Xxxxxxx 00.0
XXXXX XXXX - XX
AMENDED AND RESTATED COMMERCIAL LOAN AGREEMENT
BORROWERS' NAMES AND ADDRESS:
WPI GROUP, INC. DESCRIPTION OF LOANS:
WPI ELECTRONICS, INC. Revolving Line of Credit
WPI MAGNETEC, INC. Loan: $30,000,000.00
WPI MICRO PALM, INC.
WPI POWER SYSTEMS, INC. Term Loan: $15,000,000.00
WPI TERMIFLEX, INC.
WPI MICRO PROCESSOR SYSTEMS, INC. REVOLVING LINE OF CREDIT
WPI DECISIONKEY, INC. INITIAL CREDIT REVIEW
WPI UK HOLDING, INC. DATE: March 31, 1999
WPI UK HOLDING II, INC.
WPI OYSTER TERMINALS, INC.
WPI HUSKY COMPUTERS, INC.
0000 XXX XXXXXX DATE OF THIS AGREEMENT:
XXXXXXXXXX, XXX XXXXXXXXX 00000 December 26, 1997
----------------------------------------------------------------------
THIS AMENDED AND RESTATED COMMERCIAL LOAN AGREEMENT (the "Agreement"), is
made as of the date set forth above, between the above named Borrowers, WPI
GROUP, INC. (the "Parent"), and its wholly owned subsidiaries WPI ELECTRONICS,
INC. ("WPI EI"), WPI MAGNETEC, INC. ("WPI MI"), WPI MICRO PALM, INC. ("WPI
Palm"), WPI POWER SYSTEMS, INC. ("WPI Power"), WPI TERMIFLEX, INC. ("WPI TI"),
WPI MICRO PROCESSOR SYSTEMS, INC. ("WPI Processor"), WPI DECISIONKEY, INC.
("WPI DK"), WPI UK HOLDING, INC. ("WPI UK"), WPI UK HOLDING II, INC. ("WPI UK
II"), and WPI OYSTER TERMINALS, INC. ("WPI OTI"), each a New Hampshire
corporation, (WPI EI, WPI MI, WPI Palm, WPI Power, WPI TI, WPI Processor, WPI
DK, WPI UK, WPI UK II, and WPI OTI, collectively, the "NH Subsidiaries") and WPI
HUSKY COMPUTERS, INC., a Florida corporation ("Husky"), all such corporations
having their principal offices at 0000 Xxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxxxxx
00000 (the Parent, the NH Subsidiaries and Husky are hereinafter referred to
individually and collectively as the "BORROWER"), and FLEET BANK - NH, a bank
organized under the laws of the State of New Hampshire with a principal place of
business at Mail Stop NHNA EO2A, 0000 Xxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxxxxx
00000 (the "BANK"), and amends and restates the Commercial Loan Agreement dated
October 24, 1995 by and among the Bank, the Parent, WPI EI, WPI MI, WPI PALM,
WPI POWER, and WPI TI, as amended by First Amendment to Commercial Loan
Agreement and Loan Documents dated March
20, 1996 by and among the Bank and the Parent and certain of the NH
Subsidiaries, Second Amendment to Commercial Loan Agreement and Loan Documents
dated July 12, 1996 by and among the Bank, the Parent, and certain of the NH
Subsidiaries, Third Amendment to Commercial Loan Agreement and Loan Documents
dated February 27, 1997 by and among the Bank, the Parent, the NH Subsidiaries,
and two of Parent's foreign subsidiaries, namely WPI Group (U.K.), a private
unlimited company organized under the laws of England and Wales ("WPI G-UK"),
and WPI Oyster-Termiflex Limited, a corporation organized under the laws of
England and Wales ("WPI OTL"), and Fourth Amendment to Commercial Loan Agreement
and Loan Documents dated as of June 20, 1997 (the "Fourth Amendment"), by and
among the Bank, the Parent, the NH Subsidiaries, WPI G-UK, and WPI OTL (as
amended, the "Original Loan Agreement"). The Original Loan Agreement is hereby
amended and restated as set forth herein.
The BANK has extended to BORROWER pursuant to the Original Loan Agreement,
as amended and restated herein, the revolving line of credit and term loans
described above, at the BORROWER'S request, and may from time to time hereafter
extend other loans to BORROWER (each individually, a "Loan" and, collectively,
the "Loans"). All of the Loans are, together with all other debts, liabilities
and obligations of BORROWER to the BANK, direct or indirect, absolute or
contingent, now existing or hereafter arising, hereinafter sometimes
collectively referred to as the "Obligations". Each Loan is or shall be
evidenced by a promissory note of near or even date herewith (individually a
"Note" and collectively the "Notes"). In consideration for the release of WPI
G-UK and WPI OTL as parties to the Original Loan Agreement and co-borrowers of
the Loans, as well as the release of the Borrowers under the Original Loan
Agreement from their undertakings in the Fourth Amendment respecting joinder to
the Original Loan Agreement of Husky Computers Limited and Husky GmbH and the
pledge of 100% of the capital stock/equity interests in the Foreign Subsidiaries
and Husky GmbH, each Loan to the BORROWER and all of the other Obligations of
the BORROWER are and shall be secured pursuant to (a) a security agreement by
and between the BORROWER and the BANK of near or even date herewith (the
"Security Agreement") whereby the BANK is granted a first security interest in
all of the assets and other property interests of BORROWER, (b) a stock pledge
agreement by and between the Parent, WPI UK, and WPI UK II and the BANK of near
or even date herewith (the "Pledge Agreement"), pledging to the BANK all of the
shares of stock of the NH Subsidiaries and Husky, and 66% of the shares of
capital stock of WPI G-UK, WPI OTL and WPI Husky Computers Limited, a
corporation organized under the laws of the United Kingdom and a wholly-owned
subsidiary of the Parent (collectively, the "Foreign Subsidiaries"), and
encumbering the remainder of the shares of the Foreign Subsidiaries with a
negative pledge covenant to the BANK, (c) a negative pledge agreement of near or
even date ("Negative Pledge Agreement") by and between the Parent, WPI UK, and
WPI UK II and the BANK respecting all of the assets of the Foreign Subsidiaries,
and (d) certain other Loan Documents (as hereinafter defined). In connection
with the Loans, the BORROWER may execute certain other documents, certificates
and agreements, all of which are, together with this Agreement, the Notes, the
Security Agreement, the Pledge Agreement, and the Negative Pledge Agreement, as
all of the same may be hereafter amended, modified, revised, renewed, or
extended, sometimes collectively referred to herein as the "Loan Documents".
The collateral herein described for the Loans, and any other collateral for the
Loans granted or pledged to the BANK pursuant to the other Loan Documents is
herein collectively referred to as the "Collateral."
Each Loan, whether now existing or hereafter arising, is made upon and
subject to the terms and conditions set forth in the Note evidencing such Loan,
the other Loan Documents, and this Agreement. The terms, conditions,
representations, warranties, and covenants set forth in this Agreement are in
addition to, and not in limitation of, the terms, conditions, representations,
warranties, and covenants set forth in the other Loan Documents. In the event
of any conflict between the terms, conditions, representations, warranties and
covenants contained in the Loan Documents, the term, condition, representation,
warranty, or covenant which confers the greatest benefit upon the BANK shall
control. The determination as to which term, condition, representation,
warranty, or covenant is more beneficial shall be made by the BANK in its sole
discretion and shall be binding upon the BORROWER. Where there is more than one
BORROWER or guarantor hereunder, all of the terms, conditions, representations,
warranties, and covenants set forth herein and in the other Loan Documents shall
apply to, be binding upon, and be deemed to be made by each BORROWER and
guarantor, jointly, severally, separately, and individually.
IN CONSIDERATION OF the Loans made or to be made by BANK to the BORROWER,
and of all other Obligations of the BORROWER to the BANK, BORROWER and BANK
hereby agree as follows:
I. REVOLVING LINE OF CREDIT LOAN. The Revolving Line of Credit Loan first
described above (the "Revolving Line of Credit Loan") made available by the BANK
to the BORROWER shall be upon and subject to the terms and conditions set forth
in the Note evidencing the Revolving Line of Credit Loan, the other Loan
Documents, and this Agreement.
A. Maximum Available Amount. The aggregate maximum principal amount
------------------------
available to the BORROWER under the Revolving Line of Credit Loan shall be up to
THIRTY MILLION DOLLARS ($30,000,000.00).
B. Advances. The Revolving Line of Credit Loan shall be disbursed,
--------
advanced, re-advanced, and repaid as provided in the Note evidencing the
Revolving Line of Credit Loan and this Agreement. The Parent, for and on
behalf of each BORROWER, may request advances and re-advances be made to the
BORROWER orally or in writing from time to time in accordance with such
procedures as BANK may reasonably impose in an amount such that the aggregate
amounts outstanding under the Revolving Line of Credit Loan do not exceed the
maximum available amount as determined under Paragraph A of this Section I
above. Notwithstanding any other provision of this Agreement, no advances or
re-advances shall be made by BANK to the BORROWER at any time an Event of
Default (as hereinafter defined) exists under this Agreement or the Loan
Documents, or any condition exists which, if not cured, would with the passage
of time or the giving of notice, or both, constitute such an Event of Default.
At the time of each advance and re-advance under the Revolving Line of Credit
Loan the BORROWER shall immediately become indebted to the BANK for the amount
thereof. Each such advance or re-advance may be credited by the BANK to any
deposit account of any BORROWER with the BANK, be paid to any BORROWER, or
applied to any Obligation. Each BORROWER hereby acknowledges and agrees that
the Parent shall have sole and exclusive authority to request
advances and re-advances under the Revolving Line of Credit Loan, and the
interest rate to apply with respect thereto (as hereinafter provided), for each
BORROWER, and that that Bank shall be entitled to rely upon such authority.
C. Review. The Revolving Line of Credit Loan shall be subject to review
------
and, at the sole option and discretion of the BANK, renewal on the Revolving
Line of Credit Initial Review Date set forth on the first page of this
Agreement, and, if renewed, thereafter on each subsequent anniversary of the
Revolving Line of Credit Initial Review Date (the Revolving Line of Credit
Initial Review Date, and each anniversary thereof to which the Revolving Line of
Credit Loan is renewed and extended, being a "Review Date"). IF THE REVOLVING
LINE OF CREDIT LOAN IS NOT RENEWED BY THE BANK AS AFORESAID ON ANY REVIEW DATE,
THE ENTIRE AMOUNT OF OUTSTANDING PRINCIPAL, ACCRUED INTEREST AND OTHER CHARGES
PAYABLE THEREUNDER SHALL BE DUE AND PAYABLE BY BORROWER ON SUCH REVIEW DATE WITH
RESPECT TO WHICH THE REVOLVING LINE OF CREDIT LOAN IS NOT RENEWED. BORROWER
ACKNOWLEDGES AND AGREES THAT THE BANK HAS NO OBLIGATION OR COMMITMENT TO RENEW
THE REVOLVING LINE OF CREDIT LOAN ON ANY REVIEW DATE. NOTWITHSTANDING THE
FOREGOING, OR ANY PROVISION OF THE NOTE, ANY OF THE LOAN DOCUMENTS OR HEREIN TO
THE CONTRARY, THE REVOLVING LINE OF CREDIT LOAN SHALL BE A DEMAND OBLIGATION OF
BORROWER TO THE EXTENT THAT THE AMOUNT OUTSTANDING THEREUNDER AT ANY TIME
EXCEEDS THE MAXIMUM AVAILABLE AMOUNT UNDER THE REVOLVING LINE OF CREDIT LOAN AS
DETERMINED UNDER PARAGRAPH A OF THIS SECTION I ABOVE, BUT ONLY TO THE EXTENT OF
THE AMOUNT OUTSTANDING IN EXCESS OF THE MAXIMUM AVAILABLE AMOUNT.
D. Repayment of Principal. The BORROWER shall make payments of principal
----------------------
on the Revolving Line of Credit Loan such that the outstanding principal balance
thereunder at no time exceeds the maximum available amount thereunder as
determined under Paragraph A of this Section I above. On the Review Date as to
which the Revolving Line of Credit Loan is not renewed, BORROWER shall pay in
full all outstanding principal and accrued and unpaid interest under the
Revolving Line of Credit Loan.
E. Interest. The Revolving Line of Credit Loan shall bear interest in
--------
accordance with the following provisions:
(a) Prime Rate. The principal balance outstanding from time to time
----------
under the Revolving Line of Credit Loan, net of amounts subject to a Eurodollar
based rate of interest as provided hereinbelow, shall bear interest at a
variable annual rate equal to the Prime Rate. The "Prime Rate" shall be the rate
published by The Wall Street Journal from time to time under the category "Prime
-----------------------
Rate: The Base Rate on Corporate Loans posted by at least 75% of the Nation's 30
Largest Banks" (the lowest of the rates so published if more than one rate is
published under this category at any given time) or such other comparable index
rate selected by the Bank in its sole discretion if The Wall Street Journal
-----------------------
ceases to publish such rate. The BORROWER acknowledges that the Prime Rate is
used for reference purposes only as an index and is not
necessarily the lowest interest rate charged by the BANK on commercial loans.
Each time the Prime Rate changes the interest rate under the Revolving Line of
Credit Loan shall change contemporaneously with such change in the Prime Rate.
Interest shall be calculated and charged daily on the basis of actual days
elapsed over a three hundred sixty (360) day banking year and shall be payable
monthly in arrears.
(b) Eurodollar Based Rate. The BORROWER may elect from time to time,
---------------------
provided no Event of Default has occurred and is continuing, to have amounts
advanced under the Revolving Line of Credit Loan bear interest for a period of
one (1) month, two (2) months, three (3) months or six (6) months each (an
"interest period") at a fixed annual rate equal to the Eurodollar rate (as
hereinafter defined) plus one and six hundred twenty-five hundredths percent
----
(1.625%) (the "Eurodollar Based Rate"). The BORROWER (i) may only elect the
Eurodollar Based Rate with respect to a new or outstanding advance in an amount
of not less than One Million Dollars ($1,000,000.00) and in increments above
such amount of not less than One Hundred Thousand Dollars ($100,000.00), (ii)
may not elect more than four (4) outstanding Eurodollar Advances (as hereinafter
defined) at any time, and (iii) may not elect an interest period extending
beyond the next Review Date. The BORROWER shall notify BANK in writing by 10:00
a.m. (Eastern Time) at least two (2) Banking Days (as hereinafter defined) in
advance of the date upon which the BORROWER desires to convert an existing
advance or have a new advance subject to the Eurodollar Based Rate. The
BORROWER's notice to BANK as aforesaid shall specify the amount of the new or
existing advance under the Revolving Line of Credit Loan that BORROWER desires
to bear interest at the Eurodollar Based Rate, the interest period selected, and
the date upon which such advance is requested to be converted or made (which
must be a Banking Day). Any amounts outstanding under the Revolving Line of
Credit Loan as to which BORROWER has elected a Eurodollar Based Rate shall
hereinafter be referred to as a "Eurodollar Advance". All amounts outstanding
under the Revolving Line of Credit Loan which are not subject to the Eurodollar
Based Rate shall bear interest at a variable annual rate equal to the Prime Rate
as provided hereinabove. Notwithstanding the foregoing provisions, the BORROWER
may not convert existing advances to Eurodollar Advances at any time either an
Event of Default exists under this Agreement or the Loan Documents, or any
condition exists which, if not cured, would with the passage of time or the
giving of notice, or both, constitute such an Event of Default. Interest on
each Eurodollar Advance shall be calculated and charged daily on the basis of
actual days elapsed over a three hundred sixty (360) day banking year and shall
be payable monthly in arrears.
(c) Definition of Banking Day. For purposes hereof, a "Banking Day" means
-------------------------
a day upon which banks are open for business to the general public in Nashua,
New Hampshire, and upon which dealings are carried on and banks are open for
business in the London interbank market.
(d) Definition of Eurodollar Rate. For purposes hereof, the term
-----------------------------
"Eurodollar rate" shall mean the interest rate per annum (rounded upward, if
necessary, to the nearest 1/32 of one percent) as determined by the BANK on the
basis of the offered rates in the interbank Eurodollar market for deposits in
U.S. dollars for a one (1) month, two (2) months, three (3) months or six (6)
months period, as the case may be, which appear on the Telerate page 3750 as of
11:00 a.m. London time on the day that is two (2) Banking Days preceding the
first day of such Eurodollar
Advance. If such rate does not appear on the Telerate System on any applicable
interest determination date, the Eurodollar rate shall be the rate (rounded
upward as described above, if necessary) for deposits in U.S. dollars for a
period substantially equal to the interest period for the Eurodollar Advance on
the Reuters Page "LIBO" (or such other page as may replace the LIBO Page on that
service for the purpose of displaying such rates), as of 11:00 a.m. (London
time), on the day that is two (2) Banking Days prior to the first day of such
Eurodollar Advance. If both the Telerate and Reuters system are unavailable,
then the rate for that date will be determined on the basis of the offered rates
for deposits in U.S. dollars for a period of time comparable to the interest
period for such Eurodollar Advance which are offered by four major banks in the
London interbank market at approximately 11:00 a.m. London time, on the day that
is two (2) Banking Days preceding the first day of such Eurodollar Advance. The
principal London office of each of the four major London banks will be requested
to provide a quotation of its U.S. dollar deposit offered rate. If at least two
such quotations are provided, the rate for that date will be the arithmetic mean
of the quotations. If fewer than two quotations are provided as requested, the
rate for that date will be determined on the basis of the rates quoted for loans
in U.S. dollars to leading European banks for a period of time comparable to the
interest period for such Eurodollar Advance offered by major banks in New York
City at approximately 11:00 a.m. New York City time, on the day that is two
Banking Days preceding the first day of such Eurodollar Advance. In the event
that the Bank is unable to obtain any such quotation as provided above, it will
be deemed that the Eurodollar rate for such Eurodollar Advance cannot be
determined. In the event that the Board of Governors of the Federal Reserve
System shall impose a Reserve Percentage on the BANK with respect to Eurodollar
deposits of the BANK, then for any period during which such Reserve Percentage
shall apply, the Eurodollar rate shall be equal to the amount determined above
divided by an amount equal to one (1) minus the Reserve Percentage actually
maintained by the BANK. For purposes hereof, "Reserve Percentage" means the rate
(expressed as a decimal) at which the BANK is required to maintain reserves
under Regulation D of the Board of Governors of the Federal Reserve System
against Eurodollar liabilities outstanding.
(e) Effect of Regulatory Change. In the event that any Regulatory Change
---------------------------
(as hereinafter defined) shall:
(i) change the basis of taxation of the amounts payable to the BANK
in respect of any Eurodollar Advance (other than taxes imposed on
the overall net income of the BANK);
(ii) impose or modify any reserve, compulsory loan assessment, special
deposit or similar requirement relating to any extensions of
credit or other assets of, or any deposits with or other
liabilities of, any office of the BANK in respect of any
Eurodollar Advance (including any of such deposits referred to
hereinabove in the definition of "Eurodollar rate"); or
(iii) impose any other conditions affecting Eurodollar Advances;
and the result of any of the foregoing shall be to increase the BANK's costs of
making or maintaining any Eurodollar Advances, or to reduce any amount
receivable by the BANK
hereunder in respect of any Eurodollar Advances, in each case only to the extent
that such additional amounts are not included in the Eurodollar rate applicable
to such Eurodollar Advance, then the BORROWER and BANK shall thereafter attempt
to negotiate in good faith, within thirty (30) days of the day on which the
BORROWER receives the notice referred to hereinbelow, an adjustment payable
hereunder that will adequately compensate the BANK in light of these
circumstances. If the BORROWER and the BANK are unable to agree to such
adjustment within thirty (30) days of the date on which the BORROWER receives
such notice, then commencing as of the date of such notice applicable to such
Eurodollar Advance, the BORROWER shall pay on demand to the BANK and from time
to time as specified by the BANK, such additional amounts as shall be sufficient
to compensate the BANK for such increased cost or reduced amount receivable.
Such amounts may include amounts that arise by reason of such a Regulatory
Change for not more than thirty (30) days before receipt by the BORROWER of such
notice. If the BANK becomes entitled to claim any additional amounts pursuant
hereto, it shall promptly notify the BORROWER of the event by reason of which it
has become so entitled. A certificate setting forth in reasonable detail the
computation of any additional amounts payable pursuant hereto submitted by the
BANK to the BORROWER shall be delivered to the BORROWER promptly after the
initial incurrence of such additional amounts and shall be conclusive in the
absence of manifest error. The covenants contained in this Section (e) shall
survive for sixty (60) days following the termination of this Agreement and the
payment of the Note or for such longer period as the BANK is contesting the
validity or applicability of any law, regulation or condition as provided
hereinbelow. No failure on the part of the BANK to demand compensation hereunder
on any one occasion shall constitute a waiver of its rights to demand
compensation on any other occasion.
(f) Definition of Regulatory Change. For purposes hereof, the term
-------------------------------
"Regulatory Change" shall mean, with respect to the BANK, any change after the
date of this Agreement in federal, state or foreign law or regulation (including
without limitation Regulation D of the Board of Governors of the Federal Reserve
System), including without limitation the issuance of any final regulations or
guidelines, or the adoption or making after such date of any interpretation,
directive or request applying to a class of lenders including BANK of or under
any federal, state or foreign law or regulations (whether or not having the
force of law and whether or not failure to comply therewith would be unlawful)
by any court or governmental or monetary authority charged with the
interpretation thereof.
(g) Limitations on Eurodollar Advances; Illegality. Anything herein to the
----------------------------------------------
contrary notwithstanding, if, on or prior to the determination of an interest
rate for any Eurodollar Advance, the BANK shall determine (which determination
shall be conclusive absent manifest error) that:
(i) by reason of any event affecting United States money markets or
the London interbank market, quotations of interest rates for the
relevant deposits are not being provided in the relevant amounts
or for the relevant maturities for purposes of determining the
rate of interest for Eurodollar Advances under this Agreement; or
(ii) the rates of interest referred to in the definition of "Eurodollar
rate" hereinabove on the basis of which the rate of interest on
any Eurodollar Advances for such period is determined, do not
accurately reflect the cost to the BANK of making or maintaining
such Eurodollar Advances for such period;
then the BANK shall give the BORROWER prompt notice thereof (and shall
thereafter give the BORROWER prompt notice of the cessation, if any, of such
condition), and so long as such condition remains in effect, the BANK shall be
under no obligation to make Eurodollar Advances. Notwithstanding any other
provision herein, if any Regulatory Change shall make it unlawful for the BANK
to make or maintain Eurodollar Advances as contemplated by this Agreement, (i)
the BANK's commitment hereunder to make Eurodollar Advances or continue
Eurodollar Advances as such shall thereupon terminate, and (ii) all advances
then outstanding under the Loan as Eurodollar Advances, if any, shall be
converted automatically to Prime Rate advances on the respective last days of
the then current period with respect to such Eurodollar Advances or within such
earlier period as required by law. If any such conversion of a Eurodollar
Advance occurs on a day which is not the last day of the then current period
with respect thereto, the BORROWER shall pay to the BANK such amounts, if any,
as may be required hereinbelow with respect to prepayments of Eurodollar
Advances.
(h) Prepayment: Indemnification. Subject to the BORROWER's indemnification
---------------------------
obligations hereinafter set forth, the BORROWER may prepay the entire
outstanding amount of any Eurodollar Advance at any time. The BORROWER shall
pay to the BANK, upon the request of BANK, such amount or amounts as shall
compensate the BANK for any loss (including, in the case of Eurodollar Advances,
loss of profit), cost or expense incurred by the BANK (as reasonably determined
by the BANK) as a result of: (A) any payment or prepayment (whether voluntarily
or after acceleration and demand by the BANK pursuant to its rights hereunder)
or conversion of any Eurodollar Advance held by the BANK on a date other than
the last day of the term for such Eurodollar Advance; or (B) any failure by the
BORROWER to borrow, convert into or continue a Eurodollar Advance on the date
for such borrowing, conversion, or continuation specified in the relevant
request by BORROWER for such Eurodollar Advance or otherwise; such compensation
to include, without limitation, an amount equal to: (Y) any loss or expense
suffered by the BANK during the period from the date of receipt of such early
payment or prepayment or the date of such conversion or failure to borrow,
convert or continue to the last day of the term for such Eurodollar Advance, if
the rate of interest obtainable by the BANK upon the redeployment of an amount
of funds equal to the Eurodollar Advance so paid, prepaid or converted or as to
which such failure to borrow, convert or continue applies is less than the rate
of interest applicable to such Eurodollar Advances for such term; and (Z) any
loss or expense suffered by the BANK in liquidating Eurodollar deposits prior to
maturity which the BANK is unable to redeploy and which correspond to the
Eurodollar Advances so paid, prepaid or converted or as to which such failure to
borrow, convert or continue applies. The determination by the BANK of the
amount of any such loss or expense, then set forth in a written notice to the
BORROWER, containing the BANK's calculation thereof in reasonable detail, shall
be presumed correct in the absence of manifest error.
F. Purposes. Amounts advanced under the Revolving Line of Credit Loan
--------
shall be used
solely for financing (i) BORROWER's ordinary working capital requirements, and
(ii) Permitted Acquisitions (as hereinafter described). In no event shall
amounts advanced under the Revolving Line of Credit Loan be used to provide
loans, financing or funding to or on behalf of BORROWER's affiliates other than
another BORROWER.
G. Revolving Line of Credit Management. BORROWER desires to use its loan
-----------------------------------
account which indicates the BORROWER's current Indebtedness under the Revolving
Line of Credit Loan (the "Loan Account") and its demand deposit account with the
BANK (the "Demand Deposit Account") to manage BORROWER's funds and to maintain a
desired target balance in BORROWER's Demand Deposit Account. In furtherance
thereof, BORROWER intends to deliver to the BANK, in accordance with such
instructions as BANK may from time to time provide, all checks, drafts, cash and
other remittances in payment by debtors of BORROWER's accounts receivable
("Accounts"). All such checks, drafts, and other items shall be endorsed to the
BANK for deposit to the BORROWER's Demand Deposit Account or as the BANK may
otherwise specify from time to time. BORROWER hereby designates and appoints
the BANK as BORROWER's attorney-in-fact to endorse all remittances in whatever
form received for deposit in BORROWER's name to the Demand Deposit Account.
BANK shall not be obligated to (but may in its sole discretion) endorse and
deposit remittances which are not in the proper name of BORROWER. All such
remittances rejected for deposit by BANK may be returned to BORROWER and
BORROWER shall receive no credit therefor. BANK shall have the right to date
any undated remittances and to reject any postdated remittances or any
remittances older than six (6) months. BANK may deposit any remittance
notwithstanding any legend thereon. Checks and other drafts drawn in foreign
currency shall be handled on an individual collection basis only, and BANK
assumes no risk or responsibility for any loss which any party, including
BORROWER, may suffer by virtue of fluctuations in exchange rates. Customary
charges for such collections will be debited to the Demand Deposit Account.
BORROWER shall from time to time inform the BANK of the target balance which
BORROWER desires to maintain in its Demand Deposit Account, which shall in no
event be less than any minimum balance (if any) required under this Agreement.
To maintain the desired target balance in BORROWER's Demand Deposit Account,
BORROWER hereby instructs, authorizes, and directs BANK to charge BORROWER's
Demand Deposit Account to make payments to reduce the debit balance of
BORROWER's Loan Account and to make payment of BORROWER's other obligations to
the BANK, and to make advances under the Revolving Line of Credit Loan
increasing the debit balance in BORROWER's Loan Account and credit the same to
BORROWER's Demand Deposit Account. Notwithstanding the foregoing, BORROWER's
obligations to pay each Loan are the general obligations of the BORROWER and
shall not be deemed to be obligations to be satisfied solely from funds in the
Demand Deposit Account or by advances under the Revolving Line of Credit Loan.
BORROWER acknowledges and agrees that the target balance is only a desired goal
based upon estimates and that the BANK shall have no responsibility for
variances from the target balance as long as all charges, advances and credits
are made in good faith. All credits against BORROWER's indebtedness indicated
in the Loan Account shall be conditional upon final payment to the BANK of the
items giving rise to such credits. The amount of any item credited against
BORROWER's Loan Account which is not paid or which is charged back against the
BANK for any reason may be charged as a debit to the Loan Account or may be
charged back against the Demand Deposit Account of BORROWER, and shall be an
obligation of the
BORROWER to the BANK in each instance whether or not the item so charged back or
not paid is returned. Any item received in payment towards BORROWER's
outstanding indebtedness reflected in the Loan Account which requires clearance
or payment shall be considered to be applied immediately for purposes of
determining the maximum available amount under BORROWER's Revolving Line of
Credit under Section I(A) of this Agreement, but shall not be considered to have
been credited to the Loan Account until two (2) business days after receipt by
the BANK of such item for purposes of interest accruing on the outstanding
indebtedness indicated by the Loan Account. Notwithstanding any other provision
hereof, no advances shall be made by BANK to BORROWER's Demand Deposit Account
at any time an Event of Default exists under this Agreement or the Loan
Documents, or any condition exists which, if not cured, would with the passage
of time or the giving of notice, or both, constitute such an Event of Default.
Except in the case of BANK's gross negligence, willful misconduct, or failure to
act in good faith, BANK shall not be liable for any act done or omitted by it in
good faith, or for any mistake in fact or law, or for anything it may do or
refrain from doing in connection with or as required by this Section I(G). In
addition, BORROWER will reimburse and indemnify BANK for any damages, losses,
liabilities, claims, costs, or expenses, of any kind whatsoever and however
caused, including, but not limited to, reasonable attorneys' fees, paid,
suffered or incurred by BANK as a result of any third party claim against BANK
arising out of or in connection with BANK's performance of the services
contemplated by this Section I(G) to be provided by BANK, except to the extent
the same results from the gross negligence, willful misconduct, or failure to
act in good faith by BANK.
II. TERM LOAN. The Term Loan first described above (the "Term Loan") shall
bear interest and have a term as set forth in the promissory note evidencing
such Loan (the "Term Note"), shall be issued subject to the terms and conditions
of this Agreement and the other Loan Documents, and shall be secured by the
Collateral provided for Loans pursuant to the Loan Documents.
III. FEES. In addition to such other fees as are provided in this Agreement
and in the other Loan Documents, BORROWER agrees to pay the BANK the periodic
fees set forth on Schedule A attached hereto with respect to the maintenance of
----------
each Loan.
IV. PAYMENTS. All payments made by the BORROWER of principal and interest
on the Loans, and other sums and charges payable under the Loan Documents, shall
be made to the BANK in accordance with the terms of the respective Loan
Documents in immediately available, lawful United States of America currency at
its office set forth above, or by the debiting by the BANK of the demand deposit
account(s) in the name of the BORROWER at the BANK, or in such other reasonable
manner as may be designated by the BANK in writing to the BORROWER, and in any
event shall be made in immediately available funds. The BORROWER authorizes the
BANK automatically to debit the BORROWER's demand deposit account as described
above.
V. CONTINUING REPRESENTATIONS AND WARRANTIES. The BORROWER warrants and
represents to the BANK that so long as any of the Obligations are outstanding:
A. Good Standing. BORROWER, if other than a natural person, is duly
-------------
organized, validly existing, and in good standing under the laws of its state of
organization. BORROWER has the power to own its properties and to carry on its
business as now being conducted.
B. Authority. BORROWER has full power and authority to enter into this
---------
Agreement and to borrow under the Loan Documents, to execute and deliver the
Loan Documents and to incur the obligations provided for herein and in the other
Loan Documents, all of which have been duly authorized by all proper and
necessary corporate or other action. The persons executing the Loan Documents
on behalf of the BORROWER have been duly authorized to do so.
C. Binding Agreement. This Agreement and the other Loan Documents
-----------------
constitute the valid and legally binding obligations of the BORROWER,
enforceable in accordance with their respective terms.
D. Litigation. There are no suits or proceedings of any kind or nature
----------
pending or, to the knowledge of the BORROWER, threatened against or affecting
the BORROWER or its assets which, if adversely determined, would have a material
adverse effect on the financial condition or business of the BORROWER and which
have not been disclosed in writing to the BANK.
E. Conflicting Agreements; Consents. There is no charter, bylaw,
--------------------------------
preference stock, or trust provision of the BORROWER, and no provision(s) of any
existing mortgage, indenture, contract or agreement binding on the BORROWER or
affecting its property, which would conflict with, have a material adverse
effect upon, or in any way prevent the execution, delivery, or performance of
the terms of this Agreement or the Loan Documents. The BORROWER is not required
to obtain any order, consent, approval or authorization of any person, entity,
or governmental authority in connection with or as a condition to the execution,
delivery, and performance of this Agreement or the Loan Documents.
F. Financial Condition. The financial statements delivered to the BANK
-------------------
by the BORROWER have been and shall be prepared in accordance with generally
accepted accounting principles, consistently applied; are and will be complete
and correct; and fairly present the financial condition and results of the
BORROWER for the reported periods. Other than those liabilities disclosed in
writing to the BANK, there are no liabilities, direct or indirect, fixed or
contingent, of the BORROWER which are not reflected in the financial statements
or in the notes thereto which would be required to be disclosed therein, and
there has been no material adverse change in the financial condition or
operations of the BORROWER since the date of such financial statements.
G. Taxes. BORROWER has filed all federal, state and local tax returns
-----
required to be filed by it and has paid all taxes shown by such returns to be
due and payable on or before the due dates thereof.
H. Solvency. The present fair salable value of the BORROWER's assets
--------
is greater than the amount required to pay its total liabilities; and the amount
of the BORROWER's capital is adequate in view of the type of business in which
it is engaged.
I. Full Disclosure. None of the information with respect to the
---------------
BORROWER which has been furnished to the BANK in connection with the
transactions contemplated hereby is false or misleading with respect to any
material fact, or omits to state any material fact necessary in order to make
the statements therein not misleading.
J. Employee Benefit Plans. The BORROWER has not incurred any material
----------------------
accumulated funding deficiency within the meaning of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), has not incurred any material
liability to the Pension Benefit Guaranty Corporation established under ERISA
(or any successor thereto) in connection with any profit sharing, group
insurance, bonus, deferred compensation, percentage compensation, stock option,
severance pay, insurance, pension or retirement plan or other oral or written
agreement or commitment relating to employment or fringe benefits or perquisites
for employees, officers or directors of the BORROWER (an "Employee Benefit
Plan"), and no Employee Benefit Plan which is subject to ERISA had, as of its
latest valuation date, accrued benefits (whether or not vested) the present
value of which exceeded the value of the assets of such Employee Benefit Plan,
based upon actuarial assumptions utilized for such Plan.
K. Location of Records. All of the books and records or true and
-------------------
complete copies thereof relating to the accounts and contracts of the BORROWER
are and will be kept at BORROWER's principal place of business located at the
address first set forth above (the "Premises").
L. Compliance with Laws. To the best of BORROWER's knowledge, after due
--------------------
inquiry, the BORROWER is in compliance in all material respects with all laws
and governmental rules and regulations applicable to its businesses, properties
and assets.
M. Employees. To the best of BORROWER's knowledge, after due inquiry,
---------
the BORROWER has complied in all material respects with all laws relating to the
employment of labor, including any provisions thereof relating to ERISA, wages,
hours, collective bargaining, the payment of social security and similar taxes,
equal employment opportunity, employment discrimination and occupational safety
and health, and is not liable for any arrears of wages or any taxes or penalties
for failure to comply with any of the foregoing.
VI. AFFIRMATIVE COVENANTS. Until payment in full of all indebtedness under
the Loans and the other Obligations, the BORROWER hereby agrees that, unless the
BANK shall otherwise consent in writing, it will:
A. Prompt Payment. Pay promptly, subject to any applicable cure or
--------------
grace period, when due all amounts due and owing to One BANK.
B. Use of Proceeds. Use the proceeds of the Loans only for business
---------------
purposes and will furnish the BANK with such evidence as it may reasonably
require with respect to such use.
C. Financial Statements. Furnish the BANK with such financial
--------------------
statements and reports of BORROWER as are described on Schedule A attached
----------
hereto. All such statements shall be prepared on a consistent basis in a format
reasonably acceptable to the BANK.
D. Maintenance of Existence. Take all necessary action to maintain
------------------------
BORROWER's legal existence.
E. Maintenance of Business. Do or cause to be done all things
-----------------------
necessary to maintain and preserve BORROWER's business.
F. Maintenance of Insurance. Keep all of BORROWER's properties
------------------------
adequately insured against loss or damage by fire and such other casualties and
hazards as the BANK may specify from time to time; maintain adequate Xxxxxxx'x
Compensation Insurance under applicable laws and Comprehensive General Public
Liability Insurance; and maintain adequate insurance covering such other risks
as customary for businesses of BORROWER's size and type. All insurance required
hereunder shall be effected by valid and enforceable policies issued by insurers
of recognized responsibility authorized to transact business within the State of
New Hampshire. For the purposes of this Paragraph, an insurance policy shall be
deemed to be "adequate" if it provides coverage against such risks and in such
amounts as is customarily carried by owners of businesses and properties similar
to those of BORROWER.
G. Inspection by the BANK. Upon prior reasonable notice (other than in
----------------------
emergencies when no notice shall be required) and during normal business hours,
permit any person designated by the BANK to inspect any of its books, records,
and accounts (and including the making of copies thereof and extracts therefrom)
during normal business hours.
H. Prompt Payment of Taxes. Accrue its tax liability (including
-----------------------
withholdings for employee taxes and social security) in accordance with usual
accounting practice and pay or discharge (or cause to be paid or discharged) as
they become due all taxes, assessments, and government charges upon its
property, operations, income and products (as well as all claims for labor,
materials or supplies), which, if unpaid might become a lien upon any of its
property; provided, that the BORROWER shall, prior to payment thereof, have the
right to contest such taxes, assessments and charges in good faith by
appropriate proceedings so long as the BANK's interests are protected by bond,
letter of credit, escrowed funds or other appropriate security.
I. Notification of Default Under This and Other Loan or Financing
--------------------------------------------------------------
Arrangements. Promptly notify the BANK in writing of the occurrence of any
------------
Event of Default under this Agreement or any other loan or financing
arrangement.
J. Notification of Litigation. Promptly notify the BANK in writing of
--------------------------
any litigation that has been instituted or is pending or threatened which might
have a material adverse effect on its continued operations or financial
condition.
K. Notification of Governmental Action. Promptly notify the BANK in
-----------------------------------
writing of any governmental investigation or proceeding that has been instituted
or is pending or threatened,
including without limitation, matters relating to the federal or state tax
returns of the BORROWER, compliance with the Occupational Safety and Health Act,
or proceedings by the Treasury Department, Labor Department, or Pension Benefit
Guaranty Corporation with respect to matters affecting employee welfare, benefit
or retirement programs.
L. Maintenance of Records. Keep adequate records and books of account,
----------------------
in which complete entries will be made in a manner reasonably acceptable to the
BANK and consistently applied, reflecting all financial transactions of the
BORROWER.
M. Compliance With Laws. Comply in all material respects with all
--------------------
applicable laws, rules, regulations, and orders, such compliance to include,
without limitation, paying before the same become delinquent all taxes,
assessments, and governmental charges imposed upon it or upon its property;
provided, however, that BORROWER shall be entitled to contest the same in good
faith so long as such action, in the BANK's sole opinion, does not have an
adverse effect upon the BANK's rights hereunder.
N. Accounts and Deposits. Maintain its primary operating and deposit
---------------------
accounts with the BANK.
O. Notification of Material Adverse Chances. Promptly notify the BANK
----------------------------------------
in writing of any conditions or circumstances which might have a material
adverse effect on BORROWER's continued operations or financial condition.
P. Additional Financial and Other Covenants. Comply with the
----------------------------------------
additional financial and other covenants set forth on Schedule A attached
----------
hereto.
VII. NEGATIVE COVENANTS. Until payment in full of all indebtedness under the
Loans and the other Obligations, the BORROWER will not, without the express
prior written consent of the BANK:
A. Additional Indebtedness. Incur indebtedness for borrowed money (or
-----------------------
issue or sell any of its bonds, debentures, notes or similar obligations), or
enter into capital leases, except: (1) borrowings under the Loans; (2) other
Obligations to the BANK; (3) borrowings used to prepay in full the Obligations;
(4) ordinary trade account payables incurred in the regular course of business;
and (5) indebtedness due from one BORROWER to another.
B. Guaranties, Endorsements, and Contingent Liabilities. Guarantee,
----------------------------------------------------
endorse or otherwise become absolutely or contingently liable for the
obligations of any other person, partnership, corporation or other entity.
C. Liens and Mortgages. Incur, create, assume or suffer to exist any
-------------------
mortgage, pledge, lien, attachment, security interest, charge or other
encumbrance of any nature whatsoever on any of the BORROWER's assets, now or
hereafter owned, other than: (1) security interests or liens that may be granted
to the BANK; (2) deposits under Workmen's Compensation, Unemployment Insurance
and Social Security laws; and (3) liens imposed by law, such as carriers,
warehousemen's or mechanic's liens incurred in good faith in the ordinary course
of business, and which do not in the aggregate have a material adverse effect on
the BORROWER'S financial condition or its assets.
D. Capital Structure; Acquisition of Stock. Alter or amend the
---------------------------------------
BORROWER's capital structure (other than in connection with a Permitted
Acquisition or Permitted Divestiture as described below) or purchase, redeem or
otherwise acquire value for any of its outstanding capital stock, other than
purchases by Parent of its capital stock in the open market which (i)
individually and in the aggregate do not result in a violation by the BORROWER
of its financial covenants under this Agreement and (ii) are in compliance with
the requirements of federal and state securities laws.
E. Dividends and Distributions. Declare or pay dividends, or make any
---------------------------
other payment or distribution on account of BORROWER's capital stock.
F. Reorganizations and Acquisitions. Liquidate, merge, or consolidate
--------------------------------
into or with any other person or entity, or acquire all or substantially all of
the assets, capital stock, or other ownership interests of any person or entity
other than an acquisition of assets, capital stock, or other ownership interests
of a person or entity (an "Acquired Party") which acquisition meets the
following conditions (a "Permitted Acquisition"):
(i) the BORROWER shall provide reasonably satisfactory information
and analysis to the BANK at least ten (10) days prior to
completion of the acquisition concerning the Acquired Party and
the effect of the acquisition upon the financial condition and
operations of the BORROWER; and
(ii) immediately prior to such acquisition and after giving effect
thereto, no Event of Default shall exist, including, but not
limited to, any violation of BORROWER's financial covenants
existing prior to or resulting from the acquisition.
The BORROWER's principal financial officer shall certify as to the BORROWER's
compliance with the conditions set forth hereinabove at least ten (10) days
prior complete the acquisition.
G. Sale or Disposition of Assets. Sell, lease, transfer or otherwise
-----------------------------
dispose of the assets or properties of the BORROWER, except in the ordinary
course of business, or the capital stock of any subsidiary of the Parent, other
than a divestiture of assets, capital stock, or other ownership interests of any
BORROWER which meets the following conditions (a "Permitted Divestiture"):
(i) the BORROWER shall provide reasonably satisfactory information
and analysis to the BANK at least ten (10) days prior to
completion of the divestiture concerning the effect of the
divestiture upon the financial condition and operations of the
BORROWER; and
(ii) immediately prior to such divestiture and after giving effect
thereto, no Event of Default shall exist, including, but not
limited to, any violation of BORROWER's financial covenants
existing prior to or resulting from the divestiture.
The BORROWER's principal financial officer shall certify as to the BORROWER's
compliance with the conditions set forth hereinabove at least ten (10) days
prior to completion of the divestiture.
H. Ownership; Management. Change the current ownership by Parent of any
---------------------
other BORROWER (other than pursuant to a Permitted Divestiture), or replace
Xxxxxxx X. Xxxxxx as the Chairman and Chief Executive Officer of the Parent.
I. Covenant to Third Parties Regarding Liens and Mortgages. Provide any
-------------------------------------------------------
covenant to, or enter into any agreement with, any third party identical to,
substantially similar to, or of the general nature of the covenant provided by
the BORROWER to the BANK in Section VII(C) hereinabove.
VIII. CONDITIONS PRECEDENT TO MAKING OF LOANS. The obligation of the BANK
to make any Loan and make disbursements of the proceeds of the same to the
BORROWER is subject to the satisfaction by the BORROWER or its representatives
of the following conditions precedent with respect to such Loan: (1) the
BORROWER has executed and delivered all of the Loan Documents deemed appropriate
and necessary by the BANK, in form and substance satisfactory to the BANK; (2)
the BORROWER's warranties and representations as contained herein and in the
Loan Documents shall be accurate and complete and the BANK has received
satisfactory evidence of the same, including, at BANK's option, an opinion of
BORROWER's legal counsel to that effect; and (3) the BORROWER shall not be in
default under any of the covenants, warranties, representations, terms, or
conditions contained in this Agreement or in the Loan Documents as of the date
of entering into such Loan and as of the date of each disbursement thereunder.
IX. EVENTS OF DEFAULT; ACCELERATION. The occurrence of any one or more of
the following events shall constitute a default under this Agreement, each of
the other Loan Documents, and the Obligations (collectively, "Events of
Default"): (1) if any statement, representation or warranty made by the BORROWER
in this Agreement or in any of the other Loan Documents, or in connection with
any of the same, or if any financial statement, report, schedule, or certificate
furnished by the BORROWER or any of its officers or accountants to the BANK,
shall prove to have been false or misleading when made, or subsequently becomes
false or misleading, in any material respect (as determined in the BANK's sole
discretion); (2) default by the BORROWER in payment on its due date of any
principal or interest called for under any of the Loans or the Loan Documents,
or of other amounts due under any other of the Obligations, or other event of
default under the Loan Documents or the other Obligations, provided such default
is not cured within any applicable grace period thereunder; (3) default by the
BORROWER in the performance or observance of any of the provisions, terms,
conditions, warranties of covenants of this Agreement, the Loan Documents, or
any other of the Obligations; (4) the dissolution, termination of existence,
merger or consolidation of the BORROWER or a sale of
BORROWER's business not in the ordinary course of business; (5) the BORROWER
shall (a) apply for or consent to the appointment of a receiver, trustee or
liquidated of it or any of its property, (b) make a general assignment for the
benefit of creditors, (c) be adjudicated as bankrupt or insolvent, (d) file a
voluntary petition in bankruptcy, or a petition or an answer seeking
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation under any law or statute, or an answer admitting the material
allegations of a petition filed against it in any proceeding under any such law
or statute, or (e) offer or enter into any composition, extension or arrangement
seeking relief or extension of its debts; (6) proceedings shall be commenced or
an order, judgment or decree shall be entered, without the application, approval
or consent of the BORROWER, in or by any court of competent jurisdiction,
relating to the bankruptcy, dissolution, liquidation, reorganization or the
appointment of a receiver, trustee or liquidator of the BORROWER of all or a
substantial part of its assets, and such proceedings, order, judgment or decree
shall continue undischarged or unstayed for a period of sixty (60) days; (7)
BORROWER's inability to pay its debts as they mature or other act of insolvency,
however defined and determined by the BANK in its sole discretion; or (8) a
judgment for the payment of money shall be rendered against the BORROWER and the
same shall remain undischarged for a period of thirty (30) days, during which
period execution shall not be effectively stayed.
Upon the occurrence of any Event of Default, the BANK's commitment to make
further Loans or any advance thereunder, under the Loan Documents or any other
agreement with the BORROWER shall immediately cease and terminate and, at the
election of the BANK, all of the Obligations of the BORROWER to the BANK, either
under this Agreement, the Loan Documents, or otherwise, will immediately become
due and payable without further demand, notice or protest, all of which are
hereby expressly waived. Thereafter, the BANK may proceed to protect and
enforce its rights, at law, in equity, or otherwise, against the BORROWER, under
this Agreement, under any Loan Documents, under any other agreement between the
BORROWER and the BANK, or under any agreement between any guarantor or endorser
of the BORROWER's Obligations to the BANK.
X. BANK'S RIGHTS TO ASSIGN, PLEDGE AND PARTICIPATE LOANS.
A. Right to Pledge Notes. BANK may at any time pledge all or any
---------------------
portion of its rights under the Loan Documents, including any portion of either
of the Notes 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 BANK from its obligations under any of the
Loan Documents.
B. Assignment of Loans. BANK shall have the unrestricted right at any
-------------------
time or from time to time, and without BORROWER's consent, to assign all or any
portion of its right and obligations hereunder to one or more banks or other
financial institutions (each, an "Assignee"), and 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 BANK shall deem necessary to
effect the foregoing. In addition, at the request of BANK and any such
Assignee, BORROWER shall issue one or more new promissory notes, as applicable,
to any such Assignee and, if BANK
has retained any of its rights and obligations hereunder following such
assignment, to BANK, which new promissory notes shall be issued in replacement
of, but not in discharge of, the liability evidenced by the promissory note held
by BANK prior to such assignment and shall reflect the amount of the respective
commitments and loans held by such Assignee and BANK after giving effect to such
assignment. Upon the execution and delivery of appropriate assignment
documentation, amendments and any other documentation required by BANK in
connection with such assignment, and the payment by Assignee of the purchase
price agreed to by BANK, and such Assignee, such Assignee shall be a party to
this Agreement and shall have all of the rights and obligations of BANK
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 BANK pursuant to the assignment documentation
between BANK and such Assignee, and BANK shall be released from its obligations
hereunder and thereunder to a corresponding extent.
C. Participation of Loans. BANK shall have the unrestricted right at
----------------------
any time and from time to time, and without the consent of or notice to
BORROWER, to grant to one or more banks or other financial institutions (each, a
"Participant") participating interests in BANK's obligations to lend hereunder
and/or any or all of the loans held by BANK hereunder. In the event of any such
grant by BANK of a participating interest to a Participant, whether or not upon
notice to BORROWER, BANK shall remain responsible for the performance of its
obligations hereunder and BORROWER shall continue to deal solely and directly
with BANK in connection with BANK's rights and obligations hereunder.
D. Information to Assignees and Participants. BANK may furnish any
-----------------------------------------
information concerning BORROWER in its possession from time to time to
prospective Assignees and Participants, provided that BANK shall require any
such prospective Assignee or Participant to agree in writing to maintain the
confidentiality of such information.
XI. MISCELLANEOUS PROVISIONS.
A. Entire Agreement; Waivers. This Agreement, the Schedules hereto, and
-------------------------
the other Loan Documents together constitute the entire agreement between the
BORROWER and the BANK and no covenant, term, condition or other provision
thereof nor any default in connection therewith may be waived except by an
instrument in writing, signed by the BANK and delivered to the BORROWER. The
BANK's failure to exercise or enforce any of its rights, powers or privileges
this Agreement or the other Loan Documents shall not operate as a waiver
thereof. In the event of any conflict between the terms, covenants, conditions
and restrictions contained in the Loan Documents, the term, covenant, condition
or restriction which confers the greatest benefit upon the BANK shall control.
The determination as to which term, covenant, condition or restriction is more
beneficial shall be made by the BANK in its sole discretion.
B. Remedies Cumulative. All remedies provided under this Agreement and
-------------------
the other Loan Documents or afforded by law shall be cumulative and available to
the BANK until all of the BORROWER's Obligations to the BANK have been paid in
full.
C. Survival of Covenants. All covenants, agreements, representations
---------------------
and warranties made in this Agreement and in the Loan Documents shall be deemed
to be material and to have been relied on by the BANK, notwithstanding any
investigation made by the BANK or in its behalf, and shall survive the execution
and delivery of its Agreement and the Loan Documents. All such covenants,
agreements, representations and warranties shall bind and inure to the benefit
of the BORROWER's and the BANK's successors and assigns, whether so expressed or
not.
D. Governing Law; Jurisdiction. This Agreement and the other Loan
---------------------------
Documents shall be construed and their provisions interpreted under and in
accordance with the laws of the State of New Hampshire. The BORROWER, to the
extent they may legally do so, hereby consent to the jurisdiction of the courts
of the State of New Hampshire and the United States District Court for the State
of New Hampshire for the purpose of any suit, action or other proceeding arising
out of any of their obligations hereunder or with respect to the transactions
contemplated hereby, and expressly waive any and all objections they may have to
venue In any such courts.
E. Assurance of Execution and Delivery of Additional Instruments. The
-------------------------------------------------------------
BORROWER agrees to execute and deliver, or to cause to be executed and
delivered, to the BANK all such further instruments, and to do or cause to be
done all such further acts and things, as the BANK may reasonably request or as
may be necessary or desirable to effect further the purposes of this Agreement
and the other Loan Documents, but such shall not, in any event, be required to
provide collateral for this unsecured loan.
F. Waivers and Assents. The BORROWER hereby waives, to the fullest
-------------------
extent by law, demand, notice, protest, notice of acceptance of this Agreement
and the other Loan Documents, notice of Loans made, credit extended, or other
action taken in reliance hereon and all other demands and notices of any
description with respect to the Loan Documents. The BORROWER assents to any
extension or postponement of the time of payment or any other indulgence, to the
of any party or person primarily or secondarily liable, to the acceptance of
partial payments thereon and the settlement, compromising or adjusting of any
thereof, all in such manner and at such time or times as the BANK may deem
advisable.
G. Successors and Assigns. This Agreement and the Loan Documents shall
----------------------
be binding upon and inure to the benefit of the BANK, the BORROWER and their
respective successors and assigns; provided, however, the rights and obligations
of the BORROWER are not assignable, delegable or transferable without the
consent of the BANK.
H. Payment of Bank's Expenses. The BORROWER hereby covenants and
--------------------------
agrees that it shall pay to the BANK, on demand, any and all reasonable out-of-
pocket expenses, including reasonable attorneys' fees, court costs, sheriffs'
fees, and other expenses incurred or paid by the BANK in protecting and
enforcing its rights under this Agreement, the other Loan Documents and the
other Obligations, including the costs of preparation of this Agreement and the
Loan Documents, and any amendments, modifications, consents or waivers in
respect thereof, and all filing, auditing, accounting, and appraisal fees, if
applicable.
I. The Bank's Right to Offset. The BORROWER hereby grants to the BANK a
--------------------------
lien, continuing security interest, and right of setoff as security for all
liabilities and obligations to BANK, whether now existing or hereafter arising,
upon, in and against all deposits, credits, collateral and property, now or
hereafter in the possession, custody, safekeeping or control of BANK 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, BANK may set off the same or any
part thereof and apply to same to any liability or obligation of BORROWER even
though unmatured and regardless of the adequacy of any other collateral securing
the Loans. ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR
REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE LOANS, PRIOR TO
EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER
PROPERTY OF THE BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY
WAIVED.
J. Notices. All notices, requests, demands and other communications
-------
provided for hereunder shall be in writing (including telegraphic communication)
and shall be either mailed by registered or certified mail, return receipt
requested, postage prepaid, or delivered by overnight courier service, to the
applicable party at its address set forth at the beginning of this Agreement or
such other address as provided to the other parties by notice as herein
provided, and shall be effective on the date of the first attempted delivery
thereof by the U.S. Postal Service or overnight courier service, as shown on
the registered or certified mail return receipt or courier log.
K. Savings Clause. Any provision of this Agreement or any of the other
--------------
Loan Documents which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or thereof
or affecting the validity or enforceability of such provision in any other
jurisdiction.
L. Term of this Agreement. This Agreement shall remain in full force and
----------------------
effect until all of the Obligations have been paid in full and all of the terms,
conditions and covenants under the Loan Documents have been performed.
M. Usury. All agreements between BORROWER and BANK 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 BANK for the use or the
forbearance of the indebtedness evidenced by either of the Notes 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 the Notes 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
BORROWER and BANK in the execution, delivery and acceptance of this Agreement
and the Notes to contract in strict compliance with the laws of the State of New
Hampshire from time to time in effect. If, under or from any circumstances
whatsoever, fulfillment of any provision hereof or of any of the Notes or other
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 BANK should ever receive as interest an
amount which would exceed the highest lawful rate, such amount which would be
excessive interest shall be applied to the reduction of the principal balance
evidenced by the applicable Note and not to the payment of interest. This
provision shall control every other provision of the Notes and all other Loan
Documents.
N. Lost Note or other Loan Document. Upon receipt of an affidavit of an
--------------------------------
officer of BANK as to the loss, theft, destruction or mutilation of any Note or
any other Loan 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 Loan Document, BORROWER will issue, in lieu thereof, a
replacement Note or other Loan Document in the same principal amount thereof and
otherwise of like tenor.
O. Waiver of Trial by Jury. BORROWER AND BANK MUTUALLY HEREBY KNOWINGLY,
-----------------------
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION
HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS WAIVER CONSTITUTES A MATERIAL
INDUCEMENT FOR BANK TO ENTER INTO THIS AGREEMENT AND MAKE THE LOANS.
IN WITNESS WHEREOF, the BANK and the BORROWER have executed this Agreement
all as of the day and year first above written.
WITNESS: BANK:
FLEET BANK - NH
/s/Xxxxxxxxx X. Xxxxxxxxx
/s/ Xxxxxx X. Xxxxxx, Xx. By: /s/ Xxxxxxxxx X. Xxxxxxxxx
------------------------- ---------------------------
Xxxxxxxxx X. Xxxxxxxxx
Assistant Vice President
FLEET BANK - NH
COMMERCIAL LOAN AGREEMENT
SCHEDULE A
----------
ADDITIONAL TERMS AND CONDITIONS
I. Fees Payable by BORROWER:
------------------------
Loan Restructuring Fee: $25,000 payable to BANK at Closing.
Unused Revolving Line of Credit Commitment Fee: 0.2% per annum of daily average
of unadvanced amounts under Revolving Line of Credit Loan (based upon the
maximum available amount under Section I. A. of the Loan Agreement),
determined and payable quarterly in arrears.
II. Description of Financial Statements and Reports to be Delivered:
---------------------------------------------------------------
A. Annual consolidated and consolidating financial statements of
BORROWER within ninety (90) days after the end of each fiscal year, including
balance sheets and statements of income, retained earnings and surplus, and a
statement of cash flow, together with supporting schedules, setting forth in
each case comparative figures for the preceding fiscal year, and in each case
audited by and with an unqualified opinion of a "big six" independent certified
public accounting firm.
B. Annual reports on Form 10-K and quarterly reports on Form 10-Q of the
Parent as and when filed with the United States Securities and Exchange
Commission.
C. Annual budgets and financial projections on a quarterly basis as
prepared by BORROWER for each fiscal year of BORROWER within thirty (30) days of
the beginning of each fiscal year.
D. Monthly management prepared consolidated financial statements of
BORROWER within twenty (20) days after the end of each calendar month, including
balance sheets and statements of income, retained earnings and surplus, and a
statement of cash flow, together with supporting schedules.
E. Letters to management issued to BORROWER by its independent certified
public accounting firm in connection with its audit of the BORROWER for each
fiscal year with respect to which any such letters are issued, as and when such
letters are received by the BORROWER.
III. Description of Additional Financial and other Covenants:
--------------------------------------------------------
A. BORROWER shall have on a consolidated basis a minimum Net Worth (as
hereinafter defined) equal to at least Twenty-one Million Dollars
($21,000,000.00) as at September 30, 1997
and at all times thereafter through September 29, 1998, and equal to least
Twenty-five Million Dollars ($25,000,000.00) as at September 30, 1998 and at all
times thereafter. "Net Worth " means total assets minus total liabilities, all
as determined in accordance with generally accepted accounting principles from
BORROWER's financial statements delivered to the Bank in accordance with the
covenants of BORROWER hereinabove (the "Financial Statements").
B. BORROWER shall have on a consolidated basis a ratio of Funded Debt (as
hereinafter defined) to EBITDA (as hereinafter defined) of not greater than (i)
4.5.0:1 as at September 30, 1997; and (ii) 3.0:1 as at September 30, 1998 and as
at each fiscal quarter end thereafter. "Funded Debt " means the aggregate
interest bearing indebtedness of the BORROWER as of the applicable date of
determination, all as determined in accordance with generally accepted
accounting principles from BORROWER's Financial Statements. "EBITDA" means
earnings for the twelve-month period ending on the applicable date of
determination, before reduction for interest, taxes, depreciation, and
amortization expense for such period, all as determined in accordance with
generally accepted accounting principles from BORROWER's Financial Statements.
C. The BORROWER shall maintain EBITDA of not less than $3,000,000 for the
three (3) months ended December 31, 1997; $6,500,000 for the six (6) months
ended March 31, 1998; and $10,000,000 for the nine (9) months ended June 30,
1998, and at each fiscal quarter end thereafter, all as shown on BORROWER's
Financial Statements.
D. BORROWER shall have on a consolidated basis a ratio of EBIT (as
hereinafter defined) to Interest Expense (as hereinafter defined) of not less
than 3.0:1 as at each fiscal quarter end of BORROWER. "EBIT" means earnings for
the twelve (12) month period prior to the date of determination, before
reduction for Interest Expense and taxes, all as determined in accordance with
generally accepted accounting principles from BORROWER's Financial Statements.
"Interest Expense" means the aggregate interest on all indebtedness and capital
leases of the BORROWER payable during the twelve (12) month period prior to the
date of determination, all as determined in accordance with generally accepted
accounting principles from BORROWER's Financial Statements.
E. BORROWER shall not make capital expenditures in any fiscal year in an
aggregate amount exceeding $2,500,000.00, commencing with the fiscal year ending
September 30, 1998.
F. BORROWER shall have a ratio of EBITDA to Debt Service (as hereinafter
defined) of not less than 2.0:1 as of each fiscal quarter end of BORROWER
commencing September 30, 1997. As used herein, "Debt Service" means the
aggregate interest on the Revolving Line of Credit Loan and principal and
interest on all other Loans under the Loan Agreement due and payable during the
twelve (12) month period ending on the date of determination, all as determined
in accordance with GAAP from BORROWER's Financial Statements.
G. BORROWER shall report and certify to Bank its compliance with the
financial covenants hereinabove within forty-five (45) days of each fiscal
quarter end on the form attached hereto as Exhibit A.
---------
BORROWER:
WPI GROUP, INC.,
WPI POWER SYSTEMS, INC.,
WPI MAGNETEC, INC.,
WPI ELECTRONICS, INC.,
WPI 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., and
WPI HUSKY COMPUTERS, INC.
/s/ Xxxxxxxxx X. Xxxxxxxxx
/s/ Xxxxxx X. Xxxxxx, Xx. By: /s/ Xxxx X. Xxxxxx
---------------------------- --------------------------------------
Xxxx X. Xxxxxx, for, on behalf of, and
as Duly Authorized Officer or Agent of
each of the above-named corporations
FLEET BANK - NH
COMMERCIAL LOAN AGREEMENT
SCHEDULE A
EXHIBIT A
COMPLIANCE CERTIFICATE
Fleet Bank - NH
000 Xxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxxxxx 00000
ATTENTION: Xxxx X. Xxxxx, Senior Vice President
Ladies and Gentlemen:
Pursuant to the provisions of a certain Amended and Restated Commercial Loan
Agreement dated as of December 26, 1997 (the "Loan Agreement"), by and between
WPI GROUP, INC., WPI ELECTRONICS, INC., WPI MAGNETEC, INC., WPI MICRO PALM,
INC., WPI POWER SYSTEMS, INC., WPI TERMIFLEX, INC., WPI MICRO PROCESSOR SYSTEMS,
INC., WPI DECISIONKEY, INC., WPI UK HOLDING, INC., WPI UK HOLDING II, INC., and
WPI OYSTER TERMINALS, INC., each a New Hampshire corporation, and HUSKY
COMPUTERS, INC., a Florida corporation (collectively, the "BORROWER"), and FLEET
BANK - NH, a bank organized under the laws of the State of New Hampshire with a
principal place of business at 0000 Xxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxxxxx (the
"BANK"), the undersigned hereby certifies as follows:
1. That the financial statements and reports (the Financial Statements.) of
the BORROWER delivered to the Bank with this certificate are true and accurate
in all material respects for the periods covered therein and as of the date
thereof, and there have been no material changes since the date of such
Financial Statements to the date hereof.
2. That during the periods set forth in the Financial Statements, the
BORROWER was in compliance with the Financial Covenants set forth in Section III
of Schedule A of the Loan Agreement, and, specifically, that as of the ending
date of the period covered by the Financial Statements, the BORROWER had a:
(a) Net Worth of $_________________ (Requirement: $21,000,000.00 or greater);
[Subject to increase per Loan Agreement]
(b) Ratio of Funded Debt to EBITDA of _______:_______ (Requirement: not
greater than 3.0:1);
(c) EBITDA of $______________ (Requirement: not less than $3,500,000)
[subject to increase per Loan Agreement]
(d) Ratio of EBIT to Interest Expense of ______:______ (Requirement: not
less than 3.0:1);
(e) Capital expenditures of $____________________ (Requirement: not to exceed
$2,500,000.00); and
(f) Ratio of EBITDA to Debt Service of ______:______ (Requirement: not less
than 2.0:1).
3. The representations and warranties contained in the Loan Agreement are
otherwise true and correct in all material respects on and as of the date hereof
as if made on and as of such date and all covenants contained in the Loan
Agreement have been and continue to be met.
Terms defined in the Loan Agreement and not otherwise expressly defined herein
are used herein with the meanings so defined in the Loan Agreement.
IN WITNESS WHEREOF, the undersigned has executed this certificate on this
_____ day of _________________, 199___.
WPI GROUP, INC.,
WPI POWER SYSTEMS, INC.,
WPI MAGNETEC, INC.,
WPI ELECTRONICS, INC.,
WPI 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., and
WPI HUSKY COMPUTERS, INC.
By:
----------------------------- ---------------------------------------
Witness As Duly Authorized Officer or Agent of
each of the above-named corporations
