LMI Aerospace, Inc. Exhibit 10.1 to Form 8-K


     

        EXHIBIT
      10.1


     

    AMENDED
      AND RESTATED CREDIT AGREEMENT

    


    THIS
      AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") is entered into as
      of
      December 28, 2006, by and among LEONARD’S METAL, INC., a Missouri corporation
      (“Leonard’s Metal”), LMI FINISHING, INC., an Oklahoma corporation (“LMI
      Finishing”), TEMPCO ENGINEERING, INC., a Missouri corporation (“Tempco”),
      VERSAFORM CORP., a California corporation (“Versaform”), PRECISE MACHINE
      PARTNERS, LLP, a Texas limited liability partnership (“Precise Machine”), and
      LMI-TCA, INC., a Delaware corporation (“LMI-TCA”; Leonard’s Metal, LMI
      Finishing, Tempco, Versaform, Precise Machine and LMI-TCA are hereinafter
      collectively referred to as the “Borrower”; all references to Borrower in this
      Agreement shall mean each and all of them jointly and severally), and WELLS
      FARGO BANK, NATIONAL ASSOCIATION ("Bank").

    


    RECITALS

    


    Borrower
      and Bank are parties to a Credit and Security Agreement dated as of November
      29,
      2004 (as amended, modified and supplemented, the “Existing Credit Agreement”)
      pursuant to which Bank, through its Wells Fargo Business Credit operating
      division, has provided certain credit facilities to Borrower in the form of
      a
      $23,250,000 revolving credit facility and two term loans in the original
      principal amounts of $4,720,000 and $3,645,000.

    


    Borrower
      has requested certain modifications to the credit facilities, including, among
      other things, provision of a single revolving credit facility in an amount
      up to
      $40,000,000 to refinance the existing loans.

    


    Bank
      has
      agreed to make the requested credit facility available to Borrower on the terms
      and conditions hereinafter set forth.

    


    This
      Agreement is given in amendment to, restatement of and substitution for the
      Existing Credit Agreement;

    


    NOW,
      THEREFORE, for valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, Bank and Borrower hereby agree as follows:

    


    ARTICLE
      I

    CREDIT
      TERMS

    


    SECTION
      1.1. REVOLVING
      LINE OF CREDIT.

    


    (a) Revolving
      Line of Credit.
      Subject
      to the terms and conditions of this Agreement, Bank hereby agrees to make
      advances to Borrower from time to time up to and including March 31, 2012,
      not
      to exceed at any time the aggregate principal amount of Forty Million Dollars
      ($40,000,000.00) ("Line of Credit"), the proceeds of which shall be used to
      refinance Borrower’s existing indebtedness with Bank, for general working
      capital purposes and general corporate needs and to finance Permitted
      Acquisitions. Borrower's obligation to repay advances under the Line of Credit
      shall be evidenced by a promissory note dated as of December 28, 2006 ("Line
      of
      Credit Note"), all terms of which are incorporated herein by this
      reference.

    


    (b) Limitation
      on Borrowings; Minimum Amount.
      Outstanding borrowings under the Line of Credit shall not at any time exceed
      an
      aggregate of Forty Million Dollars ($40,000,000.00). Each advance under the
      Line
      of Credit, other than the initial advance, will be at least $500,000.00 and
      a
      multiple of $100,000.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c) Letter
      of Credit Subfeature.
      As a
      subfeature under the Line of Credit, Bank agrees from time to time during the
      term thereof to issue or cause an affiliate to issue standby letters of credit
      for the account of Borrower (each, a "Letter of Credit" and collectively,
      "Letters of Credit"); provided however, that the aggregate undrawn amount of
      all
      outstanding Letters of Credit shall not at any time exceed Five Million Dollars
      ($5,000,000.00). The form and substance of each Letter of Credit shall be
      subject to approval by Bank, in its sole discretion. Each Letter of Credit
      shall
      be issued for a term not to exceed three hundred sixty-five (365) days, as
      designated by Borrower; provided however, that a Letter of Credit may provide
      that it is automatically renewable for successive periods unless notice of
      non-renewal is given by Bank at some time prior to the then current expiration
      date. The undrawn amount of all Letters of Credit shall be reserved under the
      Line of Credit and shall not be available for borrowings thereunder. Each Letter
      of Credit shall be subject to the additional terms and conditions of the Letter
      of Credit agreements, applications and any related documents required by Bank
      in
      connection with the issuance thereof. Each drawing paid under a Letter of Credit
      shall be deemed an advance under the Line of Credit and shall be repaid by
      Borrower in accordance with the terms and conditions of this Agreement
      applicable to such advances. If the Line of Credit is terminated for any reason
      or is due to expire prior to the expiration date of any Letter of Credit when
      such Letter of Credit is issued, the Borrower shall at the time of such
      termination or upon issuance of such Letter of Credit pay the Bank in
      immediately available funds for deposit in a special account an amount equal
      to
      the face amount of any Letters of Credit outstanding upon termination or to
      be
      so issued plus any anticipated fees and costs. If the Borrower fails to promptly
      make any such payment in the amount required hereunder, then the Bank may make
      an advance under the Line of Credit in an amount sufficient to fulfill this
      obligation and deposit the proceeds to a special account. The special account
      shall be an interest bearing account maintained with the Bank. Any interest
      earned on amounts deposited in the special account shall be credited to the
      special account. The Bank may apply amounts on deposit in the special account
      at
      any time or from time to time to the indebtedness of Borrower to Bank in the
      Bank’s sole discretion. The Borrower may not withdraw any amounts on deposit in
      the special account as long as the Bank maintains a security interest therein.
      The Bank agrees to transfer any balance in the special account to the Borrower
      when the Bank is required to release its security interest in the special
      account under applicable law.

    


    (d) Borrowing
      and Repayment.
      Borrower may from time to time during the term of the Line of Credit borrow,
      partially or wholly repay its outstanding borrowings, and reborrow, subject
      to
      all of the limitations, terms and conditions contained herein or in the Line
      of
      Credit Note; provided however, that the total outstanding borrowings under
      the
      Line of Credit shall not at any time exceed the maximum principal amount
      available thereunder, as set forth above. 

    


    SECTION
      1.2. INTEREST/FEES.

    


    (a)
       Interest. The
      outstanding principal balance of the Line of Credit shall bear interest, and
      the
      amount of each drawing paid under any Letter of Credit shall bear interest
      from
      the date such drawing is paid to the date such amount is fully repaid by
      Borrower, at the rates of interest set forth in the Line of Credit
      Note.

    


    (b) Computation
      and Payment.
      Interest shall be computed on the basis and shall be payable at the times and
      place set forth in each promissory note or other instrument or document required
      hereby.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c) Unused
      Commitment Fee.
      Borrower shall pay to Bank a fee equal to the rate per annum set forth below
      opposite the applicable ratio of Total Funded Debt to EBITDA (as defined in
      the
      Line of Credit Note) then in effect (computed on the basis of a 360-day year,
      actual days elapsed) on the average daily unused amount of the Line of Credit,
      which fee shall be calculated on a quarterly basis by Bank and shall be due
      and
      payable by Borrower in arrears within ten (10) days after each billing is sent
      by Bank (the undrawn amount of all Letters of Credit issued pursuant to this
      Agreement will be deemed to be usage of the Line of Credit for purposes of
      calculating the unused commitment fee):

    


    
      	
              Tier

            	
              Total
                Funded Debt to EBITDA

            	
              Unused
                Commitment Fee

            
	
              1

            	
              ≥2.50

            	
              .30

            
	
              2

            	
              ≥1.50<2.50

            	
              .25

            
	
              3

            	
              ≥1.00<1.50

            	
              .225

            
	
              4

            	
              ≥0.50<1.00

            	
              .20

            
	
              5

            	
              <0.50

            	
              .175

            


    

    


    The
      amount of the fee shall be determined and adjusted effective as of the first
      day
      of the first month following the date on which each financial statement and
      compliance certificate are required in accordance with the provisions of
      Sections 4.3(a) or (b) and (d); provided that notwithstanding the foregoing,
      in
      the event a financial statement and compliance certificate are not delivered
      timely by the date required by Sections 4.3(a) or (b) and (d), the Unused
      Commitment Fee shall be based on pricing tier 1 until such time as an
      appropriate compliance certificate and financial statement are delivered,
      whereupon the applicable pricing tier shall be adjusted based on the information
      contained in such financial statement and compliance certificate.
      Notwithstanding the foregoing, for determining the Unused Commitment Fee from
      the date of this Agreement until delivery of the initial financial statement
      and
      compliance certificate required by Section 4.3(a) or (b) and (d), Borrower
      shall
      be entitled to the Unused Commitment Fee described at tier 5 above, after which
      the Unused Commitment Fee shall be based on the Borrower’s performance as set
      forth herein.

    


    (d) Letter
      of Credit Fees.
      Borrower shall pay to Bank (i) fees upon the issuance of each Letter of
      Credit determined at a per annum rate equal to the LIBOR Margin in effect at
      the
      time of issuance pursuant to the Line of Credit Note (computed on the basis
      of a
      360-day year, actual days elapsed) times the face amount thereof, and
      (ii) fees upon the payment or negotiation of each drawing under any Letter
      of Credit and fees upon the occurrence of any other activity with respect to
      any
      Letter of Credit (including without limitation, the transfer, amendment or
      cancellation of any Letter of Credit) determined in accordance with Bank's
      standard fees and charges then in effect for such activity.

    


    SECTION
      1.3. COLLECTION
      OF PAYMENTS. Borrower authorizes Bank to collect all interest and agreed-upon
      fees due under each credit subject hereto by charging Borrower's deposit account
      number 4121068076 with Bank, or any other deposit account maintained by Borrower
      with Bank, for the full amount thereof. Should there be insufficient funds
      in
      any such deposit account to pay all such sums when due, the full amount of
      such
      deficiency shall be immediately due and payable by Borrower.

    


    SECTION
      1.4. COLLATERAL.

    


    As
      security for all indebtedness and other obligations of Borrower to Bank,
      Borrower hereby grants to Bank security interests of first priority in all
      Borrower's accounts, chattel paper and electronic chattel paper, deposit
      accounts, documents, equipment, general intangibles, goods, instruments,
      inventory, investment property, letter-of-credit rights, letters of credit,
      all
      sums on deposit in any collateral account, and any items in any lockbox;
      together with (i) all substitutions and replacements for and products of
      any of the foregoing; (ii) in the case of all goods, all accessions;
      (iii) all accessories, attachments, parts, equipment and repairs now or
      hereafter attached or affixed to or used in connection with any goods;
      (iv) all warehouse receipts, bills of lading and other documents of title
      now or hereafter covering such goods; (v) all collateral subject to the
      lien of any Loan Document; (vi) any money, or other assets of the Borrower
      that now or hereafter come into the possession, custody, or control of the
      Bank;
      (vii) proceeds of any and all of the foregoing; (viii) books and records of
      the Borrower, including all mail or electronic mail addressed to the Borrower;
      and (ix) all of the foregoing, whether now owned or existing or hereafter
      acquired or arising or in which the Borrower now has or hereafter acquires
      any
      rights.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    All
      of
      the foregoing shall be evidenced by and subject to the terms of such security
      agreements, financing statements, deeds or mortgages, and other documents as
      Bank shall reasonably require, all in form and substance satisfactory to Bank.
      Borrower shall pay to Bank immediately upon demand the full amount of all
      charges, costs and expenses (to include fees paid to third parties and all
      allocated costs of Bank personnel), expended or incurred by Bank in connection
      with any of the foregoing security, including without limitation, filing and
      recording fees and costs of appraisals, audits and title insurance.


    


    SECTION
      1.5. GUARANTIES.
      The payment and performance of all indebtedness and other obligations of
      Borrower to Bank shall be guaranteed jointly and severally by LMI Aerospace,
      Inc. (“Parent”) and Precise Machine Company (“PMC”), as evidenced by and subject
      to the terms of guaranties in form and substance satisfactory to Bank. The
      guaranties shall be secured by, in the case of Parent, a pledge of 100% of
      the
      capital stock of Borrower, and, in the case of both Parent and PMC, by first
      priority security interests, subject to Permitted Encumbrances, in all assets,
      other than real estate, now owned or hereafter acquired by such
      entities.

    


    ARTICLE
      II

    REPRESENTATIONS
      AND WARRANTIES

    


    Borrower
      makes the following representations and warranties to Bank, which
      representations and warranties shall survive the execution of this Agreement
      and
      shall continue in full force and effect until the full and final payment, and
      satisfaction and discharge, of all obligations of Borrower to Bank subject
      to
      this Agreement.

    


    SECTION
      2.1. LEGAL
      STATUS. Each Borrower, other than Precise Machine, is a corporation, and Precise
      Machine is a limited liability partnership, in each case, duly organized and
      existing and in good standing under the laws of the state of its organization,
      and is qualified or licensed to do business (and is in good standing as a
      foreign corporation or entity, if applicable) in all jurisdictions in which
      such
      qualification or licensing is required or in which the failure to so qualify
      or
      to be so licensed could have a material adverse effect on such
      Borrower.

    


    SECTION
      2.2. AUTHORIZATION
      AND VALIDITY. This Agreement and each promissory note, contract, instrument
      and
      other document required hereby or at any time hereafter delivered to Bank in
      connection herewith (collectively, the "Loan Documents") have been duly
      authorized, and upon their execution and delivery in accordance with the
      provisions hereof will constitute legal, valid and binding agreements and
      obligations of Borrower or the party which executes the same, enforceable in
      accordance with their respective terms.

    


    SECTION
      2.3. NO
      VIOLATION. The execution, delivery and performance by Borrower of each of the
      Loan Documents do not violate any provision of any law or regulation, or
      contravene any provision of its organizational documents or result in any breach
      of or default under any contract, obligation, indenture or other instrument
      to
      which Borrower is a party or by which Borrower may be bound.

    


    SECTION
      2.4. LITIGATION.
      Except as disclosed on Schedule
      2.4
      hereto,
      there are no pending, or to the best of Borrower's knowledge threatened,
      actions, claims, investigations, suits or proceedings by or before any
      governmental authority, arbitrator, court or administrative agency which could
      have a material adverse effect on the financial condition or operation of
      Borrower other than those disclosed by Borrower to Bank in writing prior to
      the
      date hereof.

    


    SECTION
      2.5. CORRECTNESS
      OF FINANCIAL STATEMENT. The annual financial statement of Borrower dated
      December 31, 2005, and all interim financial statements delivered to Bank since
      said date, true copies of which have been delivered by Borrower to Bank prior
      to
      the date hereof, (a) present fairly the financial condition of Borrower in
      all
      material respects, (b) disclose all material liabilities of Borrower that are
      required to be reflected or reserved against under generally accepted accounting
      principles, whether liquidated or unliquidated, fixed or contingent, and (c)
      have been prepared in accordance with generally accepted accounting principles
      consistently applied. Except as disclosed on Schedule
      2.5
      attached
      hereto, since the dates of such financial statements there has been no material
      adverse change in the financial condition of Borrower, nor has Borrower
      mortgaged, pledged, granted a security interest in or otherwise encumbered
      any
      of its assets or properties except in favor of Bank or as otherwise permitted
      by
      Bank in writing. 

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

        SECTION
      2.6. INCOME
      TAX RETURNS. Borrower has no knowledge of any pending assessments or adjustments
      of its income tax payable with respect to any year which involve a claimed
      deficiency in excess of $100,000.

    


    SECTION
      2.7. NO
      SUBORDINATION. There is no agreement, indenture, contract or instrument to
      which
      Borrower is a party or by which Borrower may be bound that requires the
      subordination in right of payment of any of Borrower's obligations subject
      to
      this Agreement to any other obligation of Borrower.

    


    SECTION
      2.8. PERMITS,
      FRANCHISES. Borrower possesses, and will hereafter possess, all permits,
      consents, approvals, franchises and licenses required and rights to all
      trademarks, trade names, patents, and fictitious names, if any, necessary to
      enable it to conduct the business in which it is now engaged in compliance
      with
      applicable law.

    


    SECTION
      2.9. ERISA.
      Except as disclosed on Schedule
      2.9
      hereto,
      Borrower is in compliance in all material respects with all applicable
      provisions of the Employee Retirement Income Security Act of 1974, as amended
      or
      recodified from time to time ("ERISA"); Borrower has not violated any provision
      of any defined employee pension benefit plan (as defined in ERISA) maintained
      or
      contributed to by Borrower (each, a "Plan"); no Reportable Event as defined
      in
      ERISA has occurred and is continuing with respect to any Plan initiated by
      Borrower; Borrower has met its minimum funding requirements under ERISA with
      respect to each Plan; and each Plan will be able to fulfill its benefit
      obligations as they come due in accordance with the Plan documents and under
      generally accepted accounting principles.

    


    SECTION
      2.10. OTHER
      OBLIGATIONS. Borrower is not in default on any material obligation for borrowed
      money, any material purchase money obligation or any other material lease,
      commitment, contract, instrument or obligation.

    


    SECTION
      2.11. ENVIRONMENTAL
      MATTERS. Except as disclosed on Schedule
      2.11
      hereto,
      Borrower is in compliance in all material respects with all applicable federal
      or state environmental, hazardous waste, health and safety statutes, and any
      rules or regulations adopted pursuant thereto, which govern or affect any of
      Borrower's operations and/or properties, including without limitation, the
      Comprehensive Environmental Response, Compensation and Liability Act of 1980,
      the Superfund Amendments and Reauthorization Act of 1986, the Federal Resource
      Conservation and Recovery Act of 1976, and the Federal Toxic Substances Control
      Act, as any of the same may be amended, modified or supplemented from time
      to
      time. None of the operations of Borrower is the subject of any federal or state
      investigation evaluating whether any remedial action involving a material
      expenditure is needed to respond to a release of any toxic or hazardous waste
      or
      substance into the environment. Borrower has no material contingent liability
      in
      connection with any release of any toxic or hazardous waste or substance into
      the environment.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      III

    CONDITIONS

    


    SECTION
      3.1. CONDITIONS
      OF INITIAL EXTENSION OF CREDIT. The obligation of Bank to extend any credit
      contemplated by this Agreement is subject to the fulfillment to Bank's
      satisfaction of all of the following conditions:

    


    (a) Approval
      of Bank Counsel.
      All
      legal matters incidental to the extension of credit by Bank shall be
      satisfactory to Bank's counsel.

    


    (b) Documentation.
      Bank
      shall have received, in form and substance satisfactory to Bank, each of the
      following, duly executed:

    


    
      	
                    (i)

            	
              This
                Agreement and each instrument or document required
                hereby;

            
	
                    (ii)

            	
              The
                Line of Credit Note;

            
	
                                   
                (iii)

            	
              The
                Continuing Guaranty of Parent and PMC;

            
	
                                   
                (iv)

            	
              Such
                security and pledge agreements from Borrower and guarantors as Bank
                shall
                require to evidence the security interests in the
                collateral;

            
	
                                    (v)

            	
              Such
                UCC financing statements or amendments thereto as shall be necessary
                to
                perfect the security interests in the collateral;

            
	
                                   
                (vi)

            	
              Delivery
                of any and all stock certificates or other certificated securities
                evidencing the ownership or equity interests of Parent in the
                Borrower;

            
	
                                   
                (vii)

            	
              Certified
                copies of the organizational documents of Borrower, Parent and PMC,
                together with borrowing resolutions and incumbency certificates in
                form
                and substance acceptable to Bank; and

            
	
                                   
                (viii)

            	
              Such
                other documents as Bank may require under any other Section of this
                Agreement.

            


    

     

    (c) Financial
      Condition.
      There
      shall have been no material adverse change, as determined by Bank, in the
      financial condition or business of Borrower or any guarantor hereunder, nor
      any
      material decline, as determined by Bank, in the market value of any collateral
      required hereunder or a substantial or material portion of the assets of
      Borrower or any such guarantor.

    


    (d) Insurance.
      Borrower shall have delivered to Bank evidence of insurance coverage on all
      Borrower's property, in form, substance, amounts, covering risks and issued
      by
      companies satisfactory to Bank, and where required by Bank, with loss payable
      endorsements in favor of Bank.

    


    SECTION
      3.2. CONDITIONS
      OF EACH EXTENSION OF CREDIT. The obligation of Bank to make each extension
      of
      credit requested by Borrower hereunder shall be subject to the fulfillment
      to
      Bank's satisfaction of each of the following conditions:

    


    (a) Compliance.
      The
      representations and warranties contained herein and in each of the other Loan
      Documents shall be true on and as of the date of the signing of this Agreement
      and on the date of each extension of credit by Bank pursuant hereto, with the
      same effect as though such representations and warranties had been made on
      and
      as of each such date, and on each such date, no Event of Default as defined
      herein, and no condition, event or act which with the giving of notice or the
      passage of time or both would constitute such an Event of Default, shall have
      occurred and be continuing or shall exist; and

    


    (b) Documentation.
      Bank
      shall have received all additional documents which may be required in connection
      with such extension of credit.

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ARTICLE
      IV

    AFFIRMATIVE
      COVENANTS

    


    Borrower
      covenants that so long as Bank remains committed to extend credit to Borrower
      pursuant hereto, or any liabilities (whether direct or contingent, liquidated
      or
      unliquidated) of Borrower to Bank under any of the Loan Documents remain
      outstanding, and until payment in full of all obligations of Borrower subject
      hereto, Borrower shall, unless Bank otherwise consents in writing:

    


    SECTION
      4.1. PUNCTUAL
      PAYMENTS. Punctually pay all principal, interest, fees or other liabilities
      due
      under any of the Loan Documents at the times and place and in the manner
      specified therein, and immediately upon demand by Bank, the amount by which
      the
      outstanding principal balance of any credit subject hereto at any time exceeds
      any limitation on borrowings applicable thereto.

    


    SECTION
      4.2. ACCOUNTING
      RECORDS. Maintain adequate books and records in accordance with generally
      accepted accounting principles consistently applied, and permit any
      representative of Bank, at any reasonable time, to inspect, audit and examine
      such books and records, to make copies of the same, and to inspect the
      properties of Borrower. Absent the occurrence of an Event of Default which
      is
      continuing, any such inspection, audit or examination shall be at Bank’s
      expense.

    


    SECTION
      4.3. FINANCIAL
      STATEMENTS. Provide to Bank all of the following, in form and detail
      satisfactory to Bank:

    


    (a) not
      later
      than ninety (90) days after and as of the end of each fiscal year, consolidated
      and consolidating financial statements of Parent, prepared by a recognized
      independent accounting firm and accompanied by an unqualified opinion from
      such
      accounting firm, to include income statements, balance sheets and statements
      of
      cash flows for such fiscal year;

    


    (b) not
      later
      than forty-five (45) days after and as of the end of each fiscal quarter,
      internally prepared consolidated and consolidating financial statements of
      Parent, to include income statement, balance sheet and statement of cash flows
      for such fiscal quarter and for the fiscal year-to-date period then
      ended;

    


    (c) not
      later
      than thirty (30) days prior to the start of each fiscal year, financial
      projections for such fiscal year, to include balance sheets and income
      statements prepared on a quarterly basis;

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (d) contemporaneously
      with each annual and quarterly financial statement required hereby, a
      certificate of a senior financial officer of Parent that said financial
      statements present fairly the financial condition of Borrower in all material
      respects and that there exists no Event of Default nor any condition, act or
      event which with the giving of notice or the passage of time or both would
      constitute an Event of Default, together with calculations confirming Borrower’s
      compliance with all financial covenants;

    


    (e) promptly
      after the sending or filing thereof, copies of all regular and periodic
      financial reports or other materials filed by Parent or any affiliated entity
      with the Securities and Exchange Commission or any national securities exchange;
      and

    


    (f) 
      from
      time to time such other information as Bank may reasonably request.

    


    SECTION
      4.4. COMPLIANCE.
      Preserve and maintain all licenses, permits, governmental approvals, rights,
      privileges and franchises necessary for the conduct of its business; and comply
      with the provisions of all documents pursuant to which Borrower is organized
      and/or which govern Borrower's continued existence and with the requirements
      of
      all laws, rules, regulations and orders of any governmental authority applicable
      to Borrower and/or its business.

    


    SECTION
      4.5. INSURANCE.
      Maintain and keep in force, for each business in which Borrower is engaged,
      insurance of the types and in amounts customarily carried in similar lines
      of
      business, including but not limited to fire, extended coverage, public
      liability, flood, property damage and workers' compensation, with all such
      insurance carried with companies and in amounts satisfactory to Bank, and
      deliver to Bank from time to time at Bank's request schedules setting forth
      all
      insurance then in effect. 

    


    SECTION
      4.6. FACILITIES.
      Keep all properties useful or necessary to Borrower's business in good repair
      and condition, and from time to time make necessary repairs, renewals and
      replacements thereto so that such properties shall be fully and efficiently
      preserved and maintained.

    


    SECTION
      4.7. TAXES
      AND
      OTHER LIABILITIES. Pay and discharge when due any and all indebtedness,
      obligations, assessments and taxes, both real or personal, including without
      limitation federal and state income taxes and state and local property taxes
      and
      assessments, except such of the foregoing (a) as Borrower may in good faith
      contest or as to which a bona fide dispute may arise, and (b) for which Borrower
      has made provision, to Bank's satisfaction, for eventual payment thereof in
      the
      event Borrower is obligated to make such payment.

    


    SECTION
      4.8. LITIGATION.
      Promptly give notice in writing to Bank of any litigation pending or threatened
      against Borrower with a claim in excess of $500,000.00.

    


    SECTION
      4.9. FINANCIAL
      CONDITION. Maintain Borrower's financial condition, determined on a consolidated
      basis for Borrower and Parent, as follows using generally accepted accounting
      principles consistently applied and used consistently with prior practices
      (except to the extent modified by the definitions herein):

    


    (a) Current
      Ratio not less than 2.0 to 1.0 at each fiscal quarter end, with "Current Ratio"
      defined as total current assets divided by the sum of (i) total current
      liabilities plus (ii) 50% of the principal balance outstanding under the Line
      of
      Credit at such quarter end;

    


    (b) Net
      Worth
      at each fiscal quarter end not less than the sum of (i) $67,000.00, plus (ii)
      50% of cumulative quarterly net income (with no deduction for quarterly net
      losses) realized since the date of this Agreement, plus (iii) 100% of the net
      cash proceeds from the issuance of equity securities subsequent to the date
      of
      this Agreement, with "Net Worth" defined as total stockholders'
      equity;

    


    (c) Net
      income after taxes not less than $1.00 on an annual basis, determined as of
      each
      fiscal year end; and

    


    (d) Fixed
      Charge Coverage Ratio not less than 1.20 to 1.0 as of each fiscal quarter end,
      determined on a rolling 4-quarter basis, with “Fixed Charge Coverage Ratio”
defined as earnings for such period before deductions for interest expense,
      taxes, depreciation and amortization expense, divided by the aggregate of
      interest expense, income tax expense, scheduled amortization of long-term debt,
      maintenance capital expenditures and dividends for such period (“maintenance
      capital expenditures” shall mean investments required in property, plant and
      equipment in the ordinary course of business to maintain Borrower’s operations).
      For purposes of determining Borrower’s pro forma compliance with this covenant
      in connection with any Permitted Acquisition under Section 5.3, and for purposes
      of calculating Borrower’s compliance with this covenant subsequent to any
      acquisition, (i) income statement items attributable to the person or entity
      acquired shall, to the extent not otherwise included in such income statement
      items for Parent, be included to the extent relating to any period applicable
      in
      such calculation, and (ii) to the extent that Parent or Borrower incurs
      indebtedness in connection with such acquisition, such indebtedness shall be
      deemed to have been incurred as of the first day of the applicable period for
      purposes of determining interest expense for such period.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SECTION
      4.10. NOTICE
      TO
      BANK. Promptly (but in no event more than five (5) days after the occurrence
      of
      each such event or matter) give written notice to Bank in reasonable detail
      of:
      (a) the occurrence of any Event of Default, or any condition, event or act
      which with the giving of notice or the passage of time or both would constitute
      an Event of Default; (b) any change in the name or the organizational
      structure of Borrower; (c) the occurrence and nature of any Reportable
      Event or Prohibited Transaction, each as defined in ERISA, or any funding
      deficiency with respect to any Plan; or (d) any termination or cancellation
      of any insurance policy which Borrower is required to maintain, or any uninsured
      or partially uninsured loss through liability or property damage, or through
      fire, theft or any other cause affecting Borrower's property in excess of an
      aggregate of $500,000.00.

    


    SECTION
      4.11. DEPOSITORY
      ACCOUNTS. Maintain its principal depository accounts with Bank.

    


    ARTICLE
      V

    NEGATIVE
      COVENANTS

    


    Borrower
      further covenants that so long as Bank remains committed to extend credit to
      Borrower pursuant hereto, or any liabilities (whether direct or contingent,
      liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents
      remain outstanding, and until payment in full of all obligations of Borrower
      subject hereto, Borrower will not, and will not permit Parent to, without Bank's
      prior written consent:

    


    SECTION
      5.1. USE
      OF
      FUNDS. Use any of the proceeds of any credit extended hereunder except for
      the
      purposes stated in Article I hereof.

    


    SECTION
      5.2. OTHER
      INDEBTEDNESS. Create, incur, assume or permit to exist any indebtedness or
      liabilities resulting from borrowings, loans or advances, whether secured or
      unsecured, matured or unmatured, liquidated or unliquidated, joint or several,
      except the following permitted indebtedness (“Permitted
      Indebtedness”):

    


    (a) the
      liabilities of Borrower to Bank;

    


    (b) any
      other
      liabilities of Borrower and Parent existing as of the date hereof and disclosed
      on Schedule
      5.2
      to this
      Agreement;

    


    (c) indebtedness
      owed to trade creditors incurred in the ordinary course of business, to the
      extent that such indebtedness is not overdue past the original due date by
      more
      than 90 days or such other terms as may be agreed upon between Borrower and
      its
      trade creditors; and

    


    (d) indebtedness
      arising after the date of this Agreement from capital leases or from purchase
      money indebtedness provided that (i) Borrower shall maintain compliance with
      the
      financial covenants set forth in Section 4.9 and (ii) the aggregate outstanding
      amount attributable to such capital leases and purchase money indebtedness
      shall
      not exceed $14,000,000.00 at any given time.

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SECTION
      5.3. MERGER,
      CONSOLIDATION, TRANSFER OF ASSETS. Merge into or consolidate with any other
      entity; make any substantial change in the nature of Borrower's business as
      conducted as of the date hereof; acquire the stock of or all or substantially
      all of the assets of any other entity except for Permitted Acquisitions and
      such
      other acquisitions as to which Bank shall grant its prior consent in writing
      (which consent shall not be unreasonably withheld); nor sell, lease, transfer
      or
      otherwise dispose of all or a substantial or material portion of Borrower's
      assets except in the ordinary course of its business or as disclosed on
Schedule
      2.5.
      “Permitted Acquisition” means any acquisition by Borrower or Parent of the stock
      or substantially all of the assets of any other person provided
      that:

    


    (a) Borrower
      demonstrates pro forma compliance with all terms and conditions of this
      Agreement after giving effect to such acquisition;

    


    (b) there
      shall exist no Event of Default before or after giving effect to such
      acquisition;

    


    (c) the
      acquired entity and/or the assets acquired shall be owned directly by Parent
      or
      a Borrower or shall become a wholly-owned subsidiary (direct or indirect) of
      Parent or a Borrower and, at Bank’s election, shall execute a guaranty or a
      joinder to this Agreement and any documents securing Borrower’s obligations to
      Bank, in form and substance acceptable to Bank;

    


    (d) the
      purchase consideration for the acquisition, when combined with the purchase
      consideration of all other acquisitions in any fiscal year, shall not exceed
      $20,000,000.00; and

    


    (e) at
      least
      15 days prior to the scheduled closing of the acquisition, Borrower shall
      furnish Bank with such financial statements and other information relating
      to
      the entity to be acquired as Bank shall reasonably request.

    


    SECTION
      5.4. GUARANTIES.
      Guarantee or become liable in any way as surety, endorser (other than as
      endorser of negotiable instruments for deposit or collection in the ordinary
      course of business), accommodation endorser or otherwise for, nor pledge or
      hypothecate any assets of Borrower as security for, any liabilities or
      obligations of any other person or entity, except any of the foregoing in favor
      of Bank.

    


    SECTION
      5.5. LOANS,
      ADVANCES, INVESTMENTS. Make any loans or advances to or investments in any
      person or entity, except any of the foregoing which, in the aggregate, do not
      exceed $1,000,000.00 outstanding at any given time.

    


    SECTION
      5.6. DIVIDENDS,
      DISTRIBUTIONS. Declare or pay any dividend or distribution either in cash,
      stock
      or any other property on Parent’s stock or any other equity interest in Parent
      now or hereafter outstanding, nor redeem, retire, repurchase or otherwise
      acquire any shares of any class of Parent’s stock or any other equity interest
      in Parent now or hereafter outstanding; provided, however, that Parent may
      make
      a dividend or distribution (hereafter, a “Distribution”) which is otherwise
      prohibited herein if such Distribution will not result in any default under
      any
      of the financial covenants set forth in Section 4.9 of this
      Agreement.

    


    SECTION
      5.7. PLEDGE
      OF
      ASSETS. Mortgage, pledge, grant or permit to exist a security interest in,
      or
      lien upon, all or any portion of Borrower's assets now owned or hereafter
      acquired, except the following (each a “Permitted Lien”):

    


    (a) the
      existing security interests disclosed on Schedule
      5.7
      to this
      Agreement;

    


    (b) any
      security interest or lien in favor of Bank;

    


    (c) liens
      for
      taxes, assessments or governmental charges which are not delinquent or which
      are
      being diligently contested in good faith and by appropriate proceedings and
      for
      which adequate book reserves in accordance with generally accepted accounting
      principles are maintained;

    


    (d) liens
      arising out of deposits in connection with workers’ compensation insurance,
      unemployment insurance, old age pensions, or other social security or retirement
      benefits legislation;

    


    (e) deposits
      or pledges to secure bids, tenders, contracts, leases, statutory obligations,
      surety and appeal bonds, and other obligations of like nature arising in the
      ordinary course of business;

    


    (f) liens
      imposed by any law, such as mechanics’, worker’s, materalmen’s, landlords’,
      carriers’, or other like security interests arising in the ordinary course of
      business which secure payment of obligations which are not past due or which
      are
      being diligently contested in good faith by appropriate proceedings and for
      which adequate reserves in accordance with generally accepted accounting
      principles are maintained; and

    


    (g) purchase
      money security interests securing purchase money indebtedness of Borrower to
      the
      extent permitted in Section 5.2(d).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      VI

    EVENTS
      OF DEFAULT

    


    SECTION
      6.1. The
      occurrence of any of the following shall constitute an "Event of Default" under
      this Agreement:

    


    (a) Borrower
      shall fail to pay when due any principal or interest payable under any of the
      Loan Documents;

    


    (b) Borrower
      shall fail to pay any agreed-upon fees or other amounts payable under any of
      the
      Loan Documents within ten (10) days of the date when due;

    


    (c) Any
      financial statement or certificate furnished to Bank in connection with, or
      any
      representation or warranty made by Borrower or any other party under this
      Agreement or any other Loan Document shall prove to be incorrect, false or
      misleading in any material respect when furnished or made;

    


    (d) Any
      default in the performance of or compliance with any obligation, agreement
      or
      other provision contained herein or in any other Loan Document (other than
      those
      referred to in subsections (a) or (b) above), and with respect to any such
      default which by its nature can be cured, such default shall continue for a
      period of twenty (20) days from its occurrence;

    


    (e) Any
      default in the payment or performance of any obligation, or any defined event
      of
      default, under the terms of any contract or instrument (other than any of the
      Loan Documents) pursuant to which Borrower, any guarantor hereunder or any
      general partner or joint venturer in Borrower if a partnership or joint venture
      (with each such guarantor, general partner and/or joint venturer referred to
      herein as a "Third Party Obligor") has incurred any debt or other liability
      to
      any person or entity, including Bank;

    


    (f) The
      filing of a notice of judgment lien against Borrower or any Third Party Obligor,
      or the recording of any abstract of judgment against Borrower or any Third
      Party
      Obligor in any county in which Borrower or such Third Party Obligor has an
      interest in real property, or the entry of a judgment against Borrower or any
      Third Party Obligor, which in any instance of the foregoing, involves an order
      for the payment of money in excess of $750,000 and which remains unsatisfied
      and
      in effect for a period of 30 consecutive days without a stay of execution;
      or
      the service of a notice of levy and/or a writ of attachment or execution, or
      other like process, against the assets of Borrower or any Third Party
      Obligor.

    


    (g) Borrower
      or any Third Party Obligor shall become insolvent, or shall suffer or consent
      to
      or apply for the appointment of a receiver, trustee, custodian or liquidator
      of
      itself or any of its property, or shall generally fail to pay its debts as
      they
      become due, or shall make a general assignment for the benefit of creditors;
      Borrower or any Third Party Obligor shall file a voluntary petition in
      bankruptcy, or seeking reorganization, in order to effect a plan or other
      arrangement with creditors or any other relief under the Bankruptcy Reform
      Act,
      Title 11 of the United States Code, as amended or recodified from time to time
      ("Bankruptcy Code"), or under any state or federal law granting relief to
      debtors, whether now or hereafter in effect; or any involuntary petition or
      proceeding pursuant to the Bankruptcy Code or any other applicable state or
      federal law relating to bankruptcy, reorganization or other relief for debtors
      is filed or commenced against Borrower or any Third Party Obligor and
      such
      proceeding or petition shall continue undismissed for sixty (60) consecutive
      days,
      or
      Borrower or any Third Party Obligor shall file an answer admitting the
      jurisdiction of the court and the material allegations of any involuntary
      petition; or Borrower or any Third Party Obligor shall be adjudicated a
      bankrupt, or an order for relief shall be entered against Borrower or any Third
      Party Obligor by any court of competent jurisdiction under the Bankruptcy Code
      or any other applicable state or federal law relating to bankruptcy,
      reorganization or other relief for debtors and
      any
      order or decree approving or ordering any of the foregoing shall continue
      unstayed and in effect for sixty (60) consecutive days;

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (h) The
      dissolution or liquidation of Borrower or any Third Party Obligor if a
      corporation, partnership, joint venture or other type of entity; or Borrower
      or
      any such Third Party Obligor, or any of its directors, stockholders or members,
      shall take action seeking to effect the dissolution or liquidation of Borrower
      or such Third Party Obligor; or

    


    (i) A
      Change
      of Control shall occur, with “Change of Control” meaning the occurrence of any
      of the following events:

     

    (A) any
      Borrower ceases to be wholly-owned by Parent;

    


    (B) any
      person, entity or “group” (as such term is used in Sections 13(d) and 14(d) of
      the Securities Exchange Act of 1934; a “Person”) who is not an owner on the date
      of this Agreement is or becomes the “beneficial owner” (as defined in Rules
      13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a Person
      will be deemed to have “beneficial ownership” of all securities that such Person
      has the right to acquire, whether such right is exercisable immediately or
      only
      after the passage of time), directly or indirectly, of more than forty percent
      (40%) of the voting power of all classes of owners of the Parent;

    


    (C) during
      any consecutive two-year period, individuals who at the beginning of such period
      constituted the board of directors of the Parent (together with any new
      directors whose election to such board of directors, or whose nomination for
      election by the owners of the Parent, was approved by a vote of two thirds
      of
      the directors then still in office who were either directors at the beginning
      of
      such period or whose election or nomination for election was previously so
      approved) cease for any reason to constitute a majority of the board of
      directors of the Parent then in office;
      or


    


    (D) Ronald
      S.
      Saks shall cease to actively manage the Borrower’s day-to-day business
      activities and a successor reasonably acceptable to the Bank shall not have
      been
      appointed within 120 days thereafter.

    


    SECTION
      6.2. REMEDIES.
      Upon the occurrence of any Event of Default: (a) all indebtedness of
      Borrower under each of the Loan Documents, any term thereof to the contrary
      notwithstanding, shall at Bank's option and without notice become immediately
      due and payable without presentment, demand, protest or notice of dishonor,
      all
      of which are hereby expressly waived by Borrower; (b) the obligation, if
      any, of Bank to extend any further credit under any of the Loan Documents shall
      immediately cease and terminate; and (c) Bank shall have all rights, powers
      and remedies available under each of the Loan Documents, or accorded by law,
      including without limitation the right to resort to any or all security for
      any
      credit subject hereto and to exercise any or all of the rights of a beneficiary
      or secured party pursuant to applicable law. All rights, powers and remedies
      of
      Bank may be exercised at any time by Bank and from time to time after the
      occurrence of an Event of Default, are cumulative and not exclusive, and shall
      be in addition to any other rights, powers or remedies provided by law or
      equity.

    


    ARTICLE
      VII

    MISCELLANEOUS

    


    SECTION
      7.1.  NO
      WAIVER. No delay, failure or discontinuance of Bank in exercising any right,
      power or remedy under any of the Loan Documents shall affect or operate as
      a
      waiver of such right, power or remedy; nor shall any single or partial exercise
      of any such right, power or remedy preclude, waive or otherwise affect any
      other
      or further exercise thereof or the exercise of any other right, power or remedy.
      Any waiver, permit, consent or approval of any kind by Bank of any breach of
      or
      default under any of the Loan Documents must be in writing and shall be
      effective only to the extent set forth in such writing.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SECTION
      7.2. NOTICES.
      All notices, requests and demands which any party is required or may desire
      to
      give to any other party under any provision of this Agreement must be in writing
      delivered to each party at the following address:

    


    BORROWER:      
      c/o
      LMI
      Aerospace, Inc.

            3600
      Mueller Road

            St.
      Charles, MO 63301

            Attention:
      Chief Financial Officer

    


    BANK:                  
      WELLS
      FARGO BANK, NATIONAL ASSOCIATION

            101
      S. Hanley Road

            Suite
      1400

            Clayton,
      MO 63105

    


    or
      to
      such other address as any party may designate by written notice to all other
      parties. Each such notice, request and demand shall be deemed given or made
      as
      follows: (a) if sent by hand delivery, upon delivery; (b) if sent by
      mail, upon the earlier of the date of receipt or three (3) days after deposit
      in
      the U.S. mail, first class and postage prepaid; and (c) if sent by
      telecopy, upon receipt.

    


    SECTION
      7.3. COSTS,
      EXPENSES AND ATTORNEYS' FEES. Borrower shall pay to Bank immediately upon demand
      the full amount of all payments, advances, charges, costs and expenses,
      including reasonable attorneys' fees (to include outside counsel fees and all
      allocated costs of Bank's in-house counsel), expended or incurred by Bank in
      connection with (a) the negotiation and preparation of this Agreement and
      the other Loan Documents, Bank's continued administration hereof and thereof,
      and the preparation of any amendments and waivers hereto and thereto,
      (b) the enforcement of Bank's rights and/or the collection of any amounts
      which become due to Bank under any of the Loan Documents, whether or not suit
      is
      brought, and (c) the prosecution or defense of any action in any way
      related to any of the Loan Documents, including without limitation, any action
      for declaratory relief, whether incurred at the trial or appellate level, in
      an
      arbitration proceeding or otherwise, and including any of the foregoing incurred
      in connection with any bankruptcy proceeding (including without limitation,
      any
      adversary proceeding, contested matter or motion brought by Bank or any other
      person) relating to Borrower or any other person or entity.

    


    SECTION
      7.4. SUCCESSORS,
      ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of
      the
      heirs, executors, administrators, legal representatives, successors and assigns
      of the parties; provided however, that Borrower may not assign or transfer
      its
      interests or rights hereunder without Bank's prior written consent. Bank
      reserves the right to sell, assign, transfer, negotiate or grant participations
      in all or any part of, or any interest in, Bank's rights and benefits under
      each
      of the Loan Documents. In connection therewith, Bank may disclose all documents
      and information which Bank now has or may hereafter acquire relating to any
      credit subject hereto, Borrower or its business, any guarantor hereunder or
      the
      business of such guarantor, or any collateral required hereunder.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SECTION
      7.5. ENTIRE
      AGREEMENT; AMENDMENT. This Agreement and the other Loan Documents constitute
      the
      entire agreement between Borrower and Bank with respect to each credit subject
      hereto and supersede all prior negotiations, communications, discussions and
      correspondence concerning the subject matter hereof. This Agreement may be
      amended or modified only in writing signed by each party hereto.

    


    SECTION
      7.6. NO
      THIRD
      PARTY BENEFICIARIES. This Agreement is made and entered into for the sole
      protection and benefit of the parties hereto and their respective permitted
      successors and assigns, and no other person or entity shall be a third party
      beneficiary of, or have any direct or indirect cause of action- or claim in
      connection with, this Agreement or any other of the Loan Documents to which
      it
      is not a party.

    


    SECTION
      7.7. TIME.
      Time is of the essence of each and every provision of this Agreement and each
      other of the Loan Documents.

    


    SECTION
      7.8. SEVERABILITY
      OF PROVISIONS. If any provision of this Agreement shall be prohibited by or
      invalid under applicable law, such provision shall be ineffective only to the
      extent of such prohibition or invalidity without invalidating the remainder
      of
      such provision or any remaining provisions of this Agreement.

    


    SECTION
      7.9. COUNTERPARTS.
      This Agreement may be executed in any number of counterparts, each of which
      when
      executed and delivered shall be deemed to be an original, and all of which
      when
      taken together shall constitute one and the same Agreement.

    


    SECTION
      7.10. GOVERNING
      LAW. This Agreement shall be governed by and construed in accordance with the
      laws of the State of Missouri.

    


    SECTION
      7.11. BORROWING
      AGENCY; JOINT AND SEVERAL LIABILITY.

    


    (a) Each
      Borrower hereby irrevocably designates Parent, acting through its duly
      authorized officers, to be its attorney and agent and in such capacity to have
      the authority to borrow, sign and endorse notes, and execute and deliver all
      instruments, documents, writings and further assurances now or hereafter
      required hereunder, on behalf of such Borrower or Borrowers, and hereby
      authorizes Bank to pay over or credit all loan proceeds and payments hereunder
      in accordance with the request of Parent.

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b) Each
      Borrower has determined and represents to Bank that it is in its best interests
      and in pursuance of its legitimate business purposes to induce Bank to extend
      credit pursuant to this Agreement. Each Borrower acknowledges and represents
      that its business is related to the business of the other Borrowers, the
      availability of the commitments provided herein benefits all Borrowers, and
      advances and other credit extensions made hereunder will inure to the benefit
      of
      Borrowers, individually and as a group.

    


    (c) Each
      Borrower has determined and represents to Bank that it has, and after giving
      effect to the transactions contemplated by this Agreement will have, assets
      having a fair saleable value in excess of its debts, after giving effect to
      any
      rights of contribution or subrogation that may be available to such Borrower,
      and each Borrower has, and will have, access to adequate capital for the conduct
      of its business and the ability to pay its debts as such debts
      mature.

    


    (d) Each
      Borrower agrees that it is jointly and severally liable to Bank for, and each
      Borrower agrees to pay to Bank when due the full amount of, all indebtedness
      now
      existing or hereafter arising to Bank under or in connection with this Agreement
      and all modifications, extensions and renewals thereof, including without
      limitation all advances disbursed to any Borrower under the Line of Credit,
      all
      interest which accrues thereon and all fees, costs and expenses chargeable
      to
      Borrowers or any of them in connection therewith.

    


    (e) The
      liability of each Borrower shall be reinstated and revived and the rights of
      Bank shall continue if and to the extent that for any reason any amount at
      any
      time paid on account of any of the obligations of the Borrowers is rescinded
      or
      must otherwise be restored by Bank, whether as a result of any proceedings
      in
      bankruptcy or reorganization or otherwise, all as though such amount had not
      been paid.

    


    (f) Each
      Borrower authorizes Bank, without notice to or demand on such Borrower, and
      without affecting such Borrower's liability hereunder, from time to time to:
      (i)
      alter, compromise, extend, accelerate or otherwise change the time for payment
      of, or otherwise change the terms of, the liabilities and obligations of any
      other Borrower to Bank on account of any liability; (ii) take and hold security
      from any other Borrower for the payment of any liability, and exchange, enforce,
      waive, subordinate or release any such security; (iii) apply such security
      and
      direct the order or manner of sale thereof, including without limitation, a
      non-judicial sale permitted by the terms of the controlling security agreement
      or deed of trust, as Bank in its discretion may determine; (iv) release or
      substitute anyone or more of the endorsers or any guarantors of any liability,
      or any other party obligated thereon; and (e) apply payments received by Bank
      from any other Borrower to indebtedness of such other Borrower to Bank other
      than the Line of Credit.

    


    (g) Each
      Borrower represents and warrants to Bank that it has established adequate means
      of obtaining from all other Borrowers on a continuing basis financial and other
      information pertaining to such Borrowers' financial condition, and each Borrower
      agrees to keep adequately informed from such means of any facts, events or
      circumstances which might in any way affect its risks hereunder. Each Borrower
      further agrees that Bank shall have no obligation to disclose to it any
      information or material about any other Borrower that is acquired by Bank in
      any
      manner.

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (h) Each
      Borrower waives any right to require Bank to: (i) proceed against any other
      Borrower or any other person; (ii) marshal assets or proceed against or exhaust
      any security held from any of the Borrowers or any other person; (iii) take
      any
      action or pursue any other remedy in Bank's power; or (iv) make any presentment
      or demand for performance, or give any notices of any kind, including without
      limitation, any notice of nonperformance, protest, notice of protest, notice
      of
      dishonor, notice of intention to accelerate or notice of acceleration hereunder
      or in connection with any obligations or evidences of indebtedness held by
      Bank
      as security for or which constitute in whole or in part the liabilities subject
      hereto, or in connection with the creation of new or additional
      liabilities.

    


    (i) Each
      Borrower waives any defense to its obligations hereunder based upon or arising
      by reason of: (i) any disability or other defense of any of the Borrowers or
      any
      other person; (ii) the cessation or limitation from any cause whatsoever, other
      than payment in full, of the liabilities, of any of the Borrowers or any other
      person; (iii) any lack of authority of any officer, director, partner, agent
      or
      any other person acting or purporting to act on behalf of any of the Borrowers
      which is a trust, corporation, partnership or other type of entity, or any
      defect in the formation of any such Borrower; (iv) the application by any of
      the
      Borrowers of the proceeds of any advance for purposes other than the purposes
      represented by Borrowers to, or intended or understood by, Bank or Borrower;
      (v)
      any act or omission by Bank which directly or indirectly results in or aids
      the
      discharge of any of the Borrowers or any portion of the liabilities by operation
      of law or otherwise, or which in any way impairs or suspends any rights or
      remedies of Bank against any of the Borrowers; (vi) any impairment of the value
      of any interest in any security for the liabilities or any portion thereof,
      including without limitation, the failure to obtain or maintain perfection
      or
      recordation of any interest in any such security, the release of any such
      security without substitution, and/or the failure to preserve the value of,
      or
      to comply with applicable law in disposing of, any such security; or (vii)
      any
      modification of the liabilities, in any form whatsoever, including any
      modification made after revocation hereof to any liability incurred prior to
      such revocation, and including without limitation the renewal, extension,
      acceleration or other change in time for payment of, or other change in the
      terms of, the liabilities or any portion thereof, including increase or decrease
      of the rate of interest thereon. Until all liabilities shall have been paid
      in
      full, no Borrower shall have any right of subrogation, and each Borrower waives
      any right to enforce any remedy which Bank now has or may hereafter have against
      any of the Borrowers or any other person, and waives any benefit of, or any
      right to participate in, any security now or hereafter held by Bank. Each
      Borrower further waives all rights and defenses such Borrower may have arising
      out of (A) any election of remedies by Bank, even though that election of
      remedies, such as a non--judicial foreclosure with respect to any security
      for
      any portion of the liabilities, destroys its rights of subrogation or its rights
      to proceed against any other Borrower for reimbursement, or (B) any loss of
      rights Borrower may suffer by reason of any rights, powers or remedies of any
      of
      other Borrower in connection with any anti-deficiency laws or any other laws
      limiting, qualifying or discharging any Borrower's indebtedness, whether by
      operation of law or otherwise, including any rights Borrower may have to a
      fair
      market value hearing to determine the size of a deficiency following any
      trustee’s foreclosure sale or other disposition of any real property security
      for any portion of the liabilities.

    


    (j) Each
      Borrower further waives (i) each and every right to which it may be entitled
      by
      virtue of any suretyship law, and (ii) without limiting any of the waivers
      set
      forth herein, any other fact or event that, in the absence of this provision,
      would or might constitute or afford a legal or equitable discharge or release
      of
      or defense to such Borrower.

     

    (k) If
      any of
      the waivers herein is determined to be contrary to any applicable law or public
      policy, such waiver shall be effective only to the extent permitted by
      law.

    


    (l) It
      is the
      position of the Borrowers that each Borrower benefits from the loans that have
      been made available by Bank under this Agreement and from each extension of
      credit thereunder, regardless of whether such credit is disbursed to a joint
      account of Borrowers or to or for the account of any Borrower.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SECTION
      7.12. ARBITRATION.

    


    (a) Arbitration.
      The
      parties hereto agree, upon demand by any party, to submit to binding arbitration
      all claims, disputes and controversies between or among them (and their
      respective employees, officers, directors, attorneys, and other agents), whether
      in tort, contract or otherwise in any way arising out of or relating to (i)
      any
      credit subject hereto, or any of the Loan Documents, and their negotiation,
      execution, collateralization, administration, repayment, modification,
      extension, substitution, formation, inducement, enforcement, default or
      termination; or (ii) requests for additional credit.

    


    (b) Governing
      Rules.
      Any
      arbitration proceeding will (i) proceed in a location in Missouri selected
      by
      the American Arbitration Association (“AAA”); (ii) be governed by the Federal
      Arbitration Act (Title 9 of the United States Code), notwithstanding any
      conflicting choice of law provision in any of the documents between the parties;
      and (iii) be conducted by the AAA, or such other administrator as the parties
      shall mutually agree upon, in accordance with the AAA’s commercial dispute
      resolution procedures, unless the claim or counterclaim is at least
      $1,000,000.00 exclusive of claimed interest, arbitration fees and costs in
      which
      case the arbitration shall be conducted in accordance with the AAA’s optional
      procedures for large, complex commercial disputes (the commercial dispute
      resolution procedures or the optional procedures for large, complex commercial
      disputes to be referred to herein, as applicable, as the “Rules”). If there is
      any inconsistency between the terms hereof and the Rules, the terms and
      procedures set forth herein shall control. Any party who fails or refuses to
      submit to arbitration following a demand by any other party shall bear all
      costs
      and expenses incurred by such other party in compelling arbitration of any
      dispute. Nothing contained herein shall be deemed to be a waiver by any party
      that is a bank of the protections afforded to it under 12 U.S.C. §91 or any
      similar applicable state law.

    


    (c) No
      Waiver of Provisional Remedies, Self-Help and Foreclosure.
      The
      arbitration requirement does not limit the right of any party to (i) foreclose
      against real or personal property collateral; (ii) exercise self-help remedies
      relating to collateral or proceeds of collateral such as setoff or repossession;
      or (iii) obtain provisional or ancillary remedies such as replevin, injunctive
      relief, attachment or the appointment of a receiver, before during or after
      the
      pendency of any arbitration proceeding. This exclusion does not constitute
      a
      waiver of the right or obligation of any party to submit any dispute to
      arbitration or reference hereunder, including those arising from the exercise
      of
      the actions detailed in sections (i), (ii) and (iii) of this
      paragraph.

    


    (d) Arbitrator
      Qualifications and Powers.
      Any
      arbitration proceeding in which the amount in controversy is $5,000,000.00
      or
      less will be decided by a single arbitrator selected according to the Rules,
      and
      who shall not render an award of greater than $5,000,000.00. Any dispute in
      which the amount in controversy exceeds $5,000,000.00 shall be decided by
      majority vote of a panel of three arbitrators; provided however, that all three
      arbitrators must actively participate in all hearings and deliberations. The
      arbitrator will be a neutral attorney licensed in the State of Missouri or
      a
      neutral retired judge of the state or federal judiciary of Missouri , in either
      case with a minimum of ten years experience in the substantive law applicable
      to
      the subject matter of the dispute to be arbitrated. The arbitrator will
      determine whether or not an issue is arbitratable and will give effect to the
      statutes of limitation in determining any claim. In any arbitration proceeding
      the arbitrator will decide (by documents only or with a hearing at the
      arbitrator's discretion) any pre-hearing motions which are similar to motions
      to
      dismiss for failure to state a claim or motions for summary adjudication. The
      arbitrator shall resolve all disputes in accordance with the substantive law
      of
      Missouri and may grant any remedy or relief that a court of such state could
      order or grant within the scope hereof and such ancillary relief as is necessary
      to make effective any award. The arbitrator shall also have the power to award
      recovery of all costs and fees, to impose sanctions and to take such other
      action as the arbitrator deems necessary to the same extent a judge could
      pursuant to the Federal Rules of Civil Procedure, the Missouri Rules of Civil
      Procedure or other applicable law. Judgment upon the award rendered by the
      arbitrator may be entered in any court having jurisdiction. The institution
      and
      maintenance of an action for judicial relief or pursuit of a provisional or
      ancillary remedy shall not constitute a waiver of the right of any party,
      including the plaintiff, to submit the controversy or claim to arbitration
      if
      any other party contests such action for judicial relief.

    


    (e) Discovery.
      In any
      arbitration proceeding, discovery will be permitted in accordance with the
      Rules. All discovery shall be expressly limited to matters directly relevant
      to
      the dispute being arbitrated and must be completed no later than 20 days before
      the hearing date. Any requests for an extension of the discovery periods, or
      any
      discovery disputes, will be subject to final determination by the arbitrator
      upon a showing that the request for discovery is essential for the party's
      presentation and that no alternative means for obtaining information is
      available.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (f) Class
      Proceedings and Consolidations.
      No
      party hereto shall be entitled to join or consolidate disputes by or against
      others in any arbitration, except parties who have executed any Loan Document,
      or to include in any arbitration any dispute as a representative or member
      of a
      class, or to act in any arbitration in the interest of the general public or
      in
      a private attorney general capacity. 

    


    (g) Payment
      Of Arbitration Costs And Fees.
      The
      arbitrator shall award all costs and expenses of the arbitration
      proceeding.

    


    (h) Miscellaneous.
      To the
      maximum extent practicable, the AAA, the arbitrators and the parties shall
      take
      all action required to conclude any arbitration proceeding within 180 days
      of
      the filing of the dispute with the AAA. No arbitrator or other party to an
      arbitration proceeding may disclose the existence, content or results thereof,
      except for disclosures of information by a party required in the ordinary course
      of its business or by applicable law or regulation. If more than one agreement
      for arbitration by or between the parties potentially applies to a dispute,
      the
      arbitration provision most directly related to the Loan Documents or the subject
      matter of the dispute shall control. This arbitration provision shall survive
      termination, amendment or expiration of any of the Loan Documents or any
      relationship between
      the parties.

    


    ORAL
      AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM
      ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT
      ARE NOT ENFORCEABLE, REGARDLESS OF THE LEGAL THEORY UPON WHICH IT IS BASED
      THAT
      IS IN ANY WAY RELATED TO THE CREDIT AGREEMENT. TO PROTECT YOU (BORROWER(S))
      AND
      US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH
      COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE
      AND
      EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE
      IN
      WRITING TO MODIFY IT.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
      as
      of the day and year first written above.

     

    

      
        	
                 

                LEONARD’S
                  METAL, INC.

                 

                By:
                  /s/ Lawrence E. Dickinson 

                Title:
                  Vice President, Chief Financial Officer

                  and
                  Secretary

                 

              	
                WELLS
                  FARGO BANK, NATIONAL ASSOCIATION

                 

                By:
                  /s/ Beth A. Tiffin

                Title:
                  Vice President

              
	
                LMI
                  FINISHING, INC.

                 

                By:
                  /s/ Lawrence E. Dickinson 

                Title:
                  Vice President, Chief Financial Officer 

                       
and
                  Secretary

                 

              	 
	
                TEMPCO
                  ENGINEERING, INC.

                 

                By:
                  /s/ Lawrence E. Dickinson 

                Title:
                  Vice President, Chief Financial Officer 

                      
and
                  Secretary

                 

              	 
	
                VERSAFORM
                  CORP.

                 

                By:
                  /s/ Lawrence E. Dickinson 

                Title:
                  Vice President, Chief Financial Officer 

                      
and
                  Secretary

                 

                 

              	 
	
                PRECISE
                  MACHINE PARTNERS, LLP

                 

                By:
                  PRECISE MACHINE COMPANY

              	 
	 	 
	
                By:
                  /s/ Lawrence E. Dickinson

                      
Lawrence
                  E. Dickinson, Secretary

                 

                BEING
                  THE MANAGING PARTNER OF

                PRECISE
                  MACHINE PARTNERS, LLP

                 

                 

              	 
	
                LMI-TCA,
                  INC.

                 

                By:
                  /s/ Lawrence E. Dickinson 

                Title:
                  Vice President, Chief Financial Officer 

                      
and
                  Secretary