EXHIBIT 10.1
AMENDMENT AND MODIFICATION OF
REVOLVING LINE OF CREDIT PROMISSORY NOTE,
LOAN AGREEMENT AND REAFFIRMATION OF GUARANTIES
This Amendment and Modification of Revolving Line of Credit Promissory
Note, Loan Agreement and Reaffirmation of Guaranties ("Amendment") is made
effective the 31st day of December, 2003 ("Effective Date") by and among WSI
Industries, Inc., a Minnesota corporation, having an address of ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Borrower"), Taurus Numeric Tool, Inc.,
having an address of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and WSI Rochester,
Inc., having an address of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (jointly
"Guarantor") and Excel Bank Minnesota, a Minnesota banking corporation, having
an address of ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Bank").
WHEREAS, on or about December 4, 2002, (the "Loan Date") Borrower
executed a Revolving Line of Credit Promissory Note in favor of the Bank in the
original principal amount of One Million and 00/100 ($1,000,000.00) Dollars
("Note"); and
WHEREAS, on or about the Loan Date, Borrower and the Bank executed
that certain Loan Agreement ("Loan Agreement") which Loan Agreement, among
other things, described the terms and conditions under which the Borrower would
borrow money from and repay the money to the Bank; and
WHEREAS, to secure the sums due and payable to the Bank pursuant to
the Note and the Loan Agreement, Borrower also executed that certain Security
Agreement, also dated as of the Loan Date, whereby the Bank took a security
interest in all assets of Borrower ("Security Agreement); and
WHEREAS, to further secure the sums due and payable to the Bank
pursuant to the Note and the Loan Agreement, to perform the covenants and
conditions thereof and of certain documents executed in conjunction therewith,
each Guarantor executed an unconditional and unlimited guaranty ("Guaranty"),
also dated as of the Loan Date, whereby each Guarantor unconditionally
guaranteed the Borrower's performance of the Note and the Loan Agreement and
the other loan documents executed therewith; and
WHEREAS, the Note, the Loan Agreement, the Security Agreement and all
of the documents executed in conjunction therewith are sometimes jointly
referred to herein as the "Loan Documents"; and
WHEREAS, the Borrower has requested that the Bank amend and extend the
maturity date of the Note and modify the terms of the Note and the Loan
Agreement; and
WHEREAS, the Bank and the Borrower and each Guarantor desire that the
Note and the Loan Agreement be amended and modified as hereinafter described
and each Guarantor wishes to acknowledge and reaffirm the terms and conditions
of such Guarantor's Guaranty.
NOW, THEREFORE, in consideration of the above recitals, and in
consideration of credit given or to be given by the Bank to the Borrower and
for other good and valuable consideration, all of which consideration is hereby
acknowledged, the parties hereto agree as follows:
1. Each of the above recitals is true and correct and is incorporated
herein by this reference.
2. The Note is hereby amended, modified and extended as follows:
On and after the Effective Date hereof the Note shall bear interest at
the variable rate of equal to the Base Rate of interest as established
by Excel Bank Minnesota of Edina, Minnesota from time to time ("Base
Rate"). On the Effective Date hereof the Base Rate is four (4.00%)
percent and the initial rate of interest under the Note as of the
Effective Date is four (4.00%) percent. If the Base Rate is no longer
established or is otherwise no longer available the holder of this
Note may substitute a reasonably equivalent index to substitute for
the Base Rate. The rate of interest hereunder shall change when, if,
and as often as the Base Rate changes.
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The principal and interest due pursuant to the Note shall be repaid as
follows: In monthly payments of all accrued interest on the sums
actually advanced thereunder commencing on January 1, 2004 and
continuing monthly thereafter on the 1st day of each and every month
until December 31, 2004 ("Maturity Date"), at which time the entire
remaining balance due under the Note, including all principal and
accrued but unpaid interest, shall be due and payable in full.
3. The following sections of the Loan Agreement are hereby amended and
modified as described below (all capitalized terms have the meanings
given to them in the Loan Agreement):
Section 5.08 MINIMUM NET WORTH. So long as the Note shall remain
unpaid or the Bank shall have any Commitment hereunder, the Borrower
will maintain, during and at the end of each fiscal quarter end, Net
Worth at an amount not less than Six Million Six Hundred Fifty
Thousand and 00/100 ($6,650,000.00) Dollars.
Section 5.09 RATIO OF DEBT TO TANGIBLE NET WORTH. So long as the Note
shall remain unpaid or the Bank shall have any Commitment hereunder,
the ratio of the Borrower's Debt to Tangible Net Worth shall not
exceed 1 to 1 measured at the end of each fiscal quarter end basis.
Section 5.10 RATIO OF CURRENT ASSETS TO CURRENT LIABILITIES. The
Borrower shall maintain, for each fiscal quarter end that the Note
remains outstanding or the Bank shall have any Commitment hereunder,
the ratio of its Current Assets to its Current Liabilities added to
its outstanding debt under the Note at not less than 1.9 to 1.
4. Borrower hereby acknowledges and reaffirms each and every
representation, warranty, term, covenant and condition of the Loan
Documents. Borrower further acknowledges and agrees that the Loan
Documents (as hereby amended and modified) are fully enforceable
against Borrower and that Borrower has no defense, right of offset or
otherwise to preclude enforcement of the Loan Documents, as hereby
amended and modified, by the Bank against Borrower.
5. The Security Agreement shall continue to secure all sums owing to the
Bank by the Borrower pursuant to the terms and conditions of the Note
and the Loan Agreement, together with all interest thereon, in
accordance with the terms and conditions of the Note and all other
sums due and owing or to become due and owing pursuant to the terms
and conditions of this Amendment, the Loan Agreement, the Security
Agreement and the Note, including but not necessarily limited to any
further or additional extensions or renewals thereof.
6. Borrower and each Guarantor acknowledge that the principal balance
remaining unpaid on the Note as of the Effective Date hereof is -zero-
($0.00) Dollars.
7. Each Guarantor hereby acknowledges, ratifies and reaffirms each and
every term, covenant, agreement, provision, and condition of their
respective Guaranty and any collateral security documents securing
such guaranty, including but not limited to the security agreement
dated of even date with the Guaranty ("Collateral Security
Documents"), and the Loan Documents and hereby acknowledges and agrees
that the Guaranty guarantees to the Bank the repayment of all sums due
and owing to the Bank pursuant to the terms, conditions and covenants
of the Note and the performance of the terms and covenants of the
balance of the Loan Documents. Each Guarantor hereby affirms and
agrees that each such Guaranty is unconditional and unlimited and that
such Guaranty along with the Collateral Security Documents related
thereto are fully enforceable against such Guarantor. Each Guarantor
hereby further affirms and agrees and that such Guarantor has no
defense, right of offset, claim, cause of action or otherwise to
preclude the absolute and immediate enforcement of the Guaranty and/or
the Collateral Security Documents supporting such Guaranty by the
Bank.
8. On or before the execution hereof, Borrower shall pay to the Bank, the
Bank's costs including its reasonable attorneys' fees, incurred in
drafting this Amendment and related documents, if any.
9. Except as herein specifically modified, amended or extended, all terms
and conditions of the Loan Documents shall otherwise remain unchanged
and in full force and effect.
10. Notwithstanding anything to the contrary herein, this Amendment or any
failure by the Bank to exercise any of its rights upon an event of
default under the Loan Documents or the Guaranty or the Collateral
Security Documents, whether prior to or subsequent to the effective
date of this Amendment, shall not be deemed a waiver of the Bank's
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available remedies under the Loan Documents, the Guaranty, or the
Collateral Security Documents or any amendments thereof, or any other
documents executed in conjunction therewith or incident thereto.
11. All the terms of this Amendment shall be binding upon and inure to the
benefit of and be enforceable by the successors and assigns of the
parties hereto, to the extent assignment is permitted pursuant to the
Loan Documents or the Guaranty.
12. This Amendment is being executed in and is intended to be performed in
the State of Minnesota and shall be construed and enforced in
accordance with the laws of such state.
13. This Amendment contains the entire agreement between the parties with
respect to the covenants and promises contemplated herein and may be
amended only in a writing signed by each of the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Amendment on the
day and year first above written.
BORROWER:
WSI INDUSTRIES, INC., a Minnesota
corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Its: President
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GUARANTOR:
TAURUS NUMERIC TOOL, INC., a
Minnesota corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Its: President
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WSI ROCHESTER, INC., a Minnesota
corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Its: President
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EXCEL BANK MINNESOTA, a Minnesota
banking corporation,
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Its: Vice President
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