Document:

Prepared by MerrillDirect

 

EXHIBIT 10.26

	
  
  Wells Fargo Bank Minnesota,

                National Association
  	
  Third Amendment
  
	

  

  

THIS THIRD AMENDMENT (the “Third Amendment”) dated to
be effective as of September 26, 2000 is between WELLS FARGO BANK
MINNESOTA, NATIONAL ASSOCIATION (the “Bank”) successor by consolidation to
Norwest Bank Minnesota South, National Association and WINLAND ELECTRONICS,
INCORPORATED (the “Borrower”).

BACKGROUND

The Borrower and the Bank entered into a Term Loan and
Credit Agreement dated as of July 31, 1998, which agreement was amended by
First Amendment dated October 23, 1998 and a Second Amendment dated as of
September 29, 1999 (as amended, the “Agreement”), pursuant to which the Bank
extended to the Borrower 1) a $3,500,000.00 revolving line of credit (the
“Line”), 2) a $168,368.75 term loan and 3) a $363,726.00 term loan (together,
the “Term Loans”).  Borrowings under the
Line are currently evidenced by a revolving note dated September 29, 1999 (the
“1999 Revolving Note”).  The Borrower’s
obligations to the Bank under the Term Loans are evidenced by Term Notes dated
July 31, 1998 and September 29 (the “Term Notes”).

The Borrower has requested that the Bank extend the Line
Expiration Date to August 31, 2001.  The
Bank is willing to grant this requests subject to the terms and conditions of
this Third Amendment.  Capitalized terms
not otherwise defined in this Third Amendment shall have the meaning given them
in the Agreement.

In consideration of the above premises, the Bank and the
Borrower agree that the Agreement is hereby amended as of the date of this
Third Amendment as follows:

1.         Section 1.2
of the Agreement is hereby deleted in its entirety and restated as follows:

“1.2       Line Availability Period. 
The “Line Availability Period” will mean the period of time from the
Effective Date or the date on which all conditions precedent described in this
Agreement have been met, whichever is later, to the Line Expiration Date of
August 31, 2001.”

2.         To reflect
the changes to the Line, the Borrower will replace the existing promissory note
by executing and delivering to the Bank a new promissory note in form and
content acceptable to the Bank (the “Revolving Note”), which shall replace, but
not be deemed to satisfy, the 1999 Revolving Note, and which shall further reflect
the same unpaid loan amount as the 1999 Revolving Note as of the date of this
Third Amendment.  Each reference in the
Agreement to the Revolving Note shall be deemed to refer to the Revolving Note
dated as of the date of this Third Amendment.

3.         Sections
8.2(a), 8.2(b), and 8.2(c) are hereby deleted and restated as follows:

	
  “(a)
  	
  Debt Service Coverage Ratio.  Maintain a ratio of Traditional Cash Flow
  to Current Maturities of Long Term Debt of at least 1.2 to 1.0 as of the end
  of each fiscal year.

  
	
   (b)
  	
  Tangible Net Worth.  Maintain a minimum Tangible Net Worth of at least $4,400,000.00
  as of the end of each fiscal year.

  
	
   (c)
  	
  Total Liabilities to Tangible Net Worth Ratio.  Maintain a ratio of total liabilities to
  Tangible Net Worth of less than 2.50 to 1.0 as of the end of each fiscal
  year.
  

 

4.         The Borrower
hereby represents and warrants to the Bank as follows:

            A.        The Agreement as amended by this Third
Amendment remains in full force and effect.

            B.         The Borrower has no knowledge of any
default under the terms of the Agreement or any note evidencing any of the
obligations of the Borrower that are documented in the Agreement, or of any
event that with notice or the lapse of time or both would constitute a default
under the Agreement or any such notes.

            C.        The execution, delivery and performance
of this Third Amendment and all related documentation described in this Third
Amendment 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.

            D.        The resolutions set forth in the
Corporate Certificate of Authority dated March 26, 1997 and delivered by
the Borrower to the Bank have not been amended or rescinded, and remain in full
force and effect.

IN WITNESS WHEREOF, the Bank and Borrower have executed this
Third Amendment as of the date and year first above written.

	
  WELLS FARGO BANK MINNESOTA,
  	 
  
	
  NATIONAL ASSOCIATION
  	
  WINLAND ELECTRONICS, INCORPORATED
  
	
  By:
  	
  /s/ illegible
  	
  By:
  	
  /s/ W. K. Hankins
  
	 
  	 
  	 
  	 
  
	
  Its:
  	
  Assistant Vice President
  	
  Its:
  	
  CEOPrepared by MerrillDirect

 

EXHIBIT 10.27

	
  
  Wells Fargo Bank Minnesota,

                National Association
  	
  Second 

  Revolving Note
  
	
  
  

  

  
	
  $1,000,000.00
  	
  November 27, 2000
  
			

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 principal office or such other
address as the Bank or holder may designate from time to time, the principal
sum of ONE MILLION AND 00/100 DOLLARS ($1,000,000.00) 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 from time to time at its principal office
in Minneapolis, Minnesota.

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 1.25%, floating.

REPAYMENT TERMS

Interest. 
Interest will be payable on the first day of each month, beginning
January 1, 2001.

Principal. 
Principal and any unpaid interest, shall be payable in a single payment
due on August 31, 2001.

ADDITIONAL TERMS AND CONDITIONS.  This Revolving Note is issued pursuant to a
Fourth Amendment of even date amending a Term Loan and Credit Agreement between
the Bank and the Borrower dated July 31, 1998 (as amended, the
“Agreement”).  The Agreement, and any
amendments or substitutions, 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:       /s/ W. K.
Hankins

Its:        CEOPrepared by MerrillDirect

EXHIBIT 10.28

	
  
  Wells Fargo Bank Minnesota,

                National Association
  	
  Fourth Amendment
  
	

  

  

THIS FOURTH AMENDMENT (the “Fourth Amendment”) dated
to be effective as of November 27, 2000 is between WELLS FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION (the “Bank”) successor by consolidation to Norwest Bank
Minnesota South, National Association and WINLAND ELECTRONICS, INCORPORATED
(the “Borrower”).

BACKGROUND

The Borrower and the Bank entered into a Term Loan and
Credit Agreement dated as of July 31, 1998, which agreement was amended by
First Amendment dated October 23, 1998, a Second Amendment dated as of
September 29, 1999, and a Third Amendment dated as of September 26, 2000 (as
amended, the “Agreement”), pursuant to which the Bank extended to the Borrower
1) a $3,500,000.00 revolving line of credit (the “Line”), 2) a $168,368.75 term
loan, and 3) a $363,726.00 term loan (together, the “Term Loans”).  Borrowings under the Line are currently
evidenced by a revolving note dated the date of the Third Amendment (the “2000
Revolving Note”).  The Borrower’s
obligations to the Bank under the Term Loans are evidenced by Term Notes dated
July 31, 1998 and September 29, 1999 (the “Term Notes”).

The Borrower has requested that the Bank grant a new
revolving line in the amount of $1,000,000.00. 
The Bank is willing to grant this request subject to the terms and
conditions of this Fourth Amendment. 
Capitalized terms not otherwise defined in this Fourth Amendment shall
have the meaning given them in the Agreement.

In consideration of the above premises, the Bank and the
Borrower agree that the Agreement is hereby amended as of the date of this
Fourth Amendment as follows:

1.         A new
Section 1A is hereby added to the Agreement to read as follows:

	
  1A.1
  	
  Second Line of Credit Amount.  During the Second Line Availability Period
  defined below, the Bank agrees to provide a revolving line of credit (the
  “Second Line”) to the Borrower. 
  Outstanding amounts under the Second Line shall not, at any one time,
  exceed the lesser of availability under the Borrowing Base or One Million and
  00/100 Dollars ($1,000,000.00).
  
	 
  	 
  
	
  1A.2
  	
  Line Availability Period.  The “Second Line Availability Period” shall mean the period of
  time from the Effective Date or the date on which all conditions precedent
  described in this Agreement have been met, whichever is later, to the Second
  Line Expiration Date of August 31, 2001.
  
	 
  	 
  
	
  1A.3
  	
  The Second Revolving Note.  The Borrower’s obligation to repay
  advances under the Second Line shall be evidenced by a single promissory note
  (the “Second Revolving Note”) dated as of the Effective Date, and in form and
  content acceptable to the Bank. 
  Reference is made to the Second Revolving Note for interest rate and
  repayment terms.
  

 

2.         Section 1.4
of the Agreement is hereby amended to read as follows:

	
  1.4
  	
  Mandatory Prepayment.  If at any time the principal outstanding under the Revolving
  Note, the Second Revolving Note and the Term Notes exceeds the Borrowing
  Base, the Borrower must immediately prepay the Revolving Note or Second
  Revolving Note in an amount sufficient to eliminate the excess.
  

3.         A new
Section 4.2 is hereby added to the Agreement to read as follows:

	
  4.2
  	
  Default Interest Rate.  Notwithstanding the language contained in any of the Notes,
  upon the violation of any financial covenant contained in this Agreement, the
  Bank may, at its option, increase the interest rate on the Notes to 1.25%
  above the Base Rate, floating.  Such
  increase shall be in addition to any other rights or remedies that the Bank
  may have and shall apply regardless of whether or not the Bank has waived
  such covenant violation.
  

4.         Section
8.2(c) is hereby deleted and restated as follows:

	
  (c)
  	
  Total Liabilities to Tangible Net Worth Ratio.  Maintain a ratio of total liabilities to
  Tangible Net Worth of less than 2.20 to 1.0 as of the end of each fiscal
  year.
  

5.         Exhibits A–1
and A–2 to the Agreement are hereby replaced with the Exhibits A–1
and A–2 to this Amendment.

6.         To reflect
the addition of the Second Line, the Borrower will execute and deliver to the
Bank a new promissory note in form and content acceptable to the Bank (the
“Second Revolving Note”).  Each
reference in the Agreement to the “Notes” shall be deemed to include the Second
Revolving Note dated as of the date of this Fourth Amendment.

7.         The Borrower
hereby represents and warrants to the Bank as follows:

                        A.        The Agreement as amended by this Fourth
Amendment remains in full force and effect.

                        B.         The Borrower has no knowledge of any
default under the terms of the Agreement or any note evidencing any of the
obligations of the Borrower that are documented in the Agreement, or of any
event that with notice or the lapse of time or both would constitute a default
under the Agreement or any such notes.

                        C.        The execution, delivery and performance
of this Fourth Amendment and all related documentation described in this Fourth
Amendment 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.

                        D.  The resolutions set forth in the Corporate
Certificate of Authority dated March 26, 1997 and delivered by the Borrower to
the Bank have not been amended or rescinded, and remain in full force and
effect.

IN WITNESS WHEREOF, the Bank and Borrower have executed this
Fourth Amendment as of the date and year first above written.

	
  WELLS FARGO BANK MINNESOTA,
  	 
  
	
   NATIONAL ASSOCIATION
  	
  WINLAND ELECTRONICS, INCORPORATED
  
	 
  	 
  
	
  By:
  	
  /s/ Illegible
  	
  By:
  	
  /s/ W. K. Hankins
  
	 
  	 
  	 
  	 
  
	
  Its:
  	
  Assistant Vice President
  	
  Its:
  	
  CEO
  

 

EXHIBIT A-1

BORROWING BASE
DEFINITION

“Borrowing Base” means the sum of 80% of Eligible Accounts
Receivable (as defined below) plus 60% of Eligible Inventory (as defined below),
plus 25% of work-in-process.

Eligible Accounts Receivable means all accounts receivable
except those which are:

	 
  	
  1)  Greater Than 60
  days past the invoice date.
  
	 
  	
  2)  Due from an
  account debtor, 10% or more of whose accounts owed to the Borrower are more
  than 60 days past the invoice date.
  
	 
  	
  3)  Subject to
  offset or dispute.
  
	 
  	
  4)  Due from an
  account debtor who is subject to any bankruptcy proceeding.
  
	 
  	
  5)  Owed by a
  shareholder, subsidiary, affiliate, officer or employee of the Borrower.
  
	 
  	
  6)  Not subject to
  a perfected first lien security interest in favor of the Bank.
  
	 
  	
  7)  Due from an
  account debtor located outside the United States and not supported by a
  standby letter of credit acceptable to the Bank.
  
	 
  	
  8)  Due from a unit
  of government, whether foreign or domestic.
  
	 
  	
  9)  Otherwise
  deemed ineligible by the Bank in its reasonable discretion.
  

 

Eligible Inventory means all inventory of the Borrower, at
the lower of cost or market as determined by generally accepted accounting
principals, except inventory which is:

            1)  Work-in-process.

            2)  In transit; or located at any warehouse not approved by the Bank.

            3)  Covered by a warehouse receipt, bill of lading or other document
of title.

            4)  On consignment to or from any other person or subject to any bailment.

            5)  Damaged, obsolete or not salable in the Borrower’s ordinary
course of business.

            6)  Subject to a perfected first lien security interest in favor of
any third party.

            7)  Supplies or parts inventory.

            8)  Otherwise deemed ineligible by the Bank in its reasonable
discretion.

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