1
SECOND AMENDMENT TO FORBEARANCE AGREEMENT AND AMENDMENT
-------------------------------------------------------
This Second Amendment to Forbearance Agreement and Amendment is entered
into as of June 4, 1997 by and between
BankBoston, N.A., formerly known as The First National Bank of Boston
(hereinafter, the "BANK"), a national banking association, having a
principal place of business at 100 Federal Street, Boston, Massachusetts;
BancBoston Leasing Inc. (hereinafter, "BBL"), a Massachusetts corporation
having a principal place of business at 100 Federal Street, Boston,
Massachusetts;
Centennial Technologies, Inc. (hereinafter, the "BORROWER"), a corporation
organized under the laws of the State of Delaware, having a principal place
of business at 37 Manning Road, Billerica, Massachusetts;
NCT, Inc. (hereinafter, "NCT"), a corporation organized under the laws of
the Commonwealth of Massachusetts, having a principal place of business at
37 Manning Road, Billerica, Massachusetts;
Century Electronics Manufacturing, Inc. (f/k/a Century Industries, Inc.)
(hereinafter, "CENTURY"), a corporation organized under the laws of the
State of Delaware, having a principal place of business at 37 Manning Road,
Billerica, Massachusetts; and
Design Circuits, Inc. (hereinafter "DCI"), a corporation organized under
the laws of the Commonwealth of Massachusetts, having a principal place of
business at 374 Turnpike Road, Southborough, Massachusetts
in consideration of the mutual covenants herein contained and
benefits to be derived herefrom.
WITNESSETH:
-----------
1. BACKGROUND. On March 18, 1997, the Bank, BBL, and the Obligors entered
into a certain Forbearance Agreement and Amendment with respect to the
Obligors' obligations under the Loan Agreement, their respective
Guaranties and the Master Lease Agreement, which Forbearance Agreement
and Amendment was amended by a First Amendment to Forbearance
Agreement dated as of April 18, 1997 (collectively, the "ORIGINAL
AGREEMENT"). The Bank, BBL and the Obligors desire to modify the
Original Agreement on the terms set forth herein.
2
2. DEFINITIONS. All capitalized terms used herein and not otherwise
defined shall have the same meaning herein as in the Original
Agreement.
3. OUTSTANDING OBLIGATIONS.
-----------------------
(a) The Borrower and each of the Guarantors (individually, each an
"OBLIGOR" and collectively, the "OBLIGORS") acknowledge and agree
that they are jointly and severally obligated to the Bank to pay
the Obligations and that as of June 4, 1997, the Obligations
consist of:
Principal: $6,002,415.27
Interest through June 4, 1997: $ 6,393.83
plus interest hereafter accruing, costs, and expenses, including,
without limitation, reasonable attorneys' fees, consultants' fees, and
commercial finance examination fees.
(b) The Borrower acknowledges and agrees that SCHEDULE 1 hereto
accurately reflects the original cost of the property subject to
the Master Lease Agreement and schedules thereto, which is
presently owned by BBL.
(c) The Obligors further acknowledge and agree that none of them have
any offsets, defenses, or counterclaims (i) against the Bank with
respect to the Loan Agreement, the Guaranties , the other Loan
Documents, or otherwise, or (ii) against BBL with respect to the
Master Lease Agreement, or otherwise, and to the extent that any
such offsets, defenses or counterclaims may exist, the Obligors
each hereby WAIVE and RELEASE same. The Obligors shall execute
and deliver to the Bank and BBL such releases as the Bank or BBL
may request to confirm the foregoing.
(d) The Obligors each ratify and confirm that their respective
obligations to the Bank (as modified hereby), including, without
limitation, those under the Loan Agreement and the Guaranties,
are secured by the Collateral and the Guarantor Assets.
(e) The Borrower ratifies and confirms that its obligations to BBL
are secured by the Collateral.
4. AMENDMENTS TO LOAN DOCUMENTS. From and after the date hereof, the Loan
Documents are hereby amended as
2
3
follows (which amendment shall survive the expiration of the
Forbearance Period):
(a) Section 1.1 of the Loan Agreement is hereby amended by deleting
the definition of "Borrowing Base" in its entirety and
substituting the following in its stead:
BORROWING BASE. ON ANY DATE OF DETERMINATION THEREOF, THE LESSER
OF
(a) $6,800,000, MINUS THE AGGREGATE FACE AMOUNT OF ALL
OUTSTANDING LETTERS OF CREDIT, IN THE AMOUNTS ORIGINALLY ISSUED
OR AS REDUCED PURSUANT TO THEIR TERMS, WHICH ARE EITHER
OUTSTANDING OR WHICH HAVE BEEN DRAWN AND PAID BY THE BANK BUT NOT
REIMBURSED BY THE BORROWER, OR
(b) THE SUM OF (I) 80% OF ELIGIBLE ACCOUNTS AND (II) THE LESSER
OF (A) 35% OF ELIGIBLE INVENTORY AND (B) $5,500,000 (OR SUCH
LESSER PERCENTAGES OR AMOUNTS AS THE BANK MAY IN ITS REASONABLE
DISCRETION, DETERMINE FROM TIME TO TIME UPON THIRTY DAYS WRITTEN
NOTICE TO THE BORROWER), MINUS THE SUM OF (I) $2,000,000 AND (II)
THE AGGREGATE FACE AMOUNT OF ALL OUTSTANDING LETTERS OF CREDIT,
IN THE AMOUNTS ORIGINALLY ISSUED OR AS REDUCED PURSUANT TO THEIR
TERMS, WHICH ARE EITHER OUTSTANDING OR WHICH HAVE BEEN DRAWN AND
PAID BY THE BANK BUT NOT REIMBURSED BY THE BORROWER.
(b) Section 1.1 of the Loan Agreement is hereby amended by deleting
the definition of "Maximum Commitment" in its entirety and
substituting the following in its stead:
MAXIMUM COMMITMENT. $6,800,000 OR ANY LESSER AMOUNT, INCLUDING
ZERO, RESULTING FROM A TERMINATION OR REDUCTION OF SUCH AMOUNT IN
ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.
5. CONSENT TO INTERCOMPANY INDEBTEDNESS. The Borrower has loaned the sum
of approximately $673,000 to its subsidiary, ITP, Inc. in connection
with the settlement of a suit commenced by Hamby Hutcheson. The making
of such loan without the consent of the Bank would constitute an
additional Event of Default and Termination Event. The Bank hereby
consents to such intercompany loan and waives any Event of Default
and/or Termination Event arising therefrom.
6. GENERAL.
--------
(a) This Agreement shall be binding upon each Obligor and such
Obligor's successors, and assigns and shall enure to the benefit
of BBL, the Bank and
3
4
BBL's and the Bank's successors and assigns. In the event that
BBL or the Bank assigns or transfers its rights under this
Agreement, the assignee shall thereupon succeed to and become
vested with all rights, powers, privileges, and duties of BBL or
the Bank hereunder and BBL or the Bank shall thereupon be
discharged and relieved from its duties and obligations
hereunder.
Any determination that any provision of this Agreement or any
application thereof is invalid, illegal, or unenforceable in any
respect in any instance shall not affect the validity, legality,
or enforceability of such provision in any other instance, or the
validity, legality, or enforceability of any other provision of
this Agreement.
(c) No delay or omission by BBL or the Bank in exercising or
enforcing any of BBL's or the Bank's rights and remedies shall
operate as, or constitute, a waiver thereof. No waiver by BBL or
the Bank of any of BBL's or the Bank's rights and remedies on any
one occasion shall be deemed a waiver on any subsequent occasion,
nor shall it be deemed a continuing waiver.
(d) This Agreement and all other documents, instruments, and
agreements executed in connection herewith incorporate all
discussions and negotiations between the Obligors, BBL and the
Bank, either express or implied, concerning the matters included
herein and in such other instruments, any custom, usage, or
course of dealings to the contrary notwithstanding. No such
discussions, negotiations, custom, usage, or course of dealings
shall limit, modify, or otherwise affect the provisions hereof.
No modification, amendment, or waiver of any provision of this
Agreement or of any provision of any other agreement between any
Obligor and BBL or the Bank shall be effective unless executed in
writing by the party to be charged with such modification,
amendment and waiver, and if such party be BBL or the Bank, then
by a duly authorized officer thereof.
(e) Except as modified hereby, all terms and conditions of the
Original Agreement, the Master Lease Agreement, Loan Agreement,
the Guaranties, and other Loan Documents remain in full force and
effect. Without limiting the foregoing, the parties acknowledge
that the Forbearance Period
4
5
will expire, unless sooner terminated, on June 30, 1997. Except
as specifically provided in Paragraph 5 hereof, the Bank and BBL
are not hereby waiving any Defaults, Events of Default or rights
and remedies which exist under the Master Lease Agreement or the
Loan Documents and the Bank and BBL reserve the right upon
expiration of the Forbearance Period to undertake such action as
a result of such Defaults and Events of Default as the Bank or
BBL may determine. In particular, without limiting the generality
of the foregoing, the Bank and BBL have not waived any Defaults
or Events of Default, or the respective rights and remedies of
the Bank and/or BBL arising as a result thereof, which may have
occurred as a result of any misrepresentation made by or on
behalf of any one or more of the Obligors.
(f) This Agreement and all rights and obligations hereunder,
including matters of construction, validity, and performance,
shall be governed by the laws of The Commonwealth of
Massachusetts. The Obligors each submit to the jurisdiction of
the Courts of said Commonwealth for all purposes with respect to
this Agreement and the Obligors' relationship with the Bank and
BBL.
(g) Each Obligor makes the following waiver knowingly, voluntarily,
and intentionally, and understands that the Bank and BBL, in
entering into the within Forbearance Agreement, is relying
thereon. EACH OBLIGOR, TO THE EXTENT OTHERWISE ENTITLED THERETO,
HEREBY IRREVOCABLY WAIVES ANY PRESENT OR FUTURE RIGHT OF THAT
OBLIGOR TO A JURY IN ANY TRIAL OF ANY CASE OR CONTROVERSY IN
WHICH THE BANK OR BBL IS OR BECOMES A PARTY (WHETHER SUCH CASE OR
CONTROVERSY IS INITIATED BY OR AGAINST THE BANK OR BBL OR IN
WHICH THE BANK OR BBL IS JOINED AS A PARTY LITIGANT), WHICH CASE
OR CONTROVERSY ARISES OUT OF, OR IS IN RESPECT OF, ANY
RELATIONSHIP BETWEEN THE BORROWER OR ANY SUCH PERSON AND THE BANK
OR BBL.
(h) Each Obligor shall execute such instruments and documents as BBL
and the Bank may from time to time request in connection with the
Master Lease Agreement, Loan Agreement, the Guaranties, the Loan
Documents, the within Agreement and the arrangements contemplated
hereby.
5
6
It is intended that this Agreement take effect as a sealed instrument.
CENTENNIAL TECHNOLOGIES, INC. DESIGN CIRCUITS, INC.
By: /s/ Eugene M. Bullis By: /s/ Donald R. Peck
---------------------------------- -------------------------------------
Print Name: Eugene M. Bullis Print Name: Donald R. Peck
-------------------------- ----------------------------
Title: Chief Financial Officer Title: Treasurer and Clerk
------------------------------- ----------------------------------
CENTURY ELECTRONICS NCT, INC.
MANUFACTURING, INC.
By: /s/ Donald R. Peck By: /s/ Donald R. Peck
---------------------------------- --------------------------------------
Print Name: Donald R. Peck Print Name: Donald R. Peck
-------------------------- ----------------------------
Title: Secretary and Treasurer Title: President
------------------------------- ----------------------------------
AGREED AND ACCEPTED BY:
BANKBOSTON, N.a. f/k/a
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Ron R. Ferguson
----------------------------------
Print Name: Ron R. Ferguson
--------------------------
Title: Vice President
-------------------------------
BANCBOSTON LEASING INC.
By: /s/ Ron R. Ferguson
----------------------------------
Print Name: Ron R. Ferguson
--------------------------
Title: Vice President
-------------------------------
6
7
SCHEDULE 1 TO FORBEARANCE AGREEMENT AND AMENDMENT
-------------------------------------------------
Equipment Schedule No. 9
Total Cost - $795,777.32