party on account of any Borrower-Related Claim.  Each Lender Released Party shall be entitledto enforce this covenant through specific performance.  In addition to any other liability whichshall accrue upon the breach of this covenant, the breaching party (includingany Derivative/Successor Person of the Borrower that commences or prosecutesany such action, suit or other proceeding) shall be liable to such Lender ReleasedParty for all reasonable attorneys’ fees and costs incurred by such party inthe defense of any such action, suit or other proceeding.

 

The following terms shallhave the following definitions when used in this Section 5.5:

 

“Claims”shall mean, with respect to the Borrower, any and all claims, counterclaims,actions, causes of action (including, any relating in any manner to anyexisting 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 andexpenses) or other similar items of any kind, type, nature, character ordescription, including, whether in law, equity or otherwise, whether now knownor unknown, whether in contract or in tort, whether choate or inchoate, whethercontingent or vested, whether liquidated or unliquidated, whether fixed orunfixed, whether matured or unmatured, whether suspected or unsuspected, andwhether or not concealed, sealed or hidden, of the Borrower and/or which may beasserted by the Borrower, through the Borrower or otherwise on the behalf ofthe Borrower (including those which may be asserted on any derivative basis),which have existed at any time on or prior to the date hereof.

 

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“Derivative/SuccessorPerson” shall mean, with respect to the Borrower, any person or otherentity (including any former, current, or future employee, officer, agent,attorney, board member, shareholder, parent, subsidiary, partnership, jointventure, other affiliate, spouse, relative, heir, beneficiary, legalrepresentative, creditor, successor or assign) that may assert or may attemptto assert any Claim by or otherwise belonging to the Borrower, through theBorrower or otherwise on behalf of the Borrower (including on any derivativebasis).

 

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

 

5.6                                 Severability. Any provision of this Amendment which is prohibited or unenforceable inany jurisdiction shall, as to such provision and such jurisdiction, beineffective to the extent of such prohibition or unenforceability withoutinvalidating the remaining provisions of this Amendment or affecting thevalidity or enforceability of such provision in any other jurisdiction.

 

5.7                                 Headings.  The variousheadings of this Amendment are inserted for convenience only and shall notaffect the meaning or interpretation of this Amendment or any provisionshereof.

 

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

 

5.9                                 Governing Law. THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNEDBY 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-LAWPROVISIONS.

 

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

 

[SignaturePages Follow]

 

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IN WITNESS WHEREOF, theundersigned have duly executed this Amendment as of the date first set forthabove.

 
|   | BRAD FOOTE GEAR WORKS, INC. |
|--------|-----------------------------|
|   |                        |
|   |                        |
|   | By:                         | /s/ Ralph Placzek |
|   | Name:                       | Ralph Placzek |
|   | Title:                      | Vice President of Finance and Treasurer |

 

Thirty Fifth Amendmentand Waiver to

Loan and SecurityAgreement

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 |

 

Thirty Fifth Amendmentand Waiver to

Loan and SecurityAgreement

Signature Page

 

S-2

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**EXHIBIT A**

 

REAFFIRMATION

 

THIS REAFFIRMATION (this “Reaffirmation”)dated as of May     , 2009, is made by each of theundersigned (each, an “Undersigned”), in favor of the Lender (as definedbelow).

 

RECITALS:

 

1.                                       Brad Foote GearWorks, Inc. (the “Borrower”) and Bank of America, N.A., as lender(in such capacity, the “Lender”) are parties to that certain Loan andSecurity Agreement, dated as of January 17, 1997 (as amended to date andin effect on the date hereof, the “Existing Credit Agreement”).

 

2.                                       The Borrowerand the Lender have agreed to amend the Existing Credit Agreement pursuant tothat certain Thirty-fifth Amendment and Waiver to Loan and Security Agreement(the “Thirty-fifth Amendment”) of even date herewith (the ExistingCredit Agreement, as amended by the Thirty-fifth Amendment, and as such may befurther amended, modified, restated or supplemented from time to time, the “CreditAgreement”).

 

3.                                       Each of theUndersigned is party to one or more Loan Documents (collectively, the “ReaffirmedDocuments”) relating to the Credit Agreement.

 

4.                                       It is acondition precedent to the occurrence of the Amendment Effective Date (asdefined in the Thirty-fifth Amendment) that each of the Undersigned execute anddeliver this Reaffirmation.

 

NOW THEREFORE, for good andvaluable consideration, the receipt and sufficiency of which are herebyacknowledged, and in order to induce the Lender to enter into the Thirty-fifthAmendment, each Undersigned agrees, for the benefit of the Lender, as follows:

 

ARTICLE I.DEFINITIONS

 

Capitalized terms usedherein that are defined in the Credit Agreement shall have the same meanings whenused herein unless otherwise defined herein.

 

ARTICLE II.REAFFIRMATION

 

Each Reaffirmed Documentremains in full force and effect and is hereby ratified and confirmed, and fromand after the date hereof, each reference that appears in any of the ReaffirmedDocuments to the Existing Credit Agreement shall be deemed to be a reference tothe Credit Agreement.

 

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ARTICLEIII.MISCELLANEOUS PROVISIONS

 

SECTION 3.1.  Loan Document.  This Reaffirmation is a Loan Documentexecuted pursuant to the Credit Agreement and shall (unless otherwise expresslyindicated herein) be construed, administered and applied in accordance with theterms and provisions thereof.

 

SECTION 3.2.  Severability.  Any provision of this Reaffirmation which isprohibited or unenforceable in any jurisdiction shall, as to such provision andsuch jurisdiction, be ineffective to the extent of such prohibition orunenforceability without invalidating the remaining provisions of thisReaffirmation or affecting the validity or enforceability of such provision inany other jurisdiction.

 

SECTION 3.3.  Headings.  The various headings of this reaffirmationare inserted for convenience only and shall not affect the meaning orinterpretation of this Amendment or any provisions hereof.

 

SECTION 3.4.  Execution in Counterparts.  This Reaffirmation may be executed by theparties hereto in several counterparts, each of which shall be deemed to be anoriginal and all of which shall constitute together but one and the sameagreement.

 

SECTION 3.5  Governing Law.  THIS REAFFIRMATION SHALL BE DEEMED TO BE ACONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS(INCLUDING 735 ILCS SECTION 105/5-5), BUT OTHERWISE WITHOUT GIVING EFFECTTO ANY OF SUCH STATE’S CONFLICTS-OF-LAW PROVISIONS.

 

SECTION 3.6  Successors and Assigns.  This Reaffirmation shall be binding upon andshall inure to the benefit of the parties hereto and their respectivesuccessors and assigns.

 

SECTION 3.7  Release and Covenant Not to Sue.  Each of the Undersigned agrees that it shallbe bound by the release set forth in Section 5.5 of the Thirty-fifthAmendment as if such provision applied directly to such party mutatis mutandis.

 

**[Remainder of page intentionallyleft blank]**

 

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IN WITNESS WHEREOF, the parties hereto, by theirofficers duly authorized, have caused this Reaffirmation to be duly executedand delivered as of the date first above written.

 
|   | BROADWIND ENERGY, INC.        |
|--------|-------------------------------|
|   |                          |
|   |                          |
|   | By:                           |   |
|   | Name:                         |   |
|   | Title:                        |   |
|   |                          |
|   |                          |
|   | 1309 SOUTH CICERO AVENUE, LLC |
|   |                          |
|   |                          |
|   | By:                           |   |
|   | Name:                         |   |
|   | Title:                        |   |
|   |                          |
|   |                          |
|   | 5100 NEVILLE ROAD, LLC        |
|   |                          |
|   |                          |
|   | By:                           |   |
|   | Name:                         |   |
|   | Title:                        |   |

 

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