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.”


 

















 


(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 


 


2

















 


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.”


 


3

















 


(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 


 


4

















 


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, 


 


5

















 


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 


 


6

















 


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

  



 


7

















 


(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.


 


8

















 


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 


 


9

















 


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.”


 


10














 


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

















 


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

















 


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

















 


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

















 


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

















 


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.


 


16

















 


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

















 


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

















 


	
   

  	
  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