Document:

FIFTH AMENDMENT TO CREDIT AGREEMENT

EXHIBIT 10.28

 

FIFTH AMENDMENT TO CREDIT AGREEMENT

 

THIS FIFTH AMENDMENT is made as

of the 10th day of October, 2001, and is by and between Winland Electronics,

Incorporated, a Minnesota corporation (the “Borrower”), and Wells Fargo Bank

Minnesota, National Association, a national banking association (the “Bank”)

and successor-in-interest to Norwest Bank Minnesota South, National

Association.

 

REFERENCE IS HEREBY MADE to

that certain Term Loan and Credit Agreement dated July 31, 1998, as

amended by a First Amendment dated October 23, 1998, by a Second Amendment

dated September 29, 1999, by a Third Amendment dated September 26, 2000, and by

a Fourth Amendment dated November 27, 2000 (as amended, the “Credit

Agreement”), made between the Borrower and the Bank (or its

predecessor-in-interest).  Capitalized

terms not otherwise defined herein shall have the respective meanings ascribed

to them in the Credit Agreement.

 

WHEREAS, the Second Line has

terminated; and,

 

WHEREAS, the Borrower has

requested the Bank to extend the Line to November 30, 2001; and,

 

WHEREAS, the Bank is willing to

grant the Borrower’s request, subject to the provisions of this Fifth

Amendment;

 

NOW, THEREFORE, in

consideration of the premises and for other valuable consideration received, it

is agreed as follows:

 

1.                                      Section 1.2 of

the Credit Agreement is hereby amended by changing the date referenced in the

first sentence of said Section from “August 31, 2001” to “November 30, 2001.”

 

2.                                      The Borrower and

the Bank hereby acknowledge that the Second Line has terminated, and there is

no outstanding indebtedness thereunder. 

Accordingly, the Credit Agreement is hereby amended by deleting all

references to the Second Line, the Second Revolving Note, and the Second Line

Availability Period.  Without limiting

the generality of the foregoing, the Credit Agreement is hereby further amended

by deleting Section 1A in its entirety.

 

3.                                      Simultaneously

with the execution of this Fifth Amendment, the Borrower shall execute and

deliver to the Bank a new promissory note (which, for purposes of this Fifth

Amendment only, shall be referred to herein as the “New Revolving Note”) in the

face amount of $3,500,000.00, and in form and content acceptable to the

Bank.  The New Revolving Note shall

replace, but shall not be deemed payment or satisfaction of, the Revolving Note

dated September 26, 2000 made by the Borrower in the face amount of

 

 

$3,500,000.00 payable to the Bank. 

All references in the Credit Agreement to the “Revolving Note” shall be

deemed to mean the New Revolving Note.

 

4.                                       The Borrower

hereby represents and warrants to the Bank as follows:

 

A.                                   As of October 10,

2001, the outstanding principal balance of Revolving Note was $2,619,501.40,

and accrued but unpaid interest thereon equaled $1,569.10.

 

B.                                     As of October 10,

2001, the outstanding principal balance of the Term Note dated September 29,

1999 made by the Borrower in the face amount of $530,052.64 was $493,758.78,

and accrued but unpaid interest thereon equaled $907.82.

 

C.                                     As of the date of

this Fifth Amendment, (i) each of the representations and warranties referred

to in Section 7 of the Credit Agreement is true, and (ii) except as expressly

waived in writing by the Bank, there exists no event of default under Section 9

of the Credit Agreement, nor does there exist any event which, with the giving

of notice or the passage of time, or both, could become such an event of

default.

 

D.                                    The Credit

Agreement and the Notes constitute valid, legal and binding obligations owed by

the Borrower to the Bank, subject to no counterclaim, defense, offset,

abatement or recoupment.

 

E.                                      The execution,

delivery and performance of this Fifth Amendment and the New Revolving Note by

the Borrower are within its corporate powers, have been duly authorized, and

are not in contravention of law or the terms of the Borrower’s Articles of

Incorporation or By-laws, or of any undertaking to which the Borrower is a

party or by which it is bound.

 

F.                                      All financial

statements delivered to the Bank by or on behalf of the Borrower, including any

schedules and notes pertaining thereto, have been prepared in accordance with

Generally Accepted Accounting Principles consistently applied, and fully and

fairly present the financial condition of the Borrower at the dates thereof and

the results of operations for the periods covered thereby, and there have been

no material adverse changes in the financial condition or business of the

Borrower from August 31, 2001 to the date hereof.

 

5.                                       Upon request by

the Bank, the Borrower shall deliver a corporate certificate of authority to

the Bank dated as of the date of this Fifth Amendment, and in form and content

acceptable to the Bank.

 

6.                                       Except as

expressly modified by this Fifth Amendment, the Credit Agreement remains

unchanged and in full force and effect. 

All references in the Term Note identified in Section 4(B) of this Fifth

Amendment shall be deemed to be references to the Credit Agreement as amended

hereby.

 

2

 

IN WITNESS WHEREOF, the Borrower

and the Bank have executed this Fifth Amendment as of the date first written

above.

 

	

  WINLAND

  ELECTRONICS, INCORPORATED

  	

  WELLS FARGO

  BANK MINNESOTA NATIONAL ASSOCIATION

  	 

	

   

  	

   

  	

   

  	

   

  
	

  By:

  	

  /s/ Jennifer

  A. Thompson

  	

   

  	

  By:

  	

  /s/

  Illegible

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Its:

  	

  CFO

  	

  Its:

  	

  AVP/Business

  Banker

  
							

 

3

 

	

  Wells Fargo Bank Minnesota,

  National Association

  	

   

  	

  Revolving Note

  
	

   

  	

   

  	

   

  
	

  $3,500,000.00

  	

   

  	

  October 10, 2001

  

 

FOR

VALUE RECEIVED, Winland Electronics, Incorporated (the

“Borrower”) promises to pay to the order of Wells Fargo Bank Minnesota,

National Association (the “Bank”), at its Mankato Office or such other address

as the Bank or holder may designate from time to time, the principal sum of

THREE MILLION FIVE HUNDRED THOUSAND AND N0/100 DOLLARS ($3,500,000.00), or the

amount shown on the Bank’s records to be outstanding, plus interest (calculated

on the basis of actual days elapsed in a 360-day year) accruing on the unpaid

balance at the annual interest rate defined below.  Absent manifest error, the Bank’s records will be conclusive

evidence of the principal and accrued interest owing hereunder.

 

INTEREST

RATE.  The

principal balance outstanding under this Revolving Note will bear interest at

an annual rate equal to the Base Rate, floating.  The Base Rate is the “base” or “prime” rate of interest

established by the Bank (or its successor) from time to time.

 

INTEREST

AFTER MATURITY. 

The unpaid principal balance and interest due under this Revolving Note

after maturity (whether this Revolving Note matures by demand, acceleration or

lapse of time) shall bear interest until paid at the Base Rate plus 1.00%,

floating.

 

REPAYMENT

TERMS

 

Interest.  Interest will be payable on the first day of

each month, beginning November 1, 2001.

 

Principal.  Principal, and any unpaid interest, shall be

payable in a single payment due on November 30, 2001.

 

ADDITIONAL

TERMS AND CONDITIONS. 

This Revolving Note is issued pursuant to a Term Loan and Credit

Agreement dated July 31, 1998, as amended by a series of amendments, including

a Fifth Amendment of even date herewith (as amended, the “Agreement”), made

between the Borrower and the Bank (or its predecessor-in-interest).  The Agreement contains additional terms and

conditions, including default and acceleration provisions, which are

incorporated into this Revolving Note by reference.  Capitalized terms not expressly defined herein shall have the

meanings given them in the Agreement. 

The Borrower agrees to pay all costs of collection, including reasonable

attorneys’ fees and legal expenses incurred by the Bank if this Revolving Note

is not paid as provided above.  This

Revolving Note shall be governed by the substantive laws of the State of

Minnesota.

 

WAIVER

OF PRESENTMENT AND NOTICE OF DISHONOR.  Borrower and any other person who signs,

guarantees or endorses this Revolving Note, to the extent allowed by law,

hereby waives presentment, demand for payment, notice of dishonor, protest, and

any notice relating to the acceleration of the maturity of this Revolving Note.

 

	

   

  	

  WINLAND ELECTRONICS, INCORPORATED

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  Jennifer A.

  Thompson

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  Its:

  	

  CFO

  

 

4Wells Fargo Bank Minnesota,

EXHIBIT 10.29

 

	

  Wells

  Fargo Bank Minnesota, National Association

  	

   

  	

   

  
	

   

  	

  Security Agreement

  
	

   

  	

   

  	

   

  
	

  Wells Fargo Bank

  Minnesota,

  	

   

  	

  Winland Electronics,

  Incorporated

  
	

  National Association

  	

   

  	

  1950 Excel Drive

  
	

  Second and Hickory St.

  	

   

  	

  Mankato, MN.  56001

  
	

  Mankato, MN.  56002-0168

  	

   

  	

   

  
	

  (the “Bank”)

  	

   

  	

  (the “Borrower”)

  

 

December 19, 2001

 

1.             SECURITY INTEREST AND COLLATERAL.  To secure payment of the Obligations (as

defined below), the Borrower hereby enters into this Security Agreement (the

“Agreement”) and grants to the Bank a security interest (the “Security

Interest’s in the Collateral (defined below).

 

“Obligations” means every present and future

debt, liability, and obligation which the Borrower may owe to the Bank, whether

direct or indirect, due or unmatured, absolute or contingent, primary or

secondary, or joint, several or joint and several, and whether it arises with

or without documents, such as deposit account overdrafts and charges, and

including all extensions, renewals, amendments or replacements of such debt, liability,

or obligation.

 

“Obligations” means the debt, liability, or

obligation of the Borrower to the Bank evidenced by the credit agreement of the

same date and each promissory note or other instrument evidencing each loan or

debt incurred thereunder by the Borrower, any deposit account overdrafts and

charges, and any extensions, renewals, amendments, or replacements of any such

loan, debt, or obligation.

 

“Collateral” means the following property,

excluding consumer goods, in which the Boer now has or hereafter acquires an

interest:

 

( )            “Inventory”. 

All inventory held for sale or lease or supply under a service contract,

or which constitutes work in process or materials used or consumed in the

Borrower’s business.

 

( )            “Equipment”. 

All equipment including but not limited to ail machinery, vehicles,

furniture, appliances, fixtures, manufacturing and processing equipment, shop

equipment, office and recordkeeping equipment, computer hardware and software,

and parts and tools.

 

( )            “Equipment”. 

The following goods or types of goods: 

All equipment including but not limited to all machinery, vehicles,

furniture, appliances, fixtures, manufacturing and processing equipment, shop

equipment, office and recordkeeping equipment, computer hardware and sofware,

and parts and tools.

 

( )            “General Intangibles”.  All general intangibles including but not limited to applications

for patents, patents, copyrights, trademarks, trade secrets, goodwill, trade

names, customer lists,

 

 

permits, franchises,

contracts, and the right to use the Borrowers name, together with ail other

intangible property rights such as the right to redeem or accept payment under

an annuity contract or a non-negotiable certificate of deposit issued by a

bank.

 

( )            “Accounts and other Rights to Payment”.  All rights of the Borrower to the payment of

money, whether arising out of a sale, lease, or other disposition of goods or

other property by the Borrower, out of a rendering of services by or loan from

the Borrower, out of the overpayment of taxes or other liabilities of the

Borrower, or otherwise arising under any contract or agreement, whether earned

by performance or not, together with all other rights and interests (including

all liens and security interests) which the Borrower may at any time have by

law or agreement against the person or property of any account debtor or

obligor, including but not limited to all present and future debt instruments,

chattel papers, accounts, contract rights, loans and other obligation

receivable, unearned insurance premiums, rebates, and negotiable documents.

 

The Collateral shall also include, as

applicable, all (i) products of the Collateral; (ii) substitutions and

replacements for the Collateral; (iii) proceeds from the sale or disposition of

the Collateral, including insurance proceeds and any rights of subrogation

resulting from the damage or destruction of the Collateral; and (iv) for

Collateral that is tangible, all additions, increases, improvements,

accessories, attachments, parts, equipment and repairs now or in the future

attached to or used in connection with such Collateral, and any warehouse

receipts, bills of lading or other documents of title now or in the future

evidencing the Borrower’s ownership of the Collateral.

 

2.             REPRESENTATIONS, WARRANTIES AND AGREEMENTS.  Borrower represents, warrants and agrees

that:

 

(a)                                  Borrower is a

corporation whose chief executive office is located at the address shown at the

beginning of this agreement, and that this Agreement has been authorized by all

necessary corporate action.  If any part

or all of the tangible Collateral will become so related to particular real

estate as to become a fixture, the real estate concerned is:  1950 Excel Drive, Mankato, Minnesota, and

the name of the record owner is: 

Winland Electronics, Incorporated.

 

(b)                                 The Collateral

will be primarily used for business purposes.

 

(c)                                  Borrower has

and will have title to each item of Collateral free and clear of all security

interests and other encumbrances, except:

 

(i)                                     the Security

Interest;

 

(ii)                                  liens for taxes

not delinquent or which the Borrower is contesting in good faith;

 

(iii)                               liens securing

purchase money indebtedness to the extent consented to in writing in advance by

the Bank;

 

2

 

The Borrower will defend the Collateral

against the claims of all persons except the Bank.  Borrower will not dispose of any interest in the Collateral

without the prior written consent of the Bank, except that, until the

occurrence of an Event of Default and the revocation by the Bank of Borrower’s

right to do so, Borrower may sell Inventory in the ordinary course of business.

 

(d)                                 Borrower will

execute and deliver to the Bank financing statements and any other documents

that the Bank may require to perfect its Security Interest in the Collateral,

and will not permit any tangible Collateral to be located in any state and/or

county in which a financing statement perfecting such Collateral is required to

be but has not been filed.  Borrower

agrees that the Bank may alternatively execute financing statements to perfect

the Security Interest in the Collateral where permitted by law.

 

(e)                                  Each Account

and each document is (or will be when arising or issued) the valid and legally

enforceable obligation, subject to no defense, set–off or counterclaim

(other than those arising in the ordinary course of business) of the obligor

shown by the Borrower’s records to be obligated to pay such Account.  Borrower will not agree to the material

modification or cancellation of any such right to payment without the Bank’s

prior written consent, and will not subordinate any such Account or right to

payment to any other claim.

 

(f)                                    Borrower will

at all times:

 

(i)                                     keep all

tangible Collateral in good working order and condition, normal depreciation

excepted;

 

(ii)                                  promptly pay

all taxes and other governmental charges levied or assessed upon Collateral;

 

(iii)                               permit the Bank

to examine or inspect any Collateral, wherever located, and to examine, inspect

and copy Borrower’s books and records pertaining to the Collateral and

Borrower’s business, and to request verifications from account obligors of

amounts owed to Borrower;

 

(iv)                              keep accurate

and complete records regarding the Collateral and Borrower’s business and

financial condition and provide the Bank such periodic reports of condition as

the Bank may reasonably request;

 

(v)                                 promptly notify

the Bank of any loss of or material damage to any Collateral or of any adverse

change known to Borrower regarding the prospect of payment on any Account;

 

(vi)                              upon Bank’s

request, promptly deliver to the Bank any instrument, document or chattel paper

constituting Collateral, duly endorsed or assigned by Borrower;

 

(vii)                           keep all

tangible Collateral insured against loss and damage, including risks of fire

(including extended coverage), theft, collision (in case of Collateral

consisting

 

3

 

of

motor vehicles) and such other risks in such amounts as the Bank may reasonably

request, with any loss payable to the Bank to the extent of its interest and

with the commitment of the insurer to notify the Bank before cancellation;

 

(viii)                        pay when due or

reimburse the Bank on demand for all costs of collection of the Obligations and

all other out-of-pocket expenses (including in each case all reasonable

attorney’s fees) incurred by the Bank in connection with this Agreement and the

Obligations, including expenses incurred in any litigation or bankruptcy

proceedings;

 

(ix)                                prevent the

Collateral from being used or kept in violation of all applicable law;

 

(x)                                   obtain a waiver

or consent from the owner and any mortgagee of any real property where the

Collateral may be located that provides that the Security Interest will at all

times be senior to any such interest or lien.

 

(g)                                 If Borrower

breaches any covenant or warranty in this Agreement, and the breach or failure

continues for a period of ten calendar days after the Bank gives written notice

(or, in the case of the agreement contained in clause (vii) of Section 2(f),

immediately upon the occurrence of such failure, without notice or lapse of

time), the Bank may in its discretion perform or observe such agreements in the

Borrower’s or the Bank’s name, and may take any other actions which the Bank

deems necessary to cure or correct such failure.  Borrower shall reimburse the Bank on demand for all costs and

expenses (including reasonable attorneys’ fees) incurred by the Bank in

performing or observing such agreements. 

If the Borrower fails to reimburse the Bank upon demand, the Bank may

cause such amounts to be advanced or added to any of the Obligations secured

hereunder, which will bear interest at the highest rate provided under the note

designated for this purpose by the Bank at the time of the advance.

 

(h)                                 Borrower

irrevocably appoints the Bank or its delegate as attorney-in-fact of Borrower

with the right (but not the duty) to execute, deliver, endorse or file, in the

name and on behalf of Borrower, any instruments, documents, financing

statements, applications for insurance or other agreements required of Borrower

under Section 2 at any time following an Event of Default.  Following an Event of Default, the Bank may

in its discretion enforce any rights of the Borrower under any contract of

insurance, and in the Borrower’s or the Bank’s name, execute and deliver proofs

of claim, receive payment of proceeds, endorse checks and other instruments

representing payment of such proceeds, and adjust, litigate, compromise or

release any claim against the issuer of any such policy.

 

3.             EVENTS

OF DEFAULT.  Each of the following

occurrences shall constitute an event of default under this Agreement (each an

“Event of Default”):

 

(a)                                  the Borrower

fails to make any payment of principal or interest due under any of the

Obligations or the Borrower is otherwise in default with respect to any of the

Obligations,

 

4

 

and any applicable grace

period stated therein, if any, has lapsed and the indebtedness has been

accelerated and is fully due and payable; or

 

(b)                                 the Borrower

fails to observe or perform any of the covenants or agreements contained in

this Agreement, after giving effect to any applicable grace period, if any; or

 

(c)                                  any

representation or warranty by the Borrower set forth in this Agreement or made

to the Bank in any financial statements or reports submitted to the Bank by or

on behalf of Borrower is materially false or misleading.

 

4.             REMEDIES UPON EVENT OF DEFAULT.  Upon the occurrence of an Event of Default

and at any time thereafter, the Bank may exercise any one or more of the

following rights and remedies:

 

(a)                                  declare all

unmatured Obligations to be immediately due and payable, without presentment or

other notice or demand;

 

(b)                                 exercise all

rights available upon default to a secured party under the Uniform Commercial

Code.  The Bank may require Borrower to

make the Collateral available to the Bank at a place to be designated by the

Bank which is reasonably convenient to both parties, and if notice to Borrower

of any intended disposition of Collateral or any other intended action is

required by law in a particular instance, such notice shall be deemed

commercially reasonable if given in the manner specified in this Agreement at

least 10 calendar days prior to the date of any public sale or disposition or

the date after which any private sale may occur,

 

(c)                                  exercise any or

all other rights available to the Bank by law or agreement against the

Collateral, the Borrower or any other person or property.

 

The Bank shall not be obligated to preserve

any rights Borrower may have against prior parties, to liquidate or realize on

the Collateral at all or in any particular manner or order, or apply any cash

proceeds of Collateral in any particular order.

 

5.             OTHER

PERSONAL PROPERTY.  Unless at the time

the Bank takes possession of any tangible Collateral, or at any time within

seven days thereafter, the Borrower gives the Bank written notice of the

existence of property belonging to the Borrower that does not constitute

Collateral, but which is located or found upon or within such Collateral,

together with a description of such property, the Bank shall not be responsible

or liable to the Borrower with respect to such property unless it has actual

knowledge of its existence and location upon or in such Collateral.

 

6.             LOCK

BOX, COLLATERAL ACCOUNT.  Upon the

Bank’s request following an Event of Default, the Borrower will direct each

obligor on an account to make payments to a special lock box under the control  of the Bank.  Borrower authorizes and directs the Bank to deposit into a

special collateral account to be established and maintained with the Bank all

checks, drafts and cash payments, received in said lock box.  All deposits to this collateral account

shall

 

5

 

constitute Collateral and shall not

constitute payment of any Obligation. 

At its option, the Bank may, at any time, apply collected funds on

deposit in the collateral account to the payment of the Obligations in such

order of application as the Bank may determine, or permit the Borrower to

withdraw all or part of the balance of the collateral account.  If a collateral account is established,

Borrower agrees that it will promptly deliver to the Bank for deposit into the

collateral account all payments on Accounts. 

All such payments shall be delivered to the Bank in the form received

(except for Borrower’s endorsement where necessary).  Until deposited, all payments on Accounts received by Borrower

shall be held in trust by the Borrower as the property of the Bank, and shall

not be commingled with any funds or property of the Borrower.

 

 

7.             COLLECTION

RIGHTS OF THE BANK.  In addition to its

rights under Sections 4 and 6, the Bank may, at any time following an Event of

Default, notify any account obligor or any other person obligated to pay any

amount due with respect to an Account to make payment directly to the

Bank.  Upon the Bank’s request, Borrower

will notify such account obligors and other obligors in writing and will state

on all invoices to such account obligors or other obligors that the amount due

is payable directly to the Bank.  At any

time after the Bank or Borrower gives such notice to an account obligor or

other obligor, the Bank may, in its discretion, and in its own name or in

Borrower’s name, demand, sue for, collect or receive any money or property at

any time payable or receivable on account of, or securing, any such chattel

paper, account, or other right to payment, or grant any extension to, make any

compromise or settlement with or otherwise agree to waive or change the

obligations (including collateral obligations) of any such account obligor or

other obligor.

 

•              AMENDMENTS.  This Agreement can be waived, amended or

terminated and the Security Interest released, only in an express writing

signed by the Bank.  A waiver signed by

the Bank shall be effective only in the specific instance and for the specific

purpose given.

 

•              NO WAIVER;

CUMULATIVE REMEDIES.  Delay or failure

to act shall not preclude the exercise or enforcement of any of the Bank’s

rights or remedies.  All rights of the

Bank shall be cumulative and may be exercised singularly or concurrently, at

the Bank’s option, and the exercise of any one such right or remedy shall

neither be a condition to nor bar the exercise or enforcement of any other.

 

•              NOTICES.  All notices to be given to Borrower shall be

deemed sufficiently given if delivered or mailed to the Borrower at the above

address or at the most recent address shown on the Bank’s records.

 

•              BINDING EFFECT;

ASSIGNMENT.  This Agreement shall be

binding upon and inure to the benefit of Borrower and the Bank and their

respective heirs, representatives, successors and assigns and shall take effect

when signed by Borrower and delivered to the Bank.  A photographic or other reproduction of this Agreement or of any

financing statement signed by the Borrower shall have the same force and effect

as the original.

 

•              APPLICABLE LAW;

SEVERABILITY.  Except to the extent

otherwise required by law, this Agreement shall be governed by the laws of the

state in which the Bank’s main office is

 

6

 

located.  If any provision or application of this

Agreement is unenforceable in any respect, such unenforceability shall not

affect other provisions of this Agreement.

 

•              SURVIVAL OF

REPRESENTATIONS AND WARRANTIES.  All

representations and warranties contained in this Agreement shall survive the

execution, delivery and performance of this Agreement and the creation and

payment of the Obligations.

 

•              INTEGRATION.  This Agreement represents the entire

understanding of the Bank and Boer with respect to the Collateral and

supersedes all prior oral or written agreements between the parties relating to

the Collateral.

 

IN WITNESS WHEREOF, this

Agreement was executed the day and year first above written.

 

	

   

  	

  WINLAND ELECTRONICS,

  INCORPORATED

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Lorin E. Krueger

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  Title:

  	

  President & CEO

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Jennifer A. Thompson

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  Title:

  	

  Chief Financial Officer

  

 

7

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