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EXHIBIT 10.1
THIRD AMENDMENT AND MODIFICATION OF
REVOLVING LINE OF CREDIT PROMISSORY NOTE,
LOAN AGREEMENT AND REAFFIRMATION OF GUARANTIES
This Third Amendment and Modification of Revolving Line of
Credit
Promissory Note, Loan Agreement and Reaffirmation of Guaranties
("Amendment") is
made effective the 1st day of January, 2005 ("Effective Date")
by and among WSI
Industries, Inc., a Minnesota corporation, having an address of
213 Chelsea
Road, Monticello, MN 55362 ("Borrower"), Taurus Numeric Tool,
Inc., having an
address of 213 Chelsea Road, Monticello, MN 55362 and WSI
Rochester, Inc.,
having an address of 213 Chelsea Road, Monticello, MN 55362
(jointly
"Guarantor") and Excel Bank Minnesota, a Minnesota banking
corporation, having
an address of 50 South Sixth Street, Suite 1000, Minneapolis,
Minnesota 55402
("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 and the Security Agreement
were
amended and extended pursuant to that certain Amendment and
Modification of
Revolving Line of Credit Promissory Note, Loan Agreement and
Reaffirmation of
Guaranties dated effective December 31, 2003 ("First
Amendment"); and
WHEREAS, the Note, the Loan Agreement, the Security Agreement,
the
First Amendment 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 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 Base Rate of interest as
established
by Excel Bank Minnesota from time to time ("Base Rate"). On
the
Effective Date hereof the
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Base Rate is five and one quarter (5.25%) percent per annum and
the
initial rate of interest under the Note as of the Effective Date
is
five and one quarter (5.25%) percent per annum. 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.
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 commen
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