Document:

Unassociated Document

SECOND AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT,

TERM LOAN AND SECURITY AGREEMENT

THIS SECOND AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT (this “Agreement”) is entered into December 20, 2013 by and among AIR INDUSTRIES MACHINING, CORP. (as successor by merger with Gales Industries Acquisition Corp., Inc.), a corporation organized under the laws of the State of New York (“Air”), WELDING METALLURGY, INC. (as successor by merger with WMS Merger Corp.)(“WM”), a corporation organized under the laws of the State of New York, NASSAU TOOL WORKS, INC. (formerly known as NTW Operating Inc.) (“NTW”), a corporation organized under the laws of the State of New York, MILLER STUART INC. (“MS” and collectively with Air, WM and NTW, the “Borrower”), a corporation organized under the laws of the State of New York,  AIR INDUSTRIES GROUP (as successor by merger with Air Industries Group, Inc. f/k/a Gales Industries Incorporated, a Delaware corporation), a corporation organized under the laws of the State of Nevada (“Air Group” and collectively with the Borrower, the “Obligor”) and PNC BANK, NATIONAL ASSOCIATION (“PNC”), the various financial institutions named therein or which hereafter become a party thereto, (together with PNC, collectively, “Lenders”) and PNC as agent for Lenders (in such capacity, “Agent”).

 

RECITALS

 

Whereas, Obligor and PNC entered into a certain Amended and Restated Revolving Credit, Term Loan and Security Agreement dated June 27, 2013 (which has been, is being and may be further amended, replaced, restated, modified and/or extended, the “Loan Agreement”); and

 

Whereas, Obligor and PNC have agreed to modify the terms of the Loan Agreement as set forth in this Agreement.

 

Now, therefore, in consideration of PNC’s continued extension of credit and the agreements contained herein, the parties agree as follows:

 

AGREEMENT

 

	
1)  

	
ACKNOWLEDGMENT OF BALANCE. Obligor acknowledges that the most recent statement of account sent to Obligor with respect to the Obligations is correct.

 

	
2)  

	
MODIFICATIONS.  The Loan Agreement be and hereby is modified as follows:

 

 

	
(a)  

	
Miller Stuart Inc., a corporation organized under the laws of the State of New York, is hereby added as a borrowing entity under the Loan Agreement and the Other Documents and is added to the definition of “Borrower” in the Loan Agreement and the Other Documents.

 

 

	
(b)  

	
The following definitions in Section 1.2 of the Loan Agreement are hereby deleted, and are replaced to read as follows:

 

 

“EBITDA” shall mean for any period with regard to Air Group the sum of (i) Earnings Before Interest and Taxes for such period on a consolidated basis plus (ii) depreciation expenses for such period on a consolidated basis, plus (iii) amortization expenses for such period on a consolidated basis, provided, however, such calculation shall be increased to include the sale of certain stock by an aggregate amount not to exceed $1,000,000 solely for the calculation periods commencing on December 31, 2013 through and including September 30, 2014.

 

 

“Maximum Loan Amount” shall mean $22,847,603.50 less repayments of the Term Loan.

 

 

“Maximum Revolving Advance Amount” shall mean $20,000,000.

 

 

“Original Owners” shall mean (i) with regard to Air, Air Group, (ii) with regard to WM, Air, (iii) with regard to MS, Air Group and (iv) with regard to MS, WM.

 

 

“Revolving Interest Rate” shall mean an interest rate per annum equal to (a) the sum of the Alternate Base Rate plus three quarters of one percent (0.75%) with respect to Domestic Rate Loans and (b) the sum of the Eurodollar Rate plus two and one half of one percent (2.50%) with respect to Eurodollar Rate Loans.

 

 

“Term Loan Rate” shall mean an interest rate per annum equal to (a) the sum of the Alternate Base Rate plus one and three quarters of one percent (1.75%) with respect to Domestic Rate Loans and (b) the sum of the Eurodollar Rate plus three percent (3.00%) with respect to Eurodollar Rate Loans.

 

 

	
(c)  

	
The following definitions are hereby added to Section 1.2 of the Loan Agreement to read as follows:

 

 

“MS” shall mean Miller Stuart Inc., a corporation organized under the laws of the State of New York.

 

 

“Second Amendment Closing Date” shall mean December 20, 2013.

 

 

	
(d)  

	
Section 13.1 of the Loan Agreement is hereby deleted in its entirety and replaced with a new Section 13.1 to read as follows:

 

 

13.1  Term.  This Agreement, which shall inure to the benefit of and shall be binding upon the respective successors and permitted assigns of Obligor, Agent and each Lender, shall become effective on the date hereof and shall continue in full force and effect until the Termination Date (the “Term”) unless sooner terminated as herein provided.  Obligor may terminate this Agreement at any time upon thirty (30) days’ prior written notice upon payment in full of the Obligations.  In the event the Obligations are prepaid in full prior to the last day of the Term (the date of such prepayment hereinafter referred to as the “Early Termination Date”), Obligor shall pay to Agent for the benefit of Lenders an early termination fee in an amount equal to one percent (1%) of the Maximum Loan Amount if the Early Termination Date occurs on or after the Closing Date to and including December 20, 2014.

 

	
3)  

	
GUARANTOR’S RATIFICATION.  Air Industries Group, a corporation organized under the laws of the State of Nevada (as successor by merger with Air Industries Group, Inc. f/k/a Gales Industries Incorporated, a Delaware corporation) hereby reaffirms its continuing obligations under the terms of that certain Guaranty and Suretyship Agreement dated August 24, 2007 executed by Air Industries Group, Inc. f/k/a Gales Industries Incorporated, a Delaware corporation, (the “Guaranty”), and acknowledges that (i) it has read this Agreement, (ii) the Obligations under the Loan Agreement are secured by the Guaranty, and (iii) it makes such reaffirmation with full knowledge of the terms thereof.

 

	
4)  

	
CONSENT TO ACQUISITION.  Notwithstanding anything to the contrary in the Loan Agreement and/or any Other Document, the Lenders hereby consent to the acquisition by WM of all of the stock of Miller Stuart Inc., a New York corporation, from Arthur Hoffer, as Seller, (the “MS Acquisition”) provided, however, that the Borrower provides to the Agent for review copies of all acquisition documentation (including, but not limited to, the applicable Stock Purchase Agreement and all UCC and other searches against the MS and the Seller) and other materials evidencing the MS Acquisition, all in form and substance acceptable to the Agent (collectively, the “MS Acquisition Documents”).

 

	
5)  

	
ACKNOWLEDGMENTS.  Borrower acknowledges and represents that:

 

(A) the Loan Agreement and Other Documents, as amended hereby, are in full force and effect without any defense, claim, counterclaim, right or claim of set-off;

 

(B) to the best of its knowledge, no default by the Agent or Lenders in the performance of their duties under the Loan Agreement or the Other Documents has occurred;

 

(C) all representations and warranties of the Borrower contained herein, in the Loan Agreement and in the Other Documents are true and correct in all material respects as of this date, except for any representation or warranty that specifically refers to an earlier date;

 

(D) Borrower has taken all necessary action to authorize the execution and delivery of this Agreement; and

 

(E) this Agreement is a modification of an existing obligation and is not a novation.

 

	
6)  

	
PRECONDITIONS.  As a precondition to the effectiveness of any of the modifications, consents, or waivers contained herein, the Borrower agrees to:

 

(A) provide the Agent with this Agreement, the Amended and Restated Revolving Credit Note, the Amended and Restated Term Note and the Power of Attorney, each properly executed;

 

(B) provide the Agent with an opinion of counsel to Borrower and Guarantor in form and substance acceptable to the Agent;

 

(C) provide the Agent with a certificate of insurance with regard to MS in form and substance satisfactory to the Agent;

 

(D) provide the Agent with a Certificate of Incorporation of MS certified by the Secretary of State of incorporation;

 

(E) provide the Agent with Certificates of Good Standing of MS from its State of incorporation and all States in which it is qualified to do business;

 

(F) provide the Agent with a copy of all Warehouse Agreements, Leases and Subleases of MS with respect to each location as well as Warehouseman’s Agreements and/or Landlord’s Agreements with regard thereto in form and substance acceptable to the Agent;

 

(G) provide the Agent a list of intellectual property of MS including trademarks and trademark applications, patents and patent applications, copyrights and copyright applications, together with a search/abstract relating to the same;

 

(H) provide the Agent a certified copies of Certificates of Fictitious/Assumed Names of MS;

 

(I) provide the Agent a certificate from MS’s accountant, attorney or actuary delineating existing pension/profit sharing plans, as well as compliance with ERISA;

 

(J) provide the Agent a copy of union contracts regarding MS;

 

(K) provide the Agent a summary of all existing litigation of MS;

 

(L) review by the Agent of all books and records of MS as well as all trade references for MS;

 

(M) provide the Agent with a privity letter from MS’s accountant;

 

(N) provide the Agent with the MS Acquisition Documents;

 

(O) provide the Agent all material contracts (including, but not limited to, all employment agreements) and management/option/warrant/shareholder agreements of MS;

 

(P) provide the Agent with UCC, Federal and State Litigation, Federal and Local Judgment, Bankruptcy, Franchise Tax, Federal and State Tax Lien Searches conducted at the State level in the State where MS is incorporated, run against the name of MS and against the names of all entities which were acquired by or merged into MS;

 

(Q) provide the Agent with evidence that MS has established and is maintaining its operating accounts with the Agent;

 

(R) receipt and satisfactory review by Agent of most recent interim and annual financial statements and federal and state tax returns of MS;

 

(S) provide the Agent with secretary’s certificates and resolutions from the Borrower and Guarantor, in form and substance acceptable to the Agent;

 

(T) pay the Agent a modification fee in the amount of $25,000;

 

(U) pay all legal fees incurred by the Agent in entering into this Agreement to Wilentz, Goldman & Spitzer; and

 

(V) pay all other fees and costs incurred by the Lenders in entering into this Agreement.

 

	
7)  

	
MISCELLANEOUS.  This Agreement shall be construed in accordance with and governed by the laws of the State of New York, without reference to that state’s conflicts of law principles.  This Agreement, the Loan Agreement and the Other Documents constitute the sole agreement of the parties with respect to the subject matter thereof and supersede all oral negotiations and prior writings with respect to the subject matter thereof.  No amendment of this Agreement, and no waiver of any one or more of the provisions hereof shall be effective unless set forth in writing and signed by the parties hereto.  The illegality, unenforceability or inconsistency of any provision of this Agreement shall not in any way affect or impair the legality, enforceability or consistency of the remaining provisions of this Agreement, the Loan Agreement or the Other Documents.  This Agreement, the Loan Agreement and the Other Documents are intended to be consistent.  However, in the event of any inconsistencies among this Agreement, the Loan Agreement and/or any of the Other Documents, the terms of this Agreement, then the Loan Agreement, shall control.  This Agreement may be executed in any number of counterparts and by the different parties on separate counterparts.  Each such counterpart shall be deemed an original, but all such counterparts shall together constitute one and the same agreement.

 

	
8)  

	
DEFINITIONS.  The terms used herein and not otherwise defined or modified herein shall have the meanings ascribed to them in the Loan Agreement.  The terms used herein and not otherwise defined or modified herein or defined in the Loan Agreement shall have the meanings ascribed to them by the Uniform Commercial Code as enacted in State of New York.

 

IN WITNESS WHEREOF, the undersigned have signed and sealed this Agreement the day and year above written.

	
ATTEST:

	
AIR INDUSTRIES MACHINING, CORP.

	  	  
	  	  
	
By:/s/ Scott Glassman

	
By:  /s/ Dario Peragallo

	
Name:  SCOTT GLASSMAN

	
Name:  DARIO PERAGALLO

	
Title:    Secretary

	
Title:    President

	  	  
	  	  
	
ATTEST:

	
WELDING METALLURGY, INC.  (as successor

	  	
by merger with WMS Merger Corp.)

	  	  
	  	  
	
By: s/ Scott Glassman

	
By: /s/ Gary Settoducato

	
Name:   SCOTT GLASSMAN

	
Name: GARY SETTODUCATO

	
Title:    Secretary

	
Title:    President

	  	  
	  	  
	
ATTEST:

	
NASSAU TOOL WORKS, INC.

	  	
(formerly known as NTW Operating Inc.)

	  	  
	  	  
	
By: s/ Scott Glassman

	
By /s/ Peter Rettaliata

	
Name:  SCOTT GLASSMAN

	
Name:  PETER RETTALIATA

	
Title:    Secretary

	
Title:    President

	  	  
	  	  
	
ATTEST:

	
AIR INDUSTRIES GROUP

	  	  
	  	  
	
By: s/ Scott Glassman

	
By: /s/ Peter Rettaliata

	
Name:   SCOTT GLASSMAN

	
Name:  PETER RETTALIATA

	
Title:    Secretary

	
Title:    President

	  	  
	  	  
	
ATTEST:

	
MILLER STUART INC.

	  	  
	  	  
	
By: Kristie Ciaccio

	
By: /s/ Peter Rettaliata

	
Name:   KRISTIE CIACCIO

	
Name:  PETER RETTALIATA

	
Title:    Secretary

	
Title:    President

	  	  
	  	
PNC BANK, NATIONAL ASSOCIATION

	  	
Lender and as Agent

	  	  
	  	  
	  	
By: /s/ Jonathan Luptak

	  	
Name:  JONATHAN LUPTAK

	  	
Title:   Associate Vice PresidentUnassociated Document

AMENDED AND RESTATED REVOLVING CREDIT NOTE

 

	$20,000,000	December 20, 2013

New York, New York

This Amended and Restated Revolving Credit Note (this “Note”) is executed and delivered under and pursuant to the terms of that certain Amended and Restated Revolving Credit, Term Loan and Security Agreement dated July 27, 2013 (as amended, restated, replaced, extended, supplemented and/or modified from time to time, the “Loan Agreement”) by and among AIR INDUSTRIES MACHINING, CORP. (“Air”), a corporation organized under the laws of the State of New York, WELDING METALLURGY, INC. (as successor by merger with WMS Merger Corp.)(“WM”), a corporation organized under the laws of the State of New York, NASSAU TOOL WORKS, INC.  (formerly known as NTW Operating Inc.) (“Nassau”), a corporation organized under the laws of the State of New York, MILLER STUART INC. (“MS” and collectively with Air, WM and Nassau, the “Borrower”), a corporation organized under the laws of the State of New York,  AIR INDUSTRIES GROUP (as successor by merger with Air Industries Group, Inc. f/k/a Gales Industries Incorporated, a Delaware corporation), a corporation organized under the laws of the State of Nevada (“Air Group” and collectively with the Borrower, the “Obligor”) and PNC BANK, NATIONAL ASSOCIATION (“PNC”), the various financial institutions named therein or which hereafter become a party thereto, (together with PNC, collectively, “Lenders”) and PNC as agent for Lenders (in such capacity, “Agent”).  Capitalized terms not otherwise defined herein shall have the meanings provided in the Loan Agreement.

FOR VALUE RECEIVED, Borrower hereby promises to pay to the order of PNC, at the office of Agent located at PNC Bank Center, Two Tower Center, 8th Floor, East Brunswick, New Jersey 08816 or at such other place as Agent may from time to time designate to Borrower in writing:

(i)           the principal sum of TWENTY MILLION AND 00/100 DOLLARS ($20,000,000) or, if different, from such amount, the unpaid principal balance of PNC’s Commitment Percentage of the Revolving Advances as may be due and owing under the Loan Agreement, payable in accordance with the provisions of the Loan Agreement, subject to acceleration upon the occurrence of an Event of Default under the Loan Agreement or earlier termination of the Loan Agreement pursuant to the terms thereof;

(ii)           interest on the principal amount of this Note from time to time outstanding until such principal amount is paid in full at the applicable Revolving Interest Rate in accordance with the provisions of the Loan Agreement.  In no event, however, shall interest exceed the maximum interest rate permitted by law.  Upon and after the occurrence of an Event of Default, and during the continuation thereof, interest shall be payable at the Default Rate; and

(iii)           notwithstanding anything to the contrary herein, in the Loan Agreement and/or in any Other Document, all outstanding principal and interest hereunder is due and payable on the Termination Date.

This Note is one of the Revolving Credit Notes referred to in the Loan Agreement and is secured, inter alia, by the liens granted pursuant to the Loan Agreement and the Other Documents, is entitled to the benefits of the Loan Agreement and the Other Documents and is subject to all of the agreements, terms and conditions therein contained.

This Note is subject to mandatory prepayment and may be voluntarily prepaid, in whole or in part, on the terms and conditions set forth in the Loan Agreement.

If an Event of Default under Section 10.7 or 10.8  of the Loan Agreement shall occur, then this Note shall immediately become due and payable, without notice, together with reasonable attorneys’ fees if the collection hereof is placed in the hands of an attorney to obtain or enforce payment hereof.  If any other Event of Default shall occur under the Loan Agreement or any of the Loan Documents, which is not cured within any applicable grace period, then this Note may, as provided in the Loan Agreement, be declared to be immediately due and payable, without notice, together with reasonable attorneys’ fees, if the collection hereof is placed in the hands of an attorney to obtain or enforce payment hereof.

This Note is intended to amend, restate and replace a certain Revolving Credit Note issued by the Borrower (excluding MS) in favor of the Lenders dated June 27, 2013 in the original principal amount of $18,000,000.  This Note is not a novation.

This Note shall be construed and enforced in accordance with the laws of the State of New York.

Borrower expressly waives any presentment, demand, protest, notice of protest, or notice of any kind except as expressly provided in the Loan Agreement.

	
ATTEST:

	
AIR INDUSTRIES MACHINING, CORP.

	  	  
	  	  
	
By:/s/ Scott Glassman

	
By/s/ Dario Peragallo

	
Name:  SCOTT GLASSMAN

	
Name:  DARIO PERAGALLO

	
Title:    Secretary

	
Title:    President

	  	  
	  	  
	
ATTEST:

	
WELDING METALLURGY, INC.  (as successor

	  	
by merger with WMS Merger Corp.)

	  	  
	  	  
	
By:/s/ Scott Glassman

	
By: /s/ Gary Settoducato

	
Name:  SCOTT GLASSMAN

	
Name:  GARY SETTODUCATO

	
Title:    Secretary

	
Title:    President

	  	  
	  	  
	
ATTEST:

	
NASSAU TOOL WORKS, INC.

	  	
(formerly known as NTW Operating Inc.)

	  	  
	  	  
	
By:/s/ Scott Glassman

	
By:/s/ Peter Rettaliata

	
Name:  SCOTT GLASSMAN

	
Name:  PETER RETTALIATA

	
Title:    Secretary

	
Title:    President

	  	  
	  	  
	
ATTEST:

	
MILLER STUART INC.

	  	  
	  	  
	
By:/s/ Kristie Ciaccio

	
By:/s/ Peter Rettaliata

	
Name:  KRISTIE CIACCIO

	
Name:  PETER RETTALIATA

	
Title:    Secretary

	
Title:    President

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