FIFTH AMENDMENT AND FORBEARANCE AGREEMENT
AGREEMENT, made as of January 13, 1999, among SEMX CORPORATION (formerly
known as Semiconductor Packaging Materials Co., Inc.) a Delaware corporation,
(the "Borrower") and AMERICAN SILICON PRODUCTS, INC. ("ASP"), a Delaware
corporation, XXXXXX COMPANY, INC., a California corporation, RETCONN
INCORPORATED, ("RETCONN") a Connecticut corporation, TYPE III, INC., a
California corporation, S.T. ELECTRONICS, INC. ("STE"), a California
corporation, SPM HOLDINGS CORPORATION ("SPM Holdings"), a Delaware corporation,
AMERICAN SILICON PRODUCTS, B.V. ("ASP B.V.") a Netherland corporation, THERMAL
PACKAGING SOLUTIONS, INC. ("TPS") a Nevada corporation, (collectively, the
"Subsidiary Guarantors") and FIRST UNION NATIONAL BANK, a national banking
association as Lender and agent for Fleet National Bank (the "Lender").
Background
A. Capitalized terms not otherwise defined shall have the meanings ascribed
to them in the Credit Agreement dated January 23, 1997, between Semiconductor
Packaging Materials Co., Inc. (now known as SEMX Corporation), and First Union
Bank of Connecticut (predecessor in interest to First Union National Bank) (as
modified, amended, restated or supplemented from time to time, the "Credit
Agreement").
B. The Borrower has informed the Lender that, inter alia, it will be unable
to make the principal payment under the Term Loan due and payable on January 1,
1999, and will be unable to comply with the financial covenants contained in
Sections 9.8, 9.9, 9.10 and 9.11 of the Credit Agreement. The Borrower and the
Subsidiary Guarantors have requested that the Lender: (i) forbear from requiring
the Borrower to make scheduled payments of principal under the Term Loan from
January 1, 1999 through March 31, 1999; (ii) waive the Borrower's compliance
with the financial covenants contained in Sections 9.8, 9.9, 9.10 and 9.11 of
the Credit Agreement through March 31, 1999; (iii) extend the maturity of the
Interim Note to April 1, 1999; (iv) extend the maturity of the Revolving Loan
from January 31, 1999 to April 1, 1999. The parties agree that the maturity date
of the Term Loan will be accelerated to April 1, 1999.
C. The obligations of the Borrower under the Credit Agreement have been
guaranteed or will be guaranteed simultaneously hereunder unconditionally by the
Subsidiary Guarantors.
D. The Borrower has another subsidiary International Semiconductor Products
Pte., Ltd. ("ISP"). The Lender was delivered a document entitled Guaranty by ISP
dated on or about July 31, 1998, by the Borrower. The Borrower has advised the
Lender that this documents was not authorized and was delivered to the Lender in
error. The Lender reserves all of its rights with respect to this document.
E. The Lender has agreed to the Borrower's and the Subsidiary Guarantors'
requests to the terms and conditions of this Agreement.
Agreement
In consideration of the foregoing Background, which is incorporated by
reference, the parties, intending to be legally bound, agree as follows:
1. Conditions Precedent. The obligation of the Lender under this Agreement
is subject to the receipt and review, to the satisfaction of the Lender, of the
following:
(a) this Agreement shall be duly executed by the parties hereto;
(b) the Borrower will cause the Lender to be provided with a $950,000.
first mortgage on premises located at 15 Clarkson Street, Providence,
Rhode Island and a $750,000. second mortgage on premises located at 0
Xxxxxxxx Xxxxx, Xxxxxx, Xxx Xxxx in a form acceptable to Lender;
(c) STE, TPS and SPM Holding will execute and deliver to Lender an
acceptance and assumption of guaranty and security and agreement in
the form annexed.
(d) ASP B.V. will request and utilize their best efforts to obtain ABN
Amro's consent to the granting to Lender by ASPBV of a second security
interest in Accounts and a second mortgage on real property in Holland
(the "Dutch Property") in the amount of 500,000 Dutch Guilders;
(e) Borrower shall deliver a Secretary's Certificate of the Borrower and
each of the Subsidiary Guarantors authorizing this transaction except
as set forth in 23(d);
(f) Borrower shall deliver a true and complete copy of the September 30,
1998 Report on Form 10-Q filed by the Borrower with the Securities and
Exchange Commission;
(g) The counsel for the Borrower and Subsidiary Guarantors will deliver
their opinion that these documents are
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authorized, duly executed and enforceable against their clients; and
(h) The Borrower shall pay a restructuring fee payable $25,000 at the
Closing and $1,000. per day from and including February 1, 1999 until
the obligations under the Credit Agreement have been entirely repaid
which daily fee shall be due and payable weekly on the Friday of each
week for the immediately prior seven (7) day period and at the date of
repayment in full;
(i) the Borrower shall have granted to Lender a security interest in
certain vehicles set forth on Schedule 1.(i);
(j) the Subsidiary Guarantors shall have signed the ratification to
Guaranty in the form annexed except as set forth in Section 23(d);
(k) the Borrower shall have paid all of the current and past expenses and
fees as provided in Sections 3 and 22 due as of the closing in
accordance with the Schedule annexed.
(l) the Borrower will provide a copy of any appraisal, independent
valuation or marketing report that they may have regarding the Dutch
Property including, but not limited to, the appraisal or report
utilized by ABN Amro in extending its real estate loan to ASPBV in
Holland;
(m) Borrower and Subsidiary Guarantors will provide acknowledgements of
the pledge of all bank and/or securities accounts maintained in their
name at institutions other than Lender or Fleet National Bank and
shall provide such acknowledgements for any other accounts they may
open from time to time.
(n) Borrower shall provide such other agreements and instruments as the
Lender reasonably deems necessary to carry out the terms and
provisions of this Agreement.
2. Modifications to Credit Documents. All of the terms and conditions
contained in the Credit Documents shall remain in full force and effect except
as follows:
a) Modification to Credit Agreement
(i) Section 4.2(b) is hereby deleted in its entirety and is replaced with a
new Section 4.2(b)(1) and 4.2(b)(ii) as follows:
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Section 4.2(b)(i) In the event that the value of the Borrowing Base of
the Borrower and Subsidiary Guarantors falls below $5,100,000. the
Borrower shall within fifteen days of the time of submission of the
report make a payment in reduction of the Revolving Loan, in the
amount equal to the difference between $5,100,000. and the valuation
shown on the periodic Borrowing Base certificate provided for in
Section 8.14.
Section 4.2(b)(ii) In the event that any ISP L/C Liability valuation
exceeds US $3,200,000, then the Borrower shall, on or before the fifth
day of the next month after the date of calculation, pay to the Lender
the amount that the ISP L/C Liability exceeds US $3,200,000, such sum
to be applied to reduce the Revolving Loan.
(ii) Section 6.2 is hereby modified to add the following:
c. No Default or Event of Default shall have occurred or shall result
from the making of the requested Loan or the issuance of the requested
Letter of Credit.
d. No adverse change deemed material by Lender, in its sole and
absolute discretion, in the financial condition, operations,
properties, business, management of ownership of Borrower and the
Subsidiary Guarantors, or the risks associated with the transaction
contemplated by this Agreement, shall have occurred from the date of
this Agreement or which shall have occurred prior to the date of this
Agreement but was not disclosed to the Lender, at or before the date
this Agreement is executed.
e. Lender shall hold valid, enforceable and perfected first priority
Liens in and to all of the Collateral, which Collateral shall be
subject to no Liens, except for the Permitted Encumbrances.
f. No law or regulation shall prohibit, and no order, judgment or
decree of any court, arbitrator or governmental authority shall enjoin
or restrain Lender from making the requested Loan or the issuance of
the requested Letter of Credit.
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g. After giving effect to the amount of the requested Loan and the
Maximum ISP L/C Liability, the amount outstanding under the Revolving
Loan Commitment shall not exceed the lesser of (i) $15,000,000. and
(ii) the amount of current Borrowing Base submitted in connection with
the request for a Loan plus $9,700,000. minus the amount of any
principal repayments made from December 1, 1998 to March 30, 1999.
The formula for availability under the Revolving Loan is as
follows:
Assume: RL is the amount outstanding under the Revolving
Loan including the Maximum ISP L/C;
B is the amount of the current Borrowing Base;
RLA is the amount available under the Revolving Loan
Commitment;
P is the amount repaid;
RLA = $9,700,000.+X-X-XX
This provision can be illustrated by the following examples:
Assume that the full $15,000,000 facility is drawn and the
Borrower repays $300,000. of the Revolving Loan during the period
from December 1, 1998 to March 30, 1999, the Borrower would have
no availability if the Borrowing Base equals $5,200,000 i.e.
($9,700,000) + ($5,200,000) - ($300,000) - ($14,700,000) =
-$100,000, and would have $100,000 available if the Borrowing
Base was $5,400,000 i.e. ($9,700,000) + ($5,400,000) - ($300,000)
-($14,700,000) = $100,000.
In the example RL=$14,700,000., if (i) B <= $5,300,000. RLA is
zero or negative so that there would be no availability and
(ii) B>$5,300,000., RLA is a positive number so that there is
availability.
h. The Borrower has submitted a Borrowing Base certificate which shows
the value of the
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current Borrowing Base to be at least $5,300,000.
i. Lender shall have received such other documents and evidence with
respect to the transactions contemplated by this Agreement, in form
and substance satisfactory to Lender, as Lender may reasonably
request.
(iii) A new Section 8.12 is hereby added as follows:
Section 8.12 Financial Projections. Attached as Exhibit 8.12 are
financial projections prepared by the Borrower for the Borrower and
Subsidiary Guarantors on a consolidated basis which represent a fair
and accurate estimate of the Borrower's and Subsidiary Guarantors'
financial performance for the period from December 1, 1998 to and
including March 31, 1999 based on management's assumptions at the time
the projections were submitted to the Lender.
(iv) A new Section 8.13 is hereby added as follows:
Section 8.13 Accounts, Inventory and Collateral Position Reporting. In
addition to any other reporting requirements, the Borrower shall
provide to the Lender monthly on or before the twentieth day of the
next ensuing month a report exhibiting in a form acceptable to the
Lender, aged accounts receivable, inventory valued at the lower of
cost or market value and aged accounts payable all calculated as of
the last day of the month for which the report is being rendered
together with current copies of account receivable agings and net
payable agings commencing on January 31, 1999 which will correspond to
the month of December. Attached as Schedule 8.13 is a true and
complete report as of November 30, 1998.
(v) A new Section 8.14 is hereby added as follows:
Section 8.14 Borrowing Base Reporting. Borrower and the Subsidiary
Guarantor shall provide a Borrowing Base certificate on January 31,
1999 for the month of December, 1998 and thereafter (A) the first day
of each month containing true information as of the
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2nd Friday of the prior month, (B) twentieth day of each month
providing true information as of the last day of the prior month, and
(C) in connection with each request for a Revolving Loan or a Letter
of Credit as of the Friday prior to such request. Attached as Schedule
8.14 is a true and complete Borrowing Base certificate compiled as of
November 30, 1998.
(vi) A new Section 8.15 is hereby added as follows:
Section 8.15 Material Adverse Change. In the event of the occurrence
of a material adverse change in the business, financial conditions or
in the value of collateral pledged to the Lender, the Borrower and/or
any Subsidiary Guarantor shall give immediate written notice thereof
to the Lender.
(vii) A new Section 8.16 is hereby added as follows:
Section 8.16 Sale of Borrower and/or RETCONN Incorporated. The
Borrower together with Compass Partners International, LLC, Borrower's
present investment bankers, or such replacement or additional
investment banker, shall report to the Lender, in writing, on the
first and twentieth day of each month, the status of each and every
proposed transaction for the sale of Borrower and/or RETCONN and
describing in pertinent detail any contracts, offers, or expressions
of interest.
(viii) A new Section 8.17 is hereby added as follows:
Section 8.17 Life Insurance. A true and complete schedule of the
Borrower owned insurance insuring the lives of all key employees
together with a schedule of agreements pertaining to the obligation of
Borrower to provide all or part of the proceeds of such insurance to
the employee is annexed as Schedule 8.17. The Borrower shall take all
reasonable steps to cause all such insurance not specifically required
to be paid to such employees or at their direction pursuant to the
employment agreements to be assigned to the Lender by January 31, 1999
on such forms as are promulgated by the
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insurance companies. The Borrower shall provide copies of any such
employment agreements containing insurance requirements to the Lender
at or prior to the date hereof.
(ix) A new Section 8.18 is hereby added as follows:
Section 8.18 Covenant Reporting. The Borrower including the Subsidiary
Guarantors shall provide to the Lender on January 31, 1999 for the
month of December, 1998 and monthly on the twentieth day of each month
for the prior month internally prepared financial statements and a
statement demonstrating the covenant values set forth in Sections
9.18, 9.19, 9.20, 9.21 and 9.22 and stating whether Borrower is in
compliance with such covenants. The financials and covenant compliance
report shall be certified to be true and accurate by an officer of the
Borrower to the best of such officer's knowledge after due and
diligent inquiry subject to final audit review by their outside
auditors.
(x) A new Section 8.19 is hereby added as follows:
Section 8.19 13 Week Cash Flow Forecasts. The Borrower shall provide a
13 week cash flow forecast in the form approved by the Lender for the
week just ended and the next 12 weeks on Friday of each and every week
on a rolling basis showing actual receipts and expenditures as
compared to the budgeted amounts in such form and content acceptable
to Lender.
(xi) A new Section 9.18 is hereby added as follows:
Section 9.18 Minimum Sales. Based upon the Borrower's projections, the
Borrower covenants that the consolidated sales of the Borrower
including the Subsidiary Guarantors on a consolidated basis shall not
be less than the following amounts for each of the months specified:
December 1998 $4,874,000.
January 1999 $5,184,000.
February 1999 $5,303,000.
March 1999 $5,750,000.
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(xii) A new Section 9.19 is hereby added as follows:
Section 9.19 Earnings Covenant. Based on the Borrower's projections,
the Borrower covenants that the Consolidated EBITDA of the Borrower
including the Subsidiary Guarantors shall not be less than the
following amounts for each of the months specified:
December 1998 $ 690,000.
January 1999 $1,050,000.
February 1999 $1,057,000.
March 1999 $1,172,000.
(xiii) A new Section 9.20 is hereby added as follows:
Section 9.20 Ratio of Current Assets to Current Liabilities. Borrower
including the Subsidiary Guarantors on a consolidated basis shall not
permit the ratio of Current Assets to Current Liabilities to be less
than .90 as of December 1998 and .95 at all times thereafter and from
time to time.
(xiv) A new Section 9.21 is hereby added as follows:
Section 9.21 Interest Coverage Ratio. The Borrower including the
Subsidiary Guarantors on a consolidated basis, shall not permit the
Interest Coverage Ratio for the periods set forth to be less than the
following amounts:
December 1998 0.6
January 1999 1.6
February 1999 1.7
March 1999 2.0
(xv) A new Section 9.22 is hereby added as follows:
Section 9.22 Tangible Net Worth. The Borrower including Subsidiary
Guarantors shall not permit its Tangible Net Worth on a consolidated
basis to be less than $14,000,000. at any time or from time to time.
(xvi) Section 10.3 is hereby deleted and is hereby replaced with the
following and a new Section 10.11 is hereby added as follows:
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10.3 Covenants. Any Credit Party shall (a) default in the due
performance or observance by it of any term, covenant or agreement
contained in Section 8.1(a) or (b), 8.11 or Section 9 or (b) default
in the due performance or observance by it of any other term, covenant
or agreement contained in this Agreement or any other Credit Document
(other than those set forth in Sections 10.1, 10.2 and 10.5 hereof
which shall immediately constitute an Event of Default) and such
failure continues for more than twenty (20) business days after such
failure occurred, except that if the Borrower fails to comply with
Sections 8.13, 8.14, 8.16, 8.18 and 8.19 the Borrower shall be in
default if it fails to provide such information within three days
after it is due.
10.11 Decrease in the Value of the Borrowing Base. The value of the
Collateral comprising the Borrowing Base, as shown on a certificate
required under this Agreement or otherwise, decreases by more than
$300,000. from the November 30 Borrowing Base to less than $4,900,000.
(xvii) Section 11.1 is hereby modified to provide that the following terms
will have the following revised definitions:
"Interest Coverage Ratio" shall mean, at anytime, the ratio of consolidated
EBIT to Consolidated Interest Paid.
"Interim Loan Maturity Date: shall mean April 1, 1999.
"Revolving Loan Maturity Date" shall mean April 1, 1999.
"Term Loan Maturity Date" shall mean April 1, 1999.
and the following new definitions will be added:
"Accounts" shall mean, all present and future rights of Borrower to payment
for goods sold or leased or for services rendered, whether now existing or
hereafter arising and wherever arising, and whether or not they have been earned
by performance including, without limitation, all Eligible Accounts (herein
defined).
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"Borrowing Base" shall mean, as of any date of determination, an amount
equal to eighty percent (80%) of the Eligible Accounts and 50 percent (50%) of
the Eligible Inventory.
"Current Assets" shall mean current assets as determined in accordance with
GAAP consistently applied and shall include only the following items: (i) cash
in bank, on hand and in transit; (ii) prepaid items (excluding unamortized debt
discount and expense); (iii) Accounts, other receivables, bills and notes
receivable acquired in the ordinary course of business; (iv) Inventories at not
in excess of cost or current market value, whichever is lower; and (v) readily
marketable, direct obligations of the United States of America and certificates
of deposit issued by a bank, in each case at not in excess of cost or current
market value, whichever is lower; all after deduction of adequate reserves in
each case where a reserve is proper in accordance with GAAP; provided, however,
that any of such assets which are subject to a pledge, lien or security interest
to secure payment of any Indebtedness which is not included in Current
Liabilities shall be excluded from Current Assets to the extent of such
Indebtedness.
"Current Liabilities" shall mean current liabilities as determined in
accordance with GAAP consistently applied and shall include, as of the date of
determination thereof, (a) all Indebtedness payable on demand or maturing within
one year after such date without any option on the part of the obligor to extend
or renew beyond such year, (b) final maturities, installments and prepayments of
Indebtedness required to be made within one year after such date, and (c) all
other items (including taxes accrued as estimated and reserves for deferred
income taxes) which, in accordance with GAAP, would be included on a balance
sheet as current liabilities. Notwithstanding the above, the term debt due to
the Lender shall be accounted for as long term debt for purposes of calculating
the financial covenants of this Agreement.
"Eligible Accounts" shall mean Accounts which consist of ordinary trade
accounts receivable owned by Borrower and the Subsidiary Guarantors, payable in
cash in United States dollars and arising out of the final sale of Inventory or
delivery of services in the ordinary course of Borrower's business as presently
conducted by it other than: (i) any Account with respect to which the goods
covered thereby have not been delivered or services have not been rendered or
with respect to which Borrower failed to issue an original invoice within two
(2) days after delivery of such goods or performance of such services; (ii) any
Account with respect to which Lender does not have a valid and prior, fully
perfected Lien or which is not free of all Liens or other claims of all other
Persons (other than the Permitted
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Encumbrances) including, but not limited to, those accounts listed as contra
accounts in the BDO Xxxxxxx asset based review of the Borrower; (iii) any
Account which is not due and payable, absolutely and unconditionally, within
thirty (30) days from the date of the original invoice applicable thereto; (iv)
any Account with respect to which more than ninety (90) days have elapsed since
the date of issuance of the original invoice applicable thereto; (v) any Account
resulting from goods which are shipped or delivered to the Account Debtor on an
absolute sale basis or goods shipped on a xxxx and hold sale basis, a
consignment sale basis, a guaranteed sale basis, a sale or return basis, or on
the basis of any other similar understanding; (vi) any Account with respect to
which the Account Debtor is a director, officer, shareholder, employee or an
Affiliate of Borrower; (vii) any Account with respect to which the Account
Debtor is the United States of America or any department, agency or
instrumentality thereof; (viii) any Account with respect to which the Account
Debtor is not a resident of the United States; (ix) any Account with respect to
which the Account Debtor is the subject of bankruptcy or a similar insolvency
proceeding, or has made an assignment for the benefit of creditors, or whose
assets have been conveyed to a receiver or trustee, or who has failed or
suspended or gone out of business; (x) any Account of a particular Account
Debtor in excess of a credit limit established as to that Account Debtor by
Borrower; (xi) any Account which is evidenced by chattel paper, a promissory
note or other instrument; (xii) any Account with respect to which the terms or
conditions prohibit or restrict assignment or collection rights; (xiii) any
Account if more than 50% of the Accounts of such Account Debtor are past due
more than 90 days; and (xiv) any Account which does not conform at the time to
Borrower's representations and warranties.
"Eligible Inventory" means Inventory of the Borrower and Subsidiary
Guarantors in which Lender has a first priority, perfected security interest and
which is not, in Lender's opinion, obsolete and unmerchantable, and which Lender
in its sole judgement, shall deem Eligible Inventory based on such
considerations as you may from time to time deem appropriate and shall not
include any (1) work in progress, (2) inventory of ASP or (3) raw material of
Semiconductor Packaging Materials Co. a/k/a SPM, a division of Borrower.
"Equipment" shall mean, all machinery, all manufacturing, distribution,
selling, data processing, office and equipment, all furniture, fixtures and
trade fixtures, tools, tooling, molds, dies, vehicles, vessels, aircraft and all
other goods other than Inventory, and in each case whether now owned or
hereafter acquired by Borrower and wherever located, and accessions and
additions thereto, parts
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and appurtenances thereof, substitutions therefor and replacements thereof.
"GAAP" shall mean, generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession which are applicable to the circumstances as of the
date of determination.
"Inventory" shall mean, all goods, now owned or hereafter acquired by
Borrower and Subsidiary Guarantor (wherever located, whether in the possession
of Borrower or of a bailee or other Person) which are held for sale or lease or
other disposition, which are raw materials, work in process, supplies, whole
goods, spare parts or components, all materials which are or might be used or
consumed in Borrower's business or used in connection with the manufacture,
packing, shipping, advertising, selling or finishing of any such goods, all
documents of title representing the same, and all records, files and writings
with respect thereto, and shall include such property the sale or other
disposition of which has given rise to Accounts and which has been returned to
or repossessed or stopped in transit by Borrower.
"ISP Letter of Credit" shall mean, the letter of credit opened by Lender at
the request of ISP in the amount of SD $5,000,000.
"ISP L/C Liability" shall mean the liability of the Lender to the
beneficiary of the ISP Letter of Credit in United States Dollars which amount
shall be valued on the last day of each month.
"Maximum ISP L/C Liability" shall mean $3,200,000.
"Net Worth" shall mean, the amount by which all the assets of Borrower, as
determined in accordance with GAAP, at any given time, exceed the sum of the
then Total Liabilities and the Minority Interests.
"November 30 Borrowing Base" shall mean the Borrowing Base certificate
shown on Schedule 8.14 annexed hereto and made a part hereof certified by an
officer of the Borrower to be true and accurate to the best of such officer's
knowledge after due and diligent inquiry and for purposes of this Agreement
shall have a Borrowing Base valuation of $5,200,000.
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"Tangible Net Worth" shall mean, the amount of the Net Worth minus
goodwill, patents, and other intangible assets as determined in accordance with
GAAP.
(xviii) The following is added after the notice information contained in
Section 12.3 of the Credit Agreement:
If to the Borrower:
and
Xxxxxx Xxxxxx, & Xxxxxxx, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxx, Esq.
Tel: 000-000-0000
Fax: 000-000-0000
If to the Lender:
First Union National Bank
0 Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxx, Vice President
Tel: 000-000-0000
Fax: 000-000-0000
and
Xxxxxxxx Xxxxxx & Xxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Tel: 000-000-0000
Fax: 000-000-0000
(xix) Section 12.7 is hereby amended to delete the word "Connecticut" and
to substitute therefore the word "New York" and any reference to the state or
federal courts located in the State of Connecticut shall refer instead to courts
located in the County of New York.
3. Consultant. The Borrower agrees to pay all expenses, with respect to the
Lender's consultant PricewaterhouseCoopers LLC, which amount is anticipated to
be approximately $100,000. within sixty days of the day such amounts are sent to
Xxxxxxxx Xxxxxx & Xxxxxx (who shall promptly forward copies of the invoices to
the Borrower).
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4. Reaffirmation by the Borrower. The Borrower acknowledges that (a) it is
legally, validly and enforceably indebted to Lender under the Revolving Note,
the Interim Note and the Term Note, without defense, counterclaim or offset, (b)
it is legally, validly and enforceably liable to the Lender for all costs and
expenses of collection and attorneys' fees related to or in any way arising out
of this Agreement, the Credit Agreement, the Revolving Note, the Interim Note,
the Term Note, and the other Credit Documents, and (c) as of the date hereof,
the amount outstanding under (x) the Revolving Note is $11,822,862.50
(consisting of $11,800,000. principal and $22,862.50 accrued interest) and the
undrawn amount under the Letter of Credit is $3,093,100.50. as of December 31,
1998, (y) the Interim Note is $1,002,798.61 (consisting of $1,000,000 principal
and $2,798.61 accrued interest), and (z) the Term Note is $15,079,601.47
(consisting of $15,050,000 principal and $29,601.47 accrued interest). In
addition, Fleet National Bank's affiliate, Fleet Precious Metals, Inc., has a
separate facility to the Borrower in the amount of $1,118,373. as of January 12,
1999 pursuant to a consignment agreement (the "Consignment Agreement") in
connection with the consignment of gold (the "Gold Liability") and Lender has a
separate equipment leasing facility to SPM Holding dated October 24, 1995 which
have amounts outstanding under Schedule 1 of $317,098., Schedule 2 of $311,524.
and Schedule 3 of $551,597.00 plus any applicable interest, fees and other costs
(the "Lease Liability"), all of the separate obligations of the Borrower and
Subsidiary Guarantors under the Gold Liability and the Lease Liability are due
and owing without offset, claim, defense or right of recoupment. Except as
modified by this Agreement, the Borrower hereby remakes all representations,
warranties and covenants contained in the Credit Documents and acknowledges that
the liens and security interests granted pursuant to the Security Documents
encompass the indebtedness of the Revolving Note, the Interim Note and the Term
Note. The Borrower represents that except as described on Current Report on Form
10-Q for the period ended September 30, 1998 of the Borrower which was filed
with the Securities and Exchange Commission, there are no pending, or to the
Borrower's knowledge threatened, legal proceedings to which the Borrower is a
party, which materially or adversely affect the transactions contemplated by
this Agreement or the ability of the Borrower or any Subsidiary Guarantor to
conduct its business.
5. Reaffirmation by the Subsidiary Guarantors. Each Subsidiary Guarantor
acknowledges that it is legally and validly indebted to the Lender under the
Subsidiary Guaranty without defense, counterclaim or offset, and affirms that
the Subsidiary Guaranty is or remains in full force and effect and includes,
without limitation, the indebtedness, liabilities and obligations arising under,
or
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in any way connected with, the Credit Agreement, the Revolving Note, the Interim
Note, the Term Note, this Agreement and the other Credit Documents, whether now
existing or hereafter arising and acknowledges that the liens and security
interests granted pursuant to the Security Documents to which such Subsidiary
Guarantor is a party encompasses the foregoing indebtedness and obligations.
6. Other Representations and Agreements by Borrower and Subsidiary
Guarantors. The parties agree that to the best of their knowledge they are not
aware that any Default or Event of Default has occurred and is continuing, other
than as set forth herein on Schedule 6 annexed hereto and made a part hereof and
that the Lender has not given its consent to or waived any Default or Event of
Default other than set forth on Schedule 6. The Borrower and the Subsidiary
Guarantors represent, warrant and confirm that the Credit Agreement and the
other Credit Documents are in full force and effect and enforceable against the
Borrower and the Subsidiary Guarantors in accordance with the terms thereof
except to the extent that the Borrower and Subsidiary Guarantors make no
representation or warranty as to the effectiveness of the ASPBV guaranty under
Dutch law. The Borrower and each Subsidiary Guarantor confirm all of the rights
and remedies of Lender under the Credit Documents, including, without
limitation, any power of attorney granted to Lender under any of the Credit
Documents. The parties acknowledge and agree that the Credit Agreement, the
Credit Documents, the Consignment Agreement and this Agreement (all as
previously amended, modified or supplemented in writing from time to time)
constitute the entire agreement and understanding between Lender and Borrower
and each Subsidiary Guarantor and supersedes all prior agreements, conversations
and understandings relating to the subject matter hereof; the parties hereto
acknowledge and agree that the parties hereto have not made any representation
except as expressly set forth in this Agreement and even if any such
representations were made, the parties have not relied on any such
representation except as expressly set forth in this Agreement. The Borrower and
each of the Subsidiary Guarantors represent and confirm that as of the date
hereof, neither the Borrower nor any of the Subsidiary Guarantors has any claim
or defense (and to the extent any such defense exists the Borrower and the
Subsidiary Guarantors each hereby waives every claim and defense) against the
Lender arising out of or relating to the Credit Agreement, this Agreement and
the other Credit Documents or the making, administration or enforcement of the
Revolving Note, the Interim Note, the Term Note and the Loans and the remedies
provided for under the Credit Agreements.
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7. Forbearance and Waiver, Release. (a) In consideration of the execution,
delivery and performance of this Agreement by the Borrower and the Subsidiary
Guarantors, the Lender agrees (x) to forbear from requiring the Borrower to make
regularly scheduled payments under the Term Loan from the date of this Agreement
to the earliest to occur (a "Termination Event") of (i) Xxxxx 0, 0000, (xx) the
occurrence of an Event of Default under the Credit Agreement, (iii) the
occurrence of a breach of this Agreement by the Borrower or any of the
Subsidiary Guarantors, and (iv) the occurrence of a breach under the Consignment
Agreement and all such forborn payments shall be due and payable on the Term
Loan Maturity Date, Revolving Note Maturity Date and the Interim Note Maturity
Date, and (y) to waive until the occurrence of a Termination Event the
Borrower's compliance with the financial covenants contained in Sections 9.8,
9.9, 9.10 and 9.11 of the Credit Agreement.
(b) IN CONSIDERATION OF THE EXECUTION, DELIVERY AND PERFORMANCE OF THIS
AGREEMENT BY THE BORROWER AND THE SUBSIDIARY GUARANTORS, THE BORROWER AND EACH
OF THE SUBSIDIARY GUARANTORS RELEASE, REMISES AND DISCHARGES THE LENDER ITS
SUBSIDIARIES AND AFFILIATES AND ALL OF THEIR PAST AND PRESENT OFFICERS,
DIRECTORS, REPRESENTATIVES, EMPLOYEES, ATTORNEYS OF AND FROM ALL ACTIONS, CAUSES
OF ACTION, SUITS, REBORROWINGS, CONTROVERSIES, AGREEMENTS, PROMISES, DAMAGES,
JUDGMENTS, CLAIMS AND DEMANDS IN LAW OR IN EQUITY WHICH ANY OF THEM EVER HAD,
NOW HAS OR WHICH ANY OF THEM SHALL HAVE AGAINST THE LENDER ARISING OUT OF ANY
ACTION OF THE LENDER OCCURRING PRIOR TO THE DATE OF THIS AGREEMENT.
8. Prejudgment Remedy Waiver; Waivers. THE BORROWER AND EACH OF THE
SUBSIDIARY GUARANTORS ACKNOWLEDGES THAT THE LOANS AND THE TRANSACTIONS EVIDENCED
BY THE REVOLVING NOTE, THE INTERIM NOTE, THE TERM NOTE, THE CREDIT AGREEMENT,
THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS ARE COMMERCIAL TRANSACTIONS AND
EACH WAIVES ITS RIGHTS TO NOTICE AND HEARING PRIOR TO THE ISSUANCE OF ANY
PREJUDGMENT REMEDY, OR AS OTHERWISE ALLOWED BY ANY STATE OR FEDERAL LAW WITH
RESPECT TO ANY PREJUDGMENT REMEDY WHICH THE LENDER MAY DESIRE TO USE, AND
FURTHER WAIVES DILIGENCE DEMAND, PRESENTMENT FOR PAYMENT, NOTICE OF NONPAYMENT,
PROTEST AND NOTICE OF ANY RENEWALS OR EXTENSIONS. THE BORROWER AND EACH OF THE
SUBSIDIARY GUARANTORS ACKNOWLEDGES THAT IT MAKES THIS WAIVER KNOWINGLY,
WILLINGLY, VOLUNTARILY AND WITHOUT DURESS, AND ONLY AFTER EXTENSIVE
CONSIDERATION OF THE RAMIFICATIONS OF THIS WAIVER WITH ITS ATTORNEYS.
9. Letters of Credit. The maturity of all letters of credit issued in
connection with revolving commitment including the ISP Letter of Credit shall
not be extended for a term beyond April 15, 1999 and the amount of letters of
credit outstanding on April 1, 1999 shall be secured by cash or marketable
securities other than the
17
Borrower at the Lender's ordinary and customary margin requirements.
10. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York (without regard to such
State's conflicts of law principles).
11. Representation. The execution and delivery of this Agreement and all of
the other Loan Documents are within the Borrowers' and each Subsidiary
Guarantor's powers, corporate or otherwise, have been duly authorized or will be
ratified by all necessary corporate action, and do not contravene, or constitute
a default under any provision of applicable law or regulation of any of its
corporate documents or of any agreement, judgment, injunction, order, decree or
other instrument binding upon the Borrowers and the Subsidiary Guarantors. The
execution and delivery of this Agreement by the Lender are within Lender's power
and has been duly authorized.
12. Acceleration. In the event that the Borrower or any Subsidiary
Guarantor defaults in the prompt payment of the aforesaid obligations or in the
due performance of or compliance with any of the terms or conditions hereof or
of the Credit Documents or if the Borrower or any Subsidiary Guarantor defaults
under any obligations to Fleet National Bank or its affiliates under the Gold
Liability or otherwise or any other loan or facility with Lender under the Lease
Liability or otherwise and after the expiration of any applicable grace, notice
and right to cure provisions in this Agreement or any applicable agreement under
which such default occurred , the Lender may declare all of the obligations in
accordance with the original terms of the Loan Documents to be immediately due
and payable.
13. Remedies. In the event of a demand or default, the Lender shall have
such rights and remedies as are provided and permitted by the Loan Documents and
applicable law.
14. Loan Documents Remain Effective. Except for any modification
specifically set forth herein or in the exhibits, the Loan Documents remain in
full force and effect. Nothing herein shall be construed as a waiver of any
rights or remedies which the Lender may have at law, equity, under the Loan
Documents, as modified hereby, or otherwise, all of which are specifically
reserved.
15. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
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16. Amendments, Etc. No amendment, modification, termination, or waiver of
any provision of this Agreement, nor consent to any departure by the parties
from this Agreement, shall in any event be effective unless the same shall be in
writing and signed by the Lender, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
17. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the Lender and the Borrower, the Subsidiary Guarantors and
their respective successors and assigns, except that the Borrower and Subsidiary
Guarantor may not assign or transfer any of its rights under this Agreement
without the prior written consent of the Lender.
18. Right to Inspect, UCC Filings. At any time during the term of this
Agreement, the Lender shall have the right to inspect the books and records of
the Borrower and the Subsidiary Guarantors during normal business hours and upon
24 hours notice. At any time and from time to time the Borrower and each
Subsidiary Guarantor authorize Lender or its designee to file any financing
statements without the Borrower or such Subsidiary Guarantor's signature to
perfect any security interest granted to Lender in any jurisdiction.
19. Power of Attorney. Borrower and Subsidiary Guarantors hereby
irrevocably appoint Lender, or any other person whom Lender may designate, as
Borrower and Subsidiary Guarantors' attorney-in-fact, coupled with an interest,
with full power of substitution and with full power from time to time in
Borrower and Subsidiary Guarantors' stead: (i) to file without the signature of
Borrower and Subsidiary Guarantors any and all financing statements,
modifications and continuations in respect of the Collateral and the
transactions contemplated by this Agreement and the other Loan Documents in any
jurisdiction which Lender deems appropriate with respect to any Collateral, and
Borrower and Subsidiary Guarantors agrees to reimburse Lender for the reasonable
expense of any such filing including reasonable attorneys fees; (ii) to sign any
such statement on behalf of Borrower and Subsidiary Guarantors if Lender deems
such filing necessary or desirable under applicable law; and (iii) to file a
carbon, photographic or other reproduction of this Agreement or of a financing
statement if Lender deems such filing necessary or desirable under applicable
law.
20. No Waiver. No delay or omission in the exercise of any power or remedy
herein provided or otherwise available to the Lender shall impair or affect the
Lender's right thereafter to exercise same, including the execution of the
Agreement.
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21. Submission to Jurisdiction. (i) Any legal action or proceeding with
respect to this agreement or any document related hereto may be brought in the
courts of the State of New York or of the United States of America for the
Southern District of New York, and, by execution and delivery of this Agreement,
the Borrower and Subsidiary Guarantors hereby accept for itself and in respect
of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. The parties hereto hereby irrevocably waive any objection,
including, without limitation, any objection to the laying of venue or based on
the grounds of forum non conveniens, which any of them may now or hereafter have
to the bringing of any such action or proceeding in such respective
jurisdiction.
(ii) The Borrower and Subsidiary Guarantors irrevocably consent to the
service of process of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to the Borrower at its address, and such service will become
complete three days after the date such process is so mailed.
(iii) Nothing contained in this Paragraph 21 shall affect the right of the
Lender to serve process in any other manner permitted by law or commence legal
proceedings or otherwise proceed against the Subsidiary Guarantor in any other
jurisdiction.
22. Expenses. The Borrower shall promptly pay all expenses of the Lender
with respect to: (i) the drafting, negotiation and enforcement of this Agreement
and the documents executed in connection therewith, including, but not limited
to, reasonable attorneys fees and disbursements and the fees incurred in
connection with the August 1, 1998 Fourth Modification Agreement and Forbearance
Agreement and foreign counsel fees; (ii) inspection and evaluation of any
collateral, from time to time, including collateral audits and appraisals; (iii)
any filing, recording, title insurance or other fees and taxes or search fees
incurred in protecting, perfecting and insuring the Lender's lien or security
interest in the Collateral; and (iv) all out of pocket expenses in connection
therewith incurred by the Lender, including, but not limited to, site visits to
view and observe the Collateral. Borrower authorizes Lender to debit any account
for the payment of any such fees and disbursements if such amounts are not paid
as and when due pursuant to the Schedule.
23. Additional Collateral. (a) As additional collateral for the Credit
Agreement, the Borrower and each Subsidiary Guarantor shall to the extent
reasonable and practical as determined by Lender in its sole and absolute
discretion maintain each and every bank and/or securities
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account relationship at Lender or Fleet National Bank. Borrower represents that
attached as Schedule 24 is a true and complete schedule of all bank accounts
maintained in its name and that of the Subsidiary Guarantors which are not
maintained at either Lender or Fleet National Bank or either of their affiliates
in locations where neither Lender or its affiliates and Fleet National Bank or
its affiliates have convenient branches for general operating accounts. Borrower
and the Subsidiary Guarantors hereby specifically assign and grant a security
interest in any accounts maintained in the name of Borrower and Subsidiary
Guarantor's.
(b) The Borrower shall use its best efforts to obtain the consent ABN-AMRO
or its successors and assigns to the granting to Lender by ASP B.V. of a second
priority security interest in accounts receivable and a second mortgage on the
real property in the Netherlands. Provided that ABN-AMRO consents, on or before
February 15, 1999, the Borrower shall cause and ASP B.V. shall grant as
additional security for the Obligations, a second priority security interest in
the ASP B.V. accounts receivable and a second mortgage on the ASP B.V.'s real
property located in the Netherlands in the amounts of 500,000 Dutch Guilders.
together with all customary verifications of title and all necessary corporate
approvals and an opinion of Dutch counsel acceptable to Lender and its counsel.
Notwithstanding the foregoing, the inability of the Borrower to obtain the
consent of ABN-AMRO after utilizing its best efforts shall not be a default
under this Agreement.
(c) On or before February 15, 1999, the Borrower shall cause and ASP B.V.
shall grant as additional security for the Obligations, a first priority
security interest in all other personal property of ASP B.V. to the extent that
such property is not the collateral of ABN-AMRO. In the event such property is
the collateral of ABN-AMRO, the Borrower shall use its best efforts to obtain
the consent of ABN-AMRO to grant a second priority security interest in
accordance with section (b) hereof.
(d) On or before January 22, 1999, ASP B.V. shall deliver a guaranty in the
form signed by the Subsidiary Guarantors, a board resolution approving such
guaranty, copies of all appropriate corporate documentation furnished by the
other Subsidiary Guarantors and an opinion of Dutch counsel acceptable to Lender
and its counsel.
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24. Jury Trial Waiver. THE BORROWER AND EACH OF THE SUBSIDIARY GUARANTORS
WAIVES TRIAL BY JURY IN ANY COURT IN ANY SUIT, ACTION OR PROCEEDING ON ANY
MATTER ARISING IN CONNECTION WITH, OR IN ANY WAY RELATED TO, THE FINANCING
TRANSACTIONS OF WHICH THE CREDIT AGREEMENT, THE REVOLVLING NOTE, THE INTERIM
NOTE, THE TERM NOTE, THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS IS A PARTY OR
THE ENFORCEMENT OF ANY OF THE LENDER'S RIGHTS. THE BORROWER AND EACH OF THE
SUBSIDIARY GUARANTORS ACKNOWLEDGES THAT IT MAKES THIS WAIVER KNOWINGLY
WILLINGLY, VOLUNTARILY AND WITHOUT DURESS, AND ONLY AFTER EXTENSIVE
CONSIDERATION OF THE RAMIFICATIONS OF THIS WAIVER WITH ITS ATTORNEYS.
The parties have executed this Agreement as of the date first written
above.
Borrower:
SEMX CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman
Subsidiary Guarantors:
AMERICAN SILICON PRODUCTS, INC.
By: /s/ Xxxxxxx X. Xxxxx
----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman
XXXXXX COMPANY, INC.
By: /s/ Xxxxxxx X. Xxxxx
----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman
RETCONN INCORPORATED
By: /s/ Xxxxxxx X. Xxxxx
----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman
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TYPE III, INC.
By: /s/ Xxxxxxx X. Xxxxx
----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman
S.T. ELECTRONICS, INC.
By: /s/ Xxxxxxx X. Xxxxx
----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman
SPM HOLDINGS CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman
THERMAL PACKAGING SOLUTIONS, INC.
By: /s/ Xxxxxxx X. Xxxxx
----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman
ASP, B.V.
By: /s/ Xxxxxxx X. Xxxxx
----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman
Lender:
FIRST UNION NATIONAL BANK
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Sr. Vice President
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