Exhibit 10.1


 


THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT


 


THIS THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT
(this “Amendment”), effective as of March March 27, 2013 (the “Amendment Date”), is by and
among precision aerospace components, inc., a Delaware corporation
(“Parent”), Freundlich supply company, inc., a Delaware
corporation, tiger-tight corp., a Delaware corporation, AERO-MISSILE COMPONENTS,
INC. (formerly Apace Acquisition I, Inc.), a Delaware corporation and CREATIVE ASSEMBLY
SYSTEMS, INC., (formerly Apace Acquisition II, Inc.), a Delaware corporation (each a “Borrower” and together
with Parent, each an “Obligor” and collectively “Obligors”), the lenders from time to time
party to this Agreement (together with their respective successors and permitted assigns, each individually a “Lender”
and collectively the “Lenders”) and NEWSTAR BUSINESS CREDIT, LLC, a Delaware limited liability company, as administrative
agent (in such capacity, the “Administrative Agent”), as follows:


 


RECITALS:


 


A.         Obligors, Lenders and Administrative Agent are parties
to the certain Loan and Security Agreement dated as of May 25, 2012, as amended by the First Amendment to Loan and Security Agreement
dated as of July 27, 2012 and the Second Amendment to Loan and Security Agreement dated as of September 28, 2012 (as
may be further amended, modified, extended or renewed from time to time, “Loan Agreement”).


 


B.         Obligors have requested Administrative Agent and the Lenders
to amend the Loan Agreement in certain respects, and Administrative Agent and the Lenders are willing to do so, subject to the
terms provided by this Amendment


 


NOW THEREFORE, in consideration
of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:


ARTICLE
1

Definitions


Section 1.1            
Definitions. Terms defined by the Loan Agreement and not otherwise defined herein shall have the same meanings as
are prescribed by the Loan Agreement.


ARTICLE
2

Amendment


 


Section 2.1            
Amendment to Section 10.14(b). Effective as of the Amendment Date, Section 10.14(b) of the Loan Agreement
is hereby amended and restated to read as follows:


 


(b)Leverage
Ratio for Parent and its Subsidiaries of the end of any Fiscal Month, shall not be greater than the amount specified for such date
as follows:


	Date	Maximum Leverage Ratio
	February 28, 2013	3.72 to 1.0
	March 31, 2013 	3.61 to 1.0



 


 



    	 



    	 



    




 


 


 


	Date	Maximum
    Leverage Ratio
	 	 
	April 30, 2013	3.51 to 1.0
	May 31, 2013	3.47 to 1.0
	June 30, 2013	3.50 to 1.0
	July 31, 2013	3.47 to 1.0
	August 31, 2013	3.42 to 1.0
	September 30, 2013	3.44 to 1.0
	
        October 31, 2013

        November 30, 2013

        December 31, 2013

        January 31, 2014
	
        3.28 to 1.0

        3.18 to 1.0

        2.95 to 1.0

        2.95 to 1.0

	
        February 28, 2014

        March 31, 2014

        April 30, 2014

        May 31, 2014

        June 30, 2014

        July 31, 2014

        August 31, 2014

        September 30, 2014

        October 31, 2014

        November 30, 2014

        December 31, 2014

        January 31, 2015
	
        2.95 to 1.0

        2.95 to 1.0

        2.95 to 1.0

        2.95 to 1.0

        2.50 to 1.0

        2.50 to 1.0

        2.50 to 1.0

        2.50 to 1.0

        2.50 to 1.0

        2.50 to 1.0

        2.50 to 1.0

        2.05 to 1.0

	
        February 28, 2015

        March 31, 2015

        April 30, 2015
	
        2.05 to 1.0

        2.05 to 1.0

        2.05 to 1.0

	Last day of each Fiscal Month thereafter 	2.05 to 1.0
	 	 


Section 2.1            
Amendment to Section 10.14(c). Effective as of the Amendment Date, Section 10.14(c) of the Loan Agreement
is hereby amended and restated to read as follows:


 


(c)Tangible
Net Worth, determined for Parent and its Subsidiaries as of the end of any Fiscal Month, shall not be less than the amount specified
with respect to such Fiscal Month as follows:


	Date	Minimum Tangible Net Worth
	February 28, 2013	$3,500,000 
	March 31, 2013 	$3,600,000
	April 30, 2013	$3,650,000
	May 31, 2013	$3,725,000
	June 30, 2013	$3,800,000
	July 31, 2013	$3,900,000 
	August 31, 2013	$4,050,000
	September 30, 2013	$4,150,000
	
        October 31, 2013

        November 30, 2013

        December 31, 2013

        January 31, 2014
	
        $4,300,000

        $4,450,000

        $4,600,000

        $4,725,000

	Last day of each Fiscal Month thereafter	$4,725,000


 


  



    	 



    	 



    




ARTICLE
3

Limited Waiver


 


Section 3.1            
Stated Events of Default. Borrower failed to comply with the requirements of Section 10.14(b) (maximum Leverage
Ratio) and Section 10.14(c) (minimum Tangible Net Worth) of the Loan Agreement, in each case for the test dates December
31, 2012 and January 31, 2013. Each such instance of non-compliance constituted and Event of Default under Section 11.1(c)(i)
of the Loan Agreement (collectively, the “Stated Events of Default”).


 


Section 3.2Limited Waiver. Subject
to the terms of this Agreement, Agent and the Lenders hereby waive the Stated Events of Default, provided, that such waiver
is expressly limited as provided herein and shall not constitute a consent to non-compliance with the requirements of Section
10.14 of the Loan Agreement for any other period, or with any other requirement of the Loan Agreement.


 


Section 3.3Reservation. Except as
expressly provided by Section 3.2 of this Amendment, nothing in this Amendment constitutes a waiver of the requirements
of any provision of the Loan Agreement or of any Default or Event of Default other than the Stated Events of Default (defined in
Section 3.1 of this Amendment), and Administrative Agent and the Lenders reserve the right to require strict compliance
with all requirements of the Loan Agreement, including without limitation the requirements of Section 10.14 thereof in all
other respects.


 


ARTICLE
4 


Conditions


Section 4.1            
Conditions Precedent. The effectiveness of Article 2 of this Amendment is subject to the satisfaction of the
following conditions precedent:


(a)               
the representations and warranties contained herein and in all other Loan Documents, as amended hereby, shall be true and
correct in all material respects as of the date hereof as if made on the date hereof, except for such representations and warranties
limited by their terms to a specific date;


 


(b)              
after giving effect to this Amendment, no Default or Event of Default shall be in existence;


(c)               
Obligors shall have delivered to Administrative Agent an executed copy of this Amendment, in form and substance satisfactory
to Administrative Agent;


(d)              
all proceedings taken in connection with the transactions contemplated by this Amendment and all documentation and other
legal matters incident thereto shall be satisfactory to Administrative Agent; and


 


(e)               
Obligors shall have paid to Lender the fee required by Section 3.2.


 






    	 



    	 



    

 


Section 4.2            
Amendment Fee. Subject to the terms of the Loan Agreement, in consideration of this Amendment, Obligors jointly and
severally agree to pay to Administrative Agent, for the account of the Lenders, an amendment fee in the amount of $6,500, which
amount shall be payable on the Amendment Date.


ARTICLE
5

Ratifications, Representations and Warranties


Section 5.1            
Ratifications. The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms
and provisions set forth in the Loan Agreement and, except as expressly modified and superseded by this Amendment, the terms and
provisions of the Loan Agreement and the other Loan Documents are ratified and confirmed and shall continue in full force and effect.
Obligors, Administrative Agent and the Lenders agree that the Loan Agreement as amended hereby and the other Loan Documents shall
continue to be legal, valid, binding, and enforceable in accordance with their respective terms.


Section 5.2            
Representations and Warranties. Each Obligor hereby represents and warrants to Administrative Agent and Lenders that
(a) the execution, delivery, and performance of this Amendment and any and all other Loan Documents executed and/or delivered
in connection herewith have been authorized by all requisite action on the part of such Obligor and will not violate the governing
documents of such Obligor and (b) after giving effect to this Amendment, (i) the representations and warranties contained
in the Loan Agreement, as amended hereby, and the other Loan Documents are true and correct on and as of the date hereof as though
made on and as of the date hereof (except to the extent that such representations and warranties were expressly made only in reference
to a specific date), (ii)  no Default or Event of Default has occurred and is continuing, and (iii) Obligors are in full
compliance with all covenants and agreements contained in the Loan Agreement, as amended hereby, and the other Loan Documents.


ARTICLE
6

Other Agreements


Section 6.1            
Survival of Representations and Warranties. All representations and warranties made in this Amendment or any other
Loan Document delivered in connection with this Amendment shall survive the execution and delivery of this Amendment.


Section 6.2            
Reference to Loan Agreement. Each of the Loan Documents, including the Loan Agreement and any and all other agreements,
documents, or instruments now or hereafter executed and delivered pursuant to the terms hereof or pursuant to the terms of the
Loan Agreement as amended hereby, are hereby amended so that any reference in such Loan Documents to the Loan Agreement shall mean
a reference to the Loan Agreement as amended hereby.


Section 6.3            
Severability. Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable
shall not impair or invalidate the remainder of this Amendment and the effect thereof shall be confined to the provision so held
to be invalid or unenforceable.


Section 6.4            
Successors and Assigns. This Amendment is binding upon and shall inure to the benefit of Obligors, Lenders and Administrative
Agent and their respective successors and assigns, except Obligors may not assign or transfer any of its respective rights or obligations
hereunder without the prior written consent of Administrative Agent.


Section 6.5            
Counterparts. This Amendment may be executed in one or more counterparts, and on telecopy counterparts each of which
when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same agreement.


 



    	 



    	 



    

 


Section 6.6            
Ratification. Each Obligor reaffirms its obligations under each of such Loan Documents, as amended hereby, and agrees
that each of the Loan Documents, as amended hereby, remains in full force and effect and is hereby ratified and confirmed.


Section 6.7            
Headings. The headings, captions, and arrangements used in this Amendment are for convenience only and shall not
affect the interpretation of this Amendment.


Section 6.8           Waiver
and Release. In consideration of this agreement, each Obligor represents and warrants
that, as of the date hereof, there are no offsets, defenses or counterclaims against or in respect of its obligations under the
Loan Documents and each Obligor hereby releases and discharges Administrative Agent and each Lender and their respective agents,
employees, successors and assigns, of and from all claims, actions, causes of action, damages, costs, expenses and liabilities,
known or unknown, fixed, contingent or conditional, at law or in equity, in connection with the Loan Documents or any transactions
or acts in connection therewith, in each case existing on or before the date of this Agreement, which such Obligor may have against
any such Person, irrespective of whether any such claims, actions, causes of action, damages, costs, expenses or liabilities are
based on contract, tort or otherwise.


Section 6.9            
Entire Agreement. This Amendment embodies the final, entire agreement among
the parties hereto relating to the subject matter hereof and supersedes any and all prior agreements, written or oral, relating
to the subject matter of this Amendment. This Amendment may not be contradicted or varied by evidence of prior, contemporaneous,
or subsequent oral agreements or discussions of the parties hereto. There are no oral agreements among the parties.


 


SIGNATURES FOLLOW


REMAINDER OF PAGE BLANK


 


 


 


 


 


 


 


 


 


 


 


 


 


 




    	 



    	 



    

 


IN WITNESS WHEREOF, the parties hereto have
executed and delivered this Amendment effective as of the date first written above.


 


OBLIGORS:


 


precision aerospace
components, inc.


 


 


By:________________________________________


Name:Andrew S. Prince


Title:President, Chief Executive Officer and Treasurer


 


 


Freundlich supply
company, inc.


 


 


By:________________________________________


Name:Andrew S. Prince


Title:Chief Executive Officer and Treasurer


 


 


tiger-tight
corp


 


 


By:________________________________________


Name:Andrew S. Prince


Title:Chief Executive Officer and Treasurer


 


 


AERO-MISSILE COMPONENTS, INC.


(formerly Apace Acquisition I, Inc.)


 


 


By:________________________________________


Name:Andrew S. Prince


Title:Chief Executive Officer and Treasurer


 


 


CREATIVE ASSEMBLY SYSTEMS, INC.


(formerly Apace Acquisition II, Inc.)


 


 


By:________________________________________


Name:Andrew S. Prince


Title:Chief Executive Officer and Treasurer


 


 



    	 



    	 



    




 


ADMINISTRATIVE AGENT:


 


NEWSTAR BUSINESS CREDIT, LLC


as Administrative Agent


 


 


By:________________________________________


Name:Greg Gentry


Title:Senior Vice President


 


 


LENDERS:


 


NEWSTAR BUSINESS CREDIT, LLC, as servicer for and on
behalf of the Lenders and as servicer for and on behalf of the Swing Lender


 


 


By: ____________________________________________ 


Name:__________________________________________


Title: ___________________________________________