Contract
Exhibit
4.8
THIS
NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE
MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF
AN
EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE OR SUCH SHARES UNDER SAID
ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO MAGNETECH INTEGRATED SERVICES CORP. THAT SUCH REGISTRATION
IS
NOT REQUIRED.
FOR
VALUE
RECEIVED, each of MAGNETECH INTEGRATED SERVICES CORP., an Indiana corporation
(the “Parent”),
and
the other companies listed on Exhibit
A
attached
hereto (such other companies together with the Parent, each a “Company”
and
collectively, the “Companies”),
jointly and severally, promises to pay to LAURUS MASTER FUND, LTD., c/o M&C
Corporate Services Limited, P.O. Box 309 GT, Xxxxxx House, South Church Street,
Xxxxxx Town, Grand Cayman, Cayman Islands, Fax: 000-000-0000 (the “Holder”)
or its
registered successors or permitted assigns in interest, the sum of Seven
Million
Dollars ($7,000,000) (the “Face
Amount”),
or,
if different, the aggregate principal amount of all Revolving Loans (as defined
in the Security Agreement referred to below), without duplication of any
amounts
owing by the Companies to the Holder under the Minimum Borrowing Notes (as
defined in the Security Agreement referred to below), together with any accrued
and unpaid interest hereon, on August 24, 2008 (the “Maturity
Date”)
if not
sooner indefeasibly paid in full.
Capitalized
terms used herein without definition shall have the meanings ascribed to
such
terms in the Security and Purchase Agreement among the Companies and the
Holder
dated as of the date hereof (as amended, modified and/or supplemented from
time
to time, the “Security
Agreement”).
This
Note is issued pursuant to, and is subject to the terms and conditions of,
the
Security Agreement.
The
following terms shall apply to this Secured Revolving Note (this “Note”):
ARTICLE
I
CONTRACT
RATE AND MINIMUM BORROWING NOTE
1.1 Contract
Rate.
Subject
to Sections 3.2 and 4.10, interest payable on the outstanding principal amount
of this Note (the “Principal
Amount”)
shall
accrue at a rate per annum equal to the “prime rate” published in The
Wall Street Journal
from
time to time (the “Prime
Rate”),
plus
one percent (1.0%) (the “Contract
Rate”).
The
Contract Rate shall be increased or decreased as the case may be for each
increase or decrease in the Prime Rate in an amount equal to such increase
or
decrease in the Prime Rate; each change to be effective as of the day of
the
change in the Prime Rate. Interest shall be (i) calculated on the basis of
a 360
day year, and (ii) payable monthly, in arrears, commencing on September 1,
2005
and on the first
business
day of each consecutive calendar month thereafter through and including the
Maturity Date, and on the Maturity Date, whether by acceleration or
otherwise.
1.2 Contract
Rate Adjustments.
The
Contract Rate shall be calculated on the last business day of each calendar
month hereafter (other than for increases or decreases in the Prime Rate
which
shall be calculated and become effective in accordance with the terms of
Section
1.1) until the Maturity Date (each a “Determination
Date”)
and
shall be subject to adjustment as set forth herein. If (i) the Parent shall
have
registered the Grant Shares and the shares of Common Stock underlying the
conversion of each Minimum Borrowing Note then outstanding and each Warrant
then
outstanding on a registration statement declared effective by the Securities
and
Exchange Commission (the “SEC”),
and
(ii) the average of the Closing Prices (as defined below) of the Common Stock
as
reported by Bloomberg, L.P. on the Principal Market for the five (5) trading
days immediately preceding a Determination Date (the “Closing
Price Average”)
exceeds the then applicable Fixed Conversion Price by at least twenty-five
percent (25%), the Contract Rate for the succeeding calendar month shall
automatically be reduced by 200 basis points (200 b.p.) (2.0%) for each
incremental twenty-five percent (25%) increase in the Closing Price Average
of
the Common Stock above the then applicable Fixed Conversion Price.
Notwithstanding the foregoing (and anything to the contrary contained herein),
in no event shall the Contract Rate at any time be less than zero percent
(0%).
For purposes of this Note, the “Closing
Price”of
the
Common Stock shall mean: (i) in the event that the Common Stock is listed
on the
American Stock Exchange or New York Stock Exchange or the National or SmallCap
Market of The Nasdaq Stock Market, Inc. (“Nasdaq”), the closing or last sale
price, as the case may be, reported for the applicable day or (ii) in the
event
that the Common Stock is not traded on the American Stock Exchange or New
York
Stock Exchange or on the Nasdaq but is quoted on the NASD Over The Counter
Bulletin Board, then the average of the closing bid and asked prices reported
for the applicable day.
1.3 Allocation
of Principal to Minimum Borrowing Note.
Notwithstanding anything herein to the contrary, whenever during the Term
the
outstanding balance on the Minimum Borrowing Note shall be less than the
Minimum
Borrowing Amount (such amount being referred to herein as the “Transferable
Amount”)
to the
extent that the outstanding balance on this Note should equal or exceed
$1,000,000, that portion of the balance of this Note that exceeds $1,000,000,
but does not exceed the Transferable Amount, shall be segregated from the
outstanding balance under this Note and allocated to and aggregated with
the
then existing balance of the next unissued serialized Minimum Borrowing Note
(the “Next
Unissued Serialized Note”);
provided that such segregated balance shall remain subject to the terms and
conditions of this Note until a new serialized Minimum Borrowing Note is
issued
as set forth below. The Next Unissued Serialized Note shall remain in book
entry
form until the balance thereunder shall equal the Minimum Borrowing Amount,
at
which time a new serialized Minimum Borrowing Note in the face amount equal
to
the Minimum Borrowing Amount will be issued and registered as set forth in
the
Registration Rights Agreement (and the outstanding balance under this Note
shall
at such time be correspondingly reduced in the amount equal to the Minimum
Borrowing Amount as a result of the issuance of such new serialized Minimum
Borrowing Note).
2
1.4 Revolving
Note.
Until
the Maturity Date, the Companies may borrow, pay down (including, without
limitation, by conversion pursuant to Article II of this Note), and re-borrow
under this Note, so long as the aggregate Principal Amount outstanding at
any
one time does not exceed the Face Amount (provided that the terms set forth
in
this Section 1.4 shall be subject in all respects to with the terms and
conditions related to borrowing, repayment and reborrowing set forth in the
Security Agreement, and the other terms and conditions of the Security
Agreement).
ARTICLE
II
CONVERSION
RIGHTS AND FIXED CONVERSION PRICE
2.1 Optional
Conversion.
Subject
to the terms of this Article II, the Holder shall have the right, but not
the
obligation, at any time until the Maturity Date, or during an Event of Default
(as defined in Article III), and, subject to the limitations set forth in
Section 2.2 hereof, to convert all or any portion of the outstanding Principal
Amount and/or accrued interest under this Note and fees due and payable under
this Note, the Security Agreement or any other Ancillary Agreement (other
than
the Term Note or any Minimum Borrowing Note) into fully paid and nonassessable
restricted shares of the Common Stock at the Fixed Conversion Price (defined
below). Such conversion shall constitute complete satisfaction of the Principal
Amount and/or accrued interest and fees so converted. For purposes hereof,
subject to Section 2.6 hereof, the initial “Fixed
Conversion Price”
means
(i) with respect to the first $3,500,000 of the aggregate principal amount
converted pursuant to the terms of each Minimum Borrowing Note and this Note
(and all interest and fees related thereto), $0.19 per share of Common Stock
and
(ii) with respect to the remaining principal amount converted pursuant to
the
terms of each Minimum Borrowing Note and this Note (and all interest and
fees
related thereto), $0.32 per share of Common Stock. The shares of Common Stock
to
be issued upon such conversion are herein referred to as the “Conversion
Shares.”
2.2 Conversion
Limitation.
Notwithstanding anything contained herein to the contrary, the Holder shall
not
be entitled to convert pursuant to the terms of this Note an amount that
would
be convertible into that number of Conversion Shares which would exceed the
amount by which (i) 9.99% of the issued and outstanding shares of Common
Stock
exceeds (ii) the number of shares of Common Stock beneficially owned by the
Holder. For purposes of the immediately preceding sentence, beneficial ownership
shall be determined in accordance with Section 13(d) of the Exchange Act
and
Regulation 13d-3 thereunder. The Conversion Shares limitation described in
this
Section 2.2 shall automatically become null and void following notice to
any
Company upon the occurrence and during the continuance of an Event of Default,
or upon 75 days prior notice to the Parent. Notwithstanding anything contained
herein to the contrary, the provisions of this Section 2.2 are irrevocable
and
may not be waived by the Holder or any Company.
2.3 Mechanics
of Xxxxxx’s Conversion.
In the
event that the Holder elects to convert this Note into Common Stock, the
Holder
shall give notice of such election by delivering an executed and completed
notice of conversion in substantially the form of Exhibit
B
hereto
(appropriately completed) (“Notice
of Conversion”)
to the
Parent and such Notice of Conversion shall provide a breakdown in reasonable
detail of the Principal Amount, accrued interest and fees that are being
converted. The election to convert shall be irrevocable except (i)
3
if
an
Event of Default has occurred and is continuing or (ii) if the Parent has
consented to such a revocation. On each Conversion Date (as hereinafter defined)
and in accordance with its Notice of Conversion, the Holder shall make the
appropriate reduction to the Principal Amount, accrued interest and fees
as
entered in its records and shall provide written notice thereof to the Parent
within two (2) Business Days after the Conversion Date. Each date on which
a
Notice of Conversion is delivered or telecopied to the Parent in accordance
with
the provisions hereof shall be deemed a Conversion Date (the “Conversion
Date”).
Pursuant to the terms of the Notice of Conversion, the Parent will issue
instructions to the transfer agent accompanied by an opinion of counsel within
three (3) Business Days of the date of the delivery to the Parent of the
Notice
of Conversion and shall cause the transfer agent to transmit the certificates
representing the Conversion Shares to the Holder by crediting the account
of the
Holder’s designated broker with the Depository Trust Corporation (“DTC”)
through its Deposit Withdrawal Agent Commission (“DWAC”)
system
within three (3) Business Days after receipt by the Parent of the Notice
of
Conversion (the “Delivery
Date”).
In
the case of the exercise of the conversion rights set forth herein the
conversion privilege shall be deemed to have been exercised and the Conversion
Shares issuable upon such conversion shall be deemed to have been issued
upon
the Conversion Date. The Holder shall be treated for all purposes as the
record
holder of the Conversion Shares, unless the Holder provides the Parent written
instructions to the contrary and further provides Parent any information
reasonably requested and pays any transfer taxes or other fees relating to
the
issuance of the shares in a name other than that of the Holder.
2.4 Fractional
Shares.
The
Parent shall not be required to issue fractional shares of Common Stock upon
any
conversion of this Note. In lieu of any fractional shares of Common Stock
that
would otherwise be issuable upon conversion, the Parent shall pay the Holder
an
amount in cash equal to the product of such fraction multiplied by the then
applicable Fixed Conversion Price.
2.5 Conversion
Mechanics.
The
number of shares of Common Stock to be issued upon each conversion of this
Note
shall be determined by dividing that portion of the principal and interest
and
fees to be converted, if any, by the then applicable Fixed Conversion
Price.
2.6 Adjustment
Provisions.
The
Fixed Conversion Price and number and kind of shares or other securities
to be
issued upon conversion determined pursuant to Section 2.1 shall be subject
to
adjustment from time to time upon the occurrence of certain events during
the
period that this conversion right remains outstanding, as follows:
(a) Reclassification.
If the
Parent at any time shall, by reclassification or otherwise, change the Common
Stock into the same or a different number of securities of any class or classes,
this Note, as to the unpaid Principal Amount and accrued interest thereon,
shall
thereafter be deemed to evidence the right to purchase the number and kind
of
securities that would have been issued to the Holder had the Holder converted
this Note into Common Stock immediately before such reclassification or other
change.
(b) Stock
Splits, Combinations and Dividends.
If the
shares of Common Stock are subdivided or combined into a greater or smaller
number of shares of Common Stock, or if a dividend is paid on the Common
Stock
or any preferred stock issued by
4
the
Parent in shares of Common Stock, the Fixed Conversion Price shall be
proportionately reduced in case of subdivision of shares or stock dividend
or
proportionately increased in the case of combination of shares, in each such
case by the ratio which the total number of shares of Common Stock outstanding
immediately after such event bears to the total number of shares of Common
Stock
outstanding immediately prior to such event.
(c) Share
Issuances.
Subject
to the provisions of this Section 2.6, if the Parent shall at any time prior
to
the conversion or repayment in full of the Principal Amount issue any shares
of
Common Stock or securities convertible into Common Stock to a Person other
than
the Holder (except (i) pursuant to Sections 2.6(a) or (b) above; (ii) pursuant
to options, warrants, or other obligations to issue shares outstanding on
the
date hereof as disclosed to the Holder in writing; (iii) pursuant to any
equity
incentive plan for directors, officers or employees adopted by the Parent;
or
(iv) the Notes, the Warrants, and Common Stock issued upon conversion or
exercise, as applicable, of any of the Notes or Warrants) for a consideration
per share (the “Offer
Price”)
less
than the Fixed Conversion Price in effect at the time of such issuance, then
the
Fixed Conversion Price shall be immediately reset pursuant to the formula
below.
For purposes hereof, the issuance of any security of the Company convertible
into or exercisable or exchangeable for Common Stock shall result in an
adjustment to the Fixed Conversion Price upon the issuance of such securities
rather than upon the issuance of Common Stock in connection with the conversion,
exercise or exchange, as applicable, of such securities.
If
the
Company issues any additional shares of Common Stock for a consideration
per
share less than the then-applicable Fixed Conversion Price pursuant to this
Section 2.6 then, and thereafter successively upon each such issue, the Fixed
Conversion Price shall be adjusted by multiplying the then applicable Fixed
Conversion Price by the following fraction:
|
A
+
B
|
|
(A
+ B) + [((C - D) x B) / C]
|
A
= Total
amount of shares convertible pursuant to this Note
B
=
Actual shares sold in the offering
C
= Fixed
Conversion Price
D
= Offer
Price
(d) Computation
of Consideration.
For
purposes of any computation respecting consideration received pursuant to
Section 2.6(c) above, the following shall apply:
(i) in
the
case of the issuance of shares of Common Stock for cash, the consideration
shall
be the amount of such cash, provided that in no case shall any deduction
be made
for any commissions, discounts or other expenses incurred by the Parent for
any
underwriting of the issue or otherwise in connection therewith;
5
(ii) in
the
case of the issuance of shares of Common Stock for a consideration in whole
or
in part other than cash, the consideration other than cash shall be deemed
to be
the fair market value thereof as determined in good faith by the Board of
Directors of the Parent (irrespective of the accounting treatment thereof);
and
(iii) with
respect to any shares of Common Stock issued upon the exercise or conversion
of
any option, warrant or other convertible security, the aggregate consideration
received for such securities shall be deemed to be the consideration received
by
the Parent for the issuance of such convertible securities plus the additional
minimum consideration, if any, to be received by the Parent upon the conversion
or exchange thereof (the consideration in each case to be determined in the
same
manner as provided in subsections (i) and (ii) of this Section
2.6(d)).
2.7 Reservation
of Shares.
During
the period the conversion right exists, the Parent will reserve from its
authorized and unissued Common Stock a sufficient number of shares to provide
for the issuance of Conversion Shares upon the full conversion of this Note.
The
Parent represents that upon issuance, the Conversion Shares will be duly
and
validly issued, fully paid and non-assessable. The Parent agrees that its
issuance of this Note shall constitute full authority to its officers, agents,
and transfer agents who are charged with the duty of executing and issuing
stock
certificates to execute and issue the necessary certificates for the Conversion
Shares upon the conversion of this Note.
ARTICLE
III
EVENTS
OF DEFAULT AND DEFAULT RELATED PROVISIONS
3.1 Events
of Default.
The
occurrence of an Event of Default under the Security Agreement shall constitute
an event of default (“Event
of Default”)
hereunder.
3.2 Default
Interest.
Following the occurrence and during the continuance of an Event of Default,
the
Companies shall, jointly and severally, pay additional interest on the
outstanding principal balance of this Note in an amount equal to one percent
(1%) per month from the date of such Event of Default until the date such
Event
of Default is cured or waived.
3.3 Default
Payment.
Following the occurrence and during the continuance of an Event of Default,
the
Holder, at its option, may elect, in addition to all rights and remedies
of the
Holder under the Security Agreement and the other Ancillary Agreements and
all
obligations and liabilities of each Company under the Security Agreement
and the
other Ancillary Agreements, to require the Companies, jointly and severally,
to
make a Default Payment (“Default
Payment”).
The
Default Payment shall be 112% of the outstanding principal amount of the
Note,
plus accrued but unpaid interest under this Note, all other fees arising
under
this Note, the Security Agreement or any other Ancillary Agreement (other
than
the Term Note or any Minimum Borrowing Note), and all other amounts payable
hereunder. The Default Payment shall be applied first to any fees due and
payable to the Holder pursuant to this Note, the Security Agreement and/or
the
Ancillary Agreements (other than the Term Note or any Minimum Borrowing Note),
then to accrued and unpaid interest due on this Note and then to the outstanding
principal balance of this Note, and any remaining balance of the Default
Payment
6
shall
be
retained by the Holder. The Default Payment shall be due and payable immediately
on the date that the Holder has exercised its rights pursuant to this Section
3.3.
ARTICLE
IV
MISCELLANEOUS
4.1 Conversion
Privileges.
The
conversion privileges set forth in Article II shall remain in full force
and
effect immediately from the date hereof until the date this Note is indefeasibly
paid in full and irrevocably terminated.
4.2 Cumulative
Remedies.
The
remedies under this Note shall be cumulative.
4.3 Failure
or Indulgence Not Waiver.
No
failure or delay on the part of the Holder hereof in the exercise of any
power,
right or privilege hereunder shall operate as a waiver thereof, nor shall
any
single or partial exercise of any such power, right or privilege preclude
other
or further exercise thereof or of any other right, power or privilege. All
rights and remedies existing hereunder are cumulative to, and not exclusive
of,
any rights or remedies otherwise available.
4.4 Notices.
Any
notice herein required or permitted to be given shall be in writing and shall
be
deemed effective given (a) upon personal delivery to the party notified,
(b)
when sent by confirmed telex or facsimile if sent during normal business
hours
of the recipient, if not, then on the next business day, (c) five days after
having been sent by registered or certified mail, return receipt requested,
postage prepaid, or (d) one business day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt. All communications shall be sent to the respective
Company at the address provided for such Company in the Security Agreement
executed in connection herewith, and to the Holder at the address provided
in
the Security Agreement for the Holder, with a copy to Xxxx X. Xxxxxx, Esq.,
000
Xxxxx Xxxxxx, 00xx
Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, xxxxxxxxx number (000) 000-0000, or at such other
address as the respective Company or the Holder may designate by ten days
advance written notice to the other parties hereto.
4.5 Amendment
Provision.
The
term “Note” and all references thereto, as used throughout this instrument,
shall mean this instrument as originally executed, or if later amended or
supplemented, then as so amended or supplemented, and any successor instrument
as such successor instrument may be amended or supplemented.
4.6 Assignability.
This
Note shall be binding upon each Company and its successors and assigns, and
shall inure to the benefit of the Holder and its successors and assigns,
and may
be assigned by the Holder in accordance with the requirements of the Security
Agreement. No Company may not assign any of its obligations under this Note
without the prior written consent of the Holder, any such purported assignment
without such consent being null and void.
4.7 Cost
of Collection.
In case
of any Event of Default under this Note, the Companies shall, jointly and
severally, pay the Holder the Holder’s reasonable costs of collection, including
reasonable attorneys’ fees.
7
4.8 Governing
Law, Jurisdiction and Waiver of Jury Trial.
(a) THIS
NOTE
SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS
OF
THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW.
(b) EACH
COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED
IN
THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION
TO
HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY COMPANY, ON THE ONE
HAND,
AND THE HOLDER, ON THE OTHER HAND, PERTAINING TO THIS NOTE, THE SECURITY
AGREEMENT OR ANY OF THE OTHER ANCILLARY AGREEMENTS OR TO ANY MATTER ARISING
OUT
OF OR RELATED TO THIS NOTE, THE SECURITY AGREEMENT OR ANY OF THE OTHER ANCILLARY
AGREEMENTS PROVIDED,
THAT
EACH COMPANY ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO
BE
HEARD BY A COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF NEW
YORK;
AND FURTHER PROVIDED,
THAT
NOTHING IN THIS NOTE SHALL BE DEEMED OR OPERATE TO PRECLUDE THE HOLDER FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT
THE OBLIGATIONS, TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE
HOLDER. EACH COMPANY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH
COMPANY
HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM
NON CONVENIENS.
EACH
COMPANY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER
PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH
SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL
ADDRESSED TO THE COMPANY AT THE ADDRESS SET FORTH IN THE SECURITY AGREEMENT
AND
THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF THE COMPANY’S
ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS,
PROPER
POSTAGE PREPAID
(c) EACH
COMPANY DESIRES THAT ITS DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS
OF
THE JUDICIAL SYSTEM AND OF ARBITRATION, EACH COMPANY HERETO WAIVES ALL RIGHTS
TO
TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,
WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE HOLDER, AND/OR
ANY
COMPANY ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS NOTE, THE SECURITY
AGREEMENT, ANY OTHER ANCILLARY AGREEMENT OR THE TRANSACTIONS RELATED HERETO
OR
THERETO.
8
4.9 Severability.
In the
event that any provision of this Note is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such provision
which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision of this Note.
4.10 Maximum
Payments.
Nothing
contained herein shall be deemed to establish or require the payment of a
rate
of interest or other charges in excess of the maximum permitted by applicable
law. In the event that the rate of interest required to be paid or other
charges
hereunder exceed the maximum rate permitted by such law, any payments in
excess
of such maximum rate shall be credited against amounts owed by the Companies
to
the Holder and thus refunded to the Companies.
4.11 Security
Interest and Guarantee.
The
Holder has been granted a security interest (i) in certain assets of the
Companies as more fully described in the Security Agreement and (ii) pursuant
to
the Pledge Agreement dated as of the date hereof. The obligations of the
Companies under this Note are guaranteed by certain Subsidiaries of the
Companies pursuant to the Guaranty dated as of the date hereof.
4.12 Construction.
Each
party acknowledges that its legal counsel participated in the preparation
of
this Note and, therefore, stipulates that the rule of construction that
ambiguities are to be resolved against the drafting party shall not be applied
in the interpretation of this Note to favor any party against the
other.
4.13 Registered
Obligation.
This
Note is intended to be a registered obligation within the meaning of Treasury
Regulation Section 1.871-14(c)(1)(i) and the Company (or its agent) shall
register the Note (and thereafter shall maintain such registration) as to
both
principal and any stated interest. Notwithstanding any document, instrument
or
agreement relating to this Note to the contrary, transfer of this Note (or
the
right to any payments of principal or stated interest thereunder) may only
be
effected by (i) surrender of this Note and either the reissuance by the Company
of this Note to the new holder or the issuance by the Company of a new
instrument to the new holder, or (ii) transfer through a book entry system
maintained by the Company (or its agent), within the meaning of Treasury
Regulation Section 1.871-14(c)(1)(i)(B).
[Balance
of page intentionally left blank; signature page follows]
9
IN
WITNESS WHEREOF,
each
Company has caused this Secured Revolving Note to be signed in its name
effective as of this 24th day of August, 2005.
|
MAGNETECH
INTEGRATED SERVICES CORP.
|
|||||
|
By:
|
/s/ Xxxx X. Xxxxxxx | ||||
|
Name:
|
Xxxx X. Xxxxxxx | ||||
|
Title:
|
President & CEO | ||||
|
WITNESS:
|
|||||
| /s/ Xxxxx X. Xxxx | |||||
|
MAGNETECH
INDUSTRIAL SERVICES, INC.
|
|||||
|
By:
|
/s/ Xxxx X. Xxxxxxx | ||||
|
Name:
|
Xxxx X. Xxxxxxx | ||||
|
Title:
|
President | ||||
|
WITNESS:
|
|||||
| /s/ Xxxxx X. Xxxx | |||||
|
XXXXXXX
ELECTRIC, LLC
|
|||||
|
By:
|
/s/ Xxxx X. Xxxxxxx | ||||
|
Name:
|
Xxxx X. Xxxxxxx | ||||
|
Title:
|
President | ||||
|
WITNESS:
|
|||||
| /s/ Xxxxx X. Xxxx | |||||
10
|
HK
ENGINE COMPONENTS, LLC
|
|||||
|
By:
|
/s/ Xxxx X. Xxxxxxx | ||||
|
Name:
|
Xxxx X. Xxxxxxx | ||||
|
Title:
|
Manager | ||||
|
WITNESS:
|
|||||
| /s/ Xxxxx X. Xxxx | |||||
|
HK
MACHINED PARTS, LLC
|
|||||
|
By:
|
/s/ Xxxx X. Xxxxxxx | ||||
|
Name:
|
Xxxx X. Xxxxxxx | ||||
|
Title:
|
Manager | ||||
|
WITNESS:
|
|||||
| /s/ Xxxxx X. Xxxx | |||||
11
|
XX
XXXXXX PROPERTIES, LLC
|
|||||
|
By:
|
/s/ Xxxx X. Xxxxxxx | ||||
|
Name:
|
Xxxx X. Xxxxxxx | ||||
|
Title:
|
Manager | ||||
|
WITNESS:
|
|||||
| /s/ Xxxxx X. Xxxx | |||||
|
HK
CAST PRODUCTS, LLC
|
|||||
|
By:
|
/s/ Xxxx X. Xxxxxxx | ||||
|
Name:
|
Xxxx X. Xxxxxxx | ||||
|
Title:
|
Manager | ||||
|
WITNESS:
|
|||||
| /s/ Xxxxx X. Xxxx | |||||
12
EXHIBIT
A
OTHER
COMPANIES
Magnetech
Industrial Services, Inc., an Indiana corporation
Xxxxxxx
Electric, LLC, an Indiana limited liability company
HK
Engine
Components, LLC, an Indiana limited liability company
HK
Machined Parts, LLC, an Indiana limited liability company
XX
Xxxxxx
Properties, LLC, an Indiana limited liability company
HK
Cast
Products, LLC, an Indiana limited liability company
13
EXHIBIT
B
NOTICE
OF CONVERSION
(To
be
executed by the Holder in order to convert the Secured Revolving
Note)
Magnetech
Integrated Services Corp.
0000
X.
Xxxxxx Xxxxxx
South
Bend, Indiana 46619
Attention:
Chief Financial Officer
The
undersigned hereby elects to convert $_________ of the principal, $_________
of
the interest and $_____ of the fees due on the Secured Revolving Note dated
as
of August 24, 2005 (the “Note”)
issued
by Magnetech Integrated Services Corp. (the “Parent”)
and
the other Companies named and as defined therein into shares of Common Stock
of
the Parent (“Shares)
in
accordance with the terms and conditions set forth in the Note, as of the
date
written below.
|
Date
of Notice:
|
|
|
Conversion
Price:
|
|
|
Shares
To Be Delivered:
|
|
|
Signature:
|
|
|
Print
Name:
|
|
|
Address:
|
|
|
Holder
DWAC instructions:
|
