Contract
Exhibit
10.2
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MISCOR
GROUP, LTD., HK ENGINE COMPONENTS, LLC,
MAGNETECH
INDUSTRIAL SERVICES, INC., MAGNETECH
POWER
SERVICES, LLC, XXXXXXX ELECTRIC, LLC
0000
X. XXXXXX XXXXXX
XXXXX
XXXX, XX 00000
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MFB
FINANCIAL
0000
Xxxxxx Xxxxx Xxxxxxx, Xxxxx 000
XXXXXXXXX,
XX 00000
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ACCOUNT
# 600000547
Loan
Number 70-0028852
Date:
March
9, 2007
Maturity
Date ON
DEMAND
Loan
Amount $
5,000,000.00
Renewal
Of
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XXXXXXXX’S
NAME AND ADDRESS
“I”
includes each borrower above, jointly and severally.
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XXXXXX’S
NAME AND ADDRESS
“You”
means the lender, its successors and assigns.
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For
value
received, I promise to pay to you, or your order, at your address listed above
the PRINCIPAL sum of FIVE
MILLION AND N0/100 Dollars
$
5,000,000,00
Single
Advance:
I will
receive all of this principal sum on .
No
additional advances are contemplated under this note.
x Multiple
Advance:
The
principal sum shown above is the maximum amount of principal I can borrow under
this note. On 02-28-2007
I
will
receive the amount of $
and
future principal advances are contemplated.
Conditions:
The
conditions for future advances are TELEPHONE
ADVANCES MAY BE MADE WITH THE OFFICER’S APPROVAL. FUNDS WILL BE DEPOSITED INTO
THE, XXXXXXXX’S
OPERATING ACCOUNT
x Open
End Credit:
You and
I agree that I may borrow up to the maximum amount of principal more than one
time. This feature is subject to
all
other
conditions and expires on DEMAND .
Closed
End Credit:
You and
I agree that I may borrow up to the maximum only one time (and subject to all
other conditions).
INTEREST:
I agree
to pay interest on the outstanding principal balance from 02-28-2007
at the
rate of 8.750
% per
year until 03-01-2007 .
x Variable
Rate:
This
rate may then change as stated below,
x Index
Rate:
The
future rate will be 0.500
PERCENT ABOVE the
following index rate: THE
HIGHEST RATE ON CORPORATE, LOANS POSTED BY AT LEAST
75% 0F THE USA’S THIRTY LARGEST BANKS KNOWN AS THE WALL STREET JOURNAL PRIME
RATE.
No
Index:
The
future rate will not be subject to any internal or external index. It will
be
entirely in your control.
x Frequency
and Timing:
The rate
on this note may change as often as EVERY
DAY BEGINNING 03-01-2007
A
change
in the interest rate will take effect ON
THE
SAME DAY
Limitations:
During
the term of this loan, the applicable annual interest rata will not be more
than
%
or less
than
.
The
rate may not change more than %
each
Effect
of Variable Rate:
A change
In the interest rate will have the following effect on the
payments:
x
The
amount of each scheduled payment will change. x
The
amount of the final payment will change.
ACCRUAL
METHOD:
Interest
will be calculated on a ACTUAL/360
basis.
POST
MATURITY RATE:
I agree
to pay interest on the unpaid balance of this note owing after maturity, and
until paid in full, as stated below:
on the
same fixed or variable rate basis in effect before maturity (as indicated
above).
x
at a
rate equal to 18.00%
x LATE
CHARGE:
If a
payment Is made more than 15
days
after it is due, I agree to pay a late charge of 5.000%
OF
THE
LATE AMOUNT WITH A MIN
OF
$50.00 AND A MAX OF $500.00
ADDITIONAL
CHARGES:
In
addition to interest, I agree to pay the following charges which
are
x
are not
included
in the principal amount
above:
LOAN
CLOSING FEES
PAYMENTS:
I agree
to pay this note as follows:
MONTHLY
PAYMENTS OF ACCRUED INTEREST CALCULATED ON THE AMOUNT OF CREDIT OUTSTANDING
BEGINNING ON 04-01-2007. PRINCIPAL PLUS ANY UNPAID INTEREST DUE UPON
DEMAND.
Unpaid
Interest:
Any
accrued Interest not paid when due (whether duo by reason of a schedule of
payments or due because of Xxxxxx’s demand) will become part of the principal
thereafter, and will bear interest at the interest rate in affect from time
to
time as provided for in this agreement.
ADDITIONAL
TERMS:
ALL
ADDITIONAL TERMS RELATING TO FINANCIAL STATEMENTS WILL BE ON A CONSOLIDATING
BASIS.
I
WILL
PROVIDE ANNUAL AUDITED FINANCIAL STATEMENTS WITH APPROPRIATE FOOTNOTES TO THE
BANK.
I
WILL
PROVIDE QUARTERLY 100S TO THE BANK.
I
WILL
PROVIDE MONTHLY COMPANY PREPARED FINANCIAL STATEMENTS TO THE BANK.
I
WILL
PROVIDE MONTHLY BORROWING BASE CERTIFICATES & ACCOUNTS RECEIVABLE TO THE
BANK.
ALL
LOANS
WILL BE ADVANCED AT 60% OF ACCOUNTS RECEIVABLE, LESS THAN 90 DAYS OLD, NOT
IN
DISPUTE AND EXCLUDING INTERCOMPANY.
I
WILL
MAINTAIN MY PRIMARY CHECKING RELATIONSHIP WITH MFB FINANCIAL.
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x SECURITY:
This note is separately secured by (describe separate document by
type and
date): SECURITY AGREEMENTS DATED 2/28/07 FOR ACCOUNTS
RECEIVABLE
(This
section is for your internal use. Failure to list a separate security
document does not mean the agreement will not secure this
note.)
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PURPOSE:
The purpose of this loan is WORKING
CAPITAL
SIGNATURES:
I AGREE TO THE TERMS OF THIS NOTE (INCLUDING THOSE ON PAGE 2). I
HAVE
RECEIVED A COPY ON TODAY’S DATE.
MISCOR
GROUP, LTD., HK ENGINE COMPONENTS, LLC, MAGNETECH INDUSTRIAL SERVICES,
INC.
MAGNETECH
POWER SERVICES, LLC, XXXXXXX ELECTRIC LLC
SEE
ATTACHED SIGNATURE PAGE
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Signature
for Lender
/s/
Xxxxxx X. Xxxx
Xxxxxx
X. Xxxx, Executive Vice President/COO
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DEFINITIONS:
As used
on page 1, “x“
means
the terms that apply to this loan. “I, “me” or “my” means each Borrower who
signs this note and each other person or legal entity (including guarantors,
endorsers, and sureties) who agrees to pay this note (together referred to
as
“us”). “You” or “your” means the Lender and its successors and
assigns.
APPLICABLE
LAW:
The law
of the state of Indiana will govern this note. Any term of this note which
is
contrary to applicable law will not be effective, unless the law permits you
and
me to agree to such a variation. If any provision of this agreement cannot
be
enforced according to its terms, this fact will not offset the enforceability
of
the remainder of this agreement. No modification of this agreement may be made
without your express written consent. Time is of the essence in this
agreement.
COMMISSIONS
OR OTHER REMUNERATION:
I
understand and agree that any insurance premiums paid to insurance companies
as
part of this note will involve money retained by you or paid back to you as
commissions or other remuneration.
In
addition, I understand and agree that some other payments to third parties
as
part of this note may also involve money retained by you or paid back to you
as
commissions or other remuneration.
PAYMENTS:
Each
payment I make on this note will first reduce the amount I owe you for charges
which are neither interest nor principal. The remainder of each payment will
then reduce accrued unpaid interest, and then unpaid principal. If you and
I
agree to a different application of payments, we will describe our agreement
on
this note. I may prepay a part of, or the entire balance or this loan without
penalty, unless we specify to the contrary on this note. Any partial prepayment
will not excuse or reduce any later scheduled payment until this note is paid
in
full (unless, when I make the prepayment, you and I agree in writing to the
contrary).
INTEREST:
Interest
accrues on the principal remaining unpaid from time to time, until paid in
full.
If I receive the principal in more than one advance, each advance will start
to
earn interest only when I receive the advance. The interest rate in effect
on
this note at any given time will apply to the entire principal advanced at
that
time. You and I may provide in this agreement for accrued interest not paid
when
due to be added to principal. Notwithstanding anything to the contrary, I do
not
agree to pay and you do not intend to charge any rate of interest that is higher
than the maximum rate of interest you could charge under applicable law for
the
extension of credit that is agreed to here (either before or after maturity).
If
any notice of interest accrual is sent and is in error, we mutually agree to
correct it, and if you actually collect more interest than allowed by law and
this agreement, you agree to refund it to me.
INDEX
RATE:
The
index will serve only as a device for setting the rate on this note. You do
not
guarantee by selecting this index, or the margin, that the rate on this note
will be the same rate you charge on any other loans or class of loans to me
or
other borrowers.
ACCRUAL
METHOD:
The
amount of interest that I will pay on this loan will be calculated using the
interest rate and accrual method stated on page 1 of this note. For the purpose
of interest calculation, the accrual method will determine the number of days
in
a “year.” If no accrual method is stated, then you may, use any reasonable
accrual method for calculating interest.
POST
MATURITY RATE:
For
purposes of deciding when the “Post Maturity Rate” (shown on page 1) applies,
the term “maturity” means the date of the last scheduled payment indicated on
page 1 of this note or the date you accelerate payment on the note, whichever
is
earlier.
SINGLE
ADVANCE LOANS:
If this
is a single advance loan, you and I expect that you will make only one advance
of principal. However, you may add other amounts to the principal if you make
any payments described in the “PAYMENTS BY LENDER” paragraph below, or if we
have agreed that accrued interest not paid when due may be added to
principal.
MULTIPLE
ADVANCE LOANS:
If this
is a multiple advance loan, you and I expect that you will make more than one
advance of principal. If this is closed end credit, repaying a part of the
principal will not entitle me to additional credit.
PAYMENTS
BY LENDER:
If you
are authorized to pay, on my behalf, charges I am obligated to pay (such as
property insurance premiums), then you may treat those payments made by you
as
advances and add them to the unpaid principal under this note, or you may demand
immediate payment of the charges.
SETOFF:
I agree
that you may set off any amount due and payable under this note against any
right I have to receive money from you.
“Right
to
receive money from you” means:
(1)
any
deposit account balance I have with you;
(2)
any
money owed to me on an item presented to you or in your possession for
collection or exchange; and
(3)
any
repurchase agreement or other nondeposit obligation.
“Any
amount due and payable under this note” means the total amount of which you are
entitled to demand payment under the terms of this note at the time you set
off.
This total includes any balance the due date for which you properly accelerate
under this note.
If
my
right to receive money from you is also owned by someone who has not agreed
to
pay this note, your right of setoff will apply to my interest in the obligation
and to any other amounts I could withdraw on my sole request or endorsement.
Your right of setoff does not apply to an account or other obligation where
my
rights are only as a representative. It also does not apply to any Individual
Retirement Account or other tax-deferred retirement account.
You
will
not be liable for this dishonor of any check when the dishonor occurs because
you set off this debt against any of my accounts, I agree to hold you harmless
from any such claims arising as a result of your exercise of your right of
set-off.
REAL
ESTATE OR RESIDENCE SECURITY:
If this
note is secured by real estate or a residence that is personal property, the
existence of a default and your remedies for such a default will be determined
by applicable law, by the terms of any separate instrument creating the security
interest and, to the extent not prohibited by law and not contrary in the terms
of the separate security instrument, by the “Default” and “Remedies’ paragraphs
herein.
DEFAULT:
I will
be in default if any one or more of the following occur (1) I fail to make
a
payment on time or in the amount due; (2) I fail to keep the property insured,
if required; (3) I fail to pay, or keep any promise, on any debt or agreement
I
have with you; (4) any other creditor of mine attempts to collect any debt
I owe
him through court proceedings; (5) I die, am declared incompetent, make an
assignment for the benefit of creditors, or become insolvent (either because
my
liabilities exceed my assets or I am unable to pay my debts as they become
due);
(6) I make any written statement or provide any financial information that
is
untrue or inaccurate at the time it was provided; (7) I do or fail to do
something which causes you to believe that you will have difficulty collecting
the amount I owe you; (8) any collateral securing this note is used in a manner
or for a purpose which threatens confiscation by a legal authority; (9) I change
my name or assume an additional name without first notifying you before making
such a change; (10) I fail to plant, cultivate and harvest crops in due season;
(11) any loan proceeds are used for a purpose that will contribute to excessive
erosion of highly erodible land or to the conversion of wetlands to produce
an
agricultural commodity, as further explained in 7 C.F.R. Part 1940, Subpart
G,
Exhibit M.
REMEDIES:
If I am
in default on this note you have, but are not limited to, the following
remedies:
(1)
You
may demand immediate payment of all I owe you under this note (principal,
accrued unpaid interest and other accrued charges).
(2)
You
may set off this debt against any right I have to the payment of money from
you,
subject to the terms of the “Set-Off” paragraph herein.
(3)
[initiated and deleted]
(4)
You
may refuse to make advances to me or allow purchases on credit by
me.
(5)
You
may use any remedy you have under state or federal law.
By
selecting any one or more of these remedies you do not give up your right to
later use any other remedy. By waiving your right to declare an event to be
a
default, you do not waive your right to later consider the event as a default
if
it continues or happens again.
COLLECTION
COSTS AND ATTORNEY’S FEES:
I agree
to pay all costs of collection, replevin or any other or similar type of cost
if
I am in default. In addition, if you hire an attorney to collect this note,
I
also agree to pay any fee you incur with such attorney plus court costs (except
where prohibited by law). To the extent permitted by the United States
Bankruptcy Code, I also agree to pay the reasonable attorney’s fees and costs
you incur to collect this debt so awarded by any court exercising jurisdiction
under the Bankruptcy Code.
WAIVER:
I give
up my rights to require you to do certain things. I will not require you
to:
(1)
demand payment of amounts due (presentment);
(2)
obtain official certification of nonpayment (protest); or
(3)
give
notice that amounts due have not been paid (notice of dishonor).
I
waive
any defenses I have based on suretyship or impairment of collateral, I also
give
up any rights I may have under any valuation and appraisement laws which apply
to me.
OBLIGATIONS
INDEPENDENT:
I
understand that I must pay this note even it someone also has also agreed to
pay
it (by, for example, signing this form or a separate guarantee or endorsement).
You may sue me alone, or anyone also who is obligated on this note, or any
number of us together, to collect this note. You may do so without any notice
that it has not been paid (notice of dishonor). You may without notice release
any party to this agreement without releasing any other party. If you give
up
any of your rights, with or without notice, it will not affect my duty to pay
this note. Any extension of new credit to any of us, or renewal of this note
by
all or less than all of us will not release me from my duty to pay it. (Of
course, you are entitled to only one payment in full.) I agree that you may
at
your option extend this note or the debt represented by this note, or any
portion of the note or debt, from time to time without limit or notice and
for
any term without affecting my liability for payment of the note. I will not
assign my obligation under this agreement without your prior written
approval.
FINANCIAL
INFORMATION:
I agree
to provide you, upon request, any financial statement or information you may
deem necessary. I warrant that the financial statements and information I
provide to you are or will be accurate, correct and complete.
NOTICE:
Unless
otherwise required by law, any notice to me shall be given by delivering it
or
by mailing it by first class mail addressed to me at my last known address.
My
current address is on page 1. I agree to inform you in writing of any change
in
my address. I will give any notice to you by mailing it first class to your
address stated on page 1 of this agreement, or to any other address that you
have designated.
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DATE
OF TRANSACTION
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PRINCIPAL
ADVANCE
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BORROWER’S
INITIALS
(not
required)
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PRINCIPAL
PAYMENTS
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PRINCIPAL
BALANCE
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INTEREST
RATE
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INTEREST
PAYMENTS
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INTEREST
PAID THROUGH
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SIGNATURE
PAGE
Note
#70-0028852, Dated 2/28/07
IN
WITNESS WHEREOF, the undersigned have executed and delivered this Agreement
on
the date and year first above written.
“Borrowers”
By:/s/
Xxxx Xxxxxxx __________________
Xxxx
Xxxxxxx, President
HK
ENGINE
COMPONENTS, LLC
By:/s/
Xxxx Xxxxxxx __________________
Xxxx
Xxxxxxx, Managing Member
MAGNETECH
INDUSTRIAL SERVICES, INC.
By:/s/
Xxxx Xxxxxxx __________________
Xxxx
Xxxxxxx, President
MAGNETECH
POWER SERVICES, LLC
By:/s/
Xxxx Xxxxxxx __________________
Xxxx
Xxxxxxx, Managing Member
XXXXXXX
ELECTRIC, LLC
By:/s/
Xxxx Xxxxxxx __________________
Xxxx
Xxxxxxx, Managing Member
