Document:

Thirteenth Amendment, dated February 15, 2006, to the Credit Agreement

 EXHIBIT 10.5 
  
 THIRTEENTH AMENDMENT TO CREDIT AGREEMENT 
  
 THIS THIRTEENTH AMENDMENT TO CREDIT AGREEMENT (the “Thirteenth Amendment”) is made effective as of
February 15, 2006, among PEMCO AVIATION GROUP, INC., a Delaware corporation, PEMCO AEROPLEX, INC., an Alabama corporation, PEMCO ENGINEERS, INC., a Delaware corporation, PEMCO WORLD AIR SERVICES, INC., a
Delaware corporation, SPACE VECTOR CORPORATION, a Delaware corporation (collectively, the “Borrowers”), WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association (successor by merger to SouthTrust Bank), as Agent
(the “Agent”), WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association (successor by merger to SouthTrust Bank), as a Lender, and COMPASS BANK, an Alabama banking corporation, as a Lender. Capitalized terms used
herein but not defined shall have the meanings as set forth in the Credit Agreement, as amended (as hereinafter defined). 
  
 WHEREAS, pursuant to that certain Credit Agreement dated as of December 16, 2002, among Borrowers, Agent, and the other Lender Parties a party
thereto (the “Credit Agreement”), Lenders made available, subject to the terms and conditions thereof, (i) the Revolving Loan of up to $20,000,000.00, (ii) the Swing Line Loan of up to $5,000,000.00, and (iii) the Term Loan
of up to $5,000,000.00; and 
  
 WHEREAS, pursuant to that
certain First Amendment to Credit Agreement dated as of May 22, 2003, among Borrowers, Agent, and the other Lender Parties a party thereto (the “First Amendment”), the Credit Agreement was amended in order to extend to Borrowers the
Treasury Stock Loan in the amount of up to $5,000,000.00; and 
  
 WHEREAS, pursuant to that certain Second Amendment to Credit Agreement dated as of November 24, 2003, among Borrowers, Agent, and the other Lender Parties a party thereto (the “Second Amendment”), the Credit Agreement
was amended in order to (i) temporarily increase the Swing Line Loan Commitment to up to $7,000,000.00, and (ii) temporarily increase the Revolving Loan Commitment to up to $22,000,000.00; and 
  
 WHEREAS, pursuant to that certain Third Amendment to Credit Agreement
dated as of December 16, 2003, among Borrowers, Agent, and the other Lender Parties a party thereto (the “Third Amendment”), the Credit Agreement was amended in order to (i) increase the Swing Line Loan Commitment to up to
$6,000,000.00, (ii) increase the Revolving Loan Commitment to up to $25,000,000.00, and (iii) extend the Revolving Loan Maturity Date from December 16, 2004 until December 16, 2005; and 
  
 WHEREAS, pursuant to that certain Fourth Amendment to Credit Agreement
dated as of May 7, 2004, among Borrowers, Agent, and the other Lender Parties a party thereto (the “Fourth Amendment”), the Credit Agreement was amended in order to (i) temporarily increase the Revolving Loan Commitment to up to
$27,000,000.00, and (ii) increase the Letter of Credit Commitment to up to $1,500,000.00; and 
  
 WHEREAS, pursuant to that certain Fifth Amendment to Credit Agreement dated as of May 22, 2004, among Borrowers, Agent, and the other Lender
Parties a party thereto (the “Fifth Amendment”), the Credit Agreement was amended in order to, among other things, extend the Treasury Stock Loan Advancement Termination Date from May 22, 2004 to May 22, 2005; 

 WHEREAS, pursuant to that certain Sixth Amendment to Credit Agreement dated as of August 1,
2004, among Borrowers, Agent, and the other Lender Parties a party thereto (the “Sixth Amendment”), the Credit Agreement was amended in order to extend until December 31, 2004 the temporary increase of the Revolving Loan Commitment to
up to $27,000,000.00; and 
  
 WHEREAS, pursuant to that
certain Seventh Amendment to Credit Agreement dated as of November 5, 2004, among Borrowers, Agent, and the other Lender Parties a party thereto (the “Seventh Amendment”), the Credit Agreement was amended in order to, among other
things, temporarily increase the Revolving Loan Commitment to up to $33,000,000.00; and 
  
 WHEREAS, pursuant to that certain Eighth Amendment to Credit Agreement dated as of December 22, 2004, among Borrowers, Agent, and the other Lender Parties a party thereto (the “Eighth
Amendment”), the Credit Agreement was amended in order to, among other things, (i) extend until April 30, 2005 the temporary increase of the Revolving Loan Commitment to up to $33,000,000.00, and (ii) extend the Revolving Loan
Maturity Date from December 16, 2005 until April 30, 2006; and 
  
 WHEREAS, pursuant to that certain Ninth Amendment to Credit Agreement dated as of March 31, 2005, among Borrowers, Agent, and the other Lender Parties a party thereto (the “Ninth Amendment”), the
Credit Agreement was amended in order to, among other things, amend certain of the financial covenants set forth therein; 
  
 WHEREAS, pursuant to that certain Tenth Amendment to Credit Agreement dated as of April 30, 2005, among Borrowers, Agent, and the other Lender
Parties a party thereto (the “Tenth Amendment”), the Credit Agreement was amended in order to (i) extend until June 30, 2005 the temporary increase of the Revolving Loan Commitment to up to $33,000,000.00, and (ii) amend the
repayment terms of the Treasury Stock Loan; and 
  
 WHEREAS, pursuant to that certain Eleventh Amendment to Credit Agreement dated as of June 28, 2005, among Borrowers, Agent, and the other Lender Parties a party thereto (the “Eleventh Amendment”), the Credit Agreement
was amended in order to (i) extend the Revolving Loan Maturity Date from April 30, 2006 until October 15, 2006, (ii) change the Revolving Loan Commitment to $28,000,000.00, and (iii) amend the Borrowing Base; and 

 
 WHEREAS, pursuant to that certain Twelfth Amendment to Credit
Agreement dated as of August 12, 2005, among Borrowers, Agent, and the other Lender Parties a party thereto (the “Twelfth Amendment”), the Credit Agreement was amended in order to, among other things, amend certain of the financial
covenants set forth therein (the Credit Agreement, as amended by the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment, the Sixth Amendment, the Seventh Amendment, the Eighth Amendment, the Ninth
Amendment, the Tenth Amendment, the Eleventh Amendment and the Twelfth Amendment, hereinafter referred to as the “Credit Agreement, as amended”); and 
  

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 WHEREAS, Lender Parties and Borrowers have agreed to amend the Credit Agreement, as
amended, in order to, among other things, amend certain of the financial covenants set forth therein, all as hereinafter provided . 
  
 NOW, THEREFORE, in consideration of One Dollar ($1.00) and other good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree that the Credit Agreement, as amended, is hereby amended as follows: 
  
 1. The Credit Agreement is hereby amended by adding the following capitalized terms as defined terms in Article I: 
  
 “EBT” means, for any applicable Person for
any applicable period, Net Income (Loss) plus Income Tax Expense for such period to the extent included in the determination of such Net Income (Loss). 
  
 “Non-Cash Stock Option Expense” means, for any applicable Person for any applicable period, options to purchase shares of
Pemco Aviation pursuant to the Pemco Aviation Group, Inc. Non-Qualified Stock Option Plan as amended and restated on May 14, 2003. 
  
 2. The Credit Agreement, as amended, is hereby amended by deleting the definitions of “Fixed Charges”, “Operating
Income” and “Permitted Indebtedness” in their entirety, and by substituting the following new definitions, respectively, in lieu thereof: 
  
 “Fixed Charges” means, for any applicable Person for any applicable period, the sum of
(without duplication) (a) Interest Expense and Lease Expense for such period; plus (b) regularly scheduled principal payments on Indebtedness of such Person during such period, including, without limitation, the principal component of all
payments made in respect of capitalized lease obligations, but excluding any scheduled balloon, bullet or similar principal payment which repays such Indebtedness in full; plus (c) all payments made in respect of any Unfunded Pension Liability
(whether or not included in the determination of Net Income (Loss) of such Person). 
  
 “Operating Income” means, for any applicable Person for any applicable period, EBITDA of such Person for such period,
less Income Tax Expense (to the extent included in the determination of Net Income (Loss) of such Person), plus Lease Expense (to the extent included in the determination of Net Income (Loss) of such Person), plus all payments accrued in respect of
any Unfunded Pension Liability (to the extent included in the determination of Net Income (Loss) of such Person), plus Non-Cash Stock Option Expense (to the extent included in the determination of Net Income (Loss) of such Person). 
  
 “Permitted Indebtedness” means: 

 
 (A) The Loans; 
  
 (B) The Existing Indebtedness; 
  

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 (C) Indebtedness otherwise expressly permitted under the terms of this Agreement or any
other Loan Document, if any; 
  
 (D) Indebtedness
incurred in Borrower’s Ordinary Course of Business and not incurred through the borrowing of money, provided that such Indebtedness is either Unsecured Indebtedness or Indebtedness secured by a Permitted Lien; 
  
 (E) Subordinated Debt; and 
  
 (F) Capitalized Leases, so long as the aggregate annual
payments under all Capitalized Leases do not exceed $1,000,000.00. 
  
 3. The Credit Agreement, as amended, is hereby amended by deleting Section 10.3(A) in its entirety, and by substituting the following new Section 10.3(A) in lieu thereof: 
  
 (A) Borrower will maintain or cause to be maintained:

  
 (1) Beginning with the Fiscal Year-End of
December 31, 2006, a Fixed Charge Coverage of not less than 1.0 to 1.0; 
  
 (2) Beginning with the Quarter-End of March 31, 2006, Adjusted Tangible Net Worth of not less than (i) Adjusted Tangible Net Worth as of December 31, 2005 plus (ii) $5,000,000.00, less
(iii) $1,000,000.00, plus (iv) 60% of the Net Income as of each Quarter-End beginning March 31, 2006; 
  
 (3) At all times, a ratio of Adjusted Liabilities to Adjusted Tangible Net Worth of not more than 2.5 to 1.0; 
  
 (4) EBT for the six-month period ending June 30, 2006
of not less than $1,000,000.00, and EBT for the nine-month period ending September 30, 2006 of not less than $3,750,000.00; and 
  
 (5) At all times, a Borrowing Base such that the balance of the Revolving Loan will not, at any time, exceed the Borrowing Base.

  
 4. The Credit Agreement, as amended, is hereby amended by
deleting Exhibit A to the Credit Agreement, as amended, and by substituting in lieu thereof the Exhibit A attached to this Thirteenth Amendment. 
  

5. As a condition to the effectiveness of this Thirteenth Amendment (a) Agent shall have received appropriate resolutions of Borrowers’
directors, in a form satisfactory to Agent, authorizing Borrowers to enter into this Thirteenth Amendment and any other documentation required by Agent in connection with this Thirteenth Amendment; (b) Agent shall have received a Bringdown and
Incumbency Certificate of each Borrower, in a form satisfactory to Agent; (c) Borrowers shall have executed and delivered to Agent all further documents and performed all other acts which Agent reasonably deems necessary or appropriate to
perfect or protect its 

  

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security for the Loans; and (d) Borrowers shall have delivered to Agent such other documentation, if any, as may be requested by Agent to satisfy Agent
that this Thirteenth Amendment, and all other documents and instruments executed by Borrowers in connection with this Thirteenth Amendment or in furtherance hereof have each been duly authorized, executed and delivered on behalf of Borrowers, and
constitute valid and binding obligations of Borrowers. 
  
 6. Each
Borrower represents and warrants to Lender Parties that all representations and warranties given by such Borrower in Article IX of the Credit Agreement, as amended, are true and correct as of the date of this Thirteenth Amendment, except to the
extent affected by this Thirteenth Amendment. Each Borrower represents and warrants to Lender Parties that as of the date of this Thirteenth Amendment, such Borrower is in full compliance with all of the covenants of such Borrower contained in
Article X of the Credit Agreement, as amended, except (i) Borrowers are not in compliance with respect to the financial covenant regarding Adjusted Tangible Net Worth and Fixed Charge Coverage (and Agent and Lenders hereby waive such
non-compliance for the Quarter-Ends of September 30, 2005 and December 31, 2005), and (ii) to the extent affected by this Thirteenth Amendment. 
  

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

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

					
	WITNESS:	 	BORROWERS:
		
	 	 	PEMCO AVIATION GROUP, INC.
			
	 /s/ Leah Barnett

	 	By:	 	 /s/ John R. Lee

	Print Name: Leah Barnett	 	Its:	 	Chief Financial Officer
		
	 	 	PEMCO AEROPLEX, INC.
			
	 /s/ Leah Barnett

	 	By:	 	 /s/ John R. Lee

	Print Name: Leah Barnett	 	Its:	 	Chief Financial Officer
		
	 	 	PEMCO ENGINEERS, INC.
			
	 /s/ Leah Barnett

	 	By:	 	 /s/ John R. Lee

	Print Name: Leah Barnett	 	Its:	 	Chief Financial Officer
		
	 	 	PEMCO WORLD AIR SERVICES, INC.
			
	 /s/ Leah Barnett

	 	By:	 	 /s/ John R. Lee

	Print Name: Leah Barnett	 	Its:	 	Chief Financial Officer
		
	 	 	SPACE VECTOR CORPORATION
			
	 /s/ Leah Barnett

	 	By:	 	 /s/ John R. Lee

	Print Name: Leah Barnett	 	Its:	 	Chief Financial Officer
		
	 	 	AGENT:
		
	 	 	 WACHOVIA BANK, NATIONAL ASSOCIATION,
 as
Agent

			
	 /s/ Kelly L. McCrory

	 	By:	 	 /s/ Tod Ferguson

	Print Name: Kelly L. McCrory	 	Its:	 	Vice President

  

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	 	 	LENDERS:
		
	 	 	WACHOVIA BANK, NATIONAL ASSOCIATION
			
	 /s/ Kelly L. McCrory

	 	By:	 	 /s/ Tod Ferguson

	Print Name: Kelly L. McCrory	 	Its:	 	Vice President
		
	 	 	COMPASS BANK
			
	 /s/ Jo An Ferguson

	 	By:	 	 /s/ Alex Morton

	Print Name: Jo An Ferguson	 	Its:	 	Senior Vice President

  

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 EXHIBIT A 
  
 APPROVED CONTRACTS 
  
 Current contracts with The Government of the United States of America 
  
 Current contracts with Northwest Airlines 
  
 Current contracts with Lockheed Martin Corporation 
  
 Current contracts with McDonnell Douglas Corporation, A Wholly Owned Subsidiary of the Boeing Company 
  
 Current contracts with The Boeing Company 
  
 Current contracts with Kellstrom Defense Aerospace, Inc. 
  
 Current contracts with MTC Technologies, Inc. 
  
 Current contracts with Malaysian Airline System Berhad 
  
 Current contracts with International Lease Finance Corporation 
  
 Current contracts with Officine Meccaniche Aeronautiche S.p.A. 
  
 Current contracts with Alaska Airlines. 
  
 Current contracts with Southwest Airlines Co. 
  
 Current contracts with L3 Communications Integrated Systems LP 
  
 Current contracts with Northrup Grumman 
  
 Current contracts with Taikoo (Xiamen) Aircraft Engineering Co. Ltd. and Taikoo (Shandong) Aircraft Engineering Co. Ltd. 
  
 Current contracts with Champion Air 
  
 Current contracts with Futura International Airways, S.A. and RPK Capital Management Group,
LLC 
  
 New contracts with entities listed above on this Schedule 1.03 will be
deemed automatically an Approved Contract if (i) the new contract is for similar services with reasonably similar terms and conditions, (ii) Borrower gives written notice to Agent that such contract is intended to be an Approved Contract,
and (iii) Agent approves such contract as an Approved Contract (and as a condition of such approval, Agent may require, among other things, a copy of the new contract and financial information regarding the party to the contract to evidence
that such party and such party’s creditworthiness are acceptable to Agent). 
  

 8Secured Promissory Note

 Exhibit 10.1 
  
 THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
OF ANY STATE, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE APPLICABLE SECURITIES LAWS OF ANY STATE. 
  
 SECURED PROMISSORY NOTE 
  

			
	 $180,000.00
	 	February 15, 2006
	 	 	Clearwater, Florida

  
 For value received,
Digital Lightwave, Inc., a Delaware corporation (the “Company”), promises to pay to Optel Capital, LLC, a Delaware limited liability company (the “Holder”), or its registered assigns, the principal sum of One
Hundred Eighty Thousand Dollars ($180,000.00). Interest shall accrue from the date of this Note on the unpaid principal amount at a rate equal to 10.0% per annum, compounded annually. The interest rate shall be computed on the basis of the
actual number of days elapsed and a year of 360 days. This Note is subject to the following terms and conditions. 
  
 1. Maturity. 
  
 (a) Principal and any accrued but unpaid interest under this Note shall be due and payable upon demand by the Holder at any time after March 31,2006.

  
 (b) Notwithstanding the foregoing, the entire unpaid principal
sum of this Note, together with accrued and unpaid interest thereon, shall become immediately due and payable upon demand by the Holder at any time on or following the occurrence of any of the following events: 
  
 (i) the sale of all or substantially all of the Company’s assets, or
any merger or consolidation of the Company with or into another corporation; other than a merger or consolidation in which the holders of more than 50% of the shares of capital stock of the Company outstanding immediately prior to such transaction
continue to hold (either by the voting securities remaining outstanding or by their being converted into voting securities of the surviving entity) more than 50% of the total voting power represented by the voting securities of the Company, or such
surviving entity, outstanding immediately after such transaction; 
  
 (ii) the inability of the Company to pay its debts as they become due; 

 (iii) the dissolution, termination of existence, or appointment of a receiver, trustee or custodian, for
all or any material part of the property of, assignment for the benefit of creditors by, or the commencement of any proceeding by the Company under any reorganization, bankruptcy, arrangement, dissolution or liquidation law or statute of any
jurisdiction, now or in the future in effect; 
  
 (iv) the
execution by the Company of a general assignment for the benefit of creditors; 
  
 (v) the commencement of any proceeding against the Company under any reorganization, bankruptcy, arrangement, dissolution or liquidation law or statute of any jurisdiction, now or in the future in effect, which is not
cured by the dismissal thereof within ninety (90) days after the date commenced; or 
  
 (vi) the appointment of a receiver or trustee to take possession of the property or assets of the Company. 
  
 2. Payment; Prepayment. All payments shall be made in lawful money of the United States of America at such place as the Holder hereof may
from time to time designate in writing to the Company. Payment shall be credited first to the accrued interest then due and payable and the remainder applied to principal. Prepayment of this Note may be made at any time without penalty. 

 
 3. Transfer; Successors and Assigns. The terms and
conditions of this Note shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. This Note may be transferred only upon surrender of the original Note for registration of transfer, duly endorsed, or
accompanied by a duly executed written instrument of transfer in form satisfactory to the Company. Thereupon, a new note for the same principal amount and accrued interest will be issued to, and registered in the name of, the transferee. Interest
and principal are payable only to the registered holder of this Note. 
  
 4. Governing Law. This Note and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of Florida,
without giving effect to principles of conflicts of law. 
  
 5.
Notices. Any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient upon receipt, when delivered personally or by courier, overnight delivery service or confirmed facsimile, or 48 hours after
being deposited in the U.S. mail as certified or registered mail with postage prepaid, if such notice is addressed to the party to be notified at such party’s address or facsimile number as set forth below or as subsequently modified by written
notice. 
  
 6. Amendments and Waivers. Any term of
this Note may be amended only with the written consent of the Company and the Holder. Any amendment or waiver effected in accordance with this Section 6 shall be binding upon the Company, each Holder and each transferee of this Note.

  

 -2- 

 7. Officers and Directors Not Liable. In no event shall any officer or director of the
Company be liable for any amounts due or payable pursuant to this Note. 
  
 8. Security Interest. This Note is secured by all of the assets of the Company in accordance with the Twenty Second Amended and Restated Security Agreement by and between the Company and the Holder dated as of
September 16, 2004 (the “Security Agreement”). In case of an Event of Default (as defined in the Security Agreement), the Holder shall have the rights set forth in the Security Agreement. 
  
 9. Counterparts. This Note may be executed in any number of
counterparts, each of which will be deemed to be an original and all of which together will constitute a single agreement. 
  
 10. Action to Collect on Note. If action is instituted to collect on this Note, the Company promises to pay all costs and expenses,
including reasonable attorney’s fees, incurred in connection with such action. 
  
 11. Loss of Note. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Note or any Note exchanged for it, and indemnity satisfactory to the
Company (in case of loss, theft or destruction) or surrender and cancellation of such Note (in the case of mutilation), the Company will make and deliver in lieu of such Note a new Note of like tenor. 
  
 [Remainder of this page intentionally left blank.] 
  

 -3- 

 This Note was entered into as of the date set forth above. 
  

			
	COMPANY:
	
	DIGITAL LIGHTWAVE, INC.
		
	By:	 	 /s/ Robert F. Hussey

	 	 	Robert F. Hussey
	 	 	Interim President and Chief Executive Officer

  

			
	AGREED TO AND ACCEPTED:
	
	OPTEL CAPITAL, LLC
		
	By:	 	 /s/ Paul Ragaini

	Name:	 	Paul Ragaini
	 	 	      (print)
	Title:	 	Chief Financial Officer

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