FIRST AMENDMENT TO REVOLVING CREDIT, TERM LOAN, EQUIPMENT LINE OF
CREDIT AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO REVOLVING CREDIT, TERM LOAN, EQUIPMENT LINE OF
CREDIT AND SECURITY AGREEMENT (this "Agreement") is entered into November 10,
2006 by and among AIR INDUSTRIES MACHINING, CORP. (as successor by merger with
Xxxxx Industries Acquisition Corp., Inc.), a corporation organized under the
laws of the State of New York ("Borrower"), the financial institutions which are
now or which hereafter become a party hereto (collectively, the "Lenders" and
individually a "Lender") and PNC BANK, NATIONAL ASSOCIATION ("PNC"), as agent
for Lenders (PNC, in such capacity, the "Agent").
RECITALS
Whereas, the Borrower and PNC entered into a certain Revolving Credit,
Term Loan, Equipment Line of Credit and Security Agreement dated November 30,
2005 (as is being and may be further amended, replaced, restated, modified
and/or extended, the "Loan Agreement"); and
Whereas, Borrower and PNC have agreed to modify the terms of the Loan
Agreement as set forth in this Agreement.
Now, therefore, in consideration of PNC's continued extension of credit
and the agreements contained herein, the parties agree as follows:
AGREEMENT
1) ACKNOWLEDGMENT OF BALANCE. Borrower acknowledges that the most recent
statement of account sent to Borrower with respect to the Obligations is
correct.
2) MODIFICATIONS. The Loan Agreement be and hereby is modified as follows:
(a) The following definitions in Section 1.2 of the Loan Agreement are
hereby deleted, and are replaced to read as follows:
"Advances" shall mean and include the Revolving Advances and as well as
Letters of Credit, the Term Loan, the Converted Equipment Loans and the
Equipment Loans.
"Commitment Percentage" of any Lender shall mean the percentage set forth
below such Lender's name on the signature page hereof as same may be
adjusted upon any assignment by a Lender pursuant to Section 15.3(c) or
(d) hereof.
"Purchasing Lender" shall have the meaning set forth in Section 15.3(c)
hereof.
"Revolving Advances" shall mean the Advances made other than Letters of
Credit, Equipment Loans, the Converted Equipment Loans and the Term Loan.
"Transferee" shall have the meaning set forth in Section 15.3(d) hereof.
(b) The following definitions are hereby added to Section 1.2 of the
Loan Agreement to read as follows:
"Issuer" shall mean any Person who issues a Letter of Credit and/or
accepts a draft pursuant to the terms hereof.
"Letter of Credit Fees" shall have the meaning set forth in Section 3.11.
"Letter of Credit Borrowing" shall have the meaning set forth in Section
2.17(d).
"Letter of Credit Sublimit" shall mean $500,000.
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"Letters of Credit" shall have the meaning set forth in Section 2.14.
"Maximum Face Amount" shall mean, with respect to any outstanding Letter
of Credit, the face amount of such Letter of Credit including all
automatic increases provided for in such Letter of Credit, whether or not
any such automatic increase has become effective.
"Maximum Undrawn Amount" shall mean with respect to any outstanding Letter
of Credit, the amount of such Letter of Credit that is or may become
available to be drawn, including all automatic increases provided for in
such Letter of Credit, whether or not any such automatic increase has
become effective.
"Modified Commitment Transfer Supplement" shall have the meaning set forth
in Section 15.3(d).
"Participation Commitment" shall mean each Lender's obligation to buy a
participation of the Letters of Credit issued hereunder.
"Purchasing CLO" shall have the meaning set forth in Section 15.3(d)
hereof.
"Register" shall have the meaning set forth in Section 15.3(e).
"First Amendment Closing Date" shall mean November 10, 2006.
(c) The initial paragraph of Subsection 2.1(a) of the Loan Agreement is
deleted, and is replaced by a new initial paragraph of Subsection
2.1(a) to read as follows:
(a) Amount of Revolving Advances. Subject to the terms and
conditions set forth in this Agreement including Section 2.1(b), each
Lender, severally and not jointly, will make Revolving Advances to
Borrower in aggregate amounts outstanding at any time equal to such
Lender's Commitment Percentage of the lesser of (x) the Maximum Revolving
Advance Amount less the aggregate Maximum Undrawn Amount of all
outstanding Letters of Credit or (y) an amount equal to the sum of:
(d) Subsection 2.4(a) of the Loan Agreement is deleted, and is replaced
by a new Subsection 2.4(a) to read as follows:
(a) Term Loan. Subject to the terms and conditions of this
Agreement, each Lender, severally and not jointly, will make a Term Loan
to Borrower in the sum equal to such Lender's Commitment Percentage of
$383,330. The Term Loan shall be advanced on the First Amendment Closing
Date and shall be, with respect to principal, payable as follows, subject
to acceleration upon the occurrence of an Event of Default under this
Agreement or termination of this Agreement: thirty six (36) consecutive
monthly principal installments, the first thirty five (35) of which shall
be in the amount of $10,648 commencing on the first Business Day of
November, 2006, and continuing on the first Business Day of each month
thereafter, with a thirty sixth (36th) and final payment of any unpaid
balance of principal and interest payable on the first Business Day of
October, 2009, subject to mandatory prepayment and acceleration upon the
occurrence of an Event of Default hereunder or earlier termination of the
Loan Agreement pursuant to the terms hereof. Notwithstanding anything to
the contrary herein, in the Term Note and/or in any Other Document, all
outstanding principal and interest hereunder is due and payable on the
Termination Date in the event that the Termination Date is before the
first Business Day of October, 2009. The Term Loan shall be evidenced by
one or more secured promissory notes (collectively, the "Term Note") in
substantially the form attached hereto as Exhibit 2.4a.
(e) Section 2.5 of the Loan Agreement is deleted, and is replaced by a
new Section 2.5 to read as follows:
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2.5 Maximum Advances. The aggregate balance of Revolving Advances
outstanding at any time shall not exceed the lesser of (a) the Maximum
Revolving Advance Amount or (b) the Formula Amount less, in each case, the
aggregate Maximum Undrawn Amount of all issued and outstanding Letters of
Credit.
(f) Subsection 2.12(a) of the Loan Agreement is deleted, and is replaced
by a new Subsection 2.12(a) to read as follows:
(a) Borrower shall apply the proceeds of Advances to (i)
purchase the Mortgaged Premises, (ii) repay existing indebtedness owed to
Citibank, (iii) pay fees and expenses relating to this transaction, and
(iv) provide for its working capital needs and reimburse drawings under
Letters of Credit.
(g) Sections 2.14, 2.15, 2.16, 2.17, 2.18, 2.19, 2.20, 2.21, 2.22 and
2.23 are hereby added to the Loan Agreement to read as follows:
2.14. Letters of Credit. Subject to the terms and conditions hereof,
Agent shall issue or cause the issuance of standby Letters of Credit
("Letters of Credit") for the account of the Borrower; provided, however,
that Agent will not be required to issue or cause to be issued any Letters
of Credit to the extent that the issuance thereof would then cause the sum
of (i) the outstanding Revolving Advances plus (ii) the Maximum Undrawn
Amount of all outstanding Letters of Credit to exceed the lesser of (x)
the Maximum Revolving Advance Amount or (y) the Formula Amount. The
Maximum Undrawn Amount of outstanding Letters of Credit shall not exceed
in the aggregate at any time the Letter of Credit Sublimit. All
disbursements or payments related to Letters of Credit shall be deemed to
be Domestic Rate Loans consisting of Revolving Advances and shall bear
interest at the applicable Contract Rate for Domestic Rate Loans; Letters
of Credit that have not been drawn upon shall not bear interest.
2.15. Issuance of Letters of Credit.
(a) Borrower may request Agent to issue or cause the issuance
of a Letter of Credit by delivering to Agent at the Payment Office, prior
to 10:00 a.m. (New York time), at least five (5) Business Days' prior to
the proposed date of issuance, Agent's form of Letter of Credit
Application (the "Letter of Credit Application") completed to the
satisfaction of Agent; and, such other certificates, documents and other
papers and information as Agent may reasonably request. Borrower also has
the right to give instructions and make agreements with respect to any
application, any applicable letter of credit and security agreement, any
applicable letter of credit reimbursement agreement and/or any other
applicable agreement, any letter of credit and the disposition of
documents, disposition of any unutilized funds, and to agree with Agent
upon any amendment, extension or renewal of any Letter of Credit.
(b) Each Letter of Credit shall, among other things, (i)
provide for the payment of sight drafts, other written demands for
payment, or acceptances of usance drafts when presented for honor
thereunder in accordance with the terms thereof and when accompanied by
the documents described therein and (ii) have an expiry date not later
than twenty-four (24) months after such Letter of Credit's date of
issuance and in no event later than the last day of the Term. Each standby
Letter of Credit shall be subject either to the Uniform Customs and
Practice for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500, and any amendments or revision thereof
adhered to by the Issuer ("UCP 500") or the International Standby
Practices (ISP98-International Chamber of Commerce Publication Number 590)
(the "ISP98 Rules"), as determined by Agent, and each trade Letter of
Credit shall be subject to UCP 500.
(c) Agent shall use its reasonable efforts to notify Lenders
of the request by Borrower for a Letter of Credit hereunder.
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2.16. Requirements For Issuance of Letters of Credit.
(a) Borrower shall authorize and direct any Issuer to name the
Borrower as the "Applicant" or "Account Party" of each Letter of Credit.
If Agent is not the Issuer of any Letter of Credit, Borrower shall
authorize and direct the Issuer to deliver to Agent all instruments,
documents, and other writings and property received by the Issuer pursuant
to the Letter of Credit and to accept and rely upon Agent's instructions
and agreements with respect to all matters arising in connection with the
Letter of Credit, the application therefor or any acceptance therefor.
(b) In connection with all Letters of Credit issued or caused
to be issued by Agent under this Agreement, Borrower hereby appoints
Agent, or its designee, as its attorney, with full power and authority if
an Event of Default shall have occurred, (i) to sign and/or endorse
Borrower's name upon any warehouse or other receipts, letter of credit
applications and acceptances, (ii) to sign Borrower's name on bills of
lading; (iii) to clear Inventory through the United States of America
Customs Department ("Customs") in the name of Borrower or Agent or Agent's
designee, and to sign and deliver to Customs officials powers of attorney
in the name of Borrower for such purpose; and (iv) to complete in
Borrower's name or Agent's, or in the name of Agent's designee, any order,
sale or transaction, obtain the necessary documents in connection
therewith, and collect the proceeds thereof. Neither Agent nor its
attorneys will be liable for any acts or omissions nor for any error of
judgment or mistakes of fact or law, except for Agent's or its attorney's
willful misconduct. This power, being coupled with an interest, is
irrevocable as long as any Letters of Credit remain outstanding.
2.17. Disbursements, Reimbursement.
(a) Immediately upon the issuance of each Letter of Credit,
each Lender shall be deemed to, and hereby irrevocably and unconditionally
agrees to, purchase from Agent a participation in such Letter of Credit
and each drawing thereunder in an amount equal to such Lender's Commitment
Percentage of the Maximum Face Amount of such Letter of Credit and the
amount of such drawing, respectively.
(b) In the event of any request for a drawing under a Letter
of Credit by the beneficiary or transferee thereof, Agent will promptly
notify Borrower. Provided that Borrower shall have received such notice,
the Borrower shall reimburse (such obligation to reimburse Agent shall
sometimes be referred to as a "Reimbursement Obligation") Agent prior to
12:00 Noon, New York time on each date that an amount is paid by Agent
under any Letter of Credit (each such date, a "Drawing Date") in an amount
equal to the amount so paid by Agent. In the event Borrower fail to
reimburse Agent for the full amount of any drawing under any Letter of
Credit by 12:00 Noon, New York time, on the Drawing Date, Agent will
promptly notify each Lender thereof, and Borrower shall be deemed to have
requested that a Domestic Rate Loan be made by the Lenders to be disbursed
on the Drawing Date under such Letter of Credit, subject to the amount of
the unutilized portion of the lesser of Maximum Revolving Advance Amount
or the Formula Amount and subject to Section 8.2 hereof. Any notice given
by Agent pursuant to this Section 2.17(b) may be oral if immediately
confirmed in writing; provided that the lack of such an immediate
confirmation shall not affect the conclusiveness or binding effect of such
notice.
(c) Each Lender shall upon any notice pursuant to Section
2.17(b) make available to Agent an amount in immediately available funds
equal to its Commitment Percentage of the amount of the drawing, whereupon
the participating Lenders shall (subject to Section 2.17(d)) each be
deemed to have made a Domestic Rate Loan to Borrower in that amount. If
any Lender so notified fails to make available to Agent the amount of such
Lender's Commitment Percentage of such amount by no later than 2:00 p.m.,
New York time on the Drawing Date, then interest shall accrue on such
Lender's obligation to make such payment, from the Drawing Date to the
date on which such Lender makes such payment (i) at a rate per annum equal
to the Federal Funds Rate during the first three days following the
Drawing Date and (ii) at a rate per annum equal to the rate applicable to
Domestic Rate Loans on and after the fourth day following the Drawing
Date. Agent will promptly give notice of the occurrence of the Drawing
Date, but failure of Agent to give any such notice on the Drawing Date or
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in sufficient time to enable any Lender to effect such payment on such
date shall not relieve such Lender from its obligation under this Section
2.17(c), provided that such Lender shall not be obligated to pay interest
as provided in Section 2.17(c)(i) and (ii) until and commencing from the
date of receipt of notice from Agent of a drawing.
(d) With respect to any unreimbursed drawing that is not
converted into a Domestic Rate Loan to Borrower in whole or in part as
contemplated by Section 2.17(b), because of Borrower's failure to satisfy
the conditions set forth in Section 8.2 (other than any notice
requirements) or for any other reason, Borrower shall be deemed to have
incurred from Agent a borrowing (each a "Letter of Credit Borrowing") in
the amount of such drawing. Such Letter of Credit Borrowing shall be due
and payable on demand (together with interest) and shall bear interest at
the rate per annum applicable to a Domestic Rate Loan. Each Lender's
payment to Agent pursuant to Section 2.17(c) shall be deemed to be a
payment in respect of its participation in such Letter of Credit Borrowing
and shall constitute a "Participation Advance" from such Lender in
satisfaction of its Participation Commitment under this Section 2.17.
(e) Each Lender's Participation Commitment shall continue
until the last to occur of any of the following events: (x) Agent ceases
to be obligated to issue or cause to be issued Letters of Credit
hereunder; (y) no Letter of Credit issued or created hereunder remains
outstanding and uncancelled and (z) all Persons (other than the Borrower)
have been fully reimbursed for all payments made under or relating to
Letters of Credit.
2.18. Repayment of Participation Advances.
(a) Upon (and only upon) receipt by Agent for its account of
immediately available funds from Borrower (i) in reimbursement of any
payment made by the Agent under the Letter of Credit with respect to which
any Lender has made a Participation Advance to Agent, or (ii) in payment
of interest on such a payment made by Agent under such a Letter of Credit,
Agent will pay to each Lender, in the same funds as those received by
Agent, the amount of such Lender's Commitment Percentage of such funds,
except Agent shall retain the amount of the Commitment Percentage of such
funds of any Lender that did not make a Participation Advance in respect
of such payment by Agent.
(b) If Agent is required at any time to return to Borrower, or
to a trustee, receiver, liquidator, custodian, or any official in any
insolvency proceeding, any portion of the payments made by Borrower to
Agent pursuant to Section 2.18(a) in reimbursement of a payment made under
the Letter of Credit or interest or fee thereon, each Lender shall, on
demand of Agent, forthwith return to Agent the amount of its Commitment
Percentage of any amounts so returned by Agent plus interest at the
Federal Funds Effective Rate.
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2.19. Documentation. The Borrower agrees to be bound by the terms of
the Letter of Credit Application and by Agent's reasonable interpretations
of any Letter of Credit issued on behalf of Borrower and by Agent's
written regulations and customary practices relating to letters of credit,
though Agent's interpretations may be different from Borrower's own. In
the event of a conflict between the Letter of Credit Application and this
Agreement, this Agreement shall govern. It is understood and agreed that,
except in the case of gross negligence or willful misconduct (as
determined by a court of competent jurisdiction in a final non-appealable
judgment), Agent shall not be liable for any error, negligence and/or
mistakes, whether of omission or commission, in following the Borrower's
instructions or those contained in the Letters of Credit or any
modifications, amendments or supplements thereto.
2.20. Determination to Honor Drawing Request. In determining whether
to honor any request for drawing under any Letter of Credit by the
beneficiary thereof, Agent shall be responsible only to determine that the
documents and certificates required to be delivered under such Letter of
Credit have been delivered and that they comply on their face with the
requirements of such Letter of Credit and that any other drawing condition
appearing on the face of such Letter of Credit has been satisfied in the
manner so set forth.
2.21. Nature of Participation and Reimbursement Obligations. Each
Lender's obligation in accordance with this Agreement to make the
Revolving Advances or Participation Advances as a result of a drawing
under a Letter of Credit, and the obligations of Borrower to reimburse
Agent upon a draw under a Letter of Credit, shall be absolute,
unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Section 2.21 under all circumstances,
including the following circumstances:
(i) any set-off, counterclaim, recoupment, defense or
other right which such Lender may have against Agent, Borrower or any
other Person for any reason whatsoever;
(ii) the failure of Borrower or any other Person to
comply, in connection with a Letter of Credit Borrowing, with the
conditions set forth in this Agreement for the making of a Revolving
Advance, it being acknowledged that such conditions are not required for
the making of a Letter of Credit Borrowing and the obligation of the
Lenders to make Participation Advances under Section 2.17;
(iii) any lack of validity or enforceability of any
Letter of Credit;
(iv) any claim of breach of warranty that might be made
by Borrower or any Lender against the beneficiary of a Letter of Credit,
or the existence of any claim, set-off, recoupment, counterclaim,
crossclaim, defense or other right which Borrower or any Lender may have
at any time against a beneficiary, any successor beneficiary or any
transferee of any Letter of Credit or the proceeds thereof (or any Persons
for whom any such transferee may be acting), Agent or any Lender or any
other Person, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction (including any underlying
transaction between Borrower or any Subsidiaries of Borrower and the
beneficiary for which any Letter of Credit was procured);
(v) the lack of power or authority of any signer of (or
any defect in or forgery of any signature or endorsement on) or the form
of or lack of validity, sufficiency, accuracy, enforceability or
genuineness of any draft, demand, instrument, certificate or other
document presented under or in connection with any Letter of Credit, or
any fraud or alleged fraud in connection with any Letter of Credit, or the
transport of any property or provisions of services relating to a Letter
of Credit, in each case even if Agent or any of Agent's Affiliates has
been notified thereof;
(vi) payment by Agent under any Letter of Credit against
presentation of a demand, draft or certificate or other document which
does not comply with the terms of such Letter of Credit;
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(vii) the solvency of, or any acts or omissions by, any
beneficiary of any Letter of Credit, or any other Person having a role in
any transaction or obligation relating to a Letter of Credit, or the
existence, nature, quality, quantity, condition, value or other
characteristic of any property or services relating to a Letter of Credit;
(viii) any failure by the Agent or any of Agent's
Affiliates to issue any Letter of Credit in the form requested by
Borrower, unless the Agent has received written notice from Borrower of
such failure within three (3) Business Days after the Agent shall have
furnished Borrower a copy of such Letter of Credit and such error is
material and no drawing has been made thereon prior to receipt of such
notice;
(ix) any Material Adverse Effect on Borrower;
(x) any breach of this Agreement or any Other Document
by any party thereto;
(xi) the occurrence or continuance of an insolvency
proceeding with respect to Borrower;
(xii) the fact that a Default or Event of Default shall
have occurred and be continuing;
(xiii) the fact that the Term shall have expired or this
Agreement or the Obligations hereunder shall have been terminated; and
(xix) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing.
2.22. Indemnity. In addition to amounts payable as provided in
Section 15.5, Borrower hereby agrees to protect, indemnify, pay and save
harmless Agent and any of Agent's Affiliates that have issued a Letter of
Credit from and against any and all claims, demands, liabilities, damages,
taxes, penalties, interest, judgments, losses, costs, charges and expenses
(including reasonable fees, expenses and disbursements of counsel and
allocated costs of internal counsel) which the Agent or any of Agent's
Affiliates may incur or be subject to as a consequence, direct or
indirect, of the issuance of any Letter of Credit, other than as a result
of (A) the gross negligence or willful misconduct of the Agent as
determined by a final and non-appealable judgment of a court of competent
jurisdiction or (b) the wrongful dishonor by the Agent or any of Agent's
Affiliates of a proper demand for payment made under any Letter of Credit,
except if such dishonor resulted from any act or omission, whether
rightful or wrongful, of any present or future de jure or de facto
Governmental Body (all such acts or omissions herein called "Governmental
Acts").
2.23. Liability for Acts and Omissions. As between Borrower and
Agent and Lenders, Borrower assumes all risks of the acts and omissions
of, or misuse of the Letters of Credit by, the respective beneficiaries of
such Letters of Credit. In furtherance and not in limitation of the
respective foregoing, Agent shall not be responsible for: (i) the form,
validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the application for an
issuance of any such Letter of Credit, even if it should in fact prove to
be in any or all respects invalid, insufficient, inaccurate, fraudulent or
forged (even if Agent shall have been notified thereof); (ii) the validity
or sufficiency of any instrument transferring or assigning or purporting
to transfer or assign any such Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) the failure of the
beneficiary of any such Letter of Credit, or any other party to which such
Letter of Credit may be transferred, to comply fully with any conditions
required in order to draw upon such Letter of Credit or any other claim of
Borrower against any beneficiary of such Letter of Credit, or any such
transferee, or any dispute between or among Borrower and any beneficiary
of any Letter of Credit or any such transferee; (iv) errors, omissions,
interruptions or delays in transmission or delivery of any messages, by
mail, cable, telegraph, telex or otherwise, whether or not they be in
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cipher; (v) errors in interpretation of technical terms; (vi) any loss or
delay in the transmission or otherwise of any document required in order
to make a drawing under any such Letter of Credit or of the proceeds
thereof; (vii) the misapplication by the beneficiary of any such Letter of
Credit of the proceeds of any drawing under such Letter of Credit; or
(viii) any consequences arising from causes beyond the control of Agent,
including any Governmental Acts, and none of the above shall affect or
impair, or prevent the vesting of, any of Agent's rights or powers
hereunder. Nothing in the preceding sentence shall relieve Agent from
liability for Agent's gross negligence or willful misconduct (as
determined by a court of competent jurisdiction in a final non-appealable
judgment) in connection with actions or omissions described in such
clauses (i) through (viii) of such sentence. In no event shall Agent or
Agent's Affiliates be liable to Borrower for any indirect, consequential,
incidental, punitive, exemplary or special damages or expenses (including
without limitation attorneys' fees), or for any damages resulting from any
change in the value of any property relating to a Letter of Credit.
Without limiting the generality of the foregoing, Agent and each of
its Affiliates (i) may rely on any oral or other communication believed in
good faith by Agent or such Affiliate to have been authorized or given by
or on behalf of the applicant for a Letter of Credit, (ii) may honor any
presentation if the documents presented appear on their face substantially
to comply with the terms and conditions of the relevant Letter of Credit;
(iii) may honor a previously dishonored presentation under a Letter of
Credit, whether such dishonor was pursuant to a court order, to settle or
compromise any claim of wrongful dishonor, or otherwise, and shall be
entitled to reimbursement to the same extent as if such presentation had
initially been honored, together with any interest paid by Agent or its
Affiliates; (iv) may honor any drawing that is payable upon presentation
of a statement advising negotiation or payment, upon receipt of such
statement (even if such statement indicates that a draft or other document
is being delivered separately), and shall not be liable for any failure of
any such draft or other document to arrive, or to conform in any way with
the relevant Letter of Credit; (v) may pay any paying or negotiating bank
claiming that it rightfully honored under the laws or practices of the
place where such bank is located; and (vi) may settle or adjust any claim
or demand made on Agent or its Affiliate in any way related to any order
issued at the applicant's request to an air carrier, a letter of guarantee
or of indemnity issued to a carrier or any similar document (each an
"Order") and honor any drawing in connection with any Letter of Credit
that is the subject of such Order, notwithstanding that any drafts or
other documents presented in connection with such Letter of Credit fail to
conform in any way with such Letter of Credit.
In furtherance and extension and not in limitation of the specific
provisions set forth above, any action taken or omitted by Agent under or
in connection with the Letters of Credit issued by it or any documents and
certificates delivered thereunder, if taken or omitted in good faith and
without gross negligence (as determined by a court of competent
jurisdiction in a final non-appealable judgment), shall not put Agent
under any resulting liability to Borrower or any Lender.
(h) Subsection 3.2(b) of the Loan Agreement is deleted, and is replaced
by a new Subsection 3.2(b) to read as follows:
(b) Facility Fee. If, for any calendar quarter during the
Term, the average daily unpaid balance of the Revolving Advances and
undrawn amount of any outstanding Letters of Credit for each day of such
calendar quarter does not equal the Maximum Revolving Advance Amount, then
Borrower shall pay to Agent for the ratable benefit of Lenders a fee at a
rate equal to one half of one percent (.50%) per annum on the amount by
which the Maximum Revolving Advance Amount exceeds such average daily
unpaid balance. Such fee shall be payable to Agent in arrears on the first
day of each calendar quarter with respect to the previous calendar
quarter.
(i) Sections 3.11 is hereby added to the Loan Agreement to read as
follows:
3.11. Letter of Credit Fees.
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(a) Borrower shall pay (x) to Agent, for the ratable benefit
of Lenders, fees for each Letter of Credit for the period from and
excluding the date of issuance of same to and including the date of
expiration or termination, equal to the average daily face amount of each
outstanding Letter of Credit multiplied per annum by two and one half of
one percent (2.50%), such fees to be calculated on the basis of a 360-day
year for the actual number of days elapsed and to be payable quarterly in
arrears on the first day of each quarter and on the last day of the Term,
and (y) to the Issuer, a fronting fee of one quarter of one percent
(0.25%) per annum, together with any and all administrative, issuance,
amendment, payment and negotiation charges with respect to Letters of
Credit and all fees and expenses as agreed upon by the Issuer and the
Borrower in connection with any Letter of Credit, including in connection
with the opening, amendment or renewal of any such Letter of Credit and
any acceptances created thereunder and shall reimburse Agent for any and
all fees and expenses, if any, paid by Agent to the Issuer (all of the
foregoing fees, the "Letter of Credit Fees"). All such charges shall be
deemed earned in full on the date when the same are due and payable
hereunder and shall not be subject to rebate or pro-ration upon the
termination of this Agreement for any reason. Any such charge in effect at
the time of a particular transaction shall be the charge for that
transaction, notwithstanding any subsequent change in the Issuer's
prevailing charges for that type of transaction. All Letter of Credit Fees
payable hereunder shall be deemed earned in full on the date when the same
are due and payable hereunder and shall not be subject to rebate or
pro-ration upon the termination of this Agreement for any reason.
(b) On demand, Borrower will cause cash to be deposited and
maintained in an account with Agent, as cash collateral, in an amount
equal to one hundred and five percent (105%) of the Maximum Undrawn Amount
of all outstanding Letters of Credit, and Borrower hereby irrevocably
authorizes Agent, in its discretion, on Borrower's behalf and in
Borrower's name, to open such an account and to make and maintain deposits
therein, or in an account opened by Borrower, in the amounts required to
be made by Borrower, out of the proceeds of Receivables or other
Collateral or out of any other funds of Borrower coming into any Lender's
possession at any time. Agent will invest such cash collateral (less
applicable reserves) in such short-term money-market items as to which
Agent and Borrower mutually agree and the net return on such investments
shall be credited to such account and constitute additional cash
collateral. Borrower may not withdraw amounts credited to any such account
except upon the occurrence of all of the following: (x) payment and
performance in full of all Obligations, (y) expiration of all Letters of
Credit and (z) termination of this Agreement.
(j) Section 11.5 of the Loan Agreement is deleted, and is replaced by a
new Section 11.5 to read as follows:
11.5. Allocation of Payments After Event of Default. Notwithstanding
any other provisions of this Agreement to the contrary, after the
occurrence and during the continuance of an Event of Default, all amounts
collected or received by the Agent on account of the Obligations or any
other amounts outstanding under any of the Other Documents or in respect
of the Collateral may, at Agent's discretion, be paid over or delivered as
follows:
FIRST, to the payment of all reasonable out-of-pocket costs and
expenses (including reasonable attorneys' fees) of the Agent in connection
with enforcing its rights and the rights of the Lenders under this
Agreement and the Other Documents and any protective advances made by the
Agent with respect to the Collateral under or pursuant to the terms of
this Document;
SECOND, to payment of any fees owed to the Agent;
THIRD, to the payment of all reasonable out-of-pocket costs and
expenses (including reasonable attorneys' fees) of each of the Lenders in
connection with enforcing its rights under this Agreement and the Other
Documents or otherwise with respect to the Obligations owing to such
Lender;
FOURTH, to the payment of all of the Obligations consisting of
accrued fees and interest;
FIFTH, to the payment of the outstanding principal amount of the
Obligations (including the payment or cash collateralization of any
outstanding Letters of Credit);
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SIXTH, to all other Obligations and other obligations which shall
have become due and payable under the Other Documents or otherwise and not
repaid pursuant to clauses "FIRST" through "FIFTH" above; and
SEVENTH, to the payment of the surplus, if any, to whoever may be
lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied
in the numerical order provided until exhausted prior to application to
the next succeeding category; (ii) each of the Lenders shall receive (so
long as it is not a Defaulting Lender) an amount equal to its pro rata
share (based on the proportion that the then outstanding Advances held by
such Lender bears to the aggregate then outstanding Advances) of amounts
available to be applied pursuant to clauses "FOURTH", "FIFTH" and "SIXTH"
above; and (iii) to the extent that any amounts available for distribution
pursuant to clause "FIFTH" above are attributable to the issued but
undrawn amount of outstanding Letters of Credit, such amounts shall be
held by the Agent in a cash collateral account and applied (A) first, to
reimburse the Issuer from time to time for any drawings under such Letters
of Credit and (B) then, following the expiration of all Letters of Credit,
to all other obligations of the types described in clauses "FIFTH" and
"SIXTH" above in the manner provided in this Section 11.5.
(k) Section 15.3 of the Loan Agreement is deleted, and is replaced by a
new Section 15.3 to read as follows:
15.3. Successors and Assigns; Participations; New Lenders.
(a) This Agreement shall be binding upon and inure to the
benefit of Borrower, Agent, each Lender, all future holders of the
Obligations and their respective successors and assigns, except that
Borrower may not assign or transfer any of its rights or obligations under
this Agreement without the prior written consent of Agent and each Lender.
(b) Borrower acknowledges that in the regular course of
commercial banking business one or more Lenders may at any time and from
time to time sell participating interests in the Advances to other
financial institutions (each such transferee or purchaser of a
participating interest, a "Participant"). Each Participant may exercise
all rights of payment (including rights of set-off) with respect to the
portion of such Advances held by it or other Obligations payable hereunder
as fully as if such Participant were the direct holder thereof provided
that Borrower shall not be required to pay to any Participant more than
the amount which it would have been required to pay to Lender which
granted an interest in its Advances or other Obligations payable hereunder
to such Participant had such Lender retained such interest in the Advances
hereunder or other Obligations payable hereunder and in no event shall
Borrower be required to pay any such amount arising from the same
circumstances and with respect to the same Advances or other Obligations
payable hereunder to both such Lender and such Participant. Borrower
hereby grants to any Participant a continuing security interest in any
deposits, moneys or other property actually or constructively held by such
Participant as security for the Participant's interest in the Advances.
(c) Any Lender, with the consent of Agent which shall not be
unreasonably withheld or delayed, may sell, assign or transfer all or any
part of its rights and obligations under or relating to Revolving Advances
under this Agreement and the Other Documents to one or more additional
banks or financial institutions and one or more additional banks or
financial institutions may commit to make Advances hereunder (each a
"Purchasing Lender"), in minimum amounts of not less than $5,000,000,
pursuant to a Commitment Transfer Supplement, executed by a Purchasing
Lender, the transferor Lender, and Agent and delivered to Agent for
recording. Upon such execution, delivery, acceptance and recording, from
and after the transfer effective date determined pursuant to such
Commitment Transfer Supplement, (i) Purchasing Lender thereunder shall be
a party hereto and, to the extent provided in such Commitment Transfer
Supplement, have the rights and obligations of a Lender thereunder with a
Commitment Percentage as set forth therein, and (ii) the transferor Lender
thereunder shall, to the extent provided in such Commitment Transfer
Supplement, be released from its obligations under this Agreement, the
Commitment Transfer Supplement creating a novation for that purpose. Such
Commitment Transfer Supplement shall be deemed to amend this Agreement to
the extent, and only to the extent, necessary to reflect the addition of
such Purchasing Lender and the resulting adjustment of the Commitment
Percentages arising from the purchase by such Purchasing Lender of all or
a portion of the rights and obligations of such transferor Lender under
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this Agreement and the Other Documents. Borrower hereby consents to the
addition of such Purchasing Lender and the resulting adjustment of the
Commitment Percentages arising from the purchase by such Purchasing Lender
of all or a portion of the rights and obligations of such transferor
Lender under this Agreement and the Other Documents. Borrower shall
execute and deliver such further documents and do such further acts and
things in order to effectuate the foregoing.
(d) Any Lender, with the consent of Agent which shall not be
unreasonably withheld or delayed, may directly or indirectly sell, assign
or transfer all or any portion of its rights and obligations under or
relating to Revolving Advances under this Agreement and the Other
Documents to an entity, whether a corporation, partnership, trust, limited
liability company or other entity that (i) is engaged in making,
purchasing, holding or otherwise investing in bank loans and similar
extensions of credit in the ordinary course of its business and (ii) is
administered, serviced or managed by the assigning Lender or an Affiliate
of such Lender (a "Purchasing CLO" and together with each Participant and
Purchasing Lender, each a "Transferee" and collectively the
"Transferees"), pursuant to a Commitment Transfer Supplement modified as
appropriate to reflect the interest being assigned ("Modified Commitment
Transfer Supplement"), executed by any intermediate purchaser, the
Purchasing CLO, the transferor Lender, and Agent as appropriate and
delivered to Agent for recording. Upon such execution and delivery, from
and after the transfer effective date determined pursuant to such Modified
Commitment Transfer Supplement, (i) Purchasing CLO thereunder shall be a
party hereto and, to the extent provided in such Modified Commitment
Transfer Supplement, have the rights and obligations of a Lender
thereunder and (ii) the transferor Lender thereunder shall, to the extent
provided in such Modified Commitment Transfer Supplement, be released from
its obligations under this Agreement, the Modified Commitment Transfer
Supplement creating a novation for that purpose. Such Modified Commitment
Transfer Supplement shall be deemed to amend this Agreement to the extent,
and only to the extent, necessary to reflect the addition of such
Purchasing CLO. Borrower hereby consents to the addition of such
Purchasing CLO. Borrower shall execute and deliver such further documents
and do such further acts and things in order to effectuate the foregoing.
(e) Agent shall maintain at its address a copy of each
Commitment Transfer Supplement and Modified Commitment Transfer Supplement
delivered to it and a register (the "Register") for the recordation of the
names and addresses of each Lender and the outstanding principal, accrued
and unpaid interest and other fees due hereunder. The entries in the
Register shall be conclusive, in the absence of manifest error, and
Borrower, Agent and Lenders may treat each Person whose name is recorded
in the Register as the owner of the Advance recorded therein for the
purposes of this Agreement. The Register shall be available for inspection
by Borrower or any Lender at any reasonable time and from time to time
upon reasonable prior notice. Agent shall receive a fee in the amount of
$3,500 payable by the applicable Purchasing Lender and/or Purchasing CLO
upon the effective date of each transfer or assignment (other than to an
intermediate purchaser) to such Purchasing Lender and/or Purchasing CLO.
(f) Borrower authorizes each Lender to disclose to any
Transferee and any prospective Transferee any and all financial
information in such Lender's possession concerning Borrower which has been
delivered to such Lender by or on behalf of Borrower pursuant to this
Agreement or in connection with such Lender's credit evaluation of
Borrower.
3) ACKNOWLEDGMENTS. Borrower acknowledges and represents that:
(A) the Loan Agreement and Other Documents, as amended hereby, are in full
force and effect without any defense, claim, counterclaim, right or claim
of set-off;
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(B) to the best of its knowledge, no default by the Agent or Lenders in
the performance of their duties under the Loan Agreement or the Other
Documents has occurred;
(C) all representations and warranties of the Borrower contained herein,
in the Loan Agreement and in the Other Documents are true and correct in
all material respects as of this date, except for any representation or
warranty that specifically refers to an earlier date;
(D) Borrower has taken all necessary action to authorize the execution and
delivery of this Agreement; and
(E) this Agreement is a modification of an existing obligation and is not
a novation.
4) PRECONDITIONS. As a precondition to the effectiveness of any of the
modifications, consents, or waivers contained herein, the Borrower agrees
to:
(A) provide the Agent with this Agreement and the Amended and Restated
Term Note, properly executed;
(B) provide the Agent with a resolution, in form and substance acceptable
to the Agent, which approves the modification contemplated hereby;
(C) pay all legal fees incurred by the Agent in entering into this
Agreement to Wilentz, Xxxxxxx & Xxxxxxx via wire transfer; and
(D) pay all other fees and costs incurred by the Lenders in entering into
this Agreement.
5) MISCELLANEOUS. This Agreement shall be construed in accordance with and
governed by the laws of the State of New York, without reference to that
state's conflicts of law principles. This Agreement, the Loan Agreement
and the Other Documents constitute the sole agreement of the parties with
respect to the subject matter thereof and supersede all oral negotiations
and prior writings with respect to the subject matter thereof. No
amendment of this Agreement, and no waiver of any one or more of the
provisions hereof shall be effective unless set forth in writing and
signed by the parties hereto. The illegality, unenforceability or
inconsistency of any provision of this Agreement shall not in any way
affect or impair the legality, enforceability or consistency of the
remaining provisions of this Agreement, the Loan Agreement or the Other
Documents. This Agreement, the Loan Agreement and the Other Documents are
intended to be consistent. However, in the event of any inconsistencies
among this Agreement, the Loan Agreement and/or any of the Other
Documents, the terms of this Agreement, then the Loan Agreement, shall
control. This Agreement may be executed in any number of counterparts and
by the different parties on separate counterparts. Each such counterpart
shall be deemed an original, but all such counterparts shall together
constitute one and the same agreement.
6) DEFINITIONS. The terms used herein and not otherwise defined or modified
herein shall have the meanings ascribed to them in the Loan Agreement. The
terms used herein and not otherwise defined or modified herein or defined
in the Loan Agreement shall have the meanings ascribed to them by the
Uniform Commercial Code as enacted in State of New York.
[SIGNATURES TO FOLLOW]
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SIGNATURE PAGE TO FIRST AMENDMENT
TO REVOLVING CREDIT, TERM LOAN, EQUIPMENT LINE OF
CREDIT AND SECURITY AGREEMENT
IN WITNESS WHEREOF, the undersigned have signed and sealed this Agreement
the day and year first above written.
ATTEST: AIR INDUSTRIES MACHINING, CORP.
By:_____________________________ By:________________________________
Name: XXXXX X. XXXXXX Name: XXXXXXX X. XXXXX
Title: Vice Chairman Title: Executive Chairman
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PNC BANK, NATIONAL ASSOCIATION
Lender and as Agent
By:________________________________
Name: XXXXXXX X. XXXXXXXXX
Title: Vice President
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