AMENDMENT NO. 2 AND CONSENT to CREDIT AND SECURITY AGREEMENT and OMNIBUS AMENDMENT TO CERTAIN OTHER LOAN DOCUMENTS
EXHIBIT
10.1
AMENDMENT
NO. 2 AND CONSENT
to
and
OMNIBUS
AMENDMENT TO CERTAIN OTHER LOAN DOCUMENTS
This
AMENDMENT
NO. 2 AND CONSENT TO CREDIT AND SECURITY AGREEMENT AND OMNIBUS AMENDMENT
TO
CERTAIN OTHER LOAN DOCUMENTS,
made as
of February 1, 2007 (this “Amendment”), among HAWK
CORPORATION,
a
Delaware corporation, ALLEGHENY
CLEARFIELD, INC.,
a
Pennsylvania corporation,
FRICTION PRODUCTS CO.,
an Ohio
corporation,
HAWK MIM, INC.,
an Ohio
corporation,
HAWK MOTORS, INC.,
a
Delaware corporation,
HAWK PRECISION COMPONENTS GROUP, INC.,
an Ohio
corporation,
▇▇▇▇▇▇, INC.,
a
Delaware corporation,
▇▇▇▇▇ METAL STAMPINGS, INC.,
an Ohio
corporation,
NET SHAPE TECHNOLOGIES LLC,
a
Delaware limited liability company, QUARTER
MASTER INDUSTRIES, INC.,
a
Delaware corporation,
SINTERLOY CORPORATION,
a
Delaware corporation,
▇.▇. ▇▇▇▇▇▇▇ CORP.,
a
Delaware corporation,
▇.▇. ▇▇▇▇▇▇▇ HOLDINGS, INC.,
a
Delaware corporation,
TEX RACING ENTERPRISES, INC.,
a
Delaware corporation,
▇▇▇▇▇▇▇ PRODUCTS GROUP, INC.,
an Ohio
corporation, and
▇▇▇▇▇▇▇
PRODUCTS, LLC,
an Ohio
limited liability company, each as a Borrower and collectively as the Borrowers,
the LENDERS
listed
on the signature pages of this Agreement, KEYBANK
NATIONAL ASSOCIATION,
a
national banking association, as Administrative Agent, and KEYBANK
NATIONAL ASSOCIATION, a
national banking association, as LC Issuer,
WITNESSETH:
WHEREAS,
the
Borrowers have been extended certain financial accommodations pursuant to
that
certain Credit and Security Agreement, dated as of November 1, 2004, as
amended by that certain Amendment No. 1 to Credit and Security Agreement,
dated
as of August 31, 2006 (as so amended, the “Credit Agreement”), among the
Borrowers, the Lenders, the Administrative Agent, and the LC Issuer;
WHEREAS,
the
Borrower Representative has informed the Administrative Agent that Hawk
Corporation desires to sell Hawk Precision Components Group, Inc. and certain
of
its direct or indirect Subsidiaries, namely, Allegheny Clearfield, Inc.,
Hawk
MIM, Inc., ▇▇▇▇▇▇, Inc., Sinterloy Corporation, and Net Shape Technologies
LLC,
in one or more stock transactions (the “Sale”);
WHEREAS,
the
Borrower Representative has also informed the Administrative Agent that prior
to
the sale of Hawk Precision Components Group, Inc., certain subsidiaries of
▇▇▇▇▇▇, Inc. shall be transferred to ▇▇▇▇▇▇▇ Products Group, Inc., namely
Hawk
Mauritius, Ltd. Hawk Motors, Inc., and Hawk Motors de Mexico, S. de ▇.▇.
de C.V.
(the “Transfer”);
WHEREAS,
the
Borrowers have requested consent to the Sale and the Transfer and all releases
and amendments required pursuant to such transactions; and
WHEREAS,
the
Lenders which are signatories hereto constitute all of the Lenders for the
purposes of amending the Credit Agreement pursuant to Section 19.1
thereof;
NOW
THEREFORE,
in
consideration of the mutual promises and agreements contained herein and
other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Borrowers, the Administrative Agent, the Lenders and the
LC
Issuer do hereby agree as follows:
Section
1 .DEFINED
TERMS.
Each
defined term used herein and not otherwise defined herein shall have the
meaning
ascribed to such term in the Credit Agreement.
Section
2 CONSENT.
2.1 Consents.
In
accordance with Section 19.1 of the Credit Agreement, the Required Lenders
hereby consent to:
(a) the
transfer by ▇▇▇▇▇▇, Inc. of the shares of Hawk
Mauritius, Ltd., Hawk Motors, Inc., and Hawk Motors de Mexico, S. de ▇.▇.
de
C.V
to
▇▇▇▇▇▇▇ Products Group, Inc.;
(b) the
transactions contemplated in that certain Stock Purchase Agreement, dated
as of
December 21, 2006 (the “Purchase Agreement”), among the Hawk Corporation,
as Selling Shareholder, and PCG Holdings Group Inc., as Buyer (the “Buyer”),
including the sale or other disposition of Hawk Precision Components Group,
Inc., and its Subsidiaries: Allegheny
Clearfield, Inc., Hawk MIM, Inc., ▇▇▇▇▇▇, Inc., Sinterloy Corporation, and
Net
Shape Technologies LLC (Hawk Precision Components Group, Inc. together with
such
Subsidiaries collectively referred to as “Sold Subsidiaries”);
(c) the
release of the Liens of the Administrative Agent for the benefit of the Lenders
on (i) the stock or
other
equity interests of the Sold Subsidiaries and (ii) all of the personal
property and assets of the Sold Subsidiaries which are being acquired by
the
Buyer pursuant to the terms of the Purchase Agreement;
(d) the
application of any or all of the proceeds remaining one hundred eighty (180)
days after the date the transactions contemplated in the Purchase Agreement
are
consummated to the redemption of Senior Notes in accordance with the terms
and
conditions set forth in the Senior Note Indenture; and;
(e) the
continuation of certain guarantees provided by Hawk Corporation to secure
indebtedness of Allegheny Clearfield, Inc. to the Pennsylvania Industrial
Development Authority ("PIDA") during the transition period in which such
obligations shall be transferred to Buyer; provided, however, that Hawk
Corporation shall use its best efforts to obtain a full release from such
guarantee obligations no later than April 30, 2007.
Section
3 AMENDMENTS
TO THE CREDIT AGREEMENT:
3.1 Omnibus
Amendment to Credit Agreement and Certain Other Loan Documents.
All
references to any of the Sold Subsidiaries in the recitals or signature pages
of
the Credit Agreement shall be deleted and the Sold Subsidiaries shall no
longer
be party to such documents.
3.2 Amendment
to Annex II to the Credit Agreement.
Annex II
to the Credit Agreement is hereby amended by deleting the existing definition
of
“Borrowers” and replacing it with the following new definition:
“Borrowers”
means
collectively, Hawk Corporation, a Delaware corporation, Friction Products
Co.,
an Ohio corporation, Hawk Motors, Inc., a Delaware corporation, ▇▇▇▇▇ Metal
Stampings, Inc., an Ohio corporation, Quarter Master Industries, Inc., a
Delaware corporation, ▇.▇. ▇▇▇▇▇▇▇ Corp., a Delaware corporation, ▇.▇. ▇▇▇▇▇▇▇
Holdings, Inc., a Delaware corporation, Tex Racing Enterprises, Inc., a Delaware
corporation, ▇▇▇▇▇▇▇ Products Group, Inc., an Ohio corporation, and ▇▇▇▇▇▇▇
Products, LLC, an Ohio limited liability company.
3.3 Amendment
to Annex IV to Credit Agreement. Annex
IV
to the Credit Agreement is hereby amended by deleting the existing Annex
IV and
replacing it with the Annex IV attached hereto as Exhibit I. In addition,
within
thirty (30) days of the date of this Amendment, the Company shall deliver
to the
Administrative Agent, any additional updates to such Disclosure Schedules,
in
form and substance satisfactory to the Administrative Agent, provided,
however,
that
the Borrowers understand that such updates shall not be permitted to include
additions to Schedules 11.3(a), 11.3(c), 11.3(d), 11.3(i), or
11.3(l).
Section
4 OMNIBUS
AMENDMENTS TO CERTAIN OTHER LOAN DOCUMENTS:
4.1 Omnibus
Amendment to Certain Other Loan Documents. All
references to any of the Sold Subsidiaries in the recitals or signature pages of
the Notes, the Collateral Assignment of Security Interest Patents and Patent
Applications, the Collateral Assignment of Security Interest in Trademarks
and
Licenses, the Collateral Assignment of Security Interest in Copyrights, the
Advertising Permission Letter, the Blocked Account Control Letter, and the
Acknowledgement of Blocked Accounts is hereby deleted and the Sold Subsidiaries
shall no longer be party to such documents.
4.2 Amendment
to Certain Pledge and Security Agreements. The
Pledge and Security Agreement between Hawk Corporation and the Administrative
Agent and the Pledge Agreement between ▇▇▇▇▇▇▇ Products Group, Inc. and the
Administrative Agent are each hereby amended to replace the respective Schedule
I with the respective Schedule I attached hereto as Exhibit II.
4.3 Termination
of Certain Pledge and Security Agreements. The
Pledge and Security Agreement between Hawk Precision Components, Inc. and
the
Administrative Agent and the Pledge Agreement between ▇▇▇▇▇▇, Inc. and the
Administrative Agent are each hereby terminated and released and the Pledged
Shares (except with respect to the shares of Hawk
Mauritius, Ltd. Hawk Motors, Inc., and Hawk Motors de Mexico, S. de ▇.▇.
de
C.V
to
▇▇▇▇▇▇▇ Products Group, Inc. which shall remain in the possession of the
Administrative Agent) shall be promptly returned to the Sold
Subsidiaries.
4.4 Termination
of Certain Landlord Waivers.
The
Landlord Waiver between Net Shape Technologies, Ltd. and Solon Road Properties,
LLC and the Landlord Waiver between Sinterloy Corporation and ▇▇▇▇▇▇ Sierkes,
Trustee are each hereby terminated and released.
4.5 Amendment
to Certain Limited License Agreements.
The
Limited License Agreement between Hawk Corporation and the Administrative
Agent
is hereby amended to replace the respective Exhibit A with the respective
Exhibit A attached hereto as Exhibit III.
4.6 Termination
of Certain Limited License Agreements.
The
Limited License Agreement between Allegheny Clearfield, Inc. and the
Administrative Agent, the Limited License Agreement between Hawk MIM, Inc.
and
the Administrative Agent, the Limited License Agreement between Hawk Precision
Components, Inc. and the Administrative Agent, the Limited License Agreement
between ▇▇▇▇▇▇, Inc. and the Administrative Agent, the Limited License Agreement
between New Shape Technologies, LLC and the Administrative Agent, and the
Limited License Agreement between Sinterloy Corporation and the Administrative
Agent are each hereby terminated and released.
4.7 Amendment
to Certain Collateral Assignments of Security Interest in Patents and Patent
Applications.
The
Collateral Assignment of Security Interest in Patent and Patent Applications
by
and among the Borrowers and the Administrative Agent is hereby amended to
replace the respective Exhibit A with the respective Exhibit A attached hereto
as Exhibit IV.
4.8 Amendment
to Certain Collateral Assignments of Security Interest in Trademarks and
Licenses.
The
Collateral Assignment of Security Interest in Trademarks and Licenses by
and
among the Borrowers and the Administrative Agent is hereby amended to replace
the respective Exhibit A with the respective Exhibit A attached hereto as
Exhibit V.
4.9 Amendment
to Blocked Account Control Agreement.
The
Blocked Account Control Agreement by and among the Borrowers, the Administrative
Agent, and JPMorgan Chase Bank is hereby amended to replace the respective
Schedule 1 with Schedule 1 attached hereto as Exhibit VI.
4.10 Amendment
to Acknowledgement of Blocked Accounts.
The
Acknowledgement of Blocked Accounts by and among the Borrowers, the
Administrative Agent, and KeyBank National Association, as the Bank is hereby
amended to replace the respective Schedule I with Schedule I attached hereto
as
Exhibit VII.
Section
5 REPRESENTATIONS
AND WARRANTIES.
The
Borrower hereby represents and warrants to the Lenders, the Administrative
Agent
and the LC Issuer as follows:
5.1 The
Amendment. This
Amendment has been duly and validly executed by an authorized executive officer
of the Borrowers and constitutes the legal, valid and binding obligation
of the
Borrowers enforceable against the Borrowers in accordance with its terms.
The
Credit Agreement, as amended by this Amendment, remains in full force and
effect
and remains the valid and binding obligation of the Borrowers enforceable
against the Borrowers in accordance with its terms. Each Borrower hereby
ratifies and confirms the Credit Agreement as amended by this
Amendment.
5.2 Nonwaiver.
Except
as
expressly set forth herein, the execution, the execution, delivery, performance
and effectiveness of this Amendment shall not operate nor be deemed to be
nor
construed as a waiver (i) of any right, power or remedy of the Lenders or
the
Administrative Agent under the Credit Agreement or any other Loan Document,
or
(ii) of any term, provision, representation, warranty or covenant contained
in
the Credit Agreement or any other documentation executed in connection
therewith. Further, none of the provisions of this Amendment shall constitute,
be deemed to be or construed as, a waiver of any Potential Default or Event
of
Default under the Credit Agreement, as amended by this Amendment.
5.3 Reference
to and Effect on the Credit Agreement. Upon
the
Effectiveness of this Amendment, each reference in the Credit Agreement amended
hereby to “this Agreement,” “hereunder,” “hereof,” “herein,” or words of like
import shall mean and be a reference to the Credit Agreement, as amended
by the
prior amendments thereto and this Amendment and each reference to the Credit
Agreement in any other document, instrument or agreement executed and/or
delivered in connection with the Credit Agreement shall mean and be a reference
to the Credit Agreement, as amended by the prior amendments thereto and this
Amendment.
Section
6 CONDITIONS
PRECEDENT TO EFFECTIVENESS
The
effectiveness of this Amendment is subject to the condition precedent
that:
6.1 Amendment
No. 2 and Consent to Credit and Security Agreement.
The
Administrative Agent shall have received an original counterpart of this
Amendment No. 2 and Consent to Credit and Security Agreement, executed and
delivered by a duly authorized officer of each Borrower, the Lenders and
the LC
Issuer.
6.2 Release
Agreement.
The
Administrative Agent shall have received an original counterpart of that
certain
Release Agreement, dated as of even date herewith, executed and delivered
by a
duly authorized officer of each Borrower which shall exist after the
consummation of Sale and the Sold Subsidiaries.
Section
7 CONDITIONS
SUBSEQUENT TO EFFECTIVENESS
The
effectiveness of this Amendment is subject to the condition subsequent
that:
7.1 Consummation
of the Sale.
The
Administrative Agent shall have received written evidence in the form of
a
Borrower Certificate stating that the Sale has been consummated pursuant
to the
terms of the Purchase Agreement and certifying a true and complete copy of
the
Purchase Agreement. In the event that the Sale is not consummated on or before
February 1, 2007, this Amendment shall be of no further force and
effect.
Section
8 MISCELLANEOUS.
8.1 Governing
Law.
This
Amendment shall be governed by and construed in accordance with the laws
of the
State of Ohio with out giving effect to the conflict of laws rules
thereof.
8.2 Severability.
In the
event any provision of this Amendment should be invalid, the validity of
the
other provisions hereof and of the Credit Agreement shall not be affected
thereby.
8.3 Counterparts.
This
Amendment may be executed in one or more counterparts, each of which, when
taken
together, shall constitute but one and the same agreement.
IN
WITNESS WHEREOF,
the
Borrowers, the Administrative Agent, the Lenders and the LC Issuer have caused
this Amendment No. 2 and Consent to Credit and Security Agreement to be duly
executed by their respective officers or agents thereunto duly authorized
as of
the date first written above.
BORROWERS
HAWK
CORPORATION
/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its:
Vice
President - Finance
ALLEGHENY
CLEARFIELD, INC.
/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its:
Vice
President - Finance
FRICTION
PRODUCTS CO.
/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its:
Vice
President - Finance
HAWK
MIM, INC.
/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its:
Vice
President - Finance
HAWK
MOTORS, INC.
/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its:
Vice
President - Finance
HAWK
PRECISION COMPONENTS GROUP, INC.
/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its:
Vice
President - Finance
▇▇▇▇▇▇,
INC.
/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its:
Vice
President - Finance
▇▇▇▇▇
METAL STAMPINGS, INC.
/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its:
Vice
President - Finance
NET
SHAPE TECHNOLOGIES LLC
By:
Hawk
MIM, Inc., its sole member
/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its:
Vice
President - Finance
QUARTER
MASTER INDUSTRIES, INC.
/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its:
Vice
President - Finance
SINTERLOY
CORPORATION
/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its:
Vice
President - Finance
▇.▇.
▇▇▇▇▇▇▇ CORP.
/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its:
Vice
President - Finance
▇.▇.
▇▇▇▇▇▇▇ HOLDINGS, INC.
/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its:
Vice
President - Finance
TEX
RACING ENTERPRISES, INC.
/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its:
Vice
President - Finance
▇▇▇▇▇▇▇
PRODUCTS GROUP, INC.
/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its:
Vice
President - Finance
▇▇▇▇▇▇▇
PRODUCTS, LLC
By:
▇▇▇▇▇▇▇ Products Group, Inc.,
its
sole member
/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its:
Vice
President - Finance
ADMINISTRATIVE
AGENT
KEYBANK
NATIONAL ASSOCIATION
as
Administrative Agent
/s/
▇▇▇▇ ▇. ▇▇▇▇
By:
▇▇▇▇
▇. ▇▇▇▇
Its:
Vice
President
LENDERS
KEYBANK
NATIONAL ASSOCIATION
as
a
Lender
/s/
▇▇▇▇ ▇. ▇▇▇▇
By:
▇▇▇▇
▇. ▇▇▇▇
Its:
Vice
President
LC
ISSUER
KEYBANK
NATIONAL ASSOCIATION
as
LC
Issuer
/s/
▇▇▇▇ ▇. ▇▇▇▇
By:
▇▇▇▇
▇. ▇▇▇▇
Its:
Vice
President