EXHIBIT 10.45
WAIVER, CONSENT AND
AMENDMENT NO. 4
TO TERM LOAN AND SECURITY AGREEMENT
THIS WAIVER, CONSENT AND AMENDMENT
NO. 4 ("Amendment") is entered into as
of September 24, 2009, by and among AIR INDUSTRIES MACHINING, CORP.
("Air"),
SIGMA METALS, INC. ("Sigma"), WELDING METALLURGY, INC. ("WMI", and
together with
Air and Sigma, each a "Borrower" and collectively the "Borrowers"),
AIR
INDUSTRIES GROUP, INC. ("Air Group") and STEEL CITY CAPITAL
FUNDING, LLC
("SCC").
BACKGROUND
Borrowers and SCC are parties to a
Term Loan and Security Agreement (as
amended, restated, supplemented or otherwise modified from time to
time, the
"Loan Agreement") dated as of August 24, 2007, pursuant to which
SCC provided
Borrower with certain financial accommodations.
Borrowers (i) have violated Sections
6.5, 6.13 and 9.7 of the Loan
Agreement and seek a waiver of the Events of Default arising from
such
violations as well as a waiver of the cross-default to the Senior
Loan
Agreement, and (ii) seek consent to (a) the Consignment Agreement
between Sigma
and TW Alloys and (b) Senior Lender reducing the Availability Block
by the
amount of the outstanding term loan under the Senior Loan Agreement
and
utilizing the resulting increased availability to repay in full
such term loan,
and SCC is willing to do so on the terms and conditions hereafter
set forth.
NOW, THEREFORE, in consideration of
any loan or advance or grant of credit
heretofore or hereafter made to or for the account of Borrowers by
SCC and for
other good and valuable consideration, the receipt and sufficiency
of which are
hereby acknowledged, the parties hereto hereby agree as
follows:
1. Definitions. All capitalized
terms not otherwise defined herein shall
have the meanings given to them in the Loan Agreement.
2. Amendments to Loan Agreement.
Subject to satisfaction of the conditions
precedent set forth in Section 5 below, the Loan Agreement is
hereby amended as
follows:
(a) Section 1.2 of the Loan Agreement is hereby amended by
adding
the following defined terms in their appropriate alphabetical
order:
"Amendment No. 4" shall mean the Waiver, Consent and Amendment
No. 4 to Term Loan and Security Agreement dated as of
September __, 2009 by and among Borrowers and SCC.
"TW Alloys" shall mean TW Alloys with a place of business at
334 East Gardena Boulevard, Gardena, California 90248, a
California corporation.
(b) Section 1.2 of the Loan Agreement is hereby amended by
amending
the defined term "Term Loan Rate" in its entirety as follows:
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"Term Loan Rate" shall mean an interest rate per annum equal
to (a) the sum of (i) the greater of (1) the Alternate Base
Rate, or (2) 4.75%, (the "Prime Floor") plus (ii) six percent
(6.00%)
with respect to Domestic Rate Loans, and (b) the sum
of (i) the greater of (1) the Eurodollar Rate, or (2) 2.25%
(the "LIBOR Floor"), plus (ii) eight and one-half of one
percent (8.50%) with respect to Eurodollar Rate Loans.
(c) Section 2.1 of the Loan Agreement is hereby amended by
adding
the following sentence at the end thereof:
"Effective on the first day of the month following the
effective date of Amendment No. 4, anything in this
Agreement
or the Term Note to the contrary notwithstanding, Borrowers
shall make monthly payments of principal equal to $20,000 on
the first day of each month."
(d) Section 6.5(a) of the Loan Agreement is hereby deleted and
Sections 6.5(b), (c) and (d) of the Loan Agreement are hereby
amended in their
entirety to provide as follows:
"(b) Fixed Charge Coverage Ratio. Maintain at all times a
Fixed Charge Coverage Ratio of not less than 1.25 to 1.00,
tested monthly for the three months ending September 30, 2009
and at the end of each month thereafter building to a rolling
twelve (12) month basis. For purposes of calculating the Fixed
Charge Coverage Ratio, the repayment of the term loan under
the Senior Loan Agreement resulting from the reduction of the
Availability Block shall be excluded.
(c) Funded Debt Ratio. Maintain at all times a ratio of Funded
Debt (exclusive of Indebtedness subordinated to the Term Loan
but inclusive of Indebtedness for borrowed money not
subordinated to the Term Loan whether or not it has a maturity
of more than one year from its date of creation) to EBITDA not
greater than the ratio set forth below for the applicable time
period:
Time
Period
Ratio
-----------
-----
Three months ending September 30,
2009
8.50 to 1.00
Four months ending October 31,
2009
6.25 to 1.00
Five months ending November 30,
2009
4.80 to 1.00
Six months ending December 31,
2009
3.80 to 1.00
The
Funded Debt Ratio covenant for the seven months ending
January 31, 2010 and each month ending thereafter building to
a rolling twelve (12) month period will be based upon the
projections to be provided pursuant to Section 9.12 and
acceptable to SCC.
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