SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: April 26, 1997
OR
__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-15046
Westerbeke Corporation
(Exact name of registrant as specified in its charter)
Delaware 04-1925880
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) Identification No.)
Avon Industrial Park, Avon, Massachusetts 02322
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (508) 588-7700
No Change
(Former name, former address and former fiscal year
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was to file such reports.) and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding at
Class June 5, 1997
----- --------------
Common Stock, $.01 par value 1,864,812
WESTERBEKE CORPORATION AND SUBSIDIARY
INDEX
Page
Part I - Financial Information
Item 1 - Consolidated Financial Statements
Consolidated Balance Sheets as
of April 26, 1997 and
October 26, 1996 3
Consolidated Statements of
Operations for the three
months ended April 26, 1997
and April 27, 1996 4
Consolidated Statements of
Operations for the six
months ended April 26, 1997
and April 27, 1996 5
Consolidated Statements of
Cash Flows for the six
months ended April 26, 1997
and April 27, 1996 6
Notes to Consolidated
Financial Statements 7-8
Item 2 -
Management's Discussion and
Analysis of Financial Condition
and Results of Operations 9-11
Part II - Other Information 12-13
Signatures 14
WESTERBEKE CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
April 26, October 26,
1997 1996
----------------------------
(Unaudited) (Derived from
ASSETS Audited Financial
Statements)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 31,400 $ 200,500
Accounts receivable, net of allowance for doubtful accounts
of $62,700 and $60,700, respectively 3,171,400 2,318,500
Inventories (Note 2) 6,573,600 5,428,000
Prepaid expenses and other assets 181,600 249,000
Prepaid income taxes 34,800 -
Deferred income taxes 439,400 439,400
----------------------------
Total current assets 10,432,200 8,635,400
Property, plant and equipment, net 2,081,000 1,782,300
Other assets, net 1,410,900 1,204,600
Investments in marketable securities 1,040,000 922,300
Note receivable - related party 129,900 136,600
----------------------------
$15,094,000 $12,681,200
============================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 124,000 $ 123,400
Current portion of capital leases 30,500 -
Revolving demand note payable 1,750,000 -
Accounts payable 2,482,500 1,630,300
Accrued expenses and other liabilities 495,400 557,400
Accrued income taxes - 8,900
----------------------------
Total current liabilities 4,882,400 2,320,000
----------------------------
Deferred income taxes 123,900 123,900
Deferred compensation 98,500 -
Obligations under capital leases 126,700 -
Long-term debt, net of current portion 334,100 396,300
----------------------------
683,200 520,200
----------------------------
Stockholders' equity:
Common stock, $.01 par value; authorized 5,000,000 shares;
issued 2,122,950 shares at April 26, 1997 and October 26, 1996 21,200 21,200
Additional paid-in-capital 5,959,800 5,959,800
Unrealized gain on marketable securities 57,300 159,100
Retained earnings 4,211,100 3,834,100
----------------------------
10,249,400 9,974,200
Less - Treasury shares at cost, 258,138 at April 26, 1997 and
44,400 at October 26, 1996 721,000 133,200
----------------------------
Total stockholders' equity 9,528,400 9,841,000
----------------------------
$15,094,000 $12,681,200
============================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
WESTERBEKE CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
-------------------------
April 26, April 27,
1997 1996
-------------------------
(Unaudited)
<S> <C> <C>
Net sales $6,974,700 $5,535,200
Cost of sales 5,347,500 4,182,100
--------------------------
Gross profit 1,627,200 1,353,100
Selling, general and administrative expense 871,400 736,900
Research and development expense 237,600 237,400
--------------------------
Income from operations 518,200 378,800
Interest expense, net 34,900 1,500
--------------------------
Income before income taxes 483,300 377,300
Provision for income taxes 194,300 151,900
--------------------------
Net income $ 289,000 $ 225,400
==========================
Income per share:
Net income per share $ 0.14 $ 0.10
==========================
Weighted average common and common
equivalents shares outstanding 2,048,505 2,301,728
==========================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
WESTERBEKE CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Six Months Ended
-------------------------
April 26, April 27,
1997 1996
-------------------------
(Unaudited)
<S> <C> <C>
Net sales $12,169,300 $9,464,900
Cost of sales 9,449,400 7,403,900
--------------------------
Gross profit 2,719,900 2,061,000
Selling, general and administrative expense 1,604,300 1,269,000
Research and development expense 471,300 404,200
--------------------------
Income from operations 644,300 387,800
Interest income, net 200 44,100
--------------------------
Income before income taxes 644,500 431,900
Provision for income taxes 267,500 174,900
--------------------------
Net income $ 377,000 $ 257,000
==========================
Income per share:
Net income per share $ 0.18 $ 0.11
==========================
Weighted average common and common
equivalents shares outstanding 2,046,725 2,287,412
==========================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
WESTERBEKE CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
--------------------------
April 26, April 27,
1997 1996
--------------------------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 377,000 $ 257,000
Reconciliation of net income to net cash
provided (used) by operating activities:
Depreciation and amortization 222,400 203,400
Deferred income taxes - (24,900)
Changes in operating assets and
liabilities:
Accounts receivable (852,900) (576,000)
Inventories (1,145,600) (394,100)
Prepaid expenses and other assets 67,400 500
Other assets (206,300) -
Accounts payable 852,200 524,900
Accrued expenses and other liabilities (72,900) (82,300)
Deferred compensation 98,500 -
Income taxes payable (43,700) (187,300)
----------------------------
Net cash used by operating activities (703,900) (278,800)
----------------------------
Cash flows from investing activities:
Purchase of property, plant and equipment (335,200) (274,200)
Proceeds from payment of note receivable -
related party 6,700 6,300
Investment in marketable securities (219,500) (194,900)
----------------------------
Net cash used in investing activities (548,000) (462,800)
----------------------------
Cash flows from financing activities:
Proceeds from revolving line of credit - 197,900
Net borrowings under revolving demand note 1,750,000 -
Proceeds from exercise of employee
stock options - 6,200
Purchase of treasury stock (587,800) -
Principal payments on long-term debt and
capital lease obligations (79,400) (23,600)
----------------------------
Net cash provided in financing activities 1,082,800 180,500
----------------------------
Decrease in cash and cash equivalents (169,100) (561,100)
Cash and cash equivalents, beginning of
period 200,500 1,322,200
----------------------------
Cash and cash equivalents, end of period $ 31,400 $ 761,100
============================
Supplemental cash flow disclosures:
Interest paid $ 49,100 $ 4,500
Income taxes paid $ 311,100 $ 387,400
Supplemental disclosures of cash flow items:
Increase (decrease) in unrealized gains
on marketable securities $ (63,100) $ 61,800
Equipment purchase under capital lease $ 175,000 -
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
WESTERBEKE CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Summary of Significant Accounting Policies:
A. Financial Statements
The condensed consolidated financial statements included herein
have been prepared by Westerbeke Corporation ("the Company"),
without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. While certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules
and regulations, the Company believes that the disclosures made
herein are adequate to make the information presented not
misleading. It is recommended that these condensed statements be
read in conjunction with the consolidated financial statements and
notes thereto included in the Company's Annual Report on Form 10-K
for the fiscal year ended October 26, 1996.
In the opinion of the Company, all adjustments, consisting only of
normal recurring adjustments, necessary to present fairly the
financial position of Westerbeke Corporation and Subsidiary as of
April 26, 1997, the results of their operations for the three and
six months ended April 26, 1997 and April 27, 1996, and the cash
flows for the six months then ended, have been included.
B. Basis of Presentation
The condensed consolidated financial statements include the
accounts of the Company and its wholly owned subsidiary,
Westerbeke International, Inc. (a Foreign Sales Corporation). All
significant intercompany transactions and accounts have been
eliminated. Westerbeke International, Inc., has been inactive
since fiscal year 1987.
2. Inventories
The Company uses the last-in, first-out (LIFO) method to value
inventory.
Inventories are comprised of the following:
<TABLE>
<CAPTION>
April 26, October 26,
1997 1996
---------------------------
<S> <C> <C>
Raw materials $5,596,800 $4,563,900
Work-in-process 616,100 354,100
Finished goods 360,700 510,000
--------------------------
$6,573,600 $5,428,000
==========================
</TABLE>
The Company has estimated both the year-end inventory levels and the
inflation/deflation which will occur during the fiscal year.
The Company anticipates an increase in its LIFO valuation account as of
October 25, 1997. Accordingly, the Company has recorded an increase of
$30,000, on a pro rata basis, in the LIFO reserve during the first six
months of fiscal 1997. During the first six months of 1996, the Company
recorded, on a pro rata basis, an increase of $25,000 in the LIFO
reserve. Inventories would have been $1,175,600 higher at April 26,
1997 and $1,145,600 higher as of October 26, 1996, if the first-in,
first-out (FIFO) method had been used. Inventory cost determination on
the FIFO method approximates replacement or current cost.
Item 2 - Management's Discussion and Analysis
Of Financial Condition and Results Of Operations
Results of Operations -
Net sales increased by $1,439,500, or 26%, during the second quarter of
fiscal 1997 and increased $2,704,400 or 29% for the first six months of
fiscal 1997 as compared to the same periods in fiscal 1996. The increase in
second quarter net sales is primarily attributable to higher unit volume of
the Company's marine generator products and propulsion engines. The
increase in net sales for the first six months of fiscal 1997 is primarily
the result of higher unit volume to the Company's propulsion engine
products, generator sets and higher spare parts revenues.
Gross profit increased $274,100 or 20% during the second quarter and
increased $658,900 or 32% for the first six months of fiscal 1997 as
compared to the same periods in fiscal 1996. As a percentage of net sales,
gross profit was 23% during the second quarter of fiscal year 1997, as
compared to 24% for the second quarter of fiscal 1996, and remained constant
at 22% for the six months ended April 26, 1997 compared to the same period
ended April 27, 1996.
Operating expenses increased $134,700 or 14% for the second quarter and
$402,400 or 24% in the first six months of fiscal 1997, as compared to the
same periods in fiscal 1996. Research and development costs have increased
due to the addition of personnel and higher costs related to achieving
compliance with federal and state exhaust emission requirements. Selling
and administrative expenses have increased primarily due to higher
advertising, marketing, warranty and personnel costs.
Net interest expense increased $33,400 during the second quarter and
increased $43,900 for the first six months of fiscal 1997 as compared to the
same periods in fiscal 1996. The increase in interest expense in the second
quarter and the six months ended April 26, 1997 is primarily due to interest
expense incurred on the Revolving Line of Credit.
For the second quarter ended April 26, 1997, the Company reported net income
of $289,000, compared to a net income of $225,400 for the same period in
fiscal 1996. For the six months ended April 26, 1997, the Company reported
net income of $377,000 as compared to net income of $257,000 for the six-
months ended April 27, 1996. The increase in net income for the second
quarter and for the six months of fiscal 1997 is primarily attributable to
the increase in net sales for the period.
Liquidity and Capital Resources
During the first six months of fiscal 1997, net cash used by operations was
$703,900, compared to net cash used by operations of $278,800 for the first
six months in fiscal 1996. The decrease in cash flow from operations
is primarily attributable to increases in inventory and accounts receivable
offset partially by an increase in accounts payable for the six-month period
ended April 26, 1997, as compared to the same period in fiscal 1996. The
rise in inventories is primarily attributable to the increased demand and
the timing of engine purchase order receipts. The rise in accounts
receivable is attributable to the increase in net sales for the period ended
April 26, 1997.
During the six months ended April 26, 1997, the Company purchased property,
plant and equipment of $335,200. The Company plans to spend approximately
$250,000 more on emission testing equipment during the remainder of the
year.
As previously announced, on February 7, 1997, the Board of Directors
authorized the Company to purchase up to 215,000 shares of its outstanding
common stock. On April 11, 1997, the Company purchased 213,738 shares at a
purchase price of $2.75 per share in a private transaction. The treasury
shares will be used to meet obligations under the Company's employee
incentive and benefit plans.
The Company has a $4,000,000 Credit Agreement with State Street Bank and
Trust Company, collateralized by inventory, accounts receivable and general
intangibles. The amount of the facility available under the Credit
Agreement was increased on April 25, 1997 from $3,000,000 to $4,000,000. At
April 26, 1997, the Company had $1,750,000 in outstanding borrowings under
the Credit Agreement and approximately $485,400 committed to cover the
Company's reimbursement obligations under certain letters of credit. The
Credit Agreement expires on March 31, 1998.
On January 23, 1996, the Company entered into a $500,000 revolving line of
credit agreement (the "Revolving Line of Credit") and term loan facility
(the "Term Loan") with State Street Bank and Trust Company, collateralized
by various emission testing and product development equipment and subject to
working capital and equity covenants. On July 31, 1996, the Revolving Line
of Credit terminated and automatically converted into a five year Term Loan
in the principal amount of $491,600 bearing a fixed interest rate of 8.96%.
At April 26, 1997, the outstanding principal amount was approximately
$425,000.
On April 25, 1997, the Company entered into a $300,000 revolving line of
credit agreement (the "1997 Revolving Line of Credit") and term loan
facility with State Street Bank and Trust Company, collateralized by various
items of emission testing and product development equipment to be purchased
and subject to working capital and equity covenants. On June 30, 1997, the
1997 Revolving Line of Credit will terminate and be automatically converted
into a five year term loan bearing an interest rate calculated at the bank's
cost of funds plus 2.25%. At April 26, 1997 the Company had no borrowings
under the 1997 Revolving Line of Credit.
Management believes cash flow from operations and borrowings available under
the Credit Agreement and the 1997 Revolving Line of Credit will provide for
working capital needs, principal payments on long-term debt, and capital and
operating leases through fiscal 1997.
Domestic inflation is not expected to have a material impact on the
Company's operations.
The cost of engine blocks and other components is subject to foreign
currency fluctuations (primarily the Japanese yen). Exchange rate
fluctuations have had a minimal impact on the Company during the first
two fiscal quarters of 1997.
Part II. Other Information
Item 1 Legal Proceedings
None to report
Item 2 Changes in Securities
None to report
Item 3 Default Upon Senior Securities
None to report
Item 4 Submissions of Matters to a Vote of Security Holders
(a) The Annual Meeting of Stockholders (the "Meeting") of the
Company was held March 21, 1997.
(b) Not applicable because:
(I) proxies for the Meeting were solicited pursuant to
Regulation 14 under the Securities Exchange Act of
1934; (ii) there was no solicitation in opposition
to management's nominees as listed in the Company's
proxy statement dated February 26, 1997; and (iii)
all such nominees were elected.
(c) The matters voted upon at the Meeting were as follows:
(i) The election of three Class B directors of the
Company.
Thomas M. Haythe
FOR 1,854,310
WITHHOLD AUTHORITY 14,700
Nicholas H. Safford
FOR 1,854,310
WITHHOLD AUTHORITY 14,700
James W. Storey
FOR 1,854,210
WITHHOLD AUTHORITY 14,800
(ii) A proposal to ratify the Board of Directors'
selection of KPMG Peat Marwick LLP to serve as the
Company's independent auditors for the Company's
fiscal year ending October 25, 1997.
FOR 1,861,410
AGAINST 5,900
ABSTENTIONS AND
BROKER NON-VOTES 1,700
Item 5 Other Information
None to report
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits
10 (a) Lease dated January 22, 1997 by and between New
Avon Limited Partnership and the Company.
10 (b) Loan Facility Agreement dated April 25, 1997
between the Company and State Street Bank and Trust
Company.
10 (c) Promissory Note dated April 25, 1997 between the
Company and State Street Bank and Trust Company.
10 (d) Loan Facility Agreement dated April 25, 1997
between the Company and State Steet Bank and Trust
Company.
10 (e) Note of the Company dated April 4, 1997 due March
31, 1998 in the principal amount of $4,000,000
payable to the order of State Street Bank and Trust
Company.
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
period covered by this report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WESTERBEKE CORPORATION
(Registrant)
Dated June 9, 1997 /s/ John H. Westerbeke, Jr.
John H. Westerbeke, Jr.
Chairman of the Board,
President and Principal
Executive Officer
Dated June 9, 1997 /s/ Carleton F. Bryant III
Carleton F. Bryant III
Executive Vice President,
Chief Operating Officer
and Principal Financial
and Accounting Officer
Exhibit 10(a)
NEW AVON LIMITED PARTNERSHIP
C/O Urban Equities
21A Highland Circle, Suite 200
Needham, MA 02194
22 January 1997
Mr. Carleton Bryant
WESTERBEKE CORPORATION
41 Ledin Drive
Avon, MA 02322
Re: 40 Robbie Road, Avon MA;
LEASE AGREEMENT
Dear Carl:
Pursuant to our telephone conversation of yesterday afternoon regarding
Westerbeke Corporation's decision to lease the 10,200 square foot space
adjacent to Westerbeke's existing warehouse at 40 Robbie Road, Avon MA, this
letter, when executed by both of us, shall become a fully legal and binding
Lease Agreement for said space incorporating the following terms and conditions:
1. LANDLORD: New Avon Limited Partnership ("NALP").
2. TENANT: Westerbeke Corporation ("Westerbeke").
3. DEMISED PREMISES: 10,200(plus or minus) rentable square feet as shown on
the attached Exhibit A and provided in 'as is' condition, except that the
existing tenant occupying the space, Trace Optical, Inc., shall remove
all of its property currently stored therein prior to the commencement
date of the Lease.
4. COMMENCEMENT DATE: March 1, 1997.
5. LEASE TERM: The term of this Lease shall commence on March 1, 1997 and
shall expire on June 30, 1999 ("the Term").
6. ANNUAL RENT: Tenant shall pay to Landlord annual rent at the rate of Forty-
four Thousand Eight Hundred Eighty Dollars ($44,880.00) for the first
year of the Term, payable on the first day of each month in advance in
equal monthly installments of Three Thousand Seven Hundred Forty Dollars
($3,740.00).
Tenant shall pay to Landlord annual rent at the rate of Forty-five Thousand
Nine Hundred Dollars ($45,900.00) for the second year of the Term,
payable on the first day of each month in advance in equal monthly
installments of Thirty-eight Hundred Twenty-five Dollars ($3,825.00).
Tenant shall pay to Landlord annual rent at the rate of Forty-six Thousand
Nine Hundred Twenty Dollars ($46,920.00) for the balance of the Term,
payable on the first day of each month in advance in equal monthly
installments of Thirty-nine Hundred Ten Dollars ($3,910.00).
Notwithstanding the above, at any time after the first year of the Term and
provided that Westerbeke is not in default under the provisions of the
Lease, Westerbeke shall have the right to terminate the Lease by
providing Landlord with written notice of its intention to do so and
effective sixty (60) days from the first of the month immediately
following Landlord's receipt of said notice. Westerbeke shall pay to
Landlord with said notice an amount equal to Eighty-five ($85.00) per
month for each month that Westerbeke has occupied the Demised Premises
for the period from March 1, 1997 through February 28, 1998 and Two
Hundred Twelve Dollars and Fifty Cents ($212.50) per month for each
month that Westerbeke has occupied the Demised Premises for the period from
March 1, 1998 through the balance of the Term.
7. SECURITY DEPOSIT: None.
8. PERMITTED USE: Warehousing of non-hazardous, non-perishable items and
general administrative offices therefor.
9. TENANT'S SHARE OF REAL ESTATE TAXES AND OPERATION COST: 6.69%.
10. TENANT'S INITIAL ESTIMATED MONTHLY PAYMENTS ON ACCOUNT:
Real Estate Taxes = $401.00
Operation Cost = $531.00
11. UTILITIES: Gas and electricity as separately metered to the Demised
Premises shall be contracted by Tenant directly with Bay State Gas
Company and Eastern Edison Company respectively.
12. ALTERATION TO PREMISES: Landlord hereby gives Tenant permission to create
openings in the demising wall separating the Demised Premises from Tenant's
adjacent space except that upon termination of this Agreement, Tenant shall
restore said demising wall to its original condition.
13. LISTED BROKER: None.
14. INCORPORATION OF EXISTING LEASE AGREEMENTS: All of the terms and
conditions of the Commercial Lease dated November 4, 1986, the Lease
Amendment Agreement dated April 29, 1991, and the 2nd Lease Amendment
Agreement dated April 7, 1993 and the Third Lease Amendment Agreement
dated February 20, 1996 by and between New Avon Limited Partnership and
Westerbeke Corporation with respect to the 15,680 square foot adjacent
space at 40 Robbie Road, Avon, MA, except as specifically modified by
the terms and conditions enumerated above, are incorporated herein by
reference and shall be fully binding upon Landlord and Tenant with
respect to this Lease Agreement.
I am enclosing two originals of this Lease Agreement with the request that you
sign them where indicated below and return both originals to me for my
signature. I will then forward one fully executed original to you for your
file.
Please feel free to call me if you have any questions regarding the above.
I appreciate your prompt attention to this matter.
Sincerely,
By /s/ Lawrence J. Rothschild
NEW AVON LIMITED PARTNERSHIP
AGREED TO AND ACCEPTED BY:
LANDLORD: TENANT:
NEW AVON LIMITED PARTNERSHIP WESTERBEKE CORPORATION
By its General Partner
New Avon Development Corporation
By /s/ Lawrence J. Rothschild By /s/ Carleton F. Bryant III
Lawrence J. Rothschild Carleton F. Bryant III
President Executive VP and COO
Exhibit 10(b)
STATE STREET BANK 225 Franklin Street
Boston, Ma 02110-2804
April 25, 1997
Westerbeke Corporation
Avon Industrial Park
Avon, MA 02322
RE: Loan Facility
Ladies and Gentlemen:
State Street Bank and Trust Company (the "Bank") is pleased to make
available to Westerbeke Corporation, an organization organized under the
laws of The Commonwealth of Massachusetts (the "Borrower") a $300,000
revolving line of credit (the "Revolving Line of Credit") and term loan
facility "Term Loan") on the following terms and conditions:
I. The Revolving Line of Credit
1. Term. The Revolving Line of Credit shall commence on the date
hereof and expire on June 30, 1997 (the "Revolving Maturity Date"), unless
extended by mutual agreement.
2. Notice and Manner of Borrowings. Subject to the terms and
conditions hereof, the Bank agrees to make revolving loans provided for
herein (each, a "Revolving Loan")(the Revolving Loans and the Term Loan, as
hereinafter defined, collectively, the "Loans"). If a request for a
Revolving Loan is made orally, it shall be immediately confirmed in writing
if requested by the Bank. The outstanding amount of all Revolving Loans
hereunder shall not at any time exceed $300,000.
3. Evidence of Indebtedness. All Revolving Loans will be evidenced
by a promissory note in the form attached hereto as Exhibit A (the "Note").
The Borrower hereby authorizes the Bank to record each Loan and the
corresponding information on the schedule forming part of the Note, and,
absent manifest error, this record shall be conclusive and binding.
4. Interest Rate. Principal on each outstanding Revolving Loan shall
bear interest at a floating rate per annum equal to the Bank's Prime Rate.
Interest on each Loan shall be calculated on the basis of a 360-day year for
the actual number of days elapsed. As used herein, "Prime Rate" shall mean
the rate of interest per annum announced from time to time by the Bank in
Boston, Massachusetts as its Prime Rate.
5. Payments and Prepayment. Interest on Revolving Loans shall be
payable monthly in arrears on the first business day of each month
commencing May 1, 1997, or on the first business day of the month following
advancement of the initial Revolving Loans, and on the same day when
principal is payable, whether upon acceleration following an Event of
Default as defined herein or on the Revolving Maturity Date. On the
Revolving Maturity Date all Revolving Loans, shall be paid in full,
provided, however that so long as no default has occurred and is continuing
hereunder, on the Revolving Maturity Date, all outstanding Revolving Loans
shall be converted into a Term Loan (the "Term Loan") and shall be payable
as provided herein. Revolving Loans may be prepaid without penalty and any
amounts prepaid may be reborrowed subject to the terms hereof. All payments
of principal and interest shall be made in immediately available United
States dollars at the main office of the Bank.
6. Use of Funds. Proceeds of Revolving Loans may be used only for
purchase of equipment for which the Bank has been provided an invoice and
adequate description of the equipment to be purchased.
II. The Term Loan
On the Revolving Maturity Date, unless an Event of Default has
occurred and is continuing, the outstanding amount of all Revolving Loans
shall be converted to the Term Loan. Principal outstanding under the Term
Loan shall be payable in equal consecutive monthly installments on the first
business day of each month commencing July 1, 1997 each in an amount
necessary to fully amortize the outstanding amount of the Term Loan in 60
such monthly installments. Interest on principal outstanding under the Term
Loan shall be payable at either a floating rate equal to the Bank's Prime
Rate per annum or a fixed rate of interest quoted by the Bank as its
applicable cost of funds, determined in the discretion of the Bank, plus
2.25% percent per annum (such rate, the "Fixed Interest Rate"). Interest on
the Term Loan is payable commencing on July 1, 1997 and on the first
business day of each month thereafter with all outstanding principal
outstanding under the Term Loan with accrued and unpaid interest due and
payable in full on June 30, 2002 (the "Maturity Date"). The Term Loan shall
be evidenced by the Note and may be prepaid without penalty in the event the
Term Loan bears interest at the Prime Rate, and only if the Borrower
simultaneously pays all Lost Interest Income, cost and expense of the Bank
in connection with such prepayment in the event the Term Loan bears interest
at the Fixed Interest Rate. As used herein, "Lost Interest Income" shall be
computed by the Bank by determining the interest rate differential between
the Fixed Interest Rate on the Term Loan and the yield on a United States
Government Treasury instrument with a similar maturity as the remaining term
of the Term Loan. In the event that the rate differential is such that the
yield on such treasury instrument is greater than the Fixed Interest Rate,
no Lost Interest Income shall be payable. In the event that the Fixed
Interest Rate is greater than the yield on such treasury instrument, the
difference shall be multiplied by the principal amount of the Term Loan
being prepaid computed monthly for the remaining term of the Term Loan and
the present value (using 6 month treasury rate) of such monthly compensation
shall be calculated and paid to the Bank as "Lost Net Interest Income".
Amounts of the Term Loan which are prepaid may not be reborrowed.
III. General Loan Terms
1. Security. The Loans will be secured by the equipment purchased
with the proceeds of the Revolving Loans as described in a Security
Agreement dated January 23, 1996 from the Borrower to the Bank (the
"Security Agreement").
2. Covenants. Until all Obligations have been paid in full, the
Borrower covenants and agrees as follows:
a) To maintain as of the end of each fiscal quarter Working
Capital of not less than $4,500,000;
b) To maintain as of the end of each fiscal quarter
Consolidated Tangible Net Worth of not less than $8,500,000 plus 40%
of net income earned during the previous fiscal quarter on a
cumulative basis;
c) To maintain as of the end of each fiscal year a Debt Service
Coverage Ratio of not less than 4 to 1;
d) To maintain as of the end of each fiscal quarter a Leverage
Ratio of not more than 1 to 1;
e) Not to create, incur, assume or guarantee any Indebtedness
other than (i) Indebtedness to the Bank, (ii) Indebtedness existing as
of the date of this letter agreement and disclosed on Exhibit B, and
(iii) other Indebtedness with the prior consent of the Bank;
f) Not to create, incur, assume or suffer to exist any
mortgage, pledge, security interest, lien or other charge or
encumbrance upon any of its assets or properties, other than (i) those
in favor of the Bank, (ii) those shown on Exhibit B and (iii) those
for which the Bank has given its prior written approval;
g) To (i) duly observe and comply with all applicable laws,
including without limitation, those pertaining to environmental
matters and the release or threat of release of hazardous substances,
and pension and retirement plans, and pay all taxes and governmental
charges prior to the time they become delinquent, (ii) maintain in
full force and effect all licenses and permits necessary in any
material respect for the proper conduct of its business, (iii) keep
its properties and assets in good repair and insured in such amounts
as is customary in the industry and as the Bank may require, (iv)
remain engaged substantially in the business in which it is currently
engaged, (v) not sell or dispose of any assets except in the ordinary
course of business or merge or consolidate with or into any entity,
(vi) not pay any dividends on any class of stock or make any other
distribution or payment on account of such stock in any fiscal year in
excess of net income earned in such fiscal year, (vii) comply with all
terms and provisions of all documents evidencing or securing any
Indebtedness to any party other than the Bank ("Other Indebtedness"),
(viii) immediately notify the Bank of any default or event of default
with respect to Other Indebtedness and to provide to the Bank a copy
of any notice received by the Borrower relating thereto or any notice
or claim of any such default, and (ix) immediately notify the Bank of
any default or event of default hereunder and of any litigation or
governmental proceeding commenced or threatened in writing against the
Borrower;
h) To permit the Bank upon reasonable notice to visit and
inspect the properties of the Borrower and make copies or abstracts
from the Borrower's books and records;
i) To pay (i) all fees, costs and expenses incurred or paid by
the Bank in connection with the administration, enforcement or
amendment of this letter agreement or any other documents executed in
connection herewith including any fees associated with commercial
finance exams conducted by the Bank;
j) Until the Maturity Date, to submit to the Bank: (i) within
60 days of the end of each fiscal quarter of the Borrower, Borrower's
financial statements, including balance sheet and income statement,
together with a certificate of compliance executed by the chief
financial officer of the Borrower in a form acceptable to the Bank,
(ii) within 120 days of the end of each fiscal year of the Borrower,
Borrower's annual financial statements audited/reviewed by a certified
public accountant acceptable to the Bank, (iii) such other financial
statements and information as the Bank may reasonably request from
time to time and (iv) within 10 days after the making of any Revolving
Loan, a copy of the invoice with respect to equipment purchased using
the proceeds of such Revolving Loan; and
k) Execute and deliver such additional instruments and take
such further action as the Bank may reasonably request solely to
effect the purpose of this letter agreement and the Loans evidenced by
the Note.
3. Representations and Warranties. The Borrower represents and
warrants that:
a) It is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation,
has all requisite corporate power and authority to own its property
and conduct its business as is now conducted, is duly qualified and in
good standing as a foreign corporation and is duly authorized to do
business in each jurisdiction where the nature of its properties or
business requires such qualification and maintains no permanent
offices, assets, employees or business operations in any state other
than in The Commonwealth of Massachusetts, provided, however that the
Borrower may from time to time maintain personnel and assets
temporarily at locations outside of The Commonwealth of Massachusetts;
b) The execution, delivery and performance of this letter
agreement, the Note and the Security Agreement (i) are, and will be,
within its corporate power and authority, (ii) have been authorized by
all necessary corporate proceedings, (iii) do not, and will not,
require the consent of the stockholders of the Borrower or approvals
of any governmental authority, (iv) will not contravene any provision
of the charter documents or by-laws of the Borrower or any law, rule
or regulation applicable to the Borrower, (v) will not constitute a
default under any other agreement, order or undertaking binding on the
Borrower, and (vi) will not require the consent or approval of any
obligee or holder of any instrument relating to the Other
Indebtedness;
c) This letter agreement, the Note, the Security Agreement and
related documents constitute the legal, valid, binding and enforceable
obligations of the Borrower, except as the same may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the enforcement of creditors' rights generally and by
general equitable principles;
d) All financial statements previously furnished to the Bank by
it were prepared in accordance with generally accepted accounting
principles and present fairly and completely the financial position of
the Borrower. Since the date of such statements, there has been no
material, adverse change in the assets, liabilities, financial
condition or business of the Borrower other than in the ordinary
course of business;
e) The Borrower has good and marketable title to all its
material properties, assets and rights of every name and nature
purportedly owned by it, except for encumbrances shown on Exhibit B;
f) There is no litigation, arbitration, proceeding or
investigation pending, or to the best of the Borrower's knowledge
threatened, against the Borrower except those previously disclosed by
the Borrower to the Bank in writing; and
g) The making of each Loan hereunder shall be deemed to be a
reaffirmation by the Borrower as to the representations and
warranties contained in this paragraph and confirmation that no Event
of Default has occurred hereunder.
4. Availability of Loans. The availability of Revolving Loans under
this facility is subject to satisfaction of the following:
a) Receipt by the Bank of a duly executed copy of this letter,
the Note and a Clerk's certificate relating to corporate proceedings;
b) There shall have occurred (i) no Event of Default continuing
beyond any applicable cure periods under this letter agreement or the
Security Agreement and no Event of Default shall occur after giving
effect to the making of the requested loan, and (ii) no material
adverse change in the assets, liabilities, financial condition,
business or prospects of the Borrower, as determined by the Bank
acting in good faith; and
c) Completion of such due diligence and other matters and
receipt of such additional documentation as the Bank may reasonably
require.
5. Events of Default. It will be an Event of Default hereunder if
any of the following events occurs:
a) the Borrower fails to pay when due any amount of principal
or interest on any Loan or any fees or expenses payable hereunder or
under the Note on the due date therefor; or
b) the Borrower fails to perform any term, covenant or
agreement contained in this letter agreement, which in the case of
section III2g) of this letter agreement only continues for 15 days
from the earlier of the date when the Borrower first becomes aware of
such failure or receives notice from the Bank as to such failure, the
Note or the Security Agreement or any other agreement or document
executed in connection with this letter agreement continuing beyond
any applicable grace periods; or
c) there shall occur any material adverse change in the assets,
liabilities, financial condition, business or prospects of the
Borrower as determined by the Bank acting in good faith or a change in
the senior management or controlling ownership interest of the
Borrower from that existing on the date hereof; or
d) any representation or warranty of the Borrower made in this
letter agreement, the Note, the Security Agreement or any other
document executed in connection with this letter agreement shall prove
to have been false in any material respect upon the date when made or
deemed to have been made; or
e) the Borrower fails to pay or perform any obligation to the
Bank, including under the revolving line of credit made available by
the Bank to the Borrower in the original principal amount of
$3,000,000 and subsequently increased to $4,000,000 and revolving line
of credit/term loan facility made available by the Bank to the
Borrower in the original principal amount of $500,000, as either or
both of such facilities may be increased, amended, superseded or
replaced or an Event of Default occurs under any document evidencing
or securing such obligation, or the Borrower fails to pay at maturity,
or within any applicable period of grace, any obligations for borrowed
monies or advances, or for the use of real or personal property, or
fails to observe or perform any term, covenant or agreement evidencing
or securing such obligations for borrowed monies or advances or
relating to such use of real or personal property, the result of which
failure is to permit the holder or holders of such Indebtedness to
cause such Indebtedness to become due prior to its stated maturity
upon delivery of required notice, if any; or
f) the Borrower (i) applies for or consent to the appointment
of, or the taking of possession by, a receiver, custodian, trustee,
liquidator or similar official of itself or of all or a substantial
part of its property, (ii) is generally not paying its debts as such
debts become due, (iii) makes a general assignment for the benefit of
its creditors, (iv) commences any case or proceeding under any law
relating to bankruptcy, insolvency, reorganization, winding-up or
composition or adjustment of debts, or any other law providing for the
relief of debtors, (v) fails to contest in a timely or appropriate
manner, or acquiesces in writing to, any petition filed against it in
an involuntary case under the Federal Bankruptcy Code or other law, or
(vi) takes any action under the laws of its jurisdiction of
incorporation or organization similar to any of the foregoing; or
g) a proceeding or case shall be commenced, without the
application or consent of the Borrower in any court of competent
jurisdiction, seeking (i) the liquidation, reorganization,
dissolution, winding-up, or composition or readjustment of its debts,
(ii) the appointment of a trustee, receiver, custodian, liquidator or
the like of it or of all or any substantial part of its assets, or
(iii) similar relief in respect of it, under any law relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or
adjustment of debts or any other law providing for the relief of
debtors, and such proceeding or case shall continue undismissed, or
unstayed and in effect, for a period of 30 days; or an order for
relief shall be entered in an involuntary case under the Federal
Bankruptcy Code, against the Borrower or action under the laws of the
jurisdiction of incorporation or organization of the Borrower or
similar to any of the foregoing shall be taken with respect to the
Borrower and shall continue unstayed and in effect for any period of
30 days; or
h) a final judgment or final order for the payment of money is
entered against the Borrower by any court, or an execution or similar
process is issued or levied against property of the Borrower, that in
the aggregate exceeds $100,000 in value and such judgment, order,
warrant or process shall continue undischarged or unstayed for 30 day;
or
i) the Borrower permits any employee pension benefit plan, as
that term is defined in the Employment Retirement Income Security Act
of 1974, as amended ("Erisa") maintained by it to (a) engage in any
prohibited transaction as that term is defined in Section 4975 of the
internal Revenue Code of 1986, as amended, (b) incur any "accumulated
funding deficiency" as that term is defined in Erisa, whether or not
waived, or (c) terminate in any manner which would result in the
imposition of a lien or encumbrance on the assets of the Borrower
pursuant to Section 4058 of Erisa.
6. Remedies. Upon the occurrence of an Event of Default described in
subsections 5.1(f) and (g), immediately and automatically, and upon the
occurrence of any other Event of Default continuing beyond any applicable
cure periods, at any time thereafter while such Event of Default is
continuing, at the Bank's option and upon the Bank's declaration:
(a) The Revolving Line of Credit established hereunder shall
terminate and outstanding amounts thereunder will be due and payable
on the Revolving Maturity Date and will not be converted to the Term
Loan as provided herein;
(b) the unpaid principal amount of the Loans together with
accrued interest and all other Obligations shall become immediately
due and payable without presentment, demand, protest or further notice
of any kind, all of which are hereby expressly waived; and
(c) the Bank may exercise any and all rights it has under this
Agreement, the Note, the Security Agreement and any other document
executed in connection herewith, and proceed to protect and enforce
the Bank's rights by any action at law, in equity or other appropriate
proceeding.
7. Notices. All notices hereunder shall be in writing and shall be
deemed to have been given when delivered by hand, when properly deposited in
the mails postage prepaid, when sent by facsimile or when delivered to
overnight courier. Notices to the Bank shall be given to State Street Bank
and Trust Company 225 Franklin Street Boston, Massachusetts 02110 Attn:
Suzanne L. Dwyer or Corporate Banking Division Executive and notice to the
Borrower shall be deemed to have been given if given at the address stated
at the beginning of this letter agreement, Attention: Carleton Bryant.
8. Miscellaneous. No waivers shall be effective unless in writing.
All amendments hereto must be in writing signed by all parties hereto. Any
amounts owing from the Bank to the undersigned, including deposits, may be
set off against past due obligations of any of the undersigned to the Bank.
This letter and the Note shall be governed by the laws of The Commonwealth
of Massachusetts. The Borrower may not assign or transfer or participate
any of its rights hereunder and under the Note without consent of the
Borrower.
9. Definitions. Except as otherwise defined herein, all financial
terms shall be defined in accordance with generally accepted accounting
principles. The following defined terms as used herein shall have the
following meanings:
"Capital Expenditures" shall mean any expenditures made or
obligations incurred by the Borrower in connection with the
acquisition of any equipment or other property constituting
fixed assets.
"Consolidated Current Liabilities" shall mean at any date as of
which the amount thereof shall be determined, all amounts that
should, in accordance with generally accepted accounting
principles, be included as current liabilities on the
consolidated balance sheet of the Borrower at such date, plus,
to the extent not already included therein, all Loans made
hereunder, and all Indebtedness that is payable upon demand or
within one year from the date of determination thereof unless
such Indebtedness is renewable or extendable at the option of
the Borrower to a date more than one year from the date of
determination.
"Consolidated Tangible Net Worth" shall mean" the total assets
of the Borrower and its Subsidiaries minus (x) the sum of any
amounts attributable to (i) goodwill, (ii) intangible items such
as unamortized debt discount and expense, patents, trade marks
and names, service marks and names, copyrights and research and
development expenses except prepaid expenses, and (iii) any
write-up in the book value of assets resulting from any
revaluation thereof subsequent to the date of the financial
statements last delivered to the Bank and (y) Consolidated Total
Liabilities of the Borrower and its Subsidiaries.
"Consolidated Total Liabilities" shall mean at any date as of
which the amount thereof shall be determined, all obligations
that should, in accordance with generally accepted accounting
principles, be classified as liabilities on the consolidated
balance sheet of the Borrower and its Subsidiaries, including in
any event all Indebtedness.
"Debt Service Coverage Ratio" shall mean, at any date as of
which the amount thereof shall be determined, the ratio of the
total of the Borrower's and its Subsidiaries' (x) net income
after taxes for such period, excluding any extraordinary items,
plus (b) depreciation, amortization and interest for such
period, minus (c) Capital Expenditures for such period not
financed by the Bank to (y) current maturities of long term
Indebtedness for such period.
"Indebtedness" shall mean all obligations for borrowed money and
other extensions of credit to the Borrower, secured or
unsecured, absolute or contingent, whether or not evidenced by a
note, bond or other instrument, all guarantees, all obligations
reflecting the deferred purchase price of property or other
accounts payable, and all obligations of the Borrower secured by
a mortgage, lien, pledge or other security interest, together
with any interest, charges and fees payable on any of the
foregoing.
"Leverage Ratio" shall mean the ratio of the Borrower's
Consolidated Tangible Net Worth to the Borrower's Consolidated
Total Liabilities for such period.
"Obligations" shall mean any and all obligations of the Borrower
to the Bank of every kind and description, direct or indirect,
absolute or contingent, primary or secondary, due or to become
due, now existing or hereafter arising, regardless of how they
arise or by what agreement or instrument, if any, and including
obligations to perform acts and refrain from taking action as
well as obligations to pay money.
"Subsidiary" shall mean any corporation, association, or
similar organization of which 50% or more of the ordinary voting
power for the election of a majority of the board of directors
or other governing body of such entity is held or controlled by
the Borrower or Subsidiary of the Borrower and including, in any
event, Guarantor; or any other such organization the management
of which is directly or indirectly controlled by the Borrower or
a Subsidiary of the Borrower through the exercise of voting
power or otherwise; or any joint venture, whether incorporated
or not, in which the Borrower has a 50% ownership interest.
"Working Capital" shall mean the amount by which consolidated
current assets of the Borrower and its Subsidiaries exceeds
Consolidated Current Liabilities of the Borrower and its
Subsidiaries at the time of determination.
If the foregoing satisfactorily sets forth the terms and conditions of
this credit facility, please execute and return the enclosed copy of this
letter agreement, the Note, the applicable Security Agreement and such other
documents and agreements as the Bank may request each of which when received
will be considered to be an agreement executed under seal to be governed by
the laws of The Commonwealth of Massachusetts effective when received by the
Bank. We are pleased to provide this loan facility and look forward to the
ongoing development of our relationship.
Sincerely,
STATE STREET BANK AND TRUST COMPANY
By: /s/ Suzanne L. Dwyer
Suzanne L. Dwyer
Assistant Vice President
Acknowledged and accepted:
WESTERBEKE CORPORATION
By: /s/ Carleton F. Bryant III
Carleton F. Bryant III
Executive VP and COO
Date: April 25,1997
Exhibits
A-Note
B-Indebtedness/Encumbrances
Exhibit 10(c)
WESTERBEKE CORPORATION
PROMISSORY NOTE
$300,000 April 25, 1997
Boston, Massachusetts
For value received, the undersigned hereby promises to pay to State
Street Bank and Trust Company (the "Bank"), or order, at the head office of
the Bank at 225 Franklin Street, Boston, Massachusetts 02110, on the
Revolving Maturity Date the principal amount of Three Hundred Thousand
Dollars ($300,000), or such lesser amount as shall not have been prepaid,
provided, however, that if no Event of Default has occurred under the
Agreement on the Revolving Maturity Date, the outstanding amount of
Revolving Loans on such date shall be converted to a Term Loan which Term
Loan shall be payable in 60 equal consecutive monthly installments payable
commencing on July 1, 1997 and on the first business day of each month
thereafter in amounts necessary to fully amortize the amount outstanding
hereunder on the Revolving Maturity Date in 60 equal installments. All
outstanding principal with accrued and unpaid interest hereunder shall be
due and payable in full on June 30, 2002. Until the Revolving Maturity
Date, interest on principal outstanding hereunder shall be payable at the
rate per annum equal to the Bank's Prime Rate, in effect from time to time.
Commencing upon conversion to the Term Loan, interest on principal
outstanding under the Term Loan shall be payable at either the Prime Rate or
a fixed rate of interest quoted by the Bank as its applicable cost of funds,
determined in the discretion of the Bank, plus 2.25% per annum, as selected
by the undersigned on the date of conversion to the Term Loan. Each change
in such interest rate shall take effect simultaneously with the
corresponding change in such Prime Rate. Interest will be payable monthly in
arrears on the first business day of each month beginning on May 1, 1997.
"Prime Rate" shall mean the rate of interest announced by the Bank in Boston
from time to time as its "Prime Rate." Interest shall be computed on the
basis of a 360-day year for the actual number of days elapsed, including
holidays or other days on which the Bank is not open for the conduct of
banking business.
All loans hereunder and all payments on account of principal and
interest hereof shall be recorded by the Bank. The entries on the records
of the Bank (including any appearing on this Note) shall be prima facie
evidence of amounts outstanding hereunder.
Overdue payments of principal (whether at stated maturity by
acceleration or otherwise), and, to the extent permitted by law, overdue
interest, shall bear interest, compounded monthly and payable on demand in
immediately available funds, at a rate per annum equal to four percent (4%)
above the Bank's Prime Rate in effect from time to time.
This Note is issued pursuant to, and entitled to the benefits of, and
is subject to, the provisions of a certain Letter Agreement dated April 25,
1997 by and between the undersigned and the Bank (herein, as the same may
from time to time be amended or extended, referred to as the "Agreement"),
but neither this reference to the Agreement nor any provision thereof shall
affect or impair the absolute and unconditional obligation of the
undersigned maker of this Note to pay the principal of and interest on this
Note as herein provided. All terms not otherwise defined herein shall be
used as defined in the Agreement.
This Note is secured by certain equipment of the undersigned pursuant
to the terms of a Security Agreement executed on or near the date hereof by
and between the undersigned and the Bank, as the same may be from time to
time amended or extended.
In case an Event of Default (as defined in the Agreement) shall occur,
the aggregate unpaid principal plus accrued interest on this Note shall
become or may be declared to be due and payable in the manner and with the
effect provided in the Agreement.
The undersigned may at its option prepay all or any part of the
principal of this Note before maturity upon the terms provided in the
Agreement.
Any deposits or other sums at any time credited by or due from the
Bank to the undersigned or any endorser or guarantor hereof and any
securities or other property of the undersigned or any endorser or guarantor
at any time in the possession of the Bank may at all times be held and
treated as collateral for the payment of this Note and any and all other
liabilities (direct or indirect, absolute or contingent, sole, joint or
several, secured or unsecured, due or to become due, now existing or
hereafter arising) of the undersigned to the Bank. Regardless of the
adequacy of collateral, the Bank may apply or set-off such deposits or other
sums against such liabilities at any time in the case of makers but only
with respect to matured liabilities in the case of endorsers and guarantors.
The undersigned maker and every endorser and guarantor hereof hereby
waives presentment, demand, notice, protest and all other demands and
notices in connection with the delivery, acceptance, performance, default or
enforcement hereof and consents that this Note may be extended from time to
time and that no such extension or other indulgence, and no substitution,
release or surrender of collateral and no discharge or release of any other
party primarily or secondarily liable hereon, shall discharge or otherwise
affect the liability of the undersigned, endorser or guarantor. No delay or
omission on the part of the Bank in exercising any right hereunder shall
operate as a waiver of such right or of any other right hereunder, and a
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 future occasion.
This instrument shall have the effect of an instrument executed under
seal and shall be governed by and construed in accordance with the laws of
The Commonwealth of Massachusetts (without giving effect to any conflicts of
laws provisions contained therein).
WITNESS: WESTERBEKE CORPORATION
By /s/ Gregory Haidemenos
Gregory Haidemenos
By: /s/ Carleton F. Bryant III
Carleton F. Bryant III
Executive VP and COO
Exhibit 10(d)
STATE STREET BANK 225 Franklin Street
Boston, MA 02110-0804
April 25, 1997
Westerbeke Corporation
Avon Industrial Park
Avon, MA 02322
RE: Loan Facility
Ladies and Gentlemen:
State Street Bank and Trust Company (the "Bank") has made available to
Westerbeke Corporation, a corporation organized under the laws of The
Commonwealth of Massachusetts (the "Borrower") a $3,000,000 revolving line
of credit (the "Line of Credit") as described in a letter agreement dated
March 20, 1996 (as amended, the "Letter Agreement"). All obligations of the
Borrower arising under the Line of Credit are evidenced by a Time Note in
the original principal amount of $3,000,000 dated June 4, 1992 from the
Borrower to the order of the Bank (as amended, the "Note") and secured by
collateral as described in a Security Agreement (Inventory and Accounts
Receivable) dated June 4, 1992 (the "Security Agreement"). The Borrower has
requested, and the Bank has agreed, to increase the amount of the Line of
Credit and increase the inventory lending cap relating thereto as set forth
herein. Therefore, for good and valuable consideration, the receipt of
which is hereby acknowledged, the Borrower and the Bank hereby agree as
follows:
I. Amendments to Letter Agreement.
1. The Letter Agreement is hereby amended by deleting the following
from the paragraph headed "Line of Credit" and the heading to such
paragraph: "$3,000,000" and substituting the following therefor:
"$4,000,000".
2. The Letter Agreement is hereby further amended by deleting the
following therefrom: "Advances against inventory will be capped at
$2,000,000" and substituting the following therefor: "Advances against
inventory will be capped at $2,500,000".
3. The Letter Agreement is hereby amended by deleting the following
therefrom: "March 31, 1997" and substituting the following therefor:
"March 31, 1998".
4. The Letter Agreement is hereby amended by adding the following at
the end of the paragraph headed "Line of Credit": "The aggregate amount of
advances, face amount of letters of credit and bankers' acceptances made or
issued under the Letter of Credit shall not exceed $4,000,000 at any time
and the Company agrees to pay the amount of advances as necessary to comply
with such limitation without notice or demand by the Bank. Letters of
credit will be issued pursuant to documents executed by the Company as
requested by the Bank following payment of all applicable fees.".
II. Amendments to Note.
The Note is hereby amended by deleting the following therefrom:
"$3,000,000" and "Three Million" and substituting the following therefor
respectively: "$4,000,000" and "Four Million".
III. Amendments to Security Agreement
1. The Security Agreement is hereby amended by deleting the following
therefrom: "May 22, 1992" and substituting the following therefor: "March
20, 1996".
2. The Security Agreement is hereby amended by deleting the following
from Rider 1 thereto: "$3,000,000" and "$2,000,000" and substituting the
following therefor respectively: "$4,000,000" and "$2,500,000".
IV. Miscellaneous.
1. As amended hereby, all terms and conditions of the Letter
Agreement, Note, Security Agreement and all related documents are ratified
and affirmed as of the date hereof and shall continue in full force and
effect.
2. Upon receipt of a fully executed copy of this letter agreement and
such other documents or instruments as the Bank may reasonably request, this
letter agreement shall be deemed to be an instrument under seal and an
amendment to the Letter Agreement and Note to be governed by the laws of The
Commonwealth of Massachusetts effective _______________, 1997.
3. This letter agreement may be executed in counterparts each of
which shall be deemed to be an original document.
Sincerely,
STATE STREET BANK AND TRUST COMPANY
By: /s/ Suzanne L. Dwyer
Suzanne L. Dwyer
Assistant Vice President
Acknowledged and accepted:
WESTERBEKE CORPORATION
By: /s/ Carleton F. Bryant III
Carleton F. Bryant III
Executive VP and COO
Date: April 25, 1997
Exhibit 10(e)
TIME NOTE - GRID - FLUCTUATING INTEREST
$4,000,000.00 April 4, 1997
Boston, Massachusetts
On March 31, 1998, for value received, Westerbeke Corporation (the
"Borrower") promises to pay to the order of STATE STREET BANK AND TRUST
COMPANY ("Bank") at the office of Bank located at 225 Franklin Street,
Boston, Massachusetts 02110, or such other place as the holder hereof shall
designate, Four Million DOLLARS or, if less, the aggregate unpaid principal
amount of all loans made by the Bank to the Borrower, together with interest
on unpaid balances payable monthly in arrears on the first day of each
calendar month and on the due date hereof, at a fluctuating interest rate
per annum equal to
Zero% above Bank's Prime Rate in effect from time to time. Each change in
such interest rate shall take effect simultaneously with the corresponding
change in such Prime Rate. "Prime Rate" shall mean the rate of interest
announced by Bank in Boston from time to time as its "Prime Rate". Interest
shall be calculated on the basis of actual days elapsed and a 360-day year.
If this note is not paid in full on the due date, whether as stated or by
acceleration, interest on unpaid balances shall thereafter be payable on
demand at a fluctuating interest rate per annum equal to 4% above the Prime
Rate in effect from time to time.
All loans hereunder and all payments on account of principal and
interest hereof shall be recorded by the Bank and prior to any transfer
hereof, endorsed on the grid on the reverse hereof which is part of this
note. The entries on the records of the Bank (including any appearing on
this note) shall be prima facie evidence of amounts outstanding hereunder.
This note shall, at the option of the holder, become immediately due
and payable without notice or demand upon the occurrence of any of the
following events:
(a) Failure to make any payment of interest when due;
(b) Failure for 90 days to discharge any attachment or levy on any
property of the Borrower;
(c) Default in the payment or performance of any liability,
obligation or agreement of any maker hereof to or with the holder hereof;
(d) Occurrence of any of the following with respect to the Borrower
or any endorser or guarantor hereof: admission in writing of his or its
inability, or be generally unable, to pay his or its debts as they become
due, death, dissolution, termination of existence, cessation of normal
business operations, insolvency, appointment of a receiver of any part of
the property of, legal or equitable assignment, conveyance or transfer of
property for the benefit of creditors by, or the commencement of any
proceedings under any bankruptcy or insolvency laws by or against, such
person.
Any deposits or other sums at any time credited by or due from the
holder to the Borrower, or to any endorser or guarantor hereof, and any
securities or other property of the Borrower or any endorser or guarantor at
any time in the possession of the holder may at all times be held and
treated as collateral for the payment of this note and any and all other
liabilities (direct or indirect, absolute or contingent, sole, joint or
several, secured or unsecured, due or to become due, now existing or
hereafter arising) of the Borrower to the holder. Regardless of the
adequacy of collateral, the holder may apply or set off such deposits or
other sums against such liabilities at any time in the case of the Borrower,
but only with respect to matured liabilities in the case of endorsers and
guarantors.
The Borrower and every endorser and guarantor of this note hereby
waive presentment, demand, notice, protest and all other demands and notices
in connection with the delivery, acceptance, performance, default or
enforcement hereof and consent that this note may be extended from time to
time and that no extension or other indulgence, and no substitution, release
or surrender of collateral and no discharge or release of any other party
primarily or secondarily liable hereon, shall discharge or otherwise affect
the liability of the Borrower or any such endorser or guarantor. No delay
or omission on the part of the holder in exercising any right hereunder
shall operate as a waiver of such right or of any other right hereunder, and
a 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 future occasion.
This note is secured by any and all collateral at any time granted to
Bank to secure any obligations of any maker hereof.
The Borrower and every endorser and guarantor of this note agree to
pay on demand all costs and expenses (including legal costs and attorneys'
fees) incurred or paid by the holder in enforcing this note on default.
This note shall take effect as a sealed instrument and shall be
governed by the laws of the Commonwealth of Massachusetts.
Address Westerbeke Corporation
Borrower's Name (print or type)
Avon Industrial Park By /s/ Carleton F. Bryant III
Avon, MA 02322 Carleton F. Bryant III
Executive VP and COO
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000796502
<NAME> WESTERBEKE CORP.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-25-1997
<PERIOD-END> APR-26-1997
<CASH> 31,400
<SECURITIES> 0
<RECEIVABLES> 3,171,400
<ALLOWANCES> 62,700
<INVENTORY> 6,573,600
<CURRENT-ASSETS> 10,397,400
<PP&E> 5,465,300
<DEPRECIATION> 3,384,300
<TOTAL-ASSETS> 15,097,900
<CURRENT-LIABILITIES> 4,867,600
<BONDS> 0
0
0
<COMMON> 21,200
<OTHER-SE> 9,545,900
<TOTAL-LIABILITY-AND-EQUITY> 15,097,900
<SALES> 12,169,300
<TOTAL-REVENUES> 12,169,300
<CGS> 9,449,400
<TOTAL-COSTS> 9,449,400
<OTHER-EXPENSES> 2,075,600
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 60,700
<INCOME-PRETAX> 644,500
<INCOME-TAX> 267,500
<INCOME-CONTINUING> 377,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 377,000
<EPS-PRIMARY> .18
<EPS-DILUTED> 0
</TABLE>
