Exhibit 10.1

 

THIRD AMENDMENT TO LOAN AGREEMENT

 

THIS THIRD AMENDMENT TO LOAN AGREEMENT (the “Amendment”) dated as of January 31,
2013 (the “Effective Date”) is made by and between BMO HARRIS BANK N.A., a
national bank, as successor by merger to M&I Marshall & Ilsley Bank (“Lender”),
and AEROSONIC CORPORATION, a Delaware corporation (“Borrower”).

 

WITNESSETH

 

WHEREAS, Borrower and Lender entered into that certain Loan Agreement dated
April 30, 2010 as amended by that certain (i) First Amendment to Loan Agreement
dated January 6, 2011; (ii) Joint Amendment to Loan Agreement and Revolving Line
of Credit Note dated April 29, 2011; (iii) Joint Amendment to Loan Agreement and
Revolving Line of Credit Note dated June 27, 2011; and (iv) Second Amendment to
Loan Agreement dated September 26, 2011 (as may be further amended, restated,
modified or supplemented and in effect from time to time, the “Loan Agreement”).
Capitalized terms not otherwise defined herein shall have the meanings ascribed
to such terms in the Loan Agreement.

 

WHEREAS, pursuant to the Loan Agreement, Borrower issued to Lender that certain
(i) Amended and Restated Revolving Line of Credit Note dated September 26, 2011
in the original principal amount of Four Million Five Hundred Thousand and
No/100 Dollars ($4,500,000) as amended by that certain First Amendment to
Amended and Restated Revolving Line of Credit Note dated June 27, 2012 (as may
be further amended, restated, modified or supplemented and in effect from time
to time, the “Revolving Line of Credit Note”); (ii) Interest Bearing Installment
Note (Real Estate) dated April 30, 2010 in the original principal amount of
Three Million Five Hundred Thousand and No/100 Dollars ($3,500,000) (as may be
amended, restated, modified or supplemented and in effect from time to time, the
“Real Estate Installment Note”); (iii) Interest Bearing Installment Note
(Equipment) dated April 30, 2010 in the original principal amount of One Million
Nine Hundred Thousand and No/100 Dollars ($1,900,000) (as may be amended,
restated, modified or supplemented and in effect from time to time, the “Term
Note”); and (iv) Equipment Line of Credit Note dated April 30, 2010 in the
original principal amount of Seven Hundred Thousand and No/100 Dollars
($700,000) (as may be amended, restated, modified or supplemented and in effect
from time to time, the “Equipment Note,” collectively with the Revolving Line of
Credit Note, Real Estate Installment Note and Term Note, the “Notes”).

 

WHEREAS, to secure Borrower’s payment of the Notes and Borrower’s performance
under the Loan Agreement, Borrower, among other things, executed and delivered
to Lender that certain (i) Mortgage, Security Agreement and Assignment of Rents
dated April 30, 2010, recorded in the Official Records of Pinellas County,
Florida at O.R. Book 16909 Pages 2344-2362 (the “Mortgage”), whereby Borrower
granted a security interest in the real and personal property described therein
to Lender; (ii) Collateral Assignment of Rents and Leases dated April 30, 2010,
recorded in the Official Records of Pinellas County, Florida at O.R. Book 16909
Pages 2363-2369 (the “Collateral Assignment”), whereby Borrower granted a
security interest in the rents and leases described therein to Lender; (iii)
Security Agreement dated April 30, 2010 (the “Security Agreement”), whereby
Borrower granted a security interest in the personal property more particularly
described therein to Lender; and (iv) Negative Pledge Agreement dated April 30,
2010, recorded in the Official Records of Albemarle County, Virginia at O.R.
Book 3879 Pages 601-607 (the “Negative Pledge”), whereby Avionics Specialties,
Inc., a wholly-owned subsidiary of Borrower, agreed not to grant a lien on, or
otherwise encumber or transfer, the real property described therein.

 

WHEREAS, to further secure Borrower’s payment of the Notes and Borrower’s
performance under the Loan Agreement, Avionics Specialties, Inc., a Virginia
corporation, and OP Technologies, Inc., an Oregon corporation, each a
wholly-owned subsidiary of Borrower (each a “Guarantor” and collectively, the
“Guarantors”), each executed and delivered an unconditional Guaranty Agreement
dated April 30, 2010 guarantying payment and performance by Borrower of all
obligations evidenced by the Notes and Loan Agreement (such guarantees
collectively referred to herein as the “Guaranty”).

 

 

 

 

WHEREAS, to secure Guarantor’s obligations and performance under the Guaranty,
each Guarantor, among other things, executed and delivered to Lender that
certain Security Agreement dated April 30, 2010 (the “Guarantor Security
Agreement”) granting Lender a security interest in certain collateral more
particularly described therein. The Loan Agreement, Notes, Mortgage, Collateral
Assignment, Security Agreement, Negative Pledge, Guaranty, Guarantor Security
Agreement and any and all other documents or instruments executed in connection
therewith shall be referred to herein as the “Loan Documents.”

 

WHEREAS, as of January 31, 2013, the aggregate outstanding principal balance of
the Notes is $4,891,982.49.

 

WHEREAS, Borrower wishes to renew and extend the maturity dates of the Revolving
Line of Credit Note, Real Estate Installment Note and Term Note, and to make
certain other modifications to the Loan Agreement, and although Lender is under
no obligation to do so, Lender is willing to renew and extend the maturity dates
of the Revolving Line of Credit Note, Real Estate Installment Note and Term Note
and make certain modifications to the Loan Agreement under the terms and
conditions set forth herein.

 

NOW, THEREFORE, in consideration of the execution and delivery of this Amendment
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:

 

AGREEMENT

 

1. Recitals. The parties hereto hereby affirm all recitals and statements above
as true and correct and hereby incorporate such recitals into this Amendment.

 

2. Renewal of Revolving Line of Credit. The Lender agrees to renew the Revolving
Line of Credit. The Revolving Line of Credit shall be evidenced by the Renewal
Revolving Line of Credit Note, the form of which is attached hereto as Exhibit
“A”. The parties hereby acknowledge and agree that the Renewal Revolving Line of
Credit Note shall constitute a “Loan Document” under the Loan Agreement and the
other Loan Documents and any reference to the Revolving Line of Credit Note in
the Loan Agreement and other Loan Documents shall mean and include the Renewal
Revolving Line of Credit Note.

 

3. Renewal of Real Estate Loan. The Lender agrees to extend the maturity date of
the Real Estate Loan. The Real Estate Loan shall be evidenced by the Renewal
Interest Bearing Installment Note (Real Estate) in the original principal amount
of Two Million Eight Hundred Seventy-Seven Thousand Seven Hundred Seventy-Seven
and 92/100 Dollars ($2,877,777.92) (the “Renewal Real Estate Installment Note”),
the form of which is attached hereto as Exhibit “B”. The parties hereby
acknowledge and agree that the Renewal Real Estate Installment Note shall
constitute a “Loan Document” under the Loan Agreement and the other Loan
Documents and any reference to the Real Estate Installment Note in the Loan
Agreement and other Loan Documents shall mean and include the Renewal Real
Estate Installment Note.

 

 

 

 

4. Renewal of Term Loan. The Lender agrees to extend the maturity date of the
Term Loan. The Term Loan shall be evidenced by the Renewal Interest Bearing
Installment Note (Equipment) in the original principal amount of Eight Hundred
Eighty-Six Thousand Six Hundred Sixty-Six and 88/100 Dollars ($886,666.88) (the
“Renewal Term Note”), the form of which is attached hereto as Exhibit “C”. The
parties hereby acknowledge and agree that the Renewal Term Note shall constitute
a “Loan Document” under the Loan Agreement and the other Loan Documents and any
reference to the Term Note in the Loan Agreement and other Loan Documents shall
mean and include the Renewal Term Note.

 

5. Amendment to Section 1.2 of the Loan Agreement. Section 1.2 of the Loan
Agreement is hereby amended so that, from and after the Effective Date, it shall
read as follows:

 

““Borrowing Base” means the lesser of (a) the Revolving Credit Limit or (b) the
sum of (i) up to eighty percent (80%) of the aggregate amount of Eligible
Accounts; plus (ii) eighty percent (80%) of the aggregate amount of Finished
Goods Inventory; plus (iii) fifty percent (50%) of the aggregate amount of Raw
Materials Inventory, with the aggregate total inventory of (ii) and (iii) not to
exceed Two Million Seven Hundred Fifty Thousand and No/100 Dollars
($2,750,000).”

 

6. Amendment to Section 1.32 of the Loan Agreement. Section 1.32 of the Loan
Agreement is hereby amended so that, from and after the Effective Date, it shall
read as follows:

 

““Notes” means the Renewal Revolving Line of Credit Note, Renewal Real Estate
Installment Note, Renewal Term Note and the Equipment Line of Credit Note, as
each may be amended, restated, renewed, modified or supplemented and in effect
from time to time.”

 

7. Amendment to Section 2.2 of the Loan Agreement. Section 2.2 of the Loan
Agreement is hereby amended so that, from and after the Effective Date, it shall
read as follows:

 

“Availability Period. The Revolving Line of Credit is available between the date
of this Agreement and January 31, 2016 (the “RLOC Availability Period”), unless
Borrower is in default under this Agreement. Any amount of principal repaid by
Borrower during the RLOC Availability Period may again be borrowed by Borrower,
provided that the aggregate principal balance outstanding at any time does not
exceed the Revolving Credit Limit, subject at all times to the Borrowing Base
limitation imposed in Section 2.3 of this Agreement.”

 

8. Amendment to Section 2.4 of the Loan Agreement. Section 2.4 of the Loan
Agreement is hereby amended so that, from and after the Effective Date, it shall
read as follows:

 

“Interest Rate. Interest on the Revolving Line of Credit shall accrue at a rate
per year equal to the One Month BBA LIBOR plus 3.00 percentage point(s).”

 

9. Amendment to Section 2 of Loan Agreement; New Section 2.7. The Loan Agreement
is hereby amended to add a new section 2.7, so that, from and after the
Effective Date, it shall read as follows:

 

“2.7 Unused Commitment Fee. Borrower agrees to pay Bank a fee equal to
twenty-five (25) basis points on any difference between the Revolving Credit
Limit and the amount of credit it actually uses, determined by the daily amount
of credit outstanding during the specified period. The fee will be calculated
quarterly and is due in arrears commencing on June 30, 2013 (for the quarter
ended March 31, 2013) and on the last day of each following quarter until the
expiration of the RLOC Availability Period.”

 

10. Amendment to Section 3.2 of the Loan Agreement. Section 3.2 of the Loan
Agreement is hereby amended so that, from and after the Effective Date, it shall
read as follows:

 

 

 

“Interest Rate. Interest on the Real Estate Loan shall accrue at a rate per year
equal to the One Month BBA LIBOR plus 3.40 percentage point(s).”

 

11. Amendment to Section 4.2 of the Loan Agreement. Section 4.2 of the Loan
Agreement is hereby amended so that, from and after the Effective Date, it shall
read as follows:

 

“Interest Rate. Interest on the Term Loan shall accrue at a rate per year equal
to the One Month BBA LIBOR plus 3.40 percentage point(s).”

 

12. Amendment to Section 12.1 of the Loan Agreement. Section 12.1 of the Loan
Agreement is hereby amended so that, from and after the Effective Date, it shall
read as follows:

 

“Financial Information. At all times that any debt, liability or obligation is
owed to the Bank by Borrower under this Agreement or any of the other Loan
Documents, unless the Bank otherwise consents in writing, Borrower will maintain
for itself a system of accounting established and administered in accordance
with GAAP, consistently applied, and will furnish to the Bank:

 

(a) Within one hundred eighty (180) days of the fiscal year end, the annual
financial statements of Borrower, certified and dated by a Responsible Officer.
These financial statements must be audited (with an opinion reasonably
satisfactory to the Bank) by Mayer Hoffman McCann, P.C., or such other Certified
Public Accountant acceptable to the Bank. The statements shall be prepared on a
consolidated basis.

 

(b) Within forty-five (45) days after the end of each fiscal quarter, quarterly
financial statements of Borrower certified and dated by a Responsible Officer.
These financial statements must be reviewed by Mayer Hoffman McCann, P.C., or
such other Certified Public Accountant acceptable to the Bank. The statements
shall be prepared on a consolidated basis.

 

(c) Copies of the Form 10-K Annual Report, Form 10-Q Quarterly Report, and any
Form 8-K Current Report within ten (10) days after the date of filing with the
SEC.

 

(d) Within twenty (20) days after the end of each calendar month, Borrower shall
deliver to the Bank a duly completed borrowing base certificate in the form and
substance satisfactory to the Bank as of the last day of such calendar month
certifying Borrower’s compliance with Section 2.3 of this Agreement and an aging
schedule of its accounts receivable and accounts payable, each in a form and
detail acceptable to the Bank and certified by a Responsible Officer.

 

(e) Within forty-five (45) days after the end of each fiscal quarter, a
compliance certificate of Borrower executed by a Responsible Officer and setting
forth (i) the information and computations (in sufficient detail) to establish
that the Borrower is in compliance with all financial covenants set forth in
Section 12.2 at the end of the period covered by the financial statements then
being furnished and (ii) whether there existed as of the date of such financial
statements and whether there exists as of the date of the certificate, any
default under this Agreement and, if any such default exists, specifying the
nature thereof and the action the Borrower is taking and propose to take with
respect thereto.

 

(f) Each financial statement provided to the Bank pursuant to this Section 12.1
shall be accompanied by a certification by a Responsible Officer of Borrower
certifying that to his knowledge no Event of Default has occurred under this
Agreement or, if an Event of Default has occurred, specifying such default with
detail.

 

 

 

(g) Such other information, including non-financial information, as the Bank may
from time to time reasonably request.”

 

13. Amendment to Section 12.2(a) of the Loan Agreement. Section 12.2(a) of the
Loan Agreement is hereby amended so that, from and after the Effective Date, it
shall read as follows:

 

“Total Stockholders’ Equity. To maintain on a consolidated basis Total
Stockholders’ Equity equal to at least Eight Million Seven Hundred Fifty-Nine
Thousand One Hundred and No/100 Dollars ($8,759,100), which amount shall
increase on a quarterly basis in an amount equal to ninety percent (90%) of
Borrower’s net income (calculated on a consolidated basis) for such quarter.
This amount shall be calculated at the end of each quarterly reporting period
for which Bank requires financial statements.”

 

14. Amendment to Section 12.2(b) of the Loan Agreement. Section 12.2(b) of the
Loan Agreement is hereby amended so that, from and after the Effective Date, it
shall read as follows:

 

“Funded Debt to EBITDA. To maintain on a consolidated basis a ratio of Funded
Debt to EBITDA not exceeding 3.0:1.0. This ratio shall be calculated at the end
of each quarterly reporting period for which the Bank requires financial
statements, using the results of the twelve-month period ending with the last
day of that reporting period.”

 

15. Conditions to Effectiveness. This Amendment shall become effective as of the
Effective Date upon Lender receiving the following items, in form and content
acceptable to Lender in its sole discretion:

 

15.1 Lender shall receive counterpart originals of this Amendment executed by
all parties listed on the signature page(s) hereto and originals or certified or
other copies of such other documents as the Lender may reasonably request.

 

15.2 Lender shall have received the original duly executed Renewal Revolving
Line of Credit Note, Renewal Real Estate Installment Note and Renewal Term Note.

 

15.3 Lender shall have received the original Modification of Mortgage, Security
Agreement and Assignment of Rents in the form attached hereto as Exhibit D.

 

15.4 A certificate of the Secretary of State from the state of organization of
Borrower and each Guarantor, dated as of a date not more than five (5) business
days before the Effective Date, with respect to the good standing of Borrower
and each Guarantor, and of the Secretary of State or equivalent official of each
other jurisdiction where Borrower and each Guarantor is qualified to do business
as a foreign entity, dated not more than five (5) business days before the
Effective Date, with respect to such qualification and the good standing of
Borrower and Guarantor in such jurisdiction.

 

15.5 Lender shall receive evidence that the execution, delivery and performance
by Borrower of this Amendment and any instrument or agreement required under
this Amendment have been duly authorized.

 

 

 

 

16. Representations, Warranties and Covenants. By executing this Amendment,
Borrower represents and warrants to Lender that (a) there is no event which is,
or with notice or lapse of time or both would be, a default under the Loan
Agreement, the Notes or the Loan Documents except for those events, if any, that
have been disclosed in writing to Lender or waived in writing by Lender; (b) the
representations and warranties in the Loan Agreement are true as of the date of
this Amendment as if made on the date hereof; (c) the financial statements and
other financial information most recently provided to Lender are correct and
complete in all material respects and fairly represent the financial condition
of Borrower as at the date thereof and fairly represent the results of the
operations of Borrower for the period covered thereby; (d) there has been no
material adverse change in the business, properties, or condition, financial or
otherwise, of Borrower since the date of such financial statements or other
information; (e) this Amendment does not conflict with any law, agreement, or
obligation by which Borrower is bound; and (f) this Amendment is within
Borrower’s powers, has been duly authorized, and does not conflict with any of
Borrower’s organization papers.

 

17. Reaffirmation and Confirmation. Borrower hereby (a) acknowledges and
reaffirms its obligations as set forth in the Loan Documents; (b) agrees to
continue to comply with, and be subject to, all of the terms, provisions,
conditions, covenants, agreements and obligations set forth in the Loan
Documents, each of which remains in full force and effect; and (c) confirms,
ratifies and reaffirms that the security interest granted to Lender in the
Collateral pursuant to the Loan Documents in order to secure Borrower’s prompt
payment of the Notes and Borrower’s performance under the Loan Documents, is
continuing and is and shall remain unimpaired and shall continue to constitute a
first priority security interest (subject to Permitted Liens) in favor of
Lender, with the same force, effect and priority in effect both immediately
prior to and after entering into this Amendment. Lender’s security interest in
and to the Collateral has attached and continues to attach to all such
Collateral and no further act on the part of Lender is necessary to continue
such security interest. Should any term or provision of the Loan Agreement,
Notes or other Loan Documents conflict with the terms or provisions contained in
this Amendment, the terms and provisions of this Amendment shall be controlling.
This Amendment is not intended to be, nor shall it be construed to be, a
novation or an accord and satisfaction of any other obligation or liability of
Borrower to Lender.

 

18. Fees and Costs. Contemporaneous with the execution of this Amendment,
Borrower shall pay to the Lender (a) a renewal fee equal to Thirty Thousand and
No/Dollars ($30,000); and (b) all costs, expenses and attorneys’ fees incurred
by Lender in connection with this Amendment.

 

19. Counterparts. This Amendment may be executed in any number of counterparts
and by the different parties on separate counterparts. Each such counterpart
shall be deemed to be an original, but all such counterparts shall together
constitute one and the same agreement.

 

20. FINAL AGREEMENT. This written Amendment represents the final agreement
between and among the parties hereto and may not be contradicted by evidence of
prior, contemporaneous, or subsequent oral agreements between or among the
parties. There are no unwritten oral agreements between or among the parties.

 

[SIGNATURES ON FOLLOWING PAGE]

 

 
 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered as of the day and year first above written.

 

LENDER:

 

BMO HARRIS BANK N.A.

 

 

By: ______________________________

Its: ______________________________

Name: ___________________________

 

 

 

 

BORROWER:

 

AEROSONIC CORPORATION

 

 

By: ______________________________

Its: ______________________________

Name: ___________________________

       

 

 

 

Signature page to Third Amendment to Loan Agreement

 

 

 

 

 
 

CONSENT AND REAFFIRMATION OF GUARANTORS

 

The undersigned, each a guarantor of Borrower’s obligations to Lender pursuant
to the Guaranty executed by the undersigned in favor of Lender, hereby (i)
acknowledges and consents to the execution, delivery, and performance by
Borrower of the foregoing Third Amendment to Loan Agreement; (ii) warrants and
covenants to Lender that, except to the extent previously disclosed to Lender in
writing, all representations and warranties previously made by Guarantor to
Lender are true, complete, and accurate as of the date of this Consent and
Reaffirmation of Guarantors; and (iii) reaffirms and agrees that the Guaranty to
which the undersigned is party and all other documents and agreements executed
and delivered by either the undersigned or Borrower to Lender in connection with
the indebtedness represented by the Notes (including, without limitation, the
Renewal Revolving Line of Credit Note, Renewal Real Estate Installment Note and
Renewal Term Note), the Loan Agreement and Loan Documents are all in full force
and effect, without defense, offset, or counterclaim, or alternatively, that any
such right of defense, offset or counterclaim is hereby expressly waived.

 

IN WITNESS WHEREOF, the undersigned has duly consented to the Third Amendment to
Loan Agreement by execution and delivery to Lender of this Consent and
Reaffirmation of Guarantors as of the day and year first above written.

 

      GUARANTORS:           AVIONICS SPECIALTIES, INC.           By:
____________________________   Name: __________________________   Its:
____________________________               OP TECHNOLOGIES, INC.       By:
____________________________   Name: __________________________   Its:
____________________________

 

 
 

International Waters Closing Affidavit

 

BEFORE ME, the undersigned, a licensed captain of the
____________________________, personally appeared ____________________________
an officer of BMO Harris Bank N.A., a national bank, as successor by merger to
M&I Marshall & Ilsley Bank (the “Lender”), and ____________________________, the
____________________________ of Aerosonic Corporation, a Delaware corporation
(the “Borrower”), who, being by me first duly sworn, stated:

1. On the date hereof, Borrower executed that certain (a) Third Amendment to
Loan Agreement dated January 31, 2013 (the “Amendment”), (b) Renewal Revolving
Line of Credit Note dated January 31, 2013 (“Renewal Revolving Line of Credit
Note”), and (c) Renewal Interest Bearing Installment Note (Equipment) dated
January 31, 2013 (“Renewal Term Note”), at a latitude of
____________________________ and longitude of ____________________________,
which is not located in Florida territorial waters.

 

2. Borrower personally delivered the Amendment, Renewal Revolving Line of Credit
Note and Renewal Term Note to the Lender, and Lender accepted the Amendment,
Renewal Revolving Line of Credit Note and Renewal Term Note on the date hereof
on the ____________________________, at a latitude of
____________________________ and longitude of ____________________________,
which is not located in Florida territorial waters.

 

DATED this ___ day of ______________, 2013.

 

 

AEROSONIC CORPORATION

 

By:_______________________________________

Its:_______________________________________

Name:____________________________________

BMO HARRIS BANK N.A.

 

By:_______________________________________

Its:_______________________________________

Name:____________________________________

 

   

 

 

SWORN to and subscribed before me this ___ day of ______________, 2013, a
licensed captain.

 

 

________________________________________

Print Name:______________________________

Title:____________________________________

 
 

EXHIBIT A

 

Form of Renewal Revolving Line of Credit Note

 

 

 

 

 

See attached.

 

 
 

EXHIBIT B

 

Form of Renewal Real Estate Installment Note

 

 

 

 

 

See attached.

 

 
 

EXHIBIT C

 

Form of Renewal Term Note

 

 

 

 

 

See attached.

 

 
 

EXHIBIT D

 

Form of Modification of Mortgage, Security Agreement and Assignment of Rents

 

 

 

 

 

See attached.