EXHIBIT 10.44
EXECUTION ORIGINAL
NINTH AMENDMENT TO REVOLVING CREDIT, TERM LOAN, EQUIPMENT
LINE OF CREDIT AND
SECURITY AGREEMENT
THIS NINTH AMENDMENT TO REVOLVING
CREDIT, TERM LOAN, EQUIPMENT LINE OF
CREDIT AND SECURITY AGREEMENT (this "Agreement") is entered into
October 9, 2009
by and among AIR INDUSTRIES MACHINING, CORP. (as successor by
merger with Gales
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
Gales 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
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.
"Contract Rate" shall mean, as
applicable, the Revolving Interest Rate, as
more fully described in Section 3.1
herein.
"Earnings Before Interest and Taxes"
shall mean for any period the sum of
(i) net income (or loss) of Air
Group for such period (excluding
extraordinary gains and losses) on a
consolidated basis, plus (ii) all
interest expense of Air Group for
such period on a consolidated basis,
plus (iii) all charges against
income of Air Group for such period for
federal, state and local taxes
actually paid on a consolidated basis.
"EBITDA" shall mean for any period
with regard to Air Group the sum of (i)
Earnings Before Interest and Taxes
for such period on a consolidated basis
plus (ii) depreciation expenses for
such period on a consolidated basis,
plus (iii) amortization expenses for
such period on a consolidated basis.
"Fixed Charge Coverage Ratio" shall
mean and include, with respect to Air
Group for any fiscal period, the
ratio of (a) EBITDA on a consolidated
basis, minus the aggregate amount of
unfunded capitalized expenditures
made during such period on a
consolidated basis, minus the aggregate
amount of distributions made during
such period on a consolidated basis,
minus the aggregate amount of cash
taxes paid during such period on a
consolidated basis to (b) the
aggregate amount of principal and/or
interest payments made on Funded
Debt during such period on a consolidated
basis.
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"Loans" shall mean the Revolving
Advances.
"Maximum Loan Amount" shall mean
$14,000,000.
"Note" shall mean the Revolving
Credit Note.
"Revolving Advances" shall mean the
Advances made other than Letters of
Credit.
"Revolving Interest Rate" shall mean
an interest rate per annum equal to
(a) the sum of the Alternate Base
Rate plus two and one quarter of one
percent (2.25%) with respect to
Domestic Rate Loans and (b) the greater of
(i) the sum of the Eurodollar Rate
plus three and one half of one percent
(3.50%) and (ii) five and one half
of one percent (5.50%) with respect to
Eurodollar Rate Loans.
"Undrawn Availability" at a
particular date shall mean an amount equal to
(a) the lesser of (i) the Formula
Amount or (ii) the Maximum Revolving
Advance Amount, minus (b) the sum of
(i) the outstanding amount of
Advances plus (ii) all amounts due
and owing to Borrower's trade creditors
which are outstanding beyond normal
trade terms, plus (iii) fees and
expenses for which Borrower is
liable but which have not been paid or
charged to Borrower's Account.
(b) The following
definition is hereby added to Section 1.2 of the Loan
Agreement to read as follows:
"Ninth Amendment Closing Date" shall
mean October 9, 2009.
(c) The following
definitions are hereby deleted in their entirety from
Section 1.2 of the Loan Agreement:
"Converted Equipment Loan(s)"
"Converted Equipment Line of Credit
Note"
"Equipment Line of Credit Note"
"Equipment Line of Credit Rate"
"Equipment Loans"
"Equipment Note"
"Maximum Equipment Loan Amount"
"Term Loan"
"Term Loan Rate"
"Term Note"
(d) Subsection 2.1(a) of
the Loan Agreement is deleted, and is replaced
by a new Subsection 2.1(a) to read as follows:
2.1 Revolving Advances. (a) 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 or
(y) an amount equal to the sum
of:
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(i)
up to the sum of (A) 85%, subject to the provisions
of Section 2.1(b) hereof (the "Receivables Advance Rate A"),
of Eligible Receivables that do not constitute Eligible
Unassigned Government Receivables (specifically excluding all
Eligible Receivables of Sigma) plus (B) the lesser of (I) 50%,
subject to the provisions of Section 2.1(b) hereof (the
"Receivables Advance Rate B" and collectively with the
Receivables Advance Rate A, the "Receivables Advance Rate"),
of Eligible Unassigned Government Receivables (specifically
excluding all Eligible Unassigned Government Receivables of
Sigma) and (II) the Unassigned Government Receivables
Sublimit, plus
(ii) up to the lesser of (A) 50%, subject to the
provisions of Section 2.1(b) hereof, of the value of the
Eligible
Inventory (specifically excluding all Eligible
Inventory of Sigma), (B) 85% of the appraised net orderly
liquidation value of Eligible Inventory (as evidenced by an
Inventory appraisal satisfactory to Agent in its sole
discretion exercised in good faith and specifically excluding
all Eligible Inventory of Sigma) or (C) the Inventory Sublimit
in the aggregate at any one time ("Inventory Advance Rate" and
together with the Receivables Advance Rate, collectively, the
"Advance Rates"), minus
(iii) such reserves as Agent may reasonably deem proper
and necessary from time to time including, but not limited to,
the Seller Note Payable Reserve.
The amount derived from the sum of
(x) Sections 2.1(a)(y)(i) and (ii)
minus (y) Section 2.1 (a)(y)(iii) at
any time and from time to time shall
be referred to as the "Formula
Amount". The Revolving Advances shall be
evidenced by one or more secured
promissory notes (collectively, the
"Revolving Credit Note")
substantially in the form attached hereto as
Exhibit 2.1(a).
(e) Section 2.4 of the
Loan Agreement is deleted, and is replaced by a
new Section 2.4 to read as follows:
2.4 INTENTIONALLY DELETED.
(f) Subsection 2.6(a) of
the Loan Agreement is deleted, and is replaced
by a new
Subsection 2.6(a) to read as follows:
(a) The Revolving Advances shall be due and payable in full on
the Termination Date subject to
earlier prepayment as herein provided.
(g) Subsections 2.10(a)
and (b) of the Loan Agreement are deleted, and
are replaced by new Subsections 2.10(a) and (b) to read as
follows:
(a) Each borrowing of Revolving Advances shall be advanced
according to the applicable
Commitment Percentages of Lenders.
(b) Each payment (including each prepayment) by Borrower on
account of the principal of and
interest on the Revolving Advances, shall
be applied to the Revolving Advances
pro rata according to the applicable
Commitment Percentages of Lenders.
Except as expressly provided herein,
all payments (including prepayments)
to be made by Borrower on account of
principal, interest and fees shall
be made without set off or counterclaim
and shall be made to Agent on behalf
of the Lenders to the Payment Office,
in each case on or prior to 1:00
P.M., New York time, in Dollars and in
immediately available funds.
(h) Section 2.11 of the
Loan Agreement is deleted, and is replaced by a
new Section 2.11 to read
as follows:
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2.11 Mandatory Prepayments. Subject to Section 4.3 hereof, when
Borrower sells or otherwise disposes
of any Collateral other than
Inventory in the Ordinary Course of
Business, Borrower shall repay the
Advances in an amount equal to the
net proceeds of such sale (i.e., gross
proceeds less the reasonable costs
of such sales or other dispositions),
such repayments to be made promptly
but in no event more than one (1)
Business Day following receipt of
such net proceeds, and until the date of
payment, such proceeds shall be held
in trust for Agent. The foregoing
shall not be deemed to be implied
consent to any such sale otherwise
prohibited by the terms and
conditions hereof. Such repayments shall be
applied to the Advances in such
order as Agent may determine, subject to
Borrower's ability to reborrow
Revolving Advances in accordance with the
terms hereof.
(i) Section 3.1 of the
Loan Agreement is deleted, and is replaced by a
new Section 3.1 to read as follows:
3.1 Interest. Interest on Advances shall be payable in arrears
on
the first day of each month with
respect to Domestic Rate Loans and, with
respect to Eurodollar Rate Loans, at
the end of each Interest Period or,
for Eurodollar Rate Loans with an
Interest Period in excess of three
months, at the earlier of (a) each
three months from the commencement of
such Eurodollar Rate Loan or (b) the
end of the Interest Period. Interest
charges shall be computed on the
actual principal amount of Advances
outstanding during the month at a
rate per annum equal to with respect to
Revolving Advances, the applicable
Revolving Interest Rate (as applicable,
the "Contract Rate"). Whenever,
subsequent to the date of this Agreement,
the Alternate Base Rate is increased
or decreased, the applicable Contract
Rate for Domestic Rate Loans shall
be similarly changed without notice or
demand of any kind by an amount
equal to the amount of such change in the
Alternate Base Rate during the time
such change or changes remain in
effect. The Eurodollar Rate shall be
adjusted with respect to Eurodollar
Rate Loans without notice or demand
of any kind on the effective date of
any change in the Reserve Percentage
as of such effective date. Upon and
after the occurrence of an Event of
Default, and during the continuation
thereof, (i) at the option of Agent
or at the direction of Required
Lenders, the Obligations other than
Eurodollar Rate Loans shall bear
interest at the applicable Contract
Rate for Domestic Loans plus two
percent (2%) per annum and (ii)
Eurodollar Rate Loans shall bear interest
at the Revolving Interest Rate for
Eurodollar Rate Loans plus two percent
(2%) per annum (as applicable, the
"Default Rate").
(j) Subsection 3.3(b) of
the Loan Agreement is deleted, and is replaced
by a new Subsection 3.3(b) to read as follows:
(b) Collateral Monitoring Fee. Borrower shall pay to Agent on
the first day of each month
following any month in which Agent performs
any collateral monitoring - namely
any field examination, collateral
analysis or other business analysis,
the need for which is to be
determined by Agent and which
mo
