NINTH AMENDMENT AND MODIFICATION OF REVOLVING LINE OF CREDIT PROMISSORY NOTE, LOAN AGREEMENT AND REAFFIRMATION OF GUARANTIES
EXHIBIT 10.1
NINTH AMENDMENT AND MODIFICATION OF
REVOLVING LINE OF CREDIT PROMISSORY NOTE,
LOAN AGREEMENT AND REAFFIRMATION OF GUARANTIES
REVOLVING LINE OF CREDIT PROMISSORY NOTE,
LOAN AGREEMENT AND REAFFIRMATION OF GUARANTIES
This Ninth Amendment and Modification of Revolving Line of Credit Promissory Note, Loan
Agreement and Reaffirmation of Guaranties (“Amendment”) is made effective the 1st day of
February, 2010 (“Effective Date”) by and among WSI Industries, Inc., a Minnesota corporation,
having an address of 000 Xxxxxxx Xxxx, Xxxxxxxxxx, XX 00000 (“Borrower”), Taurus Numeric Tool,
Inc., having an address of 000 Xxxxxxx Xxxx, Xxxxxxxxxx, XX 00000 and WSI Rochester, Inc., having
an address of 000 Xxxxxxx Xxxx, Xxxxxxxxxx, XX 00000 (jointly “Guarantor”) and M&I Xxxxxxxx &
Xxxxxx Bank, having an address of 00000 Xxxxxx Xxxxx, Xxxx Xxxxxxx, Xxxxxxxxx 00000 (“Bank”).
WHEREAS, on or about December 4, 2002, (the “Loan Date”) Borrower executed a Revolving Line of
Credit Promissory Note in favor of Excel Bank Minnesota (“Excel”) in the original principal amount
of One Million and no/100 Dollars ($1,000,000.00) (“Note”); and
WHEREAS, on or about the Loan Date, Borrower and Excel 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 Excel; and
WHEREAS, to secure the sums due and payable to Excel pursuant to the Note and the Loan
Agreement, Borrower also executed that certain Security Agreement, also dated as of the Loan Date,
whereby Excel took a security interest in all assets of Borrower (“Security Agreement); and
WHEREAS, to further secure the sums due and payable to Excel 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 and the Security Agreement were amended and extended
pursuant to those certain Amendments and Modifications of Revolving Line of Credit Promissory Note,
Loan Agreement and Reaffirmation of Guaranties dated effective December 31, 2003, May 3, 2004,
January 1, 2005, January 1, 2006, January 1, 2007, January 1, 2008, August 31, 2008, January 1,
2009, and by Waiver Letters dated April 23, 2007, and October 15, 2009 (the “Amendments”); and
WHEREAS, the Note, the Loan Agreement, the Security Agreement, the Amendments and all of the
documents executed in conjunction therewith are sometimes jointly referred to herein as the “Loan
Documents”; and
WHEREAS, effective on August1, 2007, Excel was acquired by merger with the Bank; and
WHEREAS, the Borrower has requested that the Bank again amend and extend the maturity date of
the Note and modify the terms of 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 LIBOR Rate, plus two and three-fourths percent (2.75%); provided, however, that
the interest rate shall never be less than four and one half percent (4.50%) and if the
foregoing calculation results in a rate of less than four and one half percent (4.50%) the
interest rate shall be four and one half percent (4.50%). As used herein, “LIBOR Rate”
means the “London Interbank Offered Rates (LIBOR)” for one month as published in the “Money
Rates” column of The Wall Street Journal on the first business day of each month (or, if The
Wall Street Journal ceases to publish a rate so designated, any similar successor rate as
the Lender shall in good faith designate). The interest rate shall automatically adjust on
the first business day of each month in the event there has been any change in the LIBOR
Rate. On the Effective Date hereof the LIBOR Rate is twenty-two/one hundredths percent
(0.22%), and the rate of interest under the Note as of the Effective Date is four and
fifty/one hundredths percent (4.50%) per annum. If the LIBOR 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 LIBOR Rate.
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
February 1, 2010 and continuing monthly thereafter on the 1st day of each and
every month until February 1, 2011, 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 section of the Loan Agreement is hereby amended and modified as described below
(all capitalized terms have the meanings given to them in the Loan Agreement): |
| a. | Section 5.11 of the Loan Agreement shall be amended as follows: |
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“Section 5.11 Debt Service Coverage Ratio. So long as the Note shall remain unpaid
or the Bank shall have any Commitment hereunder, the Borrower will maintain an
annual ratio of earnings before interest, taxes, depreciation and amortization, less
distributions to shareholders, all for the same specified period to annual principal
and interest payments due on all Debt of the Borrower of not less than 1.25 to 1 at
each August 31st, beginning on August 31, 2010, as determined in
accordance with generally recognized accounting principles consistently applied;
notwithstanding the foregoing, however, that in making this computation at any time
for the period beginning September 1, 2009 and ending on August 31, 2010 only, the
principal balance of the loan payable to Bank in the original principal amount of
$1,200,000.00 with a current principal balance of $1,200,000.00 as of the date
hereof, and due and payable in full on June 30, 2010 (Loan # 224860-59439), shall be
excluded from the definition of “Debt”.
| 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, as amended, 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). |
| 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, as
amended, 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, as amended, and the performance of the terms and covenants of the
balance of the Loan Documents, as amended. 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. |
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| 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 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:
| By | /s/ Xxxx X. Xxxxxx | |||
| Its: | CFO | |||
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GUARANTORS:
| TAURUS NUMERIC TOOL, INC., a Minnesota corporation |
||||
| By | /s/Xxxx X. Xxxxxx | |||
| Its: | CFO | |||
| By | /s/Xxxx X. Xxxxxx | |||
| Its: | CFO | |||
LENDER:
M&I XXXXXXXX & XXXXXX BANK,
a Wisconsin state banking corporation,
a Wisconsin state banking corporation,
| By | /s/ Xxxxx Xxxxxx | |||
| Its: | SVP | |||
| By | /s/ Xxxx Xxxxxx | |||
| Its: | VP | |||
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