EXHIBIT 10.9
 
THIRD AMENDMENT TO
 
LOAN AND SECURITY AGREEMENT
 
THIS AMENDMENT, dated as of December 3, 2008, is to the Loan and Security
Agreement dated January 2, 2008 between Johnson 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.
 
 
“Loan Amount” means the sum of $5,000,000 plus the outstanding balance of the
Term Note.

 
“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.

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.”
 

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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:

(a) 
Revolving Note;

(b) 
Mortgage on Grafton Real Estate;

(c) 
Letter Report and Evidence of Insurance for Grafton Real Estate;

(d) 
Corporate Borrowing Resolutions;

(e) 
Officer’s Certificate;

(f) 
Original Consent of Lessor for Borrower’s Franklin premises;

 
(g)
Collateral Assignment of Membership Interest in Nexus Custom Magnetics, L.L.C.

 
(h)
Debt Subordination Agreement; and

 
(i)
Fully executed and notarized Consent of Lessor for Borrower’s Pharr premises.

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.
 

 
BORROWER:
 
Jefferson Electric, Inc.
                 
 
By:
/s/ Thomas Klink      
Thomas Klink, President
 

 
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BANK:
 
Johnson Bank
                 
 
By:
/s/ Roberta S. Cummings      
Roberta S. Cummings, Vice President
 

 

CONSENT OF GUARANTORS
 
The undersigned hereby consent to the foregoing amendment and ratify their
Guaranties of the obligations of Jefferson Electric, Inc. to Johnson Bank.
 

  /s/ Thomas Klink  
Thomas Klink
         
JEFFERSON ELECTRIC LEASING, LLC,
A Wisconsin limited liability company
 
 
By: 
/s/ Thomas Klink    
Thomas Klink, Member
     

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