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EXHIBIT 10.1
AMENDMENT NO. 2 AND CONSENT
to
CREDIT AND SECURITY AGREEMENT
and
OMNIBUS AMENDMENT TO CERTAIN OTHER LOAN
DOCUMENTS
This AMENDMENT NO. 2 AND CONSENT
TO CREDIT AND SECURITY AGREEMENT AND OMNIBUS AMENDMENT TO CERTAIN
OTHER LOAN DOCUMENTS , made as of
February 1, 2007 (this "Amendment"), among HAWK
CORPORATION , a Delaware
corporation, ALLEGHENY CLEARFIELD, INC.
, a Pennsylvania corporation,
FRICTION PRODUCTS CO. , an Ohio
corporation, HAWK MIM, INC. , an Ohio corporation, HAWK MOTORS,
INC. , a Delaware corporation,
HAWK PRECISION COMPONENTS GROUP, INC. , an Ohio corporation, HELSEL, INC.
, a Delaware corporation, LOGAN METAL
STAMPINGS, INC. , an Ohio
corporation, NET SHAPE TECHNOLOGIES LLC
, a Delaware limited liability company,
QUARTER MASTER INDUSTRIES, INC. , a
Delaware corporation, SINTERLOY CORPORATION
, a Delaware corporation, S.K.
WELLMAN CORP. , a Delaware
corporation, S.K. WELLMAN HOLDINGS, INC.
, a Delaware corporation, TEX RACING
ENTERPRISES, INC. , a Delaware
corporation, WELLMAN PRODUCTS GROUP, INC.
, an Ohio corporation,
and WELLMAN
PRODUCTS, LLC , an Ohio limited liability
company, each as a Borrower and collectively as the Borrowers,
the LENDERS listed on the
signature pages of this Agreement, KEYBANK NATIONAL
ASSOCIATION , a national banking
association, as Administrative Agent, and KEYBANK
NATIONAL ASSOCIATION, a national banking
association, as LC Issuer,
WITNESSETH:
WHEREAS , the Borrowers have
been extended certain financial accommodations pursuant to that
certain Credit and Security Agreement, dated as of November 1,
2004, as amended by that certain Amendment No. 1 to Credit and
Security Agreement, dated as of August 31, 2006 (as so
amended, the "Credit Agreement"), among the Borrowers, the Lenders,
the Administrative Agent, and the LC Issuer;
WHEREAS , the Borrower
Representative has informed the Administrative Agent that Hawk
Corporation desires to sell Hawk Precision Components Group, Inc.
and certain of its direct or indirect Subsidiaries, namely,
Allegheny Clearfield, Inc., Hawk MIM, Inc., Helsel, Inc., Sinterloy
Corporation, and Net Shape Technologies LLC, in one or more stock
transactions (the "Sale");
WHEREAS , the Borrower
Representative has also informed the Administrative Agent that
prior to the sale of Hawk Precision Components Group, Inc., certain
subsidiaries of Helsel, Inc. shall be transferred to Wellman
Products Group, Inc., namely Hawk Mauritius, Ltd. Hawk Motors,
Inc., and Hawk Motors de Mexico, S. de R.L. de C.V. (the
"Transfer");
WHEREAS, the Borrowers have
requested consent to the Sale and the Transfer and all releases and
amendments required pursuant to such transactions; and
WHEREAS , the Lenders which are
signatories hereto constitute all of the Lenders for the purposes
of amending the Credit Agreement pursuant to Section 19.1
thereof;
NOW THEREFORE , in consideration
of the mutual promises and agreements contained herein and other
good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the Borrowers, the Administrative Agent,
the Lenders and the LC Issuer do hereby agree as
follows:
Section 1 .DEFINED
TERMS.
Each defined term used herein and not otherwise
defined herein shall have the meaning ascribed to such term in the
Credit Agreement.
Section 2
CONSENT.
2.1 Consents
. In accordance with Section 19.1 of the Credit
Agreement, the Required Lenders hereby consent to:
(a) the
transfer by Helsel, Inc. of the shares of Hawk Mauritius, Ltd.,
Hawk Motors, Inc., and Hawk Motors de Mexico, S. de R.L. de C.V to
Wellman Products Group, Inc.;
(b) the
transactions contemplated in that certain Stock Purchase Agreement,
dated as of December 21, 2006 (the "Purchase Agreement"),
among the Hawk Corporation, as Selling Shareholder, and PCG
Holdings Group Inc., as Buyer (the "Buyer"), including the sale or
other disposition of Hawk Precision Components Group, Inc., and its
Subsidiaries: Allegheny Clearfield, Inc., Hawk MIM, Inc., Helsel,
Inc., Sinterloy Corporation, and Net Shape Technologies LLC (Hawk
Precision Components Group, Inc. together with such Subsidiaries
collectively referred to as "Sold Subsidiaries");
(c) the
release of the Liens of the Administrative Agent for the benefit of
the Lenders on (i) the stock or other equity interests of the Sold
Subsidiaries and (ii) all of the personal property and assets of
the Sold Subsidiaries which are being acquired by the Buyer
pursuant to the terms of the Purchase Agreement;
(d) the
application of any or all of the proceeds remaining one hundred
eighty (180) days after the date the transactions contemplated in
the Purchase Agreement are consummated to the redemption of Senior
Notes in accordance with the terms and conditions set forth in the
Senior Note Indenture; and ;
(e) the
continuation of certain guarantees provided by Hawk Corporation to
secure indebtedness of Allegheny Clearfield, Inc. to the
Pennsylvania Industrial Development Authority ("PIDA") during the
transition period in which such obligations shall be transferred to
Buyer; provided, however, that Hawk Corporation shall use its best
efforts to obtain a full release from such guarantee obligations no
later than April 30, 2007.
Section 3 AMENDMENTS
TO THE CREDIT AGREEMENT:
3.1 Omnibus Amendment
to Credit Agreement and Certain Other Loan Documents.
All references to any of the Sold Subsidiaries in
the recitals or signature pages of the Credit Agreement shall be
deleted and the Sold Subsidiaries shall no longer be party to such
documents.
3.2 Amendment to
Annex II to the Credit Agreement. Annex II
to the Credit Agreement is hereby amended by deleting the existing
definition of "Borrowers" and replacing it with the following new
definition:
"Borrowers" means collectively,
Hawk Corporation, a Delaware corporation, Friction Products Co., an
Ohio corporation, Hawk Motors, Inc., a Delaware corporation, Logan
Metal Stampings, Inc., an Ohio corporation, Quarter Master
Industries, Inc., a Delaware corporation, S.K. Wellman Corp., a
Delaware corporation, S.K. Wellman Holdings, Inc., a Delaware
corporation, Tex Racing Enterprises, Inc., a Delaware corporation,
Wellman Products Group, Inc., an Ohio corporation, and Wellman
Products, LLC, an Ohio limited liability company.
3.3 Amendment to
Annex IV to Credit Agreement. Annex IV to
the Credit Agreement is hereby amended by deleting the existing
Annex IV and replacing it with the Annex IV attached hereto as
Exhibit I. In addition, within thirty (30) days of the date of this
Amendment, the Company shall deliver to the Administrative Agent,
any additional updates to such Disclosure Schedules, in form and
substance satisfactory to the Administrative Agent, provided
, however , that the Borrowers understand that such updates
shall not be permitted to include additions to Schedules
11.3
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