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Exhibit 10.1
FORBEARANCE AGREEMENT
AGREEMENT made as of this 24th day of January, 2000 by and
between, on one hand, WPI GROUP, INC., a New Hampshire
corporation with its chief executive office at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ELECTRONICS, INC., a New
Hampshire corporation with its chief executive office at ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ MAGNETEC, INC., a
New Hampshire corporation with its chief executive office at ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ MICRO PALM,
INC., a New Hampshire corporation with its chief executive office
at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ POWER
SYSTEMS, INC., a New Hampshire corporation with its chief
executive office at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ OYSTER TERMIFLEX, INC., a New Hampshire corporation
with its chief executive office at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ MICRO PROCESSOR SYSTEMS, INC., a New
Hampshire corporation with its chief executive office at ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ DECISIONKEY, INC.,
a New Hampshire corporation with its chief executive office at
1155 Elm Street, Manchester, New Hampshire 03101, WPI UK
HOLDING, INC., a New Hampshire corporation with its chief
executive office at 1155 Elm Street, Manchester, New Hampshire
03101, WPI UK HOLDING II, INC., a New Hampshire corporation with
its chief executive office at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ OYSTER TERMINALS, INC., a New Hampshire
corporation with its chief executive office at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ INSTRUMENTS, INC. a New
Hampshire corporation with its chief executive office at ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and WPI HUSKY COMPUTERS,
INC., a Florida corporation with its chief executive office at
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Borrowers"), FLEET BANK-NH, KEY CORPORATE CAPITAL INC.,
SOVEREIGN BANK, BANK OF NEW HAMPSHIRE, and BANKBOSTON, N.A.
(each, individually, a "Lender," and collectively, the
"Lenders"), and FLEET BANK-NH, as Agent for the Lenders (the
"Agent").
WHEREAS, each Borrower is an affiliate of each other
Borrower and would directly benefit and gain from any
accommodation made by the Agent and the Lenders to each other
Borrower;
WHEREAS, the Agent and the Lenders have extended certain
credit facilities to the Borrowers and, as collateral security
therefor, each of the Borrowers has granted to the Agent, for the
benefit of the Lenders, liens on and security interests in all or
substantially all of its personal property and certain interests
in real property;
WHEREAS, the Borrowers have defaulted with respect to
certain obligations owed to the Agent and the Lenders, such that
all obligations of the Borrowers to the Lenders are now due and
payable;
WHEREAS, the Borrowers have requested that the Agent and the
Lenders defer collection of certain obligations owing by the
Borrowers to the Agent and the Lenders and to otherwise not
enforce certain of their rights and remedies against the
Borrowers for a certain period of time on certain terms, subject
to certain conditions, as set forth below; and
WHEREAS, the Agent and the Lenders are willing to defer
collection of certain obligations payable by the Borrowers, but
only on the terms and conditions set forth in this Agreement;
NOW, THEREFORE, based on these premises, and in
consideration of the mutual promises contained herein and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Borrowers, the Agent, and the
Lenders hereby agree as follows (capitalized terms shall have the
meanings assigned such terms in Section 21 hereof or as defined
elsewhere in this Agreement):
1. Acknowledgment of Obligations.
(a) By Borrowers. Each Borrower hereby acknowledges that it is
unconditionally liable to the Lenders for the full and immediate
payment of each of the obligations set forth at Schedule A hereto
and incorporated herein by reference, plus all reasonable
attorneys' fees and costs of collection incurred or that may be
incurred in connection with such obligations by the Agent or the
Lenders, and Borrowers are unconditionally liable to Lenders to
pay and perform each of the other liabilities and obligations
that may now or hereafter arise under the various documents
executed or delivered by any Borrower evidencing or relating to
such obligations (collectively, the "Loan Documents")
(hereinafter all such obligations are referred to as the
"Obligations"), and that no Borrower has any defenses,
counterclaims or set-offs with respect to the full and immediate
payment of any or all Obligations. Each Borrower hereby
acknowledges and agrees that all of the Obligations, and each of
them, are secured by valid and perfected, first priority liens
and security interests in all of the Collateral enforceable
against the Borrowers in accordance with their terms.
(b) No Further Commitments by Agent or Lenders. The Borrowers
further acknowledge that the Agent and the Lenders have no
existing commitments, obligations or agreements to extend or make
available credits, loans or other financial accommodations to the
Borrowers.
2. Acknowledgement of Specified Events of Default. Each of the
Borrowers acknowledges that certain Events of Default have
occurred and are continuing under the Credit Agreement dated as
of August 3, 1998 (the "Credit Agreement"), among the Borrowers,
the Agent, and the Lenders, and that, as a consequence, all
Obligations are now due and payable in full by the Borrowers.
Included among such Events of Default are: (i) the Borrowers'
failure to comply with the "Total Debt to EBITDA Ratio" and
"Minimum Fixed Charge Coverage Ratio" covenants set forth in
Annex E (Section 6.10) of the Credit Agreement for the twelve
month periods ended March 28, 1999 and June 27, 1999 in the case
of "Total Debt to EBITDA Ratio," and for the twelve month period
ended June 27, 1999 in the case of the "Minimum Fixed Charge
Coverage Ratio"; and (ii) the Borrowers' failure under Section
1.2 of the Credit Agreement to repay the aggregate outstanding
Revolving Loans to the extent required to eliminate the excess of
the outstanding balance of the aggregate Revolving Loans over the
lesser of (A) the Maximum Amount and (B) the Borrowing Base, less
in each case, the aggregate outstanding Swing Line Loan from time
to time from August 22, 1999 through the date hereof (the Events
of Default listed in clauses (i) and (ii) hereof, with respect
only to the sections of the Credit Agreement listed in such
clauses and for only the periods described in such clauses, are
defined herein as the "Specified Events of Default"). The
Borrowers acknowledge and agree that the Agent and Lenders have
reserved all of their rights and remedies with respect to the
Specified Events of Default, and have not waived any of their
rights and remedies with respect to the occurrence of the
Specified Events of Default, except on the terms of and subject
to the conditions of this Agreement.
3. Amendments.
a. Cash Management Systems. Section 1.7 of the
Credit Agreement is hereby stricken and deleted in its
entirety and replaced with the following in lieu thereof:
"1.7 Cash Management Systems.
(a) At all times: (i) Borrowers shall
maintain a blocked account at the Agent for the
collection of all remittances and payments on
Borrowers' Accounts and other Collateral, pursuant
to an agreement the terms and conditions of which
are satisfactory to Agent in all respects (the
"Blocked Account Agreement") and (ii) each
Borrower shall maintain their deposit accounts at
Agent or, in the alternative, at another financial
institution which has agreed to accept drafts
drawn on it by Agent under a written depository
transfer agreement with Agent, and to block such
Borrower's account and waive its own rights as
against such account. Each Borrower will hold in
trust for Agent all checks, drafts, cash and other
remittances that are proceeds of Collateral and
shall immediately upon receipt deliver such
remittances to the blocked account maintained at
the Agent for application to the Obligations. The
order and method of application shall be in
Agent's sole discretion and proceeds which in
Agent's discretion are not so applied shall be
credited to the respective Borrower's deposit
account with Agent or, in the alternative, at
another financial institution which has agreed to
accept drafts drawn on it by Agent under a written
depository transfer agreement with Agent, and to
block such Borrower's account and waive its own
rights as against such account.
(b) For purposes of calculating interest on
the Obligations, such payments or other funds
received by the Agent will be applied to the
Obligations as of the Business Day that is two (2)
Business Days after the date of receipt by the
Agent in the blocked account. For purposes of
calculating the amount of the Revolving Loans
available to Borrowers such payments will be
applied to the Obligations on the Business Day of
receipt by Agent in the blocked account, if such
payments are received within sufficient time (in
accordance with Agent's usual and customary
practices as in effect from time to time) to
credit the respective Borrower's loan accounts on
such day, and if not, then on the next Business
Day. In the event there are not sufficient funds
in the respective Borrower's operating account
when debited and/or charged under this paragraph,
under the Blocked Account Agreement, or otherwise,
the Borrowers agree to immediately pay such
amounts to the Agent in immediately available
funds.
(c) Only to the extent not inconsistent with the
paragraphs (a) and (b) above, the Borrowers shall continue
to use the cash management systems currently in place with
the Agent (the `Cash Management Systems')."
b. Borrowing Base. The definition of Borrowing Base
set forth in Annex A to Credit Agreement is hereby amended by
adding the following to the end of such definition: ", plus (a)
$500,000, from and after December 31, 1999 and through, but not
including, February 29, 2000; (b) $375,000, from and after
February 29, 1999 and through, but not including, March 31, 2000;
or (c) $-0-, from and after March 31, 2000."
c. Maximum Amount. The definition of Maximum Amount
set forth in Annex A to Credit Agreement is hereby amended to
read in its entirety as follows:
"`Maximum Amount' shall mean, at any particular
time, an amount equal to $12,500,000."
d. Interest Rate Hedging. Section 12 of the Credit
Agreement is hereby amended to add the following at the end of
such section: "The Borrowers hereby agree, acknowledge and
consent to the Agent's and the Lenders' directing Fleet National
Bank to terminate any such Interest Rate Protection Agreement,
effective as of December 9, 1999. The Borrowers hereby agree and
consent to Fleet National Bank offsetting any amounts due to any
Borrower under the terms of any such agreements, and delivering
such amounts to the Agent for application, in such order and in
such amounts, to the Obligations (either principal or interest,
or both) in the Lenders' discretion."
4. Release of Claims. Each Borrower hereby releases, waives,
and forever relinquishes all claims, demands, obligations,
liabilities and causes of action of whatever kind or nature,
whether known or unknown, which it has, may have, or might assert
against Agent or any Lender and/or their respective parents,
affiliates, participants, officers, directors, employees, agents,
attorneys, accountants, consultants, successors and assigns,
directly or indirectly, arising out of, based upon, or in any
manner connected with (i) any transaction, event, circumstance,
action, failure to act or occurrence of any sort or type, whether
known or unknown, which occurred, existed, was taken, permitted
or begun prior to the execution of this Agreement with respect to
the Obligations, the Loan Documents and/or the administration
thereof or the obligations created thereby; (ii) any discussions,
commitments, negotiations, conversations or communications with
respect to the refinancing, restructuring or collection of any
Obligations; or (iii) any thing or matter related to any of the
foregoing. The inclusion of this paragraph in this Agreement,
and the execution of this Agreement by the Agent and the Lenders,
does not constitute an acknowledgment or admission by the Agent
or any Lender of liability for any matter, or a precedent upon
which liability may be asserted.
5. Forbearance and Subordinated Indebtedness.
(a) On the terms and conditions hereof, for a period (the
"Forbearance Period") commencing on the date hereof and
continuing to, but not including, the Forbearance Termination
Date (as defined below), the Agent and the Lenders shall defer
the commencement of any enforcement action to recover the
Obligations. The Forbearance Termination Date shall mean the
earlier of (1) March 31, 2000, and (2) the date any Default or
Event of Default (as hereinafter defined), other than a Specified
Event of Default (as herein defined) occurs under this Agreement.
Without limiting in any way the rights and remedies of the Agent
and the Lenders hereunder, upon the Forbearance Termination Date,
if the Obligations have not been paid in full in immediately
available funds, the Agent may, at the Agent's option and without
notice to the Borrowers, exercise one and/or more than one of its
or the Lenders' rights and remedies under this Agreement, the
Loan Documents, or applicable law.
(b) Subordinated Indebtedness. The Borrowers have represented to
the Lenders that, due to the Borrowers' present financial
condition, the Borrowers have independently determined not to
make payments due to ▇▇▇▇ ▇▇▇▇▇▇ on indebtedness due to him by
the Borrowers. While the Agent and the Lenders do not direct the
Borrowers to pay or not pay any of their creditors, in light of
the fact that, if the Borrowers do make such payments, the value
of the Collateral will be correspondingly reduced, the Borrowers
hereby agree that the making of any such payments to ▇▇▇▇ ▇▇▇▇▇▇
shall cause the Forbearance Termination Date to occur, unless
such payments are made from the proceeds of new equity capital or
indebtedness that is, by virtue of an agreement between the
holder and the Agent, junior and subordinate to the prior payment
in full of all obligations to the Agent and the Lenders.
6. Loans.
(a) Revolving Loans. During the Forbearance Period, the
Borrowers may request, and the Revolving Lenders shall make
available, Revolving Credit Advances to the Borrowers under
Section 1.1(a) of the Credit Agreement for the Borrowers to pay
ordinary course expenses as set forth on the financial
projections set forth in Schedule D hereto, in an aggregate
amount (when added to all then outstanding Loans and other
financial accommodations, whether made prior to or during the
Forbearance Period) not to exceed at any time the Borrowing
Availability. Any decision by the Agent or any Lender to make
loans on a particular day shall not imply any obligation to issue
credit or make other financial accommodations on any other day
(or to issue credit or make other financial accommodations on the
same day).
(b) LIBOR. The Borrowers hereby confirm that there are
presently no LIBOR Loans outstanding and that all outstanding
Loans consist of Index Rate Loans. Notwithstanding anything in
the Loan Documents or elsewhere to the contrary, and except in
the Agent's sole and exclusive discretion, the Borrowers will no
longer be permitted to elect that Loans constitute LIBOR Loans
and the Agent will refuse to honor such request.
(c) Repayment of Principal; Payments of Interest. The Agent,
the Borrowers, and the Lenders hereby agree that, notwithstanding
the schedules in the Loan Agreement for the repayment of interest
and principal on the Revolving Loans and the Term Loans,
principal and interest shall be paid in accordance with the
following:
(i) Weekly Installments. During the Forbearance Period, the
Borrower shall make consecutive weekly installments, on the first
Business Day of each week, commencing on January 4, 1999, each in
the amount of $200,000, to be applied as follows:
(A) First, to accrued interest on the Term
Loans (applied pro rata among the Term Loans,
based on the aggregate principal amount of
each Term Loan outstanding);
(B) Second, to accrued interest on the
Revolving Loans; and
(C) Third, to principal on the Term Loans,
applied 90% to principal on Term Loan A and
10% to principal on Term Loan B.
(ii) Additional Amounts. Other than amounts received
as timely weekly installments (and only up to the amount of $200,000
per week), all payments received by the Lenders on behalf of the
Obligations, whether as proceeds of Collateral or not, shall be applied
as set forth in the Credit Agreement.
(iii) Forbearance Termination Date. On the Forbearance
Termination Date, all of the Obligations shall be immediately due
and payable by the Borrowers, jointly and severally, without
notice or demand.
(d) Miscellaneous. All Loans, whether or not made during the
Forbearance Period shall be payable on the Forbearance
Termination Date, and all such Loans and all other Obligations
shall be entitled to all benefits and protections and secured by
all of the Collateral. Interest shall accrue and be paid in
accordance with the Loan Documents, as amended hereby; provided,
however, that the Borrowers acknowledge and agree that the Agent
and the Lenders may charge interest at the Default Rate, from and
after August 22, 1999 until the Obligations are paid in full in
cash; provided further, however, that, from and after August 22,
1999, the incremental interest attributable to increasing the
applicable rate to the Default Rate will accrue and not be
payable until the Forbearance Termination Date.
(e) Transaction Fee. The Borrowers acknowledge and agree that,
as consideration for the Agent's and Lenders' agreements and
commitments in connection with the delivery of the payout letter
dated December 22, 1999 with respect to the sale of the Power
Group, the Borrowers have paid to the Agent, for distribution pro
rata to the Lenders in accordance with the amount of their
Revolving Credit Commitments, a transaction fee in an amount
equal to Two Hundred Fifty Thousand Dollars ($250,000.00), which
fee was fully earned on December 22, 1999 (the "Transaction
Fee").
7. Consultants.
(a) Financial Consultant. The Borrowers hereby acknowledge and
agree that the Borrowers have elected in their discretion to
retain, at their own expense, KPMG as their crisis manager to
advise the Borrowers with respect to their day-to-day operations,
cash flow, and management of expense. The Borrowers agree to
continue to retain KPMG, or any other financial consultant
reasonably acceptable to the Agent and the Lenders, on terms
reasonably acceptable to the Lenders.
(b) Investment Banker. The Borrowers hereby acknowledge and
agree to retain, on or before February 1, 2000, at their own
expense, a nationally-recognized investment banker reasonably
acceptable to the Lenders and on terms reasonably acceptable to
the Lenders, with respect to a sale of the Borrowers' assets and
operations, unless, the Borrowers provide evidence to the Lenders
on February 1, 2000 that demonstrates that a sale of the Husky
division on terms satisfactory to the Lenders is likely to occur
on or before February 29, 2000.
8. Refinancing/Sales of Divisions
8.1. Refinancing. On before February 29, 2000, the Borrowers
shall provide evidence satisfactory to the Agent and the Lenders
that the Borrowers are: (i) using their best efforts to proceed
towards a refinancing, on terms and conditions satisfactory to
the Agent and the Lenders; and (ii) likely to execute, on or
before March 31, 2000, a commitment letter providing for such
refinancing.
8.2. Husky Division.
(a) On or before: (i) February 29, 2000; or (ii) in the event
that governmental regulations require stockholder approval of
such transaction, March 31, 2000, the Borrowers shall consummate
the sale of the Borrowers' Husky division on terms satisfactory
to the Lenders, with a simultaneous distribution of the Net
Transfer Payments (as defined below) of such sale to the Agent,
for application to the Obligations in such order and in such
amounts as the Lenders may determine in their discretion.
(b) In the event that the Borrowers' Husky division has not been
sold prior to February 29, 2000, then, on February 29, 2000: (i)
the Borrowers must cause the potential purchaser to deposit
$2,000,000 with an independent third party which will be subject
to the Agent's security interest, and released to the Agent if
the sale does not occur by March 31, 2000; and (ii) the Borrowers
must deliver evidence satisfactory to the Agent and the Lenders
that the Borrowers are: (A) using their best efforts to proceed
towards a debt financing of the Borrowers' foreign operations or
a sale of the Borrowers' foreign operations, on terms and
conditions satisfactory to the Agent and the Lenders; and (B)
likely to execute, on or before March 31, 2000, a commitment
letter providing for such financing or sale.
8.3. Instruments Division. On or before February 29, 2000, the
Borrowers shall provide a fully-executed letter of intent between
the Borrowers and a potential purchaser of the Borrowers'
instruments division, describing the terms under which such
purchaser will purchase the Borrowers' instruments division for
an amount, by a date, and on terms and conditions satisfactory to
the Agent and the Lenders.
8.4. Net Transfer Payments. The term "Net Transfer Payments"
means the aggregate amount of all property, including cash or any
other consideration, received by any Borrower or any subsidiary
thereof directly or indirectly in connection with any disposition
of assets, whether at the time of such disposition or after such
disposition under deferred payment arrangements, including all
cash payments received in respect of Investment Property entered
into or received in connection with any such disposition, less
(a) (a) the amount of any reasonable and customary legal, title,
transfer and recording tax expenses, commissions and other
expenses payable by any Borrower in connection with such
disposition; (b) any Federal, state and local income or other
taxes estimated to be payable by any Borrower as a result of any
taxable gain realized from such disposition, but only to the
extent that such estimated taxes are in fact paid to the relevant
Federal, state, or local governmental authority within 12 months
of the date of such disposition; (c) any repayments by any
Borrower of Indebtedness to the extent such Indebtedness is
secured by a Lien on the property being transferred that is
permitted under the Credit Agreement, if the holder of such Lien
requires that such Indebtedness be repaid as a condition to the
disposition of such property.
9. Line Item Action Plan. The Borrowers shall deliver, on or
before January __, 2000, a line item action plan, under which the
Borrowers detail the actions taken after the fiscal quarter ended
in September 1999 to reduce expenses to such an extent that
EBITDA, on a quarterly basis, will be at least $400,000 larger
than EBITDA would be without such expense reductions, commencing
with the first fiscal quarter of 2000.
10. Non-Borrower Subsidiaries.
10.1. Affiliate Transactions. No Borrower shall make any
loans to, investments in, or transfers of any assets to any Non-
Borrower Subsidiary (as defined below), provided, however, that
(i) Borrowers may engage in transactions providing for the sale
of inventory or other assets to or from Non-Borrower Subsidiaries
in the ordinary course and on terms and conditions as would be
appropriate for transactions between independent third parties
conducted at an arms-length basis; and (ii) the Borrowers may
loan $1,800,000, in the aggregate, to Oyster Termiflex Ltd. or
Husky Computers Ltd., but only if, in the event that such loan is
evidenced by a note or other instrument, the Borrowers deliver
the original of such note or other instrument to the Agent,
together with a pledge agreement and endorsement in form and
substance satisfactory to the Agent.
10.2. Subsidiary Obligors. The Borrowers shall: (i) to the
extent of all funds loaned or otherwise downstreamed by Borrowers
to such foreign subsidiaries and any other direct benefits
received by them from the Borrowers or the Lenders cause such
subsidiaries to agree to become liable for the payment and
performance of the Borrowers' obligations to the Agent and the
Lenders, either as co-borrowers or as guarantors, in the
discretion of the Agent and the Lenders; and (ii) to the extent
that the following undertakings do not cause the foreign
subsidiaries to become insolvent, use their best efforts to: (a)
cause such foreign subsidiaries to agree to become liable for the
payment and performance of all of the Borrowers' obligations to
the Agent and the Lenders, either as co-borrowers or as
guarantors, in the discretion of the Agent and the Lenders; and
(b) as security for all such obligations, grant, or to cause to
be granted to Agent, first-priority liens and security interests
in foreign assets, including, without limitation, all real
estate, such that the grant is effective and perfected on or
before January 15, 2000.
11. Financial Projections. Attached hereto as Schedule D are
the Borrowers' financial projections for the period from
_________ __, 1999 through ____________ __, 2000. The Borrowers
agree that its actual sales, total collections, and net
availability for each period set forth therein shall not vary
more than 10% from the projected sales, total collections, and
net availability, respectively for each such period.
12. Conditions Precedent. The Agent's and the Lenders'
obligation to enter into this Agreement and perform its
obligations hereunder are subject to the condition precedent that
the Agent's and the Lenders shall have received the following
documents and other items, duly executed, where appropriate, by
authorized representatives of the Borrowers:
(a) this Agreement, with completed schedules hereto;
(b) evidence that the execution, delivery and performance of
this Agreement by the Borrowers have been duly authorized by all
necessary corporate action, including incumbency certificates of
each Borrower, with authorizing resolutions and certified copies
of articles of organization and by-laws, all in a form
satisfactory to the Agent and all Lenders and their counsel; and
(c) evidence of insurance coverage as required by Section
14(e)(iv) hereof;
(d) evidence of payment of all outstanding property taxes;
(e) for each Obligor, a certificate of legal existence and good
standing issued by the State of its incorporation and a
certificate of authorization to conduct business from all states
listed on the Disclosure Schedule attached hereto as Schedule B
pursuant to Section 13.2 hereof; and
(f) an opinion of counsel satisfactory to the Agent and the
Lenders that this Agreement represents the legal, valid, and
binding obligation of the Borrowers, enforceable against them in
accordance with its terms.
13. Representations and Warranties. In order to induce Agent
and the Lenders to enter into this Agreement, each Borrower
represents and warrants to the Agent and the Lenders, except as
otherwise set forth in any disclosure schedule attached hereto as
Schedule B and incorporated herein by reference (the "Disclosure
Schedule"), that:
13.1. Financial Condition. All such financial statements and
information, including any related schedules and notes, and any
other financial information or statements hereafter furnished in
accordance herewith or in accordance with any other Loan
Documents, have, to the best of Borrowers' knowledge, been
prepared in accordance with GAAP, except as otherwise disclosed
therein, subject only in the case of unaudited interim financial
statements to normal year-end audit adjustments, and, except as
otherwise disclosed therein, are in all respects are true,
complete and accurate.
13.2. Organization, Existence, Good Standing. Each Borrower
(a) is duly organized, validly existing and in good standing as a
corporation under the laws of the state of its incorporation,
(b) has obtained all material licenses and permits and has filed
all registrations necessary for the lawful operation of its
business, (c) has the corporate power and authority and the legal
right to own, lease and operate its property and to conduct the
business in which it is currently engaged, and (d) is duly
qualified to do business and is in good standing as a foreign
corporation under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its
business requires such qualification, except where the failure to
be so qualified would not result in a Material Adverse Effect.
The Disclosure Schedule attached as Schedule B lists all states
where the Borrowers are qualified as foreign corporations.
13.3. Subsidiaries; Capitalization. The Borrowers do not
have any subsidiaries that are not also Borrowers, other than WPI
Termiflex International Sales Corporation, a _________, WPI Group
(UK), a ______________, WPI Husky Computers Limited, a
____________, and WPI Oyster Termiflex Limited, a
________________ (the "Non-Borrower Subsidiaries"). The
Disclosure Schedule attached as Schedule B sets forth the
authorized capitalization, the number of shares of each class of
capital stock issued and outstanding, and the owner of each such
share with respect to each Borrower and each subsidiary of any
Borrower.
13.4. Corporate Power and Authority. Each of the Borrowers
has full corporate power, authority and legal right to execute,
deliver and perform its obligations under the Loan Documents to
which it is a party and this Agreement.
13.5. Corporate Authorization. Each of the Borrowers has
taken all necessary actions to authorize the execution, delivery
and performance by it of each Loan Document to which it is a
party and to authorize its execution and performance of this
Agreement.
13.6. Due Execution. Each of the Loan Documents to which any
Borrower is a party and this Agreement has been duly executed and
delivered on behalf of such party.
13.7. Legal, Valid, Binding Obligation. Each of the Loan
Documents and each agreement, certificate, document, instrument
or other paper delivered pursuant thereto, to which any Borrower
is a party, and this Agreement, constitutes the legal, valid, and
binding obligation of such party enforceable against such party
in accordance with its terms.
13.8. No Legal Bar. The execution, delivery and performance
by Borrowers of the Loan Documents, and each agreement,
certificate, document, instrument or other paper delivered
pursuant thereto to which any Borrower is a party, and of this
Agreement, do not and will not violate: (a) any provision of the
Articles or Certificate of Incorporation or Bylaws; (b) to the
Borrowers' knowledge, in any material respect, any existing law,
rule or regulation, order, judgment, award or decree of any
court, arbitrator or governmental authority, bureau or agency, or
(c) any security issued by, such Borrower or of any material
mortgage, deed or trust, indenture, lease, contract or other
agreement or undertaking to which any Borrower is a party or by
which any of its properties may be bound, and will not result in
the creation or imposition of any lien (other than in favor of
the Agent or any Lender) on any of its properties.
13.9. No Litigation. Except as disclosed in the Disclosure
Schedule attached hereto as Schedule B, no litigation,
investigation or other proceeding of or before any court,
arbitrator or governmental authority is currently pending nor, to
the knowledge of any Borrower, threatened against any Borrower or
any subsidiary of any Borrower or its properties or revenues.
13.10. Taxes. Except as disclosed in the Disclosure Schedule
attached hereto as Schedule B, all federal, state, local and
other tax reports and returns which are required to be filed by
any Borrower or any subsidiary of any Borrower have been filed,
except where extensions have been properly obtained, and each
Borrower or any subsidiary of any Borrower has paid or made
adequate provision for all taxes, interest and penalties shown to
be due and payable on such returns or on any assessments made
against it or any of its property and all other taxes, fees or
other charges imposed on its or any of its property by any
governmental authority, including, without limitation, all
payroll withholding taxes, have been paid and no tax liens have
been filed and no claims are being asserted with respect to any
such taxes, fees or other charges.
13.11. Compliance with the IRC and ERISA. To each Borrower's
knowledge, all Plans which are pension plans as defined in
Section 3(2) of ERISA qualify under Section 401 of the IRC, and
all Plans are in compliance with the provisions of the IRC and
ERISA, and have been administered in accordance with their terms.
13.12. Lock Boxes. No Borrower or any subsidiary of any
Borrower has any lock box accounts other than those described at
the Disclosure Schedule attached hereto as Schedule B.
13.13. Other Names. No Borrower has used any corporate or
fictitious name other than the names for such Borrower at the
beginning of this Agreement, which is the same as the name shown
on such Borrower's currently effective Articles or Certificate of
Incorporation, or the name(s) set forth on the Disclosure
Schedule attached hereto as Schedule B.
13.14. Chief Place of Business; Locations of Property. As of
the date hereof (i) the chief executive office of each Borrower
is located at the address corresponding to such Borrower in the
first paragraph of this Agreement; (ii) the principal place of
business of each Borrower is located at the address of its chief
executive office; (iii) the books and records of each Borrower,
all chattel paper, and all records of accounts receivable are
located at its principal place of business; (iv) all other
property of any Borrower (except for inventory which is in
transit) is located at its principal place of business and no
other location whatsoever except any locations specified at the
Disclosure Schedule attached hereto as Schedule B; (v) the
locations of the chief executive offices, the books and records,
all chattel paper, all records of accounts, and all other
property of any subsidiary of any Borrower is set forth on the
Disclosure Schedule attached hereto as Schedule B; (vi) there are
no other persons who have possession or control of Collateral,
except if the Agent shall have received an agreement in writing
from the person in possession or with control of the Collateral
in form and substance satisfactory to the Agent acknowledging the
Agent's first priority security interest in the Collateral,
waiving security interests and claims by such person against the
Collateral and permitting the Agent access to the Collateral so
as to exercise the Agent's rights and remedies and otherwise deal
with the Collateral; and (vii) there is no other office or place
of business at which any Borrower or any subsidiary of any
Borrower conducts business.
13.15. Laws Including Environmental and Safety Matters. Each
Borrower and each subsidiary of each Borrower is, to the best of
the Borrowers' knowledge, in compliance in all respects with all
material laws, rules, and regulations, orders of court or other
governmental bodies, applicable to it, including, without
limitation, all environmental, health, and safety statutes and
regulations and specifically the Federal Resource Conservation
and Recovery Act, the Federal Comprehensive Environmental
Response, Compensation and Liability Act, the Federal Clean Water
Act, the Clean Air Act, the requirements and regulations of the
Nuclear Regulatory Commission, and the Federal Occupational
Safety and Health Act. No Borrower or any subsidiary of any
Borrower has received written notice to the effect that it is
subject to any judicial or administrative proceedings alleging
the violation of any applicable law or regulation. No Borrower
or any subsidiary of any Borrower has received written notice to
the effect that it is the subject of any federal, state or local
investigation regarding, among other matters, the release of any
Hazardous Material into the environment, the results of which may
adversely affect its business operations, prospects, condition
(financial or otherwise). No Borrower or any subsidiary of any
Borrower has filed any notice under any applicable law indicating
past or present treatment, storage, disposal, generation,
transportation or reporting a spill or release into the
environment of any Hazardous Material. No Borrower or any
subsidiary of any Borrower has any known material contingent
liabilities in connection with any release of any Hazardous
Material into the environment which materially adversely affects
any Borrower's or any subsidiary of any Borrower's business
operations, prospects, condition (financial or otherwise) or
other property.
13.16. Full Disclosure. To the best of the Borrowers'
knowledge, neither the Financial Statements delivered to the
Lender by any Borrower, the Disclosure Schedule as Schedule B,
nor any of the Loan Documents or any list, certificate, written
statement, instrument, paper or other information furnished by
any Borrower to the Agent or any Lender in connection with the
Loan Documents, contains or will contain any untrue statement of
a material fact or omits or will omit to state any material fact
necessary to make the statements contained therein and herein, in
light of the circumstances in which they are made, not
misleading. There is no fact known to any Borrower which such
Borrower has not disclosed to the Agent or any Lender in writing
prior to the date of this Agreement, with respect to the
transactions contemplated by the Loan Documents and this
Agreement, which materially and adversely affects the condition
(financial or otherwise), results of operations, businesses,
property or prospects of any Borrower.
14. Covenants.
(a) Compliance with Loan Documents. The Borrowers shall, in any
and all respects, comply fully and completely with any and all
covenants and/or obligations in and under the Loan Documents.
(b) Additional Reporting. The Borrowers shall deliver to the
Agent, on the first Business day of each week, the following
information with respect to the immediately preceding week: (a) a
Borrowing Base Certificate, in each case accompanied by such
supporting detail and documentation as shall be requested by the
Agent in its reasonable discretion; (b) a summary of Inventory,
in each case accompanied by such supporting detail and
documentation as shall be requested by Agent in its reasonable
discretion; and (c) a summary trial balance showing Accounts
outstanding aged from invoice due date as follows, 1 to 30 days,
31 to 60 days, 61 to 90 days, and 91 days or more, accompanied by
such supporting detail and documentation as shall be requested by
Agent in its reasonable discretion.
(c) Indebtedness. No Borrower nor any subsidiary of any
Borrower shall create, incur, assume or allow to exist any
Indebtedness, except:
(i) Loan Document Indebtedness. The Obligations and any other
indebtedness owing to or held by Agent and the Lenders arising
under any of the Loan Documents;
(ii) Disclosed Indebtedness. Indebtedness of such Borrower or
subsidiary of a Borrower existing on the date hereof approved by
the Agent and the Lenders and disclosed in the Disclosure
Schedule attached as Schedule B; provided, however, that none of
such indebtedness shall be renewed, extended or otherwise
modified in any material respect without the Agent's and the
Lenders' prior written consent;
(iii) Unsecured Current Liabilities. Unsecured current
liabilities (not the result of borrowing) incurred in the
ordinary course of business which are not evidenced by notes or
instruments, and which are paid in the ordinary course of
business; and
(iv) Approved Indebtedness. Indebtedness incurred after the date
hereof by such Borrower with the prior written consent of the
Agent and the Lenders.
(d) No Liens. The Borrowers and subsidiaries of the Borrowers
have not and shall not create, permit to be created or suffer to
exist any Lien upon any of the Collateral or any other property
of any Borrower or any subsidiary of any Borrower, now owned or
hereafter acquired, except: (i) landlords', carriers',
warehousemen's, mechanics' and other similar Liens arising by
operation of law in the ordinary course of Borrowers' business;
(ii) Liens arising out of pledge or deposits under worker's
compensation, unemployment insurance, old age pension, social
security, retirement benefits or other similar legislation; (iii)
Liens in favor of the Agent; (iv) Liens for taxes (excluding any
Lien imposed pursuant to any provision of ERISA) not yet due or
which are being contested in good faith by appropriate
proceedings and Borrowers maintain appropriate reserves in
respect thereto provided that in Agent's judgment such Lien does
not adversely affect the Agent's or any Lender's rights or the
priority of Agent's Lien in the Collateral; (v) easements, rights
of way, restrictions and other similar charges or Liens relating
to real property and not interfering in a material way with the
ordinary conduct of Borrowers' or any subsidiary of any
Borrower's business; and (vi) Liens set forth on the Disclosure
Schedule attached as Schedule B hereto (collectively, "Permitted
Liens").
(e) Existence; Compliance with Laws; Etc.: Each Borrower shall:
(i) Corporate Existence. Preserve and keep in full force and
effect its corporate existence and all franchises, licenses and
permits material to the proper conduct of its business; and
(ii) Compliance with Applicable Laws. Comply with all applicable
laws and duly observe all valid requirements of governmental
authorities.
(iii) Maintain Property. Keep and maintain all property
useful and necessary in its business in operating condition and
good repair, ordinary wear and tear excepted.
(iv) Insurance. Keep adequately insured by financially sound and
responsible insurers (a) all property owned or leased by it and
all property of an insurable nature, such insurance to be in at
least such amounts and covering loss or damage from at least such
risks and hazards (including, without limitation, business
interruption insurance and use and occupancy insurance) as are
usually insured against in the same geographic areas by companies
engaged in similar businesses, (b) all liabilities of such
Borrower for damage to property, death or bodily injury,
including without limitation product liability insurance,
insurance required under all applicable workmen's compensation
laws, and insurance for such liabilities resulting from, caused
by or arising out of any product manufactured or sold by any
predecessor of such Borrower or by such Borrower, all such
insurance to be in at least such amounts as are usually insurance
against by companies engaged in the same or similar businesses.
All policies of liability insurance maintained hereunder are
listed on the Disclosure Schedule attached as Schedule B hereto
and shall name Agent as an additional insured as appropriate with
respect to Collateral; all fire and casualty policies of
insurance maintained hereunder on any of the collateral shall
reflect Agent's interest as mortgagee and loss payee. All
insurance policies shall also be otherwise satisfactory in all
respects to Agent. Such Borrower shall upon request of Agent at
any time furnish to Agent insurance certificates for such
insurance.
(v) Maintenance of Liens. Promptly upon the reasonable request
of Agent and at Borrowers' expense, execute, acknowledge and
deliver, or cause the execution, acknowledgement and delivery of,
and thereafter register, file or record in an appropriate
governmental office, any document or instrument supplemental to
or confirmatory of the Loan Documents or otherwise necessary or
desirable in Agent's opinion for the creation, preservation
and/or perfection of the liens purported to be created by the
Loan Documents. Moreover, Borrowers each appoint Agent and the
Lenders and their agents and designees, as Borrowers' attorney-in-
fact, to execute in Borrowers' name and behalf any documents in
this regard, including, without limitation, UCC financing
statements or amendments thereto, which power is coupled with an
interest, and irrevocable, until all Obligations have been paid
in full. Borrowers release Agent and the Lenders and their
officers, employees, agents, and designees from any liability
arising from any act or acts in connection with such actions(s)
or in furtherance thereof, whether of admission or omission and
whether based on any error or judgement or mistake of law or
fact.
(f) Compensation. No Borrower or subsidiary of a Borrower shall
pay compensation for services, or provide fringe or other
benefits, to any employee, shareholder, officer or director
except (a) compensation to employees that is reasonable, or (b)
compensation to any shareholder, officer or director set forth at
the Disclosure Schedule attached hereto as Schedule B.
(g) Dividends. No Borrower shall declare or make: (i) any
distributions or dividends, directly or indirectly, on account of
any shares of any class of stock of any Borrower now or hereafter
outstanding, (ii) any redemption, retirement, sinking fund or
similar payment, purchase or other acquisition for value, direct
or indirect, of shares of any class of stock of any Borrower now
or hereafter outstanding, (iii) any payment made to retire, or
obtain the surrender of, any outstanding warrants, options, or
other rights to acquire shares of any class of stock of any
Borrower now or hereafter outstanding, or (iv) any payment of any
kind made to any Affiliate or any Borrower in respect of
management consulting or other services provided to any Borrower.
(h) Intellectual Property. No Borrower owns or
licenses the rights to any trademarks, trademark applications,
patents, patent applications, copyrights, copyright applications,
trade secrets, or other intellectual property necessary or used
in the operation of its business (the "Intellectual Property"),
except as set forth on the Disclosure Schedule set forth as
Schedule B attached hereto, and no such Intellectual Property is
subject to any license or agreement for use by and other Person
except as set forth on the Disclosure Schedule set forth as
Schedule B attached hereto.
15. Events of Default. The occurrence of any Event of Default
under the Restated Credit Agreement, or any of the following,
without any notice or grace or cure period(s), shall constitute
an Event of Default hereunder:
15.1. Failure of Payment. If any Borrower fails to pay any
principal, interest or other amount due under this Agreement or
any of the Loan Documents (as the same are hereby modified) on
the date due (whether on a scheduled payment date or otherwise)
and in the manner provided herein or therein;
15.2. Misstatements. If any representation, warranty or
other statement made by or on behalf of any Borrower proves to be
or to have been incorrect or misleading in any material respect
as of the date at which it is made or deemed to be made;
15.3. Performance of Certain Covenants. If any Borrower
defaults in the due performance or observance of any other
covenant, condition or provision to be performed or observed by
it under this Agreement or under any of the Loan Documents beyond
any applicable grace period (as the same are hereby modified);
15.4. Other Obligations. If any Borrower defaults in any
payment of principal of or interest on any other obligation for
the payment of borrowed money;
15.5. Judgments. If any Borrower permits any judgment
against it in excess of $50,000 to remain undischarged for a
period of more than thirty (30) days unless during such period
such judgment is effectively stayed or bonded, on appeal or
otherwise;
15.6. Business Operations. If a substantial part of any of
the operations or business of any Borrower is suspended other
than in the ordinary course of its business, which suspension
has, in the good faith opinion of the Agent, a materially adverse
effect on the operations, business or financial condition of any
Borrower;
15.7. Voluntary Bankruptcy. If any Borrower (a) commences a
voluntary case under the Bankruptcy Code; or (b) files a petition
or commences any case, proceeding, or action in bankruptcy or
seeking reorganization, liquidation, dissolution, winding-up,
arrangement, composition, readjustment of its debts or any other
relief under any other bankruptcy, insolvency, reorganization,
liquidation, dissolution, arrangement, composition, readjustment
of debt or similar act or law of any jurisdiction, now or
hereafter existing; or (c) takes any action indicating its
consent to, approval of, or acquiescence in, any such case,
proceeding or other action; or (d) applies for a receiver,
trustee or custodian of it or for all or a substantial part of
its property; or (e) makes an assignment for the benefit of
creditors; or (f) is unable to pay its debts as they mature or
admits in writing such inability; or (g) is adjudicated insolvent
or bankrupt;
15.8. Involuntary Bankruptcy. (a) If there is commenced
against any Borrower (i) an involuntary case under the Bankruptcy
Code; or (ii) any case or proceeding or any other action in
bankruptcy or seeking reorganization, liquidation, dissolution,
winding-up, arrangement, composition, readjustment of its debts
or any other relief under any other bankruptcy, insolvency,
reorganization, liquidation, dissolution, arrangement,
composition, readjustment of debt or similar act or law of any
jurisdiction, now or hereafter existing, or seeking appointment
of a receiver, trustee or custodian of any Borrower or for all or
a substantial part of its property, and any of the foregoing
cases, proceedings, or actions is not dismissed within sixty (60)
days; or (b) if an order, judgment or decree approving any of the
foregoing is entered or a warrant of attachment, execution or
similar process against any substantial part of the property of
any Borrower is issued, and such order, judgment, decree,
warrant, execution or similar process is not vacated or stayed
within sixty (60) days; or (c) if an order for relief under the
Bankruptcy Code is entered against any Borrower;
15.9. Avoidance of Benefit to Lender. If any Borrower, or
any trustee, receiver, person or successor-in-interest claiming
by or through any one or more of them, shall cause the avoidance
or rescission of any promise, agreement, transfer, release or
conveyance made to or for the benefit of the Lender pursuant to
this Agreement or the Loan Documents, or shall cause any property
transferred to or for the benefit of the Agent or any Lender
pursuant to this Agreement or the Loan Documents or the
transactions contemplated hereby or thereby to be avoided or
rescinded or disgorged as a result of, or pursuant to, any
insolvency, bankruptcy, reorganization or similar proceeding with
respect to any Borrower or arising out of related to any action,
suit, proceeding or claim brought in connection with or pursuant
to 11 U.S.C. 510(c), 544, 547, 548, 549, 550 or 553, or any
other provisions of the Bankruptcy Code, or the Uniform
Fraudulent Conveyance Act (as enacted in any applicable
jurisdiction), or any applicable state law or any tax law or any
other similar state or federal statutory or common law;
15.10. Fraudulent Conveyances and Preferential Transfers. If
any Borrower shall have concealed or removed, or permitted to be
concealed or removed, any part of its property with intent to
hinder, delay or defraud its creditors or any of them, or made or
suffered a transfer of any of its property for less than fair
value or which may be otherwise fraudulent under any bankruptcy,
fraudulent conveyance or similar law, after or at any time before
the date hereof;
15.11. Attachments. If any Borrower or any property of any
Borrower of a value of in excess of $100,000 shall become subject
to any attachment (including attachments on trustee process), or
any similar lien or security interest; or
15.12. Adverse Changes. If the Agent, in its sole and
absolute discretion, shall determine that a change in any
Borrowers' business, assets, operations, or condition, financial
or otherwise, has occurred which may reasonably be expected to
materially adversely affect any Borrowers' ability to timely
satisfy the Obligations or to otherwise perform their obligations
hereunder or under the Loan Documents.
16. Effectiveness of Events of Default. Each Borrower
acknowledges and agrees that each and every Event of Default
described above shall be of equal weight and significance, and
equally and fully shall allow Agent and the Lenders to exercise
their rights and remedies hereunder. Each Borrower acknowledges
and agrees that each such Event of Default has been a material
inducement for the Agent and the Lenders to enter into this
Agreement and that the Agent and the Lenders would be irreparably
harmed if the Agent and the Lenders, in any way, were unable to
exercise its rights and remedies on the basis that certain Events
of Default (for example, Events of Default not relating to
payment) were of less weight or significance than certain other
Events of Default (for example, Events of Default relating to
payment).
17. Remedies. Upon the occurrence of any such Event of Default,
the Agent may, at the Agent's option, immediately exercise one or
more of the following rights: (a) declare all Obligations of the
Borrowers to the Agent and the Lenders, including, without
limitation, all amounts owing under this Agreement and/or the
Loan Documents, to be immediately due and payable, whereupon they
shall immediately become due and payable without presentment,
demand, protest or notice of any kind, all of which are hereby
expressly waived; (b) declare all obligations of the Agent and
the Lenders to the Borrowers, including, without limitation, the
Commitments, to be terminated, whereupon such obligations shall
immediately terminate; and (c) exercise any and all other rights
and remedies provided in the Loan Documents or under applicable
law; provided, however, that on demand or upon the occurrence of
any such Event of Default specified in Sections 15.7 or 15.8, (i)
all Obligations of the Borrowers to the Agent and the Lenders,
including, without limitation, all amounts owing under this
Agreement and/or the Loan Documents, shall immediately become due
and payable without presentment, further demand, protest or
notice of any kind, all of which are hereby expressly waived by
the Borrowers; (ii) all obligations of the Agent and the Lenders
to the Borrowers, including, without limitation, the Commitments,
shall immediately terminate; and (iii) the Agent and the Lenders
may immediately exercise the rights and remedies provided in the
Loan Documents or under applicable law.
18. Cross Default. It is agreed by Borrowers that any Event of
Default under this Agreement shall constitute an event of default
under all of the Loan Documents and all other agreements and
evidences of indebtedness between any Borrower and the Agent or
the Lenders, whether now existing or hereafter executed and
whether or not such is an event of default therein.
19. Setoff. The Borrowers hereby grant to the Agent and the
Lenders, a lien, security interest and right of setoff as
security for all liabilities and obligations to the Agent and the
Lenders, whether now existing or hereafter arising, upon and
against all deposits, credits, collateral and property, now or
hereafter in the possession, custody, safekeeping or control of
the Agent or any Lender or any entity under the control of Fleet
Financial Group, Inc., or in transit to any of them. At any
time, without demand or notice, the Agent or any Lender may set
off the same or any part thereof and apply the same to any
liability or obligation of the Borrowers even though unmatured
and regardless of the adequacy of any other collateral securing
the loans. ANY AND ALL RIGHTS TO REQUIRE THE AGENT OR ANY LENDER
TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER
COLLATERAL WHICH SECURE THE LOANS, PRIOR TO EXERCISING ITS RIGHT
OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER
PROPERTY OF THE BORROWERS, ARE HEREBY KNOWINGLY, VOLUNTARILY AND
IRREVOCABLY WAIVED.
20. Miscellaneous Provisions.
20.1. Notices. Except as otherwise specified herein, all
notices to or upon the parties hereto shall be in writing
(including teletransmissions), shall be given or made to the
party to which such notice is required or permitted to be given
or made under this Agreement at the address or telecopier number
set forth at Schedule C hereto and incorporated herein by
reference or at such other address or telecopier number as any
party hereto may hereafter specify to the others in writing, and
(unless otherwise specified herein) shall be deemed delivered on
receipt, if teletransmitted or delivered by hand, or three (3)
business days after mailing, if mailed, and all mailed notices
shall be by registered or certified mail, postage prepaid.
20.2. No Waiver of Rights; Tolling of Statutes of Limitation.
No failure to exercise nor any delay in exercising, on the part
of the Agent or any Lender, any right, remedy, power or privilege
under this Agreement or the Loan Documents shall operate as a
waiver thereof; nor shall any single or partial exercise of any
right, remedy, power, or privilege operate as a waiver of any
further or complete exercise thereof. No waiver shall be
effective unless in writing. No waiver or condonation of any
breach on one occasion shall be deemed a waiver or condonation on
any other occasion. In addition, each Borrowers, the Agent and
the Lenders hereby agree that, during the pendency of this
Agreement, all statutes of limitation and similar laws, rules and
equitable theories with respect to the time in which the Agent or
any Lender may bring any claim or action against any Borrower
shall be tolled and that the passage of such time shall not
otherwise operate to the detriment of the Agent or any Lender
with respect to such rights.
20.3. Borrowers' Bankruptcy. Each Borrower agrees that, in
the event that any Borrower (i) files, or there is filed against
any Borrower, a voluntary or involuntary petition under the
Bankruptcy Code, or any other state or federal law seeking any
reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief, or (ii) seeks or
consents to or acquiesces in the appointment of any trustee,
receiver, conservator, or liquidator, the Agent and the Lenders
shall thereupon be entitled and each Borrower hereby irrevocably
consents to immediate relief from any automatic stay imposed by
Section 362 of the Bankruptcy Code, or otherwise, on or against
the exercise of the rights and remedies otherwise available to
Agent or any Lender with respect to the Collateral, as provided
in this Agreement and/or the Loan Documents, or any related
document(s), and as otherwise provided by law, and each Borrower
hereby irrevocably waives its rights to object to such relief.
[In this connection, each Borrower acknowledges that, for
purposes of Section 362 of the Bankruptcy Code, and any other
applicable law, there is no equity in the Collateral, the
Collateral is not necessary for an effective reorganization, and
Borrowers cannot provide adequate protection of the Agent's and
the Lenders' interest in the Collateral.]
20.4. Subordination of Certain Claims. Each Borrower hereby
subordinates all claims each now has or may in the future acquire
against each other Borrower, including, without limitation, all
rights and claims of subrogation, reimbursement, indemnity,
contribution and like claims and rights, to the prior payment in
full and complete performance of all obligations now or in the
future owed by any Borrower to the Agent or the Lenders;
provided, however, that each Borrower hereby waives (not merely
subordinates) all rights and claims of subrogation,
reimbursement, indemnity, contribution and like claims and rights
as against each other Borrower to the extent, but only to the
extent, such rights and claims arise out of or in connection with
the liability of such other Borrower for the Obligations but,
unless the Agent otherwise agrees, such waiver by such Borrower
shall not be effective to the extent that by virtue of such
waiver Borrower's liability to the Agent and the Lenders under
the Loan Documents or otherwise is rendered invalid, avoidable or
unenforceable under any applicable state or federal laws dealing
with the recovery or avoidance of so-called "fraudulent
conveyances" or otherwise.
20.5. Loan Documents. Except as modified herein or in any
other instruments or documents executed in connection herewith,
(a) all terms and conditions of the Loan Documents shall remain
in effect in accordance with their original tenor; and
(b) nothing contained herein shall constitute a waiver by the
Agent or the Lenders or of any of Agent's or the Lenders' rights
and remedies (including, without limitation, any of the Agent's
or any Lender's rights or remedies as to, or any obligations
owing to the Agent and the Lenders of, any person who may be
liable to the Agent and the Lenders on account of any of the
Obligations, whether or not such person is a party hereto), all
of which rights and remedies are expressly reserved and not
waived. Each agreement, covenant, representation and warranty of
the Borrowers hereunder, as modified by the Schedules hereto,
shall be deemed to be in addition to, and not in substitution
for, the agreements, covenants, representations and warranties
previously made by the Borrowers. In the event that there shall
be any inconsistency between any provisions of this Agreement and
a provision set forth in any other Loan Document, the provisions
of this Agreement shall govern.
20.6. Time of the Essence. Time is of the essence of each
aspect of this Agreement.
20.7. Same Debt. It is the intent of the Borrowers, the
Agent, and the Lenders that the agreements and arrangements set
forth in this Agreement do not constitute a novation of the
Obligations. Rather, this Agreement sets forth, among other
things, the arrangements and agreements by which the Agent and
the Lenders agree, subject to the terms and conditions contained
herein, to forbear from the exercise of their collection rights
and remedies for a limited period of time. It is not intended
that any new or different financial accommodations be extended to
the Borrowers under this Agreement.
20.8. Governing Law. This Agreement shall be governed by,
and construed and interpreted in accordance with, the laws of the
Commonwealth of Massachusetts, without regard to the laws
governing conflicts of law.
20.9. Jurisdiction; Waiver of Trial by Jury.
(a) For purposes of any action or proceeding involving this
Agreement or the Loan Documents or any other agreement or
document referred to therein, each Borrower hereby submits to the
jurisdiction of all federal and state courts located in the
Commonwealth of Massachusetts and consents that any order,
process, notice of motion or other application to or by any of
said courts or a judge thereof may be served within or without
such court's jurisdiction by registered mail or by personal
service, provided a reasonable time for appearance is allowed
(but not less than the time otherwise afforded by any law or
rule), and hereby waive any right to contest the appropriateness
of any action brought within such jurisdiction based on lack of
personal jurisdiction, improper venue or forum non conveniens.
(b) THE AGENT, THE LENDERS AND EACH BORROWER MUTUALLY HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A
TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY
WITH RESPECT THERETO. THIS WAIVER CONSTITUTES A MATERIAL
INDUCEMENT FOR THE AGENT AND THE LENDERS TO ACCEPT THIS
AGREEMENT.
20.10. Complete Agreement, Amendments. This Agreement,
together with the Loan Documents, contains the entire agreement
among the parties with respect to the transactions contemplated
hereby, and supersedes all negotiations, presentations,
warranties, commitments, offers, contracts and writings prior to
the date hereof relating to the subject matters hereof. This
Agreement may be amended, modified, waived, discharged or
terminated only by a writing signed by the party to be charged
with such amendment, modification, waiver, discharge or
termination.
20.11. Expenses.
(a) Borrowers shall pay on demand, regardless of whether any
Default or Event of Default has occurred or whether any
proceeding to enforce any Loan Document has been commenced, all
reasonable out-of-pocket expenses (including, without limitation,
the reasonable fees and disbursements of counsel or consultants
to the Agent and the Lenders and allocable costs of Agent's and
any Lender's staff counsel) incurred by the Agent or any Lender
and that may be incurred by the Agent or any Lender in connection
with (a) the negotiation, preparation, administration, filing or
recording of this Agreement, (b) the performance of field
examinations at the Borrowers' and Non-Borrower Subsidiaries'
domestic and foreign locations; and (c) the collection of the
Obligations and any and all other obligations of the Borrowers to
the Agent or any Lender whether now existing or hereafter
arising, or with the preservation and enforcement of the Agent's
or any Lender's rights and remedies in connection with the Loan
Documents. This covenant shall survive payment of the
Obligations and termination of this Agreement.
(b) The Borrowers agree that any such reasonable expenses
incurred or to be incurred by any Lender constitute advances by
such Lender to the Borrower under the Restated Credit Agreement,
and are included within the definition of the term "Obligations."
The Borrowers acknowledge and agree that the Agent and each
Lender, at any time or from time to time in its sole and absolute
discretion, (a) may debit any account of the Borrowers maintained
with the Lender, in order to pay such expenses; and (b) may make
advances and loans under the Loan Documents to pay such
reasonable expenses.
20.12. Severability. Any provision hereof that is prohibited
or unenforceable in any jurisdiction shall be, as to such
jurisdiction, ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
20.13. Interest Limitation. All agreements between the
Borrowers, the Agent, and the Lenders are hereby expressly
limited so that in no contingency or event whatsoever, whether by
reason of acceleration of maturity of the indebtedness evidenced
hereby or otherwise, shall the amount paid or agreed to be paid
to the Agent or the Lenders for the use or the forbearance of the
indebtedness evidenced hereby exceed the maximum permissible
under applicable law. As used herein, the term "applicable law"
shall mean the law in effect as of the date hereof; provided,
however, that in the event there is a change in the law which
results in a higher permissible rate of interest, then any Loan
Document shall be governed by such new law as of its effective
date. In this regard, it is expressly agreed that it is the
intent of the Borrowers, the Agent, and the Lenders in the
execution, delivery and acceptance of this Agreement to contract
in strict compliance with the laws of the Commonwealth of
Massachusetts from time to time in effect. If, under or from any
circumstances whatsoever, fulfillment of any provision hereof or
of any of the Loan Documents at the time of performance of such
provision shall be due, shall involve transcending the limit of
such validity prescribed by applicable law, then the obligation
to be fulfilled shall automatically be reduced to the limits of
such validity, and if under or from circumstances whatsoever the
Agent or any Lender should ever receive as interest and amount
which would exceed then highest lawful rate, such amount which
would be excessive interest shall be applied to the reduction of
the principal balance evidenced hereby and not to the payment of
interest. This provision shall control every other provision of
all agreements between the Borrowers, the Agent, and the Lenders.
20.14. References to "Lenders". All references to "Lenders"
in this Agreement shall mean each and all Lenders (whether the
Lender is a natural person or a legal entity, and regardless of
the use of the word "it" or similar term to refer to the Lender),
except where the context otherwise requires. Each promise,
agreement, representation, warranty and covenant made by any
Borrower herein is made and given to and for the benefit of each
Lender, and all rights of the Lenders hereunder are enjoyed in
full by each Lender, except as expressly set forth herein.
20.15. References to "Borrower". All references to "Borrower"
in this Agreement shall mean each and all Borrowers (whether the
Borrower is a natural person or a legal entity, and regardless of
the use of the word "it" or similar term to refer to the
Borrower), except where the context otherwise requires. Each
promise, agreement, representation, warranty and covenant made by
any Borrower herein is made and given by each Borrower, jointly
and severally, and all rights of the Borrowers hereunder are
enjoyed with respect to each Borrower, except as expressly set
forth herein.
20.16. Descriptive Headings. The captions in this Agreement
are for convenience of reference only and shall not define or
limit the provisions hereof.
20.17. Counterparts. This Agreement may be executed by one or
more of the parties on any number of separate counterparts, and
all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
21. Defined Terms. The capitalized terms in this Agreement
shall have the meanings given such terms in the Loan Documents
(and this Agreement shall be deemed to constitute a Loan
Document), unless assigned a different meaning below:
21.1. "Agreement" - this Agreement, including all schedules
and exhibits, as the same may be amended, supplemented or
otherwise modified.
21.2. "Bankruptcy Code" - the United States Bankruptcy Code
of 1978, as codified at 11 U.S.C. 101 et seq., as amended from
time to time.
21.3. "Default" - any event specified in Section 15 of this
Agreement, whether or not any requirement for the giving of
notice or lapse of time or any other condition has been
satisfied.
21.4. "Event of Default" - any event specified in Section 15
of this Agreement, provided that any requirement for the giving
of notice or lapse of time or any other condition has been
satisfied.
21.5. "Financial Statements" - financial statements of
Borrowers prepared on a consistent basis in accordance with GAAP
and containing balance sheets, statements of income and retained
earnings and statements of cash flow. Financial Statements for a
month or quarter shall be certified by the chief executive
officer of each Borrower.
21.6. "GAAP" - those generally accepted accounting principles
set forth in Statements of the Financial Accounting Standards
Board and in Opinions of the Accounting Principles Board of the
American Institute of Certified Public Accountants or which have
other substantial authoritative support in the United States and
are applicable in the circumstances, as applied on a consistent
basis. As used in the preceding sentence "consistent basis"
shall mean that the accounting principles observed in the current
period are comparable in all material respects to those applied
in the preceding period.
21.7. "Hazardous Material" - any hazardous waste, toxic
substance hazardous chemical, radioactive material, hazardous
material, oil or gasoline, under any applicable federal or state
statute, county or municipal law or ordinance, including (without
limitation) any substance defined as a "hazardous substance" or
"toxic substance" (or comparable term) in the Comprehensive
Environmental Response, Compensation and Liability Act, as
amended (42 U.S.C. 9601, et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. 1802), or the Resource Conservation
and Recovery Act (42 U.S.C. 6901, et seq.).
21.8. "IRC" - the Internal Revenue Code of 1986, as amended
from time to time and including all regulations promulgated
thereunder.
21.9. "Plan" - any pension plan, as defined in Section 3(2)
of ERISA and any welfare plan, as defined in Section 3(1) of
ERISA, which is sponsored, maintained or contributed to by any
Borrower or any Commonly Controlled Entity, or in respect of
which any Borrower or a Commonly Controlled Entity is an
"employer," as such term is defined in Section 3(5) of ERISA.
21.10. "Subordinated Indebtedness" - means Indebtedness of the
Borrowers that is subordinated to the prior payment and
enforcement of the Obligations in favor of the Agent and the
Lenders.
21.11. Other Capitalized Terms. All other capitalized terms
used herein not expressly defined in this Agreement shall have
the meaning ascribed to them in the Loan Documents.
21.12. Accounting and Banking Terms. All accounting and
banking terms not specifically defined herein shall be construed,
in the case of accounting terms, in accordance with GAAP
consistently applied and, in the case of banking terms, in
accordance with general practice among commercial banks.
22. Pledge to Federal Reserve. The Agent or any Lender may at
any time pledge all or any portion of its rights under the Loan
Documents, including any portion of any note to any of the twelve
(12) Federal Reserve Banks organized under Section 4 of the
Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or
enforcement thereof shall release the Agent or any Lender from
its obligations under any of the Loan Documents.
23. Participations. Each Lender shall have the unrestricted
right at any time and from time to time, and without the consent
of or notice to Borrowers, to grant to one or more banks or other
financial institutions (each, a "Participant") participating
interests in such Lender's obligation to lend under the Loan
Documents and/or any or all of the loans held by such Lender
hereunder. In the event of any such grant by such Lender of a
participating interest to a Participant, whether or not upon
notice to Borrowers, the Lender shall remain responsible for the
performance of its obligations under the Loan Documents and
Borrowers shall continue to deal solely and directly with the
Lender in connection with the Lender's rights and obligations
hereunder and thereunder.
24. Replacements. Upon receipt of an affidavit of an officer of
the Agent or any Lender as to the loss, theft, destruction or
mutilation of any note or any other security document which is
not of public record, and, in the case of any such loss, theft,
destruction or mutilation, upon surrender and cancellation of
such note or other security document, Borrowers will issue, in
lieu thereof, a replacement note or other security document in
the same principal amount thereof and otherwise of like tenor.
25. Assignment. This Agreement shall be binding upon and shall
inure to the benefit of the Borrowers, the Agent, and the Lenders
and their respective successors and assigns; provided that the
Borrowers may not assign or transfer any rights or Obligations
hereunder without the Agent's and all the Lenders' prior written
consent. Each Lender shall have the unrestricted right at any
time or from time to time, and without Borrowers' consent, to
assign all or any portion of its rights and obligations hereunder
to one or more banks or other financial institutions (each, an
"Assignee"), and each Borrower agrees that it shall execute, or
cause to be executed, such documents, including, without
limitation, amendments to this Agreement and to any other
documents, instruments and agreements executed in connection
herewith as such Lender shall deem necessary to effect the
foregoing. In addition, at the request of such Lender and any
such Assignee, Borrowers shall issue one or more new promissory
notes, as applicable, to any such Assignee and, if such Lender
has retained any of its rights and obligations hereunder
following such assignment, to such Lender, which new promissory
notes shall be issued in replacement of, but not in discharge of,
the liability evidenced by the promissory note held by such
Lender prior to such assignment and shall reflect the amount of
the respective commitments and loans held by such Assignee and
such Lender after giving effect to such assignment. Upon the
execution and delivery of appropriate assignment documentation,
amendments and any other documentation required by such Lender in
connection with such assignment, and the payment by Assignee of
the purchase price agreed to by such Lender and such Assignee,
such Assignee shall be a party to this Agreement and shall have
all of the rights and obligations of such Lender hereunder (and
under any and all other guaranties, documents, instruments and
agreements executed in connection herewith) to the extent that
such rights and obligations have been assigned by such Lender
pursuant to the assignment documentation between such Lender and
such Assignee, and such Lender shall be released from its
obligations hereunder and thereunder to a corresponding extent.
26. Disclosure. Each Borrower hereby authorizes the Agent and
each Lender to release and disclose to the Agent's or any
Lender's affiliates, any assignee or any potential assignee, and
any participant or potential participant, any statements,
notices, financial and operating reports, balance sheets,
financial statements, consultant's reports, appraisals, and any
and all other documents and information relating to the
Borrowers, whether or not considered confidential by the
Borrowers. In furtherance thereof, each Borrower waives any
claims, causes of action, defenses, or set off rights against the
Agent and the Lenders or any such party respecting the Agent and
the Lenders' delivery of such documents or such information to
such parties in their capacities as an affiliate of the Agent or
any Lender, an assignee or potential assignee, or as a
participant or potential participant.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed under seal by their respective duly
authorized officers as of the date first written above.
BORROWERS:
WPI GROUP, INC.
WPI POWER SYSTEMS, INC.,
WPI MAGNETEC, INC.
WPI ELECTRONICS, INC.,
WPI OYSTER TERMIFLEX, INC.,
WPI MICRO PALM, INC.
WPI MICRO PROCESSOR SYSTEMS, INC.
WPI DECISIONKEY, INC.,
WPI UK HOLDING, INC.,
WPI UK HOLDING II, INC.,
WPI OYSTER TERMINALS, INC.,
WPI HUSKY COMPUTERS, INC., and
WPI INSTRUMENTS, INC.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Witness ▇▇▇▇ ▇. ▇▇▇▇▇▇, for, on behalf
of, and as Duly Authorized
Officer or Agent of each of the
above-named entities
AGENT AND LENDER:
FLEET BANK-NH, as Agent and as a
Lender
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Witness Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
OTHER LENDERS:
KEY CORPORATE CAPITAL INC.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Witness Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: V.P.
SOVEREIGN BANK
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Witness Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Sr. V.P.
BANK OF NEW HAMPSHIRE
/s/ ▇▇▇▇▇ ▇. Denaullt By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Witness Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
BANKBOSTON, N.A.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Witness Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Authorized Officer
SCHEDULE A
(Schedule of Obligations)*
Loans Unpaid Unpaid Late Incremental
Principal as of Interest Charges Interest
January 24, (other than as of attributable
2000 the January to increasing
incremental 24, 20000 the
interest applicable
attributabl rate to the
e to Default Rate
increasing from and
the after August
applicable 22, 1999, as
rate to the of January
Default 24, 2000
Rate from
and after
August 22,
1999) as of
January 24,
2000
Revolving $11,340,387.75 $157,081.59 $ $120,637.93
Loans 21,937.90
Swing Line $0.00 $0.00 $0.00 $0.00
Loans 0
Term Loan A $24,133,111.28 $457,115.40 $103,112.73 $229,777.80
Term Loan B $22,121,606.53 $436,477.06 $ 70,920.49 $207,864.05
* Plus any attorneys' fees or other expenses subject to
reimbursement by the Borrowers, whether incurred before or after
the date hereof, and any subsequently accruing interest, costs,
fees, or charges, and all figures are subject to adjustments to
the Agent's or any Lender's records with respect to such
Obligations, including, without limitation, adjustments for
uncollected checks and misdirected credits.
SCHEDULE B
(Disclosure Schedule)
Foreign Qualifications:
Borrower State of Incorporation States
where Foreign
Qualifications
Obtained
WPI Group, Inc. New Hampshire
WPI DecisionKey, Inc. New Hampshire
WPI Electronics, Inc. New Hampshire
WPI Power Systems, Inc. New Hampshire
WPI Husky Technology, Inc. Florida
WPI Instruments, Inc. New Hampshire
WPI Magnetec, Inc. New Hampshire
WPI Micro Palm, Inc. New Hampshire
WPI Micro Processor Systems, Inc. New Hampshire
Michigan
WPI Oyster Termiflex, Inc. New Hampshire
WPI Oyster Terminals, Inc. New Hampshire
WPI UK Holding, Inc. New Hampshire
WPI UK Holding II, Inc. New Hampshire
WPI Group (U.K.) England and Wales
WPI Husky Technology Limited England and Wales
WPI Oyster Termiflex Limited England and Wales
WPI Husky Technology GmbH Germany
Crompton Modutec (Barbados) Limited Barbados
Capitalization:
Borrower/Subsidiary Class of Owner of Stock # of # Issued
ary Stock Authorized and
Shares Outstanding
Shares
WPI Group, Inc. Common - 20,000,000 6,051,963
WPI DecisionKey, Common WPI Micro 10 10
Inc. Processor
Systems, Inc.
WPI Electronics, Common WPI Group, 10 1
Inc. Inc.
WPI Husky Common WPI Group, 1,000 1
Technology, Inc. Inc.
WPI Instruments, Common WPI Group, 100 10
Inc. Inc.
WPI Magnetec, Common WPI Group, 10 1
Inc. Inc.
WPI Micro Palm, Common WPI Oyster 10 10
Inc. Termiflex,
Inc.
WPI Micro Common WPI Group, 10 10
Processor Inc.
Systems, Inc.
WPI Oyster Common WPI Group, 10 1
Termiflex, Inc. Inc.
WPI Oyster Common WPI Group, 10 10
Terminals, Inc. Inc.
WPI Power Common WPI Group, 10 1
Systems, Inc. Inc.
WPI UK Holding, Common WPI Group, 10 1
Inc. Inc.
WPI UK Holding Common WPI Group, 10 1
II, Inc. Inc.
WPI Group (U.K.) Ordinary WPI UK 10,400,000 1,850,000 -
Holding, Inc./
WPI UK Holding 1,850,000 -
II, Inc. WPI UK
Holding II,
Inc.
WPI Oyster Ordinary WPI Group 100,000 100,000
Termiflex (U.K.)
Limited
WPI Husky Ordinary WPI Group 5,000 109
Technology (U.K.)
Limited
WPI Husky Common WPI Group, 1 1
Technology GmbH Inc.
Crompton Modutec Common WPI 80,002 80,002
(Barbados) Instruments,
Limited Inc.
Litigation:
WPI Electronics, Inc. v. Super Vision International, Inc. United
States District Court for the District of New Hampshire, Docket
No. C99-426-B, an action filed against Super Vision
International, Inc. ("Super Vision") alleging breach of contract
by failing to take shipment of and pay for electronic lamp
ballasts and ignitors specially developed for Super Vision. In
response, Super Vision has filed a complaint in the United States
District Court for the Middle District of Florida, Case No. 99-
1248-CV-18-A, alleging breach of contract, breach of warranty of
merchantability and fitness for a particular purpose and breach
of implied covenant of good faith and fair dealing. Super Vision
is seeking damages in the Florida case totaling $175,000. The
Company has filed a motion to stay this action pending a decision
on jurisdiction in the New Hampshire Case. Super Vision has
challenged the jurisdiction in the New Hampshire case.
Electronics will vigorously defend such claims. I cannot state
whether an unfavorable outcome is probable or remote or the
amount or range of loss should an unfavorable outcome occur.
SPx Corporation v. WPI Micro Processor Systems, Inc. Circuit
Court, Macomb County, State of Michigan, Case No. : 99-3852-CK an
action filed against WPI Micro Processor Systems, Inc. by SPx
Corporation ("SPx") alleging breach of contract for wrongful
termination of the exclusive distribution agreement between SPx
and MPSI, interference with an advantageous relationship and
misappropriation of confidential information. MPSI has counter-
claimed alleging breach of contract for failure to meet sales
quotas, failure to properly market the product and failure to pay
for certain delivered products. There is also a count for
misappropriation of trade secrets by SPx. MPSI will vigorously
defend such claims. I cannot state whether an unfavorable
outcome is probably or remote or the amount or range of loss
should an unfavorable outcome occur.
HDR Power Systems. The Company has received notice of a claim by
HDR Power Systems with regard to a claim involving certain
transformers manufactured by WPI Power Systems, Inc. HDR has
claimed that the transformers were defective, and has demanded
compensation in the amount of approximately $190,000. The
Company has responded that the transformers are well out of
warranty and that the failure issues are related to customer
abuse. HDR has not made a specific threat regarding the filing
of legal action. I cannot state whether suit will ultimately be
filed by HDR or, if an action is filed, whether an unfavorable
outcome is probable or remote or the amount or range of loss
should an unfavorable outcome occur.
Taxes:
Borrower/ Amount of Liens
Subsidiary Jurisdict- Description of Tax
ion Tax
WPI Husky United Corporations (in pounds) 1,067,00 none
Technology Kingdom Tax
Limited FY 1998
Lock Boxes:
None.
Other Names:
None.
Insurance:
See attached.
Locations of Property:
Borrower/Subsidiary Address Name/Address of
Record Owner
WP Group, Inc./ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, BCIA New England
WPI Oyster ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Holdings, Inc.
Termiflex, Inc. c/▇ ▇▇▇▇▇▇▇ &
WPI Electronics, Wakefield
Inc. Center of New
WPI Power Systems, Hampshire Tower
Inc. ▇▇▇ ▇▇▇ ▇▇.
▇▇▇ Micro Palm, Inc. ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ UK Holding, Inc.
WPI UK Holding II,
Inc.
WPI Oyster
Terminals, Inc.
WPI DecisionKey,
Inc.
WPI Instruments, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇./ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Road/NA, LLC
WPI Magnetec, Inc. ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
WPI Husky 14175 ICOT ICOT Land Ltd.
Technology, Inc. Boulevard, Suite 100 ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ North
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
WPI Micro Processor ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ Ledds Development
Systems, Inc. Road Center
Sterling Heights, MI 6850 Nineteen Mile
▇▇▇▇▇-▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇
WPI Husky Technology Eden Road Ashford Development
Limited Walsgrave Triangle Limited
WPI Oyster ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ Wythall Birmingham
WPI Group (U.K.) England
WPI Husky Technology ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
GmbH 53797 Lohmar ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇
Crompton Modutec New Industrial Park Barbados Investment
(Barbados) Limited ▇▇▇▇▇▇ Church, & Development Center
Barbados ▇▇▇▇▇▇ Industrial
Park
▇▇▇▇▇▇ Church,
Barbados
WPI Husky (France) ▇▇ ▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇, S.I.L.I.C.
SILIC ▇▇▇ ▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇
▇▇▇▇▇ Rungis ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇
Permitted Indebtedness:
Borrower/Subsidi- Amount Maturity Holder of Debt Description
ary
WPI Instruments, $1,701,562.50 08/03/02 ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Group, Inc. Non-negotiable
Inc. - shareholders Promissory Note
Payable in monthly
installments of
$51,562.50
WPI Instruments, $200,000. 07/31/00 ▇▇▇▇▇ Automation & Control Promissory Note
Inc. 00 Engineering, Inc.
Permitted Liens:
None.
Compensation:
WPI Group, Inc.
Officers
▇▇▇▇ ▇▇▇▇▇▇, President and Chief Executive Officer
FY 2000 Base Compensation: $300,000.000
Auto Allowance: $9,000.00
▇▇▇▇ ▇▇▇▇▇▇, Vice President and Chief Financial Officer
Base Compensation: $168,222.00
Auto Allowance: $ 7,800.00
Cash bonus to be awarded as follows:
$25,000.00 on the closing of the sale of Husky Technology
Companies;
$25,000.00 on the closing of the sale of WPI Instruments; and
$25,000.00 on the refinancing of credit facility with Fleet Bank
- NH or sale of the Company, whichever shall come first.
▇▇▇▇▇▇▇ ▇▇▇▇, Vice President, General Counsel and Secretary
Base Compensation: $107,060.00
Auto Allowance: $7,800.00
Cash bonus to be awarded as follows:
$10,000.00 on the closing of the sale of Husky Technology
Companies;
$10,000.00 on the closing of the sale of WPI Instruments; and
$10,000.00 on the refinancing of credit facility of Fleet Bank or
sale of the Company, whichever shall come first.
Company officers are covered by certain plans, including group
health, life and disability insurance, 401K plan, health club
reimbursement and stock option/bonus award plans.
Directors:
Directors who are not employees of the company receive an annual
fee of $14,000 and a $250 for each committee meeting attended.
Committee chairmen receive an additional $500 annual fee for each
committee they chair. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ does not receive the annual
retainer or committee fees.
The following individuals serve as directors of the company and
serve on the following committees:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Audit Committee
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Audit Committee
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ Audit Committee Chairman
▇▇▇▇▇▇ ▇▇▇▇▇ Stock Option/Compensation Committee Chairman,
Audit Committee
▇▇▇▇▇ ▇▇▇▇▇▇ Audit Committee
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Stock Option/Compensation Committee, Audit
Committee
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Stock Option/Compensation Committee, Audit
Committee
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ is covered by a severance agreement which provides
for the payment of $250,000 per year for the five years
commencing January 1, 2000, retention of his car and medical
benefits for the period of the severance, and the forgiveness of
a $59,000 loan carried on the books of the Corporation.
Intellectual Property:
No licensed patents. WPI Magnetec, Inc. is authorized by
agreement with Tridex Corporation to use the tradename "Magnetec"
in connection with the manufacture and sale of solenoids.
Trademarks:
WPI DecisionKey, Inc. KEYADVISOR
#2,272,749
WPI Micro Palm, Inc. MICRO PALM (and Design)
#1,639,534
WPI Micro Processor FVI #1,917,759
Systems, Inc. IBOB #1,690,730
NGT #1,921,695
PGA-9000 #1,640,915
PRO-LINK #1,489,176
SPECTRAGAS #2,269,738
MAGIKEY #2,124,406
ELECTRONIC TOOLCHEST #75/696,358*
PROTECH #75/836,046*
WPI Oyster Termiflex, Inc. HT #1,730,697
TERMIFLEX #1,193,903
TOUCHGRAF #1,528,008
WPI Instruments, Inc. MODUTEC #874,674
M (and Design) #881,233
BIG LITTLE #1,388,144
A (and Design) #1,233,393
A (and Design) #1,182,755
EMICO #438,806
EMICO (and Design) #873,350
MODUTEC (Benelux) #383,798
MODUTEC (France) #1,210,116
MODUTEC (Germany) #996,411
MODUTEC (Italy) #401,897
MODUTEC (Switzerland) #300,624
M (and Design) #401,898
BIG LITTLE (U.K.) #B 1,254,739
WPI Husky Technology Limited HUSKY (and Design) (U.S.)
#75/709,733**
ZEP TEPI (U.S.)
#75/821,583*
HUSKY HUNTER (Benelux) #758869
HUSKY WOLF (France) #1544344
HUSKY HUNTER & DEVICE (France) #1640314
HUSKY HUNTER & DEVICE (Germany) #2007042
HUSKY (U.K.) #B1205477
HUSKY & DEVICE (U.K.) #B1205478
HUSKY HUNTER & DEVICE (Italy) #611401
HUSKY HUNTER & DEVICE (U.K.) #B1205479
HUSKY HUNTER & DEVICE (U.K.) #406124
HUSKY HUNTER & DEVICE (Sweden) #245826
FIELD BASE (U.K.) #B1517447
FIELD BASE (U.S.) #1,851,997
HUSKY HUNTER & DEVICE #B1205480
* Intent-to-Use Application recently filed
** Use Application recently filed to revive trademark in the
United States
Patents:
WPI Magnetec, Inc. Tri-Core Application #08/748,286
Simplified Solenoid Assembly Application
#08/886,437
WPI Micro Processor PC Compatible Modular Based Diagnostic
Systems, Inc. System #5,659,680
Diagnostic Data Recorder (Canada) #1,231,446
Diagnostic Data Recorder #4,602,127
Vehicle Computer Diagnostic Apparatus
Interface
(Canada) #1,261,064
Vehicle Computer Diagnostic Apparatus
Interface
#4,853,580
WPI Instruments, Inc. AC Coupled LCD Annunciator Control
System #4,728,946
Elliptical Bar Graph (Benelux) #17924-01
Elliptical Bar Graph (Spain) #19824
Elliptical Bar Graph (France) #885,100
Elliptical Bar Graph (UK) #1,053,117
Elliptical Bar Graph (Italy) #54667
Elliptical Bar Graph (Sweden) #46000
Elliptical Bar Graph (Benelux) #17924-02
Elliptical Bar Graph (Benelux) #17924-03
Elliptical Bar Graph (UK) #1053117
Elliptical Bar Graph (Germany) #M 800472.4
IRC and ERISA:
To the best of the Borrowers knowledge, information and belief,
there are no exceptions.
SCHEDULE C
(Notices)
If to Borrowers: WPI Group, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇, President
Fax: (603) ___-____
with copies to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esquire
WPI Group, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (603) ___-____
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esquire
▇▇▇▇▇ Peabody
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Fleet Bank- NH
or to BankBoston, N.A.: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice
President
Fleet Corporate Administration
Mail Stop: RI/MOM20A
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(Fax: ▇▇▇-▇▇▇-▇▇▇▇)
with a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esquire
Brown, Rudnick, Freed & Gesmer
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(Fax: ▇▇▇-▇▇▇-▇▇▇▇)
If to Bank of New Hampshire: Bank of New Hampshire
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, VP
(Fax: ▇▇▇-▇▇▇-▇▇▇▇)
Peoples Heritage Bank
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
SVP
(Fax: ▇▇▇-▇▇▇-▇▇▇▇)
If to Sovereign Bank: Sovereign Bank
▇▇ ▇▇▇▇▇ ▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, SVP
(Fax: ▇▇▇-▇▇▇-▇▇▇▇)
If to Key Corporate Capital, Inc.: Key Corporate Capital, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Alex Strazella, VP
(Fax: ▇▇▇-▇▇▇-▇▇▇▇)
Key Corporate Capital, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, VP
(Fax: ▇▇▇-▇▇▇-▇▇▇▇)
SCHEDULE D
(Financial Projections)