Exhibit 10.1

 

ELEVENTH AMENDMENT TO CREDIT AGREEMENT

 

THIS ELEVENTH AMENDMENT TO CREDIT AGREEMENT (the “Eleventh Amendment”) is made
effective as of June 28, 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; and

 

WHEREAS, pursuant to that certain Ninth Amendment to Credit Agreement dated as
of March 31, 2005, among Borrowers, Agent, and the other Lender Parties a party
thereto (the “Ninth Amendment”), the Credit Agreement was amended in order to,
among other things, amend certain of the financial covenants set forth therein;

 

WHEREAS, pursuant to that certain Tenth Amendment to Credit Agreement dated as
of April 30, 2005, among Borrowers, Agent, and the other Lender Parties a party
thereto (the “Tenth Amendment”), the Credit Agreement was amended in order to
(i) extend until June 30, 2005 the temporary increase of the Revolving Loan
Commitment to up to $33,000,000.00, and (ii) amend the repayment terms of the
Treasury Stock Loan; and

 

WHEREAS, Lender Parties and Borrowers have agreed to amend the Credit Agreement,
as amended, in order to (i) extend the Revolving Loan Maturity Date from April
30, 2006 until October 15, 2006, (ii) change the Revolving Loan Commitment to
$28,000,000.00, and (iii) amend the Borrowing Base, all as hereinafter provided
(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, the Eighth Amendment, the Ninth Amendment, the
Tenth Amendment, and the Eleventh Amendment, hereinafter referred to as the
“Credit Agreement, as amended”).

 

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 Eleventh Amendment, as follows:

 

1. The Credit Agreement, as amended, is hereby amended by deleting the
definitions of “Borrowing Base”, “Revolving Loan Commitment”, “Revolving Loan
Maturity Date” and “Revolving Notes”, and by substituting the following new
definitions in lieu thereof:

 

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“Borrowing Base” means, at any time, the amount computed on the Collateral
Report most recently delivered to, and accepted by, Agent in accordance with
this Agreement and equal to the aggregate of:

 

(A) Eighty-five percent (85%) of Eligible Accounts due from prime contractors on
all U.S. Government contracts; plus

 

(B) Eighty-five percent (85%) of Eligible Accounts due from governmental and
commercial contracts; plus

 

(C) Fifty percent (50%) of Eligible Accounts which are unbilled due to the terms
of an applicable contract, but with respect to which work has been performed and
completed; plus

 

(D) The lesser of (i) fifty percent (50%) of Eligible Inventory, or (ii)
$14,000,000.00.

 

“Revolving Loan Commitment” means the commitment of the Revolving Loan Lenders,
subject to the terms of this Agreement, to lend Borrowers up to the lesser of
(i) Twenty-Eight Million Dollars ($28,000,000.00), or (ii) the Borrowing Base,
less the Available Amount of the Letters of Credit, less any outstanding Letter
of Credit Advances.

 

“Revolving Loan Maturity Date” means the earlier of (a) October 15, 2006, or (b)
the occurrence of an Event of Default.

 

“Revolving Notes” means (i) that certain Fifth Amended and Restated Revolving
Note from Borrowers to Wachovia Bank, National Association, dated June 28, 2005,
in the principal amount of $17,920,000.00, and (ii) that certain Fourth Amended
and Restated Revolving Note from Borrowers to Compass, dated June 28, 2005, in
the principal amount of $10,080,000.00, and includes any amendment to or
modification of any such note and any promissory note given in extension or
renewal of, or in substitution for, such note.

 

2. As a condition to the effectiveness of this Eleventh Amendment (a) Borrowers
shall have executed and delivered to Agent the Revolving Notes, (b) Agent shall
have received appropriate resolutions of Borrowers’ directors, in a form
satisfactory to Agent, authorizing Borrowers to enter into this Eleventh
Amendment and any other documentation required by Agent in connection with this
Eleventh Amendment; (c) Agent shall have received a Bringdown and Incumbency
Certificate of each Borrower, in a form satisfactory to Agent; (d) 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 (e) Borrowers shall have delivered to
Agent such other documentation, if any, as may be requested by Agent to satisfy
Agent that this Eleventh Amendment, and all other documents and instruments
executed by Borrowers in connection with this Eleventh 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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3. 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
Eleventh Amendment, except to the extent affected by this Eleventh Amendment.
Each Borrower represents and warrants to Lender Parties that as of the date of
this Eleventh 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 Eleventh Amendment.

 

4. Except as heretofore or herein expressly modified, or as may otherwise be
inconsistent with the terms of this Eleventh Amendment (in which case the terms
and conditions of this Eleventh 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 Eleventh Amendment has been duly executed as of the day
and year first above written.

 

WITNESS:

  BORROWERS:         PEMCO AVIATION GROUP, INC.

/s/ Randall C. Shealy

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  By:  

/s/ Doris Sewell

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Print Name:   Randall C. Shealy   Its:   Secretary         PEMCO AEROPLEX, INC.

/s/ Randall C. Shealy

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  By:  

/s/ Doris Sewell

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Print Name:   Randall C. Shealy   Its:   Secretary         PEMCO ENGINEERS, INC.

/s/ Randall C. Shealy

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  By:  

/s/ Doris Sewell

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Print Name:   Randall C. Shealy   Its:   Secretary         PEMCO WORLD AIR
SERVICES, INC.

/s/ Randall C. Shealy

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  By:  

/s/ Doris Sewell

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Print Name:   Randall C. Shealy   Its:   Secretary         SPACE VECTOR
CORPORATION

/s/ Randall C. Shealy

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  By:  

/s/ Doris Sewell

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Print Name:   Randall C. Shealy   Its:   Secretary         AGENT:        
WACHOVIA BANK, NATIONAL         ASSOCIATION, as Agent

/s/ Brad Ainsworth

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  By:  

/s/ Austin Davis

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Print Name:   Brad Ainsworth   Its:   Vice President

 

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        LENDERS:         WACHOVIA BANK, NATIONAL         ASSOCIATION

/s/ Brad Ainsworth

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  By:  

/s/ Austin Davis

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Print Name:   Brad Ainsworth   Its:   Vice President         COMPASS BANK

/s/ Alex Morton

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  By:  

/s/ Lee Smith

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Print Name:  

Alex Morton

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  Its:  

Executive Vice President

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