AMENDED AND RESTATED CREDIT AGREEMENT
AGREEMENT made as of this 1st day of October, 1997 between 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 COMCAST, 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 STATE STREET BANK AND TRUST
COMPANY, an FDIC insured Massachusetts chartered trust company ("Bank").
WHEREAS, StarMet, CMI and the Bank are parties to a Credit Agreement
dated as of March 31, 1995, as amended by a First Amendment to Credit
Agreement dated as of June 30, 1995, a letter agreement dated as of September
26, 1995, a Forbearance and Amendment Agreement dated as of January 11, 1996,
a First Amendment to Forbearance and Amendment Agreement dated as of February
15, 1996, a Second Amendment to Forbearance and Amendment Agreement dated as
of June 4, 1996, a Second Amendment to Credit Agreement dated as of December
24, 1996 and a Third Amendment to Credit Agreement dated as of August 7, 1997
(the "Original Credit Agreement");
WHEREAS, StarMet is engaged in a restructuring where certain of its
business lines will be transferred to newly organized subsidiaries as
described in a proxy statement dated August 26, 1997 (the "Proxy Statement")
WHEREAS, the Borrowers and the Bank have agreed to amend and restate the
existing credit facility described above so as to, among other things, add
Powders, Speciality, AeroCast, ComCast, NMI, and Holdings as "Borrowers"
under the Original Credit Agreement and continue to provide for revolving
credit facilities to the Borrowers;
NOW, THEREFORE, the parties agree as follows:
ARTICLE I. AMOUNT AND TERMS OF THE CREDIT.
Section 1.01. The Credit.
Subject to the terms and conditions hereof, and in reliance on the
representations and warranties contained herein, Bank hereby establishes a
credit facility in favor of the Borrowers
in the principal amount of $6,550,000 (the "Credit"). The Credit consists of a
revolving line of credit of $6,550,000 ("Revolving Credit").
Section 1.02. The Revolving Credit.
(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 February 28, 1998 (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 shall not exceed
$6,550,000 less 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 (the "Maximum Credit").
(b) Revolving Credit Payment. The aggregate Advances outstanding at any
time shall not exceed the Maximum Credit. If the aggregate Advances
outstanding at any time exceed such limit, then the Borrowers shall
immediately pay such excess. The Bank may, without prior notice to the
Borrowers, charge any of their accounts under the control of the Bank to
effect such payment.
(c) The Revolving Credit Note. Amounts owed to Bank with respect to
Advances made by Bank shall be evidenced by Bank's books and records and may,
at the request of Bank, be further evidenced by a revolving credit note in
the maximum principal amount of the Revolving Credit (the "Revolving Credit
Note") in the form of Exhibit 1.02(d) hereto. The unpaid principal balance
of the Revolving Credit may be voluntarily prepaid in whole or in part during
the continuation of the Revolving Credit 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 Bank. Upon termination, the
Borrowers shall satisfy the provisions of Section 6.01. The Revolving Credit
Note is subject to mandatory repayments, as provided in Section 1.02(b).
(d) Interest. Advances made by Bank shall bear interest prior to
maturity or the occurrence of an Event of Default (computed on the basis of
actual number of days elapsed over a 360 day year) on the unpaid principal
balances outstanding from time to time at a rate per annum equal to the Prime
Rate plus one-half percent (1/2%). After the Maturity Date or the occurrence
of an Event of Default, the unpaid principal balance shall bear interest at
the Prime Rate plus five (5%) percent. Interest shall be payable monthly in
arrears on the first day of each month commencing on October 1, 1997. The
effective rate of interest shall change on each day the Prime Rate changes.
(e) Requests for Advances. Each Advance shall be made on the Banking
Day on which Bank receives notice from the Borrower if such notice is
received prior to 11:00 a.m.
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Boston time on such Banking Day, and otherwise on the next Banking Day. Each
request for an Advance shall be made to Bank in writing or by telephone by a
duly authorized representative of the Borrowers. Bank may rely upon any
telephone request which it believes is made by such a representative. The
Borrowers agree to indemnify and hold Bank harmless for any action, including
the making of Advances hereunder, or loss or expense, taken or incurred by
Bank in good faith reliance upon such telephone request. At the time of the
initial request for an Advance, the Borrowers shall have provided Bank with a
Compliance Certificate substantially in the form of Exhibit 1.02(e) hereto
("Compliance Certificate"). Bank shall be entitled to rely upon the most
recent Compliance Certificate in its possession until it is superseded by
another certificate.
(f) Expiration. The Revolving Credit shall expire on the Maturity Date
and all Advances then outstanding under the Revolving Credit shall be due and
payable without notice on such date. In the event Bank continues Advances
after the Maturity Date without a written extension of the Maturity Date, (i)
all such Advances shall be made within the sole discretion of Bank; (ii) the
entire Revolving Credit shall be due on demand; and (iii) other than such
Advances, the entire Revolving Credit shall earn interest at the rate
specified to be earned after maturity in Section 1.02(d).
(g) Overadvances. Bank may from time to time in its sole discretion
permit Advances to exceed the limitations set forth in this Agreement,
including, without limitation, (i) Advances in excess of the Maximum Credit,
and (ii) Advances after the Maturity Date or the occurrence of an Event of
Default. All such Advances shall be deemed part of the Credit secured by any
collateral securing the Credit and supported by any credit enhancements
supporting the Credit. The making of an Advance on one or more occasion will
not operate to limit, waive or otherwise modify any rights of Bank hereunder
on any future occasion unless otherwise agreed in writing.
(h) Special Uses. The Borrowers may request portions of the Revolving
Credit in the form of letters of credit pursuant to Section 1.05 hereof.
(i) Use of Proceeds. Proceeds from Advances only shall be used by the
Borrowers for working capital purposes.
Section 1.03. Agency.
Each of the Borrowers hereby appoints StarMet as its agent to take any
action and perform any obligation under this Agreement. The Bank may
conclusively rely upon any action taken by StarMet as binding on all of the
Borrowers.
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Section 1.04. Definitions.
"Banking Day" shall mean any day which Bank is open to conduct commercial
banking business in Boston, Massachusetts.
"Notes" shall mean the Revolving Credit Note and any other notes issued
by the Borrowers to Bank pursuant to this Agreement.
"Prime Rate" shall mean the rate of interest per annum from time to time
announced by Bank as its prime rate, it being understood that such rate is a
reference rate, not necessarily the lowest, which serves as the basis upon
which effective rates of interest are calculated for obligations making
reference thereto.
The following terms are defined in the following sections:
Advance Section 1.02(a)
Affiliate Section 4.17
Banking Day Section 1.04
Base Financial Statement Section 2.04
Bonds Section 4.12(b)
Compliance Certificate Section 1.02(e)
Closing Fee Section 1.10
Credit Section 1.01
Current Assets Section 4.22
Current Liabilities Section 4.22
Debt Section 4.20
Debt Service Section 4.23
ERISA Section 2.10
Event of Default Article V
Facility Fee Section 1.08
"L/Cs" Section 1.05(a)
Maturity Date Section 1.02(a)
Maximum Credit Section 1.02(a)
Net Income Section 4.22
1985 Trust Agreement Section 4.12(b)
Notes Section 1.04
Prime Rate Section 1.04
Proxy Statement Introduction
Restricted Payments Section 4.24
Revolving Credit Section 1.01
Revolving Credit Note Section 1.02(c)
SEC Section 4.08(a)
Security Agreement Section 3.01(c)
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Service Fee Section 1.09
Special Counsel Section 3.01(b)
Stock Section 4.24
Subordinated Debt Section 4.20
Subsidiaries Section 2.02
Tangible Assets Section 4.20
Tangible Capital Base Section 4.20
Section 1.05. Letters of Credit.
(a) Issuance Procedures. Each Borrower may request and Bank will issue
standby letters of credit (such letters of credit together with any letters
of credit outstanding on the date hereof and any renewal of any such
outstanding letter of credit, collectively "L/Cs") for the account of such
requesting Borrower. With each request, the requesting Borrower shall
deliver to Bank an L/C application and L/C agreement together with the
proposed form of such L/C (which, together with all schedules and exhibits
thereto, shall be in form and substance satisfactory to Bank and its counsel)
and such other certificates, documents and other papers and information as
Bank may reasonably request. Any foreign beneficiary must be satisfactory to
Bank. All L/C's (other than letters of credit which are outstanding on the
date hereof and any renewal of any such outstanding letter of credit) must
expire at least one day prior to the Maturity Date. Within five Banking Days
following receipt of the above-described documents in satisfactory form, Bank
shall, provided that no Event of Default exists and no event exists which,
with the giving of notice or passage of time, or both, would constitute an
Event of Default, issue such L/C.
(b) Reimbursement. The Borrowers agree to pay Bank on each date that
any amount is drawn under an L/C, a sum equal to the amount so drawn. The
Borrowers agree to pay on demand any and all reasonable expenses incurred by
Bank in enforcing any rights under this Section 1.05. In the event any L/C
is payable in foreign currency, the Borrowers shall reimburse Bank at Bank's
selling rate of exchange on the date such reimbursement is made.
(c) Commission. The Borrowers agree to pay Bank in advance two percent
(2%) per year (prorated based upon the number of days from the issue date to
the expiration date) of the face amount of any L/C issued or renewed after
the date hereof, together with any transactional fees at the Bank's customary
rates.
(d) Method of Payment. Bank is authorized to obtain reimbursement by
making Advances under the Revolving Credit. Bank may make such Advance even
if it causes the outstanding balance to exceed the limits set forth in
Section 1.02(a) and the making of such Advance shall be an Event of Default
under Article V.
(e) Amount. The aggregate amount of L/Cs outstanding at any time shall
not exceed $3,550,000.
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Section 1.06. Payment by the Company.
All payments and prepayments of principal and interest due with respect
to the Credit and all other sums due hereunder shall be made by the Borrowers
in immediately available funds deposited with Bank. Payments received by
Bank after 11:00 a.m. Boston time shall be deemed received on the next
succeeding Banking Day. Bank is authorized to make all such payments by
Advances under the Revolving Credit.
Section 1.07. Credit for Uncollected Items.
Bank will give the Borrowers credit for uncollected items deposited with
Bank (a) the next Banking Day for purposes of computing availability under
the Revolving Credit and (b) two Banking Days after deposit for purposes of
computing interest and fees with respect to the Credit.
Section 1.08. Facility Fee.
On the first day of each month (and upon the day of termination if the
Credit is terminated), the Borrowers shall pay Bank a facility fee of
one-half percent (1/2%) per year of the unused portion of the Revolving
Credit for the preceding month.
Section 1.09. Audit Expenses.
The Borrowers shall pay Bank on demand Bank's customary and reasonable
fees and expenses for audit reviews by employees of Bank (currently $400 per
man-day plus out-of-pocket expenses).
Section 1.10. Closing Fee.
On the date hereof, Bank shall earn a one-time closing fee ("Closing
Fee") of $0.00.
ARTICLE II. REPRESENTATIONS AND WARRANTIES.
The Borrowers jointly and severally represent and warrant as follows:
Section 2.01. Corporate Existence and Power.
Each Borrower and its Subsidiaries (as defined in Section 2.02) are duly
organized, validly existing and in good standing under the laws of the
respective jurisdictions of their organization and have full corporate and
other power and authority to conduct businesses and own their properties as
now conducted and owned. Each Borrower and its Subsidiaries are licensed or
qualified as foreign corporations or limited liability corporations in each
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jurisdiction where the conduct of their respective businesses or the
ownership of their respective properties require such licensing or
qualification and where the failure to be so licensed or qualified would have
a material adverse effect on the business, finances or operations of such
Borrower or any of its Subsidiaries.
Section 2.02. Subsidiaries.
Any corporation, business trust, partnership or other business entity in
which any Borrower or any Subsidiary of such Borrower owns or has options to
acquire 50% or more of the voting control shall constitute a Subsidiary. The
Borrowers currently have no Subsidiaries. Powders, AeroCast, ComCast, NMI,
CMI and Holdings are each 100% owned Subsidiaries of StarMet.
Section 2.03. Power and Authority Relative to Borrowing; Legal and
Binding Nature; Compliance with Other Instruments.
Each Borrower and its Subsidiaries has full power and authority and has
taken all required corporate and other action necessary to permit such
Borrower to execute and deliver and perform all of its obligations contained
in this Agreement and all documents or instruments required hereby or
incident or collateral hereto, and to borrow hereunder, and none of such
actions will violate any provision of law applicable to, or of the
organizational documents of, such Borrower or any such Subsidiary, or result
in the breach of or constitute a default under any agreement or instrument to
which such Borrower or any such Subsidiary is a party or by which any of them
is bound. This Agreement and all documents or agreements required hereby or
incident hereto to which the Borrowers are a party are the valid and binding
obligations of the Borrowers enforceable in accordance with their terms.
Neither the execution, delivery nor performance by the Borrowers or any of
their Subsidiaries of any of the obligations contained in this Agreement or
in any document or instrument required hereby or incident or collateral
hereto requires the consent, approval or authorization of any person or
governmental authority.
Neither the Borrowers nor any of their Subsidiaries is in violation of
any term of its charter or by-laws, or any agreement, instrument, mortgage,
indenture, contract, judgment, decree, order, statute, rule or governmental
regulation applicable to the Borrowers or any of their Subsidiaries except
for possible minor violations none of which could, either individually or in
the aggregate, have any material adverse effect on the business, financial
condition or assets of any Borrower or any of their Subsidiaries and except
as otherwise disclosed on an Exhibit to this Agreement. The execution,
delivery and performance of this Agreement, all agreements incident or
collateral hereto, and the Credit will not result in the creation of any
security interest, lien, charge or encumbrance upon any of the properties or
assets of the Borrowers or any of their Subsidiaries except in favor of Bank.
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Section 2.04. Financial Condition.
The audited financial statement dated September 30, 1996 previously
delivered to Bank (the "Base Financial Statement") has been prepared with due
diligence and in accordance with generally accepted accounting principles and
practices. The Base Financial Statement fairly presents the financial
condition of the Borrowers and their Subsidiaries as of the date of such
statement and the results of their operations for the period then ending.
The Borrowers and their Subsidiaries have no material contingent liability
(including, without limitation, contingent tax and environmental liability)
nor any burdensome agreement or commitment which could have a material
adverse effect on its business or financial condition except as disclosed in
the Base Financial Statement and the Proxy Statement.
Section 2.05. No Material Adverse Change.
Since the date of the Base Financial Statement, there has been no
material adverse change in the condition (financial or otherwise), properties
or business operations of any Borrower or any of their Subsidiaries and
neither any Borrower nor any of their Subsidiaries has paid any dividends or
made any distributions on or purchased or otherwise acquired any shares of
the capital stock of any Borrower or any of their Subsidiaries.
Section 2.06. Litigation.
Except as set forth in Exhibit 2.06 hereto, there are no suits or
proceedings pending or, to the best knowledge of the Borrowers, threatened
against or affecting them or any of their Subsidiaries which could have a
material adverse effect on the business, assets or financial condition of
either of the Borrowers or any of their Subsidiaries. Moreover, there are no
suits or proceedings pending or, to the knowledge of the Borrowers,
threatened with respect to the transactions contemplated by this Agreement.
Section 2.07. Title.
Except as set forth in Exhibit 2.07, the Borrowers and their Subsidiaries
have good and marketable title to all of the properties and assets reflected
in the Base Financial Statement or acquired since such date (except for
materials used, inventory sold, accounts receivable collected and other items
disposed of, all in the ordinary course of business), free and clear of all
mortgages, liens and encumbrances except liens permitted by Section 4.14;
easements, restrictions and minor defects in title which do not, either
individually or in the aggregate, materially detract from the value or
materially limit the use of any real property; and certain assets listed on
Exhibit 2.14 which are not owned but which are reflected on the balance sheet
as capitalized leases.
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Section 2.08. Tax Returns and Payments.
Except as set forth on Exhibit 2.08 attached hereto, all of the tax
returns and tax reports relating to taxes on income and, to the best
knowledge of the Borrowers, all other tax returns and reports of each
Borrower and their Subsidiaries required by law to be filed have been duly
filed, or extensions of the time for filing have been duly obtained, and,
except as set forth in Exhibit 2.08 hereto, the Borrowers and their
Subsidiaries have paid all taxes shown due thereon. Except as set forth in
Exhibit 2.08 attached hereto, the federal income tax returns of the Borrowers
and their Subsidiaries have never been audited by the Internal Revenue
Service. Except as set forth on Exhibit 2.08 attached hereto, there are in
effect no waivers of the applicable statutes of limitations for federal taxes
for any period. No deficiency assessment or proposed adjustment of the
federal income taxes of any Borrower or of any of their Subsidiaries is
pending except as set forth in Exhibit 2.08 and the Borrowers have no
knowledge of any proposed liability of a substantial nature for any tax to be
imposed upon any of their properties or assets, for which there is not an
adequate reserve reflected in the Base Financial Statement.
Section 2.09. Compliance with Law.
The Borrowers and their Subsidiaries have all necessary franchises,
permits, licenses and other rights to allow them to conduct their businesses
as presently conducted, and are not in default with respect to any order or
decree of any court, or under any law, order or regulation of any
governmental authority, or under the provisions of any contract or agreement
to which any of them is a party or by which they may be bound, which default
would have a material adverse effect on the business, finances or operations
of any of them.
Section 2.10. Pension Matters.
Neither the Borrowers nor any of their Subsidiaries has incurred (a) any
material accumulated funding deficiency within the meaning of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or (b) any
material liability to the Pension Benefit Guaranty Corporation in connection
with any employee benefit plan established or maintained by it; nor has any
Borrower or any of their Subsidiaries had any tax assessed against it by the
Internal Revenue Service for any alleged violation under Section 4975 of the
Internal Revenue Code. Neither the Borrowers nor any of their Subsidiaries
has any material unfunded liability under a pension plan or a contingent
liability for withdrawal from a multi-employer pension plan except as
disclosed in the Base Financial Statement.
Section 2.11. Environmental Matters.
Except as set forth on Exhibit 2.11, neither the Borrowers nor any of
their Subsidiaries has (a) been named as a potentially responsible party or
received notice of an investigation that could lead to such designation under
any proposed environmental cleanup; (b) incurred any
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unsatisfied liability (contingent or otherwise) in connection with the
release, spill, generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of hazardous materials, toxic
substances or solid waste under any state or federal environmental law; or
(c) occupied in the past or currently occupies any site designated as
environmentally contaminated. The Borrowers and their Subsidiaries have all
licenses, permits, certificates and similar authorizations required to
conduct its business under applicable environmental laws and is not subject
to any pending investigation or proceeding to revoke, limit or terminate such
authorizations.
Section 2.12. Compliance with Regulation U.
None of the proceeds of the Credit will be used to purchase, carry or
refinance any borrowing the proceeds of which were used to purchase or carry
any "margin securities" within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System.
Section 2.13. Credit Agreements.
Set forth on Exhibit 2.13 is a complete and correct list of all existing
loan agreements, indentures, purchase agreements, leases, guarantees or other
instruments relating to extensions of credit or money borrowed for an amount
in excess of $25,000 under which any Borrower or any of their Subsidiaries is
or may become directly or indirectly obligated.
Section 2.14. Leases and Options to Purchase.
Set forth on Exhibit 2.14 is a complete and correct list of all existing
leases with respect to, or options to purchase any, real estate or any
equipment involving a commitment or potential commitment in excess of $25,000
under which any Borrower or any of their Subsidiaries is or may become
directly or indirectly obligated.
Section 2.15. Real Estate Owned.
Set forth on Exhibit 2.15 is a complete and correct list of all real
estate owned by each Borrower or any of their Subsidiaries.
Section 2.16. Fiscal Year.
The fiscal year end for each Borrower is September 30.
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ARTICLE III. CONDITIONS.
Section 3.01. Conditions to the First Advance.
The obligation of Bank to make the first Advance is subject to the
fulfillment of the following conditions:
(a) The Note. The Borrowers shall have executed and delivered to Bank
the Revolving Credit Note.
(b) Legal Opinions from Counsel for the Company. Bank shall have
received the written opinion of Peabody & Xxxxxx, counsel for the Borrowers,
in form satisfactory to Xxxxxxx, Procter & Xxxx LLP special counsel to Bank
(said special counsel and any successor counsel shall be hereinafter referred
to as "Special Counsel").
(c) The Security Agreement. The Borrowers shall have executed and
delivered to Bank an amended and restated security agreement in a form
approved by Special Counsel (the "Security Agreement"), granting to Bank a
first priority security interest in all accounts, inventory and general
intangibles of the Borrowers and all financing statements and other documents
in connection therewith shall have been duly filed or recorded.
(d) Patents and Trademarks. The Borrowers shall have delivered to Bank
a current list of all patents, trademarks and applications therefor and shall
have executed and delivered to the Bank agreements in a form approved by
Special Counsel granting the Bank a first priority interest in all patents,
trademarks and applications thereof.
(e) Insurance. Each Borrower shall have delivered to Bank an executed
Certificate of Insurance in the form of Exhibit 3.01(e) hereto.
(f) Compliance Certificate. The Borrowers shall have delivered to Bank
an executed Compliance Certificate dated the date of the first Advance.
(g) Closing Certificate. Each Borrower shall have delivered to Bank an
executed Officer's Closing Certificate in substantially the form of Exhibit
3.01(g)(1) hereto or a Member/Manager Closing Certificate in substantially
the form of Exhibit 3.01(g)(2) hereto, as appropriate.
(h) No Default. No Event of Default and no event which, with the giving
of notice or the lapse of time, or both, would become an Event of Default,
has occurred and is continuing.
(i) Closing Fee. Bank shall have received payment of the Closing Fee.
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Section 3.02. Conditions to Subsequent Advances.
Each request for a subsequent Advance shall be deemed to be a
representation by the Borrowers to Bank that all representations and
warranties contained in Article II hereof or in any Exhibit, Schedule or
Certificate attached hereto or delivered to Bank in connection herewith were
true and correct when made, and continue to be true and correct except those
items which relate to a specific date and except as disclosed to Bank by the
Borrowers, and that no Event of Default, and no event which, with the giving
of notice or the lapse of time, or both, would become an Event of Default,
has occurred and is then continuing.
ARTICLE IV. COVENANTS OF THE COMPANY
The Borrowers jointly and severally covenant that:
Section 4.01. Payment of Amounts Due.
The Borrowers will make all payments of principal and interest on the
Credit in accordance with the terms hereof and thereof and will observe,
perform and comply with each and every one of the covenants, terms and
conditions contained herein, in the Credit or in any other document or
instrument required hereby or incident or collateral hereto to be observed,
performed or complied with by them.
Section 4.02. Corporate Existence.
The Borrowers and each of their Subsidiaries will maintain and preserve
in full force and effect their respective corporate existences and, insofar
as reasonable and practicable, will maintain and preserve in full force and
effect all material rights, licenses, patents and franchises, and comply with
all applicable regulations in all jurisdictions necessary for the conduct of
their businesses.
Section 4.03. Maintenance of Properties.
The Borrowers and each of their Subsidiaries will maintain, preserve,
protect and keep all properties used or useful in the conduct of their
businesses in good repair, working order and condition, and from time to time
make such repairs, renewals, replacements, betterments and improvements
thereto as are necessary to permit such businesses to be properly and
advantageously conducted at all times.
Section 4.04. Payment of Taxes.
The Borrowers and each of their Subsidiaries will pay and discharge all
lawful taxes, assessments and governmental charges or levies imposed upon
them or upon their income or profits, or upon any property belonging to them
before the same shall become past due, as well
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as all lawful claims for labor, materials and supplies, which, if not paid
when due, might become a lien or charge upon such property or any part
thereof; provided, however, that neither the Borrowers nor any of their
Subsidiaries shall be required to pay and discharge any such tax, assessment,
charge, levy or claim so long as the validity thereof shall be contested in
good faith by appropriate proceedings and an adequate reserve for the payment
thereof is established on the books of the appropriate Borrowers or the
appropriate Subsidiary in accordance with generally accepted accounting
principles.
Section 4.05. Compliance with ERISA.
The Borrowers and their Subsidiaries will satisfy, or cause to be
satisfied, the minimum annual funding standard required by ERISA for any
employee benefit plan established or maintained by it which is subject to
ERISA and the Borrowers and their Subsidiaries will not permit any tax or
penalty to be incurred by it as a result of any failure to satisfy any such
minimum funding requirement or as a result of any violation of the provisions
of Section 4975 of the Internal Revenue Code or any regulation issued
thereunder.
Section 4.06. Compliance with Laws.
The Borrowers and their Subsidiaries at all time in all material respects
will comply with applicable provisions of laws, rules, regulations, licenses,
permits, approvals and orders and observe all requirements of federal, state,
local and other governmental authorities including, without limitation, all
provisions of the Fair Labor Standard Rules of 1938, the Occupational Safety
and Health Act of 1970 and all applicable environmental laws; provided,
however, that neither the Borrowers nor any of their Subsidiaries shall be
required to comply with such requirements so long as the validity or
applicability thereof shall be contested in good faith by appropriate
proceedings and an adequate reserve is established on the books of such
Borrower or any such Subsidiary in accordance with generally accepted
accounting principles.
Section 4.07. Insurance.
The Borrowers and their Subsidiaries will keep their insurable properties
insured by financially sound and reputable insurers satisfactory to Bank
against such risks and in such amounts as are deemed prudent by the Borrowers
and are reasonably acceptable to Bank and will name Bank as a Loss Payee
under all insurance policies maintained with respect to insurable properties
subject to a security interest or lien in favor of Bank. The Borrowers and
their Subsidiaries will maintain in full force and effect public liability
insurance against claims for bodily injury, death or physical property
damages occurring upon, in, about, or in connection with the use of any
properties occupied or controlled by them, or through the operation of any
motor vehicles by their agents or employees or arising in any manner out of
the businesses carried on by them in such amounts and with such coverages as
are deemed prudent by the Borrowers and are reasonably acceptable to Bank.
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Section 4.08. Accounts and Reports.
The Borrowers will furnish or cause to be furnished to Bank the following
reports:
(a) Annual Reports. As soon as available, and in any event within
ninety (90) days after the end of each fiscal year of the Borrowers,
consolidated and consolidating audited financial statements of the Borrowers,
of the Borrowers, together with all notes thereto, prepared in reasonable
detail and in accordance with generally accepted accounting principles
consistently applied (except there will be no required notes to the
consolidating balance sheet) such consolidated (but not consolidating)
statements to be duly certified by Xxxxxx Xxxxxxxx & Co., SC or other
certified, independent public accountants selected by the Borrowers and
acceptable to Bank. Such statements shall be accompanied by a statement of
such certified, independent public accountants that the examination made in
certifying such statements did not disclose the existence of any condition or
event which constitutes an Event of Default under this Agreement or which,
after notice or lapse of time or both, would constitute such an Event of
Default, or a statement specifying the nature and period of existence of any
such condition or event disclosed by such examination; provided, however,
that in issuing such statement, such accountants shall not be required to
exceed the scope of normal accounting procedures conducted in connection with
their audit opinion. Notwithstanding the foregoing, delivery within the
period specified above of a copy of the Annual Report on Form 10-K of StarMet
filed with the Securities and Exchange Commission (the "SEC"), shall be
deemed to satisfy the requirements of this Section 4.08(a) so long as the
Form 10-K contains all of the information required by this Section 4.08(a),
or, is otherwise supplemented so that such Form, together with such
supplemental information, satisfies the requirements hereof.
(b) Quarterly Reports. As soon as available, and in any event within
forty-five (45) days after the end of each quarterly accounting period in
each fiscal year of the Borrowers, unaudited consolidated and consolidating
financial statements of the Borrowers prepared in reasonable detail and in
accordance with generally accepted accounting principles consistently applied
(except that such statements need not contain notes thereto) certified by the
chief financial officers of the Borrowers, which statements shall contain
balance sheets as of the end of such accounting period and statements of
profit and loss for the period from the beginning of such fiscal year to the
end of such accounting period. Notwithstanding the foregoing, delivery
within the period specified above of a copy of the Quarterly Report on Form
10-Q of StarMet filed with the SEC, shall be deemed to satisfy the
requirements of this Section 4.08(b) so long as the Form 10-Q contains all of
the information required by this Section 4.08(b), or, is otherwise
supplemented so that such Form, together with such supplemental information,
satisfies the requirements hereof.
(c) Monthly Reports. As soon as available, and in any event within
thirty (30) days after the end of each monthly accounting period in each
fiscal year, consolidated and consolidating unaudited financial statements of
the Borrowers prepared in reasonable detail and
14
in accordance with generally accepted accounting principles consistently
applied (except that such statements need not contain notes thereto and
except as may be otherwise required hereby) certified by their respective
chief financial officers, which statements shall contain balance sheets as of
the end of such accounting period and statements of profit and loss for the
period from the beginning of such fiscal year to the end of such accounting
period.
(d) Periodic Reports. With the monthly financial statements furnished
pursuant to subsection (c) hereof, (i) summary of all Advances and L/C's
outstanding at the end of such period, (ii) consolidated and consolidating
accounts receivable aging based on invoice date, (iii) a backlog sales
report, (iv) an updated Compliance Certificate, and (v) such other reports as
Bank shall reasonably request. With the quarterly financial statements
furnished pursuant to subsection (b) hereof, a list of the names and
addresses of the respective customers of each Borrower.
(e) Auditor's Management Letter. Promptly after receipt by any
Borrower, copies of the management letter, if any, provided by the
independent certified public accountants who audit the annual financial
statements.
(f) Public Information. Promptly, copies of all reports and financial
statements which any Borrower sends to its stockholders as a class or which
any Borrower, or any of their Subsidiaries, file with the Securities and
Exchange Commission or any other public body.
(g) Projections. At least thirty (30) days prior to the end of each
fiscal year of the Borrowers, projections for the next fiscal year indicating
the Borrowers' expected operating results (on a consolidated and
consolidating basis) and proposed capital expenditures. Such projections
shall be made on a month-by-month basis.
(h) Accounting Principles. Reports furnished under this Agreement shall
be prepared in accordance with generally accepted accounting principles
except that unaudited statements shall be subject to normal year end
adjustments and there shall be no requirement for notes thereto. Any
accounting terms not otherwise defined shall have the same meaning provided
by generally accepted accounting principles. Compliance with the covenants
set forth in this Agreement will be determined on the basis of accounting
principles used in the preparation of the Base Financial Statements. In the
event that any subsequent reports shall have been prepared in accordance with
accounting principles different than those used in the Base Financial
Statements, the Borrowers shall inform Bank of such changes in accounting
principles and shall provide to Bank, with such subsequent reports, such
supplemental reconciling financial information as may be required to
ascertain performance by the Borrowers and their Subsidiaries with the
covenants contained in this Agreement.
15
Section 4.09. Information and Inspection.
At all reasonable times and as often as Bank shall reasonably request on
one (1) day's written notice, the Borrowers will furnish to Bank from time to
time with reasonable promptness full information pertinent to any covenant,
provision or condition hereof or to any matter in connection with their
business and permit any authorized representative designated by Bank to visit
and inspect any of their properties and those of their Subsidiaries,
including their books (and to make extracts therefrom), and to discuss their
affairs, finances and accounts with their officers. The Borrowers and their
Subsidiaries, will, in addition, furnish to Bank with reasonable promptness
such financial information as Bank shall reasonably request. Without
limiting the generality of the foregoing, Bank shall be entitled to conduct
field audits of the accounts receivable and inventory of the Borrowers and
their Subsidiaries, and subject to the limitations set forth in Section 1.09
hereof, the Borrowers shall pay on demand Bank's out-of-pocket expenses and
reasonable field audit fees.
Section 4.10. Additional Advice.
The Borrowers will promptly advise Bank of (i) any material casualty loss
whether or not insured; (ii) the threat of or commencement of any material
litigation; (iii) the assertion by any governmental authority or private
party of a material violation of or material liability arising under any
environmental law; (iv) any change which constitutes or, after notice or
lapse of time or both, would constitute an Event of Default as defined in
Article V of this Agreement; and (v) each waiver, consent or amendment
granted or made with respect to instruments or agreements relating to
borrowed money in excess of $100,000 and each request by any Borrower
therefor.
Section 4.11. Payment of Bank Expenses.
The Borrowers will bear all reasonable expenses incurred by Bank in
connection with the negotiation, preparation, execution, amendment,
interpretation, administration, termination or enforcement of this Agreement
(whether or not the Credit is consummated) and the making and collection of
the Credit, including without limitation, the reasonable fees and
disbursements of Special Counsel and appraisers employed by Bank.
Section 4.12. Limitation on Indebtedness.
Neither the Borrowers nor any of their Subsidiaries will create, incur,
assume, or become, be or remain liable in any manner in respect of, or allow
to exist, any indebtedness (which term includes all indebtedness, obligations
and liabilities which in accordance with generally accepted accounting
principles would be reflected on the balance sheet of any Borrower or any of
their Subsidiaries as a liability and any negative cash balance; all
indebtedness, obligations and liabilities, whether or not assumed by any
Borrower or any of their Subsidiaries, secured by any mortgage, pledge or
lien existing on property owned by any
16
Borrower or any of their Subsidiaries; and all amounts representing rental
payments which, in accordance with generally accepted accounting principles,
would be classified as a liability on its balance sheet), except for:
(a) the Credit and any other obligations owed to Bank in connection with
this Agreement or otherwise;
(b) the obligations to Xxxxxxxx County, South Carolina and the
Massachusetts Industrial Finance Agency and Bank related to those certain
industrial revenue notes or bonds (collectively "Bonds") issued pursuant to
that certain (i) Indenture dated as of September 27, 1984 between Xxxxxxxx
County, South Carolina and Bank, and (ii) Security and Trust Agreement dated
as of June 1, 1985 ("1985 Trust Agreement") between StarMet, the
Massachusetts Industrial Finance Agency and Bank;
(c) indebtedness representing trade debt, wages, employee benefits and
similar indebtedness incurred in the ordinary course of business;
(d) indebtedness secured by liens to the extent permitted by Section
4.14;
(e) liabilities for taxes, assessments, governmental charges, liens or
claims to the extent that payment thereof is not required by Section 4.04;
(f) indebtedness in respect of final judgments for the payment of money
not in excess of $50,000 in the aggregate at any time outstanding (excluding
sums covered by insurance) which has been in force for less than the
applicable appeal period or less than sixty (60) days, whichever is sooner,
provided that such indebtedness may remain outstanding if the appropriate
Borrower or the appropriate Subsidiary at the time shall in good faith be
prosecuting an appeal, or proceedings for review or pending and in respect of
which a stay shall have been obtained pending such appeal or review;
(g) Subordinated Debt;
(h) indebtedness of any Borrower to any other Borrower, provided, that
if such indebtedness is represented by a note or other negotiable instrument,
such note or negotiable instrument shall be delivered to the Bank as
collateral under the Security Agreement;
(i) such other indebtedness of the Borrowers and their Subsidiaries
which is specifically disclosed in Exhibit 4.12 attached hereto;
17
Section 4.13. Limitation on Liability for Obligations of Others.
Neither the Borrowers nor any of their Subsidiaries will assume,
guarantee, endorse or otherwise be or become liable, contingently or
otherwise, for the obligations of any other corporation, firm or entity or
other person, except:
(a) guarantees in favor of the Bank in connection with the Bonds;
(b) for the endorsement of negotiable instruments for deposit or
collection in the normal course of its business;
(c) guarantees and other contingent liabilities which are disclosed on
Exhibit 4.13; and
(d) guarantees by any Borrower of the obligations of any other Borrower,
provided, that such obligations are permitted under Section 4.12.
Section 4.14. Limitation on Liens.
Neither the Borrowers nor any of their Subsidiaries will create, incur,
assume or allow to be created, incurred or assumed, or to exist, any pledge
of, or any mortgage, lien, charge or encumbrance of any kind on, any of its
property or assets, or subject any of such assets to prior payments of any
other indebtedness whether by subordination agreement, transfer of assets or
otherwise, or own or acquire or agree to acquire any property of any
character subject to or upon any mortgage, conditional sale agreement or
other title retention agreement except:
(a) liens in favor of Bank;
(b) any lien securing the purchase price of any fixed asset to be used
in the business of any Borrower or any of their Subsidiaries, but not any
renewal, extension or refunding of any such lien or the indebtedness secured
thereby, provided that (i) each such lien shall at all times be confined
solely to the item of property so acquired, and (ii) the aggregate
indebtedness secured by all such liens does not exceed $500,000 at any one
time or if such indebtedness so exceeds $500,000, Bank has consented in
writing in advance of the subject transaction;
(c) liens for taxes, assessments, governmental charges and levies or for
claims to the extent that payment thereof is not then required by such
Section 4.04;
(d) liens in respect of judgments which had been in force for less than
the applicable appeal period or less than sixty (60) days, whichever is
sooner, so long as execution is not levied thereunder, or in respect of which
the appropriate Borrower or the appropriate
18
Subsidiary at the time shall in good faith be prosecuting an appeal, or
proceedings for review are pending and in respect of which a stay of
execution shall have been obtained pending such appeal or review;
(e) liens on deposits made in connection with, or to secure payment of,
workmen's compensation, unemployment insurance or similar programs; liens,
charges or encumbrances imposed by law, such as carriers', warehousemen's and
mechanics' liens and similar involuntary liens arising in the ordinary course
of business which do not, individually or in the aggregate, materially
detract from the value or limit the use of any property subject thereto;
landlords' liens in respect of rent not in default; and liens on deposits
made to secure the performance of bids, appeal bonds and surety bonds; and
(f) liens and encumbrances which are disclosed on Exhibit 4.14.
Section 4.15. Sale of Accounts Receivable.
Neither the Borrowers nor any of their Subsidiaries will sell or transfer
any of its accounts receivable, whether with or without recourse.
Section 4.16. Loans and Investments.
Neither the Borrowers nor any of their Subsidiaries will purchase or
otherwise acquire or retain any stock, partnership interest, or obligations
of, or make any loans or advances to, or investments in any corporation or
other entity or person, including loans or advances to or investments in any
Borrower by StarMet other than:
(a) the present investment of StarMet in its Subsidiaries;
(b) open account transactions between the Borrowers and between
Subsidiaries in the ordinary course of business;
(c) loans or advances for reimbursable expenses to employees not
exceeding $50,000 outstanding in the aggregate at any time;
(d) obligations of the United States of America, or any agency thereof,
maturing not more than one (1) year from the date of issue thereof, provided
that Bank shall acquire a perfected first security interest in such
obligation simultaneously with its purchase or acquisition;
(e) certificates of deposit or other obligations maturing not more than
one (1) year from the date of issue thereof issued by a bank, provided that
Bank have a perfected first security interest in such obligation;
19
(f) indebtedness of any Borrower to any other Borrower permitted
pursuant to Section 4.12(h); and
(g) loans or advances by StarMet to any other Borrower.
Section 4.17. Transactions With Affiliated Persons.
Except as set forth on Exhibit 4.17, neither the Borrowers nor any of
their Subsidiaries will enter into any transaction with any Affiliate, except
on terms no less favorable to either such Borrower or any such Subsidiary
than would be available in a bona fide arm's length transaction with a
non-affiliated person or entity. "Affiliate" means any officer, director or
shareholder who owns ten percent (10%) or more of any class of securities of
StarMet or any Subsidiary of StarMet; any entity where any Borrower owns
directly or indirectly ten percent (10%) or more of any class of securities
or interest issued by such entity; or any entity that controls, is controlled
by or under common control with any Borrower or any of their Subsidiaries.
Section 4.18. Consolidation, Merger and Disposition of Assets.
Neither the Borrowers nor any of their Subsidiaries will consolidate with
or merge into or with another corporation, partnership or other entity;
directly or indirectly issue, sell, assign, pledge or otherwise encumber or
dispose of any shares of its capital stock or the capital stock of any such
Subsidiary; sell, lease or otherwise dispose of all or any material portion
of its properties or assets (other than in the ordinary course of its
business) to any firm, person or corporation; or acquire any material portion
of the properties or assets of any other corporation, partnership or entity,
whether in one or a series of related transactions, except:
(a) any Subsidiary may merge into or consolidate with its respective
parent Borrower (provided that such Borrower shall be the surviving
corporation);
(b) any Borrower may transfer equipment to any other Borrower;
(c) StarMet may issue capital stock for cash and may issue options or
warrants to any person for cash or to employees for services;
provided that in each case no Event of Default as set forth in Article V
hereof, and no condition or event which after notice or lapse of time, or
both, would constitute an Event of Default, would exist immediately after any
such transaction or series of related transactions.
Section 4.19. Changes in Business.
Neither the Borrowers nor any of their Subsidiaries will materially alter
the nature of its business.
20
Section 4.20. Debt-Tangible Capital Base.
The ratio of Debt to Tangible Capital Base of the Borrowers on a
consolidated basis shall not exceed at any time 1.20 to 1.0.
"Debt" shall mean the sum of consolidated liabilities (including all
liabilities to Bank), both short-term and long-term, of the Borrowers and all
of their Subsidiaries, but excluding stockholders equity and Subordinated
Debt.
"Subordinated Debt" means the outstanding principal amount of any debt of
any Borrower which is subordinated to the obligations of the Borrowers to
Bank in form and substance satisfactory to Bank and its Special Counsel.
"Tangible Assets" shall mean the consolidated assets of the Borrowers and
all Subsidiaries, less intangible assets such as goodwill, organization
expenses, patents, trademarks, copyrights, research and development costs,
training costs, unamortized debt discount and similar items deemed to be
intangible by Bank.
"Tangible Capital Base" shall mean Tangible Assets, less Debt, plus
Subordinated Debt.
Section 4.21. Tangible Capital Base.
The Tangible Capital Base of the Borrowers shall be not less than
$25,000,000 at any time.
Section 4.22. Net Income.
The Net Income of the Borrowers for the periods set forth below shall not
be less than the amounts set forth opposite such periods:
Period Net Income
------ ----------
each consecutive three month period $300,000
"Net Income" shall mean the consolidated net income of the Borrowers before
interest and taxes.
Section 4.23. Capital Expenditure.
In any fiscal year, unless Bank otherwise consents in writing, the
Borrowers and their Subsidiaries on a consolidated basis shall not make or
incur expenditures which are properly
21
chargeable to capital account under generally accepted accounting principles
(including leases which are capitalized) in an aggregate amount in excess of
$1,000,000.
Section 4.24. Restricted Payments.
Neither the Borrowers nor any of their Subsidiaries will, directly or
indirectly, declare, order, pay or make any Restricted Payment (as
hereinafter defined), except the Borrowers may prior to the occurrence of an
Event of Default or an event which with notice or the passage of time will
constitute an Event of Default, and provided that such Restricted Payment
will not constitute an Event of Default or such an event:
(a) declare and pay dividends on its Stock payable solely in Stock;
(b) make exchanges of one or more classes of Stock provided that no cash
or other property is distributed in such exchange; or
(c) retire Stock out of the net proceeds of the simultaneous sale of
other Stock; and
(d) pay principal and interest on Subordinated Debt to extent permitted
by Bank pursuant to a subordination agreement or agreements in form and
substance satisfactory to Bank.
For the purposes of this Section 4.24, the following terms shall have the
following respective meanings:
(i) Restricted Payments shall mean:
(a) any payment or declaration of any dividend on any class of Stock
of StarMet or any other distribution on account of any class of
Stock;
(b) any redemption, purchase or other acquisition by StarMet,
directly or indirectly, of any shares of its Stock; and
(c) any payments of principal or interest made by any Borrower in
respect of any Subordinated Debt.
(ii) "Stock" shall mean capital stock and warrants or options to purchase
stock.
Section 4.25. Restriction on Use of Proceeds.
None of the proceeds of the Credit shall be used by the Borrowers to
purchase commodities except for use in the ordinary course of the Borrowers'
business or for the purpose of purchasing or carrying, or refinancing any
borrowing the proceeds of which were
22
used to purchase or carry any "margin securities" within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System.
Section 4.26. Controlling Interest.
StarMet will at all times own 100% of the issued and outstanding capital
stock or membership interests, as appropriate, of each of the Borrowers.
Section 4.27. Bank Accounts.
The Borrowers shall maintain at all times their principal operating
accounts with Bank and other operating accounts with other banks approved by
Bank. A complete list of all existing banks, mutual fund, brokerage or other
accounts containing cash, cash equivalents or marketable securities for the
Borrowers and all of their Subsidiaries is set forth on Exhibit 4.27.
Neither the Borrowers nor any of their Subsidiaries will open any further
account of the type required to be listed on Exhibit 4.27 without prior
notice in writing to Bank.
Section 4.28. Further Security.
The Borrowers agree to provide Bank with such security interest or liens
as Bank may hereafter reasonably request with respect to their assets or
assets of any of their Subsidiaries.
Section 4.29. Fiscal Year.
The Borrowers shall (a) maintain the same fiscal year end, and (b) not
change such fiscal year end without prior written consent of Bank.
Section 4.30. Amendments to Documents.
No Borrower shall agree to any amendment or modification to any
instrument or agreement executed by any Borrower in connection with any
Subordinated Debt or any of the Bonds, nor shall any Borrower request, or
consent to, any waiver of any provision contained in any of the foregoing.
ARTICLE V. EVENTS OF DEFAULT.
If, while any part of the principal of or interest on the Credit remains
unpaid or while this Agreement shall be in effect, any one of the following
"Event of Default" shall occur:
(a) nonpayment of principal of the Revolving Credit when due;
23
(b) failure to pay any Advances in excess of the Maximum Credit as
required by Section 1.02(b);
(c) failure to pay any amounts due with respect to letters of credit
issued by Bank when due;
(d) nonpayment of interest on the Advances when due;
(e) any Borrower shall (i) apply for or consent to the appointment of a
receiver, trustee or liquidator of it or of all or a substantial part of its
assets; (ii) admit in writing its inability to pay its debts as they mature;
(iii) make a general assignment for the benefit of creditors; (iv) be
adjudicated a bankrupt or insolvent; (v) file a voluntary petition in
bankruptcy or a petition or an answer seeking reorganization or an
arrangement with creditors to take advantage of any insolvency law; (vi) file
any answer admitting the material allegations of a petition filed against it
in any bankruptcy, reorganization or insolvency proceeding or fail to dismiss
such petition within thirty (30) days after the filing thereof; or (vii) take
any corporate action for the purpose of effecting any of the foregoing;
(f) an order, judgment or decree shall be entered, without the
application, approval or consent of any Borrower by any court of competent
jurisdiction, approving a petition seeking reorganization or liquidation of
such Borrower or appointing a receiver, trustee or liquidator of any Borrower
or of all or a substantial part of its assets;
(g) any representation or warranty made by the Borrowers herein or
hereunder or in any certificate, document or instrument furnished pursuant
hereto shall prove to have been false or incorrect in any material respect
when made;
(h) default by the Company in the performance of any covenant or
agreement contained in Sections 4.01 through 4.19 or Sections 4.23 through
4.30;
(i) except as otherwise set forth herein, default by the Company in the
performance of any other covenant or agreement contained herein or in any
document or instrument required hereby or incidental or collateral hereto
which shall not have been remedied within thirty (30) days after written
notice thereof shall have been given to the Borrowers by Bank;
(j) default by any Borrower in the performance of any covenant or
agreement contained in any other agreement to which it is a party or by which
it is bound involving a liability in excess of $100,000 which shall not be
remedied within the period of time (if any) within which such other agreement
permits such default to be remedied without the consent or waiver of the
other party thereto, unless such default is waived or excused as a matter of
law;
(k) failure by any Borrower to make any payment of principal or interest
beyond the period of grace contained in the respective instrument or
agreement evidencing any
24
indebtedness for money borrowed in excess of $100,000 to which it is a party
or by which it may be bound (unless such default is the result of a good
faith dispute arising under such agreement or instrument), or default by any
Borrower in the performance of any other covenant or agreement contained in
any such agreement or instrument which results in the acceleration of the
maturity of any indebtedness to others of such Borrower under such agreement
or instrument;
(l) default by any Borrower in the performance of any covenant or
agreement contained in the Security Agreement or other documents in favor of
Bank executed in connection with this Agreement which continues beyond any
grace period provided therein;
(m) all or any substantial part of the property of any Borrower shall be
condemned, seized or otherwise appropriated by any governmental authority or
any officer or instrumentally thereof;
(n) a judgment or judgments for the payment of money in excess of the
sum of $100,000 in the aggregate (not covered by insurance) shall be rendered
against any Borrower and such judgment or judgments shall remain unsatisfied
and in effect for any period of sixty (60) days without a stay of execution;
(o) there shall occur any material adverse change in the financial
condition of any Borrower;
(p) (i) Xxxxxx Xxxxxxxx shall cease, for any reason, to be the Chairman
and Chief Executive Officer of StarMet and a successor to Xx. Xxxxxxxx
reasonably satisfactory to Bank, shall not have become Chairman and Chief
Executive Officer within ninety (90) days of the date of cessation, or (ii)
Xxxxxx Xxxxx shall cease, for any reason, to be the President of StarMet and
a successor to Xx. Xxxxx reasonably satisfactory to Bank, shall not have
become President within ninety (90) days of the date of cessation, provided,
however, that in either event, an Event of Default shall not arise until
sixty (60) days after Bank has given the Borrowers written notice thereof;
then and in every such event, while such event shall be continuing, Bank may,
by written notice to the Borrowers, declare the Credit (and any Notes issued)
to be forthwith due and payable, whereupon the Credit shall forthwith become
due and payable and the right to borrow hereunder shall terminate; provided,
however, that upon the happening of any event under Subsections (e) or (f) of
this Article V, then the Credit shall, without the taking of any action by
Bank, immediately become due and payable and the right to borrow hereunder
shall immediately terminate.
ARTICLE VI. MISCELLANEOUS.
25
Section 6.01. Term of Agreement.
This Agreement shall terminate whenever all of the following conditions
shall have been met: (i) all principal of and interest of the Credit and all
other amounts due and payable under this Agreement have been paid and
discharged in full, (ii) all letters of credit or other financial
accommodation provided by Bank shall have been terminated or an indemnity
provided in a form acceptable to Bank, (iii) the Borrowers shall have
provided indemnity by cash or other collateral satisfactory to Bank for any
projected fees, expenses and other contingent liabilities, and (iv) the
Borrowers shall have no further right to borrow under the Credit.
Section 6.02. Indemnity.
The Borrowers agree to indemnify and hold harmless Bank and each of their
directors, officers, agents, employees and counsel, from and against any and
all losses, claims, damages, liabilities or expenses imposed on or incurred
by any of them in connection with the lending relationship reflected in this
Agreement except as a result of such indemnified parties' negligence or
willful misconduct. This indemnity shall survive termination of the
Agreement.
Section 6.03. Consent to Jurisdiction.
Each Borrower irrevocably consents and submits to the non-exclusive
jurisdiction of the Superior Court in the Commonwealth of Massachusetts and
the United States District Court for the Eastern District of Massachusetts in
connection with any action, proceeding or claim arising out of or relating to
this Agreement or other document executed in connection with this Agreement.
In any such litigation, each Borrower waives personal service and agrees that
service may be made in the manner specified for Notices under this Agreement.
Section 6.04. Waiver of Jury Trial.
Each Borrower waives trial by jury in any action or proceeding of any
kind arising out of or relating to this Agreement or other document executed
in connection with this Agreement.
Section 6.05. Notices.
Except as otherwise specifically provided in this Agreement, all notices
hereunder shall be deemed to have been given when delivered in person or, if
mailed, when actually received by the party to whom addressed; provided,
however, that any written notice given pursuant to Article V hereof shall be
deemed to be effective when mailed, so long as such notice is mailed by
registered or certified mail, addressed
26
to any party at its address set forth below or at any other address notified
in writing to the other parties hereto. Actual receipt shall be conclusively
presumed if such notice shall be mailed by registered or certified mail,
addressed to any party at its address set forth below or at any other address
notified in writing to the other parties hereto by notice pursuant to this
Section, and if the sender shall have received back a return receipt.
To Bank: State Street Bank and Trust Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx XX
With a copy to: Xxxxxxx, Procter & Xxxx XXX
Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxx X. Xxxxxxxxx, P.C.
To the Borrowers: c/o StarMet Corporation
0000 Xxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx
With a copy to: Peabody & Xxxxxx
00 Xxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Section 6.06. No Waiver.
No failure to exercise, and no delay in exercising, on the part of Bank,
any right, power or privilege hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. The rights and remedies herein provided
are cumulative and not exclusive of any rights or remedies provided by law.
Section 6.07. Setoff.
Any sums due from Bank to any Borrower, any property in the possession of
Bank and any balance in the Borrower's accounts with Bank may be held and
treated as collateral security for the payment of the obligations of the
Borrowers to Bank and, after the occurrence of an Event of Default, may be
applied to the payment of such obligations regardless of the adequacy of
other collateral. Any sums due from any financing institution that may
participate in the Credit or property of the Borrowers in the possession of
such institution may be held as collateral security for the payment of the
obligations of the Borrowers to Bank as if such institution had extended the
Credit directly to the Borrowers and, after the occurrence of an
27
Event of Default, may be applied to the payment of such obligations
regardless of the adequacy of other collateral.
Section 6.08. Construction.
This Agreement shall be deemed to be a contract made under the laws of
the Commonwealth of Massachusetts, and shall be construed in accordance with
the laws of the Commonwealth of Massachusetts. The descriptive headings of
the several Sections hereof are for convenience only and shall not control or
affect the meaning or construction of any of the provisions hereof.
Section 6.09. Amendments, Waivers and Consents.
Compliance by the Borrowers with any term, covenant or condition of this
Agreement may be omitted or waived (either generally or in a particular
instance and either retroactively or prospectively) only by a consent or
consents in writing signed by Bank.
Section 6.10. Counterparts.
This Agreement may be executed in any number of counterparts which
together shall constitute one Agreement.
Section 6.11. Joint and Several Obligations.
The obligations of the Borrowers hereunder and under any agreement or
instrument executed in connection herewith, including the Notes, shall be
joint and several; provided, however, that the obligations of any Borrower
shall be limited to the maximum amount that can be incurred without rendering
such liability void under applicable law.
Section 6.12. Prior Facilities.
The Credit is in substitution for the $6,550,000 line of credit facility
that was previously made available by Bank to StarMet and CMI under the
Original Credit Agreement and each of the Borrowers and Bank acknowledge and
agree that all rights and claims under or relating to the Original Credit
Agreement have been terminated and waived and (i) Bank has no further
obligations to StarMet and CMI thereunder, and (ii) StarMet and CMI have no
further obligations to Bank thereunder, provided, however, that Section 6.02
of the Original Credit Agreement shall survive termination of the Original
Credit Agreement and nothing in this Section 6.12 shall be deemed a waiver by
the Bank of its rights and claims under Section 6.02 of the Original Credit
Agreement.
Section 6.13. Guarantees.
28
Each Borrower irrevocably and unconditionally guarantees the payment and
performance of the obligations to Bank of the other Borrower under, arising
from or relating to any L/C which is outstanding as of the date hereof and
each of the Borrowers, other than StarMet, guarantees the payment and
performance of the obligations of StarMet to Bank under, arising from or
relating to the Bonds issued in connection with the 1985 Trust Agreement,
including without limitation, any guaranty of such Bonds by StarMet in favor
of Bank. The above guarantees are of payment and not collection.
Section 6.14. Confidentiality, etc.
The Bank agrees to use reasonable precautions to keep confidential, in
accordance with safe and sound banking practices, any non-public information
supplied to it by the Borrowers pursuant to this Agreement which is
identified by the Borrowers as being confidential at the time the same is
delivered to the Bank, provided that nothing herein shall limit the
disclosure of any such information (i) to the extent required by statute,
rule, regulation or judicial process, (ii) to counsel for the Bank, (iii) to
bank examiners, auditors or accountants, (iv) in connection with any
litigation to which the Bank is a party, (v) to any assignee or participant
(or prospective assignee or participant) so long as such assignee or
participant (or prospective assignee or participant) first executes and
delivers to the respective Bank a confidentiality agreement, or (vi) to the
extent it subsequently becomes public. The Bank may assign or sell
participations in, all or any part of the Credit to another bank or other
entity.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal as of the date first above written.
STARMET CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President Finance
STARMET POWDERS, LLC
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Treasurer
29
STARMET AEROCAST, LLC
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Treasurer
STARMET COMCAST, LLC
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Treasurer
STARMET NMI CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Treasurer
STARMET CMI CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Treasurer
STARMET HOLDINGS CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Treasurer
30
NMI FOREIGN SALES CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Treasurer
STATE STREET BANK AND TRUST
COMPANY
By: /s/ Xxxxxxx X. Xxxxx XX
---------------------------------
Name: Xxxxxxx X. Xxxxx XX
Title: Vice President
31
Exhibit 2.02
Subsidiaries
None.
32
Exhibit 2.06
Litigation
No pending or threatened litigation.
33
Exhibit 2.07
Title
None.
34
Exhibit 2.08
Tax Returns and Payments
StarMet is not currently being audited by the Internal Revenue Service or any
other taxing authority. StarMet was audited for fiscal years ended 1993 and
1994. StarMet was also previously audited by the Internal Revenue Service
for the fiscal years ended 1989, 1990, 1991 and 1992.
35
Exhibit 2.10
Pension Matters
None.
36
Exhibit 2.11
Environmental Matters
StarMet is named as a Potentially Responsible Party (PRP) in regard to the
Xxxxx Flats, Kentucky, Superfund Site.
StarMet has received a notice of responsibility letter from the state of
Massachusetts in regards to a closed holding basin facility on its property
in Concord, Massachusetts. The basin facility and the Concord property have
been classified as a priority disposal site, requiring remediation. StarMet
has entered into a contract with Zhargrus Environmental, Inc. for the
disposal of any hazardous waste at the basin facility.
As part of the five-year relicensing process under the federal Nuclear
Regulatory Commission (NRC), StarMet was reissued NRC licenses for both the
Concord and Barnwell facilities. The relicensing program is now being
administered in Massachusetts by the Massachusetts Department of Public
Health ("DPH"), and in the State of South Carolina by the South Carolina
Department of Health and Environmental Control ("DHEC"). StarMet has
approached both DPH and DHEC regarding (i) the transfer of the Concord
license to StarMet NMI Corporation and (ii) changing the name of the Barnwell
license to reflect CMI's change of name.
StarMet has had ongoing discussions with the these agencies regarding
Decontamination and Decommissioning funding and financial assurance plans. At
present, StarMet has posted letters of credit with each of DPH and DHEC in
the respective amounts of (i) $750,000 for DPH and (ii) $2,800,000 and
$73,024 for DHEC as security for Decontamination and Decommissioning expenses.
37
Exhibit 2.13
Credit Agreements
- $3,200,000 Xxxxxxxx County, South Carolina Industrial Development Revenue
Note, September 27, 1984 (Carolina Metals, Inc.) (the "CMI IRB")
- $500,000.00 Palmetto Federal Savings Bank of South Carolina, November 29,
1995, and a separate letter of credit in the amount of $73,024 (Carolina
Metals as Obligor and StarMet as Guarantor) (collectively, the "Palmetto
Loan")
- StarMet Corporation has issued subordinated debentures to the following
individuals (collectively, the "Debentures"):
Date of Maturity
Name Issue Date Amount
---- ------- -------- ------
Xxxxxx Xxxxxx 12-Jan-96 30-Sep-98 $ 83,500
WIAF Investors 12-Jan-96 30-Sep-98 334,000
Xxxxxx Xxxxxxxx 12-Jan-96 30-Sep-98 83,000
Xxxxxxxx Xxxxxx 18-Sep-96 30-Sep-98 25,000
Xxxxxxx Xxxxxx 18-Sep-96 30-Sep-98 225,000
Xxxxx Xxxxxx 18-Sep-96 30-Sep-98 100,000
Xxxxx Xxxxxx 09-Sep-97 22-Sep-00 500,000
------------
$ 1,350,500
------------
------------
38
Exhibit 2.14
Leases and Options to Purchase
ALCO Capital Purchase Order #100717 $76,260.00 06/22/94 5 yr lease
RESOURCE INC.
AT&T Equipment Lease #0004721 $77,101.91 05/13/97 5 yr lease
IKON Purchase Order #100990 $129,000.00 12/30/96 5 yr lease
39
Exhibit 2.15
Real Estate Owned
- Concord, MA - Approximately 46.4 acres of land with a steel and masonry
building which contains approximately 180,000 square feet, owned by StarMet
NMI Corporation.
- Barnwell, SC - Approximately 321 acres of land with a 109,000 square foot
facility that contains two manufacturing units owned by StarMet CMI
Corporation ("CMI"). Adjacent to the manufacturing facility is a 70,000
square DU Recycle Technology Center.
40
Exhibit 4.12(i)
Permitted Indebtedness
1. The Palmetto Loan.
2. The Debentures.
41
Exhibit 4.13
Permitted Liability for Obligations of Others
1. CMI is the obliger and NMI is the guarantor under the Palmetto Loan.
42
Exhibit 4.14
Permitted Liens
Limitations on Liens
1. The CMI IRB is secured by a lien on the South Carolina real property.
2. The Palmetto Loan is secured by a lien on CMI's assets subordinated to the
CMI IRB lien and is subject to an Amended and Restated Subordination and
Inter Creditor Agreement by and among Palmetto, CMI, StarMet and Bank dated
April __, 1996.
43
Exhibit 4.17
Transactions with Affiliates
StarMet expects to license or assign various intellectual property that it
owns to its operating subsidiaries.
44
Exhibit 4.27
Bank Accounts
Bank Account #
---- ---------
BankBoston 000-000-0
BankBoston 0000-000-0
BankBoston 000-000-0
BankBoston 211-4624427
Xxxx'x National Bank 00-000-000
Fidelity Investments 0059-00080342702
Fidelity Investments 349797399
Xxxxxx National Bank 20655
Palmetto Federal Savings Bank 803304925
Palmetto Federal Savings Bank 803304918
45
Exhibit 2.01
Corporate Existence and Power
FSC is not in good standing in the U.S. Virgin Islands.
46
