Document:

Exhibit
10.27

 

TWENTY-NINTH
AMENDMENT TO LOAN AND SECURITY AGREEMENT

 

THIS TWENTY-NINTH AMENDMENT TO LOAN AND SECURITY
AGREEMENT (this “Amendment”)
is dated as of June 30, 2008 between BRAD FOOTE GEAR WORKS, INC. f/k/a BFG
Acquisition Corp., an Illinois corporation (“Borrower”) and LASALLE BANK
NATIONAL ASSOCIATION f/k/a  LaSalle
National Bank f/k/a LaSalle Bank NI (“Lender”).

 

WHEREAS, Borrower and Lender have entered in that certain Loan and Security
Agreement dated as of January 17, 1997, as amended by those certain letter
amendments dated February 28, 1997 and July 23, 1997 and those
certain Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Eleventh, Twelfth,
Thirteenth, Fourteenth, Fifteenth, Sixteenth, Seventeenth, Eighteenth,
Nineteenth, Twentieth, Twenty-First, Twenty-Second, Twenty-Third,
Twenty-Fourth, Twenty-Fifth, Twenty-Sixth, Twenty-Seventh and Twenty-Eighth
Amendments to Loan and Security Agreement dated as of March 30, 1998, December 1,
1998, June 1, 1999, December 19, 2000, May 1, 2001, July 1,
2001, April 30, 2002, April 29, 2003, July 3, 2003, April 29,
2004, November 15, 2004, April 29, 2005, June 15, 2005, February 1,
2006, April 29, 2006, November 10, 2006, January 8, 2007, April 29,
2007, June 30, 2007, October       ,
2007, October 18, 2007, November 1, 2007, January 15, 2008, January 31,
2008 and April       , 2008, respectively,
and that certain letter amendment (herein, the “Tenth Amendment”) dated October 17,
2002 (such agreement, as so amended, the “Loan Agreement”) with regard to the
following loans made by Lender to Borrower: (i) a $10,000,000.00 revolving
line of credit loan (the “Revolving Loan”), (ii) a consolidated term loan
in the original principal sum of $7,899,332.98 (the “Term Loan”), (iii) an
$11,000,000.00 non-revolving equipment line of credit loan with term conversion
feature (the “Equipment Loan”), (iv) a $9,000,000.00 non-revolving
equipment line of credit loan with term conversion feature (the “Equipment Loan
No. 2”) and (v) all other Indebtedness (as defined in the Loan
Agreement); and

 

WHEREAS, Lender has been asked to extend the maturity date of the Revolving Loan
from June 30, 2008 to August 30, 2008 and to make certain other
modifications thereto; and

 

WHEREAS, Lender has agreed to the foregoing loan extension request provided,
among other conditions, that Borrower executes and delivers to this Amendment
and the note extension agreement described below;

 

NOW, THEREFORE, for valuable consideration, the receipt of
which is hereby acknowledged, and in consideration of the foregoing premises,
the parties hereto agree as follows:

 

1

 

1.                                       The capitalized terms used herein without
definition shall have the same meaning herein as such terms have in the Loan
Agreement.

 

2.                                       The definition of “Termination Date” in Section 1.1
of the Loan Agreement, is amended in its entirety to read as follows:

 

“Termination Date” shall mean August 30, 2008, or such
earlier date upon which the Revolving Note becomes due and payable.

 

3.                                       The first sentence of the first paragraph in Section 2.3
of the Loan Agreement is amended to read as follows:

 

“2.3 Revolving Note. The Revolving Loan shall be evidenced by an
amended and restated renewal revolving note, executed by the Borrower, dated January 15,
2008, as modified by Note Extension Agreement dated as of June 30, 2008,
payable to the Lender on August 30, 2008, and in the principal sum of Ten
Million and 00/100 ($10,000,000.00) Dollars (the “Revolving Note”).”

 

Hereafter,
all references in the Loan Agreement and in this Amendment to the term “Revolving
Note” shall be deemed to refer to the aforesaid amended and restated renewal
revolving note dated January 15, 2008 in the principal sum of
$10,000,000.00, executed by Borrower, as modified by Note Extension Agreement
dated as of June 30, 2008, payable to the order of Lender on August 30,
2008, together with interest payable monthly as therein described.

 

4.                                       Section 10 of the Loan Agreement is
hereby amended in its entirety to read as follows:

 

“SECTION 10. FINANCIAL REPORTING AND AUDITS.

 

As soon as available, but not later than one hundred twenty (120) days
after the end of each fiscal year of Borrower, Borrower shall furnish the
Lender with annual audited financial statements of Borrower, containing the
balance sheet of the Borrower as of the close of each such fiscal year,
statements of income and retained earnings and a statement of cash flows for
each such fiscal year, and such other comments and financial details as are
usually included in similar reports. Such financial statements shall (a) be
in form and reporting basis satisfactory to the Lender, (b) be prepared in
accordance with GAAP by an independent certified public accounting firm
selected by Borrower and acceptable to the Lender (“Borrower’s Accounting Firm”),
and (c) 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 the statements.

 

As soon as available, but not later than one hundred twenty (120) days
after the end of each fiscal year of Broadwind Energy, Inc. and its
Subsidiaries (hereafter, collectively

 

2

 

“Broadwind”),
Borrower shall furnish the Lender with annual audited financial statements of
Broadwind, containing the balance sheet of Broadwind as of the close of each
such fiscal year, statements of income and retained earnings and a statement of
cash flows for each such fiscal year; and such other comments and financial
details as are usually included in similar reports. 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 quarter, Borrower shall furnish the Lender with (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.

 

Borrower shall deliver the following to the Lender on a monthly basis
within fifteen (15) days after month-end, in form acceptable to Lender: (i) a
monthly Borrowing Base Certificate, and (ii) a monthly accounts receivable
aging and a monthly accounts payable aging.

 

Borrower shall also promptly provide the Lender with such other
information, financial or otherwise, concerning the Borrower or Broadwind, 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 conduct an annual field audit of the Borrower
(or more frequent audits if deemed reasonably necessary by the Lender under the
circumstances then existing), and Borrower shall reimburse the Lender for all
reasonable costs and expenses incurred by Lender’s for such audits.”

 

5.                                    Lender hereby waives Borrower’s violation in
failing to provide Lender with audited annual financial statements for the
Borrower for the fiscal year ended December 31, 2007. Said waiver is
limited solely to such specific reporting violation for such period, and shall
not waive, suspend, or affect any other default by Borrower under the Loan
Agreement, and Lender expressly reserves all of its rights and remedies with
respect to any such other default(s).

 

6.                                    Borrower covenants to provide to Lender with
internally prepared annual financial statements for the Borrower for the fiscal
year ended December 31, 2007 no later than June 30, 2008, in form
acceptable to Lender.

 

3

 

7.                                      Section 14.1 of the Loan Agreement is
amended in its entirety to read as follows:

 

14.1 Financial Covenants. 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, except as
expressly permitted by Section 14.3 (i) hereof. This covenant will be
measured at all times.

 

(b)                          Limitation on Debts Owed To Or By Affiliates. Indebtedness owed by Borrower to Affiliates
and/or from Affiliates to Borrower will not exceed Five Hundred Thousand
Dollars ($500,000.00) in the aggregate at all times. The foregoing sentence
shall not be deemed to prohibit or apply to the approximate $25,000,000.00 in
aggregate principal debt (hereafter, the “Tontine Debt”) owed by Broadwind
Energy, Inc. f/ka Tower Tech Holdings Inc. (“Broadwind Energy”) to Tontine
Overseas Funds, Ltd., Tontine Partners, L.P. and Tontine Capital Overseas
Master Fund, L.P., which debt shall be evidenced by senior subordinated
convertible promissory notes executed by Broadwind Energy in favor of such
payees, and subordinated to all present and future indebtedness owed by
Borrower to Lender pursuant to written subordination agreements in form
acceptable to Lender. Any other indebtedness (including inter-company payables)
owed by Borrower to Affiliates (other than described in the two preceding
sentences) will be subordinated to all present and future indebtedness owed by
Borrower to Lender in a manner satisfactory to the Lender.

 

(c)                           Subordinated Debt Payments. Borrower will not make any payments on Subordinated Debt except for
interest payments thereon permitted in accordance with Section 14.3 (i) hereof.

 

(d)                          Senior Debt to EBITDA.
As of the end of each of its fiscal quarters beginning with the quarter ended June 30,
2008, the Borrower shall maintain a ratio of Senior Debt to annualized EBITDA
of not greater than 3.0 to 1.0. This covenant will be tested quarterly
beginning with the fiscal quarter ended June 30, 2008.

 

(e)                           Cash Flow Coverage.
As of the end of each of its fiscal quarters beginning with the quarter ended March 31,
2008, the Borrower shall maintain a Cash Flow Coverage of not less than the
following (i) 1.5 to 1.0 at March 31, 2008, and (ii) 2.0 to 1.0 June 30,
2008 and thereafter (to be tested quarterly by the Lender commencing with the
quarter ended March 31, 2008). For the periods ended March 31, 2008, June 30,
2008 and September 30, 2008, Cash Flow Coverage shall be defined as (i) year-to-date
EBITDA divided by (i) year-to-date principal payments of bank long term
debt, plus year-to-date interest expense (including interest owed to Lender and
former owners), plus year-to-date lease payments for Leased Equipment.

 

(f)                                    Minimum EBITDA. As of the end of each of its fiscal
quarters beginning with the quarter ended June 30, 2008, the Borrower
shall maintain minimum EBITDA of not less than the following: (i) $7,500,000
for the six months ended June 30, 2008, (ii) $15,000,000 for the nine
months ended September 30, 2008, and (iii) $22,500,000 for the twelve
months ended

 

4

 

December 31, 2008 and for each trailing twelve month period
thereafter to be tested at each fiscal quarter end.

 

(g)                                 Minimum Excess Borrowing Availability. Borrower will at all times on and after May 15,
2008, have a minimum $3,000,000.00 of Excess Borrowing Availability.

 

For purposes of the foregoing financial covenants, the following
definitions shall have the following meaning:

 

“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 have the meaning
set forth in Section 1.1 hereof.

 

“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
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

 

5

 

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 (iii) distributions.

 

“Excess
Borrowing Availability” shall mean the amount of availability provided by
the collateral under the Borrowing Base calculation less the amount outstanding
under the Revolving Loan.

 

“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 means, 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.

 

The financial requirements set forth hereinabove shall be computed in
accordance with GAAP.”

 

8.                                       The Borrower acknowledges and agrees that the
Loan Agreement is and as amended hereby shall remain in full force and effect,
and that the Collateral is and shall remain subject to the lien and security
interest granted and provided for by the Loan Agreement as amended hereby, for
the benefit and security of (a) all obligations and indebtedness
heretofore, now or hereafter owed by Borrower to Lender, including, without
limitation, the indebtedness evidenced by the Revolving Note, the Term Note,
the Equipment Note, the Equipment No. 2 and all other Indebtedness
(including, without limitation, the repayment of all sums when due under the
Subsidiary Guaranty).

 

6

 

9.            Without limiting the foregoing, the Borrower hereby
agrees that, notwithstanding the execution and delivery hereof, (i) all
rights and remedies of the Lender under the Loan Agreement, (ii) all
obligations and indebtedness of the Borrower thereunder, and (iii) the
lien and security interest granted and provided for thereby are and as amended
hereby shall remain in full force and effect for the benefit and security of
all obligations and indebtedness of the Borrower thereunder, including, without
limitation, the indebtedness evidenced by the Revolving Note, the Term Note,
the Equipment Note, the Equipment Note No. 2 and all other Indebtedness (including,
without limitation, the repayment of all sums when due under the Subsidiary Guaranty),
it being specifically understood and agreed that this Amendment shall
constitute and be an acknowledgment and continuation of the rights, remedies,
lien and security interest in favor of the Lender, and the obligations and
indebtedness of the Borrower to the Lender, which exist under the Loan
Agreement as amended hereby, each and all of which are and shall remain applicable
to the Collateral.

 

This Amendment confirms and assures a lien and continuing first
priority security interest in the Collateral heretofore granted in favor of the
Lender under the Loan Agreement, and nothing contained herein shall in any
manner impair the priority of such lien and security interest.

 

10.          In
order to induce Lender to enter into this Amendment, the Borrower hereby
represents and warrants to the Lender that as of the date hereto, each of the
representations and warranties set forth in the Loan Agreement, as amended
hereby, are true and correct and the Borrower is in full compliance with all of
the terms and conditions of the Loan Agreement, as amended hereby, and no Event
of Default or Default has occurred and is continuing.

 

11.          Except as
specifically amended and modified hereby, all of the terms and conditions of
the Loan Agreement shall stand and remain unchanged and in full force and effect.
This instrument shall be construed and governed by and in accordance with the
laws of the State of Illinois (exclusive of choice of law principles).

 

12.          Borrower further
agrees to reimburse the Lender for its reasonable legal fees incurred in
documenting the aforesaid loan extension hereinabove described.

 

[signature page follows]

 

7

 

IN WITNESS WHEREOF, the parties have entered into this Twenty-Ninth
Amendment to Loan and Security Agreement as of date first above written.

 

Borrower:

 

BRAD FOOTE GEAR WORKS, INC.

 

 

	
  By:

  	
  /s/
  Matthew J. Gadow

  	
   

  
	
   

  	
    Matthew J. Gadow

  	
   

  
	
  Title:

  	
    Chief Financial Officer, Broadwind Energy,
  Inc.

  	
   

  
				

 

 

Lender:

 

LASALLE BANK NATIONAL ASSOCIATION

 

 

	
  By:

  	
  /s/
  Katherine Novey

  	
   

  
	
  Title:

  	
  Vice-President

  	
   

  

 

8

 

CERTIFICATE OF SECRETARY AS TO 

RESOLUTIONS
ADOPTED BY THE
BOARD OF
DIRECTORS

 

I,
the undersigned, DO
HEREBY CERTIFY, that I am the duly elected, qualified and acting Secretary of
BRAD FOOTE GEAR WORKS, INC., a corporation organized and existing under the
laws of the State of Illinois; that the principal offices of said corporation
are at 1309 S. Cicero Avenue, Cicero, Illinois 60804; that the following is a
complete, true and correct copy of certain resolutions of the Board of
Directors of said corporation, which resolutions were unanimously adopted at a
duly called meeting of the said Board held on June 30, 2008, a quorum
being present; that I am the keeper of the minutes and records of said
corporation;

 

WHEREAS, there has been
presented to this meeting a form of twenty-ninth amendment (the “Amendment”) to
loan and security agreement between the Corporation as borrower and LaSalle
Bank National Association as lender (the “Lender”), which amends that certain
Loan and Security Agreement dated January 17, 1997 between the Corporation
and Lender (such agreement, as amended from time to time, the “Loan Agreement”)
and sets forth the terms and conditions under which: (i) Lender will
extend the maturity date of the existing $10,000,000.00 revolving line of
credit loan (the “Revolving Loan”) from June 30, 2008 to August 30,
2008 (the “Loan Extension”), (ii) the Corporation confirms that such
extended revolving line of credit loan and all other present and future
indebtedness owed by the Corporation to the Lender, are and will continue to be
secured by a first priority security interest in and lien upon all of the
Corporation’s property of any kind or nature, now existing or hereafter
acquired and wherever located, and (iii) Lender and the Corporation make
certain other modifications to the Loan Agreement; and

 

WHEREAS, there has been presented to this
meeting the form of note extension agreement (the “Note Extension”) to effect
the Loan Extension;

 

NOW, THEREFORE, BE IT
RESOLVED, that either Matthew J. Gadow, the Chief Financial Officer of the
Corporation, or J. Cameron Drecoll, the Chief Executive Officer of the
Corporation, be, and each is hereby individually authorized and empowered, on
behalf of the Corporation and in its name, to execute and deliver to the Lender
the Note Extension (substantially in the form thereof presented to this
meeting, except for such changes, additions, and deletions as to him shall seem
proper); and

 

FURTHER RESOLVED, that to
further memorialize the terms and conditions under which the Loan Extension
will be made and to confirm that the Revolving Loan being so extended, and all
other present and future Indebtedness (as defined in the Loan Agreement) are
and shall continue to be secured by a first priority security interest in all
of the Corporation’s present and future assets, including, without limitation,
all present and future equipment, fixtures, accounts, inventory, chattel paper,
documents, instruments, deposit accounts, general intangibles, investment
property, supporting obligations, letter-of-credit rights, together with all
substitutions, replacements, additions, accessions, proceeds and products of
all of the foregoing, including, without limitation, proceeds of policies of
fire, credit or other insurance, and the proceeds of any sale, exchange,
collection or other disposition of the above-described collateral, the
aforesaid Chief Financial Officer or Chief Executive Officer of the Corporation
be further individually authorized and empowered, on behalf of the Corporation
and in its name, to execute and deliver to the Lender (i) the Amendment
(substantially in the form thereof presented to this meeting, except for such

 

1

 

changes, additions, and deletions as to them shall seem proper), and (ii) all
other documents (“Other Documents”) required by the Lender, if any;

 

FURTHER RESOLVED, that the
acts and doings of said Chief Financial Officer or Chief Executive Officer, and
all other officers and employees of the Corporation, or any of them, shall at
all times receive full and faithful credit without the necessity of inquiry by
the Lender or other persons relying upon the same as to any of the
circumstances attending the same, or to the application of any moneys loaned
pursuant hereto, and that the acts and doings of said officers and employees,
or any of them, in respect of the subject matter hereof, and all of the prior
and future acts and doings of said officers and employees with the Lender, and
all agreements, written or oral, and any and all instruments of any and every
kind, nature or description whatsoever heretofore or hereafter made, executed
and delivered by the Corporation to the Lender, are hereby fully ratified,
approved, adopted and confirmed, and declared to be and represent binding
obligations of the Corporation in accordance with the respective terms and
provisions thereof;

 

FURTHER RESOLVED, that such
execution by either the Chief Financial Officer or the Chief Executive Officer
of the Corporation of the Note Extension, the Amendment and all Other
Documents, if any, shall be conclusive evidence that said officer deems all of
the terms and provisions thereof to be proper.

 

I DO FURTHER CERTIFY, that the following
named persons are all of the officers and directors of the Corporation, duly
elected, qualified and now acting as such:

 

OFFICERS:

J. Cameron Drecoll, Chief Executive Officer 

Lars Moeller, Executive Vice President, Chief Operating Officer 

Matthew J.Gadow, Executive Vice President, Chief Financial Officer 

Terence P. Fox, Secretary, Vice President

 

DIRECTORS:

James M. Lindstrom 

J. Cameron Drecoll 

Charles H. Benyon 

Terence P. Fox 

William M. Barrett 

David P. Reiland

 

I DO FURTHER CERTIFY, that Broadwind Energy.,
a Delaware corporation, is currently the sole holder of all the outstanding
shares of stock of the Corporation.

 

I DO FURTHER CERTIFY, that
the foregoing resolutions of the Board of Directors are now in full force and
effect, without alteration, amendment, modification or repeal, and do not
contravene or conflict with the Articles of Incorporation, the By-Laws of the
Corporation or any trust indenture or other agreement which limits the power of
the Corporation to borrow money and to encumber its property and assets.

 

2

 

IN
WITNESS WHEREOF, I have hereunto subscribed my name this 30th day of June,
2008.

 

 

	
   

  	
  /s/
  Matthew J. Gadow

  
	
   

  	
  Matthew
  J. Gadow

  
	
   

  	
  Chief
  Financial Officer, Broadwind Energy, Inc.

  

 

3Exhibit 10.56

 

	
  GUARANTOR NAME AND ADDRESS

  	
   

  	
  LENDER NAME AND ADDRESS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Number

  
	
  Broadwind Energy, Inc.

  	
   

  	
  Investors Community Bank

  	
   

  	
   

  
	
  47 E Chicago Avenue, Suite 332

  	
   

  	
  P.O. Box 700

  	
   

  	
   

  
	
  Naperville, IL 60540

  	
   

  	
  Manitowoc, WI 54221-0700

  	
   

  	
  Amount

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Date

  

 

GUARANTY

 

DATE.
The date of this Guaranty is as of October 22, 2008. 

 

For good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged,  and to induce Lender (with its participants,
successors and assigns), at its option, at any time or from time to time to
make loans or extend other accommodations to or for the account of R. B. A. Inc.
(Borrower) or to engage in any other transactions with Borrower, the Guarantor
hereby absolutely and unconditionally guarantees to the Lender the full and
prompt payment when due, whether at maturity or earlier by reason of
acceleration or otherwise, of the debts, liabilities and obligations described
as follows: 

INDEBTEDNESS.

 

o   Specific
Debts. The Guarantor guarantees to Lender the payment and
performance of the debt, liability or obligation of Borrower to Lender
evidenced by or arising out of the following:                                                                                            
                                                 and
any extensions, renewals or replacements thereof (Indebtedness).

 

x   All Debts. Except as this Guaranty may otherwise provide,
the Guarantor guarantees to Lender the payment and performance of each and
every debt, liability and obligation of every type and description which
Borrower may now or at any time hereafter owe to Lender (whether such debt,
liability or obligation now exists or is hereafter created or incurred, and
whether it is or may be direct or indirect, due or to become due, absolute or
contingent, primary or secondary, liquidated or unliquidated, or joint,
several, or joint and several; all such debts, liabilities and obligations
(Indebtedness)). Without limitation, this Guaranty includes the following
described debt(s):

 

See Agreement
Governing Extensions of Credit between lender and borrower dated 4/7/08 and
10/28/2008.

 

Exclusions.

 

o   Guarantor will be liable for
$                                               of
the principal amount of the Indebtedness 
outstanding at default and for all of the accrued interest, and the
expenses of collection, enforcement or protection of Lender’s rights and
remedies under this Guaranty, including reasonable attorneys’ fees.

 

o   Guarantor’s liability will
not exceed                    %
of the Indebtedness outstanding at default and all of the accrued interest, and
the expenses  of collection, enforcement
or protection of Lender’s rights and remedies under this Guaranty, including
reasonable attorneys’ fees.

 

o   Indebtedness
Excludes:

 

SECURITY.

 

x   the
Guaranty is unsecured.

o    secured
by

 

.

 

IL only o CONFESSION OF
JUDGMENT. If Guarantor defaults, it authorizes any attorney to appear in a
court of record and confess judgment against it in favor of Lender. The
confession of judgment may be without process and for any amount due on this
Guaranty including collection costs and reasonable attorneys’ fees.

 

PA only o WARRANT OF
AUTHORITY TO CONFESS JUDGMENT. Upon default, in addition to all other remedies
and rights available to Lender, by signing below Guarantor irrevocably
authorizes the prothonotary, clerk, or any attorney to appear in any court of
record having jurisdiction over this matter and to confess judgment against
Guarantor at any time without stay of execution. Guarantor waives notice,
service of process and process. Guarantor agrees and understands that judgment
may be confessed against Guarantor for any unpaid principal, accrued interest
and accrued charges due on this Note, plus collection costs and reasonable
attorneys’ fees up to 15 percent of the judgment. The exercise of the power to
confess judgment will not exhaust this warrant of authority to confess judgment
and may be done as often as Lender elects. Guarantor further understands that
Guarantor’s property may be seized without prior notice to satisfy the debt
owed. Guarantor knowingly, intentionally, and voluntarily waives any and all
constitutional rights Guarantor has to pre-deprivation notice and hearing under
federal and state laws and fully understands the consequences of this waiver.

 

By signing
immediately below, Guarantor agrees to the terms of the WARRANT OF AUTHORITY TO
CONFESS JUDGMENT section.

 

SIGNATURES. By
signing under seal, Guarantor agrees to the terms contained in this Guaranty
(including those on page 2). Guarantor also acknowledges receipt of a copy
of this Guaranty.

 

GUARANTOR:

 

 

	
  Broadwind Energy, Inc.

  	
   

  	
   

  
	
  Entity Name

  	
  (Seal)

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Matthew Gadow

  	
   

  	
   

  
	
  Name, Title Matthew Gadow, Executive Vice President and CFO

  	
  (Seal)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name, Title

  	
  (Seal)

  	
   

  

 

© 2001 Wolters Kluwer Financial Services - Bankers SystemsTM Form M-250   8/29/2006.

 

1

 

ADDITIONAL PROVISIONS

 

The Guarantor further
acknowledges and agrees with Lender that

 

1.  No act or thing need occur to
establish the liability of the Guarantor hereunder, and no act or thing, except
full payment and discharge of all Indebtedness, shall in any way exonerate the
Guarantor or modify, reduce, limit or release the liability of the Guarantor
hereunder.

 

2.  This is an absolute,
unconditional and continuing Guaranty of payment of the Indebtedness and will
continue to be enforceable against the Guarantor, whether or not all
Indebtedness is paid in full, until this Guaranty is revoked by written notice
actually received by the Lender. Any revocation shall not be effective as to
any Indebtedness existing or committed to at the time of actual receipt of
notice by the Lender, or as to any renewals, extensions and refinancings
thereof.

 

The Guarantor represents and
warrants to the Lender that the Guarantor has a direct and substantial economic
Interest in Borrower and expects to derive substantial benefits therefrom and
from any loans and financial accommodations resulting from the creation of
Indebtedness guaranteed hereby, and that this Guaranty is given for a business
purpose. The Guarantor agrees to rely exclusively on its right to revoke this
Guaranty prospectively as to future transactions by written notice actually
received by Lender if at any time the benefits then being received by the
Guarantor in connection with this Guaranty are not sufficient to warrant its
continuance as a Guarantor as to future Indebtedness. Accordingly, the Lender
may rely conclusively on a continuing warranty, hereby made, that the Guarantor
continues to be benefited by this Guaranty and that the Lender has no duty to
inquire into or confirm the receipt of any benefits, and that this Guaranty
will be enforceable without regard to the receipt, nature or value of any such
benefits.

 

3.  If the Guarantor is dissolved or
becomes insolvent, however defined, or revokes this Guaranty, then the Lender
has the right to declare the full amount of all Indebtedness immediately due
and payable, and the Guarantor will forthwith pay the Lender. If the Guarantor
voluntarily commences or there is commenced involuntarily against the Guarantor
a case under the United States Bankruptcy Code, the full amount of all
Indebtedness, whether due and payable or unmatured, will become immediately due
and payable without demand or notice thereof.

 

4.  The Guarantor will be liable for
all Indebtedness, without any limitation as to amount, plus accrued interest
thereon and all other costs, fees, and expenses agreed to be paid under all
agreements evidencing the Indebtedness and securing the payment of the
Indebtedness, and all attorneys’ fees, collection costs and enforcement
expenses referable thereto, Indebtedness may be created and continued in any
amount, whether or not in excess of such principal amount, without affecting or
impairing the liability of the Guarantor hereunder. The Lender may apply any
sums received by or available to the Lender on account of the Indebtedness from
Borrower or any other person (except the Guarantor), from their properties, out
of any collateral security or from any other source to payment of the excess.
Such application of receipts will not reduce, affect or impair the liability of
the Guarantor hereunder. If the liability of the Guarantor is limited pursuant
to this paragraph 4, any payment made by the Guarantor under this Guaranty will
be effective to reduce or discharge its liability only if accompanied by a
written transmittal document, received by the Lender, advising that such
payment is made under this Guaranty for that purpose.

 

5.  The Guarantor will pay or
reimburse the Lender for all costs and expenses (including reasonable
attorneys’ fees and legal expenses) incurred by the Lender in connection with
the protection, defense or enforcement of this Guaranty in any litigation or
bankruptcy or insolvency proceedings.

 

6.  Whether or not any existing
relationship between the Guarantor and Borrower has been changed or ended and
whether or not this Guaranty has been revoked, the Lender may, but shall not be
obligated to, enter into transactions resulting in the creation or continuance
of Indebtedness, without any consent or approval by the Guarantor and without
any notice to the Guarantor. The liability of the Guarantor will not be
affected or impaired by any of the following acts or things [which the Lender
is expressly authorized to do, omit or suffer from time to time, both before
and after revocation of this Guaranty, without notice to or approval by the
Guarantor]: (i) any acceptance of collateral security, Guarantors,
accommodation parties or sureties for any or all Indebtedness; (ii) any one
or more extensions or renewals of Indebtedness (whether or not for longer than
the original period) or any modification of the interest rates, maturities or
other contractual terms applicable to any Indebtedness; (iii) any waiver,
adjustment, forbearance, compromise or indulgence granted to Borrower, any
delay or lack of diligence in the enforcement of Indebtedness, or any failure
to institute proceedings, file a claim, give any required notices or otherwise
protect any Indebtedness; (iv) any full or partial release of, settlement
with, or agreement not to sue, Borrower or any other Guarantor or other person
liable in respect of any Indebtedness; (v) any discharge of any evidence
of Indebtedness or the acceptance of any instrument in renewal thereof or substitution
therefor; (vi) any failure to obtain collateral security (including rights
of setoff) for Indebtedness, or to see to the proper of sufficient creation and
perfection thereof, or to establish the priority thereof, or to protect,
insure, or enforce any collateral security; or any release, modification,
substitution, discharge, impairment, deterioration, waste, or loss of any
collateral security; (vii) any foreclosure or enforcement of any
collateral security; (viii) any transfer of any Indebtedness or any
evidence thereof; (ix) any order of application of any payments or credits
upon Indebtedness; (x) any election by the Lender under §1111(b)(2) of
the United States Bankruptcy Code.

 

7.  The Guarantor waives any and all
defenses, claims and discharges of Borrower, or any other obligor, pertaining
to Indebtedness, except the defense of discharge by payment in full. Without
limiting the generality of the foregoing, the Guarantor will not assert, plead
or enforce against the Lender any defense of waiver, release, estoppel, statute
of limitations, res judicata, statute of frauds, fraud, forgery, incapacity,
minority, usury, illegality or unenforceability which may be available to
Borrower or any other person liable in respect of any Indebtedness, or any setoff
available against the Lender to Borrower or any such other person, whether or
not on account of a related transaction. The Guarantor expressly agrees that
the Guarantor will be liable, to the fullest extent permitted by applicable
law, for any deficiency remaining after foreclosure of any mortgage or security
interest securing Indebtedness, whether or not the liability of Borrower or any
other obligor for such deficiency is discharged pursuant to statute or judicial
decision. The Guarantor shall remain obligated, to the fullest extent permitted
by law, to pay such amounts as though Borrower’s obligations had not been
discharged.

 

8.  The Guarantor
further agree(s) that Guarantor will be obligated to pay Indebtedness even
though any other person obligated to pay Indebtedness, including Borrower, has
such obligation discharged in bankruptcy or otherwise discharged by law,
“Indebtedness” shall include post-bankruptcy petition interest and attorneys’
fees and any other amounts which Borrower is discharged from paying or which do
not accrue to Indebtedness due to Borrower’s discharge, and Guarantor will be
obligated to pay such amounts as fully as if Borrower’s obligations had not
been discharged.

 

9.  If any payment
applied by the Lender to Indebtedness is thereafter set aside, recovered,
rescinded or required to be returned for any reason (including, without
limitation, the bankruptcy, insolvency or reorganization of Borrower or any
other obligor), the Indebtedness to which such payment was applied will for the
purposes of this Guaranty be deemed to have continued in existence,
notwithstanding such application, and this Guaranty will be enforceable as to
such Indebtedness as fully as if such application had never been made.

 

10.  Until the
obligations of the Borrower to Lender have been paid in full, the Guarantor
waive(s) any claim, remedy or other right which the Guarantor may now have
or hereafter acquire against Borrower or any other person obligated to pay
Indebtedness arising out of the creation or performance of the Guarantor’s
obligation under this Guaranty, including, without limitation, any right of
subrogation, contribution, reimbursement, indemnification, exoneration or any
right to participate in any claim or remedy the Guarantor may have against the
Borrower, collateral, or other party obligated for Borrower’s debt, whether or
not such claim, remedy, or right arises in equity, or under contract, statute
or common law.

 

11.  The Guarantor
waives presentment, demand for payment, notice of dishonor or nonpayment, and
protest of any instrument evidencing Indebtedness. The Lender will not be
required first to resort for payment of the Indebtedness to Borrower or other
persons or their properties, or first to enforce, realize upon or exhaust any
collateral security for Indebtedness, before enforcing this Guaranty.

 

12.  The liability
of the Guarantor under this Guaranty is in addition to and is cumulative with
all other liabilities of the Guarantor to the Lender as Guarantor or otherwise,
without any limitation as to amount, unless the instrument or agreement
evidencing or creating such other liability specifically provides to the
contrary.

 

13.  To induce
Lender to enter into the Loan, Guarantor makes these representations and
warranties for as long as Guaranty is in effect. Guarantor is duly organized,
validly existing and in good standing under the laws in the jurisdiction where
Guarantor was organized and is duly qualified, validly existing and in good
standing in all jurisdictions in which Guarantor operates or Guarantor owns or
leases property. Guarantor has the power and authority to enter into this
transaction and to carry on Guarantor’s business or activity as now conducted.
The execution, delivery and performance of this Guaranty and the obligation evidenced
by this Guaranty are within Guarantor’s duly authorized powers; have received
all necessary governmental approval; will not violate any provision of law or
order of court or governmental agency; and will not violate any agreement to
which Guarantor is a party or to which Guarantor is or any of Guarantor’s
property is subject. Other than previously disclosed in writing to Lender,
Guarantor has not changed Guarantor’s name or principal place of business
within the last ten years and has not used any other trade or fictitious name.
Without Lender’s prior written consent, Guarantor does not and will not use any
other name and will preserve Guarantor’s existing name, trade names and
franchises. Guarantor owns or leases all property that Guarantor needs to
conduct Guarantor’s business and activities. All of Guarantor’s property is
free and clear of all liens, security interests, encumbrances and other adverse
claims and interests, except those Lender previously agreed to in writing.
Guarantor is not violating any laws, regulations, rules, orders, judgments or
decrees applicable to Guarantor or Guarantor’s property, except for those that
Guarantor is challenging in good faith through proper proceedings after
providing adequate reserves to fully pay the claim and its challenge should
Guarantor lose.

 

14.  This Guaranty
is effective upon delivery to the Lender, without further act, condition or
acceptance by the Lender. It will be binding upon the Guarantor and the
successors and assigns of the Guarantor and will inure to the benefit of the
Lender and its participants, successors and assigns. If there be more than one Guarantor,
all agreements and promises herein shall be construed to be, and are hereby
declared to be, joint and several in each and every particular and shall be
fully binding upon and enforceable against either, any or all the Guarantors.
Any invalidity or unenforceability of any provision or application of this
Guaranty will not affect other lawful provisions and application hereof, and to
this end the provisions of this Guaranty are declared to be severable. Except
as allowed by the terms herein, this Guaranty may not be waived, modified,
amended, terminated, released or otherwise changed except by a writing signed
by the Guarantor and the Lender. This Guaranty shall be governed by the laws of
the State in which it is executed. The Guarantor waives notice of  the
Lender’s acceptance hereof.

 

©
2001 Wolters Kluwer Financial Services - Bankers SystemsTM Form M-250   8/29/2006.

 

2

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