EXECUTION ORIGINALS
FOURTH AMENDMENT TO REVOLVING CREDIT, TERM LOAN, EQUIPMENT LINE OF
CREDIT AND SECURITY AGREEMENT
THIS FOURTH AMENDMENT TO REVOLVING CREDIT, TERM LOAN, EQUIPMENT LINE OF
CREDIT AND SECURITY AGREEMENT (this "Agreement") is entered into August 24, 2007
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 ("Air"), SIGMA METALS, INC. (as successor by merger with
GMS Sub, Corp.), a corporation organized under the laws of the State of New York
("Sigma" and collectively with Air, the "Borrower"), WELDING METALLURGY, INC.
(as successor by merger with WMS MERGER CORP.), a corporation organized under
the laws of the State of New York ("WM"), AIR INDUSTRIES GROUP, INC. (f/k/a
Xxxxx Industries Incorporated), a corporation organized under the laws of the
State of Delaware ("Air Group" and collectively with the Borrower and WM, the
"Obligor"), 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, Borrower and PNC entered into a certain Revolving Credit, Term
Loan, Equipment Line of Credit and Security Agreement dated November 30, 2005
(which has been, is being and may be further amended, replaced, restated,
modified and/or extended, the "Loan Agreement"); and
Whereas, Obligor and PNC have agreed to modify the terms of the Loan
Agreement as set forth in this Agreement by, among other things, adding WM and
Air Industries Group, Inc. (f/k/a Xxxxx Industries Incorporated) each as a
guaranteeing entity under the Loan Agreement and the Other Documents.
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) Welding Metallurgy, Inc., a corporation organized under the laws of
the State of New York, and Air Industries Group, Inc. (f/k/a Xxxxx
Industries Incorporated), a corporation organized under the laws of
the State of Delaware, are hereby added as guaranteeing entities
under the Loan Agreement and the Other Documents.
(b) The following definitions in Section 1.2 of the Loan Agreement are
hereby deleted, and are replaced to read as follows:
"Acquisition Agreement" shall mean, collectively, (i) that certain Stock
Purchase Agreement including all exhibits and schedules thereto dated as
of July 25, 2005 by and among Xxxxx Industries Incorporated, as buyer (the
"Original Buyer" and "Xxxxx"), and Air Industries Machining, Corp., Xxxx
Xxxxxxxxx, Xxxxx Xxxxxxxxx, Xxxxx Rettalliata and Xxxxx Xxxxxxxxx, as
sellers (collectively, the "Air Industries Seller"), as amended, restated,
modified and/or replaced from time to time, and as assigned by the
Original Buyer in favor of Xxxxx Industries Acquisition Corp., Inc. (the
"Air Industries Buyer"), (ii) that certain Stock Purchase Agreement
including all exhibits and schedules thereto dated as of January 2, 2007
by and among Xxxxx, as buyer, and Sigma Metals, Inc., Xxxxxx Xxxxxx,
Xxxxxx Xxxx and Xxxxxx Xxxxxx, as sellers (collectively, the "Sigma
Seller"), as amended, restated, modified and/or replaced from time to
time, and as assigned by Xxxxx in favor of GMS Sub, Corp. (the "Sigma
Buyer") and (iii) that certain Stock Purchase Agreement including all
exhibits and schedules thereto dated as of March 9, 2007 by and among Air
Industries Group, Inc. ("Air Group") (f/k/a Xxxxx), as buyer, and Xxxx
Xxxxx and Xxxxxxx Xxxxx, as sellers (collectively, the "WM Seller" and
collectively with the Air Industries Seller and the Sigma Seller, the
"Seller"), as amended, restated, modified and/or replaced
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EXECUTION ORIGINALS
from time to time, and as assigned by Xxxxx in favor of the Borrower (the
"WM Buyer" and collectively with the Air Industries Buyer and the Sigma
Buyer, the "Buyer").
"Capitalized Lease Obligation" shall mean any Indebtedness of Obligor
represented by obligations under a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.
"Change of Control" shall mean (a) the occurrence of any event (whether in
one or more transactions) which results in a transfer of control of
Obligor to a Person who is not an Original Owner or (b) any merger or
consolidation of or with Obligor or sale of all or substantially all of
the property or assets of Obligor. For purposes of this definition,
"control of Obligor" shall mean the power, direct or indirect (x) to vote
50% or more of the Equity Interests having ordinary voting power for the
election of directors (or the individuals performing similar functions) of
Obligor or (y) to direct or cause the direction of the management and
policies of Obligor by contract or otherwise.
"Change of Ownership" shall mean (a) 50% or more of the Equity Interests
of Obligor is no longer owned or controlled by (including for the purposes
of the calculation of percentage ownership, any Equity Interests into
which any Equity Interests of Obligor held by any of the Original Owners
are convertible or for which any such Equity Interests of Obligor or of
any other Person may be exchanged and any Equity Interests issuable to
such Original Owners upon exercise of any warrants, options or similar
rights which may at the time of calculation be held by such Original
Owners) a Person who is an Original Owner or (b) any merger, consolidation
or sale of substantially all of the property or assets of Obligor.
"Collateral" shall mean and include:
(a) all Receivables;
(b) all Equipment;
(c) all General Intangibles;
(d) all Inventory;
(e) all Investment Property;
(f) all Real Property;
(g) all Subsidiary Stock;
(h) the Leasehold Interests;
(i) all of Obligor's right, title and interest in and to, whether
now owned or hereafter acquired and wherever located, (i) its
respective goods and other property including, but not limited
to, all merchandise returned or rejected by Customers,
relating to or securing any of the Receivables; (ii) all of
Obligor's rights as a consignor, a consignee, an unpaid
vendor, mechanic, artisan, or other lienor, including stoppage
in transit, setoff, detinue, replevin, reclamation and
repurchase; (iii) all additional amounts due to Obligor from
any Customer relating to the Receivables; (iv) other property,
including warranty claims, relating to any goods securing the
Obligations; (v) all of Obligor's contract rights, rights of
payment which have been earned under a contract right,
instruments (including promissory notes), documents, chattel
paper (including electronic chattel paper), warehouse
receipts, deposit accounts, letters of credit and money; (vi)
all commercial tort claims (whether now existing or hereafter
arising); (vii) if and when obtained by Obligor, all real and
personal property of third
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EXECUTION ORIGINALS
parties in which Obligor has been granted a lien or security
interest as security for the payment or enforcement of
Receivables; (viii) all letter of credit rights (whether or
not the respective letter of credit is evidenced by a
writing); (ix) all supporting obligations; and (x) any other
goods, personal property or real property now owned or
hereafter acquired in which Obligor has expressly granted a
security interest or may in the future grant a security
interest to Agent hereunder, or in any amendment or supplement
hereto or thereto, or under any other agreement between Agent
and Obligor;
(j) all of Obligor's ledger sheets, ledger cards, files,
correspondence, records, books of account, business papers,
computers, computer software (owned by Obligor or in which it
has an interest), computer programs, tapes, disks and
documents relating to (a), (b), (c), (d), (e), (f), (g), (h)
or (i) of this Paragraph; and
all proceeds and products of (a), (b), (c), (d), (e), (f), (g), (h), (i)
and (j) in whatever form, including, but not limited to: cash, deposit
accounts (whether or not comprised solely of proceeds), certificates of
deposit, insurance proceeds (including hazard, flood and credit
insurance), negotiable instruments and other instruments for the payment
of money, chattel paper, security agreements, documents, eminent domain
proceeds, condemnation proceeds and tort claim proceeds.
"Eligible Inventory" shall mean and include Inventory of the Borrower,
specifically including work in process, valued at the lower of cost or
market value, determined on a first-in-first-out basis, which is not, in
Agent's opinion, obsolete, slow moving or unmerchantable and which Agent,
in its sole discretion, shall not deem ineligible Inventory, based on such
considerations as Agent may from time to time deem appropriate including
whether the Inventory is subject to a perfected, first priority security
interest in favor of Agent and no other Lien (other than a Permitted
Encumbrance). In addition, Inventory shall not be Eligible Inventory if it
(i) does not conform to all standards imposed by any Governmental Body
which has regulatory authority over such goods or the use or sale thereof,
(ii) is in transit, (iii) is located outside the continental United States
or at a location that is not otherwise in compliance with this Agreement,
(iv) constitutes Consigned Inventory, (v) is the subject of an
Intellectual Property Claim; (vi) is subject to a License Agreement or
other agreement that limits, conditions or restricts Borrower's or Agent's
right to sell or otherwise dispose of such Inventory, unless Agent is a
party to a Licensor/Agent Agreement with the Licensor under such License
Agreement; or (vii) or is situated at a location not owned by Borrower
unless the owner or occupier of such location has executed in favor of
Agent a Lien Waiver Agreement. Eligible Inventory shall include all
Inventory in-transit for which title has passed to Borrower, which is
insured to the full value thereof and for which Agent shall have in its
possession (a) all negotiable bills of lading properly endorsed and (b)
all non-negotiable bills of lading issued in Agent's name.
"Equipment" shall mean and include all of Obligor's goods (other than
Inventory) whether now owned or hereafter acquired and wherever located
including all equipment, machinery, apparatus, motor vehicles, fittings,
furniture, furnishings, fixtures, parts, accessories and all replacements
and substitutions therefor or accessions thereto.
"General Intangibles" shall mean and include all of Obligor's general
intangibles, whether now owned or hereafter acquired, including all
payment intangibles, all choses in action, causes of action, corporate or
other business records, inventions, designs, patents, patent applications,
equipment formulations, manufacturing procedures, quality control
procedures, trademarks, trademark applications, service marks, trade
secrets, goodwill, copyrights, design rights, software, computer
information, source codes, codes, records and updates, registrations,
licenses, franchises, customer lists, tax refunds, tax refund claims,
computer programs, all claims under guaranties, security interests or
other security held by or granted to Obligor to secure payment of any of
the Receivables by a Customer (other than to the extent covered by
Receivables) all rights of indemnification and all other intangible
property of every kind and nature (other than Receivables).
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EXECUTION ORIGINALS
"Intellectual Property Claim" shall mean the assertion by any Person of a
claim (whether asserted in writing, by action, suit or proceeding or
otherwise) that Obligor's ownership, use, marketing, sale or distribution
of any Inventory, Equipment, Intellectual Property or other property or
asset is violative of any ownership of or right to use any Intellectual
Property of such Person.
"Inventory" shall mean and include all of Obligor's now owned or hereafter
acquired goods, merchandise and other personal property, wherever located,
to be furnished under any consignment arrangement, contract of service or
held for sale or lease, all raw materials, work in process, finished goods
and materials and supplies of any kind, nature or description which are or
might be used or consumed in Obligor's business or used in selling or
furnishing such goods, merchandise and other personal property, and all
documents of title or other documents representing them.
"Inventory Sublimit" shall mean $8,250,000.
"Investment Property" shall mean and include all of Obligor's now owned or
hereafter acquired securities (whether certificated or uncertificated),
securities entitlements, securities accounts, commodities contracts and
commodities accounts.
"Leasehold Interests" shall mean all of Obligor's right, title and
interest in and to the premises set forth on Schedule 1.2(a) attached
hereto.
"License Agreement" shall mean any agreement between Obligor and a
Licensor pursuant to which Obligor is authorized to use any Intellectual
Property in connection with the manufacturing, marketing, sale or other
distribution of any Inventory of Obligor or otherwise in connection with
Obligor's business operations.
"Licensor" shall mean any Person from whom Obligor obtains the right to
use (whether on an exclusive or non-exclusive basis) any Intellectual
Property in connection with Obligor's manufacture, marketing, sale or
other distribution of any Inventory or otherwise in connection with
Obligor's business operations.
"Licensor/Agent Agreement" shall mean an agreement between Agent and a
Licensor, in form and content satisfactory to Agent, by which Agent is
given the unqualified right, vis-a-vis such Licensor, to enforce Agent's
Liens with respect to and to dispose of Obligor's Inventory with the
benefit of any Intellectual Property applicable thereto, irrespective of
Obligor's default under any License Agreement with such Licensor.
"Maximum Loan Amount" shall mean $15,830,090 less repayments of the Term
Loan, the Converted Equipment Loans and Equipment Loans.
"Maximum Revolving Advance Amount" shall mean $14,000,000.
"Multiple Employer Plan" shall mean a Plan which has two or more
contributing sponsors (including the Obligor or any member of the
Controlled Group) at least two of whom are not under common control, as
such a plan is described in Section 4064 of ERISA.
"Obligations" shall mean and include any and all loans, advances, debts,
liabilities, obligations, covenants and duties owing by the Obligor to
Lenders or Agent or to any other direct or indirect subsidiary or
affiliate of Agent or any Lender of any kind or nature, present or future
(including any interest accruing thereon after maturity, or after the
filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding relating to the Obligor,
whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding), whether or not evidenced by any note,
guaranty or other instrument, whether arising under any agreement,
instrument or document, (including this Agreement and the Other Documents)
whether or not for the payment of money, whether arising by reason of an
extension of credit, opening of a letter of credit, loan,
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EXECUTION ORIGINALS
equipment lease or guarantee, under any interest or currency swap, future,
option or other similar agreement, or in any other manner, whether arising
out of overdrafts or deposit or other accounts or electronic funds
transfers (whether through automated clearing houses or otherwise) or out
of the Agent's or any Lenders non-receipt of or inability to collect funds
or otherwise not being made whole in connection with depository transfer
check or other similar arrangements, whether direct or indirect (including
those acquired by assignment or participation), absolute or contingent,
joint or several, due or to become due, now existing or hereafter arising,
contractual or tortious, liquidated or unliquidated, regardless of how
such indebtedness or liabilities arise or by what agreement or instrument
they may be evidenced or whether evidenced by any agreement or instrument,
including, but not limited to, any and all of Obligor's Indebtedness
and/or liabilities under this Agreement, the Other Documents or under any
other agreement between Agent or Lenders and Obligor and any amendments,
extensions, renewals or increases and all costs and expenses of Agent and
any Lender incurred in the documentation, negotiation, modification,
enforcement, collection or otherwise in connection with any of the
foregoing, including but not limited to reasonable attorneys' fees and
expenses and all obligations of Obligor to Agent or Lenders to perform
acts or refrain from taking any action.
"Other Documents" shall mean the Note, the Guaranty, the Mortgage, the
Assignment of Rents, Leases and Profits, the Environmental Indemnity
Agreement, any Lender-Provided Interest Rate Hedge and any and all other
agreements, instruments and documents, including guaranties, pledges,
powers of attorney, consents, interest or currency swap agreements or
other similar agreements and all other writings heretofore, now or
hereafter executed by Borrower or any Guarantor and/or delivered to Agent
or any Lender in respect of the transactions contemplated by this
Agreement.
"Ordinary Course of Business" shall mean the ordinary course of Obligor's
business as conducted on the Closing Date.
"Original Owners" shall mean (i) with regard to the Borrower, Air Group,
and (ii) with regard to WM, the Borrower.
"Permitted Encumbrances" shall mean (a) Liens in favor of Agent for the
benefit of Agent and Lenders; (b) Liens for taxes, assessments or other
governmental charges not delinquent or being contested in good faith and
by appropriate proceedings and with respect to which proper reserves have
been taken by Obligor; provided, that, the Lien shall have no effect on
the priority of the Liens in favor of Agent or the value of the assets in
which Agent has such a Lien and a stay of enforcement of any such Lien
shall be in effect; (c) Liens disclosed in the financial statements
referred to in Section 5.5, the existence of which Agent has consented to
in writing; (d) deposits or pledges to secure obligations under worker's
compensation, social security or similar laws, or under unemployment
insurance; (e) deposits or pledges to secure bids, tenders, contracts
(other than contracts for the payment of money), leases, statutory
obligations, surety and appeal bonds and other obligations of like nature
arising in the Ordinary Course of Business; (f) Liens arising by virtue of
the rendition, entry or issuance against Obligor or any Subsidiary, or any
property of Obligor or any Subsidiary, of any judgment, writ, order, or
decree for so long as each such Lien (a) is in existence for less than 20
consecutive days after it first arises or is being Properly Contested and
(b) is at all times junior in priority to any Liens in favor of Agent; (g)
mechanics', workers', materialmen's or other like Liens arising in the
Ordinary Course of Business with respect to obligations which are not due
or which are being contested in good faith by Obligor; (h) Liens placed
upon fixed assets hereafter acquired to secure a portion of the purchase
price thereof, provided that (x) any such lien shall not encumber any
other property of Obligor and (y) the aggregate amount of Indebtedness
secured by such Liens incurred as a result of such purchases during any
fiscal year shall not exceed the amount provided for in Section 7.6; (i)
other Liens incidental to the conduct of Obligor's business or the
ownership of its property and assets which were not incurred in connection
with the borrowing of money or the obtaining of advances or credit, and
which do not in the aggregate materially detract from Agent's or Lenders'
rights in and to the Collateral or the value of Obligor's property or
assets or which do not materially impair the use thereof in the operation
of Obligor's business; and (j) Liens disclosed on Schedule 1.2.
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EXECUTION ORIGINALS
"Plan" shall mean any employee benefit plan within the meaning of Section
3(3) of ERISA (including a Pension Benefit Plan), maintained for employees
of Obligor or any member of the Controlled Group or any such Plan to which
Obligor or any member of the Controlled Group is required to contribute on
behalf of any of its employees.
"Real Property" shall mean all of Obligor's right, title and interest in
and to the owned and leased premises identified on Schedule 4.19 hereto.
"Receivables" shall mean and include, as to Obligor, all of Obligor's
accounts, contract rights, instruments (including those evidencing
indebtedness owed to Obligor by its Affiliates), documents, chattel paper
(including electronic chattel paper), general intangibles relating to
accounts, drafts and acceptances, credit card receivables and all other
forms of obligations owing to Obligor arising out of or in connection with
the sale or lease of Inventory or the rendition of services, all
supporting obligations, guarantees and other security therefor, whether
secured or unsecured, now existing or hereafter created, and whether or
not specifically sold or assigned to Agent hereunder.
"Subsidiary Stock" shall mean all of the issued and outstanding Equity
Interests of any Subsidiary owned by the Obligor (not to exceed 65% of the
Equity Interests of any Foreign Subsidiary).
"Termination Event" shall mean (i) a Reportable Event with respect to any
Plan or Multiemployer Plan; (ii) the withdrawal of Obligor or any member
of the Controlled Group from a Plan or Multiemployer Plan during a plan
year in which such entity was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA; (iii) the providing of notice of intent to
terminate a Plan in a distress termination described in Section 4041(c) of
ERISA; (iv) the institution by the PBGC of proceedings to terminate a Plan
or Multiemployer Plan; (v) any event or condition (a) which might
constitute grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Plan or Multiemployer
Plan, or (b) that may result in termination of a Multiemployer Plan
pursuant to Section 4041A of ERISA; or (vi) the partial or complete
withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of
Obligor or any member of the Controlled Group from a Multiemployer Plan.
(c) The following definitions are hereby added to Section 1.2 of the
Loan Agreement to read as follows:
"Air Group" shall mean Air Industries Group, Inc., a corporation organized
under the laws of the State of Delaware, f/k/a Xxxxx Industries
Incorporated.
"Fourth Amendment Closing Date" shall mean August 24, 2007.
"Guarantor" shall mean Air Group, WM and any other Person who may
hereafter guarantee payment or performance of the whole or any part of the
Obligations and "Guarantors" means collectively all such Persons.
"Guaranty" shall mean any guaranty of the obligations of Borrower executed
by a Guarantor in favor of Agent for its benefit and for the ratable
benefit of Lenders.
"Obligor" shall mean, collectivley, the Borrower, Air Group and WM.
"Steel City Subordinated Credit Facility" means that certain credit
facility extended by Steel City Capital Funding ("Steel City") and any
future lending institutions which may be added from time to time
thereunder, in the maximum principal amount of $4,500,000 as evidenced by
a certain Term Loan and Security Agreement by and among the Borrower, WM
and Steel City dated August __, 2007 which is subordinate to the credit
facilities extended by the Lenders pursuant to this Agreement and the Loan
Documents, together with any replacement Subordinated Debt secured by the
Obligors on terms reasonably satisfactory to the Lenders and subordinated
pursuant to a Subordination Agreement.
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EXECUTION ORIGINALS
"Subordinated Debt" shall mean the Indebtedness evidenced by the
Subordinated Loan Documentation.
"Subordinated Loan Documentation" shall mean the Subordination Agreement,
the Subordinated Note and other documents with regard thereto.
"Subordinated Note" means, collectively, the promissory notes issued from
time to time to evidence the Borrower's and WM's indebtedness under the
Steel City Subordinated Credit Facility.
"Subordination Agreement" means that certain Subordination and
Intercreditor Agreement by and among the Obligor, the Agent for the
Lenders and Steel City dated August 24, 2007.
"WM" shall mean Welding Metallurgy, Inc., a corporation organized under
the laws of the State of New York.
(d) Section 5.17 of the Loan Agreement is deleted, and is replaced by a
new Section 5.17 to read as follows:
5.17 Disclosure. No representation or warranty made by Obligor in
this Agreement, the Subordinated Loan Documentation or in the Acquisition
Agreement, or in any financial statement, report, certificate or any other
document furnished in connection herewith or therewith contains any untrue
statement of fact or omits to state any fact necessary to make the
statements herein or therein not misleading. There is no fact known to
Obligor or which reasonably should be known to Obligor which Obligor has
not disclosed to Agent in writing with respect to the transactions
contemplated by the Subordinated Loan Documentation, the Acquisition
Agreement or this Agreement which could reasonably be expected to have a
Material Adverse Effect.
(e) Section 5.18 of the Loan Agreement is deleted, and is replaced by a
new Section 5.18 to read as follows:
5.18 Delivery of Subordinated Loan Documentation and Acquisition
Agreement. Agent has received complete copies of the Subordinated Loan
Documentation and the Acquisition Agreement (including all exhibits,
schedules and disclosure letters referred to therein or delivered pursuant
thereto, if any) and all amendments thereto, waivers relating thereto and
other side letters or agreements affecting the terms thereof. None of such
documents and agreements has been amended or supplemented, nor have any of
the provisions thereof been waived, except pursuant to a written agreement
or instrument which has heretofore been delivered to Agent.
(f) Section 6.5 of the Loan Agreement is deleted, and is replaced by a new
Section 6.5 to read as follows:
6.5 Financial Covenants.
(a) Tangible Net Worth. Maintain at all times a Tangible Net
Worth in an amount not less than (i) $9,500,000 as of the Fourth Amendment
Closing Date and from the Fourth Amendment Closing Date through and
including December 30, 2007 and (ii) as of December 31, 2008, an amount
equal to the Borrower's Tangible Net Worth for the fiscal year ended
December 31, 2007 plus an amount equal to fifty (50%) percent of the
Borrower's Net Income for fiscal year ending December 31, 2008, which
amount shall increase annually on December 31st of each year thereafter by
not less than an amount equal to fifty (50%) percent of the Borrower's Net
Income for the immediately ended fiscal year, tested annually on a
consolidated basis.
(b) Fixed Charge Coverage Ratio. Maintain at all times a Fixed
Charge Coverage Ratio of not less than 1.25 to 1.00, tested quarterly on a
consolidated, rolling four quarter basis.
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EXECUTION ORIGINALS
(g) Section 7.7 of the Loan Agreement is deleted, and is replaced by a new
Section 7.7 to read as follows:
7.7 Dividends. Declare, pay or make any dividend or distribution on
any shares of the common stock or preferred stock of Obligor (other than
dividends or distributions payable in its stock, or split-ups or
reclassifications of its stock) or apply any of its funds, property or
assets to the purchase, redemption or other retirement of any common or
preferred stock, or of any options to purchase or acquire any such shares
of common or preferred stock of Obligor provided, however, that from and
after January 1, 2009, dividends may be paid in cash to the shareholders
of the Obligor as long as (a) after taking said dividend into effect,
Undrawn Availability is equal to or greater than $3,000,000 during the
period commencing thirty (30) days prior to the date that such dividend is
made and ending thirty (30) days after the date that such dividend is
made, (b) no Default and/or Event of Default exists at the time of payment
of any such dividend, and (c) no Default and/or Event of Default shall
exist after giving effect to the payment of any such dividend.
(h) Section 7.8 of the Loan Agreement is deleted, and is replaced by a new
Section 7.8 to read as follows:
7.8 Indebtedness. Create, incur, assume or suffer to exist any
Indebtedness (exclusive of trade debt) except in respect of (i)
Indebtedness to Lenders; (ii) Indebtedness incurred for Capital
Expenditures permitted under Section 7.6 hereof; and (iii) Indebtedness
due under the Subordinated Loan Documentation.
(i) Section 7.21 of the Loan Agreement is deleted, and is replaced by a
new Section 7.21 to read as follows:
7.21 Other Agreements. Enter into any material amendment, waiver or
modification of the Acquisition Agreement, the Subordinated Loan
Documentation or any related agreements.
(j) Section 7.23 is hereby added to the Loan Agreement to read as follows:
7.23 Subordinated Note. At any time, directly or indirectly, pay,
prepay, repurchase, redeem, retire or otherwise acquire, or make any
payment on account of any principal of, interest on or premium payable in
connection with the repayment or redemption of the Subordinated Note,
except as expressly permitted in the Subordination Agreement.
(k) Section 9.5 of the Loan Agreement is deleted, and is replaced by a new
Section 9.5 to read as follows:
9.5 Material Occurrences. Promptly notify Agent in writing upon the
occurrence of (a) any Event of Default or Default; ; (b) any event of
default under the Subordinated Loan Documentation; (c) any event which
with the giving of notice or lapse of time, or both, would constitute an
event of default under the Subordinated Loan Documentation; (d) any event,
development or circumstance whereby any financial statements or other
reports furnished to Agent fail in any material respect to present fairly,
in accordance with GAAP consistently applied, the financial condition or
operating results of Borrower as of the date of such statements; (e) any
accumulated retirement plan funding deficiency which, if such deficiency
continued for two plan years and was not corrected as provided in Section
4971 of the Code, could subject Obligor to a tax imposed by Section 4971
of the Code; (f) each and every default by Obligor which might result in
the acceleration of the maturity of any Indebtedness, including the names
and addresses of the holders of such Indebtedness with respect to which
there is a default existing or with respect to which the maturity has been
or could be accelerated, and the amount of such Indebtedness; and (g) any
other development in the business or affairs of Obligor which could
reasonably be expected to have a Material Adverse Effect; in each case
describing the nature thereof and the action Obligor propose to take with
respect thereto.
8
EXECUTION ORIGINALS
(l) Section 9.10 of the Loan Agreement is deleted, and is replaced by a
new Section 9.10 to read as follows:
9.10 Other Reports. Furnish Agent as soon as available, but in any
event within ten (10) days after the issuance thereof, with (i) copies of
such financial statements, reports and returns as Borrower shall send to
its stockholders and (ii) copies of all notices, reports, financial
statements and other materials sent pursuant to the Subordinated Loan
Documentation.
(m) Section 10.19 is hereby added to the Loan Agreement to read as
follows:
10.19 Subordinated Loan Default. An event of default has occurred
under the Subordinated Loan Documentation, which default shall not have
been cured or waived within any applicable grace period.
(n) Section 15.9 of the Loan Agreement is deleted, and is replaced by a
new Section 15.9 to read as follows:
15.9 Expenses. All costs and expenses including reasonable
attorneys' fees (including the allocated costs of in house counsel) and
disbursements incurred by Agent on its behalf or on behalf of Lenders and
Lenders (a) in all efforts made to enforce payment of any Obligation or
effect collection of any Collateral, or (b) in connection with the
entering into, modification, amendment, administration and enforcement of
this Agreement, the Subordination Agreement or any consents or waivers
hereunder or thereunder and all related agreements, documents and
instruments, or (c) in instituting, maintaining, preserving, enforcing and
foreclosing on Agent's security interest in or Lien on any of the
Collateral, or maintaining, preserving or enforcing any of Agent's or any
Lender's rights hereunder, under the Subordination Agreement and under all
related agreements, documents and instruments, whether through judicial
proceedings or otherwise, or (d) in defending or prosecuting any actions
or proceedings arising out of or relating to Agent's or any Lender's
transactions with any Borrower, any Guarantor or any Subordinated Lender
or (e) in connection with any advice given to Agent or any Lender with
respect to its rights and obligations under this Agreement, the
Subordination Agreement and all related agreements, documents and
instruments, may be charged to Borrowers' Account and shall be part of the
Obligations.
(o) In Sections 4.1, 4.2, 4.3, 4.4, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 4.11,
4.12, 4.13, 4.14, 4.15, 4.16, 4.17, 4.18, 4.19, 4.20, 5.1, 5.2, 5.3, 5.6,
5.7, 5.8, 5.9, 5.10, 5.11, 5.12, 5.13, 5.14, 5.15, 5.16, 5.17, 5.19, 5.20,
5.21, 5.22, 5.23, 5.24, 5.25, 5.26, 6.2, 6.3, 6.4, 6.6, 6.8, 6.9, 6.11,
7.1, 7.2, 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.10, 7.12, 7.13, 7.14, 7.15,
7.16, 7.17, 7.18, 7.19, 7.20, 8.2, 9.1, 9.2, 9.3, 9.4, 9.5, 9.6, 9.7, 9.8,
9.9, 9.10, 9.11, 9.12, 9.13, 9.14, 9.15, 9.16, 10.2, 10.3, 10.4, 10.5,
10.6, 10.7, 10.8, 10.9, 10.10, 10.11, 10.12, 10.13, 10.14, 10.15, 10.16,
10.17, 10.18, 11.1, 11.3, 12.1, 12.3, 13.1, 13.2, 14.2, 14.3, 14.6, 14.7,
14.8, 14.11, 14.12, 15.1, 15.2, 15.3, 15.4, 15.5, 15.6, 15.7, 15.10,
15.11, 15.15 and 15.16, the term "Borrower" is hereby replaced with the
term "Obligor" throughout. Furthermore, in the opening phrase of Sections
5, 6, 7 and 9, the term "Borrower" is hereby replaced with the term
"Obligor" throughout.
3) SCHEDULES. All revised schedules to the Loan Agreement attached hereto on
Exhibit A replace the applicable existing schedules and are incorporated
into the Loan Agreement and the other Loan Documents by reference.
4) CONSENT TO ACQUISITION. Notwithstanding anything to the contrary in the
Loan Agreement and/or any Other Document, the Lenders hereby consent to
the acquisition by the Borrower of all of the stock of WM from the WM
Seller (the "WM Acquisition") provided, however, that the Borrower
provides to the Agent for review copies of all acquisition documentation
(including, but not limited to, the applicable Stock Purchase Agreement
and all UCC and other searches against the WM Seller) and other materials
evidencing the WM Acquisition, all in form and substance acceptable to the
Agent (collectively, the "WM Acquisition Documents").
5) CONSENT TO SUBORDINATED INDEBTEDNESS. Notwithstanding anything to the
contrary in the Loan Agreement and/or any Loan Document, the Lenders
hereby consent to the Obligors entering
9
EXECUTION ORIGINALS
into the Steel City Subordinated Credit Facility and the documents
evidencing or securing the same and incurring the Subordinated Debt for
the uses and purposes provided for therein provided, however, that (i) the
Obligor provides to the Agent for review copies of all documentation
evidencing the Steel City Subordinated Credit Facility, all in form and
substance acceptable to the Agent (collectively, the "Steel City
Subordinated Debt Documents"), (ii) the Agent for the Lenders and Steel
City, as agent for certain other financial institutions, enter into a
certain Subordination and Intercreditor Agreement in form and substance
acceptable to the Agent, (iii) the maximum principal amount of the
Obligor's obligations under the Steel City Subordinated Credit Facility
does not exceed $4,500,000 at any time and (iv) the Obligor shall not
repay in part from time to time and/or in full the principal obligations
under the Steel City Subordinated Credit Facility.
6) CONSENT TO PLEDGE. Notwithstanding anything to the contrary in the Loan
Agreement and/or any Loan Document, the Lenders hereby consent to (i) the
pledge by the Borrower of all of the stock of WM to Steel City (the "WM
Pledge") provided, however, that the Borrower provides to the Agent for
review copies of all documentation applicable to the WM Pledge (including,
but not limited to, the applicable Pledge Agreement, stock powers and
stock transfers, and any other materials evidencing the WM Pledge, all in
form and substance acceptable to the Agent (collectively, the "WM Pledge
Documents") and (ii) the pledge by Air Group of all of the stock of each
Borrower to Steel City (collectively, the "Borrower Pledge") provided,
however, that Air Group provides to the Agent for review copies of all
documentation applicable to the Borrower Pledge (including, but not
limited to, the applicable Pledge Agreement, stock powers and stock
transfers, and any other materials evidencing the Borrower Pledge, all in
form and substance acceptable to the Agent (collectively, the "Borrower
Pledge Documents").
7) 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;
(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.
8) 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, properly executed;
(B) provide the Agent with revised schedules to the Loan Agreement;
(C) provide the Agent with the Second Amended and Restated Revolving
Credit Note, each Guaranty and Suretyship Agreement executed by Air Group
and WM, the Power of Attorney of Air Group and WM and the Financial
Condition Certificate, all properly executed;
(D) provide the Agent with a certificate of insurance with regard to Air
Group and WM in form and substance satisfactory to the Agent;
(E) provide the Agent with a Certificate of Incorporation of Air Group, WM
and WMS Merger Corp. ("Merger Corp."), certified by the Secretary of State
of incorporation;
(F) provide the Agent with Certificates of Good Standing of Air Group, WM
and A/S Sub Corp. from their State of incorporation and all States in
which each is qualified to do business;
10
EXECUTION ORIGINALS
(G) provide the Agent with a copy of all Warehouse Agreements, Leases and
Subleases of Air Group and WM with respect to each location as well as
Warehouseman's Agreements and/or Landlord's Agreements with regard thereto
in form and substance acceptable to the Agent;
(H) provide the Agent a list of intellectual property of Air Group and WM
including trademarks and trademark applications, patents and patent
applications, copyrights and copyright applications, together with a
search/abstract relating to the same;
(I) provide the Agent a certified copies of Certificates of
Fictitious/Assumed Names of Air Group, WM and Merger Corp.;
(J) provide the Agent a certificate from Air Group's and WM's accountant,
attorney or actuary delineating existing pension/profit sharing plans, as
well as compliance with ERISA;
(K) provide the Agent a copy of union contracts regarding WM and Air
Group;
(L) provide the Agent a summary of all existing litigation of WM and Air
Group;
(M) review by the Agent of all books and records of WM and Air Group as
well as all trade references for WM and Air Group;
(N) provide the Agent with a privity letter from Air Group's and WM's
accountant;
(O) provide the Agent with all documentation with regard to stock issuance
with regard to Merger Corp. in favor of Air and Sigma;
(P) provide the Agent with the WM Acquisition Documents (including, but
not limited to, evidence of merger of Merger Corp. with and into WM), the
Steel City Subordinated Debt Documents and the Subordination Agreement;
(Q) provide the Agent all material contracts (including, but not limited
to, all employment agreements) and management/option/warrant/shareholder
agreements of WM and Air Group;
(R) provide the Agent with UCC, Federal and State Litigation, Federal and
Local Judgment, Bankruptcy, Franchise Tax, Federal and State Tax Lien
Searches conducted at the State level in the State where Air Group, WM and
Merger Corp. each is incorporated, run against the name of Air Group, WM
and Merger Corp. and against the names of all entities which were acquired
by or merged into Air Group, WM and Merger Corp.;
(S) provide the Agent with evidence that Air Group and WM has each
established and is maintaining its operating accounts with the Agent;
(T) receipt and satisfactory review by Agent of most recent interim and
annual financial statements and federal and state tax returns of WM and
Air Group;
(U) receipt and satisfactory legal review by Agent of the Federal
Acquisition Regulations requirements and customer military contracts to
confirm that no offset shall occur with regard to accounts receivable
availability based on advanced/progress xxxxxxxx;
(V) receipt and Satisfactory review by Agent of an Orderly Liquidation
Valuation Appraisal of WM's and Air Group's machinery and equipment;
(W) receipt and satisfactory review by Agent of 1st West investigation;
(X) receipt by Agent of quarterly and annual projections of WM and Air
Group for the immediately succeeding year;
(Y) receipt by Agent pay-off letter with regard to JPMorgan Chase along
with all applicable UCC-3 termination statements;
(Z) provide the Agent with an opinion of counsel to Borrower and Guarantor
in form and substance acceptable to the Agent;
11
EXECUTION ORIGINALS
(AA) provide the Agent with secretary's certificates and resolutions from
the Borrower, Guarantor and Merger Corp., in form and substance acceptable
to the Agent;
(BB) pay to the Agent an amendment fee in the amount of $10,000;
(CC) pay all legal fees incurred by the Agent in entering into this
Agreement to Wilentz, Xxxxxxx & Xxxxxxx;
(DD) pay all other fees and costs incurred by the Lenders in entering into
this Agreement; and
(EE) receipt by Agent of foreign credit insurance policy of the WM
properly assigned to the Agent.
9) 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.
10) 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.
12
EXECUTION ORIGINALS
IN WITNESS WHEREOF, the undersigned have signed and sealed this Agreement
the day and year first above written.
ATTEST: AIR INDUSTRIES MACHINING, CORP.
By: /s/ XXXXX XXXXXXXXX By: /s/ XXXXX X. XXXXXX
------------------- --------------------------------------
Name: XXXXX XXXXXXXXX Name: XXXXX X. XXXXXX
Title: Secretary Title: Vice President
ATTEST: SIGMA METALS, INC.
By: /s/ XXXXX XXXXXXXXX By: /s/ XXXXX X. XXXXXX
------------------- --------------------------------------
Name: XXXXX XXXXXXXXX Name: XXXXX X. XXXXXX
Title: Secretary Title: Vice President
ATTEST: WELDING METALLURGY, INC. (as successor by
merger with WMS Merger Corp.)
By: /s/ XXXXX XXXXXXXXX
-------------------
Name: XXXXX XXXXXXXXX By: /s/ XXXXX X. XXXXXX
Title: Secretary --------------------------------------
Name: XXXXX X. XXXXXX
Title: Vice President
ATTEST: AIR INDUSTRIES GROUP, INC.
(f/k/a Xxxxx Industries Incorporated)
By: /s/ XXXXX XXXXXXXXX
-------------------
Name: XXXXX XXXXXXXXX By: /s/ XXXXX X. XXXXXX
Title: Secretary --------------------------------------
Name: XXXXX X. XXXXXX
Title: Executive Vice President
PNC BANK, NATIONAL ASSOCIATION
Lender and as Agent
By: /s/ A. XXXXX XXXXX, JR.
--------------------------------------
Name: A. XXXXX XXXXX, JR.
Title: Vice President
13
