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 mana
