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FIRST AMENDMENT TO FORBEARANCE AGREEMENT
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This First Amendment to Forbearance Agreement is entered as of April 18,
1997 by and between
The First National Bank of Boston (hereinafter, the "BANK"), a national
banking association, having a principal place business at 000 Xxxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx;
BancBoston Leasing Inc. (hereinafter, "BBL"), a Massachusetts corporation
having a principal place of business at 000 Xxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx;
Centennial Technologies, Inc. (hereinafter, the "BORROWER"), a corporation
organized under the laws of the State of Delaware, having a principal place
of business at 00 Xxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxxxx;
NCT, Inc. (hereinafter, "NCT"), a corporation organized under the laws of
the Commonwealth of Massachusetts, having a principal place of business at
00 Xxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxxxx;
Century Electronics Manufacturing, Inc. (f/k/a Century Industries, Inc.)
(hereinafter, "CENTURY"), a corporation organized under the laws of the
State of Delaware, having a principal place of business at 00 Xxxxxxx Xxxx,
Xxxxxxxxx, Xxxxxxxxxxxxx; and
Design Circuits, Inc. (hereinafter "DCI"), a corporation organized under
the laws of the Commonwealth of Massachusetts, having a principal place of
business at 000 Xxxxxxxx Xxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxxx
in consideration of the mutual covenants herein contained and benefits to be
derived herefrom.
WITNESSETH:
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1. BACKGROUND. On March 18, 1997, the Bank, BBL, and the Obligors entered
into a certain Forbearance Agreement and Amendment (the "Original
Agreement") with respect to the Obligors' obligations under the Loan
Agreement, their respective Guaranties and the Master Lease Agreement.
The Forbearance Period has expired and the Bank, BBL and the Obligors
desire to extend same and otherwise modify the Original Agreement on
the terms set forth herein.
2. DEFINITIONS. All capitalized terms used herein and not otherwise
defined shall have the same meaning herein as in the Original
Agreement.
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3. OUTSTANDING OBLIGATIONS.
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(a) The Borrower and each of the Guarantors (individually, each an
"OBLIGOR" and collectively, the "OBLIGORS") acknowledge and agree
that they are jointly and severally obligated to the Bank to pay
the Obligations and that as of April 18, 1997, the Obligations
consist of:
Principal: $8,406,554.45
Interest through April 18, 1997: $ 37,831.89
plus interest hereafter accruing, costs, and expenses, including,
without limitation, attorneys' fees, consultants' fees, and commercial
finance examination fees.
(b) The Borrower acknowledges and agrees that SCHEDULE 1 hereto
accurately reflects the original cost of the property subject to
the Master Lease Agreement and schedules thereto, which is
presently owned by BBL.
(c) The Obligors further acknowledge and agree that none of them have
any offsets, defenses, or counterclaims (i) against the Bank with
respect to the Loan Agreement, the Guaranties, the other Loan
Documents, or otherwise, or (ii) against BBL with respect to the
Master Lease Agreement, or otherwise, and to the extent that any
such offsets, defenses or counterclaims may exist, the Obligors
each hereby WAIVE and RELEASE same. The Obligors shall execute
and deliver to the Bank and BBL such releases as the Bank or BBL
may request to confirm the foregoing.
(d) The Obligors each ratify and confirm that their respective
obligations to the Bank (as modified hereby), including, without
limitation, those under the Loan Agreement and the Guaranties,
are secured by the Collateral and the Guarantor Assets.
(e) The Borrower ratifies and confirms that its obligations to BBL
are secured by the Collateral.
4. FORBEARANCE BY BANK. The provisions of Section 4 of the Original
Agreement are hereby amended by deleting the date April 18, 1997
appearing in clause (i) and substituting the date June 30, 1997 in its
stead.
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5. AMENDMENTS TO LOAN DOCUMENTS. From and after the date hereof the Loan
Documents are hereby amended as follows (which amendment shall
survive the expiration of the Forbearance Period):
(a) Section 1.1 of the Loan Agreement is hereby amended by deleting
the definition of "Borrowing Base" in its entirety and
substituting the following in its stead:
BORROWING BASE. ON ANY DATE OF DETERMINATION THEREOF, THE LESSER
OF
(A) $10,000,000, MINUS THE AGGREGATE FACE AMOUNT OF ALL
OUTSTANDING LETTERS OF CREDIT, IN THE AMOUNTS ORIGINALLY ISSUED
OR AS REDUCED PURSUANT TO THEIR TERMS, WHICH ARE EITHER
OUTSTANDING OR WHICH HAVE BEEN DRAWN AND PAID BY THE BANK BUT NOT
REIMBURSED BY THE BORROWER, OR
(B) THE SUM OF (I) 80% OF ELIGIBLE ACCOUNTS AND (II) THE LESSER
OF (A) 35% OF ELIGIBLE INVENTORY AND (B) $5,500,000 (OR SUCH
LESSER PERCENTAGES OR AMOUNTS AS THE BANK MAY IN ITS REASONABLE
DISCRETION DETERMINE FROM TIME TO TIME UPON THIRTY DAYS WRITTEN
NOTICE TO THE BORROWER) AND (III) THE LESSER OF (A) $1,125,000.00
OR (B) THE UNPAID AND OUTSTANDING AMOUNT OF THE FEDERAL INCOME
TAX REFUND PAYABLE TO THE BORROWER FOR TAX YEARS ENDING PRIOR TO
FEBRUARY 28, 1997, MINUS THE SUM OF (I) $2,000,000 AND (II) THE
AGGREGATE FACE AMOUNT OF ALL OUTSTANDING LETTERS OF CREDIT, IN
THE AMOUNTS ORIGINALLY ISSUED OR AS REDUCED PURSUANT TO THEIR
TERMS, WHICH ARE EITHER OUTSTANDING OR WHICH HAVE BEEN DRAWN AND
PAID BY THE BANK BUT NOT REIMBURSED BY THE BORROWER.
(b) Section 1.1 of the Loan Agreement is hereby amended by deleting
the definition of "Maximum Commitment" in its entirety and
substituting the following in its stead:
MAXIMUM COMMITMENT. $10,000,000 OR ANY LESSER AMOUNT, INCLUDING
ZERO, RESULTING FROM A TERMINATION OR REDUCTION OF SUCH AMOUNT IN
ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.
(c) The provisions of Section V of the Loan Agreement are hereby
amended by adding the following new sections:
5.14. CONSOLIDATED TANGIBLE NET WORTH. THE BORROWER SHALL AT ALL
TIMES MAINTAIN A CONSOLIDATED TANGIBLE NET WORTH OF AT LEAST
$37,000,000.
5.15. CONSOLIDATED EBIT. THE BORROWER SHALL NOT PERMIT
CONSOLIDATED EBIT FOR ANY MONTH, DETERMINED AT THE END OF
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EACH FISCAL MONTH OF THE BORROWER, TO BE LESS THAN THE FOLLOWING:
MONTH EBIT
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APRIL, 1997 ($200,000)
MAY, 1997 $1,000, PLUS, IF EBIT AS REPORTED
IN APRIL, 1997 WAS NEGATIVE, AN
AMOUNT EQUAL TO THE DIFFERENCE
BETWEEN $1,000 AND THE ACTUAL EBIT
FOR APRIL, 1997
JUNE, 1997 AND EACH MONTH
END THEREAFTER $1,000
FOR PURPOSES OF CALCULATING CONSOLIDATED EBIT, THERE SHALL BE
EXCLUDED IN THE CALCULATION OF CONSOLIDATED NET INCOME OF THE
BORROWER ALL ATTORNEYS, AUDITORS, AND CONSULTANTS' FEES INCURRED
BY THE COMPANY IN CONNECTION WITH ITS PRESENT RESTRUCTURING.
6. AMENDMENTS TO SECTION 6. The provisions of Section 6 of the Original
Agreement are hereby amended as follows.
o The provisions of Section 6(b) are hereby amended by adding the
following sentence immediately after the second sentence of that
section:
ANY SUCH INCOME TAX REFUNDS OR PROCEEDS (INCLUDING, WITHOUT
LIMITATION, PROCEEDS FROM THE SALE OR OTHER DISPOSITION OF
CENTURY AND TRIAX) SHALL PERMANENTLY REDUCE THE MAXIMUM
COMMITMENT AND THE AMOUNT SET FORTH IN CLAUSE (a) OF THE
DEFINITION OF BORROWING BASE.
o The provisions of Section 6(h) of the Original Agreement are hereby
amended by deleting the date "April 11, 1997" appearing in clause (i)
thereof and substituting the date June 23, 1997 in its stead.
o The following new subsections are hereby added to Section 6 of the
Original Agreement:
n. THE OBLIGORS HAVE ADVISED THE BANK AND BBI THAT THE INTEND TO
SELL AND DISPOSE OF A PORTION OF THEIR INTERESTS IN CENTURY AND
TRIAX. THE OBLIGORS SHALL KEEP THE BANK REASONABLY INFORMED AS TO
THE STATUS OF ANY OFFERS, NEGOTIATIONS, OR AGREEMENTS FOR THE
SALE OR DISPOSITION OF A PORTION OF THEIR INTERESTS IN CENTURY
AND TRIAX. ANY SUCH SALE OR DISPOSITION SHALL BE SUBJECT TO THE
CONSENT OF THE BANK AND BBL, AND NOTHING CONTAINED HEREIN SHALL
CONSTITUTE THE
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AGREEMENT OF OR CONSENT BY THE BANK OR BBL TO ANY SUCH SALE OR
DISPOSITION.
o. IN CONSIDERATION OF THE BANK'S ENTERING INTO THE FIRST AMENDMENT
TO FORBEARANCE AGREEMENT AND EXTENDING THE FORBEARANCE PERIOD,
UPON THE EXECUTION HEREOF, THE BORROWER SHALL PAY THE BANK THE
SUM OF $21,000 AS AN ADDITIONAL FORBEARANCE FEE. SUCH FEE SHALL
BE FULLY EARNED UPON PAYMENT AND SHALL NOT BE SUBJECT TO REFUND
OR REBATE UNDER ANY CIRCUMSTANCES. THE FORBEARANCE FEE SHALL NOT
BE APPLIED IN REDUCTION TO THE PRINCIPAL, INTEREST OR OTHER
AMOUNTS DUE IN CONNECTION WITH THE LOAN ARRANGEMENT.
7. The provisions of Section 7 of the Original Agreement are hereby
amended as follows:
o By deleting the provisions of Section 7(f) and substituting the
following in its stead:
f. THE FAILURE OF THE OBLIGORS, ON OR BEFORE MAY 2, 1997, TO FURNISH
THE BANK WITH A VALID, BINDING AND ARMS-LENGTH PURCHASE AND SALE
AGREEMENT FOR THE SALE OF A PORTION OF THEIR INTERESTS IN EACH OF
CENTURY AND TRIAX.
o The provisions of Section 7 of the Original Agreement are hereby
amended by adding the following new Termination Events:
g. THE FAILURE OF THE OBLIGORS, ON OR BEFORE MAY 20, 1997, TO
FURNISH THE BANK WITH EVIDENCE SATISFACTORY TO THE BANK THAT THE
PURCHASERS UNDER THE PURCHASE AND SALE AGREEMENTS REFERRED TO IN
SECTION 7(f) HAVE OBTAINED FINANCING AND/OR OTHERWISE WILL BE
ABLE TO CONSUMMATE THE ACQUISITIONS CONTEMPLATED BY THE PURCHASE
AND SALE AGREEMENTS.
h. THE FAILURE OF THE OBLIGORS, ON OR BEFORE JUNE 15, 1997, TO HAVE
CONSUMMATED THE SALE OF A PORTION OF THEIR INTERESTS IN EACH OF
CENTURY AND TRIAX ON TERMS SATISFACTORY TO THE BANK.
8. GENERAL.
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(a) This Agreement shall be binding upon each Obligor and such
Obligor's successors, and assigns and shall enure to the benefit
of BBL, the Bank and BBL's and the Bank's successors and assigns.
In the event that BBL or the Bank assigns or transfers its rights
under this Agreement, the assignee shall thereupon succeed to and
become vested with all rights, powers, privileges, and duties of
BBL or the Bank hereunder and BBL or the Bank shall
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thereupon be discharged and relieved from its duties and
obligations hereunder.
(b) Any determination that any provision of this Agreement or any
application thereof is invalid, illegal, or unenforceable in any
respect in any instance shall not affect the validity, legality,
or enforceability of such provision in any other instance, or the
validity, legality, or enforceability of any other provision of
this Agreement.
(c) No delay or omission by BBL or the Bank in exercising or
enforcing any of BBL's or the Bank's rights and remedies shall
operate as, or constitute, a waiver thereof. No waiver by BBL or
the Bank of any of BBL's or the Bank's rights and remedies on any
one occasion shall be deemed a waiver on any subsequent occasion,
nor shall it be deemed a continuing waiver.
(d) This Agreement and all other documents, instruments, and
agreements executed in connection herewith incorporate all
discussions and negotiations between the Obligors, BBL and the
Bank, either express or implied, concerning the matters included
herein and in such other instruments, any custom, usage, or
course of dealings to the contrary notwithstanding. No such
discussions, negotiations, custom, usage, or course of dealings
shall limit, modify, or otherwise affect the provisions hereof.
No modification, amendment, or waiver of any provision of this
Agreement or of any provision of any other agreement between any
Obligor and BBL or the Bank shall be effective unless executed in
writing by the party to be charged with such modification,
amendment and waiver, and if such party be BBL or the Bank, then
by a duly authorized officer thereof.
(e) Except as modified hereby, all terms and conditions of the
Original Agreement, the Master Lease Agreement, Loan Agreement,
the Guaranties, and other Loan Documents remain in full force and
effect. The Bank and BBL are not hereby waiving any Defaults,
Events of Default or rights and remedies which exist under the
Master Lease Agreement or the Loan Documents and the Bank and BBL
reserve the right upon expiration of the Forbearance Period to
undertake such action as a result of such Defaults and Events of
Default as the Bank or BBL may determine. In particular,
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without limiting the generality of the foregoing the Bank and BBL
have not waived any Defaults or Events of Default, or the
respective rights and remedies of the Bank and/or BBL arising as
a result thereof, which may have occurred as a result of any
misrepresentation made by or on behalf of any one or more of the
Obligors.
(f) This Agreement and all rights and obligations hereunder,
including matters of construction, validity, and performance,
shall be governed by the laws of The Commonwealth of
Massachusetts. The Obligors each submit to the jurisdiction of
the Courts of said Commonwealth for all purposes with respect to
this Agreement and the Obligors' relationship with the Bank and
BBL.
(g) Each Obligor makes the following waiver knowingly, voluntarily,
and intentionally, and understands that the Bank and BBL, in
entering into the within Forbearance Agreement, is relying
thereon. EACH OBLIGOR, TO THE EXTENT OTHERWISE ENTITLED THERETO,
HEREBY IRREVOCABLY WAIVES ANY PRESENT OR FUTURE RIGHT OF THAT
OBLIGOR TO A JURY IN ANY TRIAL OF ANY CASE OR CONTROVERSY IN
WHICH THE BANK OR BBL IS OR BECOMES A PARTY (WHETHER SUCH CASE OR
CONTROVERSY IS INITIATED BY OR AGAINST THE BANK OR BBL OR IN
WHICH THE BANK OR BBL IS JOINED AS A PARTY LITIGANT), WHICH CASE
OR CONTROVERSY ARISES OUT OF, OR IS IN RESPECT OF, ANY
RELATIONSHIP BETWEEN THE BORROWER OR ANY SUCH PERSON AND THE BANK
OR BBL.
(h) Each Obligor shall execute such instruments and documents as BBL
and the Bank may from time to time request in connection with the
Master Lease Agreement, Loan Agreement, the Guaranties, the Loan
Documents, the within Agreement and the arrangements contemplated
hereby.
It is intended that this Agreement take effect as a sealed instrument.
CENTENNIAL TECHNOLOGIES, INC. DESIGN CIRCUITS, INC.
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxx Xxxxxx
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Print Name: Xxxxxx X. Xxxxxx Print Name: Xxxxxx Xxxxxx
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Title: Chief Financial Officer Title: President
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CENTURY ELECTRONICS NCT, INC.
MANUFACTURING, INC.
By: /s/ Xxxxxx X. Xxxx By: /s/ Xxxxxx X. Xxxx
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Print Name: Xxxxxx X. Xxxx Print Name: Xxxxxx X. Xxxx
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Title: Secretary and Treasurer Title: President
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AGREED AND ACCEPTED BY:
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Xxx X. Xxxxxxxx
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Print Name: Xxx X. Xxxxxxxx
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Title: Vice President
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BANCBOSTON LEASING INC.
By: /s/ Xxx X. Xxxxxxxx
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Print Name: Xxx X. Xxxxxxxx
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Title: Attorney In Fact
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SCHEDULE TO FORBEARANCE AGREEMENT AND AMENDMENT
Equipment Schedule No. 9
Total Cost - $795,777.32