<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1997
--------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period to
------------- ---------------
Commission file number: 0-14275
-------
Edac Technologies Corporation
------------------------------
(Exact name of registrant as specified in its charter)
Wisconsin 39-1515599
------------------------------- --------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) Identification No.)
1806 New Britain Avenue, Farmington, CT 06032
-----------------------------------------------
(Address of principal executive offices)
(860) 677-2603
---------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15 (d) of the Securities' Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
On May 8, 1997 there were outstanding 3,778,875 shares of the Registrant's
Common Stock, $0.0025 par value per share.
<PAGE> 2
EDAC TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31
--------------------------
1997 1996
------------- -----------
<S> <C> <C>
Sales $ 9,554,326 $ 8,013,974
Cost of sales 8,449,046 7,136,940
------------ -----------
1,105,280 877,034
Selling, general and
administrative expenses 663,474 616,272
------------ -----------
INCOME FROM OPERATIONS 441,806 260,762
Non-operating income
(expense):
Interest expense (205,775) (208,025)
Other 19,930 5,411
------------ -----------
(185,845) (202,614)
INCOME BEFORE INCOME TAXES 255,961 58,148
Provision for income taxes - -
------------ -----------
NET INCOME $ 255,961 $ 58,148
============ ===========
Weighted average number of
common shares and equivalent
shares outstanding 3,901,124 3,773,256
Earnings per share $ 0.07 $ 0.02
============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 3
PART 1 FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
EDAC TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31 December 31
1997 1996
(Unaudited) (Note)
------------ ------------
<S> <C> <C>
ASSETS
- ------
CURRENT ASSETS:
Cash $ 43,703 $ 195,382
Trade accounts receivable 3,386,843 3,407,924
Inventories 8,748,181 9,562,958
Prepaid expenses and other 363,108 351,109
Deferred income taxes 540,877 540,877
----------- -----------
TOTAL CURRENT ASSETS 13,082,712 14,058,250
PROPERTY, PLANT, AND EQUIPMENT 13,252,818 13,043,442
less-accumulated depreciation 7,790,808 7,570,308
----------- -----------
5,462,010 5,473,134
OTHER ASSETS 392,094 386,325
----------- -----------
$18,936,816 $19,917,709
=========== ===========
</TABLE>
Note: The balance sheet at December 31, 1996 has been derived from the audited
financial statements at that date.
The accompanying notes are an integral part of these financial statements.
<PAGE> 4
EDAC TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31 December 31
1997 1996
(Unaudited) (Note)
------------------- ---------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Revolving line of credit $ 2,303,736 $ 3,794,571
Current portion of long-term debt 846,097 402,267
Trade accounts payable 3,358,304 3,616,599
Employee compensation and
amounts withheld 673,310 737,827
Accrued expenses 955,969 850,532
------------- ------------
TOTAL CURRENT LIABILITIES 8,137,416 9,401,796
LONG-TERM DEBT,
less current portion 4,504,010 4,509,991
OTHER LIABILITIES 12,000 12,000
DEFERRED INCOME TAXES 521,000 521,000
SHAREHOLDERS' EQUITY:
Common stock, par value $.0025 per
share; 10,000,000 shares authorized;
issued and outstanding--3,778,875
in 1997 and 3,753,875 in 1996 9,447 9,385
Additional paid-in-capital 8,663,340 8,649,340
Accumulated deficit (2,735,397) (2,991,358)
------------- ------------
5,937,390 5,667,367
Less deferred ESOP compensation
expense (175,000) (194,445)
------------- ------------
5,762,390 5,472,922
$ 18,936,816 $ 19,917,709
============= ============
</TABLE>
Note: The balance sheet at December 31, 1996 has been derived from the audited
financial statements at that date.
The accompanying notes are an integral part of these financial statements.
<PAGE> 5
EDAC TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31
-----------------------------
1997 1996
------------------------------
<S> <C> <C>
Operating Activities:
Net income $ 255,961 $ 58,148
Depreciation and amortization 242,568 217,151
Changes in working capital items 606,484 (66,163)
Other - -
----------- ----------
Net cash provided by
operating activities 1,105,013 209,136
Investing Activities:
Additions to property, plant
and equipment (209,376) (32,185)
Other (8,392) -
----------- ----------
Net cash used in investing
activities (217,768) (32,185)
Financing Activities:
Decrease in revolving
line of credit (949,682) (165,736)
Payment of equipment lines (541,153) -
Issuance of long term debt 541,153 -
Payments of long term debt (103,304) (93,590)
Proceeds from exercise of options
for common stock 14,062 -
----------- ----------
Net cash used in
financing activities (1,038,924) (259,326)
Decrease in cash (151,679) (82,375)
Cash at the beginning of year 195,382 158,077
----------- ----------
Cash at end of period $ 43,703 $ 75,702
=========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 6
EDAC TECHNOLOGIES CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1997
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals and adjustments to previously established loss
provisions) considered necessary for a fair presentation have been included.
Operating results for the three month period ending March 31, 1997 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1997. For further information, refer to the financial statements
and footnotes thereto included in the Company's annual report on Form 10-K for
the year ended December 31, 1996.
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
Sales. The Company's sales in the first quarter of 1997 increased $1,540,352 or
19.2% compared to the first quarter of 1996. This increase is due mainly to
sales from the Precision Components and Engineered Solutions divisions
increasing significantly over the corresponding quarter of 1996.
Cost of Sales. Cost of sales as a percentage of sales decreased by 0.7% of
sales compared to the first quarter of 1996. This is due to the effect of
spreading fixed overhead over higher production levels.
Selling, General & Administrative. Selling, general and administrative costs
increased by $47,202 or 7.7% for the first quarter of 1997 compared to the
first quarter of 1996. This is due to higher travel and professional expense.
Interest. Interest expense increased by $2,250 or 1.1% for the first quarter of
1997 compared to the first quarter of 1996 due to higher interest rates offset
by lower borrowing levels. Interest rates for the Company were reduced by the
Company's bank effective March 27, 1997. (Reference the Company's 1996 Annual
Report)
Liquidity and Capital Expenditures. Working capital as of March 31, 1997 has
increased by $289,000 since December 31, 1996. Capital expenditures of
$209,396 has been funded out of operating activities.
Management believes that the funds generated from operations and its credit
facilities will be sufficient to meet the Company's cash requirements for 1997.
<PAGE> 8
PART 11 -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Ninth Amendment to Revolving loan, Term Loan, Equipment Loan
and Security Agreement, Modification of Notes and Reaffirmation
of Guarantees
10.2 Amended and Restated Revolving Promissory Note
10.3 Equipment Promissory Note III
10.4 Amended and Restated Promissory Note
10.5 Eighth Modification Agreement to Open-End Mortgage Deed
10.6 Third Modification of Construction to Permanent Loan Promissory
Note and Open-End Construction to Permanent Mortgage Deed
11 Statement re: computation of earnings per share
27 Financial Data Schedule
(b) Reports on Form 8-K
None
<PAGE> 9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EDAC TECHNOLOGIES CORPORATION
May 8, 1997 By /s/ Ronald G. Popolizio
-----------------------------
Ronald G. Popolizio, Chief Financial
Officer and duly authorized officer
<PAGE> 10
EXHIBIT INDEX
Page Number
in Sequential
NUMBER DESCRIPTION Numbering System
10.1 Ninth Amendment to Revolving loan, Term
Loan, Equipment Loan and Security Agreement,
Modification of Notes and Reaffirmation of
Guarantees
10.2 Amended and Restated Revolving Promissory Note
10.3 Equipment Promissory Note III
10.4 Amended and Restated Promissory Note
10.5 Eighth Modification Agreement to Open-End Mortgage Deed
10.6 Third Modification of Construction to Permanent
Loan Promissory Note and Open-End Construction
to Permanent Mortgage Deed
11 Statement Regarding Computation of Per Share Earnings
27 Financial Data Schedule
<PAGE> 1
NINTH AMENDMENT TO REVOLVING LOAN, TERM LOAN,
EQUIPMENT LOAN AND SECURITY AGREEMENT,
MODIFICATION OF NOTES AND REAFFIRMATION OF GUARANTIES
This NINTH AMENDMENT TO REVOLVING LOAN, TERM LOAN, EQUIPMENT LOAN,
SECURITY AGREEMENT AND REAFFIRMATION OF GUARANTIES, dated as of March 27, 1997
(this "AMENDMENT") is by and between FLEET NATIONAL BANK F/K/A FLEET NATIONAL
BANK OF CONNECTICUT F/K/A SHAWMUT BANK CONNECTICUT, N.A., a national banking
association with a place of business at 777 Main Street, Hartford, Connecticut
06115 ("LENDER") and EDAC TECHNOLOGIES CORPORATION, a Wisconsin corporation
with a principal place of business at 1790 New Britain Avenue, Farmington,
Connecticut 06032 ("BORROWER").
On October 3, 1985, Lender and Borrower entered into a certain Revolving
Loan and Security Agreement which has been (a) amended and restated in its
entirety by a certain Fifth Amended and Restated Revolving Loan, Term Loan,
Equipment Loan and Security Agreement dated February 28, 1995, as amended by a
certain Sixth Amendment to Revolving Loan, Term Loan, Equipment Loan and
Security Agreement dated July 31, 1995, as further amended by a certain Seventh
Amendment to Revolving Loan, Term Loan, Equipment Loan and Security Agreement
and Reaffirmation of Guaranties dated as of January 26, 1996, as further
amended by a certain Eighth Amendment to Revolving Loan, Term Loan, Equipment
Loan and Security Agreement and Reaffirmation of Guaranties dated as of April
10, 1996, and as further amended by a certain Ninth Amendment to Revolving
Loan, Term Loan, Equipment Loan, Security Agreement, Modification of Notes and
Reaffirmation of Guaranties dated of even date herewith between Borrower and
Lender (as amended and in effect from time to time, the "LOAN AGREEMENT").
Capitalized terms used herein and not defined herein shall have the meanings
given to them in the Loan Agreement.
Pursuant to the Loan Agreement, the Lender has made: (i) a $7,000,000.00
revolving loan (the "REVOLVING LOAN") as evidenced by a certain Revolving
Promissory Note dated February 28, 1995 (the "REVOLVING NOTE"), (ii) a
$500,000.00 equipment loan (the "FIRST EQUIPMENT LOAN") as evidenced by a
certain Equipment Promissory Note dated March 29, 1994 (the "FIRST EQUIPMENT
NOTE"), (iii) a second $500,000.00 equipment loan (the "SECOND EQUIPMENT LOAN")
as evidenced by a certain Equipment Promissory Note II dated February 28, 1995
(the "SECOND EQUIPMENT NOTE"), (iv) a $4,000,000.00 term loan (the "TERM LOAN")
as evidenced by a certain Term Promissory Note dated March 22, 1993 (the "TERM
NOTE") and (v) a $1,000,000.00 construction to permanent loan (the
"CONSTRUCTION LOAN") as evidenced by a certain Construction to Permanent Loan
Promissory Note dated July 31, 1995 (the "CONSTRUCTION NOTE").
On July 30, 1992, Gros-Ite Industries, Inc. (the "GUARANTOR") executed a
guaranty of the obligations of the Borrower to the Lender, which guaranty has
been reaffirmed from time
<PAGE> 2
to time (the "GUARANTY"). The Loan Agreement, Revolving Note, the First
Equipment Note, the Second Equipment Note, the Guaranty and the related
documents are collectively referred to as the "LOAN DOCUMENTS".
Borrower has requested that Lender amend the Loan Agreement and the Loan
Documents in order to, among other things, (i) extend the termination date and
increase the maximum principal amount of the Revolving Loan, (ii) amend the
Borrowing Base, (iii) combine the First Equipment Loan and Second Equipment
Loan into one loan, (iv) modify the interest rates of the Revolving Loan, the
combined First Equipment Loan and Second Equipment Loan, the Term Loan and the
Construction Loan, (v) make a new $3,000,000 Equipment Line of Credit available
to the Borrower, and (vi) make other amendments as set forth herein. Lender
has advised Borrower that Lender is prepared to make the loans and amendments
requested on the condition that Borrower join with Lender in this Amendment
upon the terms and conditions set forth herein.
In consideration of this Amendment and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Lender, Borrower and Guarantor hereby agree as follows.
I. Acknowledgments, Affirmations and Representations and Warranties.
A. The Borrower and Guarantor acknowledge and affirm that:
1. All of the statements contained herein are true and correct and
that they understand that the Lender is relying on the truth and completeness of
such statements to enter into this Amendment.
2. As of March 26, 1997 and without regard to the financial
accommodations contemplated herein, the Borrower is legally and validly indebted
to the Lender in the principal amount of $2,361,200.36 with respect to the
Revolving Loan, $171,840.89 with respect to the First Equipment Loan,
$369,312.45 with respect to the Second Equipment Loan, $3,323,201.41 with
respect to the Term Loan and $916,666.60 with respect to the Construction Loan,
plus interest and fees accrued and accruing thereon and costs and expenses of
collection, including without limitation, attorneys' fees, and there is no
defense, offset or counterclaim with respect to any of the foregoing or
independent claim or action against the Lender.
3. The Guarantor is legally and validly indebted to the Lender by
virtue of the Guaranty and there is no defense, offset or counterclaim with
respect thereto or claim or independent against the Lender.
B. The Borrower and the Guarantor represent and warrant to the Lender that:
- 2 -
<PAGE> 3
1. The resolutions previously adopted by the Board of Directors of the
Borrower and the Guarantor and provided to the Lender have not in any way been
rescinded or modified and have been in full force and effect since their
adoption to and including the date hereof and are now in full force and effect,
except to the extent that they have been modified or supplemented to authorize
this Amendment and the documents and transactions described herein.
2. The Borrower and the Guarantor have the corporate power and
authority to enter into, and have taken all necessary corporate action to
authorize, this Amendment and the transactions contemplated hereby.
3. All representations, warranties and covenants contained in, and
schedules and exhibits attached to, the Loan Documents are true and correct on
and as of the date hereof, are incorporated herein by reference and are hereby
remade.
4. The Borrower and the Guarantor are not currently in default under
any of the Loan Documents, and no condition exists which would constitute an
event of default under any of the Loan Documents but for the giving of notice or
passage of time, or both.
5. The consummation of the transactions contemplated hereby is not
prevented or limited by, nor does it conflict with or result in a breach of
terms, conditions or provisions of the Borrower's or Guarantor's respective
Certificates of Incorporation or Bylaws or any evidence of indebtedness,
agreement or instrument of whatever nature to which the Borrower or any of the
Guarantor is a party or by which any of them is bound, does not constitute a
default under any of the foregoing and does not violate any federal, state or
local law, regulation or order or any order of any court or agency which is
binding upon the Borrower or the Guarantor.
II. Amendments to Loan Documents.
A. Amendments to the Loan Agreement.
1. Amendment to Section 1. The following are hereby inserted after
Section 1.16 of the Loan Agreement:
1.17 "ADVANCE" or "ADVANCES" shall have the meanings given to
such terms in Section 2.1 of this Agreement.
1.18 "BUSINESS DAY" means a day other than a Saturday, Sunday, or
other day on which banks in the State of Connecticut are
required or permitted by law to be closed.
1.19 "CONVERSION DATE" means April 1, 1997.
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<PAGE> 4
1.20 "COST OF FUNDS" shall mean the fixed per annum rate of interest
as of the date selected by Borrower in accordance with the terms
of this Agreement determined by Lender in good faith in
accordance with Lender's customary practices for loans in United
States currency and based on Lender's cost of obtaining funds
with a maturity approximately equal to the Interest Period for
such Cost of Funds Advance from sources as may be selected by
Lender in its sole and absolute discretion.
1.21 "COST OF FUNDS ADVANCE" means any Advance or Equipment Advance
that bears interest with reference to the Cost of Funds.
1.22 "COST OF FUNDS LOANS" or "COST OF FUNDS LOAN" means any Revolving
Loan, Equipment Loan or Second Term Loan or portion of the
Revolving Loan or Equipment Loan which bears interest with
reference to the Cost of Funds.
1.23 "EQUIPMENT ADVANCE" means that term as defined in Section 2.12.
1.24 "EQUIPMENT LOAN" means all Equipment Advances made pursuant to
this Agreement and evidenced by the Equipment Note.
1.25 "EQUIPMENT NOTE" means that term as defined in Section 2.12.
1.26 "INTEREST PERIOD" means with respect to the LIBOR Loans and Cost
of Funds Loans, the period selected by the Borrower pursuant to
this Agreement, to the extent such period is available from
Lender to other borrowers similarly situated to Borrower on the
date of such selection. Each Interest Period shall commence on
the date such advance is made or the date of a subsequent
interest rate election, as the case may be, and shall end on the
date as the Borrower may select, provided that:
(i) any Interest Period for LIBOR Loans which would otherwise
end on a day which is not a Business Day shall end on the
next or succeeding Business Day as is Lender's custom in
the inter-bank Eurodollar market to which such advance
relates;
(ii) any Interest Period for Cost of Funds Loans which would
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<PAGE> 5
otherwise end on a day which is not a Business Day shall end on
the next preceding or succeeding Business Day of Lender;
(iii) Borrower may not select an Interest Period which would end
after the Maturity Date and any Interest Period which
commences before and would otherwise end after the Maturity
Date, shall end on the Maturity Date; and
(iv) any Interest Period for LIBOR Loans which begins on a day for
which there is no numerically corresponding day in the
calendar month during which such Interest Period is to end,
shall (subject to clause (i) above) end on the last day of
such calendar month.
1.27 "LIBOR" shall mean, with respect to the Interest Period for which it
is determined, the rate per annum calculated pursuant to the
following formula:
LIBOR = LIBOR Base Rate
---------------
1-Reserve Percentage
1.28 "LIBOR ADVANCE" means any Advance or Equipment Advance that bears
interest with reference to LIBOR.
1.29 "LIBOR BASE RATE" means the rate quoted to Lender on or prior to the
commencement of an Interest Period for the offering to Lender from
prime commercial banks in the interbank Eurodollar market of
dollar deposits in immediately available funds for a period equal
to the Interest Period and in an amount equal to the requested
LIBOR Advance.
1.30 "LIBOR LOANS" or "LIBOR LOAN" means the Revolving Loan, Equipment
Loan or the Second Term Loan or any portion of the Revolving Loan or
Equipment Loan which bears interest with reference to LIBOR.
1.31 "PRIME RATE" shall mean the interest rate charged from time to time
by Lender at its principal office as its Prime Rate. The Prime Rate
is not necessarily the lowest lending rate offered by Lender to its
customers.
1.32 "PRIME RATE ADVANCE" means any Advance or Equipment
- 5 -
<PAGE> 6
Advance that bears interest with reference to the Prime Rate.
1.33 "PRIME RATE LOAN" or "PRIME RATE LOANS" means the Revolving Loan,
Equipment Loan or Second Term Loan or any portion of the
Revolving Loan or Equipment Loan which bears interest with
relevance to the Prime Rate.
1.34 "RESERVE PERCENTAGE" means for any day with respect to a LIBOR
Advance or LIBOR Loan, the maximum rate, (expressed as a
decimal) at which any lender subject thereto would be required
to maintain reserves under Regulation D of the Board of
Governors of the Federal Reserve System (or any successor or
similar regulations relating thereto) against "Eurocurrency
Requirements" (as that term is used in Regulation D) if such
liabilities were outstanding.
2. Amendment to Section 2.1 of the Loan Agreement. The Loan Agreement is
hereby amended by deleting Section 2.1 in its entirety and substituting the
following in lieu thereof:
2.1 Revolving Loan. The Lender may loan to the Borrower, at its
discretion, and the Borrower may borrow from the Lender, from
time to time (each an "ADVANCE" and collectively, the "REVOLVING
LOAN"), up to that amount (hereinafter referred to as the
BORROWING BASE") which is the lesser of:
a. The sum of:
(1) EIGHTY PERCENT (80%) of the Borrower's Eligible
Receivables;
(2) SIXTY PERCENT (60%) of the Borrower's Eligible
Inventory, but in any event not to exceed FIVE MILLION
DOLLARS ($5,000,000.00);
which sum shall be reduced by the aggregate amount committed
under any letter or letters of credit issued by the Lender on
behalf of the Borrower; OR
b. NINE MILLION DOLLARS ($9,000,000.00), reduced by the
aggregate amount committed under any letter or letters of
credit issued by the Lender on behalf of the Borrower.
Nothing herein shall be construed to require the Lender to
lend
- 6 -
<PAGE> 7
up to the Borrowing Base, and nothing shall prohibit the Lender
from
- 7 -
<PAGE> 8
lending in excess of the Borrowing Base, all loans to be at the
discretion of the Lender.
The Revolving Loan shall be evidenced by the Revolving Promissory
Note annexed hereto and made a part hereof as EXHIBIT "B".
3. Amendment to Section 2.9 of the Loan Agreement. The Loan Agreement
is hereby amended by deleting the first sentence of Section 2.9 in its entirety
and substituting the following in lieu thereof:
The Revolving Loan shall terminate on March 31, 2000 and may be
renewed by the Lender, in its sole and absolute discretion, upon
written notification by the Lender prior to March 31, 2000, which
notification will contain the terms and conditions of any renewal.
4. Amendment to Section 2.11 of the Loan Agreement. Section 2.11 of
the Loan Agreement is hereby deleted and replaced with the following:
2.11 Combined Term Loan.
The Lender made: (i) on or about March 29, 1994, a $500,000
equipment loan (the "FIRST EQUIPMENT LOAN") to the Borrower
and (ii) on or about February 28, 1995, a second $500,000
equipment loan (the "SECOND EQUIPMENT LOAN) to the Borrower.
The outstanding principal amounts of the First Equipment Loan
and Second Equipment Loan are hereby consolidated and combined
into a single term loan in the principal amount of $541,153.34
(the "SECOND TERM LOAN"), which Second Term Loan shall be
subject to the terms and conditions of this Loan Agreement and
the note attached hereto as EXHIBIT C.
5. Amendment to Section 2.12 of the Loan Agreement. Section 2.12 of
the Loan Agreement is hereby deleted in its entirety and the following
substituted in lieu thereof:
2.12 Equipment Line of Credit III.
Equipment Advances. Subject to the terms and conditions set
forth in this Agreement, Lender agrees to make advances (each
an "EQUIPMENT ADVANCE" and collectively "EQUIPMENT ADVANCES")
to Borrower from time to time during the period from the date
hereof up to, but not including, March 31, 1998 (the
"CONVERSION
- 8 -
<PAGE> 9
DATE"); provided, however, that at no time shall the aggregate
outstanding principal balance of all Equipment Advances plus the
aggregate outstanding principal amount of any leases entered into
by the Borrower with Fleet Credit Corporation exceed
$3,000,000.00.
Equipment Note. All Equipment Advances shall be evidenced by,
and repaid with interest in accordance with, a single promissory
note of Borrower in substantially the form of EXHIBIT C-1
attached hereto, duly completed, executed, and delivered to
Lender, in the principal amount of up to $3,000,000.00 and dated,
of even date herewith, payable to Lender, and maturing on the
Maturity Date (the "EQUIPMENT NOTE"). Borrower hereby authorizes
Lender to record on the Equipment Note or in its internal
computerized records the amount of each Equipment Advance and of
each payment of principal received by Lender on account of the
Equipment Loan, which recordation shall, in the absence of
manifest error, be conclusive as to the outstanding principal
balance of the Equipment Loan and shall be considered correct and
binding on Borrower provided, however, that the failure to make
such recordation with respect to any Equipment Advance or payment
shall not limit or otherwise affect the obligations of Borrower
under this Agreement or the Equipment Note.
Invoices. In the case of each Equipment Advance, Borrower shall
deliver to Lender the following: (1) an invoice for the equipment
to be purchased certified by the chief financial officer of
Borrower as being true, complete and correct, and showing that
the requested Equipment Advance does not exceed eighty (80%)
percent of the hard costs thereof excluding registration fees,
taxes, shipping charges, delivery charges, set-up charges,
maintenance costs and any and all other "soft costs", (2) if
requested by Lender, a UCC-1 financing statement or UCC-3
amendment with respect to such equipment and (3) any other
additional approvals, opinions, reports, and other documents as
may be required hereunder or as Lender may reasonably request.
6. The following is inserted after Section 2.12 hereof:
2.13 Non-Default Interest. The Borrower shall pay interest to
Lender monthly in arrears on the first day of each month
commencing April 1, 1997 on the outstanding and unpaid principal
balance of
- 9 -
<PAGE> 10
the Revolving Loan, Second Term Loan and Equipment Loan at a rate
per annum equal to, at Borrower's election pursuant to Section
2.14 below, (i) the Prime Rate, (ii) LIBOR plus two hundred (200)
basis points, or (iii) the Cost of Funds plus two hundred (200)
basis points. Notwithstanding anything contained herein to the
contrary, if the Borrower achieves a Debt Service Ratio (as
defined in Section 10 of Exhibit A hereto) of greater than or
equal to 1.5 to 1.0 for the year to date period tested, the
portion of the Revolving Loan which bears interest with respect
to the LIBOR Rate or the Cost of Funds Rate will be reduced by
twenty-five (25) basis points for the quarter in which the Debt
Service Ratio was tested. Any change in the interest rate
resulting from a change in the Prime Rate shall become effective
as of the opening of business on the day on which such change in
the Prime Rate shall become effective.
2.14 Notice and Manner of Borrowing. Borrower shall give
Lender irrevocable notice by telecopy or otherwise in writing of
its request that Lender make an Advance or Equipment Advance
hereunder, not later than 2:00 p.m. Hartford time two (2)
Business Days prior to the proposed drawdown date thereof
("DRAWDOWN DATE"). Notice received by Lender after 2:00 p.m.
Hartford, Connecticut time shall be loaned against by Lender
three (3) Business Days after the proposed Drawdown Date.
Notwithstanding anything contained herein to the contrary, for
Prime Rate Advances, the Borrower shall only be required to give
such notice not later than 2:00 p.m. on the Drawdown Date. Each
notice, in the case of a LIBOR Advance or Cost of Funds Advance,
shall specify the duration of the Interest Period therefor.
Subject to the fulfillment of the applicable conditions set forth
in this Agreement, Lender will make the Advance or Equipment
Advance in immediately available funds by crediting the amount
thereof to Borrower's account with Lender. Notwithstanding
anything contained herein to the contrary, the Borrower may only
elect LIBOR Loans or Cost of Funds Loans in original principal
amounts of not less than $1,000,000.00.
2.15 Prepayment of Principal. Borrower may prepay (i) Prime Rate
Loans, in whole or in part without penalty with accrued interest
to the date of such prepayment on the amount prepaid, and (ii)
LIBOR Loans or Cost of Funds Loans, in whole or in part on the
last Business Day of the Interest Period applicable to the
portion of the LIBOR Loans or Cost of Funds Loans being prepaid.
If
- 10 -
<PAGE> 11
any such payment is made on a day other than the last Business
Day of the then current Interest Period applicable to such LIBOR
Loan or Cost of Funds Loan or Borrower requests a LIBOR Advance
or Cost of Funds Advance pursuant to Section 2.14, but fails to
borrow such LIBOR Advance or Cost of Funds Advance, Borrower
shall pay Lender, upon Lender's request, such amount or amounts
as may be necessary to compensate Lender for any loss or expense
sustained or incurred by Lender in respect of such LIBOR Advance
or Cost of Funds Advance as a result of any such payment or
failure to borrow, including, without limitation, any interest or
other amounts payable by Lender to lenders of funds obtained by
Lender in order to make or maintain such LIBOR Advance or Cost of
Funds Advance.
2.16 Default Interest. Overdue principal and interest and, upon
the occurrence and during the continuance of an Event of Default,
all principal and accrued but unpaid interest shall bear interest
until paid in full, payable on demand, at a rate of the lesser of
(i) three percent (3%) above the interest rate in effect
immediately prior to the occurrence of an Event of Default or
(ii) the maximum rate permitted by law.
2.17 Conversion of Rate of Interest. Provided that no Event of
Default shall have occurred and be continuing Loan, the Borrower
may, (a) on any Business Day, convert any outstanding Prime Rate
Loan to a LIBOR Loan or a Cost of Funds Loan in the same
aggregate principal amount and (b) convert a LIBOR Loan to a
Prime Rate Loan or Cost of Funds Loan only on the last Business
Day of the then current Interest Period applicable to such LIBOR
Loan and (c) convert a Cost of Funds Loan to a Prime Rate Loan or
LIBOR Loan, only on the last Business Day of the then current
Interest Period for such Cost of Funds Loan. If the Borrower
desires to so convert, it shall give Lender written notice on or
prior to the conversion date in accordance with the terms of
Section 2.14, specifying the date of such conversion, the amount
to be converted and if conversion is to a LIBOR Loan or Cost of
Funds Loan, the duration of the first Interest Period therefor.
2.18 Continuation of Rate of Interest. Provided that no Event of
Default shall have occurred, any LIBOR Loan or Cost of Funds Loan
may be continued as such upon the expiration of the current
Interest Period by the Borrower giving notice to the Lender in
- 11 -
<PAGE> 12
accordance with the terms of Section 2.14 for making LIBOR
Advances or Cost of Funds Advances.
2.19 Failure to Convert or Continue. If Borrower fails to
notify Lender of its election to convert or continue an
expiring Cost of Funds Loan or LIBOR Loan on or prior to the
end of the expiring Interest Period, such expiring Cost of
Funds Loan or LIBOR Loan shall, at the end of such Interest
Period, automatically become a Prime Rate Loan.
7. Amendments to Section 4.1.i. of the Loan Agreement. Subsection (6)
of Section 4.1.i. of the Loan Agreement is hereby deleted and replaced with the
following:
(6) on the first business day of each month, a borrowing
base certificate and borrowing certificate reconciliations
in form and substance satisfactory to Lender, provided
however, if the availability under the Revolving Loan is
$1,000,000 or less, the Borrowing Base certificate and
reconciliations shall be provided daily.
8. Amendments to Sections 4.1.m., 4.1.n. and 4.1.o. of the Loan
Agreement. Sections 4.1.m., 4.1.n. and 4.1.o. of the Loan Agreement are hereby
deleted in their entirety.
9. Amendment to Section 4.2.o of the Loan Agreement. Section 4.2.o of
the Loan Agreement is hereby deleted in its entirety.
10. Amendment to Section 5.1.o of the Loan Agreement. Section 5.1.o
of the Loan Agreement is hereby deleted in its entirety.
11. Amendment to Exhibit A of the Loan Agreement. Exhibit A of the
Loan Agreement is hereby amended by:
a. Deleting Section 2 of Exhibit "A" in its entirety.
b. Deleting Section 10 of Exhibit "A" to the Loan Agreement in
its entirety and substituting the following in lieu thereof:
Debt Service Ratio. The Borrower shall maintain as of the
end of each calendar quarter, for the year to date period, a
ratio of [(earnings before interest, taxes, depreciation and
amortization) minus (unfunded Capital Expenditures (pro rated
based upon the percentage of the calendar year elapsed at the
time of the covenant testing)) to [(Current Maturities of
Long-Term Debt
- 12 -
<PAGE> 13
paid or scheduled to be paid during the period to be tested) plus
(interest) plus (taxes) plus (dividends)] of (a) not less than
1.0 to 1.0 as of March 31, 1997 and at all times through and
including December 31, 1997, and (b) 1.1 to 1.0 as of March 31,
1998 and at all times thereafter. "CURRENT MATURITIES OF LONG
TERM DEBT" shall mean all indebtedness of Borrower (excluding the
Revolving Loan) which, in accordance with GAAP may be properly
classified as long term debt, the portion of which is due within
one (1) year from the date of determination thereof. "CAPITAL
EXPENDITURES" shall mean amounts paid or indebtedness incurred by
the Borrower in connection with the purchase or lease by the
Borrower of Capital Assets that would be required to be
capitalized and shown on the balance sheet of the Borrower in
accordance with GAAP. "CAPITAL ASSETS" shall mean fixed assets,
both tangible (such as land, buildings, fixtures, machinery and
equipment) and intangible (such as patents, copyrights,
trademarks, franchises and good will); provided that Capital
Assets shall not include any item customarily charged directly to
expense or depreciated over a useful life of twelve (12) months
or less in accordance with GAAP.
c. Deleting Section 11 of Exhibit "A" to the Loan Agreement in
its entirety.
d. Deleting Section 13 of Exhibit "A" to the Loan Agreement in
its entirety and substituting the following in lieu thereof:
Leverage Ratio. The Borrower shall maintain a ratio of Total
Liabilities to Tangible Net Worth as of the end of each calendar
quarter of not greater than 3.5 to 1.0 at all times. For the
purposes of this paragraph, "TOTAL LIABILITIES" shall mean all
debt and other liabilities of the Borrower which in accordance
with GAAP may be properly classified as liabilities and all other
liabilities, indebtedness or obligation whether or not so
classified. For the purposes of this Section 13 below, the term
"TANGIBLE NET WORTH" shall mean as at any date of determination
thereof, (a) the Borrower's "net worth" as defined by and
determined in accordance with GAAP minus (b) amounts at which
good will and any other intangibles including, without
limitation, patents, trademarks, trade names, copyrights and
franchises, and amounts owed by and/or invested in officers or
shareholders of the Borrower would be shown on such balance sheet
minus (c) increases caused by a write-up of assets of the
Borrower.
- 13 -
<PAGE> 14
e. Deleting Section 14 of Exhibit "A" to the Loan Agreement in
its entirety.
f. Deleting Section 15 of Exhibit "A" to the Loan Agreement in
its entirety.
g. EXHIBITS B, C AND C-1 of the Loan Agreement are hereby
deleted and replaced with EXHIBITS B, C AND C-1 attached
hereto.
B. Amendments to Revolving Note. The Revolving Note is hereby amended
and restated as set forth in EXHIBIT B attached hereto.
C. Amendment and Restatement of the First Equipment Note and Second
Equipment Note. The First Equipment Note and Second Equipment Note are hereby
combined, amended and restated as set forth in EXHIBIT C attached hereto.
D. Amendment to the Term Note. The Term Note is hereby amended by:
1. Deleting the following paragraph after the fourth paragraph on
page one of the Term Note:
The Borrower shall also pay on the first day of each month,
together with the regularly scheduled payment of principal and
interest, accrued interest in an amount equal to one (1%) percent
per annum of the outstanding principal balance of the Note (the
"Additional Interest"). The Lender may, in its sole and absolute
discretion, reduce the Additional Interest payable monthly under
this Note to an amount equal to one-half of one percent (0.5%)
per annum of the outstanding principal balance of this Note.
Nothing contained herein shall be deemed to be an express or
implied commitment or intention by or on the part of the Lender
to so reduce the interest rate.
2. Deleting the language "eight and sixty-five hundredths percent
(8.65%) per annum" on page one of the Term Note and replacing
it with the following: "seven and sixty-five hundredths
percent (7.65%) per annum."
3. Deleting the date "April 1, 1993" on page one of the Term Note
and replacing it with "April 1, 1997".
4. Deleting the date "April 1, 1998" on page one of the Term Note
and replacing it with "March 1, 2002".
- 14 -
<PAGE> 15
5. Deleting the date "April 30, 1998" on page three
of the Term Note and replacing it with "March 31, 2002."
6. Deleting the first full paragraph on page two of
the Term Note in its entirety and substituting the following
in lieu thereof:
To the extent allowed by applicable law, after the occurrence
of an Event of Default, all outstanding principal and unpaid
interest shall bear, until paid, interest at a rate per annum
(the "DEFAULT RATE") equal to three (3) points above the
interest rate specified above.
E. Amendment to the Loan Documents. The Loan Documents, including
without limitation EXHIBIT D of the Loan Agreement, are hereby amended to be
made consistent with this Amendment.
III. Reaffirmation of Guaranty.
To induce the Lender to enter into this Amendment, the Guarantor hereby (a)
consents to this Amendment and (b) affirms and ratifies the Guaranty and
confirms that (i) the Guarantor does irrevocably and unconditionally guarantee
to the Lender the payment and performance from the Borrower of the Obligations
(as defined in the Guaranty) from the Borrower to the Lender, upon the terms and
conditions set forth in the Guaranty, (ii) the term Obligations includes,
without limitation, this Amendment, a certain Third Modification of Construction
to Permanent Loan Promissory Note and Open-End Construction to Permanent
Mortgage Deed of even date herewith in connection with the Construction Loan
(the "MODIFICATION"), the Term Loan, the Second Term Loan, the Equipment Loan
and the increase in the Revolving Loan, and (iii) the Guaranty remains in full
force and effect.
IV. Miscellaneous.
A. Ratifications, Etc. Except as otherwise expressly set forth herein,
all terms and conditions of the Loan Agreement, the Term Note, the Guaranty and
the Loan Documents are ratified and shall remain in full force and effect.
Nothing herein shall be construed to be a waiver of any requirements of the Loan
Agreement and the Loan Documents except as expressly set forth herein.
- 15 -
<PAGE> 16
B. Conditions Precedent. The effectiveness of this Amendment shall be
subject to the Lender's prior receipt of each of the following in form and
substance satisfactory to Lender and its counsel:
1. This Amendment, duly executed and delivered by
the Borrower and Guarantor and the Second Term Note, the
Equipment Note and the Amended and Restated Revolving
Promissory Note, duly executed and delivered by the Borrower;
2. Copies of all corporate action taken by the
Borrower and Guarantor, including resolutions of its Board of
Directors, authorizing the execution, delivery, and
performance of the Loan Documents to which it is a party and
each other document to be delivered pursuant to this
Amendment, certified as of the date of this Amendment by the
Secretary of the Borrower and Guarantor;
3. A certificate or certificates, dated as of the
date of this Amendment, of the Secretary of the Borrower
and/or Guarantor certifying the names and true signatures of
the officers of the Borrower and Guarantor authorized to sign
the Loan Documents to which the Borrower or Guarantor are a
party and the other documents to be delivered by the Borrower
and Guarantors under this Amendment and an opinion of
Borrower's counsel in form and substance satisfactory to the
Lender;
4. All fees and expenses, including legal fees and
related disbursements incurred by Lender in connection with
the structuring, negotiation, preparation and closing of this
Amendment and the transactions related hereto;
5. Execution and recording of the Modification and
the issuance of an endorsement to the title policy insuring
the original mortgage modified by such Modification; and
6. Execution and recording of a certain Eighth
Modification of Open-End Mortgage of even date herewith and
the issuance of an endorsement to the title policy insuring
the original mortgage modified by said Modification of
Open-End Mortgage Deed.
C. Counterparts. This Amendment may be executed in any number of
counterparts, which together shall constitute one instrument.
D. Governing Law. This Amendment shall be construed and interpreted in
accordance with the laws of the State of Connecticut.
- 16 -
<PAGE> 17
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
an instrument under seal.
LENDER:
FLEET NATIONAL BANK f/k/a
FLEET NATIONAL BANK OF
CONNECTICUT f/k/a SHAWMUT
BANK CONNECTICUT, N.A.
By
---------------------------
Edgar Ezerins
Its Vice President
Duly Authorized
BORROWER:
EDAC TECHNOLOGIES
CORPORATION
By
---------------------------
Ronald G. Popolizio
Its Vice President
Duly Authorized
GUARANTOR:
GROS-ITE INDUSTRIES, INC.
By
---------------------------
Its
- 17 -
<PAGE> 1
AMENDED AND RESTATED REVOLVING PROMISSORY NOTE
$9,000,000.00 Hartford, Connecticut
March 27, 1997
ON DEMAND FOR VALUE RECEIVED, the undersigned, EDAC TECHNOLOGIES
CORPORATION, a Wisconsin corporation with a place of business at 1790 New
Britain Avenue, Farmington, Connecticut 06032 (hereinafter "BORROWER") promises
to pay to the order of FLEET NATIONAL BANK, f/k/a Fleet National Bank of
Connecticut, N.A. f/k/a Shawmut Bank of Connecticut f/k/a Connecticut National
Bank, a national banking association ("LENDER"), having a mailing address of 777
Main Street, Hartford, Connecticut, 06115 or at such other place as Lender may
from time to time designate in writing, the principal sum of NINE MILLION
($9,000,000.00) DOLLARS (the "PRINCIPAL AMOUNT") or, if less, the aggregate
unpaid principal amount of all Advances made pursuant to that certain Fifth
Amended and Restated Revolving Loan, Term Loan, Equipment Loan and Security
Agreement dated February 28, 1995, as amended by a certain Sixth Amendment to
Revolving Loan, Term Loan, Equipment Loan and Security Agreement dated July 31,
1995, as further amended by a certain Seventh Amendment to Revolving Loan, Term
Loan, Equipment Loan and Security Agreement and Reaffirmation of Guaranties
dated as of January 26, 1996, as further amended by a certain Eighth Amendment
to Revolving Loan, Term Loan, Equipment Loan and Security Agreement and
Reaffirmation of Guaranties dated as of April 10, 1996, and as further amended
by a certain Ninth Amendment to Revolving Loan, Term Loan, Equipment Loan,
Security Agreement, Modification of Notes and Reaffirmation of Guaranties dated
of even date herewith between Borrower and Lender (as amended and in effect from
time to time, the "LOAN AGREEMENT"), together with (i) interest at the rate and
in the manner provided in the Loan Agreement; (ii) all amounts which may become
due under the Loan Agreement or any of the other Loan Documents; (iii) any costs
and expenses, including reasonable attorneys' and appraiser's fees incurred in
the collection of this Note or the enforcement of the Loan Agreement or any of
the other Loan Documents, foreclosure thereunder or in any litigation or
controversy arising from or connected with this Note, or the Loan Agreement or
any of the other Loan Documents; and (iv) all taxes or duties assessed upon said
sum against Lender or upon the debt evidenced hereby. All amounts owing under
this Note and interest thereon shall be payable in legal tender of the United
States of America. Capitalized terms used herein and not otherwise defined
shall have the meanings given to them in the Loan Agreement.
Interest on the Principal Amount shall be computed on the basis of a
360-day year for actual days elapsed and shall be payable at the rate and in the
manner as provided in the Loan Agreement until all of said Principal Amount has
been fully paid, whether before or after the maturity hereof, by acceleration or
otherwise, and whether or not any judgment is obtained hereon. If not sooner
paid, the Principal Amount, together with all accrued but unpaid interest
thereon, shall be due and payable on March 31, 2000 or such earlier date as
provided in the Loan Agreement (including by reason of an acceleration upon the
occurrence of an Event of
<PAGE> 2
Default) (the "MATURITY DATE").
In the event that Lender has not received, within fifteen (15) days of its
due date, any payment of principal or interest due hereunder (excluding any
Principal Amount or interest due upon the Maturity Date), or payment with
respect to any other payment due under this Note, Borrower shall be subject to a
late charge equal to five (5%) percent of any such payment.
Upon the occurrence of default by Borrower in the performance of any of
Borrower's obligations hereunder, or an Event of Default as defined in the Loan
Agreement or in any other Loan Documents, Lender may, at its option, accelerate
Borrower's obligations hereunder and declare the entire unpaid Principal Amount,
together with accrued interest and all other amounts then due which are
evidenced by this Note, to be immediately due and payable, without the necessity
for demand or additional notice. In addition, upon the occurrence of such
default or Event of Default or after the Maturity Date, the interest rate of
this Note shall increase without notice, as provided in the Loan Agreement.
Failure to exercise these options shall not constitute a waiver of the right to
exercise the same in the event of any subsequent default.
Borrower may prepay the Note only in accordance with the terms of the Loan
Agreement.
Notwithstanding any provisions of this Note, it is the understanding and
agreement of Borrower and Lender that the maximum rate of interest to be paid by
Borrower to Lender shall not exceed the highest of the maximum rate of interest
permissible to be charged by Lender under applicable laws. Any amount paid in
excess of such rate shall be deemed to be a payment in reduction of principal
except to the extent that such amount is in excess of the then outstanding
Principal Amount, in which event such excess shall be returned to the Borrower.
This Note shall be governed by and construed in accordance with the laws of
the State of Connecticut. This Note shall bind the successors and assigns of
Borrower, and shall inure to the benefit of Lender and its successors and
assigns. This Note may not be changed or terminated orally, but only by an
agreement in writing signed by the party against whom enforcement of any such
change or termination is sought.
Whenever in this Note words of any gender appear, they shall be deemed to
apply equally to any other gender. Whenever used in this Note, the plural shall
include the singular and the singular shall include the plural, as the context
shall require. In the event that Borrower consists of more than one person or
entity, the obligations hereunder shall be joint and several.
This Note amends, restates, and supersedes in its entirety a certain
Revolving Promissory Note dated February 28, 1995 in the original principal
amount of $7,000,000.00 from the Borrower to the Lender (as amended and in
effect from time to time, the "ORIGINAL
2
<PAGE> 3
NOTE") and the Original Note shall have no further force and effect except to
the extent necessary to preserve and maintain the Lender's previously filed and
fully protected security interest in the personal property of the Borrower.
Nothing contained herein shall constitute a novation of the Original Note.
3
<PAGE> 4
TO INDUCE LENDER TO ENTER INTO THE COMMERCIAL LOAN TRANSACTION EVIDENCED BY
THIS NOTE, THE LOAN AGREEMENT, AND ANY OTHER LOAN DOCUMENTS EVIDENCING OR
SECURING THE SAME, BORROWER AGREES THAT THIS IS A COMMERCIAL TRANSACTION AND NOT
A CONSUMER TRANSACTION, AND WAIVES ANY RIGHT TO NOTICE AND A HEARING AND
AUTHORIZES LENDER'S ATTORNEY TO ISSUE A WRIT FOR A PREJUDGMENT REMEDY WITHOUT
COURT ORDER, PROVIDED THE COMPLAINT SHALL SET FORTH A COPY OF THIS WAIVER AND
WAIVES ANY CLAIM IN TORT, CONTRACT OR OTHERWISE AGAINST LENDER'S ATTORNEY WHICH
MAY ARISE OUT OF SUCH ISSUANCE OF A WRIT FOR A PREJUDGMENT REMEDY WITHOUT COURT
ORDER. BORROWER FURTHER WAIVES ANY RIGHT IT MAY HAVE TO REQUEST THAT LENDER
POST A BOND IN CONNECTION WITH ANY SUCH PREJUDGMENT REMEDY. BORROWER
ACKNOWLEDGES AND STIPULATES THAT SUCH WAIVER AND AUTHORIZATION GRANTED ABOVE ARE
MADE KNOWINGLY AND FREELY AND AFTER FULL CONSULTATION WITH COUNSEL.
SPECIFICALLY, BORROWER RECOGNIZES AND UNDERSTANDS THAT THE EXERCISE OF LENDER'S
RIGHTS DESCRIBED ABOVE MAY RESULT IN THE ATTACHMENT OF OR LEVY AGAINST
BORROWER'S PROPERTY, AND SUCH WRIT FOR A PREJUDGMENT REMEDY WILL NOT HAVE THE
PRIOR WRITTEN APPROVAL OR SCRUTINY OF A COURT OF LAW OR OTHER JUDICIAL OFFICER
NOR WILL BORROWER HAVE THE RIGHT TO ANY NOTICE OR PRIOR HEARING WHERE BORROWER
MIGHT CONTEST SUCH A PROCEDURE. THE INTENT OF BORROWER IS TO GRANT TO LENDER
FOR GOOD AND VALUABLE CONSIDERATION THE RIGHT TO OBTAIN SUCH A PREJUDGMENT
REMEDY AND TO EXPRESS ITS BELIEF THAT ANY SUCH PREJUDGMENT REMEDY OBTAINED IS
VALID AND CONSTITUTIONAL. FURTHER, TO THE EXTENT ALLOWED UNDER APPLICABLE LAW,
BORROWER HEREBY WAIVES DEMAND, PRESENTMENT FOR PAYMENT, PROTEST, NOTICE OF
PROTEST, NOTICE OF DISHONOR, DILIGENCE IN COLLECTION, NOTICE OF NONPAYMENT OF
THIS NOTE AND ANY AND ALL NOTICES OF A LIKE NATURE.
BORROWER:
EDAC TECHNOLOGIES CORPORATION
By:
-----------------------------
Ronald G. Popolizio
Its Vice President
(Duly Authorized)
4
<PAGE> 1
EQUIPMENT PROMISSORY NOTE III
Hartford, Connecticut
$ 3,000,000.00 March 27, 1997
FOR VALUE RECEIVED, the undersigned, EDAC TECHNOLOGIES CORPORATION, a
Wisconsin corporation with a place of business at 1790 New Britain Avenue,
Farmington, Connecticut 06032 (the "BORROWER") for value received, promises to
pay to the order of FLEET NATIONAL BANK, a national banking association,
(hereinafter referred to as the "LENDER") at its office at 777 Main Street,
Hartford, Connecticut 06115 or at such other place as the holder of this Note
may from time to time designate in writing, the principal sum of THREE MILLION
($3,000,000.00) DOLLARS (the "PRINCIPAL AMOUNT") or, if less, the aggregate
unpaid principal amount of all Equipment Advances made pursuant to that certain
Fifth Amended and Restated Revolving Loan, Term Loan, Equipment Loan and
Security Agreement dated February 28, 1995, as amended by a certain Sixth
Amendment to Revolving Loan, Term Loan, Equipment Loan and Security Agreement
dated July 31, 1995, as further amended by a certain Seventh Amendment to
Revolving Loan, Term Loan, Equipment Loan and Security Agreement and
Reaffirmation of Guaranties dated as of January 26, 1996, as further amended by
a certain Eighth Amendment to Revolving Loan, Term Loan, Equipment Loan and
Security Agreement and Reaffirmation of Guaranties dated as of April 10, 1996,
and as further amended by a certain Ninth Amendment to Revolving Loan, Term
Loan, Equipment Loan, Security Agreement, Modification of Notes and
Reaffirmation of Guaranties dated of even date herewith between Borrower and
Lender (as amended and in effect from time to time, the "LOAN AGREEMENT"),
together with (i) interest at the rate and in the manner provided herein; (ii)
all amounts which may become due under the Loan Agreement or any of the other
Loan Documents; (iii) any costs and expenses, including reasonable attorneys'
and appraiser's fees incurred in the collection of this Note or the enforcement
of the Loan Agreement or any of the other Loan Documents, foreclosure thereunder
or in any litigation or controversy arising from or connected with this Note,
the Loan Agreement or any of the other Loan Documents; and (iv) all taxes or
duties assessed upon said sum against Lender or upon the debt evidenced hereby
other than income or excise taxes. All amounts owing under this Note and
interest thereon shall be payable in legal tender of the United States of
America. Capitalized terms used herein and not otherwise defined shall have the
meanings given to them in the Loan Agreement.
This Note shall bear interest at an annual rate as selected by Borrower
pursuant to the terms of the Loan Agreement. Interest shall be payable as set
forth in the Loan Agreement.
The Borrower shall make interest only payments on the first day of each
month for the first year of this Loan and on the Conversion Date at such rates
and in the manner as provided
<PAGE> 2
in the Loan Agreement. On and after March 31, 1998 (the "CONVERSION DATE"),
monthly payments of principal (based on a five-year straight-line amortization
schedule) and accrued interest shall be due and payable in arrears commencing on
April 1, 1998 and continuing on the first day of each succeeding month
thereafter until the outstanding Principal Amount, together with all interest
accrued thereon has been fully paid, except that if not sooner paid, the
Principal Amount, together with all accrued but unpaid interest thereon, shall
be due and payable on March 31, 2003 or such earlier date as provided in the
Loan Agreement (including by reason of an acceleration upon the occurrence of an
Event of Default) (the "MATURITY DATE").
Interest on the Principal Amount shall be computed on the basis of a
360-day year for actual days elapsed and shall be payable at the rate and in the
manner as provided herein until all of said Principal Amount has been fully
paid, whether before or after the Maturity Date, by acceleration or otherwise,
and whether or not any judgment is obtained hereon.
In the event that Lender has not received, within fifteen (15) days of its
due date, any installment of the Principal Amount and interest (excluding any
Principal Amount and interest due upon the Maturity Date), or payment with
respect to any other payment due under this Note, Borrower shall be subject to a
late charge equal to five (5%) percent of such payment.
Upon the occurrence of default by Borrower in the performance of any of
Borrower's obligations hereunder, or an Event of Default as defined in the Loan
Agreement or in any other Loan Documents, Lender may, at its option, accelerate
Borrower's obligations hereunder and declare the entire unpaid Principal Amount,
together with accrued interest and all other amounts then due which are
evidenced by this Note, to be immediately due and payable, without the necessity
for demand or additional notice. In addition, upon the occurrence of such
default or Event of Default or after the Maturity Date, the interest rate of
this Note shall increase without notice, as provided in the Loan Agreement.
Failure to exercise these options shall not constitute a waiver of the right to
exercise the same in the event of any subsequent default.
Borrower may prepay this Note only in accordance with the terms of the Loan
Agreement.
Notwithstanding any provisions of this Note, it is the understanding and
agreement of Borrower and Lender that the maximum rate of interest to be paid by
Borrower to Lender shall not exceed the highest of the maximum rate of interest
permissible to be charged by Lender under applicable laws. Any amount paid in
excess of such rate shall be deemed to be a payment in reduction of principal
except to the extent that such amount is in excess of the then outstanding
Principal Amount, in which event such excess shall be returned to the Borrower.
This Note shall be governed by and construed in accordance with the laws of
the State of Connecticut. This Note shall bind the successors and assigns of
Borrower, and shall inure
- 2 -
<PAGE> 3
to the benefit of Lender and its successors and assigns. This Note may not be
changed or terminated orally, but only by an agreement in writing signed by the
party against whom enforcement of any such change or termination is sought.
Whenever in this Note words of any gender appear, they shall be deemed to
apply equally to any other gender. Whenever used in this Note, the plural shall
include the singular and the singular shall include the plural, as the context
shall require. In the event that Borrower consists of more than one person or
entity, the obligations hereunder shall be joint and several.
- 3 -
<PAGE> 4
TO INDUCE LENDER TO ENTER INTO THE COMMERCIAL LOAN TRANSACTION EVIDENCED BY
THIS NOTE, THE LOAN AGREEMENT, AND ANY OTHER LOAN DOCUMENTS EVIDENCING OR
SECURING THE SAME, BORROWER AGREES THAT THIS IS A COMMERCIAL TRANSACTION AND NOT
A CONSUMER TRANSACTION, AND WAIVES ANY RIGHT TO NOTICE AND A HEARING UNDER
CHAPTER 903A OF THE CONNECTICUT GENERAL STATUTES, AS AMENDED, OR OTHER STATUTE
OR STATUTES AFFECTING PREJUDGMENT REMEDIES AND AUTHORIZES LENDER'S ATTORNEY TO
ISSUE A WRIT FOR A PREJUDGMENT REMEDY WITHOUT COURT ORDER, PROVIDED THE
COMPLAINT SHALL SET FORTH A COPY OF THIS WAIVER AND WAIVES ANY CLAIM IN TORT,
CONTRACT OR OTHERWISE AGAINST LENDER'S ATTORNEY WHICH MAY ARISE OUT OF SUCH
ISSUANCE OF A WRIT FOR A PREJUDGMENT REMEDY WITHOUT COURT ORDER. BORROWER
ACKNOWLEDGES AND STIPULATES THAT SUCH WAIVER AND AUTHORIZATION GRANTED ABOVE ARE
MADE KNOWINGLY AND FREELY AND AFTER FULL CONSULTATION WITH COUNSEL.
SPECIFICALLY, BORROWER RECOGNIZES AND UNDERSTANDS THAT THE EXERCISE OF LENDER'S
RIGHTS DESCRIBED ABOVE MAY RESULT IN THE ATTACHMENT OF OR LEVY AGAINST
BORROWER'S PROPERTY, AND SUCH WRIT FOR A PREJUDGMENT REMEDY WILL NOT HAVE THE
PRIOR WRITTEN APPROVAL OR SCRUTINY OF A COURT OF LAW OR OTHER JUDICIAL OFFICER
NOR WILL BORROWER HAVE THE RIGHT TO ANY NOTICE OR PRIOR HEARING WHERE BORROWER
MIGHT CONTEST SUCH A PROCEDURE. THE INTENT OF BORROWER IS TO GRANT TO LENDER
FOR GOOD AND VALUABLE CONSIDERATION THE RIGHT TO OBTAIN SUCH A PREJUDGMENT
REMEDY AND TO EXPRESS ITS BELIEF THAT ANY SUCH PREJUDGMENT REMEDY OBTAINED IS
VALID AND CONSTITUTIONAL. FURTHER, TO THE EXTENT ALLOWED UNDER APPLICABLE LAW,
BORROWER HEREBY WAIVES DEMAND, PRESENTMENT FOR PAYMENT, PROTEST, NOTICE OF
PROTEST, NOTICE OF DISHONOR, DILIGENCE IN COLLECTION, NOTICE OF NONPAYMENT OF
THIS NOTE AND ANY AND ALL NOTICES OF A LIKE NATURE.
EDAC TECHNOLOGIES CORPORATION
By:
---------------------------
Ronald G. Popolizio
Its Vice President
(Duly Authorized)
- 4 -
<PAGE> 1
AMENDED AND RESTATED PROMISSORY NOTE
$541,153.34 Hartford, Connecticut
March 27, 1997
FOR VALUE RECEIVED, the undersigned, EDAC TECHNOLOGIES CORPORATION, a
Wisconsin corporation ("BORROWER"), with its chief executive office at 1790 New
Britain Avenue, Farmington, Connecticut 06032, promises to pay to the order of
FLEET NATIONAL BANK F/K/A FLEET NATIONAL BANK OF CONNECTICUT F/K/A SHAWMUT BANK
CONNECTICUT, N.A. F/K/A CONNECTICUT NATIONAL BANK, a national banking
association ("LENDER"), at its place of business at 777 Main Street, Hartford,
Connecticut or at such other place as Lender may from time to time designate in
writing, the principal sum of Five Hundred Forty-One Thousand One Hundred
Fifty-Three Dollars and 34/100 Dollars ($541,153.34) (the "PRINCIPAL AMOUNT"),
pursuant to that certain Fifth Amended and Restated Revolving Loan, Term Loan,
Equipment Loan and Security Agreement dated February 28, 1995, as amended by a
certain Sixth Amendment to Revolving Loan, Term Loan, Equipment Loan and
Security Agreement dated July 31, 1995, as further amended by a certain Seventh
Amendment to Revolving Loan, Term Loan, Equipment Loan and Security Agreement
and Reaffirmation of Guaranties dated as of January 26, 1996, as further amended
by a certain Eighth Amendment to Revolving Loan, Term Loan, Equipment Loan and
Security Agreement and Reaffirmation of Guaranties dated as of April 10, 1996,
and as further amended by a certain Ninth Amendment to Revolving Loan, Term
Loan, Equipment Loan, Security Agreement, Modification of Notes and
Reaffirmation of Guaranties dated of even date herewith between Borrower and
Lender (as amended and in effect from time to time, the "LOAN AGREEMENT"),
together with (i) interest at the rate and in the manner provided in the Loan
Agreement; (ii) all amounts which may become due under the Loan Agreement or any
of the other Loan Documents; (iii) any costs and expenses, including reasonable
attorneys' and appraiser's fees incurred in the collection of this Note or the
enforcement of the Loan Agreement or any of the other Loan Documents,
foreclosure thereunder or in any litigation or controversy arising from or
connected with this Note, or the Loan Agreement or any of the other Loan
Documents; and (iv) all taxes or duties assessed upon said sum against Lender or
upon the debt evidenced hereby. All amounts owing under this Note and interest
thereon shall be payable in legal tender of the United States of America.
Capitalized terms used herein and not otherwise defined shall have the meanings
given to them in the Loan Agreement.
Monthly principal payments based on a 5-year straight line amortization
schedule shall be due and payable on the first Business Day of each calendar
month commencing on April 1, 1997 until the outstanding Principal Amount,
together with all interest accrued thereon has been fully paid, except that if
not sooner paid, the Principal Amount, together with all accrued but unpaid
interest thereon, shall be due and payable on March 31, 2002 (the "MATURITY
<PAGE> 2
DATE").
Interest on the Principal Amount shall be computed on the basis of a
360-day year for actual days elapsed and shall be payable at the rate and in the
manner as provided in the Loan Agreement until all of said Principal Amount has
been fully paid, whether before or after the Maturity Date, by acceleration or
otherwise, and whether or not any judgment is obtained hereon.
In the event that Lender has not received, within ten (10) days of its due
date, any installment of the Principal Amount and interest (upon the Maturity
Date or otherwise), or payment with respect to any other payment due under this
Note, Borrower shall be subject to a late charge equal to five percent (5%) of
such amount due. The minimum late charge shall be $15.00.
Upon the occurrence of default by Borrower in the performance of any of
Borrower's obligations hereunder, or an Event of Default as defined in the Loan
Agreement or in any other Loan Documents, Lender may, at its option, accelerate
Borrower's obligations hereunder and declare the entire unpaid Principal Amount,
together with accrued interest and all other amounts then due which are
evidenced by this Note, to be immediately due and payable, without the necessity
for demand or additional notice. In addition, upon the occurrence of such
default or Event of Default or after the Maturity Date, the interest rate of
this Note shall increase without notice, as provided in the Loan Agreement.
Failure to exercise these options shall not constitute a waiver of the right to
exercise the same in the event of any subsequent default.
Borrower may prepay the Note only as permitted under the Loan Agreement and
subject to the payment of such prepayment premiums or penalties contained
therein.
Notwithstanding any provisions of this Note, it is the understanding and
agreement of Borrower and Lender that the maximum rate of interest to be paid by
Borrower to Lender shall not exceed the highest of the maximum rate of interest
permissible to be charged by Lender under applicable laws. Any amount paid in
excess of such rate shall be deemed to be a payment in reduction of principal
except to the extent that such amount is in excess of the then outstanding
Principal Amount, in which event such excess shall be returned to the Borrower.
This Note shall be governed by and construed in accordance with the laws of
the State of Connecticut. This Note shall bind the successors and assigns of
Borrower, and shall inure to the benefit of Lender and its successors and
assigns. This Note may not be changed or terminated orally, but only by an
agreement in writing signed by the party against whom enforcement of any such
change or termination is sought.
Whenever in this Note words of any gender appear, they shall be deemed to
apply equally to any other gender. Whenever used in this Note, the plural shall
include the singular
- 2 -
<PAGE> 3
and the singular shall include the plural, as the context shall require.
In the event that Borrower consists of more than one person or entity, the
obligations hereunder shall be joint and several.
This Note combines, amends, restates, and supersedes in their entirety 1) a
certain Equipment Promissory Note dated March 29, 1994 in the original principal
amount of $500,000.00 from the Borrower to the Lender (the "EQUIPMENT NOTE I")
and 2) a certain Equipment Promissory Note II dated February 28, 1995 in the
original principal amount of $500,000.00 from the Borrower to the Lender (the
"EQUIPMENT NOTE II"); and together with Equipment Note I, (as amended and in
effect from time to time, the "ORIGINAL NOTES") and the Original Note, shall
have no further force and effect except to the extent necessary to preserve and
maintain the Lender's previously filed and fully protected security interest in
the personal property of the Borrower. Nothing contained herein shall
constitute a novation of the Original Notes.
TO INDUCE LENDER TO ENTER INTO THE COMMERCIAL LOAN TRANSACTION EVIDENCED BY
THIS NOTE, THE LOAN AGREEMENT, AND ANY OTHER LOAN DOCUMENTS EVIDENCING OR
SECURING THE SAME, BORROWER AGREES THAT THIS IS A COMMERCIAL TRANSACTION AND NOT
A CONSUMER TRANSACTION, AND WAIVES ANY RIGHT TO NOTICE AND A HEARING AND
AUTHORIZES LENDER'S ATTORNEY TO ISSUE A WRIT FOR A PREJUDGMENT REMEDY WITHOUT
COURT ORDER, PROVIDED THE COMPLAINT SHALL SET FORTH A COPY OF THIS WAIVER AND
WAIVES ANY CLAIM IN TORT, CONTRACT OR OTHERWISE AGAINST LENDER'S ATTORNEY WHICH
MAY ARISE OUT OF SUCH ISSUANCE OF A WRIT FOR A PREJUDGMENT REMEDY WITHOUT COURT
ORDER. BORROWER ACKNOWLEDGES AND STIPULATES THAT SUCH WAIVER AND AUTHORIZATION
GRANTED ABOVE ARE MADE KNOWINGLY AND FREELY AND AFTER FULL CONSULTATION WITH
COUNSEL. SPECIFICALLY, BORROWER RECOGNIZES AND UNDERSTANDS THAT THE EXERCISE OF
LENDER'S RIGHTS DESCRIBED ABOVE MAY RESULT IN THE ATTACHMENT OF OR LEVY AGAINST
BORROWER'S PROPERTY, AND SUCH WRIT FOR A PREJUDGMENT REMEDY WILL NOT HAVE THE
PRIOR WRITTEN APPROVAL OR SCRUTINY OF A COURT OF LAW OR OTHER JUDICIAL OFFICER
NOR WILL BORROWER HAVE THE RIGHT TO ANY NOTICE OR PRIOR HEARING WHERE BORROWER
MIGHT CONTEST SUCH A PROCEDURE. THE INTENT OF BORROWER IS TO GRANT TO LENDER
FOR GOOD AND VALUABLE CONSIDERATION THE RIGHT TO OBTAIN SUCH A PREJUDGMENT
REMEDY AND TO EXPRESS ITS BELIEF THAT ANY SUCH PREJUDGMENT REMEDY OBTAINED IS
VALID AND CONSTITUTIONAL. FURTHER, TO THE EXTENT ALLOWED UNDER APPLICABLE LAW,
BORROWER HEREBY WAIVES DEMAND, PRESENTMENT FOR PAYMENT, PROTEST, NOTICE
- 3 -
<PAGE> 4
F PROTEST, NOTICE OF DISHONOR, DILIGENCE IN COLLECTION, NOTICE OF NONPAYMENT OF
THIS NOTE AND ANY AND ALL NOTICES OF A LIKE NATURE.
BORROWER:
EDAC TECHNOLOGIES CORPORATION
By:
-------------------------------
Ronald G. Popolizio
Its Vice President
(Duly Authorized)
- 4 -
<PAGE> 1
EIGHTH MODIFICATION AGREEMENT
TO OPEN-END MORTGAGE DEED
THIS AGREEMENT made this 27th day of March, 1997, by and between EDAC
TECHNOLOGIES CORPORATION, a Wisconsin corporation with its principal place of
business at 1790 New Britain Avenue, Farmington, Connecticut 06032 (hereinafter
referred to as the "BORROWER") and FLEET NATIONAL BANK F/K/A FLEET NATIONAL BANK
OF CONNECTICUT F/K/A SHAWMUT BANK CONNECTICUT, N.A. F/K/A THE CONNECTICUT
NATIONAL BANK, a national banking association with an office at 777 Main Street,
MSN 240, Hartford, Connecticut 06115 (hereinafter referred to as the "LENDER").
W I T N E S E T H:
WHEREAS, on May 12, 1989, the Borrower granted to the Lender a mortgage on
certain premises located at 1790 New Britain Avenue, Farmington, Connecticut,
which mortgage was recorded in the Farmington Land Records on May 15, 1989 in
Volume 394 at Page 521, and which mortgage was modified by that certain Mortgage
Modification Agreement dated November 10, 1989 and recorded in the Farmington
Land Records on November 21, 1989 in Volume 403 at Page 644 (collectively, the
"MORTGAGE");
WHEREAS, on July 30, 1992, the parties modified the Mortgage by entering
into that certain Second Modification Agreement to Open-End Mortgage Deed
recorded in the Farmington Land Records on August 6, 1992 in Volume 446 at Page
002;
WHEREAS, on December 23, 1992, the parties modified the Mortgage by
entering into that certain Third Modification Agreement to Open-End Mortgage
Deed recorded in the Farmington Land Records on February 25, 1993 in Volume 456
at Page 1010;
WHEREAS, on March 22, 1993, the parties modified the Mortgage by entering
into that certain Fourth Modification Agreement to Open-End Mortgage Deed
recorded in the Farmington Land Records on March 31, 1993 in Volume 458 at Page
738;
WHEREAS, on March 29, 1994, the parties modified the Mortgage by entering
into that certain Fifth Modification Agreement to Open-End Mortgage Deed
recorded in the Farmington Land Records on April 19, 1994 in Volume 480 at Page
855;
WHEREAS, on February 28, 1995, the parties modified the Mortgage by
entering into that certain Sixth Modification Agreement to Open-End Mortgage
Deed recorded in the Farmington Land Records on March 3, 1995 in Volume 496 at
Page 1; and
WHEREAS, on April 10, 1996, the parties modified the Mortgage by entering
into
<PAGE> 2
that certain Seventh Modification Agreement to Open-End Mortgage Deed recorded
in the Farmington Land Records in Volume 515 at Page 376; and
WHEREAS, the parties desire to further modify the Mortgage to (a) modify
the interest rates set forth in the notes attached to the Mortgage, and (b)
amend and restate certain notes attached to the Mortgage;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, it is hereby agreed by and between the parties that the
Mortgage be modified as follows:
1. The first "WHEREAS" clause on Page 2 of the Mortgage is hereby
amended in its entirety to read as follows:
"WHEREAS, the Lender and the Borrower have entered into a Fifth
Amended and Restated Revolving Loan, Term Loan and Security Agreement,
dated February 28, 1995, as amended from time to time and now in effect,
(such Fifth Amended and Restated Revolving Loan, Term Loan, Equipment
Loan and Security Agreement, as amended from time to time and now in
effect, is hereinafter referred to as the "EDAC LOAN AGREEMENT"),
pursuant to which the full amount of the revolving loan therein
authorized (the "EDAC REVOLVING LOAN") is NINE MILLION DOLLARS
($9,000,000.00). Pursuant to the EDAC Loan Agreement, all or part of the
Revolving Loan proceeds are permitted to be advanced from time to time
(the "EDAC REVOLVING LOAN ADVANCES") and shall be secured by this
Mortgage. The EDAC Revolving Loan shall be evidenced by the promissory
note annexed hereto and made a part hereof as SCHEDULE K (the "REVOLVING
PROMISSORY NOTE"). The initial EDAC Revolving Loan Advance and future
EDAC Revolving Loan Advances, if any, may be either evidenced by
additional notes or recorded in an account on the books of the Lender as
specified in SECTION 4.1 hereof. The EDAC Loan Agreement provides for
repayment of all or a portion of the outstanding balance of the EDAC
Revolving Loan proceeds, together with interest thereon, from time to
time. The entire principal balance of the EDAC Revolving Loan, together
with accrued interest, shall be due and payable ON DEMAND; and"
2. The Mortgage is hereby modified by deleting the following "WHEREAS"
clauses:
"WHEREAS, the Borrower is justly indebted to the Lender pursuant to
a certain Equipment Promissory Note dated March 29, 1994, in the maximum
principal amount of FIVE HUNDRED THOUSAND DOLLARS ($500,000.00) the
"EQUIPMENT LINE OF CREDIT"), a copy of which note is attached
hereto and made a part hereof as SCHEDULE L (the "EQUIPMENT PROMISSORY
NOTE"); and
- 2 -
<PAGE> 3
"WHEREAS, the Borrower is justly indebted to the Lender pursuant to
a certain Equipment Promissory Note II dated February 28, 1995, in the
maximum principal amount of FIVE HUNDRED THOUSAND DOLLARS ($500,000.00)
(the "EQUIPMENT LINE OF CREDIT II"), a copy of which note is attached
hereto and made a part hereof as SCHEDULE N (the "EQUIPMENT PROMISSORY
NOTE II") and inserting the following in lieu thereof; and"
and inserting the following in lieu thereof:
"WHEREAS, the Borrower is justly indebted to the Lender pursuant to
a certain Equipment Promissory Note III dated on or about March 28, 1997
in the maximum principal amount of Three Million Dollars ($3,000,000.00)
(the "EQUIPMENT LINE OF CREDIT III"), a copy of which note is attached
hereto and made a part hereof as SCHEDULE L (the "EQUIPMENT PROMISSORY
NOTE III"); and
"WHEREAS, the Borrower is justly indebted to the Lender pursuant to
a certain Amended and Restated Promissory Note dated on or about March
28, 1997 in the original principal amount of $541,153.34 (the "SECOND
TERM NOTE"), a copy of which note is attached hereto and made a part
hereof as SCHEDULE N; and"
3. The last "WHEREAS" clause of the Mortgage (which collectively defines
all of the obligations of the Borrower to the Lender as the "LOAN") is hereby
amended in its entirety to read as follows:
"WHEREAS, the obligations of the Borrower to repay principal under
the Term Note, the ESOT Guaranty, the Equipment Promissory Note III, the
Second Term Note; the EDAC Revolving Loan, the Revolving Promissory Note
and the EDAC Loan Agreement (hereinafter collectively referred to as the
"LOAN") shall not exceed in the aggregate $15,864,354.75;"
4. SCHEDULE K to the Mortgage is hereby deleted and replaced with SCHEDULE
K attached hereto and made a part hereof.
5. SCHEDULE L to the Mortgage is hereby deleted and replaced with SCHEDULE
L attached hereto and made a part hereof.
6. SCHEDULE M to the Mortgage (which is the Term Note) is hereby
amended by:
a. Deleting the language "eight and sixty-five hundredths percent
(8.65%) per annum" on page one of Schedule M and inserting "seven
and sixty-five hundredths percent (7.65%) per annum."
b. Deleting the date "April 1, 1993" on page one of Schedule M and
- 3 -
<PAGE> 4
replacing it with "April 1, 1997."
c. Deleting the date "April 1, 1998" on page one of
Schedule M and replacing it with "March 1, 2002."
d. Deleting the date "April 30, 1998" on page one of
Schedule M and replacing it with "March 31, 2002."
e. Deleting the first full paragraph on page two of
Schedule M in its entirety and substituting the following in
lieu thereof:
To the extent allowed by applicable law, after the occurrence
of an Event of Default, all outstanding principal and unpaid
interest shall bear, until paid, interest at a rate per annum
(the "DEFAULT RATE") equal to three (3) points above the
interest rate specified above.
7. SCHEDULE N to the Mortgage (which is the Equipment Promissory Note
II) is hereby deleted.
8. All capitalized terms not otherwise defined herein shall have the
same meaning as set forth in the Mortgage.
9. Except as modified by this Agreement and any previous modifications,
the rights, privileges, duties and obligations of the parties hereto under the
Mortgage shall remain unchanged, in full force and effect and binding upon the
parties thereto. Nothing herein contained shall operate to release the
Mortgagor from its liability to pay the obligations, and to keep and perform all
of the terms, conditions, obligations and agreements, contained in the Mortgage,
as hereinbefore modified.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and their respective seals to be affixed hereto as of the date set
forth on the first page hereof.
WITNESS: BORROWER:
EDAC TECHNOLOGIES CORPORATION
By:
-----------------------------
Ronald E. Popolizio
Its Vice President
Duly Authorized
- 4 -
<PAGE> 5
LENDER:
FLEET NATIONAL BANK f/k/a FLEET NATIONAL
BANK OF CONNECTICUT f/k/a SHAWMUT BANK
CONNECTICUT, N.A.
By:
-------------------------------
Edgar Ezerins
Its Vice President
Duly Authorized
STATE OF CONNECTICUT )
) ss.: Farmington
COUNTY OF HARTFORD )
The foregoing instrument was acknowledged before me this 27th day of March,
1997, by RONALD E. POPOLIZIO, the Vice President of EDAC TECHNOLOGIES
CORPORATION, a Wisconsin corporation, on behalf of the corporation.
------------------------------------
Commissioner of Superior Court
Notary Public
My Commission Expires:
STATE OF CONNECTICUT )
) ss.: Farmington
COUNTY OF HARTFORD )
The foregoing instrument was acknowledged before me this 27th day of March,
1997, by Edgar Ezerins, the Vice President of Fleet National Bank f/k/a Fleet
National Bank of Connecticut f/k/a SHAWMUT BANK CONNECTICUT, N.A., a national
banking association, on behalf of the banking association.
------------------------------------
Commissioner of Superior Court
Notary Public
My Commission Expires:
- 5 -
<PAGE> 1
THIRD MODIFICATION OF CONSTRUCTION TO
PERMANENT LOAN PROMISSORY NOTE AND
OPEN-END CONSTRUCTION TO PERMANENT MORTGAGE DEED
THIS THIRD MODIFICATION OF CONSTRUCTION TO PERMANENT LOAN PROMISSORY NOTE AND
OPEN-END CONSTRUCTION TO PERMANENT MORTGAGE DEED (the "AGREEMENT"), entered into
as of the 27th day of March, 1997, by and between EDAC TECHNOLOGIES CORPORATION,
a Wisconsin corporation having a place of business at 1790 New Britain Avenue,
Farmington, Connecticut 06032 (the "BORROWER"), and FLEET NATIONAL BANK F/K/A
FLEET NATIONAL BANK OF CONNECTICUT F/K/A SHAWMUT BANK CONNECTICUT, N.A. a
national banking association, having an office at 777 Main Street, Hartford,
Connecticut 06115 (the "LENDER").
W I T N E S S E T H:
1. On October 3, 1985, the Lender and the Borrower entered into a certain
Revolving Loan and Security Agreement which has been (a) amended and restated in
its entirety by a certain Fifth Amended and Restated Revolving Loan, Term Loan,
Equipment Loan and Security Agreement dated February 28, 1995, (b) amended by a
certain Sixth Amendment to Revolving Loan, Term Loan, Equipment Loan and
Security Agreement dated July 31, 1995, (c) amended by a certain Seventh
Amendment to Revolving Loan, Term Loan, Equipment Loan and Security Agreement
and Reaffirmation of Guaranties dated as of January 26, 1996, and (d) amended by
a certain Eighth Amendment to Revolving Loan, Term Loan, Equipment Loan and
Security Agreement dated as of April 10, 1996 (as amended and in effect from
time to time, collectively, the "LOAN AGREEMENT"). Capitalized terms used
herein and not defined herein shall have the meanings given to them in the Loan
Agreement.
2. Pursuant to the Loan Agreement, the Borrower executed a certain
Construction to Permanent Loan Promissory Note dated July 31, 1995 in the
original principal amount of up to $1,000,000 in favor of the Lender, which was
amended pursuant to (i) a certain Modification of Construction to Permanent Loan
Promissory Note and Open-End Construction to Permanent Mortgage Deed recorded in
Volume 513 at Page 462 of the Farmington Land Records (the "MODIFICATION") and
(ii) a certain Second Modification of Construction to Permanent Loan, Promissory
Note and Open End Construction to Permanent Mortgage dated as of April 10, 1996
and recorded in Volume 514 at Page 716 of the Farmington Land Records (the
"SECOND MODIFICATION") (collectively, as modified, the "NOTE"). The Note is
secured by, among other things, an Open-End Construction to Permanent Mortgage
Deed from the Borrower in favor of Lender dated August 3, 1995 and recorded in
Volume 502 at Page 1024 of the Farmington Land Records, which was modified
pursuant to the Modification and the Second Modification (as modified, the
"MORTGAGE"), encumbering certain real property located in the Town of Farmington
1
<PAGE> 2
as more particularly described in Schedule A to the Mortgage. The Loan
Agreement, Note, Mortgage and related documents are collectively referred to as
the "LOAN DOCUMENTS".
3. The Borrower has requested that the Lender extend certain other loans
from the Lender to the Borrower and to modify the interest rates set forth in
the Note.
4. As a condition to the extension, the Lender requires the Borrower to
enter into this Agreement.
5. In consideration of the foregoing, and for One ($1.00) Dollar and
other valuable consideration received to its satisfaction, the Borrower agrees
to modify the terms and conditions of the Note and Mortgage as more specifically
set forth in this Agreement.
TERMS OF AGREEMENT
A. Acknowledgments, Affirmations and Representations and Warranties.
1. The Borrower acknowledges and affirms that:
a. All of the statements contained herein are true and correct and
that they understand that the Lender is relying on the truth and completeness of
such statements to enter into this Agreement.
b. As of the date hereof and without regard to the financial
accommodations contemplated herein, the Borrower is legally and validly indebted
to the Lender in the principal amount of $916,666.60 with respect to the Note,
plus interest and fees accrued and accruing thereon and costs and expenses of
collection, including without limitation, attorneys' fees, and there is no
defense, offset or counterclaim with respect to any of the foregoing or
independent claim or action against the Lender.
2. The Borrower represents and warrants to the Lender that:
a. The resolutions previously adopted by the Board of Directors of
the Borrower and provided to the Lender have not in any way been rescinded or
modified and have been in full force and effect since their adoption to and
including the date hereof and are now in full force and effect, except to the
extent that they have been modified or supplemented to authorize this Agreement
and the documents and transactions described herein.
2
<PAGE> 3
b. The Borrower has the corporate power and authority to enter into, and
have taken all necessary corporate action to authorize, this Agreement and the
transactions contemplated hereby.
c. All representations, warranties and covenants contained in, and
schedules and exhibits attached to, the Loan Documents are true and correct on
and as of the date hereof, are incorporated herein by reference and are hereby
remade.
d. Other than the defaults previously waived in writing by the Lender,
the Borrower is not currently in default under any of the Loan Documents, and no
condition exists which would constitute an event of default under any of the
Loan Documents but for the giving of notice or passage of time, or both.
e. The consummation of the transactions contemplated hereby is not
prevented or limited by, nor does it conflict with or result in a breach of
terms, conditions or provisions of the Borrower's Certificate of Incorporation
or Bylaws or any evidence of indebtedness, agreement or instrument of whatever
nature to which the Borrower is a party or by which it is bound, does not
constitute a default under any of the foregoing and does not violate any
federal, state or local law, regulation or order or any order of any court or
agency which is binding upon the Borrower.
B. Modification of Note.
The Borrower and the Lender agree that the terms of the Note are
hereby modified in accordance with the following:
1. All references to the "Base Rate" shall mean "Prime Rate".
2. Paragraph (3) entitled "Cost of Funds Rate" is hereby deleted in
its entirety and the following substituted in lieu thereof:
"COST OF FUNDS RATE" shall mean the fixed per annum rate of
interest as of the date selected by Borrower in accordance with
the terms of this Agreement determined by Lender in good faith in
accordance with Lender's customary practices for loans in United
States currency and based on Lender's cost of obtaining funds
with a maturity approximately equal to the Interest Period from
sources as may be selected by Lender in its sole and absolute
discretion.
3. Paragraph (9) entitled "LIBOR Rate" is hereby deleted and the
following is substituted in lieu thereof:
(9) "LIBOR RATE" shall mean, with respect to the Interest Period
for
3
<PAGE> 4
which it is determined, the rate per annum calculated
pursuant to the following formula:
LIBOR = LIBOR Base Rate
---------------
1-Reserve Percentage
4. Paragraph (15) entitled "Permanent Interest Rate" on page four of
the Note is hereby deleted in its entirety and the following is substituted in
lieu thereof:
(15) "PERMANENT INTEREST RATE" shall mean a variable rate, at
Borrower's election pursuant to Section I, below, equal to
(a) the Prime Rate, (b) the LIBOR Rate plus two hundred
(200) basis points or (c) Cost of Funds Rate plus two
hundred (200) basis points.
5. The following definitions are inserted after Paragraph (18):
(19) "INTEREST PERIOD" means the period selected by the Borrower
pursuant to this Agreement, to the extent such period is
available from Lender to other borrowers similarly situated
to Borrower on the date of such selection for the type of
interest rate selected by Borrower. Each Interest Period
shall commence on the date such interest rate election and
shall end on the date as the Borrower may select, if
available, provided that:
(i) any Interest Period for a LIBOR Rate elections
which would otherwise end on a day which is not a
Business Day shall end on the next or succeeding
Business Day as is Lender's custom in the
inter-bank Eurodollar market to which such advance
relates;
(ii) any Interest Period for Cost of Funds Date
elections which would otherwise end on a day which
is not a Business Day shall end on the next
preceding or succeeding Business Day of Lender;
(iii) Borrower may not select an Interest Period which
would end after the Maturity Date and any Interest
Period which commences before and would otherwise
end after the Maturity Date, shall end on the
Maturity Date; and
(iv) any Interest Period for LIBOR Rate elections which
begins on a day for which there is no numerically
4
<PAGE> 5
corresponding day in the calendar month during
which such Interest Period is to end, shall
(subject to clause (i) above) end on the last day
of such calendar month.
"LIBOR BASE RATE" means the rate quoted to Lender on or
prior to the commencement of an Interest Period for the
offering to Lender from prime commercial banks in the
interbank Eurodollar market of dollar deposits in
immediately available funds for a period equal to the
Interest Period and in an amount equal to the outstanding
principal balance of the Note.
(20) "RESERVE PERCENTAGE" means for any day with respect to
the principal amount of the Note bearing interest at
the LIBOR Rate, the maximum rate, (expressed as a
decimal) at which any lender subject thereto would be
required to maintain reserves under Regulation D of the
Board of Governors of the Federal Reserve System (or
any successor or similar regulations relating thereto)
against "Eurocurrency Requirements" (as that term is
used in Regulation D) if such liabilities were
outstanding
6. The following language in the third paragraph of Section C is
hereby deleted:
Upon the occurrence of an Event of Default, or after the Maturity
Date, interest shall accrue at four percent (4%) per annum above
the Permanent Interest Rate in effect (the "PERMANENT DEFAULT
RATE"). The Permanent Default Rate shall be adjusted whenever a
change in the Base Rate occurs, so that the Permanent Default
Rate shall remain at all times four (4%) percent per annum above
the Permanent Interest Rate. Any such adjustment in the
Permanent Default Rate shall be effective simultaneously with a
change in the Base Rate.
and replaced with the following:
Upon the occurrence of an Event of Default after Conversion, or
after maturity, interest shall accrue from and after such event
at three percent (3%) per annum above the Permanent Interest Rate
as the same shall be in effect from and after such default (the
"PERMANENT DEFAULT RATE"). If the interest Rate shall be
adjusted whenever a change in the Prime Rate occurs, so that the
Permanent Default Rate shall remain at all times three percent
(3%) per annum above the Prime Rate. Any such adjustment in the
5
<PAGE> 6
Permanent Default Rate shall be effective simultaneously with a
change in the Prime Rate.
7. Section G. entitled "G. PREPAYMENT OF LOAN." on page eight of the
Note is hereby deleted in its entirety and the following is substituted in lieu
thereof:
If the interest rate in effect under this Note is based upon the
Prime Rate, the Borrower may prepay this Note in whole or in part
at any time without penalty. All such prepayments shall be
applied on account of principal remaining unpaid and shall be
accompanied by payment of unpaid late charges and accrued and
unpaid interest, if any, thereon. All partial prepayments of
principal shall be credited to the unpaid principal of this Note
in the inverse order of maturity and shall not affect the
Borrower's obligation to make the regular installments required
hereunder until this Note is fully paid.
If the interest rate in effect under this Note is based upon the
LIBOR Rate or Cost of Funds Rate, the Borrower may not prepay
this Note except as set forth in this paragraph. Under no
circumstances may there by a partial prepayment of this Note.
The Borrower may prepay only the entire unpaid balance of this
Note upon payment of such amounts, as determined by the Lender,
in its sole and absolute discretion, as may be necessary to
reimburse the Lender for any losses and expenses incurred by the
Lender as a result of prepayment of this Note, including without
limitation any losses (including loss of anticipated profits) and
expenses incurred by reason of the liquidation or re-employment
of deposits or other funds acquired by the Lender to fund or
maintain this Note. The Borrower hereby acknowledges that in
reliance upon this agreement, the Lender has made certain
commitments of funds upon the terms and conditions of this Note.
In the event that this Note is accelerated for any reason
whatsoever by the Lender, such payment of the Lender's losses and
expenses shall be paid by the Borrower.
In the event that the Loan shall be accelerated for any reason
whatsoever, the prepayment fee in effect as of the date of such
acceleration shall be paid.
8. The following is inserted after Section H to the Note:
Section I. Rate Elections. Conversion of Rate of Interest.
Provided that no Event of Default shall have occurred and be
continuing hereunder, the Borrower may, (i) at any time, if the
interest rate in effect under this Note is based upon the Prime
Rate and (ii) on the last
6
<PAGE> 7
Business Day of any Interest Period if the interest rate in
effect under this Note is based upon the LIBOR Rate or Cost of
Funds Rate, convert the interest rate hereunder to an interest
rate based upon the Prime Rate, Cost of Funds Rate or LIBOR Rate.
If the Borrower desires to so convert, it shall give Lender
written notice two (2) days prior to the conversion date by
written instructions, specifying the date of such conversion and,
if conversion is to a LIBOR Rate or Cost of Funds Rate, the
duration of the first Interest Period therefor.
Failure to Convert or Continue. If Borrower fails to notify
Lender of its election to convert or continue an expiring
interest rate based upon Cost of Funds Rate or LIBOR Rate on or
prior to the end of the expiring Interest Period, such expiring
interest rate shall, at the end of such Interest Period,
automatically be based upon the Prime Rate.
C. Modification of Mortgage.
The Borrower and Lender hereby agree that the terms of the Mortgage
are hereby modified in accordance with the following:
1. Any and all references in the Mortgage to the term "Note" or
words of similar import shall be deemed to mean and refer to the Note as
modified by this Agreement.
2. The form of the Note attached as Schedule D to the Mortgage is
hereby modified in accordance with Section B. above.
D. Miscellaneous
1. Except as specifically modified hereby, all of the terms and
conditions of the Note and Mortgage shall remain in full force and effect, and
Borrower hereby ratifies and affirms each of its respect obligations, terms,
conditions, covenants, representations and warranties contained therein, except
to the extent expressly modified hereby. Borrower agrees to be bound by the
terms and conditions of said instruments, as modified by this Agreement.
2. The rights and duties of the parties under this Agreement shall
be governed by the laws of the State of Connecticut.
3. This Agreement shall be binding upon the Borrower, the Lender and
each of their respective successors and assigns.
4. Nothing contained in this Agreement shall constitute a repayment
of the Note, or affect the priority of the lien of the Mortgage.
7
<PAGE> 8
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as a sealed instrument by their duly authorized representatives as of the date
first above written.
Witnesses: EDAC TECHNOLOGIES
CORPORATION
By:
---------------------------------
Ronald G. Popolizio
Its Vice President
FLEET NATIONAL BANK f/k/a
FLEET NATIONAL BANK OF
CONNECTICUT f/k/a SHAWMUT
BANK CONNECTICUT, N.A.
By:
---------------------------------
Edgar Ezerins
Its Vice President
8
<PAGE> 9
STATE OF CONNECTICUT )
) ss.: Farmington
COUNTY OF HARTFORD )
On this 27th day of March, 1997, before me, personally appeared RONALD G.
POPOLIZIO, known to me to be the Vice President of EDAC TECHNOLOGIES
CORPORATION, a Wisconsin corporation, signer and sealer of the foregoing
instrument and acknowledged the same to be his free act and deed and the free
act and deed of said corporation.
__________________________________
Commissioner of the Superior Court
Notary Public
My Commission Expires: ___________
STATE OF CONNECTICUT )
) ss.: Farmington
COUNTY OF HARTFORD )
On this 27th day of March, 1997, before me, personally appeared Edgar
Ezerins, known to me to be the Vice President of FLEET NATIONAL BANK f/k/a
FLEET NATIONAL BANK OF CONNECTICUT f/k/a SHAWMUT BANK CONNECTICUT, N.A., a
national banking association, signer and sealer of the foregoing instrument and
acknowledged the same to be his free act and deed and the free act and deed of
said banking association.
__________________________________
Commissioner of the Superior Court
Notary Public
My Commission Expires:
9
<PAGE> 1
11--STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
EDAC TECHNOLOGIES CORPORATION
<TABLE>
<CAPTION>
Three Months Ended
March 31
-----------------------
1997 1996
---------- -----------
<S> <C> <C>
Primary:
Average shares outstanding 3,762,208 3,653,540
Net effect of dilutive stock
options based on the
treasury stock method using
average market price 130,207 111,764
---------- -----------
TOTALS 3,892,415 3,765,304
========== ===========
Net income $ 255,961 $ 58,148
========== ===========
Net income per share $ 0.07 $ 0.02
========== ===========
Fully diluted:
Average shares outstanding 3,762,208 3,653,540
Net effect of dilutive stock
options based on the
treasury stock method using
quarter end market price
if higher than average
market price 138,916 119,716
---------- -----------
TOTALS 3,901,124 3,773,256
========== ===========
Net income $ 255,961 $ 58,148
========== ===========
Net income per share $ 0.07 $ 0.02
========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-01-1997
<CASH> 43,703
<SECURITIES> 0
<RECEIVABLES> 3,386,843
<ALLOWANCES> 77,733
<INVENTORY> 8,748,181
<CURRENT-ASSETS> 13,082,712
<PP&E> 13,252,818
<DEPRECIATION> 7,790,808
<TOTAL-ASSETS> 18,936,816
<CURRENT-LIABILITIES> 8,137,416
<BONDS> 4,504,010
0
0
<COMMON> 9,447
<OTHER-SE> 5,752,943
<TOTAL-LIABILITY-AND-EQUITY> 18,936,816
<SALES> 9,554,326
<TOTAL-REVENUES> 9,554,326
<CGS> 8,449,046
<TOTAL-COSTS> 9,112,520
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 205,775
<INCOME-PRETAX> 255,961
<INCOME-TAX> 0
<INCOME-CONTINUING> 255,961
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 255,961
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
