Exhibit 10.4
SECURITY AGREEMENT
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SECURITY AGREEMENT (the "Agreement"), made as of this 26th day of December,
1997, 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 WPI HUSKY COMPUTERS, INC., a Florida corporation, all such
corporations having their principal offices at 1155 Elm Street Manchester, New
Hampshire 03101 (all of the foregoing corporations are hereinafter referred to
individually and collectively as the "Debtor"), and FLEET BANK - NH, a bank
organized under the laws of the State of New Hampshire with an address of Mail
Stop NHNA E02A, 1155 Elm Street, Manchester, New Hampshire 03101 (the "Secured
Party").
WITNESSETH:
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WHEREAS, pursuant to an Amended and Restated Commercial Loan Agreement of
even date (the "Loan Agreement") between the Secured Party and the Debtor,
Secured Party has granted to Debtor (i) a certain revolving line of credit in
the principal amount of up to Thirty Million Dollars ($30,000,000.00), and (ii)
a certain term loan in the principal amount of Fifteen Million Dollars
($15,000,000.00) (collectively, the "Loan"), all as set forth and described in
the Loan Agreement; and
WHEREAS, the obligation of the Secured Party to make the Loan to the Debtor
is subject to the condition, among others, that the Debtor shall execute and
deliver this Agreement and grant the security interests hereinafter described.
Terms not otherwise defined herein shall have the meanings ascribed to them in
the Loan Agreement.
NOW, THEREFORE, in consideration of the willingness of the Secured Party to
make the Loan to the Debtor and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Security Interest. As security for the Secured Obligations described
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in Section 2 hereof, Debtor hereby grants to the Secured Party a first priority
security interest in and lien on all of the property and assets of each Debtor
(other than real estate), including, but not limited to the property of the
types described below (hereinafter referred to collectively as the
"Collateral"):
(a) All equipment, including machinery, motor vehicles, office
equipment, furniture, fixtures, along with all other parts, tools, trade-
ins, repairs, accessories, accessions, modifications, and replacements,
whether now owned or subsequently acquired, constructed, or attached or
added to, or placed in, the foregoing (collectively, the "Equipment");
(b) All inventory, wherever located, including goods, merchandise and
other
personal property, held for sale or lease or furnished or to be furnished
under a contract of service, or constituting raw materials, work in process
or materials used or consumed in the Debtor's business, or consigned to
others or held by others for return to the Debtor, whether now owned or
subsequently acquired or manufactured and wherever located (collectively,
the "Inventory");
(c) All accounts receivable, including, without limitation, accounts,
contracts, contract rights, chattel paper, instruments, rents, deposits,
general intangibles, and any other obligations of any kind whether now
existing or hereafter arising out of or in connection with the sale or
lease of goods or the rendering of services, and all rights now or
hereafter existing in and to all security agreements, notes, leases,
licenses, franchises, supply agreements, and other contracts securing or
otherwise relating to any such accounts, contracts, contract rights,
chattel paper, instruments, rents, deposits, general intangibles, or
obligations (any and all such accounts, contracts, contract rights, chattel
paper, instruments, rents, deposits, general intangibles, and obligations
being the "Receivables", and any and all such security agreements, notes,
leases, licenses, franchises, supply agreements, and other contracts being
the "Related Contracts");
(d) All general intangibles, including, but not limited to, corporate
names, trade names, trademarks, trade secrets, books and records, customer
lists, catalogs, blue prints and plans, computer programs, tapes and
related electronic data, processing software, and all corporate ledgers;
(e) Any and all additions, accessions, substitutions or replacements
to or for any of the foregoing;
(f) Any and all products and proceeds of any or all of the foregoing,
including, without limitation, cash, cash equivalents, tax refunds and the
proceeds of insurance policies providing coverage against the loss or
destruction of or damage to any of the Collateral, or any indemnity,
warranty, or guarantee payable by reason of loss or damage to or otherwise
with respect to any of the Collateral (whether or not the Secured Party is
the loss payee thereof);
(g) All intercompany accounts, accounts receivable and promissory
notes evidencing any intercompany indebtedness, including without
limitation the promissory notes and obligations listed in Exhibit 1
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attached hereto;
(h) All of the Debtor's after-acquired property of the kinds and
types described in paragraphs (a) - (g) herein;
(i) All records and data relating to any of the property described
above, whether in the form of a writing, photograph, microfilm, microfiche,
or electronic media, together with all of the Debtor's right, title, and
interest in and to all computer software required to utilize, create,
maintain and process any of such records or data or electronic media; and
also in (1) all checks, money, securities, bank accounts, deposit accounts, and
other accounts in the possession of or held by the Secured Party whether in the
name of the Debtor or in the name of the Secured Party, and (2) all other
property given by the Debtor to the Secured Party pursuant
to this Agreement.
2. Secured Obligations. The security interest hereby granted shall secure
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the following (the "Secured Obligations"):
(a) The Debtor's repayment to the Secured Party of the Loan, together
with interest, late charges, and any other applicable charges thereon or
respecting thereto;
(b) The Debtor's payment or performance of its obligations under the
Loan Agreement and under the other Loan Documents (as defined, described
and identified in the Loan Agreement, hereinafter the "Loan Documents"), as
the same may be amended, modified, extended, renewed, replaced or restated;
(c) The payment of all other sums with interest and charges thereon
advanced in accordance herewith to protect the validity, security, and
priority of this Agreement, the Loan Agreement, or the Loan Documents; and
(d) Any and all other obligations of Debtor to Secured Party of every
kind and description, direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising, including without limitation
increases in any of such Secured Obligations.
3. Warranties and Representations of the Debtor. Debtor hereby makes the
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following representations and warranties which shall survive the execution and
delivery of this Agreement and shall be continuing representations and
warranties as long as any Secured Obligation remains outstanding:
(a) All representations and warranties made in the Loan Agreement and
the Loan Documents relating to the Debtor and the Collateral are true,
accurate and complete in all material respects;
(b) The Debtor's principal place of business is located at the
address first set forth above, except as such address may be changed upon
prior written notice to the Secured Party; the Debtor's executive offices
and the office where its books and records are kept and are to be kept
concerning the Inventory, Receivables, Related Contracts and other
Collateral are at the same address; and the Debtor has no other places of
business except for manufacturing, sales and service facilities, and
warehouses at the locations listed on Schedule I hereto;
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(c) No material authorization, approval or other action by, and no
notice to or filing with, any governmental authority or other person is
required either (i) for the grant by the Debtor of the security interests
granted hereby or for the execution, delivery or performance of this
Agreement by the Debtor, or (ii) for the perfection of or the exercise by
the Secured Party of its respective rights and remedies hereunder, except
the filing of financing statements;
(d) The Debtor has good and marketable title to all of the Collateral
pledged by it hereunder, free and clear of any liens, security interests,
encumbrances or interests or
claims of any other person or entity, except those set forth on Schedule II
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hereto (the "Permitted Encumbrances"), and there are no sums owed with
respect to the Collateral other than as disclosed on the Debtor's financial
statements delivered to the Secured Party and other than trade payables
incurred in the ordinary course of business since the date of such
financial statements;
(e) Upon the filing of UCC-1 financing statements being delivered at
or prior to the execution hereof, the Secured Party will have a valid,
perfected first security interest in all of the Collateral which may be
perfected by filing of financing statements, subject to the Permitted
Encumbrances;
(f) The Debtor has not performed any acts which might prevent the
Secured Party from enforcing any of the material terms and conditions of
this Agreement or which would limit any of them in any such enforcement;
(g) Schedule III attached hereto sets forth the description and
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location of all Collateral not located at the Debtor's principal place of
business, together with a list of the record owners of the real estate on
which any Collateral constituting fixtures is located; and
(h) No effective financing statements or other similar instrument in
effect covering all or any part of the Collateral is on file in any
recording office, except as may have been filed in favor of Secured Party
relating to this Agreement and as filed to perfect the Permitted
Encumbrances.
4. Affirmative Covenants of the Debtor.
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(a) The Debtor shall promptly notify and provide the Secured Party
with a complete description of the opening of any new places of business,
the closing of any existing places of business, the conduct of business
under any names or through any entities other than those set forth herein,
the relocation of any of the Collateral to any new place of business or any
other act which would affect the financing statements filed by the Secured
Party;
(b) The Debtor shall continuously take all steps that are necessary
or prudent to protect the security interests of the Secured Party in the
Collateral;
(c) The Debtor shall defend the Collateral against the claims and
demands of all persons;
(d) The Debtor shall deliver and pledge to the Secured Party,
endorsed or accompanied by instruments of assignment or transfer
satisfactory to the Secured Party, any instruments, documents, and chattel
paper which the Secured Party may reasonably specify, including without
limitation the promissory notes identified in Exhibit 1 attached hereto;
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(e) The Debtor shall comply, in all material respects, with all
governmental regulations applicable to the Collateral or any part thereof
or to the operation of the
Debtor's business; provided, however, that the Debtor may contest any
governmental regulation in any reasonable manner which shall not in the
reasonable opinion of the Secured Party adversely affect the Secured
Party's rights or the first priority of its security interest in the
Collateral;
(f) The Debtor shall pay promptly when due, all taxes, assessments
and governmental charges or levies imposed upon the Collateral or in
respect of its income or profits therefrom, as well as all claims of any
kind, except that no such charge need be paid if (i) the validity thereof
is being contested in good faith by appropriate proceedings, (ii) such
proceedings do not involve any danger of the sale, forfeiture or loss of
any of the Collateral or any interest therein; and (iii) such charge is
adequately reserved against in accordance with the generally accepted
accounting principles;
(g) The Debtor shall cause the Equipment to be maintained and
preserved in good working order, and shall make all repairs, replacements,
additions, and other improvements necessary to maintain the Equipment in
such condition;
(h) The Debtor shall exercise its best efforts to preserve all
beneficial Related Contracts;
(i) The Debtor shall take all commercially reasonable steps necessary
to collect the Receivables;
(j) The Debtor shall use its best efforts to assure that (i) no
Receivable is or shall be subject to any defense, offset, counterclaim, or
discounts or allowances other than such as customarily arise in the
ordinary course of Debtor's business, (ii) all statements made and all
unpaid balances appearing in the invoices, documents, agreements relating
to each Receivable are and shall be true, genuine, and correct in all
respects, and (iv) no Receivable shall be converted to a note or other
instrument in face amount of $20,000 US or more, or when aggregated with
the unpaid balances of similar notes or instruments exceeds $100,000,
unless the same shall be delivered to the possession of the Secured Party
within ten (10) days of the date of execution of such note or instrument;
(k) The Debtor shall, with respect to any Collateral which consists
of trucks, automobiles, or other motor vehicles, or any other Collateral
required to be titled, deliver all titles thereto to the Secured Party to
be held by the Secured Party and Debtor shall make, execute, and deliver
any and all applications, and take such other action to assure that the
Secured Party is listed of record as the first priority and sole lienholder
on all title certificates;
(l) Debtor shall keep accurate and complete records listing and
describing the Collateral. Secured Party shall have the right at any time
to inspect the Collateral and to audit and make copies of any records or
other writings which relate to the Collateral or the general financial
condition of Debtor. Secured Party may remove such records and writings
for the purpose of having copies made thereof;
(m) The Debtor shall advise the Secured Party promptly, in reasonable
detail, (i) of any lien, security interest, encumbrance, or claim made or
asserted against any of the
Collateral, (ii) of any material change, substantial loss or depreciation
in the composition of the Collateral, and (iii) of the occurrence of any
other material adverse effect on the aggregate value, enforceability or
collectibility of the Collateral or on the security interests created
hereunder;
(n) The Debtor shall give, execute, deliver and file or record in the
proper governmental offices, any instrument, paper or document, including,
but not limited to, one or more financing statements under the Uniform
Commercial Code, reasonably satisfactory to the Secured Party, or take any
action which the Secured Party may deem necessary or desirable in order to
create, preserve, perfect, extend, continue, modify, terminate or otherwise
effect any security interest granted pursuant hereto, or to enable the
Secured Party to exercise or enforce any of its rights hereunder; and
(o) The Debtor shall keep, and stamp or otherwise mark, any of its
documents, instruments and chattel paper and its books and records relating
to any of the Collateral in such manner as the Secured Party may reasonably
require.
5. Negative Covenants of the Debtor. Except as otherwise provided in the
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Loan Agreement, including without limitation the provisions of Section VII(G) of
the Loan Agreement respecting Permitted Divestitures, or in this Agreement,
without the prior written consent of the Secured Party, the Debtor shall not:
(a) Transfer, sell or assign any of the Collateral other than
Inventory in the ordinary course of business and Equipment which has become
obsolete or is surplus or is being replaced;
(b) Allow or permit any other security interest or lien to attach to
any of the Collateral;
(c) File, authorize, or permit to be filed in any jurisdiction any
financing statement relating to any of the Collateral unless the Secured
Party is named as sole secured party;
(d) Permit any of the Collateral to be levied upon under any legal
process;
(e) Permit anything to be done that may materially impair the value
of any of the Collateral or the security therein intended to be afforded
hereby; or
(f) Use the Collateral in violation of any law or in any manner
inconsistent with any policy of insurance thereon.
6. Fixtures. It is the intention of the parties hereto that none of the
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Collateral shall become fixtures. Without limiting the generality of the
foregoing, the Debtor will, if requested by the Secured Party, use reasonable
efforts to obtain waivers of lien, in form satisfactory to the Secured Party,
from each mortgagee or lessor of real property (other than the Secured Party) on
which any fixtures included in the Collateral is or is to be located.
7. Insurance. Debtor shall, at its own expense, maintain insurance
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covering the Collateral against such risks, with such insurers, in such form,
and in such amounts as acceptable to Secured
Party, but in any event, in such amounts and with such coverage as is customary
in Debtor's type of business. All insurance policies shall be written so as to
be payable in the event of loss to Secured Party as lender loss payee and shall
provide for thirty (30) days' written notice to Secured Party of cancellation or
modification. At the request of Secured Party, all insurance policies shall be
furnished to and held by Secured Party. Debtor hereby collaterally assigns to
Secured Party return premiums, dividends and other amounts which may be or
become due upon cancellation of any such policies for any reason whatsoever and
directs the insurers to pay Secured Party any sums so due. Secured Party is
hereby appointed as attorney irrevocable to collect return premiums, dividends
and other amounts due on any insurance policy and the proceeds of such
insurance, to settle any claims with the insurers in the event of loss or
damage, to endorse settlement drafts, and to cancel, assign, or surrender any
insurance policies, provided that Secured Party shall only exercise the
foregoing powers upon the occurrence of an Event of Default (as defined
hereinbelow). If, while any Secured Obligations are outstanding, and so long as
no Event of Default exists, any return premiums, dividends, other amounts or
proceeds are paid to Secured Party under such policies, Secured Party shall pay
over such return premiums, dividends, other amounts and proceeds in whole or in
part to Debtor for the purpose of repairing or replacing the Collateral
destroyed or damaged, any return premiums, dividends, other amounts and proceeds
so paid over by Secured Party to be secured by this Agreement. If an Event of
Default exists, then the Secured Party may apply such return premiums,
dividends, other amounts and proceeds in whole or in part to the payment or
satisfaction of any of the Secured Obligations in whatever order Secured Party
determines.
8. Receivables. After the occurrence of an Event of Default, Debtor agrees
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that Secured Party may a) communicate with account debtors in order to verify
the existence, amount, and terms of any Receivables, and b) notify account
debtors of the security interests established herein and require that payments
on Receivables be made directly to Secured Party, and upon the request of
Secured Party, Debtor shall notify account debtors and indicate on all billings
that payments and returns are to be made directly to Secured Party. In
furtherance of the foregoing, Debtor hereby appoints Secured Party attorney
irrevocable with full power to collect, compromise, endorse, sell, or otherwise
deal with the Receivables or proceeds thereof and to perform the terms of any
contract in order to create Receivables in Secured Party's name or in the name
of Debtor, provided that Secured Party shall only exercise such power following
the occurrence of an Event of Default. This Agreement may be, but need not be,
supplemented by separate assignments of Receivables and contract rights and, if
such assignments are given, the rights and security interests given thereby
shall be in addition to and not in limitation of the rights and security
interests granted by this Agreement.
9. Events of Default. The following events shall be deemed "Events of
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Default" hereunder:
(a) The occurrence of an Event of Default under the Loan Agreement or
any of the Loan Documents;
(b) Debtor fails to observe or perform any covenant, warranty, or
agreement required to be observed or performed by it under this Agreement
which is not cured within thirty (30) days after notice from Secured Party;
or
(c) Uninsured loss, theft, damage, or destruction of any substantial
portion of any
of the Collateral which has a material adverse effect on the ability of the
Debtor to make payments of its Secured Obligations or on the adequacy of
the Collateral as security for the Secured Obligations.
10. Rights and Remedies of Secured Party on Default. Upon the occurrence
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of any Event of Default, Secured Party shall have, by way of example and not of
limitation, the following rights and remedies:
(a) Secured Party may declare the Secured Obligations, or any of
them, to be immediately due and payable without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived;
(b) In addition to all other rights and remedies contained in this
Agreement, the Loan Agreement, and in the Loan Documents, Secured Party may
exercise the rights and remedies accorded Secured Party by the Uniform
Commercial Code or by any other applicable law, all of which rights and
remedies shall be cumulative and non-exclusive to the extent permitted by
law;
(c) Secured Party shall have the right to enter and/or remain upon
the Premises of Debtor, or any other place or places where any of the
Collateral is located and kept, without any obligation to pay rent to
Debtor or others, and remove Collateral therefrom to the premises of the
Secured Party or any agent of Secured Party for such time as Secured Party
may desire in order to maintain, collect, sell and/or prepare the
Collateral for sale, liquidation or collection;
(d) Secured Party may require the Debtor at Debtor's cost to assemble
the Collateral and make it available to Secured Party at a place designated
by Secured Party;
(e) Secured Party may take possession of and use and operate the
Collateral in the manner and for the purposes as set forth in Section 11
hereinbelow;
(f) Secured Party may sell, lease, or otherwise dispose of the
Collateral as set forth in Section 12 hereinbelow;
(g) Secured Party shall have the right to set-off, without notice to
the Debtor, any and all deposits or other sums at any time or times
credited or due from Secured Party to Debtor, whether in a special account
or other account or represented by a certificate of deposit (whether or not
matured); which deposit and other sums shall at all times constitute
additional security for the Secured Obligations;
(h) Secured Party may perform any warranty, covenant or agreement
which Debtor has failed to perform under this Agreement; and
(i) Secured Party may take any other action which Secured Party deems
necessary or desirable to protect the Collateral or the security interests
granted herein.
11. Rights of Secured Party to Use and Operate Collateral. Upon the
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occurrence of any Event of Default, but subject to the provisions of the Uniform
Commercial Code or other
applicable law, the Secured Party shall have the right and power to take
possession of all or any part of the Collateral, and to exclude the Debtor and
all persons claiming under the Debtor wholly or partly therefrom, and thereafter
to hold, store, and/or use, operate, manage and control the same. Upon any such
taking of possession, the Secured Party may, from time to time, at the expense
of the Debtor, make all such repairs, replacements, alterations, additions and
improvements to and of the Collateral as the Secured Party may reasonably deem
proper. In any such case, subject as aforesaid, the Secured Party shall have the
right to manage and control the Collateral and to carry on the business and to
exercise all rights and powers of the Debtor in respect thereto as the Secured
Party shall deem best, including the right to enter into any and all such
agreements with respect to the leasing and/or operation of the Collateral or any
part thereof as the Secured Party may see fit; and the Secured Party shall be
entitled to collect and receive all rents, issues, profits, fees, revenues and
other income of the same and every part thereof. Such rents, issues, profits,
fees, revenues and other income shall be applied to pay the expenses of holding
and operating the Collateral and of conducting the business thereof, and of all
maintenance, repairs, replacements, alterations, additions, and improvements,
and to make all payments which the Secured Party may be required or may elect to
make, if any, for taxes, assessments, insurance and other charges upon the
Collateral or any part thereof, and all other payments which the Secured Party
may be required or authorized to make under any provision of this Agreement
(including reasonable legal costs and attorneys' fees). The remainder of such
rents, issues, profits, fees, revenues and other income shall be applied to the
payment of the Secured Obligations in such order of priority as the Secured
Party may determine in its sole discretion and any surplus shall be returned to
the Debtor. Without limiting the generality of the foregoing, the Secured Party
shall have the right to apply for and have a receiver appointed by a court of
competent jurisdiction in any action taken by the Secured Party to enforce its
rights and remedies hereunder in order to manage, protect and preserve the
Collateral and continue the operation of the business of the Debtor and to
collect all revenues and profits thereof and apply the same to the payment of
all expenses and other charges of such receivership including the compensation
of the receiver and to the payment of the Secured Obligations as aforesaid until
a sale or other disposition of such Collateral shall be finally made and
consummated.
12. Rights of Secured Party to Sell Collateral. Upon ten (10) days prior
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written notice by registered or certified mail by Secured Party to Debtor at the
address of the Debtor set forth above (or at such other address or addresses as
the Debtor shall specify in writing by like notice to the Secured Party) of the
time and place of any intended disposition of Collateral, and following the
occurrence of an Event of Default, then Secured Party shall have the right and
power to sell, assign, lease, or otherwise dispose of the Collateral from any
business premises of the Debtor, either at public auction or private sale, by
liquidation sale or other disposition, or as if the sale was being made in the
ordinary course of Debtor's business, with or without notice to the public that
the said sale or disposition is for the benefit of the Secured Party; provided,
however, that if the Collateral is perishable or threatens to decline speedily
in value or is of a type customarily sold on a recognized market, then Secured
Party shall have the right and power to dispose of the Collateral without prior
notice to Debtor and Debtor expressly waives any rights to notice under such
circumstances. The notices described above shall be deemed to meet any
requirement hereunder or under any applicable law (including the Uniform
Commercial Code) that reasonable notification be given of the time and place of
such sale or other disposition. After deducting all costs and expenses of
collection, storage, custody, sale or other disposition and delivery (including
reasonable legal costs and attorneys' fees) and all other charges against the
Collateral, the residue of the proceeds of any such sale or disposition shall be
applied to the
payment of the Secured Obligations in such order of priority as the Secured
Party may determine in its sole discretion and any surplus shall be returned to
the Debtor. In the event the proceeds of any sale, lease or other disposition of
the Collateral hereunder are insufficient to pay all of the Secured Obligations
in full, the Debtor will be liable for the deficiency, together with interest
thereon at the maximum rate provided in the Loan Agreement and the cost and
expenses of collection of such deficiency, including, without limitation,
reasonable fees of attorneys, experts, and agents, expenses and disbursements.
13. Attorney-in-Fact. The Secured Party is hereby appointed the attorney-
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in-fact, with full power of substitution, of the Debtor for the purpose of
carrying out the provisions of this Agreement and taking any action and
executing any instruments (including, without limitation, financing or
continuation statements, conveyances, assignments, and transfers) which the
Secured Party may deem necessary or advisable to accomplish the purposes hereof,
which appointment as attorney-in-fact is coupled with an interest and is
irrevocable, provided the Secured Party shall only exercise the power granted
herein following the occurrence of an Event of Default.
14. Waiver, etc. The Debtor hereby waives presentment, demand, notice,
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protest and, except as is otherwise provided herein, all other demands and
notices in connection with this Agreement or the enforcement of the Secured
Party's rights hereunder or in connection with any Secured Obligations or any
Collateral. The Debtor further consents to and waives notice of the granting of
renewals, extensions of time for payment or other indulgences to the Debtor or
to any account debtor in respect of any Receivable, substitution, release or
surrender of any Collateral, addition or release of persons primarily or
secondarily liable on any Secured Obligation or on any Receivable or other
Collateral, or the acceptance of partial payments on any Secured Obligation or
on any account receivable or other Collateral and/or the settlement or
compromise thereof. No delay or omission on the part of the Secured Party in
exercising any right hereunder shall operate as a waiver of such right or of any
other right hereunder. Any waiver of any such right on any one occasion shall
not be construed as a bar to or waiver of any such right on any such future
occasion.
15. Termination; Assignments, etc. This Agreement and the security
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interest in the Collateral created hereby shall terminate when all of the
Secured Obligations have been paid, performed, and finally discharged in full.
In the event of a sale or assignment by the Secured Party of all or any of the
Secured Obligations held by it, such Secured Party may assign or transfer its
rights and interests under this Agreement in whole or in part to the purchaser
or purchasers of such Secured Obligations, whereupon such purchaser or
purchasers shall become vested with all of the powers and rights of such Secured
Party hereunder, and such Secured Party shall thereafter be forever released and
fully discharged from any liability or responsibility hereunder, with respect to
the rights and interests so assigned.
16. Notices. All notices, requests, demands and other communications
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provided for hereunder shall be in writing (including telegraphic communication)
and shall be either mailed by certified mail, return receipt requested, or
delivered by overnight courier service, to the applicable party at the addresses
first set forth above, or, as to each party, at such other address as shall be
designated by such parties in a written notice to the other party complying as
to delivery with the terms of this Section. All such notices, requests, demands
and other communication shall be effective on the date of first attempted
delivery.
17. Miscellaneous.
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(a) The powers conferred on the Secured Party hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon
it to exercise any such powers. Except for the safe custody of any
Collateral in its possession and the accounting for monies actually
received by it hereunder, the Secured Party shall not have any duty as to
any Collateral or as to the taking of any necessary steps to preserve any
right of it or of the Debtor against other parties pertaining to any
Collateral;
(b) No provision hereof shall be amended except by a writing signed
by the Secured Party and the Debtor;
(c) Any provision of this Agreement which is prohibited or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof;
(d) This Agreement shall be binding upon and shall inure to the
benefit of the successors and assigns of the Secured Party and the Debtor;
(e) No delay, failure to enforce, or single or partial exercise on
the part of the Secured Party in connection with any of its rights
hereunder shall constitute an estoppel or waiver thereof, or preclude other
or further exercises or enforcement thereof and no waiver of any default
hereunder shall be a waiver of any subsequent default;
(f) This Agreement shall be governed as to its validity,
interpretation and effect in accordance with the laws of the State of New
Hampshire, except to the extent the laws of other states in which the
Collateral may be located apply as to perfection of security interests in
such Collateral and realization of the proceeds of such Collateral;
(g) As used herein, the term "Uniform Commercial Code" shall mean the
Uniform Commercial Code as adopted by the State of New Hampshire, except
that with respect to issues of perfection of security interests in
Collateral located in other jurisdictions and realization of the proceeds
of such Collateral while located in such jurisdiction it shall mean the
Uniform Commercial Code as adopted by the jurisdiction in which such
Collateral is located; and
(h) DEBTOR AND SECURED PARTY 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 LOAN.
IN WITNESS WHEREOF, the Debtor and the Secured Party have executed and
delivered this Agreement as of the day and year first above written.
DEBTOR
------
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/ Elizabeth M. Fogelgren By: /s/ John W. Powers
- -------------------------- -----------------------------------------
Witness John W. Powers, for, on behalf of, and as
Duly Authorized Officer or Agent of each
of the above-named corporations
SECURED PARTY
-------------
FLEET BANK - N H
/s/ Curtis W. Little, Jr. By: /s/ Elizabeth M. Fogelgren
- ------------------------- -------------------------------
Witness Elizabeth M. Fogelgren
Assistant Vice President
SECURITY AGREEMENT
SCHEDULE I
----------
List of Other Business Locations
--------------------------------
SECURITY AGREEMENT
SCHEDULE II
-----------
List of Other Liens and Encumbrances, etc.
------------------------------------------
SECURITY AGREEMENT
SCHEDULE III
------------
Other Collateral Location
-------------------------