Second Amendment to Credit Agreement, dated December 17, 2018, by and among SIFCO Industries, Inc., T & W Forge, LLC, Quality Aluminum Forge, LLC, and JPMorgan Chase Bank, N.A., a national banking association

1.1    Section 3.16 of the Credit Agreement is restated as follows:

Section 3.16. Security Interest in Collateral. The provisions of the Collateral Documents when executed and delivered create legal and valid Liens on all of the Collateral in favor of the Lender, for the benefit of the Secured Parties, and such Liens constitute perfected and continuing Liens on the Collateral, securing the Secured Obligations, enforceable against the applicable Loan Party (except as enforceability may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally), and having priority over all other Liens on the Collateral except in the case of (a) Permitted Encumbrances and other Liens permitted by Section 6.02, to the extent any such Liens would have priority over the Liens in favor of the Lender pursuant to any applicable law or agreement, (b) Liens perfected only by possession (including possession of any certificate of title) or control to the extent the Lender has not obtained or does not maintain possession or control of such Collateral, and (c) Liens on Ex-Im Priority Collateral pursuant to the Intracreditor Agreement, which are junior only to the Liens of the Lender in the Ex-Im Priority Collateral.

1.2    The references to “Eligible Inventory” in Section 5.02(e), Section 5.16(b), and clause (g)(iii) of the Reporting Schedule of the Credit Agreement are replaced with references to “Eligible Inventory and Eligible Export-Related Inventory”.

1.3    The references to “Eligible Accounts” in clause (g)(iii) of the Reporting Schedule of the Credit Agreement are replaced with references to “Eligible Accounts and Eligible Export-Related Accounts”.

1.4    Section 6.02(a) is restated as follows:

(a)    Liens securing any of the Secured Obligations;

1.5    The following paragraph is added to the end of Article VII of the Credit Agreement:

Notwithstanding anything to contrary in this Agreement, any other Loan Document, the Export Credit Agreement or any document executed in connection therewith, any event that would constitute an “Event of Default” (as defined in the Export Credit Agreement) under the Export Credit Agreement solely as a result of one or more of the Borrowers failing to comply with a term in an Ex-Im Bank Document (as defined in the Export Credit Agreement) that differs from the corresponding term in this Agreement or any other Loan Document, and does not otherwise constitute an Event of Default hereunder, shall not constitute an Event of Default hereunder.

1.6    The following definitions in the Definitions Schedule of the Credit Agreement are restated as follows:

“Increased Borrowing Base Reporting Period” means the period commencing on the day on which Combined Availability, as calculated by the Lender, which calculation shall be deemed correct absent manifest error, is less than 12.5% of the Combined Commitments, and ending on the day on which Combined Availability, as calculated by the Lender, which calculation shall be deemed correct absent manifest error, is equal to or greater than 12.5% of the Combined Commitments for thirty (30) consecutive days.

“Secured Obligations” means all Obligations, together with all (i) Ex-Im Obligations, (ii) Banking Services Obligations, and (iii) Swap Agreement Obligations owing to the Lender or its Affiliates; provided, however, that the definition of “Secured Obligations” shall not create any guarantee by any Loan Guarantor of (or grant of security interest by any Loan Guarantor to support, as applicable) any Excluded Swap Obligations of such Loan Guarantor for purposes of determining any obligations of any Loan Guarantor.

1.7    The following new definitions are added to the Definitions Schedule of the Credit Agreement in proper alphabetical order:

“Combined Availability” means (i) Availability, plus (ii) “Availability” as defined in the Export Credit Agreement.

“Combined Commitments” means (i) the Revolving Commitment, plus (ii) the “Revolving Commitment” as defined in the Export Credit Agreement.

“Eligible Export-Related Accounts” has the meaning given thereto in the Export Credit Agreement.

“Eligible Export-Related Inventory” has the meaning given thereto in the Export Credit Agreement.

“Ex-Im Obligations” means the Obligations, as defined in the Export Credit Agreement.

“Ex-Im Priority Collateral” has the meaning given thereto in the Intracreditor Agreement.

“Export Credit Agreement” means the Export Credit Agreement dated as of [December __, 2018] among the Borrowers, the other Loan Parties party thereto, and the Lender, as may be as may be amended, modified, or restated from time to time.

“Export-Related Account” has the meaning given thereto in the Export Credit Agreement.

“Export-Related Inventory” has the meaning given thereto in the Export Credit Agreement.

“Intracreditor Agreement” means the Intracreditor Subordination Agreement dated as of the date hereof by the Lender.

“Wyman Gordon Share Repurchase” means the one time repurchase by the Company of 20,636 shares of its Equity Interests held by Wyman Gordon. For purposes of calculating Fixed Charges, the amount of the Wyman Gordon Share Repurchase shall be the lesser of (i) the amount actually paid by the Company for the repurchase of such shares, and (ii) $70,000.

1.8    Clause (l) of the definition of “Eligible Accounts” in the Borrowing Base Schedule of the Credit Agreement is restated as follows:

(l) which is an Export-Related Account;

1.9    Clause (r) of the definition of “Eligible Inventory” in the Borrowing Base Schedule of the Credit Agreement is re-lettered as clause (s), and the following new clause (r) is added to the definition of “Eligible Inventory” in the Borrowing Base Schedule of the Credit Agreement:

(r) which is Export-Related Inventory; or

1.10    Section 14 of the Terms Schedule is restated as follows:

So long as no Event of Default has occurred or exists during such calendar year, the Loan Parties shall not be obligated to reimburse the Lender for more than the number of appraisals and field examinations set forth below during any calendar year:

Field Examinations - One per calendar year, unless Combined Availability is less than 12.5% of the Combined Commitments at any time during such calendar year, in which case the Lender may require additional field examinations.

Inventory Appraisals - One per calendar year, unless Combined Availability is less than 12.5% of the Combined Commitments at any time during such calendar year, in which case the Lender may require additional inventory appraisals.

1.11    The reference to “Availability” in clause (f) of the Reporting Schedule of the Credit Agreement is replaced with a reference to “Availability or Combined Availability”.

1.12    The definition of “Fixed Charges” in the Financial Covenants Schedule of the Credit Agreement is restated as follows:

“Fixed Charges” means, for any period, without duplication, cash Interest Expense, plus prepayments (excluding prepayments to a Revolving Loan) and scheduled principal payments on Indebtedness made during such period, plus expense for taxes paid in cash, plus Restricted Payments paid in cash other than the Wyman Gordon Share Repurchase, plus Capital Lease Obligation payments, plus cash contributions to any Plan, all calculated for the Company and its Domestic Subsidiaries on a consolidated basis in accordance with GAAP but without giving effect to their Foreign Subsidiaries; provided that, notwithstanding the foregoing, cash Interest Expense and scheduled principal payments on Indebtedness for periods prior to the Effective Date shall be adjusted in a manner acceptable to the Lender to eliminate any such amounts attributable to Indebtedness paid in full on the Effective Date.

1.13    Clause (B) of the definition of “Payment Condition” in the Financial Covenants Schedule of the Credit Agreement is restated as follows:

1.14    Section (B)(i) of the Financial Covenants Schedule of the Credit Agreement is restated as follows:

ARTICLE IV. MISCELLANEOUS.

BORROWERS:

SIFCO INDUSTRIES, INC.

By:/s/ Tom Kubera_____________________________

Name: Tom Kubera

Title: Chief Financial Officer

T & W FORGE, LLC

By:/s/ Tom Kubera_____________________________

Name: Tom Kubera

Title: Treasurer

QUALITY ALUMINUM FORGE, LLC

By:/s/ Tom Kubera_____________________________

Name: Tom Kubera

Title: Treasurer

 

LENDER:

JPMORGAN CHASE BANK, N.A.

By: /s/ Matthew McLuckey _____________________

Name: Matthew McLuckey

Title: Authorized Officer