First Amendment to Loan Agreement among M-Tron Industries, Piezo Technology, and First National Bank of Omaha

 EXHIBIT 10.2 FIRST AMENDMENT TO LOAN AGREEMENT THIS Amendment to Loan Agreement made this 31st day of May, 2005, by and between M-TRON INDUSTRIES, INC., a Delaware corporation ("M-TRON"), and PIEZO TECHNOLOGY, INC., a Florida corporation (collectively, the "Borrowers"), and FIRST NATIONAL BANK OF OMAHA (the "Bank"), a national banking association established at Omaha, Nebraska. WHEREAS, M-TRON has existing term loans with the Bank evidenced by term note number 2000001751-6 with a due date of April 30, 2007, term note number 2000001751-8 with a due date of October 14, 2007, and term note number 20000001751-9 with a due date of October 14, 2005 pursuant to an existing additional loan agreement with the Bank, which shall remain in full force in accordance with its terms; and WHEREAS, M-TRON has an existing revolving line of credit with the Bank evidenced by revolving note number 2000001751-5 with a due date of May 31, 2005 pursuant to an existing additional loan agreement with the Bank, which shall be paid in full from the proceeds of the Revolving Note; and WHEREAS, the Bank is willing to provide such credit facilities to the Borrowers upon the terms and conditions herein set forth. WHEREAS, the parties hereto desire to amend the AGREEMENT. Now, therefore, in consideration of the AGREEMENT, and their mutual promises made herein, BANK and BORROWERS agree as follows: 1. Terms which are typed herein as all capitalized words and are not defined herein shall have the same meanings as when described in the AGREEMENT. 2. Article I Section 1.01. Defined Terms "Fixed Charge Coverage Ratio" of the AGREEMENT is hereby amended to read, effective immediately: "Fixed Charge Coverage Ratio" means as of any day the ratio derived when comparing EBITDA, less unfunded capital expenditures, dividends and taxes to the Borrowers' payments on the principal and interest of the Obligations and Subordinated Debt made during the applicable reporting period. 3. Article I Section 1.01. Defined Terms "Tangible Net Worth" of the AGREEMENT is hereby amended to read, effective immediately: "Tangible Net Worth" means total assets less total liabilities (but excluding Subordinated Debt existing on the Closing Date, in an amount not exceeding $2,500,000) and less the following types of assets: (a) receivables and other investments in or amounts  due from any shareholder, employee, or other person or entity related to or affiliated with the Borrowers except the $500,000 short-term note receivable from Lynch Corporation as long as Borrowers receive timely quarterly payments of no less than $125,000, starting 9/30/05. (b) goodwill, patents, copyrights, mailing lists, trade names, trademarks, servicing rights, organizational and franchise cost, bond underwriting costs and other like assets properly classified as intangible; and (c) treasury stock. Tangible Net Worth shall not include any debt due to the Borrowers not acceptable to the Bank in the exercise of its reasonable discretion including the $917,000 long-term note receivable due from Lynch Corporation. 4. Article I. Section 1.01. Defined Terms "Revolving Loan Termination Date" (a) of the AGREEMENT is hereby amended to read, effective immediately: (a) May 31, 2006, 5. Article II Section 2.12, Repayment of Revolving Note is hereby amended to read, effective immediately: 2.12 The Revolving Note shall be due and payable on May 31, 2006. Interest only shall be payable monthly on the Revolving Note. All outstanding principal and interest shall be due and payable on May 31, 2006. 6. Article VII Section 7.06. Dividends are hereby amended to read, effective immediately: 7.06 As to Borrower M-TRON, declare or pay any dividends in excess of fifty percent (50%) of M-TRON's prior year earnings, but only so long as M-TRON is in compliance with all other terms of this Agreement; or purchase, redeem, retire or otherwise acquire for value any of its capital stock now or hereafter outstanding; or make any distribution of assets to its stockholders as such whether in cash, assets or obligations of the Borrowers; or allocate or otherwise set apart any sum for the payment of any dividend or distribution on, or for the purchase, redemption or retirement of any shares of, its capital stock; or make any other distribution by reduction of capital or otherwise in respect of any shares of its capital stock; or permit any of its Subsidiaries to purchase or otherwise acquire for value any stock of the Borrowers or another Subsidiary, except that the Borrowers (a) may declare and deliver dividends and make distributions payable solely in common stock of the Borrowers; and (b) may purchase or otherwise acquire shares of its capital stock by exchange for or out of the proceeds received from a substantially concurrent issue of new shares of its capital stock, without the prior written consent of Bank. 7. Article VII Section 7.13 Management Fees is hereby added:  7.13 Annual management fees paid to Lynch Corporation shall be limited to the lesser of (a) $250,000 or (b) 50% of the sum of net income plus management fees previously expensed during the reported fiscal year period. 8. BORROWER certifies by its execution hereof that all of the representations and warranties set forth in the AGREEMENT are true as of this date, and that no EVENT OF DEFAULT under the AGREEMENT, and no event which, with the giving of notice or passage of time or both, would become such an EVENT OF DEFAULT, has occurred as of execution hereof, except as disclosed to BANK. All other terms and conditions of the AGREEMENT not affected or amended by this AGREEMENT, are hereby ratified and confirmed. 9. GUARANTOR acknowledges and consents to the foregoing amendment, and agrees and confirms that his separate guarantee of BORROWER's obligations to BANK are, and continue to be, valid and binding obligations of GUARANTOR. 10. Except as herein amended, the AGREEMENT continues to be the valid, binding obligation of BORROWER. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. M-TRON INDUSTRIES, INC. FIRST NATIONAL BANK OF OMAHA By: /s/ By: /s/ --------------------------------- --------------------------- Its: Its: --------------------------------- --------------------------- PIEZO TECHNOLOGY, INC. By: /s/ ------------------------------------ Its: ------------------------------------  ACKNOWLEDGED BY GUARANTOR: LYNCH CORPORATION By: /s/ ------------------------------------ Its: ------------------------------------