5
| CH\719123.3||
| CH\719123.3||
AMENDMENT NO. 2 AND LIMITED WAIVER TO LOAN AND SECURITY AGREEMENT
-----------------------------------------------------------------
AMENDMENT NO. 2 AND LIMITED WAIVER TO LOAN AND SECURITY AGREEMENT (this
"AMENDMENT") dated as of October 19, 2004 by and among The GSI Group, Inc., a
Delaware corporation ("BORROWER"), Assumption Leasing Company, Inc., an Illinois
corporation the "GUARANTOR"), the lenders ("LENDERS") from time to time party to
the Loan Agreement (as defined below) and Congress Financial Corporation
(Central), an Illinois corporation, in its capacity as agent for Lenders (in
such capacity, "AGENT").
R E C I T A L S:
WHEREAS, Agent, the Lenders, Borrower and Guarantor are parties to that
certain Loan and Security Agreement dated as of October 31, 2003 (as amended,
the "Loan Agreement"; capitalized terms used and not defined herein shall have
the meanings assigned to them in the Loan Agreement, as amended hereby);
WHEREAS, Borrower and Guarantor have requested that the Agent and Lenders (i)
agree to certain amendments as set forth herein and (ii) waive certain
restrictions to permit the Borrower to sell a warehouse located in Geneva,
Indiana and to sell its Canadian Subsidiary; and
WHEREAS, Agent and the Lenders have granted their approval to such amendments
and waiver upon the terms and conditions contained herein,
NOW, THEREFORE, in consideration of the premises contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
Section 1. Amendment to Loan Agreement. Immediately upon the satisfaction
----------------------------
of each of the applicable conditions precedent set forth in Section 4 of this
Amendment, the following amendments to the Loan Agreement shall become effective
as of the date hereof:
(a) Section 1 of the Loan Agreement is hereby amended by amending and
restating clause (a)(ii) of the definition of "Interest Rate" to read as
follows:
"(ii) as to Prime Rate Loans consisting of the Term Loan, a rate equal to
six and three-quarters of one percent (6.75%) per annum in excess of the Prime
Rate; provided, that, the Interest Rate with respect to the Term Loan shall not
--------
be less than eleven percent (11%) per annum or greater than thirteen and
one-quarter of one percent (13.25%) per annum at any time."
(b) Sections 1 and clause (B) of Section 11.3 of the Loan Agreement are
hereby amended by deleting the term "Maximum Term Credit".
(c) Section 2.3(a) of the Loan Agreement is hereby amended by amending and
restating Section 2.3(a) to read as follows:
"(a) The parties hereto acknowledge that the Term Lenders funded a
$12,500,000 term loan on October 21, 2003 and funded an additional $14,600,000
term loan on July 9, 2004 of which an aggregate principal amount of $14,781,959
remains outstanding as of October 19, 2004. Subject to and upon the terms and
conditions contained herein, in addition to the Revolving Loans and Letter of
Credit Accommodations under Sections 2.1 and 2.2 hereof, each Term Lender
severally (and not jointly) agrees to fund its Pro Rata Share of an additional
term loan to Borrower in the original principal amount equal to the lesser of
(x) $9,500,000 or (y) an amount equal to $17,500,000 less the amount of the
existing term loans outstanding as of such funding date, which funding shall
occur on or prior to April 19, 2005 at the Borrower's election made in writing
to Agent and the Term Lenders five (5) Business Day's prior to the proposed
funding date of the additional term loan (collectively, with the outstanding
original term loan in the amount of $14,781,959, the "Term Loan"); provided,
--------
that such additional Term Loan shall not be made if an Event of Default has
occurred and is continuing at the time such additional Term Loan is to be funded
or would result after giving effect to such additional Term Loan. The Term Loan
is (A) to be repaid, together with interest and other amounts, in accordance
with this Agreement and the other Financing Agreements and (B) secured by all of
the Collateral (subject to the application of proceeds provisions contained
herein). The entire unpaid principal amount of the Term Loan and all accrued
and unpaid interest thereon shall be due and payable on the earlier of the Term
Loan Termination Date or the acceleration of the Obligations. Except for the
making of the Term Loan as set forth in this Section, Borrower shall have no
right to request and Term Lenders shall have no obligation to make any
additional loans or advances to Borrower under this Section and any repayments
of the Term Loan shall not be subject to any readvance to or reborrowing by
Borrower. The parties hereto agree and acknowledge that proceeds from the
funding of the additional Term Loan in the amount described above on or prior to
April 19, 2004 shall be applied by Borrower to prepay the outstanding balance of
Revolving Loans and Borrower authorizes Term Lenders to direct the proceeds of
such additional Term Loan directly to Agent for application against the
Revolving Loans."
(d) Section 2.3(b) of the Loan Agreement is hereby amended by adding a new
sentence to the end of Section 2.3(b) to read as follows:
"Notwithstanding the foregoing, in no event shall Borrower prepay the Term Loan
in amounts that would cause the outstanding principal balance of the Term Loan
to be less than $8,000,000 except in connection with a sale of all or
substantially all the equity securities or assets of the Borrower or in
connection with a recapitalization of the Borrower resulting in a refinancing of
the Credit Facility."
Section 2. Limited Waiver. The Agent and Lenders hereby waive the
---------------
restriction on the sale of assets set forth in Section 9.7(b) of the Loan
-------------
Agreement for the sole purposes of (a) permitting the Borrower to sell its Real
Property located in Geneva, Indiana; provided that (i) net proceeds equal to 60%
--------
of the fair market value of such Real Property ($225,000) are applied to reduce
the Revolving Loans at which time the Fixed Asset Amount shall be reduced in
accordance with the terms of Section 2.4 of the Loan Agreement, (ii) 50% of any
-----------
remaining net proceeds are applied to prepay the Term Loan and any restrictions
set forth in Section 2.3(b) are waived for the sole purpose of permitting such
--------------
prepayment and the other 50% of the remaining net proceeds are applied to
further reduce the Revolving Loans and (iii) Agent has received copies of the
final purchase and sale documents, which shall be in form and substance
satisfactory to Agent and (b) permitting the Borrower to sell all of its Capital
Stock in the GSI Group (Canada) Co.; provided, that (i) all net proceeds from
--------
such sale, in an amount not less than $350,000, are applied to prepay the Term
Loan and any restrictions set forth in Section 2.3(b) are waived for the sole
--------------
purpose of permitting such prepayment and (ii) Agent has received copies of the
final purchase and sale documents, which shall be in form and substance
satisfactory to Agent. This limited waiver shall be limited precisely as
written and shall not be deemed or otherwise construed to constitute a waiver of
any Default or Event of Default arising out of any other failure of the Borrower
or Guarantor to comply with the terms of the Loan Agreement.
Section 3. Amendment to Fee Letter. Immediately upon the satisfaction of
-------------------------
each of the applicable conditions precedent set forth in Section 4 of this
Amendment, the Fee Letter is hereby amended by amending and restating paragraph
7 therein to read as follows:
"(7) a monthly fee for the benefit of Ableco equal to $18,229.17, which fee
shall be fully earned and payable on the first day of each month in arrears
commencing on November 1, 2004 through the earlier of (x) the Term Loan
Termination Date or (y) the date the Term Loan is paid in full from proceeds
received by the Borrower in connection with a sale of all or substantially all
the equity securities or assets of the Borrower or in connection with a
recapitalization of the Borrower resulting in a refinancing of the Credit
Facility."
Section 4. Conditions to Effectiveness of Amendment. This Amendment shall
-----------------------------------------
be effective upon satisfaction of the following conditions precedent:
4.1. This Amendment shall have been executed and delivered by Agent, the
Lenders, Borrower and Guarantor;
4.2. The representations and warranties contained herein shall be true and
correct in all respects; and
4.3. Agent shall have received a duly executed Acknowledgment and Consent
from the Guarantor.
Section 5. Representations and Warranties. In order to induce the Agent and
------------------------------
Lenders to enter into this Amendment, each of Borrower and Guarantor represents
and warrants to Agent and the Lenders, upon the effectiveness of this Amendment,
which representations and warranties shall survive the execution and delivery of
this Amendment that:
5.1. No Default; etc. No Event of Default and no event or condition which,
----------------
merely with notice or the passage of time or both, would constitute an Event of
Default, has occurred and is continuing after giving effect to this Amendment or
would result from the execution or delivery of this Amendment or the
consummation of the transactions contemplated hereby.
5.2. Corporate Power and Authority: Authorization. Each of Borrower and
------------------------------------------------
Guarantor has the corporate power and authority to execute and deliver this
Amendment and the execution and delivery by Borrower and Guarantor of this
Amendment has been duly authorized by all requisite corporate action by Borrower
or such Guarantor.
5.3. Execution and Delivery. Each of Borrower and Guarantor has duly
------------------------
executed and delivered this Amendment.
5.4. Enforceability. This Amendment constitutes the legal, valid and
--------------
binding obligation of Borrower and Guarantor, enforceable against Borrower and
Guarantor in accordance with its respective terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' right generally, and by general
principles of equity.
5.5. Representations and Warranties. All of the representations and
--------------------------------
warranties contained in the Loan Agreement and in the other Financing Agreements
(other than those which speak expressly only as of a different date) are true
and correct as of the date hereof after giving effect to this Amendment.
Section 6. Miscellaneous.
-------------
6.1. Effect; Ratification. Each of Borrower and Guarantor acknowledges that
--------------------
all of the reasonable legal expenses incurred by Agent and Lenders in
connection herewith shall be reimbursable under Section 9.20 of the Loan
-------------
Agreement. The amendments and waiver set forth herein are effective solely for
the purposes set forth herein and shall be limited precisely as written, and
shall not be deemed to (i) be a consent to any amendment, waiver or modification
of any other term or condition of the Loan Agreement or of any other Financing
Agreement except as provided herein or (ii) prejudice any right or rights that
Agent or any Lender may now have or may have in the future under or in
connection with the Loan Agreement or any other Financing Agreement. Each
reference in the Loan Agreement to "this Agreement," "herein," "hereof" and
words of like import and each reference in the other Financing Agreements to the
"Loan Agreement" shall mean the Loan Agreement as amended hereby. This
Amendment shall be construed in connection with and as part of the Loan
Agreement and all terms, conditions, representations, warranties, covenants and
agreements set forth in the Loan Agreement and each other Financing Agreement,
except as waived herein are hereby ratified and confirmed and shall remain in
full force and effect.
6.2. Counterparts. This Amendment may be executed in any number of
------------
counterparts, each such counterpart constituting an original but all together
one and the same instrument.
6.3. Governing Law. This Amendment shall be governed by, and construed and
--------------
interpreted in accordance with, the internal laws of the State of Illinois.
[Signature Page Follows]
- -
[Signature Page to Amendment No. 2 and Limited Waiver to Loan and Security
Agreement]
| CH\719123.3||
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 2
and Limited Waiver to Loan and Security Agreement as of the date first above
written.
BORROWER:
--------
THE GSI GROUP, INC.
By:
Name:
Title
GUARANTOR:
---------
ASSUMPTION LEASING COMPANY, INC.
By:
Name:
Title
AGENT:
-----
CONGRESS FINANCIAL CORPORATION (CENTRAL)
By:
Name:
Title
------
REVOLVING LENDERS:
------------------
CONGRESS FINANCIAL CORPORATION (CENTRAL)
By:
Name:
Title
FLEET CAPITAL CORPORATION
By:
Name:
Title
TERM LENDERS:
-------------
ABLECO FINANCE LLC, on behalf of itself
and its affiliate assigns
By:
Name:
Title
------
| CH\719123.3||
Acknowledgement and Consent
---------------------------
The undersigned has heretofore executed and delivered to Agent and the
Lenders that certain Guaranty Agreement dated as of October 31, 2003 (the
"Guaranty") in favor of Agent for the benefit of Lenders. The undersigned
---
hereby consents to the Amendment No. 2 and Limited Waiver to the Loan and
Security Agreement dated as of October __, 2004 set forth above ("Amendment")
---------
and confirms that the Financing Agreements executed and delivered by it and all
of the obligations of such undersigned thereunder remain in full force and
effect. The undersigned acknowledges and agrees that, notwithstanding the
execution and delivery of the Amendment, the Guaranty executed and delivered by
such undersigned to the Agent remains in full force and effect and the rights
and remedies of the Agent and the Lenders thereunder and the obligations of such
undersigned thereunder remain in full force and effect and shall not be
affected, impaired or discharged hereby. The undersigned acknowledges and
agrees that the consent of such undersigned to any further waivers, consents or
amendments to the Loan Agreement shall not be required as a result of this
waiver having been obtained. The undersigned further acknowledges that the
Agent and the Lenders are relying on the assurance set forth herein in extending
and maintaining credit outstanding to the Borrower.
GUARANTOR:
---------
ASSUMPTION LEASING COMPANY, INC.
By:
Name:
Title
