FORBEARANCE AND AMENDMENT AGREEMENT
THIS AGREEMENT is made as of January 11, 1996 between NUCLEAR METALS,
INC., a Massachusetts corporation ("Nuclear Metals"), CAROLINA METALS, INC.,
a Delaware corporation ("Carolina Metals," together with Nuclear Metals,
"Borrowers") and STATE STREET BANK AND TRUST COMPANY, an FDIC insured
Massachusetts chartered trust company ("Bank").
RECITALS
A. The Bank and Xxxxxxxx County, South Carolina ("Issuer") entered into
a certain Indenture ("1982 Indenture") dated as of May 11, 1982 in connection
with which the Issuer executed and delivered to the Bank a certain
Industrial Development Revenue Note ("1982 Revenue Note") dated May 11, 1982
in the original principal amount of $5,000,000. Pursuant to a Financing
Agreement ("1982 Financing Agreement") between the Issuer and the Borrowers
dated as of May 11, 1982, among other things, the Borrowers are obligated to
pay to the Issuer the amounts required to be paid by the Issuer to the Bank
under the 1982 Revenue Note. To secure the obligations of the Borrowers to
the Issuer under the 1982 Financing Agreement, the Borrowers granted to the
Issuer a mortgage on and a security interest in the "Mortgaged Property," as
defined in the 1982 Financing Agreement, including a first mortgage ("First
Mortgage") on the real property and buildings thereon owned by Carolina
Metals and located at Highway 80, Barnwell, South Carolina ("South Carolina
Real Property").
B. Pursuant to the 1982 Indenture, the Issuer assigned to the Bank,
among other things, the First Mortgage and the obligation of the Borrowers to
pay the amounts required to be paid by the Issuer under the 1982 Revenue Note.
C. In connection with the 1982 Financing Agreement and 1982 Indenture,
Nuclear Metals executed and delivered to the Bank a Guaranty ("1982
Guaranty") by which, among other things, it irrevocably and unconditionally
guarantees to the Bank the full and prompt payment of the principal and
interest due under the 1982 Revenue Note and any other sums due and payable
by the Issuer thereunder or under the 1982 Indenture.
D. The Bank and the Issuer entered into a certain Indenture ("1984
Indenture") dated as of September 27, 1984 in connection with which the
Issuer executed and delivered to the Bank a certain Industrial Development
Revenue Note ("1984 Revenue Note"; together with the 1982 Revenue Note,
"Revenue Notes") dated September 27, 1984 in the original principal amount of
$3,200,000. Pursuant to a Financing Agreement ("1984 Financing Agreement")
between the Issuer and Carolina Metals dated as of September 27, 1984, among
other things, Carolina Metals is obligated to pay to the Issuer the amounts
required to be paid by the Issuer to the Bank under the 1984 Revenue Note.
To secure the obligations of Carolina Metals to the Issuer under the 1984
Financing Agreement, Carolina Metals granted to the Issuer a mortgage on and
a security interest in the "Mortgaged Property," as defined in the 1984
Financing Agreement, including a second mortgage ("Second Mortgage") on the
South Carolina Real Property.
E. Pursuant to the 1984 Indenture, the Issuer assigned to the Bank,
among other things, the Second Mortgage and the obligation of Carolina Metals
to pay the amounts required to be paid by the Issuer under the 1984 Revenue
Note.
F. In connection with the 1984 Financing Agreement and 1984 Indenture,
the Borrowers executed and delivered to the Bank a Guaranty ("1984 Guaranty")
by which,
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among other things, they irrevocably and unconditionally guarantee to the
Bank the full and prompt payment of the principal and interest due under the
1984 Revenue Note and any other sums due and payable by the Issuer thereunder
or under the 0000 Xxxxxxxxx. The 1982 Indenture, 1982 Financing Agreement,
1982 Guaranty, 1984 Indenture, 1984 Financing Agreement, 1984 Guaranty and
the Revenue Notes are hereinafter collectively referred to as the "Bond
Documents."
G. The Borrowers and the Bank entered into a Credit Agreement ("Credit
Agreement") dated as of March 31, 1995, as amended by First Amendment to
Credit Agreement ("First Amendment") dated as of June 30, 1995. Pursuant to
the Credit Agreement, the Bank established a credit facility in favor of the
Borrowers in the aggregate amount of $5,650,000 evidenced by, among other
things (a) a Revolving Credit Note ("Revolving Note") dated March 31, 1995,
as amended by Amendment to Revolving Credit Note dated as of June 30, 1995 in
the principal amount of $3,250,000, and (b) a Term Note ("Term Note") dated
March 31, 1995 in the original principal amount of $2,400,000.
H. On September 26, 1995, the Bank and the Borrowers entered into a
certain letter agreement ("Line of Credit Agreement") by which the Bank
established a demand line of credit facility in favor of the Borrowers in the
amount of $2,000,000. Such facility is evidenced by, among other things, a
Line of Credit Demand Note ("Demand Note") dated September 26, 1995 in the
principal amount of $2,000,000. The Revolving Note, Term Note and Demand
Note are hereinafter collectively referred to as the "1995 Notes".
I. In connection with the Line of Credit Agreement, (a) Nuclear Metals
and the Bank entered into a Warrant Agreement ("Warrant Agreement") dated
September 26, 1995,
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and (b) Nuclear Metals issued to the Bank a certain warrant ("Warrant")
evidencing the Bank's right to purchase at any time on or before September
26, 2005, 25,000 shares of Nuclear Metals common stock, $.10 par value, at a
purchase price of $11.89 per share (as such number of shares and such price
per share may be adjusted pursuant to the Warrant). The Credit Agreement,
Line of Credit Agreement, 1995 Notes, the Warrant Agreement, Warrant, the
"Security Agreement" and the "1995 Guaranty" (each as defined below) and all
other agreements and instruments executed in connection with any of the
foregoing other than this Agreement, are hereinafter collectively as the
"Loan Documents." The obligations to the Bank of the Borrowers under the
Loan Documents (other than the Warrant, Warrant Agreement and 1995 Guaranty)
are joint and several.
J. To secure the obligations of the Borrowers to the Bank under the
Loan Documents and the Bond Documents, the Borrowers pursuant to a Joint
Security Agreement ("Security Agreement") dated as of March 31, 1995, as
amended by the First Amendment and First Amendment to Joint Security
Agreement dated as of September 26, 1995, granted the Bank a security
interest in all accounts, inventory, equipment and general intangibles
(including all tax refunds, patents, patent applications, trademarks and
trademark applications) in which either Borrower then had or thereafter
acquired any rights and the proceeds therefrom and accessions thereto
(collectively, "Collateral"). The Bank perfected such security interest by
the filing of UCC-1 Financing Statements with the Massachusetts Secretary of
State's Office, the Town Clerk of Concord, Massachusetts and the South
Carolina Secretary of State's Office. Additionally, the Bank filed with the
United States Patent and Trademark Office a Trademark Assignment of Security
between Nuclear Metals and the Bank dated
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September 26, 1995 and a Patent Assignment of Security between Nuclear Metals
and the Bank dated September 26, 1995 relating to the trademarks and patents
respectively described therein.
K. Subsequent to the closing of the transactions contemplated by the
Credit Agreement, Carolina Metals executed and delivered to the Bank a
Guaranty Agreement ("1995 Guaranty") dated as of April 13, 1995 by which,
among other things, Carolina Metals unconditionally guarantees to the Bank
the prompt payment and performance of all obligations of Nuclear Metals to
the Bank, including without limitation, any obligation and liability of
Nuclear Metals related to or in connection with any foreign exchange
transaction between Nuclear Metals and the Bank.
L. The Borrowers are in default of their obligations to the Bank under
the Loan Documents and the Bond Documents.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. CAPITALIZED TERMS. Unless otherwise defined herein, capitalized
terms used herein shall have the meanings ascribed to them in the Credit
Agreement.
2. CURRENT INDEBTEDNESS.
(a) As of the date hereof, the total indebtedness of the Borrowers
due and owing to the Bank under, arising from or in connection with the
Loan Documents is $3,890,200.04, comprised of (i) $1,000,000 in
principal and $2,500.00 in interest under the Revolving Note,
(ii) $1,680,000 in principal and $4,666.67 in interest under
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the Demand Note, and (iii) $1,200,000.03 in principal and $3,033.34 in
interest under the Term Note, plus fees and charges and costs of
collection, including the unpaid arrears in the amount of $42,261.67
for the 1% facility fee ("Facility Fee Arrears") under the Line of
Credit Agreement for the months of September, October, November and
December of 1995 and reasonable attorneys' fees (collectively, together
with any and all reimbursement obligations of the Borrowers under, in
connection with or related to any letter of credit issued by the Bank
for the account of either Borrower (collectively, (L/C's), "Credit
Agreement Obligations"). The Credit Agreement Obligations are joint
and several obligations of the Borrowers to the Bank.
(b) As of the date hereof, the total indebtedness of the Borrowers
due and owing to the Bank under, arising from or in connection with the
Bond Documents is $658,204.12, comprised of (i) $357,142.78 in
principal and $590.30 in interest under the 1982 Revenue Note, and
(ii) $300,000.00 in principal and $471.04 in interest under the 1984
Revenue Note, plus fees, charges, costs of collection, including
reasonable attorneys' fees (collectively, "Bond Obligations"). The
Credit Agreement Obligations and the Bond Obligations are hereinafter
collectively referred to as the "Obligations." The Obligations are due
and owing to the Bank without setoff, counterclaim or defense.
3. VALIDITY AND PRIORITY OF SECURITY INTEREST; MORTGAGE.
(a) The security interest granted to the Bank by the Borrowers
pursuant to the Security Agreement, as amended hereby, (i) constitutes a
first priority perfected valid, binding and enforceable security
interest in the Collateral, together with all other personal property of
the Borrowers which may be perfected by the filing of UCC-1
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Financing Statements, and (ii) such security interest secures the
Obligations, together with any and all other obligations of the
Borrowers to the Bank now existing or hereafter arising, including all
other obligations of the Borrowers to the Bank under, related to or in
connection with this Agreement, as may be amended from time to time, and
the Loan Documents and Bond Documents, as amended hereby and as may be
further amended from time to time.
(b) Pursuant to the First Mortgage, Second Mortgage, 1982 Indenture
and 1984 Indenture, the Bank has a duly recorded, valid and binding and
enforceable first mortgage and second mortgage on the South Carolina Real
Property, each of which secures the Bond Obligations.
4. DEFAULTS. The Borrowers are in default of (a) Section 1.02(a),
Section 1.02(c), Section 4.08, Section 4.12, Section 4.13, Section 4.22 and
clause (k) of Article V of the Credit Agreement, (b) paragraph numbered 3 of
the Line of Credit Agreement, and (c) Section 3.3 of the 1984 Guaranty. The
above defaults (other than the default relating to Sections 4.12 and 4.13 of
the Credit Agreement) shall be deemed to be waived until the Maturity Date;
upon which such limited waiver shall be void and of no effect and the Bank
shall have, without limitation, rights available to it under this Agreement,
the Loan Documents, the Bond Documents and applicable law. In the event that
any other or additional Event of Default occurs or any other or additional
default occurs under the Bond Documents subsequent to the date hereof, this
limited waiver shall be deemed void and of no effect, at the election of the
Bank. The defaults with regard to Sections 4.12 and 4.13 of the Credit
Agreement shall be deemed waived, provided, however, such waiver shall be
void and of no effect if on or before
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April 1, 1996, (a) the Borrowers and Palmetto Federal Savings Bank of South
Carolina ("Palmetto") have not executed and delivered to the Bank a
subordination and intercreditor agreement regarding Palmetto's secured
$500,000 loan ("Palmetto Loan") to CMI, which agreement shall be in form and
substance satisfactory to the Bank, or (b) if the Borrowers have not
requested any funding of the Palmetto Loan, (i) the borrowing facility
thereunder has been terminated, (ii) the Borrowers have obtained a release
from Palmetto of all obligations and liabilities relating to the Palmetto
Loan in form and substance satisfactory to the Bank and any notes issued in
connection therewith have been marked "canceled" and returned to the
Borrowers and (iii) the Borrowers have obtained from Palmetto discharges and
releases of all liens and encumbrances in favor of Palmetto on any real or
personal property of either Borrower, which discharges and/or releases shall
be in form and substance satisfactory to the Bank.
5. VALIDITY AND ENFORCEABILITY OF DOCUMENTS.
(a) The Loan Documents and the Bond Documents, as amended hereby,
are valid, binding and enforceable against the parties thereto in
accordance with their respective terms.
(b) The 1995 Guaranty is a valid, binding and enforceable absolute
and unconditional guaranty by which Carolina Metals guarantees to the
Bank the payment of the Obligations, together with the payment and
performance of all other obligations to the Bank of Nuclear Metals now
existing or hereafter arising.
(c) The 1984 Guaranty, as amended hereby, is a valid, binding
enforceable absolute and unconditional guaranty by which the Borrowers
guarantee to the Bank the
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full and prompt payment of the principal and interest due under the
1984 Revenue Note and any other sums due and payable by the Issuer
thereunder or under the 1984 Indenture.
(d) The 1982 Guaranty, as amended hereby, is a valid, binding
enforceable absolute and unconditional guaranty by which Nuclear Metals
guarantees to the Bank the full and prompt payment of the principal and
interest due under the 1982 Revenue Note and any other sums due and
payable by the Issuer thereunder or under the 0000 Xxxxxxxxx.
(e) The Warrant is a valid, binding and enforceable warrant pursuant
to which the Bank has the right to purchase on or before September 26,
2005, 25,000 shares of Nuclear Metals common stock, $.10 par value, at
a purchase price of $11.89 per share (as such number of shares and such
price per share may be adjusted pursuant to the Warrant).
6. REPRESENTATIONS AND WARRANTIES. The Borrowers represent and warrant
to the Bank that:
(a) INTENTIONALLY DELETED.
(b) Attached hereto as SCHEDULE B is a true and accurate copy of
the Public Law 85-804 contract adjustment request ("U.S. Request")
submitted on September 22, 1995, to the United States Army.
(c) Attached hereto as SCHEDULE C is a true and correct copy of the
contract and any amendments thereto between Nuclear Metals and British
Aerospace Limited Royal Ordnance Division ("XXXXX") relating to the sale
("XXXXX Sale") by Nuclear
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Metals to XXXXX of 7,500 CHARM III Ammunition Blanks. The Bank has been
named as payee under such contract.
(d) Attached hereto as SCHEDULE D is a true and accurate list of
all respective account debtors of the Borrowers, together with their
respective addresses.
(e) Other than with respect to the Events of Default and defaults
described in Section 4 hereof, all of the representations and warranties
made to the Bank in the Bond Documents and the Loan Documents are true
and accurate as of the date hereof as if made as of the date hereof
(except as the same may relate to an earlier date).
(f) Set forth on SCHEDULE F attached hereto is a true and accurate
list of all patents, patent applications, trademarks and trademark
applications owned by either Borrower and each such patent and trademark
is valid and enforceable and Nuclear Metals or Carolina Metals (as the
case may be) is the sole and exclusive owner of the entire and
unencumbered right, title and interest therein and thereto (as the case
may be), free and clear of any liens, charges, licenses, collateral
assignments, mortgages or other encumbrances other than in favor of the
Bank.
(g) Each Borrower has the full power and authority and has taken all
required corporate and other action necessary to permit it to execute and
deliver and perform all of its obligations contained in this Agreement
and in the Loan Documents and Bond Documents, as amended hereby, and all
documents, agreements or instruments required hereby or incident or
collateral hereto and none of such actions will violate any provision of
law applicable to its charter documents, or result in the
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breach of or constitute its default under any agreement or instrument
to which either Borrower is bound.
(h) No Subsidiary of either Borrower (other than CMI) has assets
with a fair market value greater than $10,000.
7. AMENDMENTS TO CREDIT AGREEMENT.
(a) Section 1.02(a) of the Credit Agreement is amended by replacing
"February 29, 1996" with "December 31, 1996".
(b) The first paragraph of Section 1.02(b) of the Credit Agreement is
amended by replacing the text thereof with the following:
"The Borrowing Base shall consist of (i) the sum of 70% of
Eligible Accounts plus the Overadvance Amount, less (ii) the
aggregate dollar amount of L/C's permitted to be outstanding
pursuant to Section 1.05(e) hereof, plus (iii) the aggregate
amount of certificates of deposit issued by the Bank in favor of
either Borrower in which the Bank has a first priority protected
security interest.".
(c) Pursuant to paragraph numbered 3 of the First Amendment, the Bank
and the Borrowers acknowledge and agree that only the text of the first
paragraph of Section 1.02(b) of the Credit Agreement was replaced with
new text.
(d) Section 1.02(b) of the Credit Agreement is further amended by
replacing the last paragraph thereof with the following:
"'Overadvance Amount' means (a) for the period January 11,
1996 to March 15, 1996, $2,000,000, (b) for the period March
16, 1996 to May 15, 1996, $1,500,000, (c) for the period May
16, 1996 to October 31, 1996, $1,000,000, and (d) at any time
after October 31, 1996, $0.".
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(e) Section 4.22 of the Credit Agreement is revised by replacing
the text thereof with the following:
"The Net Income of the Borrowers on the dates set forth below
shall not be less than the amounts set forth opposite such dates:
Date Net Income
---- -----------
March 31, 1996 $250,000
June 30, 1996 $ 25,000
September 30, 1996 $175,000
December 31, 1996 and on the
last day of each consecutive three-
month period thereafter $175,000
"Net Income" shall mean all net income of the Borrowers before
interest and taxes.".
(f) New Section 4.31 shall be added to the Credit Agreement as
follows:
"SECTION 4.31. WORKING CAPITAL. The Working Capital of the
Borrowers on the dates set forth below shall not be less than the
amounts set forth opposite such dates:
Dates Working Capital
----- ---------------
January 11, 1996 $14,250,000
March 31, 1996 $14,750,000
June 30, 1996 $14,900,000
September 30, 1996
December 31, 1996 and on the
last day of each consecutive three
month period thereafter $13,850,000
'Working Capital' means the current assets (excluding intangible
assets such as goodwill, patents, trademarks, research and
development costs and similar items deemed to be intangible by
the Bank) of the Borrowers less their current liabilities.".
(g) Article V of the Credit Agreement is revised by replacing
"4.30" in clause (i) thereof with "4.31".
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(h) Notwithstanding anything to the contrary contained in the Credit
Agreement, the Borrowers shall furnish to the Bank a Borrowing Base
Certificate on the second and fourth Tuesday of each month.
(i) Section 6.05 of the Credit Agreement is amended by replacing
"Xxxxxxx X. Xxxxx XX" with "Xxxxxxx X. Xxxxxx".
(j) The Credit Agreement is amended by replacing Exhibit 1.02(b)(ii)
thereof with SCHEDULE G attached hereto.
(k) The Credit Agreement is amended by replacing Exhibit 1.02(f)
thereof with SCHEDULE H attached hereto.
8. AMENDMENTS TO LINE OF CREDIT AGREEMENT.
(a) Paragraph numbered 1 of the Line of Credit Agreement is amended
by replacing the text thereof with the following:
"From time to time, at any time prior to December 31, 1995, the
Bank may in its absolute and sole discretion advance such funds
("Line of Credit Advances") as either Borrower may request
from time to time, by written notice to the Bank. Without
limiting the demand nature of the Line of Credit, the Borrowers
shall make principal payments to the Bank to reduce the Line of
Credit Advances on or before the dates set forth below to the
respective amounts set forth opposite each such date:
Principal Balance of
Date Line of Credit Advances
---- -----------------------
January 12, 1996 $1,180,000
January 31, 1996 $1,080,000
February 29, 1996 $ 880,000
March 31, 1996 $ 580,000
April 15, 1996 $ 0
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After December 31, 1995, the Borrowers shall not be entitled to
request, and the Bank shall not be obligated to make, any further
Line of Credit Advances.".
(b) Paragraph numbered 2 of the Line of Credit Agreement is amended
by deleting the second sentence thereof.
(c) Paragraph numbered 4 of the Line of Credit Agreement is amended
by replacing the text thereof with "DELETED".
(d) Paragraph numbered 5 of the Line of Credit Agreement is amended
by replacing the text thereof with "DELETED".
9. Amendments to 1982 Guaranty and 1994 Guaranty.
(a) The 1982 Guaranty is amended by replacing the text of
Sections 3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8 and 3.9 with "DELETED".
(b) The 1984 Guaranty is amended by replacing the text of
Sections 3.2, 3.3, 3.4, 3.5, 3.6 and 3.7 with "Deleted".
(c) The occurrence of any Event of Default shall constitute a
default under the 1982 Guaranty and 1984 Guaranty.
10. AMENDMENTS TO SECURITY AGREEMENT.
(a) Section 1 of the Security Agreement is amended by including in
the definition of the term "Collateral" fixtures, documents,
instruments, chattel paper (each as defined by the Uniform Commercial
Code as adopted in Massachusetts) and all other personal property to the
extent not previously included in such definition, in which either
Borrower now has or hereafter acquires any rights and the proceeds
therefrom (including without limitation, proceeds of insurance) and
accessions thereto.
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(b) The term "Credit Agreement," as defined in the Security
Agreement is redefined to mean the Credit Agreement dated as of March 31,
1995 between the Borrowers and the Bank, as amended, restated,
modified and/or supplemented from time to time.
11. MANDATORY REPAYMENT UNDER LINE OF CREDIT AGREEMENT, CREDIT
AGREEMENT AND COLLATERALIZATION. Notwithstanding anything to the contrary
contained in the Line of Credit Agreement, as amended hereby, and without
limiting the demand nature of the "Line of Credit" (as defined therein), upon
the earlier to occur of (a) any payment by XXXXX in respect of the XXXXX
Sale, and (b) any payment in respect of the U.S. Request, Nuclear Metals
shall repay all outstanding Line of Credit Advances (as defined in the Line
of Credit Agreement, as amended hereby), together with all accrued interest
thereon and all fees and expenses associated therewith. Additionally, upon
the earlier to occur of (a) and (b) above, Nuclear Metals shall (i) purchase
from the Bank a certificate or certificates of deposit in the aggregate
amount of $1,000,000, (ii) pledge to the Bank a first priority security
interest therein to secure the Obligations, together with any and all other
obligations of the Borrowers to the Bank now existing or hereafter arising,
(iii) evidence such pledge by dating, executing and delivering to the Bank
the Security and Pledge Agreement in the form attached to Schedule I hereto
or such other agreement as the Bank requires, (iv) take all other actions
requested by the Bank in connection with such pledge, including the delivery
to the Bank of a legal opinion from Borrowers' counsel covering, among other
things, the perfection of such pledge, which opinion shall be in form and
substance satisfactory to the Bank, and (v) repay all outstanding Advances
under the Credit Agreement, together with accrued interest thereon and all
fees and
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expenses associated therewith. Subsequent to the repayment of such Advances,
the Borrowers shall be permitted to request further Advances in accordance
with the terms of the Credit Agreement, as amended hereby.
12. FORBEARANCE AND RESTRUCTURING FEE AND FACILITY FEE ARREARS. On the
date hereof, the Bank shall have earned a forbearance and restructuring fee
in the amount of $150,000, which the Borrowers shall pay to the Bank in
immediately available funds upon the earlier to occur of (a) any Event of
Default, (b) December 31, 1996, (c) any payment by XXXXX in respect of the
XXXXX Sale, and (d) any payment in respect of the U.S. Request. Upon the
earlier of (a), (b), (c) and (d) above, the Borrowers also shall pay the
Facility Fee Arrears. Nothing contained herein shall modify the Borrowers'
prospective monthly obligations to pay the 1% facility fee pursuant to the
Line of Credit Agreement.
13. APPOINTMENT OF RECEIVER. Effective upon the occurrence of an Event
of Default subsequent to the date hereof, in connection with any action
brought by the Bank in a court of competent jurisdiction, the Borrowers
irrevocably consent to the appointment of a receiver for each or both of them
and their respective assets and businesses and the Borrowers agree to execute
any and all documents requested by the Bank relating to the appointment of
such receiver or receivers.
14. ADDITIONAL REMEDIES. In any bankruptcy proceeding involving either
Borrower, the Borrowers consent to the granting of relief from the automatic
stay of Section 362 of the Bankruptcy Code in favor of the Bank to permit it
to exercise its rights and remedies under the Loan Documents, Bond Documents,
this Agreement and applicable law, including its rights and remedies as a
secured creditor and mortgagee.
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15. WAIVER OF DEFENSES AND RELEASE OF BANK. The Borrowers jointly and
severally release, remise and forever discharge the Bank in each of its past,
present and future officers, directors, stockholders, agents, employees,
affiliates, attorneys, successors and assigns of and from any and all claims,
obligations, demands, causes of action, counterclaims and defenses of any
kind or nature whatsoever (including any claims, counterclaims or defenses
based on so-called lender liability), which either or both of the Borrowers
now has against the Bank and/or any of its past, present and future officers,
directors, stockholders, agents, employees, affiliates, attorneys, successors
and assigns, or ever had from the beginning of the world to the date hereof.
16. ADDITIONAL INFORMATION. In addition to the information required by
Section 4.08 of the Credit Agreement, the Borrowers shall furnish the Bank
with the following:
(a) within 30 days of the end of each monthly accounting period,
(i) an accounts receivable aging, (ii) an accounts payable aging, and
(iii) a detailed inventory breakdown, each of which shall be in a form
satisfactory to the Bank.
(b) on the second and fourth Tuesday of each month, a status report
in form satisfactory to the Bank, regarding the XXXXX Sale, the U.S.
Request, the joint venture with Lockheed-Xxxxxx, the privatization of
United States Enrichment Corporation and the memorandum of understanding
between such Corporation, Nuclear Metals and/or Carolina Metals regarding
the conversion of Uranium Hexafluoride to Uranium Tetrafluoride and the
status of the Borrowers' efforts to raise additional funds through
equity or debt investments or the sale of assets.
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17. FINANCIAL ADVISOR. On or before February 15, 1996, the Borrowers
shall engage a financial advisor, selected by the Borrowers but acceptable to
the Bank, to review the operations and assets of the Borrowers, assist the
Borrowers in the preparation of their business plan and in raising additional
funds through equity or debt investments or the sale of assets.
18. ADDITIONAL CAPITAL. On or before July 1, 1996, the Borrowers shall
provide to the Bank written evidence in a form satisfactory to the Bank that
the Borrowers have raised additional funds sufficient to on or before October
31, 1996 (a) satisfy in full the Obligations (other than contingent
obligations under L/C's), and (b) collateralize all contingent obligations of
the Borrowers relating to L/C's.
19. SUBSIDIARIES. If the assets of any Subsidiary (other than CMI) have
a fair market value greater than $100,000, such Subsidiary shall (a) execute
and deliver to the Bank a guaranty in form and substance satisfactory to the
Bank by which it guarantees all obligations of the Borrowers to the Bank, (b)
pledge and grant to the Bank a first priority security interest in its assets
to secure its guaranty obligations, (c) execute and deliver to the Bank a
security agreement in form and substance satisfactory to the Bank effecting
the foregoing, (d) execute and deliver to the Bank Uniform Commercial Code
Financing Statements required by the Bank, and (e) cause to be delivered to
the Bank an opinion from such Subsidiary's counsel in form and substance
satisfactory to the Bank.
20. GOVERNMENT CONTRACTS. In connection with any account due from any
municipal, state, federal or foreign governmental unit, the Borrowers shall
take all actions required by the Bank to more completely vest in and assure
to the Bank its rights as a secured
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creditor and/or assignee of each such account, including without limitation,
all actions required by the Bank in connection with the Federal Assignment of
Claims Act.
21. LOCKBOXES. Unless otherwise agreed to in writing by the Bank, on
or before January 31, 1996, the Borrowers shall (a) instruct all of their
account debtors to mail remittances directly to "lockboxes" maintained with
the Bank, which instructions shall not be rescinded or modified, and (b)
enter into lockbox agreements with the Bank in form and substance
satisfactory to the Bank. If either Borrower thereafter shall nonetheless
receive any collections of accounts and other proceeds of collateral, such
Borrower shall hold all such collections and proceeds in trust for the Bank
without commingling the same with other funds of such Borrower and such
Borrower shall promptly, not later than two days after receipt thereof,
transmit such collections and proceeds to its lockbox in the identical form
in which they were received by the Borrower. Collections in the lockboxes
shall be deposited by the Bank into the respective general accounts of the
Borrowers maintained at the Bank, except that the Bank reserves the right in
its sole discretion to require collections of accounts and other proceeds of
collateral to be deposited into a trust account or trust accounts at the Bank
and thereafter to be applied when they become collected funds to reduce the
amount outstanding under the Credit Agreement, Line of Credit Agreement
and/or Bond Documents.
22. SUBORDINATED DEBT. The Borrowers shall not amend or modify any
agreement or instrument evidencing any Subordinated Debt or any indebtedness
due to Palmetto. Any defaults under any Subordinated Debt or under any
agreement or instrument evidencing the indebtedness to Palmetto shall
constitute an Event of Default under the Credit Agreement.
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23. DEFAULT AND RIGHTS AND REMEDIES OF THE BANK. The failure of either
Borrower to perform any of its obligations hereunder or any obligations
relating to or in connection with the Bond Documents, shall constitute an
Event of Default under the Credit Agreement. Additionally, if any
representation or warranty made hereunder or in connection herewith shall
prove to have been false or incorrect in any material respect when made, it
shall constitute an Event of Default under the Credit Agreement. Upon the
occurrence of an Event of Default subsequent to the date hereof, the Bank in
its discretion may exercise any or all of the rights and remedies under this
Agreement, the Loan Documents, the Bond Documents, and/or applicable law, it
being understood that no such right or remedy is intended to be exclusive of
any other right or remedy, but each and every right and remedy shall be
cumulative and shall be in addition to every right and remedy given in this
Agreement, the Loan Documents, the Bond Documents now or hereafter existing
at law or in equity or by statute, and may be exercised from time to time as
often as may be deemed expedient by the Bank.
24. EXPENSES. The Borrowers shall reimburse the Bank on demand for all
reasonable costs, expenses and charges incurred by the Bank in connection
with the preparation, administration and enforcement of this Agreement, any
and all agreements, instruments and releases executed in connection herewith,
the Loan Documents, the Bond Documents and the exercise of the Bank's rights
and remedies under any of the foregoing and/or applicable law.
25. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed one original, but all of which
together constituting one and the same instrument.
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26. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of The Commonwealth of Massachusetts.
27. CLOSING. The consummation of the transactions contemplated by this
Agreement shall take place at a closing to be held on or before January 11,
1996 at the offices of Xxxxxxx, Procter & Xxxx, Exchange Place, Boston,
Massachusetts, or at such place or time as the parties hereto otherwise may
agree.
28. SUCCESSORS, ETC. This Agreement shall be binding upon and shall
inure to the benefits of any successors to or assigns of the parties hereto,
and this Agreement and all documents and instruments related hereto may not
be amended, waived or modified in any manner without the written consent of
the parties hereto.
29. FURTHER ASSURANCES. The Borrowers shall execute and deliver to the
Bank any and all other agreements, documents and instruments as the Bank
deems necessary or appropriate to effect fully the purposes of this
Agreement. The foregoing provision in no way limits or modifies any of the
other obligations of the Borrowers under any other provision in this
Agreement.
30. SETOFF. Any sums due from the Bank to either Borrower, any property
in the possession of the Bank and any balance in the Borrowers' accounts with
the Bank may be held and treated as collateral security for the payment of
the obligations of the Borrowers to the Bank and, before or after the
occurrence of an Event of Default, may be applied to the payment of such
obligations regardless of the adequacy of other collateral.
31. CONSENT TO JURISDICTION AND WAIVER OF JURY TRIAL. THE BORROWERS
IRREVOCABLY (A) CONSENT AND SUBMIT TO THE JURISDICTION OF THE
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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS, AND THE
COURTS OF THE COMMONWEALTH OF MASSACHUSETTS IN CONNECTION WITH ANY ACTION,
PROCEEDING OR CLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE LOAN
DOCUMENTS, THE BOND DOCUMENTS AND/OR ANY INSTRUMENT OR DOCUMENT REQUIRED
HEREBY OR INCIDENT OR COLLATERAL HERETO, AND (B) WAIVE ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING INVOLVING THE BANK.
32. EFFECTIVENESS OF AGREEMENT. This Agreement shall not be effective
unless on or before January 12, 1996, the Borrowers shall have made to the
Bank a $500,000 principal payment in immediately available funds to reduce
Line of Credit Advances (as defined in the Line of Credit Agreement).
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as a
sealed instrument as of the first date above written.
NUCLEAR METALS, INC.
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President - Finance
CAROLINA METALS, INC.
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
00
XXXXX XXXXXX BANK AND TRUST
COMPANY
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
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