EXHIBIT 10.(mm)

                                                                  EXECUTION COPY



                            FORBEARANCE AGREEMENT AND
                      EIGHTH AMENDMENT TO CREDIT AGREEMENT


         THIS  FORBEARANCE  AGREEMENT AND EIGHTH  AMENDMENT TO CREDIT  AGREEMENT
(this  "Agreement"),  dated as of November  12,  1999,  is by and among  STARMET
CORPORATION,   a  Massachusetts   corporation   (f/k/a  Nuclear  Metals,   Inc.)
("StarMet"),  STARMET  POWDERS,  LLC, a Delaware limited  liability  corporation
("Powders"),  STARMET AEROCAST,  LLC, a Delaware limited  liability  corporation
("AeroCast"),  STARMET  COMMERCIAL  CASTINGS,  LLC, a Delaware limited liability
corporation ("ComCast"),  STARMET NMI CORPORATION,  a Massachusetts  corporation
("NMI"), STARMET CMI CORPORATION, a Delaware corporation (f/k/a Carolina Metals,
Inc.)  ("CMI"),  STARMET  HOLDINGS  CORPORATION,   a  Massachusetts  corporation
("Holdings"),  NMI FOREIGN SALES CORPORATION,  a U.S. Virgin Islands corporation
("FSC",  and together with StarMet,  Powders,  AeroCast,  ComCast,  NMI, CMI and
Holdings,  the "Borrowers") and CITIZENS BANK OF MASSACHUSETTS,  an FDIC insured
bank and  successor in interest to State Street Bank and Trust Company under the
Credit Agreement referred to below (the "Bank").

                             Preliminary Statements

         A. The Bank,  as  successor  in interest to State Street Bank and Trust
Company  ("State  Street"),  and the  Borrowers  are  parties to an Amended  and
Restated Credit  Agreement dated as of October 1, 1997 (such Credit Agreement as
amended prior to the date hereof by a First Amendment to Credit  Agreement dated
as of December  19, 1997, a Second  Amendment  to Credit  Agreement  dated as of
December  29, 1997, a Third  Amendment to Credit  Agreement  dated as of July 2,
1998, a Fourth Amendment to Credit Agreement dated as of August 7, 1998, a Fifth
Amendment  to Credit  Agreement  dated as of September  30, 1998, a  Forbearance
Agreement and Sixth Amendment to Credit  Agreement dated as of February 24, 1999
(the "Sixth Amendment"), a Forbearance Agreement and Seventh Amendment to Credit
Agreement dated as of August 23, 1999 (the "Seventh  Amendment") and by a letter
agreement  dated  November  10, 1998 among State Street and the  Borrowers  (the
"Letter Agreement"), as further amended by this Agreement and as further amended
from  time to time,  the  "Credit  Agreement";  capitalized  terms  used but not
defined herein shall have the meanings ascribed to them in the Credit Agreement)
pursuant  to which the Bank agreed to make  certain  revolving  credit  loans to
Borrowers on the terms and conditions set forth therein.  Borrowers' obligations
under the Credit  Agreement are  evidenced by an Amended and Restated  Revolving
Credit Note dated August 7, 1998 (as amended and/or  restated by and through the
date of this Agreement, and as hereafter


<PAGE>



amended  and/or  restated  from time to time,  the  "Revolving  Credit Note" and
together  with the  Credit  Agreement,  the  "Credit  Documents")  executed  and
delivered by the Borrowers to the Bank. The  Borrowers'  obligations to the Bank
under the Credit  Documents  are  referred  to herein as the  "Revolving  Credit
Loans".  Borrowers are also parties to certain security  documents,  instruments
and agreements executed by Borrowers in connection with the Credit Documents (as
amended by and through the date of this  Agreement  and as amended  from time to
time hereafter,  the "Borrower Security  Documents";  the Credit Agreement,  the
Revolving Credit Note, the Borrower Security Documents,  this Agreement, and any
agreement or  instrument  executed in connection  therewith or herewith,  as the
same have been  amended  or may be  amended  from  time to time  hereafter,  are
collectively referred to herein as the "Borrower Loan Documents")

         B. Borrowers have defaulted on their  obligations to the Bank under the
Credit  Documents  because the "Aggregate Bank  Liabilities"  (as defined in the
Letter  Agreement)  exceed  the  "Maximum  Credit"  (as  defined  in the  Letter
Agreement") and the Borrowers have failed to pay such excess to the Bank,  which
failure  constitutes  an Event of Default.  State Street  issued a notice of the
aforesaid  Event of Default to the  Borrowers by letter dated  November 20, 1998
and reserved the full extent of its rights in respect of such Event of Default.

         C.  Following the  occurrence of the  aforesaid  Event of Default,  the
Borrowers and State Street  entered into the Sixth  Amendment  pursuant to which
State Street agreed,  subject to the terms and conditions set forth therein,  to
(i) forbear until May 28, 1999 from exercising its rights and remedies under the
Borrower Loan Documents and applicable law with respect to the existing Event of
Default and (ii) continue to provide  financing to the  Borrowers  until May 28,
1999 on the terms set forth in the Credit Agreement, as in effect at the time.

         D. After the date of the Sixth Amendment,  additional Events of Default
occurred as a result of defaults  occurring  under  Sections 4.20.  4.21,  4.22,
4.31, 4.32, and 4.33 of the Credit Agreement and the Maturity Date passed.

         E.  Following the  occurrence of the aforesaid  Events of Default,  the
Borrowers and State Street entered into the Seventh Amendment  pursuant to which
State Street agreed,  subject to the terms and conditions set forth therein,  to
(i) forbear  until  February  15, 2000  (subject to extension as provided in the
Seventh  Amendment)  from  exercising its rights and remedies under the Borrower
Loan Documents and applicable law with respect to the existing Events of Default
and (ii) continue to provide  financing to the Borrowers until February 15, 2000
(subject to  extension  as provided in the Seventh  Amendment)  on the terms set
forth in the Credit Agreement, as in effect at the time.

         F. The Borrowers  have requested that the Bank (i) forbear until August
15,  2000 from  exercising  its  rights and  remedies  under the  Borrower  Loan
Documents and applicable law with respect to the existing  Events of Default and
(ii)  continue to provide  financing to the  Borrowers on the terms set forth in
the Credit Agreement, as in effect at the time.


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<PAGE>

         G. The Bank is willing,  subject to the terms and  conditions set forth
herein, to forbear and continue to provide financing to the Borrowers,  but only
as and to the extent provided herein.

         NOW, THEREFORE,  in consideration of the mutual promises and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency  of which are  hereby  acknowledged  by each of the  Borrowers,  and
subject to the terms and  conditions  of this  Agreement,  the parties  agree as
follows:

         ss.1.  CONFIRMATION  OF  INDEBTEDNESS.  As of  November  12,  1999  the
respective  amounts of outstanding  principal of and accrued but unpaid interest
on the Revolving  Credit Note and the aggregate  face amount of all  outstanding
L/C's are as follows:

         Revolving Credit Note:
         ---------------------

                  Principal:                                  $5,499,168.00
                  Interest:                                   $    4,009.81
                                                              -------------
                                   TOTAL:                     $5,503,277.81
                                                              =============

         Face Amount of L/C's                                 $3,550,000.00
         --------------------

The Revolving  Credit Note shall continue to accrue  interest in accordance with
the terms of the Borrower Loan Documents, as amended hereby.

         The Borrowers are indebted to the Bank for unreimbursed  legal fees and
related expenses incurred by the Bank. By the execution of this Agreement by the
Borrowers,  the total amount of Borrowers'  indebtedness  and obligations to the
Bank  evidenced by and/or  related to the  Borrower  Loan  Documents,  including
without limitation principal and interest on the Revolving Credit Note, and fees
and  expenses  of the Bank's  counsel  and their  consultants,  is  jointly  and
severally ratified, confirmed and approved by the Borrowers in all respects (the
indebtedness and obligations  referred to in this ss.1, in each case whether now
existing or hereafter arising,  are hereinafter  referred to collectively as the
"Borrower  Obligations").  Borrowers acknowledge and agree that (a) the Borrower
Obligations are valid and binding  obligations of each Borrower,  enforceable in
accordance with the Borrower Loan Documents, as amended hereby, and (b) the Bank
is presently entitled to demand, and each Borrower is presently  obligated (upon
demand by the Bank) to pay in full, all of the Borrower Obligations, without any
further  demand,  notice or claim  subject only to the  agreement of the Bank to
forbear  on the  terms  set  forth  in  this  Agreement.  Without  limiting  the
foregoing,   each  Borrower  acknowledges  and  agrees  that  the  Bank  has  no
forbearance   obligation   whatsoever  except  as  expressly  provided  in  this
Agreement.

         ss.2.  RATIFICATION  AND CONFIRMATION OF BORROWER  SECURITY  DOCUMENTS,
COLLATERAL SECURITY AND EXISTING AGREEMENTS. Each


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<PAGE>

Borrower, by the execution of this Agreement, ratifies, confirms and approves in
all respects each of the Borrower Security Documents, and acknowledges, confirms
and  agrees  that all of the  Borrower  Obligations  are and shall be  hereafter
secured  by and  entitled  to the  benefits  of  each of the  Borrower  Security
Documents  and that the  liens  granted  to the Bank  thereunder  remain  valid,
perfected  and  enforceable  against  such  Borrower,  and  shall  extend to all
properties  and  assets  of each  Borrower,  whether  real,  personal  or mixed,
tangible  or  intangible,  and  now  owned  or  hereafter  acquired  or  arising
(collectively, the "Collateral"), including, without limitation, all outstanding
shares of capital  stock or other equity  interests of any Borrower  (other than
StarMet) or any  Subsidiary  of any Borrower and all rights to acquire the same,
and such liens shall secure all Borrower  Obligations  now existing or hereafter
arising.  Each Borrower  acknowledges  and agrees that for all purposes,  as the
context  permits or requires in each Borrower  Security  Document,  all Borrower
Obligations  (as  defined  in ss.1  above) do and  shall at all times  hereafter
constitute  "Obligations"  and  "Secured  Obligations"  for all  purposes of the
Borrower Security Documents.

          Each Borrower acknowledges,  confirms and agrees that, except as shown
on Exhibit  4.14 of the Credit  Agreement  and  except  with  respect to certain
specific  equipment on which  vendors have  existing  perfected  purchase  money
liens,  as previously  consented to by the Bank, the Bank has and shall retain a
first priority perfected  security interest in and lien on all Collateral.  Each
Borrower also acknowledges, confirms and agrees that they have pledged all loans
and notes receivable owned by such Borrower to the Bank. Each Borrower  confirms
its agreement in the Borrower Loan Documents to take, or cause to be taken,  all
actions requested by the Bank in order to create, maintain, renew and/or perfect
the Bank's security interests in the Collateral.

         Without  limiting the generality of this ss.2, each Borrower  ratifies,
confirms and approves the Amended and Restated Joint Security Agreement in favor
of the Bank dated as of October 1, 1997 (as  amended by and  through the date of
this  Agreement  and as  amended  from  time to time  hereafter,  the  "Security
Agreement") and each Borrower further ratifies, confirms and approves the Pledge
and  Security  Agreement  in favor of the Bank dated as of February 24, 1999 (as
amended by and through the date of this  Agreement  and as amended  from time to
time  hereafter,  the  "Pledge  Agreement")  . Each  Borrower  acknowledges  and
confirms that it intended, upon executing the Security Agreement in favor of the
Bank, that such Security  Agreement  secure any and all  indebtedness  and other
obligations  of the  Borrowers to the Bank,  whether then existing or thereafter
arising. Each Borrower further acknowledges and confirms that it intended,  upon
executing the Pledge  Agreement in favor of the Bank, that such Pledge Agreement
secure any and all  indebtedness  and other  obligations of the Borrowers to the
Bank, whether then existing or thereafter arising.

         Without  limiting any other provision of this Agreement,  the Borrowers
acknowledge and agree for the benefit of the Bank that the Bank is entering into
this  Agreement  in  reliance  on the  agreements  set  forth  in the  foregoing
provisions of this ss.2 and on the understanding that any Revolving Credit Loans
and other financing made available to Borrowers by the Bank after the


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<PAGE>



date of this  Agreement  are secured by and  entitled to the benefits of each of
the  Borrower  Security  Documents  and the  Collateral  described  therein.  In
addition,  each Borrower  hereby  incorporates by reference and restates in full
the grant of a security interest in the Collateral contained in Section 1 of the
Security  Agreement  and  contained  in Section 1 of the Pledge  Agreement,  and
confirms  that  the  Obligations,  as  defined  in  Section  2 of  the  Security
Agreement, includes all of the Borrower Obligations and every other sum owed the
Bank by any Borrower, and that the Secured Obligations,  as defined in Section 2
of the Pledge  Agreement,  includes  all of the Borrower  Obligations  and every
other sum owed the Bank by any Borrower.

         ss.3. NO PRESENT CLAIMS;  ETC. Each of the Borrowers  acknowledges  and
agrees  with the Bank that:  (a) it has no claim or cause of action  against the
Bank  (or  any of  its  directors,  officers,  employees,  consultants,  agents,
affiliates or attorneys or any of the consultants to any of its attorneys);  (b)
it has no offset right,  counterclaim  or defense of any kind against any of the
Borrower  Obligations or any other obligation or indebtedness of any Borrower to
the Bank; and (c) the Bank has heretofore  properly performed and satisfied in a
timely manner all of its obligations to each Borrower. The Bank wishes (and each
of the Borrowers  agrees) to eliminate any possibility that any past conditions,
acts,  omissions,  events or circumstances  would impair or otherwise  adversely
affect any of the Bank's rights, interests, security and/or remedies. For and in
consideration  of the agreements  contained in this Agreement and other good and
valuable   consideration,   the  Borrowers   (collectively,   the   "Releasors")
unconditionally and irrevocably  release,  waive and forever discharge the Bank,
together  with  its  successors,  assigns,  subsidiaries,  directors,  officers,
employees, consultants,  affiliates, agents and attorneys and consultants to its
attorneys  (collectively,  the  "Released  Parties"),  from:  (x)  any  and  all
liabilities,  obligations,  duties,  promises or indebtedness of any kind of the
Released  Parties to the Releasors or any of them, and (y) all claims,  offsets,
causes of action,  suits or defenses of any kind whatsoever (if any),  which the
Releasors or any of them might  otherwise  have against the Released  Parties or
any of  them,  in  either  case (x) or (y) on  account  of any  condition,  act,
omission, event, contract, liability, obligation,  indebtedness, claim, cause of
action, defense, circumstance or matter of any kind (aa) which existed, arose or
occurred at any time from the  beginning  of the world to the  execution of this
Agreement or (bb) which could  hereafter  arise as a result of the  execution of
(or the  observance of the terms of) this Agreement or any of the other Borrower
Loan Documents.

       ss.4.  AMENDMENTS TO CREDIT AGREEMENT.

         Preliminary  Statement.  Pursuant to the Seventh Amendment,  the Bank's
commitment  to  provide  Revolving  Credit  Loans to  Borrowers  will  expire on
February 15, 2000,  unless earlier  terminated and subject to extension,  all as
provided in the Seventh  Amendment.  Nonetheless,  Borrowers have requested that
the Bank agree to further extend,  on the terms and conditions set forth herein,
the Bank's  commitment  to provide  Revolving  Credit Loans to Borrowers  and to
amend certain other provisions of the Credit Agreement,  and the Bank is willing
to agree to such extension and  amendments,  all on the terms and conditions set
forth herein. In order to give

                                        5
<PAGE>

effect to the foregoing, Borrowers and the Bank hereby agree to amend the Credit
Agreement as follows:

         4.1. Section 1.02(a). Section 1.02(a) of the Credit Agreement is hereby
amended by  deleting  such  Section  1.02(a) in its  entirety  and  substituting
therefor the following:

                  "(a)  Amount.  Provided  no Event of  Default  (as  defined in
         Article V) or event which with the passage of time or notice,  or both,
         would become an Event of Default has occurred and is  continuing,  each
         Borrower  may from time to time from the date  hereof up to August  15,
         2000 (such  date,  subject to  extension  as  provided  in clauses  (j)
         through (n) below,  the  "Maturity  Date") borrow and reborrow from the
         Bank and the Bank shall  advance  funds under the  Revolving  Credit to
         such  Borrower (an  "Advance"  or the  "Advances");  provided  that the
         aggregate  of all  Advances  outstanding  at any time plus the  maximum
         aggregate  liability of the Borrowers under any outstanding  letters of
         credit  issued  prior to the date  hereof or  pursuant  to this  Credit
         Agreement (minus the aggregate amount of any Cash Collateral  Proceeds)
         shall not exceed an amount (the "Maximum  Credit") equal to $10,350,000
         up to the Maturity Date, provided, further, that the Maximum Credit:

                   (i)  shall  be  reduced  (x) on  the  twentieth  day of  each
         calendar month (other than any month which  commences after the US Army
         Payment  Commencement  Date),  commencing  September  20, 1999,  by the
         greater of (A) $50,000 or (B) the sum of (I) 25% of Available Free Cash
         for the immediately  preceding fiscal month up to $400,000 of Available
         Free Cash, and (II) 50% of the amount by which  Available Free Cash for
         the immediately preceding fiscal month exceeds $400,000, and (y) on the
         twentieth day of each calendar month which  commences after the US Army
         Payment  Commencement  Date,  by the greater of (A) $100,000 or (B) the
         sum of (I) 25% of  Available  Free Cash for the  immediately  preceding
         fiscal  month up to $400,000 of  Available  Free Cash,  (II) 50% of the
         amount  by which  Available  Free  Cash for the  immediately  preceding
         fiscal month  exceeds  $400,000,  and (III) 75% of the US Army Payments
         during the immediately preceding fiscal month; and

                  (ii) shall be further reduced from time to time as provided in
         Section 1.02(b).

         For purposes of this Agreement:

         "Available  Free Cash" for any period shall mean the  aggregate  amount
         collected by the Borrowers and their Subsidiaries during such period in
         respect of accounts receivables  (excluding any US Army Payments) minus
         the aggregate payroll expenditures and Current Accounts Payable paid by
         the  Borrowers  and  their   Subsidiaries   during  such  period,   all
         consolidated and determined in accordance with GAAP.

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<PAGE>

         "Current  Accounts  Payable" shall mean accounts  payable for goods and
         services  which remain  unpaid not more than 180 days after the date of
         invoice.

         "US Army  Payment  Commencement  Date"  shall  mean the last day of the
         first full calendar month  commencing  after the date, if any, on which
         any of the  Borrowers  first  receives  payments  under the  facilities
         contract  between one or more of the  Borrowers  and the United  States
         Army (the "Facilities Contract") in respect of either (x) "rent" on all
         or  a  portion  of  the  Borrowers'   facilities  located  in  Concord,
         Massachusetts or (y) decontamination and decommissioning costs thereof.

         "US Army  Payments"  for any  period  shall mean the  aggregate  rental
         payments made to the Borrowers  under the  Facilities  Contract  during
         such period plus any net operating  income of or other  payments to the
         Borrowers under the Facilities  Contract in respect of  decontamination
         and decommissioning during such period."

         4.2. Section 1.02(b). Section 1.02(b) of the Credit Agreement is hereby
amended by deleting the last sentence thereof and inserting the following in its
place:

                  "The  Borrowers  shall apply all proceeds  (net of  reasonable
         closing  costs  approved in advance in writing by the Bank) of sales or
         other  dispositions  of any of their  respective  properties  or assets
         (other than sales of inventory in the ordinary  course,  but  including
         proceeds of any license  agreement and including  bulk sales) (all such
         proceeds  being  referred  to as  the  "Asset  Sale  Proceeds")  to pay
         outstanding   Advances,   and  the  Maximum   Credit  shall  be  deemed
         automatically  reduced  by  the  amount  of  any  Asset  Sale  Proceeds
         (excluding  any Asset Sale Proceeds  applied at the request of the Bank
         pursuant  to the  following  two  proviso  clauses)  on the  date  such
         proceeds are received by the Borrowers,  provided that, if so requested
         by the Bank,  all or a portion of Asset Sale Proceeds  shall instead be
         used to cash  collateralize the Borrowers' maximum liability in respect
         of such  outstanding  L/C's as the Bank  may  designate  at the time of
         receipt of such Asset Sale  Proceeds  (the amount of any such  proceeds
         serving at any time as such cash  collateral  being  referred to as the
         "Cash  Collateral  Proceeds"),  and,  provided,  further,  that,  if so
         requested by the Bank,  all or a portion of Asset Sale  Proceeds  shall
         instead be used to satisfy the Financial Assurance  requirements of the
         Massachusetts  Department  of  Environmental  Protection  and the South
         Carolina Department of Health and Environmental  Control, such that the
         L/C's issued to the respective governmental agencies by the Bank may be
         canceled."

         4.3. Section 1.02(c). Section 1.02(c) of the Credit Agreement is hereby
amended by deleting  such  Section  1.02(c) in its entirety  and  inserting  the
following in its place:

                  "(c) The Revolving Credit Note.  Amounts owed to the Bank with
         respect to Advances made by the Bank shall be evidenced by Bank's books
         and records and may, at

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<PAGE>

         the request of the Bank, be further  evidenced by one or more revolving
         credit  notes  (collectively,  the  "Revolving  Credit  Notes").  As of
         November  12,  1999,  the  Advances  are  evidenced  by an Amended  and
         Restated Revolving Credit Note dated November 12, 1999 in the principal
         amount  of  $10,350,000,   which  replaces  and  supersedes  all  prior
         revolving  credit  notes  issued  under  this  Credit  Agreement.   Any
         repayments of principal  shall be applied to the Revolving  Credit Note
         in such order as the Bank in its discretion shall determine. The unpaid
         principal  balance  of the  Revolving  Credit  Note may be  voluntarily
         prepaid in whole or in part during the  continuation  of the  Revolving
         Credit Note without premium or penalty;  provided that if the Revolving
         Credit is to be  terminated  by the  Borrowers,  thirty (30) days prior
         notice  shall be given to the Bank.  Upon  termination,  the  Borrowers
         shall  satisfy the  provisions of Section 6.01 of this  Agreement.  The
         Revolving Credit Note is subject to mandatory repayments as provided in
         section 1.02(b)."

         4.4. Sections 1.02(j) through (n). Section 1.02 of the Credit Agreement
is hereby  amended by deleting  clauses  1.02(j)  through (n) and  inserting the
following new clauses 1.02(j) through (n) in their place:

                  "(j) First  Extension  Option.  The  Borrowers  shall have the
         option to extend the Maturity Date from August 15, 2000 until  December
         13, 2000 (the "First Extension Option") if both (x) the First Extension
         Option  Condition is satisfied and (y) no Event of Default has occurred
         since the date of the  Forbearance  Agreement  and Eighth  Amendment to
         Credit  Agreement dated as of November 12, 1999 among the Borrowers and
         the Bank (the "Eighth  Amendment")  nor has there  occurred  since such
         date any  event  which  with  notice  or  lapse  of time or both  would
         constitute  an  Event  of  Default.  In order  to  exercise  the  First
         Extension  Option,  the  Borrowers  shall deliver to the Bank a written
         notice  not  later  than  August  15,  2000,   which  notice  shall  be
         accompanied by a schedule  demonstrating,  to the  satisfaction  of the
         Bank,  that the First  Extension  Option  Condition  was  satisfied and
         certifying  that no Event of Default has occurred since the date of the
         Eighth  Amendment and that no other event has occurred  since such date
         which with notice or lapse of time of both would constitute an Event of
         Default.

                  The First Extension  Option Condition will be satisfied if (a)
         the gross sales of the Borrowers for the fiscal  quarter ending July 2,
         2000 exceed (on an annualized  basis) by at least  $5,000,000 the gross
         sales  of  the  Borrowers  for  the  preceding  fiscal  quarter  (on an
         annualized basis) all determined in accordance with generally  accepted
         accounting  principles  consistently  applied  ("GAAP"),  and  (b)  the
         Annualized  Operating  Cash Flow for the fiscal  quarter ending July 2,
         2000  exceeds  the  Annualized  Operating  Cash Flow for the  preceding
         fiscal quarter by at least $1,500,000.

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<PAGE>

                  "Annualized  Operating  Cash  Flow" of the  Borrowers  for any
         fiscal quarter or other three month period shall mean (a) the Operating
         Cash Flow of the Borrowers for such fiscal quarter or other three month
         period, multiplied by (b) four.

                  "Operating  Cash Flow" of the Borrowers for any fiscal quarter
         or other three month period shall mean the "operating  income  provided
         by operating  activities"  of the Borrowers for such fiscal  quarter or
         other three month period as shown on the financial  statements  for the
         Borrowers for such period,  all determined in accordance with GAAP, but
         excluding all extraordinary, unusual, or non-recurring gains or losses.

                  (k)  Further  Extension  Option.  If,  but only if,  the First
         Extension  Option is exercised,  the  Borrowers  shall have the further
         option to extend the  Maturity  Date from  December 13, 2000 until June
         10,  2001 (the  "Further  Extension  Option")  if both (x) the  Further
         Extension Option Condition is satisfied and (y) no Event of Default has
         occurred since the date of the Eighth  Amendment nor has there occurred
         since such date any event  which  with  notice or lapse of time of both
         would constitute an Event of Default.  In order to exercise the Further
         Extension  Option,  the  Borrowers  shall deliver to the Bank a written
         notice  not  later  than  December  13,  2000,  which  notice  shall be
         accompanied by a schedule  demonstrating,  to the  satisfaction  of the
         Bank,  that the Further  Extension  Option  Condition was satisfied and
         certifying  that no Event of Default has occurred since the date of the
         Eighth  Amendment and that no other event has occurred  since such date
         which with notice or lapse of time of both would constitute an Event of
         Default.

                  The Further  Extension  Option  Condition will be satisfied if
         (a) the gross sales of the  Borrowers for the three fiscal month period
         ending  September 30, 2000 exceed (on an annualized  basis) by at least
         $5,000,000  the gross sales of the Borrowers  for the preceding  fiscal
         quarter (on an annualized basis)  (determined in accordance with GAAP),
         and (b) the  Annualized  Operating Cash Flow for the three fiscal month
         period ending September 30, 2000 exceeds the Annualized  Operating Cash
         Flow for the preceding fiscal quarter by at least $1,500,000.

                  (l) First Alternate  Extension  Option. If the First Extension
         Option is not  exercised,  the  Borrowers  shall  nonetheless  have the
         option to extend the Maturity Date from August 15, 2000 until  November
         13, 2000 (the "First Alternate  Extension  Option") if as of August 15,
         2000  both  (x) the  First  Alternate  Extension  Option  Condition  is
         satisfied  and (y) no Event of Default has  occurred  since the date of
         the Eighth  Amendment nor has there  occurred since such date any event
         which with notice or lapse of time of both would constitute an Event of
         Default. In order to exercise the First Alternate Extension Option, the
         Borrowers  shall deliver to the Bank a written  notice not earlier than
         January 1, 2000 and not later than August 15,  2000,  which  notice (A)
         shall be accompanied by a copy of the First Alternate  Extension Option
         Letter  of  Intent  (as  defined   below)  and  (B)  shall   include  a
         certification that no Event of Default has occurred


                                        9
<PAGE>

         since  the date of the  Eighth  Amendment  and  that no other  even has
         occurred  since such date  which  with  notice or lapse of time of both
         would constitute an Event of Default.

                  The  First  Alternate   Extension  Option  Condition  will  be
         satisfied  if, as of August 15, 2000,  one or more of the Borrowers has
         entered  into an  unlapsed,  fully  effective  letter of intent  with a
         qualified bona fide independent third party to enter into a transaction
         with one or more Borrowers,  including without limitation a purchase of
         assets,  which  will  result  at  closing  of such  transaction  in net
         proceeds  sufficient  to, and then available for, the repayment in full
         of all indebtedness and other  obligations owed by the Borrowers to the
         Bank, including either, at the Bank's election, the cancellation of all
         outstanding  L/C's  or  the  cash   collateralization  of  the  maximum
         liability  of the  Borrowers in respect of all  outstanding  L/C's (the
         "First  Alternate  Extension  Option  Letter  of  Intent").  The  First
         Alternate  Extension Option Letter of Intent must provide for a closing
         date no later  than  February  1, 2001 and  shall  only be  subject  to
         conditions or  contingencies  customary in such  transactions,  and any
         financing  condition  or  contingency  in such letter of intent must be
         satisfactory to the Bank. In the event a definitive  binding  agreement
         is entered  into  between  the  Borrowers  and the other  party to such
         letter of intent before the then scheduled Maturity Date, the Borrowers
         shall  have the  option to  further  extend  the  Maturity  Date to the
         earlier of  February  11, 2001 and the  closing  under such  definitive
         binding  agreement by delivering to the Bank a written notice not later
         than November 13, 2000, which notice (A) shall be accompanied by a copy
         of  such  definitive   binding   agreement  and  (B)  shall  include  a
         certification  that no Event of Default has occurred  since the date of
         the Eighth  Amendment  and that no other event has occurred  since such
         date which with  notice or lapse of time of both  would  constitute  an
         Event of Default. Upon closing under such definitive binding agreement,
         the Maturity Date shall be deemed to have occurred and all net proceeds
         shall be applied  directly to repay in full all  indebtedness and other
         obligations owed by the Borrowers to the Bank, including either, at the
         Bank's   election,   to  cancel  all  outstanding   L/C's  or  to  cash
         collateralize  the maximum liability of the Borrowers in respect of all
         outstanding L/C's.

                  (m) Second Alternate  Extension  Option.  If neither the First
         Extension Option nor the First Alternate Extension Option is exercised,
         the Borrowers shall  nonetheless have the option to extend the Maturity
         Date from  August  15,  2000  until  November  13,  2000  (the  "Second
         Alternate  Extension  Option")  if as of August  15,  2000 both (x) the
         Second  Alternate  Extension  Option  Condition is satisfied and (y) no
         Event of Default has  occurred  since the date of the Eighth  Amendment
         nor has there  occurred  since such date any event which with notice or
         lapse of time of both would constitute an Event of Default. In order to
         exercise the Second  Alternate  Extension  Option,  the Borrowers shall
         deliver to the Bank a written  notice not earlier  than January 1, 2000
         and not  later  than  August  15,  2000,  which  notice  (A)  shall  be
         accompanied by a copy of the Second  Alternate  Extension Option Letter
         of Intent (as defined below) and (B) shall include a certification that
         no Event of Default has occurred since the date of the Eighth


                                       10
<PAGE>

         Amendment  and that no other  even has  occurred  since such date which
         with  notice  or lapse  of time of both  would  constitute  an Event of
         Default.

                  The  Second  Alternate  Extension  Option  Condition  will  be
         satisfied  if, as of August 15, 2000,  one or more of the Borrowers has
         entered  into an  unlapsed,  fully  effective  letter of intent  with a
         qualified bona fide independent third party to enter into a transaction
         with one or more Borrowers,  including without limitation a purchase of
         assets,  which  will  result  at  closing  of such  transaction  in net
         proceeds  sufficient  to, and then  available for, the repayment of not
         less than $5,000,000 of indebtedness and other  obligations owed by the
         Borrowers to the Bank (including by either, at the Bank's election, the
         cancellation of outstanding L/C's or the cash  collateralization of the
         maximum  liability of the  Borrowers in respect of  outstanding  L/C's)
         (the "Second Alternate Extension Option Letter of Intent").  The Second
         Alternate  Extension Option Letter of Intent must provide for a closing
         date no later  than  February  1, 2001 and  shall  only be  subject  to
         conditions or  contingencies  customary in such  transactions,  and any
         financing  condition  or  contingency  in such letter of intent must be
         satisfactory to the Bank. In the event a definitive  binding  agreement
         is entered  into  between  the  Borrowers  and the other  party to such
         letter of intent before the then scheduled Maturity Date, the Borrowers
         shall have the option to further  extend the Maturity  Date to February
         11,  2001 by  delivering  to the Bank a written  notice  not later than
         November 13, 2000,  which notice (A) shall be  accompanied by a copy of
         such definitive binding agreement and (B) shall include a certification
         that no Event of  Default  has  occurred  since the date of the  Eighth
         Amendment  and that no other event has  occurred  since such date which
         with  notice  or lapse  of time of both  would  constitute  an Event of
         Default. Upon closing under such definitive binding agreement,  all net
         proceeds,  which  must not be less than  $5,000,000,  shall be  applied
         directly to repay the  indebtedness  and other  obligations owed by the
         Borrowers to the Bank and either, at the Bank's election, to cancel all
         outstanding L/C's or to cash collateralize the maximum liability of the
         Borrowers  in  respect of all  outstanding  L/C's.  If such  closing is
         consummated and such  indebtedness  and obligations are so repaid,  the
         Maturity Date will be extended until June 10, 2001.

                  (n) Third Alternate  Extension  Option If the Second Alternate
         Extension Option is exercised,  but a definitive  binding  agreement is
         not entered into with respect to the Second Alternate  Extension Option
         Letter of Intent before the then scheduled Maturity Date, the Borrowers
         shall  nonetheless  have the  option to extend the  Maturity  Date from
         November  13,  2000  until  February  11,  2001 (the  "Third  Alternate
         Extension  Option")  if as of  November  13,  2000  both (x) the  Third
         Alternate  Extension  Option Condition is satisfied and (y) no Event of
         Default has  occurred  since the date of the Eighth  Amendment  nor has
         there  occurred since such date any event which with notice or lapse of
         time of both would constitute an Event of Default. In order to exercise
         the Third Alternate  Extension  Option,  the Borrowers shall deliver to
         the Bank a written  notice  not later than  November  13,  2000,  which
         notice (A) shall be accompanied by a


                                       11
<PAGE>

         copy of the Third  Alternate  Extension  Option  Letter  of Intent  (as
         defined below) and (B) shall include a  certification  that no Event of
         Default has occurred since the date of the Eighth Amendment and that no
         other even has  occurred  since such date which with notice or lapse of
         time of both would constitute an Event of Default.

                  The  Third  Alternate   Extension  Option  Condition  will  be
         satisfied if, as of November 13, 2000, one or more of the Borrowers has
         entered  into an  unlapsed,  fully  effective  letter of intent  with a
         qualified bona fide independent third party to enter into a transaction
         with one or more Borrowers,  including without limitation a purchase of
         assets,  which  will  result  at  closing  of such  transaction  in net
         proceeds  sufficient  to, and then available for, the repayment in full
         of all indebtedness and other  obligations owed by the Borrowers to the
         Bank, including either, at the Bank's election, the cancellation of all
         outstanding  L/C's  or  the  cash   collateralization  of  the  maximum
         liability  of the  Borrowers in respect of all  outstanding  L/C's (the
         "Third  Alternate  Extension  Option  Letter  of  Intent").  The  Third
         Alternate  Extension Option Letter of Intent must provide for a closing
         date no later than May 1, 2001 and shall only be subject to  conditions
         or  contingencies  customary in such  transactions,  and any  financing
         condition or contingency in such letter of intent must be  satisfactory
         to the Bank.  In the event a  definitive  binding  agreement is entered
         into between the Borrowers and the other party to such letter of intent
         before the then scheduled  Maturity Date, the Borrowers  shall have the
         option to further  extend the  Maturity  Date to the earlier of May 12,
         2001  and the  closing  under  such  definitive  binding  agreement  by
         delivering  to the Bank a written  notice not later than  February  11,
         2001,  which  notice  (A)  shall  be  accompanied  by a  copy  of  such
         definitive binding agreement and (B) shall include a certification that
         no Event of Default has occurred since the date of the Eighth Amendment
         and that no other event has occurred  since such date which with notice
         or lapse of time of both would  constitute  an Event of  Default.  Upon
         closing  under such  definitive  binding  agreement,  the Maturity Date
         shall be deemed to have occurred and all net proceeds  shall be applied
         directly to repay in full all indebtedness  and other  obligations owed
         by the Borrowers to the Bank, including either, at the Bank's election,
         to cancel all outstanding  L/C's or to cash  collateralize  the maximum
         liability of the Borrowers in respect of all outstanding L/C's."


         4.5  Section  1.04.  Section  1.04 of the  Credit  Agreement  is hereby
amended by deleting the reference to "Seventh  Amendment"  appearing therein and
inserting the following new definitions in appropriate alphabetical order:

         "Eighth Amendment                              Section 1.02(j)
         Facilities Contract                            Section 1.02(a)
         Seventh Amendment                              Section V(q)
         US Army Payment Commencement Date              Section 1.02(a)
         US Army Payments                               Section 1.02(a)"


                                       12
<PAGE>

         4.6  Section  1.05.  Section  1.05 of the  Credit  Agreement  is hereby
amended by deleting  clause (e) of such Section in its entirety and inserting in
its place the following:

                  "(e) Amount.  The aggregate amount of L/C's  outstanding shall
         not exceed $3,550,000."

         4.7.  Sections 4.21, 4.22 and 4.32.  Article IV of the Credit Agreement
is hereby  amended by deleting  Sections  4.21,  4.22 and 4.32 and inserting the
following new Sections 4.21, 4.22 and 4.32 in their place:

                  "Section  4.21.  Capital  Expenditures.  In any  fiscal  year,
         unless the Bank otherwise consents in writing,  the Borrowers and their
         Subsidiaries   on  a  consolidated   basis  shall  not  make  or  incur
         expenditures  which are properly  chargeable  to capital  account under
         GAAP (including leases which are capitalized) in an aggregate amount in
         excess of $500,000,  provided that such dollar limit shall be increased
         by $300,000  (solely for capital  expenditures  relating to CMI and its
         assets) to  $800,000 if the  Borrowers  have  delivered  to the Bank an
         unlapsed,  fully effective letter of intent between CMI and a qualified
         bona fide independent  third party to enter into a transaction with CMI
         for the purchase of the assets of CMI,  which will result at closing of
         such transaction in net proceeds sufficient to, and then available for,
         the repayment in full of all indebtedness and other obligations owed by
         the Borrowers to the Bank,  including  either,  at the Bank's election,
         the cancellation of all outstanding L/C's or the cash collateralization
         of the maximum liability of the Borrowers in respect of all outstanding
         L/C's,  which  letter of intent may only be subject  to  conditions  or
         contingencies  customary  in  such  transactions,   and  any  financing
         condition or contingency in such letter of intent must be  satisfactory
         to the Bank, provided, further that such dollar amount shall be reduced
         by the amount of such $300,000  increase not  theretofore  utilized for
         capital  expenditures  relating to CMI and its assets if such letter of
         intent lapses or is terminated. Except as permitted in Section 1.02(i),
         none of the  proceeds  of any  Advance  may be used to fund any capital
         expenditures.

                  Section 4.22. Limit on Consulting  Payments.  Unless waived in
         writing  in  advance  by the Bank with  respect  to  specific  proposed
         compensation, the Borrowers shall not permit the aggregate compensation
         paid or  payable in cash by the  Borrowers  and their  Subsidiaries  to
         Affiliates of any of the  Borrowers to exceed  $18,750 per month to all
         such Affiliates, provided that the Borrowers may accrue, and not pay in
         cash, amounts in excess of $18,750 per month on the condition that such
         excess amounts are not due and are not paid until the Revolving  Credit
         Loans and all other Borrower Obligations have been paid in full and the
         commitment to make Advances has terminated.

                  Section 4.32. Engagement of Consultant. If an Event of Default
         occurs  after the date of the Eighth  Amendment,  the  Borrowers  will,
         within five days after the occurrence

                                       13
<PAGE>

         of such Event of Default,  engage a firm  selected by the Borrowers and
         acceptable to the Bank, as turnaround  consultant and financial manager
         for the Borrowers."

         4.8.  Section 4.08.  Section 4.08 of Article IV of the Credit Agreement
is hereby amended by deleting clause (j) thereof in is entirety.

         4.9.  Section 4.24.  Section 4.24 of Article IV of the Credit Agreement
is hereby amended by deleting the reference to the "Seventh Amendment" appearing
in the  first  sentence  thereof  and  inserting  a  reference  to  the  "Eighth
Amendment" in its place.

         4.10.  Article V.  Article V is hereby  amended by deleting  clause (q)
thereof in its entirety and inserting the following in its place:

                  "(q)  default  by any  Borrower  of any  material  obligation,
         including  any  payment  obligation,  under  the Sixth  Amendment,  the
         Forbearance  Agreement and Seventh  Amendment to Credit Agreement dated
         as  of  August  23,  1999  (the  "Seventh  Amendment")  or  the  Eighth
         Amendment;"

Article V is hereby  further  amended  by  deleting  clause  (t)  thereof in its
entirety and inserting the following in its place:

                  "(t) the Maximum Credit shall equal or exceed $8,500,000 on or
         after May 15, 2000;"

         ss.5.  FEES.  Upon execution and delivery of the Seventh  Amendment the
Borrowers  owed the Bank an extension  fee of $50,000,  which  extension fee was
fully  earned  as of such  date,  but  payment  of such  extension  fee has been
deferred,  with the consent of the Bank, at the option of the Borrowers  through
the date of this  Agreement  and may be  further  deferred  at the option of the
Borrowers until the earlier of (i) August 1, 2000 and (ii)  immediately upon the
occurrence  of a  Forbearance  Event of Default,  provided  that payment of such
extension  fee shall be waived in the event the Maximum  Credit  shall have been
reduced to less than $8,500,000 as of February 1, 2000 and no Forbearance  Event
of Default shall have occurred and be continuing as of February 1, 2000.

         ss.6.  FORBEARANCE,  ETC. Subject to the Borrowers' compliance with the
terms and conditions of this Agreement and provided that no Forbearance Event of
Default shall have  occurred,  the Bank shall forbear from  enforcing any of its
rights  under the Borrower  Loan  Documents  or under  applicable  law until the
Maturity  Date (the period from the date of this  Agreement to and including the
Maturity  Date  being  referred  to herein  as the  "Forbearance  Period"),  and
temporarily  waives its rights to impose the default  rate of interest  provided
for in Section 1.02(d) of the Credit  Agreement.  The Borrowers  acknowledge and
agree that the


                                       14

<PAGE>


provisions  of this ss.6 relate solely to the Bank's  agreement  (subject to the
terms and conditions  hereof) to forbear from exercising its existing rights and
remedies in respect of the existing  Events of Defaults  under the Borrower Loan
Documents  described in clauses B and D of the  Preliminary  Statements  to this
Agreement,  and are not, and shall in no way be deemed or construed as, a waiver
by the Bank of such existing Events of Default or any other Event of Default now
existing or occurring subsequent to the date hereof. The Bank expressly reserves
the full extent of its rights under the Borrower Loan  Documents and  applicable
law in respect of any defaults or Events of Default  existing on the date hereof
and not  described  in  clauses  B or D of the  Preliminary  Statements  to this
Agreement.

         ss.7. TERMINATION. The Bank's obligation to forbear from exercising its
rights under the Borrower Loan Documents and applicable law and to make Advances
under  the  Credit  Agreement  shall   automatically   terminate,   without  the
requirement  of any  notice or demand to any of the  Borrowers,  on the first to
occur of (i) the Maturity  Date or (ii) the  occurrence  of any Event of Default
(other than the Events of Default described in clauses B or D of the Preliminary
Statements to this Agreement) or of any event which with notice and/or the lapse
of time  would  become an Event of  Default  or (iii) any act to  challenge  the
Bank's rights or interests which could reasonably be expected to have a material
adverse  effect on the rights or  remedies of the Bank under the  Borrower  Loan
Documents  or (iv) the  occurrence  of any  event or  circumstance  which  could
reasonably  be expected to have a material  adverse  effect on (x) the business,
operations,  properties, condition or assets of any Borrower, (y) the ability of
any  Borrower  to perform  its  obligations  under this  Agreement  or any other
Borrower Loan Document or (z) the validity or  enforceability  of this Agreement
or any other  Borrower  Loan  Document  or the rights and  remedies  of the Bank
hereunder  or  thereunder  (each of the  events  described  in this  ss.7  being
referred to as a "Forbearance Event of Default".

         ss.8. REMEDIES. On and after the occurrence of any Forbearance Event of
Default and in each case without any demand,  presentment,  notice  and/or other
action of any  nature by the Bank (all of which are hereby  expressly  waived by
each Borrower), and without limiting any other remedy provided to the Bank under
any other  agreement,  document or instrument or under  applicable  law, (a) the
default rate provided for in the Credit  Documents shall  immediately be imposed
with respect to the Revolving Credit Loans; (b) all Borrower  Obligations  shall
be immediately due and payable and the Bank shall be immediately and permanently
relieved of its  obligations to make advances under the Credit  Agreement and of
its forbearance  obligations  set forth in this Agreement or otherwise;  (c) the
Bank may proceed to enforce its rights and remedies under and in respect of this
Agreement  and the other  Borrower  Loan  Documents,  which rights and remedies,
subject only to the Bank's  forbearance  obligations  under this Agreement,  are
expressly reserved;  and (d) the Bank shall be free to avail itself of all other
rights and remedies  available  under  applicable law. The failure (or delay) of
the Bank in  exercising  any remedy after any  particular  Forbearance  Event of
Default shall not constitute a waiver of such remedy or any other remedy in that
or in any subsequent instance,  or otherwise prejudice the rights of the Bank in
any manner.


                                       15
<PAGE>


         ss.9. BANK CONSULTANT.  The Borrowers reconfirm and agree that the Bank
or, at the  Bank's  discretion,  counsel  to the Bank are  entitled  to and have
engaged a  consultant  with  respect to the Bank's  loan  arrangements  with the
Borrowers and that the Borrowers shall, on demand,  pay the reasonable costs and
expenses of such  consultant and the Borrowers also shall permit such consultant
access to the books, records, properties and assets of the Borrowers, to members
of the management of each Borrower,  to the outside  auditors and accountants of
the Borrowers and their work papers, and to legal counsel to the Borrowers,  and
the Borrowers  hereby waive any privilege which would preclude or interfere with
such access and hereby direct such accountants and legal counsel to provide such
access, all during regular business hours.

         ss.10.  REPRESENTATIONS,  WARRANTIES AND COVENANTS OF THE BORROWERS. In
order to induce the Bank to enter into this Agreement, the Borrowers jointly and
severally represent, covenant and warrant to the Bank as follows:

         (a) Authority, Etc. The execution and delivery by the Borrowers of this
Agreement and the  performance of their  respective  obligations  hereunder have
been duly authorized by all necessary action and do not and will not (i) violate
any provision of any law, rule, regulation, order, judgment,  injunction, decree
or  determination  applicable  to any Borrower or their  respective  charters or
other  governing  instruments  or (ii)  result  in a breach of or  constitute  a
default under any  agreement,  lease or instrument to which any of the Borrowers
is a party or by which it or its properties may be bound or affected.

         (b)  Binding  Obligation.  This  Agreement  and  each  other  agreement
executed by the Borrowers in connection  herewith  constitute  legal,  valid and
binding obligations of the Borrowers.

         (c) Borrower Loan Documents. Except for the Events of Default described
in clause B and clause D of the Preliminary  Statements to this Agreement,  each
Borrower is in compliance in all material respects with the covenants  contained
in the Borrower Loan Documents and the representations and warranties in each of
the Borrower Loan Documents  (except those that  expressly  relate to an earlier
date) are true and correct in all material respects on the date hereof.

         (d)  No  Approval.  No  authorization,   consent,  approval,   license,
exemption or filing or registration  with, any court or governmental  authorize,
agency  or  instrumentality  is or will be  necessary  to the  valid  execution,
delivery or  performance  by the  Borrowers of this  Agreement or any  documents
executed  pursuant hereto,  except such filings as shall have been made prior to
or  concurrent  with the  execution  of this  Agreement in  connection  with the
perfection of the Bank's liens in the Collateral.

         (e) Security  Documents.  Each Borrower  Security  Document,  including
without limitation the Security Agreement and the Pledge Agreement, is effective
to grant to the Bank a

                                       16
<PAGE>



legal,  valid,  enforceable and perfected  security interest in all right, title
and interest of each Borrower in the Collateral  described  therein;  no further
action or filing is required in order to perfect the Bank's security interests.

         (f) Preliminary Statement.  The statements contained in the Preliminary
Statements of this Agreement are true and correct.

         ss.11. NEGATIVE PLEDGE. The Borrowers hereby pledge, covenant and agree
that they will not: (i) create,  incur,  assume or suffer to exist any mortgage,
lien,  security  interest or other encumbrance on the real property and fixtures
owned by one or more of the Borrowers  located in Concord,  Massachusetts  or on
the real property and fixtures owned by one or more of the Borrowers  located in
Barnwell,  South  Carolina  (other  than the  existing  liens  on such  Barnwell
property  securing the Barnwell  Secured Debt (as defined  below));  (ii) make a
similar  pledge,  covenant or agreement to or with any party other than the Bank
with respect to the matters covered by this ss.11; (iii) sell all or any part of
its assets  outside of the ordinary  course of business other than to another of
the  Borrowers  pursuant  to Section  4.20 of the Credit  Agreement  or with the
Bank's written  consent,  obtained at least twenty (20) days prior to such sale;
or (iv) incur any debt or debts to any party other than the Bank  which,  in the
aggregate or with respect to any individual creditor,  is in excess of such debt
or debts outstanding as of the date hereof. The Barnwell Secured Debt shall mean
(i) the loan from the Lower  Savannah  Regional  Development  Corporation in the
aggregate  principal amount of $469,306.76,  and (ii) the loan from Regions Bank
(f/k/a Palmetto Federal Savings Bank of South  Carolina),  November 29, 1995, in
the aggregate principal amount of $613,910.55,  and a lien on cash collateral in
the  amount  of  $73,024  (Carolina  Metals  as  Obligor  and the  Borrowers  as
Guarantor).

         ss.12. CONDITIONS PRECEDENT.  The willingness of the Bank to enter into
this  Agreement  and the  obligations  of the Bank  hereunder are subject to the
satisfaction (or written waiver) of all of the following  conditions  precedent,
time being of the essence hereof:

         (a) As of the time of the Bank's execution hereof,  the Borrowers shall
be in  compliance  with all of the terms,  covenants  and  provisions  contained
herein and all representations and warranties  contained herein shall be true in
all material respects,  and the Bank shall have received a certificate signed by
an officer of each Borrower to the foregoing effect.

         (b) All  corporate,  limited  liability,  partnership  and other  legal
proceedings  and all  instruments in connection  herewith and therewith shall be
satisfactory  in form and  substance  to the Bank and its  counsel  and the Bank
shall  have  received  all  information  and  all  documents  and   certificates
(corporate and other) which the Bank may reasonably have requested in connection
herewith.

                                       17

<PAGE>

         (c) The  Borrowers  shall  have  delivered  to the Bank  copies  of all
documents  relating to the Subordinated  Debt, which must be satisfactory to the
Bank.

         (d)  The  Borrowers  shall  have  delivered  to the  Bank a list of all
current  or  proposed  payment  schedules  with  each  creditor  of  any  of the
Borrowers,  including all  professionals and vendors with which extended payment
agreements have been reached.

         (e) The  Borrowers  shall  have  issued  to the  Bank new  warrants  in
substitution  for the two  warrants,  dated  September 26, 1995 and December 29,
1997, respectively,  issued to State Street and SSB Investments, Inc., and shall
have  reconfirmed the obligations of the Borrowers under the Warrant  Agreements
pursuant to which such warrants were issued.

         (f) The  Borrowers and the Bank shall have executed an amendment to the
Warrant Agreement dated as of December 29, 1997 deferring until December 1, 2000
the right to require  repurchase of the warrant issued  pursuant to such Warrant
Agreement,  provided that such  repurchase  right shall only be effective if the
Borrowers have exercised either the First Extension Option,  the First Alternate
Extension Option,  the Second Alternate  Extension Option or the Third Alternate
Extension Option.

         (g) The  Borrowers  shall have  delivered  to the Bank an  Amended  and
Restated  Revolving Credit Note of even date payable to the order of the Bank in
the principal amount of $10,350,000.

         (h) The Bank shall have received a favorable  opinion of counsel to the
Borrowers, in form and substance satisfactory to the Bank.

         (i) No event or circumstance  shall have occurred which could result in
a Forbearance Event of Default.

         (j) No default shall have occurred under any other  indebtedness of any
of the Borrowers except as previously disclosed to the Bank in writing.

         (k) The Bank shall have received all such other agreements, information
and certificates as the Bank shall have reasonably requested.

         ss.13.  FURTHER  ASSURANCES,  ETC. The Borrowers  jointly and severally
agree to take any action and to execute  and deliver  any  additional  documents
which the Bank may  reasonably  request  in order to  obtain  and enjoy the full
rights  and  benefits  granted  to the  Bank  by the  Borrower  Loan  Documents,
including this Agreement.


                                       18
<PAGE>

       ss.14.  WAIVERS BY BORROWERS; BANKRUPTCY MATTERS.

         (a) WAIVER OF JURY TRIAL,  ETC. EACH BORROWER  HEREBY WAIVES ANY RIGHTS
THAT IT MAY HAVE TO A JURY  TRIAL WITH  RESPECT TO ANY ACTION OR CLAIMS  ARISING
OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT,  ANY OF THE OTHER BORROWER
LOAN DOCUMENTS,  ANY GUARANTY  PROVIDED TO THE BANK IN CONNECTION  THEREWITH AND
ANY RIGHTS OR  OBLIGATIONS  HEREUNDER OR THEREUNDER OR THE  PERFORMANCE  OF SUCH
RIGHTS AND OBLIGATIONS. Except as prohibited by law which cannot be waived, each
Borrower hereby waives any right that it may have to claim or recover in any
litigation  referred  to in  the  preceding  sentence  any  special,  exemplary,
punitive or consequential  damages or any damages other than, or in addition to,
actual damages.

         (b) BANKRUPTCY  MATTERS;  HEARING. IN THE CASE OF ANY FORBEARANCE EVENT
OF  DEFAULT  ARISING  BY  VIRTUE  OF ANY  BANKRUPTCY  PROCEEDING  INVOLVING  ANY
BORROWER,  THE BORROWERS  COVENANT AND AGREE THAT,  UPON THE  OCCURRENCE OF SUCH
FORBEARANCE  EVENT  OF  DEFAULT,  (i) ANY  OBLIGATION  OF THE  BANK  TO  PROVIDE
FINANCING  TO ANY OF THE  BORROWERS  SHALL  AUTOMATICALLY  TERMINATE AS PROVIDED
HEREIN AND THE OTHER  BORROWER LOAN  DOCUMENTS,  (ii) THE BANK SHALL CONTINUE TO
HAVE THE RIGHT TO COLLECT  ACCOUNTS  RECEIVABLE IN THE ORDINARY COURSE AND APPLY
THE  PROCEEDS  THEREOF  TO  INDEBTEDNESS  OWED TO IT,  (iii)  THE BANK  SHALL BE
ENTITLED TO AN EMERGENCY  HEARING (ON TWO (2) BUSINESS DAYS' NOTICE DELIVERED BY
MESSENGER) ON ANY MOTION WHICH IT MAY FILE SEEKING A GENERAL LIFTING OF THE STAY
TO ENFORCE  RIGHTS WHICH IT HAS IN THE  CIRCUMSTANCES  AND TO FORECLOSE  ALL ITS
SECURITY  INTERESTS,  AND (IV) THE  BORROWERS  HEREBY  WAIVE ANY AND ALL RIGHTS,
UNDER 11 U.S.C.  SECTION 1121 OR OTHERWISE,  TO THE  EXCLUSIVE  RIGHT TO FILE OR
SOLICIT  ACCEPTANCES TO A PLAN OF  REORGANIZATION  AND EACH BORROWER ALSO HEREBY
AGREES, AT THE REQUEST OF THE BANK, TO CONSENT TO ANY MOTION BY THE BANK SEEKING
A TERMINATION OF ANY SUCH EXCLUSIVITY RIGHTS.

         (c) CONSENT TO RECEIVER.  WITHOUT DEROGATING FROM ANY RIGHT,  REMEDY OR
OTHER PROVISION CONTAINED IN THIS AGREEMENT OR ANY OTHER BORROWER LOAN DOCUMENT,
AT ANY TIME FROM AND AFTER THE OCCURRENCE OF A FORBEARANCE EVENT OF DEFAULT, THE
BANK SHALL HAVE THE RIGHT TO APPLY FOR AND HAVE A RECEIVER  APPOINTED BY A COURT
OF COMPETENT  JURISDICTION IN ANY ACTION TAKEN BY THE BANK TO ENFORCE THE RIGHTS
AND  REMEDIES  OF THE BANK  UNDER  THIS  AGREEMENT  OR ANY OTHER  BORROWER  LOAN
DOCUMENT IN ORDER TO MANAGE,  PROTECT AND PRESERVE THE  COLLATERAL  AND CONTINUE
THE OPERATION OF THE BUSINESS


                                       19
<PAGE>


OF ANY  BORROWER,  OR TO SELL OR DISPOSE OF THE  COLLATERAL,  AND TO COLLECT ALL
REVENUES  AND PROFITS  THEREOF AND APPLY THE SAME TO THE PAYMENT OF ALL EXPENSES
AND OTHER  CHARGES  OF SUCH  RECEIVERSHIP,  INCLUDING  THE  COMPENSATION  OF THE
RECEIVER,  SAID EXPENSES AND CHARGES TO CONSTITUTE PART OF THE OBLIGATIONS,  AND
TO THE PAYMENT OF THE  BORROWER  OBLIGATIONS.  TO THE EXTENT NOT  PROHIBITED  BY
APPLICABLE  LAW, EACH  BORROWER  HEREBY  IRREVOCABLY  CONSENTS TO AND WAIVES ANY
RIGHT TO OBJECT TO OR OTHERWISE  CONTEST THE APPOINTMENT OF RECEIVER AS PROVIDED
ABOVE.  EACH BORROWER (I) GRANTS SUCH WAIVER AND CONSENT  KNOWINGLY AFTER HAVING
DISCUSSED THE IMPLICATIONS THEREOF WITH COUNSEL,  (II) ACKNOWLEDGES THAT (A) THE
UNCONTESTED  RIGHT TO HAVE A RECEIVER  APPOINTED FOR THE  FOREGOING  PURPOSES IS
CONSIDERED  ESSENTIAL  BY THE BANK IN  CONNECTION  WITH THE  ENFORCEMENT  OF ITS
RIGHTS AND REMEDIES UNDER THIS AGREEMENT AND THE OTHER BORROWER LOAN  DOCUMENTS,
AND (B) THE  AVAILABILITY  OF SUCH  APPOINTMENT  AS A REMEDY UNDER THE FOREGOING
CIRCUMSTANCES  WAS A  MATERIAL  FACTOR IN  INDUCING  THE BANK TO ENTER INTO THIS
AGREEMENT;  AND (III) TO THE EXTENT NOT PROHIBITED BY APPLICABLE  LAW, AGREES TO
ENTER INTO ANY AND ALL STIPULATIONS IN ANY LEGAL ACTIONS, OR AGREEMENTS OR OTHER
INSTRUMENTS  IN CONNECTION  WITH THE  FOREGOING AND TO COOPERATE  FULLY WITH THE
BANK IN CONNECTION  WITH THE  ASSUMPTION AND EXERCISE OF CONTROL BY THE RECEIVER
OVER ALL OR ANY PORTION OF THE COLLATERAL.

         (d)   ACKNOWLEDGMENTS.   The  Borrowers  hereby  (i)  certify  that  no
representative,  agent or attorney  of the Bank has  represented,  expressly  or
otherwise, that the Bank would not, in the event of litigation,  seek to enforce
the  foregoing  waivers (or any other waivers or other  provisions  contained in
this  Agreement  or in  any of the  other  Borrower  Loan  Documents)  and  (ii)
acknowledge  that the Bank has been  induced  to enter into this  Agreement  by,
among other things, the confirmations,  ratifications,  waivers,  agreements and
certifications set forth herein.

         ss.16.  FEES, ETC. The Borrowers agree to pay all reasonable  expenses,
fees and  disbursements  of counsel for the Bank and of  consultants to the Bank
which  the Bank has  incurred  or may  hereafter  incur in  connection  with the
Borrower Loan  Documents,  including the  negotiation  and  preparation  of this
Agreement and all other  documents  related  hereto and thereto  (including  any
amendment,  consent or waiver  hereunder  or  thereunder)  and the  transactions
contemplated  hereby or  thereby  or the  enforcement  of the rights of the Bank
hereunder or under the other  Borrower Loan  Documents in the event of a default
hereunder or thereunder or any "workout" of their  obligations  to the Bank. All
such expenses,  fees and disbursements shall constitute  "Borrower  Obligations"
and shall be secured by the Collateral. Concurrent with the

                                       20

<PAGE>


execution of this Agreement,  the Borrowers shall pay all of the expenses,  fees
and disbursements of the Bank's counsel and of such consultants  accrued through
the execution of this Agreement,  and the Borrowers shall  thereafter pay all of
the  expenses,  fees  and  disbursements  of the  Bank's  counsel  and  of  such
consultants on demand.

         ss.17.  SETOFFS,  ETC. If any Forbearance Event of Default occurs,  any
indebtedness  or other  obligations  from the Bank to any Borrower may,  without
regard to the value or adequacy of the Collateral,  be offset and applied toward
the payment of any  indebtedness or obligations  from such Borrower to the Bank,
whether or not such indebtedness or obligations, or any part thereof, shall then
be due.  Notwithstanding  the foregoing,  the Bank may at any time charge any of
the Borrowers'  accounts with the Bank for purposes of paying any amounts due in
respect of expenses, fees and disbursements of counsel to the Bank or the Bank's
consultants or to pay any fees due the Bank.

         ss.18.   NOTICES.   All   notices,   consents,   requests,   approvals,
instructions  and other  communications  provided for herein shall be in writing
and  validly  given or made  when  delivered  personally,  or sent by  overnight
courier,  or by facsimile  transmission (when confirmation of receipt thereof is
received) to the party entitled or required to receive the same at the addresses
set forth in the  Credit  Agreement  (provided  that a copy of any notice to the
Bank shall be delivered to Charles L. Glerum,  Esq., Choate,  Hall & Stewart, 53
State Street,  Boston,  Massachusetts,  02109),  or at such other address as any
party hereto may subsequently furnish in writing to the other parties.

         ss.19.  NO  WAIVERS,  ETC.  Except to the extent the Bank has agreed to
forbear  pursuant  to this  Agreement,  the Bank may  enforce  its rights to the
fullest extent permitted under this Agreement, the other Borrower Loan Documents
and/or  applicable  law.  Neither this  Agreement nor the compliance by the Bank
herewith  shall be deemed or  construed to be a waiver of any right or remedy to
which the Bank may now or  hereafter be entitled  against any of the  Borrowers,
except to the extent herein  otherwise  explicitly  provided.  The parties agree
that, except to the extent herein otherwise explicitly provided,  the provisions
of the Borrower Loan  Documents and all related  agreements  shall be unaffected
hereby and shall  continue in full force and effect.  The failure of the Bank to
insist upon the strict  performance  of any term,  condition or other  provision
hereof or of any other  agreement,  document or  instrument  or to exercise  any
right or remedy  hereunder or  thereunder  shall not  constitute a waiver by the
Bank of any such  term,  condition  or other  provision  or Event of  Default or
Forbearance Event of Default in connection therewith; and any waiver of any such
term,  condition or other  provision or any such Event of Default or Forbearance
Event of Default shall not affect or alter this  Agreement or the other Borrower
Loan Documents except as expressly provided by the Bank in writing, and each and
every  term,  condition  and other  provision  of this  Agreement  and the other
Borrower Loan Documents shall, in such event,  continue in full force and effect
and shall be  operative  with respect to any other then  existing or  subsequent
Event of Default or Forbearance Event of Default in connection therewith.


                                       21
<PAGE>

       ss.20.  MISCELLANEOUS.

         (a) Counterparts, Successors, Governing Law, Etc. This Agreement may be
executed in multiple counterparts, each of which shall be considered an original
but all of  which  shall  constitute  one and the  same  agreement.  One or more
counterparts  may be delivered via telecopier;  any such telecopied  counterpart
shall have the same force and effect as an  original  counterpart  hereof.  This
Agreement and the other  Borrower Loan  Documents  shall be binding and inure to
the  benefit of each of the parties  hereto,  and their  respective  successors,
heirs, legal  representatives and assigns provided,  that no Borrower may assign
its rights and  obligations  without the Bank's prior  written  consent.  In the
event of any assignment by the Bank of all of its rights and  obligations  under
this Agreement and the other Borrower Loan Documents, the term "Bank" as used in
this Agreement and the other Borrower Loan Documents shall be deemed to refer to
such assignee. This Agreement is solely for the purpose, and shall have the sole
effect,  of defining the relative  rights and  obligations of the parties hereto
and may not be relied  upon or  enforced  by any person not a party  hereto;  no
Person shall have third-party beneficiary rights hereunder.

         This  Agreement  shall be construed in accordance  with and governed by
the internal laws of the Commonwealth of Massachusetts (without giving effect to
conflicts of laws principles) and is being executed as a sealed instrument under
Massachusetts  law. To the extent that it may lawfully do so, each Borrower each
hereby  consents to service of process,  and to be sued, in the  Commonwealth of
Massachusetts and consents to the jurisdiction of the courts of the Commonwealth
of Massachusetts  and the U.S. District Court for the District of Massachusetts,
as well as to the  jurisdiction  of all  courts to which an appeal  may be taken
from  such  courts,  for the  purpose  of any suit,  action or other  proceeding
arising out of any of its obligations hereunder or under the other Borrower Loan
Documents with respect to the transactions  contemplated hereby or thereby,  and
expressly  waives  any and all  objections  it may  have as to venue in any such
courts.  Each of the  Borrowers  further  agrees  that a summons  and  complaint
commencing  an action or  proceeding  in any of such  courts  shall be  properly
served  and  shall  confer  personal  jurisdiction  if served  personally  or by
certified mail to it at its address as provided herein or as otherwise  provided
under the laws of the Commonwealth of Massachusetts or the jurisdiction in which
suit is brought.

         (b) Amendments and Waivers.  Any term of this Agreement or of the other
Borrower Loan  Documents  may be amended and the  observance of any term of this
Agreement may be waived only with the written consent of each party hereto.

         (c) Construction. The parties acknowledge and agree that this Agreement
shall not be construed  in favor of one party more than the other(s)  based upon
which  party  drafted  (or caused to be drafted)  the same.  Headings  contained
herein are included for convenience of reference only and shall not constitute a
part  of or  affect  the  meaning  or  interpretation  of this  Agreement.  This
Agreement together with the other Borrower Loan Documents sets forth the entire


                                       22
<PAGE>

understanding  of the parties with respect to its subject  matter and supersedes
all other  negotiations,  understandings and  representations  made by and among
such parties. No course of dealing, course of performance,  trade usage or parol
evidence of any nature shall be used to  supplement  or modify any terms of this
Agreement.

         (d) Survival of  Representations.  All  representations  and warranties
made herein and/or in  certificates  delivered  pursuant  hereto by any Borrower
shall  survive the  execution and delivery  hereof,  and shall  continue in full
force  and  effect  with  respect  to the date as of  which  made so long as any
obligation or indebtedness of any of the Borrowers to the Bank is outstanding.

         (e) Statute of Limitations; Time of Essence. Any statute of limitations
applicable  to any remedy of the Bank under the Borrower  Loan  Documents or any
applicable  law shall be  suspended  and  tolled  until  such time as the Bank's
forbearance  obligation  hereunder or under any  extension  or amendment  hereto
terminates.  Time  shall  be of the  essence  with  respect  to each  and  every
undertaking and obligation of the Borrowers set forth herein.

         (f) Specific Performance,  Etc. The Borrowers stipulate that the Bank's
remedies  at law,  in the event of any  default  or  threatened  default  by any
Borrower  in  the  performance  of or  compliance  with  any of  the  terms  and
provisions of this  Agreement on its part to be observed or  performed,  are not
and will not be adequate,  and that such terms may be specifically enforced by a
decree for the specific  performance of any agreement  contained herein or by an
injunction  against  a  violation  of any of the terms or  provisions  hereof or
otherwise.

         (g)  Severability.  The  unenforceability  of  any  provision  of  this
Agreement shall not affect the validity,  binding effect and  enforceability  of
any other provision or provisions of this Agreement;  provided, however, that if
any provision of this Agreement is declared  unenforceable  against any Borrower
for any  reason by any  court or  governmental  body  having  jurisdiction,  all
agreements,  consents  and waivers of the Bank set forth  herein  shall,  at the
option of the Bank,  be deemed null and void ab initio,  and the Bank shall,  at
its  election,  be restored to the  position  it would have  occupied,  with all
rights available to it as though such agreements, consents and waivers had never
been made.  Without  limiting the foregoing,  the Bank shall have all rights and
remedies  under the Borrower Loan Documents and applicable law in respect of the
Events of Default described in clauses B and D of the Preliminary  Statements to
this Agreement.

         (h)  Indemnification.  In addition to any  indemnification  obligations
contained in any of the other Borrower Loan  Documents,  each Borrower agrees to
indemnify the Bank and each of the other Released  Parties and hold the Bank and
each of the other Released Parties harmless from and against any and all claims,
damages,  losses,   liabilities,   judgments  and  expenses  (including  without
limitation  all reasonable  counsel fees and expenses and  litigation  expenses)
which the Bank or any other  Released  Party may incur or which may be  asserted
against it in connection with or arising out of any investigation, litigation or
proceeding  which arises out of the transactions  contemplated  hereby or by the
other Borrower Loan Documents (or any action or


                                       23
<PAGE>

inaction by the Bank hereunder or thereunder)  or which  otherwise  involves any
Borrower,  whether  or not the  Bank  is a party  thereto,  other  than  claims,
damages, losses, liabilities or judgments with respect to any matter as to which
the Bank or any other Released Party shall have been finally adjudicated to have
acted with  willful  misconduct  or gross  negligence.  The  provisions  of this
paragraph  shall survive  payment of all  obligations  and  indebtedness  of the
Borrowers to the Bank.  Promptly upon receipt by any indemnified party hereunder
of notice of the commencement against such party of any action, such indemnified
party  shall,  if a claim in respect  thereof is to be made against any Borrower
hereunder, notify the Borrowers in writing of the commencement thereof, provided
that the  failure to provide  such notice  shall not limit any party's  right to
indemnification  unless and to the extent  such  failure  shall have  materially
adversely affected the Borrowers.

         (i) Arms-Length  Transaction.  The Borrowers  recognize,  stipulate and
agree  that the  Bank's  actions  and  relationships  with the  parties  hereto,
including but not limited to those relationships  created or referenced by or in
this  Agreement,  have been and continue to  constitute  arms-length  commercial
transactions,  that such  actions  and  relationships  shall at all times in the
future continue to constitute arms-length  commercial  transactions and that the
Bank shall not at any time act, be  obligated  to act, or otherwise be construed
or  interpreted  as acting  as or being  the  agent,  partner,  joint  venturer,
employee or fiduciary of any of the Borrowers.

         (j)  Negotiations/Counsel.  The Borrowers stipulate and agree that this
Agreement is the product of and results from  lengthy  arms-length  negotiations
among the parties  and that  neither the Bank nor any other party has exerted or
attempted to exert improper or unlawful  pressure or has in any way attempted to
induce,  through  threats  or  otherwise,  the  execution  or  delivery  of this
Agreement. Without in any way limiting the foregoing, each of the parties hereto
stipulates  and agrees that at all times  during the course of the  negotiations
surrounding  the  execution  and delivery of this  Agreement,  they have, to the
extent deemed necessary or advisable in their sole discretion,  been advised and
assisted by competent counsel of their own choosing,  that such counsel has been
present and participated in the negotiations surrounding this Agreement and that
they have  been  fully  advised  by such  counsel  of the  effect of each  term,
condition, provision and stipulation contained herein.


                                       24
<PAGE>


         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as
a sealed instrument as of the date first above written.

                                      STARMET CORPORATION


                                      By:______________________
                                              Duly Authorized

                                      STARMET POWDERS, LLC


                                      By:______________________
                                              Duly Authorized

                                      STARMET AEROCAST, LLC


                                      By:______________________
                                              Duly Authorized

                                      STARMET COMMERCIAL CASTINGS, LLC


                                      By:______________________
                                              Duly Authorized

                                      STARMET NMI  CORPORATION


                                      By:______________________
                                              Duly Authorized

                                      STARMET CMI CORPORATION


                                      By:______________________
                                              Duly Authorized

                                      STARMET HOLDINGS CORPORATION


                                      By:______________________
                                              Duly Authorized


                                       25

<PAGE>



                                      NMI FOREIGN SALES CORPORATION


                                      By:______________________
                                              Duly Authorized

                                      CITIZENS BANK OF MASSACHUSETTS


                                      By:______________________
                                              Duly Authorized




                                       26