Document:

mis_8k0204ex7.htm

Exhibit 10.1

February 9, 2010

MISCOR GROUP, LTD.

1125 S. Walnut

South Bend, Indiana  46619

Gentlemen:

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, collectively, the “Borrowers”), and Wells Fargo Bank, National Association (the “Lender”), have entered into that certain Credit and Security Agreement dated as of January 14, 2008, as amended (the “Credit Agreement”).  Capitalized terms used herein shall have the meaning assigned to such
terms in the Credit Agreement.

Pursuant to the terms of the Sixth Amendment to the Credit Agreement, the Lender consented to the sale of the Construction and Engineering Services segment of the Borrowers’ business through a sale of the capital stock of Ideal and the membership units of Martell.  Certain terms of the sale have changed and accordingly the
terms of the Lender’s consent have been revised.

The Lender hereby agrees that the Credit Agreement shall be further amended by restating Paragraphs 4 and 5 of the Sixth Amendment as follows:

4.           Consent to CES Sale.  The Borrowers have advised the Lender that they intend to sell the Construction and Engineering Services segment of their business through a sale of the capital stock of Ideal
and the membership units of Martell, substantially in accordance with the terms of that certain Letter of Intent dated December 7, 2009, by John A. Martell and Bonnie M. Martell (the “LOI”), and subsequent negotiations among the parties.  Subject to the satisfaction of the following conditions in a manner satisfactory to the Lender in its sole discretion, the Lender consents to the CES Sale and agrees to release its liens on the assets of Ideal and Martell, as well as the capital stock
of Ideal and the membership units of Martell, upon consummation of the CES Sale:

(a)           The cash portion of the purchase price payable to MISCOR shall be sufficient to repay and eliminate the portion of the revolving credit facility based upon Eligible Progress Accounts of each of Ideal and Martell, and in no

  

  

  

MISCOR Group, Ltd.

February 9, 2010

Page 2

event shall the cash portion of the purchase price be less than Seven Hundred Fifty Thousand Dollars ($750,000).

(b)           The Definitive Acquisition Agreement (as defined in the LOI) shall be in form and substance acceptable to the Lender in its discretion.

5.           Payments to Subordinated Creditor.  Notwithstanding anything to the contrary in the Credit Agreement or any Subordination Agreement, in connection with the CES Sale and as partial consideration for
the purchase price payable in the CES Sale, the Lender hereby agrees that not more than Two Million Seven Hundred Fifty Thousand Dollars ($2,750,000) of currently outstanding subordinated debt of the Borrowers owing to John A. Martell may be forgiven and a new note shall be issued to Mr. Martell (“New Martell Note”) for the remaining subordinated debt, which Note may also include any other indebtedness due Mr. Martell by Borrowers, and which Note may be secured by a blanket security interest
(“Martell Security Interest”).

The New Martell Note and Martell Security Interest shall be subordinated to the Indebtedness pursuant to a Subordination Agreement in form and substance acceptable to the Lender dated as of the date of the New Martell Note.   So long as any Indebtedness remains outstanding or the Lender has any obligation to make any Advance,
no payment or reduction of any kind may be made on the New Martell Note without the prior written consent of the Lender, which consent may be provided in the sole discretion of the Lender.

In addition to the foregoing and notwithstanding anything to the contrary contained in the Sixth Amendment or otherwise, the Lender has agreed to extend the date by which the Borrowers must raise at least One Million Dollars ($1,000,000) of additional capital, whether in the form of additional Subordinated Debt, proceeds of further asset sales
approved by the Lender and/or cash equity contributions, to February 19, 2010.

Neither this letter, nor any other communication between the Lender and the Borrowers, shall be deemed to be a waiver, modification, or release of any Default or Event of Default (as defined in the Credit Agreement) or, except as expressly provided herein, consent to any violation of the terms of the Credit Agreement.  Except as
provided herein, the Credit Agreement shall remain in full force and effect.

  

  

  

MISCOR Group, Ltd.

February 9, 2010

Page 3

Please acknowledge your agreement to the terms of this letter by executing a copy of the same where indicated below and returning it to the undersigned.  This letter may be executed in counterparts.

Sincerely,

WELLS FARGO BANK, NATIONAL ASSOCIATION

/s/ Daniel J. Manella

Daniel J. Manella

Vice President

Acknowledged and Agreed to

this 9th day of February, 2010.

MISCOR GROUP, LTD., on behalf of itself

and the other Borrowers

	
By:
	/s/ John A. Martell	 
	
Name:
	John A. Martell	 
	
Title:
	President and Chief Executive Officermis_8k0204ex3.htm

Exhibit 10.2

 

 

LENDER'S RECEIPT & ACKNOWLEDGEMENT

 

	  	
February 3, 2010

	  	
South Bend, Indiana

JOHN A. MARTELL, a resident of Michigan (the "Lender"), hereby acknowledges the following regarding the indebtedness of MISCOR GROUP, LTD., an Indiana corporation
(the "Borrower"), owed to the Lender under Borrower's Promissory Note dated, January 1, 2004 in the face amount of Three Million Dollars ($3,000,000.00) and payable to the order of the Lender (as assigned and subsequently amended, the "Note"):

	
A.  
	
Note Reduction:  The amount outstanding under the Note was reduced by Two Million Seven Hundred Fifty Thousand and 00/100 Dollars ($2,750,000.00) (the "Note Reduction"), in order to pay a portion of the purchase price to the Borrower arising from and pursuant to that certain Purchase
Agreement dated February 3, 2010.

 

	
B.  
	
New Note:  The Lender and the Borrower entered into a Secured Promissory Note dated February 3, 2010 (the "New Note"), wherein the Borrower, for value received, promised to pay to the order of the Lender the remaining unpaid balance, after the Note Reduction, of One Hundred Forty
Thousand Eight Hundred Fifty-Seven and 00/100 Dollars ($140,857.00) due under the Note, plus additional indebtedness in the amount of Thirty-Four Thousand Two Hundred Ninety-Two and 00/100 Dollars ($34,292.00) owed by Borrower to Lender.  The total principal amount due pursuant to the New Note as of the date of this Receipt and Acknowledgment is Four Hundred Twenty-Five Thousand One Hundred Forty-Nine and 00/100 Dollars ($425,149.00).

	
C.  
	
Cancellation of the Note:  On February 3, 2010, the Lender and the Borrower cancelled the Note, leaving only the New Note from the Borrower to the Lender.

 

IN WITNESS WHEREOF, the Lender has duly executed this Receipt and Acknowledgement as of the date first above written.

 

 

	 	
JOHN A. MARTELL

	 	  
	 	
By:
	
/s/ John A. Martellmis_8k0204ex5.htm

Exhibit 10.3

 

Execution Copy

SECURED PROMISSORY NOTE

 

	
$425,149.00
	
February 3, 2010

	  	
South Bend, Indiana

THIS INSTRUMENT IS SUBJECT TO THE TERMS OF A SUBORDINATION AGREEMENT BY JOHN A. MARTELL IN FAVOR OF WELLS FARGO BANK, NATIONAL ASSOCIATION, ACTING THROUGH ITS WELLS FARGO BUSINESS CREDIT OPERATING DIVISION, DATED AS OF JANUARY 29, 2010.

FOR VALUE RECEIVED, the undersigned, MISCOR GROUP, LTD., an Indiana corporation (the "Borrower"), hereby promises to pay to the order of JOHN A. MARTELL, a resident
of Michigan (the "Lender"), at his residence of 61249 Howell Drive, Cassopolis, Michigan 49031 or at such other place as the holder hereof may designate in writing, in lawful money of the United States of America, the principal sum of Four Hundred Twenty-Five Thousand One Hundred Forty-Nine and 00/100 Dollars ($425,149.00),or such lesser principal sum as may then be owed by the Borrower to the Lender under this Secured Promissory Note (the "Note")
and any remaining accrued interest (as set forth below), on or before the earlier of the following dates:

 

The entire unpaid principal of the Note and any unpaid and accrued interest thereon shall be due in full on February 28, 2012 (the "Stated Maturity Date").

 

THE UNPAID INDEBTEDNESS EVIDENCED HEREBY SHALL BECOME IMMEDIATELY DUE AND PAYABLE UPON THE STATED MATURITY DATE, TOGETHER WITH ANY REMAINING ACCRUED INTEREST THEREON (AS SET FORTH BELOW).

 

This Note shall bear interest on the unpaid principal amount outstanding beginning on the first day of the month immediately following the date of this Note and continuing on a monthly basis thereafter until the Stated Maturity Date or until maturity due to acceleration; said interest shall accrue at the Prime Rate plus two percent (2%),
but in no event shall the total interest rate be less than five percent (5%); and interest payments shall be made by the Borrower each month beginning on the first day of the month immediately following the date of this Note and continuing on a monthly basis thereafter in an amount equal to the interest accruing for the prior month.

 

Subject to the approval of Wells Fargo Business Credit, installment payments on the principal sum shall begin April 1, 2010, and shall be made on the first day of each consecutive month thereafter in amounts of not less than Five Thousand Dollars ($5,000), with the final payment of the entire unpaid principal and all unpaid accrued interest
thereon due on the Stated Maturity Date.  All payments on account of indebtedness evidenced by this Note shall be first applied to interest on the unpaid balance and the remainder to principal.  Payments of both principal and interest hereunder are to be made in immediately available funds.

 

If the Borrower fails or refuses to pay any principal, interest, charges, costs, expenses and/or fees in accordance with the terms of this Note ("Event of Default"), the Lender shall be entitled, at its sole option, to accelerate the then outstanding indebtedness hereunder
and to take all other action permissible by law.

 

  

 

  

The remedies of the holder hereof as provided in this Note shall be cumulative and concurrent, and may be pursued singly, successively, or together against the Borrower, and/or against any collateral or guarantor, at the sole discretion of the holder hereof.

 

The Borrower hereby waives presentment for payment, demand, notice of nonpayment, notice of dishonor, protest of any dishonor, notice of protest, and protest of this Note and all other notices in connection with the delivery, acceptance, performance, default, or enforcement of the payment of this Note, and agrees that its liability shall
be unconditional without regard to the liability of any other party or person and shall not in any manner be affected by any indulgence, extension of time, renewal, waiver or modification granted or consented to by the holder hereof; and the Borrower agrees that additional makers, endorsers, guarantors, or sureties may become parties hereto without notice to the Borrower or affecting the Borrower’s liability hereunder.

 

It being the intent of the Lender and the Borrower that the rate of interest and all other charges to the Borrower be lawful, if for any reason the payment of a portion of the interest or other charges otherwise required to be paid under this Note would exceed the limit which the Lender may lawfully charge the Borrower, then the obligation
to pay interest or other charges shall automatically be reduced to such limit.

 

The holder hereof shall not by any act of omission or commission be deemed to waive any of its rights or remedies hereunder unless such waiver be in writing and signed by the holder hereof (and then only to the extent specifically set forth therein).  A waiver of any one event shall not be construed as continuing or as a bar
to or waiver of such right or remedy on a subsequent event.

 

Whenever possible, each provision of this Note shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Note shall be prohibited or invalid under such law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder
of such provisions of this Note.

 

This Note shall not be amended, supplemented or modified except pursuant to a writing signed by both the Lender and the Borrower.

 

If at any time or times, the Lender: (a) employs counsel in good faith for advice or other representation (i) with respect to this Note or any collateral securing this Note, (ii) to
represent Lender in any restructuring, workout, litigation, contest, dispute, suit or proceeding or to commence, defend or intervene or to take any other action in or with respect to any litigation, contest, dispute or proceeding (whether instituted by the Lender, the Borrower or any other person or entity) in any way or respect relating to this Note or any collateral securing this Note, or (iii) to enforce any rights of the Lender against the Borrower; (b) takes
any action to protect, collect, sell, liquidate or otherwise dispose of any collateral securing this Note; and/or (c) attempts to or enforces any of the Lender’s rights and remedies against the Borrower; then the costs and expenses incurred by the Lender shall be part of the indebtedness evidenced by this Note, payable by the Borrower to the Lender on demand.  Without limiting
the generality of the foregoing, such expenses and costs include any and all court costs, reasonable attorneys’ fees and expenses, and accountants’ fees and expenses.

 

Payment of this Note is secured pursuant to that certain Security Agreement dated as of February 3, 2010 (the "Security Agreement").

 

This Note shall inure to the benefit of the Lender and its successors and assigns and shall be binding upon the Borrower and its successors and permitted assigns.  As used herein the term “Lender”

 

  

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shall mean and include the successors and assigns of the identified payee and the holder or holders of this Note from time to time.

 

THIS NOTE SHALL BE CONSTRUED IN ALL RESPECTS IN ACCORDANCE WITH, AND ENFORCED AND GOVERNED BY THE INTERNAL LAWS OF, THE STATE OF INDIANA, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.

 

THE BORROWER AND THE LENDER HEREBY IRREVOCABLY AND KNOWINGLY WAIVE (TO THE FULLEST EXTENT PERMITTED BY LAW) ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING (INCLUDING, WITHOUT LIMITATION, ANY COUNTERCLAIM) ARISING OUT OF THIS NOTE OR ANY COLLATERAL SECURING THIS NOTE, INCLUDING, WITHOUT LIMITATION, ANY ACTION
OR PROCEEDING (A) TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR IN CONNECTION WITH THIS NOTE OR THE SECURITY AGREEMENT, OR (B) ARISING FROM ANY DISPUTE OR CONTROVERSY IN CONNECTION WITH OR RELATED TO THIS NOTE OR THE SECURITY AGREEMENT.  THE LENDER AND THE BORROWER AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT A JURY.

 

 

[SIGNATURE PAGE FOLLOWS]

 

  

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IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed by its authorized officer as of the date first above written.

 

 

	 	
MISCOR GROUP, LTD

	 	  
	 	
By:
	
/s/ Michael D. Topa

	 	  	
Michael D. Topa

Interim Chief Financial Officer

 

 

 

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