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EXHIBIT 10.2
 
FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
 
This Fifth Amendment to Loan and Security Agreement, made as of  September 3,
2008 (this “Amendment”), is between FANSTEEL INC., a Delaware corporation
(“Fansteel”), and WELLMAN DYNAMICS CORPORATION, a Delaware corporation
(“Wellman”, and together with Fansteel, “Borrowers”, and each a “Borrower”), and
Fifth Third Bank, a Michigan banking corporation (the “Lender”).  Capitalized
terms used in this Amendment and not otherwise defined herein have the meanings
assigned to such terms in the Loan Agreement as defined below.
 
 
WITNESSETH
 
WHEREAS, the Borrowers and the Lender are parties to that certain Loan and
Security Agreement dated as of July 15, 2005, as amended by that certain First
Amendment to Loan and Security Agreement dated as of December 4, 2006, and as
amended by that certain Second Amendment to Loan and Security Agreement dated as
of June 5, 2007, as amended by that certain Third Amendment to Loan and Security
Agreement dated as of September 12, 2007, and as amended by that certain Fourth
Amendment to Loan and Security Agreement dated as of August 29, 2008 (as such
agreement has been amended, restated, supplemented or otherwise modified from
time to time, the “Loan Agreement”);
 
WHEREAS, the Borrowers have requested a number of modifications to the Loan
Agreement and the Lender is willing to modify the Loan Agreement on the terms
and subject to the conditions of this Amendment;
 
NOW, THEREFORE, in consideration of the mutual agreements contained in this
Amendment, and other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties to this Amendment agree as
follows:
 
SECTION 1.  AMENDMENT TO LOAN AGREEMENT
 
On the date this Amendment becomes effective, after satisfaction by the
Borrowers of each of the conditions set forth in Section 3 (the “Effective
Date”), the Loan Agreement is amended as follows:
 
1.1           Section 2.1(B) of the Loan Agreement is hereby deleted in its
entirety and in lieu thereof is inserted the following:
 
(B)  The Lender shall also make a Term Loan to Borrowers in the amount of Three
Million and No/100 Dollars ($3,000,000).  The proceeds of the Term Loan shall be
used to repay in full the existing term loan from Fifth Third Bank to
Borrower.  Interest only shall be payable on October 5, 2008 through and
including December 5, 2008.  Commencing January 5, 2009 and on the fifth (5th)
day of each month thereafter to and including the Term Loan Maturity Date
(hereinafter defined), Borrowers shall make principal payments of Eighty Three
Thousand Three Hundred Thirty Four and No/100 Dollars ($83,334), plus accrued
interest.  The Term Loan shall be repayable in full on the earlier of: (i)
September 5, 2011, or (ii) as provided in Section 4.2 of this Agreement (the
“Term Loan Maturity Date”).  Amounts repaid under the Term Loan may not be
reborrowed.  The Term Loan shall be evidenced by a Term Loan Note, the form of
which is attached hereto as Exhibit B.
 
1.2           The following Section 2.4(e) is hereby added to the Loan
Agreement:
 
(e)           Excess Cash Flow.  Ten (10) days after receipt of Borrower’s
Fiscal Year end reviewed financial statements (but in no event more than one
hundred thirty five (135) days after the end of a Fiscal Year) for each Fiscal
Year of Borrower commencing with Borrower’s Fiscal Year ending December 31,
2008, Borrower shall make a mandatory payment of Term Loan in an amount equal to
fifty percent (50%) of Borrower’s Excess Cash Flow (but not to exceed $300,000
in any Fiscal Year) for the Fiscal Year just ended, such prepayment to be
applied against the remaining installments of principal in the inverse order of
their maturities, such mandatory prepayments to continue until the date on which
the outstanding principal balance of Term Loan is less than $2,000,000.  For the
purposes of this Section 2.4(e), “Excess Cash Flow” shall mean for each
Borrower’s Fiscal Year, Borrower’s EBITDA for such period, minus Borrower’s
taxes during such period and distributions to its members in respect of taxes
for such period, minus actual principal payments made with respect to long term
debt during such period (including all debt paid on the FMRI Notes and the PBGC
Note), minus all unfinanced Capital Expenditures by Borrower during such period
 
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SECTION 2.  REPRESENTATIONS AND WARRANTIES
 
To induce the Lender to enter into this Amendment, the Borrowers represent and
warrant to the Lender that:
 
2.1           Due Authorization: Authority; No Conflicts; Enforceability. The
execution delivery and performance by the Borrowers of this Amendment and the
other documents delivered under Section 4 (collectively the “Amendment
Documents”) are within each of their respective corporate powers, have been duly
authorized by all necessary corporate action, have received all necessary
governmental, regulatory or other approvals (if any are required), and do not
and will not contravene or conflict with any provision of (i) any law, (ii) any
judgment, decree or order or (iii) its respective articles of incorporation or
by-laws, and do not and will not contravene or conflict with, or cause any lien
to arise under, any provision of any agreement or instrument binding upon the
Borrowers or upon any of its respective properties.  This Amendment, the Loan
Agreement, as amended by this Amendment, and the other Amendment documents are
the legal, valid and binding obligations of the Borrowers enforceable against
the Borrowers in accordance with their respective terms.
 
2.2           No Default: Representations and Warranties.  As of the Effective
Date, (i) no Default or Event of Default under the Loan Agreement has occurred
and is continuing and (ii) the representations and warranties of the Borrowers
contained in the Loan Agreement are true and correct.
 
SECTION 3.  CONDITIONS TO EFFECTIVENESS
 
The obligation of the Lender to make the amendments and modifications
contemplated by this Amendment, and the effectiveness thereof, are subject to
the following:
 
3.1           Representations and Warranties. The representations and warranties
of the Borrowers contained in this Amendment are true and correct as of the
Effective Date.
 
3.2           Documents. The Lender has received all of the following, each duly
executed and dated as of the Effective Date (or such other date as is
satisfactory to the Lender) in form and substance satisfactory to the Lender:
 
(a)           Amendment.  This Amendment; and
 
(b)           Other. Such other documents as the Lender may reasonably request.
 
SECTION 4.  MISCELLANEOUS
 
4.1           Captions.  The recitals to this Amendment (except for definitions)
and the section captions used in this Amendment are for convenience only, and do
not affect the construction of this Amendment.
 
4.2           Governing Law: Severability. This Amendment is a contract made
under and governed by the internal laws of the State of Illinois.  Wherever
possible, each provision of this Amendment will be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Amendment is prohibited by or invalid under such law, such provision will be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Amendment.

 
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4.3           Counterparts. This Amendment may be executed in any number of
counterparts and by the different parties on separate counterparts, and each
such counterpart will be deemed to be an original, but all such counterparts
together constitute but one and the same Amendment.
 
4.4           Successors and Assigns. This Amendment is binding upon the
Borrowers, the Lender and their respective successors and assigns, and inures to
the sole benefit of the Borrowers, the Lender and their successors and assigns.
The Borrowers have no right to assign their rights or delegate their duties
under this Amendment.
 
4.5           References.  From and after the Effective Date, each reference in
the Loan Agreement to “this Agreement,” “hereunder,” hereof,” “herein “ or words
of like import, and each reference in the Loan Agreement or any other Financing
Agreement to the Loan Agreement or to any term, condition or provision contained
“thereunder,” “thereof,” “therein,” or words of like import, means and be a
reference to the Loan Agreement (or such term, condition or provision, as
applicable) as amended, supplemented, restated or otherwise modified by this
Amendment.
 
4.6           Continued Effectiveness.  Notwithstanding anything contained in
this Amendment, the terms of this Amendment are not intended to and do not serve
to effect a novation as to the Loan Agreement.  The parties to this Amendment
expressly do not intend to extinguish the Loan Agreement.  Instead, it is the
express intention of the parties to this Amendment to reaffirm the indebtedness
created under the Loan Agreement.  The Loan Agreement remains in full force and
effect and the terms and provisions of the Loan Agreement are ratified and
confirmed.
 
4.7           Costs. Expenses and Taxes.  Borrowers affirm and acknowledge that
Section 14.3 of the Loan Agreement applies to this Amendment and the
transactions and agreements and documents contemplated under this Amendment.
 
 
(remainder of page left intentionally blank; signature page follows)

 
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Delivered as of the day and year first above written.
 

  FIFTH THIRD BANK             By:
/s/Michael E. May
    Name:
Michael E. May
    Title:
Vice President
                    FANSTEEL INC.             By:
/s/R. Michael McEntee
    Name:
R. Michael McEntee
    Title:
VP & CFO  
                    WELLMAN DYNAMICS CORPORATION           By:
/s/R. Michael McEntee
    Name:
R. Michael McEntee
    Title:
Vice President
 

 
 
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