This Loan Agreement ("Agreement") is made this 4th day of December 2002, by and between WSI Industries,
Inc., a Minnesota corporation (the "Borrower") and Excel Bank Minnesota, a Minnesota banking corporation
(the "Bank"), and the Borrower and the Bank hereby agree as follows:
Section 1.01 DEFINITIONS. For all purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to them in this Article, and include the plural as
well as the singular; and
(b) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with
generally accepted accounting principles.
"Accounts" means, as to any Person, the aggregate unpaid obligations of customers and other account debtors to
such Person arising out of the sale or lease of goods or rendition of services by such Person on an open account
or deferred payment basis.
"Advance" means an advance by the Bank to the Borrower pursuant to Article II.
"Borrowing Base" means, at any time, the lesser of the Commitment, or the sum of
(i) Seventy-five (75%) percent of the Eligible Accounts of the Borrower, computed on the basis of the most
recent schedule of collateral prepared and furnished to the Bank as required by Section 5.01(b); and
(ii) Fifty (50%) percent of the Eligible Inventory of the Borrower, up to an aggregate total sum of Five Hundred
Thousand and 00/100 ($500,000.00) Dollars computed on the basis of the most recent schedule of collateral
prepared and furnished to the Bank as required by Section 5.01(b).
"Commitment" means One Million and 00/100 ($1,000,000.00) Dollars under the Revolving Loan as evidenced
by the Revolving Note.
"Current Assets" of any Person means the aggregate amount of assets of such Person which in accordance with
generally accepted accounting principles may be properly classified as current assets, after deducting ad