SECOND AMENDMENT TO CREDIT AND SECURITY AGREEMENT
Exhibit
10.56a
SECOND
AMENDMENT TO CREDIT AND SECURITY AGREEMENT
THIS
SECOND AMENDMENT TO CREDIT AND SECURITY AGREEMENT (the “Second Amendment”),
dated August 28, 2008, is entered into by and among MISCOR GROUP, LTD., an
Indiana corporation (“MISCOR”), MAGNETECH INDUSTRIAL SERVICES, INC., an Indiana
corporation (“MIS”), XXXXXXX ELECTRIC, LLC, an Indiana limited liability
company (“Xxxxxxx”), HK ENGINE COMPONENTS, LLC, an Indiana limited liability
company (“HK”), MAGNETECH POWER SERVICES, LLC, an Indiana limited liability
company (“MPS”), IDEAL CONSOLIDATED, INC., an Indiana corporation (“Ideal”), 3-D
SERVICE, LTD., an Ohio limited liability company (“3D”), and AMERICAN MOTIVE
POWER, INC., a Nevada corporation (“AMP” and together with MISCOR, MIS, Xxxxxxx,
XX, MPS, Ideal and 3D, the “Borrowers” and each a “Borrower”) and XXXXX FARGO
BANK, NATIONAL ASSOCIATION (the “Lender”), acting through its Xxxxx Fargo
Business Credit operating division.
RECITALS
The
Borrowers and the Lender are parties to a Credit and Security Agreement dated
January 14, 2008, as amended by the First Amendment to Credit and Security
Agreement dated April 15, 2008 (the “Credit Agreement”).
The
Borrowers have advised the Lender that AMP has created a Canadian subsidiary
known as AMP Rail Services Canada, ULC and have requested that the Lender permit
loans by AMP to such subsidiary from time to time, 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 adding or amending, as applicable, the
following definitions:
“AMP-Canada”
means AMP Rail Services Canada, ULC, an Alberta corporation and a wholly owned
subsidiary of AMP.
“Book Net
Worth” means the aggregate of the Stockholders’ equity in the Borrowers and
AMP-Canada, determined on a consolidated basis in accordance with
GAAP.
“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, MPS, 3D, Xxxxxxx, 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 Xxxxxxx and Ideal, or (z) $2,000,000, or
(B) $13,750,000, 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.
“Collateral
Assignment” means that certain Collateral Assignment from AMP the Lender dated
August ____, 2008 pursuant to which AMP has collaterally assigned to the Lender
its interests in each of the Intercompany Note and that certain Hypothec on
Movanles between AMP-Canada and AMP.
“Current
Maturities of Long Term Debt” means as of a given date, the amount of each
Borrower’s and AMP-Canada’s long-term debt (other than
Revolving Advances) and capitalized leases which became due during the fiscal
year-to-date period ending on the designated date.
“Eligible
AMP-Canada Accounts” means, as to AMP-Canada, all unpaid Accounts of AMP-Canada
which otherwise constitute Eligible Accounts (as if AMP-Canada were a Borrower)
provided that such Accounts may be denominated in Canadian dollars.
“Intercompany
Note” means AMP-Canada’s promissory note, payable to the order of AMP, as the
same may be renewed or amended from time to time, and all replacements
thereto.
“Net
Income (Loss)” means the Borrowers’ and AMP-Canada’s aggregate fiscal
year-to-date after-tax net income (loss) from
continuing operations, including
extraordinary, non-operating or non-cash losses but excluding
extraordinary, non-operating or non-cash gains, all as determined on a
consolidated basis in accordance with GAAP.
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“Security
Documents” means this Agreement, the Wholesale Lockbox and Collection Account
Agreement, the Patent and Trademark Security Agreement, the Mortgage, the
Collateral Pledge Agreement, the Collateral
Assignment and any
other document delivered to the Lender from time to time to secure the
Indebtedness.
“Unfinanced
Capital Expenditures” means Capital Expenditures for which a Borrower or
AMP-Canada, as applicable, has not become indebted to another party or incurred
a contractual liability (other than to the Lender).
2. Amendment of Section
6.2(c). Section 6.2(c) of the Agreement shall be amended to
read as follows:
(c) Capital
Expenditures. The Borrowers and AMP-Canada, collectively, will
not incur or contract to incur Capital Expenditures of more than Two Million
Dollars ($2,000,000) in the aggregate during fiscal year 2008 or One Million
Five Hundred Thousand Dollars ($1,500.000.00) during any fiscal year thereafter
during the term hereof, with no more than One Million Two Hundred Fifty Thousand
Dollars ($1,250,000) to be paid from the Borrowers’ and AMP-Canada’s working
capital in fiscal year 2008, and no more than Five Hundred Thousand
($500,000.00) to be paid from working capital in any fiscal year
thereafter.
3. Addition of Section
6.6(f). A new Section 6.6(f) shall be added to the Agreement
to read as follows:
(f) Equity
investments in and loans to AMP-Canada by AMP not to exceed $1,000,000 in the
aggregate at anytime outstanding.
4. No Other
Changes. Except as explicitly amended by this Second
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.
5. Canadian Treasury Management
Services. The Borrowers acknowledge and agree that as an
accommodation to the Borrowers the Lender has agreed to enter into or to cause
an affiliate of the Lender to enter into one or more agreements pursuant to
which the Lender, acting through its International Treasury Management
department would provide lockbox and other treasury management services to
AMP-Canada. The Borrowers further agree that to the extent there are
any unpaid liabilities of AMP-Canada arising out of such treasury management
services, such unpaid liabilities shall be paid by the making of Revolving
Advances under the Credit Agreement and shall be Indebtedness
thereunder. The Borrowers further acknowledge that the Lender intends
to impose a reserve against Availability of not less than $100,000 in respect of
such potential liabilities.
6. Conditions
Precedent. This Second 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:
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(a) The
Collateral Assignment, duly executed by AMP, together with the original executed
Intercompany Note, duly endorsed to the Lender, and the Hypotech on Movables,
duly executed by AMP and AMP-Canada.
(b) Evidence
acceptable to the Lender that AMP’s security interest in the assets of
AMP-Canada has been properly perfected, including an opinion of Borrowers’
Canadian counsel as to the same, and evidence that such perfected security
interest has been properly assigned to the Lender.
(c) 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 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.
(d) 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 as
to AMP, the Collateral Assignment, and any other agreements
or instruments required hereunder and to perform all of its obligations
hereunder, and this Amendment, as to AMP, the Collateral Assignment, and all such other
agreements and instruments has been duly executed and delivered by the Borrower
and constitute the legal, valid and binding obligations of the Borrower,
enforceable in accordance with their terms.
(b) The
execution, delivery and performance by the Borrower of this Amendment, and as to
AMP, the Collateral Assignment, and any other agreements
or instruments required hereunder have been duly authorized by all necessary
action and do 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.
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(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 release and forever discharge 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 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 and, in consideration of the Lender’s agreements set forth
herein, a fully earned, non-refundable accommodation fee of Five Thousand
Dollars ($5,000.00). 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
Second 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 Second Amendment to be duly
executed as of the date first above written.
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XXXXX
FARGO BANK, NATIONAL ASSOCIATION
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By:
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/s/ Xxxxxx X. Xxxxxx |
By:
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/s/
Xxxx X. Xxxxxxx
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Xxxxxx
X. Xxxxxx, Vice President
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Xxxx
X. Xxxxxxx, Chief Executive Officer
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MAGNETECH
INDUSTRIAL SERVICES, INC.
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XXXXXXX
ELECTRIC, LLC
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By:
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/s/
Xxxx X. Xxxxxxx
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By:
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/s/
Xxxx X. Xxxxxxx
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Xxxx
X. Xxxxxxx, Chief Executive Officer
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Xxxx
X. Xxxxxxx, Chief Executive Officer
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HK
ENGINE COMPONENTS, LLC
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MAGNETECH
POWER SERVICES, LLC
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By:
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/s/
Xxxx X. Xxxxxxx
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By:
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/s/
Xxxx X. Xxxxxxx
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Xxxx
X. Xxxxxxx, Chief Executive Officer
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Xxxx
X. Xxxxxxx, Chief Executive Officer
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IDEAL
CONSOLIDATED, INC.
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3-D
SERVICE, LTD.
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By:
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/s/
Xxxx X. Xxxxxxx
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By:
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/s/
Xxxx X. Xxxxxxx
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Xxxx
X. Xxxxxxx, Chief Executive Officer
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Xxxx
X. Xxxxxxx, Chief Executive Officer
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AMERICAN
MOTIVE POWER, INC.
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By:
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/s/
Xxxx X. Xxxxxxx
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Xxxx
X. Xxxxxxx, Chief Executive Officer
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