AMENDED AND RESTATED SUBORDINATION AGREEMENT
Exhibit
10.6
AMENDED
AND RESTATED SUBORDINATION AGREEMENT
This
Amended and Restated Subordination Agreement (this “Agreement”) is entered into
as of the 31st
day of
May, 2006, by and among Xxxx Xxxxxxx, Xxxxxxxxxxxx Xxxxxxx Tulcin Xxxxx, Inc.
(“Strasbourger”), as agent for the holders of the Subordinated Secured
Convertible Debenture holders listed on Schedule
A
(the
“Debenture Holder(s),” all of whom are collectively referred to herein as the
“Subordinated Lenders” and each, a “Subordinated Lender”), and Laurus Master
Fund, Ltd. (the “Senior Lender”). Unless otherwise defined herein, capitalized
terms used herein shall have the meaning provided such terms in the Security
and
Purchase Agreement referred to below.
BACKGROUND
WHEREAS,
the Senior Lender has made loans to MISCOR Group, Ltd. f/k/a Magnetech
Integrated Services Corp., an Indiana corporation (“MISCOR”), and to Magnetech
Industrial Services of Alabama, LLC, an Indiana limited liability company
(“MIS”, and collectively with MISCOR, the “Company”) pursuant to, and in
accordance with, (i) that certain Security and Purchase Agreement dated as
of
August 24, 2005 by and between MISCOR, certain subsidiaries of MISCOR, and
the
Senior Lender (as amended, modified or supplemented from time to time, the
"Security Agreement"), (ii) the Ancillary Agreements referred to in the Security
and Purchase Agreement, (iii) that certain Security and Purchase Agreement
dated
as of the date hereof by and between MIS and Laurus (as amended, modified or
supplemented from time to time, the “MIS Security Agreement”) and (iv) the
Ancillary Agreements referred to in the MIS Security Agreement (the “MIS
Ancillary Agreements”).
WHEREAS,
each Debenture Holder is the holder of a subordinated secured convertible
debenture issued by the Company. Pursuant to Section 9.1 of each debenture,
Strasbourger is authorized to make, take or give any consent, waiver or other
action provided by the terms of the Debentures to be made, given or taken by
the
Debenture Holders.
WHEREAS,
the Subordinated Lenders have made loans to the Company.
NOW,
THEREFORE, each Subordinated Lender and the Senior Lender agree as
follows:
TERMS
1. Up
All
loans made by the Senior Lender to the Company and/or any of its Subsidiaries
pursuant to, and all associated interest, fees and penalties owing by the
Company and/or any of its Subsidiaries to the Senior Lender under, the Security
Agreement, any Ancillary Agreement, the MIS Security Agreement, any MIS
Ancillary Agreement or otherwise are referred to as “Senior Liabilities”. Any
and all loans made by the Subordinated Lenders to the Company and/or any of
its
Subsidiaries, together with all other obligations of the Company and/or any
of
its Subsidiaries to any Subordinated Lender (in each case, including any
interest, fees or penalties related thereto), howsoever created, arising or
evidenced, whether direct or indirect, absolute or contingent or now or
hereafter existing, or due or to become due are referred to as “Junior
Liabilities”. It is expressly understood and agreed that the term “Senior
Liabilities”,
as used in this Agreement, shall include, without limitation, any and all
interest, fees and penalties accruing on any of the Senior Liabilities after
the
commencement of any proceedings referred to in paragraph 4 of this Agreement,
notwithstanding any provision or rule of law which might restrict the rights
of
the Senior Lender, as against the Company, its Subsidiaries or anyone else,
to
collect such interest, fees or penalties, as the case may be.
2. Except
as
expressly otherwise provided in this Agreement or as the Senior Lender may
otherwise expressly consent in writing, the payment of the Junior Liabilities
shall be postponed and subordinated to the payment in full of all Senior
Liabilities. Furthermore, no payments or other distributions whatsoever in
respect of any Junior Liabilities shall be made, nor shall any property or
assets of the Company or any of its Subsidiaries be applied to the purchase
or
other acquisition or retirement of any Junior Liability. Notwithstanding
anything to the contrary contained in this paragraph 2 or elsewhere in this
Agreement, the Company and its Subsidiaries may make regularly scheduled
principal and interest payments, as the case may be, to the Subordinated Lenders
with respect to the Junior Liabilities, so long as (i) no Event of Default
(as
defined in any of the Security Agreement, the Ancillary Agreements, the MIS
Security Agreement or the MIS Ancillary Agreements) has occurred and is
continuing at the time of any such payment and (ii) the amount of such regularly
scheduled principal payments and the rate of interest, in each case, with
respect to the Junior Liabilities is not increased from that in effect on the
date hereof.
3. Each
Subordinated Lender hereby subordinates all security interests that have been,
or may be, granted by the Company and/or any of its Subsidiaries to such
Subordinated Lender in respect of the Junior Liabilities, to the security
interests granted by the Company and/or any of its Subsidiaries to the Senior
Lender in respect of the Senior Liabilities.
4. In
the
event of any dissolution, winding up, liquidation, readjustment, reorganization
or other similar proceedings relating to the Company and/or any of its
Subsidiaries or to its creditors, as such, or to its property (whether voluntary
or involuntary, partial or complete, and whether in bankruptcy, insolvency
or
receivership, or upon an assignment for the benefit of creditors, or any other
marshalling of the assets and liabilities of the Company and/or any of its
Subsidiaries, or any sale of all or substantially all of the assets of the
Company and/or any of its Subsidiaries, or otherwise), the Senior Liabilities
shall first be paid in full before any Subordinated Lender shall be entitled
to
receive and to retain any payment or distribution in respect of any Junior
Liability.
5. Each
Subordinated Lender will xxxx his books and records so as to clearly indicate
that their respective Junior Liabilities are subordinated in accordance with
the
terms of this Agreement. Each Subordinated Lender will execute such further
documents or instruments and take such further action as the Senior Lender
may
reasonably request from time to time request to carry out the intent of this
Agreement.
6. Each
Subordinated Lender hereby waives all diligence in collection or protection
of
or realization upon the Senior Liabilities or any security for the Senior
Liabilities.
7. No
Subordinated Lender will without the prior written consent of the Senior Lender:
(a) attempt to enforce or collect any Junior Liability or any rights in respect
of any
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Junior
Liability; or (b) commence, or join with any other creditor in commencing,
any bankruptcy, reorganization or insolvency proceedings with respect to the
Company and/or any of its Subsidiaries.
8. The
Senior Lender may, from time to time, at its sole discretion and without notice
to any Subordinated Lender, take any or all of the following actions: (a) retain
or obtain a security interest in any property to secure any of the Senior
Liabilities; (b) retain or obtain the primary or secondary obligation of any
other obligor or obligors with respect to any of the Senior Liabilities; (c)
extend or renew for one or more periods (whether or not longer than the original
period), alter or exchange any of the Senior Liabilities, or release or
compromise any obligation of any nature of any obligor with respect to any
of
the Senior Liabilities; and (d) release their security interest in, or
surrender, release or permit any substitution or exchange for, all or any part
of any property securing any of the Senior Liabilities, or extend or renew
for
one or more periods (whether or not longer than the original period) or release,
compromise, alter or exchange any obligations of any nature of any obligor
with
respect to any such property.
9. The
Senior Lender may, from time to time, whether before or after any discontinuance
of this Agreement, without notice to any Subordinated Lender, assign or transfer
any or all of the Senior Liabilities or any interest in the Senior Liabilities;
and, notwithstanding any such assignment or transfer or any subsequent
assignment or transfer of the Senior Liabilities, such Senior Liabilities shall
be and remain Senior Liabilities for the purposes of this Agreement, and every
immediate and successive assignee or transferee of any of the Senior Liabilities
or of any interest in the Senior Liabilities shall, to the extent of the
interest of such assignee or transferee in the Senior Liabilities, be entitled
to the benefits of this Agreement to the same extent as if such assignee or
transferee were the Senior Lender, as applicable; provided, however, that,
unless the Senior Lender shall otherwise consent in writing, the Senior Lender
shall have an unimpaired right, prior and superior to that of any such assignee
or transferee, to enforce this Agreement, for the benefit of the Senior Lender,
as to those of the Senior Liabilities which the Senior Lender has not assigned
or transferred.
10. The
Senior Lender shall not be prejudiced in its rights under this Agreement by
any
act or failure to act of any Subordinated Lender, or any noncompliance of any
Subordinated Lender with any agreement or obligation, regardless of any
knowledge thereof which the Senior Lender may have or with which the Senior
Lender may be charged; and no action of the Senior Lender permitted under this
Agreement shall in any way affect or impair the rights of the Senior Lender
and
the obligations of any Subordinated Lender under this Agreement.
11. No
delay
on the part of the Senior Lender in the exercise of any right or remedy shall
operate as a waiver of such right or remedy, and no single or partial exercise
by the Senior Lender of any right or remedy shall preclude other or further
exercise of such right or remedy or the exercise of any other right or remedy;
nor shall any modification or waiver of any of the provisions of this Agreement
be binding upon the Senior Lender except as expressly set forth in a writing
duly signed and delivered on behalf of the Senior Lender. For the purposes
of
this Agreement, Senior Liabilities shall have the meaning set forth in Section
1
above, notwithstanding any right or power of any Subordinated Lender or anyone
else to assert any claim or defense as to the invalidity or unenforceability
of
any such obligation, and no such
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3
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claim
or
defense shall affect or impair the agreements and obligations of any
Subordinated Lender under this Agreement.
12. This
Agreement shall be binding upon each Subordinated Lender and upon the heirs,
legal representatives, successors and assigns of each Subordinated Lender and
the successors and assigns of any Subordinated Lender.
13. This
Agreement shall be construed in accordance with and governed by the laws of
New
York without regard to conflict of laws provisions. Wherever possible each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this
Agreement.
[signature
page follows]
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4
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IN
WITNESS WHEREOF, this Agreement has been made and delivered this __ day of
______________, 2006.
|
By:
|
/s/ Xxxx X. Xxxxxxx | |||
|
Name:
|
Xxxx
X. Xxxxxxx
|
|||
|
XXXXXXXXXXXX
XXXXXXX TULCIN XXXXX, INC. as agent for the Debenture
Holders
|
||||
|
By:
|
/s/ Xxxxxxx X. Xxxxxxxxxx | |||
|
Name:
|
Xxxxxxx X. Xxxxxxxxxx | |||
|
Title:
|
||||
|
LAURUS
MASTER FUND, LTD.
|
||||
|
By:
|
/s/ Xxxxx Grin | |||
|
Name:
|
Xxxxx Grin | |||
|
Title:
|
Partner | |||
|
Acknowledged
and Agreed to by:
|
||||
|
|
||||
|
By:
|
/s/ Xxxx X. Xxxxxxx | |||
|
Name:
|
Xxxx
X. Xxxxxxx
|
|||
|
Title:
|
President | |||
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5
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SCHEDULE
A
Debenture
Holders
Magnetech
Integrated Services Corp
Outstanding
Debentures
As
of
5/31/05
|
Warrant
#
|
Holder
|
Debenture
$
|
|
1
|
Xxxxx
X. Xxxxx
|
100,000
|
|
2
|
Xxxxxxx
Xxxxxx & Xxxxxx Xxxxxx JTWROS
|
250,000
|
|
3
|
Xxxxx
X. Xxxxxxx & Xxxxx X. Xxxxxxxx Xxxxxxx XX TR 1/18/99
|
50,000
|
|
4
|
Pershing
as Custodian, XXX FBO Xxxxxx X'Xxxxxx
|
50,000
|
|
5
|
Xx.
Xxxxx Xxxx III
|
30,000
|
|
6
|
Xx.
Xxx Xxxxxxxxx & Xxxxx X. Xxxxxxxxx
|
25,000
|
|
7
|
Xxxxxxx
Xxxxxxx & Xxxxxxx Xxxx Xxxxxxx JTWROS
|
75,000
|
|
8
|
Xxxx
X. Xxxxxxxxx
|
100,000
|
|
9
|
Xx.
Xxxxxxx Xxxxxxxxxx
|
50,000
|
|
10
|
RS
& VS Ltd., SJDE LLC Gen. Partner
|
25,000
|
|
11
|
Xxxxxxx
X. Xxxxx, Xx.
|
50,000
|
|
12
|
Xxxxxx
X. Xxxxxx, III
|
50,000
|
|
13
|
Xxxxxx
X. Xxxxxx
|
25,000
|
|
14
|
Xxxxxx
Xxxxxxxxxxx
|
25,000
|
|
15
|
Xxxx
Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxxxx JTWROS
|
25,000
|
|
16
|
Xx.
Xxxxx X. Xxxxxx
|
50,000
|
|
17
|
Xxxxxx
X Xxxxxxxx MD TR ISERP Profit Sharing Plan
|
25,000
|
|
18
|
Xx.
Xxxxxxx X. Xxxxxxxxx
|
50,000
|
|
19
|
Xxxxxx
X. Xxxx
|
50,000
|
|
20
|
Xxxxxx
Xxxxx TR The Xxxxx Xxxxx Trust UA dated 6/10/1991
|
50,000
|
|
21
|
Xxxxx
X. Xxxxxxx J. & Xxxxxx X Xxxxxxx TRS Xxxxx X Xxxxxxx
Trust
|
50,000
|
|
22
|
Xxxxxx
Xxxxxxxxxxx
|
250,000
|
|
23
|
Pershing
as Custodian, SEP FBO Xxxxxx Xxxxxxxxxxx
|
50,000
|
|
24
|
Xxxxxx
Xxx Xxxxxx
|
20,000
|
|
25
|
Xxxx
X. Xxxxxx, Xx. &eanne Xxxxxx Xxxxxx JTWROS
|
25,000
|
|
26
|
Xx.
Xxxxxx Xxx Xxxxxxx
|
30,000
|
|
27
|
StarInvest
Group, Inc
|
400,000
|
|
28
|
SwissFinanz
Partner AG
|
130,000
|
|
29
|
Xxxxxx
Xxxxxx
|
20,000
|
|
30
|
Xxxxxx
Xxxxxxxxx
|
20,000
|
|
31
|
Xxxx
Xxxxxxxx
|
50,000
|
|
32
|
Xxxxxx
Xxxxx
|
80,000
|
|
33
|
Xxxxxxxxx
Xxxx
|
50,000
|
|
34
|
Xxxx
Remensberger
|
20,000
|
|
35
|
Xxxxx
Xxxxxxxxxxx
|
25,000
|
|
36
|
Xxxxx
X. Xxxx-Xxxxxx
|
10,000
|
|
37
|
Xxxxx
Xxxxx Xxxxx
|
10,000
|
|
38
|
Xxxxxxxxx
Xxxxxxxxxx
|
10,000
|
|
39
|
Xxxx
Xxxxxxxxxx
|
15,000
|
|
40
|
Xxxxx
Xxxxxx
|
10,000
|
|
41
|
Hans
Nef-Xxxx
|
60,000
|
|
42
|
Xxxxx
Xxxxxx
|
50,000
|
|
43
|
Xxx
Xxxxxxx
|
15,000
|
|
44
|
Xxxxxx
Xxxxxxxx
|
5,000
|
|
45
|
Xxxxxxxxx
Xxxxxxxxxx
|
10,000
|
|
46
|
Xxxx
Xxx
|
20,000
|
|
47
|
StarInvest
Group, Inc
|
400,000
|
|
48
|
Kilmore
Worldwide, Inc.
|
25,000
|
|
00
|
Xxxxxxxx
Xxxxx Funds Limited
|
500,000
|
|
50
|
Xxxxxxxxx
Xxxxx
|
25,000
|
|
51
|
Pershing
LLC as Custodian, XXX FBO Xxxxxxx X. Xxxxxx
|
100,000
|
|
52
|
SwissFinanz
Partner AG
|
60,000
|
|
53
|
Xxxxxx
Xxxxx
|
50,000
|
|
54
|
Xxxx
Remensberger
|
20,000
|
|
55
|
Xxxx
Xxxxxxxxxx
|
20,000
|
|
56
|
Xxxx-Xxxxx
Xxxxxx
|
20,000
|
|
57
|
Xxxxx
Xxxxxxx III
|
25,000
|
|
58
|
Xxxxxxxxx
X. Xxxxxxx
|
50,000
|
|
59
|
Xxxxxxx
Xxxxxxx
|
75,000
|
|
60
|
Xxxx
X. Xxxxxxxxx
|
40,000
|
|
61
|
Xxxxxx
Xxxxxxx & Xxxxxxxxx Xxxxxxx JTWROS
|
25,000
|
|
4,025,000
|
