Exhibit 10.36
AMENDMENT NO. 1 TO CREDIT AGREEMENT
THIS AMENDMENT NO. 1 TO CREDIT AGREEMENT, is dated as of February 27,
2004 (this "AMENDMENT"), among the following:
(i) Hawk Corporation, a Delaware corporation ("HAWK");
(ii) each of the other Borrowers and Guarantors party to
the Credit Agreement referred to below;
(iii) the Lenders party to the Credit Agreement referred to
below; and
(iv) JPMorgan Chase Bank, as arranger, Agent and
collateral agent for the Lenders (in such capacities, together with its
successors in such capacities, the "AGENT") and as Issuing Bank
(defined herein).
PRELIMINARY STATEMENTS:
WHEREAS, Hawk, the other Borrowers, the Guarantors, the Lenders and the
Agent are parties to the Credit Agreement, dated as of October 18, 2002 (as the
same may be amended, restated, supplemented or otherwise modified from time to
time, the "CREDIT AGREEMENT"; capitalized terms used herein and not otherwise
defined herein having the meanings provided in the Credit Agreement); and
WHEREAS, 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.
1.1. Amendment to Section 1.01 - Definitions. Section 1.1 of the
Credit Agreement is hereby amended by adding the following definition in
appropriate alphabetical order:
"AMENDMENT NO. 1" means Amendment No. 1 dated as of February
27, 2004 to this Agreement by and among Hawk, the Borrowers, the
Guarantors, the Lenders and the Agent.
1.2. Amendment to Section 1.01 - Definitions - EBITDA. The
definition of "EBITDA" contained in Section 1.1 of the Credit Agreement is
hereby amended by inserting the following at the end thereof:
plus (viii) discontinued operations charges properly accounted for
under GAAP related to Hawk's Motor division not to exceed the amounts
reported on Hawk's 2004 Quarterly Model previously provided by Hawk to
the Agent.
1.3. Amendment to Section 1.01 - Definitions - Indebtedness. The
definition of "Indebtedness" contained in Section 1.1 of the Credit Agreement is
hereby amended by inserting the following proviso at the end thereof:
PROVIDED that the Indebtedness of X.X. Xxxxxxx Holdings, Inc. and its
Subsidiaries shall not include Chinese acceptances of such Subsidiaries
to the extent such acceptances are cash collateralized.
1.4. Amendment to Financial Covenants. Sections 8.01, 8.02 and 8.03
of the Credit Agreement are hereby amended and restated in their entirety to
read as follows:
SECTION 8.01 MINIMUM FIXED CHARGE COVERAGE RATIO. Hawk shall
not permit the Fixed Charge Coverage Ratio to be less than (a) 1.05 to
1.00 as of the end of any Fiscal Quarter for the Fiscal Quarters ending
March 31, 2003 through and including December 31, 2003; (b) 1.00 to
1.00 as of the end of any Fiscal Quarter for the Fiscal Quarters ending
March 31, 2004 through and including December 31, 2004; and (c) 1.10 to
1.00 as of the end of the Fiscal Quarter ending March 31, 2005 and each
Fiscal Quarter thereafter.
SECTION 8.02 MINIMUM EBITDA. (a) Hawk shall not permit EBITDA
for Fiscal Year ended December 31, 2002 to be less than 95% of the
projected EBITDA as set forth in Hawk's August 31, 2002 projections;
and (b) Hawk shall not permit EBITDA for Fiscal Year ended December 31,
2004 to be less than 90% of projected EBITDA as set forth in Hawk's
February 2004 projections previously provided by Hawk to the Agent.
SECTION 8.03 MAXIMUM LEVERAGE RATIO. Hawk shall not permit the
Leverage Ratio at any time to exceed the ratio set forth below for the
periods set forth below:
PERIOD RATIO
------ -----
On the Closing Date and for the Fiscal Quarter ending
December 31, 2002 4.85 to 1.00
For the Fiscal Quarters ending March 31, 2003 and June 30,
2003 4.25 to 1.00
For the Fiscal Quarters ending September 30, 2003 and
December 31, 2003 4.00 to 1.00
For the Fiscal Quarters ending March 31, 2004, June 30,
2004, September 30, 2004 and December 31, 2004 4.25 to 1.00
For the Fiscal quarter ending March 31, 2005 and
thereafter 3.00 to 1.00
Section 2. Consents. Notwithstanding Sections 6.01, 6.02, 7.01, 7.02
and 7.03 of the Credit Agreement to the contrary, the Required Lenders hereby
consent to the dispositions of the stock or all or substantially all of the
assets of Hawk Motors, Inc. and its Subsidiaries and of the real estate located
at the Brookpark, Ohio facility of X.X. Xxxxxxx Corp., provided that (i) such
dispositions are made pursuant to agreements, terms and conditions acceptable to
the Agent and the Required Lenders in their sole discretion, and (ii) the
proceeds of such dispositions are
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applied to the outstanding Loans in the manner provided in the Credit Agreement
or such other manner as may be agreed by the parties hereto. The consents set
forth in this paragraph are limited consents and shall not be construed to
effect a consent with respect to or waiver of any other provision of the Credit
Agreement, whether similar or dissimilar to the foregoing, or under any other
circumstances.
Section 3. Representations and Warranties. Hawk, each other Borrower
and each Guarantor hereby represents and warrants as follows:
3.1. Authorization and Validity of Amendment. This Amendment has
been duly authorized by all necessary corporate action on the part of Hawk, each
other Borrower and each Guarantor, has been duly executed and delivered by a
duly authorized officer of Hawk, each other Borrower and each Guarantor, and
constitutes the valid and binding agreement of Hawk, each other Borrower and
each Guarantor, and is enforceable against Hawk, each other Borrower and each
Guarantor in accordance with its terms.
3.2. Representations and Warranties. The representations and
warranties of Hawk, each other Borrower and each Guarantor contained in the
Credit Agreement and in the other Facility Documents are true and correct in all
material respects on and as of the Amendment Effective Date, as though made on
and as of the Amendment Effective Date, 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.
3.3. No Event of Default. Both before and after giving effect to
this Amendment, no Default or Event of Default exists or hereafter will begin to
exist.
3.4. Compliance. Hawk, each other Borrower and each Guarantor is in
full compliance with all covenants and agreements contained in the Credit
Agreement, as amended hereby, and the other Facility Documents to which it is a
party.
3.5. No Claims. Hawk, the other Borrowers and the Guarantors are
not aware of any claim or offset against, or defense or counterclaim to, any of
their respective obligations or liabilities under the Credit Agreement or any
other Facility Document.
Section 4. 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 5. Binding Effect.
This Amendment (including without limitation the consents set forth in
section 2 above) shall become effective on the date first set forth above (the
"AMENDMENT EFFECTIVE DATE") subject to the satisfaction of each of the following
conditions:
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(a) Hawk, each other Borrower, each Guarantor,
the Agent and the Required Lenders shall have delivered an executed
counterpart of this Amendment to the Agent;
(b) the representations and warranties contained
herein shall be true and correct as of such date;
(c) Hawk shall have paid all reasonable legal
fees and expenses of the Agent in connection with this Amendment and
the documents executed in connection therewith;
(d) All corporate and other proceedings and all
documents incidental to the transactions contemplated hereby shall be
satisfactory in substance and form to the Agent and the Lenders and the
Agent and its special counsel and the Lenders shall have received all
such counterpart originals or certified or other copies of such
documents as the Agent or its special counsel or any Lender may
reasonably request; and
(e) Hawk shall have provided such other items
and shall have satisfied such other conditions as may be reasonably
required by the Agent and the Lenders.
Section 6. Miscellaneous.
6.1. 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 Agent or
any Lender or any subsequent Loan or other financial accommodation shall affect
the representations and warranties or the right of the Agent or any Lender to
rely upon them.
6.2. 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.
6.3. 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.
6.4. Applicable Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York without regard to
conflicts of laws provisions.
6.5. Headings. The headings, captions and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.
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6.6. 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.
6.7. Waiver of Claims. Hawk, each other Borrower and each
Guarantor, by signing below, hereby waives and releases 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 Hawk, each other Borrower and each Guarantor 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.
6.8. 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.
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6.9. 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 FACILITY
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.
BORROWERS:
HAWK CORPORATION
ALLEGHENY CLEARFIELD, INC.
FRICTION PRODUCTS CO.
HAWK MOTORS, INC.
XXXXXX, INC.
XXXXX METAL STAMPINGS, INC.
NET SHAPE TECHNOLOGIES LLC
QUARTER MASTER INDUSTRIES, INC.
X.X. XXXXXXX CORP.
SINTERLOY CORPORATION
TEX RACING ENTERPRISES, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxx
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Xxxxxx X. Xxxxxxxxxx
Vice President - Chief Financial Officer
GUARANTORS:
X.X. XXXXXXX HOLDINGS, INC.
HAWK PRECISION COMPONENTS GROUP, INC.
HAWK MIM, INC.
XXXXXXX PRODUCTS GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxx
-------------------------------------------
Xxxxxx X. Xxxxxxxxxx
Vice President - Chief Financial Officer
AGENT:
JPMORGAN CHASE BANK, as Administrative and
Collateral Agent, Issuing Bank and Arranger
By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
Vice President
LENDERS:
JPMORGAN CHASE BANK
By: /s/ Xxxx X. Xxxxxxx
-------------------------------------------
Xxxx X. Xxxxxxx
Vice President
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxxxx X. Xxxx
-------------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Vice President
FLEET CAPITAL CORP.
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Sr. Vice President
