<PAGE>
 
                                                                   EXHIBIT 10.23

                               THIRD AMENDMENT TO
                          LOAN AND SECURITY AGREEMENT
                          ---------------------------


     THIS THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT ("this Amendment") is
                                                          ----------------
made and entered into as of the 31st day of December, 1996, by and among FLEET
CAPITAL CORPORATION, a Rhode Island corporation, successor in interest by merger
to FLEET CAPITAL CORPORATION, a Connecticut corporation, formerly known as
SHAWMUT CAPITAL CORPORATION, successor in interest by assignment to BARCLAYS
BUSINESS CREDIT, INC. ("Lender"), LOWRANCE ELECTRONICS, INC., a Delaware
                       --------
corporation ("Lowrance"), LEI EXTRAS, INC., a Delaware corporation ("LEI"),
              --------                                               ---
LOWRANCE CONTRACTS, INC., a Delaware corporation ("Lowrance Contracts") and SEA
                                                   ------------------
ELECTRONICS, INC., an Oklahoma corporation ("Sea Electronics") (Lowrance, LEI,
                                             ---------------
Lowrance Contracts and Sea Electronics are herein individually and collectively
called "Borrower").
        --------
                                    RECITALS

     A. Borrower, Lowrance Australia Pty Limited and Lender have entered into
that certain Loan and Security Agreement, dated December 15, 1993, as amended by
that certain First Amendment to Loan and Security Agreement, dated October 16,
1995, by and among Lender and Borrower, as amended by that certain Second
Amendment to Loan and Security Agreement, dated November 1, 1996 by and among
Lender and Borrower (as amended, the "Loan Agreement").
                                      --------------   

     B. Borrower has indicated that it may in the future request Revolving
Credit Loans (as defined in the Loan Agreement) which will cause the unpaid
balance of the Revolving Credit Loans to exceed the Borrowing Base (as defined
in the Loan Agreement) (the "Special Overadvance").
                             -------------------   

     C. Borrower and Lender desire to amend the Loan Agreement as hereinafter
set forth in order to, among other things, provide for the Special Overadvance.

     NOW, THEREFORE, in consideration of the premises herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, agree as follows:

                                   ARTICLE I
                                  Definitions
                                  -----------

     1.01  Capitalized terms used in this Amendment are defined in the Loan
Agreement, as amended hereby, unless otherwise stated.

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                                   ARTICLE II
                                   Amendments
                                   ----------

     2.01 Amendment to Section 1.1; Amendment of Certain Definitions. Effective
          ----------------------------------------------------------
as of the date hereof, the definition of "Borrowing Base" contained in Section
                                          --------------               -------
1.1 of the Loan Agreement is hereby deleted in their entirety, and the following
---
shall be substituted therefor:

          "Borrowing Base - as at any date of determination thereof, an amount
     equal to the lesser of:

          (a) the Revolving Credit Commitment; or

          (b) an amount equal to:

              (i) 85% of the net amount of Eligible Accounts other than Eligible
         Wal-Mart Accounts or Eligible Kmart Accounts outstanding at such date;

         PLUS

              (ii) 80% of the net amount of Eligible Wal-Mart Accounts and
         Eligible Kmart Accounts outstanding at such date;

         PLUS

             (iii) the lesser of (A) the Inventory Commitment Amount or (B) the
         sum of (x) 30% of the value of Raw Materials Eligible Inventory at such
         date, and (y) 60% of the value of Finished Goods Eligible Inventory at
         such date, all of the above as calculated on the basis of the lower of
         cost or market with cost calculated on a first-in, first-out basis;

         PLUS

              (iv) the Permitted Overadvance Amount;

         MINUS (subtract from the sum of
         clauses (i), (ii), (iii) and (iv) above)

               (v) an amount equal to the sum of (A) the face amount of all
         Letters of Credit outstanding at such date, (B) the amount of all
         reserves established by Lender on a monthly basis (and promptly
         notified to Borrower) to reflect the liability of Lender and/or Bank
         under or in connection with guaranties by Lender and/or Bank of all
         foreign exchange contracts pursuant to Section 2.5 hereof, (C) the
                                                -----------
         amount of any mandatory prepayment paid pursuant to Section 2.2(B) and
                                                             --------------
         applied by Lender to the Revolving Credit Loans outstanding, (D) any
         amounts received by Lender from the Insurance Assignment and applied to
         the Obligations,

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         and (E) any amounts which Lender may pay (but which have not been paid
         and applied to the Revolving Credit Loans outstanding) pursuant to any
         of the Loan Documents for the account of Borrower other than Letters of
         Credit.

         For purposes hereof, the net amount of Eligible Accounts, Eligible
     Wal-Mart Accounts or Eligible Kmart Accounts, as the case may be, at any
     time shall be the face amount of such Eligible Accounts, Eligible Wal-Mart
     Accounts or Eligible Kmart Accounts, less any and all credit memoranda or
                                          ----
     credit adjustments issued for discounts (which may, at Lender's option, be
     calculated on the shortest terms), credits and rebills, returns,
     allowances, pricing errors or other similar items at any time outstanding
     or payable in connection with such Accounts at such time."

     2.02 Amendment to Section 1.1; Addition of Certain Definitions. Effective
          ---------------------------------------------------------
as of the date hereof, Section 1.1 of the Loan Agreement is hereby amended by
                       -----------     
adding the following definitions thereto in alphabetical order:

          "Permitted Overadvance Amount - (i) $4,000,000.00 during the period
           ----------------------------
     from January 1, 1997 through and including January 31, 1997, (ii)
     $3,000,000.00 during the period from February 1, 1997 through and including
     March 13, 1997, (iii) $2,000,000.00 during the period from March 14, 1997
     through and including March 20, 1997, (iv) $1,000,000.00 during the period
     from March 21, 1997 through and including March 30, 1997, and (v) $0
     thereafter."

          "Third Amendment Agreement - the Third Amendment to Loan and Security
           -------------------------
     Agreement, dated as of December 30, 1996, by and between Lender and
     Borrower."

                                  ARTICLE III
                Conditions Precedent and Post-Closing Covenants
                -----------------------------------------------

     3.01 Conditions Precedent. The effectiveness of this Amendment is subject
          --------------------
to the satisfaction of the following conditions precedent, unless specifically
waived in writing by Lender:

          (a) Lender shall have received this Amendment, duly executed by 
     Borrower;

          (b) In consideration of the agreement by Lender to make the Permitted
     Overadvance Amount to Borrower, and in addition to all interest, fees,
     charges and expenses otherwise payable under the Loan Agreement with
     respect to the Permitted Overadvance Amount and the other Obligations,
     Borrower shall pay to Lender a special overadvance fee of $100,000.00 on
     March 1, 1997;

          (c) The representations and warranties contained herein, in the Loan
     Agreement and in the Other Agreements, as each is amended hereby, shall be
     true and correct as of the date hereof, as if made on the date hereof;

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          (d) No Default or Event of Default shall have occurred and be
     continuing, unless such Default or Event of Default has been specifically
     waived in writing by Lender; and

          (e) All corporate proceedings taken in connection with the
     transactions contemplated by this Amendment and all documents, instruments
     and other legal matters incident thereto shall be satisfactory to Lender
     and its legal counsel.

                                   ARTICLE IV
                                   No Waiver
                                   ---------

     Nothing contained in this Amendment shall be construed as a waiver by
Lender of any covenant or provision of the Loan Agreement, the Other Agreements,
this Amendment, or of any other contract or instrument between Borrower and
Lender, and the failure of Lender at any time or times hereafter to require
strict performance by Borrower of any provision thereof shall not waive, affect
or diminish any right of Lender to thereafter demand strict compliance
therewith.  Lender hereby reserves all rights granted under the Loan Agreement,
the Other Agreements, this Amendment and any other contract or instrument
between Borrower and Lender.

                                   ARTICLE V
                 Ratifications, Representations and Warranties
                 ---------------------------------------------

     5.01 Ratifications. The terms and provisions set forth in this Amendment
          -------------
shall modify and supersede all inconsistent terms and provisions set forth in
the Loan Agreement and the Other Agreements, and, except as expressly modified
and superseded by this Amendment, the terms and provisions of the Loan Agreement
and the Other Agreements are ratified and confirmed and shall continue in full
force and effect. Borrower and Lender agree that the Loan Agreement and the
Other Agreements, as amended hereby, shall continue to be legal, valid, binding
and enforceable in accordance with their respective terms.

     5.02 Representations and Warranties. Borrower hereby represents and
          ------------------------------
warrants to Lender that (a) the execution, delivery and performance of this
Amendment and any and all Other Agreements executed and/or delivered in
connection herewith have been authorized by all requisite corporate action on
the part of Borrower and will not violate the Certificate/Articles of
Incorporation or Bylaws of Borrower; (b) the representations and warranties
contained in the Loan Agreement, as amended hereby, and any Other Agreement are
true and correct on and as of the date hereof and on and as of the date of
execution hereof as though made on and as of each such date; (c) no Default or
Event of Default under the Loan Agreement, as amended hereby, has occurred and
is continuing; (d) Borrower is in full compliance with all covenants and
agreements contained in the Loan Agreement and the Other Agreements, as amended
hereby; (e) the Borrower's Certificate of Incorporation and Bylaws are in full
force and effect on and as of the date hereof without modification or amendment
in any respect since November 1, 1996; (f) as of the date hereof, (i) Borrower
is in existence and in corporate and tax good standing in the State of its
organization, (ii) the Borrower is qualified to do business as a foreign
corporation and is in corporate and tax good standing in each jurisdiction where
Borrower is doing business and is required to be so qualified, (iii) Borrower
does not owe franchise taxes or other taxes required to  

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maintain its corporate existence and no franchise tax reports are due, and (iv)
no proceedings are pending for forfeiture of the Company's charter or for its
dissolution either voluntarily or involuntarily; (g) the officer of Borrower
executing this Amendment has been duly elected and is, at present, qualified and
acting in the office indicated below such officer's name and is duly authorized
to execute this Amendment on behalf of Borrower.

                                   ARTICLE VI
                            Miscellaneous Provisions
                            ------------------------

     6.01 Survival of Representations and Warranties. All representations and
          ------------------------------------------
warranties made in the Loan Agreement or any Other Agreement, including, without
limitation, any document furnished in connection with this Amendment, shall
survive the execution and delivery of this Amendment and the Other Agreements,
and no investigation by Lender or any closing shall affect the representations
and warranties or the right of Lender to rely upon them.

     6.02 Reference to Loan Agreement. Each of the Loan Agreement and the Other
          ---------------------------
Agreements, and any and all other agreements, documents or instruments now or
hereafter executed and delivered pursuant to the terms hereof or pursuant to the
terms of the Loan Agreement, as amended hereby, are hereby amended so that any
reference in the Loan Agreement and such Other Agreements to the Loan Agreement
shall mean a reference to the Loan Agreement as amended hereby.

     6.03 Expenses of Lender. As provided in the Loan Agreement, Borrower agrees
          ------------------
to pay on demand all costs and expenses incurred by Lender in connection with
the preparation, negotiation and execution of this Amendment and the Other
Agreements executed pursuant hereto and any and all amendments, modifications,
and supplements thereto, including, without limitation, the costs and fees of
Lender's legal counsel, and all costs and expenses incurred by Lender in
connection with the enforcement or preservation of any rights under the Loan
Agreement, as amended hereby, or any Other Agreements, including, without,
limitation, the costs and fees of Lender's legal counsel.

     6.04  Severability.  Any provision of this Amendment held by a court of
           ------------                                                     
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.

     6.05 Successors and Assigns. This Amendment is binding upon and shall inure
          ----------------------
to the benefit of Lender and Borrower and their respective successors and
assigns, except that Borrower may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of Lender.

     6.06 Counterparts.  This Amendment may be executed in one or more
          ------------ 
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument.

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     6.07  Effect of Waiver. No consent or waiver, express or implied, by Lender
           ----------------
to or for any breach of or deviation from any covenant or condition by Borrower
shall be deemed a consent to or waiver of any other breach of the same or any
other covenant, condition or duty.

     6.08  Headings.  The headings, captions, and arrangements used in this
           --------                                                        
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.

     6.09  Applicable Law.  THIS AMENDMENT AND ALL OTHER AGREEMENTS EXECUTED
           --------------                                                   
PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE IN AND
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS.

     6.10  Final Agreement. THE LOAN AGREEMENT AND THE OTHER AGREEMENTS, EACH AS
           ---------------
AMENDED HEREBY, REPRESENT THE ENTIRE EXPRESSION OF THE PARTIES WITH RESPECT TO
THE SUBJECT MATTER HEREOF ON THE DATE THIS AMENDMENT IS EXECUTED. THE LOAN
AGREEMENT AND THE OTHER AGREEMENTS, AS AMENDED HEREBY, MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. NO
MODIFICATION, RESCISSION, WAIVER, RELEASE OR AMENDMENT OF ANY PROVISION OF THIS
AMENDMENT SHALL BE MADE, EXCEPT BY A WRITTEN AGREEMENT SIGNED BY BORROWER AND
LENDER.

     6.11  Release.  BORROWER HEREBY ACKNOWLEDGES THAT IT HAS NO DEFENSE,
           -------                                                       
COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE
WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF ITS
LIABILITY TO REPAY THE "OBLIGATIONS" OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES OF
ANY KIND OR NATURE FROM LENDER. BORROWER HEREBY VOLUNTARILY AND KNOWINGLY
RELEASES AND FOREVER DISCHARGES LENDER, ITS PREDECESSORS, OFFICERS, DIRECTORS,
AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS,
ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER,
KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED,
CONTINGENT, OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART
ON OR BEFORE THE DATE THIS AMENDMENT IS EXECUTED, WHICH THE BORROWER MAY NOW OR
HEREAFTER HAVE AGAINST LENDER, ITS PREDECESSORS, OFFICERS, DIRECTORS, AGENTS,
EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH
CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR
OTHERWISE, AND ARISING FROM ANY "LOANS", INCLUDING, WITHOUT LIMITATION, ANY
CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST
IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND
REMEDIES UNDER THE LOAN AGREEMENT

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OR OTHER AGREEMENTS, AND THE NEGOTIATION OF AND EXECUTION OF THIS AMENDMENT.

     6.12  Permitted Overadvance Amount.  The Permitted Overadvance Amount shall
           ----------------------------
(i) constitute Obligations that are secured by the Collateral and entitled to
all the benefits thereof, (ii) be payable on demand and bear interest at the per
annum rate applicable to the Revolving Credit Loans specified in Section 3.1(A)
                                                                 --------------
of the Loan Agreement and (iii) if not sooner demanded, be payable in full on
March 31, 1997;

     6.13  No Future Obligations. BORROWER IS HEREBY NOTIFIED THAT THE EXISTENCE
           ---------------------
AND/OR CONTINUATION OF THE PERMITTED OVERADVANCE AMOUNT IS IN THE SOLE
DISCRETION OF LENDER AND THAT LENDER RESERVES ITS RIGHT AT ANY TIME TO CEASE TO
PERMIT THE CREATION OR CONTINUED EXISTENCE OF THE PERMITTED OVERADVANCE AMOUNT
AND/OR TO DEMAND AT ANY TIME FROM BORROWER IMMEDIATE PAYMENT IN FULL OF THE
PERMITTED OVERADVANCE AMOUNT. Borrower agrees and understands that Lender's
prior willingness to make the Permitted Overadvance Amount shall in no way imply
that Lender agrees to make any future Permitted Overadvance Amount in a like or
similar manner. Borrower also agrees that Lender has no obligation to renew or
extend the Permitted Overadvance Amount, that Lender's actions hereunder shall
not constitute a waiver of any past, present or future violation or violations
of any provision of the Loan Agreement or any Other Agreement, and that Lender's
failure to exercise any right, privilege or remedy as a result of the matters
set forth above shall not directly or indirectly in any way whatsoever either:
(i) impair, prejudice or otherwise adversely affect Lender's right at any time
to exercise any right, privilege or remedy in connection with the Loan Agreement
or any Other Agreement, or (ii) amend or alter any provision of the Loan
Agreement or any Other Agreement, except as provided in this Amendment, or (iii)
constitute any course of dealing or other basis for altering any Obligation of
the Borrower or any right, privilege or remedy of Lender under the Loan
Agreement or any Other Agreement.

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<PAGE>
 
     IN WITNESS WHEREOF, this Amendment has been executed and is effective as of
the date first above-written.


                                "LENDER"

                                FLEET CAPITAL CORPORATION


                                By:
                                    ------------------------------------
                                    Hance VanBeber, Vice President


                                "BORROWER"

                                LOWRANCE ELECTRONICS, INC.


                                By:
                                    ------------------------------------
                                    Darrell J. Lowrance, President


                                LEI EXTRAS, INC.


                                By:
                                    ------------------------------------
                                    Steven L. Schneider, President


                                LOWRANCE CONTRACTS, INC.


                                By:
                                    ------------------------------------
                                    Terry R. Nimmo, Vice President


                                SEA ELECTRONICS, INC.


                                By:
                                    ------------------------------------
                                    Steven L. Schneider, President

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