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THIRD AMENDMENT TO FORBEARANCE AGREEMENT AND AMENDMENT
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This Third Amendment to Forbearance Agreement and Amendment is entered into
as of June 26, 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 7 Lopez Road, Wilmington, Massachusetts;
NCT, Inc. (hereinafter, "NCT"), a corporation organized under the laws of
the Commonwealth of Massachusetts, having a principal place of business at
7 Lopez Road, Wilmington, 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 7 Lopez Road,
Wilmington, 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:
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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 and a Second Amendment to
Forbearance Agreement dated June 4, t997 (collectively, the "ORIGINAL
AGREEMENT"). The Bank, BBL and the Obligors desire to modify the
Original Agreement on the terms set forth herein.
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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.
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(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 , 1997, the Obligations
consist of:
Principal: $4,748,796.27
Interest through June 26, 1997: $ 36,072.33
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 suck releases as the Bank or BBL
may request tO confirm the foregoing.
(d) The Obligers 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.
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4. FORBEARANCE BY BANK. The provisions of Section 4 of the Original
Agreement are hereby amended by deleting the date June 30, 1997
appearing in clause (i) and substituting the date July 31, 1997 in its
stead.
5. AMENDMENTS TO LOAN DOCUMENTS. From and after the date hereof, the Loan
Documents are hereby amended as follows (which amendment shall survive
the expiration of the Forbearance Period):
(a) Section 1.i 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) $2,000,000, 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) $2,000,000 (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. $2,000,000 OR ANY LESSER AMOUNT, INCLUDING
ZERO, RESULTING FROM A TERMINATION OR REDUCTION OF SUCH AMOUT IN
ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.
(c) Section 1.1 of the Loan Agreement is hereby amended by deleting
clauses (ii) and (iii) of the definition of "Subsidiary
Guarantees" in their entirety.
(d) Section 1.1 of :he Loan Agreement is hereby amended by deleting
clauses (ii) and (iii) of the
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definition of "Subsidiary Security Agreements" in their entirety.
(e) Section 1.1 of the Loan Agreement is hereby amended by deleting
the definition of "Subsidiary Stock Pledge Agreement" in its
entirety.
(f) Section 1.1 of the Loan Agreement is hereby amended by deleting
the definition of "U.K. Security Documents" in its entirety.
(g) The Loan Agreement is hereby amended by deleting Section 2.7 in
its entirety and substituting the following in its stead:
52.7 INTEREST RATE AND PAYMENT OF INTEREST . SO LONG AS EVENT OF
DEFAULT IS CONTINUING, EACH BASE RATE LOAN SHALL BEAR INTEREST
FOR THE PERIOD COMMENCING WITH THE DRAWDOWN DATE THEREOF AND
ENDING ON THE LAST DAY OF THE INTEREST PERIOD WITH RESPECT
THERETO AT A RATE PER ANNUM EQUAL TO THE AGGREGATE OF THE BASE
RATE AND THREE PERCENT (3%). AT THE OPTION OF THE BANK, AFTER THE
OCCURRENCE OF AN EVENT OF DEFAULT, AMOUNTS PAYABLE UNDER ANY OF
THE LOAN DOCUMENTS SHALL BEAR INTEREST (COMPOUNDED MONTHLY AND
PAYABLE ON DEMAND IN RESPECT OF OVERDUE AMOUNTS) AT A RATE PER
ANNUM WHICH IS EQUAL THE AGGREGATE OF THE BASE RATE AND FIVE
PERCENT (5%) UNTIL SUCH AMOUNT IS PAID IN FULL OR (AS THE CASE
MAY BE) SUCH EVENT OF DEFAULT HAS BEEN CURED OR WAIVED IN WRITING
BY THE BANK (AFTER AS WELL AS BEFORE JUDGMENT).
The Bank agrees that the foregoing default rate is not presently in
effect and shall not be charged until the earlier of (i) the
occurrence of any Termination Event, or (ii) the expiration of The
Forbearance Period, for periods following such event.
(h) Section 6.9 of the Loan Agreement is hereby amended by adding the
following clause at the end of clause (iii) thereof:
AND (IV) INVESTMENTS CONSISTING OF LOANS TO ITS SUBSIDIARY, ITP,
IN AN AMOUNT NOT TO EXCEED $673,000, PLUS THE LESSER OF (A)
$50,000 PER WEEK, COMMENCING WITH THE WEEK ENDING JUNE 27, 1997,
OR (B) $200,000 IN THE AGGREGATE.
6. RELEASE OF CERTAIN GUARANTOR'S ASSETS.
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Contemporaneously herewith, DCI is entering into a financing
arrangement with Congress Financial, the proceeds of which shall be
utilized, in part, to repay indebtedness due from DCI to the Borrower
and to purchase certain of the equipment leased by BBL to the Borrower
and utilized by DCI. A portion of the
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proceeds received by the Borrower shall be paid to the Bank and BBL to
reduce the Borrower's Obligations to each of them. In connection with
such financing, DCI and Century have requested that the Bank release
its security interest in the assets of DCI and Century and release DCI
and Century from their Guaranties and that BBL transfer title to the
agreed upon equipment to the Borrower. Upon the receipt of the
following amounts by the Bank and BBL, tke Bank shall release its
security interest in the assets of DCI and Century and the Guaranties
of DCI and Century and BBL shall transfer title to such equipment to
the Borrower.
To Be Applied to the Borrower's Obligations to Bank:
$3,298,624.15 (plus such additional amounts, if any, as may be
necessary to reduce the Borrower's Obligations to $1,900,000.00)
To Be Applied to BBL Lease Obligations: $1,042,682.85
Upon receipt of the amounts set forth above, the Bank will (a)
execute and deliver all necessary discharges, releases and other
documents that may be necessary to release (i) any security interest
held by the Bank in and to the Guarantors' assets, and (ii) the
Guaranties, and (b) release the original stock certificates of DCI and
3,928,000 of the shares of Century which have been pledged to the
Bank, and BBL shall execute such documentation as may be necessary to
transfer title to the agreed upon equipment to the Borrower.
7. AMENDMENT TO CONDITIONS TO FORBEARANCE.
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The Conditions to Forbearance set forth in the Original Agreement are
hereby amended as follows:
(a) The provisions of Paragraph 6(h) of the Original Agreement are
hereby deleted in their entirety.
(b) The existing Intercompany Note from DCI payable to the Borrower
shall be replaced by a new Intercompany Note in the principal sum
of $2,891,125.00 on terms reasonably acceptable to the Bank. The
new Intercompany Note shall continue to be collaterally assigned
to the Bank and BBL as further security for the Obligations and
the Master Lease Agreement.
(c) In consideration of the Bank's entering into this Third
Amendment, upon the execution hereof, the
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Borrower shall pay the Bank the sum of Two Thousand Five Hundred
and no/100 Dollars ($2,500.00) as a forbearance fee. Such fee
shall be fully earned upon payment and shall not be subject to
refund or rebate under any circumstances. The forbearance fee
shall not be applied in reduction of the principal, interest or
other amounts due in connection with the loan arrangement.
(d) Upon the execution hereof, the Borrower shall pay all reasonable
costs and expenses, including, without limitation, reasonable
attorneys' fees, consultants' fees, and commercial finance
examination fees, which have been incurred by the Bank and BBL in
connection with its loan and lease arrangements with the
Borrower.
(e) During the Forbearance Period, the Borrower (a) shall not permit
its tangible net worth (determined in accordance with generally
accepted accounting principles) to be less than $29,000,000 at
any time, and (b) shall not incur a loss (determined in
accordance with generally accepted accounting principles) during
any calendar month in excess of $250,000.00.
(f) All other Conditions to Forbearance set forth in the Original
Agreement remain in full force and effect.
8. GENERAL.
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(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 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.
(b) 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
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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 will expire, unless sooner
terminated, on July 31, 1997. 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 resu1t of any
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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 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.
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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
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Print Name: Eugene M. Bullis Print Name: Donald R. Peck
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Title: Chief Financial Officer Title: Treasurer and Clerk
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CENTURY ELECTRONICS NCT, INC.
MANUFACTURING, INC.
By: /s/ Donald R. Peck By: /s/ Donald R. Peck
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Print Name: Donald R. Peck Print Name: Donald R. Peck
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Title: Secretary and Treasurer Title: President
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AGREED AND ACCEPTED BY:
BANKBOSTON, N.A. f/k/a
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Ron R. Ferguson
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Print Name: Ron R. Ferguson
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Title: Vice President
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BANCBOSTON LEASING INC.
By:/s/ Ron R. Ferguson
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Print Name: Ron R. Ferguson
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Title: V. P.
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