Exhibit 10.2

 

SECOND AMENDED AND RESTATED FORBEARANCE AGREEMENT

 

This Second Amended and Restated Forbearance Agreement (this “Agreement”) is
entered into as of February 7, 2019 (the “Effective Date”), by and between
Northern Power Systems, Inc., a Delaware corporation (“Borrower”) and Comerica
Bank, a Texas banking association (“Bank”), with reference to the following
facts:

 

A.       Borrower has borrowed funds from Bank pursuant to that certain Amended
and Restated Loan and Security Agreement dated December 31, 2013 between
Borrower and Bank, as amended (as amended, the “Loan Agreement”).

 

B.       The Export Loans (as defined in the Loan Agreement) made by Bank to
Borrower are evidenced by a Master Revolving Note dated June 30, 2014 made by
Borrower payable to Bank in the original principal amount of $6,000,000, as
previously amended and reduced to $900,000 (as amended, the “Revolving Note”).

 

C.       Borrower failed to comply with the provisions of Section 6.6 and
Section 6.7(a) of the Loan Agreement (the “Existing Defaults”), and as a result
thereof, Borrower and Bank entered into a Forbearance Agreement dated as of
August 2, 2018 (the “Original Forbearance Agreement”), under which Bank agreed
to forbear until November 30, 2018 from exercising its rights with respect to
the Existing Defaults subject to satisfaction by Borrower of certain conditions
set forth in the Original Forbearance Agreement. Borrower and Bank subsequently
entered into an Amended and Restated Forbearance Agreement entered into as of
November 30, 2018 amending and restating the Original Forbearance Agreement (the
“Amended and Restated Forbearance Agreement”) under which Bank agreed to forbear
until April 1, 2019 from exercising its rights with respect to the Existing
Defaults subject to satisfaction by Borrower of certain conditions set forth in
the Amended and Restated Forbearance Agreement.

 

D.       As of the Effective Date, Borrower owes Bank the sum of:

 

(i) under the Revolving Note, a principal amount of $650,000 (not including, to
the extent applicable, any contingent obligations) and accrued and unpaid
interest; plus

 

(ii) any overdrafts in any bank accounts of Borrower at Bank, plus

 

(iii) amounts owing under one or more foreign exchange facilities issued by Bank
(the “FX Facility”); plus

 

(iv) legal fees and costs and all other outstanding amounts and costs of
enforcement due under the Loan Agreement and any other Loan Document.

 

The foregoing amounts, plus accruing interest and costs and accrued and accruing
attorney fees and costs are collectively referred to herein as the “Existing
Debt.”

 

E.       Borrower has requested that Bank provide additional time to sell its
Italian service business and that Bank consent to the sale of Borrower’s energy
storage systems assets (the “ESS Assets”) and the sale/leaseback of Borrower’s
distributed wind inverter design (the “Inverter Design” and together with the
ESS Assets, the “Transaction Assets”) to WEG Electric Corp, and in connection
therewith, has asked Bank to forbear further from exercising the remedies set
forth in the Loan Agreement and the Other Loan Documents a result of the
Existing Defaults, and Bank has agreed, provided Borrower enters into this
Agreement.

 

 

NOW, THEREFORE, for good and valuable consideration, the parties agree as
follows:

 

1.                   Defined Terms. Capitalized terms not otherwise defined
herein shall have the same meanings as set forth in the Loan Agreement.

 

2.                   Acknowledgement of Liability. As of the Effective Date,
Borrower owes Bank an amount equal to the Existing Debt. Borrower reaffirms all
of its obligations under the Loan Agreement and hereby forever waives and
relinquishes any and all claims, set-offs or defenses that Borrower may now have
with respect to the payment of sums due to Bank and the performance of other
obligations under the Loan Agreement. The security interests granted to Bank in
the Loan Documents in the Collateral remain perfected, first priority liens.

 

3.                   Forbearance. Borrower acknowledges the existence of the
Existing Defaults under the Loan Agreement and the other Loan Documents.
Borrower further acknowledges and agrees that Bank is not in any way waiving or
agreeing to waive such Existing Defaults as a result of this Agreement or the
performance by the parties of their respective obligations hereunder or
thereunder. Subject to the conditions contained herein and performance by
Borrower of all of the terms of this Agreement, the Loan Agreement and the other
Loan Documents after the Effective Date, Bank shall, until the earlier of (i)
April 1, 2019 or (ii) such date that there shall occur any further Event of
Default (the “Forbearance Period”), forbear from exercising any remedies that it
may have against Borrower as a result of the occurrence of the Existing
Defaults. Such forbearance does not apply to any other Event of Default or other
failure by Borrower to perform in accordance with the Loan Agreement or this
Agreement. This forbearance shall not be deemed a continuing waiver or
forbearance with respect to any Event of Default of a similar nature that may
occur after the Effective Date.

 

4.                   Repayment and Reduction. Borrower shall continue to make
all interest payments as they become due under the Loan Agreement. In addition,
Borrower shall make additional payments, to be applied to the principal balance
of the Export Loans on the dates and in the amounts as follows:

 

Payment Date Payment Amount   Earlier of Sale Date with respect to the
Transaction Assets set forth on Exhibit A or February 8, 2019 Lesser of (a)
amount required to repay all principal, interest and fees or (b) $350,000  
Earlier of Sale Date with respect to the Italian service business assets forth
on Exhibit A or March 15, 2019 Lesser of (a) amount required to repay all
principal, interest and fees or (b) $350,000   March 21, 2019 Lesser of (a)
amount required to repay all principal, interest and fees or (b) $200,000  
April 1, 2019 All outstanding principal, interest and fees.  

 - 2 - 

 

Principal repayments that are derived from the sale of the Transaction Assets or
the Italian service business shall be wired directly to the Bank, per wire
instructions to be provided by Bank, at the time and date of the respective sale
closing. Amounts repaid to Bank shall not be available for re-advance. Bank has
no obligation to make any advances to Borrower, whether under the Revolving Note
or otherwise, and Borrower shall not request any advances from Bank under the
Revolving Note or otherwise.

 

5.                   Replacement Lender. Borrower shall use its best efforts to
secure replacement financing of the Existing Debt as soon as possible, and on or
before March 1, 2019, shall provide to Bank a copy of an executed commitment
letter to Borrower from a refinance source in an amount not less than the
Existing Debt.

 

6.                   Ratification by Borrower of Bank’s First Priority Security
Interest in Collateral. Borrower hereby confirms and ratifies Bank’s first
priority lien and security interest in and to all Collateral. Borrower shall
execute such security agreements, financing statements and other documents as
Bank may from time to time reasonably request to carry out the terms of this
Agreement and the Loan Agreement. Borrower authorizes Bank to file such
financing statements and amendments relating to the Collateral. Such liens and
security interests shall secure all of the obligations of Borrower under this
Agreement and the Loan Agreement. Borrower covenants and agrees affirms that
Borrower shall have no right to sell, transfer, convey or dispose of any of its
assets, other than Inventory in the ordinary course of business, without the
prior approval of the Bank. Bank hereby consents to the sale of Borrower’s
Transaction Assets and to the sale of Borrower’s Italian service business in
accordance with the terms set forth on Exhibit A hereto and satisfactory review
by the Bank of the applicable asset purchase contract.

 

7.                   Intellectual Property Collateral. As soon as practicable,
but in any event, no later than 45 days after the Effective Date, Borrower shall
cause Bank to have a first priority perfected lien and security interest in and
to all of Borrower’s intellectual property of every type (the “IP Collateral”).
Borrower shall execute such security agreements, financing statements and other
documents as Bank may from time to time reasonably request in order to create,
secure, preserve, or perfect Bank’s security interest in the IP Collateral.
Borrower authorizes Bank to make any filings reasonably desirable in connection
with the IP Collateral. Bank’s lien on the IP Collateral shall secure all of the
obligations of Borrower under this Agreement, the Loan Agreement and the other
Loan Documents

 

8.                   No Additional Trades Under the FX Facility. Borrower
acknowledges and agrees that Bank is under no obligation to permit any further
trades by Borrower under the FX Facility. Borrower shall only conduct spot
currency transactions to the extent required to conduct its ordinary business
operations.

 

9.                   No Testing of Liquid Assets Covenant During Forbearance
Period. Bank and Borrower agree that during the Forbearance Period only,
Borrower shall not be required to be and remain the owner of Unencumbered Liquid
Assets as set forth in Section 6.7(a) of the Loan Agreement.

 

10.               Additional Reporting. In addition to all reporting currently
required by the Loan Documents:

 

(a)                By Tuesday of each week, Borrower shall provide Bank with a
written update on the sale of Transaction Assets and Italian service businesses
and an update on developments with the Italian feed-in-tariff.

 - 3 - 

 

(b)                By Tuesday of each week, Borrower shall provide Bank with an
updated rolling 13 week cash flow forecast, together with a comparison of actual
to forecasted results for the week ending on the immediately preceding Friday.

 

(c)                Borrower shall provide Bank, within ten days of the end of
each month, the following information as of the end of each month:

 

(i)                 Number of employees of Borrower and each subsidiary,

 

(ii)               Payroll payments made during such month of Borrower and each
subsidiary,

 

(iii)             Accrued Payroll of Borrower and each subsidiary,

 

(iv)              Accrued vacation and other paid time off for employees of
Borrower and each subsidiary,

 

(v)                Compensation of the 5 most highly compensated employees of
Borrower and each subsidiary,

 

(vi)              A listing any applications or registrations that Borrower has
made or filed in respect of any Patents, Copyrights or Trademarks and the status
of any outstanding applications or registrations, as well as any material change
in Borrower’s Intellectual Property, including but not limited to any subsequent
ownership right of Borrower in or to any Trademark, Patent or Copyright not
specified in any Intellectual Property Security Agreement delivered to Bank by
Borrower, and

 

(vii)            A written update on Borrower’s efforts to secure replacement
financing together with any commitment letters or letters of intent provided by
a refinance source.

 

(d)                Borrower shall provide Bank not less than 30 days’ prior
notice of any planned equity raises, including issuance of capital stock,
securities or warrants.

 

(e)                Borrower shall provide to Bank such other and further
reporting and information as Bank may request from time to time.

 

11.               Q3 2018 10-Q; Certified Public Accounting Firm. Bank hereby
acknowledges Borrower’s notice that Borrower’s 10-Q Securities and Exchange
Commission filing for the fiscal quarter ending September 30, 2018 will be
delayed until the end of February, 2019. Bank hereby consents to such delay,
provided that such filing occurs on or before February 28, 2019. Bank hereby
consents to Borrower engaging Wolf & Company, P.C. as its independent certified
public accounting firm.

 

12.               Appraisals and Inspections. Borrower acknowledges and agrees
to permit Bank to conduct such fair market value appraisals, collateral audits,
inspections, surveys and/or testing, that Bank deems necessary, on any and all
collateral, upon which Bank may possess a lien securing the Existing Debt, and
to reimburse the Bank for the cost of such appraisals, collateral audits,
inspections, surveys and testing.

 

13.               Modification to Revolving Note. The face amount of the
Revolving Note is decreased from Nine Hundred Thousand and 00/100 Dollars
($900,000.00) to Six Hundred Fifty Thousand and 00/100 Dollars ($650,000.00).
Borrower shall immediately pay, on the Effective Date, any principal amount
outstanding under the Revolving Note in excess of the new face amount of the
Revolving Note

 - 4 - 

 

14.               Forbearance Extension Fee. Borrower confirms its agreement to
pay the balance of the $5,000.00 forbearance extension fee in the amount of
$3,500, together with an additional $750 extension fee, both of which shall be
paid upon the earlier of April 1, 2019 or the date upon which the Existing Debt
is paid in full.

 

15.               Preference payments, Disgorgement. To the extent any payment
received by Bank is deemed a preference, fraudulent transfer, voidable transfer,
or otherwise by a court of competent jurisdiction which requires the Bank to
disgorge such payment, then such payment will be deemed to have never occurred
and the Existing Debt will be adjusted accordingly.

 

16.               Receipt and Application of Payments. All payments hereunder
and under the Loan Agreement and the other Loan Documents may, at Bank’s option,
first be applied against expenses and accrued and unpaid interest, and the
balance against the principal portion of the Existing Debt in reverse order of
maturity, all in Bank’s sole and absolute discretion. Acceptance by Bank of any
payment in an amount less than the amount then due shall be deemed an acceptance
on account only, and the failure to pay the entire amount then due shall be and
continue to be an Event of Default pursuant to this Agreement, and at any time
thereafter and until the entire amount then due has been paid, Bank shall be
entitled to exercise all rights conferred upon it herein, in the Loan Agreement
or in any other Loan Document upon the occurrence of an Event of Default. To the
extent that Bank receives any payment or benefit and such payment or benefit, or
any part thereof, is required to be repaid to a trustee, receiver, or any other
party under any bankruptcy act, state or federal law, common law or equitable
cause, then to the extent of such payment or benefit, the Existing Debt, or any
part thereof intended to be satisfied shall be revived and continued in full
force and effect as if such payment or benefit had not been made, shall accrue
interest at the highest rate applicable to any portion thereof, shall be secured
by the Collateral and payable on demand.

 

17.               Representations and Warranties.

 

(a)                Borrower hereby represents and warrants that no Event of
Default or failure of condition has occurred or exists, or would exist with
notice or lapse of time or both under any of the Loan Documents, other than the
Existing Defaults.

 

(b)                The forbearance period granted pursuant to the terms of this
Agreement is reasonable and is based upon the projections of Borrower.

 

(c)                The Certificate of Incorporation, Bylaws and resolutions of
the Borrower previously delivered to Bank: remain in full force and effect, have
not been amended, repealed or rescinded in any respect and may continue to be
relied upon by Bank until written notice to the contrary is received by Bank,
and Borrower continues to be in good standing under the laws of the States of
Delaware and Vermont.

 

(d)                All representations and warranties of Borrower in this
Agreement and the Loan Agreement are true and correct as of the Effective Date,
and shall survive the execution of this Agreement.

 

18.               Default. In addition to all other Event(s) of Default under
the Loan Agreement, the following shall constitute Events of Default under this
Agreement:

 

(a)                Borrower’s failure to pay any amount when due under this
Agreement or to perform any covenant or other agreement contained in this
Agreement or any other document entered into pursuant hereto;

 - 5 - 

 

(b)                If any warranty or representation of Borrower in connection
with or contained in this Agreement, or if any financial data or other
information now or hereafter furnished to Bank by or on behalf of Borrower shall
prove to be false or misleading in any material respect;

 

(c)                If Borrower makes any payment on account of Subordinate Debt;

 

(d)                If a judgment or judgments for the payment of money in an
amount, individually or in the aggregate, of at least $50,000 shall be rendered
against Borrower and shall remain unsatisfied and unstayed for a period of 10
days; and

 

(e)                Bank’s determination, in its sole and absolute discretion,
that Borrower may not be able to pay all or any part of the Obligations, or to
satisfy any condition, or to perform any obligation under this Agreement or any
of the Loan Documents.

 

19.               Rights and Remedies.

 

(a)                Upon the occurrence and during the continuance of an Event of
Default, Bank may, at its election, without notice of its election and without
demand, do any one or more of the following, all of which are authorized by
Borrower:

 

(i)                 Without notice to Borrower, set off and apply to the amounts
due and owing under the Loan Agreement and this Agreement:

 

(1)any and all cash or certificates of deposit held by Bank for whatever
purpose;

 

(2)indebtedness at any time owing to or for the credit or the account of
Borrower held by Bank;

 

(ii)               Take action against Borrower for payment under the Loan
Agreement and this Agreement; and/or

 

(iii)             Exercise any right and remedy authorized by the Loan
Agreement, any of the other Loan Documents and/or this Agreement and/or
applicable law.

 

(b)                Bank’s rights and remedies under this Agreement, the Loan
Agreement, the other Loan Documents and all other agreements shall be
cumulative. Bank shall have all other rights and remedies not inconsistent
herewith as provided under the UCC, by law, or in equity. No exercise by Bank of
one right or remedy shall be deemed an election, and no waiver by Bank of any
Event of Default on the part of Borrower shall be deemed a continuing waiver. No
delay by Bank shall constitute a waiver, election, or acquiescence by it. Bank
shall have the right to take any action it deems necessary against Borrower in
order to enforce or perfect, or to realize on its security interest in the
Collateral.

 

20.               Power of Attorney. Effective only upon the occurrence and
during the continuance of an Event of Default, Borrower hereby irrevocably
appoints Bank (and any of Bank’s designated officers, or employees) as
Borrower’s true and lawful attorney to: (a) send requests for verification of
Accounts or notify account debtors of Bank’s security interest in the Accounts;
(b) endorse Borrower’s name on any checks or other forms of payment or security
that may come into Bank’s possession; (c) sign Borrower’s name on any invoice or
bill of lading relating to any Account, drafts against account debtors,
schedules and assignments of Accounts, verifications of Accounts, and notices to
account debtors; (d) dispose of any Collateral; (e) make, settle, and adjust all
claims under and decisions with respect to Borrower’s policies of insurance; (f)
settle and adjust disputes and claims respecting the Accounts directly with
account debtors, for amounts and upon terms which Bank determines to be
reasonable; (g) to modify, in its sole discretion, any Memorandum and Notice of
Security Interest in Intellectual Property executed by Borrower without first
obtaining Borrower’s approval of or signature to such modification by amending
Exhibits A, B, and C, thereof, as appropriate, to include reference to any
right, title or interest in any Trademarks, Patents or Copyrights acquired by
Borrower after the execution hereof or to delete any reference to any right,
title or interest in any Trademarks, Patents or Copyrights in which Borrower no
longer has or claims to have any right, title or interest; and (h) to file, in
its sole discretion, one or more financing or continuation statements and
amendments thereto, relative to any of the Collateral without the signature of
Borrower where permitted by law; provided Bank may exercise such power of
attorney to sign the name of Borrower on any of the documents described in
clauses (g) and (h) above, regardless of whether an Event of Default has
occurred. The appointment of Bank as Borrower’s attorney in fact, and each and
every one of Bank’s rights and powers, being coupled with an interest, is
irrevocable until all of the Obligations have been fully repaid and performed
and Bank’s obligation to provide advances hereunder is terminated.

 - 6 - 

 

21.               Conditions Precedent. The effectiveness of this Agreement is
subject to satisfaction of all of the following conditions:

 

(a)                Bank’s receipt of this Agreement and such other agreements
and instruments reasonably requested by Bank pursuant hereto, each duly executed
by Borrower;

 

(b)                Execution and delivery by Parent of a Reaffirmation of
Guarantee in form and content acceptable to Bank in its sole discretion;

 

(c)                Approval, as required, of Ex-Im;

 

(d)                Bank’s receipt of payment of all expenses incurred through
the Effective Date including, without limitation, all of Bank’s legal fees; and

 

(e)                Bank’s receipt of such other documents and completion of such
other matters as Bank may reasonably deem necessary or appropriate.

 

22.               Waiver of Notice and Cure. Borrower acknowledges that Events
of Default have occurred under the Loan Agreement that, but for this Agreement,
would have entitled Bank to exercise all the remedies available to Bank under
the Loan Agreement, the other Loan Documents and applicable law. Borrower waives
all notices of default and rights to cure that are otherwise provided in the
Loan Agreement, the other Loan Documents or applicable law, including, but not
limited to, rights to notice and redemption under California Uniform Commercial
Code sections 9611, 9620 and 9623. Borrower further waives any claim that a sale
or other disposition by Bank of the Collateral is not commercially reasonable
because Bank disclaims any warranties with respect to such sale or other
disposition, including, without limitation, disclaimers of warranties relating
to title, possession, quiet enjoyment, or the like.

 

23.               Release.

 

(a)                Borrower acknowledges that Bank would not enter into this
Agreement without Borrower’s assurance hereunder. Except for the obligations
arising hereafter under this Agreement, Borrower hereby absolutely discharges
and releases Bank, any person or entity that has obtained any interest from Bank
under the Loan Agreement and each of Bank’s and such entity’s former and present
partners, stockholders, officers, directors, employees, successors, assignees,
agents and attorneys from any known or unknown claims which Borrower now has
against Bank of any nature, including any claims that Borrower, its successors,
counsel, and advisors may in the future discover they would have now had if they
had known facts not now known to them, whether founded in contract, in tort or
pursuant to any other theory of liability, including but not limited to any
claims arising out of or related to the Loan Agreement or the transactions
contemplated thereby.

 - 7 - 

 

(b)                Borrower waives the provisions of California Civil Code
Section 1542, which states:

 

A general release does not extend to claims that the creditor or releasing party
does not know or suspect to exist in his or her favor at the time of executing
the release and that, if known by him or her, would have materially affected his
or her settlement with the debtor or released party.

 

(c)                The provisions, waivers and releases set forth in this
section are binding upon Borrower and Borrower’s shareholders, agents,
employees, assigns and successors in interest. The provisions, waivers and
releases of this section shall inure to the benefit of Bank and its agents,
employees, officers, directors, assigns and successors in interest.

 

(d)                Borrower warrants and represents that Borrower is the sole
and lawful owner of all right, title and interest in and to all of the claims
released hereby and Borrower has not heretofore voluntarily, by operation of law
or otherwise, assigned or transferred or purported to assign or transfer to any
person any such claim or any portion thereof. Borrower shall indemnify and hold
harmless Bank from and against any claim, demand, damage, debt, liability
(including payment of attorneys’ fees and costs actually incurred whether or not
litigation is commenced) based on or arising out of any assignment or transfer.

 

(e)                The provisions of this section shall survive payment in full
of the Obligations, full performance of all the terms of this Agreement and the
Loan Agreement, and/or Bank’s actions to exercise any remedy available under the
Loan Agreement or otherwise.

 

24.               Further Assurances. Borrower will take such other actions as
Bank may reasonably request from time to time to perfect or continue Bank’s
security interests in Borrower’s property, and to accomplish the objectives of
this Agreement.

 

25.               Consultation of Counsel. Borrower acknowledges that Borrower
has had the opportunity to be represented by legal counsel of its own choice
throughout all of the negotiations that preceded the execution of this
Agreement. Borrower has executed this Agreement after reviewing and
understanding each provision of this Agreement and without reliance upon any
promise or representation of any person or persons acting for or on behalf of
Bank. Borrower further acknowledges that Borrower and its counsel have had
adequate opportunity to make whatever investigation or inquiry they may deem
necessary or desirable in connection with the subject matter of this Agreement
prior to the execution hereof and the delivery and acceptance of the
consideration described herein.

 

26.               Miscellaneous.

 

(a)                Amendment and Restatement. This Agreement amends and restates
in its entirety the Original Forbearance Agreement.

 

(b)                Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of Borrower and Bank and their respective
successors and assigns; provided, however, that the foregoing shall not
authorize any assignment by Borrower of its rights or duties hereunder.

 - 8 - 

 

(c)                Integration. This Agreement, the Loan Documents and any
documents executed in connection herewith or pursuant hereto contain the entire
agreement between the parties with respect to the subject matter hereof and
supersede all prior agreements, understandings, offers and negotiations, oral or
written, with respect thereto and no extrinsic evidence whatsoever may be
introduced in any judicial or arbitration proceeding, if any, involving this
Agreement; except that any financing statements or other agreements or
instruments filed by Bank with respect to Borrower shall remain in full force
and effect.

 

(d)                Entire Agreement. This Agreement and the Loan Documents
contain the entire agreement of the parties hereto and supersede any other oral
or written agreements or understandings with respect to the subject matter
hereof and thereof.

 

(e)                Course of Dealing; Waivers. No course of dealing on the part
of Bank or its officers, nor any failure or delay in the exercise of any right
by Bank, shall operate as a waiver thereof, and any single or partial exercise
of any such right shall not preclude any later exercise of any such right.
Bank’s failure at any time to require strict performance by Borrower of any
provision shall not affect any right of Bank thereafter to demand strict
compliance and performance. Any suspension or waiver of a right must be in
writing signed by an officer of Bank. Nothing contained in this Agreement shall
be deemed to constitute or be construed as a course of dealing obligating Bank
to provide any further loans or other accommodations, financial or otherwise, to
Borrower at any time, or a commitment or any agreement to make a commitment with
respect to any possible waiver, amendment, consent or other modification of the
terms provided in the Loan Documents.

 

(f)                 Time is of the Essence. Time is of the essence as to each
and every term and provision of this Agreement and the other Loan Documents.

 

(g)                Counterparts. This Agreement may be signed in counterparts
and all of such counterparts when properly executed by the appropriate parties
thereto together shall serve as a fully executed document, binding upon the
parties.

 

(h)                Legal Effect. The Loan Documents remain in full force and
effect. If any provision of this Agreement conflicts with applicable law, such
provision shall be deemed severed from this Agreement, and the balance of this
Agreement shall remain in full force and effect.

 

(i)                 WAIVER OF JURY. THE UNDERSIGNED ACKNOWLEDGE THAT THE RIGHT
TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED UNDER
CERTAIN CIRCUMSTANCES.  TO THE EXTENT PERMITTED BY LAW, EACH PARTY, AFTER
CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS, HIS
OR HER CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL
PARTIES, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION ARISING
OUT OF OR RELATED TO THIS AGREEMENT OR ANY OTHER DOCUMENT, INSTRUMENT OR
AGREEMENT BETWEEN THE UNDERSIGNED PARTIES.

 

(j)                 Reference Provision.

 

1.                   In the event that the Jury Trial Waiver provision contained
in the Agreement is not enforceable, the parties elect to proceed under this
Reference Provision.

 - 9 - 

 

2.                   With the exception of the items specified in clause 4,
below, any controversy, dispute or claim (each, a “Claim”) between the parties
arising out of or relating to the Agreement will be resolved by a reference
proceeding in California in accordance with the provisions of Section 638 et
seq. of the California Code of Civil Procedure (“CCP”), or their successor
sections, which shall constitute the exclusive remedy for the resolution of any
Claim, including whether the Claim is subject to the reference proceeding.
Except as otherwise provided in the Agreement, venue for the reference
proceeding will be in the state or federal court in the county or district where
venue is otherwise appropriate under applicable law (the “Court”).

 

3.                   The matters that shall not be subject to a reference are
the following: (i) non-judicial foreclosure of any security interests in real or
personal property, (ii) exercise of self-help remedies (including, without
limitation, set-off), (iii) appointment of a receiver and (iv) temporary,
provisional or ancillary remedies (including, without limitation, writs of
attachment, writs of possession, temporary restraining orders or preliminary
injunctions). This Agreement does not limit the right of any party to exercise
or oppose any of the rights and remedies described in clauses (i) and (ii) or to
seek or oppose from a court of competent jurisdiction any of the items described
in clauses (iii) and (iv). The exercise of, or opposition to, any of those items
does not waive the right of any party to a reference pursuant to this Agreement.

 

4.                   The referee shall be a retired judge or justice selected by
mutual written agreement of the parties. If the parties do not agree within ten
(10) days of a written request to do so by any party, then, upon request of any
party, the referee shall be selected by the Presiding Judge of the Court (or his
or her representative). A request for appointment of a referee may be heard on
an ex parte or expedited basis, and the parties agree that irreparable harm
would result if ex parte relief is not granted. Pursuant to CCP § 170.6, each
party shall have one peremptory challenge to the referee selected by the
Presiding Judge of the Court (or his or her representative).

 

5.                   The parties agree that time is of the essence in conducting
the reference proceedings. Accordingly, the referee shall be requested, subject
to change in the time periods specified herein for good cause shown, to (a) set
the matter for a status and trial-setting conference within fifteen (15) days
after the date of selection of the referee, (b) if practicable, try all issues
of law or fact within one hundred twenty (120) days after the date of the
conference and (c) report a statement of decision within twenty (20) days after
the matter has been submitted for decision.

 

6.                   The referee will have power to expand or limit the amount
and duration of discovery. The referee may set or extend discovery deadlines or
cutoffs for good cause, including a party’s failure to provide requested
discovery for any reason whatsoever. Unless otherwise ordered, no party shall be
entitled to “priority” in conducting discovery, depositions may be taken by
either party upon seven (7) days written notice, and all other discovery shall
be responded to within fifteen (15) days after service. All disputes relating to
discovery which cannot be resolved by the parties shall be submitted to the
referee whose decision shall be final and binding.

 

7.                   Except as expressly set forth in this Agreement, the
referee shall determine the manner in which the reference proceeding is
conducted including the time and place of hearings, the order of presentation of
evidence, and all other questions that arise with respect to the course of the
reference proceeding. All proceedings and hearings conducted before the referee,
except for trial, shall be conducted without a court reporter, except that when
any party so requests, a court reporter will be used at any hearing conducted
before the referee, and the referee will be provided a courtesy copy of the
transcript. The party making such a request shall have the obligation to arrange
for and pay the court reporter. Subject to the referee’s power to award costs to
the prevailing party, the parties will equally share the cost of the referee and
the court reporter at trial.

 

8.                   The referee shall be required to determine all issues in
accordance with existing case law and the statutory laws of the State of
California. The rules of evidence applicable to proceedings at law in the State
of California will be applicable to the reference proceeding. The referee shall
be empowered to enter equitable as well as legal relief, enter equitable orders
that will be binding on the parties and rule on any motion which would be
authorized in a trial, including without limitation motions for summary judgment
or summary adjudication. The referee shall issue a decision at the close of the
reference proceeding which disposes of all claims of the parties that are the
subject of the reference. Pursuant to CCP § 644, such decision shall be entered
by the Court as a judgment or an order in the same manner as if the action had
been tried by the Court and any such decision will be final, binding and
conclusive. The parties reserve the right to appeal from the final judgment or
order or from any appealable decision or order entered by the referee. The
parties reserve the right to findings of fact, conclusions of laws, a written
statement of decision, and the right to move for a new trial or a different
judgment, which new trial, if granted, is also to be a reference proceeding
under this provision.

 - 10 - 

 

9.                   If the enabling legislation which provides for appointment
of a referee is repealed (and no successor statute is enacted), any dispute
between the parties that would otherwise be determined by reference procedure
will be resolved and determined by arbitration. The arbitration will be
conducted by a retired judge or Justice, in accordance with the California
Arbitration Act §1280 through §1294.2 of the CCP as amended from time to time.
The limitations with respect to discovery set forth above shall apply to any
such arbitration proceeding.

 

10.               THE PARTIES RECOGNIZE AND AGREE THAT ALL DISPUTES RESOLVED
UNDER THIS REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY A JURY.
AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF
THEIR OWN CHOICE, EACH PARTY KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL
BENEFIT OF ALL PARTIES, AGREES THAT THIS REFERENCE PROVISION WILL APPLY TO ANY
CONTROVERSY, DISPUTE OR CLAIM BETWEEN OR AMONG THEM WHICH ARISES OUT OF OR IS
RELATED TO THE AGREEMENT.

 

(k)                Assignment and Indemnity. Borrower consents to Bank’s
assignment of all or any part of Bank’s rights under this Agreement and the Loan
Agreement. Borrower shall indemnify and defend and hold Bank and any assignee of
Bank’s interests harmless from any actions, costs, losses or expenses (including
attorneys’ fees) arising out of such assignment, this Agreement and the Loan
Agreement.

 

[end of agreement -- signatures appear on following page]

 

 

 

 

 - 11 - 

 

IN WITNESS WHEREOF the undersigned have executed this Amended and Restated
Forbearance Agreement as of the first date above written.

 

   

[exh_102s1.jpg]   [exh_102s2.jpg] 

 

 

 

 - 12 - 

 

Exhibit A

 

 

SALE OF TRANSACTION ASSETS

 

Expected Execution/Sale Date: February 8, 2019

Operative Agreement: Asset Purchase Agreement among the Borrower, WEG Electric
Corp., a corporation incorporated and existing under the laws of the State of
Georgia, U.S.A., and WEG Equipamentos Elétricos S.A., a company incorporated and
existing under the laws of Brazil.

Expected Gross Sale Proceeds: $1,100,000

Proceeds paid to Bank on the Sale Date: $350,000

 

SALE OF ITALIAN SERVICE BUSINESS

 

Expected Execution/Sale Date: March 15, 2019

Service Area: Italy

Expected Operative Agreement: Asset Purchase Agreement between Borrower and IVPC
Group.

Expected Gross Sale Proceeds (Service Contracts and Inventory): $1,750,000

Expected Net Sale Proceeds: $1,000,000, after deduction for payments to complete
sale and payments to satisfy statutory requirements for the transitioning of
employees to buyer.

Proceeds paid to Bank on the Sale Date: $350,000 plus 50% of Net Sale Proceeds
in excess of $1,000,000

 

 

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