Wells Fargo Business CreditSuite ###-###-#### West Monroe StreetChicago, IL 60606312 ###-###-#### ###-###-#### Fax

September 8, 2009

 

MISCOR Group, Ltd.

1125 S. Walnut

South Bend, Indiana 46619 Attention: Michael Topa

Re:   Reduction in Credit Facility under Credit and Security Agreement

 

 

Dear Mr. Topa:

 

Reference is made to that certain Credit and Security Agreement dated as of January 14, 2008, as amended (the "Credit Agreement") 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, collectively, the "Borrowers"), and Wells Fargo Bank, National Association (the "Lender"), acting through its Wells Fargo Business Credit operating division. Capitalized terms used herein shall have the meaning assigned to such terms in the Credit Agreement.

As you know, the Lender had previously approved an extension of its stated requirement for the Borrowers to raise $2,000,000 of additional capital by August 31, 2009 (as set forth in the Fourth Amendment to the Credit Agreement) until October 31, 2009, conditioned upon certain progress being made toward the sale of the Borrowers' rail business by August 3 I, 2009. As of the date of this letter, Lender believes insufficient progress has been made toward the sale of Borrowers’ rail business. Therefore, Lender is hereby modifying its agreement by shortening the extension of time for the Borrowers to raise $2,000,000 of additional capital, or negotiate an additional extension or amendment, until September 15, 2009, subject to reductions in the revolving credit facility, as set forth below.

The Credit Agreement is hereby amended by reducing the Maximum Line Amount to Five Million Eight Hundred Thousand Dollars ($5,800,000) and by amending part (b)(i) of the definition of Borrowing Base to read as follows:

(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) $1,750,000; provided, such amount shall be reduced by $50,000 per week, commencing August 3, 2009, and continuing on Monday of each week thereafter or (B) $5,800,000, less

 

MISCOR Group, Ltd.

September 8, 2009

Page 2

 

 

 

 

/s/ Daniel Manella

 

MISCOR GROUP, LTD.			MAGNETECH INDUSTRIAL SERVICES, INC.
By:	/s/ John A. Martell		By:	/s/ John A. Martell
	John A. Martell, Chief Executive Officer			John A. Martell, Chief Executive Officer
HK ENGINE COMPONENTS, LLC			MARTELL ELECTRIC, LLC
By:	/s/ John A. Martell		By:	/s/ John A. Martell
	John A. Martell, Chief Executive Officer			John A. Martell, Chief Executive Officer
IDEAL CONSOLIDATED, INC.			AMERICAN MOTIVE POWER, INC.
By:	/s/ John A. Martell		By:	/s/ John A. Martell
	John A. Martell, Chief Executive Officer			John A. Martell, Chief Executive Officer