Exhibit 10.3


 


IMPORTANT NOTICE


 


THIS INSTRUMENT CONTAINS A CONFESSION OF JUDGMENT
PROVISION WHICH CONSTITUTES A WAIVER OF IMPORTANT RIGHTS YOU MAY HAVE AS A
DEBTOR AND ALLOWS THE CREDITOR TO OBTAIN A JUDGMENT AGAINST YOU WITHOUT ANY
FURTHER NOTICE.


 


THIRD AMENDMENT

TO TERM NOTE


 


THIS THIRD
AMENDMENT TO TERM NOTE (this “Third Amendment”) is made as of March 1,
2010, by and among EF JOHNSON TECHNOLOGIES,
INC. (formerly known as EFJ, Inc.), a Delaware corporation, E.F. JOHNSON COMPANY, a Minnesota corporation (successor-by-merger
to Transcrypt International, Inc.), and 3e
TECHNOLOGIES INTERNATIONAL, INC., a Maryland corporation
(collectively, jointly and severally, the “Borrower”) and BANK OF AMERICA, N.A., a national banking association (the “Lender”).


 


RECITALS


 


A.                                   The Borrower is obligated to the Lender
with respect to a term loan (the “Term Loan”) evidenced by that certain
Term Note dated as of July 11, 2006, as amended by that certain First
Amendment to Term Note dated as of March 10, 2008, and as further amended
by that certain Second Amendment to Term Note dated as of March 16, 2009
made by the Borrower payable to the Lender in the original principal amount of
Fifteen Million and 00/100 Dollars ($15,000,000.00) (as amended and in effect, the
“Term Note”).


 


B.                                     The Term Note evidences the Borrower’s
obligations to repay advances of principal made by the Lender under a Revolving
Line of Credit Loan Agreement and Security Agreement, dated as of November 15,
2002, as amended by that certain First Amendment to Revolving Line of Credit
Loan Agreement and Security Agreement dated as of September 13, 2004, and
as further amended by that certain Second Amendment to Revolving Line of Credit
Loan Agreement and Security Agreement dated as of July 11, 2006, and as
further amended by that certain Third Amendment to Revolving Line of Credit
Loan Agreement, Term Loan Agreement and Security Agreement dated as of March 6,
2007, and as further modified by that certain Fourth Amendment to Revolving
Line of Credit Loan Agreement, Term Loan Agreement and Security Agreement dated
as of March 10, 2008, and as further modified by that certain Fifth
Amendment to Revolving Line of Credit Loan Agreement, Term Loan Agreement and
Security Agreement dated as of March 16, 2009 (as amended and in effect,
the “Loan Agreement”).  The Term
Note is governed, in part, by certain provisions of the Loan Agreement.


 


C.                                     Contemporaneously with the execution and
delivery of this Third Amendment, the Borrower and the Lender are entering into
that certain Sixth Amendment to


 

















 


Revolving Line of
Credit Loan Agreement, Term Loan Agreement and Security Agreement dated as of March 1,
2010 (the “Loan Agreement Amendment”). 
The Loan Agreement Amendment, among other things, further amends the
Loan Agreement (1) to provide for the waiver of certain financial covenant
defaults for one or more of the fiscal quarters of the Borrower ending (i) March 31,
2009, (ii) June 30, 2009, (iii) October 31, 2009, and/or (iv) December 31,
2009, (2) to provide for the waiver of certain financial covenants for the
fiscal quarter of the Borrower ending March 31, 2010, and (3) for
certain other purposes.


 


D.                                    In connection therewith, the Borrower and
the Lender desire to, among other things, amend the Term Note (1) to
revise the interest rate in effect under the Term Note, and (2) for
certain other purposes.


 


AGREEMENTS


 


NOW,
THEREFORE, in consideration of the mutual agreements herein contained, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Borrower and the Lender hereby agree as follows:


 


1.             Capitalized Terms. Capitalized
terms used in this Third Amendment but not defined herein have the meanings
ascribed to them in the Term Note.


 


2.             Ratification of Term Note; Further Assurances.  The Borrower hereby ratifies, confirms, and
reaffirms all and singular the terms and conditions of the Term Note.  The Borrower further acknowledges and agrees
that (a) except as specifically amended in this Third Amendment, all terms
and conditions of the Term Note shall remain in full force and effect and (b) the
Borrower has no offsets or defenses to its obligations under the Term Note.  The Borrower shall from and after the date of
the execution of this Third Amendment, execute and deliver to the Lender
whatever additional documents, instruments, and agreements that the Lender may
require to give effect to the terms and conditions of this Third Amendment.


 


3.             Amendments to Term Note.   Effective as of the date of the execution of
this Third Amendment, the Term Note is hereby amended as follows:


 


3.1           Amendment to Definition of Borrower.  The definition of “Borrower” as set forth in
the Term Note is hereby amended to mean EF Johnson Technologies, Inc.
(formerly known as EFJ, Inc.), a Delaware corporation, E.F. Johnson
Company, a Minnesota corporation (successor-by-merger to Transcrypt
International, Inc.), and 3e Technologies International, Inc., a
Maryland corporation, jointly and severally.


 


3.2           Amendment to Interest Section.  Section 1 of the Term Note entitled “Interest” is hereby deleted in its
entirety and the following inserted in its place:


 


“1.                                 Interest. 
Interest on the principal balance outstanding from time to time shall
accrue at a fluctuating annual rate equal to the LIBOR-Based Rate (as
hereinafter defined).


 


“LIBOR-Based Rate” means the interest rate equal to
the LIBOR Rate (as hereinafter defined) in effect from time to time plus five
hundred (500) basis points.


 


2

















 


“LIBOR Rate” means the interest rate determined by the
following formula, rounded upward to the nearest 1/100 of one percent (provided,
however, that at no time after May 31, 2010 shall the LIBOR Rate be
less than two hundred (200) basis points):


 


	
  LIBOR
  Rate

  	
  =

  	
  London Inter-Bank
  Offered Rate

  	
   

  
	
   

  	
   

  	
  (1.00 - Reserve
  Percentage)

  	
   

  



 


“London Inter-Bank Offered Rate” means the average per
annum interest rate at which U.S. dollar deposits would be offered for an “Interest
Period” of one (1) month by major banks in the London inter-bank market,
as shown on the Telerate Page 3750 (or any successor page) at
approximately 11:00 a.m. London time two (2) London Banking Days
before the commencement of the Interest Period. 
If such rate does not appear on the Telerate Page 3750 (or any
successor page), the rate for that Interest Period will be determined by such
alternate method as reasonably selected by the Lender.  A “London Banking Day” is a day on which the
Lender’s London Banking Center is open for business and dealing in offshore
dollars.  “Reserve Percentage” means the
total of the maximum reserve percentages for determining the reserves to be
maintained by member banks of the Federal Reserve System for Eurocurrency
Liabilities, as defined in Federal Reserve Board Regulation D, rounded upward
to the nearest 1/100 of one percent.  The
percentage will be expressed as a decimal, and will include, but not be limited
to, marginal, emergency, supplemental, special, and other reserve percentages.  The first day of the Interest Period must be
a day other than a Saturday, or a Sunday on which the Lender is open for
business in New York and London and dealing in offshore dollars.  The last day of the Interest Period and the
actual number of days during the Interest Period will be determined by the Lender
using the practices of the London inter-bank market.  Absent manifest error, the Lender’s
certificate to the Borrower stating the LIBOR Rate for each Interest Period
shall be conclusive.


 


The rate at which interest shall accrue under this
Note may change immediately upon any change at the commencement of each
Interest Period (if the London Inter-Bank Offered Rate has changed).


 


If the LIBOR Rate is discontinued or unavailable,
interest on the outstanding principal balance shall accrue at the Prime Rate (as
hereafter defined) plus (a) at any time prior to May 31, 2010, Two
percent (2.0%), and (b) from and after May 31, 2010, Three and Three
Quarters of One Percent (3.75%). The “Prime Rate” means the fluctuating rate
announced by the Lender from time to time, in the Lender’s sole discretion, as
the Lender’s Prime Rate.  Changes in the
Prime Rate will be effective, without prior notice, as of the date any change
is announced.  The Prime Rate is a
reference rate only; it is not necessarily the most favorable rate of interest
that the Lender charges to any borrower or class of borrowers.


 


All interest payable under the terms of this Note
shall be calculated by applying a daily interest rate, determined by
multiplying the outstanding principal balance by the applicable annual interest
rate and dividing the resulting product by three hundred sixty (360), to the
actual number of days principal is outstanding.”


 


4.             Confession of judgment.  The Borrower hereby appoints or reappoints (as
the case may be) Joseph P. Corish and Jennifer A. Brust, and each of them, as
the Borrower’s true and lawful attorneys-in-fact, for the Borrower, in the
Borrower’s name, place and stead, to confess judgment against the Borrower,
following the occurrence of an Event of Default, in the office of the Clerk of
the Circuit Court of Montgomery County, Maryland, for the outstanding principal
balance owing under the Term Note, as amended hereby, together with interest,
late payment charges, court costs, and attorneys’ fees of fifteen percent (15.0%)
of the then


 


3

















 


outstanding principal balance, hereby ratifying and confirming the acts
of said attorneys-in-fact as if done by the Borrower.  Notwithstanding the amount confessed for
attorneys’ fees, the Lender agrees that enforcement of the judgment for such
attorneys’ fees so confessed shall not exceed the amount of fees and expenses
actually charged by counsel for the Lender for services rendered by counsel in
connection with the confession of such judgment and the collection of the sums
owing by the Borrower to the Lender.  The
Borrower consents to immediate execution of any such confessed judgment and
waives the benefit of any exemption laws. 
Any provisions set forth hereafter regarding arbitration of disputes
between the Borrower and the Lender shall not be deemed to limit the Lender’s
right to have the attorneys-in-fact named in this paragraph confess judgment
against the Borrower in favor of the Lender following the occurrence of an
Event of Default.


 


5.             Arbitration; Waiver of Jury Trial.  The Provisions of the Loan Agreement
specifying that certain disputes between the Borrower and the Lender shall be
resolved by binding arbitration and that the Borrower and the Lender waive any
present or future right that they may have to a trial by jury are incorporated
by reference into the Term Note and shall have the same force and effect as if
fully set forth in the Term Note.


 


6.             Lender consent. The Lender has
executed this Third Amendment for the sole purpose of evidencing its consent
hereto, and not for the purpose of becoming liable on the Term Note as a
co-maker, endorser, or guarantor.


 


7.             No Oral Agreements.  This Third Amendment constitutes the entire
agreement of the parties concerning the subject matter hereof and may not be
contradicted by evidence of prior, contemporaneous or subsequent oral
agreements of the parties.  There are no
unwritten or oral agreements between the parties.


 


8.             Illegality or Unenforceability.  Any determination that any provision or
application of this Third Amendment is invalid, illegal, or unenforceable in
any respect, or in any instance, shall not affect the validity, legality, or
enforceability of any such provision in any other instance, or the validity,
legality, or enforceability of any other provision of this Third Amendment.


 


9.             Counterparts.  This Third Amendment may be
executed in multiple identical counterparts, each of which when duly executed
shall be deemed an original, and all of which shall be construed together as
one agreement.  This Third Amendment will
not be binding on or constitute evidence of a contract between the parties
hereto until such time as a counterpart has been executed by such party and a
copy thereof is delivered to each other party to this Third Amendment.


 


(Signatures and Notary Acknowledgments on following pages)


 


4

















 


IN
WITNESS WHEREOF, the undersigned have duly executed this Third Amendment to
Term Note as of the day and year first hereinabove set forth, the Lender having
signed for the sole purpose of evidencing its consent to the amendments herein
contained and not for the purpose of becoming liable on the Term Note as a
co-maker, endorser, or guarantor.


 


	
   

  	
  EF
  JOHNSON TECHNOLOGIES, INC., a Delaware corporation
  (formerly known as EFJ, INC.)

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Jana Ahlfinger Bell

  	
   (SEAL)

  
	
   

  	
  Name:
  Jana Ahlfinger Bell

  
	
   

  	
  Title:
  Executive Vice President and Chief Financial Officer

  
	
   

  	
   

  
	
  State of Texas

  	
  )

  
	
  County of Dallas

  	
  ) To Wit:

  
	
   

  	
   

  
	
  Acknowledged before me by
  Jana Ahlfinger Bell as Executive Vice President and Chief Financial Officer
  of EF Johnson Technologies, Inc. (formerly known as EFJ, Inc.), a
  Delaware corporation, this 2nd of March, 2010.

  
	
   

  	
   

  
	
   

  	
  /s/
  Amy M. Fritts

  
	
   

  	
  Notary
  Public

  
	
   

  	
   

  
	
  My
  commission expires: 11-7-2013

  	
   

  
	
  My
  registration number:  12548867-6

  	
   

  
	
   

  	
   

  
	
   

  	
  E.F.
  JOHNSON COMPANY, a Minnesota corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Jana Ahlfinger Bell

  	
   (SEAL)

  
	
   

  	
  Name:
  Jana Ahlfinger Bell

  
	
   

  	
  Title:
  Chief Financial Officer

  
	
   

  
	
  State of Texas

  	
  )

  
	
  County of Dallas

  	
  ) To Wit:

  
	
   

  
	
  Acknowledged before me by
  Jana Ahlfinger Bell as Chief Financial Officer of E.F.  Johnson Company, a Minnesota corporation,
  this 2nd of March, 2010.

  
	
   

  
	
   

  	
  /s/
  Amy M. Fritts

  
	
   

  	
  Notary
  Public

  
					



 


My commission expires:  11-7-2013

My registration number:   12548867-6


 


5

















 


	
   

  	
  3e
  TECHNOLOGIES INTERNATIONAL, INC., a Maryland corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Jana Ahlfinger Bell

  	
   (SEAL)

  
	
   

  	
  Name:
  Jana Ahlfinger Bell

  
	
   

  	
  Title:
  Chief Financial Officer

  
	
   

  	
   

  
	
  State of Texas

  	
  )

  
	
  County of Dallas

  	
  ) To Wit:

  
	
   

  	
   

  
	
  Acknowledged before me by
  Jana Ahlfinger Bell as Chief Financial Officer of 3e Technologies
  International, Inc., a Maryland corporation, this 2nd of March, 2010.

  
	
   

  	
   

  
	
   

  	
  /s/
  Amy M. Fitts

  
	
   

  	
  Notary
  Public

  
	
   

  	
   

  
	
  My
  commission expires:  11-7-2013

  	
   

  
	
  My
  registration number:   12548867-6

  	
   

  
	
   

  	
   

  
	
   

  	
  BANK
  OF AMERICA, N.A., a national banking association

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Fred
  P. Lucy, II

  	
   (SEAL)

  
	
   

  	
  Name:
  Fred P. Lucy, II

  
	
   

  	
  Title:
  Senior Vice President

  
	
   

  	
   

  
	
  State of Rhode Island

  	
  )

  
	
  County of Providence

  	
  ) To Wit:

  
	
   

  	
   

  
	
  Acknowledged before me by
  Fred P. Lucy, II as Sr. Vice President of Bank of America, N.A., this
  1st day of March, 2010.

  
	
   

  	
   

  
	
   

  	
  /s/
  Jane A. Martin

  
	
   

  	
  Notary
  Public

  
	
   

  	
   

  
	
  My
  commission expires: 2/12/14

  	
   

  
	
  My
  registration number:  42760

  	
   

  
					



 


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