EXHIBIT 10.6

 

NINTH AMENDMENT TO CREDIT AGREEMENT

 

THIS NINTH AMENDMENT TO CREDIT AGREEMENT (the “Ninth Amendment”) is made
effective as of March 31, 2005, among PEMCO AVIATION GROUP, INC., a Delaware
corporation, PEMCO AEROPLEX, INC., an Alabama corporation, PEMCO ENGINEERS,
INC., a Delaware corporation, PEMCO WORLD AIR SERVICES, INC., a Delaware
corporation, SPACE VECTOR CORPORATION, a Delaware corporation (collectively, the
“Borrowers”), WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking
association (successor by merger to SouthTrust Bank), as Agent (the “Agent”),
WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association (successor
by merger to SouthTrust Bank), as a Lender, and COMPASS BANK, an Alabama banking
corporation, as a Lender. Capitalized terms used herein but not defined shall
have the meanings as set forth in the Credit Agreement, as amended (as
hereinafter defined).

 

WHEREAS, pursuant to that certain Credit Agreement dated as of December 16,
2002, among Borrowers, Agent, and the other Lender Parties a party thereto (the
“Credit Agreement”), Lenders made available, subject to the terms and conditions
thereof, (i) the Revolving Loan of up to $20,000,000.00, (ii) the Swing Line
Loan of up to $5,000,000.00, and (iii) the Term Loan of up to $5,000,000.00; and

 

WHEREAS, pursuant to that certain First Amendment to Credit Agreement dated as
of May 22, 2003, among Borrowers, Agent, and the other Lender Parties a party
thereto (the “First Amendment”), the Credit Agreement was amended in order to
extend to Borrowers the Treasury Stock Loan in the amount of up to
$5,000,000.00; and

 

WHEREAS, pursuant to that certain Second Amendment to Credit Agreement dated as
of November 24, 2003, among Borrowers, Agent, and the other Lender Parties a
party thereto (the “Second Amendment”), the Credit Agreement was amended in
order to (i) temporarily increase the Swing Line Loan Commitment to up to
$7,000,000.00, and (ii) temporarily increase the Revolving Loan Commitment to up
to $22,000,000.00; and

 

WHEREAS, pursuant to that certain Third Amendment to Credit Agreement dated as
of December 16, 2003, among Borrowers, Agent, and the other Lender Parties a
party thereto (the “Third Amendment”), the Credit Agreement was amended in order
to (i) increase the Swing Line Loan Commitment to up to $6,000,000.00, (ii)
increase the Revolving Loan Commitment to up to $25,000,000.00, and (iii) extend
the Revolving Loan Maturity Date from December 16, 2004 until December 16, 2005;
and

 

WHEREAS, pursuant to that certain Fourth Amendment to Credit Agreement dated as
of May 7, 2004, among Borrowers, Agent, and the other Lender Parties a party
thereto (the “Fourth Amendment”), the Credit Agreement was amended in order to
(i) temporarily increase the Revolving Loan Commitment to up to $27,000,000.00,
and (ii) increase the Letter of Credit Commitment to up to $1,500,000.00; and

 

WHEREAS, pursuant to that certain Fifth Amendment to Credit Agreement dated as
of May 22, 2004, among Borrowers, Agent, and the other Lender Parties a party
thereto (the “Fifth Amendment”), the Credit Agreement was amended in order to,
among other things, extend the Treasury Stock Loan Advancement Termination Date
from May 22, 2004 to May 22, 2005;

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WHEREAS, pursuant to that certain Sixth Amendment to Credit Agreement dated as
of August 1, 2004, among Borrowers, Agent, and the other Lender Parties a party
thereto (the “Sixth Amendment”), the Credit Agreement was amended in order to
extend until December 31, 2004 the temporary increase of the Revolving Loan
Commitment to up to $27,000,000.00; and

 

WHEREAS, pursuant to that certain Seventh Amendment to Credit Agreement dated as
of November 5, 2004, among Borrowers, Agent, and the other Lender Parties a
party thereto (the “Seventh Amendment”), the Credit Agreement was amended in
order to, among other things, temporarily increase the Revolving Loan Commitment
to up to $33,000,000.00; and

 

WHEREAS, pursuant to that certain Eighth Amendment to Credit Agreement dated as
of December 22, 2004, among Borrowers, Agent, and the other Lender Parties a
party thereto (the “Eighth Amendment”), the Credit Agreement was amended in
order to, among other things, (i) extend until April 30, 2005 the temporary
increase of the Revolving Loan Commitment to up to $33,000,000.00, and (ii)
extend the Revolving Loan Maturity Date from December 16, 2005 until April 30,
2006 (the Credit Agreement, as amended by the First Amendment, the Second
Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment, the
Sixth Amendment, the Seventh Amendment and the Eighth Amendment, hereinafter
referred to as the “Credit Agreement, as amended”); and

 

WHEREAS, Lender Parties and Borrowers have agreed to amend the Credit Agreement,
as amended, in order to, among other things, amend certain of the financial
covenants set forth therein, as more specifically hereinafter provided.

 

NOW, THEREFORE, in consideration of One Dollar ($1.00) and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree that the Credit Agreement, as amended, is hereby
amended, effective as of the date of this Ninth Amendment, as follows:

 

1. Borrowers and Lender Parties acknowledge that Wachovia Bank, National
Association, a national banking association, is the successor by merger to
SouthTrust Bank, and agree that any reference to “SouthTrust” or “SouthTrust
Bank” in the Credit Agreement, as amended, or any other Loan Document is hereby
amended to refer to “Wachovia” (as hereinafter defined).

 

2. The Credit Agreement, as amended, is hereby amended by adding the following
capitalized terms as defined terms in Section 1.1:

 

“Wachovia” means Wachovia Bank, National Association, a national banking
association.

 

3. The Credit Agreement, as amended, is hereby amended by deleting Section
10.2(G) in its entirety, and by substituting the following new Section 10.2(G)
in lieu thereof:

 

(G) No Borrower will, without Agent’s prior written consent (and subject to the
approval of the Required Lenders, which consent and approval shall not be
unreasonably withheld or delayed), issue, redeem, purchase or retire any of its
Equity Interests or grant or issue any warrant, right or option pertaining
thereto or any other security convertible into any of the foregoing.

 

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4. The Credit Agreement, as amended, is hereby amended by deleting Section
10.3(A) in its entirety, and by substituting the following new Section 10.3(A)
in lieu thereof:

 

(A) Borrower will maintain or cause to be maintained at all times during the
term of this Agreement:

 

(1) A Fixed Charge Coverage of not less than 1.2 to 1.0 (it being agreed that
for purposes of computation of the Fixed Charge Coverage, (i) for the
Quarter-End of June 30, 2005, such ratio shall be computed based on such Quarter
and the preceding Quarter (viz., the period from January 1, 2005 through June
30, 2005), and multiplying the same by 2; (ii) for the Quarter-End of September
30, 2005, such ratio shall be computed based on such Quarter and the preceding
two Quarters (viz., the period from January 1, 2005 through September 30, 2005),
and multiplying the same by 1.33; and (iii) for the Quarter-End of December 31,
2005 and each Quarter-End thereafter, such ratio shall be computed based on an
Annualized Rolling Period);

 

(2) Beginning with the Fiscal Year-End of December 31, 2004, Adjusted Tangible
Net Worth of not less than $33,500,000.00, plus 60% of the Net Income as of each
Quarter-End beginning March 31, 2005; and

 

(3) A ratio of Adjusted Liabilities to Adjusted Tangible Net Worth of not more
than 2.5 to 1.0; and

 

(4) A Borrowing Base such that the balance of the Revolving Loan will not, at
any time, exceed the Borrowing Base;

 

5. As a condition to the effectiveness of this Ninth Amendment (a) Agent shall
have received appropriate resolutions of Borrowers’ directors, in a form
satisfactory to Agent, authorizing Borrowers to enter into this Ninth Amendment
and any other documentation required by Agent in connection with this Ninth
Amendment; (b) Agent shall have received a Bringdown and Incumbency Certificate
of each Borrower, in a form satisfactory to Agent; (c) Borrowers shall have
executed and delivered to Agent all further documents and performed all other
acts which Agent reasonably deems necessary or appropriate to perfect or protect
its security for the Loans; and (d) Agent shall have received for the account of
the Revolving Loan Lenders a waiver fee of $10,000.00; (e) Borrowers shall have
delivered to Agent such other documentation, if any, as may be requested by
Agent to satisfy Agent that this Ninth Amendment, and all other documents and
instruments executed by Borrowers in connection with this Ninth Amendment or in
furtherance hereof have each been duly authorized, executed and delivered on
behalf of Borrowers, and constitute valid and binding obligations of Borrowers.

 

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6. Each Borrower represents and warrants to Lender Parties that all
representations and warranties given by such Borrower in Article IX of the
Credit Agreement, as amended, are true and correct as of the date of this Ninth
Amendment, except (i) that Borrowers are not in compliance with the financial
covenant regarding Fixed Charge Coverage (and Lender Parties hereby waive such
non-compliance for the periods ending December 31, 2004 and March 31, 2005), and
(ii) to the extent affected by this Ninth Amendment. Each Borrower represents
and warrants to Lender Parties that as of the date of this Ninth Amendment, such
Borrower is in full compliance with all of the covenants of such Borrower
contained in Article X of the Credit Agreement, as amended, except to the extent
affected by this Ninth Amendment.

 

7. Except as heretofore or herein expressly modified, or as may otherwise be
inconsistent with the terms of this Ninth Amendment (in which case the terms and
conditions of this Ninth Amendment shall govern), all terms of the Credit
Agreement, as amended, and all documents and instruments executed and delivered
in furtherance thereof shall be and remain in full force and effect, and the
same are hereby ratified and confirmed in all respects.

 

* * * * *

 

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IN WITNESS WHEREOF, this Ninth Amendment has been duly executed as of the day
and year first above written.

 

WITNESS:   BORROWERS:    

PEMCO AVIATION GROUP, INC.

/s/ Doris Sewell

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By:

 

/s/ John R. Lee

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Print Name: Doris Sewell

 

Its:

 

Senior Vice President & Chief Financial Officer

   

PEMCO AEROPLEX, INC.

/s/ Doris Sewell

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By:

 

/s/ John R. Lee

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Print Name: Doris Sewell

 

Its:

 

Chief Financial Officer

   

PEMCO ENGINEERS, INC.

/s/ Doris Sewell

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By:

 

/s/ John R. Lee

--------------------------------------------------------------------------------

Print Name: Doris Sewell

 

Its:

 

Chief Financial Officer

   

PEMCO WORLD AIR SERVICES, INC.

/s/ Doris Sewell

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By:

 

/s/ John R. Lee

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Print Name: Doris Sewell

 

Its:

 

Chief Financial Officer

   

SPACE VECTOR CORPORATION

/s/ Doris Sewell

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By:

 

/s/ John R. Lee

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Print Name: Doris Sewell

 

Its:

 

Chief Financial Officer

    AGENT:    

WACHOVIA BANK, NATIONAL

   

ASSOCIATION, as Agent

/s/ Kelly Peace

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By:

 

/s/ Austin Davis

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Print Name: Kelly Peace

 

Its:

 

Vice President

 

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    LENDERS:    

WACHOVIA BANK, NATIONAL

   

ASSOCIATION

/s/ Kelly Peace

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By:

 

/s/ Austin Davis

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Print Name: Kelly Peace

 

Its:

 

Vice President

   

COMPASS BANK

/s/ Evelyn Maulden

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By:

 

/s/ Alex Morton

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Print Name: Evelyn Maulden

 

Its:

 

Senior Vice President

 

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