Document:

EXHIBIT 10.1

            
            SECOND AMENDMENT TO

            
            AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

            
            THIS SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY
            AGREEMENT is made as of this 28th day of August, 2007, by and
            among BANK OF AMERICA, N.A., a national banking association (“Bank of
            America”) with an office at One South Wacker Drive, Suite 3400, Chicago, Illinois
            60606, individually as a Lender and as Agent (“Agent”) for itself and any
            other financial institution which is or becomes a party hereto (each such financial
            institution, including Bank of America, is referred to hereinafter individually as a
            “Lender” and collectively as the “Lenders”), the
            LENDERS and MFRI,
            INC., a Delaware corporation (“MFRI”),
            MIDWESCO FILTER RESOURCES, INC., a Delaware
            corporation (“Midwesco”), PERMA-PIPE,
            INC., a Delaware corporation
            (“Perma-Pipe”), THERMAL CARE,
            INC., a Delaware corporation (“Thermal
            Care”), TDC FILTER MANUFACTURING,
            INC., a Delaware corporation (“TDC”) and
            MIDWESCO MECHANICAL AND ENERGY, INC., a
            Delaware corporation (“Mechanical”). Capitalized terms used in this
            Agreement have the meanings assigned to them in Appendix A, General Definitions.
            Accounting terms not otherwise specifically defined herein shall be construed in
            accordance with GAAP consistently applied. MFRI, Midwesco, Perma-Pipe, Thermal Care,
            TDC and Mechanical are sometimes hereinafter referred to individually as a
            “Borrower” and collectively as “Borrowers”.

            
            WHEREAS, Borrowers (other than Mechanical), Agent, and the Lender
            signatories thereto hereto entered into that certain Amended and Restated Loan and
            Security Agreement dated December 15, 2006, as amended by that First Amendment to
            Amended and Restated Loan and Security Agreement dated February 28, 2007 by and among
            Borrowers, Agent and Lenders (said Amended and Restated Loan and Security Agreement, as
            amended from time to time, the “Loan Agreement”); and

            
            WHEREAS, Borrowers, Agent and Lenders desire to amend and restate the
            Loan Agreement as provided herein;

            
            NOW, THEREFORE, in consideration of the following terms and conditions,
            the parties agreed as follows:

            
            1.          
            Definitions. All capitalized terms used
            herein without definition shall have the meanings contained in the Loan
            Agreement.

            
            2.          
            Amended Definitions. The definitions of
            “Borrowing Base” and “Term Loan Notes” contained in Appendix A
            to the Loan Agreement are hereby deleted and the following are inserted in their
            stead:

            
            “Borrowing Base
            – as at any date of determination thereof, an amount equal to the
            lesser of:

            
            (i)         the Revolving
            Credit Maximum Amount minus the sum
            of (x) unpaid principal balance of the Term Loan
            plus (y) the unpaid principal balance of
            the Equipment Loans; or

             

             

            

            

            

            

             

             

            	
                        
                        (ii)

                    	
                        
                        an amount equal to:

                    
	
                        
                         

                    	
                        
                        (x)

                    	
                        
                        the sum of:

                    	
                        
                         

                    

            
            (a)       eighty-five percent (85%)
            of the net amount of Eligible Accounts (other than Eligible Accounts arising from short
            Term Projects) outstanding at such date; plus

            
            (b)       the lesser of Six Million
            Dollars ($6,000,000) or eighty-five percent (85%) of the next amount of Eligible
            Accounts arising from Short Term Projects outstanding at such date;
            plus

            
            (c)       the lesser of (1) Fourteen
            Million Dollars ($14,000,000) or (2) fifty-five percent (55%) of the value of Eligible
            Inventory at such date;

            	
                        
                        MINUS (subtract from the sum of
                        (a) plus (b)
                        plus (c));

                    

            
            (y)        $1,500,000 (the
            “Availability Reserve”); provided that Borrowers acknowledge that Agent
            shall have the right (exercisable in its reasonable discretion) to increase the
            Availability Reserve, if for any consecutive period of five (5) days or more
            Availability is less than $5,000,000.

            
            * * *

            
            Term Loan Notes – the Amended and
            Restated Secured Promissory Notes executed by Borrowers on or about August 28, 2007 in
            favor of each applicable Lender to evidence its Term Loan, which shall be in the form
            of Exhibit 1.3A to the Second
            Amendment, together with any replacement or successor notes therefor.”

            
            3.          
            Letters of Credit. Section 1.2 of the Loan
            Agreement is hereby deleted and the following is inserted in its stead:

            
            “1.2      
            Letters of Credit; LC Guaranties. Agent
            agrees, for so long as no Default or Event of Default exists and if requested by MFRI,
            on its own behalf and on behalf of all other Borrowers, to (i) issue its, or cause
            to be issued by Bank or another Affiliate of Agent, on the date requested by MFRI, on
            its own behalf and on behalf of all other Borrowers, Letters of Credit for the account
            of Borrowers or (ii) execute LC Guaranties by which Agent, Bank, or another
            Affiliate of Agent, on the date so requested by MFRI, shall guaranty the payment or
            performance by Borrowers of their reimbursement obligations with respect to letters of
            credit; provided that the LC Amount
            shall not exceed Ten Million
            Dollars ($10,000,000) at any time.
            No Letter of Credit or LC Guaranty may have an expiration date after the last day of
            the Term. Notwithstanding anything to the contrary contained herein, Borrowers, Agent
            and Lenders hereby agree that all LC Obligations and all obligations of Borrowers
            relating thereto shall be satisfied by the prompt issuance of one or more Revolving
            Credit Loans that are Base Rate Portions, which Borrowers hereby acknowledge are
            requested and Lenders hereby agree to fund.

             

             

            	
                        
                         

                    	
                        
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            In the event that Revolving Credit Loans are not, for any reason,
            promptly made to satisfy all then existing LC Obligations, each Lender hereby agrees to
            pay to Agent, on demand, an amount equal to such LC Obligations
            multiplied by
            such Lender’s Revolving Loan Percentage, and until so paid, such
            amount shall be secured by the Collateral and shall bear interest and be payable at the
            same rate and in the same manner as Base Rate Portions. Immediately upon the issuance
            of a Letter of Credit or an LC Guaranty under this Agreement, each Lender shall be
            deemed to have irrevocably and unconditionally purchased and received from Agent,
            without recourse or warranty, an undivided interest and participation therein equal to
            such LC Obligations multiplied
            by such Lender’s Revolving Loan
            Percentage.” (changed language underscored)

            
            4.          
            Term Loan. Section 1.3 of the Loan
            Agreement is hereby deleted and the following is inserted in its stead:

            
            “1.3      
            Term Loan. On or about March 28, 2005, each
            Lender made a term loan (collectively, the “2005 Term Loan”) to Borrowers
            in the aggregate principal amount of $4,300,000. As of the date hereof, the aggregate
            outstanding principal amount of the 2005 Term Loan is $2,027,000. On the Second
            Amendment Effective Date (as defined in Section 5 of the Second Amendment), each
            Lender, severally and not jointly, agrees to make a term loan (collectively, the
            “2007 Term Loan”) to Borrowers on the Closing Date, in the aggregate
            principal amount set forth below such Lender’s signature to this Second
            Amendment. The aggregate amount of the 2007 Term Loan is $973,000. The aggregate
            principal amount of the 2005 Term Loan and the 2007 Term Loan shall be $3,000,000 as of
            the Second Amendment Effective Date. The 2005 Term Loan and the 2007 Term Loan shall be
            combined into one term loan (the “Term Loan”), which Term Loan shall be
            repayable in accordance with the terms of the Term Loan Notes and shall be secured by
            all of the Collateral. The proceeds of the 2007 Term Loan shall be used solely for the
            purposes for which the proceeds of the Revolving Credit Loans are authorized to be
            used.”

            
            5.          
            Fixed Charge Coverage Ratio. The definition
            of “Fixed Charge Coverage Ratio” contained in Exhibit 8.3 to the Loan
            Agreement is hereby deleted and the following is inserted in its stead:

            
            “Fixed Charge Coverage
            Ratio – with respect to any fiscal period, the
            ratio of (i) EBITDA for such period minus
            Capital Expenditures (excluding, however, Capital Expenditures financed
            by third party financing) made within such period
            minus income taxes paid in cash in such
            period to (ii) the sum of Interest Expense paid in cash within such period
            plus principal payments of Money Borrowed
            (other than Revolving Credit Loans and the $3,150,000 principal payment made on or
            about September 1, 2007 in respect of the IRB Indebtedness.)”

            
            6.          
            Conditions Precedent. This Second Amendment
            shall become effective upon satisfaction of each of the following conditions
            precedent:

            
            (A)       Borrowers, Agent and
            Lenders shall have executed and delivered to each other this Second
            Amendment;

             

             

            	
                        
                         

                    	
                        
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            (B)        Borrowers shall have
            executed and delivered to Agent an amended and restated Term Loan Note in the form
            attached to this Second Amendment as
            Exhibit 1.3A; and

            
            (C)       Borrowers shall have
            delivered to Agent a Certificate of the Secretary of each Borrower, together with
            copies of the resolutions of the Board of Directors of each Borrower authorizing or
            ratifying the execution, delivery and performance of this Second Amendment and the
            other Loan Documents to be executed by Borrowers and the names of the officer or
            officers of each Borrower authorized to sign this Second Amendment and the other Loan
            Documents to be executed by each Borrower in connection therewith together with a
            sample of the true signature of each such officer.

            
            The date on which all of the above conditions precedent have been
            satisfied or waived is hereinafter revered to as the “Second Amendment Effective
            Date.” After the Second Amendment Effective Date, Agent shall return the Term
            Loan Note previously delivered to Agent and Bank of America, as Agent, marked
            “Amended and Superceded.”

            
            7.          
            Governing Law. This Second Amendment shall
            be governed by, and construed in accordance with, the laws of the State of Illinois,
            without regard to the principles thereof relating to conflict of laws.

            
            8.          
            Execution in Counterparts. This Second
            Amendment may be executed in any number of counterparts, which shall, collectively and
            separately, constitute one Agreement.

            
            9.          
            Continuing Effect. Except as otherwise
            provided herein, the Loan Agreement remains in full force and effect.

            
            (Signature Page Follows)

             

            	
                        
                         

                    	
                        
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            (Signature Page to Second Amendment to

            
            Amended and Restated Loan and Security
            Agreement)

             

            	
       
	
      MFRI, INC.

      By:  /s/ Michael D. Bennett                                   

                Name: Michael
        D. Bennett                             

                Title:
        VP CFO                                                   

	
    	
    
	 	 
	
       
	
      MIDWESCO FILTER RESOURCES, INC.

      By:  /s/ Michael D. Bennett                                   

                Name: Michael
        D. Bennett                             

                Title:
        VP                                                            

	
    	
    
	 	 
	
       
	
      PERMA-PIPE, INC.

      By:  /s/ Michael D. Bennett                                   

                Name: Michael
        D. Bennett                             

                Title:
        VP                                                            

	
    	
    
	 	 
	
       
	
      THERMAL CARE, INC.

      By:  /s/ Michael D. Bennett                                   

                Name: Michael
        D. Bennett                             

                Title:
        VP                                                            

	
    	
    
	 	 
	
       
	
      TDC FILTER MANUFACTURING, INC.

      By:  /s/ Michael D. Bennett                                   

                Name: Michael
        D. Bennett                             

                Title:
        VP                                                            

	
    	
    
	 	 
	
       
	
      MIDWESCO MECHANICAL AND ENERGY, INC.

      By:  /s/ Michael D. Bennett                                   

                Name: Michael
        D. Bennett                             

                Title:
        VP                                                            

             

             

            	
                        
                         

                    	
                        
                         

                    	
                        
                         

                    

             

             

            

            

            

            

             

             

            
            (Signature Page to Second Amendment to

            
            Amended and Restated Loan and Security
            Agreement)

             

            	
       
	
      BANK OF AMERICA, N.A., as
        Agent and as a Lender

      By:  /s/ Brian Conole                                          
              

        Name: Brian Conole                                                   

        Title: Senior Vice President                                      

      2007 Term Loan: $973,000

             

             

            	
                        
                         

                    	
                        
                         

                    	
                        
                         

                    

             

             

        

 

 

 

 

 

EXHIBIT 1.3A

FORM OF TERM LOAN NOTE

(SECURED PROMISSORY NOTE)

	 $3,000,000
	
      Amended and Restated as of

        August __, 2007

        Chicago, Illinois

       

 

FOR VALUE RECEIVED, the undersigned (“Borrowers”), hereby jointly and severally promises to pay to the order of Bank of America, N.A., a national banking association (hereinafter “Lender”), or its registered assigns at the office of Bank of America, N.A., as agent for such Lender, or at such other place in the United States of America as the holder of this Note may designate from time to time in writing, in lawful money of the United States, in immediately available funds, at the time of payment, the principal sum of Three Million Dollars ($3,000,000), together with interest from and after the date hereof on the unpaid principal balance outstanding from time to time.

This Secured Promissory Note (the “Note”) is one of the Term Loan Notes referred to in, and is issued pursuant to, that certain Amended and Restated Loan and Security Agreement dated as of December 15, 2006, by and among Borrowers, the lender signatories thereto (including Lender), and Bank of America, N.A. (“Bank of America”) as Agent for said lenders (Bank of America in such capacity “Agent”) (hereinafter, as amended from time to time, the “Loan Agreement”), and is entitled to all of the benefits and security of the Loan Agreement. All of the terms, covenants and conditions of the Loan Agreement and the Security Documents are hereby made a part of this Note
and are deemed incorporated herein in full. All capitalized terms used herein, unless otherwise specifically defined in this Note, shall have the meanings ascribed to them in the Loan Agreement.

For so long as no Event of Default shall have occurred and be continuing, the principal amount and accrued interest of this Note shall be due and payable on the dates and in the manner hereinafter set forth:

(a)        interest on the unpaid principal balance outstanding from time to time shall be paid at such interest rates and at such times as are specified in the Loan Agreement;

(b)        principal shall continue to be due and payable quarterly on September 1, 2007 and each December 1, March 1, June 1 and September 1 thereafter in installments equal to $107,142.86 and

(c)        the entire remaining principal amount then outstanding, together with any and all other amounts due hereunder, shall be due and payable on the last day of the Term.

Notwithstanding the foregoing, the entire unpaid principal balance and accrued interest on this Note shall be due and payable immediately upon any termination of the Loan Agreement pursuant to Section 4 thereof.

 

 

	
             
 	
            Exhibit 1.3A – Page 1
 	
             
 

 

 

 

 

This Note shall be subject to mandatory prepayment in accordance with the provisions of Section 3.3 of the Loan Agreement. Borrowers may also prepay this Note in the manner provided in subsection 3.3.5 or Section 4 of the Loan Agreement.

Upon the occurrence, and during the continuation, of an Event of Default, this Note shall or may, as provided in the Loan Agreement, become or be declared immediately due and payable.

The right to receive principal of, and stated interest on, this Note may only be transferred in accordance with the provisions of the Loan Agreement.

Demand, presentment, protest and notice of nonpayment and protest are hereby waived by Borrowers.

This Note shall be governed by, and construed and enforced in accordance with, the laws of the State of Illinois.

 

	  
	 MFRI,
        INC.

      By:                                                                            

                Name:                                          
                                  

                Title:                                                                 

	 	 
	  
	 MIDWESCO
        FILTER RESOURCES, INC.

      By:                                                                            

                Name:                                          
                                  

                Title:                                                                 
      

	 	 
	  
	 PERMA-PIPE,
        INC.

      By:                                                                            

                Name:                                          
                                  

                Title:                                                                 
      

	 	 
	  
	 THERMAL
        CARE, INC.

      By:                                                                            

                Name:                                          
                                  

                Title:                                                                 

 

 

	
             
 	
            Exhibit 1.3A – Page 2
 	
             
 

 

 

 

 

 

	  
	 TDC
        FILTER MANUFACTURING, INC.

      By:                                                                            

                Name:                                          
                                  

                Title:                                                                 

	 	 
	  
	 MIDWESCO
        MECHANICAL AND 

        ENERGY, INC.

      By:                                                                            

                Name:                                          
                                  

                Title:                                                                 
      

 

 

 

	
             
 	
            Exhibit 1.3A – Page 3Note to Great Plains -- 8-K Exhibit  (K0149060.DOC;1)

Exhibit 10.1

COGNOVIT PROMISSORY NOTE OF

JOHN D. OIL & GAS COMPANY, INC.

$ 500,000.00                           August 28, 2007 

                                                                    

For value received, the undersigned, promises to pay to the order of GREAT PLAINS EXPLORATION, LLC the principal sum of  Five Hundred Thousand  Dollars ($500,000.00) with interest at the rate of libor plus 1.75% per annum.  Payment of Principal and accrued interest is due and payable upon DEMAND. 

The indebtedness evidenced hereby may be prepaid in whole or in part at any time without penalty or notice.

Notwithstanding anything to the contrary which may be provided for, or implied by, the other terms of this Note, the entire principal balance, together with all accrued and unpaid interest and any other charges, advances and fees, if any, outstanding hereunder, shall be due and payable in full on demand.

The Maker waives demand presentment for payment, protest, notice of protest and of non-payment, and any and all lack of diligence or delays in collection or enforcement of this Note, and expressly consent to any extension of time of payment hereof, or any other indulgence of forbearance, any of which may be made without notice to any party and without in any way affecting the personal liability of any party.

The undersigned authorize any attorney-at-law to appear in any court of record in Lake County, Ohio after the indebtedness evidenced hereby becomes due in accordance with the terms hereof, whether by acceleration or otherwise, and to thereupon waive the issuing and service of process, waive presentment, demand, notice of dishonor, protest and notice of non-payment, and to confess judgment against the undersigned Makers, in favor of the holder hereof for the amount then appearing due together with the costs of this suit, and thereupon to waive all errors and all rights of appeal and stays of execution.

WARNING: BY SIGNING THIS PAPER, YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL.  IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE.

JOHN D. OIL & GAS COMPANY, INC.

By:/s/ Gregory J. Osborne

     Gregory J. Osborne, President

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