Exhibit 10.28
AMENDMENT NO. 3 TO CREDIT AGREEMENT
THIS AMENDMENT NO. 3 TO CREDIT AGREEMENT is dated as of November 9,
2001 (this "Amendment") among the following:
(i) HAWK CORPORATION, a Delaware corporation (the "Borrower");
(ii) the Lenders a party to the Credit Agreement, as
hereinafter defined; and
(iii) KEYBANK NATIONAL ASSOCIATION, a national banking
association, as the Administrative Agent under the Credit Agreement
(the "Administrative Agent").
PRELIMINARY STATEMENTS:
(1) The Borrower, the Lenders and the Administrative Agent entered into
the Credit Agreement, dated as of May 1, 1998 (as amended and as the same may
from time to time be further amended, restated or otherwise modified, the
"Credit Agreement"; the terms defined therein are used herein as so defined).
(2) The parties hereto desire to modify certain terms and provisions of
the Credit Agreement, all as more fully set forth below.
NOW, THEREFORE, the parties hereby agree as follows:
SECTION 1. AMENDMENTS, ETC.
1.1. Section 1.1 of the Credit Agreement is hereby amended to delete
the definitions of "Applicable Eurodollar Margin", "Borrowing Base",
"Consolidated EBIT", "Consolidated Net Worth", "Maximum Available Revolving
Commitment" and "Pricing Grid Table" therefrom and to insert in place thereof,
respectively, the following:
"Applicable Eurodollar Margin" shall mean:
(a) for any date prior to November 9, 2001, as such margin
shall have been determined in accordance with section 2.8(h) of this
Agreement as in effect prior to November 9, 2001;
(b) from November 9, 2001 through March 31, 2002, (i) three
hundred (300) basis points for General Revolving Loans, and (ii) three
hundred fifty (350) basis points for Term Loans; and
(c) commencing with the fiscal quarter of the Borrower ended
December 31, 2001, and continuing with each fiscal quarter thereafter,
the number of basis points determined by the Administrative Agent in
accordance with the Pricing Grid Table, based upon the Adjusted
Leverage Ratio. Changes in the Applicable Eurodollar Margin shall
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become effective on the first day of the month following the receipt by
the Administrative Agent, pursuant to Section 8.1(a) or (b) of the
financial statements of the Borrower.
Notwithstanding the foregoing, unless otherwise agreed by the Required
Lenders and subject to section 2.8(d), during any period when (A) the
Borrower shall have failed to timely deliver its financial statements
referred to in Section 8.1(a) or (b), (B) a Default under Section
10.1(a) shall have occurred and be continuing, or (C) an Event of
Default shall have occurred and be continuing, the Applicable
Eurodollar Margin for all Loans that are Eurodollar Loans shall be the
highest number of basis points indicated therefor in the Pricing Grid
Table, regardless of the Adjusted Leverage Ratio at such time. Any
changes in the Applicable Eurodollar Margin for Loans shall be
determined by the Administrative Agent in accordance with the above
provisions and the Administrative Agent shall promptly provide notice
of such determinations to the Borrower and the Lenders, which
determination by the Administrative Agent shall be conclusive and
binding absent manifest error.
"Borrowing Base" shall mean an amount not in excess of (a) the
sum of (i) eighty-five percent (85%) of the amount due and owing on
Eligible Accounts Receivable, plus (ii) the lesser of (A) sixty percent
(60%) of the aggregate of the cost or market value (whichever is lower)
of Eligible Inventory, or (B) Eighteen Million Dollars ($18,000,000),
minus (b) the aggregate principal amount of all Term Loans then
outstanding.
"Consolidated EBIT" shall mean, for any period, Consolidated
Net Income for such period; plus (a) the sum of the amounts for such
period included in determining such Consolidated Net Income of (i)
Consolidated Interest Expense, (ii) Consolidated Income Tax Expense,
(iii) amortization or write-off of deferred financing costs and charges
for prepayment penalties on prepayment of Indebtedness (all of which
amounts do not in the aggregate exceed in the 1998 fiscal year a
maximum of $5,500,000 on a pre-tax basis), and (iv) extraordinary and
other non-recurring non-cash losses and charges; less (b) gains on
sales of assets and other extraordinary gains and other non-recurring
non-cash gains; all as determined for the Borrower and its Subsidiaries
on a consolidated basis in accordance with GAAP; provided, however,
that in computing Consolidated Net Income for purposes of this
definition, there shall be excluded therefrom (A) any non-cash gains or
losses recorded in accordance with SFAS 133, Accounting for
Derivatives, (B) the effects of any non-cash gains or losses as a
result of foreign currency translation adjustments, (C) non-cash
charges associated with the write-off of goodwill in accordance with
SFAS 142, all as determined for the Borrower and its Subsidiaries on a
consolidated basis and in accordance with GAAP, (D) the income, (or
loss) of any entity (other than Subsidiaries of the Borrower) in which
the Borrower or any of its Subsidiaries has a joint interest, except to
the extent of the amount of dividends or other distributions actually
paid to the Borrower or any of its Subsidiaries during such period, and
(E) the income of any Subsidiary of the Borrower to the extent that the
declaration or payment of dividends or similar distributions by that
Subsidiary of that income is not at the time permitted by operation of
the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to
that Subsidiary.
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"Consolidated Net Worth" shall mean at any time for the
determination thereof all amounts that, in conformity with GAAP, would
be included under the caption "total stockholders' equity" (or any like
caption) on a consolidated balance sheet of the Borrower as at such
date; provided, however, that the calculation of Consolidated Net Worth
shall exclude (a) any amounts in respect of Redeemable Stock and (b)
non-cash charges associated with the write-off of goodwill in
accordance with SFAS 142.
"Maximum Available Revolving Commitment" shall mean at any
time an amount equal to the lesser of (a) the Total General Revolving
Commitment, or (b) (i) the Borrowing Base plus (ii) the Alternate
Currency Outstandings.
"Pricing Grid Table" shall mean the following pricing grid
table:
Applicable
Applicable Prime Rate
Eurodollar Margin Margin for Applicable Applicable
for General Eurodollar Prime Rate Applicable
General Revolving Revolving Margin for Margin for Term Facility Fee
Adjusted Leverage Ratio Loans Loans Term Loans Loans Rate
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Greater than 4.00 to 1.00 300 basis points 175 basis 350 basis points 225 basis points 50 basis points
points
Greater than 3.50 to 1.00 275 basis points 150 basis 325 basis points 200 basis points 50 basis points
but less than 4.00 to 1.00 points
Greater than 3.00 to 1.00 250 basis points 125 basis 300 basis points 175 basis points 50 basis points
but less than or equal to points
3.50 to 1.00
Greater than 2.50 to 1.00 225 basis points 100 basis 275 basis points 150 basis points 50 basis points
but less than or equal to points
3.00 to 1.00
Greater than 2.00 to 1.00 200 basis points 75 basis 250 basis points 125 basis points 50 basis points
but less than or equal to points
2.50 to 1.00
Less than or equal to 2.00 187.5 basis points 50 basis 225 basis points 100 basis points 37.5 basis
to 1.00 points points
1.2. Section 1.1 of the Credit Agreement is hereby amended to delete
the definition of "Interest Coverage Period" therefrom.
1.3. Section 1.1 of the Credit Agreement is hereby amended to add the
following new definitions thereto:
"Account" shall mean an account, as defined in Chapter 1309 of
the Ohio Revised Code as in effect from time to time.
"Account Debtor" shall mean any Person obligated to pay all or
any part of any Account in any manner and includes (without limitation)
any guarantor thereof.
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"Adjusted Interest Coverage Ratio" shall mean, for the most
recently completed four fiscal quarters of the Borrower, the ratio of
(a) Consolidated EBITDA to (b) Consolidated Interest Expense.
"Applicable Prime Rate Margin" shall mean:
(a) for any date prior to November 9, 2001, 0 basis points;
(b) from November 9, 2001 through March 31, 2002, (i) one
hundred seventy-five (175) basis points for General Revolving Loans,
and (ii) two hundred twenty-five (225) basis points for Term Loans; and
(c) commencing with the fiscal quarter of the Borrower ended
December 31, 2001, and continuing with each fiscal quarter thereafter,
the number of basis points determined by the Administrative Agent in
accordance with the Pricing Grid Table, based upon the Adjusted
Leverage Ratio. Changes in the Applicable Prime Rate Margin shall
become effective on the first day of the month following the receipt by
the Administrative Agent, pursuant to Section 8.1(a) or (b) of the
financial statements of the Borrower.
Notwithstanding the foregoing, unless otherwise agreed by the Required
Lenders and subject to section 2.8(d), during any period when (A) the
Borrower shall have failed to timely deliver its financial statements
referred to in Section 8.1(a) or (b), (B) a Default under Section
10.1(a) shall have occurred and be continuing, or (C) an Event of
Default shall have occurred and be continuing, the Applicable Prime
Rate Margin for all Loans that are Prime Rate Loans shall be the
highest number of basis points indicated therefor in the Pricing Grid
Table, regardless of the Adjusted Leverage Ratio at such time. Any
changes in the Applicable Prime Rate Margin for Loans shall be
determined by the Administrative Agent in accordance with the above
provisions and the Administrative Agent shall promptly provide notice
of such determinations to the Borrower and the Lenders, which
determination by the Administrative Agent shall be conclusive and
binding absent manifest error.
"Borrowing Base Certificate" shall mean a certificate,
substantially in the form of the attached Annex VIII.
"Eligible Account Receivable" shall mean an Account of the
Borrower or any of its Subsidiaries (other than a Foreign Subsidiary)
to the extent arising out of completed sales by Borrower or any of its
Subsidiaries (other than a Foreign Subsidiary) in accordance with the
terms and conditions of all purchase orders, contracts and other
documents relating thereto, which, at all times until it is collected
in full, continuously meets the following requirements: (a) to the
extent not subject to any claim for credit, allowance or adjustment by
the Account Debtor or any set-off or counterclaim; (b) arose in the
ordinary course of business of the Borrower or any of its Subsidiaries
from the performance (fully completed) of services or bona fide sale of
goods that have been shipped to the Account Debtor, and not more than
90 days from the due date as specified in the invoice relating to such
account receivable have elapsed with respect to such account
receivable; (c) is not due
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from any Account Debtor with respect to which the Borrower of any of
its Subsidiaries has received any notice or has any knowledge of
insolvency, bankruptcy or financial impairment; (d) is not subject to
an assignment, pledge, claim, mortgage, lien, or security interest of
any type except that granted to or in favor of the Administrative Agent
and the Lenders; (e) does not relate to any goods rejected or returned,
or acceptance of which has been revoked or refused; (f) is not the
subject of any instrument or chattel paper offered in payment thereof;
(g) has not been determined by the Administrative Agent, in its sole
discretion, to be unsatisfactory in any respect; (h) is not a
Government Account Receivable, unless the security interest of the
Administrative Agent and the Lenders in such Government Account
Receivable is filed in accordance with the Federal Assignment of Claims
Act; (i) is not an account receivable due from any Affiliate,
shareholder or employee of the Borrower or any of its Subsidiaries; (j)
is not a Foreign Account Receivable; (k) is not evidenced by a
promissory note or any other negotiable instrument; (l) is not an
account receivable owed to the Borrower or any of its Subsidiaries by
an Account Debtor that has failed to pay more than 50% of its currently
outstanding accounts receivable within 90 days from the due date
thereof as specified in the invoice with respect to such accounts
receivable; and (m) is an Account in which the Administrative Agent,
for the benefit of the Lenders, has a valid and enforceable first
security interest.
"Eligible Inventory" shall mean all Inventory of the Borrower
or any of its Subsidiaries in which the Administrative Agent, for the
benefit of the Lenders, has a valid and enforceable first security
interest, except Inventory that is (a) located outside of the United
States, (b) in the possession of a bailee or a third party, (c)
damaged, defective, or obsolete, (d) held by the Borrower or any of its
Subsidiaries or a third party on consignment, or (e) determined by the
Administrative Agent, in its sole discretion, to be unsatisfactory in
any respect.
"Foreign Account Receivable" shall mean any Account that
arises out of contracts with or orders from an Account Debtor that is
not a resident of the United States.
"Government Account Receivable" shall mean any Account that
arises out of contracts with or orders from the United States or any of
its departments, agencies or instrumentalities.
"Inventory" shall mean inventory, as defined in Chapter 1309
of the Ohio Revised Code as in effect from time to time.
"Required Supermajority Lenders" shall mean the holders of at
least 75% of the aggregate amount of the Commitments (other than the
Swing Line Revolving Commitment), or, if there shall be any borrowing
hereunder, the holders of at least 75% of the aggregate amount
outstanding under the Notes (other than the Swing Line Revolving Note).
1.4. Section 2A of the Credit Agreement is hereby amended so that all
references therein to Eligible Subsidiary shall be deemed to be references only
to X.X. Xxxxxxx S.p.A. The Borrower, the Administrative Agent and the Lenders
agree that, effective as of the date of this Amendment, no other Foreign
Subsidiary of the Borrower shall become an Eligible Subsidiary.
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Concurrently with the execution and delivery of this Amendment, each Eligible
Subsidiary (other than X.X. Xxxxxxx S.p.A.) shall have delivered to the
Administrative Agent an Election to Terminate and shall in no event be able to
request an Alternative Currency Advance regardless of whether or not such
Eligible Subsidiary shall have delivered to the Administrative Agent an Election
to Terminate.
1.5. Section 2.8 of the Credit Agreement is hereby amended to delete
subpart (a) therefrom and to insert in place thereof the following:
(a) Interest on Prime Rate Loans. The unpaid principal amount
of each Loan that is a Prime Rate Loan shall bear interest from the
date of Borrowing thereof until maturity (whether by acceleration or
otherwise) at a fluctuating rate per annum that shall at all times be
equal to the Prime Rate in effect from time to time plus the Applicable
Prime Rate Margin.
1.6. Section 5.3 of the Credit Agreement is hereby amended to add the
following new subpart (f) thereto:
(f) Mandatory Prepayment Event.
(i) In addition to any prepayment required pursuant to
subparts (a) through (d) above, if the Borrower or any Subsidiary shall
effect a Mandatory Prepayment Event (which Mandatory Prepayment Event
shall only be permitted in accordance with the terms of this
Agreement), then, unless otherwise agreed to in writing by the Required
Supermajority Lenders, the Prepayment Proceeds of such Mandatory
Prepayment Event shall be paid, on the date of such Mandatory
Prepayment Event, by the Borrower (or the applicable Subsidiary) to the
Administrative Agent to be applied, first, on a pro rata basis to the
outstanding principal balance of the Term Loans (to be applied on a pro
rata basis to the Scheduled Repayments thereof in the inverse order of
maturity), and, second, to the outstanding principal balance of the
Revolving Loans (or, if there shall be no Revolving Loans outstanding
or if the outstanding Revolving Loans shall have been paid in full,
then, first, to the outstanding principal balance of the Swing Line
Revolving Loans, second, to the outstanding principal balance of the
Alternate Currency Outstandings, and, third, to the Stated Amount of
the Letter of Credit Outstandings to be held and applied by the
Administrative Agent as security for the reimbursement obligations in
respect thereof), with the Total General Revolving Commitments being
permanently reduced by the amount of such Prepayment Proceeds, whether
or not there shall be any Revolving Credit Exposure.
(ii) As used in this section 5.3(f), "Mandatory Prepayment
Event" shall mean the receipt by the Borrower or any Subsidiary of (i)
any funds, in excess of the aggregate amount of $250,000 for any single
casualty event from (A) insurance losses, returns or unearned premiums
under any policy of insurance, (B) any condemnation, eminent domain or
other proceeding relating to the Real Property, or (C) any litigation,
settlement or other legal proceeding; (ii) the proceeds of a public or
private offering of equity or debt securities (other than pursuant to
section 9.4(c) (i) or (ii)) by the Borrower or any
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Subsidiary; or (iii) the proceeds of any Significant Asset Disposition;
"Prepayment Proceeds" shall mean the proceeds of any Mandatory
Prepayment Event minus taxes, fees and expenses actually paid in
connection with such Mandatory Prepayment Event; and "Significant Asset
Disposition" shall mean the sale, lease, transfer or other disposition
of assets (other than a sale in the ordinary course of business or
other than a sale, lease transfer or other disposition permitted
pursuant to section 9.2(a)) by the Borrower or any Subsidiary for which
the aggregate fair market value or book value, whichever is greater, of
the assets sold, leased, transferred or otherwise disposed of shall be
greater than or equal to $250,000.
1.7. Section 8.1 of the Credit Agreement is hereby amended to add the
following new subsection (j) thereto:
(j) Borrowing Base Certificate. Within 30 days after the end
of each month, and at such other time as the Administrative Agent may
request, (i) a Borrowing Base Certificate prepared by an Authorized
Officer of the Borrower, and (ii) an Accounts aging report and
Inventory report, each in form and substance satisfactory to the
Administrative Agent and signed by a Authorized Officer of Borrower;
1.8. Section 8.15 of the Credit Agreement is hereby amended to delete
subsection (d) therefrom and to insert in place thereof the following:
(d) On or before November 30, 2001, or such later date as may
be agreed to in writing by the Administrative Agent, the Borrower and
each Guarantor of Payment (as applicable) shall deliver to the
Administrative Agent, a landlord's waiver, in form and substance
satisfactory to the Administrative Agent, for each leased location at
which the Borrower or such Guarantor of Payment maintains assets (other
than locations owned by the Borrower or a Guarantor of Payment).
1.9. Section 8.15 of the Credit Agreement is hereby amended to add the
following new subsection (e) thereto:
(e) On or before November 30, 2001, or such later date as may
be agreed to in writing by the Administrative Agent, the Borrower shall
have delivered to the Administrative Agent title examinations and
commitments, in form and detail satisfactory to the Administrative
Agent, issued by a title insurance company acceptable to the
Administrative Agent with respect to the Mortgaged Property.
1.10. Section 9.2 of the Credit Agreement is hereby amended to delete
subsection (b) therefrom and to insert in place thereof the following:
(b) Permitted Acquisitions. Prior to November 9, 2001, the
Borrower or any Subsidiary shall be permitted to make Acquisitions in
accordance with the terms of this subpart (b) as in effect prior to
November 9, 2001, and on or after November 9, 2001, neither the
Borrower nor any of its Subsidiaries shall make any Acquisition without
the prior written consent of the Administrative Agent and the Required
Lenders.
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1.11. Section 9.4(c)(A) of the Credit Agreement is hereby amended to
delete "$9,500,000" therefrom and to insert in place thereof "$8,500,000".
1.12. Section 9.4 of the Credit Agreement is hereby amended to delete
subsection (f) therefrom and to insert in place thereof the following:
(f) Additional Unsecured Debt and Guaranty Obligations:
additional unsecured Indebtedness of the Borrower (including additional
unsecured Guaranty Obligations of the Borrower) incurred by the
Borrower on or before November 9, 2001, in an aggregate principal
amount outstanding at any time not to exceed $4,000,000 (including any
refinancing, extension or renewal of such Indebtedness so long as the
principal amount thereof shall not be increased), provided that at the
time of incurrence thereof, and after giving effect thereto, (i) the
Borrower would be in compliance with section 9.8; and (ii) no Event of
Default shall have occurred and be continuing or would result
therefrom.
1.13. Section 9 of the Credit Agreement is hereby amended to delete
section 9.8 therefrom and to insert in place thereof the following:
9.8. Leverage Ratio. The Borrower shall not permit at any time
the Leverage Ratio to exceed (i) 3.80 to 1.00 on the Closing Date
through December 30, 1998, (ii) 3.50 to 1.00 on December 31, 1998
through June 29, 2001, (iii) 4.10 to 1.00 on June 30, 2001 through
September 29, 2001, (iv) 4.30 to 1.00 on September 30, 2001 through
December 30, 2001, (v) 5.00 to 1.00 on December 31, 2001 through March
30, 2002, (vi) 5.35 to 1.00 on March 31, 2002 through June 29, 2002,
(vii) 5.10 to 1.00 on June 30, 2002 through September 29, 2002, (viii)
4.65 to 1.00 on September 30, 2002 through December 30, 2002, and (ix)
4.25 to 1.00 on December 31, 2002 and thereafter.
1.14. Section 9.5 of the Credit Agreement is hereby amended to delete
subpart (k) and subpart (iv) that appears immediately following subpart (k) and
to insert in place thereof the following:
(k) to the extent not permitted by the foregoing clauses, (i)
loans and advances by the Borrower or by any Subsidiary of the Borrower
to, or other investments in, any Subsidiary of the Borrower which is
(A) a Subsidiary Guarantor, (B) a Wholly-Owned Subsidiary, and (C) not
a Foreign Subsidiary, and (ii) loans and advances to, and investments
in, any Foreign Subsidiary, made after March 31, 1998, provided that
the cumulative aggregate amount thereof which are so made and
outstanding at any time shall not exceed an aggregate of $13,000,000,
taking into account the repayment of any loans or advances to such
Foreign Subsidiaries;
1.15. Section 9 of the Credit Agreement is hereby amended to delete
section 9.9 therefrom and to insert in place thereof the following:
9.9. Interest Coverage Ratio. The Borrower shall not permit at
any time (a) the Interest Coverage Ratio to be less than (i) 2.00 to
1.00 on the Closing Date through
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June 29, 2001, and (ii) 1.20 to 1.00 on June 30, 2001 through September
29, 2001, and (b) the Adjusted Interest Coverage Ratio to be less than
(i) 2.40 to 1.00 on September 30, 2001 through December 30, 2001, (ii)
2.10 to 1.00 on December 31, 2001 through Xxxxx 00, 0000, (xxx) 1.85 to
1.00 on March 31, 2002 through June 29, 2002, (iv) 2.05 to 1.00 on June
30, 2002 through September 29, 2002, (v) 2.20 to 1.00 on September 30,
2002 through December 30, 2002, and (vi) 2.45 to 1.00 on December 31,
2002 and thereafter.
1.16. Section 9 of the Credit Agreement is hereby amended to delete
Section 9.11 therefrom and to insert in place thereof the following:
9.11. Prepayments and Refinancings of Other Debt. The Borrower
shall not, and shall not permit any of its Subsidiaries to, make (or
give any notice in respect thereof) any voluntary or optional payment
or prepayment or redemption or acquisition for value of (including,
without limitation, by way of depositing with the trustee with respect
thereto money or securities before due for the purpose of paying when
due) or exchange of, or refinance or refund, any Indebtedness of the
Borrower or its Subsidiaries that has an outstanding principal balance
(or Capitalized Lease Obligation, in the case of a Capital Lease)
greater than $1,000,000 (other than (a) the Obligations and
intercompany loans and advances among the Borrower and its
Subsidiaries, and (b) any Indebtedness incurred pursuant to this
Agreement).
1.17. The Credit Agreement is hereby amended to add a new Annex VIII
thereto in the form of Annex VIII attached hereto.
1.18. Pursuant to Section 8.16 of the Credit Agreement, the
Administrative Agent has requested, and the Borrower hereby agrees, that,
concurrently with the execution of this Amendment, the Borrower and each
Guarantor of Payment shall execute and deliver to the Administrative Agent a
Pledge Agreement, dated as of the date hereof, pledging all of the stock or
other equity interest of each Subsidiary (other than a Foreign Subsidiary) of
the Borrower or such Guarantor of Payment.
1.19. The Borrower hereby agrees that the failure of the Borrower to
deliver any item required pursuant to, or otherwise fail to satisfy the terms
of, section 8.15(d) of the Credit Agreement, section 8.15(e) of the Credit
Agreement or Section 4 of this Amendment, within the time period specified in
such sections, shall constitute an Event of Default and, at the Administrative
Agent's sole option, all outstanding amounts of principal and all accrued but
unpaid interest thereon shall bear interest at the default rate of interest
specified in section 2.8(d) of the Credit Agreement (the "Default Rate") unless
and until the Borrower shall have satisfied, in the opinion of the
Administrative Agent, the requirements of such sections.
SECTION 2. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants as follows:
2.1. Authorization and Validity of Amendment. This Amendment has been
duly authorized by all necessary corporate action on the part of the Borrower,
has been duly executed
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and delivered by a duly authorized officer of the Borrower, and constitutes the
valid and binding agreement of the Borrower, enforceable against the Borrower in
accordance with its terms.
2.2. Representations and Warranties. The representations and warranties
of the Credit Parties contained in the Credit Agreement or in the other Credit
Documents are true and correct in all material respects on and as of the date
hereof, as though made on and as of the date hereof, except to the extent that
such representations and warranties expressly relate to an earlier specified
date, in which case such representations and warranties are hereby reaffirmed as
true and correct in all material respects as of the date when made.
2.3. No Event of Default. No Default or Event of Default exists or
immediately hereafter will begin to exist.
2.4. Compliance. The Borrower is in full compliance with all covenants
and agreements contained in the Credit Agreement, as amended hereby, and the
other Credit Documents to which it is a party.
2.5. No Claims. The Borrower is not aware of any claim or offset
against, or defense or counterclaim to, any of its or any Subsidiary's
obligations or liabilities under the Credit Agreement or any other Credit
Document.
SECTION 3. RATIFICATIONS.
Except as expressly modified and superseded by this Amendment, the
terms and provisions of the Credit Agreement are ratified and confirmed and
shall continue in full force and effect.
SECTION 4. CLOSING DELIVERIES.
Concurrently herewith:
(a) the Borrower shall cause each Guarantor of Payment to consent and
agree to and acknowledge the terms of this Amendment;
(b) the Borrower and each Guarantor of Payment shall execute and
deliver to the Administrative Agent a Pledge Agreement, in form and substance
satisfactory to the Administrative Agent, pursuant to which the Borrower and
each such Guarantor of Payment shall pledge all of the stock or other equity
interest of each Subsidiary (other than a Foreign Subsidiary) of the Borrower or
such Guarantor of Payment, together with the stock certificates pledged
thereunder and accompanying stock transfer powers;
(c) the Borrower shall deliver to the Administrative Agent such
examinations and reports, in form and detail satisfactory to the Administrative
Agent, with respect to the Mortgaged Property, issued by a title company
satisfactory to the Administrative Agent, that shows each Mortgage to be a valid
first priority Lien on such Mortgaged Property, free and clear of all defects
and encumbrances except such matters of record as permitted pursuant to the
Credit Agreement;
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(d) the Borrower shall deliver to the Administrative Agent evidence of
insurance on XXXXX 27 form, and otherwise satisfactory to the Administrative
Agent, of adequate personal property and liability insurance of each Credit
Party, with the Administrative Agent, on behalf of the Lenders, listed as
mortgagee, loss payee and additional insured;
(e) the Borrower shall provide to the Administrative Agent and the
Lenders an officer's certificate certifying the names of the officers of the
Borrower and each Guarantor of Payment authorized to sign this Amendment and the
Security Documents that are being executed on the date hereof to which the
Borrower or such Guarantor of Payment is a party, together with the true
signatures of such officers and certified copies of the resolutions of the board
of directors or executive committee of the Borrower or such Guarantor of
Payment, evidencing approval of the execution and delivery of this Amendment and
the Security Documents to which the Borrower or such Guarantor of Payment is a
party;
(f) the Borrower shall provide to the Administrative Agent and the
Lenders such opinions of counsel for the Borrower and each Guarantor of Payment,
in form and substance satisfactory to the Administrative Agent and the Lenders,
as the Administrative Agent and the Lenders may deem necessary or appropriate;
(g) pursuant to Section 1.5 of this Amendment, the Borrower shall cause
each Eligible Subsidiary (other than X.X. Xxxxxxx S.p.A.) to deliver to the
Administrative Agent an Election to Terminate;
(h) the Borrower shall pay to the Administrative Agent, for the pro
rata benefit of the Lenders, an amendment fee in the amount of Fifty Thousand
Dollars ($50,000);
(i) with respect to each parcel of the Mortgaged Property, evidence to
the satisfaction of the Administrative Agent that no portion of any Mortgaged
Real Property is located in a Special Flood Hazard Area or is otherwise
classified as Class A or Class BX on the Flood Maps maintained by the Federal
Emergency Management Agency;
(j) the Borrower shall pay all legal fees and expenses of the
Administrative Agent in connection with this Amendment and the documents
executed in connection herewith; and
(k) the Borrower shall provide such other items and shall satisfy such
other conditions as may be reasonably required by the Administrative Agent and
the Lenders.
SECTION 5. MISCELLANEOUS.
5.1. Survival of Representations and Warranties. All representations
and warranties made in this Amendment shall survive the execution and delivery
of this Amendment, and no investigation by the Administrative Agent or any
Lender or any subsequent Loan or other Credit Event shall affect the
representations and warranties or the right of the Administrative Agent or any
Lender to rely upon them.
11
5.2. Reference to Credit Agreement. The Credit Agreement and any and
all other agreements, instruments or documentation now or hereafter executed and
delivered pursuant to the terms of the Credit Agreement as amended hereby, are
hereby amended so that any reference therein to the Credit Agreement shall mean
a reference to the Credit Agreement as amended hereby.
5.3. Severability. Any term or provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the term or provision so held to be invalid or unenforceable.
5.4. Applicable Law. This Amendment shall be governed by and construed
in accordance with the laws of the State of Ohio without regard to conflicts of
laws provisions.
5.5. Headings. The headings, captions and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.
5.6. Entire Agreement. This Amendment is specifically limited to the
matters expressly set forth herein. This Amendment and all other instruments,
agreements and documentation executed and delivered in connection with this
Amendment embody the final, entire agreement among the parties hereto with
respect to the subject matter hereof and supersede any and all prior
commitments, agreements, representations and understandings, whether written or
oral, relating to the matters covered by this Amendment, and may not be
contradicted or varied by evidence of prior, contemporaneous or subsequent oral
agreements or discussions of the parties hereto. There are no oral agreements
among the parties hereto relating to the subject matter hereof or any other
subject matter relating to the Credit Agreement. Except as set forth herein, the
Credit Agreement shall remain in full force and effect and be unaffected hereby.
5.7. Waiver of Claims. The Borrower, by signing below, hereby waives
and releases Administrative Agent and each of the Lenders and their respective
directors, officers, employees, attorneys, affiliates and subsidiaries from any
and all claims, offsets, defenses and counterclaims of which Borrower is aware,
such waiver and release being with full knowledge and understanding of the
circumstances and effect thereof and after having consulted legal counsel with
respect thereto.
5.8. Counterparts. This Amendment may be executed by the parties hereto
separately in one or more counterparts and by facsimile signature, each of which
when so executed shall be deemed to be an original, but all of which when taken
together shall constitute one and the same agreement.
[Remainder of page intentionally left blank.]
12
5.9. JURY TRIAL WAIVER. EACH OF THE PARTIES TO THIS AMENDMENT HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AMENDMENT, THE OTHER CREDIT
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY HERETO
HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AMENDMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
IN WITNESS WHEREOF, this Amendment has been duly executed and delivered
as of the date first above written.
HAWK CORPORATION
By:___________________________
Name:_________________________
Title: _________________________
KEYBANK NATIONAL
ASSOCIATION,
as the Administrative Agent and as a
Lender
By:____________________________
Name: _________________________
Title: __________________________
NATIONAL CITY BANK
By:____________________________
Name:_________________________
Title:__________________________
LASALLE BANK NATIONAL
ASSOCIATION
By:____________________________
Name:_________________________
Title:__________________________
Signature Page 1 of 2
COMERICA BANK
By:____________________________
Name:_________________________
Title:__________________________
BANK ONE, N.A.
By:___________________________
Name:_________________________
Title:__________________________
XXXXXX TRUST AND SAVINGS
BANK
By:____________________________
Name:_________________________
Title:__________________________
Signature Page 2 of 2
ANNEX VIII
FORM OF
BORROWING BASE CERTIFICATE
Calculated as of: __________________
Calendar Month Ended:__________________
I, the undersigned and ________________ of Hawk Corporation, a Delaware
corporation (the "Borrower"), do hereby certify pursuant to Credit Agreement,
dated as of May 1, 1998, as amended (the "Credit Agreement"), among Borrower,
the lending institutions listed on Annex I thereto (collectively, the
"Lenders"), and KeyBank National Association, as administrative agent for the
Lenders (the "Administrative Agent"), that the following calculations have been
made in accordance with the provisions of the Credit Agreement. All capitalized
terms used herein and not defined herein shall have the meaning given to such
terms in the Credit Agreement.
A. CALCULATIONS
1. ACCOUNTS
a. Domestic Accounts Receivable $________________
b. Ineligible Accounts $________________
c. Eligible Accounts Receivable $_________________
(a minus b)
d. 85% of Eligible Accounts Receivable $________________
2. INVENTORY
a. Domestic Inventory $________________
b. Ineligible Inventory $________________
c. Eligible Inventory $________________
(a minus b)
d. Eligible Inventory $________________*
*cannot exceed inventory
cap of $18,000,000)
A-1
B. AVAILABILITY
1. Borrowing Base $________________
(the sum of 1d. and 2d. above)
2. Revolving Credit Exposure $________________
3. Aggregate principal amount of Term $________________
Loans outstanding
4. Availability $_________________
(1 minus 2 and 3 above)
For purposes of inducing the Administrative Agent and the Lenders to
grant Loans and issue Letters of Credit to the Borrower pursuant to the terms of
the Credit Agreement, I hereby certify that this Borrowing Base Certificate and
the information contained herein is true and correct and that no Default or
Event of Default has occurred under the Credit Agreement.
HAWK CORPORATION
By:_________________________
Name: ______________________
Title: _______________________
A-2
GUARANTOR ACKNOWLEDGMENT
Each of the undersigned consents and agrees to and acknowledges the
terms of the foregoing Amendment No. 3 to Credit Agreement. The undersigned
specifically agrees to the waivers set forth in such agreement, including, but
not limited to, the jury trial waiver. Each of the undersigned further agrees
that the obligations of the undersigned pursuant to the Guaranty of Payment
executed by the undersigned shall remain in full force and effect and be
unaffected hereby.
Each of the undersigned hereby waives and releases the Administrative
Agent and the Lenders and the directors, officers, employees, attorneys,
affiliates and subsidiaries of the Administrative Agent and the Lenders from any
and all claims, offsets, defenses and counterclaims of which the undersigned is
aware, such waiver and release being with full knowledge and understanding of
the circumstances and effect thereof and after having consulted legal counsel
with respect thereto.
FRICTION PRODUCTS CO.
X.X. XXXXXXX CORP.
XXXXXX, INC.
XXXXX METAL STAMPINGS, INC.
HAWK MOTORS, INC. (fka Xxxxxxxxxx
Products LLC)
SINTERLOY CORPORATION
HAWK BRAKE, INC.
X.X. XXXXXXX HOLDINGS, INC.
XXXXXXX FRICTION PRODUCTS U.K.
CORP.
CLEARFIELD POWDERED METALS,
INC.
ALLEGHENY POWDER METALLURGY,
INC.
QUARTER MASTER INDUSTRIES, INC.
HAWK MIM, INC.
TEX RACING ENTERPRISES, INC.
NET SHAPE TECHNOLOGIES LLC
By:__________________________________
Name: _______________________________
_____________ of each of the
foregoing companies
CREDIT AGREEMENT
dated as of
May 1, 1998
among
HAWK CORPORATION,
as the Borrower,
THE LENDING INSTITUTIONS NAMED THEREIN,
as Lenders,
and
KEYBANK NATIONAL ASSOCIATION
as the Administrative Agent
---------------------
AMENDMENT NO. 3
to
CREDIT AGREEMENT
dated as of
November 9, 2001
---------------------
