Document:

Wells Fargo Bank Minnesota,

EXHIBIT 10.30

 

	

  Wells Fargo Bank Minnesota,

  National Association

  	

   

  	

  Fifth Amendment

  

 

THIS

FIFTH AMENDMENT (the “Fifth Amendment”) dated to be

effective as of December 28, 2001 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, a Third Amendment dated as of

September 26, 2000, and a Fourth Amendment dated as of November 27, 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”), and 2) a $530,052.64

term loan (the “Term Loan”).  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 Loan are

evidenced by a Term Note dated September 29, 1999 (the “Term Note”).  All other notes executed by Borrower in

favor of the Bank have terminated and are no longer in effect.

 

The Line Availability Period

expired on November 30, 2001 and the Borrower has requested an extension of the

Line Availability Period.  The Bank is

willing to grant this request subject to the terns and conditions of this Fifth

Amendment.  Capitalized terms not

otherwise defined in this Fifth 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 Fifth 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 March 1, 2002.”

 

2.             Section 1.3 of the Agreement is

hereby amended to provide that the interest rate on the Revolving Note,

commencing as of the date of execution of this Amendment, shall be at an annual

rate equal to the Base Rate plus 2%, 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.

 

1

 

3.             Section 8.2 of the Agreement is

hereby amended to add the following paragraph:

 

“(e)         Minimum Profit.  Maintain a minimum profit before taxes of

not less than $1.00 for each month during the term of this agreement commencing

the month of January, 2002.”

 

4.             Section 8.3(h) shall be amended to

provide that the Bank will conduct a collateral audit on a semi-annual basis,

or more frequently if requested by Bank. 

Borrower shall immediately pay to Bank, upon request, the cost of such

collateral audits.

 

5.             Exhibit A-1 and A-2 to the

Agreement are hereby replaced with the Exhibits A-1 and A-2 to this

Amendment.  Section 8.1 (c) is hereby

amended to provide that the new Exhibit A-1 and A-2 to this Amendment shall be provided

within ten (10) days of January, 2002 month end and within ten (10) days of

each month end, current through the end of that period and certified as correct

by an officer of the Borrower acceptable to the Bank.

 

6.             Section 4.1 of the Agreement shall

be amended to include the following language:

 

“Borrower

shall collect a $300,000.00 account receivable from Peoples Net that matures on

December 30, 2001 and shall apply the proceeds of such account receivable to

the Bank Revolving Note prior to January 10, 2002.  Failure to collect such account receivable and apply the proceeds

to the Revolving Note shall constitute an Event of Default under Section 9 of

the Agreement.”

 

7.             Section 3 of the Agreement shall be

amended to provide that Borrower shall pay to the Bank a renewal fee of

$10,000.00 on or before March 1, 2002. 

If Borrower has a minimum profit before taxes of not less than $1.00 for

the months of January and February, 2002 then the Bank shall waive this renewal

fee.

 

8.             Section 8.2 of the Agreement shall

be amended to add the following paragraph:

 

“(f)          Borrower shall not show a net loss of

more than $710,000.00 for the 2001 fiscal year.”

 

9.             Simultaneously with the execution of this Fifth

Amendment, the Borrower shall execute and deliver to the Bank a new security

agreement as a renewal of the old security agreement in the form of Exhibit

“B.”

 

10.           Simultaneously with the execution of this Fifth Amendment

the Borrower shall deliver proof of insurance, as required under Section 8.3(c)

of the Agreement, including a lender’s loss payable endorsement in favor of and

in form acceptable to the Bank.

 

11.           The Borrower hereby represents and warrants to the Bank as

follows:

 

A.            The Agreement as

amended by this Fifth Amendment remains in full force and effect.

 

2

 

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 Fifth Amendment and all related documentation

described in this Fifth 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 Fifth Amendment as of the date and year first

above written.

 

	

  WELLS FARGO

  BNK MINNESOTA, NATIONAL ASSOCIATION

  	

  WINLAND

  ELECTRONICS, INCORPORATED

  
	

   

  	

   

  
	

   

  	

   

  
	

  By:

  	

  /s/

  Illegible

  	

   

  	

  By:

  	

  /s/ Lorin

  Krueger

  	

   

  
	

  Its:

  	

  VP

  	

  Its:

  	

  President

  and CEO

  
						

 

3

 

EXHIBIT A-1

 

BORROWING BASE DEFINITION

 

“Borrowing Base” means the sum

of 80% of Eligible Accounts Receivable (as defined below) plus 50% of Eligible

Inventory (as defined below), plus 0% 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.

 

 

EXHIBIT A-2

 

WINLAND ELECTRONICS, INCORPORATED

 

BORROWING BASE CERTIFICATE

 

TO:                            Wells Fargo Bank Minnesota,

National

Association

Second and

Hickory Street

Mankato,

Minnesota  56002-0188

(the “Bank”)

 

Winland Electronics,

Incorporated (the “Borrower”) certifies that the following computation of the

Borrowing Base was performed as of the date set forth below in accordance with

the Borrowing Base definitions set forth in Exhibit A-1 to the Credit Agreement

between the Bank and the Borrower dated January 31, 1996, as amended.

 

	

  Total Accounts Receivable

  	

   

  	

  $

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Less:       1)  Greater than 60

  days in age

  	

   

  	

  $

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  2)  Other ineligibles

  	

   

  	

  $

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Eligible Accounts Receivable

  	

   

  	

  $

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  80% of Eligible Accounts Receivable

  	

   

  	

   

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Total Inventory

  	

   

  	

  $

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Less: 

  Ineligible Inventory

  	

   

  	

  $

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Eligible Inventory

  	

   

  	

  $

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  50% of Eligible Inventory

  	

   

  	

   

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  0% of Work-in-Process

  	

   

  	

   

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Total Borrowing Base

  	

   

  	

   

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Total Outstandings

  	

   

  	

   

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Excess (Deficit)

  	

   

  	

   

  	

   

  	

  $

  	

   

  	

   

  

 

 

	

  WINLAND

  ELECTRONICS, INCORPORATED

  
	

   

  
	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Its:

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Date:

  	

   

  	

   

  
				

 

1

 

Addendum to Fifth Amendment

Dated December 28, 2001

 

This addendum will apply to the

Fifth Amendment (the “Fifth Amendment”) dated to be effective as of December

28, 2001 which 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”).

 

Section 7.2(a) “Tangible Net

Worth Covenant” and Section 7.2(e) “Debt Service Coverage Ratio” as stated in

the Credit Agreement dated January 31, 1996 and any amendments made to these

two covenants to present, will not apply during the effective time frame of the

Fifth Amendment.  The amendment will expire

March 1, 2002 at which time all covenants will be reassessed.

 

	

  Wells Fargo

  Bank Minnesota, National Association

  	

  Winland

  Electronics, Incorporated

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  By:

  	

  /s/

  Illegible

  	

   

  	

  By:

  	

  /s/ Lorin

  Krueger

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Its:

  	

  VP

  	

  Its:

  	

  President

  & CEO

  
						

 

2Wells Fargo Bank Minnesota,

EXHIBIT 10.31

 

	

  Wells Fargo Bank Minnesota,

  National Association

  	

   

  	

  Sixth Amendment

  

 

THIS SIXTH AMENDMENT (the

“Sixth Amendment”) dated to be effective as of March 19, 2002 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, a Third Amendment dated as of

September 26, 2000, a Fourth Amendment dated as of November 27, 2000, and a

Fifth Amendment Dated as of December 28, 2001 (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”), and 2) a $530,052.84 term loan (the

“Term Loan”).  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 Loan are evidenced

by a Term Note dated September 29, 1999 (the “Term Note”).  All other notes executed by Borrower in

favor of the Bank have terminated and are no longer in effect.

 

The Line Availability Period

expired on March 1, 2002 and the Borrower has requested an extension of the

Line Availability Period.  The Bank is

willing to grant this request subject to the terms and conditions of this Sixth

Amendment.  Capitalized terms not

otherwise defined in this Sixth 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 Sixth 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 September 15,

2002.”

 

2.                                       Section

8.2 of the Agreement is hereby amended to add the following paragraph:

 

“(e)                             Minimum

Profit.  Maintain a minimum profit

before taxes of not less than $152,000.00 for the quarter ended March 31, 2002

and maintain a minimum profit before taxes of not less than $74,000.00 for the

quarter beginning April 1, 2002 through June 30, 2002.”

 

 

3.             Section 8.3(h) shall be amended to provide that the Bank

will conduct a collateral audit prior to April 30, 2002, and at such other

times if requested by Bank.  Borrower

shall immediately pay to Bank, upon request, the cost of such collateral audits.

 

4.             Exhibit A-1 and A-2 to the

Agreement are hereby replaced with the Exhibits A-1 and A-2 to

this Amendment.  Section 8.1(c) is

hereby amended to provide that the new Exhibit A-1 and A-2 to this Amendment

shall be provided within ten (10) days of March, 2002 month end and within ten

(10) days of each month end, current through the end of that period and

certified as correct by an officer of the Borrower acceptable to the Bank.

 

5.             Section 3 of the Agreement shall be amended to provide

that Borrower shall pay to the Bank a renewal fee of $10,000.00 on or before

September 15, 2002.  If Borrower has

both a minimum profit before taxes of not less than $152,000.00 for the quarter

ended March 31, 2002 and maintains a minimum profit before taxes of not less than

$74,000.00 for the quarter beginning April 1, 2002 through June 30, 2002, then

the Bank shall waive this renewal fee.

 

6.             Simultaneously with the execution of this Sixth

Amendment the Borrower shall pay to the Bank the fees and expenses of legal

counsel for the Bank, incurred in connection with the preparation of this Sixth

Amendment in the amount of sum of $143.75.

 

7.             The Borrower hereby represents and warrants to the Bank

as follows:

 

A.            The Agreement as

amended by this Sixth 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 Sixth Amendment and all related documentation

described in this Sixth Amendment are within its corporate powers, have been

duly authorized and are not in contravention of law or the terms of the

Borrowers 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 Borrower shall

provide a current Corporate Certificate of Authority to update and replace the

previous Corporate Certificates of Authority dated March 26, 1997 and December

15, 2000 with the Certificate delivered by the Borrower to the Bank.

 

2

 

IN WITNESS WHEREOF, the Bank

and Borrower have executed this Sixth Amendment as of the date and year first

above written.

 

 

	

  WELLS FARGO BANK MINNESOTA, NATIONAL

  ASSOCIATION

  	

  WINLAND

  ELECTRONICS, INCORPORATED

  	 

	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  By:

  	

  /s/  Illegible

  	

   

  	

  By:

  	

  /s/ Lorin E.

  Krueger

  	

   

  
	

  Its:

  	

  Vice

  President

  	

  Its:

  	

  President

  & CEO

  
							

 

3

 

EXHIBIT A-1

 

BORROWING BASE

DEFINITION

 

“Borrowing Base” means the sum

of 75% of Eligible Accounts Receivable (as defined below) plus 50% of Eligible

Inventory (as defined below), plus 0% 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.

 

4

 

EXHIBIT A-2

 

WINLAND ELECTRONICS,

INCORPORATED

 

BORROWING BASE CERTIFICATE

 

TO:         Wells Fargo Bank Minnesota,

National

Association

Second and

Hickory Street

Mankato,

Minnesota 56002-0168

(the “Bank”)

 

Winland Electronics,

Incorporated (the “Borrower”) certifies that the following computation of the

Borrowing Base was performed as of the date set forth below in accordance with

the Borrowing Base definitions set forth in Exhibit A-1 to the Credit Agreement

between the Bank and the Borrower dated January 31, 1996, as amended.

 

	

  Total Accounts Receivable

  	

   

  	

  $

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Less:  1) Greater than 60 days in age

  	

   

  	

  $

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  2) Other ineligibles

  	

   

  	

  $

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Eligible Accounts Receivable

  	

   

  	

  $

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  75% of Eligible Accounts Receivable

  	

   

  	

   

  	

   

  	

  $

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Total Inventory

  	

   

  	

  $

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Less:  

  Ineligible inventory

  	

   

  	

  $

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Eligible Inventory

  	

   

  	

  $

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  50% of Eligible Inventory

  	

   

  	

   

  	

   

  	

  $

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  50% of Work-in-Process

  	

   

  	

   

  	

   

  	

  $

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Total Borrowing Base

  	

   

  	

   

  	

   

  	

  $

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Total Outstandings

  	

   

  	

   

  	

   

  	

  $

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Excess (Deficit)

  	

   

  	

   

  	

   

  	

  $

  	

   

  

 

	

  WINLAND ELECTRONICS, INCORPORATED

  
	

   

  
	

   

  
	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Its:

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Date:

  	

   

  	

   

  
				

 

5

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