Document:

mis_8k0917amnd.htm

Exhibit 10.2

 

 

 

FIFTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT

 

This FIFTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT (the “Amendment”), dated September 16, 2009, is entered into by and among MISCOR GROUP, LTD., an Indiana corporation (“MISCOR”), MAGNETECH INDUSTRIAL SERVICES, INC., an Indiana corporation (“MIS”), MARTELL ELECTRIC, LLC, an Indiana limited liability
company (“Martell”), HK ENGINE COMPONENTS, LLC, an Indiana limited liability company (“HK”), IDEAL CONSOLIDATED, INC., an Indiana corporation (“Ideal”), and AMERICAN MOTIVE POWER, INC., a Nevada corporation (“AMP” and together with MISCOR, MIS, Martell, HK and Ideal, the “Borrowers” and each a “Borrower”) and WELLS FARGO BANK, NATIONAL ASSOCIATION (the “Lender”), acting through its Wells Fargo Business Credit operating division.

RECITALS

The Lender and the Borrowers are parties to a Credit and Security Agreement dated January 14, 2008, as amended (the “Credit Agreement”).

The Borrowers have requested that certain amendments be made to the Credit Agreement, which the Lender is willing to do pursuant to the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, it is agreed as follows:

 

1.           Defined Terms.  Capitalized terms used in this Amendment which are defined in the Credit Agreement shall have the same meanings as defined therein, unless otherwise defined herein.  In addition,
Section 1.1 of the Credit Agreement shall be amended by amending the following definitions:

 

“Borrowing Base” means at any time the lesser of:

 

(a)           The Maximum Line Amount; or

 

(b)           Subject to change from time to time in the Lender’s sole discretion, the sum of:

 

(i)           The lesser of (A) the sum of (1) the product of the Accounts Advance Rate times Eligible Accounts of each of MIS, HK, 3D, Martell, Ideal and AMP, plus (2)
the lesser of (w) the product of the Accounts Advance Rate times the Eligible AMP-Canada Accounts, or (x) $500,000, plus (3) the lesser of (y) the product of the Special Accounts Advance Rate times Eligible Progress Accounts of each of Martell and Ideal, or (z) $1,450,000; or (B) $5,800,000, less

 

(ii)           The Borrowing Base Reserve, less

 

(iii)           The Personal Property Tax Reserve, less

 

  

 

  

(iv)           The Real Estate Tax Reserve, less

 

(v)           The Landlord Reserve, less

 

(vi)           Indebtedness that any Borrower owes to the Lender that has not yet been advanced on the Revolving Note, including, without limitation, the L/C Amount, and the dollar amount that the Lender in its reasonable discretion then determines to be a reasonable determination of
each Borrower’s credit exposure with respect to any swap, derivative, foreign exchange, hedge, deposit, treasury management or other similar transaction or arrangement offered to any Borrower by Lender that is not described in Article II of this Agreement.

 

“Special Accounts Advance Rate” means up to thirty five percent (35%), or such lesser rate as the Lender in its sole discretion may deem appropriate from time to time, including, without limitation, in the event the Borrowers hereafter request that the Lender make Advances based on Inventory.

 

3.           No Other Changes.  Except as explicitly amended by this Amendment, all of the terms and conditions of the Credit Agreement shall remain in full force and effect and shall apply to any advance or letter
of credit thereunder.

 

4.           Additional Condition.  As a condition to the Lender’s agreements hereunder and notwithstanding anything to the contrary contained in the Fourth Amendment to Credit Agreement dated July 14, 2009
or the letter agreement dated September 8, 2009, on or before October 31, 2009, the Borrowers shall raise at least Two Million Dollars ($2,000,000) of additional capital, whether in the form of additional Subordinated Debt, proceeds of asset sales approved by the Lender and/or cash equity contributions.  The Borrowers’ failure to comply with such additional condition shall constitute an Event of Default:

 

5.           Accommodation Fee.  The Borrowers shall pay to the Lender a fully earned, non-refundable fee in the amount of Twenty Five Thousand Dollars ($25,000), which fee shall be payable upon execution of this
Amendment.

 

6.           Conditions Precedent.  This Amendment shall be effective when the Lender shall have received an executed original hereof, together with each of the following, each in substance and form acceptable
to the Lender in its sole discretion:

 

(a)           The Acknowledgment and Agreement of Subordinated Creditors set forth at the end of this Amendment, duly executed by each Subordinated Creditor.

 

(b)           With respect to each Borrower, a Certificate of the Secretary of the Borrower certifying as to (i) the resolutions of the board of directors or manager, as applicable, of the Borrower approving the execution and delivery of this Amendment, (ii) the fact that the
Constituent Documents of the Borrower, which were certified and delivered to the Lender pursuant to the Certificate of Authority of the Borrower’s secretary issued in connection with the original execution of the Credit Agreement, continue in full force and effect and have not been amended or otherwise modified except as set forth in

 

  

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the Certificate to be delivered, and (iii) certifying that the officers and agents of the Borrower who have been previously certified to the Lender as being authorized to sign and to act on behalf of the Borrower continue to be so authorized or setting forth the sample signatures of each of the officers and agents of the Borrower authorized
to execute and deliver this Amendment and all other documents, agreements and certificates on behalf of the Borrower.

 

(c)           Such other matters as the Lender may require.

 

7.           Representations and Warranties.  Each Borrower (as to such Borrower) hereby represents and warrants to the Lender as follows:

 

(a)           The Borrower has all requisite power and authority to execute this Amendment, and this Amendment, and has been duly executed and delivered by the Borrower and constitutes the legal, valid and binding obligations of the Borrower, enforceable in accordance with its terms.

 

(b)           The execution, delivery and performance by the Borrower of this Amendment, has been duly authorized by all necessary action and does not (i) require any authorization, consent or approval by any governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, (ii) violate any provision of any law, rule or regulation or of any order, writ, injunction or decree presently in effect, having applicability to the Borrower, or the Constituent Documents of the Borrower, or (iii) result in a breach of or constitute a default under any indenture or loan or credit agreement or any other agreement, lease or instrument to which the Borrower is a party or by which it or its properties may be bound or affected.

 

(c)           All of the representations and warranties contained in Article V of the Credit Agreement are correct on and as of the date hereof as though made on and as of such date, except to the extent that such representations and warranties relate solely to an earlier date.

 

8.           References.  All references in the Credit Agreement to “this Agreement” shall be deemed to refer to the Credit Agreement as amended hereby; and any and all references in the Security Documents
to the Credit Agreement shall be deemed to refer to the Credit Agreement as amended hereby.

 

9.           No Waiver.  The execution of this Amendment and the acceptance of all other agreements and instruments related hereto shall not be deemed
to be a waiver of any Default or Event of Default under the Credit Agreement or a waiver of any breach, default or event of default under any Security Document or other document held by the Lender, whether or not known to the Lender and whether or not existing on the date of this Amendment.

 

10.           Release.  Each Borrower hereby absolutely and unconditionally releases and forever discharges the Lender, and any and all participants, parent corporations, subsidiary corporations, affiliated corporations,
insurers, indemnitors, successors and assigns thereof, together with all of the present and former directors, officers, agents and employees of any of the

 

  

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foregoing, from any and all claims, demands or causes of action of any kind, nature or description, whether arising in law or equity or upon contract or tort or under any state or federal law or otherwise, which such Borrower had, now has or has made claim to have against any such person for or by reason of any act, omission, matter, cause
or thing whatsoever arising from the beginning of time to and including the date of this Amendment, whether such claims, demands and causes of action are matured or unmatured or known or unknown.

 

11.           Fees, Costs and Expenses.  Each Borrower hereby reaffirms its agreement under the Credit Agreement to pay or reimburse the Lender on demand for all costs and expenses incurred by the Lender in connection
with the Loan Documents, including without limitation all reasonable fees and disbursements of legal counsel.  Without limiting the generality of the foregoing, the Borrowers specifically agree to pay all reasonable fees and disbursements of counsel to the Lender for the services performed by such counsel in connection with the preparation of this Amendment and the documents and instruments incidental hereto.  The Borrower hereby agrees that the Lender may, at any time or from time to time
in its sole discretion and without further authorization by the Borrower, make a loan to the Borrower under the Credit Agreement, or apply the proceeds of any loan, for the purpose of paying any such fees, disbursements, costs and expenses.

 

12.           Miscellaneous.  This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original and all of which counterparts, taken together,
shall constitute one and the same instrument.

 

 

Signatures appear on following page.

 

  

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written.

 

	
WELLS FARGO BANK, NATIONAL ASSOCIATION
	  	
MISCOR GROUP, LTD.

	  	  	  	  	  
	
By:
	/s/ Daniel J. Manella  	  	
By:
	/s/ John A. Martell
	  	
Daniel J. Manella, Vice President
	  	  	
John A. Martell, Chief Executive Officer

	  	  	  	  	  
	  	  	  	  	  
	
MAGNETECH INDUSTRIAL SERVICES, INC.
	  	
MARTELL ELECTRIC, LLC

	  	  	  	  	  
	  	  	  	  	  
	
By:
	/s/ John A. Martell	  	
By:
	/s/ John A. Martell
	  	
John A. Martell, Chief Executive Officer
	  	  	
John A. Martell, Chief Executive Officer

	  	  	  	  	  
	  	  	  	  	  
	
HK ENGINE COMPONENTS, LLC
	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	
By:
	/s/ John A. Martell	  	  	  
	  	
John A. Martell, Chief Executive Officer
	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	
IDEAL CONSOLIDATED, INC.
	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	
By:
	/s/ John A. Martell	  	  	  
	  	
John A. Martell, Chief Executive Officer
	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	
AMERICAN MOTIVE POWER, INC.
	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	
By:
	/s/ John A. Martell	  	  	  
	  	
John A. Martell, Chief Executive Officer
	  	  	  

 

 

  

 

  

 

ACKNOWLEDGMENT AND AGREEMENT OF SUBORDINATED CREDITORS

 

The undersigned, each a subordinated creditor of MISCOR GROUP, LTD., an Indiana corporation (“MISCOR”), MAGNETECH INDUSTRIAL SERVICES, INC., an Indiana corporation (“MIS”), MARTELL ELECTRIC, LLC, an Indiana limited liability company (“Martell”), HK ENGINE COMPONENTS, LLC, an Indiana limited liability
company (“HK”), IDEAL CONSOLIDATED, INC., an Indiana corporation (“Ideal”), and AMERICAN MOTIVE POWER, INC., a Nevada corporation (“AMP” and together with MISCOR, MIS, Martell, HK and Ideal, the “Borrowers” and each a “Borrower”) to WELLS FARGO BANK, NATIONAL ASSOCIATION (the “Lender”), acting through its Wells Fargo Business Credit operating division pursuant to a Subordination Agreement dated as of January 14, 2008 (the “Subordination
Agreement”), hereby (i) acknowledges receipt of the foregoing Amendment; (ii) consents to the terms and execution thereof; and (iii) reaffirms his or its obligations to the Lender pursuant to the terms of his or its Subordination Agreement.

 

	  	
BDEWEES, INC.

	  	  	  
	  	  	  
	  	
By:
	/s/ Bernard L. DeWees
	  	  	
Bernard L. DeWees, President

	  	  	  
	  	  	  
	  	
XGEN III, LTD.

	  	  	  
	  	  	  
	  	
By:
	/s/ Thomas J. Embrescia  
	  	  	
Thomas J. Embrescia, Manager

	  	  	  
	  	  	  
	  	/s/ John A. Martell
	  	
John A. MartellExhibit 10.1

SENIOR PROMISSORY NOTE

 

IT IS THE MAKER’S EXPRESS INTENTION THAT THIS SENIOR PROMISSORY NOTE BE, AS OF THE DATE OF THIS SENIOR PROMISSORY NOTE, SENIOR TO ALL OTHER MAKER DEBT EXCEPT THE BANK OF INDIA WHO IS AS OF THE DATE OF THIS SENIOR PROMISSORY NOTE THE MAKER’S SENIOR SECURRED CREDITOR.

 

	
    $700,000.00
 	
  July 17, 2009
 

 

FOR VALUE RECEIVED, Synovics Pharmaceuticals, Inc., with its principal office located at 5360 NW 35th Ave., Fort Lauderdale, Fl. 33309 (hereinafter referred to as the "Maker"), hereby promises to pay to the order of Maneesh Pharmaceuticals Ltd (“Company”) or its assigns (Company and its assigns are each hereinafter referred to as the "Holder") in accordance with the terms and conditions of this Senior Promissory Note (this “Note”), as amended, modified or supplemented from time to time, each of the payments as set forth on Exhibit A (the “Payments”), attached hereto and made a part hereof.

 

Any failure of the Maker to make any of the Payments within five (5) calendar days of receipt of written notice from the Holder shall constitute an event of default (an “Event of Default”) under this Note. Upon the occurrence of any Event of Default, this Note, at the option of the Holder, shall become immediately due and payable without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived by Maker. The Holder's failure to exercise such option shall not constitute a waiver of the right to exercise it at any subsequent date.

 

Upon the occurrence of any event of default, the Maker shall also pay to the Holder interest on the then-current unpaid balance of the Amount due from the date of default until payment of the full amount due at the rate of 18% per annum. All interest payable hereunder shall be computed on the basis of the actual number of days elapsed using a three hundred sixty-five (365) day year.  

 

All sums payable hereunder are payable in lawful money of the United States of America and in immediately available funds at such place or places as the Holder may designate in writing.  This Note may be prepaid at any time, in whole or in part, without penalty. All sums paid under this Note shall be applied first to any interest, fees, expenses and other charges then due and unpaid, in such order as the Holder shall determine, with the remaining principal amount, if any, to be applied to unpaid principal.  

 

The Maker may not assign, transfer or negotiate this Note and any security for the performance of Maker's obligations hereunder without the written consent of the Holder. 

 

Maker further acknowledges and agrees that in the event of the filing of a voluntary or involuntary bankruptcy, whether under Chapter 7, Chapter 11, or otherwise, under the Federal Bankruptcy Code (11 U.S.C. § 101 et seq.), involving Maker, prior to the date on which Maker has fully satisfied its payment obligations, pursuant to this Note, it shall 

 

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specifically request of the bankruptcy court, that its debt to Holder, in the amount of the remaining monies due and owing by it, pursuant to this Note, not be discharged in bankruptcy and that such debt to  Holder shall survive such bankruptcy filing, together with the discharge of same.

 

Maker will pay all of the legal and other fees and expenses of the Holder reasonably incurred in connection with the enforcement of any of the obligations of Maker or rights of the Holder under this Note.

 

In the event any provision of this Note is held to be unenforceable, void, or invalid for any reason, the unenforceability or invalidity thereof shall not affect the remainder of this Note, which shall remain in full force and effect and enforceable in accordance with its terms.

 

This Note may not be modified or terminated orally.  This Note for all purposes shall be enforced and construed in accordance with the substantive law of the State of Florida, without application of its conflict of laws provisions.  The Maker hereby consents to the exclusive jurisdiction and venue of the state and federal courts located in Florida with respect to any matters arising from enforcement of this Note.

 

IN WITNESS WHEREOF, the undersigned has executed this Note under seal as of the date first above written.

 

SYNOVICS PHARMACEUTICALS, INC.

 

 

By: \s\Ron Lane                                          
      

	
            Title:  Ron Lane, Director  
 

 

 

By: \s\Harcharan Sing                                      

	
            Title:  Harcharan Singh, Director  
 

 

 

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EXHIBIT A

Senior Promissory Note Payment Schedule

 

In exchange for Company’s direct payment to Bank of India, in accordance with the Bank of India letter dated July 3, 2009, of $700,000.00 on Maker’s behalf, Maker hereby agrees to pay Company, in one lump sum, $700,000.00 plus interest at the rate of 15% per annum upon the earlier to occur of: (a) December 31, 2009; or (b) the Maker’s receipt of an investment of at least $1,000,000.00 (on terms acceptable to the Maker). All interest payable hereunder shall be computed on the basis of the actual number of days elapsed using a three hundred sixty-five (365) day year.

 

 

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