EXHIBIT 10.1

 

Second Amendment to Credit Agreement

 

This Second Amendment to Credit Agreement (herein, the “Amendment”) is entered
into as of September 30, 2013, by and among Pioneer Power Solutions, Inc., a
Delaware corporation (the “Borrower”), the direct and indirect Domestic
Subsidiaries of the Borrower, as Guarantors, and Bank of Montreal, a Canadian
chartered bank acting through its Chicago branch (the “Bank”).

 

Preliminary Statements

 

A.     The Borrower, the Guarantors and the Bank entered into a certain Credit
Agreement, dated as of June 28, 2013 (the Credit Agreement being referred to
herein as the “Credit Agreement”). All capitalized terms used herein without
definition shall have the same meanings herein as such terms have in the Credit
Agreement.

 

B.     The Borrower has requested that the Bank make certain amendments to the
Credit Agreement, and the Bank is willing to do so under the terms and
conditions set forth in this Amendment.

 

Now, Therefore, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:

 

Section 1.          Amendments.

 

Subject to the satisfaction of the conditions precedent set forth in Section 2
below, the Credit Agreement shall be and hereby is amended as follows:

 

1.1.          The definition of “Eligible Receivables” appearing in Section 1.1
of the Credit Agreement shall be amended by amending and restating clause (c)
thereof to read as follows:

 

(c)          is the valid, binding and legally enforceable obligation of the
Account Debtor obligated thereon and such Account Debtor (i) is not a Subsidiary
or an Affiliate of any Loan Party, (ii) is not a shareholder, director, officer,
or employee of any Loan Party or of any of its Subsidiaries, (iii) is not the
United States of America or Canada, or any state, province, or political
subdivision thereof, or any department, agency or instrumentality of any of the
foregoing, unless the Assignment of Claims Act or any similar state, provincial,
or local statute, as the case may be, is complied with to the satisfaction of
the Bank, (iv) is not a debtor under any proceeding under any Debtor Relief Law,
(v) is not an assignor for the benefit of creditors, (vi) has not sold all or
substantially all of its assets, or (vii) is not Siemens Corp. or any of its
Affiliates;

 

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1.2.          Section 8.10 of the Credit Agreement shall be amended by deleting
the word “and” at the end of clause (f) and by replacing clause (g) thereof with
the following clauses (g) and (h):

 

(g)          the sale of Receivables owing by Siemens Corp. or its Affiliates to
Orbian and/or Orbian Corp. pursuant to a discounting agreement which is
non-recourse to the Borrower or any Subsidiary and which agreement is otherwise
satisfactory to the Bank and which agreement cannot be amended without the
consent of the Bank; and

 

(h)          the Disposition of Property of any Loan Party or any Subsidiary of
a Loan Party (including any Disposition of Property as part of a sale and
leaseback transaction) aggregating for all Loan Parties and their Subsidiaries
not more than $200,000 during any fiscal year of the Borrower; provided,
however, that this clause (h) shall not permit any Loan Party to factor any of
its Receivables with any party except as permitted by clause (g) above.

 

1.3.          Section 8.23(d) of the Credit Agreement is hereby amended and
restated in its entirety as follows:

 

(d)          Special Provision Regarding 6/30/13 and 9/30/13. With respect to
the calculation of each of the foregoing covenants in this Section 8.23 for the
fiscal quarters ending June 30, 2013 and September 30, 2013, the Borrower shall
calculate such covenants as if the proceeds of the initial public offering
received by the Borrower on or about September 24, 2013 (the “IPO Proceeds”) and
which were subsequently applied to the Obligations had been received (and
applied to the Obligations) on June 30, 2013.

 

1.4.          Schedule 6.2 shall be amended and restated in its entirety to read
as set forth on Schedule 6.2 hereto.

 

Section 2.          Conditions Precedent.

 

The effectiveness of this Amendment is subject to the satisfaction of all of the
following conditions precedent:

 

2.1.          The Borrower, the Guarantors and the Bank shall have executed and
delivered this Amendment.

 

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2.2.          The Bank shall have received copies (executed or certified, as may
be appropriate) of all legal documents or proceedings taken in connection with
the execution and delivery of this Amendment to the extent the Bank or its
counsel may reasonably request.

 

2.3.          Legal matters incident to the execution and delivery of this
Amendment shall be satisfactory to the Bank and its counsel.

 

Section 3.          Representations.

 

In order to induce the Bank to execute and deliver this Amendment, the Borrower
hereby represents to the Bank that as of the date hereof (a)  the
representations and warranties set forth in Section 6 of the Credit Agreement
are and shall be and remain true and correct (except that the representations
contained in Section 6.5 shall be deemed to refer to the most recent financial
statements of the Borrower delivered to the Bank) and (b) the Borrower is in
compliance with the terms and conditions of the Credit Agreement and no Default
or Event of Default has occurred and is continuing under the Credit Agreement or
shall result after giving effect to this Amendment.

 

Section 4.          Miscellaneous.

 

4.1.      The Borrower and the Guarantors heretofore executed and delivered to
the Bank the Security Agreement and certain other Collateral Documents. The
Borrower and the Guarantors hereby acknowledge and agree that the Liens created
and provided for by the Collateral Documents continue to secure, among other
things, the Secured Obligations arising under the Credit Agreement as amended
hereby; and the Collateral Documents and the rights and remedies of the Bank
thereunder, the obligations of the Borrower and Guarantors thereunder, and the
Liens created and provided for thereunder remain in full force and effect and
shall not be affected, impaired or discharged hereby. Nothing herein contained
shall in any manner affect or impair the priority of the liens and security
interests created and provided for by the Collateral Documents as to the
indebtedness which would be secured thereby prior to giving effect to this
Amendment.

 

4.2.       Except as specifically amended herein, the Credit Agreement shall
continue in full force and effect in accordance with its original terms.
Reference to this specific Amendment need not be made in the Credit Agreement,
the Notes, or any other instrument or document executed in connection therewith,
or in any certificate, letter or communication issued or made pursuant to or
with respect to the Credit Agreement, any reference in any of such items to the
Credit Agreement being sufficient to refer to the Credit Agreement as amended
hereby.

 

4.3.       The Borrower agrees to pay on demand all costs and expenses of or
incurred by the Bank in connection with the negotiation, preparation, execution
and delivery of this Amendment, including the reasonable fees and expenses of
counsel for the Bank.

 

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4.4.     This Amendment may be executed in any number of counterparts, and by
the different parties on different counterpart signature pages, all of which
taken together shall constitute one and the same agreement. Any of the parties
hereto may execute this Amendment by signing any such counterpart and each of
such counterparts shall for all purposes be deemed to be an original. Delivery
of a counterpart hereof by facsimile transmission or by e-mail transmission of
an Adobe portable document format file (also known as a “PDF” file) shall be
effective as delivery of a manually executed counterpart hereof. This Amendment
shall be governed by, and construed in accordance with, the internal laws of the
State of Illinois.

 

[Signature Page to Follow]

 

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This Second Amendment to Credit Agreement is entered into as of the date and
year first above written.

 

  “Borrower”         Pioneer Power Solutions, Inc.         By /s/ Andrew Minkow
  Name Andrew Minkow   Title Chief Financial Officer         “Guarantors”      
  Jefferson Electric, Inc.         By /s/ Andrew Minkow   Name Andrew Minkow  
Title Chief Financial Officer         Pioneer Critical Power Inc.         By /s/
Andrew Minkow   Name   Andrew Minkow   Title Chief Financial Officer        
Pioneer Custom Electrical Products Corp.         By /s/ Andrew Minkow   Name
Andrew Minkow   Title Chief Financial Officer       Accepted and agreed to.    
        Bank of Montreal, acting through its Chicago Branch         By /s/ Larry
Allan Swiniarski   Name Larry Allan Swiniarski   Title Director

 

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Schedule 6.2

Subsidiaries

 

Name   Jurisdiction of
Organization   Percentage
Ownership   Owner               Pioneer Critical Power, Inc.   Delaware   100%  
Borrower               Jefferson Electric, Inc.   Delaware   100%   Borrower    
          Nexus Custom Magnetics, LLC   Texas   100%   Jefferson Electric, Inc.
              JE Mexican Holdings, Inc.   Delaware   100%   Borrower            
  Jefferson Electric Mexico Holdings, LLC   Wisconsin   100%   JE Mexican
Holdings, Inc.               Nexus Magneticos de Mexico, S. de R.L. de C.V.  
Mexico   100%   Nexus Custom Magnetics,
LLC—99%                           Jefferson Electric Mexico
Holdings, LLC—1%               Pioneer Electrogroup Canada, Inc.   Quebec   100%
  Borrower               Pioneer Transformers Ltd.   Quebec   100%   Pioneer
Electrogroup Canada, Inc.               Pioneer Wind Energy Systems, Inc.  
Quebec   100%   Pioneer Electrogroup Canada, Inc.               Bemag
Transformer Inc.   Quebec   100%   Pioneer Electrogroup Canada, Inc.            
  Pioneer Custom Electrical Products Corp.   Delaware   100%   Borrower

 

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