THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT
EXHIBIT 10.9
THIRD
AMENDMENT TO
THIS
AMENDMENT, dated as of December 3, 2008, is to the Loan and Security Agreement
dated January 2, 2008 between Xxxxxxx Bank (“Bank”), and Jefferson Electric,
Inc. (“Borrower”), as amended by Amendment to Loan and Security Agreement dated
January 29, 2008 and Second Amendment to Loan and Security Agreement dated May
2, 2008 (as amended, the “Loan Agreement”).
RECITAL
WHEREAS, Bank and Borrower desire to
amend the Loan Agreement as provided herein.
AGREEMENT
1. Definitions.
(a) Terms Defined in Loan
Agreement. All capitalized terms used but not defined herein
shall have the meanings set forth in the Loan Agreement.
(b) Additional
Definitions. As used in the Loan Agreement as amended hereby,
the following terms shall have the following meanings:
“Collateral Shortfall”
means the difference between the Loan Amount and the Discounted Collateral
Amount, but not less than $0.00.
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“Loan Amount”
means the sum of $5,000,000 plus the outstanding balance of the Term
Note.
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“Revolving Note”
means Borrower’s promissory note, substantially in form attached hereto as
Exhibit
A, as it may be amended, restated or replaced from time to
time.
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2. Revolving Loans;
Advances. Section 2.1.1 of the Loan Agreement is amended in
its entirety to read as follows:
2.1.1 “Revolving Loans;
Advances. Subject to the terms, conditions and limitations
hereof, and provided that no Event of Default has occurred hereunder, Bank
agrees to lend (and upon repayment relend) money to Borrower in such amounts as
Borrower from time to time requests, up to the maximum amount of Five Million
Dollars ($5,000,000.00), provided that the amount available to be borrowed under
the Revolving Credit Facility shall be reduced by the amount of any Letter of
Credit Liabilities. Advances by Bank hereunder shall be made by
deposits or transfers to Borrower’s commercial demand account number 1001368991,
maintained with Bank. Loans so made shall be evidenced by Borrower’s
Revolving Note, and, in addition, Bank shall maintain a loan account ledger for
Borrower, the debit balance of which shall reflect the amount of Borrower’s
indebtedness to the Bank from time to time by reason of any loans, advances or
financial accommodations made in conformance with this Revolving Credit
Facility. Each month the Bank shall render to Borrower a statement of
account, which statement shall be considered correct and accepted by Borrower
and conclusively binding upon Borrower unless Borrower notifies the Bank to the
contrary within thirty (30) days from the date of mailing of said
statement. Borrower promises to pay to Bank the outstanding principal
and accrued and unpaid interest under the Revolving Note as
follows: (1) monthly payments of accrued interest on the first day of
each month, and (2) a final payment of all outstanding principal and accrued but
unpaid interest on June 1, 2009.”
3. Interest Rate on the
Revolving Note. Section 2.3.1 of the Loan Agreement is amended
in its entirety to read as follows:
“2.3.1 Interest Rate on the
Revolving Note. The interest rate hereunder on the Revolving
Note shall be equal to (a) as to the first $4,000,000 of outstanding principal
under the Revolving Note, the greater of (i) four and one-half percentage points
(4.50%) per annum, or (ii) LIBOR Rate plus three percentage points (3.0%) per
annum, and (b) as to any principal amount outstanding under the Revolving Note
in excess of $4,000,000, the greater of (i) five percentage points (5.0%) per
annum, or (ii) LIBOR Rate plus three and one-half percentage points (3.5%) per
annum. “LIBOR Rate” means the 30 Day London Interbank Offer Rate as
published in the Wall Street Journal on the first business day of each calendar
month and effective on the same day (the "Index"). The Index is not
necessarily the lowest rate charged by Lender on its loans. If the
Index becomes unavailable during the term of this loan, Lender may designate a
substitute index after notice to Borrower. Lender will tell Borrower
the current Index rate upon Borrower's request. Borrower understands
that Lender may make loans based on other rates as well.”
4. Collateral Obligation
Ratio. Section 2.6 of the Loan Agreement is amended to delete
“$4,000,000” and replace it with “$5,000,000.”
5. Cash
Equity. Section 5.21 (Net Income) of the Loan agreement is
hereby deleted and replaced with the following:
“5.21 Cash
Equity. Borrower shall (a) on or before January 31, 2009,
provide Bank with a copy of a letter of intent from a proposed investor who is
satisfactory to Bank to make a contribution of equity to Borrower in the amount
of at least $2,500,000 on terms and conditions satisfactory to Bank, and (b) on
or before March 31, 2009, close on such transaction and obtain additional cash
equity in the amount of at least $2,500,000.”
6. Debt
Service. Section 5.22 of the Loan Agreement is amended in its
entirety to read as follows:
“5.22
Debt
Service. Borrower shall maintain as of the last day of each
fiscal month of Borrower, commencing December 31, 2008, in each case for the
period of twelve months ending on such date, a ratio of (1) Borrower’s Net Cash
Flow, to (2) the sum of Borrower’s required principal payments, plus interest
expense, of at least 1.0 to 1.0.”
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7. Conditions
Precedent. This Amendment shall not be effective until Bank
has received a fully executed copy of this Amendment and each of the following
in form and substance satisfactory to the Bank, executed as
appropriate:
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(a)
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Revolving
Note;
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(b)
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Mortgage
on Grafton Real Estate;
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(c)
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Letter
Report and Evidence of Insurance for Grafton Real
Estate;
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(d)
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Corporate
Borrowing Resolutions;
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(e)
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Officer’s
Certificate;
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(f)
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Original
Consent of Lessor for Borrower’s Franklin
premises;
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(g)
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Collateral
Assignment of Membership Interest in Nexus Custom Magnetics,
L.L.C.
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(h)
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Debt
Subordination Agreement; and
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(i)
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Fully
executed and notarized Consent of Lessor for Borrower’s Xxxxx
premises.
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8. Effect of
Amendment. Except as otherwise provided herein, the Loan
Agreement shall remain in full force and effect and Borrower shall be bound by
all of the covenants therein.
9. Law
Governing. This Amendment shall be governed by the laws of the
State of Wisconsin.
10. Binding
Effect. This Amendment shall be binding on and inure to the
benefit of Borrower, Bank and their respective successors and
assigns.
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BORROWER:
Jefferson
Electric, Inc.
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By:
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/s/ Xxxxxx Xxxxx | |
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Xxxxxx
Xxxxx, President
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BANK:
Xxxxxxx
Bank
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By:
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/s/ Xxxxxxx X. Xxxxxxxx | |
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Xxxxxxx
X. Xxxxxxxx, Vice President
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CONSENT
OF GUARANTORS
The undersigned hereby consent to the
foregoing amendment and ratify their Guaranties of the obligations of Jefferson
Electric, Inc. to Xxxxxxx Bank.
| /s/ Xxxxxx Xxxxx | ||
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Xxxxxx
Xxxxx
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JEFFERSON ELECTRIC LEASING,
LLC,
A
Wisconsin limited liability company
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By:
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/s/ Xxxxxx Xxxxx | |
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Xxxxxx
Xxxxx, Member
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