Exhibit 10.1
 
 
FIRST AMENDMENT AND MODIFICATION OF
 REVOLVING LINE OF CREDIT PROMISSORY NOTE,
 LOAN AGREEMENT AND REAFFIRMATION OF GUARANTIES

This First 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, 2012 ("Effective Date") by and among WSI
Industries, Inc., a Minnesota corporation, having an address of 213 Chelsea
Road, Monticello, MN 55362  ("Borrower"), WSI Industries, Co., formerly known as
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 BMO Harris Bank N.A., a national
banking association, successor by merger to M&I Marshall & Ilsley Bank("M&I"),
having an address of 50 South Sixth Street, Suite 1000, Minneapolis, Minnesota
55402 ("Bank").

WHEREAS, on or about February 1, 2011, (the "Loan Date") Borrower executed a
Revolving Line of Credit Promissory Note in favor of M&I 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 M&I 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 M&I; 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 in
favor of M&I, also dated as of the Loan Date, whereby Borrower granted to M&I a
security interest in all assets of Borrower ("Security Agreement); and

WHEREAS, to further secure the sums due and payable to M&I 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, 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 or about July 6, 2011, M&I was acquired by merger with the
Bank; and
 
WHEREAS, Taurus Numeric Tool, Inc. has changed its name to WSI Industries, Co.;
and
 
 
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WHEREAS, the Borrower has requested that the Bank 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 first Paragraph of the Note is hereby amended to read as follows:

"FOR VALUE RECEIVED, WSI Industries, Inc., a Minnesota corporation, (the
“Borrower”) promises to pay to the order of BMO Harris Bank N.A., a national
banking associaition, or any future holder hereof (“Lender”), the principal sum
of One Million and no/100 Dollars ($1,000,000.00), or so much thereof as may be
advanced and be outstanding pursuant to and subject to the restrictions
contained in, that certain Loan Agreement between Borrower and Lender dated as
of February 1, 2011, as amended by the First Amendment and Modification of
Revolving Line of Credit Promissory Note, Loan Agreement and Reaffirmation of
Guaranties of even date herewith ("Loan Agreement''), together with interest
accruing from and after the date hereof on the unpaid principal balance from
time to time outstanding at a fluctuating annual interest rate equal to the
LIBOR Rate, as hereinafter defined, plus Three Hundred (300) basis points per
year (collectively the LIBOR Rate plus Three Hundred (300) basis points is the
“Note Rate”).  The Note Rate shall change concurrently with each change in the
LIBOR Rate. The Note Rate is not necessarily the lowest rate charged by Lender
on loans at any given time.  NOTICE: Under no circumstances will the Note Rate
be more than the maximum rate allowed by applicable law.  Principal and interest
due hereunder shall be paid in immediately available funds as follows:"

3.
Paragraph 5 of the Note is hereby amended in its entirety to read as follows:

 
"5.   Maturity Date.  The entire outstanding balance of principal, if not sooner
paid, together with all accrued interest thereon, shall be due and payable on
February 1, 2013".

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.

 
 
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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 outstanding
and 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.

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.

 
 
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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 ______________________________
Its: ______________________________

 
GUARANTORS:
 
WSI INDUSTRIES, CO. (formerly known
asTaurus Numeric Tool, Inc.), a Minnesota
corporation
 
By ______________________________
Its: ______________________________

 
WSI ROCHESTER, INC., a Minnesota
Minnesota corporation
 
By ______________________________
Its: ______________________________

LENDER:

BMO HARRIS BANK N.A., successor by
merger to M&I Marshall & Ilsley Bank,
a national banking association

By ______________________________
Its: ______________________________

By ______________________________
Its: ______________________________