EXHIBIT 10.(mm)
EXECUTION COPY
FORBEARANCE AGREEMENT AND
EIGHTH AMENDMENT TO CREDIT AGREEMENT
THIS FORBEARANCE AGREEMENT AND EIGHTH AMENDMENT TO CREDIT AGREEMENT
(this "Agreement"), dated as of November 12, 1999, is by and among STARMET
CORPORATION, a Massachusetts corporation (f/k/a Nuclear Metals, Inc.)
("StarMet"), STARMET POWDERS, LLC, a Delaware limited liability corporation
("Powders"), STARMET AEROCAST, LLC, a Delaware limited liability corporation
("AeroCast"), STARMET COMMERCIAL CASTINGS, LLC, a Delaware limited liability
corporation ("ComCast"), STARMET NMI CORPORATION, a Massachusetts corporation
("NMI"), STARMET CMI CORPORATION, a Delaware corporation (f/k/a Carolina Metals,
Inc.) ("CMI"), STARMET HOLDINGS CORPORATION, a Massachusetts corporation
("Holdings"), NMI FOREIGN SALES CORPORATION, a U.S. Virgin Islands corporation
("FSC", and together with StarMet, Powders, AeroCast, ComCast, NMI, CMI and
Holdings, the "Borrowers") and CITIZENS BANK OF MASSACHUSETTS, an FDIC insured
bank and successor in interest to State Street Bank and Trust Company under the
Credit Agreement referred to below (the "Bank").
Preliminary Statements
A. The Bank, as successor in interest to State Street Bank and Trust
Company ("State Street"), and the Borrowers are parties to an Amended and
Restated Credit Agreement dated as of October 1, 1997 (such Credit Agreement as
amended prior to the date hereof by a First Amendment to Credit Agreement dated
as of December 19, 1997, a Second Amendment to Credit Agreement dated as of
December 29, 1997, a Third Amendment to Credit Agreement dated as of July 2,
1998, a Fourth Amendment to Credit Agreement dated as of August 7, 1998, a Fifth
Amendment to Credit Agreement dated as of September 30, 1998, a Forbearance
Agreement and Sixth Amendment to Credit Agreement dated as of February 24, 1999
(the "Sixth Amendment"), a Forbearance Agreement and Seventh Amendment to Credit
Agreement dated as of August 23, 1999 (the "Seventh Amendment") and by a letter
agreement dated November 10, 1998 among State Street and the Borrowers (the
"Letter Agreement"), as further amended by this Agreement and as further amended
from time to time, the "Credit Agreement"; capitalized terms used but not
defined herein shall have the meanings ascribed to them in the Credit Agreement)
pursuant to which the Bank agreed to make certain revolving credit loans to
Borrowers on the terms and conditions set forth therein. Borrowers' obligations
under the Credit Agreement are evidenced by an Amended and Restated Revolving
Credit Note dated August 7, 1998 (as amended and/or restated by and through the
date of this Agreement, and as hereafter
amended and/or restated from time to time, the "Revolving Credit Note" and
together with the Credit Agreement, the "Credit Documents") executed and
delivered by the Borrowers to the Bank. The Borrowers' obligations to the Bank
under the Credit Documents are referred to herein as the "Revolving Credit
Loans". Borrowers are also parties to certain security documents, instruments
and agreements executed by Borrowers in connection with the Credit Documents (as
amended by and through the date of this Agreement and as amended from time to
time hereafter, the "Borrower Security Documents"; the Credit Agreement, the
Revolving Credit Note, the Borrower Security Documents, this Agreement, and any
agreement or instrument executed in connection therewith or herewith, as the
same have been amended or may be amended from time to time hereafter, are
collectively referred to herein as the "Borrower Loan Documents")
B. Borrowers have defaulted on their obligations to the Bank under the
Credit Documents because the "Aggregate Bank Liabilities" (as defined in the
Letter Agreement) exceed the "Maximum Credit" (as defined in the Letter
Agreement") and the Borrowers have failed to pay such excess to the Bank, which
failure constitutes an Event of Default. State Street issued a notice of the
aforesaid Event of Default to the Borrowers by letter dated November 20, 1998
and reserved the full extent of its rights in respect of such Event of Default.
C. Following the occurrence of the aforesaid Event of Default, the
Borrowers and State Street entered into the Sixth Amendment pursuant to which
State Street agreed, subject to the terms and conditions set forth therein, to
(i) forbear until May 28, 1999 from exercising its rights and remedies under the
Borrower Loan Documents and applicable law with respect to the existing Event of
Default and (ii) continue to provide financing to the Borrowers until May 28,
1999 on the terms set forth in the Credit Agreement, as in effect at the time.
D. After the date of the Sixth Amendment, additional Events of Default
occurred as a result of defaults occurring under Sections 4.20. 4.21, 4.22,
4.31, 4.32, and 4.33 of the Credit Agreement and the Maturity Date passed.
E. Following the occurrence of the aforesaid Events of Default, the
Borrowers and State Street entered into the Seventh Amendment pursuant to which
State Street agreed, subject to the terms and conditions set forth therein, to
(i) forbear until February 15, 2000 (subject to extension as provided in the
Seventh Amendment) from exercising its rights and remedies under the Borrower
Loan Documents and applicable law with respect to the existing Events of Default
and (ii) continue to provide financing to the Borrowers until February 15, 2000
(subject to extension as provided in the Seventh Amendment) on the terms set
forth in the Credit Agreement, as in effect at the time.
F. The Borrowers have requested that the Bank (i) forbear until August
15, 2000 from exercising its rights and remedies under the Borrower Loan
Documents and applicable law with respect to the existing Events of Default and
(ii) continue to provide financing to the Borrowers on the terms set forth in
the Credit Agreement, as in effect at the time.
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G. The Bank is willing, subject to the terms and conditions set forth
herein, to forbear and continue to provide financing to the Borrowers, but only
as and to the extent provided herein.
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each of the Borrowers, and
subject to the terms and conditions of this Agreement, the parties agree as
follows:
ss.1. CONFIRMATION OF INDEBTEDNESS. As of November 12, 1999 the
respective amounts of outstanding principal of and accrued but unpaid interest
on the Revolving Credit Note and the aggregate face amount of all outstanding
L/C's are as follows:
Revolving Credit Note:
---------------------
Principal: $5,499,168.00
Interest: $ 4,009.81
-------------
TOTAL: $5,503,277.81
=============
Face Amount of L/C's $3,550,000.00
--------------------
The Revolving Credit Note shall continue to accrue interest in accordance with
the terms of the Borrower Loan Documents, as amended hereby.
The Borrowers are indebted to the Bank for unreimbursed legal fees and
related expenses incurred by the Bank. By the execution of this Agreement by the
Borrowers, the total amount of Borrowers' indebtedness and obligations to the
Bank evidenced by and/or related to the Borrower Loan Documents, including
without limitation principal and interest on the Revolving Credit Note, and fees
and expenses of the Bank's counsel and their consultants, is jointly and
severally ratified, confirmed and approved by the Borrowers in all respects (the
indebtedness and obligations referred to in this ss.1, in each case whether now
existing or hereafter arising, are hereinafter referred to collectively as the
"Borrower Obligations"). Borrowers acknowledge and agree that (a) the Borrower
Obligations are valid and binding obligations of each Borrower, enforceable in
accordance with the Borrower Loan Documents, as amended hereby, and (b) the Bank
is presently entitled to demand, and each Borrower is presently obligated (upon
demand by the Bank) to pay in full, all of the Borrower Obligations, without any
further demand, notice or claim subject only to the agreement of the Bank to
forbear on the terms set forth in this Agreement. Without limiting the
foregoing, each Borrower acknowledges and agrees that the Bank has no
forbearance obligation whatsoever except as expressly provided in this
Agreement.
ss.2. RATIFICATION AND CONFIRMATION OF BORROWER SECURITY DOCUMENTS,
COLLATERAL SECURITY AND EXISTING AGREEMENTS. Each
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Borrower, by the execution of this Agreement, ratifies, confirms and approves in
all respects each of the Borrower Security Documents, and acknowledges, confirms
and agrees that all of the Borrower Obligations are and shall be hereafter
secured by and entitled to the benefits of each of the Borrower Security
Documents and that the liens granted to the Bank thereunder remain valid,
perfected and enforceable against such Borrower, and shall extend to all
properties and assets of each Borrower, whether real, personal or mixed,
tangible or intangible, and now owned or hereafter acquired or arising
(collectively, the "Collateral"), including, without limitation, all outstanding
shares of capital stock or other equity interests of any Borrower (other than
StarMet) or any Subsidiary of any Borrower and all rights to acquire the same,
and such liens shall secure all Borrower Obligations now existing or hereafter
arising. Each Borrower acknowledges and agrees that for all purposes, as the
context permits or requires in each Borrower Security Document, all Borrower
Obligations (as defined in ss.1 above) do and shall at all times hereafter
constitute "Obligations" and "Secured Obligations" for all purposes of the
Borrower Security Documents.
Each Borrower acknowledges, confirms and agrees that, except as shown
on Exhibit 4.14 of the Credit Agreement and except with respect to certain
specific equipment on which vendors have existing perfected purchase money
liens, as previously consented to by the Bank, the Bank has and shall retain a
first priority perfected security interest in and lien on all Collateral. Each
Borrower also acknowledges, confirms and agrees that they have pledged all loans
and notes receivable owned by such Borrower to the Bank. Each Borrower confirms
its agreement in the Borrower Loan Documents to take, or cause to be taken, all
actions requested by the Bank in order to create, maintain, renew and/or perfect
the Bank's security interests in the Collateral.
Without limiting the generality of this ss.2, each Borrower ratifies,
confirms and approves the Amended and Restated Joint Security Agreement in favor
of the Bank dated as of October 1, 1997 (as amended by and through the date of
this Agreement and as amended from time to time hereafter, the "Security
Agreement") and each Borrower further ratifies, confirms and approves the Pledge
and Security Agreement in favor of the Bank dated as of February 24, 1999 (as
amended by and through the date of this Agreement and as amended from time to
time hereafter, the "Pledge Agreement") . Each Borrower acknowledges and
confirms that it intended, upon executing the Security Agreement in favor of the
Bank, that such Security Agreement secure any and all indebtedness and other
obligations of the Borrowers to the Bank, whether then existing or thereafter
arising. Each Borrower further acknowledges and confirms that it intended, upon
executing the Pledge Agreement in favor of the Bank, that such Pledge Agreement
secure any and all indebtedness and other obligations of the Borrowers to the
Bank, whether then existing or thereafter arising.
Without limiting any other provision of this Agreement, the Borrowers
acknowledge and agree for the benefit of the Bank that the Bank is entering into
this Agreement in reliance on the agreements set forth in the foregoing
provisions of this ss.2 and on the understanding that any Revolving Credit Loans
and other financing made available to Borrowers by the Bank after the
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date of this Agreement are secured by and entitled to the benefits of each of
the Borrower Security Documents and the Collateral described therein. In
addition, each Borrower hereby incorporates by reference and restates in full
the grant of a security interest in the Collateral contained in Section 1 of the
Security Agreement and contained in Section 1 of the Pledge Agreement, and
confirms that the Obligations, as defined in Section 2 of the Security
Agreement, includes all of the Borrower Obligations and every other sum owed the
Bank by any Borrower, and that the Secured Obligations, as defined in Section 2
of the Pledge Agreement, includes all of the Borrower Obligations and every
other sum owed the Bank by any Borrower.
ss.3. NO PRESENT CLAIMS; ETC. Each of the Borrowers acknowledges and
agrees with the Bank that: (a) it has no claim or cause of action against the
Bank (or any of its directors, officers, employees, consultants, agents,
affiliates or attorneys or any of the consultants to any of its attorneys); (b)
it has no offset right, counterclaim or defense of any kind against any of the
Borrower Obligations or any other obligation or indebtedness of any Borrower to
the Bank; and (c) the Bank has heretofore properly performed and satisfied in a
timely manner all of its obligations to each Borrower. The Bank wishes (and each
of the Borrowers agrees) to eliminate any possibility that any past conditions,
acts, omissions, events or circumstances would impair or otherwise adversely
affect any of the Bank's rights, interests, security and/or remedies. For and in
consideration of the agreements contained in this Agreement and other good and
valuable consideration, the Borrowers (collectively, the "Releasors")
unconditionally and irrevocably release, waive and forever discharge the Bank,
together with its successors, assigns, subsidiaries, directors, officers,
employees, consultants, affiliates, agents and attorneys and consultants to its
attorneys (collectively, the "Released Parties"), from: (x) any and all
liabilities, obligations, duties, promises or indebtedness of any kind of the
Released Parties to the Releasors or any of them, and (y) all claims, offsets,
causes of action, suits or defenses of any kind whatsoever (if any), which the
Releasors or any of them might otherwise have against the Released Parties or
any of them, in either case (x) or (y) on account of any condition, act,
omission, event, contract, liability, obligation, indebtedness, claim, cause of
action, defense, circumstance or matter of any kind (aa) which existed, arose or
occurred at any time from the beginning of the world to the execution of this
Agreement or (bb) which could hereafter arise as a result of the execution of
(or the observance of the terms of) this Agreement or any of the other Borrower
Loan Documents.
ss.4. AMENDMENTS TO CREDIT AGREEMENT.
Preliminary Statement. Pursuant to the Seventh Amendment, the Bank's
commitment to provide Revolving Credit Loans to Borrowers will expire on
February 15, 2000, unless earlier terminated and subject to extension, all as
provided in the Seventh Amendment. Nonetheless, Borrowers have requested that
the Bank agree to further extend, on the terms and conditions set forth herein,
the Bank's commitment to provide Revolving Credit Loans to Borrowers and to
amend certain other provisions of the Credit Agreement, and the Bank is willing
to agree to such extension and amendments, all on the terms and conditions set
forth herein. In order to give
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effect to the foregoing, Borrowers and the Bank hereby agree to amend the Credit
Agreement as follows:
4.1. Section 1.02(a). Section 1.02(a) of the Credit Agreement is hereby
amended by deleting such Section 1.02(a) in its entirety and substituting
therefor the following:
"(a) Amount. Provided no Event of Default (as defined in
Article V) or event which with the passage of time or notice, or both,
would become an Event of Default has occurred and is continuing, each
Borrower may from time to time from the date hereof up to August 15,
2000 (such date, subject to extension as provided in clauses (j)
through (n) below, the "Maturity Date") borrow and reborrow from the
Bank and the Bank shall advance funds under the Revolving Credit to
such Borrower (an "Advance" or the "Advances"); provided that the
aggregate of all Advances outstanding at any time plus the maximum
aggregate liability of the Borrowers under any outstanding letters of
credit issued prior to the date hereof or pursuant to this Credit
Agreement (minus the aggregate amount of any Cash Collateral Proceeds)
shall not exceed an amount (the "Maximum Credit") equal to $10,350,000
up to the Maturity Date, provided, further, that the Maximum Credit:
(i) shall be reduced (x) on the twentieth day of each
calendar month (other than any month which commences after the US Army
Payment Commencement Date), commencing September 20, 1999, by the
greater of (A) $50,000 or (B) the sum of (I) 25% of Available Free Cash
for the immediately preceding fiscal month up to $400,000 of Available
Free Cash, and (II) 50% of the amount by which Available Free Cash for
the immediately preceding fiscal month exceeds $400,000, and (y) on the
twentieth day of each calendar month which commences after the US Army
Payment Commencement Date, by the greater of (A) $100,000 or (B) the
sum of (I) 25% of Available Free Cash for the immediately preceding
fiscal month up to $400,000 of Available Free Cash, (II) 50% of the
amount by which Available Free Cash for the immediately preceding
fiscal month exceeds $400,000, and (III) 75% of the US Army Payments
during the immediately preceding fiscal month; and
(ii) shall be further reduced from time to time as provided in
Section 1.02(b).
For purposes of this Agreement:
"Available Free Cash" for any period shall mean the aggregate amount
collected by the Borrowers and their Subsidiaries during such period in
respect of accounts receivables (excluding any US Army Payments) minus
the aggregate payroll expenditures and Current Accounts Payable paid by
the Borrowers and their Subsidiaries during such period, all
consolidated and determined in accordance with GAAP.
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"Current Accounts Payable" shall mean accounts payable for goods and
services which remain unpaid not more than 180 days after the date of
invoice.
"US Army Payment Commencement Date" shall mean the last day of the
first full calendar month commencing after the date, if any, on which
any of the Borrowers first receives payments under the facilities
contract between one or more of the Borrowers and the United States
Army (the "Facilities Contract") in respect of either (x) "rent" on all
or a portion of the Borrowers' facilities located in Concord,
Massachusetts or (y) decontamination and decommissioning costs thereof.
"US Army Payments" for any period shall mean the aggregate rental
payments made to the Borrowers under the Facilities Contract during
such period plus any net operating income of or other payments to the
Borrowers under the Facilities Contract in respect of decontamination
and decommissioning during such period."
4.2. Section 1.02(b). Section 1.02(b) of the Credit Agreement is hereby
amended by deleting the last sentence thereof and inserting the following in its
place:
"The Borrowers shall apply all proceeds (net of reasonable
closing costs approved in advance in writing by the Bank) of sales or
other dispositions of any of their respective properties or assets
(other than sales of inventory in the ordinary course, but including
proceeds of any license agreement and including bulk sales) (all such
proceeds being referred to as the "Asset Sale Proceeds") to pay
outstanding Advances, and the Maximum Credit shall be deemed
automatically reduced by the amount of any Asset Sale Proceeds
(excluding any Asset Sale Proceeds applied at the request of the Bank
pursuant to the following two proviso clauses) on the date such
proceeds are received by the Borrowers, provided that, if so requested
by the Bank, all or a portion of Asset Sale Proceeds shall instead be
used to cash collateralize the Borrowers' maximum liability in respect
of such outstanding L/C's as the Bank may designate at the time of
receipt of such Asset Sale Proceeds (the amount of any such proceeds
serving at any time as such cash collateral being referred to as the
"Cash Collateral Proceeds"), and, provided, further, that, if so
requested by the Bank, all or a portion of Asset Sale Proceeds shall
instead be used to satisfy the Financial Assurance requirements of the
Massachusetts Department of Environmental Protection and the South
Carolina Department of Health and Environmental Control, such that the
L/C's issued to the respective governmental agencies by the Bank may be
canceled."
4.3. Section 1.02(c). Section 1.02(c) of the Credit Agreement is hereby
amended by deleting such Section 1.02(c) in its entirety and inserting the
following in its place:
"(c) The Revolving Credit Note. Amounts owed to the Bank with
respect to Advances made by the Bank shall be evidenced by Bank's books
and records and may, at
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the request of the Bank, be further evidenced by one or more revolving
credit notes (collectively, the "Revolving Credit Notes"). As of
November 12, 1999, the Advances are evidenced by an Amended and
Restated Revolving Credit Note dated November 12, 1999 in the principal
amount of $10,350,000, which replaces and supersedes all prior
revolving credit notes issued under this Credit Agreement. Any
repayments of principal shall be applied to the Revolving Credit Note
in such order as the Bank in its discretion shall determine. The unpaid
principal balance of the Revolving Credit Note may be voluntarily
prepaid in whole or in part during the continuation of the Revolving
Credit Note without premium or penalty; provided that if the Revolving
Credit is to be terminated by the Borrowers, thirty (30) days prior
notice shall be given to the Bank. Upon termination, the Borrowers
shall satisfy the provisions of Section 6.01 of this Agreement. The
Revolving Credit Note is subject to mandatory repayments as provided in
section 1.02(b)."
4.4. Sections 1.02(j) through (n). Section 1.02 of the Credit Agreement
is hereby amended by deleting clauses 1.02(j) through (n) and inserting the
following new clauses 1.02(j) through (n) in their place:
"(j) First Extension Option. The Borrowers shall have the
option to extend the Maturity Date from August 15, 2000 until December
13, 2000 (the "First Extension Option") if both (x) the First Extension
Option Condition is satisfied and (y) no Event of Default has occurred
since the date of the Forbearance Agreement and Eighth Amendment to
Credit Agreement dated as of November 12, 1999 among the Borrowers and
the Bank (the "Eighth Amendment") nor has there occurred since such
date any event which with notice or lapse of time or both would
constitute an Event of Default. In order to exercise the First
Extension Option, the Borrowers shall deliver to the Bank a written
notice not later than August 15, 2000, which notice shall be
accompanied by a schedule demonstrating, to the satisfaction of the
Bank, that the First Extension Option Condition was satisfied and
certifying that no Event of Default has occurred since the date of the
Eighth Amendment and that no other event has occurred since such date
which with notice or lapse of time of both would constitute an Event of
Default.
The First Extension Option Condition will be satisfied if (a)
the gross sales of the Borrowers for the fiscal quarter ending July 2,
2000 exceed (on an annualized basis) by at least $5,000,000 the gross
sales of the Borrowers for the preceding fiscal quarter (on an
annualized basis) all determined in accordance with generally accepted
accounting principles consistently applied ("GAAP"), and (b) the
Annualized Operating Cash Flow for the fiscal quarter ending July 2,
2000 exceeds the Annualized Operating Cash Flow for the preceding
fiscal quarter by at least $1,500,000.
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"Annualized Operating Cash Flow" of the Borrowers for any
fiscal quarter or other three month period shall mean (a) the Operating
Cash Flow of the Borrowers for such fiscal quarter or other three month
period, multiplied by (b) four.
"Operating Cash Flow" of the Borrowers for any fiscal quarter
or other three month period shall mean the "operating income provided
by operating activities" of the Borrowers for such fiscal quarter or
other three month period as shown on the financial statements for the
Borrowers for such period, all determined in accordance with GAAP, but
excluding all extraordinary, unusual, or non-recurring gains or losses.
(k) Further Extension Option. If, but only if, the First
Extension Option is exercised, the Borrowers shall have the further
option to extend the Maturity Date from December 13, 2000 until June
10, 2001 (the "Further Extension Option") if both (x) the Further
Extension Option Condition is satisfied and (y) no Event of Default has
occurred since the date of the Eighth Amendment nor has there occurred
since such date any event which with notice or lapse of time of both
would constitute an Event of Default. In order to exercise the Further
Extension Option, the Borrowers shall deliver to the Bank a written
notice not later than December 13, 2000, which notice shall be
accompanied by a schedule demonstrating, to the satisfaction of the
Bank, that the Further Extension Option Condition was satisfied and
certifying that no Event of Default has occurred since the date of the
Eighth Amendment and that no other event has occurred since such date
which with notice or lapse of time of both would constitute an Event of
Default.
The Further Extension Option Condition will be satisfied if
(a) the gross sales of the Borrowers for the three fiscal month period
ending September 30, 2000 exceed (on an annualized basis) by at least
$5,000,000 the gross sales of the Borrowers for the preceding fiscal
quarter (on an annualized basis) (determined in accordance with GAAP),
and (b) the Annualized Operating Cash Flow for the three fiscal month
period ending September 30, 2000 exceeds the Annualized Operating Cash
Flow for the preceding fiscal quarter by at least $1,500,000.
(l) First Alternate Extension Option. If the First Extension
Option is not exercised, the Borrowers shall nonetheless have the
option to extend the Maturity Date from August 15, 2000 until November
13, 2000 (the "First Alternate Extension Option") if as of August 15,
2000 both (x) the First Alternate Extension Option Condition is
satisfied and (y) no Event of Default has occurred since the date of
the Eighth Amendment nor has there occurred since such date any event
which with notice or lapse of time of both would constitute an Event of
Default. In order to exercise the First Alternate Extension Option, the
Borrowers shall deliver to the Bank a written notice not earlier than
January 1, 2000 and not later than August 15, 2000, which notice (A)
shall be accompanied by a copy of the First Alternate Extension Option
Letter of Intent (as defined below) and (B) shall include a
certification that no Event of Default has occurred
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since the date of the Eighth Amendment and that no other even has
occurred since such date which with notice or lapse of time of both
would constitute an Event of Default.
The First Alternate Extension Option Condition will be
satisfied if, as of August 15, 2000, one or more of the Borrowers has
entered into an unlapsed, fully effective letter of intent with a
qualified bona fide independent third party to enter into a transaction
with one or more Borrowers, including without limitation a purchase of
assets, which will result at closing of such transaction in net
proceeds sufficient to, and then available for, the repayment in full
of all indebtedness and other obligations owed by the Borrowers to the
Bank, including either, at the Bank's election, the cancellation of all
outstanding L/C's or the cash collateralization of the maximum
liability of the Borrowers in respect of all outstanding L/C's (the
"First Alternate Extension Option Letter of Intent"). The First
Alternate Extension Option Letter of Intent must provide for a closing
date no later than February 1, 2001 and shall only be subject to
conditions or contingencies customary in such transactions, and any
financing condition or contingency in such letter of intent must be
satisfactory to the Bank. In the event a definitive binding agreement
is entered into between the Borrowers and the other party to such
letter of intent before the then scheduled Maturity Date, the Borrowers
shall have the option to further extend the Maturity Date to the
earlier of February 11, 2001 and the closing under such definitive
binding agreement by delivering to the Bank a written notice not later
than November 13, 2000, which notice (A) shall be accompanied by a copy
of such definitive binding agreement and (B) shall include a
certification that no Event of Default has occurred since the date of
the Eighth Amendment and that no other event has occurred since such
date which with notice or lapse of time of both would constitute an
Event of Default. Upon closing under such definitive binding agreement,
the Maturity Date shall be deemed to have occurred and all net proceeds
shall be applied directly to repay in full all indebtedness and other
obligations owed by the Borrowers to the Bank, including either, at the
Bank's election, to cancel all outstanding L/C's or to cash
collateralize the maximum liability of the Borrowers in respect of all
outstanding L/C's.
(m) Second Alternate Extension Option. If neither the First
Extension Option nor the First Alternate Extension Option is exercised,
the Borrowers shall nonetheless have the option to extend the Maturity
Date from August 15, 2000 until November 13, 2000 (the "Second
Alternate Extension Option") if as of August 15, 2000 both (x) the
Second Alternate Extension Option Condition is satisfied and (y) no
Event of Default has occurred since the date of the Eighth Amendment
nor has there occurred since such date any event which with notice or
lapse of time of both would constitute an Event of Default. In order to
exercise the Second Alternate Extension Option, the Borrowers shall
deliver to the Bank a written notice not earlier than January 1, 2000
and not later than August 15, 2000, which notice (A) shall be
accompanied by a copy of the Second Alternate Extension Option Letter
of Intent (as defined below) and (B) shall include a certification that
no Event of Default has occurred since the date of the Eighth
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Amendment and that no other even has occurred since such date which
with notice or lapse of time of both would constitute an Event of
Default.
The Second Alternate Extension Option Condition will be
satisfied if, as of August 15, 2000, one or more of the Borrowers has
entered into an unlapsed, fully effective letter of intent with a
qualified bona fide independent third party to enter into a transaction
with one or more Borrowers, including without limitation a purchase of
assets, which will result at closing of such transaction in net
proceeds sufficient to, and then available for, the repayment of not
less than $5,000,000 of indebtedness and other obligations owed by the
Borrowers to the Bank (including by either, at the Bank's election, the
cancellation of outstanding L/C's or the cash collateralization of the
maximum liability of the Borrowers in respect of outstanding L/C's)
(the "Second Alternate Extension Option Letter of Intent"). The Second
Alternate Extension Option Letter of Intent must provide for a closing
date no later than February 1, 2001 and shall only be subject to
conditions or contingencies customary in such transactions, and any
financing condition or contingency in such letter of intent must be
satisfactory to the Bank. In the event a definitive binding agreement
is entered into between the Borrowers and the other party to such
letter of intent before the then scheduled Maturity Date, the Borrowers
shall have the option to further extend the Maturity Date to February
11, 2001 by delivering to the Bank a written notice not later than
November 13, 2000, which notice (A) shall be accompanied by a copy of
such definitive binding agreement and (B) shall include a certification
that no Event of Default has occurred since the date of the Eighth
Amendment and that no other event has occurred since such date which
with notice or lapse of time of both would constitute an Event of
Default. Upon closing under such definitive binding agreement, all net
proceeds, which must not be less than $5,000,000, shall be applied
directly to repay the indebtedness and other obligations owed by the
Borrowers to the Bank and either, at the Bank's election, to cancel all
outstanding L/C's or to cash collateralize the maximum liability of the
Borrowers in respect of all outstanding L/C's. If such closing is
consummated and such indebtedness and obligations are so repaid, the
Maturity Date will be extended until June 10, 2001.
(n) Third Alternate Extension Option If the Second Alternate
Extension Option is exercised, but a definitive binding agreement is
not entered into with respect to the Second Alternate Extension Option
Letter of Intent before the then scheduled Maturity Date, the Borrowers
shall nonetheless have the option to extend the Maturity Date from
November 13, 2000 until February 11, 2001 (the "Third Alternate
Extension Option") if as of November 13, 2000 both (x) the Third
Alternate Extension Option Condition is satisfied and (y) no Event of
Default has occurred since the date of the Eighth Amendment nor has
there occurred since such date any event which with notice or lapse of
time of both would constitute an Event of Default. In order to exercise
the Third Alternate Extension Option, the Borrowers shall deliver to
the Bank a written notice not later than November 13, 2000, which
notice (A) shall be accompanied by a
11
copy of the Third Alternate Extension Option Letter of Intent (as
defined below) and (B) shall include a certification that no Event of
Default has occurred since the date of the Eighth Amendment and that no
other even has occurred since such date which with notice or lapse of
time of both would constitute an Event of Default.
The Third Alternate Extension Option Condition will be
satisfied if, as of November 13, 2000, one or more of the Borrowers has
entered into an unlapsed, fully effective letter of intent with a
qualified bona fide independent third party to enter into a transaction
with one or more Borrowers, including without limitation a purchase of
assets, which will result at closing of such transaction in net
proceeds sufficient to, and then available for, the repayment in full
of all indebtedness and other obligations owed by the Borrowers to the
Bank, including either, at the Bank's election, the cancellation of all
outstanding L/C's or the cash collateralization of the maximum
liability of the Borrowers in respect of all outstanding L/C's (the
"Third Alternate Extension Option Letter of Intent"). The Third
Alternate Extension Option Letter of Intent must provide for a closing
date no later than May 1, 2001 and shall only be subject to conditions
or contingencies customary in such transactions, and any financing
condition or contingency in such letter of intent must be satisfactory
to the Bank. In the event a definitive binding agreement is entered
into between the Borrowers and the other party to such letter of intent
before the then scheduled Maturity Date, the Borrowers shall have the
option to further extend the Maturity Date to the earlier of May 12,
2001 and the closing under such definitive binding agreement by
delivering to the Bank a written notice not later than February 11,
2001, which notice (A) shall be accompanied by a copy of such
definitive binding agreement and (B) shall include a certification that
no Event of Default has occurred since the date of the Eighth Amendment
and that no other event has occurred since such date which with notice
or lapse of time of both would constitute an Event of Default. Upon
closing under such definitive binding agreement, the Maturity Date
shall be deemed to have occurred and all net proceeds shall be applied
directly to repay in full all indebtedness and other obligations owed
by the Borrowers to the Bank, including either, at the Bank's election,
to cancel all outstanding L/C's or to cash collateralize the maximum
liability of the Borrowers in respect of all outstanding L/C's."
4.5 Section 1.04. Section 1.04 of the Credit Agreement is hereby
amended by deleting the reference to "Seventh Amendment" appearing therein and
inserting the following new definitions in appropriate alphabetical order:
"Eighth Amendment Section 1.02(j)
Facilities Contract Section 1.02(a)
Seventh Amendment Section V(q)
US Army Payment Commencement Date Section 1.02(a)
US Army Payments Section 1.02(a)"
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4.6 Section 1.05. Section 1.05 of the Credit Agreement is hereby
amended by deleting clause (e) of such Section in its entirety and inserting in
its place the following:
"(e) Amount. The aggregate amount of L/C's outstanding shall
not exceed $3,550,000."
4.7. Sections 4.21, 4.22 and 4.32. Article IV of the Credit Agreement
is hereby amended by deleting Sections 4.21, 4.22 and 4.32 and inserting the
following new Sections 4.21, 4.22 and 4.32 in their place:
"Section 4.21. Capital Expenditures. In any fiscal year,
unless the Bank otherwise consents in writing, the Borrowers and their
Subsidiaries on a consolidated basis shall not make or incur
expenditures which are properly chargeable to capital account under
GAAP (including leases which are capitalized) in an aggregate amount in
excess of $500,000, provided that such dollar limit shall be increased
by $300,000 (solely for capital expenditures relating to CMI and its
assets) to $800,000 if the Borrowers have delivered to the Bank an
unlapsed, fully effective letter of intent between CMI and a qualified
bona fide independent third party to enter into a transaction with CMI
for the purchase of the assets of CMI, which will result at closing of
such transaction in net proceeds sufficient to, and then available for,
the repayment in full of all indebtedness and other obligations owed by
the Borrowers to the Bank, including either, at the Bank's election,
the cancellation of all outstanding L/C's or the cash collateralization
of the maximum liability of the Borrowers in respect of all outstanding
L/C's, which letter of intent may only be subject to conditions or
contingencies customary in such transactions, and any financing
condition or contingency in such letter of intent must be satisfactory
to the Bank, provided, further that such dollar amount shall be reduced
by the amount of such $300,000 increase not theretofore utilized for
capital expenditures relating to CMI and its assets if such letter of
intent lapses or is terminated. Except as permitted in Section 1.02(i),
none of the proceeds of any Advance may be used to fund any capital
expenditures.
Section 4.22. Limit on Consulting Payments. Unless waived in
writing in advance by the Bank with respect to specific proposed
compensation, the Borrowers shall not permit the aggregate compensation
paid or payable in cash by the Borrowers and their Subsidiaries to
Affiliates of any of the Borrowers to exceed $18,750 per month to all
such Affiliates, provided that the Borrowers may accrue, and not pay in
cash, amounts in excess of $18,750 per month on the condition that such
excess amounts are not due and are not paid until the Revolving Credit
Loans and all other Borrower Obligations have been paid in full and the
commitment to make Advances has terminated.
Section 4.32. Engagement of Consultant. If an Event of Default
occurs after the date of the Eighth Amendment, the Borrowers will,
within five days after the occurrence
13
of such Event of Default, engage a firm selected by the Borrowers and
acceptable to the Bank, as turnaround consultant and financial manager
for the Borrowers."
4.8. Section 4.08. Section 4.08 of Article IV of the Credit Agreement
is hereby amended by deleting clause (j) thereof in is entirety.
4.9. Section 4.24. Section 4.24 of Article IV of the Credit Agreement
is hereby amended by deleting the reference to the "Seventh Amendment" appearing
in the first sentence thereof and inserting a reference to the "Eighth
Amendment" in its place.
4.10. Article V. Article V is hereby amended by deleting clause (q)
thereof in its entirety and inserting the following in its place:
"(q) default by any Borrower of any material obligation,
including any payment obligation, under the Sixth Amendment, the
Forbearance Agreement and Seventh Amendment to Credit Agreement dated
as of August 23, 1999 (the "Seventh Amendment") or the Eighth
Amendment;"
Article V is hereby further amended by deleting clause (t) thereof in its
entirety and inserting the following in its place:
"(t) the Maximum Credit shall equal or exceed $8,500,000 on or
after May 15, 2000;"
ss.5. FEES. Upon execution and delivery of the Seventh Amendment the
Borrowers owed the Bank an extension fee of $50,000, which extension fee was
fully earned as of such date, but payment of such extension fee has been
deferred, with the consent of the Bank, at the option of the Borrowers through
the date of this Agreement and may be further deferred at the option of the
Borrowers until the earlier of (i) August 1, 2000 and (ii) immediately upon the
occurrence of a Forbearance Event of Default, provided that payment of such
extension fee shall be waived in the event the Maximum Credit shall have been
reduced to less than $8,500,000 as of February 1, 2000 and no Forbearance Event
of Default shall have occurred and be continuing as of February 1, 2000.
ss.6. FORBEARANCE, ETC. Subject to the Borrowers' compliance with the
terms and conditions of this Agreement and provided that no Forbearance Event of
Default shall have occurred, the Bank shall forbear from enforcing any of its
rights under the Borrower Loan Documents or under applicable law until the
Maturity Date (the period from the date of this Agreement to and including the
Maturity Date being referred to herein as the "Forbearance Period"), and
temporarily waives its rights to impose the default rate of interest provided
for in Section 1.02(d) of the Credit Agreement. The Borrowers acknowledge and
agree that the
14
provisions of this ss.6 relate solely to the Bank's agreement (subject to the
terms and conditions hereof) to forbear from exercising its existing rights and
remedies in respect of the existing Events of Defaults under the Borrower Loan
Documents described in clauses B and D of the Preliminary Statements to this
Agreement, and are not, and shall in no way be deemed or construed as, a waiver
by the Bank of such existing Events of Default or any other Event of Default now
existing or occurring subsequent to the date hereof. The Bank expressly reserves
the full extent of its rights under the Borrower Loan Documents and applicable
law in respect of any defaults or Events of Default existing on the date hereof
and not described in clauses B or D of the Preliminary Statements to this
Agreement.
ss.7. TERMINATION. The Bank's obligation to forbear from exercising its
rights under the Borrower Loan Documents and applicable law and to make Advances
under the Credit Agreement shall automatically terminate, without the
requirement of any notice or demand to any of the Borrowers, on the first to
occur of (i) the Maturity Date or (ii) the occurrence of any Event of Default
(other than the Events of Default described in clauses B or D of the Preliminary
Statements to this Agreement) or of any event which with notice and/or the lapse
of time would become an Event of Default or (iii) any act to challenge the
Bank's rights or interests which could reasonably be expected to have a material
adverse effect on the rights or remedies of the Bank under the Borrower Loan
Documents or (iv) the occurrence of any event or circumstance which could
reasonably be expected to have a material adverse effect on (x) the business,
operations, properties, condition or assets of any Borrower, (y) the ability of
any Borrower to perform its obligations under this Agreement or any other
Borrower Loan Document or (z) the validity or enforceability of this Agreement
or any other Borrower Loan Document or the rights and remedies of the Bank
hereunder or thereunder (each of the events described in this ss.7 being
referred to as a "Forbearance Event of Default".
ss.8. REMEDIES. On and after the occurrence of any Forbearance Event of
Default and in each case without any demand, presentment, notice and/or other
action of any nature by the Bank (all of which are hereby expressly waived by
each Borrower), and without limiting any other remedy provided to the Bank under
any other agreement, document or instrument or under applicable law, (a) the
default rate provided for in the Credit Documents shall immediately be imposed
with respect to the Revolving Credit Loans; (b) all Borrower Obligations shall
be immediately due and payable and the Bank shall be immediately and permanently
relieved of its obligations to make advances under the Credit Agreement and of
its forbearance obligations set forth in this Agreement or otherwise; (c) the
Bank may proceed to enforce its rights and remedies under and in respect of this
Agreement and the other Borrower Loan Documents, which rights and remedies,
subject only to the Bank's forbearance obligations under this Agreement, are
expressly reserved; and (d) the Bank shall be free to avail itself of all other
rights and remedies available under applicable law. The failure (or delay) of
the Bank in exercising any remedy after any particular Forbearance Event of
Default shall not constitute a waiver of such remedy or any other remedy in that
or in any subsequent instance, or otherwise prejudice the rights of the Bank in
any manner.
15
ss.9. BANK CONSULTANT. The Borrowers reconfirm and agree that the Bank
or, at the Bank's discretion, counsel to the Bank are entitled to and have
engaged a consultant with respect to the Bank's loan arrangements with the
Borrowers and that the Borrowers shall, on demand, pay the reasonable costs and
expenses of such consultant and the Borrowers also shall permit such consultant
access to the books, records, properties and assets of the Borrowers, to members
of the management of each Borrower, to the outside auditors and accountants of
the Borrowers and their work papers, and to legal counsel to the Borrowers, and
the Borrowers hereby waive any privilege which would preclude or interfere with
such access and hereby direct such accountants and legal counsel to provide such
access, all during regular business hours.
ss.10. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWERS. In
order to induce the Bank to enter into this Agreement, the Borrowers jointly and
severally represent, covenant and warrant to the Bank as follows:
(a) Authority, Etc. The execution and delivery by the Borrowers of this
Agreement and the performance of their respective obligations hereunder have
been duly authorized by all necessary action and do not and will not (i) violate
any provision of any law, rule, regulation, order, judgment, injunction, decree
or determination applicable to any Borrower or their respective charters or
other governing instruments or (ii) result in a breach of or constitute a
default under any agreement, lease or instrument to which any of the Borrowers
is a party or by which it or its properties may be bound or affected.
(b) Binding Obligation. This Agreement and each other agreement
executed by the Borrowers in connection herewith constitute legal, valid and
binding obligations of the Borrowers.
(c) Borrower Loan Documents. Except for the Events of Default described
in clause B and clause D of the Preliminary Statements to this Agreement, each
Borrower is in compliance in all material respects with the covenants contained
in the Borrower Loan Documents and the representations and warranties in each of
the Borrower Loan Documents (except those that expressly relate to an earlier
date) are true and correct in all material respects on the date hereof.
(d) No Approval. No authorization, consent, approval, license,
exemption or filing or registration with, any court or governmental authorize,
agency or instrumentality is or will be necessary to the valid execution,
delivery or performance by the Borrowers of this Agreement or any documents
executed pursuant hereto, except such filings as shall have been made prior to
or concurrent with the execution of this Agreement in connection with the
perfection of the Bank's liens in the Collateral.
(e) Security Documents. Each Borrower Security Document, including
without limitation the Security Agreement and the Pledge Agreement, is effective
to grant to the Bank a
16
legal, valid, enforceable and perfected security interest in all right, title
and interest of each Borrower in the Collateral described therein; no further
action or filing is required in order to perfect the Bank's security interests.
(f) Preliminary Statement. The statements contained in the Preliminary
Statements of this Agreement are true and correct.
ss.11. NEGATIVE PLEDGE. The Borrowers hereby pledge, covenant and agree
that they will not: (i) create, incur, assume or suffer to exist any mortgage,
lien, security interest or other encumbrance on the real property and fixtures
owned by one or more of the Borrowers located in Concord, Massachusetts or on
the real property and fixtures owned by one or more of the Borrowers located in
Barnwell, South Carolina (other than the existing liens on such Barnwell
property securing the Xxxxxxxx Secured Debt (as defined below)); (ii) make a
similar pledge, covenant or agreement to or with any party other than the Bank
with respect to the matters covered by this ss.11; (iii) sell all or any part of
its assets outside of the ordinary course of business other than to another of
the Borrowers pursuant to Section 4.20 of the Credit Agreement or with the
Bank's written consent, obtained at least twenty (20) days prior to such sale;
or (iv) incur any debt or debts to any party other than the Bank which, in the
aggregate or with respect to any individual creditor, is in excess of such debt
or debts outstanding as of the date hereof. The Barnwell Secured Debt shall mean
(i) the loan from the Lower Savannah Regional Development Corporation in the
aggregate principal amount of $469,306.76, and (ii) the loan from Regions Bank
(f/k/a Palmetto Federal Savings Bank of South Carolina), November 29, 1995, in
the aggregate principal amount of $613,910.55, and a lien on cash collateral in
the amount of $73,024 (Carolina Metals as Obligor and the Borrowers as
Guarantor).
ss.12. CONDITIONS PRECEDENT. The willingness of the Bank to enter into
this Agreement and the obligations of the Bank hereunder are subject to the
satisfaction (or written waiver) of all of the following conditions precedent,
time being of the essence hereof:
(a) As of the time of the Bank's execution hereof, the Borrowers shall
be in compliance with all of the terms, covenants and provisions contained
herein and all representations and warranties contained herein shall be true in
all material respects, and the Bank shall have received a certificate signed by
an officer of each Borrower to the foregoing effect.
(b) All corporate, limited liability, partnership and other legal
proceedings and all instruments in connection herewith and therewith shall be
satisfactory in form and substance to the Bank and its counsel and the Bank
shall have received all information and all documents and certificates
(corporate and other) which the Bank may reasonably have requested in connection
herewith.
17
(c) The Borrowers shall have delivered to the Bank copies of all
documents relating to the Subordinated Debt, which must be satisfactory to the
Bank.
(d) The Borrowers shall have delivered to the Bank a list of all
current or proposed payment schedules with each creditor of any of the
Borrowers, including all professionals and vendors with which extended payment
agreements have been reached.
(e) The Borrowers shall have issued to the Bank new warrants in
substitution for the two warrants, dated September 26, 1995 and December 29,
1997, respectively, issued to State Street and SSB Investments, Inc., and shall
have reconfirmed the obligations of the Borrowers under the Warrant Agreements
pursuant to which such warrants were issued.
(f) The Borrowers and the Bank shall have executed an amendment to the
Warrant Agreement dated as of December 29, 1997 deferring until December 1, 2000
the right to require repurchase of the warrant issued pursuant to such Warrant
Agreement, provided that such repurchase right shall only be effective if the
Borrowers have exercised either the First Extension Option, the First Alternate
Extension Option, the Second Alternate Extension Option or the Third Alternate
Extension Option.
(g) The Borrowers shall have delivered to the Bank an Amended and
Restated Revolving Credit Note of even date payable to the order of the Bank in
the principal amount of $10,350,000.
(h) The Bank shall have received a favorable opinion of counsel to the
Borrowers, in form and substance satisfactory to the Bank.
(i) No event or circumstance shall have occurred which could result in
a Forbearance Event of Default.
(j) No default shall have occurred under any other indebtedness of any
of the Borrowers except as previously disclosed to the Bank in writing.
(k) The Bank shall have received all such other agreements, information
and certificates as the Bank shall have reasonably requested.
ss.13. FURTHER ASSURANCES, ETC. The Borrowers jointly and severally
agree to take any action and to execute and deliver any additional documents
which the Bank may reasonably request in order to obtain and enjoy the full
rights and benefits granted to the Bank by the Borrower Loan Documents,
including this Agreement.
18
ss.14. WAIVERS BY BORROWERS; BANKRUPTCY MATTERS.
(a) WAIVER OF JURY TRIAL, ETC. EACH BORROWER HEREBY WAIVES ANY RIGHTS
THAT IT MAY HAVE TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIMS ARISING
OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY OF THE OTHER BORROWER
LOAN DOCUMENTS, ANY GUARANTY PROVIDED TO THE BANK IN CONNECTION THEREWITH AND
ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH
RIGHTS AND OBLIGATIONS. Except as prohibited by law which cannot be waived, each
Borrower hereby waives any right that it may have to claim or recover in any
litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages.
(b) BANKRUPTCY MATTERS; HEARING. IN THE CASE OF ANY FORBEARANCE EVENT
OF DEFAULT ARISING BY VIRTUE OF ANY BANKRUPTCY PROCEEDING INVOLVING ANY
BORROWER, THE BORROWERS COVENANT AND AGREE THAT, UPON THE OCCURRENCE OF SUCH
FORBEARANCE EVENT OF DEFAULT, (i) ANY OBLIGATION OF THE BANK TO PROVIDE
FINANCING TO ANY OF THE BORROWERS SHALL AUTOMATICALLY TERMINATE AS PROVIDED
HEREIN AND THE OTHER BORROWER LOAN DOCUMENTS, (ii) THE BANK SHALL CONTINUE TO
HAVE THE RIGHT TO COLLECT ACCOUNTS RECEIVABLE IN THE ORDINARY COURSE AND APPLY
THE PROCEEDS THEREOF TO INDEBTEDNESS OWED TO IT, (iii) THE BANK SHALL BE
ENTITLED TO AN EMERGENCY HEARING (ON TWO (2) BUSINESS DAYS' NOTICE DELIVERED BY
MESSENGER) ON ANY MOTION WHICH IT MAY FILE SEEKING A GENERAL LIFTING OF THE STAY
TO ENFORCE RIGHTS WHICH IT HAS IN THE CIRCUMSTANCES AND TO FORECLOSE ALL ITS
SECURITY INTERESTS, AND (IV) THE BORROWERS HEREBY WAIVE ANY AND ALL RIGHTS,
UNDER 11 U.S.C. SECTION 1121 OR OTHERWISE, TO THE EXCLUSIVE RIGHT TO FILE OR
SOLICIT ACCEPTANCES TO A PLAN OF REORGANIZATION AND EACH BORROWER ALSO HEREBY
AGREES, AT THE REQUEST OF THE BANK, TO CONSENT TO ANY MOTION BY THE BANK SEEKING
A TERMINATION OF ANY SUCH EXCLUSIVITY RIGHTS.
(c) CONSENT TO RECEIVER. WITHOUT DEROGATING FROM ANY RIGHT, REMEDY OR
OTHER PROVISION CONTAINED IN THIS AGREEMENT OR ANY OTHER BORROWER LOAN DOCUMENT,
AT ANY TIME FROM AND AFTER THE OCCURRENCE OF A FORBEARANCE EVENT OF DEFAULT, THE
BANK SHALL HAVE THE RIGHT TO APPLY FOR AND HAVE A RECEIVER APPOINTED BY A COURT
OF COMPETENT JURISDICTION IN ANY ACTION TAKEN BY THE BANK TO ENFORCE THE RIGHTS
AND REMEDIES OF THE BANK UNDER THIS AGREEMENT OR ANY OTHER BORROWER LOAN
DOCUMENT IN ORDER TO MANAGE, PROTECT AND PRESERVE THE COLLATERAL AND CONTINUE
THE OPERATION OF THE BUSINESS
19
OF ANY BORROWER, OR TO SELL OR DISPOSE OF THE COLLATERAL, AND TO COLLECT ALL
REVENUES AND PROFITS THEREOF AND APPLY THE SAME TO THE PAYMENT OF ALL EXPENSES
AND OTHER CHARGES OF SUCH RECEIVERSHIP, INCLUDING THE COMPENSATION OF THE
RECEIVER, SAID EXPENSES AND CHARGES TO CONSTITUTE PART OF THE OBLIGATIONS, AND
TO THE PAYMENT OF THE BORROWER OBLIGATIONS. TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW, EACH BORROWER HEREBY IRREVOCABLY CONSENTS TO AND WAIVES ANY
RIGHT TO OBJECT TO OR OTHERWISE CONTEST THE APPOINTMENT OF RECEIVER AS PROVIDED
ABOVE. EACH BORROWER (I) GRANTS SUCH WAIVER AND CONSENT KNOWINGLY AFTER HAVING
DISCUSSED THE IMPLICATIONS THEREOF WITH COUNSEL, (II) ACKNOWLEDGES THAT (A) THE
UNCONTESTED RIGHT TO HAVE A RECEIVER APPOINTED FOR THE FOREGOING PURPOSES IS
CONSIDERED ESSENTIAL BY THE BANK IN CONNECTION WITH THE ENFORCEMENT OF ITS
RIGHTS AND REMEDIES UNDER THIS AGREEMENT AND THE OTHER BORROWER LOAN DOCUMENTS,
AND (B) THE AVAILABILITY OF SUCH APPOINTMENT AS A REMEDY UNDER THE FOREGOING
CIRCUMSTANCES WAS A MATERIAL FACTOR IN INDUCING THE BANK TO ENTER INTO THIS
AGREEMENT; AND (III) TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW, AGREES TO
ENTER INTO ANY AND ALL STIPULATIONS IN ANY LEGAL ACTIONS, OR AGREEMENTS OR OTHER
INSTRUMENTS IN CONNECTION WITH THE FOREGOING AND TO COOPERATE FULLY WITH THE
BANK IN CONNECTION WITH THE ASSUMPTION AND EXERCISE OF CONTROL BY THE RECEIVER
OVER ALL OR ANY PORTION OF THE COLLATERAL.
(d) ACKNOWLEDGMENTS. The Borrowers hereby (i) certify that no
representative, agent or attorney of the Bank has represented, expressly or
otherwise, that the Bank would not, in the event of litigation, seek to enforce
the foregoing waivers (or any other waivers or other provisions contained in
this Agreement or in any of the other Borrower Loan Documents) and (ii)
acknowledge that the Bank has been induced to enter into this Agreement by,
among other things, the confirmations, ratifications, waivers, agreements and
certifications set forth herein.
ss.16. FEES, ETC. The Borrowers agree to pay all reasonable expenses,
fees and disbursements of counsel for the Bank and of consultants to the Bank
which the Bank has incurred or may hereafter incur in connection with the
Borrower Loan Documents, including the negotiation and preparation of this
Agreement and all other documents related hereto and thereto (including any
amendment, consent or waiver hereunder or thereunder) and the transactions
contemplated hereby or thereby or the enforcement of the rights of the Bank
hereunder or under the other Borrower Loan Documents in the event of a default
hereunder or thereunder or any "workout" of their obligations to the Bank. All
such expenses, fees and disbursements shall constitute "Borrower Obligations"
and shall be secured by the Collateral. Concurrent with the
20
execution of this Agreement, the Borrowers shall pay all of the expenses, fees
and disbursements of the Bank's counsel and of such consultants accrued through
the execution of this Agreement, and the Borrowers shall thereafter pay all of
the expenses, fees and disbursements of the Bank's counsel and of such
consultants on demand.
ss.17. SETOFFS, ETC. If any Forbearance Event of Default occurs, any
indebtedness or other obligations from the Bank to any Borrower may, without
regard to the value or adequacy of the Collateral, be offset and applied toward
the payment of any indebtedness or obligations from such Borrower to the Bank,
whether or not such indebtedness or obligations, or any part thereof, shall then
be due. Notwithstanding the foregoing, the Bank may at any time charge any of
the Borrowers' accounts with the Bank for purposes of paying any amounts due in
respect of expenses, fees and disbursements of counsel to the Bank or the Bank's
consultants or to pay any fees due the Bank.
ss.18. NOTICES. All notices, consents, requests, approvals,
instructions and other communications provided for herein shall be in writing
and validly given or made when delivered personally, or sent by overnight
courier, or by facsimile transmission (when confirmation of receipt thereof is
received) to the party entitled or required to receive the same at the addresses
set forth in the Credit Agreement (provided that a copy of any notice to the
Bank shall be delivered to Xxxxxxx X. Xxxxxx, Esq., Xxxxxx, Hall & Xxxxxxx, 00
Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, 02109), or at such other address as any
party hereto may subsequently furnish in writing to the other parties.
ss.19. NO WAIVERS, ETC. Except to the extent the Bank has agreed to
forbear pursuant to this Agreement, the Bank may enforce its rights to the
fullest extent permitted under this Agreement, the other Borrower Loan Documents
and/or applicable law. Neither this Agreement nor the compliance by the Bank
herewith shall be deemed or construed to be a waiver of any right or remedy to
which the Bank may now or hereafter be entitled against any of the Borrowers,
except to the extent herein otherwise explicitly provided. The parties agree
that, except to the extent herein otherwise explicitly provided, the provisions
of the Borrower Loan Documents and all related agreements shall be unaffected
hereby and shall continue in full force and effect. The failure of the Bank to
insist upon the strict performance of any term, condition or other provision
hereof or of any other agreement, document or instrument or to exercise any
right or remedy hereunder or thereunder shall not constitute a waiver by the
Bank of any such term, condition or other provision or Event of Default or
Forbearance Event of Default in connection therewith; and any waiver of any such
term, condition or other provision or any such Event of Default or Forbearance
Event of Default shall not affect or alter this Agreement or the other Borrower
Loan Documents except as expressly provided by the Bank in writing, and each and
every term, condition and other provision of this Agreement and the other
Borrower Loan Documents shall, in such event, continue in full force and effect
and shall be operative with respect to any other then existing or subsequent
Event of Default or Forbearance Event of Default in connection therewith.
21
ss.20. MISCELLANEOUS.
(a) Counterparts, Successors, Governing Law, Etc. This Agreement may be
executed in multiple counterparts, each of which shall be considered an original
but all of which shall constitute one and the same agreement. One or more
counterparts may be delivered via telecopier; any such telecopied counterpart
shall have the same force and effect as an original counterpart hereof. This
Agreement and the other Borrower Loan Documents shall be binding and inure to
the benefit of each of the parties hereto, and their respective successors,
heirs, legal representatives and assigns provided, that no Borrower may assign
its rights and obligations without the Bank's prior written consent. In the
event of any assignment by the Bank of all of its rights and obligations under
this Agreement and the other Borrower Loan Documents, the term "Bank" as used in
this Agreement and the other Borrower Loan Documents shall be deemed to refer to
such assignee. This Agreement is solely for the purpose, and shall have the sole
effect, of defining the relative rights and obligations of the parties hereto
and may not be relied upon or enforced by any person not a party hereto; no
Person shall have third-party beneficiary rights hereunder.
This Agreement shall be construed in accordance with and governed by
the internal laws of the Commonwealth of Massachusetts (without giving effect to
conflicts of laws principles) and is being executed as a sealed instrument under
Massachusetts law. To the extent that it may lawfully do so, each Borrower each
hereby consents to service of process, and to be sued, in the Commonwealth of
Massachusetts and consents to the jurisdiction of the courts of the Commonwealth
of Massachusetts and the U.S. District Court for the District of Massachusetts,
as well as to the jurisdiction of all courts to which an appeal may be taken
from such courts, for the purpose of any suit, action or other proceeding
arising out of any of its obligations hereunder or under the other Borrower Loan
Documents with respect to the transactions contemplated hereby or thereby, and
expressly waives any and all objections it may have as to venue in any such
courts. Each of the Borrowers further agrees that a summons and complaint
commencing an action or proceeding in any of such courts shall be properly
served and shall confer personal jurisdiction if served personally or by
certified mail to it at its address as provided herein or as otherwise provided
under the laws of the Commonwealth of Massachusetts or the jurisdiction in which
suit is brought.
(b) Amendments and Waivers. Any term of this Agreement or of the other
Borrower Loan Documents may be amended and the observance of any term of this
Agreement may be waived only with the written consent of each party hereto.
(c) Construction. The parties acknowledge and agree that this Agreement
shall not be construed in favor of one party more than the other(s) based upon
which party drafted (or caused to be drafted) the same. Headings contained
herein are included for convenience of reference only and shall not constitute a
part of or affect the meaning or interpretation of this Agreement. This
Agreement together with the other Borrower Loan Documents sets forth the entire
22
understanding of the parties with respect to its subject matter and supersedes
all other negotiations, understandings and representations made by and among
such parties. No course of dealing, course of performance, trade usage or parol
evidence of any nature shall be used to supplement or modify any terms of this
Agreement.
(d) Survival of Representations. All representations and warranties
made herein and/or in certificates delivered pursuant hereto by any Borrower
shall survive the execution and delivery hereof, and shall continue in full
force and effect with respect to the date as of which made so long as any
obligation or indebtedness of any of the Borrowers to the Bank is outstanding.
(e) Statute of Limitations; Time of Essence. Any statute of limitations
applicable to any remedy of the Bank under the Borrower Loan Documents or any
applicable law shall be suspended and tolled until such time as the Bank's
forbearance obligation hereunder or under any extension or amendment hereto
terminates. Time shall be of the essence with respect to each and every
undertaking and obligation of the Borrowers set forth herein.
(f) Specific Performance, Etc. The Borrowers stipulate that the Bank's
remedies at law, in the event of any default or threatened default by any
Borrower in the performance of or compliance with any of the terms and
provisions of this Agreement on its part to be observed or performed, are not
and will not be adequate, and that such terms may be specifically enforced by a
decree for the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms or provisions hereof or
otherwise.
(g) Severability. The unenforceability of any provision of this
Agreement shall not affect the validity, binding effect and enforceability of
any other provision or provisions of this Agreement; provided, however, that if
any provision of this Agreement is declared unenforceable against any Borrower
for any reason by any court or governmental body having jurisdiction, all
agreements, consents and waivers of the Bank set forth herein shall, at the
option of the Bank, be deemed null and void ab initio, and the Bank shall, at
its election, be restored to the position it would have occupied, with all
rights available to it as though such agreements, consents and waivers had never
been made. Without limiting the foregoing, the Bank shall have all rights and
remedies under the Borrower Loan Documents and applicable law in respect of the
Events of Default described in clauses B and D of the Preliminary Statements to
this Agreement.
(h) Indemnification. In addition to any indemnification obligations
contained in any of the other Borrower Loan Documents, each Borrower agrees to
indemnify the Bank and each of the other Released Parties and hold the Bank and
each of the other Released Parties harmless from and against any and all claims,
damages, losses, liabilities, judgments and expenses (including without
limitation all reasonable counsel fees and expenses and litigation expenses)
which the Bank or any other Released Party may incur or which may be asserted
against it in connection with or arising out of any investigation, litigation or
proceeding which arises out of the transactions contemplated hereby or by the
other Borrower Loan Documents (or any action or
23
inaction by the Bank hereunder or thereunder) or which otherwise involves any
Borrower, whether or not the Bank is a party thereto, other than claims,
damages, losses, liabilities or judgments with respect to any matter as to which
the Bank or any other Released Party shall have been finally adjudicated to have
acted with willful misconduct or gross negligence. The provisions of this
paragraph shall survive payment of all obligations and indebtedness of the
Borrowers to the Bank. Promptly upon receipt by any indemnified party hereunder
of notice of the commencement against such party of any action, such indemnified
party shall, if a claim in respect thereof is to be made against any Borrower
hereunder, notify the Borrowers in writing of the commencement thereof, provided
that the failure to provide such notice shall not limit any party's right to
indemnification unless and to the extent such failure shall have materially
adversely affected the Borrowers.
(i) Arms-Length Transaction. The Borrowers recognize, stipulate and
agree that the Bank's actions and relationships with the parties hereto,
including but not limited to those relationships created or referenced by or in
this Agreement, have been and continue to constitute arms-length commercial
transactions, that such actions and relationships shall at all times in the
future continue to constitute arms-length commercial transactions and that the
Bank shall not at any time act, be obligated to act, or otherwise be construed
or interpreted as acting as or being the agent, partner, joint venturer,
employee or fiduciary of any of the Borrowers.
(j) Negotiations/Counsel. The Borrowers stipulate and agree that this
Agreement is the product of and results from lengthy arms-length negotiations
among the parties and that neither the Bank nor any other party has exerted or
attempted to exert improper or unlawful pressure or has in any way attempted to
induce, through threats or otherwise, the execution or delivery of this
Agreement. Without in any way limiting the foregoing, each of the parties hereto
stipulates and agrees that at all times during the course of the negotiations
surrounding the execution and delivery of this Agreement, they have, to the
extent deemed necessary or advisable in their sole discretion, been advised and
assisted by competent counsel of their own choosing, that such counsel has been
present and participated in the negotiations surrounding this Agreement and that
they have been fully advised by such counsel of the effect of each term,
condition, provision and stipulation contained herein.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
a sealed instrument as of the date first above written.
STARMET CORPORATION
By:______________________
Duly Authorized
STARMET POWDERS, LLC
By:______________________
Duly Authorized
STARMET AEROCAST, LLC
By:______________________
Duly Authorized
STARMET COMMERCIAL CASTINGS, LLC
By:______________________
Duly Authorized
STARMET NMI CORPORATION
By:______________________
Duly Authorized
STARMET CMI CORPORATION
By:______________________
Duly Authorized
STARMET HOLDINGS CORPORATION
By:______________________
Duly Authorized
25
NMI FOREIGN SALES CORPORATION
By:______________________
Duly Authorized
CITIZENS BANK OF MASSACHUSETTS
By:______________________
Duly Authorized
26
