mibankamendment10.htm


     

     

    AMENDMENT
      NO. 10

    TO

    CREDIT
      AGREEMENT

    


    THIS
      AMENDMENT NO. 10 is entered into effective as of the 30th day of September,
      2007, by and between WINLAND ELECTRONICS, INC., a Minnesota corporation (the
      “Borrower”) and M&I MARSHALL & ILSLEY BANK, a banking corporation
      organized and existing under the laws of Wisconsin (“Bank”).

    


    WHEREAS,
      Borrower and the Bank have entered into that certain Credit and Security
      Agreement dated as of June 30, 2003, as amended (the “Credit Agreement”)
      pursuant to which Bank has agreed to provide a revolving credit facility to
      Borrower on the terms and conditions contained therein; and

    


    WHEREAS,
      Borrower and Bank desire to amend certain provisions of the Credit
      Agreement.

    


    NOW,
      THEREFORE, Bank and Borrower hereby agree as follows:

    


    1.  Certain
      Definitions.  Capitalized terms used herein and not otherwise
      defined shall have the meanings set forth in the Credit Agreement.

     

    2.  Tangible
      Net Worth Covenant.  Section 6.12 of the Credit Agreement is
      hereby amended by deleting the text of said Section in its entirety and
      replacing the same with the following: “The Borrower will maintain its Tangible
      Net Worth, on a consolidate basis with all Subsidiaries, as of the end of each
      fiscal quarter, at not less than the amounts set forth below as of the dates
      set
      forth below:

     

    Measurement
      Dates                            Minimum
      Tangible
      Net Worth

     

    09/30/07
      through 09/30/08                   $9,250,000

    


    12/31/08
      through 09/30/09                   The
      sum of (i)
      $9,250,000, plus (ii)
      50% of the Borrower’s Net Income
      (after taxes), excluding losses, for
      the
      fiscal year ending December
      31, 2008.

     

    12/31/09
      and each fiscal quarter thereafter               The
      sum of (i) the Tangible
      Net Worth of the
      Borrower as required pursuant to this Section
      as of the end of the most recent fiscal
      year (“Base Year”), plus (ii) 50% ofthe Borrower’s Net Income (after taxes),
excluding
      losses, for

                                            the
      fiscal year
immediately
      following the Base Year.

    


    The
      minimum Tangible Net Worth required pursuant to this Section 6.12 shall be
      adjusted as of each December 31 as described above, and the applicable
      requirement as of each December 31 shall be the same requirement for the
      following March 31, June 30 and September 30 measurement dates.”

    


    3.  Compliance
      Certificate.  The form of Compliance Certificate attached to the
      Credit Agreement as Exhibit B is hereby amended by deleting said form and
      replacing it with the form of Compliance Certificate attached
      hereto.

    


    4.  Miscellaneous.  Except
      as specifically set forth herein, the Credit Agreement shall remain in full
      force and effect, with no other modification or waiver.  This
      Amendment shall be governed by, and construed in accordance with, the laws
      of
      the State of Wisconsin.  This Amendment may be executed in two or more
      counterparts, each of which shall be deemed an original, but all of which taken
      together shall constitute one and the same agreement.  The Borrower
      hereby restates and reaffirms its obligation under the Credit Agreement to
      pay
      on demand all costs and expenses, including (without limitation) attorneys’
fees, incurred by the Lender in connection with the Obligations, this Amendment,
      the Loan Documents, and any other document or agreement related hereto, and
      the
      transactions contemplated hereby.

    


    IN
      WITNESS WHEREOF, the parties hereto have caused this Amendment No. 10 to
      Credit Agreement to be executed as of the day and year first written
      above.

    


    


    
      	
              M&I
                Marshall & Ilsley Bank

               

              By  
                /s/ Samuel Sanchez

                Samuel
                Sanchez

                 Its
                Assistant
                Vice President

               

               

              By  
                /s/ John Howard

                John
                Howard

                    Its
                Senior Vice President

            	
              Winland
                Electronics, Inc.

               

              By  
                /s/  Glenn A. Kermes

              Glenn
                A. Kermes

              Its: 
Chief
                Financial
                Officer

               

               

            


    

     

     

    
       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      Exhibit
        B
        to Credit and Security Agreement

      


      Compliance
        Certificate

       

      
 

      To:        M&I
        Marshall
& Ilsley Bank

      


      Date:      


      


      
        	
                Subject:

              	
                WINLAND
                  ELECTRONICS, INC. (the “Borrower”).

              


      

      
        	
                 

              	
                Financial
                  Statements

              


      

       

      In
        accordance with our Credit and Security Agreement dated as of June 30, 2003,
        as
        amended (the “Credit Agreement”), attached are the financial statements of the
        Borrower as of and for ________________, 200___ (the “Reporting Date”) and the
        year-to-date period then ended (the “Current Financials”).  All terms
        used in this certificate have the meanings given in the Credit
        Agreement.

       

      The
        undersigned certifies that the Current Financials have been prepared in
        accordance with GAAP, subject to year-end audit adjustments, and fairly present
        the Borrower’s financial condition and the results of its operations as of the
        date thereof.

       

      Events
        of Default. (Check one):

      The
        undersigned does not have knowledge of the occurrence of a Default or Event
        of
        Default under the Credit Agreement.

      The
        undersigned has knowledge of the occurrence of a Default or Event of Default
        under the Credit Agreement and attached hereto is a statement of the facts
        with
        respect thereto.

       

      The
        undersigned hereby certifies to the Lender as follows:

      The
        Reporting Date does not mark the end of one of the Borrower’s fiscal quarters,
        hence the undersigned is completing none of the paragraphs below.

      The
        Reporting Date marks the end of one of the Borrower’s fiscal quarters, hence the
        undersigned is completing all paragraphs below.

       

      Financial
        Covenants.  The undersigned further hereby certifies as
        follows:

       

      1. Minimum
        Tangible Net Worth.  Pursuant to Section 6.12 of the Credit
        Agreement, as of the Reporting Date, the Borrower’s Tangible Net Worth was
        $__________ which ÿ satisfies
ÿ
        does not satisfy
        the requirement that the Tangible Net Worth be no less than (1) $9,250,000,
        for
        the fiscal quarters ending September 30, 2007 through September 30, 2008,
        (2)
        the sum of (a) $9,250,000, plus (b) 50% of the Borrower’s Net Income (after
        taxes), excluding losses, for the fiscal year ending December 31, 2008, as
        to
        the fiscal quarters ending December 31, 2008 through September 30, 2009,
        or (3)
        the sum of (a) the Tangible Net Worth of the Borrower as required pursuant
        to
        Section 6.12 as of the end of the most recent fiscal year (“Base Year”), plus
        (b) 50% of the Borrower’s Net Income (after taxes), excluding losses, for the
        fiscal year immediately following the Base Year, as to the fiscal quarters
        ending December 31, 2009 and thereafter.

       

       

      
        	
                (1)

              	
                Book
                  Net Worth:

              	
                $

              	 	 
	
                (2)

              	
                Less:  Patents/Trademarks:

              	
                $

              	 	 
	 	
                Other
                  Intangibles:

              	
                $

              	 	 
	
                (3)

              	
                Tangible
                  Net Worth:

              	
                $

              	 	 
	 	 	 	 	 
	
                (4)

              	
                Prior
                  FYE TNW:

              	
                $

              	
                 

              	 
	
                (5)

              	
                Net
                  Income (excl. losses)

              	
                $

              	 	 
	
                 

              	 	
                X
                  50%

              	 	 
	
                (6)

              	
                Product
                  of line (5) x 50%

              	
                $

              	 	 
	
                 

              	 	 	 	 
	
                (7)

              	
                Required
                  Tangible Net Worth

              	
                $

              	 	 
	 	
                (Sum
                  of line (4) and line (6))

              	 	 	 
	 	 	 	 	 


      

       

       

       

      
2. Maximum
        Leverage Ratio.  Pursuant to Section 6.13 of the Credit
        Agreement, as of the Reporting Date, the Borrower’s Leverage Ratio was _____ to
        1.00 which satisfies does not satisfy the requirement that such ratio
        be no more than 1.50 to 1.00 on the Reporting Date.

       

      
        	
                Total
                  Liabilities:

              	
                $

              	 	 	 
	
                ÷
                  Book
                  Net Worth:

              	
                $

              	 	 	 
	
                Leverage
                  Ratio:

              	 	
                _________  to  1.00

              	 
	 	 	 	 	 


      

       

       

       

      3. Capital
        Expenditures.  Pursuant to Section 7.10 of the Credit
        Agreement, for the year-to-date period ending on the Reporting Date, the
        Borrower has expended or contracted to expend during the fiscal year ending
        ______________, 200___, for Capital Expenditures, $_____________ in the
        aggregate, which satisfies does not satisfy the requirement that such
        expenditures not exceed $1,000,000.00 in the aggregate during such fiscal
        year.

      
 

      
        	
                YTD
                  CapEx (prior quarter-end):

              	
                $

              	 	 
	
                CapEx
                  during this quarter:

              	
                $

              	 	 
	
                Total
                  YTD CapEx:

              	
                $

              	 	 
	 	 	 	 


      

       

       

       

      


      
        	 	
                WINLAND
                  ELECTRONICS, INC.

                 

                By
                  _________________________________

                 

                Its: