Pioneer Power Solutions, Inc. 10-Q [ppsi-10q_063019.htm]

Exhibit 10.2

 

August 8, 2019

Pioneer Power Solutions, Inc.

Pioneer Electrogroup Canada Inc.

400 Kelby Street, 9th Floor

Fort Lee, NJ 07024

Attention:Thomas Klink

Re: credit facilities granted by bank of montreal to pioneer power solutions,
inc. and pioneer electrogroup canada inc. – temporary amendment to borrowing
base in the ppsi credit agreement

Gentlemen:

Reference is hereby made to that certain Amended and Restated Credit Agreement
dated as of April 29, 2016, as amended from time to time (collectively, the
“PPSI Credit Agreement”), between Pioneer Power Solutions, Inc. (the “US
Borrower” or “PPSI”), the Guarantors party thereto and Bank of Montreal (the
“Bank”), acting through its Chicago branch and to that certain Amended and
Restated Credit Agreement dated as of April 29, 2016, as amended from time to
time (collectively, the “PECI Credit Agreement”) , among Pioneer Electrogroup
Canada Inc., a Quebec corporation, as borrower (the “Canadian Borrower” or
“PECI”), and the Bank. Reference is also made to the Bank’s letter dated
November 20, 2018 which was accepted by the Borrowers and the Guarantors in
connection with the sale of assets by the US Borrower and the Canadian Borrower.
Capitalized terms used herein without definition shall have the same meanings
herein as such terms have in the PPSI Credit Agreement.

Further to our discussions, we understand that the US Borrower and the Canadian
Borrower (collectively, the “Borrowers”) have entered into a Stock Purchase
Agreement with Pioneer Acquireco ULC (the “Buyer”) on or about June 28, 2019
(the “SPA”) in order for the Buyer to acquire all outstanding capital stock of
the Borrowers and their Subsidiaries (the “Mill Point Transaction”). All
existing credit facilities granted by the Bank to the Borrowers under the PPSI
Credit Agreement and the PECI Credit Agreement will be repaid in full
concurrently with the closing of the Mill Point Transaction.

Until closing of the Mill Point Transaction and repayment in full of all
outstanding credit facilities granted by the Bank to the Borrowers, the Canadian
Borrower has asked the Bank to amend temporarily the Borrowing Base set forth in
the PPSI Credit Agreement in order to increase the percentage of the outstanding
unpaid amount of Eligible Receivables from 80% to 90% (the “Temporary Borrowing
Base Increase”), up to a maximum of CDN$1,000,000 of additional Borrowing Base.

 

 

Therefore, the Bank hereby confirms its agreement to put the Temporary Borrowing
Base Increase until the earlier of (i) the closing of the Mill Point Transaction
which shall include the repayment in full of all amounts owed under the PPSI
Credit Agreement and the PECI Credit Agreement, and (ii) August 31, 2019.

In addition, in the event that the SPA is terminated prior to closing and if the
Borrowers receive the termination fee provided for in such SPA, the Borrowers
undertake to remit to the Bank an amount corresponding to 50% of such
termination fee which shall be applied by the Bank in permanent reduction of the
Term Loan Facility granted under the PPSI Credit Agreement.

Finally, an amendment fee of C$25,000 shall be payable by the Canadian Borrower
to the Bank upon signature of this letter of agreement for the Temporary
Borrowing Base Increase.

Until full repayment of all amounts owed to the Bank, the Obligors agree that
they remain obligated to comply at all times with the terms and conditions of
the PPSI Credit Agreement and the PECI Credit Agreement. Except as specifically
waived or amended hereby, all of the terms and conditions of the PPSI Credit
Agreement and the PECI Credit Agreement stand and remain in full force and
effect. In addition, the Bank hereby confirms that no increase in the revolving
credits or margin deficit under such revolving credits will be allowed or
tolerated by the Bank until full repayment of all credit facilities.

This letter of agreement shall be effective upon the execution and delivery
hereof by the Bank and the Obligors. Please provide your consent to the
conditions set forth in this letter of agreement to the Bank by no later than
August 9, 2019, before 12:00 noon EST.

This letter of agreement may be executed in any number of counterparts, and by
different parties on separate counterpart signature pages, each of which shall
constitute an original and all of which taken together shall constitute one and
the same instrument. 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 letter of agreement is entered into between us as of the date and year
first above written.

 

  Bank of Montreal, acting through its Chicago Branch               By:    
Name:   Title:               Bank of Montreal               By:     Name:  
Title:               By:     Name:   Title:

 

 

 

 

This letter is acknowledged and agreed to as of the date and year first above
written.

 

  Pioneer Power Solutions, Inc.               By:     Name: Nathan Mazurek  
Title: President

 

  By:     Name: Thomas Klink   Title: Chief Financial Officer

  

  Pioneer Electrogroup Canada Inc.               By:     Name: Nathan Mazurek  
Title: President

 

  By:     Name: Thomas Klink   Title: Chief Financial Officer

 

  Jefferson Electric, Inc.               By:     Name: Nathan Mazurek   Title:
President

 

  By:     Name: Thomas Klink   Title: Chief Financial Officer

 

 

 

  Pioneer Critical Power Inc.               By:     Name: Nathan Mazurek  
Title: President

 

  By:     Name: Thomas Klink   Title: Chief Financial Officer

 

  Pioneer Custom Electrical products corp.               By:     Name: Nathan
Mazurek   Title: President

 

  By:     Name: Thomas Klink   Title: Chief Financial Officer

 

 

  Titan Energy Systems, Inc.               By:     Name: Nathan Mazurek   Title:
President

 

  By:     Name: Thomas Klink   Title: Chief Financial Officer