EXHIBIT 10.25
AMENDED AND RESTATED
SECURITY AGREEMENT
Date: February 1, 2011
DEBTOR: WSI Industries, Inc., a Minnesota corporation
Address: 213 Chelsea Road, Monticello, MN 55362
State Charter No.: K-680
SECURED PARTY: M&I Marshall & Ilsley Bank
Address: 11455 Viking Drive, Eden Prairie, MN 55344
1. OBLIGATIONS SECURED. This Agreement secures the following (called the
“Obligations”):
All debts, liabilities and obligations of every type and description which the
Debtor may now or at any time owe to the Secured Party, including but not
limited to all principal, interest, and other charges, fees, expenses and
amounts, and all notes, guaranties, agreements, and other writings in favor of
the Secured Party, whether now existing or hereafter arising, direct or
indirect, due or to become due, absolute or contingent, primary or secondary,
liquidated or unliquidated, independent, joint, several, or joint and several.
2. SECURITY INTEREST. To secure the payment and performance of the Obligations,
the Debtor grants the Secured Party a security interest (the “Security
Interest”) in, and assigns to the Secured Party, the following property (called
the “Collateral”):
All inventory of the Debtor, and all returns of such inventory, and all
warehouse receipts, bills of lading and other documents of title covering such
inventory, whether now existing or hereafter arising, whether now owned or
hereafter acquired;
All equipment of the Debtor, including but not limited to all accessions,
accessories, attachments, fittings, increases, parts, repairs, returns, renewals
and substitutions of all or any part thereof, and all warehouse receipts, bills
of lading and other documents covering such equipment, whether now existing or
hereafter arising, whether now owned or hereafter acquired;
All accounts (including but not limited to all health-care-insurance
receivables), instruments, chattel paper, investment property, letter of credit
rights, letters of credit, other rights to payment, documents, deposit accounts,
money, patents, patent applications, trademarks, trademark applications,
copyrights, copyright applications, trade names, other names, software, payment
intangibles, and other general intangibles of the Debtor, together with all good
will related to the foregoing property and all rights, liens, security interests
and other interests which the Debtor may at any time have by law or agreement
against any account debtor, issuer or obligor obligated to make any such payment
or against any of the property of such account debtor, issuer, or obligor, and
all supporting obligations relating to the foregoing, whether now existing or
hereafter arising, whether now owned or hereafter acquired;

 

 

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All other assets of the Debtor, not described above; and
All products and proceeds of the foregoing property, including without
limitation all accounts, instruments, chattel paper, investment property, letter
of credit rights, letters of credit, other rights to payment, documents, deposit
accounts, money, insurance proceeds and general intangibles related to the
foregoing property, and all refunds of insurance premiums due or to become due
under all insurance policies covering the foregoing property.
3. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. The Debtor represents and
warrants to the Secured Party and agrees as follows:
a. The Debtor is a Minnesota corporation and the address of the Debtor’s chief
executive office is shown at the beginning of this Agreement. The Debtor has not
used any trade name, assumed name, or other name except the Debtor’s name stated
above. The Debtor shall not change its state of organization without the Secured
Party’s prior written consent. The Debtor shall give the Secured Party prior
written notice of any change in such address or the Debtor’s name or if the
Debtor uses any other name. The Debtor has authority to execute and perform this
Agreement.
b. If any Collateral is or will become a fixture, the record owner of the real
estate is WSI Industries, Inc. and the legal description of the real estate is
set forth on the attached Exhibit A.
c. Except as set forth in any existing or future agreement executed by the
Secured Party: the Debtor is the owner of the Collateral, or will be the owner
of the Collateral hereafter acquired, free of all security interests, liens and
encumbrances other than the Security Interest and any other security interest of
the Secured Party; and except for certain security interests granted in favor of
lessors of leased equipment, the Debtor shall not permit any security interest,
lien or encumbrance, other than the Security Interest and any other security
interest of the Secured Party, to attach to any Collateral without the prior
written consent of the Secured Party; the Debtor shall defend the Collateral
against the claims and demands of all persons and entities other than the
Secured Party, and shall promptly pay all taxes, assessments and other
government charges upon or against the Debtor, any Collateral and the Security
Interest; and no financing statement covering any Collateral is on file in any
public office. If any Collateral is or will become a fixture the Debtor, at the
request of the Secured Party, shall furnish the Secured Party with a statement
or statements executed by all persons and entities who have or claim an interest
in the real estate, in a form acceptable to the Secured Party, which statement
or statements shall provide that such persons and entities consent to the
Security Interest.

 

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d. The Debtor shall not sell or otherwise dispose of any Collateral or any
interest therein without the prior written consent of the Secured Party, which
consent shall not be unreasonably withheld, except that, until the occurrence of
an Event of Default or the revocation by the Secured Party of the Debtor’s right
to do so, the Debtor (i) may sell or lease any Collateral constituting inventory
in the ordinary course of business at prices constituting the fair market value
thereof, or (ii) sell or dispose of collateral as otherwise permitted by the
Loan Agreement between Secured Party and Debtor of even date herewith. For
purposes of this Agreement, a transfer in partial or total satisfaction of a
debt, obligation or liability shall not constitute a sale or lease in the
ordinary course of business.
e. Each account, instrument, investment property, chattel paper,
letter-of-credit right, letter of credit, other right to payment, document, and
general intangible constituting Collateral is, or will be when acquired, the
valid, genuine and legally enforceable obligation of the account debtor or other
issuer or obligor named therein or in the Debtor’s records pertaining thereto as
being obligated to pay such obligation, subject to no defense, setoff or
counterclaim. The Debtor shall not, without the prior written consent of the
Secured Party, agree to any material modification or amendment of any such
obligation or agree to any subordination or cancellation of any such obligation.
f. Other than inventory in transit and motor vehicles in use, all tangible
Collateral shall be located at the Debtor’s address stated above and no such
Collateral shall be located at any other address without the prior written
consent of the Secured Party.
g. The Debtor shall: (i) keep all tangible Collateral in good condition and
repair, normal depreciation excepted; (ii) from time to time replace any worn,
broken or defective parts thereof; (iii) promptly notify the Secured Party of
any loss of or material damage to any Collateral or of any adverse change in the
prospect of payment of any account, instrument, chattel paper, letter of credit
other right to payment or general intangible constituting Collateral; (iv) not
permit any Collateral to be used or kept for any unlawful purpose or in
violation of any federal, state or local law; (v) keep all tangible Collateral
insured in such amounts, against such risks and in such companies as shall be
acceptable to the Secured Party, with lender loss payable clauses in favor of
the Secured Party to the extent of its interest in form acceptable to the
Secured Party (including without limitation a provision for at least 30 days
prior written notice to the Secured Party of any cancellation or modification of
such insurance), and deliver policies or certificates of such insurance to the
Secured Party; (vi) at the Debtor’s chief executive office, keep accurate and
complete records pertaining to the Collateral and the Debtor’s financial
condition, business and property, and Provide the Secured Party such periodic
reports concerning the Collateral and the Debtor’s financial condition, business
and property as the Secured Party may from time to time request; (vii) at all
reasonable times permit the Secured Party and its representatives to examine and
inspect any Collateral, and to examine, inspect and copy the Debtor’s records
pertaining to the Collateral and the Debtor’s financial condition, business and
property; and (viii) at the Secured Party’s request, promptly execute, endorse
and deliver such financing statements and other instruments, documents, control
agreements, chattel paper and writings and take such other actions deemed by the
Secured Party to be necessary or desirable to establish, protect, perfect or
enforce the Security Interest and the rights of the Secured Party under this
Agreement and applicable law, and pay all costs of filing financing statements
and other writings in all public offices where filing is deemed by the Secured
Party to be necessary or desirable.

 

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h. The Debtor authorizes the Secured Party to file all of the Secured Party’s
financing statements and amendments to financing statement, and all terminations
of the filings of other secured parties, all with respect to the Collateral, in
such form and substance as the Secured Party, in its sole discretion, may
determine.
4. COLLECTION RIGHTS. At any time after an Event of Default, the Secured Party
may, and at the request of the Secured Party the Debtor shall, promptly notify
any account debtor, issuer or obligor of an account, instrument, investment
property, chattel paper, letter-of-credit right, letter of credit, other right
to payment or general intangible constituting Collateral that the same has been
assigned to the Secured Party and direct such account debtor, issuer or obligor
to make all future payments to the Secured Party. In addition, at the request of
the Secured Party, the Debtor shall deposit in a collateral account designated
by the Secured Party all proceeds constituting Collateral, in their original
form received (with any necessary endorsement), within one business day after
receipt of such proceeds by the Debtor. Until the Debtor makes each such
deposit, the Debtor will hold all such proceeds separately in trust for the
Secured Party for deposit in such collateral account, and will not commingle any
such proceeds with any other property. The Debtor shall have no right to
withdraw any funds from such collateral account, and the Debtor shall have no
control over such collateral account. Such collateral account and all funds at
any time therein shall constitute Collateral under this Agreement. Before or
upon final collection of any funds in such collateral account, the Secured
Party, at its discretion, may release any such funds to the Debtor or any
account of the Debtor or apply any such funds to the Obligations whether or not
then due. Any release of funds to the Debtor or any account of the Debtor shall
not prevent the Secured Party from subsequently applying any funds to the
Obligations. All items credited to such collateral account and subsequently
returned and all other costs, fees and charges of the Secured Party in
connection with such collateral account may be charged by the Secured Party to
any account of the Debtor, and the Debtor shall pay the Secured Party all such
amounts on demand.
5. LIMITED POWER OF ATTORNEY. If the Debtor at any time fails to perform or
observe any agreement herein, the Secured Party, in the name and on behalf of
the Debtor or, at its option, in its own name, may perform or observe such
agreement and take any action which the Secured Party may deem necessary or
desirable to cure or correct such failure. The Debtor irrevocably authorizes
Secured Party and grants the Secured Party a limited power of attorney in the
name and on behalf of the Debtor or, at its option, in its own name, to collect,
receive, receipt for, create, prepare, complete, execute, endorse, deliver and
file any and all financing statements, control agreements, insurance
applications, remittances, instruments, documents, chattel paper and other
writings, to grant any extension to, compromise, settle, waive, notify, amend,
adjust, change and release any obligation of any account debtor, issuer,
obligor, insurer or other person or entity pertaining to any Collateral, to
demand terminations of other security interests in any of the Collateral and to
take any other action deemed by the Secured Party to be necessary or desirable
to establish, perfect, protect or enforce the Security Interest. All of the
Secured Party’s advances, fees, charges, costs and expenses, including but not
limited to audit fees and expenses and reasonable attorneys’ fees and legal
expenses, in connection with the Obligations and in the protection and exercise
of any rights or remedies hereunder, together with interest thereon at the
highest rate then applicable to any of the Obligations, shall be secured
hereunder and shall be paid by the Debtor to the Secured Party on demand.

 

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6. EVENTS OF DEFAULT. The occurrence of any of the following events shall
constitute an “Event of Default”: (a) any breach or default in the payment or
performance of any of the Obligations; or (b) any breach or default under the
terms of this Agreement or any other note, obligation, mortgage, deed of trust,
assignment, guaranty, other agreement, or other writing heretofore, herewith or
hereafter existing to which the Debtor or any maker, endorser, guarantor or
surety of any of the Obligations or any other person or entity providing
security for any of the Obligations or for any guaranty of any of the
Obligations is a party; or (c) the insolvency, dissolution, liquidation, merger
or consolidation of the Debtor or any such maker, endorser, guarantor, surety or
other person or entity; or (d) any appointment of a receiver, trustee or similar
officer of any property of the Debtor or any such maker, endorser, guarantor,
surety or other person or entity; or (e) any assignment for the benefit of
creditors of the Debtor or any such maker, endorser, guarantor, surety or other
person or entity; or (f) any commencement of any proceeding under any
bankruptcy, insolvency, receivership, dissolution, liquidation or similar law by
or against the Debtor or any such maker, endorser, guarantor, surety or other
person or entity; or (g) the sale, lease or other disposition (whether in one or
more transactions) to one or more persons or entities of all or a substantial
part of the assets of the Debtor or any such maker, endorser, guarantor, surety
or other person or entity; or (h) the Debtor or any such maker, endorser,
guarantor, surety or other person or entity takes any action to go out of
business, or to revoke or terminate any agreement, liability or security in
favor of the Secured Party; or (i) the entry of any judgment or other order for
the payment of money in the amount of $50,000.00 or more against the Debtor or
any such maker, endorser, guarantor, surety or any other person or entity, and
the continuance of such judgment, or order unsatisfied and in effect for any
period of 60 consecutive days without a stay of execution; or j) the issuance or
levy of any writ, warrant, attachment, garnishment, execution or other process
against any property of the Debtor or any such maker, endorser, guarantor,
surety or any other person or entity; or (k) the attachment of any tax lien to
any property of the Debtor or any such maker, endorser, guarantor, surety or
other person or entity; or (1) any statement, representation or warranty made by
the Debtor or any such maker, endorser, guarantor, surety or other person or
entity (or any representative of the Debtor or any such maker, endorser,
guarantor, surety or other person or entity) to the Secured Party at any time
shall be incorrect or misleading in any material respect when made; or (m) there
is a material adverse change in the condition (financial or otherwise), business
or property of the Debtor or any such maker, endorser, guarantor, surety or
other person or entity; or (n) the Secured Party shall in good faith believe
that the prospect for due and punctual payment or performance of any of the
Obligations, this Agreement or any other note, obligation, mortgage, deed of
trust, assignment, guaranty, or other agreement heretofore, herewith or
hereafter given to or acquired by the Secured Party in connection with any of
the Obligations is impaired.

 

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7. REMEDIES. Upon the commencement of any proceeding under any bankruptcy law by
or against the Debtor or any such maker, endorser, guarantor, surety or other
person or entity, all Obligations automatically shall become immediately due and
payable in full, without declaration, presentment, or other notice or demand,
all of which are hereby waived by the Debtor. In addition, upon the occurrence
of any Event of Default and at any time thereafter, the Secured Party may
exercise any one or more of the following rights and remedies: (a) declare all
Obligations to be immediately due and payable in full, and the same shall
thereupon be immediately due and payable in full, without presentment or other
notice or demand, all of which are hereby waived by the Debtor; (b) require the
Debtor to assemble all or any part of the Collateral and make it available to
the Secured Party at a place to be designated by the Secured Party which is
reasonably convenient to both parties; (c) exercise and enforce any and all
rights and remedies available upon default under this Agreement, the Minnesota
Uniform Commercial Code, as amended from time to time (the “UCC”), and any other
applicable agreements and laws. If notice to the Debtor of any intended
disposition of Collateral or other action is required, such notice shall be
deemed reasonably and properly given if mailed by regular or certified mail,
postage prepaid, to the Debtor at the address stated at the beginning of this
Agreement or at the most recent address shown in the Secured Party’s records, at
least 10 days prior to the action described in such notice. The Debtor consents
to the personal jurisdiction of the state and federal courts located in the
State of Minnesota in connection with any controversy related to this Agreement,
the Collateral, the Security Interest or any of the Obligations, waives any
argument that venue in such forums is not convenient, and agrees that any
litigation initiated by the Debtor against the Secured Party in connection with
this Agreement, the Collateral, the Security Interest or any of the Obligations
shall be venued in either the District Court of Hennepin County, Minnesota or
the United States District Court, District of Minnesota, Fourth Division.
8. MISCELLANEOUS. All terms in this Agreement that are defined in the UCC shall
have the meanings set forth in the UCC, and such meanings shall automatically
change at the time that any amendment to the UCC, which changes such meanings,
shall become effective. A carbon, photographic or other reproduction of this
Agreement is sufficient as a financing statement. No provision of this Agreement
can be waived, modified, amended, abridged, supplemented, terminated or
discharged and the Security Interest cannot be released or terminated, except by
a writing duly executed by the Secured Party. A waiver shall be effective only
in the specific instance and for the specific purpose given. No delay or failure
to act shall preclude the exercise or enforcement of any of the Secured Party’s
rights or remedies. All rights and remedies of the Secured Party shall be
cumulative and may be exercised singularly, concurrently or successively at the
Secured Party’s option, and the exercise or enforcement of any one such right or
remedy shall not be a condition to or bar the exercise or enforcement of any
other. No notice or other communication by the Debtor to the Secured Party,
which relates to any of the Obligations, the Security Interest or the
Collateral, shall be effective until it is received by the Secured Party at the
Secured Party’s address above. This Agreement shall bind and benefit the Debtor
and the Secured Party and their respective heirs, representatives, successors
and assigns and shall take effect when executed by the Debtor and delivered to
the Secured Party, and the Debtor waives notice of the Secured Party’s
acceptance hereof. If any provision or application of this Agreement is held
unlawful or unenforceable in any respect, such illegality or unenforceability
shall not affect other provisions or applications which can be given effect, and
this Agreement shall be construed as if the unlawful or unenforceable provision
or application had never been contained herein or prescribed hereby. All
representations and warranties contained in this Agreement shall survive the
execution, delivery and performance of this Agreement and the creation, payment
and performance of the Obligations. This Agreement and the rights and duties of
the parties shall be governed by and construed in accordance with the internal
laws of the State of Minnesota (excluding conflict of law rules).

 

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9. AMENDED AND RESTATED SECURITY AGREEMENT. This Security Agreement amends and
restates in its entirety that certain Security Agreement dated December 4, 2002,
made by Debtor in favor of Excel Bank Minnesota, predecessor in interest to
Lender.
THE DEBTOR REPRESENTS AND WARRANTS TO THE SECURED PARTY AND AGREES THAT THE
DEBTOR HAS READ ALL OF THIS AGREEMENT AND UNDERSTANDS ALL OF THE PROVISIONS OF
THIS AGREEMENT.

              WSI INDUSTRIES, INC.,
a Minnesota corporation
 
       
 
  By:    
 
       
 
  Its:    
 
       

 

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EXHIBIT A
LEGAL DESCRIPTION
Lot 1, Block 1, Remmele Addition, Wright County, Minnesota

 

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